PROCEEDS GUARANTEE AGREEMENT
PROCEEDS GUARANTEE AGREEMENT (the "Guarantee") dated December 20, 1998 by
and between Kimeragen, Inc., a Delaware corporation ("Seller"), and AgriBioTech,
Inc., a Nevada corporation ("ABT" or the "Buyer").
W I T N E S S E T H:
WHEREAS, Buyer has agreed to license from Seller certain intellectual
property rights (the "Assets") pursuant to a License Agreement dated December
20, 1998 (the "License Agreement") by and between Seller and Buyer and purchase
shares of Seller's Common Stock pursuant to a Stock Purchase Agreement (the
"Stock Purchase Agreement") dated December 20, 1998 (the "Signing Date") by and
between Seller and ABT;
WHEREAS, pursuant to Section 1B of the Stock Purchase Agreement and
Sections 3.1.1 and 3.1.4 of the License Agreement, ABT will transfer to the
Seller (or Seller's broker-dealer) in the aggregate, Two Hundred Twenty Five
Thousand (225,000) shares of ABT Common Stock, par value $0.01 per share ("ABT
Common Stock"), at the Closing (as defined in the Stock Purchase Agreement), and
subject to adjustments as provided herein, and may transfer additional shares of
ABT Common Stock (collectively, the "ABT Shares") as set forth herein;
WHEREAS, pursuant to Sections 2F and 3E of the Stock Purchase Agreement,
Seller and Buyer have entered into a Lock-Up Agreement (the "Lock-Up") pursuant
to which Seller has agreed that it shall not sell, transfer or otherwise dispose
of the ABT Shares except as specified in the Lock-Up; and
WHEREAS, pursuant to Section 2D of the Stock Purchase Agreement, ABT has
guaranteed Seller $4,000,000 in cash by guaranteeing the Guaranteed Net Proceeds
(as defined below) from the sale of the ABT Shares when sold pursuant to the
Lock-Up.
NOW, THEREFORE, in consideration of the foregoing and the terms, conditions
and mutual covenants appearing in this Guarantee, the parties hereto hereby
agree as follows:
Section 1. The ABT Shares, if sold in accordance with the terms of the Lock-Up,
shall have Guaranteed Net Proceeds (defined as gross sales price less customary
sales commissions using a resale prospectus and any applicable stock transfer
and sales taxes) in order that Seller shall have received no less than
$3,000,000 in cash proceeds from the sale of ABT Shares as of the date 90 days
after the Signing and no less than $4,000,000 as of the date 120 days after the
Signing.
Section 2. (a) Interim determinations of the Guaranteed Net Proceeds shall be
made on each of February 26,1999, March 8, 1999, 90 days and 120 days after the
Signing Date. The final determination of the Guaranteed Net Proceeds shall be
made at date no later than 127 days after the Closing Date or within 7 days of
when all of the ABT Shares have been sold pursuant to the Lock-Up.
(b) On or about February 26, 1999, ABT and Seller will review Seller's
schedule of all sales of ABT Shares prior to that date. To the extent
that the aggregate value (determined by multiplying the last sale
price of ABT Common Stock as quoted on the Nasdaq National Market, the
"Fair Market Value Per Share," times the number of remaining ABT
shares) of the remaining ABT Shares held by Seller combined with net
cash proceeds received from sales prior to that date by Seller are
less than $4,000,000, ABT shall, at its sole option, issue additional
ABT Shares (valued at the Fair Market Value) and/or deposit cash into
an escrow account in an amount equal to such difference, sufficient to
ensure that Seller shall have received no less than $3,000,000 in cash
proceeds from sales of ABT Shares as of the date 90 days after the
Signing Date and no less than $4,000,000 as of the date 120 days after
the Signing Date.
(c) On March 8, 1999, ABT shall provide Seller in writing with its
determination made in accordance with subsection (b) above, however,
brought current through March 5, 1999 (ABT and Seller will review an
updated schedule of all sales of ABT shares), and on such date ABT
shall deposit the cash into an escrow account and/or deliver
additional ABT Shares to Seller's broker-dealer to ensure that Seller
shall receive $3,000,000 in cash proceeds from sales of ABT Shares as
of the date 90 days after the Signing Date and no less than $4,000,000
as of the date 120 days after the Signing Date. To the extent that
Seller has received net cash proceeds of less than $4,000,000 by 120
days after the Signing Date, ABT shall pay to Seller cash for any such
deficit and Seller shall deliver any remaining ABT Shares to ABT, if
any, at a date no later than one week after such 120 day period.
(d) To the extent that Seller Seller retains any ABT Shares after
receiving $4,000,000 in cash proceeds from sales of ABT Shares, the
Seller shall deliver such shares back to ABT and such excess cash over
$4,000,000, if any, at a date no later than one week after receiving
ne cash proceeds of $4,000,000.
(e) In the event that Seller offers, sells, transfers or otherwise
disposes of the ABT Shares in violation of the Lock-Up, without the
prior written consent of ABT, (i) the Guarantee shall not apply to the
Guaranteed Net Proceeds received from such sales and the Guarantee
shall from that time be null and void, and (ii) all proceeds in excess
of $17.78 per share from the sale of all ABT Shares, regardless of
whether such proceeds derive from sales made prior to, concurrent with
or subsequent to such event of default, shall be paid to ABT as
liquidated damages.
2
(f) In the event ABT delivers to Seller the certificate set forth in
Section 4.5(iii)(c) of the Stock Purchase Agreement, ABT shall pay to
Seller within 2 business days of such delivery the amount equal to the
difference of $4,000,000 and the net cash proceeds received by Seller
as of that date. Seller shall assign to ABT, within 2 business days of
such delivery, the remaining unsold ABT Shares or, at ABT's option,
shall sell the remaining ABT shares at the rates specified in the
Lock-Up and deliver to ABT the net proceeds in excess of the
$4,000,000 due to Seller.
(g) In the event that by January 8, 1999, Buyer does not have an effective
Registration Statement (as such term is defined in Section 36 of the
Stock Purchase Agreement) allowing public resale of the ABT Shares,
Buyer shall pay to Seller by January 12, 1999, $500,000 in cash which
shall be deemed to be an advance of $500,000 of the Guaranteed Net
Proceeds.
Section 3. Subject to Section 6 hereunder, this Agreement shall inure to the
benefit of and be binding upon ABT and its successors and assigns, and upon the
Seller and its successors and assigns.
Section 4. Should any part of this Guarantee, for any reason whatsoever, be
declared invalid, illegal, or incapable of being enforced in whole or in part,
such decision shall not affect the validity of any remaining portion, which
remaining portion shall remain in full force and effect as if this Guarantee had
been executed with the invalid portion thereof eliminated, and it is hereby
declared the intention of the parties hereto that they would have executed the
remaining portion of this Guarantee without including therein any portion which
may for any reason be declared invalid.
Section 5. This Guarantee shall be construed and enforced in accordance with the
laws of the State of Nevada applicable to agreements made and to be performed in
such State without application of the principles of conflicts of laws of such
State.
Section 6. This Guarantee and all rights hereunder are personal to the parties
and shall not be assignable, and any purported assignment in violation thereof
shall be null and void.
Section 7. (a) All notices, requests, consents, and demands by the parties
hereunder shall be delivered by hand, recognized national overnight courier or
by deposit in the United States Mail, postage prepaid, by registered or
certified mail, return receipt requested, addressed to the party to be notified
at the address set forth below:
(i) if to the Seller to:
Kimeragen, Inc.
000 Xxxxxxxx Xxx
Xxxxxxx, XX 00000
Attention: President
Telecopier No.: (000) 000-0000
3
with a copy to:
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
0000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
Telecopier No.: (000) 000-0000
(ii) if to ABT to:
AgriBioTech, Inc.
000 Xxxxxxxxx Xxxx Xxxxx
Xxxxxxxxx, Xxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, CEO
Telecopier No.: (000) 000-0000
with a copy to:
Snow Xxxxxx Xxxxxx P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopier No.: (000) 000-0000
(b) Notices given by mail shall be deemed effective on the earlier of the
date shown on the proof of receipt of such mail or, unless the
recipient proves that the notice was received later or not received,
three (3) days after the date of mailing thereof. Other notices shall
be deemed given on the date of receipt. Any party hereto may change
the address specified herein by written notice to the other parties
hereto.
Section 8. The failure of either party to insist upon the strict performance of
any of the terms, conditions and provisions of this Guarantee shall not be
construed as a waiver or relinquishment of future compliance therewith, and said
terms, conditions and provisions shall remain in full force and effect. No
waiver of any term or any condition of this Guarantee on the part of either
party shall be effective for any purpose whatsoever unless such waiver is in
writing and signed by such party.
4
IN WITNESS WHEREOF, the parties hereto have executed this Guarantee as of
the day and year first written above.
KIMERAGEN, INC.
By: /s/ Xxxxxx Xxxxxxxxxxxxx, M.D.
-----------------------------------
Name: Xxxxxx Xxxxxxxxxxxxx, M.D.
Title: President
AGRIBIOTECH, INC.
By: /s/ Xxxxxx X. Xxxx
-----------------------------------
Name: Xxxxxx X. Xxxx
Title: Vice President
