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Exhibit 10.13
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT ("Guaranty Agreement"), made and entered into as of
the 1st day of December, 1987, by and among NATIONAL HEALTHCORP L.P., a
Delaware limited partnership (the Partnership Guarantor JACKS X. XxXXXXXX an
individual resident of the State of Texas (the "Individual Guarantor") (the
Partnership Guarantor and the Individual Guarantor being some times hereinafter
referred to individually as a Guarantor and collectively as the "Guarantors")
and THE TORONTO-DOMINION Bank acting through its Chicago-Branch (the "Banks");
W I T E S S E T H :
WHEREAS, the Issuers have heretofore issued, or will issue the Bonds
pursuant to their respective Indentures with the Trustees; and
WHEREAS, the proceeds of the Bonds have heretofore been loaned by or will
be loaned by, the Issuers to Florida Convalescent Centers, Inc., a Florida
corporation (together with its successors and permitted assigns, the
"Borrower"), or have been or will be utilized by the Issuers, pursuant to the
Financing Agreements (as hereinafter defined), for the purpose of refunding the
Refunded Bonds; and
WHEREAS, subject to the terms and conditions of that certain Reimbursement
Agreement of even date herewith (as the same may be amended from time to time,
the "Reimbursement Agreement") between the Borrower and the Bank, and
acknowledged by the Guarantors, the Bank has agreed to issue for the account of
the Borrower certain Letters of Credit to assure the timely payment of the
principal of and interest on the Bonds, and the purchase price of Bonds tendered
for purchase pursuant to the Indentures; and
WHEREAS, pursuant to the provisions of the Reimbursement Agreement, the
Borrower will be responsible for amounts drawn under the Letters of Credit, and
for fees and other amounts due with respect to the Letters of Credit; and
WHEREAS, it is a condition to the issuance of the Letters of Credit that
the Guarantors jointly severally and unconditionally guarantee to the Bank the
payment of all amounts owing by the Borrower from time to time under the
Reimbursement Agreement and certain other amounts and obligations; and
WHEREAS, the Individual Guarantor is the sole shareholder of the Borrower
and the Partnership Guarantor has heretofore entered into one or more agreements
with the Borrower whereby the Partnership Guarantor agreed to provide working
capital to the
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Borrower and to guarantee certain obligations of the Borrower with respect to
the Projects; and
WHEREAS, the Guarantors are desirous that the Bank issue the Letters of
Credit and are willing to enter into this Guaranty Agreement in order to induce
the Bank to issue the Letters of Credit so as to enhance the marketability of
the Bonds and thereby achieve interest cost and other savings;
NOW, THEREFORE in consideration of the premises and in order to enhance the
marketability of the Bonds and thereby achieve interest cost and other savings,
the Guarantors do hereby, subject to the terms hereof, jointly and severally
covenant and agree with the Bank as follows:
ARTICLE I
Definitions
Section 1.1 Definitions. For purposes of this Guaranty Agreement, the
following terms shall have the following meanings:
"Accumulated Funding Deficiency" has the meaning assigned to that term in
Section 302 of ERISA.
"Affiliate" means any Person directly or indirectly controlling, controlled
by, or under direct or indirect common control with, any Guarantor.
"Applicable Law" means in respect of any Person, all provisions of
constitutions, statutes, rules, regulations and orders of governmental bodies or
regulatory agencies applicable to such Person, and all orders and decrees of all
courts and arbitrators in proceedings or actions to which the Person in question
is a party.
"Authorized Signatory" means such personnel of the Partnership Guarantor or
its managing general partner as may be designated in writing by the Partnership
Guarantor to the Bank as having authority to sign documents, certificates and
other instruments to be signed on behalf of the Partnership Guarantor.
"Capitalized Lease Obligation" means, with respect to any Person, that
portion of any obligation as lessee which at the time would be required to be
capitalized on the balance sheet of such lessee ii) accordance with Financial
Accounting Standards Board Statement No. 13 dated November 1976, as it may be
amended
"Consolidated Current Assets" means the aggregate, after eliminating
intercompany items, of all Current Assets of the Partnership Guarantor and its
Subsidiaries, consolidated in accordance with GAAP.
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"Consolidated Current Liabilities" means the aggregate, after eliminating
intercompany items, of all Current Liabilities of the Partnership Guarantor and
its Subsidiaries, consolidated in accordance with GAAP
"Consolidated Funded Debt" means the aggregate, after eliminating
intercompany items, of all Funded Debt of the Partnership Guarantor and its
Subsidiaries, consolidated in accordance with GAAP.
"Consolidated Net Income" means the aggregate, after eliminating
intercompany items, of all Net Income of the Partnership Guarantor and its
Subsidiaries, consolidated in accordance with GAAP.
"Consolidated Tangible Net Worth" means the aggregate, after eliminating
intercompany items, of all Tangible Net Worth of the Partnership Guarantor and
its Subsidiaries, consolidated in accordance with GAAP.
"Current Assets" means, with respect to any Person, the aggregate amount of
all assets which would, in accordance with GAAP, properly be classified as
current assets; provided, however, such method of determination shall be
modified where in conflict with the following: Current Assets will include only
those assets which may, in the ordinary course of business, be reasonably
converted into cash within a period of one (1) year from the date as of which
such computation is being made, and Current Assets will exclude (i) loans and
advances to or receivables due from employees, partners or officers of such
Person, (ii) all deferred assets, other than prepaid items such as insurance,
taxes, interest, commissions, rents, royalties and similar items, and (iii)
any properties or assets located outside the continental United States.
"Current Liabilities" means, with respect to any Person, the aggregate
amount of all current obligations, as determined in accordance with GAAP, but in
any event shall include all obligations except those having a maturity date
which is more than one (1) year from the date as of which such computation is
being made.
"Current Maturities of Funded Debt" means, with respect to any Person, that
portion of its Indebtedness which matures or becomes due within one (1) year
from the date as of which such computation is made and which formerly qualified
as Funded Debt.
"Current Ratio" means the ratio of Consolidated Current Assets to
Consolidated Current Liabilities.
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"Debt Service Coverage Ratio" means, with respect to any Person for any
period, a ratio of (i) the sum of Net Income and Operating Lease Obligations,
depreciation, amortization and interest expense of such Person for such period
to (ii) the sum of Current Maturities of Funded Debt and interest expense,
Operating Lease Obligations and payments required to fund obligations guaranteed
by such Person.
"Equity" means the total partners' equity of the Partnership Guarantor
(including the par value of the issued and outstanding capital stock, capital
surplus and retained earnings of all of the Partnership Guarantor's
Subsidiaries).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default" mean any of the events specified in Section 6.1 hereof,
provided that any requirement for notice or lapse of time has been satisfied;
"Facility" means any nursing home or health care facility or part thereof
(including without limitation, related medical office buildings, parking lots or
other related real property) owned, operated or managed by the Partnership
Guarantor or any of its Subsidiaries; together with any other nursing home or
health care facility or part thereof which is hereafter acquired by the
Partnership Guarantor or any of its Subsidiaries, in each case, including,
without limitation, the land on which such facility is located, all buildings
and other improvements thereon, all fixtures, equipment, inventory and other
tangible personal property located in or used in connection with such facility
and all accounts receivable and other intangible personal property related to
the operations of such facility, all whether now or hereafter existing.
"Facility Guaranty Agreements" means the Agreements to Guarantee between
the Borrower and the Partnership Guarantor (as successor in interest to National
Health Corporation, a Tennessee corporation), pursuant to which the Partnership
Guarantor has agreed to guarantee certain obligations of the Borrower with
respect to the financing of the Projects, together with any amendments or
supplements thereto, any replacements thereof and any new, similar agreements
which the Borrower and the Partnership Guarantor may hereafter enter into with
respect to Facilities other than the Projects, as the latter agreements may be
amended or supplemented from time to time.
"Funded Debt" means, with respect to any Person, all obligations and
indebtedness issued, incurred, assumed or guaranteed by such Person or for the
payment of which such Person is otherwise liable, directly or indirectly,
whether or not such
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obligations and indebtedness now exist or shall hereafter be created, which
mature or become due more than one (1) year after the date on which a
calculation of Funded Debt is being made, and shall include all Capitalized
Lease Obligations.
GAAP, means, as in effect from time to time, generally accepted accounting
principles consistently applied.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof, and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled (through stock or
capital ownership or otherwise) by any of the foregoing.
"Guaranty" or "guarantee" as applied to an obligation, means and includes
(a) any guaranty or other agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of any part
or all of such obligation, including, without limiting the foregoing, the
payment or reimbursement of amounts drawn down by beneficiaries of letters of
credit.
"Indebtedness" means, with respect to any Person, (i) all items, except
items of capital stock or of surplus or of general contingency or deferred tax
reserves, which in accordance with GAAP would be included in determining total
liabilities as shown on the liability side of a balance sheet of such Person,
(ii) to the extent not otherwise included, all obligations secured by any Lien
to which any property or assets owned by such Person is subject, whether or not
the obligation secured thereby shall have been assumed, and (iii) to the extent
not otherwise included, all Capitalized Lease Obligations of such Person and all
obligations of such Person with respect to leases constituting part of a sale
and lease-back arrangement.
"Lien" means, with respect to any property, any security deed, mortgage,
deed to secure debt, deed of trust, lien, pledge, assignment, charge, security
interest, title retention agreement, levy, execution, seizure, attachment,
garnishment or other encumbrance of any kind in respect of such property.
"Management Agreements" means the management agreements between the
Partnership Guarantor (whether as an original party or as successor-by-merger to
F.M.S.C., Inc., a Florida corporation) and the Borrower pursuant to which the
Guarantor manages the Projects, as said management agreements may be amended or
supplemented from time to time.
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"Materially Adverse Effect" means any act, omission or undertaking which
would, singly or in the aggregate, have a materially adverse effect upon the
business, assets, liabilities, financial condition, results of operations or
business prospects of the Guarantors or any of the Partnership Guarantor's
Subsidiaries or the ability of the Guarantors to perform any material
obligations under this Guaranty Agreement.
"Multiemployer Plan" has the meaning set forth in Section 4001(a)(3) of
ERISA.
"Necessary Authorizations" means with respect to any Person, all
authorizations, consents, approvals, permits, licenses and exemptions of,
filings and registrations with, and reports to, all governmental and other
regulatory authorities, whether federal, state or local, and all agencies
thereof, required for the operation of the business of such Person and the
consummation of the transactions contemplated herein.
"Net Income" means, as applied to any Person for any fiscal period, the
aggregate amount of net income (or net loss) of such Person, after taxes, for
such period as determined in accordance with GAAP,
"Operating Lease Obligations" means all lease obligations other than
Capitalized Lease Obligations.
"Partnership Agreement" means the limited partnership agreement pursuant to
which the Partnership Guarantor is organized and existing, as the same may be
amended and supplemented from time to time.
"Permitted Liens" means, as applied to any Person,
(a) Liens securing taxes, assessments and other governmental charges or
levies (excluding any Lien imposed pursuant to any of the provisions of ERISA)
or the claims of materialmen, mechanics, carriers, warehousemen or landlords for
labor, materials, supplies or rentals incurred in the ordinary course of
business, but in all cases only if payment shall not at the time be required to
be made;
(b) Liens consisting of deposits or pledges made in the ordinary COURSE of
business in connection with, or to secure payment of, obligations under worker's
compensation unemployment insurance or similar legislation;
(c) Liens constituting encumbrances in the nature of zoning restrictions,
easements and rights or restrictions of record on use of real property, which in
the sole judgment of the Bank, do not materially detract from the value of such
property or impair the use thereof in the business of the Guarantors;
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(d) Liens of record as of the date of delivery of this Guaranty Agreement
acceptable to the Bank;
(e) Liens in favor of the Bank; and
(f) Purchase money security interests which arise by operation of law for a
period of twenty-one (21) days after the inception thereof.
"Person" means an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Plan" means an employee benefit plan or other plan maintained for
employees of any Person.
"Prohibited Transaction" means a transaction which is prohibited under
Section 4975 of the Code or Section 406 of ERISA and not exempt under Section
4975 of the Code or Section 408 of ERISA
"Reportable Event" shall have the meaning set forth in Title IV of ERISA
"Revolver Agreement" means that certain Revolving Credit Loan Agreement
dated as of March 31, 1987, by and among the Partnership Guarantor, as borrower,
Third National Bank in Nashville, The Citizens and Southern National Bank and
Commerce Union Bank, collectively as lenders; and Third National Bank in
Nashville, as agent, providing for a $30,000,000 revolving line of credit.
"Single Employer Plan" means any Plan which is not a Multiemployer Plan.
"Subordinated Debt" means the Indebtedness of the Partnership Guarantor
which is subordinated in right of payment to the obligations of the Partnership
Guarantor under this Guaranty Agreement.
"Subsidiary. shall mean, as applied to any Person, (a) any of which more
than 50% of the outstanding stock (other than directors' qualifying shares)
having ordinary voting power to elect a majority of its board of directors (or
other governing body), regardless of the existence at the time of a right of the
holders of any class or classes (however designated) of securities of such
corporation to exercise such voting power by reason of the happening of any
contingency, or any partnership of which more than 50% of the outstanding
partnership interests is, at the time, owned by such Person or by one or more
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Subsidiaries of such Person, or by such Person and one or more Subsidiaries of
such person, and (b) any other entity which is controlled or capable of being
controlled by such Person, or by one or more Subsidiaries of such Person, or by
such Person and one or more Subsidiaries of such Person.
"Tangible Net Assets" shall mean, with respect to any Person, the aggregate
amount of all items categorized as assets on the balance sheet of such Person,
including, without limitation, Equity and Subordinated Debt, but excluding all
except $1,167,000 of deferred assets and all other items which would be
considered "intangible assets" under GAAP, including goodwill, trademarks,
service marks, formulae, franchise rights and patents.
"Tangible Net Worth" shall mean, with respect to any Person, the excess of
Tangible Net Assets over Indebtedness (other than Subordinated Debt).
"Termination Event" means (i) a Reportable Event, (ii) the termination of a
Single Employer Plan, or the treatment of a Single Employer Plan amendment as a
termination of the Plan under Section 4041 of ERISA or the filing of a notice of
intent to terminate a Single Employer Plan, (iii) the institution of proceedings
to terminate a Single Employer Plan by the Pension Benefit Guaranty Corporation
under Section 4042 of ERISA or (iv) the appointment of a trustee to administer
any Single Employer Plan.
"Working Capital" shall mean, with respect to any Person, the excess of
Current Assets over Current Liabilities.
1.2 Financial Terms. Except as hereinabove provided, all financial terms
used in this Guaranty Agreement shall be interpreted in accordance with GAAP,
1.3. Terms Not Defined Herein. Capitalized terms not defined herein shall,
unless otherwise indicated herein, have the meanings ascribed to such terms in
the Reimbursement Agreement.
ARTICLE II
Guaranty
2.1 Guaranty. (a) The Guarantors hereby jointly, severally, absolutely,
unconditionally and irrevocably guarantee to the Bank the full and prompt
payment of all amounts now or hereafter owing to the Bank by the Borrower under
the provisions of the Reimbursement Agreement, under the Mortgages (including,
without limitation, indemnification amounts pursuant to
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Section 1.14 thereof), under the Pledge Agreement and under any of the other
Related Documents when and as the same shall become due, whether at the stated
maturity thereof, by acceleration or call for prepayment or otherwise, and agree
to pay all reasonable expenses and charges (including court costs and attorney's
fees and expenses) paid or incurred by the Bank in realizing upon any of the
payments hereby guaranteed or in enforcing this Guaranty Agreement.
(b) The Guarantors hereby jointly, severally, absolutely, unconditionally
and irrevocably guarantee to the Bank the full and faithful performance all of
the Borrower's obligations under the Financing Agreements to be kept and
performed with respect to the completion of the construction, renovation,
installation and equipping of the Projects, in accordance with the plans and
specifications referred to in the Financing Agreements, free from any liens or
claims of any or all persons performing services or labor on the Projects, or
any of them, or furnishing materials thereto. If for any reason or under any
contingency, the Borrower shall abandon the construction, renovation,
installation and equipping of the Projects, or any of them, in accordance with
the terms of the applicable Financing Agreements, or shall fail to pay the costs
thereof, then, in any such event, the Bank shall have the option to require the
Guarantors, or either of them, to assume all responsibility therefor, and the
Guarantors hereby agree that they shall jointly and severally assume all
responsibility therefor and, at their own cost and expense, cause such
Project(s) to be fully completed in accordance with the above-mentioned plans
and specifications and applicable Financing Agreement(s), and shall pay and
discharge all liens and claims of all persons performing services or labor in
connection therewith or furnishing materials hereto which the Borrower shall
have failed to pay, whether or not such services, labor or materials shall have
been provided for in said plans and specifications.
(c) The obligations guaranteed by the Guarantors under this Section 2.1 are
sometimes hereinafter collectively referred to as the "Guaranteed Obligations.
2.2 Payments. All payments by the Guarantors shall be paid in lawful money
of the United States of America, to Account No. 000-0-00000, at Manufacturers
Hanover Trust, 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, for credit to The
Toronto-Dominion Bank, New York Branch, in favor of Toronto-Dominion Chicago
Branch, or at such other account as the Bank may designate to the Guarantors in
writing. Each and every default in payment of sums due and payable under the
provisions of this Guaranty Agreement shall give rise to a separate cause of
action hereunder, and separate suits may be brought hereunder as each cause of
action arises.
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2.3 Obligations Absolute and Unconditional. The obligations of the
Guarantors under this Guaranty Agreement shall be absolute and unconditional and
shall remain in full force and effect until there shall be no Letter of Credit
outstanding and all amounts owing to the Bank under the provisions of the
Reimbursement Agreement and the other Related Documents and the obligation of
the Guarantors under Section 2.1 hereof shall have been paid in full,
irrespective of the validity, regularity or enforceability of the Bond
Documents, the Letters of Credit or the Reimbursement Agreement or any other
Related Document, and, until such payment, shall not be affected, modified or
impaired upon the happening from time to time of any event, including, without
limitation, any of the following, whether or not with notice to or the consent
of the Guarantors, or either of them:
(a) the compromise, settlement, release or termination of any or all of the
obligations, covenants or agreements of the Borrower under the Reimbursement
Agreement, the Pledge Agreement, any Mortgage, any Financing Agreement or any
other Related Documents;
(b) the failure to give notice to the Guarantors, or either of them, of the
occurrence of a default or an event of default under the terms and provisions of
this Guaranty Agreement, the Reimbursement Agreement, the Pledge Agreement, any
Indenture, any Mortgage, any Financing Agreement or any other Related Documents;
(c) the waiver of the payment, performance or observance by any Issuer, any
Trustee, the Borrower or any Guarantor of any of the obligations, covenants, or
agreements of any of them contained in the Reimbursement Agreement, the Pledge
Agreement, any Indenture, any Financing Agreement, any Mortgage or any of the
other Related Documents, or this Guaranty Agreement;
(d) the extension of the time for payment of any principal of or interest
on the Bonds or of the time for performance of any other obligations, covenants
or agreements under or arising out of the Reimbursement Agreement, any
Indenture, any Financing Agreement, the Pledge Agreement, any Mortgage or any of
the other Related Documents, or under or arising out of this Guaranty Agreement,
or the extension or the renewal of any thereof;
(e) the modification or amendment (whether material or otherwise) of any
obligation, covenant or agreement set forth in the Reimbursement Agreement, the
Pledge Agreement, any Indenture, any Financing Agreement, any Mortgage or any
other Related Document;
(f) the taking or the omission of any of the actions referred to in the
Reimbursement Agreement, the Pledge Agreement, any Indenture, any Financing
Agreement, any Mortgage or any other Related Documents or this Guaranty
Agreement;
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(g) any failure, omission, delay or lack on the part of any Issuer, any
Trustee or the Bank to enforce, assert or exercise any right, power or remedy
conferred on any Issuer, any Trustee or the Bank in this Guaranty Agreement, the
Reimbursement Agreement, the Pledge Agreement, any Indenture, any Financing
Agreement, any Mortgage or any other Related Document, or any other act or acts
on the part of any Issuer, any Trustee, the Bank or any holder at any time or
from time to time of the Bonds;
(h) the voluntary or involuntary liquidation, dissolution, marshalling of
assets and liabilities, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition with creditors or
readjustment of, or other similar proceedings affecting any Guarantor, the
Borrower or any Issuer or any of the assets of them, or any allegation or
contest of the validity of this Guaranty Agreement in any such proceeding or the
sale or other disposition of all or substantially all the assets of any Issuer,
the Borrower or any Guarantors; and this Guaranty Agreement shall continue to be
effective or be reinstated, as the case may be, if, at any time, payment, or any
part thereof, pursuant to Section 2.1 hereof, is rescinded or must otherwise be
restored or returned by the Bank upon any of the events listed in this
subsection (h) or otherwise, as though such payment has not been made;
(i) to the extent permitted by applicable law, the release or discharge of
the Guarantors, or either of them, from the performance or observance of any
obligation, covenant or agreement contained in this Guaranty Agreement by
operation of law;
(j) the default or failure of the Guarantors, or either of them, fully to
perform any of the obligations thereof set forth in this Guaranty Agreement;
(k) the failure of the Bank to comply with the terms of the this Guaranty
Agreement, the Reimbursement Agreement, the Pledge Agreement, any Mortgage or
any of the other Related Documents;
(1) the invalidity or unenforceability of the Reimbursement Agreement, the
Pledge Agreement, any Indenture, any Financing Agreement, any Mortgage or any
other Related Documents;
(m) the sale, assignment or mortgaging or the purported sale, assignment or
mortgaging of all or any part of the Projects; or
(n) any other cause, whether similar or dissimilar to the foregoing.
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2.4 No set-off. No set-off counterclaim, reduction, or diminution of any
obligation, or, to the extent permitted by applicable law, any defense of any
kind or nature which the Guarantors or the Borrower, or any of the foregoing,
has or may have against any Issuer, any Trustee or the Bank shall be available
hereunder to the Guarantors, or either of them.
2.5 Right to Proceed against Guarantors-First. In the event of a default in
payment of any amount owing to the Bank from time to time under the provisions
of the Reimbursement Agreement, the Pledge Agreement, any Mortgage or any other
Related Document, whether at the stated maturity thereof, by acceleration or
call for prepayment or otherwise, and in each instance the expiration of any
applicable cure period provided for in the Reimbursement Agreement, the Pledge
Agreement, such Mortgage or any other such Related Document, the Bank may
proceed hereunder, and the Bank, in its sole discretion, shall have the right to
proceed first and directly against the Guarantors, or either of them, under this
Guaranty Agreement without proceeding against the Borrower or exhausting any
other remedies which it may have and without resorting to any other security
held by the Bank.
2.6 Waiver of Notice. The Guarantors hereby expressly waive: (a) notice of
acceptance of this Guaranty Agreement, (b) notice of the existence or creation
of all or any of the Guaranteed Obligations, (c) presentment, demand, notice of
dishonor, protest, and all other notices whatsoever, (d) all diligence in
collection or protection of or realization upon the Guaranteed Obligations or
any part thereof, any obligation hereunder, or any security for any of the
foregoing, except as provided by law, and (e) all rights of subrogation, all
rights to enforce any remedy the Bank may have against the Borrower and all
rights to participate in any security held by the Bank for the Guaranteed
Obligations until the Guaranteed Obligations have been paid or performed in
full.
2.7 Attorneys Fees and Expenses. The Guarantors jointly and severally agree
to pay all costs, expenses and fees, including all reasonable attorney's fees,
which may be incurred by the Bank in amending this Guaranty, in enforcing or
attempting to enforce this Guaranty Agreement following any default on the part
of the Guarantors, or either of them, hereunder, whether the same shall be
enforced by suit or otherwise, or in consenting to any action not otherwise
permitted hereunder.
2.8 Assignment of Guaranteed Obligations by Bank. The Bank may, without
notice of any kind, sell, assign or transfer all or any of the Guaranteed
Obligations, and in such event each and every immediate and successive assignee,
transferee, or holder of all or any of the Guaranteed Obligations, shall have
the right to
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enforce this Guaranty Agreement, by suit or otherwise, for the benefit of such
assignee, transferee or holder as fully as if such assignee, transferee or
holder were herein by name specifically given such rights, powers and benefits,
but the Bank shall have an unimpaired right, prior and superior to that of any
such assignee, transferee or holder, to enforce this Guaranty Agreement for the
Bank's benefit, as to so much of the Guaranteed Obligations as the Bank has not
sold, assigned or transferred.
ARTICLE III
Representations and Warranties
3.1 The Partnership Guarantor represents and warrants that:
(a) Organization; Power, Qualification. The Partnership Guarantor is a
limited partnership duly organized, validly existing under the laws of the state
of its organization, each of its Subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation, and the Partnership Guarantor and each of its Subsidiaries has
the power and authority, corporate, partnership and otherwise, to own or lease
and operate their respective properties and to carry on their respective
businesses as now being and hereafter proposed to be conducted and are duly
qualified and in good standing as a foreign partnership or corporation, as the
case may be, and authorized to do business, in each jurisdiction in which the
character of their respective properties or the nature of their respective
businesses requires such qualification or authorization, and in which failure to
so qualify would have a Materially Adverse Effect.
(b) Authorization. The Partnership Guarantor has the power and has taken
all necessary action to authorize it to execute, deliver and perform this
Guaranty Agreement in accordance with its terms and to consummate the
transactions contemplated hereby. This Guaranty Agreement has been duly executed
and delivered by the Partnership Guarantor and is a legal, valid and binding
obligation of the Partnership Guarantor, enforceable in accordance with its
terms, subject, as to enforcement of remedies, to the following qualifications:
(i) an order of specific performance and an injunction are discretionary
remedies and, in particular, may not be available where damages are considered
an adequate remedy at law, and (ii) enforcement may be limited by bankruptcy,
insolvency, liquidation, reorganization, reconstruction and other similar laws
affecting enforcement of creditors' rights generally (insofar as any such law
relates to the bankruptcy, insolvency or similar event of the Partnership
Guarantor).
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(c) Subsidiaries. Except as listed on Exhibit "A" attached hereto, the
Partnership Guarantor has no Subsidiaries. With respect to each Subsidiary of
the Partnership Guarantor, Exhibit "A" also sets forth (i) the state of its
incorporation; (ii) all jurisdictions in which such Subsidiary is qualified to
do business as a foreign corporation; (iii) the address of the principal place
of business and chief executive office of such Subsidiary; and (iv) the name and
registered office of the registered agent appointed by such Subsidiary.
(d) Compliance with Laws, etc. of Guaranty Agreement and Contemplated
Transactions. The execution, delivery and performance of this Guaranty Agreement
in accordance with its terms and the consummation of the transactions
contemplated hereby do not and will not (i) violate any Applicable Law, (ii)
conflict with, result in a breach of, or constitute a default under the
Partnership Agreement of the Partnership Guarantor or under any material
indenture, agreement, or other instrument to which the Partnership Guarantor is
a party or by which it or any of its properties may be bound, or, (iii) result
in or require the creation or imposition of any Lien upon or with respect to any
property now owned or hereafter acquired by the Partnership Guarantor except
Permitted Liens.
(e) Necessary Authorizations. The Partnership Guarantor and each of its
Subsidiaries has secured all Necessary Authorizations, and all such Necessary
Authorizations are in full force and effect. None of said Necessary
Authorizations are the subject of any pending or, to the best of the Partnership
Guarantor's knowledge, threatened attack or revocation, by the grantor of the
Necessary Authorization. The Partnership Guarantor is not required to obtain any
additional Necessary Authorizations in connection with the execution, delivery
and performance of this Guaranty Agreement.
(f) Title to Properties. The Partnership Guarantor and each of its
Subsidiaries has good, marketable and legal title to, or a valid leasehold
interest in, all of their respective material properties and assets, and none of
such properties or assets is subject to any Liens which materially detract from
the value of such properties or assets or materially interferes with the
business or operations of the Partnership Guarantor or any of its Subsidiaries
as presently conducted or proposed to be conducted. All improvements on the real
estate owned by, leased to or used by the Partnership Guarantor and its
Subsidiaries conform in all material respects to all applicable state and local
laws, zoning and building ordinances and health and safety ordinances, and such
real estate is zoned for the various purposes for which such real estate and
improvements thereon are presently being used.
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(g) Collective Bargaining. There are no material grievances, disputes or
controversies with any union or any other organization of the employees of the
Partnership Guarantor or any of its Subsidiaries or threats of strikes, work
stoppages or any asserted pending demands for collective bargaining by any union
or organization.
(h) Taxes. All federal, state and other tax returns of the Partnership
Guarantor and each of its Subsidiaries required by law to be filed have been
duly filed, and all federal, state and other taxes, assessments and other
governmental charges or levies upon the Partnership Guarantor and each of its
Subsidiaries and any of their respective properties, income, profits and assets,
which are due and payable, have been paid, except any such the payment of which
the Partnership Guarantor or any of its Subsidiaries, as applicable, is
contesting in good faith by appropriate proceedings and for which adequate
reserves have been provided on the books of the Partnership Guarantor or any of
its Subsidiaries, as applicable, and as to which neither any Lien other than a
Permitted Lien has attached nor any foreclosure, distraint, sale or similar
proceedings have been commenced. The charges, accruals and reserves on the books
of the Partnership Guarantor and each of its Subsidiaries in respect of taxes
are, in the reasonable judgment of the Partnership Guarantor, adequate.
(i) Financial Statements. The Partnership Guarantor has furnished, or
caused to be furnished, to the Bank financial statements for the Partnership
Guarantor and its Subsidiaries on a consolidated basis which are complete and
correct in all material respects and present fairly in accordance with GAAP, the
financial position of the Partnership Guarantor and its Subsidiaries on a
consolidated basis as at June 30, 1987 and the results of operations for the
periods then ended. Except as disclosed in such financial statements, neither
the Partnership Guarantor nor any of its Subsidiaries had any material
liabilities, contingent or otherwise, and there are no material unrealized or
anticipated losses of the Partnership Guarantor or any of its Subsidiaries,
which have not heretofore been disclosed in writing to the Bank.
(j) No Adverse Channel. Since June 30, 1987, there has occurred no event
which would have a Materially Adverse Effect.
(k) Investments and Guaranties. The Partnership Guarantor" has not made
investments in, advances to, or guaranties of, the obligations of any Person,
except as reflected in the financial statements referred to in Section 3.1(i)
above or as otherwise disclosed to the Bank in writing.
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(1) Liabilities, Litigation etc. Except for liabilities incurred in the
normal course of business, neither the Partnership Guarantor nor any of its
Subsidiaries has any material (individually or in the aggregate) liabilities,
direct or contingent, except as disclosed or referred to in the financial
statements referred to in Section 3.1(i) above. Except as described in such
financial statements or on Exhibit "B" attached hereto, there is no litigation,
legal or administrative proceeding, investigation or other action of any nature
pending or, to the knowledge of the Partnership Guarantor, threatened against or
effecting the Partnership Guarantor or any of its Subsidiaries or any of their
respective properties which involves the possibility of any judgment or
liability not fully covered by insurance, and which may have a Materially
Adverse Effect. The Partnership Guarantor knows of no unusual or unduly
burdensome restriction, restraint or hazard relative to the business or
properties of the Partnership Guarantor or any of its Subsidiaries except as
previously disclosed to the Bank in writing.
(m) ERISA. No Reportable event has occurred and is continuing with respect
to any Plan of the Partnership Guarantor or any of its Subsidiaries and neither
the Partnership Guarantor nor any of its Subsidiaries has any material unfunded
liability; for vested benefits. Neither the Partnership Guarantor nor any of
its Subsidiaries has incurred any material Accumulated Funding Deficiency or
incurred any material liability to the Pension Benefit Guaranty Corporation
established under ERISA (or any successor thereto under ERISA) in connection
with any Plan.
(n) Patents, Trademarks, Franchises, etc. The Partnership Guarantor and
each of its Subsidiaries owns, possesses or has the right to use all necessary
patents, trademarks, trademark rights, trade names, trade name rights, service
marks, copyrights, franchises and licenses, and rights with respect thereof,
necessary to conduct its business as now conducted, without known conflict with
any patent, trademark, tradename, servicemark, franchise, license or copyright
of any other Person, and in each case, subject to no mortgage, pledge, lien,
lease, encumbrance, charge, security interest, title retention agreement or
option. All such patents, trademarks, trademark rights, tradenames, tradename
rights, servicemarks, copyrights, franchises and licenses are in full force and
effect, the holder thereof is in full compliance in all material respects with
all of the provisions thereof, and no such asset or agreement is subject to any
pending or, to the best of the Partnership Guarantor's knowledge, threatened
attack of revocation.
(o) Compliance with Law: Absence of Default. The Partnership Guarantor and
each of its Subsidiaries is in compliance with all Applicable Laws
non-compliance with which
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would have a Materially Adverse Effect and with all of the provisions of their
respective partnership agreements, articles of incorporation and by-laws, as the
case may be, and no event has occurred or failed to occur, which has not been
remedied or waived, the occurrence or non-occurrence of which constitutes, (i)
an Event of Default or (ii) a default by the Partnership Guarantor or any of its
Subsidiaries under any other indenture, agreement or other instrument, or any
judgment, decree or order to which the Partnership Guarantor or any of its
Subsidiaries is a party or by which the Partnership Guarantor or any of its
Subsidiaries or any of their respective properties may be bound, which default
could have a Materially Adverse Effect.
(p) Casualties: Taking of Properties etc. Neither the business nor the
properties of the Partnership Guarantor or any of its subsidiaries has been
materially and adversely affected as a result of any fire, explosion,
earthquake, flood, drought, windstorm, accident, strike or other labor
disturbance, embargo, requisition or taking of property or cancellation of
contracts, permits or concessions by any domestic or foreign government or any
agency thereof, riot, activities of armed forces or acts of God or of any public
enemy.
(q) Accuracy and completeness of Information. All information, reports and
other papers and data relating to the Partnership Guarantor or any of its
Subsidiaries furnished to the Bank were, at the time the same were so furnished,
complete and correct in all material respects to the extent necessary to give
the Bank a true and accurate knowledge of the subject matter. No fact is
currently known to the Partnership Guarantor which has or could reasonably be
expected to have a Materially Adverse Effect. No information, exhibit or report
furnished or to be furnished by the Partnership Guarantor to the Bank in
connection with this Guaranty Agreement, including all financial statements of
the Partnership Guarantor previously delivered to the Bank, contain as of the
date thereof, or will contain as of the Date of Issuance of any Letter of
Credit, any material misstatement of fact or fail or will fail to state any
material fact, the omission of which would render the statements therein
materially false or misleading.
(r) Business. The Partnership Guarantor is engaged in the business of
owning and operating licensed nursing homes and other health care facilities.
(s) Investments, Advances, and Guaranties. The Partnership Guarantor has
not made investments in, advances to, or guaranties of, the obligations of any
Person, or committed or agreed to do any of these things, except as reflected in
the Financial Statements or as previously disclosed to the Bank in writing.
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(t) Regulation U. The Partnership Guarantor is not engaged principally, or
as one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying margin stock within the meaning of Regulation
of the Board of Governors of the Federal Reserve System.
(u) Personal Holding Company. The Partnership Guarantor is not a "personal
holding company" as defined in Section 542 of the Code.
(v) Tax Shelter. The Partnership Guarantor is not a "tax shelter" as
defined in Section 6111 of the Code.
(w) Filings. To the date hereof, the Partnership Guarantor has filed all
reports and statements required to be filed with the Securities and Exchange
Commission, if any, and any stock exchange which lists securities issued by the
Partnership Guarantor. As of their respective dates, such reports and statements
complied in all material respects with all rules and regulations promulgated by
the Securities and Exchange Commission and such stock exchanges and did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(x) Solvency. The Partnership Guarantor and its Subsidiaries are now and at
all times hereafter shall be solvent and able to pay their respective debts as
they mature, and the Partnership Guarantor and its Subsidiaries now own and
shall at all times hereafter own property whose fair salable value is greater
than the amount required to pay their respective debts.
(y) Capital. The Partnership Guarantor and its Subsidiaries now have and
shall have at all times hereafter capital sufficient to carry on their
respective businesses and transactions and all businesses and transactions in
which they are about to engage.
(z) Healthcare Compliance. The Partnership Guarantor and each of its
Subsidiaries have all permits, licenses, authorizations and approvals material
to the lawful ownership (or lease) and operation of each Facility, and each such
Facility is in substantial compliance with all zoning laws, building codes,
environmental protection laws and other laws material to the use, occupancy and
ownership thereof, and each such Facility may be expanded and/or rebuilt in the
event of a casualty without violation of applicable zoning laws and has access
to utilities sufficient to satisfy its needs. Each Facility, except as provided
in Exhibit "C" hereto, is entitled to participate in, or is a party to, the
Medicare, Medicaid and, to the best of the
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Partnership Guarantor's knowledge after due inquiry, all other public and
private reimbursement programs applicable to facilities of the same type as such
facility. All certifications and contracts allowing participation in such
reimbursement programs are in full force and effect and have not been amended or
otherwise modified, rescinded, revoked or assigned as of the date hereof. Each
Facility, except as provided in Exhibit "C" hereto, is in such material
compliance with the requirements of Medicare, Medicaid and all other public and
private reimbursement programs applicable thereto that reimbursement thereunder
will not be affected or impaired by any noncompliance therewith.
(aa) Tax-Exempt Status of Bonds. The Partnership Guarantor has not taken
any action which would cause interest on the Bonds and the Refunded Bonds, or
any of them, to be subject to federal income taxation.
(bb) Management Agreements Facility Guaranty Agreements. The Partnership
Guarantor has heretofore furnished the Bank with true, correct and complete
copies of the Management Agreements and the Facility Guaranty Agreements and all
amendments thereto. Except as so amended, none of the Management Agreements or
the Facility Guaranty Agreements has been modified, amended or terminated, and
each of the Management Agreements and the Facility Guaranty Agreements is in
full force and effect.
3.2 The Individual Guarantor represents and warrants that:
(a) Due Execution, Etc. The Individual Guarantor has the power and legal
capacity to execute, deliver and perform this Guaranty Agreement in accordance
with its terms and to consummate the transactions contemplated hereby. This
Guaranty Agreement has been duly executed and delivered by the Individual
Guarantor and is a legal, valid and binding obligation of the Individual
Guarantor, enforceable in accordance with its terms, subject, as to enforcement
of remedies, to the following qualifications: (i) an order of specific
performance and an injunction are discretionary remedies and, in particular, may
not be available where damages are considered an adequate remedy at law, and
(ii) enforcement may be limited by bankruptcy, insolvency, liquidation,
reorganization, reconstruction and other similar laws affecting enforcement of
creditors' rights generally (insofar as any such law relates to the bankruptcy,
insolvency or similar event of the Individual Guarantor).
(b) Compliance with Laws, etc. of Guaranty Agreement and Contemplated
Transactions. The execution, delivery and performance of this Guaranty Agreement
in accordance with its terms and the consummation of the transactions
contemplated hereby do not and will not (i) violate any Applicable Law, (ii)
conflict with, result in a breach of, or constitute a default
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under any material indenture, agreement, or other instrument to which the
Individual Guarantor is a party or by which he or any of his properties may be
bound, or, (iii) result in or require the creation or imposition of any Lien
upon or with respect to any property now owned or hereafter acquired by the
Individual Guarantor except Permitted Liens.
(c) Liabilities, Litigation, etc. The Individual Guarantor does not have
any material (individually or in the aggregate) liabilities, direct or
contingent, except as disclosed in Exhibit "B" hereto. Except as so disclosed,
there is no litigation, legal or administrative proceeding, investigation or
other action of any nature pending or, to the knowledge of the Individual
Guarantor, threatened against or affecting the Individual Guarantor which
involves the possibility of any judgment or liability not fully covered by
insurance, and which may have a Materially Adverse Effect.
(d) Solvency. The Individual Guarantor is now and at all times hereafter
shall be solvent and able to pay his debts as they mature.
3.3 Survival of Representations and Warranties, etc. All representations
and warranties made under this Guaranty Agreement shall be deemed to be made,
and shall be true and correct, at and as of the date of delivery of this
Guaranty Agreement and at as of the date of each Drawing, except to the
extent previously fulfilled in accordance with the terms hereof and to the
extent subsequently inapplicable. All representations and warranties made under
this Guaranty Agreement shall survive, and not be waived by, the honoring of any
Drawing by the Bank or by any investigation or inquiry by the Bank.
ARTICLE IV
Special Covenants
Until this Guaranty Agreement is terminated, the Guarantors covenant and
agree as follows:
4.1 Preservation of Existence and Similar Matters. The Partnership
Guarantor and each of its Subsidiaries will, subject to the provisions of
Section 4.16 hereof, (i) preserve and maintain their respective existence,
rights, franchises, licenses and privileges in their respective states of
incorporation or organization, as the case may be, including, without
limitation, all Necessary Authorizations and (ii) qualify and remain qualified
and authorized to do business in each jurisdiction in which the character of
properties or the nature of businesses requires such qualification or
authorization.
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4.2 Compliance with Applicable Law. The Partnership Guarantor will comply
with the requirements of all Applicable Law.
4.3 Maintenance of Properties. The Partnership Guarantor will maintain and
will cause each of its Subsidiaries to maintain or cause to be maintained in the
ordinary course of business in good repair, working order and condition all
properties used or useful in their respective businesses (whether owned or held
under lease), and from time to time to make or cause to be made all needed and
appropriate repairs, renewals, replacements, additions, betterments and
improvements thereto.
4.4 Accounting Methods and Financial Records. The Partnership Guarantor
will maintain and will cause each of its Subsidiaries to maintain a system of
accounting established and administered in accordance with GAAP, keep adequate
records and books of account in which complete entries will be made in
accordance with such accounting principles consistently applied and reflecting
all transactions required to be reflected by such accounting principles.
4.5 Payment of Taxes and Claims. The Guarantors and each of the Partnership
Guarantor's Subsidiaries will pay and discharge all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits or
upon any properties belonging to it prior to the date on which penalties attach
thereto, and all lawful claims for labor, materials and supplies which, if
unpaid, might become a Lien or charge upon any of its properties; except that,
no such tax, assessment, charge, levy or claim need be paid which is being
contested in good faith by appropriate proceedings and, in the case of the
Partnership Guarantor, for which adequate reserves shall have been set aside on
the appropriate books, but only so long as such tax, assessment, charge, levy or
claim does not become a Lien or charge other than a Permitted Lien and no
foreclosure, distraint, sale or similar proceedings shall have been commenced
and remain unstayed for a period of thirty (30) days after such commencement.
The Guarantors and each of the Partnership Guarantor's Subsidiaries shall timely
file all information returns required by federal, state or local tax
authorities.
4.6 Visits and Inspections. The Partnership Guarantor will permit and will
cause each of its Subsidiaries to permit representatives of the Bank to (i)
visit and inspect the properties of the Partnership Guarantor and each of its
Subsidiaries during normal business hours, (ii) inspect and make extracts from
and copies of its books and records, and (iii) discuss with its principal
officers its businesses, assets, liabilities, financial positions, results of
operations and business prospects relating to the Partnership Guarantor and each
of its Subsidiaries.
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4.7 payment of Indebtedness. The Partnership Guarantor and each of its
Subsidiaries will, subject to any provisions therein regarding subordination,
pay any and all of its Indebtedness when and as the same becomes due, other than
amounts duly disputed in good faith the non-payment of which would not have a
Materially Adverse Effect.
4.8 ERISA The Partnership Guarantor will at all times make, or cause to be
made, prompt payment of contributions required to meet the minimum funding
standards set forth in ERISA with respect to its and its Affiliates' employee
benefit plans; promptly after the filing thereof, furnish to the Bank copies of
any annual report required to be filed pursuant to ERISA in connection with each
such plan of it and its Affiliates; notify the Bank as soon as practicable of
any Reportable Event and of any additional act or condition arising in
connection with any such plan which the Partnership Guarantor believes might
constitute grounds for the termination thereof by the Pension Benefit Guaranty
Corporation or for the appointment by the appropriate United States District
Court of a trustee to administer such plan; and furnish to the Bank, promptly
upon the Bank's request therefor such additional information concerning any such
employee benefit plan as may be reasonably requested by the Bank.
4.9 Audited Annual Financial Statements and Information: Certificate of No
Default. The Partnership Guarantor will furnish to the Bank, within one hundred
twenty (120) days after the end of each fiscal year of the Partnership
Guarantor, the balance sheets of the Partnership Guarantor as at the end of such
fiscal year and the related statements of income, retained earnings and changes
in financial position of the Partnership Guarantor for such fiscal year, on a
consolidated and a consolidating basis with the Partnership Guarantor's
Subsidiaries, setting forth in comparative form the figures as at the end of and
(except for the first year after the date hereof) for the previous fiscal year
and certified without qualifications or with only such qualifications as shall
be acceptable to the Bank by independent certified public accountants of
recognized standing reasonably satisfactory to the Bank, whose opinion shall be
in scope and substance satisfactory to the Bank, and who shall have authorized
the Partnership Guarantor to deliver such -- financial statements and opinion
thereon to the Bank pursuant to this Guaranty Agreement. In the event that any
such financial statements are qualified by the independent certified public
accountants preparing such financial statements, such accountants shall submit
to the Bank, with such financial statements, their certificate to the effect
that in making the examination necessary for their audit they have obtained no
knowledge of the occurrence of an Event of Default or any fact or circumstance
which, with notice or lapse of time, or both, would constitute an
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Event of Default, or if they have obtained knowledge of any such Event of
Default or any such fact or circumstance, disclosing the nature and period of
existence of such Event of Default or of such fact or circumstance.
4.10 Quarterly Financial Statements and Information. The Partnership
Guarantor will furnish to the Bank, within sixty (60) days after the last day of
each of the first three quarters in each fiscal year of the Partnership
Guarantor, the balance sheets of the Partnership Guarantor as at the end of such
quarter and the related statements of income and retained earnings of the
Partnership Guarantor for such quarter and for the elapsed portion of the fiscal
year ended with the last day of such quarter, all of which shall be on a
consolidated and a consolidating basis with Partnership Guarantor's Subsidiaries
and certified by a person authorized to make such certification on behalf of the
Partnership Guarantor, as the case may be, to be, in his opinion, complete and
correct in all material respects and to present fairly, in accordance with GAAP,
the statements of financial position of the Partnership Guarantor as at the end
of each period and the results of operations for such period, and for the
elapsed portion of the year ended with the last day of such period, subject only
to normal year-end adjustments.
4.11 Quarterly Performance Certificates. The Partnership Guarantor shall
furnish the Bank, within sixty (60) days after the last day of each of the first
three quarters in each fiscal year of the Partnership Guarantor, and within one
hundred twenty (120) days after the last day of the fourth quarter of each
fiscal year, a certificate of an Authorized Signatory:
(a) setting forth as at the end of such quarterly period or fiscal year, as
the case may be, the arithmetical calculations required to establish whether or
not the Partnership Guarantor, on a consolidated basis, was in compliance with
the requirements of Section 4.14 hereof; and
(b) stating that, to the best of his knowledge, no Event of Default, and no
fact or circumstance which with notice or the passage of time or both would
constitute an Event of Default, has occurred as at the end of such quarterly
period or year, as the case may be, or, if an Event of Default or any such fact
or circumstance has occurred disclosing each such Event of Default, fact and
circumstance and its nature, when it occurred, whether it is continuing and the
steps being taken by the Partnership Guarantor with respect to such default or
Event of Default.
4.12 Copies of Other reports. The Partnership Guarantor shall furnish the
following documents and information to the Bank:
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(a) promptly upon receipt thereof, copies of all reports, if any, submitted
to the Partnership Guarantor by the Partnership Guarantor's independent public
accountants regarding the Partnership Guarantor or any of its Subsidiaries,
including, without limitation, any management report prepared in connection with
the annual audit referred to in Section 4.9 hereof.
(b) within forty-five (45) days after the end of each calendar year, annual
projections of operating income and expenses for the Partnership Guarantor, and
all material amendments and changes thereafter to the same.
(c) from time to time and promptly upon each request, such data,
certificates, reports, statements, opinions of counsel, documents or further
information regarding the business, assets, liabilities, financial position,
projections, results of operations or business prospects of the Partnership
Guarantor or any of its Subsidiaries as the Bank reasonably may request.
(d) promptly after the preparation of the same, copies of all reports or
financial information filed with the Securities and Exchange Commission.
4.13 Notice of Litigation and Other Matters. The Guarantors will give the
Bank prompt notice of the following events after Guarantors have, or in the
exercise of reasonable diligence should have, received notice thereof:
(a) the commencement of all proceedings and investigations by or before any
governmental body and all actions and proceedings in any court or before any
arbitrator (1) against, or (2) (to the extent known to any Guarantor) in any
other way relating adversely to, the Guarantors, or either of them, or any of
the Partnership Guarantor's Subsidiaries or any of their respective assets or
businesses which, if adversely determined, would singly or when aggregated with
all other such proceedings, investigations and actions, if adversely determined,
have a Materially Adverse Effect;
(b) any material adverse change with respect to the business, assets,
liabilities, financial position, results of operations or business prospects of
the Guarantors, or either of them, or any of the Partnership Guarantor's
Subsidiaries other than changes in the ordinary course of business the effects
of which have not had a Materially Adverse Effect;
(c) any event of default or the occurrence or nonoccurrence of any event
which constitutes, or which with the passage of time or giving of notice, or
both, would constitute, an event of default by the Guarantors, or either of
them, or any the Partnership Guarantor's of Subsidiaries under any material
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agreement other than this Guaranty Agreement to which any such Guarantor or any
of the Partnership Guarantor's Subsidiaries is a party or by which their
respective properties may be bound, giving in each case the details thereof and
specifying the action proposed to be taken with respect thereto; and
(d) copies of all notices of actual suspension or revocation of
participation or qualification with respect to (A) the Medicare or Medicaid
programs, (B.) any private health insurance program issued by any Governmental
Authority having jurisdiction over the licensing or operation of any of the
Projects or any other health care related assets or operations of the
Partnership Guarantor and any of its Subsidiaries, or (C) any private insurance
company.
4.14 Financial Covenants. The Partnership Guarantor will maintain at all
times:
(a) a Current Ratio greater than or equal to 1.5 to 1;
(b) Working Capital greater than or equal to $7,500,000;
(c) a ratio of Funded Debt to Tangible Net Worth less than or equal to (i)
4.50 to 1.0 for the period from the date of delivery of this Guaranty Agreement
through March 31, 1988; (ii) 4.25 to 1.0 for the period from April 1, 1988
through September 30, 1988; and (iii) 4.0 to 1.0 thereafter; provided, however,
that if at any time during any of the periods set forth above the Partnership
Guarantor shall (i) issue Equity or Subordinated Debt or (ii) sell any of its
assets and, as a result of either of such events, the Partnership Guarantor
obtains proceeds which causes the Partnership Guarantor to have a ratio of
Funded Debt to Tangible Net Worth which is less than the above ratios, then the
Partnership Guarantor shall thereafter maintain the lesser of such ratio or,
during succeeding periods, the ratio set forth above for such succeeding periods
and further provided, that at no time shall the Partnership Guarantor be
required to maintain a ratio of Funded Debt to Tangible Net Worth which is less
than 4.0 to 1.0.
(d) Consolidated Tangible Net Worth of not less than (i) $32,000,000 for
the period from the date of delivery of this Guaranty Agreement through December
30, 1987. (ii) $36,000,000 for the period from December 31, 1987 through
December 30, 1988; and (iii) $40,000,000 at all times thereafter provided,
however, that at such time as the Partnership Guarantor shall have maintained
its (a) Current Ratio at not less than 1.5 and (b) ratio of Funded Debt to
Tangible Net Worth at not more than 3.5 to 1.0 for two consecutive fiscal
quarters, then for so long as the Partnership Guarantor continues to maintain
such ratios, the Partnership Guarantor shall instead maintain its Tangible Net
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Worth at not less than the following amounts for the following periods: (i)
$32,000,000 for the period from the date delivery of this Guaranty Agreement
through December 30, (ii) $34,000,000 for the period from December 31, 1987
through December 30, 1988 and (iii) $36,000,000 at all times the and
(e) a Debt Service Coverage Ratio of at least 1.3 to
4.15 Amendment of Bond Documents. The Partnership Guarantor will not amend,
modify, supplement or terminate Bond Documents, or any of them, or permit or
consent to an amendment, modification, supplementation or termination, were the
Bank's prior written consent.
4.16 No Merger Consolidation or Sale of Assets. The Partnership Guarantor
will not dissolve or otherwise dispose all or substantially all of its assets
and will not console with or merge into another partnership or corporation or
per one or more other partnerships or corporations to consolidate with or merge
into it without the prior written consent of Bank; provided that, so long as no
Event of Default then and is continuing hereunder, the Partnership Guarantor
may consolidate with the Borrower, allow the Borrower to merge the Partnership
Guarantor, or acquire all or substantially the assets of the Borrower, provided
further, that (a) the Partnership Guarantor is the surviving, resulting or
transfer entity (as the case may be), (b) the Partnership Guarantor assumes in
writing the Borrower obligations under the Reimbursement Agreement, the Pledge
Agreement, any applicable Mortgage(s) and such other Related Documents as the
Bank require, (c) immediately following the consummation of such consolidation,
merger or asset acquisition, the Partnership Guarantor is in compliance with
each and every covenant set in Section 4.14 hereof, as evidenced to the Bank by
an opinion independent certified public accountants of recognized satisfactory
to the Bank, and (d) the Partnership Guarantor furnishes to the Bank such
additional agreements, certificate title insurance and legal opinions
(including, without limitation, an opinion of nationally recognized bond
counsel satisfactory to the Bank that such consolidation, merger or acquisition
of assets will not adversely affect the exemption from federal income taxation
of interest on the Bonds) as Bank may require. Notwithstanding the immediately
preceding sentence so long as no Event of Default shall exist and be continuing
hereunder, the Partnership Guarantor may incorporate itself (whether by
consolidation with or merger into a corporation, or otherwise), provided that
(i) the surviving resulting entity (as the case may be) is a corporation
incorporated under the laws of one of the states of the United States of
America and, if not incorporated under the laws of a
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State of Florida is duly qualified to transact business in the State of Florida,
(ii) such surviving or resulting corporation assumes in writing the obligations
of the Partnership Guarantor under this Guaranty, (iii) immediately following
the consummation of such consolidation, merger or other incorporation
transaction, such surviving or resulting corporation is in compliance with each
and every covenant set forth in Section 4.14 hereof, as evidenced to the Bank by
an opinion of independent certified public accountants of recognized standing
satisfactory to the Bank, and (iv) such surviving or resulting corporation
furnishes to the Bank such additional agreements, certificates and legal
opinions as the Bank may require.
4.17 Insurance. The Partnership Guarantor shall use its best efforts to
maintain adequate medical malpractice liability insurance at a minimum of
$1,000,000 per occurrence and $1,000,000 in the aggregate; and the Partnership
Guarantor shall maintain, and cause each of the Partnership Guarantor's
Subsidiaries to maintain, with responsible and reputable insurance companies or
associations (a) insurance (including, without limitation, comprehensive general
liability and hazard insurance insuring replacement value with respect to all of
its properties) with respect to its properties and business, in such amounts,
covering such risks and having deductibles, as is carried generally in
accordance with sound business practice by companies in similar businesses
similarly situated or as otherwise is deemed acceptable by the Bank, and (b)
workmen's compensation and other insurance as may be required by law.
4.18 Individual Guarantor Financial Reporting Requirements. Within one
hundred twenty (120) days after the end of each calendar year, the Individual
Guarantor shall furnish financial statements of the Individual Guarantor in such
reasonable detail as may be requested by the Bank. The Individual Guarantor
shall also furnish such additional financial information as the Bank may
reasonably request from time to time.
ARTICLE V
Subordination
5.1 Subordination. The Partnership Guarantor hereby agrees that all
amounts owing from time to time to the Partnership Guarantor under the
Management Agreements and guaranty fees and other payments owing from time
to time to the Partnership Guarantor under the Facility Guaranty Agreements,
are subordinated in right of payment to the prior payment in full of all
amounts now or hereafter owing under the Reimbursement Agreement, the Pledge
Agreement, the Mortgages and the other Related Documents, and under this
Guaranty Agreement.
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ARTICLE VI
EVENTS OF DEFAULTS; REMEDIES
6.1 Events of Default. The occurrence of any of the following events shall
be an "Event of Default" hereunder
(a) any representation or warranty made by the Guarantors, or either of
them, herein or in any certificate or financial or other written statement
furnished by such Guarantors pursuant to this Guaranty Agreement shall prove to
have been untrue or incomplete in any material respect when made; or
(b) The Guarantors, or either of them, shall fail to perform or observe any
term, covenant or agreement contained in Sections 2.1, 4.9, 4.10, 4.11, 4.14,
4.15 or 4.16 to which such Guarantors are subject; or
(c) The Guarantors, or either of them, shall fail to perform or observe any
term, covenant or agreement contained in this Guaranty Agreement and to which
such Guarantors are subject, other than those referred to in paragraph (b) of
this Section 6.1, and any such failure shall remain unremedied for thirty (30)
days after written notice thereof shall have been given to the Guarantors by the
Bank or
(d) any material provision of this Guaranty Agreement shall at any time for
any reason cease to be valid and binding on the Guarantors, or either of them,
or shall be declared to be null and void, or the validity or enforceability
thereof shall be contested by the Guarantors, or either of them, or any
Governmental Authority having jurisdiction in the premises, or the Guarantors,
or either of them, shall deny that they have any or further liability or
obligation under this Guaranty Agreement or
(e) the Partnership Guarantor shall fail to pay when due and payable, after
giving effect to any applicable grace period, the principal of or interest on
any Indebtedness in an aggregate amount over $100,000 (excluding Indebtedness
guaranteed under this Guaranty Agreement) or the maturity of any such
Indebtedness shall have been accelerated or been required to be prepaid prior
to the stated maturity thereof or any event shall have occurred and be
continuing which with the passage of time or the giving of notice or both, would
permit any holder or holders of such Indebtedness any trustee or agent acting on
behalf of such holder or holders or any other Person so to accelerate such
maturity, unless the Partnership Guarantor's obligation to pay, or the
acceleration or required prepayment of, such Indebtedness is being contested or
any right of set-off is being asserted by the Partnership Guarantor in good
faith by appropriate
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proceedings and reserves in respect thereof deemed adequate by the Partnership
Guarantor have been established on the books of the Partnership Guarantor in
accordance with GAAP, or
(f) a judgment or order for the payment of money shall be entered against
the Partnership Guarantor by any court or a warrant of attachment or execution
or similar process shall be issued or levied against property of the Partnership
Guarantor, which in the aggregate exceeds $100,000 in value over any applicable
issuance coverage or reserve previously established on the books of the
Partnership Guarantor and such judgment, order, warrant or process shall
continue undischarged or unstayed for thirty (30) consecutive days; or
(g) (1) any Guarantor shall (A) apply for or consent to the appointment of
a receiver, trustee, liquidator or custodian or the like of itself or of its
property, (B) admit in writing its inability to pay its debts generally as they
become due, (C) make a general assignment for the benefit of creditors, (D) be
adjudicated a bankrupt or insolvent, or (E) commence a voluntary case under the
Federal bankruptcy laws of the United States of America or file a voluntary
petition or answer seeking reorganization, an arrangement with creditors or an
order for relief or seeking to take advantage of any insolvency law or file an
answer admitting the material allegations of a petition filed against it in any
bankruptcy, reorganization or insolvency proceeding, or corporate action shall
be taken by it for the purpose of effecting any of the foregoing; or (2) if
without the application, approval or consent of such Guarantor a proceeding
shall be instituted in any court of competent jurisdiction, under any law
relating to bankruptcy, insolvency, reorganization or relief of debtors,
seeking in respect of such Guarantor an order for relief or an adjudication in
bankruptcy, reorganization, dissolution, winding up, liquidation, a composition
or arrangement with creditors, a readjustment of debts, the appointment of a
trustee, receiver, liquidator or custodian or the like of such Guarantor or of
all or any substantial part of its assets, or other like relief in respect
thereof under any bankruptcy or insolvency law, and, if such proceeding is being
contested by such Guarantor in good faith, the same shall (A) result in the
entry of an order for relief or any such adjudication or appointment or (B)
continue undismissed, or pending and unstayed, for any period of sixty (60)
days; or
(h) an "event of default" shall occur under the provisions of the Revolver
Agreement; or
(i) (A) a Termination Event with respect to a Plan shall occur, (B) any
person shall engage in any Prohibited Transaction involving any Plan of the
Partnership Guarantor or any Affiliated of the Partnership Guarantor, (C) an
Accumulated Funding
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Deficiency, whether or not waived, shall exist with respect to any Plan of the
Partnership Guarantor or any Affiliate of the Partnership Guarantor (D) the
Partnership Guarantor or any Affiliate of the Partnership Guarantor shall be in
"default" (as defined in Section 4219(c)(5) of ERISA with respect to payments
due to a Multiemployer Plan resulting from the Partnership Guarantor's or such
Partnership Guarantor Affiliate's complete or partial withdrawal (as described
in Section 4203 or 4205 of ERISA from such Plan, or (E) any other event or
condition shall occur or exist with respect to a Single Employer Plan of the
Partnership Guarantor or any Affiliate of the Partnership Guarantor except that
no such event or condition shall constitute an Event of Default if it, together
with all other events or conditions at the time existing, would not subject the
Partnership Guarantor to any tax, penalty, debt or liability which, alone or in
the aggregate, would have a Materially Adverse Effect on the Partnership
Guarantor.
6.2 Remedies. (a) Upon the occurrence of an Event of Default, the Bank may
thereupon exercise such rights and remedies as may be provided in the
Reimbursement Agreement, the Pledge Agreement, this Guaranty, any Mortgage and
any other Related Documents by reason of such Event of Default in order to
enforce the provisions of this Guaranty, with or without the simultaneous
exercise of any other such right or remedy under said documents.
(b) No remedy herein conferred upon or reserved to the Bank is intended to
be exclusive of any other available remedy or remedies, but each and every such
remedy shall be cumulative and shall be in addition to every other remedy given
under this Guaranty Agreement or now or hereafter existing at law or in equity
or by statute. No delay or omission to exercise any right or power accruing upon
any default, omission or failure of performance hereunder shall impair any such
right of power or shall be construed to be a waiver thereof, but any such right
and power may be exercised from time to time as often as may be deemed
expedient. In order to entitle the Bank to exercise any remedy reserved to it in
this Guaranty Agreement, it shall not be necessary to give any notice, other
than such notice as may be herein expressly required. In the event any provision
contained in this Guaranty Agreement should be breached by any party and
thereafter duly waived by the other party so empowered to act, such waiver shall
be limited to the particular breach so waived and shall not be deemed to waive
any other breach hereunder. No waiver, amendment, release or modification of
this Guaranty Agreement shall be established by conduct, custom or course of
dealing, but solely by an instrument in writing duly executed by the parties
thereunto duly authorized by this Guaranty Agreement.
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ARTICLE VII
Miscellaneous
7.1 When Obligations Arise. The obligations of the Guarantors hereunder
shall arise absolutely and unconditionally the issuance by the Bank of the first
Letter of Credit to be issued pursuant to the Reimbursement Agreement.
7.2 Nature of Guarantors' Obligations. This guaranty Agreement is a
continuing obligation of the Guarantors and shall (i) be binding upon the
Guarantors, their respective heirs, executors, personal representatives
successors and permitted assigns, and (ii) inure to the benefit of and be
enforceable by the Bank and its successors, transferees and assigns; provided,
that neither of the Guarantors may assign all or any part of this Guaranty
Agreement or the rights or obligations of such Guarantor hereunder without the
prior written consent of the Bank; and, provided further, that unless the Bank
shall agree in writing to release any Guarantor from its rights or obligations
hereunder, no such assignment (whether or not consented to by the Bank) shall in
itself relieve or release such Guarantor from its obligations hereunder.
7.3 Notices. All notices, requests and other communications hereunder shall
be in writing and shall be given to the party to whom sent, addressed to it as
follows:
If directed to the Bank:
The Toronto-Dominion Bank, Chicago Branch
Three First Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Senior Manager, Credit Administration
with a copy to:
The Toronto-Dominion Bank
U.S.A. Division
Park Avenue Plaza
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Senior Manager
Health Care Finance
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If directed to the Partnership Guarantor:
National HealthCorp L.P.
000 X. Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. XxXxxxx, Xx.
Senior Vice President and General Counsel
If directed to the Individual Guarantor:
Xx. Xxxxx X. XxXxxxxx
c/o Florida Convalescent Centers, Inc.
0000 Xxxxxxxxxxx Xxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
The Bank and the Guarantors may designate a different address to which such
notices should be sent by giving the other written notice thereof. Each such
notice, request or communication shall be effective (i) if given by mail,
three (3) Business Days after such communication is deposited in the mails with
first class postage prepaid, addressed as aforesaid or (ii) if given by any
other means, when delivered at the address of the party to whom such notice is
being delivered.
7.4 Bank's Right of Set-Off.
(a) To the fullest extent permitted by law, upon the occurrence and during
the continuance of any Event of Default, the Bank is hereby authorized at any
time and from time to time, without notice to the Guarantors (any such notice
being expressly waived by the Guarantors), to set-off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by the Bank to or for the credit
or the account of the Guarantors, or either of them, against any of the
obligations of the Guarantors now or hereafter existing under this Guaranty
Agreement, irrespective of whether the Bank shall have made any demand hereunder
or thereunder and although such obligations may be unmatured.
(b) The Bank agrees promptly to notify the Guarantors after any set-off and
application, provided that the failure to give such notice shall not affect the
validity of such set-off and application. Subject to the provisions of
subsection (a), the rights of the Bank under this Section are in addition to
other rights and remedies (including, without limitation, other rights of
set-off) which the Bank may have.
7.5 Jurisdiction; Service of Process. The Guarantors agree that any legal
action or proceeding with respect to this Guaranty Agreement or to enforce any
judgment obtained against
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the Guarantors, or against either of them, in connection with this Guaranty
Agreement may be brought by the Bank in the courts of the State or in the United
States District Court for the Northern District of Illinois, or any other court
to the jurisdiction of which the Guarantors, or either of them, or any of their
respective properties is or may be subject. The Guarantors each irrevocably
submits to the jurisdiction of the courts of the State and of the United States
District Court for the Northern District of Illinois, and irrevocably waive any
present or future objection to venue in any such court, and any present or
future claim that any such court is an inconvenient forum, in connection with
any action or proceeding relating to this Guaranty Agreement. Nothing herein
shall effect the right of the Bank to serve process in any manner permitted by
law or to bring any civil suit, action or proceeding against the Guarantors, or
either of them, or their respective property in the courts of any jurisdiction
in which venue may be granted.
(b) For the purposes of any legal action or proceeding brought by the Bank
with respect to this Guaranty, the Partnership Guarantor hereby irrevocably
designates and appoints CT Corporation System, currently located at 000 Xxxxx
XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx, 00000, as its authorized agent for service of
process in the State of Illinois. The Bank shall for all purposes be entitled to
treat such designee of the Partnership Guarantor as the authorized agent to
receive for and on its behalf service of writs or summons or other legal process
in the State of Illinois; delivery of such service to its authorized agent shall
be deemed to be made when personally delivered to the agent or three (3) days
after mailing by registered or certified mail addressed to such authorized
agent. In the event that, for any reason, such agent or his successor shall no
longer serve as agent of the Partnership Guarantor to receive service of process
in the State of Illinois, the Partnership Guarantor shall appoint a person in
the State of Illinois as a successor so to serve and advise the Bank thereof so
that at all times the Partnership Guarantor will maintain an agent to receive
service of process in the State of Illinois on its behalf with respect to this
Guaranty Agreement. In the event that, for any reason, service of legal process
cannot be made in the manner described above, such service may be made in such
other manner as permitted by law.
7.6 Amendments. This Guaranty Agreement may be amended, and the guarantors
may take any action herein prohibited, or omit to perform any act herein
required to be performed, only if the Guarantors shall first obtain the written
consent of the Bank thereto. No course of dealing between the Guarantors and the
Bank nor any delay in exercising any rights hereunder, shall operate as a waiver
of any rights of the Bank hereunder.
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7.7 Sole Judgment of the Bank. Unless otherwise specifically indicated,
if any agreement, certificate or other writing, or any action taken or to be
taken, is by the terms of this Guaranty Agreement required to be satisfactory
to the bank, the determination of such satisfaction shall be made by the Bank
in its sole and exclusive judgment exercised in good faith.
7.8 Severability. Any provision of this Guaranty Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization as to the remaining provisions hereof and
shall not affect the validity, enforceability or legality of such provision in
any other jurisdiction.
7.9 Headings. Section headings are included herein for convenience of
reference only and shall not constitute a part of this Guaranty Agreement for
any other purpose.
7.10 Governing Law. This Guaranty Agreement is intended to be performed in
the State of Illinois, and shall be construed and enforced in accordance with
and the rights of the parties shall be governed by, the laws of the State of
Illinois.
7.11 Exhibits. All Exhibits referred to herein are by this reference
incorporated herein and made a part hereof.
7.12 Entire Agreement; Multiple Counterparts. This Guaranty Agreement
constitutes the entire agreement, and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and may be executed simultaneously in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.13 Time of the Essence. Time is of the essence of this contract.
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IN WITNESS WHEREOF, the Guarantors and the Bank have duly executed and
delivered this Guaranty Agreement, or caused same to be duly executed and
delivered, under seal, as of the date first above written.
/s/
---------------------------------- [SEAL]
XXXXX X. XxXXXXXX
NATIONAL HEALTHCORP L.P., a
Delaware limited partnership
By: NHC, Inc., a Tennessee
corporation, as Managing
General Partner
By: /s/
---------------------------------
Title: President
Attest:
------------------------------
Title: SECRETARY
[SEAL]
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THE TORONTO-DOMINION BANK
acting through its
Chicago Branch
By:/S/
---------------------
Title: MANAGER
CREDIT
ADMINISTRATION
[BANK SEAL]
