GUARANTY
Exhibit 10.3
GUARANTY (the “Guaranty”), dated as of February 11, 2008, by Echo Therapeutics, Inc., a
Delaware corporation with an address of 00 Xxxxx Xxxxxxx, Xxxxxxxx, XX 00000 (the “Guarantor”), in
favor of the Purchasers identified in the Purchase Agreement (as defined below) (collectively,
“Secured Parties”).
WHEREAS, the Guarantor is a subsidiary or affiliate of Echo Therapeutics, Inc. (the
“Borrower”); and
WHEREAS, in accordance with a certain senior convertible note, dated as of the date hereof
(the “Notes”), executed by the Borrower, and certain related agreements between the Borrower and
the Secured Parties (collectively, as amended, restated, or extended from time to time, the “Loan
Documents”), the Secured Parties have agreed to loan to the Borrower up to Two
Million, Two Hundred Ninety Two Thousand, Four Hundred Fifty Nine Dollars ($2,292,459) (the
“Loan”); and
WHEREAS, the Secured Parties’ willingness to extend the loan is conditioned upon the Guarantor
executing and delivering this Guaranty; and
WHEREAS, the aforesaid Loan will be beneficial to the Guarantor inasmuch as the proceeds of
the Loan to the Borrower will indirectly benefit the Guarantor;
NOW, THEREFORE, in order to induce the Secured Parties to make the Loan to the Borrower
pursuant to the Loan Documents, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the Guarantor, the Guarantor hereby agrees as
follows:
1. Guaranty of Payment and Performance. The Guarantor hereby guarantees to the Secured
Parties the full and punctual payment when due (whether at maturity, by acceleration or otherwise),
and the performance, of all liabilities, agreements and other obligations of the Borrower to the
Secured Parties, whether direct or indirect, absolute or contingent, due or to become due, secured
or unsecured, now existing or hereafter arising or acquired (whether by way of discount, letter of
credit, lease, loan, overdraft or otherwise), including without limitation all obligations under
the Loan Documents (collectively, the “Obligations”). This Guaranty is an absolute, unconditional
and continuing guaranty of the full and punctual payment and performance of the Obligations and not
of their collectibility only and is in no way conditioned upon any requirement that the Secured
Parties first attempt to collect any of the Obligations from the Borrower or resort to any security
or other means of obtaining their payment. Should the Borrower default in the payment or
performance of any of the Obligations, the obligations of the Guarantor hereunder shall become
immediately due and payable to the Secured Parties, without demand or notice of any nature, all of
which are expressly waived by the Guarantor. Payments by the Guarantor hereunder may be required
by the Secured Parties on any number of occasions.
2. Guarantor’s Agreement to Pay. The Guarantor further agrees, as the principal obligor and
not as a guarantor only, to pay to the Secured Parties, on demand, all reasonable costs and
expenses (including court costs and reasonable legal expenses) incurred or expended by the
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Secured Parties in connection with enforcement of this Guaranty, together with interest on amounts
recoverable under this Guaranty from the time such amounts become due under this Guaranty until
payment, at the rate per annum equal to the default rate set forth in the Notes; provided that if
such interest exceeds the maximum amount permitted to be paid under applicable law, then such
interest shall be reduced to such maximum permitted amount.
3. Unlimited Guaranty. The liability of the Guarantor hereunder shall be unlimited to the
extent of the Obligations and the other obligations of the Guarantor hereunder (including, without
limitation, under Section 2 above).
4. Waivers by Guarantor; Secured Party’s Freedom to Act. The Guarantor agrees that the
Obligations will be paid and performed strictly in accordance with their respective terms
regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting
any of such terms or the rights of the Secured Parties with respect thereto. The Guarantor waives
presentment, demand, protest, notice of acceptance, notice of Obligations incurred and all other
notices of any kind, all defenses which may be available to Borrower by virtue of any valuation,
stay, moratorium law or other similar law now or hereafter in effect, any right to require the
marshalling of assets of the Borrower, and all suretyship defenses generally. Without limiting the
generality of the foregoing, the Guarantor agrees to the provisions of any instrument evidencing,
securing or otherwise executed in connection with any Obligation and agrees that the obligations of
the Guarantor hereunder shall not be released or discharged, in whole or in part, or otherwise
affected by (i) the failure of any Secured Party to assert any claim or demand or to enforce any
right or remedy against the Borrower; (ii) any extensions or renewals of any Obligation; (iii) any
rescissions, waivers, amendments or modifications of any of the terms or provisions of any
agreement evidencing, securing or otherwise executed in connection with any Obligation (provided,
that, the obligations of the Guarantor hereunder shall be appropriately modified to reflect any
amendment or modification of the Obligations); (iv) the substitution or release of any entity
primarily or secondarily liable for any Obligation; (v) the adequacy of any rights any Secured
Party may have against any collateral or other means of obtaining repayment of the Obligations;
(vi) the impairment of any collateral securing the Obligations, including without limitation the
failure to perfect or preserve any rights a Secured Party might have in such collateral or the
substitution, exchange, surrender, release, loss or destruction of any such collateral; or
(vii) any other act or omission which might in any manner or to any extent vary the risk of the
Guarantor or otherwise operate as a release or discharge of any other guarantor, all of which may
be done without notice to the Guarantor.
5. Unenforceability of Obligations Against Borrower. If for any reason the Borrower has no
legal existence or is under no legal obligation to discharge any of the Obligations, or if any of
the Obligations have become irrecoverable from the Borrower by operation of law or for any other
reason, this Guaranty shall nevertheless be binding on the Guarantor to the same extent as if the
Guarantor at all times had been the principal obligor on all such Obligations. In the event that
acceleration of the time for payment of the Obligations is stayed upon the insolvency, bankruptcy
or reorganization of the Borrower, or for any other reason, all such amounts otherwise subject to
acceleration under the terms of any agreement evidencing, securing or otherwise executed in
connection with any Obligation shall be immediately due and payable by the Guarantor.
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6. Subrogation; Subordination. Until the payment and performance in full of all Obligations,
the Guarantor shall not exercise any rights against the Borrower arising as a result of payment by
any Guarantor hereunder, by way of subrogation or otherwise, and will not prove any claim in
competition with any Secured Party or its affiliates in respect of any payment hereunder in
bankruptcy or insolvency proceedings of any nature; the Guarantor will not claim any set-off or
counterclaim against the Borrower in respect of any liability of the Guarantor to the Borrower; and
the Guarantor waives any benefit of and any right to participate in any collateral which may be
held by any Secured Party. The payment of any amounts due with respect to any indebtedness of the
Borrower now or hereafter held by the Guarantor is hereby subordinated to the prior payment in full
of the Obligations. The Guarantor agrees that after the occurrence of any default in the payment
or performance of the Obligations, after the expiration of any applicable cure period, it will not
demand, xxx for or otherwise attempt to collect after such time any such indebtedness of the
Borrower to the Guarantor until the Obligations shall have been paid in full. If, notwithstanding
the foregoing sentence, the Guarantor shall collect, enforce or receive any amounts in respect of
such indebtedness, such amounts shall be collected, enforced and received by the Guarantor as
trustee for the Secured Parties and be paid over to the Secured Parties on account of the
Obligations without affecting in any manner the liability of the Guarantor under the other
provisions of this Guaranty.
7. Further Assurances. The Guarantor agrees to do all such things and execute all such
documents, as a Secured Party may consider reasonably necessary or desirable to give full effect to
this Guaranty and to perfect and preserve the rights and powers of a Secured Party hereunder.
8. Termination; Reinstatement. This Guaranty shall remain in full force and effect until the
earlier of: (i) the Obligations are paid in full or otherwise satisfied (including by the
conversion in full of the Notes) (other than contingent indemnity obligations), and not subject to
any recapture or preference in bankruptcy or similar proceedings, and the Secured Parties have no
further commitment to extent credit to the Borrower or (ii) the Secured Parties are given written
notice of the Guarantor’s intention to discontinue this Guaranty, notwithstanding any intermediate
or temporary payment or settlement of the whole or any part of the Obligations. No such notice
under (ii) above shall be effective against a Secured Party unless received and acknowledged by an
officer of a Secured Party at its head office. Without limiting the generality of the foregoing
sentence, the Guarantor will be released from all liability hereunder concurrently with either the
repayment of in full of all amounts owed under the Notes or the conversion in full of the Notes.
No notice under (ii) above shall affect any rights of a Secured Party or of any affiliate hereunder
with respect to any Obligations incurred prior to such notice. This Guaranty shall continue to be
effective or be reinstated, notwithstanding any notice or termination, if at any time any payment
made or value received with respect to an Obligation is rescinded or must otherwise be returned by
a Secured Party upon the insolvency, bankruptcy or reorganization of the Borrower, or otherwise,
all as though such payment had not been made or value received.
9. Successors and Assigns. This Guaranty shall be jointly and severally binding upon the
Guarantor, its successors and assigns, and shall inure to the benefit of and be enforceable by the
Secured Parties and their successors, transferees and assigns. Without limiting the generality of
the foregoing sentence, the Secured Parties may assign or otherwise transfer any agreement or any
note held by it evidencing, securing or otherwise executed in connection with the
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Obligations, or sell participations in any interest therein, to any other person or entity, and
such other person or entity shall thereupon become vested, to the extent set forth in the agreement
evidencing such assignment, transfer or participation, with all the rights in respect thereof
granted to the Secured Parties herein.
10. Amendments and Waivers. No amendment or waiver of any provision of this Guaranty nor
consent to any departure by the Guarantor therefrom shall be effective unless the same shall be in
writing and signed by the Secured Parties holding a majority of the principal amount of the Notes.
No failure on the part of a Secured Party to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or the exercise of any other right.
11. Notices. All notices and other communications called for hereunder shall be made in
writing and, unless otherwise specifically provided herein, shall be deemed to have been duly made
or given when delivered by hand or mailed first class mail postage prepaid or, in the case of
telegraphic or telexed notice, when transmitted, answer back received, addressed as follows: if to
the Guarantor, at the address set forth above, and if to a Secured Party, at the address set forth
in the Purchase Agreement (as defined in the Notes).
12. Governing Law; Consent to Jurisdiction. This Guaranty shall be governed by, and construed
in accordance with, the laws of the State of New York without reference to its conflicts of laws
provisions. The Guarantor agrees that any suit for the enforcement of this Guaranty may be brought
in the courts of the State of New York or any federal court sitting therein and consents to the
non-exclusive jurisdiction of such court and to service of process in any such suit being made upon
the Guarantor by mail at the address specified in Section 11 hereof. The Guarantor hereby waives
any objection that it may now or hereafter have to the venue of any such suit or any such court or
that such suit was brought in an inconvenient court. Any enforcement action relating to this
Guarantee may be brought by motion for summary judgment in lieu of a complaint pursuant to Section
3213 of the New York Civil Practice Law and Rules.
13. WAIVER OF JURY TRIAL. THE GUARANTOR AND, BY THEIR ACCEPTANCE OF THIS GUARANTY, EACH
SECURED PARTY, HEREBY WAIVES TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN
CONNECTION WITH, OR ARISING OUT OF: (A) THIS GUARANTY OR ANY OTHER INSTRUMENT OR DOCUMENT DELIVERED
IN CONNECTION WITH THE OBLIGATIONS; (B) THE VALIDITY, INTERPRETATION, COLLECTION OR ENFORCEMENT
THEREOF; OR (C) ANY OTHER CLAIM OR DISPUTE HOWEVER ARISING BETWEEN THE GUARANTOR AND ANY SECURED
PARTY.
14. Certain References. All pronouns and any variations thereof shall be deemed to refer to
the masculine, feminine, neuter, singular or plural, as the identity of the person, persons, entity
or entities may require. The terms “herein”, “hereof” or “hereunder” or similar terms used in this
Guaranty refer to this entire Guaranty and not only to the particular provision in which the term
is used.
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15. Miscellaneous. This Guaranty, together with the Security Agreement, delivered by the
Guarantor as of the date hereof to the Secured Parties, constitutes the entire agreement of the
Guarantor with respect to the matters set forth herein. The rights and remedies herein provided
are cumulative and not exclusive of any remedies provided by law or any other agreement, and this
Guaranty shall be in addition to any other guaranty of the Obligations. The invalidity or
unenforceability of any one or more sections of this Guaranty shall not affect the validity or
enforceability of its remaining provisions. Captions are for the ease of reference only and shall
not affect the meaning of the relevant provisions. The meanings of all defined terms used in this
Guaranty shall be equally applicable to the singular and plural, masculine, feminine and generic
forms of the terms defined.
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IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be executed and delivered as of the
date appearing in the introductory paragraph of this Guaranty.
| ECHO THERAPEUTICS, INC. | ||||
By:
|
/s/ Xxxxx X. Xxxxxxxx | |||
| Name: Xxxxx X. Xxxxxxxx | ||||
| Title: Chief Executive Officer | ||||
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