10.5 GUARANTY
This Guaranty ("Guaranty") dated as of March 3, 2003 is made by CITA
Americas, Inc., a Nevada corporation ("Guarantor"), to and for the benefit of
the holder ("Holder") of that certain Promissory Note ("Note") made and
delivered by CITA Biomedical, Inc. ("Company") as of the date hereof.
WHEREAS, Company has this day executed and delivered the Note, which is
incorporated herein by reference, in the original principal amount of Three
Hundred Thousand Dollars ($300,000.00) in connection with a loan for like amount
(the "Loan");
WHEREAS, the Note and all other documents and instruments executed or
delivered by Company or Guarantor in connection with the Note are referred to
herein collectively as the "Transaction Documents;"
WHEREAS, the Guarantor is a wholly-owned subsidiary of Company, and
Guarantor expects to derive substantial economic benefit from the Loan; and
WHEREAS, as a material condition to making the Loan and accepting the
Transaction Documents, Guarantor has agreed to be individually liable with full
recourse for the Liability (as defined below).
NOW, THEREFORE, in consideration of the Loan, and for other good and
valuable consideration, the receipt and legal sufficiency of which are hereby
acknowledged, Guarantor agrees as follows:
1. "Liability" shall mean the full personal and recourse
liability of Guarantor to indemnify Holder for any or all loss, cost, liability,
judgment, claim, damage or expense sustained, suffered or incurred by Holder,
arising out of or attributable or relating to:
(a) Any failure by Company to timely pay the entire principal balance of
the Note, and all interest thereon;
(b) fraud or misrepresentation by Company or Guarantor in connection with
the Loan;
(c) the default or material breach of any provision, representation or
warranty in any of the Transaction Documents;
(d) the misappropriation or conversion by Company or Guarantor of any
Collateral for the Loan;
(e) attorney's fees, costs and expenses arising out of or relating to the
collection, enforcement or defense of the Note or other Transaction
Documents;
(f) any of the following events: (i) any financial information concerning
Company or Guarantor is fraudulent in any respect, contains any
fraudulent information or misrepresents in any material respect the
financial condition of Company or Guarantor; (ii) a voluntary
bankruptcy or insolvency proceeding is commenced by Company, or (iii)
an involuntary bankruptcy or insolvency proceeding is commenced by any
party against Company and is not unconditionally dismissed within
ninety (90) days of filing (except if such involuntary action is
brought by Holder).
2. Guarantor hereby absolutely, unconditionally and irrevocably
guarantees the prompt satisfaction and discharge of any and all Liability,
without defense, offset, counterclaim or right of subrogation, all of which are
hereby waived. This Guaranty is and shall be construed as a continuing, absolute
and unconditional guaranty of payment, and not as a guaranty of collection. It
is expressly understood and agreed that this is a continuing guaranty and that
the obligations of Guarantor hereunder are and shall be absolute under any and
all circumstances, without regard to the validity, regularity or enforceability
of the Note or the other Transaction Documents, a true copy of each of which
documents Guarantor hereby acknowledges having received and reviewed. Company
and Guarantor shall have full joint and several recourse liability for all sums
due under the Note and other Transaction Documents.
(a) Guarantor hereby waives: (i) notice of acceptance
of this Guaranty by Holder and of presentment, demand, protest, notice of
protest and of dishonor, notice of default and all other notices of every kind
or nature now or hereafter provided by agreement or available at law, including,
without limitation, notice of default, notice of intention to accelerate all
sums under the Transaction Documents, and notice of acceleration of all sums
under the Transaction Documents;
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(ii) the pleading of any statute of limitations as a defense to the obligations
hereunder; (iii) any right to require or compel Holder, prior to exercising its
rights hereunder to first proceed against Company or any security for the Loan,
or to pursue any other remedy available to Holder; and (iv) all rights waived by
Company under the Note. Holder's failure to exercise, or delay in exercising,
any right or power hereunder shall not operate as a waiver thereof, nor shall
any single or partial exercise by Holder of any right, remedy or power hereunder
preclude any other or future exercise of any other right, remedy or power.
Guarantor acknowledges that if there shall occur any Liability, Holder may seek
recovery therefore, and may exercise any remedies it may have, against Guarantor
with the same force and effect as if Guarantor were primary obligor under the
Note and the other Transaction Documents.
(b) Guarantor further agrees that the validity of this
Guaranty and the obligations of Guarantor hereunder shall in no way be
terminated, affected or impaired by reason of: (i) the assertion by Holder of
any rights or remedies which it may have under or with respect to the Note or
the other Transaction Documents, against any person obligated thereunder; (ii)
any failure to file or record any of the Transaction Documents or to take or
perfect any security intended to be provided thereby; (iii) the release or
exchange of the Collateral for the Loan; (iv) the commencement of a case under
the Bankruptcy Code, 11 U.S.C. ss.101 et seq., as amended from time to time (the
"Bankruptcy Code"), by or against any person obligated under the Note or the
other Transaction Documents; or (v) any payment made on the Loan or any other
Liabilities arising under the Note or the other Transaction Documents, whether
made by Company or Guarantor or any other person, which is required to be
refunded pursuant to any bankruptcy or insolvency law; it being understood that
no payment so refunded shall be considered as a payment of any portion of the
Note, nor shall it have the effect of reducing the liability of Guarantor
hereunder. It is further understood that if Company shall have taken advantage
of, or be subject to the protection of, any provision of the Bankruptcy Code,
the effect of which is to prevent or delay Holder from taking any remedial
action against Company, including the exercise of any option Holder has to
declare the Note due and payable on the happening of any Default or event by
which, under the terms of the Transaction Documents, the Note shall become due
and payable, Holder may, as against Guarantor, nevertheless, declare the
Liability due and payable and enforce any and all of its rights and remedies
provided for herein.
(c) Guarantor further covenants: (i) that this Guaranty shall remain
and continue in full force and effect as to any modification, extension or
renewal of the Note or any of the other Transaction Documents; (ii) that Holder
shall not be under a duty to protect, secure or insure any security or lien
provided by the Transaction Documents or other collateral for the Loan; and
(iii) that other indulgence or forbearance may be granted under any or all of
the Transaction Documents, without notice to or further consent of Guarantor.
(d) Without limitation, Guarantor hereby waives any rights of
subrogation, reimbursement, indemnification and contribution and any other
rights and defenses that are or may become available to Guarantor, by reasons of
Section 2787 to 2855, inclusive, of the California Civil Code. Without
limitation, Guarantor waives all rights and defenses that Guarantor may have
because this Guaranty is secured by real or personal property. This means, among
other things: (i) the Holder may collect from Guarantor without first
foreclosing on Collateral and (ii) if the Holder forecloses on Collateral
pledged by the Debtor: (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) the Holder may collect from
Guarantor even if the Holder, by foreclosing on the Collateral, has destroyed
any right Guarantor may have to collect from the Debtor. This is an
unconditional and irrevocable waiver of any rights and defenses Guarantor may
have because the Debtor's debt is secured by the Collateral. 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.
Without limitation, Guarantor also waives all rights and defenses arising out of
an election of remedies by the Holder, even though that election of remedies,
such as a nonjudicial 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 or otherwise.
3. Guarantor will not convey, transfer or assign, directly or
indirectly, any material portion of its property of any nature, whether real,
personal or mixed, tangible or intangible, or any interest therein, for less
than full and fair consideration.
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4. Any indebtedness of Company to Guarantor now or hereafter existing
(including, without limitation, any rights of subrogation Guarantor may have as
a result of any payment by Guarantor under this Guaranty), together with any
interest thereon, shall be, and such indebtedness is hereby, deferred, postponed
and subordinated to the prior payment in full of the Note. Until payment in full
of the Note (and including interest accruing on the Note after the commencement
of a proceeding by or against Company under the Bankruptcy Code which interest
the parties agree shall remain a claim that is prior and superior to any claim
of Guarantor notwithstanding any contrary practice, custom or ruling in cases
under the Bankruptcy Code generally), Guarantor agrees not to accept any payment
or satisfaction of any kind of indebtedness of Company to Guarantor and hereby
assigns such indebtedness to Holder, including the right to file proof of claim
and to vote thereon in connection with any such proceeding under the Bankruptcy
Code, including the right to vote on any plan of reorganization. Further, if
Guarantor shall now or at any time in the future comprise more than two persons,
firms or corporations, Guarantor agrees that until such payment in full of the
Note: (a) no one of them shall accept payment from the others by way of
contribution on account of any payment made hereunder by such party to Holder;
(b) no one of them will take any action to exercise or enforce any rights to
such contribution; and (c) if any one of them should receive any payment,
satisfaction or security for any indebtedness of Company to Guarantor or for any
contribution by the others of them for payment made hereunder by the recipient
to Holder, such payment, satisfaction or security shall be delivered to Holder
in the form received, endorsed or assigned as may be appropriate for application
on account of, or as security for, the Note and until so delivered shall be held
in trust for Holder as security for the Note.
5. Guarantor hereby represents, warrants and covenants that he has full
power, authority and right to execute, deliver and perform its obligations
pursuant to this Guaranty and to keep and observe all of the terms of this
Guaranty on Guarantor's respective part to be performed. Guarantor hereby
further represents, warrants and covenants as follows:
(a) Guarantor is a wholly-owned subsidiary of Company.
(b) The execution, delivery and performance of the Transaction
Documents executed or delivered by Guarantor and the consummation of the
transactions contemplated thereby: (i) have been duly authorized by all
requisite actions; (ii) have been approved or consented to by all of its
respective constituent entities whose approval or consent is required to be
obtained; (iii) do not require the approval or consent of any governmental
authority having jurisdiction over Guarantor or the Collateral; (iv) do not and
will not constitute a violation of, or default under, the governing instruments
of Guarantor, or any applicable requirement of a governmental authority; and (v)
will not be in contravention of any court or administrative order or ruling
applicable to Guarantor or the Property, or any mortgage, indenture, agreement,
commitment or instrument to which Guarantor is a party or by which it or its
assets are bound, nor create or cause to be created any mortgage, lien,
encumbrance, or charge against the assets of Guarantor other than those
permitted by the Transaction Documents.
(c) Except as already disclosed in writing, there are no actions, suits
or proceedings pending, or, to the knowledge of Guarantor, threatened, nor any
pending or, to the knowledge of Guarantor, threatened labor disputes, against or
affecting Guarantor or the Collateral covered by the Transaction Documents, or
involving the validity or enforceability of the Transaction Documents or the
priority of the liens created or to be created thereby, at law or in equity, or
before or by any governmental authority, which, if adversely determined, would,
in the determination of Holder, either individually or in the aggregate, have a
material adverse affect on (i) the ability of Guarantor to pay all of its
liabilities or to perform all of its obligations in the manner and within the
time periods required under the Transaction Documents, (ii) the validity,
enforceability or consummation of the Transaction Documents or the transactions
contemplated thereby, or (iii) the title to the Collateral, the permitted uses
of the Collateral or the value of the Collateral provided by the Transaction
Documents.
(d) The Transaction Documents to which Guarantor is a party are the
legal, valid and binding obligations of Guarantor, and are not subject to any
right of rescission, set-off, counterclaim or defense, including the defense of
usury, nor would the operation of any of the terms of the Transaction Documents,
or the exercise of any right thereunder, render this Guaranty unenforceable, in
whole or in part, or subject to any right of rescission, set-off, counterclaim
or defense, including the defense of usury.
(e) To Guarantor's best knowledge, since the date of the information
and documentation relating to the Collateral furnished to Holder, no material
change in the Collateral has occurred.
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(f) No default has occurred and is continuing in the performance of any
obligation of Guarantor or any affiliate of Guarantor which would be deemed a
Default under the Transaction Documents if they were in effect, or any
instruments evidencing, securing or guaranteeing any other loan.
(g) There exists no fact, event or disclosure in connection with the
Loan that reasonably could be expected to cause the Loan to become delinquent or
otherwise have a material adverse affect on the Loan or the Collateral.
(h) Guarantor is and will be, and at all times will hold itself out to
the public as a legal entity separate and distinct from any other entity
(including any affiliate or constituent party of Company or any affiliate or
constituent party of Guarantor).
6. Governing Law. This Guaranty shall be governed by the laws of the
State of California, without regard for conflicts of laws principles or
otherwise.
7. Assignment. Guarantor shall not be permitted to assign this
Guaranty without the prior written consent of Holder. Holder may, at any time,
sell, transfer or assign this Guaranty and the Transaction Documents, and any or
all servicing rights with respect thereto, or grant participations therein. Upon
any transfer or proposed transfer contemplated above and by the Transaction
Documents, at Holder's request, Guarantor shall provide an estoppel certificate
to any prospective Holder in such form, substance and detail as Holder, or such
prospective Holder may require.
8. Third Party Beneficiaries. This Guaranty shall inure to the
benefit of each Holder and their permitted successors and assigns and any
subsequent holder of the Transaction Documents and shall be binding upon
Guarantor and its permitted successors and assigns. Holder may assign this
Guaranty without the prior written consent of Guarantor.
9. Survival. This Guaranty shall survive any termination, satisfaction,
assignment, entry of a judgment of foreclosure, exercise of power of sale,
acceptance by Holder of a deed in lieu of foreclosure or repayment of the Loan.
10. Construction. Wherever possible, each provision of this
Guaranty shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guaranty. Capitalized terms not
defined herein shall have the meaning ascribed thereto in the Note or other
Transaction Documents.
11. Remedies Available. The remedies of Holder, as provided
herein or in any other Loan Document, shall be cumulative and concurrent, and
may be pursued singularly, successively or together, at the sole discretion of
Holder, and may be exercised as often as occasion therefore shall arise. No act
of omission or commission of Holder, including specifically any failure to
exercise any right, remedy or recourse, shall be deemed to be a waiver or
release of the same, and any waiver or release with reference to any one event
shall not be construed as continuing or as a bar to, or as a waiver or release
of, any subsequent right, remedy or recourse as to a subsequent event.
12. Effect of Waiver. No failure to exercise, and no delay in
exercising any right, power or remedy hereunder or under any other Loan Document
shall impair any right, power or remedy which Holder may have, nor shall any
such delay be construed to be a waiver of any of such rights, powers or
remedies, or an acquiescence in any breach or default under this Guaranty
Agreement or any other Loan Document, nor shall any waiver of any breach or
default of Guarantor hereunder or under any other Loan Document be deemed a
waiver of any default or breach subsequently occurring. The rights and remedies
herein specified are cumulative and not exclusive of any rights or remedies
which Holder would otherwise have.
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13. Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
14. Entire Agreement. This Guaranty and the Transaction Documents
constitute the entire agreement between Guarantor and Holder with respect to the
matters referred to herein, and no modification or waiver of any of the terms
hereof shall be effective unless in writing, signed by the party to be charged
with such modification or waiver.
IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the day
and year first above written.
CITA AMERICAS, INC.
By:
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Its___________________________
By:
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Its___________________________
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