Exhibit 10.7
AGREEMENT
THIS AGREEMENT ("Agreement") dated as of September 18, 1997 among VITAS
HEALTHCARE CORPORATION, a Delaware corporation ("Vitas"), CHEMED CORPORATION,
a Delaware corporation ("Chemed"), and OCR HOLDING COMPANY, a Nevada
corporation and a wholly owned subsidiary of Chemed ("OCR").
WHEREAS, OCR is the holder of (i) 270,000 shares of 9.0% Cumulative
Nonconvertible Preferred Stock, par value $1.00 per share ("9% Preferred
Stock"), of Vitas, (ii) Warrant No. A-1 dated December 17, 1991 to purchase
2,556,153 shares of the common stock, par value $.001 per share ("Common
Stock"), of Vitas, at an initial exercise price of $4.55 per share ("Warrant
A"), and (iii) Warrant No. B-1 dated December 17, 1991 to purchase 1,396,805
shares of Common Stock of Vitas, at an initial exercise price of $4.56 per
share ("Warrant B", and together with Warrant A, the "Chemed Warrants");
WHEREAS, the number of shares of Common Stock issuable under each Chemed
Warrant and the exercise price thereof has been adjusted pursuant to that
certain Acknowledgment, Stipulation and Waiver dated as of July 18, 1997
executed by each of Chemed and OCR (the "AS&W");
WHEREAS, Vitas is currently contemplating an initial public offering of
its Common Stock that, if consummated, would qualify as a "Qualified Initial
Public Offering" as such term is defined in Warrant A (the "Contemplated
Offering");
WHEREAS, in connection with the Contemplated Offering, Vitas has
requested that OCR and Chemed (i) consent to certain amendments to the
Certificate of Designation, Preferences and Other Rights of 9.0% Cumulative
Nonconvertible Preferred Stock of Vitas (the "9% Certificate of Designation")
as described in the form of Certificate of Amendment to Amended and Restated
Certificate of Incorporation of Vitas Healthcare Corporation attached as
Exhibit A hereto (the "Certificate of Amendment") and (ii) agree to waive
certain rights under, and take certain actions with respect to, each of the
Chemed Warrants, as more fully described herein;
WHEREAS, as an inducement to OCR's and Chemed's consent to the amendments
set forth in the Certificate of Amendment and OCR's and Chemed's agreement to
waive certain rights under, and take certain actions with respect to, each of
the Chemed Warrants as more fully described herein, OCR and Chemed have
requested that Vitas agree to take certain actions with respect to, and/or
modify the terms and provisions of, the 9% Preferred Stock and each of the
Chemed Warrants, as more fully described herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants herein contained and other good and valuable consideration given
and received by each party, receipt of which is hereby acknowledged, the
parties hereto agree as follows:
1. Certificate of Amendment. OCR and Chemed hereby agree to execute and
deliver all consents, waivers or approvals required to be executed by either
or both of them in connection with the Certificate of Amendment. Chemed and
OCR hereby acknowledge that Vitas intends to file the Certificate of
Amendment with the Secretary of State of Delaware as soon as practicable
following Vitas' receipt of all consents, waivers or approvals required to be
obtained for the execution, delivery and filing thereof.
2. Waiver of Adjustments. OCR and Chemed hereby agree that
notwithstanding the terms of the Chemed Warrants, OCR and Chemed hereby waive
any adjustment to the number of shares of Common Stock issuable under each
Chemed Warrant and any adjustment to the Purchase Price per share (as such
term is defined in the Chemed Warrants) as a result of the issuance of a new
warrant to NationsBank, N.A. ("NationsBank") to purchase up to 291,918 shares
of the Corporation's Common Stock (the "NationsBank Warrants") pursuant to an
amendment to the Corporation's existing credit facility with NationsBank.
Vitas, OCR and Chemed hereby agree that promptly following the issuance of
the NationsBank Warrants, and in any event no later than 20 days following
the date of such issuance, Vitas, OCR and Chemed shall enter into a mutually
acceptable acknowledgment, stipulation and waiver as to the effect on the
Chemed Warrants of such NationsBank Warrants becoming exercisable, if at all,
such acknowledgment, stipulation and waiver to be in a form substantially
similar to the AS&W.
3. Redemption of 9% Preferred Stock. Vitas hereby agrees to redeem all
of the issued and outstanding shares of 9% Preferred Stock held by OCR
immediately upon and subject to the closing of the Contemplated Offering
using a portion of the net proceeds thereof, such redemption to be effected
by Vitas pursuant to the terms of the 9% Certificate of Designation, as
amended by the Certificate of Amendment.
4. Exercise of Warrant A. (a) OCR and Chemed hereby agree that
immediately prior and subject to the closing of the Contemplated Offering,
OCR shall exercise, and Chemed shall cause OCR to exercise, Warrant A, for
cash or by delivery of shares of 9% Preferred Stock in accordance with the
terms thereof, for such number of shares of Common Stock, at the then-current
exercise price therefor, such that the aggregate exercise price for such
shares paid to Vitas by OCR in respect of such shares equals at least
$3,000,000.
(b) OCR and Chemed hereby agree to notify Vitas in writing as soon as
practicable, and in any event at least three (3) business days prior to the
date Amendment No. 1 to the Registration Statement on Form S-1 is filed by
Vitas with the
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Securities and Exchange Commission with respect to the Contemplated Offering
(which is expected to occur on or about October 20, 1997), in the event OCR
intends to exercise Warrant A for a number of shares of Common Stock in
excess of the minimum number required to be exercised by OCR pursuant to the
terms of Section 4(a) of this Agreement. OCR and Chemed hereby agree that
notwithstanding the terms of Warrant A, the terms of Section 4(a) of this
Agreement or anything else to the contrary, in no event shall OCR be entitled
to exercise Warrant A for such number of shares of Common Stock, at the
then-current exercise price therefor, such that the aggregate exercise price
for such shares paid to Vitas by OCR in respect of such shares exceeds
$5,000,000 until the earlier of (1) a decision by the Board of Directors of
Vitas to abandon the Contemplated Offering and (2) April 1, 1998, unless
pursuant to Section 6 of Warrant A Vitas provides or is required to provide a
notice to the holder of Warrant A of a transaction of the type described in
Section 6 of Warrant A or as Vitas may otherwise approve in writing.
(c) OCR and Chemed acknowledge that pursuant to the terms of Section
2(c) of Warrant A, as modified by Section 6(a) below, Warrant A shall expire
upon the closing of the Contemplated Offering to the extent not exercised
prior to its expiration.
5. Payment in Respect of Warrant X. Xxxxx, Chemed and OCR hereby agree
that notwithstanding the terms of Warrant B, immediately prior and subject to
the closing of the Contemplated Offering (i) Vitas (using a portion of the
net proceeds of the Contemplated Offering) shall repurchase Warrant B from
OCR, and OCR shall sell Warrant B to Vitas, for an amount equal to the
greater of (x) (A) the spread value (if a positive number) as measured by the
difference of (I) the offering price to the public of a share of Common Stock
in the Contemplated Offering minus (II) the then-current exercise price of a
share of Common Stock pursuant to Warrant B, multiplied by (B) the number of
shares of Common Stock for which Warrant B is exercisable as of the closing
of the Contemplated Offering, and (y) $700,000, and (ii) upon such payment,
OCR shall surrender, and Chemed shall cause OCR to surrender, to Vitas
Warrant B for cancellation. Chemed and OCR hereby further agree that
notwithstanding the terms of Warrant B, OCR shall not be entitled exercise
Warrant B until the earlier of (1) a decision by the Board of Directors of
Vitas to abandon the Contemplated Offering and (2) April 1, 1998, unless
pursuant to Section 6 of Warrant B Vitas provides or is required to provide a
notice to the holder of Warrant B of a transaction of the type described in
Section 6 of Warrant B or as Vitas may otherwise approve in writing.
6. Amendment of Chemed Warrants. (a) Vitas, Chemed and OCR hereby agree
that Warrant A hereby is amended by deleting in its entirety Section 2(c)
thereof and replacing it with the following:
"(c) Expiration of Warrant. Subject to the terms and conditions
hereof, including Sections 6 and 7 hereof, this Warrant, or any portion
of this Warrant then outstanding, shall expire at the earlier of (1)
eight years from the date it is first issued, as set forth on page 1
above (the "Expiration
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Date")(provided that if all of the issued and outstanding shares of the
Company's 9% Preferred Stock have not been redeemed on or prior to March
31, 1998, the Expiration Date shall automatically be extended by that
number of days equal to the number of days beyond March 31, 1998 that all
or any portion of the issued and outstanding shares of the 9% Preferred
Stock remain outstanding, but in no event shall the Expiration Date be
extended beyond December 16, 2005), or (2) upon the closing of a public
offering of the Company's Common Stock resulting in gross proceeds of not
less than $12 million and at a total market capitalization of the common
equity of the Company at that time of not less than $60 million (a
"Qualified Initial Public Offering")."
(b) Vitas, Chemed and OCR hereby agree that Warrant B hereby is amended
by deleting in its entirety Section 2(c) thereof and replacing it with the
following:
"(c) Expiration of Warrant. Subject to the terms and conditions
hereof, including Sections 6 and 7 hereof, this Warrant, or any portion
of this Warrant then outstanding, shall expire, unless it is exercised
in full prior to its expiration, eight years from the date it is first
issued, as set forth on page 1 above (the "Expiration Date")(provided
that if all of the issued and outstanding shares of the Company's 9%
Preferred Stock have not been redeemed on or prior to March 31, 1998,
the Expiration Date shall automatically be extended by that number of
days equal to the number of days beyond March 31, 1998 that all or any
portion of the issued and outstanding shares of the 9% Preferred Stock
remain outstanding, but in no event shall the Expiration Date be
extended beyond December 16, 2005)."
7. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with, the laws of the State of Delaware (excluding the
choice of law provisions thereof).
8. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be considered an original, but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to
be duly executed and delivered on its behalf as of the date set first set
forth above.
VITAS HEALTHCARE CORPORATION
By: /s/ Xxxx X. Xxxxxxxxx
-----------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Chairman and Chief
Executive Officer
CHEMED CORPORATION
By: /s/ Xxxxxxx X. X'Xxxxx
-----------------------------
Name: Xxxxxxx X. X'Xxxxx
Title: Executive Vice President
& Treasurer
OCR HOLDING COMPANY
By: /s/ Xxxxx X. XxXxxxxx
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Name: Xxxxx X. XxXxxxxx
Title: Vice President
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Exhibit A
VITAS AGREES TO PROVIDE A COPY OF THIS EXHIBIT TO THE COMMISSION UPON REQUEST.
