Exhibit 10.12


 


EXECUTION COPY


 


SUBSIDIARIES GUARANTY


 


SUBSIDIARIES
GUARANTY, (as amended, modified, restated and/or supplemented from time to
time, this “Guaranty”), dated as of March 17, 2004, made by and among
each of the undersigned guarantors (each, a “Guarantor” and, together
with any other entity that becomes a guarantor hereunder pursuant to Section 27
hereof, the “Guarantors”) in favor of Bank of America, N.A., as
Administrative Agent (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, EnerSys,
a Delaware corporation (“Holdings”), EnerSys Capital Inc., a Delaware
corporation (the “Borrower”), the lenders from time to time party
thereto (the “Lenders”), the Administrative Agent, Morgan Stanley Senior
Funding, Inc., as Syndication Agent and Lehman Commercial Paper, Inc., as
Documentation Agent, have entered into a Credit Agreement, dated as of March
17, 2004 (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
Borrower, all as contemplated therein (the Lenders, each Letter of Credit
Issuer, the Administrative Agent, the Collateral Agent, each other Agent and the
Pledgee are herein called the “Lender Creditors”);


 


WHEREAS, the
Borrower and/or one or more of its Subsidiaries may at any time and from time
to time (i) enter into one or more Interest Rate Protection Agreements or Other
Hedging Agreements with one or more Lenders or any affiliate thereof, (ii)
enter into one or more Commodities Agreements with one or more Lenders or any
affiliate thereof and/or (iii) maintain Existing Interest Rate Protection
Agreements with any financial institution (each such Lender, affiliate or
financial institution, even if the respective Lender subsequently ceases to be
a Lender under the Credit Agreement for any reason, together with such
Lender’s, affiliate’s or other financial institutions’ successors and assigns,
if any, collectively, the “Other Creditors” and, together with the
Lender Creditors, the “Secured Creditors” and each such Interest Rate
Protection Agreement (including each Existing Interest Rate Protection
Agreement), each such Commodities Agreement and each such Other Hedging
Agreement, a “Secured Hedging Agreement”);


 


WHEREAS, each
Guarantor is a direct or indirect Wholly-Owned Domestic Subsidiary of the
Borrower;


 


WHEREAS, it is a
condition precedent to the making of Loans to the Borrower and the issuance of,
and participation in, Letters of Credit for the account of the Borrower under
the Credit Agreement and to the Other Creditors maintaining Secured Hedging
Agreements that each Guarantor shall have executed and delivered to the
Administrative Agent this Guaranty; and


 

















 


WHEREAS, each
Guarantor will obtain benefits from the incurrence of Loans by the Borrower and
the issuance of, and participation in, Letters of Credit for the account of the
Borrower under the Credit Agreement and the entering into and maintaining of
Secured Hedging Agreements 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 Borrower and issue, and/or participate
in, Letters of Credit for the account of the Borrower and the Other Creditors
to enter into and/or maintain Secured Hedging Agreements with the Borrower
and/or one or more of its 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.             Each Guarantor, jointly and
severally, irrevocably, absolutely and unconditionally guarantees as a primary
obligor and not merely as surety:


 


(i)            to the Lender Creditors 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 Borrower under the Credit Agreement, and all reimbursement
obligations and Unpaid Drawings with respect to Letters of Credit and (y) all
other obligations (including, without limitation, obligations which, but for
the automatic stay under Section 362(a) of the Bankruptcy Code, would become
due), liabilities and indebtedness owing by the Borrower to the Lender
Creditors under the Credit Agreement and each other Credit Document to which
the Borrower is a party (including, without limitation, indemnities, Fees and
interest thereon (including, without limitation, any interest accruing after
the commencement of any bankruptcy, insolvency, receivership or similar
proceeding at the rate provided for in the Credit Agreement, whether or not
such interest is an allowed claim in any such proceeding)), 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 the Borrower with all of the terms, conditions and agreements
contained in all such Credit Documents (all such principal, premium, interest,
liabilities, indebtedness and obligations under this clause (i), except to the
extent consisting of obligations or liabilities with respect to Secured Hedging
Agreements, being herein collectively called the “Credit Document
Obligations”); and


 


(ii)           to each Other Creditor the full and
prompt payment when due (whether at the stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise) of all obligations
(including, without limitation, obligations which, but for the automatic stay
under Section 362(a) of the Bankruptcy Code, would become due), liabilities and
indebtedness (including, without limitation, any interest accruing after the
commencement of any bankruptcy, insolvency, receivership or similar proceeding
at the rate provided for in the respective Secured Hedging Agreements, whether
or not such interest is an allowed claim in any such proceeding) owing by the
Borrower and/or one or


 

















 


more of its
Subsidiaries under each Secured Hedging Agreement, whether now in existence or
hereafter arising, and the due performance and compliance by the Borrower and
each such Subsidiary with all of the terms, conditions and agreements contained
therein (all such obligations, liabilities and indebtedness being herein
collectively called the “Other Obligations”, and together with the
Credit Document Obligations are herein collectively called the “Guaranteed
Obligations”).


 


As used herein, the term
“Guaranteed Party” shall mean the Borrower and each Subsidiary of the
Borrower party to any each Secured Hedging Agreement with an Other
Creditor.  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, the Borrower or any other Guaranteed
Party, or against any security for the Guaranteed Obligations, or under any other
guaranty covering all or a portion of the Guaranteed Obligations.


 


2.             Additionally, each Guarantor,
jointly and severally, unconditionally, absolutely and irrevocably, guarantees
the payment of any and all Guaranteed Obligations whether or not due or payable
by the Borrower or any other Guaranteed Party upon the occurrence in respect of
the Borrower or any other Guaranteed Party of any of the events specified in
Section 10.05 of the Credit Agreement, and unconditionally, absolutely and
irrevocably, jointly and severally, promises to pay such Guaranteed Obligations
to the Secured Creditors, or order, on demand. 
This Guaranty is an absolute, present and continuing guaranty of prompt
payment and performance and not of collection.


 


3.             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 Borrower or any other Guaranteed Party 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 the Borrower or any other Guaranteed Party or by 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) any dissolution, termination or increase, decrease or change
in personnel by the Borrower or any other Guaranteed Party, (e) the failure of
the 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 the Borrower or
any other Guaranteed Party 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 6 hereof or (h)
any invalidity, rescission, irregularity or unenforceability of all or any part
of the Guaranteed Obligations or of any security therefor.


 


4.             The obligations of each Guarantor
hereunder are independent of the obligations of any other Guarantor, any other
guarantor, the Borrower or any other Guaranteed Party, 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, the Borrower or any
other Guaranteed Party and whether or not any other Guarantor, any other
guarantor, the Borrower or any other Guaranteed Party be joined in any such
action or actions.  Each Guarantor
waives (to the fullest extent permitted by applicable law) the benefits of any
statute of limitations affecting its liability hereunder or the enforcement
thereof.  Any payment by the Borrower or
any other Guaranteed Party or other circumstance which operates to toll any
statute of limitations as to the Borrower or such other Guaranteed Party shall
operate to toll the statute of limitations as to each Guarantor.


 


5.             Each Guarantor hereby waives (to
the fullest extent permitted by applicable law) notice of acceptance of this
Guaranty and notice of any liability to which it may apply, and waives
promptness, diligence, presentment, demand of payment, 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, the Borrower or any other Guaranteed Party) and
the 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.


 


6.             Any Secured Creditor may (except as
shall be required by applicable statute and cannot be waived) at any time 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 Borrower, any other Guaranteed Party, any other Credit
Party, any Subsidiary thereof, any other guarantor of the Borrower or others or
otherwise act or refrain from acting;


 

















 


(d)           release or substitute any one or more
endorsers, Guarantors, other guarantors, the Borrower, any other Guaranteed
Party 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 the Borrower or any other
Guaranteed Party to creditors of the Borrower or such other Guaranteed Party
other than the Secured Creditors;


 


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


 


(g)           consent to or waive any breach of, or
any act, omission or default under, any of the Secured Hedging Agreements, the
Credit Documents or any of the instruments or agreements referred to therein,
or otherwise amend, modify or supplement any of the Secured Hedging Agreements,
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
Borrower or any other Guaranteed Party 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 the Guarantor or
constitute a legal or equitable defense to or discharge of the liabilities of a
guarantor or surety or that might otherwise limit recourse against the
Guarantor).


 


7.             No invalidity, illegality,
irregularity or unenforceability 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.


 


8.             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 Borrower
or any other Guaranteed Party 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.


 


9.             Any indebtedness of the Borrower or
any other Guaranteed Party now or hereafter held by any Guarantor is hereby
subordinated to the indebtedness of the Borrower or such other Guaranteed Party
to the Secured Creditors; and such indebtedness of the Borrower or such other
Guaranteed Party 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 Borrower or such other Guaranteed Party 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 the Borrower
or any other Guaranteed Party 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 the 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 upon 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 Creditors as collateral security for any Guaranteed Obligations
thereafter existing.


 


10.           (a) 
Each Guarantor waives any right to require the Secured Creditors
to:  (i) proceed against the Borrower,
any other Guaranteed Party, any other Guarantor, any other guarantor of the
Guaranteed Obligations or any other party; (ii) proceed against or exhaust any
security held from the Borrower, any other Guaranteed Party, 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 Borrower, any other
Guaranteed Party, 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 Borrower, any other Guaranteed Party, 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
Borrower or any other Guaranteed Party other than payment in full in cash of
the Guaranteed Obligations.  The Secured
Creditors may, at their election, 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
may have against the Borrower, any other Guaranteed Party 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 Borrower, any other Guaranteed Party, any other
guarantor of the Guaranteed Obligations or any other party or any security.


 


(b)           Each Guarantor waives all
presentments, demands for performance, protests and notices, including, without
limitation, notices of nonperformance, notices of protest, notices of dishonor,
notices of acceptance of this Guaranty, and notices of the existence, creation
or incurring of new or additional indebtedness.  Each Guarantor has knowledge and assumes all responsibility for
being and keeping itself informed of the Borrower’s, each other Guaranteed
Party’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
the Borrower, each other Guaranteed Party and each other Guarantor on an
ongoing basis information relating thereto and the Borrower’s, each other
Guaranteed Party’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 Borrower, any other Guaranteed Party
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 Borrower, any other Guaranteed Party 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
afore-mentioned circumstances or risks.


 


(c)           Each Guarantor hereby acknowledges
and agrees that no Secured Creditor nor any other Person shall be under any
obligation (a) to marshal any assets in favor of the Guarantor or in payment of
any or all of the liabilities of any Guaranteed Party under the Documents or
the obligation of such Guarantor hereunder or (b) to pursue any other remedy
that the Guarantor may or may not be able to pursue itself any right to which
such Guarantor hereby waives.


 


(d)           Each Guarantor warrants and agrees
that each of the waivers set forth in Sections 4, 5 and in this Section 10 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.


 


11.           Notwithstanding anything to the
contrary contained elsewhere in this Guaranty, 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 (or,
after the date on which all Credit Document Obligations have been paid in full,
the holders of at least a majority of the outstanding Other Obligations) and
that no other Secured Creditor shall have any right individually to seek to
enforce or to enforce this Guaranty or to realize upon the security to be
granted by the Security Documents, it being understood and agreed that such
rights and remedies may be exercised by the Administrative Agent or the
Collateral Agent or, after all the Credit Document Obligations have been paid
in full, by the holders of at least a majority of the outstanding Other
Obligations, as the case may be, for the benefit of the Secured Creditors upon the
terms of this Guaranty and the Security Documents.  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 11 is
among and solely for the benefit of the Secured Creditors and that, if the
Required Lenders (or, after the date on which all Credit Document Obligations
have been paid in full, the holders of at least a majority of the outstanding
Other Obligations) so agree (without requiring the consent of any Guarantor),
this Guaranty may be directly enforced by any Secured Creditor.


 


12.           In order to induce the Lenders to
make Loans to, and issue Letters of Credit for the account of, the Borrower
pursuant to the Credit Agreement, and in order to induce the Other Creditors to
execute, deliver and perform the Secured Hedging Agreements, each Guarantor represents,
warrants and covenants that:


 


(a)           such Guarantor (i) is a duly
organized and validly existing corporation, partnership or limited liability
company, as the case may be, in good standing under the laws of the
jurisdiction of its organization, (ii) has the corporate, partnership or
limited liability company power and authority, as the case may be, to own its
property and assets and to transact the business in which it is engaged and
presently proposes to engage and (iii) is duly qualified and is authorized to
do business and is in good standing in each jurisdiction where the conduct of
its business requires such qualification except for failures to be so qualified
which, either individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect;


 


(b)           such Guarantor has the corporate,
partnership or limited liability company power and authority, as the case may
be, to execute, deliver and perform the terms and provisions of this Guaranty
and each other Document (such term, for purposes of this Guaranty, to mean each
Credit Document and each Secured Hedging Agreement to which it is a party and
has taken all necessary corporate, partnership or limited liability company
action, as the case may be, to authorize the execution, delivery and
performance by it of this Guaranty and each such other Document.


 

















 


(c)           such Guarantor has duly executed and
delivered this Guaranty and each other Document to which it is a party, and
this Guaranty and each such other Credit Document constitutes the legal, valid
and binding obligation of such Guarantor enforceable in accordance with its
terms, except to the extent that the enforceability hereof or thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws generally affecting creditors’ rights and by equitable principles
(regardless of whether enforcement is sought in equity or at law);


 


(d)           neither the execution, delivery or
performance by such Guarantor of this Guaranty or any other Document to which
it is a party, nor compliance by it with the terms and provisions hereof and
thereof, will (i) contravene any provision of any applicable law, statute, rule
or regulation or any applicable order, writ, injunction or decree of any court
or governmental instrumentality, (ii) conflict with or result in any breach of
any of the terms, covenants, conditions or provisions of, or constitute a
default under, or result in the creation or imposition of (or the obligation to
create or impose) any Lien (except pursuant to the Security Documents) upon any
of the property or assets of such Guarantor or any of its Subsidiaries pursuant
to the terms of any indenture, mortgage, deed of trust, loan agreement, credit
agreement, or any other material agreement, contract or instrument to which
such Guarantor or any of its Subsidiaries is a party or by which it or any of
its property or assets is bound or to which it may be subject or (iii) violate
any provision of the certificate or articles of incorporation, by-laws,
partnership agreement or limited liability company agreement (or equivalent
organizational documents), as the case may be, of such Guarantor or any of its
Subsidiaries;


 


(e)           no order, consent, approval, license,
authorization or validation of, or filing, recording or registration with
(except as have been obtained or made prior to the date when required and which
remain in full force and effect), or exemption by, any governmental or public
body or authority, or any subdivision thereof, is required to authorize, or is
required in connection with, (i) the execution, delivery and performance of
this Guaranty by such Guarantor or any other Document to which such Guarantor
is a party or (ii) the legality, validity, binding effect or enforceability of
this Guaranty or any other Document to which such Guarantor is a party; and


 


(f)            there are no actions, suits or
proceedings pending or, to such Guarantor’s knowledge, threatened (i) with
respect to this Guaranty or any other Document to which such Guarantor is a
party, (ii) with respect to such Guarantor or any of its Subsidiaries that,
either individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect or (iii) that could reasonably be expected to have a
material adverse effect on the rights or remedies of the Secured Creditors or
on the ability of such Guarantor to perform its obligations to the Secured
Creditors hereunder and under the other Credit Documents to which it is a
party.


 


13.           Each Guarantor covenants and agrees
that on and after the Effective Date and until the termination of the Total
Commitment and all Secured Hedging Agreements and until such time as no Note or
Letter of Credit remains outstanding (other than Letters of Credit, together
with all Fees that have accrued and will accrue thereon through the stated
termination


 

















 


date of such Letters of Credit,
which have been supported in a manner satisfactory to the Letter of Credit
Issuer in its sole and absolute discretion) and all Guaranteed Obligations have
been paid in full (other than indemnities described in Sections 12.07 and 13.05
of the Credit Agreement and analogous provisions in the Security Documents
which are not then due and payable), such Guarantor will comply, and will cause
each of its Subsidiaries to comply, with all of the applicable provisions,
covenants and agreements contained in Sections 8 and 9 of the Credit Agreement,
and 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 8 and 9 of the Credit
Agreement, and so that no Default or Event of Default, is caused by the actions
of such Guarantor or any of its Subsidiaries.


 


14.           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 Secured Creditor in
connection with the enforcement of this Guaranty and the protection of the
Secured Creditors’ rights hereunder and any amendment, waiver or consent
relating hereto (including, in each case, without limitation, the reasonable
fees and disbursements of counsel (including in-house counsel) employed by the
Collateral Agent, the Administrative Agent and each Secured Creditor).


 


15.           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.


 


16.           Subject to Section 22 hereof, 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 either (x) the Required Lenders (or, to the extent
required by Section 13.01 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 or (y) the holders of at least a majority of
the outstanding Other Obligations at all times after the time at which all
Credit Document Obligations have been paid in full; provided, that any
change, waiver, modification or variance affecting the rights and benefits of a
single Class (as defined below) of Secured Creditors (and not all Secured
Creditors in a like or similar manner) shall also require the written consent
of the Requisite Creditors (as defined below) of such Class of Secured
Creditors (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).  For the purpose of this Guaranty, the term “Class”
shall mean each class of Secured Creditors, i.e., whether (x) the Lender
Creditors as holders of the Credit Document Obligations or (y) the Other
Creditors as the holders of the Other Obligations.  For the purpose of this Guaranty, the term “Requisite
Creditors” of any Class shall mean (x) with respect to the Credit Document
Obligations, the Required Lenders (or, to the extent required by Section 13.01
of the Credit Agreement, each Lender) and (y) with respect to the Other
Obligations, the holders of at least a majority of all obligations outstanding
from time to time under the Secured Hedging Agreements.


 

















 


17.           Each Guarantor acknowledges that an
executed (or conformed) copy of each of the Credit Documents, Secured Hedging
Agreements has been made available to a senior officer of such Guarantor and
such officer is familiar with the contents thereof.


 


18.           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 and any payment default under any Secured Hedging Agreement
continuing after any applicable grace period), 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 unmatured.


 


19.           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 Lender
Creditor, as provided in the Credit Agreement, (ii) in the case of any Guarantor,
at its address set forth opposite its signature page below, and (iii) in the
case of any Other Creditor, at such address as such Other Creditor shall have
specified in writing to the Guarantors; or in any case at such other address as
any of the Persons listed above may hereafter notify the others in writing.


 


20.           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 Borrower or any other Guaranteed Party),
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, any
Secured Hedging Agreement or any other instrument evidencing any liability of
the Borrower or any other Guaranteed Party, 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.


 

















 


21.           (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.  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 County 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)           Each Guarantor hereby irrevocably
waives (to the fullest 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 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.


 


22.           In the event that all of the capital
stock or other equity interests of one or more Guarantors is sold or otherwise
disposed of or liquidated in compliance with the requirements of Section 9.02
of the Credit Agreement (or such sale, other disposition or liquidation has
been approved in writing by the Required Lenders (or all the Lenders if
required by Section 13.01 of the Credit Agreement)) and the proceeds of such
sale, disposition or liquidation are applied in accordance with the provisions
of the Credit Agreement, to the extent applicable, such Guarantor shall, upon
consummation of such sale or other disposition (except to the extent that such
sale or disposition is to Holdings or another Subsidiary thereof), be released


 

















 


from this Guaranty
automatically and without further action and this Guaranty shall, as to each
such Guarantor or Guarantors, terminate, and have no further force or effect
(it being understood and agreed that the sale of one or more Persons that own,
directly or indirectly, all of the capital stock or other Equity Interests of
any Guarantor shall be deemed to be a sale of such Guarantor for the purposes
of this Section 22).


 


23.           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 shall 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 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 to 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, it being
expressly recognized and agreed by all parties hereto that any Guarantor’s
right of contribution arising pursuant to this Section 23 against any other
Guarantor 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 23:  (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
or any guaranteed obligations arising under any guaranty of Refinancing Senior
Subordinated Notes, if any) on such date. 
Notwithstanding anything to the contrary contained above, any Guarantor
that is released from this Guaranty pursuant to Section 22 hereof shall
thereafter have no contribution obligations, or rights, pursuant to this
Section 23, and at the time of any such release, if the released Guarantor had
an Aggregate Excess Amount or an Aggregate Deficit Amount, same shall be deemed
reduced to $0, and the contribution rights and obligations of the remaining
Guarantors shall be recalculated on the respective date of release (as
otherwise provided above) based on the payments made hereunder by the remaining
Guarantors.  All parties hereto
recognize and agree


 

















 


that, except for any right of
contribution arising pursuant to this Section 23 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.


 


24.           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 (it being understood that it
is the intention of the parties to this Guaranty and the parties to any
guaranty of the Refinancing Senior Subordinated Notes that, to the maximum
extent permitted under applicable laws, the liabilities in respect of the
guarantees of the Refinancing Senior Subordinated Notes shall not be included
for the foregoing purposes and that, if any reduction is required to the amount
guaranteed by any Guarantor hereunder
and with respect to the Refinancing Senior Subordinated Notes, its
guarantee of amounts owing in respect of the Refinancing Senior Subordinated
Notes shall first be reduced) 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. 
Notwithstanding the provisions of the two preceding sentences, as
between the Secured Creditors and the holders of any Refinancing Senior
Subordinated Notes, it is agreed (and the provisions of the relevant indentures
or other agreements governing the Refinancing Senior Subordinated Notes shall
so provide) that any diminution (whether pursuant to court decree or otherwise)
of any Guarantor’s obligation to make any distribution or payment pursuant to
this Guaranty shall have no force or effect for purposes of the subordination
provisions contained in the respective indenture or other agreements governing
any such Refinancing Senior Subordinated Notes, and that any payments received
in respect of a Guarantor’s obligations with respect to any Refinancing Senior
Subordinated Notes shall be turned over to the holders of the “Guarantor Senior
Debt” (or similar term) (as defined in each indenture or other agreements
governing any Refinancing Senior Subordinated Notes) (or obligations which
would have constituted “Guarantor Senior Debt” if same had not been reduced or
disallowed) of such Guarantor (which “Guarantor Senior Debt” shall be
calculated as if there were no diminution thereto pursuant to this Section 24
or for any other reason other than the irrevocable payment in full in cash of
the respective obligations which would otherwise have constituted “Guarantor
Senior Debt”) until all such “Guarantor Senior Debt” (or obligations which
would have constituted “Guarantor Senior Debt” if same had not been reduced or
disallowed) has been irrevocably paid in full in cash.


 

















 


25.           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 Borrower and the
Administrative Agent.


 


26.           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 Borrower under Sections 4.03 and 4.04 of
the Credit Agreement.


 


27.           It is understood and agreed that any
Subsidiary of Holdings that is required to execute a counterpart of this
Guaranty after the date hereof pursuant to the Credit Agreement shall become a
Guarantor hereunder by (x) executing and delivering a counterpart hereof or an
appropriate assumption agreement to the Administrative Agent, in each case as
may be requested by (and in form and substance satisfactory to) the
Administrative Agent and (y) taking all actions as specified in this Guaranty
as would have been taken by such Guarantor had it been an original party to
this Guaranty, in each case with all documents and actions required to be taken
to be taken above to the reasonable satisfaction of the Administrative Agent.


 


*  *  *


 

















 


IN WITNESS
WHEREOF, each Guarantor has caused this Guaranty to be executed and delivered
as of the date first above written.


 


	
  Address:

  	
   

  
	
   

  	
   

  
	
  2366
  Bernville Road

  	
  ENERSYS
  DELAWARE INC.,

  
	
  Reading, PA,
  19605

  	
  as a
  Guarantor

  
	
  Telephone:  (610) 208-1991

  	
   

  
	
  Facsimile:  (610) 208-1671

  	
   

  
	
  Attention:
  Michael T. Philion

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
  2366
  Bernville Road

  	
  ESFINCO,
  INC.,

  
	
  Reading, PA,
  19605

  	
  as a
  Guarantor

  
	
  Telephone:  (610) 208-1991

  	
   

  
	
  Facsimile:  (610) 208-1671

  	
   

  
	
  Attention:
  Michael T. Philion

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
  2366
  Bernville Road

  	
  ESRMCO,
  INC.,

  
	
  Reading, PA,
  19605

  	
  as a Guarantor

  
	
  Telephone:  (610) 208-1991

  	
   

  
	
  Facsimile:  (610) 208-1671

  	
   

  
	
  Attention:
  Michael T. Philion

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
  2366
  Bernville Road

  	
  HAWKER
  ENERGY PRODUCTS INC.,

  
	
  Reading, PA,
  19605

  	
  as a
  Guarantor

  
	
  Telephone:  (610) 208-1991

  	
   

  
	
  Facsimile:  (610) 208-1671

  	
   

  
	
  Attention:
  Michael T. Philion

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 

















 


	
  2366
  Bernville Road

  	
  HAWKER POWER
  SYSTEMS, INC.,

  
	
  Reading, PA,
  19605

  	
  as a
  Guarantor

  
	
  Telephone:  (610) 208-1991

  	
   

  
	
  Facsimile:  (610) 208-1671

  	
   

  
	
  Attention:
  Michael T. Philion

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
  2366
  Bernville Road

  	
  POWERSAFE
  STANDBY BATTERIES INC.,

  
	
  Reading, PA,
  19605

  	
  as a
  Guarantor

  
	
  Telephone:  (610) 208-1991

  	
   

  
	
  Facsimile:  (610) 208-1671

  	
   

  
	
  Attention:
  Michael T. Philion

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
  2366
  Bernville Road

  	
  HAWKER POWERSOURCE,
  INC.,

  
	
  Reading, PA,
  19605

  	
  as a
  Guarantor

  
	
  Telephone:  (610) 208-1991

  	
   

  
	
  Facsimile:  (610) 208-1671

  	
   

  
	
  Attention:
  Michael T. Philion

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
  2366
  Bernville Road

  	
  NEW PACIFICO
  REALTY, INC.,

  
	
  Reading, PA,
  19605

  	
  as a
  Guarantor

  
	
  Telephone:  (610) 208-1991

  	
   

  
	
  Facsimile:  (610) 208-1671

  	
   

  
	
  Attention:
  Michael T. Philion

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 

















 


	
  Accepted and
  Agreed to:

  	
   

  
	
   

  	
   

  
	
  BANK OF
  AMERICA, N.A.,

  	
   

  
	
  as
  Administrative Agent

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
  ,

  	
   

  
	
  Name:

  	
   

  
	
  Title: