Exhibit 10.46
GUARANTY AGREEMENT
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This Guaranty Agreement (this "Guaranty") is made as of this 21st day of
August, 2000 by STAR TOBACCO AND PHARMACEUTICALS, INC., a corporation organized
under the laws of the Commonwealth of Virginia, the "Guarantor," for the benefit
of XXXXX & XXXXXXXXXX TOBACCO CORPORATION, a corporation organized under the
laws of the State of Delaware, the "Lender".
RECITALS:
Guarantor, Lender and Star Scientific, Inc., a Delaware corporation
("Star") have entered into a Restated Loan Agreement of like date with this
Guaranty, whereby Lender will make a $4,950,000 loan to Guarantor upon the terms
and conditions set forth therein (the "Restated Loan Agreement").
The execution and delivery by the Guarantor of this Guaranty is a material
condition precedent to Lender's obligations to enter into the Restated Loan
Agreement and to make the Credit Facility C Advance. Guarantor will derive
substantial benefit from the Credit Facility C Advance and from Credit Facility
B, if it is advanced, and Guarantor has derived substantial benefit from Credit
Facility A and Credit Facility D. Guarantor desires to induce Lender to enter
into the Restated Loan Agreement, and as a wholly-owned subsidiary of Star it is
in Guarantor's interest to guarantee the direct and primary Obligations of Star
to Lender arising under the Restated Loan Agreement.
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt of which is hereby acknowledged, Guarantor
agrees as follows:
1. Guarantor does hereby absolutely, unconditionally and irrevocably
guarantee to Lender the due and punctual payment in full (and not merely the
collectibility) and performance when due of the primary and direct Obligations
of Star, in each case when due and payable, whether at the stated maturity or by
acceleration or otherwise, all according to the terms of Note A, Note B and Note
D (collectively the "Notes") and the other Loan Documents. Notwithstanding any
contrary provision contained in this Guaranty, Guarantor and, by its acceptance
hereof, Lender hereby confirms that it is the intention of such parties that the
obligations of Guarantor under this Guaranty shall not constitute a fraudulent
transfer or obligation for the purposes of the Bankruptcy Code and applicable
state law, including any such state law based on the Uniform Fraudulent Transfer
Act or the Uniform Fraudulent Conveyance Act. To effectuate the foregoing
intention, Lender irrevocably agrees that the aggregate liability of Guarantor
under this Guaranty shall in no event exceed, at any time, the lesser of (a) the
Obligations and (b) the greater of (i) the aggregate amount from time to time
received (directly or indirectly) by or for the account of Guarantor from the
proceeds of the loans, advances or other financial accommodations from time to
time made by Lender under the Loan Documents to or for the account of Star minus
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the aggregate amount of all prior payments made by Guarantor pursuant to this
Guaranty and (ii) Maximum Amount (as hereinafter defined). As used herein, the
term "Maximum Amount" shall be a sum equal to [***] the Net Asset Value (as
hereinafter defined) of Guarantor on the
Note: Redacted portions have been marked with [***]. The redacted portions are
subject to a request for confidential treatment that has been filed with the
Securities and Exchange Commission.
date hereof. As used herein, the term "Net Asset Value" means (x) the fair
saleable value of the assets of Guarantor as of the date hereof minus (y) the
total liabilities of Guarantor (including contingent liabilities, but excluding
liabilities of Guarantor under the Loan Documents executed by Guarantor) as of
the date hereof. Guarantor's liability hereunder only relates to the Obligations
of Star arising under the Loan Documents.
2. Guarantor expressly agrees that Lender may, in its sole and absolute
discretion, without notice to or further assent of Guarantor and without in any
way releasing, affecting or impairing the obligations and liabilities of
Guarantor hereunder:
(a) waive compliance with, or any defaults under, or grant any other
indulgences with respect to the Notes and any of the other Loan Documents;
(b) with any necessary agreement of any other party to any such
agreement, modify, amend, or change any provisions of the Notes or any of the
other Loan Documents;
(c) grant extensions or renewals of, or with respect to the Notes and
the Loan Documents and effect any release, compromise or settlement in
connection with the Notes and the Loan Documents;
(d) agree with Star to the substitution, exchange, release or other
disposition of all or any part of the security and other property covered by the
Loan Documents or any instrument delivered pursuant thereto;
(e) deal in all respects with Star or the then-owner of the security
or any other party to the Loan Documents as if this Guaranty Agreement were not
in effect.
The obligations of the Guarantor under this Guaranty shall be unconditional,
irrespective of the genuineness, validity, regularity or enforceability of the
Notes and the Loan Documents and any security given therefor or in connection
therewith or any other circumstances which might otherwise constitute a legal or
equitable discharge of a surety or guarantor. The Guarantor further agrees that
the disability, bankruptcy, insolvency or dissolution of Star hereafter existing
or occurring (even though rendering the Notes void or unenforceable or
uncollectible as against Star) shall not impair, affect, or release the
liability of Guarantor hereunder.
4. The liability of Guarantor under this Guaranty shall be primary,
direct, immediate and not conditional or contingent upon pursuit by Lender of
any remedies it may have against Star, its successors and assigns, with respect
to the Notes and the Loan Documents whether pursuant to the terms thereof or by
law. Guarantor waives presentment, protest, demand, notice of dishonor, and all
other notices (other than the notices required under the terms of the Notes) and
all defenses and pleas on the ground of any extension of the times of payment or
the due date of the Notes (other than extensions granted in writing by Lender).
Guarantor hereby authorizes Lender, without notice or demand and without
affecting Guarantor's liability hereunder, from time to time to: (a) change or
extend the time, or manner, or payment of the Notes; (b) change any of the
terms, covenants, conditions or provisions of the Notes and/or other Loan
Documents; (c) transfer, assign or negotiate the
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Notes and transfer or assign the Loan Documents; (d) take and hold additional
security for the payment of the Notes or the performance of the Loan Documents,
and exchange, enforce, waive and release any such security; (e) release all or
part of the Collateral whether in accordance with any partial release provision
to which Lender may agree or otherwise as Lender may determine in its
discretion; (f) apply the Collateral to the payment of the Notes and direct the
order or manner of sale thereof as Lender may determine in its discretion; (g)
proceed against Star or Guarantor on the Notes without first foreclosing under
any of the Security Documents or proceeding under any other Loan Documents; (h)
accept a conveyance of all or part of the Collateral in partial satisfaction of
the indebtedness due under the Notes and proceed against Star or Guarantor for
the balance then due thereunder; (i) accept one or more substitute properties to
replace any portion of the Collateral which might, at Lender's option, be
released from the Loan Documents; (j) discharge or release any parties liable
under the Loan Documents; (k) accept or make compositions or other arrangements
or file or refrain from filing a claim in any bankruptcy proceeding of or
affecting Star or Guarantor or the property of any of them; or (l) credit
payments in such manner and order of priority to principal, interest or other
obligations as Lender may determine in its discretion.
By executing this Guaranty, Guarantor, freely, irrevocably and
unconditionally:
(a) agrees that Guarantor will be fully liable under this Guaranty
even though Lender may foreclose judicially or nonjudicially against the
any portion of the Collateral;
(b) waives presentment, demand, protest, notice of protest, notice of
dishonor and notice of non-payment and notice of acceptance of this
Guaranty;
(c) waives the right, if any, to the benefit of, or to direct the
application of, any security held by Lender, including, without limitation,
the Collateral described in the various Loan Documents; and, until all the
indebtedness and obligations, payment and performance of which are
guaranteed by this Guaranty, have been paid and performed in full, any
right to enforce any remedy which Lender now has or hereafter may have
against Star, and any right to participate in any security now or hereafter
held by Lender;
(d) waives the right to require Lender to proceed against Star, to
proceed against the Collateral, or to proceed against any other security
now or hereafter held by Lender or to pursue any other remedy in Lender's
power;
(e) waives any other defenses arising out of the absence, impairment
or loss of any right or reimbursement, contribution, indemnification or
subrogation or other right or remedy of Guarantor against Star or against
any security resulting from the exercise or election of any remedy or
remedies by Lender, including, without limitation, the exercise of the
power of sale under the Star, and any defense arising by reason of any
disability or other defense of Star or by reason of the cessation, from any
cause, of the liability of Star;
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(f) waives the benefit of or right to assert any statute of
limitations affecting the liability of Guarantor under this Guaranty or the
enforcement thereof to the extent permitted by law; any part payment by
Star or other circumstance which operates to toll any statue of limitations
as to Star shall also operate to toll the statue of limitations as to
Guarantor;
(g) waives the suretyship and other rights, benefits and defenses, if
any, otherwise available to Guarantor under Virginia law, any rights,
benefits or defenses resulting from alteration, impairment or suspension in
any respect or by any means of any of Star's obligations under the Loan
Documents or any of Lender's rights or remedies under the Loan Documents
without Guarantor's prior written consent; and
(h) acknowledges and agrees that Lender is relying on the above
waivers in entering into the Restated Loan Agreement and making the
additional loans provided for therein, and that these waivers are a
material part of the consideration which Lender is receiving for making the
Loan.
5. Any indebtedness of Star now or later held by Guarantor is hereby
subordinated to the indebtedness of Star to Lender; and any such indebtedness of
Star to Guarantor, if Lender so requests, shall be collected, enforced, received
and held by Guarantor as trustee for Lender on account of the indebtedness of
Star to Lender and without affecting the liability of Guarantor under this
Guaranty.
6. It is not necessary for Lender to inquire into the powers of Star or of
the officers, partners, joint venturers or agents, if any, acting or purporting
to act on Star's behalf, and any indebtedness or other obligation made or
created in reliance upon the professed exercise of such powers shall be
guarantied under this Guaranty.
7. Guarantor agrees to pay all attorneys' fees and all other costs and
expenses which may be incurred by Lender in the enforcement of this Guaranty on
and after the occurrence and during the continuance of an Event of Default,
including, without limitation, those incurred in connection with any case,
action, proceeding, claim or otherwise under Chapters 7, 11 or 13 of Title 11 of
the United States Code or under any successor statute thereto ("Bankruptcy
Code") or any successor statute or statutes thereto whether the same be
commenced or filed by Star, Guarantor or any other person or entity.
8. As used in this Guaranty, the term "Guarantor" shall also include any
estate created by the commencement of a case under the Bankruptcy Code or under
any other insolvency, bankruptcy reorganization or liquidation proceeding, or
whether acting by any trustee under the Bankruptcy Code, liquidator,
sequestrator or receiver of any person or entity comprising any Guarantor or of
the property of any such person or entity or acting by similar person or entity
duly appointed pursuant to any law generally governing any insolvency,
bankruptcy, reorganization, liquidation, receivership or like proceeding.
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9. This Guaranty shall follow the Notes and, if any of the Notes is sold,
transferred, assigned or conveyed by Lender as permitted under the terms of the
Loan Documents and the Notes, this Guaranty may be likewise sold, transferred,
assigned or conveyed by Lender to the successor holder of the Notes and, in such
event, the successor holder of this Guaranty may enforce this Guaranty just as
if the holder had been originally named as Lender under this Guaranty.
10. If all or any portion of the obligations guaranteed under this Guaranty
are paid or performed, the obligations of Guarantors under this Guaranty shall
continue and shall remain in full force and effect in the event that all or any
part of such payment or performance is avoided or recovered directly or
indirectly from Lender as a preference, fraudulent transfer or otherwise under
the Bankruptcy Code or any other federal and state laws, irrespective of (a) any
notice of revocation given by Guarantor before such avoidance or recover, and
(b) full payment and performance of all of the indebtedness and obligations
evidenced and secured by the Loan Documents.
11. No term or provision of this Guaranty may be changed, waived, revoked
or amended without Lender's prior written consent. Should any term or provision
of this Guaranty be determined by a court of competent jurisdiction to be
unenforceable, all other terms and provisions of this Guaranty shall remain
effective.
12. This Guaranty embodies the entire agreement of Guarantor as to the
matters set forth in this Guaranty, and supersedes all prior and contemporaneous
agreements (whether oral or written) as to the matters set forth in this
Guaranty. No course of prior dealing between Guarantor and Lender, no usage or
trade, and no parole or extrinsic evidence of any nature shall be used to
supplement, modify or vary any of the terms hereof. There are no conditions to
the full effectiveness of this Guaranty.
13. Anything herein or in the Notes or any of the Loan Documents to
the contrary notwithstanding, Lender at its option, may as to the Guarantor
accelerate the indebtedness evidenced and secured by the Notes and the Loan
Documents in the event of: (i) the making by Guarantor of an assignment for the
benefit of creditors; or (ii) the appointment of a trustee or receiver for
Guarantor, or for any property of Guarantor; or (iii) the commencement of any
proceeding by or against Guarantor under any bankruptcy, reorganization,
arrangement, insolvency, readjustment, receivership or like law or statute if
such proceedings shall remain undismissed for a period of sixty (60) days from
date of commencement of same.
14. All notices, requests, demands and other communications required
or permitted under this Guaranty shall be in writing (which shall include notice
by telex or facsimile transmission) and shall be deemed to have been duly made
and received when personally served, or when delivered by United Parcel Service
or a similar overnight courier service, expenses prepaid, or, if sent by telex,
graphic scanning or other facsimile communications equipment, delivered by such
equipment, addressed as set forth below:
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(a) If to Guarantor:
Star Tobacco & Pharmaceuticals, Inc.
000 Xxxxxxx Xxx
Xxxxxxx, Xxxxxxxx
Attention: Xxxxxx X. Xxxxxxxx
Telecopier No.: (000) 000-0000
with a copy (which shall not constitute notice) to:
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
0000 Xxxxxxxxxxxx Xxxxxx, X.X., 00/xx/ Xx.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxx X. Xxxxxx, Esq.
Telecopier No.: (000) 000-0000
and
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: W. Xxxxxx Xxxxx, Esq.
Telecopier No.: (000) 000-0000
(b) If to Lender:
Xxxxx & Xxxxxxxxxx Tobacco Corporation
0000 Xxxxx & Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Telecopier No.: (000) 000-0000
With a copy (which shall not constitute notice) to:
Wiley, Rein & Fielding
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx X. Xxxxxxx
Telecopier No.: (000) 000-0000
Any party may alter the address to which communications are to be sent by giving
notice of such change of address in conformity with the provisions of this
Section providing for the giving of notice.
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15. All rights and remedies afforded to Lender or any subsequent holder or
assignee of the Notes or any of the Loan Documents by reason of this Guaranty or
any Loan Document are separate and cumulative and the exercise of one shall not
in any way limit or prejudice the exercise of any other such rights or remedies.
No delay or omission by Lender or any subsequent holder or assignee of the Notes
with respect to the Notes or any Loan Document in exercising any such right or
remedy shall operate as a waiver thereof. No waiver of any rights and remedies
hereunder and no modification or amendment hereof shall be deemed made by Lender
unless in writing and duly signed by Lender.
16. Anything contained herein to the contrary notwithstanding, the
liability of Guarantor and all of the duties and obligations of Guarantor under
this Guaranty shall cease and terminate and be of no further force and effect
upon full payment of all of the obligations of Star pursuant to the Notes and
the other Loan Documents.
17. The Guarantor hereby acknowledges, represents and warrants that:
(a) it has as reviewed, understood and approved all the terms and
conditions of the Loan Documents and has been advised by competent and
independent legal counsel of Guarantor's own choosing in connection with fully
understanding the Loan Documents and this Guaranty, including, but not limited
to, all of Guarantor's obligations hereunder and all of the waivers by Guarantor
hereunder;
(b) it has been advised by counsel in the negotiation, execution and
delivery of this Guaranty;
(c) Lender has no fiduciary relationship with or duty to Guarantor
arising out of or in connection with this Guaranty or any of the other Loan
Documents; and
(d) no joint venture is created hereby or by any of the other Loan
Documents or otherwise exists by virtue of the transactions contemplated hereby
or thereby among the Lender, Guarantor, or any other party hereto or thereto.
18. This Guaranty shall inure to the benefit of and be enforceable by
Lender, its successors and permitted assigns, and shall be binding upon and
enforceable against Guarantor and his estate.
19. This Guaranty shall be construed under the laws of the Commonwealth of
Virginia, without regard to its principles of conflicts of laws.
20. Initially capitalized terms used herein and not defined herein shall
have the meaning given to them in the Restated Loan Agreement. Guarantor
acknowledges receipt of a copy of all of the Loan Documents.
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21. Waiver of Jury Trial.
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THE GUARANTOR HEREBY WAIVES TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH
RESPECT TO THIS GUARANTY AGREEMENT OR ANY OTHER AGREEMENTS EXECUTED IN
CONNECTION HEREWITH. NEITHER THE GUARANTOR NOR ANY ASSIGNEE OF OR SUCCESSOR TO
THE GUARANTOR, SHALL SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM,
OR ANY OTHER LITIGATION OR PROCEDURE BASED UPON, OR ARISING OUT OF, THIS
GUARANTY AGREEMENT OR ANY OF THE OTHER DOCUMENTS, INSTRUMENTS AND AGREEMENTS
ENTERED INTO IN CONNECTION HEREWITH OR THE DEALINGS OR THE RELATIONSHIP BETWEEN
OR AMONG THE PARTIES HERETO, OR ANY OF THEM.
[SIGNATURE ON FOLLOWING PAGE]
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SIGNATURE PAGE FOR GUARANTY AGREEMENT
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IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the date first
above written.
GUARANTOR:
STAR TOBACCO AND PHARMACEUTICALS, INC.
______________________ By:_____________________________________
Witness President
ACCEPTED:
XXXXX & XXXXXXXXXX TOBACCO CORPORATION
By: ______________________________
Name:
Title:
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