Document:

EXHIBIT 10.8

 

	
  WELLS
  FARGO

  	
   

  	
  CONTINUING GUARANTY

  

 

TO:
WELLS FARGO BANK, NATIONAL ASSOCIATION

 

1.                                  GUARANTY;
DEFINITIONS. In consideration of any credit or other financial accommodation
heretofore, now or hereafter extended or made to S&W Seed
Company (“Borrowers”), or any of them, by WELLS FARGO BANK, NATIONAL
ASSOCIATION (“Bank”), and for other valuable consideration, the undersigned Seed Holding, Ltd. (“Guarantor”), jointly and severally
unconditionally guarantees and promises to pay to Bank or order, on demand in
lawful money of the United States of America and in immediately available
funds, any and all Indebtedness of any of the Borrowers to Bank. The term “Indebtedness”
is used herein in its most comprehensive sense and includes any and all
advances, debts, obligations and liabilities of Borrowers, or any of them,
heretofore, now or hereafter made, incurred or created, whether voluntary or
involuntary and however arising, whether due or not due, absolute or
contingent, liquidated or unliquidated, determined or undetermined, including
under any swap, derivative, foreign exchange, hedge, deposit, treasury
management or other similar transaction or arrangement, and whether Borrowers
may be liable individually or jointly with others, or whether recovery upon such
Indebtedness may be or hereafter becomes unenforceable. This Guaranty is a
guaranty of payment and not collection.

 

2.                                  MAXIMUM
LIABILITY; SUCCESSIVE TRANSACTIONS; REVOCATION; OBLIGATION UNDER OTHER
GUARANTIES. The liability of Guarantor shall not exceed at any time the sum of (a) $2,500,000.00, (b) all accrued and unpaid interest on
any Indebtedness, and (c) all costs and expenses pertaining to the
enforcement of this Guaranty and/or the collection of the Indebtedness.
Notwithstanding the foregoing, Bank may permit the Indebtedness of Borrowers to
exceed Guarantor’s liability. This is a continuing guaranty and all rights,
powers and remedies hereunder shall apply to all past, present and future
Indebtedness of each of the Borrowers to Bank, including that arising under
successive transactions which shall either continue the Indebtedness, increase
or decrease it, or from time to time create new Indebtedness after all or any
prior Indebtedness has been satisfied, and notwithstanding the death,
incapacity, dissolution, liquidation or bankruptcy of any of the Borrowers or
Guarantor or any other event or proceeding affecting any of the Borrowers or
Guarantor. This Guaranty shall not apply to any new Indebtedness created after
actual receipt by Bank of written notice of its revocation as to such new
Indebtedness; provided however, that loans or advances made by Bank to any of
the Borrowers after revocation under commitments existing prior to receipt by
Bank of such revocation, and extensions, renewals or modifications, of any
kind, of Indebtedness incurred by any of the Borrowers or committed by Bank
prior to receipt by Bank of such revocation, shall not be considered new
Indebtedness. Any such notice must be sent to Bank by registered U.S. mail,
postage prepaid, addressed to its office at Fresno RCBO,
8405 N. Fresno Street, Suite #200, Fresno, CA 93720, or at such
other address as Bank shall from time to time designate. Any payment by
Guarantor with respect to the Indebtedness shall not reduce Guarantor’s maximum
obligation hereunder unless written notice to that effect is actually received
by Bank at or prior to the time of such payment. The obligations of Guarantor
hereunder shall be in addition to any obligations of Guarantor under any other
guaranties of any liabilities or obligations of any of the. Borrowers or any other persons heretofore or
hereafter given to Bank unless said other guaranties are expressly modified or
revoked in writing; and this Guaranty shall not, unless expressly herein
provided, affect or invalidate any such other guaranties.

 

3.                                  OBLIGATIONS JOINT AND SEVERAL; SEPARATE
ACTIONS; WAIVER OF STATUTE OF LIMITATIONS; REINSTATEMENT OF LIABILITY. The
obligations hereunder are joint and several and independent of the obligations
of Borrowers, and a separate action or actions may be brought and prosecuted
against Guarantor whether action is brought against any of the Borrowers or any
other person, or whether any of the Borrowers or any other person is joined in
any such action or actions. Guarantor acknowledges that this Guaranty is
absolute and unconditional, there are no conditions precedent to the
effectiveness of this Guaranty, and this Guaranty is in full force and effect
and is binding on Guarantor as of the date written below, regardless of whether
Bank obtains collateral or any guaranties from others or takes any other action
contemplated by Guarantor. Guarantor waives the benefit of any statute of
limitations affecting Guarantor’s liability hereunder or the enforcement
thereof, and Guarantor agrees that any payment of any Indebtedness or other act
which shall toll any statute of limitations applicable thereto shall similarly
operate to toll such statute of limitations applicable to 

 

 

Guarantor’s liability
hereunder. The liability of Guarantor hereunder shall be reinstated and revived
and the rights of Bank shall continue if and to the extent that for any reason
any amount at any time paid on account of any Indebtedness guaranteed hereby is
rescinded or must otherwise be restored by Bank, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise, all as though such
amount had not been paid. The determination as to whether any amount so paid
must be rescinded or restored shall be made by Bank in its sole discretion; provided
however, that if Bank chooses to contest any such matter at the request of
Guarantor, Guarantor agrees to indemnify and hold Bank harmless from and
against all costs and expenses, including reasonable attorneys’ fees, expended
or incurred by Bank in connection therewith, including without limitation, in
any litigation with respect thereto.

 

4.                                  AUTHORIZATIONS TO BANK. Guarantor
authorizes Bank either before or after revocation hereof, without notice to or
demand on Guarantor, and without affecting Guarantor’s liability hereunder,
from time to time to: (a) alter, compromise, renew, extend, accelerate or
otherwise change the time for payment of, or otherwise change the terms of, the
Indebtedness or any portion thereof, including increase or decrease of the rate
of interest thereon; (b) take and hold security for the payment of this
Guaranty or the Indebtedness or any portion thereof, and exchange, enforce,
waive, subordinate or release any such security; (c) apply such security
and direct the order or manner of sale thereof, including without limitation, a
non-judicial sale permitted by the terms of the controlling security agreement,
mortgage or deed of trust, as Bank in its discretion may determine; (d) release
or substitute any one or more of the endorsers or any other guarantors of the
Indebtedness, or any portion thereof, or any other party thereto; and (e) apply
payments received by Bank from any of the Borrowers to any Indebtedness of any
of the Borrowers to Bank, in such order as Bank shall determine in its sole
discretion, whether or not such Indebtedness is covered by this Guaranty, and
Guarantor hereby waives any provision of law regarding application of payments
which specifies otherwise. Bank may without notice assign this Guaranty in
whole or in part. Upon Bank’s request, Guarantor agrees to provide to Bank
copies of Guarantor’s financial statements.

 

5.                                  REPRESENTATIONS AND WARRANTIES. Guarantor
represents and warrants to Bank that: (a) this Guaranty is executed at
Borrowers’ request; (b) Guarantor shall not, without Bank’s prior written
consent, sell, lease, assign, encumber, hypothecate, transfer or otherwise
dispose of all or a substantial or material part of Guarantor’s assets other
than in the ordinary course of Guarantor’s business; (c) Bank has made no
representation to Guarantor as to the creditworthiness of any of the Borrowers;
and (d) Guarantor has established adequate means of obtaining from each of
the Borrowers on a continuing basis financial and other information pertaining
to Borrowers’ financial condition. Guarantor agrees to keep adequately informed
from such means of any facts, events or circumstances which might in any way
affect Guarantor’s risks hereunder, and Guarantor further agrees that Bank
shall have no obligation to disclose to Guarantor any information or material
about any of the Borrowers which is acquired by Bank in any manner.

 

6.                                  GUARANTOR’S WAIVERS.

 

6.1 Guarantor waives any
right to require Bank to: (a) proceed against any of the Borrowers or any
other person; (b) marshal assets or proceed against or exhaust any
security held from any of the Borrowers or any other person; (c) give
notice of the terms, time and place of any public or private sale or other
disposition of personal property security held from any of the Borrowers or any
other person; (d) take any action or pursue any other remedy in Bank’s
power; or (e) make any presentment or demand for performance, or give any
notice of nonperformance, protest, notice of protest or notice of dishonor
hereunder or in connection with any obligations or evidences of indebtedness
held by Bank as security for or which constitute in whole or in part the
Indebtedness guaranteed hereunder, or in connection with the creation of new or
additional Indebtedness.

 

6.2 Guarantor waives any
defense to its obligations hereunder based upon or arising by reason of: (a) any
disability or other defense of any of the Borrowers or any other person; (b) the
cessation or limitation from any cause whatsoever, other than payment in full,
of the Indebtedness of any of the Borrowers or any other person; (c) any
lack of authority of any officer, director, partner, agent or other person
acting or purporting to act on behalf of any of the Borrowers which is a
corporation, partnership or other type of entity, or any defect in the
formation of any such Borrower; (d) the application by any of the
Borrowers of the proceeds of any Indebtedness for purposes other than the
purposes represented by Borrowers to, or 

 

 

intended or understood
by, Bank or Guarantor; (e) any act or omission by Bank which directly or
indirectly results in or aids the discharge of any of the Borrowers or any
portion of the Indebtedness by operation of law or otherwise, or which in any
way impairs orsuspends any rights or remedies of Bank against any of the
Borrowers; (f) any impairment of the value of any interest in any security
for the Indebtedness or any portion thereof, including without limitation, the
failure to obtain or maintain perfection or recordation of any interest in any
such security, the release of any such security without substitution, and/or
the failure to preserve the value of, or to comply with applicable law in
disposing of, any such security; (g) any modification of the Indebtedness,
in any form whatsoever, including any modification made after revocation hereof
to any indebtedness incurred prior to such revocation, and including without
limitation the renewal, extension, acceleration or other change in time for
payment of, or other change in the terms of, the Indebtedness or any portion
thereof, including increase or decrease of the rate of interest thereon; or (h) any
requirement that Bank give any notice of acceptance of this Guaranty. Until all
Indebtedness shall have been paid in full, Guarantor shall have no right of
subrogation, and Guarantor waives any right to enforce any remedy which Bank
now has or may hereafter have against any of the Borrowers or any other person,
and waives any benefit of, or any right to participate in, any security now or
hereafter held by Bank. Guarantor further waives all rights and defenses
Guarantor may have arising out of (i) any election of remedies by Bank,
even though that election of remedies, such as a non-judicial foreclosure with
respect to any security for any portion of the Indebtedness, destroys Guarantor’s
rights of subrogation or Guarantor’s rights to proceed against any of the
Borrowers for reimbursement, or (ii) any loss of rights Guarantor may
suffer by reason of any rights, powers or remedies of any of the Borrowers in
connection with any anti-deficiency laws or any other laws limiting, qualifying
or discharging Borrowers’ Indebtedness, whether by operation of Sections 726,
580a or 580d of the Code of Civil Procedure as from time to time amended, or
otherwise, including any rights Guarantor may have to a Section 580a fair
market value hearing to determine the size of a deficiency following any
foreclosure sale or other disposition of any real property security for any
portion of the Indebtedness.

 

7.                                  BANK’S RIGHTS
WITH RESPECT TO GUARANTOR’S PROPERTY IN BANK’S POSSESSION. In addition to all
liens upon and rights of setoff against the monies, securities or other
property of Guarantor given to Bank by law, Bank shall have a lien upon and a
right of setoff against all monies, securities and other property of Guarantor
now or hereafter in the possession of or on deposit with Bank, whether held in
a general or special account or deposit or for safekeeping or otherwise, and
every such lien and right of setoff may be exercised without demand upon or
notice to Guarantor. No lien or right of setoff shall be deemed to have been
waived by any act or conduct on the part of Bank, or by any neglect to exercise
such right of setoff or to enforce such lien, or by any delay in so doing, and
every right of setoff and lien shall continue in full force and effect until
such right of setoff or lien is specifically waived or released by Bank in
writing.

 

8.                                  SUBORDINATION.
Any Indebtedness of any of the Borrowers now or hereafter held by Guarantor is
hereby subordinated to the Indebtedness of Borrowers to Bank. Such Indebtedness
of Borrowers to Guarantor is assigned to Bank as security for this Guaranty and
the Indebtedness and, if Bank requests, shall be collected and received by
Guarantor as trustee for Bank and paid over to Bank on account of the
Indebtedness of Borrowers to Bank but without reducing or affecting in any
manner the liability of Guarantor under the other provisions of this Guaranty.
Any notes or other instruments now or hereafter evidencing such Indebtedness of
any of the Borrowers to Guarantor shall be marked with a legend that the same
are subject to this Guaranty and, if Bank so requests, shall be delivered to
Bank. Bank is hereby authorized in the name of Guarantor from time to time to
file financing statements and continuation statements and execute such other
documents and take such other action as Bank deems necessary or appropriate to
perfect, preserve and enforce its rights hereunder.

 

9.                                  REMEDIES; NO
WAIVER. All rights, powers and remedies of Bank hereunder are cumulative. No
delay, failure or discontinuance of Bank in exercising any right, power or
remedy hereunder shall affect or operate as a waiver of such right, power or
remedy; nor shall any single or partial exercise of any such right, power or
remedy preclude, waive or otherwise affect any other or further exercise
thereof or the exercise of any other right, power or remedy. Any waiver,
permit, consent or approval of any kind by bank of any breach of this Guaranty,
or any such waiver of any provisions or conditions hereof, must be in writing
and shall be effective only to the extent set forth in writing.

 

 

10.                            COSTS, EXPENSES
AND ATTORNEYS’ FEES. Guarantor shall pay to Bank immediately upon demand the
full amount of all payments, advances, charges, costs and expenses, including
reasonable attorneys’ fees (to include outside counsel fees and all allocated
costs of Bank’s in-house counsel), expended or incurred by Bank in connection
with the enforcement of any of Bank’s rights, powers or remedies and/or the
collection of any amounts which become due to Bank under this Guaranty, and the
prosecution or defense of any action in any way related to this Guaranty,
whether incurred at the trial or appellate level, in an arbitration proceeding
or otherwise, and including any of the foregoing incurred in connection with
any bankruptcy proceeding (including without limitation, any adversary
proceeding, contested matter or motion brought by Bank or any other person)
relating to Guarantor or any other person or entity. All of the foregoing shall
be paid by Guarantor with interest from the date of demand until paid in full
at a rate per annum equal to the greater of ten percent (10%) or Bank’s Prime
Rate in effect from time to time.

 

11.                            SUCCESSORS;
ASSIGNMENT. This Guaranty shall be binding upon and inure to the benefit of the
heirs, executors, administrators, legal representatives, successors and assigns
of the parties; provided however, that Guarantor may not assign or transfer any
of its interests or rights hereunder without Bank’s prior written consent.
Guarantor acknowledges that Bank has the right to sell, assign, transfer,
negotiate or grant participations in all or any part of, or any interest in,
any Indebtedness of Borrowers to Bank and any obligations with respect thereto,
including this Guaranty. In connection therewith, Bank may disclose all
documents and information which Bank now has or hereafter acquires relating to
Guarantor and/or this Guaranty, whether furnished by Borrowers, Guarantor or
otherwise. Guarantor. further agrees that Bank may disclose such documents and
information to Borrowers.

 

12.                            AMENDMENT. This
Guaranty may be amended or modified only in writing signed by Bank and
Guarantor.

 

13.                            OBLIGATIONS OF
MARRIED PERSONS. Any married person who signs this Guaranty as a Guarantor
hereby expressly agrees that recourse may be had against his or her separate
property for all his or her obligations under this Guaranty.

 

14.                            APPLICATION OF
SINGULAR AND PLURAL. In all cases where there is but a single Borrower, then
all words used herein in the plural shall be deemed to have been used in the
singular where the context and construction so require; and when there is more
than one Borrower named herein, or when this Guaranty is executed by more than
one Guarantor, the word “Borrowers” and the word “Guarantor” respectively shall
mean all or any one or more of them as the context requires.

 

15.                            UNDERSTANDING
WITH RESPECT TO WAIVERS; SEVERABILITY OF PROVISIONS. Guarantor warrants and
agrees that each of the waivers set forth herein is made with Guarantor’s full
knowledge of its significance and consequences, and that under the
circumstances, the waivers are reasonable and not contrary to public policy or
law. If any waiver or other provision of this Agreement shall be held to be
prohibited by or invalid under applicable public policy or law, such waiver or
other provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such waiver or other
provision or any remaining provisions of this Agreement.

 

16.                            GOVERNING LAW.
This Guaranty shall be governed by and construed in accordance with the laws of
the State of California.

 

17.                            ARBITRATION.

 

17.1 Arbitration.  The parties hereto agree, upon demand by any
party, to submit to binding arbitration all claims, disputes and controversies
between or among them (and their respective employees, officers, directors,
attorneys, and other agents), whether in tort, contract or otherwise, in any
way arising out of or relating to this Guaranty and its negotiation, execution,
collateralization, administration, repayment, modification, extension,
substitution, formation, inducement, enforcement, default or termination.

 

 

17.2 Governing Rules.  Any arbitration proceeding will (a) proceed
in a location in California selected by the American Arbitration Association (“AAA”);
(b) be governed by the Federal Arbitration Act (Title 9 of the United
States Code), notwithstanding any conflicting choice of law provision in any of
the documents between the parties; and (c) be conducted by the AAA, or
such other administrator as the parties shall mutually agree upon, in
accordance with the AAA’s commercial dispute resolution procedures, unless the
claim or counterclaim is at least $1,000,000.00 exclusive of claimed interest,
arbitration fees and costs in which case the arbitration shall be conducted in
accordance with the AAA’s optional procedures for large, complex commercial
disputes (the commercial dispute resolution procedures or the optional
procedures for large, complex commercial disputes to be referred to herein, as
applicable, as the “Rules”). If there is any inconsistency between the terms
hereof and the Rules, the terms and procedures set forth herein shall control.
Any party who fails or refuses to submit to arbitration following a demand by
any other party shall bear all costs and expenses incurred by such other party
in compelling arbitration of any dispute. Nothing contained herein shall be
deemed to be a waiver by any party that is a bank of the protections afforded
to it under 12 U.S.C. §91 or any similar applicable state law.

 

17.3 No Waiver of
Provisional Remedies, Self-Help and Foreclosure.  The arbitration requirement does not limit the
right of any party to (a) foreclose against real or personal property
collateral; (b) exercise self-help remedies relating to collateral or
proceeds of collateral such as setoff or repossession; or (c) obtain
provisional or ancillary remedies such as replevin, injunctive relief,
attachment or the appointment of a receiver, before during or after the
pendency of any arbitration proceeding. This exclusion does not constitute a
waiver of the right or obligation of any party to submit any dispute to arbitration
or reference hereunder, including those arising from the exercise of the
actions detailed in sections (a), (b) and (c) of this paragraph.

 

17.4 Arbitrator
Qualifications and Powers.  Any
arbitration proceeding in which the amount in controversy is $5,000,000.00 or
less will be decided by a single arbitrator selected according to the Rules,
and who shall not render an award of greater than $5,000,000.00. Any dispute in
which the amount in controversy exceeds $5,000,000.00 shall be decided by
majority vote of a panel of three arbitrators; provided however, that all three
arbitrators must actively participate in all hearings and deliberations. The
arbitrator will be a neutral attorney licensed in the State of California or a
neutral retired judge of the state or federal judiciary of California, in
either case with a minimum of ten years experience in the substantive law
applicable to the subject matter of the dispute to be arbitrated. The
arbitrator will determine whether or not an issue is arbitratable and will give
effect to the statutes of limitation in determining any claim. In any
arbitration proceeding the arbitrator will decide (by documents only or with a
hearing at the arbitrator’s discretion) any pre-hearing motions which are
similar to motions to dismiss for failure to state a claim or motions for
summary adjudication. The arbitrator shall resolve all disputes in accordance
with the substantive law of California and may grant any remedy or relief that
a court of such state could order or grant within the scope hereof and such
ancillary relief as is necessary to make effective any award. The arbitrator
shall also have the power to award recovery of all costs and fees, to impose
sanctions and to take such other action as the arbitrator deems necessary to
the same extent a judge could pursuant to the Federal Rules of Civil
Procedure, the California Rules of Civil Procedure or other applicable
law. Judgment upon the award rendered by the arbitrator may be entered in any
court having jurisdiction. The institution and maintenance of an action for
judicial relief or pursuit of a provisional or ancillary remedy shall not
constitute a waiver of the right of any party, including the plaintiff, to
submit the controversy or claim to arbitration if any other party contests such
action for judicial relief.

 

17.5 Discovery.  In any arbitration proceeding, discovery will
be permitted in accordance with the Rules. All discovery shall be expressly
limited to matters directly relevant to the dispute being arbitrated and must
be completed no later than 20 days before the hearing date. Any requests for an
extension of the discovery periods, or any discovery disputes, will be subject
to final determination by the arbitrator upon a showing that the request for
discovery is essential for the party’s presentation and that no alternative
means for obtaining information is available.

 

17.6 Class Proceedings
and Consolidations.  No party hereto
shall be entitled to join or consolidate disputes by or against others in any
arbitration, except parties who have executed this Guaranty or any other
contract, instrument or document relating to any Indebtedness, or to include in
any arbitration any dispute as a representative or member of a class, or to act
in any arbitration in the interest of the general public or in a private
attorney general capacity.

 

 

17.7 Payment Of
Arbitration Costs And Fees.  The
arbitrator shall award all costs and expenses of the arbitration proceeding.

 

17.8 Real Property
Collateral; Judicial Reference. 
Notwithstanding anything herein to the contrary, no dispute shall be
submitted to arbitration if the dispute concerns indebtedness secured directly
or indirectly, in whole or in part, by any real property unless (a) the
holder of the mortgage, lien or security interest specifically elects in
writing to proceed with the arbitration, or (b) all parties to the
arbitration waive any rights or benefits that might accrue to them by virtue of
the single action rule statute of California, thereby agreeing that all
indebtedness and obligations of the parties, and all mortgages, liens and
security interests securing such indebtedness and obligations, shall remain
fully valid and enforceable. If any such dispute is not submitted to
arbitration, the dispute shall be referred to a referee in accordance with
California Code of Civil Procedure Section 638 et seq., and this general
reference agreement is intended to be specifically enforceable in accordance
with said Section 638. A referee with the qualifications required herein
for arbitrators shall be selected pursuant to the AAA’s selection procedures.
Judgment upon the decision rendered by a referee shall be entered in the court
in which such proceeding was commenced in accordance with California Code of
Civil Procedure Sections 644 and 645.

 

17.9 Miscellaneous.  To the maximum extent practicable, the AAA,
the arbitrators and the parties shall take all action required to conclude any
arbitration proceeding within 180 days of the filing of the dispute with the
AAA. No arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business, by applicable law or
regulation, or to the extent necessary to exercise any judicial review rights
set forth herein. If more than one agreement for arbitration by or between the
parties potentially applies to a dispute, the arbitration provision most
directly related to the documents between the parties or the subject matter of
the dispute shall control. This arbitration provision shall survive
termination, amendment or expiration of any of the documents or any
relationship between the parties.

 

17.10 Small Claims
Court.  Notwithstanding anything
herein to the contrary, each party retains the right to pursue in Small Claims
Court any dispute within that court’s jurisdiction. Further, this arbitration
provision shall apply only to disputes in which either party seeks to recover
an amount of money (excluding attorneys’ fees and costs) that exceeds the
jurisdictional limit of the Small Claims Court.

 

IN
WITNESS WHEREOF, the undersigned Guarantor has executed this Guaranty as of December 26,
2008.

 

Seed
Holding, Ltd.

 

 

	
  By:

  	
  /s/ Gregory D. Ransdell

  	
   

  
	
   

  	
  Gregory
  D. Ransdell, Manager

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Robert W. Lishman, Jr.

  	
   

  
	
   

  	
  Robert
  W. Lishman, Jr., ManagerEXHIBIT 10.9

 

	
  WELLS
  FARGO

  	
   

  	
  CONTINUING GUARANTY

  

 

TO: WELLS FARGO BANK,
NATIONAL ASSOCIATION

 

1.             GUARANTY; DEFINITIONS. In consideration of any credit or
other financial accommodation heretofore, now or hereafter extended or made to WAN Seed Company (“Borrowers”), or any of them, by WELLS
FARGO BANK, NATIONAL ASSOCIATION (“Bank”), and for other valuable
consideration, the undersigned Yellowjacket, LP (“Guarantor”),
jointly and severally unconditionally guarantees and promises to pay to Bank or
order, on demand in lawful money of the United States of America and in
immediately available funds, any and all Indebtedness of any of the Borrowers
to Bank. The term “Indebtedness” is used herein in its most comprehensive sense
and includes any and all advances, debts, obligations and liabilities of
Borrowers, or any of them, heretofore, now or hereafter made, incurred or
created, whether voluntary or involuntary and however arising, whether due or
not due, absolute or contingent, liquidated or unliquidated, determined or
undetermined, including under any swap, derivative, foreign exchange, hedge,
deposit, treasury management or other similar transaction or arrangement, and
whether Borrowers may be liable individually or jointly with others, or whether
recovery upon such Indebtedness may be or hereafter becomes unenforceable. This
Guaranty is a guaranty of payment and not collection.

 

2.             MAXIMUM LIABILITY; SUCCESSIVE TRANSACTIONS; REVOCATION;
OBLIGATION UNDER OTHER GUARANTIES. The liability of Guarantor shall not exceed at
any time the sum of (a) $2,500,000.00, (b) all
accrued and unpaid interest on any Indebtedness, and (c) all costs and
expenses pertaining to the enforcement of this Guaranty and/or the collection
of the Indebtedness. Notwithstanding the foregoing, Bank may permit the
Indebtedness of Borrowers to exceed Guarantor’s liability. This is a continuing
guaranty and all rights, powers and remedies hereunder shall apply to all past,
present and future Indebtedness of each of the Borrowers to Bank, including
that arising under successive transactions which shall either continue the
Indebtedness, increase or decrease it, or from time to time create new
Indebtedness after all or any prior Indebtedness has been satisfied, and
notwithstanding the death, incapacity, dissolution, liquidation or bankruptcy
of any of the Borrowers or Guarantor or any other event or proceeding affecting
any of the Borrowers or Guarantor. This Guaranty shall not apply to any new
Indebtedness created after actual receipt by Bank of written notice of its
revocation as to such new Indebtedness; provided however, that loans or
advances made by Bank to any of the Borrowers after revocation under
commitments existing prior to receipt by Bank of such revocation, and
extensions, renewals or modifications, of any kind, of Indebtedness incurred by
any of the Borrowers or committed by Bank prior to receipt by Bank of such
revocation, shall not be considered new Indebtedness. Any such notice must be
sent to Bank by registered U.S. mail, postage prepaid, addressed to its office
at Fresno RCBO, 8405 N. Fresno Street, Suite #200,
Fresno, CA 93720, or at such other address as Bank shall from time
to time designate. Any payment by Guarantor with respect to the Indebtedness
shall not reduce Guarantor’s maximum obligation hereunder unless written notice
to that effect is actually received by Bank at or prior to the time of such
payment. The obligations of Guarantor hereunder shall be in addition to any
obligations of Guarantor under any other guaranties of any liabilities or
obligations of any of the Borrowers or any other persons heretofore or
hereafter given to Bank unless said other guaranties are expressly modified or
revoked in writing; and this Guaranty shall not, unless expressly herein
provided, affect or invalidate any such other guaranties.

 

3.             OBLIGATIONS JOINT AND SEVERAL; SEPARATE ACTIONS; WAIVER
OF STATUTE OF LIMITATIONS; REINSTATEMENT OF LIABILITY. The obligations
hereunder are joint and several and independent of the obligations of
Borrowers, and a separate action or actions may be brought and prosecuted
against Guarantor whether action is brought against any of the Borrowers or any
other person, or whether any of the Borrowers or any other person is joined in
any such action or actions. Guarantor acknowledges that this Guaranty is
absolute and unconditional, there are no conditions precedent to the
effectiveness of this Guaranty, and this Guaranty is in full force and effect
and is binding on Guarantor as of the date written below, regardless of whether
Bank obtains collateral or any guaranties from others or takes any other action
contemplated by Guarantor. Guarantor waives the benefit of any statute of
limitations affecting Guarantor’s liability hereunder or the enforcement
thereof, and Guarantor agrees that any payment of any Indebtedness or other act
which shall toll any statute of limitations applicable thereto shall similarly
operate to toll such statute of limitations applicable to 

 

 

Guarantor’s
liability hereunder. The liability of Guarantor hereunder shall be reinstated
and revived and the rights of Bank shall continue if and to the extent that for
any reason any amount at any time paid on account of any indebtedness
guaranteed hereby is rescinded or must otherwise be restored by Bank, whether
as a result of any proceedings in bankruptcy or reorganization or otherwise,
all as though such amount had not been paid. The determination as to whether
any amount so paid must be rescinded or restored shall be made by Bank in its
sole discretion; provided however, that if Bank chooses to contest any such
matter at the request of Guarantor, Guarantor agrees to indemnify and hold Bank
harmless from and against all costs and expenses, including reasonable
attorneys’ fees, expended or incurred by Bank in connection therewith,
including without limitation, in any litigation with respect thereto.

 

4.             AUTHORIZATIONS TO BANK. Guarantor authorizes Bank either
before or after revocation · hereof, without notice to or demand on Guarantor, and
without affecting Guarantor’s liability hereunder, from time to time to: (a) alter,
compromise, renew, extend, accelerate or otherwise change the time for payment
of, or otherwise change the terms of, the Indebtedness or any portion thereof,
including increase or decrease of the rate of interest thereon; (b) take
and hold security for the payment of this Guaranty or the Indebtedness or any
portion thereof, and exchange, enforce, waive, subordinate or release any such
security; (c) apply such security and direct the order or manner of sale
thereof, including without limitation, a non-judicial sale permitted by the
terms of the controlling security agreement, mortgage or deed of trust, as Bank
in its discretion may determine; (d) release or substitute any one or more
of the endorsers or any other guarantors of the Indebtedness, or any portion
thereof, or any other party thereto; and (e) apply payments received by
Bank from any of the Borrowers to any Indebtedness of any of the Borrowers to
Bank, in such order as Bank shall determine in its sole discretion, whether or
not such Indebtedness is covered by this Guaranty, and Guarantor hereby waives
any provision of law regarding application of payments which specifies
otherwise. Bank may without notice assign this Guaranty in whole or in part.
Upon Bank’s request, Guarantor agrees to provide to Bank copies of Guarantor’s
financial statements.

 

5.             REPRESENTATIONS AND WARRANTIES. Guarantor represents and
warrants to Bank that: (a) this Guaranty is executed at Borrowers’
request; (b) Guarantor shall not, without Bank’s prior written consent,
sell, lease, assign, encumber, hypothecate, transfer or otherwise dispose of
all or a substantial or material part of Guarantor’s assets other than in the
ordinary course of Guarantor’s business; (c) Bank has made no
representation to Guarantor as to the creditworthiness of any of the.
Borrowers; and (d) Guarantor has established adequate means of obtaining
from each of the Borrowers on a continuing basis financial and other
information pertaining to Borrowers’ financial condition. Guarantor agrees to
keep adequately informed from such means of any facts, events or circumstances
which might in any way affect Guarantor’s risks hereunder, and Guarantor
further agrees that Bank shall have no obligation to disclose to Guarantor any
information or material about any of the Borrowers which is acquired by Bank in
any manner.

 

6.             GUARANTOR’S WAIVERS.

 

6.1 Guarantor waives any
right to require Bank to: (a) proceed against any of the Borrowers or any
other person; (b) marshal assets or proceed against or exhaust any
security held from any of the Borrowers or any other person; (c) give
notice of the terms, time and place of any public or private sale or other
disposition of personal property security held from any of the Borrowers or any
other person; (d) take any action or pursue any other remedy in Bank’s
power; or (e) make any presentment or demand for performance, or give any
notice of nonperformance, protest, notice of protest or notice of dishonor
hereunder or in connection with any obligations or evidences of indebtedness
held by Bank as security for or which constitute in whole or in part the
Indebtedness guaranteed hereunder, or in connection with the creation of new or
additional Indebtedness.

 

6.2 Guarantor waives any
defense to its obligations hereunder based upon or arising by reason of: (a) any
disability or other defense of any of the Borrowers or any other person; (b) the
cessation or limitation from any cause whatsoever, other than payment in full,
of the Indebtedness of any of the Borrowers or any other person; (c) any
lack of authority of any officer, director, partner, agent or other person
acting or purporting to act on behalf of any of the Borrowers which is a
corporation, partnership or other type of entity, or any defect in the
formation of any such Borrower; (d) the application by any of the
Borrowers of the proceeds of any Indebtedness for purposes other than the
purposes represented by Borrowers to, or 

 

 

intended or understood
by, Bank or Guarantor; (e) any act or omission by Bank which directly or
indirectly results in or aids the discharge of any of the Borrowers or any
portion of the Indebtedness by operation of law or otherwise, or which in any
way impairs or suspends any rights or remedies of Bank against any of the
Borrowers; (f) any impairment of the value of any interest in any security
for the Indebtedness or any portion thereof, including without limitation, the
failure to obtain or maintain perfection or recordation of any interest in any
such security, the release of any such security without substitution, and/or
the failure to preserve the value of, or to comply with applicable law in
disposing of, any such security; (g) any modification of the Indebtedness,
in any form whatsoever, including any modification made after revocation hereof
to any indebtedness incurred prior to such revocation, and including without
limitation the renewal, extension, acceleration or other change in time for
payment of, or other change in the terms of, the Indebtedness or any portion
thereof, including increase or decrease of the rate of interest thereon; or (h) any
requirement that Bank give any notice of acceptance of this Guaranty. Until all
Indebtedness shall have been paid in full, Guarantor shall have no right of
subrogation, and Guarantor waives any right to enforce any remedy which Bank
now has or may hereafter have against any of the Borrowers or any other person,
and waives any benefit of, or any right to participate in, any security now or
hereafter held by Bank. Guarantor further waives all rights and defenses
Guarantor may have arising out of (i) any election of remedies by Bank,
even though that election of remedies, such as a non-judicial foreclosure with
respect to any security for any portion of the Indebtedness, destroys Guarantor’s
rights of subrogation or Guarantor’s rights to proceed against any of the
Borrowers for reimbursement, or (ii) any loss of rights Guarantor may
suffer by reason of any rights, powers or remedies of any of the Borrowers in
connection with any anti-deficiency laws or any other laws limiting, qualifying
or discharging Borrowers’ Indebtedness, whether by operation of Sections 726,
580a or 580d of the Code of Civil Procedure as from time to time amended, or
otherwise, including any rights Guarantor may have to a Section 580a fair
market value hearing to determine the size of a deficiency following any
foreclosure sale or other disposition of any real property security for any
portion of the Indebtedness.

 

7.             BANK’S RIGHTS WITH RESPECT TO GUARANTOR’S PROPERTY IN
BANK’S POSSESSION. In addition to all liens upon and rights of setoff against
the monies, securities or other property of Guarantor given to Bank by law,
Bank shall have a lien upon and a right of setoff against all monies,
securities and other property of Guarantor now or hereafter in the possession
of or on deposit with Bank, whether held in a general or special account or
deposit or for safekeeping or otherwise, and every such lien and right of
setoff may be exercised without demand upon or notice to Guarantor. No lien or
right of setoff shall be deemed to have been waived by any act or conduct on
the part of Bank, or by any neglect to exercise such right of setoff or to
enforce such lien, or by any delay in so doing, and every right of setoff and
lien shall continue in full force and effect until such right of setoff or lien
is specifically waived or released by Bank in writing.

 

8.             SUBORDINATION. Any Indebtedness of any of the Borrowers
now or hereafter held by Guarantor is hereby subordinated to the Indebtedness
of Borrowers to Bank. Such Indebtedness of Borrowers to Guarantor is assigned
to Bank as security for this Guaranty and the Indebtedness and, if Bank
requests, shall be collected and received by Guarantor as trustee for Bank and
paid over to Bank on account of the Indebtedness of Borrowers to Bank but
without reducing or affecting in any manner the liability of Guarantor under the
other provisions of this Guaranty. Any notes or other instruments now or
hereafter evidencing such Indebtedness of any of the Borrowers to Guarantor
shall be marked with a legend that the same are subject to this Guaranty and,
if Bank so requests, shall be delivered to Bank. Bank is hereby authorized in
the name of Guarantor from time to time to file financing statements and
continuation statements and execute such other documents and take such other
action as Bank deems necessary or appropriate to perfect, preserve and enforce
its rights hereunder.

 

9.             REMEDIES; NO WAIVER. All rights, powers and remedies of
Bank hereunder are cumulative. No delay, failure or discontinuance of Bank in
exercising any right, power or remedy hereunder shall affect or operate as a
waiver of such right, power or remedy; nor shall any single or partial exercise
of any such right, power or remedy preclude, waive or otherwise affect any
other or further exercise thereof or the exercise of any other right, power or
remedy. Any waiver, permit, consent or approval of any kind by bank of any
breach of this Guaranty, or any such waiver of any provisions or conditions
hereof, must be in writing and shall be effective only to the extent set forth
in writing.

 

 

10.           COSTS, EXPENSES AND ATTORNEYS’ FEES.
Guarantor shall pay to Bank immediately upon demand the full amount of all
payments, advances, charges, costs and expenses, including reasonable attorneys’
fees (to include outside counsel fees and all allocated costs of Bank’s
in-house counsel), expended or incurred by Bank in connection with the
enforcement of any of Bank’s rights, powers or remedies and/or the collection
of any amounts which become due to Bank under this Guaranty, and the
prosecution or defense of any action in any way related to this Guaranty,
whether incurred at the trial or appellate level, in an arbitration proceeding
or otherwise, and including any of the foregoing incurred in connection with
any bankruptcy proceeding (including without limitation, any adversary proceeding,
contested matter or motion brought by Bank or any other person) relating to
Guarantor or any other person or entity. All of the foregoing shall be paid by
Guarantor with interest from the date of demand until paid in full at a rate
per annum equal to the greater of ten percent (10%) or Bank’s Prime Rate in
effect from time to time.

 

11.           SUCCESSORS; ASSIGNMENT. This Guaranty
shall be binding upon and inure to the benefit of the heirs, executors,
administrators, legal representatives, successors and assigns of the parties;
provided however, that Guarantor may not assign or transfer any of its
interests or rights hereunder without Bank’s prior written consent. Guarantor
acknowledges that Bank has the right to sell, assign, transfer, negotiate or
grant participations in all or any part of, or any interest in, any
Indebtedness of Borrowers to Bank and any obligations with respect thereto,
including this Guaranty. In connection therewith, Bank may disclose all
documents and information which Bank now has or hereafter acquires relating to
Guarantor and/or this Guaranty, whether furnished by Borrowers, Guarantor or
otherwise. Guarantor further agrees that Bank may disclose such documents and
information to Borrowers.

 

12.           AMENDMENT. This Guaranty may be
amended or modified only in writing signed by Bank and Guarantor.

 

13.           OBLIGATIONS OF MARRIED PERSONS. Any
married person who signs this Guaranty as a Guarantor hereby expressly agrees
that recourse may be had against his or her separate property for all his or
her obligations under this Guaranty.

 

14.           APPLICATION OF SINGULAR AND PLURAL.
In all cases where there is but a single Borrower, then all words used herein
in the plural shall be deemed to have been used in the singular where the
context and construction so require; and when there is more than one Borrower
named herein, or when this Guaranty is executed by more than one Guarantor, the
word “Borrowers” and the word “Guarantor” respectively shall mean all or any
one or more of them as the context requires.

 

15.           UNDERSTANDING WITH RESPECT TO
WAIVERS; SEVERABILITY OF PROVISIONS. Guarantor warrants and agrees that each of
the waivers set forth herein is made with Guarantor’s full knowledge of its
significance and consequences, and that under the circumstances, the waivers
are reasonable and not contrary to public policy or law. If any waiver or other
provision of this Agreement shall be held to be prohibited by or invalid under
applicable public policy or law, such waiver or other provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such waiver or other provision or any remaining
provisions of this Agreement.

 

16.           GOVERNING LAW. This Guaranty shall be
governed by and construed in accordance with the laws of the State of
California.

 

17.           ARBITRATION.

 

17.1 Arbitration.  The parties hereto agree, upon demand by any
party, to submit to binding arbitration all claims, disputes and controversies
between or among them (and their respective employees, officers, directors,
attorneys, and other agents), whether in tort, contract or otherwise, in any
way arising out of or relating to this Guaranty and its negotiation, execution,
collateralization, administration, repayment, modification, extension,
substitution, formation, inducement, enforcement, default or termination.

 

17.2 Governing Rules.  Any arbitration proceeding will (a) proceed
in a location in California selected by the American Arbitration Association (“AAA”);
(b) be governed by the Federal Arbitration Act (Title 9 of the 

 

 

United States Code),
notwithstanding any conflicting choice of law provision in any of the documents
between the parties; and (c) be conducted by the AAA, or such other
administrator as the parties shall mutually agree upon, in accordance with the
AAA’s commercial dispute resolution procedures, unless the claim or
counterclaim is at least $1,000,000.00 exclusive of claimed interest,
arbitration fees and costs in which case the arbitration shall be conducted in
accordance with the AAA’s optional procedures for large, complex commercial
disputes (the commercial dispute resolution procedures or the optional
procedures for large, complex commercial disputes to be referred to herein, as
applicable, as the “Rules”). If there is any inconsistency between the terms
hereof and the Rules, the terms and procedures set forth herein shall control.
Any party who fails or refuses to submit to arbitration following a demand by
any other party shall bear all costs and expenses incurred by such other party
in compelling arbitration of any dispute. Nothing contained herein shall be
deemed to be a waiver by any party that is a bank of the protections afforded
to it under 12 U.S.C. §91 or any similar applicable state law.

 

17.3 No Waiver of
Provisional Remedies. Self-Help and Foreclosure.  The arbitration requirement does not limit
the right of any party to (a) foreclose against real or personal property
collateral; (b) exercise self-help remedies relating to collateral or
proceeds of collateral such as setoff or repossession; or (c) obtain
provisional or ancillary remedies such as replevin, injunctive relief,
attachment or the appointment of a receiver, before during or after the
pendency of any arbitration proceeding. This exclusion does not constitute a waiver
of the right or obligation of any party to submit any dispute to arbitration or
reference hereunder, including those arising from the exercise of the actions
detailed in sections (a), (b) and (c) of this paragraph.

 

17.4 Arbitrator
Qualifications and Powers.  Any
arbitration proceeding in which the amount in controversy is $5,000,000.00 or
less will be decided by a single arbitrator selected according to the Rules,
and who shall not render an award of greater than $5,000,000.00. Any dispute in
which the amount in controversy exceeds $5,000,000.00 shall be decided by
majority vote of a panel of three arbitrators; provided however, that all three
arbitrators must actively participate in all hearings and deliberations. The
arbitrator will be a neutral attorney licensed in the State of California or a
neutral retired judge of the state or federal judiciary of California, in
either case with a minimum of ten years experience in the substantive law
applicable to the subject matter of the dispute to be arbitrated. The
arbitrator will determine whether or not an issue is arbitratable and will give
effect to the statutes of limitation in determining any claim. In any
arbitration proceeding the arbitrator will decide (by documents only or with a
hearing at the arbitrator’s discretion) any pre-hearing motions which are
similar to motions to dismiss for failure to state a claim or motions for
summary adjudication. The arbitrator shall resolve all disputes in accordance
with the substantive law of California and may grant any remedy or relief that
a court of such state could order or grant within the scope hereof and such
ancillary relief as is necessary to make effective any award. The arbitrator
shall also have the power to award recovery of all costs and fees, to impose
sanctions and to take such other action as the arbitrator deems necessary to
the same extent a judge could pursuant to the Federal Rules of Civil
Procedure, the California Rules of Civil Procedure or other applicable
law. Judgment upon the award rendered by the arbitrator may be entered in any
court having jurisdiction. The institution and maintenance of an action for
judicial relief or pursuit of a provisional or ancillary remedy shall not
constitute a waiver of the right of any party, including the plaintiff, to
submit the controversy or claim to arbitration if any other party contests such
action for judicial relief.

 

17.5 Discovery.  In any arbitration proceeding, discovery will
be permitted in accordance with the Rules. All discovery shall be expressly
limited to matters directly relevant to the dispute being arbitrated and must
be completed no later than 20 days before the hearing date. Any requests for an
extension of the discovery periods, or any discovery disputes, will be subject
to final determination by the arbitrator upon a showing that the request for
discovery is essential for the party’s presentation and that no alternative
means for obtaining information is available.

 

17.6 Class Proceedings
and Consolidations.  No party hereto
shall be entitled to join or consolidate disputes by or against others in any
arbitration, except parties who have executed this Guaranty or any other
contract, instrument or document relating to any Indebtedness, or to include in
any arbitration any dispute as a representative or member of a class, or to act
in any arbitration in the interest of the general public or in a private
attorney general capacity.

 

 

17.7 Payment Of
Arbitration Costs And Fees.  The
arbitrator shall award all costs and expenses of the arbitration proceeding.

 

17.8 Real Property
Collateral: Judicial Reference. 
Notwithstanding anything herein to the contrary, no dispute shall be
submitted to arbitration if the dispute concerns indebtedness secured directly
or indirectly, in whole or in part, by any real property unless (a) the
holder of the mortgage, lien or security interest specifically elects in
writing to proceed with the arbitration, or (b) all parties to the
arbitration waive any rights or benefits that might accrue to them by virtue of
the single action rule statute of California, thereby agreeing that all
indebtedness and obligations of the parties, and all mortgages, liens and
security interests securing such indebtedness and obligations, shall remain
fully valid and enforceable. If any such dispute is not submitted to
arbitration, the dispute shall be referred to a referee in accordance with
California Code of Civil Procedure Section 638 et seq., and this general
reference agreement is intended to be specifically enforceable in accordance
with said Section 638. A referee with the qualifications required herein
for arbitrators shall be selected pursuant to the AAA’s selection procedures.
Judgment upon the decision rendered by a referee shall be entered in the court
in which such proceeding was commenced in accordance with California Code of
Civil Procedure Sections 644 and 645.

 

17.9 Miscellaneous.  To the maximum extent practicable, the AAA,
the arbitrators and the parties shall take all action required to conclude any
arbitration proceeding within 180 days of the filing of the dispute with the
AAA. No arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business, by applicable law or
regulation, or to the extent necessary to exercise any judicial review rights
set forth herein. If more than one agreement for arbitration by or between the
parties potentially applies to a dispute, the arbitration provision most
directly related to the documents between the parties or the subject matter of
the dispute shall control. This arbitration provision shall survive
termination, amendment or expiration of any of the documents or any
relationship between the parties.

 

17.10 Small Claims
Court.  Notwithstanding anything
herein to the contrary, each party retains the right to pursue in Small Claims
Court any dispute within that court’s jurisdiction. Further, this arbitration
provision shall apply only to disputes in which either party seeks to recover
an amount of money (excluding attorneys’ fees and costs) that exceeds the
jurisdictional limit of the Small Claims Court.

 

IN WITNESS WHEREOF, the
undersigned Guarantor has executed this Guaranty as of December 26,
2008.

 

	
  Yellowjacket, LP

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: Glenbrook Capital
  Management, General Partner

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Robert W. Lishman

  	
   

  
	
  Robert W. Lishman,
  President

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