SUBSIDIARY GUARANTEE



Exhibit 10.6

SUBSIDIARY GUARANTEE

 

SUBSIDIARY GUARANTEE, dated as of July 28, 2008 (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 (together with their
permitted assigns, the “Purchasers”) to that certain Securities Purchase
Agreement, dated as of the date hereof, between Blink Logic Inc., a Nevada
corporation (the “Company”) 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 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 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 the Company or any Guarantor to the Purchasers, including, without
limitation, allobligations under this Guarantee, the
Debentures 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 Purchasers 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 Company or any Guarantor from time to
time under or in connection with this Guarantee, the Debentures 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 the Company or any
Guarantor. 
 
2.                Guarantee.

 

(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 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 paid in full or otherwise fully satisfied and discharged.


 

(v)            
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 indefeasibly paid in full.

 

(vi)           
Notwithstanding anything to the
contrary in this Guarantee, 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. 

 

(b)            
Right of
Contribution. Subject to Section
2(c), 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 indefeasibly 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 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 and performance 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 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.

 

(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 Signature Pages to 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.

 

(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.  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 indefeasibly 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 (as defined in the Debentures) 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, unless Purchasers holding at least 75% 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:
 
                                                         i.                    other than Permitted Indebtedness (as defined in the Debentures), 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.                    other than Permitted Liens (as defined in the Debentures), 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 any Purchaser;
 
                                                      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.

 

(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.

 

(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 Company 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.

 

(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
Laws. All questions concerning the construction, validity,
enforcement and interpretation of this Guarantee shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof.  Each
of the Company and the Guarantors agree that all proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Guarantee (whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, partners, members, employees or
agents) shall be commenced exclusively in the state and federal courts sitting
in the City of New York, Borough of Manhattan. Each of the Company and the
Guarantors 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 proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such proceeding
is improper. Each party hereto hereby irrevocably waives personal service of
process and consents to process being served in any such proceeding by mailing a
copy thereof via registered or certified mail or overnight delivery (with
evidence of delivery) to such party at the address in effect for notices to it
under this Guarantee and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law.  Each party hereto hereby irrevocably
waives, to the fullest extent permitted by applicable law, any and all right to
trial by jury in any legal proceeding arising out of or relating to this
Guarantee or the transactions contemplated hereby.

 

(l)              
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.


 

(m)           
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.

 

(n)            
Release of
Guarantors. Each Guarantor will be
released from all liability hereunder concurrently with the indefeasible
repayment in full of all amounts owed under the Purchase Agreement, the
Debentures and the other Transaction Documents. 

 

(o)            
Seniority. 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. 

 

(p)            
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.

 

*********************

 

 

(Signature
Pages Follow)


 

IN WITNESS WHEREOF, each of the undersigned has caused
this Guarantee
to be duly executed and delivered as of the date first above
written.


                         BLINK LOGIC CORP.
 

                       
By:___/s/  Larry Bruce__________________________

    
                        
Name:  Larry Bruce

    
                        
Title:    Chief Financial Officer
 
 
                          
 

SCHEDULE 1
 
GUARANTORS
 
                  The following are the names, notice addresses and jurisdiction of organization of each Guarantor.
 
                                                                                                                   COMPANY
                                                                            JURISDICTION OF                       OWNED BY
                                                         INCORPORATION                       PERCENTAGE
                                                         -------------                                      ----------
 
 
----------

 


                                
                            Annex
1 to

SUBSIDIARY
GUARANTEE

 

ASSUMPTION AGREEMENT, dated as of July 28, 2008 made by
Blink Logic Inc., a Nevada 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, Blink Logic Inc., a Nevada corporation (the “Company”) and the
Purchasers have entered into a Securities Purchase Agreement, dated as of July
28, 2008 (as amended, supplemented or otherwise modified from time to time, the
“Purchase Agreement”); 


              
WHEREAS, in connection with the Purchase Agreement, the Subsidiaries of the
Company (other than the Additional Guarantor) have entered into the Subsidiary
Guarantee, dated as of July 28, 2008 (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(m) 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 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.


                 
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: