GUARANTY (the
“ Guaranty ”), dated as of January 1, 2006
of Global Monitoring Systems, Inc. (“ GMS ”) in
favor of American Capital Financial Services, Ltd., as agent (the
“ Agent ”) for the benefit of the purchasers
(the “ Purchasers ”) identified on Annex A to
the Amended and Restated Note and Equity Purchase Agreement dated
as of October 29, 2004 by and among IST Acquisitions, Inc., a
Delaware corporation (“ Parent ”), Imaging and
Sensing Technology Corporation, a New York corporation (“
Borrower ”), IST Conax Nuclear, INC., a New York
corporation, I.S. Technology de Puerto Rico, Inc., a Delaware
corporation, Imaging and Sensing Technology Ineternational Corp., a
New York corporation, IST Instruments, Inc., a New York
corporation, Quadtek, Inc., a Washington corporation (together with
Borrower and Parent, the “ Loan Parties ”) and
Agent, as amended (collectively, the Purchase Agreement
”).
WHEREAS, pursuant
to the terms of the Purchase Agreement, the Purchasers have agreed
to lend the Loan Parties: (i) $15,000,000 in aggregate principal
amount as evidenced by the Senior Term A Notes due May 24,
2009, (ii) $7,500,000 in aggregate principal amount as evidenced by
the Senior Term B Notes due May 24, 2010, (iii) $4,000,000 in
aggregate principal amount as evidenced by the Senior Term C Notes
due October 29, 2011; (iv) $7,500,000 in aggregate principal
amount as evidenced by the Senior Subordinated Notes due
May 24, 2011; (v) $1,250,000 in aggregate principal amount as
evidenced by the Junior Subordinated Notes due May 24, 2012
and (vi) a Revolving Loan Facility in a maximum aggregate
principal amount of $5,250,000 as evidenced by the Revolving Notes
of the Loan Parties payable to the Purchasers (together, the
“ Notes ”);
WHEREAS, pursuant
to the Master Restructuring Agreement, dated as of
December 22, 2005 among GMS, Parent and the other parties
thereto, the stockholders of Parent will contribute their shares of
Parent to GMS in exchange for shares of GMS (the “
Restructuring ”).
WHEREAS,
immediately after the effectiveness of the Restructuring, Parent
proposes to to convert into a limited liability company under the
laws of Delaware (the “ Conversion
”);
WHEREAS, Parent
has requested that the Agent and Purchasers consent to the
Conversion and Restructuring and waive the applicability of any
provisions of the Purchase Agreement that may be breached as a
result of the Conversion and Restructuring (the “
Consent ”);
WHEREAS, it is a
condition to the Consent by the Agent and Purchaser that GMS enter
into this Guaranty and that GMS enter into a Pledge and Security
Agreement in the form attached to the Consent to secure GMS’s
obligations hereunder; and
WHEREAS, GMS is
willing to enter into this Guaranty to provide additional security
for the payment and performance of the obligations under the terms
of the Purchase Agreement; and
WHEREAS,
capitalized terms used herein without definition shall have the
respective meanings assigned thereto in the Purchase
Agreement.
NOW, THEREFORE,
GMS hereby agrees:
Section 1.
Guaranty by GMS . From and after the date hereof, GMS hereby
absolutely, unconditionally and irrevocably guarantees, as primary
obligor and not merely as surety, the full and punctual payment
when due, whether at stated maturity or earlier, by reason of
acceleration, mandatory prepayment or otherwise (including, without
limitation, upon a demand in the event of an Event of Default under
the Purchase Agreement) in accordance herewith, the Notes and all
other Obligations of the Loan Parties under the Notes and any other
Purchase Document (the “ Guaranteed Obligations
”), whether or not from time to time reduced or extinguished
or hereafter increased or incurred, whether or not recovery is or
hereafter may become barred by any statute of limitations, whether
or not enforceable, whether now or hereafter existing, and whether
due or to become due, including principal, interest (including
interest at the contract rate applicable upon default accrued or
accruing after the commencement of any proceeding under the United
States Bankruptcy Code and any amendments thereto (Title 11, United
States Code) (the “ Bankruptcy Code ”) whether
or not such interest is an allowed claim in such proceeding), fees
and costs of collection. This Guaranty constitutes a guaranty of
payment and not of collection. GMS hereby further agrees that, if
any payment made by the Loan Parties or GMS and applied to the
Guaranteed Obligations is at any time annulled, avoided, set aside,
rescinded, invalidated, declared to be fraudulent or preferential
or otherwise required to be refunded or repaid, then, to the extent
of such payment or repayment, GMS’s liability hereunder shall
be and remain in full force and effect, as fully as if such payment
had never been made. If, prior to any of the foregoing, this
Guaranty shall have been cancelled or surrendered, this Guaranty
shall be reinstated in full force and effect, and such prior
cancellation or surrender shall not diminish, release, discharge,
impair or otherwise affect the obligations of GMS in respect of the
amount of such payment.
Section 2.
Authorization; Other Agreements . Agent, for the benefit of
Purchasers is hereby authorized, without notice to, or demand upon,
GMS, which notice and demand requirements each are expressly waived
hereby, and without discharging or otherwise affecting the
obligations of GMS hereunder (which obligations shall remain
absolute and unconditional notwithstanding any such action or
omission to act), from time to time, to do each of the
following:
(a) supplement,
renew, extend, accelerate or otherwise change the time for payment
of, or other terms relating to, the Guaranteed Obligations, or any
part of them, or otherwise modify, amend or change the terms of any
promissory note or other agreement, document or instrument
(including any Transaction Document) now or hereafter executed by
the Loan Parties and delivered to Agent or any Purchaser, including
any increase or decrease of principal or the rate of interest
thereon;
(b) waive or
otherwise consent to noncompliance with any provision of any
instrument evidencing the Guaranteed Obligations, or any part
thereof, or any other instrument or agreement in respect of the
Guaranteed Obligations (including any Transaction Document) now or
hereafter executed by the Loan Parties and delivered to Agent or
any Purchaser;
2
(c) accept
partial payments on the Guaranteed Obligations;
(d) receive,
take and hold additional security or collateral for the payment of
the Guaranteed Obligations or any part of them and exchange,
enforce, waive, substitute, liquidate, terminate, abandon, fail to
perfect, subordinate, transfer, otherwise alter and release any
such additional security or collateral;
(e) settle,
release, compromise, collect or otherwise liquidate the Guaranteed
Obligations or accept, substitute, release, exchange or otherwise
alter, affect or impair any security or collateral for the
Guaranteed Obligations or any part of them or any other guaranty
therefor, in any manner;
(f) add,
release or substitute any one or more other guarantors, makers or
endorsers of the Guaranteed Obligations or any part of them and
otherwise deal with the Loan Parties or any other guarantor, maker
or endorser;
(g) apply to
the Guaranteed Obligations any payment or recovery from the Loan
Parties, from GMS or from any other guarantor, maker or endorser of
the Guaranteed Obligations or any part of them, in each case
whether such Guaranteed Obligations are secured or unsecured or
guaranteed or not guaranteed by others;
(h) apply to
the Guaranteed Obligations any payment or recovery from GMS of any
sum realized from security furnished by the Loan Parties upon their
indebtedness or obligations to the Agent or any Purchaser, in each
case whether or not such indebtedness or obligations relate to the
Guaranteed Obligations; and
(i) refund at
any time any payment received by Agent or any Purchaser in respect
of any Obligation, and payment to Agent or any Purchaser of the
amount so refunded shall be fully guaranteed hereby even though
prior thereto this Guaranty sha
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