SUBSIDIARY GUARANTY
SUBSIDIARY GUARANTY, dated as of May 21, 1997 (as amended,
modified or supplemented from time to time, "this Guaranty"), made by each of
the undersigned (each, together with its successors and assigns, a "Guarantor"
and collectively, the "Guarantors"), with KEYBANK NATIONAL ASSOCIATION, a
national banking association, as Administrative Agent (herein, together with its
successors and assigns in such capacity, the "Administrative Agent") for itself
and the other Lenders (defined below), for the benefit of (i) the Administrative
Agent, (ii) the Lenders from time to time party to the Credit Agreement referred
to below, and (iii) the Hedge Creditors referred to below:
PRELIMINARY STATEMENTS:
(1) Except as otherwise defined herein, terms used herein and
defined in the Credit Agreement (as defined below) shall be used herein as
therein defined.
(2) This Guaranty is made pursuant to the Credit Agreement,
dated as of the date hereof (herein, as amended or otherwise modified from time
to time, the "Credit Agreement"), among Safety Components International, Inc., a
Delaware corporation (herein, together with its successors and assigns, the
"Company"), the other Borrowers named therein, the financial institutions named
as lenders therein, and the Administrative Agent, as agent for the Lenders (as
defined in the Credit Agreement), providing, among other things, for loans or
advances or other extensions of credit to or for the benefit of the Borrowers of
up to $27,000,000, with such loans or advances being evidenced by promissory
notes (the "Notes", such term to include all notes and other securities issued
in exchange therefor or in replacement thereof).
(3) The Company or any of its Subsidiaries may from time to
time be party to one or more Designated Hedged Agreements (as defined in the
Credit Agreement). Any institution that participates, and in each case their
subsequent assigns, as a counterparty to any Designated Hedge Agreement
(collectively, the "Hedge Creditors," and the Hedge Creditors together with the
Lenders, collectively the "Creditors"), shall benefit hereunder as herein
provided. This Guaranty is made for the pro rata benefit of the Administrative
Agent and the Creditors to guarantee the payment of the principal of and
interest on the Notes and the payment and performance by the Borrowers of their
obligations under the Credit Agreement, the other Credit Documents to which any
Borrower is a party, and the payment and performance by the Company or any of
its Subsidiaries of its obligations under Designated Hedge Agreements. This
Guaranty is one of the Credit Documents referred to in the Credit Agreement.
(4) Each Guarantor is a direct or indirect Subsidiary of the
Company.
(5) It is a condition to the making of Loans and the issuance
of and participation in, Letters of Credit under the Credit Agreement that each
Guarantor shall have executed and delivered this Guaranty.
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(6) Each Guarantor will obtain benefits from the incurrence of
Loans by, and the issuance of Letters of Credit for the account of, the Company
and the other Borrowers under the Credit Agreement and, accordingly, desires to
execute this Guaranty in order to satisfy the conditions described in the
preceding paragraph and to induce the Lenders to make Loans to, and to issue and
participate in Letters of Credit for the account of, the Borrowers or any of
their Subsidiaries.
NOW, THEREFORE, in consideration of the foregoing and other
benefits accruing to each Guarantor, the receipt and sufficiency of which are
hereby acknowledged, each Guarantor hereby makes the following representations
and warranties to the Administrative Agent and the Creditors and hereby
covenants and agrees with the Administrative Agent and each Creditor as follows:
1. Each Guarantor, jointly and severally, irrevocably and
unconditionally guarantees:
(i) to the Lenders the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of (x) the principal of and
interest on the Notes issued by, and the Loans made to, the Borrowers under the
Credit Agreement and all reimbursement obligations and Unpaid Drawings with
respect to Letters of Credit issued under the Credit Agreement and (y) all other
obligations (including obligations which, but for any automatic stay under
section 362(a) of the Bankruptcy Code, would become due) and liabilities owing
by the Borrowers to the Lenders under the Credit Agreement (including, without
limitation, indemnities, Fees and interest thereon) now existing or hereafter
incurred under, arising out of or in connection with the Credit Agreement or any
other Credit Document and the due performance and compliance with the terms of
the Credit Documents by the Borrowers (all such principal, interest, liabilities
and obligations being herein collectively called the "Credit Document
Obligations"); and
(ii) to each Hedge Creditor the full and prompt payment when due
(whether at the stated maturity, by acceleration or otherwise) of all
obligations (including obligations which, but for any automatic stay under
section 362(a) of the Bankruptcy Code, would become due) and liabilities owing
by the Company or any of its Subsidiaries under any Designated Hedge Agreement,
whether now in existence or hereafter arising, and the due performance and
compliance by the Company and any such Subsidiary with all terms, conditions and
agreements contained therein (all such obligations and liabilities, the "Hedge
Obligations", and the Hedge Obligations together with the Credit Document
Obligations, collectively the "Guaranteed Obligations").
Each Guarantor understands, agrees and confirms that the Creditors may enforce
this Guaranty up to the full amount of the Guaranteed Obligations against any
Guarantor without proceeding against any other Guarantor, any Borrower or other
person, against any security for the Guaranteed Obligations, or under any other
guaranty covering all or a portion of the Guaranteed Obligations. All payments
by each Guarantor under this Guaranty shall be made on the same basis as
payments by the Borrowers under sections 5.2 and 5.3 of the Credit Agreement.
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2. Additionally, each Guarantor, jointly and severally, unconditionally
and irrevocably, guarantees the payment of any and all Guaranteed Obligations to
the Creditors, whether or not due or payable by the obligor thereon, upon the
occurrence in respect of the Company or any other Borrower of any of the events
specified in section 10.1(g) of the Credit Agreement, and unconditionally and
irrevocably, jointly and severally, promises to pay such Guaranteed Obligations
to the Administrative Agent, for the benefit of the Administrative Agent and the
Creditors, on demand, in lawful money of the United States.
3. The liability of each Guarantor hereunder is exclusive and
independent of any security for or other guaranty of the indebtedness of any
Borrower whether executed by such Guarantor, any other Guarantor, any other
guarantor or by any other person, and the liability of each Guarantor hereunder
shall not be affected or impaired by (i) any direction as to application of
payment by any Borrower or by any other person, (ii) any other continuing or
other guaranty, undertaking or maximum liability of a guarantor or of any other
person as to the indebtedness of any Borrower, (iii) any payment on or in
reduction of any such other guaranty or undertaking, (iv) any dissolution,
termination or increase, decrease or change in personnel by any Borrower or (v)
any payment made to any Creditor on the indebtedness which any Creditor repays
to any Borrower pursuant to court order in any bankruptcy, reorganization,
arrangement, moratorium or other debtor relief proceeding, and each Guarantor
waives any right to the deferral or modification of its obligations hereunder by
reason of any such proceeding.
4. The obligations of each Guarantor hereunder are independent of the
obligations of any other Guarantor, any other guarantor or any Borrower, and a
separate action or actions may be brought and prosecuted against each Guarantor
whether or not action is brought against any other Guarantor, any other
guarantor or any Borrower and whether or not any other Guarantor, any other
guarantor of any Borrower or any Borrower be joined in any such action or
actions.
5. Each Guarantor hereby waives notice of acceptance of this Guaranty
and notice of any liability to which it may apply, and waives promptness,
diligence, presentment, demand of payment, protest, notice of dishonor or
nonpayment of any such liabilities, suit or taking of other action by the
Administrative Agent or any other Creditor against, and any other notice to, any
party liable thereon (including such Guarantor or any other guarantor of any
Borrower).
6. Any Creditor may at any time and from time to time without the
consent of or notice to, any Guarantor, without incurring responsibility to such
Guarantor, without impairing or releasing the obligations of such Guarantor
hereunder upon or without any terms or conditions and in whole or in part ( but,
in each case, in accordance with the Credit Agreement or the Designated Hedge
Agreement, as the case may be):
(i) change the manner, place or terms of payment of, and/or
change or extend the time of payment of, renew or alter, any of the
Guaranteed Obligations, any security therefor, or any liability
incurred directly or indirectly in respect thereof, and the guaranty
herein made shall apply to the Guaranteed Obligations as so changed,
extended, renewed or altered;
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(ii) sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by
whomsoever at any time pledged or mortgaged to secure, or howsoever
securing, the Guaranteed Obligations or any liabilities (including any
of those hereunder) incurred directly or indirectly in respect thereof
or hereof, and/or any offset thereagainst;
(iii) exercise or refrain from exercising any rights against
any Borrower or others or otherwise act or refrain from acting;
(iv) settle or compromise any of the Guaranteed Obligations,
any security therefor or any liability (including any of those
hereunder) incurred directly or indirectly in respect thereof or
hereof, and may subordinate the payment of all or any part thereof to
the payment of any liability (whether due or not) of any Borrower to
creditors of such Borrower;
(v) apply any sums by whomsoever paid or whomsoever realized
to any liability or liabilities of any Borrower to the Creditors
regardless of what liabilities of such Borrower remain unpaid;
(vi) consent to or waive any breach of, or any act, omission
or default under, any of the Credit Documents or any of the instruments
or agreements referred to therein, or otherwise amend, modify or
supplement any of the Credit Documents or any of such other instruments
or agreements; and/or
(vii) act or fail to act in any manner referred to in this
Guaranty which may deprive such Guarantor of its right to subrogation
against any Borrower to recover full indemnity for any payments made
pursuant to this Guaranty.
7. No invalidity, irregularity or unenforceability of all or any part
of the Guaranteed Obligations or of any security therefor shall affect, impair
or be a defense to this Guaranty, and this Guaranty shall be primary, absolute
and unconditional notwithstanding the occurrence of any event or the existence
of any other circumstances which might constitute a legal or equitable discharge
of a surety or guarantor except payment in full of the Guaranteed Obligations.
8. This Guaranty is a continuing one and all liabilities to which it
applies or may apply under the terms hereof shall be conclusively presumed to
have been created in reliance hereon. No failure or delay on the part of the
Administrative Agent or any Creditor in exercising any right, power or privilege
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein expressly specified are cumulative and not
exclusive of any rights or remedies which any Creditor would otherwise have. No
notice to or demand on any Guarantor in any case shall entitle such Guarantor to
any other further notice or demand in similar or other circumstances or
constitute a waiver of the rights of any Creditor to any other or further action
in any circumstances without notice or demand. It is not necessary for the
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Administrative Agent or any Creditor to inquire into the capacity or powers of
the Company or any of its Subsidiaries or the officers, directors, partners or
agents acting or purporting to act on its behalf, and any indebtedness made or
created in reliance upon the professed exercise of such powers shall be
guaranteed hereunder.
9. Any Indebtedness of any Borrower now or hereafter held by any
Guarantor is hereby subordinated to the Indebtedness of such Borrower to the
Creditors; and such indebtedness of such Borrower to any Guarantor, if the
Administrative Agent, after an Event of Default has occurred so requests, shall
be collected, enforced and received by such Guarantor as trustee for the
Creditors and be paid over to the Administative Agent, for the benefit of the
Creditors, on account of the Indebtedness of such Borrower to the Creditors, but
without affecting or impairing in any manner the liability of such Guarantor
under the other provisions of this Indebtedness of any Borrower to such
Guarantor, such Guarantor shall xxxx such note or negotiable instrument with a
legend that the same is subject to this subordination.
10. (a) Each Guarantor waives any right (except as shall be required by
applicable statute and cannot be waived) to require the Administrative Agent or
any of the Creditors to:(i) proceed against any Borrower, any other Guarantor,
any other guarantor of any Borrower or any other party; (ii) proceed against or
exhaust any security held from any Borrower, any other Guarantor any other
guarantor of any Borrower or any other party; or (iii) pursue any other remedy
in the Administrative Agent's or the Creditors' power whatsoever. Each Guarantor
waives, to the extent permitted by applicable law, any defense based on or
arising out of any defense of any Borrower, any other Guarantor, any other
guarantor of any Borrower or any other party other than payment in respect of
the Guaranteed Obligations or that the Guaranteed Obligations are not yet due
and payable, including, without limitation, any defense based on or arising out
of the disability of any Borrower, any other Guarantor, any other guarantor of
any Borrower or any other person, or the unenforceability of the Guaranteed
Obligations or any part thereof from any cause, or the cessation from any cause
of the liability of any Borrower other than payment in respect of the Guaranteed
Obligations. The Creditors may, at their election, foreclose on any security
held by the Administrative Agent, the Collateral Agent or the other Creditors by
one or more judicial or nonjudicial sales, whether or not every aspect of any
such sale is commercially reasonable (to the extent such sale is permitted by
applicable law), or exercise any other right or remedy the Administrative Agent
or the Creditors may have against any Borrower or any other party, or any
security, without affecting or impairing in any way the liability of any
Guarantor hereunder except to the extent the Guaranteed Obligations have been
paid.
(b) Each Guarantor waives, to the extent permitted by applicable law,
all presentments, demands for performance, protests and notices, including,
without limitation, notices of nonperformance, notices of protest, notices of
dishonor, notices of acceptance of this Guaranty, and notices of the existence,
creation or incurring of new or additional indebtedness. Each Guarantor assumes
all responsibility for being and keeping itself informed of each Borrower's
financial condition and assets, and of all other circumstances bearing upon the
risk of nonpayment of the Guaranteed Obligations and the nature, scope and
extent of the risks which such Guarantor assumes and incurs
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hereunder, and agrees that the Administrative Agent and the Creditors shall have
no duty to advise any Gurantor of information known to them regarding such
circumstances or risks.
(c) Until such time as the Guaranteed Obligations have been paid in
full in cash or Cash Equivalents, each Guarantor hereby waives all rights of
subrogation which it may at any time otherwise have as a result of this Guaranty
(whether contractual, under section 509 of the Bankruptcy Code, or otherwise) to
the claims of the Creditors against any Borrower, any other Guarantor or any
other guarantor of the Guaranteed Obligations and all contractual, statutory or
common law rights of reimbursement, contribution or indemnity from any Borrower
or any other Guarantor which it may at any time otherwise have as a result of
this Guaranty.
11. If and to the extent that any Guarantor makes any payment to any
Creditor or to any other person pursuant to or in respect of this Guaranty, any
claim which such Guarantor may have against any Borrower by reason thereof shall
be subject and subordinate to the prior payment in full of the Guaranteed
Obligations to each Creditor.
12. Each Guarantor covenants and agrees that on and after the date
hereof and until the termination of the Total Commitment and when no Letter of
Credit or Note remains outstanding and all Guaranteed Obligations have been paid
in full, such Guarantor shall take, or will refrain from taking, as the case may
be, all actions that are necessary to be taken or not taken so that no violation
of any provision, covenant or agreement contained in section 8 or 9 of the
Credit Agreement, and so that no Default or Event of Default, is caused by the
actions of such Guarantor or any of its Subsidiaries.
13. The Guarantors hereby jointly and severally agree to pay, to the
extent not paid pursuant to section 13.1 of the Credit Agreement, all reasonable
out-of-pocket costs and expenses of each Creditor in connection with the
enforcement of this Guaranty and any amendment, waiver or consent relating
hereto (including, without limitation, the reasonable fees and disbursements of
counsel employed by the Administative Agent or any of the Creditors).
14. This Guaranty shall be binding upon each Guarantor and its
successors and assigns, and shall inure to the benefit of the Administrative
Agent and the Creditors and their successors and assigns to the extent permitted
under the Credit Agreement (or any Designated Hedge Agreement, in the case of an
Hedge Creditor).
15. Neither this Guaranty nor any provision hereof may be changed,
waived, discharged or terminated except with the written consent of the Required
Lenders (or to the extent required by section 13.12 of the Credit Agreement,
with the written consent of each Lender) and each Guarantor affected thereby (it
being understood that the addition or release of any Guarantor hereunder shall
not constitute a change, waiver, discharge or termination affecting any
Guarantor other than the Guarantor so added or released).
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16. Each Guarantor acknowledges that an executed (or conformed) copy of
each of the Credit Documents has been made available to its principal executive
officers and such officers are familiar with the contents thereof.
17. In addition to any rights now or hereafter granted under applicable
law and not by way of limitation of any such rights, upon the occurrence and
during the continuance of an Event of Default (such term to mean any "Event of
Default" as defined in the Credit Agreement or any payment default under any
Designated Hedge Agreement after any applicable grace period), each Creditor is
hereby authorized at any time or from time to time, without notice to such
Guarantor or to any other person, any such notice being expressly waived, to set
off and to appropriate and apply any and all deposits (general or special) and
any other indebtedness at any time held or owing by such Creditor to or for the
credit or the account of such Guarantor, against and on account of the
obligations and liabilities of such Guarantor to such Creditor under this
Guaranty, irrespective of whether or not such Creditor shall have made any
demand hereunder and although said obligations, liabilities, deposits or claims,
or any of them, shall be contingent or unmatured. Each Creditor agrees to
promptly notify the relevant Guarantor after any such set off and application,
provided, however that the failure to give such notice shall not affect the
validity of such set off and application.
18. All notices requests, demands or other communications pursuant
hereto shall be made in writing (including telegraphic, telex, facsimile
transmission or cable communication) and mailed, telegraphed, telexed,
transmitted, cabled or delivered, if to any Guarantor, at the address specified
for it in Schedule I hereto; if to the Administrative Agent or any Lender, as
provided in the Credit Agreement; if to any Hedge Creditor, as provided in the
Designated Hedge Agreement to which it is a party; or in any case at such other
address as any of the persons listed above may hereafter notify the others in
writing. All such notices and communication shall be mailed, telegraphed,
telexed, facsimile transmitted, or cabled or sent by overnight courier, and
shall be effective when received.
19. If claim is ever made upon any Creditor for repayment or recovery
of any amount or amounts received in payment or on account of any of the
Guaranteed Obligations and any of the aforesaid payees repays all or part of
said amount by reason of (i) any judgment, decree or order of any court or
administrative body having jurisdiction over such payee or any of its property
or (ii) any settlement or compromise of any such claim effected by such payee
with any such claimant (including any Borrower), then and in such event each
Guarantor agrees that any such judgment, decree, order, settlement or compromise
shall be binding upon such Guarantor, notwithstanding any revocation hereof or
other instrument evidencing any liability of any Borrower, and such Guarantor
shall be and remain liable to the aforesaid payees hereunder for the amount so
repaid or recovered to the same extent as if such amount had never originally
been received by any such payee.
20. (a) THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE CREDITORS
AND OF THE UNDERSIGNED HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. Any legal action or proceeding
with respect to this Guaranty may be brought in the Courts of the State of New
York, or of the United States of America for the Xxxxxxxx Xxxxxxxx xx Xxx Xxxx,
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and, by execution and delivery of this Guaranty, each Guarantor hereby
irrevocably accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Each Guarantor hereby
irrevocably consents to the service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
registered mail, return receipt requested, to each Guarantor at its address set
forth opposite its signature below, such service to become effective 30 days
after such mailing, or such earlier time as may be provided by applicable law.
Nothing herein shall affect the right of the Administrative Agent or any of the
Creditors to serve process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against each Guarantor in any other
jurisdiction.
(b) Each Guarantor hereby irrevocably waives any objection which it may
now or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Guaranty or any other
Credit Document brought in the courts referred to in section 20(a) above and
hereby further irrevocably waives and agrees not to plead or claim in any such
court that such action or proceeding brought in any such court has been brought
in an inconvenient forum.
(c) Each Guarantor, the Administrative Agent and each Creditor hereby
irreovably waives all rights to a trial by jury in any action, proceeding or
counterclaim arising out of or relating to this Guaranty, the other Credit
Documents or the transactions contemplated hereby or thereby.
21. In the event that all of the capital stock of one or more Gurantors
is sold or otherwise disposed of or liquidated in compliance with the
requirements of section 9.2 of the Credit Agreement (or such sale or other
disposition has been approved in writing by the Required Lenders (or all Lenders
if required by section 13.12 of the Credit Agreement)) and the proceeds of such
sale, disposition or liquidation are applied, to the extent applicable, in
accordance with the provisions of the Credit Agreement, such Gurarantor shall be
released from this Guaranty and this Guaranty shall, as to each such Guarantor
or Guarantors, terminate, and have to further force or effect (it being
understood and agreed that the sale of one or more persons that own, directly or
indirectly, all of the capital stock or other equity interests of any Gurantor
shall be deemed to be a sale of such Guarantor for the purposes of this section
21).
22. Each Guarantor, in addition to the subrogation rights it shall have
against any Borrower under applicable law as a result of any payment it makes
hereunder, shall also have a right of contribution against all other Guarantors
in respect of any such payment pro rata among same based on their respective net
fair value as enterprises, provided any such right of contribution shall be
subject and subordinate to the prior payment in full of the Guaranteed
Obligations (and such Guarantor's obligations in respect thereof). It is the
desire and intent of each Guarantor and the Creditors that this Guaranty shall
be enforced to the fullest extent permissible under the laws and public policies
applied in each jurisdiction in which enforcement is sought. If and to the
extent that the obligations of any Guarantor under this Guaranty would, in the
absence of this sentence, be adjudicated to be invalid or unenforceable because
of any applicable state or federal law relating to fraudulent conveyances or
transfers, then the amount of such Guarantor's liability hereunder in respect
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of the Guaranteed Obligations shall be deemed to be reduced ab initio to that
maximum amount which would be permitted without causing such Guarantor's
obligations hereunder to be so invalidated.
23. The Creditors agree that this Guaranty may be enforced only by the
action of the Administrative Agent, acting upon the instructions of the Required
Lenders, and that no Creditor shall have any right individually to seek to
enforce or to enforce this Guaranty or to realize upon the security to be
granted by the Security Documents, it being understood and agreed that such
rights and remedies may be exercised by the Administrative Agent or the
Collateral Agent for the benefit of the Creditors upon the terms of this
Guaranty and the Security Documents. The Creditors further agree that this
Guaranty may not be enforced against any director, officer or employee of any
Guarantor.
24. This Guaranty may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument. A set of counterparts executed by all
the parties hereto shall be lodged with the Company and the Administative Agent.
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IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be
executed and delivered as of the date first above written.
AUTOMOTIVE SAFETY COMPONENTS,
INTERNATIONAL, INC.
By:
------------------------------
Executive Vice President
ASCI HOLDINGS GERMANY (DE), INC.
By:
------------------------------
Executive Vice President
ASCI HOLDINGS CZECH (DE), INC.
By:
------------------------------
Executive Vice President
ASCI HOLDINGS MEXICO (DE), INC.
By:
------------------------------
Executive Vice President
ASCI HOLDINGS U.K. (DE), INC.
By:
------------------------------
Executive Vice President
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ASCI HOLDINGS ASIA (DE), INC.
By:
------------------------------
Executive Vice President
VALENTEC SYSTEMS, INC.
By:
------------------------------
Executive Vice President
GALION, INC.
By:
------------------------------
Executive Vice President
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