1
EXHIBIT 10.62
XXXXXX GUARANTY
WHEREAS, XXXXXX DRUG CO., INC., a New York corporation ("Borrower"),
entered into a Loan Agreement dated as of March 29, 2000 (the "Loan Agreement";
terms used herein and not otherwise defined shall have the meanings given to
them in the Loan Agreement), with Xxxxxx Pharmaceuticals, Inc., a Nevada
Corporation ("Lender");
WHEREAS, pursuant to and in accordance with the terms of the Loan
Agreement, Lender has made certain financial accommodations to Borrower and
Borrower will continue to receive certain benefits from such accommodations;
WHEREAS, pursuant to and in accordance with the terms of the Loan
Agreement, Lender requires that certain of Borrower's subsidiaries, Xxxxxx
Pharmaceutical, Inc., a Delaware corporation ("HP, Inc.") and Houba, Inc., an
Indiana corporation (together with HP, Inc., the "Guarantors") execute and
deliver this Guaranty (the "Guaranty") to Lender as a condition to the
effectiveness of the Loan Agreement;
WHEREAS, the extension of credit by Lender to Borrower is necessary and
desirable to the conduct and operation of the business of the Guarantors and
will inure to their financial benefit; and
WHEREAS, the Guarantors are willing to guarantee the prompt payment and
performance by Borrower of the Obligations on the terms set forth in the
Guaranty.
NOW, THEREFORE, for value received and in consideration of the
financial accommodations provided by Lender to Borrower under the Loan Agreement
and other transactions contemplated thereby, Guarantors unconditionally
guarantee (i) the full and prompt payment and performance when due, whether at
maturity or earlier, by reason of acceleration or otherwise, and at all times
thereafter, of all liabilities of Borrower to Lender and (ii) the prompt, full
and faithful discharge by Borrower of each and every term, condition, agreement,
representation and warranty now or hereafter made by Borrower to Lender under
the Loan Agreement or any document or instrument delivered by Borrower to the
Purchasers in connection therewith or pursuant thereto (which, together with the
liabilities described in clause (i) hereof, are collectively referred to herein
as the "Borrower's Liabilities"). The Guarantors further agree to pay all
reasonable out-of-pocket costs and expenses, including, without limitation, all
court costs and reasonable attorneys' and paralegals' fees paid or incurred by
Lender, in endeavoring to collect all or any part of Borrower's Liabilities
from, or in prosecuting any action against the Guarantors of all or any part of
Borrower's Liabilities. All amounts payable by the Guarantors under this
Guaranty shall be payable pursuant to the terms of the Loan Agreement upon
demand by Lender.
Notwithstanding any provision of this Guaranty to the contrary, it is
intended that this Guaranty, and any liens and security interests granted by the
Guarantors to secure this Guaranty, not constitute a Fraudulent Conveyance (as
defined below). Consequently, the Guarantors agree that if this Guaranty, or any
liens or security interests securing this Guaranty, would, but for the
application of this sentence, constitute a Fraudulent Conveyance, this Guaranty
and each such lien and security interest shall be valid and enforceable only to
the maximum extent that would not cause this Guaranty or such lien or security
interest to constitute a Fraudulent Conveyance, and this Guaranty shall
automatically be deemed to have been amended accordingly at all relevant times.
For purposes hereof, "Fraudulent Conveyance" means a fraudulent conveyance under
Section 548 of the
2
"Bankruptcy Code" (as hereinafter defined) or a fraudulent conveyance or
fraudulent transfer under the provisions of any applicable fraudulent conveyance
or fraudulent transfer law or similar law of any state, nation or other
governmental unit, as in effect from time to time.
The Guarantors hereby agree that, except as hereinafter provided, and
to the extent permitted by applicable law, its obligations under this Guaranty
shall be unconditional, irrespective of (i) the validity or enforceability of
Borrower's Liabilities or any part thereof, or of any promissory note or other
document evidencing all or any part of Borrower's Liabilities, (ii) the absence
of any attempt to collect Borrower's Liabilities from Borrower or any other
Guarantors or other action to enforce the same, (iii) the waiver or consent by
any Lender with respect to any provision of any instrument evidencing Borrower's
Liabilities, or any part thereof, or any other agreement heretofore, now or
hereafter executed by Borrower and delivered to Lender, (iv) failure by any
Lender to take any steps to perfect and maintain its security interest in, or to
preserve its rights to, any security or collateral for Borrower's Liabilities,
(v) the institution of any proceeding under Chapter 11 of Title 11 of the United
States Code (11 U.S.C. Section 101 et seq.), as amended (the "Bankruptcy Code"),
or any similar proceeding, by or against Borrower, or any Lender's election in
any such proceeding of the application of Section 1111(b)(2) of the Bankruptcy
Code, (vi) any borrowing or grant of a security interest by Borrower as
debtor-in-possession, under Section 364 of the Bankruptcy Code, (vii) the
disallowance, under Section 502 of the Bankruptcy Code, of all or any portion of
Lender' claim(s) for repayment of Borrower's Liabilities, or (viii) any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of the Guarantors.
The Guarantors hereby waive diligence, presentment, demand of payment,
filing of claims with a court in the event of receivership or bankruptcy of
Borrower, protest or notice with respect to Borrower's Liabilities and all
demands whatsoever, and covenants that this Guaranty will not be discharged,
except by complete performance of the obligations and liabilities contained
herein. Upon the occurrence and during the continuance of an Event of Default
under the Loan Agreement, Lender may, at its sole election, proceed directly and
at once, without notice, against the Guarantors to collect and recover the full
amount or any portion of Borrower's Liabilities, without first proceeding
against any other person, firm, or corporation, or against any security or
collateral for Borrower's Liabilities.
Lender is hereby authorized, without notice or demand and without
affecting the liability of the Guarantors hereunder, at any time and from time
to time to (i) renew, extend, accelerate or otherwise change the time for
payment of, or other terms relating to Borrower's Liabilities or otherwise
modify, amend or change the terms of any debenture, note or other agreement,
document or instrument now or hereafter executed by Borrower and delivered to
Lender; (ii) accept partial payments on Borrower's Liabilities; (iii) take and
hold security or collateral for the payment of Borrower's Liabilities guaranteed
hereby, or for the payment of this Guaranty, or for the payment of any other
guaranties of Borrower's Liabilities or other liabilities of Borrower, and
exchange, enforce, waive and release any such security or collateral; (iv) apply
such security or collateral and direct the order or manner of sale thereof as in
their sole discretion they may determine; and (v) settle, release, compromise,
collect or otherwise liquidate Borrower's Liabilities and any security or
collateral therefor in any manner, without affecting or impairing the
obligations of the Guarantors hereunder. Lender shall have the exclusive right
to determine the time and manner of application of any payments or credits,
whether received from the Borrower or any other source, and such determination
shall be binding on the Guarantor. All such payments and credits may be applied,
reversed and reapplied, in whole or in part, to any of Borrower's Liabilities as
Lender shall determine
2
3
in their sole discretion without affecting the validity or enforceability of
this Guaranty (unless otherwise required pursuant to the Loan Agreement).
The Guarantors hereby confirm and reaffirm the granting by the
Guarantors to Lender, of a perfected lien on and security interest in all of the
Collateral described in Section II of the Xxxxxx Guarantors Security Agreement
dated as of the date hereof between the Guarantors and the Lender as collateral
security for all liabilities of the Guarantors, including without limitation all
liabilities, obligations and indebtedness owing by the Guarantors to Lender
arising under or relating to this Guaranty. In addition, at any time after
maturity of Borrower's Liabilities by reason of acceleration or otherwise, any
Lender may, in its sole discretion, without notice to the Guarantors and
regardless of the acceptance of any security or collateral for the payment
hereof, appropriate and apply toward the payment of Borrower's Liabilities (i)
any indebtedness due or to become due from such Lender to the Guarantors, and
(ii) any moneys, credits or other property belonging to the Guarantors, at any
time held by or coming into the possession of such Lender whether for deposit or
otherwise.
The Guarantors hereby assume responsibility for keeping themselves
informed of the financial condition of Borrower, and any and all endorsers
and/or other guarantors of any instrument or document evidencing all or any part
of Borrower's Liabilities and of all other circumstances bearing upon the risk
of nonpayment of Borrower's Liabilities or any part thereof that diligent
inquiry would reveal and the Guarantors hereby agree that Lender shall not have
any duty to advise the Guarantors of information known to any of them regarding
such condition or any such circumstances or to undertake any investigation not a
part of their respective regular business routines. If any Lender, in its sole
discretion, undertakes at any time or from time to time to provide any such
information to any the Guarantors, such Lender shall not be under any obligation
to update any such information or to provide any such information to the
Guarantors on any subsequent occasion.
The Guarantors consent and agree that Lender shall not be under any
obligation to xxxxxxxx any assets in favor of the Guarantors or against or in
payment of any or all of Borrower's Liabilities. The Guarantors further agree
that, to the extent that Borrower makes a payment or payments to Lender or
Lender receive any proceeds of collateral, which payment or payments or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside and/or required to be repaid to Borrower, its estate, trustee,
receiver or any other party, including, without limitation, the Guarantors,
under any bankruptcy law or state or federal statutory or common law, then to
the extent of such payment or repayment, Borrower's Liabilities or the part
thereof which has been paid, reduced or satisfied by such amount, and the
Guarantors' obligations hereunder with respect to such portion of Borrower's
Liabilities, shall be reinstated and continued in full force and effect as of
the date such initial payment, reduction or satisfaction occurred.
Until payment in full of all of Borrower's Liabilities, the Guarantors
hereby waive any and all claims (including without limitation any claim for
reimbursement, contribution or subrogation) of the Guarantors against Borrower,
any endorser or any other Guarantors of all or any part of Borrower's
Liabilities, or against any of Borrower's properties, arising by reason of any
payment by the Guarantors to Lender pursuant to the provisions hereof.
Each Lender may, to the extent and in the manner set forth in the Loan
Agreement, sell or assign Borrower's Liabilities or any part thereof, or grant
participations therein, and in any such event each and every permitted assignee
or holder of, or participant in, all or any of Borrower's Liabilities shall have
the right to enforce this Guaranty, by suit or otherwise for the benefit of such
assignee, holder, or participant, as fully as if herein by name specifically
given such right.
3
4
The Guarantors hereby represent and warrant that: (a) each of them is a
corporation duly organized, validly existing and in good standing under the laws
of the state of incorporation; (b) each of them is duly authorized and empowered
to execute and deliver the Guaranty; (c) all corporate action on the part of the
Guarantors requisite for the due execution and delivery of the Guaranty and the
due granting and creation of the security interests referred to herein has been
duly and effectively taken and (d) the Guarantors' chief executive offices are
located at Xxxxxx Drug Co., Inc., 000 Xx. Xxxxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx,
00000 and 00000 Xxxxx Xxxx 00, Xxxxxx, Xxxxxxx, respectively.
This Guaranty shall be binding upon the Guarantors and upon the
successors (including without limitation, any receiver, trustee or debtor in
possession of or for the Guarantors) of the Guarantors and shall inure to the
benefit of Lender and their respective successors and permitted assigns.
This Guaranty shall continue in full force and effect, and Lender shall
be entitled to make loans and advances and extend financial accommodations to
Borrower on the faith hereof, until such time as all of Borrower's Liabilities
have been paid in full and discharged and the Loan Agreement has been
terminated.
Wherever possible each provision of this Guaranty shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Guaranty shall be prohibited by or invalid under such law,
such provision shall be ineffective to the extent of such prohibition or
invalidity without invalidating the remainder of such provision or the remaining
provisions of this Guaranty.
THIS GUARANTY SHALL BE GOVERNED AND CONTROLLED BY THE LAWS OF THE STATE
OF CALIFORNIA.
The Guarantors irrevocably agree that, subject to the sole and absolute
election of Lender, ALL ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT,
ARISING OUT OF OR FROM OR RELATED TO THIS GUARANTY SHALL BE LITIGATED IN COURTS
HAVING SITUS WITHIN THE STATE OF CALIFORNIA.
THE GUARANTORS HEREBY CONSENT AND SUBMIT TO THE JURISDICTION OF ANY
LOCAL, STATE OR FEDERAL COURTS LOCATED WITHIN ORANGE COUNTY, CALIFORNIA and
waives the defense of "forum non conveniens." The Guarantors waive personal
service of any and all process, and consents that all such service of process
may be made by certified mail, return receipt requested, directed to the
Guarantors at the address indicated in the Agent's records; and service so made
shall be complete five (5) days after the same has been deposited in the U.S.
mails as aforesaid. THE GUARANTORS HEREBY WAIVE ANY RIGHT IT MAY HAVE TO
TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST THE GUARANTORS BY
LENDER IN ACCORDANCE WITH THIS PARAGRAPH.
THE GUARANTORS HEREBY WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION
OR PROCEEDING WHICH PERTAINS DIRECTLY OR INDIRECTLY TO THIS GUARANTY.
4
5
IN WITNESS WHEREOF, this Guaranty has been duly executed by the
undersigned as of this 29th day as of March, 2000.
XXXXXX PHARMACEUTICAL, INC.,
a Delaware corporation
/s/ Xxxxxxx Xxxxxxx
Name:
Title: Chief Executive Officer
HOUBA, INC.,
an Indiana corporation
/s/ Xxxxxxx Xxxxxxx
Name:
Title: Chief Executive Officer
5
