Exhibit 10.7


 


DEBTOR-IN-POSSESSION SUBSIDIARY GUARANTY


 


DEBTOR-IN-POSSESSION
SUBSIDIARY GUARANTY (as amended, modified, restated and/or supplemented from
time to time, this “Guaranty”), dated as of October 30, 2009, made
by and among each of the undersigned guarantors, each of which is a debtor and
debtor-in-possession under Chapter 11 of the Bankruptcy Code (as defined in the
Credit Agreement referred to below) (each, a “Guarantor” and
collectively, the “Guarantors”) in favor of BANK OF AMERICA, N.A., as Administrative
Agent (in such capacity, together with any successor administrative agent, the “Administrative
Agent”), for the benefit of the Secured Creditors (as defined below).  Except as otherwise defined herein, all
capitalized terms used herein and defined in the Credit Agreement (as defined
below) shall be used herein as therein defined.


 


W I T N E S S E T H :


 


WHEREAS,
FairPoint Communications, Inc., a Delaware corporation and a debtor and
debtor-in-possession under Chapter 11 of the Bankruptcy Code (“FairPoint”),
and FairPoint Logistics, Inc., a South Dakota corporation and a debtor and
debtor-in-possession under Chapter 11 of the Bankruptcy Code (“FairPoint
Logistics”; and together with FairPoint, each a “Borrower” and
collectively the “Borrowers”) and each of the Guarantors have filed in the
United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy
Court”) a voluntary petition for relief under Chapter 11 of the Bankruptcy
Code and have continued in the possession of their assets and in the management
of their businesses pursuant to Sections 1107 and 1108 of the Bankruptcy Code,
and such reorganization cases are being jointly administered under Case Number
09-16335-brl (the “Cases”);


 


WHEREAS,
the Borrowers, the lenders from time to time party thereto (the “Lenders”)
and the Administrative Agent have entered into a Debtor-In-Possession Credit
Agreement, dated as of October 27, 2009 (as amended, modified, restated
and/or supplemented from time to time, the “Credit Agreement”),
providing for the making of Loans to, and the issuance of, and participation
in, Letters of Credit for the account of, the Borrowers and/or one or more of
their Subsidiaries, all as contemplated therein (the Lenders, the Letter of
Credit Issuer, the Administrative Agent, the Collateral Agent and the Pledgee
referred to in the Pledge Agreement are herein called the “Secured Creditors”).


 


WHEREAS,
each Guarantor is a direct or indirect Subsidiary of the Borrowers.


 


WHEREAS,
it is a condition precedent to the making of Loans to the Borrowers and the
issuance of, and participation in, Letters of Credit for the account of the
Borrowers and/or one or more of their Subsidiaries under the Credit Agreement
that each Guarantor shall have executed and delivered this Guaranty to the
Administrative Agent.


 


WHEREAS,
each Guarantor will obtain benefits from the incurrence of Loans by the
Borrowers and the issuance of, and participation in, Letters of Credit for the
account of the Borrowers and/or one or more of their Subsidiaries under the
Credit Agreement and, 


 

















 


accordingly,
desires to execute this Guaranty in order to satisfy the condition described in
the preceding paragraph and to induce the Lenders to make Loans to the
Borrowers and issue, and/or participate in, Letters of Credit for the account
of the Borrowers and/or one or more of their Subsidiaries.


 


NOW,
THEREFORE, in consideration of the foregoing and other benefits accruing to
each Guarantor, the receipt and sufficiency of which are hereby acknowledged,
each Guarantor hereby makes the following representations and warranties to the
Administrative Agent for the benefit of the Secured Creditors and hereby
covenants and agrees with each other Guarantor and the Administrative Agent for
the benefit of the Secured Creditors as follows:


 


1.                                       GUARANTY.  Each Guarantor, jointly and severally,
irrevocably, absolutely and unconditionally guarantees as a primary obligor and
not merely as surety the full and prompt payment when due (whether at the
stated maturity, by required prepayment, declaration, acceleration, demand or
otherwise) of (x) the principal of, premium, if any, and interest on the
Notes issued by, and the Loans made to, the Borrowers under the Credit
Agreement, and all reimbursement obligations and Unpaid Drawings with respect
to Letters of Credit and (y) all other obligations, liabilities and
indebtedness owing by each Borrower to the Secured Creditors under the Credit
Agreement and each other Credit Document to which such Borrower is a party
(including, without limitation, indemnities, Fees and interest thereon, whether
now existing or hereafter incurred under, arising out of or in connection with
the Credit Agreement and any such other Credit Document and the due performance
and compliance by each Borrower with all of the terms, conditions, covenants
and agreements contained in all such Credit Documents (all such principal,
premium, interest, liabilities, indebtedness and obligations being herein
collectively called the “Guaranteed Obligations”).


 


Each
Guarantor understands, agrees and confirms that the Secured Creditors may
enforce this Guaranty up to the full amount of the Guaranteed Obligations
against such Guarantor without proceeding against any other Guarantor or either
Borrower, or against any security for the Guaranteed Obligations, or under any
other guaranty covering all or a portion of the Guaranteed Obligations.  This Guaranty is a guaranty of prompt payment
and performance and not of collection. 
In addition, if as a result of an Event of Default any or all of the
Obligations of the Borrowers to the Secured Creditors become due and payable
under the Credit Agreement, each Guarantor, jointly and severally,
unconditionally promises to pay such Obligations to the Secured Creditors, on
demand, together with any and all reasonable expenses which may be incurred by
the Administrative Agent or the other Secured Creditors in collecting any of
the Obligations.


 


2.                                       LIABILITY OF
GUARANTORS ABSOLUTE.  The
liability of each Guarantor hereunder is primary, absolute, joint and several,
and unconditional and is exclusive and independent of any security for or other
guaranty of the indebtedness of the Borrowers whether executed by such
Guarantor, any other Guarantor, any other guarantor or by any other party, and
the liability of each Guarantor hereunder shall not be affected or impaired by
any circumstance or occurrence whatsoever, including, without limitation:  (a) any direction as to application of
payment by any Borrower or any other party; (b) any other continuing or
other guaranty, undertaking or maximum liability of a Guarantor or of any other
party as to the Guaranteed Obligations; (c) any payment on or in reduction
of any such other guaranty or undertaking; (d) 


 


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any
dissolution, termination or increase, decrease or change in personnel by any
Borrower, (e) the failure of any Guarantor to receive any benefit from or
as a result of its execution, delivery and performance of this Guaranty, (f) any
payment made to any Secured Creditor on the indebtedness which any Secured
Creditor repays any Borrower pursuant to court order in any bankruptcy,
reorganization, arrangement, moratorium or other debtor relief proceeding, and
each Guarantor waives any right to the deferral or modification of its
obligations hereunder by reason of any such proceeding; (g) any action or
inaction by the Secured Creditors as contemplated in Section 5 hereof, or (h) any
invalidity, rescission, irregularity or unenforceability of all or any part of
the Guaranteed Obligations or of any security therefor.


 


3.                                       OBLIGATIONS OF
GUARANTORS INDEPENDENT.  The
obligations of each Guarantor hereunder are independent of the obligations of
any other Guarantor, any other guarantor or any Borrower, and a separate action
or actions may be brought and prosecuted against each Guarantor whether or not
action is brought against any other Guarantor, any other guarantor or any
Borrower and whether or not any other Guarantor, any other guarantor or the
Borrowers be joined in any such action or actions.


 


4.                                       WAIVERS BY
GUARANTORS.  (a) Each
Guarantor hereby waives notice of acceptance of this Guaranty and notice of the
existence, creation or incurrence of any new or additional liability to which
it may apply, and waives promptness, diligence, presentment, demand of payment,
demand for performance, protest, notice of dishonor or nonpayment of any such
liabilities, suit or taking of other action by the Administrative Agent or any
other Secured Creditor against, and any other notice to, any party liable
thereon (including such Guarantor, any other Guarantor, any other guarantor or
any Borrower) and each Guarantor further hereby waives any and all notice of
the creation, renewal, extension or accrual of any of the Guaranteed Obligations
and notice or proof of reliance by any Secured Creditor upon this Guaranty, and
the Guaranteed Obligations shall conclusively be deemed to have been created,
contracted or incurred, or renewed, extended, amended, modified, supplemented
or waived, in reliance upon this Guaranty.


 


(b)                                 Each Guarantor
waives any right to require the Secured Creditors to:  (i) proceed against the Borrowers, any
other Guarantor, any other guarantor of the Guaranteed Obligations or any other
party; (ii) proceed against or exhaust any security held from the
Borrowers, any other Guarantor, any other guarantor of the Guaranteed
Obligations or any other party; or (iii) pursue any other remedy in the
Secured Creditors’ power whatsoever. 
Each Guarantor waives any defense based on or arising out of any defense
of the Borrowers, any other Guarantor, any other guarantor of the Guaranteed
Obligations or any other party other than payment in full in cash of the
Guaranteed Obligations, including, without limitation, any defense based on or
arising out of the disability of the Borrowers, any other Guarantor, any other
guarantor of the Guaranteed Obligations or any other party, or the
unenforceability of the Guaranteed Obligations or any part thereof from any
cause, or the cessation from any cause of the liability of the Borrowers other
than payment in full in cash of the Guaranteed Obligations.  The Secured Creditors may, at their election
and in accordance with the security documents governing the same, foreclose on
any collateral serving as security held by the Administrative Agent, the
Collateral Agent or the other Secured Creditors by one or more judicial or
nonjudicial sales, whether or not every aspect of any such sale is commercially
reasonable (to the extent such sale is permitted by applicable law), or
exercise any other right or remedy the Secured Creditors 


 


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may
have against the Borrowers or any other party, or any security, without
affecting or impairing in any way the liability of any Guarantor hereunder
except to the extent the Guaranteed Obligations have been paid in full in
cash.  Each Guarantor waives any defense
arising out of any such election by the Secured Creditors, even though such
election operates to impair or extinguish any right of reimbursement,
contribution, indemnification or subrogation or other right or remedy of such
Guarantor against the Borrowers, any other Guarantor, any other guarantor of
the Guaranteed Obligations or any other party or any security.


 


(c)                                  Each Guarantor
hereby waives the benefits of any statute of limitations affecting its
liability hereunder or the enforcement thereof. 
Any payment by the Borrowers or other circumstance which operates to
toll any statute of limitations as to the Borrowers shall operate to toll the
statute of limitations as to each Guarantor.


 


(d)                                 Each Guarantor
has knowledge and assumes all responsibility for being and keeping itself
informed of each Borrower’s and each other Guarantor’s financial condition,
affairs and assets, and of all other circumstances bearing upon the risk of
nonpayment of the Guaranteed Obligations and the nature, scope and extent of
the risks which such Guarantor assumes and incurs hereunder, and has adequate
means to obtain from each Borrower and each other Guarantor on an ongoing basis
information relating thereto and to each Borrower’s and each other Guarantor’s
ability to pay and perform its respective Guaranteed Obligations, and agrees to
assume the responsibility for keeping, and to keep, so informed for so long as
this Guaranty is in effect.  Each
Guarantor acknowledges and agrees that (x) the Secured Creditors shall
have no obligation to investigate the financial condition or affairs of the
Borrowers or any other Guarantor for the benefit of such Guarantor nor to
advise such Guarantor of any fact respecting, or any change in, the financial
condition, assets or affairs of the Borrowers or any other Guarantor that might
become known to any Secured Creditor at any time, whether or not such Secured
Creditor knows or believes or has reason to know or believe that any such fact
or change is unknown to such Guarantor, or might (or does) increase the risk of
such Guarantor as guarantor hereunder, or might (or would) affect the
willingness of such Guarantor to continue as a guarantor of the Guaranteed
Obligations hereunder and (y) the Secured Creditors shall have no duty to
advise any Guarantor of information known to them regarding any of the
aforementioned circumstances or risks.


 


(e)                                  Each Guarantor
hereby acknowledges and agrees that no Secured Creditor or any other Person
shall be under any obligation (a) to marshal any assets in favor of such
Guarantor or in payment of any or all of the liabilities of any Borrower under
the Credit Documents or the obligation of such Guarantor hereunder or (b) to
pursue any other remedy that such Guarantor may or may not be able to pursue
itself, any right to which such Guarantor hereby waives.


 


(f)                                    Each Guarantor
warrants and agrees that each of the waivers set forth in Section 3 and in
this Section 4 is made with full knowledge of its significance and
consequences and that if any of such waivers are determined to be contrary to
any applicable law or public policy, such waivers shall be effective only to
the maximum extent permitted by applicable law.


 


5.                                       RIGHTS OF
SECURED CREDITORS.  Subject to Section 4,
any Secured Creditor may (except as shall be required by applicable law and
cannot be waived) at any time 


 


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and
from time to time without the consent of, or notice to, any Guarantor, without
incurring responsibility to such Guarantor, without impairing or releasing the
obligations or liabilities of such Guarantor hereunder, upon or without any
terms or conditions and in whole or in part:


 


(a)                                  change the
manner, place or terms of payment of, and/or change, increase or extend the
time of payment of, renew, increase, accelerate or alter, any of the Guaranteed
Obligations (including, without limitation, any increase or decrease in the
rate of interest thereon or the principal amount thereof), any security
therefor, or any liability incurred directly or indirectly in respect thereof,
and the guaranty herein made shall apply to the Guaranteed Obligations as so
changed, extended, increased, accelerated, renewed or altered;


 


(b)                                 take and hold
security for the payment of the Guaranteed Obligations and sell, exchange,
release, surrender, impair, realize upon or otherwise deal with in any manner
and in any order any property or other collateral by whomsoever at any time
pledged or mortgaged to secure, or howsoever securing, the Guaranteed
Obligations or any liabilities (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and/or any offset thereagainst;


 


(c)                                  exercise or
refrain from exercising any rights against the Borrowers, any other Credit
Party, any Subsidiary thereof, any other guarantor of the Guaranteed
Obligations or others or otherwise act or refrain from acting;


 


(d)                                 release or substitute
any one or more endorsers, Guarantors, other guarantors, the Borrowers or other
obligors;


 


(e)                                  settle or
compromise any of the Guaranteed Obligations, any security therefor or any
liability (including any of those hereunder) incurred directly or indirectly in
respect thereof or hereof, and may subordinate the payment of all or any part
thereof to the payment of any liability (whether due or not) of a Borrower to
creditors of such Borrower other than the Secured Creditors;


 


(f)                                    apply any sums
by whomsoever paid or howsoever realized to any liability or liabilities of the
Borrowers to the Secured Creditors regardless of what liabilities of the
Borrowers remain unpaid;


 


(g)                                 consent to or
waive any breach of, or any act, omission or default under, any of the Credit
Documents or any of the instruments or agreements referred to therein, or
otherwise amend, modify or supplement any of the Credit Documents or any of
such other instruments or agreements;


 


(h)                                 act or fail to
act in any manner which may deprive such Guarantor of its right to subrogation
against the Borrowers to recover full indemnity for any payments made pursuant
to this Guaranty, and/or


 


(i)                                     take any other
action or omit to take any other action which would under otherwise applicable
principles of common law, give rise to a legal or equitable discharge of such
Guarantor from its liabilities under this Guaranty (including, without
limitation, any action or omission whatsoever that might otherwise vary the
risk of such Guarantor or constitute a legal 


 


5

















 


or equitable defense to or
discharge of the liabilities of a guarantor or surety or that might otherwise
limit recourse against such Guarantor).


 


No
invalidity, illegality, irregularity or enforceability of all or any part of
the Guaranteed Obligations, the Credit Documents or any other agreement or
instrument relating to the Guaranteed Obligations or of any security or
guarantee therefor shall affect, impair or be a defense to this Guaranty, and this
Guaranty shall be primary, absolute and unconditional notwithstanding the
occurrence of any event or the existence of any other circumstances which might
constitute a legal or equitable discharge of a surety or guarantor except
payment in full in cash of the Guaranteed Obligations.


 


6.                                       CONTINUING
GUARANTY.  This
Guaranty is a continuing one and all liabilities to which it applies or may
apply under the terms hereof shall be conclusively presumed to have been
created in reliance hereon.  No failure
or delay on the part of any Secured Creditor in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege.  The rights and remedies
herein expressly specified are cumulative and not exclusive of any rights or
remedies which any Secured Creditor would otherwise have.  No notice to or demand on any Guarantor in
any case shall entitle such Guarantor to any other further notice or demand in
similar or other circumstances or constitute a waiver of the rights of any
Secured Creditor to any other or further action in any circumstances without
notice or demand.  It is not necessary
for any Secured Creditor to inquire into the capacity or powers of the
Borrowers or the officers, directors, partners or agents acting or purporting
to act on its or their behalf, and any indebtedness made or created in reliance
upon the professed exercise of such powers shall be guaranteed hereunder.


 


7.                                       SUBORDINATION
OF INDEBTEDNESS HELD BY GUARANTORS.  Any indebtedness of any Borrower now or
hereafter held by any Guarantor is hereby subordinated to the indebtedness of
such Borrower to the Secured Creditors, and such indebtedness of any Borrower
to any Guarantor, if the Administrative Agent or the Collateral Agent, after an
Event of Default has occurred and is continuing, so requests, shall be
collected, enforced and received by such Guarantor as trustee for the Secured
Creditors and be paid over to the Secured Creditors on account of the
indebtedness of the Borrowers to the Secured Creditors, but without affecting
or impairing in any manner the liability of such Guarantor under the other
provisions of this Guaranty.  Prior to
the transfer by any Guarantor of any note or negotiable instrument evidencing
any indebtedness of any Borrower to such Guarantor, such Guarantor shall mark
such note or negotiable instrument with a legend that the same is subject to
this subordination.  Without limiting the
generality of the foregoing, each Guarantor hereby agrees with the Secured
Creditors that it will not exercise any right of subrogation which it may at
any time otherwise have as a result of this Guaranty (whether contractual,
under Section 509 of the Bankruptcy Code or otherwise) until all
Guaranteed Obligations have been irrevocably paid in full in cash; provided,
that if any amount shall be paid to any Guarantor on account of such
subrogation rights at any time prior to the irrevocable payment in full in cash
of all the Guaranteed Obligations, such amount shall be held in trust for the
benefit of the Secured Creditors and shall forthwith be paid to the Secured
Creditors to be credited and applied to the Guaranteed Obligations, whether
matured or unmatured, in accordance with the terms of the Credit Documents or,
if the Credit Documents do not provide for the application of such amount, to
be held by the Secured 


 


6

















 


Creditors
as collateral security for any Guaranteed Obligations thereafter existing.  Upon irrevocable payment in full in cash of
all of the Guaranteed Obligations, each Guarantor shall be subrogated to the
rights of the Secured Creditors to receive payments or distributions applicable
to the Guaranteed Obligations until all Indebtedness of the Borrowers held by
such Guarantor shall be paid in full.


 


8.                                       GUARANTY
ENFORCEABLE BY ADMINISTRATIVE AGENT OR COLLATERAL AGENT.  Notwithstanding anything to the contrary
contained elsewhere in this Guaranty or any other Credit Document, the Secured
Creditors agree (by their acceptance of the benefits of this Guaranty) that
this Guaranty may be enforced only by the action of the Administrative Agent or
the Collateral Agent, in each case acting upon the instructions of the Required
Lenders (to the extent required under the Credit Agreement) and that no other
Secured Creditor will have any right individually to seek to enforce or to
enforce this Guaranty or to realize upon the security to be granted by the
Credit Documents, it being understood and agreed that such rights and remedies
may be exercised by the Administrative Agent or the Collateral Agent, for the
benefit of the Secured Creditors, upon the terms of this Guaranty and the other
Credit Documents.  Exercise by the
Administrative Agent or the Collateral Agent of the powers granted under this
Agreement is not a violation of the automatic stay provided by Section 362
of the Bankruptcy Code and each Guarantor waives applicability thereof.  The Secured Creditors further agree that this
Guaranty may not be enforced against any director, officer, employee, partner,
member or stockholder of any Guarantor (except to the extent such partner,
member or stockholder is also a Guarantor hereunder).  It is understood and agreed that the
agreement in this Section 8 is among and solely for the benefit of the
Secured Creditors.


 


9.                                       REPRESENTATIONS,
WARRANTIES AND COVENANTS OF GUARANTORS.  In order to induce the Lenders to make Loans
to, and issue Letters of Credit for the account of, the Borrowers pursuant to
the Credit Agreement, each Guarantor represents, warrants and covenants that:


 


(a)                                  until the
termination of the Total Revolving Commitment and until such time as no Loan or
Letter of Credit remains outstanding and all Guaranteed Obligations have been
paid in full (other than indemnities described in Section 11.01 of the
Credit Agreement and analogous provisions in the other Credit Documents which
are not then due and payable), such Guarantor will take, or will refrain from
taking, as the case may be, all actions that are necessary to be taken or not
taken so that no violation of any provision, covenant or agreement contained in
Sections 6 and 7 of the Credit Agreement, and so that no Event of Default, is
caused by the actions of such Guarantor or any of its Subsidiaries; and


 


(b)                                 an executed (or
conformed) copy of each of the Credit Documents has been made available to a
senior officer of such Guarantor and such officer is familiar with the contents
thereof.


 


10.                                 EXPENSES.  The Guarantors hereby jointly and severally
agree to pay all reasonable out-of-pocket costs and expenses of the Collateral
Agent, the Administrative Agent and each other Secured Creditor in connection
with the enforcement of this Guaranty and the protection of the Secured
Creditors’ rights hereunder (including the reasonable fees, disbursements and
other charges of (x) counsel to the Administrative Agent and the
Collateral 


 


7

















 


Agent
and (y) the Financial Advisor); provided, that the Guarantors’
obligation to pay the fees, disbursements and other charges of counsel to the
Secured Parties (but not of counsel to the Administrative Agent or the
Collateral Agent) shall be limited to one outside counsel, which as of the
Closing Date, is Wachtell Lipton, Rosen and Katz) and of the Administrative
Agent in connection with any amendment, waiver or consent relating hereto
(including, without limitation, the reasonable fees and disbursements of
counsel).


 


11.                                 BENEFIT AND
BINDING EFFECT.  This
Guaranty shall be binding upon each Guarantor and its successors and assigns
and shall inure to the benefit of the Secured Creditors and their successors
and assigns to the extent permitted under the Credit Agreement.


 


12.                                 AMENDMENTS;
WAIVERS.  Neither this Guaranty nor any
provision hereof may be changed, waived, discharged or terminated except with
the written consent of each Guarantor directly affected thereby (it being
understood that the addition or release of any Guarantor hereunder shall not
constitute a change, waiver, discharge or termination affecting any Guarantor
other than the Guarantor so added or released) and with the written consent of
the Required Lenders (or, to the extent required by Section 11.11 of the
Credit Agreement, with the written consent of each Lender) at all times prior
to the time at which all Credit Document Obligations have been paid in full.


 


13.                                 SET OFF.  In addition to any rights now or hereafter
granted under applicable law (including, without limitation, Section 151
of the New York Debtor and Creditor Law) and not by way of limitation of any
such rights, upon the occurrence and during the continuance of an Event of
Default (such term to mean and include any “Event of Default” as defined
in the Credit Agreement, each Secured Creditor is hereby authorized, at any
time or from time to time, without notice to any Guarantor or to any other
Person, any such notice being expressly waived, to set off and to appropriate
and apply any and all deposits (general or special) and any other indebtedness
at any time held or owing by such Secured Creditor to or for the credit or the
account of such Guarantor, against and on account of the obligations and
liabilities of such Guarantor to such Secured Creditor under this Guaranty,
irrespective of whether or not such Secured Creditor shall have made any demand
hereunder and although said obligations, liabilities, deposits or claims, or
any of them, shall be contingent or natured. 
Each Secured Creditor (by its acceptance of the benefits hereof)
acknowledges and agrees (i) to promptly notify the relevant Guarantor
after any such set-off and application; provided, that the failure to
give such notice shall not affect the validity of such set-off and application;
and (ii) that the provisions of this Section 13 are subject to the
sharing provisions set forth in Section 11.06 of the Credit Agreement.


 


14.                                 NOTICE.  Except as otherwise specified herein, all
notices, requests, demands or other communications to or upon the respective
parties hereto shall be sent or delivered by mail, telegraph, telex, telecopy,
cable or courier service and all such notices and communications shall, when
mailed, telegraphed, telexed, telecopied, or cabled or sent by courier, be
effective when deposited in the mails, delivered to the telegraph company,
cable company or overnight courier, as the case may be, or sent by telex or
telecopier, except that notices and communications to the Administrative Agent
or any Guarantor shall not be effective until received by the Administrative
Agent or such Guarantor, as the case may be. 
All notices and other communications shall be in writing and addressed
to such party at (i) in the case of any Secured 


 


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Creditor,
as provided in the Credit Agreement, and (ii) in the case of any
Guarantor, at its address set forth opposite its signature below.


 


15.                                 REINSTATEMENT.  If any claim is ever made upon any Secured
Creditor for repayment or recovery of any amount or amounts received in payment
or on account of any of the Guaranteed Obligations and any of the aforesaid
payees repays all or part of said amount by reason of (i) any judgment,
decree or order of any court or administrative body having jurisdiction over
such payee or any of its property or (ii) any settlement or compromise of
any such claim effected by such payee with any such claimant (including,
without limitation, the Borrowers), then and in such event each Guarantor
agrees that any such judgment, decree, order, settlement or compromise shall be
binding upon such Guarantor, notwithstanding any revocation hereof or the
cancellation of any Note or any other instrument evidencing any liability of
the Borrowers, and such Guarantor shall be and remain liable to the aforesaid
payees hereunder for the amount so repaid or recovered to the same extent as if
such amount had never originally been received by any such payee.


 


16.                                 CONSENT TO
JURISDICTION; SERVICE OF PROCESS; AND WAIVER OF TRIAL BY JURY.  (a) THIS GUARANTY AND THE RIGHTS AND
OBLIGATIONS OF THE SECURED CREDITORS AND OF THE UNDERSIGNED HEREUNDER SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.  Except for matters within the exclusive
jurisdiction of the Bankruptcy Court, any legal action or proceeding with
respect to this Guaranty or any other Credit Document to which any Guarantor is
a party may be brought in the courts of the State of New York or of the United
States of America for the Southern District of New York, in each case located
within the City of New York and, by execution and delivery of this Guaranty,
each Guarantor hereby irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts.  Each Guarantor hereby further
irrevocably waives any claim that any such courts lack jurisdiction over such
Guarantor, and agrees not to plead or claim in any legal action or proceeding
with respect to this Guaranty or any other Credit Document to which such
Guarantor is a party brought in any of the aforesaid courts, that any such
court lacks jurisdiction over such Guarantor. 
Each Guarantor further irrevocably consents to the service of process
out of any of the aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
each Guarantor at its address set forth opposite its signature below, such
service to become effective 30 days after such mailing.  Each Guarantor hereby irrevocably waives any
objection to such service of process and further irrevocably waives and agrees
not to plead or claim in any action or proceeding commenced hereunder or under
any other Credit Document to which such Guarantor is a party that such service
of process was in any way invalid or ineffective.  Nothing herein shall affect the right of any
of the Secured Creditors to serve process in any other manner permitted by law
or to commence legal proceedings or otherwise proceed against each Guarantor in
any other jurisdiction.


 


(b)                                 Except for
matters within the exclusive jurisdiction of the Bankruptcy Court, each
Guarantor hereby irrevocably waives (to the full extent permitted by applicable
law) any objection which it may now or hereafter have to the laying of venue of
any of the aforesaid actions or proceedings arising out of or in connection
with this Guaranty or any other Credit 


 


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Document
to which such Guarantor is a party brought in the courts referred to in clause (a) above
and hereby further irrevocably waives and agrees not to plead or claim in any
such court that such action or proceeding brought in any such court has been
brought in an inconvenient forum.


 


(c)                                  EACH GUARANTOR
AND EACH SECURED CREDITOR (BY ITS ACCEPTANCE OF THE BENEFITS OF THIS GUARANTY)
HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS GUARANTY, THE
OTHER CREDIT DOCUMENTS TO WHICH SUCH GUARANTOR IS A PARTY OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.


 


17.                                 TERMINATION.  After the Termination Date (as defined
below), but subject to Section 15, this Guaranty shall terminate (provided
that all indemnities set forth herein shall survive any such termination) and
the Administrative Agent, at the request and expense of the respective
Guarantor, will execute and deliver to such Guarantor a proper instrument or
instruments acknowledging the satisfaction and termination of this Guaranty as
provided above.  As used in this
Guaranty, ‘‘Termination Date” shall mean the date upon which the Total
Revolving Commitment has been terminated, no Note or Letter of Credit under the
Credit Agreement is outstanding (and all Loans have been paid in full) and all
other Obligations (as defined in the Credit Agreement) have been paid in full
(other than arising from indemnities for which no request has been made).


 


18.                                 CONTRIBUTION.  At any time a payment in respect of the
Guaranteed Obligations is made under this Guaranty, the right of contribution
of each Guarantor against each other Guarantor shalt be determined as provided
in the immediately following sentence, with the right of contribution of each
Guarantor to be revised and restated as of each date on which a payment (a “Relevant
Payment”) is made on the Guaranteed Obligations under this Guaranty.  At any time that a Relevant Payment is made
by a Guarantor that results in the aggregate payments made by such Guarantor in
respect of the Guaranteed Obligations to and including the date of the Relevant
Payment exceeding such Guarantor’s Contribution Percentage (as defined below)
of the aggregate payments made by all Guarantors in respect of the Guaranteed
Obligations to and including the date of the Relevant Payment (such excess, the
“Aggregate Excess Amount”), each such Guarantor shall have a right of
contribution against each other Guarantor who either has not made any payments
or has made payments in respect of the Guaranteed Obligations to and including
the date of the Relevant Payment in an aggregate amount less than such other
Guarantor’s Contribution Percentage of the aggregate payments made to and
including the date of the Relevant Payment by all Guarantors in respect of the
Guaranteed Obligations (the aggregate amount of such deficit, the “Aggregate
Deficit Amount”) in an amount equal to (x) a fraction the numerator of
which is the Aggregate Excess Amount of such Guarantor and the denominator of
which is the Aggregate Excess Amount of all Guarantors multiplied by (y) the
Aggregate Deficit Amount of such other Guarantor.  A Guarantor’s right of contribution pursuant
to the preceding sentences shall arise at the time of each computation, subject
to adjustment at the time of each computation; provided, that no
Guarantor may take any action to enforce such right until the Guaranteed
Obligations have been irrevocably paid in full in cash and the Total Revolving
Commitment and all Letters of Credit have been terminated (or have expired,
undrawn), it being expressly recognized and agreed by all parties hereto that
any Guarantor’s right of contribution arising pursuant to this Section 18
against any other Guarantor 


 


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shall
be expressly junior and subordinate to such other Guarantor’s obligations and
liabilities in respect of the Guaranteed Obligations and any other obligations
owing under this Guaranty.  As used in
this Section 18 (i) each Guarantor’s “Contribution Percentage”
shall mean the percentage obtained by dividing (x) the Adjusted Net Worth
(as defined below) of such Guarantor by (y) the aggregate Adjusted Net
Worth of all Guarantors; (ii) the “Adjusted Net Worth” of each
Guarantor shall mean the greater of (x) the Net Worth (as defined below)
of such Guarantor and (y) zero; and (iii) the “Net Worth” of
each Guarantor shall mean the amount by which the fair saleable value of such
Guarantor’s assets on the date of any Relevant Payment exceeds its existing
debts and other liabilities (including contingent liabilities, but without
giving effect to any Guaranteed Obligations arising under this Guaranty) on
such date.  All parties hereto recognize
and agree that, except for any right of contribution arising pursuant to this Section 18,
each Guarantor who makes any payment in respect of the Guaranteed Obligations
shall have no right of contribution or subrogation against any other Guarantor
in respect of such payment until all of the Guaranteed Obligations have been
irrevocably paid in full in cash.  Each
of the Guarantors recognizes and acknowledges that the rights to contribution
arising hereunder shall constitute an asset in favor of the party entitled to
such contribution.  In this connection,
each Guarantor has the right to waive its contribution right against any
Guarantor to the extent that after giving effect to such waiver such Guarantor
would remain solvent, in the determination of the Required Lenders.


 


19.                                 LIMITATION ON
GUARANTEED OBLIGATIONS.  Each
Guarantor and each Secured Creditor (by its acceptance of the benefits of this
Guaranty) hereby confirms that it is its intention that this Guaranty not
constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy Code,
the Uniform Fraudulent Conveyance Act of any similar Federal or state law.  To effectuate the foregoing intention, each
Guarantor and each Secured Creditor (by its acceptance of the benefits of this
Guaranty) hereby irrevocably agrees that the Guaranteed Obligations guaranteed
by such Guarantor shall be limited to such amount as will, after giving effect
to such maximum amount and all other (contingent or otherwise) liabilities of
such Guarantor that are relevant under such laws and after giving effect to any
rights to contribution pursuant to any agreement providing for an equitable
contribution among such Guarantor and the other Guarantors, result in the
Guaranteed Obligations of such Guarantor in respect of such maximum amount not
constituting a fraudulent transfer or conveyance.


 


20.                                 COUNTERPARTS.  This Guaranty may be executed in any number
of counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument.  A set of counterparts executed by all the
parties hereto shall be lodged with the Borrowers and the Administrative Agent.


 


21.                                 PAYMENTS.  All payments made by any Guarantor hereunder
will be made without setoff, counterclaim or other defense and on the same
basis as payments are made by the Borrowers under Sections 3.03 and 3.04 of the
Credit Agreement.


 


22.                                 HEADINGS
DESCRIPTIVE.  The
headings of the several Sections of this Guaranty are inserted for convenience
only and shall not in any way affect the meaning or construction of any
provision of this Guaranty.


 


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