1
EXHIBIT 10.10
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT, dated as of March 28, 1997 (this "Guaranty"), is
made by KEY MEXICO A, L.L.C., a Michigan limited liability company, and KEY
MEXICO B, L.L.C., a Michigan limited liability company (the foregoing are
hereinafter sometimes referred to individually as a "Guarantor" and
collectively as the "Guarantors"), in favor of the lenders (the "Lenders")
which are parties to the Credit Agreement hereinafter defined and NBD BANK, a
Michigan banking corporation, as agent (in such capacity, the "Agent") for the
Lenders.
RECITALS
A. Key Plastics, Inc., a Michigan corporation (the "Company") has entered
into a Credit Agreement, dated as of March 24, 1997 (as amended or modified
from time to time, the "Credit Agreement"), with the Lenders and the Agent
pursuant to which the Lenders may make Advances to the Company.
B. As a condition to the effectiveness of the obligations of the Lenders
under the Credit Agreement, each Guarantor is required to guarantee, among
other things, the obligations of the Company in respect of the Advances and
other obligations of the Company under the Operative Documents (hereinafter
defined).
C. The Guarantors and the Company and the Company's other subsidiaries are
engaged as an integrated group and the integrated operation requires financing
on such a basis that credit supplied to the Company can be made available from
time to time to the Company's subsidiaries, including without limitation the
Guarantors, as required for the continued successful operation of the Company
and its subsidiaries and the integrated operation as a whole. The Company has
requested that the Lenders lend and make credit available to the Company for
the purpose of financing the integrated operations of the Company and its
subsidiaries with the Guarantors expecting to derive benefit, directly or
indirectly, from the loans and letters of credit extended by the Lenders to the
Company, both in its separate capacity and as a member of the integrated group,
inasmuch as the successful operation and condition of each Guarantor is
dependent upon the continued successful performance of the functions of the
integrated group as a whole.
D. Each Guarantor has reviewed the Credit Agreement, the Notes, the
Security Documents, and all other documents, agreements, instruments and
certificates furnished by or on behalf of the Company in connection therewith
(all of the foregoing, as amended or modified from time to time and together
with any agreements or instruments in replacement thereof, being herein
collectively referred to as the "Operative Documents"), and each Guarantor has
determined that it is in its interest and to its financial benefit that the
parties to the Operative Documents enter into the transactions contemplated
thereby.
For valuable consideration, the receipt of which is hereby acknowledged
and as further consideration, and as an inducement to the Lenders and the Agent
to maintain the credit
- 1 -
2
facilities established by the Operative Documents, each Guarantor agrees with
the Lenders and the Agent as follows:
1. Guarantee of Obligations.
(a) Each Guarantor hereby, jointly and severally, (i) guarantees, as
principal obligor and not as surety only, to the Agent and the Lenders the
prompt payment of the principal of and any and all accrued and unpaid interest
(including interest which otherwise may cease to accrue by operation of any
insolvency law, rule, regulation or interpretation thereof) on the Advances and
all other obligations of the Company to the Lenders and the Agent under the
Credit Agreement when due, whether by scheduled maturity, acceleration or
otherwise, all in accordance with the terms of the Credit Agreement and the
Notes, including, without limitation, default interest, all reimbursement
obligations under any letters of credit, indemnification payments and all
reasonable costs and expenses incurred by the Lenders and the Agent in
connection with enforcing any obligations of the Company thereunder, including
without limitation the reasonable fees and disbursements of counsel, (ii)
guarantees the prompt and punctual performance and observance of each and every
term, covenant or agreement contained in any Operative Document to be performed
or observed on the part of the Company and any monies expended by any Lender or
the Agent therewith, and (iii) guarantees the prompt and complete payment of
all obligations and performance of all covenants of the Company or any
Subsidiary in connection with Swaps relating to indebtedness under the Credit
Agreement (including any interest accruing subsequent to any petition filed by
or against the Company or any Subsidiary under the U.S. Bankruptcy Code,
whether or not allowed), indemnity and reimbursement obligations, charges,
expenses, fees, reasonable attorneys' fees and disbursements and any other
amounts owing under the Loan Documents, including, without limitation, all
renewals, extensions, refinancings, refundings, amendments and modifications of
any of the obligations in clauses (i) through (iii) above, and (iv) agrees to
make prompt payment, on demand, of any and all reasonable costs and expenses
incurred by the Lenders or the Agent in connection with enforcing the
obligations of any Guarantor hereunder, including, without limitation, the
reasonable fees and disbursements of counsel (all of the foregoing being
collectively referred to as the "Guaranteed Obligations").
(b) If for any reason any duty, agreement or obligation of the Company
contained in any Operative Document shall not be performed or observed by the
Company as provided therein, or if any amount payable under or in connection
with any Operative Document shall not be paid in full when the same becomes due
and payable, each Guarantor undertakes, but without duplication, to perform or
cause to be performed promptly each of such duties, agreements and obligations
and to pay forthwith each such amount to the Agent for the account of the
Lenders regardless of any defense or setoff or counterclaim which the Company
may have or assert, and regardless of any other condition or contingency.
2. Nature of Guaranty. This Guaranty is an absolute and unconditional and
irrevocable guaranty of payment and not a guaranty of collection and is wholly
independent of and in addition to other rights and remedies of the Lenders and
the Agent and is not contingent
GUARANTY AGREEMENT
- 2 -
3
upon the pursuit by the Lenders and the Agent of any such rights and remedies,
such pursuit being hereby waived by each Guarantor.
3. Waivers and Other Agreements. Each Guarantor hereby unconditionally
(a) waives any requirement that the Lenders or the Agent, upon the occurrence
of an Event of Default first make demand upon, or seek to enforce remedies
against the Company before demanding payment under or seeking to enforce this
Guaranty, (b) covenants that this Guaranty will not be discharged except by
complete performance of all obligations of the Company contained in the
Operative Documents, (c) agrees that this Guaranty shall remain in full force
and effect without regard to, and shall not be affected or impaired, without
limitation, by any invalidity, irregularity or unenforceability in whole or in
part of any of the Operative Documents, or any limitation on the liability of
the Company thereunder, or any limitation on the method or terms of payment
thereunder which may or hereafter be caused or imposed in any manner whatsoever
(including, without limitation, usury laws), (d) waives diligence, presentment
and protest with respect to, and any notice of default or dishonor in the
payment of any amount at any time payable by the Company under or in connection
with any of the Operative Documents, and further waives notice of any of the
matters referred to in paragraph 4 below, and further waives all notices which
may be required by statute, rule of law or otherwise to preserve any rights of
the Lenders or the Agent, including without limitation any requirement of
notice of acceptance of, or other formality relating to this Guaranty and (e)
agrees that the Guaranteed Obligations shall include any amounts paid by the
Company to the Lenders or the Agent which may be required to be returned to the
Company or to its representative or to a trustee, custodian or receiver for the
Company.
4. Obligations Absolute. The obligations, covenants, agreements and
duties of any Guarantor under this Guaranty shall not be released, affected or
impaired by any of the following whether or not undertaken with notice to or
consent of any Guarantor: (a) an assignment or transfer, in whole or in part,
of any of the Guaranteed Obligations or any of the Operative Documents although
made without notice to or consent of any Guarantor, or (b) any waiver by any
Lender or the Agent or by any other person, of the performance or observance by
the Company of any of the agreements, covenants, terms or conditions contained
in any of the Operative Documents, or (c) any indulgence in or the extension of
the time for payment by the Company of any amounts payable under or in
connection with any of the Operative Documents, or of the time for performance
by the Company of any other obligations under or arising out of any of the
Operative Documents, or the extension or renewal thereof, or (d) the
modification, amendment or waiver (whether material or otherwise) of any duty,
agreement or obligation of the Company set forth in any of the Operative
Documents (the modification, amendment or waiver from time to time of any of
the Operative Documents to which the Company is a party being expressly
authorized without further notice to or consent of any Guarantor), or (e) the
voluntary or involuntary liquidation, sale or other disposition of all or
substantially all of the assets of the Company or any receivership, insolvency,
bankruptcy, reorganization, or other similar proceedings, affecting the Company
or any of its assets, or (f) the merger or consolidation of the Company with or
into any other person or any transfer or other disposition of any shares of
capital stock of the Company by the holder thereof, or (g)
GUARANTY AGREEMENT
- 3 -
4
the release of discharge of the Company from the performance or observance of
any agreement, covenant, term or condition contained in any Operative Document,
by operation of law, or (h) the release of any security, if any, for the
obligations of the Company under any of the Operative Documents, or the
impairment of or failure to perfect an interest in any such security, or (i)
the running of any limitations period otherwise applicable, or (j) any exercise
or non-exercise of any right, remedy, power or privilege in respect of this
Guaranty or any of the Operative Documents, including without limitation the
release, discharge, or variance of the liability of any Guarantor, or (k) any
other cause whether similar or dissimilar to the foregoing which would release,
affect or impair the obligations, covenants, agreements or duties of any
Guarantor hereunder.
5. Joint and Several Obligations. The obligations of the Guarantors
hereunder shall be several and also joint each with all or with any one or more
of the other parties now or hereafter guaranteeing any of the Guaranteed
Obligations, and such obligations of the Guarantors may be enforced against
each Guarantor separately or against any two or more jointly, or against some
separately and some jointly.
6. No Investigation by Lenders or Agent. Each Guarantor hereby waives
unconditionally any obligation which, in absence of such provision, the Lenders
or the Agent might otherwise have to investigate or to assure that there has
been compliance with the law of any jurisdiction with respect to the Guaranteed
Obligations recognizing that, to save both time and expense, each Guarantor has
requested that the Lenders and the Agent not undertake such investigation.
Each Guarantor hereby expressly confirms that the obligations of such Guarantor
hereunder shall remain in full force and effect without regard to compliance or
noncompliance with any such law and irrespective of any investigation or
knowledge of any Lender or the Agent of any such law.
7. Indemnity. As a separate, additional and continuing obligation, each
Guarantor unconditionally and irrevocably undertakes and agrees with the
Lenders and the Agent that, should the Guaranteed Obligations not be
recoverable from any Guarantor under paragraph 1 hereof for any reason
whatsoever (including, without limitation, by reason of any provision of this
Guaranty or any Operative Document being or becoming void, unenforceable, or
otherwise invalid under any applicable law) then, notwithstanding any knowledge
thereof by any Lender or the Agent at any time, each Guarantor as sole,
original and independent obligor, upon demand by the Agent, will make payment
to the Agent for the account of the Lenders and the Agent of the Guaranteed
Obligations by way of a full indemnity in such currency and otherwise in such
manner as is provided in this Guaranty and the Operative Documents.
8. Subordination. Each Guarantor agrees that any present or future
indebtedness, obligations or liabilities of the Company to such Guarantor shall
be fully subordinate and junior in right and priority of payment to any present
or future indebtedness, obligations or liabilities of the Company to the
Lenders and the Agent. Each Guarantor waives any right of subrogation to the
rights of any Lender or the Agent against the Company or any other person
obligated for payment of the Guaranteed Obligations and any right of
reimbursement or
GUARANTY AGREEMENT
- 4 -
5
indemnity whatsoever arising or accruing out of any payment which such
Guarantor may make pursuant to this Guaranty and the Notes, and any right of
recourse to security for the debts and obligations of the Company, unless and
until the entire principal balance of and interest on the Guaranteed
Obligations shall have been paid in full.
9. Representations and Warranties. Each Guarantor represents and warrants
that (a) the execution, delivery and performance by such Guarantor of this
Guaranty are within its company powers, have been duly authorized by all
necessary company action, require no action by or in respect of, or filing
with, any governmental body, and do not contravene, or constitute a default
under, any provision of any material applicable law or regulation or of the
articles of organization or other charter documents or operating agreement of
such Guarantor, or of any agreement, judgment, injunction, order, decree or
other instrument binding upon such Guarantor or its property which would have a
material adverse effect; (b) this Guaranty constitutes a legal, valid and
binding obligation of such Guarantor, enforceable against such Guarantor in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to creditors' rights and except that the remedy of specific
performance and injunctive and other forms of equitable relief are subject to
equitable defenses and to the discretion of the court for which any proceedings
may be brought; and (c) as of the date hereof, each of the following is true
and correct for such Guarantor: (i) the fair saleable value and the fair
valuation of such Guarantor's property, both as valued and as a going concern,
is greater than the total amount of its liabilities (including contingent
liabilities) and greater than the amount that would be required to pay its
probable aggregate liability on its existing debts as they become absolute and
matured, (ii) such Guarantor's capital is not unreasonably small in relation to
its current and/or contemplated business or other undertaken transactions, and
(iii) such Guarantor does not intend to incur, or believe that it will incur,
debt beyond its ability to pay such debts as they become due.
10. Remedies.
(a) Upon the occurrence and during the continuance of any Event of
Default, the Lenders, or the Agent on behalf of the Lenders, may, in addition
to the remedies provided in the Operative Documents, enforce their rights
either by suit in equity, or by action at law, or by other appropriate
proceedings, whether for the specific performance (to the extent permitted by
law) of any covenant or agreement contained in this Guaranty or in aid of the
exercise of any power granted in this Guaranty and may enforce payment under
this Guaranty and any of their other rights available at law or in equity.
(b) Upon the occurrence and during the continuance of any Event of
Default hereunder, the Lenders are hereby authorized at any time and from time
to time, without notice to any Guarantor (any requirement for such notice
being expressly waived by each Guarantor) to set off and apply against any
and all of the obligations of the Guarantors now or hereafter existing under
this Guaranty any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by the Lenders
GUARANTY AGREEMENT
- 5 -
6
to or for the credit of the account of the Guarantors and any property of the
Guarantors from time to time in possession of the Lenders, irrespective of
whether or not the Lenders shall have made any demand hereunder and although
such obligations may be contingent and unmatured. The rights of the Lenders
under this paragraph 10(b) are in addition to other rights and remedies
(including, without limitation, other rights of setoff) which the Lenders may
have.
(c) To the extent that it lawfully may, each Guarantor agrees
that it will not at any time insist upon or plead, or in any manner whatever
claim or take any benefit or advantage of any applicable present or future
stay, extension or moratorium law, which may affect observance or performance
of the provisions of this Guaranty, or any of the Operative Documents nor will
it claim, take or insist upon any benefit or advantage of any present or
future law providing for the evaluation or appraisal of any security for its
obligations hereunder or the obligations of the Company under the Operative
Documents prior to any sale or sales thereof which may be made under or by
virtue of any instrument governing the same.
11. Amendments, Etc. This Guaranty may be amended from time to time and
any provision hereof may be waived in accordance with the requirements of
Section 8.1 of the Credit Agreement. No such amendment or waiver of any
provision of this Guaranty nor consent to any departure by any Guarantor
therefrom shall in any event be effective unless the same shall be in writing
and signed by the Required Lenders or all of the Lenders, as the case may be,
and, to the extent any rights or duties of the Agent may be affected, the
Agent, and then such amendment, waiver of consent shall be effective only in
the specific instance and for the specific purpose for which given.
12. Notices. All notices, demands, requests, consents and other
communications hereunder shall be in writing and shall be delivered or sent to
all or any of the Guarantors c/o, Key Plastics International L.L.C., 00000
Xxxxxxxx Xxxx, Xxxxx 000, Xxxx, Xxxxxxxx 00000, Facsimile No. (000) 000-0000
and to the Lenders and the Agent at the respective addresses for notice set
forth in the Credit Agreement or to such other address as may be designated by
the Guarantors, the Agent or any Lender by notice to the other parties hereto.
All notices and other communications shall be made in accordance with Section
8.2 of the Credit Agreement.
13. Conduct No Waiver; Remedies Cumulative. The obligations of each
Guarantor under this Guaranty are continuing obligations and a separate and
independent cause of action shall arise in respect of each enforcement
hereunder and default hereunder or under the Credit Agreement. No course of
dealing on the part of any Lender or the Agent, nor any delay or failure on the
part of any Lender or the Agent in exercising any right, power or privilege
hereunder shall operate as a waiver of such right, power or privilege or
otherwise prejudice the rights and remedies of the Lenders and the Agent
hereunder; nor shall any single or partial exercise thereof preclude any
further exercise thereof or the exercise of any other right, power or
privilege. No right or remedy conferred upon or reserved to the Lenders or the
Agent under this Guaranty is intended to be exclusive of any other right or
remedy, and every right and remedy shall be cumulative and in addition to every
other right or remedy given hereunder or now or hereafter existing under any
applicable law. Every right and remedy given by this
GUARANTY AGREEMENT
- 6 -
7
Guaranty or by applicable law to the Lenders or the Agent may be exercised from
time to time and as often as may be deemed expedient by them.
14. Reliance on and Survival of Various Provisions. All terms, covenants,
agreements, representations and warranties of each Guarantor made herein or in
any certificate or other document delivered pursuant hereto shall be deemed to
be have been relied upon by the Lenders and the Agent, notwithstanding any
investigation heretofore or hereafter made by any Lender or the Agent or on its
behalf.
15. Successors and Assigns. The rights and remedies of the Lenders and
the Agent hereunder shall inure to the benefit of the Lenders and the Agent and
their respective successors and assigns, and the duties and obligations of each
Guarantor hereunder shall be binding upon such Guarantor and its successors and
assigns.
16. Survival of Lenders' Rights and Remedies. Notwithstanding any
provision of this Guaranty to the contrary, the execution and delivery by the
Guarantors of this Guaranty, and the Lenders' and the Agent's acceptance
thereof, shall not be deemed to (a) be a consent to any action, whether
heretofore or hereafter taken, by the Company in violation of any provision of
any Operative Document, (b) be a waiver of any provision of any Operative
Document or (c) prejudice any rights or remedies which the Lenders and the
Agent may now have or have in the future under or in connection with any
Operative Document, including without limitation any such rights or remedies
with respect to any event of default or event causing or permitting
acceleration under any Operative Document which may heretofore have occurred
and be continuing or may hereafter occur.
17. Governing Law; Consent to Jurisdiction. This Guaranty is a contract
made under, and the rights and obligations of the parties hereunder, shall be
governed by and construed in accordance with, the laws of the State of Michigan
applicable to contracts to be made and to be performed entirely with such
State. Each Guarantor further agrees that any legal action or proceeding
brought with respect to this Guaranty or the transactions contemplated hereby
may be brought in any court of the State of Michigan, or any court of the
United States of America sitting in Michigan, and each Guarantor hereby
irrevocably submits to and accepts generally and unconditionally the
jurisdiction of those courts with respect to its person and property.
18. Definitions; Headings. Terms used but not defined herein shall have
the respective meanings ascribed thereto in the Credit Agreement. The headings
of the various subdivisions hereof are for convenience of reference only and
shall in no way modify any of the terms or provisions hereof.
19. Integration; Severability; Enforceability. This Guaranty embodies the
entire agreement and understanding among the Guarantors, the Lenders and the
Agent, and supersedes all prior agreements and understandings, relating to the
subject matter hereof. If any one or more provisions of this Guaranty should
be invalid, illegal or unenforceable in any
GUARANTY AGREEMENT
- 7 -
8
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected, impaired, prejudiced or
disturbed thereby. If at any time any portion of the obligations of any
Guarantor under this Guaranty shall be determined by a court of competent
jurisdiction to be invalid, unenforceable or avoidable, the remaining portion
of the obligations of such Guarantor and each other Guarantor under this
Guaranty shall not in any way be affected, impaired, prejudiced or disturbed
thereby and shall remain valid and enforceable to the fullest extent permitted
by applicable law. If at any time all or any portion of the obligations of any
Guarantor under this Guaranty would otherwise be determined by a court of
competent jurisdiction to be invalid, unenforceable or avoidable under Section
548 of the federal Bankruptcy Code or under a similar applicable law of any
jurisdiction, then notwithstanding any other provisions of this Guaranty to the
contrary such obligation or portion thereof of such Guarantor under this
Guaranty shall be limited to the greatest of (i) the value of any quantifiable
economic benefits accruing to such Guarantor as a result of this Guaranty, (ii)
an amount equal to 95% of the excess on the date the relevant Guaranteed
Obligations were incurred of the present fair saleable value of the assets of
such Guarantor over the amount of all liabilities of such Guarantor, contingent
or otherwise, and (iii) the maximum amount for which this Guaranty is
determined to be enforceable.
20. Reinstatement. This Guaranty shall remain in full force and effect
and continue to be effective in the event any petition be filed by or against
the Company or any Guarantor for liquidation or reorganization, in the event
the Company or any Guarantor becomes insolvent or makes an assignment for the
benefit of creditors or in the event a receiver or trustee be appointed for all
or any significant part of the Company's or any Guarantor's assets, and shall
continue to be effective or be reinstated, as the case may be, if at any time
payment and performance of the Guaranteed Obligations, or any part thereof, is,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise
be restored or returned by the Agent or any Lender, whether as a "voidable
preference", "fraudulent conveyance", or otherwise, all as though such payment
or performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Guaranteed
Obligations shall be reinstated and deemed reduced only by such amount paid and
not so rescinded, reduced, restored or returned.
21. Counterpart Execution. This Guaranty may be signed upon any number of
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument. This Guaranty
shall become effective as to each Guarantor when a counterpart hereof shall
have been signed by such Guarantor.
22. Waiver of Jury Trial. The Agent, the Lenders and each Guarantor,
after consulting or having had the opportunity to consult with counsel,
knowingly, voluntarily and intentionally waive any right any of them may have
to a trial by jury in any litigation based upon or arising out of this Guaranty
or any related instrument or agreement or any of the transactions contemplated
by this Guaranty. Neither the Agent, any Lender nor any Guarantor shall seek
to consolidate, by counterclaim or otherwise, any such action in which a jury
trial has been waived with any other action in which a jury trial cannot be or
has not been waived.
GUARANTY AGREEMENT
- 8 -
9
These provisions shall not be deemed to have been modified in any respect or
relinquished by the Agent, any Lender or any Guarantor except by a written
instrument executed by all of them.
IN WITNESS WHEREOF, each Guarantor has caused this Agreement to be duly
executed and delivered as of the day and year first above written.
KEY MEXICO A., L.L.C.
By: /s/ Xxxx X. Xxxx
----------------------------------------
Key Plastics, Inc., its Member
By: Xxxx X. Xxxx
Its: Treasurer and Assistant Secretary
And By: /s/ Xxxx X. Xxxx
-----------------------------
Key Plastics Technology, L.L.C., its
Member
By: Key Plastics, Inc., its Member
By: Xxxx X. Xxxx
Its: Treasurer and Assistant Secretary
KEY MEXICO B, L.L.C.
By: /s/ Xxxx X. Xxxx
----------------------------------------
Key Plastics, Inc., its Member
By: Xxxx X. Xxxx
Its: Treasurer and Assistant Secretary
And By: /s/ Xxxx X. Xxxx
----------------------------
Key Plastics Technology, L.L.C., its
Member
By: Key Plastics, Inc., its Member
By: Xxxx X. Xxxx
Its: Treasurer and Assistant Secretary
GUARANTY AGREEMENT
- 9 -
