EXHIBIT 10.55
GUARANTY
THIS GUARANTY (this "GUARANTY"), is made and entered into as of the 19th
day of December, 2001, by the Guarantors identified as such on the signature
page hereof (individually a "GUARANTOR" and collectively "GUARANTORS"), in favor
of Xxxxxx Xxxxx ("Xxxxx"), an individual, as agent (in such capacity "AGENT")
for himself and the holder's party to the Purchase Agreements referred to below
(Toibb and the holders party to the Purchase Agreements collectively "HOLDERS").
W I T N E S S E T H:
WHEREAS, Brilliant Digital Entertainment, Inc., a Delaware corporation
("BORROWER"), and each of the Holders have entered into a Purchase Agreement,
dated as of December 10, 2001 (as at any time amended, modified, or
supplemented, each a "PURCHASE AGREEMENT" and collectively, the "PURCHASE
AGREEMENTS"), pursuant to which each Holder has agreed to make a loan
(collectively, the "CONVERTIBLE NOTE LOANS") to Borrower;
WHEREAS, Guarantors and Borrower are members of the same consolidated group
of companies and are engaged in related businesses, and Guarantors will receive
a portion of the proceeds of Convertible Note Loans provided for in the Purchase
Agreements and will derive other direct and indirect economic benefits
therefrom; and
WHEREAS, in connection with the making of the Convertible Note Loans under
the Purchase Agreements and as a condition among others precedent thereto,
Holders are requiring that each Guarantor shall have executed and delivered this
Guaranty;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, and to induce Holders to provide the Convertible Note
Loans and other extensions of credit under the Purchase Agreements, it is agreed
as follows:
1. DEFINITIONS. Capitalized terms used herein shall have the meanings
assigned to them in the Security and Pledge Agreement dated December 19, 2001,
executed in connection with the Purchase Agreements ("Security Agreement"), or
the Purchase Agreements, unless the context otherwise requires or unless
otherwise defined herein.
References to this "Guaranty" shall mean this Guaranty, including all
amendments, modifications, and supplements and any exhibits or schedules to any
of the foregoing, and shall refer to this Guaranty as the same may be in effect
at the time such reference becomes operative.
2. THE GUARANTY. The guaranty of Guarantors hereunder is as follows:
2.1. GUARANTY OF SECURED OBLIGATIONS OF BORROWER. Each Guarantor hereby
jointly and severally unconditionally guaranties to Holders, and its successors,
endorsees, transferees, and assigns, the prompt payment (whether at stated
maturity, by acceleration or otherwise) and performance of the Secured
Obligations. Guarantors agree that this Guaranty is a guaranty of
payment and performance and not of collection, and that their obligations under
this Guaranty shall be primary, absolute, and unconditional, irrespective of,
and unaffected by:
(a) the genuineness, validity, regularity, enforceability, or any future
amendment of, or change in this Guaranty, the Security Agreement or any other
agreement, document, or instrument to which Borrower and/or Guarantors is or are
or may become a party;
(b) the absence of any action to enforce this Guaranty or the Security
Agreement or the waiver or consent by Agent or Holders with respect to any of
the provisions thereof;
(c) the existence, value, or condition of, or failure to perfect the Lien
against the Collateral, any security for the Secured Obligations or any action,
or the absence of any action, by Agent or Holders in respect thereof (including,
without limitation, the release of any such security); or
(d) any other action or circumstances that might otherwise constitute a
legal or equitable discharge or defense of a surety or guarantor,
it being agreed by each Guarantor that its obligations under this Guaranty shall
not be discharged until the payment and performance, in full, of the Secured
Obligations. Each Guarantor shall be regarded, and shall be in the same
position, as principal debtor with respect to the Secured Obligations. Each
Guarantor expressly waives all rights it may have now or in the future under any
statute, or at common law, or at law or in equity, or otherwise, to compel Agent
or any Holders to proceed in respect of the Secured Obligations against Borrower
or any other party or against any security for the payment and performance of
the Secured Obligations before proceeding against, or as a condition to
proceeding against, any Guarantor. Each Guarantor agrees that any notice or
directive given at any time to Agent or any Holders that is inconsistent with
the waiver in the immediately preceding sentence shall be null and void and may
be ignored by Holders, and, in addition, may not be pleaded or introduced as
evidence in any litigation relating to this Guaranty for the reason that such
pleading or introduction would be at variance with the written terms of this
Guaranty, unless Agent has specifically agreed otherwise in writing. It is
agreed between each Guarantor and Agent that the foregoing waivers are of the
essence of the transaction contemplated by the Security Agreement and that, but
for this Guaranty and such waivers, Holders would decline to make the
Convertible Note Loans under the Purchase Agreements.
2.2. DEMAND BY AGENT. In addition to the terms of the Guaranty set forth in
SECTION 2.1 hereof, and in no manner imposing any limitation on such terms, it
is expressly understood and agreed that, if the then outstanding principal
amount of the Secured Obligations under the Purchase Agreements (together with
all accrued interest thereon) is declared to be immediately due and payable,
then, Guarantors shall, upon demand in writing therefor by Agent to Guarantors,
pay to the holder or holders of the Secured Obligations the entire outstanding
Secured Obligations due and owing to such holder or holders. Payment by
Guarantors shall be made to Agent for the ratable benefit of Holders, to be
credited and applied upon the Secured Obligations, in immediately available
Federal funds to an account designated by Agent for the ratable benefit of
Holders or at the address set forth herein for the giving of notice to Agent or
at any other address that may be specified in writing from time to time by
Holders.
Page 2
2.3. ENFORCEMENT OF GUARANTY. In no event shall Agent or Holders have any
obligation (although it is entitled, at its option) to proceed against the
Borrower or any other Person or any real or personal property pledged to secure
the Secured Obligations before seeking satisfaction from Guarantors, and Holders
may proceed, prior or subsequent to, or simultaneously with, the enforcement of
Holder's rights hereunder, to exercise any right or remedy which it may have
against any property, real or personal, as a result of any Lien or security
interest it may have as security for all or any portion of the Secured
Obligations.
2.4. WAIVER. In addition to the waivers contained in SECTION 2.1 hereof,
Guarantors waive, and agree that they shall not at any time insist upon, plead,
or in any manner whatever claim or take the benefit or advantage of, any
appraisal, valuation, stay, extension, marshalling of assets, or redemption
laws, or exemption, whether now or at any time hereafter in force, which may
delay, prevent, or otherwise affect the performance by the Guarantors of their
obligations under, or the enforcement by Holders of, this Guaranty. Guarantors
hereby waive diligence, presentment, and demand (whether for non-payment or
protest or of acceptance, maturity, extension of time, change in nature or form
of the Secured Obligations, acceptance of further security, release of further
security, composition, or agreement arrived at as to the amount of, or the terms
of, the Secured Obligations, notice of adverse change in Borrower's financial
condition, or any other fact that might materially increase the risk to
Guarantors) with respect to any of the Secured Obligations or all other demands
whatsoever and waive the benefit of all provisions of law that are or might be
in conflict with the terms of this Guaranty. Guarantors represent, warrant, and
jointly and severally agree that, as of the date of this Guaranty, their
obligations under this Guaranty are not subject to any offsets or defenses
against Agent, Holders, or Borrower of any kind. Guarantors further jointly and
severally agree that their obligations under this Guaranty shall not be subject
to any counterclaims, offsets, or defenses against Agent or Holders, or against
Borrower of any kind which may arise in the future.
Additionally, neither the Agent nor Holders shall be required to take any
action of any kind or nature against the Borrower or any other Person, or resort
to any security held by the Agent or Holders or any other Person, at any time
before the Agent or Holders may proceed against Guarantors hereunder. Guarantors
hereby expressly waive, relinquish, and release any right, defense, protection,
claim of exoneration, or other claim, and any right to assert any right,
defense, protection, claim of exoneration, or other claim, in any action brought
on, arising out of or relating to this Guaranty or otherwise:
2.4.1 based upon California Civil Code Section 2809, and/or any claim
thereunder or otherwise, that any obligation of Guarantors under this Guaranty
is larger in amount or in other respects more burdensome than that of the
Borrower, or that any such obligation of Guarantors is reducible in proportion
to any of the Secured Obligations;
2.4.2 based upon California Civil Code Section 2810, and/or any claim
thereunder or otherwise, that for any reason there is no liability upon the part
of the Borrower under any of the Purchase Agreements, the Convertible Notes or
the Security Agreement at the time of the execution of any such agreements, or
that, subject to the provisions of SECTION 2.8 hereof, the liability of the
Borrower under any of the Purchase Agreements, the Convertible Notes or the
Security Agreement thereafter ceases for any reason other than the full,
effective, and irrevocable payment, performance; and/or satisfaction of such
liability and the expiration of all time periods within which any court of
competent jurisdiction, including any foreign court of competent jurisdiction,
Page 3
could order any payment relating to the Secured Obligations to be disgorged,
repaid, recovered, or paid into court or that, subject to the provisions of
SECTION 2.8 thereof, the Agent or any Holder, or any other Person, has recovered
any res which formed all or part of the consideration for any of the Purchase
Agreements, the Convertible Notes or the Security Agreement except only to the
extent that any of the Secured Obligations are fully, effectively, irrevocably
and finally paid, performed, and satisfied, and all time periods have expired
within which any court of competent jurisdiction, including any foreign court of
competent jurisdiction, could order any payment relating to the Secured
Obligations to be disgorged, repaid, recovered, or paid into court (and then
subject to SECTION 2.8 hereof);
2.4.3 based upon California Civil Code Section 2815, and/or any claim
thereunder or otherwise, that the Guaranty may be revoked in respect to future
transactions, whether or not there is continuing consideration as to such
transactions and whether or not Guarantors renounce any such consideration;
2.4.4 based upon California Civil Code Section 2819, and/or any claim
thereunder or otherwise, that any Secured Obligation of the Borrower has been
altered in any respect without Guarantors' consent (whether or not by any act of
the Agent or Holders or any other Person), or that the remedies or rights of the
Agent or Holders or any other Person against the Borrower in respect thereto,
have been in any way impaired or suspended;
2.4.5 based upon California Civil Code Section 2822, and/or any claim
thereunder or otherwise, that acceptance by the Agent or Holders of anything in
partial satisfaction of the Secured Obligations reduces the obligations of
Guarantors hereunder, or otherwise affects the continuing liability of
Guarantors;
2.4.6 based upon California Civil Code Section 2839, and/or any claim
thereunder or otherwise, that, subject to SECTION 2.8 hereof, performance of any
or all of the Secured Obligations, or any offer of such performance, exonerates
Guarantors except only to the extent that any of the Secured Obligations are
fully, effectively, irrevocably, and finally paid, performed, and satisfied, and
all time periods have expired within which any court of competent jurisdiction,
including any foreign court of competent jurisdiction, could order any payment
relating to the Secured Obligations to be disgorged, repaid, recovered, or paid
into court (and then subject to SECTION 2.8 hereof);
2.4.7 based upon California Civil Code Section 2845, and/or any claim
thereunder or otherwise, that Guarantors may require the Agent or Holders, or
any other Person, to proceed against the Borrower, or to pursue any other remedy
in such Agent's or Holder's, or such other Person's, power which Guarantors
cannot pursue and/or which would lighten Guarantors' burden, or that the Agent
or Holders, or any other Person, have neglected so to proceed against the
Borrower, or to pursue any such other remedy;
2.4.8 based upon California Civil Code Section 2846, and/or any claim
thereunder or otherwise, that Guarantors may compel the Borrower to perform any
Secured Obligation when due, whether as a condition precedent to any liability
of Guarantors or otherwise;
2.4.9 based upon California Civil Code Section 2847, and/or any claim
thereunder or otherwise, that if Guarantors satisfy any of the Secured
Obligations (or any part
Page 4
thereof), whether with or without legal proceedings, the Borrower is bound to
reimburse what Guarantors have disbursed, whether or not including any necessary
costs and expenses;
2.4.10 based upon California Civil Code Section 2848, and/or any claim
thereunder or otherwise, that Guarantors, upon satisfying or discharging all or
any part of any of the Secured Obligations, are entitled to enforce any remedy
that the Agent or Holders, or any other Person, then has against the Borrower,
whether to the extent of reimbursing what the Borrower has expended or
otherwise, or to require any or all of any co-sureties of Guarantors to
contribute thereto;
2.4.11 based upon California Civil Code Section 2849, and/or any claim
thereunder or otherwise, that Guarantors are entitled to the benefit of any
security for the performance of any of the Secured Obligations, whether any such
security is held by the Agent or Holders, or by any co-surety of Guarantors, or
otherwise, and whether any such security was held at the time of Guarantors'
entering into this Guaranty or acquired afterwards, and whether Guarantors were
aware of any such security or not;
2.4.12 based upon California Civil Code Section 2850, and/or any claim
thereunder or otherwise, that as to any property of Guarantors that has been
hypothecated with property of the Borrower's, Guarantors are entitled to have
the property of the Borrower first applied to the discharge of any or all of the
Secured Obligations;
2.4.13 based upon California Civil Code Section 2899, and/or any claim
thereunder or otherwise, that the Agent or Holders, or any other Person, must
resort to property upon which the Agent or Holders, or such other Person, has a
lien in any particular order, or must otherwise marshal any such liens or
property;
2.4.14 based upon California Civil Code Section 3433, and/or any claim
thereunder or otherwise, that Guarantors may require the Agent or Holders, or
any other Person, to seek satisfaction from funds to which Guarantors have no
claim or must otherwise marshal assets;
2.4.15 otherwise based upon any of the sections of the California Civil
Code referred to in this SECTION 2.4; and/or
2.4.16 based upon any other action or circumstance that might otherwise
constitute a legal or equitable discharge, defense, or exoneration of a
guarantor or surety.
Without limiting the generality of the foregoing, Guarantors hereby expressly
waive (a) pursuant to California Civil Code Section 2856(a)(1), all of
Guarantors' rights of subrogation, reimbursement, indemnification and
contribution and any other rights and defenses that are or may become available
to Guarantors by reason of California Civil Code Sections 2787 to 2855,
inclusive; (b) pursuant to California Civil Code Section 2856(a)(2), all rights
and defenses arising out of any election of remedies by the Agent or Holders,
even if any such election of remedies has destroyed or impaired any right or
claim of subrogation and/or reimbursement that might otherwise have been
available to Guarantors; (c) notice of the acceptance of this Guaranty by any
Person; (d) notice of the Secured Obligations now existing or which may
hereafter exist or be created; (e) notice of any adverse change in the financial
condition of the Borrower or of any other fact that might increase Guarantors'
risk hereunder; (f) notice of demand for payment or performance, or notice of
default
Page 5
or nonpayment or nonperformance, under the Loan Documents (or any of them), or
otherwise in respect of any of the Secured Obligations; and (g) all other
notices to which Guarantors might otherwise be entitled in connection with this
Guaranty, the Purchase Agreements, the Convertible Notes or the Security
Agreement (or any of them), or otherwise in respect of any Secured Obligation.
2.5. BENEFIT OF GUARANTY. The provisions of this Guaranty are for the
benefit of Agent for the ratable benefit of Holders and their respective
successors, transferees, endorsees, and assigns, and nothing herein contained
shall impair, as between Borrower and Agent or Holders, the obligations of
Borrower under the Purchase Agreements, the Convertible Notes and the Security
Agreement. In the event all or any part of the Secured Obligations are
transferred, endorsed, or assigned by Agent or Holders to any Person or Persons,
any Holders reference to "Agent" or "Holders" herein shall be deemed to refer
equally to such Person or Persons as the case may be.
2.6. MODIFICATION OF CONVERTIBLE NOTE LOANS. If Agent or Holders shall at
any time or from time to time, with or without the consent of, or notice to,
Guarantors or any of them:
(a) change or extend the manner, place, or terms of payment of, or renew or
alter all or any portion of, the Secured Obligations;
(b) take any action under or in respect of the Purchase Agreements, the
Convertible Notes or the Security Agreement in the exercise of any remedy, power
or privilege contained therein or available to it at law, equity, or otherwise,
or waive or refrain from exercising any such remedies, powers, or privileges;
(c) amend or modify, in any manner whatsoever, the Purchase Agreements, the
Convertible Notes or the Security Agreement;
(d) extend or waive the time for any of Guarantors', Borrower's or other
Person's performance of, or compliance with, any term, covenant, or agreement on
its part to be performed or observed under the Purchase Agreements, the
Convertible Notes or the Security Agreement, or waive such performance or
compliance or consent to a failure of, or departure from, such performance or
compliance;
(e) take and hold security or collateral for the payment of the Secured
Obligations guarantied hereby or sell, exchange, release, dispose of, or
otherwise deal with, any property pledged, mortgaged, or conveyed, or in which
Agent for the ratable benefit of Holders has been granted a Lien or security
interest, to secure any indebtedness of Guarantors or Borrower to Agent or
Holders;
(f) release anyone who may be liable in any manner for the payment of any
amounts owed by Guarantors or Borrower to Holders;
(g) modify or terminate the terms of any intercreditor or subordination
agreement pursuant to which claims of other creditors of Guarantors or Borrower
are subordinated to the claims of Agent or Holders; and/or
Page 6
(h) apply any sums by whomever paid or however realized to any amounts
owing by Guarantors or Borrower to Agent or Holders in such manner as Agent
shall determine in its discretion;
then Agent and Holders shall not incur any liability to Guarantors pursuant
hereto as a result thereof, and no such action shall impair or release the
obligations of Guarantors or any of them under this Guaranty.
2.7. REINSTATEMENT. This Guaranty shall remain in full force and effect and
continue to be effective should any petition be filed by or against Borrower or
any Guarantor for liquidation or reorganization, should Borrower or any
Guarantor become insolvent or make an assignment for the benefit of creditors,
or should a receiver or trustee be appointed for all or any significant part of
Borrower's or any Guarantor's assets, and shall continue to be effective or be
reinstated, as the case may be, if at any time payment and performance of the
Secured Obligations, or any part thereof, is, pursuant to applicable law,
rescinded or reduced in amount, or must otherwise be restored or returned by
Holders, whether as a "voidable preference", "fraudulent conveyance", or
otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced, restored, or
returned, the Secured Obligations shall be reinstated and deemed reduced only by
such amount paid and not so rescinded, reduced, restored, or returned.
2.8. WAIVER OF SUBROGATION.
(a) Guarantors shall not exercise any rights which they may have acquired
by way of subrogation under this Guaranty, by any payment made hereunder or
otherwise, nor shall any Guarantor seek any reimbursement from Borrower in
respect of payments made by such Guarantor hereunder, unless and until all of
the Secured Obligations shall have been paid to Holders and discharged, in full,
and if any payment shall be made to Guarantors on account of such subrogation or
reimbursement rights at any time when the Secured Obligations shall not have
been paid and discharged, in full, each and every amount so paid shall forthwith
be paid to Holders to be credited and applied against the Secured Obligations,
whether matured or unmatured.
(b) If, pursuant to applicable law, any or all Guarantors, by payment or
otherwise, becomes subrogated to all or any of the rights of Agent or Holders
under any of the Purchase Agreements, the Convertible Notes or the Security
Agreement, the rights of Agent or Holders to which such Guarantors shall be
subrogated shall be accepted by Guarantors "as is" and without any
representation or warranty of any kind by Holders, express or implied, with
respect to the legality, value, validity, or enforceability of any of such
rights, or the existence, availability, value, merchantability, or fitness for
any particular purpose of any Collateral and shall be without recourse to Agent
or Holders.
(c) If Agent or Holders may, under applicable law, proceed to realize their
benefits under any of the Purchase Agreements, the Convertible Notes or the
Security Agreement giving Agent or Holders a Lien upon any collateral, whether
owned by Borrower or by any other Person, either by judicial foreclosure or by
non-judicial sale or enforcement, Agent may, at its sole option, determine which
of its remedies or rights it may pursue without affecting any of its rights and
remedies under this Guaranty. If, in the exercise of any of its rights and
remedies, Agent or Holders shall forfeit any of their rights or remedies,
including their right to enter a deficiency
Page 7
judgment against Borrower or any other Person, whether because of any applicable
laws pertaining to "election of remedies" or the like, Guarantors hereby consent
to such action by Agent and waive any claim based upon such action, even if such
action by Agent or Holders shall result in a full or partial loss of any rights
of subrogation which Guarantors might otherwise have had but for such action by
Agent or Holders. Any election of remedies that results in the denial or
impairment of the right of Agent or Holders to seek a deficiency judgment
against Borrower shall not impair each Guarantor's obligation to pay the full
amount of the Secured Obligations. In the event Holders shall bid at any
foreclosure or trustee's sale or at any private sale permitted by law or the
Security Agreement, Agent for the ratable benefit of Holders may bid all or less
than the amount of the Secured Obligations and the amount of such bid need not
be paid by Agent but shall be credited against the Secured Obligations. The
amount of the successful bid at any such sale, whether Agent for the ratable
benefit of Holders or any other party is the successful bidder, shall be
conclusively deemed to be the fair market value of the collateral and the
difference between such bid amount and the remaining balance of the Secured
Obligations shall be conclusively deemed to be the amount of the Secured
Obligations guarantied under this Guaranty, notwithstanding that any present or
future law or court decision or ruling may have the effect of reducing the
amount of any deficiency claim to which Agent for the ratable benefit of the
Holders might otherwise be entitled but for such bidding at any such sale.
2.9. CONTINUING GUARANTY. Guarantors agree that this Guaranty is a
continuing guaranty and shall remain in full force and effect until the payment
and performance in full of the Secured Obligations.
3. DELIVERIES. In a form satisfactory to Holders, Guarantors shall deliver
to Agent for the ratable benefit of Holders, concurrently with the execution of
this Guaranty and the Purchase Agreement, such of the Transaction Documents and
other instruments, certificates and documents as are required to be delivered by
Guarantors to Agent for the ratable benefit of Holders under the Purchase
Agreement.
4. REPRESENTATIONS AND WARRANTIES. To induce Holders to make the
Convertible Note Loans under the Purchase Agreements, each Guarantor jointly and
severally makes the following representations and warranties to Holders, each
and all of which shall survive the execution and delivery of this Guaranty:
4.1. CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Each Guarantor (i) is a
corporation duly organized, validly existing, and in good standing under the
laws of the state of its organization; (ii) is duly qualified to do business and
is in good standing under the laws of each jurisdiction where its ownership or
lease of property or the conduct of its business requires such qualification
(except for jurisdictions in which such failure so to qualify or to be in good
standing would not have a materially adverse effect on (A) the business,
operations, prospects, or financial condition of Borrower or each Guarantor, (B)
each Guarantor's ability to pay the Secured Obligations in accordance with the
terms hereof, or (C) the Collateral, Holder's Lien on the Collateral, or the
priority of any such Lien); (iii) has the requisite corporate power and
authority and the legal right to own, pledge, mortgage, and operate its
properties, to lease the property it operates under lease, and to conduct its
business as now, heretofore, and proposed to be conducted; (iv) has all material
licenses, permits, consents, or approvals from or by, and has made all material
filings with, and has given all material notices to, all governmental
authorities having jurisdiction, to the extent required for such ownership,
operation, and conduct; (v) is in compliance with its articles or
Page 8
certificate of incorporation and by-laws; and (vi) is in compliance with all
applicable provisions of law where the failure to comply would have a materially
adverse effect on (A) the business, operations, prospects, assets, or financial
or other condition of Borrower or such Guarantor, (B) such Guarantor's ability
to pay the Secured Obligations in accordance with the terms hereof, or (C) the
Collateral, Holder's Lien on the Collateral, or the priority of any such Lien.
4.2. EXECUTIVE OFFICES. Each Guarantor's executive office and principal
place of business are as set forth in Schedule II to the Security Agreement.
4.3. CORPORATE POWER; AUTHORIZATION; ENFORCEABLE SECURED OBLIGATIONS. The
execution, delivery and performance of this Guaranty and all of the Purchase
Agreements and the Security Agreement and all instruments and documents to be
delivered by each Guarantor hereunder and under the Purchase Agreements and the
Security Agreement are within such Guarantor's corporate powers, have been duly
authorized by all necessary or proper corporate action, including the consent of
stockholders where required, are not in contravention of any provision of such
Guarantor's articles or certificate of incorporation or by-laws, will not
violate any law or regulation, or any order or decree of any court or
governmental instrumentality, will not conflict with or result in the breach of,
or constitute a default under, any indenture, mortgage, deed of trust, lease,
agreement, or other instrument to which any Guarantor is a party or by which any
Guarantor or any of its property is bound, will not result in the creation or
imposition of any Lien upon any of the property of any Guarantor, other than
those in favor of Agent or Holders, and the same do not require the consent or
approval of any governmental body, agency, authority, or any other Person except
those already obtained. This Guaranty and each of the Purchase Agreements and
the Security Agreement to which any Guarantor is a party shall have been duly
executed and delivered for the benefit of or on behalf of such Guarantor, and
each shall then constitute a legal, valid, and binding obligation of such
Guarantor, enforceable against such Guarantor in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency, or other
similar laws affecting the rights of creditors generally or by the application
of general equity principles.
5. PERMITTED ASSIGNMENT BY HOLDERS. Agent and Holders may freely assign
their rights and delegate their duties under this Guaranty, but no such
assignment or delegation shall increase or diminish any Guarantor's obligations
hereunder. Agent or Holders shall give Guarantors prompt notice of such
assignment or delegation and agree to use their best efforts to give such notice
at least three (3) Business Days prior to such assignment or delegation, but the
consent of Guarantors shall not be required for any such assignment or
delegation and failure to give such notice shall not affect the validity or
enforceability of any such assignment or delegation or this Guaranty or subject
Agent or Holders to any liability.
6. FURTHER ASSURANCES. Each Guarantor agrees, upon the written request of
Agent, to execute and deliver to Agent, from time to time, any additional
instruments or documents reasonably considered necessary by Agent to cause this
Guaranty to be, become, or remain valid and effective in accordance with its
terms.
7. PAYMENTS FREE AND CLEAR OF TAXES. All payments required to be made by
each Guarantor hereunder shall be made to Agent for the ratable benefit of
Holders free and clear of, and without deduction for, any and all present and
future taxes, withholdings, levies, duties, and other governmental charges
("TAXES"), excluding such income and franchise taxes of the United States and
any political subdivision thereof that Agent or Holders would otherwise have
been payable by
Page 9
Agent or Holders if Borrower had paid the Secured Obligations to Agent or
Holders in accordance with the terms of the Transaction Documents. Upon request
by Agent, each Guarantor shall furnish to Agent for the ratable benefit of
Holders a receipt for any Taxes paid by such Guarantor pursuant to this SECTION
7 or, if no Taxes are payable with respect to any payments required to be made
by such Guarantor hereunder, either a certificate from each appropriate taxing
authority or an opinion of counsel acceptable to Agent, in either case stating
that such payment is exempt from or not subject to Taxes. If Taxes are paid by
Agent or Holders such Guarantor will, upon demand of Agent or Holders, and
whether or not such Taxes shall be correctly or legally asserted, indemnify
Agent or Holders for such payments, together with any interest, penalties, and
expenses in connection therewith plus interest thereon at the rate specified in
the Purchase Agreement applicable to the Convertible Note Loan (calculated as if
such payments constituted overdue amounts of principal as of the date of the
making of such payments).
8. MISCELLANEOUS.
8.1. ENTIRE AGREEMENT; AMENDMENTS. This Guaranty, together with the
Purchase Agreements, the Convertible Notes and the Security Agreement,
constitutes the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior agreements relating to a guaranty of the
loans and advances under the Purchase Agreements, the Convertible Notes and the
Security Agreement and may not be amended or supplemented except by a writing
signed by Guarantors and Agent.
8.2. HEADINGS. The headings in this Guaranty are for convenience of
reference only and are not part of the substance of this Guaranty.
8.3. SEVERABILITY. In the event that any one or more of the provisions
contained in this Guaranty shall be determined to be invalid, illegal, or
unenforceable in any respect for any reason, the validity, legality, and
enforceability of any such provision or provisions in every other respect and
the remaining provisions of this Guaranty shall not be in any way impaired.
8.4. NOTICES. Whenever it is provided herein that any notice, demand,
request, consent, approval, declaration, or other communication shall or may be
given to or served upon any of the parties by another, or whenever any of the
parties desires to give or serve upon another any such communication with
respect to this Guaranty, each such notice, demand, request, consent, approval,
declaration, or other communication shall be in writing and either shall be
delivered in person with receipt acknowledged or by registered or certified
mail, return receipt requested, postage prepaid, or by telecopy confirmed by
telecopy answerback addressed as follows:
(a) If to the Agent, at:
Xxxxxx Xxxxx
0000 Xxxxxxx Xxxxxx Xxxx., Xxxxx 000
Xxxxxxxx Xxxxx, XX 00000
Facsimile Number: (000) 000-0000
With copies to:
Xxxxxxx, Xxxxxxxx & Xxxxx, Professional Corporation
Page 10
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx Xxxx
Facsimile Number: (000) 000-0000
(b) If to any Guarantor, at its principal business address
specified on Schedule II to the Security Agreement
With a copy to:
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
0000 Xxxxxxx Xxxx Xxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx Xxxxxxxx
Facsimile Number: (000) 000-0000
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, or other communication hereunder shall be deemed
to have been duly given or served on the date on which personally delivered,
with receipt acknowledged, telecopied and confirmed by telecopy answerback, or
three (3) Business Days after the same shall have been deposited with the United
States mail.
8.5. BINDING EFFECT. This Guaranty shall bind Guarantors and shall inure to
the benefit of Agent for the ratable benefit of Holders and their respective
successors and assigns. Guarantors may not assign this Guaranty.
8.6. NON-WAIVER. The failure of Agent or Holders to enforce any right or
remedy hereunder, or promptly to enforce any such right or remedy, shall not
constitute a waiver thereof, nor give rise to any estoppel against Agent or
Holders, nor excuse Guarantors or any of them from its or their Secured
Obligations hereunder. Any waiver of any such right or remedy by Agent or
Holders must be in writing and signed by Agent.
8.7. TERMINATION. This Guaranty shall terminate and be of no further force
or effect at such time as the Secured Obligations shall be paid and performed in
full. Upon payment and performance in full of the Secured Obligations, Agent
shall deliver to Guarantors such documents as Guarantors may reasonably request
to evidence such termination.
8.8. GOVERNING LAW. The terms of this Guaranty shall be governed by, and
shall be construed and enforced in accordance with, the laws of the State of
California (exclusive of any rules as to conflict of laws) and the laws of the
United States applicable therein. Each Guarantor hereby submits to personal
jurisdiction and waives any objection as to venue in the County of Los Angeles,
State of California. Service of process on Guarantors in any action arising out
of or relating to this Guaranty shall be effective if mailed to Guarantors in
accordance with Section 8.4 hereof. Nothing herein shall preclude Agent for the
ratable benefit of Holders from bringing suit or taking other legal action in
any other jurisdiction.
Page 11
8.9. REIMBURSEMENT. To the extent that any Guarantor shall be required to
repay a portion of the Convertible Note Loans which shall exceed the greater of
(i) the amount of such Convertible Note Loans actually received by such
Guarantor and (ii) the amount that such Guarantor would otherwise have paid if
such Guarantor had repaid the aggregate amount of such Convertible Note Loans
(excluding the amount thereof repaid by Borrower) in the same proportion as each
Guarantor's net worth immediately after the date hereof bears to the aggregate
net worth of all Guarantors immediately after the date hereof, then such
Guarantor shall be reimbursed by the other Guarantors for the amount of such
excess, pro rata based on their respective net worths immediately after the date
hereof. This SECTION 8.9 is intended only to define the relative rights of
Guarantors, and nothing set forth in this SECTION 8.9 is intended to or shall
impair the obligations of Guarantors, jointly and severally, to pay to Agent for
the ratable benefit of Holders the Secured Obligations as and when the same
shall become due and payable in accordance with the terms hereof.
8.10. COUNTERPARTS. This Guaranty may be executed in any number of
counterparts which shall individually and collectively constitute one agreement.
Page 12
IN WITNESS WHEREOF, Guarantors have executed and delivered this Guaranty as
of the date first above written.
GUARANTORS
BRILLIANT STUDIOS, INC.,
a Delaware corporation
By: /S/ XXXXX XXXXXXXXXX
----------------------------
Name: Xxxxx Xxxxxxxxxx
Title: President
B3D INC.
a Delaware corporation
By: /S/ XXXXX XXXXXXXXXX
----------------------------
Name: Xxxxx Xxxxxxxxxx
Title: President
Accepted and acknowledged by:
XXXXXX XXXXX
as Agent for the ratable
benefit of Holders
By: /S/ XXXXXX XXXXX
-----------------------------
Xxxxxx Xxxxx
Page 13
