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EXECUTION COPY
GUARANTY
THIS GUARANTY (this
“Guaranty”) is made effective as of December 11, 2007
by
SONG JINAN, an
individual, with his principal business address located at
No.
999 Ningqiao Road, Jinqiao Export Processing Zone, Pudong, Shanghai
201206, People’s Republic of China (the
“Guarantor”), to and for the benefit of
POPE INVESTMENTS II LLC ,
a Delaware limited liability company, with its principal executive
offices located at 5100 Poplar Avenue, Suite 805, Memphis,
Tennessee 38137 (“Purchaser”).
WHEREAS ,
China-Biotics, Inc,
a
Delaware company (“Issuer”), and Purchaser have entered
into that certain Investment Agreement dated as of even date
herewith (as amended, supplemented or modified from time to time,
the “Agreement”), and Issuer has issued to Purchaser
its 4% Senior Convertible Notes Due 2010 in the aggregate principal
amount of TWENTY FIVE MILLION DOLLARS ($25,000,000) (the
“Notes);
WHEREAS ,
Guarantor, as an inducement for Purchaser’s entering into the
Agreement and purchasing the Notes, offered and agreed to
personally guarantee the performance of and full and prompt payment
of the Notes in full, with all accrued but unpaid interest and any
other payments which may be due thereunder, and to secure his
guaranty with a pledge or deposit of Four Million shares of Common
Stock of the Issuer;
WHEREAS ,
it is a condition precedent to Purchaser’s obligation to
consummate the transactions contemplated by the Agreement,
including the purchase of the Notes that Guarantor execute and
deliver this Guaranty; and
WHEREAS ,
Guarantor acknowledges and confirms that, (a) he will benefit from
the Purchaser’s consummation of the transactions contemplated
by the Agreement, (b) the Notes constitute valuable consideration
to Guarantor, (d) this Guaranty is intended to be an inducement to
Purchaser to execute, deliver and perform under the Agreement and
to purchase the Notes, and (e) Purchaser is relying upon this
Guaranty in consummating the transactions contemplated by the
Agreement, including the purchase of the Notes.
NOW,
THEREFORE ,
in consideration of the foregoing and of the covenants and
agreements hereinafter set forth, the receipt and sufficiency of
which are hereby acknowledged, and as an inducement for Purchaser
to enter into the Notes, Guarantor, intending to be legally bound
hereby, agrees as follows:
1.
All
capitalized terms used in this Guaranty and not defined herein
shall have the defined meanings provided in the Agreement.
Whenever the context so requires, each reference to gender
includes the masculine and feminine, the singular number
includes the plural and vice versa. The words
“hereof” “herein” and
“hereunder” and words of similar import when used
in this Guaranty shall refer to this Guaranty as a whole and
not to any particular provision of this Guaranty, and
references to section, article, annex, schedule, exhibit and
like references are references to this Guaranty unless
otherwise specified. An Event of Default shall
“continue” or be “continuing” until
such Event of Default has been cured or waived by Purchaser.
References in this Guaranty to any person shall include such
person and its successors and permitted assigns.
2.
Guarantor
hereby irrevocably, unconditionally and absolutely guarantees
the prompt, complete and full payment and performance when
due, no matter how the same shall become due, but subject to
any applicable grace periods, of all Notes outstanding from
time to time under the Notes, together with all interest
thereon and all other sums payable under the Notes, whether in
respect of interest, Default Interest, additional fees,
expense reimbursement or otherwise, (the “Guaranteed
Obligations”).
3.
As
collateral security for his obligations under this Guaranty,
the Guarantor shall pledge Four Million (4,000,000) shares of
the Issuer’s Common Stock and shall have executed and
delivered to Purchaser a pledge, assignment or similar
agreement in form and substance satisfactory to the Purchaser
with respect thereto (the “Pledge Agreement”), and
shall have taken such other steps or actions as Purchaser may
reasonably require to perfect its interest in such
collateral.
4.
The
Guarantor shall also be responsible for and pay, or promptly
reimburse the Purchaser all out-of-pocket expenses (including
reasonable fees and expenses of counsel) incurred in the
enforcement or protection of rights hereunder, after proper
demand under this Guaranty has been made and not timely
honored by Guarantor.
5.
This
Guaranty is a guaranty of payment and not a guaranty of
collection. If any Guaranteed Obligation is not satisfied when
due, whether by acceleration or otherwise, the Guarantor shall
forthwith satisfy such Guaranteed Obligation, upon
demand,
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