EXH.
10.6
GUARANTY
This Guaranty (the "Guaranty"), dated as of
February 12, 2007, is entered into by Lotus Pharmaceutical
International, Inc., a Nevada corporation (and wholly owned
subsidiary of Lotus Pharmaceuticals, Inc., a Nevada corporation),
En Ze Jia Shi Pharmaceutical CO., Ltd., a People’s Republic
of China corporation, Liang Fang Pharmaceutical CO., Ltd., a
People’s Republic of China corporation (each a
“Guarantor” or “Guarantors”), for the
benefit of the parties identified on Schedule A hereto (each a
“Lender” and collectively, the "Lenders").
2.1 Guarantor Lotus Pharmaceutical International,
Inc. is a wholly owned subsidiary of Lotus Pharmaceuticals, Inc., a
Nevada corporation (“Parent”). En Ze Jia Shi
Pharmaceutical CO., Ltd., and Liang Fang Pharmaceutical CO., Ltd.,
are both entities formed in the People’s Republic of China as
corporations and are not direct subsidiaries of Parent but have
entered contracts assigning all or substantially all of their
respective revenue to Lotus Pharmaceutical International, Inc. The
Lenders have made, are making and will be making loans to Parent
(the "Loans"). Guarantors, and each of them, will obtain
substantial benefit from the proceeds of the Loans.
2.2
The Loans are and will be evidenced
by certain promissory Notes (collectively, “Note” or
“Notes") issued by Parent on, about or after the date of this
Guaranty pursuant to subscription agreements dated at or about the
date hereof (“Subscription Agreements”). The Notes are
further identified on Schedule A hereto and were and will be
executed by Parent as “Borrower” or
“Debtor” for the benefit of each Lender as the
“Holder” or “Lender” thereof.
2.3 In consideration of the Loans made and to be
made by Lenders to Parent and for other good and valuable
consideration, and as security for the performance by Parent of its
obligations under the Notes and as security for the repayment of
the Loans and all other sums due from Debtor to Lenders arising
under the Notes, Subscription Agreements and any other agreement
between or among them relating to the foregoing (collectively, the
"Obligations"), Guarantors, for good and valuable consideration,
receipt of which is acknowledged, each has agreed to enter into
this Guaranty. Obligations include all future advances by Lenders
to Parent made by Lenders pursuant to the Subscription
Agreement.
2.4 The Lenders have appointed S. Michael Rudolph
as Collateral Agent pursuant to that certain Collateral Agent
Agreement dated at or about the date of this Agreement
(“Collateral Agent Agreement”), among the Lenders and
Collateral Agent.
3.1 Guaranty . Guarantors, and each of them, hereby
unconditionally and irrevocably guarantees, jointly and severally
with any other Guarantor, the punctual payment, performance and
observance when due, whether at stated maturity, by acceleration or
otherwise, of all of the Obligations now or hereafter existing,
whether for principal, interest (including, without limitation, all
interest that accrues after the commencement of any insolvency,
bankruptcy or reorganization of Parent, whether or not constituting
an allowed claim in such proceeding), fees, commissions, expense
reimbursements, liquidated damages, indemnifications or otherwise
(such obligations, to the extent not paid by Parent being the
“Guaranteed Obligations”), and agrees to pay any and
all reasonable costs, fees and expenses (including reasonable
counsel fees and expenses) incurred by Collateral Agent and the
Lenders in enforcing any rights under the guaranty set forth
herein. Without limiting the generality of the foregoing, each
Guarantor’s liability shall extend to all amounts that
constitute part of the Guaranteed Obligations and would be owed by
Parent to Collateral Agent and the Lenders, but for the fact that
they are unenforceable or not allowable due to the existence of an
insolvency, bankruptcy or reorganization involving
Parent.
3.2 Guaranty Absolute . Guarantor and each of them undersigned hereby
guarantees that the Guaranteed Obligations will be paid strictly in
accordance with the terms of the Notes, regardless of any law,
regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of Collateral Agent or
the Lenders with respect thereto. The obligations of each Guarantor
under this Guaranty are independent of the Guaranteed Obligations,
and a separate action or actions may be brought and prosecuted
against Guarantor to enforce such obligations, irrespective of
whether any action is brought against Parent or any other Guarantor
or whether Parent or any other Guarantor is joined in any such
action or actions. The liability of each Guarantor under this
Guaranty constitutes a primary obligation, and not a contract of
surety, and to the extent permitted by law, shall be irrevocable,
absolute and unconditional irrespective of, and Guarantors hereby
irrevocably waive any defenses they may now or hereafter have in
any way relating to, any or all of the following:
(a) any lack of validity or enforceability of
the Notes or any agreement or instrument relating
thereto;
(b) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Guaranteed
Obligations, or any other amendment or waiver of or any consent to
departure from the Notes, including, without limitation, any
increase in the Guaranteed Obligations resulting from the extension
of additional credit to Parent or otherwise;
(c) any taking, exchange, release, subordination
or non-perfection of any Collateral, or any taking, release or
amendment or waiver of or consent to departure from any other
guaranty, for all or any of the Guaranteed Obligations;
(d) any change, restructuring or termination of
the corporate, limited liability company or partnership structure
or existence of Parent; or
(e) any other circumstance (including, without
limitation, any statute of limitations) or any existence of or
reliance on any representation by Collateral Agent or the Lenders
that might otherwise constitute a defense available to, or a
discharge of, Parent or any other guarantor or surety.
This Guaranty
shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations
is rescinded or must otherwise be returned by Collateral Agent, the
Lenders or any other entity upon the insolvency, bankruptcy or
reorganization of the Parent or otherwise (and whether as a result
of any demand, settlement, litigation or otherwise), all as though
such payment had not been made.
3.3 Waiver . Guarantors hereby waive promptness, diligence,
notice of acceptance and any other notice with respect to any of
the Guaranteed Obligations and this Guaranty and any requirement
that Collateral Agen
