GUARANTY
(Corporate)
New York, New York July 31, 2003
FOR VALUE RECEIVED, and in consideration of note purchases from, loans made
or to be made or credit otherwise extended or to be extended by Laurus Master
Fund, Ltd. ("Laurus") to or for the account of Xxxxxx, Inc. ("Debtor") from time
to time and at any time and for other good and valuable consideration and to
induce Laurus, in its discretion, to purchase such notes, make such loans or
extensions of credit and to make or grant such renewals, extensions, releases of
collateral or relinquishments of legal rights as Xxxxxx may deem advisable, 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
"Guarantor" 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 Debtor to Laurus and of all instruments of any nature
evidencing or relating to any such obligations and liabilities upon which Debtor
or one or more parties and Debtor is or may become liable to Laurus, whether
incurred by Debtor as maker, endorser, drawer, acceptor, guarantor,
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 that
certain Convertible Note dated as of the date hereof made by Debtor in favor of
Laurus (as amended, modified, restated or supplemented from time to time, the
"Note") or any documents, instruments or agreements relating to or executed in
connection with the Note or any documents, instruments or agreements referred to
therein (together with the Note, as each may be amended, modified, restated or
supplemented from time to time, the "Documents"), 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 Debtor under Title 11, United States Code,
including, without limitation, obligations or indebtedness of Debtor 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. 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, and may also make any agreement with
Debtor 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
Debtor 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 Debtor, or any change in the composition, nature,
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personnel or location of Debtor and shall extend to any successor entity to
Debtor, including a debtor in possession or the like under any Insolvency
Law.
2. Guaranty Absolute. The undersigned guarantees that the Obligations will be
paid strictly in accordance with the terms of the Note 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 Debtor with
respect thereto. Guarantor hereby knowingly accepts the full range of risk
encompassed within a contract of "continuing guaranty" which risk includes
the possibility that Debtor will contract additional indebtedness for which
Guarantor may be liable hereunder after Xxxxxx's financial condition or
ability to pay its lawful debts when they fall due has deteriorated,
whether or not Debtor has properly authorized incurring such additional
indebtedness. The undersigned acknowledges that (i) no oral
representations, including any representations to extend credit or provide
other financial accommodations to Debtor, have been made by Xxxxxx to
induce the undersigned to enter into this Guaranty and (ii) any extension
of credit to the Debtor shall be governed solely by the provisions of the
Documents. The liability 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 Loan 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 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 Debtor, 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.
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 Debtor 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 Guarantor hereby waives any and all rights which it
may have by statute or otherwise which would require Laurus to do any
of the foregoing. Guarantor further consents and agrees that Xxxxxx
shall be under no obligation to marshal any assets in favor of
Guarantor, 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
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and among Xxxxxx, Debtor and/or the undersigned with respect to the
undersigned's obligations under this Guaranty, or which Debtor 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) 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
Debtor'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 Debtor 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 Debtor in respect of payments made
by the undersigned hereunder, until all amounts owing to Laurus by
Xxxxxx on account of the Obligations are paid in full and the
Documents have been terminated. If, 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 the Documents shall not have been terminated, such
amount shall be held by the undersigned in trust for Xxxxxx,
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 Laurus 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 Debtor 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 Debtor
to Xxxxxx.
4. Security. All sums at any time to the credit of the undersigned and any
property of the undersigned in Laurus's 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
Xxxxxx 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. The undersigned hereby 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. The undersigned is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware and has full power, authority and legal right to own its
property and assets and to transact the business in which it is
engaged.
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(b) Authority and Execution. The undersigned 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 and legal
action to authorize the execution, delivery and performance of this
Guaranty.
(c) Legal, Xxxxx and Binding Character. This Guaranty constitutes the
valid and binding obligation of the undersigned enforceable in
accordance with its terms, except as enforceability may be limited by
applicable Insolvency Law.
(d) Violations. The execution, delivery and performance of this Guaranty
will not violate any requirement of law applicable to the undersigned
or any material contract, agreement or instrument to which the
undersigned is a party or by which the undersigned or any property of
the undersigned is bound or result in the creation or imposition of
any mortgage, lien or other encumbrance other than to Laurus on any of
the property or assets of the undersigned pursuant to the provisions
of any of the foregoing.
(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.
(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 knowledge of the undersigned, threatened (i) with respect to
this Guaranty or any of the transactions contemplated by this Guaranty
or (ii) against or affecting the undersigned, or any of property or
assets of the undersigned, which, if adversely determined, would have
a material adverse effect on the business, operations, assets or
condition, financial or otherwise, of the undersigned.
(g) Financial Benefit. The undersigned 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 Debtor to Laurus.
6. Acceleration.
(a) If any breach of any covenant or condition or other event of default
shall occur and be continuing after applicable notice to Debtor or the
undersigned and any applicable opportunity to cure under any agreement
made by Debtor or the undersigned to Laurus, or either Debtor or 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, the undersigned, or if a
notice of any lien, levy, or assessment is filed of record with
respect to any assets 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's possession, or otherwise, any and all Obligations shall
for purposes hereof, at Laurus's option, be deemed due and payable
without notice notwithstanding that any such Obligation is not then
due and payable by Debtor; provided, however, that in the case of any
involuntary proceeding in or under any Insolvency Law in respect of
the undersigned, no Obligations shall be deemed due and payable
pursuant to this Section 6(a) unless the undersigned has failed to
have such proceeding dismissed within ninety (90) days.
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(b) The undersigned will promptly notify Xxxxxx of any default by the
undersigned in the 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 the undersigned's obligations hereunder.
7. Payments from Guarantor. 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 guarantor, 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.
8. Costs. The undersigned shall pay on demand, all costs, fees and expenses
(including reasonable 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 the
undersigned's successors and assigns, until all of the Obligations have
been paid in full and the Documents have 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 the 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 Xxxxxx and Debtor 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. 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
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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. 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 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. 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 the
undersigned 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
telephonically, 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.
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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.
19. Release. Nothing except irrevocable payment in full of the Obligations
shall release the undersigned from liability under this Guaranty.
IN WITNESS WHEREOF, this Guaranty has been executed by the undersigned this
31st day of July, 2003.
CROSSING GUARD, INC.
By:/s/ Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title President
Address: 000 Xxxxxxxxx Xxxxxx Xxxxx 000
Xxxx Xxxxxxxxxx, XX 00000
Telephone No: (000) 000-0000
Facsimile No.: (000) 000-0000
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STATE OF Rhode Island )
): ss.:
COUNTY OF Providence )
On the 31st day of July, 2003, before me personally came
Xxxxx X. Xxxxxxx to me known, who being by me duly sworn, did depose and
say s/he is the President of Crossing Guard, Inc., the corporation
described in and which executed the foregoing instrument; and that s/he signed
her/his name thereto by order of the board of directors of said corporation.
----------------------------
Notary Public
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