GUARANTY
Exhibit 10.4
THIS GUARANTY (“Guaranty”) dated as of August 10, 2007, by ADVOCAT INC., a Delaware
corporation (“Guarantor”), is to and for the benefit of LASALLE BANK NATIONAL ASSOCIATION, a
national banking association (together with its successors and assigns, the “Lender”).
R E C I T A L S:
A. DIVERSICARE MANAGEMENT SERVICES CO., a Tennessee corporation, (together with each (i) of
the other borrowers set forth on Schedule 1 to the Loan Agreement (as defined below) and (ii)
additional borrowers from time to time party to the Loan Agreement (whether pursuant to an
amendment, written joinder or otherwise), individually and collectively referred to herein as,
“Borrower”, has requested that the Lender make certain revolving loans and a term loan
(individually and collectively, the “Loan”) to Borrower pursuant to and in accordance with that
certain Loan and Security Agreement dated of even date herewith by and among Borrower and the
Lender (as the same may be amended, supplemented, amended and restated or otherwise modified from
time to time, the “Loan Agreement”); capitalized terms used but not defined herein shall have the
meanings ascribed thereto in the Loan Agreement.
B. As security for repayment of the Loan, in addition to this Guaranty, certain other loan
and security documents have been executed and delivered to the Lender. The Loan Agreement, the
Revolving Credit Note, the Term Loan Note, the Blocked Account Agreements, this Guaranty, each
other guaranty delivered in favor of the Lender in connection with the Loan Agreement, and any and
all other instruments, agreements, and documents executed in conjunction herewith and therewith
(including, without limitation, each of the “Financing Agreements” (as defined in the Loan
Agreement)) are hereinafter sometimes collectively referred to herein as the “Loan Documents.”
C. The Guarantor and Borrower are Affiliates of each other. Guarantor will derive substantial
direct and indirect benefit (financial and otherwise) from the Loan made to Borrower under the Loan
Agreement. The Guarantor desires to induce the Lender to make the Loan to Borrower.
D. Lender is unwilling to make the Loan pursuant to the Loan Agreement unless Guarantor
guarantees the payment of the principal and interest and all other amounts due or owing to the
Lender provided in the Loan Agreement and other Loan Documents and the performance by Borrower of
all of the covenants on Borrower’s part to be performed and observed pursuant to the terms thereof,
and Guarantor has agreed to execute and deliver this Guaranty to Lender for its benefit.
NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION RECEIVED, the adequacy and sufficiency of
which is hereby acknowledged, and in further consideration of any advances, credit or other
financial accommodation heretofore, now or that may hereafter at any time be extended to Borrower
by Lender under, pursuant to or in connection with the Loan Documents, (a) Guarantor hereby,
jointly and severally, together with each Other Guarantor (as defined in Section 3 below), and,
unconditionally and irrevocably, guarantees,
irrespective of the validity or enforceability of any instrument, writing or agreement
relating to or the subject of any such advances, financial accommodation or loans (including, but
not limited to, the Loan Documents), and whether or not due or to become due before or after any
bankruptcy or insolvency proceeding involving Borrower or would have become due but for Borrower’s
bankruptcy proceeding, (i) the full and prompt payment to Lender at maturity, whether by
acceleration or otherwise, and at all times thereafter of any and all “Liabilities” (as defined in
the Loan Agreement) of every kind and nature of Borrower to Lender (arising out of or in connection
with the Loan, the Loan Agreement, and each of the other Loan Documents to which Borrower (or any
of its Affiliates) is a party, including, without limitation, for principal, interest, charges,
fees, costs, expenses or otherwise), and whether or not due or to become due before or after any
bankruptcy or insolvency proceeding involving Borrower or would have become due but for Borrower’s
bankruptcy proceeding, howsoever evidenced, whether now existing or hereafter created or arising,
directly or indirectly, primary or secondary, absolute or contingent, due or to become due, and
howsoever owned, held or acquired, whether through discount, overdraft, purchase, direct loan or as
collateral, or otherwise, and (ii) the prompt, full and faithful performance and discharge by
Borrower of each and every of the terms, conditions, agreements, covenants, representations and
warranties on the part of Borrower contained in any agreement, the Loan Agreement and each of the
other Loan Documents to which Borrower is a party, and any other promissory notes, loan agreements,
or security agreements, or in any modification or addenda thereto or substitution thereof in
connection with any advance, credit or financial accommodation afforded by Lender to Borrower
(collectively the “Guaranteed Liabilities”); and (b) Guarantor further agrees to pay all costs and
expenses, legal and/or otherwise (including, but not limited to, court costs and reasonable
attorneys’ fees and expenses), paid or incurred by Lender in endeavoring to collect the Guaranteed
Liabilities, the Extraordinary Claims (as hereinbelow defined), or in either case, any part
thereof, or in enforcing this Guaranty or in defending any suit based on any act of commission or
omission of Lender with respect to the Indebtedness, the Collateral (as defined in the Loan
Agreement), or this Guaranty or in connection with any Recovery Claim (as hereinbelow defined) (the
“Enforcement Costs”); and (c) Guarantor further agrees to pay any and all costs, losses, damages
and reasonable attorney’s fees incurred by the Lender in connection with any of the following: (i)
misapplication or misappropriation of any insurance or condemnation proceeds; and (ii) Borrower or
Guarantor institutes or becomes by virtue of a counterclaim a party to any case, action, suit, or
proceeding which reduces, impedes or impairs Lender’s right of recourse to the Collateral or any
part thereof or Borrower or Guarantor engages in any act, omission, or misrepresentation which has
the effect of suspending, delaying, reducing, impeding, or impairing the Lender’s right of recourse
to the Collateral or any part thereof (each of the aforesaid are collectively referred to as an
“Extraordinary Claims”). The Guaranteed Liabilities, the Enforcement Costs, and the Extraordinary
Claims are collectively referred to as the “Guaranteed Obligations.” Capitalized terms used
herein and not otherwise defined herein shall have the meaning given to them in the Loan Agreement.
Guarantor hereby further agrees as follows:
1. Continuing Guaranty. This Guaranty includes any and all Guaranteed Obligations
arising under successive transactions continuing, compromising, extending, increasing, modifying,
releasing, or renewing
the Guaranteed Obligations, changing the interest rate, payment terms, or other terms and
conditions thereof, or creating new or additional
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Guaranteed Obligations after prior Guaranteed
Obligations have been satisfied in whole or in part. To the maximum extent permitted by law,
Guarantor hereby waives any right to revoke this Guaranty as to future Liabilities. If such a
revocation is effective notwithstanding the foregoing waiver, Guarantor acknowledges and agrees
that (a) no such revocation shall be effective until written notice thereof has been received by
Lender, (b) no such revocation shall apply to any Guaranteed Obligations in existence on such date
(including, but not limited to, any subsequent continuation, extension, or renewal thereof, or
change in the interest rate, payment terms, or other terms and conditions thereof), (c) no such
revocation shall apply to any Guaranteed Obligations made or created after such date to the extent
made or created pursuant to a legally binding commitment of Lender in existence on the date of such
revocation, (d) no payment by Guarantor, Borrower, or from any other source, prior to the date of
such revocation shall reduce the maximum obligation of Guarantor hereunder, and (e) any payment by
Borrower or from any source other than Guarantor, subsequent to the date of such revocation, shall
first be applied to that portion of the Guaranteed Obligations as to which the revocation is
effective and which are not, therefore, guaranteed hereunder, and to the extent so applied shall
not reduce the maximum obligation of Guarantor hereunder.
2. Performance Under This Guaranty. If Borrower fails to make any payment of any
Guaranteed Obligations on or before the due date thereof and after the expiration of the applicable
notice and cure period, if any, or if Borrower shall fail, after the expiration of the applicable
notice and cure period, if any, to perform, keep, observe, or fulfill any other obligation,
covenant or agreement referred to or contained in any instrument, writing, document or agreement
relating to the Guaranteed Obligations, Guarantor immediately shall cause such payment to be made
or each of such obligations to be performed, kept, observed, or fulfilled to the extent such
obligations constitute Guaranteed Obligations.
3. Primary Obligations. This Guaranty is a primary and original obligation of
Guarantor, is not merely the creation of a surety relationship, and is an absolute, unconditional,
and continuing guaranty of payment and performance and not of collection which shall remain in full
force and effect without respect to future changes in conditions, including any change of law or
any invalidity or irregularity with respect to the issuance of any instrument, writing or agreement
relating to the Guaranteed Obligations. Guarantor agrees that Guarantor is directly and severally
with any other guarantors of the Guaranteed Obligations liable to Lender, that the obligations of
Guarantor hereunder are independent of the obligations of Borrower or any other guarantor, and that
a separate action may be brought against Guarantor whether such action is brought against Borrower
or any other guarantor of Borrower’s Indebtedness, obligations or liabilities to Lender (each an
“Other Guarantor”) or whether Borrower or any such Other Guarantor is joined in such action.
Guarantor agrees that Guarantor’s liability hereunder shall be immediate and shall not be
contingent upon the exercise or enforcement of any lien, security interest, mortgage or realization
upon any security or collateral Lender may at any time possess. Guarantor agrees that any release
which may be given by Lender to Borrower or any Other Guarantor shall not release Guarantor.
Guarantor consents and agrees that Lender shall be under no obligation to marshal
any assets of Borrower or any Other Guarantor in favor of said Guarantor, or against or in
payment of any or all of the Guaranteed Obligations.
4. Return of Payments. Guarantor agrees that, if at any time all or any part of any
payment theretofore applied by Lender to any amounts due under the Loan or the Loan
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Agreement is
rescinded or returned by Lender for any reason whatsoever (including, without limitation, the
insolvency, bankruptcy, liquidation or reorganization of any party), such amounts shall, for the
purposes of this Guaranty, be deemed to have continued in existence to the extent of such payment,
notwithstanding such application by Lender and this Guaranty shall continue to be effective or be
reinstated, as the case may be, as to such amounts due under the Loan and the Loan Agreement, all
as though such application by Lender had not been made.
5. Waivers.
(a) Guarantor hereby waives: (1) notice of acceptance hereof; (2) notice of any Loan or other
financial accommodations made or extended to Borrower or the creation or existence of any
Guaranteed Obligations; (3) notice of the amount of the Guaranteed Obligations, subject, however,
to Guarantor’s right to make inquiry of Lender to ascertain the amount of the Guaranteed
Obligations at any reasonable time; (4) notice of any adverse change in the financial condition of
Borrower or of any other fact that might increase Guarantor’s risk hereunder; (5) notice of
presentment for payment, demand, protest, and notice thereof as to any promissory notes or other
instruments, writing or agreements evidencing Guaranteed Obligations; (6) notice of any event of
default by Borrower under any instrument, writing or agreement with Lender including the Loan
Documents; and (7) all other notices (except if such notice is specifically required to be given to
Guarantor hereunder) and demands to which Guarantor might otherwise be entitled.
(b) Guarantor hereby waives the right by statute or otherwise to require Lender to institute
suit against Borrower or under any other guaranty; or to exhaust any rights and remedies which
Lender has or may have against Borrower or under any other guaranty; provided,
however, that nothing herein contained shall prevent Lender from suing on the Loan
Agreement or foreclosing any security interest or lien created by any of the other Loan Documents,
or from exercising any other rights thereunder, and if such commercial code sale or other remedy is
availed of, only the net proceeds therefrom, after deduction of all charges and expenses of every
kind and nature whatsoever relating to the proceedings or sale, shall be applied in reduction of
the amount due on the Loan Agreement and other Loan Documents, and Lender shall not be required to
institute or prosecute proceedings to cover any deficiency as a condition of any payment hereunder
or enforcement hereof. At any sale of the security or collateral for the Loan, or any part
thereof, whether by commercial code sale or otherwise, Lender may, at its discretion, purchase all
or any part of such collateral offered for sale, for its own account, and may apply against the
amount bid therefore the balance due it pursuant to the terms of the Loan Agreement and other Loan
Documents. Guarantor further agrees that Guarantor is bound to the payment of all Guaranteed
Obligations, whether now existing or hereafter accruing, as fully as if such Guaranteed Obligations
were directly owing to Lender by Guarantor. Guarantor further waives
any defense arising by reason of any disability or other defense (other than the defense that
the Guaranteed Obligations shall have been fully and finally performed and indefeasibly paid) of
Borrower or by reason of the cessation from any cause whatsoever of the liability of Borrower in
respect thereof. Guarantor consents to any and all forbearances and extensions of the time of
payment of the Loan Agreement or any of the other Loan Documents, and to any and all changes in the
terms, covenants and conditions thereof hereafter made or granted, and to any part of the
collateral therefor; it being the intention and agreement hereof that Guarantor shall remain
unconditionally liable as a principal as, to and until the Guaranteed Obligations shall have been
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fully repaid to Lender, and the terms, covenants and conditions of the Loan Agreement and of the
other Loan Documents and all other notes, instruments, writing or agreements evidencing or securing
the Guaranteed Obligations shall have been fully performed and observed, notwithstanding any act,
omission or thing which might otherwise operate as a legal or equitable discharge of Borrower or
Guarantor.
(c) Guarantor hereby waives: (1) any rights to assert against Lender any defense (legal or
equitable), setoff, counterclaim, or claim which Guarantor may now or at any time hereafter have
against Borrower or any other party liable to Lender (other than the defense that the Guaranteed
Obligations shall have been fully and finally performed and indefeasibly paid); and (2) any
defense, setoff, counterclaim, or claim, of any kind or nature, arising directly or indirectly from
the present or future lack of perfection, sufficiency, validity, or enforceability of the
Guaranteed Obligations or any security therefor (including, but not limited to, any of the Loan
Documents). Without limiting the generality of the foregoing or any other provisions of this
Guaranty, Guarantor agrees that this Guaranty shall not be discharged, limited, impaired or
affected by: (a) the transfer of all or any part of the personal property or real property
described in any of the Loan Documents; (b) any sale, pledge, surrender, indulgence, alteration,
substitution, exchange, modification or other disposition of any of the Guaranteed Obligations, all
of which Lender is expressly authorized to make from time to time; (c) any failure, neglect or
omission on the part of Lender to realize or protect any of the Guaranteed Obligations, or any
personal property or real property or lien security given as security therefor, or to exercise any
lien upon or right of appropriation of monies, credits or property of Borrower toward liquidation
of the Indebtedness, or performance of the covenants guaranteed hereby; and (d) any proceedings
with respect to the voluntary or involuntary liquidation, dissolution, sale or other disposition of
all or substantially all the assets, the marshaling of assets and liabilities, receivership,
insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement,
imposition or readjustment of, or other similar proceedings affecting Borrower or any Other
Guarantor or any of their respective assets, it being expressly understood and agreed that no such
proceeding shall affect, modify, limit or discharge the liability or obligation of Guarantor
hereunder in any manner whatsoever, and that Guarantor shall continue to remain absolutely liable
under this Guaranty to the same extent, and in the same manner, as if such proceedings had not been
instituted.
(d) Guarantor hereby waives any right of subrogation Guarantor has or may have as against
Borrower until all preference periods under all applicable laws have expired. In addition,
Guarantor hereby waives any right to proceed against Borrower, now or hereafter for contribution,
indemnity, reimbursement and any other suretyship rights and claims, whether direct or indirect,
liquidated or contingent, whether arising under express or implied contract or
by operation of law, which Guarantor may now have or hereafter have as against Borrower.
Until the Guaranteed Obligations are indefeasibly paid in full hereunder, Guarantor also hereby
waives any right to recourse to or with respect to any asset of Borrower. Guarantor agrees that in
light of the immediately foregoing waivers, the execution of the Guaranty shall not be deemed to
make Guarantor a “creditor” of Borrower, and that for purposes of Sections 547 and 550 of the
Bankruptcy Code, Guarantor shall not be deemed a “creditor” of Borrower.
6. Releases. No release or discharge of the Other Guarantor, or of any other person
or entity, whether primarily or secondarily liable for or obligated with respect to the Guaranteed
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Obligations, or the institution of bankruptcy, receivership, insolvency, reorganization,
dissolution or liquidation proceedings by or against the Other Guarantor or any other person or
entity, or the entry of any restraining or other order in any such proceeding, shall release or
discharge Guarantor, unless and until all of the Guaranteed Obligations shall have been fully paid.
Notwithstanding anything to the contrary contained herein, Lender agrees that the obligations of
Guarantor under this Guaranty shall terminate, subject to Sections 4 and 8 hereof, at the earlier
of such time as (a) Lender shall have received indefeasible payment in full in cash of all
Guaranteed Liabilities and all other Guaranteed Obligations under this Guaranty and all financing
arrangements and accommodations between Borrower and Lender shall have been irrevocably terminated
and Lender has no obligations to make any loans, financial accommodations or advance any funds to
Borrower which could constitute Liabilities. Release of this Guaranty, if it occurs, however,
shall not affect, in any respect, the Loan or any other instrument securing or guarantying the
Loan.
7. Right of Setoff. Guarantor agrees that Lender has all rights of setoff and
banker’s liens provided by applicable law. Following any default by Guarantor hereunder or an
Event of Default by Borrower under the Loan Agreement, any and all moneys, credits, deposits,
accounts, or other property belonging to the Guarantor in transit to or in the possession or under
the control of Lender, or any agent or bailee of Lender, may, without notice and opportunity to be
heard, be setoff against, and appropriated and applied against and towards the payment of any and
all of the liabilities of Guarantor under this Guaranty. Following any default by Guarantor
hereunder or an Event of Default by Borrower under the Loan Agreement, subject to the terms of the
Intercreditor Agreements, Guarantor does hereby assign and transfer to Lender any and all cash,
negotiable instruments, documents of title, chattel paper, securities, certificates of deposit,
deposit accounts, other cash equivalents and other assets of said Guarantor in transit to, or in
the possession or control of Lender, or any agent or bailee of Lender for any purpose and to apply
the same on any or all of the Guaranteed Obligations. The rights of the Lender under this Section
are in addition to all other rights and remedies which the Lender may otherwise have in equity or
at law.
8. Recovery Claim. Should a claim (“Recovery Claim”) be made upon Lender at any time
for recovery of any amount received by Lender in payment of the Guaranteed Obligations (whether
received
from Borrower, Guarantor pursuant hereto, or otherwise) and should Lender repay all or part of
said amount by reason of (a) any judgment, decree, or order of any court or administrative body
having jurisdiction over Lender or any of its property; or (b) any reasonable settlement or
compromise of any such Recovery Claim effected by Lender with the claimant (including Borrower),
Guarantor shall remain liable to Lender for the amount so repaid to the same extent as if such
amount had never originally been received by Lender, notwithstanding any termination hereof or the
return of this document to Guarantor or the cancellation of any note or other instrument evidencing
any of the Indebtedness.
9. Assignments. In the event Lender shall sell, assign or transfer the Guaranteed
Obligations, or any part hereof, or grant participations therein, each and every immediate or
remote successive assignee, transferee, holder of or participant or other interests therein, of all
or any part of the Guaranteed Obligations shall have the right to enforce this Guaranty by suit or
otherwise for the benefit of such assignee, transferee, holder or participant, as fully as if such
assignee, transferee, holder or participant were herein by name specifically given such rights,
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powers and benefits; but Lender shall have an unimpaired, prior and superior right to enforce this
Guaranty for its benefit as to so much of the guaranteed debt as it has not sold, assigned or
transferred.
10. Representations and Warranties. Guarantor agrees that the following shall
constitute representations and warranties of Guarantor to Lender, which shall survive the execution
and delivery hereof, and that Lender intends to make the Loan and other financial accommodations,
if any, guaranteed hereby in reliance thereon:
(a) Guarantor is not in default under any agreement to which Guarantor is a party, the effect
of which will materially impair performance by the Guarantor of Guarantor’s obligations pursuant to
and as contemplated by the terms of this Guaranty, and neither the execution and delivery of this
Guaranty nor compliance with the terms and provisions of this Guaranty, will violate any law or any
presently existing regulation, order, writ, injunction or decree of any court or governmental
department, commission, board, bureau, agency or instrumentality, will conflict or will be
inconsistent with, or will result in any breach of, any of the terms, covenants, conditions or
provisions of, or constitute a default under, any indenture, mortgage, deed of trust, instrument,
document, agreement or contract of any kind which creates, represents, evidences or provides for
any lien, charge or encumbrance upon any of the property or assets of the Guarantor, or any other
indenture, mortgage, deed of trust, instrument, document, agreement or contract of any kind to
which Guarantor is a party or by which Guarantor may be bound of which the Guarantor is a party or
by which Guarantor may be bound, or in the event of any such conflict, the required consent or
waiver of the other party or parties thereto has been validly granted, is in full force and effect
and is valid and sufficient therefor. This Guaranty is the legal, valid and binding obligation of
the Guarantor and is enforceable against the Guarantor in accordance with its terms.
(b) Except as set forth on Schedule 10(b) hereof, there are no actions, suits or
proceedings pending or to the best of Guarantor’s knowledge threatened against the Guarantor
before any court or any governmental, administrative, regulatory, adjudicatory or
arbitrational body or agency of any kind which will materially adversely affect performance by the
Guarantor of Guarantor’s obligations pursuant to and as contemplated by the terms and provisions of
this Guaranty.
(c) Neither this Guaranty nor any document, financial statement (other than those of the SMSA
Parties), credit information, written certificate or written statement heretofore furnished or
required herein to be furnished to Lender by the Guarantor contains any untrue statement of
material fact or omits to state a fact material to this Guaranty.
(d) Guarantor is currently informed of the financial condition of Borrower and of all other
circumstances which a diligent inquiry would reveal and which would bear upon the risk of
nonpayment of the Guaranteed Obligations. Guarantor will continue to keep informed of the
financial condition of Borrower and of all other circumstances which bear upon the risk of
nonpayment or nonperformance of the Guaranteed Obligations.
(e) As of the date hereof, the present fair saleable value of Guarantor’s assets is greater
than the amount required to pay Guarantor’s total Indebtedness (contingent or otherwise),
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and is
greater than the amount that will be required to pay such Indebtedness as it matures and as it
becomes absolute and matured. The transactions contemplated hereby were effectuated without actual
intent to hinder, delay or defraud present or future creditors of Guarantor; it is Guarantor’s
express intention that Guarantor will maintain a Solvent financial condition, giving effect to the
Guaranteed Obligations incurred hereunder, as long as any of the Guaranteed Obligations remain
outstanding or Guarantor is obligated to Lender in any other manner whatsoever. At all times until
the Guaranteed Obligations remain satisfied and paid in full, the Guarantor shall keep and maintain
assets sufficient to honor and pay any and all of the Guaranteed Obligations as and when due,
subject to any express monetary limitation set forth herein.
11. Subordination. Any rights of Guarantor, whether now existing or later arising, to
receive payment on account of any Indebtedness (including interest) owed to Guarantor by Borrower,
or to withdraw capital invested by Guarantor in Borrower, if any, or to receive and retain
distributions from Borrower if and solely as expressly provided in the Loan Agreement, shall at all
times be subordinate as to Lien and time of payment, and in all other respects to the full and
prior repayment to Lender of all of the Liabilities owing to Lender pursuant to the Loan Agreement
and the other Loan Documents (including, without limitation, the Loan). Except for dividends or
distributions permitted by Section 9.9 of the Loan Agreement, Guarantor shall not be entitled to
enforce or receive payment of any sums hereby subordinated until the Loan have been paid and
performed in full, and any such sums received in violation of this Guaranty shall not be commingled
with other monies of Guarantor and shall be received by Guarantor in trust for Lender.
12. Payments; Application. All payments to be made hereunder by Guarantor shall be made in lawful money of the United
States of America at the time of payment, shall be made in immediately available funds, and shall
be made without deduction (whether for taxes or otherwise) or offset. All payments made by
Guarantor hereunder shall be applied as follows; first, to all costs and expenses (including, but
not limited to, reasonable attorneys’ fees, expenses and court costs) incurred by Lender in
enforcing this Guaranty or in collecting the Guaranteed Obligations; second, to all accrued and
unpaid interest and fees owing to Lender constituting Guaranteed Obligations; and third, to the
balance of the Guaranteed Obligations.
13. [Intentionally Omitted]
14. Notices. Any notice or other communication required or permitted under this
Guaranty shall be in writing and personally delivered, mailed by registered or certified U.S. mail
(return receipt requested and postage prepaid), sent by telecopier (with a confirming copy sent by
regular mail), or sent by prepaid nationally recognized overnight courier service, and addressed to
the relevant party at its address set forth below, or at such other address as such party may, by
written notice, designate as its address for purposes of notice under this Guaranty:
If to Lender, at:
LaSalle Bank National Association
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
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Attention: Xxxx Xxxxx
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
With a copy to:
Xxxxx Xxxxxx LLP
000 Xxxx Xxxxxx Xx. — Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telephone No: 000-000-0000
Facsimile No: 000-000-0000
000 Xxxx Xxxxxx Xx. — Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telephone No: 000-000-0000
Facsimile No: 000-000-0000
If to Guarantor, at:
Advocat Inc.
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx Xxxxxx
Telephone No.: 000-000-0000
Facsimile No.: 615-771-7409
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx Xxxxxx
Telephone No.: 000-000-0000
Facsimile No.: 615-771-7409
With a copy to:
Xxxxxxx Xxxxxx Xxxx Xxxxxxx & Manner
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxx X. Xxxxxx XX
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxx X. Xxxxxx XX
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
If mailed, notice shall be deemed to be given three (3) days after being sent, and if sent by
personal delivery, telecopier, or prepaid courier, notice shall be deemed to be given when
delivered.
15. Cumulative Remedies. No remedy under this Guaranty is intended to be exclusive of
any other remedy, but each and every remedy shall be cumulative and in addition to any and every
other remedy given hereunder and those provided by law or in equity. No delay or omission by
Lender to exercise any right under this Guaranty shall impair any such right nor be construed to be
a waiver thereof. No failure on the part of Lender to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise of any other right.
16. Financial Information. Without limiting anything contained in this Guaranty,
Guarantor agrees that, so long as any of the Guaranteed Obligations remain outstanding, Guarantor
shall deliver to Lender, upon Lender’s written request and to the extent not included in
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the
Guarantor’s public filings with the United States Securities and Exchange Commission, on at least
an annual basis, and at such other times as Lender may reasonably request, (i) financial statements
(showing all changes in Guarantor’s financial condition which occurred during the preceding fiscal
year and Guarantor’s current financial position), (ii) federal and state tax returns of Guarantor,
as applicable, and (iii) such other financial information as Lender may reasonably request. Copies
of annual tax returns shall be delivered to Lender upon Lender’s written request therefore. The
failure of Guarantor to perform or observe any of its obligations hereunder within the period of
time specified in any notice from Lender to Guarantor, which notice shall in no event be less than
five (5) business days, advising Guarantor of such failure, shall constitute a default under this
Guaranty and an Event of Default under the Loan Agreement and the other Loan Documents.
17. Books and Records. Guarantor agrees that Lender’s books and records showing the
Liabilities between Lender and Borrower shall be admissible in any action or proceeding and shall
be binding upon Guarantor for the purpose of establishing the items therein set forth and shall
constitute prima facie proof thereof absent manifest error.
18. Interpretation and Severability of Provisions. The headings of sections and
paragraphs in this Guaranty are for convenience of reference only and shall not be construed in any
way to limit or define the content, scope or intent of the provisions hereof. As used in this
Guaranty, the singular shall include the plural, and masculine, feminine and neuter pronouns shall
be fully interchangeable, where the context so requires. Whenever the words “including”, “include
or includes” are used in this Guaranty, they should be interpreted in a non-exclusive manner as
though the words “, without limitation,” immediately followed the same. Wherever possible, each
provision of this Guaranty shall be interpreted in such manner as to be effective and valid under
applicable law. If any provision of this Guaranty is prohibited or unenforceable under applicable
law, such provision shall be ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof. As used herein, except in circumstances
where under the Loan Documents the term is intended to mean or refer to all of the Borrowers or all
of the Credit Parties on a consolidated basis, the term “Borrower” refers to any one or all of the
Borrowers under the Loan Agreement, as applicable, provided, however, in the event of any
disagreement between Lender and Guarantor as to whether or not a reference to Borrower means any or
all of such Borrower(s) individually or collectively herein, and the circumstances are not covered
by the Loan Documents, the Lender shall in reasonable good faith make such determination.
19. Bankruptcy. So long as any Guaranteed Obligations shall be owing to Lender,
Guarantor shall file in any bankruptcy or other proceeding against Borrower in which the filing of
claims is required or permitted by law all claims which Guarantor may have against Borrower
relating to any Indebtedness of Borrower to Guarantor and will assign to Lender all rights of
Guarantor thereunder. If Guarantor does not file any such claim, Lender, as attorney-in-fact for
Guarantor, is hereby authorized to do so in the name of Guarantor or, in Lender’s discretion, to
assign the claim to a nominee and to cause proof of claim to be filed in the name of Lender’s
nominee. The foregoing power of attorney is coupled with an interest and cannot be revoked.
Lender or its nominee shall have the sole right to accept or reject any plan proposed in such
proceeding and to take any other action which a party filing a claim is entitled to do. In all
such cases, whether in administration, bankruptcy or otherwise, the person or persons authorized to
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pay such claim shall pay to Lender the amount payable on such claim and, to the full extent
necessary for that purpose, Guarantor hereby assigns to Lender all of Guarantor’s rights to any
such payments or distributions to which Guarantor would otherwise be entitled; provided, however,
Guarantor’s obligations hereunder shall not be satisfied except to the extent that Lender receives
cash by reason of any such payment or distribution. If Lender receives anything hereunder other
than cash, the same shall be held as collateral for amounts due under this Guaranty. At such time
as all Guaranteed Obligations have been fully paid, any sums or other collateral received by Lender
pursuant to this Section 19 remaining in the possession of Lender shall be paid or delivered to
Guarantor.
20. Additional and Independent Obligations. Guarantor’s obligations under this
Guaranty are in addition to Guarantor’s obligations under any other existing or future guaranties,
each of which shall remain in full force and effect until it is expressly modified or released in a
writing signed by Lender. Guarantor’s obligations under this Guaranty are independent of those of
Borrower and any Other Guarantor. Lender may
bring a separate action against Guarantor without first proceeding against Borrower, any Other
Guarantor, any other person or entity or any security that Lender may hold, and without pursuing
any other remedy. Lender’s rights under this Guaranty shall not be exhausted by any action by
Lender until all of the Indebtedness, liabilities and obligations owing to Lender pursuant to the
Loan Agreement and the other Loan Documents (including, without limitation, the Loan and other
Liabilities) have been indefeasibly paid in full in cash and otherwise performed in full and all
financing arrangements and accommodations between Borrower and Lender shall have been irrevocably
terminated and Lender has no obligations to make any loans, financial accommodations or advance any
funds to Borrower which could constitute Liabilities.
21. Costs and Expenses. If any lawsuit is commenced which arises out of or which
relates to this Guaranty, the Loan Documents or the Loan, including, without limitation, any
insolvency, bankruptcy or similar proceeding, Guarantor agrees to pay all of Lender’s costs and
expenses, including, without limitation, reasonable attorneys’ fees which may be incurred in any
effort to collect or enforce any term of this Guaranty. From the time(s) incurred until paid in
full to Lender, all sums shall bear interest at the “Default Rate” set forth in the Loan Agreement.
22. Entire Agreement; Amendments; Other Agreements. This Guaranty constitutes the
entire agreement between Guarantor and Lender pertaining to the subject matter contained herein,
and may not be altered, amended, or modified, nor may any provision hereof be waived or
noncompliance therewith consented to, except by means of a writing executed by Guarantor as to
which such consent or waiver is applicable and by Lender. Any such alteration, amendment,
modification, waiver, or consent shall be effective only to the extent specified therein and for
the specific purpose for which it is given. No course of dealing and no delay or waiver of any
right or default under this Guaranty shall be deemed a waiver of any other similar or dissimilar
right or default or otherwise prejudice the rights and remedies hereunder. The Guarantor shall not
enter into any agreement containing any provision which would be violated or breached by the
performance of Guarantor’s obligations hereunder or which would violate or breach any provision
hereof, or that would or is reasonably likely to adversely affect the Lender’s interests or rights
under this Guaranty. Time is of the essence for the payment and performance of this Guaranty. The
recitals hereto are hereby made a part of and incorporated into this Guaranty by this reference
thereto. A signature delivered or sent by facsimile or other
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electronic transmission shall be as
legally binding and enforceable as a signed original for any and all purposes.
23. Successors and Assigns. This Guaranty shall be binding upon Guarantor’s
representatives, heirs, legal beneficiaries, successors, and assigns, as applicable, and shall
inure to the benefit of the successors and assigns of Lender; provided, however, Guarantor shall
not be permitted to assign this Guaranty or any of Guarantor’s rights, liabilities or obligations
hereunder without the prior written consent of the Lender. In the event of the dissolution,
bankruptcy or failure to maintain a Solvent financial condition, as applicable, of the Guarantor,
the Loan Agreement and any and all
sums due thereunder, along with all of the other Guaranteed Obligations, shall at once,
without any notice or demand from Lender, be due and payable.
24. SUBMISSION OF JURISDICTION. THE GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(a) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
GUARANTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT HEREOF, TO THE
NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS, THE COURTS OF THE UNITED
STATES OF AMERICA FOR THE NORTHERN DISTRICT OF ILLINOIS AND APPELLATE COURTS FROM ANY THEREOF;
(b) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND WAIVES TO
THE FULLEST EXTENT PERMITTED BY LAW IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING (i) ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY
SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO
PLEAD OR CLAIM THE SAME, (ii) THE RIGHT TO ASSERT OR IMPOSE ANY CLAIM, NONCOMPULSORY SET-OFF,
COUNTERCLAIM OR CROSS-CLAIM IN RESPECT THEREOF IN SUCH PROCEEDING; PROVIDED, HOWEVER, THIS WAIVER
DOES NOT PRECLUDE THE RIGHT TO ASSERT A DEFENSE IN SUCH ACTION OR PROCEEDING OR TO ASSERT OR IMPOSE
ANY CLAIM, COUNTERCLAIM OR CROSS-CLAIM WHICH THE GUARANTOR WISHES TO PURSUE IN A SEPARATE
PROCEEDING AT ITS SOLE COST AND EXPENSE, AND (iii) ALL STATUTES OF LIMITATIONS WHICH MAY BE
RELEVANT THERETO; AND
(c) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING
A COPY THEREOF BY CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID,
RETURN RECEIPT REQUESTED, TO THE GUARANTOR AT ITS ADDRESS SET FORTH ABOVE OR AT SUCH OTHER ADDRESS
OF WHICH THE LENDER SHALL HAVE BEEN NOTIFIED PURSUANT THERETO. THE GUARANTOR AGREES THAT SUCH
SERVICE, TO THE FULLEST EXTENT PERMITTED BY LAW (i) SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE
SERVICE OF PROCESS UPON THE GUARANTOR IN ANY SUIT, ACTION OR PROCEEDING, AND (ii) SHALL BE TAKEN
AND HELD TO BE VALID PERSONAL SERVICE UPON AND PERSONAL DELIVERY TO THE GUARANTOR.
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NOTHING HEREIN
SHALL AFFECT THE LENDER’S RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR LIMIT THE
LENDER’S RIGHT TO BRING PROCEEDINGS AGAINST THE GUARANTOR OR ITS PROPERTY IN ANY COURT OR ANY OTHER
JURISDICTION.
25. GOVERNING LAW. THIS GUARANTY SHALL BE CONSTRUED IN ALL RESPECTS IN ACCORDANCE
WITH, AND ENFORCED AND GOVERNED BY THE INTERNAL LAWS
OF THE STATE OF ILLINOIS, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.
26. JURY TRIAL. THE GUARANTOR AND THE LENDER HEREBY IRREVOCABLY AND KNOWINGLY WAIVE
(TO THE FULLEST EXTENT PERMITTED BY LAW) ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
(INCLUDING, WITHOUT LIMITATION, ANY COUNTERCLAIM) ARISING OUT OF THIS GUARANTY OR ANY OTHER
AGREEMENTS OR TRANSACTIONS RELATED HERETO, INCLUDING, WITHOUT LIMITATION, ANY ACTION OR PROCEEDING
(A) TO ENFORCE OR DEFEND ANY RIGHTS UNDER OR IN CONNECTION WITH THIS GUARANTY OR ANY INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH, OR
(B) ARISING FROM ANY DISPUTE OR CONTROVERSY IN CONNECTION WITH OR RELATED TO THIS GUARANTY. THE
LENDER AND THE GUARANTOR AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND
NOT A JURY.
27. No Pledge of Equity. Guarantor agrees that, so long as any of the Guaranteed
Obligations remain outstanding, Guarantor shall remain the owner (either directly or through one of
its Subsidiaries) of 100% of the equity in each Borrower; and without the prior written consent of
Lender, Guarantor shall not assign, sell, convey, gift, transfer, pledge, hypothecate, grant a
security interest in, encumber or in any other manner permit any lien (other than Permitted Liens)
to exist in or on, all or any portion of the equity in or of any Borrower, except for those pledges
to Capmark and the Omega Senior Lessors in effect on the date hereof.
28. REVIEW BY GUARANTOR. The Guarantor acknowledges that Guarantor has thoroughly
read and reviewed the terms and provisions of this Guaranty, and that such terms and provisions are
clearly understood by the Guarantor, and has been fully and unconditionally consented to by the
Guarantor with the full benefit and advice of counsel chosen by the Guarantor.
[Signature Page Follows]
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Exhibit 10.4
IN WITNESS WHEREOF, Guarantor has executed and delivered this Guaranty as of the date set
forth in the first paragraph hereof.
| Guarantor: | ||||
| ADVOCAT INC. | ||||
| /s/ Xxxxx Xxxxxx
|
||||
| Title: EVP & CFO |
[Signature Page — Guaranty]
