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EXHIBIT 4.10
MATERIAL SUBSIDIARY GUARANTY
This Material Subsidiary Guaranty is entered into as of November 26,
1997 by BW/IP INTERNATIONAL, INC., a Delaware corporation ("Subsidiary
Guarantor"), in favor of and for the benefit of Bank of America National Trust
and Savings Association, as agent for and representative of (in such capacity
herein called "Agent") itself, the Banks and the Issuing Bank (as each such term
is defined in the Credit Agreement referenced below).
RECITALS
A. Flowserve Corporation, a New York corporation (the "Borrower") is
entering into that certain Credit Agreement dated as of November 26, 1997 among,
Borrower, the banks from time to time party thereto, and Bank of America
National Trust and Savings Association, as Agent and Issuing Bank (said Credit
Agreement, as it may hereafter be amended, supplemented, restated or otherwise
modified from time to time, being the "Credit Agreement"; capitalized terms
defined therein and not otherwise defined herein being used herein as therein
defined).
B. A portion of the proceeds of the Loans may be loaned to Subsidiary
Guarantor and Letters of Credit may be issued for the benefit of Subsidiary
Guarantor and thus the Guarantied Obligations (as hereinafter defined) are being
incurred for and will inure to the benefit of Subsidiary Guarantor (which
benefits are hereby acknowledged).
C. It is a condition precedent to the making of the Loans and issuance
of Letters of Credit that Borrower's obligations under the Credit Agreement be
guarantied by Subsidiary Guarantor.
D. Subsidiary Guarantor is willing irrevocably and unconditionally to
guaranty such obligations of Borrower.
NOW, THEREFORE, based upon the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
in order to induce Banks, the Issuing Bank and Agent to make the Loans and issue
Letters of Credit, Subsidiary Guarantor hereby agrees as follows:
SECTION 1. DEFINITIONS
1.1 Certain Defined Terms. As used in this Subsidiary Guaranty, the
following terms shall have the following meanings unless the context otherwise
requires:
"Guarantied Obligations" has the meaning assigned to that term in
Section 2.1.
"Payment in full", "paid in full" or any similar term means payment in
full of the Guarantied Obligations including, without limitation, all principal,
interest, costs, fees and expenses (including, without limitation, legal fees
and expenses) of Banks and Agent as required under the Loan Documents.
"Subsidiary Guaranty" means this Subsidiary Guaranty.
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1.2 Interpretation.
(a) References to "Sections" shall be to Sections of this Subsidiary
Guaranty unless otherwise specifically provided. All accounting terms not
otherwise defined herein shall have the meanings assigned to them under
generally accepted accounting principles.
(b) In the event of any conflict or inconsistency between the terms,
conditions and provisions of this Subsidiary Guaranty and the terms, conditions
and provisions of the Credit Agreement, the terms, conditions and provisions of
this Subsidiary Guaranty shall prevail.
SECTION 2. THE GUARANTY
2.1 Guaranty of the Guarantied Obligations. Subsidiary Guarantor hereby
irrevocably and unconditionally guaranties, as primary obligor and not merely as
surety, the due and punctual payment in full of all Guarantied Obligations when
the same shall become due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise (including amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. ss. 362(a)). The term "Guarantied Obligations" is
used herein in its most comprehensive sense and includes:
(a) any and all Obligations of Borrower now or hereafter made, incurred
or created, whether absolute or contingent, liquidated or unliquidated, whether
due or not due, and however arising under or in connection with the Credit
Agreement and the other Loan Documents, including those arising under successive
borrowing transactions under the Credit Agreement which shall either continue
the Obligations of Borrower or from time to time renew them after they have been
satisfied; and
(b) those expenses set forth in Section 2.9 hereof.
2.2 Limitation on Amount Guarantied; Contribution by Subsidiary
Guarantor.
(a) Anything contained in this Subsidiary Guaranty to the contrary
notwithstanding, if any Fraudulent Transfer Law (as hereinafter defined) is
determined by a court of competent jurisdiction to be applicable to the
obligations of Subsidiary Guarantor under this Subsidiary Guaranty, such
obligations of Subsidiary Guarantor hereunder shall be limited to a maximum
aggregate amount equal to the largest amount that would not render its
obligations hereunder subject to avoidance as a fraudulent transfer or
conveyance under Section 548 of Title 11 of the United States Code or any
applicable provisions of comparable state law (collectively, the "Fraudulent
Transfer Laws"), in each case after giving effect to all other liabilities of
Subsidiary Guarantor, contingent or otherwise, that are relevant under the
Fraudulent Transfer Laws (specifically excluding, however, any liabilities of
Subsidiary Guarantor (x) in respect of intercompany indebtedness to Borrower or
other affiliates of Borrower to the extent that such indebtedness would be
discharged in an amount equal to the amount paid by Subsidiary Guarantor
hereunder and (y) under any guaranty of Subordinated Indebtedness which guaranty
contains a limitation as to maximum amount similar to that set forth in this
Section 2.2(a), pursuant to which the liability of Subsidiary Guarantor
hereunder is included in the liabilities taken into account in determining such
maximum amount) and after giving effect as assets to the value (as determined
under the applicable provisions of the Fraudulent Transfer Laws) of any
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rights to subrogation, reimbursement, indemnification or contribution of
Subsidiary Guarantor pursuant to applicable law or pursuant to the terms of any
agreement (including without limitation any such right of contribution under a
Related Guaranty (as hereinafter defined) as contemplated by Section 2.2(b)).
(b) Subsidiary Guarantor under this Subsidiary Guaranty, and each
guarantor under other guaranties, if any, relating to the Credit Agreement (the
"Related Guaranties") which contain a contribution provision similar to that set
forth in this Section 2.2(b), together desire to allocate among themselves
(collectively, the "Contributing Guarantors"), in a fair and equitable manner,
their obligations arising under this Subsidiary Guaranty and the Related
Guaranties. Accordingly, in the event any payment or distribution is made on any
date by Subsidiary Guarantor under this Subsidiary Guaranty or a guarantor under
a Related Guaranty (a "Funding Guarantor") that exceeds its Fair Share (as
defined below) as of such date, that Funding Guarantor shall be entitled to a
contribution from each of the other Contributing Guarantors in the amount of
such other Contributing Guarantor's Fair Share Shortfall (as defined below) as
of such date, with the result that all such contributions will cause each
Contributing Guarantor's Aggregate Payments (as defined below) to equal its Fair
Share as of such date. "Fair Share" means, with respect to a Contributing
Guarantor as of any date of determination, an amount equal to (i) the ratio of
(x) the Adjusted Maximum Amount (as defined below) with respect to such
Contributing Guarantor to (y) the aggregate of the Adjusted Maximum Amounts with
respect to all Contributing Guarantors, multiplied by (ii) the aggregate amount
paid or distributed on or before such date by all Funding Guarantors under this
Subsidiary Guaranty and the Related Guaranties in respect of the obligations
guarantied. "Fair Share Shortfall" means, with respect to a Contributing
Guarantor as of any date of determination, the excess, if any, of the Fair Share
of such Contributing Guarantor over the Aggregate Payments of such Contributing
Guarantor. "Adjusted Maximum Amount" means, with respect to a Contributing
Guarantor as of any date of determination, the maximum aggregate amount of the
obligations of such Contributing Guarantor under this Subsidiary Guaranty and
the Related Guaranties, determined as of such date in accordance with Section
2.2(a) or, if applicable, a similar provision contained in a Related Guaranty;
provided that, solely for purposes of calculating the "Adjusted Maximum Amount"
with respect to any Contributing Guarantor for purposes of this Section 2.2(b),
any assets or liabilities of such Contributing Guarantor arising by virtue of
any rights to subrogation, reimbursement or indemnification or any rights to or
obligations of contribution hereunder or under any similar provision contained
in a Related Guaranty shall not be considered as assets or liabilities of such
Contributing Guarantor. "Aggregate Payments" means, with respect to a
Contributing Guarantor as of any date of determination, an amount equal to (i)
the aggregate amount of all payments and distributions made on or before such
date by such Contributing Guarantor in respect of this Subsidiary Guaranty and
the Related Guaranties (including, without limitation, in respect of this
Section 2.2(b) or any similar provision contained in a Related Guaranty) minus
(ii) the aggregate amount of all payments received on or before such date by
such Contributing Guarantor from the other Contributing Guarantors as
contributions under this Section 2.2(b) or any similar provision contained in a
Related Guaranty. The amounts payable as contributions hereunder and under
similar provisions in the Related Guaranties shall be determined as of the date
on which the related payment or distribution is made by the applicable Funding
Guarantor. The allocation among Contributing Guarantors of their obligations as
set forth in this Section 2.2(b) or any similar provision contained in a Related
Guaranty shall not be construed in any way to limit the liability of any
Contributing Guarantor hereunder or under a
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Related Guaranty. Each Contributing Guarantor under a Related Guaranty is a
third party beneficiary to the contribution agreement set forth in this Section
2.2(b).
2.3 Liability of Subsidiary Guarantor. Subsidiary Guarantor agrees that
its obligations hereunder are irrevocable, absolute, independent and
unconditional and shall not be affected by any circumstance which constitutes a
legal or equitable discharge of a guarantor or surety other than indefeasible
payment in full of the Guarantied Obligations, the termination of the
Commitments, and the expiration or cancellation of all Letters of Credit. In
furtherance of the foregoing and without limiting the generality thereof,
Subsidiary Guarantor agrees as follows:
(a) This Subsidiary Guaranty is a guaranty of payment when due and
not of collectibility.
(b) Agent may enforce this Subsidiary Guaranty upon the occurrence of
an Event of Default under the Credit Agreement notwithstanding the existence of
any dispute between Banks and Borrower with respect to the existence of such
Event of Default.
(c) The obligations of Subsidiary Guarantor hereunder are independent
of the obligations of Borrower under the Loan Documents and the obligations of
any other guarantor of the obligations of Borrower under the Loan Documents, and
a separate action or actions may be brought and prosecuted against Subsidiary
Guarantor whether or not any action is brought against Borrower or any of such
other guarantors and whether or not Borrower is joined in any such action or
actions.
(d) Subsidiary Guarantor's payment of a portion, but not all, of the
Guarantied Obligations shall in no way limit, affect, modify or abridge
Subsidiary Guarantor's liability for any portion of the Guarantied Obligations
which has not been paid. Without limiting the generality of the foregoing, if
Agent is awarded a judgment in any suit brought to enforce Subsidiary
Guarantor's covenant to pay a portion of the Guarantied Obligations, such
judgment shall not be deemed to release Subsidiary Guarantor from its covenant
to pay the portion of the Guarantied Obligations that is not the subject of such
suit.
(e) Agent or any Bank, upon such terms as it deems appropriate,
without notice or demand and without affecting the validity or enforceability of
this Subsidiary Guaranty or giving rise to any reduction, limitation,
impairment, discharge or termination of Subsidiary Guarantor's liability
hereunder, from time to time may (i) renew, extend, accelerate, increase the
rate of interest on, or otherwise change the time, place, manner or terms of
payment of the Guarantied Obligations, (ii) settle, compromise, release or
discharge, or accept or refuse any offer of performance with respect to, or
substitutions for, the Guarantied Obligations or any agreement relating thereto
and/or subordinate the payment of the same to the payment of any other
obligations; (iii) request and accept other guaranties of the Guarantied
Obligations and take and hold security for the payment of this Subsidiary
Guaranty or the Guarantied Obligations; (iv) release, surrender, exchange,
substitute, compromise, settle, rescind, waive, alter, subordinate or modify,
with or without consideration, any security for payment of the Guarantied
Obligations, any other guaranties of the Guarantied Obligations, or any other
obligation of any Person with respect to the Guarantied Obligations; (v) enforce
and apply any security now or
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hereafter held by or for the benefit of Agent or any Bank in respect of this
Subsidiary Guaranty or the Guarantied Obligations and direct the order or manner
of sale thereof, or exercise any other right or remedy that Agent or Banks, or
any of them, may have against any such security, as Agent in its discretion may
determine consistent with the Credit Agreement and any applicable security
agreement, including foreclosure on any such security pursuant to one or more
judicial or nonjudicial sales, whether or not every aspect of any such sale is
commercially reasonable, and even though such action operates to impair or
extinguish any right of reimbursement or subrogation or other right or remedy of
Subsidiary Guarantor against Borrower or any security for the Guarantied
Obligations; and (vi) exercise any other rights available to it under the Loan
Documents.
(f) This Subsidiary Guaranty and the obligations of Subsidiary
Guarantor hereunder shall be valid and enforceable and shall not be subject to
any reduction, limitation, impairment, discharge or termination for any reason
(other than indefeasible payment in full of the Guarantied Obligations, the
termination of the Commitments, and the expiration or cancellation of all
Letters of Credit), including without limitation the occurrence of any of the
following, whether or not Subsidiary Guarantor shall have had notice or
knowledge of any of them: (i) any failure or omission to assert or enforce or
agreement or election not to assert or enforce, or the stay or enjoining, by
order of court, by operation of law or otherwise, of the exercise or enforcement
of, any claim or demand or any right, power or remedy (whether arising under the
Loan Documents, at law, in equity or otherwise) with respect to the Guarantied
Obligations or any agreement relating thereto, or with respect to any other
guaranty of or security for the payment of the Guarantied Obligations; (ii) any
rescission, waiver, amendment or modification of, or any consent to departure
from, any of the terms or provisions (including without limitation provisions
relating to events of default) of the Credit Agreement, any of the other Loan
Documents or any agreement or instrument executed pursuant thereto, or of any
other guaranty or security for the Guarantied Obligations, in each case whether
or not in accordance with the terms of the Credit Agreement or such Loan
Document or any agreement relating to such other guaranty or security; (iii) the
Guarantied Obligations, or any agreement relating thereto, at any time being
found to be illegal, invalid or unenforceable in any respect; (iv) the
application of payments received from any source (other than payments received
pursuant to the other Loan Documents or from the proceeds of any security for
the Guarantied Obligations, except to the extent such security also serves as
collateral for indebtedness other than the Guarantied Obligations) to the
payment of indebtedness other than the Guarantied Obligations, even though Agent
or Banks, or any of them, might have elected to apply such payment to any part
or all of the Guarantied Obligations; (v) any Bank's or Agent's consent to the
change, reorganization or termination of the corporate structure or existence of
Borrower or any of its Subsidiaries and to any corresponding restructuring of
the Guarantied Obligations; (vi) any failure to perfect or continue perfection
of a security interest in any collateral which secures any of the Guarantied
Obligations; (vii) any defenses, set-offs or counterclaims which Borrower may
allege or assert against Agent or any Bank in respect of the Guarantied
Obligations, including but not limited to failure of consideration, breach of
warranty, payment, statute of frauds, statute of limitations, accord and
satisfaction and usury; and (viii) any other act or thing or omission, or delay
to do any other act or thing, which may or might in any manner or to any extent
vary the risk of Subsidiary Guarantor as an obligor in respect of the Guarantied
Obligations.
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2.4 Waivers by Subsidiary Guarantor. Subsidiary Guarantor hereby
waives, for the benefit of Banks and Agent:
(a) any right to require Agent or Banks, as a condition of payment or
performance by Subsidiary Guarantor, to (i) proceed against Borrower, any other
guarantor of the Guarantied Obligations or any other Person, (ii) proceed
against or exhaust any security held from Borrower, any other guarantor of the
Guarantied Obligations or any other Person, (iii) proceed against or have resort
to any balance of any deposit account or credit on the books of Agent or any
Bank in favor of Borrower or any other Person, or (iv) pursue any other remedy
in the power of Agent or any Bank whatsoever;
(b) any defense arising by reason of the incapacity, lack of authority
or any disability or other defense of Borrower including, without limitation,
any defense based on or arising out of the lack of validity or the
unenforceability of the Guarantied Obligations or any agreement or instrument
relating thereto or by reason of the cessation of the liability of Borrower from
any cause other than indefeasible payment in full of the Guarantied Obligations,
the termination of the Commitments, and the expiration or cancellation of all
Letters of Credit;
(c) any defense based upon any statute or rule of law which provides
that the obligation of a surety must be neither larger in amount nor in other
respects more burdensome than that of the principal;
(d) any defense based upon Agent's or any Bank's errors or omissions in
the administration of the Guarantied Obligations, except behavior which amounts
to bad faith;
(e) (i) any principles or provisions of law, statutory or otherwise,
which are or might be in conflict with the terms of this Subsidiary Guaranty and
any legal or equitable discharge of Subsidiary Guarantor's obligations
hereunder, (ii) the benefit of any statute of limitations affecting Subsidiary
Guarantor's liability hereunder or the enforcement hereof, (iii) any rights to
set-offs, recoupments and counterclaims, and (iv) promptness, diligence and any
requirement that Agent or any Bank protect, secure, perfect or insure any
security interest or lien or any property subject thereto;
(f) notices, demands, presentments, protests, notices of protest,
notices of dishonor and notices of any action or inaction, including acceptance
of this Subsidiary Guaranty, notices of default under the Credit Agreement or
any agreement or instrument related thereto, notices of any renewal, extension
or modification of the Guarantied Obligations or any agreement related thereto,
notices of any extension of credit to Borrower and notices of any of the matters
referred to in Section 2.3 and any right to consent to any thereof; and
(g) any defenses or benefits that may be derived from or afforded by
law which limit the liability of or exonerate guarantors or sureties, or which
may conflict with the terms of this Subsidiary Guaranty.
2.5 Payment by Subsidiary Guarantor; Application of Payments.
Subsidiary Guarantor hereby agrees, in furtherance of the foregoing and not in
limitation of any other right which Agent or any other Person may have at law or
in equity against Subsidiary Guarantor by virtue hereof, upon the failure of
Borrower to pay any of the Guarantied Obligations when and as
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the same shall become due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise (including amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. ss. 362(a)), Subsidiary Guarantor will forthwith
pay, or cause to be paid, in cash, to Agent for the ratable benefit of Banks, an
amount equal to the sum of the unpaid principal amount of all Guarantied
Obligations then due as aforesaid, accrued and unpaid interest on such
Guarantied Obligations (including, without limitation, interest which, but for
the filing of a petition in bankruptcy with respect to Borrower, would have
accrued on such Guarantied Obligations, whether or not a claim is allowed
against Borrower for such interest in any such bankruptcy proceeding) and all
other Guarantied Obligations then owed to Agent and/or Banks as aforesaid. All
such payments shall be applied promptly from time to time by Agent:
First, to the payment of the costs and expenses of any collection or
other realization under this Subsidiary Guaranty, including reasonable
compensation to Agent and its agents and counsel, and all expenses, liabilities
and Loans made or incurred by Agent in connection therewith;
Second, to the payment of all other Guarantied Obligations; and
Third, after payment in full of all Guarantied Obligations, to the
payment to Subsidiary Guarantor, or its successors or assigns, or to whomsoever
may be lawfully entitled to receive the same or as a court of competent
jurisdiction may direct, of any surplus then remaining from such payments.
2.6 Subrogation. Until the Guarantied Obligations shall have been
indefeasibly paid in full and the Commitments shall have terminated and all
Letters of Credit shall have expired or been cancelled or cash collateralized
pursuant to the terms of the Credit Agreement, Subsidiary Guarantor shall
withhold exercise of (a) any right of subrogation, (b) any right of contribution
Subsidiary Guarantor may have against any other guarantor of the Guarantied
Obligations, (c) any right to enforce any remedy which Agent or any Bank now has
or may hereafter have against Borrower or (d) any benefit of, and any right to
participate in, any security now or hereafter held by Agent or any Bank.
Subsidiary Guarantor further agrees that, to the extent the waiver of its rights
of subrogation and contribution as set forth herein is found by a court of
competent jurisdiction to be void or voidable for any reason, any rights of
subrogation Subsidiary Guarantor may have against Borrower or against any
collateral or security, and any rights of contribution Subsidiary Guarantor may
have against any other guarantor, shall be junior and subordinate to any rights
Agent or Banks may have against Borrower, to all right, title and interest Agent
or Banks may have in any such collateral or security, and to any right Agent or
Banks may have against such other guarantor. Agent, on behalf of Banks, may use,
sell or dispose of any item of collateral or security as it sees fit without
regard to any subrogation rights Subsidiary Guarantor may have, and upon any
such disposition or sale any rights of subrogation Subsidiary Guarantor may have
shall terminate. If any amount shall be paid to Subsidiary Guarantor on account
of such subrogation rights at any time when all Guarantied Obligations shall not
have been paid in full, such amount shall be held in trust for Agent on behalf
of Banks and shall forthwith be paid over to Agent for the benefit of Banks to
be credited and applied against the Guarantied Obligations, whether matured or
unmatured, in accordance with the terms of the Credit Agreement or any
applicable security agreement.
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2.7 Subordination of Other Obligations. Any indebtedness of Borrower
now or hereafter held by Subsidiary Guarantor is hereby subordinated in right of
payment to the Guarantied Obligations, and any such indebtedness of Borrower to
Subsidiary Guarantor collected or received by Subsidiary Guarantor after an
Event of Default has occurred and is continuing shall be held in trust for Agent
on behalf of Banks and shall forthwith be paid over to Agent for the benefit of
Banks to be credited and applied against the Guarantied Obligations but without
affecting, impairing or limiting in any manner the liability of Subsidiary
Guarantor under any other provision of this Subsidiary Guaranty.
2.8 Real Property Security. Subsidiary Guarantor agrees that, if all or
a portion of the Guarantied Obligations are at any time secured by a deed of
trust or mortgage covering interests in real property, Agent or its designee, in
its sole discretion, without notice or demand and without affecting the
liability of Subsidiary Guarantor under this Subsidiary Guaranty, may foreclose,
pursuant to the terms of the Loan Documents or otherwise, on such deed of trust
or mortgage and the interests in real property secured thereby by nonjudicial or
other sale. Subsidiary Guarantor understands that the exercise by Banks or
Agent, or any of them, of certain rights and remedies contained in the Credit
Agreement and such deed of trust or mortgage may affect or eliminate Subsidiary
Guarantor's right of subrogation against Borrower and that Subsidiary Guarantor
may therefore incur a partially or totally nonreimbursable liability hereunder.
Nevertheless, Subsidiary Guarantor hereby authorizes and empowers Agent and any
Bank to exercise, in its sole discretion, any rights and remedies, or any
combination thereof, which may then be available, since it is the intent and
purpose of Subsidiary Guarantor that the obligations hereunder shall be
absolute, independent and unconditional under any and all circumstances.
Notwithstanding any foreclosure of the lien of such deed of trust or mortgage
with respect to any or all real or personal property secured thereby, whether by
the exercise of the power of sale contained therein, by an action for judicial
foreclosure or by an acceptance of a deed in lieu of foreclosure, Subsidiary
Guarantor shall remain bound under this Subsidiary Guaranty, including its
obligation to pay any deficiency after a nonjudicial foreclosure.
2.9 Expenses. Subsidiary Guarantor agrees to pay, or cause to be paid,
and to save Agent and Banks harmless against liability for, any and all costs
and expenses (including fees and disbursements of counsel and the allocated cost
of inhouse counsel) incurred or expended by Agent or any Bank in connection with
the enforcement of or preservation of any rights under this Subsidiary Guaranty.
2.10 Continuing Guaranty; Termination of Subsidiary Guaranty. This
Subsidiary Guaranty is a continuing guaranty and shall remain in effect until
all of the Guarantied Obligations shall have been indefeasibly paid in full, the
Commitments shall have terminated and all Letters of Credit shall have expired
or been cancelled or cash collateralized pursuant to the terms of the Credit
Agreement. Anything contained in this Subsidiary Guaranty to the contrary
notwithstanding, this Subsidiary Guaranty shall not apply to Guarantied
Obligations created after actual receipt by Agent of written notice (delivered
in accordance with Section 5.2) from Subsidiary Guarantor of its revocation as
to future transactions; provided, however, that any such revocation shall not
affect Subsidiary Guarantor's liability for any Guarantied Obligations
outstanding at the time of receipt of such notice or any extension or renewal of
such Guarantied Obligations.
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2.11 Authority of Subsidiary Guarantor or Borrower. It is not necessary
for Banks or Agent to inquire into the capacity or powers of Subsidiary
Guarantor or Borrower or the officers, directors or any agents acting or
purporting to act on behalf of any of them.
2.12 Financial Condition of Borrower. Any Loans may be granted to
Borrower or continued from time to time without notice to or authorization from
Subsidiary Guarantor regardless of the financial or other condition of Borrower
at the time of any such grant or continuation. Banks and Agent shall have no
obligation to disclose or discuss with Subsidiary Guarantor their assessment, or
Subsidiary Guarantor's assessment, of the financial condition of Borrower.
Subsidiary Guarantor has adequate means to obtain information from Borrower on a
continuing basis concerning the financial condition of Borrower and its ability
to perform its obligations under the Credit Agreement, and Subsidiary Guarantor
assumes the responsibility for being and keeping informed of the financial
condition of Borrower and of all circumstances bearing upon the risk of
nonpayment of the Guarantied Obligations. Subsidiary Guarantor hereby waives and
relinquishes any duty on the part of Agent or any Bank to disclose any matter,
fact or thing relating to the business, operations or conditions of Borrower now
known or hereafter known by Agent or any Bank.
2.13 Rights Cumulative. The rights, powers and remedies given to Banks
and Agent by this Subsidiary Guaranty are cumulative and shall be in addition to
and independent of all rights, powers and remedies given to Banks and Agent by
virtue of any statute or rule of law or in any of the other Loan Documents or
any agreement between Subsidiary Guarantor and Banks and/or Agent or between
Borrower and Banks and/or Agent. Any forbearance or failure to exercise, and any
delay by any Bank or Agent in exercising, any right, power or remedy hereunder
shall not impair any such right, power or remedy or be construed to be a waiver
thereof, nor shall it preclude the further exercise of any such right, power or
remedy.
2.14 Bankruptcy; Post-Petition Interest; Reinstatement of
Subsidiary Guaranty.
(a) The obligations of Subsidiary Guarantor under this Subsidiary
Guaranty shall not be reduced, limited, impaired, discharged, deferred,
suspended or terminated by any proceeding, voluntary or involuntary, involving
the bankruptcy, insolvency, receivership, reorganization, liquidation or
arrangement of Borrower or by any defense which Borrower may have by reason of
the order, decree or decision of any court or administrative body resulting from
any such proceeding.
(b) Subsidiary Guarantor acknowledges and agrees that any interest on
any portion of the Guarantied Obligations which accrues after the commencement
of any proceeding referred to in clause (a) above (or, if interest on any
portion of the Guarantied Obligations ceases to accrue by operation of law by
reason of the commencement of said proceeding, such interest as would have
accrued on such portion of the Guarantied Obligations if said proceedings had
not been commenced) shall be included in the Guarantied Obligations because it
is the intention of Subsidiary Guarantor and Agent that the Guarantied
Obligations which are guarantied by Subsidiary Guarantor pursuant to this
Subsidiary Guaranty should be determined without regard to any rule of law or
order which may relieve Borrower of any portion of such Guarantied Obligations.
Subsidiary Guarantor will permit any trustee in bankruptcy, receiver, debtor in
possession, assignee for the benefit of creditors or similar person to pay
Agent, or allow the
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claim of Agent in respect of, any such interest accruing after the date on which
such proceeding is commenced.
(c) In the event that all or any portion of the Guarantied Obligations
are paid by Borrower, the obligations of Subsidiary Guarantor hereunder shall
continue and remain in full force and effect or be reinstated, as the case may
be, in the event that all or any part of such payment(s) are rescinded or
recovered directly or indirectly from Agent or any Bank as a preference,
fraudulent transfer or otherwise, and any such payments which are so rescinded
or recovered shall constitute Guarantied Obligations for all purposes under this
Subsidiary Guaranty.
2.15 Set Off. In addition to any other rights any Bank or Agent may
have under law or in equity, if any amount shall at any time be due and owing by
Subsidiary Guarantor to any Bank or Agent under this Subsidiary Guaranty, such
Bank or Agent is authorized at any time or from time to time, without notice
(any such notice being hereby expressly waived), to set off and to appropriate
and to apply any and all deposits (general or special, including but not limited
to indebtedness evidenced by certificates of deposit, whether matured or
unmatured) and any other indebtedness of any Bank or Agent owing to Subsidiary
Guarantor and any other property of Subsidiary Guarantor held by any Bank or
Agent to or for the credit or the account of Subsidiary Guarantor against and on
account of the Guarantied Obligations and liabilities of Subsidiary Guarantor to
any Bank or Agent under this Subsidiary Guaranty.
2.16 Discharge of Subsidiary Guaranty Upon Sale of Subsidiary
Guarantor. If all of the stock of Subsidiary Guarantor or any of its successors
in interest under this Subsidiary Guaranty shall be sold or otherwise disposed
of (including by merger or consolidation) in an asset sale not prohibited by
Section 5.02(e) of the Credit Agreement or otherwise consented to by Requisite
Banks, the Subsidiary Guaranty of Subsidiary Guarantor or such successor in
interest, as the case may be, hereunder shall automatically be discharged and
released without any further action by Agent or any Bank or any other Person
effective as of the time of such asset sale. Notwithstanding the foregoing, so
long as the Subsidiary Guarantor or its successor shall remain a Subsidiary of
the Borrower and any Guarantied Obligations remain outstanding, such Subsidiary
Guarantor or successor shall enter into a new Subsidiary Guaranty with the Agent
for the benefit of the Banks.
SECTION 3. REPRESENTATIONS AND WARRANTIES
In order to induce Banks and Agent to accept this Subsidiary Guaranty
and to enter into the Credit Agreement and to make the Loans thereunder,
Subsidiary Guarantor hereby represents and warrants to Banks that the following
statements are true and correct:
3.1 Corporate Existence. Subsidiary Guarantor is duly organized,
validly existing and in good standing under the laws of the state of its
incorporation, has the corporate power to own its assets and to transact the
business in which it is now engaged and is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership or lease of property or the conduct of its business requires such
qualification, except for failures to be so qualified, authorized or licensed
that would not in the aggregate have a material adverse effect on the business,
operations, assets or financial condition of Subsidiary Guarantor.
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3.2 Corporate Power; Authorization; Enforceable Obligations. Subsidiary
Guarantor has the corporate power, authority and legal right to execute, deliver
and perform this Subsidiary Guaranty and all obligations required hereunder and
has taken all necessary corporate action to authorize its Subsidiary Guaranty
hereunder on the terms and conditions hereof and its execution, delivery and
performance of this Subsidiary Guaranty and all obligations required hereunder.
No consent of any other Person including, without limitation, stockholders and
creditors of Subsidiary Guarantor (other than those which have been obtained),
and no license, permit, approval or authorization of, exemption by, notice or
report to, or registration, filing or declaration with, any governmental
authority is required by Subsidiary Guarantor in connection with this Subsidiary
Guaranty or the execution, delivery, performance, validity or enforceability of
this Subsidiary Guaranty and all obligations required hereunder except such
consents licenses, permits, approvals or authorizations which, if not obtained,
either (i) would not adversely affect the ability of the Subsidiary Guarantor to
perform the transactions contemplated by this Subsidiary Guaranty, or (ii) would
not have a Material Adverse Effect. This Subsidiary Guaranty has been, and each
instrument or document required hereunder will be, executed and delivered by a
duly authorized officer of Subsidiary Guarantor, and this Subsidiary Guaranty
constitutes, and each instrument or document required hereunder when executed
and delivered hereunder will constitute, the legally valid and binding
obligation of Subsidiary Guarantor, enforceable against Subsidiary Guarantor in
accordance with its terms, except as enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws or
equitable principles relating to or limiting creditors' rights generally.
3.3 No Legal Bar to this Subsidiary Guaranty. The execution, delivery
and performance of this Subsidiary Guaranty and the documents or instruments
required hereunder, and the use of the proceeds of the borrowings, and the
issuance of the Letters of Credit will not violate any provision of any existing
law or regulation binding on Subsidiary Guarantor, or any order, judgment, award
or decree of any court, arbitrator or governmental authority binding on
Subsidiary Guarantor, or the certificate of incorporation or bylaws of
Subsidiary Guarantor or any securities issued by Subsidiary Guarantor, or any
mortgage, indenture, lease, contract or other agreement, instrument or
undertaking to which Subsidiary Guarantor is a party or by which Subsidiary
Guarantor or any of its assets may be bound, the violation of which would have a
material adverse effect on the business, operations, assets or financial
condition of Subsidiary Guarantor and will not result in, or require, the
creation or imposition of any Lien on any of its property, assets or revenues
pursuant to the provisions of any such mortgage, indenture, lease, contract or
other agreement, instrument or undertaking.
SECTION 4. AFFIRMATIVE COVENANTS.
So long as any Loan shall remain unpaid or any Bank shall have any
Commitment hereunder and until the expiration, the cancellation and the payment
in full or cash collateralization of all Letters of Credit, Subsidiary Guarantor
covenants and agrees, unless Requisite Banks shall otherwise consent in writing:
4.1 Corporate Existence, Etc. Except as permitted under Section 5.02(c)
of the Credit Agreement, Subsidiary Guarantor shall at all times preserve and
keep in full force and effect its corporate existence and all rights and
franchises material to its business.
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4.2 Compliance with Laws, Etc. Subsidiary Guarantor shall perform and
promptly comply with the requirements of all applicable laws, rules, regulations
and orders other than those with which the failure to comply would not have a
Material Adverse Effect, such compliance to include, without limitation, paying
when due all taxes, assessments and governmental charges imposed upon it or upon
any of its properties or assets or in respect of any of its franchises,
businesses, income or property in accordance with Section 5.01(e) of the Credit
Agreement.
4.3 Books and Records. Subsidiary Guarantor shall keep and maintain
books of record and account with respect to its operations in accordance with
generally accepted accounting principles and shall permit Agent or any Bank and
their respective officers, employees and authorized agents, to the extent Agent
in good xxxxx xxxxx necessary for the proper administration of this Subsidiary
Guaranty, to examine, copy and make excerpts from the books and records of
Subsidiary Guarantor and its Subsidiaries and to inspect the properties of
Subsidiary Guarantor and its Subsidiaries, both real and personal, at such
reasonable times as Agent may request.
SECTION 5. MISCELLANEOUS
5.1 Survival of Warranties. All agreements, representations and
warranties made herein shall survive the execution and delivery of this
Subsidiary Guaranty.
5.2 Notices. Any communications between Agent and Subsidiary Guarantor
and any notices or requests provided herein to be given may be given by mailing
the same, postage prepaid, or by telex, facsimile transmission or cable to each
such party at its address set forth in the Credit Agreement, on the signature
pages hereof or to such other addresses as each such party may in writing
hereafter indicate. Any notice, request or demand to or upon Agent or Banks or
Subsidiary Guarantor shall not be effective until received.
5.3 Severability. In case any provision in or obligation under this
Subsidiary Guaranty shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
5.4 Amendments and Waivers. No amendment, modification, termination or
waiver of any provision of this Subsidiary Guaranty, or consent to any departure
by Subsidiary Guarantor therefrom, shall in any event be effective without the
written concurrence of Requisite Banks under the Credit Agreement; provided,
however, that no amendment, waiver or consent shall, unless in writing and
signed by all Banks change the number of Banks required to take any action
hereunder. Any waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it was given.
5.5 Headings. Section and Section headings in this Subsidiary Guaranty
are included herein for convenience of reference only and shall not constitute a
part of this Subsidiary Guaranty for any other purpose or be given any
substantive effect.
5.6 APPLICABLE LAW. THIS SUBSIDIARY GUARANTY AND THE RIGHTS AND
OBLIGATIONS OF SUBSIDIARY GUARANTOR, AGENT AND BANKS HEREUNDER
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AND ALL OTHER ASPECTS HEREOF SHALL BE DEEMED TO BE MADE UNDER, SHALL BE GOVERNED
BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF CALIFORNIA APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE.
5.7 Successors and Assigns. This Subsidiary Guaranty is a continuing
guaranty and shall be binding upon Subsidiary Guarantor and its successors and
assigns. This Subsidiary Guaranty shall inure to the benefit of Banks, Agent and
their respective successors and assigns. Subsidiary Guarantor shall not assign
this Subsidiary Guaranty or any of the rights or obligations of Subsidiary
Guarantor hereunder without the prior written consent of all Banks. Any Bank
may, without notice or consent, assign its interest in this Subsidiary Guaranty
in whole or in part in conjunction with the assignment of its interest in the
Guarantied Obligations. The terms and provisions of this Subsidiary Guaranty
shall inure to the benefit of any assignee or transferee permitted under the
Credit Agreement, and in the event of such transfer or assignment the rights and
privileges herein conferred upon Banks and Agent shall automatically extend to
and be vested in such transferee or assignee, all subject to the terms and
conditions hereof.
5.8 Consent to Jurisdiction; Waiver of Immunities. Subsidiary Guarantor
hereby irrevocably submits to the jurisdiction of any California state or
Federal court sitting in Los Angeles, California, in any action or proceeding
arising out of or relating to this Subsidiary Guaranty, and Subsidiary Guarantor
hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such California state or Federal
court. Subsidiary Guarantor hereby irrevocably waives, to the fullest extent it
may effectively do so, the defense of an inconvenient forum to the maintenance
of such action or proceeding. Subsidiary Guarantor hereby irrevocably appoints
Borrower as its agent to receive, on behalf of Subsidiary Guarantor and its
property, service of copies of the summons and complaint and any other process
which may be served in any such action or proceeding. Such service may be made
by mail or by delivering a copy of such process to Subsidiary Guarantor in care
of the agent named above, and Subsidiary Guarantor hereby irrevocably authorizes
and directs such agent to accept such service on its behalf. As an alternative
method of service, Subsidiary Guarantor also irrevocably consents to the service
of any and all process in any such action or proceeding by the mailing of copies
of such process to Subsidiary Guarantor at its address specified in Section 5.2
in accordance with the procedures for service by mail under California.
Subsidiary Guarantor agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Section 5.8 shall affect the right of any Bank or Agent to serve legal process
in any other manner permitted by law or affect the right of any Bank or Agent to
bring any action or proceeding against Subsidiary Guarantor or its property in
the courts of any other jurisdiction.
5.9 Waiver of Trial by Jury. SUBSIDIARY GUARANTOR AND, BY ITS
ACCEPTANCE OF THE BENEFITS HEREOF, AGENT EACH HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS SUBSIDIARY GUARANTY. The scope of this waiver is intended to
be all-encompassing of any and all disputes that may be filed in any court and
that relate to the subject matter of this transaction, including without
limitation contract claims, tort claims, breach of duty claims and all other
common law and statutory claims. Subsidiary Guarantor and, by its acceptance of
the benefits hereof, Agent each
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(i) acknowledges that this waiver is a material inducement for Subsidiary
Guarantor and Agent to enter into a business relationship, that Subsidiary
Guarantor and Agent have already relied on this waiver in entering into this
Subsidiary Guaranty or accepting the benefits thereof, as the case may be, and
that each will continue to rely on this waiver in their related future dealings
and (ii) further warrants and represents that each has reviewed this waiver with
its legal counsel, and that each knowingly and voluntarily waives its jury trial
rights following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS SUBSIDIARY GUARANTY. In the event of litigation, this Subsidiary
Guaranty may be filed as a written consent to a trial by the court.
5.10 No Other Writing. This writing is intended by Subsidiary Guarantor
and Agent as the final expression of this Subsidiary Guaranty and is also
intended as a complete and exclusive statement of the terms of their agreement
with respect to the matters covered hereby. No course of dealing, course of
performance or trade usage, and no parole evidence of any nature, shall be used
to supplement or modify any terms of this Subsidiary Guaranty. There are no
conditions to the full effectiveness of this Subsidiary Guaranty.
5.11 Further Assurances. At any time or from time to time, upon the
request of Agent or Requisite, Subsidiary Guarantor shall execute and deliver
such further documents and do such other acts and things as Agent or Banks may
reasonably request in order to effect fully the purposes of this Subsidiary
Guaranty.
IN WITNESS WHEREOF, Subsidiary Guarantor has executed this Subsidiary
Guaranty by its duly authorized officer as of the date first above written.
BW/IP INTERNATIONAL, INC.
By: /s/ XXXXX XXX
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Name: Xxxxx Xxx
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Title: Treasurer
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