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Exhibit
10.7
SUBSIDIARY
GUARANTY
Dated as of August 31,
2007
From
THE GUARANTORS NAMED
HEREIN
and
THE ADDITIONAL GUARANTORS
REFERRED TO HEREIN
as
Guarantors
in favor of
PRIDES CAPITAL FUND I,
L.P.
TABLE OF
CONTENTS
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Section
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Page |
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Section 1.
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Guaranty;
Limitation of Liability |
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1 |
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Section 2.
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Guaranty
Absolute |
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2 |
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Section 3.
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Waivers
and Acknowledgments |
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3 |
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Section 4.
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Subrogation |
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3 |
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Section 5.
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Payments
Free and Clear of Taxes, Etc. |
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4 |
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Section 6.
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Representations and Warranties |
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5 |
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Section 7.
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Covenants |
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5 |
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Section 8.
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Amendments, Guaranty Supplements, Etc. |
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6 |
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Section 9.
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Notices,
Etc. |
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6 |
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Section 10.
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No
Waiver; Remedies |
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6 |
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Section 11.
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Right of
Set-off |
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6 |
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Section 12.
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Indemnification |
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7 |
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Section 13.
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Subordination |
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7 |
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Section 14.
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Continuing Guaranty; Assignments under the Note |
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8 |
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Section 15.
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Execution
in Counterparts |
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9 |
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Section 16.
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Governing
Law; Jurisdiction; Waiver of Jury Trial, Etc. |
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9 |
Exhibit A—Guaranty
Supplement
i
SUBSIDIARY
GUARANTY
THIS SUBSIDIARY GUARANTY
dated as of August 31, 2007 is made by the parties listed on
the signature pages hereof under the caption “Subsidiary
Guarantors” and the Additional Guarantors (as defined in
Section 8(b)) (such Persons so listed and the Additional
Guarantors being, collectively, the “
Guarantors ” and, individually, each a “
Guarantor ”) in favor of Prides Capital Fund I,
L.P. (the “ Purchaser ”).
PRELIMINARY STATEMENT. The
Purchaser has purchased a $10,000,000 note dated as of the date
hereof (the “ Note ”; capitalized terms
defined therein and not otherwise defined herein being used herein
as therein defined) pursuant to a Note Purchase Agreement dated
August 31, 2007 (the “ Note Purchase
Agreement ”) between eDiets.com, Inc., a Delaware
corporation (the “ Company ”) and the
Purchaser. Each Guarantor will derive substantial direct and
indirect benefits from financing provided by the Note. It is a
condition precedent to the purchase of the Note that each Guarantor
shall have executed and delivered this Guaranty.
NOW, THEREFORE, in
consideration of the premises and in order to induce the Purchaser
to purchase the Note, each Guarantor, jointly and severally with
each other Guarantor, hereby agrees as follows:
Section 1.
Guaranty; Limitation of Liability (a) Each Guarantor hereby
absolutely, unconditionally and irrevocably guarantees the punctual
payment when due, whether at scheduled maturity or on any date of a
required prepayment or by acceleration, demand or otherwise, of all
amounts due under the Note ( the “ Obligations
”) (including, without limitation, any extensions,
modifications, substitutions, amendments or renewals of any or all
of the foregoing Obligations), whether direct or indirect, absolute
or contingent, and whether for principal, interest, premiums, fees,
indemnities, contract causes of action, costs, expenses or
otherwise (such Obligations being the “ Guaranteed
Obligations ”), and agrees to pay any and all
expenses (including, without limitation, fees and expenses of
counsel) incurred by the Purchaser in enforcing any rights under
this Guaranty, the Security Agreement dated as of the date hereof
(the “ Security Agreement ”) among the
Purchaser and the parties signatory thereto (each such party, a
“ Note Party ” and collectively, the
“ Note Parties ”) or the Note
(collectively, the “ Note Documents ”).
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
any other Note Party under or in respect of the Note Documents but
for the fact that they are unenforceable or not allowable due to
the existence of a bankruptcy, reorganization or similar proceeding
involving such other Note Party.
(b) Each Guarantor, and by
its acceptance of this Guaranty, the Purchaser, hereby confirms
that it is the intention of all such parties that this Guaranty and
the Obligations of each Guarantor hereunder not constitute a
fraudulent transfer or conveyance for purposes of Bankruptcy Law
(as hereinafter defined), the Uniform Fraudulent Conveyance Act,
the Uniform Fraudulent Transfer Act or any similar foreign, federal
or state law to the extent applicable to this Guaranty and the
Obligations of each Guarantor hereunder. To effectuate the
foregoing intention, the Purchaser and the Guarantors hereby
irrevocably agree that the Obligations of each Guarantor under this
Guaranty at any time shall be limited to the maximum amount as will
result in the Obligations of such Guarantor under this Guaranty not
constituting a fraudulent transfer or conveyance. For purposes
hereof, “ Bankruptcy Law ” means
the
Bankruptcy Code of the United States,
and all other liquidation, conservatorship, bankruptcy, assignment
for the benefit of creditors, laws of the United States or other
applicable jurisdictions from time to time in effect and affecting
the rights of creditors generally.
(c) Each Guarantor hereby
unconditionally and irrevocably agrees that in the event any
payment shall be required to be made to the Purchaser under this
Guaranty or any other guaranty, such Guarantor will contribute, to
the maximum extent permitted by law, such amounts to each other
Guarantor and each other guarantor so as to maximize the aggregate
amount paid to the Purchaser under or in respect of the Note
Documents.
Section 2.
Guaranty Absolute . Each Guarantor guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the
terms of the Note Documents, regardless of any law, regulation or
order now or hereafter in effect in any jurisdiction affecting any
of such terms or the rights of the Purchaser with respect thereto.
The Obligations of each Guarantor under or in respect of this
Guaranty are independent of the Guaranteed Obligations or any other
Obligations of any other Note Party under or in respect of the Note
Documents, and a separate action or actions may be brought and
prosecuted against each Guarantor to enforce this Guaranty,
irrespective of whether any action is brought against the Company
or any other Note Party or whether the Company or any other Note
Party is joined in any such action or actions. The liability of
each Guarantor under this Guaranty shall be irrevocable, absolute
and unconditional irrespective of, and each Guarantor hereby
irrevocably waives any defenses it may now have or hereafter
acquire in any way relating to, any or all of the
following:
(a) any lack of validity or
enforceability of any Note Document 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 Obligations of any other
Note Party under or in respect of the Note Documents, or any other
amendment or waiver of or any consent to departure from any Note
Document, including, without limitation, any increase in the
Guaranteed Obligations resulting from the extension of additional
credit to any Note Party or any of its Subsidiaries or
otherwise;
(c) any taking, exchange,
release or non-perfection of any Collateral (as such term is
defined in the Security Agreement) (or any other 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 manner of application
of Collateral or any other collateral, or proceeds thereof, to all
or any of the Guaranteed Obligations, or any manner of sale or
other disposition of any Collateral or any other collateral for all
or any of the Guaranteed Obligations or any other Obligations of
any Note Party under the Note Documents or any other assets of any
Note Party or any of its subsidiaries;
(e) any change, restructuring
or termination of the corporate structure or existence of any Note
Party or any of its subsidiaries;
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(f) the failure of any other
individual or business entity to execute or deliver this Guaranty,
any Guaranty Supplement (as hereinafter defined) or any other
guaranty or agreement or the release or reduction of liability of
any Guarantor or other guarantor or surety with respect to the
Guaranteed Obligations; or
(g) any other circumstance
(including, without limitation, any statute of limitations) or any
existence of or reliance on any representation by the Purchaser
that might otherwise constitute a defense available to, or a
discharge of, any Note Party 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 the Purchaser or any
successor-in-interest, assignee or transferee of the Purchaser upon
the insolvency, bankruptcy or reorganization of the Company or any
other Note Party or otherwise, all as though such payment had not
been made.
Section 3.
Waivers and Acknowledgments (a) Each Guarantor hereby
unconditionally and irrevocably waives promptness, diligence,
notice of acceptance, presentment, demand for performance, notice
of nonperformance, default, acceleration, protest or dishonor and
any other notice with respect to any of the Guaranteed Obligations
and this Guaranty and any requirement that the Purchaser protect,
secure, perfect or insure any lien or other encumbrance or any
property subject thereto or exhaust any right or take any action
against any Note Party or any other entity or any
Collateral.
(b) Each Guarantor hereby
unconditionally and irrevocably waives any right to revoke this
Guaranty and acknowledges that this Guaranty is continuing in
nature and applies to all Guaranteed Obligations, whether existing
now or in the future.
(c) Each Guarantor hereby
unconditionally and irrevocably waives (i) any defense arising
by reason of any claim or defense based upon an election of
remedies by the Purchaser that in any manner impairs, reduces,
releases or otherwise adversely affects the subrogation,
reimbursement, exoneration, contribution or indemnification rights
of such Guarantor or other rights of such Guarantor to proceed
against any of the other Note Parties, any other guarantor or any
entity or any Collateral and (ii) any defense based on any
right of set-off or counterclaim against or in respect of the
Obligations of such Guarantor hereunder.
(d) Each Guarantor
acknowledges that it will receive substantial direct and indirect
benefits from the financing arrangements contemplated by the Note
Documents and that the waivers set forth in Section 2 and this
Section 3 are knowingly made in contemplation of such
benefits.
Section 4.
Subrogation . Each Guarantor hereby unconditionally and
irrevocably agrees not to exercise any rights that it may now have
or hereafter acquire against the Company, any other Note Party or
any other insider guarantor that arise from the existence, payment,
performance or enforcement of such Guarantor’s Obligations
under or in respect of this Guaranty or any other Note Document,
including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any
right to participate in any claim or remedy of the Purchaser
against the Company, any other Note Party or any other
insider
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guarantor or any Collateral, whether or
not such claim, remedy or right arises in equity or under contract,
statute or common law, including, without limitation, the right to
take or receive from the Company, any other Note Party or any other
insider guarantor, directly or indirectly, in cash or other
property or by set-off or in any other manner, payment or security
on account of such claim, remedy or right, unless and until all of
the Guaranteed Obligations and all other amounts payable under this
Guaranty shall have been paid in full in cash. If any amount shall
be paid to any Guarantor in violation of the immediately preceding
sentence at any time prior to the payment in full in cash of the
Guaranteed Obligations and all other amounts payable under this
Guaranty, such amount shall be received and held in trust for the
benefit of the Purchaser, shall be segregated from other property
and funds of such Guarantor and shall forthwith be paid or
delivered to the Purchaser in the same form as so received (with
any necessary endorsement or assignment) to be credited and applied
to the Guaranteed Obligations and all other amounts payable under
this Guaranty, whether matured or unmatured, in accordance with the
terms of the Note Documents, or to be held as Collateral for any
Guaranteed Obligations or other amounts payable under this Guaranty
thereafter arising. If (i) any Guarantor shall make payment to
the Purchaser of all or any part of the Guaranteed Obligations and
(ii) all of the Guaranteed Obligations and all other amounts
payable under this Guaranty shall have been paid in full in cash,
the Purchaser will, at such Guarantor’s request and expense,
execute and deliver to such Guarantor appropriate documents,
without recourse and without representation or warranty, necessary
to evidence the transfer by subrogation to such Guarantor of an
interest in the Guaranteed Obligations resulting from such payment
made by such Guarantor pursuant to this Guaranty.
Section 5.
Payments Free and Clear of Taxes, Etc . (a) Any and all
payments made by any Guarantor under or in respect of this Guaranty
or any other Note Document shall be made free and clear of and
without deduction for any and all present or future Taxes (as
defined below). If any Guarantor shall be required by law to deduct
any Taxes from or in respect of any sum payable under or in respect
of this Guaranty or any other Note Document to the Purchaser,
(i) the sum payable by such Guarantor shall be increased as
may be necessary so that after such Guarantor and the Purchaser
have made all required deductions (including deductions applicable
to additional sums payable under this Section 5), the
Purchaser receives an amount equal to the sum it would have
received had no such deductions been made, (ii) such Guarantor
shall make all such deductions and (iii) such Guarantor shall
pay the full amount deducted to the relevant taxation authority or
other authority in accordance with applicable law.
(b) In addition, each
Guarantor agrees to pay any present or future Other Taxes (as
defined below) that arise from any payment made by or on behalf of
such Guarantor under or in respect of this Guaranty or any other
Note Document or from the execution, delivery or registration of,
performance under, or otherwise with respect to, this Guaranty and
the other Note Documents.
(c) Each Guarantor will
indemnify the Purchaser for and hold it harmles
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