GUARANTEE AGREEMENT
GUARANTEE AGREEMENT (the "Guarantee") dated as of August 31, 1999 (the
"Closing Date"), by and between Xxxxxxx X. XxXxxxxx ("XxXxxxxx"), 0000 X.X.
Xxxxxx Xxxx, Xxxxxx Xxxxx, XX 00000, and AgriBioTech, Inc., a Nevada corporation
("ABT").
W I T N E S S E T H:
WHEREAS, pursuant to a Cancellation of Obligations Agreement made effective
July 1, 1998 (the "Agreement"), ABT has agreed to pay XxXxxxxx $2,000,000 plus
accrued interest of 6% on the unpaid balance ($106,735.89 through August 27,
1999) (the "Obligation") by October 1, 1999, in termination of all obligations
of X.X. Xxxxxxxxxx & Sons Inc. ("Xxxxxxxxxx") to XxXxxxxx for use by Xxxxxxxxxx
or others of turfgrass developed by XxXxxxxx and/or all claims which XxXxxxxx
may have in such turfgrass and/or the intellectual property associated with such
turfgrass;
WHEREAS, pursuant to the Agreement ABT has made payments totaling $230,000
to XxXxxxxx as partial payment of the Obligation;
WHEREAS, the parties have agreed that ABT will issue to XxXxxxxx five
hundred thousand (500,000) registered shares of ABT's Common Stock (the "ABT
Shares") in order to complete payment to XxXxxxxx of the Obligation. The ABT
Shares will be issued without restriction pursuant to ABT's shelf registration
statement;
WHEREAS, XxXxxxxx has entered into a Lock-Up Agreement (the "Lock-Up")
pursuant to which he has agreed that he shall not sell, transfer or otherwise
dispose of the ABT Shares except as specified in the Lock-Up;
WHEREAS, ABT has agreed to guarantee the Net Proceeds (as defined below)
from the sale of the ABT Shares when sold pursuant to the Lock-Up.
NOW, THEREFORE, in consideration of the foregoing and the terms, conditions
and mutual covenants appearing in this Guarantee, the parties hereto hereby
agree as follows:
Section 1. (a) The ABT Shares, if sold pursuant to the Lock-Up, shall have Net
Proceeds (defined as the aggregate gross sales proceeds from the sale of all of
the ABT Shares less customary sales commissions and any applicable stock
transfer and sales taxes) to fully satisfy the Obligation.
(b) In consideration of the guarantee granted hereby, XxXxxxxx hereby
agrees that Net Proceeds from the sales of all of the ABT Shares in
excess of the amount necessary to fully satisfy the Obligation shall
be paid to ABT.
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(c) In the event the proceeds from the sale of the ABT shares exceed the
amount of the Obligation prior to all (c) In the event the proceeds
from the sale of the ABT shares exceed the amount of the Obligation
prior to all ABT shares being sold, ABT may, in its sole discretion,
instruct XxXxxxxx to not sell the remaining ABT Shares and have them
returned to ABT.
(d) ABT represents and warrants to XxXxxxxx as follows:
(i) Validity of Shares. The ABT Shares, when delivered pursuant to
the terms of this Agreement, will be validly issued, fully paid
and non-assessable and will not have been issued in violation of
or subject to any preemptive or similar right.
(ii) Securities Registration. The ABT Shares have been registered
under the Securities Act of 1933, as amended. The issuance of the
ABT Shares to XxXxxxxx shall comply with the Securities Act of
1933, as amended, and all rules and regulations promulgated
thereunder and any applicable state securities laws and rules and
regulations promulgated thereunder. The re-sale of the ABT Shares
by XxXxxxxx pursuant to the terms of this Agreement and the
Lock-Up will comply with the Securities Act of 1933, as amended,
and all rules and regulations promulgated thereunder and any
applicable state securities laws and rules and regulations
promulgated thereunder.
(iii)Since July 1, 1997, ABT has made all filings required to be made
by it under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and any rules and regulations promulgated
thereunder (the "SEC Reports"). The SEC Reports, when filed,
complied in all material respects with all applicable
requirements of the Exchange Act or other requirements of law.
None of the SEC Reports at the time of filing, contained or today
contain any untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary in order
to make the statements therein not misleading in light of the
circumstances in which they were made.
Section 2. (a) The Net Proceeds shall be determined as of November 3, 1999. The
final amount of the Obligation shall also be determined as of November 3, 1999,
reflecting actual proceeds received from sales of the ABT Shares and calculating
interest through the trade date. To compensate for the time between trade date
and settlement date, ABT will pay XxXxxxxx additional interest in the amount of
$1000.00. Net proceeds shall be applied first against outstanding principal and
then against accrued interest through November 3, 1999.
(b) To the extent that the Net Proceeds are less than the final amount of
the Obligation, ABT shall pay to XxXxxxxx cash for any shortfall,
including interest at 6% from November 3, 1999, no later than November
10, 1999. Cash payouts shall be applied first against accrued interest
and then against outstanding principal.
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(c) To the extent that the Net Proceeds are greater than the final amount
of the Obligation, XxXxxxxx shall pay to ABT cash for any surplus,
including interest at 6% on the daily average amount of such surplus,
no later than November 10, 1999.
(d) XxXxxxxx shall prepare and deliver to ABT by November 5, 1999 a
cumulative statement, supported by documentation reflecting all sales
of ABT Shares, and stating the amount to be paid by ABT to XxXxxxxx
pursuant to the terms of this Guarantee or the amount to be paid by
XxXxxxxx to ABT pursuant to the terms of this Guarantee.
(e) In the event that XxXxxxxx sells, transfers or otherwise disposes of
the ABT Shares in violation of the Lock-Up, without the prior written
consent of ABT, (i) the Guarantee shall be null and void, (ii) any
amounts previously paid by ABT to XxXxxxxx pursuant to Section 2(b) of
this Guarantee shall be refunded to ABT by XxXxxxxx, and (iii) all
proceeds in excess of the Obligation from the sale of all ABT Shares,
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. Notwithstanding the forgoing, any violation of the Lock-Up
which is cured by XxXxxxxx within three (3) business days of its
occurrence shall not trigger the above-described provisions in this
paragraph.
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
XxXxxxxx, his heirs, executors, administrators, legatees and legal
representatives.
Section 4. Should any part of this Guarantee, 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 Guarantee 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 Guarantee without including therein any portion which
may for any reason be declared invalid.
Section 5. This Guarantee 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 Guarantee 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.
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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 XxXxxxxx to:
0000 X.X. Xxxxxx Xxxx
Xxxxxx Xxxxx, XX 00000
with a copy to:
Xxxxxxx, Xxxxxxxxxx & Xxxxx
0000 Xxxxxxx Xxxxxx
0000 X.X. 0xx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxx Xxxxxxx, Esq.
Telecopier No.: (000) 000-0000
(ii) if to ABT to:
AgriBioTech, Inc.
000 Xxxxxxxxx Xxxx Xxxxx
Xxxxxxxxx, Xxxxxx 00000
Attention: Xxxxxx X. Xxxx,
Executive Vice President
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.
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Section 8. ABT hereby agrees to defend, indemnify and hold XxXxxxxx harmless
against any claim, loss, damage, cost, and expense (including reasonable
attorney's fees) resulting or arising from any claim made by any person that the
ABT Shares are not duly registered and free from restriction on resale or that
XxXxxxxx is an underwriter of ABT Shares for purposes of the Securities Act of
1933 or any state securities law due to his receipt of ABT stock in accordance
with this Guarantee, his sale in accordance with the terms of the Lock-Up, and
his disposition of sale proceeds in accordance with the terms of this Guarantee.
Section 9. Each party will pay their own expenses incurred in connection with
this Agreement, except ABT will reimburse XxXxxxxx for reasonable legal expenses
in connection with this Guarantee and the Lock-Up upon presentation of an
invoice.
Section 10. The failure of either party to insist upon the strict performance of
any of the terms, conditions and provisions of this Guarantee 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 Guarantee on the part of either
party shall be effective for any purpose whatsoever unless such waiver is in
writing and signed by such party.
Section 11. Attorney Fees. If any claim, suit or action is filed by any party to
enforce this Guarantee or otherwise with respect to the subject matter of this
Guarantee, including any claim filed in a bankruptcy proceeding, the prevailing
party shall be entitled to recover reasonable attorney fees incurred in
preparation or in prosecution or defense of such claim, suit or action as fixed
by the trial court, and if any appeal is taken from the decision of the trial
court, reasonable attorney fees as fixed by the appellate court.
IN WITNESS WHEREOF, the parties hereto have executed this Guarantee as of
the day and year first written above.
/s/ Xxxxxxx X. XxXxxxxx
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Xxxxxxx X. XxXxxxxx
AGRIBIOTECH, INC.
By: /s/Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx
Executive Vice President
