GUARANTEE AGREEMENT DATED AS OF 5/21/96
Published on August 14, 1996
EXHIBIT 10.2
EXECUTION COPY
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GUARANTEE AGREEMENT
Dated as of May 21, 1996
between
KANSAS-LTC CORPORATION,
L-TEX GP, INC.,
L-TEX LP, INC.,
RUSK-TEX LP, INC.,
TEXAS-LTC LIMITED PARTNERSHIP
as Guarantors
and
SANWA BANK CALIFORNIA,
as the Agent
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TABLE OF CONTENTS
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GUARANTEE AGREEMENT
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This GUARANTEE AGREEMENT (this "Guarantee"), dated as of May 21,
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1996, is made between Kansas-LTC Corporation, L-TEX GP, Inc., L-TEX LP, Inc.,
Rusk-TEX LP, INC. and Texas-LTC Limited Partnership (the "Guarantors") and Sanwa
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Bank California, as the agent (in such capacity, the "Agent") for the Banks
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identified in the Credit Agreement referred to below.
The Second Amended and Restated Credit Agreement, dated as of May 21,
1996 (as amended, supplemented or modified, the "Credit Agreement") between LTC
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Properties, Inc. (the "Company"), the lenders identified in the Credit Agreement
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(the "Banks") and the Agent provides, subject to its terms and conditions, for
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certain extensions of credit to the Company. It is a condition to the
obligations of the Agent and the Banks under the Credit Agreement that each
Guarantor shall have executed and delivered this Guarantee.
To induce the Banks to enter into, and to extend credit under, the
Credit Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Guarantors have agreed jointly
and severally to guarantee the Guaranteed Obligations upon the terms and
conditions of this Guarantee. Accordingly, the Guarantors agree with the Agent
as follows:
Section 1. Definitions.
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1.01 Definitions. Unless otherwise defined, all capitalized terms
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used in this Guarantee that are defined in the Credit Agreement (including those
terms incorporated by reference) shall have the respective meanings assigned to
them in the Credit Agreement. In addition, the following terms shall have the
following meanings under this Guarantee:
"Basic Documents" shall have the meaning assigned to the term "Basic
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Documents" in the Credit Agreement and shall also mean any other agreement (oral
or written), instrument, document or book entry evidencing, creating, securing
or otherwise relating to all or any part of the Guaranteed Obligations referred
to in clause (b) of the definition of that term that are intended by the Company
and the Agent and Banks or any such Person individually (as the case may be) to
be guaranteed by this Guarantee.
"Guaranteed Obligations" shall mean (a) any and all Obligations and
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any and all obligations of the Company for the performance by it of its
agreements, covenants and undertakings
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under or in respect of the Basic Documents referred to in the Credit Agreement,
it being acknowledged by each Guarantor that extensions of credit under the
Credit Agreement are available on a revolving basis, and (b) any and all other
obligations of the Company for the payment of all amounts, liabilities and
indebtedness (whether for principal, interest, reimbursement, fees, charge,
indemnification or otherwise) now or in the future owed to the Agent, the Banks
or any such Person individually, and for the performance by the Company of its
agreements, covenants and undertakings, under or in respect of any and all the
Basic Documents, it being acknowledged by each Guarantor that such other
obligations may arise or be created, incurred or assumed at any time and from
time to time and in such manner and such circumstances and with such terms and
provisions as the Company and the Agent and the Banks or any such Person
individually may agree without notice or demand of any kind or nature whatsoever
to any Guarantor.
1.02 Interpretation. In this Guarantee, unless otherwise indicated,
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the singular includes the plural and plural the singular; words importing any
gender include the other gender; references to statutes or regulations are to be
construed as including all statutory or regulatory provisions consolidating,
amending or replacing the statute or regulation referred to; references to
"writing" include printing, typing, lithography and other means of reproducing
words in a tangible visible form; the words "including," "includes" and
"include" shall be deemed to be followed by the words "without limitation";
references to articles, sections (or subdivisions of sections), exhibits,
annexes or schedules are to this Guarantee; references to agreements and other
contractual instruments shall be deemed to include all subsequent amendments,
extensions and other modifications to such instruments (without, however,
limiting any prohibition on any such amendments, extensions or modifications by
the terms of this Agreement); and references to Persons include their respective
successors and permitted assigns and, in the case of Governmental Persons,
Persons succeeding to their respective functions and capacities.
Section 2. The Guarantee
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2.01 Guarantee. Subject to the limitation set forth in Section 2.08,
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the Guarantors hereby jointly and severally guarantee to each Bank and the Agent
the timely payment in full when due (whether at stated maturity, by acceleration
or otherwise) and performance of the Guaranteed Obligations in each case
strictly in accordance with their terms. The Guarantors hereby further jointly
and severally agree that if the Company shall fail to pay in full when due
(whether at stated maturity, by acceleration or otherwise) all or any part of
the Guaranteed
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Obligations, the Guarantors will immediately pay the same, without any demand or
notice whatsoever, and that in the case of any extension of time of payment or
renewal of all or any part of the Guaranteed Obligations, the same will be
timely paid in full when due (whether at extended maturity, by acceleration or
otherwise) in accordance with the terms of such extension or renewal. This
Guarantee is irrevocable and unconditional in nature and is made with respect to
any Guaranteed Obligations now existing or in the future arising. The
Guarantors' liability under this Guarantee shall continue until full
satisfaction of all Guaranteed Obligations. This Guarantee is a guarantee of
due and punctual payment and performance and is not merely a guarantee of
collection.
2.02 Acknowledgements, Waivers and Consents. Each Guarantor
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acknowledges that the obligations undertaken by it under this Guarantee involve
the guarantee of obligations of Persons other than such Guarantor and that such
obligations of such Guarantor are absolute, irrevocable and unconditional under
any and all circumstances. In full recognition and in furtherance of the
foregoing, each Guarantor agrees that:
(a) Without affecting the enforceability or effectiveness of
this Guarantee in accordance with its terms and without affecting, limiting,
reducing, discharging or terminating the liability of such Guarantor, or the
rights, remedies, powers and privileges of the Agent and the Banks under this
Guarantee, the Agent and the Banks may, at any time and from time to time and
without notice or demand of any kind or nature whatsoever:
(i) amend, supplement, modify, extend, renew, waive,
accelerate or otherwise change the time for payment or performance of, or the
terms of, all or any part of the Guaranteed Obligations (including any increase
or decrease in the rate or rates of interest on all or any part of the
Guaranteed Obligations);
(ii) amend, supplement, modify, extend, renew, waive or
otherwise change, or enter into or give, any Basic Document or any agreement,
security document, guarantee, approval, consent or other instrument with respect
to all or any part of the Guaranteed Obligations, any Basic Document or any such
other instrument or any term or provision of the foregoing;
(iii) accept or enter into new or additional agreements,
security documents, guarantees (including letters of credit) or other
instruments in addition to, in exchange for or relative to any Basic Document,
all or any part of the Guaranteed Obligations or any collateral now or in the
future serving as security for the Guaranteed Obligations;
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(iv) accept or receive (including from any other Guarantor)
partial payments or performance on the Guaranteed Obligations (whether as a
result of the exercise of any right, remedy, power or privilege or otherwise);
(v) accept, receive and hold any additional collateral for
all or any part of the Guaranteed Obligations (including from any other
Guarantor);
(vi) release, reconvey, terminate, waive, abandon, allow to
lapse or expire, fail to perfect, subordinate, exchange, substitute, transfer,
foreclose upon or enforce any collateral, security documents or guarantees
(including letters of credit or the obligations of any other Guarantor) for or
relative to all or any part of the Guaranteed Obligations;
(vii) apply any collateral or the proceeds of any collateral
or guarantee (including any letter of credit or the obligations of any other
Guarantor) to all or any part of the Guaranteed Obligations in such manner and
extent as the Agent or any Bank may in its discretion determine;
(viii) release any Person (including any other Guarantor)
from any personal liability with respect to all or any part of the Guaranteed
Obligations;
(ix) settle, compromise, release, liquidate or enforce upon
such terms and in such manner as the Agent or the Banks may determine or as
applicable law may dictate all or any part of the Guaranteed Obligations or any
collateral on or guarantee of (including any letter of credit issued with
respect to) all or any part of the Guaranteed Obligations (including with any
other Guarantor);
(x) consent to the merger or consolidation of, the sale of
substantial assets by, or other restructuring or termination of the corporate
existence of the Company or any other Person (including any other Guarantor);
(xi) proceed against the Company, such or any other
Guarantor or any other guarantor of (including any issuer of any letter of
credit issued with respect to) all or any part of the Guaranteed Obligations or
any collateral provided by any Person and exercise the rights, remedies, powers
and privileges of the Agent and the Banks under the Basic Documents or otherwise
in such order and such manner as the Agent or any Bank may, in its discretion,
determine, without any necessity to proceed upon or against or exhaust any
collateral, right, remedy, power or privilege before proceeding to call upon or
otherwise enforce this Guarantee as to any Guarantor;
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(xii) foreclose upon any deed of trust, mortgage or other
instrument creating or granting liens on any interest in real property by
judicial or nonjudicial sale or by deed in lieu of foreclosure, bid any amount
or make no bid in any foreclosure sale or make any other election of remedies
with respect to such liens or exercise any right of set-off;
(xiii) obtain the appointment of a receiver with respect to
any collateral for all or any part of the Guaranteed Obligations and apply the
proceeds of such receivership as the Agent or any Bank may in its discretion
determine (it being agreed that nothing in this clause (xiii) shall be deemed to
make the Agent or any Bank a party in possession in contemplation of law, except
at its option);
(xiv) enter into such other transactions or business
dealings with any other Guarantor, the Company, any Subsidiary or Affiliate of
the Company or any other guarantor of all or any part of the Guaranteed
Obligations as the Agent or any Bank may desire; and
(xv) do all or any combination of the actions set forth in
this Section 2.02(a).
(b) The enforceability and effectiveness of this Guarantee and
the liability of the Guarantors, and the rights, remedies, powers and privileges
of the Agent and the Banks, under this Guarantee shall not be affected, limited,
reduced, discharged or terminated, and each Guarantor hereby expressly waives to
the fullest extent permitted by law any defense now or in the future arising, by
reason of:
(i) the illegality, invalidity or unenforceability of all or
any part of the Guaranteed Obligations, any Basic Document or any agreement,
security document, guarantee or other instrument relative to all or any part of
the Guaranteed Obligations;
(ii) any disability or other defense with respect to all of
any part of the Guaranteed Obligations of the Company, any other Guarantor or
any other guarantor of all or any part of the Guaranteed Obligations (including
any issuer of any letters of credit), including the effect of any statute of
limitations that may bar the enforcement of all or any part of the Guaranteed
Obligations or the obligations of any such other guarantor;
(iii) the illegality, invalidity or unenforceability of any
security or guarantee (including any letter of credit) for all or any part of
the Guaranteed Obligations or the
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lack of perfection or continuing perfection or failure of the priority of any
lien on any collateral for all or any part of the Guaranteed Obligations;
(iv) the cessation, for any cause whatsoever, of the
liability of the Company, any other Guarantor or any other guarantor of all or
any part of the Guaranteed Obligations (other than, subject to Section 2.05, by
reason of the full payment and performance of all Guaranteed Obligations);
(v) any failure of the Agent or any Bank to marshal assets
in favor of the Company or any other Person (including any other Guarantor), to
exhaust any collateral for all or any part of the Guaranteed Obligations, to
pursue or exhaust any right, remedy, power or privilege it may have against any
other Guarantor, the Company, any other guarantor of all or any part of the
Guaranteed Obligations (including any issuer of any letter of credit) or any
other Person or to take any action whatsoever to mitigate or reduce such or any
other Guarantor's liability under this Guarantee, neither the Agent nor any Bank
being under any obligation to take any such action notwithstanding the fact that
all or any part of the Guaranteed Obligations may be due and payable and that
the Company may be in default of its obligations under any Basic Document;
(vi) any failure of the Agent or any Bank to give notice of
sale or other disposition of any collateral (including any notice of any
judicial or nonjudicial foreclosure or sale of any interest in real property
serving as collateral for all or any part of the Guaranteed Obligations) for all
or any part of the Guaranteed Obligations to the Company, any Guarantor or any
other Person or any defect in, or any failure by any Guarantor or any other
Person to receive, any notice that may be given in connection with any sale or
disposition of any collateral;
(vii) any failure of the Agent or any Bank to comply with
applicable laws in connection with the sale or other disposition of any
collateral for all or any part of the Guaranteed Obligations;
(viii) any judicial or nonjudicial foreclosure or sale of,
or other election of remedies with respect to, any interest in real property or
other collateral serving as security for all or any part of the Guaranteed
Obligations, even though such foreclosure, sale or election of remedies may
impair the subrogation rights of any Guarantor or may preclude any Guarantor
from obtaining reimbursement, contribution, indemnification or other recovery
from any other Guarantor, the Company, any other guarantor or any other Person
and even though the Company may
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not, as a result of such foreclosure, sale or election of remedies, be liable
for any deficiency;
(ix) any benefits the Company, any Guarantor or any other
guarantor may otherwise derive from Section 580a, 580b, 580d or 726 of the
California Code of Civil Procedure or any comparable provisions of the laws of
any other jurisdiction;
(x) any act or omission of the Agent, any Bank or any other
Person that directly or indirectly results in or aids the discharge or release
of the Company or any other Guarantor of all or any part of the Guaranteed
Obligations or any security or guarantee (including any letter of credit) for
all or any part of the Guaranteed Obligations by operation of law or otherwise;
(xi) any law which provides that the obligation of a surety
or guarantor must neither be larger in amount nor in other respects more
burdensome than that of the principal or which reduces a surety's or guarantor's
obligation in proportion to the principal obligation;
(xii) the possibility that the obligations of the Company to
the Agent and the Banks may at any time and from time to time exceed the
aggregate liability of the Guarantors under this Guarantee;
(xiii) any counterclaim, set-off or other claim which the
Company or any other Guarantor has or alleges to have with respect to all or any
part of the Guaranteed Obligations;
(xiv) any failure of the Agent or any Bank to file or
enforce a claim in any bankruptcy or other proceeding with respect to any
Person;
(xv) the election by the Agent or any Bank, in any
bankruptcy proceeding of any Person, of the application or nonapplication of
Section 1111(b)(2) of the Bankruptcy Code;
(xvi) any extension of credit or the grant of any Lien under
Section 364 of the Bankruptcy Code;
(xvii) any use of cash collateral under Section 363 of the
Bankruptcy Code;
(xviii) any agreement or stipulation with respect to the
provision of adequate protection in any bankruptcy proceeding of any Person;
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(xix) the avoidance of any Lien in favor of the Agent or any
Bank for any reason;
(xx) any bankruptcy, insolvency, reorganization,
arrangement, readjustment of debt, liquidation or dissolution proceeding
commenced by or against any Person, including any discharge of, or bar or stay
against collecting, all or any part of the Guaranteed Obligations (or any
interest on all or any part of the Guaranteed Obligations) in or as a result of
any such proceeding;
(xxi) any action taken by the Agent or any Bank that is
authorized by this Section 2.02 or otherwise in this Guarantee or by any other
provision of any Basic Document or any omission to take any such action; or
(xxii) any other circumstance whatsoever that might
otherwise constitute a legal or equitable discharge or defense of a surety or
guarantor, including by reason of Sections 2809, 2810, 2819, 2839, 2845, 2850,
2899, 3275 and 3433 of the California Civil Code, and any future judicial
decisions or legislation or of any comparable provisions of the laws of any
other jurisdiction.
(c) Each Guarantor expressly waives, for the benefit of the
Agent and the Banks, all set-offs and counterclaims and all presentments,
demands for payment or performance, notices of nonpayment or nonperformance,
protests, notices of protest, notices of dishonor and all other notices or
demands of any kind or nature whatsoever with respect to the Guaranteed
Obligations, and all notices of acceptance of this Guarantee or of the
existence, creation, incurring or assumption of new or additional Guaranteed
Obligations. Each Guarantor further expressly waives the benefit of any and all
statutes of limitation and any and all laws providing for the exemption of
property from execution or for valuation and appraisal upon foreclosure, to the
maximum extent permitted by applicable law.
(d) Each Guarantor represents and warrants to the Agent and the
Banks that it has established adequate means of obtaining financial and other
information pertaining to the business, operations and condition (financial and
otherwise) of the Company and its properties on a continuing basis and that such
Guarantor is now and will in the future remain fully familiar with the business,
operations and condition (financial and otherwise) of the Company and its
properties. Each Guarantor further represents and warrants that it has reviewed
and approved each of the Basic Documents and is fully familiar with the
transaction contemplated by the Basic Documents and that it will in the future
remain fully familiar with such transaction and
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with any new Basic Documents and the transactions contemplated by such Basic
Documents. Each Guarantor hereby expressly waives and relinquishes any duty on
the part of the Agent or the Banks (should any such duty exist) to disclose to
such or any other Guarantor any matter of fact or other information related to
the business, operations or condition (financial or otherwise) of the Company or
its properties or to any Basic Document or the transactions undertaken pursuant
to, or contemplated by, any such Basic Document, whether now or in the future
known by the Agent or any Bank.
(e) Each Guarantor intends that its rights and obligations shall
be those expressly set forth in this Guarantee and that its obligations shall
not be affected, limited, reduced, discharged or terminated by reason of any
principles or provisions of law which conflict with the terms of this Guarantee.
2.03 Understanding With Respect to Waivers and Consents. Each
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Guarantor warrants and agrees that each of the waivers and consents set forth in
this Guarantee is made voluntarily and unconditionally after consultation with
outside legal counsel and with full knowledge of its significance and
consequences, with the understanding that events giving rise to any defense or
right waived may diminish, destroy or otherwise adversely affect rights which
such or any other Guarantor otherwise may have against the Company, the Agent,
any Bank or any other Person or against any collateral. If, notwithstanding the
intent of the parties that the terms of this Guarantee shall control in any and
all circumstances, any such waivers or consents are determined to be
unenforceable under applicable law, such waivers and consents shall be effective
to the maximum extent permitted by law.
2.04 Subrogation. Each Guarantor hereby waives, until the payment
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and satisfaction in full of all of the Guaranteed Obligations and the expiration
and termination of the Commitments of the Banks, under the Credit Agreement, any
right, remedy, power or privilege, such as any right of subrogation,
contribution or indemnity or related remedy, power or privilege, arising
(whether by contract or operation of law, including under the Bankruptcy Code)
against the Company, any other Guarantor or any other guarantor of all or any
part of the Guaranteed Obligations or any collateral for all or any part of the
Guaranteed Obligations by reason of any payment or other performance pursuant to
the provisions of this Guarantee and, if any amount shall be paid to such
Guarantor on account of such rights, remedies, powers or privileges, it shall
hold such amount in trust for the benefit of, and pay the same over to, the
Agent (for the benefit of the Banks) on account of the Guaranteed
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Obligations. Each Guarantor understands that the exercise by the Agent or any
Bank of any right, remedy, power or privilege that it may have under the Basic
Documents, any agreement, security document, guarantee or other instrument
relative to all or any part of the Guaranteed Obligations or otherwise may
affect or eliminate such or any other Guarantor's right of subrogation or
similar recovery against the Company, any other Guarantor, any other guarantors
or any collateral and that such and the other Guarantors may therefore incur
partially or totally nonreimbursable liability under this Guarantee.
Nevertheless, each Guarantor hereby authorizes and empowers the Agent and the
Banks to exercise, in its or their sole discretion, any combination of such
rights, remedies, powers and privileges.
2.04 Reinstatement. The obligations of each Guarantor under this
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Guarantee shall be automatically reinstated if and to the extent that for any
reason any payment by or on behalf of the Company, any other Guarantor or any
other Person or any other application of funds (including the proceeds of any
collateral for all or any part of the Guaranteed Obligations) in respect of all
or any part of the Guaranteed Obligations is rescinded or must be otherwise
restored by any holder of such Guaranteed Obligations, whether as a result of
any proceedings in bankruptcy, reorganization or otherwise and Guarantors
jointly and severally agree that it will indemnify the Agent and each Bank on
demand for all reasonable costs and expenses (including fees and expenses of
counsel) incurred by the Agent or such Bank in connection with such rescission
or restoration.
2.05 Remedies. The Guarantors hereby jointly and severally agree
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that, between each of them and the Banks, the obligations of the Company under
the Credit Agreement and the other Basic Documents may be declared to be
forthwith (or may become automatically) due and payable as provided in Section 9
of the Credit Agreement for purposes of Section 2.01 notwithstanding any stay,
injunction or other prohibition preventing such declaration (or such obligations
becoming due and payable as against the Company) and that, in the event of such
declaration (or such obligation being deemed due and payable), such obligations
(whether or not due and payable by the Company) shall forthwith become due and
payable for purposes of Section 2.01.
2.06 Separate Action. The Agent may bring and prosecute a separate
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action or actions against any Guarantor whether or not any other Guarantor, the
Company, any other guarantor or any other Person is joined in any such action or
a separate action or actions are brought against any other Guarantor, the
Company, any other guarantor, any other Person, or any collateral for all or any
part of the Guaranteed Obligations. The obligations of each Guarantor under,
and the effectiveness
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of, this Guarantee are not conditioned upon the existence or continuation of any
other guarantee (including any letter of credit) of all or any part of the
Guaranteed Obligations.
2.07 Subordination of Indebtedness of the Company; Security Interest.
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(a) Each Guarantor agrees that any indebtedness of the Company
now or in the future owed to such Guarantor is hereby subordinated to the
Guaranteed Obligations. If the Agent so requests, any such indebtedness shall be
collected, enforced and received by such Guarantor as trustee for the Agent and
shall be paid over to the Agent (for the benefit of the Banks) in kind on
account of the Guaranteed Obligations. If, after the Agent's request, such
Guarantor fails to collect or enforce any such indebtedness or to pay the
proceeds of such indebtedness to the Agent, the Agent as such Guarantor's
attorney-in-fact may do such acts and sign such documents in such Guarantor's
name and on such Guarantor's behalf as the Agent considers necessary or
desirable to effect such collection, enforcement or payment, the Agent being
hereby appointed such Guarantor's attorney-in-fact for such purpose.
(b) Each Guarantor hereby grants to the Agent (for the benefit
of the Banks) a security interest in any indebtedness and in any personal
property of the Company in which such Guarantor now has or in the future
acquires any right, title or interest. Each Guarantor agrees that such security
interest shall be additional security for the Guaranteed Obligations and shall
be superior to any right of such Guarantor in such property until the Guaranteed
Obligations have been fully satisfied and performed.
2.08 Limitation on Guarantee. In any proceeding involving any state
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corporate law or any state or federal bankruptcy, insolvency, reorganization or
other law affecting the rights of creditors generally, if the obligations of the
Guarantors under Section 2.01 would otherwise, taking into account the
provisions of Section 2.09, be held or determined to be void, invalid or
unenforceable or if the claims of the Banks in respect of such obligations would
be subordinated to the claims of any other creditors on account of the
Guarantors' liability under Section 2.01, then, notwithstanding any other
provision of this Guarantee to the contrary, the amount of such liability shall,
without any further action by the Guarantors, any Bank, the Agent or any other
Person, be automatically limited and reduced to the highest amount which is
valid and enforceable and not subordinated to the claims of other creditors as
determined in such action or proceeding.
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2.09 Rights of Contribution. The Guarantors hereby agree, as between
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themselves, that if any Guarantor (an "Excess Funding Guarantor") shall pay a
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portion of the Guaranteed Obligations in excess of the Excess Funding
Guarantor's Pro Rata Share (as defined below) of the Guaranteed Obligations, the
other Guarantors shall, on demand (but subject to the next sentence), pay to the
Excess Funding Guarantor an amount equal to their respective Pro Rata Shares of
such Excess Funding Guarantor's payment. The payment obligations of any
Guarantor under this Section 2.09 shall be subordinate and subject in right of
payment to the prior payment in full and in cash of the obligations of such
Guarantor under the other provision of this Section 2, and such Excess Funding
Guarantor shall not exercise any right, remedy, power or privilege with respect
to such excess until payment and satisfaction in full of all such obligations.
For the purposes of this Section 2.09, "Pro Rata Shares" shall mean, for any
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Guarantor, a percentage equal to the percentage that such Guarantor's Tangible
Net Worth as at March 31, 1996 (as reflected on the balance sheet as at that
date referred to in Section 3.02) is of the aggregate Tangible Net Worth of all
of the Guarantors as so reflected as at such date.
2.10 Revocation. To the fullest extent permitted by law, each
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Guarantor hereby waives all right of revocation with respect to the Guaranteed
Obligations.
2.11 Right to Offset Balances. Each Guarantor agrees that, in
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addition to (and without any limitation of) any right of set-off, banker's lien
or counterclaim a Bank may otherwise have, each Bank shall be entitled, at its
option but only with the prior written consent of the Majority Banks or the
Agent, to offset balances held by it for the account of any Guarantor at any of
its offices, in Dollars or in any other currency, against any Obligations of the
Company to such Bank that are not paid when due (regardless of whether such
balances are then due to such Guarantor). Any Bank so entitled shall promptly
notify such Guarantor and the Agent of any offset effected by it, provided that
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such Bank's failure to give such notice shall not affect the validity of such
offset.
Section 3. Representations of the Guarantors. As of the Signing Date
---------------------------------
and as of the date of each extension of credit by the Banks, each Guarantor
represents to the Agent and the Banks that:
3.01 Corporate Existence. Each of such Guarantor and its
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Subsidiaries: (i) is a corporation, partnership or other entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation; (ii) has all requisite corporate or other power, and has all
material
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Governmental Approvals, necessary to own its assets and carry on its business as
now being or as proposed to be conducted; and (iii) is qualified to do business
in all jurisdictions in which the nature of the business conducted by it makes
such qualification necessary and where the failure so to qualify would have a
Material Adverse Effect.
3.02 Financial Condition. The consolidated and consolidating balance
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sheets of the Company and the Guarantors as of March 31, 1996 are complete and
correct and fairly present the financial condition of such entities as at such
date.
3.03 Litigation. Except as disclosed to the Banks in writing prior
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to the Signing Date, there are no legal or arbitral proceedings by or before any
Governmental Person, now pending or (to the knowledge of such Guarantor)
threatened against such Guarantor or its Property or any of its Subsidiaries or
any of their Property that, if adversely determined, could have a Material
Adverse Effect.
3.04 No Breach. None of the execution and delivery of this
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Agreement, the consummation of the transactions contemplated by this Guarantee
or compliance with the terms and provisions of this Guarantee will conflict with
or result in a breach of, or require any consent under, the corporate charter or
by-laws of such Guarantor, or any applicable Governmental Rule, or any agreement
or instrument to which such Guarantor or any of its Subsidiaries is a party or
by which any of them is bound or to which any of them is subject, or constitute
a default under, or result in the acceleration or mandatory prepayment of, any
Indebtedness evidenced by, or termination of, any such agreement or instrument,
or result in the creation or imposition of any Lien upon any Property of such
Guarantor or any of its Subsidiaries pursuant to the terms of any such agreement
or instrument.
3.05 Corporate Action. Such Guarantor has all necessary corporate
----------------
power and authority to execute, deliver and perform its obligations under this
Guarantee; the execution, delivery and performance by such Guarantor of this
Guarantee have been duly authorized by all necessary corporate action on its
part (including any required shareholder approvals); and this Guarantee has been
duly and validly executed and delivered by such Guarantor and constitutes its
legal, valid and binding obligation, enforceable in accordance with its terms.
3.06 Approvals. No Governmental Approvals are necessary for the
---------
execution, delivery or performance by such Guarantor of this Guarantee or for
the legality, validity or enforceability of this Guarantee.
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3.07 ERISA. Such Guarantor and its ERISA Affiliates have fulfilled
-----
their respective obligations under the minimum funding standards of ERISA and
the Code with respect to each Plan and are in compliance with all material
respects with the presently applicable provisions of ERISA and the Code, and
have not incurred any liability to the PBGC or any Plan or Multiemployer Plan
(other than to make contributions in the ordinary course of business).
3.08 Taxes. Such Guarantor and its Subsidiaries have filed all
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United States Federal income tax returns and all other material tax returns that
are required to be filed by them and have paid all taxes due pursuant to such
returns or pursuant to any assessment received by such Guarantor or any of its
Subsidiaries and all other related penalties and charges. The charges, accruals
and reserves on the books of such Guarantor and its Subsidiaries in respect of
taxes and other governmental charges are, in the opinion of such Guarantor,
adequate. Such Guarantor has not given or been requested to give a waiver of
the statute of limitations relating to the payment of any Federal or other
taxes.
3.09 Certain Regulations. Such Guarantor is not (a) an "investment
-------------------
company," or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, (b) a "holding company," or an
"affiliate" of a "holding company" or a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935
or (c) subject to any other Governmental Rule restricting its ability to incur
Indebtedness or to issue guarantees.
Section 4. Covenants of the Guarantors. So long as this Guarantee is
---------------------------
in effect and until all of the Guaranteed Obligations have been paid in full and
the expiration and termination of the Commitments of the Bank under the Credit
Agreement, each Guarantor agrees as follows:
4.01 Financial Statements. Such Guarantor shall deliver to each of
--------------------
the Banks:
(a) consolidated and consolidating statements of income,
retained earnings and changes in financial position (or of cash flow, as the
case may be) of such Guarantor and its Consolidated Subsidiaries and copies of
all registration statements and regular periodic reports, if any, that such
Guarantor shall have filed with the Securities and Exchange Commission, any
comparable Governmental Person of any State or any national securities exchange
each in accordance with the Credit Agreement;
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(b) as soon as possible, and in any event within 10 days after
such Guarantor knows or has reason to know that any of the events or conditions
specified below with respect to any Plan or Multiemployer Plan have occurred or
exist, a statement signed by a senior financial officer of such Guarantor
setting forth details respecting such event or condition and the action, if any,
that such Guarantor or its ERISA Affiliate proposes to take with respect to such
event or condition (and a copy of any report or notice required to be filed with
or given to PBGC by such Guarantor or an ERISA Affiliate with respect to such
event or condition):
(i) any reportable event, as defined in Section 4043(b) of
ERISA and the regulations issued under ERISA, with respect to a Plan, as to
which PBGC has not by regulation waived the requirement of Section 4043(a) of
ERISA that it be notified within 30 days of the occurrence of such event
(provided that a failure to meet the minimum funding standard of Section 412 of
the Code or Section 302 of ERISA shall be a reportable event regardless of the
issuance of any waivers in accordance with Section 412(d) of the Code);
(ii) the filing under Section 4041 of ERISA of a notice of
intent to terminate any Plan or the termination of any Plan;
(iii) the institution by PBGC of proceedings under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by such Guarantor or any ERISA Affiliate of
a notice from a Multiemployer Plan that such action has been taken by PBGC with
respect to such Multiemployer Plan;
(iv) the complete or partial withdrawal by such Guarantor or
an ERISA Affiliate under Section 4201 or 4204 of ERISA from a Multiemployer
Plan, or the receipt by such Guarantor or any ERISA Affiliate of notice from a
Multiemployer Plan that it is in reorganization or insolvency pursuant to
Section 4241 or 4245 of ERISA or that it intends to terminate or has terminated
under Section 4041A of ERISA; and
(v) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against such Guarantor or any ERISA Affiliate to enforce
Section 515 of ERISA, which proceeding is not dismissed within 30 days;
(c) promptly after such Guarantor knows or has reason to know
that any Default has occurred, a notice of such Default describing the same in
reasonable detail and, together with such notice or as soon thereafter as
possible, a description
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of the action that such Guarantor has taken and proposes to take with respect to
such Default; and
(d) from time to time such other information regarding the
business, affairs or financial condition of such Guarantor or any of its
Subsidiaries (including any Plan or Multiemployer Plan and any reports or other
information required to be filed under ERISA) as any Bank or the Agent may
reasonably request.
4.02 Litigation. Such Guarantor will promptly give to each Bank
----------
notice of all legal or arbitral proceedings by or before any Governmental Person
affecting such Guarantor or any of its Subsidiaries, except proceedings that, if
adversely determined, would not have a Material Adverse Effect.
4.03 Corporate Existence, Etc. Such Guarantor will, and will cause
-------------------------
each of its Subsidiaries to: preserve and maintain its corporate existence and
all of its material rights, privileges and franchises; comply with the
requirements of all applicable Governmental Rules if the failure to comply with
such requirements has a Material Adverse Effect; pay and discharge all taxes,
assessments and governmental charges or levies imposed on it or on its income or
profits or on any of its other Property prior to the date on which penalties
would attach, except for any such tax, assessment, charge or levy, the payment
of which is being contested in good faith and by proper proceedings and against
which adequate reserves are being maintained; maintain all of its Properties
used or useful in its business in good working order and condition, ordinary
wear and tear excepted; permit representatives of any Bank or the Agent, during
normal business hours, to examine, copy and make extracts from its books and
records, to inspect its Properties, and to discuss its business and affairs with
its officers, all to the extent reasonably requested by any Bank or the Agent
(as the case may be); keep adequate records and books of account, in which
complete entries will be made in accordance with GAAP; and keep insured by
financially sound and reputable insurers all property of a character usually
insured by corporations engaged in the same or similar business similarly
situated against loss or damage of the kinds and in the amounts customarily
insured against by such corporations and carry such other insurance as is
usually carried by such corporations.
Section 5. Miscellaneous Provisions.
------------------------
5.01 Waiver. No failure or delay by the Agent or any Bank in
------
exercising any remedy, right, power or privilege under this Guarantee or any
other Basic Document shall operate as a waiver of such remedy, right, power or
privilege, nor shall any
-16-
single or partial exercise of such remedy, right, power or privilege preclude
any other or further exercise of such remedy, right, power or privilege or the
exercise of any other remedy, right, power or privilege. The remedies, rights,
powers and privileges provided by this Guarantee are cumulative and not
exclusive of any remedies, rights, powers or privileges provided by the other
Basic Documents or by law.
5.02 Notices. All notices and communications to be given under this
-------
Guarantee shall be given or made in writing to the intended recipient at the
address specified below or, as to any party, at such other address as shall be
designated by such party in a notice to each other party. Except as otherwise
provided in this Guarantee, all such communications shall be deemed to have been
duly given when transmitted by telex or telecopier, delivered to the telegraph
or cable office or personally delivered or, in the case of a mailed notice, upon
receipt, in each case, given or addressed as provided in this Section 5.03:
To the Guarantors: LTC Properties, Inc.
300 Esplanade Drive
Suite 1860
Oxnard, California 93030
Attention: James J. Pieczynski
To the Agent: Sanwa Bank California
601 S. Figueroa Street
8th Floor
Los Angeles, California 90017
Attention: John C. Hyche
5.03 Expenses, Etc. The Guarantors jointly and severally agree to
--------------
pay or to reimburse the Banks and the Agent for all costs and expenses
(including reasonable attorneys' fees and expenses) that may be incurred by the
Agent or the Banks in any effort to enforce any of the obligations of any
Guarantor under this Guarantee, whether or not any lawsuit is filed, including
all such costs and expenses (and reasonable attorneys' fees and expenses)
incurred by the Agent or the Banks in any bankruptcy, reorganization, workout or
similar proceeding. All amounts due under this Guarantee (including under
Section 2.01) not paid when due shall bear interest until paid at the rate per
annum equal to the Post-Default Rate.
-17-
5.04 Amendments, Etc. Any provision of this Guarantee may be
----------------
modified, supplemented or waived only by an instrument in writing signed by the
Guarantors and the Agent (with the consent of the Banks as specified in Section
11.4 of the Credit Agreement). Any modification, supplement or waiver shall be
for such period and subject to such conditions as shall be specified in the
written instrument effecting the same and shall be binding upon the Agent, each
Bank, each holder of Guaranteed Obligations and each Guarantor, and any such
waiver shall be effective only in the specific instance and for the purpose for
which given.
5.05 Successors and Assigns. This Guarantee shall be binding upon
----------------------
and inure to the benefit of its parties and their respective successors and
assigns. No Guarantor may assign or transfer its rights or obligations under
this Guarantee without the prior written consent of the Agent (with the further
consent of the Banks as specified in Section 11.4 of the Credit Agreement).
5.06 Survival. All representations and warranties made in this
--------
Guarantee or in any certificate or other document delivered pursuant to or in
connection with this Guarantee shall survive the execution and delivery of this
Guarantee or such certificate or other document (as the case may be) or any
deemed repetition of any such representation or warranty.
5.07 Agreements Superseded. This Guarantee supersedes all prior
---------------------
agreements and understandings, written or oral, among the parties with respect
to the subject matter of this Guarantee.
5.08 Severability. Any provision of this Guarantee that is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Guarantee, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
5.10 Captions. The table of contents, captions and section headings
--------
appearing in this Guarantee are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this
Guarantee.
5.11 Counterparts. This Guarantee may be executed in any number of
------------
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties to the Guarantee may execute this Guarantee by
signing any such counterpart.
-18-
5.12 GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS GUARANTEE SHALL
-----------------------------------------
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
CALIFORNIA. EACH GUARANTOR HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF
THE UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA AND OF
ANY CALIFORNIA STATE COURT SITTING IN LOS ANGELES, CALIFORNIA FOR THE PURPOSES
OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS GUARANTEE OR THE
TRANSACTIONS CONTEMPLATED BY THIS GUARANTEE. EACH GUARANTOR IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT
IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
5.13 WAIVER OF JURY TRIAL. EACH OF THE GUARANTORS AND THE AGENT (ON
--------------------
BEHALF OF ITSELF AND THE BANKS) HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS GUARANTEE OR THE TRANSACTIONS CONTEMPLATED BY
THIS GUARANTEE.
-19-
IN WITNESS WHEREOF, the undersigned have executed this Guarantee as of
the date first above written.
GUARANTORS
----------
KANSAS-LTC CORPORATION,
By: /s/ CHRISTOPHER T. ISHIKAWA
------------------------------------
Title: Secretary
L-TEX GP, INC.,
By: /s/ CHRISTOPHER T. ISHIKAWA
------------------------------------
Title: Secretary
L-TEX LP, INC.
By: /s/ CHRISTOPHER T. ISHIKAWA
------------------------------------
Title: Secretary
RUSK-TEX LP, INC.
By: /s/ CHRISTOPHER T. ISHIKAWA
------------------------------------
Title: Secretary
TEXAS-LTC LIMITED PARTNERSHIP
By: /s/ CHRISTOPHER T. ISHIKAWA
------------------------------------
Title: G.P.
AGENT
-----
SANWA BANK CALIFORNIA,
By: /s/ JOHN C. HYCHE
------------------------------------
Title: Vice President