1
EXHIBIT 10.3.5
GUARANTY
(FM Precision Golf Corp.)
THIS GUARANTY ("Guaranty"), made by FM PRECISION GOLF CORP., a Delaware
corporation ("Guarantor"), to, and for the benefit of, STAR BANK, NATIONAL
ASSOCIATION, a national banking association ("Lender"), is as follows:
1. GUARANTY. For value received and in consideration of any loan, advance or
financial accommodation of any kind whatsoever heretofore, now or hereafter
made, given or granted by Lender to either or both of FM Precision Golf
Manufacturing Corp. and FM Precision Golf Sales Corp. (each a "Borrower" and,
collectively, "Borrowers"), Guarantor unconditionally guarantees to Lender, the
full and prompt payment when due of the principal of, all interest on, and all
fees in respect of, all Loans (as defined in the Financing Agreement defined
below) and the full and prompt payment and performance of any and all other
Obligations (as defined in the Financing Agreement) which are outstanding from
time to time under the Loan Documents (as defined in the Financing Agreement)
(all of the foregoing described indebtedness, liabilities and obligations which
are outstanding from time to time being hereinafter collectively referred to as
the "GUARANTEED OBLIGATIONS"), whether all or any portion of the Guaranteed
Obligations are now or hereafter existing, direct or indirect, related or
unrelated, joint or several, or absolute or contingent, should all or any
portion of the Guaranteed Obligations not be paid when due under the terms of
the Loan Documents, including, without limitation, on the occurrence of an Event
of Default (as defined in the Financing Agreement), by reason of the maturity or
acceleration of any of the Loans, on the occurrence of a default under the terms
of this Guaranty or otherwise, and at any times after the date when due. The
"Financing Agreement" means the Financing Agreement of even date herewith
between Lender and Borrowers.
2. NATURE OF THE GUARANTY.
2.1 ABSOLUTE OBLIGATIONS. The obligations of Guarantor under this
Guaranty are absolute, unconditional, and will be continuing and remain in full
force and effect subject to SECTION 2.2 below. This is a continuing guaranty of
payment and not of collection. Guarantor's obligations under this Guaranty will
not be released, discharged, affected, modified or impaired by any event,
including, without limitation, any of the following events:
(i) the compromise, settlement, release, discharge or
termination of any or all of the obligations of either or both of Borrowers to
Lender by operation of law or otherwise, except as may result from the full and
prompt performance and payment of the Guaranteed Obligations;
(ii) the extension of the time for payment of any obligation
under the Financing Agreement or any of the other Loan Documents, or the waiver,
modification or amendment (whether material or otherwise) of any obligation
under the Financing Agreement or any of the other Loan Documents or the
acceptance of partial payments of the Guaranteed Obligations;
2
(iii) the taking or failure to take any action under the
Financing Agreement, any of the other Loan Documents or this Guaranty;
(iv) the invalidity or unenforceability of any provision of
the Financing Agreement, any of the other Loan Documents, or this Guaranty;
(v) any (a) failure by Lender to take any steps to perfect,
maintain, or enforce its Liens (as defined in the Financing Agreement) on the
Loan Collateral (as defined in the Financing Agreement) or (b) loss, release,
substitution of, or other dealings with, any collateral or other security given
to Lender with respect to the Guaranteed Obligations;
(vi) the voluntary or involuntary liquidation, dissolution,
sale or other disposition of all or substantially all of the assets, marshalling
of assets and liabilities, receivership, insolvency, bankruptcy, assignment,
composition with creditors or readjustment of, or other similar proceedings
affecting either or both of Borrowers, any Subsidiary (as defined in the
Financing Agreement) of either Borrower, or any other guarantor of the
Obligations;
(vii) any allegation of invalidity or contest of the validity
of this Guaranty in any of the proceedings described in clause (vi) of this
SECTION 2.1;
(viii) any act, election or remedy, or other election,
occurrence or circumstance of any nature, whether or not under Lender's control,
that may affect or impair any subrogation right of Guarantor or the
effectiveness or value thereof;
(ix) the default or failure of Guarantor to perform fully any
of its obligations set forth in this Guaranty;
(x) Lender's election, in any proceeding instituted under
Chapter 11 of Title 11 of the United States Code (11 U.S.C. Section 101 ET SEQ.)
(the "BANKRUPTCY CODE"), of the application of Section 1111(b)(2) of the
Bankruptcy Code;
(xi) any borrowing or grant of a security interest by
Borrower, as debtor-in-possession, under Section 364 of the Bankruptcy Code;
(xii) the disallowance of all or any portion of Lender's
claim(s) for repayment of the Guaranteed Obligations under Section 502 of the
Bankruptcy Code; or
(xiii) any other circumstance which might otherwise constitute
a legal or equitable discharge or defense of a guarantor.
2.2 REVIVAL OF GUARANTY. If (i) any demand is made at any time on
Lender for the repayment of any amount received by it or as proceeds of any
collateral or security which have been applied in payment of any of the
Guaranteed Obligations, and (ii) Lender makes any repayment by reason of any
judgment, decree or order of any court or administrative body or by reason of
any settlement or compromise of such demand, Guarantor will be liable under this
Guaranty for all amounts so repaid to the same extent as if such amounts had
never been received
-2-
3
originally by Lender. Except as provided in the preceding sentence, Guarantor's
obligations under this Guaranty will terminate when the Guaranteed Obligations
have been fully paid, performed and satisfied.
2.3 WAIVERS BY GUARANTOR. Guarantor hereby covenants that this Guaranty
will not be discharged except by complete performance of the obligations
contained in this Guaranty. Guarantor waives all setoffs and counterclaims and
all presentments, demands for performance, notices of nonperformance, protests,
notices of protest, notices of dishonor, and notices of acceptance of, and
reliance on, this Guaranty. Guarantor further waives all (i) notices of the
existence, creation or incurring of new or additional indebtedness, arising
either from additional loans extended to either or both of Borrowers or
otherwise, (ii) notices that the principal amount, or any portion thereof (and
any interest thereon), of the Loans or any of the other Guaranteed Obligations
is due, (iii) notices of any and all proceedings to collect from either or both
of Borrowers, any indorser or any other guarantor of all or any part of the
Guaranteed Obligations, or from anyone else, and (iv), to the extent permitted
by law, notices of exchange, sale, surrender or other handling of any security
or collateral given to Lender to secure payment of all or any part of Guaranteed
Obligations.
2.4 APPLICATION OF PROCEEDS BY LENDER. Lender will have the exclusive
right to determine, in its discretion, the order and method of application of
payments from and credits to, if any, Guarantor, Borrowers or any other Person
(as defined in the Financing Agreement) on account of the Guaranteed Obligations
or of any other liability of Guarantor to Lender.
2.5 RESPONSIBILITY OF GUARANTOR. Guarantor hereby assumes
responsibility for keeping itself informed of the financial condition of each
Borrower, and any and all indorsers and other guarantors of any instrument or
document evidencing all or any part of the Guaranteed Obligations and of all
other circumstances bearing on the risk of nonpayment of the Guaranteed
Obligations or any part thereof that diligent inquiry would reveal. Lender will
have no duty to advise Guarantor of information known to Lender regarding such
condition or any such circumstances.
2.6 SECURITY. This Guaranty and the Guaranteed Obligations are secured
by (i) a Security Agreement of even date herewith between Lender and Guarantor
and (ii) a Stock Pledge Agreement of even date herewith between Lender and
Guarantor (collectively, the "Security Documents").
3. REPRESENTATIONS AND WARRANTIES. To induce Lender to extend the Guaranteed
Obligations, and for other good and valuable consideration, Guarantor hereby
represents and warrants to Lender that: (i) this Guaranty is the legal, valid
and binding obligation of Guarantor, enforceable in accordance with its terms,
(ii) the execution, delivery, and performance of this Guaranty does not and will
not, by the lapse of time, by the giving of notice, or the satisfaction of any
other condition: (a) violate or constitute a default under, any rule or
provision of Guarantor's Certificate of Incorporation, By-Laws, any resolution
of its Board of Directors or any committee thereof or any agreement or other
instrument to which Guarantor is a party or by which Guarantor or any of its
properties is or may be bound, (b) violate or constitute a default under any
law, requirement, rule, regulation, ordinance or restriction of any
-3-
4
governmental authority applicable to Guarantor or by which its properties are
bound or affected, (c) result in the creation or imposition of any Lien (as
defined in the Financing Agreement) on any of the properties of Guarantor; and
(d) does not require any consent or approval of any Person; and (iii) there is
no action or proceeding pending before any court or Governmental Authority (as
defined in the Financing Agreement) which materially, adversely affects the
condition (financial or otherwise) of Guarantor or any of its properties.
4. COVENANTS. From the date of the execution of this Guaranty until all
Guaranteed Obligations have been fully paid, performed and satisfied:
4.1 FINANCIAL STATEMENTS. Commencing June 1, 1997 and each subsequent
June 1 so long as this Guaranty remains in effect, Guarantor will furnish Lender
with Guarantor's financial statements and tax returns (including, without
limitation, applicable schedules) for the then most recently ended fiscal year
of Guarantor, certified by Guarantor to be accurate and complete and
acknowledged. Such financial statements will be in detail reasonably
satisfactory to Lender and will be prepared on a basis consistent with GAAP (as
defined in the Financing Agreement) (except the omission of footnotes and as
otherwise disclosed to Lender to the extent such exceptions are acceptable to
Lender);
4.2 NO DISPOSITION OF ASSETS; NO TRANSFER OF BORROWER STOCK. Guarantor
will not encumber, transfer or otherwise dispose of all or substantially all of
its properties. Guarantor will not (i) sell, assign, pledge, hypothecate or
otherwise encumber or transfer, or dispose of, any rights or interests in any
voting securities issued by either Borrower ("BORROWER STOCK") which are owned
legally or beneficially by it or (ii) allow any lien, interest, or adverse claim
to attach to any of its Borrower Stock.
4.3 PAYMENTS. Guarantor will pay all of the costs, expenses and fees,
including, without limitation, all reasonable attorneys' fees, incurred by
Lender in enforcing or attempting to enforce this Guaranty following any default
on the part of Guarantor, whether the same is enforced by suit or otherwise, and
all amounts recoverable by law, including, without limitation, interest on any
unpaid amounts due under this Guaranty.
4.4 SECURITY DOCUMENTS. Guarantor will duly and punctually pay, perform
and observe the obligations of Guarantor under the Security Documents.
5. DEFAULT; SUBROGATION AND CONTRIBUTION RIGHTS; SUBORDINATION.
5.1 PAYMENT OF GUARANTEED OBLIGATIONS. At any time after all or any
portion of the Guaranteed Obligations are due and payable, whether on maturity,
after the acceleration of the Obligations (as defined in the Financing
Agreement) on the occurrence of an Event of Default (as defined in the Financing
Agreement), or otherwise, or at any time after the occurrence of any default
under this Guaranty: (i) Lender will have the right: (a) to proceed directly
against Guarantor under this Guaranty without first exhausting any other remedy
it may have and without resorting to any security or guaranty held by it, and
(b) to compromise, settle, release, discharge or terminate any of the
obligations of any other guarantor(s) of the Guaranteed Obligations as Lender,
in its discretion, determines without thereby in any way affecting,
-4-
5
limiting or diminishing its rights thereafter to enforce the obligations of
Guarantor under this Guaranty; (ii) Guarantor will, on the demand of Lender,
immediately deposit with Lender in U.S. dollars the total amount of the
Guaranteed Obligations; (iii) Lender will have the right to sell, collect, or
otherwise dispose of and to apply the proceeds of any collateral or other
security given to Lender with respect to the Guaranteed Obligations in
satisfaction of the Guaranteed Obligations; and (iv) Lender will have the right
to exercise all of Lender's other powers, rights and remedies under this
Guaranty, the Loan Documents and under applicable law. Lender will have no
obligation to xxxxxxxx any assets in favor of Guarantor or against or in payment
of any or all of the Guaranteed Obligations.
5.2 SUBROGATION; CONTRIBUTION. Each of Guarantor and Borrowers is
guaranteeing the full and prompt payment and performance of the Guaranteed
Obligations under a separate guaranty. It is the intent of Guarantor and
Borrowers (each of Guarantor and Borrowers being sometimes called an "Obligor")
that this Guaranty and the guaranty of each other Obligor (this Guaranty and the
guaranty of each other Obligor being called, collectively, the "Guaranties") not
be subject to challenge on any basis. Accordingly, as of the date of this
Guaranty, the probable liability of Guarantor under this Guaranty, together with
all of its other liabilities to all Persons as of the date of this Guaranty and
as of any other date on which a transfer is deemed to occur by virtue of this
Guaranty or any of the Security Documents, calculated in amount sufficient to
pay its probable net liabilities on its existing debts as the same become
absolute and matured ("GUARANTOR'S DATED LIABILITIES") is, and is to be, less
than the amount of the aggregate of the present fair salable value of its
property, and, if different, at a fair valuation thereof, as of such
corresponding date ("GUARANTOR'S DATED ASSETS"). To this end, Guarantor (i)
grants to and recognizes in each Obligor ratably rights of subrogation and
contribution in the amount, if any, by which Guarantor's Dated Assets, but for
the aggregate of subrogation and contribution rights in its favor recognized in
all the Guaranties, would exceed Guarantor's Dated Liabilities or, as the case
may be, (ii) acknowledges receipt of and recognizes in Guarantor rights of
subrogation and contribution ratably from each Obligor in the amount, if any, by
which Guarantor's Dated Liabilities, but for the aggregate of subrogation and
contribution rights in its favor granted and recognized in all the Guaranties,
would exceed Guarantor's Dated Assets. In recognizing the value of Guarantor's
Dated Assets and Guarantor's Dated Liabilities, it is understood that each
Obligor will recognize, to at least the same extent of its aggregate recognition
of liabilities under its respective Guaranty, its rights to subrogation and
contribution under the Guaranties. It is expressly recognized and agreed to by
Guarantor that Guarantor's rights of contribution and subrogation against
Borrower is expressly junior and subordinate to the prior payment and
performance in full of the Obligations. It is a material objective of this
SECTION 5.2 that each Obligor recognize rights of subrogation and contribution
rather than be deemed to be insolvent (or in contemplation thereof) by reason of
an arbitrary interpretation of any of the Guaranties or any of the Loan
Documents.
5.3 SUBORDINATION. Until the Guaranteed Obligations have been fully
paid, performed and satisfied, (i) if an Event of Default has occurred and is
continuing, any and all claims of Guarantor against either Borrower, any
indorser or any other guarantor of all or any part of the Guaranteed
Obligations, or against any of their respective properties are, by signing this
Guaranty, made subordinate and subject in right of payment to the prior payment
to Lender in full of all Obligations (as defined in the Financing Agreement);
and (ii) Guarantor may not
-5-
6
exercise any right to enforce any remedy which Guarantor now has or may in the
future have against either Borrower, any indorser or any other guarantor of all
or any part of the Guaranteed Obligations.
6. GENERAL.
6.1 CUMULATIVE REMEDIES. No waiver by Lender of any default under this
Guaranty will operate as a waiver of any other default or of the same default on
a future occasion. No failure or delay on the part of Lender in the exercise of
any power, remedy or right will operate as a waiver thereof nor will any single
or partial exercise of any power, remedy or right or the exercise of any other
power, remedy or right operate as a waiver thereof. Lender may assert any of its
powers, rights or remedies successively, concurrently, independently or
cumulatively. The powers, remedies, and rights of Lender provided for in this
Guaranty are not intended to be Lender's sole powers, remedies, or rights.
6.2 NO IMPLIED WAIVER BY LENDER; AMENDMENTS. A waiver, amendment,
release or modification of this Guaranty will not be established by conduct,
custom or course of dealing and will occur solely by an instrument in writing
duly executed by Lender.
6.3 ENTIRE AGREEMENT. This Guaranty, together with the Security
Documents, constitutes the entire agreement between the parties with respect to
the subject matter of this Guaranty, and supersedes all prior written and oral
agreements and understandings.
6.4 COUNTERPARTS; CONSTRUCTION. This Guaranty may be executed in
several counterparts, each of which will be regarded as an original instrument.
The captions in this Guaranty are for reference purposes only and will not
relate to the interpretation of any provision of this Guaranty. Any and all
references in this Guaranty to any other document or documents will be
references to this other document or documents as they may, from time to time,
be modified, amended, renewed, consolidated, extended or replaced.
6.5 SEPARATE INSTRUMENT. This Guaranty constitutes a separate
instrument, enforceable in accordance with its terms, and neither this Guaranty
nor the obligations of Guarantor under this Guaranty will, under any
circumstance or in any legal proceeding, be deemed to have merged into any other
agreement or obligation of Guarantor.
6.6 SEVERABILITY. If any term of this Guaranty is found invalid under
Ohio law (or laws of mandatory application) by a court with jurisdiction, this
invalid term will be considered excluded from this Guaranty and will not
invalidate the remaining terms of this Guaranty.
6.7 OHIO LAW. This Guaranty will be governed by and construed in
accordance with the internal laws of the State of Ohio (without regard to Ohio
conflicts of law principles).
6.8 CHOICE OF FORUM. AS A SPECIFICALLY BARGAINED INDUCEMENT FOR LENDER
TO ACCEPT THIS GUARANTY AND TO EXTEND CREDIT TO BORROWERS, GUARANTOR AGREES THAT
ANY ACTION, SUIT OR PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS GUARANTY,
ITS VALIDITY OR PERFORMANCE, AT THE
-6-
7
SOLE OPTION OF LENDER, ITS SUCCESSORS AND ASSIGNS, AND WITHOUT LIMITATION ON THE
ABILITY OF LENDER, ITS SUCCESSORS AND ASSIGNS, TO INITIATE AND PROSECUTE IN ANY
APPLICABLE JURISDICTION ACTIONS RELATED TO REPAYMENT OF THE GUARANTEED
OBLIGATIONS, WILL BE INITIATED AND PROSECUTED AS TO ALL PARTIES AND THEIR HEIRS,
SUCCESSORS AND ASSIGNS AT CINCINNATI, OHIO. LENDER AND GUARANTOR EACH CONSENTS
TO AND SUBMITS TO THE EXERCISE OF JURISDICTION OVER THEIR PERSON BY ANY COURT
SITUATED AT CINCINNATI, OHIO HAVING JURISDICTION OVER THE SUBJECT MATTER, WAIVES
PERSONAL SERVICE OF ANY AND ALL PROCESS ON THEM AND CONSENTS THAT ALL SUCH
SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO GUARANTOR AND LENDER
AT THEIR RESPECTIVE ADDRESSES AS SET FORTH BELOW (OR SUCH OTHER ADDRESS AS A
PARTY MAY FROM TIME TO TIME DESIGNATE FOR ITSELF BY NOTICE TO THE OTHER PARTY)
OR AS OTHERWISE PROVIDED UNDER THE LAWS OF THE STATE OF OHIO. GUARANTOR AND
LENDER EACH WAIVES TRIAL BY JURY, AND GUARANTOR WAIVES ANY OBJECTION BASED ON
FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED UNDER
THIS GUARANTY.
6.9 SUCCESSORS AND ASSIGNS. This Guaranty will inure to the benefit of
Lender, its successors and assigns and be binding on the heirs, executors, legal
representatives, successors and assigns of Guarantor.
6.10 NOTICES. Any notice or notification required, permitted or
contemplated under this Guaranty must be in writing, addressed to the party to
be notified at the address set forth below or at such other address as each
party may designate for itself from time to time by notice under this Guaranty,
and will be deemed to have been validly served, given or delivered on the
earliest of receipt or (i) three Business Days following deposit in the United
States mails, via registered U.S. mail, with proper postage prepaid, or (ii) the
next Business Day after such notice was delivered to a regularly scheduled
overnight delivery carrier with delivery fees either prepaid or an arrangement,
satisfactory with such carrier, made for the payment of such fees, or (iii) on
receipt of notice given by telecopy, mailgram, telegram, telex, or personal
delivery:
To Guarantor: FM Precision Golf Corp.
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxx 00000
Attn: Xxxxxxx Xxxxxxxx
Telecopier No. (000) 000-0000
To Lender: Star Bank, National Association
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxx
Telecopier No. (000) 000-0000
-7-
8
6.11 SEPARATE ACTION. Each default in payment of any amount due under
this Guaranty will, at Lender's sole option, give rise to a separate cause of
action under this Guaranty, and separate suits, at Lender's sole option, may be
brought under this Guaranty as each cause of action arises.
Guarantor has signed this Guaranty as of May 31, 1996.
FM PRECISION GOLF CORP.
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------
Name: Xxxxx X. Xxxxxxxx
----------------------------
Its: Vice-President
-----------------------------
Accepted in Cincinnati, Ohio
as of May 31, 1996.
STAR BANK, NATIONAL ASSOCIATION
By: /s/ Xxxxx X. Xxxxx
----------------------------------------
Xxxxx X. Xxxxx , Vice President
------------------ ---------------------
(Name) (Title)
-8-
