EXHIBIT 3.5 TO FORM 10-QSB
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT (this "Guaranty") is made as of the 21st day of
September, 1993 by Xxxxxx X. Xxxxxx ("Guarantor") in favor of Xxxxxxx Xxxx
Xxxxxxx (the "Lender").
For valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, and in order to induce the Lender to extend credit to Phy.
Med., Inc. * a Texas corporation ("PhyMed") and Phy. Med., Inc. Employee Stock
Ownership Plan ("ESOP") (collectively referred to herein as the "Borrower"),
Guarantor hereby undertake and agree as follows:
1. The Guaranty. Guarantor hereby guaranties to Lender, absolutely and
unconditionally, the prompt and full payment and performance when due of the
indebtedness and obligations evidenced by that certain Loan and Security
Agreement and that certain Note in the original principal amount of Eight
Hundred Thousand Dollars ($800,000.00) executed by PhyMed in favor of Lender of
even date herewith and that certain Note in the original principal amount of
Eight Hundred Thou~and Dollars ($800,000.00) executed by ESOP in favor of Lender
of eve~ date herewith, and any and all renewals, modifications, and extensions
thereof, and all other indebtedness and obligations of Borrower to Lender,
whether direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising, whether incurred by or arising from agreements or
dealings between Lender and Borrower or by or from any agreements or dealings
with any third party by which Lender may be or become in any manner whatsoever a
creditor of Borrower, wheresoever and howsoever incurred and any ultimate unpaid
balance thereof and whether the same is from time to time reduced and thereafter
increased or entirely extinguished and thereafter incurred again, and whether
Borrower be bound severally or jointly, alone or with others, and whether as
principal or as surety (all of which indebtedness, obligations and liabilities
referred to in this sentence may be referred to herein as "Indebtedness"). This
Guaranty is a guaranty of payment, not collection, and is intended to be and
shall be construed to be a continuing guaranty. Lender, in its sole discretion,
may proceed against Guarantor with or without having instituted any demand or
action against or having obtained or executed upon any judgment against Borrower
or other guarantors or sureties or asserting any rights against any collateral
or security for the Indebtedness.
2. Obligations Not Impaired. This Guaranty and all of the obligations
of Guarantor hereunder shall remain in full force and effect without regard to
and shall not be affected or impaired by: (a) any renewal, extension, amendment,
modification of or addition or supplement to the Indebtedness, or any documents
given in connection with any of the Indebtedness (all of which may hereinafter
be referred to as the "Agreements"); (b) any extension, indulgence or other
action or inaction in respect of any of the Agreements or the Indebtedness or
any acceptance of security for, or other guaranties of, any of the Agreements or
the Indebtedness, or any release, exchange, or alteration of any or all of such
security or guaranties; (c) any default by Borrower under, or any lack of due
execution, invalidity or unenforceability of, or any irregularity or other
defect in, any of the Indebtedness or the Agreements; (d) any waiver by Lender
of any required performance of any condition precedent or waiver of any
requirement imposed by any of the Indebtedness or the Agreements; (e) any
exercise or non-exercise of any right, remedy, power or privilege in respect of
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this Guaranty or any of the Indebtedness or the Agreements; (f) any sale, lease,
transfer or other disposition of the assets of Borrower to, or any consolidation
or merger of Borrower with or into, any other person, corporation, or entity, or
any transfer or other disposition by Guarantor or any other holder of any shares
of capital stock of Borrower; (g) the addition of a new guarantor or guarantors
or any suit against, compromise with or release of any other guarantor; (h)
Lender's failure to use diligence in preserving the liability of any person with
respect to the Indebtedness or bringing suit to enforce the collection of the
Indebtedness; (i) any bankruptcy, insolvency, reorganization or similar
proceedings involving or affecting Borrower; (j) any release or subordination of
any security interest of Lender in the assets of Borrower; (k) any change in the
status, composition, structure or name of Borrower, including, but not limited
to, change by reason of merger, dissolution, consolidation, reorganization or
addition or withdrawal of a partner or limited partner; (l) the validity or
enforceability of any promissory note, loan document or other agreement
evidencing all or a part of the Indebtedness; (m) any defense arising by reason
of any disability or other defense of Borrower or any endorser, guarantor,
co-maker or other person; or (n) any other circumstances which might otherwise
constitute a legal or equitable discharge or defense of a guarantor, other than
a written release signed by Lender.
3. Waiver. Guarantor unconditionally waives: (a) notice of any of the
matters referred to in Paragraph 2 above; (b) all notices which may be required
by statute, rule of law or otherwise to preserve any right of Lender, including
without limitation, notice to Guarantor of default, intent to accelerate,
acceleration, presentment to and demand of payment or performance from Borrower
and protest for non-payment or dishonor; (c) any exercise by Lender of any
right, remedy, power or privilege in connection with any of the Agreements; (d)
any requirement of promptness or diligence on the part of Lender.
4. Modification/Revocation. No modification, consent or waiver of any
provision of this Guaranty, nor consent to any departure by Guarantor therefrom,
shall be effective unless the same shall be executed by Lender and Guarantor and
then shall be effective only in the specific instance and for the purpose for
which given. This is a continuing guaranty relating to all of the Indebtedness,
including Indebtedness arising under successive transactions which from time to
time continue or renew the Indebtedness after it has been satisfied. The
obligations of Guarantor hereunder may be terminated only as to future
transactions and only by giving written notice thereof to Lender at its address
set forth hereinbelow by certified U.S. mail, postage prepaid, return receipt
requested. No such revocation shall be effective until the fifth business day
(excluding Saturdays, Sundays and holidays) following the date of actual receipt
thereof by Lender. Notwithstanding the effectuation of such revocation, this
Guaranty shall continue in full force and effect as to any and all Indebtedness
which is outstanding on the effective date of revocation and all extensions and
renewals of said Indebtedness,and all interest thereon both then and thereafter
accruing, and all attorneys' fees, court costs and collection charges
theretofore and thereafter incurred in endeavoring to collect or enforce any
rights and remedies relative to said Indebtedness against Borrower, the
Guarantor and other guarantors or in asserting Lender's right against any
collateral or security (whether or not suit be brought).
5. Full Performance. Nothing shall discharge or satisfy any liability
or obligation of Guarantor hereunder excepts the full performance and
satisfaction of the entire Indebtedness and all other liabilities and
obligations of Borrower to Lender, whether now or hereafter existing. Guarantor
further agrees that to the extent that Borrower makes a payment or payments to
Lender, which
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payment or payments or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside and/or required to be repaid to a
trustee, receiver or any other party under any state or federal bankruptcy or
receivership law, common law or equitable cause, then to the extent of such
payment or repayment, the obligation or part thereof intended to be satisfied
shall be revived and continued in full force and effect as if said payment had
not been made.
6. Benefit to Guarantor/Condition of Guarantor. Guarantor acknowledges
and warrants that Guarantor derives and expects to derive financial and other
benefits, directly or indirectly, from each and every extension of credit from
Lender to Borrower and from each and every renewal, extension, release of
collateral or other relinquishment of legal rights made or granted or to be made
or granted by Lender to Borrower. Guarantor further represents and warrants to
Lender that, as of the date of this Guaranty, the fair market value of
Guarantor's respective assets exceed Guarantors' respective liabilities;
Guarantor is meeting current liabilities as they mature; the financial
statements furnished to Lender by Guarantor are true, complete and correct in
all material respects, do not omit any facts or circumstances necessary to make
the statements therein not misleading, and include in any footnotes all
contingent liabilities of the undersigned; there has been no material adverse
change in the financial condition of Guarantor since the date of the financial
statement; there are no pending material court or administrative proceedings or
undischarged judgments against Guarantor, and no federal or state tax liens
against Guarantor; and Guarantor is not in default or claimed to be in default
under any agreement requiring the repayment of money. Guarantor agrees to
furnish Lender with immediate written notice of any material adverse change in
its financial condition, including, without limitation, litigation commenced,
tax liens filed, defaults claimed under their indebtedness for borrowed money or
bankruptcy proceedings commenced against Guarantor. Guarantor also agrees to
provide Lender with an updated financial statement upon written request for such
by Lender and hereby affirm that any. updated financial statements shall comply
with the warranties and representations hereinabove set forth. Guarantor further
agrees to provide annual tax returns to Lender upon written request for such
returns by Lender.
7. Rights and Remedies. All rights and remedies of the Lender hereunder
are cumulative of each other and of every other right or remedy which the Lender
may have at law or in equity or under any contract or document, and the exercise
of one or more rights or remedies shall not prejudice or impair the concurrent
or subsequent exercise of other rights or remedies. Lender shall not be required
to pursue any other remedies before invoking the benefits of this Guaranty;
specifically Lender shall not be required to take any action against Borrower or
any other person or to exhaust its remedies against collateral and other
security. This Guaranty is secured by a lien on certain Phy. Med., Inc. stock
pursuant to that certain Security Pledge) Agreement of even date herewith
("Stock Pledge"). Notwithstanding any provision contained herein to the
contrary, Lender's recovery pursuant to this Guaranty is solely limited to
Lender's rights pursuant to the Security Pledge) Agreement and Lender shall not
have any right to recover any deficiency in addition to the foreclosure under
the Security Pledge) Agreement.
8. Costs of Collection. Guarantor agrees to reimburse Lender for all
expenses (including, without limitation, reasonable legal fees) incurred by
Lender in connection with the collection of any sums payable by Guarantor
hereunder.
9. Notice. All written notices shall be given to Guarantor at 0000
Xxxxx Xxxx Xxxxx, Xxxxx 000, Xxxxxx, Xxxxx or at such other address(es) as
Guarantor may specify hereafter. Any notice
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that Lender may elect to give Guarantor shall be deemed effective when forwarded
by mail to the above address (or at such other address as Guarantor may specify,
in writing, to Lender). All written notices shall be given to Lender as follows:
Xxxx Xxxxxxx, do Xxxx Xxx Evans, Hoge, Xxxxx & Xxxxxx, X.X., 00000 Xxxxxxx Xxxx,
Xxxxx Xxxxx, Xxxxxx, Xxxxx 00000 or at such other address(es) as Lender may
specify hereafter.
10. Successors and Assigns. This Guaranty shall be binding upon
Guarantor and upon his heirs, executors and administrators, or successors and
assigns (as the case may be) of Guarantor, and shall inure to the benefit of
Lender's successors and assigns; all references herein to Borrower and to
Guarantor shall be deemed to include their successors and assigns or heirs,
executors and administrators (as the case may be). Guarantor may not sell,
transfer or assign any of their obligations or liabilities under this Guaranty
without the express written consent of Lender. Lender may sell, transfer or
assign this Guaranty, in its sole discretion, without notice, and each
successive assignee shall have the right to enforce this Guaranty for its
benefit.
11. Severability. In the event that any obligation hereunder becomes
unavailable or unenforceable for whatever reason, such provision or obligation
shall be deemed null and void to the extent of such unavailability or
unenforceability and shall be deemed severable from but shall not invalidate any
other obligation or provision hereunder. In the event that the Guarantor is
released from any obligations hereunder or such obligations become unenforceable
or unavailable with respect to Guarantor for whatever reason, such release,
unavailability or unenforceability shall be severable and all other obligations
hereunder shall continue in effect with respect to Guarantor.
12. Subordination and Subrogation. Guarantor agrees that any
indebtedness of the Borrower to Guarantor or any indebtedness arising or
accruing out of any payment which Guarantor may make pursuant to this Guaranty
shall be fully subordinate and junior in priority in right of payment to any
indebtedness of Borrower to Lender and Guarantor shall have no right of
subrogation, reimbursement or indemnity whatsoever, nor any right of recourse
for any such indebtedness, unless and until the entire principal balance,
accrued interest and all other amounts required to be paid under and pursuant to
the Indebtedness and the Agreements shall have been paid in full. The Guarantor
hereby agrees that such indebtedness of Borrower to Guarantor, present and
future, is hereby assigned to Lender and all monies received by Guarantor in
respect thereof shall be received in trust for Lender and forthwith upon receipt
shall be paid over to Lender, all without in any way limiting or lessening the
liability of Guarantor under this Guaranty.
13. Limitation on Interest. Guarantor acknowledges and agrees that
Guarantor and Lender intend to contract in strict compliance with applicable
usury laws, if any, from time to time in effect. In furtherance thereof,
Guarantor stipulates and agrees that none of the terms and provisions contained
in this Guaranty shall ever be construed to create a contract to pay, for the
use, forbearance or detention of money, interest in excess of the maximum amount
of interest permitted to be charged by applicable law from time to time in
effect. All agreements between Guarantor and Lender, whether now existing or
hereafter arising and whether written or oral, are hereby implied so that in no
contingency, whether by reason of demand for payment of any indebtedness
guaranteed hereby or otherwise, shall the interest contracted for, charged or
received by Lender exceed the maximum amount permissible under applicable law.
If, from any circumstance whatsoever, interest would otherwise be payable to
Lender in excess of the maximum lawful amount, the interest payable to Lender
shall be reduced to the maximum amount permitted under applicable law; and, if
from any
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circumstance Lender shall ever receive anything of value deemed interest by
applicable law in excess of the maximum lawful amount, an amount equal to any
excessive interest shall be applied to the reduction of the principal of the
indebtedness guaranteed hereby and not to the payment of interest, or if such
excessive interest exceeds the unpaid balance of principal of the indebtedness
guaranteed hereby such excess shall be refunded to Guarantor or other
appropriate party. All interest paid or agreed to be paid to the Lender shall,
to the extent permitted by applicable law, be amortized, prorated, allocated and
spread throughout the full period until payment in full of the principal of the
Indebtedness guaranteed hereby (including the period of any renewal or extension
thereof) so that interest thereon for such full period shall not exceed the
maximum amount permitted by applicable law.
14. Headings. The headings of paragraphs or subparagraphs of this
Guaranty are intended for convenience only and shall not in any way control or
affect the meaning or Construction of any provision of this Guaranty.
15. GOVERNING LAW/VENUE. THIS GUARANTY SHALL BE DEEMED A CONTRACT AND
INSTRUMENT MADE UNDER THE LAWS OF THE STATE OF TEXAS AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS AND
THE LAWS OF THE UNITED STATES OF AMERICA. GUARANTOR HEREBY IRREVOCABLY SUBMIT
HIMSELF TO THE NON- EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS OF
THE STATE OF TEXAS AND AGREE AND CONSENT THAT SERVICE OF PROCESS MAY BE MADE
UPON THEM IN ANY LEGAL PROCEEDING RELATING TO THIS GUARANTY BY ANY MEANS ALLOWED
UNDER TEXAS OR FEDERAL LAW. VENUE FOR ANY LEGAL PROCEEDING MAY BE TARRANT
COUNTY, TEXAS.
16. LEGAL COUNSEL. GUARANTOR ACKNOWLEDGES THAT THEY HAVE BEEN
REPRESENTED BY INDEPENDENT LEGAL COUNSEL IN CONNECTION WITH ALL MATTERS
CONCERNING THIS GUARANTY, INCLUDING BUT NOT LIMITED TO THE NEGOTIATION,
ACCEPTANCE AND EXECUTION OF THE GUARANTY; THAT THEY HAVE RELIED UPON THE ADVICE
OF ms INDEPENDENT LEGAL COUNSEL IN AGREEING TO THE TERMS AND CONDITIONS HEREIN
AND IN EXECUTING THIS GUARANTY; AND THAT HE HAVE FREELY AND VOLUNTARILY ENTERED
INTO THIS GUARANTY AS THE PRODUCT OF ARMS LENGTH NEGOTIATIONS.
17. WAIVER OF JURY TRIAL. GUARANTOR AND LENDER EACH HEREBY WAIVE ANY
RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, CAUSE OF ACTION, SUIT OR
PROCEEDINGS (a) ARISING UNDER THIS GUARANTY OR ANY OTHER INSTRUMENT, DOCUMENT,
OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR (b) IN ANY WAY
CONNECTED WITH OR RELATED TO OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO
OR ANY OF THEM WITH RESPECT TO THIS GUARANTY, THE LOAN AGREEMENT, OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH
OR THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.
GUARANTOR AND LENDER
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HEREBY AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION, CAUSE OF ACTION,
SUIT OR PROCEEDING SHALL BE DECIDED BY A COURT TRIAL, WITHOUT A JURY, AND THAT
EITHER PARTY MAY FILE AN ORIGINAL COUNTERPART OR COPY OF THIS AGREEMENT WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF
THEIR RIGHT TO TRIAL BY JURY.
IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the date
first above written.
/s/ Xxxxxx X. Xxxxxx
--------------------------------
XXXXXX X. XXXXXX
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