SUBSIDIARY GUARANTY
EXHIBIT
10.7 – FORM OF SUBSIDIARY GUARANTY
THIS SUBSIDIARY GUARANTY (this
“Subsidiary
Guaranty”), dated as of February 25, 2008, among Admiralty Holding
Company, a Colorado corporation (the “Company”), Admiralty
Corporation, a Georgia corporation and Admiralty Marine Operations, Ltd., a
Bahamas corporation (individually a “Subsidiary Guarantor”
and collectively, the “Subsidiary
Guarantors”), for the benefit of the secured parties signatory hereto and
their respective endorsees, transferees and assigns (individually a “Secured Party” and
collectively, the “Secured
Parties”).
W I T N E S S E T
H:
WHEREAS,
pursuant to a Securities Purchase Agreement, dated the date hereof, between
Company and the Secured Parties (the “Purchase Agreement”),
Company has agreed to issue to the Secured Parties and the Secured Parties have
agreed to purchase from Company certain of Company’s 8% Callable Secured
Convertible Notes, due three years from the date of issue (the “Notes”), which are
convertible into shares of Company’s Common Stock, par value $.001 per share
(the “Common
Stock”). In connection therewith, Company shall issue the
Secured Parties certain Common Stock purchase warrants (the “Warrants”);
and
WHEREAS,
the Company and the Subsidiary Guarantors have been, and are now, engaged
principally in the business of locating and recovering valuable cargoes from
historic shipwrecks. The company also continues to evaluate the technology for
assisting domestic governmental agencies in locating and retrieving unexploded
marine ordinances and weapons. Operating business is principally conducted
through Admiralty Corporation. It has undertaken to fund and conduct research to
develop ATLIS, a remote sensing nonferrous metal detection device. Admiralty
Marine Operations, Ltd. is the title and registration holder of the ship, the M.
V. New World Legacy. In the past, as now, the Company has provided
financing for the Subsidiary Guarantors, and the Subsidiary Guarantors have
relied upon the Company to provide such financing. In addition, it is
anticipated that, if the Subsidiary Guarantors execute and deliver this
Subsidiary Guaranty, the Company will continue to provide such financing to the
Subsidiary Guarantors, and that the proceeds of the Purchase Agreement and
Notes will be used,
in part, for the general working capital purposes of the Subsidiary Guarantors;
and
WHEREAS,
the Subsidiary Guarantors constitute all of the subsidiaries of the Company and
it is in the best interest of the Subsidiary Guarantors as subsidiaries of the
Company and the indirect beneficiaries of the Purchase Agreement and Notes, that
the Secured Parties enter into the Purchase Agreement and purchase the Notes to
the Company; and
WHEREAS,
as a material inducement to the Secured Parties to enter into the Purchase
Agreement and Notes, the Secured Parties have required and the Subsidiary
Guarantors have agreed to unconditionally guarantee the timely and full
satisfaction of all obligations of the Company, whether matured or unmatured,
now or hereafter existing or created and becoming due and payable (the “Obligations”) to the
Secured Parties, their successors, endorsees, transferees or assigns under the
Transaction Documents (as defined in the Purchase Agreement);
and
WHEREAS,
in light of the foregoing, each Subsidiary Guarantor expects to derive
substantial benefit from the Purchase Agreement and sale of the Notes and the
transactions contemplated thereby and, in furtherance thereof, has agreed to
execute and deliver this Subsidiary Guaranty.
NOW,
THEREFORE, in consideration of the foregoing recitals, and the mutual covenants
contained herein, the parties hereby agree as follows:
1.
Guaranty. The
Subsidiary Guarantors, jointly and severally, hereby absolutely, unconditionally
and irrevocably guarantee to the Secured Parties, their successors, endorsees,
transferees and assigns the due and punctual performance and payment of the
Obligations owing to the Secured Parties, their successors, endorsees,
transferees or assigns when due, all at the time and place and in the amount and
manner prescribed in, and otherwise in accordance with, the Transaction
Documents, regardless of any defense or set-off counterclaim which the Company
or any other person may have or assert, and regardless of whether or not the
Secured Parties or anyone on behalf of the Secured Parties shall have instituted
any suit, action or proceeding or exhausted its remedies or taken any steps to
enforce any rights against the Company or any other person to compel any such
performance or observance or to collect all or part of any such amount, either
pursuant to the provisions of the Transaction Documents or at law or in equity,
and regardless of any other condition or contingency.
2.
Waiver of
Demand. The Subsidiary Guarantors hereby
unconditionally: (i) waives any requirement that the Secured Parties,
in the event of a breach in any material respect by the Company of any of its
representations or warranties in the Transaction Documents, first make demand
upon, or seek to enforce remedies against, the Company or any other person
before demanding payment of enforcement hereunder; (ii) covenants that this
Subsidiary Guaranty will not be discharged except by complete performance of all
the Obligations; (iii) agrees that this Subsidiary Guaranty shall remain in full
force and effect without regard to, and shall not be affected or impaired,
without limitation, by, any invalidity, irregularity or unenforceability in
whole or in part of the Transaction Documents or any limitation on the liability
of the Company thereunder, or any limitation on the method or terms of payment
thereunder which may now or hereafter be caused or imposed in any manner
whatsoever; and (iv) waives diligence, presentment and protest with respect to,
and notice of default in the performance or payment of any Obligation by the
Company under or in connection with the Transaction Documents.
3.
Absolute
Obligation. Each Subsidiary Guarantor acknowledges and agrees
that (i) no Secured Party has made any representation or warranty to such
Subsidiary Guarantor with respect to the Company, any of its subsidiaries, any
Transaction Documents or any agreement, instrument or document executed or
delivered in connection therewith, or any other matter whatsoever, and (ii) such
Subsidiary Guarantor shall be liable hereunder, and such liability shall not be
affected or impaired, irrespective of (A) the validity or enforceability of any
Transaction Documents, or any agreement, instrument or document executed or
delivered in connection therewith, or the collectability of any of the
Obligations, (B) the preference or priority ranking with respect to any of the
Obligations, (C) the existence, validity, enforceability or perfection of any
security interest or collateral security under any Transaction Documents, or the
release, exchange, substitution or loss or impairment of any such security
interest or collateral security, (D) any failure, delay, neglect or omission by
any Secured Party to realize upon or protect any direct or indirect collateral
security, indebtedness, liability or obligation, any Transaction Documents, or
any agreement, instrument or document executed or delivered in connection
therewith, or any of the Obligations, (E) the existence or exercise of any right
of set-off by any Secured Party, (F) the existence, validity or enforceability
of any other guaranty with respect to any of the Obligations, the liability of
any other person in respect of any of the Obligations, or the release of any
such person or any other guarantor of any of the Obligations, (G) any act or
omission of any Secured Party in connection with the administration of any
Transaction Documents or any of the Obligations, (H) the bankruptcy, insolvency,
reorganization or receivership of, or any other proceeding for the relief of
debtors commenced by or against, any person, (I) the disaffirmance or rejection,
or the purported disaffirmance or purported rejection, of any of the
Obligations, any Transaction Documents, or any agreement, instrument or document
executed or delivered in connection therewith, in any bankruptcy, insolvency,
reorganization or receivership, or any other proceeding for the relief of
debtor, relating to any person, (J) any law, regulation or decree now or
hereafter in effect which might in any manner affect any of the terms or
provisions of any Transaction Documents, or any agreement, instrument or
document executed or delivered in connection therewith or any of the
Obligations, or which might cause or permit to be invoked any alteration in the
time, amount, manner or payment or performance of any of the Company's
obligations and liabilities (including the Obligations), (K) the merger or
consolidation of the Company into or with any person, (L) the sale by the
Comapny of all or any part of its assets, (M) the fact that at any time and from
time to time none of the Obligations may be outstanding or owing to any Secured
Party, (N) any amendment or modification of, or supplement to, any Transaction
Documents, or (O) any other reason or circumstance which might otherwise
constitute a defense available to or a discharge of the Comapny in respect of
its obligations or liabilities (including the Obligations) or of such Subsidiary
Guarantor in respect of any of the Obligations (other than by the performance in
full thereof).
4.
Release. The
obligations, covenants, agreements and duties of the Subsidiary Guarantors
hereunder shall not be released, affected or impaired by any assignment or
transfer, in whole or in part, of the Transaction Documents or any Obligation,
although made without notice to or the consent of the Subsidiary Guarantors, or
any waiver by the Secured Parties, or by any other person, of the performance or
observance by the Company or the Subsidiary Guarantors of any of the agreements,
covenants, terms or conditions contained in the Transaction Documents, or any
indulgence in or the extension of the time or renewal thereof, or the
modification or amendment (whether material or otherwise), or the voluntary or
involuntary liquidation, sale or other disposition of all or any portion of the
stock or assets of the Company or the Subsidiary Guarantors, or any
receivership, insolvency, bankruptcy, reorganization, or other similar
proceedings, affecting the Company or the Subsidiary Guarantors or any assets of
the Company or the Subsidiary Guarantors, or the release of any proper from any
security for any Obligation, or the impairment of any such property or security,
or the release or discharge of the Company or the Subsidiary Guarantors from the
performance or observance of any agreement, covenant, term or condition
contained in or arising out of the Transaction Documents by operation of law, or
the merger or consolidation of the Company, or any other cause, whether similar
or dissimilar to the foregoing.
5.
Subrogation.
(a)
Unless and until complete performance of all the Obligations, the
Subsidiary Guarantors shall not be entitled to exercise any right of subrogation
to any of the rights of the Secured Parties against the Company or any
collateral security or guaranty held by the Secured Parties for the payment or
performance of the Obligations, nor shall the Subsidiary Guarantors seek any
reimbursement from the Company in respect of payments made by the Subsidiary
Guarantors hereunder.
(b)
In the extent that the Subsidiary Guarantors shall become obligated to
perform or pay any sums hereunder, or in the event that for any reason the
Company is now or shall hereafter become indebted to the Subsidiary Guarantors,
the amount of such sum shall at all times be subordinate as to lien, time of
payment and in all other respects, to the amounts owing to the Secured Parties
under the Transaction Documents and the Subsidiary Guarantors shall not enforce
or receive payment thereof until all Obligations due to the Secured Parties
under the Transaction have been performed or paid. Nothing herein
contained is intended or shall be construed to give to the Subsidiary Guarantors
any right of subrogation in or under the Transaction Documents, or any right to
participate in any way therein, or in any right, title or interest in the assets
of the Secured Parties.
6.
Application of Proceeds;
Release. The proceeds of any sale or enforcement of or against
all or any part of the cash or collateral at the time held by the Secured
Parties hereunder, shall be applied by the Secured Parties first to the payment
of the reasonable costs of any such sale or enforcement, then to the payment of
the principal amount or stated valued (as applicable) of, and interest or
dividends (as applicable) and any other payments due in respect of, the
Obligations. The remainder, if any, shall be paid to the Subsidiary
Guarantors. As used in this Subsidiary Guaranty, “proceeds” shall mean
cash, securities and other property realized in respect of.
7.
Representations and
Warranties.
(a)
The Subsidiary Guarantors hereby represent and warrant to the
Secured Parties that:
(i)
this Subsidiary Guaranty constitutes a legal, valid and
binding obligation of the Subsidiary Guarantors, enforceable in accordance with
its terms.
(ii)
the execution, delivery and performance of this
Subsidiary Guaranty and other instruments contemplated herein will not violate
any provision of any order or decree of any court or governmental
instrumentality or of any mortgage, indenture, contract or other agreement to
which the Subsidiary Guarantors are a party or by which the Subsidiary
Guarantors may be bound, and will not result in the creation or imposition of
any lien, charge or encumbrance on, or security interest in, any of the
Subsidiary Guarantors’ properties pursuant to the provisions of such mortgage,
indenture, contract or other agreement.
(iii) all
representations and warranties relating to it contained in the Purchase
Agreement are true and correct.
(b) The
Company represents and warrants to the Secured Parties that it has no knowledge
that any of the representations or warranties of the Subsidiary Guarantors
herein are incorrect or false in any material respect.
8. No Waiver; No Election of
Remedies. No failure on the part of the Secured Parties to
exercise, and no delay in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise by the
Secured Parties of any right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or
remedy. The remedies herein provided are cumulative and are not
exclusive of any remedies provided by law. In addition, the exercise
of any right or remedy of the Secured Parties at law or equity or under this
Subsidiary Guaranty or any of the documents shall not be deemed to be an
election of Pledgee’s rights or remedies under such documents or at law or
equity.
9.
Termination. This
Subsidiary Guaranty shall terminate on the date on which all Obligations have
been performed, satisfied, paid or discharged in full.
10.
Further
Assurances. The parties hereto agree that, from time to time
upon the written request of any party hereto, they will execute and deliver such
further documents and do such other acts and things as such party may reasonably
request in order fully to effect the purposes of this Subsidiary
Guaranty.
11.
Miscellaneous.
(a)
Payment of
Fees. The Subsidiary Guarantors and the Company jointly and
severally agree to pay all costs including all reasonable attorneys’ fees and
disbursements incurred by the Secured Parties in enforcing this Subsidiary
Guaranty in accordance with its terms.
(b)
Modification. This
Subsidiary Guaranty contains the entire understanding between the parties with
respect to the subject matter hereof and specifically incorporates all prior
oral and written agreements relating to the subject matter hereof. No
portion or provision of this Subsidiary Guaranty may be changed, modified,
amended, waived, supplemented, discharged, canceled or terminated orally or by
any course of dealing, or in any manner other than by an agreement in writing,
signed by the party to be charged.
(c)
Notice. Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (i) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified in this Section prior to 6:30 p.m. (New York City time) on a Business
Day (as defined in the Purchase Agreement), (ii) the Business Day after the date
of transmission, if such notice or communication is delivered via facsimile at
the facsimile telephone number specified in this Subsidiary Guaranty later than
6:30 p.m. (New York City time) on any date and earlier than 11:59 p.m. (New York
City time) on such date, (iii) the Business Day following the date of mailing,
if sent by nationally recognized overnight courier services, or (iv) upon actual
receipt by the party to whom such notice is required to be given. The
address for such notices and communications shall be as
follows:
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If
to the Company:
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Admiralty
Holding Company
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0000
Xxxxxxxxx Xxxx, Xxxxx 000
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Xxxxxxx,
XX 00000
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Attention:
Chief Executive Officer
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Telephone: (000)
000-0000
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Facsimile: (000)
000-0000
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If
to the Subsidiary Guarantors:
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Admiralty
Corporation
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_____________________
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_____________________
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Attention:_____________
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Telephone:
____________
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Facsimile:
_____________
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Admiralty
Marine Operations, Ltd.
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_____________________
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_____________________
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Attention:_____________
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Telephone:
____________
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Facsimile:
_____________
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If
to the Secured Parties:
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AJW
Partners, LLC
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AJW
Master Fund, Ltd.
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New
Millennium Capital Partners II, LLC
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0000
Xxxxxxxx Xxxxxxxxx
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Xxxxx
000
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Xxxxxx,
Xxx Xxxx 00000
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Attention: Xxxxx
Xxxxxxxx
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Facsimile: 000-000-0000
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With
copies to:
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Xxxxxxx
Xxxxx Xxxxxxx & Xxxxxxxxx, LLP
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0000
Xxxxxx Xxxxxx
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00xx
Xxxxx
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Xxxxxxxxxxxx,
Xxxxxxxxxxxx 00000
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Attention: Xxxxxx
X. Xxxxxxxx, Esq.
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Telephone: 000-000-0000
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Facsimile: 000-000-0000
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(d)
Invalidity. If
any part of this Subsidiary Guaranty is contrary to, prohibited by, or deemed
invalid under applicable laws or regulations, such provision shall be
inapplicable and deemed omitted to the extent so contrary, prohibited or
invalid, but the remainder hereof shall not be invalidated thereby and shall be
given effect so far as possible.
(e)
Benefit of
Agreement. This Subsidiary Guaranty shall be binding upon and
inure to the parties hereto and their respective successors and
assigns.
(f)
Mutual
Agreement. This Subsidiary Guaranty embodies the arm’s length
negotiation and mutual agreement between the parties hereto and shall not be
construed against either party as having been drafted by it.
(g)
New
York Law to Govern. This Subsidiary Guaranty shall be governed
by and construed and enforced in accordance with the internal laws of the State
of New York without regard to the principals of conflicts of law
thereof. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and Federal courts sitting in the city of New York,
borough of Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court or that such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address in effect for
notices to it under this agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
IN
WITNESS WHEREOF, the parties hereto have caused this Guaranty and Pledge
Agreement to be duly executed by their respective authorized persons as of the
date first indicated above.
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COMPANY
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ADMIRALTY
HOLDING COMPANY
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By:
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_____________________________________
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Xxxxxxx
X. Xxxxxxx
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Chief
Executive Officer
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SUBSIDIARY
GUARANTORS:
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ADMIRALTY
CORPORATION
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By:
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_____________________________________
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Xxxxxxx
X. Xxxxxxx
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CEO
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ADMIRALTY
MARINE OPERATIONS, LTD.
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By:
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_____________________________________
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Xxxxxxx
X. Xxxxxxx
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CEO
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SECURED
PARTIES:
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AJW
PARTNERS, LLC
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By:
SMS Group, LLC
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By:
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_____________________________________
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Xxxxx
X. Xxxxxxxx
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Manager
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AJW
MASTER FUND, LTD.
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By: First
Street Manager II, LLC
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By:
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_____________________________________
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Xxxxx
X. Xxxxxxxx
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Manager
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NEW
MILLENNIUM CAPITAL PARTNERS II, LLC
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By: First
Street Manager II, LLC
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By:
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_____________________________________
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Xxxxx
X. Xxxxxxxx
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Manager
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