Guarantee - Congress Financial Corp. (Southwest) and Supplies Distributors Inc.
GUARANTEE
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March 29, 2002
Congress Financial Corporation (Southwest)
1201 Main Street, Suite 1625
Dallas, Texas 75202
Re: Supplies Distributors, Inc., a Delaware corporation (herein
referred to as "Borrower")
Gentlemen:
Congress Financial Corporation (Southwest) ("Lender") and Borrower have
entered into certain financing arrangements pursuant to which Lender may make
loans and advances and provide other financial accommodations to Borrower as set
forth in the Loan and Security Agreement, dated March 29, 2002 by and between
Borrower and Lender (as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced, the "Loan
Agreement"), and other agreements, documents and instruments referred to therein
or at any time executed and/or delivered in connection therewith or related
thereto, including, but not limited to, this Guarantee (all of the foregoing,
together with the Loan Agreement, as the same now exist or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced, being
collectively referred to herein as the "Financing Agreements").
Due to the close business and financial relationships between Borrower
and each and all of the undersigned (individually and collectively,
"Guarantors"), in consideration of the benefits which will accrue to Guarantors
and as an inducement for and in consideration of Lender making loans and
advances and providing other financial accommodations to Borrower pursuant to
the Loan Agreement and the other Financing Agreements, each of Guarantors hereby
jointly and severally agrees in favor of Lender as follows:
1. Guarantee.
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(a) Each of Guarantors absolutely and unconditionally, jointly
and severally, guarantees and agrees to be liable for the full and indefeasible
payment and performance when due of the following (all of which are collectively
referred to herein as the "Guaranteed Obligations"): (i) all obligations,
liabilities and indebtedness of any kind, nature and description of Borrower to
Lender and/or its affiliates, including principal, interest, charges, fees,
costs and expenses, however evidenced, whether as principal, surety, endorser,
guarantor or otherwise, whether arising under the Loan Agreement, the other
Financing Agreements or otherwise, whether now existing or hereafter arising,
whether arising before, during or after the initial or any renewal term of the
Loan Agreement or after the commencement of any case with respect to Borrower
under the United States Bankruptcy Code or any similar statute (including,
without
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limitation, the payment of interest and other amounts, which would accrue and
become due but for the commencement of such case, whether or not such amounts
are allowed or allowable in whole or in part in any such case and including
loans, interest, fees, charges and expenses related thereto and all other
obligations of Borrower or its successors to Lender arising after the
commencement of such case), whether direct or indirect, absolute or contingent,
joint or several, due or not due, primary or secondary, liquidated or
unliquidated, secured or unsecured, and however acquired by Lender and (ii) all
expenses (including, without limitation, attorneys' fees and legal expenses)
incurred by Lender in connection with the preparation, execution, delivery,
recording, administration, collection, liquidation, enforcement and defense of
Borrower's obligations, liabilities and indebtedness as aforesaid to Lender, the
rights of Lender in any collateral or under this Guarantee and all other
Financing Agreements or in any way involving claims by or against Lender
directly or indirectly arising out of or related to the relationships between
Borrower, any of Guarantors or any other Obligor (as hereinafter defined) and
Lender, whether such expenses are incurred before, during or after the initial
or any renewal term of the Loan Agreement and the other Financing Agreements or
after the commencement of any case with respect to Borrower or any of Guarantors
under the United States Bankruptcy Code or any similar statute.
(b) This Guarantee is a guaranty of payment and not of
collection. Each of Guarantors agrees that Lender need not attempt to collect
any Guaranteed Obligations from Borrower, any one of Guarantors or any other
Obligor or to realize upon any collateral, but may require any one of Guarantors
to make immediate payment of all of the Guaranteed Obligations to Lender when
due, whether by maturity, acceleration or otherwise, or at any time thereafter.
Lender may apply any amounts received in respect of the Guaranteed Obligations
to any of the Guaranteed Obligations, in whole or in part (including attorneys'
fees and legal expenses incurred by Lender with respect thereto or otherwise
chargeable to Borrower or Guarantors) and in such order as Lender may elect.
(c) Payment by Guarantors shall be made to Lender at the
office of Lender from time to time on demand as Guaranteed Obligations become
due. Guarantors shall make all payments to Lender on the Guaranteed Obligations
free and clear of, and without deduction or withholding for or on account of,
any setoff, counterclaim, defense, duties, taxes, levies, imposts, fees,
deductions, withholding, restrictions or conditions of any kind. One or more
successive or concurrent actions may be brought hereon against any of Guarantors
either in the same action in which Borrower or any of the other Guarantors or
any other Obligor is sued or in separate actions. In the event any claim or
action, or action on any judgment, based on this Guarantee is brought against
any of Guarantors, each of Guarantors agrees not to deduct, set-off, or seek any
counterclaim for or recoup any amounts which are or may be owed by Lender to any
of Guarantors.
2. Waivers and Consents.
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(a) Notice of acceptance of this Guarantee, the making of
loans and advances and providing other financial accommodations to Borrower and
presentment, demand, protest, notice of protest, notice of nonpayment or default
and all other notices to which Borrower or any
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of Guarantors are entitled are hereby waived by each of Guarantors. Each of
Guarantors also waives notice of and hereby consents to, (i) any amendment,
modification, supplement, extension, renewal, or restatement of the Loan
Agreement and any of the other Financing Agreements, including, without
limitation, extensions of time of payment of or increase or decrease in the
amount of any of the Guaranteed Obligations, the interest rate, fees, other
charges, or any collateral, and the guarantee made herein shall apply to the
Loan Agreement and the other Financing Agreements and the Guaranteed Obligations
as so amended, modified, supplemented, renewed, restated or extended, increased
or decreased, (ii) the taking, exchange, surrender and releasing of collateral
or guarantees now or at any time held by or available to Lender for the
obligations of Borrower or any other party at any time liable on or in respect
of the Guaranteed Obligations or who is the owner of any property which is
security for the Guaranteed Obligations (individually, an "Obligor" and
collectively, the "Obligors"), including, without limitation, the surrender or
release by Lender of any one of Guarantors hereunder, (iii) the exercise of, or
refraining from the exercise of any rights against Borrower, any of Guarantors
or any other Obligor or any collateral, (iv) the settlement, compromise or
release of, or the waiver of any default with respect to, any of the Guaranteed
Obligations and (v) any financing by Lender of Borrower under Section 364 of the
United States Bankruptcy Code or consent to the use of cash collateral by Lender
under Section 363 of the United States Bankruptcy Code. Each of Guarantors
agrees that the amount of the Guaranteed Obligations shall not be diminished and
the liability of Guarantors hereunder shall not be otherwise impaired or
affected by any of the foregoing.
(b) No invalidity, irregularity or unenforceability of all or
any part of the Guaranteed Obligations shall affect, impair or be a defense to
this Guarantee, nor shall any other circumstance which might otherwise
constitute a defense available to or legal or equitable discharge of Borrower in
respect of any of the Guaranteed Obligations, or any one of Guarantors in
respect of this Guarantee, affect, impair or be a defense to this Guarantee.
Without limitation of the foregoing, the liability of Guarantors hereunder shall
not be discharged or impaired in any respect by reason of any failure by Lender
to perfect or continue perfection of any lien or security interest in any
collateral or any delay by Lender in perfecting any such lien or security
interest. As to interest, fees and expenses, whether arising before or after the
commencement of any case with respect to Borrower under the United States
Bankruptcy Code or any similar statute, Guarantors shall be liable therefor,
even if Borrower's liability for such amounts does not, or ceases to, exist by
operation of law. Each of Guarantors acknowledges that Lender has not made any
representations to any of Guarantors with respect to Borrower, any other Obligor
or otherwise in connection with the execution and delivery by Guarantors of this
Guarantee and Guarantors are not in any respect relying upon Lender or any
statements by Lender in connection with this Guarantee.
(c) Each of Guarantors hereby irrevocably and unconditionally
waives and relinquishes all statutory, contractual, common law, equitable and
all other claims against Borrower, any collateral for the Guaranteed Obligations
or other assets of Borrower or any other Obligor, for subrogation,
reimbursement, exoneration, contribution, indemnification, setoff or other
recourse in respect to sums paid or payable to Lender by each of Guarantors
hereunder and each of Guarantors hereby further irrevocably and unconditionally
waives and relinquishes any
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and all other benefits which Guarantors might otherwise directly or indirectly
receive or be entitled to receive by reason of any amounts paid by or collected
or due from Guarantors, Borrower or any other Obligor upon the Guaranteed
Obligations or realized from their property.
3. Subordination. Except as expressly set forth in that certain Notes
Payable Subordination Agreement dated as of the date hereof by Priority
Fulfillment Services, Inc. in favor of Lender, payment of all amounts now or
hereafter owed to Guarantors by Borrower or any other Obligor is hereby
subordinated in right of payment to the indefeasible payment in full to Lender
of the Guaranteed Obligations and all such amounts and any security and
guarantees therefor are hereby assigned to Lender as security for the Guaranteed
Obligations.
4. Acceleration. Notwithstanding anything to the contrary contained
herein or any of the terms of any of the other Financing Agreements, the
liability of Guarantors for the entire Guaranteed Obligations shall mature and
become immediately due and payable, even if the liability of Borrower or any
other Obligor therefor does not, upon the occurrence of any act, condition or
event which constitutes an Event of Default as such term is defined in the Loan
Agreement.
5. Account Stated. The books and records of Lender showing the account
between Lender and Borrower shall be admissible in evidence in any action or
proceeding against or involving Guarantors as prima facie proof of the items
therein set forth, and the monthly statements of Lender rendered to Borrower, to
the extent to which no written objection is made within thirty (30) days from
the date of sending thereof to Borrower, shall be deemed conclusively correct
and constitute an account stated between Lender and Borrower and be binding on
Guarantors.
6. Termination. This Guarantee is continuing, unlimited, absolute and
unconditional. All Guaranteed Obligations shall be conclusively presumed to have
been created in reliance on this Guarantee. Each of Guarantors shall continue to
be liable hereunder until one of Lender's officers actually receives a written
termination notice from a Guarantor sent to Lender at its address set forth
above by certified mail, return receipt requested and thereafter as set forth
below. Such notice received by Lender from any one of Guarantors shall not
constitute a revocation or termination of this Guarantee as to any of the other
Guarantors. Revocation or termination hereof by any of Guarantors shall not
affect, in any manner, the rights of Lender or any obligations or duties of any
of Guarantors (including the Guarantor which may have sent such notice) under
this Guarantee with respect to (a) Guaranteed Obligations which have been
created, contracted, assumed or incurred prior to the receipt by Lender of such
written notice of revocation or termination as provided herein, including,
without limitation, (i) all amendments, extensions, renewals and modifications
of such Guaranteed Obligations (whether or not evidenced by new or additional
agreements, documents or instruments executed on or after such notice of
revocation or termination), (ii) all interest, fees and similar charges accruing
or due on and after revocation or termination, and (iii) all attorneys' fees and
legal expenses, costs and other expenses paid or incurred on or after such
notice of revocation or termination in attempting to collect or enforce any of
the Guaranteed Obligations against Borrower, Guarantors or any other Obligor
(whether or not suit be brought), or (b) Guaranteed Obligations which have been
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created, contracted, assumed or incurred after the receipt by Lender of such
written notice of revocation or termination as provided herein pursuant to any
contract entered into by Lender prior to receipt of such notice. The sole effect
of such revocation or termination by any of Guarantors shall be to exclude from
this Guarantee the liability of such Guarantor for those Guaranteed Obligations
arising after the date of receipt by Lender of such written notice which are
unrelated to Guaranteed Obligations arising or transactions entered into prior
to such date. Without limiting the foregoing, this Guarantee may not be
terminated and shall continue so long as the Loan Agreement shall be in effect
(whether during its original term or any renewal, substitution or extension
thereof).
7. Reinstatement. If after receipt of any payment of, or proceeds of
collateral applied to the payment of, any of the Guaranteed Obligations, Lender
is required to surrender or return such payment or proceeds to any Person for
any reason, then the Guaranteed Obligations intended to be satisfied by such
payment or proceeds shall be reinstated and continue and this Guarantee shall
continue in full force and effect as if such payment or proceeds had not been
received by Lender. Each of Guarantors shall be liable to pay to Lender, and
does indemnify and hold Lender harmless for the amount of any payments or
proceeds surrendered or returned. This Section 7 shall remain effective
notwithstanding any contrary action which may be taken by Lender in reliance
upon such payment or proceeds. This Section 7 shall survive the termination or
revocation of this Guarantee.
8. Amendments and Waivers. Neither this Guarantee nor any provision
hereof shall be amended, modified, waived or discharged orally or by course of
conduct, but only by a written agreement signed by an authorized officer of
Lender. Lender shall not by any act, delay, omission or otherwise be deemed to
have expressly or impliedly waived any of its rights, powers and/or remedies
unless such waiver shall be in writing and signed by an authorized officer of
Lender. Any such waiver shall be enforceable only to the extent specifically set
forth therein. A waiver by Lender of any right, power and/or remedy on any one
occasion shall not be construed as a bar to or waiver of any such right, power
and/or remedy which Lender would otherwise have on any future occasion, whether
similar in kind or otherwise.
9. Corporate Existence, Power and Authority. Each of Guarantors is a
corporation duly organized and in good standing under the laws of its state or
other jurisdiction of incorporation and is duly qualified as a foreign
corporation and in good standing in all states or other jurisdictions where the
nature and extent of the business transacted by it or the ownership of assets
makes such qualification necessary, except for those jurisdictions in which the
failure to so qualify would not have a material adverse effect on the financial
condition, results of operation or businesses of any of Guarantors or the rights
of Lender hereunder or under any of the other Financing Agreements. The
execution, delivery and performance of this Guarantee is within the corporate
powers of each of Guarantors, have been duly authorized and are not in
contravention of law or the terms of the certificates of incorporation, by-laws,
or other organizational documentation of each of Guarantors, or any indenture,
agreement or undertaking to which any of Guarantors is a party or by which any
of Guarantors or its property are bound. This Guarantee constitutes the legal,
valid and binding obligation of each of Guarantors enforceable in accordance
with its terms. Any one of Guarantors signing this Guarantee shall be
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bound hereby whether or not any of the other Guarantors or any other person
signs this Guarantee at any time.
10. Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver.
(a) The validity, interpretation and enforcement of this
Guarantee and any dispute arising out of the relationship between any of
Guarantors and Lender, whether in contract, tort, equity or otherwise, shall be
governed by the internal laws of the State of Texas (without giving effect to
principles of conflicts of law).
(b) Each of Guarantors hereby irrevocably consents and submits
to the non-exclusive jurisdiction of the State of Texas and the United States
District Court for the Northern District of Texas and waives any objection based
on venue or forum non conveniens with respect to any action instituted therein
arising under this Guarantee or any of the other Financing Agreements or in any
way connected with or related or incidental to the dealings of any of Guarantors
and Lender in respect of this Guarantee or any of the other Financing Agreements
or the transactions related hereto or thereto, in each case whether now existing
or hereafter arising and whether in contract, tort, equity or otherwise, and
agrees that any dispute arising out of the relationship between any of
Guarantors or Borrower and Lender or the conduct of any such persons in
connection with this Guarantee, the other Financing Agreements or otherwise
shall be heard only in the courts described above (except that Lender shall have
the right to bring any action or proceeding against any of Guarantors or its
property in the courts of any other jurisdiction which Lender deems necessary or
appropriate in order to realize on collateral at any time granted by Borrower or
any of Guarantors to Lender or to otherwise enforce its rights against any of
Guarantors or its property).
(c) Each of Guarantors hereby waives personal service of any
and all process upon it and consents that all such service of process may be
made by certified mail (return receipt requested) directed to its address set
forth on the signature pages hereof and service so made shall be deemed to be
completed five (5) days after the same shall have been so deposited in the U.S.
mails, or, at Lender's option, by service upon any of Guarantors in any other
manner provided under the rules of any such courts. Within thirty (30) days
after such service, any of Guarantors so served shall appear in answer to such
process, failing which such Guarantors shall be deemed in default and judgment
may be entered by Lender against Guarantors for the amount of the claim and
other relief requested.
(d) EACH OF GUARANTORS HEREBY WAIVES ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS
GUARANTEE OR ANY OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY CONNECTED
WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF ANY OF GUARANTORS AND LENDER IN
RESPECT OF THIS GUARANTEE OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE
TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. EACH OF
GUARANTORS HEREBY
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AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL
BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY OF GUARANTORS OR LENDER
MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF GUARANTORS AND LENDER TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.
(e) Lender shall not have any liability to Guarantors (whether
in tort, contract, equity or otherwise) for losses suffered by Guarantors in
connection with, arising out of, or in any way related to the transactions or
relationships contemplated by this Guarantee, or any act, omission or event
occurring in connection herewith, unless it is determined by a final and
non-appealable judgment or court order binding on Lender that the losses were
the result of acts or omissions constituting gross negligence or willful
misconduct. In any such litigation, Lender shall be entitled to the benefit of
the rebuttable presumption that it acted in good faith and with the exercise of
ordinary care in the performance by it of the terms of the Loan Agreement and
the other Financing Agreements.
11. Notices. All notices, requests and demands hereunder shall be in
writing and (a) made to Lender at its address set forth above and to each of
Guarantors at its chief executive office set forth below, or to such other
address as either party may designate by written notice to the other in
accordance with this provision, and (b) deemed to have been given or made: if
delivered in person, immediately upon delivery; if by telex, telegram or
facsimile transmission, immediately upon sending and upon confirmation of
receipt; if by nationally recognized overnight courier service with instructions
to deliver the next business day, one (1) business day after sending; and if by
certified mail, return receipt requested, five (5) days after mailing.
12. Partial Invalidity. If any provision of this Guarantee is held to
be invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Guarantee as a whole, but this Guarantee shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
13. Entire Agreement. This Guarantee represents the entire agreement
and understanding of this parties concerning the subject matter hereof, and
supersedes all other prior agreements, understandings, negotiations and
discussions, representations, warranties, commitments, proposals, offers and
contracts concerning the subject matter hereof, whether oral or written.
14. Successors and Assigns. This Guarantee shall be binding upon
Guarantors and their respective successors and assigns and shall inure to the
benefit of Lender and its successors, endorsees, transferees and assigns. The
liquidation, dissolution or termination of any of Guarantors shall not terminate
this Guarantee as to such entity or as to any of the other Guarantors.
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15. Construction. All references to the term "Guarantors" wherever used
herein shall mean each and all of Guarantors and their respective successors and
assigns, individually and collectively, jointly and severally (including,
without limitation, any receiver, trustee or custodian for any of Guarantors or
any of their respective assets or any of Guarantors in its capacity as debtor or
debtor-in-possession under the United States Bankruptcy Code). All references to
the term "Lender" wherever used herein shall mean Lender and its successors and
assigns and all references to the term "Borrower" wherever used herein shall
mean Borrower and its successors and assigns (including, without limitation, any
receiver, trustee or custodian for Borrower or any of its assets or Borrower in
its capacity as debtor or debtor-in-possession under the United States
Bankruptcy Code). All references to the term "Person" or "person" wherever used
herein shall mean any individual, sole proprietorship, partnership, corporation
(including, without limitation, any corporation which elects subchapter S status
under the Internal Revenue Code of 1986, as amended), limited liability company,
limited liability partnership, business trust, unincorporated association, joint
stock corporation, trust, joint venture or other entity or any government or any
agency or instrumentality of political subdivision thereof. All references to
the plural shall also mean the singular and to the singular shall also mean the
plural.
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IN WITNESS WHEREOF, each of Guarantors has executed and delivered this
Guarantee as of the day and year first above written.
ATTEST: BUSINESS SUPPLIES DISTRIBUTORS
HOLDINGS, LLC
By:
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Joe Farrell
Manager
[CORPORATE SEAL]
Chief Executive Office
500 North Central Expressway, 5th Floor
Plano, Texas 75074
ATTEST: PRIORITY FULFILLMENT SERVICES, INC.
By:
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Thomas J. Madden
Chief Financial Officer and
Executive Vice President
[CORPORATE SEAL]
Chief Executive Office
500 North Central Expressway, 5th Floor
Plano, Texas 75074
ATTEST: PFSWEB, INC.
By:
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Thomas J. Madden
Chief Financial Officer and
Executive Vice President
[CORPORATE SEAL]
Chief Executive Office
500 North Central Expressway, 5th Floor
Plano, Texas 75074
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STATE OF TEXAS )
) SS.:
COUNTY OF DALLAS )
On this 29th day of March, 2002 before me personally came Joe Farrell,
to me known, who stated that he is the Manager of Business Supplies Distributors
Holders, LLC, the limited liability company described in and which executed the
foregoing instrument; and that he signed his name thereto by order of the Board
of Directors of said limited liability company.
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Notary Public
STATE OF TEXAS )
) SS.:
COUNTY OF DALLAS )
On this 29th day of March, 2002 before me personally came Thomas J.
Madden, to me known, who stated that he is the Chief Financial Officer and
Executive Vice President of Priority Fulfillment Services, Inc., the corporation
described in and which executed the foregoing instrument; and that he signed his
name thereto by order of the Board of Directors of said corporation.
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Notary Public
STATE OF TEXAS )
) SS.:
COUNTY OF DALLAS )
On this 29th day of March, 2002 before me personally came Thomas J.
Madden to me known, who stated that he is the Chief Financial Officer and
Executive Vice President of PFSweb, Inc., the corporation described in and which
executed the foregoing instrument; and that he signed his name thereto by order
of the Board of Directors of said corporation.
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Notary Public
Guarantee