Document:

kl06021_ex10-2.htm

    
      

    

     

    Exhibit
      10.2

     

    

    CREDIT
      LINE NOTE

    

    $1,050,000.00                                                                                                                                                   May
      31, 2007

    

    FOR
      VALUE RECEIVED, NEW WORLD
      BRANDS, INC., a Delaware corporation, (“Maker”),
      hereby unconditionally promises to pay to the order of P&S SPIRIT,
      LLC, a Nevada limited liability company, (“Payee”), at the offices of
      Payee at 2700 Lighthouse Point East, Suite 626, Baltimore, MD  21224,
      or at such other place as Payee or any holder hereof may from time to time
      designate, the principal sum of One Million Fifty Thousand
      Dollars  ($1,050,000.00), or the aggregate unpaid principal amount of
      all advances made or extended by Payee to Maker pursuant to the Loan Agreement
      (hereinafter defined),  in lawful money of the United States of
      America and in immediately available funds on or before June 1, 2011 (the
“Maturity Date”).

    

    Notwithstanding
      anything to the
      contrary contained herein or in the Loan Agreement (hereinafter defined), unless
      earlier paid in accordance with the terms and conditions of this Note, the
      entire unpaid principal balance of this Note and all accrued but unpaid interest
      shall be due and payable on the Maturity Date. The principal balance of this
      Note may be paid in full at any time or in part from time to time, provided,
      however, that all payments of principal of this Note shall be accompanied by
      the
      payment of all accrued and unpaid interest under this Note.

    

    The
      unpaid principal balance of this Note shall bear interest at a floating per
      annum rate equal to the “Prime Rate” as reported from time to time in the “Money
      Market Rates” section of The Wall Street Journal plus two percent (2%)
      per annum.  Any change in the interest rate hereunder as a result of a
      change in the Prime Rate shall become effective on the date of said
      announcement.  Maker agrees to pay consecutive monthly installments of
      interest only, commencing on July 1, 2007, and continuing on the first Business
      Day of each succeeding calendar month, with a final payment of all unpaid
      principal and accrued but unpaid interest, late charges, and other fees and
      charges being due and payable on the Maturity Date, unless paid earlier as
      provided below.

    

    For
      purposes hereof, (a) the term
“Event of Default” shall mean an Event of Default as such term is defined in the
      Loan Agreement, and (b) the term “Loan Agreement” shall mean the Credit Line and
      Security Agreement, dated of even date herewith, between Maker and Payee, as
      the
      same now exists or may hereafter be amended, modified, supplemented, extended,
      renewed, restated, or replaced.  Unless otherwise defined herein, all
      capitalized terms used herein shall have the meaning assigned thereto in the
      Loan Agreement.

    

    This
      Note is issued pursuant to and is
      subject to the terms and provisions of the Loan Agreement to evidence the Credit
      Line by Payee to Maker.  This Note is secured by the Collateral
      described in the Loan Agreement and all notes, guarantees, security agreements,
      and other agreements, documents, and instruments now or at any time hereafter
      executed and/or delivered by Maker or any other party in connection therewith
      (all of the foregoing, together with the Loan Agreement, as the same now exist
      or may hereafter be amended, modified, supplemented, renewed, extended,
      restated, or replaced, being collectively referred to herein as the “Financing
      Agreements”), and is entitled to all of the benefits and rights thereof and of
      the other Financing Agreements.  At the time any payment is due
      hereunder,

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    at
      its
      option, Payee may charge the amount thereof to any account of Maker maintained
      by Payee.

    

    If
      any payment of principal or interest
      is not made when due hereunder, or if any other Event of Default shall occur
      for
      any reason, or if the Loan Agreement shall be terminated or not renewed for
      any
      reason whatsoever, then and in any such event, in addition to all rights and
      remedies of Payee under the Financing Agreements, applicable law or otherwise,
      all such rights and remedies being cumulative, not exclusive and enforceable
      alternatively, successively and concurrently, Payee may, at its option, declare
      any or all of Maker’s obligations, liabilities, and indebtedness owing to Payee
      under the Loan Agreement and the other Financing Agreements (the “Obligations”),
      including, without limitation, all amounts owing under this Note, to be due
      and
      payable, whereupon the then unpaid balance hereof, together with all interest
      accrued thereon, shall forthwith become due and payable, together with interest
      accruing thereafter at the then applicable Interest Rate stated above until
      the
      indebtedness evidenced by this Note is paid in full, plus the costs and expenses
      of collection hereof, including, but not limited to, attorneys' fees and legal
      expenses.

    

    Maker
      (i) waives diligence, demand,
      presentment, protest, and notice of any kind, (ii) agrees that it will not
      be
      necessary for Payee to first institute suit in order to
      enforce  payment of this Note, and (iii) consents to any one or more
      extensions or postponements of time of payment, release, surrender, or
      substitution of collateral security, or forbearance or other indulgence, without
      notice or consent.  The pleading of any statute of limitations as a
      defense to any demand against Maker is expressly hereby waived by
      Maker.  Upon any Event of Default or termination or nonrenewal of the
      Loan Agreement, Payee shall have the right, but not the obligation to setoff
      against this Note all money owed by Payee to Maker.

    

    Payee
      shall not be required to resort
      to any Collateral for payment, but may proceed against Maker and any guarantors
      or endorsers hereof in such order and manner as Payee may
      choose.  None of the rights of Payee shall be waived or diminished by
      any failure or delay in the exercise thereof.

    

    The
      validity, interpretation, and
      enforcement of this Note and the other Financing Agreements and any dispute
      arising in connection herewith or therewith shall be governed by the internal
      laws of the State of Maryland (without giving effect to principles of conflicts
      of law).

    

    MAKER
      IRREVOCABLY CONSENTS AND SUBMITS
      TO THE NONEXCLUSIVE JURISDICTION OF THE STATE OF MARYLAND AND THE UNITED STATES
      DISTRICT COURT FOR THE DISTRICT OF MARYLAND AND WAIVES ANY OBJECTION BASED
      ON
      VENUE OR FORUM NON CONVENIENS WITH RESPECT TO ANY ACTION INSTITUTED
      THEREIN ARISING UNDER THIS NOTE OR ANY OF THE OTHER FINANCING AGREEMENTS OR
      IN
      ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF MAKER AND
      PAYEE IN RESPECT OF THIS NOTE OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE
      TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR
      HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE, AND
      AGREES THAT ANY DISPUTE ARISING OUT OF THE RELATIONSHIP

     

     

     

    
      
        
        

      

      
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    BETWEEN
      MAKER AND PAYEE OR THE CONDUCT OF SUCH PERSONS IN CONNECTION WITH THIS NOTE
      OR
      OTHERWISE SHALL BE HEARD ONLY IN THE COURTS DESCRIBED ABOVE (EXCEPT THAT PAYEE
      SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST MAKER OR ITS
      PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION THAT PAYEE DEEMS NECESSARY
      OR
      APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE ITS
      RIGHTS AGAINST MAKER OR ITS PROPERTY).

    

    Maker
      hereby waives personal service of
      any and all process upon it and consents that all such service of process may
      be
      made by certified mail (return receipt requested) directed to it and service
      so
      made shall be deemed to be completed five (5) days after the same shall have
      been so deposited in the U.S. mails, or, at Payee's option, by service upon
      Maker in any other manner provided under the rules of any court of competent
      jurisdiction.  Within thirty (30) days after such service, Maker shall
      appear in answer to such process, failing which Maker shall be deemed in default
      and judgment may be entered by Payee against Maker for the amount of the claim
      and other relief requested.

    

    MAKER
      HEREBY WAIVES ANY RIGHT TO TRIAL
      BY JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION ARISING UNDER THIS
      NOTE
      OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS AMONG
      MAKER AND PAYEE IN RESPECT OF THIS NOTE OR THE OTHER FINANCING AGREEMENTS OR
      THE
      TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR
      HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY, OR
      OTHERWISE.  MAKER AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND,
      ACTION, OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A
      JURY.

    

    The
      execution and delivery of this Note
      has been authorized by the Board of Directors and by any necessary vote or
      consent of the stockholders of Maker.  Maker hereby authorizes Payee
      to complete this Note in any particulars according to the terms of the loan
      evidenced hereby.

    

    This
      Note shall be binding upon the
      successors and assigns of Maker and shall inure to the benefit of Payee and
      its
      successors, endorsees, and assigns.  Whenever used herein, the term
“Maker” shall be deemed to include its successors and assigns and the term
“Payee” shall be deemed to include its successors, endorsees, and
      assigns.  If any term or provision of this Note shall be held invalid,
      illegal, or unenforceable, the validity of all other terms and provisions hereof
      shall in no way be affected thereby.  This Note evidences a loan made
      for business or commercial purposes.

    

    UNDER
      OREGON LAW, MOST AGREEMENTS,
      PROMISES AND COMMITMENTS MADE BY PAYEE CONCERNING LOANS AND OTHER CREDIT
      EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED
      SOLELY BY THE BORROWER’S RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND
      BE SIGNED BY PAYEE TO BE ENFORCEABLE.

     

     

    
      
        
        

      

      
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    PRIOR
      TO SIGNING THIS NOTE, MAKER READ
      AND UNDERSTOOD ALL OF THE PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE
      INTERST RATE PROVISIONS.  MAKER AGREES TO THE TERMS OF THE
      NOTE.

    

    MAKER
      ACKNOWLEDGES RECEIPT OF A
      COMPLETED COPY OF THIS PROMISSORY NOTE.

    

    {Signatures
      on next page.}

     

     

     

     

     

    

    
      
        
          
          

        

        
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    WITNESS,
      the due execution of this Credit Line Note, intending this to be a sealed
      instrument and a specialty, the date and year first above written.

    

                    NEW
      WORLD BRANDS,
      INC.

                    a
      Delaware
      corporation

    

    

                    By:
      /s/  M.
      David Kamrat

                    Name:
      M. David
      Kamrat

                    Title:
      CEO

    

     

     

     

     

     

     

     

     

    5kl06021_ex10-3.htm

    
      

    

     

    Exhibit
      10.3

    
 

    
      GUARANTY

      

      THIS
        GUARANTY (this
“Guaranty”) is made as of May 31, 2007 by QUALMAX,
        INC., a Delaware corporation having its principal place of business at
        340 West Fifth Avenue, Eugene, OR 97401 (“Guarantor”), to and
        for the benefit of P&S SPIRIT, LLC, a Nevada limited
        liability company, having an address at 2700 Lighthouse Point East, Suite
        626,
        Baltimore, MD 21224 (“Lender”).

      

      WHEREAS,
        NEW WORLD BRANDS, INC., a Delaware corporation,
        (“Borrower”) and Lender have entered into that certain Credit
        Line and Security Agreement, dated as of the date hereof (as amended,
        supplemented or modified from time to time, the “Loan
        Agreement”), pursuant to which Lender has agreed to extend to Borrower
        a revolving line of credit in the principal amount not to exceed $1,050,000.00
        (the “Credit Line”), all in accordance with and subject to the
        terms and conditions set forth in the Loan Agreement, that certain Credit
        Line
        Note in the maximum principal amount of the Credit Line, having a Maturity
        Date
        of June 1, 2011 (the “Note”) and all of the other agreements,
        documents, instruments, certificates, reports and financing statements
        heretofore or hereafter executed or delivered in connection therewith or
        with
        the Loan to be made under the Loan Agreement, as the same may be amended,
        supplemented or modified from time to time, (collectively referred to herein
        as
        the “Loan Documents”);

       

      WHEREAS,
        Borrower has
        requested that Lender extend the Credit Line to Borrower pursuant to the
        terms
        of the Loan Agreement and that Borrower and Lender execute, deliver and perform
        their respective obligations under the Loan Agreement and the other Loan
        Documents;

      

      WHEREAS,
        Guarantor, as
        the parent corporation of Borrower, pursuant to Lender’s request, as an incident
        to the obligation of Lender to make the Credit Line available to Borrower
        pursuant to the Loan Agreement, is required, and has agreed, to execute and
        deliver this Guaranty of even date herewith;

      

      WHEREAS,
        Lender is
        willing to execute, deliver and perform under the Loan Agreement and the
        other
        Loan Documents and to make the Credit Line available only upon the condition
        that Guarantor executes and delivers to Lender this Guaranty and agrees to
        perform and to comply with its obligations under this Guaranty; and

      

      WHEREAS,
        Guarantor
        acknowledges and confirms that (a) it will benefit from the advancement of
        funds
        under the Loan Agreement to Borrower, (b) the Credit Line provided by Lender
        to
        Borrower constitutes valuable consideration to Guarantor, and (c) Lender
        is
        relying upon this Guaranty in making and extending the Credit Line to
        Borrower.

      

      NOW,THEREFORE,
        in consideration of the foregoing and of the covenants and agreements
        hereinafter set forth, the receipt and sufficiency of which are hereby
        acknowledged, and as an inducement for Lender to enter into the Loan Agreement
        and the other Loan Documents, the Guarantor, intending to be legally bound
        hereby, agrees as follows:

       

      1.           All
        capitalized terms in this Guaranty and not defined herein shall have the
        defined
        meanings provided in the Loan Agreement.  Whenever the context so
        requires, each reference to gender includes the masculine and feminine, the
        singular number includes the plural and vice versa.  The words
“hereof” “herein” and “hereunder” and words of similar import when used in this
        Guaranty shall refer to this Guaranty as a whole and not to any particular
        provision of this Guaranty, and references to section, article, annex, schedule,
        exhibit and like references are references to this Guaranty unless

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

       

      otherwise
        specified.  A Default or Event of Default shall “continue” or be
“continuing” until such Default or Event of Default has been cured or waived by
        Lender.  References in this Guaranty to any Person shall include such
        Person and its successors and permitted assigns.

      

      2.           Guarantor
        unconditionally and absolutely guarantees (i) the due and punctual payment
        and
        performance when due of the principal of all amounts due for advances under
        the
        Credit Line, any Note evidencing the Credit Line, and the interest thereon
        and
        of the Obligations and any and all other monies and amounts due or which
        may
        become due on or with respect to any of the foregoing, and the due and punctual
        performance and observance by Borrower of all of the other terms, covenants,
        agreements and conditions of the Loan Documents, in any case whether according
        to the present terms thereof, at any earlier or accelerated date or dates
        or
        pursuant to any extension of time or to any change in the terms, covenants,
        agreements and conditions thereof now or at any time hereafter made or granted,
        (ii)  all liabilities and obligations of Guarantor hereunder, and (iii) all
        costs, expenses and liabilities (including, without limitation, reasonable
        attorneys fees and expenses, documentation and diligence fees and legal
        expenses, and search, audit, recording, professional and filing fees and
        expenses) that may be incurred or advanced by Lender in any way in connection
        with the foregoing and/or otherwise required to be paid by Guarantor hereunder
        (collectively, such items in clauses (i) through (iv) being the
“Guaranteed Obligations”).  Guarantor acknowledges
        that this Guaranty shall be deemed a continuing guaranty of the Guaranteed
        Obligations under the Loan Documents.

      

      3.           This
        Guaranty is a guaranty of payment and not a guaranty of
        collection.  If any Guaranteed Obligation is not satisfied when due,
        whether by acceleration or otherwise, the Guarantor shall forthwith satisfy
        such
        Guaranteed Obligation, upon demand, and no such satisfaction shall discharge
        the
        obligations of the Guarantor hereunder until all Guaranteed Obligations have
        been indefeasibly paid in cash and performed and satisfied in full and the
        Loan
        Agreement terminated.  The liability of Guarantor under this Guaranty
        shall be primary and direct and not conditional or contingent upon the
        enforceability of any obligation, the solvency of Borrower or any other Person,
        any obligation or circumstance which might otherwise constitute a legal or
        equitable discharge or defense of a surety or guaranty or the pursuit by
        Lender
        of any remedies it may have against Borrower or any other guarantor of the
        Guaranteed Obligations or any other Person.  Without limiting the
        generality of the foregoing, Lender shall not be required to make any demand
        on
        Borrower or any other guarantor of the Guaranteed Obligations or any other
        Person or to sell at foreclosure or otherwise pursue or exhaust its remedies
        against any Collateral of Borrower or any other guarantor of the Guaranteed
        Obligations or any other Person before, simultaneously with or after enforcing
        its rights and remedies hereunder against Guarantor, and any one or more
        successive and/or concurrent actions may be brought against Guarantor in
        the
        same action brought against Borrower or any other guarantor of the Guaranteed
        Obligations or any other Person or in separate actions, as often as Lender
        may
        deem advisable, in its sole discretion.  The obligations of Guarantor
        hereunder shall not in any way be affected by any action taken or not taken
        by
        Lender, which action or inaction is hereby consented and agreed to by Guarantor,
        or by the partial or complete unenforceability or invalidity of any other
        guaranty or surety agreement, pledge, assignment, Lien or other security
        interest or security for any of the Guaranteed Obligations or of the value,
        genuineness, validity or enforceability of the Collateral or any of the
        Guaranteed Obligations.

      

      4.           Guarantor
        hereby represents and warrants to Lender (which representations and warranties
        shall survive the execution and delivery of this Guaranty and the making
        of
        Advances under the Loan Agreement) as follows:

      

      (A)  Guarantor
        is a corporation, duly organized, validly existing and in good standing under
        the laws of the State of Delaware;

       

       

      
        
          
          

        

        
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      (B)  Guarantor
        (i) has all requisite power and authority to own its properties and assets
        and to carry on its business as now being conducted and as contemplated in
        the
        Loan Documents, and (ii) is duly qualified to do business in every
        jurisdiction in which failure so to qualify could reasonably be expected
        to have
        or result in a Material Adverse Effect.

      

      (C)  Guarantor
        has all requisite power and authority (i) to execute, deliver and perform
        this
        Guaranty and other Loan Documents to which it is a party, and (ii) to consummate
        the transactions contemplated hereunder and the other Loan Documents to which
        it
        is a party, and Guarantor is under no legal restriction, limitation or
        disability that would prevent it from doing any of the foregoing.

      

      (D)  The
        execution, delivery and performance by Guarantor of this Guaranty and other
        Loan
        Documents to which it is a party and the consummation of the transactions
        contemplated hereby and thereby have been duly and validly authorized by
        all
        necessary actions on the part of Guarantor (including any required approval
        of
        shareholders or members or other equity holders, if applicable) (none of
        which
        actions have been modified or rescinded, and all of which actions are in
        full
        force and effect), and have been duly executed and delivered by Guarantor
        and
        constitute the legal, valid and binding obligation of Guarantor, enforceable
        against Guarantor in accordance with its terms, subject to the effect of
        any
        applicable bankruptcy, moratorium, insolvency, reorganization or other similar
        law affecting the enforceability of creditors’ rights generally and to the
        effect of general principles of equity which may limit the availability of
        equitable remedies (whether in a proceeding at law or in equity);

      

      (E)  The
        execution, delivery and performance by Guarantor of this Guaranty and the
        consummation of the transactions contemplated hereby and thereby do not and
        will
        not (1) conflict with or violate any provision of any applicable law,
        statute, rule, regulation, ordinance, license or tariff or any judgment,
        decree
        or order of any court or other Governmental Authority binding on or applicable
        to Guarantor or any of its properties or assets; (2) conflict with, result
        in a
        breach of, constitute a default of or an event of default under, or an event,
        fact, condition or circumstance which, with notice or passage of time, or
        both,
        would constitute or result in a conflict, breach, default or event of default
        under, require any consent not obtained under, or result in or require the
        acceleration of any indebtedness pursuant to, any indenture, agreement or
        other
        instrument to which Guarantor is a party or by which it or any of its properties
        or assets are bound or subject; (3) conflict with or violate any provision
        of
        the certificate of incorporation or formation, by-laws, limited liability
        company agreement or similar documents of Guarantor or Borrower or any agreement
        by and between Guarantor and its shareholders or equity owners or among any
        such
        shareholders or equity owners; or (4) result in the creation or imposition
        of any Lien or Encumbrance of any nature whatsoever upon any of the properties
        or assets of Guarantor except those contemplated under the Loan
        Documents;

      

      (F)  Guarantor
        is not (1) a party or subject to any judgment, order or decree or any agreement,
        document or instrument or subject to any restriction, any of which do or
        would
        adversely affect or prevent its ability to execute or deliver, perform under,
        consummate the transactions contemplated by, or observe the covenants and
        agreements contained in, this Guaranty or other Loan Documents to which it
        is a
        party or to pay the Guaranteed Obligations; (2) in default or breach of the
        performance, observance or fulfillment of any obligation, covenant or condition
        contained in any agreement, document or instrument to which it is a party
        or by
        which it or any of its properties or assets is or are bound or subject, which
        default or breach, if not remedied within any applicable grace period or
        cure
        period, could reasonably be expected to have or result in a Material Adverse
        Effect or Material Adverse Change, nor is there any event, fact, condition
        or
        circumstance which, with notice or passage of time, or both, would constitute
        or

       

       

      
        
          
          

        

        
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      result
        in
        a conflict, breach, default or event of default under, any of the foregoing
        which, if not remedied within any applicable grace or cure period, could
        reasonably be expected to have or result in a Material Adverse Effect or
        Material Adverse Change, or (3) a party or subject to any agreement (oral
        or
        written), document or instrument with respect to, or obligation to pay any,
        service or management fee with respect to the ownership, operation, leasing
        or
        performance of any of its business or any facility, nor is there any manager
        with respect to any such facility;

      

      (G)  Guarantor
        and each of its Subsidiaries is in compliance with all laws, statutes, rules,
        regulations, ordinances and tariffs of any Governmental Authority with respect
        or applicable to it and/or its assets and properties and is not in violation
        of
        any order, judgment or decree of any court or other Governmental Authority
        or
        arbitration board or tribunal, in each case except where noncompliance or
        violation could not reasonably be expected to have or result in a Material
        Adverse Effect, and there is no event, fact, condition or circumstance which,
        with notice or passage of time, or both, would constitute or result in any
        noncompliance with, or any violation of, any of the foregoing, in each case
        except where noncompliance or violation could not reasonably be expected
        to have
        or result in a Material Adverse Effect;

      

      (H)  There
        is
        no action, suit, proceeding or investigation pending or, to Guarantor’s
        knowledge, threatened before or by any court, arbitrator or Governmental
        Authority against or affecting the Collateral, Guarantor, this Guaranty or
        other
        Loan Documents to which Guarantor is a party or the transactions contemplated
        hereby or thereby, (1) that questions or could prevent the validity of this
        Guaranty or other Loan Documents to which Guarantor is a party or the right
        or
        ability of Guarantor to execute or deliver this Guaranty or such other documents
        or to consummate the transactions contemplated hereby and thereby; (2) that
        could reasonably be expected to have or result in, either individually or
        in the
        aggregate, any Material Adverse Change or Material Adverse Effect, or (3)
        that
        could reasonably be expected to result in any change in the current equity
        ownership of Guarantor or otherwise in a Change of Control, nor is Guarantor
        aware that there is any basis for the foregoing;

      

      (I)  None
        of
        the business or properties of Guarantor, any relationship between Guarantor
        and
        any other Person, any circumstance in connection with the execution, delivery
        and performance of this Guaranty, or any of the other Loan Documents to which
        it
        is a party or the consummation of the transactions contemplated hereby or
        thereby, requires a consent, approval or authorization of, or filing,
        registration or qualification which has not been obtained with, any Governmental
        Authority or any other Person;

      

      (J)  Guarantor
        is not a party to and has not entered into any agreement, document or instrument
        that conflicts with this Guaranty or that otherwise relates to the Guaranteed
        Obligations (other than the Loan Documents to which it is a party);

      

      (K)  The
        obligations of Guarantor under this Guaranty are not subordinated in any
        way to
        any other obligation of Guarantor or to the rights of any other
        Person;

      

      (L)  Guarantor
        and its Affiliates, licensed employees and contractors are in compliance
        with,
        have procured and are now in possession of, all material licenses, permits,
        franchises, certificates and other approvals or authorizations of or required
        by
        any applicable federal, state, foreign or local law, statute, ordinance or
        regulation or Governmental Authority or regulatory authority, including without
        limitation, for the operation of their respective businesses in each
        jurisdiction (including foreign jurisdictions) wherein they are now conducting
        business and/or where the failure to procure such licenses or permits could
        reasonably be expected to have or result in a Material Adverse Effect and
        as
        proposed to be conducted pursuant to this Agreement and the Financial Statements
        and Guarantor is not in breach of or default under the

       

       

       

      
        
          
          

        

        
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      provisions
        of any of the foregoing and there is no event, fact, condition or circumstance
        which, with notice or passage of time, or both, would constitute or result
        in a
        conflict, breach, default or event of default under, any of the foregoing
        which,
        if not remedied within any applicable grace or cure period could reasonably
        be
        expected to have or result in a Material Adverse Effect;

      

      (M)  No
        representation or warranty made by Guarantor in this Guaranty or in any other
        Loan Document contains any untrue statement of material fact or omits to
        state
        any fact necessary to make the statements herein or therein not materially
        misleading, and there is no fact known to Guarantor which Guarantor has not
        disclosed to Lender in writing which could reasonably be expected to have
        or
        result in a Material Adverse Effect;

      

      (N)  During
        the five years prior to the date hereof, Guarantor has not conducted business
        under or used any other name (whether corporate, partnership or assumed)
        except
        as previously disclosed in writing to Lender;

      

      (O)  Guarantor
        hereby confirms, adopts and makes, as to itself, as if set out in full herein,
        all of the other representations and warranties not expressly included in
        this
        Guaranty that are set forth in the Loan Agreement and that relate or apply
        to
        any Guarantor (as defined in the Loan Agreement), and shall be deemed to
        have
        made all such representations and warranties as to itself in this Guaranty
        as if
        set out in full herein.

      

      (P)  the
        foregoing representations and warranties are made with the knowledge and
        intention that Lender is relying and will rely thereon, and such representations
        and warranties shall survive the execution and delivery of this
        Guaranty.

      

      5.           Guarantor
        hereby waives demand, setoff, counterclaim, presentment, protest, notice
        of
        dishonor or non-payment, as well as all defenses with respect to any and
        all
        instruments, notice of acceptance hereof, notice of Loan or Advances made,
        credit extended, collateral received or delivered, or any other action taken
        by
        Lender in reliance hereon, and all other demands and notices of any description,
        except such as are expressly provided for herein, it being the intention
        hereof
        that Guarantor shall remain liable as a principal until the full amount of all
        Guaranteed Obligations shall have been indefeasibly paid in full in cash
        and
        performed and satisfied in full and the Loan Agreement terminated,
        notwithstanding any act, omission, or anything else which might otherwise
        operate as a legal or equitable discharge of Guarantor.  The pleading
        of any statute of limitations as a defense to any demand against Guarantor
        hereunder and under the other Loan Documents is expressly waived by
        Guarantor.

       

      6.           Guarantor
        acknowledges and agrees that its obligations as Guarantor shall not be impaired,
        modified, changed, released or limited in any manner whatsoever by any
        impairment, modification, change, release or limitation of the liability
        of
        Borrower or any other guarantor of the Guaranteed Obligations or any other
        Person or its estate in bankruptcy resulting from the operation of any present
        or future provision of the bankruptcy laws or other similar statute, or from
        the
        decision of any court.

      

      7.           Guarantor
        acknowledges and agrees that Lender shall have the full right and power,
        in its
        sole discretion and without any notice to or consent from Guarantor and without
        affecting or discharging, in whole or in part, the liability of Guarantor
        hereunder to deal in any manner with the Guaranteed Obligations and any security
        or guaranties therefor, including, without limitation, to (A) release,
        extend, renew, accelerate, compromise or substitute and administer the
        Guaranteed Obligations and other obligations under the Loan Documents in
        any
        manner it sees fit, (B) release any or all collateral for the Guaranteed
        Obligations, (C) release any guarantor of the Guaranteed Obligations,
        (D) extend the time for payment of the Guaranteed Obligations or any part
        thereof, (E) change the interest

       

       

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

       

       

      rate
        on
        the Guaranteed Obligations or any Note under the Loan Agreement, (F) reduce
        or
        increase the outstanding principal amount of the Guaranteed Obligations or
        any
        Note under the Loan Agreement, (G) accelerate the Guaranteed Obligations,
        (H) make any change, amendment or modification whatsoever to the terms or
        conditions of the Loan Documents, (I) extend, in whole or in part, on one
        or any
        number of occasions, the time for the payment of any principal or interest
        or
        any other amount pursuant to any Note or for the performance of any term
        or
        condition of the Loan Documents, (J) settle, compromise, release,
        substitute, impair, enforce or exercise, or fail or refuse to enforce or
        exercise, any claims, rights, or remedies, of any kind or nature, which Lender
        may at any time have against Borrower or any other guarantor of the Guaranteed
        Obligations or any other Person, or with respect to any security interest
        of any
        kind held by Lender at any time, whether under any Loan Document or otherwise,
        (K) release or substitute any security interest of any kind held by Lender
        at
        any time, (L) collect and retain or liquidate any collateral subject to such
        security interest, (M) make advances for the purpose of performing any term
        or
        covenant contained in the Loan Documents with respect to which the Borrower
        or
        any other guarantor of the Guaranteed Obligations is in default, (N) foreclose
        on any of the Collateral, (O) grant waivers or indulgences, (P) take additional
        collateral, (Q) obtain any additional guarantors, (R) take a deed in lieu
        of
        foreclosure and/or (S) take or fail to take any other action whatsoever with
        respect to the Guaranteed Obligations.  Guarantor hereby waives and
        agrees not to assert against Lender any rights which a guarantor or surety
        could
        exercise.  Notwithstanding any other provision of this Guaranty or any
        other Loan Document, Guarantor agrees that Lender has no duties of any nature
        whatsoever to Guarantor, whether express or implied, by virtue of this Guaranty
        or any other Loan Document, operation of law or otherwise.

      

      8.           Guarantor
        agrees that its obligations hereunder are irrevocable, joint and several
        and
        independent of the obligations of Borrower or any other guarantor of the
        Guaranteed Obligations or any other Person.  Guarantor shall take all
        necessary and appropriate actions to ensure that this Guaranty is and remains
        enforceable against Guarantor in accordance with their respective terms and
        that
        Guarantor complies with each of its obligations hereunder and
        thereunder.  Guarantor shall not (a) cause or permit to be done, or
        enter into or make or become a party to any agreement (oral or written),
        arrangement or commitment to do or cause to be done, any of the things
        prohibited by this Guaranty or the other Loan Documents to which it is a
        party
        or that would breach this Guaranty any other Loan Document to which it is
        a
        party or any other instrument, agreement, arrangement, commitment or document
        to
        which Guarantor is a party or by which it or any of its properties or assets
        is
        or may be bound or subject, or (b) enter into or make or become a party to
        any agreement, document or instrument or arrangement that conflicts with
        this
        Guaranty or other Loan Documents to which it is a party or that would prevent
        Guarantor from complying with and performing under this Guaranty or other
        Loan
        Documents to which it is a party.  If applicable, each Guarantor
        executing this Guaranty or any separate guaranty of the Guaranteed Obligations
        shall be jointly and severally liable for all of the Guaranteed
        Obligations.

      

      9.           Guarantor
        agrees that it shall have no right of subrogation whatever with respect to
        the
        Guaranteed Obligations guaranteed hereby or to any collateral securing such
        Guaranteed Obligations unless and until such Guaranteed Obligations have
        been
        irrevocably and indefeasibly paid in full in cash and performed in full and
        the
        Loan Agreement and this Guaranty have been terminated.  Guarantor
        waives all rights of marshalling of assets or property securing this Guaranty
        or
        the Guaranteed Obligations.

      

      10.           Guarantor
        acknowledges and agrees that (a) it will benefit from the execution, delivery
        and performance by Lender of the Loan Agreement and the other Loan Documents
        and
        the advancement of the Loan to Borrower and that the Loan by Lender constitute
        valuable consideration to Guarantor, (b) this Guaranty is intended to be
        an
        inducement to Lender to execute, deliver and perform the Loan Agreement and
        the
        other Loan Documents and to extend credit and the Loan to Borrower,

       

       

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

       

      whether
        the Guaranteed Obligations were created or acquired before or after the date
        of
        this Guaranty, and (c) Lender is relying upon this Guaranty in making and
        advancing the Loan to Borrower.

      

      11.           Guarantor
        agrees that this Guaranty shall inure to the benefit of, and may be enforced
        by,
        Lender, all future holders of any Note or any of the Guaranteed Obligations
        or
        any of the Collateral and all Transferees (as defined below), and each of
        their
        respective successors and permitted assigns, and shall be binding upon and
        enforceable against Guarantor and Guarantor’s assigns and
        successors.  Guarantor agrees that it may not assign, delegate or
        transfer this Guaranty or any of its rights or obligations under this Guaranty
        without the prior written consent of Lender.  Nothing contained in
        this Guaranty, or any other Loan Document shall be construed as a delegation
        to
        Lender of Guarantor’s duty of performance, including, without limitation, any
        duties under any account or contract in which Lender has a security interest
        or
        Lien.  GUARANTOR ACKNOWLEDGES THAT LENDER AT ANY TIME AND FROM TIME TO
        TIME MAY SELL, ASSIGN OR GRANT PARTICIPATING INTERESTS IN OR TRANSFER ALL
        OR ANY
        PART OF ITS RIGHTS OR OBLIGATIONS UNDER, THIS GUARANTY, ANY NOTE, THE GUARANTEED
        OBLIGATIONS, THE COLLATERAL AND/OR THE LOAN DOCUMENTS TO ONE OR MORE OTHER
        PERSONS, INCLUDING, WITHOUT LIMITATION, FINANCIAL INSTITUTIONS (EACH SUCH
        TRANSFEREE, ASSIGNEE OR PURCHASER, A
“TRANSFEREE”).  In such case, the Transferee shall
        have all of the rights and benefits with respect to the portion of such
        Guaranteed Obligations, any Note, this Guaranty, the Collateral and the Loan
        Documents held by it as fully as if such Transferee were the original holder
        thereof (including without limitation rights of set-off and recoupment),
        and
        shall become vested with all of the powers and rights given to Lender hereunder
        with respect thereto, and shall be deemed to be a “Lender” for all purposes
        hereunder, the predecessor Lender shall thereafter be forever released and
        fully
        discharged from any liability or responsibility hereunder with respect to
        the
        rights and interests so assigned, and either Lender or any Transferee may
        be
        designated as the sole agent to manage the transactions and obligations
        contemplated herein.  Notwithstanding any other provision of this
        Guaranty, or any other Loan Document, Lender may disclose to any Transferee
        all
        information, and may furnish to such Transferee copies of reports, financial
        statements, certificates, and documents obtained under any provision of this
        Guaranty or any Loan Document.

      

      12.Guarantor
        hereby agrees to take or
        cause to be taken such further actions, to obtain such consents and approvals
        and to duly execute, deliver and file or cause to be executed, delivered
        and
        filed such further agreements, assignments, instructions, documents and
        instruments as may be necessary or as may be reasonably requested by Lender
        in
        order to fully effectuate the purposes, terms and conditions of this Guaranty
        and the consummation of the transactions contemplated hereby and performance
        and
        payment of the Guaranteed Obligations hereunder, whether before, at or after
        the
        performance and/or consummation of the transactions contemplated hereby or
        the
        occurrence of a Default or Event of Default under any Loan
        Document.

      

      13.           Notwithstanding
        and without limiting or being limited by any other provision of this Guaranty
        or
        the Loan Documents, Guarantor shall pay all costs and expenses incurred by
        Lender or any of its Affiliates, including, without limitation, documentation
        and diligence fees and expenses, all search, audit, appraisal, recording,
        professional and filing fees and expenses and all other out-of-pocket charges
        and expenses (including, without limitation, UCC and judgment and tax lien
        searches and UCC filings and fees for post-Closing UCC and judgment and tax
        lien
        searches), and reasonable attorneys’ fees and expenses (a) in any effort to
        enforce this Guaranty any other Loan Document and/or any related agreement,
        document or instrument, or to effect collection hereunder or thereunder,
        (b) in
        connection with entering into, negotiating, preparing, reviewing and executing
        this Guaranty and the other Loan Documents and all related agreements, documents
        and instruments, (c) arising in any way out of administration of the Guaranteed
        Obligations or the security interests or Liens created with respect thereto,
        including without limitation, any wire transfer fees or audit expenses or
        filing
        or recordation fees,

       

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

       

      (d)
        in
        connection with instituting, maintaining, preserving and enforcing Lender’s
        rights hereunder or under all related agreements, documents and instruments,
        (e)
        in defending or prosecuting any actions, claims or proceedings arising out
        of or
        relating to this Guaranty and/or any related agreement, document or instrument,
        (f) in seeking or receiving any advice with respect to its rights and
        obligations under this Guaranty, any of the other Loan Documents and/or all
        related agreements, documents and instruments, and/or (g) in connection with
        any
        modification, amendment, supplement, waiver or extension of this Guaranty
        any
        other Loan Document and/or any related agreement, document or instrument,
        and
        all of the same shall be part of the Guaranteed Obligations.  If
        Lender or any of its Affiliates uses in-house counsel for any of the purposes
        set forth above or any other purposes under this Guaranty for which Guarantor
        is
        responsible to pay or indemnify, Guarantor expressly agrees that its Obligations
        include reasonable charges for such work commensurate with the fees that
        would
        otherwise be charged by outside legal counsel selected by Lender or such
        Affiliate in its sole discretion for the work performed.

      

      14.           Any
        notice or request under this Agreement shall be given to any Guarantor or
        to
        Lender at their respective addresses set forth below or beneath it’s signature
        on the signature page to this Agreement below or at such other address as
        such
        Person may hereafter specify in a notice given in the manner required under
        this
Section 14.  Any notice or request hereunder shall be given
        only by, and shall be deemed to have been received upon (each a
“Receipt”): (i) registered or certified mail, return
        receipt requested, on the date on which such is received as indicated in
        such
        return receipt, (ii) receipt of delivery by a nationally recognized overnight
        courier, or (iii) facsimile (or upon telephone or further electronic
        communication from the recipient acknowledging receipt (whether automatic
        or
        manual from recipient), as applicable.

       

      (i)           
        If to Lender:

      

                                                         
P&S
        Spirit,
        LLC

      2700
        Lighthouse Point East, Suite
        626

      Baltimore,
        Maryland 21224

      Attention:  Selvin
        Passen,
        M.D.

      Telephone:  (410)
        327-9650

      FAX:  (410)
        327-9656

      

      15.           No
        course of action or delay, renewal or extension of this Guaranty or any rights
        or obligations hereunder, release of Guarantor or any of the foregoing, or
        delay, failure or omission on Lender’s part in enforcing this Guaranty, or any
        other Loan Document or in exercising any right, remedy, option or power
        hereunder or thereunder shall affect the liability of Guarantor or operate
        as a
        waiver of such or of any other right, remedy, power or option or of any default,
        nor shall any single or partial exercise of any right, remedy, option or
        power
        hereunder or thereunder affect the liability of Guarantor or preclude any
        other
        or further exercise of such or any other right, remedy, power or
        option.  No waiver by Lender of any one or more defaults by Guarantor
        party in the performance of any of the provisions of this Guaranty shall
        operate
        or be construed as a waiver of any future default or defaults, whether of
        a like
        or different nature.  Notwithstanding any other provision of this
        Guaranty or any other Loan Document, by completing the Closing or by making
        Advances, Lender does not waive a breach of any representation or warranty
        of
        Guarantor under this Guaranty or under any other Loan Document, and all of
        Lender’s claims and rights resulting from any breach or misrepresentation by
        Guarantor are specifically reserved by Lender.

       

      16.           If
        any term or provision of this Guaranty is adjudicated to be invalid under
        applicable laws or regulations, such provision shall be inapplicable to the
        extent of such invalidity or

       

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

       

      unenforceability
        without affecting the validity or enforceability of, the remainder of this
        Guaranty which shall be given effect so far as possible.

       

      17.           It
        is the express intention and agreement of the Guarantor that all obligations,
        covenants, agreements, representations, warranties, waivers and indemnities
        made
        by Guarantor herein shall survive the execution, delivery and termination
        of
        this Guaranty until all Guaranteed Obligations are performed in full and
        indefeasibly paid in full in cash and the Loan Agreement is
        terminated.

       

      18.           Lender
        shall have the right in its sole discretion to determine which rights, powers,
        Liens, security interests or remedies Lender may at any time pursue, relinquish,
        subordinate or modify or to take any other action with respect thereto and
        such
        determination will not in any way modify or affect any of Lender’s rights,
        powers, Liens, security interests or remedies hereunder or under any of the
        Loan
        Documents or under applicable law or at equity.  The enumeration of
        the rights and remedies herein is not intended to be exhaustive.  The
        rights and remedies of Lender described herein are cumulative and are not
        alternative to or exclusive of any other rights or remedies which Lender
        otherwise may have by contract or at law or in equity, and the partial or
        complete exercise of any right or remedy shall not preclude any other further
        exercise of such or any other right or remedy.

       

      19.           This
        Guaranty shall be effective on the date hereof and shall continue in full
        force
        and effect until full performance and indefeasible payment in full in cash
        of
        all Guaranteed Obligations and termination of this Guaranty and the Loan
        Agreement, all in accordance with the Loan Agreement, and the rights and
        powers
        granted to Lender hereunder shall continue in full force and effect
        notwithstanding the termination of this Guaranty or the fact that Borrower’s
        borrowings under the Loan Agreement may from time to time be temporarily
        in a
        zero or credit position until all of the Guaranteed Obligations have been
        indefeasibly paid in full in cash and performed and satisfied in
        full.  Guarantor waives any rights which it may have under the UCC or
        otherwise to demand the filing of termination statements with respect to
        the
        Collateral, and Lender shall not be required to send such termination statements
        to Guarantor, or to file them with any filing office, unless and until this
        Guaranty and the Loan Agreement shall have been terminated in accordance
        with
        their respective terms and all Guaranteed Obligations shall have been performed
        in full and indefeasibly paid in full in cash.

       

      20.           This
        Guaranty shall be governed by and construed in accordance with the internal
        laws
        of the State of Maryland without giving effect to its choice of law
        provisions.  Any judicial proceeding brought by or against Guarantor
        with respect to any of the Guaranteed Obligations or any of the rights or
        obligations hereunder, this Guaranty or any related agreement may be brought
        in
        any federal or state court of competent jurisdiction located in the State
        of  Maryland, and, by execution and delivery of this Guaranty,
        Guarantor accepts for itself and in connection with its properties generally
        and
        unconditionally the non-exclusive jurisdiction of the aforesaid courts and
        irrevocably agrees to be bound by any judgment rendered thereby in connection
        with this Guaranty and/or any of the other Loan Documents or any such other
        agreement.  Guarantor hereby waives personal service of process and
        agrees that service of process upon Guarantor may be made by certified or
        registered mail, return receipt requested, at Guarantor’s address specified or
        determined in accordance with Section 14, and service so made shall
        be deemed completed on the third (3rd) Business Day after
        mailing.  Nothing herein shall affect the right to serve process in
        any manner permitted by law or shall limit the right of Lender to bring
        proceedings against Guarantor in the courts of any other jurisdiction having
        jurisdiction over Guarantor.  Guarantor waives any objection to
        jurisdiction and venue of any action instituted hereunder and shall not assert
        any defense based on lack of jurisdiction or venue or based upon forum non
        conveniens.  Any judicial proceeding by Guarantor against Lender
        involving, directly or indirectly, any matter or claim in any way arising
        out
        of, related to or connected with the Guaranteed Obligations, this Guaranty,
        any
        related agreement or any of the other Loan Documents, shall be brought only
        in a
        federal or state court located in the State of Maryland.  Guarantor
        acknowledges that Guarantor participated in the negotiation

       

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

       

      and
        drafting of this Guaranty and that, accordingly, Guarantor shall not move
        or
        petition a court construing this Guaranty to construe it more stringently
        against Lender than against Guarantor.

       

      21.           This
        Guaranty may be executed in one or more counterparts, all of which taken
        together shall constitute one and the same instrument.  This Guaranty
        may be executed by facsimile transmission, which facsimile signatures shall
        be
        considered original executed counterparts for purposes of this Section
        21, and Guarantor agrees that it will be bound by its own facsimile
        signature and that it accepts the facsimile signature of each other party
        to
        this Guaranty.

       

      22.           Notwithstanding
        and without limiting any other provision of this Guaranty or any Loan Document,
        Guarantor shall indemnify Lender and its Affiliates and its and their respective
        managers, members, officers, employees, Affiliates, agents, representatives,
        accountants, successors, assigns and attorneys and their respective Affiliates
        (collectively, the “Indemnified Persons”) from and against any
        and all liabilities, obligations, losses, damages, penalties, actions,
        judgments, suits, costs, expenses and disbursements of any kind or nature
        whatsoever (including, without limitation, in-house documentation and diligence
        fees and legal expenses and reasonable fees and disbursements of counsel)
        which
        may be imposed on, incurred by or asserted against Lender or any other
        Indemnified Person with respect to or arising out of any aspect of, or in
        any
        litigation, proceeding or investigation instituted or conducted by any
        Governmental Authority or any other Person with respect to, or any transaction
        contemplated by or referred to in, or any matter related to or any aspect
        of,
        this Guaranty or any of the Guaranteed Obligations or any of the Loan Documents
        or any agreement or document contemplated hereby or thereby, whether or not
        Lender or such Indemnified Person is a party thereto, except to the extent
        that
        any of the foregoing arises out of the gross negligence or willful misconduct
        of
        Lender or such Indemnified Person.  Lender agrees to give Guarantor
        reasonable notice of any event of which Lender becomes aware for which
        indemnification may be required under this Section 22, and Lender may
        elect (but is not obligated) to direct the defense thereof, provided that
        the
        selection of counsel shall be subject to Guarantor’s consent, which consent
        shall not be unreasonably withheld or delayed.  Lender and any other
        Indemnified Person may, in its reasonable discretion, take such actions as
        it
        deems necessary and appropriate to investigate, defend or settle any event
        or
        take other remedial or corrective actions with respect thereto as may be
        necessary for the protection of Lender or any of the other Indemnified Persons,
        its or their interest or the Collateral generally.  If any Indemnified
        Person uses in-house counsel for any of the purposes set forth above or any
        other purposes under this Guaranty for which Guarantor is responsible to
        pay or
        indemnify, Guarantor expressly agrees that its indemnification obligations
        include reasonable charges for such work commensurate with the fees that
        would
        otherwise be charged by outside legal counsel selected by such Indemnified
        Person in its sole discretion for the work performed.

       

      23.           GUARANTOR
        HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM OR CAUSE
        OF
        ACTION (I) ARISING UNDER THIS GUARANTY OR ANY OTHER LOAN DOCUMENT OR ANY
        RELATED AGREEMENT OR (II) IN ANY WAY RELATING TO THIS GUARANTY OR ANY OTHER
        LOAN
        DOCUMENT OR THE TRANSACTIONS EVIDENCED HEREBY OR THEREBY, IN EACH CASE WHETHER
        NOW EXISTING OR HEREAFTER ARISING, AND GUARANTOR HEREBY AGREES THAT ANY SUCH
        CLAIM OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY,
        AND
        THAT EITHER GUARANTOR OR LENDER MAY FILE AN ORIGINAL COUNTERPART OR A COPY
        OF
        THIS SECTION 23 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF
        GUARANTOR TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.

       

      24.           This
        Guaranty and the other Loan Documents to which Guarantor is a party constitute
        the entire agreement between Guarantor and Lender with respect to the subject
        matter hereof and thereof, and supersede all prior agreements and
        understandings, if any, relating to the subject matter hereof or
        thereof.   Neither this Guaranty nor any provision hereof may be
        changed, modified, amended,

       

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

       

      waived,
        restated, supplemented, canceled or terminated other than by an agreement
        in
        writing signed by both Lender and Guarantor.  Guarantor acknowledges
        that Guarantor has been advised by counsel in connection with the negotiation
        and execution of this Guaranty and the other Loan Documents to which it is
        a
        party and is not relying upon oral representations or statements inconsistent
        with the terms and/or provisions of this Guaranty or such
        documents.  Any waiver of this Guaranty by Lender shall be limited
        solely to the express terms and provisions of such waiver.

       

      25.           This
        Guaranty is not intended to benefit or confer any rights upon Borrower or
        upon
        any third party other than Lender, who is an intended beneficiary hereof
        and for
        whose benefit this Guaranty is explicitly made.

      

      26.           In
        addition to any other rights Lender may have hereunder or under any of the
        Loan
        Documents or under applicable law or at equity, upon the occurrence and
        continuation of any Event of Default, Lender shall have the right to apply
        any
        property of Guarantor held by Lender to reduce the Guaranteed
        Obligations.  In addition to the provisions set forth in this Guaranty
        and the other Loan Documents, Lender shall have the right to exercise any
        and
        all other rights, options and remedies provided for herein or in any other
        Loan
        Document, under the UCC or at law or in equity generally, including, without
        limitation, (a) the right to foreclose its security interests and Liens,
        (b) to
        realize upon or to take possession of or sell any of the Collateral with
        or
        without judicial process, and (c) to exercise such rights and powers with
        respect to the Collateral as Guarantor might exercise.

       

      27.           Lender
        shall have no responsibility for or obligation or duty with respect to all
        or
        any part of the Collateral or any matter or proceeding arising out of or
        relating thereto or to this Guaranty, including without limitation, any
        obligation or duty to collect any sums due in respect thereof or to protect
        or
        preserve any rights pertaining thereto.  Guarantor hereby waives any
        and all defenses and counterclaims it may have or could interpose in any
        action
        or procedure brought by Lender to obtain an order of court recognizing the
        assignment or security interests and Liens of Lender in and to any Account,
        Receivable or other Collateral, whether payable to Guarantor or any Subsidiary
        of Guarantor or any other Person.

       

      28.           [RESERVED]

       

      29.           Upon
        the exercise by Lender or any of its Affiliates of any right or remedy under
        this Guaranty or any other Loan Document that requires any consent, approval
        or
        registration with, or consent, qualification or authorization by, any
        Governmental Authority, Guarantor will execute and deliver, or will cause
        the
        execution and delivery of, all applications, certificates, instruments and
        other
        documents that Lender may be required to obtain for such governmental consent,
        approval, registration, qualification or authorization.

       

      30.           In
        addition to and notwithstanding any other provision of this Guaranty, or
        any
        other Loan Document, Lender, in its sole discretion, shall have the right,
        at
        any time that Guarantor fails to do so, without prior notice to Guarantor,
        to
        (i) obtain insurance covering any of the Collateral as and to the extent
        required under the Loan Agreement; (ii) pay for the performance of any of
        the
        Guarantor’s obligations hereunder; (iii) discharge taxes, liens, security
        interests, or other encumbrances at any time levied or placed on any of the
        Collateral in violation of this Guaranty unless Guarantor is in good faith
        with
        due diligence by appropriate proceedings contesting those items; and
        (iv) pay for the maintenance and preservation of any of the
        Collateral.  Such expenses and advances shall be added to the
        Guaranteed Obligations until reimbursed to Lender and shall be secured by
        the
        Collateral.  Any such payments and advances by Lender shall not be
        construed as a waiver by Lender of an Event of Default or any other rights,
        remedies or powers of Lender hereunder, or under any other Loan Document
        or
        otherwise.

       

       

      
        
          
          

        

        
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      31.           Unless
        expressly provided herein to the contrary, Guarantor agrees that any approval,
        consent, waiver or satisfaction of Lender with respect to any matter that
        is
        subject of this Guaranty, or the other Loan Documents may be granted or withheld
        by Lender in its sole and absolute discretion.

       

      32.           [RESERVED]

       

      33.           In
        any litigation, arbitration or other dispute resolution proceeding relating
        to
        this Guaranty, or to any of the other Loan Documents, Guarantor waives any
        and
        all defenses, objections and counterclaims it may have or could interpose
        with
        respect to any director, officer, employee or agent of Guarantor and/or its
        and
        their Affiliates being deemed to be employees or managing agents of Guarantor
        for purposes of all applicable law or court rules regarding the production
        of
        witnesses by notice for testimony (whether in a deposition, at trial or
        otherwise).  Guarantor waives any and all defenses, objections and
        counterclaims it may have or could interpose with respect to Lender’s counsel in
        any such dispute resolution proceeding examining any such individuals as
        if
        under cross-examination and using any discovery deposition of any of them
        in
        that proceeding as if it were an evidence deposition.  Guarantor
        waives any and all defenses, objections and counterclaims it may have or
        could
        interpose with respect to it using all commercially reasonable efforts to
        produce in any such dispute resolution proceeding, at the time and in the
        manner
        requested by Lender, all Persons, documents (whether in tangible, electronic
        or
        other form) and/or other things under its control and relating to the dispute
        in
        any jurisdiction that recognizes that (or any similar) distinction.

       

      34.           Guarantor
        hereby confirms, adopts and agrees to be bound by and comply with, as if
        set out
        in full herein, all of the other agreements, appointments, covenants and
        obligations not expressly included in this Guaranty that are set forth in
        the
        Loan Agreement and that relate or apply to any Borrower, Subsidiary of Borrower
        or any Guarantor.

       

      35.           SPECIAL
        OREGON NOTICE:

       

      (a)           THIS
        GUARANTY RESULTS IN GUARANTOR’S WAIVER OF CERTAIN LEGAL RIGHTS AND DEFENSES,
        INCLUDING WITHOUT LIMITATION GUARANTOR’S SUBROGATION RIGHTS AND ANY DEFENSES
        BASED ON LENDER’S ELECTION OF REMEDIES.  IT IS RECOMMENDED THAT
        GUARANTOR CONSULT ITS OWN ATTORNEY BEFORE ENTERING INTO THIS
        AGREEMENT.

       

      (b)           UNDER
        OREGON LAW ORAL AGREEMENTS OR ORAL COMMITMENTS TO (1) LOAN MONEY, (2) EXTEND
        CREDIT, (3) MODIFY OR AMEND ANY TERMS OF LOAN DOCUMENTS, (4) RELEASE ANY
        GUARANTOR, (5) FOREBEAR FROM ENFORCING REPAYMENT OF ANY LOAN OR THE EXERCISE
        OF
        ANY REMEDY UNDER LOAN DOCUMENTS, OR (6) MAKE ANY OTHER FINANCIAL ACCOMMODATION
        PERTAINING TO ANY LOAN ARE ALL UNENFORCEABLE.

       

      (c)           THE
        UNDERSIGNED GUARANTOR CLEARLY UNDERSTANDS THAT LENDER DOES NOT HAVE TO PURSUE
        BORROWER OR ANY OTHER GUARANTOR OR OBLIGATED PARTY OR FORECLOSE OR REALIZE
        UPON
        ANY SECURITY BEFORE DEMANDING PAYMENT FROM THE UNDERSIGNED.  GUARANTOR
        FURTHER UNDERSTANDS THAT IT WILL HAVE TO PAY THE AMOUNTS THEN DUE EVEN IF
        BORROWER OR ANY OTHER GUARANTOR OR OBLIGATED PARTY DOES NOT MAKE PAYMENT
        OR IS
        OTHERWISE RELIEVED OF THE OBLIGATION OF MAKING PAYMENT.

       

       

       

      
        
          
          

        

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

       

                             QUALMAX,
        INC.

                                                     A
        Delaware
        corporation

                                                                                                    

       

                                                     By:
        /s/ M. David
        Kamrat___________________________________ (SEAL)

                                                                                                     Name:
        M. David
        Kamrat___________________________________

                                         Its:
        CEO____________________________________

       

       

       

      13

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