Document:

ex10-4.htm

Exhibit 10.4

 

SUBSIDIARY GUARANTEE

SUBSIDIARY GUARANTEE, dated as of May 14, 2012 (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,” and together with the Company (as defined below), the “Debtors”), in favor of the purchaser (including such purchaser’s successors, transferees and assigns, the “Purchaser”) signatory to the Purchase Agreement (as defined below).

 

WHEREAS, pursuant to that certain Securities Purchase Agreement (“Purchase Agreement”) dated as of May __, 2012, by and between AtheroNova Inc., a Delaware corporation (the “Company”), and the Purchaser, the Company has agreed to sell and issue to the Purchaser, and the Purchaser has agreed to purchase from the Company the Company’s 12% Convertible Note (the “Note”), subject to the terms and conditions set forth therein;

WHEREAS, each Guarantor is a direct or indirect Subsidiary of the Company, and as a condition to the Closing of the transactions contemplated by the Purchase Agreement, and in order to induce the Purchaser to enter into and consummate the transactions contemplated by the Purchase Agreement (including without limitation purchasing the Note and making the loan evidenced thereby), the Company has agreed that the Guarantors would guarantee the Company’s obligations under the Note, Purchase Agreement and other Transaction Documents in accordance with the terms set forth in this Guarantee, the Note, the Purchase Agreement and other Transaction Documents; and

WHEREAS, each Guarantor will directly benefit from the extension of credit to the Company represented by the issuance of the Note.

NOW, THEREFORE, in consideration of the premises and to induce the Purchaser to enter into the Purchase Agreement and to carry out the transactions contemplated thereby, each Guarantor hereby agrees with the Purchaser as follows:

 

1.           Definitions.  Unless otherwise defined herein, initially capitalized terms defined in the Purchase Agreement and used herein shall have the meanings given to them in the Purchase 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:

“Guarantee” means this Subsidiary Guarantee, as the same may be amended, supplemented or otherwise modified from time to time.

  

  

  

“Obligations” means, in addition to all other costs and expenses of collection incurred by the Purchaser in enforcing any of such Obligations and/or this Guarantee, all of the liabilities and obligations (primary, secondary, direct, contingent, sole, joint or several) due or to become due, or that are now or may be hereafter contracted or acquired, or owing, of any Debtor to the Purchaser, including without limitation all obligations under the Purchase Agreement, the Note, the Warrant, this Guarantee and any other instruments, agreements or other documents executed and/or delivered in connection herewith or therewith, in each case, whether now or hereafter existing, voluntary or involuntary, direct or indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly owed with others, and whether or not from time to time decreased or extinguished and later increased, created or incurred, and all or any portion of such obligations or liabilities that are paid, to the extent all or any part of such payment is avoided or recovered directly or indirectly from the Purchaser as a preference, fraudulent transfer or otherwise, as such obligations may be amended, supplemented, converted, extended or modified from time to time.  Without limiting the generality of the foregoing, the term “Obligations” shall include without limitation: (i) principal of, and interest on, the Note and the loan extended pursuant thereto; (ii) any and all other fees, indemnities, costs, obligations and liabilities of the Debtors from time to time under or in connection with the Purchase Agreement, the Note, the Warrant, this Guarantee and any other instruments, agreements or other documents executed and/or delivered in connection herewith or therewith; and (iii) all amounts (including but not limited to post-petition interest) in respect of the foregoing that would be payable but for the fact that the obligations to pay such amounts are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving any Debtor.

2.           Guarantee.

(a)           Guarantee.

 

(i)           The Guarantors hereby, jointly and severally, absolutely, unconditionally and irrevocably, guarantee to the Purchaser and its successors, endorsees, 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.  The Guarantors’ liability under this Guarantee shall be unlimited, open and continuous for so long as this Guarantee remains in force.

(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 set forth 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.

  

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(iv)           The guarantee contained in this Section 2 shall remain in full force and effect until all the Obligations shall have been fully paid or satisfied.

(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 in respect 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 Guarantee, 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 Transaction Documents.

(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 have not 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, promptly following 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.

 

  

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(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 Purchase Agreement, the Note 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 fullest 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) the validity or enforceability of the Purchase Agreement, the Note or any other Transaction Document, 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 and performance in full of the Obligations) 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 without limitation the commencement and continuance of any legal proceedings.

  

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(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 that payments hereunder will be paid to the Purchaser without set-off or counterclaim in U.S. dollars at the address set forth or referred to in the Purchase Agreement.

3.           Representations and Warranties.  Each Guarantor hereby makes the following representations and warranties to the Purchaser as of the date hereof:

(a)           Organization and Qualification.  The Guarantor is an entity, validly existing and in good standing under the laws of the applicable jurisdiction set forth on Schedule 1, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted.  The Guarantor has no subsidiaries other than those identified as such on Schedule 1.  The Guarantor is duly qualified to do business and is in good standing as a foreign corporation in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not, individually or in the aggregate, (x) adversely affect the legality, validity or enforceability of any of this Guarantee in any material respect, (y) have a material adverse effect on the results of operations, assets, prospects, or financial condition of the Guarantor, or (z) adversely impair in any material respect the Guarantor’s ability to perform fully on a timely basis its obligations under this Guarantee (a “Material Adverse Effect”).

  

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(b)           Authorization; Enforcement.  The Guarantor has the requisite power and authority to enter into and to consummate the transactions contemplated by this Guarantee, and otherwise to carry out its obligations hereunder.  The execution and delivery of this Guarantee by the Guarantor and the consummation by it of the transactions contemplated hereby have been duly authorized by all requisite action on the part of the Guarantor.  This Guarantee has been duly executed and delivered by the Guarantor and constitutes the legal, valid and binding obligation of the Guarantor enforceable against the Guarantor in accordance with its terms.

(c)           No Conflicts.  The execution, delivery and performance of this Guarantee by the Guarantor and the consummation by the Guarantor of the transactions contemplated thereby do not and will not (i) conflict with or violate any provision of its certificate of incorporation or similar charter document, (ii) conflict with, constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Guarantor is a party or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Guarantor is subject (including federal and state securities laws and regulations), or by which any material property or asset of the Guarantor is bound or affected, except in the case of each of clauses (ii) and (iii) such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as could not, individually or in the aggregate, have or result in a Material Adverse Effect.  The business of the Guarantor is not being conducted in violation of any law, ordinance or regulation of any governmental authority, except for violations which, individually or in the aggregate, do not have a Material Adverse Effect.

 

(d)           Consents and Approvals.  The Guarantor is not required to obtain any consent, waiver, authorization or order of, or make any filing or registration with, any court or other federal, state, local, foreign or other governmental authority or other person in connection with the execution, delivery and performance by the Guarantor of this Guarantee, other than those obtained as of the date hereof.

(e)           Purchase Agreement.  The representations and warranties of the Company set forth in the Purchase Agreement as they relate to such Guarantor, each of which is hereby incorporated herein by reference, are true and correct as of each time such representations are deemed to be made pursuant to the Purchase Agreement, and the Purchaser shall be entitled to rely on each of them as if they were fully set forth herein, provided that each reference in each such representation and warranty to the Company’s knowledge shall, for the purposes of this Section 3, be deemed to be a reference to such Guarantor’s knowledge.

(f)           Company’s Request.  This Guarantee is executed at the Company’s request and not at the request of the Purchaser.

  

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(g)           Obtaining Company Information.  The Guarantor has established adequate means of obtaining from the Company on a continuing basis information regarding the Company’s financial condition.

4.           Covenants.

(a)         Actions.  Each Guarantor covenants and agrees with the Purchaser that, from and after the date of this Guarantee until the Obligations shall have been paid in full, such Guarantor shall take, and/or shall refrain from taking, as the case may be, each commercially reasonable action that is necessary to be taken or not taken, as the case may be, so that no Event of Default is caused by the failure to take such action or to refrain from taking such action by such Guarantor.

(b)         Insurance.  So long as the Note remains outstanding, the Guarantors shall have in full force and effect (a) insurance reasonably believed by the Guarantors to be adequate on all assets and activities, covering property damage and loss of income by fire or other casualty, and (b) insurance reasonably believed to be adequate protection against all liabilities, claims and risks against which it is customary for companies similarly situated as the Guarantors to insure.

(c)         Compliance with Laws.  So long as the Note remain outstanding, the Guarantors will use reasonable efforts to comply with all applicable laws, rules, regulations, orders and decrees of all governmental authorities, except to the extent non-compliance (in one instance or in the aggregate) would not have a Material Adverse Effect.

(d)         Corporate Existence; Merger and Consolidation.  So long as the Note remain outstanding, the Guarantors shall maintain their corporate existence.  The Guarantors shall not consolidate with or merge with or into, or convey, transfer or lease all or substantially all its assets to, any Person, except to the same extent that the Company is so permitted, and in accordance with the same provisions applicable to the Company, in the Purchase Agreement or the Note (with the assumption of obligations applying to the assumption of the obligations under this Guarantee).

(e)         Taxes.  The Guarantors shall pay, and shall cause each of its subsidiaries to pay, prior to delinquency, all material taxes, assessments, and governmental levies except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment is not adverse in any material respect to the Guarantors or the Purchaser.

(f)         Stay, Extension and Usury Laws.  The Guarantors covenant (to the extent that they may lawfully do so) that they shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Guarantee; and the Guarantors (to the extent that they may lawfully do so) hereby expressly waive all benefit or advantage of any such law, and covenant that they shall not, by resort to any such law, hinder, delay or impede the execution of any right herein granted to the Purchaser, but shall suffer and permit the execution of every such right as though no such law has been enacted.

  

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(g)         Negative Covenants.  So long as any of the Obligations are outstanding, unless the Purchaser shall otherwise consent in writing, each Guarantor will not directly or indirectly on or after the date of this Guarantee:

i.           enter into, create, incur, assume or suffer to exist any indebtedness for borrowed money of any kind, including but not limited to, a guarantee, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom;

ii.           enter into, create, incur, assume or suffer to exist any liens of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom;

iii.           amend its certificate of incorporation, bylaws or other charter documents so as to adversely affect any rights of the Purchaser hereunder;

iv.           repay, repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of shares of its securities or debt obligations;

v.           pay cash dividends on any equity securities of the Company;

vi.           enter into any transaction with any Affiliate of the Guarantor which would be required to be disclosed in any public filing of the Company with the Commission, unless such transaction is made on an arm’s-length basis and expressly approved by a majority of the disinterested directors of the Company (even if less than a quorum otherwise required for board approval); or

 

vii.           enter into any agreement with respect to any of the foregoing;

 

provided, however, that the Guarantor shall not be prohibited from undertaking any of the actions described above that the Company is permitted to undertake pursuant to the terms of the Purchase Agreement, the Note and any and all other agreements or other documents entered into in connection with the financing contemplated by the Purchase Agreement.

5.           Miscellaneous.

(a)           Amendments in Writing.  None of the terms or provisions of this Guarantee may be waived, amended, supplemented or otherwise modified except in writing by the Purchaser.

 

  

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(b)           Notices.  All notices, requests and demands to or upon the Purchaser or any Guarantor hereunder shall be effected in the manner provided for in the Purchase Agreement, provided that any such notice, request or demand to or upon any Guarantor shall be addressed to such Guarantor at its notice address set forth on Schedule 1.

(c)           No Waiver by Course of Conduct; Cumulative Remedies.  The Purchaser shall not by any act (except by a written instrument pursuant to Section 5(a)), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any default under the Transaction Documents or Event of Default.  No failure to exercise, nor any delay in exercising, on the part of the Purchaser any right, power or privilege hereunder shall operate as a waiver thereof.  No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  A waiver by the Purchaser of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Purchaser would otherwise have on any future occasion.  The rights and remedies provided herein are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law.

(d)           Enforcement Expenses; Indemnification.

(i)           Each Guarantor agrees to pay, or reimburse the Purchaser for, all costs and expenses incurred in collecting against such Guarantor under the guarantee contained in Section 2 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 Purchaser.

(ii)           Each Guarantor agrees to pay, and to save the Purchaser harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be payable in connection with any of the transactions contemplated by this Guarantee.

(iii)           Each Guarantor agrees to pay, and to save the Purchaser 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 execution, delivery, enforcement, performance and administration of this Guarantee to the extent the Company would be required to do so pursuant to the Purchase Agreement.

(iv)           The agreements in this section shall survive repayment of the Obligations and all other amounts payable under the Purchase Agreement, the Note and the other Transaction Documents.

  

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(e)           Successors and Assigns.  This Guarantee shall be binding upon the successors and assigns of each Guarantor and shall inure to the benefit of the Purchaser and their respective successors and assigns; provided that no Guarantor may assign, transfer or delegate any of its rights or obligations under this Guarantee without the prior written consent of the Purchaser.

(f)           Set-Off.  Each Guarantor hereby irrevocably authorizes the Purchaser at any time and from time to time while an Event of Default under any of the Transaction Documents shall have occurred and be continuing, without notice to such Guarantor or any other Guarantor, any such notice being expressly waived by each Guarantor, to set-off and appropriate and apply any and all deposits, credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by the Purchaser to or for the credit or the account of such Guarantor, or any part thereof in such amounts as the Purchaser may elect, against and on account of the obligations and liabilities of such Guarantor to the Purchaser hereunder and claims of every nature and description of the Purchaser against such Guarantor, in any currency, whether arising hereunder, under the Purchase Agreement, any other Transaction Document or otherwise, as the Purchaser may elect, whether or not the Purchaser has made any demand for payment and although such obligations, liabilities and claims may be contingent or unmatured.  The Purchaser shall notify such Guarantor promptly of any such set-off and the application made by the Purchaser of the proceeds thereof, provided that the failure to give such notice shall not affect the validity of such set-off and application.  The rights of the Purchaser under this section are in addition to other rights and remedies (including without limitation other rights of set-off) which the Purchaser may have.

(g)           Counterparts.  This Guarantee may be executed by one or more of the parties to this Guarantee on any number of separate counterparts (including by fax or PDF), and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

(h)           Severability.  Any provision of this Guarantee which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

(i)           Section Headings.  The section headings used in this Guarantee are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof.

(j)           Integration.  This Guarantee and the other Transaction Documents represent the agreement of the Guarantors and the Purchaser with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by the Purchaser relative to the subject matter hereof and thereof not expressly set forth or referred to herein or in the other Transaction Documents.

  

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(k)           Governing Law.  This guarantee shall be governed by, and construed and interpreted in accordance with, the law of the state of California without regard to any principles of conflicts of laws.

(l)           Submission to Jurisdictional; Waiver.  Each Guarantor hereby irrevocably and unconditionally:

(i)           submits for itself and its property in any legal action or proceeding relating to this Guarantee and the other Transaction Documents to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the Courts of the State of California, located in Los Angeles County, California, the courts of the United States of America for the Southern District of California, and appellate courts from any thereof;

(ii)           consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same;

(iii)           agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such Guarantor at its address referred to in Schedule 1 below or at such other address of which the Purchaser shall have been notified pursuant thereto;

(iv)           agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and

(v)           waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this section any special, exemplary, punitive or consequential damages.

(m)           Acknowledgements.  Each Guarantor hereby acknowledges that:

(i)           it has been advised by counsel in the negotiation, execution and delivery of this Guarantee and the other Transaction Documents to which it is a party;

(ii)           the Purchaser has no fiduciary relationship with or duty to any Guarantor arising out of or in connection with this Guarantee or any of the other Transaction Documents, and the relationship between the Guarantors, on the one hand, and the Purchaser, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and

  

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(iii)           no joint venture is created hereby or by the other Transaction Documents or otherwise exists by virtue of the transactions contemplated hereby among the Guarantors and the Purchaser.

(n)           Release of Guarantors. Subject to Section 2, each Guarantor will be released from all liability hereunder concurrently with the repayment in full of all amounts owed under the Purchase Agreement, the Note and the other Transaction Documents.

[Signature Page Follows]

  

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IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee to be duly executed and delivered as of the date first above written.

	  
	  

                         ATHERONOVA OPERATIONS, INC.

                          By:  /s/ Mark Selawski                                                                                               

                         Name:  Mark Selawski

                         Title:  Chief Financial Officer

  

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SCHEDULE 1

GUARANTORS

The following are the names, notice addresses, jurisdiction of organization and percentage ownership of each Guarantor.

	
NAME

	 	
ADDRESS FOR NOTICE

	 	
JURISDICTION OF INCORPORATION

	 	
PERCENTAGE OWNED BY COMPANY

	
 

ATHERONOVA OPERATIONS, INC.

 

	 	
2301 Dupont Drive, Suite 525

Irvine, CA 92612

	 	
DELAWARE

	 	
100%

14ex10-1.htm

Exhibit 10.1

 

CONSULTING AGREEMENT

This Consulting Agreement (“Agreement”) is entered into as of  May 23, 2012, but effective as of May 1, 2012 (“Effective Date”), by and between The Shaw Group Inc., a Louisiana corporation (“Shaw”), and Gary P. Graphia, a resident of the State of Louisiana, whose permanent address is 19634 S. Muirfield, Baton Rouge, LA 70810 (“Consultant”).

WHEREAS, Shaw is the business of providing, among other things, industrial piping systems and construction services for refinery, chemical and power generation projects throughout the world;

WHEREAS, Consultant resigned from The Shaw Group Inc. contemporaneous with the effective date of this Agreement,

WHEREAS, Consultant is a former employee of Shaw and has knowledge of the business of Shaw and can provide valuable consulting services related to that business; and

WHEREAS, Shaw desires to obtain, and Consultant desires to provide, consulting services in accordance with the terms of this agreement;

NOW, THEREFORE, in consideration of the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are herein contained, the parties agree as follows:

1.           Consulting Services.  During the term of this Agreement, Consultant agrees to provide advice and assistance on matters about which Consultant has knowledge and familiarity (“Consulting Services”) to Shaw making himself available as reasonably requested by Shaw or any of its subsidiaries or affiliates.  Where such Consulting Services must be provided in person, Shaw will accommodate Consultant’s availability to every extent possible and shall reimburse consultant for reasonable expenses incurred should he need to travel in order to provide Consulting Services.  Further any time expended on travel associated with the provision of Consulting Services shall be considered as Consulting Services.

2.           Authority and Relationship.  Except as otherwise consented to or directed by Shaw in writing, Consultant does not have the authority to accept or reject any inquiry or order from any customer or to enter into any agreement or contract on behalf of Shaw.  The parties hereto agree that Consultant is an independent contractor of Shaw and that no employer/employee relationship shall exist between Shaw and Consultant, or any of his employees, agents or contractors.  Any employee, agent or contractor retained by Consultant to fulfill any of his obligations hereunder shall be an employee, agent or contractor of Consultant and not of Shaw.  Nothing stated herein shall be construed to establish any legal relationship whatsoever between Shaw and any employee, agent or contractor of Consultant.

3.           Confidentiality.  Consultant has entered into a Confidentiality Agreement as part of his employment with Shaw and continues to be bound by said Confidentiality Agreement for his Consulting Services.

4.           Compliance with Laws.  In rendering the services to be performed under this Agreement, each of the parties hereby warrants and agrees that it has and will comply with any and all applicable laws, regulations, decrees or other local, state or national directives of the United States of America, any state or political subdivision thereof, or any other country or political subdivision thereof having the force of law, including, without limitation, those laws and regulations pertaining to the taxation, trade, labor, currency exchange, boycotts, bribery and corruption in connection with government actions and procurement and those laws and regulations of similar import and subject matter.  Without limiting the foregoing, Consultant hereby warrants and agrees that it will not violate the United States Foreign Corrupt Trade Practices Act (Section 30A of the Securities Exchange Act of 1934, as amended).

  

  

  

5.           Fees.

(a) During the first twelve (12) months of the Term (as defined below), Shaw will pay Consultant a consulting fee of $16,666.66 per month for Consulting Services not to exceed 20 hours per month.  This monthly fee shall be paid to Consultant at the end of each of the first twelve (12) months of the Term.  If the Agreement is executed more than 30 days after the Effective Date, Shaw shall have 15 days from the date of execution to make the first monthly fee payment.  Any Consulting Services performed in excess of 20 hours per month (“Additional Services”) shall be billed at an hourly rate of $1,000.00.  Such amounts for Additional Services will be payable within thirty (30) days of the receipt of Consultant’s invoice for such Additional Services, which invoice must be provided on or before the 15th of the month following the month in which the Additional Services are provided.  Further, the provision of any Additional Services shall be at the sole discretion of Consultant.

 

 

(b) During the second twelve (12) months of the Term (as defined below), Shaw will pay Consultant a consulting fee of $8,333.33 per month for Consulting Services not to exceed 10 hours per month.  This monthly fee shall be paid to Consultant at the end of each of the second twelve (12) months of the Term.  Any Consulting Services performed in excess of 10 hours per month (“Additional Services”) shall be billed at an hourly rate of $1,000.00.  Such amounts for Additional Services will be payable within thirty (30) days of the receipt of Consultant’s invoice for such Additional Services, which invoice must be provided on or before the 15th of the month following the month in which the Additional Services are provided.  Further, the provision of any Additional Services shall be at the sole discretion of Consultant.

(c)  Time spent on Consulting Services and Additional Services shall be tracked, and in the case of Additional Services, billed, in increments of not less than .25 of an hour.  In addition, Company will reimburse Consultant for reasonable and necessary out-of-pocket expenses incurred by Consultant in performing any requested Consulting Services. Consultant shall be responsible for all personal income taxes and similar obligations with respect to any and all payments hereunder, including without limitation all federal and state income tax, social security tax and any withholding or similar obligations of Consultant or any other employee or subcontractor of Consultant.

6.           Term.  Except for Section 3 above, which shall survive the termination of this Agreement pursuant to the terms of the confidentiality agreement referenced therein, or as otherwise agreed in writing by the parties, this Agreement shall be two (2) years from the Effective Date.  The Agreement shall automatically terminate two (2) years after the Effective Date with no further documents to be executed by the parties. The Agreement may only be extended by an Amendment to the Agreement set forth in writing and signed by the parties.

7.           Payments Due Upon Cancellation.  Consultant and the Company shall have the right to cancel this Agreement for any reason upon 30 days written notice.  If the agreement is cancelled by either party, Consultant is not entitled to any additional payments other than fees earned to the date of cancellation, and expenses incurred but not yet paid.

8.           Long Term Incentives.  Notwithstanding any provisions to the contrary in the plan(s) or grant agreements governing such Long Term Incentives, Consultant’s stock options that are vested as of the Effective Date shall continue to be exercisable during the first twelve (12) months of the Term and shall not terminate until the earlier of: (1) twelve (12) months after the Effective Date, or (2) ninety (90) days after the date of cancellation of this agreement if cancelled by Consultant; provided that in no event shall such period extend the exercise period for such options beyond the date that is 10 years from the date of grant of such option.

9.           Notices.  All formal notices, requests, consents, and other communications hereunder shall be in writing and shall be faxed to the other party at its fax number provided below with a copy forwarded by first class mail or overnight courier, fully prepaid and addressed as follows:

  

  

  

To Consultant at:

Gary P. Graphia

19634 S. Muirfield

Baton Rouge, LA 70810

To Shaw at:

Scott Trezise (or the Senior VP of Human Resources at that time)

The Shaw Group Inc.

4171 Essen Lane

Baton Rouge, LA  70809

(225) 987-7111

or at such other address as may be furnished in writing.

10.           Miscellaneous.  This Agreement sets forth the entire understanding between the parties and supersedes all other agreements and understandings, whether written or oral, of the parties with respect to Consulting Services.  Without the prior written consent of Shaw, this Agreement shall not be transferred or assigned by Consultant, except that Consultant may provide Consulting Services through a legal entity, such as an LLC, of which he is a principal.  This Agreement shall bind and inure to the benefit of the permitted successors and assignees of the parties.  The terms and provisions of this Agreement may not be modified or amended except in writing executed by duly authorized representatives of both parties.  This Agreement shall be construed under, governed by and enforced pursuant to the laws of the State of Louisiana, where Shaw’s principal office is located.  Any action related to this agreement shall proceed in arbitration in accordance with Paragraph 15 of Consultant’s Employment Agreement dated December 22, 2008.

THE SHAW GROUP INC.                                                                                                CONSULTANT

By: /s/ John Donofrio                                                                                                       /s/ Gary P. Graphia

Name: John Donofrio                                                                                                        Gary P. Graphia

Title: Executive Vice President                                                                                        Date: May 23, 2012

Date: May 23, 2012

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