Exhibit 10.24
GUARANTY AGREEMENT
Guaranty Agreement dated as of July 27, 2007 (as amended from time to time, this
"Guaranty Agreement") by FREEHAND SYSTEMS, INC., a Nevada corporation (the
"Subsidiary Guarantor") and a wholly-owned subsidiary of FREEHAND SYSTEMS
INTERNATIONAL, INC., a Delaware corporation (the "Issuer"), for the benefit of
the Holder (as such term is defined in the Note referred to below).
WHEREAS:
A. The Issuer and the Holder are entering into a Securities Purchase
Agreement (the "Securities Purchase Agreement"), dated the even date herewith,
pursuant to which the Issuer will sell and issue to the Holder and the Holder
will purchase from the Issuer certain senior secured notes in an aggregate
principal amount of $1,500,000 (the "Notes").
B. To induce the Holder to enter into the Securities Purchase Agreement
and to purchase the Notes, the Subsidiary Guarantor agrees to guarantee the
performance of the Issuer's obligation under the Securities Purchase Agreement
and the Notes.
NOW THEREFORE, FOR VALUED CONSIDERATION, the Subsidiary Guarantor agrees as
follows:
Section 1. The Subsidiary Guarantor hereby unconditionally and
irrevocably guarantees, on a senior secured basis, to the Holder, the due and
punctual payment of the principal of and interest on such Notes when and as the
same shall become due and payable, whether at the maturity, by acceleration,
call for redemption, purchase or otherwise, in accordance with the terms of such
Notes. In case of the failure of the Issuer punctually to make any such payment,
the Subsidiary Guarantor hereby agrees to cause such payment to be made
punctually when and as the same shall become due and payable, whether at the
maturity or by acceleration, call for redemption, purchase or otherwise, and as
if such payment were made by the Issuer.
Section 2. Subsidiary Guarantor hereby agrees that its
obligations hereunder shall be unconditional, irrespective of the validity,
regularity or enforceability of such Notes, the absence of any action to enforce
the same, any exchange, release or non-perfection of any lien on any collateral
for, or any release or amendment or waiver of any term of any other guarantee
of, or any consent to departure from any requirement of any other guarantee of,
all or any of the Note, the effects of Bankruptcy Law applicable in the event of
bankruptcy proceedings being opened with respect to the Issuer, of all or any
portion of the claims of the Holder for payment of any of the Notes, the
obtaining of any judgment against the Issuer or any action to enforce the same
or any other circumstances which might otherwise constitute a legal or equitable
discharge or defense of a guarantor. The Subsidiary Guarantor hereby waives the
benefits of diligence, presentment, demand for payment, any requirement that the
Holder protects, secures, perfects or insures any security interest in or other
Lien on any property subject thereto or exhaust any right or take any action
against the Issuer or any other Person or any collateral, filing of claims with
a court in the event of insolvency or bankruptcy of the Issuer, any right to
require a proceeding first against the Issuer, protest or notice with respect to
such Note or the indebtedness evidenced thereby and all demands whatsoever, and
covenants that this Guaranty Agreement will not be discharged in respect of such
Note except by complete performance of the obligations contained in such Note
and in this Guaranty Agreement. The Subsidiary Guarantor hereby agrees that, in
the event of a default in payment of principal or interest on such Note, whether
at its maturity, by acceleration, call for redemption, purchase or otherwise,
legal proceedings may be instituted by the Holder of the Notes, directly against
the Subsidiary Guarantor to enforce this Guaranty Agreement without first
proceeding against the Issuer. The Subsidiary Guarantor agrees that, to the
extent permitted by applicable law, if, after the occurrence and during the
continuance of an Event of Default, the Holder is prevented by applicable law
from exercising its respective rights to accelerate the maturity of the Notes,
to collect interest on the Notes, or to enforce or exercise any other right or
remedy with respect to the Notes, or the Holder is prevented from taking any
action to realize on any collateral, such Subsidiary Guarantor agrees to pay to
the Holder, upon demand therefor, the amount that would otherwise have been due
and payable had such rights and remedies been permitted to be exercised by the
Holder.
Section 3. This Guaranty Agreement shall remain in full force
and effect and continue to be effective should any petition be filed by or
against the Issuer for liquidation or reorganization, or equivalent proceeding
under applicable law, should the Issuer become insolvent or make an assignment
for the benefit of creditors or should a receiver or trustee be appointed for
all or any significant part of the Issuer's assets, or the equivalent of any of
the foregoing under applicable law, and shall, to the fullest extent permitted
by applicable law, continue to be effective or be reinstated, as the case may
be, if at any time payment and performance of the Notes is, pursuant to
applicable law, rescinded or reduced in amount, or must otherwise be restored or
returned by any obligee on the Notes whether as a voidable preference,
fraudulent transfer, or as otherwise provided under similar laws affecting the
rights of creditors generally or under applicable laws of the jurisdiction of
formation of the Issuer, all as though such payment or performance had not been
made. In the event that any payment, or any part thereof, is rescinded, reduced,
restored or returned, the Notes shall, to the fullest extent permitted by
applicable law, be reinstated and deemed reduced only by such amount paid and
not so rescinded, reduced, restored or returned.
Section 4. All terms used in this Guaranty Agreement which are
defined in the Notes shall have the meanings assigned to them in the Notes.
Section 5. This Guaranty Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York without giving
effect to the rules governing the conflicts of laws. The Subsidiary Guarantor
consents to the exclusive jurisdiction of the Federal courts whose districts
encompass any part of the County of New York located in the City of New York in
connection with any dispute arising under this Guaranty Agreement and hereby
waives, to the maximum extent permitted by law, any objection, including any
objection based on forum non conveniens, to the bringing of any such proceeding
in such jurisdictions. The Subsidiary Guarantor waives its right to a trial by
jury. The Subsidiary Guarantor irrevocably consents to the service of process in
any such proceeding by the mailing of copies thereof by registered or certified
mail, postage prepaid, to the Subsidiary Guarantor at its address set forth in
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the Securities Purchase Agreement. Nothing herein shall affect the right of
Subsidiary Guarantor to serve process in any other manner permitted by law.
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IN WITNESS WHEREOF, the Subsidiary Guarantor has caused this Guaranty Agreement
to be duly executed as of the day and year first above written.
FREEHAND SYSTEMS, INC.
By: /s/ Xxx Xxxx
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Name: Xxx Xxxx
Title: President and CEO
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