SUBSIDIARY GUARANTY
THIS SUBSIDIARY GUARANTY (this “ Subsidiary
Guaranty ”), dated as of April 22, 2008, among
Motivnation, Inc., a Nevada corporation (the “ Company
”) and TrixMotive Inc., a Nevada corporation (the “
Subsidiary
Guarantor ”), for the benefit of the secured parties
signatory hereto and their respective endorsees, transferees and
assigns (individually a “ Secured Party
” and collectively, the “ Secured
Parties ”).
W I T N E S S E T H :
WHEREAS,
pursuant to a Securities Purchase Agreement, dated the date
hereof, between Company and the Secured Parties (the “
Purchase
Agreement ”), Company has agreed to issue to the
Secured Parties and the Secured Parties have agreed to
purchase from Company certain of Company’s 8% Callable
Secured Convertible Notes, due three years from the date of
issue (the “ Notes
”), which are convertible into shares of Company’s
Common Stock, par value $.001 per share (the “
Common
Stock ”). In connection therewith,
Company shall issue the Secured Parties certain Common Stock
purchase warrants (the “ Warrants
”); and
WHEREAS,
the Company and the Subsidiary Guarantors have been, and are
now, engaged in Our target clients fall into two categories:
the individual custom automotive enthusiast or collectors of
the “one of a kind” custom motorcycle and auto
creations, and those of local fabricators, custom shops, and
Original Equipment Manufacturers. Our primary market is the
latter of two listed and these customers buy materials,
supplies, and finished parts for their work in serving the
growing market of custom or modified automobile creations. In
addition to distributing several lines of materials and
equipment, we plan to provide training through independent
dealers and our own distribution infrastructure to our primary
market clientele.
Our
manufacturing operations consist of in-house production of
components and parts, assembly and finishing of components,
painting, conversion and assembly of motorcycles and
automobiles, and quality control, which includes performance
testing of finished products under running conditions. The
custom design, fabrication, finish and paint processes are
moved into and out of each aspect of the manufacturing
process.
We
offer various products and services depending on which client
we are catering to for every project. For our individual
retail clients we offer products and services including
restoration work, finish and paint for automobiles as well as
signature paint and design applied to non automotive personal
property. For our independent dealers we offer products and
services directly to the dealers which include custom and
signature finish and design work on a dealer’s own
restoration or manufactured work. We also offer consultative
work in the preparation of signature paints blends,
techniques, and design advice related to the dealer’s
own project. For our original equipment manufacturers we offer
services and products that include signature design and
fabrication for manufactured parts and accessories, which are
a party of a “designer” or “signature”
series of products or design themes. These products and
services are also sold direct to the original equipment
manufacturers and the subsidiary is the primary sources of
revenues and expenses. Corporate expenses are
mainly the costs related to being a public entity. From time
to time there are transfer of funds back and forth between
corporate and the subsidiary; and
WHEREAS,
[ the
Subsidiary Guarantors constitute all of the subsidiaries of
the Company and ] it is in the best interest of the
Subsidiary Guarantors as subsidiaries of the Company and the
indirect beneficiaries of the Purchase Agreement and Notes,
that the Secured Parties enter into the Purchase Agreement and
purchase the Notes to the Company; and
WHEREAS,
as a material inducement to the Secured Parties to enter into
the Purchase Agreement and Notes, the Secured Parties have
required and the Subsidiary Guarantors have agreed to
unconditionally guarantee the timely and full satisfaction of
all obligations of the Company, whether matured or unmatured,
now or hereafter existing or created and becoming due and
payable (the “ Obligations
”) to the Secured Parties, their successors, endorsees,
transferees or assigns under the Transaction Documents (as
defined in the Purchase Agreement); and
WHEREAS,
in light of the foregoing, each Subsidiary Guarantor expects
to derive substantial benefit from the Purchase Agreement and
sale of the Notes and the transactions contemplated thereby
and, in furtherance thereof, has agreed to execute and deliver
this Subsidiary Guaranty.
NOW,
THEREFORE, in consideration of the foregoing recitals, and the
mutual covenants contained herein, the parties hereby agree as
follows:
1.
Guaranty . The Subsidiary Guarantors, jointly and
severally, hereby absolutely, unconditionally and irrevocably
guarantee to the Secured Parties, their successors, endorsees,
transferees and assigns the due and punctual performance and
payment of the Obligations owing to the Secured Parties, their
successors, endorsees, transferees or assigns when due, all at the
time and place and in the amount and manner prescribed in, and
otherwise in accordance with, the Transaction Documents, regardless
of any defense or set-off counterclaim which the Company or any
other person may have or assert, and regardless of whether or not
the Secured Parties or anyone on behalf of the Secured Parties
shall have instituted any suit, action or proceeding or exhausted
its remedies or taken any steps to enforce any rights against the
Company or any other person to compel any such performance or
observance or to collect all or part of any such amount, either
pursuant to the provisions of the Transaction Documents or at law
or in equity, and regardless of any other condition or
contingency.
2.
Waiver of Demand . The Subsidiary Guarantors
hereby unconditionally: (i) waives any requirement that
the Secured Parties, in the event of a breach in any material
respect by the Company of any of its representations or warranties
in the Transaction Documents, first make demand upon, or seek to
enforce remedies against, the Company or any other person before
demanding payment of enforcement hereunder; (ii) covenants that
this Subsidiary Guaranty will not be discharged except by complete
performance of all the Obligations; (iii) agrees that this
Subsidiary Guaranty shall remain in full force and effect without
regard to, and shall not be affected or impaired, without
limitation, by, any invalidity, irregularity or unenforceability in
whole or in part of the Transaction Documents or any limitation on
the liability of the Company thereunder, or any limitation on the
method or terms of payment thereunder which may now or hereafter be
caused or imposed in any manner whatsoever; and (iv) waives
diligence, presentment and protest with respect to, and notice of
default in the performance or payment of any Obligation by the
Company under or in connection with the Transaction
Documents.
3.
Absolute Obligation . Each Subsidiary Guarantor
acknowledges and agrees that (i) no Secured Party has made any
representation or warranty to such Subsidiary Guarantor with
respect to the Company, any of its subsidiaries, any Transaction
Documents or any agreement, instrument or document executed or
delivered in connection therewith, or any other matter whatsoever,
and (ii) such Subsidiary Guarantor shall be liable hereunder, and
such liability shall not be affected or impaired, irrespective of
(A) the validity or enforceability of any Transaction Documents, or
any agreement, instrument or document executed or delivered in
connection therewith, or the collectability of any of the
Obligations, (B) the preference or priority ranking with respect to
any of the Obligations, (C) the existence, validity, enforceability
or perfection of any security interest or collateral security under
any Transaction Documents, or the release, exchange, substitution
or loss or impairment of any such security interest or collateral
security, (D) any failure, delay, neglect or omission by any
Secured Party to realize upon or protect any direct or indirect
collateral security, indebtedness, liability or obligation, any
Transaction Documents, or any agreement, instrument or document
executed or delivered in connection therewith, or any of the
Obligations, (E) the existence or exercise of any right of set-off
by any Secured Party, (F) the existence, validity or enforceability
of any other guaranty with respect to any of the Obligations, the
liability of any other person in respect of any of the Obligations,
or the release of any such person or any other guarantor of any of
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