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EXHIBIT 10.5 GUARANTY BY CORPORATION Minneapolis,
Minnesota
August 26, 2008
For
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and to induce M&I Marshall &
Ilsley Bank, a Wisconsin State banking corporation (herein, with
its participants, successors and assigns, called "Bank"), at its
option, at any time or from time to time to make loans or extend
other accommodations to or for the account of WSI Industries, Inc.,
a Minnesota corporation (herein called "Borrower") or to engage in
any other transactions with Borrower, the undersigned hereby
absolutely and unconditionally guarantees to the Bank the full and
prompt payment when due, whether at maturity or earlier by reason
of acceleration or otherwise, of the debts, liabilities and
obligations described as follows: The
undersigned guarantee(s) to Bank the payment and performance of
each and every debt, liability and obligation of every type and
description which Borrower may now or at any time hereafter owe to
Bank (whether such debt, liability or obligation now exists or is
hereafter created or incurred, and whether it is or may be direct
or indirect, due or to become due, absolute or contingent, primary
or secondary, liquidated or unliquidated, or joint, several or
joint and several, all such debts, liabilities and obligations
being hereinafter collectively referred to as the "Indebtedness")
without limitation, this Guaranty includes the following described
obligations: That certain Promissory Note, Loan Agreement, and
Security Agreement executed by Borrower in favor of Bank of even
date herewith and any extensions, renewals or replacements thereof
(hereinafter referred to as the "Indebtedness").
The term "Indebtedness" as used in
this guaranty shall not include any obligations entered into
between Borrower and Bank after the date hereof (including any
extensions, renewals or replacements of such obligations) for which
Borrower meets the Bank’s standard of creditworthiness based
on Borrower’s own assets and income without the addition of a
guaranty, or for which a guaranty is required but Borrower chooses
someone other than the joint undersigned to guaranty the
obligation. The undersigned further
acknowledges and agrees with Bank that:
1. No act or thing need
occur to establish the liability of the undersigned hereunder, and
no act or thing, except full payment and discharge of all
Indebtedness, shall in any way exonerate the undersigned or modify,
reduce, limit or release the liability of the undersigned
hereunder. 2. This is
an absolute, unconditional and continuing guaranty of payment of
the Indebtedness and shall continue to be in force and be binding
upon the undersigned, whether or not all Indebtedness is paid in
full, until this guaranty is revoked by written notice actually
received by the Bank, and such revocation shall not be effective as
to Indebtedness existing or committed for at the time of actual
receipt of such notice by the Bank, or as to any renewals,
extensions and refinancings thereof. The undersigned represents and
warrants to the Bank that the undersigned has a direct and
substantial economic interest in Borrower and expects to derive
substantial benefits therefrom and from any loans and financial
accommodations resulting in the creation of Indebtedness guaranteed
hereby, and that this guaranty is given for a corporate purpose.
The undersigned agrees to rely exclusively on the right to revoke
this guaranty prospectively as to future transactions by written
notice actually received by the Bank if at any time, in the opinion
of the directors or officers of the undersigned, the corporate
benefits then being received by the undersigned in connection with
this guaranty are not sufficient to warrant the continuance of this
guaranty as to future Indebtedness. Accordingly, so long as this
guaranty is not revoked prospectively in accordance with this
guaranty, the Bank may rely conclusively on a continuing warranty,
hereby made, that the undersigned continues to be benefited by this
guaranty and the Bank shall have no duty to inquire into or
confirm
the receipt of any such benefits, and this guaranty shall be
effective and enforceable by the Bank without regard to the
receipt, nature of value of any such benefits.
3. If the undersigned
shall be dissolved or shall be or become insolvent (however
defined) then the Bank shall have the right to declare immediately
due and payable, and the undersigned will forthwith pay to the
Bank, the total amount of all Indebtedness, whether due and payable
or unmatured. It the undersigned voluntarily commences or there is
commenced involuntarily against the undersigned a case under the
United States Bankruptcy Code, the full amount of all Indebtedness,
whether due and payable or unmatured, shall be immediately due and
payable without demand or notice thereof.
4. The liability of the
undersigned hereunder shall be limited to a principal amount of $
UNLIMITED (if unlimited or if no amount is stated, the
undersigned shall be liable for all Indebtedness, without any
limitation as to amount), plus accrued interest thereon and all
attorneys’ fees, collection costs and enforcement expenses
referable thereto. Indebtedness may be created and continued in any
amount, whether or not in excess of such principal amount, without
affecting or impairing the liability of the undersigned hereunder.
The Bank may apply any sums received by or available to the Bank on
account of the Indebtedness from Borrower or any other person
(except the undersigned), from their properties, out of any
collateral security or from any other source to payment of the
excess. Such application of receipts shall not reduce, affect or
impair the liability of the undersigned hereunder. If the liability
of the undersigned is limited to a stated amount pursuant to this
paragraph 4, any payment made by the undersigned under this
guaranty shall be effective to reduce or discharge such liability
only if accompanied by a written transmittal document, received by
the Bank, advising the Bank that such payment
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