EXHIBIT 10.19
GUARANTY
THIS GUARANTY (this "Guaranty") dated as of January 29, 1998, is from
____________________________, a ___________ corporation (the "Guarantor"), to
the Lenders referred to hereinafter and Bank One, Texas, NA, as Agent for the
Lenders (in such capacity the "Agent").
W I T N E S S E T H:
A. PalEx, Inc. (the "Borrower"), a Delaware corporation, the various
financial institutions (collectively, the "Lenders") as are or may from time to
time become parties thereto and the Agent have entered into that certain Secured
Credit Agreement dated as of January 29, 1998 (herein, as the same may be
amended, modified, supplemented, extended, rearranged, and/or restated from time
to time, called the "Credit Agreement"), pursuant to which, upon the terms and
conditions therein set forth, (a) the Lenders have agreed to make Revolving
Loans to the Borrower, which Revolving Loans are evidenced by Notes of the
Borrower dated January 29, 1998, in the aggregate original principal amount of
$125,000,000, payable the order of the Lenders, respectively, and the Agent may,
in its sole discretion make Agent Loans to the Borrower, in a principal amount
of up to $5,000,000 pursuant to its Note, (herein, as amended, extended,
modified, rearranged and/or supplemented, from time to time together with any
promissory notes given in extension, replacement, rearrangement, modification
and/or substitution thereof or therefor, collectively called the "Notes") and
(b) the Agent on behalf of the Lenders has agreed to issue Letters of Credit for
the account of Borrower. Capitalized terms used herein without definition shall
have the meanings assigned in the Credit Agreement.
B. As a condition precedent to the making of the Loans and the
issuance of the Letters of Credit under the Credit Agreement, the Guarantor is
required to execute and deliver this Guaranty.
C. The Guarantor has duly authorized the execution, delivery and
performance of this Guaranty.
D. It is in the best interests of the Guarantor to execute this
Guaranty inasmuch as the Guarantor will derive substantial direct and indirect
benefits from the Loans made from time to time to the Borrower and the issuance
of Letters of Credit by the Agent and the Lenders pursuant to the Credit
Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce the Agent
and the Lenders to make Loans (including the initial Loans) to the Borrower and
to issue Letters of Credit pursuant to the Credit Agreement, the Guarantor
agrees, for the benefit of the Agent and each Lender, as follows:
ARTICLE I
GUARANTY
1.1 Guaranty. For value received, and in consideration of any loan or
other financial accommodation, heretofore or hereafter at any time made or
granted to the Borrower by the Agent and the Lenders, the Guarantor hereby
unconditionally guarantees the full and prompt payment when due, whether by
acceleration or otherwise, and at all times thereafter, of all obligations of
the Borrower to the Agent and each Lender and their successors and assigns,
howsoever created, arising or evidenced, whether direct or indirect, primary or
secondary, absolute or contingent, joint or several, or now or hereafter
existing or due or to become due, including, without limitation, all such
amounts which would become due but for the operation of the automatic stay under
Section 362(a) of the United States Bankruptcy Code, 11 U.S.C. (S) 362(a), and
the operation of Sections 502(b) and 506(b) of such Bankruptcy Code, 11 U.S.C.
(S) 502(b) and (S) 506(b), under and in connection with the Credit Agreement,
including, without limitation under (a) the Notes, and (b) the Letters of
Credit, including any Reimbursement Obligations with respect thereto (all such
obligations being hereinafter collectively called the "Liabilities"), and the
Guarantor further agrees to pay all reasonable expenses (including reasonable
attorneys' fees and legal expenses) paid or incurred by the Agent and any Lender
in endeavoring to collect the Liabilities, or any part thereof, and in enforcing
this Guaranty. Anything herein contained to the contrary notwithstanding, the
amount of this Guaranty, however, shall not exceed the maximum amount which the
Guarantor could pay under this Guaranty without having such payment set aside as
a fraudulent transfer or conveyance or similar action under such Bankruptcy Code
or any applicable state law.
1.2. Bankruptcy. The Guarantor hereby agrees that, in the event of the
dissolution or insolvency of the Borrower or the Guarantor, or the inability or
failure of the Borrower or the Guarantor to pay its debts as they become due, or
an assignment by the Borrower or the Guarantor for the benefit of creditors, or
the commencement of any case or proceeding in respect of the Borrower or the
Guarantor under any bankruptcy, insolvency or similar laws, and if such event
shall occur at a time when any of the Liabilities may not then be due and
payable, the Guarantor will pay to the Lender forthwith the full amount which
would be payable hereunder by the Guarantor as if all Liabilities were then due
and payable.
1.3. Setoff. In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon the
occurrence of, and throughout the continuance of, any Event of Default under the
Credit Agreement, the Agent and each Lender and each subsequent holder of any of
the Notes is hereby authorized by the Guarantor without notice to the Borrower,
the Guarantor or any other Person, 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, but not including trust
accounts, and in whatever currency denominated) and any other Indebtedness at
any time held or owing by the Agent, that Lender or that subsequent holder to or
for the credit or the account of the Guarantor, whether or not matured, against
and on
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account of the obligations and liabilities of the Borrower or the Guarantor to
the Agent, such Lender or such subsequent holder under the Credit Documents,
including, but not limited to, all claims of any nature or description arising
out of or connected with the Credit Documents irrespective of whether or not (a)
the Agent, such Lender or such subsequent holder shall have made any demand
hereunder, or (b) the principal of or the interest on the Loans, the L/C
Obligations or any other amounts due hereunder shall have become due and payable
and although said obligations and liabilities, or any of them, may be contingent
or unmatured.
1.4. Guaranty Absolute, etc. This Guaranty shall in all respects be a
continuing, absolute and unconditional Guaranty, and shall remain in full force
and effect (notwithstanding, without limitation, the dissolution of the Borrower
or the Guarantor or that at any time or from time to time all Liabilities may
have been paid in full), until all Liabilities (including any renewals,
extensions and/or rearrangements of any thereof) and all interest thereon and
all reasonable expenses (including reasonable attorneys' fees and legal
expenses) paid or incurred by the Agent and the Lenders in endeavoring to
collect the Liabilities and in enforcing this Guaranty shall have been finally
paid in full and the Commitments have been permanently terminated.
1.5. Reinstatement. The Guarantor further agrees that, if at any time all
or any part of any payment theretofore applied by the Agent or any Lender to any
of the Liabilities is or must be rescinded or returned by the Agent or any
Lender for any reason whatsoever (including, without limitation, the insolvency,
bankruptcy or reorganization of the Borrower), such Liabilities shall, for the
purposes of this Guaranty, to the extent that such payment is or must be
rescinded or returned, be deemed to have continued in existence, notwithstanding
such application by the Agent or any Lender, and this Guaranty shall continue to
be effective or be reinstated, as the case may be, as to such Liabilities, all
as though such application by the Agent or any Lender had not been made.
1.6 Rights of the Lenders. The Agent or any Lender may, from time to
time, at its sole discretion and without notice to the Guarantor, and without
affecting the obligations of the Guarantor hereunder, which shall remain in full
force and effect, take any or all of the following actions:
(a) retain or obtain a lien upon or a security interest in any
property to secure any of the Liabilities or any obligation hereunder;
(b) retain or obtain the primary or secondary obligation of any
obligor or obligors, in addition to the Guarantor, with respect to any of
the Liabilities;
(c) extend or renew for one or more periods (whether or not longer
than the original period), alter or exchange any of the Liabilities, or
release or compromise any obligation of the Guarantor hereunder or any
obligation of any nature of any other obligor with respect to any of the
Liabilities;
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(d) extend or renew for one or more periods (whether or not longer
than the original period) or release, compromise, alter or exchange any
obligations of any nature of any obligor with respect to any such property
securing any of the Liabilities; or
(e) resort to the Guarantor for payment of any of the Liabilities,
whether or not the Lender shall have proceeded against any other obligor
primarily or secondarily obligated with respect to any of the Liabilities
(all of the actions referred to in this clause being hereby expressly
waived by the Guarantor).
1.7. Application of Payments. Any amounts received by the Agent or any
Lender from whatsoever source on account of the Liabilities may be applied by it
toward the payment of such of the Liabilities, and in such order of application,
as the Agent or any Lender may from time to time elect.
1.8. Waiver. (a) The Guarantor hereby expressly waives:
(i) notice of the acceptance by the Agent or any Lender of this
Guaranty;
(ii) notice of the existence or creation or non-payment of all or
any of the Liabilities;
(iii) presentment for payment, demand, protest, notice of intent
to accelerate, notice of acceleration, notice of dishonor and all
other notices whatsoever; and
(iv) any right to require marshalling of assets and all diligence
in collection or protection of or realization upon the Liabilities or
any thereof, any obligation hereunder, or any security for or guaranty
of any of the foregoing.
(b) No delay on the part of the Agent or any Lender in the exercise of
any right or remedy shall operate as a waiver thereof, and no single or
partial exercise by the Agent or any Lender of any right or remedy shall
preclude other or further exercise thereof or the exercise of any other
right or remedy; nor shall any modification or waiver of any of the
provisions of this Guaranty be binding upon the Agent or any Lender except
as expressly set forth in a writing duly signed and delivered on behalf of
the Agent or such Lender. No action of the Agent or any Lender permitted
hereunder shall in any way affect or impair the rights of the Agent or any
Lender and the obligations of the Guarantor under this Guaranty. The
obligations of the Guarantor under this Guaranty shall be absolute and
unconditional irrespective of any circumstance whatsoever which might
constitute a legal or equitable discharge or defense of the Guarantor. The
Guarantor hereby acknowledges that there are no conditions to the
effectiveness of this Guaranty.
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1.9. Subrogation. No payment made by or for the account of the Guarantor
pursuant to this Guaranty shall entitle the Guarantor by subrogation or
otherwise to demand or receive any payments by the Borrower or from or out of
any properties of the Borrower until the Liabilities shall have been paid in
full and the Commitments terminated. The Guarantor shall not exercise any right
or remedy against the Borrower or any properties of the Borrower by reason of
any performance by the Guarantor of this Guaranty until the Liabilities shall
have been paid in full.
1.10. Subordination. The Guarantor hereby subordinates its right to
payment from the Borrower of any obligations, howsoever created, arising or
evidenced, whether direct or indirect absolute or contingent, now or hereafter
existing or due or to become due (collectively, "Liabilities") to the
Liabilities of the Borrower to the Agent and the Lenders, and no payments or
other distributions whatsoever in respect of any such Liabilities owing to the
Guarantor, nor shall any property or assets of the Borrower be applied to the
purchase, acquisition or retirement of any such Liabilities owing to the
Guarantor; provided that payments on such Liabilities permitted under the Credit
Agreement may be made at any time no Default or Event of Default shall have
occurred and be continuing. Any payments received by the Guarantor in respect
of any such Liabilities owing to it other than as expressly provided herein
shall be held in trust for the Lenders.
1.11. Excess Liabilities. The creation or existence from time to time
of Liabilities in excess of the amount to which the right of recovery under this
Guaranty is limited, if any, is hereby authorized, without notice to the
Guarantor, and shall in no way affect or impair the rights of the Lender and the
obligation of the Guarantor under this Guaranty.
1.12. Successors, Transferees and Assigns. The Agent and each Lender
may, from time to time, without notice to the Guarantor, assign or transfer any
or all of the Liabilities or any interest therein in accordance with the terms
of the Credit Agreement; and, notwithstanding any such assignment or transfer or
any subsequent assignment or transfer thereof, such Liabilities shall be and
remain Liabilities for the purposes of this Guaranty, and each and every
immediate and successive assignee or transferee of any of the Liabilities or of
any interest therein shall, to the extent of the interest of such assignee or
transferee in the Liabilities, be entitled to the benefits of this Guaranty to
the same extent as if such assignee or transferee were the transferring Lender;
provided, however, that, unless the transferring Lender shall otherwise consent
in writing, the transferring Lender shall have an unimpaired right, prior and
superior to that of any such assignee or transferee, to enforce this Guaranty,
for the benefit of the transferring Lender as to those of the Liabilities which
the transferring Lender has not assigned or transferred.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Independent Means of Obtaining Information. The Guarantor hereby
represents and warrants to the Agent and each Lender that it now has and will
continue to have independent means of obtaining information concerning the
affairs, operations, financial condition, business and prospects of the
Borrower.
2.2 Authorization; No Conflict. The Guarantor hereby further represents
and warrants to the Agent and each Lender that
(a) the execution and delivery of this Guaranty, and the performance
by the Guarantor of its obligations hereunder, are within the Guarantor's
corporate powers and have been duly authorized by all necessary corporate
action on the part of the Guarantor; and
(b) this Guaranty has been duly executed and delivered on behalf of
the Guarantor and is the legal, valid and binding obligation of the
Guarantor, enforceable in accordance with its terms subject as to
enforcement only to bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally
and equitable principles relating to or limiting creditors' rights
generally, the making and performance of which do not and will not
contravene or conflict with the articles of incorporation and by-laws or
other corporate governance documents of the Guarantor or violate or
constitute a default under any law, any presently existing requirement or
restriction imposed by any judicial, arbitral or governmental
instrumentality or any agreement, instrument or indenture by which the
Guarantor is bound.
2.3 Validity and Binding Nature. This Guaranty shall be binding upon the
Guarantor, and upon the successors and assigns of the Guarantor, and shall
include any successor or successors, whether immediate or remote, to such
corporation; provided, however, that the Guarantor may not assign any of its
obligations hereunder without the prior written consent of the Agent and the
Lenders except as may be provided in the Credit Agreement.
ARTICLE III
MISCELLANEOUS PROVISIONS
3.1 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial. This
Guaranty, and the rights and duties of the parties hereto, shall be construed in
accordance with and governed by the internal laws of the State of Texas. Each
party hereto hereby submits to the nonexclusive jurisdiction of the United
States District Court for the Southern District of Texas and of any Texas state
court sitting in Houston, Texas for purposes of all legal proceedings arising
out of or relating to this Guaranty or the transactions contemplated hereby.
Each party hereto irrevocably waives,
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to the fullest extent permitted by law, any objection it may now or hereafter
have to the laying of the venue of any such proceeding brought in such a court
and any claim that any such proceeding brought in such a court has been brought
in an inconvenient forum. EACH PARTY TO THIS GUARANTY HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING
OUT OF OR RELATING TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY.
3.2. Severability. Wherever possible, each provision of this Guaranty
shall be interpreted in such manner as to be effective and valid under
applicable laws, but if any provision of this Guaranty shall be prohibited by or
invalid under such laws, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guaranty.
3.3 Notices. Except as otherwise specified herein, all notices under this
Guaranty shall be in writing (including cable, telecopy or telex) and shall be
given to the Guarantor at its address, telecopier number or telex number set
forth on the signature page hereof or such other address, telecopier number or
telex number as the Guarantor may hereafter specify by notice to the Agent,
given by courier, by United States certified or registered mail, by telegram or
by other telecommunication device capable of creating a written record of such
notice and its receipt. Each such notice, request or other communication shall
be effective (i) if given by telecopier, when such telecopy is transmitted to
the telecopier number specified in this Section on the signature pages hereof
and a confirmation of receipt of such telecopy has been received by the sender,
(ii) if given by telex, when such telex is transmitted to the telex number
specified on the signature pages hereof and the answerback is received by
sender, (iii) if given by courier, when delivered, (iv) if given by mail, five
(5) days after such communication is deposited in the mail, certified or
registered with return receipt requested, or (v) if given by any other means,
when delivered at the addresses specified on the signature page hereof.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its duly authorized officer as of the date first above
written.
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Address: By:________________________________
________________ Name:______________________________
________________ Title:_____________________________
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