EXHIBIT 10.34
EXECUTION COPY
SECOND SUPPLEMENTAL INDENTURE (this "Second Supplemental Indenture")
dated as of March 31, 1998, among Renal Treatment Centers, Inc., a Delaware
corporation (the "Company"), Total Renal Care Holdings, Inc., a Delaware
corporation ("TRCH"), and PNC Bank, National Association, as trustee (the
"Trustee"), under the Indenture (the "Indenture") dated as of June 12,
1996, between the Company and the Trustee, as amended by that certain First
Supplemental Indenture, dated as of February 27, 1998, among the Company,
TRCH and the Trustee.
WHEREAS pursuant to an Agreement and Plan of Merger dated as of November 18,
1997 (the "Merger Agreement"), among TRCH, Nevada Acquisition Corp., a
Delaware corporation and a wholly owned subsidiary of TRCH ("Merger Sub") and
the Company, Merger Sub merged with and into the Company (the "Merger") and
the Company continued as the surviving corporation and thereupon became a
wholly owned subsidiary of TRCH;
WHEREAS the Boards of Directors of the Company and TRCH have determined that
it is in the best interests of the Company and TRCH, on the one hand, and the
noteholders, on the other hand, to make TRCH a guarantor of the obligations of
the Company under the Indenture;
WHEREAS TRCH, in furtherance of the foresaid determinations, as guarantor,
will enter into a guaranty in the form attached hereto as Exhibit A (the
"Guaranty") in favor of the Trustee for the benefit of the Noteholders;
WHEREAS Section 11.1(d) of the Indenture provides that, without the consent
of the Noteholders, the Company, when authorized by a resolution of its Board
of Directors, and the Trustee may enter into indentures supplemental to the
Indenture in order to, among other things, add such further covenants,
restrictions or conditions as the Company's Board of Directors and the Trustee
shall consider to be for the benefit of the holders of the Notes;
WHEREAS the entry into this Second Supplemental Indenture by the parties
hereto is in all respects authorized by the provisions of the Indenture; and
WHEREAS all things necessary to make this Second Supplemental Indenture a
valid indenture and agreement according to its terms have been done;
NOW THEREFORE, TRCH hereby covenants and agrees with the Company and the
Trustee for the benefit of the present and future holders of the Notes as
follows:
ARTICLE I
SECTION 1.01 Guaranty of the Notes by TRCH. For value received and pursuant
to the Guaranty dated March 31, 1998 in favor of the Trustee for the benefit
of the Noteholders, TRCH guarantees (a) the due and punctual payment of the
principal of, and premium, if any, and interest on each Note, when and as the
same shall become due and payable, subject to any applicable grace period,
whether at maturity, by acceleration or otherwise, the due and punctual
payment of interest on the overdue principal of, and premium, if any, and
interest on the Notes, to the extent lawful, and the due and punctual
performance of all other Obligations (as defined in the Guaranty) of Company
to the Noteholders or the Trustee all in accordance with the terms of such
Note and the Indenture, subject, however, to the limitations set forth in the
Guaranty, and (ii) in the case of any extension of time of payment or renewal
of any Notes or any of such other Obligations, that the same will be promptly
paid in full when due or performed in accordance with the terms of the
extension or renewal, at stated maturity, by acceleration or otherwise. TRCH
hereby agrees that its obligations under the Guaranty shall be absolute and
unconditional, irrespective of, and shall be unaffected by, any invalidity,
irregularity or unenforceability of any
such Note or the Indenture, any failure to enforce the provisions of any such
Note or the Indenture, any waiver, modification or indulgence granted to
Company with respect thereto by the Noteholder of such Note or the Trustee, or
any other circumstances which may otherwise constitute a legal or equitable
discharge of a surety or Guarantor.
SECTION 1.02 Effectiveness of the Guaranty. TRCH agrees that the Guaranty
set forth in Section 1.02 above shall be and remain in full force and effect
notwithstanding any failure to endorse on each Note a notation of such
Guaranty and that each Note shall be entitled to the full benefit of the
Guaranty whether or not the Guaranty is notated thereon.
ARTICLE II
SECTION 2.01 Definition of "Guaranty". The following definition shall be
added to Section 1.1 of the Indenture:
"Guaranty: The term "Guaranty" shall mean a Guaranty in the form attached
hereto as Exhibit A, in favor of and for the benefit of the Trustee, as
representative of the Noteholders.
SECTION 2.02 Amendment to Section 7.1. Section 7.1 of the Indenture is
hereby amended by adding a new sentence after the second complete sentence of
that section as follows:
"In addition, without limiting the foregoing provisions, upon the
effectiveness of such acceleration of the principal of all the Notes and
the interest accrued thereon, the Trustee shall promptly make a demand for
payment on the Notes under the Guaranty not discharged."
SECTION 2.03 Amendment to Section 14.1. Section 14.1 of the Indenture is
hereby amended by adding a new sentence to the end of that section as follows:
"Notwithstanding the foregoing, the Trustee may seek recourse for the
payment of the principal of or premium, if any, or interest on any Note, or
for any claim based thereon or otherwise in respect thereof or for
Obligations (as defined in the Guaranty) of the Company against TRCH under
the Guaranty in accordance with the provisions of Article VII and the
Guaranty."
ARTICLE III
SECTION 3.01 Second Supplemental Indenture. The Trustee accepts the
provisions of this Second Supplemental Indenture upon the terms and conditions
set forth in the Indenture as amended by this Second Supplemental Indenture.
SECTION 3.02 Other Terms of Indenture. Except insofar as herein otherwise
expressly provided, all the provisions, terms and conditions of the Indenture
are in all respects ratified and confirmed and shall remain in full force and
effect.
SECTION 3.03 Definitions. Capitalized terms used herein and not defined
herein have the meanings ascribed to such terms in the Indenture unless the
context of this Second Supplemental Indenture otherwise requires.
SECTION 3.04 Governing Law. This Second Supplemental Indenture shall be
deemed to be a contract made under the laws of New York, and for all purposes
shall be construed in accordance with, the laws of New York.
SECTION 3.05 Counterparts. This Second Supplemental Indenture may be
executed in any number of counterparts, each of which shall be an original,
but such counterparts shall together constitute but one and the same
instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental
Indenture to be duly executed by their respective authorized officers as of the
date first written above.
TOTAL RENAL CARE HOLDINGS, INC.,
by
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Name:
Title:
Attest:
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Name:
RENAL TREATMENT CENTERS, INC.,
by
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Name:
Title:
Attest:
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Name:
PNC BANK, NATIONAL ASSOCIATION
as Trustee,
by
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Name:
Title:
Attest:
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Name:
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EXHIBIT A
GUARANTY
This Guaranty (this "Guaranty") is entered into as of March 31, 1998 by
Total Renal Care Holdings, Inc., a Delaware corporation ("Guarantor"), in
favor of PNC Bank, National Association, as Trustee ("Trustee") for the
benefit of the noteholders ("Noteholders") under that certain Indenture, dated
as of June 12, 1996, between Renal Treatment Centers, Inc., a Delaware
corporation and wholly owned subsidiary of Guarantor ("Company"), and Trustee,
as amended by that certain First Supplemental Indenture, dated as of February
27, 1998, between Company, Guarantor and Trustee (as amended, supplemented or
otherwise modified from time to time, the "Indenture") with respect to
Company's 5 5/8% Convertible Subordinated Notes due 2006 (the "Notes"). Unless
otherwise defined herein, capitalized terms used in this Guaranty shall have
the meanings assigned to such terms in the Indenture.
RECITALS
A. Company became a wholly owned subsidiary of Guarantor pursuant to that
certain Agreement and Plan of Merger by and among Guarantor, Nevada
Acquisition Corp., a Delaware corporation, and Company, dated as of November
18, 1997 (the "Merger").
B. Guarantor has determined that it is in its best interest irrevocably and
unconditionally to guaranty the Notes.
Now, therefore, based upon the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Guarantor hereby agrees as follows:
SECTION 1
DEFINITIONS
1.1 Certain Defined Terms. As used in this Guaranty, the following terms
shall have the following meanings unless the context otherwise requires:
"Additional Interest" means additional interest on the Notes pursuant to
Section 2.3 of the Indenture which Company and Guarantor, jointly and
severally, hereby agree to pay to the Noteholders.
"Credit Facilities" means, collectively, (i) Guarantor's $800,000,000
Revolving Credit Agreement, dated as of October 24, 1997 with DLJ Capital
Funding, Inc., as Syndication Agent, First Union National Bank, as
Documentation Agent, The Bank of New York, as Administrative Agent, BNY
Capital Markets, Inc. and Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation,
as Co-Arrangers, and the various lenders party thereto, together with the
promissory notes issued thereunder and the other documents related thereto,
and (ii) Guarantor's $250,000,000 Term Loan Agreement, dated as of October 24,
1997, with DLJ Capital Funding, Inc., as Syndication Agent, The Bank of New
York, as Administrative Agent, BNY Capital Markets, Inc. and Xxxxxxxxx, Lufkin
& Xxxxxxxx Securities Corporation, as Co-Arrangers, and the various lenders
party thereto, together with the promissory notes issued thereunder and the
other documents related thereto, in each case as such agreements may be
amended (including any amendment and restatement thereof), supplemented or
otherwise modified from time to time, including any agreements extending the
maturity of, refinancing, replacing or otherwise restructuring (including
increasing the amount of available borrowings thereunder or adding
subsidiaries of Guarantor and/or Company as additional borrowers or guarantors
thereunder) all or any portion of the Indebtedness and other Obligations under
such agreements and whether by the same or any other agent, lender or group of
lenders.
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"Designated Senior Indebtedness" means any Indebtedness under either of the
Credit Facilities and any other Indebtedness in an original principal amount
of at least $50 million, provided that by its terms such Indebtedness
expressly provides that it is "Designated Senior Indebtedness" for purposes of
this Guaranty.
"Indebtedness" means (without duplication), with respect to any Person, any
obligation at any time outstanding, secured or unsecured, contingent or
otherwise, which is for borrowed money (whether or not the recourse of the
lender is to the whole of the assets of such Person or only to a portion
thereof), or evidenced by bonds, notes, debentures or similar instruments or
representing the balance deferred and unpaid of the purchase price of any
property (excluding, without limitation, any balance that constitutes accounts
payable or trade payables, and other accrued liabilities arising in the
ordinary course of business) if and to the extent any of the foregoing
indebtedness would appear as a liability upon a balance sheet of such Person
prepared in accordance with generally accepted accounting principles ("GAAP"),
and shall also include, to the extent not otherwise included, (i) any
obligations secured by a lien to which the property or assets owned or held by
such Person is subject, whether or not the obligation or obligations secured
thereby shall have been assumed, to the extent of the fair market value of
such property or assets, (ii) guarantees of items of other Persons which would
be included within this definition for such other Persons (whether or not such
items would appear upon the balance sheet of the guarantor), to the extent of
the amount of the Indebtedness so guaranteed, and (iii) all obligations for
the reimbursement of any obligor on any letter of credit, banker's acceptance
or similar credit transaction. The amount of Indebtedness of any Person at any
date shall be the outstanding balance at such date of all unconditional
obligations as described above and, with respect to contingent obligations,
the maximum liability upon the occurrence of the contingency giving rise to
the obligations; provided, that (i) the amount outstanding at any time of any
Indebtedness issued with original issue discount is the principal amount of
such Indebtedness less the remaining unamortized portion of the original issue
discount of such Indebtedness at such time as determined in conformity with
GAAP and (ii) Indebtedness shall not include any liability for federal, state,
local or other taxes. Notwithstanding any other provision of the foregoing
definition, any trade payable arising from the purchase of goods or materials
or for the services obtained in the ordinary course of business shall not be
deemed to be "Indebtedness." Furthermore, guarantees of (or obligations with
respect to letters of credit supporting) Indebtedness otherwise included in
the determination of such amount shall not also be included.
"Non-Payment Event of Default" means any event (other than a Payment
Default) the occurrence of which entitles one or more Persons to accelerate
the maturity of any Designated Senior Indebtedness.
"Obligations" means, with respect to any Indebtedness, any principal,
premium, interest, penalties, fees, indemnifications, reimbursements, damages
and other expenses payable under the documentation governing such
Indebtedness.
"Payment Default" means any default, whether or not any requirement for the
giving of notice, the lapse of time or both, or any other condition to such
default becoming an event of default has occurred, in the payment of principal
of or premium, if any, or interest on or any other amount payable in
connection with any Designated Senior Indebtedness.
"Person" means any individual, corporation, company (including any limited
liability company), partnership, joint venture, trust, unincorporated
organization, government or any agency or political subdivision thereof or any
other entity.
"Senior Indebtedness," as to Guarantor, means the principal of and premium,
if any, and interest on, and any and all other fees, expense reimbursement
obligations and all other Obligations and amounts due pursuant to the terms of
all agreements, documents and instruments providing for, creating, securing or
evidencing or otherwise entered into in connection with (a) all Indebtedness
of Guarantor owed to lenders or agents under either of the Credit Facilities,
(b) all obligations of Guarantor to reimburse any bank or other person in
respect of amounts paid under letters of credit, acceptances or other similar
instruments and all obligations of Guarantor with respect to guarantees of
such reimbursement obligations, (c) all other Indebtedness of Guarantor which
does not provide that it is to be ranked pari passu with or subordinate to the
Guaranty and (d) all deferrals, renewals,
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refinancings, extensions and refundings of, and amendments, modifications and
supplements to, any of the Senior Indebtedness described above.
Notwithstanding anything to the contrary in the foregoing, Senior Indebtedness
will not include (i) Indebtedness of Guarantor to any of its Subsidiaries, or
to any Affiliate of Guarantor or any of such Affiliate's Subsidiaries, (ii)
Indebtedness represented by the Guaranty, (iii) any Indebtedness which by the
express terms of the agreement or instrument creating, evidencing or governing
the same is junior or subordinate in right of payment to any item of Senior
Indebtedness, (iv) any trade payable arising from the purchase of goods or
materials or for services obtained in the ordinary course of business, and (v)
any Indebtedness to or guaranteed on behalf of, any stockholders, director,
officer or employee of Guarantor or any Subsidiary of Guarantor.
SECTION 2
THE GUARANTY
2.1 Guaranty.
(a) Subject to the provisions hereof, Guarantor hereby unconditionally
guarantees in favor of the Trustee for benefit of the Noteholders, (i) the due
and punctual payment of the principal of, and premium, if any, and interest on
each Note, when and as the same shall become due and payable, subject to any
applicable grace period, whether at maturity, by acceleration or otherwise,
the due and punctual payment of interest on the overdue principal of, and
premium, if any, and interest on the Notes, to the extent lawful, and the due
and punctual performance of all other Obligations of Company to the
Noteholders or the Trustee all in accordance with the terms of such Note and
the Indenture, subject, however, to the limitations set forth in Section 2.2,
and (ii) in the case of any extension of time of payment or renewal of any
Notes or any of such other Obligations, that the same will be promptly paid in
full when due or performed in accordance with the terms of the extension or
renewal, at stated maturity, by acceleration or otherwise. Guarantor hereby
agrees that its obligations thereunder and hereunder shall be absolute and
unconditional, irrespective of, and shall be unaffected by, any invalidity,
irregularity or unenforceability of any such Note or the Indenture, any
failure to enforce the provisions of any such Note or the Indenture, any
waiver, modification or indulgence granted to Company with respect thereto by
the Noteholder of such Note or the Trustee, or any other circumstances which
may otherwise constitute a legal or equitable discharge of a surety or
Guarantor.
(b) Guarantor hereby waives diligence, presentment, demand for payment,
filing of claims with a court in the event of merger or bankruptcy of Company,
any right to require a proceeding first against Company, protest or notice
with respect to any such Note or the Indebtedness evidenced thereby and all
demands whatsoever, and covenants that this Guaranty will not be discharged as
to any such Note except by payment in full of the principal thereof, premium
if any, and interest thereon and as provided in Section 13.1 of the Indenture.
Guarantor further agrees that, as between Guarantor, on the one hand, and the
Noteholders and the Trustee, on the other hand, (i) the maturity of the
Obligations guaranteed hereby may be accelerated as provided in Article 7 of
the Indenture for the purposes of this Guaranty, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
Obligations guaranteed hereby, and (ii) in the event of any declaration of
acceleration of such Obligations as provided in Article 7 of the Indenture,
such Obligations (whether or not due and payable) shall forthwith become due
and payable by Guarantor for the purpose of this Guaranty. In addition,
without limiting the foregoing provisions, upon the effectiveness of an
acceleration under Article 7 of the Indenture, the Trustee shall promptly make
a demand for payment on the Notes under the Guaranty provided for herein and
not discharged.
2.2 Effectiveness of the Guaranty. Guarantor agrees that this Guaranty shall
be and remain in full force and effect notwithstanding any failure to endorse
on each Note a notation of such Guaranty and that each Note shall be entitled
to the full benefit of the Guaranty whether or not the Guaranty is notated
thereon.
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2.3 Limitation of Guaranty. Notwithstanding any term or provision of the
Indenture to the contrary, the maximum aggregate amount of the obligations
guaranteed hereunder by Guarantor shall not exceed the maximum amount that can
be guaranteed hereunder by Guarantor without rendering the Guaranty, as it
relates to Guarantor, voidable under applicable law relating to fraudulent
conveyance or fraudulent transfer or similar laws affecting the rights of
creditors generally.
2.4 Guaranty Obligations Subordinated to Guarantor Senior Indebtedness.
(a) Guarantor hereby covenants and agrees that, to the extent and in the
manner set forth herein, the Indebtedness represented by the Guaranty and the
payment of the principal of, premium, if any, and interest on the Notes
pursuant to the Guaranty by Guarantor are hereby expressly made subordinate
and subject in right of payment as provided herein to the prior indefeasible
payment and satisfaction in full in cash of all Senior Indebtedness.
(b) The holders of Senior Indebtedness (including, without limitation,
Designated Senior Indebtedness) shall have the right to rely on this Section
2.4 and the following Section 2.4 through Section 2.12, and such provisions
are made for the benefit of the holders of Senior Indebtedness; and such
holders are made obligees hereunder and they or each of them may enforce such
provisions, and no amendment or modification of the provisions contained
herein shall diminish the rights of such holders unless such holders have
agreed in writing thereto.
2.5 Payment Over of Proceeds upon Dissolution, etc., of Guarantor. In the
event of (x) any insolvency or bankruptcy case or proceeding, or any
receivership, arrangement, reorganization, liquidation, dissolution or other
similar case or proceeding in connection therewith whether or not involving
insolvency or bankruptcy, relative to Guarantor or to its creditors, as such,
or to its assets, whether voluntary or involuntary, or (y) any general
assignment for the benefit of creditors or other marshaling of assets or
liabilities of Guarantor (except in connection with the merger or
consolidation of Guarantor or its liquidation or dissolution following the
transfer of all or substantially all of its assets, upon the terms and
conditions that would be permitted under Article 12 of the Indenture if
references to "Company" were to Guarantor) (all of the foregoing referred to
herein individually as a "Guarantor Bankruptcy Proceeding" and collectively as
"Guarantor Bankruptcy Proceedings"), then and in any such event:
i. the holders of all Senior Indebtedness shall be entitled to receive
payment and satisfaction in full in cash of all amounts due on or in
respect of all such Senior Indebtedness (including any interest accruing
after the commencement of any such Guarantor Bankruptcy Proceeding whether
or not such interest is an allowable claim enforceable against Company in
any such proceeding) before the Noteholders are entitled to receive or
retain, pursuant to this Guaranty, any payment or distribution of any kind
by Guarantor on account of this Guaranty;
ii. any payment or distribution of assets of Guarantor of any kind or
character, whether in cash, property or securities, by set-off or
otherwise, to which the Noteholders or the Trustee would be entitled but
for the subordination provisions hereof shall be paid by the liquidating
trustee or agent or other Person making such payment or distribution,
whether a trustee in bankruptcy, a receiver or liquidating trustee or
otherwise, directly to the holders of Senior Indebtedness or their
representative or representatives or to the trustee or trustees under any
indenture under which any instruments evidencing any of such Senior
Indebtedness may have been issued, ratably according to the aggregate
amounts remaining unpaid on account of such Senior Indebtedness held or
represented by each, to the extent necessary to make payment in full in
cash of all such Senior Indebtedness remaining unpaid, after giving effect
to any concurrent payment or distribution, or provision therefor, to the
holders of such Senior Indebtedness;
iii. in the event that, notwithstanding the foregoing provisions of this
Section 2.5, the Trustee or the Noteholder of any Note shall have received
any payment or distribution of assets of Guarantor of any kind or
character, whether in cash, property or securities, including, without
limitation, by way of set-off or otherwise, in respect of this Guaranty
before all Senior Indebtedness is paid and satisfied in full in cash,
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then such payment or distribution shall be held by the recipient in trust
for the benefit of holders of such Senior Indebtedness and shall be
immediately paid over or delivered to the holders of such Senior
Indebtedness or their representative or representatives to the extent
necessary to make payment in full in cash of all such Senior Indebtedness
remaining unpaid after giving effect to any concurrent payment or
distribution to or for the holders of such Senior Indebtedness; and
iv. the consolidation of Guarantor with, or the merger of Guarantor with
or into, another Person or the liquidation or dissolution of Guarantor
following the conveyance, transfer or lease of its properties and assets
substantially as an entirety to another Person upon the terms and
conditions set forth herein shall not be deemed a dissolution, winding-up,
liquidation, reorganization, assignment for the benefit of creditors or
marshaling of assets and liabilities of such Guarantor for, as would be
applicable as if references to "Company" were to Guarantor, the purposes of
Article 12 of the Indenture if the Person formed by such consolidation or
the surviving entity of such merger or the Person which acquires by
conveyance, transfer or lease such properties and assets substantially as
an entirety, as the case may be, shall, as a part of such consolidation,
merger, conveyance, transfer or lease, comply with the conditions set forth
in such Article 12 of the Indenture, as would be applicable as if
references to "Company" were to Guarantor.
2.6 Suspension of Guaranty Obligations When Senior Indebtedness in Default.
(a) Unless Section 2.5 hereof shall be applicable, after the occurrence of a
Payment Default with respect to any Designated Senior Indebtedness which
constitutes Senior Indebtedness, no payment or distribution of any kind or
character of Guarantor (including, without limitation, cash, property and any
payment or distribution which may be payable or deliverable by reason of the
payment of any other Indebtedness of Guarantor being subordinated to its
Obligations herein) may be made by or on behalf of Guarantor, including,
without limitation, by way of set-off or otherwise, for or on account hereof,
and neither the Trustee nor any Noteholder shall take or receive from
Guarantor, directly or indirectly in any manner, payment in respect of all or
any portion of its Obligations hereof commencing on the date of receipt by the
Trustee of written notice from any representative of the holders of any
Designated Senior Indebtedness which constitutes Senior Indebtedness (each, a
"Guarantor Representative") of such Payment Default, and in any such event,
such prohibition shall continue until such Payment Default is cured, waived in
writing or ceases to exist. At such time as the prohibition set forth in the
preceding sentence shall no longer be in effect, subject to the provisions of
the preceding and following paragraph, Guarantor shall resume making any and
all required payments in respect hereof, including any missed payments.
(b) Unless Section 2.5 hereof shall be applicable, upon the occurrence of a
Non-Payment Event of Default on Designated Senior Indebtedness, no payment or
distribution of any kind or character (including, without limitation, cash,
property and any payment or distribution which may be payable or deliverable
by reason of the payment of any other Indebtedness of Guarantor being
subordinated to its Obligations herein) shall be made by Guarantor, including,
without limitation, by way of set-off or otherwise, for or on account of any
of its Obligations herein, and neither the Trustee nor any Noteholder shall
take or receive from Guarantor, directly or indirectly in any manner, payment
in respect of all or any portion of its obligations on its Guaranty for a
period (a "Guaranty Payment Blockage Period") commencing on the date of
receipt by the Trustee of written notice from any Guarantor Representative of
such Non-Payment Event of Default, unless and until (subject to any blockage
of payments that may then be in effect under the preceding paragraphs), the
earlier of: (x) the date that such Non-Payment Event of Default shall have
been cured or waived in writing or shall have ceased to exist or such
Designated Senior Indebtedness shall have been paid in full in cash or (y) the
date that such Guaranty Payment Blockage Period shall have been terminated by
written notice to Guarantor or the Trustee from the applicable Guarantor
Representative, after which, in the case of clause (x) or (y), Guarantor shall
resume making any and all required payments in respect of its Obligations
herein, including any missed payments. Any number of additional Guaranty
Payment Blockage Periods may be commenced during any Guaranty Payment Blockage
Period.
(c) In the event that, notwithstanding the foregoing, the Trustee or any
Noteholder shall have received any payment or distribution from Guarantor
prohibited by the foregoing provisions of this Section 2.6, then and in
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such event such payment or distribution shall be held in trust for the benefit
of and shall be paid over and delivered forthwith to the holders of the Senior
Indebtedness or their representative or representatives for distribution to
the holders of Senior Indebtedness or, if no amounts are then due in respect
of Senior Indebtedness, promptly returned to Guarantor, or otherwise as a
court of competent jurisdiction shall direct.
2.7 Subrogation to Rights of Noteholders of Senior Indebtedness.
(a) Upon the payment in full in cash of all Senior Indebtedness, the
Noteholders shall be subrogated to the rights of the holders of such Senior
Indebtedness to receive payments and distributions of cash, property and
securities of Guarantor made on such Senior Indebtedness until all amounts due
to be paid hereunder shall be paid in full. For purposes of such subrogation,
no payments or distributions to holders of Senior Indebtedness of any cash,
property or securities to which Noteholders or the Trustee would be entitled
except for the provisions hereof, and no payments over pursuant to the
provisions hereof to holders of Senior Indebtedness by Noteholders or the
Trustee, shall, as among Guarantor, its creditors other than holders of Senior
Indebtedness and the Noteholders be deemed to be a payment or distribution by
Guarantor to or on account of Senior Indebtedness.
(b) If any payment or distribution to which the Noteholders would otherwise
have been entitled but for the provisions hereof shall have been applied,
pursuant to the provisions hereof, to the payment of all amounts payable under
Senior Indebtedness, then and in such case, the Noteholders shall be entitled
to receive from the holders of such Senior Indebtedness at the time
outstanding any payments or distributions received by such holders of Senior
Indebtedness in excess of the amount sufficient to pay all amounts payable
under or in respect of such Senior Indebtedness in full in cash.
2.8 Guaranty Subordination Provisions Solely to Define Relative Rights. The
subordination provisions hereof are and are intended solely for the purpose of
defining the relative rights of the Noteholders on the one hand and the
holders of Senior Indebtedness on the other hand. Nothing contained herein or
in the Indenture or in the Notes is intended to or shall (a) impair, as to
Guarantor, its creditors other than holders of its Senior Indebtedness and the
Noteholders, the obligation of Guarantor, which is absolute and unconditional,
to make payments to the Noteholders in respect of its Obligations hereof; or
(b) affect the relative rights against Guarantor of the Noteholders and
creditors of Guarantor other than the holders of the Senior Indebtedness; or
(c) prevent the Trustee or any Noteholder from exercising all remedies
otherwise permitted by applicable law upon a Default or an Event of Default
under the Indenture, subject to the rights, if any, hereunder of the holders
of Senior Indebtedness (1) in any case, proceeding, dissolution, liquidation
or other winding-up, assignment for the benefit of creditors or other
marshaling of assets and liabilities of Company referred to in Section 2.5
hereof, to receive, pursuant to and in accordance with such Section, cash,
property and securities otherwise payable or deliverable to the Trustee or
such Noteholder, or (2) under the conditions specified in Section 2.6 hereof,
to prevent any payment prohibited by such Section or enforce their rights
pursuant to Section 2.6(c) hereof.
2.9 Trustee's Relation to Senior Indebtedness. With respect to the holders
of Senior Indebtedness, the Trustee undertakes to perform or to observe only
such of its covenants and obligations as are specifically set forth herein,
and no implied covenants or obligations with respect to the holders of Senior
Indebtedness shall be read into this Guaranty against the Trustee. The Trustee
shall not be deemed to owe any fiduciary duty to the holders of Senior
Indebtedness and the Trustee shall not be liable to any holder of Senior
Indebtedness if it shall mistakenly pay over or deliver to Noteholders,
Company, Guarantor or any other Person moneys or assets to which any holder of
Senior Indebtedness shall be entitled by virtue of this Guaranty or otherwise.
2.10 No Waiver of Subordination Provisions. No right of any present or
future holder of any Senior Indebtedness to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of Company or Guarantor or by any act or failure to
act, in good faith, by any such holder, or by any non-compliance by Company or
Guarantor with the terms, provisions and covenants of this Guaranty or the
Indenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
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2.11 Notice to Trustee.
(a) Guarantor shall give prompt written notice to the Trustee of any fact
known to Guarantor which would prohibit the making of any payment to or by the
Trustee at its Corporate Trust Office in respect of the Notes. Notwithstanding
the provisions of this Guaranty or any provision of the Indenture, the Trustee
shall not be charged with knowledge of the existence of any facts which would
prohibit the making of any payment to or by the Trustee in respect of the
Notes, unless and until the Trustee shall have received written notice thereof
from Guarantor or any Guarantor Representative or from any trustee, fiduciary
or agent therefor; and, prior to the receipt of any such written notice, the
Trustee, subject to the provisions of this Section 2.11, shall be entitled in
all respects to assume that no such facts exist.
(b) The Trustee shall be entitled to rely on the delivery to it and
Guarantor of a written notice by any Guarantor Representative to establish
that such notice has been given by a holder of Senior Indebtedness (or a
trustee, fiduciary or agent therefor); provided, however, that failure to give
such notice to Guarantor shall not affect in any way the right of the Trustee
to rely on such notice. In the event that the Trustee determines in good faith
that further evidence is required with respect to the right of any Person as a
holder of Senior Indebtedness to participate in any payment or distribution
pursuant hereto, the Trustee may request such Person to furnish evidence to
the reasonable satisfaction of the Trustee as to the amount of Senior
Indebtedness held by such Person, the extent to which such Person is entitled
to participate in such payment or distribution and any other facts pertinent
to the rights of such Person hereunder, and if such evidence is not furnished,
the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
2.12 Reliance on Judicial Order or Certificate of Liquidating Agent. Upon
any payment or distribution of assets of Company or Guarantor referred to
herein, the Trustee, and the Noteholders shall be entitled to rely upon any
order or decree entered by any court of competent jurisdiction in which such
insolvency, bankruptcy, receivership, liquidation, reorganization,
dissolution, winding-up or similar case or proceeding is pending, or a
certificate of the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee for the benefit of creditors, agent or other Person making
such payment or distribution, delivered to the Trustee or to the Noteholders,
for the purpose of ascertaining the Persons entitled to participate in such
payment or distribution, the holders of Senior Indebtedness and other
Indebtedness of Company or Guarantor, the amount thereof or payable thereon,
the amount or amounts paid or distributed thereon and all other facts
pertinent thereto.
SECTION 3
REPRESENTATIONS AND WARRANTIES
To induce the Trustee and the Noteholders to accept this Guaranty, Guarantor
hereby represents and warrants that the following statements are true and
correct:
3.1 Corporate Existence. Guarantor is duly organized, validly existing and
in good standing under the laws of the State of Delaware, has full corporate
power and authority to own its assets and properties and to operate its
business as presently owned and conducted, and as proposed to be conducted,
and is qualified to do business and in good standing in every jurisdiction
where its assets are located and wherever necessary to carry out its business
and operations, except where failure to be so qualified or in good standing or
a lack of such corporate power or authority has not had or would not have, in
the aggregate, a material adverse effect.
3.2 Corporate Power; Authorization; Enforceable Obligations. Guarantor has
the corporate power, authority and legal right to execute, deliver and perform
this Guaranty and all obligations required hereunder and has taken all
necessary corporate action to authorize its Guaranty hereunder on the terms
and conditions hereof and its execution, delivery and performance of this
Guaranty and all obligations required hereunder. No consent of any other
Person including, without limitation, stockholders and creditors of Guarantor,
and no license, permit, approval or authorization of, or exemption by, notice
or report to, or registration, filing or
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declaration with, any governmental authority is required by Guarantor in
connection with this Guaranty or the execution, delivery, performance,
validity or enforceability of this Guaranty and all obligations required
hereunder, except for pursuant to the Credit Facilities. This Guaranty has
been, and each instrument or document required hereunder will be, executed and
delivered by a duly authorized officer of Guarantor, and this Guaranty
constitutes, and each instrument or document required hereunder when executed
and delivered hereunder will constitute, the legally valid and binding
obligation of Guarantor, enforceable against Guarantor in accordance with its
terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws or equitable
principles relating to or limiting creditors' rights generally.
3.3 No Legal Bar to this Guaranty. The execution, delivery and performance
of this Guaranty and the documents or instruments required hereunder, and the
use of the proceeds of the borrowings under the Indenture, will not violate
any provision of any existing law or regulation binding on Guarantor, or any
order, judgment, award or decree of any court, arbitrator or governmental
authority binding on Guarantor, or the certificate of incorporation or bylaws
of Guarantor or any securities issued by Guarantor, or any mortgage,
indenture, lease, contract or other agreement, instrument or undertaking to
which Guarantor is a party or by which Guarantor or any of its assets may be
bound, the violation of which would have a material adverse effect on the
business, operations, assets or financial condition of Guarantor and will not
result in, or require, the creation or imposition of any lien on any of its
property, assets or revenues pursuant to the provisions of any such mortgage,
indenture, lease, contract or other agreement, instrument or undertaking.
SECTION 4
MISCELLANEOUS
4.1 Survival of Warranties. All agreements, representations and warranties
made herein shall survive the execution and delivery of this Guaranty and the
Indenture.
4.2 Notices. Any communications between Trustee and Guarantor and any
notices or requests provided herein to be given may be given by mailing the
same, postage prepaid, or by telex, facsimile transmission or cable to each
such party at its address set forth below or to such other addresses as each
such party may in writing hereafter indicate. Any notice, request or demand to
or upon Trustee or Guarantor shall not be effective until received:
TRUSTEE:Corporate Trust Xxxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Corporate Trust Division
(Renal Treatment Centers, Inc., 5 5/8%
Convertible Subordinated Notes due 2006)
GUARANTOR:Total Renal Care Holdings, Inc.
Suite 800
00000 Xxxxxxxxx Xxxxxxxxx
Xxxxxxxx, XX 00000
Attention: Chief Financial Officer
4.3 Severability. In case any provision in or obligation under this Guaranty
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way
be affected or impaired thereby.
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4.4 Amendments and Waivers. No amendment, modification, termination or
waiver of any provision of this Guaranty, and no consent to any departure by
Guarantor therefrom, shall in any event be effective without the written
concurrence of Trustee and, in the case of any such amendment or modification,
Guarantor. Any such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it was given.
4.5 Headings. Section and section headings in this Guaranty are included
herein for convenience of reference only and shall not constitute a part of
this Guaranty for any other purpose or be given any substantive effect.
4.6 Applicable Law. THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF
GUARANTOR, TRUSTEE AND THE NOTEHOLDERS HEREUNDER SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE VALIDITY OR
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN
RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless otherwise defined herein
or in the Indenture, terms used in Article 8 and Article 9 of the Uniform
Commercial Code in the State of New York are used herein as therein defined.
4.7 Successors and Assigns. This Guaranty is a continuing guaranty and shall
be binding upon Guarantor and its successors and assigns. This Guaranty shall
inure to the benefit of Noteholders and their respective successors and
assigns. Guarantor shall not assign this Guaranty or any of the rights or
obligations of Guarantor hereunder without the prior written consent of
Trustee. The terms and provisions of this Guaranty shall inure to the benefit
of any transferee or assignee of any Note transferred or assigned in
accordance with the provisions of the Indenture, and in the event of such
transfer or assignment the rights and privileges herein conferred upon such
Noteholder shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions hereof.
4.8 Consent to Jurisdiction and Service of Process. ALL JUDICIAL PROCEEDINGS
BROUGHT AGAINST GUARANTOR ARISING OUT OF OR RELATING TO THIS GUARANTY, OR ANY
OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN XXX XXXXX, XXXXXX XXX XXXX XX XXX XXXX. BY EXECUTING
AND DELIVERING THIS AGREEMENT, GUARANTOR, FOR ITSELF AND IN CONNECTION WITH
ITS PROPERTIES, IRREVOCABLY:
(a) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION
AND VENUE OF SUCH COURTS;
(b) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(c) DESIGNATES AND APPOINTS CT CORPORATION SERVICES, OR SUCH OTHER
PERSONS LOCATED IN NEW YORK STATE AS MAY HEREAFTER BE SELECTED BY THE
GUARANTOR AND AGREEING IN WRITING TO SO SERVE, AS ITS AGENT TO RECEIVE ON
ITS BEHALF SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDINGS IN ANY SUCH
COURT, SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY THE GUARANTOR TO BE
EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. A COPY OF ANY SUCH PROCESS
SO SERVED SHALL BE MAILED BY REGISTERED MAIL TO THE GUARANTOR AT ITS
ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 4.2 PROVIDED THAT, UNLESS
OTHERWISE PROVIDED BY APPLICABLE LAW, ANY FAILURE TO MAIL SUCH COPY SHALL
NOT AFFECT THE VALIDITY OF SERVICE OF SUCH PROCESS. IF ANY AGENT APPOINTED
BY THE GUARANTOR REFUSES TO ACCEPT SERVICE, THE
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GUARANTOR HEREBY AGREES THAT SERVICE OF PROCESS SUFFICIENT FOR PERSONAL
JURISDICTION IN ANY ACTION AGAINST THE GUARANTOR IN THE STATE OF NEW YORK
MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO
THE GUARANTOR AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 4.2, AND
THE GUARANTOR HEREBY ACKNOWLEDGES THAT SUCH SERVICE SHALL BE EFFECTIVE AND
BINDING IN EVERY RESPECT. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO
BRING PROCEEDINGS AGAINST THE GUARANTOR IN THE COURTS OF ANY OTHER
JURISDICTION; AND
(d) AGREES THAT THE PROVISIONS OF THIS SECTION 4.8 RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE
FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW
SECTION 5-1402 OR OTHERWISE.
4.9 Waiver of Trial Jury. GUARANTOR AND, BY ACCEPTANCE OF THE BENEFITS
HEREOF, TRUSTEE AND EACH NOTEHOLDER, EACH HEREBY AGREES TO WAIVE, TO THE
EXTENT PERMITTED BY LAW, ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS GUARANTY. The scope of this
waiver is intended to be all-encompassing of any and all disputes that may be
filed in any court and that relate to the subject matter of this transaction,
including without limitation contract claims, tort claims, breach of duty
claims and all other common law and statutory claims. Guarantor and, by its
acceptance of the benefits hereof, Trustee and each Noteholder each (i)
acknowledges that this waiver is a material inducement for Guarantor, Trustee
and each Noteholder to enter into a business relationship, that Guarantor,
Trustee and each Noteholder have already relied on this waiver in entering
into this Guaranty or accepting the benefits thereof, as the case may be, and
that each will continue to rely on this waiver in their related future
dealings with respect to the transaction contemplated hereby and (ii) further
warrants and represents that each has reviewed this waiver with its legal
counsel, and that each knowingly and voluntarily waives its jury trial rights
following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING
THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A
MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 4.9 AND EXECUTED
BY GUARANTIED PARTY AND GUARANTOR), AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
GUARANTY. In the event of litigation, this Guaranty may be filed as a written
consent to a trial by the court.
4.10 No Other Writing. This writing is intended by Guarantor, Trustee and
each Noteholder as the final expression of this Guaranty and is also intended
as a complete and exclusive statement of the terms of their agreement with
respect to the matters covered hereby. No course of dealing, course of
performance or trade usage, and no parol evidence of any nature, shall be used
to supplement or modify any terms of this Guaranty. There are no conditions to
the full effectiveness of this Guaranty.
4.11 Further Assurances. At any time or from time to time, upon the request
of Trustee, Guarantor shall execute and deliver such further documents and do
such other acts and things as Trustee may reasonably request in order to
effect fully the purposes of this Guaranty.
4.12 Trustee as Agent.
(a) Trustee has been appointed to act as Trustee hereunder by the
Noteholders. Trustee shall be obligated, and shall have the right hereunder,
to make demands, to give notices, to exercise or refrain from exercising any
rights, and to take or refrain from taking any action, solely in accordance
with this Guaranty and the Indenture.
(b) Trustee shall at all times be the same Person that is Trustee under the
Indenture. Written notice of resignation by Trustee pursuant to Section 8.10
of the Indenture shall also constitute notice of resignation as
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Trustee under this Guaranty; removal of Trustee pursuant to Section 8.10 of the
Indenture shall also constitute removal as Trustee under this Guaranty; and
appointment of a successor Trustee pursuant to Section 8.10 of the Indenture
shall also constitute appointment of a successor Trustee under this Guaranty.
Upon the acceptance of any appointment as Trustee under Section 8.10 of the
Indenture by a successor Trustee, that successor Trustee shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring or removed Trustee under this Guaranty, and the retiring or
removed Trustee under this Guaranty shall promptly (i) transfer to such
successor Trustee all sums held hereunder, together with all records and other
documents necessary or appropriate in connection with the performance of the
duties of the successor Trustee under this Guaranty, and (ii) take such other
actions as may be necessary or appropriate in connection with the assignment to
such successor Trustee of the rights created hereunder, whereupon such retiring
or removed Trustee shall be discharged from its duties and obligations under
this Guaranty. After any retiring or removed Trustee's resignation or removal
hereunder as Trustee, the provisions of this Guaranty shall inure to its
benefit as to any actions taken or omitted to be taken by it under this
Guaranty while it was Trustee hereunder.
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly executed
and delivered by its officer thereunto duly authorized as of the date first
written above.
TOTAL RENAL CARE HOLDINGS, INC.
By: _________________________________
Name:
Title:
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