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Exhibit 10.3
SUBSIDIARY GUARANTEE
SUBSIDIARY
GUARANTEE, dated as of March 5, 2008 (this “ Guarantee
”), made by each of the signatories hereto (together
with any other entity that may become a party hereto as
provided herein, (the “ Guarantors
”), in favor of the purchasers signatory (the
"Purchaser") to that certain Debt Restructuring Agreement,
dated as of the date hereof, between Viral Genetics, Inc., a
Delaware corporation (the “ Company
”) and the Purchaser.
W I T N E S S E T H:
WHEREAS,
pursuant to that certain Debt Restructuring Agreement, dated
as of the date hereof, by and between the Company and the
Purchaser (the “ Restructuring
Agreement ”), the Company and the Purchaser have
agreed to restructure certain debt obligated to the Purchaser
by the Company, said Restructuring Agreement including the
Purchaser’s commitment to provide to the Company certain
revolving loan financing pursuant a Secured Revolving Credit
Note, dated as of the date hereof, and maturing June 30, 2013
(the “ Revolving
Credit ”), subject to the terms and conditions
set forth in the Restructuring Agreement, the obligations of
the Revolving Credit being secured by a Security Agreement
(the “ Security
Agreement ”), also dated as of the date hereof;
and
WHEREAS,
each Guarantor will directly benefit from the extension of
credit to the Company represented by the issuance of the
Revolving Credit; and
NOW,
THEREFORE, in consideration of the premises and to induce the
Purchaser to enter into the Restructuring Agreement and to
carry out the transactions contemplated thereby, each
Guarantor hereby agrees with the Purchaser as
follows:
1.
Definitions.
Unless otherwise defined herein, terms defined in the
Restructuring Agreement and used herein shall have the
meanings given to them in the Restructuring Agreement. The
words “hereof,” “herein,”
“hereto” and “hereunder” and words of
similar import when used in this Guarantee shall refer to this
Guarantee as a whole and not to any particular provision of
this Guarantee, and Section and Schedule references are to
this Guarantee unless otherwise specified. The meanings given
to terms defined herein shall be equally applicable to both
the singular and plural forms of such terms. The following
terms shall have the following meanings:
“
Event of
Default ” means the Events of Default set forth
in Section 6 of the Security Agreement.
“
Guarantee
” means this Subsidiary Guarantee, as the same may be
amended, supplemented or otherwise modified from time to
time.
“
Obligations
” means the collective reference to all obligations and
undertakings of the Company of whatever nature, monetary or
otherwise, under the Revolving Credit and the Security
Agreement, together with all reasonable attorneys’ fees,
disbursements and all other costs and expenses of collection
incurred by Purchaser in enforcing any of such obligations
and/or this Guarantee.
“
Person
” means an individual or corporation, partnership,
trust, incorporated or unincorporated association, joint
venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other
entity of any kind.
“
Transaction
Documents ” means this Guarantee, the
Restructuring Agreement, and any other documents or agreements
executed in connection with the transactions contemplated
herein or therein.
2.
Guarantee
.
(a)
Guarantee
.
(i) The
Guarantors hereby, jointly and severally, unconditionally and
irrevocably, guarantee to the Purchaser and its respective
successors, indorsees, transferees and assigns, the prompt and
complete payment and performance by the Company when due
(whether at the stated maturity, by acceleration or otherwise)
of the Obligations.
(ii) 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 2(b)).
(iii) Each
Guarantor agrees that the Obligations may at any time and from
time to time exceed the amount of the liability of such
Guarantor hereunder without impairing the guarantee contained
in this Section 2 or affecting the rights and remedies of the
Purchaser hereunder.
(iv) The
guarantee contained in this Section 2 shall remain in full
force and effect until all the Obligations and the obligations
of each Guarantor under the guarantee contained in this
Section 2 shall have been satisfied by payment in
full.
(v) No
payment made by the Company, any of the Guarantors, any other
guarantor or any other Person or received or collected by the
Purchaser from the Company, any of the Guarantors, any other
guarantor or any other Person by virtue of any action or
proceeding or any set-off or appropriation or application at
any time or from time to time in reduction of or in payment of
the Obligations shall be deemed to modify, reduce, release or
otherwise affect the liability of any Guarantor hereunder
which shall, notwithstanding any such payment (other than any
payment made by such Guarantor in respect of the Obligations
or any payment received or collected from such Guarantor
inrespect of the Obligations), remain liable for the
Obligations up to the maximum liability of such Guarantor
hereunder until the Obligations are paid in full.
(vi) 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 issuance of the Company's Common Stock),
the Guarantors shall only be liable for making the Purchaser
whole on a monetary basis for the Company's failure to perform
such Obligations in accordance with the terms of the Revolving
Credit.
(b)
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 2(c). The provisions of this Section
2(b) shall in no respect limit the obligations and liabilities
of any Guarantor to the Purchaser, and each Guarantor shall
remain liable to the Purchaser for the full amount guaranteed
by such Guarantor hereunder.
(c)
No
Subrogation . Notwithstanding any payment made by any
Guarantor hereunder or any set-off or application of funds of
any Guarantor by the Purchaser, no Guarantor shall be entitled
to be subrogated to any of the rights of the Purchaser against
the Company or any other Guarantor or any collateral security
or guarantee or right of offset held by the Purchaser 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
Purchaser by the Company 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 Purchaser,
segregated from other funds of such Guarantor, and shall,
forthwith upon receipt by such Guarantor, be turned over to
the Purchaser in the exact form received by such Guarantor
(duly indorsed by such Guarantor to the Purchaser, if
required), to be applied against the Obligations, whether
matured or unmatured, in such order as the Purchaser may
determine.
(d)
Amendments,
Etc . With Respect to the 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 Purchaser may be
rescinded by the Purchaser 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 Purchaser,
and the Restructuring Agreement and the other Transaction
Documents and any other documents executed and delivered in
connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Purchaser may deem
advisable from time to time, and any collateral security,
guarantee or right of offset at any time held by the Purchaser
for the payment of the Obligations may be sold, exchanged,
waived, surrendered or released. The Purchaser 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
the guarantee contained in this Section 2 or any property
subject thereto.
(e)
Guarantee
Absolute and Unconditional . 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 Purchaser upon the guarantee contained in this Section
2 or acceptance of the guarantee contained in this Section 2;
the Obligations, and any of them, shall conclusively be deemed
to have been created, contracted or incurred, or renewed,
extended, amended or waived, in reliance upon the guarantee
contained in this Section 2; and all dealings between the
Company and any of the Guarantors, on the one hand, and the
Purchaser, on the other hand, likewise shall be conclusively
presumed to have been had or consummated in reliance upon the
guarantee contained in this Section 2. 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. Each Guarantor understands
and agrees that the guarantee contained in this Section 2
shall be construed as a continuing, absolute and unconditional
guarantee of payment without regard to (a) 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 Purchaser, (b) any defense,
set-off or counterclaim (other than a defense
of payment or performance or fraud or misconduct by Purchaser)
which may at any time be available to or be asserted by the
Company or any other Person against the Purchaser, 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 the guarantee contained in this Section 2, in
bankruptcy or in any other instance. When making any demand
hereunder or otherwise pursuing its rights and remedies
hereunder against any Guarantor, the Purchaser may, but shall
be under no obligation to, make a similar demand on or
otherwise pursue such rights and remedies as they 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 Purchaser 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 Purchaser against any Guarantor. For the
purposes hereof, "demand" shall include the commencement and
continuance of any legal proceedings.
(f)
Reinstatement
. The guarantee contained in this Section 2 shall continue to
be effective, or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any of the Obligations
is rescinded or must otherwise be restored or returned by the
Purchaser upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Company or any Guarantor,
or upon or as a result of the appointment of a receiver,
intervenor or conservator of, or trustee or similar officer
for, the Company or any Guarantor or any substantial part of
its property, or otherwise, all as though such payments had
not been made.
(g)
Payments
. Each Guarantor hereby guarantees tha
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