GUARANTEE
THIS GUARANTEE, dated as of July 22, 2002, is made by COMMANDER
AIRCRAFT COMPANY AND STRATEGIC JET SERVICES, INC., (collectively, the
"Guarantors") each a Delaware Corporation and a wholly owned subsidiary of
AVIATION GENERAL, INCORPORATED, a Delaware corporation ("Borrower"), in favor of
NYLTIAK INVESTMENTS, LLC, a Maryland Limited Liability company ("Lender").
WHEREAS, Borrower and Lender have entered into that certain Securities
Purchase Agreement, Investor Rights Agreement, and Security Agreement dated as
of the date hereof pursuant to which Borrower has issued that certain Secured
Convertible Note in the original principal amount of one million dollars
($1,000,000) (collectively, the "Loan Agreements");
WHEREAS, each Guarantor has determined that as a wholly owned
subsidiary of Borrower it is in the best interests of such Guarantor for
Borrower to enter into the Loan Agreements and accordingly each has agreed to
execute and deliver to Lender an unconditional and irrevocable guarantee of the
obligations of Borrower under the Loan Agreements;
THEREFORE, in order to induce Lender to enter into the Loan Agreements
and in consideration of the foregoing premises and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound, each of the Guarantors agrees as follows:
1. Guarantee. (a) Each Guarantor hereby jointly and severally
guarantees to Lender the due and punctual performance, whether at stated
maturity or otherwise, of any and all obligations of Borrower under the Loan
Agreements, whether direct or contingent, including all Borrower's Obligations
(as defined in the Security Agreement). The obligations guaranteed hereunder are
hereafter referred to as the "Guaranteed Obligations."
(b) Each Guarantor covenants, in case of default in the
payment by Borrower of any part of the Guaranteed Obligations, to pay any such
unpaid amounts as the same shall become due, on demand of Lender.
2. Obligations Unconditional. (a) This Guarantee is an unconditional
and absolute guarantee of payment and not of collectibility. The liability of
Guarantors on this Guarantee shall be direct and immediate. Each Guarantor
guarantees that the Guaranteed Obligations will be paid strictly in accordance
with their respective terms, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of Lender or Borrower with respect thereto. If the Guaranteed Obligations
or any part thereof shall not be paid promptly when due and payable, each
Guarantor shall forthwith pay such amounts to Lender, regardless of any defense,
set-off, or counterclaim, and regardless of whether Lender or anyone on its
behalf shall have instituted any suit, action, or proceeding, or exhausted its
remedies, or taken any steps to enforce any rights against Borrower or any other
person to collect all or part of any such amounts, either pursuant to the
provisions of this Guarantee or the Loan Agreements, or at law or in equity, and
regardless of any other condition or contingency. Each Guarantor hereby waives
any requirement that Lender, in the event of default by Borrower, first make
demand on, or seek to enforce remedies against, Borrower before demanding
payment under or seeking to enforce this Guarantee. The obligations of
Guarantors under this Guarantee are independent of the Guaranteed Obligations,
and a separate action or actions may be brought and prosecuted against
Guarantors to enforce this Guarantee, irrespective of whether any action is
brought against any collateral, Borrower or any other person and irrespective of
whether Borrower or any other person is joined in any such action or actions.
Each Guarantor agrees that this Guarantee shall remain in full force and effect
without regard to, and shall not be affected or impaired by, any invalidity,
irregularity, or unenforceability in whole or in part of this Guarantee or the
Loan Agreements or any limitation on the liability of Borrower thereunder, or
any limitation on the method or terms of payment thereunder, which may now or
hereafter be caused or imposed in any manner whatsoever. Each Guarantor hereby
unconditionally waives diligence, presentment, and protest, and any notice of
default in the payment of any of the Guaranteed Obligations, and notice of the
breach of any obligation of Borrower contained in the Loan Agreements.
(b) Each Guarantor agrees that in the event it shall make any
payment in respect of the Loan Agreements, any right of payment to Guarantors
from Borrower, whether by way of reimbursement, indemnity, subrogation, or
otherwise, shall constitute indebtedness of Borrower subordinated in right and
time of payment, and in every other way, to the unpaid amount, if any, of
indebtedness represented by the Loan Agreements. No payment shall be made on the
subordinated indebtedness until prior payment in full has been made of the
indebtedness represented by the Loan Agreements.
(c) The obligations, covenants, agreements, and duties of
Guarantors under this Guarantee shall not be affected or impaired by any
assignment or transfer in whole or in part of the Loan Agreements without notice
to either Guarantor; or any waiver by Lender of the performance or observance by
Borrower or any other party of any of the agreements, covenants, terms or
conditions contained in the Loan Agreements; or any indulgence in or the
extension of the time for payment by Borrower of any amounts payable under or in
connection with the Loan Agreements or of the time for performance by Borrower
or any other party of any other obligation under or arising out of the Loan
Agreements, or the extension or renewal thereof; or any change, amendment,
modification, waiver, or termination (whether material or otherwise, and whether
or not made without notice to or further assent by either Guarantor) of any
duty, agreement, or obligation of Borrower or any other party set forth in the
Loan Agreements; or the voluntary or involuntary liquidation, sale, or other
disposition of all or substantially all of the assets of Borrower; or any
receivership, insolvency, bankruptcy, reorganization, or similar proceedings
affecting Borrower or its assets; or the release or discharge by operation of
law of Borrower from the performance or observance of any agreement, covenant,
term or condition contained in the Loan Agreements, where such release or
discharge occurs without the consent of Lender; or any release or exchange in
whole or in part of any security granted for the Guaranteed Obligations; or any
failure to perfect any lien or security interest granted to or in favor of
Lender as security for the Guaranteed Obligations; or any other cause, whether
similar or dissimilar to the foregoing.
3. Continuing Guarantee; Release; Reinstatement. (a) This Guarantee is
a continuing guarantee and shall remain in full force and effect until all of
the Guaranteed Obligations have been paid in full, unless earlier released
pursuant to the terms of the Loan Agreements.
(b) Notwithstanding the foregoing, the obligations of
Guarantors under this Guarantee shall be automatically reinstated if and to the
extent that for any reason any payment by or on behalf of Borrower in respect of
the Guaranteed Obligations is rescinded or must be otherwise restored by any
holder of any of the Guaranteed Obligations, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise, and Each Guarantor
agrees that it will indemnify Lender on demand for all reasonable costs and
expenses (including, without limitation, fees of counsel) incurred by Lender in
connection with any such rescission of termination and restoration of this
Guarantee.
4. Representations and Warranties. Each of the Guarantors represents
and warrants as follows:
(i) Guarantors are corporations duly organized and in good standing
under the laws of Delaware, and have full right, power and authority to enter
into and perform this Guarantee, and Guarantors shall do or shall cause to be
done all things necessary and appropriate to preserve and keep in full force and
effect their corporate existence, rights and franchises.
(ii) This Guarantee has been duly authorized and approved by all
necessary corporate action.
(iii) Guarantors have duly and validly executed and delivered this
Guarantee, which constitutes a valid and binding obligation of Guarantors
enforceable against Guarantors in accordance with its terms, except as limited
by bankruptcy, insolvency or other similar laws (regardless of whether
enforcement is sought in a court of law or equity), and except that the remedy
of specific performance may be limited by the equitable discretion of the court
before which any proceeding hereunder may be brought.
(iv) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required for
the due execution, delivery and performance by Guarantors of this Guarantee.
5. Notices. All notices or other communications in connection with this
Guarantee shall be deemed satisfactorily given if in writing and delivered
personally or by registered or certified mail, postage pre-paid, by overnight
courier, or by telecopier to the parties at their respective
addresses set forth below or at such other address as may be given by any party
to the other in writing in accordance with this section:
If to the Guarantors:
Commander Aircraft Company
Strategic Jet Services, Inc.
0000 Xxxxxxxxx 00xx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
With copy to:
Xxxx Xxxxx & Xxxxxx
000 Xxx Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxxxxx, X.X. 00000
Attn: Xxxx Xxxxxxx
Facsimile: (000) 000-0000
If to the Lender:
Nyltiak Investments, LLC
000 Xxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Miles & Stockbridge, P.C.
0000 Xxxxxxxx Xxxxx, Xxxxx 000
XxXxxx, XX 00000-0000
Attn: Xxxxxx XxXxx
Facsimile: 000-000-0000
6. Governing Law. (a) This Guarantee shall be governed by, and
construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, Guarantors have caused this Guarantee to be signed,
sealed and delivered by their duly authorized representatives as of the date
first above written.
COMMANDER AIRCRAFT COMPANY
By:
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Name:
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Title:
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STRATEGIC JET SERVICES, INC.
By:
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Name:
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Title:
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