Exhibit 10.4
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UNCONDITIONAL GUARANTY
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DATED AS OF JUNE 30, 1999
Re:
$20,000,000 14.5% SENIOR SUBORDINATED NOTES DUE JUNE 30, 2005
ISSUED BY QUESTRON OPERATING COMPANY, INC.
TABLE OF CONTENTS
PAGE
Annex 1 - Addresses of Guarantors
Annex 2 - Form of Joinder Agreement
UNCONDITIONAL GUARANTY
UNCONDITIONAL GUARANTY, dated as of June 30, 1999 (as amended,
restated or otherwise modified from time to time, this "Subsidiary Guaranty"),
by QUESTRON TECHNOLOGY, INC., a Delaware corporation, QUESTRON FINANCE CORP., a
Delaware corporation, QUESTRON DISTRIBUTION LOGISTICS, INC., a Delaware
corporation, INTEGRATED MATERIAL SYSTEMS, INC., an Arizona corporation, POWER
COMPONENTS, INC., a Pennsylvania corporation, FORTUNE INDUSTRIES, INC., a Texas
corporation, FAS-TRONICS, INC., a Texas corporation, CALIFORNIA FASTENERS, INC.,
a California corporation, COMP ▇▇▇▇, INC., a Delaware corporation, ACTION
THREADED PRODUCTS, INC., an Illinois corporation, ACTION THREADED PRODUCTS OF
GEORGIA, INC., a Georgia corporation, ACTION THREADED PRODUCTS OF MINNESOTA,
INC., a Minnesota corporation and CAPITAL FASTENERS, INC., a North Carolina
corporation (collectively, the "Original Guarantors") and each other Person
that becomes a party hereto from time to time by execution and delivery of a
Joinder Agreement (collectively, with the Original Guarantors, and including
their respective successors and assigns, the "Guarantors"), in favor of each of
the Noteholders (as such term is hereinafter defined).
1. PRELIMINARY STATEMENTS
WHEREAS, Questron Operating Company, Inc. (together with its
successors and assigns, the "Company"), a Delaware corporation, has authorized
the issuance of its 14.50% Senior Subordinated Notes due June 30, 2005 (as may
be amended, restated or otherwise modified from time to time, the "Notes"), in
the aggregate principal amount of Twenty Million Dollars ($20,000,000), pursuant
to a Note Agreement, dated as of June 29, 1999 (as may be amended, restated or
otherwise modified from time to time, the "Note Agreement"), entered into by the
Company with each of the purchasers of the Notes named on Annex 1 to the Note
Agreement (the "Purchasers"); and
WHEREAS, the proceeds of the sale of the Notes will be used, in part,
and together with other new indebtedness of the Company, to repay indebtedness
of the Company which is guaranteed by the Original Guarantors and which is
secured by Liens upon the assets of the Original Guarantors; and
WHEREAS, in order to induce the Purchasers to purchase the Notes,
each of the Original Guarantors has agreed to become a Guarantor hereunder and
the Company has agreed, pursuant to the Note Agreement, that each other
Subsidiary, will be required to become a Guarantor hereunder; and
WHEREAS, each of the Original Guarantors will receive direct economic
benefit from the granting of this Subsidiary Guaranty in that the proceeds from
the sale of the Notes will be used to prepay indebtedness of the Company, which
payment will result in the discharge of the existing guarantees of such
indebtedness by the Original Guarantors and the discharge of existing Liens upon
the Property of such Original Guarantors; and each Guarantor will receive direct
and indirect economic, financial and other benefits from the Debt incurred under
the Note Agreement and the Notes by the Company, and under this Subsidiary
Guaranty, and the incurrence of such Debt and the guaranteeing of such Debt
hereby is in the best interests of such Guarantor; and
WHEREAS, all acts and proceedings required by law and by the
constitutive documents of each Guarantor necessary to constitute this Subsidiary
Guaranty 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 have been in all respects duly authorized;
NOW, THEREFORE, in consideration of the foregoing and the agreements
set forth herein, each of the Guarantors agrees as follows:
2. GUARANTY AND OTHER RIGHTS AND UNDERTAKINGS
2.1 Guarantied Obligations
(a) Each Guarantor, in consideration of the execution and
delivery of the Note Agreement, the purchase of the Notes by the
Purchasers and other consideration, hereby irrevocably,
unconditionally and absolutely guaranties, on a continuing basis, to
each Noteholder, jointly and severally, as and for such Guarantor's
own debt:
(i) the prompt payment of the principal of the
Notes and any and all accrued and unpaid interest
(including, without limitation, interest which otherwise
may cease to accrue by operation of any insolvency law,
rule, regulation or interpretation thereof) and
Compensation Amount on the Notes and all other obligations
of the Company to the Noteholders under the Note Agreement
(including, without limitation, its obligations in respect
of Section 9.6 and Section 9.8 thereof), whether by
mandatory or optional prepayment, acceleration or
otherwise, all in accordance with the terms of the Note
Agreement and the Notes, including, without limitation,
overdue interest, indemnification payments and all
reasonable costs and expenses incurred by the Noteholders
in connection with enforcing any obligations of the Company
under the Note Agreement and the Notes, including, without
limitation, the reasonable fees and disbursements of
Noteholders' special counsel;
(ii) the prompt and punctual performance and
observance of each and every term, covenant or agreement
contained in the Note Agreement and the Notes to be
performed or observed on the part of the Company; and
(iii) the prompt and complete payment, on demand,
of any and all reasonable costs and expenses incurred by
the Noteholders in connection with enforcing the
obligations of such Guarantor hereunder, including, without
limitation, the reasonable fees and disbursements of
Noteholders' special counsel.
All of the obligations set forth in subsections (i), (ii) and (iii)
of this Section 2.1 are referred to herein as the "Guarantied
Obligations" and the guaranty thereof contained herein is a primary,
original and immediate obligation of each 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.
(b) If for any reason any duty, agreement or obligation of
the Company contained in the Note Agreement shall not be performed or
observed by the Company as provided therein, or if any amount payable
under or in connection with the Note Agreement or the Notes shall not
be paid in full when the same becomes due and payable, each Guarantor
undertakes to perform or cause to be performed promptly each of such
duties, agreements and obligations and to pay forthwith each such
amount to the Noteholders regardless of any defense or setoff or
counterclaim which the Company may have or assert, and regardless of
any other condition or contingency.
2.2 Waivers and Other Agreements
Each Guarantor hereby unconditionally:
(a) waives any requirement that the Noteholders, upon the
occurrence of an Event of Default, first make demand upon, or seek to
enforce remedies against, the Company before demanding payment under
or seeking to enforce the obligations of such Guarantor under this
Subsidiary Guaranty;
(b) agrees that the obligations of such Guarantor under
this Subsidiary Guaranty will not be discharged except by complete
performance of all obligations of the Company contained in the Note
Agreement, the Notes and the other Financing Documents;
(c) agrees that the obligations of such Guarantor under
this Subsidiary Guaranty shall remain in full force and effect
without regard to, and shall not be affected or impaired, without
limitation, by any invalidity, irregularity or unenforceability in
whole or in part of the Note Agreement, the Notes or any other
Financing Document, or any limitation on the liability of any
Guarantor under this Subsidiary Guaranty, or any limitation on the
method or terms of payment under the Note Agreement, the Notes or any
other Financing Document which may at any time be caused or imposed
in any manner whatsoever (including, without limitation, usury laws);
(d) waives diligence, presentment and protest with respect
to, and any notice of default or dishonor in the payment of any
amount at any time payable by the Company under or in connection with
the Note Agreement, the Notes or any other Financing Document, and
further waives any requirement of notice of acceptance of, or other
formality relating to, the obligations of such Guarantor under this
Subsidiary Guaranty; and
(e) 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,
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.
2.3 Nature of Guaranty
The obligations of each Guarantor under this Subsidiary Guaranty
constitute an absolute and unconditional and irrevocable guaranty of payment and
not a guaranty of collection and are wholly independent of and in addition to
other rights and remedies of the Noteholders and are not contingent upon the
pursuit by the Noteholders of any such rights and remedies, such pursuit being
hereby waived by such Guarantor. Notwithstanding anything to the contrary set
forth in the Note Agreement, the Notes or any other Financing Document, the
obligations of each Guarantor under this Subsidiary Guaranty are joint and
several with the obligations of each other Guarantor and any other guarantor of
all or any part of the Guarantied Obligations.
2.4 Obligations Absolute
The obligations, covenants, agreements and duties of each Guarantor
under this Subsidiary Guaranty shall not be released, affected or impaired by
any of the following, whether or not undertaken with notice to or consent of
such Guarantor:
(a) any assignment or transfer, in whole or in part, of any
Note although made without notice to or consent of such Guarantor;
(b) any waiver by any Noteholder, or by any other Person,
of the performance or observance by the Company of any of the
agreements, covenants, terms or conditions contained in the Note
Agreement or in any other Financing Document;
(c) any indulgence in or the extension of the time for
payment by the Company of any amounts payable under or in connection
with the Note Agreement, the Notes or any other Financing Document,
or of the time for performance by the Company of any other
obligations under or arising out of the Note Agreement, the Notes or
any other Financing Document, or the extension or renewal thereof;
(d) the modification, amendment or waiver (whether material
or otherwise) of any duty, agreement or obligation of the Company set
forth in the Note Agreement, the Notes or any other Financing
Document (the modification, amendment or waiver from time to time of
the Note Agreement, the Notes and the other Financing Documents being
expressly authorized without further notice to or consent of such
Guarantor);
(e) the voluntary or involuntary liquidation, sale or other
disposition of all or substantially all of the assets of the Company
or any receivership, insolvency, bankruptcy, reorganization or other
similar proceedings affecting the Company or any of its assets;
(f) the merger or consolidation of the Company or any
Guarantor with any other Person;
(g) the release or discharge of the Company from the
performance or observance of any agreement, covenant, term or
condition contained in the Note Agreement, the Notes or any other
Financing Document, by operation of law; or
(h) any other cause, whether similar or dissimilar to the
foregoing, that would release, affect or impair the obligations,
covenants, agreements or duties of any Guarantor under this
Subsidiary Guaranty.
2.5 No Investigation by Noteholders
Each Guarantor hereby waives unconditionally any obligation that, in
the absence of such provision, the Noteholders might otherwise have to
investigate or to assure that there has been compliance with the law of any
jurisdiction with respect to the Guarantied Obligations, recognizing that, to
save both time and expense, such Guarantor has requested that the Noteholders
not undertake such investigation. Each Guarantor hereby expressly confirms that
the obligations of such Guarantor hereunder shall remain in full force and
effect without regard to compliance or noncompliance with any such law and
irrespective of any investigation or knowledge of any such law by any
Noteholder.
2.6 Indemnity
As a separate, additional and continuing obligation, each Guarantor
unconditionally and irrevocably undertakes and agrees with the Noteholders that,
should the Guarantied Obligations not be recoverable from such Guarantor under
Section ? for any reason whatsoever (including, without limitation, by reason of
any provision of the Note Agreement or the Notes or any other agreement or
instrument executed in connection therewith being or becoming void,
unenforceable or otherwise invalid under any applicable law) then,
notwithstanding any knowledge thereof by any Noteholder at any time, such
Guarantor as sole, original and independent obligor, upon demand by the Required
Holders, will make payment of the Guarantied Obligations to the Noteholders by
way of a full indemnity in such currency and otherwise in such manner as is
provided in the Note Agreement and the Notes.
2.7 Subordination, Subrogation, Etc.
Each Guarantor agrees that any present or future indebtedness,
obligations or liabilities of the Company to such Guarantor shall be fully
subordinate and junior in right and priority of payment to the Guarantied
Obligations and any present or future indebtedness, obligations or liabilities
of the Company to the Noteholders. Each Guarantor waives any right of
subrogation to the rights of the Noteholders against the Company or any other
Person obligated for payment of the Guarantied Obligations and any right of
reimbursement, contribution or indemnity whatsoever (including, without
limitation, any such right as against the Company or any other Guarantor)
arising or accruing out of any payment that such Guarantor may make pursuant to
this Subsidiary Guaranty, and any right of recourse to security for the debts
and obligations of the Company, unless and until the entire amount of the
Guarantied Obligations shall have been fully, finally and indefeasibly paid in
full for a period of not less than one hundred twenty (120) days.
2.8 Waiver
To the extent that it lawfully may, each Guarantor agrees that it
will not at any time insist upon or plead, or in any manner whatsoever claim or
take any benefit or advantage of any applicable present or future stay,
extension or moratorium law, which may affect observance or performance of the
provisions of this Subsidiary Guaranty, the Note Agreement, the Notes or any
other Financing Document; nor will it claim, take or insist upon any benefit or
advantage of any present or future law providing for the evaluation or appraisal
of any security for its obligations hereunder or the Company under the Note
Agreement, the Notes or any other Financing Document prior to any sale or sales
thereof which may be made under or by virtue of any instrument governing the
same; nor will it, after any such sale or sales, claim or exercise any right,
under any applicable law, to redeem any portion of such security so sold.
2.10 Limitation on Guarantied Obligations.
Notwithstanding anything in Section 2.1 or elsewhere in this
Subsidiary Guaranty or any other Financing Document to the contrary, the
obligations of each Guarantor under this Subsidiary Guaranty shall at each point
in time be limited to an aggregate amount equal to the greatest amount that
would not result in such obligations being subject to avoidance, or otherwise
result in such obligations being unenforceable, at such time under applicable
law (including, without limitation, to the extent, and only to the extent,
applicable to any such Guarantor, Section 548 of the Bankruptcy Code of the
United States of America and any comparable provisions of the law of any other
jurisdiction, any capital preservation law of any jurisdiction and any other law
of any jurisdiction that at such time limits the enforceability of the
obligations of such Guarantor under this Subsidiary Guaranty).
2.11 Marshaling
Neither any Noteholder nor any Person acting for the benefit of any
Noteholder shall be under any obligation to marshal any assets in favor of any
Guarantor or against or in payment of any or all of the Guarantied Obligations.
2.12 Setoff, Counterclaim or Other Deductions
Except as otherwise required by law, each payment by each Guarantor
shall be made without setoff, counterclaim or other deduction.
2.13 No Election of Remedies by Noteholders
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 any Guarantor
under any document or instrument evidencing obligations of the Company or any
Guarantor to such Noteholder shall serve to diminish the liability of any
Guarantor under this Subsidiary Guaranty, except to the extent that such
Noteholder finally and unconditionally shall have realized payment by such
action or proceeding in respect of the Guarantied Obligations.
2.14 Separate Action; Other Enforcement Rights
Each of the rights and remedies granted under this Subsidiary
Guaranty to each Noteholder in respect of the Notes held by such Noteholder may
be exercised by such Noteholder without notice by such Noteholder to, or the
consent of or any other action by, any other Noteholder. Each Noteholder may
proceed to protect and enforce this Subsidiary Guaranty 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.
2.15 Noteholder Setoff
Each Noteholder shall have, to the fullest extent permitted by law
and this Subsidiary Guaranty, a right of set-off against any and all credits and
any and all other property of each Guarantor now or at any time whatsoever,with
or in the possession of such Noteholder, or anyone acting for such Noteholder,
to ensure the full performance of any and all obligations of each Guarantor
hereunder.
2.16 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 this Subsidiary Guaranty or by law to any Noteholder may be exercised
from time to time as often as may be deemed expedient by such Person.
2.17 Restoration of Rights and Remedies
If any Noteholder shall have instituted any proceeding to enforce any
right or remedy under this Subsidiary Guaranty or under any 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
each 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 positions 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.
2.18 Cumulative Remedies
No remedy under this Subsidiary Guaranty, the Note Agreement, the
Notes or any other Financing Document 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 Subsidiary Guaranty, the Note
Agreement, the Notes or any other Financing Document.
2.19 Subordination to Senior Debt
The Guarantied Obligations are subordinate and junior in right of
payment to any and all guaranties or other Debt of the Guarantors owing to the
holders of Senior Debt in respect of the Senior Debt to the same extent and on
the same terms as the Notes are subordinated to the Senior Debt pursuant to the
provisions of Section 7 of the Note Agreement. The provisions of Section 7 of
the Note Agreement and the defined terms set forth in Section 8.1 of the Note
Agreement, to the extent used in such Section 7, are hereby incorporated in
their entirety herein, mutatis mutandis, by this reference thereto. Each
Noteholder shall be deemed to acknowledge and agree that the these subordination
provisions are, and are intended to be, an inducement to and a consideration of
each holder of any Senior Debt, whether such Senior Debt was created or acquired
before or after the creation of Notes, to acquire and hold, or to continue to
hold, such Senior Debt, and such holder of Senior Debt shall be deemed
conclusively to have relied on such subordination provisions in acquiring and
holding, or in continuing to hold, such Senior Debt, and each holder of Senior
Debt shall be a direct beneficiary of the provisions of this Section ?.
Notwithstanding anything contained in this Unconditional Guaranty or any other
Financing Document to the contrary, this Section ? may not, directly or
indirectly, be amended, modified, supplemented or waived without the prior
written consent of the Senior Agent, on behalf of the holders of the Senior
Debt, for so long as the Senior Credit Facility shall exist, and, thereafter,
the holders of the Senior Debt. Nothing in this Section ? shall affect, as among
the Guarantors and the Noteholders, the obligations of the Guarantors under this
Subsidiary Guaranty, which obligations remain absolute and unconditional
notwithstanding such subordination.
3. WARRANTIES AND REPRESENTATIONS
Each Guarantor warrants and represents, as of the date such Guarantor
becomes a Guarantor hereunder, as follows:
3.1 Representations and Warranties in Securities Purchase
Agreement
Each of the warranties and representations made by the Company in
Section 2 of the Securities Purchase Agreement with respect to Subsidiaries or
the Guarantors generally are true with respect to such Guarantor on the date
that such Guarantor becomes a Guarantor, with the same effect as though such
warranties and representations were made on and as of such date rather than on
and as of the date of this Subsidiary Guaranty.
3.2 Due Authorization; Enforceability
(a) Unconditional Guaranty is Legal and Authorized. The
execution and delivery of this Subsidiary Guaranty by such Guarantor
and compliance by such Guarantor with all of the provisions hereof:
(i) is within the corporate powers of such
Guarantor; and
(ii) is legal and does not conflict with, result
in any breach of any of the provisions of, constitute a
default under, or result in the creation of any Lien upon
any Property of such Guarantor under the provisions of:
(A) any agreement, charter instrument,
bylaw or other instrument to which such Guarantor
is a party or by which such Guarantor is or may
be bound;
(B) any order, judgment, decree, or
ruling of any court, arbitrator or Governmental
Authority applicable to such Guarantor or any of
its Property; or
(C) any statute or other rule or
regulation of any Governmental Authority
applicable to such Guarantor or any of its
Property.
(b) Obligations are Enforceable. This Subsidiary Guaranty
has been duly authorized by all necessary action on the part of such
Guarantor, has been executed and delivered by one or more duly
authorized officers of such Guarantor, and constitutes a legal, valid
and binding obligation of such Guarantor, enforceable in accordance
with its terms, except that:
(i) the enforceability thereof may be limited by
applicable bankruptcy, reorganization, arrangement,
insolvency, moratorium, or other similar laws affecting the
enforceability of creditors' rights generally and subject
to the availability of equitable remedies; and
(ii) rights to indemnity and contribution
contained therein may be limited by applicable law or
public policy.
3.3 Governmental Consent
(a) Neither the execution and delivery of this Subsidiary
Guaranty by such Guarantor, nor the performance of the obligations of
such Guarantor hereunder, is such as to require a consent, approval
or authorization of, or pre-filing, registration or qualification
with, any Governmental Authority on the part of such Guarantor as a
condition hereto, except for such
consents, approvals, authorizations, pre-filings, registrations and
qualifications as have been obtained on or prior to the date that
such Guarantor becomes a Guarantor.
(b) Neither the execution and delivery of this Subsidiary
Guaranty by such Guarantor, nor the incurrence of obligations
represented hereby, nor the performance of its obligations hereunder:
(i) is subject to regulation under the Investment
Company Act of 1940, as amended, the Public Utility Holding
Company Act of 1935, as amended, the Transportation Acts of
the United States of America (49 U.S.C.), as amended, or
the Federal Power Act, as amended; or
(ii) violates any provision of any statute or
other rule or regulation of any Governmental Authority
applicable to such Guarantor.
3.4 Nature of Business of Company and Subsidiaries
The Company and the Subsidiaries have sought and obtained the Note
Agreement, the sale of the Notes and the related transactions based upon their
consolidated financial position and such Guarantor understands that the
Purchasers are relying upon the consolidated financial condition of the Company
and the Subsidiaries in purchasing the Notes.
3.5 Solvency
The fair value of the business and assets of each of the Company and
the Guarantors exceeds the amount that will be required to pay its liabilities
(including, without limitation, contingent, subordinated, unmatured and
unliquidated liabilities on existing debts, as such liabilities may become
absolute and matured), in each case after giving effect to the transactions
contemplated by the Note Agreement, the Notes and this Subsidiary Guaranty,
including, without limitation, the provisions of Section ?. Neither the Company
nor any of the Guarantors, after giving effect to the transactions contemplated
by the Note Agreement, the Notes and this Subsidiary Guaranty, will be insolvent
or will be engaged in any business or transaction, or about to engage in any
business or transaction, for which such Person has unreasonably small assets or
capital (within the meaning of the Uniform Fraudulent Transfer Act, the Uniform
Fraudulent Conveyance Act and Section 548 of Title 11 of the United States
Code), and none of the Guarantors nor the Company has any intent to hinder,
delay or defraud any entity to which it is, or will become, on or after the
Closing Date, indebted or incur debts that would be beyond its ability to pay as
they mature.
4. INTERPRETATION OF THIS SUBSIDIARY GUARANTY
4.1 Terms Defined
As used in this Subsidiary Guaranty, the capitalized terms have the
meaning specified in the Note Agreement unless otherwise specified below or set
forth in the section of this Subsidiary Guaranty referred to immediately
following such term (such definitions, unless otherwise expressly provided, to
be equally applicable to both the singular and plural forms of the terms
defined):
Company - the first Recital.
Financing Documents - means and includes this Subsidiary Guaranty,
the Note Agreement, the Securities Purchase Agreements, the Notes, and the other
agreements, certificates and instruments to be executed pursuant to the terms of
each of the foregoing, as each may be amended, restated or otherwise modified
from time to time.
Guarantied Obligations - Section 2.1.
Guarantors - the introductory paragraph.
Note Agreement - the first Recital.
Noteholder - means, at any time, each Person that is the holder of
any Note at such time.
Notes - the first Recital.
Original Guarantor - the introductory paragraph.
Purchasers - the first Recital.
Subsidiary Guaranty, this - the introductory paragraph.
4.2 Directly or Indirectly.
Where any provision herein refers to action to be taken by any
Person, or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person,
including actions taken by or on behalf of any partnership in which such Person
is a general partner.
4.3 Section Headings and Construction
(b) Section Headings, etc. The titles of the Sections of
this Subsidiary Guaranty and the Table of Contents of this Subsidiary
Guaranty 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 Subsidiary
Guaranty as a whole and not to any particular Section or other
subdivision. References to Sections are, unless otherwise specified,
references to Sections of this Subsidiary Guaranty. References to
Annexes and Exhibits are, unless otherwise specified, references to
Annexes and Exhibits attached to this Subsidiary Guaranty.
(d) Construction. Each covenant contained herein shall be
construed (absent express provision to the contrary) as being
independent of each other covenant contained herein, so that
compliance with any one covenant shall not (absent such an express
contrary provision) be deemed to excuse compliance with any other
covenant.
4.4 Governing Law.
THIS SUBSIDIARY GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO ANY CONFLICTS OF LAW RULES WHICH WOULD REQUIRE THE APPLICATION OF THE
LAW OF ANY OTHER JURISDICTION.
5. MISCELLANEOUS
5.1 Communications
(a) Method; Address. All communications hereunder shall be
in writing and shall be delivered either by nationwide overnight
courier or by facsimile transmission (confirmed by delivery by
nationwide overnight courier sent on the day of the sending of such
facsimile transmission). Communications to any Guarantor shall be
addressed to such Guarantor at the address of the Company as set
forth in the Note Agreement, or, at the option of any holder of
Notes, as set forth on Annex 1 or at such other address of which such
Guarantor shall have notified each holder of Notes. Communications to
the holders of the Notes shall be addressed as provided in Section
9.1 of the Note Agreement.
(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.
(c) Service of Process. Notwithstanding the foregoing
provisions of this Section 9.1, service of process in any suit,
action or proceeding arising out of or relating to this agreement or
any document, agreement or transaction contemplated hereby, or any
action or proceeding to execute or otherwise enforce any judgment in
respect of any breach hereunder or under any document or agreement
contemplated hereby, shall be delivered in the manner provided in
Section 9.7(c).
5.2 Reproduction of Documents
This Subsidiary Guaranty and all documents relating hereto,
including, without limitation, consents, waivers and modifications that may
hereafter be executed may be reproduced by any Guarantor or any holder of Notes
by any photographic, photostatic, microfilm, micro-card, miniature photographic,
digital or other similar process and each holder of Notes may destroy any
original document so reproduced. Any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made by such Guarantor or such holder of Notes in the regular
course of business) and any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence. Nothing in this
Section 9.2 shall prohibit any Guarantor or holder of Notes from contesting the
accuracy or validity of any such reproduction.
5.3 Survival; Entire Agreement
All warranties, representations, certifications and covenants
contained herein, in the Securities Purchase Agreement or in any certificate or
other instrument delivered hereunder shall be considered to have been relied
upon by the other parties hereto and shall survive the delivery to you of the
Notes regardless of any investigation made by or on behalf of any party hereto.
All statements in any certificate or other instrument delivered pursuant to the
terms hereof or of the Securities Purchase Agreement shall constitute warranties
and representations hereunder. All obligations hereunder (other than payment of
the Guarantied Obligations, but including, without limitation, reimbursement
obligations in respect of costs, expenses and fees) shall survive the payment of
the Notes and the termination hereof. Subject to the preceding sentence, this
Subsidiary Guaranty and the other Financing Documents embody the entire
agreement and understanding among the Guarantors and the Purchasers, and
supersede all prior agreements and understandings, relating to the subject
matter hereof.
5.4 Successors and Assigns
This Subsidiary Guaranty shall inure to the benefit of and be binding
upon the successors and assigns of each of the parties hereto. The provisions
hereof are intended to be for the benefit of all holders, from time to time, of
Notes, and shall be enforceable by any such holder whether or not an express
assignment to such holder of rights hereunder shall have been made by any
holder. Anything contained in this Section 9.4 notwithstanding, no Guarantor may
assign any of its respective rights, duties or obligations hereunder or under
any of the other Financing Documents without the prior written consent of all
holders of Notes.
5.5 Amendment
This Subsidiary Guaranty may be amended in accordance with Section ?
and this Subsidiary Guaranty may be further amended, and the observance of any
term hereof may be waived (either retroactively or prospectively), with (and
only with) the written consent of each Guarantor and the Required Holders,
except that no amendment or waiver of any of the provisions of Section ?, or any
defined term as it is used therein, will be effective unless consented to by
each Guarantor and each Noteholder in writing; provided that this Subsidiary
Guaranty may, in the manner specified in Section ?, be amended to add one or
more new Guarantors hereunder without the consent of any other Guarantor or any
holder of Notes.
5.6 Benefits of Guaranty Restricted to Noteholders
Nothing express or implied in this Subsidiary Guaranty is intended or
shall be construed to give to any Person other than the Guarantors 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 Guarantors and the Noteholders.
5.7 Joinder Agreement
Upon execution and delivery by any Person of a counterpart of a
Joinder Agreement substantially in the form attached to this Subsidiary Guaranty
as Annex 2, this Subsidiary Guaranty shall for all purposes, without further
action, be deemed to have been amended to add such Person as a Guarantor
hereunder with the same effect as if such Person had been an original party
hereto.
5.8 Waiver of Jury Trial; Consent to Jurisdiction; Etc.
(a) Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE PARTIES HERETO VOLUNTARILY AND INTENTIONALLY WAIVE
ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS SUBSIDIARY
GUARANTY OR ANY OF THE DOCUMENTS, AGREEMENTS OR TRANSACTIONS
CONTEMPLATED HEREBY.
(b) Consent to Jurisdiction. ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS SUBSIDIARY GUARANTY OR ANY OF THE
DOCUMENTS, AGREEMENTS OR TRANSACTIONS CONTEMPLATED HEREBY OR ANY
ACTION OR PROCEEDING TO EXECUTE OR OTHERWISE ENFORCE ANY JUDGMENT IN
RESPECT OF ANY BREACH UNDER THIS SUBSIDIARY GUARANTY OR ANY DOCUMENT
OR AGREEMENT CONTEMPLATED HEREBY MAY BE BROUGHT BY SUCH PARTY IN ANY
FEDERAL DISTRICT COURT LOCATED IN NEW YORK CITY, NEW YORK OR ANY NEW
YORK STATE COURT LOCATED IN NEW YORK CITY, NEW YORK AS SUCH PARTY MAY
IN ITS SOLE DISCRETION ELECT, AND BY THE EXECUTION AND DELIVERY OF
THIS SUBSIDIARY GUARANTY, EACH GUARANTOR HERETO IRREVOCABLY AND
UNCONDITIONALLY SUBMITS TO THE NON-EXCLUSIVE IN PERSONAM JURISDICTION
OF EACH SUCH COURT, AND EACH GUARANTOR HERETO IRREVOCABLY WAIVES AND
AGREES NOT TO ASSERT IN ANY PROCEEDING BEFORE ANY TRIBUNAL, BY WAY OF
MOTION, AS A DEFENSE OR OTHERWISE, ANY CLAIM THAT IT IS NOT SUBJECT
TO THE IN PERSONAM JURISDICTION OF ANY SUCH COURT. IN ADDITION, EACH
GUARANTOR IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS SUBSIDIARY GUARANTY OR ANY DOCUMENT, AGREEMENT OR TRANSACTION
CONTEMPLATED HEREBY BROUGHT IN ANY SUCH COURT, AND HEREBY IRREVOCABLY
WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN
ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c) Service of Process. EACH GUARANTOR IRREVOCABLY AGREES
THAT PROCESS PERSONALLY SERVED OR SERVED BY U.S. REGISTERED MAIL AT
THE ADDRESSES PROVIDED HEREIN FOR NOTICES SHALL CONSTITUTE, TO THE
EXTENT PERMITTED BY LAW, ADEQUATE SERVICE OF PROCESS IN ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SUBSIDIARY
GUARANTY OR ANY DOCUMENT, AGREEMENT OR TRANSACTION CONTEMPLATED
HEREBY, OR ANY ACTION OR PROCEEDING TO EXECUTE OR OTHERWISE ENFORCE
ANY JUDGMENT IN RESPECT OF ANY BREACH HEREUNDER OR UNDER ANY DOCUMENT
OR AGREEMENT CONTEMPLATED HEREBY. RECEIPT OF PROCESS SO SERVED SHALL
BE CONCLUSIVELY PRESUMED AS EVIDENCED BY A DELIVERY RECEIPT FURNISHED
BY THE UNITED STATES POSTAL SERVICE OR ANY COMMERCIAL DELIVERY
SERVICE.
(d) Other Forums. NOTHING HEREIN SHALL IN ANY WAY BE DEEMED
TO LIMIT THE ABILITY OF ANY HOLDER OF NOTES TO SERVE ANY WRITS,
PROCESS OR SUMMONSES IN ANY MANNER PERMITTED BY APPLICABLE LAW OR TO
OBTAIN JURISDICTION OVER ANY GUARANTOR IN SUCH OTHER JURISDICTION,
AND IN SUCH OTHER MANNER, AS MAY BE PERMITTED BY APPLICABLE LAW.
5.9 Execution in Counterpart
This Subsidiary Guaranty 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.]
IN WITNESS WHEREOF, each Guarantor has caused this Unconditional
Guaranty to be executed on its behalf by its duly authorized officer.
QUESTRON TECHNOLOGY, INC.
QUESTRON FINANCE CORP.
QUESTRON DISTRIBUTION LOGISTICS, INC.
COMP ▇▇▇▇, INC.
POWER COMPONENTS, INC.
INTEGRATED MATERIAL SYSTEMS, INC.
CALIFORNIA FASTENERS, INC.
FAS-TRONICS, INC.
FORTUNE INDUSTRIES, INC.
CAPITAL FASTENERS, INC.
ACTION THREADED PRODUCTS, INC.
ACTIONED THREADED PRODUCTS OF GEORGIA,
INC.
ACTION THREADED PRODUCTS OF MINNESOTA,
INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chairman and Chief
Executive Officer
[Signature Page to UNCONDITIONAL GUARANTY]
Annex 1
Addresses of Guarantors
Annex 2
[FORM OF JOINDER AGREEMENT]
JOINDER AGREEMENT
[Date]
To each of the Noteholders (as defined in the Subsidiary Guaranty
hereinafter referred to)
Ladies and Gentlemen:
Reference is made to the Unconditional Guaranty, dated as of June
___, 1999 (as amended, restated or otherwise modified from time to time, the
"Subsidiary Guaranty"), by QUESTRON DISTRIBUTION LOGISTICS, INC., a
{JURISDICTION?} corporation; QUESTNET COMPONENTS, INC., a {JURISDICTION?}
corporation; COMPWARE, INC. , a {JURISDICTION?} corporation; POWER COMPONENTS,
INC., a {JURISDICTION?} corporation; INTEGRATED MATERIAL SYSTEMS, INC., a
{JURISDICTION?} corporation; CALIFORNIA FASTENERS, INC., a {JURISDICTION?}
corporation; FAS-TRONICS, INC., a {JURISDICTION?} corporation; FORTUNE
INDUSTRIES, INC., a {JURISDICTION?} corporation; METRO FORM CORPORATION , a
{JURISDICTION?} corporation; CAPITAL FASTENERS, INCORPORATED , a {JURISDICTION?}
corporation; and ACTION THREADED PRODUCTS, INC., a {JURISDICTION?} corporation
(collectively, together with each other Person that becomes or has become a
party to the Subsidiary Guaranty and including their respective successors and
assigns, the "Guarantors"), in favor of each of the Noteholders (as defined in
the Subsidiary Guaranty). Capitalized terms used herein and not otherwise
defined have the meanings ascribed to such terms in the Subsidiary Guaranty.
[NEW GUARANTOR], a ________________________ (the "New Guarantor"),
agrees with you as follows:
1. Guaranty. The New Guarantor hereby unconditionally and expressly
agrees to become, by execution and delivery of this Agreement does become, and
assumes each and every one of the obligations of, a "Guarantor" under and as
defined in the Subsidiary Guaranty. In addition, the New Guarantor makes each
and every representation and warranty of a Guarantor set forth in the Subsidiary
Guaranty as of the date hereof. Without limitation of the foregoing or of
anything in the Subsidiary Guaranty, by such execution and delivery hereof the
New Guarantor does become fully liable, as a Guarantor, for the payment of the
Guarantied Obligations as further provided in Section ? of the Subsidiary
Guaranty. As provided in Section ? of the Subsidiary Guaranty, the Subsidiary
Guaranty is hereby amended, without any further action, to add the New Guarantor
as a Guarantor thereunder as if the New Guarantor had been an original party to
the Subsidiary Guaranty. Annex 1 to the Subsidiary Guaranty is hereby amended by
adding the following address of the New Guarantor for purposes of communications
pursuant to Section ? of the Subsidiary Guaranty: [insert name and address of
New Guarantor].
2. Further Assurances. The New Guarantor agrees to cooperate with the
Noteholders and execute such further instruments and documents as the Required
Holders shall reasonably request to effect, to the reasonable satisfaction of
the Required Holders, the purposes of this Agreement.
3. Binding Effect. This Agreement shall be binding upon the New
Guarantor and shall inure to the benefit of the Noteholders and their respective
successors and assigns.
4. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF
THE STATE OF NEW YORK, EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH
STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER
THAN SUCH STATE.
IN WITNESS WHEREOF, the New Guarantor has caused this Agreement to be
executed on its behalf by one of its duly authorized officers.
[NEW GUARANTOR]
By______________________________
Name:
Title: