1
GUARANTEE
THIS GUARANTEE AGREEMENT (this "Guarantee") is dated as of October 2,
1997 and is given by Fremont Partners, L.P., a Delaware limited partnership (the
"Guarantor"), in favor of Kinetic Concepts, Inc., a Texas corporation ("KCI").
WHEREAS, the Guarantor is providing this Guarantee in order to induce
KCI to enter into a Transaction Agreement (the "Transaction Agreement"), dated
as of the date hereof, among Fremont Purchaser II, Inc., a Delaware corporation
and wholly owned indirect subsidiary of the Guarantor (the "Obligor"), RCBA
Purchaser I, L.P., a Delaware limited partnership and wholly owned subsidiary of
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ and Associates, L.L.P., and KCI; and
WHEREAS, the Guarantor has agreed to execute this Guarantee.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Guarantor, intending to be legally bound, hereby agrees, for the benefit and in
favor of KCI as follows:
SECTION 1. Guarantee. (a) The Guarantor hereby unconditionally and
irrevocably guarantees the punctual payment and performance of the obligations
of Obligor under the Transaction Agreement (without regard to Section 9.09
thereof) in an amount up to but not exceeding $138,197,020.50 million with
respect to the obligations of Obligor under Section 2.01, 2.02, 2.05 and 5.06 of
the Transaction Agreement and in an amount up to but not exceeding $30,000,000
with respect to all other obligations of Obligor under the Transaction Agreement
(such obligations being the "Guaranteed Obligation").
(b) In the event that KCI is seeking payment from the Guarantor on the
Guaranteed Obligation pursuant to this Section 1, KCI shall promptly cause
written notice of the demand of such payment to be provided to the Guarantor in
accordance with Section 5 hereof. Such written notice shall set forth in
reasonable detail the Guaranteed Obligation and the amount of payment.
SECTION 2. Construction of Guarantee. (a) Guarantor guarantees that the
Guaranteed Obligation shall be paid or performed, as the case may be, strictly
in accordance with the terms of the Transaction Agreement. The obligations of
the Guarantor under this Guarantee are independent of the Guaranteed Obligation
or any other obligations of any other person under the Transaction Agreement and
a separate action or actions may be brought and prosecuted against the Guarantor
to enforce this Guarantee in respect of the payment of the Guaranteed
Obligation. This guarantee is a guarantee of payment, not collection, and the
liability of the Guarantor under this Guarantee shall be unconditional and
absolute, irrespective of, and the Guarantor hereby irrevocably waives any
defenses it may now or hereafter have in any way relating to, any or all of the
following:
(i) any lack of validity or enforceability of the Transaction
Agreement or any other agreement or instrument relating thereto;
(ii) any change in the time, manner or place of payment of, or
in any other term of, all of the Guaranteed Obligation or any other
obligations of any other person under the Transaction Agreement, or any
other amendment or waiver of or any consent to departure from the
Transaction Agreement, including, without limitation, any increase in
any obligation of the Obligor under the Transaction Agreement;
2
2
(iii) any change, restructuring or termination of the
corporate structure or existence of the Obligor or any of its
subsidiaries;
(iv) any requirement that, at any time, any action be taken by
any person against Obligor or any other person;
(v) any right to be subrogated to the rights of KCI hereunder
or thereunder unless and until all of the Guaranteed Obligation and all
other amounts payable under this Guarantee shall have been paid in
full;
(vi) any right arising from the stay for any reason of any of
the obligations of Obligor hereunder or of Obligor or any successor or
assign of Obligor thereunder; and/or
(vii) any other defense of a surety or guarantor.
This Guarantee shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of the Guaranteed Obligation is rescinded or must
otherwise be returned by KCI or any other person upon the insolvency, bankruptcy
or reorganization of the Obligor or any other person or otherwise, all as though
such payment had not been made.
(b) Notwithstanding any other provision of this Guarantee, KCI
and the Guarantor agree that the Guarantor is entitled to the benefit of, and
may assert as a defense to payment and performance of this Guarantee, any
defense available to the Obligor to the enforcement of the Obligor's obligation
under the terms of the Transaction Agreement.
(c) The Guarantor hereby waives (i) promptness, diligence,
notice of acceptance and any other notice (other than that required by Section
1(b) hereof) with respect to the Guaranteed Obligation and this Guarantee and
(ii) any act or omission of either party that would otherwise constitute a legal
or equitable discharge of the obligations set forth in this Guarantee.
SECTION 3. Continuing Guarantee. This Guarantee is a
continuing guaranty and shall (i) remain in full force and effect until Obligor
shall have performed in full the Guaranteed Obligation, (ii) be binding upon the
Guarantor and its successors and assigns and (iii) inure to the benefit of and
be enforceable by KCI and its successors and assigns.
SECTION 4. Representations and Warranties of Guarantor.
Guarantor hereby represents, warrants and covenants to KCI as follows:
(a) Guarantor is a limited partnership duly organized and
validly existing under the laws of the State of Delaware. Guarantor has the
necessary power and authority to own and operate its properties and assets and
to carry on its business as currently conducted.
(b) Guarantor has all requisite legal power and authority to
enter into this Guarantee. The Guarantor has all requisite legal power and
authority to carry out and perform its obligations under the terms of this
Guarantee. The Guarantee constitutes the valid and binding obligation of
Guarantor, enforceable against it in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, moratorium, reorganization
or other laws or equitable principles relating to or affecting creditors' rights
generally.
3
3
(c) All partnership action on the part of Guarantor and its
general partner and limited partners necessary to authorize the execution,
delivery and performance of this Guarantee has been taken.
(d) Guarantor has funds available to it sufficient to
purchase, or cause the purchase of, the F Shares in accordance with the terms of
the Transaction Agreement.
SECTION 5. Amendments, etc. No amendment or waiver of any
provision of this Guarantee, and no consent to any departure by the Guarantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by KCI and the Guarantor, and then such waiver or consent shall be
effective only in the specific instance and for the specific purchase for which
given.
SECTION 6. Notices. Any notice, payment, demand, or
communication required or permitted to be given by any provision of this
Guarantee shall be duly given when delivered in writing or by telecopy:
If to the Guarantor or Obligor:
Fremont Partners, L.P.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
with a copy to:
Shearman & Sterling
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
If to KCI:
The Company
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
with a copy to:
▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
SECTION 7. No Waiver; Remedies. No failure on the part of KCI
to exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of
4
4
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 8. Expenses. The Guarantor agrees that it will upon
demand pay to KCI the amount of any and all reasonable expenses, including the
reasonable fees and expenses of its counsel and of any experts and agents, that
KCI may incur in connection with the exercise or enforcement of any of the
rights of KCI hereunder as a result of the failure by the Guarantor to perform
or observe any of the provisions hereof.
SECTION 9. Severability. If any term or other provision of
this Guarantee is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this Guarantee
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the Transactions is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Guarantee so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions be consummated as originally contemplated to the
fullest extent possible.
SECTION 10. Entire Agreement; Assignment. This Guarantee
constitutes the entire agreement among the parties with respect to the subject
matter hereof and supersedes all prior agreements and undertakings, both written
and oral, among the parties, or any of them, with respect to the subject matter
hereof. This Guarantee shall not be assigned by operation of law or otherwise,
except that the Guarantor may assign all or any of its rights and obligations
hereunder to any affiliate or affiliates of the Guarantor provided that no such
assignment shall relieve the assigning party of its obligations hereunder if
such assignee does not perform such obligations.
SECTION 11. Parties in Interest. This Guarantee shall be
binding upon and inure solely to the benefit of KCI, and nothing in this
Guarantee, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Guarantee.
SECTION 12. Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of this Guarantee
was not performed in accordance with the terms hereof and that the parties shall
be entitled to specific performance of the terms hereof, in addition to any
other remedy at law or equity.
SECTION 13. Governing Law. This Guarantee shall be governed
by, and construed in accordance with, the laws of the State of Delaware
applicable to contracts executed in and to be performed in that State. All
actions and proceeding arising out of or relating to this Guarantee shall be
heard and determined in any Delaware state or federal court. THE COMPANY AND
PURCHASERS KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVER ANY RIGHT THEY MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, ARISING OUT OF,
UNDER OR IN CONNECTION WITH, THIS GUARANTEE, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENT (VERBAL OR WRITTEN) OR ACTION OF THE COMPANY OR PURCHASERS.
5
5
SECTION 14. Headings. The descriptive headings contained in
this Guarantee are included for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Guarantee.
IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to
be duly executed and delivered as of the date first above written.
FREMONT PARTNERS, L.P.
By /s/ ▇.▇. ▇▇▇▇
---------------------------------
Name: ▇.▇. ▇▇▇▇
Title:
