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EXHIBIT (a)(5)
THIS SUBSIDIARY GUARANTY IS SUBJECT TO THE TERMS OF A SUBORDINATION AGREEMENT
(AS FROM TIME TO TIME AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED),
DATED AS OF THE DATE HEREOF, BY AND AMONG FIRST UNION NATIONAL BANK, AS AGENT
FOR THE SENIOR LENDERS, AND THE OTHER PARTIES NAMED THEREIN.
SUBSIDIARY GUARANTY
THIS SUBSIDIARY GUARANTY (the "GUARANTY") is made as of the 1st day of
November, 1999, by the undersigned (collectively, the "GUARANTORS") in favor of
ALLIED CAPITAL CORPORATION ("ALLIED"), a Maryland corporation having an address
at 0000 Xxxxxxxxxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000-0000.
RECITALS
A. Allied has agreed to make an investment (the "INVESTMENT") in
Physicians' Specialty Corp., a Delaware corporation (the "COMPANY") in the
original principal amount of SIXTEEN MILLION and 00/100 Dollars
($16,000,000.00), pursuant to the terms of a certain Investment Agreement of
even date herewith by and among the Company, the Guarantors, and Allied (the
"INVESTMENT AGREEMENT"). Allied has agreed to make FIFTEEN MILLION and 00/100
Dollars ($15,000,000.00) of the Investment in exchange for a certain Senior
Subordinated Debenture (the "DEBENTURE") of even date herewith in the same
amount.
B. Allied requires, as a condition of making the Investment, that the
Guarantors enter into this Guaranty to guarantee the obligations of the Company
under the Debenture and Investment Agreement.
C. The Guarantors desire to induce Allied to make the Investment, and
the Guarantors acknowledge that they will receive substantial direct and
indirect benefits by reason of the making of the Investment by Allied.
NOW, THEREFORE, in consideration of the foregoing Recitals, the making
of the Investment by Allied in the Company, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Guarantors hereby jointly and severally agree with Allied and the permitted
successors and assigns thereof (collectively, the "HOLDER") as follows:
1. Guaranty. The Guarantors hereby jointly and severally
undertake and guarantee all obligations and liabilities of the Company to the
Holder arising pursuant to the Debenture and the Investment Agreement, whether
now due or hereafter falling due, including at maturity or upon acceleration
(including, without limitation, the payment of principal, interest and late
charges under the Debenture), together with all costs of collection, compromise
or enforcement, including without limitation, reasonable attorneys' fees and
disbursements incurred with respect to any such obligations or liabilities or
with respect to this or any other guaranty of any of them,
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or with respect to a proceeding under the federal bankruptcy laws or any
moratorium, insolvency, receivership arrangement or reorganization law, or an
assignment for the benefit of creditors concerning the Company or the
Guarantors, together with interest on all such costs of collection, compromise
or enforcement from the date arising (all of the foregoing, collectively, the
"GUARANTEED OBLIGATIONS"). Each Guarantor agrees that this Guaranty is a present
and continuing guaranty of payment and not of collectability.
2. Covenants. The Guarantors hereby jointly and severally
covenant and agree with the Holder as follows:
(a) This Guaranty shall not be impaired by any modification,
supplement, extension or amendment of the Debenture, Investment Agreement, or
any of the other Investment Documents, nor by any modification, release or other
alteration of any of the Guaranteed Obligations, nor by any agreements or
arrangements whatsoever made by the Holder with the Company, or anyone else.
(b) The Guarantors shall have no right of subrogation,
reimbursement or indemnity whatsoever from the Company, unless and until all of
the Guaranteed Obligations have been fully paid and performed.
(c) If any payment or transfer to any Holder that has been
credited against any of the Guaranteed Obligations under the Debenture or
Investment Agreement, is voided or rescinded or required to be returned by such
Holder, this Guaranty shall continue in effect and shall be reinstated with
respect to all such voided, rescinded or returned payments, transfers or
recoveries as though such payment, transfer or recovery had not been made.
(d) Any Holder's books and records showing the account between
such Holder and the Company shall be admissible in any action or proceeding,
shall, absent demonstrable error, be binding upon each of the Guarantors for the
purpose of establishing the items therein set forth and shall constitute prima
facie proof thereof; provided, however, that the Holder will furnish, from time
to time, copies of such books and records to the Guarantors upon the Guarantors'
written request.
(e) This Guaranty shall be construed as a continuing
obligation of each of the Guarantors without regard to the regularity, validity
or enforceability of any of the Guaranteed Obligations, and without regard to
whether any of the Guaranteed Obligations are limited, modified, voided,
released or discharged in any proceeding under the federal bankruptcy laws or in
any moratorium, insolvency, receivership, arrangement or reorganization
proceeding.
(f) This Guaranty shall be irrevocable and shall not be
discharged and the Guarantors shall not be released from liability until all
Guaranteed Obligations have been satisfied in full, and if all or any portion of
the Guaranteed Obligations are satisfied and any Holder is required for any
reason to pay to any Person all or any part of the sums used to satisfy
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the Guaranteed Obligations, the Guaranteed Obligations shall remain in effect
and enforceable to the extent thereof.
(g) This Guaranty shall remain in full force and effect
notwithstanding any failure, omission or delay on the part of the Company, any
Guarantor or any Holder to conform or comply with any term of any of the
Investment Documents or any failure of any Holder to give notice of any Default
or Event of Default.
(h) This Guaranty shall remain in full force and effect
notwithstanding any action or inaction by any Holder under or in respect of any
of the Investment Documents, any failure, lack of diligence, omission or delay
on the part of any Holder to enforce, assert or exercise any right, power or
remedy conferred on it any of the Investment Documents, or any other action or
inaction on the part of any Holder.
(i) Any and all present and future debts and obligations of
the Company to any of the Guarantors are subordinated to the full payment and
performance of the Guaranteed Obligations.
3. Representations and Warranties. Each Guarantor represents and
warrants that it has read the representations and warranties of the Company in
the Investment Agreement and each such representation and warranty that pertains
to such Guarantor is true and correct.
4. Waivers. The Guarantors hereby jointly and severally expressly
waive: (a) notice of acceptance of this Guaranty by the Holder; (b) presentment,
demand, notice of dishonor, protest, and any and all notices and demands of
every kind that may be required to be given by any statute or rule or law,
except as required by the express terms of the Debenture, Investment Agreement
or other Investment Documents; (c) any defense arising by reason of any
disability or other defense of the Company; (d) except as provided herein, any
right to participate in any security now or later held by any Holder; (e) any
right to enforce any remedies any Holder now has, or later may have, against the
Company; and (f) diligence in collection or protection of, or realization upon,
any of the Guaranteed Obligations or any other obligation hereunder, or any
security for or guaranty of any of the foregoing, and any and all formalities
that otherwise might be legally required to charge any of the Guarantors with
liability to the extent provided hereunder.
5. Successive Actions. Each Guarantor agrees that one or more
successive actions may be brought against any Guarantor, as often as the Holder
deems advisable, until all of the Guaranteed Obligations are paid and performed
in full.
6. No Waiver of Rights. No delay or failure on the part of the
Holder to exercise any right, power or privilege under this Guaranty or any of
the other Investment Documents shall operate as a waiver thereof, and no single
or partial exercise of any right, power or privilege shall preclude any other or
further exercise thereof or the exercise of any other power or right, or be
deemed to establish a custom or course of dealing or performance between the
parties hereto.
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7. No Modification Without Writing. This Guaranty may not be
modified, amended, revised, revoked, terminated, changed or varied in any way
whatsoever, except by the express terms of a writing signed by the party or
parties sought to be bound thereby.
8. Severability. Whenever possible, each provision of this
Guaranty shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be held invalid or
ineffective, such ineffectiveness or invalidity shall not affect any other
provisions of this Guaranty, and this Guaranty shall be construed as if such
ineffective or invalid provision had never been contained therein.
9. Capitalized Terms. Any capitalized term that is not defined in
this Guaranty has the meaning given to it in the Investment Agreement.
10. Successors and Assigns. This Guaranty shall inure to the
benefit of the Holder, and shall bind each of the Guarantors and their
respective heirs, legal representatives, successors and assigns.
11. Costs and Expenses. Each Guarantor agrees to pay on demand all
costs and expenses incurred by or on behalf of the Holder (including, without
limitation attorneys' fees and expenses) in enforcing the obligations of such
Guarantor under this Guaranty.
12. Joinder. Each Guarantor agrees that any action to enforce this
Guaranty may be brought against Guarantor without any reimbursement or joinder
of Company or any other guarantor of the Guaranteed Obligations in such action.
13. Notice. Notice shall be given under this Guaranty in
accordance with Section 8.1 of the Investment Agreement. The address of the
Company shall be deemed the address of each of the Guarantors for purposes of
delivering notice under this Guaranty and under any of the Investment Documents.
14. GOVERNING LAW. THIS GUARANTY SHALL BE DEEMED TO HAVE BEEN MADE
IN THE STATE OF MARYLAND. THIS GUARANTY SHALL BE GOVERNED AND CONTROLLED AS TO
INTERPRETATION, ENFORCEMENT, VALIDITY, CONSTRUCTION, EFFECT AND IN ALL OTHER
RESPECTS BY THE LAWS, STATUTES AND DECISIONS OF THE STATE OF MARYLAND (EXCLUDING
CONFLICTS OF LAWS PROVISIONS). THE UNDERSIGNED, IN ORDER TO INDUCE THE HOLDER TO
ACCEPT THIS GUARANTY, AND FOR OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT
AND SUFFICIENCY OF WHICH HEREBY IS ACKNOWLEDGED, AGREE THAT ALL ACTIONS OR
PROCEEDINGS ARISING DIRECTLY, INDIRECTLY OR OTHERWISE IN CONNECTION WITH OR
RELATED TO THIS GUARANTY SHALL BE LITIGATED, AT HOLDER'S SOLE DISCRETION AND
ELECTION, ONLY IN COURTS HAVING A SITUS WITHIN THE STATE OF MARYLAND. THE
GUARANTORS HEREBY CONSENT AND SUBMIT TO THE JURISDICTION OF ANY LOCAL, STATE OR
FEDERAL COURT LOCATED WITHIN MARYLAND. THE UNDERSIGNED HEREBY AGREE THAT SERVICE
OF PROCESS HEREUNDER MAY BE ACCOMPLISHED AND SHALL CONSTITUTE PERSONAL SERVICE
OF SUCH PROCESS UPON THE UNDERSIGNED IF NOTICE IS MAILED BY CERTIFIED MAIL TO
THE UNDERSIGNED AT THE ADDRESS SET
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FORTH BELOW AFTER THE SIGNATURE OF THE UNDERSIGNED. THE UNDERSIGNED HEREBY WAIVE
ANY RIGHT THEY MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION
BROUGHT AGAINST THEM BY THE HOLDER ON THIS GUARANTY IN ACCORDANCE WITH THIS
PARAGRAPH. THE UNDERSIGNED HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY
WAIVE THE RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS GUARANTY. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE HOLDER TO ENTER INTO THE CONTEMPLATED
TRANSACTIONS. THE HOLDER HEREBY WAIVES THE RIGHT TO JURY TRIAL TO THE SAME
EXTENT AS SUCH RIGHT IS WAIVED BY THE UNDERSIGNED.
15. Waiver of Rights Against Company. Notwithstanding anything to
the contrary that may be contained herein, each Guarantor hereby unconditionally
and irrevocably agrees that such Guarantor (i) will not assert against the
Company any right or claim, at law or in equity, to indemnification,
reimbursement, contribution, restitution or payment for or with respect to any
and all amounts such Guarantor may pay or be obligated to pay to any Holder,
including, without limitation, the Guaranteed Obligations, and any and all other
obligations that such Guarantor may perform, satisfy or discharge, under or with
respect to this Guaranty, (ii) waives and releases all such rights and claims,
at law or in equity, to indemnification, reimbursement, contribution,
restitution or payment that such Guarantor may have now or at any time against
Company and (iii) will not assign or otherwise transfer any such right or claims
to any other person. Each Guarantor further unconditionally and irrevocably
agrees that such Guarantor shall have no right of subrogation, and waives any
right to enforce any remedy that any Holder now has or hereafter may have
against the Company and waives any defense based upon an election of remedies by
any Holder which destroys or otherwise impairs any subrogation rights of such
Guarantor and/or the right of such Guarantor to proceed against the Company for
reimbursement.
16. Subordination. The indebtedness guaranteed by this Subsidiary
Guaranty is subordinate to the Permitted Senior Debt of the Company in
accordance with the terms of the Subordination Agreement and as specified in the
Investment Agreement.
17. Incorporation of Recitals. The Recitals are incorporated
herein by reference.
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IN WITNESS WHEREOF, this Guaranty has been executed and delivered under
seal by the undersigned as of the date first above written.
ATTEST: ALABAMA ENT CENTER, INC.
/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxxxx (SEAL)
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Name: Xxxxxxx X. Xxxxxxx
Title: President
ATLANTA ENT CENTER FOR
PHYSICIANS, INC.
/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxx X. Xxxxx (SEAL)
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Name: Xxxxx X. Xxxxx
Title:
ENT CENTER OF ATLANTA, INC.
/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxx X. Xxxxx (SEAL)
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Name: Xxxxx X. Xxxxx
Title: President
PSC ACQUISITION CORP.
/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxx X. Xxxxx (SEAL)
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Name: Xxxxx X. Xxxxx
Title: President
PSC GEORGIA CORP.
/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxxxx (SEAL)
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Name: Xxxxxxx X. Xxxxxxx
Title: President
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PSC MANAGEMENT CORP.
/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxx X. Xxxxx (SEAL)
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Name: Xxxxx X. Xxxxx
Title: President
PSC SLEEP CENTERS, INC.
/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxxxx (SEAL)
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Name: Xxxxxxx X. Xxxxxxx
Title: President
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