GUARANTY AGREEMENT
GUARANTY AGREEMENT (the "Guaranty") dated January 22, 1999 (the "Closing
Date") by and between each of Xxxxxx X. Xxxxxx and Xxxxxx X. Xxxxxx (each or
whom shall be individually referred to as "Seller" and collectively as the
"Sellers"), and AgriBioTech, Inc., a Nevada corporation ("ABT" or the "Buyer").
W I T N E S S E T H:
WHEREAS, Buyer has agreed to purchase from the Sellers an aggregate of
seventy-five (75%) percent of the membership interests (the "Securities") of
HybriGene, L.L.C., an Indiana limited liability company (the "Company"),
pursuant to a Securities Purchase Agreement dated January 20, 1999 (the
"Securities Purchase Agreement") by and among the Sellers, the Company, and ABT
for a purchase price of $9,500,000 (the "Purchase Price");
WHEREAS, pursuant to Section 3(a) of the Securities Purchase Agreement, ABT
will transfer to the Sellers Five Hundred Fifteen Thousand (515,000) shares of
the Common Stock of ABT (the "ABT Shares"), the net proceeds from the sale of
which shall be credited against the Purchase Price;
WHEREAS, pursuant to Section 3(c) of the Securities Purchase Agreement, the
Sellers have entered into a Lock-Up Agreement (the "Lock-Up") pursuant to which
they have agreed that they shall not sell, transfer or otherwise dispose of the
ABT Shares except as specified in the Lock-Up;
WHEREAS, pursuant to Section 3(a) of the Securities Purchase Agreement, ABT
has guaranteed the Purchase Price by guaranteeing the Net Proceeds (as defined
below) from the sale of the ABT Shares when sold pursuant to the Lock-Up; and
NOW, THEREFORE, in consideration of the foregoing and the terms, conditions
and mutual covenants appearing in this Guaranty, the parties hereto hereby agree
as follows:
Section 1.
(a) The ABT Shares, if sold pursuant to the Lock-Up, shall have Guaranteed
Net Proceeds (defined as gross sales price less customary sales commissions and
any applicable stock transfer and sales taxes) of no less than $18.45 per share
(the "Guaranteed Price/Share").
(b) ABT further agrees that until the Sellers have received an aggregate of
$9,500,000 from all sales of ABT Shares made pursuant to the Lock-Up, they shall
be secured pursuant to the terms of a securities pledge agreement (the
"Securities Pledge Agreement").
(c) In consideration of the guarantee granted hereby and the Securities
Pledge Agreement, each of the Sellers hereby agrees that all Net Proceeds from
all sales of ABT Shares at a price per share greater than the Guaranteed
Price/Share shall be paid to ABT.
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Section 2.
(a) The Net Proceeds shall be determined on a quarterly basis according to
ABT's fiscal calendar.
(b) For purposes of this Guaranty a Shortfall is defined as; (i) sales of
ABT Shares pursuant to the Lock-Up made at prices per Share that are lower than
the Guaranteed Price/Share, or (ii) if Sellers are unable to sell the member ABT
Shares in the amounts set forth in paragraph 1(a) of the Lock-Up, in the manner
set forth in Section 1 (b) of the Lock-Up then a Shortfall shall equal the
Guaranteed Price/Share. ABT shall pay to each of the Sellers cash, or at the
option of ABT, ABT shall issue to Sellers additional, duly registered ABT Shares
that can be sold immediately, for any Shortfalls in the Guaranteed Net Proceeds
resulting from their individual sales of the ABT Shares on the last day of the
month following the end of the fiscal quarter in which such Shortfall occurred.
Any cash payment or issuance of ABT Shares shall be made within ten days after
the end of the fiscal quarter. Any Shortfalls shall be calculated on a
cumulative basis during such fiscal quarter such that any Shortfalls in the
Guaranteed Price/Share shall be offset against any surplus in the Guaranteed
Price/Share. Any additional ABT Shares issued to Sellers pursuant to this
Section shall be subject to a Lock-Up agreement which shall provide that such
shares can be sold by Sellers within six months from the date of this Guaranty.
In the event a Shortfall results from Seller's inability to sell ABT Shares as
set forth in this Section, ABT may take possession of said unsold ABT Shares for
that particular fiscal quarter, or at ABT's discretion, seller may retain said
ABT Shares, and any resulting Shortfall or surplus shall be addressed in
accordance with the terms of this Agreement.
(c) To the extent that sales of ABT Shares pursuant to the Lock-Up are made
at prices per Share that are greater than the Guaranteed Price/Share, each of
the Sellers shall pay to ABT cash for any surplus in the Guaranteed Net Proceeds
resulting from their individual sales of the ABT Shares on the last day of the
month following the end of the fiscal quarter in which such surplus occurred;
provided, however, that any surplus shall be calculated on a cumulative basis
during such fiscal quarter such that any surplus in the Guaranteed Price/Share
shall be offset against any Shortfalls in the Guaranteed Price/Share.
(d) Sellers shall prepare and deliver to ABT within two weeks of the end of
each month a cumulative statement, supported by documentation reflecting all
sales of ABT Shares by each of them during such month, if not previously
provided and stating the mount to be paid by ABT to each of them pursuant to the
terms of this guarantee or the amount to be paid by each them to ABT pursuant to
the terms of this guarantee. In the event of a surplus in the Guaranteed
Price/Share during any fiscal quarter, ABT, in its sole discretion, may elect to
maintain such surplus without receiving cash payment therefor, to be offset
against any future deficits in the Guaranteed Price/Share, by providing the
Sellers with written notice of such election prior to the date upon which a
payment of such surplus would otherwise be due.
(e) In the event that any of the Sellers offers, sells, transfers or
otherwise disposes of the ABT Shares in violation of the Lock-Up, without the
prior written consent of ABT, (i) the Guaranty shall not apply to the Net
Proceeds received from such sale and the Guaranty shall from that time be null
and void, and (ii) all net proceeds in excess of $10.00 per share from the sale
of all ABT Shares by such individual, regardless of whether such proceeds derive
from sales made prior to, concurrent with or subsequent to such event of
default, shall be paid to ABT.
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Section 3. Subject to Section 6 hereunder, this Agreement shall inure to the
benefit of and be binding upon ABT, its successors and assigns, and upon the
Sellers, their heirs, executors, administrators, legatees and legal
representatives.
Section 4. Should any part of this Guaranty, for any reason whatsoever, be
declared invalid, illegal, or incapable of being enforced in whole or in part,
such decision shall not affect the validity of any remaining portion, which
remaining portion shall remain in full force and effect as if this Guaranty had
been executed with the invalid portion thereof eliminated, and it is hereby
declared the intention of the parties hereto that they would have executed the
remaining portion of this Guaranty without including therein any portion which
may for any reason be declared invalid.
Section 5. This Guaranty shall be construed and enforced in accordance with the
laws of the State of Nevada applicable to agreements made and to be performed in
such State without application of the principles of conflicts of laws of such
State.
Section 6. This Guaranty and all rights hereunder are personal to the parties
and shall not be assignable, and any purported assignment in violation thereof
shall be null and void.
Section 7.
(a) All notices, requests, consents, and demands by the parties hereunder
shall be delivered by hand, recognized national overnight courier or by deposit
in the United States Mail, postage prepaid, by registered or certified mail,
return receipt requested, addressed to the party to be notified at the address
set forth below:
(i) if to the Sellers to:
Xxxxxx X. Xxxxxx
0000 X. 00 X
Xxxx Xxxxxxxxx, XX 00000
Xxxxxx X. Xxxxxx
0000 X. 00 X
Xxxx Xxxxxxxxx, XX 00000
with a copy to:
Xxxxxxxxx, Daily, Xxxxxxx & XxXxx
0000 Xxx Xxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: O. Xxxxx Xxxxx
Telecopier No.: (000) 000-0000
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(ii) if to ABT to:
AgriBioTech, Inc.
000 Xxxxxxxxx Xxxx Xxxxx
Xxxxxxxxx, Xxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, CEO
Telecopier No.: (000) 000-0000
with a copy to:
Snow Xxxxxx Xxxxxx P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopier No.: (000) 000-0000
(b) Notices given by mail shall be deemed effective on the earlier of the
date shown on the proof of receipt of such mail or, unless the recipient proves
that the notice was received later or not received, three (3) days after the
date of mailing thereof. Other notices shall be deemed given on the date of
receipt. Any party hereto may change the address specified herein by written
notice to the other parties hereto.
Section 8. In the event that ABT fails to make a payment for a Shortfall in the
Net Proceeds in accordance with Section 2 hereof within 5 days after such
payment is due, ABT shall be in default under this Guaranty with respect to such
payment ("Default Payment"). Upon such default by ABT, Sellers may declare a
default under the Securities Purchase Agreement and the Securities Pledge
Agreement and pursue all remedies to which they are entitled to the extent
necessary to relieve such default. This Guaranty shall otherwise remain in full
force and effect with respect to the payment of any future deficits or surpluses
by ABT or the Sellers, as the case may be, provided that Sellers may set off
amount of any future surpluses against the default payment.
Section 9. The failure of either party to insist upon the strict performance of
any of the terms, conditions and provisions of this Guaranty shall not be
construed as a waiver or relinquishment of future compliance therewith, and said
terms, conditions and provisions shall remain in full force and effect. No
waiver of any term or any condition of this Guaranty on the part of either party
shall be effective for any purpose whatsoever unless such waiver is in writing
and signed by such party.
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IN WITNESS WHEREOF, the parties hereto have executed this Guaranty as of
the day and year first written above.
/S/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
AGRIBIOTECH, INC.
By: /s/ Xxxxxxxx X. Xxxxxxxxx
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Xxxxxxxx X. Xxxxxxxxx
Vice President
