EXHIBIT 10.4
GUARANTY
GUARANTY dated as of October 24, 2002 (this "Guaranty"), by
FIVE STAR QUALITY CARE, INC., FIVE STAR QUALITY CARE TRUST AND FIVE STAR QUALITY
CARE HOLDING CO., INC. (each, together with its successors and assigns, a
"Guarantor" and, collectively, the "Guarantors"), in favor of FSQC FUNDING CO.,
LLC, a Delaware limited liability company (the "Purchaser").
PRELIMINARY STATEMENTS. The Purchaser has entered into that
certain Receivables Purchase and Transfer Agreement, dated as of the date hereof
(as amended, restated, modified or supplemented from time to time, the "RPTA";
capitalized terms used herein and not defined herein shall have the meanings
attributed thereto in the RPTA) with each of the entities named on Schedule I of
the RPTA (each, together with each one's successors and assigns, a "Provider"
and, collectively, the "Providers") and Five Star Quality Care, Inc., a Maryland
corporation, as Primary Servicer.
The Guarantors will derive substantial benefit from the
transactions contemplated by the RPTA and the Loan and Security Agreement, dated
as of the date hereof (as amended, restated, modified or supplemented from time
to time, the "LSA") among the Purchaser, the lenders party thereto (the
"Lenders"), Dresdner Kleinwort Wasserstein LLC, as Co-Program Manager,
Syndication Agent and Lead Arranger, Healthcare Finance Group, Inc., as
Co-Program Manager, and HFG Healthco-4 LLC, as Collateral Agent.
It is a condition precedent to the effectiveness of the RPTA
and the LSA and the making of any financial accommodations thereunder that the
Guarantors shall have executed and delivered a guaranty in the form hereof of
the due and punctual payment and performance of (i) the obligations of the
Providers to purchase Denied Receivables under Section 4.01 of the RPTA, (ii)
the indemnification obligations of the Providers to the Purchaser under Section
4.02 of the RPTA, and (iii) all obligations of the Providers to pay costs,
expenses and fees under Section 5.05 of the RPTA (collectively, the "Guaranteed
Obligations").
NOW, THEREFORE, in consideration of the premises, and in order
to induce the Lenders under the LSA to make loans to the Purchaser or other
financial accommodations thereunder, each Guarantor hereby agrees as follows:
Section 1. Guaranty. Each Guarantor hereby, jointly and
severally, irrevocably and unconditionally guarantees the punctual payment when
due and the punctual performance of all present and future Guaranteed
Obligations, and agrees to pay any and all costs and expenses (including
reasonable counsel fees and expenses) paid or incurred by the Purchaser, the
Lenders, the Program Manager or the Collateral Agent in enforcing any rights
under this Guaranty or in enforcing payment of the Guaranteed Obligations or
otherwise in connection with
the provisions hereof. Without limiting the generality of the foregoing, the
Guarantors' liability shall extend to all amounts that constitute part of the
Guaranteed Obligations and would be owed by the Providers under the RPTA but for
the fact that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving a Provider.
(a) Any and all payments by or on behalf of the Guarantors
hereunder shall be made free and clear of and without deduction or withholding
for any and all present or future taxes unless required by law.
Section 2. Guaranty Absolute. The Guarantor guarantees that
the Guaranteed Obligations will be paid or performed in accordance with the
terms of the RPTA regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of the
Providers or the Borrower with respect thereto. This Guaranty is one of payment
and performance, and not of collection, and the obligations of the Guarantors
hereunder are independent of the obligations of the Providers under the RPTA and
a separate action or actions may be brought or prosecuted against each Guarantor
to enforce this Guaranty, irrespective of whether action is brought against the
Providers or whether the Providers are joined in any such action or actions. The
liability of the Guarantors under this Guaranty shall, to the fullest extent
permitted under applicable law, be absolute and unconditional, and shall not be
affected or released in any way, irrespective of:
(a) any lack of validity or enforceability or any
irregularity, voidability or voidness of the RPTA, the LSA or any
agreement or instrument relating thereto (collectively, the
"Documents") or of all or any part of the Guaranteed Obligations or of
any security therefore;
(b) any change in the manner, place or terms of payment or
performance of, and/or any change or extension or the time of payment
or performance of, renewal or alteration of all or any of the
Guaranteed Obligations, any security therefor, or any liability
incurred directly or indirectly in respect thereof, or any other
amendment or waiver of or any consent to departure from any Document
including, without limitation, any increase in the Guaranteed
Obligations;
(c) any taking and holding of collateral or additional
guarantees for all or any of the Guaranteed Obligations, or any
amendment, alteration, exchange, substitution, sale, transfer,
enforcement, waiver, subordination, termination or release of or
realization upon any collateral or such guarantees, or non-perfection,
failure to perfect or continue the perfection of or delay in perfection
of any Lien on any collateral, or any waiver or consent to departure
from any such guaranty, for all or any of the Guaranteed Obligations;
(d) any manner of application of collateral, or proceeds
thereof, to all or any of the Guaranteed Obligations, or any manner of
sale or other disposition of any collateral for all or any of the
Guaranteed Obligations or any other assets of any Provider or any
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other Person;
(e) any exercise or failure to exercise any rights against the
Providers or any other Person (including the Guarantors);
(f) any settlement or compromise of any Guaranteed Obligation,
any security therefor or any liability (including any of those
hereunder) incurred directly or indirectly in respect thereof or
hereof, and any subordination of the payment of all or any part thereof
to the payment of a Guaranteed Obligation (whether due or not) of the
Providers to creditors of the Providers other than the Guarantors;
(g) any change, restructuring or termination of the existence
of any of the Providers, the Purchaser or any of their affiliates, or
any consent by the Purchaser, any Provider, any Lender, the Program
Manager or the Collateral Agent or any other Person to any such change,
restructuring or termination, and any corresponding restructure of the
Guaranteed Obligations, or any other restructure or refinancing of the
Guaranteed Obligations or any portion thereof; or
(h) any other agreements or circumstance of any nature
whatsoever which might otherwise constitute a defense available to, or
a discharge of, this Guaranty and/or obligations of the Guarantors
hereunder, or a defense to, or discharge of, any of the Providers or
any other Person or party relating to this Guaranty or the obligations
of the Guarantors hereunder.
Without limiting the generality of the foregoing, each
Guarantor hereby consents to, and hereby agrees, that the rights of the
Purchaser hereunder, and the liability of each Guarantor hereunder, shall not be
affected by any and all releases of any collateral, whether for purposes of
commercially reasonable sales or other dispositions of assets or for any other
purpose. The Purchaser may at any time and from time to time (whether or not
after revocation or termination of this Guaranty) without the consent of, or
notice (except as shall be required by applicable law that cannot be waived) to,
the Guarantors, and without incurring responsibility to the Guarantors or
impairing or releasing the obligations of the Guarantors hereunder, apply any
sums by whomsoever paid or howsoever realized to any Guaranteed Obligation
regardless of what Guaranteed Obligations remain unpaid.
This Guaranty shall continue to be effective or be reinstated,
as the case may be, if claim is ever made upon the Purchaser, any Lender, any
Program Manager or the Collateral Agent for repayment or recovery of any amount
or amounts received by the Purchaser, such Lender, such Program Manager or the
Collateral Agent in payment or on account of any of the Guaranteed Obligations
and the Purchaser, such Lender, such Program Manager or the Collateral Agent
repays all or part of said amount by reason of any judgment, decree or order of
any court or administrative body having jurisdiction over the Purchaser, such
Lender, such Program Manager or the Collateral Agent or the respective property
of each, or any settlement or compromise of any such claim effected
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by the Purchaser, such Lender, such Program Manager or the Collateral Agent with
any such claimant (including the Providers), the Guarantors shall be and remain
liable to the Purchaser, such Lender, such Program Manager and/or the Collateral
Agent hereunder for the amount so repaid or recovered to the same extent as if
such amount had never originally been received by the Purchaser, such Lender,
such Program Manager or the Collateral Agent.
Section 3. Waiver. Each Guarantor hereby absolutely,
unconditionally and irrevocably waives, to the fullest extent permitted by law,
(i) promptness, diligence, notice of acceptance and any other notice with
respect to this Guaranty, (ii) presentment, demand of payment, protest, notice
of dishonor or nonpayment and any other notice with respect to the Guaranteed
Obligations, (iii) any requirement that the Purchaser, the Lenders, the Program
Manager or the Collateral Agent or any other Person protect, secure, perfect or
insure any security interest or Lien or any property subject thereto or exhaust
any right or take any action against the Providers or any other Person or any
collateral, (iv) any other action, event or precondition to the enforcement of
this Guaranty or the performance by each Guarantor of its obligations hereunder,
and (v) any duty on the part of the Purchaser, the Lenders, the Program Manager
or the Collateral Agent or any other Person to disclose to the Guarantors any
matter, fact or thing relating to the business, operation or condition of the
Providers and their assets now known or hereafter known by such Person.
Section 4. Waiver of Subrogation and Contribution. Until the
later to occur of the Facility Termination Date and payment in full of all
Guaranteed Obligations, each Guarantor hereby irrevocably waives any claim or
other rights which he may now or hereafter acquire against any Provider that
arises from the existence, payment, performance or enforcement of the
Guarantors' obligations under this Guaranty, including, without limitation, any
right of subrogation, reimbursement, exoneration, contribution or
indemnification and any right to participate in any claim or remedy against a
Provider or any collateral which the Purchaser, a Lender, the Program Manager or
the Collateral Agent now has or hereafter acquires, whether or not such claim,
remedy or right arises in equity, or under contract, statute or common law,
including, without limitation, the right to take or receive from a Provider or,
directly or indirectly, in cash or other property or by set-off or in any other
manner, payment or security on account of such claim, remedy or other right. If
any amount shall be paid to a Guarantor in violation of the preceding sentence
at any time prior to the later to occur of the Facility Termination Date and
payment in full of all Guaranteed Obligations, such amount shall be deemed to
have been paid to such Guarantor for the benefit of, and held in trust for the
benefit of, the Purchaser, and shall forthwith be paid to the Purchaser to be
credited and applied to the Guaranteed Obligations and all other amounts payable
under this Guaranty, whether matured or unmatured, in accordance with the terms
of the Documents, or to be held as collateral for any Guaranteed Obligations or
other amounts payable under this Guaranty thereafter arising. Each Guarantor
acknowledges that it will receive direct and indirect benefits from the
financing arrangements contemplated by the Documents and that the waiver set
forth in this subsection is knowingly made in contemplation of such benefits.
Section 5. Representations and Warranties. Each Guarantor
hereby represents and warrants as follows:
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(a) Such Guarantor has the power to execute and deliver this
Guaranty and to incur and perform its obligations hereunder;
(b) Such Guarantor has duly taken all necessary action to
authorize the execution, delivery and performance of this Guaranty and to incur
and perform its obligations hereunder;
(c) No consent, approval, authorization or other action by,
and no notice to or of, or declaration or filing with, any governmental or other
public body, or any other Person, is required for the due authorization,
execution, delivery or performance by such Guarantor of this Guaranty or the
consummation of the transactions contemplated hereby;
(d) The execution, delivery and performance by such Guarantor
of this Guaranty do not and will not violate or otherwise conflict with any term
or provision of any material agreement, instrument, judgment, decree, order or
any statute, rule or governmental regulation applicable to such Guarantor or
result in the creation of any Lien upon any of its properties or assets pursuant
thereto (other than any Liens created pursuant to the Documents);
(e) This Guaranty has been duly authorized, executed and
delivered by such Guarantor and constitutes the legal, valid and binding
obligation of such Guarantor, and is enforceable against such Guarantor in
accordance with its terms, except as enforcement thereof may be subject to the
effect of any applicable bankruptcy, insolvency, reorganization, moratorium or
similar law affecting creditors' rights generally, and general principles of
equity (regardless of whether such enforcement is sought in a proceeding in
equity or at law);
(f) No proceeding referred to in paragraph (g) of Exhibit V of
the RPTA is pending against such Guarantor and no other event referred to in
such paragraph (g) of such Exhibit V has occurred and is continuing with respect
to such Guarantor, and the property of such Guarantor is not subject to any
assignment for the benefit of creditors;
(g) Such Guarantor is the sole direct or indirect shareholder
or member, as the case may be, of the Providers and Guarantors listed below its
name on Schedule I attached hereto, and there are no outstanding rights,
options, warrants or agreements pursuant to which any such Provider or such
Guarantor may be required to sell any of its capital stock or membership
interests, as applicable; and
Section 6. Amendments, Etc. No amendment or waiver of any
provision of this Guaranty nor consent to any departure by the Guarantors
therefrom shall in any event be effective unless the same shall be in writing
and signed by the Purchaser, the Program Manager and the Collateral Agent (and
in an amendment, by the Guarantors), and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
Section 7. Remedies Upon Event of Termination. Upon the
occurrence and
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during the continuance of any Event of Termination, the Purchaser may, without
notice to or demand upon the Providers or the Guarantors, declare any Guaranteed
Obligations immediately due and payable, and shall be entitled to enforce the
obligations of the Guarantors hereunder.
Section 8. Statute of Limitations. Any acknowledgment or new
promise, whether by sale or contribution of a Receivable or otherwise and
whether by the Providers or others (including any Guarantor), with respect to
any of the Guaranteed Obligations shall, to the fullest extent permitted under
applicable law, if the statute of limitations in favor of the Guarantors against
the Purchaser or the Collateral Agent (for the benefit of the Lenders), as
assignee hereunder, shall have commenced to run, toll the running of such
statute of limitations and, if the period of such statute of limitations shall
have expired, prevent the operation of such statute of limitations.
Section 9. ASSIGNABILITY. SUBJECT TO SECTION 5.03(a) OF THE
LSA, THIS GUARANTY AND THE PURCHASER'S RIGHTS AND OBLIGATIONS HEREIN SHALL BE
ASSIGNABLE BY THE PURCHASER AND ITS SUCCESSORS AND ASSIGNS. EACH GUARANTOR
HEREBY ACKNOWLEDGES AND CONFIRMS THAT, AS COLLATERAL SECURITY FOR ANY AND ALL
OBLIGATIONS OF THE PURCHASER PURSUANT TO THE LSA, THE PURCHASER IS GRANTING TO
THE COLLATERAL AGENT, FOR THE BENEFIT OF THE LENDERS, A SECURITY INTEREST IN,
AND COLLATERAL ASSIGNMENT OF, THIS GUARANTY AND ALL OF THE PURCHASER'S RIGHTS,
TITLE AND INTERESTS HEREUNDER, INCLUDING, ALL MONIES DUE OR TO BECOME DUE TO THE
PURCHASER, UNDER OR IN CONNECTION WITH THIS GUARANTY.
Section 10. No Waiver; Remedies. No failure on the part of the
Purchaser or the Collateral Agent (for the benefit of the Lenders), as assignee
hereunder, to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law or any other Document.
Section 11. Continuing Guaranty. This Guaranty is a continuing
one and shall (i) remain in full force and effect until the later to occur of
the Facility Termination Date and payment in full of all Guaranteed Obligations,
(ii) be binding upon each Guarantor, its successors and assigns, and (iii) inure
to the benefit of, and be enforceable by, the Purchaser and its successors,
transferees and assigns, including, without limitation, the Collateral Agent
(for the benefit of the Lenders). All obligations to which this Guaranty applies
or may apply under the terms hereof shall be conclusively presumed to have been
created in reliance hereon.
Section 12. Financial Condition of the Providers. Each
Guarantor represents to the Purchaser (and its successors and assigns,
including, without limitation, the Collateral Agent, for the benefit of the
Lenders) that it is now and will be completely familiar with the prospects,
business, operations and condition (financial and otherwise) of the Providers,
and each Guarantor hereby waives and relinquishes any duty on the part of the
Purchaser, the Lenders, the Collateral Agent, the
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Program Manager or any other Person to disclose any matter, fact or thing
relating to the prospects, business, assets, liabilities, operations or
condition (financial or otherwise) of any Provider now known or hereafter known
by the Purchaser, the Lenders, the Collateral Agent, the Program Manager or any
other Person.
Section 13. Admissibility of Guaranty. Each Guarantor agrees
that any copy of this Guaranty signed by the Guarantor and transmitted by
telecopier for delivery to the Collateral Agent (for the benefit of the Lenders)
shall be admissible in evidence as the original itself in any judicial or
administrative proceeding, whether or not the original is in existence.
Section 14. Notices. All notices and other communications
hereunder shall, unless otherwise stated herein, be in writing (which may
include facsimile communication) and shall be faxed or delivered to such party
at its address set forth under its name on the signature page hereof or at such
other address as shall be designated by such party in a Written Notice to the
other party. Notices and communications by facsimile shall be effective when
sent (and shall be followed by hard copy sent by regular mail) and notices and
communications sent by other means shall be effective when received.
Section 15. Counterparts. This Guaranty may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original
and all of which shall together constitute one and the same agreement.
Section 16. GOVERNING LAW. THIS GUARANTY SHALL, IN ACCORDANCE
WITH SECTION 5-1401 OF THE GENERAL OBLIGATION LAW OF THE STATE OF NEW YORK, BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ANY CONFLICTS
OF LAWS PRINCIPLES THEREOF.
Section 17. WAIVER OF JURY TRIAL, JURISDICTION AND VENUE. EACH
OF THE PARTIES HERETO HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN THE EVENT
OF ANY LITIGATION WITH RESPECT TO ANY MATTER RELATED TO THIS GUARANTY, AND
HEREBY IRREVOCABLY CONSENTS TO THE JURISDICTION OF THE STATE AND FEDERAL COURTS
LOCATED IN NEW YORK COUNTY, NEW YORK CITY, NEW YORK IN CONNECTION WITH ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY. IN ANY SUCH
LITIGATION, EACH OF THE PARTIES HERETO WAIVES PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS AND AGREES THAT SERVICE THEREOF MAY BE MADE BY
CERTIFIED OR REGISTERED MAIL DIRECTED TO THE PARTIES HERETO AT THEIR ADDRESSES
SET FORTH ON THE SIGNATURE PAGE HEREOF. THE PARTIES HERETO SHALL APPEAR IN
ANSWER TO SUCH SUMMONS, COMPLAINT OR OTHER PROCESS WITHIN THE TIME PRESCRIBED BY
LAW, FAILING WHICH THE PARTY FAILING TO SO APPEAR SHALL BE DEEMED IN DEFAULT AND
JUDGMENT MAY BE ENTERED BY THE OTHER PARTY FOR THE
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AMOUNT OF THE CLAIM AND OTHER RELIEF REQUESTED THEREIN.
Section 18. Captions; Separability. The captions of the
Sections and subsections of this Guaranty have been inserted for convenience
only and shall not in any way affect the meaning or construction of any
provision of this Guaranty.
(a) If any term of this Guaranty shall be held to be invalid,
illegal or unenforceable, the validity of all other terms hereof shall in no way
be affected thereby.
Section 19. Acknowledgment of Receipt. Each Guarantor
acknowledges receipt of a copy of this Guaranty and each of the Documents.
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IN WITNESS WHEREOF, each party hereto has caused this Guaranty
to be duly executed as of the date first above set forth.
FIVE STAR QUALITY CARE, INC.
By: /s/ Bruce J. Mackey, Jr.
Bruce J. Mackey, Jr.
Chief Financial Officer, Treasurer
and Assistant Secretary
Address: 400 Center Street
Newton, MA 02458
FIVE STAR QUALITY CARE TRUST
By: /s/ Bruce J. Mackey, Jr.
Bruce J. Mackey, Jr.
Chief Financial Officer, Treasurer
and Assistant Secretary
Address: 400 Center Street
Newton, MA 02458
FIVE STAR QUALITY HOLDING CO., INC.
By: /s/ Bruce J. Mackey, Jr.
Bruce J. Mackey, Jr.
Chief Financial Officer, Treasurer
and Assistant Secretary
Address: 400 Center Street
Newton, MA 02458
ACCEPTED AND AGREED:
FSQC FUNDING CO., LLC
By: /s/ Bruce J. Mackey, Jr.
Bruce J. Mackey, Jr.
Chief Financial Officer, Treasurer
and Assistant Secretary
Address: 400 Center Street
Newton, MA 02458
with a copy to:
Dresdner Kleinwort Wasserstein LLC
1301 Avenue of the Americas
New York, New York 10019
Attention: Michael Leffler/Stephen Kovach
Fax: 212-895-1723/1774
and
Healthcare Finance Group, Inc.
110 Wall Street - 2nd Floor
New York, New York 10005
Attention: Robert Lynch
Fax: 212-785-9211
SCHEDULE I
Five Star Quality Care - AZ, LLC
Five Star Quality Care - CA, LLC
Five Star Quality Care - Colorado, LLC
Five Star Quality Care - CT, LLC
Five Star Quality Care - GA, LLC
Five Star Quality Care - IA, LLC
Five Star Quality Care - KS, LLC
Five Star Quality Care - MI, LLC
Five Star Quality Care - MO, LLC
Five Star Quality Care - NE, LLC
Five Star Quality Care - WI, LLC
Five Star Quality Care - WY, LLC
Five Star Quality Care - CA, Inc.
Five Star Quality Care - IA, Inc.
Five Star Quality Care - MI, Inc.
Five Star Quality Care - NE, Inc.