AMENDED AND RESTATED GUARANTEE OF CARLYLE PARTNERS IV, L.P.
Exhibit (e)(2)
GUARANTEE, dated as of January 15, 2007 (this “Guarantee”), by Carlyle Partners IV,
L.P. (the “Guarantor”), in favor of ElkCorp, a Delaware corporation (the
“Company”).
1. GUARANTEE. To induce the Company to enter into that certain
Amended and Restated Agreement and Plan of Merger, dated as of January 15, 2007 (as
amended, supplemented or otherwise modified from time to time, the “Merger
Agreement”), by and among the Company, CGEA Holdings, Inc. a Delaware corporation
(“Parent”), and CGEA Investor Inc., a Delaware corporation and a wholly-owned
subsidiary of Parent (“Merger Sub”), pursuant to which Merger Sub will commence a
tender offer (the “Offer”) to purchase all outstanding shares of common stock, par
value
$1.00 per share, of the Company, and following the consummation of the Offer, merge
with and into the Company, the Guarantor absolutely, unconditionally and irrevocably
guarantees to the Company, the due and punctual observance, payment, performance and
discharge of the obligation of Parent and Merger Sub to pay (a) the Parent Termination
Fee pursuant to Section 7.3 of the Merger Agreement, (b) the Company Financing
Expenses, and (c) the Company Note Repurchase Expenses (as such terms are defined in
the Merger Agreement) to the Company (the “Obligations”); provided that
notwithstanding anything to the contrary set forth herein, the maximum amount payable
by the Guarantor under this Guarantee shall not exceed $35 million plus any amount
payable pursuant to Section 11 of this Guarantee (the “Cap”), it being understood that
this Guarantee may not be enforced without giving effect to the Cap. This Amended and
Restated Guarantee amends and restates the Guarantee dated as of December 18, 2006
among the parties hereto and as so amended and restated shall be deemed to be the
Guarantee referred to in Section 4.6 of the Merger Agreement.
2. NATURE OF GUARANTEE. The Company shall not be obligated to
seek payment of the Obligations from Parent or Merger Sub or file any claim relating to
the Obligations in the event that Parent or Merger Sub becomes subject to a bankruptcy,
reorganization or similar proceeding, and the failure of the Company to seek such
payment or to so file shall not affect the Guarantor’s obligations hereunder. In the event
that any payment to the Company in respect of any Obligations is rescinded or must
otherwise be returned for any reason whatsoever, the Guarantor shall remain liable
hereunder with respect to such Obligations as if such payment had not been made. This
is an unconditional guarantee of payment and not of collectibility. The Guarantor
reserves the right to assert defenses which Parent or Merger Sub may have to payment of
any Obligations that arise under the terms of the Merger Agreement.
3. CHANGES IN OBLIGATIONS, CERTAIN WAIVERS. The Guarantor agrees that the
Company may at any time and from time to time, without notice to or further consent of the
Guarantor, extend the time of payment of any of the Obligations, and may also make any agreement
with Parent or Merger Sub for the extension, renewal, payment, compromise, discharge or release
thereof, in whole or in part, or for any modification of the terms thereof or of any agreement
between the Company and Parent or Merger Sub or any such other Person without in any way impairing
or affecting this Guarantee. The Guarantor agrees that the obligations of the Guarantor hereunder
shall not be released or discharged, in whole or in part, or otherwise affected by (a) the failure
of the Company to assert any claim or demand or to enforce any right or remedy against Parent or
Merger Sub or any other entity or person liable with respect to any of the Obligations; (b) any
change in the time, place or manner of payment of any of the Obligations or any rescission, waiver,
compromise, consolidation or other amendment or modification of any of the terms or provisions of
the Offer, the Merger Agreement or any other agreement evidencing, securing or otherwise executed
in connection with any of the Obligations; (c) the addition, substitution or release of any other
entity or person liable with respect to any of the Obligations; (d) any change in the corporate
existence, structure or ownership of Parent or Merger Sub or any other entity or person liable with
respect to any of the Obligations; (e) any insolvency, bankruptcy, reorganization, or other similar
proceeding affecting Parent or Merger Sub or any other entity or person liable with respect to any
of the Obligations; (f) the existence of any claim, set-off or other rights which the Guarantor may
have at any time against Parent, Merger Sub or the Company, whether in connection with the
Obligations or otherwise; or (g) the adequacy of any other means the Company may have of obtaining
payment of the Obligations. To the fullest extent permitted by law, the Guarantor hereby expressly
waives any and all rights or defenses arising by reason of any law which would otherwise require
any election of remedies by the Company. The Guarantor waives promptness, diligence, notice of the
acceptance of this Guarantee and of the Obligations, presentment, demand for payment, notice of
non-performance, default, dishonor and protest, notice of any Obligations incurred and all other
notices of any kind (except for notices to be provided to Parent and Merger Sub in accordance with
Section 8.7 of the Merger Agreement), all defenses which may be available by virtue of any
valuation, stay, moratorium law or other similar law now or hereafter in effect, any right to
require the marshalling of assets of the Parent or Merger Sub or any other entity or other person
liable with respect to any of the Obligations, and all suretyship defenses generally (other than
fraud by the Company or any of its Subsidiaries or defenses to the payment of the Obligations that
are available to Parent or Merger Sub under the terms of the Merger Agreement or breach by the
Company of this Guarantee). The Guarantor acknowledges that it will receive substantial direct and
indirect benefits from the transactions contemplated by the Offer and the Merger Agreement and that
the waivers set forth in this Guarantee are knowingly made in contemplation of such benefits.
Notwithstanding anything to the contrary contained in this Guarantee, the Company hereby agrees
that to the extent Parent and Merger Sub are relieved of their obligations with respect to the
Parent Termination Fee,
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the Company Financing Expenses or the Company Note Repurchase Expenses, the Guarantor shall be
similarly relieved of its Obligations under this Guarantee but only to the same extent.
The Guarantor hereby unconditionally and irrevocably waives, and agrees not to exercise, any
rights that it may now have or hereafter acquire against Parent or Merger Sub that arise from the
existence, payment, performance, or enforcement of the Guarantor’s obligations under or in respect
of this Guarantee, including, without limitation, any right of subrogation, reimbursement,
exoneration, contribution or indemnification and any right to participate in any claim or remedy of
the Company against Parent or Merger Sub, whether or not such claim, remedy or right arises in
equity or under contract, statute or common law, including, without limitation, the right to take
or receive from Parent or Merger Sub, directly or indirectly, in cash or other property or by
setoff or in any other manner, payment or security on account of such claim, remedy or right,
unless and until all of the Obligations and any amounts payable pursuant to Section 11 of this
Guarantee shall have been paid in full in cash. If any amount shall be paid to the Guarantor in
violation of the immediately preceding sentence at any time prior to the payment in full in cash of
the Obligations and any amounts payable pursuant to Section 11 of this Guarantee, such amount shall
be received and held in trust for the benefit of the Company, shall be segregated from other
property and funds of the Guarantor and shall forthwith be paid or delivered to the Company in the
same form as so received (with any necessary endorsement or assignment) to be credited and applied
to the Obligations and any amounts payable pursuant to Section 11 of this Guarantee, in accordance
with the terms of the Merger Agreement, whether matured or unmatured, or to be held as collateral
for any Obligations or other amounts payable pursuant to Section 11 of this Guarantee thereafter
arising.
4. NO WAIVER; CUMULATIVE RIGHTS. No failure on the part of the
Company to exercise, and no delay in exercising, any right, remedy or power hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise by the Company
of any right, remedy or power hereunder preclude any other or future exercise of any
right, remedy or power hereunder. Each and every right, remedy and power hereby
granted to the Company or allowed it by law or other agreement shall be cumulative and
not exclusive of any other, and may be exercised by the Company at any time or from
time to time.
5. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby
represents and warrants that:
(a) the execution, delivery and performance of this Guarantee have been duly
authorized by all necessary action and do not contravene any provision of the Guarantor’s
partnership agreement, operating agreement or similar organizational documents or any law,
regulation, rule, decree, order, judgment or contractual restriction binding on the
Guarantor or its assets;
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(b) all consents, approvals, authorizations and permits of, filings with
and notifications to, any governmental authority necessary for the due execution,
delivery and performance of this Guarantee by the Guarantor have been obtained
or made and all conditions thereof have been duly complied with, and no other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required in connection with the execution, delivery or
performance of this Guarantee;
(c) this Guarantee constitutes a legal, valid and binding obligation of
the Guarantor enforceable against the Guarantor in accordance with its terms,
subject to (i) the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws affecting creditors’ rights
generally, and (ii) general equitable principles (whether considered in a
proceeding in equity or at law); and
(d) Guarantor has the financial capacity to pay and perform its
obligations under this Guarantee, and all funds necessary for the Guarantor to
fulfill its Obligations under this Guarantee shall be available to the Guarantor for
so long as this Guarantee shall remain in effect in accordance with Section 8
hereof.
6. NO ASSIGNMENT. Neither the Guarantor nor the Company may assign
its rights, interests or obligations hereunder to any other person (except by operation of
law) without the prior written consent of the Company or the Guarantor, as the case may
be; provided, however, that the Guarantor may assign all or a portion of its obligations
hereunder to an affiliate or to an entity managed or advised by an affiliate of the
Guarantor, provided that no such assignment shall relieve the Guarantor of any liability
or obligation hereunder except to the extent actually performed or satisfied by the
assignee.
7. NOTICES. All notices and other communications hereunder shall be in
writing in the English language and shall be given (a) on the date of delivery if delivered
personally, (b) on the first business day following the date of dispatch if delivered by a
nationally recognized next-day courier service, (c) on the fifth business day following the
date of mailing if delivered by registered or certified mail (postage prepaid, return receipt
requested) or (d) if sent by facsimile or electronic transmission, when transmitted and
receipt is confirmed. All notices to the Guarantor hereunder shall be delivered as set
forth below:
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Attention:
|
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ | |
Address:
|
Carlyle Partners IV, L.P. | |
| c/o The Carlyle Group | ||
| ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ | ||
| ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ | ||
| ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ | ||
Facsimile No.:
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(▇▇▇) ▇▇▇-▇▇▇▇ | |
with a copy to: |
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Attention:
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▇▇▇▇ ▇. ▇▇▇▇ | |
Address:
|
Debevoise & ▇▇▇▇▇▇▇▇ LLP | |
| ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ | ||
| ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||
Facsimile No.:
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(▇▇▇) ▇▇▇-▇▇▇▇ |
or to such other address or facsimile number as the Guarantor shall have notified the Company in a
written notice delivered to the Company in accordance with the Merger Agreement. All notices to the
Company hereunder shall be delivered as set forth in the Merger Agreement.
8. CONTINUING GUARANTEE. This Guarantee shall remain in full force and effect
and shall be binding on the Guarantor, its successors and assigns until the Obligations are
satisfied in full. Notwithstanding the foregoing, this Guarantee shall terminate and the Guarantor
shall have no further obligations under this Guarantee as of the
earlier of (i) the Effective Time
(as defined in the Merger Agreement) and (ii) the first anniversary of any termination of the
Merger Agreement in accordance with its terms, except as to a claim for payment of any Obligation
presented by the Company to Parent, Merger Sub or the Guarantor by such first anniversary.
Notwithstanding the foregoing, in the event that the Company or any of its affiliates asserts in
any litigation or other proceeding that the provisions of Section 1 hereof limiting the Guarantor’s
liability to the Cap or the provisions of this Section 8 or Section 9 hereof are illegal, invalid
or unenforceable in whole or in part, or asserts any theory of liability against any Affiliate (as
hereinafter defined) or, other than its right to recover from Guarantor for up to the amount of the
Obligations (subject to the Cap and the other limitations described herein) and other than a suit
against Parent or Merger Sub for declaratory relief in connection with obtaining payment hereunder
from Guarantor, Parent or Merger Sub, with respect to
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the transactions contemplated by the Offer, the Merger Agreement, then (i) the obligations of
the Guarantor under this Guarantee shall terminate ab initio and be null and void, (ii) if the
Guarantor has previously made any payments under this Guarantee, it shall be entitled to recover
such payments and (iii) neither the Guarantor nor any of its Affiliates shall have any liability to
the Company with respect to the transactions contemplated by the Offer, the Merger Agreement or
under this Guarantee; provided, however, that if the Guarantor asserts in any
litigation or other proceeding that this Guarantee is illegal, invalid or unenforceable in
accordance with its terms, then, to the extent the Company prevails in such litigation or
proceeding, the Guarantor shall pay on demand all reasonable fees and out of pocket expenses of the
Company in connection with such litigation or proceeding.
9. NO RECOURSE.
(a) The Company acknowledges that the sole assets of Parent and Merger Sub are cash in a
de minimus amount and its rights under the Merger Agreement, and that no additional funds are
expected to be contributed to Parent or Merger Sub unless and until the Closing occurs.
Notwithstanding anything that may be expressed or implied in this Guarantee or any document or
instrument delivered contemporaneously herewith, and notwithstanding the fact that the Guarantor
may be a partnership, by its acceptance of the benefits of this Guarantee, the Company acknowledges
and agrees that it has no right of recovery against, and no liability shall attach to, the former,
current or future stockholders, directors, officers, employees, agents, affiliates, (other than
Parent or Merger Sub in connection with a suit for declaratory relief as aforesaid) members,
managers, general or limited partners of the Guarantor, Parent or Merger Sub or any former, current
or future stockholder, director, officer, employee, general or limited partner, member, manager,
affiliate, (other than Parent or Merger Sub in connection with a suit for declaratory relief as
aforesaid) of any of the foregoing (collectively, but not including Guarantor, Parent or Merger
Sub, each an “Affiliate”), or, other than its right to recover from Guarantor for up to the amount
of the Obligations (subject to the Cap and the other limitations described herein) and other than
Parent or Merger Sub in connection with a suit for declaratory relief in connection with obtaining
payment hereunder from Guarantor, Parent or Merger Sub, through Parent, Merger Sub or otherwise,
whether by or through attempted piercing of the corporate, partnership or limited liability company
veil, by or through a claim by or on behalf of Parent or Merger Sub against an Affiliate,
Guarantor, Parent or Merger Sub (including a claim to enforce the commitment letter dated as of the
date hereof from the Guarantor to Parent) arising under, or in connection with, the Offer, the
Merger Agreement or the transactions contemplated thereby or otherwise relating thereto, by the
enforcement of any assessment or by any legal or equitable proceeding, by virtue of any statute,
regulation or applicable law, or otherwise. The Company hereby covenants and agrees that it shall
not institute, directly or indirectly, and shall cause its respective affiliates not to institute,
any proceeding or bring any other claim arising under, or in connection with, the Merger Agreement
or the transactions contemplated thereby or
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otherwise relating thereto, against an Affiliate or, other than its right to recover from
Guarantor for up to the amount of the Obligations (subject to the Cap and the other limitations
described herein) and other than Parent or Merger Sub in connection with a suit for declaratory
relief in connection with obtaining payment hereunder from Guarantor, Parent or Merger Sub.
(b) Recourse against the Guarantor under this Guarantee (including a suit
against Parent or Merger Sub for declaratory relief in connection with obtaining payment
hereunder from Guarantor) shall be the sole and exclusive remedy of the Company
against the Guarantor and any of its Affiliates in respect of any liabilities or obligations
arising under, or in connection with, the Merger Agreement or the transactions
contemplated thereby or hereby or otherwise relating thereto or hereto. Nothing set forth
in this Guarantee shall confer or give or shall be construed to confer or give to any Person
other than the Guarantor and the Company (including any Person acting in a
representative capacity) any rights or remedies against any Person other than the
Company and the Guarantor as expressly set forth herein.
(c) For all purposes of this Guarantee, a person shall be deemed to have
pursued a claim against another person if such first person brings a legal action against
such person, adds such other person to an existing legal proceeding, or otherwise asserts a
legal claim of any nature against such person.
(d) The Company acknowledges that the Guarantor is agreeing to enter into
this Guarantee in reliance on the provisions set forth in this Section 9. This Section 9
shall survive termination of this Guarantee.
10. GOVERNING LAW. This Guarantee shall be governed and construed in
accordance with the laws of the State of Delaware applicable to contracts executed in and
to be performed in that State. All actions arising out of or relating to this Guarantee shall
be heard and determined exclusively in the state or federal courts of the United States of
America located in the State of Delaware. The parties hereto hereby (a) submit to the
exclusive jurisdiction of the state or federal courts of the United States of America
located in the State of Delaware for the purpose of any action arising out of or relating to
this Guarantee brought by any party hereto, and (b) irrevocably waive, and agree not to
assert by way of motion, defense, or otherwise, in any such action, any claim that it is not
subject personally to the jurisdiction of the above-named court, that its property is exempt
or immune from attachment or execution, that the action is brought in an inconvenient
forum, that the venue of the action is improper, or that this Guarantee or the transactions
contemplated hereby may not be enforced in or by the above-named court.
11. EXPENSES OF ENFORCEMENT. The Guarantor agrees to pay all
reasonable out-of-pocket fees and expenses (including the reasonable fees and expenses
of the Company’s counsel) incurred by the Company in connection with the enforcement
of the rights of the Company hereunder; provided, that the Guarantor shall not be
liable
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for expenses of the Company under this Section 11 if it is finally determined by a court of
competent jurisdiction that no payment under this Guarantee is due provided, further, that
the obligation of the Guarantor under this Section 11 shall not exceed $500,000. The Company agrees
to pay all reasonable out-of-pocket fees and expenses (including the reasonable fees and expenses
of the Guarantor’s counsel) incurred by the Guarantor in connection with the defense and
enforcement of the rights of the Guarantor hereunder; provided, that the Company shall not
be liable for any expenses of the Guarantor under this Section 11 if it is finally determined by a
court of competent jurisdiction that any payment under this Guarantee is due, and provided,
further, that the obligation of the Company hereunder shall not exceed $500,000.
12. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO
ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR
IN CONNECTION WITH THIS GUARANTEE OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY.
13. COUNTERPARTS. This Guarantee may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which when executed shall be deemed to
be an original but all of which taken together shall constitute one and the same instrument.
[SIGNATURE PAGE FOLLOWS]
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IN
WITNESS WHEREOF, the Guarantor and the Company have caused this Guarantee to be
executed and delivered as of the date first written above by its
officer thereunto duly authorized.
| CARLYLE PARTNERS IV, L.P. | ||||||||||||
| By: | TC Group IV, LP., its general partner | |||||||||||
| By: | TC Group IV, L.L.C., its general partner | |||||||||||
| By: | TC Group, L.L.C., its sole member | |||||||||||
| By: | TCG Holdings, L.L.C., its managing | |||||||||||
| member | ||||||||||||
| By: | /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ | |||||||||||
| Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ | ||||||||||||
| Title: Managing Director | ||||||||||||
| Accepted and Agreed to: | ||||
| ELKCORP | ||||
By:
|
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇ | |||
| Name: ▇▇▇▇▇▇ ▇▇▇▇▇ | ||||
| Title: CEO | ||||