Exhibit 10.8

 

SUBSIDIARY GUARANTY

 

This SUBSIDIARY GUARANTY (as amended, restated, supplemented, or otherwise
modified and in effect from time to time, this “Guaranty”) is made as of this 13
day of January, 2017, jointly and severally, by usell.com, Inc., a Delaware
corporation (“usell”), BST Distribution, Inc., a New York corporation (“BST”),
WE SELL CELLULAR LLC, a Delaware limited liability company (“We Sell” and
together with usell and BST, each a “Company” and collectively the “Companies”),
HD Capital Holdings LLC, a Delaware limited liability company (“HD Capital”),
Upstream Phone Company USA, Inc., a Delaware corporation (“Upstream”), and
Upstream Phone Holdings, Inc., a Delaware corporation (“Upstream Holdings” and
together with HD Capital, Upstream, and with each other person or entity who
becomes a party to this Guaranty by execution of a joinder in the form of
Exhibit A attached hereto, each referred to individually as a “Guarantor” and
collectively as the “Guarantors”); in favor of XXXXXXXXXXX, a Delaware limited
liability company, in its capacity as agent (together with its successors and
assigns in such capacity, the “Agent”) for the benefit of the Purchasers (as
defined below).

 

WITNESSETH:

 

WHEREAS, XXXX (“Purchaser”, and together with its successors and assigns and
each other purchaser of a Note (as defined below) and their respective
successors and assigns, individually and collectively, the “Purchasers”) have
made, and may make, loans and certain other financial accommodations
(collectively, the “Loans”) the Companies, as evidenced by those certain senior
secured notes dated as of the Closing Date in an original aggregate principal
amount of $8,660,000 (such notes, together with any promissory notes or other
securities issued in exchange or substitution therefor or replacement thereof,
and as any of the same may be amended, supplemented, restated or modified and in
effect from time to time, the “Notes”);

 

WHEREAS, the Notes are being acquired by each Purchaser, together with their
successors and assigns and each other purchaser of a Note and their respective
successors and assigns, individually and collectively, the “Purchasers”,
pursuant to a Note Purchase Agreement dated as of the date hereof among the
Purchasers, the Companies and the Agent (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the “Note Purchase
Agreement”);

 

WHEREAS, pursuant to a Pledge Agreement dated as of the Closing Date by the
usell, BST and Upstream Holdings in favor of the Agent, usell, BST and Upstream
Holdings have pledged a lien on and security interest in all of the issued and
outstanding equity interests owned by usell, BST and Upstream Holdings;

 

WHEREAS, pursuant to a Security Agreement dated as of the Closing Date (as the
same may be amended, restated, supplemented or otherwise modified and in effect
from time to time, the “Security Agreement”) by the “Debtors” (as defined
therein) in favor of the Agent, such Debtors have granted the Agent, for its
benefit and the benefit of the Purchasers, a first priority security interest
in, lien upon and pledge of each of their rights in the Collateral (as defined
in the Security Agreement); and

 

 

 

  

WHEREAS, the Guarantors are direct or indirect subsidiaries of the Companies
and, as such, will derive substantial benefit and advantage from the Loans and
other financial accommodations available to the Companies set forth in the Note
Purchase Agreement, the Notes and the other Related Agreements (together, the
“Transaction Documents”), and it will be to each Guarantor’s direct interest and
economic benefit to assist the Companies in procuring said Loans and other
financial accommodations from Purchasers.

 

NOW, THEREFORE, for and in consideration of the premises and in order to induce
Purchasers to make the Loans, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, each Guarantor hereby
jointly and severally agrees as follows:

 

1.            Definitions: Capitalized terms used herein without definition and
defined in the Note Purchase Agreement are used herein as defined therein. In
addition, as used herein:

 

“Bankruptcy Code” shall mean the Federal Bankruptcy Reform Act of 1978
(11 U.S.C. §101, et seq.), as amended and in effect from time to time
thereunder.

 

“Obligations” shall mean (i) all obligations, liabilities and indebtedness of
every nature of each Company from time to time owed or owing to the Purchasers
and Agent arising under, out of or in connection with the Note Purchase
Agreement, the Notes, the Loans and the other Transaction Documents, including,
without limitation, the principal amount of all debts, claims and indebtedness,
accrued and unpaid interest and all fees, taxes, indemnities, costs and
expenses, whether primary, secondary, direct, contingent, fixed or otherwise,
heretofore, now and/or from time to time hereafter owing, due or payable,
whether before or after the filing of a bankruptcy, insolvency or similar
proceeding under applicable federal, state, foreign or other law and whether or
not an allowed claim in any such proceeding, and (ii) all obligations,
liabilities and indebtedness of every nature of any subsequent Guarantor from
time to time owed or owing to the Purchasers and/or Agent, under or in respect
of this Guaranty, the Pledge Agreement, the Security Agreement, the Note
Purchase Agreement, the Notes, the Loans and the other Transaction Documents, as
the case may be, including, without limitation, the principal amount of all
debts, claims and indebtedness, accrued and unpaid interest and all fees, taxes,
indemnities, costs and expenses, whether primary, secondary, direct, contingent,
fixed or otherwise, heretofore, now and/or from time to time hereafter owing,
due or payable, whether before or after the filing of a bankruptcy, insolvency
or similar proceeding under applicable federal, state, foreign or other law and
whether or not an allowed claim in any such proceeding.

 

2.            Guaranty of Payment.

 

(a)          Each Guarantor, jointly and severally, hereby unconditionally and
irrevocably guarantees the full and prompt payment and performance to Purchasers
and Agent, on behalf of itself and in its capacity as agent for the benefit of
Purchasers, when due, upon demand, at maturity or by reason of acceleration or
otherwise and at all times thereafter, of any and all of the Obligations.

 

2

 

 

(b)          Each Guarantor acknowledges that valuable consideration supports
this Guaranty, including, without limitation, the consideration set forth in the
recitals above, as well as any commitment to lend, extension of credit or other
financial accommodation, whether heretofore or hereafter made by Purchasers to
any Company; any extension, renewal or replacement of any of the Obligations;
any forbearance with respect to any of the Obligations or otherwise; any
cancellation of an existing guaranty; any purchase of any Company’s assets by
any Purchaser or Agent; or any other valuable consideration.

 

(c)          Each Guarantor agrees that all payments under this Guaranty shall
be made in United States currency and in the same manner as provided for the
Obligations.

 

(d)          Notwithstanding any provision of this Guaranty to the contrary, it
is intended that this Guaranty, and any interests, liens and security interests
granted by Guarantors as security for this Guaranty, not constitute a
“Fraudulent Conveyance” (as defined below) in the event that this Guaranty or
such interest is subject to the Bankruptcy Code or any applicable fraudulent
conveyance or fraudulent transfer law or similar law of any state. Consequently,
Guarantors, Agent and Purchasers agree that if this Guaranty, or any such
interests, liens or security interests securing this Guaranty, would, but for
the application of this sentence, constitute a Fraudulent Conveyance, this
Guaranty and each such lien and security interest shall be valid and enforceable
only to the maximum extent that would not cause this Guaranty or such interest,
lien or security interest to constitute a Fraudulent Conveyance, and this
Guaranty shall automatically be deemed to have been amended accordingly at all
relevant times. For purposes hereof, “Fraudulent Conveyance” means a fraudulent
conveyance under Section 548 of the Bankruptcy Code or a fraudulent conveyance
or fraudulent transfer under the provisions of any applicable fraudulent
conveyance or fraudulent transfer law or similar law of any state, as in effect
from time to time.

 

3.          Costs and Expenses. Each Guarantor, jointly and severally, agrees to
pay on demand, all reasonable costs and expenses of every kind incurred by any
Purchaser or Agent: (a) in enforcing this Guaranty, (b) in collecting any of the
Obligations from any Company or any Guarantor, (c) in realizing upon or
protecting or preserving any collateral for this Guaranty or for payment of any
of the Obligations, and (d) in connection with any amendment of, modification
to, waiver or forbearance granted under, or enforcement or administration of any
Transaction Document or for any other purpose in connection with any Transaction
Document, in each case, to the extent Purchaser or Agent may take such action
pursuant to the terms and conditions of this Agreement. “Costs and expenses” as
used in the preceding sentence shall include, without limitation, reasonable
attorneys’ fees incurred by any Purchaser or Agent in retaining legal counsel
for advice, suit, appeal, any insolvency or other proceedings under the
Bankruptcy Code or otherwise, or for any purpose specified in the preceding
sentence.

 

3

 

 

4.Nature of Guaranty: Continuing, Absolute and Unconditional.

 

(a)          This Guaranty is and is intended to be a continuing guaranty of
payment of the Obligations, and not of collectibility, and is intended to be
independent of and in addition to any other guaranty, endorsement, collateral or
other agreement held by Purchasers or Agent therefor or with respect thereto,
whether or not furnished by a Guarantor. None of Purchasers and Agent shall be
required to prosecute collection, enforcement or other remedies against any
Company, any other Guarantor or guarantor of the Obligations or any other person
or entity, or to enforce or resort to any of the Collateral or other rights or
remedies pertaining thereto, before calling on a Guarantor for payment. The
obligations of each Guarantor to repay the Obligations hereunder shall be
unconditional. Guarantor shall have no right to exercise any right of
subrogation, reimbursement, indemnity, exoneration, contribution or any other
claim which it may now or hereafter have against any Company in connection with
this Guaranty until the termination of this Guaranty in accordance with Section
8 below, and hereby waives any benefit of, and any right to participate in, any
security or collateral given to Purchasers to secure payment of the Obligations,
and each Guarantor agrees that it will not take any action to enforce any
obligations of any Company to such Guarantor prior to the Obligations being
finally and irrevocably paid in full in cash, provided that, in the event of the
bankruptcy or insolvency of any Company, to the extent the Obligations have not
been finally and irrevocably paid in full in cash, Agent, for the benefit of
itself and Purchasers, and Purchasers shall be entitled notwithstanding the
foregoing, to file in the name of any Guarantor or in its own name a claim for
any and all indebtedness owing to a Guarantor by such Company (exclusive of this
Guaranty), vote such claim and to apply the proceeds of any such claim to the
Obligations.

 

(b)          For the further security of Purchasers and without in any way
diminishing the liability of the Guarantors, following the occurrence and during
the continuance of an Event of Default, all debts and liabilities, present or
future of the Companies to the Guarantors and all monies received from any
Company or for its account by the Guarantors in respect thereof shall be
received in trust for Purchasers and Agent and promptly following receipt shall
be paid over to Agent, for its benefit and in its capacity as Agent for the
benefit of Purchasers, until all of the Obligations have been paid in full in
cash. This assignment and postponement is independent of and severable from this
Guaranty and shall remain in full effect whether or not any Guarantor is liable
for any amount under this Guaranty.

 

(c)          This Guaranty is absolute and unconditional and shall not be
changed or affected by any representation, oral agreement, act or thing
whatsoever, except as herein provided. This Guaranty is intended by the
Guarantors to be the final, complete and exclusive expression of the guaranty
agreement among the Companies (as limited by the express terms of this
Guaranty), the Guarantors, the Agent and Purchasers. No modification or
amendment of any provision of this Guaranty shall be effective against any party
hereto unless in writing and signed by a duly authorized officer of such party.
This Guaranty, together with the other Transaction Documents, supersedes all
other prior oral or written agreements between each Purchaser, the Guarantors,
the Agent, their Affiliates and Persons acting on their behalf with respect to
the matters discussed herein, and this Guaranty, together with the other
Transaction Documents and the other instruments referenced herein and therein,
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither any Guarantor, the Agent nor any Purchaser makes any
representation, warranty, covenant or undertaking with respect to such matters.
As of the date of this Guaranty, there are no unwritten agreement between the
parties with respect to the matters discussed herein. No provision of this
Guaranty may be amended, modified or supplemented other than by an instrument in
writing signed by the parties hereto.

 

4

 

 

(d)          Each Guarantor hereby releases each Company from all, and agrees
not to assert or enforce (whether by or in a legal or equitable proceeding or
otherwise) any “claims” (as defined in Section 101(5) of the Bankruptcy Code),
whether arising under any law, ordinance, rule, regulation, order, policy or
other requirement of any domestic or foreign Governmental Authority or any
instrumentality or agency thereof, having jurisdiction over the conduct of its
business or assets or otherwise, to which the Guarantors are or would at any
time be entitled by virtue of its obligations hereunder, any payment made
pursuant hereto or the exercise by any Purchaser or Agent of its rights with
respect to the Collateral, including any such claims to which such Guarantors
may be entitled as a result of any right of subrogation, exoneration or
reimbursement.

 

5.Certain Rights and Obligations.

 

(a)          Each Guarantor acknowledges and agrees that Purchasers and Agent,
for its benefit and as agent for the benefit of Purchasers, may, without notice,
demand or any reservation of rights against such Guarantor and without affecting
such Guarantor’s obligations hereunder, from time to time:

 

(i)          renew, extend, increase, accelerate or otherwise change the time
for payment of, the terms of or the interest on the Obligations or any part
thereof or grant other indulgences to any Company or others;

 

(ii)         accept from any person or entity and hold collateral for the
payment of the Obligations or any part thereof, and modify, exchange, enforce or
refrain from enforcing, or release, compromise, settle, waive, subordinate or
surrender, with or without consideration, such collateral or any part thereof;

 

(iii)        accept and hold any endorsement or guaranty of payment of the
Obligations or any part thereof, and discharge, release or substitute any such
obligation of any such endorser or guarantor, or discharge, release or
compromise any Guarantor, or any other person or entity who has given any
security interest in any collateral as security for the payment of the
Obligations or any part thereof, or any other person or entity in any way
obligated to pay the Obligations or any part thereof, and enforce or refrain
from enforcing, or compromise or modify, the terms of any obligation of any such
endorser, guarantor, or person or entity;

 

(iv)        dispose of any and all collateral securing the Obligations in its
reasonable discretion, as it may deem appropriate, and direct the order or
manner of such disposition and the enforcement of any and all endorsements and
guaranties relating to the Obligations or any part thereof as Agent in its
reasonable discretion may determine;

 

(v)         subject to the terms of the Notes, determine the manner, amount and
time of application of payments and credits, if any, to be made on all or any
part of any component or components of the Obligations (whether principal,
interest, fees, costs, and expenses, or otherwise), including, without
limitation, the application of payments received from any source to the payment
of indebtedness other than the Obligations even though Purchasers might lawfully
have elected to apply such payments to the Obligations or to amounts which are
not covered by this Guaranty; and

 

(vi)        take advantage or refrain from taking advantage of any security or
accept or make or refrain from accepting or making any compositions or
arrangements when and in such manner as Agent, in its sole discretion, may deem
appropriate;

 

5

 

 

and generally do or refrain from doing any act or thing which might otherwise,
at law or in equity, release the liability of such Guarantor as a guarantor or
surety in whole or in part, and in no case shall Purchasers or Agent be
responsible or shall any Guarantor be released either in whole or in part for
any act or omission in connection with Purchasers or Agent having sold any
security at less than its value.

 

(b)          Following the occurrence and during the continuance of an Event of
Default, and upon demand by Agent, each Guarantor, jointly and severally, hereby
agrees to pay the Obligations to the extent hereinafter provided and to the
extent unpaid:

 

(i)          without deduction by reason of any setoff, defense (other than
payment) or counterclaim of any Company or any other Guarantor;

 

(ii)         without requiring presentment, protest or notice of nonpayment or
notice of default to any Guarantor, to any Company or to any other person or
entity;

 

(iii)        without demand for payment or proof of such demand or filing of
claims with a court in the event of receivership, bankruptcy or reorganization
of any Company or any other Guarantor;

 

(iv)        without requiring Purchasers or Agent to resort first to any Company
(this being a guaranty of payment and not of collection), to any other
Guarantor, or to any other guaranty or any collateral which Purchasers or Agent
may hold;

 

(v)         without requiring notice of acceptance hereof or assent hereto by
any Purchaser or Agent; and

 

(vi)        without requiring notice that any of the Obligations has been
incurred, extended or continued or of the reliance by any Purchaser or Agent
upon this Guaranty;

 

all of which each Guarantor hereby waives.

 

(c)          Each Guarantor’s obligation hereunder shall not be affected by any
of the following, all of which such Guarantor hereby waives:

 

(i)          any failure to perfect or continue the perfection of any security
interest in or other lien on any collateral securing payment of any of the
Obligations or any Guarantor’s obligation hereunder;

 

(ii)         the invalidity, unenforceability, propriety of manner of
enforcement of, or loss or change in priority of any document or any such
security interest or other lien or guaranty of the Obligations;

 

(iii)        any failure to protect, preserve or insure any such collateral;

 

(iv)        failure of a Guarantor to receive notice of any intended disposition
of such collateral;

 

6

 

 

(v)         any defense arising by reason of the cessation from any cause
whatsoever of liability of any Company including, without limitation, any
failure, negligence or omission by any Purchaser or Agent in enforcing its
claims against any Company;

 

(vi)        any release, settlement or compromise of any obligation of any
Company, any other Guarantor or any other guarantor of the Obligations;

 

(vii)       the invalidity or unenforceability of any of the Obligations;

 

(viii)      any change of ownership of any Company, any other Guarantor or any
other guarantor of the Obligations or the insolvency, bankruptcy or any other
change in the legal status of any Company, any other Guarantor or any other
guarantor of the Obligations;

 

(ix)         any change in, or the imposition of, any law, decree, regulation or
other governmental act which does or might impair, delay or in any way affect
the validity, enforceability or the payment when due of the Obligations;

 

(x)          the existence of any claim, setoff or other rights which the
Guarantor, any Company, any other Guarantor or guarantor of the Obligations or
any other person or entity may have at any time against any Purchaser, Agent or
any Company in connection herewith or any unrelated transaction;

 

(xi)         any Purchaser’s or Agent’s election in any case instituted under
chapter 11 of the Bankruptcy Code, of the application of section 1111(b)(2) of
the Bankruptcy Code;

 

(xii)        any use of cash collateral, or grant of a security interest by any
Company, as debtor in possession, under sections 363 or 364 of the Bankruptcy
Code;

 

(xiii)       the disallowance of all or any portion of any of any Purchaser’s or
Agent’s claims for repayment of the Obligations under sections 502 or 506 of the
Bankruptcy Code;

 

(xiv)      any stay or extension of time for payment by any Company or any other
Guarantor resulting from any proceeding under the Bankruptcy Code or any similar
law; or

 

(xv)       any other fact or circumstance which might otherwise constitute
grounds at law or equity for the discharge or release of a Guarantor from its
obligations hereunder, all whether or not such Guarantor shall have had notice
or knowledge of any act or omission referred to in the foregoing clauses (i)
through (xiv) of this Section 5(c).

 

7

 

 

6.          Representations and Warranties. Each Guarantor further represents
and warrants to Purchasers and Agent that: (a) such Guarantor is a corporation
or other entity duly incorporated or organized, as applicable, validly existing
and in good standing under the laws of the jurisdiction of its incorporation or
formation, as applicable, and has full power, authority and legal right to own
its property and assets and to transact the business in which it is presently
engaged; (b) such Guarantor has full power, authority and legal right to execute
and deliver, and to perform its obligations under, this Guaranty, and has taken
all necessary action to authorize the guarantee hereunder on the terms and
conditions of this Guaranty and to authorize the execution, delivery and
performance of this Guaranty; (c) this Guaranty has been duly executed and
delivered by such Guarantor and constitutes a legal, valid and binding
obligation of such Guarantor enforceable against such Guarantor in accordance
with its terms, except to the extent that such enforceability is subject to
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance and
moratorium laws and other laws of general application affecting enforcement of
creditors’ rights generally, or the availability of equitable remedies, which
are subject to the discretion of the court before which an action may be
brought; and (d) the execution, delivery and performance by each Guarantor of
this Guaranty do not require any action by or in respect of, or filing with, any
governmental body, agency or official and do not violate, conflict with or cause
a breach or a default under any provision of (i) applicable law or regulation,
(ii) the organizational documents of any Guarantor, (iii) any judgment,
injunction, order, decree or other instrument binding upon it, or (iv) any
agreement binding upon it.

 

7.          Negative Covenants. Each Guarantor covenants with Purchasers and
Agent that such Guarantor shall not grant any security interest in or permit any
lien, claim or encumbrance upon any of its assets in favor of any person or
entity other than liens and security interests in favor of Purchasers and Agent
and Permitted Encumbrances. Each Guarantor agrees that it shall not take any
action or engage in any transaction that such Guarantor is prohibited from
taking or engaging in pursuant to the terms of the Note Purchase Agreement. In
addition, each Guarantor agrees to comply with the terms of Section 8 of the
Note Purchase Agreement to the same extent that any Company is required to cause
the Guarantors to comply with such Section of the Note Purchase Agreement. Each
Company, by its signature hereto, hereby acknowledges and agrees that any breach
by a Guarantor of any term or provision of this Guaranty or the Security
Agreement, which is not cured to the Agent’s reasonable satisfaction within any
applicable cure or grace period, shall constitute an “Event of Default” under
the Note.

 

8.          Termination. This Guaranty shall not terminate until such time, if
any, as (i) all Obligations shall be finally and irrevocably paid in full in
cash, (ii) no Notes shall remain outstanding, (iii) all commitments to lend
under the Note Purchase Agreement shall have terminated and (iv) there shall
exist no other outstanding payment or reimbursement obligations (other than
contingent indemnification obligations for which no claims shall have been
asserted) of the Borrower or the Guarantors to the Agent under any of the
Transaction Documents. Thereafter, but subject to the following, Agent, on its
behalf and as agent for Purchasers, shall take such action and execute such
documents as the Guarantors may request (and at the Guarantors’ cost and
expense) in order to evidence the termination of this Guaranty. Payment of all
of the Obligations owing from time to time shall not operate as a discontinuance
of this Guaranty. Each Guarantor further agrees that, to the extent that any
Company makes a payment or payments to Purchasers or Agent on the Obligations,
or Purchasers or Agent receive any proceeds of collateral securing the
Obligations or any other payments with respect to the Obligations, which payment
or receipt of proceeds or any part thereof is subsequently invalidated, declared
to be fraudulent or preferential, set aside or required to be returned or repaid
to any Company, its estate, trustee, receiver, debtor in possession or any other
person or entity, including, without limitation, the Guarantors, under any
insolvency or bankruptcy law, state or federal law, common law or equitable
cause, then to the extent of such payment, return or repayment, the obligation
or part thereof which has been paid, reduced or satisfied by such amount shall
be reinstated and continued in full force and effect as of the date when such
initial payment, reduction or satisfaction occurred, and this Guaranty shall
continue in full force notwithstanding any contrary action which may have been
taken by any Purchaser or Agent in reliance upon such payment, and any such
contrary action so taken shall be without prejudice to any Purchaser’s or
Agent’s rights under this Guaranty and shall be deemed to have been conditioned
upon such payment having become final and irrevocable.

 

8

 

 

9.          Guaranty of Performance. Each Guarantor also guarantees the full,
prompt and unconditional performance of all obligations and agreements of every
kind owed or hereafter to be owed by the Companies and the Guarantors to
Purchasers and Agent under the Note Purchase Agreement, the Notes, and the other
Transaction Documents. Every provision for the benefit of Purchasers and Agent
contained in this Guaranty shall apply to the guaranty of performance given in
this paragraph.

 

10.         Assumption of Liens and Obligations. To the extent that a Guarantor
has received or shall hereafter receive distributions or transfers from any
Company of property or cash that are subject, at the time of such contribution,
to liens and security interests in favor of Purchasers and/or the Agent in
accordance with the Notes, the Security Agreement or any other Transaction
Document, such Guarantor hereby expressly agrees that (i) it shall hold such
assets subject to such liens and security interests, and (ii) it shall be liable
for the payment of the Obligations secured thereby. Each Guarantor’s obligations
under this Section 10 shall be in addition to its obligations as set forth in
other sections of this Guaranty and not in substitution therefor or in lieu
thereof.

 

11.Miscellaneous.

 

(a)          The terms “Company” and “Guarantor” as used in this Guaranty shall
include: (i) any successor individual or individuals, association, partnership,
limited liability company or corporation to which all or substantially all of
the business or assets of such Company or such Guarantor shall have been
transferred and (ii) any other association, partnership, limited liability
company, corporation or entity into or with which such Company or such Guarantor
shall have been merged, consolidated, reorganized, or absorbed.

 

(b)          Without limiting any other right of any Purchaser or Agent,
whenever any Purchaser or Agent has the right to declare any of the Obligations
to be immediately due and payable (whether or not it has been so declared),
Agent, on its behalf and in its capacity as agent for the benefit of Purchasers,
at its sole election without notice to the undersigned may appropriate and set
off against the Obligations:

 

(i)          any and all indebtedness or other moneys due or to become due to
any Guarantor by any Purchaser or Agent in any capacity; and

 

(ii)         any credits or other property belonging to any Guarantor (including
all account balances, whether provisional or final and whether or not collected
or available) at any time held by or coming into the possession of any Purchaser
or Agent, or any affiliate of any Purchaser or Agent, whether for deposit or
otherwise;

 

9

 

 

whether or not the Obligations or the obligation to pay such moneys owed by any
Purchaser or Agent is then due, and the applicable Purchaser or Agent shall be
deemed to have exercised such right of set off immediately at the time of such
election even though any charge therefor is made or entered on such Purchaser’s
or Agent’s records subsequent thereto. Agent agrees to notify such Guarantor in
a reasonably practicable time of any such set-off; however, failure to so notify
such Guarantor shall not affect the validity of any set-off.

 

(c)          Each Guarantor’s obligation hereunder is to pay the Obligations in
full in cash when due according to the Notes, the other Transaction Documents,
this Guaranty and the other agreements, documents and instruments governing the
Obligations to the extent provided herein, and shall not be affected by any stay
or extension of time for payment by any Company or any other Guarantor resulting
from any proceeding under the Bankruptcy Code or any similar law.

 

(d)          No course of dealing between any Company or any Guarantor and
Purchasers or Agent and no act, delay or omission by Purchasers or Agent in
exercising any right or remedy hereunder or with respect to any of the
Obligations shall operate as a waiver thereof or of any other right or remedy,
and no single or partial exercise thereof shall preclude any other or further
exercise thereof or the exercise of any other right or remedy. Any Purchaser or
Agent may remedy any default by any Company under any agreement with any Company
or with respect to any of the Obligations in any reasonable manner without
waiving the default remedied and without waiving any other prior or subsequent
default by any Company. All rights and remedies of Purchasers and Agent
hereunder are cumulative.

 

(e)          This Guaranty shall inure to the benefit of the parties hereto and
their respective successors and assigns.

 

(f)          Agent may assign its rights hereunder without the consent of
Guarantors, in which event such assignee shall be deemed to be Agent hereunder
with respect to such assigned rights.

 

(g)          Captions of the sections of this Guaranty are solely for the
convenience of the parties hereto, and are not an aid in the interpretation of
this Guaranty and do not constitute part of the agreement of the parties set
forth herein.

 

(h)          If any provision of this Guaranty is unenforceable in whole or in
part for any reason, the remaining provisions shall continue to be effective.

 

(i)          All questions concerning the construction, validity, enforcement
and interpretation of this Guaranty shall be governed by the internal laws of
the State of New York, without giving effect to any choice of law or conflict of
law provision or rule (whether of the State of New York or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of New York. Each Guarantor hereby irrevocably submits to
the exclusive jurisdiction of the state and federal courts sitting in the City
of New York, borough of Manhattan, for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to assert in any
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each Guarantor hereby irrevocably waives personal service of process
and consents to process being served in any such suit, action or proceeding by
mailing by registered or certified mail a copy thereof to such party at the
address for such notices to it under this Guaranty and agrees that such service
shall constitute good and sufficient service of process and notice thereof as of
the date that is five (5) business days after the mailing thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law.

 

10

 

 

(j)          Notices. All notices, approvals, requests, demands and other
communications hereunder shall be delivered or made in the manner set forth in,
and shall be effective in accordance with the terms of, the Note Purchase
Agreement or, in the case of communications to the Agent, directed to the notice
address set forth in the Security Agreement; provided, that any communication
shall be effective as to any Guarantor if made or sent to the Company in
accordance with the foregoing.

 

12.WAIVERS.

 

(a)          EACH GUARANTOR WAIVES THE BENEFIT OF ALL VALUATION, APPRAISAL AND
EXEMPTION LAWS.

 

(b)          UPON THE OCCURRENCE OF A DEFAULT OR EVENT OF DEFAULT, EACH
GUARANTOR HEREBY WAIVES ALL RIGHTS TO NOTICE AND HEARING OF ANY KIND PRIOR TO
THE EXERCISE BY ANY PURCHASER OR AGENT, ON ITS BEHALF AND IN ITS CAPACITY AS
AGENT FOR THE BENEFIT OF PURCHASERS, OF ITS RIGHTS TO REPOSSESS THE COLLATERAL
WITHOUT JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON THE COLLATERAL
WITHOUT PRIOR NOTICE OR HEARING. EACH GUARANTOR ACKNOWLEDGES THAT IT HAS BEEN
ADVISED BY COUNSEL OF ITS CHOICE WITH RESPECT TO THIS TRANSACTION AND THIS
GUARANTY.

 

(c)          EACH GUARANTOR WAIVES ITS RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS GUARANTY, OR THE
TRANSACTIONS CONTEMPLATED HEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION
OF ANY TYPE BROUGHT BY ANY PURCHASER OR AGENT. EACH GUARANTOR AGREES THAT ANY
SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.
WITHOUT LIMITING THE FOREGOING, EACH GUARANTOR FURTHER AGREES THAT ITS RIGHT TO
A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OR ENFORCEABILITY OF THIS GUARANTY OR ANY PROVISION HEREOF. THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS GUARANTY.

 

13.         Agent. The terms and provisions of Section 5.11 of the Security
Agreement which set forth the appointment of the Agent are hereby incorporated
by reference herein as if fully set forth therein.

 

11

 

 

14.Payments Free of Taxes.

 

(a)Definitions. In this Section 14:

 

(i)          “Excluded Taxes” means, with respect to the Agent or the
Purchasers, or any other recipient of any payment to be made by or on account of
any obligations of any Guarantor under this Guaranty, or under any other
Security Document, income or franchise taxes imposed on (or measured by) its net
income by the United States of America or such other jurisdiction under the laws
of which such recipient is organized or in which its principal office is
located.

 

(ii)         “Governmental Authority” means the government of the United States
of America or any other nation, or any political subdivision thereof, whether
state or local, or any agency, authority, instrumentality, regulatory body,
court, central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government over the Company or any of its Subsidiaries, or any of their
respective properties, assets or undertakings.

 

(iii)        “Indemnified Taxes” means Taxes other than Excluded Taxes.

 

(iv)        “Taxes” means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.

 

(b)          Any and all payments by or on account of any obligation of any of
the Guarantors under this Guaranty or any other Security Document shall be made
without any set-off, counterclaim or deduction and free and clear of and without
deduction for any Indemnified Taxes; provided that if any Guarantor shall be
required to deduct any Indemnified Taxes from such payments, then (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 14(b)), the Agent or Purchasers, as applicable, receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
such Guarantor shall make such deductions and (iii) such Guarantor shall pay the
full amount deducted to the relevant Governmental Authority in accordance with
applicable law.

 

(c)          Indemnification by the Guarantors. Each Guarantor shall indemnify
the Agent and the Purchasers, within ten (10) days after written demand
therefor, for the full amount of any Indemnified Taxes paid by the Agent or
Purchasers, as applicable, on or with respect to any payment by or on account of
any obligation of such Guarantor under this Guaranty and the other Transaction
Documents (including Indemnified Taxes or imposed or asserted on or attributable
to amounts payable under this Section 14) and any penalties, interest and
reasonable expenses arising therefrom or with respect thereto, whether or not
such Indemnified Taxes were correctly or legally imposed or asserted by the
relevant Governmental Authority. A certificate of the Agent or any Purchaser as
to the amount of such payment or liability under this Section 14 shall be
delivered to such Guarantor and shall be conclusive absent manifest error.

 

12

 

 

15.         Counterparts; Headings. This Guaranty may be executed in two or more
identical counterparts, all of which together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to each other party; provided that a facsimile, .pdf or
similar electronically transmitted signature shall be considered due execution
and shall be binding upon the signatory thereto with the same force and effect
as if the signature were an original signature. The headings in this Guaranty
are for convenience of reference only and shall not alter or otherwise affect
the meaning hereof.

 

16.         Rights of Contribution. The Guarantors hereby agree as among
themselves that, if any Guarantor shall make an Excess Payment (as defined
below), such Guarantor shall have a right of contribution from each other
Guarantor in an amount equal to such other Guarantor’s Contribution Share (as
defined below) of such Excess Payment. The payment obligations of any Guarantor
under this Section 16 shall be subordinate and subject in right of payment to
the Obligations until such time as the Obligations have been paid in full in
cash and all commitments to lend under the Note Purchase Agreement have expired
or terminated, and none of the Guarantors shall exercise any right or remedy
under this Section 16 against any other Guarantor until such Obligations have
been paid in full in cash and all commitments to lend under the Note Purchase
Agreement have expired or terminated. For purposes of this Section 16, (a)
“Excess Payment” shall mean the amount paid by any Guarantor in excess of its
Ratable Share of any Obligations; (b) “Ratable Share” shall mean, for any
Guarantor in respect of any payment of Obligations, the ratio (expressed as a
percentage) as of the date of such payment of Obligations of (i) the amount by
which the aggregate present fair salable value of all of its assets and
properties exceeds the amount of all debts and liabilities of such Guarantor
(including contingent, subordinated, unmatured, and unliquidated liabilities,
but excluding the obligations of such Guarantor hereunder) to (ii) the amount by
which the aggregate present fair salable value of all assets and other
properties of Companies and Guarantors exceeds the amount of all of the debts
and liabilities (including contingent, subordinated, unmatured, and unliquidated
liabilities, but excluding the obligations of the Guarantors hereunder) of the
Companies and Guarantors, provided, however, that, for purposes of calculating
the Ratable Shares of the Guarantors in respect of any payment of Obligations,
any Guarantor that became a Guarantor subsequent to the date of any such payment
shall be deemed to have been a Guarantor on the date of such payment and the
financial information for such Guarantor as of the date such Guarantor became a
Guarantor shall be utilized for such Guarantor in connection with such payment;
and (c) “Contribution Share” shall mean, for any Guarantor in respect of any
Excess Payment made by any other Guarantor, the ratio (expressed as a
percentage) as of the date of such Excess Payment of (i) the amount by which the
aggregate present fair salable value of all of its assets and properties exceeds
the amount of all debts and liabilities of such Guarantor (including contingent,
subordinated, unmatured, and unliquidated liabilities, but excluding the
Obligations) of Companies and Guarantors other than the maker of such Excess
Payment; provided, however, that, for purposes of calculating the Contribution
Shares of the Guarantors in respect of any Excess Payment, any Guarantor that
became a Guarantor subsequent to the date of any such Excess Payment shall be
deemed to have been a Guarantor on the date of such Excess Payment and the
financial information for such Guarantor as of the date such Guarantor became a
Guarantor shall be utilized for such Guarantor in connection with such Excess
Payment. This Section 16 shall not be deemed to affect any right of subrogation,
indemnity, reimbursement or contribution that any Guarantor may have under law
against any Company in respect of any payment of Obligations.

 

[rest of page intentionally left blank; signature page follows]

 

13

 

 

IN WITNESS WHEREOF, each Company and the Guarantors have executed this Guaranty
as of the date first written above.

 

USELL.COM, INC.,
a Delaware corporation   BST DISTRIBUTION, INC., a New York corporation        
  By:     By:     Name:  Nikhil Raman     Name:  Brian Tepfer   Title:  Chief
Executive Officer     Title:  Chief Executive Officer         WE SELL CELLULAR
LLC,
a Delaware limited liability company   Upstream Phone Company USA, Inc., a
Delaware corporation           By:     By:     Name:  Nikhil Raman     Name:
Nikhil Raman   Title:  Manager     Title:  Chief Executive Officer      
UPSTREAM PHONE HOLDINGS, INC., a Delaware corporation   HD CAPITAL HOLDINGS LLC,
a Delaware limited liability company           By:     By:     Name: Nikhil
Raman     Name:  Daniel Brauser   Title:  Chief Executive Officer    
Title:  Manager

 

SIGNATURE PAGE TO

SUBSIDIARY GUARANTY