EXHIBIT 10.4
SUBSIDIARY GUARANTEE
SUBSIDIARY GUARANTEE, dated as of October 27, 2005 (this "Guarantee"),
made by each of the signatories hereto (together with any other entity that may
become a party hereto as provided herein, (the "Guarantors"), in favor of the
purchasers signatory (the "Purchasers") to that certain Securities Purchase
Agreement, dated as of the date hereof, between Velocity Asset Management Inc.,
a Delaware corporation (the "Company"), J. Holder Inc. (collectively with the
Company, "the Borrowers"), a New Jersey corporation and the Purchasers.
W I T N E S S E T H:
WHEREAS, pursuant to that certain Securities Purchase Agreement, dated
as of the date hereof, by and between the Borrowers and the Purchasers (the
"Purchase Agreement"), the Borrowers have agreed to sell and issue to the
Purchasers, and the Purchasers have agreed to purchase from the Borrowers, the
Borrower's Secured Convertible Debentures, due April 27, 2007 (the
"Debentures"), subject to the terms and conditions set forth therein; and
WHEREAS, each Guarantor will directly benefit from the extension of
credit to the Borrowers represented by the issuance of the Debentures; and
NOW, THEREFORE, in consideration of the premises and to induce the
Purchasers to enter into the Purchase Agreement and to carry out the
transactions contemplated thereby, each Guarantor hereby agrees with the
Purchasers as follows:
1. Definitions. Unless otherwise defined herein, terms defined in
the Purchase Agreement and used herein shall have the meanings given to them in
the Purchase Agreement. The words "hereof," "herein," "hereto" and "hereunder"
and words of similar import when used in this Guarantee shall refer to this
Guarantee as a whole and not to any particular provision of this Guarantee, and
Section and Schedule references are to this Guarantee unless otherwise
specified. The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms. The following
terms shall have the following meanings:
"Guarantee" means this Subsidiary Guarantee, as the same may
be amended, supplemented or otherwise modified from time to time.
"Obligations" means the collective reference to all
obligations and undertakings of the Borrowers of whatever nature,
monetary or otherwise, under the Debentures, the Purchase Agreement,
the Security Agreement, the Warrants, the Registration Rights Agreement
or any other future agreement or obligations undertaken by the
Borrowers to the Purchasers, together with all reasonable attorneys'
fees, disbursements and all other costs and expenses of collection
incurred by Purchasers in enforcing any of such Obligations and/or this
Guarantee.
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2. Guarantee.
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(a) Guarantee.
(i) The Guarantors hereby, jointly and
severally, unconditionally and irrevocably,
guarantee to the Purchasers and their
respective successors, indorsees,
transferees and assigns, the prompt and
complete payment and performance by the
Borrowers when due (whether at the stated
maturity, by acceleration or otherwise) of
the Obligations.
(ii) Anything herein or in any other Transaction
Document to the contrary notwithstanding,
the maximum liability of each Guarantor
hereunder and under the other Transaction
Documents shall in no event exceed the
amount which can be guaranteed by such
Guarantor under applicable federal and state
laws, including laws relating to the
insolvency of debtors, fraudulent conveyance
or transfer or laws affecting the rights of
creditors generally (after giving effect to
the right of contribution established in
Section 2(b)).
(iii) Each Guarantor agrees that the Obligations
may at any time and from time to time exceed
the amount of the liability of such
Guarantor hereunder without impairing the
guarantee contained in this Section 2 or
affecting the rights and remedies of the
Purchasers hereunder.
(iv) The guarantee contained in this Section 2
shall remain in full force and effect until
all the Obligations and the obligations of
each Guarantor under the guarantee contained
in this Section 2 shall have been satisfied
by payment in full.
(v) No payment made by the Borrowers, any of the
Guarantors, any other guarantor or any other
Person or received or collected by the
Purchasers from the Borrowers, any of the
Guarantors, any other guarantor or any other
Person by virtue of any action or proceeding
or any set-off or appropriation or
application at any time or from time to time
in reduction of or in payment of the
Obligations shall be deemed to modify,
reduce, release or otherwise affect the
liability of any Guarantor hereunder which
shall, notwithstanding any such payment
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(other than any payment made by such
Guarantor in respect of the Obligations or
any payment received or collected from such
Guarantor in respect of the Obligations),
remain liable for the Obligations up to the
maximum liability of such Guarantor
hereunder until the Obligations are paid in
full.
(vi) Notwithstanding anything to the contrary in
this Agreement, with respect to any
defaulted non-monetary Obligations the
specific performance of which by the
Guarantors is not reasonably possible (e.g.
the issuance of the Borrowers' Common
Stock), the Guarantors shall only be liable
for making the Purchasers whole on a
monetary basis for the Borrowers' failure to
perform such Obligations in accordance with
the Transaction Documents.
(b) Right of Contribution. Each Guarantor hereby agrees
that to the extent that a Guarantor shall have paid more than its
proportionate share of any payment made hereunder, such Guarantor shall
be entitled to seek and receive contribution from and against any other
Guarantor hereunder which has not paid its proportionate share of such
payment. Each Guarantor's right of contribution shall be subject to the
terms and conditions of Section 2(c). The provisions of this Section
2(b) shall in no respect limit the obligations and liabilities of any
Guarantor to the Purchasers, and each Guarantor shall remain liable to
the Purchasers for the full amount guaranteed by such Guarantor
hereunder.
(c) No Subrogation. Notwithstanding any payment made by
any Guarantor hereunder or any set-off or application of funds of any
Guarantor by the Purchasers, no Guarantor shall be entitled to be
subrogated to any of the rights of the Purchasers against the Borrowers
or any other Guarantor or any collateral security or guarantee or right
of offset held by the Purchasers for the payment of the Obligations,
nor shall any Guarantor seek or be entitled to seek any contribution or
reimbursement from the Borrowers or any other Guarantor in respect of
payments made by such Guarantor hereunder, until all amounts owing to
the Purchasers by the Borrowers on account of the Obligations are paid
in full. If any amount shall be paid to any Guarantor on account of
such subrogation rights at any time when all of the Obligations shall
not have been paid in full, such amount shall be held by such Guarantor
in trust for the Purchasers, segregated from other funds of such
Guarantor, and shall, forthwith upon receipt by such Guarantor, be
turned over to the Purchasers in the exact form received by such
Guarantor (duly indorsed by such Guarantor to the Purchasers, if
required), to be applied against the Obligations, whether matured or
unmatured, in such order as the Purchasers may determine.
(d) Amendments, Etc. With Respect to the Obligations.
Each Guarantor shall remain obligated hereunder notwithstanding that,
without any reservation of rights against any Guarantor and without
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notice to or further assent by any Guarantor, any demand for payment of
any of the Obligations made by the Purchasers may be rescinded by the
Purchasers and any of the Obligations continued, and the Obligations,
or the liability of any other Person upon or for any part thereof, or
any collateral security or guarantee therefor or right of offset with
respect thereto, may, from time to time, in whole or in part, be
renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Purchasers, and the Purchase Agreement
and the other Transaction Documents and any other documents executed
and delivered in connection therewith may be amended, modified,
supplemented or terminated, in whole or in part, as the Purchasers may
deem advisable from time to time, and any collateral security,
guarantee or right of offset at any time held by the Purchasers for the
payment of the Obligations may be sold, exchanged, waived, surrendered
or released. The Purchasers shall have no obligation to protect,
secure, perfect or insure any Lien at any time held by them as security
for the Obligations or for the guarantee contained in this Section 2 or
any property subject thereto.
(e) Guarantee Absolute and Unconditional. Each Guarantor
waives any and all notice of the creation, renewal, extension or
accrual of any of the Obligations and notice of or proof of reliance by
the Purchasers upon the guarantee contained in this Section 2 or
acceptance of the guarantee contained in this Section 2; the
Obligations, and any of them, shall conclusively be deemed to have been
created, contracted or incurred, or renewed, extended, amended or
waived, in reliance upon the guarantee contained in this Section 2; and
all dealings between the Borrowers and any of the Guarantors, on the
one hand, and the Purchasers, on the other hand, likewise shall be
conclusively presumed to have been had or consummated in reliance upon
the guarantee contained in this Section 2. Each Guarantor waives to the
extent permitted by law diligence, presentment, protest, demand for
payment and notice of default or nonpayment to or upon the Borrowers or
any of the Guarantors with respect to the Obligations. Each Guarantor
understands and agrees that the guarantee contained in this Section 2
shall be construed as a continuing, absolute and unconditional
guarantee of payment without regard to (a) the validity or
enforceability of the Purchase Agreement or any other Transaction
Document, any of the Obligations or any other collateral security
therefor or guarantee or right of offset with respect thereto at any
time or from time to time held by the Purchasers, (b) any defense,
set-off or counterclaim (other than a defense of payment or performance
or fraud or misconduct by Purchasers) which may at any time be
available to or be asserted by the Borrowers or any other Person
against the Purchasers, or (c) any other circumstance whatsoever (with
or without notice to or knowledge of the Borrowers or such Guarantor)
which constitutes, or might be construed to constitute, an equitable or
legal discharge of the Borrowers for the Obligations, or of such
Guarantor under the guarantee contained in this Section 2, in
bankruptcy or in any other instance. When making any demand hereunder
or otherwise pursuing its rights and remedies hereunder against any
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Guarantor, the Purchasers may, but shall be under no obligation to,
make a similar demand on or otherwise pursue such rights and remedies
as they may have against the Borrowers, any other Guarantor or any
other Person or against any collateral security or guarantee for the
Obligations or any right of offset with respect thereto, and any
failure by the Purchasers to make any such demand, to pursue such other
rights or remedies or to collect any payments from the Borrowers, any
other Guarantor or any other Person or to realize upon any such
collateral security or guarantee or to exercise any such right of
offset, or any release of the Borrowers, any other Guarantor or any
other Person or any such collateral security, guarantee or right of
offset, shall not relieve any Guarantor of any obligation or liability
hereunder, and shall not impair or affect the rights and remedies,
whether express, implied or available as a matter of law, of the
Purchasers against any Guarantor. For the purposes hereof, "demand"
shall include the commencement and continuance of any legal
proceedings.
(f) Reinstatement. The guarantee contained in this
Section 2 shall continue to be effective, or be reinstated, as the case
may be, if at any time payment, or any part thereof, of any of the
Obligations is rescinded or must otherwise be restored or returned by
the Purchasers upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Borrowers or any Guarantor, or
upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, the Borrowers or any
Guarantor or any substantial part of its property, or otherwise, all as
though such payments had not been made.
(g) Payments. Each Guarantor hereby guarantees that
payments hereunder will be paid to the Purchasers without set-off or
counterclaim in U.S. dollars at the address set forth or referred to in
the Purchase Agreement.
3. Representations and Warranties. Each Guarantor hereby makes
the following representations and warranties to Purchasers as of the date
hereof:
(a) Organization and Qualification. The Guarantor is a
corporation, duly incorporated, validly existing and in good standing
under the laws of the applicable jurisdiction set forth on Schedule 1,
with the requisite corporate power and authority to own and use its
properties and assets and to carry on its business as currently
conducted. The Guarantor has no subsidiaries other than those
identified as such on the Disclosure Schedules to the Purchase
Agreement. The Guarantor is duly qualified to do business and is in
good standing as a foreign corporation in each jurisdiction in which
the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or
in good standing, as the case may be, could not, individually or in the
aggregate, (x) adversely affect the legality, validity or
enforceability of any of this Guaranty in any material respect, (y)
have a material adverse effect on the results of operations, assets,
prospects, or financial condition of the Guarantor or (z) adversely
impair in any material respect the Guarantor's ability to perform fully
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on a timely basis its obligations under this Guaranty (a "Material
Adverse Effect").
(b) Authorization; Enforcement. The Guarantor has the
requisite corporate power and authority to enter into and to consummate
the transactions contemplated by this Guaranty, and otherwise to carry
out its obligations hereunder. The execution and delivery of this
Guaranty by the Guarantor and the consummation by it of the
transactions contemplated hereby have been duly authorized by all
requisite corporate action on the part of the Guarantor. This Guaranty
has been duly executed and delivered by the Guarantor and constitutes
the valid and binding obligation of the Guarantor enforceable against
the Guarantor in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies
or by other equitable principles of general application.
(c) No Conflicts. The execution, delivery and performance
of this Guaranty by the Guarantor and the consummation by the Guarantor
of the transactions contemplated thereby do not and will not (i)
conflict with or violate any provision of its Certificate of
Incorporation or By-laws or (ii) conflict with, constitute a default
(or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument
to which the Guarantor is a party, or (iii) result in a violation of
any law, rule, regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which the
Guarantor is subject (including Federal and state securities laws and
regulations), or by which any material property or asset of the
Guarantor is bound or affected, except in the case of each of clauses
(ii) and (iii), such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as could not, individually
or in the aggregate, have or result in a Material Adverse Effect. The
business of the Guarantor is not being conducted in violation of any
law, ordinance or regulation of any governmental authority, except for
violations which, individually or in the aggregate, do not have a
Material Adverse Effect.
(d) Consents and Approvals. The Guarantor is not required
to obtain any consent, waiver, authorization or order of, or make any
filing or registration with, any court or other federal, state, local,
foreign or other governmental authority or other person in connection
with the execution, delivery and performance by the Guarantor of this
Guaranty.
(e) Purchase Agreement. The representations and
warranties of the Borrowers set forth in the Purchase Agreement as they
relate to such Guarantor, each of which is hereby incorporated herein
by reference, are true and correct as of each time such representations
are deemed to be made pursuant to such Purchase Agreement, and the
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Purchasers shall be entitled to rely on each of them as if they were
fully set forth herein, provided, that each reference in each such
representation and warranty to the Borrowers's knowledge shall, for the
purposes of this Section 3, be deemed to be a reference to such
Guarantor's knowledge.
(f) Foreign Law. Each Guarantor has consulted with
appropriate foreign legal counsel with respect to any of the above
representations for which non-U.S. law is applicable. Such foreign
counsel have advised each applicable Guarantor that such counsel knows
of no reason why any of the above representations would not be true and
accurate. Such foreign counsel were provided with copies of this
Subsidiary Guarantee and the Transaction Documents prior to rendering
their advice.
4. Covenants.
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(a) Each Guarantor covenants and agrees with the
Purchasers that, from and after the date of this Guarantee until the
Obligations shall have been paid in full, such Guarantor shall take,
and/or shall refrain from taking, as the case may be, each commercially
reasonable action that is necessary to be taken or not taken, as the
case may be, so that no Event of Default is caused by the failure to
take such action or to refrain from taking such action by such
Guarantor.
(b) So long as any of the Obligations are outstanding,
each Guarantor will not directly or indirectly on or after the date of
this Guarantee:
i. except with the prior written consent of the
Agent (as defined in the Security Agreement), enter into,
create, incur, assume or suffer to exist any indebtedness for
borrowed money of any kind, including but not limited to, a
guarantee, on or with respect to any of its property or assets
now owned or hereafter acquired or any interest therein or any
income or profits therefrom that is senior to, or pari passu
with, in any respect, such Guarantor's obligations hereunder;
ii. enter into, create, incur, assume or suffer
to exist any liens of any kind, on or with respect to any of
its property or assets now owned or hereafter acquired or any
interest therein or any income or profits therefrom that is
senior to, in any respect, such Guarantor's obligations
hereunder;
iii. amend its certificate of incorporation,
bylaws or other charter documents so as to adversely affect
any rights of the Holder hereunder;
iv. repay, repurchase or offer to repay,
repurchase or otherwise acquire more than a de minimis number
of shares of its Common Stock or Common Stock Equivalents;
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v. enter into any agreement with respect to any
of the foregoing; or
vi. pay cash dividends on any equity securities
of the Borrowers.
5. Miscellaneous.
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(a) Amendments in Writing. None of the terms or
provisions of this Guarantee may be waived, amended, supplemented or
otherwise modified except in writing by the Purchasers.
(b) Notices. All notices, requests and demands to or upon
the Purchasers or any Guarantor hereunder shall be effected in the
manner provided for in the Purchase Agreement; provided that any such
notice, request or demand to or upon any Guarantor shall be addressed
to such Guarantor at its notice address set forth on Schedule 5(b).
(c) No Waiver By Course Of Conduct; Cumulative Remedies.
The Purchasers shall not by any act (except by a written instrument
pursuant to Section 5(a)), delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have
acquiesced in any default under the Transaction Documents or Event of
Default. No failure to exercise, nor any delay in exercising, on the
part of the Purchasers, any right, power or privilege hereunder shall
operate as a waiver thereof. No single or partial exercise of any
right, power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Purchasers of any right or remedy hereunder
on any one occasion shall not be construed as a bar to any right or
remedy which the Purchasers would otherwise have on any future
occasion. The rights and remedies herein provided are cumulative, may
be exercised singly or concurrently and are not exclusive of any other
rights or remedies provided by law.
(d) Enforcement Expenses; Indemnification.
-------------------------------------
(i) Each Guarantor agrees to pay, or reimburse
the Purchasers for, all its costs and
expenses incurred in collecting against such
Guarantor under the guarantee contained in
Section 2 or otherwise enforcing or
preserving any rights under this Guarantee
and the other Transaction Documents to which
such Guarantor is a party, including,
without limitation, the reasonable fees and
disbursements of counsel to the Purchasers.
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(ii) Each Guarantor agrees to pay, and to save
the Purchasers harmless from, any and all
liabilities with respect to, or resulting
from any delay in paying, any and all stamp,
excise, sales or other taxes which may be
payable or determined to be payable in
connection with any of the transactions
contemplated by this Guarantee.
(iii) Each Guarantor agrees to pay, and to save
the Purchasers harmless from, any and all
liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or
nature whatsoever with respect to the
execution, delivery, enforcement,
performance and administration of this
Guarantee to the extent the Borrowers would
be required to do so pursuant to the
Purchase Agreement.
(iv) The agreements in this Section shall survive
repayment of the Obligations and all other
amounts payable under the Purchase Agreement
and the other Transaction Documents.
(e) Successor and Assigns. This Guarantee shall be
binding upon the successors and assigns of each Guarantor and shall
inure to the benefit of the Purchasers and their respective successors
and assigns; provided that no Guarantor may assign, transfer or
delegate any of its rights or obligations under this Guarantee without
the prior written consent of the Purchasers.
(f) Set-Off. Each Guarantor hereby irrevocably authorizes
the Purchasers at any time and from time to time while an Event of
Default under any of the Transaction Documents shall have occurred and
be continuing, without notice to such Guarantor or any other Guarantor,
any such notice being expressly waived by each Guarantor, to set-off
and appropriate and apply any and all deposits, credits, indebtedness
or claims, in any currency, in each case whether direct or indirect,
absolute or contingent, matured or unmatured, at any time held or owing
by the Purchasers to or for the credit or the account of such
Guarantor, or any part thereof in such amounts as the Purchasers may
elect, against and on account of the obligations and liabilities of
such Guarantor to the Purchasers hereunder and claims of every nature
and description of the Purchasers against such Guarantor, in any
currency, whether arising hereunder, under the Purchase Agreement, any
other Transaction Document or otherwise, as the Purchasers may elect,
whether or not the Purchasers have made any demand for payment and
although such obligations, liabilities and claims may be contingent or
unmatured. The Purchasers shall notify such Guarantor promptly of any
such set-off and the application made by the Purchasers of the proceeds
thereof, provided that the failure to give such notice shall not affect
the validity of such set-off and application. The rights of the
Purchasers under this Section are in addition to other rights and
remedies(including, without limitation, other rights of set-off) which
the Purchasers may have.
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(g) Counterparts. This Guarantee may be executed by one
or more of the parties to this Guarantee on any number of separate
counterparts (including by telecopy), and all of said counterparts
taken together shall be deemed to constitute one and the same
instrument.
(h) Severability. Any provision of this Guarantee 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.
(i) Section Headings. The Section headings used in this
Guarantee are for convenience of reference only and are not to affect
the construction hereof or be taken into consideration in the
interpretation hereof.
(j) Integration. This Guarantee and the other Transaction
Documents represent the agreement of the Guarantors and the Purchasers
with respect to the subject matter hereof and thereof, and there are no
promises, undertakings, representations or warranties by the Purchasers
relative to subject matter hereof and thereof not expressly set forth
or referred to herein or in the other Transaction Documents.
(k) Governing Law. THIS GUARANTEE SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE
OF NEW YORK WITHOUT REGARD TO ANY PRINCIPLES OF CONFLICTS OF LAWS.
(l) Submission to Jurisdictional; Waiver. Each Guarantor
hereby irrevocably and unconditionally:
(i) submits for itself and its property in any
legal action or proceeding relating to this
Guarantee and the other Transaction
Documents to which it is a party, or for
recognition and enforcement of any judgment
in respect thereof, to the non-exclusive
general jurisdiction of the Courts of the
State of New York, located in New York
County, New York, the courts of the United
States of America for the Southern District
of New York, and appellate courts from any
thereof;
(ii) consents that any such action or proceeding
may be brought in such courts and waives any
objection that it may now or hereafter have
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to the venue of any such action or
proceeding in any such court or that such
action or proceeding was brought in an
inconvenient court and agrees not to plead
or claim the same;
(iii) agrees that service of process in any such
action or proceeding may be effected by
mailing a copy thereof by registered or
certified mail (or any substantially similar
form of mail), postage prepaid, to such
Guarantor at its address referred to in the
Purchase Agreement or at such other address
of which the Purchasers shall have been
notified pursuant thereto;
(iv) agrees that nothing herein shall affect the
right to effect service of process in any
other manner permitted by law or shall limit
the right to sue in any other jurisdiction;
and
(v) waives, to the maximum extent not prohibited
by law, any right it may have to claim or
recover in any legal action or proceeding
referred to in this Section any special,
exemplary, punitive or consequential
damages.
(m) Acknowledgements. Each Guarantor hereby acknowledges
that:
(i) it has been advised by counsel in the
negotiation, execution and delivery of this
Guarantee and the other Transaction
Documents to which it is a party;
(ii) the Purchasers have no fiduciary
relationship with or duty to any Guarantor
arising out of or in connection with this
Guarantee or any of the other Transaction
Documents, and the relationship between the
Guarantors, on the one hand, and the
Purchasers, on the other hand, in connection
herewith or therewith is solely that of
debtor and creditor; and
(iii) no joint venture is created hereby or by the
other Transaction Documents or otherwise
exists by virtue of the transactions
contemplated hereby among the Guarantors and
the Purchasers.
(n) Additional Guarantors. The Borrowers shall cause each
of its subsidiaries formed or acquired on or subsequent to the date
hereof to become a Guarantor for all purposes of this Guarantee by
executing and delivering an Assumption Agreement in the form of Annex 1
hereto.
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(o) Release of Guarantors. Subject to Section 2.6, each
Guarantor will be released from all liability hereunder concurrently
with the repayment in full of all amounts owed under the Purchase
Agreement, the Debentures and the other Transaction Documents.
(p) Seniority. The Obligations of each of the Guarantors
hereunder rank senior in priority to any other unsecured Debt (as
defined in the Debentures) of such Guarantor.
(q) Waiver of Jury Trial. EACH GUARANTOR AND, BY
ACCEPTANCE OF THE BENEFITS HEREOF, THE PURCHASERS, HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS GUARANTEE AND FOR ANY COUNTERCLAIM THEREIN.
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IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee
to be duly executed and delivered as of the date first above written.
TLOP Acquisition Company, LLC
By: /s/ JAMES J. MASTRIANI
----------------------------------
Name: James J. Mastriani
Title: CFO and Chief Legal Officer
VOM, LLC
By: /s/ W. PETER RAGAN, SR.
----------------------------------
Name: W. Peter Ragan, Sr.
Title: President
SH Sales, Inc.
By: /s/ W. PETER RAGAN, SR.
----------------------------------
Name: W. Peter Ragan, Sr.
Title: President
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SCHEDULE 1
GUARANTORS
The following are the names, notice addresses and jurisdiction of
organization of each Guarantor.
COMPANY
JURISDICTION OF OWNED BY
INCORPORATION PERCENTAGE
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Annex 1 to
SUBSIDIARY GUARANTEE
ASSUMPTION AGREEMENT, dated as of ____ __, ______ made by
______________________________, a ______________ corporation (the "Additional
Guarantor"), in favor of the Purchasers pursuant to the Purchase Agreement
referred to below. All capitalized terms not defined herein shall have the
meaning ascribed to them in such Purchase Agreement.
W I T N E S S E T H :
WHEREAS, Velocity Asset Management Inc., a Bermuda corporation (the
"Company") and the Purchasers have entered into a Securities Purchase Agreement,
dated as of ____________, 2005 (as amended, supplemented or otherwise modified
from time to time, the "Purchase Agreement");
WHEREAS, in connection with the Purchase Agreement, the Borrowers and
its Subsidiaries (other than the Additional Guarantor) have entered into the
Subsidiary Guarantee, dated as of [______________ ____, 2005 (as amended,
supplemented or otherwise modified from time to time, the "Guarantee") in favor
of the Purchasers;
WHEREAS, the Purchase Agreement requires the Additional Guarantor to
become a party to the Guarantee; and
WHEREAS, the Additional Guarantor has agreed to execute and deliver
this Assumption Agreement in order to become a party to the Guarantee;
NOW, THEREFORE, IT IS AGREED:
1. Guarantee. By executing and delivering this Assumption
Agreement, the Additional Guarantor, as provided in Section 5.14 of the
Guarantee, hereby becomes a party to the Guarantee as a Guarantor thereunder
with the same force and effect as if originally named therein as a Guarantor
and, without limiting the generality of the foregoing, hereby expressly assumes
all obligations and liabilities of a Guarantor thereunder. The information set
forth in Annex 1-A hereto is hereby added to the information set forth in
Schedule 1 to the Guarantee. The Additional Guarantor hereby represents and
warrants that each of the representations and warranties contained in Section 3
of the Guarantee is true and correct on and as the date hereof as to such
Additional Guarantor (after giving effect to this Assumption Agreement) as if
made on and as of such date.
2. Governing Law. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK.
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IN WITNESS WHEREOF, the undersigned has caused this Assumption
Agreement to be duly executed and delivered as of the date first above written.
[ADDITIONALGUARANTOR]
By: ____________________________________
Name:
Title:
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