Exhibit 10.1

 
GUARANTEE
 
GUARANTEE dated as of January 21, 2005 by Matria Healthcare, Inc., a Delaware
corporation formerly known as Matria Holding Company, Inc., (the "Guarantor"),
in favor of HFG Healthco-4 LLC, a Delaware limited liability company (the
"Lender").
 
PRELIMINARY STATEMENTS. The Lender has entered into that certain Loan and
Security Agreement dated as of October 22, 2002, by and among Matria Women’s and
Children’s Healthcare, Inc., a Delaware corporation ("Matria WCH") as the
successor by merger to Matria Healthcare, Inc., a Delaware corporation, Diabetes
Acquisition, Inc., a Georgia corporation, Gainor Medical Acquisition Company, a
Georgia corporation, Diabetes Management Solutions, Inc., a Delaware
corporation, Diabetes Self Care, Inc., a Virginia corporation, Matria
Laboratories, Inc., a Delaware corporation, Facet Technologies, LLC, a Georgia
limited liability company, Matria of New York, Inc., a New York corporation,
Matria Healthcare of Illinois, Inc., a Georgia corporation and Quality Oncology,
Inc., a Delaware corporation, as Borrowers, and the Lender (as amended, modified
or supplemented from time to time in accordance with its terms, including by
that certain Consent Agreement and Amendment No. 6 to Loan and Security
Agreement dated as of December 31, 2004, the "Loan Agreement")
 
The Lender has agreed to extend Revolving Advances and certain other financial
accommodations to the Borrowers pursuant to, and subject to the terms and
conditions of, the Loan Agreement. The Guarantor is the sole shareholder of
Matria WCH, is benefitting from the transactions described in the Loan Agreement
and is a beneficiary thereof.
 
The Guarantor has agreed, pursuant to the terms of the Consent Agreement and
Amendment No. 6 (the "Consent Agreement") referred to above to execute and
deliver a guarantee in the form hereof to secure all obligations of the
Borrowers under the Loan Agreement at any time and from time to time to pay the
Lender Debt (as that term is defined in the Loan Agreement), including without
limitation any and all reasonable costs and expenses (including reasonable
counsel fees and expenses) paid or incurred in enforcing any rights under this
Guarantee (the " Obligations")
 
Accordingly, in consideration of the premises and in order to induce the Lender
to make Revolving Advances and extend other financial accommodations under the
Loan Agreement, the Guarantor hereby agrees as follows:
 
Section 1.   Guarantee. The Guarantor hereby irrevocably and unconditionally
guarantees the punctual payment when due, whether at stated maturity, by
acceleration or otherwise, and the punctual performance, of all present and
future Guaranteed Obligations. The Guarantor also guarantees the full, prompt
and unconditional performance of all obligations and agreements of every kind
owed or hereafter to be owed by the Borrowers to the Lender under the Loan
Agreement and the other Documents to which the Borrower is a party.
 
Section 2.   Waiver. The Guarantor hereby absolutely, unconditionally and
irrevocably waives, to the fullest extent permitted by law, (i) promptness,
diligence, notice of acceptance and any other notice with respect to this
Guarantee, (ii) presentment, demand of payment, protest, notice of dishonor or
nonpayment and any other notice with respect to the Guaranteed Obligations,
(iii) any requirement that the Lender protect, secure, perfect or insure any
security interest or Lien or any property subject thereto or exhaust any right
or take any action against any Borrowers or any other Person or any Collateral,
and (iv) any other action, event or precondition to the enforcement of this
Guarantee or the performance by the Guarantor of its obligations hereunder.
 
Section 3.   Guarantee Absolute.
 
(a)  This Guarantee is one of payment and performance, not collection, and the
obligations of the Guarantor under this Guarantee are independent of the
obligations of the Borrowers under the Loan Agreement and any other Document,
and a separate action or actions may be brought and prosecuted against the
Guarantor to enforce this Guarantee, irrespective of whether any action is
brought against the Borrowers or whether the Borrowers are joined in any such
action or actions.
 
(b)  The liability of the Guarantor under this Guarantee shall, to the fullest
extent permitted under applicable law, be absolute and unconditional
irrespective of:
 
(i)  any invalidity, irregularity, voidability, voidness or unenforceability of
the Loan Agreement or any other Document or any other agreement or instrument
relating thereto, or of all or any part of the Guaranteed Obligations or of any
security therefor;
 
(ii)  any change in the manner, place or terms of payment or performance, and/or
any change or extension of the time of payment or performance of, renewal or
alteration of, any Guaranteed Obligation, any security therefor, or any
liability incurred directly or indirectly in respect thereof, or any other
amendment or waiver of or any consent to departure from the Loan Agreement or
any other Document, including any increase in the Guaranteed Obligations
resulting from the extension of additional credit to the Borrowers or any of
their Subsidiaries or otherwise;
 
(iii)  any sale, exchange, release, surrender, realization upon any property by
whomsoever at any time pledged or mortgaged to secure, or howsoever securing,
all or any of the Guaranteed Obligations, and/or any offset against, or failure
to perfect, or continue the perfection of, any Lien in any such property, or
delay in the perfection of any such Lien, or any amendment or waiver of or
consent to departure from any other guaranty for all or any of the Guaranteed
Obligations;
 
(iv)  any exercise or failure to exercise any rights against the Borrowers or
others (including the Guarantor);
 
(v)  any settlement or compromise of any Guaranteed Obligation, any security
therefor or any liability (including any of those hereunder) incurred directly
or indirectly in respect thereof or hereof, and any subordination of the payment
of all or any part thereof to the payment of any Guaranteed Obligation (whether
due or not) of the Borrowers to creditors of the Borrowers other than the
Guarantor;
 
(vi)  any manner of application of Collateral, or proceeds thereof, to all or
any of the Guaranteed Obligations, or any manner of sale or other disposition of
any Collateral for all or any of the Guaranteed Obligations or any other assets
of the Borrowers or any of their Subsidiaries;
 
(vii)  any change, restructuring or termination of the existence of any of the
Borrowers or any of their Subsidiaries; or
 
(viii)  any other agreements or circumstance of any nature whatsoever which
might otherwise constitute a defense available to, or a discharge of, this
Guarantee and/or obligations of the Guarantor hereunder, or a defense to, or
discharge of, any of the Borrowers or any other Person or party relating to this
Guarantee or the obligations of the Guarantor hereunder or otherwise with
respect to the Revolving Advances or other financial accommodations extended to
the Borrowers, in each case other than the indefeasible payment in full of the
Guaranteed Obligations.
 
(c)  The Lender may at any time and from time to time (whether or not after
revocation or termination of this Guarantee) without the consent of, or notice
(except as shall be required by applicable law that cannot be waived) to, the
Guarantor, and without incurring responsibility to the Guarantor or impairing or
releasing the obligations of the Guarantor hereunder, apply any sums by
whomsoever paid or howsoever realized to any Guaranteed Obligation regardless of
what Guaranteed Obligations remain unpaid.
 
(d)  This Guarantee shall continue to be effective or be reinstated, as the case
may be, if claim is ever made upon the Lender for repayment or recovery of any
amount or amounts received by the Lender in payment or on account of any of the
Guaranteed Obligations and the Lender repays all or part of said amount by
reason of any judgment, decree or order of any court or administrative body
having jurisdiction over the Lender or its property, or any settlement or
compromise of any such claim effected by the Lender with any such claimant
(including the Borrowers), the Guarantor shall be and remain liable to the
Lender for the amount so repaid or recovered to the same extent as if such
amount had never originally been received by the Lender.
 
Section 4.   Continuing Guarantee; Assignability
 
(a)  This Guarantee is a continuing one and shall (i) remain in full force and
effect until the indefeasible payment and satisfaction in full of the Guaranteed
Obligations, (ii) be binding upon the Guarantor, its successors and assigns, and
(iii) inure to the benefit of, and be enforceable by, the Lender and its
successors, transferees and assigns. All obligations to which this Guarantee
applies or may apply under the terms hereof shall be conclusively presumed to
have been created in reliance hereon.
 
(b)  NEITHER THE GUARANTOR NOR ITS SUCCESSORS AND ASSIGNS SHALL ASSIGN ITS
RIGHTS OR OBLIGATIONS HEREUNDER OR ANY INTEREST HEREIN WITHOUT THE PRIOR WRITTEN
CONSENT OF THE LENDER.
 
Section 5.   Representations. Warranties and Covenants. The Guarantor hereby
re-presents, warrants and covenants to and with the Lender that:
 
(a)  It is a corporation, duly incorporated, validly existing and in good
standing under the laws of the state of its incorporation set forth in the
preamble hereto, and is duly qualified to do business, and is in good standing,
in every jurisdiction where the nature of its business requires it to be so
qualified, except where the failure to be so qualified could not reasonably be
expected to result in a Material Adverse Effect. For the purposes of this
Guarantee, "Material Adverse Effect" means any event, condition, change or
effect that (i) has a materially adverse effect on the business, Properties,
capitalization, assets, liabilities, operations or financial condition of the
Guarantor, (ii) materially impairs the ability of the Guarantor to perform its
obligations under this Guarantee, or (iii) materially impairs the validity or
enforceability of, or materially impairs the rights, remedies or benefits
available to the Lender under this Guarantee or any other Document.
 
(b)  The execution, delivery and performance by it of this Guarantee and the
actions contemplated hereby (i) are within its corporate powers, (ii) have been
duly authorized by all necessary corporate action, (iii) do not contravene (1)
its charter or its bylaws, (2) any law, rule or regulation applicable to it, (3)
any contractual restriction binding on or affecting it or its Property, or (4)
any order, writ, judgment, award, injunction or decree binding on or affecting
it or its Property, and (iv) do not result in or require the creation of any
Lien upon or with respect to any of its Properties, other than in favor of the
Lender pursuant to the Pledge Agreement of the Guarantor dated as of the date
hereof. This Guarantee has been duly executed and delivered by it.
 
(c)  This Guarantee constitutes the legal, valid and binding obligation of the
Guarantor, enforceable against the Guarantor in accordance with its terms,
except as limited by bankruptcy, insolvency, moratorium, fraudulent conveyance
or other laws relating to the enforcement of creditors’ rights generally and
general principles of equity (regardless of whether enforcement is sought at
equity or law).
 
(d)  No consent, approval, authorization or other action by, and no notice to or
of, or declaration or filing with, any governmental or other public body, or any
other Person, is required for the due authorization, execution, delivery and
performance by the Guarantor of this Guarantee or the consummation of the
transactions contemplated hereby, except for disclosure filings requried by
applicable securities laws;
 
(e)  Except as disclosed on Schedule I hereto, there is no pending or, to its
knowledge, threatened action or proceeding or injunction, writ or restraining
order affecting it before any court, Governmental Entity or arbitrator which
could reasonably be expected to result in a Material Adverse Effect.
 
(f)  No proceeding referred to in paragraph (h) of Exhibit V of the Loan
Agreement is pending against the Guarantor and no other event referred to in
such paragraph (h) of such Exhibit V has occurred and is continuing with respect
to the Guarantor, and the property of the Guarantor is not subject to any
assignment for the benefit of creditors;
 
(g)  The Guarantor is the sole shareholder of Matria WCH and Matria WCH has no
outstanding rights, options, warrants or agreements pursuant to which it may be
required to sell any of its capital stock interests;
 
(h)  Without the prior written consent of the Lender, the Guarantor will not own
or operate any assets or properties or engage in any business or other activity
whatsoever (including, without limitation, the incurring of Indebtedness or the
granting of Liens), except for its ownership of the capital stock of Matria WCH,
the activities and transactions contemplated by the Merger Agreement (as such
term is defined in the Consent Agreement) and activities incidental to any of
the foregoing and except as otherwise may be specifically permitted by the other
Documents.
 
Section 6.   Expenses.
 
(a)  The Guarantor agrees to pay on demand (i) all reasonable out-of-pocket
non-legal costs and expenses of any member of the Lender Group in connection
with the negotiation, preparation, execution and delivery of this Guarantee;
(ii) the reasonable fees and out-of-pocket expenses of counsels for any member
of the Lender Group in connection with this transaction; and (iii) all
reasonable costs and out-of-pocket expenses, if any (including reasonable
counsel fees and expenses), of any member of the Lender Group in connection with
any waiver, modification, supplement or amendment hereto, or the enforcement of
this Guarantee. In addition, the Guarantor indemnifies and holds the Lender
harmless from and against any and all liability incurred by the Lender hereunder
or in connection herewith, unless such liability shall be due to the gross
negligence or wilful misconduct of the Lender, as the case may be.
 
(b)  In the event that the Lender shall retain an attorney or attorneys to
collect, enforce, protect, maintain or preserve its interests with respect to
this Guarantee, the Guarantor shall pay all of the reasonable costs and expenses
of such collection, enforcement, protection, maintenance, preservation or
foreclosure, including attorneys’ fees, which amounts shall be part of the
Guaranteed Obligations, and the Lender may take judgment for all such amounts.
The attorney’s fees arising from such services, including those of any appellate
proceedings, and all expenses, costs, charges and other fees incurred by such
counsel in any way or with respect to or arising out of or in connection with or
relating to any of the events or actions described in this Section 6 shall be
payable by the Guarantor to the Lender on demand (with interest accruing from
the two Business Days following the date of such demand, and shall be additional
obligations under this Guarantee. Without limiting the generality of the
foregoing, such expenses, costs, charges and fees may include the following (in
each case to the extent reasonable): recording costs, appraisal costs, paralegal
fees, costs and expenses; accountants’ fees, costs and expenses; court costs and
expenses; photocopying and duplicating expenses; court reporter fees, costs and
expenses; long distance telephone charges; air express charges; telegram
charges; telecopier charges; secretarial overtime charges; and expenses for
travel, lodging and food paid or incurred in connection with the performance of
such legal services.
 
Section 7.   Terms
 
(a)  All terms defined in the UCC and used herein shall have the meanings as
defined in the UCC, unless the context otherwise requires.
 
(b)  The words "include," "includes" and "including" shall be deemed to be
followed by the phrase "without limitation".
 
(c)  All references herein to Sections and subsections shall be deemed to be
references to Sections and subsections of this Guarantee unless the context
shall otherwise require.
 
Section 8.   Amendments and Modification: Waivers.
 
(a)  No provision hereof shall be modified, altered or limited except by written
instrument expressly referring to this Guarantee and to such provision, and
executed by the party to be charged. No waiver of any provision of this
Guarantee or consent to any departure therefrom by the Guarantor shall be
effective unless in a writing signed by the Lender, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
 
(b)  No failure on the part of the Lender to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof nor shall any
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right.
 
Section 9.   Subrogation. Upon making full payment with respect to any
Guaranteed Obligation hereunder, the Guarantor shall be subrogated to the rights
of the payee against the Borrowers with respect to such obligation; provided
that the Guarantor shall not enforce any payment by way of subrogation so long
as the Lender has any Revolving Commitment under the Loan Agreement or any
Guaranteed Obligation remains unpaid.
 
Section 10.   Remedies Upon Default: Right of Set-Off
 
(a)  Upon the occurrence and during the continuance of any Event of Default, the
Lender may, without notice to or demand upon the Borrowers or the Guarantor,
declare any Guaranteed Obligations immediately due and payable, and shall be
entitled to enforce the obligations of the Guarantor hereunder.
 
(b)  Upon such declaration by the Lender, the Lender is hereby authorized,
without notice to the Guarantor, 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, provisional or final) at any time held and
other indebtedness at any time owing by the Lender to or for the credit or the
account of the Guarantor against any and all of the obligations of the Guarantor
now or hereafter existing under this Guarantee that are then due, whether or not
the Lender shall have made any demand under this Guarantee. The rights of the
Lender under this Section 10 are in addition to other rights and remedies
(including other rights of set-off) which the Lender may have.
 
Section 11.   Statute of Limitations. Any acknowledgment or new promise, whether
by payment of principal or interest or otherwise and whether by the Borrowers or
others (including the Guarantor), with respect to any of the Guaranteed
Obligations shall, to the fullest extent permitted under applicable law, if the
statute of limitations in favor of the Guarantor against the Lender shall have
commenced to run, toll the running of such statute of limitations and, if the
period of such statute of limitations shall have expired, prevent the operation
of such statute of limitations.
 
Section 12.   Interest. All amounts payable from time to time by the Guarantor
hereunder shall bear interest at an interest rate per annum determined in
accordance with Section 1.05 of the Loan Agreement as if such amounts were
payable by the Borrowers.
 
Section 13.   Admissibility of Guarantee. The Guarantor agrees that any copy of
this Guarantee signed by the Guarantor and transmitted by telecopier for
delivery to the Lender shall be admissible in evidence as the original itself in
any judicial or administrative proceeding, whether or not the original is in
existence.
 
Section 14.   Notices. All notices, requests and demands to or upon the Lender
or the Guarantor under this Agreement shall be in writing and given as provided
in the Loan Agreement (with respect to the Guarantor, to the address of the
Authorized Representative as set forth in the Loan Agreement).
 
Section 15.   Counterparts. This Guarantee may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original and all of which
shall together constitute one and the same agreement.
 
Section 16.   GOVERNING LAW: WAIVER OF JURY TRIAL. JURISDICTION AND VENUE. ETC
 
(a)  THIS GUARANTEE SHALL, II ACCORDANCE WITH SECTION 5-140 1 OF THE GENERAL
OBLIGATION LAW OF THE STATE OF NEW YORK, BE GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO ANY CONFLICTS OF LAWS PRINCIPLES THEREOF THAT WOULD
CALL FOR THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION.
 
(b)  THE GUARANTOR HERETO HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN THE
EVENT OF ANY LITIGATION WITH RESPECT TO ANY MATTER RELATED TO THIS GUARANTEE,
AND HEREBY IRREVOCABLY CONSENTS TO THE JURISDICTION OF THE STATE AND FEDERAL
COURTS LOCATED IN NEW YORK COUNTY, NEW YORK CITY, NEW YORK IN CONNECTION WITH
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTEE. IN ANY
SUCH LITIGATION, THE GUARANTOR WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT
OR OTHER PROCESS AND AGREES THAT SERVICE THEREOF MAY BE MADE BY CERTIFIED OR
REGISTERED MAIL DIRECTED TO THE PARTIES HERETO AT ITS ADDRESS DETERMINED
PURSUANT TO SECTION 14 HEREOF. THE GUARANTOR SHALL APPEAR IN ANSWER TO SUCH
SUMMONS, COMPLAINT OR OTHER PROCESS WITHIN THE TIME PRESCRIBED BY LAW, FAILING
WHICH THE GUARANTOR SHALL BE DEEMED IN DEFAULT AND JUDGMENT MAY BE ENTERED BY
THE LENDER FOR THE AMOUNT OF THE CLAIM AND OTHER RELIEF REQUESTED THEREIN.
 
(c)  The Guarantor hereby waives presentment, notice of dishonor and protests of
all instruments included in or evidencing any of the Guaranteed Obligations, and
any and all other notices and demands whatsoever (except as expressly provided
herein).
 
Section 17.   Captions; Separability
 
(a)  The captions of the Sections and subsections of this Guarantee have been
inserted for convenience only and shall not in any way affect the meaning or
construction of any provision of this Guarantee.
 
(b)  If any term of this Guarantee shall be held to be invalid or unenforceable,
the validity of all other terms hereof shall in no way be affected thereby.
 
Section 18.   Acknowledgment of Receipt. The Guarantor acknowledges receipt of a
copy of this Guarantee and each of the Documents.
 
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IN WITNESS WHEREOF, the Guarantor has duly executed or caused this Guarantee to
be duly executed in the State of New York as of the date first above set forth.
 
 

        MATRIA HEALTHCARE, INC.  
   
   
  By:   /s/ Stephen M. Mengert  

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Name: Stephen M. Mengert   Title: Vice President Finance and Chief Financial
Officer