SUBSIDIARIES GUARANTY
SUBSIDIARIES GUARANTY, dated as of May 29, 1998 (as amended, modified
or supplemented from time to time, this "Guaranty"), made by each of the
undersigned guarantors (each a "Guarantor," and together with any other entity
that becomes a guarantor hereunder pursuant to Section 26 hereof, the
"Guarantors"). Except as otherwise defined herein, capitalized terms used
herein and defined in the Credit Agreement (as defined below) shall be used
herein as therein defined.
W I T N E S S E T H :
WHEREAS, Elgar Holdings, Inc., Elgar Electronics Corporation (the
"Borrower"), the lenders from time to time party thereto (the "Banks"), and
Bankers Trust Company, as Agent (together with any successor agent, the
"Agent"), have entered into an Amended and Restated Credit Agreement, dated as
of February 3, 1998 and amended and restated as of May 29, 1998, providing for
the making of Loans to, and the issuance of Letters of Credit for the account
of, the Borrower as contemplated therein (as amended, modified as supplemented
from time to time, the "Credit Agreement") (the Banks, the Collateral Agent and
the Agent are herein called the "Bank Creditors");
WHEREAS, the Borrower may at any time and from time to time enter into
one or more Interest Rate Protection Agreements or Other Hedging Agreements with
one or more Banks or any affiliate thereof (each such Bank or affiliate, even if
the respective Bank subsequently ceases to be a Bank under the Credit Agreement
for any reason, together with such Bank's or affiliate's successors and assigns,
if any, collectively, the "Other Creditors," and together with the Bank
Creditors, the "Secured Creditors");
WHEREAS, each Guarantor is a direct or indirect Subsidiary of the
Borrower;
WHEREAS, it is a condition to the making of Loans to, and the issuance
of Letters of Credit for the account of, the Borrower under the Credit Agreement
that each Guarantor shall have executed and delivered this Guaranty; and
WHEREAS, each Guarantor will obtain benefits from the incurrence of
Loans to, and the issuance of Letters of Credit for the account of, the Borrower
under the Credit Agreement and the entering into by the Borrower of Interest
Rate Protection Agreements or Other Hedging Agreements and, accordingly, desires
to execute this Guaranty in order to satisfy the conditions described in the
preceding paragraph;
NOW, THEREFORE, in consideration of the foregoing and other benefits
accruing to each Guarantor, the receipt and sufficiency of which are hereby
acknowledged, each Guarantor hereby makes the following representations and
warranties to the Secured Creditors and hereby covenants and agrees with each
Secured Creditor as follows:
1. Each Guarantor, jointly and severally, irrevocably, absolutely and
unconditionally guarantees: (i) to the Bank Creditors the full and prompt
payment when due (whether at the stated maturity, by acceleration or otherwise)
of (x) the principal of and interest on the Notes issued by, and the Loans made
to, the Borrower under the Credit Agreement, and all reimbursement obligations
and Unpaid Drawings with respect to Letters of Credit issued under the Credit
Agreement and (y) all other obligations (including obligations which, but for
the automatic stay under Section 362(a) of the Bankruptcy Code, would become
due), liabilities and indebtedness owing by the Borrower to the Bank Creditors
under the Credit Agreement or any other Credit Document to which the Borrower is
a party (including, without limitation, indemnities, Fees and interest thereon),
whether now existing or hereafter incurred under, arising out of or in
connection with the Credit Agreement or any such other Credit Document and the
due performance and compliance by the Borrower with all of the terms, conditions
and agreements contained in the Credit Agreement and such other Credit Documents
(all such principal, interest, liabilities, indebtedness and obligations being
herein collectively called the "Credit Document Obligations"); and (ii) to each
Other Creditor the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due), liabilities and indebtedness owing by the
Borrower under any Interest Rate Protection Agreement or Other Hedging
Agreement, whether now in existence or hereafter arising, and the due
performance and compliance by the Borrower with all of the terms, conditions and
agreements contained in the Interest Rate Protection Agreements or Other Hedging
Agreements (all such obligations, liabilities and indebtedness being herein
collectively called the "Other Obligations," and together with the Credit
Document Obligations, the "Guaranteed Obligations"). Each Guarantor
understands, agrees and confirms that the Secured Creditors may enforce this
Guaranty up to the full amount of the Guaranteed Obligations against such
Guarantor without proceeding against any other Guarantor, the Borrower, against
any security for the Guaranteed Obligations, or under any other guaranty
covering all or a portion of the Guaranteed Obligations.
2. Additionally, each Guarantor, jointly and severally,
unconditionally, absolutely and irrevocably, guarantees the payment of any and
all Guaranteed Obligations whether or not due or payable by the Borrower upon
the occurrence in respect of the Borrower of any of the events specified in
Section 10.05 of the Credit Agreement, and unconditionally, absolutely and
irrevocably, jointly and severally, promises to pay such Guaranteed Obligations
to the Secured Creditors, or order, on demand, in legal tender of the United
States. This Guaranty shall constitute a guaranty of payment, and not of
collection.
3. The liability of each Guarantor hereunder is primary, absolute and
unconditional and is exclusive and independent of any security for or other
guaranty of the indebtedness of the Borrower whether executed by such Guarantor,
any other Guarantor, any other guarantor or by any other party, and the
liability of each Guarantor hereunder shall not be affected or impaired by any
circumstance or occurrence whatsoever, including, without limitation: (a) any
direction as to application of payment by the Borrower or by any other party,
(b) any other continuing or other guaranty, undertaking or maximum liability of
a guarantor or of any other party as to the Guaranteed Obligations, (c) any
payment on or in reduction of any such
2
other guaranty or undertaking (other than a payment in full in cash of all
Guaranteed Obligations), (d) any dissolution, termination or increase,
decrease or change in personnel by the Borrower, (e) any payment made to any
Secured Creditor on the indebtedness which any Secured Creditor repays the
Borrower pursuant to court order in any bankruptcy, reorganization,
arrangement, moratorium or other debtor relief proceeding, and each Guarantor
waives any right to the deferral or modification of its obligations hereunder
by reason of any such proceeding, (f) any action or inaction by the Secured
Creditors as contemplated in Section 6 hereof or (g) any invalidity,
irregularity or unenforceability of all or any part of the Guaranteed
Obligations or of any security therefor.
4. The obligations of each Guarantor hereunder are independent of the
obligations of any other Guarantor, any other guarantor or the Borrower, and a
separate action or actions may be brought and prosecuted against each Guarantor
whether or not action is brought against any other Guarantor, any other
guarantor or the Borrower and whether or not any other Guarantor, any other
guarantor or the Borrower be joined in any such action or actions. Each
Guarantor waives, to the fullest extent permitted by law, the benefits of any
statute of limitations affecting its liability hereunder or the enforcement
thereof. Any payment by the Borrower or other circumstance which operates to
toll any statute of limitations as to the Borrower shall operate to toll the
statute of limitations as to each Guarantor.
5. Each Guarantor hereby waives notice of acceptance of this Guaranty
and notice of any liability to which it may apply, and waives promptness,
diligence, presentment, demand of payment, protest, notice of dishonor or
nonpayment of any such liabilities, suit or taking of other action by the Agent
or any other Secured Creditor against, and any other notice to, any party liable
thereon (including such Guarantor, any other Guarantor, any other guarantor, the
Borrower).
6. Any Secured Creditor may at any time and from time to time without
the consent of, or notice to, any Guarantor, without incurring responsibility to
such Guarantor, without impairing or releasing the obligations of such Guarantor
hereunder, upon or without any terms or conditions and in whole or in part:
(a) change the manner, place or terms of payment of, and/or change or
extend the time of payment of, renew, alter or increase, any of the Guaranteed
Obligations (including any increase or decrease in the rate of interest
thereon), any security therefor, or any liability incurred directly or
indirectly in respect thereof, and the guaranty herein made shall apply to the
Guaranteed Obligations as so changed, extended, renewed or altered;
(b) take and hold security for the payment of the Guaranteed
Obligations and sell, exchange, release, surrender, impair, realize upon or
otherwise deal with in any manner and in any order any property by whomsoever at
any time pledged or mortgaged to secure, or howsoever securing, the Guaranteed
Obligations or any liabilities (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and/or any offset
thereagainst;
3
(c) exercise or refrain from exercising any rights against the
Borrower, any other Credit Party, any Subsidiary thereof or otherwise act or
refrain from acting;
(d) release or substitute any one or more endorsers, Guarantors,
other guarantors, the Borrower or other obligors;
(e) settle or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and may subordinate the
payment of all or any part thereof to the payment of any liability (whether due
or not) of the Borrower to creditors of the Borrower other than the Secured
Creditors;
(f) apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the Borrower to the Secured Creditors regardless of
what liabilities of the Borrower remain unpaid;
(g) consent to or waive any breach of, or any act, omission or
default under, any of the Interest Rate Protection Agreements or Other Hedging
Agreements, the Credit Documents or any of the instruments or agreements
referred to therein, or otherwise amend, modify or supplement any of the
Interest Rate Protection Agreements or Other Hedging Agreements, the Credit
Documents or any of such other instruments or agreements;
(h) act or fail to act in any manner referred to in this Guaranty
which may deprive such Guarantor of its right to subrogation against the
Borrower to recover full indemnity for any payments made pursuant to this
Guaranty; and/or
(i) take any other action which would, under otherwise applicable
principles of common law, give rise to a legal or equitable discharge of such
Guarantor from its liabilities under this Guaranty.
7. This Guaranty is a continuing one and all liabilities to which it
applies or may apply under the terms hereof shall be conclusively presumed to
have been created in reliance hereon. No failure or delay on the part of any
Secured Creditor in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein expressly specified are cumulative and not exclusive of any
rights or remedies which any Secured Creditor would otherwise have. No notice
to or demand on any Guarantor in any case shall entitle such Guarantor to any
other further notice or demand in similar or other circumstances or constitute a
waiver of the rights of any Secured Creditor to any other or further action in
any circumstances without notice or demand. It is not necessary for any Secured
Creditor to inquire into the capacity or powers of the Borrower or the officers,
directors, partners or agents acting or purporting to act on its behalf, and any
indebtedness made or created in reliance upon the professed exercise of such
powers shall be guaranteed hereunder.
4
8. Any indebtedness of the Borrower now or hereafter held by any
Guarantor is hereby subordinated to the indebtedness of the Borrower or to the
Secured Creditors, and if the Agent or the Collateral Agent so requests, after
the occurrence and during the continuance of an Event of Default, such
indebtedness of the Borrower to any Guarantor shall be collected, enforced and
received by such Guarantor as trustee for the Secured Creditors and be paid over
to the Secured Creditors on account of the indebtedness of the Borrower to the
Secured Creditors, but without affecting or impairing in any manner the
liability of such Guarantor under the other provisions of this Guaranty.
Without limiting the generality of the foregoing, each Guarantor hereby agrees
with the Secured Creditors that it will not exercise any right of subrogation
which it may at any time otherwise have as a result of this Guaranty (whether
contractual, under Section 509 of the Bankruptcy Code or otherwise) until all
Guaranteed Obligations have been irrevocably paid in full in cash.
9. (a) Each Guarantor waives any right (except as shall be required
by applicable law and cannot be waived) to require the Secured Creditors to:
(i) proceed against the Borrower, any other Guarantor, any other guarantor of
the Guaranteed Obligations or any other party; (ii) proceed against or exhaust
any security held from the Borrower, any other Guarantor, any other guarantor of
the Guaranteed Obligations or any other party; or (iii) pursue any other remedy
in the Secured Creditors' power whatsoever. Each Guarantor waives any defense
based on or arising out of any defense of the Borrower, any other Guarantor, any
other guarantor of the Guaranteed Obligations or any other party other than
payment of the Guaranteed Obligations (but only to the extent of such payment),
including, without limitation, any defense based on or arising out of the
disability of the Borrower, any other Guarantor, any other guarantor of the
Guaranteed Obligations or any other party, or the unenforceability of the
Guaranteed Obligations or any part thereof from any cause, or the cessation from
any cause of the liability of the Borrower other than payment of the Guaranteed
Obligations. The Secured Creditors may, at their election, foreclose on any
security held by the Agent, the Collateral Agent or the other Secured Creditors
by one or more judicial or nonjudicial sales, whether or not every aspect of any
such sale is commercially reasonable, or exercise any other right or remedy the
Secured Creditors may have against the Borrower or any other party, or any
security, without affecting or impairing in any way the liability of any
Guarantor hereunder except to the extent the Guaranteed Obligations have been
paid in full in cash. Each Guarantor waives any defense arising out of any such
election by the Secured Creditors, even though such election operates to impair
or extinguish any right of reimbursement or subrogation or other right or remedy
of such Guarantor against the Borrower or any other party or any security.
(b) Each Guarantor waives all presentments, demands for performance,
protests and notices, including, without limitation, notices of nonperformance,
notices of protest, notices of dishonor, notices of acceptance of this Guaranty,
and notices of the existence, creation or incurring of new or additional
indebtedness. Each Guarantor assumes all responsibility for being and keeping
itself informed of the Borrower's financial condition and assets, and of all
other circumstances bearing upon the risk of nonpayment of the Guaranteed
Obligations and the nature, scope and extent of the risks which such Guarantor
assumes and incurs hereunder, and agrees that the Secured Creditors shall have
no duty to advise any Guarantor of information known to them regarding such
circumstances or risks.
5
(c) Each Guarantor hereby acknowledges and affirms that it
understands that to the extent the Guaranteed Obligations are secured by Real
Property located in the State of California, such Guarantor shall be liable for
the full amount of its liability hereunder notwithstanding foreclosure on such
Real Property by trustee sale or any other reason impairing such Guarantor's or
any Secured Creditors' right to proceed against the Borrower or any other
guarantor of the Guaranteed Obligations. In accordance with Section 2856 of the
California Civil Code, each Guarantor hereby waives:
(i) all rights of subrogation, reimbursement, indemnification, and
contribution and any other rights and defenses that are or may become
available to such Guarantor by reason of Sections 2787 to 2855, inclusive,
2899 and 3433 of the California Civil Code;
(ii) all rights and defenses that such Guarantor may have because
the Guaranteed Obligations are secured by Real Property located in the
State of California. This means, among other things: (A) the Secured
Creditors may collect from such Guarantors without first foreclosing on any
real or personal property collateral pledged by the Borrower or any other
Credit Party; and (B) if the Secured Creditors foreclose on any Real
Property collateral pledged by the Borrower or any other Credit Party, (1)
the amount of the Guaranteed Obligations may be reduced only by the price
for which that collateral is sold at the foreclosure sale, even if the
collateral is worth more than the sale price, and (2) the Secured Creditors
may collect from such Guarantor even if the Secured Creditors, by
foreclosing on the Real Property collateral, have destroyed any right such
Guarantor may have to collect from the Borrower. This is an unconditional
and irrevocable waiver of any rights and defenses such Guarantor may have
because the Guaranteed Obligations are secured by Real Property. These
rights and defenses include, but are not limited to, any rights or defenses
based upon Section 580a, 580b, 580d or 726 of the California Code of Civil
Procedure; and
(iii) all rights and defenses arising out of an election of
remedies by the Secured Creditors, even though that election of remedies,
such as a nonjudicial foreclosure with respect to security for the
Guaranteed Obligations, has destroyed such Guarantor's rights of
subrogation and reimbursement against the Borrower by the operation of
Section 580d of California the Code of Civil Procedure or otherwise.
Each Guarantor warrants and agrees that each of the waivers set forth
above is made with full knowledge of its significance and consequences and that
if any of such waivers are determined to be contrary to any applicable law or
public policy, such waivers shall be effective only to the maximum extent
permitted by law.
10. The Secured Creditors agree that this Guaranty may be enforced
only by the action of the Agent or the Collateral Agent and that no other
Secured Creditors shall have any right individually to seek to enforce or to
enforce this Guaranty or to realize upon the security to be granted by the
Security Documents, it being understood and agreed that such rights and remedies
may be exercised by the Agent or the Collateral Agent or, after all the Credit
Document Obligations have been paid in full, by the holders of at least a
majority of the outstanding Other
6
Obligations, as the case may be, for the benefit of the Secured Creditors upon
the terms of this Guaranty and the Security Documents. The Secured Creditors
further agree that this Guaranty may not be enforced against any director,
officer, employee, partner or stockholder of any Guarantor (except to the
extent such partner or stockholder is also a Guarantor hereunder).
11. In order to induce the Banks to make Loans to, and issue Letters
of Credit for the account of, the Borrower pursuant to the Credit Agreement, and
in order to induce the Other Creditors to execute, deliver and perform the
Interest Rate Protection Agreements or Other Hedging Agreements, each Guarantor
represents, warrants and covenants that:
(a) Such Guarantor (i) is a duly organized and validly existing
corporation in good standing under the laws of the jurisdiction of its
organization, (ii) has the corporate power and authority to own its property and
assets and to transact the business in which it is engaged and presently
proposes to engage and (iii) is duly qualified and is authorized to do business
and is in good standing in each jurisdiction where the conduct of its business
requires such qualification except for failures to be so qualified which,
individually or in the aggregate, could not reasonably be expected to have a
material adverse effect on the business, operations, property, assets,
liabilities or condition (financial or otherwise) of Holdings and its
Subsidiaries taken as a whole.
(b) Such Guarantor has the corporate power and authority to execute,
deliver and perform the terms and provisions of this Guaranty and each other
Document to which it is a party and has taken all necessary corporate action to
authorize the execution, delivery and performance by it of this Guaranty and
each such other Document. Such Guarantor has duly executed and delivered this
Guaranty and each other Document to which it is a party, and this Guaranty and
each such other Document constitutes the legal, valid and binding obligation of
such Guarantor enforceable in accordance with its terms, except to the extent
that the enforceability hereof or thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
generally affecting creditors' rights and by equitable principles (regardless of
whether enforcement is sought in equity or at law).
(c) Neither the execution, delivery or performance by such Guarantor
of this Guaranty or any other Document to which it is a party, nor compliance by
it with the terms and provisions hereof and thereof, will (i) contravene any
provision of any applicable law, statute, rule or regulation or any applicable
order, writ, injunction or decree of any court or governmental instrumentality,
(ii) conflict with or result in any breach of any of the terms, covenants,
conditions or provisions of, or constitute a default under, or result in the
creation or imposition of (or the obligation to create or impose) any Lien
(except pursuant to the Security Documents) upon any of the property or assets
of such Guarantor or any of its Subsidiaries pursuant to the terms of any
indenture, mortgage, deed of trust, loan agreement, credit agreement, or any
other material agreement, contract or instrument to which such Guarantor or any
of its Subsidiaries is a party or by which it or any of its property or assets
is bound or to which it may be subject or (iii) violate any provision of the
certificate of incorporation or by-laws (or equivalent organizational documents)
of such Guarantor or any of its Subsidiaries.
7
(d) No order, consent, approval, license, authorization or validation
of, or filing, recording or registration with (except as have been obtained or
made), or exemption by, any governmental or public body or authority, or any
subdivision thereof, is required to authorize, or is required for, (i) the
execution, delivery and performance of this Guaranty by such Guarantor or any
other Document to which such Guarantor is a party or (ii) the legality,
validity, binding effect or enforceability of this Guaranty or any other
Document to which such Guarantor is a party.
(e) There are no actions, suits or proceedings pending or threatened
(i) with respect to this Guaranty or any other Document to which such Guarantor
is a party or (ii) with respect to such Guarantor that could reasonably be
expected to materially and adversely affect (a) the business, operations,
property, assets, liabilities or condition (financial or otherwise) of Holdings
and its Subsidiaries taken as a whole or (b) the rights or remedies of the
Secured Creditors hereunder or under the other Credit Documents to which such
Guarantor is a party or the ability of such Guarantor to perform its respective
obligations to the Secured Creditors hereunder and under the other Credit
Documents to which it is a party.
12. Each Guarantor covenants and agrees that on and after the
Restatement Effective Date and until the termination of the Total Commitment and
all Interest Rate Protection Agreements and Other Hedging Agreements and when no
Note or Letter of Credit remains outstanding and all Guaranteed Obligations have
been paid in full, such Guarantor will comply, and will cause each of its
Subsidiaries to comply, with all of the applicable provisions, covenants and
agreements contained in Sections 8 and 9 of the Credit Agreement, and will take,
or will refrain from taking, as the case may be, all actions that are necessary
to be taken or not taken so that it is not in violation of any provision,
covenant or agreement contained in Section 8 or 9 of the Credit Agreement, and
so that no Default or Event of Default, is caused by the actions of such
Guarantor or any of its Subsidiaries.
13. The Guarantors hereby jointly and severally agree to pay all
reasonable out-of-pocket costs and expenses of each Secured Creditor in
connection with the enforcement of this Guaranty and of the Agent in connection
with any amendment, waiver or consent relating hereto (including in each case,
without limitation, the reasonable fees and disbursements of counsel employed by
each Secured Creditor).
14. This Guaranty shall be binding upon each Guarantor and its
successors and assigns and shall inure to the benefit of the Secured Creditors
and their successors and assigns.
15. Neither this Guaranty nor any provision hereof may be changed,
waived, discharged or terminated except with the written consent of each
Guarantor directly affected thereby and with the written consent of the Required
Secured Creditors (as defined in the Security Agreement); PROVIDED, that any
change, waiver, modification or variance affecting the rights and benefits of a
single Class (as defined below) of Secured Creditors (and not all Secured
Creditors in a like or similar manner) shall also require the written consent of
the Requisite Creditors (as defined below) of such Class of Secured Creditors
(it being understood that the addition or release of any Guarantor hereunder
shall not constitute a change, waiver, discharge or
8
termination affecting any Guarantor other than the Guarantor so added or
released). For the purpose of this Guaranty, the term "Class" shall mean each
class of Secured Creditors, I.E., whether (x) the Bank Creditors as holders of
the Credit Document Obligations or (y) the Other Creditors as the holders of
the Other Obligations. For the purpose of this Guaranty, the term "Requisite
Creditors" of any Class shall mean (x) with respect to the Credit Document
Obligations, the Required Banks and (y) with respect to the Other Obligations,
the holders of at least a majority amount of all obligations outstanding from
time to time under the Interest Rate Protection or Other Hedging Agreements.
16. Each Guarantor acknowledges that an executed (or conformed) copy
of each of the Credit Documents and Interest Rate Protection Agreements or Other
Hedging Agreements has been made available to its principal executive officers
and such officers are familiar with the contents thereof.
17. In addition to any rights now or hereafter granted under
applicable law (including, without limitation, Section 151 of the New York
Debtor and Secured Creditor Law) and not by way of limitation of any such
rights, upon the occurrence and during the continuance of an Event of Default
(such term to mean and include any "Event of Default" as defined in the Credit
Agreement or any payment default under any Interest Rate Protection Agreement or
Other Hedging Agreement continuing after any applicable grace period), each
Secured Creditor is hereby authorized, at any time or from time to time, without
notice to any Guarantor or to any other Person, any such notice being expressly
waived, to set off and to appropriate and apply any and all deposits (general or
special) and any other indebtedness at any time held or owing by such Secured
Creditor to or for the credit or the account of such Guarantor, against and on
account of the obligations and liabilities of such Guarantor to such Secured
Creditor under this Guaranty, irrespective of whether or not such Secured
Creditor shall have made any demand hereunder and although said obligations,
liabilities, deposits or claims, or any of them, shall be contingent or
unmatured. Notwithstanding anything to the contrary contained in this Section
17, no Secured Creditor shall exercise any such right of set-off without the
prior consent of the Agent or the Required Secured Creditors so long as the
Guaranteed Obligations shall be secured by any Real Property located in the
State of California, it being understood and agreed, however, that this sentence
is for the sole benefit of the Secured Creditors and may be amended, modified or
waived in any respect by the Required Secured Creditors without the requirements
of prior notice to or consent by any Credit Party and does not constitute a
waiver of any rights against any Credit Party or against any Collateral.
18. All notices, requests, demands or other communications pursuant
hereto shall be deemed to have been duly given or made when delivered to the
Person to which such notice, request, demand or other communication is required
or permitted to be given or made under this Guaranty, addressed to such party at
(i) in the case of any Bank Creditor, as provided in the Credit Agreement, (ii)
in the case of any Guarantor, at the address set forth opposite such Guarantor's
signature below and (iii) in the case of any Other Creditor, at such address as
such Other Creditor shall have specified in writing to the Guarantors; or in any
case at such other address as any of the Persons listed above may hereafter
notify the others in writing.
9
19. If claim is ever made upon any Secured Creditor for repayment or
recovery of any amount or amounts received in payment or on account of any of
the Guaranteed Obligations and any of the aforesaid payees repays all or part of
said amount by reason of (i) any judgment, decree or order of any court or
administrative body having jurisdiction over such payee or any of its property
or (ii) any settlement or compromise of any such claim effected by such payee
with any such claimant (including the Borrower) then and in such event each
Guarantor agrees that any such judgment, decree, order, settlement or compromise
shall be binding upon such Guarantor, notwithstanding any revocation hereof or
other instrument evidencing any liability of the Borrower, and such Guarantor
shall be and remain liable to the aforesaid payees hereunder for the amount so
repaid or recovered to the same extent as if such amount had never originally
been received by any such payee.
20. (a) THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE SECURED
CREDITORS AND OF THE UNDERSIGNED HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. Any legal action or
proceeding with respect to this Guaranty or any other Credit Document to which
any Guarantor is a party may be brought in the courts of the State of New York
or of the United States of America for the Southern District of New York, and,
by execution and delivery of this Guaranty, each Guarantor hereby irrevocably
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Each Guarantor
hereby further irrevocably waives any claim that any such court lacks personal
jurisdiction over such Guarantor, and agrees not to plead or claim in any legal
action or proceeding with respect to this Guaranty or any other Credit Document
to which such Guarantor is a party brought in any of the aforesaid courts that
any such court lacks personal jurisdiction over such Guarantor. Each Guarantor
further irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to such Guarantor at
its address set forth opposite its signature below, such service to become
effective 30 days after such mailing. Each Guarantor hereby irrevocably waives
any objection to such service of process and further irrevocably waives and
agrees not to plead or claim in any action or proceeding commenced hereunder or
under any other Credit Document to which such Guarantor is a party that such
service of process was in any way invalid or ineffective. Nothing herein shall
affect the right of any of the Secured Creditors to serve process in any other
manner permitted by law or to commence legal proceedings or otherwise proceed
against each Guarantor in any other jurisdiction.
(b) Each Guarantor hereby irrevocably waives (to the fullest extent
permitted by applicable law) any objection which it may now or hereafter have to
the laying of venue of any of the aforesaid actions or proceedings arising out
of or in connection with this Guaranty or any other Credit Document to which
such Guarantor is a party brought in the courts referred to in clause (a) above
and hereby further irrevocably waives and agrees not to plead or claim in any
such court that such action or proceeding brought in any such court has been
brought in an inconvenient forum.
10
(c) EACH GUARANTOR AND EACH SECURED CREDITOR (BY ITS ACCEPTANCE OF
THE BENEFITS OF THIS GUARANTY) HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS GUARANTY, THE OTHER CREDIT DOCUMENTS TO WHICH SUCH GUARANTOR IS A PARTY OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
21. In the event that all of the capital stock of one or more
Guarantors is sold or otherwise disposed of or liquidated in compliance with the
requirements of Section 9.02 of the Credit Agreement (or such sale or other
disposition has been approved in writing by the Required Secured Creditors) and
the proceeds of such sale, disposition or liquidation are applied in accordance
with the provisions of the Credit Agreement, to the extent applicable, such
Guarantor shall upon consummation of such sale or other disposition (except to
the extent that such sale or disposition is to the Borrower or another
Subsidiary thereof) be released from this Guaranty automatically and without
further action and this Guaranty shall, as to each such Guarantor or Guarantors,
terminate, and have no further force or effect (it being understood and agreed
that the sale of one or more Persons that own, directly or indirectly, all of
the capital stock of any Guarantor shall be deemed to be a sale of such
Guarantor for the purposes of this Section 21).
22. At any time a payment in respect of the Guaranteed Obligations is
made under this Guaranty, the right of contribution of each Guarantor against
each other Guarantor shall be determined as provided in the immediately
following sentence, with the right of contribution of each Guarantor to be
revised and restated as of each date on which a payment (a "Relevant Payment")
is made on the Guaranteed Obligations under this Guaranty. At any time that a
Relevant Payment is made by a Guarantor that results in the aggregate payments
made by such Guarantor in respect of the Guaranteed Obligations to and including
the date of the Relevant Payment exceeding such Guarantor's Contribution
Percentage (as defined below) of the aggregate payments made by all Guarantors
in respect of the Guaranteed Obligations to and including the date of the
Relevant Payment (such excess, the "Aggregate Excess Amount"), each such
Guarantor shall have a right of contribution against each other Guarantor who
has made payments, in respect of the Guaranteed Obligations to and including the
date of the Relevant Payment, in an aggregate amount less than such other
Guarantor's Contribution Percentage of the aggregate payments made to and
including the date of the Relevant Payment by all Guarantors in respect of the
Guaranteed Obligations (the aggregate amount of such deficit, the "Aggregate
Deficit Amount") in an amount equal to (x) a fraction the numerator of which is
the Aggregate Excess Amount of such Guarantor and the denominator of which is
the Aggregate Excess Amount of all Guarantors multiplied by (y) the Aggregate
Deficit Amount of such other Guarantor. A Guarantor's right of contribution
pursuant to the preceding sentences shall arise at the time of each computation,
subject to adjustment to the time of any subsequent computation; PROVIDED, that
no Guarantor may take any action to enforce such right until the Guaranteed
Obligations have been irrevocably paid in full in cash, it being expressly
recognized and agreed by all parties hereto that any Guarantor's right of
contribution arising pursuant to this Section 22 against any other Guarantor
shall be expressly junior and subordinate to such other Guarantor's obligations
and liabilities in respect of the Guaranteed Obligations and any other
obligations owing under this Guaranty. As used in this Section 22: (i) each
Guarantor's "Contribution
11
Percentage" shall mean the percentage obtained by dividing (x) the Adjusted
Net Worth (as defined below) of such Guarantor by (y) the aggregate Adjusted
Net Worth of all Guarantors; (ii) the "Adjusted Net Worth" of each Guarantor
shall mean the greater of (x) the Net Worth (as defined below) of such
Guarantor and (y) zero; and (iii) the "Net Worth" of each Guarantor shall mean
the amount by which the fair salable value of such Guarantor's assets on the
date of any Relevant Payment exceeds its existing debts and other liabilities
(including contingent liabilities, but without giving effect to any Guaranteed
Obligations arising under this Guaranty) on such date. All parties hereto
recognize and agree that, except for any right of contribution arising
pursuant to this Section 22, each Guarantor who makes any payment in respect
of the Guaranteed Obligations shall have no right of contribution or
subrogation against any other Guarantor in respect of such payment until all
of the Guaranteed Obligations have been irrevocably paid in full in cash.
Each of the Guarantors recognizes and acknowledges that the rights to
contribution arising hereunder shall constitute an asset in favor of the party
entitled to such contribution. In this connection, each Guarantor has the
right to waive its contribution right against any Guarantor to the extent that
after giving effect to such waiver such Guarantor would remain solvent, in the
determination of the Required Banks.
23. Each Guarantor and each Secured Creditor (by its acceptance of
the benefits of this Guaranty) hereby confirms that it is its intention that
this Guaranty not constitute fraudulent transfer or conveyance for purposes of
the Bankruptcy Code, the Uniform Fraudulent Conveyance Act of any similar
Federal or state law. To effectuate the foregoing intention, each Guarantor and
each Secured Creditor (by its acceptance of the benefits of this Guaranty)
hereby irrevocably agrees that the Guaranteed Obligations guaranteed by such
Guarantor shall be limited to such amount as will, after giving effect to such
maximum amount and all other (contingent or otherwise) liabilities of such
Guarantor that are relevant under such laws, and after giving effect to any
rights to contribution pursuant to any agreement providing for an equitable
contribution among such Guarantor and the other Guarantors, result in the
Guaranteed Obligations of such Guarantor in respect of such maximum amount not
constituting a fraudulent transfer or conveyance.
24. This Guaranty may be executed in any number of counterparts and
by the different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument. A set of counterparts executed by all
the parties hereto shall be lodged with the Guarantors and the Agent.
25. All payments made by any Guarantor hereunder will be made without
setoff, counterclaim or other defense and on the same basis as payments are made
by the Borrower under Sections 4.03 and 4.04 of the Credit Agreement.
26. It is understood and agreed that any Subsidiary of Holdings that
is required to execute a counterpart of this Guaranty after the date hereof
pursuant to the Credit Agreement shall automatically become a Guarantor
hereunder by executing a counterpart hereof and delivering the same to the
Agent.
12
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be
executed and delivered as of the date first above written.
Address: POWER TEN,
000 Xxxxxxx Xxxxx xx x Xxxxxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn: By: /s/ XXXXX XXXXX
Telephone No.: -------------------------
Telecopier No.: Title:
and
c/o X.X. Xxxxxx & Company, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
Accepted and Agreed to:
BANKERS TRUST COMPANY,
as Agent
By /s/ XXXXXX XXXXX
----------------------------
Title:
13
