SUBSIDIARY GUARANTEE
EXHIBIT
4.4
SUBSIDIARY
GUARANTEE, dated as of May 21, 2007 (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
MSGI Security Solutions, Inc., a Nevada corporation (the “Company”)
and
the Purchasers.
WITNESSETH:
WHEREAS,
pursuant to that certain Securities Purchase Agreement, dated as of the date
hereof, by and between the Company and the Purchasers (the “Purchase
Agreement”),
the
Company has agreed to sell and issue to the Purchasers, and the Purchasers
have
agreed to purchase from the Company the Company’s Secured Convertible
Debentures, due May __,
2010
(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 Company
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,
in addition to all other costs and expenses of collection incurred by Purchasers
in enforcing any of such Obligations and/or this Guarantee, all
of
the liabilities
and obligations (primary, secondary, direct, contingent, sole, joint or several)
due or to become due, or that are now or may be hereafter contracted or
acquired, or owing to, of any Debtor to the Secured Parties, including, without
limitation, all
obligations under this Agreement, the Debentures, this Guarantee and any other
instruments, agreements or other documents executed and/or delivered in
connection herewith or therewith, in each case, whether now or hereafter
existing, voluntary or involuntary, direct or indirect, absolute or contingent,
liquidated or unliquidated, whether or not jointly owed with others, and whether
or not from time to time decreased or extinguished and later increased, created
or incurred, and all or any portion of such obligations or liabilities that
are
paid, to the extent all or any part of such payment is avoided or recovered
directly or indirectly from any of the Secured Parties as a preference,
fraudulent transfer or otherwise as such obligations may be amended,
supplemented, converted, extended or modified from time to time. Without
limiting the generality of the foregoing, the term “Obligations” shall include,
without limitation: (i) principal of, and interest on the Debentures and the
loans extended pursuant thereto; (ii) any and all other fees, indemnities,
costs, obligations and liabilities of the Debtors from time to time under or
in
connection with this Agreement, the Debentures, the Guarantee and any other
instruments, agreements or other documents executed and/or delivered in
connection herewith or therewith; and (iii) all amounts (including but not
limited to post-petition interest) in respect of the foregoing that would be
payable but for the fact that the obligations to pay such amounts are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving any Debtor.
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2. Guarantee.
(a) Guarantee.
(i)
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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 Company when due (whether at the stated maturity, by acceleration
or otherwise) of the Obligations.
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(ii)
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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)).
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(iii)
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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.
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(iv)
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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.
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(v)
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No
payment made by the Company, any of the Guarantors, any other guarantor
or
any other Person or received or collected by the Purchasers from
the
Company, 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 (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.
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(vi)
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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 Company's
Common Stock), the Guarantors shall only be liable for making the
Purchasers whole on a monetary basis for the Company's failure to
perform
such Obligations in accordance with the Transaction Documents.
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(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
Company 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 Company or any other Guarantor in respect of payments made by such Guarantor
hereunder, until all amounts owing to the Purchasers by the Company 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.
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(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 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 Company 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
Company 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 Company or any other Person against the Purchasers, or (c)
any other circumstance whatsoever (with or without notice to or knowledge of
the
Company or such Guarantor) which constitutes, or might be construed to
constitute, an equitable or legal discharge of the Company 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 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 Company,
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 Company, 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
Company, 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.
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(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 Company 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 Company 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 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.
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(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 Company 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 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 Company's knowledge shall, for the purposes of this Section 3, be deemed
to
be a reference to such Guarantor's knowledge.
(f) Foreign
Law.
If
applicable, 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.
(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
at least 10% of the original aggregate principal amount of all Debentures issued
on the Closing Date remains outstanding, unless Purchasers holding at least
85%
of the aggregate principal amount of the then outstanding Debentures shall
otherwise consent in writing, each Guarantor will not directly or indirectly
on
or after the date of this Guarantee:
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i. 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;
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;
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 securities or debt obligations;
v. pay
cash
dividends on any equity securities of the Company;
vi. enter
into any transaction with any Affiliate of the Guarantor which would be required
to be disclosed in any public filing of the Company with the Commission, unless
such transaction is made on an arm’s-length basis and expressly approved by a
majority of the disinterested directors of the Company (even if less than a
quorum otherwise required for board approval); or
vii. enter
into any agreement with respect to any of the foregoing.
5. Miscellaneous.
(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.
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(d) Enforcement
Expenses; Indemnification.
(i)
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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)
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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.
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(iii)
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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
Company
would be required to do so pursuant to the Purchase
Agreement.
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(iv)
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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.
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(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.
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(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.
(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.
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(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)
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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;
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(ii)
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consents
that any such action or proceeding may be brought in such courts
and
waives any objection that it may now or hereafter have 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;
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(iii)
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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;
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(iv)
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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 xxx
in any
other jurisdiction; and
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(v)
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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.
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(m) Acknowledgements.
Each
Guarantor hereby acknowledges that:
(i)
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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;
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(ii)
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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
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(iii)
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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.
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(n) Additional
Guarantors.
The
Company 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.
(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.
Except
as set forth on Schedule 3.1(ff) of the Purchase Agreement, the Obligations
of
each of the Guarantors hereunder rank senior in priority to any other
Indebtedness (as defined in the Purchase Agreement) 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.
11
IN
WITNESS WHEREOF, each of the undersigned has caused this Guarantee to
be
duly executed and delivered as of the date first above written.
[SUBSIDIARY] | ||
|
|
|
By: | ||
Name:
Title:
|
12
SCHEDULE
1
GUARANTORS
The
following are the names, notice addresses and jurisdiction of organization
of
each Guarantor.
COMPANY | ||
JURISDICTION OF | OWNED BY | |
INCORPORATION | PERCENTAGE | |
____________ |
13
Annex
1
to
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,
MSGI Security Solutions, Inc., a Nevada corporation (the “Company”)
and
the Purchasers have entered into a Securities Purchase Agreement, dated as
of
May ___, 2007 (as amended, supplemented or otherwise modified from time to
time,
the “Purchase
Agreement”);
WHEREAS,
in connection with the Purchase Agreement, the Company and its Subsidiaries
(other than the Additional Guarantor) have entered into the Subsidiary
Guarantee, dated as of May ___, 2007 (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(n) 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.
14
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:
|
15
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