GUARANTY
This GUARANTY is made as of the day of August, 1999 by
Xxxxxx (Xxx) Xxxxxxxx ("Guarantor") to and for the benefit of Y.L.
Xxxxxx, Xxxxxx Xxxxxxxxxx, Xxxxx Xxxxxxx, Xxxxxx Xxxxxxxx, and Xxx
X. Xxxxxxxxxx ("Holders").
WHEREAS:
A. The Holders have purchased from Lakota Technologies,
Inc. ("Company"), $750,000 aggregate principal amount of the
Company's 8% Convertible Notes due August , 2001 ("Convertible
Notes");
B. The Convertible Notes will be convertible into shares
of the Company's common stock, par value $.01 per share
("Common Stock"); and
C. In order to induce the Holders to purchase the Convertible Notes,
Guarantor has agreed to guarantee the (i) obligations of the Company
under the Convertible Notes and the related transaction documents,
including but not limited to the Securities Purchase Agreement
("Agreement"), the (ii) Company's obligations to issue to the
Holders warrants to purchase shares of Common Stock of the Company
and certain registration rights with respect to shares of Common
Stock issuable (A) as interest under, and upon conversion of, the
Convertible Notes (collectively, the "Conversion Shares"), and (B)
upon exercise of the Warrants ("Warrant Shares"), all as set forth
in the Registration Rights Agreement ("Registration Rights
Agreement") executed simultaneously with the Agreement.
NOW, THEREFORE, in consideration of the foregoing premises
and the covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Guarantor hereby agrees as follows:
1. The Guarantor hereby:
(a) Unconditionally and absolutely, irrevocably
guarantees the due and punctual payment of the principal of the
Convertible Notes, the interest thereon and any other monies due or
which may become due thereon, the performance of the Company's
obligations under the Agreement, the Registration Rights Agreement,
and the Company's obligation to issue the Warrant Shares upon
exercise by the Holders (collectively "Obligations");
(b) Waive diligence, presentment, protest, notice of
dishonor, demand for payment, extension of time of payment, notice
of acceptance of this guaranty, notice of nonpayment at maturity and
notices of every kind, and consents to any and all forbearance and
extensions of the time of payment of the Convertible Notes, it being
the intention and agreement hereof that the Guarantor shall remain
liable as principal, to and until the Obligations are fully repaid
to the Holders and the Obligations are fully performed and observed
by the Company, notwithstanding any act, omission or thing which
might otherwise operate as a legal or equitable discharge of the
Company or the Guarantor;
(c) Agree that the Guarantor shall have no right of subrogation
whatsoever with respect to the Obligations;
(d) Agree that this Guaranty may be enforced by the
Holders without first resorting to or exhausting any other security
or collateral, or without first having recourse to the Convertible
Notes, or without first commencing an action against the Company and
agrees that this is a guaranty of payment, not collection; provided,
however, that nothing contained herein shall prevent the Holders
from suing on the Convertible Notes or suing the Company or
exercising his rights pursuant to a certain Stock Pledge and
Security Agreement executed and delivered simultaneously with this
Guaranty ("Stock Pledge and Security Agreement"), and if such rights
are exercised only the net proceeds therefrom, after deduction of
all charges and expenses of every kind and nature whatsoever due
thereunder, shall be applied in reduction of the amount due under
the Convertible Notes and the Holders shall not be required to
institute or prosecute proceedings to cover any deficiency as a
condition of any payment hereunder or enforcement hereof.
(e) Agree to pay the Holders' attorneys' fees and all
costs and other expenses which the Holders reasonably expend or
incur in collecting or compromising the Obligations or in enforcing
this Guaranty against the Guarantor, whether or not a lawsuit is
filed ("Enforcement Costs").
(f) Agrees that this Guaranty shall inure to the benefit
of, and be enforced by, the Holders and any subsequent holders of
the Convertible Notes and shall be binding upon and enforceable
against the Guarantor and Guarantor's legal representatives,
successors and/or assigns.
(g) Agree that this Guaranty shall not be discharged,
limited, impaired or affected by:
(i) The existence or continuance of any obligation
on the part of the Company under or with respect to the Convertible
Notes, the Agreement, the Registration Rights Agreement or the
Warrant Shares;
(ii) The power or authority of the Company to issue the Convertible
Notes or the power or authority of the Company to execute,
acknowledge or deliver the Agreement, the Registration Rights
Agreement or the Warrant Shares;
(iii) Any defenses whatsoever that the Company may
or might have to the payment of the Convertible Notes or to the
performance or observance of any of the Obligations;
(iv) The existence or non-existence of the Company as a legal entity;
(v) Any limitation or exculpation of liability of the Company that may be
expressed or implied in the Convertible Notes, the Agreement or the
Registration Rights Agreement;
(vi) The transfer or subordination of all or any part of the collateral
described in the Stock Pledge and Security Agreement;
(vii) Any failure, neglect or omission on part of the Holders to
realize or protect any of the collateral or security given in the
Stock Pledge and Security Agreement, or to exercise any lien upon or
right of appropriation of monies, credits or property of the Company
toward payment of the Convertible Notes or performance of the
Obligations;
(viii) Any defense (other than the full performance of the Obligations)
that the Guarantor may or might have to the Guarantor's
undertakings, liabilities and obligations hereunder, each and every
such defense being hereby waived by the undersigned Guarantor; and
(ix) Any proceedings with respect to the voluntary or involuntary
liquidation, dissolution, receiverships, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization,
arrangement, imposition or readjusting of, or other similar
proceedings affecting the Company, it being expressly understood and
agreed that no such proceeding shall affect, modify, limit or
discharge the liability or obligation of the Guarantor in any manner
whatsoever, and that the Guarantor shall continue to remain liable
under this Guaranty to the same extent and in the same manner as if
such proceedings had not been instituted.
2. There shall be no release or discharge of the
Guarantor, unless and until the Convertible Notes and Enforcement
Costs, if any, have been fully paid or the Obligations fully
performed, as the case may be.
3. All references herein to the Company shall be deemed
to include any successor or successors, whether immediate or remote,
to such corporation or partnership.
4. Wherever possible each provision of this Guaranty
shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Guaranty shall be
prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining
provisions of this Guaranty.
5. No delay on the part of the Holders in the exercise
of any right or remedy shall operate as a waiver thereof, and no
single or partial exercise by the Holders of any right or remedy
shall preclude other or further exercise of any other right or
remedy; nor shall any modification, termination, discharge or waiver
of any of the provisions there be binding upon the Holders except as
expressly set forth in a writing duly signed and delivered on behalf
of the Holders.
6. The provisions hereof shall be binding upon the
Guarantor and upon his heirs, legal representatives, successors
and/or assigns, and shall inure to the benefit of the Receiver and
its successors and/or assigns.
IN WITNESS WHEREOF, the Guarantors have executed this instrument the
day and year first above written.
GUARANTOR:
/s/Xxx Xxxxxxxx
XXXXXX (XXX) XXXXXXXX
ACKNOWLEDGMENT
STATE OF GEORGIA )
) ss.:
COUNTY OF )
On August , 1999, before me personally appeared Xxxxxx
(Xxx) Xxxxxxxx, the person described in the foregoing Guaranty,
who signed the Guaranty in my presence and acknowledged to me that
he signed the same.
/s/NOTARY PUBLIC
