Exhibit 10.5
EXECUTION COPY
THIS CONTINUING GUARANTY IS
SUBJECT TO A SUBORDINATION
AGREEMENT OF EVEN DATE (THE “SUBORDINATION
AGREEMENT”)
BETWEEN COLLATERAL AGENT AND THE
HOLDER OF SENIOR INDEBTEDNESS
CONTINUING
GUARANTY
THIS CONTINUING GUARANTY (the
“ Guaranty ”) is made as of August 20, 2008
and is executed by EMRISE Corporation, a Delaware corporation
(“ Guarantor ”), in favor of Thomas P. M.
Couse, Joanne Couse, Michael Gaffney and Charles Brand (each, a
“Lender” and collectively, the “
Lenders ”).
R
E C I
T A L S
A.
EMRISE Electronics Corporation, a New Jersey corporation (“
Borrower ”) and the Lenders are parties to that
certain Stock Purchase Agreement dated as of May 23, 2008 (the
“ Stock Purchase Agreement ”) relating to the
purchase by Borrower of all of the issued and outstanding shares of
capital stock (collectively, the “ Shares ”) of
(i) Advanced Control Components, Inc., a New Jersey
corporation (the “ Company ”), owned by
Thomas P. M. Couse, Joanne Couse and Michael Gaffney, and
(ii) Custom Components, Inc., a New Jersey corporation,
owned by Charles S. Brand. Capitalized terms used but
not otherwise defined herein shall have the meanings ascribed to
them in the Stock Purchase Agreement.
B.
Pursuant to the terms of the Stock Purchase Agreement, upon the
happening of certain events Borrower is obligated to deliver
certain Deferred Purchase Price Payments to Lenders.
C.
Pursuant to the terms of the Stock Purchase Agreement, Borrower
issued certain subordinated secured contingent promissory notes
(which are defined in the Stock Purchase Agreement as well as
herein as the “ Subordinated Contingent Notes ”)
to Lenders to satisfy a portion of the aggregate consideration to
be paid by Borrower for the purchase of the Shares.
D.
Lenders require as a condition to the Stock Purchase Agreement, the
Subordinated Contingent Notes and the other Related Agreements,
that a guaranty in the form of this Guaranty be executed and
delivered by Guarantor.
NOW, THEREFORE, for and in
consideration of the recitals contained herein and to induce
Lenders to accept the terms of the Stock Purchase Agreement, the
Subordinated Contingent Notes and the other Related Agreements and
for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is agreed as
follows:
1.
Guarantor hereby unconditionally, irrevocably and absolutely
guarantees to and for the benefit of Lenders or order, the full,
prompt, unconditional and faithful payment, when and as the same
shall become due, whether at the stated maturity date, by
acceleration or otherwise and the full, prompt, unconditional and
faithful performance of all of Borrower’s and
the Company’s present and future
indebtedness and obligations, direct or indirect, to Lenders and
each and every term, condition and covenant arising under or with
respect to: (i) the Stock Purchase Agreement, including,
without limitation, the Deferred Purchase Price Payments;
(ii) the Subordinated Contingent Notes and all extensions,
renewals, replacements, substitutions, amendments and modifications
thereof, (iii) the Security Agreement of even date herewith
executed by Borrower and the Company in favor of Lenders;
(iv) the other Related Agreements, and (v) any other
document or instrument contemplated by or securing any obligation
whatsoever of Borrower or the Company to any of the Lenders
(collectively, the “ Obligations ”).
2.
This Guaranty is a primary obligation of the Guarantor and shall be
a continuing, unconditional, inexhaustible Guaranty. This
Guaranty is, and is intended to be, a guaranty of the Obligations,
in addition to any other guaranty, endorsement or collateral held
by Lenders therefor, whether or not furnished by Guarantor.
Guarantor shall have no right of subrogation with respect to any
payments made by Guarantor hereunder until all of the Obligations
are paid or performed in full.
3.
No delay or omission by Lenders in exercising any right or remedy
hereunder shall operate as a waiver thereof or of any other right
or remedy, and no single or partial exercise thereof shall preclude
any other or further exercise thereof or the exercise of any other
right or remedy. All rights and remedies of Lenders hereunder
are cumulative. Guarantor waives the right to marshalling of
the Borrower’s or Company’s assets or any stay of
execution and the benefit of all exemption laws, to the extent
permitted by law, and any other protection granted by law to the
Guarantor now or hereafter in effect with respect to any action or
proceeding brought against it. No invalidity, illegality or
unenforceability o
