CONTINUING UNCONDITIONAL GUARANTY
WHEREAS,
Wherify Wireless, Inc., a Delaware corporation, as borrower
(“
Borrower ”)
and each Guarantor (as defined in the Security Agreement), from
time to time party thereto are entering into that certain Security
Agreement dated as of _____
__ ,
2008 (as may be amended, restated, supplemented or otherwise
modified from time to time, the “
Security Agreement ”;
all capitalized terms used herein shall have the same meanings
ascribed to them in the Security Agreement unless otherwise
expressly stated) with the Secured Party (as defined in the
Security Agreement) (the “
Lender ”),
pursuant to which Lender is concurrently purchasing an aggregate
principal amount of up to $800,000 of the Borrower’s senior
secured convertible bridge notes (the “
Bridge Note(s) ”);
and
WHEREAS,
Lender has required that each Guarantor, execute and deliver
this Continuing Unconditional Guaranty (this “
Guaranty ”)
to Lender as a condition precedent to purchasing the Bridge Note(s)
of the Borrower; and
WHEREAS,
each Guarantor is a wholly owned subsidiary
of
the Borrower and therefore each such Guarantor will directly or
indirectly receive certain benefits from the credit accommodations
hereinabove described and is therefore willing to guaranty the
prompt payment and performance of the Guaranty Obligations (as such
term is hereinafter defined) of Borrower, on the terms set forth in
this Guaranty.
NOW,
THEREFORE, for value received and in consideration of
Lender’s execution of the Security Agreement and
issuance of the Bridge Note(s) to Borrower, the undersigned
jointly and severally irrevocably, absolutely and
unconditionally guarantees (i) the full and prompt payment
when due, whether at maturity or earlier, by reason of
acceleration or otherwise, and at all times thereafter, of all
of the indebtedness and obligations of every kind and nature
of Borrower to Lender, or any parent, affiliate or subsidiary
of Lender (the term “
Lender ”
as used hereafter shall include such parents, affiliates and
subsidiaries), pursuant to the terms of the Security Agreement and
the other Transaction Documents (as defined in the Security
Agreement), and whether principal, interest, fees, costs, expenses
or otherwise (including, without limitation, any interest, fees or
expenses accruing following the commencement of any insolvency,
receivership, reorganization or bankruptcy case or proceeding
relating to Borrower, whether or not a claim for post-petition
interest, fees or expenses is allowed in such case or proceeding),
howsoever created, arising or evidenced, whether direct or
indirect, absolute or contingent, joint or several, now or
hereafter existing, or due or to become due, and howsoever owned,
held or acquired by Lender, whether through discount, overdraft,
purchase, direct loan or as collateral or otherwise; and (ii) the
prompt, full and faithful discharge by Borrower of each and every
term, condition, agreement, covenant, representation and warranty
now or hereafter made by Borrower to Lender under the Security
Agreement and the other Transaction Documents (all such
indebtedness and obligations being hereinafter referred to as the
“
Guaranty Obligations ”).
For sake of clarity, the Guaranty Obligations shall include the
“
Obligations ”
as defined in the Security Agreement. Each Guarantor further agrees
to pay all reasonable out-of-pocket costs and expenses, including,
without limitation, all court costs and reasonable attorneys’
and paralegals’ fees paid or incurred by Lender in collecting
all or any part of the Guaranty Obligations from, or in prosecuting
or defending any action against, any Guarantor or any other
guarantor of all or any part of the Guaranty Obligations. All
amounts payable by any Guarantor under this Guaranty shall be
payable upon demand by Lender and shall be made in lawful money of
the United States, in immediately available funds.
SECTION
1.
No Fraudulent Conveyance .
Notwithstanding any provision of this Guaranty to the contrary, it
is intended that this Guaranty, and any liens and/or floating
charges and security interests granted by each Guarantor to secure
this Guaranty, do not constitute a Fraudulent Conveyance (as
defined below). Consequently, each Guarantor agrees that if this
Guaranty, or any liens and/or floating charges and security
interests securing this Guaranty, would, but for the application of
this sentence, constitute a Fraudulent Conveyance, this Guaranty
and each such lien and/or floating charge and security interest
shall be valid and enforceable only to the maximum extent that
would not cause this Guaranty or such lien and/or floating charge
and security interest to constitute a Fraudulent Conveyance, and
this Guaranty or the other Transaction Documents providing for such
liens and/or floating charges and security interests shall
automatically be deemed to have been amended accordingly at all
relevant times. For purposes hereof, “
Fraudulent Conveyance ”
means a fraudulent conveyance under Section 548 of the Bankruptcy
Code (as hereinafter defined) or a fraudulent conveyance or
fraudulent transfer under the provisions of any applicable
fraudulent conveyance or fraudulent transfer law or similar law of
any state, nation or other governmental unit, as in effect from
time to time.
SECTION
2.
Unconditional Guaranty .
Each Guarantor hereby agrees that, except as hereinafter provided,
its obligations under this Guaranty shall be irrevocable, absolute
and unconditional, irrespective of (i) the validity or
enforceability of the Guaranty Obligations or any part thereof, or
of the Bridge Note(s), or any promissory note or other document
evidencing all or any part of the Guaranty Obligations, (ii) the
absence of any attempt to collect from Borrower or any other
guarantor all or any part of the Guaranty Obligations or other
action to enforce the same, (iii) the waiver or consent by Lender
with respect to any provision of any instrument evidencing the
Guaranty Obligations, or any part thereof, or any other agreement
heretofore, now or hereafter executed by Borrower or any other
guarantor, and delivered to Lender, (iv) failure by Lender to take
any steps to perfect and maintain its security interest in, or to
preserve its rights, title or interest in and to, any security or
collateral for the Guaranty Obligations, (v) the existence or
nonexistence of any defenses which may be available to Borrower or
any other guarantor with respect to all or any part of the Guaranty
Obligations, (vi) the institution of any proceeding under Chapter
11 of Title 11 of the United States Code (11 U.S.C. § 101 et
seq.), as amended (the “
Bankruptcy Code ”),
or any similar proceeding, by or against Borrower or any other
guarantor or Lender’s election in any such proceeding of the
application of Section 1111(b)(2) of the Bankruptcy Code, (vii) any
borrowing or grant of a security interest by Borrower, as
debtor-in-possession, under Section 364 of the Bankruptcy Code (or
use of cash collateral under
Section 363 of
the Bankruptcy Code), (viii) the disallowance, under Section 502 of
the Bankruptcy Code, of all or any portion of Lender’s
claim(s) for repayment of the Guaranty Obligations, or (ix) any
other circumstance which might otherwise constitute a legal or
equitable discharge or defense of any other guarantor.
SECTION
3.
Waiver .
Each Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of receivership
or bankruptcy of Borrower or any other guarantor, protest or notice
(except as provided elsewhere in the Transaction Documents) with
respect to the Guaranty Obligations and all demands whatsoever, and
covenants that this Guaranty will not be discharged, except by the
complete and indefeasible payment and satisfaction in full
of
all
of the Guaranty Obligations. Each Guarantor further waives notice
of (i) acceptance of this Guaranty, (ii) the existence or incurring
from time to time of any Guaranty Obligations guarantied hereunder,
(iii) the existence of any Default or Event of Default, demand of
payment, nonpayment, or Lender taking any action, under the
Security Agreement or any other Transaction Document, and (iv)
default and demand hereunder. Upon the occurrence and during the
continuance of any Event of Default (as defined in the Security
Agreement), Lender may, in its sole election (regardless of whether
the liability of Borrower or any other guarantor of all or any part
of the Guaranty Obligations has matured or may then be enforced),
proceed directly and at once, without notice, against any Guarantor
to collect and recover the full amount or any portion of the
Guaranty Obligations, without first proceeding against Borrower,
any other guarantor, or any other Person (as defined in the
Security Agreement), firm or corporation, or against any security
or collateral for the Guaranty Obligations. Each Guarantor agrees
that this Guaranty constitutes a guarantee of payment when due and
not of collection.
SECTION
4.
Authorization .
Lender is hereby authorized, without notice or demand and without
affecting the liability of any Guarantor hereunder, at any time and
from time to time to (i) renew, extend, accelerate or otherwise
change the time for payment of, or other terms relating to, the
Guaranty Obligations or otherwise modify, amend or change the terms
of the Bridge Note(s) or any other promissory note or other
agreement, document or instrument now or hereafter executed by
Borrower or any other guarantor and delivered to Lender; (ii)
accept partial payments on the Guaranty Obligations; (iii) take and
hold security or collateral for the payment of the Guaranty
Obligations guaranteed hereby, or for the payment of this Guaranty,
or for the payment of any other guaranties of the Guaranty
Obligations, and exchange, enforce, waive and release any such
security or collateral; (iv) apply such security or collateral and
direct the order or manner of sale or other disposition thereof in
its discretion as it may determine; and (v) settle, release,
compromise, collect or otherwise liquidate the Guaranty Obligations
and any security or collateral therefor in any manner, without
affecting or impairing the obligations of any Guarantor hereunder.
Lender shall have the exclusive right to determine the time and
manner of application of any payments or credits, whether received
from Borrower or any other source, and such determination shall be
binding on each Guarantor. All such payments and credits may be
applied, reversed and reapplied, in whole or in part, to any of the
Guaranty Obligations as Lender shall determine in its discretion
without affecting the validity or enforceability of this
Guaranty.
SECTION
5.
Security Interest .
To secure the payment
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