EXHIBIT 10.10
GUARANTY
This GUARANTY dated as of February 1, 2005 (the "Guaranty"),
is given,
by ARNE DUNHEM (the
"Guarantor"),
in favor of CORNELL
CAPITAL PARTNERS, LP,
a
Delaware limited partnership
("Cornell").
Capitalized terms used herein and not
otherwise defined herein shall have the respective meanings set forth in
the
Promissory Note of even date herewith given by ARIEL WAY, INC., a Delaware
corporation (the "Company") to Cornell as amended,
restated, supplemented or
otherwise modified from time
to time, the "Promissory Note").
WHEREAS:
A. To induce Cornell to enter into the Promissory Note in the
principal
amount of Four Hundred
Thousand Dollars ($400,000), the Guarantor has agreed
to
provide a guaranty
of the payment and
performance
obligations
of the
Company
under the Promissory Note and a Pledge Agreement (the "Pledge") of even
date
herewith among the Company,
Cornell, and Arne
Dunhem (collectively,
the Note,
the Pledge and this Guaranty
are referred to as the "Transaction Documents").
B. The Guarantor
is an affiliate of the Company and the Guarantor
acknowledges that without this Guaranty Cornell would not be willing to
enter
into the Promissory
Note.
NOW, THEREFORE,
in consideration of the premises and the mutual
covenants set forth herein,
and for other good and
valuable consideration
the
receipt and sufficiency of
which is hereby
acknowledged, the
Guarantors hereby
agrees as follows:
1. Guaranty.
1.1 Guaranty.
Except as otherwise provided in this Section 1.1,
the
Guarantor, as direct obligor and not merely
as surety, hereby
unconditionally,
absolutely, and irrevocably guarantees to Cornell (i) that the Company
shall
repay to Cornell the
principal amount plus accrued interest within the period
of
time provided in the
Promissory Note, and all other amounts due to Cornell
under
the Promissory Note, including, without limitation, all reasonable fees and
costs incurred by Cornell in collecting
or securing or attempting to collect or
secure the Promissory Note,
including reasonable
attorneys' fees and
expenses,
whether or not involving
litigation and/or
appellate or bankruptcy proceedings
(collectively, the
"Obligations"), and
(ii) the full and prompt performance and
payment of all of the
Company's Obligations
under the Promissory
Note and
the
other Transaction
Documents.
Except as otherwise
provided in this Section 1.1,
if the Company should default in the payment or performance of any of the
Obligations, the Guarantor, jointly and
severally with the Guarantor, as direct
obligor and not merely as a surety, shall forthwith pay or perform such
Obligations without notice or demand by Cornell in the manner and on the
day
required by this Guaranty. Notwithstanding anything to the contrary set
forth
above and solely with
respect to the
original principal amount due under the
Promissory Note, the
Guarantor shall be solely responsible for the payment of
a
maximum of Four Hundred
Thousand Dollars
($400,000) in principal plus interest.
In the event of default,
Cornell shall first apply the proceeds from the sale of
the Guarantor's common stock held pursuant to the Pledge to pay the
principal
and interest due on the
Promissory
Note prior to
enforcing its rights
against
the Guarantor under this
Guaranty.
<PAGE>
1.2 Continuing
Guaranty. The
Guarantor agrees that their obligations
pursuant to this Section 1
are unconditional,
absolute, and irrevocable and
shall not be released,
discharged or affected in any way by any circumstances
or
condition, including without
limitation:
(a) any amendment or modification or other change to any of the
Transaction
Documents;
(b) any failure,
omission or delay on the part of the Company to
conform or comply with any
term of any of the Transaction Documents;
(c) any release or
discharge by operation of law of the Company or any
Guarantor from any obligation
or agreement contained
in any of the
Transaction
Documents or this Guaranty;
and
(d) any other
occurrence,
circumstance,
happening or event,
whether
similar or dissimilar to the
foregoing and whether foreseen or unforeseen, which
otherwise might constitute a legal or equitable defense or discharge of
the
liabilities of a guarantor or surety or which
otherwise might limit recourse
against the Company or the
Guarantor.
1.3. Guaranty of
Payment and Not of
Collection. The
liability of the
Guarantor shall be continuing, direct and immediate and not conditional or
contingent upon either the pursuit of any
remedies against the Company, a
Guarantor or any other person
or foreclosure of any security interests or liens
available to Cornell, its
successors, endorsees
or assigns. Cornell
may accept
any payment(s), plan for adjustment of debts, plan of reorganization or
liquidation, or plan of composition or
extension proposed by,
or on behalf of,
the Company or any other
guarantor without in any way affecting or
discharging
the liability of the
Guarantor.
If the Obligations are partially paid, the
Guarantor shall remain liable
for any balance of such Obligations. This Guaranty
shall be revived and
reinstated in the event any payment received by Cornell on
any Obligation is required to be repaid or
rescinded under
present or
future
federal or state law or
regulation relating to
bankruptcy, insolvency
or other
relief of debtors.
1.4 Discharge.
The Guarantor
covenants and agrees
that this Guaranty
will not be discharged, except by complete performance of their obligations
contained herein.
Notwithstanding anything to the contrary herein, so long as
no
amounts of principal,
interest or other
amounts whatsoever are
due or would be
made zero simultaneously with the termination hereof, the
Guarantor shall have
the right to terminate this
Guaranty at any time by providing written notice of
such termination to
Cornell.
1.5 Costs and Expenses. Without limiting any obligation of the
Guarantor hereunder, the Guarantor agrees, jointly and severally,
to pay all
reasonable fees and costs incurred by Cornell in collecting or securing or
attempting to collect or
secure this Guaranty or the Promissory Note, including,
without limitation, reasonable attorneys' fees and expenses, whether or not
involving litigation and/or
appellate or bankruptcy proceedings.
2
<PAGE>
1.6 Representations and Warranties. The Guarantor hereby represents
and
warrants to Cornell as follows:
(a) the Guarantor has full power, right and
authority to enter into and
perform his
obligations under this
Guaranty, and
this Guaranty has been duly executed and delivered by the Guarantor and
constitutes the valid and
binding obligation of the Guarantor and is enforceable
against the Guarantor in
accordance
with its terms.
No permits,
approvals
or
consents of or notifications
to (a) any governmental entities, or (b) any
other
persons or entities are
necessary in connection with the execution, delivery and
performance by the Guarantors of this Guaranty and the consummation by the
Guarantors of the
transactions
contemplated hereby.
Neither the execution
and
delivery of this Guaranty by
the Guarantors nor the
performance by them of
the
transactions contemplated
hereby will:
(i) violate or conflict with or result in a breach of any
provision of
any law, statute, rule,
regulation, order, permit, judgment, ruling, injunction,
decree or other decision
(collectively,
"Rules") of any court or other tribunal
or any governmental entity or agency binding on a
Guarantor or his properties,
or conflict with or cause an
event of default under any contract or agreement of
a Guarantor; or
(ii) require any authorization, c
