GUARANTY AGREEMENT
1. Guarantee. In consideration of Xxxxxxx Machinery Co. ("Secured Party") and to
induce it to enter into with Cashmere Manufacturing Co., Inc. ("Debtor") one
certain Secured Promissory Note and Security Agreement dated February 19, 1997
in the original principal amount of $268,956.00 and one certain Secured
Promissory Note and Security Agreement dated April 10, 1997 in the original
principal amount of $1,168,000.00 ("Loans"), the undersigned ("Guarantor")
hereby unconditionally guarantee to Secured Party the full and prompt
performance by Debtor of all undertakings to Secured Party pursuant to the Loans
and the Obligations including, but not limited to, the payment when due of all
sums payable thereunder, late charges and amounts due as a result of a default
by Debtor.
2. Independent Liability. Guarantor's obligations to Secured Party under this
Guaranty shall not be affected by invalidity in or unenforceability of Secured
Party's rights against Debtor under the Loans or the Obligations. Further,
Guarantor's obligations under this Guaranty shall not be affected or diminished
by, and Guarantor hereby waives the right to assert, all defenses which might
constitute a legal or equitable discharge of a surety or guarantor and agrees
that this Guaranty shall be valid and binding notwithstanding that all or any
part of the liability of Debtor under the Loans or the Obligations are released
by operation of the law or otherwise or avoided in any way; recovery from
Secured Party, by a bankruptcy court or otherwise, of payments or other
performance by Debtor under the Loans or the Obligations whether claimed as void
against public policy, a preference, fraudulent transfer or otherwise; any
change, alteration, renewal, extension, continuation, compromise, waiver or
other modification of the terms and conditions of the Loans or the Obligations;
or loss of collateral securing the Loans or the Obligations including, but
limited to, conversion thereof by Debtor or Secured Party's failure to perfect
or continue perfection of any lien or security interest therein.
3. Waiver of Rights and Defenses. This Guaranty may be enforced by Secured Party
against Guarantor without first proceeding against the Debtor or any other party
or against any security which may be available with respect to Debtor's Loans or
the Obligations. Guarantor hereby waives notice of acceptance of this Guaranty
and of extensions of credit by Secured Party to Debtor, presentment and demand
for payment of any of the obligations of Debtor, protest and notice of dishonor
or default to Guarantor, of any other party with respect to such obligations and
all other notices, demands, set-offs, counterclaims and defenses of any nature
whatsoever.
4. Claims Against Debtor; Collections. In the event of any default by Debtor of
any payment owed or performance to the Secured Party under the Loans or the
Obligations, Guarantor agrees not to demand, take steps for the collection of,
or assign, transfer or otherwise dispose of any indebtedness owed by the Debtor
to Guarantor until such time as Guarantor has paid all sums due hereunder.
5. Assignment. Guarantor may not transfer its rights or duties under this
Guaranty without Secured Party's prior written consent. Guarantor acknowledges
and agrees that Secured Party may, at any time without notice to or consent of
Guarantor, assign its rights under this Guaranty. Any such transferee shall be
entitled to exercise any rights and powers of Secured Party hereunder. Guarantor
further agrees in the event it receives written notice of assignment from
Secured Party, Guarantor shall all of its obligations hereunder directly to such
transferee.
6. Default and Remedies. Time is of the essence and if Guarantor should fail to
pay any sums due hereunder or otherwise fail to perform its obligations in a
timely fashion, Secured Party shall have the right to exercise any right or
remedy at law or in equity and collect damages for enforcement hereof including
reasonable attorney's fees and court costs. No express or implied waiver of any
default hereunder shall constitute a waiver of any of Secured Party's other
rights.
7. Enforceability. Any provision of this Guaranty which is unenforceable shall
not affect the enforceability of the remaining provisions hereof. Any waiver of
the terms hereof shall be effective only in the specific instance and for the
specific purpose given.
8. Notices. Any notices and demands required or permitted under this Guaranty
shall be in writing by certified mail, return receipt requested, and shall
become effective when deposited in the United States mail with postage prepaid
to the address hereinabove set forth, or to such other address as the party to
receive notice hereunder designates by such written notice.
Dated: This 30th day of April, 1997.
PACIFIC AEROSPACE AND ELECTRONICS, INC.
Signature: /s/ XXXX X. XXXXX
Title: Vice President Finance/CFO
