GUARANTY
September 19, 1997
The CIT Group/Credit Finance, Inc.
00 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Re: Xxxxxxx Xxxxxxxxxxxxxxx, Inc., Xxxx Dermatologics,
Inc., Xxxxxxx Pharmaceuticals (Canada), Inc. and
Xxxxxxx Pharmaceuticals Overseas, Ltd. (individually
or collectively, "Borrower")
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Ladies and Gentlemen:
Reference is made to the financing arrangements between The
CIT Group/Credit Finance, Inc. ("Lender") and Borrower, pursuant
to which Lender may extend loans, advances and other financial
accommodations to Borrower as set forth in the Loan and Security
Agreement between Borrower and Lender and various other
agreements, documents and instruments now or at any time executed
and/or delivered in connection therewith or otherwise related
thereto, including, but not limited to, this Guaranty (all of the
foregoing, as the same now exist or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced,
being collectively referred to herein as the "Financing
Agreements"). Capitalized terms used in this Guaranty without
definition shall have the respective meanings ascribed to them in
the Financing Agreements.
Due to the close business and financial relationships
between Borrower and the undersigned ("Guarantor"), in
consideration of the benefits which will accrue
to Guarantor, and as an inducement for and in consideration of
Lender at any time providing or extending loans, advances and
other financial accommodations to Borrower, pursuant to the
Financing Agreement, Guarantor hereby, irrevocably and
unconditionally, (a) guarantees and agrees to be liable for the
prompt indefeasible and full payment and performance of all
revolving loans, term loans, letters of credit, bankers'
acceptances, merchandise purchase guaranties or other guaranties
or indemnities for Borrower's account and all other obligations,
liabilities and indebtedness of every kind, nature or description
owing by Borrower to Lender and/or its affiliates, including
principal, interest, charges, fees and expenses, arising under
any of the Financing Agreements, whether now existing or
hereafter arising, whether arising during or after the initial or
any renewal term of the Financing Agreements or after the
commencement of any case with respect to Borrower under the
United States Bankruptcy Code or any similar statute, whether
direct or indirect, absolute or contingent, joint or several, due
or not due, primary or secondary, liquidated or unliquidated,
secured or unsecured, original, renewed or extended, and whether
arising directly or howsoever acquired by Xxxxxx including from
any other entity outright, conditionally or as collateral
security, by assignment, merger with any other entity,
participations or interests of Lender in the obligations of
Borrower to others, assumption, operation of law, subrogation or
otherwise and (b) agrees to pay to Lender on demand the amount of
all expenses (including, without limitation, reasonable
attorneys' fees and legal expenses) incurred by Lender in
connection with the preparation, execution, delivery, recording,
administration, collection, liquidation, enforcement and defense
of Borrower's obligations, liabilities and indebtedness as
aforesaid to Lender, Xxxxxx's rights in any collateral or under
this Guaranty and all other Financing Agreements or in any way
involving claims by or against Lender directly or indirectly
arising out of or related to the relationship between Borrower
and Lender, Guarantor and Lender, or any other Obligor (as
hereinafter defined) and Lender, whether such expenses are
incurred before, during or after the initial or any renewal term
of the Financing Agreements or after the commencement of any case
with respect to Borrower, Guarantor or any other Obligor under
the United States Bankruptcy Code or any similar statute (all of
which being collectively referred to herein as the
"Obligations").
Notwithstanding anything contained in this Guaranty to the
contrary, the liability of Guarantor hereunder shall, in no
event, exceed the sum of Two Hundred Fifty Thousand and No/100ths
Dollars ($250,000.00) plus
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(i) interest thereon from and after the date of demand for
payment hereunder at the per annum rate of two and one-quarter
per cent (2 1/4%) per annum plus Prime Rate (as defined in the
Financing Agreements) and (ii) Guarantor Enforcement Expenses
incurred by Lender to enforce this Guaranty against the Guarantor
(all of which are being collectively referred to herein as the
"Guaranteed Obligations"). It is expressly understood that the
Obligations of Borrower under the Financing Agreements may at any
time or from time to time be an amount greater than the
Guaranteed Obligations without affecting the validity of this
Guaranty. It is specifically understood and agreed, moreover,
that if and to the extent the Obligations at any time or from
time to time exceed the Guaranteed Obligations, any payments made
upon the Obligations shall be first considered payments upon the
amount of the Obligations to Lender which exceed the amount
guaranteed and shall affect neither the liability of the
Guarantor to Lender for the amount guaranteed hereunder, nor the
validity of this Guaranty. Furthermore, Xxxxxx agrees to cancel
and terminate this Guaranty at such a time as each of the
following events shall have occurred and be continuing:
(a) Borrower shall have had Net Availability (as defined in
the Financing Agreements) of Three Hundred Thousand
Dollars ($300,000.00) or more for three continuous
months;
(b) None of Borrowers' trade payables is more than ninety
(90) days past due, except for trade payables Borrower
is disputing in good faith and proceeding diligently to
resolve; and
(c) Xxxxxx shall have received Xxxxxxxx's audited year end
financial statements for the immediately preceding
fiscal year which display a pre-tax income determined
according to generally accepted accounting principles
consistently applied of at least One Million Dollars
($1,000,000.00), excluding, however, from such
determination of pre-tax income any unusual or
extraordinary items.
Guarantor further agrees to pay all costs and expenses
("Guarantor Enforcement Expenses") including, without limitation,
all court costs and reasonable attorneys' and paralegals' fees,
and expenses paid or incurred by Lender in endeavoring to collect
all or any portion of the Guaranteed Obligations from, or in
prosecuting any action against Guarantor.
Notice of acceptance of this Guaranty, the making of loans,
advances and extensions of credit or other financial
accommodations to, and the incurring of any expenses by or in
respect of, Borrower, and presentment, demand, protest, notice of
protest, notice of nonpayment or default and all other notices to
which Borrower or Guarantor are or may be entitled are hereby
waived. Guarantor also waives notice of, and hereby consents to,
(i) any amendment, modification, supplement, renewal, restatement
or extensions of time of payment of or increase or decrease in
the amount of any of the Obligations or to the Financing
Agreements and any collateral, and the guarantee made herein
shall apply to the Obligations as so amended, modified,
supplemented, renewed, restated or extended, increased or
decreased, (ii) the taking, exchange, surrender and releasing of
collateral or guarantees now or at any time held by or available
to Lender for the obligations of Borrower or any other party at
any time liable for or in respect of the Guaranteed Obligations
(individually and collectively, the "Obligors"), (iii) the
exercise of, or refraining from the exercise of any rights
against Borrower, Guarantor or any other Obligor or any
collateral, and (iv) the settlement, compromise or release of, or
the waiver of any default with respect to, any Obligations.
Guarantor agrees that the amount of the Guaranteed Obligations
shall not be diminished and the liability of Guarantor hereunder
shall not be otherwise impaired or affected by any of the
foregoing.
This Guaranty is a guaranty of payment and not of
collection. Xxxxxxxxx agrees that Xxxxxx need not attempt to
collect any Obligations from Borrower or any other Obligor or to
realize upon any collateral, but except as otherwise provided
herein, may require Guarantor to make immediate payment of the
Guaranteed Obligations to Lender when due or at any time
thereafter. Lender may apply any amounts received in respect of
the Obligations to any of the Obligations, in whole or in part
(including reasonable attorneys' fees and legal expenses incurred
by Lender with respect thereto or otherwise chargeable to
Borrower or Guarantor) and in such order as Lender may elect,
whether or not then due.
No invalidity, irregularity or unenforceability of all or
any part of the Obligations shall affect, impair or be a defense
to this Guaranty, nor shall any other circumstance which might
otherwise constitute a defense available to, or legal or
equitable discharge of Borrower in respect of any of the
Obligations in respect of this Guaranty, affect, impair or be a
defense to this Guaranty. Without limitation of the foregoing,
the liability of Guarantor hereunder shall not be discharged or
impaired in any respect by reason of any failure by Lender to
perfect or continue perfection of any lien or security interest
in any collateral for the Obligations or any delay by Lender in
perfecting any such lien or security interest. As to interest,
fees and expenses, whether arising before or after the
commencement of any case with respect to Borrower under the
United States Bankruptcy Code or any similar statue, Guarantor
shall be liable therefor, even if Borrower's liability for such
amounts does not, or ceases to, exist by operation of law.
This Guaranty is absolute, unconditional and continuing.
Payment by Guarantor shall be made to Lender at its office from
time to time on demand as Guaranteed Obligations become due. One
or more successive or concurrent actions may be brought hereon
against Guarantor either in the same action in which Borrower or
any other Obligors are sued or in separate actions.
Payment of all amounts now or hereafter owed to Guarantor by
Borrower or any other Obligor is hereby subordinated in right of
payment to the indefeasible payment in full to Lender of the
Obligations and is hereby assigned to Lender as security
therefor. Until the Obligations shall have been irrevocably
paid in full, Guarantor shall have no right of subrogation and
Guarantor hereby waives any right to enforce any remedy which
Lender now has or may hereafter have against the Borrower, any
endorser or any other guarantor of all of any part of the
Obligations, and Guarantor hereby waives any benefit of, and any
right to participate in, any security or collateral given to
Lender to secure payment of the Obligations or any other
liability of Borrower to Lender. If any amount is paid to
Guarantor on account of such right of subrogation while any of
the Obligations remain unpaid, such amount will be paid forthwith
by Guarantor to Lender to be credited against the Obligations,
whether matured or unmatured. Guarantor further agrees that any
and all claims of the Guarantor against Borrower, any endorser or
any other guarantor of all or any part of the Obligations, or
against any of their respective properties, whether arising by
reason of any payment by Guarantor to Lender pursuant to the
provisions hereof, or otherwise, shall be subordinate and subject
in right of payment to the prior payment, in full, of all
principal and interest, all reasonable costs of collection
(including attorneys' and paralegals' fees) and any other
liabilities or obligations owing to Lender by Borrower which may
arise either with respect to or on any note, instrument,
document, item, agreement or other writing heretofore, now or
hereafter delivered to Lender.
Guarantor waives (i) all defenses based on suretyship or
impairment of collateral, and (ii) any defenses which Borrower
may assert with respect to the Obligations, including but not
limited to, failure of consideration, breach of warranty, fraud,
statute of frauds, bankruptcy, lack of legal capacity, statute of
limitations, lender liability, accord and satisfaction, and
usury.
All sums at any time owed by Xxxxxx to Guarantor or to the
credit of Guarantor and any property of Guarantor on which Lender
at any time has a lien or security interest or of which Lender at
any time has possession, shall secure payment and performance of
all Guaranteed Obligations and all other obligations of Guarantor
to Lender however arising.
In case proceedings being instituted by or against Borrower
or Guarantor or any other Obligor, in bankruptcy or insolvency,
or for reorganization, arrangement, receivership, or the like, or
if Borrower or Guarantor or any other Obligor calls a meeting of
creditors or makes any assignment for the benefit of creditors,
or upon the occurrence of any event which constitutes a default
or event of default under the Financing Agreements, the liability
of Guarantor for the entire Guaranteed Obligations shall mature,
even if the liability of Borrower or any other Obligor therefor
does not.
Guarantor shall continue to be liable hereunder until one of
Xxxxxx's officers actually receives a written termination notice
by certified mail; but the giving of such notice shall not
relieve Guarantor from liability for any Guaranteed Obligations
incurred before termination or for posttermination collection
expenses and interest pertaining to any Guaranteed Obligations
arising before termination.
Xxxxxxxxx agrees that this Guaranty shall remain in full
force and effect or be reinstated, as the case may be, if at any
time payment of any of the Guaranteed Obligations is rescinded or
otherwise restored by Lender to Borrower or to any other person
who made such payment, or to the creditors or creditors'
representative of Borrower or such other person.
Xxxxxx's books and records showing the account between
Xxxxxx and Borrower shall be admissible in evidence in any action
or proceeding as prima facie proof of the items therein set
forth, and any written statements rendered by Xxxxxx to Borrower,
to the extent to which no written objection is made within sixty
(60) days after the date thereof, shall be considered correct and
be binding on Guarantor as an account stated for purposes of this
Guaranty.
Guarantor covenants with Xxxxxx that he shall deliver to
Lender his current personal financial statement in form
acceptable to Lender once each year on or before March 31st with
respect to Guarantor's financial condition as of the end of the
immediately prior calendar year, and after default within ten
(10) days after demand by Xxxxxx.
No delay on Xxxxxx's part in exercising any rights hereunder
or failure to exercise the same shall constitute a waiver of such
rights. No notice to, or demand on, Guarantor shall be deemed to
be a waiver of the obligation of Guarantor to take further action
without notice or demand as provided herein. No waiver of any of
Xxxxxx's rights hereunder, and no modification or amendment of
this Guaranty, shall be deemed to be made by Lender unless the
same shall be in writing, duly signed on Xxxxxx's behalf, and
each such waiver, if any, shall apply only with respect to the
specific instance involved and shall in no way impair Lender's
rights or the obligations of Guarantor to Lender in any other
respect at any other time.
This Guaranty is binding upon Guarantor, its successors and
assigns and shall benefit Lender and its successors, endorses,
transferees and assigns. If the undersigned are more than one,
this Guaranty shall be binding jointly and severally upon them
and their respective successors and assigns and the term
"Guarantor" wherever used herein shall mean all the undersigned
and any one or more of them and their successors and assigns.
All references to Xxxxxxxx and Xxxxxx herein shall include their
respective successors and assigns. This instrument shall be
governed by, and construed and interpreted in accordance with,
the laws of the State in which the office of Lender set forth
above is located.
Guarantor waives all rights to interpose any claims,
deductions, setoffs or counterclaims of any kind, nature or
description in any action or proceeding instituted by Lender with
respect to this Guaranty or any matter arising here from or
relating hereto, except compulsory counterclaims.
Guarantor hereby irrevocably submits and consents and to the
nonexclusive jurisdiction of the State and Federal Courts located
in the State in which the office of Lender designated above is
located with respect to any action or proceeding arising out of
this Guaranty or any matter arising here from or relating hereto.
Any such action or proceeding commenced by Guarantor against
Lender will be litigated only in a Federal Court located in the
district, or a State Court in New York, New York or in the State
and County, in which the office of Lender set forth above is
located and Guarantor waives any objection based on forum non-
conveniens and any objection to venue in connection therewith.
In any such action or proceeding, Guarantor waives personal
service of the summons and complaint or other process and papers
therein and agrees that any process or notice of motion or other
application to any of said Courts or a judge thereof, or any
notice in connection with any proceedings hereunder may be served
(i) inside or outside such State by registered or certified
mail, return receipt requested, addressed to Guarantor at the
address set forth below or which Guarantor has previously advised
Xxxxxx in writing and as indicated in the records of Lender and
service or notice so served shall be deemed complete five (5)
days after the same shall have been posted or (ii) in such other
manner as may be permissible under the rules of said Courts.
XXXXXXXXX AND XXXXXX XXXXX ALL RIGHTS TO TRIAL BY JURY IN
ANY ACTION OR PROCEEDING INSTITUTED BY EITHER OF THEM AGAINST THE
OTHER WHICH PERTAINS DIRECTLY OR INDIRECTLY TO THIS GUARANTY, ANY
ALLEGED TORTIOUS CONDUCT BY GUARANTOR OR LENDER, OR, IN ANY WAY,
DIRECTLY OR INDIRECTLY, ARISING OUT OF OR RELATED TO THE
RELATIONSHIP BETWEEN GUARANTOR AND LENDER OR BORROWER AND LENDER.
IN NO EVENT WILL LENDER BE LIABLE FOR LOST PROFITS OR OTHER
SPECIAL OR CONSEQUENTIAL DAMAGES.
IN WITNESS WHEREOF, Xxxxxxxxx has executed and delivered
this Guaranty as of the day and year first above written.
____________________________________
Xxxxxx Xxxxxxxx
Address: _________________________
_________________________
STATE OF ILLINOIS )
) SS.
COUNTY OF COOK )
On this 19th day of September, 1997, before me personally
came Xxxxxx Xxxxxxxx, to me known to be the individual described
in and who executed the foregoing instrument.
Notary Public
