EXHIBIT 10.49
AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT (this "Security
Agreement") is made as of this 17th day of February, 1995, by and between VITAS
HEALTHCARE CORPORATION, a Delaware corporation having its principal place of
business in Miami, Dade County, Florida (the "Borrower"), and NATIONSBANK OF
FLORIDA, NATIONAL ASSOCIATION, a national banking association ("NationsBank"),
for itself and as agent (in such agency capacity and together with any successor
agent, the "Agent") for certain lenders (the "Lenders") party to the Credit
Agreement described below (in such capacities as described below and together
with any successor agent acting as such under the Credit Agreement described
below, the "Secured Party").
W I T N E S S E T H:
WHEREAS, (i) pursuant to a Revolving Credit and Reimbursement Agreement
dated as of August 11, 1994 (the "Prior Credit Agreement") among the Borrower,
NationsBank and NationsBank as agent, NationsBank made available to the Borrower
a revolving credit facility in the aggregate principal amount of up to
$15,000,000, including within such revolving credit facility the issuance of
letters of credit for the account of the Borrower and (ii) pursuant to a
Guaranty and Contingent Purchase Agreement of even date with the Prior Credit
Agreement between the Borrower and NationsBank (the "Prior Guaranty" and,
together with the Prior Credit Agreement, the "Prior Agreements"), NationsBank
extended a term loan of $2,386,670 to the Vitas Healthcare Corporation Employee
Stock Ownership Trust (the "Trust") to refinance certain indebtedness owing from
the Trust to the Borrower, the repayment of which loan was, inter alia,
guaranteed under the Prior Guaranty; and
WHEREAS, as security for its obligations and liabilities under the Prior
Agreements, the Borrower entered into a Pledge and Security Agreement of even
date with the Prior Credit Agreement granting to the agent under the Prior
Credit Agreement and to NationsBank upon the occurrence of certain events
therein specified a security interest in certain property of the Borrower; and
WHEREAS, the Borrower and Vitas Healthcare Corporation of California, a
Subsidiary of the Borrower ("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 defined in the Credit Agreement) pursuant to the terms and
subject to the conditions set forth therein and, in connection therewith, the
Borrower has requested that the Prior Credit Agreement be amended and restated
to increase the revolving credit
facility from $15,000,000 to $20,000,000, to provide for a $25,000,000 term loan
facility, and to make certain other modifications, and that the Prior Guaranty
be amended and restated to reflect the agreement of the parties; and
WHEREAS, at the request of the Borrower and to effect the modifications
referred to above, (i) the Borrower, the Agent and the Lenders are entering into
an Amended and Restated Revolving Credit, Term Loan and Reimbursement Agreement
of even date herewith (as the same may be modified, amended or restated from
time to time, the "Credit Agreement") and (ii) the Borrower and NationsBank are
entering into an Amended and Restated Guaranty and Contingent Purchase Agreement
of even date herewith (as the same may be modified, amended or restated from
time to time, the "Guaranty" and, together with the Credit Agreement, the
"Agreements"); and
WHEREAS, the Lenders are unwilling to extend the amend and increase the
revolving credit facility or make such term loan pursuant to the Credit
Agreement, and NationsBank is unwilling to amend the Prior Agreements as
reflected in the Agreements to permit the consummation of the CHC Transaction,
unless the Borrower enters into this Security Agreement pursuant to which it
secures all of its obligations and liabilities arising under the Agreements;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and promises herein contained, the parties hereto agree as follows:
1. Certain Definitions. Unless otherwise defined herein, capitalized terms
used in this Security Agreement shall have the respective meanings therefor
provided in the Credit Agreement.
2. Grant of Security Interest. As collateral security for the full and
prompt payment, satisfaction and performance of (i) all Obligations under the
Credit Agreement and (ii) all obligations and liabilities of the Borrower under
the Guaranty, whether now existing or hereafter arising (the "Guaranty
Obligations" and, collectively with the Obligations, the "Secured Obligations"),
Borrower hereby grants to the Secured Party a continuing security interest in
all of its right, title and interest in and to all of the following property in
which Borrower now has or hereafter acquires an interest, whether now owned or
existing or hereafter acquired or arising and wheresoever located:
(A) All accounts, accounts receivable, notes, bills, acceptances,
choses in action, chattel paper, instruments, documents, and other forms
of obligations at any time owing to Borrower, the proceeds thereof and all
of Borrower'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,
2
books and records, ledger and account cards, computer tapes, software, disks,
printouts and records, whether now in existence or hereafter created, relating
thereto (collectively referred to hereinafter as "Accounts");
(B) All goods of Borrower, including without limitation, all
machinery, equipment, motor vehicles, parts, supplies, apparatus,
appliances, tools, patterns, molds, dies, blueprints, fittings, furniture,
furnishings, fixtures and articles of tangible personal property of every
description now or hereafter owned by Borrower or in which Borrower may
have or may hereafter acquire any interest, but as to leasehold interests
in personal property, only to the extent assignable (collectively referred
to hereinafter as "Equipment");
(C) All general intangibles of Borrower, now existing or hereafter
owned or acquired or arising or in which Borrower now has or hereafter
acquires any rights, including but not limited to causes of action,
corporate or business records, inventions, designs, patents, patent
applications, trademarks, trademark registrations and applications
therefor, goodwill, trade names, trade secrets, trade processes,
copyrights, copyright registrations and applications therefor, licenses
(to the extent assignable), permits (to the extent assignable),
franchises, customer lists (to the extent permitted by law), computer
programs, all claims under guaranties, tax refund claims, rights and
claims against carriers and shippers, leases (to the extent assignable),
claims under insurance policies, all rights to indemnification and all
other intangible personal property of every kind and nature (collectively
referred to hereinafter as "General Intangibles");
(D) All inventory of Borrower wherever located, including without
limitation, all goods manufactured or acquired for sale or lease, and any
piece goods, raw materials, work in process and finished merchandise,
findings or component materials, and all supplies, goods, incidentals,
office supplies, packaging materials and any and all items used or
consumed in the operation of the business of Borrower or which may
contribute to the finished product or to the sale, promotion and shipment
thereof, in which Borrower now or at any time hereafter may have an
interest, whether or not the same is in transit or in the constructive,
actual or exclusive occupancy or possession of Borrower or is held by
Borrower or by others for Borrower's account (collectively referred to
hereinafter as "Inventory");
(E) To the extent assignable, all rights now or hereafter arising to
any Borrower under contracts, leases, agreements or other instruments of
every character and description, and all rights of enforcement thereunder
3
(collectively referred to as hereinafter as "Contract Rights");
(F) All monies, certificates of deposit, commercial paper, cash
equivalents, account balances, notes, options, interests, and securities
(certificated or uncertificated), wheresoever located; excluding, however,
the equity interests (other than interests in money market funds) of the
Borrower in Persons not constituting Subsidiaries;
(G) All accessions to, substitutions for and all replacements,
products and proceeds of the foregoing including, without limitation,
proceeds of insurance policies insuring the Collateral (as hereinafter
defined); and
(H) All books and records (including without limitation, customer
data, credit files, computer programs, printouts, and other computer
materials and records of the Borrower and all documents) pertaining to any
of the foregoing.
All of the property and interests in property described in subsections (A)
through (H) and all other property and interests in personal property which
shall, from time to time, secure the Secured Obligations are herein collectively
referred to as the "Collateral".
3. Financing Statements. At the time of execution of this Security
Agreement, Borrower shall have (i) furnished the Secured Party with financing
statements, approved by the Secured Party and executed by the Borrower, as
prescribed by the Uniform Commercial Code as presently in effect in the states
of California, Florida, Texas, Illinois, Wisconsin and Indiana, and the District
of Columbia, and where other Collateral is located, as may be reasonably
requested by the Secured Party, in form and number sufficient to perfect in
favor of the Secured Party the security interest in the Collateral, and (ii)
delivered to Secured Party's possession certificated securities (with duly
executed stock powers in blank affixed thereto) representing the Borrower's
interests in Subsidiaries, in order that the Secured Party shall have a
perfected security interest in the Collateral following such filing of such
financing statements with the appropriate local and state governmental
authorities and the delivery of such securities (to the extent that a security
interest in such Collateral is capable of perfection by such filing or
possession), and subject only to (a) permitted liens described in the Credit
Agreement, (b) such other security interests, liens and encumbrances currently
existing and set forth in Exhibit A attached hereto and by reference made a part
hereof, or as shall otherwise be acceptable to the Secured Party in its sole
discretion, and (c) limitations under applicable law which may limit the
creation, perfection or priority of liens on Government Receivables
(collectively referred to hereinafter as "Permitted Liens"); provided, however,
that with respect to the items of property described in clause (F) of Section 2,
the
4
security interest in such property will not be perfected until the Secured Party
or any Lender takes possession thereof or otherwise obtains perfection in
accordance with the applicable requirements of the Uniform Commercial Code.
Borrower shall execute as reasonably required by the Secured Party any
additional financing statements or other documents to effect a perfected
security interest in the Collateral to the extent contemplated hereby, together
with any necessary continuation statements so long as this Security Agreement
remains in effect.
4. Maintenance of Security Interest. Borrower will, from time to time,
upon the request of the Secured Party, deliver specific assignments of
Collateral, together with such other instruments and documents, financing
statements, amendments thereto, assignments or other writings as the Secured
Party or any Lender may reasonably request to carry out the terms of this
Security Agreement or to protect or enforce the Secured Party's security
interest in the Collateral.
With respect to any and all Collateral as to which a security interest is
granted under this Security Agreement, Borrower agrees to do and cause to be
done all things necessary to perfect and keep in full force the security
interest granted in favor of the Secured Party, including, but not limited to,
the prompt payment of all fees and expenses incurred in connection with any
filings made to perfect a security interest in the Collateral in favor of the
Secured Party.
Borrower agrees to make appropriate entries upon its financial statements
and books and records disclosing the Secured Party's security interest in the
Collateral.
5. Collections; Secured Party's Right to Notify Account Debtors and to
Endorse Each Borrower's Name. Borrower hereby authorizes Secured Party at any
time after the occurrence and during the continuation of an Event of Default
subject, with respect to the Guaranty Obligations, to Section 2.08 of the
Guaranty, (a) to open Borrower's mail and collect any and all amounts due to
Borrower from persons obligated on any Accounts ("Account Debtors"), but only to
the extent permitted by law with respect to Government Receivables; (b) to take
over Borrower's post office boxes or make other arrangements as Secured Party
deems necessary to receive Borrower's mail, including notifying the post office
authorities to change the address for delivery of Borrower's mail to such
address as Secured Party may designate; and (c) to notify any or all Account
Debtors, but only to the extent permitted by law with respect to Government
Receivables, that the Accounts have been assigned to Secured Party and that
Secured Party has a security interest therein. Borrower irrevocably makes,
constitutes and appoints Secured Party and all Persons designated by Secured
Party for that purpose as Borrower's true and lawful attorney (and
agent-in-fact) after the occurrence and during the continuation of an Event of
Default subject to the limitations set forth in the
5
immediately preceding sentence and, with respect to the Guaranty Obligations, to
Section 2.08 of the Guaranty, to endorse Borrower's name on any checks, notes,
drafts or any other payment relating to and/or proceeds of the Collateral which
comes into Secured Party's possession or Secured Party's control, and apply the
same on account of the Secured Obligations as provided herein and in the
Agreements, in such order as Secured Party may elect. Secured Party shall
promptly furnish Borrower with a copy of any such notice sent with respect to
Accounts of Borrower and Borrower hereby agrees that any such notice, in Secured
Party's sole discretion, may be sent on Borrower's stationery, in which event
Borrower shall co-sign such notice with Secured Party.
6. Collateral. Borrower covenants with Lender that:
(A) Inspection. Secured Party and any Lender (by any of its
officers, employees and agents) shall have the right, at any time or times
during Borrower's usual business hours, to inspect the Collateral, all
records related thereto (and to make extracts or copies from such
records), and the premises upon which any of the Collateral is located, to
discuss Borrower's affairs and finances with its principal officers and
independent auditors and to verify the amount, quality, quantity, value
and condition of, or any other matter relating to, the Collateral. Upon or
after the occurrence of a Default or an Event of Default, Secured Party
may at any time and from time to time employ and maintain at Borrower's
premises a custodian selected by Secured Party who shall have full
authority to do all acts necessary to protect Secured Party's interest.
All reasonable expenses incurred by Secured Party by reason of the
employment of such custodian shall be paid by the Borrower, added to the
Secured Obligations and secured by the Collateral.
(B) Assignments, Records and Schedules of Accounts. Borrower shall
keep accurate and complete records of its Accounts ("Account Records")
and, upon Secured Party's request from time to time at intervals
acceptable to Secured Party, Borrower shall reasonably provide Secured
Party and each Lender with a Schedule of Accounts in form and substance
reasonably acceptable to the Secured Party describing all Accounts created
or acquired by Borrower ("Schedule of Accounts") and shall at the request
of Secured Party execute and deliver further written assignments of such
Accounts to Secured Party; provided however, that Borrower's failure to
execute and deliver any such Schedule of Accounts or assignments shall not
affect or limit Secured Party's security interest or other rights in and
to any Accounts. If requested by Secured Party, Borrower shall furnish
Secured Party with copies of proof of delivery of invoices and the
original copy of all documents, including, without limitation, repayment
histories and present status reports, relating to the Accounts so
scheduled (collectively, "Account Documents") and such
6
other matter and information relating to the status of then existing Accounts as
Secured Party shall reasonably request.
(C) Notice Regarding Disputed Accounts. In the event any amounts due
and owing in excess of $100,000 are in dispute between any Account Debtor
and Borrower (which shall include, without limitation, any dispute in
which an offset claim or counterclaim may result), Borrower shall provide
the Secured Party with written notice thereof promptly, explaining in
detail the reason for the dispute, all claims related thereto and the
amount in controversy.
(D) Verification of Accounts. Whether or not a Default or an Event
of Default has occurred, any of Secured Party's officers, employees, or
agents shall have the right, at any time or times hereafter, to verify
under reasonable procedures the validity, amount or any other matter
relating to any Accounts by mail, telephone, telegraph or otherwise.
(E) Change of Trade Styles. Borrower shall not change, amend, alter,
terminate, or cease using its trade names or styles under which it
provides services giving rise to Accounts as of the date of this Agreement
("Trade Styles"), or use additional Trade Styles, except upon giving not
less than ten (10) days prior written notice to the Secured Party and
taking or causing to be taken all such action at Borrower's expense as may
be reasonably requested by the Secured Party (including the furnishing of
additional financing statements) to enable the Secured Party to perfect or
maintain the perfection of the security interest of the Secured Party in
Accounts, General Intangibles, Contract Rights and related Collateral.
(F) Safekeeping of Inventory. Borrower shall be responsible for the
safekeeping of its Inventory, and in no event shall Secured Party or any
Lender have any responsibility for:
(i) Any loss or damage to Inventory or destruction thereof
occurring or arising in any manner or fashion from any cause other
than as a result of gross negligence, bad faith or willful
misconduct of the Agent or any Lender;
(ii) Any diminution in the value of Inventory; or
(iii) Any act or default of any carrier, warehouseman, bailee
or forwarding agency thereof or other Person in any way dealing with
or handling Inventory.
(G) Records and Schedules of Inventory. Borrower shall keep correct
and accurate records on a perpetual basis, itemizing and describing the
kind, type, location, quality and
7
quantity of Inventory owned by it, if any, from time to time, and such
Borrower's cost therefor and selling price thereof, and at the reasonable
request of the Secured Party shall furnish to the Secured Party a current
Schedule of Inventory ("Schedule of Inventory"). Borrower shall conduct a
physical inventory, of which Secured Party shall be given prior written
notice and shall have the right to be present, no less than annually, and
shall furnish to Secured Party such other documents and reports as Secured
Party shall reasonably request with respect to the Inventory, including,
without limitation, invoices relating to Borrower's purchase of Inventory.
(H) Evidence of Ownership of Equipment. Borrower, promptly on
request therefor by the Secured Party, shall deliver to the Secured Party
any and all evidence of ownership of any of the Equipment (including
without limitation certificates of title and applications for title).
(I) Records and Schedules of Equipment. Borrower shall maintain
accurate, itemized records describing in reasonable detail its Equipment
and shall furnish the Secured Party upon reasonable request with a current
schedule containing the foregoing information ("Schedule of Equipment").
(J) Administration of Collateral. So long as no Event of Default
shall have occurred and be continuing, Borrower may (to the extent not
inconsistent with the provisions of the Loan Documents or the ESOP Loan
Documents) (i) sell, transfer or dispose of any asset owned by it or (ii)
collect or compromise Accounts and General Intangibles in the ordinary
course of business in any lawful manner.
(K) Voting Rights, Consensual Rights, Dividends and Distributions.
A. So long as no Event of Default shall have occurred and be continuing:
1. the Borrower shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Collateral or
any part thereof for any purpose not inconsistent with the terms of
this Security Agreement, the Credit Agreement, the other Loan
Documents or the other ESOP Loan Documents;
2. the Borrower shall be entitled to receive and retain any
and all cash distributions or dividends paid on the Collateral which
they are otherwise entitled to receive, notwithstanding the
assignment and transfer of the Collateral and the grant of security
interest in Section 2 of this Security Agreement (provided that any
cash distributions or dividends received upon the occurrence and
during the continuance of a Default shall remain segregated from all
other funds of the Borrower
8
and deposited with the Secured Party), but any and all stock
dividends, liquidating dividends, distributions in property, returns
of capital or other distributions made on or in respect of any of
the Collateral, whether resulting from a subdivision, combination or
reclassification of the outstanding capital stock of any issuer of
the Collateral or received in exchange for the Collateral or any
part thereof or as a result of any merger, consolidation,
acquisition or other exchange of assets to which any issuer of any
Collateral may be a party or otherwise, and any and all cash and
other property received in exchange for any of the Collateral shall
be and become part of the Collateral hereunder and, if received by
the Borrower, shall forthwith be delivered to the Secured Party, to
the extent the Collateral for which it was exchanged was held or
required to be held by the Secured Party; and
3. the Secured Party shall execute and deliver (or cause to be
executed and delivered) to the Borrower all such proxies and other
instruments as the Borrower may reasonably request for the purpose
of enabling the Borrower to exercise the voting, consensual and
other rights which the Borrower are entitled to exercise pursuant to
subparagraph (1) above and to receive such distributions and
dividends which it is authorized to receive and retain pursuant to
subparagraph (2) above.
B. Upon the occurrence and during the continuance of an Event of
Default:
1. subject, with respect to Guaranty Obligations to Section
2.08 of the Guaranty, all rights of the Borrower to exercise the
voting and other consensual rights which it would otherwise be
entitled to exercise pursuant to Section 6(K)A.1 and to receive and
retain the distributions and dividends which it would otherwise be
authorized to receive and retain pursuant to Section 6(K)A.2, shall
become vested in the Secured Party, which shall thereupon have the
sole right to exercise such voting and other consensual rights and
to receive and hold as Collateral such distributions and dividends
(whether or not the relevant Collateral shall have been transferred
into the name of the Secured Party or any of its nominees, the
Borrower hereby irrevocably appointing and constituting the Secured
Party as proxy and attorney-in-fact of Borrower, which appointment
is coupled with an interest and is irrevocable, with full power of
substitution, to act as if the Secured Party were the outright owner
thereof); and
2. all distributions and dividends which are received by the
Borrower contrary to the provisions of
9
Section 6(K)A.2 or Section 6(K)▇.▇ shall be received in trust for
the benefit of the Secured Party, shall be segregated from other
funds of Borrower and shall be paid over to the Secured Party
forthwith as Collateral in the same form as so received (with any
necessary endorsement).
7. Warranties Regarding Collateral. Borrower warrants and represents that
it is and will continue to be the owner of the Collateral, now owned and upon
the acquisition of the same, free and clear of all encumbrances and security
interests other than the security interest in favor of Secured Party hereunder
and Permitted Liens, and that it will defend the Collateral and the Secured
Party's security interest therein and any products and proceeds thereof against
all claims and demands of all Persons at any time claiming the same or any
interest therein adverse to the Secured Party or any Lender.
8. Account Warranties and Representations. With respect to its Accounts,
Borrower warrants and represents to the Secured Party and the Lenders that they
may rely on all statements or representations made by Borrower on or with
respect to any Schedule of Accounts prepared and delivered by Borrower and,
unless otherwise indicated in writing by Borrower, that:
(A) All Account Records and Account Documents are located and shall
be kept only at Borrower's location as set forth in Section 6.04 of the
Credit Agreement;
(B) They are genuine, are in all material respects what they purport
to be, are not evidenced by a judgment instrument or document or, if
evidenced by an instrument or document, are only evidenced by one original
instrument or document, which has been delivered to the Secured Party;
(C) They cover the bona fide rendition of services, or the bona fide
sales and deliveries of Inventory usually dealt in by Borrower, in the
ordinary course of business;
(D) Each Account is actually and absolutely owing to Borrower in the
face value thereof, is valid and enforceable against the applicable
Account Debtor, and is not subject to any setoffs, discounts, allowances,
claims, counterclaims, disputes or doubtful collectibility except (i) as
is customary for Accounts of the type represented by such Account
(including the nature of the Account Debtor) of the Borrower in the
ordinary course of Borrower's business and consistent with past practices,
and (ii) as is reflected by reserves and reductions in the stated value of
such Account, computed in a manner consistent with Borrower's policies and
practices in preparing the financial statements described in Sections 7.01
and 8.01 of the Credit Agreement and Sections 3.01(f) and 4.01 of the
Guaranty, included in such financial statements, in the
10
Schedule of Accounts and in any report or certificate including financial
information regarding such Account furnished to the Secured Party pursuant
to the Loan Documents or the ESOP Loan Documents.
(E) The goods or services giving rise thereto are not, and were not
at the time of the sale or performance thereof, subject to any lien,
claim, encumbrance or security interest, except those of the Secured Party
and those removed or terminated prior to the date hereof;
(F) They have not been pledged to any Person other than to Secured
Party under this Security Agreement and will be owned by Borrower free and
clear of any liens, claims or encumbrances except Permitted Liens; and
(G) Secured Party's security interest therein will not be subject to
any offset, deduction, counterclaim, lien or other adverse condition,
other than Permitted Liens or as is consistent with Section 8(D) above.
9. Inventory Warranties and Representations. With respect to Inventory,
Borrower warrants and represents to the Secured Party and the Lenders that they
may rely on all statements or representations made by Borrower on or with
respect to any Inventory and, unless otherwise indicated in writing by Borrower,
that:
(A) Except for the relocation of Inventory from time to time in the
ordinary course of business not aggregating more than $100,000 at any one
time in any location other than those set forth in Schedules 6.03 and 6.04
delivered pursuant to the Credit Agreement or Schedule 4.22 delivered
pursuant to the Guaranty, the Borrower shall not locate or relocate
inventory to any location other than those set forth in Schedules 6.03 and
6.04 delivered pursuant to the Credit Agreement or Schedule 4.22 delivered
pursuant to the Guaranty without giving the Secured Party not less than
thirty (30) days prior written notice and taking or causing to be taken at
its expense all steps as may be reasonably requested by the Secured Party
(including the furnishing of additional financing statements) to enable
the Secured Party to perfect or continue the perfection of its security
interest in such property.
(B) No Inventory is or will be subject to any lien, claim,
encumbrance or security interest whatsoever, except for the security
interest of Secured Party hereunder and Permitted Liens;
(C) No Inventory having an aggregate value in excess of $100,000 is
now, and shall not at any time or times hereafter be, stored with a
bailee, warehouseman, or similar party
11
without Secured Party's prior written consent and, if Secured Party gives
such consent, Borrower will concurrently therewith cause any such bailee,
warehouseman, or similar party to issue and deliver to Secured Party in
form and substance acceptable to Secured Party, warehouse receipts
therefor in Secured Party's name; and
(D) No Inventory is under consignment to any Person.
10. Equipment Warranties and Representations. With respect to Equipment,
Borrower warrants and represents to the Secured Party and each Lender that:
(A) Except for the relocation of Equipment from time to time in the
ordinary course of business not aggregating more than $100,000 at any one
time in any location other than those set forth in Schedules 6.03 and 6.04
delivered pursuant to the Credit Agreement or Schedule 4.22 delivered
pursuant to the Guaranty, the Borrower shall not locate or relocate
Equipment to any location other than those set forth in Schedules 6.03 and
6.04 delivered pursuant to the Credit Agreement or Schedule 4.22 delivered
pursuant to the Guaranty without giving the Secured Party not less than
thirty (30) days prior written notice and taking or causing to be taken at
their expense all steps as may be reasonably requested by the Secured
Party (including the furnishing of additional financing statements) to
enable the Secured Party to perfect or continue the perfection of its
security interest in such property; and
(B) Borrower has and at all times will have good and marketable
title to and ownership of the Equipment free and clear of any lien, claim,
encumbrance, or security interest whatsoever, except for (i) the security
interest of Secured Party created hereunder and (ii) Permitted Liens.
11. Casualty and Liability Insurance Required. (A) Borrower will keep the
Collateral continuously insured as may be expressly required by the Agreements.
(B) Each insurance policy obtained in satisfaction of the
requirements of Section 11(A) hereof:
(i) shall be by such insurer (or insurers) as shall be
financially responsible and qualified to do business in the
applicable jurisdictions;
(ii) shall be in such form and have such provisions
(including, without limitation, the loss payable clause, the waiver
of subrogation clause, the deductible amount, if any, and the
standard mortgagee endorsement clause), as are generally considered
standard provisions for the type of
12
insurance involved and are acceptable in all respects to Secured
Party;
(iii) shall prohibit cancellation or substantial modification,
termination or lapse in coverage by the insurer without at least 30
days' prior written notice to Secured Party;
(iv) shall provide that the interest of Secured Party shall
not be impaired or invalidated by any act or neglect of Borrower nor
by the occupation of the premises wherein such Collateral is located
for purposes more hazardous than are permitted by said policy;
(v) without limiting the generality of the foregoing, all
insurance policies covering loss or damage to the Collateral shall
name Secured Party as mortgagee, loss payee and a party insured
thereunder and any loss thereunder shall be paid directly to Secured
Party.
(C) Prior to expiration of any such policy, Borrower shall furnish
Secured Party with evidence reasonably satisfactory to Secured Party that
the policy or certificate has been renewed or replaced or is no longer
required by this Security Agreement.
(D) Borrower hereby irrevocably makes, constitutes and appoints
Secured Party (and all officers, employees or agents designated by Secured
Party), effective upon the occurrence of an Event of Default which has not
been waived or cured, as Borrower's true and lawful attorney (and
agent-in-fact) for the purpose of making, settling and adjusting claims
under such policies of insurance, endorsing the name of Borrower on any
check, draft, instrument or other item or payment for the proceeds of such
policies of insurance and for making all determinations and decisions with
respect to such policies of insurance.
(E) In the event Borrower shall fail to maintain, or cause to be
maintained, the full insurance coverage required hereunder or shall fail
to keep any Collateral in good repair and good operating condition, the
Secured Party may (but shall be under no obligation to), without waiving
or releasing any Secured Obligation or Event of Default, after giving
notice to the Borrower, contract for the required policies of insurance
and pay the premiums on the same or make any required repairs, renewals
and replacements; and all sums so disbursed by Secured Party, including
reasonable attorneys' fees, court costs, expenses and other charges
related thereto, shall be payable on demand by Borrower to Secured Party
and shall be additional Secured Obligations secured by the Collateral.
(F) In case of any material damage to or destruction of all or any
part of the Collateral, Borrower shall give prompt notice thereof to
Secured Party. Each such notice shall describe generally
13
the nature and extent of such damage, destruction, taking, loss, proceeding or
negotiations.
12. Rights and Remedies Upon Default. Subject, with respect to the
Guaranty Obligations, to Section 2.08 of the Guaranty, upon and after an Event
of Default which has not been waived or cured, the Secured Party shall have the
following rights and remedies, all of which may be exercised with or without
notice to Borrower:
(A) All of the rights and remedies of a secured party under the
Uniform Commercial Code of the state where such rights and remedies are
asserted, or under other applicable law, all of which rights and remedies
shall be cumulative, and none of which shall be exclusive, to the extent
permitted by law, in addition to any other rights and remedies contained
in this Security Agreement, the Agreements, or any of the other Loan
Documents or ESOP Loan Documents;
(B) The right to foreclose the liens and security instruments
created under this Security Agreement or any of the other Loan Documents
or ESOP Loan Documents by any available judicial procedure or without
judicial process;
(C) The right to (i) enter upon the premises of Borrower through
self-help and without judicial process, without first obtaining a final
judgment or giving Borrower notice and opportunity for a hearing on the
validity of Secured Party's claim and without any obligation to pay rent
to Borrower, or any other place or places where any Collateral is located
and kept, and remove the Collateral therefrom to the premises of Secured
Party or any agent of Secured Party, for such time as Secured Party may
desire, in order to effectively collect or liquidate the Collateral,
and/or (ii) require Borrower to assemble the Collateral and make it
available to Secured Party at a place to be designated by Secured Party in
its sole discretion;
(D) The right (to the extent permissible by law with respect to
Government Receivables) to (i) demand payment of the Accounts; (ii)
enforce payment of the Accounts and General Intangibles and enforce all
Contract Rights, by legal proceedings or otherwise; (iii) exercise all or
any of Borrower's rights and remedies with respect to the collection of
the Accounts and General Intangibles and in respect of Contract Rights;
(iv) settle, adjust, compromise, extend or renew the Accounts; (v) settle,
adjust or compromise any legal proceedings brought to collect the Accounts
or General Intangibles or to enforce Contract Rights; (vi) sell or assign
the Accounts, General Intangibles, Contract Rights or other Collateral
upon such terms, for such amounts and at such time or times as Secured
Party deems advisable; (vii) discharge and release the Accounts; (viii)
take control, in any manner, of any item of payment or proceeds; (ix)
prepare, file and sign
14
Borrower's name on a Proof of Claim in bankruptcy or similar document
against any account obligor; (x) prepare, file and sign Borrower's name on
any notice of lien, assignment or satisfaction of lien or similar document
in connection with the Accounts; (xi) endorse the name of Borrower upon
any chattel paper, document, instrument, invoice, freight ▇▇▇▇, ▇▇▇▇ of
lading or similar document or agreement relating to the Accounts or
Inventory; (xii) use Borrower's stationery for verifications of the
Accounts and notices thereof to account obligors; (xiii) use the
information recorded on or contained in any data processing equipment and
computer hardware and software relating to the Accounts, General
Intangibles, Equipment, Contract Rights or Inventory to which Borrower has
access; and (xiv) do all acts and things and execute all documents
necessary, in Secured Party's sole discretion, to collect the Accounts and
General Intangibles;
(E) The right to sell, assign, lease or to otherwise dispose of all
or any Collateral in its then condition, or after any further
manufacturing or processing thereof, at public or private sale or sales,
with such notice as may be required by law, in lots or in bulk, for cash
or on credit, with or without representations and warranties, all as
Secured Party, in its sole discretion, may deem advisable (except, in the
case of Government Receivables, to the extent such sales or other
disposition are prohibited by applicable law). Secured Party shall have
the right to conduct such sales on Borrower's premises or elsewhere and
shall have the right to use Borrower's premises without charge for such
sales for such time or times as Secured Party may see fit. Secured Party
may, if it deems it reasonable, postpone or adjourn any sale of the
Collateral from time to time by an announcement at the time and place of
such postponed or adjourned sale, without being required to give a new
notice of sale. Borrower agrees that Secured Party has no obligation to
preserve rights to the Collateral against prior parties or to ▇▇▇▇▇▇▇▇ any
Collateral for the benefit of any Person. Secured Party is hereby granted
a license or other right to use, without charge, Borrower's labels,
patents, copyrights, rights of use of any name, trade secrets, trade
names, trademarks and advertising matter, or any property of a similar
nature, as it pertains to the Collateral, in completing production of,
advertising for sale and selling any Collateral and Borrower's rights
under any license and any franchise agreement shall inure to Secured
Party's benefit. If any of the Collateral shall require repairs,
maintenance, preparation or the like, or is in process or other unfinished
state, Secured Party shall have the right, but shall not be obligated to
perform such repairs, maintenance, preparation, processing or completion
of manufacturing for the purpose of putting the same in such saleable form
as Secured Party shall deem appropriate, but Secured Party shall have the
right to sell or dispose of the Collateral without such processing. In
addition, Borrower
15
agrees that in the event notice is necessary under applicable law, written
notice mailed to Borrower in the manner specified in either of the
Agreements ten (10) days prior to the date of public sale of any of the
Collateral or prior to the date after which any private sale or other
disposition of the Collateral will be made shall constitute commercially
reasonable notice to Borrower. Secured Party or any Lender may purchase
all or any part of the Collateral at public or, if permitted by law,
private sale, free from any right of redemption which is hereby expressly
waived by Borrower and, in lieu of actual payment of such purchase price,
may set off the amount of such price against the Secured Obligations. The
net cash proceeds resulting from the collection, liquidation, sale, lease
or other disposition of the Collateral shall be applied first to the
reasonable expenses (including all reasonable attorneys' fees) of
retaking, holding, storing, processing and preparing for sale, selling,
collecting, liquidating and the like (collectively, the "Administration
Expenses"), and then to the satisfaction of all Secured Obligations,
application as to particular Secured Obligations or against principal or
interest to be in subject to the terms of Section 13 hereof and of the
Agreements. Borrower shall be liable to Secured Party and the Lenders and
shall pay to the Secured Party on demand any deficiency which may remain
after such sale, disposition, collection or liquidation of the Collateral.
Borrower recognizes that the Secured Party may be unable to effect a
public sale of securities constituting Collateral by reason of certain
prohibitions contained in the Securities Act of 1933, as amended (the
"Securities Act"), and applicable state securities or Blue Sky laws, and
as a consequence may be compelled to resort to one or more private sales
to a restricted group of purchasers who will be obliged to agree, among
other things, to acquire such Collateral for their own account, for
investment and not with a view to the distribution or resale thereof.
Borrower agrees and acknowledges that private sales so made may be at
prices and upon terms less favorable to Borrower than if such Collateral
were sold at public sales and that the Secured Party has no obligation to
delay the sale of any of the Collateral for the period of time necessary
to permit the issuer of such Collateral to register or otherwise qualify
them, even if such issuer would agree to register or otherwise qualify
such Collateral for public sale under the Securities Act and applicable
state securities or Blue Sky laws. Borrower further agrees, to the extent
permitted by applicable law, that the use of private sales made under the
foregoing circumstances to dispose of the Collateral shall be deemed to be
dispositions in a commercially reasonable manner;
(F) The rights and remedies provided to Secured Party or any Lender
under this Security Agreement or any of the other Loan Documents or ESOP
Loan Documents.
16
13. Pari Passu Secured Obligations. The parties hereto acknowledge that
the Obligations and the Guaranty Obligations shall rank pari passu with respect
to the application of proceeds of Collateral to satisfy the same and, in
accordance therewith, agree that the proceeds of Collateral, after payment of
all Administration Expenses, shall be applied ratably to Obligations and
Guaranty Obligations in accordance with the respective amounts thereof
outstanding as of the date of any application of proceeds of Collateral for such
purpose.
14. Anti-Marshalling Provisions. The right is hereby given by Borrower to
Secured Party and the Lenders to make releases (whether in whole or in part) of
all or any part of the Collateral agreeable to Secured Party and the Lenders
without notice to, or the consent, approval or agreement of other parties and
interests, including junior lienors, which releases shall not impair in any
manner the validity of or priority of the liens and security interest in the
remaining Collateral conferred under such documents, nor release Borrower from
personal liability for the indebtedness hereby secured. Notwithstanding the
existence of any other security interest in the Collateral held by Secured Party
or any Lender, Secured Party and the Lenders shall have the right to determine
the order in which any or all of the Collateral shall be subjected to the
remedies provided in this Security Agreement. The proceeds realized upon the
exercise of the remedies provided herein shall be applied as provided herein and
in the Agreements. Borrower hereby waives any and all right to require the
marshalling of assets in connection with the exercise of any of the remedies
permitted by applicable law or provided herein.
15. Appointment of Secured Party as Borrower's Lawful Attorney. Upon and
after an Event of Default which has not been waived or cured, Borrower
irrevocably designates, makes, constitutes and appoints Secured Party (and all
Persons designated by Lender) as Borrower's true and lawful attorney (and
agent-in-fact). To the extent permitted by law, all acts of Secured Party or its
designee lawfully taken pursuant to Section 13 are hereby ratified and confirmed
and Secured Party or its designee shall not be liable for any acts of omission
or commission nor for any error of judgment or mistake of fact or law which does
not constitute bad faith, willful misconduct or gross negligence. This power,
being coupled with an interest, is irrevocable by Borrower until all Secured
Obligations are finally paid in full.
16. Rights and Remedies Cumulative; Non-Waiver; Etc. The enumeration of
Secured Party's and Lenders' rights and remedies set forth in this Security
Agreement is not intended to be exhaustive and the exercise by the Secured Party
or any Lender of any right or remedy shall not preclude the exercise of any
other rights or remedies, all of which shall be cumulative, and shall be in
addition to any other right or remedy given hereunder, or under any other
agreement between Borrower and Secured Party or any Lender or which may now or
hereafter exist in law or in equity or by suit or
17
otherwise. No delay or failure to take action on the part of Lender in
exercising any right, power or privilege shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power or privilege
preclude other or further exercise thereof or the exercise of any other right,
power or privilege or be construed to be a waiver of any Event of Default. No
waiver by a party hereunder shall be effective unless it is in writing and
signed by the party making such waiver, and then only to the extent specifically
stated in such writing. No course of dealing between Borrower and the Secured
Party or any Lender or their respective agents or employees shall be effective
to change, modify or discharge any provision of this Security Agreement or to
constitute a waiver of any Event of Default.
17. Waivers. In addition to the other waivers contained herein and in any
other agreement between Borrower and Secured Party or any Lender, Borrower
hereby expressly waives, to the extent permitted by law: presentment for
payment, demand, protest, notice of demand, notice of protest, notice of default
or dishonor, notice of payments and nonpayments and all other notices and
consents that Secured Party may release, compromise, settle, extend or renew any
commercial paper, instruments or guaranties at any time held by Secured Party or
any Lender on which Borrower may in any way be liable and notice of any action
taken by Secured Party or any Lender unless expressly required by this Security
Agreement, the Agreements or by law.
18. Notice. Except as otherwise provided herein, all notices, requests and
demands to or upon a party hereto shall be effective as provided (i) as among
the Borrower, the Agent and the Lenders, for the giving of notices to such
parties in the Credit Agreement and (ii) as between the Borrower and
NationsBank, for the giving of notices to such parties in the Guaranty.
19. Applicable Law. This Security Agreement shall be governed in all
respects by, and construed in accordance with, the internal laws of the State of
Florida without reference to choice of laws principles.
20. References to Credit Agreement Definitions. In the event that the
Credit Agreement shall no longer be in effect at any time while the Guaranty
shall continue in effect or there shall otherwise continue to remain outstanding
Secured Obligations, all references to the Credit Agreement, including terms
defined by reference to their respective definitions contained in the Credit
Agreement, shall be deemed to refer to the Credit Agreement as in effect as of
the date hereof, with such amendments thereto to which the Secured Party shall
have given its express consent in accordance with the Loan Documents and the
ESOP Loan Documents.
21. Entire Agreement. This Security Agreement, together with the
Agreements and other Loan Documents and ESOP Loan Documents, constitute and
express the entire understanding between the parties
18
hereto with respect to the subject matter hereof, and supersede all prior
agreements and understandings, inducements, commitments or conditions, express
or implied, oral or written, except as herein contained. The express terms
hereof control and supersede any course of performance or usage of the trade
inconsistent with any of the terms hereof. Neither this Security Agreement nor
any portion or provision hereof may be changed, altered, waived, modified,
supplemented, discharged, canceled, terminated, or amended orally or in any
manner other than (i) as to the Agent, as provided in the Credit Agreement and
(ii) as to NationsBank, by the express written consent of NationsBank in each
instance.
22. Section Headings. The Section headings in this Security Agreement are
for convenience of reference only; they form no part of this Security Agreement
and shall not affect its interpretation.
23. Severability. The provisions of this Security Agreement are
independent of and separable from each other. If any provision hereof shall for
any reason be held invalid or unenforceable, such invalidity or unenforceability
shall not affect the validity or enforceability of any other provision hereof,
but this Security Agreement shall be construed as if much invalid or
unenforceable provision had never been contained herein.
24. Successors and Assigns. This Security Agreement shall be binding upon
the successors and assigns of Borrower and shall inure to the benefit of and be
enforceable by the Secured Party and its successors and assigns; provided,
however, the obligations of Borrower hereunder may not be assigned or delegated
to any other Person without the prior written consent of the Secured Party.
25. Agency. Notwithstanding the foregoing references to the Secured Party,
Borrower acknowledges and agrees that so long as NationsBank shall be the sole
Lender under the Credit Agreement, the term "Agent" shall mean NationsBank as
Lender. When and if there shall be more than one Lender party to the Credit
Agreement, then the term "Agent" shall refer to the Agent under the Credit
Agreement pursuant to the provisions of Article XI of the Credit Agreement, to
which reference is hereby made.
26. Termination. In the event that all of the Secured Obligations shall be
fully, finally and indefeasibly paid and satisfied in full (subject to
provisions of the Agreements that expressly survive), the Agreements shall be
terminated and there shall be no Outstanding Letters of Credit, the Secured
Party shall, at the request and at the expense of the Borrower, terminate the
security interest and powers of attorney herein conferred and, in furtherance
thereof, execute such Uniform Commercial Code termination statements and such
other documents in form and substance reasonably satisfactory to the Secured
Party to release and terminate the Lien hereof of record. Notwithstanding the
foregoing provisions of this Section 26, in the event that any payment made or
deemed made to the Secured Party or any Lender in
19
payment of any Secured Obligation shall be rescinded or declared to be or become
void, voidable or otherwise recoverable from the Secured Party or such Lender
for any reason whatsoever, the Lien in favor of the Secured Party created
hereunder shall be and become reinstituted in respect of such Secured
Obligations until the same shall be thereafter fully and finally paid, satisfied
and discharged.
[Remainder of page intentionally left blank]
20
IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be
duly executed by authority duly given as of the day and year first above
written.
WITNESS: VITAS HEALTHCARE CORPORATION
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------- -----------------------------------
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------- Vice President
SECURED PARTY:
WITNESS: NATIONSBANK OF FLORIDA, NATIONAL
ASSOCIATION, as Agent
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------- -----------------------------------
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President
WITNESS: NATIONSBANK OF FLORIDA, NATIONAL
ASSOCIATION
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------- -----------------------------------
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------- Vice President
21
EXHIBIT A
Permitted Encumbrances
Schedule 7.01(g) delivered pursuant to the Credit Agreement as in effect on the
Closing Date is incorporated by reference herein.