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EXHIBIT 10.26
FORM OF
SUBORDINATED GUARANTEE AGREEMENT
THIS SUBORDINATED GUARANTEE AGREEMENT, dated as of June 30, 1995 (as
amended or restated from time to time, this "GUARANTEE AGREEMENT"), by FRICTION
PRODUCTS CO., an Ohio corporation (together with its successors and assigns, the
"GUARANTOR"), in favor of each of the Noteholders (as such term is hereinafter
defined).
1. PRELIMINARY STATEMENT.
1.1 The Hawk Group of Companies, Inc. (together with its
successors and assigns, the "COMPANY"), a Delaware corporation, has authorized
the issuance of its 12% Senior Subordinated Notes due June 30, 2005 (as may be
amended or restated from time to time, the "SUBORDINATED NOTES"), in the
aggregate principal amount of Thirty Million Dollars ($30,000,000) pursuant to
the separate Senior Subordinated Note and Warrant Purchase Agreements
(collectively, as may be amended or restated from time to time, the "NOTE
PURCHASE AGREEMENT"), each dated as of June 30, 1995, between the Company and
each of the purchasers listed on Annex 1 thereto (individually, a "PURCHASER,"
and collectively, the "PURCHASERS").
1.2 In order to induce the Purchasers to purchase the Subordinated
Notes, the Company has agreed, pursuant to the Note Purchase Agreement, that
certain Subsidiaries (including the Guarantor) will be required to guaranty
unconditionally all of the obligations of the Company under and in respect of
the Subordinated Notes and the Note Purchase Agreement pursuant to the terms and
provisions hereof.
1.3 All acts and proceedings required of the Guarantor by the
certificate or articles of incorporation, as the case may be, the bylaws of the
Guarantor and by law necessary to constitute this Guarantee Agreement a valid
and binding agreement for the uses and purposes set forth herein in accordance
with its terms have been done and taken, and the execution and delivery hereof
has been in all respects duly authorized.
1.4 The Guarantor and the Company are operated as part of one
consolidated business entity and are directly dependent upon each other for and
in connection with their respective business activities and their respective
financial resources. The Guarantor will receive direct and indirect economic,
financial and other benefits from the indebtedness incurred under the Note
Purchase Agreement and the Subordinated Notes by the Company and the incurrence
of such indebtedness is in the best interests of the Guarantor. The Purchasers
have agreed with the Company to purchase the Subordinated Notes based on the
consolidated financial condition of the Company and its Subsidiaries, including,
but not limited to, the Guarantor.
2. GUARANTEE AND OTHER RIGHTS AND UNDERTAKINGS
2.1 GUARANTIED OBLIGATIONS.
The Guarantor, in consideration of the execution and delivery of the
Note Purchase Agreement and the purchase of the Subordinated Notes by the
Purchasers, subject to Section 6
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hereto, hereby irrevocably, unconditionally and absolutely guarantees, on a
continuing basis, to each Noteholder, as and for the Guarantor's own debt, until
final and indefeasible payment has been made:
(a) the due and punctual payment by the Company of the
principal of, and interest, and Prepayment Compensation (if any) on,
the Subordinated Notes at any time outstanding and the due and punctual
payment of all other amounts payable, and all other indebtedness owing,
by the Company to the Noteholders under the Note Purchase Agreement and
the Subordinated Notes, in each case when and as the same shall become
due and payable, whether at maturity, pursuant to mandatory or optional
prepayment, by acceleration or otherwise, all in accordance with the
terms and provisions hereof and thereof; it being the intent of the
Guarantor that the guaranty set forth herein shall be a continuing
guaranty of payment and not a guaranty of collection; and
(b) the punctual and faithful performance, keeping,
observance, and fulfillment by the Company of all duties, agreements,
covenants and obligations of the Company contained in the Note Purchase
Agreement and the Subordinated Notes.
All of the obligations set forth in subsection (a) and subsection (b) of this
Section 2.1 are referred to herein as the "GUARANTIED OBLIGATIONS" and the
guaranty thereof contained herein is referred to herein as the "UNCONDITIONAL
GUARANTEE"). The Unconditional Guarantee is a primary, original and immediate
obligation of the Guarantor and is an absolute, unconditional, continuing and
irrevocable guaranty of payment and performance and shall remain in full force
and effect until the full, final and indefeasible payment of the Guarantied
Obligations.
2.2 PERFORMANCE UNDER THE NOTE PURCHASE AGREEMENT.
In the event the Company fails to pay, perform, keep, observe, or
fulfill any Guarantied Obligation in the manner provided in the Subordinated
Notes or in the Note Purchase Agreement, the Guarantor shall, subject to Section
6 hereof, cause forthwith to be paid the moneys, or to be performed, kept,
observed, or fulfilled each of such obligations, in respect of which such
failure has occurred in accordance with the terms and provisions of the Note
Purchase Agreement and the Subordinated Notes. In furtherance of the foregoing,
if an Event of Default shall exist, all of the Guarantied Obligations shall, in
the manner and subject to the limitations provided in the Note Purchase
Agreement for the acceleration of the Subordinated Notes and subject to Section
6 hereof, forthwith become due and payable without notice, regardless of whether
the acceleration of the Subordinated Notes shall be stayed, enjoined, delayed or
otherwise prevented.
2.3 RELEASES.
The Guarantor consents and agrees that, without notice to or by the
Guarantor and without impairing, releasing, abating, deferring, suspending,
reducing, terminating or otherwise affecting the obligations of the Guarantor
hereunder, each Noteholder, in the manner provided herein, by action or
inaction, may:
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(a) compromise or settle, renew or extend the period of
duration or the time for the payment, or discharge the performance of,
or may refuse to, or otherwise not, enforce, or may, by action or
inaction, release all or any one or more parties to, any one or more of
the Subordinated Notes, the Note Purchase Agreement, any other
Guarantee Agreement or agreement or instrument related thereto or
hereto;
(b) subject to the provisions of the Note Purchase Agreement,
assign, sell or transfer, or otherwise dispose of, any one or more of
the Subordinated Notes;
(c) grant waivers, extensions, consents and other indulgences
to the Company or any other guarantor in respect of any one or more of
the Subordinated Notes, the Note Purchase Agreement, any other
Guarantee Agreement or any agreement or instrument related thereto or
hereto;
(d) amend, modify or supplement in any manner and at any time
(or from time to time) any one or more of the Subordinated Notes, the
Note Purchase Agreement, any other Guarantee Agreement or any agreement
or instrument related hereto;
(e) release or substitute any one or more of the endorsers or
guarantors of the Guarantied Obligations whether parties hereto or not;
and
(f) sell, exchange, release, surrender or enforce, by action
or inaction, any Property at any time pledged or granted as security in
respect of the Guarantied Obligations, whether so pledged or granted by
the Company, the Guarantor or another guarantor of the Company's
obligations under the Note Purchase Agreement, the Subordinated Notes,
any other Guarantee Agreement or any agreement or instrument related
hereto.
2.4 WAIVERS.
To the fullest extent permitted by law, the Guarantor does hereby
waive:
(a) any notice of
(i) acceptance of the Unconditional Guarantee;
(ii) any purchase of the Subordinated Notes under the
Note Purchase Agreement, or the creation, existence or
acquisition of any of the Guarantied Obligations, or the
amount of the Guarantied Obligations, subject to the
Guarantor's right to make inquiry of each Noteholder to
ascertain the amount of the Guarantied Obligations owing to
such Noteholder at any reasonable time;
(iii) any transfer of Subordinated Notes from one
holder to another;
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(iv) any adverse change in the financial condition of
the Company or any other fact that might increase, expand or
affect the Guarantor's risk hereunder;
(v) presentment for payment, demand, protest, and
notice thereof as to the Subordinated Notes or any other
instrument;
(vi) any Default or Event of Default; and
(vii) any kind or nature whatsoever to which the
Guarantor might otherwise be entitled (except if such notice
or demand is specifically otherwise required to be given to
such Guarantor pursuant to the terms of this Guarantee
Agreement);
(b) the right by statute or otherwise to require any
Noteholder to institute suit against the Company or any other guarantor
or to exhaust the rights and remedies of any Noteholder against the
Company or any other guarantor, the Guarantor being bound to the
payment of each and all Guarantied Obligations, whether now existing or
hereafter accruing, as fully as if such Guarantied Obligations were
directly owing to the Noteholders by the Guarantor;
(c) the benefit of any stay (except in connection with a
pending appeal), valuation, appraisal, redemption or extension law now
or at any time hereafter in force which, but for this waiver, might be
applicable to any sale of Property of the Guarantor made under any
judgment, order or decree based on this Guarantee Agreement, and the
Guarantor covenants that it will not at any time insist upon or plead,
or in any manner claim or take the benefit or advantage of such law;
(d) any defense or objection to the absolute, primary,
continuing nature, or the validity, enforceability or amount, of the
Unconditional Guarantee, including, without limitation, any defense
based on (and the primary, continuing nature, and the validity,
enforceability and amount, of the Unconditional Guarantee shall be
unaffected by), any of the following:
(i) any change in future conditions;
(ii) any change of law;
(iii) any invalidity or irregularity with respect to
the issuance or assumption of any obligations (including,
without limitation, the Note Purchase Agreement, the
Subordinated Notes or any agreement or instrument related
hereto) by the Company or any other Person;
(iv) the execution and delivery of any agreement at
any time hereafter (including, without limitation, the Note
Purchase Agreement, the Subordinated Notes or any agreement or
instrument related hereto) by the Company or any other Person;
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(v) the genuineness, validity, regularity or
enforceability of any of the Guarantied Obligations;
(vi) any default, failure or delay, willful or
otherwise, in the performance of any obligations by the
Company or the Guarantor;
(vii) any creditors' rights, bankruptcy, receivership
or other insolvency proceeding of the Company or the
Guarantor, or sequestration or seizure of any Property of the
Company or the Guarantor, or any merger, consolidation,
reorganization, dissolution, liquidation or winding up or
change in corporate constitution or corporate identity or loss
of corporate identity of the Company or the Guarantor;
(viii) any disability or other defense of the Company
or the Guarantor to payment and performance of all Guarantied
Obligations other than the defense that the Guarantied
Obligations shall have been fully and finally performed and
indefeasibly paid;
(ix) the cessation from any cause whatsoever of the
liability of the Company or the Guarantor in respect of the
Guarantied Obligations, and any other defense that the
Guarantor may otherwise have against the Company or any
Noteholder;
(x) impossibility or illegality of performance on the
part of the Company or the Guarantor under the Note Purchase
Agreement, the Subordinated Notes or this Guarantee Agreement;
(xi) any change of the circumstances of the Company,
the Guarantor or any other Person, whether or not foreseen or
foreseeable, whether or not imputable to the Company or the
Guarantor, including, without limitation, impossibility of
performance through fire, explosion, accident, labor
disturbance, floods, droughts, embargoes, wars (whether or not
declared), civil commotions, acts of God or the public enemy,
delays or failure of suppliers or carriers, inability to
obtain materials, economic or political conditions, or any
other causes affecting performance, or any other force
majeure, whether or not beyond the control of the Company or
the Guarantor and whether or not of the kind hereinbefore
specified;
(xii) any attachment, claim, demand, charge, Lien,
order, process, encumbrance or any other happening or event or
reason, similar or dissimilar to the foregoing, or any
withholding or diminution at the source, by reason of any
taxes, assessments, expenses, indebtedness, obligations or
liabilities of any character, foreseen or unforeseen, and
whether or not valid, incurred by or against any Person, or
any claims, demands, charges, Liens or encumbrances of any
nature, foreseen or unforeseen, incurred by any Person, or
against any sums payable under the Note
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Purchase Agreement or the Subordinated Notes or any agreement
or instrument related hereto so that such sums would be
rendered inadequate or would be unavailable to make the
payment as herein provided;
(xiii) any change in the ownership of the equity
securities of the Company, the Guarantor or any other Person
liable in respect of the Subordinated Notes; or
(xiv) any other action, happening, event or reason
whatsoever that shall delay, interfere with, hinder or
prevent, or in any way adversely affect, the performance by
the Company or the Guarantor of any of its obligations under
the Note Purchase Agreement, the Subordinated Notes or this
Guarantee Agreement.
2.5 CERTAIN WAIVERS OF SUBROGATION, REIMBURSEMENT AND INDEMNITY.
The Guarantor hereby acknowledges and agrees that the Guarantor shall
not have any right of subrogation, reimbursement, or indemnity whatsoever in
respect of the Guarantied Obligations, and no right of recourse to or with
respect to any assets or Property of the Company.
2.6 INVALIDATED PAYMENTS.
The Guarantor further agrees that, to the extent the Company makes a
payment or payments to any Noteholder, which payment or payments or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside or required, for any of the foregoing reasons or for any other reason,
to be repaid or paid over to a custodian, trustee, receiver or any other party
or officer under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, fraudulent conveyance, dissolution or liquidation law of
any jurisdiction, state or federal law, or any common law or equitable cause,
then to the extent of such payment or repayment, the obligation or part thereof
intended to be satisfied shall be revived and continued in full force and effect
as if said payment had not been made and each Guarantor shall be primarily
liable for such obligation.
2.7 MARSHALING.
The Guarantor consents and agrees that each Noteholder, and each Person
acting for the benefit of each Noteholder, shall be under no obligation to
marshal any assets in favor of the Guarantor or against or in payment of any or
all of the Guarantied Obligations.
2.8 SUBORDINATION.
In the event that, for any reason whatsoever, the Company or a Person
obligated in respect of the Guarantied Obligations pursuant to another Guarantee
Agreement, is now or hereafter becomes indebted to the Guarantor in any manner
(an "AFFILIATE OBLIGATION"), the Guarantor agrees that the amount of such
Affiliate Obligation, interest thereon, and all other amounts due with respect
thereto, shall, at all times during the existence of a Default or an Event of
Default, be subordinate as to time of payment and in all other respects to all
the Guarantied Obligations, and that the
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Guarantor shall not be entitled to enforce or receive payment thereof until all
sums then due and owing to the Noteholders in respect of the Guarantied
Obligations shall have been paid in full, except that the Guarantor may enforce
any obligations in respect of any such Affiliate Obligation owing to the
Guarantor from the Company or such indebted Person so long as all proceeds in
respect of any recovery from such enforcement shall be held by the Guarantor in
trust, subject to the provisions of Section 6, for the benefit of the
Noteholders. If any other payment, other than pursuant to the immediately
preceding sentence, shall have been made to the Guarantor by the Company or such
indebted Person on any such Affiliate Obligation during any time that a Default
or an Event of Default exists and there are Guarantied Obligations outstanding,
the Guarantor shall hold in trust, subject to the provisions of Section 6, all
such payments for the benefit of the Noteholders.
2.9 SETOFF, COUNTERCLAIM OR OTHER DEDUCTIONS.
Except as otherwise required by law, each payment by the Guarantor
shall be made without setoff, counterclaim or other deduction.
2.10 ELECTION BY GUARANTOR TO PERFORM OBLIGATIONS.
Any election by the Guarantor to pay or otherwise perform any of the
obligations of the Company under the Subordinated Notes, the Note Purchase
Agreement or any agreement or instrument related hereto shall not release the
Company, the Guarantor or any other guarantor from such obligations or any of
such Person's other obligations under the Subordinated Notes, the Note Purchase
Agreement or any agreement or instrument related hereto.
2.11 NO ELECTION OF REMEDIES BY NOTEHOLDERS.
Each Noteholder shall, individually or collectively, have the right to
seek recourse against the Guarantor to the fullest extent provided for herein
(subject to the limitations set forth in Section 6) for such Guarantor's
obligations under this Guarantee Agreement in respect of the Guarantied
Obligations. No election to proceed in one form of action or proceeding, or
against any party, or on any obligation, shall constitute a waiver of such
Noteholder's right to proceed in any other form of action or proceeding or
against other parties unless such Noteholder has expressly waived such right in
writing. Specifically, but without limiting the generality of the foregoing, no
action or proceeding by any Noteholder against the Company or the Guarantor
under any document or instrument evidencing obligations of the Company or the
Guarantor to such Noteholder shall serve to diminish the liability of the
Guarantor under this Guarantee Agreement, except to the extent that such
Noteholder finally and unconditionally shall have realized payment by such
action or proceeding.
2.12 SEPARATE ACTION; OTHER ENFORCEMENT RIGHTS.
Subject to Section 6, each of the rights and remedies granted under
this Guarantee Agreement may be exercised by the holders of at least sixty-six
and two-thirds percent (66-2/3%) in principal amount of the Subordinated Notes
then outstanding (exclusive of Subordinated Notes then owned by any one or more
of the Company, any Subsidiary or any Affiliate). Subject to Section 6, each of
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such Noteholders, acting together, may proceed to protect and enforce the
Unconditional Guarantee by suit or suits or proceedings in equity, at law or in
bankruptcy, and whether for the specific performance of any covenant or
agreement contained herein or in execution or aid of any power herein granted or
for the recovery of judgment for the obligations hereby guarantied or for the
enforcement of any other proper, legal or equitable remedy available under
applicable law. Notwithstanding the foregoing, during the existence of an Event
of Default described in Section 9.1(a) or Section 9.1(b) of the Note Purchase
Agreement, and irrespective of whether the Subordinated Notes then outstanding
shall have been declared to be due and payable pursuant to Section 9.2(a)(ii) of
the Note Purchase Agreement, subject to Section 6, any Purchaser who is a holder
of Subordinated Notes at such time, or any holder or holders of at least
twenty-five percent (25%) in principal amount of the Subordinated Notes at the
time outstanding (exclusive of Subordinated Notes then owned by any one or more
of the Company, any Subsidiary or any Affiliate), who or which Purchaser or
holder shall have not consented to any waiver with respect to such Event of
Default, may exercise each of the rights and remedies granted to the Noteholders
under this Guaranty Agreement.
2.13 DELAY OR OMISSION; NO WAIVER.
No course of dealing on the part of any Noteholder and no delay or
failure on the part of any such Person to exercise any right hereunder shall
impair such right or operate as a waiver of such right or otherwise prejudice
such Person's rights, powers and remedies hereunder. Every right and remedy
given by the Unconditional Guarantee or by law to any Noteholder may, subject to
Section 6, be exercised from time to time and as often as may be deemed
expedient by such Person.
2.14 RESTORATION OF RIGHTS AND REMEDIES.
If any Noteholder shall have instituted any proceeding to enforce any
right or remedy under the Unconditional Guarantee or under any Subordinated Note
held by such Noteholder, and such proceeding shall have been dismissed,
discontinued or abandoned for any reason, or shall have been determined
adversely to such Noteholder, then and in every such case each such Noteholder,
the Company and the Guarantor shall, except as may be limited or affected by any
determination (including, without limitation, any determination in connection
with any such dismissal) in such proceeding, be restored severally and
respectively to its respective former position hereunder and thereunder, and
thereafter, subject as aforesaid, the rights and remedies of such Noteholders
shall continue as though no such proceeding had been instituted.
2.15 CUMULATIVE REMEDIES.
No remedy under this Guarantee Agreement, the Note Purchase Agreement
or the Subordinated Notes is intended to be exclusive of any other remedy, but
each and every remedy shall be cumulative and in addition to any and every other
remedy given pursuant to this Guarantee Agreement, the Note Purchase Agreement
or the Subordinated Notes.
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2.16 LIMITATION ON GUARANTIED OBLIGATIONS.
It is the intention of the Guarantor and each Noteholder that the
maximum amount of the obligations of the Guarantor hereunder shall be equal to,
but not in excess of, the amount equal to the lesser of
(a) the amount of the Guaranteed Obligations, and
(b) the greater of
(i) the amount of the value received by the Guarantor
as a result of the transactions contemplated hereby,
(ii) the amount of the proceeds of the sale of the
Subordinated Notes received by the Guarantor, and
(iii) the maximum amount permitted by applicable law.
With respect to the foregoing determination of the "maximum amount permitted by
applicable law," but only to the extent the obligations of the Guarantor
hereunder would be avoidable under applicable law if they were not limited to
"the maximum amount permitted by applicable law," such obligations shall be
limited to the maximum amount that, after giving effect to the incurrence
thereof and after taking in consideration the value of any rights of
subrogation, reimbursement, contribution and similar rights the Guarantor may
have, would not render the Guarantor insolvent or unable to pay its debts
(within the meaning of Title 11 of the United States Code or as defined in the
analogous applicable law) as they mature or leave the Guarantor with an
unreasonably small capital. The need for any such limitation shall be
determined, and any such needed limitation shall be effective, at the time or
times that the Guarantor is deemed, under applicable law, to incur obligations
hereunder. Any such limitation shall be apportioned amongst the Guarantied
Obligations owed to the Noteholders pro rata. This Section 2.17 is intended
solely to preserve the rights of each Noteholder hereunder to the maximum extent
permitted by applicable law, and neither the Guarantor nor any other Person
shall have any rights under this Section 2.17 that it would not otherwise have
under applicable law. For the purposes of this Section 2.17, "insolvency",
"unreasonably small capital" and "inability to pay debts (as so defined) as they
mature" shall be determined in accordance with applicable law.
3. INTERPRETATION OF THIS GUARANTEE AGREEMENT
3.1 TERMS DEFINED.
As used in this Guarantee Agreement, the capitalized terms have the
meaning specified in the Note Purchase Agreement unless otherwise specified
below or set forth in the section of this Guarantee Agreement referred to
immediately following such term (such definitions, unless
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otherwise expressly provided, to be equally applicable to both the singular and
plural forms of the terms defined):
AFFILIATE OBLIGATION -- Section 2.8
COMPANY -- Section 1.1.
GUARANTEE AGREEMENT, THIS -- has the meaning assigned to such term in
the first paragraph hereof.
GUARANTIED OBLIGATIONS -- Section 2.1.
GUARANTOR -- has the meaning assigned to such term in the first
paragraph hereof.
NOTE PURCHASE AGREEMENT -- Section 1.1.
NOTEHOLDER -- means, at any time, each Person that is the holder of any
Subordinated Note at such time.
PURCHASERS -- Section 1.1.
REQUIRED HOLDERS -- means, at any time, the holders of greater than
fifty percent (50%) in principal amount of the Subordinated Notes at the time
outstanding (exclusive of Subordinated Notes then owned by any one or more of
the Company, any Subsidiary, any Affiliate and any officer or director of any
thereof).
SUBSIDIARY SENIOR GUARANTEE -- means any guaranty agreement executed by
the Guarantor or any other guarantor with respect to an Acceptable Credit
Facility.
SUBORDINATED NOTES -- Section 1.1.
UNCONDITIONAL GUARANTEE -- Section 2.1.
3.2 SECTION HEADINGS AND CONSTRUCTION.
(a) SECTION HEADINGS, ETC. The titles of the Sections appear
as a matter of convenience only, do not constitute a part hereof and
shall not affect the construction hereof. The words "herein," "hereof,"
"hereunder" and "hereto" refer to this Guarantee Agreement as a whole
and not to any particular Section or other subdivision.
(b) CONSTRUCTION. Each covenant contained herein shall be
construed (absent an express contrary provision herein) as being
independent of each other covenant contained herein, and compliance
with any one covenant shall not (absent such an express contrary
provision) be deemed to excuse compliance with one or more other
covenants.
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4. WARRANTIES AND REPRESENTATIONS
The Guarantor represents and warrants to the Purchasers, as of the date
of effectiveness hereof, as follows:
4.1 GENERALLY.
(a) The Guarantor is fully aware of the financial condition of
the Company. The Guarantor delivers this guaranty based solely upon its
own independent investigation and in no part upon any representation or
statement of any one or more of any Noteholder with respect thereto.
The Guarantor is in a position to obtain, and hereby assumes full
responsibility for obtaining, any additional information concerning the
financial condition of the Company as the Guarantor may deem material
to its obligations hereunder, and the Guarantor is not relying upon,
nor expecting, any Noteholder to furnish it any information concerning
the financial condition of the Company.
(b) As of the date of the execution and delivery of this
Guarantee Agreement, there are no presently pending material court or
administrative proceedings or undischarged judgments against the
Guarantor; and no tax liens have been filed or threatened against the
Guarantor, nor is the Guarantor in default or claimed default under any
agreement for borrowed money.
(c) The Guarantor is a corporation duly organized and validly
existing and in good standing under the laws of its jurisdiction of
incorporation. The Guarantor has the corporate power to own its
properties and carry on its business as it is now being conducted. The
Guarantor has the valid authority and the corporate power to enter into
and perform, and has taken all necessary action to authorize the entry
into, and the performance and delivery of, this Guarantee Agreement and
the transactions contemplated hereby.
(d) This Guarantee Agreement has been duly authorized by all
necessary action on the part of the Guarantor, has been duly executed
and delivered by duly authorized officers of the Guarantor, and
constitutes a legal, valid and binding obligation of the Guarantor,
except, in each case:
(i) as such enforceability may be limited by
applicable bankruptcy, reorganization, arrangement, fraudulent
conveyance, insolvency, moratorium, or other similar laws
affecting the enforceability of creditors' rights generally;
(ii) as such enforceability may be subject to the
availability of equitable remedies; and
(iii) that certain rights to indemnity and
contribution may be limited by applicable law.
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(e) The entry into and performance of this Guarantee Agreement
and the transactions contemplated hereby do not and will not conflict
with any applicable law or regulation or official or judicial order,
conflict with the charter, bylaws or other organizational documents of
the Guarantor, conflict with any agreement or document to which the
Guarantor is a party or that is binding upon it or any of its
Properties, or result in the creation or imposition of any Lien on any
of its Properties pursuant to the provisions of any agreement or
document.
(f) Neither the legal nature of the Guarantor, nor any of its
businesses and Properties, nor any relationship between or among the
Guarantor or any other Person, nor any circumstance in connection with
the execution or delivery of this Guarantee Agreement, is such as to
require any authorization, consent, approval, license, registration,
notarization, exemption or other action by or notice to or filing with
any court or administrative or governmental body or agency in
connection with the execution and delivery of this Guarantee Agreement
or the fulfillment of and compliance with the terms and provisions
hereof.
4.2 NATURE OF BUSINESS OF COMPANY AND SUBSIDIARIES.
The Company and the Guarantor are, and will be, as to financing and
capital raising activities, operated as part of one consolidated business entity
and the Guarantor is directly or indirectly dependent upon the Company for and
in connection with its business activities and its financial resources. The
Guarantor understands that the Company agreed to cause the Guarantor to provide
this Agreement, to sell the Subordinated Notes and to enter into the related
transactions based on the consolidated financial position of the Company and the
Subsidiaries, and the Guarantor further understands that the Purchasers are
relying on the consolidated financial condition of the Company and the
Subsidiaries in purchasing the Subordinated Notes.
5. GENERAL COVENANTS
The Guarantor covenants and agrees that on and after the date hereof
and so long as any of the Guarantied Obligations shall be outstanding:
5.1 UNDERTAKINGS IN NOTE PURCHASE AGREEMENT.
The Guarantor will comply with each of the undertakings of the Company
in the Note Purchase Agreement in respect of which the Company undertakes to
cause the Guarantor (in its capacity as a Guarantor and as a Subsidiary) to
comply with such undertakings, as if such undertakings (as they apply to the
Guarantor) were set forth at length herein as the undertakings of the Guarantor.
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5.2 PAYMENT OF SUBORDINATED NOTES AND MAINTENANCE OF OFFICES.
The Guarantor will punctually pay, or cause to be paid, all of the
Guarantied Obligations when due in accordance with the terms hereof, and subject
to the limitations set forth in Section 6, and all other payment obligations
required of it hereunder and will maintain an office at its address set forth in
Section 7.3 where notices, presentations and demands in respect of this
Guarantee Agreement may be made upon it. Such office will be maintained at such
address until such time as the Guarantor shall notify the Noteholders of any
change of location of such office.
5.3 FURTHER ASSURANCES.
The Guarantor will cooperate with the Noteholders and execute such
further instruments and documents as the Required Holders shall reasonably
request to carry out, to the reasonable satisfaction of the Required Holders,
the transactions contemplated by this Guarantee Agreement and the other
Financing Documents.
6. SUBORDINATION
The Guaranteed Obligations are subordinate and junior in right of
payment to the Subsidiary Senior Guarantee and the Senior Debt to the extent
that the Subordinated Notes are subordinate and junior to the Senior Debt as
provided in Section 10 of the Note Purchase Agreement, and as if the provisions
of Section 10 of the Note Purchase Agreement, together with the definitions set
forth in Section 11 of the Note Purchase Agreement of the terms used in such
Section 10, were set forth herein mutatis mutandis, and as if the term
"Company," as used therein, related to the Guarantor; the term "Senior Debt," as
used therein, related to each of the Subsidiary Senior Guarantee and the Senior
Debt; and the term "Subordinated Debt," as used therein, related to this
Guarantee Agreement. Upon the sale or other transfer or disposition (by merger
or otherwise) of the capital stock of the Guarantor (so long as such sale, other
transfer or disposition is permitted or in accordance with the terms of the Note
Purchase Agreement), then this Guarantee Agreement shall automatically terminate
and the Guarantor shall be deemed automatically and unconditionally released and
discharged from all obligations under this Guarantee Agreement without any
further action required on the part of any Noteholder; provided that in such
event any cash proceeds of the sale or other disposition of such capital stock
remaining after payment in full of the Senior Debt shall be applied to the
Subordinated Notes in accordance with their terms and the terms of the Note
Purchase Agreement. The Noteholders shall deliver appropriate instruments
evidencing such release upon receipt of a request of the Guarantor or the
holders of the Senior Debt.
7. MISCELLANEOUS
7.1 SUCCESSORS AND ASSIGNS.
(a) Whenever the Guarantor or any of the parties to the Note
Purchase Agreement is referred to, such reference shall be deemed to
include the successors and assigns of such party, and all the
covenants, promises and agreements contained in this Guarantee
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Agreement by or on behalf of the Guarantor shall bind the successors
and assigns of the Guarantor and shall inure to the benefit of each of
the Noteholders from time to time whether so expressed or not and
whether or not an assignment of the rights hereunder shall have been
delivered in connection with any assignment or other transfer of
Subordinated Notes.
(b) In connection with the transfer of the Subordinated Notes
by any Noteholder in accordance with the requirements of the Note
Purchase Agreement, the Guarantor agrees to provide an executed copy of
this Guarantee Agreement to the new Noteholder or Noteholders of such
Subordinated Notes, provided that no additional obligations of the
Guarantor shall thereby be created but rather that the existing
obligations of the Guarantor shall be more particularly stated in
respect of one or more future Noteholders that are the subject of this
Guarantee Agreement.
7.2 PARTIAL INVALIDITY.
The unenforceability or invalidity of any provision or provisions
hereof shall not render any other provision or provisions contained herein
unenforceable or invalid.
7.3 COMMUNICATIONS.
(A) METHOD; ADDRESS. All communications hereunder shall be in
writing, shall be delivered in the manner required by the Note Purchase
Agreement, and shall be addressed, if to the Guarantor, at the address
set forth on Annex 1 hereto, and if to any of the Noteholders:
(A) if such Noteholder is a Purchaser, at the address
set forth on Annex 1 to the Note Purchaser Agreement for such
Purchaser, and further including any parties referred to on
such Annex 1 which are required to receive notices in addition
to such Purchaser; and
(B) if such Noteholder is not a Purchaser, at the
address set forth in the register for the registration and
transfer of Subordinated Notes maintained pursuant to Section
6.1 of the Note Purchase Agreement for such Noteholder;
or to any such party at such other address as such party may designate
by notice duly given in accordance with this Section 7.3.
(B) WHEN GIVEN. Any communication addressed and delivered as
herein provided shall be deemed to be received when actually delivered
to the address of the addressee (whether or not delivery is accepted)
or received by the telecopy machine of the recipient. Any communication
not so addressed and delivered shall be ineffective.
7.4 GOVERNING LAW.
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THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, INTERNAL CONNECTICUT LAW.
7.5 EFFECTIVE DATE.
This Guarantee Agreement shall be effective as of the date first
written above.
7.6 BENEFITS OF GUARANTEE AGREEMENT RESTRICTED TO NOTEHOLDERS.
Nothing express or implied in this Guarantee Agreement is intended or
shall be construed to give to any Person other than the Guarantor and the
Noteholders any legal or equitable right, remedy or claim under or in respect
hereof or any covenant, condition or provision therein or herein contained; and
all such covenants, conditions and provisions are and shall be held to be for
the sole and exclusive benefit of the Guarantor and the Noteholders.
7.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein or made in writing
by the Guarantor in connection herewith shall survive the execution and delivery
hereof.
7.8 EXPENSES.
(a) The Guarantor shall pay when billed the reasonable costs
and expenses (including reasonable attorneys' fees) incurred by the
Noteholders in connection with the consideration, negotiation,
preparation or execution of any amendments, waivers, consents,
standstill agreements and other similar agreements with respect hereto
(whether or not any such amendments, waivers, consents, standstill
agreements or other similar agreements are executed).
(b) At any time when either of the Company or the Guarantor
and the Noteholders are conducting restructuring or workout
negotiations in respect hereof, or a Default or Event of Default
exists, the Guarantor shall pay when billed the reasonable costs and
expenses (including reasonable attorneys' fees and the reasonable fees
of professional advisors) incurred by the Noteholders in connection
with the assessment, analysis or enforcement of any rights or remedies
that are or may be available to the Noteholders.
(c) If the Guarantor shall fail to pay when due any principal
of, or Prepayment Compensation Amount or interest on, any Subordinated
Note, the Guarantor shall pay to each holder of Subordinated Notes, to
the extent permitted by law, such amounts as shall be sufficient to
cover the costs and expenses, including but not limited to reasonable
attorneys' fees, incurred by such holder in collecting any sums due on
such Subordinated Notes.
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7.9 AMENDMENT.
This Guarantee Agreement may be amended only in a writing executed by
the Guarantor and the Required Holders.
7.10 SURVIVAL.
So long as the Guarantied Obligations and all payment obligations of
the Guarantor hereunder shall not have been fully and finally performed and
indefeasibly paid, the obligations of the Guarantor hereunder shall survive the
transfer and payment of any Subordinated Note.
7.11 ENTIRE AGREEMENT.
This Guarantee Agreement constitutes the final written expression of
all of the terms hereof and is a complete and exclusive statement of those
terms.
7.12 DUPLICATE ORIGINALS, EXECUTION IN COUNTERPART.
Two or more duplicate originals hereof may be signed by the parties,
each of which shall be an original but all of which together shall constitute
one and the same instrument. This Guarantee Agreement may be executed in one or
more counterparts and shall be effective when at least one counterpart shall
have been executed by each party hereto, and each set of counterparts that,
collectively, show execution by each party hereto shall constitute one duplicate
original.
[Remainder of page intentionally blank. Next page is signature page.]
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IN WITNESS WHEREOF, the Guarantor has caused this Guarantee Agreement
to be executed on its behalf by a duly authorized officer of the Guarantor.
[NAME OF GUARANTOR]
By
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Name:
Title:
By
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Name:
Title:
[SUBORDINATED GUARANTEE AGREEMENT of _____________________]
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ANNEX 1
Address of Guarantor
_____________________
c/o The Hawk Group of Companies, Inc.
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Guarantee Agreement
