[EXHIBIT 10.18]
GUARANTY AND PLEDGE AGREEMENT
GUARANTY AND PLEDGE AGREEMENT (this "Agreement"), dated
as of March 30, 2005, among Med Gen, Inc., a Nevada corporation
(the "Company"), _____________ (the "Pledgor"), and the pledgees
signatory hereto and their respective endorsees, transferees and
assigns (collectively, the "Pledgees").
W I T N E S S E T H:
WHEREAS, pursuant to a Securities Purchase Agreement,
dated the date hereof, between Company and the Pledgees (the
"Purchase Agreement"), Company has agreed to issue to the
Pledgees and the Pledgees have agreed to purchase from Company
certain of Company's 8% Callable Secured Convertible Notes, due
three years from the date of issuance (the "Notes"), which are
convertible into shares of Company's Common Stock, par value
$.001 per share (the "Common Stock"). In connection therewith,
Company shall issue the Pledgees certain Common Stock purchase
warrants (the "Warrants"); and
WHEREAS, as a material inducement to the Pledgees to
enter into the Purchase Agreement, the Pledgees have required and
the Pledgor has agreed (i) to unconditionally guarantee the
timely and full satisfaction of all obligations of the Company,
whether matured or unmatured, now or hereafter existing or
created and becoming due and payable (the "Obligations") to the
Pledgees, their successors, endorsees, transferees or assigns
under the Transaction Documents (as defined in the Purchase
Agreement) to the extent of the Collateral (as defined in Section
5 hereof), and (ii) to grant to the Pledgees, their successors,
endorsees, transferees or assigns a security interest in the
number of shares of Common Stock currently owned by the Pledgor
as set forth below the Pledgor's signature on the signature page
hereto (collectively, the "Shares"), as collateral security for
Obligations. Terms used and not defined herein shall have the
meaning ascribed to them in the Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing
recitals, and the mutual covenants contained herein, the parties
hereby agree as follows:
1. Guaranty. To the extent of the Collateral, the Pledgor
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hereby absolutely, unconditionally and irrevocably guarantees to
the Pledgees, their successors, endorsees, transferees and
assigns the due and punctual performance and payment of the
Obligations owing to the Pledgees, their successors, endorsees,
transferees or assigns when due, all at the time and place and in
the amount and manner prescribed in, and otherwise in accordance
with, the Transaction Documents, regardless of any defense or
set-off counterclaim which the Company or any other person may
have or assert, and regardless of whether or not the Pledgees or
anyone on behalf of the Pledgees shall have instituted any suit,
action or proceeding or exhausted its remedies or taken any steps
to enforce any rights against the Company or any other person to
compel any such performance or observance or to collect all or
part of any such amount, either pursuant to the provisions of the
Transaction Documents or at law or in equity, and regardless of
any other condition or contingency. The Pledgor shall have no
obligation whatsoever to the Pledgees beyond the Collateral
pledged for the Obligations set forth herein.
2. Waiver of Demand. The Pledgor hereby unconditionally:
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(i) waives any requirement that the Pledgees, in the event of a
breach in any material respect by the Company of any of its
representations or warranties in the Transaction Documents, first
make demand upon, or seek to enforce remedies against, the
Company or any other person before demanding payment of
enforcement hereunder; (ii) covenants that this Agreement will
not be discharged except by complete performance of all the
Obligations to the extent of the Collateral; (iii) agrees that
this Agreement shall remain in full force and effect without
regard to, and shall not be affected or impaired, without
limitation, by, any invalidity, irregularity or unenforceability
in whole or in part of the Transaction Documents or any
limitation on the liability of the Company thereunder, or any
limitation on the method or terms of payment thereunder which may
now or hereafter be caused or imposed in any manner whatsoever;
and (iv) waives diligence, presentment and protest with respect
to, and notice of default in the performance or payment of any
Obligation by the Company under or in connection with the
Transaction Documents.
3. Release. The obligations, covenants, agreements and
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duties of the Pledgor hereunder shall not be released, affected or
impaired by any assignment or transfer, in whole or in part, of
the Transaction Documents or any Obligation, although made
without notice to or the consent of the Pledgor, or any waiver by
the Pledgees, or by any other person, of the performance or
observance by the Company or the Pledgor of any of the
agreements, covenants, terms or conditions contained in the
Transaction Documents, or any indulgence in or the extension of
the time or renewal thereof, or the modification or amendment
(whether material or otherwise), or the voluntary or involuntary
liquidation, sale or other disposition of all or any portion of
the stock or assets of the Company or the Pledgor, or any
receivership, insolvency, bankruptcy, reorganization, or other
similar proceedings, affecting the Company or the Pledgor or any
assets of the Company or the Pledgor, or the release of any
proper from any security for any Obligation, or the impairment of
any such property or security, or the release or discharge of the
Company or the Pledgor from the performance or observance of any
agreement, covenant, term or condition contained in or arising
out of the Transaction Documents by operation of law, or the
merger or consolidation of the Company, or any other cause,
whether similar or dissimilar to the foregoing.
4. Subrogation.
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(a) Unless and until complete performance of all
the Obligations to the extent of the Collateral, the Pledgor shall
not be entitled to exercise any right of subrogation to any of the
rights of the Pledgees against the Company or any collateral
security or guaranty held by the Pledgees for the payment or
performance of the Obligations, nor shall the Pledgor seek any
reimbursement from the Company in respect of payments made by the
Pledgor hereunder.
(b) In the extent that the Pledgor shall become
obligated to perform or pay any sums hereunder, or in the event that
for any reason the Company is now or shall hereafter become indebted
to the Pledgor, the amount of such sum shall at all times be
subordinate as to lien, time of payment and in all other
respects, to the amounts owing to the Pledgees under the
Transaction Documents and the Pledgor shall not enforce or
receive payment thereof until all Obligations due to the Pledgees
under the Transaction have been performed or paid. Nothing
herein contained is intended or shall be construed to give to the
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Pledgor any right of subrogation in or under the Transaction
Documents, or any right to participate in any way therein, or in
any right, title or interest in the assets of the Pledgees.
5. Security. As collateral security for the punctual payment
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and performance, when due, by the Company of all the Obligations,
the Pledgor hereby pledges with, hypothecates, transfers and
assigns to the Pledgees all of the Shares and all proceeds,
shares and other securities received, receivable or otherwise
distributed in respect of or in exchange for the Shares,
including, without limitation, any shares and other securities
into which such Shares may be convertible or exchangeable
(collectively, the "Additional Collateral" and together with the
Shares, the "Collateral"). Simultaneously herewith, the Pledgor
shall deliver to the Pledgees the certificate(s) representing the
Shares, stamped with a bank medallion guarantee, along with a
stock transfer power duly executed in blank by the Pledgor, to be
held by the Pledgees as security. Any Collateral received by the
Pledgor on or after the date hereof shall be immediately
delivered to the Pledgees together with any executed stock powers
or other transfer documents requested by the Pledgees, which
request may be made at any time prior to the date when the
Obligations shall have been paid and otherwise satisfied in full.
6. Voting Power, Dividends, Etc. and other Agreements.
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(a) Unless and until an Event of Default (as set forth
in Section 7 hereof) has occurred, the Pledgor shall be entitled to:
(i) Exercise all voting and/or consensual powers
pertaining to the Collateral, or any part thereof, for all purposes;
(ii) Receive and retain dividends paid with respect
to the Collateral; and
(iii) Receive the benefits of any income tax deductions
available to the Pledgor as a shareholder of the Company.
(b) The Pledgor agrees that it will not sell, assign,
transfer, pledge, hypothecate, encumber or otherwise dispose of the
Collateral.
(c) The Pledgor and the Company jointly and severally
agree to pay all costs including all reasonable attorneys' fees and
disbursements incurred by the Pledgees in enforcing this
Agreement in accordance with its terms.
7. Default and Remedies.
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(a) For the purposes of this Agreement, "Event of Default"
shall mean:
(i) default in or under any of the Obligations after
the expiration, without cure, of any applicable cure period;
(ii) a breach in any material respect by the Company
of any of its representations or warranties in the Transaction Documents;
or
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(iii) a breach in any material respect by the Pledgor
of any of its representations or warranties in this Agreement.
(b) the Pledgees shall have the following rights upon any
Event of Default:
(i) the rights and remedies provided by the Uniform
Commercial Code as adopted by the State of New York (the "UCC") (as said
law may at any time be amended);
(ii) the right to receive and retain all dividends,
payments and other distributions of any kind upon any or all of the
Collateral;
(iii) the right to cause any or all of the Collateral
to be transferred to its own name or to the name of its designee and
have such transfer recorded in any place or places deemed appropriate
by the Pledgees; and
(iv) the right to sell, at a public or private sale,
the Collateral or any part thereof for cash, upon credit or for
future delivery, and at such price or prices in accordance with
the UCC (as such law may be amended from time to time). Upon any
such sale the Pledgees shall have the right to deliver, assign
and transfer to the purchaser thereof the Collateral so sold.
The Pledgees shall give the Pledgor not less than ten (10) days'
written notice of its intention to make any such sale. Any such
sale, shall be held at such time or times during ordinary
business hours and at such place or places as the Pledgees may
fix in the notice of such sale. The Pledgees may adjourn or
cancel any sale or cause the same to be adjourned from time to
time by announcement at the time and place fixed for the sale,
and such sale may be made at any time or place to which the same
may be so adjourned. In case of any sale of all or any part of
the Collateral upon terms calling for payments in the future, any
Collateral so sold may be retained by the Pledgees until the
selling price is paid by the purchaser thereof, but the Pledgees
shall incur no liability in the case of the failure of such
purchaser to take up and pay for the Collateral so sold and, in
the case of such failure, such Collateral may again be sold upon
like notice. The Pledgees, however, instead of exercising the
power of sale herein conferred upon them, may proceed by a suit
or suits at law or in equity to foreclose the security interest
and sell the Collateral, or any portion thereof, under a judgment
or decree of a court or courts of competent jurisdiction, the
Pledgor having been given due notice of all such action. The
Pledgees shall incur no liability as a result of a sale of the
Collateral or any part thereof. All proceeds of any such sale,
after deducting the reasonable expenses and reasonable attorneys'
fees incurred in connection with such sale, shall be applied in
reduction of the Obligations, and the remainder, if any, shall be
paid to the Pledgor.
8. Application of Proceeds; Release. The proceeds of
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any sale or enforcement of or against all or any part of the Collateral,
and any other cash or collateral at the time held by the Pledgees
hereunder, shall be applied by the Pledgees first to the payment
of the reasonable costs of any such sale or enforcement, then to
reimburse the Pledgees for any damages, costs or expenses
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incurred by the Pledgees as a result of an Event of Default, then
to the payment of the principal amount or stated valued (as
applicable) of, and interest or dividends (as applicable) and any
other payments due in respect of, the Obligations. The
remainder, if any, shall be paid to the Pledgor. As used in this
Agreement, "proceeds" shall mean cash, securities and other
property realized in respect of, and distributions in kind of,
the Collateral, including any thereof received under any
reorganization, liquidation or adjustment of debt of any issuer
of securities included in the Collateral.
9. Representations and Warranties.
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(a) The Pledgor hereby represents and warrants to the
Pledgees that:
(i) the Pledgor has full power and authority and
legal right to pledge the Collateral to the Pledgees pursuant to this
Agreement and this Agreement constitutes a legal, valid and binding
obligation of the Pledgor, enforceable in accordance with its
terms.
(ii) the execution, delivery and performance of
this Agreement and other instruments contemplated herein will not
violate any provision of any order or decree of any court or
governmental instrumentality or of any mortgage, indenture, contract
or other agreement to which the Pledgor is a party or by which the
Pledgor and the Collateral may be bound, and will not result in the
creation or imposition of any lien, charge or encumbrance on, or
security interest in, any of the Pledgor's properties pursuant to
the provisions of such mortgage, indenture, contract or other
agreement.
(iii) the Pledgor is the sole record and
beneficial owner of all of the Shares; and
(iv) the Pledgor owns the Collateral free and
clear of all Liens.
(b) The Company represents and warrants to the
Pledgees that:
(i) it has no knowledge that any of the
representations or warranties of the Pledgor herein are incorrect or
false in any material respect;
(ii) all of the Shares were validly issued, fully
paid and non-assessable; and
(iii) the Pledgor is the record holder of the Shares.
10. No Waiver; No Election of Remedies. No failure on the part
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of the Pledgees to exercise, and no delay in exercising, any
right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise by the Pledgees
of any right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or
remedy. The remedies herein provided are cumulative and are not
exclusive of any remedies provided by law. In addition, the
exercise of any right or remedy of the Pledgees at law or equity
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or under this Agreement or any of the documents shall not be
deemed to be an election of Pledgee's rights or remedies under
such documents or at law or equity.
11. Termination. This Agreement shall terminate on the date
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on which all Obligations have been performed, satisfied, paid or
discharged in full.
12. Further Assurances. The parties hereto agree that, from
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time to time upon the written request of any party hereto, they
will execute and deliver such further documents and do such other
acts and things as such party may reasonably request in order
fully to effect the purposes of this Agreement. The Pledgees
acknowledge that they are aware that Pledgor shall have no
obligations whatsoever to the Pledgees beyond the Collateral
pledged for the Obligations set forth herein, and no request for
further assurance may or shall increase such Obligations.
13. Miscellaneous.
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(a) Modification. This Agreement contains the entire
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understanding between the parties with respect to the subject
matter hereof and specifically incorporates all prior oral and
written agreements relating to the subject matter hereof. No
portion or provision of this Agreement may be changed, modified,
amended, waived, supplemented, discharged, canceled or terminated
orally or by any course of dealing, or in any manner other than
by an agreement in writing, signed by the party to be charged.
(b) Notice. Any and all notices or other communications
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or deliveries required or permitted to be provided hereunder shall
be in writing and shall be deemed given and effective on the
earliest of (i) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile
telephone number specified in this Section prior to 6:30 p.m.
(New York City time) on a Business Day (as defined in the
Purchase Agreement), (ii) the Business Day after the date of
transmission, if such notice or communication is delivered via
facsimile at the facsimile telephone number specified in this
Agreement later than 6:30 p.m. (New York City time) on any date
and earlier than 11:59 p.m. (New York City time) on such date,
(iii) the Business Day following the date of mailing, if sent by
nationally recognized overnight courier services, or (iv) upon
actual receipt by the party to whom such notice is required to be
given. The address for such notices and communications shall be
as follows:
If to the Company: Med Gen, Inc.
0000 X. Xxxxxxxx Xxxx, Xxxxx 000
Xxxx Xxxxx, XX 00000
Attention: President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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With copies to: Law Office if Xxxxxxx X. Xxxxxx
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Pledgor:
c/o Med Gen, Inc.
0000 X. Xxxxxxxx Xxxx, Xxxxx 000
Xxxx Xxxxx, XX 00000
Attention: Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Pledgees: AJW Partners, LLC
AJW Offshore, Ltd.
AJW Qualified Partners, LLC
New Millennium Capital Partners II, LLC
0000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx
With copies to: Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx, LLP
0000 Xxxxxx Xxxxxx, 00xx Xx.
Xxxxxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esquire
(c) Invalidity. If any part of this Agreement is
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contrary to, prohibited by, or deemed invalid under applicable laws or
regulations, such provision shall be inapplicable and deemed
omitted to the extent so contrary, prohibited or invalid, but the
remainder hereof shall not be invalidated thereby and shall be
given effect so far as possible.
(d) Benefit of Agreement. This Agreement shall be
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binding upon and inure to the parties hereto and their respective
successors and assigns.
(e) Mutual Agreement. This Agreement embodies the
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arm's length negotiation and mutual agreement between the parties
hereto and shall not be construed against either party as having been
drafted by it.
(f) New York Law to Govern. This Agreement shall be
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governed by and construed and enforced in accordance with the internal
laws of the State of New York without regard to the principals of
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conflicts of law thereof. Each party hereby irrevocably submits
to the exclusive jurisdiction of the state and Federal courts
sitting in the city of New York, borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein,
and hereby irrevocably waives, and agrees not to assert in any
suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court or that such suit,
action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy
thereof to such party at the address in effect for notices to it
under this agreement and agrees that such service shall
constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in
any way any right to serve process in any manner permitted by
law.
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IN WITNESS WHEREOF, the parties hereto have caused this
Guaranty and Pledge Agreement to be duly executed by their
respective authorized persons as of the date first indicated
above.
MED GEN, INC.
By:
___________________________________
Xxxx X. Xxxxxxx
Chairman and Chief Executive Officer
Pledgees:
AJW PARTNERS, LLC
By: SMS Group, LLC
By:
___________________________________
Xxxxx X. Xxxxxxxx
Manager
AJW OFFSHORE, LTD.
By: First Street Manager II, LLC
By:
___________________________________
Xxxxx X. Xxxxxxxx
Manager
AJW QUALIFIED PARTNERS, LLC
By: AJW Manager, LLC
By:
___________________________________
Xxxxx X. Xxxxxxxx
Manager
NEW MILLENNIUM CAPITAL PARTNERS II, LLC
By: First Street Manager II, LLC
By:
___________________________________
Xxxxx X. Xxxxxxxx
Manager
[Signatures Continued on Following Page]
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Pledgor:
___________________________________
___________________________________
Number of Shares subject
to this pledge:____________________
Date such Shares were
acquired:__________________________
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