GUARANTY
GUARANTY, dated August 29, 1997, by RT Industries, Inc., a Delaware
corporation ("Guarantor"), to Xxxxxx Xxxxxxxxx and Xxxxxxx X. Xxxxxxxxx, owners
by the entirety, residing in the Commonwealth of Virginia at 00 Xxxxxxxxxx
Xxxxx, Xxxx Xxxxx Xxxx Xxxxxxx, Xxxxxxxxxxxx, XX 00000 ("Payee").
W I T N E S S E T H:
WHEREAS, concurrently with the delivery of this Guaranty, the wholly-owned
subsidiary of Guarantor, Quality Automotive Company (formerly known as QUAC
Acquisition Corp. ("NewCo"), has executed and delivered to Payee a promissory
note (the "Note") in the principal amount of $2,697,841.73, in partial
consideration for the merger of Quality Automotive Company, of which Payee was a
stockholder, with and into NewCo pursuant to the terms of a merger agreement
dated June 6, 1997 (the "Merger Agreement"); and
WHEREAS, in order to induce the Payee to enter into, and in order to
consummate, the Merger Agreement, Guarantor has agreed to guarantee the payment
of the Note pursuant to the terms hereinafter set forth.
NOW THEREFORE, in consideration of the foregoing Recitals and other good
and valuable consideration paid to Payee, the receipt and sufficiency of which
is hereby acknowledged, the Guarantor agrees as follows:
1. Guarantor does hereby guaranty to Payee the due and punctual payment of
all principal, interest and other sums due under the Note and performance of all
of the NewCo's obligations evidenced by the Note and all extensions, renewals or
refinancings thereof, whenever due and payable (collectively, the
"Obligations"). This is a Guaranty of payment and not of collection, and the
Guarantor expressly waives any rights to require that any action be brought
against the NewCo or to require that resort be had to any security.
2. This Guaranty is a continuing, absolute and unconditional guaranty and
shall remain in full force and effect until indefeasible payment in full of the
Obligations guaranteed hereunder and, except as otherwise provided herein, may
be proceeded upon immediately after failure by NewCo to pay the Obligations
under the Note. Guarantor hereby consents to and waives notice of the following,
none of which shall affect, change or discharge the liability of Guarantor
hereunder: (a) any change in the terms of any agreement between NewCo and Payee;
and (b) the acceptance, alteration, release or substitution by
Payee of any security for the Obligations, whether provided by Guarantor or any
other person. The Guarantor shall remain liable hereunder notwithstanding the
NewCo's bankruptcy or any other occurrence, condition, circumstance or operation
of law that would prevent or prohibit the NewCo from meeting its obligations
under the Note.
3. Guarantor has not and will not set up or claim any defense,
counterclaim, set-off or other objection of any kind to the suit, action or
proceeding at law, in equity, or otherwise, or to any demand or claim that may
be instituted or made under and by virtue of the Guaranty, other than any
defense, counterclaim, set-off or other objection which would be available to
NewCo against Payee. All remedies of Payee by reason of or under the Guaranty
are separate and cumulative remedies, and it is agreed that no one of such
remedies shall be deemed in exclusion of any other remedies available to Payee.
4. This Guaranty may not be changed or terminated orally. No modification
or waiver of any provision of the Guaranty shall be effective unless such
modification or waiver shall be in writing and signed by Payee, and the same
shall then be effective only for the period and on the conditions and for the
specific instances and purposes specified in such writing. No course of dealing
between Guarantor and Payee in exercising any rights or remedies hereunder shall
operate as a waiver or preclude the exercise of any other rights or remedies
hereunder. This Guaranty expresses the complete, final and entire understanding
of the parties as to subject matter hereof.
5. This Guaranty shall be construed in accordance with, and governed by,
the laws of the Commonwealth of Virginia.
6. This Guaranty shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, executors, administrators, successors
and assigns.
7. The Guarantor shall pay any and all expenses incurred by the Payee in
enforcement of the Guaranty, including reasonable attorney's fees, accrued
interest and other sums due and payable under the Note and hereunder.
8. The Guarantor's obligations hereunder are secured pursuant to the terms
of a certain Stock Pledge and Security Agreement dated the date hereof among
Guarantor, as Pledgor, the Payee and certain other persons, as Pledgees, and
certain others.
9. The Guarantor hereby waives presentment, demand, protest, notice of
nonpayment and notice of dishonor except that any notice required to be given to
NewCo under the Note shall be
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given to Guarantor, in writing and deemed delivered as of the date delivered, if
delivered personally, or one (1) business day after having been deposited with a
courier, if sent by overnight courier, or after being sent by telecopy, if sent
by telecopy (receipt confirmed), or three (3) business days after having been
mailed, if mailed by registered or certified mail, postage prepaid, return
receipt requested, sent as follows:
RT Industries, Inc.
d/b/a US Automotive Manufacturing, Inc.
Attention: President
Xxxxx 000, Xxxxxxx Xxxxx
X.X. Xxx 0000
Xxxxxxxxxxxx, XX 00000
Telefax: 000-000-0000
- and -
each of the outside directors (and their duly appointed successors), as
follows:
Xxxxxx Xxxxxxx Xxxxx Xxxx
c/o Elmgrove Associates II, L.P. 00 Xxxxxxx Xxxx Xxxxxxx
000 Xxxxxxxxx Xxxxxxxx Xxxx, XX 00000
Xxxxxxxxx, XX 00000 Telecopier: (000)000-0000
Telecopier: (000)000-0000
with a copy to:
Frankfurt, Xxxxxx, Xxxxx & Xxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxxx, Esq.
Telefax: 212-593-9175
IN WITNESS WHEREOF, Guarantor has given and executed the Guaranty on the
date first above written.
RT INDUSTRIES, INC.
By: /s/ Xxxx X. Xxxxxx
-------------------------
Xxxx X. Xxxxxx, President
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