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EXHIBIT 10.9
UNCONDITIONAL GUARANTY
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For and in consideration of the loan by IMPERIAL BANK ("Bank") to MHL
DEVELOPMENT COMPANY ("Borrower"), pursuant to a Loan and Security Agreement of
even date as amended from time to time (the "Loan Agreement"), and any and all
other Obligations owing by Borrower to Bank, the undersigned guarantor
("Guarantor") hereby unconditionally and irrevocably guarantees the prompt and
complete payment of all amounts that Borrower owes to Bank and performance by
Borrower of the Loan Agreement (collectively, the "Agreements") in strict
accordance with their terms. All terms used without definition in this Guaranty
shall have the meaning assigned to them in the Agreement.
1. If Borrower does not perform its obligations in strict accordance
with the Agreements, Guarantor shall immediately pay all amounts due thereunder
(including, without limitation, all principal, interest, and fees) and otherwise
to proceed to complete the same and satisfy all of Borrower's obligations under
the Agreements.
2. If there is more than one guarantor, the obligations hereunder are
joint and several, and whether or not there is more than one Guarantor, the
obligations hereunder are independent of the obligations of Borrower, and a
separate action or actions may be brought and prosecuted against Guarantor
whether action is brought against Borrower or whether Borrower be joined in any
such action or actions. Guarantor waives the benefit of any statute of
limitations affecting its liability hereunder or the enforcement thereof, to the
extent permitted by law. Guarantor's liability under this Guaranty is not
conditioned or contingent upon the genuineness, validity, regularity or
enforceability of the Agreements.
3. Guarantor authorizes Bank, without notice or demand and without
affecting its liability hereunder, from time to time to (a) renew, extend, or
otherwise change the terms of the Agreements or any part thereof; (b) take and
hold security for the payment of this Guaranty or the Agreements, and exchange,
enforce, waive and release any such security; and (c) apply such security and
direct the order or manner of sale thereof as Bank in its sole discretion may
determine.
4. Guarantor waives any right to require Bank to (a) proceed against
Borrower or any other person; (b) proceed against or exhaust any security held
from Borrower; or (c) pursue any other remedy in Bank's power whatsoever. Bank
may, at its election, exercise or decline or fail to exercise any right or
remedy it may have against Borrower or any security held by Bank, including
without limitation the right to foreclose upon any such security by judicial or
nonjudicial sale, without affecting or impairing in any way the liability of
Guarantor hereunder. Guarantor waives any defense arising by reason of any
disability or other defense of Borrower or by reason of the cessation from any
cause whatsoever of the liability of Borrower. Guarantor waives any setoff,
defense or counterclaim that Borrower may have against Bank. Guarantor waives
any defense arising out of the absence, impairment or loss of any right of
reimbursement or subrogation or any other rights against Borrower. Until all of
the Obligations under the Agreements have been satisfied in full, Guarantor
shall have no right
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of subrogation or reimbursement, contribution or other rights against Borrower,
and Guarantor waives any right to enforce any remedy that Bank now has or may
hereafter have against Borrower. Guarantor waives all rights to participate in
any security now or hereafter held by Bank. Guarantor waives all presentments,
demands for performance, notices of nonperformance, protests, notices of
protest, notices of dishonor, and notices of acceptance of this Guaranty and of
the existence, creation, or incurring of new or additional indebtedness.
Guarantor assumes the responsibility for being and keeping itself informed of
the financial condition of Borrower and of all other circumstances bearing upon
the risk of nonpayment of any indebtedness or nonperformance of any obligation
of Borrower, warrants to Bank that it will keep so informed, and agrees that
absent a request for particular information by Guarantor, Bank shall have no
duty to advise Guarantor of information known to Bank regarding such condition
or any such circumstances. Guarantor waives the benefits of California Civil
Code sections 2809, 2810, 2819, 2845, 2847, 2848, 2849, 2850, 2899 and 3433.
5. Guarantor acknowledges that, to the extent Guarantor has or may have
certain rights of subrogation or reimbursement against Borrower, those rights
may be impaired or destroyed if Bank elects to proceed against any real property
security of Borrower by non-judicial foreclosure. That impairment or destruction
could, under certain judicial cases and based on equitable principles of
estoppel, give rise to a defense by Guarantor against its obligations under this
Guaranty. Guarantor waives that defense and any others arising from Bank's
election to pursue non-judicial foreclosure. Without limiting the generality of
the foregoing, Guarantor waives any and all benefits and defenses under
California Code of Civil Procedure Sections 580a, 580b, 580d and 726, to the
extent they are applicable.
6. If Borrower becomes insolvent or is adjudicated bankrupt or files a
petition for reorganization, arrangement, composition or similar relief under
any present or future provision of the United States Bankruptcy Code, or if such
a petition is filed against Borrower, and in any such proceeding some or all of
any indebtedness or obligations under the Loan Agreement are terminated or
rejected or any obligation of Borrower is modified or abrogated, or if
Borrower's obligations are otherwise avoided for any reason, Guarantor agrees
that Guarantor's liability hereunder shall not thereby be affected or modified
and such liability shall continue in full force and effect as if no such action
or proceeding had occurred. This Guaranty shall continue to be effective or be
reinstated, as the case may be, if any payment must be returned by Bank upon the
insolvency, bankruptcy or reorganization of Borrower, Guarantor, any other
guarantor, or otherwise, as though such payment had not been made.
7. This Guaranty shall automatically terminate upon the occurrence of
all of the following: (i) Borrower receives cash proceeds, following the date of
the Loan Agreement, in an amount of at least $3,000,000 from the sale and
issuance of its equity securities to investors satisfactory to Bank in its sole
discretion and (ii) Borrower is in compliance with the financial covenants set
forth in Sections 6.8 through 6.11 of the Loan Agreement.
8. Guarantor agrees, as so requested by Bank, to complete and sign a
personal financial statement on the Bank's form. Guarantor agrees to pay a
reasonable attorneys' fee
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and all other costs and expenses which may be incurred by Bank in the
enforcement of this Guaranty. No terms or provisions of this Guaranty may be
changed, waived, revoked or amended without Bank's prior written consent. Should
any provision of this Guaranty be determined by a court of competent
jurisdiction to be unenforceable, all of the other provisions shall remain
effective. This Guaranty embodies the entire agreement among the parties hereto
with respect to the matters set forth herein, and supersedes all prior
agreements among the parties with respect to the matters set forth herein. No
course of prior dealing among the parties, no usage of trade, and no parol or
extrinsic evidence of any nature shall be used to supplement, modify or vary any
of the terms hereof. There are no conditions to the full effectiveness of this
Guaranty. Bank may assign this Guaranty without in any way affecting Guarantor's
liability under it. This Guaranty shall inure to the benefit of Bank and its
successors and assigns. This Guaranty is in addition to the guaranties of any
other guarantors and any and all other guaranties of Borrower's indebtedness or
liabilities to Bank.
9. This Guaranty shall be governed by the laws of the State of
California, without regard to conflicts of laws principles. GUARANTOR WAIVES ANY
RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS GUARANTY OR ANY TRANSACTION CONTEMPLATED THEREIN, INCLUDING CLAIMS BASED
ON CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER COMMON LAW OR STATUTORY BASES.
Guarantor submits to the exclusive jurisdiction of the state and federal courts
located in the County of Santa ▇▇▇▇▇, State of California.
10. (a) Other than (i) nonjudicial foreclosure and all matters in
connection therewith regarding security interests in real or personal property;
or (ii) the appointment of a receiver, or the exercise of other provisional
remedies (any and all of which may be initiated pursuant to applicable law),
each controversy, dispute or claim between the parties arising out of or
relating to this Agreement, which controversy, dispute or claim is not settled
in writing within thirty (30) days after the "Claim Date" (defined as the date
on which a party subject to this Agreement gives written notice to all other
parties that a controversy, dispute or claim exists), will be settled by a
reference proceeding in California in accordance with the provisions of Section
638 et seq. of the California Code of Civil Procedure, or their successor
section ("CCP"), which shall constitute the exclusive remedy for the settlement
of any controversy, dispute or claim concerning this Agreement, including
whether such controversy, dispute or claim is subject to the reference
proceeding and except as set forth above, the parties waive their rights to
initiate any legal proceedings against each other in any court or jurisdiction
other than the Superior Court in the County where the Real Property, if any, is
located or Santa ▇▇▇▇▇ County if none (the "Court"). The referee shall be a
retired Judge of the Court selected by mutual agreement of the parties, and if
they cannot so agree within forty-five (45) days after the Claim Date, the
referee shall be promptly selected by the Presiding Judge of the Court (or his
representative). The referee shall be appointed to sit as a temporary judge,
with all of the powers for a temporary judge, as authorized by law, and upon
selection should take and subscribe to the oath of office as provided for in
Rule 244 of the California Rules of the Court (or any subsequently enacted
Rule). Bach party shall have one peremptory challenge pursuant to CCP Section
170.6. The referee shall (a) be requested to set the
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matter for hearing within sixty (60) days after the date of selection of the
referee and (b) try any and all issues of law or fact and report a statement of
decision upon them, if possible, within ninety (90) days of the Claim Date. Any
decision rendered by the referee will be final, binding and conclusive and
judgment shall be entered pursuant to CCP Section 644 in any court in the State
of California having jurisdiction. Any party may apply for a reference
proceeding at any time after thirty (30) days following notice to any other
party of the nature of the controversy, dispute or claim, by filing a petition
for a hearing and/or trial. All discovery permitted by this Agreement shall be
completed no later than fifteen (15) days before the first hearing date
established by the referee. The referee may extend such period in the event of a
party's refusal to provide requested discovery or unavailability of a witness
due to absence or illness. No party shall be entitled to "priority" in
conducting discovery. Depositions may be taken by either party upon seven (7)
days written notice, and request for production or inspection of documents which
cannot be resolved by the parties shall be submitted to the referee as provided
herein. The Superior Court is empowered to issue temporary and/or provisional
remedies, as appropriate.
(b) Except as expressly set forth in this Agreement, the referee shall
determine the manner in which the reference proceeding is conducted including
the time and place of all 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. The party making such a request shall have the obligation to
arrange for and pay for the court reporter. The costs of the court reporter at
the trial shall be borne equally by the parties.
(c) 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, to provide all temporary and/or
provisional remedies and to enter equitable orders that will be binding upon the
parties. The referee shall issue a single judgment at the close of the reference
proceeding which shall dispose of all of the claims of the parties that are the
subject of the reference. The parties hereto expressly reserve the right to
contest or appeal from the final judgment or any appealable order or appealable
judgment entered by the referee. The parties hereto expressly reserve the right
to findings of fact, conclusions of laws, 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 Section 10.
(d) In the event that 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 the reference
procedure herein described will be resolved and determined by arbitration. The
arbitration will be conducted by a retired judge of the Court, in accordance
with the California Arbitration Act, Section 1280 through Section 1294.2 of the
CCP as amended from time to time. The limitations with respect to discovery as
set forth hereinabove shall apply to any such arbitration proceeding.
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IN WITNESS WHEREOF, the undersigned Guarantor has executed this Guaranty
as of January 5, 2001.
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