EXHIBIT 10.37
GUARANTY
This GUARANTY (the "Guaranty") is made on March 26, 1999, by K.V. MART Co.,
a California corporation ("Guarantor"), whose address is ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attn.: President, in favor of Grocers
Capital Company, a California corporation ("GCC"), whose address is ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn.: Secretary.
1. Recitals. This Guaranty is made with respect to the following facts
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and circumstances:
(a) GCC, Guarantor and Khaledi Family Partnership, a California general
partnership ("Khaledi"), and ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇ (collectively, "Vazin")
(Khaledi and Vazin being referred to herein, collectively, as the "Borrower")
have entered into a Stock Purchase Agreement (the "Agreement"), dated the date
hereof, pursuant to which GCC is selling certain shares of the capital stock of
the Company to the Borrower in consideration for, among other things, the
execution and delivery by the Borrower to GCC of a Promissory Note (the "Note")
in the principal amount of $3,600,000. The Agreement and the Note are
collectively referred to in this Guaranty as the "Loan Documents."
(b) GCC would not sell said capital stock to the Borrower nor enter into
the Loan Documents with the Borrower unless the Guarantor agreed to guarantee
the obligations of the Borrower thereunder as provided in this Guaranty, and the
Guarantor, as a material inducement and consideration to GCC to sell said
capital stock to the Borrower and to enter into the Loan Documents is willing to
execute and deliver this Guaranty and to agree to and be bound by its terms.
2. Guaranty.
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2.1 Guaranty of Obligations. The Guarantor unconditionally, absolutely and
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irrevocably guarantees to GCC and to its successors and assigns the full and
prompt payment when due (whether by acceleration or otherwise) of all
indebtedness of the Borrower to GCC under the Loan Documents, and the full,
prompt and complete performance when due of all obligations of the Borrower to
GCC under the Loan Documents.
2.2 Guaranty of Payment. The liability of the Guarantor on this Guaranty
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is a guaranty of payment and performance and not of collectability, and is not
conditional or contingent on the genuineness, validity, regularity or
enforceability of any of the
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Loan Documents or the pursuit by GCC of any remedies that it now has or may
hereafter have with respect thereto.
2.3 Continuing Guaranty. This Guaranty is a continuing guaranty of the
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indebtedness and obligations of the Borrower under the Loan Documents, including
any and all such indebtedness and obligations which are renewed, extended,
compromised, refinanced or restructured from time to time.
2.4 Independent Obligations. The Guarantor agrees that it is directly and
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primarily liable to GCC, that the Guarantor's obligations hereunder are
independent of the indebtedness and the obligations of the Borrower under the
Loan Documents, and that a separate action or actions may be brought and
prosecuted against the Guarantor, whether or not action is brought against the
Borrower or whether or not the Borrower is joined in any such action or actions.
The Guarantor agrees that any releases which may be given by GCC to the Borrower
or any other guarantor or endorser shall not release the Guarantor from this
Guaranty.
3. Consents by Guarantor.
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3.1 Consents. The Guarantor hereby authorizes GCC, without notice or
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demand and without affecting the Guarantor's liability hereunder, from time to
time to:
3.1.1 Changes in Terms. Renew, compromise, extend, refinance, accept
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partial payments, accelerate or restructure the indebtedness and
obligations of the Borrower under the Loan Documents or otherwise change
the time for payment or the terms of an: such indebtedness or obligations,
or any part thereof, including, without limitation, increasing or
decreasing the amount thereof (whether through the extension of new credit
or otherwise) or increasing or decreasing the rate of interest thereon
3.1.2 Amendment of Documents. Waives, amend, rescind, modify or
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otherwise change any of the terms or provisions of the Loan Documents.
3.1.3 Liquidation of Guaranteed Obligations. Settle, release,
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compromise, collect or otherwise liquidate any of the indebtedness or
obligations of the Borrower under the Loan Documents, or any part thereof,
and any security or collateral therefor in any manner as GCC may determine
in its sole and absolute discretion.
3.1.4 Collateral. Take and hold collateral to secure the payment and
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performance of the indebtedness and obligations of the Borrower under the
Loan Documents and exchange, enforce, waive and release any such
collateral, and apply such collateral and direct the order or manner of
sale thereof as GCC in its sole and absolute discretion may determine.
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3.1.5 Releases. Release or substitute any one or more endorsers or
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other guarantors.
3.1.6 Assignment. Assign, without notice, this Guaranty in whole or
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in part and GCC's rights hereunder to anyone at any time.
3.2 Non-Release of Guarantor. The Guarantor agrees that GCC may do any or
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all of the matters specified in Section 3.1 in such manner, upon such terms, and
at such times, as GCC, in its sole and absolute discretion, deems advisable,
without, in any way or respect, impairing, affecting, reducing or releasing the
Guarantor from its undertakings hereunder and the Guarantor hereby consents to
each and all of the matters specified in Section 3.1.
4. Waivers.
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4.1 Defenses. The Guarantor hereby waives any right to assert against GCC
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as a defense, counterclaim, setoff or cross-claim, any defense (legal or
equitable), counterclaim, setoff or cross-claim which the Guarantor may now or
at any time hereafter have under applicable law, rule, arrangement or
relationship against the Borrower, GCC or any other party. The Guarantor waives
all defenses, counterclaims and setoffs of any kind or nature arising, directly
or indirectly, from the present or future lack of Loan Documents or any security
interest thereunder.
4.2 Presentment, Demand and Notice. The Guarantor waives all presentments,
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demands for performance, notices of nonperformance, protests, notices of
protests, notices of dishonor, notices of default, notice of acceptance of this
Guaranty, diligence and notices of the existence, creation or incurrence of the
indebtedness and obligations of the Borrower under the Loan Documents or of new
or additional indebtedness or obligations of the Borrower incurred or created
after the date of this Guaranty, and all other demands, notices or formalities
of whatsoever kind to which the Guarantor may be entitled under applicable law.
4.3 Remedies Against Borrower. As a condition to payment or performance by
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the Guarantor under this Guaranty, GCC shall not be required to, and the
Guarantor hereby waives any and all rights to require GCC to, prosecute or seek
to enforce any remedies against the Borrower or any other party liable to GCC on
account of the indebtedness and obligations of the Borrower under the Loan
Documents or to require GCC to seek to enforce or resort to any remedies with
respect to any security interests, liens or encumbrances granted to GCC by the
Borrower or any other party on account of the indebtedness and obligations of
the Borrower under the Loan Documents.
4.4 Subrogation Rights. Until all the terms, covenants and conditions of
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the Loan Documents on the Borrower's part to be performed and observed are fully
performed and observed, the Guarantor shall have no right of subrogation,
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reimbursement, exoneration, indemnity or contribution against the Borrower by
reason of any payments or acts of performance by the Guarantor in compliance
with the obligations of the Guarantor under this Guaranty; provided that,
notwithstanding the foregoing, the Guarantor shall have no right of subrogation,
reimbursement, exoneration, indemnity, contribution or any other rights that
would result in the Guarantor being deemed a creditor of the Borrower under the
Federal Bankruptcy Code, and the Guarantor irrevocably waives all such rights
and the right to assert any such rights.
5. Waiver of Suretyship Defenses; Antideficiency Legislation. The
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Guarantor agrees that nothing contained in this Guaranty shall prevent GCC from
suing on the Note or from exercising any rights available to it under the Note
or under any of the other Loan Documents, and that the exercise of any of these
rights shall not constitute a legal or equitable discharge of the Guarantor. The
Guarantor understands that the exercise by GCC of certain rights and remedies
contained in the Loan Documents may affect or eliminate the Guarantor's right of
subrogation against the Borrower and that the Guarantor may therefore succeed to
a partially or totally non-reimbursable liability hereunder. Nevertheless, the
Guarantor hereby authorizes and empowers the GCC to exercise, in its sole and
absolute discretion, any rights and remedies, or any combination of rights and
remedies, that may then be available, since it is the intent and purpose of the
Guarantor that the obligations hereunder shall be absolute, independent and
unconditional under any and all circumstances. Without limiting the generality
of the foregoing, the Guarantor expressly waives any and all benefits under
California Civil Code (S)(S) 2809, 2810, 2819, 2845, 2849, 2850 and 2855.
6. Subordination. Any and all indebtedness of the Borrower now or
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hereafter held by the Guarantor shall be subordinated and junior in right of
payment to the indebtedness and obligations of the Borrower to GCC under the
Loan Documents, and all such indebtedness of the Borrower to the Guarantor shall
be collected, and enforced and received by the Guarantor as trustee for GCC and
immediately paid over to GCC on account of the indebtedness and obligations of
the Borrower under the Loan Documents.
7. Bankruptcy.
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7.1 Liability of Guarantor Unaffected. The liability of the Guarantor
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under this Guaranty shall in no way be affected by: the release or discharge of
the Borrower in any creditor proceeding, receive ship, bankruptcy or other
proceeding; the impairment, limitation or modification of the liability of the
Borrower or the estate of the Borrower, or any remedy for the enforcement of the
Borrower's liability, resulting from he operation of any present or future
provision of the Federal Bankruptcy Code or any bankruptcy, insolvency, debtor
relief statute (state or federal), or any other statute, or from the decision of
any court, the rejection or disaffirmance of the indebtedness or obligations of
the Borrower under the Loan Documents, or any portion
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thereof, in any such proceeding; or the cessation; from any cause whatsoever,
whether consensual or by operation of law, of the liability of the Borrower to
GCC.
7.2 Claims and Bankruptcy. The Guarantor will file all claims against the
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Borrower in any bankruptcy or other proceeding in which the filing of claims is
required by law on any indebtedness of the Borrower to the Guarantor, and will
assign to GCC all rights of the Guarantor on any such indebtedness. If the
Guarantor does not file any such claim, GCC, as attorney-in-fact for the
Guarantor, is authorized to do so in the name of the Guarantor, or, in GCC's
sole and absolute discretion, to assign the claim and to file a proof of claim
in the name of GCC's nominee. In all such cases, whether in bankruptcy or
otherwise , the person or persons authorized to pay such claim shall pay to GCC
the full amount of any such claim, and, to the full extent necessary for that
purpose, the Guarantor assigns to GCC all of the Guarantor's rights to any such
payments or distributions to which the Guarantor would otherwise be entitled.
8. Financial Condition of Borrower. The Guarantor is presently informed
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of the financial condition of the Borrower and of all other circumstances which
a diligent inquiry would reveal and which bear upon the risk of nonpayment of
the indebtedness and obligations of the Borrower under the Loan Documents. The
Guarantor hereby covenants that it will keep itself informed of the Borrower's
financial condition and of all other circumstances which bear upon the risk of
nor payment. The Guarantor waives any duty on the part of GCC to disclose to the
Guarantor any facts it may now or hereafter know about the Borrower, regardless
of whether GCC has reason to believe that any such facts materially increase the
risk beyond that which the Guarantor intends to assume, or has reason to believe
that such facts are unknown to the Guarantor, or has a reasonable opportunity to
communicate such facts to the Guarantor, it being understood and agreed that the
Guarantor is fully responsible for being and keeping informed of the financial
condition of the Borrower and of all circumstances bearing on the risk of
nonpayment of the indebtedness and obligations of the Borrower under the Loan
Documents.
9. Termination of Guaranty. The Guarantor's obligations under this
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Guaranty shall continue in full force and effect and this Guaranty shall not
terminate until the indebtedness and obligations of the Borrower under the Loan
Documents are fully paid, performed and discharged and GCC gives the Guarantor
written notice of that fact. The indebtedness and obligations of the Borrower
under the Loan Documents shall not be considered fully paid, performed and
discharged unless and until all payments by the Borrower to GCC are no longer
subject to any right on the part of any person, including, without limitation,
the Borrower, the Borrower as debtor-in-possession, or any trustee or receiver
in bankruptcy, to set aside such payments or seek to recoup the amount of such
payments, or any part thereof. The for going shall include, without limitation,
all rights to r cover preferences voidable under
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the federal Bankruptcy Code. In the event that any such payments by the Borrower
to GCC are set aside after the making thereof, in whole or in part, or settled
without litigation, to the extent of any such settlement, all of which is within
GCC's sole and absolute discretion, the Guarantor shall be liable for the full
amount GCC is required to repay plus costs, interest, attorneys' fees and any
and all expenses which GCC paid or incurred in connection therewith. The
Guarantor shall continue to be liable under the terms of this Guaranty
notwithstanding the transfer by the Borrower of all or any portion of the
property encumbered by the Loan Documents.
10. Other Provisions.
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10.1 Expenses. The Guarantor agrees to pay all attorneys' fees and all
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other costs and expenses which may be incurred by GCC in the enforcement or
collection of this Guaranty and the indebtedness and obligation of the Borrower
under the Loan Documents, whether or not suit is filed.
10.2 Interest. All amounts required to be paid to GCC by the Guarantor
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pursuant to the provisions of this Guaranty (including, without limitation,
pursuant to Section 2 and 10.1 hereof) shall bear interest from the date upon
which such amounts are due to the date of payment thereof at the highest rate
permitted by law. All payments of such amounts by the Guarantor shall include
any such accrued interest.
10.3 Governing Law. The validity, construction and performance of this
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Guarantee shall be governed by the laws, without regard to the laws as to choice
or conflict of laws, of the State of California.
10.4 Entire Agreement. This Guaranty embodies the entire agreement and
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understanding between GCC and the Guarantor pertaining to the subject matter of
this Guaranty, and supersedes all prior agreements, understandings,
negotiations, representations and discussions, whether verbal or written, of
such parties, pertaining to that subject matter.
10.5 Assignment; Binding Effect. Neither this Guaranty nor any rights or
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obligations under his Guaranty may be assigned by the Guarantor without the nor
written consent of GCC. Subject to the foregoing, the provisions of this
Guaranty shall bind and inure to the benefit of GCC and the Guarantor and their
respective heirs, executors, personal representatives, successors and assigns.
10.6 Notices. Whenever GCC or the Guarantor desire or are required to give
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any notice, demand or request with respect to this Guaranty, each such
communication shall be in writing and shall be given by personal service or
mailed by Certified Mail, postage prepaid, return receipt requested, addressed
as set forth in the first paragraph of this Guaranty. Such communications sent
shall be effectively given when they are received by the addressee thereof, but
if sent by Certified Mail, they shall be
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effectively given three (3) days after being deposited in the United States
Mail. GCC and the Guarantor may change their respective address for such
communications by giving notice to the other in conformity with this Section.
10.7 Amendment and Waiver. This Guaranty may not be amended, modified or
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supplemented except by a writing duly executed by the respective duly authorized
officers of Guarantor and GCC. No provision of this Guaranty or right of GCC
under this Guaranty can be waived except by a writing duly executed by a duly
authorized officer of GCC. No waiver by GCC of a breach of any provision of this
Guaranty shall be construed as a waiver of an subsequent or different breach,
and no forbearance by GCC to seek a remedy for noncompliance or breach by the
Guarantor shall be construed as a waiver of any right or remedy with respect to
such noncompliance or breach.
10.8 Time. Time is of the essence with respect to each provision of this
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Guaranty.
10.9 Severability. The invalidity or unenforceability of any particular
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provision of this Guaranty shall not affect the other provisions, and this
Guaranty shall be construed in all respects as if any invalid or unenforceable
provision were omitted.
10.10 Further Action. The Guarantor agrees to perform any further acts and
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to execute and deliver any other documents which may be necessary in the opinion
of GCC to effect the provisions of this Guarantor.
10.11 Headings. The section and other headings contained in this Guaranty
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are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Guaranty.
IN WITNESS WHEREOF, the Guarantor, intending to be bound, has executed this
Guaranty as of the year and date first above written.
Guarantor:
K.V. MART CO., a California corporation
By ____________________________________
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
Chairman and CEO
By ____________________________________
▇▇ ▇▇▇▇,
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Senior Vice President and CFO
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