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Exhibit 4.6
EXECUTION VERSION
GUARANTY
dated as of
November 3, 2006
among
ENCORE MEDICAL HOLDINGS LLC,
as Holdings,
and
CERTAIN SUBSIDIARIES OF HOLDINGS
IDENTIFIED HEREIN,
and
BANK OF AMERICA, N.A.,
as Collateral Agent
TABLE OF CONTENTS
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Page
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ARTICLE I
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Definitions
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SECTION 1.01. Credit Agreement
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1
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SECTION 1.02. Other Defined Terms
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1
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ARTICLE II
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Guaranty
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SECTION 2.01. Guaranty
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2
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SECTION 2.02. Guaranty of Payment
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3
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SECTION 2.03. No Limitations
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3
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SECTION 2.04. Reinstatement
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4
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SECTION 2.05. Agreement To Pay;
Subrogation
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4
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SECTION 2.06. Information
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4
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ARTICLE III
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Indemnity, Subrogation and
Subordination
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SECTION 3.01. Indemnity and
Subrogation
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4
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SECTION 3.02. Contribution and
Subrogation
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4
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SECTION 3.03. Subordination
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5
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ARTICLE IV
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Miscellaneous
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SECTION 4.01. Notices
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6
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SECTION 4.02. Waivers; Amendment
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6
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SECTION 4.03. Collateral Agent’s Fees and
Expenses; Indemnification
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7
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SECTION 4.04. Successors and Assigns
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7
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SECTION 4.05. Survival of Agreement
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7
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SECTION 4.06. Counterparts; Effectiveness;
Several Agreement
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8
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SECTION 4.07. Severability
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8
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SECTION 4.08. Right of Set-Off
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8
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SECTION 4.09. Governing Law; Jurisdiction;
Consent to Service of Process
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9
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SECTION 4.10. WAIVER OF JURY TRIAL
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9
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SECTION 4.11. Headings
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9
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SECTION 4.12. Security Interest
Absolute
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10
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SECTION 4.13. Termination or Release
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10
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SECTION 4.14. Additional Restricted
Subsidiaries
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11
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i
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Schedules
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Schedule
I Subsidiary
Parties
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Exhibits
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Exhibit
I Form
of Guaranty Supplement
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ii
GUARANTY dated as of November 3, 2006 among ENCORE MEDICAL
HOLDINGS LLC (" Holdings "), the Subsidiaries of Holdings
from time to time party hereto and BANK OF AMERICA, N.A., as
Collateral Agent.
Reference is made to the Credit Agreement dated as of
November 3, 2006 (as amended, supplemented or otherwise
modified from time to time, the " Credit Agreement "), among
ENCORE MEDICAL FINANCE LLC (" Borrower "), Holdings, BANK OF
AMERICA, N.A., as Administrative Agent, Swing Line Lender and an
L/C Issuer, each lender from time to time party thereto
(collectively, the " Lenders " and individually, a "
Lender "), BANC OF AMERICA SECURITIES LLC, as Arranger and
Book Runner, CREDIT SUISSE SECURITIES (USA) LLC, as Arranger, Book
Runner and Syndication Agent, and GENERAL ELECTRIC CAPITAL
CORPORATION, as Documentation Agent. The Lenders have agreed to
extend credit to the Borrower subject to the terms and conditions
set forth in the Credit Agreement. The Guarantors may receive,
directly or indirectly, a portion of the proceeds of the Loans
under the Credit Agreement and will derive substantial direct and
indirect benefits from the transactions contemplated by the Credit
Agreement. It is a condition precedent to the making of Loans and
the issuance of Letters of Credit by the Lenders under the Credit
Agreement and the entry by any Lender or Affiliate of a Lender in
its capacity as a provider of cash management services into Cash
Management Obligations and Hedge Banks into Secured Hedge
Agreements from time to time that the Guarantors shall have
executed and delivered this Agreement. Holdings and the Subsidiary
Parties are affiliates of the Borrower, will derive substantial
benefits from the extension of credit to the Borrower pursuant to
the Credit Agreement and are willing to execute and deliver this
Agreement in order to induce the Lenders to extend such credit.
Accordingly, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Credit Agreement .
(a)
Capitalized terms used in this Agreement and not
otherwise defined herein have the meanings specified in the Credit
Agreement.
(b)
The rules of construction specified in Article I of
the Credit Agreement also apply to this Agreement.
SECTION 1.02. Other Defined Terms . As used in this
Agreement, the following terms have the meanings specified
below:
" Agreement " means this Guaranty.
" Bankruptcy Law " has the meaning assigned to such term
in Section 2.01.
" Claiming Party " has the meaning assigned to such term
in Section 3.02.
" Collateral Agent " means Bank of America, N.A, in its
capacity as collateral agent under any of the Loan Documents, or
any successor collateral agent.
" Contributing Party " has the meaning assigned to such
term in Section 3.02.
" Credit Agreement " has the meaning assigned to such
term in the preliminary statement of this Agreement.
" Guarantor " means Holdings and each Subsidiary
Party.
" Guaranty Supplement " means an instrument in the form
of Exhibit I hereto.
" Holdings " has the meaning assigned to such term in the
preliminary statement of this Agreement.
" Subordinated Obligations " has the meaning assigned to
such term in Section 3.03.
" Subsidiary Parties " means (a) those Subsidiaries
identified on Schedule I and (b) each other Restricted Subsidiary
that becomes a party to this Agreement as a Subsidiary Party after
the Closing Date.
ARTICLE II
Guaranty
SECTION 2.01. Guaranty .
(a)
Each Guarantor unconditionally guarantees, jointly
with the other Guarantors and severally, as a primary obligor and
not merely as a surety, the due and punctual payment and
performance of the Obligations. Each of the Guarantors further
agrees that the Obligations may be extended or renewed, in whole or
in part, without notice to or further assent from it, and that it
will remain bound upon its guarantee notwithstanding any extension
or renewal of any Obligation. Each of the Guarantors waives
presentment to, demand of payment from and protest to the Borrower
or any other Loan Party of any of the Obligations, and also waives
notice of acceptance of its guarantee and notice of protest for
nonpayment.
(b)
Each Guarantor, and by its acceptance of this
Agreement, the Collateral Agent and each other Secured Party,
hereby confirms that it is the intention of all such Persons that
this Agreement and the Obligations of each Guarantor hereunder not
constitute a fraudulent transfer or conveyance for purposes of
Bankruptcy Law (as hereinafter defined), the Uniform Fraudulent
Conveyance Act, the Uniform Fraudulent Transfer Act or any similar
foreign, federal or state law to the extent applicable to this
Agreement and the Obligations of each Guarantor hereunder. To
effectuate the foregoing intention, the Collateral Agent, the other
Secured Parties and the Guarantors hereby irrevocably agree that
the Obligations of each Guarantor under this Agreement at any time
shall be limited to the maximum amount as will result in the
Obligations of such Guarantor under this Agreement not constituting
a fraudulent transfer or conveyance. For purposes hereof, "
Bankruptcy Law " means any proceeding of the type referred
to in Section 8.01(f) of the Credit Agreement or Title 11, U.S.
Code, or any similar foreign, federal or state law for the relief
of debtors.
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SECTION 2.02. Guaranty of Payment . Each of the
Guarantors further agrees that its guarantee hereunder constitutes
a guarantee of payment when due and not of collection, and waives
any right to require that any resort be had by the Collateral Agent
or any other Secured Party to any security held for the payment of
the Obligations, or to any balance of any deposit account or credit
on the books of the Collateral Agent or any other Secured Party in
favor of the Borrower or any other Person.
SECTION 2.03. No Limitations .
(a)
Except for termination of a Guarantor’s
obligations hereunder as expressly provided in Section 4.13, the
obligations of each Guarantor hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason,
including any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to any defense or set-off,
counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality or unenforceability of the Obligations, or
otherwise. Any and all payments made by the Guarantor under or in
respect of this Agreement or any other Loan Document shall be made,
in accordance with Section 3.01 of the Credit Agreement.
Without limiting the generality of the foregoing, the obligations
of each Guarantor hereunder shall not be discharged or impaired or
otherwise affected by (i) the failure of the Collateral Agent or
any other Secured Party to assert any claim or demand or to enforce
any right or remedy under the provisions of any Loan Document or
otherwise; (ii) any rescission, waiver, amendment or modification
of, or any release from any of the terms or provisions of, any Loan
Document or any other agreement, including with respect to any
other Guarantor under this Agreement; (iii) the release of any
security held by the Collateral Agent or any other Secured Party
for the Obligations; (iv) any default, failure or delay, willful or
otherwise, in the performance of the Obligations; or (v) any other
act or omission that may or might in any manner or to any extent
vary the risk of any Guarantor or otherwise operate as a discharge
of any Guarantor as a matter of law or equity (other than the
indefeasible payment in full in cash of all the Obligations). Each
Guarantor expressly authorizes the Secured Parties to take and hold
security for the payment and performance of the Obligations, to
exchange, waive or release any or all such security (with or
without consideration), to enforce or apply such security and
direct the order and manner of any sale thereof in their sole
discretion or to release or substitute any one or more other
guarantors or obligors upon or in respect of the Obligations, all
without affecting the obligations of any Guarantor
hereunder.
(b)
To the fullest extent permitted by applicable law,
each Guarantor waives any defense based on or arising out of any
defense of the Borrower or any other Loan Party or the
unenforceability of the Obligations, or any part thereof from any
cause, or the cessation from any cause of the liability of the
Borrower or any other Loan Party, other than the indefeasible
payment in full in cash of all the Obligations. The Collateral
Agent and the other Secured Parties may in accordance with the
terms of the Collateral Documents, at their election, foreclose on
any security held by one or more of them by one or more judicial or
nonjudicial sales, accept an assignment of any such security in
lieu of foreclosure, compromise or adjust any part of the
Obligations, make any other accommodation with the Borrower or any
other Loan Party or exercise any other right or remedy available to
them against the Borrower or any other Loan Party, without
affecting or impairing in any way the liability of any Guarantor
hereunder except to the extent the Obligations have been fully and
indefeasibly paid in full in cash. To the fullest extent permitted
by applicable law, each Guarantor waives any defense arising out of
any such
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election even though such election operates, pursuant to
applicable law, to impair or to extinguish any right of
reimbursement or subrogation or other right or remedy of such
Guarantor against the Borrower or any other Loan Party, as the case
may be, or any security.
SECTION 2.04. Reinstatement . Each of the Guarantors
agrees that its guarantee hereunder shall continue to be effective
or be reinstated, as the case may be, if at any time payment, or
any part thereof, of any Obligation, is rescinded or must otherwise
be restored by the Collateral Agent or any other Secured Party upon
the bankruptcy or reorganization of the Borrower, any other Loan
Party or otherwise.
SECTION 2.05. Agreement To Pay; Subrogation . In
furtherance of the foregoing and not in limitation of any other
right that the Collateral Agent or any other Secured Party has at
law or in equity against any Guarantor by virtue hereof, upon the
failure of the Borrower or any other Loan Party to pay any
Obligation when and as the same shall become due, whether at
maturity, by acceleration, after notice of prepayment or otherwise,
each Guarantor hereby promises to and will forthwith pay, or cause
to be paid, to the Collateral Agent for distribution to the Secured
Parties in cash the amount of such unpaid Obligation. Upon payment
by any Guarantor of any sums to the Collateral Agent as provided
above, all rights of such Guarantor against the Borrower or any
other Loan Party arising as a result thereof by way of right of
subrogation, contribution, reimbursement, indemnity or otherwise
shall in all respects be subject to Article III.
SECTION 2.06. Information . Each Guarantor assumes all
responsibility for being and keeping itself informed of the
Borrower’s and each other Loan Party’s financial
condition and assets, and of all other circumstances bearing upon
the risk of nonpayment of the Obligations, and the nature, scope
and extent of the risks that such Guarantor assumes and incurs
hereunder, and agrees that none of the Collateral Agent or the
other Secured Parties will have any duty to advise such Guarantor
of information known to it or any of them regarding such
circumstances or risks.
ARTICLE III
Indemnity, Subrogation and
Subordination
SECTION 3.01. Indemnity and Subrogation . In addition to
all such rights of indemnity and subrogation as the Guarantors may
have under applicable law (but subject to Section 3.03), the
Borrower agrees that in the event a payment of an obligation shall
be made by any Guarantor under this Agreement, the Borrower shall
indemnify such Guarantor for the full amount of such payment and
such Guarantor shall be subrogated to the rights of the Person to
whom such payment shall have been made to the extent of such
payment.
SECTION 3.02. Contribution and Subrogation . Each
Subsidiary Party (a " Contributing Party ") agrees (subject
to Section 3.03) that, in the event a payment shall be made by any
other Subsidiary Party hereunder in respect of any Obligation and
such other Subsidiary Party (the " Claiming Party ") shall
not have been fully indemnified by the Borrower as provided in
Section 3.01, the Contributing Party shall indemnify the Claiming
Party in an amount equal to the amount of such payment, in each
case multiplied by a fraction of which the numerator shall be the
net worth of the Contributing Party on the date hereof and the
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denominator shall be the aggregate net worth of all the
Contributing Parties together with the net worth of the Claiming
Party on the date hereof (or, in the case of any Guarantor becoming
a party hereto pursuant to Section 4.14, the date of the Guaranty
Supplement hereto executed and delivered by such Guarantor). Any
Contributing Party making any payment to a Claiming Party pursuant
to this Section 3.02 shall be subrogated to the rights of such
Claiming Party to the extent of such payment.
SECTION 3.03. Subordination .
(a)
Notwithstanding any provision of this Agreement to
the contrary, all rights of the Guarantors under Sections 3.01 and
3.02 and all other rights of indemnity, contribution or subrogation
under applicable law or otherwise shall be fully subordinated to
the indefeasible payment in full in cash of the Obligations. No
failure on the part of the Borrower or any Guarantor to make the
payments required by Sections 3.01 and 3.02 (or any other payments
required under applicable law or otherwise) shall in any respect
limit the obligations and liabilities of any Guarantor with respect
to its obligations hereunder, and each Guarantor shall remain
liable for the full amount of the obligations of such Guarantor
hereunder.
(b)
Each Guarantor hereby agrees that upon the
occurrence and during the continuance of an Event of Default and
after notice from the Collateral Agent all Indebtedness owed by it
to any Subsidiary shall be fully subordinated to the indefeasible
payment in full in cash of the Obligations.
(c)
Each Guarantor hereby subordinates any and all
debts, liabilities and other obligations owed to such Guarantor by
each other Loan Party in respect of any payment by any Guarantor
under this Agreement (the " Subordinated Obligations ") to
the Obligations to the extent and in the manner hereinafter set
forth in this Section 3.03:
(d)
Prohibited Payments, Etc . Except during
the continuance of an Event of Default and after notice from the
Collateral Agent, each Guarantor may receive regularly scheduled
payments from any other Loan Party on account of the Subordinated
Obligations. After the occurrence and during the continuance of any
Event of Default and after notice from the Collateral Agent,
however, unless the Collateral Agent otherwise agrees, no Guarantor
shall demand, accept or take any action to collect any payment on
account of the Subordinated Obligations.
(e)
Prior Payment of Obligations . In any
proceeding under any Bankruptcy Law relating to any other Loan
Party, each Guarantor agrees that the Secured Parties shall be
entitled to receive payment in full in cash of all Obligations
before such Guarantor receives payment of any Subordinated
Obligations.
(f)
Turn-Over . After the occurrence and
during the continuance of any Event
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