Unassociated Document


    GUARANTY
      AGREEMENT

    


    THIS
      PERSONAL GUARANTY AGREEMENT (this “Guaranty”)
      is
      made as of January 29,
      2007 by
      Arthur
      Liu (
      “Guarantor”),
      whose
      address is ____________________ and whose
      social security number is __________________, in favor of Michael and Maureen
      Sachs Living Trust (dated 10/21/03)(“Lender”),
      whose
      address is _______________________________.

     

    1. The
      Note.
      This
      Guaranty is executed in connection with that certain Secured Promissory Note
      (the “Note”)
      of
      even date herewith, made by AuraSound, Inc., a California corporation, in the
      original principal amount of $500,000 ( “Borrower”),
      pursuant to which Lender is making a loan (the “Loan”)
      to
      Borrower. Unless otherwise defined herein, any capitalized terms used herein
      shall have the meanings assigned to such terms in the Note. The Note and all
      other documents executed in connection with, or as security for, the Loan are
      hereinafter referred to as the “Loan
      Documents.”

     

    2. Purpose
      and Consideration.
      The
      execution and delivery of this Guaranty by Guarantor is a condition to the
      making of the Loan to Borrower, is made in order to induce Lender to make the
      Loan, and is made in recognition that Lender has relied on this Guaranty in
      making the Loan and performing any other obligations it may have under the
      Loan
      Documents.

     

    3. Guaranty.
      Guarantor hereby guarantees absolutely, primarily, unconditionally, and
      irrevocably: (i) the full and timely payment of all indebtedness evidenced
      by or arising under the Note, as and when the same becomes due, whether at
      maturity, by acceleration, or otherwise, all fees payable by Borrower in
      connection with the Loan, and any advances made by Lender under the authority
      of
      any of the Loan Documents, including any sums expended by Lender for the benefit
      of Borrower or for the benefit of any security provided under any of the Loan
      Documents, including, without limitation, taxes, assessments, insurance
      premiums, and costs of maintenance, repair or restoration; and (ii) the
      full and timely performance by Borrower of any and all of its obligations under
      the Loan Documents. Borrower’s obligations to make payments under the Note and
      all of Borrower’s other obligations under the Loan Documents are sometimes
      collectively referred to herein as the “Obligations.”
      Guarantor agrees that this is a guarantee of payment and performance and not
      of
      collection, and that there is no limitation on the amount of Guarantor’s
      liability hereunder.

     

    4. Guaranty
      Is Independent and Absolute.
      The
      obligations of Guarantor hereunder are independent of the obligations of
      Borrower and any other guarantor or other person or entity who may become liable
      with respect to the Obligations. Guarantor is jointly and severally liable
      with
      Borrower for the full and timely payment and performance of all of the
      Obligations. Guarantor expressly agrees that a separate action or actions may
      be
      brought and prosecuted against Guarantor, whether or not any action is brought
      against Borrower, any other guarantor, or any other person or entity for any
      Obligations guaranteed hereby and whether or not Borrower, any other guarantor,
      or any other person or entity is joined in any action against Guarantor.
      Guarantor further agrees that Lender shall have no obligation to proceed against
      any security for the Obligations prior to enforcing this Guaranty against
      Guarantor, and that Lender may pursue or omit to pursue any and all rights
      and
      remedies Lender has against any person or entity or with respect to any security
      in any order or simultaneously or in any other manner. All rights of Lender
      and
      all obligations of Guarantor hereunder shall be absolute and unconditional
      irrespective of: (i) any lack of validity or enforceability of the Note or
      any other Loan Document, and (ii) any other circumstances which might
      otherwise constitute a defense available to, or a discharge of, Borrower in
      respect of the Obligations.

     

    5. Authorizations
      to Lender.
      Guarantor authorizes Lender, without notice or demand and without affecting
      Guarantor’s liability hereunder, from time to time, to: (i) renew, extend,
      accelerate or otherwise change the time for payment of, change, amend, alter,
      cancel, compromise or otherwise modify the terms of the Note, including any
      increase in the rate or rates of interest thereunder agreed to by Borrower,
      and
      to grant any indulgences, forbearances, or extensions of time; (ii) renew,
      extend, change, amend, alter, cancel, compromise or otherwise modify any of
      the
      terms, covenants, conditions or provisions of any of the Loan Documents or
      any
      of the Obligations; (iii) apply any security and direct the order or manner
      of sale thereof as Lender, in Lender’s sole and absolute discretion, may
      determine; (iv) proceed against Borrower or Guarantor with respect to any
      or all of the Obligations without first foreclosing against any security
      therefor; (v) exchange, release, surrender, impair or otherwise deal in any
      manner with, or waive, release or subordinate any security interest in, any
      security for the Obligations; (vi) release or substitute Borrower or any
      one or more of any other guarantor, any endorser, or any other party who may
      be
      or becomes liable with respect to the Obligations, without any release or
      reduction in liability being deemed made of Guarantor or any other such person
      or entity; and (vii) accept a conveyance or transfer to Lender of all or
      any part of any security in partial satisfaction of the Obligations, or any
      of
      them, without releasing Borrower, Guarantor, any other guarantor, or any
      endorser or other party who may be or becomes liable with respect to the
      Obligations, from any liability for the balance of the Obligations.

     


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    6. Application
      of Payments Received by Lender.
      Any
      sums of money Lender receives from or for the account of Borrower (other than
      regular installment payments under the Note when Borrower is not in default
      under any of the Loan Documents) may be applied by Lender to reduce any of
      the
      Obligations or any other liability of Borrower to Lender, as Lender, in Lender’s
      sole and absolute discretion, deems appropriate.

     

    7. Waivers
      by Guarantor.
      In
      addition to all waivers expressed in any of the Loan Documents, all of which
      are
      incorporated herein by Guarantor:

     

    (a) Guarantor
      hereby waives: (i) presentment, demand, protest and notice of protest,
      notice of dishonor and of non-payment, notice of acceptance of this Guaranty,
      and diligence in collection; (ii) notice of the existence, creation, or
      incurring of any new or additional Obligations under or pursuant to any of
      the
      Loan Documents; (iii) any right to require Lender to proceed against, give
      notice to, or make demand upon Borrower or any other guarantor; (iv) any
      right to require Lender to proceed against or exhaust any security or to proceed
      against or exhaust any security in any particular order; (v) any right to
      require Lender to pursue any remedy of Lender; (vi) any right to direct the
      application of any security held by Lender; (vii) any right of subrogation
      and any right to enforce any remedy that Lender may have against Borrower,
      any
      right to participate in any security now or hereafter held by Lender, and any
      right to reimbursement from Borrower for amounts paid to Lender by Guarantor;
      (viii) benefits, if any, of Guarantor under any anti-deficiency statutes or
      single-action legislation; (ix) any defense arising out of any disability
      or other defense of Borrower, including bankruptcy, dissolution, liquidation,
      cessation, impairment, modification, or limitation, from any cause, of any
      liability of Borrower, or of any remedy for the enforcement of such liability;
      (x) any statute of limitations affecting the liability of Guarantor
      hereunder; (xi) any right to plead or assert any election of remedies by
      Lender; and (xii) any other defenses available to a surety under applicable
      law.

     

    (b) Guarantor
      hereby waives its right, under Sections 2845 or 2850 of the California
      Civil Code or otherwise, to require Lender to institute suit against, or to
      exhaust any rights and remedies that Lender has or may have against Borrower
      or
      any third party, or against any collateral for the Obligations provided by
      Borrower, Guarantor or any third party. In this regard, Guarantor agrees that
      he
      is bound to the payment of all Obligations, whether now existing or hereafter
      accruing as fully as if such Obligations were directly owing to Lender by
      Guarantor. Guarantor further waives any defense arising by reason of any
      disability or other defense (other than the defense that the Obligations shall
      have been fully and finally performed and indefeasibly paid) of Borrower or
      by
      reason of the cessation from any cause whatsoever of the liability of Borrower
      in respect thereof.


    
      
         

      

      
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    (c) Guarantor
      hereby waives: (i) any rights to assert against Lender any defense (legal
      or equitable), set-off, counterclaim or claim that Guarantor may now or at
      any
      time hereafter have against Borrower or any other party liable to Lender;
      (ii) any defense, set-off, counterclaim or claim, of any kind or nature,
      arising directly or indirectly from the present or future lack of perfection,
      sufficiency, validity or enforceability of the Obligations or any security
      therefor; (iii) any defense Guarantor has to performance hereunder, and any
      right Guarantor has to be exonerated, provided by Sections 2819, 2822 or
      2825 of the California Civil Code or otherwise, arising by reason of: any claim
      or defense based upon an election of remedies by Lender; the impairment or
      suspension of Lender’s rights or remedies against Borrower; the alteration by
      Lender of the Obligations; any discharge of Borrower’s obligations to Lender by
      operation of law as a result of Lender’s intervention or omission; or the
      acceptance by Lender of anything in partial satisfaction of the Obligations;
      (iv) the benefit of any statute of limitations affecting Guarantor’s
      liability hereunder or the enforcement thereof, and any act which shall defer
      or
      delay the operation of any statute of limitations applicable to the Obligations
      shall similarly operate to defer or delay the operation of such statute of
      limitations applicable to Guarantor’s liability hereunder.

     

    (d) Guarantor
      hereby waives any right of subrogation Guarantor has or may have as against
      Borrower with respect to the Obligations. In addition, Guarantor hereby waives
      any right to proceed against Borrower, now or hereafter for contribution,
      indemnity, reimbursement and any other suretyship rights and claims, whether
      direct or indirect, liquidated or contingent, whether arising under express
      or
      implied contract or by operation of law, which Guarantor may now have or
      hereafter have as against Borrower with respect to the Obligations. Guarantor
      also hereby waives any rights to recourse to or with respect to any asset of
      Borrower. Guarantor agrees that in light of the immediately foregoing waivers,
      the execution of this Guaranty shall not be deemed to make Guarantor a
“creditor” of Borrower, and that for purposes of Sections 547 and 550 of
      the Bankruptcy Code Guarantor shall not be deemed a “creditor” of
      Borrower.

     

    (e) Guarantor
      waives all rights and defenses arising out of an election of remedies by Lender,
      even though that election of remedies, such as a non-judicial 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 (“CCP”) or
      otherwise. Guarantor acknowledges and agrees that, as a result of the foregoing
      sentence, Guarantor is knowingly waiving in advance a complete or partial
      defense to this Guaranty arising under CCP sections 580d or 580a and based
      upon
      Lender’s election to conduct a private non-judicial foreclosure sale, even
      though such election would destroy, diminish or affect Guarantor’s rights of
      subrogation against Borrower or any other party and Guarantor’s rights to pursue
      Borrower or such other party for reimbursement contribution, indemnity or
      otherwise.

     

    (f) WITHOUT
      LIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER PROVISION SET FORTH IN
      THIS
      GUARANTY, GUARANTOR HEREBY WAIVES AND AGREES NOT TO ASSERT ANY AND ALL BENEFITS
      OR DEFENSES ARISING DIRECTLY OR INDIRECTLY UNDER ANY ONE OR MORE OF CALIFORNIA
      CIVIL CODE SECTIONS 2799, 2808, 2809, 2810, 2815, 2819, 2820, 2821, 2822,
      2825, 2839, 2845, 2848, 2849, 2850, 2899 and 3433, CCP SECTIONS 580a, 580b,
      580c, 580d AND 726, AND CHAPTER 2 OF TITLE 14 OF THE CALIFORNIA CIVIL
      CODE.

     

    (g) Guarantor
      waives all rights and defenses that Guarantor may have because the Borrower’s
      debt is secured by real property. This means, among other things,
      (i) Lender may collect from the Guarantor without first foreclosing on any
      real or personal property collateral pledged by the Borrower; (ii) if
      Lender forecloses on any real property collateral pledged by the Borrower:
      (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) Lender may collect from the Guarantor, even if
      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 Borrower’s debt is secured by real property. These rights and defenses
      include, but are not limited to, any rights and defenses based upon Section
      580a, 580b, 580d, or 726 of the California Code of Civil Procedure. Guarantor
      understands and agrees that the foregoing waivers are waivers of substantive
      rights and defenses to which such Guarantor might otherwise be entitled under
      state and federal law. The rights and defenses waived include, without
      limitation, those provided by California laws of suretyship and guaranty,
      anti-deficiency laws, and the Uniform Commercial Code. Guarantor acknowledges
      that he has provided these waivers of rights and defenses with the intention
      that they be fully relied upon by Lender.


    
      
         

      

      
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    8. Subordination
      by Guarantor.
      Guarantor hereby agrees that any indebtedness of Borrower to Guarantor, whether
      now existing or hereafter created, shall be and is hereby subordinated to the
      indebtedness of Borrower to Lender under the Loan Documents, subject to the
      Intercreditor agreement of even date hereof between Lender and Mapleridge
      Insurance Services. Guarantor shall not accept or seek to receive any amounts
      from Borrower on account of any indebtedness of Borrower to Guarantor until
      such
      time as the Obligations have been paid and satisfied in full.

     

    9. Bankruptcy
      Reimbursements.
      Guarantor agrees that if any amounts paid to Lender by Borrower or any other
      party liable for payment and satisfaction of the Obligations (other than
      Guarantor) are recovered from Lender in any bankruptcy proceeding, Guarantor
      shall reimburse Lender immediately on demand for all amounts so recovered from
      Lender, together with interest thereon at the Default Rate from the date such
      amounts are so recovered until repaid in full to Lender, and for this purpose
      this Guaranty shall survive repayment of the Loan. Without limiting the
      foregoing, Guarantor shall pay all costs and expenses incurred by Lender in
      connection with any bankruptcy proceeding of Borrower or any other party liable
      for payment and satisfaction of the Obligations, including attorneys’ fees and
      expenses.

     

    10. Service
      of Process on Guarantor.
      Guarantor covenants that, for so long as this Guaranty remains in effect,
      Guarantor will be subject to service of process for the purposes of any suit,
      action, or proceeding brought in the State of California to enforce Guarantor’s
      obligations under this Guaranty.

     

    11. Assignability.
      This
      Guaranty shall be binding upon Guarantor and Guarantor’s heirs, representatives,
      successors, and assigns and shall inure to the benefit of Lender and Lender’s
      successors and assigns. This Guaranty shall follow the Note and other Loan
      Documents which are for the benefit of Lender; and, in the event the Note and
      other such Loan Documents, or any of them, are negotiated, sold, transferred,
      assigned, or conveyed by Lender in whole or in part, this Guaranty shall be
      deemed to have been sold, transferred, assigned, or conveyed by Lender to the
      holder or holders of the Note and other such Loan Documents, with respect to
      the
      Obligations contained therein, and such holder or holders may enforce this
      Guaranty as if such holder or holders had been originally named as Lender
      hereunder.

     

    12. Payment
      of Costs of Enforcement.
      In the
      event any action or proceeding is brought to enforce this Guaranty, Guarantor
      agrees to pay all costs and expenses of Lender in connection with such action
      or
      proceeding, including, without limitation, all reasonable attorneys’ fees
      incurred by Lender.

     

    13. Notices.
      Whenever any notice, demand, or request is required or permitted under this
      Guaranty, such notice, demand, or request shall be effective when delivered
      or
      three (3) days after being mailed by certified mail, return receipt requested,
      to Guarantor at the address set forth above or to such other address as
      Guarantor may designate in a notice given to Lender.


    14. Severability
      of Provisions.
      If any
      provision hereof or of any other Loan Document shall, for any reason and to
      any
      extent, be invalid or unenforceable, then the remainder of the document in
      which
      such provision is contained, the application of the provision to other persons
      or entities or circumstances, and any other document referred to herein shall
      not be affected thereby but instead shall be enforceable to the maximum extent
      permitted by law.

    

      
        
           

        

        
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    15. Waiver.
      Neither
      the failure of Lender to exercise any right or power given hereunder or to
      insist upon strict compliance by Borrower, Guarantor, any other guarantor,
      or
      any other person or entity with any of its, his or her obligations set forth
      herein or in any of the Loan Documents nor any practice of Borrower or Guarantor
      at variance with the terms hereof or of any of the Loan Documents shall
      constitute a waiver of Lender’s right to demand strict compliance with the terms
      and provisions of this Guaranty.

     

    16. Term.
      This
      Guaranty shall survive repayment in full of the Loan and remain in effect until
      such time as all payments received by Lender are no longer subject to recovery
      in any bankruptcy proceeding.

     

    17. Applicable
      Law.
      This
      Guaranty and the rights and obligations of the parties hereunder shall be
      governed by and interpreted in accordance with the laws of the State of
      California. 

     

    18. Waiver
      of Jury Trial.
      NEITHER
      GUARANTOR NOR ANY ASSIGNEE, SUCCESSOR, HEIR OR PERSONAL REPRESENTATIVE OF
      GUARANTOR SHALL SEEK A JURY TRIAL IN RESPECT OF ANY ACTION, PROCEEDING OR
      COUNTERCLAIM BASED UPON OR ARISING IN CONNECTION WITH THIS GUARANTY, THE NOTE
      OR
      ANY OTHER LOAN DOCUMENT, OR THE COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
      (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY THERETO. THIS PROVISION
      IS A
      MATERIAL INDUCEMENT FOR LENDER TO MAKE THE LOAN. GUARANTOR ACKNOWLEDGES THAT
      IT
      HAS CONSULTED WITH ITS ATTORNEY CONCERNING THIS WAIVER OF JURY TRIAL, FULLY
      UNDERSTANDS THE LEGAL EFFECT OF SUCH WAIVER, AND HEREBY VOLUNTARILY, KNOWINGLY
      AND INTENTIONALLY WAIVES ANY AND ALL SUCH RIGHTS TO A JURY
      TRIAL.

     

    19. Jurisdiction.
      Guarantor hereby consents to the jurisdiction of any state or federal court
      situated in Orange County, California, and waives any objection based on lack
      of
      personal jurisdiction, improper venue or forum
      non conveniens,
      with
      regard to any actions, claims, disputes or proceedings relating to this
      Guaranty, any of the Loan Documents, or any other document delivered hereunder
      or in connection herewith, or any transaction arising form or connected to
      any
      of the foregoing. Guarantor waives personal service of any and all process
      upon
      it, and consents to all such service of process made by mail or by messenger
      directed to it at the address specified above. Nothing herein shall affect
      the
      right of the Lender to serve process in any manner permitted by law, or limit
      the right of Lender to bring proceedings against Guarantor or its property
      or
      assets in the competent courts of any other jurisdiction or
      jurisdictions.

     

    20. Counterparts.
      This
      Guaranty may be executed in counterparts, each of which shall be deemed a
      duplicate original.

     

    [signature
      follows on next page]


    
      
         

      

      
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    IN
      WITNESS WHEREOF, Guarantor has executed this Guaranty as of the day and year
      first above written.

    


    


    /s/
      Arthur
      Liu                                              


    Arthur
      Liu, an individual

     

     

    
      
         

      

      
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