Exhibit 10.4
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT (the "Guaranty") is made as of this
1st day of May, 1997, and is made by XXXX INDUSTRIES, INC., a Delaware
corporation (the "Guarantor"), in favor of FIRST UNION NATIONAL BANK OF NORTH
CAROLINA, a national banking association (the "Bank") and FIRST UNION NATIONAL
BANK OF NORTH CAROLINA, a national banking association, in its capacity as
counterparty to the Hedge Agreement (as hereinafter defined) (the "Hedge
Counterparty").
RECITALS
WHEREAS, pursuant to a Trust Indenture of even date herewith (as
amended, modified, supplemented or restated from time to time, the "Indenture")
among the Maryland Industrial Development Financing Authority (the "Issuer") and
First Union National Bank of Virginia, as Trustee, and Branch Banking and Trust
Company, as Credit Facility Trustee (collectively, in such capacities, the "Bond
Trustee"), the Issuer has issued and sold its Maryland Industrial Development
Financing Authority Economic Development Revenue Bonds (Alcore, Inc. Facility)
1997 Issue in the original aggregate principal amount of $2,600,000 (the
"Bonds"); and
WHEREAS, the proceeds of the sale of the Bonds will be loaned (such
loan of the proceeds of the Bonds being hereinafter referred to as the "Loan")
by the Issuer to the Alcore, Inc., a Delaware corporation and wholly-owned
subsidiary of the Guarantor (the "Borrower"), pursuant to a Loan Agreement of
even date herewith (as amended, modified, supplemented or restated from time to
time, the "Loan Agreement") between the Issuer and the Borrower, and used by the
Borrower to finance the acquisition of a certain facility to consist of and
include (a) the acquisition by the Borrower of two adjacent parcels of land
containing approximately 7.26 acres in the aggregate in the Riverside Business
Park at 1324 and 0000 Xxxxx Xxxx Xxxx in Belcamp, Harford County, Maryland,
together any and all improvements located thereon including, without limitation,
a building containing approximately 50,000 square feet (the "Building"), (b) the
renovation and expansion of such building to add approximately 15,000 square
feet (the "Addition"), (c) the acquisition and installation of certain necessary
and useful machinery and equipment (the "Equipment"), and (d) the acquisition of
such other interests in land or improvements as may be necessary or suitable for
the foregoing, including roads and rights of access, utilities and other
necessary site preparation facilities, all of which shall be used by the
Borrower in its business of making honeycomb aluminum products (such real
property, Building, Addition and Equipment being herewith collectively referred
to as the "Facility"); and
WHEREAS, in order to enhance the marketability of the Bonds, pursuant
to a Letter of Credit and Reimbursement Agreement of even date herewith (the
"Letter of Credit Agreement") by and between the Borrower and the Bank, the
Bank has agreed to issue to the Bond Trustee an irrevocable direct pay letter of
credit in the stated amount of $2,704,000 (such letter of credit and all
amendments and supplements thereto, or any successor or substitute letter of
credit issued by the Bank with respect thereto being hereinafter called the
"Letter of Credit"); and
WHEREAS, the Borrower and the Hedge Counterparty have entered into an
ISDA Master Agreement dated April 17, 1997 but effective as of the date hereof
(the "Hedge Agreement") providing for an interest rate swap or other hedge
arrangement (the "Hedge") for the Loan (the Borrower's obligations under the
Hedge Agreement being herein called the "Hedge Obligations"; and
WHEREAS, as a condition precedent to the issuance of the Letter of
Credit, the Bank has required that the Borrower's Obligations (hereinafter
defined) be guaranteed by the Guarantor; and
WHEREAS, as a condition precedent to the Hedge, the Hedge Counterparty
has required that the Hedge Obligations be guaranteed by the Guarantor; and
WHEREAS, as a condition precedent to the issuance of the Letter of
Credit, and as a condition precedent to the Hedge, among other things, the Bank
and the Hedge Counterparty also have required that the payment and performance
of the Borrower's Obligations (hereinafter defined) be secured by a Security
Agreement of even date herewith by and among the Borrower and the Guarantor in
favor of the Bank, the Issuer, and the Hedge Counterparty (the "Security
Agreement") encumbering certain personal property assets (the "Collateral"),
together with a Deed of Trust of even date herewith (the "Deed of Trust")
encumbering the Facility.
NOW, THEREFORE, in consideration of these premises, the respective
representations, covenants and agreements hereinafter contained, and other good
and valuable consideration, the receipt and sufficiency of which are by all
parties hereby acknowledged, and to induce the Bank to issue the Letter of
Credit in order to enhance the marketability of the Bonds, and to thereby
achieve lower interest costs and other savings to the Borrower, and to encourage
the Hedge Party to provided the Hedge, the Guarantor agrees as follows:
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
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SECTION 1.1. Definitions. The terms defined in the Preamble and
Recitals hereto shall have the respective meanings specified therein, and the
following terms shall have the following meanings:
"Borrower's Obligations" means any and all obligations, whether
absolute or contingent, now or hereafter due or becoming due or owing by the
Borrower (a) to the Bank under the Letter of Credit Documents, (b) to the Hedge
Counterparty under the Hedge Documents, and (c) the Enforcement Costs.
"Consistent Basis" shall have the meaning assigned to such term in the
Letter of Credit Agreement.
"Enforcement Costs" means any and all funds, costs, expenses and
charges of any nature whatsoever (including, without limitation, reasonable
attorneys' fees and expenses) reasonably advanced, paid or incurred by or on
behalf of the Bank under or in connection with the administration or enforcement
of this Guaranty or any of the Borrower's Obligations, including, without
limitation, (a) the compliance of the Borrower with any covenant, warranty,
representation or agreement of the Borrower made in or pursuant to this
Agreement or any of the Financing Documents, (b) the collection or enforcement
of any of the Borrower's Obligations, this Agreement and any of the Financing
Documents, and (c) the exercise, preservation, maintenance, protection,
operation, management, collection, sale or other disposition of, or realization
upon, all or any part of the Collateral, the Security Interests and the rights
and remedies of the Bank and the Hedge Counterparty hereunder, under the
Financing Documents, under applicable law and otherwise.
"Environmental Law" shall have the same meaning assigned to such term
in the Letter of Credit Agreement.
"ERISA" shall have the same meaning assigned to such term in the Letter
of Credit Agreement.
"Event of Default" means an event which, with the giving of notice or
the lapse of time, or both, could or would constitute an Event of Default under
the provisions of this Guaranty.
"Financing Documents" means, collectively, the Letter of Credit
Documents and the Hedge Documents.
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"Generally Accepted Accounting Principles" shall have the meaning
assigned to such term in the Letter of Credit Agreement.
"Hedge Obligations" shall have the meaning given such term in the
Recitals of this Agreement.
"Indebtedness for Money Borrowed" means all indebtedness in respect of
money borrowed, including (without limitation) the deferred purchase price of
any property or asset or indebtedness evidenced by a promissory note, bond,
guaranty or similar written obligation for the payment of money (including but
not limited to, conditional sales or similar title retention agreements).
"Letter of Credit Documents" means the Letter of Credit, the Letter of
Credit Agreement, the Deed of Trust, the Security Agreement, and any other
documents now or hereafter executed by the Borrower or any other party to
evidence, secure or in connection with the Letter of Credit, as the same may be
amended, modified or supplemented from time to time in accordance with their
respective terms.
"Letter of Credit Obligations" means the obligations of the Borrower
under the Letter of Credit Documents (a) to make all payments required by the
Letter of Credit Documents, when and as the same become due and payable,
including without limitation, all drafts drawn under the Letter of Credit, and
(b) to timely perform, observe and comply with all of the terms, covenants,
conditions, stipulations and agreements, express or implied, which the Borrower
is required by the Letter of Credit Documents to observe or perform.
"Lien" means any mortgage, deed of trust, pledge, security interest,
assignment, encumbrance, judgment, lien, claim or charge of any kind in, on, of
or in respect of, any asset or property or any rights to any asset or property,
including, without limitation, (a) any interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to any such asset or property, and (b) the filing of, or any agreement
to give, any financing statement relating to any such asset or property under
the Uniform Commercial Code of any jurisdiction.
"Long Term Debt" shall have the meaning assigned to such term in the
Letter of Credit Agreement.
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"Material Adverse Effect" means (a) any material adverse effect upon
the condition (financial or otherwise), results of operations, properties,
assets, business or prospects of the Borrower or of the Guarantor, or of the
Borrower and the Guarantor and their Consolidated Subsidiaries, taken as a
whole; (b) a material adverse effect on the ability of the Borrower to perform
the Borrower's Obligations; (c) a material adverse effect on the ability of the
Guarantor to perform the Guaranteed Obligations (as hereinafter defined), or (d)
a material adverse effect on the rights and remedies of the Bank or the Hedge
Counterparty under this Agreement.
"Permitted Liens" means Permitted Liens, as such term is defined in the
Letter of Credit Agreement with respect to the Facility, and as such term is
described in the Security Agreement with respect to the Collateral.
"Person" means and includes an individual, a corporation, a
partnership, a joint venture, a trust, an unincorporated association, a
government or political subdivision or agency thereof, or any other entity.
"Security Interests" means the security interests and other Liens in
the Collateral granted under the Security Agreement.
"Subsidiary" shall have the meaning assigned to such term in the Letter
of Credit Agreement.
"UCC" means the Uniform Commercial Code as in effect on the date hereof
in the State of Maryland.
SECTION 1.2. Rules of Construction. Unless otherwise defined herein and
unless the context otherwise requires, all terms used herein which are defined
by the UCC shall have the same meanings assigned to them by the UCC unless and
to the extent varied by this Agreement. The words "hereof", "herein",
"hereunder", "hereto", and other words of similar import refer to this Agreement
in its entirety. The terms "agree" and "agreements" contained herein are
intended to include and mean "covenant" and "covenants". References to Articles,
Sections, and other subdivisions of this Agreement are to the designated
Articles, Sections, and other subdivisions of this Guaranty as originally
executed. The headings of this Agreement are for convenience only and shall not
define or limit the provisions hereof. As used herein, the singular number shall
include the plural, the plural number shall include the singular, and the use of
the masculine, feminine or neuter gender shall include all genders, as the
context may require.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES BY THE GUARANTOR
The Guarantor makes the following representations and warranties:
SECTION 2.1 Incorporation. The Guarantor is a corporation duly
organized, existing and in good standing under the laws of State of Delaware,
and has the power to own its properties and to carry on its business as now
being conducted, and, is duly qualified and in good standing as a foreign entity
to do business in every jurisdiction in which the character of the properties
they own or the business they transact makes such qualification necessary,
and/or in which the failure to be so qualified would have a natural adverse
effect on the business of the Guarantor.
SECTION 2.2 Power and Authority. Guarantor is duly authorized under all
applicable provisions of law to execute, deliver and perform this Guaranty, and
all corporate action on its part required for the lawful execution, delivery and
performance hereof has been duly taken; and this Guaranty, upon the due
execution and delivery hereof, will be the valid and binding obligation of
Guarantor enforceable in accordance with its terms subject to the effect of
applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws
affecting creditors' rights generally and to principles of equity, regardless of
whether applied in a proceeding in equity or law. Neither the execution of this
Guaranty, nor the fulfillment of or compliance with its provisions and terms,
(a) will conflict with, or will result in a breach of, a violation of, or a
default under, any terms, conditions, or provisions of the Articles of
Incorporation or Bylaws of the Guarantor, or any other organizational documents
of Guarantor or any Subsidiary, or (b) will be a breach of, a violation of, or a
default under any agreement or instrument to which Guarantor or any Subsidiary
is now a party, or, (c) to, the best of the Guarantor's knowledge, will be a
breach of, a violation of, or a default under any applicable law, regulation,
judgment, writ, order or decree to which Guarantor or any Subsidiary or any of
their respective properties are subject.
SECTION 2.3 Taxes. Guarantor has filed all tax returns required to be
filed by it and all taxes due with respect thereto have been paid, and no
controversy in respect of additional taxes, state, federal or foreign, of
Guarantor is pending, or, to the knowledge of Guarantor, threatened, except as
otherwise disclosed to the Bank in writing from time to time.
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SECTION 2.4 No Default. Guarantor is not in default in the performance,
observance or fulfillment of any of its material obligations, covenants or
conditions contained in any agreement or instrument to which it is a party.
SECTION 2.5 Government Authority. Guarantor has received the written
approval of all federal, state, local and foreign governmental authorities, if
any, necessary to carry out the terms of this Guaranty, and no further
governmental consents or approvals are required in the making or performance of
this Guaranty by the Guarantor.
SECTION 2.6 No Untrue Statements. Neither this Guaranty nor any
reports, schedules, certificates, information, exhibits, agreements or
instruments heretofore or simultaneously with the execution of this Guaranty
delivered to the Bank or the Hedge Counterparty by Guarantor in connection with
the negotiation of this Guaranty or the issuance and sale of the Bonds contains
any material misrepresentation or untrue statement of any material fact or omits
to state any material fact necessary to make this Guaranty or any such reports,
schedules, certificates, information, exhibits, agreements or instruments in
light of the circumstances under which made or materially misleading.
SECTION 2.7 ERISA Requirements. Guarantor has not incurred any material
accumulated funding deficiency within the meaning of ERISA, or incurred any
material liability to the Pension Benefit Agreement Corporation established
under ERISA (or any successor thereto under ERISA) in connection with any
employee pension benefit plan established or maintained by it or by any Person
under common control with any of them (within the meaning of Section 414(c) of
the Internal Revenue Code of 1986, as amended, or of Section 400(b) of ERISA),
or in which employees of any of them are entitled to participate. No Reportable
Event (as defined in ERISA) in connection with any such plan has occurred or is
continuing, except as disclosed in writing to the Bank from time to time.
SECTION 2.8 Labor Relations. The Guarantor is not engaged in any unfair
labor practice that could have a Material Adverse Effect. There is (i) no
significant unfair labor practice complaint pending against the Guarantor, to
the best knowledge of the Guarantor, threatened against it, before the National
Labor Relations Board, and no significant grievance or significant arbitration
proceedings arising out of or under any collective bargaining agreement is so
pending against the Guarantor or, to the best knowledge of the Guarantor,
threatened against it, (ii) no significant strike, labor dispute, slowdown or
stoppage pending against the Guarantor or, to the best knowledge of the
Guarantor, threatened against the Guarantor, and (iii) to the best
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knowledge of the Guarantor, no union representation question existing with
respect to the employees of the Guarantor and, to the best knowledge of the
Guarantor, no union organizing activities are taking place.
SECTION 2.9 Purpose of Guaranty. The Guarantor has a direct financial
interest in the Borrower. This Guaranty is made in furtherance of the purposes
for which the Guarantor has been organized, and the assumption by the Guarantor
of its obligations hereunder will result in direct financial benefits to the
Guarantor.
ARTICLE III
GENERAL COVENANTS AND AGREEMENTS
SECTION 3.1 Guaranteed Obligations. The Guarantor, for itself, its
successors and assigns, hereby fully and unconditionally and irrevocably
guarantees to the Bank and to the Hedge Counterparty the full and prompt payment
and performance of the Borrower's Obligations, and the Guarantor further agrees
to indemnify and hold the Bank and the Hedge Counterparty harmless from any loss
(including reasonable attorneys' fees) resulting from any default by the
Guarantor under the terms of this Guaranty (these obligations of the Guarantor
being hereinafter referred to as the "Guaranteed Obligations").
SECTION 3.2. Separate Causes of Action; Currency. Each and every Event
of Default under the terms of any of the Financing Documents or this Guaranty
shall give rise to a separate cause of action, and separate actions may be
brought as each cause of action arises. All payments by the Guarantor shall be
paid in lawful money of the United States which at the time and place of payment
is legal tender for the payment of public or private debts in the United States.
SECTION 3.3. Guaranty Agreement is a Continuing Obligation. The
Guaranteed Obligations shall be continuing, absolute, irrevocable and
unconditional and shall remain in full force and effect until all of the
Guaranteed Obligations shall have been paid and performed in
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full, irrespective of the genuineness, validity, regularity or enforceability of
the Bonds, or the bankruptcy, insolvency, merger, reorganization, termination,
discontinuation or dissolution of the Issuer, the Bank, the Hedge Counterparty,
or the Borrower, or any assignment for the benefit of creditors by the Issuer,
the Bank, the Hedge Counterparty, or the Borrower.
SECTION 3.4. Certain Events Which Will Not Impair Guaranty. Without in
any way limiting the generality of the absolute and unconditional obligations
imposed by Section 3.1 hereof, the obligations, covenants, agreements and duties
of the Guarantor under this Guaranty shall not be affected or impaired by reason
of the happening from time to time of any of the following events with respect
to the Financing Documents, or any assignment thereof, or with respect to this
Guaranty, or any assignment hereof, even if such events happen without the
giving of notice to, or the obtaining of the consent of, the Guarantor:
(a) any compromise, settlement, release, renewal, extension,
indulgence, modification, or termination of any or all of the Borrower's
Obligations under any of the Financing Documents, or of the Guarantor under this
Guaranty; or
(b) any failure to give notice to the Guarantor of the occurrence of an
Event of Default under the terms and provisions of any of the Financing
Documents; or
(c) any assignment or mortgaging or the purported assignment or
mortgaging of all or any part of the interest of the Borrower in the Facility or
the Collateral, or any condemnation or destruction of the Facility or the
Collateral, or any part thereof; or
(d) any waiver of the performance or observance by the Borrower or the
Guarantor, as the case may be, of any of the obligations, covenants, agreements,
duties, terms or conditions contained in any of the Financing Documents or this
Guaranty, or any assignment thereof; or
(e) any extension of time for the payment of any sums of money due from
the Borrower or the Guarantor under any of the Financing Documents or this
Guaranty; or
(f) any modification or amendment (whether material or otherwise) of
any obligation, covenant or agreement set forth in any of the Financing
Documents or this Guaranty; or
(g) any taking or any omission of the actions referred to in any of the
Financing Documents or this Guaranty, or
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(h) any failure, omission, delay, or deficiency on the part of the Bank
or the Hedge Counterparty in enforcing, asserting or exercising any right, power
or remedy conferred on the Bank or the Hedge Counterparty in any of the
Financing Documents or this Guaranty; or
(i) any voluntary or involuntary liquidation, dissolution, merger, sale
or other disposition of all or substantially all the assets, the marshaling of
assets and liabilities, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition, readjustment of
debt, or other similar proceeding affecting the Borrower (including, without
limitation, the occurrence of an Act of Bankruptcy), the Bank, the Hedge
Counterparty, or the Guarantor, or any of their assets, or any allegation
contesting the validity or enforceability of any of the Financing Documents or
this Guaranty, or any stay of the enforcement by the Bank or the Hedge
Counterparty of any remedies against the Borrower or the Guarantor in connection
with any of the Financing Documents or this Guaranty; or
(j) any release or discharge of the Borrower, the Bank, or the Hedge
Counterparty from the performance or observance of any obligation, covenant,
agreement, duty, term or condition contained in any of the Financing Documents
or this Guaranty, or
(k) any merger, consolidation or sale of assets by the Borrower or the
Guarantor; or
(1) any default or failure of the Guarantor fully to perform any of its
obligations, covenants, agreements or duties set forth in this Guaranty; or
(m) any release of any collateral or security for the Borrower's
Obligations or the Guaranteed Obligations; or
(n) the invalidity or unenforceability of any of the Financing
Documents or this Guaranty; or
(o) any extensions of the expiration date of the Letter of Credit.
SECTION 3.5. Limitation of Liability of Borrower under any of the
Financing Documents Not to Affect Liability of Guarantor Hereunder. Without
limiting the foregoing, it is specifically understood that any modification,
limitation or discharge of the liability of the Borrower under any of the
Financing Documents arising out of or by virtue of any bankruptcy, arrangement,
reorganization or similar proceeding for relief of debtors under federal or
state law initiated by or against the Borrower shall not affect, modify, limit
or discharge the liability of the
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Guarantor hereunder in any manner whatsoever, and this Guaranty shall remain and
continue in full force and effect; and it is the intent and purpose of this
Guaranty that the Guarantor shall and does hereby waive all rights and benefits
which might accrue to it by reason of any such proceeding, and the Guarantor
agrees that it shall be liable for the full amount of the obligations guaranteed
by it pursuant to this Guaranty, irrespective of and without regard to any
modification, limitation or discharge of the liability of the Borrower under any
of the Financing Documents that may result from any such proceedings.
SECTION 3.6. No Action by Bank to Impair Enforcement of Bank's Rights
Hereunder. No act of commission or omission of any kind or at any time upon the
part of the Bank, or any successor or assignee of any of the Bank, in respect of
any matter whatsoever, shall in any way affect or impair the rights of the Bank,
or any successor or assignee of any of the Bank, to enforce any right, power or
benefit of the Bank under this Guaranty, and no set-off, counterclaim,
reduction, or diminution of an obligation, or any defense of any kind or nature
which the Guarantor has or may have against the Bank, or any assignee or
successor of any of the Bank, shall be available to the Guarantor with respect
to the Guaranteed Obligations.
SECTION 3.7. Right to Proceed Directly Against Guarantor. Each of the
Bank and the Hedge Counterparty, or any successor or assign of the Bank or the
Hedge Counterparty, in their sole discretion, shall have the right to proceed
first and directly against the Guarantor, its successors and assigns under this
Guaranty without proceeding against or exhausting their remedies against the
Borrower under any of the Financing Documents, and without resorting to any
other security for the Borrower's Obligations or the Guaranteed Obligations.
SECTION 3.8. Security for the Guaranteed Obligations. The Guaranteed
Obligations are secured by the Security Agreement.
ARTICLE IV
SPECIAL COVENANTS
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SECTION 4.1. Jurisdiction, Service of Process, and Waiver of Jury
Trial.
(a) The Guarantor hereby agrees and consents that any action or
proceeding arising out of or brought to enforce the provisions of this Guaranty
or any of the Guaranteed Obligations may be brought in any appropriate court in
the State of Maryland, and by the execution of this Guaranty the Guarantor
irrevocably consents to the jurisdiction of each such court.
(b) The Guarantor hereby designates and appoints, without power of
revocation, _______________________________, as agent for the Guarantor for
service of process within the State of Maryland upon whom may be served all
process, pleadings, notice or other papers required to be served upon the
Guarantor which pertain to of any of the Guaranteed Obligations.
(c) The Guarantor covenants that throughout the period during which any
of the Guaranteed Obligations remain outstanding, if a new agent for service of
process within the State is designated pursuant to the terms of subsection (b)
of this Section, the Guarantor will immediately serve notice upon the Bank and
the Hedge Counterparty of the name and address of such new agent and the date on
which his appointment is to become effective.
(d) The Guarantor hereby waives trial by jury in any action or
proceeding to which it and the Bank or the Hedge Counterparty may be parties,
arising out of, or in any way pertaining to, this Guaranty or the Guaranteed
Obligations. It is agreed and understood that this waiver constitutes a waiver
of trial by jury of all claims against all parties to such actions or
proceedings, including claims against parties who are not parties to this
Guaranty. This waiver is knowingly, willingly and voluntarily made by the
Guarantor, and the Guarantor hereby represents that no representations of fact
or opinion have been made by any individual to induce this waiver of trial by
jury, or to in any way modify or nullify its effect. The Guarantor has had the
opportunity to discuss this waiver with counsel prior to signing of this
Guaranty making of this waiver.
ARTICLE V
AFFIRMATIVE COVENANTS
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Until all of the Guaranteed Obligations shall be performed, the
Guarantor covenants and agrees that, unless the Bank and the Hedge Counterparty
consent otherwise in writing:
SECTION 5.1 Repayment of Obligations. The Guarantor will promptly repay
and satisfy, when due, all of payment obligations of the Guarantor hereunder and
under the Financing Documents.
SECTION 5.2 Performance Under Guaranty and Financing Documents. The
Guarantor will, and will cause each of its Subsidiaries to, perform all
obligations required to be performed by each of them under the terms of this
Guaranty and the Financing Documents, and under any other agreements now or
hereafter existing or entered into between the Guarantor, its Subsidiaries.
SECTION 5.3 Financial and Business Information about the Guarantor. The
Guarantor shall cause to be delivered to the Bank:
(A) ANNUAL FINANCIAL STATEMENTS. AS SOON AS AVAILABLE AND IN
ANY EVENT WITHIN 120 DAYS AFTER THE END OF EACH FISCAL YEAR OF THE
GUARANTOR, A CONSOLIDATED AND CONSOLIDATING BALANCE SHEET OF THE
GUARANTOR AND ALL CONSOLIDATED SUBSIDIARIES AS OF THE END OF SUCH
FISCAL YEAR AND THE RELATED CONSOLIDATED AND CONSOLIDATING STATEMENTS
OF INCOME AND CASH FLOWS FOR SUCH FISCAL YEAR, SETTING FORTH IN EACH
CASE IN COMPARATIVE FORM THE FIGURES FOR THE PREVIOUS FISCAL YEAR, ALL
IN REASONABLE DETAIL AND ACCOMPANIED BY AN OPINION THEREON BY COOPERS &
XXXXXXX OR OTHER INDEPENDENT PUBLIC ACCOUNTANTS SATISFACTORY TO THE
BANK, WHICH OPINION SHALL NOT BE QUALIFIED AS TO THE SCOPE OF THE AUDIT
AND WHICH SHALL STATE THAT SUCH CONSOLIDATED FINANCIAL STATEMENTS
PRESENT FAIRLY THE CONSOLIDATED FINANCIAL POSITION OF THE GUARANTOR AND
ITS CONSOLIDATED SUBSIDIARIES AS OF THE DATE OF SUCH FINANCIAL
STATEMENTS AND THE RESULTS OF THEIR OPERATIONS FOR THE PERIOD COVERED
BY SUCH FINANCIAL STATEMENTS IN CONFORMITY WITH GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES APPLIED ON A CONSISTENT BASIS (EXCEPT FOR CHANGES
IN THE APPLICATION OF WHICH SUCH ACCOUNTANTS CONCUR) AND SHALL NOT
CONTAIN ANY "GOING CONCERN" OR LIKE QUALIFICATION OR EXCEPTION OR
QUALIFICATION ARISING OUT OF THE SCOPE OF THE AUDIT.
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(B) QUARTERLY FINANCIAL STATEMENTS. AS SOON AS AVAILABLE AND
IN ANY EVENT WITHIN 50 DAYS AFTER THE END OF EACH QUARTER OF EACH
FISCAL YEAR OF THE GUARANTOR, A CONSOLIDATED AND CONSOLIDATING BALANCE
SHEET OF THE GUARANTOR AND ALL CONSOLIDATED SUBSIDIARIES AS OF THE END
OF SUCH FISCAL QUARTER (WITH ALL SUPPORTING SCHEDULES), THE RELATED
CONSOLIDATED AND CONSOLIDATING STATEMENTS OF INCOME AND CASH FLOWS OF
THE GUARANTOR AND ALL CONSOLIDATED SUBSIDIARIES FOR SUCH QUARTER, AND A
PROFIT AND LOSS STATEMENT OF THE GUARANTOR AND ITS CONSOLIDATED
SUBSIDIARIES, SETTING FORTH IN EACH CASE IN COMPARATIVE FORM THE
FIGURES FOR THE CORRESPONDING QUARTER OF THE GUARANTOR'S PREVIOUS
FISCAL YEAR, ALL CERTIFIED (SUBJECT TO NORMAL YEAR-END AUDIT
ADJUSTMENTS) AS TO FAIRNESS OF PRESENTATION, GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES AND CONSISTENCY BY THE CHIEF FINANCIAL OFFICER OR
CHIEF ACCOUNTING OFFICER OF THE GUARANTOR.
(C) OFFICER'S CERTIFICATE. SIMULTANEOUSLY WITH THE DELIVERY OF
EACH SET OF FINANCIAL STATEMENTS REFERRED TO IN SUBSECTIONS (A) AND (B)
ABOVE, A CERTIFICATE OF THE CHIEF FINANCIAL OFFICER OR CHIEF ACCOUNTING
OFFICER OF THE GUARANTOR, (I) STATING WHETHER THERE EXISTS ON THE DATE
OF SUCH CERTIFICATE ANY EVENT OF DEFAULT AND, IF ANY EVENT OF DEFAULT
THEN EXISTS, SETTING FORTH THE DETAILS THEREOF AND THE ACTION WHICH THE
GUARANTOR IS TAKING OR PROPOSES TO TAKE WITH RESPECT THERETO, AND (II)
STATING WHETHER, SINCE THE DATE OF THE MOST RECENT PREVIOUS DELIVERY OF
FINANCIAL STATEMENTS PURSUANT TO SUBSECTIONS (A) AND (B) OF THIS
SECTION, THERE HAS BEEN ANY MATERIAL ADVERSE CHANGE IN THE CONDITION
(FINANCIAL OR OTHERWISE), RESULTS OF OPERATIONS, PROPERTIES, ASSETS,
BUSINESS OR PROSPECTS OF THE GUARANTOR AND/OR ITS ALL CONSOLIDATED
SUBSIDIARIES, CONSIDERED AS A WHOLE, AND, IF SO, THE NATURE OF SUCH
MATERIAL ADVERSE CHANGE.
(D) ACCOUNTANT'S CERTIFICATE. SIMULTANEOUSLY WITH THE DELIVERY
OF EACH SET OF FINANCIAL STATEMENTS REFERRED TO IN SUBSECTION (A)
ABOVE, A STATEMENT OF THE FIRM OF INDEPENDENT PUBLIC ACCOUNTANTS WHICH
REPORTED ON SUCH STATEMENTS AS TO WHETHER ANYTHING HAS COME TO THEIR
ATTENTION TO CAUSE THEM TO BELIEVE THAT ANY EVENT OF DEFAULT EXISTED ON
THE DATE OF SUCH STATEMENTS AND CONFIRMING THE STATEMENTS SET FORTH IN
THE OFFICER'S
- 14 -
CERTIFICATE DELIVERED SIMULTANEOUSLY THEREWITH PURSUANT TO SUBSECTION
(C) ABOVE.
(E) EVENT OF DEFAULT. FORTHWITH UPON THE OCCURRENCE OF ANY
EVENT OF DEFAULT, A CERTIFICATE OF THE CHIEF FINANCIAL OFFICER OR CHIEF
ACCOUNTING OFFICER OF THE GUARANTOR SETTING FORTH THE DETAILS THEREOF
AND THE ACTION WHICH THE GUARANTOR IS TAKING OR PROPOSES TO TAKE WITH
RESPECT THERETO.
(F) LITIGATION. AS SOON AS REASONABLY PRACTICABLE AFTER
OBTAINING KNOWLEDGE OF THE COMMENCEMENT OF, OR OF A MATERIAL THREAT OF
THE COMMENCEMENT OF, AN ACTION, SUIT, PROCEEDING OR INVESTIGATION
AGAINST THE GUARANTOR OR ANY OF ITS SUBSIDIARIES WHICH COULD MATERIALLY
ADVERSELY AFFECT ITS CONDITION (FINANCIAL OR OTHERWISE), THE
COLLATERAL, RESULTS OF OPERATIONS, PROPERTIES, ASSETS, BUSINESS OR
PROSPECTS OF THE GUARANTOR AND ITS CONSOLIDATED SUBSIDIARIES,
CONSIDERED AS A WHOLE, OR COULD OTHERWISE HAVE A MATERIAL ADVERSE
EFFECT OR WHICH IN ANY MANNER QUESTIONS THE VALIDITY OF THIS AGREEMENT
OR ANY OF THE OTHER TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, AN
EXPLANATION OF THE NATURE OF SUCH PENDING OR THREATENED ACTION, SUIT,
PROCEEDING OR INVESTIGATION AND SUCH ADDITIONAL INFORMATION AS MAY BE
REASONABLY REQUESTED BY THE BANK.
(G) AUDITORS' MANAGEMENT LETTERS. PROMPTLY UPON RECEIPT
THEREOF, COPIES OF EACH REPORT SUBMITTED TO THE GUARANTOR OR ANY OF ITS
CONSOLIDATED SUBSIDIARIES BY INDEPENDENT PUBLIC ACCOUNTANTS IN
CONNECTION WITH ANY ANNUAL, INTERIM OR SPECIAL AUDIT MADE BY THEM OF
THE BOOKS OF THE GUARANTOR OR ANY OF ITS CONSOLIDATED SUBSIDIARIES
INCLUDING, WITHOUT LIMITATION, EACH REPORT SUBMITTED TO THE GUARANTOR
OR ANY OF ITS CONSOLIDATED SUBSIDIARIES CONCERNING ITS ACCOUNTING
PRACTICES AND SYSTEMS AND ANY FINAL COMMENT LETTER SUBMITTED BY SUCH
ACCOUNTANTS TO MANAGEMENT IN CONNECTION WITH THE ANNUAL AUDIT OF THE
GUARANTOR AND ITS CONSOLIDATED SUBSIDIARIES.
(H) TAX RETURNS. WITHIN 30 DAYS AFTER FILING, COPIES OF (I)
ALL FEDERAL, STATE AND LOCAL INCOME TAX RETURNS FILED BY THE GUARANTOR
OR ANY SUBSIDIARY, (II) ALL QUARTERLY REPORTS BY THE GUARANTOR OR ANY
SUBSIDIARY ON FORM 941, AND (III) ALL ANNUAL FUTA TAX RETURNS OF THE
GUARANTOR OR ANY SUBSIDIARY.
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(i) Reports and Proxies. The Guarantor shall deliver to the
Bank: (i) prior to or simultaneously with its annual financial
statements, copies of all 10K's, (ii) prior to or simultaneously with
its quarterly financial statements, (A) copies of all 10-Q's, and (B) a
current backlog report, and (iii) promptly following the date of items,
copies of all other financial statements, reports, notices and proxy
statements which are sent to stockholders of the Guarantor or its
Consolidated Subsidiaries, and all regular and periodic reports
required to be filed by Guarantor or its Consolidated Subsidiaries with
any governmental agency or authority.
(J) ENVIRONMENTAL MATTERS. PROMPTLY, UPON RECEIPT OF ANY
COMPLAINT, ORDER, CITATION, NOTICE OR OTHER WRITTEN COMMUNICATION FROM
ANY PERSON WITH RESPECT TO, OR UPON THE GUARANTOR'S OBTAINING KNOWLEDGE
OF, (I) THE EXISTENCE OR ALLEGED EXISTENCE OF A VIOLATION OF ANY
APPLICABLE ENVIRONMENTAL LAW IN CONNECTION WITH ANY PROPERTY NOW OR
PREVIOUSLY OWNED, LEASED OR OPERATED BY THE GUARANTOR OR ANY OF ITS
SUBSIDIARIES, (II) ANY RELEASE ON SUCH PROPERTY OR ANY PART THEREOF IN
A QUANTITY THAT IS REPORTABLE UNDER ANY APPLICABLE ENVIRONMENTAL LAW
AND (III) ANY PENDING OR THREATENED PROCEEDING FOR THE TERMINATION,
SUSPENSION OR NON-RENEWAL OF ANY PERMIT REQUIRED UNDER ANY APPLICABLE
ENVIRONMENTAL LAW, IN EACH CASE IN WHICH THERE IS A REASONABLE
LIKELIHOOD OF AN ADVERSE DECISION OR DETERMINATION WHICH COULD RESULT
IN A MATERIAL ADVERSE EFFECT.
(K) OTHER INFORMATION. FROM TIME TO TIME SUCH ADDITIONAL
FINANCIAL OR OTHER INFORMATION REGARDING THE CONDITION (FINANCIAL OR
OTHERWISE), RESULTS OF OPERATIONS, PROPERTIES, ASSETS, BUSINESS OR
PROSPECTS OF THE GUARANTOR OR ANY OF ITS SUBSIDIARIES AS THE BANK MAY
REASONABLY REQUEST.
SECTION 5.4 Notice of Certain Events. The Guarantor shall promptly,
after any officer of the Guarantor learns or obtains knowledge of the occurrence
thereof, give written notice to the Bank of:
(a) any written notice of a violation received by the
Guarantor or any of its Subsidiaries from any governmental regulatory
body or law enforcement authority which, if such violation were
established, might have a Material Adverse Effect on the business of
the Guarantor or any of its Subsidiaries or the value of the
Collateral;
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(b) any labor controversy that has resulted in a strike or
other work action materially affecting the Guarantor or any of its
Subsidiaries;
(c) any attachment, judgment, lien, levy or order (other than
Permitted Liens) that may be placed on or assessed against or
threatened against the Guarantor, any of its Subsidiaries, the
Guarantor or the Collateral;
(d) any other matter that has resulted in a Material Adverse
Effect on the financial condition of the Guarantor and its Subsidiaries
as a whole, or on the financial condition of the Guarantor, alone;
(e) the removal of inventory by the Guarantor or any of its
Subsidiaries, other than by consumption or sale in the ordinary course
of business, from the places where such inventory is located on the
date hereof to other places, with information as to the new places
where such inventory shall be maintained;
(f) the acquisition or leasing of material items of new
equipment by the Guarantor or any of its Subsidiaries, or the removal
of material items of equipment by the Guarantor or any of its
Subsidiaries from the places where such items or equipment is located
on the date hereof to other places, with information as to the places
such new or removed equipment shall be maintained;
(g) the acquisition or leasing by the Guarantor or any of its
Subsidiaries of any material additional real property, or the transfer
or termination of tenancy of any material existing personal or real
property, and the Guarantor shall, if requested by the Bank, deliver
such other information relating to any such acquisition, leasing,
transfer or termination of tenancy as the Bank may reasonably request.
(h) any material changes, additions or deletions as to the
material contracts of the Guarantor or any of its Subsidiaries; and
(i) any breach or violation of or noncompliance with any
covenant or condition of this Agreement.
SECTION 5.5 Payment of Obligations. The Guarantor will pay and
discharge, and will cause each of its Subsidiaries to pay and
discharge, as the same shall become due and
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payable, (a) all their respective obligations and liabilities, including all
claims or demands of materialmen, mechanics, carriers, warehousemen, landlords
and other like persons which, in any such case, if unpaid, might by law give
rise to a lien upon any of their properties or assets, and (b) all lawful taxes,
assessments and charges or levies made upon their properties or assets, by any
governmental body, agency or official, except where any of the items in clause
(a) or (b) of this Section 5.5 may be diligently contested in good faith by
appropriate proceedings and the Guarantor or such Subsidiary shall have set
aside on its books, if required under generally accepted accounting principles,
appropriate reserves for the accrual of any such items.
SECTION 5.6 Maintenance of Property; Insurance.
(a) Maintenance of the Property, Collateral and Other
Property. The Guarantor will keep, and will cause each of its Subsidiaries to
keep, the Property, the Collateral, and any other property of the Guarantor or
each of its Subsidiaries useful and necessary in their respective businesses in
good working order and condition, subject to ordinary wear and tear.
(b) Insurance. The Guarantor will maintain, and will cause
each of its Subsidiaries to maintain, insurance with financially sound and
responsible companies in such amounts (and with such risk retentions) and
against such risks as is usually carried by owners of similar businesses and
properties in the same general areas in which the Guarantor and its Subsidiaries
operate. The Guarantor will deliver to the Bank upon request from time to time
full information as to the insurance carried.
SECTION 5.7 Conduct of Business and Maintenance of Existence. The
Guarantor will continue, and will cause each of its Subsidiaries to continue, to
engage in business of the same general type as now conducted by the Guarantor
and its Subsidiaries, and will preserve, renew and keep in full force and
effect, and will cause each of its Subsidiaries to preserve, renew and keep in
full force and effect, their respective corporate existence and their respective
rights, privileges and franchises necessary or desirable in the normal conduct
of business; provided that nothing in this Section shall prohibit the merger of
a Subsidiary into the Guarantor or the merger or consolidation of a Subsidiary
with or into another Person if the corporation surviving such consolidation or
merger is a Subsidiary and if, in each case, after giving effect thereto, no
Event of Default shall have occurred.
SECTION 5.8 Compliance with Laws. The Guarantor will comply, and will
cause each of its Subsidiaries to comply, with all applicable laws, ordinances,
rules, regulations, and requirements of governmental authorities (including,
without limitation, Environmental Laws, ERISA
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and the rules and regulations thereunder) except (a) where the necessity of
compliance therewith is contested in good faith by appropriate proceedings or
(b) where noncompliance could not reasonably be expected to have a Material
Adverse Effect.
SECTION 5.9 Accounting; Inspection of Property, Books and Records. The
Guarantor will keep, and will cause each of its Subsidiaries to keep, proper
books of record and account in which full, true and correct entries in
conformity with generally accepted accounting principles shall be made of all
dealings and transactions in relation to their respective businesses and
activities, will maintain, and will cause each of its Subsidiaries to maintain,
their respective fiscal reporting periods on the present basis and will permit,
and will cause each of its Subsidiaries to permit, representatives of the Bank
to visit and inspect any of their respective properties, to examine and make
copies from any of their respective books and records and to discuss their
respective affairs, finances and accounts with their officers, employees and
independent public accountants, all at such reasonable times and as often as may
reasonably be desired.
SECTION 5.10 Taxes and Liens. The Guarantor shall promptly pay, or
cause to be paid, all taxes, assessments or other governmental charges which may
lawfully be levied or assessed upon the income or profits of the Guarantor or
upon any property, real, personal or mixed, belonging to the Guarantor or upon
any part thereof, and also any lawful claims for labor, material and supplies
which, if unpaid, might become a lien or charge against any such property;
provided, however, the Guarantor shall not be required to pay or cause to be
paid any such tax, assessment, charge, levy or claim so long as the validity
thereof shall be actively contested in good faith by proper proceedings and, if
requested by the Bank, reserves with respect thereto acceptable to the
Guarantor's independent certified public accountants shall be established and
maintained; but provided further that any such tax, assessment, charge, levy or
claim shall be paid forthwith upon the commencement of proceedings to foreclose
any lien securing the same unless a surety bond satisfactory to the Bank is
obtained and delivered to the Bank.
SECTION 5.11 Comply with ERISA. The Guarantor and each of its
Subsidiaries shall at all times make prompt payment of contributions required to
meet the minimum funding standards set forth in ERISA with respect to any
employee benefit plan; promptly after the filing thereof, furnish to the Bank
copies of any annual report required to be filed under ERISA in connection with
each employee benefit plan; not withdraw from participation in, permit the
termination or partial termination of, or permit the occurrence of any other
event with respect to any employee benefit plan that could result in liability
to the Pension Benefit Guaranty Corporation; notify the Bank as soon as
practicable of any "reportable event" (as defined in Section 4043(b) of ERISA)
and of any additional act or condition arising in connection with any employee
benefit plan which the
- 19 -
Guarantor or any of its Subsidiaries believe might constitute grounds for the
termination thereof by the Pension Benefit Guaranty Corporation (or any
successor under ERISA) or for the appointment by the appropriate United States
district court of a trustee to administer such plan; and furnish to the Bank
upon the Bank's request, such additional information about any employee benefit
plan as may be reasonably requested. Neither the Guarantor nor any of its
Subsidiaries will permit the occurrence of any "prohibited transaction" (as
defined in ERISA).
ARTICLE VI
NEGATIVE COVENANTS
Until all the Guaranteed Obligations to be performed and paid hereunder
shall have been performed and paid in full, unless the Bank shall otherwise
consent in writing, the Guarantor will not, and will not permit any Subsidiary
to, either directly or indirectly:
SECTION 6.1 Restriction on Liens. The Guarantor will not, and will not
permit any of its Subsidiaries to, create, incur, assume or suffer to exist any
Lien upon or with respect to any property or assets of any kind (real or
personal, tangible or intangible) of the Guarantor or any such Subsidiary
whether now owned or hereafter acquired, or sell any such property or assets
subject to an understanding or agreement, contingent or otherwise, to repurchase
such property or assets (including sales of accounts receivable or notes with
recourse to the Guarantor or any of its Subsidiaries) or assign any right to
receive income, or file or permit the filing of any financing statement under
the Uniform Commercial Code as in effect in any applicable jurisdiction or any
other similar notice of Lien under any similar recording or notice statute;
provided that the provisions of this Section shall not prevent the creation,
incurrence, assumption or existence of the Permitted Liens.
SECTION 6.2 Limitation on Guarantees. Neither the Guarantor nor any of
its Subsidiaries shall guarantee any debt of any Person or Persons.
SECTION 6.3 No Voluntary Prepayment of Subordinated Debt and Long Term
Debt. The Guarantor will not, and will not permit any of its Subsidiaries to,
directly or indirectly, redeem, retire, purchase, acquire, defease or otherwise
make any payment with respect to the principal of any Long Term Debt at a date
in advance of its legal obligations to do so.
SECTION 6.4 Change of Management. The Guarantor and each of its
Subsidiaries, without the Bank's prior consent, will not make any material
change of management.
- 20 -
SECTION 6.5 Change in Fiscal Year. The Guarantor and each of its
Subsidiaries, shall not, without the Bank's prior consent, change its fiscal
year.
SECTION 6.6 Transactions with Other Persons. The Guarantor will not,
and will not permit any of its Subsidiaries to, enter into any agreement with
any Person whereby any of them shall agree to any restriction on the right of
the Guarantor or any of its Subsidiaries to amend or waive any of the provisions
of this Agreement or any other Letter of Credit Document.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
SECTION 7.1. Events of Default Defined. Each of the following shall be
Events of Default under this Agreement, whereupon all obligations of the
Guarantor hereunder, whether then owing or contingently owing, will, at the
option of the Bank or its successors or assigns, immediately become due and
payable by the Guarantor without presentation, demand, protest or notice of any
kind, all of which are hereby expressly waived. The terms "Event of Default" or
"default" shall mean, whenever they are used in this Agreement, any one or more
of the following events:
(a) The Guarantor shall fail to pay or perform any of the
Guaranteed Obligations;
(b) The occurrence of an "event of default" or an "Event of
Default" (beyond any applicable cure period) under any of the Financing
Documents;
(c) The Borrower or the Guarantor defaults (beyond any
applicable cure period) in the payment of principal or interest on any
other Indebtedness for Money Borrowed (other than in indebtedness to
the Bank under any of the Financing Documents) beyond any period of
grace provided with respect thereto, or in the performance of any other
agreement, term or conditions contained in any agreement under which
any such obligation is created, if the effect of such default is to
cause, or permit the holder or holders of such obligation to cause such
obligation to become due prior to its stated maturity, and the
acceleration of such
- 21 -
obligation would have a material and adverse effect on the business or
financial condition of the Borrower or the Guarantor; or
(d) Any representation, warranty, certification or statement
made by the Guarantor herein, or in any writing furnished by or on
behalf of the Borrower or the Guarantor in connection with any of the
transactions evidenced by, or which are the subject of, any of the
Financing Documents, shall have been false, misleading or incomplete in
any material respect on the date as of which made; or
(e) The commencement of the liquidation or dissolution of the
Guarantor, or suspension of the business of the Guarantor or filing by
the Guarantor of a voluntary petition in bankruptcy or a voluntary
petition or an answer seeking reorganization, arrangement, readjustment
of its debts or for any other relief under the Bankruptcy Reform Act of
1978, as amended (the "Bankruptcy Code"), or under any other insolvency
act or law, state or Federal, now or hereafter existing, or any other
action of the Guarantor indicating its consent to, approval of, or
acquiescence in any such petition or proceeding, or the application by
the Borrower or the Guarantor for (or the consent or acquiescence to)
the appointment of a receiver or a trustee for the Guarantor, or an
assignment for the benefit of creditors, or the inability of the
Guarantor to pay its debts as they mature, or the admission by the
Guarantor in writing of its inability to pay its debts as they mature;
or
(f) The filing of an involuntary petition or other involuntary
proceeding against the Guarantor seeking a reorganization, arrangement,
readjustment of the Guarantor's debts or for any other relief under the
Bankruptcy Code or under any other insolvency act or law, state or
federal, now or hereafter existing, or the involuntary appointment of a
receiver or trustee for the Guarantor or for all or a substantial part
of the Borrower's or the Guarantor's property, and the continuance of
any of such action for (90) days undismissed or undischarged; or the
issuance of an order for attachment, execution or similar process
against any substantial part of the property of the Guarantor and the
continuance of any such order for (90) days undismissed or
undischarged; or
(g) The entry of an order in any proceedings against the
Guarantor decreeing the dissolution or split-up of the Guarantor; or
(h) The entry of a final judgment against the Guarantor, which
with other outstanding final judgments against the Guarantor exceeds an
aggregate of $100,000, if within thirty (30) days after entry thereof
such judgment shall not have been discharged or bonded
- 22 -
or execution thereof stayed pending appeal, or if within thirty (30)
days after the expiration of any such stay such judgment shall not have
been discharged or bonded; or
(i) The dissolution of termination of the existence of the
Borrower or the Guarantor.
SECTION 7.2 Remedies on Default. Upon the occurrence of an Event of
Default and at any time thereafter, payment and performance of all of the
Guaranteed Obligations shall be immediately due and owing, and the Bank and the
Hedge Counterparty may proceed hereunder, and, to the extent therein provided,
under any of the Financing Documents, to exercise all remedies available at law,
in equity, or otherwise, in such order as the Bank and the Hedge Counterparty
may elect in their sole discretion, to recover payment and performance of all of
the Guaranteed Obligations and the Bank and the Hedge Counterparty shall have no
obligation to proceed against any Person, to resort to any other security, or to
exhaust any other remedy or remedies which may be available to the Bank and the
Hedge Counterparty.
SECTION 7.3 No Remedy Exclusive. No remedy herein conferred upon or
reserved to the Bank and the Hedge Counterparty is intended to be exclusive of
any other available remedy or remedies, but each and every such remedy shall be
cumulative and shall be in addition to any other remedy given hereunder, under
any of the Financing Documents, or now or hereafter existing at law or in equity
or by statute.
SECTION 7.4 Anti-Marshaling Provisions. The right is hereby given by
the Guarantor to the Bank and the Hedge Counterparty to make releases (whether
in whole or in part) of all or any part of the Property or Collateral under the
Financing Documents agreeable to the Bank and/or the Hedge Counterparty without
notice to, or the consent, approval or agreement of other parties and interests,
including junior lienors, which releases shall not impair in any manner the
validity of or priority of the liens and security interest in the remaining
Property or Collateral conferred under such Financing Documents, nor release the
Borrower or the Guarantor from the liability for any of the obligations secured
thereby. Notwithstanding the existence of any other security interest in all or
any part of the Property or the Collateral, the Bank and the Hedge Counterparty
shall have the right to determine the order in which all or any part of the
Property or the Collateral (subject to the provisions of the Intercreditor
Agreement) shall be subjected to the remedies provided therein, or in the
Financing Documents. The Guarantor hereby waives any and all rights to require
the marshaling of assets in connection with the exercise of any of the remedies
permitted by applicable law or provided herein or therein.
- 23 -
SECTION 7.5 Confession of Judgment. Upon the occurrence of an Event of
Default, the Guarantor authorizes the clerk or any attorney designated by the
Bank or the Hedge Counterparty or any clerk of any court of record to appear for
it in any court of record and confess judgment against it without prior hearing,
in favor of the Bank and the Hedge Counterparty for and in the amount equal to
such of the obligations of the Guarantor which have been due and payable under
Section 7.1 hereof, plus interest accrued and unpaid thereon, all other amounts
then due and payable hereunder, costs of suit and an attorney's fee in an amount
equal to fifteen percent (15%) of such obligations, provided, however, (a) if
the actual attorney's fees incurred by the Bank and the Hedge Counterparty are
less than 15% of such obligations, the Bank and the Hedge Counterparty will
refund (to the extent actually collected) to the Guarantor an amount equal to
the difference between 15% of such obligations and the amount of such actual
attorney's fees (after all of such obligations have been paid in full), or (b)
if the actual attorney's fees incurred by the Bank and the Hedge Counterparty or
other holder hereof exceed 15% of such obligations, whether by reason of
judgment being contested or otherwise, the Guarantor will pay to the Bank and
the Hedge Counterparty on demand the amount of any such excess. The authority
and power to appear for and enter judgment against the Guarantor shall not be
exhausted by one or more exercises thereof, or by any imperfect exercise
thereof, and shall not be extinguished by any judgment entered pursuant thereto.
Such authority and power may be exercised on one or more occasions, from time to
time, in the same or different jurisdictions, as often as the Bank shall deem
necessary or desirable, for all of which this Guaranty shall be a sufficient
warrant.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Indemnification. The Guarantor hereby indemnifies and holds
the Bank and the Hedge Counterparty harmless from and against any and all
claims, damages, losses, liabilities, costs or expenses whatsoever which the
Bank and the Hedge Counterparty may incur (or which may be claimed against the
Bank and the Hedge Counterparty by any Person) by reason of or, in connection
with, the execution, delivery or performance of any of the Financing Documents,
or any transaction contemplated by any of any of the Financing Documents.
- 24 -
SECTION 8.2 Successors and Assigns. This Guaranty shall be binding upon
the Guarantor, its successors and assignees, and all rights against the
Guarantor arising under this Guaranty shall be for the sole benefit of the Bank
and the Hedge Counterparty, and their successors and assigns, all of whom shall
be entitled to enforce performance and observance of this Guaranty to the same
extent as if they were parties hereto. The Bank and the Hedge Counterparty will
not sell or assign the obligations of the Borrower or the Guarantor hereunder to
any competitor of the Borrower or Guarantor, as reasonably determined by the
Bank.
SECTION 8.3 Notices. All notices, requests and demands to or upon the
respective parties hereto shall be deemed to have been given or made when hand
delivered or mailed first class, certified or registered mail, postage prepaid,
addressed as follows or to such other address as the parties hereto shall have
been notified pursuant to this Section 9.6:
Guarantor: Xxxx, Industries, Inc.
0 Xxxxxxx Xxxxx Xxxx
Xxxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxx X. Xxxxxxx
Chief Executive Officer and Chairman
With a copy to: X. Xxxxxx Weeks, Esquire
Ballard, Spahr, Xxxxxxx & Ingersoll
Suite 1900
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Bank: First Union National Bank of North Carolina
Two First Union Center, T-7
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: International Operations
With a copy to: Xxxxx X. Xxxxxx, Esquire
Piper & Marbury
0000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Hedge Counterparty: First Union National Bank of Maryland
c/o First Union National Bank of North Carolina
- 25 -
One First Xxxxx Xxxxxx, XX-0
000 X. Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Attention: Xxxx Xxxxxxxx
except in cases where it is expressly herein provided that such notice, request
or demand is not effective until received by the party to whom it is addressed,
in which event said notice, request or demand shall be effective only upon
receipt by the addressee.
SECTION 8.4 Amendment. The Guaranty may be amended, modified or
discharged only upon an agreement in writing of the Guarantor and the Bank and
the Hedge Counterparty.
SECTION 8.5 Effect of Delay and Waivers. No delay or omission to
exercise any right or power accruing upon any default, omission or failure of
performance hereunder shall impair any such right or power or shall be construed
to be a waiver thereof, but any such right and power may be exercised from time
to time and as often as may be deemed expedient. In order to entitle the Bank to
exercise any remedy now or hereafter existing at law or in equity or by statute,
it shall not be necessary to give any notice, other than such notice as may be
herein expressly required. In the event any provision contained in this Guaranty
should be breached by any party and thereafter waived by the other party so
empowered to act, such waiver shall be limited to the particular breach
hereunder. No waiver, amendment, release or modification of this Guaranty shall
be established by conduct, custom or course of dealing, but solely by an
instrument in writing duly executed by the parties thereunto duly authorized by
this Guaranty.
SECTION 8.6 Counterparts. This Guaranty may be executed simultaneously
in several counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
SECTION 8.7 Severability. The invalidity or unenforceability of any one
or more phrases, sentences, clauses or Sections contained in this Guaranty shall
not affect the validity or enforceability of the remaining portions of this
Guaranty, or any part thereof.
SECTION 8.8 Cost of Collection. The Guarantor shall be liable for the
payment of all fees and expenses, including attorneys' fees (computed without
regard to any statutory presumption), reasonably incurred in connection with the
enforcement of this Guaranty.
- 26 -
SECTION 8.9 Set Off. Upon the occurrence of an Event of Default
hereunder, the Bank is hereby authorized, without notice to the Guarantor, to
set off, appropriate and apply and all monies, securities and other properties
of the Guarantor hereafter held or received by or in transit to the Bank from or
for the Guarantor, against the obligations of the Guarantor irrespective of
whether the Bank shall have made any demand hereunder or under any of the
Financing Documents.
SECTION 8.10 Governing Law. This Guaranty shall be governed by and
construed in accordance with the laws of the State of Maryland.
SECTION 8.11 References. The words "herein", "hereof", "hereunder" and
other words of similar import when used in this Guaranty refer to this Guaranty
as a whole, and not to any particular article, section or subsection.
SECTION 8.12 Taxes, Etc. Any taxes (excluding income taxes) payable or
ruled payable by federal or state authority in respect to this Guaranty or the
Financing Documents shall be paid by the Guarantor upon demand by the Bank,
together with interest and penalties, if any.
SECTION 8.13 CONSENT TO JURISDICTION, WAIVER OF JURY TRIAL. THE
GUARANTOR HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE COURT WITHIN HARFORD
COUNTY, MARYLAND OR ANY FEDERAL COURT LOCATED WITHIN THE STATE OF MARYLAND, FOR
ANY PROCEEDING TO WHICH THE BANK AND/OR THE HEDGE COUNTERPARTY IS A PARTY AND
CONSENTS THAT ALL SERVICE OF PROCESS BE MADE BY REGISTERED OR CERTIFIED MAIL
DIRECTED TO THE GUARANTOR AT THE ADDRESS INDICATED IN SECTION 8.3 OR AT SUCH
OTHER ADDRESS AS THE GUARANTOR MAY HAVE DESIGNATED IN WRITING TO THE BANK AND
THE HEDGE COUNTERPARTY, AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON
THE EARLIER OF ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE
UNITED STATES MAILS, PROPER POSTAGE PREPAID AND PROPERLY ADDRESSED. TO THE
EXTENT PERMITTED BY LAW, THE GUARANTOR VOLUNTARILY AND KNOWINGLY WAIVES TRIAL BY
JURY AND WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED ON LACK OF JURISDICTION OR
IMPROPER VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF ANY PROCEEDING
INSTITUTED HEREUNDER, OR ARISING OUT OF OR IN CONNECTION WITH THIS GUARANTY OR
ANY OF THE FINANCING DOCUMENTS, OR ANY PROCEEDING TO WHICH THE BANK AND/OR THE
HEDGE COUNTERPARTY IS A PARTY, INCLUDING ANY ACTIONS BASED UPON, ARISING OUT OF
OR IN CONNECTION WITH ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT
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(WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE BANK AND/OR THE HEDGE COUNTERPARTY
OR THE GUARANTOR, AND THE GUARANTOR CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. IN THE EVENT THAT THE
GUARANTOR'S WAIVER OF JURY TRIAL HEREIN SHALL BE DETERMINED TO BE INVALID OR
UNENFORCEABLE AS A MATTER OF LAW, THE GUARANTOR AND THE BANK AND THE HEDGE
COUNTERPARTY AGREE THAT THE PROVISIONS OF ARTICLE __ HEREOF SHALL GOVERN AS TO
THE MATTERS SET FORTH THEREIN. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF
THE BANK AND/OR THE HEDGE COUNTERPARTY TO SERVE LEGAL PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF THE BANK AND THE HEDGE
COUNTERPARTY TO BRING ANY ACTION AND PROCEEDING AGAINST THE GUARANTOR IN THE
COURTS OF ANY JURISDICTION THAT HAS JURISDICTION OVER THE GUARANTOR.
SECTION 8.14 Indirect Means. Any act which the Guarantor is prohibited
from doing shall not be done indirectly through a Subsidiary or by any other
indirect means.
SECTION 8.15 Entire Agreement. Subject to the provisions of Article IX
below, Guaranty and the other Financing Documents shall completely and fully
supersede all other prior agreements, both written and oral, between the Bank
and the Guarantor relating to the obligations of the Guarantor to the Bank in
regard thereto.
SECTION 8.16 Intercreditor Agreement. Notwithstanding anything herein
to the contrary, all rights and remedies of the Bank and the Hedge Counterparty
under the Letter of Credit Documents are subject to the provisions of the
Intercreditor Agreement. In the event of any conflict between the terms and
provisions of this Guaranty and the terms and provisions of the Intercreditor
Agreement, the terms and provisions of the Intercreditor Agreement shall
prevail.
ARTICLE IX
ARBITRATION
SECTION 9.1 Arbitration. Except as otherwise specifically set forth in
this Guaranty or agreed to in writing by the Guarantor and the Bank, and except
as expressly provided otherwise in Section 9.3 below, in the event that the
Guarantor's waiver of trial by jury contained in Section 8.13 of this Guaranty
is determined to be invalid or unenforceable as a matter of law, then
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any action, dispute, claim or controversy between the parties, whether sounding
in contract, tort, or otherwise, arising under this Guaranty or any proceeding
to which the Bank is a party, including any actions based upon, arising out of,
or in connection with any course of conduct, course of dealing, statement
(whether oral or written), or actions of the Bank or the Guarantor ("Dispute" or
"Disputes"), shall be resolved by arbitration, as set forth in the Letter of
Credit Agreement. Such Disputes shall be resolved by binding arbitration in
accordance with Title 9 of the United States Code, as amended, and the
Commercial Arbitration Rules of the American Arbitration Association ("AAA"), as
in effect from time to time (the "Rules"). In the event of any inconsistency
between the Rules and the provisions of this Annex, the provisions of this Annex
shall supersede the Rules. All statutes of limitations that would otherwise be
applicable shall apply to any arbitration proceeding hereunder. In any
arbitration proceeding subject to the provisions of this Annex, the arbitrator
is specifically empowered to decide (by documents only, or with a hearing, at
the arbitrator's sole discretion) pre-hearing motions that are substantially
similar to pre-hearing motions to dismiss and motions for summary adjudication.
Judgment upon the award rendered may be entered in any court having
jurisdiction. Whenever an arbitration is required, the parties shall select an
arbitrator in the manner provided in Section 9.4 below.
SECTION 9.2 Judicial Reference. If a Dispute is not submitted to
arbitration as provided in Section 1 above for any reason, but become the
subject of a judicial action, at any point in the proceeding, any party may
elect to have any specific questions of fact or law, or all questions of fact or
law, determined by a reference accordance with Rule 53 of the North Carolina
Rules of Civil Procedure (or the equivalent rule of another State, as
applicable). A party shall not waive the right to request such judicial
reference for any remaining questions of fact or law to be decided by virtue of
the party's initiating or participating in judicial or other proceedings or by
failure to request such a reference up to any point in a judicial proceeding.
Whenever such an election is made, the parties shall designate to the court a
single referee selected in the manner provided in Section 9.4 below. Judgment
upon the award rendered shall be entered in the court in which such proceeding
was commenced.
SECTION 9.3 Remedies. No provision of, nor the exercise of any rights
under, Sections 9.1 or 9.2 above shall limit or otherwise affect the right of
the Bank (a) to proceed and foreclose against the Property or any of the
Collateral by the exercise of a power of sale available under the Financing
Documents and applicable law, (b) to exercise any self help remedies available
under this Guaranty or the Financing Documents and applicable law, including,
without limitation, set off, or to exercise any other nonjudicial rights and
remedies available to it under any of the Financing Documents or this Guaranty
and applicable law, or (c) to obtain provisional or ancillary remedies,
including, without limitation, injunctive relief and the appointment of a
receiver, from a
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court having jurisdiction before, during or after the pendency of any
arbitration or referral. The Bank's pursuit of provisional or ancillary
remedies, or its exercise of self help and other nonjudicial remedies, shall not
constitute a waiver of its right to submit the Dispute to arbitration or
judicial reference.
SECTION 9.4 Selection of Arbitrator or Referee. Whenever an arbitration
is required under Section 9.1 above or a referral is required under Section 9.2
above, the arbitrator or referee shall be selected in accordance with this
Section 9.4. Except as otherwise provided, the arbitrator or referee shall be an
attorney or retired judge selected in accordance with the Rules of the AAA. Any
arbitrator or referee selected under this Section 11.4 shall be knowledgeable in
the subject matter of the Dispute. Qualified retired judges shall be selected
through panels maintained by AAA, or any North Carolina Superior Court (or a
court, of an equivalent or higher level, of another State) or private
organization providing such services. A single arbitrator who is an attorney but
is not a retired judge shall have the power to render a maximum award of
$100,000. Where any party makes timely written request prior to appointment of
the arbitrator, or whether the claim of any party exceeds $100,000, the
arbitrator shall be a retired judge formerly sitting on the bench in a North
Carolina Superior Court or any higher State court (or a court, of an equivalent
level, of another State), or a retired Federal court judge formerly sitting on
the bench of a United States Court of Appeals or any Federal District Court. A
single arbitrator who is a retired judge shall have the power to render a
maximum award of $1,000,000. Where any party seeks an award in excess of
$1,000,000, the Dispute shall be decided by a majority vote of three
arbitrators, at least one of whom shall meet the requirements for retired judges
set forth herein. For purposes of this Section 9.4, the computation of the
maximum award an arbitrator may make shall include any amounts awarded for
arbitration fees, attorneys fees and all other related costs provided by Section
9.5 below.
SECTION 9.5 Miscellaneous. Any arbitration questions arising under this
Article on dispute resolution shall by governed in accordance with Title 9 of
the United States Code, as amended. This Article of the Guaranty, constitutes
the entire agreement of the parties with respect to its subject matter and
supersedes all prior discussions, arrangements, negotiations and other
communications on dispute resolution. To the extent any provision of this
Article is prohibited by or invalid under applicable law, such provision shall
be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Article. The provisions of this Article shall survive any termination or
expiration of this Guaranty until full payment and performance of the
Guarantor's Obligations thereunder, unless the parties otherwise expressly agree
in writing. The arbitrator shall have the power to award to the prevailing party
recovery of all costs, expenses and fees incurred by it (including reasonable
attorneys' fees, administrative fees, arbitrators' fees, and court costs), and
in particular, but without limitation of the
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foregoing, shall have the power to aware to either party hereto, whether or not
such party shall be the prevailing party in an arbitration, recovery of all
costs, expenses and fees incurred by it (including reasonable attorneys' fees,
administrative fees, arbitrators' fees, and court costs), but only to the extent
payable or reimbursable by the other party under the applicable provisions of
this Guaranty.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
executed in its name under seal, all as of the date first above written.
ATTEST: GUARANTOR:
XXXX INDUSTRIES, INC.
By: By: /s/ Xxxx X. Xxxxxxx (SEAL)
----------------------------- -----------------------------
Name: Name: Xxxx X. Xxxxxxx
Title: Title: Chief Executive Officer
[CORPORATE SEAL]
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