Exhibit 10.9
UNCONDITIONAL GUARANTY
December 20, 2001
Trendirect Marketing, Inc.
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▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
(Individually and collectively "Borrower")
Infotopia, Inc.
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▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
(Individually and collectively "Guarantor")
Vitaquest International, Inc.
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▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
(Hereinafter referred to as "VITAQUEST")
To induce VITAQUEST to make, extend or renew loans, advances, credit, or other
financial accommodations to or for the benefit of Borrower, to consent to the
assignment by Guarantor to Borrower of Guarantor's rights and liabilities under
that certain letter of intent dated November 6, 2001, as amended, among
Borrower, Guarantor and VITAQUEST (the "LOI"), and in consideration of loans,
advances, credit, or other financial accommodations made, extended or renewed to
or for the benefit of Borrower, Guarantor hereby absolutely, irrevocably and
unconditionally guarantees to VITAQUEST and its successors, assigns and
affiliates the timely payment and performance of all liabilities and obligations
of Borrower to VITAQUEST and its affiliates, including, but not limited to, all
obligations under any notes, loan agreements, security agreements, letters of
credit, swap agreements (as defined in 11 U.S. Code Section 101), instruments,
accounts receivable, contracts, drafts, leases, chattel paper, indemnities,
acceptances, repurchase agreements, overdrafts, and the Loan Documents defined
below, however and whenever incurred or evidenced, whether primary, secondary,
direct, indirect, absolute, contingent, due or to become due, now existing or
hereafter contracted or acquired, and all modifications, extensions and renewals
thereof, (collectively, the "Guaranteed Obligations").
Guarantor further covenants and agrees:
GUARANTOR'S LIABILITY. This Guaranty is a continuing and unconditional guaranty
of payment and performance and not of collection. The parties to this Guaranty
are jointly and severally obligated hereunder. This Guaranty does not impose any
obligation on VITAQUEST to extend or continue to extend credit or otherwise deal
with Borrower at any subsequent time. This Guaranty shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
the Guaranteed Obligations is rescinded, avoided or for any other reason must be
returned by VITAQUEST, and the returned payment shall remain payable as part of
the Guaranteed Obligations, all as though such payment had not been made. Except
to the extent the provisions of this Guaranty give VITAQUEST additional rights,
this Guaranty shall not be deemed to supersede or replace any other guaranties
given to VITAQUEST by Guarantor; and the obligations guaranteed hereby shall be
in addition to any other obligations guaranteed by Guarantor pursuant to any
other agreement of guaranty given to VITAQUEST and other guaranties of the
Guaranteed Obligations.
CONSENT TO MODIFICATIONS. Guarantor consents and agrees that VITAQUEST may from
time to time, in its sole discretion, without affecting, impairing, lessening or
releasing the obligations of Guarantor hereunder: (a) extend or modify the time,
manner, place or terms of payment or performance and/or otherwise change or
modify the credit terms of the Guaranteed Obligations or the Loan Documents; (b)
increase, renew, or enter into a novation of the Guaranteed Obligations; (c)
waive or consent to the
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departure from terms of the Guaranteed Obligations; (d) permit any change in the
business or other dealings and relations of Borrower or any other guarantor with
VITAQUEST; (e) proceed against, exchange, release, realize upon, or otherwise
deal with in any manner any collateral that is or may be held by VITAQUEST in
connection with the Guaranteed Obligations or any liabilities or obligations of
Guarantor; and (f) proceed against, settle, release, or compromise with
Borrower, any insurance carrier, or any other person or entity liable as to any
part of the Guaranteed Obligations, and/or subordinate the payment of any part
of the Guaranteed Obligations to the payment of any other obligations, which may
at any time be due or owing to VITAQUEST; all in such manner and upon such terms
as VITAQUEST may deem appropriate, and without notice to or further consent from
Guarantor. No invalidity, irregularity, discharge or unenforceability of, or
action or omission by VITAQUEST relating to any part of the Guaranteed
Obligations or any security therefor shall affect or impair this Guaranty.
WAIVERS AND ACKNOWLEDGMENTS. Guarantor waives and releases the following rights,
demands, and defenses Guarantor may have with respect to VITAQUEST and
collection of the Guaranteed Obligations: (a) promptness and diligence in
collection of any of the Guaranteed Obligations from Borrower or any other
person liable thereon, and in foreclosure of any security interest and sale of
any property serving as collateral for the Guaranteed Obligations; (b) any law
or statute that requires that VITAQUEST make demand upon, assert claims against,
or collect from Borrower or other persons or entities, foreclose any security
interest, sell collateral, exhaust any remedies, or take any other action
against Borrower or other persons or entities prior to making demand upon,
collecting from or taking action against Guarantor with respect to the
Guaranteed Obligations; (c) any law or statute that requires that Borrower or
any other person be joined in, notified of or made part of any action against
Guarantor; (d) that VITAQUEST preserve, insure or perfect any security interest
in collateral or sell or dispose of collateral in a particular manner or at a
particular time, provided that VITAQUEST's obligation to dispose of Collateral
in a commercially reasonable manner is not waived hereby; (e) notice of
extensions, modifications, renewals, or novations of the Guaranteed Obligations,
of any new transactions or other relationships between VITAQUEST, Borrower
and/or any guarantor, and of changes in the financial condition of, ownership
of, or business structure of Borrower or any other guarantor; (f) presentment,
protest, notice of dishonor, notice of default, demand for payment, notice of
intention to accelerate maturity, notice of acceleration of maturity, notice of
sale, and all other notices of any kind whatsoever; (g) the right to assert
against VITAQUEST any defense (legal or equitable), set-off, counterclaim, or
claim that Guarantor may have at any time against Borrower or any other party
liable to VITAQUEST; (h) all defenses relating to invalidity, insufficiency,
unenforceability, enforcement, release or impairment of VITAQUEST's lien on any
collateral, of the Loan Documents, or of any other guaranties held by VITAQUEST;
(i) any claim or defense that acceleration of maturity of the Guaranteed
Obligations is stayed against Guarantor because of the stay of assertion or of
acceleration of claims against any other person or entity for any reason
including the bankruptcy or insolvency of that person or entity; and (j) the
benefit of any exemption claimed by Guarantor. Guarantor acknowledges and
represents that Guarantor has relied upon Guarantor's own due diligence in
making an independent appraisal of Borrower, Borrower's business affairs and
financial condition, and any collateral; Guarantor will continue to be
responsible for making an independent appraisal of such matters; and Guarantor
has not relied upon VITAQUEST for information regarding Borrower or any
collateral.
FINANCIAL CONDITION. Guarantor warrants, represents and covenants to VITAQUEST
that on and after the date hereof: (a) the fair saleable value of Guarantor's
assets exceeds its liabilities, Guarantor is meeting its current liabilities as
they mature, and Guarantor is and shall remain solvent; (b) all financial
statements of Guarantor furnished to VITAQUEST are correct and accurately
reflect the financial condition of Guarantor as of the respective dates thereof;
(c) since the date of such financial statements, there has not occurred a
material adverse change in the financial condition of Guarantor; and (d) there
are not now pending any court or administrative proceedings or undischarged
judgments against Guarantor, no federal or state tax liens have been filed or
threatened against Guarantor, and Guarantor is not in default or claimed default
under any agreement.
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INTEREST AND APPLICATION OF PAYMENTS. Regardless of any other provision of this
Guaranty or other Loan Documents, if for any reason the effective interest on
any of the Guaranteed Obligations should exceed the maximum lawful interest, the
effective interest shall be deemed reduced to and shall be such maximum lawful
interest, and any sums of interest which have been collected in excess of such
maximum lawful interest shall be applied as a credit against the unpaid
principal balance of the Guaranteed Obligations. Monies received from any source
by VITAQUEST for application toward payment of the Guaranteed Obligations may be
applied to such Guaranteed Obligations in any manner or order deemed appropriate
by VITAQUEST.
DEFAULT. If any of the following events occur, a default ("Default") under this
Guaranty shall exist: (a) failure of timely payment or performance of the
Guaranteed Obligations, including any cure period, or a default under any Loan
Document; (b) a breach of any agreement or representation contained or referred
to in the Guaranty, or any of the Loan Documents, or contained in any other
contract or agreement of Guarantor with VITAQUEST or its affiliates, whether now
existing or hereafter arising; (c) the dissolution of, termination of existence
of, loss of good standing status by, appointment of a receiver for, assignment
for the benefit of creditors of, or the commencement of any insolvency or
bankruptcy proceeding by or against Guarantor; (d) Without prior written consent
of VITAQUEST (which consent shall not be unreasonably withheld), (i) a material
alteration in the kind or type of Guarantor's business or that of Guarantor's
Subsidiaries or Affiliates, if any; (ii) the sale of substantially all of the
business or assets of Guarantor, any of Guarantor's Subsidiaries or Affiliates
or any guarantor, or a material portion (10% or more) of such business or assets
if such a sale is outside the ordinary course of business of Guarantor, or any
of Guarantor's Subsidiaries or Affiliates or any guarantor; or (iii) should any
Guarantor or any of Guarantor's Subsidiaries or Affiliates or any guarantor
enter into any merger or consolidation; and/or (e) any representation or
warranty given by Guarantor in this Guaranty, the LOI or any documents executed
or provided in connection therewith or otherwise furnished by Guarantor proves
materially false or, if of a continuing nature becomes materially false.
If a Default occurs, the Guaranteed Obligations shall be due immediately and
payable without notice, and, VITAQUEST may exercise any rights and remedies as
provided in this Guaranty and other Loan Documents, or as provided at law or
equity. Guarantor shall pay interest on the Guaranteed Obligations from such
Default at the highest rate of interest charged on any of the Guaranteed
Obligations.
ATTORNEYS' FEES AND OTHER COSTS OF COLLECTION. Guarantor shall pay all of
VITAQUEST's reasonable expenses incurred to enforce or collect any of the
Guaranteed Obligations, including, without limitation, reasonable arbitration,
paralegals', attorneys' and experts' fees and expenses, whether incurred without
the commencement of a suit, in any suit, arbitration, or administrative
proceeding, or in any appellate or bankruptcy proceeding.
SUBORDINATION OF OTHER DEBTS. Guarantor agrees: (a) to subordinate the
obligations now or hereafter owed by Borrower to Guarantor ("Subordinated Debt")
to any and all obligations of Borrower to VITAQUEST now or hereafter existing
while this Guaranty is in effect, provided however that Guarantor may receive
regularly scheduled principal and interest payments on the Subordinated Debt so
long as (i) all sums due and payable by Borrower to VITAQUEST have been paid in
full on or prior to such date, and (ii) no event or condition which constitutes
or which with notice or the lapse or time would constitute an event of default
with respect to the Guaranteed Obligations shall be continuing on or as of the
payment date; (b) Guarantor will either place a legend indicating such
subordination on every note, ledger page or other document evidencing any part
of the Subordinated Debt or deliver such documents to VITAQUEST; and (c) except
as permitted by this paragraph, Guarantor will not request or accept payment of
or any security for any part of the Subordinated Debt, and any proceeds of the
Subordinated Debt paid to Guarantor, through error or otherwise, shall
immediately be forwarded to VITAQUEST by Guarantor, properly endorsed to the
order of VITAQUEST, to apply to the Guaranteed Obligations.
MISCELLANEOUS. Assignment. This Guaranty and other Loan Documents shall inure to
the benefit of and be binding upon the parties and their respective heirs, legal
representatives, successors and assigns.
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VITAQUEST's interests in and rights under this Guaranty and other Loan Documents
are freely assignable, in whole or in part, by VITAQUEST. Any assignment shall
not release Guarantor from the Guaranteed Obligations. APPLICABLE LAW; CONFLICT
BETWEEN DOCUMENTS. This Guaranty shall be governed by and construed under the
laws of the state named in VITAQUEST's address shown above without regard to
that state's conflict of laws principles. If the terms of this Guaranty should
conflict with the terms of any commitment letter that survives closing, the
terms of this Guaranty shall control. JURISDICTION. Guarantor irrevocably agrees
to non-exclusive personal jurisdiction in the state named in VITAQUEST's address
shown above. SEVERABILITY. If any provision of this Guaranty or of the other
Loan Documents shall be prohibited or invalid under applicable law, such
provision shall be ineffective but only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Guaranty or other Loan Documents. NOTICES. Any
notices to Guarantor shall be sufficiently given if in writing and mailed or
delivered to Guarantor's address shown above or such other address as provided
hereunder, and to VITAQUEST, if in writing and mailed or delivered to
VITAQUEST's office address shown above or such other address as VITAQUEST may
specify in writing from time to time. In the event that Guarantor changes
Guarantor's address at any time prior to the date the Guaranteed Obligations are
paid in full, Guarantor agrees to promptly give written notice of said change of
address to VITAQUEST by registered or certified mail, return receipt requested,
all charges prepaid. PLURAL; CAPTIONS. All references in the Loan Documents to
borrower, guarantor, person, document or other nouns of reference mean both the
singular and plural form, as the case may be, and the term "person" shall mean
any individual person or entity. The captions contained in the Loan Documents
are inserted for convenience only and shall not affect the meaning or
interpretation of the Loan Documents. BINDING CONTRACT. Guarantor by execution
of and VITAQUEST by acceptance of this Guaranty agree that each party is bound
to all terms and provisions of this Guaranty. AMENDMENTS, WAIVERS AND REMEDIES.
No waivers, amendments or modifications of this Guaranty and other Loan
Documents shall be valid unless in writing and signed by an officer of
VITAQUEST. No waiver by VITAQUEST of any Default shall operate as a waiver of
any other Default or the same Default on a future occasion. Neither the failure
nor any delay on the part of VITAQUEST in exercising any right, power, or
privilege granted pursuant to this Guaranty and other Loan Documents shall
operate as a waiver thereof, nor shall a single or partial exercise thereof
preclude any other or further exercise or the exercise of any other right, power
or privilege. All remedies available to VITAQUEST with respect to this Guaranty
and other Loan Documents and remedies available at law or in equity shall be
cumulative and may be pursued concurrently or successively. LOAN DOCUMENTS. The
term "Loan Documents" refers to the $3,075,000 note dated of even date herewith
given by Borrower in favor of VITAQUEST, this Guaranty, the security agreements
dated of even date herewith given by Borrower and Guarantor, the LOI, the
License Agreement between Borrower and VITAQUEST of even date herewith, and all
documents executed and/or delivered in connection with or related to such
documents or the Guaranteed Obligations and may include, without limitation,
commitment letters or letters of intent that survive closing, loan agreements,
other guaranty agreements, security agreements, instruments, financing
statements, mortgages, deeds of trust, deeds to secure debt, letters of credit
and any amendments or supplements (excluding swap agreements as defined in 11
U.S. Code Section 101).
FINANCIAL AND OTHER INFORMATION. Guarantor shall deliver to VITAQUEST such
information as VITAQUEST may reasonably request from time to time, including
without limitation, financial statements and information pertaining to
Guarantor's financial condition. Such information shall be true, complete, and
accurate.
AFFIRMATIVE COVENANTS. Guarantor agrees that from the date hereof and until
final payment in full of the Obligations, unless VITAQUEST shall otherwise
consent in writing, Guarantor will: NON-DEFAULT CERTIFICATE FROM GUARANTOR.
Deliver to VITAQUEST, with the Financial Statements required below, a
certificate signed by Guarantor, in the form attached hereto as Exhibit A, if
Guarantor is an individual, or by a principal financial officer of Guarantor
warranting that no "Default" as specified in the Loan Documents nor any event
which, upon the giving of notice or lapse of time or both, would constitute such
a Default, has occurred and demonstrating Guarantor's compliance with the
financial covenants contained herein.
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NEGATIVE COVENANTS. Guarantor agrees that from the date of this Agreement and
until final payment in full of the Obligations, unless VITAQUEST shall otherwise
consent in writing, Guarantor will not: CHANGE IN FISCAL YEAR. Change its fiscal
year. CHANGE OF CONTROL. Make or suffer a change of ownership that effectively
changes control of Guarantor from current ownership. ENCUMBRANCES. Create,
assume, or permit to exist any additional mortgage, security deed, deed of
trust, pledge, lien, charge or other encumbrance on any of its assets, whether
now owned or hereafter acquired, other than: (i) security interests required by
the Loan Documents; (ii) liens for taxes contested in good faith; (iii) liens
accruing by law for employee benefits; or (iv) Permitted Liens (as defined in
the Security Agreement). GUARANTEES. Guarantee or otherwise become responsible
for any further obligations of any other person or persons, other than the
endorsement of checks and drafts for collection in the ordinary course of
business. INVESTMENTS. Purchase any further stock, securities, or evidence of
indebtedness of any other person or entity except investments in direct
obligations of the United States Government and certificates of deposit of
United States commercial banks having a tier 1 capital ratio of not less than 6%
and then in an amount not exceeding 10% of the issuing bank's unimpaired capital
and surplus. DEFAULT ON OTHER CONTRACTS OR OBLIGATIONS. Materially default on
any material contract with or obligation when due to a third party or default in
the performance of any obligation to a third party incurred for money borrowed.
GOVERNMENT INTERVENTION. Permit the assertion or making of any seizure, vesting
or intervention by or under authority of any government by which the management
of Guarantor or any guarantor is displaced of its authority in the conduct of
its respective business or its such business is curtailed or materially
impaired. JUDGMENT ENTERED. Permit the entry of any material monetary judgment
or the assessment against, the filing of any tax lien against, or the issuance
of any writ of garnishment or attachment against any property of or debts due.
ANNUAL FINANCIAL STATEMENTS. Guarantor shall deliver to VITAQUEST, within 105
days after the close of each fiscal year, audited financial statements
reflecting its operations during such fiscal year, including, without
limitation, a balance sheet, profit and loss statement and statement of cash
flows, with supporting schedules; all on a consolidated and consolidating basis
with respect to Guarantor and its Subsidiaries, Affiliates and parent or holding
company, as applicable, and in reasonable detail, prepared in conformity with
generally accepted accounting principles, applied on a basis consistent with
that of the preceding year. All such statements shall be examined by an
independent certified public accountant acceptable to VITAQUEST. The opinion of
such independent certified public accountant shall not be acceptable to
VITAQUEST if qualified due to any limitations in scope imposed by Guarantor or
any other person or entity. Any other qualification of the opinion by the
accountant shall render the acceptability of the financial statements subject to
VITAQUEST's approval. Guarantor's accountant shall provide VITAQUEST with a
written acknowledgment of the VITAQUEST's reliance upon the statements in
accordance with N.J.S. 2A: 53A-25.
PERIODIC FINANCIAL STATEMENTS. Guarantor shall deliver to VITAQUEST audited
quarterly financial statements including, without limitation, a balance sheet,
profit and loss statement and statement of cash flows, with supporting
schedules, as soon as available and in any event within 50 days after the close
of each such period; all on a consolidated and consolidating basis with respect
to Guarantor and its subsidiaries, affiliates and parent or holding company, as
applicable, all in reasonable detail and prepared in conformity with generally
accepted accounting principles, applied on a basis consistent with that of the
preceding year. Such statements shall be certified as to their correctness by a
principal financial officer of Guarantor and in each case, if audited statements
are required, subject to audit and year-end adjustments.
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IN WITNESS WHEREOF, Guarantor, on the day and year first written above, has
caused this Unconditional Guaranty to be executed under seal.
INFOTOPIA, INC.
Taxpayer Identification Number: ▇▇-▇▇▇▇▇▇▇
___________________
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
____________________________________(SEAL)
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EXHIBIT A
NON-DEFAULT CERTIFICATE
In accordance with the terms of the Loan Documents dated December , 2001 by and
between Vitaquest International Inc. and ____________("Guarantor"), I hereby
certify that:
1. I am a principal financial officer of Guarantor;
2. The enclosed financial statements are prepared in accordance with
generally accepted accounting principles;
3. No Default (as defined in the Loan Documents) or any event which, upon the
giving of notice or lapse of time or both, would constitute such a
Default, has occurred.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
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Name:
Title: CEO