Exhibit 10.4
SUBSIDIARY GUARANTEE
THIS SUBSIDIARY GUARANTEE, dated as
of March 24, 2008, (this “ Guarantee
”), is by and among each of the undersigned subsidiaries
(together with any other entity that may become an additional
guarantor hereunder, the “ Guarantors ”)
of Echo Therapeutics, Inc., a Minnesota corporation (the "
Company ”), for the benefit of Imperium
Advisers, LLC, as collateral agent (in such capacity, the "
Collateral Agent ”), and the holders (the
“ Holders ”) of the Original Issue
Discount Senior Secured Notes (the “ Notes
”) issued as of the date hereof, pursuant to the Securities
Purchase and Loan Agreement, dated as of the date hereof (as
amended, restated, supplemented or otherwise modified from time to
time, the “ Securities Purchase Agreement
”), by and between the Company and Imperium Master Fund, Ltd.
(“ Imperium ”). Capitalized terms used
herein and not otherwise defined shall have the respective meanings
specified in the Securities Purchase Agreement. The Holders and the
Collateral Agent are sometimes collectively referred to herein as
the “ Secured Parties ”.
W I T
N E S S E T H:
WHEREAS, it is a condition to the
obligation of Imperium to enter into the transactions contemplated
by the Securities Purchase Agreement that the Guarantors execute
and deliver to the Collateral Agent for the benefit of the Holders
this Guarantee; and
WHEREAS, each Guarantor, as a
Subsidiary of the Company, will directly or indirectly benefit from
the extension of credit to the Company represented by the issuance
of the Notes and the other transactions contemplated by the
Transaction Documents.
NOW, THEREFORE, in consideration of
the agreements herein contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. GUARANTEE
.
1.1 Guarantee of Obligations
.
(a) Each
Guarantor hereby, jointly and severally, unconditionally and
irrevocably, guarantees to each Secured Party and its lawful
successors, endorsees, transferees and assigns, the prompt and
complete payment and performance by the Company and each other
Guarantor when due (whether at the stated maturity, by acceleration
or otherwise) of all obligations and undertakings of the Company
and the Guarantors of whatever nature, monetary or otherwise, under
the Notes, the Securities Purchase Agreement, the Warrant, the
Registration Rights Agreement, the Security Agreement and the other
Transaction Documents, together with all reasonable
attorneys’ fees, disbursements and all other costs and
expenses of collection incurred by Holders or the Collateral Agent
in enforcing any of such obligations and/or this Guarantee
(collectively, the “ Obligations ”). This
Guarantee shall remain in full force and effect until all the
Obligations and the obligations of each Guarantor under this
Guarantee shall have been satisfied by payment and performance in
full. Each Guarantor shall be regarded, and shall be in the same
position, as principal debtor with respect to the
Obligations.
(b) Anything
herein or in any other Transaction Document to the contrary
notwithstanding, the maximum liability of each Guarantor hereunder
and under the other Transaction Documents shall in no event exceed
the amount which can be guaranteed by such Guarantor under
applicable federal and state laws, including laws relating to the
insolvency of debtors, fraudulent conveyance or transfer or laws
affecting the rights of creditors generally (after giving effect to
the right of contribution established in
Section 1.3 of this Guarantee).
1.2 Guarantee Absolute and
Unconditional . Each Guarantor understands and agrees that this
Guarantee shall be construed as a continuing, absolute and
unconditional guarantee of payment and performance without regard
to (a) the validity or enforceability of any of the
Transaction Documents, any of the Obligations or any other
collateral security therefor or guarantee or right of offset with
respect thereto at any time or from time to time held by the
Secured Parties, (b) any defense, set-off or counterclaim (other
than a defense of payment or performance or fraud or misconduct by
the Secured Parties) which may at any time be available to or be
asserted by the Company or any other Person against the Secured
Parties, or (c) any other circumstance whatsoever (with or
without notice to or knowledge of the Company or such Guarantor)
which constitutes, or might be construed to constitute, an
equitable or legal discharge of the Company for the Obligations, or
of such Guarantor under this Guarantee, in bankruptcy or in any
other instance.
1.3 Right of Contribution .
Each Guarantor hereby agrees that to the extent that a Guarantor
shall have paid more than its proportionate share of any payment
made hereunder, such Guarantor shall be entitled to seek and
receive contribution from and against any other Guarantor hereunder
which has not paid its proportionate share of such payment. Each
Guarantor’s right of contribution shall be subject to the
terms and conditions of Section 1.4 of this
Guarantee. The provisions of this Section 1.3
shall in no respect limit the obligations and liabilities of any
Guarantor to the Secured Parties, and each Guarantor shall remain
liable to the Secured Parties for the full amount guaranteed by
such Guarantor hereunder.
1.4 No Subrogation .
Notwithstanding any payment made by any Guarantor hereunder or any
set-off or application of funds of any Guarantor by the Secured
Parties, no Guarantor shall be entitled to be subrogated to any of
the rights of the Secured Parties against the Company or any other
Guarantor or any collateral security or guarantee or right of
offset held by the Secured Parties for the payment of the
Obligations, nor shall any Guarantor seek or be entitled to seek
any contribution or reimbursement from the Company or any other
Guarantor in respect of payments made by such Guarantor hereunder,
until all amounts owing to the Secured Parties by the Company and
the Guarantors on account of the Obligations are paid in full. If
any amount shall be paid to any Guarantor on account of such
subrogation rights at any time when all of the Obligations shall
not have been paid in full, such amount shall be held by such
Guarantor in trust for the benefit of the Secured Parties,
segregated from other funds of such Guarantor, and shall, forthwith
upon receipt by such Guarantor, be turned over to the Collateral
Agent in the exact form received by such Guarantor (duly indorsed
by such Guarantor to the Collateral Agent, if required), to be
applied
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against
the Obligations, whether matured or unmatured, in such order as the
Secured Parties may determine.
1.5 Modification of Guaranteed
Obligations . Each Guarantor shall remain obligated hereunder
notwithstanding that, without any reservation of rights against any
Guarantor and without notice to or further assent by any Guarantor,
any demand for payment of any of the Obligations made by the
Secured Parties may be rescinded by the Secured Parties and any of
the Obligations continued, and the Obligations, or the liability of
any other Person upon or for any part thereof, or any collateral
security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed,
extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Secured Parties, and the Transaction
Documents may be amended, modified, supplemented or terminated, in
whole or in part, as the Secured Parties may deem advisable from
time to time, and any collateral security, guarantee or right of
offset at any time held by the Secured Parties for the payment of
the Obligations may be sold, exchanged, waived, surrendered or
released. The Secured Parties shall have no obligation to protect,
secure, perfect or insure any Lien at any time held by them as
security for the Obligations or for this Guarantee or any property
subject thereto.
1.6 Waiver . Each Guarantor
waives any and all notice of the creation, renewal, extension or
accrual of any of the Obligations and notice of or proof of
reliance by the Secured Parties upon the guarantees contained in
this Section 1 or acceptance of the guarantees
contained in this Section 1 . The Obligations
shall conclusively be deemed to have been created, contracted or
incurred, or renewed, extended, amended or waived, in reliance upon
the guarantees contained in this Section 1 . All
dealings between the Company and any of the Guarantors, on the one
hand, and the Secured Parties, on the other hand, shall be
conclusively presumed to have been had or consummated in reliance
upon the guarantees contained in this Section 1
. Each Guarantor waives, to the extent permitted by law, diligence,
presentment, protest, demand for payment and notice of default or
nonpayment to or upon the Company or any of the Guarantors with
respect to the Obligations.
1.7 Enforcement of Guarantee
.
(a) When
making any demand hereunder or otherwise pursuing its rights and
remedies hereunder against any Guarantor, the Collateral Agent,
acting on behalf of each Holder, may, but shall be under no
obligation to, make a similar demand on or otherwise pursue such
rights and remedies as the Collateral Agent, acting on behalf of
the Holders, may have against the Company, any other Guarantor or
any other Person or against any collateral security or guarantee
for the Obligations or any right of offset with respect thereto,
and any failure by the Collateral Agent, acting on behalf of the
Holders, to make any such demand, to pursue such other rights or
remedies or to collect any payments from the Company, any other
Guarantor or any other Person or to realize upon any such
collateral security or guarantee or to exercise any such right of
offset, or any release of the Company, any other Guarantor or any
other Person or any such collateral security, guarantee or right of
offset, shall not relieve any Guarantor of any obligation or
liability hereunder, and shall not impair or affect the rights and
remedies, whether express, implied or available as a matter of law,
of the Secured Parties against any Guarantor. For the purposes
hereof, “ demand ” shall include the
commencement and continuance of any legal proceedings.
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(b)
Expenses; Indemnification .
(i) Each
Guarantor agrees to pay, or reimburse the Collateral Agent, acting
on behalf of the Holders, all of the Collateral Agent’s costs
and expenses incurred in collecting against such Guarantor under
this Guarantee or otherwise enforcing or preserving any rights
under this Guarantee and the other Transaction Documents to which
such Guarantor is a party, including, without limitation, the
reasonable fees and disbursements of counsel to the Collateral
Agent.
(ii) Each
Guarantor agrees to pay, and to save the Secured Parties harmless
from, any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the
enforcement, performance and administration of this Guarantee,
except any such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or
disbursements which result from the gross negligence or willful
misconduct of a Secured Party as determined by a final
nonappealable decision of a court of competent jurisdiction.
(iii) Notwithstanding
anything to the contrary in this Agreement, with respect to any
defaulted non-monetary Obligations the specific performance of
which by the Guarantors is not reasonably possible (e.g., the
is
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