Exhibit 10.4
GUARANTY
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| New York, New York |
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August 28, 2007 |
FOR VALUE RECEIVED, and in
consideration of note purchases from, or credit otherwise extended
or to be extended by Laurus Master Fund, Ltd.
(“Laurus”), Valens U.S. SPV I, LLC (“Valens
U.S.”), Valens Offshore SPV I, Ltd. (“Valens
Offshore”) and PSource Structured Debt Limited
(“PSource” and, together with Laurus, Valens U.S.,
Valens Offshore, the “Purchasers” and each, a
“Purchaser”) to or for the account of Silicon Mountain
Memory, Incorporated, a Colorado corporation (the
“SMM”) and VCI Systems, Inc., a Colorado corporation
(“VCI” and together with SMM, the
“Companies” and each, a “Company”) from
time to time and at any time and for other good and valuable
consideration and to induce each Purchaser, in its discretion, to
purchase such notes or make other extensions of credit and to make
or grant such renewals, extensions, releases of collateral or
relinquishments of legal rights as such Purchaser 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 each
Purchaser, 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 each
Company to any Purchaser and of all instruments of any nature
evidencing or relating to any such obligations and liabilities upon
which such Company or one or more parties and such Company is or
may become liable to any Purchaser, whether incurred by such
Company 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 any Purchaser, whether arising
under, out of, or in connection with (i) that certain Security
Agreement dated as of September 25, 2006 by and among SMM, the
other Companies named therein and Laurus (the “Security
Agreement”) and (ii) each Ancillary Agreement referred
to in the Security Agreement (the Security Agreement and each
Ancillary Agreement, as each may be amended, modified, restated
and/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 obligations or
liabilities of such Company to any Purchaser, 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 any Company under Title 11, United States Code,
including, without limitation, obligations or indebtedness of any
Company 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 Security Agreement. In
furtherance of the foregoing, the undersigned hereby agrees as
follows:
Subsidiary Guaranty
1. No Impairment . Any
Purchaser 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 any Company 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 any Purchasers and any Company
or any such other party or person, or make any election of rights
such Purchaser 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
Guaranty shall be effective regardless of the subsequent
incorporation, merger or consolidation of any Company, or any
change in the composition, nature, personnel or location of any
Company and shall extend to any successor entity to each Company,
including a debtor in possession or the like under any Insolvency
Law.
2. Guaranty Absolute .
Subject to Section 5(c) hereof, 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 any Company 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 a Company will contract additional obligations
and liabilities for which Guarantors may be liable hereunder after
such Company’s financial condition or ability to pay its
lawful debts when they fall due has deteriorated, whether or not
such Company has properly authorized incurring such additional
obligations and liabilities. The undersigned acknowledge that
(i) no oral representations, including any representations to
extend credit or provide other financial accommodations to any
Company, have been made by any Purchaser to induce the undersigned
to enter into this Guaranty and (ii) any extension of credit
to any Company 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 any Purchaser or its assignees or any
acceptance thereof or any release of any security by any Purchaser
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,
Subsidiary Guaranty
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composition, adjustment, dissolution, liquidation or other like
proceeding relating to any Company, 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 any Purchaser 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. No Purchaser shall be under any
obligation to institute suit, exercise rights or remedies or take
any other action against any Company or any other person or entity
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 any Purchaser to do any of the foregoing. Each of the
Guarantors further consents and agrees that no Purchaser shall be
under any obligation to marshal any assets in favor of Guarantors,
or against or in payment of any or all of the Obligations. Each of
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 any Purchaser, any Company and/or the
undersigned with respect to the undersigned’s obligations
under this Guaranty, or which any Company 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
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 any Company’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 any Purchaser, the
undersigned shall not be entitled to be subrogated to any of the
rights of any Purchaser against any Company or against any
collateral or guarantee or right of offset held by any Purchaser
for the payment of the Obligations, nor shall the undersigned seek
or be entitled to seek any contribution or reimbursement from any
Company in respect of payments made by the undersigned hereunder,
until all amounts owing to each Purchaser
Subsidiary Guaranty
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by each Company
on account of the Obligations are indefeasibly paid in full and
each Purchaser’s obligation to extend credit pursuant to the
Documents has been irrevocably 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 each Purchaser’s
obligation to extend credit pursuant to the Documents shall not
have been terminated, s
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