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Exhibit 10.7
SUBSIDIARY
GUARANTY
Dated as of May 30,
2008
From
THE GUARANTORS NAMED
HEREIN
and
THE ADDITIONAL GUARANTORS
REFERRED TO HEREIN
as
Guarantors
in favor of
PRIDES CAPITAL FUND I,
L.P.
T A B
L E O F
C O N T E N T
S
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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 Notes |
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8 |
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| Section 15. |
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Execution
in Counterparts |
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8 |
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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 May 30, 2008 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 (i) has purchased a $2,595,000.00 note dated as of
the date hereof (the “ Initial Note ”)
and (ii) may purchase a $2,550,000.00 note dated June 30,
2008 (the “ Subsequent Note ”, and
together with the Initial Note, each a “ Note
” and collectively the “ Notes ”;
capitalized terms defined in the Notes and not otherwise defined
herein being used herein as therein defined) pursuant to a Note
Purchase Agreement dated May 30, 2008 (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 Notes. It is a
condition precedent to the purchase of the Notes 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 Notes, 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 Notes ( 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 Notes
(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;
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(e) any change, restructuring
or termination of the corporate structure or existence of any Note
Party or any of its subsidiaries;
(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
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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 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
be
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