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EXHIBIT C
SUBSIDIARY GUARANTEE
SUBSIDIARY
GUARANTEE, dated as of August ___, 2008 (this "
Guarantee "), made by each of the signatories hereto
(together with any other entity that may become a party hereto as
provided herein, the " Guarantors "), in favor of the
Secured Parties signatory (the " Secured Parties ") to that
certain Loan and Security Agreement, dated as of the date hereof,
between KeyOn Communications Holdings, Inc. (the " Company
"), the Guarantors and the Secured Parties.
W I T N E S S E T H:
WHEREAS,
pursuant to that certain Loan and Security Agreement, dated as of
the date hereof, by and between the Company and the Secured Parties
(the " Security Agreement "), the Company has agreed to sell
and issue to the Secured Parties, and the Secured Parties have
agreed to purchase from the Company the Company’s Secured
Promissory Notes, due November 30, 2008 or such earlier date as
required therein (the " Notes "), subject to the terms and
conditions set forth therein; and
WHEREAS,
each Guarantor will directly benefit from the extension of credit
to the Company represented by the issuance of the Notes; and
NOW,
THEREFORE, in consideration of the premises and to induce the
Secured Parties to enter into the Security Agreement and to carry
out the transactions contemplated thereby, each Guarantor hereby
agrees with the Secured Parties as follows:
1.
Definitions . Unless otherwise defined herein, terms defined
in the Security Agreement and used herein shall have the meanings
given to them in the Security Agreement. The words "hereof,"
"herein," "hereto" and "hereunder" and words of similar import when
used in this Guarantee shall refer to this Guarantee as a whole and
not to any particular provision of this Guarantee, and Section and
Schedule references are to this Guarantee unless otherwise
specified. The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such
terms. The following terms shall have the following meanings:
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"
Guarantee " means this Subsidiary Guarantee, as the same may
be amended, supplemented or otherwise modified from time to
time.
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"
Obligations " means, in addition to all other costs and
expenses of collection incurred by Secured Parties in enforcing any
of such Obligations and/or this Guarantee, all of the liabilities
and obligations (primary, secondary, direct, contingent, sole,
joint or several) due or to become due, or that are now or may be
hereafter contracted or acquired, or owing to, of any Debtor to the
Secured Parties, including, without limitation, all obligations
under this Agreement, the Notes, this Guarantee and any other
instruments, agreements or other documents
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executed and/or delivered in
connection herewith or therewith, in each case, whether now or
hereafter existing, voluntary or involuntary, direct or indirect,
absolute or contingent, liquidated or unliquidated, whether or not
jointly owed with others, and whether or not from time to time
decreased or extinguished and later increased, created or incurred,
and all or any portion of such obligations or liabilities that are
paid, to the extent all or any part of such payment is avoided or
recovered directly or indirectly from any of the Secured Parties as
a preference, fraudulent transfer or otherwise as such obligations
may be amended, supplemented, converted, extended or modified from
time to time. Without limiting the generality of the foregoing, the
term "Obligations" shall include, without limitation: (i) principal
of, and interest on the Notes and the loans extended pursuant
thereto; (ii) any and all other fees, indemnities, costs,
obligations and liabilities of the Debtors from time to time under
or in connection with this Agreement, the Notes, the Guarantee and
any other instruments, agreements or other documents executed
and/or delivered in connection herewith or therewith; and (iii) all
amounts (including but not limited to post-petition interest) in
respect of the foregoing that would be payable but for the fact
that the obligations to pay such amounts are unenforceable or not
allowable due to the existence of a bankruptcy, reorganization or
similar proceeding involving any Debtor.
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2.
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Guarantee.
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(a)
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Guarantee .
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(i) The
Guarantors hereby, jointly and severally, unconditionally and
irrevocably, guarantee to the Secured Parties and their respective
successors, indorsees, transferees and assigns, the prompt and
complete payment and performance by the Company when due (whether
at the stated maturity, by acceleration or otherwise) of the
Obligations.
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(ii) Anything
herein or in any other Transaction Document to the contrary
notwithstanding, the maximum liability of each Guarantor hereunder
and under the other Transaction Documents shall in no event exceed
the amount which can be guaranteed by such Guarantor under
applicable federal and state laws, including laws relating to the
insolvency of debtors, fraudulent conveyance or transfer or laws
affecting the rights of creditors generally (after giving effect to
the right of contribution established in Section 2(b)).
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(iii) Each
Guarantor agrees that the Obligations may at any time and from time
to time exceed the amount of the liability of such Guarantor
hereunder without impairing the guarantee contained in this Section
2 or affecting the rights and remedies of the Secured Parties
hereunder.
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(iv) The
guarantee contained in this Section 2 shall remain in full force
and effect until all the Obligations and the obligations of each
Guarantor under the guarantee contained in this Section 2 shall
have been satisfied by payment in full.
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(v) No
payment made by the Company, any of the Guarantors, any other
guarantor or any other Person or received or collected by the
Secured Parties from the Company, any of the Guarantors, any other
guarantor or any other Person by virtue of any action or proceeding
or any set-off or appropriation or application at any time or from
time to time in reduction of or in payment of the Obligations shall
be deemed to modify, reduce, release or otherwise affect the
liability of any Guarantor hereunder which shall, notwithstanding
any such payment (other than any payment made by such Guarantor in
respect of the Obligations or any payment received or collected
from such Guarantor in respect of the Obligations), remain liable
for the Obligations up to the maximum liability of such Guarantor
hereunder after giving effect to any payment made pursuant to this
Section 2 (e) until the Obligations are paid in full.
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(vi) Notwithstanding
anything to the contrary in this Agreement, with respect to any
defaulted non-monetary Obligations the specific performance of
which by the Guarantors is not reasonably possible (e.g. the
issuance of the Company’s Common Stock), the Guarantors shall
only be liable for making the Secured Parties whole on a monetary
basis for the Company’s failure to perform such Obligations
in accordance with the Transaction Documents.
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(b)
Right of Contribution . Each Guarantor hereby agrees that to
the extent that a Guarantor shall have paid more than its
proportionate share of any payment made hereunder, such Guarantor
shall be entitled to seek and receive contribution from and against
any other Guarantor hereunder which has not paid its proportionate
share of such payment. Each Guarantor’s right of contribution
shall be subject to the terms and conditions of Section 2(c). The
provisions of this Section 2(b) shall in no respect limit the
obligations and liabilities of any Guarantor to the Secured
Parties, and each Guarantor shall remain liable to the Secured
Parties for the full amount guaranteed by such Guarantor
hereunder.
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(c)
No Subrogation . Notwithstanding any payment made by any
Guarantor hereunder or any set-off or application of funds of any
Guarantor by the Secured Parties, no Guarantor shall be entitled to
be subrogated to any of the rights of the Secured Parties against
the Company or any other Guarantor or any collateral security or
guarantee or right of offset held by the Secured Parties for the
payment of the Obligations, nor shall any Guarantor seek or be
entitled to seek any contribution or reimbursement from the Company
or any other Guarantor in respect of payments made by such
Guarantor hereunder, until all amounts owing to the Secured Parties
by the Company on account of the Obligations are paid in
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full. If any amount shall be paid
to any Guarantor 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 such Guarantor in trust for the Secured
Parties, segregated from other funds of such Guarantor, and shall,
forthwith upon receipt by such Guarantor, be turned over to the
Secured Parties in the exact form received by such Guarantor (duly
indorsed by such Guarantor to the Secured Parties, if required), to
be applied against the Obligations, whether matured or unmatured,
in such order as the Secured Parties may determine.
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(d)
Amendments, Etc. With Respect to the Obligations . Each
Guarantor shall remain obligated hereunder notwithstanding that,
without any reservation of rights against any Guarantor and without
notice to or further assent by any Guarantor, any demand for
payment of any of the Obligations made by the Secured Parties may
be rescinded by the Secured Parties and any of the Obligations
continued, and the Obligations, or the liability of any other
Person upon or for any part thereof, or any collateral security or
guarantee therefor or right of offset with respect thereto, may,
from time to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered or
released by the Secured Parties, and the Security Agreement and the
other Transaction Documents and any other documents executed and
delivered in connection therewith may be amended, modified,
supplemented or terminated, in whole or in part, as the Secured
Parties may deem advisable from time to time, and any collateral
security, guarantee or right of offset at any time held by the
Secured Parties for the payment of the Obligations may be sold,
exchanged, waived, surrendered or released. The Secured Parties
shall have no obligation to protect, secure, perfect or insure any
Lien at any time held by them as security for the Obligations or
for the guarantee contained in this Section 2 or any property
subject thereto.
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(e)
Guarantee Absolute and Unconditional . Each Guarantor waives
any and all notice of the creation, renewal, extension or accrual
of any of the Obligations and notice of or proof of reliance by the
Secured Parties upon the guarantee contained in this Section 2 or
acceptance of the guarantee contained in this Section 2; the
Obligations, and any of them, shall conclusively be deemed to have
been created, contracted or incurred, or renewed, extended, amended
or waived, in reliance upon the guarantee contained in this Section
2; and all dealings between the Company and any of the Guarantors,
on the one hand, and the Secured Parties, on the other hand,
likewise shall be conclusively presumed to have been had or
consummated in reliance upon the guarantee contained in this
Section 2. Each Guarantor waives to the extent permitted by law
diligence, presentment, protest, demand for payment and notice of
default or nonpayment to or upon the Company or any of the
Guarantors with respect to the Obligations. Each Guarantor
understands and agrees that the guarantee contained in this Section
2 shall be construed as a continuing, absolute and unconditional
guarantee of payment without regard to (a) the validity or
enforceability of the Security Agreement or any other Transaction
Document, any of the Obligations or any
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other collateral security
therefor or guarantee or right of offset with respect thereto at
any time or from time to time held by the Secured Parties, (b) any
defense, set-off or counterclaim (other than a defense of payment
or performance or fraud or misconduct by Secured Parties) which may
at any time be available to or be asserted by the Company or any
other Person against the Secured Parties, or (c) any other
circumstance whatsoever (with or without notice to or knowledge of
the Company or such Guarantor) which constitutes, or might be
construed to constitute, an equitable or legal discharge of the
Company for the Obligations, or of such Guarantor under the
guarantee contained in this Section 2, in bankruptcy or in any
other instance. When making any demand hereunder or otherwise
pursuing its rights and remedies hereunder against any Guarantor,
the Secured Parties may, but shall be under no obligation to, make
a similar demand on or otherwise pursue such rights and remedies as
they may have against the Company, any other Guarantor or any other
Person or against any collateral security or guarantee for the
Obligations or any right of offset with respect thereto, and any
failure by the Secured Parties to make any such demand, to pursue
such other rights or remedies or to collect any payments from the
Company, any other Guarantor or any other Person or to realize upon
any such collateral security or guarantee or to exercise any such
right of offset, or any release of the Company, any other Guarantor
or any other Person or any such collateral security, guarantee or
right of offset, shall not relieve any Guarantor of any obligation
or liability hereunder, and shall not impair or affect the rights
and remedies, whether express, implied or available as a matter of
law, of the Secured Parties against any Guarantor. For the purposes
hereof, "demand" shall include the commencement and continuance of
any legal proceedings.
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(f)
Reinstatement . The guarantee contained in this Section 2
shall continue to be effective, or be reinstated, as the case may
be, if at any time payment, or any part thereof, of any of the
Obligations is rescinded or must otherwise be restored or returned
by the Secured Parties upon
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