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EXHIBIT 10.22
SPECIFIC GUARANTEE
GUARANTEE, made by PENFORD CORPORATION, a Washington corporation,
(the "Guarantor") in favor of THE BANK OF NOVA SCOTIA (the "Bank")
in respect of the indebtedness and liability of PENWEST
PHARMACEUTICALS CO., a Washington corporation, (the "Borrower") to
the Bank under a letter loan agreement dated as of July 2, 1998.
PRELIMINARY STATEMENT. The Borrower and the Bank have entered into letter
loan agreement dated as of July 2, 1998 (such agreement, as it may hereafter be
amended, supplemented, replaced or otherwise modified from time to time, being
the "Loan Agreement") under which the Borrower may utilize the revolving term
credit facility thereunder (the "Credit") upon the terms and conditions set
forth therein. It is a condition precedent to the Bank incurring any obligation
under the Loan Agreement that the Guarantor shall execute and deliver this
Guarantee.
NOW THEREFORE, in consideration of the premises and in order to induce the
Bank to permit the Borrower to utilize the Credit on the terms and conditions of
the Loan Agreement, the Guarantor hereby agrees as follows:
1. Guarantee. The Guarantor hereby irrevocably guarantees the punctual
payment to the Bank when due whether at stated maturity, by demand, acceleration
or otherwise of all indebtedness and liability which the Borrower has incurred
or may incur or be under to the Bank in connection with the Loan Agreement and
any documents and instruments delivered thereunder or collateral thereto (the
Loan Agreement and such documents and instruments being, collectively, the "Loan
Documents") and whether for principal, interest, fees, expenses or otherwise
(collectively, the "Obligations"); provided that, the aggregate liability of the
Guarantor and any other guarantor of the Obligations in respect of the aggregate
outstanding indebtedness and liability of the Borrower to the Bank, inclusive of
all principal, interest, fees, costs (including, without limitation, costs
incurred in connection with the enforcement of this Guarantee), expenses and
other amounts forming part of the Obligations and any other amount owing under
this Guarantee, is limited to U.S.$18,000,000 (the "Maximum Liability"), which
Maximum Liability shall be reduced by any reduction in the Borrower's Commitment
Amount (as defined in the Loan Agreement).
Upon default of the Borrower under the Loan Agreement and the expiration
of any period to cure such default without cure having occurred, all debts and
liabilities present and future of the Borrower to the Guarantor are hereby
assigned to the Bank and postponed to the Obligations and any monies received by
the Guarantor in respect thereof shall be received in trust for and shall be
paid over to the Bank to assure the prior repayment to the Bank of the
Obligations and credited against the liability of the Guarantor under this
Guarantee. No right of the Guarantor
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by way of subrogation shall be asserted against the Borrower until the
Obligations have been paid in full.
The Bank shall not be bound to exhaust all or any of its recourse against
the Borrower or any securities it may hold or to sell collateral in a
commercially reasonable manner before being entitled to payment from the
Guarantor under this Guarantee. Notwithstanding any other obligations of the
Guarantor hereunder, any amounts which may not be recoverable from the Guarantor
as guarantor under this Guarantee shall be recoverable from the Guarantor as
principal debtor in respect thereof and shall be paid to the Bank after demand
therefor as hereinafter provided. The Guarantor's obligations hereunder shall
not be limited, lessened or discharged by any act on the part of the Bank or
other matter or thing, including:
(a) any incapacity or disability or lack or limitation of status or
power of the Borrower or that the Borrower may not be a legal entity;
(b) the bankruptcy or insolvency of the Borrower;
(c) any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of the Obligations or the rights of the Bank
with respect thereto;
(d) any lack of validity or enforceability of any document,
agreement or instrument evidencing or giving rise to or securing the
Obligations or any of them (including without limitation any Loan
Document);
(e) any change in the name, constitution or capacity of the
Borrower, or the Borrower being merged with another corporation, or if a
partnership the Borrower's membership changes (in these latter two cases
this Guarantee shall apply to the liabilities of the resulting corporation
or partnership, and the term "Borrower" shall include such resulting
corporation or partnership); or
(g) any other circumstance that would constitute a defense generally
available to guarantors under the law of suretyship or otherwise at
equity, or a set-off or counterclaim available to, or a legal or equitable
discharge of, the Borrower in respect of the Obligations or the Guarantor
in respect of this Guarantee, all of which are hereby expressly waived by
the Guarantor;
save due performance by the Borrower or the Guarantor; provided, however, that
the Bank shall not amend, waive or modify the Obligations or the Loan Agreement
without the Guarantor's prior written consent, which consent shall not be
unreasonably withheld. Any account settled or stated by or between the Bank and
the Borrower shall be accepted by the Guarantor in the absence of manifest
error, as conclusive evidence that the balance or amount thereof thereby
appearing due by the Borrower to the Bank, is so due.
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Subject to the limitations set forth herein, this Guarantee shall be a
continuing guarantee of all of the Obligations and shall apply to and secure any
ultimate balance due or remaining unpaid to the Bank; and this Guarantee shall
not be considered as wholly or partially satisfied by the payment or liquidation
at any time of any sum of money for the time being due or remaining unpaid to
the Bank. This Guarantee shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any of the Obligations is rescinded
or must otherwise be returned by the Bank on the insolvency, bankruptcy or
reorganization of the Borrower or the Guarantor or otherwise, all as though such
payment had not been made.
2. Payment. The Guarantor shall make payment from time to time to the Bank
of the amount of the liability of the Guarantor hereunder forthwith upon demand
by the Bank in writing. Such demand shall be conclusively deemed to have been
effectively made when an envelope containing it addressed to the Guarantor at
the last address of the Guarantor known to the Bank is deposited, postage
prepaid and registered or certified, in the post office and the liability of the
Guarantor shall bear interest from the date of such demand at the rate or rates
applicable to the Obligations from time to time stated in the Loan Agreement.
3. Taxes. All payments by the Guarantor shall be made free and clear of
and without deduction for any and all present and future taxes, levies and
withholdings including stamp and documentary taxes, other than taxes imposed on
the net income or receipts of the Bank (collectively "Taxes"). If the Guarantor
is required by law to deduct any Taxes from or in respect of any amount paid or
payable hereunder, such amount shall be increased as necessary so that the Bank
receives an amount equal to the sum it would have received had no such deduction
been made and the Guarantor shall pay same to the relevant taxing authority and
give to the Bank acceptable evidence of such payment. The Guarantor will
indemnify the Bank for any Taxes paid by the Bank in respect of any amount paid
or payable by the Guarantor hereunder. The provisions of this Section as they
pertain to Taxes shall survive payment in full hereunder.
4. Judgment Currency. The obligation of the Guarantor hereunder to make
payments in any currency of payment and account shall not be discharged or
satisfied by any tender or recovery pursuant to any judgment expressed in or
converted into any other currency except to the extent to which such tender or
recovery shall result in the effective receipt by the Bank of the full amount of
such currency of payment and account so payable and accordingly the obligation
of the Guarantor shall be enforceable as an alternative or additional cause of
action for the purpose of recovery in the other currency of the amount (if any)
by which such effective receipt shall fall short of the full amount of such
currency of payment and account so payable and shall not be affected by any
judgment being obtained for any other sums due hereunder.
5. Guarantee by Subsidiaries. Guarantor agrees to cause any subsidiary of
the Guarantor hereafter formed which owns assets with a value equal to ten
percent (10%) or more of the value of the consolidated assets of the Guarantor
and its subsidiaries, to guarantee the Obligations to the same extent guaranteed
by Guarantor hereunder.
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6. General. No amendment or waiver of any provision of this Guarantee nor
consent to any departure by the Guarantor therefrom shall be effective unless it
shall be in writing and signed by the Bank, and then only for the specific
purpose for which it is given. This Guarantee shall be binding upon the
Guarantor's successors in interest.
7. Governing Law & Jurisdiction. This Guarantee shall be governed and
construed in accordance with the law of the State of Oregon and for the purpose
of any legal actions or proceedings brought by the Bank in respect of the same,
the Guarantor hereby irrevocably submits to the non-exclusive jurisdiction of
any state or Federal court of such State and acknowledges their competence and
the convenience and propriety of the venue and agrees to be bound by any
judgment thereof and not to seek, and hereby waives, any review of such
judgments by the courts of any other jurisdiction. IN ANY ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT, THE GUARANTOR WAIVES ANY AND ALL RIGHTS TO TRIAL
THEREOF BY JURY.
8. Oregon Legal Notice. UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND
COMMITMENTS MADE BY US AFTER OCTOBER 3, 1989, CONCERNING LOANS AND OTHER CREDIT
EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED
SOLELY BY THE BORROWER'S RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND
BE SIGNED BY US TO BE ENFORCEABLE. THE TERM "US" MEANS THE BANK.
IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be duly
executed and delivered by its duly authorized officers on the 2nd day of July,
1998.
PENFORD CORPORATION
By: /s/ XXXXXX X. BREED
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Name: XXXXXX X. BREED
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Title: CORPORATE DIRECTOR OF FINANCE
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