Exhibit 10.11
GUARANTY
New York, New York May 28, 2004
FOR VALUE RECEIVED, and in consideration of certain Series A Preferred
Stock to be issued to Laurus Master Fund, Ltd. ("Laurus") by SDA AMERICA, INC.,
a Delaware corporation (the "Issuer") and in consideration of other obligations
of Secured Digital Applications, Inc., a Delaware corporation (the "Company"),
to be performed for the benefit of Xxxxxx from time to time and at any time and
for other good and valuable consideration and to induce Xxxxxx, in its
discretion, to purchase such Series A Preferred Stock or make other extensions
of credit and to make or grant such renewals, extensions, releases of collateral
or relinquishments of legal rights as Xxxxxx may deem advisable, each of the
undersigned (and each of them if more than one, the liability under this
Guaranty being joint and several) (jointly and severally referred to as
"Guarantors" or "the undersigned") unconditionally guaranties to Laurus, its
successors, endorsees and assigns the prompt payment when due (whether by
acceleration or otherwise) of all present and future obligations and liabilities
of any and all kinds of the Company and/or the Issuer to Laurus and of all
instruments of any nature evidencing or relating to any such obligations and
liabilities upon which the Company and/or the Issuer or one or more parties and
the Company and/or the Issuer is or may become liable to Laurus, whether
incurred by the Company and/or the Issuer as maker, endorser, drawer, acceptor,
guarantors , accommodation party or otherwise, and whether due or to become due,
secured or unsecured, absolute or contingent, joint or several, and however or
whenever acquired by Xxxxxx, whether arising under, out of, or in connection
with (i) that certain Securities Purchase Agreement dated as of the date hereof
by and between the Company, the Issuer and Xxxxxx related to the issuance of the
Series A Preferred and the Warrants referred to therein (the "Series A
Securities Purchase Agreement"), (ii) the Related Agreements referred to in the
Series A Securities Purchase Agreement, (iii) that certain Securities Purchase
Agreement dated as of the date hereof by and between the Company and Laurus
related to the issuance of the Note and the Warrants referred to therein (the
"Term Note Securities Purchase Agreement") (the Series A Securities Purchase
Agreement, each Related Agreement referred to in the Series A Securities
Purchase Agreement, the Term Note Securities Purchase Agreement and each Related
Agreement referred to in the Term Note Securities Purchase Agreement, as each
may be amended, modified, restated or supplemented from time to time, are
collectively referred to herein as the "Documents"), or any documents,
instruments or agreements relating to or executed in connection with the
Documents or any documents, instruments or agreements referred to therein or
otherwise, or any other indebtedness, obligations or liabilities of the Company
and/or the Issuer to Laurus, whether now existing or hereafter arising, direct
or indirect, liquidated or unliquidated, absolute or contingent, due or not due
and whether under, pursuant to or evidenced by a note, agreement, guaranty,
instrument or otherwise (all of which are herein collectively referred to as the
"Obligations"), and irrespective of the genuineness, validity, regularity or
enforceability of such Obligations, or of any instrument evidencing any of the
Obligations or of any collateral therefor or of the existence or extent of such
collateral, and irrespective of the allowability, allowance or disallowance of
any or all of the Obligations in any case commenced by or against the Company
and/or the Issuer under Title 11, United States Code, including, without
limitation, obligations or indebtedness of the Company and/or the Issuer for
post-petition interest, fees, costs and charges that would have accrued or been
added to the Obligations but for the commencement of such case. Terms not
otherwise defined herein shall have the meaning assigned such terms in the
Series A Securities Purchase Agreement or the Term Note Securities Purchase
Agreement, as applicable. In furtherance of the foregoing, the undersigned
xxxxxx agrees as follows:
1. No Impairment. Laurus may at any time and from time to time, either
before or after the maturity thereof, without notice to or further consent of
the undersigned, extend the time of payment of, exchange or surrender any
collateral for, renew or extend any of the Obligations or increase or decrease
the interest rate thereon, or any other agreement with the Company and/or the
Issuer or with any other party to or person liable on any of the Obligations, or
interested therein, for the extension, renewal, payment, compromise, discharge
or release thereof, in whole or in part, or for any modification of the terms
thereof or of any agreement between Laurus and the Company and/or the Issuer or
any such other party or person, or make any election of rights Laurus may deem
desirable under the United States Bankruptcy Code, as amended, or any other
federal or state bankruptcy, reorganization, moratorium or insolvency law
relating to or affecting the enforcement of creditors' rights generally (any of
the foregoing, an "Insolvency Law") without in any way impairing or affecting
this Guaranty. This instrument shall be effective regardless of the subsequent
incorporation, merger or consolidation of the Company and/or the Issuer, or any
change in the composition, nature, personnel or location of the Company and/or
the Issuer and shall extend to any successor entity to the Company and/or the
Issuer, including a the Company and/or the Issuer in possession or the like
under any Insolvency Law.
2. Guaranty Absolute. Subject to Section 5(c), each of the undersigned
jointly and severally guarantees that the Obligations will be paid strictly in
accordance with the terms of the Documents and/or any other document, instrument
or agreement creating or evidencing the Obligations, regardless of any law,
regulation or order now or hereafter in effect in any jurisdiction affecting any
of such terms or the rights of the Company and/or the Issuer with respect
thereto. Guarantors hereby knowingly accept the full range of risk encompassed
within a contract of "continuing guaranty" which risk includes the possibility
that the Company and/or the Issuer will contract additional indebtedness or
issue additional preferred stock for which Guarantors may be liable hereunder
after the Company's and/or the Issuer's financial condition or ability to pay
its lawful debts when they fall due has deteriorated, whether or not the Company
and/or the Issuer has properly authorized incurring such additional
indebtedness. The undersigned acknowledge that (i) no oral representations,
including any representations to extend credit or provide other financial
accommodations to the Company and/or the Issuer, have been made by Xxxxxx to
induce the undersigned to enter into this Guaranty and (ii) any extension of
credit to the Company and/or the Issuer shall be governed solely by the
provisions of the Documents. The liability of each of the undersigned under this
Guaranty shall be absolute and unconditional, in accordance with its terms, and
shall remain in full force and effect without regard to, and shall not be
released, suspended, discharged, terminated or otherwise affected by, any
circumstance or occurrence whatsoever, including, without limitation: (a) any
waiver, indulgence, renewal, extension, amendment or modification of or
addition, consent or supplement to or deletion from or any other action or
inaction under or in respect of the Documents or any other instruments or
agreements relating to the Obligations or any assignment or transfer of any
thereof, (b) any lack of validity or enforceability of any Document or other
documents, instruments or agreements relating to the Obligations or any
assignment or transfer of any thereof, (c) any furnishing of any additional
security to Laurus or its assignees or any acceptance thereof or any release of
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any security by Laurus or its assignees, (d) any limitation on any party's
liability or obligation under the Documents or any other documents, instruments
or agreements relating to the Obligations or any assignment or transfer of any
thereof or any invalidity or unenforceability, in whole or in part, of any such
document, instrument or agreement or any term thereof, (e) any bankruptcy,
insolvency, reorganization, composition, adjustment, dissolution, liquidation or
other like proceeding relating to the Company and/or the Issuer, or any action
taken with respect to this Guaranty by any trustee or receiver, or by any court,
in any such proceeding, whether or not the undersigned shall have notice or
knowledge of any of the foregoing, (f) any exchange, release or nonperfection of
any collateral, or any release, or amendment or waiver of or consent to
departure from any guaranty or security, for all or any of the Obligations or
(g) any other circumstance which might otherwise constitute a defense available
to, or a discharge of, the undersigned. Any amounts due from the undersigned to
Laurus shall bear interest until such amounts are paid in full at the highest
rate then applicable to the Obligations. Obligations include post-petition
interest whether or not allowed or allowable.
3. Waivers.
(a) This Guaranty is a guaranty of payment and not of collection. Laurus
shall be under no obligation to institute suit, exercise rights or remedies or
take any other action against the Company and/or the Issuer or any other person
liable with respect to any of the Obligations or resort to any collateral
security held by it to secure any of the Obligations as a condition precedent to
the undersigned being obligated to perform as agreed herein and each of the
Guarantors hereby waives any and all rights which it may have by statute or
otherwise which would require Laurus to do any of the foregoing. Each of the
Guarantors further consents and agrees that Xxxxxx shall be under no obligation
to marshal any assets in favor of Guarantors, or against or in payment of any or
all of the Obligations. The undersigned hereby waives all suretyship defenses
and any rights to interpose any defense, counterclaim or offset of any nature
and description which the undersigned may have or which may exist between and
among Laurus, the Company, the Issuer and/or the undersigned with respect to the
undersigned's obligations under this Guaranty, or which the Company and/or the
Issuer may assert on the underlying debt, including but not limited to failure
of consideration, breach of warranty, fraud, payment (other than cash payment in
full of the Obligations), statute of frauds, bankruptcy, infancy, statute of
limitations, accord and satisfaction, and usury.
(b) Each of the undersigned further waives (i) notice of the acceptance of
this Guaranty, of the making of any such loans or extensions of credit, and of
all notices and demands of any kind to which the undersigned may be entitled,
including, without limitation, notice of adverse change in the Company and/or
the Issuer's financial condition or of any other fact which might materially
increase the risk of the undersigned and (ii) presentment to or demand of
payment from anyone whomsoever liable upon any of the Obligations, protest,
notices of presentment, non-payment or protest and notice of any sale of
collateral security or any default of any sort.
(c) Notwithstanding any payment or payments made by the undersigned
hereunder, or any setoff or application of funds of the undersigned by Xxxxxx,
the undersigned shall not be entitled to be subrogated to any of the rights of
Xxxxxx against the Company and/or the Issuer or against any collateral or
guarantee or right of offset held by Xxxxxx for the payment of the Obligations,
nor shall the undersigned seek or be entitled to seek any contribution or
reimbursement from the Company and/or the Issuer in respect of payments made by
the undersigned hereunder, until all amounts owing to Laurus by the Company
and/or the Issuer on account of the Obligations are paid in full and Laurus'
obligation to extend credit pursuant to the Documents have been terminated. If,
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notwithstanding the foregoing, any amount shall be paid to the undersigned on
account of such subrogation rights at any time when all of the Obligations shall
not have been paid in full and Laurus' obligation to extend credit pursuant to
the Documents shall not have been terminated, such amount shall be held by the
undersigned in trust for Laurus, segregated from other funds of the undersigned,
and shall forthwith upon, and in any event within two (2) business days of,
receipt by the undersigned, be turned over to Xxxxxx in the exact form received
by the undersigned (duly endorsed by the undersigned to Laurus, if required), to
be applied against the Obligations, whether matured or unmatured, in such order
as Laurus may determine, subject to the provisions of the Documents. Any and all
present and future debts and obligations of the Company and/or the Issuer to any
of the undersigned are hereby waived and postponed in favor of, and subordinated
to the full payment and performance of, all present and future debts and
Obligations of the Company and/or the Issuer to Laurus.
4. Security. All sums at any time to the credit of the undersigned and any
property of the undersigned in Laurus' possession or in the possession of any
bank, financial institution or other entity that directly or indirectly, through
one or more intermediaries, controls or is controlled by, or is under common
control with, Laurus (each such entity, an "Affiliate") shall be deemed held by
Laurus or such Affiliate, as the case may be, as security for any and all of the
undersigned's obligations to Laurus and to any Affiliate of Laurus, no matter
how or when arising and whether under this or any other instrument, agreement or
otherwise.
5. Representations and Warranties. Each of the undersigned respectively,
hereby jointly and severally represents and warrants (all of which
representations and warranties shall survive until all Obligations are
indefeasibly satisfied in full and the Documents have been irrevocably
terminated), that:
(a) Corporate Status. It is a corporation, partnership or limited liability
company, as the case may be, duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization indicated on the
signature page hereof and has full power, authority and legal right to own its
property and assets and to transact the business in which it is engaged.
(b) Authority and Execution. It has full power, authority and legal right
to execute and deliver, and to perform its obligations under, this Guaranty and
has taken all necessary corporate, partnership or limited liability company, as
the case may be, action to authorize the execution, delivery and performance of
this Guaranty.
(c) Legal, Xxxxx and Binding Character. This Guaranty constitutes its
legal, valid and binding obligation enforceable in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting the
enforcement of creditor's rights and general principles of equity that restrict
the availability of equitable or legal remedies.
(d) Violations. The execution, delivery and performance of this Guaranty
will not violate any requirement of law applicable to it or any contract,
agreement or instrument to it is a party or by which it or any of its property
is bound or result in the creation or imposition of any mortgage, lien or other
encumbrance other than to Laurus on any of its property or assets pursuant to
the provisions of any of the foregoing, which, in any of the foregoing cases,
could reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect.
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(e) Consents or Approvals. No consent of any other person or entity
(including, without limitation, any creditor of the undersigned) and no consent,
license, permit, approval or authorization of, exemption by, notice or report
to, or registration, filing or declaration with, any governmental authority is
required in connection with the execution, delivery, performance, validity or
enforceability of this Guaranty by it, except to the extent that the failure to
obtain any of the foregoing could not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect.
(f) Litigation. No litigation, arbitration, investigation or administrative
proceeding of or before any court, arbitrator or governmental authority, bureau
or agency is currently pending or, to the best of its knowledge, threatened (i)
with respect to this Guaranty or any of the transactions contemplated by this
Guaranty or (ii) against or affecting it, or any of its property or assets,
which, in each of the foregoing cases, if adversely determined, could reasonably
be expected to have a Material Adverse Effect.
(g) Financial Benefit. It has derived or expects to derive a financial or
other advantage from each and every loan, advance or extension of credit made
under the Documents or other Obligation incurred by the Company and/or the
Issuer to Laurus.
6. Acceleration.
(a) If any breach of any covenant or condition or other event of default
shall occur and be continuing under any agreement made by the Company and/or the
Issuer or any of the undersigned to Laurus, or either the Company and/or the
Issuer or any of the undersigned should at any time become insolvent, or make a
general assignment, or if a proceeding in or under any Insolvency Law shall be
filed or commenced by, or in respect of, any of the undersigned, or if a notice
of any lien, levy, or assessment is filed of record with respect to any assets
of any of the undersigned by the United States of America or any department,
agency, or instrumentality thereof, or if any taxes or debts owing at any time
or times hereafter to any one of them becomes a lien or encumbrance upon any
assets of the undersigned in Laurus' possession, or otherwise, any and all
Obligations shall for purposes hereof, at Laurus' option, be deemed due and
payable without notice notwithstanding that any such Obligation is not then due
and payable by the Company and/or the Issuer.
(b) Each of the undersigned will promptly notify Laurus of any default by
such undersigned in its respective performance or observance of any term or
condition of any agreement to which the undersigned is a party if the effect of
such default is to cause, or permit the holder of any obligation under such
agreement to cause, such obligation to become due prior to its stated maturity
and, if such an event occurs, Xxxxxx shall have the right to accelerate such
undersigned's obligations hereunder.
7. Payments from Guarantors. Laurus, in its sole and absolute discretion,
with or without notice to the undersigned, may apply on account of the
Obligations any payment from the undersigned or any other guarantors, or amounts
realized from any security for the Obligations, or may deposit any and all such
amounts realized in a non-interest bearing cash collateral deposit account to be
maintained as security for the Obligations.
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8. Costs. The undersigned shall pay on demand, all costs, fees and expenses
(including expenses for legal services of every kind) relating or incidental to
the enforcement or protection of the rights of Laurus hereunder or under any of
the Obligations.
9. No Termination. This is a continuing irrevocable guaranty and shall
remain in full force and effect and be binding upon the undersigned, and each of
the undersigned's successors and assigns, until all of the Obligations have been
paid in full and Laurus' obligation to extend credit pursuant to the Documents
has been irrevocably terminated. If any of the present or future Obligations are
guarantied by persons, partnerships or corporations in addition to the
undersigned, the death, release or discharge in whole or in part or the
bankruptcy, merger, consolidation, incorporation, liquidation or dissolution of
one or more of them shall not discharge or affect the liabilities of any
undersigned under this Guaranty.
10. Recapture. Anything in this Guaranty to the contrary notwithstanding,
if Xxxxxx receives any payment or payments on account of the liabilities
guaranteed hereby, which payment or payments or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver, or any other party under
any Insolvency Law, common law or equitable doctrine, then to the extent of any
sum not finally retained by Xxxxxx, the undersigned's obligations to Xxxxxx
shall be reinstated and this Guaranty shall remain in full force and effect (or
be reinstated) until payment shall have been made to Laurus, which payment shall
be due on demand.
11. Books and Records. The books and records of Xxxxxx showing the account
between Laurus and the Company and/or the Issuer shall be admissible in evidence
in any action or proceeding, shall be binding upon the undersigned for the
purpose of establishing the items therein set forth and shall constitute prima
facie proof thereof.
12. No Waiver. No failure on the part of Laurus to exercise, and no delay
in exercising, any right, remedy or power hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise by Xxxxxx of any right, remedy
or power hereunder preclude any other or future exercise of any other legal
right, remedy or power. Each and every right, remedy and power hereby granted to
Laurus or allowed it by law or other agreement shall be cumulative and not
exclusive of any other, and may be exercised by Xxxxxx at any time and from time
to time.
13. Waiver of Jury Trial. EACH OF THE UNDERSIGNED DOES HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BASED ON OR WITH RESPECT TO THIS GUARANTY OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR RELATING OR INCIDENTAL HERETO. THE UNDERSIGNED DOES
HEREBY CERTIFY THAT NO REPRESENTATIVE OR AGENT OF XXXXXX HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT LAURUS WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION.
14. Governing Law; Jurisdiction; Amendments. THIS INSTRUMENT CANNOT BE
CHANGED OR TERMINATED ORALLY, AND SHALL BE GOVERNED, CONSTRUED AND INTERPRETED
AS TO VALIDITY, ENFORCEMENT AND IN ALL OTHER RESPECTS IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT HAVING EFFECT TO PRINCIPLES OF CONFLICTS
OF LAWS. EACH OF THE UNDERSIGNED EXPRESSLY CONSENTS TO THE JURISDICTION AND
VENUE OF THE SUPREME COURT OF THE STATE OF NEW YORK, COUNTY OF NEW YORK, AND OF
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR ALL
PURPOSES IN CONNECTION HEREWITH. ANY JUDICIAL PROCEEDING BY THE UNDERSIGNED
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AGAINST LAURUS INVOLVING, DIRECTLY OR INDIRECTLY ANY MATTER OR CLAIM IN ANY WAY
ARISING OUT OF, RELATED TO OR CONNECTED HEREWITH SHALL BE BROUGHT ONLY IN THE
SUPREME COURT OF THE STATE OF NEW YORK, COUNTY OF NEW YORK OR THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK. THE UNDERSIGNED FURTHER
CONSENTS THAT ANY SUMMONS, SUBPOENA OR OTHER PROCESS OR PAPERS (INCLUDING,
WITHOUT LIMITATION, ANY NOTICE OR MOTION OR OTHER APPLICATION TO EITHER OF THE
AFOREMENTIONED COURTS OR A JUDGE THEREOF) OR ANY NOTICE IN CONNECTION WITH ANY
PROCEEDINGS HEREUNDER, MAY BE SERVED INSIDE OR OUTSIDE OF THE STATE OF NEW YORK
OR THE SOUTHERN DISTRICT OF NEW YORK BY REGISTERED OR CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, OR BY PERSONAL SERVICE PROVIDED A REASONABLE TIME FOR
APPEARANCE IS PERMITTED, OR IN SUCH OTHER MANNER AS MAY BE PERMISSIBLE UNDER THE
RULES OF SAID COURTS. EACH OF THE UNDERSIGNED WAIVES ANY OBJECTION TO
JURISDICTION AND VENUE OF ANY ACTION INSTITUTED HEREON AND SHALL NOT ASSERT ANY
DEFENSE BASED ON LACK OF JURISDICTION OR VENUE OR BASED UPON FORUM NON
CONVENIENS.
15. Severability. To the extent permitted by applicable law, any provision
of this Guaranty which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
16. Amendments, Waivers. No amendment or waiver of any provision of this
Guaranty nor consent to any departure by the undersigned therefrom shall in any
event be effective unless the same shall be in writing executed by each of the
undersigned directly affected by such amendment and/or waiver and Xxxxxx.
17. Notice. All notices, requests and demands to or upon the undersigned,
shall be in writing and shall be deemed to have been duly given or made (a) when
delivered, if by hand, (b) three (3) days after being sent, postage prepaid, if
by registered or certified mail, (c) when confirmed electronically, if by
facsimile, or (d) when delivered, if by a recognized overnight delivery service
in each event, to the numbers and/or address set forth beneath the signature of
the undersigned.
18. Successors. Laurus may, from time to time, without notice to the
undersigned, sell, assign, transfer or otherwise dispose of all or any part of
the Obligations and/or rights under this Guaranty. Without limiting the
generality of the foregoing, Laurus may assign, or grant participations to, one
or more banks, financial institutions or other entities all or any part of any
of the Obligations. In each such event, Laurus, its Affiliates and each and
every immediate and successive purchaser, assignee, transferee or holder of all
or any part of the Obligations shall have the right to enforce this Guaranty, by
legal action or otherwise, for its own benefit as fully as if such purchaser,
assignee, transferee or holder were herein by name specifically given such
right. Laurus shall have an unimpaired right to enforce this Guaranty for its
benefit with respect to that portion of the Obligations, which Xxxxxx has not
disposed of, sold, assigned, or otherwise transferred.
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19. Release. Nothing except cash payment in full of the Obligations shall
release any of the undersigned from liability under this Guaranty.
[Remainder of this page is blank.
Signature page immediately follows]
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IN WITNESS WHEREOF, this Guaranty has been executed by the undersigned this
28th day of May, 2004.
SECURED DIGITAL APPLICATIONS, INC.
By: /s/ Xxxxxxx Soon-Xxxx Xxx
Name: Xxxxxxx Soon-Xxxx Xxx
Title: Chairman
Address: 00 Xxxxx 00X/000
00000 Xxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx
Telephone: 000 (000) 0000 0000
Facsimile: 000 (000) 0000 0000
State of Incorporation: Delaware
EYSTAR MEDIA, INC.
By: /s/ Xxxxxxx Xxx-Xxx Xxxx
Name: Xxxxxxx Xxx-Xxx Xxxx
Title: Secretary
Address: 000 Xxxx Xxxxxx 00xx Xxxxx,
Xxx Xxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 212-808-3020
State of Incorporation: Delaware
SDA AMERICA, INC.
By: /s/ Xxxxxxx Soon-Xxxx Xxx
Name: Xxxxxxx Soon-Xxxx Xxx
Title: Chairman
Address: 000 Xxxx Xxxxxx 00xx Xxxxx,
Xxx Xxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 212-808-3020
State of Incorporation: Delaware
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