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EXHIBIT 10.37e
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT, dated as of July 27, 2001, is made by
MEDCATH CORPORATION, a Delaware corporation (the "Parent"), and certain
Subsidiaries of the Parent as identified on the signature pages attached hereto
or otherwise joined as a party hereto (such subsidiaries collectively, the
"Subsidiary Guarantors", and each, a "Subsidiary Guarantor", and together with
the Parent, the "Guarantors"), in favor of BANK OF AMERICA, N.A., a national
banking association, as Administrative Agent (the "Administrative Agent") for
the ratable benefit of itself and the financial institutions (the "Lenders")
from time to time party to the Loan Agreement (as defined below).
STATEMENT OF PURPOSE
Pursuant to the terms of the Amended and Restated Loan Agreement of
even date herewith (as amended, restated, supplemented or otherwise modified,
the "Loan Agreement"), by and among Heart Hospital of BK, LLC, as Borrower (the
"Borrower"), the Lenders party thereto (the "Lenders") and the Administrative
Agent, the Lenders have agreed to extend certain credit facilities to the
Borrower as more specifically described in the Loan Agreement.
The Borrower and the Guarantors, though separate legal entities,
comprise one integrated financial enterprise, and all Term Loans under the Loan
Agreement to the Borrower will inure, directly or indirectly, to the benefit of
each of the Guarantors.
In connection with the transactions contemplated by the Loan Agreement
and as a condition precedent thereto, the Lenders have requested that each
Guarantor execute and deliver this Guaranty, and each of the Guarantors has
agreed to do so pursuant to the terms hereof.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth herein, and to induce the Administrative Agent and the
Lenders to enter into and to make available Term Loans pursuant to the Loan
Agreement, each Guarantor hereby agrees with the Administrative Agent for the
ratable benefit of the Administrative Agent and the Lenders as follows:
SECTION 1. Definitions and Rules of Construction.
(a) Definitions. Capitalized terms used and not otherwise defined in
this Guaranty including the preambles and recitals hereof, shall have the
meanings ascribed to them in the Loan Agreement. In the event of a conflict
between capitalized terms defined herein and in the Loan Agreement, this
Guaranty shall control. In addition, the following terms when used in this
Guaranty shall have the meaning assigned to them below:
"Administrative Agent" shall have the meaning assigned thereto in the
Preamble.
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"Adjusted EBITDA" means, for any period, the sum of the following
determined, without duplication, in accordance with GAAP: (a) Consolidated
EBITDA of the Parent and its Subsidiaries for such period plus (or minus) (b) to
the extent deducted in determining Net Income (or to the extent added in
determining Net Income), the "minority interest share of earnings of the
consolidated subsidiaries" of the Parent for such period as reflected on the
consolidated statement of operations of the Parent and its Subsidiaries plus (c)
to the extent deducted in determining Net Income, the "equity in the net losses
of unconsolidated affiliates" attributable to Unconsolidated Entities for such
period as reflected on the consolidated statement of operations of the Parent
and its Subsidiaries minus (d) to the extent added in determining Net Income,
the "equity in the net profits of unconsolidated affiliates" attributable to
Unconsolidated Entities for such period as reflected on the consolidated
statement of operations of the Parent and its Subsidiaries plus (e)
Unconsolidated EBITDA of each Unconsolidated Entity for such period plus (f)
certain adjustments approved by the Administrative Agent and the Lenders and set
forth on Schedule 1(a)(i) minus (g) to the extent in included in any of the
foregoing clauses (a) through (e), the aggregate amount of EBITDA of the
Developmental Pool for such period. For the purpose hereof, each item referred
to herein which is determined by reference to the consolidated statement of
operations of the Parent and its Subsidiaries shall be calculated in the manner
required pursuant to Section 28.
"Affiliate" shall have the meaning assigned thereto in the Loan
Agreement.
"Aggregate Commitment" shall have the meaning assigned thereto in the
Loan Agreement.
"Applicable Insolvency Laws" means all Applicable Laws governing
bankruptcy, reorganization, arrangement, adjustment of debts, relief of debtors,
dissolution, insolvency, fraudulent transfers or conveyances or other similar
laws (including, without limitation, 11 U.S.C. ss.547, ss.548, ss.550 and other
"avoidance" provisions of Title 11 of the United States Code) applicable in any
proceeding involving the bankruptcy, reorganization, arrangement, adjustment of
debts, relief of debtors, dissolution or insolvency or any similar proceeding
with respect to any Guarantor or its assets or this Guaranty.
"Applicable Law" means, collectively, all international, foreign,
federal, state and local statutes, treaties, rules, guidelines, regulations,
ordinances, codes, constitutions and administrative or judicial precedents or
authorities, including the interpretation or administration thereof by any
Governmental Authority charged with the enforcement, interpretation or
administration thereof, and all applicable administrative orders, directed
duties, requests, licenses, authorizations and permits of, and agreements with,
any Governmental Authority, in each case whether or not having the force of law.
"Available Cash" means, as of any date of determination, the sum of the
following, without duplication, calculated in accordance with GAAP: (a) the
aggregate amount of all cash and cash equivalents of the Parent and its
Subsidiaries, which such cash or cash equivalents are readily marketable and
available without restriction or limitation for the immediate payment or
repayment of Debt thereof as of such date of determination plus (b) the
aggregate amount of all Unconsolidated Cash of the Unconsolidated Entities as of
such date of determination.
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"Borrower" shall have the meaning assigned thereto in the Statement of
Purpose.
"Capital Lease" means any lease of any property by the Parent or any of
its Subsidiaries, as Lessee, that should, in accordance with GAAP, be classified
and accounted for as a capital lease on a Consolidated balance sheet of Parent
and its Subsidiaries.
"Cash Interest Expense" means, with respect to any Person for any
period, all Interest Expense paid in cash during such period.
"Closing Date" shall have the meaning assigned thereto in the Loan
Agreement.
"Collateral" shall have the meaning assigned thereto in the Loan
Agreement.
"Commitments" shall have the meaning assigned thereto in the Loan
Agreement.
"Completion Date" means, with respect to any Hospital Facility owned by
any Hospital Joint Venture, the date upon which such Hospital Joint Venture has
received (i) the final certificate of occupancy for such Hospital Facility and
(ii) all permits and licenses required under Applicable Law (including the
Medicare Certification and the Medicaid Certification) to operate such Hospital
Facility.
"Consolidated" means, when used with reference to financial statements
or financial statement items of the Parent and its Subsidiaries, such statements
or items on a consolidated basis in accordance with applicable principles of
consolidation under GAAP.
"Consolidated Net Worth" means, with respect to the Parent and its
Subsidiaries at any date of determination, the sum of the following determined
on a Consolidated basis, without duplication, in accordance with GAAP: (a) the
amount of assets shown on the Consolidated balance sheet of the Parent and its
Subsidiaries less (b) all liabilities of the Parent and its Subsidiaries. For
purposes of this definition, assets shall include sums due from (i) physicians
or medical practices managed by the Parent or any of its Subsidiaries, (ii)
health care facilities owned or managed by the Parent or any of its
Subsidiaries, and (iii) physicians with whom Borrower is affiliated, to the
extent that (x) the repayment of such sums constitutes valid and enforceable
obligations of such Persons and (y) such Persons have not defaulted in the
repayment of such sums.
"Corporate Revolver" means the Loan Agreement dated as of July 31,
1998, as amended, restated, supplemented or otherwise modified from time to
time, by and among MedCath Intermediate Holdings, Inc., as borrower, the lenders
referred to therein, as lenders, and Bank of America, N. A., as agent.
"Debt" means, with respect to any Person at any date and without
duplication, the sum of the following calculated in accordance with GAAP: (a)
all liabilities, obligations and indebtedness for borrowed money including, but
not limited to, obligations evidenced by bonds, debentures, notes or other
similar instruments of any such Person, (b) all obligations to pay the deferred
purchase price of property or services of any such Person (including, without
limitation, all
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obligations under non-competition agreements), except trade payables arising in
the ordinary course of business not more than one hundred and twenty (120) days
past due, (c) all obligations of any such Person as lessee under Capital Leases,
(d) all Debt of any other Person secured by a Lien on any asset of any such
Person, (e) all Guaranty Obligations of any such Person, (f) all obligations,
contingent or otherwise, of any such Person relative to the face amount of
letters of credit, whether or not drawn, and banker's acceptances issued for the
account of any such Person, (g) all obligations of any such Person to redeem,
repurchase, exchange, defease or otherwise make payments in respect of capital
stock or other securities or partnership interests of such Person, (h) all net
payment obligations incurred by any such Person pursuant to Hedging Agreements
and (i) all outstanding payment obligations of any such Person with respect to
any synthetic lease, tax retention operating lease, off-balance sheet loan or
similar off-balance sheet financing product where such transaction is considered
borrowed money indebtedness for tax purposes but is classified as an operating
lease in accordance with GAAP.
"Default" shall have the meaning assigned thereto in the Loan
Agreement.
"Developmental Pool" shall mean the collective reference to all
Hospital Joint Ventures which own a Hospital Facility with respect to which (i)
the Completion Date has not yet occurred or (ii) six (6) full fiscal quarters or
less have elapsed since the Completion Date of such Hospital Facility.
"EBITDA" means, with respect to any Person for any period, the sum of
the following determined, without duplication, in accordance with GAAP: (a) Net
Income for such period plus (b) the sum of the following to the extent deducted
in determining Net Income for such period: (i) Interest Expense for such period,
(ii) income and franchise taxes for such period, (iii) amortization and
depreciation for such period, (iv) non-cash charges for such period solely with
respect to the impairment of goodwill in accordance with GAAP, (v) non-cash
impairment charges for such period solely with respect to management contracts
of MedCath Diagnostics LLC and its Subsidiaries and MedCath Cardiology
Consulting & Management, Inc. and its Subsidiaries, and (vi) non-cash impairment
charges for such period solely with respect to loan acquisition costs minus (c)
to the extent added in the determination of Net Income, extraordinary gains for
such period.
"Employee Benefit Plan" means any employee benefit plan within the
meaning of Section 3(3) of ERISA which (a) is maintained for employees of the
Parent or any ERISA Affiliate or (b) has at any time within the preceding six
(6) years been maintained for the employees of the Parent or any current or
former ERISA Affiliate.
"Environmental Laws" means any and all federal, foreign, state,
provincial and local laws, statutes, ordinances, rules, regulations, permits,
licenses, approvals, interpretations and orders of courts or Governmental
Authorities, relating to the protection of human health or the environment,
including, but not limited to, requirements pertaining to the manufacture,
processing, distribution, use, treatment, storage, disposal, transportation,
handling, reporting, licensing, permitting, investigation or remediation of
Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
the rules and regulations thereunder, each as amended or modified from time to
time.
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"ERISA Affiliate" means any Person who together with the Parent is
treated as a single employer within the meaning of Section 414(b), (c), (m) or
(o) of the Code or Section 4001(b) of ERISA.
"Event of Default" shall have the meaning assigned thereto in the Loan
Agreement.
"Fiscal Year" means the fiscal year of the Parent ending on September
30.
"GAAP" means generally accepted accounting principles, as recognized by
the American Institute of Certified Public Accountants and the Financial
Accounting Standards Board, consistently applied and maintained on a consistent
basis for the Parent and its Subsidiaries or any other applicable Person
throughout the period indicated and (subject to Section 28) consistent with the
prior financial practice of the Parent and its Subsidiaries or any such other
Person.
"Governmental Approval" means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities.
"Governmental Authority" means any nation, province, state or political
subdivision thereof, and any government or any Person 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.
"Guaranteed Obligations" shall have the meaning assigned thereto in
Section 2(a) of this Guaranty.
"Guarantors" shall have the meaning assigned thereto in the Preamble.
"Guaranty" means this Guaranty Agreement, as amended, restated,
supplemented otherwise modified from time to time.
"Guaranty Obligation" means, with respect to any Person at any date and
without duplication, any obligation, contingent or otherwise, of any such Person
pursuant to which such Person has directly or indirectly guaranteed any Debt or
other obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of any
such Person (a) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Debt or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
condition or otherwise) or (b) entered into for the purpose of assuring in any
other manner the obligee of such Debt or other obligation of the payment thereof
or to protect such obligee against loss in respect thereof (in whole or in
part); provided, that the term Guaranty Obligation shall not include
endorsements for collection or deposit in the ordinary course of business. The
amount of any Guaranty Obligation hereunder shall (subject to any limitations
set forth therein) be deemed to be the lower of (a) an amount equal to the
stated or determinable amount of the primary obligation in respect of which such
Guaranty Obligation is made and (b)
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the maximum amount for which such guaranteeing Person may be liable pursuant to
the terms of the instrument evidencing such Guaranty Obligation.
"Hazardous Materials" means any substances or materials (a) which are
or become defined as hazardous wastes, hazardous substances, pollutants,
contaminants, chemical substances or mixtures or toxic substances under any
Environmental Law, (b) which are toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise harmful to human
health or the environment and are or become regulated by any Governmental
Authority, (c) the presence of which require investigation or remediation under
any Environmental Law or common law, (d) the discharge or emission or release of
which requires a permit or license under any Environmental Law or other
Governmental Approval, (e) which are deemed to constitute a nuisance or a
trespass which pose a health or safety hazard to Persons or neighboring
properties, (f) which consist of underground or aboveground storage tanks,
whether empty, filled or partially filled with any substance, or (g) which
contain, without limitation, asbestos, polychlorinated biphenyls, urea
formaldehyde foam insulation, petroleum hydrocarbons, petroleum derived
substances or waste, crude oil, nuclear fuel, natural gas or synthetic gas.
"Hedging Agreements" means any agreement with respect to any Interest
Rate Contract, forward rate agreement, commodity swap, forward foreign exchange
agreement, currency swap agreement, cross-currency rate swap agreement, currency
option agreement or other agreement or arrangement designed to alter the risks
of any Person arising from fluctuations in interest rates, currency values or
commodity prices, all as amended, restated, supplemented or otherwise modified
from time to time.
"HFCA" means the Health Care Finance Administration or any successor
agency.
"HHS" means the United States Department of Health and Human Services,
and any successor thereto.
"Hospital Facility" shall mean any heart hospital and related
facilities or diagnostic facilities owned by a Hospital Joint Venture.
"Hospital Joint Venture" means any business entity (a) formed for the
purpose of owning, operating or managing a heart hospital and related facilities
or diagnostic facilities, and (b) a portion of the capital stock, limited
liability company interests, partnership interests or other ownership interest
of which is owned or beneficially controlled, either directly or indirectly, by
the Parent or one or more of its Wholly-Owned Subsidiaries.
"Interest Expense" means, with respect to any Person for any period,
the gross interest expense (including without limitation, interest expense
attributable to Capital Leases and all net payment obligations pursuant to
Hedging Agreements) of such Person, all determined for such period, without
duplication, in accordance with GAAP.
"Interest Rate Contract" means any interest rate swap agreement,
interest rate cap agreement, interest rate floor agreement, interest rate collar
agreement, interest rate option or any other agreement regarding the hedging of
interest rate risk exposure executed in connection with
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hedging the interest rate exposure of any Person and any confirming letter
executed pursuant to such agreement, all as amended, restated, supplemented or
otherwise modified from time to time.
"Joinder Agreement" means, collectively, each joinder agreement
executed in favor of the Administrative Agent for the ratable benefit of itself
and the Lenders, substantially in the form of Exhibit A.
"Lease Expense" means, with respect to any Person for any period, all
obligations of such Person for payments under leases of real or personal
property, whether such leases presently exist or are hereafter entered into by
such Person.
"Lenders" shall have the meaning assigned thereto in the Preamble.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest, hypothecation or encumbrance of any kind in respect
of such asset. For the purposes of this Agreement, a Person shall be deemed to
own subject to a Lien any asset which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, Capital
Lease or other title retention agreement relating to such asset.
"Loan Agreement" shall have the meaning assigned thereto in the
Statement of Purpose.
"Loan Documents" shall have the meaning assigned thereto in the Loan
Agreement.
"Material Adverse Effect" shall have the meaning assigned thereto in
the Loan Agreement.
"Material Contract" shall have the meaning assigned thereto in the Loan
Agreement.
"Maturity Date" shall have the meaning assigned thereto in the Loan
Agreement.
"Maximum Available Corporate Revolver Commitment" means the amount of
the unused portion of the aggregate commitment of the lenders under the
Corporate Revolver which is available for borrowing from time to time under the
Corporate Revolver to the extent that (a) no default or event of default shall
have occurred and be continuing under the Corporate Revolver on the date of any
such borrowing and after giving effect thereto and (b) the Parent and its
Subsidiaries shall be in compliance with Section 12(c) on the date of any such
borrowing and after giving effect thereto.
"Medicaid Certification" means certification by HCFA or a Governmental
Authority under contract with HCFA that health care operations are in compliance
with all the conditions of participation set forth in the Medicaid Regulations.
"Medicaid Regulations" means, collectively, (a) all federal statutes
(whether set forth in Title XIX of the Social Security Act or elsewhere)
affecting the medical assistance program established by Title XIX of the Social
Security Act and any statutes succeeding thereto; (b) all applicable provisions
of all federal rules, regulations, manuals and orders of all Governmental
Authorities promulgated pursuant to or in connection with the statutes described
in clause (a) above and all federal administrative, reimbursement and other
guidelines of all Governmental
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Authorities having the force of law promulgated pursuant to or in connection
with the statutes described in clause (a) above; (c) all state statutes and
plans for medical assistance enacted in connection with the statutes and
provisions described in clauses (a) and (b) above; and (c) all applicable
provisions of all rules, regulations, manuals and orders of all Governmental
Authorities promulgated pursuant to or in connection with the statutes described
in clause (c) above and all state administrative, reimbursement and other
guidelines of all Governmental Authorities having the force of law promulgated
pursuant to or in connection with the statutes described in clause (b) above, in
each case as may be amended, supplemented or otherwise modified from time to
time.
"Medicare Certification" means certification by HCFA or a Governmental
Authority under contract with HCFA that the health care operation is in
compliance with all the conditions of participation set forth in the Medicare
Regulations.
"Medicare Regulations" means, collectively, (i) all federal statutes
(whether set forth in Title XVIII of the Social Security Act or elsewhere)
affecting the health insurance program for the aged and disabled established by
Title XVIII of the Social Security Act and any statutes succeeding thereto; and
(ii) all applicable provisions of all rules, regulations, manuals, orders and
administrative, reimbursement and other guidelines having the force of law of
all Governmental Authorities (including without limitation, HHS, HCFA, the
Office of the Inspector General for HHS, or any person succeeding to the
functions of any of the foregoing) promulgated pursuant to or in connection with
any of the foregoing having the force of law, as each may be amended,
supplemented or otherwise modified from time to time.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which the Parent or any ERISA Affiliate is making, or is
accruing an obligation to make, or has accrued an obligation to make
contributions within the preceding six (6) years.
"Net Income" means, with respect to any Person, for any period of
determination, the net income (or loss) of the such Person for such period,
determined in accordance with GAAP.
"Obligations" shall have the meaning assigned thereto in the Loan
Agreement.
"Officer's Compliance Certificate" shall have the meaning assigned
thereto in Section 10(b) of this Guaranty.
"Parent" shall have the meaning assigned thereto in the Preamble.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
agency.
"Pension Plan" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to the provisions of Title IV of ERISA or
Section 412 of the Code and which (a) is maintained for the employees of the
Parent or any ERISA Affiliates or (b) has at any time within the preceding six
(6) years been maintained for the employees of the Parent or any of its current
or former ERISA Affiliates.
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"Permanent Principal Payment" means, with respect to the Debt of any
Person, an actual payment or repayment of the outstanding principal amount of
(a) term Debt (excluding voluntary prepayments thereof), which by its terms does
not permit any payments or repayments of principal to be re-borrowed, or (b)
Debt under a revolving credit facility (or other facility which permits the
re-borrowing of principal payments or repayments) so long as the aggregate
commitment of the lender thereunder to allow any such re-borrowing has been
permanently reduced by an amount equal to such payment or repayment.
"Person" means an individual, corporation, limited liability company,
partnership, association, trust, business trust, joint venture, joint stock
company, pool, syndicate, sole proprietorship, unincorporated organization,
Governmental Authority or any other form of entity or group thereof.
"Required Lenders" shall have the meaning assigned thereto in the Loan
Agreement.
"Subsidiary" means as to any Person, any corporation, partnership,
limited liability company or other entity of which more than fifty percent (50%)
of the outstanding capital stock or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other managers of
such corporation, partnership, limited liability company or other entity is at
the time owned by or the management is otherwise controlled by such Person
(irrespective of whether, at the time, capital stock or other ownership
interests of any other class or classes of such corporation, partnership,
limited liability company or other entity shall have or might have voting power
by reason of the happening of any contingency). Unless otherwise qualified
references to "Subsidiary" or "Subsidiaries" herein shall refer to those of the
Parent.
"Subsidiary Guarantors" shall have the meaning assigned thereto in the
Preamble.
"Termination Event" means: (a) except for any such event that could not
reasonably be expected to have a Material Adverse Effect, a "Reportable Event"
described in Section 4043 of ERISA for which the notice requirement has not been
waived by the PBGC, or (b) except for any withdrawal that could not reasonably
be expected to have a Material Adverse Effect, the withdrawal of the Parent or
any ERISA Affiliate from a Pension Plan during a plan year in which it was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA, or (c) the
termination of a Pension Plan, the filing of a notice of intent to terminate a
Pension Plan or the treatment of a Pension Plan amendment as a termination, each
under Section 4041(c) of ERISA, or (d) the institution of proceedings to
terminate, or the appointment of a trustee with respect to, any Pension Plan by
the PBGC, or (e) any other event or condition which would constitute grounds
under Section 4042(a) of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan, or (f) the imposition of a Lien
pursuant to Section 412 of the Code or Section 302 of ERISA, or (g) except for
any such event or condition that could not reasonably be expected to have a
Material Adverse Effect, any event or condition which results in the
reorganization or insolvency of a Multiemployer Plan under Sections 4241 or 4245
of ERISA, or (h) except for any such event or condition that could not
reasonably be expected to have a Material Adverse Effect, any event or condition
which results in the termination of a Multiemployer Plan under Section 4041A of
ERISA or the institution by PBGC of proceedings to terminate a Multiemployer
Plan under Section 4042 of ERISA.
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"Term Loans" shall have the meaning assigned thereto in the Loan
Agreement.
"Total Capitalization" means, at any date of determination, the sum of
(a) Total Debt plus (b) Total Equity, each as of such date and calculated in
accordance with GAAP.
"Total Debt" means, as of any date of determination, the sum of the
following, without duplication, calculated in accordance with GAAP: (a) all Debt
of the Parent and its Subsidiaries less (b) all Available Cash.
"Total Equity" means, with respect to the Parent, its Subsidiaries and
each Hospital Joint Venture owned thereby, at any date of determination, the
stockholders' equity calculated in accordance with GAAP without duplication.
"Unconsolidated Cash" means, with respect to each Unconsolidated
Entity, for any period, the greater of the following clause (a) or clause (b),
as applicable, in each case determined, without duplication, in accordance with
GAAP:
(a) an amount equal to (i) the proportion of (A) the Debt of
such Unconsolidated Entity guaranteed by the Parent or any Wholly-Owned
Subsidiary thereof as of the last day of such period to (B) all Debt of
such Unconsolidated Entity as of the last day of such period times (ii)
the aggregate amount of all cash and cash equivalents of such
Unconsolidated Entity, which such cash or cash equivalents are readily
marketable and available without restriction or limitation for the
immediate payment or repayment of Debt thereof as of the last day of
such period, and
(b) an amount equal to (i) the percentage of the total amount
of issued and outstanding capital stock, limited liability company
interests, partnership interests, or other ownership interests of such
Unconsolidated Entity owned by the Parent or any Wholly-Owned
Subsidiary thereof as of the last day of such period times (ii) the
aggregate amount of all cash and cash equivalents of such
Unconsolidated Entity, which such cash or cash equivalents are readily
marketable and available without restriction or limitation for the
immediate payment or repayment of Debt thereof as of the last day of
such period.
"Unconsolidated Cash Interest Expense" means, with respect to each
Unconsolidated Entity, for any period, the greater of the following clause (a)
or clause (b), as applicable, in each case determined, without duplication, in
accordance with GAAP:
(a) an amount equal to (i) the proportion of (A) the Debt of
such Unconsolidated Entity guaranteed by the Parent or any Wholly-Owned
Subsidiary thereof as of the last day of such period to (B) all Debt of
such Unconsolidated Entity as of the last day of such period times (ii)
the amount of Cash Interest Expense of such Unconsolidated Entity for
such period, and
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(b) an amount equal to (i) the percentage of the total amount
of issued and outstanding capital stock, limited liability company
interests, partnership interests, or other ownership interests of such
Unconsolidated Entity owned by the Parent or any Wholly-Owned
Subsidiary thereof as of the last day of such period times (ii) the
amount of Cash Interest Expense of such Unconsolidated Entity for such
period.
"Unconsolidated EBITDA" means, with respect to each Unconsolidated
Entity, for any period, the greater of the following clause (a) or clause (b),
as applicable, in each case determined, without duplication, in accordance with
GAAP:
(a) an amount equal to (i) the proportion of (A) the Debt of
such Unconsolidated Entity guaranteed by the Parent or any Wholly-Owned
Subsidiary thereof as of the last day of such period to (B) all Debt of
such Unconsolidated Entity as of the last day of such period times (ii)
the amount of EBITDA of such Unconsolidated Entity for such period, and
(b) an amount equal to (i) the percentage of the total amount
of issued and outstanding capital stock, limited liability company
interests, partnership interests, or other ownership interests of such
Unconsolidated Entity owned by the Parent or any Wholly-Owned
Subsidiary thereof as of the last day of such period times (ii) the
amount of EBITDA of such Unconsolidated Entity for such period.
"Unconsolidated Entity" means any Hospital Joint Venture the financial
information with respect to which is not included in the Consolidated financial
statements of the Parent and its Subsidiaries required to be delivered pursuant
to Section 10(a)(i) hereof.
"Unconsolidated Lease Expense" means, with respect to each
Unconsolidated Entity, for any period, the greater of the following clause (a)
or clause (b), as applicable, in each case determined, without duplication, in
accordance with GAAP:
(a) an amount equal to (i) the proportion of (A) the Debt of
such Unconsolidated Entity guaranteed by the Parent or any Wholly-Owned
Subsidiary thereof as of the last day of such period to (B) all Debt of
such Unconsolidated Entity as of the last day of such period times (ii)
the amount of Lease Expense of such Unconsolidated Entity for such
period, and
(b) an amount equal to (i) the percentage of the total amount
of issued and outstanding capital stock, limited liability company
interests, partnership interests, or other ownership interests of such
Unconsolidated Entity owned by the Parent or any Wholly-Owned
Subsidiary thereof as of the last day of such period times (ii) the
amount of Lease Expense of such Unconsolidated Entity for such period.
"Unconsolidated Permanent Principal Payments" means, with respect to
each Unconsolidated Entity, for any period, the greater of the following clause
(a) or clause (b), as applicable, in each case determined, without duplication,
in accordance with GAAP:
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(a) an amount equal to (i) the proportion of (A) the Debt of
such Unconsolidated Entity guaranteed by the Parent or any Wholly-Owned
Subsidiary thereof as of the last day of such period to (B) all Debt of
such Unconsolidated Entity as of the last day of such period times (ii)
the amount of Permanent Principal Payments of such Unconsolidated
Entity for such period, and
(b) an amount equal to (i) the percentage of the total amount
of issued and outstanding capital stock, limited liability company
interests, partnership interests, or other ownership interests of such
Unconsolidated Entity owned by the Parent or any Wholly-Owned
Subsidiary thereof as of the last day of such period times (ii) the
amount of Permanent Principal Payments of such Unconsolidated Entity
for such period.
"Wholly-Owned" means, with respect to a Subsidiary, that all of the
shares of capital stock or other ownership interests of such Subsidiary are,
directly or indirectly, owned or controlled by the Parent and/or one or more of
its Wholly-Owned Subsidiaries (except for directors' qualifying shares or other
shares required by Applicable Law to be owned by a Person other than the
Parent).
(b) General. Unless otherwise specified, a reference in this Guaranty
to a particular article, section, subsection, schedule or exhibit is a reference
to that article, section, subsection, schedule or exhibit of this Guaranty.
Wherever from the context it appears appropriate, each term stated in either the
singular or plural shall include the singular and plural, and pronouns stated in
the masculine, feminine or neuter gender shall include the masculine, the
feminine and the neuter. Any reference herein to "Charlotte time" shall refer to
the applicable time of day in Charlotte, North Carolina.
(c) Reference to Agreement. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Guaranty shall refer
to this Guaranty as a whole and not to any particular provision of this
Guaranty.
SECTION 2. Terms of the Guaranty.
(a) Guaranty of Obligations. Each Guarantor hereby, jointly
and severally with the other Guarantors, unconditionally guarantees to
the Administrative Agent for the ratable benefit of itself and the
Lenders, and their respective permitted successors, endorsees,
transferees and assigns, the prompt payment (whether at stated
maturity, by acceleration or otherwise) and performance of all
Obligations of the Borrower, whether primary or secondary (whether by
way of endorsement or otherwise), whether now existing or hereafter
arising, whether or not from time to time reduced or extinguished
(except by payment thereof) or hereafter increased or incurred, whether
or not recovery may be or hereafter become barred by the statute of
limitations, whether enforceable or unenforceable as against the
Borrower, whether or not discharged, stayed or otherwise affected by
any bankruptcy, insolvency or other similar law or proceeding, whether
created directly with the Administrative Agent or any Lender or
acquired by the Administrative Agent or any Lender through assignment,
endorsement or otherwise, whether matured or unmatured, whether joint
or
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several, as and when the same become due and payable (whether at
maturity or earlier, by reason of acceleration, mandatory repayment or
otherwise), in accordance with the terms of any such instruments
evidencing any such Obligations, including all renewals, extensions or
modifications thereof (all Obligations of the Borrower to the
Administrative Agent or any Lender under the Loan Agreement and the
other Loan Documents, including all of the foregoing, being hereinafter
collectively referred to as the "Guaranteed Obligations").
(b) Bankruptcy Limitations on Guarantors. Notwithstanding
anything to the contrary contained in paragraph (a) above, it is the
intention of each Guarantor and the Lenders that, in any proceeding
involving the bankruptcy, reorganization, arrangement, adjustment of
debts, relief of debtors, dissolution or insolvency or any similar
proceeding with respect to any Guarantor or its assets, the amount of
such Guarantor's obligations with respect to the Guaranteed Obligations
shall be in, but not in excess of, the maximum amount thereof not
subject to avoidance or recovery by operation of any Applicable
Insolvency Laws. To that end, but only in the event and to the extent
that such Guarantor's obligations with respect to the Guaranteed
Obligations or any payment made pursuant to the Guaranteed Obligations
would, but for the operation of the first sentence of this Section
2(b), be subject to avoidance or recovery in any such proceeding under
Applicable Insolvency Laws, the amount of such Guarantor's obligations
with respect to the Guaranteed Obligations shall be limited to the
largest amount which, after giving effect thereto, would not, under
Applicable Insolvency Laws, render such Guarantor's obligations with
respect to such Guaranteed Obligations unenforceable or avoidable or
otherwise subject to recovery under Applicable Insolvency Laws. To the
extent any payment actually made pursuant to the Guaranteed Obligations
exceeds the limitation of the first sentence of this Section 2(b) and
is otherwise subject to avoidance and recovery in any such proceeding
under Applicable Insolvency Laws, the amount subject to avoidance shall
in all events be limited to the amount by which such actual payment
exceeds such limitation and the Guaranteed Obligations as limited by
the first sentence of this Section 2(b) shall in all events remain in
full force and effect and be fully enforceable against such Guarantor.
The first sentence of this Section 2(b) is intended solely to preserve
the rights of the Administrative Agent hereunder against such Guarantor
in such proceeding to the maximum extent permitted by Applicable
Insolvency Laws and neither such Guarantor, the Borrower, any other
guarantor nor any other Person shall have any right or claim under such
sentence that would not otherwise be available under Applicable
Insolvency Laws in such proceeding.
(c) Mutual Grant of Present Right of Contribution and
Indemnity. To the extent that the value as of the time of execution of
this Guaranty of the benefits received by any Guarantor by reason of
matters stated in the preamble (whether determined under a standard of
"fair value," "reasonably equivalent value" or any other valuation
standard under Applicable Law) is less than the sum of the Guaranteed
Obligations incurred by such Guarantor to the Administrative
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Agent and the Lenders plus such Guarantor's liability under this
Section 2(c), then subject only to Section 15 hereof and in addition to
all other rights and remedies such Guarantor has or may have under
Applicable Law, each remaining Guarantor respectively agrees that such
Guarantor has the present right to recover the amount of such excess
from the remaining Guarantors, which right shall be enforceable jointly
and severally against the remaining Guarantors to the full extent that
the Guaranteed Obligations are enforceable against such Guarantor.
Without limiting the foregoing, in the event any Guarantor is required,
by reason of this Guaranty, to pay an amount in excess of the value of
the benefit such Guarantor is deemed to have received by reason of
matters described in the preamble of this Guaranty, the remaining
Guarantors jointly and severally agree to pay such Guarantor, upon
demand, the amount of such excess. Subject only to the provisions of
Section 15 hereof, such Guarantor shall be subrogated to any and all
rights of the Administrative Agent and the Lenders against the
remaining Guarantors to the extent of such excess payment.
SECTION 3. Nature of Guaranty. Each Guarantor agrees that this Guaranty
is a continuing, unconditional guaranty of payment and performance and not of
collection, and that its obligations under this Guaranty shall be primary,
absolute and unconditional, irrespective of, and unaffected by:
(a) the genuineness, validity, regularity, enforceability or
any future amendment of, or change in, this Guaranty, the Loan
Agreement or any other Loan Document or any other agreement, document
or instrument to which the Borrower, any Subsidiary thereof or any
Affiliate thereof is or may become a party;
(b) the absence of any action to enforce this Guaranty, the
Loan Agreement or any other Loan Document or the waiver or consent by
the Administrative Agent or any Lender with respect to any of the
provisions of this Guaranty, the Loan Agreement or any other Loan
Document;
(c) the existence, value or condition of, or failure to
perfect its Lien against, any security (including, without limitation,
the Collateral) for or other guaranty of the Guaranteed Obligations or
any action, or the absence of any action, by the Administrative Agent
or any Lender in respect of such security or guaranty (including,
without limitation, the release of any such security or guaranty);
(d) any structural change in, restructuring of or other
similar change of the Borrower or any of its Subsidiaries; or
(e) any other action or circumstances which might otherwise
constitute a legal or equitable discharge or defense of a surety or
guarantor;
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it being agreed by each Guarantor that, subject to the first sentence in Section
2(b) hereof, its obligations under this Guaranty shall not be discharged until
the final indefeasible payment and performance, in full, of the Guaranteed
Obligations and the termination of the Aggregate Commitment. To the extent
permitted by Applicable Law, each Guarantor expressly waives all rights it may
now or in the future have under any statute (including, without limitation,
North Carolina General Statutes Section 26-7, et seq. or similar law), or at law
or in equity, or otherwise, to compel the Administrative Agent or any Lender to
proceed in respect of the Guaranteed Obligations against the Borrower or any
other party or against any security (including, without limitation, the
Collateral) for or other guaranty of the payment and performance of the
Guaranteed Obligations before proceeding against, or as a condition to
proceeding against, such Guarantor. To the extent permitted by Applicable Law,
each Guarantor further expressly waives and agrees not to assert or take
advantage of any defense based upon the failure of the Administrative Agent or
any Lender to commence an action in respect of the Guaranteed Obligations
against the Borrower, such Guarantor, any other guarantor or any other Person or
any security (including, without limitation, the Collateral) for the payment and
performance of the Guaranteed Obligations. Each Guarantor agrees that any notice
or directive given at any time to the Administrative Agent or any Lender which
is inconsistent with the waivers in the preceding two sentences shall be null
and void and may be ignored by the Administrative Agent or such Lender, and, in
addition, may not be pleaded or introduced as evidence in any litigation
relating to this Guaranty for the reason that such pleading or introduction
would be at variance with the written terms of this Guaranty, unless the
Administrative Agent and the Required Lenders have specifically agreed otherwise
in writing. The foregoing waivers are of the essence of the transaction
contemplated by the Loan Agreement and the other Loan Documents and, but for
this Guaranty and such waivers, the Administrative Agent and the Lenders would
decline to enter into the Loan Agreement and the other Loan Documents.
SECTION 4. Demand by the Administrative Agent. In addition to the terms
set forth in Section 3 hereof, and in no manner imposing any limitation on such
terms, if all or any portion of the then outstanding Guaranteed Obligations
under the Loan Agreement are declared to be immediately due and payable, then
the Guarantors shall, upon demand in writing therefor by the Administrative
Agent to the Guarantors, pay all or such portion of the outstanding Guaranteed
Obligations then declared due and payable. Payment by the Guarantors shall be
made to the Administrative Agent, to be credited and applied upon the Guaranteed
Obligations, in immediately available Dollars to an account designated by the
Administrative Agent or at the address referenced herein for the giving of
notice to the Administrative Agent or at any other address that may be specified
in writing from time to time by the Administrative Agent.
SECTION 5. Waivers. In addition to the waivers contained in Section 3
hereof, each Guarantor, to the extent permitted by Applicable Law, waives and
agrees that it shall not at any time insist upon, plead or in any manner
whatever claim or take the benefit or advantage of, any appraisal, valuation,
stay, extension, marshalling of assets or redemption laws, or exemption, whether
now or at any time hereafter in force, which may delay, prevent or otherwise
affect the performance by such Guarantor of its obligations under, or the
enforcement by the Administrative Agent or the Lenders of, this Guaranty. Each
Guarantor further hereby waives, to the extent permitted by Applicable Law,
diligence, presentment, demand, protest and notice
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(except as specifically required herein) of whatever kind or nature with respect
to any of the Guaranteed Obligations and waives, to the extent permitted by
Applicable Law, the benefit of all provisions of law which are or might be in
conflict with the terms of this Guaranty. Each Guarantor represents, warrants
and agrees that its obligations under this Guaranty are not and shall not be
subject to any counterclaims, offsets or defenses of any kind against the
Administrative Agent, the Lenders or the Borrower whether now existing or which
may arise in the future.
SECTION 6. Benefits of Guaranty. The provisions of this Guaranty are
for the benefit of the Administrative Agent and the Lenders and their respective
permitted successors, transferees, endorsees and assigns, and nothing herein
contained shall impair, as between the Borrower, the Administrative Agent and
the Lenders, the obligations of the Borrower under the Loan Documents. In the
event all or any part of the Guaranteed Obligations are transferred, endorsed or
assigned by the Administrative Agent or any Lender to any Person or Persons as
permitted under the Loan Agreement, any reference to the "Administrative Agent",
or the "Lenders" herein shall be deemed to refer equally to such Person or
Persons.
SECTION 7. Modification of Loan Documents etc. If the Administrative
Agent or the Lenders shall at any time or from time to time, with or without the
consent of, or notice to, the Guarantors:
(a) change or extend the manner, place or terms of payment of,
or renew or alter all or any portion of, the Guaranteed Obligations;
(b) take any action under or in respect of the Loan Agreement
or the other Loan Documents in the exercise of any remedy, power or
privilege contained therein or available to it at law, in equity or
otherwise, or waive or refrain from exercising any such remedies,
powers or privileges;
(c) amend or modify, in any manner whatsoever, the Loan
Agreement or the other Loan Documents;
(d) extend or waive the time for performance by any Guarantor,
any other guarantor, the Borrower or any other Person of, or compliance
with, any term, covenant or agreement on its part to be performed or
observed under the Loan Agreement or any other Loan Document, or waive
such performance or compliance or consent to a failure of, or departure
from, such performance or compliance;
(e) take and hold security or collateral (including, without
limitation, the Collateral) for the payment of the Guaranteed
Obligations or sell, exchange, release, dispose of, or otherwise deal
with, any property (including, without limitation, the Collateral)
pledged, mortgaged or conveyed, or in which the Administrative Agent or
the Lenders have been granted a Lien, to secure any Debt of any
Guarantor, any other guarantor or the Borrower to the Administrative
Agent or the Lenders;
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(f) release anyone who may be liable in any manner for the
payment of any amounts owed by any Guarantor, any other guarantor or
the Borrower to the Administrative Agent or any Lender;
(g) modify or terminate the terms of any intercreditor or
subordination agreement pursuant to which claims of other creditors of
any Guarantor, any other guarantor or the Borrower are subordinated to
the claims of the Administrative Agent or any Lender; or
(h) apply any sums by whomever paid or however realized to any
Guaranteed Obligations owing by any Guarantor, any other guarantor or
the Borrower to the Administrative Agent or any Lender in such manner
as the Administrative Agent or any Lender shall determine in its
reasonable discretion;
then neither the Administrative Agent nor any Lender shall incur any liability
to any Guarantor as a result thereof, and no such action shall impair or release
the obligations of any Guarantor under this Guaranty.
SECTION 8. Reinstatement. Each Guarantor agrees that, if any payment
made by the Borrower or any other Person applied to the Obligations is at any
time annulled, set aside, rescinded, invalidated, declared to be fraudulent or
preferential or otherwise required to be refunded or repaid or the proceeds of
any collateral are required to be refunded by the Administrative Agent or any
Lender to the Borrower, its estate, trustee, receiver or any other party,
including, without limitation, any Guarantor, under any Applicable Law or
equitable cause, then, to the extent of such payment or repayment, each
Guarantor's liability hereunder (and any Lien securing such liability) shall be
and remain in full force and effect, as fully as if such payment had never been
made, and, if prior thereto, this Guaranty shall have been canceled or
surrendered (and if any Lien or collateral securing such Guarantor's liability
hereunder shall have been released or terminated by virtue of such cancellation
or surrender), this Guaranty (and such Lien) shall be reinstated in full force
and effect, and such prior cancellation or surrender shall not diminish,
release, discharge, impair or otherwise affect the obligations of such Guarantor
in respect of the amount of such payment (or any Lien securing such obligation).
SECTION 9. Representations and Warranties.
(a) Representations and Warranties. To induce the Lenders to make the
Term Loans, each Guarantor hereby represents and warrants to the Administrative
Agent and the Lenders both before and after giving effect to the transactions
contemplated under the Loan Agreement:
(i) Ownership. Each Subsidiary and each Hospital Joint Venture
owned by the Parent, either directly or indirectly, is listed on
Schedule 9(a)(i) (as updated from time to time pursuant to Section
11(j)). As of the Closing Date, the capitalization of the Parent, its
Subsidiaries and each Hospital Joint Venture consists of the number of
shares or other ownership interests, authorized, issued and
outstanding, of such classes and series, with or without par value,
described on
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Schedule 9(a)(i). All outstanding shares or other ownership interests
have been duly authorized and validly issued and are fully paid and
nonassessable, with no personal liability attaching to the ownership
thereof, and not subject to any preemptive or similar rights. The
shareholders of the Subsidiaries and the Hospital Joint Ventures owned
by the Parent, either directly or indirectly, and the number of shares
or other ownership interests owned by each as of the Closing Date are
described on Schedule 9(a)(i). As of the Closing Date, there are no
outstanding stock purchase warrants, subscriptions, options,
securities, instruments or other rights of any type or nature
whatsoever, which are convertible into, exchangeable for or otherwise
provide for or permit the issuance of capital stock or other ownership
interests of the Parent, any Subsidiary, or any Hospital Joint Venture
except as described on Schedule 9(a)(i).
(ii) Organization; Power; Qualification. Each Guarantor is
duly organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation or formation, has the power and
authority to own its properties and to carry on its business as now
being and hereafter proposed to be conducted and is duly qualified and
authorized to do business in each jurisdiction in which the character
of its properties or the nature of its business requires such
qualification and authorization, except where the failure to so qualify
could not reasonably be expected to have a Material Adverse Effect. The
jurisdictions in which each Guarantor is organized and qualified to do
business as of the Closing Date are described on Schedule 9(a)(ii) (as
updated from time to time pursuant to Section 11(j)).
(iii) Authorization of Guaranty and Loan Documents. Each
Guarantor has the corporate or limited liability company right, power
and authority to execute, deliver and perform this Guaranty and each of
the other Loan Documents to which such Guarantor is a party and has
taken all necessary corporate or limited liability company action to
authorize its execution, delivery and performance of, this Guaranty and
each of the other Loan Documents to which such Guarantor is a party.
(iv) Enforceability of Guaranty and Loan Documents. This
Guaranty and each of the other Loan Documents to which each Guarantor
is a party constitutes the legal, valid and binding obligation of such
Guarantor enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by the availability of equitable
remedies.
(v) Compliance with Laws, Etc. The execution, delivery and
performance of this Guaranty and each of the other Loan Documents to
which each Guarantor is a party will not violate any Applicable Law or
contractual obligation of such Guarantor and will not result in the
creation or imposition of any Lien upon or with respect to any property
or revenues of such Guarantor.
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(vi) Consents and Authorizations. No consent or authorization
of, filing with, or other act by or in respect of, any arbitrator or
Governmental Authority and no consent of any other Person (including,
without limitation, any stockholder or creditor of each Guarantor), is
required in connection with the execution, delivery, performance,
validity or enforceability of this Guaranty or any of the other Loan
Documents to which such Guarantor is a party, other than the approval
of the board of directors of each Guarantor (which approval has been
obtained prior to the date hereof).
(vii) Litigation. Except for matters set forth on Schedule
9(a)(vii), no actions, suits or proceedings before any arbitrator or
Governmental Authority are pending or, to the knowledge of each
Guarantor, threatened by or against such Guarantor or against any of
its properties with respect to this Guaranty, any other Loan Document
or any of the transactions contemplated hereby or thereby which could
reasonably be expected to have a Material Adverse Effect.
(viii) Title to Properties. Each Guarantor has such title to
the real property owned by it and a valid leasehold interest in the
real property leased by it, and has good and marketable title to all of
its personal property sufficient to carry on its business free of any
and all Liens of any type whatsoever.
(ix) Solvency. As of the Closing Date (or such later date upon
which such Guarantor became a party hereto), each Guarantor (A) has
capital sufficient to carry on its business and transactions and all
business and transactions in which it engages and is able to pay its
debts as they mature, (B) owns property having a value, both at fair
valuation and at present fair saleable value on a going concern basis,
greater than the amount required to pay its probable liabilities
(including contingencies) and (C) does not believe that it will incur
debts or liabilities beyond its ability to pay such debts or
liabilities as they mature, subject in each case to the first sentence
in Section 2(b) hereof.
(x) Financial Statements. The (A) audited Consolidated balance
sheet of the Parent and its Subsidiaries as of September 30, 2000 and
the related audited statements of income and retained earnings and cash
flows for the Fiscal Year of the Parent and its Subsidiaries then ended
and (B) unaudited Consolidated balance sheet of the Parent and its
Subsidiaries as of March 31, 2001 and the related unaudited statements
of income and retained earnings and cash flows for the fiscal quarter
of the Parent and its Subsidiaries then ended, copies of which has been
furnished to Administrative Agent and the Lenders, are complete and
correct in all material respects and fairly present on a Consolidated
basis the assets, liabilities and financial position of the Parent and
its Subsidiaries as of such dates and the results of its operations and
cash flows for the periods then ended.
(xi) No Material Adverse Change. Since September 30, 2000,
there has been no Material Adverse Effect with respect to any Guarantor
or the Guarantors
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taken as a whole, as applicable, and no event has occurred or condition
arisen that could reasonably be expected to have a Material Adverse
Effect.
(xii) Tax Returns and Payments. Each Guarantor has duly filed
or caused to be filed all federal, state, local and other tax returns
required by Applicable Law to be filed, and has paid, or made adequate
provision for the payment of, all federal, state, local and other
material taxes, assessments and governmental charges or levies upon it
and its property, income, profits and assets which are due and payable,
except for taxes (i) that are not yet delinquent or (ii) that are being
contested in good faith and against which adequate reserves are being
maintained in accordance with GAAP; such returns accurately reflect in
all material respects all liability for taxes of such Guarantor for the
periods covered thereby; there is no ongoing audit or examination or,
to the knowledge of the such Guarantor, other investigation by any
Governmental Authority of the tax liability of such Guarantor; no
Governmental Authority has asserted any Lien or other claim against
such Guarantor with respect to unpaid taxes which has not been
discharged or resolved; and the charges, accruals and reserves on the
books of such Guarantor in respect of federal, state, local and other
taxes for all Fiscal Years and portions thereof since the organization
of such Guarantor are in the judgment of such Guarantor adequate, and
such Guarantor does not anticipate any additional material taxes or
assessments for any of such periods.
(xiii) Environmental Matters.
(A) The properties owned, leased or operated by each
Guarantor now or in the past do not contain, and to its
knowledge have not previously contained, any Hazardous
Materials in amounts or concentrations which (1) constitute or
constituted a material violation of applicable Environmental
Laws or (2) could give rise to a material liability under
applicable Environmental Laws;
(B) Each Guarantor and such properties and all
operations conducted in connection therewith are in compliance
in all material respects with all applicable Environmental
Laws, and there is no contamination at, under or about such
properties or such operations which could reasonably interfere
with the continued operation of such properties or impair the
fair saleable value thereof;
(C) No Guarantor has received any notice of
violation, alleged violation, non-compliance, liability or
potential liability regarding environmental matters, Hazardous
Materials, or compliance with Environmental Laws from (A) any
Governmental Authority or (B) to the extent any such
violation, alleged violation, non-compliance, liability or
potential liability could reasonably be expected to have a
Material Adverse Effect, any other Person, nor does any
Guarantor have knowledge or reason to believe that any such
notice will be received or is being threatened;
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(D) Hazardous Materials have not been transported or
disposed of to or from the properties owned, leased or
operated by of any Guarantor in violation of, or in a manner
or to a location which could give rise to a material liability
under, Environmental Laws, nor have any Hazardous Materials
been generated, treated, stored or disposed of at, on or under
any of such properties in violation of, or in a manner that
could give rise to a material liability under, any applicable
Environmental Laws;
(E) No judicial proceedings or governmental or
administrative action is pending, or, to the knowledge of any
Guarantor, threatened, under any Environmental Law to which
such Guarantor is or will be named as a potentially
responsible party with respect to such properties or
operations conducted in connection therewith, nor are there
any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other administrative
or judicial requirements outstanding under any Environmental
Law with respect to such Guarantor or such properties or such
operations; and
(F) There has been no release, or to the best of any
Guarantor's knowledge, threat of release, of Hazardous
Materials at or from properties owned, leased or operated by
such Guarantor, now or in the past, in violation of or in
amounts or in a manner that could give rise to a material
liability under Environmental Laws.
(xiv) ERISA.
(A) The Parent and each ERISA Affiliate is in
material compliance with all applicable provisions of ERISA
and the regulations and published interpretations thereunder
with respect to all Employee Benefit Plans except for any
required amendments for which the remedial amendment period as
defined in Section 401(b) of the Code has not yet expired and
except where a failure to so comply could not reasonably be
expected to have a Material Adverse Effect. Each Employee
Benefit Plan that is intended to be qualified under Section
401(a) of the Code has been determined by the Internal Revenue
Service to be so qualified, and each trust related to such
plan has been determined to be exempt under Section 501(a) of
the Code except for such plans that have not yet received
determination letters but for which the remedial amendment
period for submitting a determination letter has not yet
expired. No liability has been incurred by the Parent or any
ERISA Affiliate which remains unsatisfied for any taxes or
penalties with respect to any Employee Benefit Plan or any
Multiemployer Plan except for a liability that could not
reasonably be expected to have a Material Adverse Effect;
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(B) As of the Closing Date, no Pension Plan has been
terminated, nor has any accumulated funding deficiency (as
defined in Section 412 of the Code) been incurred (without
regard to any waiver granted under Section 412 of the Code),
nor has any funding waiver from the Internal Revenue Service
been received or requested with respect to any Pension Plan,
nor has the Parent or any ERISA Affiliate failed to make any
contributions or to pay any amounts due and owing as required
by Section 412 of the Code, Section 302 of ERISA or the terms
of any Pension Plan prior to the due dates of such
contributions under Section 412 of the Code or Section 302 of
ERISA, nor has there been any event requiring any disclosure
under Section 4041(c)(3)(C) or 4063(a) of ERISA with respect
to any Pension Plan;
(C) Except where the failure of any of the following
representations to be correct in all material respects could
not reasonably be expected to have a Material Adverse Effect,
neither the Parent nor any ERISA Affiliate has: (1) engaged in
a nonexempt prohibited transaction described in Section 406 of
the ERISA or Section 4975 of the Code, (2) incurred any
liability to the PBGC which remains outstanding other than the
payment of premiums and there are no premium payments which
are due and unpaid, (3) failed to make a required contribution
or payment to a Multiemployer Plan, or (4) failed to make a
required installment or other required payment under Section
412 of the Code;
(D) No Termination Event has occurred or is
reasonably expected to occur; and
(E) Except where the failure of any of the following
representations to be correct in all material respects could
not reasonably be expected to have a Material Adverse Effect,
no proceeding, claim (other than a benefits claim in the
ordinary course of business), lawsuit and/or investigation is
existing or, to the best knowledge of the Parent after due
inquiry, threatened concerning or involving any (1) employee
welfare benefit plan (as defined in Section 3(1) of ERISA)
currently maintained or contributed to by the Parent or any
ERISA Affiliate, (2) Pension Plan or (3) Multiemployer Plan.
(xv) Accuracy and Completeness of Information. All written
information, reports, statements and other papers and data produced by
or on behalf of the Parent or any Subsidiary thereof and furnished to
the Administrative Agent or any Lender in connection with this
Guaranty, or any of the other Loan Documents, were, at the time the
same were so furnished, complete and correct in all material respects
to the extent necessary to give the Administrative Agent or any Lender
complete, true and accurate knowledge of the subject matter based on
Parent's knowledge thereof (other than projections, budgets or other
estimates which shall be determined in good faith utilizing reasonable
assumptions). No
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document furnished or written statement made to the Administrative
Agent or the Lenders by the Parent or any Subsidiary thereof in
connection with the negotiation, preparation or execution of this
Guaranty or any of the Loan Documents contains or will contain any
untrue statement of a fact material to the creditworthiness of the
Parent or its Subsidiaries or omits or will omit to state a fact
necessary in order to make the statements contained therein not
misleading to the extent material to the creditworthiness of the Parent
or its Subsidiaries. The Parent is not aware of any facts which it has
not disclosed in writing to the Administrative Agent having a Material
Adverse Effect, or insofar as the Parent can now foresee, which could
reasonably be expected to have a Material Adverse Effect.
(b) Survival of Representations and Warranties, Etc. All
representations and warranties set forth in this Section 9 and all
representations and warranties of the Guarantors contained in any certificate,
or any of the Loan Documents (including, but not limited to, any such
representation or warranty made in or in connection with any amendment thereto)
shall constitute representations and warranties made under this Guaranty. All
representations and warranties made under this Guaranty shall be made or deemed
to be made at and as of the Closing Date (except those that are expressly made
as of a specific date), shall survive the Closing Date and shall not be waived
by the execution and delivery of this Guaranty, any investigation made by or on
behalf of the Lenders or any borrowing hereunder.
SECTION 10. Financial Information and Reports. Until all Obligations
have been finally and indefeasibly paid and satisfied in full and the
Commitments of the Lenders under the Loan Agreement have been terminated, unless
consent has been obtained in the manner provided for in Section 19, the Parent
will furnish, or cause to be furnished to the Administrative Agent and the
Lenders at their respective addresses as set forth on Schedule 1, or such other
office as may be designated by the Administrative Agent and the Lenders from
time to time:
(a) Financial Statements.
(i) Quarterly and Annual Financial Statements.
(A) As soon as practicable and in any event within
fifty-five (55) days after the end of each fiscal quarter, an
unaudited Consolidated and consolidating balance sheet of the
Parent and its Subsidiaries as of the close of such fiscal
quarter and unaudited Consolidated and consolidating
statements of income and expenses and cash flow for the fiscal
quarter then ended and that portion of the Fiscal Year then
ended, all in reasonable detail and prepared by the Parent and
its Subsidiaries in accordance with GAAP and certified by a
Responsible Officer of Parent to present fairly in all
material respects the financial condition of the Parent and
its Subsidiaries as of their respective dates and the results
of operations of the Parent and its Subsidiaries for the
respective periods then ended, subject to normal year end
adjustments.
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(B) As soon as practicable and in any event within
one hundred (100) days after the end of each Fiscal Year of
Parent and its Subsidiaries, commencing with Fiscal Year
ending September 30, 2001, an audited Consolidated and
unaudited consolidating balance sheet of Parent and its
Subsidiaries as of the close of such Fiscal Year and audited
Consolidated and unaudited consolidating statements of income
and expenses, retained earnings and cash flows for the Fiscal
Year then ended, including the notes thereto, all in
reasonable detail and prepared in accordance with GAAP and
accompanied by a report thereon prepared by Deloitte & Touche,
LLP, or another independent certified public accounting firm
of nationally recognized standing which is reasonably
acceptable to the Administrative Agent, that such financial
statements are not qualified with respect to scope limitations
imposed by Parent and its Subsidiaries or with respect to
accounting principles followed by Parent and its Subsidiaries
not in accordance with GAAP.
(C) As soon as practicable and in any event within
forty-five (45) days after the Closing Date, an unaudited
Consolidated and consolidating pro forma balance sheet of the
Parent and its Subsidiaries as of the close of the fiscal
quarter ending June 30, 2001 and unaudited Consolidated and
consolidating pro forma statements of income and expenses and
cash flow for the fiscal quarter ending June 30, 2001 and that
portion of the Fiscal Year then ended, all in reasonable
detail and prepared by the Parent and its Subsidiaries in
accordance with GAAP and certified by a Responsible Officer of
Parent to present fairly in all material respects the
financial condition of the Parent and its Subsidiaries as of
their respective dates and the results of operations of the
Parent and its Subsidiaries for the respective periods then
ended, subject to normal year end adjustments.
(ii) Annual Forecasts. As soon as practicable and in any event
no later than thirty (30) days after the beginning of each Fiscal Year,
an annual forecast prepared by management of the Parent, in reasonable
detail and in the form customarily prepared by management of the Parent
for its internal use and setting forth an explanation for the principal
assumptions on which such forecasts were based, of balance sheets,
income statements and cash flow statements with respect to the Parent
and its Subsidiaries on a quarterly basis for each Fiscal Year
thereafter until the Maturity Date.
(iii) SEC Reports. Promptly after the same become publicly
available, copies of all periodic and other reports, proxy statements
and other materials filed with the Securities and Exchange Commission,
or any Governmental Authority succeeding to any or all of the functions
of said Commission, or with any national securities exchange.
(iv) Other Information. Such other information regarding the
operations, business affairs and financial condition of the Parent and
its Subsidiaries as the Administrative Agent may reasonably request, in
each case in the form regularly prepared by the Parent and its
Subsidiaries (if applicable).
(b) Officer's Compliance Certificate. At each time financial
statements are delivered pursuant to Sections 10(a)(i)(A) or 10(a)(i)(B) and at
such other times as the Administrative
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Agent shall reasonably request a certificate of the chief financial officer or
the treasurer of Parent in the form of Exhibit B attached hereto (an "Officer's
Compliance Certificate"):
(i) stating that such officer has reviewed such financial
statements and, to the best of his knowledge, such financial statements
fairly present in all material respects the financial condition of the
Parent and its Subsidiaries as of the dates indicated and the results
of their operations and cash flows for the periods indicated;
(ii) stating that to such officer's knowledge, based on a
reasonable examination, no Default or Event of Default exists, or, if
such is not the case, specifying such Default or Event of Default and
its nature, when it occurred, whether it is continuing and the steps
being taken by the Parent and its Subsidiaries with respect to such
Default;
(iii) stating that Parent and its Subsidiaries are in
compliance with the covenants and restrictions set forth in Section 11,
Section 12 and Section 13 of this Guaranty applicable to Parent and its
Subsidiaries and, with respect to the covenants set forth in Section
12, the calculations applicable thereto; and
(iv) setting forth any other information reasonably required
by the Administrative Agent to ensure compliance with this Guaranty.
(c) Accountant's Certificate. At each time financial statements are
delivered pursuant to Section 10(a)(i)(B), a certificate of the independent
public accountants certifying such financial statements addressed to the
Administrative Agent for the benefit of the Lenders:
(i) stating that in making the examination necessary for the
certification of such financial statements, they obtained no knowledge
of any Default or Event of Default or, if such is not the case,
specifying such Default or Event of Default and its nature and period
of existence; and
(ii) including the calculations prepared by such accountants
required to establish whether or not the Parent and its Subsidiaries
are in compliance with the financial covenants set forth in Section 12
hereof as at the end of each respective period.
(d) Other Reports.
(i) Accountants Reports. Promptly upon receipt thereof, copies
of all reports, if any, submitted to the Parent or its Board of
Directors by its independent public accountants in connection with
their auditing function, including, without limitation, any management
report and any management responses thereto.
(ii) Other Reports. Such other information regarding the
operations, business affairs and financial condition of the Parent and
its Subsidiaries as the Administrative Agent or any Lender may
reasonably request.
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(e) Notice of Litigation and Other Matters. Prompt (but in no event
later than ten (10) days after an officer of the Parent obtains knowledge
thereof) telephonic and written notice of:
(i) the commencement of all proceedings and investigations by
or before any Governmental Authority and all actions and proceedings in
any court or before any arbitrator against or involving the Parent or
any Subsidiary thereof or any of its properties, assets or businesses
which, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect;
(ii) any violation by the Parent or any Subsidiary thereof of
any Applicable Law or any notice of any violation received by the
Parent or any Subsidiary thereof from any Governmental Authority
including, without limitation, any notice of violation of Environmental
Laws, which in any such case could reasonably be expected to have a
Material Adverse Effect;
(iii) any labor controversy that has resulted in, or threatens
to result in, a strike or other work action against the Parent or any
Subsidiary thereof or any contractor or any material development in any
labor controversy which if adversely determined could reasonably be
expected to have a Material Adverse Effect;
(iv) any attachment, judgment, lien, levy or order exceeding
$1,000,000 that may be assessed against the Parent or any Subsidiary
thereof (to the extent such attachment, judgment, lien, levy or order
is not fully covered by insurance and with respect to which the
applicable insurance carrier has not acknowledged that such attachment,
judgment, lien, levy or order is fully covered by insurance);
(v) (A) any Default or Event of Default or (B) any event which
constitutes or which with the passage of time or giving of notice or
both would constitute a default or event of default under any Material
Contract to which the Parent or any Subsidiary thereof is a party or by
which the Parent or any Subsidiary thereof or any of their respective
properties may be bound which could reasonably be expected to have a
Material Adverse Effect;
(vi) (A) any unfavorable determination letter from the
Internal Revenue Service regarding the qualification of an Employee
Benefit Plan under Section 401(a) of the Code (along with a copy
thereof), (B) all notices received by the Parent or any ERISA Affiliate
of the PBGC's intent to terminate any Pension Plan or to have a trustee
appointed to administer any Pension Plan, (C) all notices received by
the Parent or any ERISA Affiliate from a Multiemployer Plan sponsor
concerning the imposition or amount of withdrawal liability pursuant to
Section 4202 of ERISA and (D) the Parent obtaining knowledge or reason
to know that the Parent or any ERISA Affiliate has filed or intends to
file a notice of intent to terminate any Pension Plan under a distress
termination within the meaning of Section 4041(c) of ERISA; and
(vii) any event which makes any of the representations set
forth in Section 9 inaccurate in any respect.
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(f) Accuracy of Information. All written information, reports,
statements and other papers and data furnished by or on behalf of the Parent or
its Subsidiaries to the Administrative Agent or any Lender pursuant to this
Section 10, or any other provision of this Guaranty or any of the other Loan
Documents, shall be, at the time the same is so furnished, in compliance with
the representations and warranties set forth in Section 9(a)(xv).
SECTION 11. Affirmative Covenants. Until all of the Obligations have
been paid and satisfied in full and the Commitments of the Lenders under the
Loan Agreement have been terminated, unless consent has been obtained in the
manner provided for in Section 19, each Guarantor will, and will cause each of
its Subsidiaries to:
(a) Preservation of Existence and Related Matters. Preserve and
maintain:
(i) its separate corporate existence, and will not sell, lease
or otherwise dispose of all or substantially all of its business or
assets; provided that any Subsidiary Guarantor may be merged or
consolidated with or into, or be liquidated, wound up or dissolved, or
all or substantially all of its business or assets may be conveyed,
sold, assigned, leased, transferred or otherwise disposed of, in one
transaction or a series of transactions, to the Parent, any other
Subsidiary Guarantor or the Borrower; and
(ii) all rights, franchises, licenses and privileges necessary
to the conduct of its business, and qualify and remain qualified to do
business in each jurisdiction in which the failure to so qualify would
have a Material Adverse Effect.
(b) Compliance with Laws and Approvals. Observe and remain in
compliance with all Applicable Laws and maintain in full force and effect all
Governmental Approvals, in each case applicable to the conduct of its business,
except were the failure to observe or comply could not reasonably be expected to
have a Material Adverse Effect.
(c) Compliance with Agreements. Comply in all respects with each term,
condition and provision of each Material Contract to which it is a party or by
which it is bound and with all other material leases, agreements and other
instruments entered into in the conduct of its business, except (i) where the
failure to so comply could not reasonably be expected to have a Material Adverse
Effect or (ii) where any such term, condition or provision is contested in good
faith through applicable proceedings and where adequate reserves are maintained
in accordance with GAAP.
(d) Maintenance of Properties. Protect and preserve all properties
useful in and material to its business, including copyrights, patents, trade
names, service marks and trademarks material to the conduct of its business;
maintain in good working order and condition, reasonable wear and tear and
casualty excepted, all buildings, items of equipment and other items of tangible
real and personal property material to the conduct of its business; and from
time to time make or cause to be made all renewals, replacements and additions
to such property necessary for the conduct of its business, so that the business
carried on in connection therewith may be properly conducted at all times.
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(e) Accounting Methods and Financial Records. Maintain a system of
accounting, and keep such books, records and accounts (which shall be true and
complete in all material respects) as may be required or as may be necessary to
permit the preparation of financial statements in accordance with GAAP and in
compliance with the regulations of any Governmental Authority having
jurisdiction over it or any of its properties.
(f) Payment and Performance of Obligations. Pay and perform all
obligations under this Guaranty and the other Loan Documents, and pay or perform
(i) all taxes, assessments and other governmental charges that may be levied or
assessed upon it or any of its property, and (ii) all other indebtedness,
obligations and liabilities in accordance with customary trade practices;
provided, that each Guarantor and each of its Subsidiaries may contest any item
described in clauses (i) or (ii) of this Section 11(f) in good faith so long as
adequate reserves are maintained with respect thereto in accordance with GAAP.
(g) Visits and Inspections. Upon reasonable notice to the Parent
(unless there exists any Default or Event of Default), permit representatives of
the Administrative Agent or any Lender, from time to time, to visit and inspect
its properties and any materials thereon; inspect, audit and make extracts from
its books, records and files, including, but not limited to, management letters
prepared by independent accountants; and discuss with its principal officers,
and its independent accountants, its business, assets, liabilities, financial
condition, results of operations and business prospects.
(h) Insurance. Maintain insurance with financially sound and reputable
insurance companies against such risks and in such amounts as are customarily
maintained by similar businesses and as may be required by Applicable Law, and
on the Closing Date and from time to time thereafter deliver to the
Administrative Agent upon its request a detailed list of the insurance then in
effect, stating the names of the insurance companies, the amounts and rates of
the insurance, the dates of the expiration thereof and the properties and risks
covered thereby.
(i) Conduct of Business. Engage only in businesses in substantially the
same fields as the businesses conducted or proposed to be conducted in
accordance with business plans delivered to the Administrative Agent and the
Lenders on or prior to the Closing Date or in lines of business reasonably
related thereto.
(j) New Subsidiaries. Concurrently with the creation or acquisition of
any Subsidiary by the Parent (other than any Hospital Joint Venture) which is
not a "controlled foreign corporation" under Section 957 of the Code, cause such
Subsidiary to:
(i) execute a Joinder Agreement in substantially the same form
as Exhibit A attached hereto; and
(ii) deliver to the Administrative Agent, with the Joinder
Agreement, such other documentation as the Administrative Agent may
reasonably request, including, certified resolutions and other
organizational and authorizing documents of such Subsidiary, favorable
opinions of counsel to such Subsidiary (which shall cover, among
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other things, the legality, validity, binding effect and enforceability
of the Joinder Agreement), all in form and substance satisfactory to
the Administrative Agent.
For the purposes of this Section 11(j), a Subsidiary shall not be deemed to have
been created or acquired until the earlier of (i) the date upon which such
Subsidiary begins to conduct business operations, (ii) the date upon which such
Subsidiary obtains assets with a fair market value in excess of $10,000.00 or
(iii) the date upon which such Subsidiary is initially capitalized.
(k) Transactions with Affiliates. Conduct all transactions otherwise
permitted under this Guaranty, the Loan Agreement and the other Loan Documents
with any of their Affiliates on terms that are fair and reasonable and no less
favorable to such Guarantor or such Subsidiary than it would obtain in a
comparable arm's length transaction with a Person not an Affiliate.
(l) Subordinated Working Capital Loan.
(i) Cause ▇▇▇▇▇ to make working capital advances to the
Borrower in an amount necessary to ensure that the Borrower can meet
all of its working capital and other general corporate needs (the
"Working Capital Advances");
(ii) Immediately upon the request of the Administrative Agent
or the Required Lenders, cause ▇▇▇▇▇ to make additional Working Capital
Advances to the Borrower (in addition to any Working Capital Advances
made to the Borrower pursuant to clause (i) above); provided that ▇▇▇▇▇
shall not be required to make such Working Capital Advances to the
extent that the sum of (A) the aggregate amount of such Working Capital
Advances plus (B) the aggregate amount of Subordinated Working Capital
Loans outstanding as of any applicable date of determination would
exceed $30,100,000 and
(iii) Cause all Working Capital Advances to be subordinated
pursuant to an Intercompany Loan Subordination Agreement in form and
substance satisfactory to the Administrative Agent.
SECTION 12. Financial Covenants. Until all of the Obligations have been
paid and satisfied in full and the Commitments of the Lenders under the Loan
Agreement have been terminated, unless consent has been obtained in the manner
provided for in Section 19, the Parent and its Subsidiaries on a Consolidated
basis will not:
(a) Minimum Fixed Charge Ratio. As of the end of any fiscal
quarter during any period set forth in the table below, permit the
ratio of:
(i) the sum of (A) Adjusted EBITDA for the period of
four (4) consecutive fiscal quarters ending on or immediately
prior to such date plus (B) the aggregate amount of Lease
Expense of the Parent and its Subsidiaries for such period of
four (4) consecutive fiscal quarters plus (C) Unconsolidated
Lease Expense of the Unconsolidated Entities for such period
of four (4) consecutive fiscal quarters minus (D) Lease
Expense of the Developmental Pool (to the extent added above)
for such period of four (4) consecutive fiscal quarters, to
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(ii) the sum of:
(A) the aggregate amount of Cash Interest
Expense of the Parent and its Subsidiaries for such
period of four (4) consecutive fiscal quarters plus
the aggregate amount of Unconsolidated Cash Interest
Expense of the Unconsolidated Entities for such
period of four (4) consecutive fiscal quarters minus
the aggregate amount of Cash Interest Expense of the
Developmental Pool (to the extent added above) for
such period of four (4) consecutive fiscal quarters
minus the aggregate amount of Cash Interest Expense
paid by the Parent, its Subsidiaries and each
Unconsolidated Entity to ▇▇▇▇▇ for such period of
four (4) consecutive fiscal quarters plus or minus
the aggregate amount of certain adjustments related
to Cash Interest Expense approved by the
Administrative Agent and the Lenders as set forth on
Schedule 12(a)(ii)(B); plus
(B) the aggregate amount of Permanent
Principal Payments of the Parent and its Subsidiaries
for such period of four (4) consecutive fiscal
quarters plus the aggregate amount of Unconsolidated
Permanent Principal Payments of the Unconsolidated
Entities for such period of four (4) consecutive
fiscal quarters minus the aggregate amount of
Permanent Principal Payments of the Developmental
Pool (to the extent added above) for such period of
four (4) consecutive fiscal quarters plus or minus
the aggregate amount of certain adjustments related
to Permanent Principal Payments approved by the
Administrative Agent and the Lenders as set forth on
Schedule 12(a)(ii)(B); plus
(C) the aggregate amount of Lease Expense of
the Parent and its Subsidiaries for such period of
four (4) consecutive fiscal quarters plus the
aggregate amount of Unconsolidated Lease Expense of
the Unconsolidated Entities for such period of four
(4) consecutive fiscal quarters minus the aggregate
amount of Lease Expense of the Developmental Pool (to
the extent added above) for such period of four (4)
consecutive fiscal quarters plus or minus the
aggregate amount of certain adjustments related to
Lease Expense approved by the Administrative Agent
and the Lenders as set forth on Schedule
12(a)(ii)(B),
to be less than the corresponding ratio set forth below:
Period Ratio
------ -----
Closing Date through
March 30, 2002 1.20 to 1.00
March 31, 2002 and
thereafter 1.25 to 1.00
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(b) Maximum Debt to Capitalization Ratio. As of the end of any
fiscal quarter, permit the ratio of (i) Total Debt on such date to (ii)
Total Capitalization on such date to exceed 0.60 to 1.00.
(c) Maximum Leverage Ratio. As of the end of any fiscal
quarter during any period set forth in the table below, permit the
ratio of (i) the sum of (A) Total Debt on such date less (B) Debt of or
attributable to the Developmental Pool (to the extent included in the
calculation of Total Debt) on such date to (ii) Adjusted EBITDA for the
period of four (4) consecutive fiscal quarters ending on or immediately
prior to such date, to exceed the corresponding ratio set forth below:
Period Ratio
------ -----
Closing Date through
September 29, 2002 3.50 to 1.00
September 30, 2002 and
thereafter 3.00 to 1.00
(d) Consolidated Net Worth. As of the Closing Date and as of
the end of any fiscal quarter thereafter, permit Consolidated Net Worth
on such date to be less than the sum of (i) $130,000,000 plus (ii)
fifty percent (50%) of cumulative Net Income of the Parent and its
Subsidiaries (if positive) after the Closing Date plus (iii) an amount
equal to one hundred percent (100%) of the net cash proceeds received
by the Parent or any Subsidiary thereof from any issuance of equity
after the Closing Date.
(e) Minimum Liquid Assets. As of the end of any fiscal
quarter, permit the sum of (i) Available Cash as of such date of
determination plus (ii) the Maximum Available Corporate Revolver
Commitment as of such date of determination (in each case to be
calculated on a Consolidated basis, without duplication, in accordance
with GAAP) to be less than $30,000,000.
SECTION 13. Negative Covenants.
(a) Negative Covenants. Until all of the Obligations have been paid and
satisfied in full and the Commitments of the Lenders under the Loan Agreement
have been terminated, unless consent has been obtained in the manner provided
for in Section 19, the Guarantors will:
(i) Comply with each and every covenant and agreement set
forth in Section 5.02 of the Corporate Revolver (as such agreement may
be amended from time to time) as if such Section 5.02 of the Corporate
Revolver (including, without limitation, each defined term, article,
section, exhibit or schedule referenced in or relating to such Section
5.02 of the Corporate Revolver) was written herein; provided that the
aggregate amount of Debt permitted under Section 5.02(b)(iii) of the
Corporate Revolver (including any
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amendment, restatement, refinancing or replacement thereof, the
"Corporate Revolver Debt") shall not exceed $125,000,000 unless (A) the
Obligations, the Guaranteed Obligations and all other obligations under
the Related Credit Documents (as defined in the Loan Agreement) shall
be secured on a pari passu basis with the Corporate Revolver Debt or
(B) the Corporate Revolver Debt shall be unsecured; and
(ii) Notify the Administrative Agent and the Lenders promptly
upon the execution of any amendment, restatement, supplement or other
modification to the Corporate Revolver.
(b) Rules of Construction.
(i) The terms and conditions of the Corporate Revolver which
are incorporated in this Guaranty by reference shall continue as such
terms and conditions are set forth in the Corporate Revolver
irrespective of any termination of the Corporate Revolver. Such terms
and conditions shall include any amendments, restatements, supplements
or other modifications which are approved by the Required Lender
pursuant to Section 5(a)(ii).
(ii) All definitions and other provisions of the Corporate
Revolver which are incorporated herein by reference shall be construed
in such a manner so as to give such incorporated terms legal effect and
meaning hereunder. More specifically, any references to the terms
defined in both the Corporate Revolver and this Guaranty shall be
deemed references to such terms as defined herein; provided that any
references to the "Borrower" and the "Parent" in the Corporate Revolver
shall be deemed to be references to MedCath Intermediate Holdings, Inc.
and MedCath Holdings, Inc. hereunder. For example, references in the
Corporate Revolver to the "Loan Documents", the "Commitments", the
"Obligations", the "Administrative Agent" and the "Lenders" shall be
deemed to be references to the Loan Documents, the Commitments, the
Obligations, the Administrative Agent and the Lenders as defined in
this Guaranty, in each case to the extent necessary to give any such
incorporated provisions legal effect and meaning hereunder. In
addition, any references to defined terms in the Corporate Revolver
which are similarly defined in this Guaranty shall be deemed references
to such similar terms as defined herein. For example, references in the
Corporate Revolver to an "Advance" shall be deemed to be references to
a "Term Loan" hereunder, in each case to the extent necessary to give
any such incorporated provisions legal effect and meaning hereunder.
SECTION 14. Remedies. Upon the occurrence and during the continuance of
any Default or Event of Default, with the consent of the Required Lenders, the
Administrative Agent may, or upon the request of the Required Lenders, the
Administrative Agent shall, enforce against the Guarantors their respective
obligations and liabilities hereunder and exercise such other rights and
remedies as may be available to the Administrative Agent hereunder, under the
Loan Agreement or the other Loan Documents or otherwise.
SECTION 15. No Subrogation. Notwithstanding any payment or payments by
any of the Guarantors hereunder, or any set-off or application of funds of any
of the Guarantors by the Administrative Agent or any Lender, or the receipt of
any amounts by the Administrative
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Agent or any Lender with respect to any of the Guaranteed Obligations, none of
the Guarantors shall be entitled to be subrogated to any of the rights of the
Administrative Agent or any Lender against the Borrower or the other Guarantors
or any other guarantor or against any collateral security (including, without
limitation, the Collateral) held by the Administrative Agent or any Lender for
the payment of the Guaranteed Obligations nor shall any of the Guarantors seek
any reimbursement from the Borrower or any of the other Guarantors in respect of
payments made by such Guarantor in connection with the Guaranteed Obligations,
until all amounts owing to the Administrative Agent and the Lenders on account
of the Guaranteed Obligations are paid in full and the Aggregate Commitment is
terminated. If any amount shall be paid to any Guarantor on account of such
subrogation rights at any time when all of the Guaranteed Obligations shall not
have been paid in full, such amount shall be held by such Guarantor in trust for
the Administrative Agent and the Lenders, segregated from other funds of such
Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over
to the Administrative Agent in the exact form received by such Guarantor (duly
endorsed by such Guarantor to the Administrative Agent, if required) to be
applied against the Guaranteed Obligations, whether matured or unmatured, in
such order as set forth in the Loan Agreement.
SECTION 16. Expenses. All costs and expenses (including reasonable
attorneys' fees, legal expenses and court costs) incurred by the Administrative
Agent or any Lender in enforcing or protecting their rights or remedies
hereunder shall be payable by the Guarantors on demand and shall bear interest
(after as well as before judgment) until paid at the interest rate then
applicable to Base Rate Loans under the Loan Agreement and shall be additional
Guaranteed Obligations hereunder.
SECTION 17. Notices. All notices and communications hereunder shall be
made in accordance with Section 12.1 of the Loan Agreement; provided that
notices and communications to the Guarantors shall be directed to the Guarantors
at the address of the Parent set forth in Section 12.1 of the Loan Agreement.
SECTION 18. Successors and Assigns. This Guaranty is for the benefit of
the Administrative Agent and the Lenders and their permitted successors and
assigns. This Guaranty shall be binding on each Guarantor and its successors and
assigns; provided that no Guarantor may assign any of its rights or obligations
hereunder without the prior written consent of the Administrative Agent and the
Lenders.
SECTION 19. Amendments, Waivers and Consents. No term, covenant,
agreement or condition of this Guaranty may be amended or waived, nor may any
consent be given, except in the manner set forth in Section 12.11 of the Loan
Agreement.
SECTION 20. Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable and
powers coupled with an interest.
SECTION 21. Governing Law. THIS GUARANTY SHALL BE GOVERNED BY,
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH
CAROLINA, WITHOUT REFERENCE TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES
THEREOF; PROVIDED, THAT THE ADMINISTRATIVE
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AGENT AND EACH LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
SECTION 22. Jurisdiction and Venue.
(a) Jurisdiction. The Guarantors hereby irrevocably consent to the
personal jurisdiction of the state and federal courts located in Mecklenburg
County, North Carolina, in any action, claim or other proceeding arising out of
any dispute in connection with this Guaranty and the other Loan Documents, any
rights or obligations hereunder, or the performance of such rights and
obligations. The Guarantors hereby irrevocably consent to the service of a
summons and complaint and other process in any action, claim or proceeding
brought by the Administrative Agent or any Lender in connection with this
Guaranty any the other Loan Documents, any rights or obligations hereunder, or
the performance of such rights and obligations, on behalf of itself or its
property, in the manner specified in Section 12.1 of the Loan Agreement. Nothing
in this Section 22 shall affect the right of the Administrative Agent or any
Lender to serve legal process in any other manner permitted by Applicable Law or
affect the right of the Administrative Agent or any Lender to bring any action
or proceeding against any Guarantor or its properties in the courts of any other
jurisdictions.
(b) Venue. Each Guarantor hereby irrevocably waives any objection it
may have now or in the future to the laying of venue in the aforesaid
jurisdiction in any action, claim or other proceeding arising out of or in
connection with this Guaranty, any other Loan Document or the rights and
obligations of the parties hereunder. Each Guarantor irrevocably waives, in
connection with such action, claim or proceeding, any plea or claim that the
action, claim or other proceeding has been brought in an inconvenient forum.
SECTION 23. Waiver of Right to Trial by Jury. EACH PARTY TO THIS
GUARANTY HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS GUARANTY OR IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR
ANY OF THEM WITH RESPECT TO THIS GUARANTY, OR THE TRANSACTIONS RELATED THERETO,
IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN
CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS GUARANTY MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION 23 WITH ANY COURT AS WRITTEN EVIDENCE OF
THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY
JURY.
SECTION 24. Injunctive Relief; Punitive Damages.
(a) Injunctive Relief. Each Guarantor recognizes that, in the event
such Guarantor fails to perform, observe or discharge any of its obligations or
liabilities under this Guaranty, any remedy of law may prove to be inadequate
relief to the Lenders. Therefore, each Guarantor agrees that the
34
35
Lenders, at the Lenders' option, shall be entitled to temporary and permanent
injunctive relief in any such case without the necessity of proving actual
damages.
(b) Punitive Damages. Each Guarantor agrees that it shall not have a
remedy of punitive or exemplary damages against any other party to a Loan
Document and each such Guarantor hereby waives any right or claim to punitive or
exemplary damages that it may now have or which may arise in the future in
connection with any dispute, whether the dispute is resolved by arbitration or
judicially.
SECTION 25. Severability. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(a) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Administrative
Agent and the Lenders in order to carry out the intentions of the parties hereto
as nearly as may be possible; and (b) the invalidity or unenforceability of any
provisions hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.
SECTION 26. Headings. The various headings of this Guaranty are
inserted for convenience only and shall not affect the meaning or interpretation
of this Guaranty or any provisions hereof.
SECTION 27. Counterparts. This Guaranty may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
and all of which shall constitute together but one and the same agreement.
SECTION 28. Accounting Matters.
(a) All financial and accounting calculations, measurements and
computations made for any purpose relating to this Guaranty, including, without
limitation, all computations utilized by the Guarantors to determine compliance
with any covenant contained herein, shall, except as otherwise expressly
contemplated hereby or unless there is an express written direction by the
Administrative Agent to the contrary agreed to by the Parent, be performed in
accordance with GAAP as in effect on the Closing Date. In the event that changes
in GAAP shall be mandated by the Financial Accounting Standards Board, or any
similar accounting body of comparable standing, or shall be recommended by the
Parent's certified public accountants, to the extent that such changes would
modify such accounting terms or the interpretation or computation thereof, such
changes shall be followed in defining such accounting terms only from and after
the date the Parent and the Required Lenders shall have amended this Guaranty to
the extent necessary to reflect any such changes in the financial covenants and
other terms and conditions of this Guaranty.
35
36
(b) For the purposes of computing the financial covenants set forth in
Section 12 of this Guaranty for any applicable period, such financial covenants
(and the related definitions) shall be calculated on a pro forma basis to
include as of the first day of any such period any permitted acquisition of
assets (including stock) and calculated on a pro forma basis to exclude as of
the first day of any such period any permitted sale of assets (including stock).
Such calculations shall be made in a manner, in form and substance, reasonably
satisfactory to the Administrative Agent.
[Signature Pages Follow]
36
37
IN WITNESS WHEREOF, each of the Guarantors has executed and delivered
this Guaranty under seal as of the date first above written.
PARENT:
------
[CORPORATE SEAL] MEDCATH CORPORATION
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
SUBSIDIARY GUARANTORS:
---------------------
[CORPORATE SEAL] MEDCATH HOLDINGS, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
[CORPORATE SEAL] MEDCATH INTERMEDIATE HOLDINGS, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
[CORPORATE SEAL] MEDCATH INCORPORATED
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
[CORPORATE SEAL] MEDCATH FINANCE COMPANY
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
[Signature Pages Continue]
38
MEDCATH DIAGNOSTICS, LLC
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
[CORPORATE SEAL] MEDCATH OF MASSACHUSETTS, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
HEART RESEARCH CENTERS
INTERNATIONAL, LLC
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
CHF CENTERS OF AMERICA, LLC
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
[CORPORATE SEAL] MEDCATH CARDIOLOGY CONSULTING &
MANAGEMENT, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
[CORPORATE SEAL] MEDCATH MANAGEMENT OF OHIO, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
[Signature Pages Continue]
39
[CORPORATE SEAL] WMS MANAGEMENT, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
[CORPORATE SEAL] AUSTIN MOB, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
[CORPORATE SEAL] VENTURE HOLDINGS, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
MEDCATH NUCLEAR SERVICES, LLC
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
[CORPORATE SEAL] HHBF, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
40
Schedule 1
Addresses of Administrative Agent and Lenders
Administrative Agent:
Bank of America, N.A.
ILI-231-08-03
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Lenders:
Bank of America, N.A.
ILI-231-08-03
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
The Bankers Trust Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
First Union National Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
GE Healthcare Financial Services
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Siemens Medical Systems, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
The Chase Manhattan Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fifth Third Bank (Western Ohio)
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
First National Bank of Southwestern Ohio
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
41
Schedule 1(a)(i)
Adjustments to Adjusted EBITDA
42
Schedule 9(a)(i)
Jurisdictions of Organization and Qualification
43
Schedule 9(a)(ii)
Capitalization
44
Schedule 9(a)(vii)
Litigation
45
Schedule 12(a)(ii)(B)
Permanent Principal Payment Adjustments
46
Exhibit A
to
Guaranty Agreement
FORM OF JOINDER AGREEMENT
47
Joinder Agreement
THIS JOINDER AGREEMENT, dated as of the ____ day of __________, ____
(the "Agreement"), to the Guaranty Agreement referred to below is entered into
by and among MedCath Corporation, a corporation organized under the laws of
Delaware (the "Parent"), ____________, a corporation organized under the laws of
__________ (the "New Subsidiary Guarantor"), and Bank of America, N.A., as
administrative agent (the "Administrative Agent") for the ratable benefit of
itself and the financial institutions (the "Lenders") from time to time party to
the Loan Agreement referred to below.
Statement of Purpose
Heart Hospital of BK, LLC, a limited liability company organized under
the laws of North Carolina (the "Borrower"), the Lenders and the Administrative
Agent are parties to that certain Amended and Restated Loan Agreement dated as
of July [26], 2001 (as amended, restated, supplemented or otherwise modified,
the "Loan Agreement). In connection with the Loan Agreement, the Parent and
certain Subsidiaries of the Parent who are or may become party thereto
(collectively, the "Guarantors") entered into that certain Guaranty Agreement
dated as of July [26], 2001 in favor of the Administrative Agent for the ratable
benefit of itself and the Lenders (as supplemented hereby and as further
amended, restated, supplemented or otherwise modified, the "Guaranty
Agreement").
The New Subsidiary Guarantor has become a direct or indirect Subsidiary
of the Parent pursuant to [insert description of agreement or transaction
relating to creation of the New Subsidiary Guarantor]. Pursuant to Section 11(j)
of the Guaranty Agreement, the New Subsidiary Guarantor is required to execute
and deliver this joinder agreement.
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the parties hereto hereby agree as follows:
1.01 Guaranty Agreement Supplement. Pursuant to Section 11(j) of the
Guaranty Agreement, the New Subsidiary Guarantor hereby agrees that it is a
Guarantor and a Subsidiary Guarantor under the Guaranty Agreement as if a
signatory thereof on the Closing Date, and the New Subsidiary Guarantor shall
comply with and be subject to and have the benefit of all of the terms,
conditions, covenants, agreements and obligations set forth therein. The New
Subsidiary Guarantor hereby agrees that each reference to a "Guarantor", the
"Guarantors", a "Subsidiary Guarantor" or the "Subsidiary Guarantors" in the
Loan Agreement, the Guaranty Agreement and other Loan Documents shall include
the New Subsidiary Guarantor, and each reference to the "Guaranty Agreement" or
"Guaranty" as used therein shall mean the Guaranty Agreement as supplemented
hereby.
48
2.01 Effectiveness. This Agreement shall become effective upon receipt
by the Administrative Agent of (a) an originally executed counterpart hereof,
(b) an update of Schedule (a)(i) and Schedule 9(a)(ii) and (c) any other
agreement or document required to be delivered in accordance with Section 11(j)
of the Guaranty Agreement (including, without limitation, any other agreement or
document required to be delivered in connection with any Loan Document) and (c)
all fees and expenses required to be paid by the Borrower pursuant to Section
12.2 of the Loan Agreement.
3.01 General Provisions.
(a) Representations and Warranties of the New Subsidiary Guarantor.
(i) The New Subsidiary Guarantor hereby confirms that each
representation and warranty made under the Guaranty Agreement is true and
correct with respect to such New Subsidiary Guarantor as of the date hereof
(except to the extent such representations and warranties expressly refer to an
earlier date, in which case they shall be true and correct as of the earlier
date).
(ii) The New Subsidiary Guarantor hereby acknowledges it has
received a copy of the Loan Agreement, the Guaranty Agreement and the other Loan
Documents and that it has read and understands the terms thereof.
(b) Representations and Warranties of the Parent.
(i) The Parent hereby confirms that that no Default or Event
of Default has occurred or is continuing under the Loan Agreement, the Guaranty
Agreement and the other Loan Documents.
(ii) The Parent hereby represents and warrants that as of the
date hereof there are no claims or offsets against or defenses or counterclaims
to the obligations of the Borrower and the Guarantors under the Loan Agreement,
the Guaranty Agreement and the other Loan Documents and the other Loan
Documents.
(c) Limited Effect. Except as supplemented hereby, the Loan Agreement,
the Guaranty Agreement and each other Loan Document shall continue to be, and
shall remain, in full force and effect. This Agreement shall not be deemed (i)
to be a waiver of, or consent to, or a modification or amendment of, any other
term or condition of the Loan Agreement, the Guaranty Agreement or any other
Loan Document or (ii) to prejudice any right or rights which the Administrative
Agent or any Lender may now have or may have in the future under or in
connection with the Loan Agreement, the Guaranty Agreement or any other Loan
Document or any of the instruments or agreements referred to therein, as the
same may be amended or modified from time to time.
(d) Counterparts. This Agreement may be executed by one or more of the
parties hereto in any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
49
(e) Definitions. All capitalized terms used and not defined herein
shall have the meanings given thereto in the Guaranty Agreement.
(f) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA, WITHOUT
REFERENCE TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES THEREOF; PROVIDED, THAT
THE ADMINISTRATIVE AGENT AND EACH LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER
FEDERAL LAW.
50
IN WITNESS WHEREOF the undersigned hereby causes this Agreement to be
executed and delivered as of the date first above written.
PARENT:
[CORPORATE SEAL] MEDCATH CORPORATION
By:
----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
NEW SUBSIDIARY GUARANTOR:
[CORPORATE SEAL]
--------------------------------------------
By:
----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
51
ADMINISTRATIVE AGENT:
BANK OF AMERICA, N.A., as Administrative
Agent
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
52
Exhibit B
to
Guaranty Agreement
FORM OF OFFICER'S COMPLIANCE CERTIFICATE
53
Officer's Compliance Certificate
The undersigned, on behalf of MedCath Corporation, a corporation
organized under the laws of Delaware (the "Parent"), hereby certifies to the
Administrative Agent and the Lenders, each as defined below, as follows:
1. This Certificate is delivered to you pursuant to Section 10(b) of
the Guaranty Agreement dated as of July [26], 2001 (as amended, restated,
supplemented or otherwise modified from time to time, the "Guaranty Agreement"),
made by the Parent and certain Subsidiaries of the Parent who are or may become
party thereto (collectively, the "Guarantors"), in favor of Bank of America,
N.A., as administrative agent (the "Administrative Agent") for the ratable
benefit of itself and the financial institutions (collectively, the "Lenders")
from time to time party to the Loan Agreement referred to therein. Capitalized
terms used herein and not defined herein shall have the meanings assigned
thereto in the Guaranty Agreement.
2. I have reviewed the financial statements of the Parent and its
Subsidiaries dated as of _______________ and for the _______________ period[s]
then ended and, to the best of my knowledge, such statements fairly present in
all material respects the financial condition of the Parent and its Subsidiaries
as of the dates indicated and the results of their operations and cash flows for
the period[s] indicated.
3. I have reviewed the terms of the Guaranty Agreement, the Loan
Agreement, and the other related Loan Documents and have made, or caused to be
made under my supervision, a review in reasonable detail of the transactions and
the condition of the Parent and its Subsidiaries during the accounting period
covered by the financial statements referred to in Paragraph 2 above. Such
review has not disclosed, to my knowledge, the existence during or at the end of
such accounting period of any condition or event that constitutes a Default or
an Event of Default, nor do I have any knowledge of the existence of any such
condition or event as at the date of this Certificate [except, if such condition
or event existed or exists, describe the nature and period of existence thereof
and what action the Parent and its Subsidiaries have taken, are taking and
propose to take with respect thereto].
4. The Parent and its Subsidiaries are in compliance with the financial
covenants contained in Section 12 of the Guaranty Agreement as shown on such
Schedule 1 and the Parent and its Subsidiaries are in compliance with the other
covenants and restrictions contained in the Guaranty Agreement.
[Signature Page Follows]
54
WITNESS the following signature as of the _____ day of _________, ____.
[CORPORATE SEAL] MEDCATH CORPORATION
By:
----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
55
Schedule 1
to
Officer's Compliance Certificate
[To be provided by Parent in form acceptable to Administrative Agent]