CORPORATE GUARANTY
FOR
VALUE RECEIVED, the receipt and sufficiency is hereby
acknowledged, and with the knowledge that but for this corporate guaranty (this
"Guaranty") Xxxxx Xxxxxxxxx and Xxxxxxx Xxxxxxxxx (collectively, the "Holder")
would not enter into that certain Stock Purchase Agreement executed on July
5,
2007 and effective as of June 30, 2007 (the "SPA"), to induce further the Holder
to enter into the SPA and to accept the Convertible Promissory Note and any
other promissory notes to be made pursuant to the SPA, SECURE SYSTEM, INC.,
a
New Jersey corporation ("Secure") hereby absolutely and unconditionally
guarantees certain obligations to the Holder as follows:
1. The
Convertible Note. Secure hereby absolutely and unconditionally
guarantees to the Holder the prompt payment and performance of all obligations
of Somerset International Group, Inc. ("Somerset") arising out of the
Convertible Promissory Note in the original principal amount of $250,000, made
and given to the Holder pursuant to paragraph 4(a)(ii) of the SPA, together
with
any extensions, renewals or replacements thereof.
2. The
EBITDA Adjustment Note. The SPA provides for the post closing execution
of a promissory note (the "EBITDA Adjustment Note") by Somerset upon the
satisfaction of certain conditions. In the event that Xxxxxxxx executes a
promissory note payable to the Holder pursuant to the terms of Paragraph
4(b)(iv) of the SPA, then Secure absolutely and unconditionally guarantees
to
the Holder the prompt payment and performance of all obligations of Somerset
arising out of the EBITDA Adjustment Note, together with any extensions,
renewals or replacements thereof.
3. The
Net Current Asset Note. The SPA provides for the post closing execution
of a promissory note (the "Net Current Asset Note") by Somerset upon the
satisfaction of certain conditions. In the event that Xxxxxxxx executes a
promissory note payable to the Holder pursuant to the terms of Paragraph
4(b)(iii) of the SPA, then Secure absolutely and unconditionally guarantees
to
the Holder the prompt payment and performance of all obligations of Somerset
arising out of the Net Current Asset Note, together with any extensions,
renewals or replacements thereof.
4. The
Indebtedness. The Convertible Note, the EBIDTA Adjustment Note, and the
Net Current Asset Note shall individually and collectively be referred to as
"the Indebtedness". No act or thing need occur to establish the liability of
Secure hereunder, and no act or thing, except full payment and discharge of
all
Indebtedness, shall in any way exonerate Secure, or modify, reduce, limit or
release the liability of Secure hereunder.
5. Corporate
Purpose. This Guaranty is given for a legitimate corporate purpose of
Secure. Secure represents and warrants to the Holder that Secure has a direct
and substantial interest in the SPA and in the financial accommodations that
resulted in the creation of Indebtedness that is guaranteed hereby.
6. Dissolution
and/or Insolvency. If Secure shall be dissolved or shall be or become
insolvent (however defined) or attempt revoke this Guaranty, then the Holder
shall have the right to declare immediately due and payable, and Secure will
forthwith pay to the Holder, the full amount of all Indebtedness, whether due
and payable or unmatured. If Secure voluntarily commences or there is commenced
involuntarily against Secure a case under the United States Bankruptcy Code,
the
full amount of all Indebtedness, whether due and payable or unmatured, shall
be
immediately due and payable without demand or notice thereof.
7. Pledge
of Xxxxxxx Xxxxxx. Secure's obligations hereunder shall be secured by a
pledge of certain common stock of Xxxxxxx Electronics, Inc. (the "Pledged
Shares") pursuant to the terms of a certain Stock Pledge and Escrow aAreement
dated the date hereof (the "Pledge Agreement"). Any breach or default under
this
Guaranty shall be deemed to be a default under the Pledge Agreement and,
conversely, any breach or default under the Pledge Agreement shall be deemed
to
be a default under this Guaranty.
8. Change
in Affiliate Relationship. Whether or not any existing relationship
between Secure and Somerset changes or ends, the Holder may, but shall not
be
obligated to, enter into transactions resulting in the continuance of the
Indebtedness, without any consent or approval by Secure, and without notice
to
Secure. The liability of Secure shall not be affected or impaired by any of
the
following acts or things (which the Holder is expressly authorized to do,
omit or suffer from time-to-time, without notice to or approval
by
Secure): (a) any acceptance of collateral security, adding guarantors,
accommodation parties, or sureties for any or all Indebtedness; (b) any one
or
more extensions or renewals of the Indebtedness (whether or not for
longer than the original period) or any modification of the interest rates,
maturities or other contractual terms applicable to any Indebtedness; (c) any
waiver, adjustment, forbearance, compromise or indulgence other than a release
of liability granted to Borrower, any delay or lack of diligence in the
enforcement of Indebtedness, or any failure to institute proceedings, file
a
claim, give any required notices or otherwise protect any Indebtedness; (d)
any
full or partial release of, settlement with, or agreement not to sue, Borrower
or any other guarantor or other person liable in respect of any Indebtedness;
(e) any failure to obtain collateral security (including rights of setoff)
for Indebtedness, or to see to the proper or sufficient creation
and
perfection thereof, or to establish the priority thereof, or to protect, insure,
or enforce any collateral security; or any release, modification, substitution,
discharge, impairment, deterioration, waste, or loss of any collateral security;
(f) any foreclosure or enforcement of any collateral security; (g) any transfer
of any Indebtedness or any evidence thereof; (h) any order of application of
any
payments or credits upon Indebtedness; and/or (i) any election by the Holder
under Section 111 1(b)(2) of the United States Bankruptcy Code.
9. Continuation
of Obligation. Secure further agrees that it shall be and remain
obligated to pay and/or perform the Indebtedness even though any other person
or
entity obligated to pay the Indebtedness, including but not limited to Somerset,
has such obligation discharged in bankruptcy or otherwise discharged by law.
In
such event, the "Indebtedness' shall include post-bankruptcy petition interest
and attorneys' fees actually incurred and any other amounts which Borrower
is
discharged from paying or which do not accrue to Indebtedness due to Borrower's
discharge, and Secure shall remain obligated to pay such amounts as fully as
if
Borrower's obligations had not been discharged.
10. Limitation
of Subrogation Rights. Secure will not exercise any rights which it may
have acquired by way of subrogation under this Guaranty or otherwise, by any
payment made hereunder or otherwise, unless and until all of the Indebtedness
hereby guaranteed shall have been performed, observed or paid in full, and
if
any payment shall be made to the Guarantors on account of such subrogation
rights at any time when all of the Indebtedness so to be performed or observed
shall not have been performed, observed or paid in full, each and every amount
so paid will be forthwith paid to the Holder to be credited and applied to
the
Indebtedness.
11. Execution
of Additional Documents. Secure agrees that, at any time or from time
to time, upon the request of the Holder, it will promptly execute and deliver
any and all such further instruments and documents and do such further acts
as
the Holder may request in order to more effectively carry out the purposes
hereof.
12. Costs
and Attorney Fees. Secure will pay or reimburse the Holder for all
costs and expenses (including reasonable attorneys' fees and legal expenses
actually incurred by the Holder in connection with the protection, defense
or
enforcement of this Guaranty in any litigation or bankruptcy or insolvency
proceedings).
13. Waiver
of Presentment, etc. SECURE WAIVES PRESENTMENT, DEMAND FOR PAYMENT,
NOTICE OF DISHONOR OR NONPAYMENT, AND PROTEST OF ANY INSTRUMENT EVIDENCING
INDEBTEDNESS. THE HOLDER SHALL NOT BE REQUIRED FIRST TO RESORT FOR PAYMENT
OF
THE INDEBTEDNESS TO SOMERSET OR TO ANY OTHER PERSONS OR THEIR PROPERTIES, OR
FIRST TO ENFORCE, REALIZE UPON, OR EXHAUST ANY OTHER COLLATERAL SECURITY FOR
INDEBTEDNESS, BEFORE ENFORCING THIS GUARANTY.
14. Cumulative
Rights. The liability of Secure under this Guaranty is in addition to
and shall be cumulative with all other liabilities of Secure to the Holder
under
any other agreement including, but not limited to, the SPA, or as a separate
guarantor or otherwise, without any limitation as to amount, unless the
instrument or agreement evidencing or creating such other liability specifically
provides to the contrary. The effect of this Guaranty is to authorize the Holder
to enforce the Indebtedness as if same were a principal obligation of
Secure.
15. Corporate
Authority. Secure represents and warrants to the Holder that: (a)
Secure is a corporation duly organized and existing in good standing and has
full power and authority to make and deliver this Guaranty; (b) the execution,
delivery and performance of this Guaranty by Secure have been duly authorized
by
all necessary action of its directors and shareholders and do not and will
not
violate the provisions of, or constitute a default under, any presently
applicable law or its articles of incorporation or by-laws or any agreement
presently binding on it; (c) this Guaranty has been duly executed and delivered
by the authorized officers of Secure and constitutes its lawful, binding and
legally enforceable obligation (subject to the United States
Bankruptcy Code and other similar laws generally affecting the enforcement
of
creditors' rights); and (d) the authorization, execution, delivery
and performance of this Guaranty
do not require notification to, registration with, or consent or approval by,
any federal, state or local regulatory body or administrative
agency.
16. Notices.
Any notice pursuant to this Guaranty required to be given or made
shall
be sufficiently given or made if sent by certified or registered mail, postage
prepaid, addressed as follows:
To
Secure:
Secure
System, Inc.
c/o
Somerset International Group
00
Xxxxxxxxxx Xxxxxx Xxxx
Bedminster,
NJ 07921
Attn:
Xxxx X. Xxxxxxxx, Chief Executive Officer
with
a copy to:
Xxxxxxxx
& XxXxxxx, Esqs.
000
Xxxxxxxxxx Xxxx, Xxxxx 000
Glen
Rock, New Jersey 07542
Attn:
Xxxxxxx X. XxXxxxx, Esq.
To
the Holder:
Mr
&
Xxx. Xxxxx Xxxxxxxxx
00
Xxxxx
Xxxx Xxxxx
Lake
Hopatcong, New Jersey 07849
with
a copy to.
Xxxxx,
Xxxxxxxxx & Xxxxxx, P.C.
00
Xxxx
Xxxxxx, Xxxxx 000
Millburn,
New Jersey 07041
Attn:
Xxxxxx X. Xxxxx, Esq.
17. Effectiveness.
This Guaranty shall be effective upon delivery to the Holder, without
further act, condition or acceptance by the Holder, shall be binding upon Secure
and the successors and assigns of Secure, and shall inure to the benefit of
the
Holder, all successors, and assigns. Secure waives all required notice of the
Holder's acceptance hereof.
18.
Partial Invalidity. Any invalidity or unenforceability of any
provision or application of this Guaranty shall not affect other lawful
provisions and application hereof, and to this end the provisions of this
Guaranty are declared to be severable. Except allowed by the terms herein,
this
Guaranty may not be waived, modified, amended, terminated, released or otherwise
changed except by a writing signed by Secure and the Holder.
19. Arbitration.
In
the event that there shall be a dispute among the parties arising out of or
relating to this Guaranty, the parties agree that such dispute shall be resolved
by final and binding arbitration before one arbitrator if such dispute involves
an amount of less than $100,000 and if such dispute involves an amount equal
to
or in excess of $100,000 then before a panel of three arbitrators, in either
case, in Somerset County, New Jersey, administered by the American Arbitration
Association ("AAA"), in accordance with AAA's commercial rules of practice
then
in effect. Any award issued as a result of such arbitration shall be final
and
binding between the parties thereto, and shall be enforceable by any court
having jurisdiction over the party against whom enforcement is sought. The
arbitrator shall have the authority in his or her discretion to award to the
prevailing party the fees and expenses of such arbitration (including reasonable
attorneys' fees) or any action to enforce an arbitration award.
20. Singular,
Plural.
The singular and plural form shall be interchangeable herein
except where specific contextual reference is otherwise required.
21. Governing
Law.
This Guaranty shall be governed by and construed in accordance
with the laws of the State of New Jersey, without reference to the choice of
law
doctrine of such state.
IN
WITNESS WHEREOF, the parties have entered into this Corporate Guaranty Agreement
as of the date set forth on the first page.
Guarantor:
|
ATTEST:
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SECURE
SYSTEM, INC.
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By:
___________________________
|
|
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Xxxx
X. Xxxxxxxx, Secretary
|
Xxxx
X. Xxxxxxxx, CEO
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Holders:
|
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Xxxxx
Xxxxxxxxx
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Xxxxxxx
Xxxxxxxxx
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