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EXECUTION COPY
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT, dated as of March 31, 2005 (the "Guaranty
Agreement"), is made by QUAKER TEXTILE CORPORATION, a Massachusetts corporation
("Quaker Textile") and QUAKER FABRIC MEXICO, S.A. de C.V., a corporation
organized under the laws of Mexico ("Quaker Mexico" and together with Quaker
Textile, each a "Guarantor" and collectively, the "Guarantors") in favor of THE
PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey mutual insurance company
("Prudential"), PRUCO LIFE INSURANCE COMPANY, a New Jersey mutual insurance
company ("Pruco") and the other Purchasers from time to time party to the Note
Agreement (as defined below) (together with Prudential and Pruco, each a
"Purchaser" and collectively, the "Purchasers"). Terms not defined herein shall
have the meanings specified in the Note Agreement (as defined below).
WHEREAS, each of the Purchasers agreed to purchase those certain 7.56%
Senior Notes due February 11, 2009, in the aggregate principal amount of
$5,000,000 (collectively, the "Initial Notes") issued by Quaker Fabric
Corporation of Fall River (the "Company") pursuant to that certain Note Purchase
Agreement and Private Shelf Facility dated as of February 14, 2002, by and
between each of the Purchasers and the Company (the "Note Agreement"); and
WHEREAS, pursuant to the Note Agreement, the Company may issue from
time to time thereunder the Shelf Notes described therein (collectively with the
Initial Notes, the "Notes"); and
WHEREAS, pursuant to that certain Forbearance Agreement, dated as of
March 11, 2005, each of the Purchasers agreed to forbear from making demand of
payment on any amounts due and owing under the Notes and the Note Agreement and
to forbear from exercising and pursuing their rights and remedies under the Note
Agreement (the "Forbearance Agreement"); and
WHEREAS, it is a condition to the continued effectiveness of the
Forbearance Agreement, that the Guarantors execute and deliver this Guaranty
Agreement;
NOW THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, and intending to be legally bound, each
Guarantor hereby covenants and agrees with, and represents and warrants to each
of the Purchasers as follows:
1. THE GUARANTY. Each Guarantor hereby irrevocably and unconditionally
guarantees to each holder from time to time of any of the Notes, the
due and punctual payment in full of (i) the principal of, the
Yield-Maintenance Amount, if any, and interest on, and any other
amounts due under, the Notes when and as the same shall become due and
payable (whether at stated maturity or by required or optional
prepayment or by acceleration or otherwise) and (ii) any other sums
which may become due under the terms and provisions of the Note
Agreement and the Notes (all such obligations described in clauses (i)
and (ii) above are herein called the "Guaranteed Obligations"). The
guaranty in the preceding sentence is an absolute, present and
continuing guaranty of
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payment and not of collectibility and is in no way conditional or
contingent upon any attempt to collect from the Company or upon any
other action, occurrence or circumstance whatsoever. In the event that
the Company shall fail so to pay any of such Guaranteed Obligations,
each Guarantor agrees to pay the same when due to the holders of the
Notes entitled thereto, without demand, presentment, protest or notice
of any kind, in the specified Available Currency, at the place for
payment specified in the Notes and the Note Agreement. Each default in
payment of principal of, Yield-Maintenance Amount, if any, or interest
on any Note shall give rise to a separate cause of action hereunder and
separate suits may be brought hereunder as each cause of action arises.
Each Guarantor hereby agrees that the Notes issued in connection with
the Note Agreement may make reference to this guaranty.
Each Guarantor hereby agrees to pay and to indemnify and save the
holders of the Notes harmless from and against any damage, loss, cost
or expense (including attorneys' fees) which such holder may incur or
be subject to as a consequence, direct or indirect, of (i) any breach
by any Guarantor or by the Company of any warranty, covenant, term or
condition in, or the occurrence of any default under, this Guaranty
Agreement, the Notes or the Note Agreement, together with all expenses
resulting from the compromise or defense of any claims or liabilities
arising as a result of any such breach or default, and (ii) any legal
action commenced to challenge the validity of this Guaranty Agreement,
the Notes or the Note Agreement.
2. OBLIGATIONS ABSOLUTE. The obligations of each Guarantor hereunder shall
be primary, absolute, irrevocable and unconditional, irrespective of
the validity, regularity or enforceability of the Notes or of the Note
Agreement, shall not be subject to any counterclaim, setoff, deduction
or defense based upon any claim any Guarantor may have against the
Company or any holder of the Notes or otherwise, and shall remain in
full force and effect without regard to, and shall not be released,
discharged or in any way affected by, any circumstance or condition
whatsoever (whether or not any Guarantor shall have any knowledge or
notice thereof), including, without limitation: (a) any amendment,
modification of or supplement to the Note Agreement, the Notes or any
other instrument referred to therein (except that the obligations of
the Guarantors hereunder shall apply to the Note Agreement, the Notes
or such other instruments as so amended, modified or supplemented) or
any assignment or transfer of any thereof or of any interest therein,
or any furnishing, acceptance or release of any security for the Notes,
(b) any waiver, consent, extension, indulgence or other action or
inaction under or in respect of the Notes or in respect of the Note
Agreement; (c) any bankruptcy, insolvency, readjustment, composition,
liquidation or similar proceeding with respect to the Company or its
property; (d) any merger, amalgamation or consolidation of any
Guarantor or of the Company into or with any other corporation or any
sale, lease or transfer of any or all of the assets of any Guarantor or
of the Company to any person; (e) any failure on the part of the
Company for any reason to comply with or perform any of the terms of
any other agreement with any Guarantor; or (f) any other circumstance
which might otherwise constitute a legal or equitable discharge or
defense of a guarantor. Each Guarantor covenants that its obligations
hereunder will not be discharged except by payment in full of all of
the Guaranteed Obligations.
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3. WAIVER. Each Guarantor unconditionally waives to the fullest extent
permitted by law, (a) notice of acceptance hereof, of any action taken
or omitted in reliance hereon and of any defaults by the Company in the
payment of any amounts due under the Notes or the Note Agreement, and
of any of the matters referred to in paragraph 2 hereof, (b) all
notices which may be required by statute, rule of law or otherwise to
preserve any of the rights of each holder from time to time of the
Notes against each Guarantor, including, without limitation,
presentment to or demand for payment from the Company or any Guarantor
with respect to any Note, notice to the Company or to any Guarantor of
default or protest for nonpayment or dishonor and the filing of claims
with a court in the event of the bankruptcy of the Company, (c) any
right to the enforcement, assertion or exercise by any holder of the
Notes of any right, power or remedy conferred in this Guaranty
Agreement, the Note Agreement or the Notes, (d) any requirement or
diligence on the part of any holder of the Notes and (e) any other act
or omission or thing or delay to do any other act or thing which might
in any manner or to any extent vary the risk of any Guarantor or which
might otherwise operate as a discharge of such Guarantor.
4. OBLIGATIONS UNIMPAIRED. Each Guarantor authorizes the holders of the
Notes, without notice or demand to any Guarantor and without affecting
its obligations hereunder, from time to time (a) to renew, compromise,
extend, accelerate or otherwise change the time for payment of, or
otherwise change the terms of, all or any part of the Notes, the Note
Agreement or any other instrument referred to therein, (b) to take and
hold security for the payment of the Notes, for the performance of this
Guaranty Agreement or otherwise for the indebtedness guaranteed hereby
and to exchange, enforce, waive and release any such security, (c) to
apply any such security and to direct the order or manner of sale
thereof as the holders of the Notes in their sole discretion may
determine; (d) to obtain additional or substitute endorsers or
guarantors; (e) to exercise or refrain from exercising any rights
against the Company and others and (f) to apply any sums, by whomsoever
paid or however realized, to the payment of the principal of,
Yield-Maintenance Amount, if any, and interest on the Notes and any
other Guaranteed Obligation hereunder. Each Guarantor waives any right
to require the holders of the Notes to proceed against any additional
or substitute endorsers or guarantors or to pursue or exhaust any
security provided by the Company, any Guarantor or any other person or
to pursue any other remedy available to such holders.
5. SUBROGATION. No Guarantor will exercise any rights which it may have
acquired by way of subrogation under this Guaranty Agreement, by any
payment made hereunder or otherwise, or accept any payment on account
of such subrogation rights, or any rights of reimbursement or indemnity
or any rights or recourse to any security for the Notes or this
Guaranty Agreement unless and until all of the obligations,
undertakings or conditions to be performed or observed by the Company
pursuant to the Notes and the Note Agreement at the time of such
Guarantor's exercise of any such right shall have been performed,
observed or paid in full.
For a period of one year after the payment in full of the Guaranteed
Obligations, each Guarantor hereby waives (x) all rights of subrogation
which it may at any time otherwise have as a result of this Guaranty
Agreement (whether, statutory or otherwise) to the claims of the
holders of the Notes against the Company or any other guarantor of the
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Guaranteed Obligations (each referred to herein as the "Other Party")
and all contractual, statutory or common law rights of reimbursement,
contribution or indemnity from any Other Party which it may at any time
otherwise have as a result of this Guaranty Agreement; (y) any right to
enforce any other remedy which the holders of the Notes now have or may
hereafter have against any Other Party, any endorser or any other
guarantor of all or any part of the Guaranteed Obligations; and (z) all
claims (as such term is defined in the Bankruptcy Code) it may at any
time otherwise have against any Other Party arising from any
transaction whatsoever, including without limitation its right to
assert or enforce any such claims.
6. REINSTATEMENT OF GUARANTY. This Guaranty Agreement shall continue to be
effective, or be reinstated, as the case may be, if and to the extent
at any time payment, in whole or in part, of any of the sums due to any
holder of the Notes for principal, Yield-Maintenance Amount, if any, or
interest on the Notes or any of the other Guaranteed Obligations is
rescinded or must otherwise be restored or returned by such holder upon
the insolvency, bankruptcy, dissolution, liquidation or reorganization
of the Company, or upon or as a result of the appointment of a
custodian, receiver, trustee or other officer with similar powers with
respect to the Company or any substantial part of its property, or
otherwise, all as though such payments had not been made. If an event
permitting the acceleration of the maturity of the principal amount of
the Notes shall at any time have occurred and be continuing and such
acceleration shall at such time be prevented or the right of any holder
of a Note to receive any payment under any Note shall at such time be
delayed or otherwise affected by reason of the pendency against the
Company of a case or proceeding under a bankruptcy or insolvency law,
each Guarantor agrees that, for purposes of this Guaranty Agreement and
its obligations hereunder, the maturity of such principal amount shall
be deemed to have been accelerated with the same effect as if the
holders of the Notes had accelerated the same in accordance with the
terms of the Note Agreement, and each Guarantor shall forthwith pay
such accelerated principal amount, accrued interest and
Yield-Maintenance Amount, if any, thereon and any other amounts
guaranteed hereunder.
7. RANK OF GUARANTY. Each Guarantor agrees that its obligations under this
Guaranty Agreement shall rank at least pari passu with all other
secured senior obligations of such Guarantor now or hereafter existing.
8. ADDITIONAL COVENANTS OF THE GUARANTORS.
(a) Maintenance of Corporate Existence, Etc. Each Guarantor
will at all times do or cause to be done all things necessary to
maintain and preserve its corporate existence and the corporate
existence of each subsidiary of such Guarantor, and maintain, preserve
and renew its and their licenses, patents and franchises material to
the conduct of the business of such Guarantor and such subsidiaries
taken as a whole, provided that nothing contained in this Section 8(a)
shall (i) require any Guarantor or any such subsidiary to maintain,
preserve or renew any license, patent or franchise not necessary or
desirable in the conduct of its business, (ii) prohibit any Guarantor
from terminating the corporate existence of a subsidiary if in the
reasonable opinion of an officer of such Guarantor such termination is
in the best interests of such Guarantor and is not
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disadvantageous to the holders of the Notes and such termination has
been approved by the Board of Directors of such Guarantor, or (iii)
prohibit a consolidation or merger by one subsidiary with, or a
conveyance, transfer or lease by one subsidiary to, any Guarantor or
another subsidiary.
(b) Merger, Consolidation. No Guarantor shall consolidate with
or merge into any other person or convey, transfer or lease all or
substantially all of its assets as an entirety (whether by one
transaction or a series of related transactions) to any person, unless:
(i) the successor entity formed by such consolidation
or into which such Guarantor is merged or the successor entity
which acquires by conveyance, transfer or lease all or
substantially all of its assets as an entirety shall be a
solvent entity organized and existing under the laws of the
United States of America, any State thereof or the District of
Columbia and a substantial part of such successor entity's
assets, properties and operations shall be within the United
States;
(ii) such successor entity (or entity to which all or
substantially all of such Guarantor's assets shall have been
conveyed, transferred or leased) shall expressly assume in
writing by instrument or instruments reasonably satisfactory
to the Required Holders, in scope, form and legal effect, the
due and punctual payment, performance and observance of all
obligations of such Guarantor under this Guaranty Agreement,
with the same effect as if such entity had originally been
named a Guarantor herein or had been a party hereto;
(iii) prior to and immediately after giving effect to
such transaction, no default or Event of Default shall exist
under the Notes or the Note Agreement, or under any other
document or instrument referred to therein; and
(iv) such Guarantor shall have delivered to each of
the holders of the Notes an officer's certificate stating that
such consolidation, merger, conveyance, transfer or lease and
the assumption agreement required by clause (ii) above comply
with the provisions of this Section 8(b).
Upon any consolidation or merger, or any conveyance,
transfer or lease of all or substantially all of the assets of
any Guarantor as an entirety in accordance with this Section
8(b), the successor corporation formed by such consolidation
or into which such Guarantor is merged or to which such
conveyance, transfer or lease is made shall succeed to, and be
substituted for, such Guarantor under this Guaranty Agreement,
with the same effect as if such successor corporation had been
named as a Guarantor herein. No such conveyance, transfer or
lease of all or substantially all of the assets of any
Guarantor (or any successor corporation which shall
theretofore have become such in the manner prescribed in this
Section 8(b)) from its obligations hereunder unless and until
such Guarantor (or such successor) shall dissolve.
(c) Intentionally Omitted.
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(d) Addition or Amendment of Certain Provisions. In the event
the any Guarantor is a party to, enters into, assumes or otherwise
becomes bound or obligated under, or agrees to the modification of, any
agreement creating or evidencing Indebtedness in excess of $10,000,000
containing one or more Additional Covenants or Additional Defaults,
unless prior written consent to such agreement shall have been obtained
pursuant to paragraph 14 below, the terms of this Agreement shall,
without any further action on the part of any Guarantor or any of the
holders of the Notes, be deemed to be amended automatically to include
each Additional Covenant contained in such agreement, but only for so
long as such Additional Covenants remain in effect with respect to such
other agreement. Each Guarantor further covenants to promptly execute
and deliver at their expense (including, without limitation, the fees
and expenses of counsel for the holders of the Notes) an amendment to
this Agreement in form and substance satisfactory to the Required
Holders evidencing the amendment of this Agreement to include such
Additional Covenants, provided that the execution and delivery of such
amendment shall not be a precondition to the effectiveness of such
amendment as provided for in this paragraph, but shall merely be for
the convenience of the parties hereto. As used in this paragraph, the
term "Additional Covenants" shall mean any affirmative or negative
covenant or similar restriction applicable to any Guarantor (regardless
of whether such provision is labeled or otherwise characterized as a
covenant) the subject matter of which either (i) is similar to that of
the covenants in paragraph 8 of this Agreement, or related definitions,
but is more beneficial to the holder or holders of the Indebtedness
created or evidenced by the document in which such covenant or similar
restriction is contained (and such covenant or similar restriction
shall be deemed an Additional Covenant only to the extent that it is
more restrictive or more beneficial) or (ii) is different from the
subject matter of the covenants in paragraph 8 of this Agreement, or
related definitions.
9. REPRESENTATIONS AND WARRANTIES OF THE GUARANTORS.
Each Guarantor represents and warrants as follows:
(a) Incorporation, Good Standing and Location. Each Guarantor
is (i) a corporation duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, (ii)
duly qualified and authorized to do business and in good standing in
every other jurisdiction where the nature of its business requires such
qualification and (iii) has all requisite corporate power and
authority, and all governmental licenses and permits, to own and
operate its properties and to carry on its businesses as presently
conducted. Each Guarantor has the requisite corporate power to enter
into and perform its obligations under this Guaranty Agreement.
(b) Approval and Enforceability of Guaranty Agreement. The
execution, delivery and performance of this Guaranty Agreement have
been duly authorized by all necessary corporate action on the part of
each Guarantor. The Guaranty Agreement has been duly and validly
executed and delivered and constitutes the legal, valid and binding
obligation of each Guarantor, enforceable against it in accordance with
its terms, subject to (i) applicable bankruptcy, insolvency,
moratorium, reorganization, receivership and similar laws affecting the
rights and remedies of creditors generally, and (ii) general
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principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
10. NOTICES. Unless otherwise specifically provided herein, all notices,
consents, directions, approvals, instructions, requests and other
communications required or permitted by the terms hereof shall be in
writing, and any such communication shall become effective when
received, addressed in the following manner: (a) if to any Guarantor,
to 941 Grinnell Street, Fall River, Massachusetts 02721, Attn:
President, or (b) if to any holder of a Note, to the respective
addresses set forth in the Purchasers Schedule to the Note Agreement;
provided, however, that any such addressee may change its address for
communications by notice given as aforesaid to the other parties
hereto.
11. CONSTRUCTION. The section and subsection headings in this Guaranty
Agreement are for convenience of reference only and shall neither be
deemed to be a part of this Guaranty Agreement nor modify, define,
expand or limit any of the terms or provisions hereof. All references
herein to numbered sections, unless otherwise indicated, are to
sections of this Guaranty Agreement. Words and definitions in the
singular shall be read and construed as though in the plural and vice
versa, and words in the masculine, neuter or feminine gender shall be
read and construed as though in either of the other genders where the
context so requires.
12. SEVERABILITY. If any provision of this Guaranty Agreement, or the
application thereof to any person or circumstances, shall, for any
reason or to any extent, be invalid or unenforceable, such invalidity
or unenforceability shall not in any manner affect or render invalid or
unenforceable the remainder of this Guaranty Agreement, and the
application of that provision to other persons or circumstances shall
not be affected but, rather, shall be enforced to the extent permitted
by applicable law.
13. SUCCESSORS. The terms and provisions of this Guaranty Agreement shall
be binding upon and inure to the benefit of each Guarantor and the
holders of the Notes from time to time and their respective permitted
successors, transferees and assigns.
14. ENTIRE AGREEMENT; AMENDMENT. This Guaranty Agreement expresses the
entire understanding of the subject matter hereof; and all other
understandings, written or oral, are hereby merged herein and
superseded. No amendment of or supplement to this Guaranty Agreement,
or waiver or modification of, or consent under, the terms hereof shall
be effective unless in writing and signed by the party to be bound
thereby and consented to in writing by the Required Holders.
15. TERM OF GUARANTY AGREEMENT. The Guaranty Agreement and all guarantees,
covenants and agreements of each Guarantor contained herein shall
continue in full force and effect and shall not be discharged until
such time as all of the Guaranteed Obligations shall be paid or
otherwise discharged in full.
16. SURVIVAL. All warranties, representations and covenants made by each
Guarantor herein or in any certificate or other instrument delivered by
it or on its behalf under this
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Guaranty Agreement shall be considered to have been relied upon by the
holders of the Notes and shall survive the execution and delivery of
this Guaranty Agreement, regardless of any investigation made by the
holder of the Notes or on their behalf.
17. FURTHER ASSURANCES. Each Guarantor hereby agrees to execute and deliver
all such instruments and take all such action as the holders of the
Notes may from time to time reasonably request in order to effectuate
fully the purposes of this Guaranty Agreement.
18. GOVERNING LAW. This Guaranty Agreement has been executed and delivered
in the State of New York and shall be governed by, construed and
enforced in all respects in accordance with the laws of the State of
New York applicable to contracts made and to be performed entirely
therein, without regard to principles of conflicts of laws.
19. PAYMENT CURRENCY. All payments on account of any Notes denominated in a
specified Available Currency other than Dollars (including principal,
interest and Yield-Maintenance Amounts) shall be made in such specified
currency, and all payments on account of any Notes denominated in
Dollars (including principal, interest and Yield-Maintenance Amounts)
shall be made in Dollars. The obligation of the Guarantors to make
payment hereunder in the applicable currency specified in the preceding
sentence shall not be discharged or satisfied by any tender, or any
recovery pursuant to any judgment, which is expressed in or converted
into any currency other than such applicable currency, except to the
extent the applicable obligee actually receives the full amount of the
currency in which the underlying obligation is denominated. The
obligation of the Guarantors to make payment in any given currency as
required by the first sentence of this paragraph shall be enforceable
as an alternative or additional cause of action for the purpose of
recovery in such currency, of the amount, if any, by which such actual
receipt shall fall short of the full amount of such currency expressed
to be payable in respect of any such obligation, and shall not be
affected by judgment being obtained for any other sums due under the
Notes, the Note Agreement or this Guaranty Agreement, as the case may
be.
20. PAYMENTS FREE AND CLEAR OF TAXES. Each Guarantor will pay all amounts
of principal of, Yield Maintenance Amount, if any, and interest on the
Notes, and all other amounts payable hereunder or under the Note
Agreement or the Notes, without set-off or counterclaim and free and
clear of, and without deduction or withholding for or on account of,
all present and future income, stamp, documentary and other taxes and
duties, and all other levies, imposts, charges, fees, deductions and
withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any governmental authority (except net income taxes and
franchise taxes in lieu of net income taxes imposed on any holder of
any Note by its jurisdiction of incorporation or the jurisdiction in
which its applicable lending office is located) (all such non-excluded
taxes, duties, levies, imposts, duties, charges, fees, deductions and
withholdings being hereinafter called "Taxes"). If any Taxes are
required to be withheld from any amounts payable hereunder to a holder
of any Notes, the amounts so payable to such holder shall be increased
to the extent necessary to yield such holder (after payment of all
Taxes) interest on any such other amounts payable hereunder at the
rates or in the amounts specified in the Note Agreement, this Guaranty
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Agreement and the Notes. Whenever any Taxes are payable by any
Guarantor, as promptly as possible thereafter, such Guarantor shall
send to each holder of the Notes, a certified copy of an original
official receipt received by such Guarantor showing payment thereof. If
any Guarantor fails to pay any Taxes when due to the appropriate taxing
authority or fails to remit to each holder of the Notes the required
receipts or other required documentary evidence, such Guarantor shall
indemnify each holder of the Notes for any Taxes (including interest or
penalties) that may become payable by such holder as a result of any
such failure. The obligations of the Guarantors under this paragraph
shall survive the payment and performance of the Notes and the
termination of the Note Agreement and this Guaranty Agreement.
21. CONTRIBUTION; MAXIMUM LIABILITY. (a) Each Guarantor is unconditionally
obligated to pay the Guaranteed Obligations as a joint and several
obligor under this Guaranty Agreement. If, as of any date, the
aggregate amount of payments made by a Guarantor on account of the
Guaranteed Obligations and proceeds of such Guarantor's collateral that
are applied to the Guaranteed Obligations exceeds the aggregate amount
of the proceeds of the Guaranteed Obligations actually used by such
Guarantor in its business (such excess amount being referred to as an
"Accommodation Payment"), then each of the other Guarantors (each such
Guarantor being referred to as a "Contributing Guarantor") shall be
obligated to make contribution to such Guarantor (the "Paying
Guarantor") in an amount equal to (i) the product derived by
multiplying the sum of each Accommodation Payment of each Guarantor by
the Allocable Percentage of the Guarantor from whom contribution is
sought less (ii) the amount, if any, of the then outstanding
Accommodation Payment of such Contributing Guarantor (such last
mentioned amount which is to be subtracted from the aforesaid product
to be increased by any amounts theretofore paid by such Contributing
Guarantor by way of contribution hereunder); provided, however, that a
Paying Guarantor's recovery of contribution hereunder from the other
Guarantors shall be limited to that amount paid by the Paying Guarantor
in excess of its Allocable Percentage of all Accommodation Payments
then outstanding of all Guarantors. As used herein, the term "Allocable
Percentage" shall mean, on any date of determination thereof, a
fraction of the denominator of which shall be equal to the number of
Guarantors who are parties to this Guaranty Agreement on such date and
the numerator of which shall be 1; provided, however, that such
percentages shall be modified in the event that contribution from a
Guarantor is not possible by reason of insolvency, bankruptcy, or
otherwise by reducing such Guarantor's Allocable Percentage equitably
and by adjusting the Allocable Percentage of the other Guarantors
proportionately so that the Allocable Percentages of all Guarantors at
all times equals 100%.
(b) It is the intention of the Guarantors and the Purchasers that each
Guarantor's obligations hereunder shall be in, but not in excess of,
the maximum amount permitted by applicable federal bankruptcy, state
insolvency, fraudulent conveyance or transfer or similar laws
("Applicable Laws"). To that end, but only to the extent such
obligations would otherwise be subject to avoidance under Applicable
Law, if after giving effect to the provisions of the preceding
paragraph (a), any Guarantor is not deemed to have received valuable
consideration, fair value or reasonably equivalent value for its
obligations hereunder, such Guarantor's obligations hereunder shall be
reduced to that
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amount which, after giving effect thereto, would not render such
Guarantor insolvent, or leave such Guarantor with unreasonably small
capital to conduct its business, or cause such Guarantor to have
incurred debts (or intended to have incurred debts) beyond its ability
to pay such debts as they mature, at the time such obligations are
deemed to have been incurred under Applicable Laws. As used herein, the
terms "insolvent" and "unreasonably small capital" shall likewise be
determined in accordance with Applicable Law. This Section is intended
solely to preserve the rights of the Purchasers hereunder the maximum
extent permitted by Applicable Law, and neither any Guarantor nor any
other Person shall have any right or claim under this Section that
would not otherwise be available under Applicable Law.
[Signature Page Follows]
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IN WITNESS WHEREOF, each Guarantor has caused this Guaranty Agreement
to be duly executed and delivered as of the date and year first above written.
QUAKER TEXTILE CORPORATION
By
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Name:
Title:
QUAKER FABRIC MEXICO, S.A. de
C.V.
By
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Name:
Title:
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