Exhibit
10.5
SUBSIDIARY
GUARANTY
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Chicago,
Illinois
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March 30, 2007
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FOR VALUE RECEIVED, and in consideration of the
loans made or to be made or credit otherwise extended or to be
extended by Biometrics Investors, L.L.C., a Delaware limited
liability Company ("Lender") to or for the account of Sequiam
Corporation, a California corporation ("Debtor"), from time to time
and at any time and for other good and valuable consideration and
to induce Lender, in its discretion, to make such loans or
extensions of credit and to make or grant such renewals,
extensions, releases of collateral or relinquishments of legal
rights as Lender 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 Lender, 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 Debtor to Lender and of all instruments of any
nature evidencing or relating to any such obligations and
liabilities upon which Debtor or one or more parties and Debtor is
or may become liable to Lender, whether incurred by Debtor 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 Lender, whether arising under, out of, or in
connection with (i) that certain Agreement dated as of the date
here of between Lender and Debtor (the "Agreement"), (ii) that
certain Term Note A in the principal amount of $6,500,000 dated as
of the date hereof made by the Debtor in favor of the Lender ("Term
Note A"), (iii) that certain Term Note B in the principal amount of
$5,000,000 scheduled to be made by the Debtor in favor of the
Lender ("Term Note B"), (iv) the Common Share Purchase Warrants
delivered to Lender which shall be exercisable immediately for
65,719,041]Common Shares of Debtor at an exercise price of $0.01
(the "Initial Warrants"), (v) the Common Share Purchase Warrants
delivered to Lender which shall be exercisable immediately for
39,431,424 Common Shares of Debtor at an exercise price of $0.01
(the "Additional Warrants"), (vi) that certain Registration Rights
Agreement dated as of the date hereof by and between the Debtor and
Lender (the "Registration Rights Agreement"), (vii) Master Security
Agreement dated as of the date hereof by and between the Guarantors
and Lender (the “Master Security Agreement”), (viii)
that certain Second Amended and Restated Stock Pledge Agreement
dated as of the date hereof among the Debtor, certain subsidiaries
of the Debtor and Lender (the “Stock Pledge
Agreement”), (ix) this Guaranty, and (x) the Subordination
Agreement dated as of the date hereof among the Subordinated
Lenders, as defined therein, and Lender (the “Subordination
Agreement”), (xi) the Account Control Agreement among the
Borrower, the Lender and the Bank (as defined therein) (the
“Account Control Agreement”) (the Agreement, Term Note
A, Term Note B, the Initial Warrants, the Additional Warrants, the
Registration Rights Agreement, the Master Security Agreement, the
Stock Pledge Agreement, this Guaranty, the Subordination Agreement,
and the Account Control Agreement, as each may be amended,
modified, restated 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
indebtedness, obligations or liabilities of the Debtor to Lender,
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 Debtor under Title
11, United States Code, including, without limitation, obligations
or indebtedness of Debtor 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. Previously,
certain of the Guarantors had executed that certain Amended and
Restated Subsidiary Guaranty in favor of Lee Harrison Corbin,
Attorney in-Fact for the Trust Under the Will of John Svenningsen
(“the Trust”) dated as of May 18, 2005 (the
“Prior Guaranty”). The Trust has assigned all of its
rights under the Prior Guaranty to the Lender such that the Lender
now stands in place of the Trust thereunder. Terms not otherwise
defined herein shall have the meaning assigned such terms in the
Agreement. In furtherance of the foregoing, the undersigned hereby
agrees as follows:
1. No Impairment . Lender 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 Debtor 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 Lender and Debtor or any such
other party or person, or make any election of rights Lender 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 instrument shall be
effective regardless of the subsequent incorporation, merger or
consolidation of Debtor, or any change in the composition, nature,
personnel or location of Debtor and shall extend to any successor
entity to Debtor, including a debtor in possession or the like
under any Insolvency Law.
2. Guaranty Absolute . Subject to Section 5(c), 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 Debtor 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 Debtor will contract
additional indebtedness for which Guarantors may be liable
hereunder after Debtor’s financial condition or ability to
pay its lawful debts when they fall due has deteriorated, whether
or not Debtor has properly authorized incurring such additional
indebtedness. The undersigned acknowledge that (i) no oral
representations, including any representations to extend credit or
provide other financial accommodations to Debtor, have been made by
Lender to induce the undersigned to enter into this Guaranty and
(ii) any extension of credit to the Debtor 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 Lender or its assignees or
any acceptance thereof or any release of any security by Lender 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,
composition, adjustment, dissolution, liquidation or other like
proceeding relating to Debtor, 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 Lender 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.
(a) This Guaranty is a guaranty of payment and not
of collection. Lender shall be under no obligation to institute
suit, exercise rights or remedies or take any other action against
Debtor or any other person 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 Lender to do any of the
foregoing. Each of the Guarantors further consents and agrees that
Lender shall be under no obligation to marshal any assets in favor
of Guarantors, or against or in payment of any or all of the
Obligations. 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 Lender, Debtor and/or the undersigned
with respect to the undersign
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