Document:

Exhibit 4.8

 

THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAWS. THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE
OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT AND THE
COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT UNDER SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO HOUSE OF BRUSSELS CHOCOLATES INC. THAT SUCH REGISTRATION IS NOT
REQUIRED.

 

Right to
Purchase up to 1,500,000 Shares of Common Stock of

 

House
of Brussels Chocolates Inc.

 

(subject
to adjustment as provided herein)

 

COMMON
STOCK PURCHASE WARRANT

	
       

      No.
	 	 

      Issue
      Date: March 29, 2005

 

HOUSE OF
BRUSSELS CHOCOLATES INC., a corporation organized under the laws of the State of
Nevada (the “Company”), hereby certifies that, for value received, LAURUS MASTER
FUND, LTD., or assigns (the “Holder”), is entitled, subject to the terms set
forth below, to purchase from the Company (as defined herein) from and after the
Issue Date of this Warrant and at any time or from time to time before 5:00
p.m., New York time, through the close of business March 29, 2012 (the
“Expiration Date”), up to 1,500,000 fully paid and nonassessable shares of
Common Stock (as hereinafter defined), $0.001 par value per share, at the
applicable Exercise Price per share (as defined below). The number and character
of such shares of Common Stock and the applicable Exercise Price per share are
subject to adjustment as provided herein.

 

As used
herein the following terms, unless the context otherwise requires, have the
following respective meanings: 

 

(a)    The term
“Company” shall include the Company and any person or entity which shall
succeed, or assume the obligations of, the Company hereunder. 

 

(b)    The term
“Common Stock” includes (i) the Company’s Common Stock, par value $0.001 per
share; and (ii) any other securities into which or for which any of the
securities described in the preceding clause (i) may be converted or exchanged
pursuant to a plan of recapitalization, reorganization, merger, sale of assets
or otherwise.

 

(c)    The term
“Other Securities” refers to any stock (other than Common Stock) and other
securities of the Company or any other person (corporate or otherwise) which the
holder of the Warrant at any time shall be entitled to receive, or shall have
received, on the exercise of the Warrant, in lieu of or in addition to Common
Stock, or which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other Securities pursuant to
Section 4 or otherwise. 

 

(d)    The
“Exercise Price” applicable under this Warrant shall be a price of
$1.20.

 

1.    Exercise
of Warrant.

 

1.1    Number
of Shares Issuable upon Exercise. From
and after the date hereof through and including the Expiration Date, the Holder
shall be entitled to receive, upon exercise of this Warrant in whole or in part,
by delivery of an original or fax copy of an exercise notice in the form
attached hereto as Exhibit A (the “Exercise Notice”), shares of Common Stock of
the Company, subject to adjustment pursuant to Section 4.

 

1.2    Fair
Market Value. For
purposes hereof, the “Fair Market Value” of a share of Common Stock as of a
particular date (the “Determination Date”) shall mean: 

 

(a)    If the
Company’s Common Stock is traded on the American Stock Exchange or another
national exchange or is quoted on the National or SmallCap Market of The Nasdaq
Stock Market, Inc. (“Nasdaq”), then the closing or last sale price,
respectively, reported for the last business day immediately preceding the
Determination Date.

 

(b)    If the
Company’s Common Stock is not traded on the American Stock Exchange or another
national exchange or on the Nasdaq but is traded on the NASD OTC Bulletin Board,
then the mean of the average of the closing bid and asked prices reported for
the last business day immediately preceding the Determination Date.

 

(c)    Except as
provided in clause (d) below, if the Company’s Common Stock is not publicly
traded, then as the Holder and the Company agree or in the absence of agreement
by arbitration in accordance with the rules then in effect of the American
Arbitration Association, before a single arbitrator to be chosen from a panel of
persons qualified by education and training to pass on the matter to be
decided.

 

(d)    If the
Determination Date is the date of a liquidation, dissolution or winding up, or
any event deemed to be a liquidation, dissolution or winding up pursuant to the
Company’s charter, then all amounts to be payable per share to holders of the
Common Stock pursuant to the charter in the event of such liquidation,
dissolution or winding up, plus all other amounts to be payable per share in
respect of the Common Stock in liquidation under the charter, assuming for the
purposes of this clause (d) that all of the shares of Common Stock then issuable
upon exercise of the Warrant are outstanding at the Determination
Date.

 

1.3    Company
Acknowledgment. The
Company will, at the time of the exercise of this Warrant, upon the request of
the holder hereof acknowledge in writing its continuing obligation to afford to
such holder any rights to which such holder shall continue to be entitled after
such exercise in accordance with the provisions of this Warrant. If the holder
shall fail to make any such request, such failure shall not affect the
continuing obligation of the Company to afford to such holder any such rights.

2

 

1.4    Trustee
for Warrant Holders. In the
event that a bank or trust company shall have been appointed as trustee for the
holders of this Warrant pursuant to Subsection 3.2, such bank or trust company
shall have all the powers and duties of a warrant agent (as hereinafter
described) and shall accept, in its own name for the account of the Company or
such successor person as may be entitled thereto, all amounts otherwise payable
to the Company or such successor, as the case may be, on exercise of this
Warrant pursuant to this Section 1.

 

2.    Procedure
for Exercise.

 

2.1    Delivery
of Stock Certificates, Etc., on Exercise. The
Company agrees that the shares of Common Stock purchased upon exercise of this
Warrant shall be deemed to be issued to the Holder as the record owner of such
shares as of the close of business on the date on which this Warrant shall have
been surrendered and payment made for such shares in accordance herewith. As
soon as practicable after the exercise and payment of this Warrant in full or in
part, and in any event within three (3) business days thereafter, the Company at
its expense (including the payment by it of any applicable issue taxes) will
cause to be issued in the name of and delivered to the Holder, or as such Holder
(upon payment by such Holder of any applicable transfer taxes) may direct in
compliance with applicable securities laws, a certificate or certificates for
the number of duly and validly issued, fully paid and nonassessable shares of
Common Stock (or Other Securities) to which such Holder shall be entitled on
such exercise, plus, in lieu of any fractional share to which such holder would
otherwise be entitled, cash equal to such fraction multiplied by the then Fair
Market Value of one full share, together with any other stock or other
securities and property (including cash, where applicable) to which such Holder
is entitled upon such exercise pursuant to Section 1 or otherwise.

 

2.2    Exercise.

 

Payment
may be made either in cash or by certified or official bank check payable to the
order of the Company equal to the applicable aggregate Exercise Price, for the
number of Common Shares specified in such Exercise Notice (as such exercise
number shall be adjusted to reflect any adjustment in the total number of shares
of Common Stock issuable to the Holder per the terms of this Warrant) and the
Holder shall thereupon be entitled to receive the number of duly authorized,
validly issued, fully-paid and non-assessable shares of Common Stock (or Other
Securities) determined as provided herein. 

 

3.    Effect
of Reorganization, Etc.; Adjustment of Exercise Price.

 

3.1    Reorganization,
Consolidation, Merger, Etc. In case
at any time or from time to time, the Company shall (a) effect a reorganization,
(b) consolidate with or merge into any other person, or (c) transfer all or
substantially all of its properties or assets to any other person under any plan
or arrangement contemplating the dissolution of the Company, then, in each such
case, as a condition to the consummation of such a transaction, proper and
adequate provision shall be made by the Company whereby the Holder of this
Warrant, on the exercise hereof as provided in Section 1 at any time after the
consummation of such reorganization, consolidation or merger or the effective
date of such dissolution, as the case may be, shall receive, in lieu of the
Common Stock (or Other Securities) issuable on such exercise prior to such
consummation or such effective date, the stock and other securities and property
(including cash) to which such Holder would have been entitled upon such
consummation or in connection with such dissolution, as the case may be, if such
Holder had so exercised this Warrant, immediately prior thereto, all subject to
further adjustment thereafter as provided in Section 4.

3

 

3.2    Dissolution. In the
event of any dissolution of the Company following the transfer of all or
substantially all of its properties or assets, the Company, concurrently with
any distributions made to holders of its Common Stock, shall at its expense
deliver or cause to be delivered to the Holder the stock and other securities
and property (including cash, where applicable) receivable by the Holder of this
Warrant pursuant to Section 3.1, or, if the Holder shall so instruct the
Company, to a bank or trust company specified by the Holder and having its
principal office in New York, NY as trustee for the Holder of this
Warrant.

 

3.3    Continuation
of Terms. Upon
any reorganization, consolidation, merger or transfer (and any dissolution
following any transfer) referred to in this Section 3, this Warrant shall
continue in full force and effect and the terms hereof shall be applicable to
the shares of stock and other securities and property receivable on the exercise
of this Warrant after the consummation of such reorganization, consolidation or
merger or the effective date of dissolution following any such transfer, as the
case may be, and shall be binding upon the issuer of any such stock or other
securities, including, in the case of any such transfer, the person acquiring
all or substantially all of the properties or assets of the Company, whether or
not such person shall have expressly assumed the terms of this Warrant as
provided in Section 4. In the event this Warrant does not continue in full force
and effect after the consummation of the transactions described in this Section
3, then the Company’s securities and property (including cash, where applicable)
receivable by the Holder of this Warrant will be delivered to the Holder or the
Trustee as contemplated by Section 3.2.

 

4.    Extraordinary
Events Regarding Common Stock. In the
event that the Company shall (a) issue additional shares of the Common Stock as
a dividend or other distribution on outstanding Common Stock, (b) subdivide its
outstanding shares of Common Stock, or (c) combine its outstanding shares of the
Common Stock into a smaller number of shares of the Common Stock, then, in each
such event, the Exercise Price shall, simultaneously with the happening of such
event, be adjusted by multiplying the then Exercise Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such event and the denominator of which shall be the number
of shares of Common Stock outstanding immediately after such event, and the
product so obtained shall thereafter be the Exercise Price then in effect. The
Exercise Price, as so adjusted, shall be readjusted in the same manner upon the
happening of any successive event or events described herein in this Section 4.
The number of shares of Common Stock that the holder of this Warrant shall
thereafter, on the exercise hereof as provided in Section 1, be entitled to
receive shall be adjusted to a number determined by multiplying the number of
shares of Common Stock that would otherwise (but for the provisions of this
Section 4) be issuable on such exercise by a fraction of which (a) the numerator
is the Exercise Price that would otherwise (but for the provisions of this
Section 4) be in effect, and (b) the denominator is the Exercise Price in effect
on the date of such exercise (taking into account the provisions of this Section
4).

4

 

5.    Certificate
as to Adjustments. In each
case of any adjustment or readjustment in the shares of Common Stock (or Other
Securities) issuable on the exercise of this Warrant, the Company at its expense
will promptly cause its Chief Financial Officer or other appropriate designee to
compute such adjustment or readjustment in accordance with the terms of this
Warrant and prepare a certificate setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or readjustment is
based, including a statement of (a) the consideration received or receivable by
the Company for any additional shares of Common Stock (or Other Securities)
issued or sold or deemed to have been issued or sold, (b) the number of shares
of Common Stock (or Other Securities) outstanding or deemed to be outstanding,
and (c) the Exercise Price and the number of shares of Common Stock to be
received upon exercise of this Warrant, in effect immediately prior to such
adjustment or readjustment and as adjusted or readjusted as provided in this
Warrant. The Company will forthwith mail a copy of each such certificate to the
holder of this Warrant and any Warrant agent of the Company (appointed pursuant
to Section 11 hereof).

 

6.    Reservation
of Stock, Etc., Issuable on Exercise of Warrant. The
Company will at all times reserve and keep available, solely for issuance and
delivery on the exercise of this Warrant, shares of Common Stock (or Other
Securities) from time to time issuable on the exercise of this
Warrant.

 

7.    Assignment;
Exchange of Warrant. Subject
to compliance with applicable securities laws, this Warrant, and the rights
evidenced hereby, may be transferred by any registered holder hereof (a
“Transferor”) in whole or in part. On the surrender for exchange of this
Warrant, with the Transferor’s endorsement in the form of Exhibit B attached
hereto (the “Transferor Endorsement Form”) and together with evidence reasonably
satisfactory to the Company demonstrating compliance with applicable securities
laws, which shall include, without limitation, a legal opinion from the
Transferor’s counsel (at the Company’s expense) that such transfer is exempt
from the registration requirements of applicable securities laws, the Company at
its expense (but with payment by the Transferor of any applicable transfer
taxes) will issue and deliver to or on the order of the Transferor thereof a new
Warrant of like tenor, in the name of the Transferor and/or the transferee(s)
specified in such Transferor Endorsement Form (each a “Transferee”), calling in
the aggregate on the face or faces thereof for the number of shares of Common
Stock called for on the face or faces of the Warrant so surrendered by the
Transferor.

 

8.    Replacement
of Warrant. On
receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant and, in the case of any such loss,
theft or destruction of this Warrant, on delivery of an indemnity agreement or
security reasonably satisfactory in form and amount to the Company or, in the
case of any such mutilation, on surrender and cancellation of this Warrant, the
Company at its expense will execute and deliver, in lieu thereof, a new Warrant
of like tenor.

 

9.    Registration
Rights. The
Holder of this Warrant has been granted certain registration rights by the
Company. These registration rights are set forth in a Registration Rights
Agreement entered into by the Company and Purchaser dated as of the date hereof,
as the same may be amended, modified or supplemented from time to
time.

5

 

10.    Maximum
Exercise.
Notwithstanding anything contained herein to the contrary, the Holder shall not
be entitled to exercise this Warrant in connection with that number of shares of
Common Stock which would exceed the difference between (i) 4.99% of the
outstanding shares of Common Stock and (ii) the number of shares of Common Stock
beneficially owned by the Holder and issuable to the Holder upon exercise of
this Warrant. For purposes of the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder. The
limitation described in the first sentence of this Section 10 shall
automatically become null and void without any notice to the Company upon the
occurrence and during the continuance of an Event of Default (as defined in the
Security Agreement dated as of the date hereof among the Holder, the Company and
various subsidiaries of the Company, as amended, modified, restated and/or
supplemented from time to time), or upon 75 days prior notice to the
Company.

 

11.    Warrant
Agent. The
Company may, by written notice to the each Holder of the Warrant, appoint an
agent for the purpose of issuing Common Stock (or Other Securities) on the
exercise of this Warrant pursuant to Section 1, exchanging this Warrant pursuant
to Section 7, and replacing this Warrant pursuant to Section 8, or any of the
foregoing, and thereafter any such issuance, exchange or replacement, as the
case may be, shall be made at such office by such agent.

 

12.    Transfer
on the Company’s Books. Until
this Warrant is transferred on the books of the Company, the Company may treat
the registered holder hereof as the absolute owner hereof for all purposes,
notwithstanding any notice to the contrary.

 

13.    Notices,
Etc. All
notices and other communications from the Company to the Holder of this Warrant
shall be mailed by first class registered or certified mail, postage prepaid, at
such address as may have been furnished to the Company in writing by such Holder
or, until any such Holder furnishes to the Company an address, then to, and at
the address of, the last Holder of this Warrant who has so furnished an address
to the Company.

 

14.    Miscellaneous. This
Warrant and any term hereof may be changed, waived, discharged or terminated
only by an instrument in writing signed by the party against which enforcement
of such change, waiver, discharge or termination is sought. This Warrant shall
be governed by and construed in accordance with the laws of State of New York
without regard to principles of conflicts of laws. Any action brought concerning
the transactions contemplated by this Warrant shall be brought only in the state
courts of New York or in the federal courts located in the state of New York;
provided, however, that the Holder may choose to waive this provision and bring
an action outside the state of New York. The individuals executing this Warrant
on behalf of the Company agree to submit to the jurisdiction of such courts and
waive trial by jury. The prevailing party shall be entitled to recover from the
other party its reasonable attorneys’ fees and costs. In the event that any
provision of this Warrant is invalid or unenforceable under any applicable
statute or rule of law, then such provision shall be deemed inoperative to the
extent that it may conflict therewith and shall be deemed modified to conform
with such statute or rule of law. Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability of
any other provision of this Warrant. The headings in this Warrant are for
purposes of reference only, and shall not limit or otherwise affect any of the
terms hereof. The invalidity or unenforceability of any provision hereof shall
in no way affect the validity or enforceability of any other provision hereof.
The Company acknowledges that legal counsel participated in the preparation of
this Warrant and, therefore, stipulates that the rule of construction that
ambiguities are to be resolved against the drafting party shall not be applied
in the interpretation of this Warrant to favor any party against the other
party.

 

[BALANCE
OF PAGE INTENTIONALLY LEFT BLANK;

 

SIGNATURE
PAGE FOLLOWS]

6

 

IN
WITNESS WHEREOF, the Company has executed this Warrant as of the date first
written above. 

 

	 	 	
       

      HOUSE
      OF BRUSSELS CHOCOLATES INC.

	
       

      WITNESS:
	 	 
	 	 	
      By:
	 
	 	 	
      Name
	 
	 	 	
      Title:
	 

 

7

 

EXHIBIT
A

 

FORM
OF SUBSCRIPTION

(To Be
Signed Only On Exercise Of Warrant)

 

	
      TO:
	
      House
      of Brussels Chocolate Inc. 

 

_____________________

_____________________

 

 

Attention: Chief
Financial Officer

 

The
undersigned, pursuant to the provisions set forth in the attached Warrant
(No.____), hereby irrevocably elects to purchase

 ________ shares of the common
stock covered by such warrant. 

 

.

 

The
undersigned herewith makes payment of the full Exercise Price for such shares at
the price per share provided for in such Warrant, which is $___________. Such
payment takes the form of 

$__________
in lawful money of the United States.

 

The
undersigned requests that the certificates for such shares be issued in the name
of, and delivered to ______________________________________________ whose
address is
___________________________________________________________________________.

 

The
undersigned represents and warrants that all offers and sales by the undersigned
of the securities issuable upon exercise of the within Warrant shall be made
pursuant to registration of the Common Stock under the Securities Act of 1933,
as amended (the “Securities Act”) or pursuant to an exemption from registration
under the Securities Act.

	
       

      Dated:
	 	 	 
	 	 	 	
      (Signature
      must conform to name of holder as specified on the face of the
      Warrant)

	 	 	 	
      Address:
	 
	 	 	 	 	 

 

8

 

EXHIBIT
B

 

FORM
OF TRANSFEROR ENDORSEMENT

(To Be
Signed Only On Transfer Of Warrant)

 

For value
received, the undersigned hereby sells, assigns, and transfers unto the
person(s) named below under the heading “Transferees” the right represented by
the within Warrant to purchase the percentage and number of shares of Common
Stock of House of Brussels Chocolate Inc. into which the within Warrant relates
specified under the headings “Percentage Transferred” and “Number Transferred,”
respectively, opposite the name(s) of such person(s) and appoints each such
person Attorney to transfer its respective right on the books of House of
Brussels Chocolate Inc. with full power of substitution in the
premises.

	 

      Transferees
	 

      Address
	
       

      Percentage
      Transferred
	 

      Number
      Transferred

	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 

	
       

      Dated:
	 	 	 
	 	 	 	
      (Signature
      must conform to name of holder as specified on the face of the
      Warrant)

	 	 	 	
      Address:
	 
	 	 	 	 	 
	 	 	 	
       

      SIGNED
      IN THE PRESENCE OF:

	 	 	 	 
	 	 	 	
      (Name)

	
       

      [TRANSFEREE]
	 
	
       

      ACCEPTED
      AND AGREED:
	 
	 	 
	 	 
	
      (Name)
	 

 

9Exhibit 4.9

 

GUARANTY

 

	
      New
      York, New York

       
	
      March
      29, 2005

       

FOR VALUE
RECEIVED, and in consideration of note
purchases from, loans made or to be made or credit otherwise extended or to be
extended by Laurus Master Fund, Ltd. (“Laurus”) to or for the account of House
of Brussels Chocolates Inc., a Nevada corporation or any other Eligible U.S.
Subsidiary (as defined in the Security Agreement referred to below)
(collectively, the “Debtor”), from time to time and at any time and for other
good and valuable consideration and to induce Laurus, in its discretion, to
purchase such notes, make such loans or other extensions of credit and to make
or grant such renewals, extensions, releases of collateral or relinquishments of
legal rights as Laurus may deem advisable, each of the undersigned (and each of
them if more than one, the liability under this Guaranty being joint and
several) (jointly and severally referred to as “Guarantors” or “the
undersigned”) irrevocably and unconditionally guarantees to Laurus, its
successors, endorsees and assigns the prompt payment when due (whether by
acceleration or otherwise) of all present and future obligations and liabilities
of any and all kinds of Debtor to Laurus and of all instruments of any nature
evidencing or relating to any such obligations and liabilities upon which Debtor
or one or more parties and Debtor is or may become liable to Laurus, whether
incurred by Debtor as maker, endorser, drawer, acceptor, guarantors ,
accommodation party or otherwise, and whether due or to become due, secured or
unsecured, absolute or contingent, joint or several, and however or whenever
acquired by Laurus, whether arising under, out of, or in connection with
(i) that certain Securities Purchase Agreement dated as of the date hereof by
and between the Debtor and Laurus (the “Securities Purchase Agreement”) and (ii)
each Related Agreement referred to in the Securities Purchase Agreement, (iii)
that certain Security Agreement dated as of the date hereof by and among the
Debtor , certain other entities named therein and Laurus (the “Security
Agreement”) and (iv) each Ancillary Agreement referred to in the Security
Agreement (the Securities Purchase Agreement and each Related Agreement and the
Security Agreement and each Ancillary Agreement, as each may be amended,
modified, restated or supplemented from time to time, are collectively referred
to herein as the “Documents”), or any documents, instruments or agreements
relating to or executed in connection with the Documents or any documents,
instruments or agreements referred to therein or otherwise, or any other
indebtedness, obligations or liabilities of the Debtor to Laurus, whether now
existing or hereafter arising, direct or indirect, liquidated or unliquidated,
absolute or contingent, due or not due and whether under, pursuant to or
evidenced by a note, agreement, guaranty, instrument or otherwise (all of which
are herein collectively referred to as the “Obligations”), and irrespective of
the genuineness, validity, regularity or enforceability of such Obligations, or
of any instrument evidencing any of the Obligations or of any collateral
therefor or of the existence or extent of such collateral, and irrespective of
the allowability, allowance or disallowance of any or all of the Obligations in
any case commenced by or against Debtor under Title 11, United States Code, the
Bankruptcy and Insolvency Act (Canada) (the “BIA”) and the Companies’ Creditors
Arrangement Act (the “CCAA”) including, without limitation, obligations or
indebtedness of Debtor for post-petition interest, fees, costs and charges that
would have accrued or been added to the Obligations but for the commencement of
such case. Terms not otherwise defined herein shall have the meaning assigned
such terms in the Securities Purchase Agreement and the Security Agreement, as
applicable]. In furtherance of the foregoing, the undersigned hereby agrees as
follows:

 

 

1.    No
Impairment. Laurus
may at any time and from time to time, either before or after the maturity
thereof, without notice to or further consent of the undersigned, extend the
time of payment of, exchange or surrender any collateral for, renew or extend
any of the Obligations or increase or decrease the interest rate thereon, or any
other agreement with Debtor or with any other party to or person liable on any
of the Obligations, or interested therein, for the extension, renewal, payment,
compromise, discharge or release thereof, in whole or in part, or for any
modification of the terms thereof or of any agreement between Laurus and Debtor
or any such other party or person, or make any election of rights Laurus may
deem desirable under the United States Bankruptcy Code, as amended, the BIA, the
CCAA or any other federal, provincial or state bankruptcy, reorganization,
moratorium or insolvency law relating to or affecting the enforcement of
creditors’ rights generally (any of the foregoing, an “Insolvency Law”) without
in any way impairing or affecting this Guaranty. This Guaranty shall be
effective regardless of the subsequent incorporation, merger, amalgamation or
consolidation of Debtor or Guarantors, or any change in the composition, nature,
personnel or location of Debtor or Guarantors and shall extend to any successor
entity to Debtor or Guarantors, including a debtor in possession or the like
under any Insolvency Law.

 

2.    Guaranty
Absolute. Subject
to Section 6(c) hereof,
each of the undersigned jointly and severally guarantees that the Obligations
will be paid strictly in accordance with the terms of the Documents and/or any
other document, instrument or agreement creating or evidencing the Obligations,
regardless of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of Debtor with respect
thereto. Guarantors hereby knowingly accept the full range of risk encompassed
within a contract of “continuing guaranty” which risk includes the possibility
that Debtor will contract additional indebtedness for which Guarantors may be
liable hereunder after Debtor’s financial condition or ability to pay its lawful
debts when they fall due has deteriorated, whether or not Debtor has properly
authorized incurring such additional indebtedness. The undersigned acknowledge
that (i) no oral representations, including any representations to extend credit
or provide other financial accommodations to Debtor, have been made by Laurus to
induce the undersigned to enter into this Guaranty and (ii) any extension of
credit to the Debtor shall be governed solely by the provisions of the
Documents. The liability of each of the undersigned under this Guaranty shall be
absolute and unconditional, in accordance with its terms, and shall remain in
full force and effect without regard to, and shall not be released, suspended,
discharged, terminated or otherwise affected by, any circumstance or occurrence
whatsoever, including, without limitation: (a) any waiver, indulgence, renewal,
extension, amendment or modification of or addition, consent or supplement to or
deletion from or any other action or inaction under or in respect of the
Documents or any other instruments or agreements relating to the Obligations or
any assignment or transfer of any thereof, (b) any lack of validity or
enforceability of any Document or other documents, instruments or agreements
relating to the Obligations or any assignment or transfer of any thereof, (c)
any furnishing of any additional security to Laurus or its assignees or any
acceptance thereof or any release of any security by Laurus or its assignees,
(d) any limitation on any party’s liability or obligation under the Documents or
any other documents, instruments or agreements relating to the Obligations or
any assignment or transfer of any thereof or any invalidity or unenforceability,
in whole or in part, of any such document, instrument or agreement or any term
thereof, (e) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceeding relating to
Debtor, or any action taken with respect to this Guaranty by any trustee,
receiver, interim receiver, or receiver and manager, or by any court, in any
such proceeding, whether or not the undersigned shall have notice or knowledge
of any of the foregoing, (f) any exchange, release or nonperfection of any
collateral, or any release, or amendment or waiver of or consent to departure
from any guaranty or security, for all or any of the Obligations or (g) any
other circumstance which might otherwise constitute a defense available to, or a
discharge of, the undersigned. Any amounts due from the undersigned to Laurus
shall bear interest until such amounts are paid in full at the highest rate then
applicable to the Obligations. Obligations include post-petition interest
whether or not allowed or allowable.

 

2

 

3.    Waivers.

 

	 	
      (a)
	
      This
      Guaranty is a guaranty of payment and not of collection. Laurus shall be
      under no obligation to institute suit, exercise rights or remedies or take
      any other action against Debtor or any other person or entity liable with
      respect to any of the Obligations or resort to any collateral security
      held by it to secure any of the Obligations as a condition precedent to
      the undersigned being obligated to perform as agreed herein and each of
      the Guarantors hereby waives any and all rights which it may have by
      statute or otherwise which would require Laurus to do any of the
      foregoing. The obligations of each Guarantor hereunder are independent of
      the Obligations and a separate action or actions may be brought and
      prosecuted against each Guarantor to enforce this Guaranty, irrespective
      of whether any action is brought against Debtor or whether Debtor is
      joined in any such action or actions. Each of the Guarantors further
      consents and agrees that Laurus shall be under no obligation to marshal
      any assets in favor of Guarantors, or against or in payment of any or all
      of the Obligations. The undersigned hereby waives all suretyship defenses
      and any rights to interpose any defense, counterclaim or offset of any
      nature and description which the undersigned may have or which may exist
      between and among Laurus, Debtor and/or the undersigned with respect to
      the undersigned’s obligations under this Guaranty, or which Debtor may
      assert on the underlying debt, including but not limited to failure of
      consideration, breach of warranty, fraud, payment (other than cash payment
      in full of the Obligations), statute of frauds, bankruptcy, infancy,
      statute of limitations, accord and satisfaction, and usury.
    

 

	 	
      (b)
	
      Each
      of the undersigned further waives (i) notice of the acceptance of this
      Guaranty, of the making of any such loans or extensions of credit, and of
      all notices and demands of any kind to which the undersigned may be
      entitled, including, without limitation, notice of adverse change in
      Debtor’s financial condition or of any other fact which might materially
      increase the risk of the undersigned and (ii) presentment to or demand of
      payment from anyone whomsoever liable upon any of the Obligations,
      protest, notices of presentment, non-payment or protest and notice of any
      sale of collateral security or any default of any
sort.

 

3

 

	
       

       

       

       

       

       

       

       
	
      (c)
	
      Notwithstanding
      any payment or payments made by the undersigned hereunder, or any setoff
      or application of funds of the undersigned by Laurus, the undersigned
      shall not be entitled to be subrogated to any of the rights of Laurus
      against Debtor or against any collateral or guarantee or right of offset
      held by Laurus for the payment of the Obligations, nor shall the
      undersigned seek or be entitled to seek any contribution, indemnification
      or reimbursement from Debtor in respect of payments made by the
      undersigned hereunder, until all amounts owing to Laurus by Debtor on
      account of the Obligations are indefeasibly paid in full and Laurus’
      obligation to extend credit pursuant to the Documents has been irrevocably
      terminated. If, notwithstanding the foregoing, any amount shall be paid to
      the undersigned on account of such subrogation rights at any time when all
      of the Obligations shall not have been paid in full and Laurus’ obligation
      to extend credit pursuant to the Documents shall not have been terminated,
      such amount shall be held by the undersigned in trust for Laurus,
      segregated from other funds of the undersigned, and shall forthwith upon,
      and in any event within two (2) business days of, receipt by the
      undersigned, be turned over to Laurus in the exact form received by the
      undersigned (duly endorsed by the undersigned to Laurus, if required), to
      be applied against the Obligations, whether matured or unmatured, in such
      order as Laurus may determine, subject to the provisions of the Documents.
      Any and all present and future debts and obligations of Debtor to any of
      the undersigned are hereby waived and postponed in favor of, and
      subordinated to the full payment and performance of, all present and
      future debts and Obligations of Debtor to
Laurus.

 

4.    Indemnity.
As an original and independent obligation under this Guaranty each Guarantor
shall:

 

	 	
      (a)
	
      indemnify
      Laurus and keep Laurus indemnified against any cost, loss, expense or
      liability of whatever kind resulting from the failure by Debtor to make
      due and punctual payment of any of the Obligations or resulting from any
      of the Obligations being or becoming void, voidable, unenforceable or
      ineffective against Debtor (including, but without limitation, all legal
      and other costs, charges and expenses incurred by Laurus, in connection
      with preserving or enforcing, or attempting to preserve or enforce, its
      rights under this Guaranty); and 

 

	 	
      (b)
	
      pay
      on demand the amount of such cost, loss, expense or liability whether or
      not Laurus has attempted to enforce any rights against any Debtor or any
      other person or otherwise.

 

5.    Security. All
sums at any time to the credit of the undersigned and any property of the
undersigned in Laurus’ possession or in the possession of any bank, financial
institution or other entity that directly or indirectly, through one or more
intermediaries, controls or is controlled by, or is under common control with,
Laurus (each such entity, an “Affiliate”) shall be deemed held by Laurus or such
Affiliate, as the case may be, as security for any and all of the undersigned’s
obligations to Laurus and to any Affiliate of Laurus, no matter how or when
arising and whether under this or any other instrument, agreement or otherwise.

 

6.    Representations
and Warranties. Each of
the undersigned respectively, hereby jointly and severally represents and
warrants (all of which representations and warranties shall survive until all
Obligations are indefeasibly satisfied in full and the Documents have been
irrevocably terminated), that:

 

	 	
      (a)
	
      Corporate
      Status.
      It is a corporation, partnership or limited liability company, as the case
      may be, duly formed, validly existing and in good standing under the laws
      of its jurisdiction of formation indicated on the signature page hereof
      and has full power, authority and legal right to own its property and
      assets and to transact the business in which it is
  engaged.

 

4

 

	 	
      (b)
	
      Authority
      and Execution.
      It has full power, authority and legal right to execute and deliver, and
      to perform its obligations under, this Guaranty and has taken all
      necessary corporate, partnership or limited liability company, as the case
      may be, action to authorize the execution, delivery and performance of
      this Guaranty.

 

	 	
      (c)
	
      Legal,
      Valid and Binding Character.
      This Guaranty constitutes its legal, valid and binding obligation
      enforceable in accordance with its terms, except as enforceability may be
      limited by applicable bankruptcy, insolvency, reorganization, moratorium
      or other laws of general application affecting the enforcement of
      creditor’s rights and general principles of equity that restrict the
      availability of equitable or legal remedies. 

 

	 	
      (d)
	
      Violations.
      The execution, delivery and performance of this Guaranty will not violate
      any requirement of law applicable to it or any contract, agreement or
      instrument to which it is a party or by which it or any of its property is
      bound or result in the creation or imposition of any mortgage, lien or
      other encumbrance other than in favor of Laurus on any of its property or
      assets pursuant to the provisions of any of the foregoing, which, in any
      of the foregoing cases, could reasonably be expected to have, either
      individually or in the aggregate, a Material Adverse
    Effect.

 

	 	
      (e)
	
      Consents
      or Approvals.
      No consent of any other person or entity (including, without limitation,
      any creditor of the undersigned) and no consent, license, permit, approval
      or authorization of, exemption by, notice or report to, or registration,
      filing or declaration with, any governmental authority is required in
      connection with the execution, delivery, performance, validity or
      enforceability of this Guaranty by it, except to the extent that the
      failure to obtain any of the foregoing could not reasonably be expected to
      have, either individually or in the aggregate, a Material Adverse
      Effect.

 

	 	
      (f)
	
      Litigation.
      Except as set forth in Schedule 6(f), no litigation, arbitration,
      investigation or administrative proceeding of or before any court,
      arbitrator or governmental authority, bureau or agency is currently
      pending or, to the best of its knowledge, threatened (i) with respect to
      this Guaranty or any of the transactions contemplated by this Guaranty or
      (ii) against or affecting it, or any of its property or assets, which, in
      each of the foregoing cases, if adversely determined, could reasonably be
      expected to have a Material Adverse Effect.

 

	 	
      (g)
	
      Financial
      Benefit.
      It has derived or expects to derive a financial or other advantage from
      each and every loan, advance or extension of credit made under the
      Documents or other Obligation incurred by the Debtor to
      Laurus.

 

	 	
      (h)
	
      Solvency.
      As of the date of this Guaranty, (a) the fair saleable value of its assets
      exceeds its liabilities and (b) it is meeting its current liabilities as
      they mature.

 

5

 

7.    Acceleration.

 

	 	
      (a)
	
      If
      any breach of any covenant or condition or other event of default shall
      occur and be continuing under any agreement made by Debtor or any of the
      undersigned to Laurus, or either Debtor or any of the undersigned should
      at any time become insolvent, or make a general assignment, or if a
      proceeding in or under any Insolvency Law shall be filed or commenced by,
      or in respect of, any of the undersigned, or if a notice of any lien,
      levy, or assessment is filed of record with respect to any assets of any
      of the undersigned by the United States of America or Canada or any
      respective department, agency, or instrumentalityof either country, or if
      any taxes or debts owing at any time or times hereafter to any one of them
      becomes a lien or encumbrance upon any assets of the undersigned in
      Laurus’ possession, or otherwise, any and all Obligations shall for
      purposes hereof, at Laurus’ option, be deemed due and payable without
      notice notwithstanding that any such Obligation is not then due and
      payable by Debtor.

 

	 	
      (b)
	
      Each
      of the undersigned will promptly notify Laurus of any default by such
      undersigned in its respective performance or observance of any term or
      condition of any agreement to which the undersigned is a party if the
      effect of such default is to cause, or permit the holder of any obligation
      under such agreement to cause, such obligation to become due prior to its
      stated maturity and, in the event that the amount of such obligations
      exceeds, when taken together, $100,000 in the aggregate and such default
      has not been cured or waived by the holder of such obligations on or prior
      to the fifteenth (15th)
      day after occurrence thereof. If such an event occurs, Laurus shall have
      the right to accelerate such undersigned’s obligations
      hereunder.

 

8.    Payments
from Guarantors. Laurus,
in its sole and absolute discretion, with or without notice to the undersigned,
may apply on account of the Obligations any payment from the undersigned or any
other guarantors, or amounts realized from any security for the Obligations, or
may deposit any and all such amounts realized in a non-interest bearing cash
collateral deposit account to be maintained as security for the
Obligations.

 

9.    Additional
Amounts. Any and all payments by each Guarantor hereunder, and any amounts on
account of interest or deemed interest, shall be made free and clear of and
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding taxes imposed on net income or franchise taxes of Laurus by the
jurisdiction in which such person is organized or has its principal office (all
such non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities, collectively or individually, “Taxes”). If any Guarantor shall be
required to deduct any Taxes from or in respect of any sum payable hereunder to
Laurus, (i) the sum payable shall be increased by the amount (an “additional
amount”) necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 9) Laurus
shall receive 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.

 

In
addition, each Guarantor agrees to pay to the relevant governmental authority in
accordance with applicable law any present or future stamp or documentary taxes
or any other excise or property taxes, charges or similar levies that arise from
any payment made hereunder or from the execution, delivery or registration of,
or otherwise with respect to, this Guaranty (“Other Taxes”). Each Guarantor
shall deliver to Laurus official receipts, if any, in respect of any Taxes or
Other Taxes payable hereunder promptly after payment of such Taxes or Other
Taxes or other evidence of payment reasonably acceptable to Laurus.

 

6

 

Each
Guarantor hereby indemnifies and agrees to hold Laurus harmless from and against
Taxes and Other Taxes (including, without limitation, Taxes and Other Taxes
imposed on any amounts payable under this Section 9) paid by such person,
whether or not such Taxes or Other Taxes were correctly or legally asserted.
Such indemnification shall be paid within ten (10) days from the date on which
any such person makes written demand therefore specifying in reasonable detail
the nature and amount of such Taxes or Other Taxes.

 

10.    Costs. The
undersigned shall pay on demand, all costs, fees and expenses (including,
without limitation, expenses for legal services of every kind) relating or
incidental to the enforcement or protection of the rights of Laurus hereunder or
under any of the Obligations.

 

11.    No
Termination. This is
a continuing irrevocable guaranty and shall remain in full force and effect and
be binding upon the undersigned, and each of the undersigned’s successors and
assigns, until all of the Obligations have been indefeasibly paid in full and
Laurus’ obligation to extend credit pursuant to the Documents has been
irrevocably terminated. If any of the present or future Obligations are
guaranteed by persons, partnerships or entities in addition to the undersigned,
the death, release or discharge in whole or in part or the bankruptcy,
amalgamation, merger, consolidation, incorporation, liquidation or dissolution
of one or more of them shall not discharge or affect the liabilities of any
undersigned under this Guaranty.

 

12.    Recapture.
Anything in this Guaranty to the contrary notwithstanding, if Laurus receives
any payment or payments on account of the liabilities guaranteed hereby, which
payment or payments or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside and/or required to be repaid to a
trustee, receiver, interim receiver or receiver and manager or any other party
under any Insolvency Law, common law or equitable doctrine, then to the extent
of any sum not finally retained by Laurus, the undersigned’s obligations to
Laurus shall be reinstated and this Guaranty shall remain in full force and
effect (or be reinstated) until payment shall have been made to Laurus, which
payment shall be due on demand.

 

13.    Books
and Records. The
books and records of Laurus showing the account between Laurus and Debtor shall
be admissible in evidence in any action or proceeding, shall be binding upon the
undersigned for the purpose of establishing the items therein set
forth.

 

14.    No
Waiver. No
failure on the part of Laurus to exercise, and no delay in exercising, any
right, remedy or power hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise by Laurus of any right, remedy or power hereunder
preclude any other or future exercise of any other legal right, remedy or power.
Each and every right, remedy and power hereby granted to Laurus or allowed it by
law or other agreement shall be cumulative and not exclusive of any other, and
may be exercised by Laurus at any time and from time to time.

 

15.    Waiver
of Jury Trial. EACH OF
THE UNDERSIGNED DESIRES THAT ITS DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH
APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF
THE JUDICIAL SYSTEM AND OF ARBITRATION, EACH OF THE UNDERSIGNED HERETO WAIVES
ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO
RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN
LAURUS, AND/OR ANY OF THE UNDERSIGNED ARISING OUT OF, CONNECTED WITH, RELATED OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS
GUARANTY, ANY DOCUMENT OR THE TRANSACTIONS RELATED HERETO OR THERETO.

 

7

 

16.    Governing
Law; Jurisdiction. THIS
GUARANTY CANNOT BE CHANGED OR TERMINATED ORALLY, AND SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS. EACH OF THE UNDERSIGNED HEREBY CONSENTS AND
AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE
OF NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS
OR DISPUTES BETWEEN ANY OF THE UNDERSIGNED, ON THE ONE HAND, AND LAURUS, ON THE
OTHER HAND, PERTAINING TO THIS GUARANTY OR ANY OF THE DOCUMENTS OR TO ANY MATTER
ARISING OUT OF OR RELATED TO THIS GUARANTY OR ANY OF THE DOCUMENTS; PROVIDED, THAT
EACH OF THE UNDERSIGNED ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE
TO BE HEARD BY A COURT LOCATED OUTSIDE OF THE COUNTY OF NEW YORK, STATE OF NEW
YORK; AND FURTHER PROVIDED, THAT
NOTHING IN THIS GUARANTY SHALL BE DEEMED OR OPERATE TO PRECLUDE LAURUS FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT
THE OBLIGATIONS, TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF LAURUS.
EACH OF THE UNDERSIGNED EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH
UNDERSIGNED HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF
PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. EACH OF
THE UNDERSIGNED HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND
OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH
SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO SUCH UNDERSIGNED IN ACCORDANCE WITH SECTION 21 AND THAT
SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF SUCH UNDERSIGNED’S
ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER
POSTAGE PREPAID IF SENT BY REGISTERED OR CERTIFIED MAIL.

 

17.    Understanding
With Respect to Waivers and Consents. Each
Guarantor warrants and agrees that each of the waivers and consents set forth in
this Guaranty is made voluntarily and unconditionally after consultation with
outside legal counsel and with full knowledge of its significance and
consequences, with the understanding that events giving rise to any defense or
right waived may diminish, destroy or otherwise adversely affect rights which
such Guarantor otherwise may have against the Debtor, Laurus or any other person
or entity or against any collateral. If, notwithstanding the intent of the
parties that the terms of this Guaranty shall control in any and all
circumstances, any such waivers or consents are determined to be unenforceable
under applicable law, such waivers and consents shall be effective to the
maximum extent permitted by law.

 

8

 

18.    Judgment
Currency. If, for the purpose of obtaining or enforcing judgment against any
Guarantor in any court in any jurisdiction, it becomes necessary to convert into
any other currency (such other currency being hereinafter in this section
referred to as the “Judgment Currency”) an amount due under this Guaranty in any
currency (the “Obligation Currency”) other than the Judgment Currency, the
conversion shall be made at the rate of exchange prevailing on the business day
immediately preceding (a) the date of actual payment of the amount due, in the
case of any proceeding in the courts of New York or in the courts of any other
jurisdiction that will give effect to such conversion being made on such date,
or (b) the date on which the foreign court determines, in the case of any
proceeding in the courts of any other jurisdiction (the applicable date as of
which such conversion is made pursuant to this section being hereinafter in this
section referred to as the “Judgment Conversion Date”).

 

If, in
the case of any proceeding in the court of any jurisdiction referred to in the
preceding paragraph, there is a change in the rate of exchange prevailing
between the Judgment Conversion Date and the date of actual receipt of the
amount due in immediately available funds, the Guarantor shall pay such
additional amount (if any, but in any event not a lesser amount) as may be
necessary to ensure that the amount actually received in the Judgment Currency,
when converted at the rate of exchange prevailing on the date of payment, will
produce the amount of the Obligation Currency which could have been purchased
with the amount of the Judgment Currency stipulated in the judgment or judicial
order at the rate of exchange prevailing on the Judgment Conversion Date. Any
amount due from any Guarantor under this section shall be due as a separate debt
and shall not be affected by judgment being obtained for any other amounts due
under or in respect of this Guaranty.

 

19.    Severability. To the
extent permitted by applicable law, any provision of this Guaranty which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

 

20.    Amendments,
Waivers. No
amendment or waiver of any provision of this Guaranty nor consent to any
departure by the undersigned therefrom shall in any event be effective unless
the same shall be in writing executed by each of the undersigned directly
affected by such amendment and/or waiver and Laurus.

 

21.    Notice. All
notices, requests and demands to or upon the undersigned, shall be in writing
and shall be deemed to have been duly given or made (a) when delivered, if by
hand, (b) three (3) days after being sent, postage prepaid, if by registered or
certified mail, (c) when confirmed electronically, if by facsimile, or (d) when
delivered, if by a recognized overnight delivery service in each event, to the
numbers and/or address set forth beneath the signature of the
undersigned.

 

22.    Counterparts.
This
Guaranty may be executed in any number of counterparts which shall, collectively
and separately constitute one agreement. Any signature delivered by a party by
facsimile transmission or by sending a scanned copy by electronic mail shall be
deemed an original signature hereto.

 

9

 

23.    Successors. Laurus
may, from time to time, without notice to the undersigned, sell, assign,
transfer or otherwise dispose of all or any part of the Obligations and/or
rights under this Guaranty to any person or entity other than to a competitor of
any Debtor or Guarantor. Without limiting the generality of the foregoing,
Laurus may assign, or grant participations to, one or more banks, financial
institutions or other entities all or any part of any of the Obligations. In
each such event, Laurus, its Affiliates and each and every immediate and
successive purchaser, assignee, transferee or holder of all or any part of the
Obligations shall have the right to enforce this Guaranty, by legal action or
otherwise, for its own benefit as fully as if such purchaser, assignee,
transferee or holder were herein by name specifically given such right. Laurus
shall have an unimpaired right to enforce this Guaranty for its benefit with
respect to that portion of the Obligations which Laurus has not disposed of,
sold, assigned, or otherwise transferred.

 

24.    Joinder. It is
understood and agreed that any person or entity that desires to become a
Guarantor hereunder, or is required to execute a counterpart of this Guaranty
after the date hereof pursuant to the requirements of any Document, shall become
a Guarantor hereunder by (x) executing a Joinder Agreement in form and substance
satisfactory to Laurus, (y) delivering supplements to such exhibits and annexes
to such Documents as Laurus shall reasonably request and (z) taking all actions
as specified in this Guaranty as would have been taken by such such Guarantor
had it been an original party to this Guaranty, in each case with all documents
required above to be delivered to Laurus and with all documents and actions
required above to be taken to the reasonable satisfaction of
Laurus.

 

25.    Release. Nothing
except indefeasible payment in full of the Obligations shall release any of the
undersigned from liability under this Guaranty.

 

26.    Remedies
Not Exclusive. The
remedies conferred upon Laurus in this Guaranty are intended to be in addition
to, and not in limitation of any other remedy or remedies available to
Laurus.

 

27.    Limitation
of Obligations under this Guaranty. Each
Guarantor and Laurus (by its acceptance of the benefits of this Guaranty) hereby
confirms that it is its intention that this Guaranty not constitute a (i)
fraudulent transfer or conveyance for purposes of the Bankruptcy Code, the
Uniform
Fraudulent Conveyance Actor any
similar federal, provincial or state law; or (ii) a preference or a preferential
transfer for purposes of the BIA or under any other applicable bankruptcy,
insolvency or similar law now or hereafter in effect in any bankruptcy,
insolvency or similar proceeding with respect to Debtor. To effectuate the
foregoing intention, each Guarantor which is subject to the Bankruptcy Code, the
Uniform Fraudulent Conveyance Act or any similar US federal or state law and
Laurus (by its acceptance of the benefits of this Guaranty) hereby irrevocably
agrees that the Obligations guaranteed by such Guarantor shall be limited to
such amount as will, after giving effect to such maximum amount and all other
(contingent or otherwise) liabilities of such Guarantor that are relevant under
such laws and after giving effect to any rights to contribution pursuant to any
agreement providing for an equitable contribution among such Guarantor and the
other Guarantors (including this Guaranty), result in the Obligations of such
Guarantor under this Guaranty in respect of such maximum amount not constituting
a fraudulent transfer or conveyance, preference or preferential transfer.

 

[REMAINDER
OF THIS PAGE IS BLANK.

 

SIGNATURE
PAGE IMMEDIATELY FOLLOWS] 

 

10

IN
WITNESS WHEREOF, this Guaranty has been executed by the undersigned as of the
date and year here above written.

 

	 	 
	 	
      HOUSE
      OF BRUSSELS CHOCOLATES INC.

	 	 
	 	
      By:____________________________________ 

	 	
      Name:__________________________________

	 	
      Title:___________________________________

	 	 
	 	
      Address:________________________________

	 	 
	 	
      Telephone:_______________________________

	 	
      Facsimile:________________________________

	 	
      State
      of Formation: Nevada

	 	 
	 	
      HOUSE
      OF BRUSSELS CHOCOLATES (USA) LTD.

	 	 
	 	
      By:____________________________________ 

	 	
      Name:__________________________________

	 	
      Title:___________________________________

	 	 
	 	
      Address:________________________________

	 	 
	 	
      Telephone:_______________________________

	 	
      Facsimile:________________________________

	 	
      State
      of Formation: Nevada

	 	 
	 	
      DEBAS
      CHOCOLATE INC.

	 	 
	 	
      By:____________________________________ 

	 	
      Name:__________________________________ 

	 	
      Title:___________________________________

	 	 
	 	
      Address:________________________________

	 	 
	 	
      Telephone:_______________________________

	 	
      Facsimile:________________________________

	 	
      State
      of Formation: California

	 	 
	 	
      CHOCOMED,
      INC.

	 	 
	 	
      By:____________________________________ 

	 	
      Name:__________________________________

	 	
      Title:___________________________________

	 	 
	 	
      Address:________________________________

	 	 
	 	
      Telephone:_______________________________

	 	
      Facsimile:________________________________

	 	
      State
      of Formation: Nevada

 

11

 

	 	
      HOUSE
      OF BRUSSELS HOLDINGS LTD.

	 	 
	 	
      By:____________________________________ 

	 	
      Name:__________________________________

	 	
      Title:___________________________________

	 	 
	 	
      Address:________________________________

	 	 
	 	
      Telephone:_______________________________

	 	
      Facsimile:________________________________

	 	
      Jurisdiction
      of Organization: BC

	 	 
	 	
      BRUSSELS
      CHOCOLATES LTD.

	 	 
	 	
      By:____________________________________ 

	 	
      Name:__________________________________

	 	
      Title:___________________________________

	 	 
	 	
      Address:________________________________

	 	 
	 	
      Telephone:_______________________________

	 	
      Facsimile:________________________________

	 	
      Jurisdiction
      of Organization: BC

	 	 
	 	 
	 GOODMANS\MANTELLL\5141153.2	 

 

12

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