EXHIBIT 10.46
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SUBSIDIARY GUARANTY
New York, New York May 16, 2005
FOR VALUE RECEIVED, and in consideration of note purchases from, loans made
or to be made or credit otherwise extended or to be extended by Laurus Master
Fund, Ltd. ("Laurus") to or for the account of ▇▇▇▇▇▇, Inc., (parent corporation
of ▇▇▇▇▇▇ Traffic Systems, Inc., the parent corporation of the undersigned)
("Debtor") from time to time and at any time and for other good and valuable
consideration and to induce ▇▇▇▇▇▇, in its discretion, to purchase such notes,
make such loans or extensions of credit and to make or grant such renewals,
extensions, releases of collateral or relinquishments of legal rights as Laurus
may deem advisable, 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 "Guarantor" or "the undersigned") unconditionally guaranties to
Laurus, 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 Laurus 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
Laurus, whether incurred by Debtor as maker, endorser, drawer, acceptor,
guarantor, 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 Laurus, whether arising under, out of, or in connection
with the Securities Purchase Agreement dated as of the date hereof betweenDebtor
and Laurus (as the same may be amended, modified and supplemented from time to
time, the "Purchase Agreement"), the Related Agreements referred to in the
Purchase Agreement, including , without limitation, by Debtor to you whether
under the Convertible Note dated as of the date hereof made by Debtor in favor
of ▇▇▇▇▇▇ in the original principal amount of $6,000,000, (as the same may be
amended, modified and supplemented from time to time (the "Note") and any
documents, instruments or agreements relating to or executed in connection with
the Note or any documents, instruments or agreements referred to therein
(together with the Note, as each may be amended, modified, restated or
supplemented from time to time, the "Documents"), 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. In furtherance
of the foregoing, the undersigned ▇▇▇▇▇▇ agrees as follows:
1. NO IMPAIRMENT. Laurus 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, and may also make any 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 Laurus and Debtor or any such other party or person, or
make any election of rights ▇▇▇▇▇▇ 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. The undersigned guarantees that the Obligations will
be paid strictly in accordance with the terms of the Note 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. Guarantor hereby knowingly accepts 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 Guarantor may be
liable hereunder after ▇▇▇▇▇▇'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 acknowledges
that (i) no oral representations, including any representations to extend credit
or provide other financial accommodations to Debtor, have been made by ▇▇▇▇▇▇ 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 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 Loan 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 Laurus or its
assignees or any acceptance thereof or any release of any security by Laurus 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 Laurus shall bear interest until such
amounts are paid in full at the highest rate then applicable to the Obligations.
3. WAIVERS. (a) This Guaranty is a guaranty of payment and not of
collection. Laurus 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 Guarantor hereby
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waives any and all rights which it may have by statute or otherwise which would
require Laurus to do any of the foregoing. Guarantor further consents and agrees
that ▇▇▇▇▇▇ shall be under no obligation to marshal any assets in favor of
Guarantor, 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 Laurus, Debtor and/or
the undersigned with respect to the undersigned's obligations under this
Guaranty, or which Debtor may assert on the underlying debt, including but not
limited to failure of consideration, breach of warranty, fraud, payment (other
than cash payment in full of the Obligations), statute of frauds, bankruptcy,
infancy, statute of limitations, accord and satisfaction, and usury.
(b) The undersigned further waives (i) notice of the acceptance of
this Guaranty, of the making of any such loans or extensions of credit, and of
all notices and demands of any kind to which the undersigned may be entitled,
including, without limitation, notice of adverse change in Debtor's financial
condition or of any other fact which might materially increase the risk of the
undersigned and (ii) presentment to or demand of payment from anyone whomsoever
liable upon any of the Obligations, protest, notices of presentment, non-payment
or protest and notice of any sale of collateral security or any default of any
sort.
(c) Notwithstanding any payment or payments made by the undersigned
hereunder, or any setoff or application of funds of the undersigned by ▇▇▇▇▇▇,
the undersigned shall not be entitled to be subrogated to any of the rights of
▇▇▇▇▇▇ against Debtor or against any collateral or guarantee or right of offset
held by ▇▇▇▇▇▇ for the payment of the Obligations, nor shall the undersigned
seek or be entitled to seek any contribution or reimbursement from Debtor in
respect of payments made by the undersigned hereunder, until all amounts owing
to Laurus by ▇▇▇▇▇▇ on account of the Obligations are paid in full and the
Documents have been terminated. If, notwithstanding the foregoing, any amount
shall be paid to the undersigned on account of such subrogation rights at any
time when all of the Obligations shall not have been paid in full and the
Documents shall not have been terminated, such amount shall be held by the
undersigned in trust for ▇▇▇▇▇▇, segregated from other funds of the undersigned,
and shall forthwith upon, and in any event within two (2) business days of,
receipt by the undersigned, be turned over to Laurus in the exact form received
by the undersigned (duly endorsed by the undersigned to Laurus, if required), to
be applied against the Obligations, whether matured or unmatured, in such order
as Laurus may determine, subject to the provisions of the Documents. Any and all
present and future debts and obligations of Debtor to any of the undersigned are
hereby waived and postponed in favor of, and subordinated to the full payment
and performance of, all present and future debts and obligations of Debtor to
▇▇▇▇▇▇.
4. SECURITY. All sums at any time to the credit of the undersigned and any
property of the undersigned in Laurus's possession or in the possession of any
bank, financial institution or other entity that directly or indirectly, through
one or more intermediaries, controls or is controlled by, or is under common
control with, Laurus (each such entity, an "Affiliate") shall be deemed held by
Laurus or such Affiliate, as the case may be, as security for any and all of the
undersigned's obligations to ▇▇▇▇▇▇ and to any Affiliate of Laurus, no matter
how or when arising and whether under this or any other instrument, agreement or
otherwise.
5. REPRESENTATIONS AND WARRANTIES. The undersigned hereby represents and
warrants (all of which representations and warranties shall survive until all
Obligations are indefeasibly satisfied in full and the Documents have been
irrevocably terminated), that:
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(a) CORPORATE STATUS. The undersigned is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has full power, authority and legal right to own its property and assets and
to transact the business in which it is engaged.
(b) AUTHORITY AND EXECUTION. The undersigned has full power, authority
and legal right to execute and deliver, and to perform its obligations under,
this Guaranty and has taken all necessary corporate and legal action to
authorize the execution, delivery and performance of this Guaranty.
(c) LEGAL, VALID AND BINDING CHARACTER. This Guaranty constitutes the
valid and binding obligation of the undersigned enforceable in accordance with
its terms, except as enforceability may be limited by applicable Insolvency Law.
(d) VIOLATIONS. The execution, delivery and performance of this
Guaranty will not violate any requirement of law applicable to the undersigned
or any material contract, agreement or instrument to which the undersigned is a
party or by which the undersigned or any property of the undersigned is bound or
result in the creation or imposition of any mortgage, lien or other encumbrance
other than to Laurus on any of the property or assets of the undersigned
pursuant to the provisions of any of the foregoing.
(e) CONSENTS OR APPROVALS. No consent of any other person or entity
(including, without limitation, any creditor of the undersigned) and no consent,
license, permit, approval or authorization of, exemption by, notice or report
to, or registration, filing or declaration with, any governmental authority is
required in connection with the execution, delivery, performance, validity or
enforceability of this Guaranty.
(f) LITIGATION. No litigation, arbitration, investigation or
administrative proceeding of or before any court, arbitrator or governmental
authority, bureau or agency is currently pending or, to the best knowledge of
the undersigned, threatened (i) with respect to this Guaranty or any of the
transactions contemplated by this Guaranty or (ii) against or affecting the
undersigned, or any of property or assets of the undersigned, which, if
adversely determined, would have a material adverse effect on the business,
operations, assets or condition, financial or otherwise, of the undersigned.
(g) FINANCIAL BENEFIT. The undersigned has derived or expects to
derive a financial or other advantage from each and every loan, advance or
extension of credit made under the Documents or other Obligation incurred by
Debtor to Laurus.
6. ACCELERATION. (a) If any breach of any covenant or condition or other
event of default shall occur and be continuing after applicable notice to Debtor
or the undersigned and any applicable opportunity to cure under any agreement
made by Debtor or the undersigned to Laurus, or either Debtor or the undersigned
should at any time become insolvent, or make a general assignment, or if a
proceeding in or under any Insolvency Law shall be filed or commenced by, or in
respect of, the undersigned, or if a notice of any lien, levy, or assessment is
filed of record with respect to any assets of the undersigned by the United
States of America or any department, agency, or instrumentality thereof, or if
any taxes or debts owing at any time or times hereafter to any one of them
becomes a lien or encumbrance upon any assets of the undersigned in Laurus's
possession, or otherwise, any and all Obligations shall for purposes hereof, at
Laurus's option, be deemed due and payable without notice notwithstanding that
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any such Obligation is not then due and payable by Debtor; provided, however,
that in the case of any involuntary proceeding in or under any Insolvency Law in
respect of the undersigned, no Obligations shall be deemed due and payable
pursuant to this Section 6(a) unless the undersigned has failed to have such
proceeding dismissed within ninety (90) days.
(b) The undersigned will promptly notify ▇▇▇▇▇▇ of any default by the
undersigned in the performance or observance of any term or condition of any
agreement to which the undersigned is a party if the effect of such default is
to cause, or permit the holder of any obligation under such agreement to cause,
such obligation to become due prior to its stated maturity and, if such an event
occurs, ▇▇▇▇▇▇ shall have the right to accelerate the undersigned's obligations
hereunder.
7. PAYMENTS FROM GUARANTOR. Laurus, in its sole and absolute discretion,
with or without notice to the undersigned, may apply on account of the
Obligations any payment from the undersigned or any other guarantor, or amounts
realized from any security for the Obligations, or may deposit any and all such
amounts realized in a non-interest bearing cash collateral deposit account to be
maintained as security for the Obligations.
8. COSTS. The undersigned shall pay on demand, all costs, fees and expenses
(including reasonable expenses for legal services of every kind) relating or
incidental to the enforcement or protection of the rights of Laurus hereunder or
under any of the Obligations.
9. NO TERMINATION. This is a continuing irrevocable guaranty and shall
remain in full force and effect and be binding upon the undersigned, and the
undersigned's successors and assigns, until all of the Obligations have been
paid in full and the Documents have been irrevocably terminated. If any of the
present or future Obligations are guarantied by persons, partnerships or
corporations in addition to the undersigned, the death, release or discharge in
whole or in part or the bankruptcy, merger, consolidation, incorporation,
liquidation or dissolution of one or more of them shall not discharge or affect
the liabilities of the undersigned under this Guaranty.
10. RECAPTURE. Anything in this Guaranty to the contrary notwithstanding,
if ▇▇▇▇▇▇ receives any payment or payments on account of the liabilities
guaranteed hereby, which payment or payments or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver, or any other party under
any Insolvency Law, common law or equitable doctrine, then to the extent of any
sum not finally retained by ▇▇▇▇▇▇, the undersigned's obligations to ▇▇▇▇▇▇
shall be reinstated and this Guaranty shall remain in full force and effect (or
be reinstated) until payment shall have been made to Laurus, which payment shall
be due on demand.
11. BOOKS AND RECORDS. The books and records of ▇▇▇▇▇▇ showing the account
between ▇▇▇▇▇▇ and Debtor shall be admissible in evidence in any action or
proceeding, shall be binding upon the undersigned for the purpose of
establishing the items therein set forth and shall constitute prima facie proof
thereof.
12. NO WAIVER. No failure on the part of Laurus to exercise, and no delay
in exercising, any right, remedy or power hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise by ▇▇▇▇▇▇ of any right, remedy
or power hereunder preclude any other or future exercise of any other legal
right, remedy or power. Each and every right, remedy and power hereby granted to
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Laurus or allowed it by law or other agreement shall be cumulative and not
exclusive of any other, and may be exercised by ▇▇▇▇▇▇ at any time and from time
to time.
13. WAIVER OF JURY TRIAL. THE UNDERSIGNED DOES HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BASED ON OR WITH RESPECT TO THIS GUARANTY OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR RELATING OR INCIDENTAL HERETO. THE UNDERSIGNED DOES
HEREBY CERTIFY THAT NO REPRESENTATIVE OR AGENT OF ▇▇▇▇▇▇ HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT LAURUS WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION.
14. GOVERNING LAW; JURISDICTION; AMENDMENTS. THIS INSTRUMENT CANNOT BE
CHANGED OR TERMINATED ORALLY, AND SHALL BE GOVERNED, CONSTRUED AND INTERPRETED
AS TO VALIDITY, ENFORCEMENT AND IN ALL OTHER RESPECTS IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK. THE UNDERSIGNED EXPRESSLY CONSENTS TO THE
JURISDICTION AND VENUE OF THE SUPREME COURT OF THE STATE OF NEW YORK, COUNTY OF
NEW YORK, AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK FOR ALL PURPOSES IN CONNECTION HEREWITH. ANY JUDICIAL PROCEEDING BY THE
UNDERSIGNED AGAINST LAURUS INVOLVING, DIRECTLY OR INDIRECTLY ANY MATTER OR CLAIM
IN ANY WAY ARISING OUT OF, RELATED TO OR CONNECTED HEREWITH SHALL BE BROUGHT
ONLY IN THE SUPREME COURT OF THE STATE OF NEW YORK, COUNTY OF NEW YORK OR THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK. THE
UNDERSIGNED FURTHER CONSENTS THAT ANY SUMMONS, SUBPOENA OR OTHER PROCESS OR
PAPERS (INCLUDING, WITHOUT LIMITATION, ANY NOTICE OR MOTION OR OTHER APPLICATION
TO EITHER OF THE AFOREMENTIONED COURTS OR A JUDGE THEREOF) OR ANY NOTICE IN
CONNECTION WITH ANY PROCEEDINGS HEREUNDER, MAY BE SERVED INSIDE OR OUTSIDE OF
THE STATE OF NEW YORK OR THE SOUTHERN DISTRICT OF NEW YORK BY REGISTERED OR
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY PERSONAL SERVICE PROVIDED A
REASONABLE TIME FOR APPEARANCE IS PERMITTED, OR IN SUCH OTHER MANNER AS MAY BE
PERMISSIBLE UNDER THE RULES OF SAID COURTS. THE UNDERSIGNED WAIVES ANY OBJECTION
TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED HEREON AND SHALL NOT ASSERT
ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE OR BASED UPON FORUM NON
CONVENIENS.
15. SEVERABILITY. To the extent permitted by applicable law, any provision
of this Guaranty which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
16. AMENDMENTS, WAIVERS. No amendment or waiver of any provision of this
Guaranty nor consent to any departure by the undersigned therefrom shall in any
event be effective unless the same shall be in writing executed by the
undersigned and ▇▇▇▇▇▇.
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17. NOTICE. All notices, requests and demands to or upon the undersigned,
shall be in writing and shall be deemed to have been duly given or made (a) when
delivered, if by hand, (b) three (3) days after being sent, postage prepaid, if
by registered or certified mail, (c) when confirmed telephonically, if by
facsimile, or (d) when delivered, if by a recognized overnight delivery service
in each event, to the numbers and/or address set forth beneath the signature of
the undersigned.
18. SUCCESSORS. Laurus may, from time to time, without notice to the
undersigned, sell, assign, transfer or otherwise dispose of all or any part of
the Obligations and/or rights under this Guaranty. Without limiting the
generality of the foregoing, Laurus may assign, or grant participations to, one
or more banks, financial institutions or other entities all or any part of any
of the Obligations. In each such event, Laurus, its Affiliates and each and
every immediate and successive purchaser, assignee, transferee or holder of all
or any part of the Obligations shall have the right to enforce this Guaranty, by
legal action or otherwise, for its own benefit as fully as if such purchaser,
assignee, transferee or holder were herein by name specifically given such
right. Laurus shall have an unimpaired right to enforce this Guaranty for its
benefit with respect to that portion of the Obligations which ▇▇▇▇▇▇ has not
disposed of, sold, assigned, or otherwise transferred.
19. RELEASE. Nothing except irrevocable payment in full of the Obligations
shall release the undersigned from liability under this Guaranty.
IN WITNESS WHEREOF, this Guaranty has been executed by the undersigned this
16th day of May, 2005.
▇▇▇▇▇▇ TRAFFIC SYSTEMS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title President & CEO
Address: ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
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