UNCONDITIONAL CONTINUING GUARANTY
Execution Copy
This
UNCONDITIONAL CONTINUING
GUARANTY (“Guaranty”)
is executed as of January 8, 2009, by ARGYLE SECURITY, INC., a
Delaware corporation, (“Guarantor”),
for the benefit of THE
PRIVATEBANK AND TRUST COMPANY, an Illinois banking corporation (“Bank”).
R E C I T A L
S
A. ISI
Security Group, Inc., a Delaware corporation (“Borrower”)
and Bank have entered into that certain Loan and Security Agreement dated
October 3, 2008, (the “Loan
Agreement”), pursuant to which the Bank has agreed to make two (2)
revolving loans and a term loan in the original aggregate amount of twenty-five
million and no/100 dollars ($25,000,000.00) (the “Loans”).
All capitalized terms used herein but not defined herein shall have the meanings
ascribed to them in the Loan Agreement.
B. The
Borrower has requested that the Bank agree to certain amendments to the Loan
Agreement set forth in Amendment No. 1 to Loan and Security Agreement, dated as
of January 8, 2009 (the “Amendment”).
C. The
Bank is willing to agree to the Amendment only if the Guarantor unconditionally
guarantees payment and performance to Bank of the Obligations; and
D. The
Guarantor is an affiliate of the Borrower, and the Guarantor will directly
benefit from the Amendment.
NOW
THEREFORE, as an inducement to the Bank to make the Amendment, and for other
good and valuable consideration, the receipt and legal sufficiency of which are
hereby acknowledged, Guarantor agrees with Bank, as follows:
A G R E E M E N
T:
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Section
1.
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GUARANTY OF
OBLIGATIONS.
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Guarantor
hereby absolutely, irrevocably and unconditionally guarantees to Bank the
payment and performance of the obligations, as defined in the Loan Agreement
(the “Obligations”),
as and when the same shall be due and payable, whether by lapse of time, by
acceleration of maturity or otherwise. Guarantor hereby absolutely, irrevocably
and unconditionally covenants and agrees that it is liable, jointly and
severally, for the Obligations as a primary obligor, and that Guarantor shall
fully perform each and every term and provision hereof. This Guaranty is a
guaranty of payment and not of collection only. Bank shall not be required to
exhaust any right or remedy or take any action against Borrower or any other
person or entity or any collateral. Guarantor agrees that, as between the
Guarantor and Bank, the Obligations may be declared to be due and payable for
the purposes of this Guaranty notwithstanding any stay, injunction or other
prohibition which may prevent, delay or vitiate any declaration as regards
Borrower and that in the event of a declaration or attempted declaration, the
Obligations shall immediately become due and payable by Guarantors for the
purposes of this Guaranty.
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Section
2.
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GUARANTY
ABSOLUTE.
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Guarantor
guarantees that the Obligations shall be paid strictly in accordance with the
terms of the Loan Documents. The liability of the Guarantor under this Guaranty
is absolute and unconditional irrespective of: (a) any change in the time,
manner or place of payment of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any consent to departure
from any of the terms of any Loan Document, including any increase or decrease
in the rate of interest thereon; (b) any release or amendment or waiver of,
or consent to departure from, or failure to act by Bank with respect to, any
other guaranty or support document, or any exchange, release or non-perfection
of, or failure to act by Bank with respect to, any Collateral, for all or any of
the Obligations; (c) any present or future law, regulation or order of any
jurisdiction (whether of right or in fact) or of any agency thereof purporting
to reduce, amend, restructure or otherwise affect any term of the Obligations or
any Loan Document; (d) any change in the corporate existence, structure, or
ownership of Borrower; (e) without being limited by the foregoing, any lack
of validity or enforceability of any Loan Document; and (f) any other
setoff, recoupment, defense or counterclaim whatsoever (in any case, whether
based on contract, tort or any other theory) with respect to the Loan Documents
or the transactions contemplated thereby which might constitute a legal or
equitable defense available to, or discharge of, Borrower or a
Guarantor.
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Section
3.
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GUARANTY
IRREVOCABLE.
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This
Guaranty is a continuing guaranty of the payment of all Obligations now or
hereafter existing and shall remain in full force and effect until payment in
full of all Obligations and other amounts payable under this Guaranty and until
the Loan Documents are no longer in effect.
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Section
4.
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REINSTATEMENT.
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This
Guaranty shall continue to be effective or be reinstated, as the case may be, if
at any time any payment of any of the Obligations is rescinded or must otherwise
be returned by the Bank on the insolvency, bankruptcy or reorganization of
Borrower or otherwise, all as though the payment had not been made, whether or
not Bank is in possession of the Guaranty.
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Section
5.
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SUBROGATION.
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Guarantor
shall not exercise any rights which it may acquire by way of subrogation, by any
payment made under this Guaranty or otherwise, until all the Obligations have
been paid in full and the Loan Documents are no longer in effect. If any amount
is paid to Guarantor on account of subrogation rights under this Guaranty at any
time when all the Obligations have not been paid in full, the amount shall be
held in trust for the benefit of the Bank and shall be promptly paid to Bank to
be credited and applied to the Obligations, whether matured or unmatured or
absolute or contingent, in accordance with the terms of the Loan Documents. If
Guarantors make payment to Bank of all or any part of the Obligations and all
the Obligations are paid in full and the Loan Documents are no longer in effect,
Bank shall, at Guarantor's request, execute and deliver to Guarantor appropriate
documents, without recourse and without representation or warranty, necessary to
evidence the transfer by subrogation to Guarantor of the interest in the
Obligations resulting from the payment.
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Section
6.
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SUBORDINATION.
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Without
limiting Bank’s rights under any other agreement, any liabilities owed by
Borrower to Guarantor in connection with any extension of credit or financial
accommodation by Guarantor to or for the account of Borrower, including but not
limited to interest accruing at the agreed contract rate after the commencement
of a bankruptcy or similar proceeding, are hereby subordinated to the
Obligations, and such liabilities of Borrower to Guarantor, if Bank so requests,
shall be collected, enforced and received by a Guarantor as trustee for the Bank
and shall be paid over to Bank on account of the Obligations but without
reducing or affecting in any manner the liability of Guarantor under the other
provisions of this Guaranty.
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Section
7.
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REPRESENTATIONS AND
WARRANTIES.
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Guarantor
represents and warrants that: (a) this Guaranty (i) has been
authorized by all necessary action; (ii) does not violate any agreement,
instrument, law, regulation or order applicable to any Guarantor;
(iii) does not require the consent or approval of any person or entity,
including but not limited to any governmental authority, or any filing or
registration of any kind; and (iv) is the legal, valid and binding
obligation of Guarantors enforceable against Guarantors, jointly and severally,
in accordance with its terms, except to the extent that enforcement may be
limited by applicable bankruptcy, insolvency and other similar laws affecting
creditors' rights generally; and (b) in executing and delivering this
Guaranty, Guarantor has (i) without reliance on Bank or any information
received from Bank and based upon such documents and information it deems
appropriate, made an independent investigation of the transactions contemplated
hereby and Borrower, Borrower’s business, assets, operations, prospects and
condition, financial or otherwise, and any circumstances which may bear upon
such transactions, Borrower or the obligations and risks undertaken herein with
respect to the Obligations; (ii) adequate means to obtain from Borrower on
a continuing basis information concerning Borrower; (iii) full and complete
access to the Loan Documents and any other documents executed in connection with
the Loan Documents; and (iv) not relied and will not rely upon any
representations or warranties of Bank not embodied herein or any acts heretofore
or hereafter taken by Bank (including but not limited to any review by Bank of
the affairs of Borrower).
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Section
8.
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FINANCIAL REPORTS AND
COVENANTS.
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(a) Guarantor
shall keep adequate books and records of account in accordance with GAAP,
consistently applied and furnish to Bank the financial statements described in
the Loan Agreement.
(b) Bank
and its accountants shall have the right to examine the records, books,
management and other papers of Guarantor which reflect upon its financial
condition, at any office regularly maintained by Guarantor where the books and
records are located. Bank and its accountants shall have the right to make
copies and extracts from the foregoing records and other papers. In addition,
Bank and its accountants shall have the right to examine and audit the books and
records of Guarantor pertaining to the income, expenses and operation of
Guarantor during reasonable business hours at any office of Guarantor where the
books and records are located.
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Section
9.
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REMEDIES
GENERALLY.
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The
remedies provided in this Guaranty are cumulative and not exclusive of any
remedies provided by law.
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Section
10.
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SETOFF.
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If an
Event of Default as defined in Section 11 of the
Loan Agreement shall have occurred and be continuing, Bank is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, and
to the extent permitted under the Loan Agreement, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held and other obligations at any time owing by Borrower to or for the
credit or the account of Guarantor against any of and all the Obligations held
by Bank, irrespective of whether or Bank shall have made any demand under this
Guaranty and although such Obligations may be unmatured. The rights of Bank
under this Section are in addition to other rights and remedies (including other
rights of setoff) which Bank may have.
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Section
11.
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FORMALITIES.
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Guarantor
waives presentment, demand, notice of dishonor, protest, notice of acceptance of
this Guaranty or incurrence of any of the Obligations and any other formality
with respect to any of the Obligations or this Guaranty.
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Section
12.
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AMENDMENTS AND
WAIVERS.
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No
amendment or waiver of any provision of this Guaranty, nor consent to any
departure by Guarantor therefrom, shall be effective unless it is in writing and
signed by Bank, and then the waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given. No failure on
the part of Bank to exercise, and no delay in exercising, any right under this
Guaranty shall operate as a waiver or preclude any other or further exercise
thereof or the exercise of any other right.
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Section
13.
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WAIVER OF SURETYSHIP
DEFENSES.
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Guarantor,
to the fullest extent permitted by law, hereby irrevocably waives any defenses
given to Guarantor at law or in equity, other than actual payment and
performance of the Obligations, including all defenses based upon suretyship or
impairment of collateral pursuant to § 80 I.L.C.S.
5/3-605.
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Section
14.
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EXPENSES.
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Guarantor
shall reimburse Bank on demand for all costs, expenses and charges (including
without limitation fees and charges of external legal counsel for Bank and costs
allocated by its internal legal department) incurred by Bank in connection with
the performance or enforcement of this Guaranty. The obligations of Guarantor
under this Section shall survive the termination of this Guaranty.
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Section
15.
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ASSIGNMENT.
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This
Guaranty shall be binding on, and shall inure to the benefit of Guarantor and
Bank and their respective successors and
assigns; provided that Guarantor may not assign or
transfer its rights or obligations under this Guaranty. Without limiting the
generality of the foregoing: (a) the obligations of Guarantor under this
Guaranty shall continue in full force and effect and shall be binding on any
successor partnership and on previous partners and their respective estates if
any Guarantor is a partnership, regardless of any change in the partnership as a
result of death, retirement or otherwise; and (b) Bank may assign, sell
participations in or otherwise transfer its rights under the Loan Documents to
any other person or entity in accordance with the terms of the Loan Agreement,
and the other person or entity shall then become vested with all the rights
granted to Bank, as applicable, in this Guaranty or otherwise.
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Section
16.
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CAPTIONS.
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The
headings and captions in this Guaranty are for convenience only and shall not
affect the interpretation or construction of this Guaranty.
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Section
17.
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NOTICES.
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All
notices or other written communications hereunder shall be in writing and shall
be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
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To
Guarantor:
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00000
Xxxxxxxx Xxxxx
Xxx
Xxxxxxx, Xxxxx 00000
Attention:
Xxxxxx X. Xxxxxxx
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With
a copy to:
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000
Xxxx 00xx
Xxxxxx, Xxxxx0000
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxxxxx X. Xxxxx, Esq.
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To
the Lender:
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The
PrivateBank and Trust Company
00
X. Xxxxxxx, 0xx
Xxxxx
Xxxxxxx,
Xxxxxxxx 00000
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With
copy to:
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Xxxxx
Xxxxxx & Xxxxxx LLP
0000
00xx
Xxxxxx, Xxxxx 000
Xxxxxx,
XX 00000
Attention:
Xxx X. Xxxxxx XX
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Guarantor
and Bank may change their address or telecopy number for notices and other
communications hereunder by notice to the other party. All notices and other
communications given to Guarantor or Bank in accordance with the provisions of
this Guaranty shall be deemed to have been given on the date of
receipt.
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Section
18.
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GOVERNING LAW;
JURISDICTION; CONSENT TO SERVICE OF
PROCESS.
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(a) This
Guaranty shall be construed in accordance with and governed by the law of the
State of Illinois.
(b) Guarantor
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any United States Federal or Illinois State
court sitting in Chicago, Illinois, and any appellate court from any thereof, in
any action or proceeding arising out of or relating to this Guaranty, or for
recognition or enforcement of any judgment, and Guarantor hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such Illinois State or, to the extent
permitted by law, in such Federal court. Guarantor hereto agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Guaranty shall affect any right that Bank may
otherwise have to bring any action or proceeding relating to this Guaranty
against any Guarantor or its properties in the courts of any
jurisdiction.
(c) Guarantor
hereby irrevocably and unconditionally waives, to the fullest extent it may
legally and effectively do so, any objection which it may now or hereafter have
to the laying of venue of any suit, action or proceeding arising out of or
relating to this Guaranty in any court referred to in subsection (b)
above. Guarantor hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(d) Guarantor
irrevocably consents to service of process in the manner provided for notices in
Section 16
hereof. Nothing in this Guaranty will affect the right of Bank to serve process
in any other manner permitted by law.
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Section
19.
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INVALID
PROVISIONS.
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If any
provision of this Guaranty is held to be illegal, invalid, or unenforceable
under present or future laws effective during the term of this Guaranty, such
provision shall be fully severable and this Guaranty shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part of this Guaranty, and the remaining provisions of this Guaranty
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance from this Guaranty,
unless such continued effectiveness of this Guaranty, as modified, would be
contrary to the basic understandings and intentions of the parties as expressed
herein.
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Section
20. ENTIRETY. THIS
GUARANTY AND THE OTHER LOAN DOCUMENTS WHICH MAY BE EXECUTED BY GUARANTOR EMBODY
THE FINAL, ENTIRE AGREEMENT OF GUARANTORS AND BANK WITH RESPECT TO THE SUBJECT
MATTER HEREOF AND THEREOF AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS,
AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF. THIS GUARANTY AND THE OTHER
LOAN DOCUMENTS WHICH MAY BE EXECUTED BY GUARANTOR IS INTENDED BY GUARANTOR AND
BANK AS A FINAL AND COMPLETE EXPRESSION OF THE TERMS HEREOF AND THEREOF, AND NO
COURSE OF DEALING AMONG GUARANTORS AND BANK, NO COURSE OF PERFORMANCE, NO TRADE
PRACTICES, AND NO EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC EVIDENCE OF ANY NATURE SHALL BE
USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFY ANY TERM OF THIS GUARANTY OR ANY
OTHER LOAN DOCUMENT WHICH MAY BE EXECUTED BY ANY GUARANTOR. THERE ARE NO ORAL
AGREEMENTS BETWEEN GUARANTOR AND BANK.
Section
21. WAIVER OF RIGHT TO TRIAL BY
JURY. GUARANTOR AND BANK HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY
LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY). GUARANTOR AND BANK EACH (A) CERTIFY THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGE THAT IT AND SUCH OTHER
PARTY HAVE BEEN INDUCED TO EXECUTE OR ACCEPT THIS GUARANTY BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 21.
Section
22. JOINT AND SEVERAL
OBLIGATIONS.
The
obligations of the Guarantor hereunder and any other Guarantors, sureties or
pledgors as may exist from time to time are joint and
several. Accordingly, the Guarantor is liable for the full amount of
the Obligations notwithstanding the existence of other Guarantors, sureties or
pledgors.
Section
23. TERMINATION OF GUARANTY
AGREEMENT.
This Guaranty will terminate on the
earlier of (a) the payment in full of all Obligations under the Loan Agreement,
and (b) at the time the Bank determines in its sole judgment that the Borrower’s
financial statements issued pursuant to Section 8.8 of the
Loan Agreement for the fiscal year ended December 31, 2009 establish that the
Borrower is in compliance with the financial covenants set forth in Sections 10.1, 10.2 and
10.3(a) of the Loan Agreement, as amended.
Section
24. LIMITATION ON INCREASE IN
THE OBLIGATIONS.
The
definition of the term "Obligations" notwithstanding, the Guaranty hereunder is
limited to $18,100,000 with respect to the principal amount of the Loans
evidenced by the Notes. The Bank and Borrower may enter into amendments to
the Loan Agreement or additional loan agreements increasing the principal
amount of the Obligations without the consent of the Guarantor, provided, however, that this
Guaranty shall not guaranty any increase in the principal amount of $18,100,000
guaranteed by the Guarantor without the express written consent of the
Guarantor.
[Signature pages
follow]
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IN
WITNESS WHEREOF, 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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GUARANTOR:
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| By: |
a
Delaware corporation
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| By: | /s/ Xxxxxx X. Xxxxxxx |
| Name: | Xxxxxx X. Xxxxxxx |
| Title: | CFO |
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