UNCONDITIONAL GUARANTY
September 30, 1996
Oak Tree Medical Management, Inc.
0 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxx Xxxxxx, Xxx Xxxx 00000
(Individually and collectively "Borrower")
Oak Tree Medical Systems, Inc.
0000 Xxxx Xxxxxx Xxxx., Xxxxx 000
Xxxxx, Xxxxxxx 00000
(Individually and collectively "Guarantor")
First Union National Bank
00 Xxxx Xxxxxx
Xxxxx Xxxxxx, Xxx Xxxx 00000
(Hereinafter referred to as "Bank")
To induce Bank to make, extend or renew loans, advances, credit, or other
financial (accommodations to or for the benefit of Borrower, and in
consideration of loans, advances, credit, or other financial accommodations
made, extended or renewed to or for the benefit of Borrower, Guarantor hereby
absolutely, irrevocably and unconditionally guarantees to Bank and its
successors, assigns and affiliates the timely payment and performance of all
liabilities and obligations of Borrower to Bank and its affiliates, including,
but not limited to, all obligations under any notes, loan agreements, security
agreements, letters of credit, swap agreements (as defined in 11 U.S. Code ss.
101), instruments, accounts receivable, contracts, drafts, leases, chattel
paper, indemnities, acceptances, repurchase agreements, overdrafts, and the Loan
Documents defined below, however and whenever incurred or evidenced, whether
primary, secondary, direct, indirect, absolute, contingent, due or to become
due, now existing or hereafter contracted or acquired, and all modifications,
extensions or renewals thereof, including without limitation all principal,
interest, charges, and costs and expenses incurred thereunder (including
attorneys' fees and other costs of collection incurred, regardless of whether
suit is commenced) (collectively, the "Guaranteed Obligations").
Guarantor further covenants and agrees:
GUARANTOR'S LIABILITY. This Guaranty is a continuing and unconditional guaranty
of payment and performance and not of collection. The parties to this Guaranty
are jointly and severally obligated hereunder. This Guaranty does not impose any
obligation on Bank to extend or continue to extend credit or otherwise deal with
Borrower at any subsequent time. This Guaranty shall continue to be effective or
be reinstated, as the case may be, if at any time any payment of Guaranteed
Obligations is rescinded, avoided or for any other reason must be
returned by Bank, and the returned payment shall remain payable as part of the
Guaranteed Obligations, all as though such payment had not been made. Except to
the extent the provisions of this Guaranty give Bank additional rights, this
Guaranty shall not be deemed to supersede or replace any other guaranties given
to Bank by Guarantor; and the obligations guaranteed hereby shall be in addition
any other obligations guaranteed by Guarantor pursuant to any other agreement of
guaranty given to Bank and other guaranties of the Guaranteed Obligations.
TERMINATION OF GUARANTY. Guarantor may terminate this Guaranty by written
notice, delivered personally to or received by certified or registered United
States Mail by an authorized officer of the Bank at the address for notices
provided herein. Such termination shall be effective with respect to Guaranteed
Obligations arising more than 15 days after the date such written notice is
received by said Bank officer. Guarantor may not terminate this Guaranty as to
Guaranteed Obligations (including any subsequent extensions, modifications or
compromises of the Guaranteed Obligations) then existing, or to Guaranteed
Obligations arising subsequent to receipt by Bank of said notice if such
Guaranteed Obligations are a result of Bank's obligation to make advances
pursuant to a commitment entered into prior to expiration of the 15 day notice
period, or are a result of advances which are necessary for Bank to protect its
collateral or otherwise preserve its interests. Termination of this Guaranty by
any single Guarantor will not affect the existing and continuing obligations of
any other guarantor hereunder.
AFFIRMATIVE COVENANT. Xxxxxxxxx agrees that from the date of this Agreement and
until final payment in full of the Obligations, unless Bank shall otherwise
consent in writing, Guarantor will: Reports and Proxies. Guarantor shall deliver
to First Union, promptly, a copy of all financial statements, reports, notices,
and proxy statements, sent by Guarantor to stockholders, and all regular or
periodic reports required to be filed by Guarantor with any governmental agency
or authority.
NEGATIVE COVENANTS. Guarantor agrees that from the date of this Agreement and
until final payment in full of the Obligations, unless Bank shall otherwise
consent in writing, Guarantor will not: Default on Other Contracts or
Obligations. Default on any material contract with or obligation when due to a
third party or default in the performance of any obligation to a third party
incurred for money borrowed. Judgment Entered. Permit the entry of any monetary
judgment or the assessment against, the filing of any tax lien against, or the
issuance of any writ of garnishment or attachment against any property of or
debts due Guarantor in an amount in excess of $25,000.00 and that is not
discharged or execution is not stayed within Thirty (30) days of entry. Change
in Fiscal Year. Guarantor shall not change its fiscal year without the consent
of Bank. Guarantees. Guarantee or otherwise become responsible for obligations
of any other person or persons in an aggregate amount in excess of $10,000.00
per fiscal year, other than the endorsement of checks and drafts for collection
in the ordinary course of business. Encumbrances. Create, assume, or permit to
exist any mortgage, security deed, deed of trust, pledge, lien, charge or other
encumbrance on any of its assets, whether now owned or hereafter acquired, other
than: (i) security interests required by the Loan
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Documents; (ii) liens for taxes contested in good faith; (iii) liens accruing by
law for employee benefits; or (iv) Permitted Liens.
FINANCIAL COVENANTS. Guarantor, on a consolidated basis, agrees to the following
provisions from the date of this Agreement and until final payment in full of
the Obligations, unless Bank shall otherwise consent in writing: Current Ratio.
Guarantor and its subsidiaries shall, at all times, maintain a Current Ratio of
not less than 2.00 to 1.00. "Current Ratio" shall mean the ratio of current
assets divided by current liabilities. Working Capital. Guarantor and its
subsidiaries shall, at all times, maintain Working Capital of at least
$2,000,000.00. "Working Capital" shall mean the excess of the current assets
over the current liabilities. Tangible Net Worth. Guarantor and its subsidiaries
shall, at all times, maintain Tangible Net Worth of at least $6,000,000.00.
"Tangible Net Worth" shall mean the total assets minus total liabilities. For
purposes of this computation, the aggregate amount of any intangible assets of
Guarantor including, without limitation, goodwill, franchises, licenses,
patents, trademarks, trade names, copyrights, service marks, and brand names,
shall be subtracted from total assets, and total liabilities shall include fully
subordinated debt. Total Liabilities to Tangible Net Worth Ratio. Guarantor and
its subsidiaries shall, at all times, maintain a ratio of Total Liabilities,
including fully subordinated debt, divided by Tangible Net Worth of not more
than 3.00 to 1.00. For purposes of this computation, "Total Liabilities" shall
mean all liabilities of Guarantor, including capitalized leases and all reserves
for deferred taxes and other deferred sums appearing on the liabilities side of
a balance sheet of Guarantor, in accordance with generally accepted accounting
principles applied on a consistent basis. Debt Service Coverage Ratio. Guarantor
and its subsidiaries shall at all times maintain a Debt Service Coverage Ratio
of not less than 2.00 to 1.00. "Debt Service Coverage Ratio" shall mean the sum
of net profit plus interest expense plus income tax expense plus depreciation
and amortization divided by the sum of interest expense plus the current portion
of long term debt and capital leases plus income tax expense. Limitation on
Debt. Guarantor and its subsidiaries shall not, without the Bank's prior
written, directly or indirectly, create, incur, assume or become liable for any
debt, contingent or direct, if, giving effect to such additional debt on a pro
forma basis, causes the aggregate amount of Guarantor's debt, including
obligations to Bank, to exceed $1,300,000.00. Loans and Advances. Guarantor
shall not, during any fiscal year, make loans or advances, excepting ordinary
course of business travel and expense advances, to any person or entity, which
total more than $10,000.00 in the aggregate.
APPLICATION OF PAYMENTS, BANK LIEN AND SET-OFF. Monies received from any source
by Bank for application toward payment of the Guaranteed Obligations may be
applied to such Guaranteed Obligations in any manner or order deemed appropriate
by Bank. Except as prohibited by law, Guarantor grants Bank a security interest
in all of Guarantor's accounts maintained with Bank and any of its affiliates
(collectively, the "Accounts"). If a Default occurs, Bank is authorized to
exercise its right of set-off or to foreclose its lien against any obligation of
Bank to Guarantor including, without limitation, all Accounts or any other debt
of any maturity, without notice.
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CONSENT TO MODIFICATIONS. Guarantor consents and agrees that Bank may from time
to time, in its sole discretion, without affecting, impairing, lessening or
releasing the obligations of the Guarantor hereunder: (a) extend or modify the
time, manner, place or terms of payment or performance and/or otherwise change
or modify the credit terms of the Guaranteed Obligations; (b) increase, renew,
or enter into a novation of the Guaranteed Obligations; (c) waive or consent to
the departure from terms of the Guaranteed Obligations; (d) permit any change in
the business or other dealings and relations of Borrower or any other guarantor
with Bank; (e) proceed against, exchange, release, realize upon, or otherwise
deal with in any manner any collateral that is or may be held by Bank in
connection with the Guaranteed Obligations or any liabilities or obligations of
Guarantor; and (f) proceed against, settle, release, or compromise with
Borrower, any insurance carrier, or any other person or entity liable as to any
part of the Guaranteed Obligations, and/or subordinate the payment of any part
of the Guaranteed Obligations to the payment of any other obligations, which may
at any time be due or owing to Bank; all in such manner and upon such terms as
Bank may deem appropriate, and without notice to or further consent from
Guarantor. No invalidity, irregularity, discharge or unenforceability of, or
action or omission by Bank relating to any part of, the Guaranteed Obligations
or any security therefor shall affect or impair this Guaranty.
WAIVERS AND ACKNOWLEDGMENTS. Guarantor waives and releases the following rights,
demands, and defenses Guarantor may have with respect to Bank and collection of
the Guaranteed Obligations: (a) promptness and diligence in collection of any of
the Guaranteed Obligations from Borrower or any other person liable thereon, and
in foreclosure of any security interest and sale of any property serving as
collateral for the Guaranteed Obligations; (b) any law or statute that requires
that Bank make demand upon, assert claims against, or collect from Borrower or
other persons or entities, foreclose any security interest, sell collateral,
exhaust any remedies, or take any other action against Borrower or other persons
or entities prior to making demand upon, collecting from or taking action
against Guarantor with respect to the Guaranteed Obligations, including any such
rights Guarantor might otherwise have had under Va. Code ss. 49- 25 and 49-26,
et seq., N.C.G.S. ss. 26-7, et seq., Tenn. Code Xxx. ss. 00-00-000, O.C.G.A. ss.
10-7-24 (and any successor statute) and any other applicable law; (c) any law or
statute that requires that Borrower or any other person be joined in, notified
of or made part of any action against Guarantor; (d) that Bank preserve, insure
or perfect any security interest in collateral or sell or dispose of collateral
in a particular manner or at a particular time; (e) notice of extensions,
modifications, renewals, or novations of the Guaranteed Obligations, of any new
transactions or other relationships between Bank, Borrower and/or any guarantor,
and of changes in the financial condition of, ownership of, or business
structure of Borrower or any other guarantor; (f) presentment, protest, notice
of dishonor, notice of default, demand for payment, notice of intention to
accelerate maturity, notice of acceleration of maturity, notice of sale, and all
other notices of any kind whatsoever; (g) the right to assert against Bank any
defense (legal or equitable), set-off, counterclaim, or claim that Guarantor may
have at any time against Borrower or any other party liable to Bank; (h) all
defenses relating to invalidity, insufficiency, unenforceability, enforcement,
release or impairment of Bank's lien on any collateral, of the Loan Documents,
or of any other guaranties held by Bank; (i) any claim or defense that
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acceleration of maturity of the Guaranteed Obligations is stayed against
Guarantor because of the stay of assertion or of acceleration of claims against
any other person or entity for any reason including the bankruptcy or insolvency
of that person or entity; and (j) the benefit of any exemption claimed by
Guarantor. Guarantor acknowledges and represents that it has relied upon its own
due diligence in making its own independent appraisal of Borrower, Xxxxxxxx's
business affairs and financial condition, and any collateral; Guarantor will
continue to be responsible for making its own independent appraisal of such
matters; and Guarantor has not relied upon and will not hereafter rely upon Bank
for information regarding Borrower or any collateral.
FINANCIAL CONDITION. Guarantor warrants, represents and covenants to Bank that
on and after the date hereof: (a) the fair saleable value of Guarantor's assets
exceeds its liabilities, Guarantor is meeting its current liabilities as they
mature, and Guarantor is and shall remain solvent; (b) all financial statements
of Guarantor furnished to Bank are correct and accurately reflect the financial
condition of Guarantor as of the respective dates thereof; (c) since the date of
such financial statements, there has not occurred a material adverse change in
the financial condition of Guarantor; (d) there are not now pending any court or
administrative proceedings or undischarged judgments against Guarantor, no
federal or state tax liens have been filed or threatened against Guarantor, and
Guarantor is not in debut or claimed default under any agreement; and (e) at
such reasonable times as Bank requests, Guarantor will furnish Bank with such
other financial information as Bank may reasonably request.
INTEREST. Regardless of any other provision of this Guaranty or other Loan
Documents, if for any reason the effective interest on any of the Guaranteed
Obligations should exceed the maximum lawful interest, the effective interest
shall be deemed reduced to and shall be such maximum lawful interest, and any
sums of interest which have been collected in excess of such maximum lawful
interest shall be applied as a credit against the unpaid principal balance of
the Guaranteed Obligations.
DEFAULT. If any of the following events occur, a default ("Default") under this
Guaranty shall exist: (a) Failure of timely payment or performance of the
Guaranteed Obligations or a default under any Loan Document; (b) A breach of any
agreement or representation contained or referred to in the Guaranty, or any of
the Loan Documents, or contained in any other contract or agreement of Guarantor
with Bank or its affiliates, whether now existing or hereafter arising; (c) The
death of, appointment of a guardian for, dissolution of, termination of
existence of, loss of good standing status by, appointment of a receiver for,
assignment for the benefit of creditors of, or the commencement of any
insolvency or bankruptcy proceeding by or against, Guarantor or any general
partner of or the holder(s) of the majority ownership interests of Guarantor;
and/or (d) The entry of any monetary judgment or the assessment against, the
filing of any tax lien against, or the issuance of any writ of garnishment or
attachment against any property of or debts due Guarantor.
If a Default occurs, the Guaranteed Obligations shall be due immediately and
payable without notice. Guarantor shall pay interest on the Guaranteed
Obligations from such Default at the
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highest rate of interest charged on any of the Guaranteed Obligations.
ATTORNEY'S FEES AND OTHER COSTS OF COLLECTION. Guarantor shall pay all of Bank's
reasonable expenses incurred to enforce or collect any of the Guaranteed
Obligations, including, without limitation, reasonable arbitration, paralegals',
attorneys' and experts' fees and expenses, whether incurred without the
commencement of a suit, in any suit, arbitration, or administrative proceeding,
or in any appellate or bankruptcy proceeding.
SUBORDINATION OF OTHER DEBTS. Guarantor agrees: (a) to subordinate the
obligations now or hereafter owed by Borrower to Guarantor ("Subordinated Debt")
to any and all obligations of Borrower to Bank now or hereafter existing while
this Guaranty is in effect, provided however that Guarantor may receive
regularly scheduled principal and interest payments on the Subordinated Debt so
long as (i) all sums due and payable by Borrower to Bank have been paid in full
on or prior to such date, and (ii) no event or condition which constitutes or
which with notice or the lapse or time would constitute an event of default with
respect to the Guaranteed Obligations, shall be continuing on or as of the
payment date; (b) Guarantor will place a legend indicating such subordination on
every note, ledger page or other document evidencing any part of the
Subordinated Debt; and (c) except as punished by this paragraph, Guarantor will
not request or accept payment of or any security for any part of the
Subordinated Debt, and any proceeds of the Subordinated Debt paid to Guarantor,
through error or otherwise, shall immediately be forwarded to Bank by Guarantor,
properly endorsed to the order of Bank, to apply to the Guaranteed Obligations.
MISCELLANEOUS. (a) Assignment. This Guaranty and other Loan Documents shall
inure to the benefit of and be binding upon the parties and their respective
heirs, legal representatives, successors and assigns. Bank's interests in and
rights under this Guaranty and other Loan Documents are freely assignable, in
whole or in part, by Bank. Any assignment shall not release Guarantor from the
Guaranteed Obligations. (b) Applicable Law; Conflict Between Documents. This
Guaranty and other Loan Documents shall be governed by and construed under the
laws of the state in which office of Bank first shown above is located without
regard to that state's conflict of laws principles. If the terms of this
Guaranty should conflict with the terms of any commitment letter that survives
closing, the terms of this Guaranty shall control. (c) Jurisdiction. Guarantor
irrevocably agrees to non-exclusive personal jurisdiction in the state in which
the office of Bank first shown above is located. (d) Severability. If any
provision of this Guaranty or of the other Loan Documents shall be prohibited or
invalid under applicable law, such provision shall be ineffective but only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Guaranty or other
document. (e) Notices. Any notices to Guarantor shall be sufficiently given, if
in writing and mailed or delivered to the Guarantor's address shown above or
such other address as provided hereunder, and to Bank, if in writing and mailed
or delivered to Bank's office address shown above or such other address as Bank
may specify in writing from time to time. In the event that Guarantor changes
Guarantor's address at any time prior to the date the Guaranteed Obligations are
paid in full, Guarantor agrees to promptly give written notice of said
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change of address by registered or certified mail, return receipt requested, all
charges prepaid. (f) Plural; Captions. All references in the Loan Documents to
borrower, guarantor, person, document or other nouns of reference mean both the
singular and plural form, as the case may be, and the term "person" shall mean
any individual, person or entity. The captions contained in the Loan Documents
are inserted for convenience only and shall not affect the meaning or
interpretation of the Loan Documents. (g) Binding Contract. Guarantor by
execution of and Bank by acceptance of this Guaranty agree that each party is
bound to all terms and provisions of this Guaranty. (h) Amendments, Waivers and
Remedies. No waivers, amendments or modifications of this Guaranty and other
Loan Documents shall be valid unless in writing and signed by an officer of
Bank. No waiver by Bank of any Default shall operate as a waiver of any other
Default or the same Default on a future occasion. Neither the failure nor any
delay on the part of Bank in exercising any right, power, or privilege granted
pursuant to this Guaranty and other Loan Documents shall operate as a waiver
thereof, nor shall a single or partial exercise thereof preclude any other or
further exercise or the exercise of any other right, power or privilege. All
remedies available to Bank with respect to this Guaranty and other Loan
Documents and remedies available at law or in equity shall be cumulative and may
be pursued concurrently or successively. (i) Partnerships. If Guarantor is a
partnership, the obligations, liabilities and agreements on the part of
Guarantor shall remain in full force and effect and fully applicable
notwithstanding any changes in the individuals comprising the partnership. The
term "Guarantor" includes any altered or successive partnerships, and
predecessor partnership(s) and the partners shall not be released from any
obligations or liabilities hereunder. (j) Loan Documents. The term "Loan
Documents" refers to all documents executed in connection with the Guaranteed
Obligations and may include, without limitation, commitment letters that survive
closing, loan agreements, other guaranty agreements, security agreements,
instruments, financing statements, mortgages, deeds of trust, deeds to secure
debt, letters of credit and any amendments or supplements (excluding swap
agreements as defined in 11 U.S. Code ss. 101).
ANNUAL FINANCIAL STATEMENTS. Guarantor shall deliver to Bank, within 120 days
after the close of each fiscal year, audited financial statements reflecting its
operations during such fiscal year, including, without limitation, a balance
sheet, profit and loss statement and statement of cash flows, with supporting
schedules; all on a consolidated and consolidating basis and in reasonable
detail, prepared in conformity with generally accepted accounting principles,
applied on a basis consistent with that of the preceding year. All such
statements shall be examined by an independent certified public accountant
acceptable to Bank. The opinion of such independent certified public accountant
shall not be acceptable to Bank if qualified due to any limitations in scope
imposed by Guarantor or its Subsidiaries, if any. Any other qualification of the
opinion by the accountant shall render the acceptability of the financial
statements subject to Bank's approval.
PERIODIC FINANCIAL STATEMENTS. Guarantor shall deliver to Bank unaudited
management-prepared quarterly financial statements, including, without
limitation, a balance sheet, profit and loss statement and statement of cash
flows, with supporting schedules, as soon as available and in any event within
30 days after the close of each such period; all in reasonable
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detail and prepared in conformity with generally accepted accounting principles,
applied on a basis consistent with that of the preceding year. Such statements
shall be certified as to their correctness by a principal financial officer of
Guarantor.
FINANCIAL AND OTHER INFORMATION. Guarantor shall deliver to Bank such
information as Bank may reasonably request from time to time, including without
limitation, financial statements and information pertaining to Guarantor's
financial condition. Such information shall be true, complete, and accurate.
TAX RETURNS. Guarantor shall deliver to Bank, within 30 days of filing, complete
copies of federal and state tax returns, as applicable, each of which shall be
signed and certified by Guarantor to be true and complete copies of such
returns. In the event an extension is filed, Guarantor shall deliver a copy of
the extension within 30 days of filing.
WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, GUARANTOR BY
EXECUTION HEREOF AND BANK BY ACCEPTANCE HEREOF, KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED ON THIS GUARANTY, OR ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS GUARANTY OR ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONNECTION
WITH THIS GUARANTY, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY WITH RESPECT HERETO. THIS
PROVISION IS A MATERIAL INDUCEMENT TO BANK TO ACCEPT THIS GUARANTY.
GUARANTOR AND BANK AGREE THAT THEY SHALL NOT HAVE A REMEDY OF PUNITIVE OR
EXEMPLARY DAMAGES AGAINST THE OTHER IN ANY DISPUTE AND HEREBY WAIVE ANY RIGHT OR
CLAIM TO PUNITIVE OR EXEMPLARY DAMAGES THEY HAVE NOW OR WHICH MAY ARISE IN THE
FUTURE IN CONNECTION WITH ANY DISPUTE WHETHER THE DISPUTE IS RESOLVED BY
ARBITRATION OR JUDICIALLY.
IN WITNESS WHEREOF, Guarantor, on the day and year first written above, has
caused this Unconditional Guaranty to be executed under seal.
Oak Tree Medical Systems, Inc.
Taxpayer Identification Number: 00-0000000
CORPORATE By:______________________________
SEAL Xxxxx Xxxxxx, Vice Chairman
By:______________________________
Xxxxxxx Xxxxxx, President
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