EXHIBIT 10.42
GUARANTY
GUARANTY, dated as of November 9, 2006, by QUAKER TEXTILE CORPORATION,
a Massachusetts corporation ("Quaker Textile"), QUAKER FABRIC MEXICO, S.A. DE
C.V. ("Quaker Mexico"), a Mexican corporation, and QUAKER FABRIC CORPORATION, a
Delaware corporation (the "Parent", and together with Quaker Textile and Quaker
Mexico, the "Guarantors"), in favor of GB MERCHANT PARTNERS, LLC, as
administrative agent (hereinafter, the "Administrative Agent") for itself and
the other lending institutions (hereinafter, collectively the "Lenders") which
are or may become parties to the Term Loan Agreement of even date herewith (the
"Credit Agreement"), among Quaker Fabric Corporation of Fall River (the
"Company"), the Parent, the Lenders, and the Administrative Agent.
WHEREAS, the Company and the Guarantors are members of a group of
related corporations, the success of any one of which is dependent in part on
the success of the other members of such group;
WHEREAS, each Guarantor expects to receive substantial direct and
indirect benefits from the extensions of credit to the Company by the Lenders
pursuant to the Credit Agreement (which benefits are hereby acknowledged);
WHEREAS, it is a condition precedent to the Lenders' making any loans
or otherwise extending credit to the Company under the Credit Agreement that the
Guarantors execute and deliver to the Administrative Agent, for the benefit of
the Lenders and the Administrative Agent, a guaranty substantially in the form
hereof; and
WHEREAS, each Guarantor wishes to guaranty the Company's obligations to
the Lenders and the Administrative Agent under or in respect of the Credit
Agreement as provided herein;
NOW, THEREFORE, each Guarantor hereby agrees with the Lenders and the
Administrative Agent as follows:
1. DEFINITIONS. The term "Obligations" and all other capitalized terms
used herein without definition shall have the respective meanings provided
therefor in the Credit Agreement.
2. GUARANTY OF PAYMENT AND PERFORMANCE. Each Guarantor hereby jointly
and severally unconditionally guarantees to the Lenders and the Administrative
Agent the full and punctual payment when due (whether at stated maturity, by
required pre-payment, by acceleration or otherwise), as well as the performance,
of all of the Obligations, including all such which would become due but for the
operation of the automatic stay pursuant to Section 362(a) of the Federal
Bankruptcy Code and the operation of Section 502(b) and 506(b) of the Federal
Bankruptcy Code. This Guaranty is an absolute, unconditional and continuing
guaranty of the full and punctual payment and performance of all of the
Obligations and not of their collectibility only and is in no way conditioned
upon any requirement that the Administrative Agent or any Lender first attempt
to collect any of the Obligations from the Company or resort to any collateral
security or other means of obtaining payment. Should the Company default in the
payment or performance of any of the Obligations, the obligations of the
Guarantors hereunder with respect to such Obligations in default shall, upon
demand by the Administrative Agent, become immediately due and payable to the
Administrative Agent, for the benefit of the Lenders and the Administrative
Agent, without demand or notice of any nature, all of which are expressly waived
by each Guarantor. Payments by the Guarantors hereunder may be required by the
Administrative Agent on any number of occasions. All payments by each Guarantor
hereunder shall be made to the Administrative Agent, in the manner and at the
place of payment specified therefor in the Credit Agreement, for the account of
the Lenders and the Administrative Agent.
3. GUARANTOR'S AGREEMENT TO PAY ENFORCEMENT COSTS, ETC. Each Guarantor
further jointly and severally agrees, as the principal obligor and not as a
guarantor only, to pay to the Administrative Agent, on demand, all costs and
expenses (including court costs and legal expenses) incurred or expended by the
Administrative Agent or any Lender in connection with the Obligations, this
Guaranty and the enforcement thereof, together with interest on amounts
recoverable under this Section y3 from the time when such amounts become due
until payment, whether before or after judgment, at the rate of interest for
overdue principal set forth in the Credit Agreement, provided that if such
interest exceeds the maximum amount permitted to be paid under applicable law,
then such interest shall be reduced to such maximum permitted amount.
4. WAIVERS BY GUARANTOR; LENDERS' FREEDOM TO ACT. Each Guarantor agrees
that the Obligations will be paid and performed strictly in accordance with
their respective terms, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction, and applicable to the Company,
affecting any of such terms or the rights of the Administrative Agent or any
Lender with respect thereto. Each Guarantor waives promptness, diligence,
presentment, demand, protest, notice of acceptance, notice of any Obligations
incurred and all other notices of any kind, all defenses which may be available
by virtue of any valuation, stay, moratorium law or other similar law now or
hereafter in effect, any right to require the marshalling of assets of the
Company or any other entity or other person primarily or secondarily liable with
respect to any of the Obligations, and all suretyship defenses generally.
Without limiting the generality of the foregoing, each Guarantor agrees to the
provisions of any instrument evidencing, securing or otherwise executed in
connection with any Obligation and agrees that the obligations of each Guarantor
hereunder shall not be released or discharged, in whole or in part, or otherwise
affected by (i) the failure of the Administrative Agent or any Lender to assert
any claim or demand or to enforce any right or remedy against the Company or any
other entity or other person primarily or secondarily liable with respect to any
of the Obligations; (ii) any extensions, compromise, refinancing, consolidation
or renewals of any Obligation; (iii) any change in the time, place or manner of
payment of any of the Obligations or any rescissions, waivers, compromise,
refinancing, consolidation or other amendments or modifications of any of the
terms or provisions of the Credit Agreement, the Notes, the other Loan Documents
or any other agreement evidencing, securing or otherwise executed in connection
with any of the Obligations; (iv) the addition, substitution or release of any
entity or other person primarily or secondarily liable for any Obligation; (v)
the adequacy of any rights which the Administrative Agent or any Lender may have
against any collateral security or other means of obtaining repayment of any of
the Obligations; (vi) the impairment of any collateral securing any of the
Obligations, including without limitation the failure to perfect or preserve any
rights which the Administrative Agent or any Lender might have in such
collateral security or the substitution, exchange, surrender, release, loss or
destruction of any such collateral security; or (vii) any other act or omission
which might in any manner or to any extent vary the risk of any of the
Guarantors or otherwise operate as a release or discharge of any of the
Guarantors, all of which may be done without notice to the Guarantors. To the
fullest extent permitted by law, each Guarantor hereby expressly waives any and
all rights or defenses arising by reason of (A) any "one action" or
"anti-deficiency" law which would otherwise prevent the Administrative Agent or
any Lender from bringing any action, including any claim for a deficiency, or
exercising any other right or remedy (including any right of set-off), against
any of the Guarantors before or after the Administrative Agent's or such
Lender's commencement or completion of any foreclosure action, whether
judicially, by exercise of power of sale or otherwise, or (B) any other law
which in any other way would otherwise require any election of remedies by the
Administrative Agent or any Lender.
5. UNENFORCEABILITY OF OBLIGATIONS AGAINST COMPANY. If for any reason
the Company has no legal existence or is under no legal obligation to discharge
any of the Obligations, or if any of the Obligations have become irrecoverable
from the Company by reason of the Company's insolvency, bankruptcy or
reorganization or by other operation of law or for any other reason, this
Guaranty shall nevertheless be binding on each Guarantor to the same extent as
if such Guarantor at all times had been the principal obligor on all such
Obligations. In the event that acceleration of the time for payment of any of
the Obligations is stayed upon the insolvency, bankruptcy or reorganization of
the Company, or for any other reason, all such amounts otherwise subject to
acceleration under the terms of the Credit Agreement, the Notes, the other Loan
Documents or any other agreement evidencing, securing or otherwise executed in
connection with any Obligation shall be immediately due and payable by each
Guarantor.
6. SUBROGATION; SUBORDINATION.
6.1. WAIVER OF RIGHTS AGAINST COMPANY. Until the final payment
and performance in full in cash of all of the Obligations, none of the
Guarantors shall exercise and each hereby waives any rights against the
Company arising as a result of payment by such Guarantor hereunder, by
way of subrogation, reimbursement, restitution, contribution or
otherwise, and will not prove any claim in competition with the
Administrative Agent or any Lender in respect of any payment hereunder
in any bankruptcy, insolvency or reorganization case or proceedings of
any nature; none of the Guarantors will claim any setoff, recoupment or
counterclaim against the Company in respect of any liability of such
Guarantor to the Company in respect of any payment hereunder; and each
Guarantor waives any benefit of and any right to participate in any
collateral security which may be held by the Administrative Agent or
any Lender.
6.2. SUBORDINATION. The payment of any amounts due with
respect to any indebtedness of the Company for money borrowed or credit
received now or hereafter owed to any of the Guarantors is hereby
subordinated to the prior payment in full in cash of all of the
Obligations. Each Guarantor agrees that, after the occurrence of any
default in the payment or performance of any of the Obligations, such
Guarantor will not demand, xxx for or otherwise attempt to collect any
such indebtedness of the Company to such Guarantor until all of the
Obligations shall have been paid in full in cash. If, notwithstanding
the foregoing sentence, any Guarantor shall collect, enforce or receive
any amounts in respect of such indebtedness while any Obligations are
still outstanding, such amounts shall be collected, enforced and
received by such Guarantor as trustee for the Lenders and the
Administrative Agent and be paid over to the Administrative Agent, for
the benefit of the Lenders and the Administrative Agent, on account of
the Obligations.
6.3. PROVISIONS SUPPLEMENTAL. The provisions of this Section
y6 shall be supplemental to and not in derogation of any rights and
remedies of the Lenders and the Administrative Agent under any separate
subordination agreement which the Administrative Agent may at any time
and from time to time enter into with any Guarantor for the benefit of
the Lenders and the Administrative Agent.
7. SECURITY; SETOFF. Each Guarantor grants to each of the
Administrative Agent and the Lenders, as security for the full and punctual
payment and performance of all of such Guarantor's obligations hereunder, a
continuing lien on and security interest in all securities or other property
belonging to such Guarantor now or hereafter held by the Administrative Agent or
such Lender and in all deposits (general or special, time or demand, provisional
or final) and other sums credited by or due from the Administrative Agent or
such Lender to such Guarantor or subject to withdrawal by such Guarantor.
Regardless of the adequacy of any collateral security or other means of
obtaining payment of any of the Obligations, if any Event of Default shall have
occurred and be continuing, each of the Administrative Agent and the Lenders is
hereby authorized at any time and from time to time, without notice to any
Guarantor (any such notice being expressly waived by each Guarantor) and to the
fullest extent permitted by law, to set off and apply such deposits and other
sums against the obligations of each Guarantor under this Guaranty, whether or
not the Administrative Agent or such Lender shall have made any demand under
this Guaranty and although such obligations may be contingent or unmatured.
8. FURTHER ASSURANCES. Each Guarantor agrees that it will from time to
time, at the request of the Administrative Agent, do all such things and execute
all such documents as the Administrative Agent may consider necessary or
desirable to give full effect to this Guaranty and to perfect and preserve the
rights and powers of the Lenders and the Administrative Agent hereunder. Each
Guarantor acknowledges and confirms that such Guarantor itself has established
its own adequate means of obtaining from the Company on a continuing basis all
information desired by such Guarantor concerning the financial condition of the
Company and that such Guarantor will look to the Company and not to the
Administrative Agent or any Lender in order for such Guarantor to keep
adequately informed of changes in the Company's financial condition.
9. TERMINATION; REINSTATEMENT. This Guaranty shall remain in full force
and effect until the Administrative Agent is given written notice of any
Guarantor's intention to discontinue this Guaranty, notwithstanding any
intermediate or temporary payment or settlement of the whole or any part of the
Obligations. No such notice shall be effective unless received and acknowledged
by an officer of the Administrative Agent at the address of the Administrative
Agent for notices set forth in Section 19 of the Credit Agreement. No such
notice shall affect any rights of the Administrative Agent or any Lender
hereunder, including without limitation the rights set forth in Sections 4 and
6, with respect to any Obligations incurred or accrued prior to the receipt of
such notice or any Obligations incurred or accrued pursuant to any contract or
commitment in existence prior to such receipt. This Guaranty shall continue to
be effective or be reinstated, notwithstanding any such notice, if at any time
any payment made or value received with respect to any Obligation is rescinded
or must otherwise be returned by the Administrative Agent or any Lender upon the
insolvency, bankruptcy or reorganization of the Company, or otherwise, all as
though such payment had not been made or value received.
10. SUCCESSORS AND ASSIGNS. This Guaranty shall be binding upon each
Guarantor, its respective successors and assigns, and shall inure to the benefit
of the Administrative Agent and the Lenders and their respective successors,
transferees and assigns. Without limiting the generality of the foregoing
sentence, each Lender may assign or otherwise transfer the Credit Agreement, the
Notes, the other Loan Documents or any other agreement or note held by it
evidencing, securing or otherwise executed in connection with the Obligations,
or sell participations in any interest therein, to any other entity or other
person, and such other entity or other person shall thereupon become vested, to
the extent set forth in the agreement evidencing such assignment, transfer or
participation, with all the rights in respect thereof granted to such Lender
herein, all in accordance with Section 18 of the Credit Agreement. No Guarantor
may assign any of its obligations hereunder.
11. AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Guaranty nor consent to any departure by any Guarantor therefrom shall be
effective unless the same shall be in writing and signed by the Administrative
Agent with the consent of the Required Lenders. No failure on the part of the
Administrative Agent or any Lender to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right.
12. NOTICES. All notices and other communications called for hereunder
shall be made in writing and, unless otherwise specifically provided herein,
shall be deemed to have been duly made or given when delivered by hand or mailed
first class, postage prepaid, or, in the case of telegraphic or telexed notice,
when transmitted, answer back received, addressed as follows: if to a Guarantor,
at the address set forth beneath its signature hereto, and if to the
Administrative Agent, at the address for notices to the Administrative Agent set
forth in Section 19 of the Credit Agreement, or at such address as either party
may designate in writing to the other.
13. GOVERNING LAW; CONSENT TO JURISDICTION. THIS GUARANTY IS INTENDED
TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS. Each Guarantor
agrees that any suit for the enforcement of this Guaranty may be brought in the
courts of the Commonwealth of Massachusetts or any federal court sitting therein
and consents to the nonexclusive jurisdiction of such court and to service of
process in any such suit being made upon such Guarantor by mail at the address
specified by reference in Section 12. Each Guarantor hereby waives any objection
that it may now or hereafter have to the venue of any such suit or any such
court or that such suit was brought in an inconvenient court.
14. WAIVER OF JURY TRIAL. EACH GUARANTOR HEREBY WAIVES ITS RIGHT TO A
JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS GUARANTY, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE
PERFORMANCE OF ANY OF SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law,
each Guarantor hereby waives any right which it may have to claim or recover in
any litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. Each Guarantor (i) certifies that neither the Administrative
Agent or any Lender nor any representative, agent or attorney of the
Administrative Agent or any Lender has represented, expressly or otherwise, that
the Administrative Agent or any Lender would not, in the event of litigation,
seek to enforce the foregoing waivers and (ii) acknowledges that, in entering
into the Credit Agreement and the other Loan Documents to which the
Administrative Agent or any Lender is a party, the Administrative Agent and the
Lenders are relying upon, among other things, the waivers and certifications
contained in this Section 14.
15. MISCELLANEOUS. This Guaranty constitutes the entire agreement of
each Guarantor with respect to the matters set forth herein. The rights and
remedies herein provided are cumulative and not exclusive of any remedies
provided by law or any other agreement, and this Guaranty shall be in addition
to any other guaranty of or collateral security for any of the Obligations. The
invalidity or unenforceability of any one or more sections of this Guaranty
shall not affect the validity or enforceability of its remaining provisions.
Captions are for the ease of reference only and shall not affect the meaning of
the relevant provisions. The meanings of all defined terms used in this Guaranty
shall be equally applicable to the singular and plural forms of the terms
defined.
16. CONTRIBUTION. To the extent any Guarantor makes a payment hereunder
in excess of the aggregate amount of the benefit received by such Guarantor in
respect of the extensions of credit under the Credit Agreement (the "Benefit
Amount"), then such Guarantor, after the payment in full, in cash, of all of the
Obligations, shall be entitled to recover from each other Guarantor such excess
payment, pro rata, in accordance with the ratio of the Benefit Amount received
by each such other Guarantor to the total Benefit Amount received by all
Guarantors, and the right to such recovery shall be deemed to be an asset and
property of such Guarantor so funding; provided, that all such rights to
recovery shall be subordinated and junior in right of payment to the final and
undefeasible payment in full in cash of all of the Obligations.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
(Signature Page to Guaranty)
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be
executed and delivered as of the date first above written.
QUAKER FABRIC CORPORATION
QUAKER TEXTILE CORPORATION
By: /s/ Xxxx X. Xxxxx
---------------------------------------------------------
Name: Xxxx X. Xxxxx
Title: Vice President Finance
Address: 000 Xxxxxxxx Xxxxxx, Xxxx Xxxxx, XX 00000
Telex: ____________________________________________________
QUAKER FABRIC MEXICO, S.A. DE C.V.
By: /s/ Xxxx X. Xxxxx
---------------------------------------------------------
Name: Xxxx X. Xxxxx
Title: Vice President Finance
Address: Xxxxxxx Xxxxxx #00, Xxxxxxxxx xx Xxxxxx
Xxxxxx xx Xxxxxx, 00000
Telex: ____________________________________________________
