SUBSIDIARY GUARANTY
This SUBSIDIARY GUARANTY, dated as of August 19, 2005 (this "Guaranty"), is
by VYTERIS, INC., a Delaware corporation (the "Guarantor"), for and on behalf of
each of the entities whose name appears on Exhibit A hereto. Such entities are
each referred to herein as an "Investor" and, collectively, as the "Investors".
This Guaranty is being executed and delivered by the Guarantor in connection
with that certain Securities Purchase Agreement, dated as of August 19, 2005
(the "Securities Purchase Agreement"), between Vyteris Holdings (Nevada), Inc.,
a Nevada corporation ("Vyteris"), and each Investor. Capitalized terms used
herein and not otherwise defined herein shall have the respective meanings set
forth in the Securities Purchase Agreement.
W I T N E S S E T H:
WHEREAS, the Guarantor shall directly and indirectly benefit from the
transactions contemplated by the Securities Purchase Agreement; and
WHEREAS, it is a condition to the transactions contemplated by the
Securities Purchase Agreement that the Guarantor execute and deliver this
Guaranty to the Investors;
NOW, THEREFORE, in consideration of the foregoing, the covenants set forth
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Guarantor hereby agrees as follows:
1. THE GUARANTY.
1.1. Guaranty of Guaranteed Obligations. Guarantor hereby unconditionally
guarantees to each Investor, its successors, endorsees, transferees and assigns,
the prompt payment (whether at stated maturity, by acceleration or otherwise)
and performance of any and all indebtedness (whether principal or interest),
liabilities and other obligations of Vyteris under the Debentures owned by such
Investor now existing or hereafter arising, whether direct, indirect, related,
unrelated, fixed, contingent, liquidated, unliquidated, joint, several or joint
and several, and to pay all fees, indemnities, costs and expenses (including
reasonable attorneys' fees) provided for in this Guaranty (collectively, the
"Guaranteed Obligations"). Guarantor agrees that this Guaranty is a guaranty of
payment and performance and not of collection, and that its obligations under
this Guaranty shall be primary, absolute and unconditional, irrespective of, and
unaffected by:
(a) the genuineness, validity, regularity, enforceability or any
future amendment of, or change in this Guaranty or any other Transaction
Document now existing or hereafter arising;
(b) the absence of any action to enforce this Guaranty or any other
Transaction Document, or the waiver or consent by an Investor with respect
to any of the provisions thereof;
(c) the existence, value or condition of, or failure to perfect a Lien
(as defined below) against, any collateral ("Collateral") for the
Guaranteed Obligations or any action, or the absence of any action, by an
Investor in respect thereof (including, without limitation, the release of
any such security);
(d) the insolvency of Vyteris, Guarantor or any other party; or
(e) any other action or circumstances which might otherwise constitute
a legal or equitable discharge or defense of a surety or guarantor.
it being agreed by Guarantor that its obligations under this Guaranty shall not
be discharged until the satisfaction of the Guaranteed Obligations in full.
Guarantor shall be regarded, and shall be in the same position, as principal
debtor with respect to the Guaranteed Obligations.
1.2. Demand by Investors. In addition to the terms of the Guaranty set
forth in Section 1.1 hereof, and in no manner imposing any limitation on such
terms, it is expressly understood and agreed that, if, at any time, any of the
Guaranteed Obligations is declared to be immediately due and payable by an
Investor, then Guarantor shall, upon ten (10) Business Days' notice, pay to such
Investor the entire outstanding Guaranteed Obligations due and owing to such
Investor. Payment by Guarantor shall be made to such Investor in immediately
available Federal funds to an account designated by such Investor or at the
address set forth herein for the giving of notice to such Investor or at any
other address that may be specified in writing from time to time by such
Investor, and shall be credited and applied to the Guaranteed Obligations.
1.3. Enforcement of Guaranty. In no event shall an Investor have any
obligation (although it is entitled, at its option) to proceed against Vyteris
or any Collateral before seeking satisfaction from Guarantor, and such Investor
may proceed, prior or subsequent to, or simultaneously with, the enforcement of
its rights hereunder, to exercise any right or remedy which it may have against
any Collateral, as a result of any Liens it may have as security for all or any
portion of the Guaranteed Obligations.
1.4. Waiver. Guarantor waives, and agrees that it shall not at any time
insist upon, plead or in any manner whatsoever claim or take the benefit or
advantage of, any appraisal, valuation, stay, extension, marshaling of assets or
redemption laws, or exemption, whether now or at any time hereafter in force,
which may delay, prevent or otherwise affect the performance by Guarantor of its
Guaranteed Obligations under, or the enforcement by an Investor of, this
Guaranty. Guarantor hereby waives diligence, presentment and demand (whether for
non-payment or protest or of acceptance, maturity, extension of time, change in
nature or form of the Guaranteed Obligations, acceptance of further security,
release of further security, composition or agreement arrived at as to the
amount of, or the terms of, the Guaranteed Obligations, notice of adverse change
in Vyteris' financial condition or any other fact which might increase the risk
to Guarantor) with respect to any of the Guaranteed Obligations or all other
demands whatsoever and waive the benefit of all provisions of law which are or
might be
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in conflict with the terms of this Guaranty. Guarantor represents, warrants and
agrees that to its knowledge, as of the date of this Guaranty, its obligations
under this Guaranty are not subject to any offsets or defenses against Vyteris
or any Investor. Guarantor further agrees that its obligations under this
Guaranty shall not be subject to any counterclaims, offsets or defenses against
Vyteris or any Investor which may arise in the future.
1.5. Benefit of Guaranty. The provisions of this Guaranty are for the
benefit of each Investor and its successors, transferees, endorsees and assigns,
and nothing herein contained shall impair, as between Guarantor and each
Investor, the obligations of Guarantor under this Guaranty. In the event all or
any part of the Guaranteed Obligations are transferred, indorsed or assigned by
an Investor to any person or entity, any reference to such Investor herein shall
be deemed to refer equally to such person or entity.
1.6. Modification of Guaranteed Obligations, Etc. Guarantor hereby
acknowledges and agrees that each Investor may at any time or from time to time,
with or without the consent of, or notice to, Guarantor:
(a) change or extend the manner, place or terms of payment of, or
renew or alter all or any portion of, the Guaranteed Obligations;
(b) take any action under or in respect of any of the other
Transaction Documents in the exercise of any remedy, power or privilege
contained therein or available to it at law, equity or otherwise, or waive
or refrain from exercising any such remedies, powers or privileges;
(c) amend or modify, in any manner whatsoever, any of the other
Transaction Documents in accordance with the terms therein;
(d) extend or waive the time for Vyteris' performance of, or
compliance with, any term, covenant or agreement on its part to be
performed or observed under the Debentures or any other Transaction
Document, or waive such performance or compliance or consent to a failure
of, or departure from, such performance or compliance;
(e) take and hold Collateral for the payment of the Guaranteed
Obligations guaranteed hereby or sell, exchange, release, dispose of, or
otherwise deal with, any property pledged, mortgaged or conveyed, or in
which such Investor has been granted a Lien, to secure any Guaranteed
Obligations or any other obligations;
(f) release anyone who may be liable in any manner for the payment of
any amounts owed by Guarantor or Vyteris to such Investor; and/or
(g) apply any sums by whomever paid or however realized to any amounts
owing by Guarantor or Vyteris to such Investor in such manner as such
Investor shall determine in its discretion;
and such Investor shall not incur any liability to Guarantor as a result
thereof, and no such action shall impair or release the Guarantor or any of the
Guaranteed Obligations under this Guaranty.
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1.7. Deferral of Subrogation, Etc. Notwithstanding anything to the contrary
in this Guaranty or any other Transaction Document, Guarantor hereby:
(a) expressly and irrevocably waives, on behalf of itself and its
successors and assigns (including any surety) until the satisfaction of the
Guaranteed Obligations in full, any and all rights at law or in equity to
subrogation, to reimbursement, to exoneration, to contribution, to
indemnification, to set off or to any other rights that could accrue to a
surety against a principal, to a guarantor against a principal, to a
guarantor against a maker or obligor, to an accommodation party against the
party accommodated, to a holder or transferee against a maker, or to the
holder of any claim against any person or entity, and which Guarantor may
have or hereafter acquire against Vyteris in connection with or as a result
of Guarantor's execution, delivery and/or performance of this Guaranty, or
any other documents to which such Guarantor is a party or otherwise; and
(b) acknowledges and agrees (i) that this waiver is intended to
benefit each Investor and shall not limit or otherwise affect Guarantor's
liability hereunder or the enforceability of this Guaranty, and (ii) that
each Investor and its successors and assigns are intended third party
beneficiaries of the waivers and agreements set forth in this Section 1.7
and their rights under this Section 1.7 shall survive payment in full of
the Guaranteed Obligations.
1.8. Election of Remedies. If an Investor may, under applicable law,
proceed to realize benefits under the Transaction Documents giving such Investor
a Lien upon any Collateral, either by judicial foreclosure or by non-judicial
sale or enforcement, such Investor may, at its sole option, determine which of
such remedies or rights it may pursue without affecting any of such rights and
remedies under this Guaranty. If, in the exercise of any of its rights and
remedies, an Investor shall forfeit any of its rights or remedies, including its
right to enter a deficiency judgment against Guarantor or Vyteris, whether
because of any applicable laws pertaining to "election of remedies" or the like,
Guarantor hereby consents to such action by such Investor and waives any claim
based upon such action, even if such action by such Investor shall result in a
full or partial loss of any rights of subrogation which Guarantor might
otherwise have had but for such action by such Investor. Any election of
remedies which results in the denial or impairment of the right of an Investor
to seek a deficiency judgment against Guarantor or Vyteris shall not impair,
reduce or limit Guarantor's obligation to pay the full amount of the Guaranteed
Obligations. In the event an Investor shall bid at any foreclosure or trustee's
sale or at any private sale permitted by law or the Transaction Documents, such
Investor may bid all or less than the amount of the Guaranteed Obligations and
the amount of such bid need not be paid by such Investor but shall be credited
against the Guaranteed Obligations. The amount of the successful bid at any such
sale shall be conclusively deemed to be the fair market value of the Collateral
and the difference between such bid amount and the remaining balance of the
Guaranteed Obligations shall be conclusively deemed to be the amount of the
Guaranteed Obligations guaranteed under this Guaranty, notwithstanding that any
present or future law or court decision or ruling may have the effect of
reducing the amount of any deficiency claim to which the Investor making such
bid might otherwise be entitled but for such bidding at any such sale.
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2. REPRESENTATIONS AND WARRANTIES.
2.1 Organization, Good Standing. Guarantor is duly and validly organized,
validly existing and in good standing under the laws of its formation and has
all requisite power and authority to carry on its business as now conducted.
2.2 Authorization; Consents. Guarantor has the requisite power and
authority to enter into and perform its obligations under this Guaranty. All
action on the part of Guarantor necessary for the authorization, execution and
delivery of, and the performance of its obligations under, this Guaranty has
been taken, and no further consent or authorization of Guarantor, its board of
managers, members, or to its knowledge any governmental authority or
organization, or any other person or entity is required in connection therewith.
2.3 Due Execution; Enforceability. This Guaranty has been duly executed and
delivered by Guarantor. This Guaranty constitutes the valid and legally binding
obligation of Guarantor, enforceable against it in accordance with its terms,
subject to (i) applicable bankruptcy, insolvency, fraudulent transfer,
moratorium, reorganization or other similar laws of general application relating
to or affecting the enforcement of creditors' rights generally and (ii) general
principles of equity.
2.4 No Conflict with Other Instruments. The execution, delivery and
performance of this Guaranty will not result in any material violation of any
provisions of Guarantor's articles of organization, operating agreement or any
other governing document or in a default under any provision of any instrument
or contract to which it is a party or by which it or any of its assets or
properties are bound, or in any violation of any provision of any laws,
regulations or permits applicable to Guarantor or be in conflict with or
constitute, with or without the passage of time and giving of notice, either a
default under any material provision, instrument or contract or an event which
results in the creation of any Lien upon any assets of Guarantor.
3. FURTHER ASSURANCES.
Guarantor agrees, upon the written request of an Investor, to execute and
deliver to such Investor, from time to time, any additional instruments or
documents reasonably considered necessary by such Investor to cause this
Guaranty to be, become or remain valid and effective in accordance with its
terms.
4. REINSTATEMENT.
This Guaranty shall remain in full force and effect and continue to be
effective should any petition be filed by or against Guarantor or Vyteris for
liquidation or reorganization, should Guarantor or Vyteris become insolvent or
make an assignment for the benefit of any creditor or creditors or should a
receiver or trustee be appointed for all or any significant part of Guarantor's
or Vyteris' assets, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment and performance of the Guaranteed
Obligations, or any part thereof, is, pursuant to applicable law, rescinded or
reduced in amount, or must otherwise be restored or returned by any obligee of
the Guaranteed Obligations, whether as a "voidable preference," "fraudulent
conveyance," or otherwise, all as though such payment or performance had not
been made. In
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the event that any payment, or any part thereof, is rescinded, reduced, restored
or returned, the Guaranteed Obligations shall be reinstated and deemed reduced
only by such amount paid and not so rescinded, reduced, restored or returned.
5. MISCELLANEOUS.
5.1 Survival; Severability. In the event that any provision of this
Guaranty becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Guaranty shall continue in full force and
effect without said provision; provided that in such case the parties shall
negotiate in good faith to replace such provision with a new provision which is
not illegal, unenforceable or void, as long as such new provision does not
materially change the economic benefits of this Guaranty to the parties.
5.2 Successors and Assigns. The terms and conditions of this Guaranty shall
inure to the benefit of and be binding upon the respective successors and
permitted assigns of the parties. Nothing in this Guaranty, express or implied,
is intended to confer upon any party other than the parties hereto or their
respective successors and permitted assigns any rights, remedies, obligations or
liabilities under or by reason of this Guaranty, except as expressly provided in
this Guaranty. Each Investor may assign its rights and obligations hereunder in
connection with any private sale or transfer of the Debentures, in which case
the term "Investor" shall also be deemed to refer to such transferee. Guarantor
may not assign its obligations under this Guaranty.
5.3 Independent Nature of Investors' Rights. The rights of each Investor
hereunder are separate and apart from the rights of the other Investors
hereunder. Except with respect to an Investor that is an Affiliate of another
Investor, each Investor has been represented by its own separate counsel in
connection with this Guaranty, shall be entitled to protect and enforce its
rights hereunder individually, and shall not be required to be join any other
Investor as an additional party in any proceeding for such purpose.
5.4 Governing Law; Jurisdiction. This Guaranty shall be governed by and
construed under the laws of the State of New York applicable to contracts made
and to be performed entirely within the State of New York. Guarantor hereby
irrevocably submits to the non-exclusive jurisdiction of the state and federal
courts sitting in the City and County of New York for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Guarantor hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to Guarantor at the address in effect for notices to it
under this Guaranty and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any manner permitted
by law.
5.5 Waiver of Jury Trial. Because disputes arising in connection with
complex financial transactions are most quickly and economically resolved by an
experienced and expert person and the parties wish applicable state and federal
laws to apply (rather than arbitration
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rules), the parties desire that disputes arising hereunder or relating hereto be
resolved by a judge applying such applicable laws. Therefore, to achieve the
best combination of the benefits of the judicial system and of arbitration, the
parties hereto waive all right to trial by jury in any action, suit or
proceeding brought to resolve any dispute, whether sounding in contract, tort,
or otherwise, among Guarantor and any Investor arising out of, connected with,
related to, or incidental to the relationship established in connection with,
this Guaranty or the transactions related hereto.
5.6 Headings. The headings used in this Guaranty are used for convenience
only and are not to be considered in construing or interpreting this Guaranty.
5.7 Notices. Any notice, demand or request required or permitted to be
given by Guarantor or any Investor pursuant to the terms of this Guaranty shall
be in writing and shall be deemed delivered (i) when delivered personally or by
verifiable facsimile transmission, unless such delivery is made on a day that is
not a Business Day, in which case such delivery will be deemed to be made on the
next succeeding Business Day and (ii) on the next Business Day after timely
delivery to an overnight courier, addressed as follows:
If to Guarantor:
Vyteris, Inc.
00-00 Xxxxxxx Xxxxx
Xxxx Xxxx, XX 00000
Attn: Chief Financial Officer
Tel: 000-000-0000
Fax: 000-000-0000
with a copy to:
Xxxxxxxxxx Xxxxxxx PC
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxx X. Xxxxxxxxx, Esq.
Tel: 000-000-0000
Fax: 000-000-0000
and if to any Investor, to such address for such Investor as shall appear on the
signature page to the Securities Purchase Agreement executed by such Investor,
or as shall be designated by such Investor in writing to Guarantor in accordance
with this Section 5.7.
5.8 Entire Agreement; Amendments. This Guaranty constitutes the entire
agreement between the parties with regard to the subject matter hereof,
superseding all prior agreements or understandings, whether written or oral,
between or among the parties. Except as expressly provided herein, neither this
Guaranty nor any term hereof may be amended or waived except pursuant to a
written instrument executed by Guarantor and the holders of at least two-thirds
(2/3) of the Registrable Securities into which all of the Debentures then
outstanding are convertible
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(without regard to any limitation on such conversion), and no provision hereof
may be waived other than by a written instrument signed by the holders of at
least two-thirds (2/3) of the Registrable Securities into which all of the
Debentures then outstanding are convertible (without regard to any limitation on
such conversion). Any waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
5.9 No Waiver; Cumulative Remedies. No Investor shall by any act, delay,
omission or otherwise be deemed to have waived any of its rights or remedies
hereunder. No failure to exercise, nor any delay in exercising on the part of an
Investor, any right, power or privilege hereunder, shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or future exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
hereunder provided are cumulative and may be exercised singly or concurrently,
and are not exclusive of any rights and remedies provided by law.
5.10 Limitation By Law. All rights, remedies and powers provided in this
Guaranty may be exercised only to the extent that the exercise thereof does not
violate any applicable provision of law, and the provisions of this Guaranty are
intended to be subject to all applicable mandatory provisions of law that may be
controlling and to be limited to the extent necessary so that they shall not
render this Guaranty invalid, unenforceable, in whole or in part, or not
entitled to be recorded, registered or filed under the provisions of any
applicable law.
[Signature on Following Page]
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IN WITNESS WHEREOF, the undersigned has executed this Guaranty as of the
date first-above written.
VYTERIS, INC.
By: /s/ Xxxxxxx XxXxxxxxxx
--------------------------------
Name: Xxxxxxx XxXxxxxxxx
Title: Chief Financial Officer
Exhibit A
Investors
SATELLITE STRATEGIC FINANCE ASSOCIATES, LLC
SATELLITE STRATEGIC FINANCE PARTNERS, LTD.
PALISADES MASTER FUND, L.P.
QUBIT HOLDINGS LLC
