|
<PAGE>
Exhibit 10.6
GUARANTY
GUARANTY, dated as of November __, 2006 made by each of the
undersigned (each a "GUARANTOR", and collectively, the
"GUARANTORS"), in favor
of GOTTBETTER CAPITAL MASTER, LTD., a company organized under the
laws of the
Cayman Islands (the "INVESTOR") for the "Buyers" (as defined below)
party to the
Securities Purchase Agreement, dated as of even date herewith (as
amended,
restated or otherwise modified from time to time, the "SECURITIES
PURCHASE
AGREEMENT").
WITNESSETH:
WHEREAS, Catuity, Inc., a Delaware corporation (the "PARENT"),
and
each party listed as a "Buyer" on the Schedule of Buyers attached
thereto (each
a "BUYER", and collectively, the "BUYERS") are parties to the
Securities
Purchase Agreement;
WHEREAS, it is a condition precedent to the Buyers purchasing
the
Notes (as defined below) that the Guarantors execute and deliver to
the Investor
a guaranty guaranteeing all of the obligations of the Parent under
the
Securities Purchase Agreement, the Notes and the Transaction
Documents (as
defined in the Securities Purchase Agreement, the "TRANSACTION
DOCUMENTS"); and
WHEREAS, each Guarantor has determined that the execution,
delivery
and performance of this Guaranty directly benefits, and is in the
best interest
of, such Guarantor;
NOW, THEREFORE, in consideration of the premises and the
agreements
herein and in order to induce the Buyers to perform under the
Securities
Purchase Agreement, each Guarantor hereby agrees with each Buyer as
follows:
SECTION 1. Definitions. Reference is hereby made to the
Securities
Purchase Agreement and the "Notes" (as defined therein) issued
pursuant thereto
(as such Notes may be amended, restated, replaced or otherwise
modified from
time to time in accordance with the terms thereof, collectively,
the "NOTES")
for a statement of the terms thereof. All terms used in this
Guaranty, which are
defined in the Securities Purchase Agreement or the Notes and not
otherwise
defined herein, shall have the same meanings herein as set forth
therein.
SECTION 2. Guaranty. The Guarantors, jointly and severally,
hereby
unconditionally and irrevocably, guaranty the punctual payment, as
and when due
and payable, by stated maturity or otherwise, of all Obligations
(as defined in
the Security Agreement) of the Parent from time to time owing by it
in respect
of the Securities Purchase Agreement, the Notes and the other
Transaction
Documents, including, without limitation, all interest that accrues
after the
commencement of any Insolvency Proceeding (as defined in the
Security Agreement)
of the Parent or any Guarantor, whether or not the payment of such
interest is
unenforceable or is not allowable due to the existence of such
Insolvency
Proceeding, and all fees, commissions, expense reimbursements,
indemnifications
and all other amounts due or to become due under any of the
Transaction
Documents (such obligations, to the extent not paid by the Parent,
being the
"GUARANTEED OBLIGATIONS"), and agrees to pay any and all expenses
(including
reasonable counsel fees and expenses) reasonably incurred by the
Investor in
enforcing any rights under this
<PAGE>
Guaranty. Without limiting the generality of the foregoing, each
Guarantor's
liability hereunder shall extend to all amounts that constitute
part of the
Guaranteed Obligations and would be owed by the Parent to the
Investor under the
Securities Purchase Agreement and the Notes but for the fact that
they are
unenforceable or not allowable due to the existence of an
Insolvency Proceeding
involving any Guarantor or the Parent (each, a "TRANSACTION
PARTY").
SECTION 3. Guaranty Absolute; Continuing Guaranty; Assignments.
(a) The Guarantors, jointly and severally, guaranty that the
Guaranteed Obligations will be paid strictly in accordance with the
terms of the
Transaction Documents, regardless of any law, regulation or order
now or
hereafter in effect in any jurisdiction affecting any of such terms
or the
rights of the Investor with respect thereto. The obligations of
each Guarantor
under this Guaranty are independent of the Guaranteed Obligations,
and a
separate action or actions may be brought and prosecuted against
any Guarantor
to enforce such obligations, irrespective of whether any action is
brought
against any Transaction Party or whether any Transaction Party is
joined in any
such action or actions. The liability of any Guarantor under this
Guaranty shall
be irrevocable, absolute and unconditional irrespective of, and
each Guarantor
hereby irrevocably waives, to the extent permitted by law, any
defenses it may
now or hereafter have in any way relating to, any or all of the
following:
(i) any lack of validity or enforceability of any Transaction
Document or any agreement or instrument relating thereto;
(ii) any change in the time, manner or place of payment of, or
in
any other term of, all or any of the Guaranteed Obligations, or any
other
amendment or waiver of or any consent to departure from any
Transaction
Document, including, without limitation, any increase in the
Guaranteed
Obligations resulting from the extension of additional credit to
any Transaction
Party or otherwise;
(iii) any taking, exchange, release or non-perfection of any
Collateral (as defined in the Security Documents), or any taking,
release or
amendment or waiver of or consent to departure from any other
guaranty, for all
or any of the Guaranteed Obligations;
(iv) any change, restructuring or termination of the corporate,
limited liability company or partnership structure or existence of
any
Transaction Party; or
(v) any other circumstance (including any statute of
limitations)
or any existence of or reliance on any representation by the
Investor that might
otherwise constitute a defense available to, or a discharge of, any
Transaction
Party or any other guarantor or surety.
This Guaranty shall continue to be effective or be reinstated, as
the case may
be, if at any time any payment of any of the Guaranteed Obligations
is rescinded
or must otherwise be returned by the Investor or any other Person
upon the
insolvency, bankruptcy or reorganization of any Transaction Party
or otherwise,
all as though such payment had not been made.
(b) This Guaranty is a continuing guaranty and shall (i) remain
in
full force and effect until the indefeasible cash payment in full
of the
Guaranteed Obligations (other than inchoate indemnity obligations)
and/or
complete conversion of all of the Company's obligations
-2-
<PAGE>
under the Notes to equity securities of the Company and payment of
all other
amounts payable under this Guaranty (other than inchoate indemnity
obligations)
and shall not terminate for any reason prior to the respective
Maturity Date of
each Note (other than payment in full of the Notes and/or complete
conversion of
all of the Company's obligations under the Notes to equity
securities of the
Company) and (ii) be binding upon each Guarantor and its respective
successors
and assigns. This Guaranty shall inure to the benefit of and be
enforceable by
the Investor and its successors, and permitted pledgees,
transferees and
assigns. Without limiting the generality of the foregoing sentence,
the Investor
or any Buyer may pledge, assign or otherwise transfer all or any
portion of its
rights and obligations under and subject to the terms of any
Transaction
Document to any other Person, and such other Person shall thereupon
become
vested with all the benefits in respect thereof granted to such
Buyer herein or
otherwise, in each case as provided in the Securities Purchase
Agreement or such
Transaction Document.
SECTION 4. Waivers. To the extent permitted by applicable law,
each
Guarantor hereby waives promptness, diligence, notice of acceptance
and any
other notice with respect to any of the Guaranteed Obligations and
this Guaranty
and any requirement that the Investor exhaust any right or take any
action
against any Transaction Party or any other Person or any
Collateral. The
Guarantor acknowledges that it will receive direct and indirect
benefits from
the financing arrangements contemplated herein and that the waiver
set forth in
this Section 4 is knowingly made in contemplation of such benefits.
The
Guarantors hereby waive any right to revoke this Guaranty, and
acknowledges that
this Guaranty is continuing in nature and applies to all Guaranteed
Obligations,
whether existing now or in the future.
SECTION 5. Subrogation. No Guarantor may exercise any rights that
it
may now or hereafter acquire against any Transaction Party or any
other
guarantor that arise from the existence, payment, performance or
enforcement of
any Guarantor's obligations under this Guaranty, including, without
limitation,
any right of subrogation, reimbursement, exoneration, contribution
or
indemnification and any right to participate in any claim or remedy
of the
Investor against any Transaction Party or any other guarantor or
any Collateral,
whether or not such claim, remedy or right arises in equity or
under contract,
statute or common law, including, without limitation, the right to
take or
receive from any Transaction Party or any other guarantor, directly
or
indirectly, in cash or other property or by set-off or in any other
manner,
payment or security solely on account of such claim, remedy or
right, unless and
until all of the Guaranteed Obligations (other than inchoate
indemnity
obligations) and all other amounts payable under this Guaranty
(other than
inchoate indemnity obligations) shall have indefeasibly been paid
in full in
cash. If any amount shall be paid to the Guarantor in violation of
the
immediately preceding sentence at any time prior to the later of
the payment in
full in cash of the Guaranteed Obligations and all other amounts
payable under
this Guaranty, such amount shall be held in trust for the benefit
of the
Investor and shall forthwith be paid to the Investor to be credited
and applied
to the Guaranteed Obligations and all other amounts payable under
this Guaranty,
whether matured or unmatured, in accordance with the terms of the
Transaction
Document, or to be held as Collateral for any Guaranteed
Obligations or other
amounts payable under this Guaranty thereafter arising. If (a) any
Guarantor
shall make payment to the Investor of all or any part of the
Guaranteed
Obligations, and (b) all of the Guaranteed Obligations (other than
inchoate
indemnity obligations) and all other amounts payable under this
Guaranty (other
than inchoate indemnity obligations) shall indefeasibly be paid in
full in cash,
the Investor will, at such Guarantor's request and expense, execute
and deliver
to such Guarantor appropriate
-3-
<PAGE>
documents, without recourse and without representation or warranty,
necessary to
evidence the transfer by subrogation to such Guarantor of an
interest in the
Guaranteed Obligations resulting from such payment by such
Guarantor.
SECTION 6. Representations, Warranties and Covenants.
(a) Each Guarantor hereby represents and warrants as of the date
first
written above as follows:
(i) The Guarantor (A) is a corporation, limited liability
company
or limited partnership duly organized, validly existing and in good
standing
under the laws of th
|
