EXHIBIT 10.60
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AMENDED AND RESTATED GUARANTY AND CONTINGENT PURCHASE AGREEMENT
Dated as of February 17, 1995
between
VITAS HEALTHCARE CORPORATION
and
NATIONSBANK OF FLORIDA, NATIONAL ASSOCIATION
relating to
$2,386,670 Term Loan to the
Vitas Healthcare Corporation Employee Stock Ownership Trust
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms ..................................... 3
SECTION 1.02. General ................................................... 19
ARTICLE II
GUARANTY AND CONTINGENT PURCHASE
SECTION 2.01. The Guaranty .............................................. 21
SECTION 2.02. Guaranty Unconditional .................................... 21
SECTION 2.03. Operation of Guaranty ..................................... 21
SECTION 2.04. Obligation of Guarantor Absolute .......................... 22
SECTION 2.05. Waiver of Notice .......................................... 22
SECTION 2.06. Postponement of Subrogation ............................... 23
SECTION 2.07. Security .................................................. 23
SECTION 2.08. Purchase of ESOP Loan Documents ........................... 24
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties ............................ 26
ARTICLE IV
AFFIRMATIVE COVENANTS
SECTION 4.01. Financial Reports, Etc. ................................... 35
SECTION 4.02. Maintain Properties ....................................... 37
SECTION 4.03. Existence, Qualification, Etc. ............................ 37
SECTION 4.04. Regulations and Taxes ..................................... 37
SECTION 4.05. Insurance ................................................. 37
SECTION 4.06. True Books ................................................ 38
SECTION 4.07. Perform Covenants ......................................... 38
SECTION 4.08. Right of Inspection ....................................... 38
SECTION 4.09. Observe all Laws .......................................... 38
SECTION 4.10. Governmental Licenses ..................................... 38
SECTION 4.11. Covenants Extending to Subsidiaries ....................... 38
SECTION 4.12. Officer's Knowledge of Default ............................ 38
SECTION 4.13. Suits or Other Proceedings ................................ 39
SECTION 4.14. Notice of Discharge of Hazardous Material or
Environmental Complaint ................................. 39
SECTION 4.15. Environmental Compliance .................................. 39
SECTION 4.16. Indemnification ........................................... 39
SECTION 4.17. Further Assurances ........................................ 39
SECTION 4.18. ERISA Requirement ......................................... 40
SECTION 4.19. Continued Operations ...................................... 40
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SECTION 4.20. Use of Proceeds ........................................... 40
SECTION 4.21. Trade Names ............................................... 40
SECTION 4.22. Property Location ......................................... 41
SECTION 4.23. Chief Executive Offices ................................... 41
SECTION 4.24. New Obligated Subsidiaries ................................ 41
SECTION 4.25. Sufficient Contributions .................................. 43
ARTICLE V
NEGATIVE COVENANTS
SECTION 5.01. Consolidated Shareholders' Equity ......................... 44
SECTION 5.02. Current Ratio ............................................. 44
SECTION 5.03. Consolidated Interest Coverage Ratio ...................... 44
SECTION 5.04. Consolidated Leverage Ratio ............................... 44
SECTION 5.05. Consolidated Fixed Charge Ratio ........................... 45
SECTION 5.06. Indebtedness .............................................. 45
SECTION 5.07. Liens ..................................................... 46
SECTION 5.08. Transfer of Assets ........................................ 47
SECTION 5.09. Investments; Acquisitions ................................. 47
SECTION 5.10. Dividends or Distributions ................................ 48
SECTION 5.11. Merger or Consolidation ................................... 49
SECTION 5.12. Change in Control ......................................... 49
SECTION 5.13. Transactions with Affiliates .............................. 49
SECTION 5.14. ERISA ..................................................... 50
SECTION 5.15. Fiscal Year ............................................... 50
SECTION 5.16. Dissolution, etc. ......................................... 51
SECTION 5.17. Rate Hedging Obligations .................................. 51
SECTION 5.18. Subordinated Obligations .................................. 51
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.01. Events of Default ........................................ 52
SECTION 6.02. Rights Upon an Event of Default .......................... 55
SECTION 6.03. No Remedy Exclusive ...................................... 55
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Amendments, Etc. .......................................... 56
SECTION 7.02. Notices, Etc. ............................................. 56
SECTION 7.03. No Waiver ................................................. 57
SECTION 7.04. Right of Set-off .......................................... 57
SECTION 7.05. Costs, Expenses and Taxes ................................. 57
SECTION 7.06. Binding Effect ............................................ 58
SECTION 7.07. Severability .............................................. 58
SECTION 7.08. Governing Law ............................................. 58
SECTION 7.09. Headings .................................................. 58
SECTION 7.10. Prior Agreements Superseded ............................... 58
SECTION 7.11. Counterparts .............................................. 58
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SECTION 7.12. Consents ................................................. 58
SECTION 7.13. Supplements to Schedules ................................. 59
EXHIBIT A Notice of Appointment (or Revocation)
of Authorized Representative ............................... 62
EXHIBIT B Compliance Certificate ..................................... 63
EXHIBIT C Form of Subsidiary Guaranty ................................ 70
EXHIBIT D Form of Subsidiary Security Agreement ...................... 71
Schedule 3.01(d) Subsidiaries and Investments
Schedule 3.01(f) Contingent and Other Obligations
Schedule 3.01(g) Existing Liens on the Collateral
Schedule 3.01(h) Taxes
Schedule 3.01(j) Litigation
Schedule 3.01(m) Exceptions Regarding Patents
Schedule 3.01(o) Consents and Notices
Schedule 3.01(r) Hazardous Materials
Schedule 3.01(t) Pending Administrative Matters
Schedule 4.05 Existing Insurance
Schedule 4.21 Trade Names
Schedule 4.22 Locations of Equipment and Inventory
Schedule 5.06 Indebtedness
Vitas agrees to provide a copy of this exhibit to the Commission upon request.
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AMENDED AND RESTATED GUARANTY AND CONTINGENT PURCHASE AGREEMENT (the
"Guaranty"), dated as of February 17, 1995, by and between VITAS HEALTHCARE
CORPORATION, a Delaware corporation (the "Guarantor"), and NATIONSBANK OF
FLORIDA, NATIONAL ASSOCIATION, a national banking association (the "Bank").
PRELIMINARY STATEMENTS:
(1) The Vitas Healthcare Corporation Employee Stock Ownership Trust, a
trust organized and existing under the Federal law and laws of the State of
Delaware (the "Borrower") formed pursuant to the Vitas Healthcare Corporation
Employee Stock Ownership Plan originally effective as of October 1, 1989 , as
amended to date (the "Plan"), entered into a Loan Agreement dated as of August
11, 1994 (as the same may be amended, modified or supplemented as therein
permitted, the "Agreement") with the Bank pursuant to which the Bank made a term
loan to the Borrower in the initial principal amount of $2,386,670 (the "Loan")
to refinance a securities acquisition loan to the Trust by the Guarantor in the
original principal amount of $2,864,000 made on or about December 17, 1991 (the
"Prior Loan").
(2) In connection with the making of the Loan, the Guarantor, as sponsor
of the Plan and lender of the Prior Loan, executed and delivered a Guaranty and
Contingent Purchase Agreement of even date with the Agreement (the "Prior
Guaranty") thereby (i) guaranteeing the payment and performance by the Borrower
of its obligations under the Agreement and other loan documents executed by the
Borrower in connection therewith and (ii) agreeing, upon the occurrence of
certain events, to purchase at the election of the Bank all of the right, title
and interest of the Bank (other than rights under the Security Agreement, as
defined below) in, to and under the Agreement and such other loan documents.
(3) The Guarantor and Vitas Healthcare Corporation of California, a
Subsidiary of the Guarantor ("Vitas California"), have entered into an Asset
Purchase Agreement with the Sellers (as hereinafter defined) dated as of
December 27, 1994 (the "Asset Purchase Agreement") pursuant to which Vitas
California has agreed to purchase substantially all of the operating assets of
the CHC Entities (as hereinafter defined) pursuant to the terms and subject to
the conditions set forth therein, and, in connection therewith the Guarantor has
requested the Bank to consent to such acquisition.
(4) The Bank is unwilling to consent to the acquisition transaction
described above unless the Prior Guaranty is amended and restated as herein
provided.
(5) The Guarantor has and will continue to materially and directly benefit
from the making and continuation of the Loan to Borrower and will materially
benefit from the consummation of the acquisition transaction described above,
and, therefore, to provide an inducement to the Bank to consent thereto, the
Guarantor is willing to enter into this Guaranty.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, including the covenants, terms and conditions
hereinafter appearing and in order to induce the Lender to make the Loan, the
parties hereto agree as follows:
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ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this Guaranty, in addition
to the terms defined above, the following terms shall have the following
meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined):
"Accounts" of any Person means all accounts, accounts receivable,
contract rights, general intangibles, notes, bills, acceptances, choses in
action, chattel paper, instruments, documents, and other forms of
obligations at any time owing to such Person, the proceeds thereof and all
of such Person's rights with respect to any goods represented thereby,
whether or not delivered, goods returned by customers and all rights as an
unpaid vendor or lienor, including rights of stoppage in transit and of
recovering possession by proceedings including replevin and reclamation,
together with all customer lists, books and records, ledger and account
cards, computer tapes, software, disks, printouts and records, whether now
in existence or hereafter created, relating to Accounts.
"Affiliate" means a Person, other than a Subsidiary, (i) which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with the Guarantor; (ii) which
is the beneficial owner (as defined in Rule 13d-3 of the Securities
Exchange Act of 1934, as amended) of 10% or more of any class of the
outstanding voting stock of the Guarantor; (iii) 10% or more of any class
of the outstanding voting stock (or in the case of a Person which is not a
corporation, 10% or more of the equity interest) of which is beneficially
owned or held by the Guarantor. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of
the management and policies of a Person, whether through ownership of
voting stock, by contract or otherwise; provided, however, that when the
Guarantor registers any security issued by it pursuant to the Securities
Act of 1933, as amended, the figure 10% used throughout this definition
shall automatically be changed to 5%.
"Authorized Representative" means any of the President, chief
executive officer or chief financial officer of the Guarantor or, with
respect to financial matters, the Treasurer, any Assistant Treasurer or
chief financial officer of the Guarantor or any other person expressly
designated by the Board of Directors of the Guarantor (or the appropriate
committee thereof) as an Authorized Representative of the
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Guarantor, as set forth from time to time in a certificate in the form
attached hereto as Exhibit A.
"Board" means the Board of Governors of the Federal Reserve System
(or any successor body).
"Business Day" means any day which is not a Saturday, Sunday or a
day on which banks in the States of North Carolina or Florida are
authorized or obligated by law, executive order or governmental decree to
be closed.
"Capital Expenditures" means, for any period, the sum of (without
duplication) (i) all expenditures (whether paid in cash or accrued as
liabilities) by the Guarantor or any Subsidiary during that period that
are for items that would be classified as "property, plant or equipment"
or comparable items on the consolidated balance sheet of the Guarantor,
plus (ii) with respect to any Capital Lease entered into by the Guarantor
or its Subsidiaries during such period, the present Value of the lease
payments due under such Capital Lease over the term of such Capital Lease
applying a discount rate equal to the interest rate provided in such lease
(or in the absence of a stated interest rate that rate used in the
preparation of the financial statements described in Section 4.01(a)
hereof), excluding, however, the amount of any Capital Expenditures paid
for with proceeds of casualty insurance.
"Capital Leases" means all leases which have been or should be
capitalized in accordance with Generally Accepted Accounting Principles as
in effect from time to time including Statement No. 13 of the Financial
Accounting Standards Board and any successor thereof.
"CHC Entities" means, collectively, Community and the following
limited partnerships, of each of which Community is the sole general
partner as of the Closing Date: Community Hospice Care of Orange County,
Ltd. L.P., Community Hospice Care of San Diego Limited Partnership,
Community Hospice Care - Coastal Cities Limited Partnership, Community
Hospice Care - Inland Cities Limited Partnership, Community Hospice Care -
San ▇▇▇▇▇▇▇ Valley Limited Partnership, Community Hospice Care - Valley
Cities, L. P., and Community Hospice Care - Los Angeles Cities, L.P.
"CHC Transaction" means the acquisition by Vitas California of
substantially all of the operating assets of the CHC Entities in
accordance with the terms of the Asset Purchase Agreement.
"CHC Transaction Documents" means, collectively, the Asset Purchase
Agreement, the Seller Notes, the Subordination Agreements, and the ▇▇▇▇ of
Sale, Assumption Agreement, guaranty, Will Agreement, Joint Account
Agreement, Non-
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Competition Agreement and Will Non-Competition Agreement referred to in
the Asset Purchase Agreement (including in each case all exhibits and
schedules thereto).
"Closing Date" means the date of this Guaranty.
"Code" means the Internal Revenue Code of 1986, as amended, any
successor provision or provisions and any regulations promulgated
thereunder.
"Collateral" means, collectively, all collateral or security at any
time granted to the Bank in its capacity as lender under the Agreement and
as agent for the lenders under the Revolving Credit Agreement by the
Borrower, the Guarantor, the Subsidiaries or any other Person pursuant to
the Security Documents.
"Community" means Community Hospice Care, Inc., a California
corporation.
"Consistent Basis" in reference to the application of Generally
Accepted Accounting Principles means the accounting principles observed in
the period referred to are comparable in all material respects to those
applied in the preparation of the audited financial statements of the
Guarantor referred to in Section 3.0l(f)(i) hereof, subject to Section
1.02 hereof.
"Consolidated Current Assets" means cash and all other assets of the
Guarantor and its Subsidiaries which are expected to be realized in cash,
sold in the ordinary course of business, or consumed within one year or
which would be classified as a current asset, all determined in accordance
with Generally Accepted Accounting Principles applied on a Consistent
Basis.
"Consolidated Current Liabilities" means all liabilities of the
Guarantor and its Subsidiaries which by their terms are payable within one
year (including all Indebtedness payable on demand or maturing not more
than one year from the date of computation and the current portion of
Indebtedness having a maturity date in excess of one year, but excluding
in all cases the Revolving Credit Debit Balance, the Term Loan and the
Seller Notes (each as defined in the Revolving Credit Agreement)), all
determined in accordance with Generally Accepted Accounting Principles
applied on a Consistent Basis.
"Consolidated EBITDAR" means, with respect to the Guarantor and its
Subsidiaries for any period of computation thereof, the sum of, without
duplication, (i) Consolidated Net Income, plus (ii) Consolidated Interest
Expense accrued during such period, plus (iii) taxes on income accrued
during such period, plus (iv) amortization accrued during such period,
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plus (v) any depreciation during such period, plus (vi) all contributions
made or accrued by the Guarantor during such period related to the ESOP,
plus (vii) Consolidated Rentals, all determined on a consolidated basis in
accordance with Generally Accepted Accounting Principles applied on a
Consistent Basis.
"Consolidated Fixed Charge Ratio" means, with respect to the
Guarantor and its Subsidiaries for the Four-Quarter Period ending on the
date of computation thereof, the ratio of (a) Consolidated EBITDAR minus
Capital Expenditures (other than (i) Capital Expenditures of up to
$2,300,000 in the aggregate incurred in connection with the operation of
the business acquired in the CHC Transaction and (ii) Capital Expenditures
incurred under Capital Leases) to (b) Consolidated Fixed Charges.
"Consolidated Fixed Charges" means, with respect to the Guarantor
and its Subsidiaries, for any period of computation thereof, the sum of,
without duplication, (i) Consolidated Interest Expense accrued during such
period, (ii) dividends and distributions (other than dividends payable
solely in capital stock of the Guarantor) paid during such period,
including Preferred Stock Redemptions, but excluding redemptions of
Preferred Stock effected in connection with and funded with proceeds of
the Borrower's offering of Qualified Equity Securities, (iii) required
principal payments of Consolidated Funded Indebtedness required to be paid
during such period (but excluding any principal payments that might be
required under the Revolving Credit Agreement), and (iv) Consolidated
Rentals.
"Consolidated Funded Indebtedness" means Indebtedness for Money
Borrowed of the Guarantor and its Subsidiaries and the ESOP Debt.
"Consolidated Indebtedness" means all Indebtedness of the Guarantor
and its Subsidiaries, all determined on a consolidated basis and including
the ESOP Debt.
"Consolidated Interest Coverage Ratio" means, with respect to the
Guarantor and its Subsidiaries for the Four-Quarter Period ending on the
date of computation thereof, the ratio of (a) Consolidated Net Income plus
to the extent deducted in determining Consolidated Net Income (i) taxes
based on income accrued during such period, (ii) Consolidated Interest
Expense, plus (iii) all contributions made or accrued by the Guarantor
during such period related to the ESOP to (b) Consolidated Interest
Expense.
"Consolidated Interest Expense" means, with respect to any period of
computation thereof, the gross interest expense of the Guarantor and its
Subsidiaries accrued during such
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period and including interest expense payable in respect of the ESOP Debt,
including without limitation (i) the amortization of debt discounts, (ii)
the amortization of all fees (including, without limitation, fees payable
in respect of a Swap Agreement) payable in connection with the incurrence
of Indebtedness to the extent included in interest expense and (iii) the
portion of any liabilities incurred in connection with Capital Leases
allocable to interest expense, all determined on a consolidated basis in
accordance with Generally Accepted Accounting Principles applied on a
Consistent Basis.
"Consolidated Leverage Ratio" means the ratio of Consolidated Funded
Indebtedness to Consolidated Total Capital.
"Consolidated Net Income" means, for any period of computation
thereof, the gross revenues from operations of the Guarantor and its
Subsidiaries (including payments received by the Guarantor and its
Subsidiaries of (i) interest income, and (ii) dividends and distributions
made in the ordinary course of their businesses by Persons in which
investment is permitted pursuant to Section 5.09 and not related to an
extraordinary event) less all operating and non-operating expenses of the
Guarantor and its Subsidiaries including taxes on income (excluding,
however, up to $800,000 of expenses incurred in connection with
preparation of a proposed public offering of the Guarantor's capital stock
that was not pursued due to market conditions) all determined on a
consolidated basis in accordance with Generally Accepted Accounting
Principles applied on a Consistent Basis; but excluding as income: (i) net
gains on the sale, conversion or other disposition of capital assets, (ii)
net gains on the acquisition, retirement, sale or other disposition of
capital stock and other securities of the Guarantor or its Subsidiaries,
(iii) net gains on the collection of proceeds of life insurance policies,
(iv) any write-up of any asset, and (v) any other net gain or credit of an
extraordinary nature as determined in accordance with Generally Accepted
Accounting Principles applied on a Consistent Basis.
"Consolidated Rentals" means and includes with respect to any period
of determination thereof, the aggregate amount of all fixed payments
(including as such all payments which the lessee is obligated to make to
the lessor on termination of the lease or surrender of the leased
property) payable by the Guarantor or any of its Subsidiaries, as lessee
or sublessee under any lease of real property, or with respect to
inpatient facilities, any lease of real or personal property, and shall
include any amounts required to be paid by the Guarantor or any of its
Subsidiaries (whether or not designated as rents or additional rents) on
account of maintenance, repairs, insurance, taxes and similar charges.
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"Consolidated Shareholders' Equity" means, at any time as of which
the amount thereof is to be determined, the sum of the following in
respect of the Guarantor and its Subsidiaries (determined on a
consolidated basis and excluding intercompany items among the Borrower and
its Subsidiaries and any upward adjustment after the Closing Date due to
revaluation of assets): (i) the amount of issued and outstanding capital
stock, plus (ii) the amount of additional paid-in capital and retained
income (or, in the case of a deficit, minus the amount of such deficit),
minus, without duplication, (iii) the amount of any deferred compensation
or other contra-equity account in respect of the ESOP Debt), in each case
as determined in accordance with Generally Accepted Accounting Principles
applied on a Consistent Basis, except that regardless of the treatment
thereof under Generally Accepted Accounting Principles, the Preferred
Stock and Qualified Equity Securities shall be considered part of
Consolidated Shareholders' Equity for purposes of this Guaranty.
"Consolidated Total Capital" means the sum of Consolidated Funded
Indebtedness and Consolidated Shareholders' Equity.
"Contingent Obligation" of any Person means all contingent
liabilities required (or which, upon the creation or incurring thereof,
would be required) to be included in the consolidated financial statements
(including footnotes) of such Person in accordance with Generally Accepted
Accounting Principles applied on a Consistent Basis, including Statement
No. 5 of the Financial Accounting Standards Board, and any obligation of
such Person guaranteeing or in effect guaranteeing any Indebtedness,
dividend or other obligation of any other Person (the "primary obligor")
in any manner, whether directly or indirectly, including obligations of
such Person however incurred:
(1) to purchase such Indebtedness or other obligation or any
property or assets constituting security therefor;
(2) to advance or supply funds in any manner (i) for the
purchase or payment of such Indebtedness or other obligation, or
(ii) to maintain a minimum working capital, net worth or other
balance sheet condition or any income statement condition of the
primary obligor;
(3) to grant or convey any lien, security interest, pledge,
charge or other encumbrance on any property or assets of such Person
to secure payment of such Indebtedness or other obligation;
(4) to lease property or to purchase securities or other
property or services primarily for the purpose of
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assuring the owner or holder of such Indebtedness or obligation of
the ability of the primary obligor to make payment of such
Indebtedness or other obligation; or
(5) otherwise to assure the owner of the Indebtedness or such
obligation of the primary obligor against loss in respect thereof.
with respect to Contingent Obligations, such liabilities shall be computed
at the amount which, in light of all the facts and circumstances existing
at the time, represent the present value of the amount which can
reasonably be expected to become an actual or matured liability.
"Cost of Acquisition" means the sum of the purchase price, as
reflected in any definitive agreement to acquire all or any portion of the
stock or all or any portion of the assets of any Person plus, without
duplication, any Indebtedness assumed by the Guarantor or its Subsidiaries
in connection with such acquisition.
"Default" shall mean an Event of Default or an event that with
notice or lapse of time or both would become an Event of Default.
"Default Rate" shall mean the Prime Rate plus two percent (2%) per
annum.
"Eligible Securities" means the following obligations and any other
obligations previously approved in writing by the Bank:
(a) Government Securities;
(b) the following debt securities of the following agencies or
instrumentalities of the United States of America if at all times
the full faith and credit of the United States of America is pledged
to the full and timely payment of all interest and principal
thereof:
(i) all direct or fully guaranteed obligations of the
United States Treasury; and
(ii) mortgage-backed securities and participation
certificates guaranteed by the Government National Mortgage
Association or any successor thereto;
(c) the following obligations of the following agencies or
instrumentalities of the United States of America:
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(i) participation certificates and debt obligations of
the Federal Home Loan Mortgage Corporation or any successor
thereto;
(ii) consolidated debt obligations, and obligations
secured by a letter of credit, of any of the Federal Home Loan
Banks; and
(iii) debt obligations and mortgage-backed securities of
the Federal National Mortgage Association or any successor
thereto which have not had the interest portion thereof
severed therefrom;
(d) obligations of any corporation organized under the laws of
any state of the United States of America or under the laws of any
other nation, payable in the United States of America, expressed to
mature not later than one year following the date of purchase
thereof and rated in an investment grade rating category by S&P and
Moody's;
(e) interest bearing demand or time deposits issued by the
Bank or certificates of deposit maturing within one year from the
date of acquisition issued by a bank or trust company organized
under the laws of the United States or of any state thereof having
capital surplus and undivided profits aggregating at least
$400,000,000 and being rated A-3 or better by S&P or A or better by
Moody's;
(f) Repurchase Agreements;
(g) Pre-Refunded Municipal Obligations;
(h) shares of mutual funds which invest in obligations
described in paragraphs (a) through (g) above, the shares of which
mutual funds are at all times rated "AAA" by S&P;
(i) asset-backed remarketed certificates of participation
representing a fractional undivided interest in the assets of a
trust, which certificates are rated at least "A-l" by S&P and "P-l"
by Moody's; and
(j) any other obligation or security, the investment in which
is consistent with the Guarantor's written investment policies, a
copy of which has been delivered by the Guarantor to the Bank.
Obligations which are in book-entry form must be held in a
book-entry custody account with any Federal Reserve Bank or with a
clearing corporation or chain of clearing corporations which has an
account with any Federal Reserve Bank.
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"Environmental Laws" means, collectively, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended, the Superfund Amendments and Reauthorization Act of 1986, the
Resource Conservation and Recovery Act, the Toxic Substances Control Act,
as amended, the Clean Air Act, as amended, the Clean Water Act, as
amended, any other "Superfund" or "Superlien" law or any other federal, or
applicable state or local statute, law, ordinance, code, rule, regulation,
order or decree regulating, relating to, or imposing liability or
standards of conduct concerning, any hazardous, toxic or dangerous waste,
substance or material.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and the regulations thereunder, all as the same shall be
in effect at such time.
"ESOP Debt" means, as of any date of computation thereof, the
aggregate principal amount of the indebtedness outstanding under the ESOP
Loan Documents.
"ESOP Loan Documents" means the Agreement and all promissory notes,
pledge agreements and other documents, instruments and agreements now or
hereafter delivered to the Bank evidencing or relating to the indebtedness
incurred pursuant to the Agreement, as any of such documents may have been
or hereafter be amended, modified or supplemented as therein and herein
permitted.
"Event of Default" shall have the meaning assigned to such term in
Article VI hereof.
"Fiscal Year" means the 12 month period of the Guarantor ending on
September 30 of each calendar year and commencing on October 1 of each
calendar year, subject to change pursuant to Section 5.15 hereof.
"Four-Quarter Period" means a period of four full consecutive
quarterly periods, taken together as one accounting period.
"Generally Accepted Accounting Principles" means generally accepted
accounting principles in effect in the United States of America as applied
by nationally recognized accounting firms.
"Government Receivables" means Accounts of the Guarantor or any
Subsidiary as to which the United States of America or any State or agency
or instrumentality thereof (including, without limitation, any agent,
fiscal intermediary or carrier acting on behalf or under the direction of
the United States of America or any State or agency or instrumentality
thereof) is the account obligor.
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"Government Securities" means direct obligations of, or obligations
the timely payment of principal and interest on which are fully and
unconditionally guaranteed by, the United States of America.
"Governmental Authority" shall mean any Federal, state, municipal,
national or other governmental department, commission, board, bureau,
agency or instrumentality or political subdivision thereof or any entity
or officer exercising executive, legislative or judicial, regulatory or
administrative functions of or pertaining to any government or any court,
in each case whether of a state, territory or possession of the United
States, the United States, a foreign governmental entity or the District
of Columbia.
"Hazardous Material" means and includes any hazardous, toxic or
dangerous waste, substance or material, the generation, handling, storage,
disposal, treatment or emission of which is subject to any Environmental
Law.
"Indebtedness" means with respect to any Person, without
duplication, all Indebtedness for Money Borrowed, all indebtedness of such
Person for the acquisition of property, all indebtedness secured by any
Lien on the property of such Person whether or not such indebtedness is
assumed (but if not assumed, then the amount of such indebtedness shall be
the lower of the amount thereof or the book value of such property), all
liability of such Person by way of endorsements (other than for collection
or deposit in the ordinary course of business), all Contingent
Obligations; but excluding all accounts payable in the ordinary course of
business so long as payment therefor is due within one year; provided that
in no event shall the term Indebtedness include shareholders' capital,
surplus and retained earnings, minority interest in Subsidiaries, lease
obligations (other than pursuant to Capital Leases), the Preferred Stock,
obligations to pay dividends on or to redeem the Preferred Stock,
Qualified Equity Securities, reserves for deferred income taxes and
investment credits, other deferred credits and reserves, including,
without limitation, unearned Medicare prospective payments, and deferred
compensation obligations (except that deferred compensation obligations
relating to the ESOP Debt shall constitute Indebtedness).
"Indebtedness for Money Borrowed" means all indebtedness in respect
of money borrowed, including without limitation all Capital Leases and the
deferred purchase price of any property or asset, evidenced by a
promissory note, bond or similar written obligation for the payment of
money (including, but not limited to, conditional sales or similar title
retention agreements) and shall include the ESOP Debt.
12
"Individual Sellers" means, collectively, ▇▇▇▇▇▇ ▇. Black, a
resident of the State of California, and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, a resident of
the State of Colorado, each a signatory to the Asset Purchase Agreement.
"Lien" means any interest in property securing any obligation owed
to, or a claim by, a Person other than the owner of the property, whether
such interest is based on the common law, statute or contract, and
including but not limited to the lien or security interest arising from a
mortgage, encumbrance, pledge, security agreement, conditional sale or
trust receipt or a lease, consignment or bailment for security purposes.
For the purposes of this Guaranty, the Guarantor and its Subsidiaries
shall be deemed to be the owners of any property which any of them have
acquired or hold subject to a conditional sale agreement, financing lease,
or other arrangement pursuant to which title to the property has been
retained by or vested in some other Person for security purposes.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc., a Delaware
corporation, or any successor thereto.
"Multi-employer Plan" means an employee pension benefit plan covered
by Title IV of ERISA and in respect of which the Guarantor or any
Subsidiary is an "employer" as described in Section 4001(b) of ERISA,
which is also a multi-employer plan as defined in Section 4001(a)(3) of
ERISA.
"Obligated Subsidiary" means, collectively, (i) Vitas California,
Vitas Healthcare Corporation of Florida, a Florida corporation, Vitas
Healthcare Corporation of Ohio, a Delaware corporation, Vitas Healthcare
Corporation of Pennsylvania, a Delaware corporation, (ii) every other
Subsidiary of the Guarantor, existing as of the Closing Date, and every
Strategic Investment Subsidiary, which (x) in any calendar month shall
have operating revenues of $50,000 or more and (y) shall have executed and
delivered a Guaranty pursuant to Section 4.24 hereof, and (iii) every
other Subsidiary (excluding Strategic Investment Subsidiaries) of the
Guarantor hereafter organized or acquired which shall have executed and
delivered a Guaranty pursuant to Section 4.24 hereof.
"New Guaranty Event" shall have the meaning therefor provided in
Section 4.24.
"9% Preferred Stock" means the 9.0% Cumulative Nonconvertible
Preferred Stock, par value $1.00 per share, issued by the Guarantor, of
which 270,000 shares are issued and outstanding as of the Closing Date.
"Permitted Acquisition" means the acquisition by Guarantor or any
Subsidiary of any Person or the assets of any
13
Person, which satisfies the following: (i) such Person is or the assets of
such Person are used in the same or similar line of business as that
engaged in by Guarantor, (ii) the Person acquired does not oppose such
acquisition, (iii) such Person (to the extent a separate entity is
acquired or results) becomes a Subsidiary and is consolidated with
Guarantor for financial reporting purposes or the assets acquired from
such Person are owned by Guarantor or a Subsidiary, (iv) if the Cost of
Acquisition exceeds $2,500,000, the Bank shall have consented thereto, and
(v) no Default or Event of Default exists immediately after giving effect
to such acquisition.
"Permitted Liens" means those Liens described in subsections (i)
through (vii) of Section 5.07 hereof.
"Person" means an individual, partnership, corporation, trust,
unincorporated organization, association, joint venture or a government or
agency or political subdivision thereof.
"Pledge Agreement" shall mean the Pledge Agreement of even date with
the Agreement from the Borrower to the Bank, as amended, modified or
supplemented from time to time.
"Preferred Stock" means , collectively, the 9% Preferred Stock and
the Series B Preferred Stock.
"Preferred Stock Redemption" means (i) with respect to 9% Preferred
Stock, redemptions made by Guarantor pursuant to Section 3(b) of the
Certificate of Designation, Preferences and Other Rights of 9.0%
Cumulative Nonconvertible Preferred Stock of Guarantor, and (ii) with
respect to Series B Preferred Stock, redemptions made by Guarantor
pursuant to Sections 3(a) and 3(b) of the Certificate of Designation,
Preferences and Other Rights of the Series B Convertible Preferred Stock
of Guarantor.
"Pre-Refunded Municipal Obligations" means obligations of any state
of the United States of America or of any municipal corporation or other
public body organized under the laws of any such state which are rated,
based on the escrow, in the highest investment rating category by both S&P
and Moody's and which have been irrevocably called for redemption and
advance refunded through the deposit in escrow of Government Securities or
other debt securities which are (i) not callable at the option of the
issuer thereof prior to maturity, (ii) irrevocably pledged solely to the
payment of all principal and interest and other charges on such
obligations as the same becomes due and (iii) in a principal amount and
bear such rate or rates of interest as shall be sufficient to pay in full
all principal of, interest, and premium, if any, on such obligations as
the same becomes due as verified by a nationally recognized firm of
certified public accountants.
14
"Prime Rate" shall mean that rate of interest announced from time to
time by the Bank to be its prime rate. The Prime Rate is not necessarily
the best or the lowest rate of interest offered by the Bank.
"Projection of Combined Entities" means the Vitas Healthcare
Corporation Analysis of Community Hospice Care, Inc. dated as of January
24, 1995;
"Purchase Event" means any Event of Default as defined in Article VI
hereof.
"Qualified Equity Securities" means either of the following types of
equity securities of the Guarantor sold in a public or private offering:
(i) common stock; or
(ii) preferred stock having no right to the payment of cash
dividends or other similar cash distributions and as to which the
Guarantor has no obligation to redeem, repurchase or otherwise
retire any of such securities during the period from the date of
issuance thereof until not earlier than 91 days following the full
payment and satisfaction of the obligations arising under this
Guaranty and termination of this Guaranty, the net proceeds of which
preferred stock are used to the extent necessary to redeem in whole
the Series A Preferred Stock;
provided that in either case such securities are issued substantially
simultaneously with or following either (x) the redemption in full of the
Series B Preferred Stock or (y) amendment of the Series B Preferred Stock
(and related Certificate of Designature, Preferences and Other Rights) in
form and substance reasonably acceptable to the Agent in order to
eliminate any obligation of the Guarantor to redeem, repurchase or
otherwise retire any of such securities until not earlier than 91 days
following the full payment and satisfaction of the obligations arising
under this Guaranty and termination of this Guaranty.
"Rate Hedging Obligations" means any and all obligations of the
Guarantor, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals,
extensions and modifications thereof and substitutions therefor), under
(a) any and all agreements, devices or arrangements designed to protect at
least one of the parties thereto from the fluctuations of interest rates,
exchange rates or forward rates applicable to such party's assets,
liabilities or exchange transactions, including, but not limited to,
dollar-denominated or cross-currency interest rate exchange agreements,
forward currency exchange
15
agreements, interest rate cap or collar protection agreements, forward
rate currency or interest rate options, puts, warrants and those commonly
known as interest rate "swap" agreements; and (b) any and all
cancellations, buybacks, reversals, terminations or assignments of any of
the foregoing.
"Repurchase Agreement" means a repurchase agreement entered into
with any financial institution whose debt obligations or commercial paper
are rated "A" by either of S&P or Moody's or "A-1" by S&P or "P-1" by
Moody's.
"Required New Obligated Subsidiary" shall have the meaning therefor
provided in Section 4.24.
"Revolving Credit Agreement" means the Amended and Restated
Revolving Credit, Term Loan and Reimbursement Agreement of even date
herewith among the Guarantor, NationsBank of Florida, National
Association, as agent, and the lenders signatories thereto, as the same
may be amended, modified or supplemented as therein permitted.
"Revolving Credit Loan Documents" shall have the meaning ascribed to
the term "Loan Documents" provided in the Revolving Credit Agreement."
"S&P" means Standard & Poor's Ratings Group, a division of
▇▇▇▇▇▇-▇▇▇▇, or any successor thereto.
"Security Agreement" means the Amended and Restated Pledge and
Security Agreement dated as of the date hereof by the Guarantor to the
Bank pursuant to which the Guarantor, inter alia, grants a security
interest in the Collateral (i) to the Agent (as defined in the Revolving
Credit Agreement) for the ratable benefit of the lenders as security for
the Obligations under the Revolving Credit Loan Documents and (ii) to the
Bank as security for the obligations of Guarantor hereunder, as the same
may be modified, amended or supplemented from time to time as herein and
therein permitted.
"Security Agreements" means, collectively, the Security Agreement
and the Subsidiary Security Agreements.
"Security Documents" means the Security Agreement, the Subsidiary
Security Agreements, the financing statements required to perfect a
security interest in the Collateral, the stock certificates evidencing the
Guarantor's equity interests in all Subsidiaries with duly executed stock
powers in blank affixed thereto ("Subsidiary Stock"), and such other
documents and instruments as the Agent may require to create or perfect a
security interest in the Collateral.
16
"Series B Preferred Stock" means the Series B Convertible Preferred
Stock, par value $1.00 per share, issued by the Guarantor, of which
262,500 shares are issued and outstanding as of the Closing Date.
"Single Employer Plan" means any employee pension benefit plan
covered by Title IV of ERISA and in respect of which the Borrower or any
Subsidiary is an "employer" as described in Section 4001(b) of ERISA,
which is not a Multi-employer Plan.
"Solvent" means, when used with respect to any Person, that at the
time of determination:
(i) the fair value of its assets (both at fair valuation and
at present fair saleable value on an orderly basis) is in excess of
the total amount of its liabilities, including, without limitation,
Contingent Obligations; and
(ii) it is then able and expects to be able to pay its debts
as they mature; and
(iii) it has capital sufficient to carry on its business as
presently conducted.
"Strategic Investment" means an equity investment not constituting a
Permitted Acquisition by the Guarantor or any Subsidiary in, or any loan
or advance by the Guarantor or any Subsidiary to, a Person (i) not
constituting a Subsidiary at the time of such investment and (ii) who is
engaged in the same or similar line of business as the Guarantor, which
investment (a) is not opposed by the Person in whom such investment is
made, (b) is made pursuant to an interest or plan reflected in the minutes
of the board of directors (or appropriate committee thereof) of the
Guarantor or Subsidiary making such investment, either to acquire all or
substantially all of the stock or assets of such Person or to enter into a
joint venture, co-ownership or similar arrangement through such
investment, and (c) does not, and so far as can reasonably be foreseen
will not, give rise to or result in any Indebtedness (including any
Contingent Obligation) or other liability of, or claim against the assets
of, Guarantor or any Subsidiary (other than claims against the related
Strategic Investment itself), whether as a result of being a general
partner or joint venturer, an owner or operator of any facility or
property, or otherwise by operation of any contract, commitment, statute
or principle of law.
"Strategic Investment Subsidiary" means any Subsidiary used for the
primary purpose of making one or more Strategic Investments.
17
"Subordination Agreements" means, collectively, the Subordination
Agreement-A and the Subordination Agreement-B, each of even date herewith
from the CHC Entities subordinating the Seller Notes and certain other
rights to payment under the Asset Purchase Agreement to the payment and
satisfaction of certain obligations, as the same may be amended, modified
or supplemented from time to time as therein permitted.
"Subordinated Obligations" has the meaning provided in the
Subordination Agreements.
"Subsidiary" means any corporation or other entity in which more
than 50% of its outstanding voting stock or more than 50% of all equity
interests is owned directly or indirectly by the Guarantor and/or by one
or more of the Guarantor's Subsidiaries.
"Subsidiary Guaranty" means (i) as to all Persons who executed and
delivered a "Subsidiary Guaranty" under and as defined in the Prior
Guaranty, each Amended and Restated Guaranty and Suretyship Agreement of
an Obligated Subsidiary of even date herewith, (ii) as to Vitas
California, the Guaranty and Suretyship Agreement of Vitas California of
even date herewith, and (iii) as to Persons delivering a Guaranty pursuant
to Section 4.24 hereof, each Guaranty and Suretyship Agreement dated as of
the date of delivery thereof, in favor of the Bank, as the same may be
amended, modified or supplemented.
"Subsidiary Security Agreement" means (i) as to all Persons who
executed and delivered a "Subsidiary Security Agreement" under and as
defined in the Prior Guaranty, the Amended and Restated Pledge and
Security Agreement of each Obligated Subsidiary dated as of the date
hereof as to an Obligated Subsidiary in existence as of the date hereof,
(ii) as to Vitas California, the Pledge and Security Agreement of Vitas
California of even date herewith, and (iii) as to Persons delivering a
Pledge and Security Agreement pursuant to Section 4.24 hereof, each Pledge
and Security Agreement dated the date of such delivery, by an Obligated
Subsidiary of the Guarantor to the Agent pursuant to which such Obligated
Subsidiary, inter alia, grants a security interest in Collateral (i) to
the Agent (as defined in the Revolving Credit Agreement) for the ratable
benefit of the lenders under the Revolving Credit Loan Documents, and (ii)
to the Bank, as security for the obligations of such Obligated Subsidiary
under its Subsidiary Guaranty, as the same may be modified, amended or
supplemented from time to time as herein and therein permitted.
"Successor Preferred Stock" means preferred stock of the Guarantor
(a) described in clause (ii) of the definition of "Qualified Equity
Securities" in this Section 1.01 issued in
18
connection with (and the net proceeds of which issue are utilized to fund)
the redemption in full of the 9% Preferred Stock, or (b) (ii) having terms
which are approved by the Bank.
"Swap Agreement" means one or more agreements with respect to
Indebtedness evidenced by the promissory notes of the Guarantor
constituting Revolving Credit Loan Documents, between the Guarantor and
another Person, on terms mutually acceptable to such Guarantor and such
Person, which agreements create Rate Hedging Obligations.
"Will Agreement" has the meaning therefor provided in the Asset
Purchase Agreement.
"Will Entities" means, collectively, ▇▇▇▇▇▇ ▇. Will and WilCare
Corporation, a California corporation, signatories to the Will Agreement.
SECTION 1.02. General. All accounting terms not specifically defined
herein shall have the meanings assigned to such terms and shall be interpreted
in accordance with Generally Accepted Accounting Principles applied on a
Consistent Basis; provided, however, if any change in Generally Accepted
Accounting Principles or, if applicable, Regulation S-X promulgated pursuant to
the Securities Act of 1933, as amended, in effect on the date hereof shall
result in a change in any calculation (or the meaning or effect of any
calculation) required to determine compliance with any provision contained in
this Guaranty, the Guarantor and the Bank will amend such provision in a manner
to reflect such change such that the determination of compliance with such
provision shall yield the same result as would have obtained prior to such
change in Generally Accepted Accounting Principles or Regulation S-X. Until an
amendment is entered into covenants shall be calculated in accordance with
Generally Accepted Accounting Principles as in effect immediately preceding such
change.
All references in this instrument to designated "Articles", "Sections" and
other subdivisions are to the designated Articles, Sections and subdivisions of
this instrument as originally executed.
The terms "herein", "hereof" and "hereunder" and other words of similar
import refer to this Guaranty as a whole and not to any particular Article,
Section or other subdivision.
The terms "include," "including" and similar terms shall be construed as
if followed by the phrase "without being limited to."
All Article and Section captions herein are used for reference only and in
no way limit or describe the scope or intent of, or in any way affect, this
Guaranty.
19
Words importing the singular number shall mean and include the plural
number and visa versa.
All recitals set forth in this Guaranty are hereby incorporated in the
operative provisions of this Guaranty.
No inference in favor of or against either party shall be drawn from the
fact that such party or its counsel has drafted any portion hereof.
In the event of any conflict or inconsistency between this Guaranty and
the Revolving Credit Agreement, the Revolving Credit Agreement shall govern and
control.
20
ARTICLE II
GUARANTY AND CONTINGENT PURCHASE
SECTION 2.01. The Guaranty. Guarantor hereby unconditionally and
absolutely (i) guarantees to the Bank the full and prompt payment and
performance by Borrower of all its obligations under the ESOP Loan Documents,
including without limitation its obligations to pay interest, principal, fees,
expenses and indemnification amounts when and as the same shall become due
whether at the stated maturity thereof, by acceleration or otherwise, and (ii)
agrees to pay any and all reasonable expenses (including reasonable attorneys'
fees) incurred by the Bank in enforcing its rights under this Guaranty.
SECTION 2.02. Guaranty Unconditional. This Guaranty shall be a continuing,
absolute and unconditional guaranty and shall remain in full force and effect
until all of the obligations of Borrower under the ESOP Loan Documents shall
have been paid and satisfied in full and the ESOP Loan Documents terminated,
provided that the guarantee hereunder of indemnification obligations of Borrower
shall survive. The obligations of Guarantor hereunder shall arise absolutely and
unconditionally upon the making of the Loan to the Borrower.
SECTION 2.03. Operation of Guaranty. This is a guaranty of payment and not
of collection, and Guarantor expressly waives any right to require that any
action be brought against Borrower or to require that resort be had to any
security, whether held by or available to the Bank or to any other Person. If
Borrower shall default in payment of principal, interest, fees or any other
amount payable under the ESOP Loan Documents when and as the same shall become
due, whether at stated maturity, by acceleration, upon demand, or otherwise, or
upon the occurrence of any other Event of Default hereunder, Guarantor, upon
demand by the Bank or its successors or assigns, will promptly and fully make
such payments. Guarantor will pay all reasonable costs and expenses, including
reasonable attorneys' fees, paid or incurred by the Bank or its successors or
assigns, under this Guaranty. All payments by Guarantor shall be made in
immediately available freely transferable coin or currency of the United States
of America which on the respective dates of payment thereof is legal tender for
the payment of public and private debts. Each Event of Default under the ESOP
Loan Documents shall give rise to a separate cause of action hereunder, and
separate suits may be brought hereunder as each cause of action arises. The Bank
or its successors or assigns, in its sole discretion, shall have the right to
proceed first and directly against Guarantor and its successors and assigns. In
the event that any amount payable hereunder is not paid when due, then (without
limiting the rights of the Bank under Section 5.01 hereof) such amount shall
bear interest until paid in full at the lesser of the Default Rate or the
maximum rate permitted by applicable law.
21
SECTION 2.04. Obligation of Guarantor Absolute. The obligations of
Guarantor hereunder shall not be impaired, modified, released or limited by any
occurrence or condition whatsoever, including without limitation (a) the release
of any co-guarantor or any compromise, settlement, release, waiver, renewal,
extension, indulgence or modification of or change in any of the obligations and
liabilities of Borrower contained in the ESOP Loan Documents, (b) any
impairment, modification, release or limitation of the liability of Borrower or
its estate in bankruptcy, or any other security for the ESOP Loan Documents
other than any such impairment of security resulting from the Agent's (as
defined in the Revolving Credit Agreement), the Bank's or any Lender's (as
defined in the Revolving Credit Agreement) actions or inactions, or any remedy
for the enforcement thereof, resulting from the operation of any present or
future provision of the Bankruptcy Code, or other statute or from the decision
of any court, (c) the assertion or exercise by the Bank or its successors or
assigns, of any rights or remedies under any of the ESOP Loan Documents or its
delay in or failure to assert or exercise any such rights or remedies, (d) any
lack of validity or enforceability of the ESOP Loan Documents or any other
agreement or instrument relating thereto; (e) any change in the time, manner or
place of payment of, or in any other term of, all or any of the obligations
under the ESOP Loan Documents, or any other amendment or waiver of or any
consent to departure from the ESOP Loan Documents; (f) any exchange, release or
non-perfection of any collateral, or any release or amendment or waiver of or
consent to departure from any other guaranty; (g) any delay in or limitation on
the full and timely payment or performance of obligations or liabilities under
the ESOP Loan Documents, whether arising before or after default, as a result of
the application of any applicable limitation on payment or performance by the
Trust described in Section 1.05 of the Agreement (a "Performance Limitation"),
or (h) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, a guarantor except, subject to the following
sentence of this paragraph, final and irrevocable payment in full of Borrower's
obligations to the Bank under the ESOP Loan Documents. This Guaranty shall
continue to be effective or be reinstated, as the case may be, if at any time
any payment of any of the obligations of Borrower under the ESOP Loan Documents
or the Guarantor is rescinded or is otherwise returned by the Bank upon the
insolvency, bankruptcy or reorganization of Borrower or the Guarantor, or
otherwise, all as though such payment had not been made. Guarantor specifically
acknowledges that, notwithstanding the application of any Performance
Limitation, it guarantees hereby the full and timely payment and performance of
the obligations and liabilities of the Trust arising under the ESOP Loan
Documents as if no Performance Limitation were applicable thereto.
SECTION 2.05. Waiver of Notice. Guarantor unconditionally waives (a)
notice of any of the matters referred to in Section 2.04 hereof and (b) any
demand (except as specified in Section 2.03 hereof), proof or notice of
nonpayment under the ESOP Loan
22
Documents, or of default by Borrower, in performing and keeping any other
covenant, condition or agreement required of it under the ESOP Loan Documents.
SECTION 2.06. Postponement of Subrogation. Until (i) all of the Borrower's
obligations under the ESOP Loan Documents and all of the Guarantor's obligations
hereunder shall have been paid and satisfied in full and (ii) the lapse or
expiration of any time period in which any payment under the ESOP Loan Documents
or hereunder is subject to avoidance as a preferential or similar transfer under
any applicable bankruptcy, insolvency or similar law without any such claim for
avoidance having been made, the Guarantor hereby waives any and all rights of
subrogation, contribution or similar claims against Borrower, whether arising by
statute, at law or in equity.
SECTION 2.07. Security. (a) As security for the obligations of Guarantor
to the Bank hereunder the Guarantor shall execute and deposit with the Bank on
the Closing Date the Security Agreement pursuant to which the Guarantor grants
to the Bank, inter alia, a security interest in the Collateral therein
described. Guarantor shall also cause each Person who shall be an Obligated
Subsidiary or be required to become an Obligated Subsidiary pursuant to Section
4.24 hereof, to execute and deliver to the Bank (i) a Subsidiary Guaranty in the
form of Exhibit C attached hereto, (ii) as security for the obligations of each
such Obligated Subsidiary under its Subsidiary Guaranty, a Subsidiary Security
Agreement in the form of Exhibit D attached hereto, and (iii) related Uniform
Commercial Code financing statements, and stock certificates evidencing the
Guarantor's equity interests in all Subsidiaries with duly executed stock powers
in blank affixed thereto (the "Subsidiary Stock") and such other documents and
instruments relating thereto as are described in Section 4.24 hereof. In
addition, the Guarantor shall deliver or cause to be delivered to the Bank on
the Closing Date certificates of the Guarantor's and Obligated Subsidiaries'
insurers, or, if the Bank shall request, original insurance policies, evidencing
compliance with the insurance requirements contained herein and in the Security
Documents, including without limitation provisions naming the Bank as loss payee
and additional insured under such policies.
(b) Notwithstanding the foregoing provisions of this Section 2.07, Section
4.24 or anything to the contrary contained in the Security Agreement or the
Subsidiary Guaranties, in the event that the Revolving Credit Agreement shall
for any reason terminate or be of no further force or of fact prior to the full,
final and irrevocable payment and satisfaction of the obligations of Guarantor
and the Obligated Subsidiaries arising hereunder, under the Subsidiary
Guaranties and under the other ESOP Loan Documents, upon delivery to and
acceptance by the Bank of (i) an irrevocable standby letter of credit supporting
payment of such obligations and issued by such bank and having such stated
amount, expiry date and terms and conditions as shall be in all respects
acceptable to the
23
Bank, or (ii) in the discretion of the Bank and provided no Default or Event or
Default shall have occurred and be continuing, cash collateral in an amount
acceptable to the Bank, the Bank shall, at the request and expense of the
Guarantor, terminate the security interest and powers of attorney therein
conferred and, in furtherance thereof, execute such Uniform Commercial Code
termination statements and such other documents in form and substance reasonably
satisfactory to the Bank to release and terminate the Liens created thereunder
of record.
SECTION 2.08. Purchase of ESOP Loan Documents. Upon the occurrence of any
Purchase Event, the Bank may at its option require the Guarantor, and if not
required by the Bank, the Guarantor shall have the option, to purchase the
Purchase Interests (as herein defined) as provided in this Section 2.08. Upon
the occurrence of any Purchase Event, the Bank shall, prior to exercising any
other right, power or remedy available to it (other than the giving of notices,
declaration of default and acceleration of indebtedness), notify the Guarantor
of the occurrence of a Purchase Event and if the Bank elects, by such notice or
later notice to the Guarantor, demand that the Guarantor or its designee
purchase from the Bank all of the right, title and interest of the Bank in, to
and under the Agreement, the Pledge Agreement, the promissory note or notes of
the Borrower issued under the Agreement, and this Guaranty (collectively, the
"Purchase Interests"), but not any interest of the Bank under the Security
Agreements or the Subsidiary Guaranties on a date (the "Purchase Date")
specified in such notice, which shall be a Business Day not less than five (5)
nor more than thirty (30) days following the date of the notice. Within five (5)
Business Days of the receipt of notice of the Purchase Event, if the Bank shall
not have demanded that the Guarantor purchase the Purchase Interests, the
Guarantor may by notice to the Bank, effective upon receipt, elect to purchase
the Purchase Interests on a Purchase Date specified by the Guarantor and meeting
the requirements of the next preceding sentence for a Purchase Date selected by
the Bank. The Bank shall not be entitled to exercise any other right, power or
remedy available to it (other than the giving of notices, declarations of
default and acceleration of indebtedness) under the Security Agreements or the
ESOP Loan Documents, at law or in equity, (i) for a period of five (5) Business
Days after notice to the Guarantor of the occurrence a Purchase Event and (ii)
if either the Bank or the Guarantor shall have by notice to the other elected to
cause the purchase of the Purchase Interests under this Section 2.08, from the
date of notice of such election to and including the Purchase Date. The
Guarantor unconditionally, absolutely and irrevocably agrees that upon the
election of the Bank or the Guarantor to cause the purchase of the Purchase
Interests under this Section 2.08, it will purchase the Purchase Interests on
the Purchase Date without recourse at a price equal to the then outstanding
aggregate amount of all obligations and liabilities of the Borrower for
principal, interest, fees, expenses and indemnification amounts under the ESOP
Loan Documents, plus the reasonable out of pocket expenses
24
(including reasonable attorneys' fees and expenses) of the Bank incurred in
connection with such purchase or the occurrence of any Purchase Event giving
rise thereto. Upon receipt of the purchase price for the Purchase Interests in
immediately available funds, the Bank shall assign the Purchase Interests to the
Guarantor without representation, recourse or warranty. The costs of
preparation, execution and recordation of all documents or instruments of
assignment (including reasonable attorneys' fees and expenses) and all
documentary stamp, excise, intangibles, registration, recording or other fees,
taxes, duties or imposts (except for taxes on income) arising in connection with
the purchase of Purchase Interests shall be payable by the Guarantor (i) on the
Purchase Date to the extent incurred and calculated by such date and (ii)
thereafter on demand. If the Guarantor fails to satisfy in full its obligations
to the Bank under this Section 2.08 on the Purchase Date, the Bank may thereupon
exercise any or all rights, remedies and powers available to it hereunder, under
the other ESOP Loan Documents, the Security Agreements, or the Subsidiary
Guaranties, at law and in equity. Notwithstanding anything to the contrary
contained in this Section 2.08, in the event that there shall occur and not be
waived any Default or Event of Default under the Revolving Credit Agreement,
nothing herein contained shall prevent, impair or delay the right of the Agent
or any Lender (each as defined in the Revolving Credit Agreement) to exercise
any right, power or privilege contained in the Revolving Credit Loan Documents
or otherwise available at law, in equity or by statute to enforce or obtain
payment of the Obligations (as defined in the Revolving Credit Agreement).
25
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties. The Guarantor represents and
warrants to the Bank as follows (which representations and warranties shall
survive the making of the Loan), after giving effect to the CHC Transaction:
(a) Organization and Authority.
(i) the Guarantor and each Subsidiary is a corporation duly
organized and validly existing under the laws of the jurisdiction of
its incorporation;
(ii) the Guarantor and each Subsidiary (x) has the requisite
power and authority to own its properties and assets and to carry on
its business as now being conducted and as contemplated in this
Guaranty, the Subsidiary Guaranties, the Security Agreements and the
CHC Transaction Documents, and (y) is qualified to do business in
every jurisdiction in which failure so to qualify would have a
material adverse effect on the business or operations of the
Guarantor or any Subsidiary;
(iii) the Guarantor has the power and authority to execute,
deliver and perform this Guaranty and each of the other ESOP Loan
Documents and CHC Transaction Documents to which the Guarantor is a
party;
(iv) each Obligated Subsidiary has the power and authority to
execute, deliver and perform the Subsidiary Guaranty, the Subsidiary
Security Agreement, the other Loan Documents and the CHC Transaction
Documents to which it is a party; and
(v) when executed and delivered, this Guaranty, each of the
other ESOP Loan Documents and the CHC Transaction Documents to which
the Guarantor or any Obligated Subsidiary is a party will be the
legal, valid and binding obligation or agreement, as the case may
be, of the Guarantor or such Obligated Subsidiary, enforceable
against the Guarantor or such Obligated Subsidiary in accordance
with its terms, subject to the effect of any applicable bankruptcy,
moratorium, insolvency, reorganization or other similar law
affecting the enforceability of creditors' rights generally and to
the effect of general principles of equity which may limit the
availability of equitable remedies (whether in a proceeding at law
or in equity);
26
(b) Loan Documents and CHC Transaction Documents. The execution,
delivery and performance by the Guarantor and each Obligated Subsidiary of
each of the ESOP Loan Documents and each of the CHC Transaction Documents
to which the Guarantor or such Obligated Subsidiary is a party:
(i) have been duly authorized by all requisite corporate
action (including any required shareholder approval) of the
Guarantor or Obligated Subsidiary signatory thereto required for the
lawful execution, delivery and performance thereof;
(ii) do not violate any provisions of (1) applicable law, rule
or regulation, (2) any order of any court or other agency of
government binding on the Guarantor, or any Obligated Subsidiary of
Guarantor, or their respective properties, or (3) the charter
documents or by-laws of Guarantor or any Obligated Subsidiary;
(iii) will not be in conflict with, result in a breach of or
constitute an event of default, or an event which, with notice or
lapse of time, or both, would constitute an event of default, under
any indenture, agreement or other instrument to which Guarantor or
any Subsidiary is a party, or by which the properties or assets of
Guarantor or any Subsidiary of Guarantor are bound, the effect of
which would have any material adverse effect on the ability of the
Guarantor or any Obligated Subsidiary to observe the covenants and
agreements contained herein or in any other ESOP Loan Document or in
any of the CHC Transaction Documents, or on its ability to pay its
obligations hereunder or under the other ESOP Loan Documents;
(iv) will not result in the creation or imposition of any
Lien, charge or encumbrance of any nature whatsoever upon any of the
properties or assets of Guarantor or any Subsidiary of Guarantor
except any Liens in favor of the Bank created by the ESOP Loan
Documents or in favor of the Agent and the Lenders (each as defined
in the Revolving Credit Agreement) under the Revolving Credit Loan
Documents.
(c) Solvency. Guarantor and each Obligated Subsidiary is Solvent
after giving effect to the transactions contemplated by this Guaranty, the
other ESOP Loan Documents, assuming, with respect to each Obligated
Subsidiary, that the Guarantor's past practice of making capital
contributions to such Obligated Subsidiary as necessary will continue;
provided that with respect to any date after the date hereof on which this
representation and warranty is deemed to be made or reaffirmed hereunder,
the Guarantor represents and warrants
27
that as of such later date the Guarantor and the Obligated Subsidiaries,
taken as a whole, are Solvent.
(d) Subsidiaries and Stockholders. Guarantor has no Subsidiaries
other than those Persons listed as Subsidiaries in Schedule 3.01(d)
delivered to the Bank simultaneously with the execution of this Guaranty;
Schedule 3.01(d) states as of the date hereof the authorized and issued
capitalization of each Subsidiary listed thereon, the number of shares or
other equity interests of each class of capital stock or interest issued
and outstanding of each such Subsidiary and the number and/or percentage
of outstanding shares or other equity interest (including options,
warrants and other rights to acquire any interest) of each such class of
capital stock or equity interest owned by Guarantor or by any such
Subsidiary; the outstanding shares or other equity interests of each such
Subsidiary have been duly authorized and validly issued and are fully paid
and nonassessable; and Guarantor and each such Subsidiary own beneficially
and of record all the shares and other interests it is listed as owning in
Schedule 3.01(d), free and clear of any Lien other than the Lien arising
under the ESOP Loan Documents and applicable restrictions on transfer of
such securities in effect on the Closing Date or otherwise imposed by
applicable law.
(e) Ownership Interests. Guarantor owns no interest in any Person
other than the Persons listed in Schedule 3.01(d);
(f) Financial Condition. (i) The Guarantor has heretofore furnished
to the Bank an audited consolidated balance sheet of the Guarantor and its
Subsidiaries as of September 30, 1994 and the notes thereto and the
related consolidated statements of income, stockholders' equity and cash
flows for the Fiscal Year then ended as audited by Ernst & Young. Except
as set forth therein, such financial statements (including the notes
thereto) present fairly the financial condition of the Guarantor and its
Subsidiaries as of the end of such Fiscal Year and results of their
operations and the changes in their stockholders' equity for the Fiscal
Year then ended, all in conformity with Generally Accepted Accounting
Principles applied on a Consistent Basis;
(ii) since September 30, 1994, there has been no material adverse
change in the financial condition of the Guarantor and its Subsidiaries or
in the businesses, properties and operations of the Guarantor or any of
its Subsidiaries (for purposes of this clause (ii), a change in the
business, properties and operations of the Guarantor or any Subsidiary
shall not be deemed to be a material adverse change unless such change
reduces net income of the affected entity in an amount not less than an
amount equal to two and one-half percent (2 1/2%) of Consolidated Net
Income of the Guarantor and its Subsidiaries for the Four-Quarter Period
immediately
28
preceding the occurrence of such change), nor have such businesses or
properties, taken as a whole, been materially adversely affected as a
result of any fire, explosion, earthquake, accident, strike, lockout,
combination of workers, flood, embargo or act of God; nor has any event
occurred the effect of which would have a material adverse effect on the
ability of the Guarantor or any Obligated Subsidiary to observe the
covenants and agreements contained herein or in any of the other ESOP Loan
Documents or in the CHC Transaction Documents, or on its ability to pay
its obligations hereunder or under the other ESOP Loan Documents;
(iii) except as set forth in the financial statements referred to in
Section 3.0l(f)(i) or in Schedule 3.01(f) or Schedule 3.01(j) delivered to
the Bank simultaneously with the execution of this Guaranty, neither
Guarantor nor any Subsidiary has incurred, other than in the ordinary
course of business, any material indebtedness, obligations, commitments or
other liability, contingent or otherwise, which remains outstanding or
unsatisfied;
(iv) the Projection of Combined Entities provided to the Bank was
prepared by the Guarantor in good faith and is based upon assumptions
which the Guarantor believes to have been reasonable as of the time of
preparation thereof and as of the Closing Date;
(g) Title to Properties. The Guarantor and its Subsidiaries have
title to all their respective real and personal properties, subject to no
transfer restrictions or Liens of any kind, except for (x) the transfer
restrictions and Liens described in Schedule 3.01(g)-Liens delivered to
the Bank simultaneously with the execution of this Guaranty, and (y)
Permitted Liens;
(h) Taxes. Except as set forth in Schedule 3.01(h) delivered to the
Bank simultaneously with the execution of this Guaranty, the Guarantor and
its Subsidiaries have filed or caused to be filed all federal, state and
local tax returns which are required to be filed by them and except for
taxes and assessments being contested in good faith and against which
reserves satisfactory to the Guarantor's independent certified public
accountants have been established, have paid or caused to be paid all
taxes as shown on said returns or on any assessment received by them, to
the extent that such taxes have become due;
(i) Other Agreements. Neither the Guarantor nor any Subsidiary is
(i) a party to any judgment, order, decree or any agreement or
instrument or subject to restrictions materially adversely affecting
the ability of the
29
Guarantor or any Obligated Subsidiary to observe the covenants and
agreements contained herein or in the other ESOP Loan Documents or
in the CHC Transaction Documents, or to pay the obligations
hereunder or under the other ESOP Loan Documents; or
(ii) in default in the performance, observance or fulfillment
of any of the obligations, covenants or conditions contained in any
agreement or instrument to which the Guarantor or any Subsidiary is
a party, which default has, or if not remedied within any applicable
grace period would reasonably be likely to have, a material adverse
effect on the ability of the Guarantor or any Obligated Subsidiary
to observe the covenants and agreements contained herein or in the
other ESOP Loan Documents or the CHC Transaction Documents, or to
pay the obligations hereunder or under the other ESOP Loan
Documents;
(j) Litigation. Except as set forth in Schedule 3.0l(j) or Schedule
3.0l(t) delivered to the Bank simultaneously with the execution of this
Guaranty, other than proposed legislation or regulation or other
governmental proceedings affecting the healthcare or hospice industries
generally, there is no action, suit or proceeding at law or in equity or
by or before any governmental instrumentality or agency or arbitral body
pending against the Guarantor or affecting any Subsidiary or any
properties or rights of the Guarantor or any Subsidiary, or to the
knowledge of the Guarantor, pending against any of the Sellers or
affecting any properties or rights of any of the Sellers, which would
reasonably be expected to (i) materially adversely affect the financial
condition, business or operations of the Guarantor or any of its
Subsidiaries, or (ii) restrain, enjoin, impose burdensome conditions upon
or otherwise materially and adversely affect the consummation of the CHC
Transaction in accordance with the CHC Transaction Documents or the
exercise of rights and powers by the Bank under the ESOP Loan Documents
or, to the knowledge of the Guarantor, threatened in writing against the
Guarantor or any Subsidiary affecting the Guarantor or any Subsidiary or
any properties or rights of the Guarantor or any Subsidiary, or, to the
knowledge of the Guarantor, threatened in writing against any Seller
affecting any Seller or any properties or rights of any Seller, which
reasonably is expected to (i) materially adversely affect the financial
condition, business or operations of the Guarantor or any of its
Subsidiaries, or (ii) restrain, enjoin, impose burdensome conditions upon
or otherwise materially and adversely affect the consummation of the CHC
Transaction in accordance with the CHC Transaction Documents or the
exercise of rights and powers by the Bank under the ESOP Loan Documents;
30
(k) Margin Stock. Neither the Guarantor nor any Subsidiary owns any
"margin stock" as such term is defined in Regulation U, as amended (12
C.F.R. Part 221), of the Board. The proceeds of the Loan will be used by
the Borrower only for the purposes set forth in the Preliminary Statements
of this Guaranty. None of such proceeds will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin stock or
for the purpose of reducing or retiring any Indebtedness which was
originally incurred to purchase or carry margin stock or for any other
purpose which might constitute any the Loan a "purpose credit" within the
meaning of said Regulation U or Regulation X (12 C.F.R. Part 224) of the
Board. Neither the Guarantor nor any agent acting in its behalf has taken
or will take any action which might cause this Guaranty or any of the ESOP
Loan Documents or instruments delivered pursuant hereto or thereto to
violate any regulation of the Board or to violate the Securities Exchange
Act of 1934, as amended, or the Securities Act of 1933, as amended, or any
state securities laws, in each case as in effect on the date hereof;
(l) Investment Company. Neither the Guarantor nor any Subsidiary is
an "investment company," or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended (15 U.S.C. (S)
80a-l, et seq.). The application of the proceeds of the Loan and repayment
thereof by the Borrower and the performance by the Guarantor of the
transactions contemplated by this Guaranty will not violate any provision
of said Act, or any rule, regulation or order issued by the Securities and
Exchange Commission thereunder, in each case as in effect on the date
hereof;
(m) Patents, Etc. Except as set forth in Schedule 3.01(m) delivered
to the Bank simultaneously with the execution of this Guaranty, the
Guarantor and its Subsidiaries own or have the right to use, under valid
license agreements or otherwise, all material patents, licenses,
franchises, trademarks, trademark rights, trade names, trade name rights,
trade secrets and copyrights necessary to the conduct of their businesses
as now conducted, without known conflict with any patent, license,
franchise, trademark, trade secrets and confidential commercial or
proprietary information, trade name, copyright, rights to trade secrets or
other proprietary rights of any other Person;
(n) No Untrue Statement. Neither this Guaranty nor any other ESOP
Loan Document or certificate or document executed and delivered by or on
behalf of the Borrower or the Guarantor in accordance with or pursuant to
any ESOP Loan Document contains any misrepresentation or untrue statement
of material fact or omits to state a material fact necessary, in light of
31
the circumstance under which it was made, in order to make any such
representation or statement contained therein not misleading in any
material respect;
(o) No Consents. Etc. Except as set forth in Schedule 3.01(o) or
Schedule 3.01(g) delivered to the Bank simultaneously with the execution
of this Guaranty, neither the respective businesses or properties of the
Guarantor or any Subsidiary, nor any relationship between the Guarantor or
any Subsidiary and any other Person, nor any circumstance in connection
with the execution, delivery and performance (i) by the Guarantor or the
Borrower of the ESOP Loan Documents or (ii) by Vitas California or the
Guarantor of the CHC Transaction Documents and the transactions
contemplated hereby and thereby is such as to require a consent, approval
or authorization of, or filing, registration or qualification with, any
governmental or other authority or any other Person on the part of the
Borrower, the Guarantor or any Subsidiary as a condition to the execution,
delivery and performance of, or consummation of the transactions
contemplated by this Guaranty or the other ESOP Loan Documents or the CHC
Transaction Documents by the Guarantor or the Obligated Subsidiaries or if
so, such consent, approval, authorization, filing, registration or
qualification has been obtained or effected, as the case may be;
(p) ERISA.
(i) None of the employee benefit plans maintained at any time
by the Guarantor or any Subsidiary or the trusts created thereunder has
engaged in a prohibited transaction which could subject any such employee
benefit plan or trust to a material tax or penalty on prohibited
transactions imposed under Internal Revenue Code Section 4975 or ERISA;
(ii) None of the employee benefit plans maintained at any time
by the Guarantor or any Subsidiary which are employee pension benefit
plans and which are subject to Title IV of ERISA or the trusts created
thereunder has been terminated so as to result in a material liability of
the Guarantor under ERISA nor has any such employee benefit plan of the
Guarantor or any Subsidiary incurred any material liability to the Pension
Benefit Guaranty Corporation established pursuant to ERISA, other than for
required insurance premiums which have been paid or are not yet due and
payable; neither the Guarantor nor any Subsidiary has withdrawn from or
caused a partial withdrawal to occur with respect to any Multi-employer
Plan resulting in any assessed and unpaid withdrawal liability; the
Guarantor and the Subsidiaries have made or provided for all contributions
to all such employee pension benefit plans which they maintain and which
are required as of the end of the most recent fiscal year under each such
plan; neither the Guarantor nor any
32
Subsidiary has incurred any accumulated funding deficiency with respect to
any such plan, whether or not waived; nor has there been any reportable
event, or other event or condition, which presents a material risk of
termination of any such employee benefit plan by such Pension Benefit
Guaranty Corporation;
(iii) The present value of all vested accrued benefits under
the employee pension benefit plans which are subject to Title IV of ERISA,
maintained by the Guarantor or any Subsidiary, did not, as of the most
recent valuation date for each such plan, exceed the then current value of
the assets of such employee benefit plans allocable to such benefits;
(iv) The consummation of the Loan pursuant to the ESOP Loan
Documents will not involve any prohibited transaction under ERISA which is
not subject to a statutory or administrative exemption;
(v) To the best of the Guarantor's knowledge, each employee
pension benefit plan subject to Title IV of ERISA, maintained by the
Guarantor or any Subsidiary, has been administered in accordance with its
terms in all material respects and is in compliance in all material
respects with all applicable requirements of ERISA and other applicable
laws, regulations and rules;
(vi) There has been no withdrawal liability incurred and
unpaid with respect to any Multi-employer Plan to which the Guarantor or
any Subsidiary is or was a contributor;
(vii) As used in this Agreement, the terms "employee benefit
plan," "employee pension benefit plan," "accumulated funding deficiency,"
"reportable event," and "accrued benefits" shall have the respective
meanings assigned to them in ERISA, and the term "prohibited transaction"
shall have the meaning assigned to it in Code Section 4975 and ERISA;
(viii) Neither the Guarantor nor any Subsidiary has any
liability not disclosed on any of the financial statements furnished to
the Lenders pursuant to Section 3.01(f) hereof, contingent or otherwise,
under any plan or program or the equivalent for unfunded post-retirement
benefits, including pension, medical and death benefits, which liability
would have a material adverse effect on the financial condition of the
Guarantor or any Subsidiary;
(q) No Default. As of the date hereof, and after giving effect to
the CHC Transaction, there does not exist any Default or Event of Default
hereunder;
33
(r) Hazardous Materials. Except as set forth on Schedule 3.01(r),
the Guarantor and each Subsidiary is in compliance with all applicable
Environmental Laws in all material respects and neither the Guarantor nor
any Subsidiary has been notified of any action, suit, proceeding or
investigation which calls into question compliance by the Guarantor or any
Subsidiary with any Environmental Laws or which seeks to suspend, revoke
or terminate any license, permit or approval necessary for the generation,
handling, storage, treatment or disposal of any Hazardous Material;
(s) RICO. Neither the Guarantor nor any Subsidiary is engaged in or
has engaged in any course of conduct that could subject any of their
respective properties to any Lien, seizure or other forfeiture under any
criminal law, racketeer influenced and corrupt organizations law, civil or
criminal, or other similar laws;
(t) Employment Matters. Except as disclosed on Schedule 3.01(t)
delivered to the Bank simultaneously with the execution of this Guaranty,
the Guarantor and all Subsidiaries are in compliance in all material
respects with all applicable laws, rules and regulations pertaining to
labor or employment matters, including without limitation those pertaining
to wages, hours, occupational safety and taxation and there is neither
pending or to the knowledge of the Guarantor threatened any material
litigation, administrative proceeding nor, to the knowledge of the
Guarantor, any investigation, in respect of such matters.
34
ARTICLE IV
AFFIRMATIVE COVENANTS
Until the obligations of the Borrower under the ESOP Loan Documents have
been paid and satisfied in full and until the Agreement has been terminated in
accordance with the terms thereof following such payment and satisfaction,
unless the Bank shall otherwise consent in writing, the Guarantor will and will,
where applicable, cause each Subsidiary to:
SECTION 4.01. Financial Reports, Etc. (a) as soon as practicable and in
any event within one hundred and five (105) days (or, at all times after the
Guarantor shall become subject to the financial reporting requirements of the
Securities Exchange Act of 1934, as amended, ninety (90) days) after the end of
each Fiscal Year of the Guarantor, deliver or cause to be delivered to the Bank
(i) a consolidated balance sheet of the Guarantor and its Subsidiaries, and the
notes thereto, and the related consolidated statements of income, stockholders'
equity and cash flows and the respective notes thereto, for such Fiscal Year,
setting forth comparative financial statements for the preceding Fiscal Year,
all prepared in accordance with Generally Accepted Accounting Principles applied
on a Consistent Basis and containing, with respect to the consolidated financial
reports, opinions of Ernst & Young, or other such independent certified public
accountants of nationally recognized standing selected by the Guarantor, which
are unqualified as to the scope of the audit performed and as to the "going
concern" status of the Guarantor; and (ii) a certificate of an Authorized
Representative demonstrating compliance with Sections 5.01, 5.02, 5.03, 5.04,
5.05, and 5.09(v) of this Guaranty, which certificate shall be in the form
attached hereto as Exhibit B (provided, however, that so long as the Revolving
Credit Agreement remains in effect, timely delivery of the certificate for the
corresponding period described in Section 8.01(a)(ii) of the Revolving Credit
Agreement shall satisfy the requirement of this clause (ii));
(b) as soon as practicable and in any event within thirty (30) days after
the end of each calendar month, other than the last month of each Fiscal Year
(except the last month of each fiscal quarter as to which forty-five (45) days
shall apply), deliver to the Bank (i) a consolidated balance sheet of the
Guarantor and its Subsidiaries as of the end of such reporting period, the
related consolidated statement of income and in the case of quarterly statements
a statement of cash flows for such reporting period and for the period from the
beginning of the Fiscal Year through the end of such reporting period,
accompanied by a certificate of an Authorized Representative to the effect that
such financial statements present fairly the financial position of the Guarantor
and its Subsidiaries as of the end of such reporting period and the results of
their operations and the changes in their financial position for such reporting
period, in conformity with the
35
standards set forth in Section 3.01(f)(i) with respect to interim financials,
and (ii) a certificate of an Authorized Representative (which shall be required
to be delivered only in connection with the interim financial statements
delivered as at the end of each three, six and nine month period in each Fiscal
Year) containing computations for such quarter comparable to that required
pursuant to Section 4.01(a)(ii) (provided, however, that so long as the
Revolving Credit Agreement remains in effect, timely delivery of the certificate
for the corresponding period described in Section 8.01(b)(iii) of the Revolving
Credit Agreement shall satisfy the requirement of this clause (ii));
(c) together with each delivery of the financial statements required by
Section 4.01(a)(i) hereof, deliver to the Bank a letter from the Guarantor's
accountants specified in Section 4.01(a)(i) hereof stating that in performing
the audit necessary to render an opinion on the financial statements delivered
under Section 4.O1(a)(i), nothing has come to their attention that has caused
them to believe that there exists any Default or Event of Default by the
Guarantor in the fulfillment of the terms and provisions of this Guaranty
insofar as they relate to financial matters (which at the date of such statement
remains uncured); and if the accountants have obtained knowledge of such Default
or Event of Default, a statement specifying the nature and period of existence
thereof;
(d) promptly upon their becoming available to the Guarantor, the Guarantor
shall deliver to the Bank a copy of (i) all regular or special reports or
effective registration statements which Guarantor or any Subsidiary shall file
with the Securities and Exchange Commission (or any successor thereto)
(including without limitation filings on Forms 10-K, l0-Q and 8-K) or any
securities exchange, (ii) at any time after becoming subject to the Securities
Exchange Act of 1934, as amended, any proxy statement distributed by the
Guarantor to its shareholders, bondholders or the financial community in
general, and (iii) any management letter or other similar report submitted to
the Guarantor or any of its Subsidiaries by independent accountants presenting
in final form any results of, deficiencies discovered during or recommendations
arising from any annual, interim or special audit of the Guarantor or any of its
Subsidiaries; and
(e) promptly, from time to time, deliver or cause to be delivered to the
Bank such other information regarding Guarantor's and each Subsidiary's
operations, business affairs and financial condition as the Bank may reasonably
request. The Bank is hereby authorized to deliver a copy of any such financial
information delivered hereunder to the Bank (or any affiliate of the Bank) to
any regulatory authority having jurisdiction over the Bank pursuant to any
written request therefor, or to any other Person who shall acquire or consider
the acquisition of a participation interest in or assignment of all or any
portion of the Loan.
36
SECTION 4.02. Maintain Properties. Maintain all properties necessary to
its operations in good working order and condition (ordinary wear and tear
excepted) and make all needed repairs, replacements and renewals as are
necessary to conduct its business in accordance with customary business
practices.
SECTION 4.03. Existence, Qualification, Etc. Do or cause to be done all
things necessary to preserve and keep in full force and effect its existence and
all material rights and material franchises, trade names, trademarks and
permits, and, except as otherwise expressly provided by this Agreement, maintain
its license or qualification to do business as a foreign corporation and good
standing in each jurisdiction in which its ownership or lease of property or the
nature of its business makes such license or qualification necessary and failure
to maintain qualification or good standing would reasonably be likely to have a
material adverse effect on the Guarantor or any of its Subsidiaries; except that
the Guarantor may effect the dissolution of Vitas Healthcare Corporation of
Texas so long as it remains an inactive Subsidiary of the Borrower prior to such
dissolution.
SECTION 4.04. Regulations and Taxes. Comply with, in all material
respects, or contest in good faith, all statutes and governmental regulations
applicable to the Guarantor or its Subsidiaries and pay all taxes, assessments,
governmental charges, claims for labor, supplies, rent and any other obligation
which, if unpaid, might become a Lien against any of its properties, except
liabilities being contested in good faith and against which adequate reserves
have been established.
SECTION 4.05. Insurance. (i) Keep all of its insurable properties
adequately insured in all material respects at all times with responsible
insurance carriers against loss or damage by fire and other hazards to the
extent and in the manner required by the Security Agreement and otherwise as are
customarily insured against by similar businesses owning such properties
similarly situated, (ii) maintain general public liability insurance and medical
malpractice insurance at all times with responsible insurance carriers against
liability on account of damage to persons and property having such limits,
deductibles, exclusions and co-insurance and other provisions providing no less
coverage than that specified in Schedule 4.05 delivered to the Bank
simultaneously with the execution of this Guaranty, such insurance policies to
be in form reasonably satisfactory to the Bank, and (iii) maintain insurance
under all applicable workers' compensation laws (or in the alternative, maintain
required reserves if self-insured for workers' compensation purposes). Without
limiting any additional requirement contained in the Security Agreement, each of
the policies of insurance described in this Section 4.05 shall provide that the
insurer shall give the Bank not less than thirty (30) days' prior written notice
before any such policy shall be terminated, lapse or be altered in any manner.
37
SECTION 4.06. True Books. Keep true books of record and account in
accordance with commercially reasonable business practices in which full, true
and correct entries will be made of all of its dealings and transactions in all
material respects, and set up on its books such reserves as may be required by
Generally Accepted Accounting Principles with respect to doubtful accounts and
all taxes, assessments, charges, levies and claims and with respect to its
business in general, and include such reserves in quarterly as well as year-end
financial statements.
SECTION 4.07. Perform Covenants. Duly comply with all the terms and
covenants contained in all ESOP Loan Documents and other instruments and
documents given to the Bank pursuant hereto or thereto.
SECTION 4.08. Right of Inspection. Permit any Person designated by the
Bank at the Bank's expense, as the case may be, to visit and inspect any of the
properties, corporate books and financial reports of the Guarantor and its
Subsidiaries, and to discuss their respective affairs, finances and accounts
with their principal officers and independent auditors, all at reasonable times,
at reasonable intervals and with reasonable prior notice.
SECTION 4.09. Observe all Laws. Conform to and duly observe in all
material respects all laws, rules and regulations of any applicable regulatory
authority with respect to the conduct of its business.
SECTION 4.10. Governmental Licenses. To the extent the Guarantor or any
Subsidiaries provides goods or services giving rise to Accounts constituting
Government Receivables, maintain all licenses, permits, certifications and
approvals and take such other necessary action as shall entitle such Person to
obtain payment or reimbursement of such Account.
SECTION 4.11. Covenants Extending to Subsidiaries. Cause each of its
Subsidiaries to do with respect to itself, its business and its assets, each of
the things required of the Guarantor in Sections 4.02 through 4.10, inclusive.
SECTION 4.12. Officer's Knowledge of Default. Upon the President, the
chief executive officer, the chief financial officer, the Treasurer or the Vice
President for Legal and Regulatory Affairs of the Guarantor obtaining knowledge
of any Default or Event of Default hereunder or any default under any other
obligation of the Guarantor or any Subsidiary where the amount of such other
obligation or obligations aggregates $250,000 or more, cause such officer or an
Authorized Representative to promptly notify the Bank of the nature thereof, the
period of existence thereof, and what action the Guarantor proposes to take with
respect thereto.
38
SECTION 4.13. Suits or Other Proceedings. Upon the President, the chief
executive officer, the chief financial officer, the Treasurer or the Vice
President for Legal and Regulatory Affairs of the Guarantor obtaining knowledge
of any litigation or other proceedings being instituted against the Guarantor or
any Subsidiary, or any attachment, levy, execution or other process being
instituted against any assets of the Guarantor or any Subsidiary, in an
aggregate amount greater than $500,000 and not otherwise covered by insurance
(or, in the alternative, not otherwise reserved against if self-insured),
promptly deliver to the Bank written notice thereof stating the nature and
status of such litigation, dispute, proceeding, levy, execution or other
process.
SECTION 4.14. Notice of Discharge of Hazardous Material or Environmental
Complaint. Promptly provide to the Bank true, accurate and complete copies of
any and all notices, complaints, orders, directives, claims, or citations
received by the Guarantor or any Subsidiary relating to any material (a)
violation or alleged violation by the Guarantor or any Subsidiary of any
applicable Environmental Laws or OSHA; (b) release or threatened release by the
Guarantor or any Subsidiary of any Hazardous Material, except where occurring
legally; or (c) liability or alleged liability of the Guarantor or any
Subsidiary for the costs of cleaning up, removing, remediating or responding to
a release of Hazardous Materials.
SECTION 4.15. Environmental Compliance. If the Guarantor or any Subsidiary
shall receive written notice from any governmental authority that the Guarantor
or any Subsidiary has violated any applicable Environmental Laws, the Guarantor
shall promptly (and in any event within the time period permitted by the
applicable governmental authority) remove or remedy, or cause the applicable
subsidiary to remove or remedy, such violation, unless the Guarantor in good
faith is disputing such claim of violation by appropriate proceedings promptly
commenced and diligently pursued and such claim does not give rise to or result
in the imposition of any Lien against property of the Guarantor or any
Subsidiary.
SECTION 4.16. Indemnification. The Guarantor hereby agrees to defend,
indemnify and hold the Bank harmless from and against any and all claims,
losses, liabilities, damages and expenses (including, without limitation,
cleanup costs and reasonable attorneys' fees) arising directly or indirectly
from, out of or by reason of the handling, storage, treatment, emission or
disposal of any Hazardous Material by or in respect of the Guarantor or any
Subsidiary or property owned or leased or operated by the Guarantor or any
Subsidiary. The provisions of this Section 4.16 shall survive repayment of the
Loan and termination of this Guaranty.
SECTION 4.17. Further Assurances. At its cost and expense, upon request of
the Bank, duly execute and deliver or cause to be duly executed and delivered,
to the Bank such further instruments,
39
documents, certificates, financing and continuation statements, and do and cause
to be done such further acts that may be reasonably necessary or advisable in
the reasonable opinion of the Bank to carry out more effectively the provisions
and purposes of this Guaranty and the other ESOP Loan Documents.
SECTION 4.18. ERISA Requirement. Comply in all material respects with all
requirements of ERISA applicable to it and furnish to the Bank as soon as
possible and in any event (i) within thirty (30) days after the President or
chief executive officer of the Guarantor or, with respect to financial matters,
the Treasurer, any Assistant Treasurer or the chief financial officer of the
Guarantor, knows or has reason to know that any reportable event with respect to
any employee benefit plan maintained by the Guarantor or any Subsidiary which
could give rise to termination or the imposition of any material tax or penalty
has occurred, written statement of an Authorized Representative describing in
reasonable detail such reportable event and any action which the Guarantor or
applicable Subsidiary proposes to take with respect thereto, together with a
copy of the notice of such reportable event given to the PBGC or a statement
that said notice will be filed with the annual report of the United States
Department of Labor with respect to such plan if such filing has been
authorized, (ii) promptly after receipt thereof, a copy of any notice that the
Guarantor or any Subsidiary may receive from the PBGC relating to the intention
of the PBGC to terminate any employee benefit plan or plans of the Guarantor or
any Subsidiary or to appoint a trustee to administer any such plan, and (iii)
within 10 days after a filing with the PBGC pursuant to Section 412(n) of the
Code of a notice of failure to make a required installment or other payment with
respect to a plan, a certificate of an Authorized Representative setting forth
details as to such failure and the action that the Guarantor or its affected
Subsidiary, as applicable, proposes to take with respect thereto, together with
a copy of such notice given to the PBGC.
SECTION 4.19. Continued Operations. Continue at all times (i) to conduct
its business and engage principally in the same or similar line or lines of
business substantially as heretofore conducted, and (ii) preserve, protect and
maintain free from Liens its material patents, copyrights, licenses, trademarks,
trademark rights, trade names, trade name rights, trade secrets and know-how
necessary or useful in the conduct of its operations.
SECTION 4.20. Use of Proceeds. Cause the proceeds of the Loan to be used
solely for the purposes specified in the Preliminary Statements of this
Guaranty.
SECTION 4.21. Trade Names.
(a) Conduct, and cause each Obligated Subsidiary to conduct, its
business in all respects and obtain and maintain title to all Collateral
solely in the names set forth in Schedule 4.21 delivered to the Bank
simultaneously with the
40
execution of this Guaranty unless the Guarantor shall have (i) given (or
caused the appropriate Obligated Subsidiary to give) the Bank ten (10)
days prior written notice of its intention to operate under another name,
and (ii) caused to be delivered to the Bank any additional financing
statements necessary to perfect a security interest in the Collateral (to
the extent contemplated hereunder);
(b) Cause at its expense all filings to be made and other action to
be taken as the Bank may reasonably request to continue the perfection of
the Bank's first priority security interest in the Collateral (to the
extent contemplated hereunder); and
(c) Except as may be set forth in Schedule 3.01(m), at all times
have the lawful right, power and authority, and cause each Obligated
Subsidiary to have the lawful right, power and authority, to utilize all
trade names or trade styles employed by Guarantor or such Obligated
Subsidiary to provide services giving rise to Accounts or to ▇▇▇▇ such
Accounts.
SECTION 4.22. Property Location. Maintain (and cause all Subsidiaries to
maintain) all Collateral which constitutes inventory or equipment at the
locations listed on Schedule 4.22 delivered to the Bank simultaneously with the
execution of this Guaranty, and advise the Bank at the time of delivery of each
certificate described in Section 4.01(a)(ii) and Section 4.01(b)(ii) of any
change in or addition to the location or locations of such property. The
information provided to the Bank shall include the address of each such
location, the identity (including legal name and any trade name, if different)
of the Person in whose facilities or custody such property is located, and such
additional information as the Bank shall reasonably deem necessary or advisable
in connection with perfecting or maintaining the perfection of a Lien on such
property pursuant to the ESOP Loan Documents.
SECTION 4.23. Chief Executive Offices. Not change (or permit any Obligated
Subsidiary to change) the location of its chief executive office from the
respective addresses set forth in the Revolving Credit Agreement as of the date
hereof except upon giving not less than thirty (30) days prior written notice to
the Bank and taking or causing to be taken all such action at Guarantor's
expense as may be reasonably requested by the Bank to perfect or maintain the
perfection of the security interest of the Bank in Accounts (to the extent
contemplated hereunder), general intangibles and related Collateral.
SECTION 4.24. New Obligated Subsidiaries. Upon the occurrence of a New
Guaranty Event, the Guarantor shall, as soon as practicable but in any event
within fifteen (15) Business Days of
41
such event cause to be delivered to the Bank by each Required New Obligated
Subsidiary each of the following:
(i) a Subsidiary Guaranty substantially in the form attached hereto
as Exhibit C duly executed by such Required New Obligated Subsidiary;
(ii) a Subsidiary Security Agreement in the form attached hereto as
Exhibit D duly executed by such Required New Obligated Subsidiary;
(iii) an opinion of counsel to such Required New Obligated
Subsidiary dated as of the date of delivery of the Subsidiary Guaranty
provided in the foregoing clause (i) and addressed to the Bank,
substantially in the form of the opinion of special counsel for the
Guarantor and the Obligated Subsidiaries delivered on the Closing Date
(the "Initial Opinion") with respect to paragraphs (b), (g), (k) and (n)
thereof regarding the organization, good standing and foreign
qualification of such Required New Obligated Subsidiary, the authorization
of such Required New Obligated Subsidiary to execute, deliver and perform
its obligations under the Guaranty and the Subsidiary Security Agreement,
the due execution and delivery of the Guaranty and the Subsidiary Security
Agreement on behalf of such Required New Obligated Subsidiary as valid and
binding obligations of such Required New Obligated Subsidiary, enforceable
against such Required New Obligated Subsidiary in accordance with their
respective terms (subject to the exceptions set forth in paragraph (k) of
the Initial Opinion), and the creation and perfection of a security
interest in the collateral described in the Subsidiary Security Agreement
(subject to the exceptions set forth in paragraph (n) of the Initial
Opinion);
(iv) current copies of the charter documents, including partnership
agreements and certificate of limited partnership, if applicable, and
bylaws of such Required New Obligated Subsidiary, minutes of duly called
and conducted meetings (or duly effected consent actions) of the Board of
Directors, partners, or appropriate committees thereof (and, if required
by such charter documents, by-laws or by applicable laws, of the
shareholders or partners) of such Required New Obligated Subsidiary
authorizing the actions and the execution and delivery of documents
described in clauses (i) and (ii) of this Section 4.24 and evidence
satisfactory to the Bank that such Required New Obligated Subsidiary is
Solvent as of such date and after giving effect to the Subsidiary Guaranty
and the Subsidiary Security Agreement;
(v) such duly executed Uniform Commercial Code financing statements
and other documents and instruments, each in form and content acceptable
to the Bank, as shall be necessary to
42
perfect the Liens created under the applicable Subsidiary Security
Agreement to the extent contemplated hereunder; and
(vi) the Subsidiary Stock (as defined in Section 2.07 hereof)
evidencing ownership of such Required New Obligated Subsidiary, together
with duly executed stock powers in blank affixed thereto.
For purposes of this Section 4.24, (i) "New Guaranty Event" means each
occurrence of any of the following: (A) the acquisition or creation after the
Closing Date of any Subsidiary (other than Strategic Investment Subsidiaries),
or (B) any Subsidiary in existence (but not an Obligated Subsidiary) as of the
Closing Date or any Strategic Investment Subsidiary (whenever created or
acquired) satisfying the criteria in clause (ii)(x) of the definition of
"Obligated Subsidiary" in Article I hereof, or (C) the aggregate operating
revenues of all Subsidiaries who are not Obligated Subsidiaries exceeding in any
calendar month ten percent (10%) of the consolidated operating revenues of the
Guarantor and its Subsidiaries, and (ii) "Required New Obligated Subsidiary"
means (A) in the case of a New Guaranty Event described in clauses (i)(A) or
(i)(B) immediately above, the Subsidiary giving rise to such New Guaranty Event,
and (B) in the case of a New Guaranty Event described in clause (i)(C)
immediately above, the Subsidiary (or Subsidiaries, to the extent necessary to
eliminate the occurrence of the New Guaranty Event) not then Obligated
Subsidiaries having the largest operating revenues in the relevant calendar
month.
SECTION 4.25. Sufficient Contributions. Make sufficient and timely
contributions to the Borrower pursuant to the Plan in order to enable the
Borrower to make in full timely payments of principal of and interest on the
Loan and all other amounts payable by the Borrower under the ESOP Loan
Documents.
SECTION 4.26. Modification of Covenants. In the event that, in connection
with the initial public offering of the Guarantor's common stock, covenants in
the Revolving Credit Agreement shall be amended by the Guarantor and the Lenders
(as defined in the Revolving Credit Agreement) to reflect the Guarantor's
resulting financial condition, then the parties hereto agree that they shall
enter into an amendment to this Guaranty effecting corresponding amendments to
the covenants contained herein.
43
ARTICLE V
NEGATIVE COVENANTS
Until all of the obligations of the Borrower under the ESOP Loan Documents
to be performed and paid shall have been performed and paid in full, and until
the Agreement is terminated following such payment and performance, unless the
Bank shall otherwise consent in writing, the Guarantor will not, nor will it
permit any Subsidiary to, either directly or indirectly:
SECTION 5.01. Consolidated Shareholders' Equity. Permit Consolidated
Shareholders' Equity to be less than (i) $22,000,000 at the Closing Date, and
(ii) as at the last day of each fiscal quarter of the Guarantor and until (but
excluding) the last day of the next following fiscal quarter of the Guarantor,
the sum of (A) the amount of Consolidated Shareholders' Equity required to be
maintained pursuant to this Section 5.01 as at the end of the immediately
preceding fiscal quarter, plus (B) 50% of positive Consolidated Net Income
during the immediately preceding fiscal quarter of the Guarantor ending on such
day (including in Consolidated Net Income for purposes of this Section 5.01 only
any net gain or credit of an extraordinary nature) plus (C) 80% of the net
proceeds (less (only in connection with the consummation of the Guarantor's
offering of Qualified Equity Securities) an amount equal to the lesser of (i)
the amount required to redeem the 9% Preferred Stock, reduced by the net
proceeds to the Guarantor from the exercise of Warrant A dated December 17, 1991
or Warrant B dated December 17, 1991, as applicable, and (ii) $17,000,000) of
each sale of equity interest (or securities other than those constituting
Indebtedness exchangeable, convertible or exercisable into equity interests) in
the Guarantor or any Subsidiary.
SECTION 5.02. Current Ratio. Permit at any time the ratio of Consolidated
Current Assets to Consolidated Current Liabilities (before giving effect to any
prepayment obligation arising under Section 2.05(c)(iv) of the Revolving Credit
Agreement) to be less than 1.00 to 1.00.
SECTION 5.03. Consolidated Interest Coverage Ratio. Permit at any time
during the periods set forth below the Consolidated Interest Coverage Ratio to
be less than the respective amount set forth opposite each such period:
Period Ratio
------ -----
From the Closing Date through
December 31, 1996 1.75 to 1.00
From January 1, 1997 and
thereafter 2.25 to 1.00
SECTION 5.04. Consolidated Leverage Ratio. Permit at any time during the
periods set forth below the Consolidated Leverage
44
Ratio to be more than the respective amount set forth opposite each such period:
Period Ratio
------ -----
From the Closing Date through
December 31, 1995 .75 to 1.00
From and including
January 1, 1996 through
December 31, 1996 .70 to 1.00
From and including
January 1, 1997 through
December 31, 1997 .55 to 1.00
From and including
January 1, 1998 and thereafter .50 to 1.00
SECTION 5.05. Consolidated Fixed Charge Ratio. Permit at any time during
the respective periods set forth below the Consolidated Fixed Charge Ratio to be
less than the respective amount set forth opposite such period:
Period Ratio
------ -----
From the Closing Date through
December 31, 1995 1.00 to 1.00
From and including
January 1, 1996 through
December 31, 1996 1.10 to 1.00
From and including
January 1, 1997 through
December 31, 1997 1.25 to 1.00
From and including
January 1, 1998 and thereafter 1.40 to 1.00
SECTION 5.06. Indebtedness. Incur, create, assume or permit to exist any
Indebtedness, howsoever evidenced, except
(i) Indebtedness existing as of the date hereof and as set forth in
Schedule 5.06 delivered to the Bank simultaneously with the execution of
this Guaranty and incorporated herein by reference;
(ii) Indebtedness owed under the Revolving Credit Loan Documents;
(iii) the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
45
(iv) additional Indebtedness not to exceed in the aggregate
$3,000,000 during each of the Fiscal Years ending September 30, 1995 and
1996 (on a non-cumulative basis, so that amounts not incurred in one
Fiscal Year may not be carried over to a subsequent Fiscal Year) incurred
to acquire computer hardware and software and related components or
telecommunications equipment, systems and services and other equipment;
(v) Indebtedness of the Guarantor or Vitas California evidenced by
the Seller Notes and the Guarantor's guaranty thereof or otherwise arising
under the CHC Transaction Documents; and
(vi) the guaranty by the Guarantor of lease obligations of Vitas
California.
SECTION 5.07. Liens. Incur, create or permit to exist any pledge, Lien,
charge or other encumbrance of any nature whatsoever with respect to any
property or assets now owned or hereafter acquired by the Guarantor or any of
its Subsidiaries, other than
(i) Liens existing as of the date hereof and as set forth in
Schedule 3.01(g) delivered to the Bank simultaneously with the execution
of this Guaranty;
(ii) Liens imposed by law for taxes, assessments or charges of any
Governmental Authority for claims not yet due or which are being contested
in good faith by appropriate proceedings and with respect to which
adequate reserves or other appropriate provisions are being maintained in
accordance with Generally Accepted Accounting Principles;
(iii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by law or
created in the ordinary course of business and in existence less than 120
days from the date of creation thereof for amounts not yet due or which
are being contested in good faith by appropriate proceedings and with
respect to which adequate reserves or other appropriate provisions are
being maintained in accordance with Generally Accepted Accounting
Principles;
(iv) Liens incurred or deposits made in the ordinary course of
business (including, without limitation, surety bonds and appeal bonds) in
connection with workers' compensation, unemployment insurance and other
types of social security benefits or to secure the performance of tenders,
bids, leases, contracts (other than for the repayment of Indebtedness),
statutory obligations and other similar obligations or arising as a result
of progress payments under government contracts;
46
(v) easements (including, without limitation, reciprocal easement
agreements and utility agreements), rights-of-way, covenants, consents,
reservations, encroachments, variations and zoning and other restrictions,
charges or encumbrances (whether or not recorded), which do not interfere
materially with the ordinary conduct of the business of the Guarantor or
any Subsidiary and which do not materially detract from the value of the
property to which they attach or materially impair the use thereof to the
Guarantor or any Subsidiary;
(vi) Liens arising under the Revolving Credit Loan Documents and the
ESOP Loan Documents;
(vii) purchase money Liens to secure Indebtedness permitted under
Section 5.06(iv) hereof so long as such Indebtedness is incurred to
purchase computer hardware and software, the Indebtedness represents not
less than 75% of the purchase price of such assets, no other property
other than the property acquired with the proceeds of such Indebtedness
secures such Indebtedness; and
(viii) the right of the Sellers to payments from certain accounts
and funds pursuant to Sections 2.6 and 2.7 of the Asset Purchase Agreement
and the Joint Account Agreement (as such term is defined in the Asset
Purchase Agreement).
SECTION 5.08. Transfer of Assets. Sell, lease, transfer or otherwise
dispose of (i) any interest in any Subsidiary, or (ii) any other asset of
Guarantor or any Subsidiary except, in each case, (a) assets sold in the
ordinary course of business, (b) assets which are worn out, obsolete or no
longer necessary, or (c) assets transferred by Guarantor to any Obligated
Subsidiary, by one Obligated Subsidiary to another Obligated Subsidiary, or by
any Obligated Subsidiary to the Guarantor.
SECTION 5.09. Investments; Acquisitions. Purchase, own, invest in or
otherwise acquire, directly or indirectly, any stock or other securities or all
or substantially all of the assets, or make or permit to exist any interest
whatsoever in any other Person other than an Obligated Subsidiary or permit to
exist any loans or advances to any Person; provided, Guarantor and its
Subsidiaries may consummate the CHC Transaction in accordance with the CHC
Transaction Documents and otherwise may maintain investments or invest in, own,
make loans or advances to, or acquire
(i) Eligible Securities;
(ii) loans, advances and investments existing as of the date hereof
and as set forth in Schedule 3.01(d) delivered to the Bank simultaneously
with the execution of this Guaranty;
(iii) accounts receivable arising and trade credit granted in the
ordinary course of business and any securities received
47
in satisfaction or partial satisfaction thereof in connection with
accounts of financially troubled Persons to the extent reasonably
necessary in order to prevent or limit loss;
(iv) loans and advances to other Persons in an aggregate outstanding
amount not exceeding at any time $750,000 except the dollar limit
restriction contained in this clause (iv) shall not apply to non-cash
loans and advances made to Persons in connection with the exercise of
stock options or other equity interests in the Guarantor so long as such
loan or advance is repaid within five (5) Business Days;
(v) Strategic Investments (including Strategic Investment
Subsidiaries not constituting Obligated Subsidiaries), provided that no
such Strategic Investment shall be made if after giving effect thereto (W)
the aggregate investment in any one Person shall exceed $1,000,000 (valued
at cost), (X) the aggregate amount of Strategic Investments made in any
Fiscal Year (on a noncumulative basis, with the effect that amounts not
expended in any Fiscal Year may not be expended in any subsequent Fiscal
Year) shall exceed $2,000,000, (Y) the aggregate amount of Strategic
Investments made in any Fiscal Year (on a noncumulative basis, with the
effect that amounts not expended in any Fiscal Year may not be expended in
any subsequent Fiscal Year), together with the aggregate amount of Costs
of Acquisitions (excluding the CHC Transaction) incurred during such
Fiscal Year (similarly computed on a non-cumulative basis), shall exceed
$5,000,000, or (Z) the aggregate amount of Strategic Investments shall
exceed five percent (5%) of Consolidated Shareholders' Equity, provided
that each of the limitations described in this Section 5.09(v) shall be
applied after giving effect to reductions in Strategic Investments from
receipt of cash distributions and cash management fees; and
(vi) Permitted Acquisitions provided that if the Cost of Acquisition
exceeds $2,500,000 the Guarantor shall have furnished to the Bank a
certificate in the form of Exhibit B prepared on a historical pro forma
basis giving effect to such Permitted Acquisition which certificate shall
demonstrate that no Default or Event of Default will exist; provided,
further, the aggregate Costs of Acquisitions (excluding the CHC
Transaction) in any Fiscal Year (on a noncumulative basis, with the effect
that amounts not expended in any Fiscal Year may not be expended in any
subsequent Fiscal Year), together with the aggregate amount of Strategic
Investments in such Fiscal Year (similarly computed on a non-cumulative
basis), shall not exceed $5,000,000.
SECTION 5.10. Dividends or Distributions. Declare or pay any dividends
(other than those payable solely in capital stock) or distribution in reduction
of capital or otherwise in respect of any equity interest, or purchase, redeem
or otherwise retire any such
48
equity interest except (i) dividends paid with respect to Preferred Stock, (ii)
Preferred Stock Redemptions, (iii) redemptions of the Preferred Stock with the
net proceeds from the issuance and sale of Qualified Equity Securities, (iv)
payments to purchase stock of the Guarantor pursuant to the exercise by Plan
beneficiaries of put rights under Section 16(b) of the Plan, and (v) pursuant to
the exercise of rights of first refusal or similar rights relating to stock
options or securities issuable upon the exercise of stock options in an
aggregate amount in any Fiscal Year not exceeding $300,000 (on a non-cumulative
basis, with the effect that amounts not expended in any Fiscal Year may not be
expended in a subsequent Fiscal Year), provided that after giving effect to
payment of such dividend or Preferred Stock Redemption no Default or Event of
Default exist hereunder; provided further that, without limiting other rights of
the Bank hereunder or under the other ESOP Loan Documents, the provisions of
this Section 5.10 shall not prohibit any Preferred Stock Redemption after
December 30, 1996.
SECTION 5.11. Merger or Consolidation. (a) Consolidate with or merge into
any other Person, or permit any other Person to merge into it; or (b) liquidate,
wind-up or dissolve or sell, transfer or lease or otherwise dispose of all or a
substantial part of its assets (other than sales in the ordinary course of
business or transfers from an Obligated Subsidiary to the Guarantor or another
obligated Subsidiary or from the Guarantor to an Obligated Subsidiary);
provided, however, (i) any Subsidiary of the Guarantor may merge into or
transfer all or substantially all of its assets to or consolidate with any
wholly-owned Subsidiary of the Guarantor, and (ii) any Person may merge with the
Guarantor or any wholly-owned Subsidiary of the Guarantor (whether or not such
Subsidiary is the survivor, provided such Person becomes a Subsidiary and, if
required, an Obligated Subsidiary) if the Guarantor or such wholly-owned
Subsidiary shall be the survivor thereof and, if required, an Obligated
Subsidiary, and such merger shall not cause, create or result in the occurrence
of any Default or Event of Default hereunder.
SECTION 5.12. Change in Control. Cause, suffer or permit any Person or
group of Persons, other than the owners existing as of the Closing Date, to own
beneficially more than 49% (and after an initial public offering of Guarantor's
capital stock, 25%) of the outstanding securities of (on a fully diluted basis
and taking into account any outstanding securities or contract rights
exercisable, exchangeable or convertible into equity interests) the Guarantor
having voting rights in the election of directors.
SECTION 5.13. Transactions with Affiliates. Enter into any transaction
after the date hereof, including, without limitation, the purchase, sale,
leasing or exchange of property, real or personal, or the rendering of any
service, with any Affiliate of the Guarantor, except for the following: (a) such
Persons may render services to the Guarantor or its Subsidiaries for
compensation at the same rates generally paid by Persons engaged in
49
the same or similar businesses for the same or similar services, and (b) such
transactions may be entered into in the ordinary course of and pursuant to the
reasonable requirements of the Guarantor's (or any Subsidiary's) business and
upon fair and reasonable terms no less favorable to the Guarantor (or any
Subsidiary) than would be obtained in a comparable arm's-length transaction with
a Person not an Affiliate and (c) the limitation contained in this Section does
not apply to compensation arrangements (present and deferred) for Affiliates who
are or were officers or employees of the Guarantor or any Subsidiary as of or
prior to the Closing Date if such compensation arrangements are (i) approved by
a majority of the non-employee directors of the Board of Directors or the
Compensation Committee of the Board of Directors and (ii) such compensation is
paid for services rendered to the Guarantor or such Subsidiary in the ordinary
course of business.
SECTION 5.14. ERISA. With respect to all employee pension benefit plans
maintained by the Guarantor or any Subsidiary:
(i) terminate any of such employee pension benefit plans so as to
incur any liability to the Pension Benefit Guaranty Corporation
established pursuant to ERISA;
(ii) allow or suffer to exist any prohibited transaction involving
any of such employee pension benefit plans or any trust created thereunder
which would subject the Guarantor or a Subsidiary to a tax or penalty or
other liability on prohibited transactions imposed under Internal Revenue
Code Section 4975 or ERISA;
(iii) fail to pay to any such employee pension benefit plan any
contribution which it is obligated to pay under the terms of such plan;
(iv) allow or suffer to exist any accumulated funding deficiency,
whether or not waived, with respect to any such employee pension benefit
plan;
(v) allow or suffer to exist any occurrence of a reportable event or
any other event or condition, which presents a material risk of
termination by the Pension Benefit Guaranty Corporation of any such
employee pension benefit plan that is a Single Employer Plan, which
termination could result in any liability to the Pension Benefit Guaranty
Corporation; or
(vi) incur any withdrawal liability with respect to any
Multi-employer Plan.
SECTION 5.15. Fiscal Year. Change its Fiscal Year unless the Guarantor can
demonstrate compliance with the covenants contained herein for both the Fiscal
Year in effect prior to any change and
50
the new fiscal year period by delivery to the Bank of appropriate interim and
annual pro forma historical and current compliance certificates for such periods
and such other information as the Bank may reasonably request.
SECTION 5.16. Dissolution, etc. Wind up, liquidate or dissolve
(voluntarily or involuntarily) or commence or suffer any proceedings seeking any
such winding up, liquidation or dissolution, except in connection with (i) the
merger or consolidation of Subsidiaries into each other or into the Guarantor
permitted pursuant to Section 5.11 and (ii) the dissolution of Vitas Healthcare
Corporation of Texas so long as it remains an inactive Subsidiary of the
Guarantor prior to such dissolution.
SECTION 5.17. Rate Hedging Obligations. Incur any Rate Hedging Obligations
or enter into any agreements, arrangements, devices or instruments relating to
Rate Hedging Obligations, except in regard to Swap Agreements.
SECTION 5.18. Subordinated Obligations. Cause, suffer or permit to be made
any payments in respect of Subordinated Obligations except to the extent
expressly permitted by the Subordination Agreements.
51
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.01. Events of Default. The following shall constitute Events of
Default under this Guaranty (whether such occurrence shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):
(a) the Guarantor shall fail to observe or perform any of the terms,
covenant or provisions contained in Article II hereof, including without
limitation failure to pay any amount as and when the same shall become due as
therein provided; or
(b) default shall be made in the performance or observance of
any covenant set forth in Sections 4.06, 4.07, 4.08, 4.12, 4.13, 4.24, 4.25 or
Article V hereof and in the case of Section 4.01 through 4.05, 4.07 and 4.14
such default shall continue for a period of five (5) days; or
(c) if a default shall be made in the performance or observance of,
or shall occur under, any covenant, agreement or provision contained in this
Guaranty (other than as described in clauses (a) or (b) above) and such default
shall continue for 30 or more days after the earlier of receipt of notice of
such default by the Authorized Representative from the Bank, the President, the
chief executive officer, the chief financial officer, the Treasurer or the Vice
President for Legal and Regulatory Affairs of the Guarantor becomes aware of
such default, or if a default shall be made in the performance or observance of,
or shall occur under, any covenant, agreement or provision contained in any of
the subsidiary Guaranties, Subsidiary Security Agreements or other ESOP Loan
Documents (beyond any applicable grace period, if any, contained therein) or in
any instrument or document evidencing or creating any obligation, guaranty, or
Lien in favor of the Bank or delivered to the Bank in connection with or
pursuant to this Guaranty or any of the ESOP Loan Documents, or if any ESOP Loan
Document ceases to be in full force and effect (other than by reason of any
action by the Bank), or if without the written consent of the Bank, this
Guaranty or any other ESOP Loan Document shall be disaffirmed or shall
terminate, be terminable or be terminated or become void or unenforceable for
any reason whatsoever (other than in accordance with its terms in the absence of
default or by reason of any action by the Bank); or
(d) if a default shall occur, which is not waived, (i) in the
payment of any principal, interest, premium or other amounts with respect to any
Indebtedness (other than the Loans) of the Guarantor or of any Subsidiary in an
amount not less than $25O,000 in the aggregate outstanding, or (ii) in the
performance, observance or fulfillment of any term or covenant contained in any
52
agreement or instrument under or pursuant to which any such Indebtedness may
have been issued, created, assumed, guaranteed or secured by the Guarantor or
any Subsidiary, and such default shall continue for more than the period of
grace, if any, therein specified, or if such default shall permit the holder of
any such Indebtedness to accelerate the maturity thereof; or
(e) if any representation, warranty or other statement of fact
contained herein or any other ESOP Loan Document or in any writing, certificate,
report or statement at any time furnished to the Bank by or on behalf of the
Guarantor or, any Obligated Subsidiary pursuant to or in connection with this
Guaranty or the other ESOP Loan Documents, or otherwise, shall be false or
misleading in any material respect when given; or
(f) if the Guarantor or any Subsidiary shall be unable to pay its
debts generally as they become due; file a petition to take advantage of any
insolvency statute; make an assignment for the benefit of its creditors;
commence a proceeding for the appointment of a receiver, trustee, liquidator or
conservator of itself or of the whole or any substantial part of its property;
file a petition or answer seeking reorganization or arrangement or similar
relief under the federal bankruptcy laws or any other applicable law or statute;
or
(g) if a court of competent jurisdiction shall enter an order,
judgment or decree appointing a custodian, receiver, trustee, liquidator or
conservator of the Guarantor or any Subsidiary or of the whole or any
substantial part of its properties and such order, judgment or decree continues
unstayed and in effect for a period of sixty (60) days, or approve a petition
filed against the Guarantor or any Subsidiary seeking reorganization or
arrangement or similar relief under the federal bankruptcy laws or any other
applicable law or statute of the United States of America or any state, which
petition is not dismissed within thirty (30) days; or if, under the provisions
of any other law for the relief or aid of debtors, a court of competent
jurisdiction shall assume custody or control of the Guarantor or any Subsidiary
or of the whole or any substantial part of its properties, which control is not
relinquished within sixty (60) days; or if there is commenced against the
Guarantor or any Subsidiary any proceeding or petition seeking reorganization,
arrangement or similar relief under the federal bankruptcy laws or any other
applicable law or statute of the United States of America or any state which
proceeding or petition remains undismissed for a period of sixty (60) days; or
if the Guarantor or any Subsidiary takes any action to indicate its consent to
or approval of any such proceeding or petition; or
(h) if (i) any final, non-appealable judgment where the amount not
covered by insurance (or the amount as to which the insurer denies liability) is
in excess of $250,000 is rendered against the Guarantor or any Subsidiary, or
(ii) there is any
53
attachment, injunction or execution against any of the Guarantor's or any
Subsidiary's properties for any amount in excess of $250,000; and in either case
such judgment, attachment, injunction or execution remains unpaid, unstayed,
undischarged, unbonded or undismissed for a period of sixty (60) days; or
(i) if the Guarantor or any Subsidiary shall, other than in the
ordinary course of business (as determined by past practices), suspend all or
any part of its operations material to the conduct of the business of the
Guarantor and its Subsidiaries, taken as a whole; or
(j) if (i) the Guarantor or any Subsidiary shall engage in any
prohibited transaction (as described in Section 5.14(u) hereof), which is not
subject to a statutory or administrative exemption, involving any employee
pension benefit plan of the Guarantor or any Subsidiary, (ii) any accumulated
funding deficiency (as referred to in Section 5.14(iv) hereof), whether or not
waived, shall exist with respect to any Single Employer Plan, (iii) a reportable
event (as referred to in Section 5.14(v) hereof) (other than a reportable event
for which the statutory notice requirement to the Pension Benefit Guaranty
Corporation has been waived by regulation) shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee shall be
appointed to administer or to terminate, any Single Employer Plan, which
reportable event or institution or proceedings is, in the reasonable opinion of
the Required Lenders, likely to result in the termination of such Single
Employer Plan for purposes of Title IV of ERISA, and in the case of such a
reportable event, the continuance of such reportable event shall be unremedied
for sixty (60) days after notice of such reportable event pursuant to Section
4043(a), (c) or (d) of ERISA is given, as the case may be, (iv) any Single
Employer Plan shall terminate for purposes of Title IV of ERISA, and such
termination results in a material liability of the Guarantor or any Subsidiary
to such Single Employer Plan or the Pension Benefit Guaranty Corporation, or (v)
the Guarantor or any Subsidiary shall withdraw from a Multi-employer Plan for
purposes of Title IV of ERISA, and, as a result of any such withdrawal, the
Guarantor or any Subsidiary shall incur withdrawal liability to such
Multi-employer Plan; and in each case in clauses (i) through (v) of this Section
6.01(i), such event or condition, together with all other such events or
conditions, if any, would subject the Guarantor or any Subsidiary to any tax,
penalty or other liabilities, and in each such case the event or condition is
not remedied to the satisfaction of the Required Lenders within ninety (90) days
after the earlier of (i) receipt of notice of such event or condition by the
Authorized Representative from the Bank or (ii) the Guarantor becomes aware of
such event or condition; or
(k) if the Guarantor or any Subsidiary shall breach any of the terms
or conditions of any agreement under which any Rate Hedging Obligation permitted
pursuant to Section 5.17 is created
54
and such breach shall continue beyond any grace period, if any, relating thereto
pursuant to the terms of such obligation; or
(1) if there shall occur and not be waived an Event of Default as
defined in any of the Revolving Credit Loan Documents or any of the other ESOP
Loan Documents; or
(m) if there shall occur any loss of any permits, licenses,
authorizations, certifications or approvals from any federal, state or local
governmental or administrative authority or termination of any contract with any
such authority, which loss or termination (i) continues for a period greater
than 60 days and (ii) results in the suspension or termination of operations of
the Guarantor or any Subsidiary which produces 5% or more of the Guarantor's
gross revenues.
SECTION 6.02. Rights Upon an Event of Default. If any Event of Default
shall have occurred and not been waived subject to Section 2.08 hereof, the Bank
may proceed to protect and enforce its rights and interests hereunder and under
the other ESOP Loan Documents, and shall have the right to proceed first
directly against the Guarantor or any signatory to a Subsidiary Guaranty, and
the Bank shall have no obligation to proceed against or exhaust any other remedy
or remedies which it may have without resorting to any other security or
guaranty, whether held by or available to the Bank.
SECTION 6.03. No Remedy Exclusive. No remedy herein conferred upon or
reserved to the Bank is intended to be exclusive of any other available remedy
or remedies, but each and every such remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing at
law or in equity or by statute.
55
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Amendments, Etc. No amendment or waiver of any provision of
this Guaranty, nor consent to any departure by the Guarantor in any event shall
be effective unless the same shall be in writing and signed by the Bank and then
such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 7.02. Notices, Etc. All notices, demands or requests provided for
or permitted to be given pursuant to this Guaranty shall be deemed to have been
properly given or served by personal delivery, by telecopy with telephone or
telecopied confirmation of receipt, or by depositing in the United States mail,
postpaid and registered or certified, return receipt requested, and addressed to
the parties at their addresses set forth below. All notices, demands and
requests shall be effective upon being personally delivered at the address
specified herein, upon confirmation of receipt by telecopy, or three (3)
Business Days after being deposited in the United States mail. The time period
for which a response to any notice, demand or request must be given, if any,
shall commence to run from the date of delivery at the address specified herein,
the date of receipt of telecopy notice, or the date of receipt of the notice,
demand, or request, by the addressee thereof as disclosed by the return receipt.
Rejection or other refusal to accept or the inability to deliver because of
changed address of which no notice was given shall be deemed to be receipt of
the notice, demand or request sent. Any party hereto shall have the right from
time to time and at any time during the term of this Guaranty to change its
address or addressee and each shall have the right to specify as its address any
other address within the United States by giving notice in accordance with the
terms hereof. For the purposes of this Guaranty, the addresses of the parties
are as follows:
(a) if to the Guarantor at:
Vitas Healthcare Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Chief Financial Officer
Telefacsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
56
with a copy (which shall not constitute notice) to:
Vitas Healthcare Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President for Legal and Regulatory Affairs
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Bank at:
NationsBank Plaza
▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Banking Department
Telefacsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 7.03. No Waiver. No failure on the part of the Bank to exercise,
and no delay in exercising, any right hereunder or under the other ESOP Loan
Documents shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder or thereunder preclude any other or further
exercise thereof or the exercise of any other right.
SECTION 7.04. Right of Set-off. Upon the occurrence of any Event of
Default, the Bank is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand other than deposits identified as for the
benefit of third parties) at any time held and other indebtedness at any time
owing by the Bank to or for the credit or the account of the Guarantor against
any and all of the obligations of the Guarantor now and hereafter existing under
this Guaranty, irrespective of whether or not the Bank shall have made any
demand hereunder and although such obligations may be contingent or unmatured.
SECTION 7.05. Costs, Expenses and Taxes. The Guarantor agrees to pay
immediately when due all costs and expenses in connection with the preparation,
execution, delivery, filing, recording, and administration and enforcement of or
monitoring of compliance with this Guaranty and any other documents which may be
delivered in connection with this Guaranty or the transactions contemplated
hereby, including, without limitation, the reasonable fees and out-of-pocket
expenses of the Bank and of counsel and any agents or consultants for the Bank,
with respect thereto and with respect to advising the Bank as to its rights and
responsibilities under this Guaranty, subject to an aggregate cap of fees and
expenses of counsel to the Bank of $55,000 in connection with the negotiation,
preparation and execution of the ESOP Loan Documents and the Loan Documents (as
defined in the Revolving Credit
57
Agreement), excluding fees and expenses arising in connection with any
amendment, supplement or modification hereto or to any of the ESOP Loan
Documents or to any Loan Documents. In addition, the Guarantor shall pay any and
all documentary stamp, intangibles and other taxes and fees payable or
determined to be payable in connection with the execution, delivery, filing and
recording of this Guaranty, and agrees to save the Bank harmless from and
against any and all liabilities with respect to or resulting from any delay in
paying or failure to pay such taxes and fees.
SECTION 7.06. Binding Effect. This Guaranty shall be binding upon and
inure to the benefit of the Guarantor and the Bank and their respective
successors and assigns, except that the Guarantor shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the Bank. The Bank may assign or sell a participation in all or any
part of, or any interest (undivided or divided) in, the Bank's rights and
benefits under this Guaranty to any financial institution and agrees to give the
Guarantor written notice thereof. To the extent of any assignment by the Bank,
the assignee shall have the same rights and benefits against the Guarantor
hereunder as it would have had if such assignee were the Bank.
SECTION 7.07. Severability. Any provision of this Guaranty which is
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
SECTION 7.08. Governing Law. This Guaranty shall be governed by, and
construed in accordance with, the internal laws of the State of Florida, without
regard to its choice of law principles.
SECTION 7.09. Headings. Section headings in this Guaranty are included
herein for convenience of reference only and shall not constitute a part of this
Guaranty for any other purpose.
SECTION 7.10. Prior Agreements Superseded. This Guaranty and the other
ESOP Loan Documents shall completely and fully supersede all prior undertakings
or agreements, both written and oral, between the Guarantor and the Bank
relating to the subject matter hereof and thereof, including those contained in
any commitment letter between the Bank and the Guarantor executed in
anticipation of the issuance of the making of the Loan.
SECTION 7.11. Counterparts. This Guaranty may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
SECTION 7.12. Consents. Whenever pursuant to the terms of the ESOP Loan
Documents the consent of a party to the ESOP Loan
58
Documents shall be required for any other Person to take any action or obtain
any right, privilege or other benefit thereunder, the party entitled to give or
withhold consent shall respond to any such request for consent duly made
hereunder within the time for such response expressly provided therefor in the
ESOP Loan Documents or, if no such time is so provided, within a reasonable time
following receipt thereof; provided that (i) nothing in this section shall
impair the effect of any other provision of the ESOP Loan Documents expressly
providing in certain circumstances that the failure to give consent shall
constitute a refusal to consent, (ii) in no event shall the Bank be required to
respond to any such request for consent more rapidly than thirty (30) days
following the latest date upon which the Bank receives such request for consent
and all information relating thereto which the Bank may request in connection
therewith, and (iii) failure of the Bank to respond to any request for consent
as provided in this Section 7.12 shall not discharge, diminish or constitute a
defense to enforcement of any obligations under the ESOP Loan Documents.
SECTION 7.13. Supplements to Schedules. The Guarantor may, from time to
time, amend or supplement the Schedules to this Guaranty by delivering
(effective upon receipt) to the Bank a copy of such revised Schedule or
Schedules which shall (i) be dated the date of delivery, (ii) be certified by an
Authorized Representative as true, complete and correct as of such date and as
delivered in replacement for the corresponding Schedule or Schedules previously
in effect, and (iii) show in reasonable detail (by blacklining or other
appropriate graphic means) the changes from each such corresponding predecessor
Schedule.
59
IN WITNESS WHEREOF, the parties hereto have caused this Guaranty to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
WITNESS: VITAS HEALTHCARE CORPORATION
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------- -----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Title: Vice President
----------------------------
[The remainder of this page intentionally left blank.]
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WITNESS: NATIONSBANK OF FLORIDA, NATIONAL
ASSOCIATION
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------- -----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Title: Vice President
----------------------------
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