Guaranty And Negative Pledge Agreement

GUARANTY AND NEGATIVE PLEDGE AGREEMENT


Dated as of November 1, 1998


For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and to induce GE Capital Public Finance, Inc., a Delaware corporation (herein, with its participants, successors and assigns, "Lender"), at its option, to provide financing to or for the account of Arkansas Development Finance Authority ("Authority") and Quail Piping Products, Inc. ("Borrower"), or to engage in any other transactions with Borrower and Authority, the undersigned hereby: (a) absolutely and unconditionally guarantees to Lender the full and prompt payment when due, whether at maturity or earlier by reason of acceleration or otherwise, of any and all present and future debts, liabilities and obligations owed by Borrower or Authority to Lender evidenced by or arising out of the Loan Agreement (Equipment) dated as of November 1, 1997 and the Loan Agreement (Real Estate) dated as of November 1, 1997, both among Lender, Authority and Borrower (the "Loan Agreements"), and any and all extensions, renewals, modifications, supplements or amendments thereto or thereof and any related agreements (whether such debt, liability or obligation now exists or is hereafter created or incurred, and whether it is or may be direct or indirect, due or to become due, absolute or contingent, primary or secondary, liquidated or unliquidated, or joint, several or joint and several, all such debts, liabilities and obligations being hereinafter collectively referred to as the "Indebtedness"), (b) absolutely and unconditionally guarantees to Lender the full and timely performance by Borrower of all of its obligations under the Loan Agreements, and (c) so long as any Indebtedness shall remain outstanding, agrees and covenants that it will at all times own not less than 50% of the outstanding common stock of Borrower.


1. The undersigned represents and warrants to Lender that (a) the undersigned is a corporation duly organized and existing in good standing and has full power and authority to make and deliver this Guaranty and Negative Pledge Agreement; (b) the execution, delivery and performance of this Guaranty and Negative Pledge Agreement by the undersigned have been duly authorized by all necessary action of its directors and do not and will not violate the provisions of, or constitute a default under, any presently applicable law or its articles of incorporation or bylaws or any agreement presently binding on it; (c) this Guaranty and Negative Pledge Agreement has been duly executed and delivered by the authorized officers of the undersigned and constitutes its lawful, binding and legally enforceable obligation except to the extent limited by bankruptcy, reorganization or other laws of general application relating to or effecting the enforcement of creditors' rights; and (d) the authorization, execution, delivery and performance of this Guaranty and Negative Pledge Agreement do not require notification to, registration with, or consent or approval by, any federal, state or local regulatory body or administrative agency.


2. No act or thing need occur to establish the liability of the undersigned hereunder, and no act or thing, except full payment and discharge of all Indebtedness, shall in any way exonerate the undersigned hereunder or modify, reduce, limit or release the liability of the


undersigned hereunder. This is an absolute, unconditional and continuing guaranty of payment of the Indebtedness.


3. The undersigned represents and warrants to Lender that the undersigned has a direct and substantial economic interest in Borrower and expects to derive substantial benefits therefrom and from any loans, credit transactions, financial accommodations, discounts, purchases of property and other transactions and events resulting in the creation of Indebtedness guaranteed hereby, and that this Guaranty and Negative Pledge Agreement is given for a corporate purpose. This Guaranty and Negative Pledge Agreement shall be effective and enforceable by Lender without regard to the receipt, nature or value of any such benefits.


4. If the undersigned shall be dissolved or shall be or become bankrupt or insolvent (however defined), then Lender shall have the right to declare immediately due and payable, and the undersigned shall forthwith pay to Lender, the full amount of all Indebtedness whether due and payable or unmatured. If the undersigned voluntarily commences or there is commenced involuntarily against the undersigned a case under the United States Bankruptcy Code, the full amount of all Indebtedness, whether due and ...