Exhibit 10.4
Dated: __________________, 1996
Guaranty and Surety Agreement
To induce Midlantic Bank, N.A. (the "Lender") to make loans, extensions of
credit or other financial accommodations to, and grant temporary forbearance
with respect to existing loans to, RYKA INC. (the "Borrower"), now or in the
future, to secure the observance, payment, and performance of the Liabilities
(as defined below) and with full knowledge that the Lender would not make the
said loans, extensions of credit, or financial accommodations without this
Guaranty and Surety Agreement (together with any amendments or modifications
hereto in effect from time to time, the "Guaranty"), which shall be a contract
of suretyship, the Guarantor (as defined below), intending to be legally bound
hereby, unconditionally agrees as follows:
A. Liabilities Secured. The Guarantor, hereby guarantees the
full, prompt, and unconditional payment of the Liabilities (as
defined below), when and as the same shall become due, whether
at the stated maturity date, by acceleration, or otherwise,
and the full, prompt, and unconditional performance of each
and every term and condition of every transaction to be kept
and performed by the Borrower and any other Obligor under the
Loan Documents (as defined below). This Guaranty is a primary
obligation of the Guarantor and shall be a continuing
inexhaustible Guaranty without limitation as to amount or
duration and may not be revoked.
B. Definitions. As used herein, the following terms shall have
the following meanings:
1. Affiliate. The term "Affiliate" means Midlantic Bank,
N.A., and any of its direct and indirect affiliates and
subsidiaries.
2. Collateral. The term "Collateral" means all property of
the Guarantor and/or any Obligor, now or hereafter in the
possession of the Lender or any Affiliate, in any
capacity whatsoever including, but not limited to, any
balance or share of any deposit, trust or agency account,
and all property and assets of the Guarantor and/or any
Obligor now or hereafter subject to a security agreement,
pledge, mortgage, assignment, or other document or
agreement granting the Lender a security interest therein
or lien or encumbrance thereon.
3. Guarantor. The term "Guarantor" means each of the
persons and entities who are signatories to this Guaranty
other than the Lender.
4. Liability. The term "Liability" or "Liabilities" means
any and all obligations and indebtedness of every kind
and description of the Borrower or of any Obligor owing
to the Lender under the Loan Documents, including,
without limitation, any increase in and renewals or
extensions of the credit facility established thereby,
and whether such debts or obligations are primary or
secondary, direct or indirect, absolute or contingent,
sole, joint or several, secured or unsecured, due or to
become due, contractual or tortious, arising by operation
of law, by overdraft, or otherwise, or now or hereafter
existing, including, without limitation, principal,
interest, fees, late fees, expenses, and reasonable
attorneys' fees and costs, that have been or may
hereafter be contracted or incurred.
5. Loan Documents. The term "Loan Documents" means this
Guaranty and that certain Loan and Security Agreement,
dated July 31, 1995, between Lender and Borrower,
together with any and all amendments, modifications,
renewals, increases, restatements or extensions thereof
(as heretofore and hereafter amended, the "Loan
Agreement") and Revolving Credit Note in the principal
amount of $4,000,000 bearing even date therewith issued
by Borrower to Lender.
6. Obligor. The term "Obligor" means the Borrower and each
and every maker, endorser, guarantor, or surety,
including, without limitation, the Guarantor, of or for
the Liabilities.
C. Representations and Warranties. The Guarantor represents and
warrants as of the date hereof and at all times hereafter
until the Liabilities are fully paid and performed, and any
commitment to make loans, extensions of credit, or other
financial accommodations to the Borrower have been terminated,
that this Guaranty and any other Loan Document to which the
Guarantor is a party agree authorized by all necessary
corporation action on Guarantor's part, are within the
corporate power and authority of Guarantor, does not violate
or result in a default under Guarantor's Articles of
Incorporation, By-laws or any contract or agreement to which
Guarantor is a party, are the legal, valid, and binding
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obligations of the Guarantor, enforceable against it in
accordance with their terms, except as the same may be limited
by bankruptcy, insolvency, reorganization, or other laws or
equitable principles relating to or affecting the enforcement
of creditors' rights generally. The loans or credit
accommodations made by the Lender to the Borrower and the
assumption by the Guarantor of its obligations hereunder and
under any other Loan Document to which the Guarantor is a
party will result in material benefits to the Guarantor. This
Guaranty was entered into by the Guarantor for commercial
purposes.
D. No Limitation of Liability. Without incurring responsibility
to the Guarantor and without impairing or releasing the
obligations of the Guarantor to the Lender or to any
Affiliate, the Lender may, at any time, and from time to time,
without the consent of, or notice to the Guarantor, upon any
terms or conditions, and in whole or in part:
1. Payment Terms. Change the manner, place, or terms of
payment, and/or change or extend the time for payment, or
renew or alter, any of the Liabilities, any security
therefor or any of the Loan Documents evidencing same,
and the Guaranty herein made shall apply to the
Liabilities and the Loan Documents as so changed,
extended, renewed, or altered;
2. Sale of Property. Sell, exchange, release, surrender,
realize upon, or otherwise deal with in any manner and in
any order, any property including the Collateral, by
whomsoever at any time pledged, mortgaged, or in which a
security interest is given to secure, or howsoever
securing, the Liabilities;
3. Failure to Exercise Rights. Exercise or refrain from
exercising any rights against the Borrower or any other
Obligor (including the Guarantor) or against any
Collateral for the Liabilities or otherwise act or
refrain from acting;
4. Settlement of Liabilities. Settle or compromise any
Liabilities, whether in a proceeding or not, and whether
voluntarily or involuntarily, dispose of any Collateral
therefor, with or without consideration, or settle or
compromise any liability incurred directly or indirectly
in respect thereof or hereof, and/or subordinate the
payment of all or any part thereof to the payment of any
Liabilities, whether due or not;
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5. Application of Funds. Apply any sums by whomsoever paid
or howsoever realized to any Liabilities in any order
deemed appropriate by the Lender;
6. Release of Obligations. Add, release, settle, modify, or
discharge the obligation of any Obligor or any other
party who is in any way obligated for any of the
Liabilities;
7. Additional Security. Accept any additional security for
the Liabilities; and/or
8. Any Other Action. Take any other action which might
constitute a defense available to, or a discharge of, the
Borrower or any other Obligor (including the Guarantor),
in respect of the Liabilities.
The invalidity, irregularity, or unenforceability of all or
any part of the Liabilities or any Loan Document or any
agreement or instrument relating thereto, or the lack of
validity, enforceability, perfection, impairment or loss of
any liens or security interests granted in connection
therewith, whether caused by any action or inaction of the
Lender or any Affiliate, or otherwise, shall not affect,
impair, or be a defense to the Guarantor's obligations under
this Guaranty.
E. Waiver of Subrogation.
(a) The Guarantor irrevocably waives any present or future
claim, right or remedy to which the Guarantor is or
becomes entitled that arises hereunder and/or from the
performance by the Guarantor hereunder to be subrogated
to the Lender's rights against the Borrower or any other
Obligor and/or any present or future claim, right or
remedy to seek contribution, reimbursement, exoneration,
indemnification, payment or the like from the Borrower or
any other Obligor on account of this Guaranty or any
other Loan Document and/or to participate in any security
which the Lender now has or hereafter acquires, whether
or not such claim, right or remedy arises in equity,
under contract, by statute, under common law or
otherwise.
(b) If, notwithstanding the aforesaid waiver, any funds or
property shall be paid or transferred to the Guarantor on
account of such subrogation, reimbursement, exoneration,
indemnification, or contribution at any time when all of
the Liabilities have not been paid in full, the Guarantor
shall hold such funds and/or property in trust for the
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Lender and shall forthwith pay over or deliver to the
Lender such funds and/or property to be applied by the
Lender to the Liabilities.
F. Events of Default. The occurrence of any Event of Default
under the Loan Agreement shall constitute an event of default
("Event of Default") under this Guaranty.
G. Remedies.
1. Acceleration of Liabilities; Rights of Lender. Upon the
occurrence of an Event of Default described in the Loan
Agreement, at the Lender's sole option, all Liabilities
shall immediately become due and payable in full, all
without protest, presentment, demand or further notice of
any kind to the Guarantor or any other Obligor, all of
which are expressly waived. Upon and following an Event
of Default, the Lender may, at its option, exercise any
and all rights and remedies it has under this Guaranty,
any other Loan Document and/or applicable law including,
without limitation, an action for specific performance to
enforce or aid in the enforcement of any provision
contained herein or in any other Loan Document.
2. Right of Set-off. If any of the Liabilities shall be due
and payable and whether or not the Lender shall have made
any demand under this Guaranty, and regardless of the
adequacy of any Collateral for the Liabilities or other
means of obtaining repayment of the Liabilities, the
Lender shall have the right, without notice to the
Guarantor or to any other Obligor, and is specifically
authorized hereby to apply toward and set-off against and
apply to the then unpaid balance of the Liabilities any
items or funds of the Guarantor and/or any Obligor held
by the Lender or any Affiliate, any and all deposits
(whether general or special, time or demand, matured or
unmatured) or any other property of the Guarantor and/or
any Obligor, including, without limitation, securities
and/or certificates of deposit, now or hereafter
maintained by the Guarantor and/or any Obligor for its or
their own account with the Lender, and any other
indebtedness at any time held or owing by the Lender or
any Affiliate to or for the credit or the account of the
Guarantor and/or any Obligor, even if effecting such
set-off results in a loss or reduction of interest or the
imposition of a penalty applicable to the early
withdrawal of time deposits. For such purpose, the
Lender shall have, and the Guarantor hereby grants to the
Lender, a first lien on and security interest in such
deposits, property, funds and accounts and the proceeds
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thereof. The Guarantor further authorizes any Affiliate,
upon and following the occurrence of an Event of Default,
at the request of the Lender, and without notice to the
Guarantor, to turn over to the Lender any property of the
Guarantor held by the Affiliate for the Guarantor's
account and to debit any deposit account maintained by
the Guarantor with such Affiliate (even if such deposit
account is not then due or there results a loss or
reduction of interest or the imposition of a penalty in
accordance with law applicable to the early withdrawal of
time deposits), in the amount requested by the Lender up
to the amount of the Liabilities, and to pay or transfer
such amount or property to the Lender for application to
the Liabilities.
3. Remedies Cumulative; No Waiver. The rights, powers and
remedies of the Lender provided in this Guaranty and the
other Loan Documents are cumulative and concurrent, and
are not exclusive of any right, power or remedy available
to the Lender. No failure or delay on the part of the
Lender in the exercise of any right, power or remedy
shall operate as a waiver thereof, nor shall any single
or partial exercise preclude any other or further
exercise thereof, or the exercise of any other right,
power or remedy.
4. Continuing Enforcement of the Loan Documents. If, after
receipt of any payment of all or any part of the
Liabilities or the obligations of the Guarantor to the
Lender, the Lender is compelled or agrees, for settlement
purposes, to surrender such payment to any person or
entity for any reason, then this Guaranty and the other
Loan Documents shall continue in full force and effect or
be reinstated, as the case may be. The provisions of
this paragraph shall survive the termination of this
Guaranty and the other Loan Documents and shall be and
remain effective notwithstanding the payment of the
Liabilities, the cancellation of the Guaranty or any
other Loan Document, the release of any security
interest, lien or encumbrance securing the Liabilities,
or any other action which the Lender may have taken in
reliance upon its receipt of such payment.
H. Miscellaneous.
1. Notices. Any notices and communications which may be
given under this Guaranty shall be in writing and shall
be given by (i) hand-delivery, (ii) first class mail
(postage prepaid), (iii) reliable overnight commercial
courier (charges prepaid), or (iv) telecopy, in each case
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to the addresses or telecopy numbers set forth in this
Guaranty. Notice by overnight courier shall be deemed to
have been given and received on the date scheduled for
delivery. Notice by mail shall be deemed to have been
given and received three (3) calendar days after the date
first deposited in the United States Mail. Notice by
hand-delivery shall be deemed to have been given and
received upon delivery. Notice by telecopy will be
deemed to have been given upon transmission. A party may
change its address by giving written notice to the other
party as specified herein.
2. Costs and Expenses. Whether or not the transactions
contemplated by the Loan Documents are fully consummated,
the Guarantor shall promptly pay (or reimburse, as the
Lender may elect) all costs and expenses which the Lender
has incurred or may hereafter incur in connection with
the enforcement of this Guaranty and the other Loan
Documents, the collection of all amounts due under this
Guaranty and the other Loan Documents, and all
amendments, modifications, consents or waivers, if any,
to this Guaranty and the other Loan Documents. The
Guarantor's reimbursement obligations under this
paragraph shall survive any termination of the Loan
Documents.
3. Governing Law. This Guaranty shall be construed in
accordance with and governed by the substantive laws of
the Commonwealth of Pennsylvania without reference to
conflict of laws principles.
4. Integration; Amendment; No Third Party Beneficiary. This
Guaranty and the other Loan Documents constitute the sole
agreement of the parties with respect to the subject
matter hereof and thereof and supersede all oral
negotiations and prior writings with respect to the
subject matter hereof and thereof. No amendment of this
Guaranty, and no waiver of any one or more of the
provisions hereof shall be effective unless set forth in
writing and signed by the parties hereto. The Guarantor
and the Lender do not intend any benefits of this
Guaranty to inure to any third party and no third party
(including the Borrower) shall have any status, right or
entitlement under this Guaranty.
5. Successors and Assigns. This Guaranty (i) shall be
binding upon the Guarantor and the Lender and their
respective successors and permitted assigns, and (ii)
shall inure to the benefit of the Guarantor and the
Lender and their respective successors and permitted
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assigns; provided, however, that the Guarantor may not
assign its rights or obligations hereunder or any
interest herein without the prior written consent of the
Lender, and any such assignment or attempted assignment
by the Guarantor shall be void and of no effect with
respect to the Lender. The Lender may from time to time
sell or assign, in whole or in part, or grant
participations in some or all of the Loan Documents
and/or the obligations evidenced thereby. The Guarantor
authorizes the Lender to provide information concerning
the Guarantor to any prospective purchaser, assignee or
participant.
6. Severability and Consistency. The illegality,
unenforceability or inconsistency of any provision of
this Guaranty or any instrument or agreement required
hereunder shall not in any way affect or impair the
legality, enforceability or consistency of the remaining
provisions of this Guaranty or any instrument or
agreement required hereunder. The Loan Documents are
intended to be consistent. However, in the event of any
inconsistencies among any of the Loan Documents, such
inconsistency shall not affect the validity or
enforceability of any Loan Document. The Guarantor
agrees that in the event of any inconsistency or
ambiguity in any of the Loan Documents, the Loan
Documents shall not be construed against any one party
but shall be interpreted consistent with the Lender's
policies and procedures.
7. Consent to Jurisdiction and Service of Process. The
Guarantor hereby consents that (i) any action or
proceeding against it may be commenced and maintained in
any court within the Commonwealth of Pennsylvania or in
the United States District Court for the Eastern District
of Pennsylvania by service of process on such officer;
and (ii) such courts shall have jurisdiction with respect
to the subject matter hereof and the person of the
Guarantor and all Collateral for the Liabilities. The
Guarantor agrees that any action brought by the Guarantor
shall be commenced and maintained only in a court in the
federal judicial district or county in which the Lender
has its principal place of business in Pennsylvania.
8. Joint and Several Liability. In the event that the
Guarantor consists of more than one person or entity, the
Liabilities or obligations of each such person or entity
shall be joint and several and the word "Guarantor" means
each of them, any of them and/or all of them.
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9. Judicial Proceedings; Waivers.
THE GUARANTOR AND THE LENDER ACKNOWLEDGE AND AGREE THAT
(I) ANY SUIT, ACTION OR PROCEEDING, WHETHER CLAIM OR
COUNTERCLAIM, BROUGHT OR INSTITUTED BY THE LENDER OR THE
GUARANTOR OR ANY SUCCESSOR OR ASSIGN OF THE LENDER OR THE
GUARANTOR, ON OR WITH RESPECT TO THIS GUARANTY OR ANY OF
THE OTHER LOAN DOCUMENTS OR THE DEALINGS OF THE PARTIES
WITH RESPECT HERETO, OR THERETO, SHALL BE TRIED ONLY BY
A COURT AND NOT BY A JURY AND EACH PARTY WAIVES THE RIGHT
TO TRIAL BY JURY; (II) EACH WAIVES ANY RIGHT IT MAY HAVE
TO CLAIM OR RECOVER, IN ANY SUCH SUIT, ACTION OR
PROCEEDING, ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN
ADDITION TO, ACTUAL DAMAGES; AND (III) THIS SECTION IS
A SPECIFIC AND MATERIAL ASPECT OF THIS GUARANTY AND THE
LENDER WOULD NOT EXTEND CREDIT TO THE BORROWER IF THE
WAIVERS SET FORTH IN THIS SECTION WERE NOT A PART OF THIS
GUARANTY. THE GUARANTOR HEREBY WAIVES PRESENTMENT, NOTICE
OF DISHONOR AND PROTEST OF ALL INSTRUMENTS INCLUDED IN OR
EVIDENCING THE LIABILITIES OR THE COLLATERAL, IF ANY, AND
ALL OTHER NOTICES AND DEMANDS WHATSOEVER, WHETHER OR NOT
RELATING TO SUCH INSTRUMENTS.
10. WARRANT OF ATTORNEY. THE GUARANTOR HEREBY AUTHORIZES
AND EMPOWERS ANY ATTORNEY OR ATTORNEYS OR THE
PROTHONOTARY OR CLERK OF ANY COURT OF RECORD IN THE
COMMONWEALTH OF PENNSYLVANIA, UPON THE FAILURE BY THE
GUARANTOR TO PAY WHEN DUE ANY SUM PAYABLE BY THE
GUARANTOR PURSUANT TO THIS AGREEMENT, TO APPEAR FOR THE
GUARANTOR IN ANY SUCH COURT, WITH OR WITHOUT DECLARATION
FILED, AS OF ANY TERM OR TIME THERE OR ELSEWHERE TO BE
HELD AND THEREIN TO CONFESS OR ENTER JUDGMENT AGAINST THE
GUARANTOR IN FAVOR OF THE LENDER FOR ALL SUMS DUE OR TO
BECOME DUE BY THE GUARANTOR TO THE LENDER UNDER THIS
AGREEMENT, WITH COSTS OF SUIT AND RELEASE OF ERRORS AND
WITH THE GREATER OF FIVE PERCENT (5%) OF SUCH SUMS OR
$7,500.00 ADDED AS A REASONABLE ATTORNEYS' FEE; AND FOR
DOING SO THIS AGREEMENT OR A COPY VERIFIED BY AFFIDAVIT
SHALL BE SUFFICIENT WARRANT; SUCH AUTHORITY AND POWER
SHALL NOT BE EXHAUSTED BY ANY EXERCISE THEREOF, AND
JUDGMENT MAY BE CONFESSED AS AFORESAID FROM TIME TO TIME
AS OFTEN AS THERE IS OCCASION THEREFOR.
THE GUARANTOR ACKNOWLEDGES THAT HE HAS HAD THE
ASSISTANCE OF COUNSEL IN THE REVIEW AND EXECUTION OF THIS
AGREEMENT AND FURTHER ACKNOWLEDGES THAT THE MEANING AND
EFFECT OF THE CONFESSION OF JUDGMENT HAVE BEEN FULLY
EXPLAINED TO HIM BY SUCH COUNSEL.
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THE GUARANTOR, BEING FULLY AWARE OF THE RIGHT TO
NOTICE AND A HEARING CONCERNING THE VALIDITY OF ANY AND
ALL CLAIMS THAT MAY BE ASSERTED AGAINST THE GUARANTOR BY
THE LENDER BEFORE A JUDGMENT CAN BE ENTERED HEREUNDER OR
BEFORE EXECUTION MAY BE LEVIED ON SUCH JUDGMENT AGAINST
ANY AND ALL PROPERTY OF THE GUARANTOR, HEREBY WAIVES
THESE RIGHTS AND AGREES AND CONSENTS TO JUDGMENT BEING
ENTERED BY CONFESSION IN ACCORDANCE WITH THE TERMS HEREOF
AND EXECUTION BEING LEVIED ON SUCH JUDGMENT AGAINST ANY
AND ALL PROPERTY OF THE GUARANTOR, IN EACH CASE WITHOUT
FIRST GIVING NOTICE AND THE OPPORTUNITY TO BE HEARD ON
THE VALIDITY OF THE CLAIM OR CLAIMS UPON WHICH SUCH
JUDGMENT IS ENTERED.
/s/ MICHAEL G. RUBIN
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MICHAEL G. RUBIN
ADDRESS:
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TELECOPY #
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