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GENERAL CONTINUING
GUARANTY
June 4, 2007
BFI Business Finance
1655 The Alameda
San Jose, California 95126
To: BFI Business Finance
For good and valuable
consideration, and in order to induce BFI Business Finance, a
California corporation ("Lender"), to extend and/or continue to
extend financial accommodations to Adsouth Marketing, LLC, a
Delaware limited liability company, WORLDWIDE EXCELLENCE, INC., a
Delaware corporation, Pet Vac, LLC, a California limited liability
company, TRAMP-O-LEAN, LLC, a California limited liability company,
YOUTH FACTOR BEAUTY CARE, LLC, a California limited liability
company, and LEGACY FORMULAS, LLC, a California limited liability
company (individually and collectively "Borrower"), pursuant to the
terms and conditions of that certain Loan and Security Agreement
and/or promissory note (individually and collectively, the
"Agreement") , dated June 4, 2007,
evidencing and otherwise relating to a loan by Lender to Borrower
in the original principal amount of Five Million and 00/100 Dollars
($5,000,000.00) (the "Loan"), or pursuant to any other present or
future agreement between Lender and Borrower, and in consideration
thereof, and inconsideration of any loans, advances, or financial
accommodations hereto fore or here after granted by Lender to or
for the account of Borrower, whether pursuant to the Agreement, or
otherwise , Vertical Branding, Inc. , a Delaware corporation
("Guarantor"), whose address is 16000 Ventura Blvd., Suite 301,
Encino, CA 91436, hereby, jointly and severally, guarantees,
promises and undertakes as follows:
1. Guarantor
unconditionally, absolutely and irrevocably guarantees and promises
to pay to Lender, or order, on demand, in lawful money of the
United States, any and all indebtedness and/or obligations of
Borrower to Lender and the payment to Lender of all sums which may
be presently due and owing and of all sums which shall in the
future become due and owing to Lender from Borrower whether under
the Agreement or otherwise . The terms
"indebtedness" and "obligations" (hereinafter collectively referred
to as the "Obligations") are used herein in their most
comprehensive sense and include, without limitation , the Loan and
any and all advances , debts, obligations, and liabilities of
Borrower, heretofore, now, or hereafter made, incurred, or created,
whether voluntarily or involuntarily, and however arising ,
including, without limitation, (a) indebtedness owing by Borrower
to third parties who have granted Lender a security interest in the
accounts, chattel paper and/or general intangibles of said third
party; (b) any and all attorneys' fees, expenses, costs, premiums,
charges and/or interest owed by Borrower to Lender, whether under
the Agreement, or otherwise , whether
due or not due , absolute or
contingent, liquidated or unliquidated, determined or undetermined,
whether Borrower may be liable individually or jointly with others,
whether recovery upon such indebtedness may be or hereafter becomes
barred by any statute of limitations or whether such indebtedness
may be or hereafter becomes otherwise unenforceable, and includes
Borrower's prompt, full and faithful performance, observance and
discharge or each and every term, condition, agreement , representation, warranty undertaking and
provision to be performed by Borrower under the Agreement; (c) any
and all obligations or liabilities of Borrower to Lender arising
out of any other agreement by Borrower including without limitation
any agreement to indemnify Lender for environmental liability or to
clean up hazardous waste; (d) any and all indebtedness, obligations
or liabilities for which Borrower would otherwise be liable to
Lender were it not for the invalidity , irregularity or
unenforceability of them by reason of any bankruptcy, insolvency or
other law or order of any kind, including from and after the filing
by or against Borrower of a bankruptcy petition, whether an
involuntary or voluntary bankruptcy case, and all attorneys' fees
related thereto; and (e) any and all amendments, modifications
, renewals and/or extensions of any of
the above , including without limit amendments, modifications
, renewals and/or extensions which are
evidenced by new or additional instruments, documents or
agreements.
2. This General
Continuing Guaranty (this "Guaranty") is a continuing guaranty that
shall remain effective during the term of the Agreement and relates
to any Obligations, including those which arise under successive
transactions which shall either continue the Obligations from time
to time or renew them after they have been satisfied until this
Guaranty has been expressly terminated. Any such termination (a)
shall be applicable only with respect to Obligations incurred at
least thirty (30) days after written notice to Lender specifying
such termination , (b) shall be
effective only with respect to transactions having their inception
after the effective date of termination, and (c) shall not affect
the Loan or any rights or obligations arising out of transactions
having their inception prior to such date. No termination shall be
effective until such time as Lender is no longer committed or
otherwise obligated to make the Loan or any other loans or advances
, or to grant any credit whatsoever to Borrower. In the absence of
any termination of this Guaranty, Guarantor agrees that nothing
shall discharge or satisfy its obligations created hereunder except
for the full payment and performance of the Obligations with
interest.
3. Guarantor agrees
that it is directly and primarily liable to Lender, that the
obligations hereunder are independent of the obligations of
Borrower, and that a separate action or actions may be brought and
prosecuted against Guarantor irrespective of whether Borrower is
joined in any such action or actions . Guarantor agrees that any
releases which may be given by Lender to Borrower or any other
guarantor or endorser shall not release it from this Guaranty .
4. In the event that
any bankruptcy, insolvency, receivership or similar proceeding is
instituted by or against Guarantor and/or Borrower or in the event
that either Guarantor or Borrower become insolvent, make an
assignment for the benefit of creditors , or attempt to effect a composition with
creditors, or if there be any default under the Agreement (whether
declared or not) , then , at Lender's election, without notice or demand,
the obligations
of Guarantor created hereunder shall become
due , payable and enforceable against
Guarantor whether or not the Obligations are then due and
payable.
5. Guarantor agrees
to indemnify Lender and hold Lender harmless against all
obligations , demands , and liabilities ,
by whomsoever asserted and against all losses in any way suffered
, incurred , or paid by Lender as a result of or in any way
arising out of, following , or
consequential to transactions with Borrower whether under the
Agreement , or otherwise , and also agrees that this Guaranty shall not be
impaired by any modification, supplement , extension , or
amendment of an y contract or
agreement to which Lender and Borrower may hereafter agree, nor by
any modification , release
, or other alteration of any of the
Obligations hereby guaranteed or of any security there for, nor by
any agreements or arrangements whatsoever with Borrower or anyone
else .
6. Guarantor hereby authorizes Lender , without notice or demand and without affecting
its liability hereunder , from time to
time to: (a) renew , compromise
, extend , accelerate , or
otherwise change the interest rate, time for payment, or the other
terms of any of the Obligations guaranteed hereby, and exchange,
enforce, waive , and release any
security there for ; (b) apply such
security and direct the order or manner of sale thereof as Lender
in its discretion may determine; (c) release or substitute anyone
or more endorser(s) or guarantor(s) ;
and (d) assign, without notice, this Guaranty in whole or in part
and/or Lender's rights hereunder to anyone at any time . Guarantor agrees that Lender may do any or all
of the foregoing in such manner , upon
such terms , and at such times as
Lender , in its discretion
, deems advisable, without, in any way
or respect , impairing, affecting,
reducing or releasing Guarantor from its undertakings hereunder and
Guarantor hereby consents to each and all of the foregoing acts
, events and/or occurrences.
7. Guarantor hereby
waives any right to assert against Lender as a defense , counterclaim, set-off on crossclaim, any defense
(legal or equitable) , set-off
, counterclaim , and/or claim which Guarantor may now or at any
time hereafter have against Borrower and/or any other party liable
to Lender in any way or manner.
8. Guarantor hereby
waives all defenses, counterclaims and/off-sets of any kind or
nature , arising directly or
indirectly from the present or future lack of perfection
, sufficiency , validity and/or enforceability of the Agreement,
or any security interest.
9 .
Guarantor hereby waives any defense arising by reason
of any claim or defense based upon an election of remedies by
Lender, which , in any manner impairs
, affects , reduces, releases ,
destroys and/or extinguishes Guarantor's subrogation rights
, rights to proceed against Borrower
for reimbursement , and/or any rights
of Guarantor to proceed against Borrower or against any other
person or security, including , but
not limited to, any defense based upon an election of remedies by
Lender under the provisions of Section 580d of the California Code
of Civil Procedure , and/or any
similar law of California or of any other State or of the United
States. Guarantor waives all presentments , demands for performance, notices of
non-performance, protests, notices of protest, notices of dishonor
, notices of default , notices of acceptance of this Guaranty, and
notices of the existence
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