GUARANTY AND NEGATIVE PLEDGE AGREEMENT
Dated as of November 1, 1998
For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and to induce GE Capital Public Finance, Inc., a
Delaware corporation (herein, with its participants, successors and assigns,
"Lender"), at its option, to provide financing to or for the account of Arkansas
Development Finance Authority ("Authority") and Quail Piping Products, Inc.
("Borrower"), or to engage in any other transactions with Borrower and
Authority, the undersigned hereby: (a) absolutely and unconditionally guarantees
to Lender the full and prompt payment when due, whether at maturity or earlier
by reason of acceleration or otherwise, of any and all present and future debts,
liabilities and obligations owed by Borrower or Authority to Lender evidenced by
or arising out of the Loan Agreement (Equipment) dated as of November 1, 1997
and the Loan Agreement (Real Estate) dated as of November 1, 1997, both among
Lender, Authority and Borrower (the "Loan Agreements"), and any and all
extensions, renewals, modifications, supplements or amendments thereto or
thereof and any related agreements (whether such debt, liability or obligation
now exists or is hereafter created or incurred, and whether it is or may be
direct or indirect, due or to become due, absolute or contingent, primary or
secondary, liquidated or unliquidated, or joint, several or joint and several,
all such debts, liabilities and obligations being hereinafter collectively
referred to as the "Indebtedness"), (b) absolutely and unconditionally
guarantees to Lender the full and timely performance by Borrower of all of its
obligations under the Loan Agreements, and (c) so long as any Indebtedness shall
remain outstanding, agrees and covenants that it will at all times own not less
than 50% of the outstanding common stock of Borrower.
1. The undersigned represents and warrants to Lender that (a) the
undersigned is a corporation duly organized and existing in good standing and
has full power and authority to make and deliver this Guaranty and Negative
Pledge Agreement; (b) the execution, delivery and performance of this Guaranty
and Negative Pledge Agreement by the undersigned have been duly authorized by
all necessary action of its directors and do not and will not violate the
provisions of, or constitute a default under, any presently applicable law or
its articles of incorporation or bylaws or any agreement presently binding on
it; (c) this Guaranty and Negative Pledge Agreement has been duly executed and
delivered by the authorized officers of the undersigned and constitutes its
lawful, binding and legally enforceable obligation except to the extent limited
by bankruptcy, reorganization or other laws of general application relating to
or effecting the enforcement of creditors' rights; and (d) the authorization,
execution, delivery and performance of this Guaranty and Negative Pledge
Agreement do not require notification to, registration with, or consent or
approval by, any federal, state or local regulatory body or administrative
agency.
2. No act or thing need occur to establish the liability of the undersigned
hereunder, and no act or thing, except full payment and discharge of all
Indebtedness, shall in any way exonerate the undersigned hereunder or modify,
reduce, limit or release the liability of the
undersigned hereunder. This is an absolute, unconditional and continuing
guaranty of payment of the Indebtedness.
3. The undersigned represents and warrants to Lender that the undersigned
has a direct and substantial economic interest in Borrower and expects to derive
substantial benefits therefrom and from any loans, credit transactions,
financial accommodations, discounts, purchases of property and other
transactions and events resulting in the creation of Indebtedness guaranteed
hereby, and that this Guaranty and Negative Pledge Agreement is given for a
corporate purpose. This Guaranty and Negative Pledge Agreement shall be
effective and enforceable by Lender without regard to the receipt, nature or
value of any such benefits.
4. If the undersigned shall be dissolved or shall be or become bankrupt or
insolvent (however defined), then Lender shall have the right to declare
immediately due and payable, and the undersigned shall forthwith pay to Lender,
the full amount of all Indebtedness whether due and payable or unmatured. If the
undersigned voluntarily commences or there is commenced involuntarily against
the undersigned a case under the United States Bankruptcy Code, the full amount
of all Indebtedness, whether due and payable or unmatured, shall be immediately
due and payable without demand or notice thereof.
5. The undersigned shall not exercise or enforce any right of contribution,
reimbursement, recourse or subrogation available to the undersigned as to any
Indebtedness, or against any person liable therefor, or as to any collateral
security therefor, unless and until all Indebtedness shall have been fully paid
and discharged.
6. The undersigned shall pay or reimburse Lender for all reasonable costs
and expenses (including reasonable attorneys' fees and legal expenses) incurred
by Lender in connection with the protection, defense or enforcement of this
Guaranty and Negative Pledge Agreement in any litigation or bankruptcy or
insolvency proceedings.
7. Lender shall not be obligated by reason of its acceptance of this
Guaranty and Negative Pledge Agreement to engage in any transactions with or for
Borrower or Authority except as provided in the Loan Agreements. Whether or not
any existing relationship between the undersigned and Borrower has been changed
or ended, Lender may enter into transactions resulting in the creation or
continuance of Indebtedness and may otherwise agree, consent to, or suffer the
creation or continuance of any Indebtedness, without any consent or approval by
the undersigned and without any prior or subsequent notice to the undersigned.
To the extent permitted by law, the liability of the undersigned shall not be
affected or impaired by any of the following acts or things (which Lender is
expressly authorized to do, omit or suffer from time to time, both before and
after revocation of this Guaranty and Negative Pledge Agreement, without consent
or approval by or notice to the undersigned): (a) any acceptance of collateral
security, guarantors, accommodation parties or sureties for any or all
Indebtedness; (b) one or more extensions or renewals of Indebtedness (whether or
not for longer than the original period) or any modification of the interest
rates, maturities or other contractual terms applicable to any Indebtedness; (c)
any waiver or indulgence granted to Borrower or Authority, any delay or lack of
diligence in the enforcement of Indebtedness, or any failure to institute
proceedings, file a
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claim, give any required notices or otherwise protect any Indebtedness; (d) any
full or partial release of, compromise or settlement with, or agreement not to
xxx, Borrower, Authority or any guarantor or other person liable in respect of
any Indebtedness; (e) any release, surrender, cancellation or other discharge of
any evidence of Indebtedness or the acceptance of any instrument in renewal or
substitution therefor; (f) any failure to obtain collateral security (including
rights of setoff) for Indebtedness, or to see to the proper or sufficient
creation and perfection thereof, or to establish the priority thereof, or to
preserve, protect, insure, care for, exercise or enforce any collateral
security; or any modification, alteration, substitution, exchange, surrender,
cancellation, termination, release or other change, impairment, limitation, loss
or discharge of any collateral security; (g) any collection, sale, lease or
disposition of, or any other foreclosure or enforcement of or realization on,
any collateral security; (h) any assignment, pledge or other transfer of any
Indebtedness or any evidence thereof; (i) any manner, order or method of
application of any payments or credits upon Indebtedness; (j) any election by
Lender under Section 1111(b) of the United States Bankruptcy Code. The
undersigned waives any and all defenses and discharges available to a surety,
guarantor, or accommodation co-obligor.
8. To the extent permitted by law, the undersigned waives any and all
defenses, claims, setoffs, and discharges of Borrower or Authority, or any other
obligor, pertaining to Indebtedness, except the defense of discharge by payment
in full. Without limiting the generality of the foregoing, the undersigned shall
not assert, plead or enforce against Lender any defense of waiver, release,
discharge in bankruptcy, statute of limitations, res judicata, statute of
frauds, anti-deficiency statute, fraud, incapacity, minority, usury, illegality
or unenforceability which may be available to Borrower or Authority or any other
person liable in respect of any Indebtedness, or any setoff available against
Lender to Borrower or Authority or any other such person, whether or not on
account of a related transaction. The undersigned expressly agrees that the
undersigned shall be and remain liable for any deficiency remaining after
foreclosure of any mortgage or security interest securing Indebtedness, whether
or not the liability of Borrower or Authority or any other obligor for such
deficiency is discharged pursuant to statute or judicial decision. The liability
of the undersigned shall not be affected or impaired by any voluntary or
involuntary liquidation, dissolution, sale or other disposition of all or
substantially all the assets, marshalling of assets and liabilities,
receivership, insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition or readjustment of, or other similar
event or proceeding affecting Borrower or Authority or any of their respective
assets. The undersigned shall not assert, plead or enforce against Lender any
claim, defense or setoff available to the undersigned against Borrower or
Authority.
9. The undersigned waives presentment, demand for payment, notice of
dishonor or nonpayment, and protest of any instrument evidencing Indebtedness.
Lender shall not be required first to resort for payment of the Indebtedness to
Borrower or Authority or other persons, or their properties, or first to
enforce, realize upon or exhaust any collateral security for Indebtedness,
before enforcing this Guaranty and Negative Pledge Agreement.
10. If any payment applied by Lender to Indebtedness is thereafter set
aside, recovered, rescinded or required to be returned for any reason
(including, without limitation, the bankruptcy, insolvency or reorganization of
Borrower or Authority or any other obligor), the
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Indebtedness to which such payment was applied shall for the purpose of this
Guaranty and Negative Pledge Agreement be deemed to have continued in existence,
notwithstanding such application, and this Guaranty and Negative Pledge
Agreement shall be enforceable as to such Indebtedness as fully as if such
application had never been made.
11. The liability of the undersigned under this Guaranty and Negative
Pledge Agreement is in addition to and shall be cumulative with all other
liabilities of the undersigned to Lender as guarantor, surety, endorser,
accommodation co-obligor or otherwise of any Indebtedness or obligation of
Borrower or Authority, without any limitation as to amount, unless the
instrument or agreement evidencing or creating such other liability specifically
provides to the contrary.
12. This Guaranty and Negative Pledge Agreement shall be effective upon
delivery to Lender, without further act, condition or acceptance by Lender,
shall be binding upon the undersigned and the successors and assigns of the
undersigned and shall inure to the benefit of Lender and its participants,
successors and assigns. Any invalidity or unenforceability of any provision or
application of this Guaranty and Negative Pledge Agreement shall not affect
other lawful provisions and application hereof, and to this end the provisions
of this Guaranty and Negative Pledge Agreement are declared to be severable.
This Guaranty and Negative Pledge Agreement may not be waived, modified,
amended, terminated, released or otherwise changed except by a writing signed by
the undersigned and Lender. This Guaranty and Negative Pledge Agreement shall be
governed by the laws of the State of Arkansas. The undersigned waives notice of
Lender's acceptance hereof and waives the right to trial by jury in any action
based on or pertaining to this Guaranty and Negative Pledge Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; EXECUTION PAGE
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IN WITNESS WHEREOF, this Guaranty and Negative Pledge Agreement has been
duly executed on behalf of the undersigned by its duly authorized officer as of
the day and year first above written.
ASAHI/AMERICA, INC.
By: /s/ Xxxxxx X. Xxxxx
--------------------------
Its: President
--------------------------
STATE OF _______________)
)
COUNTY OF ______________)
The foregoing instrument was acknowledged before me this ____ day of
_________, 1998, by ___________________, the _______________________ of
Asahi/America, Inc., a Massachusetts corporation, on behalf of the corporation.
_______________________________________
Notary Public
[EXECUTION PAGE OF GUARANTY AND NEGATIVE PLEDGE AGREEMENT]
