GUARANTEE
This Guarantee dated as of March 8, 2004 made by TSI MEDICAL CORP. (the “Guarantor”) to and in favour of THE XXXXXXX X. XXXXX CORPORATION (the “Lender”) as lender under the Loan Agreement hereinafter referred to.
WHEREAS:
| A. | 689158 B.C. Ltd. (the “Borrower”)
has entered into a loan agreement with the Lender dated as of the date
hereof (as such agreement may at any time or from time tot time be amended,
supplemented, extended or otherwise modified or restated, the “Loan
Agreement”) pursuant to which a loan in the principal amount
of US$500,000 is being advanced by the Lender to the Borrower (the
“Loan”). |
| B. |
NOW THEREFORE WITNESSETH that in consideration of the payment of the sum of $1.00 in lawful money of Canada by the Lender to the Guarantor and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Guarantor herby covenants, declares and agrees as follows:
| 1. | Guarantee. The Guarantor hereby
irrevocably and unconditionally guarantees the due and punctual performance
and payment to the Lender, whether at stated maturity, by acceleration
or otherwise, of all obligations of the Borrower to the Lender, now or
hereafter existing under or pursuant to the Loan Agreement, whether for
principal, interest, bonus, fees, expenses, indemnity or otherwise, and
any and all out-of-pocket expenses (including counsel fees and disbursements
on a solicitor and own client basis) incurred by the Lender in enforcing
any of its rights under this guarantee (such obligations being herein
called the “Guaranteed Obligations”) |
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| 2. | ||
| a.
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the lack of validity or enforceability of any terms
of the Loan Agreement or any security granted to the Lender by the Borrower
or any other person or persons pursuant to the terms of the Loan Agreement;
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| b. |
any consent by the Borrower or any other person
as to the amount of the Guaranteed Obligations or the validity or enforceability
of any terms of the Loan Agreement; |
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| c. |
any defence, counter-claim or right of set-off available
to the Borrower; |
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| d. |
any extension of the time or times for payment of
the Guaranteed Obligations or any other indulgences the Lender may grant
to the Borrower; |
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| e. |
any dealings with the security which the Lender
holds or may hold pursuant to the terms and conditions of the Loan Agreement,
including the taking and giving up of securities, the accepting of compositions
and the granting of releases and discharges; |
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| f. | the assignment of all or any part of the benefits
of this guarantee; |
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| g. | any modification or amendment of or supplement to
the Guaranteed Obligations or the Loan Agreement, including, without limitation,
any assignment or assumption of the commitment or commitments of the Lender
under the Loan Agreement and any increase or decrease in the principal,
the rates of interest or other amounts payable under the Loan Agreement;
or |
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| h. | any other circumstances which might otherwise constituted
a defence available to or a discharge of a guarantor, the Borrower or
any other person in respect of the Guaranteed Obligations, or of the Guarantor
in respect to this guarantee. |
|
| 3. | Remedies. The Guarantor agrees that the Lender
shall not be bound to seek or exhaust its recourses against the Borrower
or any other person or to realize on any security it may hold in respect
of the Guaranteed Obligations before being entitled to payment hereunder.
Should the Lender elect to realize on any security it may hold, either
before, concurrently with our after demand for payment under this guarantee,
the Guarantor shall have no right of discussion or division. |
| 4. | Amount of Guaranteed Obligations. Any account
settled or stated by or between the Lender and the Borrower or, if any
such account has not been so settled or stated immediately before demand
for payment under this guarantee, any account thereafter stated by the
Lender shall, in the absence of demonstrated error, be accepted by the
Guarantor as conclusive evidence of the amount of the Guaranteed Obligations
which at the date of the account so settled or stated is due by the Borrower
to the Lender or remains unpaid by the Borrower to the Lender. |
| 5. | Payment on Demand. The Guarantor shall make
payment to the Lender of the amount of the Guaranteed Obligations forthwith
after demand therefore is made in writing to it, and such demand shall
be deemed to have been effectively made when an envelope containing such
demand addressed to the Guarantor at: 000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000,
Xxxxxx, Xxxxxxxxxx 00000, Attention: ________________ , is personally
delivered to such address or is deposited, postage prepaid and registered,
in any post office within or outside Canada. The indebtedness of the Guarantor
hereunder shall bear interest from the date of such demand to the date
of payment thereof in full at the rate or rates of interest applicable
to the Guaranteed Obligations under and calculated in the manner provided
in the Loan Agreement. |
| 6. | Subrogation and Repayment. Upon receipt by
the Lender of any payments on account of liability under this guarantee,
whether by realization on security or otherwise, the Guarantor shall not
be entitled to claim repayment against the Borrower until the Lender’s
claims against the Borrower in respect of the Guaranteed Obligations have
been repaid in full. In the case of the liquidation, winding-up or bankruptcy
of the Borrower (whether voluntary or compulsory) or in the event that
the Borrower shall make a bulk sale of any of the Borrower’s assets
within the provisions of any bulk sales legislation or any composition
with creditors or scheme of arrangement, the Lender shall have the right
to rank in priority to the Guarantor for its full claims in respect of
the Guaranteed Obligations and receive all dividends or other payments
in respect thereof until its claims in respect of the Guaranteed Obligations
have been paid in full, and the Guarantor shall continue to be liable,
less any payments made by or on behalf of the Guarantor, for any balance
which may be owing to the Lender by the Borrower. In the event of the
valuation by the Lender of any of its security or the retention thereof
by the Lender or both, such valuation or retention, or both, shall not,
as between the Lender and the Guarantor, be considered as a purchase of
such security, or as payment or satisfaction or reduction of the Guaranteed
Obligations or any part thereof. If any amount shall be paid to the Guarantor
on account of any subrogation rights at any time when all the Guaranteed
Obligations shall not have been paid in full, such amount shall be held
in trust for the benefit of the Lender and shall forthwith be paid to
the Lender to be credited and applied upon the Guaranteed Obligations,
whether matured or unmatured. |
| 7. | Assignment and Postponement. | ||
| (1)
|
All obligations, liabilities and indebtedness of
the Borrower to the Guarantor of any nature whatsoever, and all security
therefore, (the “Subject Indebtedness”) are hereby
assigned and transferred to the Lender as continuing and collateral security
for the obligations of the Guarantor hereunder. The Guarantor shall not
assign the Subject Indebtedness or any part thereof to any person other
than the Lender or as permitted pursuant to the Loan Agreement. |
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| (2) |
From and after demand by the Lender pursuant to
Section 5 hereof, the Subject Indebtedness shall be held in trust by the
Guarantor for the Lender and shall be collected, enforced or proved subject
to and for the purposes of this guarantee, and any payments received by
the Guarantor in respect thereof shall be segregated from other funds
and property held by the Guarantor and forthwith paid over to the Lender
on account of the Guaranteed Obligations. |
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| (3) |
From and after demand by the Lender pursuant to
Section 5 hereof, the Lender shall be entitled to receive payment of the
Guaranteed Obligations in full before the Guarantor shall be entitled
to receive any payment on account of the Subject Indebtedness. The Subject
Indebtedness shall not be released or withdrawn by the Guarantor unless
the Lender’s written consent to such release or withdrawal is first
obtained, and the Guarantor shall not permit the prescription of the Subject
Indebtedness by any stature of limitations or ask for or obtain any security
or negotiable paper for or other evidence of the Subject Indebtedness
except for the purpose of delivering the same to the Lender. |
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| 8. | No Prejudice to the Lender. The
Lender shall not be prejudiced in any way in the right to enforce any
provision of this guarantee by any act or failure to act on the part of
the Borrower. The Lender may, at any time and from time to time, without
any consent of or notice to the Guarantor and without impairing or releasing
the Guarantor from its obligations hereunder: |
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| a. |
change the manner, place or terms of payment or change or extend time of payment of, or renew or alter, the Guaranteed Obligations; | ||
| b. |
release anyone liable in any manner under or in respect of the Guaranteed Obligations; | ||
| c. |
exercise or refrain from exercising any rights against the Borrower or the Guarantor or any other person; and | ||
| d. |
apply to the Guaranteed Obligations any sums from time to time received. | ||
| 9. | Rights of Set-Off. To the fullest
extent permitted by law, the Guarantor shall make all payments hereunder
without regard to any defence, counter-claim or right of set-off available
to it. Upon the making of a demand for payment hereunder, the Lender is
hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set-off and apply any deposits (general or special,
time or demand, provisional or final) at any time held or other indebtedness
at any time owing by the Lender to or for the credit or the account of
the Guarantor against the Guaranteed Obligations and other amounts due
to the Lender hereunder irrespective of whether or not the Lender shall
have made any demand under this guarantee and although such Guaranteed
Obligation and other amounts may be contingent and unmatured. The rights
of the Lender under this Section 9 are in addition, without prejudice
and supplemental to any other rights and remedies (including, without
limitation, other rights of set-off) which the Lender may have. |
||
| 10. | No Recourse. Any right of subrogation
acquired by the Guarantor by reason of payment under or pursuant to this
guarantee shall not be exercised until the Guaranteed Obligations and
other amounts due to the Lender hereunder have been paid or repaid in
full to the Lender, and shall be no greater than the right held by the
Lender and the Guarantor shall have no recourse against the Lender for
any invalidity, non- perfection or unenforceability of any security held
by the Lender or any irregularity or defect in the manner or procedure
by which the Lender realizes on such security. |
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| 11. | Continuing Guarantee. This guarantee
shall continue to be effective or be reinstated, as the case may be, if
at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by the Lender upon the insolvency, bankruptcy
or reorganization of the Borrower or otherwise, all as though such payment
had not been made. |
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| 12. | Supplemental Security. This guarantee
is in addition, without prejudice and supplemental to all other guarantees
and securities held, or which may hereafter be held, by or for the Lender.
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| 13. | Representations. |
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| (1) |
The Guarantor represents and warrants
that: |
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| a.
|
it is a corporation duly incorporated and organized
and is validly subsisting and in good standing under the laws of Nevada
and is duly qualified as a foreign or extra-provincial corporation, as
the case may be, and is in good standing, in all jurisdictions where the
Guarantor carries on business; |
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| b. |
has full corporate right, power and authority to
enter into and perform its obligations under this guarantee and any security
given in respect hereof, and has full corporate right, power and authority
to own and operate its properties and to carry on its business as now
conducted; |
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| c. |
all representations and warranties of the Borrower
in the Loan Agreement are true and correct as at the date hereof; and
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| d. |
the Borrower has compiled with all covenants contained
in the Loan Agreement and there exists no Default or Event of Default
(as such terms are defined in the Loan Agreement) which is continuing
on the date hereof. |
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| (2) |
The execution and delivery by it of this
guarantee has been duly authorized by all necessary action by the Guarantor.
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| 14. | Interest Act (Canada). For purposes
of the Interest Act (Canada), the Guarantor hereby acknowledges tat the
rate or rates of interests applicable to the Guaranteed Obligations shall
be computed and shall be paid at the times and in the manner set froth
in the Loan Agreement. |
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| 15. | Governing Law. This guarantee shall
be governed by and constructed in accordance with the laws of the Province
of British Columbia and the laws of Canada applicable therein and shall
be treated in all respects as a British Columbia contract. |
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| 16. | Successors, etc. This guarantee
shall extend to and enure to the benefit of the Lender and its successors
and assigns and shall be binding upon the Guarantor and its successors
and permitted assigns. This guarantee shall not be assigned by the Guarantor
without the Lender’s written consent. All rights of the Lender hereunder
shall be assignable in accordance with the terms of the Loan Agreement.
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| 17. | Notices. All notices, requests, demands,
directions and communications (“notices”) hereunder
shall be sent by telecopy or similar means of recorded communication or
hand delivery or registered mail, and shall be effective when hand delivered
or, in the case of telecopy or similar means of recorded communication,
when received. All notices shall be given to the Lender at its principal
office as show in the Loan Agreement and to the Guarantor at the address
referred to in Section 5 hereof, or otherwise in accordance with any unrevoked
written direction of the Guarantor to the Lender at its principal office
as to a change of address, given in accordance with this Section 14. |
| 18. | Attornment/Service. The Guarantor hereby
irrevocably submits to the jurisdiction of any British Columbia court
in any action or proceeding arising out of or relating to this guarantee,
and hereby irrevocably agrees that all claims in respect of any such action
or proceeding may be heard and determined in such British Columbia court.
The Guarantor hereby irrevocably appoints the Borrower at its principal
office and to the attention of the officer shown on the signature pages
of the Loan Agreement as its agent to receive on behalf of the Guarantor
service of copies of the summons and complaint and any other process which
may be served in any such action or proceeding. Such service may be made
by delivering a copy of such process to the Guarantor in care of such
agent and the Guarantor herby irrevocably authorizes and directs such
agent to accept such service on its behalf. As an alternative method of
service, the Guarantor also irrevocably consents to the service of any
process in any such action or proceeding by the mailing of copies of such
process to the Guarantor at the address referred to in Section 5 hereof,
or at such other address as it on its own behalf may direct. The Guarantor
agrees that a final judgement in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgement
or in any other manner provided by law. Nothing in this Section shall
affect the right of the Lender to serve legal process in any other manner
permitted by law or affect the right of the Lender to bring any action
or proceeding against the Guarantor or its property in the courts of other
jurisdictions. |
| 19. | Acknowledgement of Receipt/Waiver. The Guarantor
acknowledges receipt of an executed copy of this guarantee and the Loan
Agreement. The Guarantor waives, to the extent permitted by law, the right
to receive a copy of any financing statement, financing change statement
or verification statement registered with or issued by any personal property
registry or other official body in connection with this guarantee. |
| IN WITNESS WHEREOF the Guarantor has duly
executed this guarantee and affixed its seal under the hands of its proper
officers duly authorized for the purpose thereof as of the date first
above written. |
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| Per: | /s/ Xxxxx X. Xxx Xxxxx | |
| Authorized Signatory | ||
| Per: | /s/ Xxxxxx Xxxx | |
| Authorized Signatory |
