58055
SUBSIDIARY GUARANTY
New York, New York February 11, 2005
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 Science Dynamics Corporation, a
Delaware corporation ("Debtor"), 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 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 Laurus 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
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, 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 Debtor and
Laurus (the "Securities Purchase Agreement") and (ii) each Related Agreement
referred to in the Securities Purchase Agreement (the Securities Purchase
Agreement and each Related 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 Debtor 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 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. Terms not
otherwise defined herein shall have the meaning assigned such terms in the
Securities Purchase Agreement. 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 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, 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. 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 Debtor 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 Debtor will
contract additional indebtedness for which Guarantors 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 acknowledge 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 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 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. 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 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 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, 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) 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 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 Debtor on account of the
Obligations are paid in full and Laurus' obligation to extend credit
pursuant to 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 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 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' 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.
(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.
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(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 Debtor 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 Debtor or
any of the undersigned to Laurus, or either Debtor 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 Debtor.
(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.
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.
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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. 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
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.
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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.
19. It is understood and agreed that any person or entity that desires to
become a Guarantor hereunder, or is required to execute a counterpart of this
Guaranty after the date hereof pursuant to the requirements of any Document,
shall become Guarantor hereunder by (x) executing a Joinder Agreement in form
and substance satisfactory to Laurus, (y) delivering supplements to such
exhibits and annexes to such Documents as Laurus shall reasonably request and
(z) taking all actions as specified in this Guarnaty as would have been taken by
such such Guarantor had it been an original party to this Guaranty, in each case
with all documents required above to be delivered to Laurus and with all
documents and actions required above to be taken to the reasonable satisfaction
of Xxxxxx.
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20. Release. Nothing except cash payment in full of the Obligations shall
release any of the undersigned from liability under this Guaranty.
21. Limitation of Obligations under this Guaranty. Each Guarantor and
Laurus (by its acceptance of the benefits of this Guaranty) hereby confirms that
it is its intention that this Guaranty not constitute a fraudulent transfer or
conveyance for purposes of the Bankruptcy Code, the Uniform Fraudulent
Conveyance Act of any similar Federal or state law. To effectuate the foregoing
intention, each Guarantor and Laurus (by its acceptance of the benefits of this
Guaranty) hereby irrevocably agrees that the Obligations guaranteed by such
Guarantor shall be limited to such amount as will, after giving effect to such
maximum amount and all other (contingent or otherwise) liabilities of such
Guarantor that are relevant under such laws and after giving effect to any
rights to contribution pursuant to any agreement providing for an equitable
contribution among such Guarantor and the other Guarantors (including this
Guaranty), result in the Obligations of such Guarantor under this Guaranty in
respect of such maximum amount not constituting a fraudulent transfer or
conveyance.
[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
___ day of February, 2005.
M3 ACQUISITION CORP.
By:
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Name:
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Title:
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Address: 0000 X. Xxxx Xxxxx, Xxxxx 000,
Xxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
State of Incorporation: New Jersey
SCIDYN CORP.
By:
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Name:
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Title:
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Address: 0000 X. Xxxx Xxxxx, Xxxxx 000,
Xxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
State of Incorporation: New Jersey
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