EXHIBIT 10.4
(Giant Group, Ltd.)
LIMITED GUARANTY
August 10, 1999
Century Business Credit Corporation
119 West 40th Street
New York, New York 10018
Re: Periscope Sportswear, Inc.
Gentlemen:
In order to induce you to enter into a certain Factoring Agreement, dated
as of August 10, 1999 and all supplements and agreements related thereto, as
amended, modified and supplemented from time to time (the "Agreement") with
Periscope Sportswear, Inc. (the "Client") and/or to induce you to refrain at
this time from terminating said Agreement and/or in consideration of any loans,
advances, payment, extensions of credit, benefits or financial accommodations
heretofore or hereafter made, granted or extended by you or which you have or
will become obligated to make, grant or extend to or for the account of the
Client, the undersigned guarantees without deduction by reason of setoff,
defense, or counterclaim of any party, or loss of contribution from any co-
guarantor hereunder, the due performance of all of the Client's contracts and
agreements with you under the Agreement or otherwise, both present and future
and any and all subsequent renewals, extensions, continuations, modifications,
supplements and amendments thereof, and the prompt payment to you with interest
of any and all sums which may be presently due and owing or which shall in the
future become due and owing to you from the Client. This primary liability shall
include but not be limited to any and all existing and future obligations and
indebtedness of the Client, whether acquired by you by assignment, transfer, or
otherwise, and whether or not such obligations and indebtedness shall arise
under the Agreement or under any other contract or agreement or any renewal,
modification, supplement or amendment thereof, or shall be represented by or
payable under instruments of indebtedness or otherwise and whether or not such
obligations and indebtedness shall be acquired by you from any concern which is
your parent or subsidiary or the co-subsidiary of your parent or for which you
may now or in the future act as a factor and/or lender, and in addition, the
undersigned shall, subject to the limitations set forth in the last paragraph of
this guaranty, be liable to you for reasonable attorneys' fees, if any claim
hereunder is referred to an attorney for collection.
The undersigned hereby waives notice of acceptance hereof and of all
notices and demands of any kind to which the undersigned may be entitled,
including without limitation, notice of adverse change in Client's financial
condition or of any other fact which might materially increase the risk of the
undersigned; all demands of payment on, and notice of nonpayment, protest and
dishonor to the undersigned, or the Client, or the makers, or endorsers of any
notes and other instruments for which the undersigned is or may be liable
hereunder. All sums at any time to the credit of the undersigned and any
property of the undersigned in your possession shall
be deemed held by you as security for any and all of the undersigned's
obligations to you, no matter how or when arising and whether under this or any
other instrument, agreement or otherwise. The undersigned shall at all times
maintain (free of all encumbrances, mortgages, pledges and security interests)
marketable securities, cash and other cash equivalents net of all liabilities of
the undersigned in an aggregate amount of not less than $4,000,000. The
undersigned further waives notice of and hereby consents to any agreement or
arrangements whatever with the Client or anyone else including, without
limitation, agreements and arrangements for payment extension, subordination,
composition, arrangement, discharge or release of the whole or any part of said
obligations or of said indebtedness, contracts or agreements or other
guarantors, or of the making of any election of rights or remedies you may deem
desirable under any bankruptcy code or act, or for the change or surrender of
any and all security, or for compromise, whether by way of acceptance of part
payment or of dividends or in any other way whatsoever, and the same shall in no
way impair the undersigned's liability hereunder. Nothing shall discharge or
satisfy the liability of the undersigned hereunder except the full performance
and payment of the said obligations and indebtedness with interest.
Notwithstanding any payment or payments made by the undersigned hereunder, or
any setoff or application of funds of the undersigned by you, the undersigned
shall not be entitled to be subrogated to any of your rights against the Client
or against any collateral or guarantee or right of offset held by you for the
payment of the said obligations or of said indebtedness, nor shall the
undersigned seek or be entitled to seek any contribution or reimbursement from
the Client in respect of payments made by the undersigned hereunder, until all
amounts owing to you by the Client on account of the said obligations or of said
indebtedness are paid in full and the Agreement has been terminated. If,
notwithstanding the foregoing, any amount shall be paid to the undersigned on
account of such subrogation rights at any time when all of the said obligations
or of said indebtedness shall not have been paid in full and the Agreement shall
not have been terminated, such amount shall be held by the undersigned in trust
for you, segregated from other funds of the undersigned, and shall, forthwith
upon (and in any event within two (2) business days of) receipt by the
undersigned, be turned over to you in the exact form received by the undersigned
(duly endorsed by the undersigned to you, if required), to be applied against
the said obligations or of said indebtedness, whether matured or unmatured, in
such order as you may determine, subject to the provisions of the Agreement, or
against or with respect to the Client's property (including, without limitation
property collateralizing its obligations and indebtedness to you), arising from
the existence and performance of this guaranty. Any and all future debts and
obligations of the Client to the undersigned are hereby postponed in favor of,
and subordinated until the full payment and performance of, all present and
future debts and obligations of the Client to you; provided that, the foregoing
subordination shall not apply with respect to the indebtedness owing by Client
to the undersigned in the principal amount of $1,008,000 plus interest thereon
outstanding on the date hereof. The undersigned agrees that if the Client or the
undersigned should at any time become insolvent, or make a general assignment,
or if a proceeding in bankruptcy or any insolvency or reorganization proceeding
shall be filed or commenced by, or in respect of the Client or the undersigned,
or if any notice of Lien, levy or assessment is filed of record with respect to
any assets of the undersigned by the United States or any department, agency or
instrumentality thereof, or if any taxes or debts owing at any time or times
hereafter to any one of them becomes a Lien or encumbrance upon any assets of
the undersigned in your possession or otherwise, any and all obligations of the
undersigned shall, at your option, forthwith become due and payable without
notice. If you receive any payment or payments on account of the liabilities
guaranteed hereby, which payment or payments or any part thereof are
subsequently invalidated, declared to be fraudulent or
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preferential, set aside and/or required to be repaid to a trustee, receiver, or
any other party under any bankruptcy act or code, state or federal law, common
law or equitable doctrine, then to the extent of any sum not finally retained by
you, our obligations to you shall be reinstated and this guaranty shall remain
in full force and effect (or be reinstated) until we shall have made payment to
you, which payment shall be due on demand.
Your books and records showing the account between you and the Client shall
be admissible in evidence in any action or proceeding, shall be binding upon the
undersigned for the purpose of establishing the items therein set forth and
shall constitute prima facie proof thereof. This instrument is and shall be
construed to be an absolute, continuing, unconditional and unlimited guaranty of
payment, and shall continue in full force and effect until terminated by the
actual receipt by you from the undersigned by registered or certified mail or
hand delivery of not less than ninety (90) days prior written notice of
termination; such termination shall be applicable only to transactions having
their inception thereafter, and rights and obligations arising out of
transactions having their inception prior to such termination shall not be
affected; provided, however, in the event such termination arises out of a
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Permitted Guaranty Termination (as defined in the Agreement), then such
termination shall be applicable to transactions having their inception prior to
and after the effective date of such termination. The undersigned acknowledges
that (i) no oral representations, including any oral representations to extend
credit or provide other financial accommodations to Client have been made by you
to induce the undersigned to enter into this guaranty; and (ii) any extension of
credit to the Client shall be governed solely by the provisions of the
Agreement.
This guaranty shall be enforceable before or after proceeding against the
Client or simultaneously therewith, and without recourse to any security, and
shall be effective regardless of the subsequent incorporation, merger or
consolidation of the Client, or any change in the composition, nature, personnel
or location of the Client. This guaranty shall inure to and shall be
enforceable by you, any concern which is or may at any time be your parent or
subsidiary or the co-subsidiary of your parent and your and their successors and
assigns and shall be binding upon the successors and assigns of the undersigned.
THE UNDERSIGNED DOES HEREBY WAIVE ANY AND ALL RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING BASED HEREON. NO FAILURE OR DELAY BY YOU IN EXERCISING ANY
OF YOUR POWERS OR RIGHTS HEREUNDER SHALL OPERATE AS A WAIVER THEREOF NOR SHALL
ANY SINGLE OR PARTIAL EXERCISE OF ANY SUCH POWER OR RIGHT PRECLUDE OTHER OR
FURTHER EXERCISE THEREOF OR THE EXERCISE OF ANY OTHER RIGHT OR POWER. YOUR
RIGHTS, REMEDIES AND BENEFITS HEREUNDER ARE CUMULATIVE AND NOT EXCLUSIVE OF ANY
OTHER RIGHTS, REMEDIES OR BENEFITS WHICH YOU MAY HAVE. THIS INSTRUMENT CANNOT
BE CHANGED OR TERMINATED ORALLY, AND SHALL BE GOVERNED, CONSTRUED AND
INTERPRETED AS TO VALIDITY, ENFORCEMENT AND IN ALL OTHER RESPECTS IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK. THE UNDERSIGNED EXPRESSLY SUBMITS AND
CONSENTS TO THE JURISDICTION OF THE SUPREME COURT OF THE STATE OF NEW YORK, IN
THE COUNTY OF NEW YORK, WITH RESPECT TO ANY CLAIM OR DEMAND UPON THE UNDERSIGNED
BASED UPON THIS INSTRUMENT OF GUARANTY OR ANY AMENDMENT OR SUPPLEMENT THERETO,
AND THE UNDERSIGNED HEREBY WAIVES PERSONAL SERVICE OF ANY SUMMONS OR COMPLAINT
OR OTHER PROCESS OR PAPERS TO BE ISSUED IN ANY ACTION OR PROCEEDING BASED UPON
ANY SUCH CLAIM OR
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DEMAND, AND HEREBY AGREES THAT SUCH SUMMONS OR COMPLAINT OR PROCESS MAY BE MADE
BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE UNDERSIGNED AT
THE ADDRESS OF THE UNDERSIGNED APPEARING HEREIN OR SUCH DIFFERENT ADDRESS OF
WHICH THE UNDERSIGNED SHALL HAVE ADVISED YOU IN WRITING; FAILURE ON THE PART OF
THE UNDERSIGNED TO APPEAR OR ANSWER WITHIN THIRTY DAYS AFTER SUCH MAILING OF
SUCH SUMMONS, COMPLAINT OR PROCESS SHALL CONSTITUTE A DEFAULT ENTITLING YOU TO
ENTER A JUDGMENT OR ORDER AS DEMANDED OR PRAYED FOR THEREIN TO THE EXTENT THAT
SAID COURT OR DULY AUTHORIZED OFFICER THEREOF MAY AUTHORIZE OR PERMIT.
Notwithstanding anything to the contrary contained in this guaranty, the
liability of the undersigned hereunder shall in no event exceed the principal
sum $4,000,000 exclusive of interest on such principal sum and all fees, costs
and expenses relating, or incidental to the enforcement, protection collection
and prosecution of actions hereunder; provided, however, that, you shall only be
entitled to your attorney's fees and expenses in connection with any action
brought by you against the undersigned to the extent awarded by the court or
other tribunal deciding such action. Such limitation shall not be affected by
nor shall anything herein be deemed to be a limitation of the amount of credit
that may be extended to Client or the number of transactions with Client or the
nature or amount of the Obligations which may be incurred by client.
Very truly yours,
GIANT GROUP, LTD.
By: /s/ David Gotterer
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Its: Vice Chairman
ATTEST:
/s/ Peter Fairley
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Dated: August 10, 1999
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