GUARANTY
This
GUARANTY (the “Guaranty”)
is
made and dated as of the 8th day
of
September, 2006
by
XXXXXX “XXXX” XXXX, III (the “Guarantor”).
RECITALS
A. Pursuant
to that certain Secured Convertible Note and Warrant Purchase Agreement, dated
as of September 8,
2006
(as the same may be amended, modified, supplemented or restated from time to
time, the “Financing
Agreement”)
between Patient Safety Technologies, Inc., a Delaware corporation (the
“Borrower”),
and
Xxxxxx X. Xxxxx (the “Lender”),
the
Lender agreed to extend credit to the Borrower in the principal amount of
$1,495,280.89. Capitalized terms used herein without definition have the
meanings assigned thereto in the Financing Agreement.
B. As
a
condition precedent to the Lender’s obligation to extend such credit, the
Guarantor is required to execute and deliver this Guaranty to the
Lender.
NOW,
THEREFORE, in consideration of the above Recitals and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Guarantor hereby agrees as follows, subject to the terms
of
Section 18 of this Guaranty which shall, in all cases, control:
AGREEMENT
1. The
Guarantor hereby unconditionally guarantees the payment when due, upon maturity,
acceleration or otherwise, of all obligations of the Borrower to the Lender
under the Financing Agreement, the Note and the Related Documents, whether
heretofore, now, or hereafter made, incurred or created, whether voluntary
or
involuntary and however arising, absolute or contingent, liquidated or
unliquidated, determined or undetermined (collectively and severally, the
“Obligations”),
whether or not such Obligations are from time to time reduced, or extinguished
and thereafter increased (subject to the proviso set forth in Section 5(a)
below)
or
incurred, whether the Borrower may be liable individually or jointly with
others, whether or not recovery upon such Obligations may be or hereafter become
barred by any statute of limitations, and whether or not such Obligations may
be
or hereafter become otherwise unenforceable.
2. The
Guarantor unconditionally guarantees the payment of the Obligations, due or
payable by the Borrower, upon: (a) the dissolution, insolvency or business
failure of, or any assignment for benefit of creditors by, or commencement
of
any bankruptcy, reorganization, arrangement, moratorium or other debtor relief
proceedings by or against, the Borrower or the Guarantor, or (b) the appointment
of a receiver for, or the attachment, restraint of or making or levying of
any
order of court or legal process affecting, the property of the Borrower or
the
Guarantor, and unconditionally promises to pay such Obligations to the Lender,
or order, on demand, in lawful money of the United States.
3. The
liability of the Guarantor hereunder is exclusive and independent of any
security for or other guaranty of the Obligations, whether executed by the
Guarantor or by any other party, and the liability of the Guarantor hereunder
is
not affected or impaired by (a) any direction of application of payment by
the
Borrower or by any other party, or (b) any other guaranty, undertaking or
maximum liability of the Guarantor or of any other party as to the Obligations,
or (c) any payment on or in reduction of any such other guaranty or undertaking,
or (d) any revocation or release of any obligations of any other guarantor
of
the Obligations, or (e) any dissolution, termination or increase, decrease
or
change in personnel of the Guarantor, or (f) any payment made to the Lender
on
the Obligations which the Lender repays to the Borrower pursuant to court order
in any bankruptcy, reorganization, arrangement, moratorium or other debtor
relief proceeding, and the Guarantor waives any right to the deferral or
modification of the Guarantor’s obligations hereunder by reason of any such
proceeding.
4. (a) The
obligations of the Guarantor hereunder are independent of the Obligations of
the
Borrower, and a separate action or actions may be brought and prosecuted against
the Guarantor whether or not action is brought against the Borrower and whether
or not the Borrower be joined in any such action or actions. The Guarantor
waives, to the fullest extent permitted by law, the benefit of any statute
of
limitations affecting its liability hereunder or the enforcement thereof. Any
payment by the Borrower or other circumstance which operates to toll any statute
of limitations as to the Borrower shall operate to toll the statute of
limitations as to the Guarantor.
(b) All
payments made by the Guarantor under this Guaranty shall be made without set-off
or counterclaim and free and clear of and without deductions for any present
or
future taxes, fees, withholdings or conditions of any nature (“Taxes”).
The
Guarantor shall pay any such Taxes, including Taxes on any amounts so paid,
and
will promptly furnish the Lender copies of any tax receipts or such other
evidence of payment as the Lender may require.
5. The
Guarantor authorizes the Lender (whether or not after termination of this
Guaranty), without notice or demand (except as shall be required by applicable
statute and cannot be waived), and without affecting or impairing its liability
hereunder, from time to time to (a) renew, compromise, extend, increase,
accelerate or otherwise change the time for payment of, or otherwise change
the
terms of Obligations or any part thereof, including increase or decrease of
the
rate of interest thereon; provided, however, that except for any loans or
advances that are made to protect the Collateral or maintain the Collateral
lien
free (such as advances of rea estate taxes or insurance), any additional loans
or advances by the Lender to the Borrower that increase the principal amount
of
the Obligations shall not increase the Obligations guaranteed hereunder, unless
the Guarantor has consented to such increase;
(b) take
and hold security for the payment of this Guaranty or the Obligations and
exchange, enforce, waive and release any such security; (c) apply such security
and direct the order or manner of sale thereof as the Lender in its discretion
may determine; and (d) release or substitute any one or more endorsers,
guarantors, the Borrower or other obligors. The Lender may, without notice
to or
the further consent of the Borrower or the Guarantor, assign this Guaranty
in
whole or in part to any person acquiring an interest in the
Obligations.
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6. It
is not
necessary for the Lender to inquire into the capacity or power of the Borrower
or the officers acting or purporting to act on its behalf, and Obligations
made
or created in reliance upon the professed exercise of such powers shall be
guaranteed hereunder.
7. The
Guarantor waives any right to require the Lender to (a) proceed against the
Borrower or any other party; (b) proceed against or exhaust any security held
from the Borrower; or (c) pursue any other remedy in the Lender’s power
whatsoever. The Guarantor waives any personal defense based on or arising out
of
any personal defense of the Borrower other than payment in full of the
Obligations, including, without limitation, any defense based on or arising
out
of the disability of the Borrower, or the unenforceability of the Obligations
or
any part thereof from any cause, or the cessation from any cause of the
liability of the Borrower other than payment in full of the Obligations. The
Lender may, at its election, foreclose on any security held for the Obligations
by one or more judicial or nonjudicial sales, or exercise any other right or
remedy the Lender may have against the Borrower, or any security, without
affecting or impairing in any way the liability of the Guarantor hereunder
except to the extent the Obligations have been paid. The Guarantor waives all
rights and defenses that the Guarantor may have because the Obligations are
or
become secured by real property. This means, among other things: (a) the Lender
may collect from the Guarantor without first foreclosing on any real or personal
property collateral pledged by the Borrower; (b) if the Lender forecloses on
any
real property collateral pledged by the Borrower: (1) the amount of the
Obligations 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 (2) the Lender may collect from the Guarantor even if the 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
Obligations are secured by real property. These rights and defenses include,
but
are not limited to, any rights or defenses based upon Section 580a, 580b, 580d,
or 726 of the California Code of Civil Procedure. The Guarantor waives all
rights and defenses arising out of an election of remedies by the Lender, even
though that election of remedies, such as a nonjudicial foreclosure with respect
to security for a guaranteed obligation, has destroyed the Guarantor’s rights of
subrogation and reimbursement against the principal by the operation of Section
580d of the California Code of Civil Procedure or otherwise.
8. The
Guarantor hereby waives any claim or other rights which the Guarantor may now
have or may hereafter acquire against the Borrower or any other guarantor of
all
or any of the Obligations that arise from the existence or performance of the
Guarantor’s obligations under this Guaranty or any other of this Guaranty (any
such claims and rights being referred to as the “Guarantor’s
Conditional Rights”),
including, without limitation, any right of subrogation, reimbursement,
exoneration, contribution, or indemnification, any right to participate in
any
claim or remedy which the Lender has against the Borrower or any collateral
which the Lender now has or hereafter acquires for the Obligations, whether
or
not such claim, remedy or right arises in equity or under contract, statute
or
common law, by any payment made hereunder or otherwise, including, without
limitation, the right to take or receive from the Borrower, directly or
indirectly, in cash or other property or by setoff or in any other manner,
payment or security on account of such claim or other rights until such time
as
the Obligations have been paid and performed in full and the period of time
has
expired during which any payment made by the Borrower or the Guarantor to the
Lender may be determined to be a preferential payment. If, notwithstanding
the
foregoing provisions, any amount shall be paid to the Guarantor on account
of
the Guarantor’s Conditional Rights and either (a) such amount is paid to the
Guarantor at any time when the Obligations shall not have been paid or performed
in full, or (b) regardless of when such amount is paid to the Guarantor any
payment made by the Borrower to the Lender is at any time determined to be
a
preferential payment, then such amount paid to the Guarantor shall be deemed
to
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 Obligations, whether matured
or
unmatured, in such order and manner as the Lender, in its sole discretion,
shall
determine. To the extent that any of the provisions of this Section
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shall
not be enforceable, the Guarantor agrees that until such time as the Obligations
have been paid and performed in full and the period of time has expired during
which any payment made by the Borrower or the Guarantor to the Lender may be
determined to be a preferential payment, the Guarantor’s Conditional Rights to
the extent not validly waived shall be subordinate to the Lender’s right to full
payment and performance of the Obligations and the Guarantor shall not seek
to
enforce the Guarantor’s Conditional Rights during such period.
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9. The
Guarantor waives all presentments, demands for performance, protests and
notices, including, without limitation, notices of nonperformance, notices
of
protest, notices of dishonor, notices of acceptance of this Guaranty, and
notices of the existence, creation or incurring of new or additional
Obligations. The Guarantor assumes all responsibility for being and keeping
itself informed of the Borrower’s financial condition and assets, and of all
other circumstances bearing upon the risk of nonpayment of the Obligations
and
the nature, scope and extent of the risks which the Guarantor assumes and incurs
hereunder, and agrees that the Lender shall have no duty to advise the Guarantor
of information known to it regarding such circumstances or risks.
10. In
addition to the Obligations, the Guarantor agrees to pay reasonable attorneys’
fees and all other costs and expenses incurred by the Lender in enforcing this
Guaranty in any action or proceeding arising out of or relating to this
Guaranty. This Guaranty and the liability and obligations of the Guarantor
hereunder are binding upon the Guarantor and its successors and assigns, and
this Guaranty inures to the benefit of and is enforceable by the Lender and
its
successors, transferees, and assigns.
11. No
right
or power of the Lender hereunder shall be deemed to have been waived by any
act
or conduct on the part of the Lender, or by any neglect to exercise such right
or power, or by any delay in so doing, and every right or power shall continue
in full force and effect until specifically waived or released by an instrument
in writing executed by the Lender.
12. The
Guarantor agrees to execute any and all further documents, instruments and
agreements as the Lender from time to time reasonably requests to evidence
the
Guarantor’s obligations hereunder.
13. The
Guarantor hereby represents and warrants and agrees that:
(a) The
Guarantor has reviewed and approved the Financing Agreement and the Related
Documents.
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(b) This
Guaranty has been duly executed and delivered on behalf of the Guarantor and
constitutes the legal, valid and binding obligation of the Guarantor enforceable
against the Guarantor in accordance with its terms.
(c) The
execution, delivery and performance of this Guaranty by the Guarantor will
not
violate any requirement of law or regulation binding upon or applicable to
the
Guarantor or any contractual obligation of the Guarantor.
(d) The
Guarantor will not sell, transfer or convey any of his assets for less than
fair
market value and reasonably equivalent consideration.
14. This
Guaranty shall be deemed to be made under and shall be governed by the laws
of
the State of California. THE GUARANTOR AND THE LENDER KNOWINGLY, VOLUNTARILY
AND
INTENTIONALLY WAIVE ANY RIGHT EITHER OF THEM MAY HAVE TO A TRIAL BY JURY IN
ANY
LITIGATION BASED UPON OR ARISING OUT OF THIS GUARANTY OR ANY RELATED INSTRUMENT
OR AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS GUARANTY OR ANY
COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTION
OF
EITHER OF THEM. NEITHER THE LENDER NOR THE GUARANTOR SHALL SEEK TO CONSOLIDATE,
BY COUNTERCLAIM OR OTHERWISE, ANY SUCH ACTION IN WHICH A JURY TRIAL HAS BEEN
WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN
WAIVED. THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY
RESPECT OR RELINQUISHED BY LENDER OR GUARANTOR EXCEPT BY A WRITTEN INSTRUMENT
EXECUTED BY BOTH OF THEM.
15.
(a) In
the
event that the waiver of jury trial set forth in Section 14 above is not
enforceable, the Guarantor and the Lender elect to proceed under the provisions
of this Section 15 (the “Reference
Provision”).
(b) With
the
exception of the matters specified in clause (c) below, any controversy, dispute
or claim (each, a “Claim”)
between the parties arising out of or relating to this Guaranty will be resolved
by a reference proceeding in California in accordance with the provisions of
Section 638
et
seq.
of the
California Code of Civil Procedure (“CCP”),
or
their successor sections, which shall constitute the exclusive remedy for the
resolution of any Claim, including whether the Claim is subject to the reference
proceeding. Except as otherwise provided in this Guaranty, venue for the
reference proceeding will be in the state or federal court in the county or
district where venue is otherwise appropriate under applicable law (the
“Court”).
(c) The
matters that shall not be subject to a reference are the following:
(i) non-judicial
foreclosure of any security interests in real or personal property;
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(ii)
exercise
of self-help remedies (including, without limitation, set-off);
(iii) appointment
of a receiver; and
(iv) temporary,
provisional or ancillary remedies (including, without limitation, writs of
attachment, writs of possession, temporary restraining orders or preliminary
injunctions).
This
Section 15 does not limit the right of any party to exercise or oppose any
of
the rights and remedies described in clauses (i) and (ii) or to seek or oppose
from a court of competent jurisdiction any of the matters described in clauses
(iii) and (iv). The exercise of, or opposition to, any of those matters does
not
waive the right of any party to a reference pursuant to this Section
15.
(d) The
referee shall be a retired judge or justice selected by mutual written agreement
of the parties. If the parties do not agree within ten (10) days of a written
request to do so by any party, then, upon request of any party, the referee
shall be selected by the Presiding Judge of the Court (or his or her
representative). A request for appointment of a referee may be heard on an
ex
parte or expedited basis, and the parties agree that irreparable harm would
result if ex parte relief is not granted. Pursuant to CCP Sec. 170.6, each
party
shall have one peremptory challenge to the referee selected by the Presiding
Judge of the Court (or his or her representative).
(e) The
parties agree that time is of the essence in conducting the reference
proceedings. Accordingly, the referee shall be requested, subject to change
in
the time periods specified herein for good cause shown, to:
(i) set
the
matter for a status and trial-setting conference within fifteen (15) days after
the date of selection of the referee;
(ii) if
practicable, try all issues of law or fact within one hundred twenty (120)
days
after the date of the conference; and
(iii) report
a
statement of decision within twenty (20) days after the matter has been
submitted for decision.
(f) The
referee will have power to expand or limit the amount and duration of discovery.
The referee may set or extend discovery deadlines or cutoffs for good cause,
including a party’s failure to provide requested discovery for any reason
whatsoever. Unless otherwise ordered, no party shall be entitled to “priority”
in conducting discovery, depositions may be taken by either party upon seven
(7)
days written notice, and all other discovery shall be responded to within
fifteen (15) days after service. All disputes relating to discovery which cannot
be resolved by the parties shall be submitted to the referee whose decision
shall be final and binding.
(g) Except
as
expressly set forth in this Section 15, the referee shall determine the manner
in which the reference proceeding is conducted including the time and place
of
hearings, the order of presentation of evidence, and all other questions that
arise with respect to the course of the reference proceeding. All proceedings
and hearings conducted before the referee, except for trial, shall be conducted
without a court reporter, except that when any party so requests, a court
reporter will be used at any hearing conducted before the referee, and the
referee will be provided a courtesy copy of the transcript. The party making
such a request shall have the obligation to arrange for and pay the court
reporter. Subject to the referee’s power to award costs to the prevailing party,
the parties will equally share the cost of the referee and the court reporter
at
trial.
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(h) The
referee shall be required to determine all issues in accordance with existing
case law and the statutory laws of the State of California. The rules of
evidence applicable to proceedings at law in the State of California will be
applicable to the reference proceeding. The referee shall be empowered to enter
equitable as well as legal relief, enter equitable orders that will be binding
on the parties and rule on any motion that would be authorized in a trial,
including without limitation motions for summary judgment or summary
adjudication. The referee shall issue a decision at the close of the reference
proceeding which disposes of all Claims of the parties that are the subject
of
the reference. Pursuant to CCP Sec. 644, such decision shall be entered by
the
Court as a judgment or an order in the same manner as if the action had been
tried by the Court and any such decision will be final, binding and conclusive.
The parties reserve the right to appeal from the final judgment or order or
from
any appealable decision or order entered by the referee. The parties reserve
the
right to findings of fact, conclusions of law, a written statement of decision,
and the right to move for a new trial or a different judgment, which new trial,
if granted, is also to be a reference proceeding under this
provision.
(i) If
the
enabling legislation which provides for appointment of a referee is repealed
(and no successor statute is enacted), any dispute between the parties that
would otherwise be determined by reference procedure will be resolved and
determined by arbitration. The arbitration will be conducted by a retired judge
or Justice, in accordance with the California Arbitration Act Sec. 1280 through
Sec. 1294.2 of the CCP as amended from time to time. The limitations with
respect to discovery set forth above shall apply to any such arbitration
proceeding.
(j) THE
PARTIES RECOGNIZE AND AGREE THAT ALL DISPUTES RESOLVED UNDER THIS REFERENCE
PROVISION WILL BE DECIDED BY A REFEREE AND NOT BY A JURY. AFTER CONSULTING
(OR
HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR OWN CHOICE, EACH
PARTY KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL PARTIES,
AGREES THAT THIS REFERENCE PROVISION WILL APPLY TO ANY CONTROVERSY, DISPUTE
OR
CLAIM BETWEEN OR AMONG THEM WHICH ARISES OUT OF OR IS RELATED TO THIS
GUARANTY.
(k) By
its
acceptance of this Guaranty, the Lender agrees to the provisions of this Section
15 as a “party.”
16. The
terms
and provisions hereof may not be waived, altered, modified or amended except
in
writing duly signed by the Lender and by the Guarantor.
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17. If
any of
the provisions of this Guaranty shall contravene or be held invalid under the
laws of any jurisdiction, this Guaranty shall be construed as if not containing
those provisions and the rights and obligations of the parties hereto shall
be
construed and enforced accordingly.
18. NOTWITHSTANDING
ANY OF THE FOREGOING, GUARANTOR, AND BY HIS SIGNATURE BELOW, LENDER, HEREBY
AGREE THAT, SHOULD IT BECOME NECESSARY FOR LENDER TO ENFORCE THE TERMS OF THIS
GUARANTY, LENDER SHALL DO SO ONLY AFTER EXHAUSTING ALL OTHER AVAILABLE REMEDIES,
AT LAW OR IN EQUITY, AND NOTHING IN THIS GUARANTY SHALL INVALIDATE THIS
AGREEMENT BETWEEN LENDER AND GUARANTOR.
|
Executed
as of the day and year first above written.
|
|||
| By: | |||
| Name: | Xxxxxx “Xxxx” Xxxx, III | ||
| Address: | |||
| Countersigned and agreed to: | |||
| By: | |||
| Name: Xxxxxx X. Xxxxx | |||
| Address: | |||
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