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GUARANTY
GUARANTY
dated as of June 30, 2008 ("Guaranty") made by Steven B. Rash,
an individual residing at,10 Spiceberry Place, The Woodlands,
TX 77382 (“Guarantor”) in favor of
_____________________ ("Lender").
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WHEREAS,
Power 3 Medical Products, Inc., a New York corporation (the
“Borrower”), and the Lender are parties to a
Debenture, dated as of June 30, 2008 (such agreement, as
amended, restated, supplemented or otherwise modified from
time to time, being hereinafter referred to as the
“Debenture”);
WHEREAS,
pursuant to the Debenture, the Guarantor is required to
execute and deliver to the Lender a guaranty guaranteeing the
Debenture and all other obligations under the Debenture and
the other Loan Documents; and
WHEREAS,
the Guarantor has determined that (i) it will derive
substantial benefit and advantage from the loan and other
financial accommodations made available to the Borrower under
the Debenture and the other Loan Documents and (ii) its
execution, delivery and performance of this Guaranty directly
benefit, and are within the best interests of, the
Guarantor;
NOW,
THEREFORE, in consideration of $1,000, paid by the Borrower to
the Guarantor, receipt of which is hereby acknowledged, the
premises, the agreements herein and in order to induce the
Lender to make and maintain the Loan pursuant to the
Debenture, the Guarantor hereby agrees with the Lender, as
follows:
Section
1.
Definitions .
Reference is hereby made to the Debenture for a statement of the
terms thereof. All terms used in this Guaranty which are defined in
the Debenture and not otherwise defined herein shall have the same
meanings herein as set forth therein. As used in this Guaranty, the
following terms have the following meanings (terms defined in the
singular to have the same meaning when used in the plural and vice
versa):
“Borrower”
has the meaning specified in the preamble above.
“Guaranty”
means this Guaranty.
“Guaranty
Documents” means the Loan Documents and any document or
agreement evidencing, related to or delivered in connection
with any or all of the Guaranteed Obligations.
“Guaranteed
Obligations” means any and all present and future
liabilities and obligations of Borrower and Grantor to Lender
incurred by Borrower and Grantor under the Loan Documents, and
whether due or to become due, secured or unsecured, absolute
or contingent, joint or several, direct or indirect, acquired
outright, conditionally or as collateral security by Lender
from another, liquidated or unliquidated, arising by operation
of law or otherwise, together with all fees and expenses
incurred in collecting any or all of the items specified in
this definition or enforcing any rights under any of the
Guaranty Documents, including all fees and expenses of
Lender’s counsel and of any experts and agents which may
be paid or incurred by Lender in collecting any such items or
enforcing any such rights.
Section
2.
Rules of Interpretation .
When used in this Guaranty: (1) “or” is not exclusive,
(2) a reference to a law includes any amendment or modification to
such law, and (3) a reference to an agreement, instrument or
document includes any amendment or modification of such agreement,
instrument or document.
Section
3.
Guaranty .
Guarantor hereby guarantees to Lender and its successors,
endorsees, transferees and assigns the prompt and complete payment,
as and when due and payable (whether at stated maturity or by
required prepayment, acceleration, demand or otherwise), of all of
the Guaranteed Obligations now existing or hereafter incurred will
be paid strictly in accordance with their terms.
Section
4.
Limitation of Liability .
The obligation of Guarantor under this Guaranty shall be limited to
an aggregate amount equal to the largest amount that would not
render the obligation of Guarantor under this Guaranty subject to
avoidance under Section 548 of the United States Bankruptcy Code or
any comparable provision of any applicable state law.
Section
5.
Type of Guaranty .
This Guaranty is absolute and unconditional and as such is not
subject to any conditions and Guarantor is fully liable to perform
all of its duties and obligations under this Guaranty as of the
date of execution of this Guaranty. This Guaranty is a continuing
guaranty and applies to all future Guaranteed Obligations. In
addition, this Guaranty shall remain in full force and effect even
if at any time there are no outstanding Guaranteed Obligations.
This Guaranty is a guaranty of payment and not of collection. The
obligations and liabilities of Guarantor under this Guaranty shall
not be conditioned or contingent upon the pursuit by Lender of any
right or remedy against Borrower, Grantor or any other person which
may be or become liable in respect of all or any part of the
Guaranteed Obligations, or against any assets securing the payment
of the Guaranteed Obligations or guarantee for such Guaranteed
Obligations or right of setoff with respect to such Guaranteed
Obligations. This Guaranty is irrevocable and as such cannot be
cancelled, terminated or revoked by Guarantor.
Section
6.
Reinstatement of Guaranty .
This Guaranty shall continue to be effective or shall be
reinstated, as the case may be, if at any time any payment, or any
part thereof, of any of the Guaranteed Obligations are rescinded or
must otherwise be returned by Lender upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of Borrower,
Grantor or otherwise, all as though such payment had not been
made.
Guarantor
hereby consents that, without the necessity of any reservation
of rights against Guarantor and without notice to or further
assent by Guarantor, any demand for payment of any of the
Guaranteed Obligations made by Lender may be rescinded by
Lender and any of such Guaranteed Obligations continued after
such rescission.
Section
7.
Security Interest .
To secure the payment of the obligations of Guarantor under this
Guaranty, Guarantor has executed a Pledge Agreement in favor of,
and grants Lender a pledge and security interest in the Pledged
Shares listed in Schedule 1 to the Pledge Agreement.
Section
8.
Waiver of Notices .
Guarantor hereby waives any and all notices including (1) notice of
or proof of reliance by Lender upon this Guaranty or acceptance of
this Guaranty, (2) notice of the incurrence of any Guaranteed
Obligations or the renewal, extension or accrual of any such
Guaranteed Obligations, (3) notice of any actions taken by Lender,
Borrower, Grantor or any other person under any Guaranty Document,
and (4) notices of nonpayment or nonperformance, protest, notices
of protest and notices of dishonor.
Section
9.
Waiver of Defenses .
Guarantor hereby waives any and all defenses to the performance by
Guarantor of its duties and obligations under this Guaranty,
including any defense based on any of the following:
(1)
any
failure of Lender to disclose to Guarantor any information
relating to the business, condition (financial or otherwise),
operations, performance, properties or prospects of any party
obligated to make payment on any and all Guaranteed
Obligations, whether as principal or guarantor, now or
hereafter known to Lender,
(2)
any
defense to the payment of any or all the Guaranteed
Obligations, including lack of validity or enforceability of
any of the Guaranteed Obligations or any Guaranty
Documents,
(3)
any
change in the time, manner or place of payment of, or in any
other term in respect of, all or any of the Guaranteed
Obligations, or any other amendment or waiver of or consent to
any departure from any Guaranty Document,
(4)
any
exchange or release of, or non-perfection of any security
interest on or in any assets securing the payment of the
Guaranteed Obligations,
(5)
any
failure to execute any other guaranty for all or any part of
the Guaranteed Obligations, or any release or amendment or
waiver of, or consent to any departure from, any other
guaranty for any or all of the Guaranteed
Obligations,
(6)
any
subordination of any or all of the Guaranteed
Obligations,
(7)
any
act or omission of Lender in connection with the enforcement
of, or the exercise of rights and remedies, including any
election of, or the order of exercising any, remedies, with
respect to (a) the Guaranteed Obligations, (b) any other
guarantor of the Guaranteed Obligations, or (c) any assets
securing the payment of the Guaranteed
Obligations,
(8)
any
manner of application of any funds received by Lender to
Guaranteed Obligations or any other obligations owed to
Lender, whether from the sale or disposition of any assets
securing the Guaranteed Obligations, from another guarantor of
the Guaranteed Obligations or otherwise, and
(9)
any
failure to give or provide any notices, demands or protests,
including those specified under Section 8 herein, entitled
“Waiver of Notices”.
Section
10.
Subrogation .
Guarantor may not exercise any rights which Guarantor may acquire
by way of subrogation or contribution, whether acquired by any
payment made under this Guaranty, by any setoff or application of
funds of Borrower, by Lender or otherwise, until (1) the payment in
full of the Guaranteed Obligations (after Lender no longer has any
obligation or arrangement to provide credit to Borrower, including
under or pursuant to a line of credit), and (2) the payment of all
fees and expenses to be paid by Guarantor pursuant to this
Guaranty. If any amount shall be paid to Gua
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