GUARANTY AGREEMENT
THIS
PERSONAL GUARANTY AGREEMENT (this “Guaranty”) is made as of February
5, 2007 by
Xxxxxx
Xxx (
“Guarantor”), whose address is ___________________________________ whose
social security number is ____________, in favor of Apex Investment Fund, Ltd.
(“Lender”).
1. The
Note.
This
Guaranty is executed in connection with that certain Secured Promissory Note
(the “Note”) of even date herewith, made by AuraSound, a California corporation,
in the original principal amount of $500,000 ( “Borrower”), pursuant to which
Lender is making a loan (the “Loan”) to Borrower. Unless otherwise defined
herein, any capitalized terms used herein shall have the meanings assigned
to
such terms in the Note. The Note and all other documents executed in connection
with, or as security for, the Loan are hereinafter referred to as the “Loan
Documents.”
2. Purpose
and Consideration.
The
execution and delivery of this Guaranty by Guarantor is a condition to the
making of the Loan to Borrower, is made in order to induce Lender to make the
Loan, and is made in recognition that Lender will be relying upon this Guaranty
in making the Loan and performing any other obligations it may have under the
Loan Documents.
3. Guaranty.
Guarantor hereby guarantees absolutely, primarily, unconditionally, and
irrevocably: (i) the full and timely payment of all indebtedness evidenced
by or arising under the Note, as and when the same becomes due, whether at
maturity, by acceleration, or otherwise, all fees payable by Borrower in
connection with the Loan, and any advances made by Lender under the authority
of
any of the Loan Documents, including any sums expended by Lender for the benefit
of Borrower or for the benefit of any security provided under any of the Loan
Documents, including, without limitation, taxes, assessments, insurance
premiums, and costs of maintenance, repair or restoration; and (ii) the
full and timely performance by Borrower of any and all of its obligations under
the Loan Documents. Borrower’s obligations to make payments under the Note and
all of Borrower’s other obligations under the Loan Documents are sometimes
collectively referred to herein as the “Obligations.” Guarantor agrees that this
is a guarantee of payment and performance and not of collection, and that there
is no limitation on the amount of Guarantor’s liability hereunder.
4. Guaranty
Is Independent and Absolute.
The
obligations of Guarantor hereunder are independent of the obligations of
Borrower and any other guarantor or other person or entity who may become liable
with respect to the Obligations. Guarantor is jointly and severally liable
with
Borrower for the full and timely payment and performance of all of the
Obligations. Guarantor expressly agrees that a separate action or actions may
be
brought and prosecuted against Guarantor, whether or not any action is brought
against Borrower, any other guarantor, or any other person or entity for any
Obligations guaranteed hereby and whether or not Borrower, any other guarantor,
or any other person or entity is joined in any action against Guarantor.
Guarantor further agrees that Lender shall have no obligation to proceed against
any security for the Obligations prior to enforcing this Guaranty against
Guarantor, and that Lender may pursue or omit to pursue any and all rights
and
remedies Lender has against any person or entity or with respect to any security
in any order or simultaneously or in any other manner. All rights of Lender
and
all obligations of Guarantor hereunder shall be absolute and unconditional
irrespective of: (i) any lack of validity or enforceability of the Note or
any other Loan Document, and (ii) any other circumstances which might
otherwise constitute a defense available to, or a discharge of, Borrower in
respect of the Obligations.
5. Authorizations
to Lender.
Guarantor authorizes Lender, without notice or demand and without affecting
Guarantor’s liability hereunder, from time to time, to: (i) renew, extend,
accelerate or otherwise change the time for payment of, change, amend, alter,
cancel, compromise or otherwise modify the terms of the Note, including any
increase in the rate or rates of interest thereunder agreed to by Borrower,
and
to grant any indulgences, forbearances, or extensions of time; (ii) renew,
extend, change, amend, alter, cancel, compromise or otherwise modify any of
the
terms, covenants, conditions or provisions of any of the Loan Documents or
any
of the Obligations; (iii) apply any security and direct the order or manner
of sale thereof as Lender, in Lender’s discretion, may determine;
(iv) proceed against Borrower or Guarantor with respect to any or all of
the Obligations without first foreclosing against any security therefor;
(v) exchange, release, surrender, impair or otherwise deal in any manner
with, or waive, release or subordinate any security interest in, any security
for the Obligations; (vi) release or substitute Borrower or any one or more
of any other guarantor, any endorser, or any other party who may be or become
liable with respect to the Obligations, without any release or reduction in
liability being deemed made of Guarantor or any other such person or entity;
and
(vii) accept a conveyance or transfer to Lender of all or any part of any
security in partial satisfaction of the Obligations, or any of them, without
releasing Borrower, Guarantor, any other guarantor, or any endorser or other
party who may be or become liable with respect to the Obligations, from any
liability for the balance of the Obligations.
6. Application
of Payments Received by Lender.
Any
sums of money Lender receives from or for the account of Borrower (other than
regular installment payments under the Note when Borrower is not in default
under any of the Loan Documents) may be applied by Lender to reduce any of
the
Obligations or any other liability of Borrower to Lender, as Lender in Lender’s
discretion deems appropriate.
7. Waivers
by Guarantor.
In
addition to all waivers expressed in any of the Loan Documents, all of which
are
incorporated herein by Guarantor:
(a) Guarantor
hereby waives: (i) presentment, demand, protest and notice of protest,
notice of dishonor and of non-payment, notice of acceptance of this Guaranty,
and diligence in collection; (ii) notice of the existence, creation, or
incurring of any new or additional Obligations under or pursuant to any of
the
Loan Documents; (iii) any right to require Lender to proceed against, give
notice to, or make demand upon Borrower or any other guarantor; (iv) any
right to require Lender to proceed against or exhaust any security or to proceed
against or exhaust any security in any particular order; (v) any right to
require Lender to pursue any remedy of Lender; (vi) any right to direct the
application of any security held by Lender; (vii) any right of subrogation
and any right to enforce any remedy which Lender may have against Borrower,
any
right to participate in any security now or hereafter held by Lender, and any
right to reimbursement from Borrower for amounts paid to Lender by Guarantor;
(viii) benefits, if any, of Guarantor under any anti-deficiency statutes or
single-action legislation; (ix) any defense arising out of any disability
or other defense of Borrower, including bankruptcy, dissolution, liquidation,
cessation, impairment, modification, or limitation, from any cause, of any
liability of Borrower, or of any remedy for the enforcement of such liability;
(x) any statute of limitations affecting the liability of Guarantor
hereunder; (xi) any right to plead or assert any election of remedies by
Lender; and (xii) any other defenses available to a surety under applicable
law.
(b) Guarantor
hereby waives its right, under Sections 2845 or 2850 of the California
Civil Code or otherwise, to require Lender to institute suit against, or to
exhaust any rights and remedies which Lender has or may have against, Borrower
or any third party, or against any collateral for the Obligations provided
by
Borrower, Guarantor or any third party. In this regard, Guarantor agrees that
it
is bound to the payment of all Obligations, whether now existing or hereafter
accruing as fully as if such Obligations were directly owing to Lender by
Guarantor. Guarantor further waives any defense arising by reason of any
disability or other defense (other than the defense that the Obligations shall
have been fully and finally performed and indefeasibly paid) of Borrower or
by
reason of the cessation from any cause whatsoever of the liability of Borrower
in respect thereof.
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(c) Guarantor
hereby waives: (i) any rights to assert against Lender any defense (legal
or equitable), set-off, counterclaim or claim which Guarantor may now or at
any
time hereafter have against Borrower or any other party liable to Lender;
(ii) any defense, set-off, counterclaim or claim, of any kind or nature,
arising directly or indirectly from the present or future lack of perfection,
sufficiency, validity or enforceability of the Obligations or any security
therefor; (iii) any defense Guarantor has to performance hereunder, and any
right Guarantor has to be exonerated, provided by Sections 2819, 2822 or
2825 of the California Civil Code or otherwise, arising by reason of: any claim
or defense based upon an election of remedies by Lender; the impairment or
suspension of Lender’s rights or remedies against Borrower; the alteration by
Lender of the Obligations; any discharge of Borrower’s obligations to Lender by
operation of law as a result of Lender’s intervention or omission; or the
acceptance by Lender of anything in partial satisfaction of the Obligations;
(iv) the benefit of any statute of limitations affecting Guarantor’s
liability hereunder or the enforcement thereof, and any act which shall defer
or
delay the operation of any statute of limitations applicable to the Obligations
shall similarly operate to defer or delay the operation of such statute of
limitations applicable to Guarantor’s liability hereunder.
(d) Guarantor
hereby waives any right of subrogation Guarantor has or may have as against
Borrower with respect to the Obligations. In addition, Guarantor hereby waives
any right to proceed against Borrower, now or hereafter for contribution,
indemnity, reimbursement and any other suretyship rights and claims, whether
direct or indirect, liquidated or contingent, whether arising under express
or
implied contract or by operation of law, which Guarantor may now have or
hereafter have as against Borrower with respect to the Obligations. Guarantor
also hereby waives any rights to recourse to or with respect to any asset of
Borrower. Guarantor agrees that in light of the immediately foregoing waivers,
the execution of this Guaranty shall not be deemed to make Guarantor a
“creditor” of Borrower, and that for purposes of Sections 547 and 550 of
the Bankruptcy Code Guarantor shall not be deemed a “creditor” of
Borrower.
(e) Guarantor
waives all rights and defenses arising out of an election of remedies by Lender,
even though that election of remedies, such as a non-judicial foreclosure with
respect to security for a guaranteed obligation, has destroyed Guarantor’s
rights of subrogation and reimbursement against the principal by the operation
of Section 580d of the California Code of Civil Procedure (“CCP”) or
otherwise. Guarantor acknowledges and agrees that, as a result of the foregoing
sentence, Guarantor is knowingly waiving in advance a complete or partial
defense to this Guaranty arising under CCP sections 580d or 580a and based
upon
Lender’s election to conduct a private non-judicial foreclosure sale, even
though such election would destroy, diminish or affect Guarantor’s rights of
subrogation against Borrower or any other party and Guarantor’s rights to pursue
Borrower or such other party for reimbursement contribution, indemnity or
otherwise.
(f) WITHOUT
LIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER PROVISION SET FORTH IN
THIS
GUARANTY, GUARANTOR HEREBY WAIVES AND AGREES NOT TO ASSERT ANY AND ALL BENEFITS
OR DEFENSES ARISING DIRECTLY OR INDIRECTLY UNDER ANY ONE OR MORE OF CALIFORNIA
CIVIL CODE SECTIONS 2799, 2808, 2809, 2810, 2815, 2819, 2820, 2821, 2822,
2825, 2839, 2845, 2848, 2849, 2850, 2899 and 3433, CCP SECTIONS 580a, 580b,
580c, 580d AND 726, AND CHAPTER 2 OF TITLE 14 OF THE CALIFORNIA CIVIL
CODE.
(g) Guarantor
waives all rights and defenses that Guarantor may have because the Borrower’s
debt is secured by real property. This means, among other things,
(i) Lender may collect from the Guarantor without first foreclosing on any
real or personal property collateral pledged by the Borrower; (ii) if
Lender forecloses on any real property collateral pledged by the Borrower:
(A) the amount of the debt may be reduced only by the price for which that
collateral is sold at the foreclosure sale, even if the collateral is worth
more
than the sale price; and (B) Lender may collect from the Guarantor, even if
Lender, by foreclosing on the real property collateral, has destroyed any right
the Guarantor may have to collect from the Borrower. This is an unconditional
and irrevocable waiver of any rights and defenses the Guarantor may have because
the Borrower’s debt is secured by real property. These rights and defenses
include, but are not limited to, any rights and defenses based upon Section
580a, 580b, 580d, or 726 of the California Code of Civil Procedure. Guarantor
understands and agrees that the foregoing waivers are waivers of substantive
rights and defenses to which such Guarantor might otherwise be entitled under
state and federal law. The rights and defenses waived include, without
limitation, those provided by California laws of suretyship and guaranty,
anti-deficiency laws, and the Uniform Commercial Code. Guarantor acknowledges
that such Guarantor has provided these waivers of rights and defenses with
the
intention that they be fully relied upon by Lender.
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8. Subordination
by Guarantor.
Guarantor hereby agrees that any indebtedness of Borrower to Guarantor, whether
now existing or hereafter created, shall be and is hereby subordinated to the
indebtedness of Borrower to Lender under the Loan Documents. Guarantor shall
not
accept or seek to receive any amounts from Borrower on account of any
indebtedness of Borrower to Guarantor until such time as the Obligations have
been paid and satisfied in full.
9. Bankruptcy
Reimbursements.
Guarantor agrees that if any amounts paid to Lender by Borrower or any other
party liable for payment and satisfaction of the Obligations (other than
Guarantor) are recovered from Lender in any bankruptcy proceeding, Guarantor
shall reimburse Lender immediately on demand for all amounts so recovered from
Lender, together with interest thereon at the Default Rate from the date such
amounts are so recovered until repaid in full to Lender, and for this purpose
this Guaranty shall survive repayment of the Loan. Without limiting the
foregoing, Guarantor shall pay all costs and expenses incurred by Lender in
connection with any bankruptcy proceeding of Borrower or any other party liable
for payment and satisfaction of the Obligations, including attorneys’ fees and
expenses.
10. Service
of Process on Guarantor.
Guarantor covenants that, for so long as this Guaranty remains in effect,
Guarantor will be subject to service of process for the purposes of any suit,
action, or proceeding brought in the State of California to enforce Guarantor’s
obligations under this Guaranty.
11. Assignability.
This
Guaranty shall be binding upon Guarantor and Guarantor’s heirs, representatives,
successors, and assigns and shall inure to the benefit of Lender and Lender’s
successors and assigns. This Guaranty shall follow the Note and other Loan
Documents which are for the benefit of Lender; and, in the event the Note and
other such Loan Documents, or any of them, are negotiated, sold, transferred,
assigned, or conveyed by Lender in whole or in part, this Guaranty shall be
deemed to have been sold, transferred, assigned, or conveyed by Lender to the
holder or holders of the Note and other such Loan Documents, with respect to
the
Obligations contained therein, and such holder or holders may enforce this
Guaranty as if such holder or holders had been originally named as Lender
hereunder.
12. Payment
of Costs of Enforcement.
In the
event any action or proceeding is brought to enforce this Guaranty, Guarantor
agrees to pay all costs and expenses of Lender in connection with such action
or
proceeding, including, without limitation, all reasonable attorneys’ fees
incurred by Lender.
13. Notices.
Whenever any notice, demand, or request is required or permitted under this
Guaranty, such notice, demand, or request shall be effective when delivered
or
three (3) days after being mailed by certified mail, return receipt requested,
to Guarantor at the address set forth above or to such other address as
Guarantor may designate in a notice given to Lender.
14. Severability
of Provisions.
If any
provision hereof or of any other Loan Document shall, for any reason and to
any
extent, be invalid or unenforceable, then the remainder of the document in
which
such provision is contained, the application of the provision to other persons
or entities or circumstances, and any other document referred to herein shall
not be affected thereby but instead shall be enforceable to the maximum extent
permitted by law.
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15. Waiver.
Neither
the failure of Lender to exercise any right or power given hereunder or to
insist upon strict compliance by Borrower, Guarantor, any other guarantor,
or
any other person or entity with any of its, his or her obligations set forth
herein or in any of the Loan Documents nor any practice of Borrower or Guarantor
at variance with the terms hereof or of any of the Loan Documents shall
constitute a waiver of Lender’s right to demand strict compliance with the terms
and provisions of this Guaranty.
16. Term.
This
Guaranty shall survive repayment in full of the Loan and remain in effect until
such time as all payments received by Lender are no longer subject to recovery
in any bankruptcy proceeding.
17. Applicable
Law.
This
Guaranty and the rights and obligations of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of
California.
18. Waiver
of Jury Trial.
NEITHER
GUARANTOR NOR ANY ASSIGNEE, SUCCESSOR, HEIR OR PERSONAL REPRESENTATIVE OF
GUARANTOR SHALL SEEK A JURY TRIAL IN RESPECT OF ANY ACTION, PROCEEDING OR
COUNTERCLAIM BASED UPON OR ARISING IN CONNECTION WITH THIS GUARANTY, THE NOTE
OR
ANY OTHER LOAN DOCUMENT, OR THE COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY THERETO. THIS PROVISION
IS A
MATERIAL INDUCEMENT FOR LENDER TO MAKE THE LOAN. GUARANTOR ACKNOWLEDGES THAT
IT
HAS CONSULTED WITH ITS ATTORNEY CONCERNING THIS WAIVER OF JURY TRIAL, FULLY
UNDERSTANDS THE LEGAL EFFECT OF SUCH WAIVER, AND HEREBY VOLUNTARILY, KNOWINGLY
AND INTENTIONALLY WAIVES ANY AND ALL SUCH RIGHTS TO A JURY
TRIAL.
19. Jurisdiction.
Guarantor hereby consents to the jurisdiction of any state or federal court
situated in Orange County, California, and waives any objection based on lack
of
personal jurisdiction, improper venue or forum
non conveniens,
with
regard to any actions, claims, disputes or proceedings relating to this
Guaranty, any of the Loan Documents, or any other document delivered hereunder
or in connection herewith, or any transaction arising form or connected to
any
of the foregoing. Guarantor waives personal service of any and all process
upon
it, and consents to all such service of process made by mail or by messenger
directed to it at the address specified above. Nothing herein shall affect
the
right of the Lender to serve process in any manner permitted by law, or limit
the right of Lender to bring proceedings against Guarantor or its property
or
assets in the competent courts of any other jurisdiction or
jurisdictions.
20. Counterparts.
This
Guaranty may be executed in counterparts, each of which shall be deemed a
duplicate original.
[signature
follows on next page]
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IN
WITNESS WHEREOF, Guarantor has executed this Guaranty as of the day and year
first above written.
| /s/ Xxxxxx Xxx | |||
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Art Xxx, xx individual |
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