UNCONDITIONAL GUARANTY
March ___, 2002
Xxxxxx Tree Construction, Inc. (which
may become known as Nutritionary, Inc.)
0000 Xxxxxxxx Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000
(Individually and collectively, "Borrower")
American Health and Diet Centers, Inc.
000 Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
(Individually and collectively, "Guarantor")
Xxxxx Xxxxxxx
0 Xxxxxxxxx Xxxxx
Xxxx Xxxxxxxx, Xxx Xxxxxx 00000
(Hereinafter referred to as "XXXXXXX")
To induce XXXXXXX to make, extend or renew loans, advances, credit, or other
financial accommodations to or for the benefit of Borrower, and in consideration
of loans, advances, credit, or other financial accommodations made, extended or
renewed to or for the benefit of Borrower, Guarantor hereby absolutely,
irrevocably and unconditionally guarantees to XXXXXXX and his successors,
assigns and affiliates the timely payment and performance of all liabilities and
obligations of Borrower to XXXXXXX and his affiliates, including, but not
limited to, all obligations under any notes, loan agreements, security
agreements, letters of credit, swap agreements (as defined in 11 U.S. Code ss.
101), instruments, accounts receivable, contracts, drafts, leases, chattel
paper, indemnities, acceptances, repurchase agreements, overdrafts, and the
Transaction Documents defined below, however and whenever incurred or evidenced,
whether primary, secondary, direct, indirect, absolute, contingent, due or to
become due, now existing or hereafter contracted or acquired, and all
modifications, extensions and renewals thereof, (collectively, the "Guaranteed
Obligations"). This Guaranty is being delivered pursuant to that certain Stock
Purchase Agreement dated as of March __, 2002 among Xxxxxxxx, XXXXXXX and Xxxxxx
Xxxxx (as the same may be amended from time to time, the "Stock Purchase
Agreement"), the terms of which are incorporated herein. Terms used but not
otherwise defined herein shall have the meanings ascribed to such terms in the
Stock Purchase Agreement.
Guarantor further covenants and agrees:
GUARANTOR'S LIABILITY. This Guaranty is a continuing and unconditional guaranty
of payment and performance and not of collection. The parties to this Guaranty
are jointly and severally obligated hereunder. This Guaranty does not impose any
obligation on XXXXXXX to extend or continue to extend credit or otherwise deal
with Borrower at any subsequent time. This Guaranty shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
the Guaranteed Obligations is rescinded, avoided or for any other reason must be
returned by XXXXXXX, and the returned payment shall remain payable as part of
the Guaranteed Obligations, all as though such payment had not been made. Except
to the extent the provisions of this Guaranty give XXXXXXX additional rights,
this Guaranty shall not be deemed to supersede or replace any other guaranties
given to XXXXXXX by Guarantor or any other obligations of Guarantor to XXXXXXX;
and the obligations guaranteed hereby shall be in addition to any other
obligations guaranteed by Guarantor pursuant to any other agreement of guaranty
given to XXXXXXX and other guaranties of the Guaranteed Obligations and/or any
other obligations of Guarantor to XXXXXXX.
CONSENT TO MODIFICATIONS. Xxxxxxxxx consents and agrees that XXXXXXX may from
time to time, in his sole discretion, without affecting, impairing, lessening or
releasing the obligations of Guarantor
hereunder: (a) extend or modify the time, manner, place or terms of payment or
performance and/or otherwise change or modify the credit terms of the Guaranteed
Obligations or the Transaction Documents; (b) increase, renew, or enter into a
novation of the Guaranteed Obligations; (c) waive or consent to the departure
from terms of the Guaranteed Obligations; (d) permit any change in the business
or other dealings and relations of Borrower or any other guarantor with XXXXXXX;
(e) proceed against, exchange, release, realize upon, or otherwise deal with in
any manner any collateral that is or may be held by XXXXXXX in connection with
the Guaranteed Obligations or any liabilities or obligations of Guarantor; and
(f) proceed against, settle, release, or compromise with Borrower, any insurance
carrier, or any other person or entity liable as to any part of the Guaranteed
Obligations, and/or subordinate the payment of any part of the Guaranteed
Obligations to the payment of any other obligations, which may at any time be
due or owing to XXXXXXX; all in such manner and upon such terms as XXXXXXX may
xxxx appropriate, and without notice to or further consent from Guarantor. No
invalidity, irregularity, discharge or unenforceability of, or action or
omission by XXXXXXX relating to any part of the Guaranteed Obligations or any
security therefor shall affect or impair this Guaranty.
WAIVERS AND ACKNOWLEDGMENTS. Guarantor waives and releases the following rights,
demands, and defenses Guarantor may have with respect to XXXXXXX and collection
of the Guaranteed Obligations: (a) promptness and diligence in collection of any
of the Guaranteed Obligations from Borrower or any other person liable thereon,
and in foreclosure of any security interest and sale of any property serving as
collateral for the Guaranteed Obligations; (b) any law or statute that requires
that XXXXXXX make demand upon, assert claims against, or collect from Borrower
or other persons or entities, foreclose any security interest, sell collateral,
exhaust any remedies, or take any other action against Borrower or other persons
or entities prior to making demand upon, collecting from or taking action
against Guarantor with respect to the Guaranteed Obligations, including any such
rights Guarantor might otherwise have had under any applicable law; (c) any law
or statute that requires that Borrower or any other person be joined in,
notified of or made part of any action against Guarantor; (d) that XXXXXXX
preserve, insure or perfect any security interest in collateral or sell or
dispose of collateral in a particular manner or at a particular time, provided
that XXXXXXX'X obligation to dispose of Collateral in a commercially reasonable
manner is not waived hereby; (e) notice of extensions, modifications, renewals,
or novations of the Guaranteed Obligations, of any new transactions or other
relationships between XXXXXXX, Borrower and/or any guarantor, and of changes in
the financial condition of, ownership of, or business structure of Borrower or
any other guarantor; (f) presentment, protest, notice of dishonor, notice of
default, demand for payment, notice of intention to accelerate maturity, notice
of acceleration of maturity, notice of sale, and all other notices of any kind
whatsoever; (g) the right to assert against XXXXXXX any defense (legal or
equitable), set-off, counterclaim, or claim that Guarantor may have at any time
against Borrower or any other party liable to XXXXXXX; (h) all defenses relating
to invalidity, insufficiency, unenforceability, enforcement, release or
impairment of XXXXXXX'X xxxx on any collateral, or the Transaction Documents, or
of any other guaranties held by XXXXXXX; (i) any claim or defense that
acceleration of maturity of the Guaranteed Obligations is stayed against
Guarantor because of the stay of assertion or of acceleration of claims against
any other person or entity for any reason including the bankruptcy or insolvency
of that person or entity; and (j) the benefit of any exemption claimed by
Guarantor. Guarantor acknowledges and represents that Guarantor has relied upon
Guarantor's own due diligence in making an independent appraisal of Borrower,
Xxxxxxxx's business affairs and financial condition, and any collateral;
Guarantor will continue to be responsible for making an independent appraisal of
such matters; and Guarantor has not relied upon XXXXXXX for information
regarding Borrower or any collateral.
FINANCIAL CONDITION. Guarantor warrants, represents and covenants to XXXXXXX
that on the date hereof: (a) the fair saleable value of Guarantor's assets
exceeds its liabilities, Guarantor is meeting its current liabilities as they
mature, and Guarantor is and shall remain solvent; (b) all financial statements
of Guarantor furnished to XXXXXXX are correct and accurately reflect the
financial condition of Guarantor as of the respective dates thereof; (c) since
the date of such financial statements, there has not occurred a material adverse
change in the financial condition of Guarantor; and (d) there are not now
pending any court or administrative proceedings or undischarged judgments
against Guarantor, no federal or state tax
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liens have been filed or threatened against Guarantor, and Guarantor is not in
default or claimed default under any agreement.
INTEREST AND APPLICATION OF PAYMENTS. Regardless of any other provision of this
Guaranty or other Transaction Documents, if for any reason the effective
interest on any of the Guaranteed Obligations should exceed the maximum lawful
interest, the effective interest shall be deemed reduced to and shall be such
maximum lawful interest, and any sums of interest which have been collected in
excess of such maximum lawful interest shall be applied as a credit against the
unpaid principal balance of the Guaranteed Obligations. Monies received from any
source by XXXXXXX for application toward payment of the Guaranteed Obligations
may be applied to such Guaranteed Obligations in any manner or order deemed
appropriate by XXXXXXX.
DEFAULT. If any of the following events occur, an event of default ("Event of
Default") under this Guaranty shall exist: (a) failure of timely payment or
performance of the Guaranteed Obligations or a default under any Transaction
Document and the lapse of any notice or cure period provided under such
Guaranteed Obligations with respect to such default; (b) a breach of any
agreement or representation contained or referred to in the Guaranty, or any of
the Transaction Documents, or contained in any other contract or agreement of
Guarantor with XXXXXXX or his affiliates, whether now existing or hereafter
arising; (c) at XXXXXXX'x option, any default in payment or performance of any
obligation under any of the Transaction Documents, the Manufacturing Agreement,
or any other loans, contracts or agreements of Guarantor, any Subsidiary or
Affiliate of Guarantor, any general partner of or the holder(s) of the majority
ownership interests of Guarantor with XXXXXXX or his affiliates and/or any
default under the guaranties of Guarantor in favor of Xxxxxx Xxxxx and/or any
other documents executed and/or delivered in connection therewith ("Affiliate"
shall have the meaning as defined in 11 U.S.C. ss. 101, except that the term
"Guarantor" shall be substituted for the term "Debtor" therein; "Subsidiary"
shall mean any business in which Guarantor holds, directly or indirectly, a
controlling interest); (d) the death of, appointment of a guardian for,
dissolution of, termination of existence of, loss of good standing status by,
appointment of a receiver for, assignment for the benefit of creditors of, or
the commencement of any insolvency or bankruptcy proceeding by or against
Guarantor, its Subsidiaries or Affiliates, if any, or any general partner of or
the holder(s) of the majority ownership interests of Guarantor; (e) without
prior written consent of XXXXXXX, (i) a material alteration in the kind or type
of Guarantor's business or that of Guarantor's Subsidiaries or Affiliates, if
any; (ii) the sale of substantially all of the business or assets of Guarantor,
any of Guarantor's Subsidiaries or Affiliates or any guarantor, or a material
portion (10% or more) of such business or assets if such a sale is outside the
ordinary course of business of Guarantor, or any of Guarantor's Subsidiaries or
Affiliates or any guarantor; (iii) any transfer of any of the outstanding stock
or voting power of Guarantor or any transfer of more than 50% of the outstanding
stock or voting power of Borrower, or any other Affiliate or Subsidiary in a
single transaction or a series of transactions; (iv) the acquisition of
substantially all of the business or assets or more than 50% of the outstanding
stock or voting power of any other entity; or (v) should any of Guarantor or any
of Guarantor's Subsidiaries or Affiliates or any guarantor enter into any merger
or consolidation; (f) any representation or warranty given by Guarantor in this
Guaranty, the Transaction Documents or any documents executed or provided in
connection therewith or otherwise furnished by Guarantor proves materially false
or, if of a continuing nature becomes materially false; and/or (g) a failure to
comply with any of the terms of this Guaranty or any other Transaction Document.
If an Event of Default occurs, the Guaranteed Obligations shall be due
immediately and payable without notice, and, XXXXXXX may exercise any rights and
remedies as provided in this Guaranty and other Transaction Documents, or as
provided at law or equity. Guarantor shall pay interest on the Guaranteed
Obligations from such Event of Default at the highest rate of interest charged
on any of the Guaranteed Obligations.
ATTORNEYS' FEES AND OTHER COSTS OF COLLECTION. Guarantor shall pay all of
XXXXXXX'X reasonable expenses incurred to enforce or collect any of the
Guaranteed Obligations, including, without limitation, reasonable arbitration,
paralegals', attorneys' and experts' fees and expenses, whether incurred
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without the commencement of a suit, in any suit, arbitration, or administrative
proceeding, or in any appellate or bankruptcy proceeding.
SUBORDINATION OF OTHER DEBTS. Guarantor agrees: (a) to subordinate the
obligations now or hereafter owed by Borrower to Guarantor ("Subordinated Debt")
to any and all obligations of Borrower to XXXXXXX now or hereafter existing
while this Guaranty is in effect; (b) Guarantor will either place a legend
indicating such subordination on every note, ledger page or other document
evidencing any part of the Subordinated Debt or deliver such documents to
XXXXXXX; and (c) except as permitted by this paragraph, Guarantor will not
request or accept payment of or any security for any part of the Subordinated
Debt, and any proceeds of the Subordinated Debt paid to Guarantor, through error
or otherwise, shall immediately be forwarded to XXXXXXX by Guarantor, properly
endorsed to the order of XXXXXXX, to apply to the Guaranteed Obligations.
MISCELLANEOUS. ASSIGNMENT. This Guaranty and other Transaction Documents shall
inure to the benefit of and be binding upon the parties and their respective
heirs, legal representatives, successors and assigns. XXXXXXX'x interests in and
rights under this Guaranty and other Transaction Documents are freely
assignable, in whole or in part, by XXXXXXX. Guarantor shall not assign its
rights and interest hereunder without the prior written consent of XXXXXXX, and
any attempt by Guarantor to assign without XXXXXXX'x prior written consent is
null and void. Any assignment shall not release Guarantor from the Guaranteed
Obligations. APPLICABLE LAW; CONFLICT BETWEEN DOCUMENTS. This Guaranty shall be
governed by and construed under the laws of the state of New Jersey without
regard to that state's conflict of laws principles. JURISDICTION. Guarantor
irrevocably agrees to non-exclusive personal jurisdiction in the state of New
Jersey. SEVERABILITY. If any provision of this Guaranty or of the other
Transaction Documents shall be prohibited or invalid under applicable law, such
provision shall be ineffective but only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Guaranty or other Transaction Documents. NOTICES.
Any notices to Guarantor shall be sufficiently given if in writing and mailed or
delivered to Guarantor's address shown above or such other address as provided
hereunder, and to XXXXXXX, if in writing and mailed or delivered to XXXXXXX'x
office address shown above or such other address as XXXXXXX may specify in
writing from time to time. In the event that Guarantor changes Guarantor's
address at any time prior to the date the Guaranteed Obligations are paid in
full, Guarantor agrees to promptly give written notice of said change of address
to XXXXXXX by registered or certified mail, return receipt requested, all
charges prepaid. PLURAL; CAPTIONS. All references in the Transaction Documents
to borrower, guarantor, person, document or other nouns of reference mean both
the singular and plural form, as the case may be, and the term "person" shall
mean any individual person or entity. The captions contained in the Transaction
Documents are inserted for convenience only and shall not affect the meaning or
interpretation of the Transaction Documents. AMENDMENTS, WAIVERS AND REMEDIES.
No waivers, amendments or modifications of this Guaranty and other Transaction
Documents shall be valid unless in writing and signed by XXXXXXX. No waiver by
FRANKEL of any Event of Default shall operate as a waiver of any other Event of
Default or the same Event of Default on a future occasion. Neither the failure
nor any delay on the part of XXXXXXX in exercising any right, power, or
privilege granted pursuant to this Guaranty and other Transaction Documents
shall operate as a waiver thereof, nor shall a single or partial exercise
thereof preclude any other or further exercise or the exercise of any other
right, power or privilege. All remedies available to XXXXXXX with respect to
this Guaranty and other Transaction Documents and remedies available at law or
in equity shall be cumulative and may be pursued concurrently or successively.
TRANSACTION DOCUMENTS. The term "Transaction Documents" refers to this Guaranty,
the $1,500,000 note dated of even date herewith given by Borrower in favor of
XXXXXXX, the security agreements dated of even date herewith given by Xxxxxxxx
and Guarantor to XXXXXXX, the pledge agreement dated of even date herewith given
by Borrower to XXXXXXX, the Stock Purchase Agreement, the reimbursement and
indemnification agreement dated of even date herewith given by Xxxxxxxx and
Guarantor in favor of XXXXXXX, and all documents executed in connection with or
related to such documents or the Guaranteed Obligations and may include, without
limitation, other guaranty agreements, security agreements, instruments,
financing statements, mortgages, deeds of trust, deeds to
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secure debt, letters of credit and any amendments or supplements (excluding swap
agreements as defined in 11 U.S. Code ss. 101).
IN WITNESS WHEREOF, Guarantor, on the day and year first written above, has
caused this Unconditional Guaranty to be executed under seal.
AMERICAN HEALTH AND DIET CENTERS, INC.
Taxpayer Identification Number: ___________________
By: (SEAL)
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