This GUARANTY, dated as of April 23, 2003, is made by FAO, Inc. (fka The Right Start, Inc.), a Delaware corporation ("Guarantor"), in favor of KBB Retail Assets Corp., a New York corporation (fka F.A.O. Schwarz) ( the "Subordinated Note Holder") the holder of that certain Subordinated Note (the "Subordinated Note") issued by FAO Schwarz, Inc. (fka Toy Soldier, Inc.), a Delaware corporation ("Issuer") and wholly-owned subsidiary of Guarantor pursuant to the Plan (defined below):
NOW, THEREFORE, Guarantor hereby represents, warrants, covenants, agrees and guaranties as follows:
THIS GUARANTY AGREEMENT (as amended, restated, supplemented or otherwise modified, this "Guaranty"), dated as of June 13, 2002 is made by THOMA CRESSEY FUND VII, L.P., a Delaware limited partnership (the "Guarantor"), in favor of WACHOVIA BANK, NATIONAL ASSOCIATION (formerly known as First Union National Bank), as Administrative Agent (the "Administrative Agent"), for the ratable benefit of itself and the financial institutions (the "Lenders") from time to time parties to the Credit Agreement referred to below.
STATEMENT OF PURPOSE
Pursuant to the terms of the Credit Agreement dated as of September 29, 2000 (as amended by the First Amendment and Consent Agreement dated as of September 20, 2001, the Second Amendment dated as of March 1, 2002, the Third Amendment dated as of the date hereof (the "Third Amendment") and as may be further amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement"), by and among LECG, LLC, a California limited liability company (the "Borrower"), LECG Holding Company, LLC, a California limited liability company (the "Company"), the Lenders, the Administrative Agent and U.S. Bank National Association, as Documentation Agent, the Lenders have extended certain credit facilities to the Borrower as more specifically described in the Credit Agreement.
The Borrower is a wholly-owned subsidiary of the Company. The Guarantor, through a wholly-owned affiliate, owns approximately forty-eight percent (48%) of the outstanding preferred member interests and approximately thirty-nine percent (39%) of the common member interests in the Company, and all Extensions of Credit under the Credit Agreement to the Borrower will inure, directly or indirectly, to the benefit of the Guarantor.
In connection with the transactions contemplated by the Third Amendment and as a condition precedent thereto, the Lenders have requested that the Guarantor execute and deliver this Guaranty, and the Guarantor has agreed to do so pursuant to the terms hereof.
NOW, THEREFORE, in consideration of the premises and the mutual agreements set forth herein, and to induce the Administrative Agent and the Lenders to enter into and to make available Loans pursuant to the Third Amendment, the Guarantor hereby agrees with the Administrative Agent for the ratable benefit of the Administrative Agent and the Lenders as follows:
SECTION 1. Definitions. Capitalized terms used and not otherwise defined in this Guaranty including the preambles and recitals hereof, shall have the meanings ascribed to them in the Credit Agreement.
SECTION 2. Terms of the Guaranty.
(a) Guaranty of Obligations of Guarantor. The Guarantor hereby unconditionally guarantees to the Administrative Agent for the ratable benefit of itself and the Lenders, and their respective permitted successors, endorsees, transferees and assigns, the prompt payment of the obligations of the Borrower in connection with and with respect to the total principal amount of the Subsequent Draw, whether now existing or hereafter arising, whether or not from time to time reduced or extinguished (except by payment thereof) or hereafter increased or incurred, whether enforceable or unenforceable as against the Borrower, whether or not discharged, stayed or otherwise affected by any bankruptcy, insolvency or other similar law or proceeding, whether created directly with the Administrative Agent or any Lender or acquired by the Administrative Agent or any Lender through assignment or endorsement, whether matured or unmatured, whether joint or several, as and when the same become due and payable (subject to Section 10(a) hereof), in accordance with the terms of any such instruments evidencing any such obligations, including all renewals, extensions or modifications thereof, to the maximum aggregate amount of Five Million Dollars ($5,000,000) (the "Guarantor Obligations").
(b) Bankruptcy Limitations on Guarantor. Notwithstanding anything to the contrary contained to paragraph (a) above, it is the intention of the Guarantor and the Lenders that, in any proceeding involving the bankruptcy, reorganization, arrangement, adjustment of debts, relief of debtors, dissolution or insolvency or any similar proceeding with respect to the Guarantor or its assets, the amount of the Guarantor's obligations with respect to the Guarantor Obligations shall be in, but not in excess of, the maximum amount thereof not subject to avoidance or recovery by operation of applicable law governing bankruptcy, reorganization, arrangement, adjustment of debts, relief of debtors, dissolution, insolvency, fraudulent transfers or conveyances or other similar laws (including, without limitation, 11 U.S.C. Section 547, Section 548, Section 550 and other "avoidance" provisions of Title 11 of the United States Code) applicable in any such proceeding to the Guarantor and this Guaranty (collectively, "Applicable Insolvency Laws"). To that end, but only in the event and to the extent that the Guarantor's obligations with respect to the Guarantor Obligations or any payment made pursuant to the Guarantor Obligations would, but for the operation of the first sentence of this subsection (b), be subject to avoidance or recovery in any such proceeding under Applicable Insolvency Laws, the amount of the Guarantor's obligations with respect to the Guarantor's Obligations shall be limited to the largest amount which, after giving effect thereto, would not, under Applicable Insolvency Laws, render the Guarantor's obligations with respect to the Guarantor Obligations unenforceable or avoidable or otherwise subject to recovery under Applicable Insolvency Laws. To the extent any payment actually made pursuant to the Guarantor Obligations exceeds the limitation of the first sentence of this subsection (b) and is otherwise subject to avoidance and recovery in any such proceeding under Applicable Insolvency Laws, the amount subject to avoidance shall in all events be limited to the amount by which such actual payment exceeds such limitation and the Guarantor Obligations as limited by the first sentence of this subsection (b) shall in all events remain in full force and effect and be fully enforceable against the Guarantor. The first sentence of this subsection (b) is intended solely to preserve the rights of the Administrative Agent hereunder against the Guarantor in such proceeding to the maximum extent permitted by Applicable Insolvency Laws and neither the Guarantor, the Borrower, any other Guarantor nor any other Person shall have any right or claim under such sentence that would not otherwise be available under Applicable Insolvency Laws in such proceeding.
SECTION 3. Nature of Guaranty. The Guarantor agrees that this Guaranty is a continuing, unconditional guaranty of payment and performance and not of collection, and that its obligations under this Guaranty shall be primary, absolute and unconditional, irrespective of, and unaffected by:
(a) the genuineness, validity, regularity, enforceability or any future amendment of, or change in, the Credit Agreement or any other Loan Document or any other agreement, document or instrument to which the Parent, the Borrower or any Subsidiary thereof is or may become a party;
(b) the absence of any action to enforce this Guaranty, the Credit Agreement, any Term B Note or any other Loan Document or the waiver or consent by the Administrative Agent or any Lender with respect to any of the provisions of this Guaranty, the Credit Agreement or any other Loan Document;
(c) the existence, value or condition of, or failure to perfect its Lien against, any security for or other guaranty of the Guarantor Obligations or any action, or the absence of any action, by the Administrative Agent or any Lender in respect of such security or guaranty (including, without limitation, the release of any such security or guaranty);
(d) any structural change in, restructuring of or other similar change of the Parent, the Borrower or any of its Subsidiaries; or
(e) any other action or circumstances which might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor;
WHEREAS, the execution of this Guaranty Agreement is a condition to REGIONS BANK (F/K/A UNION BANK PLANTERS, N.A.) ("Lender") making certain loans to GEOSPACE TECHNOLOGIES, LP, a Texas limited partnership ("Geospace"), OYO INSTRUMENTS, LP, a Texas limited partnership ("Instruments"), GEOSPACE ENGINEERING RESOURCES INTERNATIONAL, LP, a Texas limited partnership ("Engineering"), CONCORD TECHNOLOGIES, LP, a Texas limited partnership ("Concord"), and OYOG OPERATIONS, LP, a Texas limited partnership ("Operations" and together with Geospace, . . .
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