SUBSIDIARY GUARANTY
To:
Atlantic Professional Association, Inc., as Agent for
Purchasers
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 Purchasers, as defined in
the
Securities Purchase Agreement described below (each a "Purchaser" and together
the "Purchasers") to or for the account of friendlyway Corporation, a Nevada
corporation ("Debtor"), from time to time and at any time and for other good
and
valuable consideration and to induce the Purchasers, in their 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 the Purchasers or the Agent, as defined in the Securities
Purchase Agreement, may deem advisable, the undersigned (and each of them if
more than one, the liability under this Guaranty being joint and several)
(jointly and severally referred to as "Guarantors" or "the undersigned")
unconditionally guaranties to the Purchasers, their 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 the Purchasers and of all instruments of any nature evidencing or
relating to any such obligations and liabilities upon which Debtor is or may
become liable to the Purchasers, whether incurred by Debtor as maker, endorser,
drawer, acceptor, guarantor, accommodation party or otherwise, and whether
due
or to become due, secured or unsecured, absolute or contingent, joint or
several, and however or whenever acquired by the Purchasers, whether arising
under, out of, or in connection with (i) that certain Securities Purchase
Agreement dated as of the date hereof by and between Debtor and the Purchasers
(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 Debtor to the Purchasers or the Agent, 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 Xxxxx 00, Xxxxxx Xxxxxx 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
hereby agrees as follows:
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1.
No
Impairment.
The
Agent, on behalf of the Purchasers and if authorized to do so pursuant to the
terms of the Documents, 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 enter into 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 the Purchasers, Debtor and/or the Agent or any such other
party or person, or make any election of rights the Purchasers 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.
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 Debtor'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 the
Purchasers or Agent to induce the undersigned to enter into this Guaranty and
(ii) any extension of credit to 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 the Purchasers, the Agent or their assignees or any acceptance
thereof or any release of any security by the Purchasers, the Agent or their
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 the Purchasers 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.
2
3.
Waivers.
(a)
This
Guaranty is a guaranty of payment and not of collection. The Agent, acting
on
behalf of the Purchasers, 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 them to secure any of the Obligations as a condition precedent
to the undersigned being obligated to perform as agreed herein and each
Guarantor hereby waives any and all rights which it may have by statute or
otherwise which would require the Agent or the Purchasers to do any of the
foregoing. Each Guarantor further consents and agrees that the Agent, acting
on
behalf of the Purchasers, 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 the
Purchasers, the Agent, 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.
3
(c)
Notwithstanding any payment or payments made by the undersigned hereunder,
or
any setoff or application of funds of the undersigned by the Purchasers, the
undersigned shall not be entitled to be subrogated to any of the rights of
the
Purchasers or the Agent against Debtor or against any collateral or guarantee
or
right of offset held by the Purchasers or Agent 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 the Purchasers by Debtor
on
account of the Obligations are paid in full. 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,
such amount shall be held by the undersigned in trust for the Purchasers,
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 the Purchasers or Agent in the exact form received by the undersigned
(duly endorsed by the undersigned to the Purchasers or Agent, if required),
to
be applied against the Obligations, whether matured or unmatured, in such order
as the Agent 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 the Purchasers.
4.
Security.
All
sums at any time to the credit of the undersigned and any property of the
undersigned in the Agent’s possession or in the possession of any bank,
financial institution or other entity that directly or indirectly, through
one
or more intermediaries, controls or is controlled by, or is under common control
with, the Agent (each such entity, an "Affiliate") shall be deemed held by
Agent
on behalf of the Purchasers or such Affiliate, as the case may be, as security
for any and all of the undersigned's obligations to the Purchasers and to any
Affiliate of the Purchasers, no matter how or when arising and whether under
this or any other instrument, agreement or otherwise. In addition, this Guaranty
is secured by that certain Security Agreement as of even date herewith in favor
of the Purchasers.
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.
4
(c)
Legal,
Valid 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
which 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 the Purchasers on any of its property or assets pursuant to the provisions
of
any of the foregoing, which, in any of the foregoing cases, would 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 would
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, would reasonably be expected to have
a
Material Adverse Effect.
(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 Debtor to the Purchasers.
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 the Purchasers or the Agent, 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 the Agent’s possession, or otherwise, any and all Obligations
shall for purposes hereof, at the Agent’s option, be deemed due and payable
without notice notwithstanding that any such Obligation is not then due and
payable by Debtor.
5
(b)
Each
of the undersigned will promptly notify the Agent 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, the Agent shall have the right to accelerate such
undersigned's obligations hereunder.
7.
Payments
from Guarantors.
The
Agent, 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
reasonable expenses for legal services of every kind) relating or incidental
to
the enforcement or protection of the rights of the Purchasers or Agent 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 the Purchasers'
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.
10.
Recapture.
Anything in this Guaranty to the contrary notwithstanding, if the Purchasers
or
Agent receive 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 the Purchasers or Agent, the undersigned's obligations
to the Purchasers shall be reinstated and this Guaranty shall remain in full
force and effect (or be reinstated) until payment shall have been made to the
Purchasers or Agent, which payment shall be due on demand.
11.
Books
and Records.
The
books and records of the Agent showing the account between the Purchasers 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.
6
12.
No
Waiver.
No
failure on the part of the Purchasers or Agent 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 the Purchasers or Agent
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 the Purchasers or allowed them by law or other agreement
shall
be cumulative and not exclusive of any other, and may be exercised by the
Purchasers or Agent 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 THE PURCHASERS HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE
PURCHASERS 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 THE PURCHASERS OR AGENT 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.
7
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 the Agent.
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.
Becoming
a Guarantor.
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
a Guarantor hereunder by (x) executing a Joinder Agreement in form and substance
satisfactory to the Agent, (y) delivering supplements to such exhibits and
annexes to such Documents as the Agent shall reasonably request and (z) taking
all actions as specified in this Guaranty as would have been taken by such
Guarantor had it been an original party to this Guaranty, in each case with
all
documents required above to be delivered to the Agent and with all documents
and
actions required above to be taken to the reasonable satisfaction of the Agent.
19.
Release.
Nothing
except cash payment in full of the Obligations shall release any of the
undersigned from liability under this Guaranty.
20.
Limitation
of Obligations under this Guaranty.
Each
Guarantor and the Purchasers (by their acceptance of the benefits of this
Guaranty) hereby confirm that it is their intention that this Guaranty not
constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy
Code, the Uniform Fraudulent Conveyance Act or any similar Federal or state
law.
To effectuate the foregoing intention, each Guarantor and the Purchasers (by
their acceptance of the benefits of this Guaranty) hereby irrevocably agree
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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| FRIENDLYWAY TECHNOLOGIES, INC. | |||
| By: | /S/ XXX XXXXXXX | ||
|
Xxxxxxx Xxxxxxx, President & CEO |
|||
| PANTEL FINANCIAL CENTERS, INC. | |||
| By: | /S/ XXX XXXXXXX | ||
|
Xxxxxxx
Xxxxxxx, President & CEO
|
|||
| PANTEL SYSTEMS, INC. | |||
| By: | /S/ XXX XXXXXXX | ||
|
Xxxxxxx Xxxxxxx, President & CEO |
|||
9
