<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 18, 1994
REGISTRATION NO. 33-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
CHARTER MEDICAL CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 8060 58-1076937
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
577 Mulberry Street
Macon, Georgia 31298
(912) 742-1161
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------------
See Table of Additional Registrants below.
------------------------
ROBERT W. MILLER, ESQ.
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
(404) 572-4600
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------------
COPY TO:
LAWRENCE W. DRINKARD, EXECUTIVE VICE PRESIDENT - FINANCE
Charter Medical Corporation
577 Mulberry Street
Macon, Georgia 31298
(912) 742-1161
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
------------------------
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF PROPOSED MAXIMUM AGGREGATE
SECURITIES TO BE AMOUNT TO OFFERING PRICE OFFERING AMOUNT OF
REGISTERED BE REGISTERED PER UNIT PRICE (1) REGISTRATION FEE
<S> <C> <C> <C> <C>
11 1/4% Series A Senior
Subordinated Notes due
2004.................... $375,000,000 Not Applicable $375,000,000 $117,187.50
<FN>
(1) Estimated solely for the purpose of calculating the registration fee. The
proposed maximum offering price is based upon, pursuant to Rule 457(f)(2),
the book value of the Registrant's 11 1/4% Senior Subordinated Notes due
2004 as of May 16, 1994.
</TABLE>
------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
ADDITIONAL REGISTRANTS(1)
<TABLE>
<CAPTION>
ADDRESS INCLUDING ZIP CODE,
STATE OR OTHER AND TELEPHONE NUMBER
EXACT NAME OF JURISDICTION OF I.R.S. EMPLOYER INCLUDING AREA CODE,
REGISTRANT AS SPECIFIED INCORPORATION IDENTIFICATION OF REGISTRANT'S PRINCIPAL
IN ITS CHARTER OR ORGANIZATION NUMBER EXECUTIVE OFFICES
- ------------------------------------------ -------------------- ---------------- ------------------------------------------
<S> <C> <C> <C>
Ambulatory Resources, Inc. Georgia 58-1456102 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Atlanta MOB, Inc. Georgia 58-1558215 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Beltway Community Hospital, Inc. Texas 58-1324281 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
C.A.C.O. Services, Inc. Ohio 58-1751511 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
CCM, Inc. Nevada 58-1662418 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
CMCI, Inc. Nevada 88-0224620 1061 East Flamingo Road
Suite One
Las Vegas, NV 89119
(702) 737-0282
CMFC, Inc. Nevada 88-0215629 1061 East Flamingo Road
Suite One
Las Vegas, NV 89119
(702) 737-0282
CMSF, Inc. Florida 58-1324269 3550 Colonial Boulevard
Fort Myers, FL 33906
(813) 939-0403
CPS Associates, Inc. Virginia 58-1761039 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Alvarado Behavioral Health System, California 58-1394959 577 Mulberry Street
Inc. Macon, GA 31298
(912) 742-1161
Charter Appalachian Hall Behavioral Health North Carolina 58-2097827 577 Mulberry Street
System, Inc. Macon, GA 31298
(912) 742-1161
Charter Arbor Indy Behavioral Health Indiana 35-1916340 577 Mulberry Street
System, Inc. Macon, GA 31298
(912) 742-1161
Charter Augusta Behavioral Health System, Georgia 58-1615676 3100 Perimeter Parkway
Inc. Augusta, GA 30909
(404) 868-6625
Charter Bay Harbor Behavioral Health Florida 58-1640244 577 Mulberry Street
System, Inc. Macon, GA 31298
(912) 742-1161
Charter Beacon Behavioral Health System, Indiana 58-1524996 1720 Beacon Street
Inc. Fort Wayne, IN 46805
(219) 423-3651
Charter Behavioral Health System at Fair New Jersey 58-2097832 577 Mulberry Street
Oaks, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System at Hidden Maryland 52-1866212 577 Mulberry Street
Brook, Inc. Macon, GA 31298
(912) 742-1161
</TABLE>
i
<PAGE>
ADDITIONAL REGISTRANTS(1) (CONTINUED)
<TABLE>
<CAPTION>
ADDRESS INCLUDING ZIP CODE,
STATE OR OTHER AND TELEPHONE NUMBER
EXACT NAME OF JURISDICTION OF I.R.S. EMPLOYER INCLUDING AREA CODE,
REGISTRANT AS SPECIFIED INCORPORATION IDENTIFICATION OF REGISTRANT'S PRINCIPAL
IN ITS CHARTER OR ORGANIZATION NUMBER EXECUTIVE OFFICES
- ------------------------------------------ -------------------- ---------------- ------------------------------------------
<S> <C> <C> <C>
Charter Behavioral Health System at Los California 33-0606642 577 Mulberry Street
Altos, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System at Maryland 52-1866221 577 Mulberry Street
Potomac Ridge, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System at Maryland 52-1866214 577 Mulberry Street
Warwick Manor, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System of Georgia 58-1513304 240 Mitchell Bridge Road
Athens, Inc. Athens, GA 30604
(404) 546-7277
Charter Behavioral Health System of Texas 58-1440665 8402 Cross Park Drive
Austin, Inc. Austin, TX 78754
(512) 837-1800
Charter Behavioral Health System of Texas 76-0430571 577 Mulberry Street
Baywood, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System of Florida 58-1527678 577 Mulberry Street
Bradenton, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System of Canoga California 95-4470774 577 Mulberry Street
Park, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System of Georgia 58-1408670 3500 Riverside Drive
Central Georgia, Inc. Macon, GA 31209
(912) 474-6200
Charter Behavioral Health System of South Carolina 58-1761157 2777 Speissegger Drive
Charleston, Inc. Charleston, SC 29405-8299
(803) 747-5830
Charter Behavioral Health System of Virginia 58-1616917 2101 Arlington Boulevard
Charlottesville, Inc. Charlottesville, VA 22903-1593
(804) 977-1120
Charter Behavioral Health System of Illinois 58-1315760 4700 North Clarendon Avenue
Chicago, Inc. Chicago, IL 60640
(312) 728-7100
Charter Behavioral Health System of Chula California 58-1473063 577 Mulberry Street
Vista, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System of Missouri 61-1009977 200 Portland Street
Columbia, Inc. Columbia, MO 65201
(314) 876-8000
Charter Behavioral Health System of Corpus Texas 58-1513305 3126 Rodd Field Road
Christi, Inc. Corpus Christi, TX 78414
(512) 993-8893
Charter Behavioral Health System of Texas 58-1513306 6800 Preston Road
Dallas, Inc. Plano, TX 75024
(214) 964-3939
Charter Behavioral Health System of Indiana 35-1916338 577 Mulberry Street
Evansville, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System of Fort Texas 58-1643151 6201 Overton Ridge Blvd.
Worth, Inc. Fort Worth, TX 76132
(817) 292-6844
</TABLE>
ii
<PAGE>
ADDITIONAL REGISTRANTS(1) (CONTINUED)
<TABLE>
<CAPTION>
ADDRESS INCLUDING ZIP CODE,
STATE OR OTHER AND TELEPHONE NUMBER
EXACT NAME OF JURISDICTION OF I.R.S. EMPLOYER INCLUDING AREA CODE,
REGISTRANT AS SPECIFIED INCORPORATION IDENTIFICATION OF REGISTRANT'S PRINCIPAL
IN ITS CHARTER OR ORGANIZATION NUMBER EXECUTIVE OFFICES
- ------------------------------------------ -------------------- ---------------- ------------------------------------------
<S> <C> <C> <C>
Charter Behavioral Health System of Mississippi 58-1616919 East Lakeland Drive
Jackson, Inc. Jackson, MS 39208
(601) 939-9030
Charter Behavioral Health System of Florida 58-1483015 3947 Salisbury Road
Jacksonville, Inc. Jacksonville, FL 32216
(904) 296-2447
Charter Behavioral Health System of Indiana 35-1916342 577 Mulberry Street
Jefferson, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System of Kansas Kansas 58-1603154 8000 West 127th Street
City, Inc. Overland Park, KS 66213
(913) 897-4999
Charter Behavioral Health System of Louisiana 72-0686492 577 Mulberry Street
Lafayette, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System of Lake Louisiana 62-1152811 4250 Fifth Avenue, South
Charles, Inc. Lake Charles, LA 70605
(318) 474-6133
Charter Behavioral Health System of California 33-0606647 577 Mulberry Street
Lakewood, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System of Indiana 35-1916343 577 Mulberry Street
Michigan City, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System of Alabama 58-1569921 5800 Southland Drive
Mobile, Inc. Mobile, AL 36609
(205) 661-3001
Charter Behavioral Health System of New Hampshire 02-0470752 577 Mulberry Street
Nashua, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System of Nevada 58-1321317 7000 West Spring Mountain Road
Nevada, Inc. Las Vegas, NV 89180
(702) 876-4357
Charter Behavioral Health System of New New Mexico 58-1479480 5901 Zuni Road, SE
Mexico, Inc. Albuquerque, NM 87108
(505) 265-8800
Charter Behavioral Health System of California 58-1857277 101 Cirby Hills Drive
Northern California, Inc. Roseville, CA 95678
(916) 969-4666
Charter Behavioral Health System of Arkansas 58-1449455 4253 Crossover Road
Northwest Arkansas, Inc. Fayetteville, AR 72701
(501) 521-5731
Charter Behavioral Health System of Indiana 58-1603160 101 West 61st Avenue
Northwest Indiana, Inc. State Road 51
Hobart, IN 46342
(219) 947-4464
Charter Behavioral Health System of Kentucky 61-1006115 435 Berger Road
Paducah, Inc. Paducah, KY 42002-7609
(502) 444-0444
Charter Behavioral Health System of Illinois 36-3946945 577 Mulberry Street
Rockford, Inc. Macon, GA 31298
(912) 742-1161
</TABLE>
iii
<PAGE>
ADDITIONAL REGISTRANTS(1) (CONTINUED)
<TABLE>
<CAPTION>
ADDRESS INCLUDING ZIP CODE,
STATE OR OTHER AND TELEPHONE NUMBER
EXACT NAME OF JURISDICTION OF I.R.S. EMPLOYER INCLUDING AREA CODE,
REGISTRANT AS SPECIFIED INCORPORATION IDENTIFICATION OF REGISTRANT'S PRINCIPAL
IN ITS CHARTER OR ORGANIZATION NUMBER EXECUTIVE OFFICES
- ------------------------------------------ -------------------- ---------------- ------------------------------------------
<S> <C> <C> <C>
Charter Behavioral Health System of San California 58-1747020 577 Mulberry Street
Jose, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System of Georgia 58-1750583 1150 Cornell Ave
Savannah, Inc. Savannah, GA 31416
(912) 354-3911
Charter Behavioral Health System of California 58-1366605 577 Mulberry Street
Southern California, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System of Tampa Florida 58-1616916 4004 North Riverside Drive
Bay, Inc. Tampa, FL 33603
(813) 238-8671
Charter Behavioral Health System of Arkansas 71-0752815 577 Mulberry Street
Texarkana, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System of the California 95-2685883 2055 Kellogg Drive
Inland Empire, Inc. Corona, CA 91720
(714) 735-2910
Charter Behavioral Health System of Ohio 58-1731068 1725 Timberline Road
Toledo, Inc. Maumee, Ohio 43537
(419) 891-9333
Charter Behavioral Health System of Arizona 86-0757462 577 Mulberry Street
Tucson, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System of Virginia 54-1703071 577 Mulberry Street
Virginia Beach, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System of California 33-0606644 577 Mulberry Street
Visalia, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System of District of Columbia 52-1866204 577 Mulberry Street
Washington, D.C., Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System of Minnesota 41-1775626 577 Mulberry Street
Waverly, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System of North Carolina 56-1050502 3637 Old Vineyard Road
Winston-Salem, Inc. Winston-Salem, NC 27104
(919) 768-7710
Charter Behavioral Health System of Yorba California 33-0606646 577 Mulberry Street
Linda, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health Systems of Georgia 58-1900736 577 Mulberry Street
Atlanta, Inc. Macon, GA 31298
(912) 742-1161
Charter Brawner Behavioral Health System, Georgia 58-0979827 577 Mulberry Street
Inc. Macon, GA 31298
(912) 742-1161
Charter-By-The-Sea Behavioral Health Georgia 58-1351301 2927 Demere Road
System, Inc. St. Simons Island, GA 31522
(912) 638-1999
Charter Canyon Behavioral Health System, Utah 58-1557925 175 West 7200 South
Inc. Midvale, UT 84047
(801) 561-8181
</TABLE>
iv
<PAGE>
ADDITIONAL REGISTRANTS(1) (CONTINUED)
<TABLE>
<CAPTION>
ADDRESS INCLUDING ZIP CODE,
STATE OR OTHER AND TELEPHONE NUMBER
EXACT NAME OF JURISDICTION OF I.R.S. EMPLOYER INCLUDING AREA CODE,
REGISTRANT AS SPECIFIED INCORPORATION IDENTIFICATION OF REGISTRANT'S PRINCIPAL
IN ITS CHARTER OR ORGANIZATION NUMBER EXECUTIVE OFFICES
- ------------------------------------------ -------------------- ---------------- ------------------------------------------
<S> <C> <C> <C>
Charter Canyon Springs Behavioral Health California 33-0606640 577 Mulberry Street
System, Inc. Macon, GA 31298
(912) 742-1161
Charter Centennial Peaks Behavioral Health Colorado 58-1761037 577 Mulberry Street
System, Inc. Macon, GA 31298
(912) 742-1161
Charter Colonial Institute, Inc. Virginia 58-1492652 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Community Hospital, Inc. California 58-1398708 21530 South Pioneer Boulevard
Hawaiian Gardens, CA 90716
(310) 860-0401
Charter Community Hospital of Des Moines, Iowa 58-1523702 577 Mulberry Street
Inc. Macon, GA 31298
(912) 742-1161
Charter Contract Services, Inc. Georgia 58-2100699 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Cove Forge Behavioral Health Pennsylvania 25-1730464 577 Mulberry Street
System, Inc. Macon, GA 31298
(912) 742-1161
Charter Crescent Pines Behavioral Health Georgia 58-1249663 577 Mulberry Street
System, Inc. Macon, GA 31298
(912) 742-1161
Charter Fairbridge Behavioral Health Maryland 52-1866218 577 Mulberry Street
System, Inc. Macon, GA 31298
(912) 742-1161
Charter Fairmount Behavioral Health Pennsylvania 58-1616921 561 Fairthorne Avenue
System, Inc. Philadelphia, PA 19128
(215) 487-4000
Charter Fenwick Hall Behavioral Health South Carolina 57-0995766 577 Mulberry Street
System, Inc. Macon, GA 31298
(912) 742-1161
Charter Financial Offices, Inc. Georgia 58-1527680 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Forest Behavioral Health System, Louisiana 58-1508454 9320 Linwood Avenue
Inc. Shreveport, LA 71106
(318) 688-3930
Charter Grapevine Behavioral Health Texas 58-1818492 2300 William D. Tate Ave.
System, Inc. Grapevine, TX 76051
(817) 481-1900
Charter Greensboro Behavioral Health North Carolina 58-1335184 700 Walter Reed Drive
System, Inc. Greensboro, NC 27403
(919) 852-4821
Charter Health Management of Texas, Inc. Texas 58-2025056 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Hospital of Columbus, Inc. Ohio 58-1598899 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Hospital of Denver, Inc. Colorado 58-1662413 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
</TABLE>
v
<PAGE>
ADDITIONAL REGISTRANTS(1) (CONTINUED)
<TABLE>
<CAPTION>
ADDRESS INCLUDING ZIP CODE,
STATE OR OTHER AND TELEPHONE NUMBER
EXACT NAME OF JURISDICTION OF I.R.S. EMPLOYER INCLUDING AREA CODE,
REGISTRANT AS SPECIFIED INCORPORATION IDENTIFICATION OF REGISTRANT'S PRINCIPAL
IN ITS CHARTER OR ORGANIZATION NUMBER EXECUTIVE OFFICES
- ------------------------------------------ -------------------- ---------------- ------------------------------------------
<S> <C> <C> <C>
Charter Hospital of Ft. Collins, Inc. Colorado 58-1768534 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Hospital of Laredo, Inc. Texas 58-1491620 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Hospital of Miami, Inc. Florida 61-1061599 11100 N.W. 27th Street
Miami, FL 33172
(305) 591-3230
Charter Hospital of Mobile, Inc. Alabama 58-1318870 251 Cox Street
Mobile, AL 36604
(205) 432-4111
Charter Hospital of Northern New Jersey, New Jersey 58-1852138 577 Mulberry Street
Inc. Macon, GA 31298
(912) 742-1161
Charter Hospital of Santa Teresa, Inc. New Mexico 58-1584861 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Hospital of St. Louis, Inc. Missouri 58-1583760 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Hospital of Torrance, Inc. California 58-1402481 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Indianapolis Behavioral Health Indiana 58-1674291 5602 Caito Drive
System, Inc. Indianapolis, IN 46226
(317) 545-2111
Charter Lafayette Behavioral Health Indiana 58-1603158 3700 Rome Drive
System, Inc. Lafayette, IN 47905
(317) 448-6999
Charter Lakehurst Behavioral Health New Jersey 22-3286879 577 Mulberry Street
System, Inc. Macon, GA 31298
(912) 742-1161
Charter Lakeside Behavioral Health System, Tennessee 62-0892645 2911 Brunswick Road
Inc. Memphis, TN 38134
(901) 377-4700
Charter Laurel Heights Behavioral Health Georgia 58-1558212 577 Mulberry Street
System, Inc. Macon, GA 31298
(912) 742-1161
Charter Laurel Oaks Behavioral Health Florida 58-1483014 577 Mulberry Street
System, Inc. Macon, GA 31298
(912) 742-1161
Charter Linden Oaks Behavioral Health Illinois 36-3943776 577 Mulberry Street
System, Inc. Macon, GA 31298
(912) 742-1161
Charter Little Rock Behavioral Health Arkansas 58-1747019 1601 Murphy Drive
System, Inc. Haumelle, AR 72118
(501) 851-8700
Charter Louisville Behavioral Health Kentucky 58-1517503 1405 Browns Lane
System, Inc. Louisville, KY 40207
(502) 896-0495
Charter Meadows Behavioral Health System, Maryland 52-1866216 577 Mulberry Street
Inc. Macon, GA 31298
(912) 742-1161
</TABLE>
vi
<PAGE>
ADDITIONAL REGISTRANTS(1) (CONTINUED)
<TABLE>
<CAPTION>
ADDRESS INCLUDING ZIP CODE,
STATE OR OTHER AND TELEPHONE NUMBER
EXACT NAME OF JURISDICTION OF I.R.S. EMPLOYER INCLUDING AREA CODE,
REGISTRANT AS SPECIFIED INCORPORATION IDENTIFICATION OF REGISTRANT'S PRINCIPAL
IN ITS CHARTER OR ORGANIZATION NUMBER EXECUTIVE OFFICES
- ------------------------------------------ -------------------- ---------------- ------------------------------------------
<S> <C> <C> <C>
Charter MOB of Charlottesville, Inc. Virginia 58-1761158 1023 Millmont Avenue
Charlottesville, VA 22901
(804) 977-1120
Charter Medfield Behavioral Health System, Florida 58-1705131 577 Mulberry Street
Inc. Macon, GA 31298
(912) 742-1161
Charter Medical -- California, Inc. Georgia 58-1357345 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Medical -- Clayton County, Inc. Georgia 58-1579404 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Medical -- Cleveland, Inc. Texas 58-1448733 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Medical -- Dallas, Inc. Texas 58-1379846 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Medical -- Long Beach, Inc. California 58-1366604 6060 Paramount Boulevard
Long Beach, CA 90805
(310) 220-1000
Charter Medical -- New York, Inc. New York 58-1761153 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Medical (Cayman Islands) Ltd. Cayman Islands 58-1841857
Charter Medical Executive Corporation Georgia 58-1538092 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Medical Information Services, Inc. Georgia 58-1530236 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Medical International, Inc. Cayman Islands applied for P.O. Box 1043
Swiss Bank Building
Caledonian House,
Georgetown, Grand Cayman,
Cayman Islands
(809) 949-0050
Charter Medical International, S.A., Inc. Nevada 58-1605110 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Medical Management Company Georgia 58-1195352 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Medical of East Valley, Inc. Arizona 58-1643158 2190 N. Grace Boulevard
Chandler, AZ 85224
(602) 809-8989
Charter Medical of England Limited United Kingdom applied for 111 Kings Road, Box 323
London SW3 4PB, England
Charter Medical of North Phoenix, Inc. Arizona 58-1643154 6015 W. Peoria Avenue
Glendale, AZ 85311
(602) 878-7878
</TABLE>
vii
<PAGE>
ADDITIONAL REGISTRANTS(1) (CONTINUED)
<TABLE>
<CAPTION>
ADDRESS INCLUDING ZIP CODE,
STATE OR OTHER AND TELEPHONE NUMBER
EXACT NAME OF JURISDICTION OF I.R.S. EMPLOYER INCLUDING AREA CODE,
REGISTRANT AS SPECIFIED INCORPORATION IDENTIFICATION OF REGISTRANT'S PRINCIPAL
IN ITS CHARTER OR ORGANIZATION NUMBER EXECUTIVE OFFICES
- ------------------------------------------ -------------------- ---------------- ------------------------------------------
<S> <C> <C> <C>
Charter Medical of Orange County, Inc. Florida 58-1615673 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Medical of Puerto Rico, Inc. Puerto Rico 58-1208667 1225 Ponce de Leon Avenue
Santuree, Puerto Rico 00907
(809) 723-8666
Charter Mental Health Options, Inc. Florida 58-2100704 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Mid-South Behavioral Health Tennessee 58-1860496 577 Mulberry Street
System, Inc. Macon, GA 31298
(912) 742-1161
Charter Milwaukee Behavioral Health Wisconsin 58-1790135 11101 West Lincoln Avenue
System, Inc. West Allis, WI 53227
(414) 327-3000
Charter Mission Viejo Behavioral Health California 58-1761156 23228 Madero
System, Inc. Mission Viejo, CA 92691
(714) 830-4800
Charter North Behavioral Health System, Alaska 58-1474550 2530 DeBarr Road
Inc. Anchorage, AK 99508-2996
(907) 258-7575
Charter North Counseling Center, Inc. Alaska 58-2067832 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Northbrooke Behavioral Health Wisconsin 39-1784461 577 Mulberry Street
System, Inc. Macon, GA 31298
(912) 742-1161
Charter Northridge Behavioral Health North Carolina 58-1463919 400 Newton Road
System, Inc. Raleigh, NC 27615
(919) 847-0008
Charter Northside Hospital, Inc. Georgia 58-1440656 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Oak Behavioral Health System, Inc. California 58-1334120 1161 East Covina Boulevard
Covina, GA 91724
(818) 966-1632
Charter Palms Behavioral Health System, Texas 58-1416537 1421 E. Jackson Avenue
Inc. McAllen, TX 78502
(512) 631-5421
Charter Peachford Behavioral Health Georgia 58-1086165 2151 Peachford Road
System, Inc. Atlanta, GA 30338
(404) 455-3200
Charter Pines Behavioral Health System, North Carolina 58-1462214 3621 Randolph Road
Inc. Charlotte, NC 28211
(704) 365-5368
Charter Plains Behavioral Health System, Texas 58-1462211 801 N. Quaker Avenue
Inc. Lubbock, TX 79408
(806) 744-5505
Charter Psychiatric Hospitals, Inc. Delaware 58-1852072 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Real Behavioral Health System, Texas 58-1485897 8550 Huebner Road
Inc. San Antonio, TX 78240
(512) 699-8585
</TABLE>
viii
<PAGE>
ADDITIONAL REGISTRANTS(1) (CONTINUED)
<TABLE>
<CAPTION>
ADDRESS INCLUDING ZIP CODE,
STATE OR OTHER AND TELEPHONE NUMBER
EXACT NAME OF JURISDICTION OF I.R.S. EMPLOYER INCLUDING AREA CODE,
REGISTRANT AS SPECIFIED INCORPORATION IDENTIFICATION OF REGISTRANT'S PRINCIPAL
IN ITS CHARTER OR ORGANIZATION NUMBER EXECUTIVE OFFICES
- ------------------------------------------ -------------------- ---------------- ------------------------------------------
<S> <C> <C> <C>
Charter Regional Medical Center, Inc. Texas 74-1299623 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Richmond Behavioral Health System, Virginia 58-1761160 577 Mulberry Street
Inc. Macon, GA 31298
(912) 742-1161
Charter Ridge Behavioral Health System, Kentucky 58-1393063 3050 Rio Dosa Drive
Inc. Lexington, KY 40509
(606) 269-2325
Charter Rivers Behavioral Health System, South Carolina 58-1408623 2900 Sunset Boulevard
Inc. West Columbia, SC 29171
(803) 796-9911
Charter San Diego Behavioral Health California 58-1669160 11878 Avenue of Industry
System, Inc. San Diego, CA 92128
(619) 487-3200
Charter Serenity Lodge Behavioral Health Virginia 56-1703066 577 Mulberry Street
System, Inc. Macon, GA 31298
(912) 742-1161
Charter Sioux Falls Behavioral Health South Dakota 58-1674278 2812 South Louise Avenue
System, Inc. Sioux Falls, SD 57106
(605) 341-8111
Charter South Bend Behavioral Health Indiana 58-1674287 6704 North Gumwood Drive
System, Inc. Granger, IN 46530
(219) 272-9799
Charter Springs Behavioral Health System, Florida 58-1517461 3130 S.W. 27th Avenue
Inc. Ocala, FL 32678
(904) 237-7293
Charter Springwood Behavioral Health Virginia 58-2097829 577 Mulberry Street
System, Inc. Macon, GA 31298
(912) 742-1161
Charter Suburban Hospital of Mesquite, Texas 75-1161721 577 Mulberry Street
Inc. Macon, GA 31298
(912) 742-1161
Charter Terre Haute Behavioral Health Indiana 58-1674293 1400 Crossing Boulevard
System, Inc. Terre Haute, IN 47802
(812) 299-4196
Charter Thousand Oaks Behavioral California 58-1731069 150 Via Merida
Health System, Inc. Thousand Oaks, CA 91361
(805) 495-3292
Charter Tidewater Behavioral Virginia 54-1703069 577 Mulberry Street
Health System, Inc. Macon, GA 31298
(912) 742-1161
Charter Treatment Center of Michigan 58-2025057 577 Mulberry Street
Michigan, Inc. Macon, GA 31298
(912) 742-1161
Charter Westbrook Behavioral Virginia 54-0858777 1500 Westbrook Avenue
Health System, Inc. Richmond, VA 23227
(804) 266-9671
Charter White Oak Behavioral Maryland 52-1866223 577 Mulberry Street
Health System, Inc. Macon, GA 31298
(912) 742-1161
Charter Wichita Behavioral Kansas 58-1634296 8901 East Orme
Health System, Inc. Wichita, KS 67207
(316) 686-5000
</TABLE>
ix
<PAGE>
ADDITIONAL REGISTRANTS(1) (CONTINUED)
<TABLE>
<CAPTION>
ADDRESS INCLUDING ZIP CODE,
STATE OR OTHER AND TELEPHONE NUMBER
EXACT NAME OF JURISDICTION OF I.R.S. EMPLOYER INCLUDING AREA CODE,
REGISTRANT AS SPECIFIED INCORPORATION IDENTIFICATION OF REGISTRANT'S PRINCIPAL
IN ITS CHARTER OR ORGANIZATION NUMBER EXECUTIVE OFFICES
- ------------------------------------------ -------------------- ---------------- ------------------------------------------
<S> <C> <C> <C>
Charter Woods Behavioral Alabama 58-1330526 700 Cottonwood Road
Health System, Inc. Dothan, AL 36302
(205) 794-4357
Charter Woods Hospital, Inc. Alabama 58-2102628 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter of Alabama, Inc. Alabama 63-0649546 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter-Provo School, Inc. Utah 58-1647690 4501 North University Ave.
Provo, UT 84603
(801) 227-2000
Charterton/LaGrange, Inc. Kentucky 61-0882911 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Desert Springs Hospital, Inc. Nevada 88-0117696 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Employee Assistance Services, Inc. Georgia 58-1501282 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Florida Health Facilities, Inc. Florida 58-1860493 21808 State Road 54
Lutz, FL 33549
(813) 948-2441
Gulf Coast EAP Services, Inc. Alabama 58-2101394 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Gwinnett Immediate Care Center, Inc. Georgia 58-1456097 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
HCS, Inc. Georgia 58-1527679 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Holcomb Bridge Immediate Care Center, Inc. Georgia 58-1374463 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Hospital Investors, Inc. Georgia 58-1182191 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Mandarin Meadows, Inc. Florida 58-1761155 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Metropolitan Hospital, Inc. Georgia 58-1124268 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Middle Georgia Hospital, Inc. Georgia 58-1121715 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Pacific-Charter Medical, Inc. California 58-1336537 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Peachford Professional Network, Inc. Georgia 58-2100700 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
</TABLE>
x
<PAGE>
ADDITIONAL REGISTRANTS(1) (CONTINUED)
<TABLE>
<CAPTION>
ADDRESS INCLUDING ZIP CODE,
STATE OR OTHER AND TELEPHONE NUMBER
EXACT NAME OF JURISDICTION OF I.R.S. EMPLOYER INCLUDING AREA CODE,
REGISTRANT AS SPECIFIED INCORPORATION IDENTIFICATION OF REGISTRANT'S PRINCIPAL
IN ITS CHARTER OR ORGANIZATION NUMBER EXECUTIVE OFFICES
- ------------------------------------------ -------------------- ---------------- ------------------------------------------
<S> <C> <C> <C>
Rivoli, Inc. Georgia 58-1686160 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Shallowford Community Hospital, Inc. Georgia 58-1175951 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Sistemas De Terapia Respiratoria S.A., Georgia 58-1181077 577 Mulberry Street
Inc. Macon, GA 31298
(912) 742-1161
Stuart Circle Hospital Corporation Virginia 54-0855184 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Tampa Bay Behavioral Health Alliance, Inc. Florida 58-2100703 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Western Behavioral Systems, Inc. California 58-1662416 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
<FN>
- ------------------------------
(1) The Additional Registrants listed are wholly-owned subsidiaries of the
Registrant and are guarantors of the Registrant's 11 1/4% Senior
Subordinated Notes due 2004 and will be guarantors of the Registrant's
11 1/4% Series A Senior Subordinated Notes due 2004 to be issued pursuant
to the Exchange Offer described in the attached Registration Statement.
The Additional Registrants have been conditionally exempted, pursuant to
Section 12(h) of the Securities Exchange Act of 1934, from filing reports
under Sections 13 or 15(d) of the Securities Exchange Act of 1934, as
amended.
</TABLE>
xi
<PAGE>
ADDITIONAL REGISTRANTS(1) (CONTINUED)
CHARTER MEDICAL CORPORATION
CROSS-REFERENCE SHEET
FOR REGISTRATION STATEMENT ON FORM S-4
AND INFORMATION STATEMENT/PROSPECTUS
<TABLE>
<CAPTION>
ITEM CAPTION IN INFORMATION
NUMBER CAPTION STATEMENT/PROSPECTUS
- --------- -------------------------------------------------- ----------------------------------------------------
<C> <S> <C>
1. Forepart of Registration Statement and Outside
Front Cover Page of Prospectus................... Facing Page of Registration Statement; Cross
Reference Sheet; Outside Front Cover Page of
Prospectus.
2. Inside Front and Outside Back Cover Pages of
Prospectus....................................... Inside Front and Outside Back Cover Pages of
Prospectus; Available Information.
3. Risk Factors, Ratio of Earnings to Fixed Charges
and Other Information............................ Summary; Investment Considerations; Certain Federal
Income Tax Consequences of the Exchange Offer; The
Exchange Offer; Selected Historical Consolidated
Financial and Statistical Data; Unaudited Pro Forma
Financial Information.
4. Terms of the Transaction.......................... Summary; Investment Considerations; The Exchange
Offer; Certain Federal Income Tax Consequences of
the Exchange Offer; Description of the New Notes;
Plan of Distribution.
5. Pro Forma Financial Information................... Summary; Capitalization; Selected Historical
Consolidated Financial and Statistical Data;
Unaudited Pro Forma Financial Information.
6. Material Contacts with the Company Being
Acquired......................................... Not Applicable.
7. Additional Information Required for Reoffering by
Persons and Parties Deemed to be Underwriters.... Not Applicable.
8. Interests of Named Experts and Counsel............ Legal Matters; Experts.
9. Disclosure of Commission Position on In-
demnification for Securities Act Liabilities..... Not Applicable.
10. Information With Respect to S-3 Registrants....... Not Applicable.
11. Incorporation of Certain Information by Ref-
erence........................................... Not Applicable.
12. Information With Respect to S-2 or S-3
Registrants...................................... Not Applicable.
13. Incorporation of Certain Information by Ref-
erence........................................... Not Applicable.
</TABLE>
<PAGE>
ADDITIONAL REGISTRANTS(1) (CONTINUED)
<TABLE>
<CAPTION>
ITEM CAPTION IN INFORMATION
NUMBER CAPTION STATEMENT/PROSPECTUS
- --------- -------------------------------------------------- ----------------------------------------------------
<C> <S> <C>
14. Information With Respect to Registrants Other than
S-3 or S-2 Registrants........................... Summary; The Company; Investment Considerations; The
Acquisition; Capitalization; Selected Historical
Consolidated Financial and Statistical Information;
Target Hospital Selected Financial Information;
Unaudited Pro Forma Financial Information;
Management's Discussion and Analysis of Financial
Condition and Results of Operations; Business;
Management; Executive Compensation; Security
Ownership of Certain Beneficial Owners and Manage-
ment; Certain Relationships and Related Trans-
actions; Index to Financial Statements; Financial
Statements.
15. Information With Respect to S-3 Companies......... Not Applicable.
16. Information With Respect to S-2 or S-3
Companies........................................ Not Applicable.
17. Information With Respect to Companies Other Than
S-2 or S-3 Companies............................. Not Applicable.
18. Information if Proxies, Consents or Authori-
zations are to be Solicited...................... Not Applicable.
19. Information if Proxies, Consents or Authori-
zations are not to be Solicited, or in an
Exchange Offer................................... Summary; Management; Security Ownership of Certain
Beneficial Owners and Management.
</TABLE>
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED MAY 18, 1994
PROSPECTUS
$375,000,000
CHARTER MEDICAL CORPORATION
[LOGO] OFFER TO EXCHANGE ITS
11 1/4% SERIES A SENIOR SUBORDINATED NOTES DUE 2004
FOR ANY AND ALL OF ITS OUTSTANDING
11 1/4% SENIOR SUBORDINATED NOTES DUE 2004
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1994, UNLESS EXTENDED.
Charter Medical Corporation, a Delaware corporation ("Charter" or the
"Company"), hereby offers (the "Exchange Offer"), upon the terms and subject to
the conditions set forth in this Prospectus (the "Prospectus") and the
accompanying Letter of Transmittal (the "Letter of Transmittal"), to exchange
$1,000 principal amount of its 11 1/4% Series A Senior Subordinated Notes due
2004 (the "New Notes"), which have been registered under the Securities Act of
1933, as amended (the "Securities Act"), pursuant to a Registration Statement of
which this Prospectus is a part, for each $1,000 principal amount of its
outstanding 11 1/4% Senior Subordinated Notes due 2004 (the "Old Notes"), which
have not been registered under the Securities Act. The aggregate principal
amount of the Old Notes currently outstanding is $375,000,000. The form and
terms of the New Notes are the same as the form and terms of the Old Notes
except that (i) the New Notes have been registered under the Securities Act and,
therefore, will not bear legends restricting their transfer, (ii) holders of New
Notes will not be entitled to certain rights under the Registration Rights
Agreement (as defined), which rights will terminate when the Exchange Offer is
consummated, and (iii) the New Notes have been given a series designation to
distinguish them from the Old Notes. The New Notes will evidence the same debt
as the Old Notes (which they will replace) and will be issued under and be
entitled to the benefits of the indenture governing the Old Notes dated as of
May 2, 1994 (the "Indenture"). The Old Notes and the New Notes are sometimes
referred to herein collectively as the "Notes." See "The Exchange Offer" and
"Description of the New Notes."
The Company will accept for exchange and exchange any and all Old Notes
validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on
, 1994, unless extended by the Company in its sole discretion
(the "Expiration Date"). Tenders of Old Notes may be withdrawn at any time prior
to 5:00 p.m. on the Expiration Date. The Exchange Offer is subject to certain
customary conditions. See "The Exchange Offer." Old Notes may be tendered only
in integral multiples of $1,000.
The Old Notes were sold by the Company on May 2, 1994, in transactions that
were not registered under the Securities Act in reliance upon the exemption
provided in Section 4(2) of the Securities Act. The initial purchasers of the
Old Notes subsequently resold the Old Notes to "qualified institutional buyers"
in reliance upon Rule 144A under the Securities Act. Accordingly, the Old Notes
may not be reoffered, resold or otherwise transferred unless so registered or
unless an applicable exemption from the registration requirements of the
Securities Act is available. See "The Exchange Offer -- Purpose and Effect of
the Exchange Offer."
The New Notes are being offered for exchange hereby to satisfy certain
obligations of the Company under the Exchange and Registration Rights Agreement,
dated April 22, 1994, among the Company and the initial purchasers of the Old
Notes (the "Registration Rights Agreement"). Based on existing interpretations
of the staff of the Division of Corporation Finance (the "Staff") of the
Securities and Exchange Commission (the "Commission") with respect to similar
transactions, the Company believes that New Notes issued pursuant to the
Exchange Offer in exchange for Old Notes may be offered for resale, resold and
otherwise transferred by holders thereof (other than any such holder which is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act ), without compliance with the registration and prospectus delivery
requirements of the Securities Act, provided that such New Notes are acquired in
the ordinary course of such holders' business and such holders have no
arrangement with any person to participate in any public distribution of the New
Notes. Each broker-dealer that receives New Notes for its own account pursuant
to the Exchange Offer must acknowledge that it will deliver a resale prospectus
in connection with any resale of such New Notes. The Letter of Transmittal which
accompanies this Prospectus states that by so acknowledging and by delivering a
resale prospectus, a broker-dealer will be deemed not to be acting in the
capacity of an "underwriter" (within the meaning of Section 2(11) of the
Securities Act). This Prospectus, as it may be amended or supplemented from time
to time, may be used by a broker-dealer in connection with resales of New Notes
received in exchange for Old Notes where such Old Notes were acquired by such
broker-dealer as a result of market-making or other trading activities. The
Company has agreed that, for a period of 180 days after the date on which the
Registration Statement of which this Prospectus is a part is first declared
effective, it will make this Prospectus available to any broker-dealer for use
in connection with any such resale. See "Plan of Distribution."
Holders of Old Notes whose Old Notes are not tendered and accepted in the
Exchange Offer will continue to hold such Old Notes and will be entitled to all
the rights and preferences and will be subject to the limitations applicable
thereto under the Indenture, and with respect to transfer, under the Securities
Act.
The Company will not receive any proceeds from the Exchange Offer and will
pay all the expenses incurred by it incident to the Exchange Offer. Any Old
Notes not accepted for exchange for any reason will be returned without expense
to the tendering holders thereof as promptly as practicable after the expiration
or termination of the Exchange Offer. See "The Exchange Offer."
There is no public market for the Old Notes, although the Old Notes are
included in the Private Offerings, Resales and Trading through Automated
Linkages ("PORTAL") Market for trading among "qualified institutional buyers."
To the extent that Old Notes are tendered and accepted in the Exchange Offer,
the trading market for untendered and tendered but unaccepted Old Notes could be
adversely affected. The Company has been advised by the American Stock Exchange,
Inc. ("AMEX") that the New Notes have been approved for listing on AMEX, subject
to official notice of issuance. There can be no assurance that an active trading
market for the New Notes will develop after such listing.
SEE "INVESTMENT CONSIDERATIONS" FOR A DESCRIPTION OF CERTAIN RISKS TO BE
CONSIDERED BY HOLDERS WHO TENDER THEIR OLD NOTES IN THE EXCHANGE OFFER.
------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 1994.
<PAGE>
[GRAPHIC]
This is a map of the United States (excluding Hawaii), showing the Charter
Medical Facilities and Target Hospitals.
NEW HAMPSHIRE RESIDENTS ONLY
Neither the fact that a registration statement or an application for a
license has been filed under Chapter 421-B of the New Hampshire Revised Statutes
with the State of New Hampshire nor the fact that a security is effectively
registered or a person is licensed in the State of New Hampshire constitutes a
finding by the Secretary of State that any document filed under Chapter 421-B of
the New Hampshire Revised Statutes is true, complete and not misleading. Neither
any such fact nor the fact that an exemption or exception is available for a
security or a transaction means that the Secretary of State has passed in any
way upon the merits or qualifications of, or recommended or given approval to,
any person, security or transaction. It is unlawful to make, or cause to be
made, to any prospective purchaser, customer or client any representation
inconsistent with the provisions of this paragraph.
<PAGE>
SUMMARY
THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED ELSEWHERE IN
THIS PROSPECTUS. THIS SUMMARY IS NOT INTENDED TO BE COMPLETE AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO, AND SHOULD BE READ IN CONJUNCTION WITH, THE
DETAILED INFORMATION APPEARING ELSEWHERE, OR INCORPORATED BY REFERENCE IN, THIS
PROSPECTUS. ALL CAPITALIZED TERMS USED IN THIS PROSPECTUS WITHOUT A DEFINITION
ARE DEFINED AS SET FORTH BELOW UNDER THE CAPTION "DESCRIPTION OF THE NEW NOTES
- -- CERTAIN DEFINITIONS."
THE COMPANY
Charter Medical Corporation ("Charter" or the "Company") is a leading
private provider of behavioral healthcare services and one of the largest owners
and operators of private psychiatric hospitals in the United States. As of March
31, 1994, the Company operated 73 psychiatric hospitals and two free-standing
residential treatment centers with an aggregate capacity of 6,970 licensed beds.
Most of the Company's hospitals are located in well-populated urban and suburban
communities in 26 primarily southern or western states of the United States. In
addition, the Company operates 120 outpatient centers staffed by behavioral
health professionals, 68 of the Company's hospitals operate partial
hospitalization programs, 40 of the Company's hospitals operate intensive
outpatient programs, and 14 hospitals offer residential treatment programs. The
Company's facilities provide a continuum of behavioral care for children,
adolescents and adults. These services include crisis stabilization; acute
psychiatric services; acute chemical dependency services; partial (day and
evening) hospitalization programs; intensive adolescent weekend services;
outpatient services; support group services and aftercare, including programs
such as ALCOHOLICS ANONYMOUS, NARCOTICS ANONYMOUS and OVEREATERS ANONYMOUS; and
residential treatment.
According to industry and government estimates, mental disorders affect
approximately 40 million American adults (22% of the adult population) each
year. Direct expenditures in 1990, the latest year for which data are available,
for the treatment of persons suffering from mental and substance abuse disorders
were approximately $67 billion. Only approximately 15% of those who reportedly
suffer from mental or substance abuse disorders receive professional treatment.
Management believes that demand for behavioral healthcare services should
increase commensurate with an increase in the percentage of persons who seek
treatment for their behavioral health disorders. Management anticipates that the
percentage of persons who seek treatment will increase because of a continuing
decline in the social stigma associated with behavioral disorders and a growing
recognition by the government and employers of the indirect costs (such as lost
productivity, work and vehicular accidents, and social welfare costs) of failing
to treat such behavioral health disorders.
The Company's patient admissions increased 20.7% from 70,565 in fiscal 1991
to 85,158 in fiscal 1993. While admissions of behavioral healthcare patients
have grown, third-party payors have been imposing more stringent admission,
length of stay and reimbursement rate criteria. Also, in recent years,
reimbursement rate increases have failed to offset increases in the cost of
providing care. In response to these industry trends, the Company (i) developed
a wider array of outpatient services, such as partial hospitalization, intensive
outpatient and residential treatment programs; (ii) decentralized hospital
management to increase the Company's responsiveness to local market conditions;
(iii) pursued joint ventures and strategic affiliations with other healthcare
providers; and (iv) implemented more efficient operating expense controls.
The Company's strategy is to become a nationwide integrated provider of
high-quality, cost-effective behavioral healthcare services. To implement this
strategy, management intends to expand the Company's partial hospitalization and
outpatient programs in its existing markets and to enter approximately 30 new
markets in the United States and Europe. Management also is seeking additional
strategic alliances with, and additional acquisitions of, group psychiatric
practices, mental health clinics, other behavioral healthcare providers and
behavioral managed-care firms. Management believes that this strategy will
enhance the Company's ability to obtain nationwide, area-wide and local
contracts to be the exclusive or a preferred provider of behavioral healthcare
services to major employers, third-party payors and managed-care firms.
1
<PAGE>
The Company was reorganized pursuant to chapter 11 of the United States
Bankruptcy Code during fiscal 1992 (the "Reorganization"). Following the
Reorganization, the Company has focused on further reducing its long-term debt
and managing its core group of psychiatric hospitals. As of March 31, 1994, the
Company had repaid approximately $692.7 million of its approximately $1.1
billion post-Reorganization long-term debt. On September 30, 1993, the Company
sold ten of its general hospitals for approximately $338.0 million, the net
proceeds of which were applied to such repayment.
THE ACQUISITION
The Company has entered into an asset sale agreement (the "Asset Sale
Agreement") with National Medical Enterprises, Inc. ("NME") providing for the
purchase from NME of substantially all of the assets of 36 psychiatric
hospitals, eight chemical-dependency treatment facilities, two residential
treatment centers and one physician outpatient practice (including related
outpatient facilities and other associated assets, the "Target Hospitals"). The
purchase price for the Target Hospitals will be approximately $151.9 million in
cash plus an additional cash amount, estimated to be approximately $50.7
million, subject to adjustment, for the net working capital of the Target
Hospitals at the closing of the Acquisition. The Target Hospitals have an
aggregate capacity of 3,496 licensed beds and are located in 20 states. During
their fiscal year ended May 31, 1993, the Target Hospitals had approximately
40,000 patient admissions, net revenue of approximately $407.5 million and
Target Hospital EBITDA (as defined) of approximately $55.1 million. See
"Investment Considerations -- The Acquisition" and "The Acquisition."
Management believes that the Acquisition will assist the Company in
implementing its strategy by increasing the Company's size, market position and
geographic coverage. For example, the Acquisition will permit the Company to
enter 16 new markets, including markets in the mid-Atlantic and northeastern
United States. Management also believes that the introduction to the Target
Hospitals of Charter's operating and financial control systems, continuum of
care and marketing efforts will increase the utilization and profitability of
the Target Hospitals.
Except for the combined financial statements of the Selected Psychiatric
Hospitals of National Medical Enterprises, Inc. included elsewhere in this
Prospectus, information contained herein regarding NME and the Target Hospitals
has been derived by the Company from information obtained by the Company during
its due diligence review of the Target Hospitals prior to executing the Asset
Sale Agreement. Except for the combined financial statements of the Selected
Psychiatric Hospitals of National Medical Enterprises, Inc., NME has not passed
upon the accuracy or adequacy of this Prospectus, which has been prepared by the
Company. Subject to certain conditions, the Company has agreed to indemnify NME
in connection with the offering of the securities made hereby.
THE OLD NOTES OFFERING
<TABLE>
<S> <C>
The Old Notes..................... The Old Notes were sold by the Company on May 2, 1994 in
a private placement (the "Offering") to accredited
investors (the "Initial Purchasers") pursuant to a
Purchase Agreement dated April 22, 1994 (the "Purchase
Agreement"). The Initial Purchasers subsequently resold
the Old Notes to "qualified institutional buyers"
pursuant to Rule 144A under the Securities Act. As of
the date of this Prospectus, all $375,000,000
outstanding principal amount of the Old Notes were
evidenced by global securities, registered in the name
of CEDE & Co., as nominee for The Depositary Trust
Company ("DTC"), and held by Marine Midland Bank as
securities custodian for CEDE & Co. As indicated
elsewhere in this Prospectus, the Old Notes have been
included in the PORTAL Market for trading among
"qualified institutional buyers" pursuant to Rule 144A
under the Securities Act.
Registration Rights Agreement..... Pursuant to the Purchase Agreement, the Company and the
Initial Purchasers entered into the Registration Rights
Agreement,
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
which, among other things, grants the holders of the Old
Notes certain exchange and registration rights. The
Exchange Offer is intended to satisfy such exchange
rights, which rights will terminate upon consummation of
the Exchange Offer. See "The Exchange Offer -- Purpose
and Effect of the Exchange Offer."
The Financing Transaction......... Simultaneously with the sale of the Old Notes, the
Company amended and restated its existing credit
agreements with a group of financial institutions (as so
amended and restated, the "New Credit Agreement"). The
Company used the net proceeds from the sale of the Old
Notes and the initial borrowings pursuant to the New
Credit Agreement to refinance substantially all of the
Company's outstanding indebtedness and certain
indebtedness of its subsidiaries. The issuance of the
Old Notes, the borrowings pursuant to the New Credit
Agreement and the application of the proceeds thereof as
described in the preceding sentence and to finance the
Acquisition are referred to herein collectively as the
"Financing Transactions." See "Use of Proceeds."
THE EXCHANGE OFFER
Securities Offered................ $375,000,000 aggregate principal amount of 11 1/4%
Series A Senior Subordinated Notes due April 15, 2004
that have been registered pursuant to the Securities Act
(the "New Notes").
The Exchange Offer................ $1,000 principal amount of the New Notes in exchange for
each $1,000 principal amount of 11 1/4% Senior
Subordinated Notes due April 15, 2004 that have not been
registered pursuant to the Securities Act (the "Old
Notes"). As of the date hereof, $375,000,000 aggregate
principal amount of Old Notes is outstanding. The
Company will issue the New Notes to holders on or
promptly after the Expiration Date.
The New Notes are being offered for exchange hereby to
satisfy certain obligations of the Company under the
Registration Rights Agreement. Based on existing
interpretations of the Staff with respect to similar
transactions, the Company believes that New Notes issued
pursuant to the Exchange Offer in exchange for Old Notes
may be offered for resale, resold and otherwise
transferred by holders thereof (other than any such
holder which is an "affiliate" of the Company within the
meaning of Rule 405 under the Securities Act), without
compliance with the registration and prospectus delivery
requirements of the Securities Act, provided that such
New Notes are acquired in the ordinary course of such
holders' business and such holders have no arrangement
with any person to participate in any public
distribution of the New Notes. Each broker-dealer that
receives New Notes for its own account pursuant to the
Exchange Offer must acknowledge that it will deliver a
resale prospectus in connection with any resale of such
New Notes. The Letter of Transmittal which accompanies
this Prospectus states that by so acknowledging and by
delivering a resale prospectus, a broker-dealer will be
deemed not to be acting in the capacity of an
"underwriter" (within the meaning of Section 2(11) of
the Securities Act). This Prospectus, as it may be
amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of New
Notes received
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
in exchange for Old Notes where such Old Notes were
acquired by such broker-dealer as a result of
market-making or other trading activities. The Company
has agreed that, for a period of 180 days after the date
on which the Registration Statement of which this
Prospectus is a part is first declared effective it will
make this Prospectus available to any broker-dealer for
use in connection with any such resale. See "Plan of
Distribution."
Expiration Date................... 5:00 p.m., New York City time, on , 1994
unless the Exchange Offer is extended, in which case the
term "Expiration Date" means the latest date and time to
which the Exchange Offer is extended.
Accrued Interest on the New Notes
and Old Notes..................... Each New Note will bear interest from its date of
original issuance. Holders of Old Notes that are
accepted for exchange and exchanged for New Notes will
receive, in cash, accrued interest thereon to, but not
including, the original issuance date of the New Notes.
Such interest will be paid on the first interest pay-
ment date for the New Notes. Interest on the Old Notes
accepted for exchange and exchanged in the Exchange
Offer will cease to accrue on the date next preceding
the date of original issuance of the New Notes.
Conditions to the Exchange
Offer............................. The Exchange Offer is subject to certain customary
conditions, which may be waived by the Company. See "The
Exchange Offer -- Conditions."
Procedures for Tendering Old
Notes............................. Each holder of Old Notes wishing to accept the Exchange
Offer must complete, sign and date the accompanying
Letter of Transmittal, or a facsimile thereof, in
accordance with the instructions contained herein and
therein, and mail or otherwise deliver such Letter of
Transmittal, or such facsimile, together with the Old
Notes and any other required documentation to the
Exchange Agent (as defined) at the address set forth
herein. By executing the Letter of Transmittal, each
holder will represent to the Company that, among other
things, each holder of the Old Notes who wishes to
exchange its Notes for New Notes in the Exchange Offer
will be required to make certain representations to the
Company, including that (i) any New Notes to be received
by it will be acquired in the ordinary course of its
business, (ii) it has no arrangement with any person to
participate in a public distribution (within the meaning
of the Securities Act) of the New Notes, and (iii) it is
not an "affiliate," as defined in Rule 405 of the
Securities Act of the Company, or if it is such an
affiliate, that it will comply with the registration and
prospectus delivery requirements of the Securities Act
to the extent applicable to it. In addition, each holder
who is not a broker-dealer will be required to represent
that it is not engaged in, and does not intend to engage
in, a public distribution of the New Notes. Each holder
who is a broker-dealer and who receives New Notes for
its own account in exchange for Old Notes that were
acquired by it as a result of market-making activities
or other trading activities, will be required to
acknowledge that it will deliver a prospectus in
connection with any resale by it of such New Notes. The
Company has agreed that, for a period of 180 days after
the date on
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
which the Registration Statement of which this
Prospectus is a part is first declared effective, it
will make this Prospectus available to any broker-dealer
for use in connection with any such resales. For a
description of the procedures for certain resales by
broker-dealers, see "Plan of Distribution." See "The
Exchange Offer -- Procedures for Tendering."
Untendered Old Notes.............. Following the consummation of the Exchange Offer,
holders of Old Notes eligible to participate and to
receive freely transferrable New Notes (based on
existing interpretations of the staff described
elsewhere in this Prospectus) but who do not tender
their Old Notes will not have any further registration
rights and such Old Notes will continue to be subject to
certain restrictions on transfer under the Securities
Act. Accordingly, the liquidity of the market for such
Old Notes could be adversely affected.
Shelf Registration Statement...... Pursuant to the Registration Rights Agreement, in the
event that applicable interpretations of the Staff do
not permit the Company to effect the Exchange Offer or
if for any other reason the Exchange Offer is not
consummated by August 31, 1994, or if the Initial
Purchasers so request with respect to Old Notes not
eligible to be exchanged for New Notes in the Exchange
Offer or if any holder of Old Notes is not eligible to
participate in the Exchange Offer or does not receive
freely tradeable New Notes in the Exchange Offer, the
Company will, at its expense, (a) promptly file a shelf
registration statement (a "Shelf Registration
Statement") permitting resales from time to time of the
Old Notes, (b) use its best efforts to cause such
registration statement to become effective and (c) use
its best efforts to keep such registration statement
current and effective until three years from the date it
becomes effective or such shorter period that will
terminate when all the Old Notes covered by such
registration statement have been sold pursuant thereto.
The Company, at its expense, will provide to each holder
of the Old Notes copies of the prospectus that is a part
of the Shelf Registration Statement, notify each such
holder when the Shelf Registration Statement has become
effective and take certain other actions as are re-
quired to permit unrestricted resales of the Old Notes
from time to time. A holder of Old Notes who sells such
Old Notes pursuant to the Shelf Registration Statement
generally will be required to be named as a selling
security holder in the related prospectus and to deliver
a prospectus to purchasers, will be subject to certain
of the civil liability provisions under the Securities
Act in connection with such sales and will be bound by
the provisions of the Registration Rights Agreement
which are applicable to such holder (including certain
indemnification obligations).
Special Procedures for Beneficial
Owners............................ Any beneficial owner whose Old Notes are registered in
the name of a broker, dealer, commercial bank, trust
company or other nominee and who wishes to tender its
Old Notes for exchange in the Exchange Offer should
contact such registered holder promptly and instruct
such registered holder to tender on such beneficial
owner's behalf. If such beneficial owner wishes to tend-
er on such beneficial owner's behalf, such owner must,
prior to
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
completing and executing the Letter of Transmittal and
delivering its Old Notes, either make appropriate
arrangements to register ownership of the Old Notes in
such owner's name or obtain a properly completed bond
power from the registered holder. The transfer of
registered ownership may take considerable time.
Guaranteed Delivery Procedures.... Holders of Old Notes who wish to tender their Old Notes
and whose Old Notes are not immediately available or who
cannot deliver their Old Notes, the Letter of
Transmittal or any other documents required by the
Letter of Transmittal to the Exchange Agent (or comply
with the procedures for book-entry transfer) prior to
the Expiration Date must tender their Old Notes accord-
ing to the guaranteed delivery procedures set forth in
"The Exchange Offer -- Guaranteed Delivery Procedures."
Withdrawal Rights................. Tenders may be withdrawn at any time prior to 5:00 p.m.,
New York City time, on the Expiration Date.
Acceptance of Old Notes and
Delivery of New Notes............. The Company will accept for exchange and exchange any
and all Old Notes which are properly tendered in the
Exchange Offer and not withdrawn prior to 5:00 p.m., New
York City time, on the Expiration Date. The New Notes
issued pursuant to the Exchange Offer will be delivered
promptly following the Expiration Date. See "The
Exchange Offer -- Terms of the Exchange Offer."
Federal Income Tax Consequences... The exchange pursuant to the Exchange Offer should not
be a taxable event for federal income tax purposes. See
"Certain Federal Income Tax Consequences of the Exchange
Offer."
Use of Proceeds................... There will be no cash proceeds to the Company from the
exchange pursuant to the Exchange Offer. See "Use of
Proceeds."
Exchange Agent.................... Marine Midland Bank.
</TABLE>
SUMMARY OF TERMS OF THE NEW NOTES
The form and terms of the New Notes are identical to the form and terms of
the Old Notes except that the New Notes have been registered under the
Securities Act and, therefore, will not bear legends restricting the transfer
thereof and except for the series designation. The New Notes will evidence the
same debt as the Old Notes and will be entitled to the benefits of the
Indenture. See "Description of the New Notes."
<TABLE>
<S> <C>
Maturity Date..................... April 15, 2004.
Interest Payment Dates............ April 15 and October 15, commencing October 15, 1994.
Guarantees........................ The New Notes will be guaranteed on an unsecured senior
subordinated basis by the Guarantors. See "Description
of the New Notes -- Guarantees."
Ranking........................... The New Notes will be general unsecured obligations of
the Company, subordinate in right of payment to all
existing and future Senior Indebtedness and senior or
PARI PASSU in right of payment to all existing and
future subordinated indebtedness of the Company. The
guarantees of the New Notes by the Guarantors will be
subordinated in right of payment to all Senior Indebt-
edness of the Guarantors and senior or PARI PASSU in
right of payment to all existing and future subordinated
indebtedness of the Guarantors. The New Notes and the
guarantees thereof will be PARI PASSU in right of
payment with all Old Notes that are not
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
exchanged for New Notes pursuant to the Exchange Offer.
As of March 31, 1994, giving pro forma effect to the
Financing Transactions, the aggregate outstanding
principal amount of Senior Indebtedness of the Company
and the Guarantors would have been approximately $232.4
million. The Indenture will prohibit the Company from
incurring, assuming or guaranteeing any Indebtedness
that is subordinated to any Senior Indebtedness and se-
nior in right of payment to the New Notes.
Optional Redemption............... The New Notes will be redeemable for cash, at the option
of the Company, in whole or in part, on or after April
15, 1999, at the redemption prices set forth herein,
plus accrued interest. See "Description of the New Notes
-- Optional Redemption."
Change of Control................. Upon the occurrence of a Change of Control, holders of
the New Notes will have the option to require the
Company to repurchase their New Notes at a repurchase
price equal to 101% of the principal amount thereof,
plus accrued and unpaid interest to the repurchase date.
The Company's ability to repurchase the New Notes
following a Change of Control will be dependent upon it
having sufficient cash therefor and the terms of its
then outstanding Senior Indebtedness. See "Description
of the New Notes -- Change of Control" and "Summary of
New Credit Agreement."
Certain Covenants................. The Indenture contains certain covenants, including
limitations on the ability of the Company and its
Restricted Subsidiaries to: (i) incur additional
indebtedness; (ii) incur indebtedness that is
subordinated to any Senior Indebtedness and senior in
right of payment to the New Notes; (iii) grant liens to
secure subordinated indebtedness; (iv) sell equity
interests in subsidiaries; (v) engage in transactions
with affiliates; (vi) make certain restricted payments;
(vii) apply the net proceeds of certain asset sales;
(viii) agree to payment restrictions affecting certain
subsidiaries; and (ix) engage in mergers, consolidations
and the transfer of all or substantially all of the
assets of the Company or its Restricted Subsidiaries to
another person.
Investment Considerations......... In evaluating the Exchange Offer, holders of Old Notes
should carefully consider the factors set forth under
the caption "Investment Considerations" prior to
determining whether to participate in the Exchange
Offer. Holders of the Old Notes should also consider
that such factors are also generally applicable to the
Old Notes.
</TABLE>
7
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS, EXCEPT PER DAY AMOUNTS)
The following summary consolidated historical financial data of Charter have
been prepared from, and should be read in conjunction with, Charter's
consolidated financial statements for the year ended September 30, 1993 and
notes thereto, including the unaudited interim consolidated financial data for
the six months ended March 31, 1993 and 1994, set forth elsewhere in this
Prospectus. The summary selected consolidated pro forma financial data have been
prepared assuming that the Financing Transactions occurred on the first day of
the period presented, in the case of the pro forma operating data, and on the
balance sheet date, in the case of the pro forma balance sheet data. For an
explanation of the adjustments and assumptions made to prepare the pro forma
financial data, see "Unaudited Pro Forma Financial Information."
<TABLE>
<CAPTION>
SIX MONTHS ENDED MARCH 31,
---------------------------------
YEAR ENDED
SEPTEMBER 30, 1993 1993 1994
---------------------- --------- ----------------------
ACTUAL PRO FORMA ACTUAL ACTUAL PRO FORMA
--------- ----------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net revenue......................................... $897,907 $1,284,127 $ 459,550 $ 421,427 $599,834
Operating expenses.................................. 640,847 966,652 323,367 305,589 453,042
Bad debt expense.................................... 67,300 82,937 34,870 32,288 40,981
EBITDA(1)........................................... 189,760 234,538 101,313 83,550 105,811
Depreciation and amortization (2)................... 69,060 77,313 35,302 29,179 33,309
Interest, net....................................... 74,156 56,474 37,307 16,785 28,652
Net income (loss)................................... (52,227) (6,012 ) (26,915) (2,743) 1,016
OTHER FINANCIAL DATA:
Ratio of EBITDA to interest, net.................... 2.56x 4.15 x 2.72x 4.98x 3.69 x
EBITDA as % of net revenue.......................... 21.1% 18.3 % 22.0% 19.8% 17.6 %
SELECTED OPERATING DATA:
Number of psychiatric hospitals..................... 74 120 78 75 121
Average licensed beds............................... 7,145 10,693 7,207 6,980 10,434
Total inpatient days(3)............................. 1,373,835 2,059,333 705,235 649,931 970,136
Total equivalent patient days(4).................... 1,481,221 2,228,414 755,057 712,485 1,068,937
Admissions.......................................... 86,794 125,660 42,723 46,912 65,751
Average length of stay (days)....................... 15.8 16.2 16.3 13.9 14.6
Net revenue per equivalent patient day(5)........... $576 $556 $581 $557 $531
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 1994
----------------------
ACTUAL PRO FORMA
--------- -----------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital(6)..................................................................... $ (18,532) $ 65,304
Property and equipment -- net.......................................................... 429,720 582,215
Total assets........................................................................... 768,056 1,011,258
Long-term debt and capital lease obligations........................................... 321,192 604,137
Stockholders' equity................................................................... 82,109 68,420
Ratio of long-term debt and capital lease obligations to EBITDA(7)..................... 1.9x 2.9x
<FN>
- ------------------------------
(1) Earnings before interest, income taxes, stock option expense, ESOP
expense, depreciation and amortization. The Company believes that EBITDA
provides useful information regarding the Company's ability to service its
debt payment obligations; however, EBITDA does not represent cash flow
from operations, as defined by generally accepted accounting principles,
and should not be considered as a substitute for net income as an
indicator of the Company's operating performance or for cash flow as a
measure of liquidity.
(2) Includes amortization of reorganization value in excess of amounts
allocable to identifiable assets.
(3) Provision of care to one inpatient for one day.
(4) Inpatient days adjusted to reflect outpatient utilization, computed by
dividing patient revenue by inpatient revenue per day.
(5) Includes inpatient and outpatient revenue. Excludes revenue from
non-psychiatric operations.
(6) The Company had a working capital deficiency of $18.5 million at March 31,
1994, due primarily to the retention of liabilities for cost report
settlements for the general hospitals sold on September 30, 1993.
(7) This ratio is based on annualized EBITDA.
</TABLE>
8
<PAGE>
THE COMPANY
The Company was incorporated in 1969 under the laws of the State of
Delaware. The Company's principal executive offices are located at 577 Mulberry
Street, Macon, Georgia 31298, and its telephone number is (912) 742-1161. Unless
the context otherwise requires, the "Company" includes Charter Medical
Corporation and its subsidiaries.
INVESTMENT CONSIDERATIONS
IN EVALUATING THE EXCHANGE OFFER, HOLDERS OF THE OLD NOTES SHOULD CAREFULLY
CONSIDER THE FOLLOWING FACTORS IN ADDITION TO THOSE DISCUSSED ELSEWHERE IN THIS
PROSPECTUS PRIOR TO ACCEPTING THE EXCHANGE OFFER. HOLDERS OF OLD NOTES SHOULD
ALSO CONSIDER THAT SUCH FACTORS ARE ALSO GENERALLY APPLICABLE TO THE OLD NOTES.
THE OLD NOTES AND THE NEW NOTES ARE COLLECTIVELY REFERRED TO HEREIN AS THE
"NOTES."
LEVERAGE AND DEBT SERVICE. As of March 31, 1994, giving pro forma effect to
the Financing Transactions, the ratio of the Company's total long-term debt and
capital lease obligations to EBITDA (as defined) would have been approximately
2.9 to 1. The pro forma ratio of EBITDA (as defined) to net interest for the
quarter ended March 31, 1994, would have been approximately 3.69 to 1. The
Indenture permits the Company and its subsidiaries to incur additional
indebtedness, subject to certain limitations. The degree to which the Company is
leveraged could have important consequences to holders of the Notes, including:
(a) a significant portion of the Company's cash flow from operations must be
dedicated to the payment of principal and interest on indebtedness and (b) the
Company's leverage may make it more vulnerable to healthcare industry related or
general economic downturns and may limit its ability to withstand competitive
pressures or to take advantage of attractive business opportunities. The
Company's ability to make scheduled payments or to refinance its obligations
with respect to its indebtedness (including the Notes) depends on its financial
and operating performance, which, in turn, is subject to prevailing economic
conditions, to governmental healthcare policies and to financial, business,
regulatory and other factors beyond its control. There can be no assurance that
the Company's operating results will continue to be sufficient for payment of
all of the Company's indebtedness, including the Notes. See "Management's
Discussion and Analysis of Results of Operations and Financial Condition" and
"Unaudited Pro Forma Financial Information."
LIMITATIONS IMPOSED BY THE NEW CREDIT AGREEMENT. The New Credit Agreement
contains a number of restrictive covenants which, among other things, limit the
ability of the Company and its Restricted Subsidiaries to incur other
indebtedness, engage in transactions with affiliates, incur liens, make certain
restricted payments, enter into certain business combination and asset sale
transactions and limit capital expenditures. There can be no assurance that such
restrictions will not adversely affect the Company's ability to conduct its
operations or finance its capital needs or impair the Company's ability to
pursue attractive business and investment opportunities if such opportunities
arise. Under the New Credit Agreement, the Company is also required to maintain
certain specified financial ratios. Failure by the Company to maintain such
financial ratios or to comply with the restrictions contained in the New Credit
Agreement could cause such indebtedness (and by reason of cross-acceleration
provisions, other indebtedness) to become immediately due and payable and/or
could cause the cessation of funding under the New Credit Agreement. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources," and "Summary of the New Credit
Agreement." The Indenture contains certain restrictive covenants that are less
restrictive than those contained in the New Credit Agreement.
SUBORDINATION. The New Notes will be senior subordinated obligations of the
Company and, as such, will be subordinated to all existing and future Senior
Indebtedness of the Company and the Guarantors, which include borrowings
pursuant to the New Credit Agreement in an amount not to exceed $300 million and
will rank PARI PASSU in right of payment with all Old Notes not exchanged for
New Notes pursuant to the Exchange Offer. As of March 31, 1994, giving pro forma
effect to the Financing Transactions, the aggregate outstanding principal amount
of Senior Indebtedness of the Company and the Guarantors would have been
approximately $232.4 million. Upon the maturity of any Specified Senior
Indebtedness by lapse of time, acceleration (unless waived, rescinded or
annulled) or otherwise, all principal thereof, premium, if any, interest and
fees thereon and all other obligations with respect thereto shall first be paid
in full in cash, or such payment duly provided for, before any payment is made
on account of principal of, premium, if any, or interest on the Notes. In
addition, the Company may not pay principal of, premium, if any, or interest on
the
9
<PAGE>
Notes and may not acquire any Notes (including by means of redemption or upon
the occurrence of a Change of Control) for cash or property, if there has been
any default in the payment of principal of or interest on any Specified Senior
Indebtedness or in the payment of any letter of credit commission under the New
Credit Agreement, unless such default has been cured, waived or has ceased to
exist, or such Specified Senior Indebtedness has been discharged. In addition,
if any non-payment event of default exists with respect to any Specified Senior
Indebtedness pursuant to which the maturity of such Specified Senior
Indebtedness may be accelerated and certain other conditions are satisfied, the
Company may not make or otherwise provide for any payments on the Notes for a
designated period of time. Pursuant to the terms of certain Senior Indebtedness,
a non-payment default under such Senior Indebtedness could result in (i) the
acceleration of such Senior Indebtedness, (ii) the cessation of funding under
the New Credit Agreement, and (iii) the ability of holders of certain Senior
Indebtedness to stop payments of principal of, premium, if any, and interest on
the Notes. Upon any payment or distribution of assets of the Company upon
liquidation, dissolution, reorganization or any similar proceeding, the holders
of Senior Indebtedness of the Company and the Guarantors will be entitled to
receive payment in full before the holders of the Notes are entitled to receive
any payment. See "Description of the New Notes."
The indebtedness outstanding pursuant to the New Credit Agreement (including
the guarantees thereof by the Guarantors) is secured by substantially all of the
real and personal property of the Company and its domestic subsidiaries (except
for the real property of the Target Hospitals and of subsidiaries formed after
the date of the New Credit Agreement, subject to certain exceptions), including
pledges of all or a portion of the capital stock of substantially all of the
Company's operating subsidiaries. The Notes and the guarantees thereof are not
secured. See "Summary of New Credit Agreement."
HOLDING COMPANY STRUCTURE. The Company is a holding company which derives
substantially all of its operating income from its subsidiaries. The holders of
the Notes have no direct claim against the subsidiaries other than the claim
created by the guarantees. The guarantees may be subject to legal challenge as
constituting fraudulent conveyances or for otherwise being given for inadequate
consideration. If such a challenge were upheld, the guarantees would be
invalidated and unenforceable. In addition, it is possible that holders of the
Notes would be ordered by a court to turn over to other creditors of the
Guarantors or to their trustees in bankruptcy all or a portion of the payments
made to them pursuant to the guarantees. To the extent that the guarantees are
not enforceable in amounts sufficient to satisfy the claims of the holders of
the Notes, the rights of holders of the Notes to participate in any distribution
of assets of any Guarantor upon liquidation, bankruptcy, reorganization or
otherwise may, as is the case with other unsecured creditors of the Company, be
subject to prior claims of creditors of that Guarantor. The Company must rely
upon dividends and other payments from its subsidiaries to generate the funds
necessary to meet its obligations, including the payment of principal of and
interest on the Notes. The ability of the Company's subsidiaries to make such
payments may be restricted by, among other things, applicable state corporate
laws and other laws and regulations. See "Description of the New Notes."
PREVIOUS BANKRUPTCY REORGANIZATION. The Reorganization, which became
effective on July 21, 1992 (July 31, 1992 for accounting purposes),
significantly reduced the Company's outstanding indebtedness and reorganized its
equity capital structure. Prior to the Reorganization, the Company's total
indebtedness was approximately $1.8 billion; and from February 1991 until July
1992, the Company was in default in the payment of interest and principal, or
both, on substantially all such indebtedness. The indebtedness was incurred by
the Company in connection with a management buyout of the Company in 1988 and a
hospital-construction program. Pursuant to the Reorganization, the Company
reduced its total indebtedness by approximately $700 million and eliminated
redeemable preferred stock having an aggregate liquidation preference of
approximately $233 million. These debtholders and preferred stockholders
received approximately 97% of the Company's common stock outstanding on July 21,
1992. After the Reorganization, through March 31, 1994, the Company further
reduced its indebtedness by approximately $692.7 million, to approximately
$362.2 million at March 31, 1994. See "Capitalization" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
REIMBURSEMENT BY THIRD-PARTY PAYORS. For the fiscal year ended September
30, 1993, the Company derived approximately 56% of its gross psychiatric patient
service revenue from private-pay sources (including HMO's, PPO's and Blue
Cross), 23% from Medicare, 15% from Medicaid and 6% from the Civilian
10
<PAGE>
Health and Medical Program for the Uniformed Services ("CHAMPUS"). Changes in
the mix of the Company's patients among the private-pay, Medicare and Medicaid
categories, and among different types of private-pay sources, can significantly
affect the profitability of the Company's operations. Various cost-containment
mechanisms by both governmental and private third-party payors have begun to
restrict the scope and amount of reimbursable healthcare expenses. Therefore,
there can be no assurance that payments under governmental and private
third-party payor programs will remain at levels comparable to present levels or
will, in the future, be sufficient to cover the costs allocable to patients
eligible for reimbursement pursuant to such programs. In addition, there can be
no assurance that the Company's hospitals will continue to meet the requirements
for participation in such programs.
REGULATION. The federal government and all states in which the Company
operates regulate various aspects of the Company's business. Healthcare
facilities are subject to periodic inspection by governmental and other
authorities to ensure continued compliance with various standards, their
continued licensing under state law and certification under the Medicare and
Medicaid programs. Although the Company has not failed to obtain necessary
approvals or licenses in the past, the failure to obtain or renew any required
regulatory approvals or licenses in the future could adversely affect the
operations of the Company.
DEPENDENCE ON HEALTHCARE PROFESSIONALS. Physicians traditionally have been
the source of a majority of the Company's hospital admissions. Therefore, the
success of the Company's hospitals is dependent in part on the number and
quality of the physicians on the medical staffs of the Company's hospitals and
their admission practices. A small number of physicians account for a
significant portion of patient admissions at some of the Company's hospitals.
There can be no assurance that the Company can retain its current physicians on
staff or that additional physician relationships will be developed in the
future. Furthermore, hospital physicians are generally not employees of the
Company and in general the Company does not have contractual arrangements with
hospital physicians restricting the ability of such physicians to practice
elsewhere.
HEALTHCARE REFORM. On October 27, 1993, President Clinton submitted to
Congress comprehensive healthcare reform legislation (the "Administration's
Proposal"). At present, six other comprehensive reform proposals have been
introduced in the Congress, several of which are likely to be viewed by Congress
as significant alternatives to the Administration's Proposal. A central
component of the Administration's Proposal is the restructuring of health
insurance markets through the use of "managed competition." Under the
Administration's Proposal, states would be required to establish regional
purchasing cooperatives, known as "regional alliances," that would be the
exclusive source of insurance coverage for individuals and employers with fewer
than 5,000 employees. All employers would be required to make such coverage
available to their employees and contribute 80% of the premium, and all
individuals would be required to enroll in an approved health plan. Regional
alliances would contract with health plans that demonstrate an ability to
provide consumers with a broad range of benefits, including hospital services.
The federal government would provide subsidies to low income individuals and
certain small businesses to help pay for the cost of coverage. These subsidies
and other costs of the Administration's Proposal would be funded in significant
part by reductions in payments by the federal Medicare and Medicaid programs to
providers, including hospitals. The Administration's Proposal would also place
stringent limits on the annual growth in health-plan insurance premiums.
Certain aspects of the Administration's Proposal, such as reductions in
Medicare and Medicaid payments, if adopted, could adversely affect the Company's
business. Other aspects of the Administration's Proposal, such as universal
health insurance coverage, could have a positive impact on the Company's
business by reducing the amount of uncompensated care provided by the Company's
hospitals. No assurance can be given that any reform proposal will be adopted or
implemented or that any reform proposal which is ultimately adopted will not
have a material adverse effect on the Company's financial condition and results
of operations.
In addition to the Administration's Proposal and other federal reform
initiatives, state legislatures also have undertaken healthcare reform
initiatives independent of federal reform. The States of Maine, Florida,
California and Washington have adopted legislation based on managed competition.
It is not possible at this time to predict what, if any, reforms will be adopted
by these and other states, or when such reforms will be adopted and implemented.
No assurance can be given that any such reforms will not have a material adverse
effect upon the Company's revenues and earnings or upon the demand for the
Company's services.
11
<PAGE>
COMPETITION. Competition among hospitals and other healthcare providers for
patients has intensified in recent years. During this period, hospital occupancy
rates in the United States have declined as a result of cost containment
pressures, changing technology, changes in regulations and reimbursement,
changes in practice patterns from inpatient to outpatient treatment and other
factors. In areas in which the Company operates, there are other hospitals or
facilities that provide inpatient or outpatient services comparable to those
offered by the Company's hospitals. The competitive position of the Company's
hospitals also has been, and in all likelihood will continue to be, affected by
the increased initiatives undertaken during the past several years by federal
and state governments and other major purchasers of healthcare services,
including insurance companies and employers, to revise payment methodologies and
monitor healthcare expenditures in order to contain healthcare costs. In
addition, hospitals owned by governmental agencies or other tax-exempt entities
benefit from endowments, charitable contributions and tax-exemptions, the
advantages of which are not enjoyed by the Company's hospitals.
LIABILITY INSURANCE. In prior years, the Company self-insured against a
substantial portion of its general and professional liability risk, including a
self-insured deductible of $2 million per occurrence for the policy years ended
May 31, 1992 and 1993, of $2.5 million per occurrence for the policy years ended
May 31, 1990 and 1991, and of $3 million for the policy year ended May 31, 1989.
Effective for the policy year beginning on June 1, 1993, the Company eliminated
its self-insured deductible for psychiatric hospitals and reduced its
self-insured deductible to $1.5 million per occurrence for its general
hospitals, which were sold on September 30, 1993. The amount of expense relating
to the Company's malpractice insurance may materially increase or decrease from
year to year depending, among other things, on the nature and number of new
reported claims against the Company and amounts of settlements of previously
reported claims. To date, the Company has not experienced a loss in excess of
policy limits. The Company believes that its coverage limits are adequate.
ABSENCE OF TRADING MARKETS; RESTRICTIONS ON TRANSFER OF THE NOTES. The Old
Notes are currently owned by a relatively small number of institutional
investors. The Company believes that none of such holders is an affiliate (as
defined in Rule 405 under the Securities Act) of the Company. Prior to the
Exchange Offer, no public market for the Old Notes will exist, although the Old
Notes are eligible for trading in the PORTAL Market among "qualified
institutional buyers." The holders of Old Notes who are not eligible to
participate in the Exchange Offer are entitled to certain registration rights,
and the Company is required to file the Shelf Registration Statement with
respect to resales from time to time of any such Old Notes. The Old Notes have
not been registered under the Securities Act and will remain subject to
restrictions on transferability to the extent they are not exchanged for New
Notes by holders who are entitled to participate in the Exchange Offer. The
Company has been advised by AMEX that the New Notes have been approved for
listing on AMEX, subject to official notice of issuance. There can be no
assurance that an active trading market for the New Notes will develop after any
such listing. Future trading prices of the Notes will depend on many factors,
including, among other things, prevailing interest rates, the Company's results
of operations and the market for similar securities. Depending on prevailing
interest rates, the markets for similar securities and other factors, including
the financial condition of the Company, the Notes may trade at a discount from
their principal amount.
EXCHANGE OFFER PROCEDURES. Issuance of the New Notes in exchange for the
Old Notes pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of such Old Notes, a properly completed and duly executed
Letter of Transmittal and all other required documents. Therefore, holders of
the Old Notes desiring to tender such Old Notes in exchange for New Notes should
allow sufficient time to ensure timely delivery. The Company is under no duty to
give notification of defects or irregularities with respect to tenders of Old
Notes for exchange. Old Notes that are not tendered or that are tendered but not
accepted by the Company for exchange will, following consummation of the
Exchange Offer, continue to be subject to the existing restrictions upon
transfer thereof under the Securities Act and, upon consummation of the Exchange
Offer, certain registration rights under the Registration Rights Agreement will
terminate. In addition, any holder of Old Notes who tenders in the Exchange
Offer for the purpose of participating in a public distribution of the New Notes
may be deemed to be an "underwriter" (within the meaning of Section 2(11) of the
Securities Act) of the New Notes and, if so, will be required to comply with the
registration and prospectus delivery requirements in the Securities Act in
connection with any resale
12
<PAGE>
transaction. Each broker-dealer that receives New Notes for its own account in
exchange for Old Notes, where such Old Notes were acquired by such broker-dealer
as result of market-making activities or other trading activities, must
acknowledge in the Letter of Transmittal that accompanies this Prospectus that
it will deliver a prospectus in connection with any resale of such New Notes.
See "Plan of Distribution." To the extent that Old Notes are tendered and
accepted in the Exchange Offer, the trading market for untendered and tendered
but unaccepted Old Notes could be adversely affected. See "The Exchange Offer."
THE ACQUISITION. The Acquisition poses risks for the holders of the Notes
resulting from the following factors:
(i) Although the Company has entered into a definitive Asset Sale Agreement,
there can be no assurance that the Acquisition will be consummated with respect
to any or all of the Target Hospitals. Consummation of the Acquisition is
subject to the satisfaction of various conditions, some of which cannot be
waived. If the Acquisition is not consummated or is consummated with respect to
less than all of the Target Hospitals, the Company could have substantial excess
net proceeds from the sale of the Notes. Pursuant to the New Credit Agreement
and the Indenture, the Company's ability to invest such excess net proceeds is
restricted. Accordingly, the Company may be unable to earn a return on the
investment of such excess net proceeds equal to or greater than the borrowing
cost thereof. To the extent permitted by the New Credit Agreement and the
Indenture, the Company intends to utilize such excess cash to finance additional
strategic alliances with, and additional acquisitions of, group psychiatric
practices, mental health clinics and other behavioral healthcare providers.
There can be no assurance that the Company will be able to utilize such excess
funds in this manner or to do so promptly. The Company is not now pursuing
another significant acquisition or alliance.
(ii) The following is the text of Note 9 to the audited combined financial
statements of the Target Hospitals for their fiscal years ended May 31, 1992 and
1993, set forth elsewhere in this Offering Memorandum: "At May 31, 1993, NME and
certain of its subsidiaries, including those that own the [Target Hospitals],
were involved in significant lawsuits and governmental investigations concerning
possible improper practices related principally to its psychiatric business. The
suits sought compensatory and punitive damages and in some cases, attorneys
fees. At May 31, 1993, neither the ultimate disposition of the unusual lawsuits,
investigations and claims nor the amount of liabilities or losses arising from
them could be determined. Furthermore, at May 31, 1993, NME and NME's
subsidiaries expected to incur substantial legal charges until these matters
could be disposed of, for which NME established a reserve. As of August 31,
1993, NME recorded additional reserves to estimate the cost of the ultimate
disposition of the significant lawsuits, the majority of which have been settled
subsequent to August 31, 1993. In April, 1994, NME reached an
agreement-in-principle with the Civil Division and Criminal Division of the
Department of Justice, and the Department of Health and Human Services which
upon execution will bring to a close all open investigations of NME (and its
subsidiaries and affiliates) by the federal government and its agencies. As a
result, NME recorded an additional reserve at February 28, 1994 to estimate the
costs of the ultimate disposition of all federal and state investigations.
The aggregate amount of the reserves recorded in connection with these
settlements and agreements as of February 28, 1994 amounted to $690,000,000.
These settlements and agreements were reached in the aggregate and were not
allocated or apportioned to individual facilities. Accordingly, none of these
reserves have been reflected in the accompanying combined financial statements,
nor has any provision for any liability resulting from the ultimate disposition
of these matters been recognized in such financial statements."
The Company believes that, as a purchaser of assets, it will have no
successor civil or criminal liability for the practices of NME. Furthermore, the
Company is indemnified pursuant to the Asset Sale Agreement for liabilities
relating to the matters described above. The Company intends to employ a
significant number of managerial employees who are now employed by NME in
connection with the Target Hospitals. While the Company is not aware that any
employees it intends to hire were involved in allegedly wrongful activities, it
is possible that the Company could unknowingly employ persons who were so
involved. The alleged wrongful activities are against the Company's corporate
policy. The Company will advise all former NME employees that it hires of the
Company's policy and will promptly discharge any employee who violates the
policy.
13
<PAGE>
THE ACQUISITION
DESCRIPTION OF THE TARGET HOSPITALS. On March 29, 1994, the Company entered
into the Asset Sale Agreement with respect to the purchase of the Target
Hospitals. The Target Hospitals have an aggregate capacity of 3,496 licensed
beds and are located in 20 states. During their fiscal year ended May 31, 1993,
the Target Hospitals had approximately 40,000 patient admissions. The following
table sets forth certain unaudited financial information regarding the Target
Hospitals set forth elsewhere in this Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED MAY 31, MARCH 31,
---------------------- ----------------------
1992 1993 1993 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net revenue...................................................... $ 537,218 $ 407,525 $ 309,273 $ 265,160
Operating and administrative expenses............................ 424,985 351,281 268,206 228,326
Target Hospital EBITDA........................................... 110,581 55,059 40,146 36,514
</TABLE>
See "Target Hospital Summary Financial Information."
RATIONALE FOR THE ACQUISITION. Management believes that the Acquisition
will assist the Company in implementing its strategy by increasing the Company's
size, market position and geographic coverage. For example, the Acquisition will
permit the Company to enter 16 new markets, including markets in the mid-
Atlantic and northeastern United States. Management also believes that the
introduction to the Target Hospitals of Charter's operating and financial
control systems, continuum of care and marketing efforts will increase the
utilization and profitability of the Target Hospitals.
TERMS OF THE ACQUISITION AND RELATED DOCUMENTS. Under the terms of the
Asset Sale Agreement, the aggregate purchase price of the Target Hospitals is
approximately $151.9 million (the "Basic Purchase Price"), plus an additional
cash amount estimated to be approximately $50.7 million, subject to adjustment,
for the net working capital of the Target Hospitals on the closing date of the
Acquisition. The Basic Purchase Price has been allocated among the Target
Hospitals so that adjustments may be made if one or more of the Target Hospitals
is not acquired because of the inability to obtain certain necessary consents or
approvals, the existence of certain prohibitions or restraints relating to the
contemplated transactions, defects in the title to real property, environmental
conditions or events of casualty or condemnation. In connection with obtaining
regulatory approvals, the Company has received a request for additional
information from the Federal Trade Commission and is in the process of complying
with such request. The Asset Sale Agreement includes a covenant by NME not to
compete with any Target Hospital from or through any facility located within a
25-mile radius of such Target Hospital for a period of three years after closing
of the Acquisition, subject to certain conditions. In addition, the Asset Sale
Agreement requires that if NME exercises its right to terminate the Acquisition
because of fiduciary duties to its shareholders, NME shall pay to the Company a
termination fee of $15 million.
The Asset Sale Agreement contemplates up to three closings of purchases of
the Target Hospitals. The purchase of each Target Hospital is subject to certain
conditions set forth in the Asset Sale Agreement, including (i) the receipt of
all required approvals and consents to the purchases, (ii) the Company's having
obtained all necessary licenses and permits necessary for operation of the
Target Hospital, (iii) the absence of pending or threatened legal or
governmental actions seeking to restrain the sale of the Target Hospital, (iv)
the performance of covenants and agreements and the accuracy of representations
and warranties set forth in the Asset Sale Agreement, and (v) the absence of any
material adverse change in the financial, banking or capital markets as a result
of which lending institutions generally cease their commercial financing
activities.
Pursuant to the Asset Sale Agreement, the Company and NME have each agreed
to indemnify and hold harmless the other against, among other things, certain
losses ("Losses") resulting from inaccuracy of representations or warranties,
nonperformance or breach of covenants or agreements, and the failure to
discharge liabilities for which such party is responsible. In addition, NME has
agreed to indemnify the Company against Losses resulting from operations of the
Target Hospitals before closing (including Losses arising in connection with the
matters described in "Investment Considerations -- The Acquisition,"
but excluding specific contracts, debt obligations and working capital
liabilities expressly assumed by the Company), and the Company has agreed to
indemnify NME against Losses resulting from the operations of the Company and
the assets purchased by the Company from NME after closing, including the
continuation or performance by the Company of any agreement or practice of NME
or the Target Hospitals. Certain of the indemnification obligations of the
Company and NME are subject to a deductible.
14
<PAGE>
USE OF PROCEEDS
The Exchange Offer is intended to satisfy certain of the Company's
obligations under the Registration Rights Agreement. The Company will not
receive any cash proceeds from the issuance of the New Notes offered hereby. In
consideration for issuing the New Notes contemplated in this Prospectus, the
Company will receive in exchange Old Notes in like principal amount, the form
and terms of which are the same as the form and terms of the New Notes, except
as otherwise described herein. The Old Notes surrendered in exchange for New
Notes will be retired and cancelled and cannot be reissued. Accordingly,
issuance of the New Notes will not result in any increase or decrease in the
indebtedness of the Company.
The net proceeds from the sale of the Old Notes were approximately $365.6
million. Approximately $181.8 million of such net proceeds were used for the
purpose of redeeming the Company's 7 1/2% Senior Subordinated Debentures due
2003. Approximately $56.8 million of the net proceeds from the sale of the Old
Notes were used to repay certain indebtedness of the Company outstanding under
its Amended and Restated Credit Agreements, dated July 21, 1992 (the "Old Credit
Agreement") and to pay transaction costs relating to the Financing Transactions
(approximately $8.7 million). The remaining net proceeds from the sale of the
Old Notes together with approximately $84.3 million of borrowings pursuant to
the New Credit Agreement, will be used to finance the Acquisition (approximately
$202.6 million). In the event that the Acquisition is not consummated, the
Company will use the remaining net proceeds from the sale of the Old Notes for
strategic acquisitions and alliances, the creation of joint ventures or other
general corporate purposes. See "Investment Considerations -- The Acquisition."
The Financing Transactions also included the refinancing of the existing
mortgage indebtedness of certain of the subsidiaries of the Company
(approximately $14.7 million) and the indebtedness of certain subsidiaries of
the Company outstanding under the Old Credit Agreement (approximately $46.8
million) pursuant to the New Credit Agreement. The following table indicates the
sources and uses of the funds obtained or to be obtained by the Company in
connection with the Financing Transactions. The amounts of indebtedness shown in
the "Uses of Funds" table set forth below are the balances as of April 1, 1994.
(DOLLARS IN MILLIONS)
<TABLE>
<S> <C>
SOURCES OF FUNDS
- ------------------------------------------------
New Credit Agreement................. $ 145.8
Senior Subordinated Notes............ 375.0
Less: Discount to Initial
Purchasers........................ (9.4)
---------
Total Sources........................ $ 511.4
---------
---------
USES OF FUNDS
- ------------------------------------------------
Old Credit Agreement
Company Indebtedness............... $ 56.8
Subsidiary Indebtedness............ 46.8
Mortgages............................ 14.7
7 1/2% Senior Subordinated
Debentures.......................... 181.8
Acquisition.......................... 202.6
Transaction Expenses................. 8.7
---------
Total Uses........................... $ 511.4
---------
---------
</TABLE>
The indebtedness outstanding pursuant to the Old Credit Agreement consisted
of a term-loan facility and an ESOP term-loan facility. At March 31, 1994,
approximately $66.0 million was outstanding under the term-loan facility and
$37.6 million was outstanding under the ESOP term-loan facility. The term-loan
facility also provided for the support of letters of credit securing industrial
development bonds issued on behalf of certain of the Company's subsidiaries. The
term-loan facility (except for borrowings used to fund letter of credit
drawings) bore interest per annum at BTCo's prime lending rate plus .5%.
Borrowings with respect to letter of credit drawings bore interest per annum at
BTCo's prime lending rate plus 1.5% per annum for the first $40 million drawn
and at BTCo's prime lending rate plus 1% per annum for amounts drawn in excess
of $40 million. The ESOP term loan facility funded purchases of the Company's
common stock by the Company's employee stock ownership plan. Approximately 75%
of the borrowings outstanding pursuant to the ESOP term-loan facility bore
interest at a fixed rate of 8.375% per annum, with the remaining portion bearing
interest at a rate per annum equal to 85% of the interest rate applicable to the
term-loan facility. The principal amount outstanding pursuant to the Old Credit
Agreement was payable in installments, with the final installment being due on
September 30, 1997. The indebtedness that was secured by mortgages bore interest
at 12.32% per annum and matured in 1997.
15
<PAGE>
CAPITALIZATION
The following table sets forth (i) the capitalization of the Company at
March 31, 1994, and (ii) such capitalization as adjusted as of such date to give
effect to the Financing Transactions.
<TABLE>
<CAPTION>
ACTUAL PRO FORMA
MARCH 31, MARCH 31,
1994 PRO FORMA 1994
(UNAUDITED) ADJUSTMENTS (1) (UNAUDITED)
------------ --------------- ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Short Term Debt:
Current maturities of long-term debt and capital lease
obligations...................................................... $ 41,010 $ (37,740) $ 3,270
------------ --------------- ------------
Long Term Debt and Capital Lease Obligations:
New Credit Agreement.............................................. -- 141,695 141,695
Old Credit Agreement.............................................. 103,156 (103,156) --
Collateralized notes payable and capital lease obligations........ 101,668 (10,956) 90,712
11 1/4% Senior Subordinated Notes due 2004(2)..................... -- 375,000 375,000
7 1/2% Senior Subordinated Debentures due 2003.................... 200,000 (200,000) --
------------ --------------- ------------
404,824 202,583 607,407
Less amounts due within one year.................................... 41,010 (37,740) 3,270
Less unamortized discount........................................... 42,622 (42,622) --
------------ --------------- ------------
Total Long Term Debt and Capital Lease Obligations.............. 321,192 282,945 604,137
------------ --------------- ------------
Stockholders' Equity (Deficit)
Common stock, par value $.25
80,000,000 shares authorized
26,750,950 shares outstanding.................................... 6,688 -- 6,688
Additional paid-in capital........................................ 240,162 -- 240,162
Accumulated deficit............................................... (62,166) (13,689) (75,855)
Unearned compensation under ESOP.................................. (98,125) -- (98,125)
Warrants outstanding.............................................. 182 -- 182
Cumulative foreign currency adjustments........................... (4,632) -- (4,632)
------------ --------------- ------------
Total Stockholders' Equity...................................... 82,109 (13,689) 68,420
------------ --------------- ------------
Total Capitalization............................................ $ 444,311 $ 231,516 $ 675,827
------------ --------------- ------------
------------ --------------- ------------
<FN>
- ------------------------
(1) See Notes to Pro Forma Condensed Consolidated Financial Statements
(Unaudited) for a discussion of the pro forma adjustments.
(2) The New Notes will evidence the same debt as the Old Notes, which they will
replace.
</TABLE>
16
<PAGE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND STATISTICAL INFORMATION
The selected consolidated financial data set forth below as of September 30,
1989, 1990 and 1991, July 31, 1992, and September 30, 1992 and 1993, and for
each of the fiscal periods in the five-year period ended September 30, 1993,
have been derived from the Company's audited consolidated financial statements.
The information for periods after July 31, 1992 is not comparable to information
presented for periods prior to such date because of consummation of the
Reorganization and the implementation of fresh start accounting in fiscal 1992,
which included the revaluation of the Company's assets and liabilities at the
assumed reorganization value thereof and resulted in, among other things,
significant reductions in the principal amount of the Company's long-term debt
and interest expense and the elimination of preferred stock and preferred stock
dividend requirements. Accordingly, a line has been used to separate the
financial data of the Company after the consummation of the Reorganization from
those of the Company prior to the consummation of the Reorganization. The
consolidated financial statements of the Company as of September 30, 1991, July
31, 1992 and September 30, 1992 and 1993, and for each of the fiscal periods in
the three-year period ended September 30, 1993, together with the notes thereto
and the related reports of Arthur Andersen & Co., independent public
accountants, are included elsewhere in this Prospectus. Selected consolidated
financial information for the six months ended March 31, 1993 and 1994 has been
derived from unaudited consolidated financial statements and, in the opinion of
Management, includes all adjustments (consisting only of normal recurring
adjustments) that are necessary for a fair presentation of the operating results
for such interim periods. Results for the interim periods are not necessarily
indicative of the results for the full year or for any future periods. The
selected financial data set forth below should be read in conjunction with the
Consolidated Financial Statements of the Company, the notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this Prospectus.
17
<PAGE>
SELECTED STATEMENT OF OPERATIONS DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE
TEN TWO SIX MONTHS
MONTHS MONTHS YEAR ENDED
YEAR ENDED SEPTEMBER 30, ENDED ENDED ENDED MARCH 31,
-------------------------------- JULY 31, SEPT. 30, SEPT. 30, ------------------
1989 1990 1991 1992 1992 1993 1993 1994
-------- ---------- ---------- -------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenue................... $930,831 $ 954,508 $ 868,264 $777,855 $142,850 $897,207 $459,550 $421,427
Operating expenses............ 667,482 804,897 656,828 563,600 107,608 640,847 323,367 305,589
Bad debt expense.............. 41,935 78,944 51,617 50,403 14,804 67,300 34,870 32,288
Depreciation and
amortization................. 43,555 66,571 48,659 35,126 3,631 26,382 13,802 13,579
Amortization of reorganization
value in excess of amounts
allocable to identifiable
assets....................... -- -- -- -- 7,167 42,678 21,500 15,600
Interest, net................. 180,351 205,723 232,218 169,244 12,690 74,156 37,307 16,785
ESOP expense (credit)......... 43,941 52,033 (3,962) 33,714 4,811 45,874 17,970 24,599
Deferred compensation
expense...................... 31,399 6,815 5,061 3,190 -- -- -- --
Stock option expense
(credit)..................... -- -- -- -- (789) 38,416 31,277 6,851
Provision for restructuring of
operations................... -- 105,000 45,000 -- -- -- -- --
Income (Loss) from continuing
operations before income
taxes, reorganization items,
extraordinary item and
cumulative effect of a change
in accounting principle...... (77,832) (365,475) (167,157) (77,422) (7,072) (37,746) (20,543) 6,136
Provision for (Benefit from)
income taxes................. (12,197) (43,132) -- 4,259 1,054 1,874 364 8,879
Loss from continuing
operations before
reorganization items,
extraordinary item and
cumulative effect of a change
in accounting principle...... (65,635) (322,343) (167,157) (81,681) (8,126) (39,620) (20,907) (2,743)
Discontinued operations:
Income (Loss) from
discontinued operations.... 28,954 18,606 37,115 24,211 930 (14,703) (6,008) --
Gain on disposal of
discontinued operations.... -- -- -- -- -- 10,657 -- --
Loss before reorganization
items, extraordinary item and
cumulative effect of a change
in accounting principle...... (36,681) (303,737) (130,042) (57,470) (7,196) (43,666) (26,915) (2,743)
Reorganization items:
Professional fees and other
expenses................... -- -- -- (8,156) -- -- -- --
Adjust accounts to fair
value...................... -- -- -- 83,004 -- -- -- --
Extraordinary item-gain (loss)
on early extinguishment or
discharge of debt............ -- -- -- 730,589 -- (8,561) -- --
Cumulative effect of a change
in accounting principle...... -- (7,567) -- -- -- -- -- --
Net income (loss)............. (36,681) (311,304) (130,042) 747,967 (7,196) (52,227) (26,915) (2,743)
Earnings (Loss) per common
share:
Loss from continuing
operations before
extraordinary item......... $(.33) $(1.59) $(.84) $(.11)
Income (Loss) from
discontinued operations and
disposal of discontinued
operations................. .04 (.16) (.24) --
Loss before extraordinary
item....................... (.29) (1.75) (1.08) (.11)
Extraordinary loss on early
extinguishment of debt..... -- (.35) -- --
Net loss.................... --(A) --(A) --(A) --(A) $(.29) $(2.10) $(1.08) $(.11)
<FN>
- ------------------------------
(A) Earnings (loss) per share for periods prior to the two months ended
September 30, 1992 are not presented because they are not meaningful due
to the implementation of fresh start accounting and an increase in the
number of shares outstanding as a result of the Plan.
</TABLE>
SELECTED BALANCE SHEET DATA
(IN THOUSANDS)
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30,
------------------------------------------------------- AS OF MARCH
1989 1990 1991 1992 1993 31, 1994
--------- ---------- ---------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Current assets............................. $ 230,524 $ 255,644 $ 320,755 $ 290,742 $ 231,915 $ 196,540
Current liabilities........................ 185,019 1,986,748 2,123,006 296,144 272,598 215,072
Working capital............................ 45,505 (1,731,104) (1,802,251) (5,402) (40,683) (18,532)
Property and equipment -- net.............. 691,272 696,813 645,173 486,762 444,786 429,720
Total assets............................... 1,349,528 1,333,659 1,338,823 1,299,198 838,186 768,056
Long-term debt and capital lease
obligations............................... 1,549,231 12,633 5,920 844,839 350,205 321,192
Redeemable preferred stock................. 187,460 189,989 214,842 -- -- --
Common stockholders' equity (deficit)...... (729,262) (984,954) (1,138,279) 10,424 57,298 82,109
</TABLE>
18
<PAGE>
TARGET HOSPITAL SELECTED FINANCIAL INFORMATION
The selected combined financial information (other than the Operating Data)
as of May 31, 1992 and 1993 and for the fiscal years then ended set forth below
regarding the Target Hospitals has been derived from the audited combined
financial statements for the Target Hospitals included elsewhere in this
Prospectus. The selected unaudited combined financial information (other than
the Operating Data) for the nine months ended February 28, 1993 and 1994 has
been derived from unaudited combined condensed financial statements. The
selected financial data (other than the Operating Data) set forth below should
be read in conjunction with the audited financial statements of the Target
Hospitals as of May 31, 1992 and 1993 and for the fiscal years then ended and
the notes thereto included elsewhere in this Prospectus.
In view of the fact that this information necessarily is incomplete and
relates to the operation of the Target Hospitals by NME for the historical
periods presented, it is not indicative of future results from operations of the
Target Hospitals by the Company following the Acquisition.
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
MAY 31, FEBRUARY 28,
-------------------- --------------------
1992 1993 1993 1994
--------- --------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER DAY
AMOUNTS)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net operating revenue................................................... $ 537,218 $ 407,525 $ 309,273 $ 265,160
--------- --------- --------- ---------
Operating and administrative expenses................................... 424,985 351,281 268,206 228,326
Intercompany fees and allocations....................................... 66,962 53,252 42,540 40,086
Depreciation and amortization........................................... 32,137 21,826 16,396 9,274
Provision for loss on sale of selected hospitals........................ 2,202 4,262 0 165,289
Minority interest in earnings of certain selected hospitals............. 1,652 1,185 921 320
Interest, net........................................................... 11,012 11,906 8,578 9,076
--------- --------- --------- ---------
Total costs and expenses............................................ 538,950 443,712 336,641 452,371
--------- --------- --------- ---------
Loss before income tax benefit.......................................... (1,732) (36,187) (27,368) (187,211)
Income tax benefit...................................................... (439) (13,121) (10,126) (69,268)
--------- --------- --------- ---------
Net Loss................................................................ $ (1,293) $ (23,066) $ (17,242) $(117,943)
--------- --------- --------- ---------
--------- --------- --------- ---------
Target Hospital EBITDA (4).............................................. $ 110,581 $ 55,059 $ 40,146 $ 36,514
--------- --------- --------- ---------
--------- --------- --------- ---------
OPERATING DATA:
Number of psychiatric hospitals......................................... 44 46 47 47
Average licensed beds................................................... 3,391 3,556 3,549 3,447
Total inpatient days (1)................................................ 913,658 707,587 533,651 480,148
Total equivalent patient days........................................... 971,538 768,563 584,645 530,790
Occupancy rate (2)...................................................... 73.6% 54.5% 55.1% 51.0%
Admissions.............................................................. 43,734 39,539 29,480 27,949
Average length of stay (days)........................................... 21.3 17.6 19.6 16.3
Net revenue per equivalent patient day (3).............................. $550 $525 $525 $489
</TABLE>
<TABLE>
<CAPTION>
AS OF AS OF
MAY 31, FEBRUARY 28,
1993 1994
--------- -------------
<S> <C> <C>
BALANCE SHEET DATA:
Current assets.................................................................. $ 65,885 $ 205,119
Current liabilities............................................................. 44,713 39,756
Property and equipment -- net................................................... 286,462 --
Total assets.................................................................... 379,640 206,672
<FN>
- ------------------------------
(1) Provision of care to one inpatient for one day.
(2) Inpatient days as a percentage of licensed bed days.
(3) Includes inpatient and outpatient revenue. Excludes revenue from
non-psychiatric operations.
(4) Earnings before interest, income tax benefit, provision for loss on sale
of selected hospitals, depreciation and amortization, and intercompany
fees and allocations.
</TABLE>
19
<PAGE>
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The unaudited Pro Forma Condensed Consolidated Statements of Operations for
the year ended September 30, 1993, and the six months ended March 31, 1994, and
the unaudited Pro Forma Condensed Consolidated Balance Sheet as of March 31,
1994, set forth below, have been prepared giving effect to the Financing
Transactions and the payment of the estimated related expenses. The pro forma
financial information should be read in conjunction with "Investment
Considerations -- Leverage and Debt Service," Charter's consolidated historical
financial statements and notes thereto and the combined financial statements of
the Target Hospitals and notes thereto included elsewhere in this Prospecuts.
The unaudited Pro Forma Condensed Consolidated Statements of Operations for
the year ended September 30, 1993, and the six months ended March 31, 1994, were
prepared as if the Financing Transactions had occurred on October 1, 1992 and
1993, respectively. The unaudited Pro Forma Condensed Consolidated Balance Sheet
as of March 31, 1994, was prepared as if the Financing Transactions had occurred
on such date.
For purposes of presenting pro forma results, no changes in revenues and
expenses have been made to reflect the result of any modification to operations
that might have been made had the Financing Transactions been consummated on the
assumed effective dates of such transactions. The pro forma expenses include the
recurring costs which are directly attributable to such transactions, such as
interest expense, and the related tax effects. The pro forma financial
information does not purport to be indicative of the results which would
actually have been attained had such transactions been completed as of the date
and for the periods presented or which may be attained in the future.
20
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
AS OF MARCH 31, 1994
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
TOTAL
CONTINUING
CHARTER AS TARGET HOSPITALS PRO FORMA PRO FORMA
REPORTED AS OF 2/28/94 ADJUSTMENTS CONSOLIDATED
---------- ---------------- ----------- ------------
<S> <C> <C> <C> <C>
Current assets
Cash and cash equivalents........................................... $ 40,535 $ 2,019 $ (2,019)(a) $ 50,220
9,685(c)
Cash collateral account............................................. 8,207 0 (8,207)(c) 0
Accounts receivable, net............................................ 129,117 65,707 2,817(a) 197,641
Supplies............................................................ 4,933 2,328 7,261
Assets held for sale................................................ 0 131,943 (131,943)(b) 0
Other current assets................................................ 13,748 3,122 (670)(a) 16,200
---------- -------- ------------
Total current assets.............................................. 196,540 205,119 271,322
Property and equipment
Land................................................................ 93,850 0 93,850
Buildings and improvements.......................................... 307,768 0 307,768
Equipment........................................................... 69,017 0 69,017
Purchase price subject to allocation................................ 0 0 152,495(b) 152,495
---------- -------- ------------
470,635 0 623,130
Accumulated depreciation............................................ (43,109) 0 (43,109)
---------- -------- ------------
427,526 0 580,021
Construction in progress............................................ 2,194 0 2,194
---------- -------- ------------
429,720 0 582,215
Other long-term assets................................................ 100,195 1,553 (1,553)(a) 116,120
15,925(c)
Reorganization value in excess of amounts allocable to identifiable
assets, net.......................................................... 41,601 0 41,601
---------- -------- ----------- ------------
$ 768,056 $ 206,672 $ 36,530 $ 1,011,258
---------- -------- ----------- ------------
---------- -------- ----------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable.................................................... $ 39,021 $ 9,107 $ 48,128
Accrued expenses.................................................... 67,847 29,969 (16,373)(a) 79,526
(1,917)(c)
Other accrued liabilities........................................... 62,392 0 62,392
Current income taxes payable........................................ 4,802 0 7,900(c) 12,702
Current maturities of long-term debt and capital lease
obligations........................................................ 41,010 680 (175)(a) 3,270
(38,245)(c)
---------- -------- ------------
Total current liabilities......................................... 215,072 39,756 206,018
Long-term debt and capital lease obligations.......................... 321,192 5,169 (1,635)(a) 604,137
279,411(c)
Deferred income tax liabilities....................................... 36,439 0 (17,000)(c) 19,439
Reserve for unpaid claims............................................. 98,268 0 98,268
Deferred credits and other long-term liabilities...................... 14,976 81,661 (81,661)(a) 14,976
Stockholders' equity common stock..................................... 6,688 361 (361)(a) 6,688
Other stockholders' equity (deficit)
Additional paid-in capital.......................................... 240,162 43,593 (43,593)(a) 240,162
Retained earnings (accumulated deficit)............................. (62,166) 36,132 (36,132)(a) (75,855)
(13,689)(c)
Unearned compensation under ESOP.................................... (98,125) 0 (98,125)
Warrants outstanding................................................ 182 0 182
Cumulative foreign currency adjustments............................. (4,632) 0 (4,632)
---------- -------- ------------
Stockholder's equity................................................ 82,109 80,086 68,420
Commitments and contingencies
---------- -------- ----------- ------------
$ 768,056 $ 206,672 $ 36,530 $ 1,011,258
---------- -------- ----------- ------------
---------- -------- ----------- ------------
<FN>
- ------------------------------
See Notes to Pro Forma Condensed Consolidated Financial Statements (Unaudited)
</TABLE>
21
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
FOR THE YEAR ENDED SEPTEMBER 30, 1993
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
TOTAL TARGET
CONTINUING HOSPITALS
CHARTER AS (FOR 12 MONTHS PRO FORMA PRO FORMA
REPORTED ENDED 8/31/93) ADJUSTMENTS CONSOLIDATED
---------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
Net revenue....................................... $ 897,907 $ 386,220 $ 1,284,127
---------- -------------- ------------
Operating expenses................................ 640,847 310,439 $ 4,400(d) 966,652
10,008(e)
958(e)
Bad debt expense.................................. 67,300 15,637 82,937
Intercompany fees and allocations................. 0 62,743 (10,008)(e) 0
(52,735)(f)
Depreciation and amortization..................... 26,382 21,903 (13,650)(g) 34,635
Amortization of reorganization value in excess of
amounts allocable to identifiable assets......... 42,678 0 42,678
Interest, net..................................... 74,156 12,590 (18,194)(h) 56,474
(12,078)(i)
ESOP expense...................................... 45,874 0 45,874
Stock option expense.............................. 38,416 0 38,416
Minority interest in earnings of certain
hospitals........................................ 0 958 (958)(e) 0
Provision for loss on sale of assets.............. 0 4,262 (4,262)(j) 0
---------- -------------- ------------
935,653 428,532 1,267,666
---------- -------------- ------------
Income (Loss) from continuing operations before
income taxes..................................... (37,746) (42,312) 16,461
Provision (Benefit) for income taxes.............. 1,874 (15,570) 36,169(k) 22,473
---------- -------------- ------------ ------------
Loss from continuing operations................... $ (39,620) $ (26,742) $ 60,350 $ (6,012)
---------- -------------- ------------ ------------
---------- -------------- ------------ ------------
Average number of common shares
outstanding...................................... 24,875 24,875
---------- ------------
---------- ------------
Loss from continuing operations per common
share............................................ $ (1.59) $ (.24)
---------- ------------
---------- ------------
<FN>
- ------------------------
See Notes to Pro Forma Condensed Consolidated Financial Statements (Unaudited)
</TABLE>
22
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
FOR THE SIX MONTHS ENDED MARCH 31, 1994
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
TARGET
TOTAL HOSPITALS
CONTINUING (FOR SIX
CHARTER AS MONTHS PRO FORMA PRO FORMA
REPORTED ENDED 2/28/94) ADJUSTMENTS CONSOLIDATED
---------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
Net revenue....................................... $ 421,427 $ 178,407 $ 599,834
---------- -------------- ------------
Operating expenses................................ 305,589 143,470 $ 2,200(d) 453,042
1,602(e)
181(e)
Bad debt expense.................................. 32,288 8,693 40,981
Intercompany fees and allocations................. 0 27,574 (1,602)(e) 0
(25,972)(f)
Depreciation and amortization..................... 13,579 3,945 185(g) 17,709
Amortization of reorganization value in excess of
amounts allocable to identifiable assets......... 15,600 0 15,600
Interest, net..................................... 16,785 5,952 11,640(h) 28,652
(5,725)(i)
ESOP expense...................................... 24,599 0 24,599
Stock option expense.............................. 6,851 0 6,851
Minority interest in earnings of certain
hospitals........................................ 0 181 (181)(e) 0
Provision for loss on sale of assets.............. 0 165,289 (165,289)(j) 0
---------- -------------- ------------
415,291 355,104 587,434
---------- -------------- ------------
Income (Loss) before income taxes................. 6,136 (176,697) 12,400
Provision (Benefit) for income taxes.............. 8,879 (65,063) 67,568(k) 11,384
---------- -------------- ------------ ------------
Net income (loss) from continuing operations...... $ (2,743) $ (111,634) $ 115,393 $ 1,016
---------- -------------- ------------ ------------
---------- -------------- ------------ ------------
Average number of common shares outstanding (l)... 25,936
----------
----------
Loss per common share (l)......................... $ (.11)
----------
----------
Earnings per common share and common equivalent
share (l)........................................ $ .04
------------
------------
Earnings per common share assuming full dilution
(l).............................................. $ .04
------------
------------
<FN>
- ------------------------
See Notes to Pro Forma Condensed Consolidated Financial Statements (Unaudited)
</TABLE>
23
<PAGE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(a) To eliminate assets, liabilities and equity of the Target Hospitals which
will not be purchased or assumed by the Company.
(b) To record the property and equipment of the Target Hospitals at the purchase
price. No allocation has been made between the components of property and
equipment.
(c) To record (i) the repayment of the Old Credit Agreement, (ii) the redemption
of the 7 1/2% Senior Subordinated Debentures and the related loss on early
extinguishment of debt, (iii) the initial borrowings under the New Credit
Agreement, (iv) the issuance of the Notes, and (v) the estimated related
expenses.
(d) To record estimated incremental overhead related to the Target Hospitals.
(e) To reclassify to operating expenses the estimated direct cost of hospital
chief executive officers' and chief financial officers' ("CEO/CFO") salaries
and bonuses, management information services costs and minority interests in
certain hospitals as follows:
<TABLE>
<CAPTION>
FOR THE YEAR
ENDED
SEPTEMBER 30, FOR THE SIX MONTHS
1993 ENDED MARCH 31, 1994
----------------- ---------------------
<S> <C> <C>
CEO/CFO salaries and bonuses........................ $ 6,033 $ 555
Management information services costs............... 3,975 1,047
Minority interests.................................. 958 181
------- ------
$ 10,966 $ 1,783
------- ------
------- ------
</TABLE>
(f) To eliminate intercompany management fees and corporate overhead allocated
to the Target Hospitals by their parent corporations.
(g) To adjust depreciation and amortization expenses, based on the purchase
price of property and equipment, an estimated composite life of 18.5 years,
and the elimination of amortization of intangibles which will not be
purchased by the Company.
(h) Interest expense related to the Refinancing and the borrowings under the New
Credit Agreement and the Notes was determined reflecting the Company's pro
forma capitalization as if it were outstanding during the entire period. The
pro forma consolidated interest expense is based upon the historical rates
for indebtedness that will not be refinanced and an assumed blended rate of
approximately 10.3% on the borrowings under the New Credit Agreement and the
Notes.
(i) To remove historical interest expense of the Target Hospitals other than
interest on long-term debt and capital lease obligations to be assumed by
the Company.
(j) To remove the provision for loss on sale of assets recorded by the Target
Hospitals related to the sale of assets and working capital to the Company.
(k) To adjust the income tax provision resulting from the earnings of the Target
Hospitals, based on the combined federal and state statutory rate of 38% and
40% for the year ended September 30, 1993 and the six months ended March 31,
1994, respectively.
(l) Loss per common share for the six months ended March 31, 1994 was calculated
by dividing net loss by the weighted average number of common shares
outstanding during the period. Common equivalent shares would have been
antidilutive and were therefore not included in the calculation of loss per
common share. Pro forma earnings per common share and common equivalent
share were calculated by dividing net income by the total weighted average
common shares outstanding during the period (25,935,523) increased by the
number of shares issuable on the exercise of options and warrants
outstanding, reduced by the number of common shares that are assumed to have
been purchased with the proceeds from the exercise of the options and
warrants (1,392,832). Those purchases were assumed to have been made at the
average price of the common stock during the period. Pro forma earnings per
common share assuming full dilution were calculated in the same manner.
However, purchases assumed in the computation of pro forma earnings per
common share assuming full dilution were computed using the common stock
price at the end of the period, which was higher than the average price. The
net increase resulting from the exercise of options and warrants outstanding
would have been 1,406,212.
24
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
For the fiscal years ended September 30, 1991 and 1993 and the six months
ended March 31, 1994, the Company derived approximately 6%, 11% and 14%,
respectively, of its gross patient revenue from HMO's and PPO's; 64%, 45% and
39%, respectively, from other private payor sources (primarily Blue Cross and
commercial insurance); 14%, 23% and 26%, respectively, from Medicare; 8%, 15%
and 16%, respectively, from Medicaid; and 8%, 6% and 5%, respectively, from
CHAMPUS. The Company does not expect its current payor mix to be altered
significantly as a result of the Acquisition. Changes in the mix of the
Company's patients among the private-pay, Medicare and Medicaid categories, and
among different types of private-pay sources, can significantly affect the
profitability of the Company's operations. The psychiatric hospital industry has
been adversely affected by (i) the imposition of more stringent length of stay
and admission criteria by non-governmental insurance and other healthcare
benefit programs; (ii) the failure of reimbursement rate increases from certain
third-party payors that reimburse on a per diem or other discounted basis to
offset increases in the cost of providing services; (iii) an increase in the
percentage of its business that the Company derives from third-party payors that
reimburse on a per diem or other discounted basis; (iv) a trend toward higher
deductibles and co-insurance for individual patients; (v) a trend toward
limiting employee health benefits, such as reductions in annual and lifetime
limits on behavioral health coverage; and (vi) a trend toward agreements with
payors where the Company agrees to assume the risk for provision of treatment to
all members of a particular group for a specified revenue amount.
The Company continues to experience admission increases at its psychiatric
hospitals, but as a result of the reductions in average length of stay,
aggregate patient days have decreased. Accordingly, the Company continues to
broaden the scope of healthcare services it provides by offering alternatives to
traditional inpatient treatment settings, such as partial hospitalization,
intensive outpatient and residential treatment programs. Despite the pressures
noted above, in fiscal 1993 all but five of the Company's psychiatric hospitals
generated sufficient revenues to cover their operating expenses. These five
hospitals had operating expenses in excess of revenues of $1.4 million, of which
$1.0 million was attributable to one facility.
Because of the industry factors described above, the Company's operating
margins declined to 20.4% and 19.8% in the second quarter and first six months,
respectively, of fiscal year 1994 from 22.8% and 22.0% in the second quarter and
first six months, respectively, of the prior year. Operating income (which is
defined as net revenue less operating expenses and bad debt expenses) was $43
million for the Company's second fiscal quarter ended March 31, 1994, compared
with $53 million in the comparable quarter in fiscal 1993. Operating income in
the fiscal quarter ended March 31, 1993 was approximately $2 million more than
operating income in the fiscal quarter ended March 31, 1994, due to the normal
settlement of reimbursement issues. The Company may continue to experience
reduced margins and fewer inpatient days when compared to prior periods. The
Company's intends further to increase its outpatient services and to enter
approximately 30 new markets in response to this trend.
Management believes that the Acquisition will assist the Company in
implementing its strategy by increasing the Company's size, market position and
geographical coverage. For example, the Acquisition will permit the Company to
enter 16 new markets, including markets in the mid-Atlantic and northeastern
United States. Management also believes that the introduction to the Target
Hospitals of Charter's operating and financial control systems, continuum of
care and marketing efforts will increase the utilization and profitability of
the Target Hospitals.
The Company generally has been able to increase the rates it charges
non-Medicare/Medicaid and certain non-managed care patients to cover increased
costs due to inflation. However, in recent years, Medicare and Medicaid payments
to hospitals have not kept pace with inflation. To the extent that inflation
continues, the Company will not be able to pass on the increased costs
associated with its Medicare/Medicaid patients unless federal and state
governments make corresponding increases in the reimbursement rates under these
programs, and the Company may not be able to pass on increased costs associated
with managed care patients due to private payor contractual limitations.
25
<PAGE>
The Company's business is seasonal in nature, with a reduced demand for
certain services generally occurring in the fourth quarter and around major
holidays, such as Thanksgiving and Christmas. The Company believes that business
in the entire behavioral healthcare industry is seasonal and, therefore, does
not expect the Acquisition to alter this aspect of the Company's business.
As of September 30, 1990, the Company operated 91 psychiatric hospitals and
12 general hospitals with an aggregate capacity of 9,798 licensed beds. During
fiscal years 1991, 1992, and 1993, and through March 31, 1994, the Company sold
eight psychiatric hospitals for a total of $42.7 million, leased two psychiatric
hospitals, with options to purchase by the lessees, and closed five psychiatric
hospitals. One of the closed hospitals was leased, and the lease was terminated;
the remaining four hospitals are held for sale or sublease. During fiscal year
1992, the Company closed one general hospital, and on September 30, 1993, it
sold ten general hospitals. As a result of these transactions, and the combining
into one facility of two psychiatric hospitals formerly licensed separately, the
Company operated 75 psychiatric hospitals as of March 31, 1994. The Company
leases one general hospital, which is managed by an unrelated third party. The
lease and management agreement expire in 1997.
The ten general hospitals were sold for approximately $338.0 million. The
Company retained the assets and liabilities for professional liability claims
incurred and cost report settlements for periods prior to September 30, 1993.
The results of operations of the general hospitals sold on September 30, 1993
have been reported as discontinued operations in the Company's financial
statements. Included in these amounts are net interest expenses related to debt
specifically identifiable as debt of the general hospitals. One of the ten
hospitals sold had previously been classified as a "non-core general hospital."
The results of operations of this hospital were not included in the consolidated
financial statements. For fiscal 1993, the core general hospitals had net
revenue of approximately $347 million and a net loss of approximately $15
million. The sale of the general hospitals has enabled the Company to
concentrate its efforts on behavioral healthcare systems. Additionally, the sale
of the general hospitals enabled the Company to reduce its long-term debt by
approximately $310.3 million.
During fiscal 1992, the Company filed a voluntary petition for relief
pursuant to Chapter 11 of the U.S. Bankruptcy Code. The Reorganization, which
became effective on July 21, 1992, resulted in a reduction of approximately $700
million principal amount of long-term debt and the elimination of redeemable
preferred stock having an aggregate liquidation preference of $233 million. The
Company accounted for the Reorganization by using the principles of fresh start
accounting, as required by AICPA Statement of Position 90-7, "Financial
Reporting by Entities in Reorganization Under the Bankruptcy Code." For
accounting purposes, the Company assumed that the Reorganization was consummated
on July 31, 1992. Under the principles of fresh start accounting, the Company's
total assets were recorded at their assumed reorganization value, with the
reorganization value allocated to identified tangible assets on the basis of
their estimated fair value at July 31, 1992. The excess of the reorganization
value over the value of identifiable assets is reported as "reorganization value
in excess of amounts allocable to identifiable assets."
Since consummation of the Reorganization in July 1992, the Company made
further reductions in its long-term debt of approximately $692.7 million as of
March 31, 1994. This debt reduction was made from the net proceeds from the sale
of the general hospitals ($310.3 million), sale of other assets ($27.3 million),
mandatory prepayments from excess cash ($108.6 million) and voluntary and
scheduled principal amortization ($246.5 million).
RESULTS OF OPERATIONS
The comparability of the Company's net revenue, operating expenses and bad
debt expense from continuing operations for fiscal years 1991 through 1993 was
not affected by the consummation of the Reorganization or the sale of the
general hospitals. During the fourth quarters of fiscal 1990 and 1991, the
Company recorded charges related to the estimated losses through estimated
disposal dates of hospitals that the Company planned to sell, lease or close
(the "Noncore Hospitals"). Accordingly, financial results presented in the
Company's consolidated financial statements for the fiscal years ended September
30, 1991, 1992 and 1993 and the six months ended March 31, 1993 and 1994, do not
include net revenue, operating expenses, bad debt expenses or depreciation and
amortization expense for the Noncore Hospitals.
26
<PAGE>
QUARTER AND SIX MONTHS ENDED MARCH 31, 1993 COMPARED TO QUARTER AND SIX
MONTHS ENDED MARCH 31, 1994. The selected statistics presented below are for
the "same store" core hospitals in operation at March 31, 1994.
<TABLE>
<CAPTION>
QUARTER ENDED MARCH 31, SIX MONTHS ENDED MARCH 31,
------------------------------------- -----------------------------------------
1993 1994 % CHANGE 1993 1994 % CHANGE
---------- ---------- ------------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Number of psychiatric hospitals.......... 75 75 -- 75 75 --
Average licensed beds.................... 7,016 6,975 (1) 7,008 6,980 --
Licensed bed days........................ 631,460 627,765 (1) 1,275,368 1,270,385 --
Total inpatient days (1)................. 353,709 329,267 (7) 692,903 649,931 (6)
Total equivalent outpatient days (2)..... 25,519 33,271 30 49,147 62,554 27
Total equivalent patient days............ 379,228 362,538 (4) 742,050 712,485 (4)
Occupancy rate (3)....................... 56.0% 52.5% (6) 54.3% 51.2% (6)
Admissions............................... 22,380 25,037 12 42,004 46,912 (12)
Average length of stay (days)............ 15.7 13.4 (15) 16.3 13.9 (15)
Psychiatric net revenue (in thousands)
(4)..................................... $ 217,954 $ 198,947 (9) $ 430,637 $ 397,076 (8)
Net revenue per equivalent patient day
(4)..................................... $ 575 $ 549 (5) $ 580 $ 557 (4)
<FN>
- ------------------------
(1) Provision of care to one inpatient for one day.
(2) Represents outpatient utilization computed by dividing gross outpatient
revenue by gross inpatient revenue per day.
(3) Inpatient days as a percentage of licensed bed days.
(4) Includes inpatient and outpatient revenue. Excludes revenue from
non-psychiatric operations.
</TABLE>
The Company had 329,267 patient days during the second quarter of fiscal
1994, a decrease of 24,442, or 7%, as compared to 353,709 for the same period of
fiscal 1993. The decrease in patient days occurred despite an increase of 2,657,
or 12%, in admissions from 22,380 in the second quarter of fiscal 1993 to 25,037
in the second quarter of fiscal 1994. The Company had 649,931 patient days
during the first six months of fiscal 1994, a decrease of 42,972, or 6%, as
compared to 692,903 for the same period of fiscal 1993. These decreases in
patient days were due primarily to a 15% decrease in the average length of stay
per patient caused primarily by increasingly stringent utilization criteria
imposed by third party payors regarding inpatient treatment. Admissions
increased 4,908, or 12%, from 42,004 in the first half of fiscal 1993 to 46,912
in the first half of fiscal 1994.
The Company's net revenue declined from $233,160,000 in the second quarter
of fiscal 1993 to $212,610,000 in the second quarter of fiscal 1994, a decrease
of $20,550,000 or 9%. Of this decrease, $2,950,000 related to three hospitals
which were closed during the last two quarters of fiscal 1993. The remaining
decline was related to the "same store" core hospitals in operation at March 31,
1993 and 1994. Net revenue at the "same store" core hospitals decreased from
$217,954,000 in the second quarter of fiscal 1993 to $198,947,000 in the second
quarter of fiscal 1994, a decline of $19,007,000 or 9%. Net revenue per
equivalent patient day also declined for the "same store" core hospitals from
$575 to $549, or 5%, for the same periods. The decline in net revenue was
offset, in part, by a $1,407,000 increase in revenue from non-psychiatric
operations, from $12,256,000 in the second quarter of fiscal 1993 to $13,663,000
in the second quarter of fiscal 1994. The Company's net revenue for the six
months ended March 31, 1994 declined from $459,550,000 for the same period in
fiscal 1993 to $421,427,000, a decrease of $38,123,000, or 8%. Of this decrease,
$8,048,000 related to the four hospitals closed during fiscal 1993 and the
removal of one hospital from the Noncore group which was previously held for
sale. The remaining decline related to the "same store" core hospitals. Net
revenue decreased $33,561,000, or 8%, from $430,637,000 for the six months ended
March 31, 1993, to $397,076,000 for the six months ended March 31, 1994. Net
revenue per equivalent patient day also decreased to $557 from $580, or 4%, for
the same periods. The declines in net revenue and net revenue per equivalent
patient day were due primarily to a shift in payor mix toward more Medicare,
Medicaid and other cost-based business. The decline in net revenue was offset,
in part, by a $3,486,000
27
<PAGE>
increase in net revenue from non-psychiatric operations, from $20,865,000 in the
first six months of fiscal 1993 to $24,351,000 in the first six months of fiscal
1994. The increase was primarily due to additional reserves established in
fiscal 1993 for uncollectible accounts.
The Company experienced a $10,466,000, or 6%, decrease in operating costs
other than bad debt expenses to $153,147,000 for the second quarter of fiscal
1994, as compared to $163,613,000 for the second quarter of fiscal 1993.
Operating costs other than bad debt expenses for the six months ended March 31,
1994 were $305,589,000 as compared to $323,367,000 for the six months ended
March 31, 1993, a decline of $17,778,000, or 5% due primarily to reductions in
salaries and benefits and other purchased services.
Bad debt expenses for the quarter ended March 31, 1994 decreased $334,000,
or 2%, to $16,159,000 from $16,493,000 for the same period of the previous
fiscal year. Bad debt expenses as a percentage of net revenue increased to 7.6%
in the second quarter of fiscal 1994 from 7.1% in the second quarter of fiscal
1993. Bad debt expenses for the six months ended March 31, 1994 decreased
$2,582,000, or 7%, to $32,288,000 from $34,870,000 for the same period of the
previous fiscal year. Bad debt expenses as a percentage of net revenue increased
to 7.7% in the first six months of fiscal 1994 from 7.6% in the first six months
of fiscal 1993.
Depreciation and amortization expense increased $269,000, or 4%, from
$6,635,000 in the second quarter of fiscal 1993 to $6,904,000 in the second
quarter of fiscal 1994 and decreased $223,000, or 2%, from $13,802,000 for the
six months ended March 31, 1993 to $13,579,000 for the six months ended March
31, 1994.
Reorganization value in excess of amounts allocable to identifiable assets
(the "Excess Reorganization Value") is being amortized over the three-year
period ending June 1995. During fiscal 1993, Excess Reorganization Value was
reduced by approximately $21 million to reflect the recognition of tax benefits
related to pre-Reorganization tax loss carry forwards, and accordingly
amortization expense for the Excess Reorganization Value decreased 27%, or
$2,950,000 to $7,800,000 from $10,750,000 for the second quarter of fiscal 1994
and 1993, respectively and decreased 27%, or $5,900,000, to $15,600,000 from
$21,500,000 for the six months ended March 31, 1994 and 1993, respectively.
Net interest expense for the quarter and six months ended March 31, 1994
decreased 54% and 55%, respectively, from the same periods of the previous
fiscal year, due to the debt reductions resulting from the sale of the general
hospitals, mandatory and voluntary prepayments and scheduled payments in fiscal
1993 and the first half of fiscal 1994.
ESOP expense for the second quarter of fiscal 1994 increased $3,335,000, or
37%, to $12,300,000 from $8,965,000 for the second quarter of fiscal 1993. ESOP
expense for the first half of fiscal 1994 also increased 37%, or $6,629,000, to
$24,599,000 from $17,970,000 for the first half of fiscal 1993. These increases
resulted primarily from changes in eligibility requirements, which increased the
number of employees who participate in the ESOP.
Stock option expense for the second quarter and first half of fiscal 1994
decreased from the same periods of the previous year due to a one-time charge
during the second quarter of fiscal 1993 of $21.3 million related to the vesting
of certain options held by a former employee and director. Under the terms of
the 1992 Stock Option Plan, upon the satisfaction of certain financial targets
and the termination of his employment, all of the employee's options vested
immediately and the option prices were reduced to $.25 per share. During
December 1993, the former employee and director exercised approximately 2.2
million options to purchase shares of the Company's common stock and surrendered
approximately 570,000 of such optioned shares as consideration for the payment
of required withholding taxes. As a result, the Company was required to make
withholding tax payments on behalf of the former employee of approximately $14.2
million which was charged against additional paid-in capital. This charge was
offset by a tax benefit recorded of approximately $9.4 million related to
additional stock option expense allowable for income tax purposes.
The financial and statistical data presented below for the fiscal years
ended September 30, 1991, 1992, and 1993 is "same store" data for the core
hospitals in operation as of September 30, 1993, and differs from amounts
reported above, amounts previously reported and amounts presented below under
"Business."
28
<PAGE>
SELECTED "SAME STORE" PSYCHIATRIC HOSPITAL OPERATING DATA
FISCAL YEAR ENDED SEPTEMBER 30
<TABLE>
<CAPTION>
1991 % CHANGE 1992 % CHANGE 1993 % CHANGE
-------------- ----------- -------------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Number of psychiatric hospitals..... 74 -- 74 -- 74 --
Average licensed beds............... 6,920 5 6,936 -- 6,938 --
Licensed bed days................... 2,525,900 5 2,538,524 1 2,532,464 --
Total inpatient days (1)............ 1,445,614 (10) 1,388,915 (4) 1,350,835 (3)
Total equivalent outpatient days
(2)................................ 54,948 24 75,345 37 106,263 41
Total equivalent patient days....... 1,500,562 (9) 1,464,260 (2) 1,457,098 (1)
Occupancy rate (3).................. 57.2% (14) 54.7% (4) 53.3% (3)
Admissions.......................... 70,565 6 78,597 11 85,158 8
Average length of stay (days)....... 20.4 (15) 17.8 (13) 15.8 (11)
Psychiatric net revenue (in
thousands) (4)..................... $ 810,451 1 $ 847,349 5 $ 838,775 (1)
Net revenue per equivalent patient
day (4)............................ $ 540 11 $ 579 7 $ 576 (1)
<FN>
- ------------------------------
(1) Provision of care to one inpatient for one day.
(2) Represents outpatient utilization computed by dividing gross outpatient
revenue by gross inpatient revenue per day.
(3) Inpatient days as a percentage of licensed bed days.
(4) Includes inpatient and outpatient revenue. Excludes revenue from
non-psychiatric operations.
</TABLE>
FISCAL 1992 COMPARED TO FISCAL 1993. The Company had 1,350,835 patient days
in fiscal 1993, a decrease of 38,080, or 3%, from 1,388,915 in fiscal 1992. The
decrease in patient days occurred despite an increase of 6,561, or 8%, in
admissions from 78,597 in fiscal 1992 to 85,158 in fiscal 1993. The decrease in
average length of stay was caused by stringent criteria regarding inpatient
treatment by payors and changes in program mix.
The Company's net revenue decreased $22,798,000, or 2%, from $920,705,000 in
fiscal 1992 to $897,907,000 in fiscal 1993. Of this decline, $13,410,000
resulted from the disposal of hospitals which were considered core hospitals in
fiscal 1992, and $814,000 was related to non-psychiatric operations. Net revenue
at the "same store" core hospitals in operation at September 30, 1993 decreased
to $838,775,000 in fiscal 1993 as compared to $847,349,000 for fiscal 1992, a
decrease of $8,574,000, or 1%. Net revenue per equivalent patient day also
decreased 1% in fiscal 1993 from $579 in fiscal 1992 to $576 in fiscal 1993. The
decreases were primarily the result of an increase in the percentage of business
the Company derived from Medicare and Medicaid patients during fiscal 1993. The
increase in Medicaid patients results primarily from certain state Medicaid
programs which have begun reimbursing for psychiatric coverages. The Company
believes the increase in Medicare patients results from new programs started in
certain markets for senior patients and from the general aging of the
population. Net revenue in 1993 includes approximately $8 million over the prior
year from the normal settlement of reimbursement issues. In fiscal 1993, gross
outpatient revenue increased 53% to $100,376,000 from $65,686,000 in fiscal
1992.
The Company's operating costs other than bad debt expenses declined from
$671,208,000 in fiscal 1992 to $640,847,000 in fiscal 1993, a decrease of
$30,361,000, or approximately 5%. The decrease in fiscal 1993 resulted primarily
from reductions in salaries and benefits and purchased services and the sale of
two facilities during the year. The reductions in salaries and benefits and
purchased services were the result of the Company's continued focus on
controlling its variable costs.
The Company's bad debt expense increased $2,093,000, or 3%, from $65,207,000
in fiscal 1992 to $67,300,000 in fiscal 1993. Bad debt expenses as a percentage
of net revenue were 7.5% for fiscal 1993. The Company anticipates future
increases in bad debt expenses due to increased deductibles and co-insurance and
reduced annual and lifetime psychiatric maximum payment limits for individual
patients, which will result in the Company not collecting full charges on an
increasing number of patients.
29
<PAGE>
Depreciation and amortization expense decreased $12,375,000, or 32%, in
fiscal 1993 from $38,757,000 in fiscal 1992 to $26,382,000 in fiscal 1993 due to
the writedown of depreciable property and equipment and the write-off of
deferred charges which occurred upon consummation of the Reorganization and the
implementation of fresh start accounting.
Net interest expense decreased $107,778,000, or 59%, in fiscal 1993 to
$74,156,000 as compared to $181,934,000 in fiscal 1992 due to the reduction of
debt upon consummation of the Reorganization and the significant debt reductions
which occurred since consummation of the Reorganization.
ESOP expense for fiscal 1993 increased $7,349,000, or 19% to $45,874,000 as
compared to $38,525,000 for fiscal 1992 due primarily to increased contributions
to the ESOP, which were required as a result of larger debt service requirements
in fiscal 1993. Also, the ESOP plan was amended to permit broader participation
in the plan which increased the number of employees eligible to receive an ESOP
contribution in calendar 1993.
Upon consummation of the Reorganization, the Company implemented the 1992
Stock Option Plan. A former employee and director of the Company was granted
options under the 1992 Stock Option Plan to purchase approximately 2.2 million
shares at exercise prices of either $4.36 per share or $9.60 per share. On March
4, 1993, all of the options issued to the former employee and director vested
and the option prices were reduced to $.25 per share, which resulted in the
Company recognizing approximately $21.3 million in additional stock option
expense during the second quarter of fiscal 1993. The remaining expenses related
to the 1992 Stock Option Plan were due to increases in the market price of the
underlying Common Stock and the impact of additional shares vesting in fiscal
1993.
As of September 30, 1993, the Company had estimated tax net operating loss
(NOL) carryforwards of approximately $171 million available to reduce future
federal taxable income. These NOL carryforwards expire in 2006 and 2007 and are
subject to examination by the Internal Revenue Service. Due to the ownership
change which occurred as a result of the Reorganization, the Company's
utilization of NOLs generated prior to the consummation of the Reorganization is
significantly limited. The Internal Revenue Service is currently examining the
Company's income tax returns for fiscal 1989 through 1992. Adjustments arising
from such examination could reduce or eliminate the NOL carryforwards. In
Management's opinion, adequate provisions have been made for any adjustments
which may result from such examinations.
The Company's tax provision in fiscal 1993 results primarily from the fact
that the amortization of reorganization value in excess of amounts allocable to
identifiable assets is not deductible for tax purposes.
FISCAL 1991 COMPARED TO FISCAL 1992. The Company had 1,388,915 patient days
in fiscal 1992, a decrease of 56,699, or 4%, as compared to 1,445,614 in fiscal
1991. The decrease in patient days occurred despite an increase of 8,032, or
11%, in admissions from 70,565 in fiscal 1991 to 78,597 in fiscal 1992. The
decrease in patient days was due primarily to a 13% decrease in the average
length of stay from 20.4 to 17.8 caused by changes in program mix and stringent
criteria regarding inpatient treatment by third-party payors.
Net revenue for the Company's hospitals increased to $920,705,000 in fiscal
1992 from $868,264,000 in fiscal 1991, for an increase of $52,441,000, or 6%.
Non-psychiatric net revenue increased $14,832,000 relating primarily to the
Company's general hospital which is operated by an unaffiliated third party.
Hospitals which were no longer in operation at September 30, 1993 accounted for
$711,000 of the increase. The net revenue for the Company's "same store" core
hospitals in operation at September 30, 1993 increased $36,898,000, or 5%, to
$847,349,000 in fiscal 1992 from $810,451,000 in fiscal 1991. Net revenue per
equivalent patient day for the "same store" hospitals increased from $540 in
fiscal 1991 to $579 in fiscal 1992, an increase of $39, or 7%, per equivalent
patient day. These increases were due to increases in hospital charges,
increases in outpatient revenue and approximately $12.3 million in normal
settlements of open reimbursement issues related to contractual and cost-based
programs.
The Company's operating costs other than bad debt expenses increased
$14,380,000, or approximately 2%, in fiscal 1992. The increase from $656,828,000
to $671,208,000 resulted primarily from increased salaries and benefits, supply
expenses and professional fees as a result of increased admissions in the
Company's hospitals.
The Company's bad debt expense increased $13,590,000, or 26%, in fiscal 1992
to $65,207,000 from $51,617,000. Bad debt expenses as a percentage of net
revenue were 7.1% for fiscal 1992.
30
<PAGE>
LIQUIDITY AND SOURCES OF CAPITAL
OPERATIONAL ACTIVITIES. During fiscal 1993, cash provided by operations
decreased approximately $25.3 million, due primarily to the normal settlement of
open reimbursement issues related to contractual and cost-based programs.
The number of days of net patient revenue in net patient accounts receivable
was 62 days at March 31, 1994 and 61 days at September 30, 1993.
Management believes that the Company will have adequate cash flow from
operations to fund its operations, capital expenditures and debt service
obligations over the next year. The Company had working capital deficiencies at
September 30, 1992 and 1993 and at March 31, 1994 due primarily to the retention
of liabilities for cost report settlements for the general hospitals sold on
September 30, 1993, and $19.5 million and $13.9 million of long-term debt
classified as current at September 30, 1992 and 1993, respectively, resulting
from mandatory payments made in October 1992 and 1993.
INVESTING ACTIVITIES. During fiscal 1993 and the first six months of fiscal
1994, the Company incurred approximately $11 million and $7 million,
respectively, in capital expenditures, primarily for routine capital
replacement. The Company also incurred expenditures of approximately $1.7
million for the acquisition of a business related to the implementation of the
Company's new growth and expansion strategy. The capital outlays were financed
from cash provided by operations. The Company anticipates that capital
expenditures for fiscal 1994 relating to existing hospitals will be
approximately $15 million. The Company also anticipates making capital
expenditures of approximately $7 million during fiscal 1994 and 1995 to renovate
certain of the Target Hospitals. The fiscal 1994 capital expenditures will be
financed from cash provided by operations or from borrowings pursuant to the New
Credit Agreement.
FINANCING ACTIVITIES. Since consummation of the Reorganization in July
1992, the Company has made reductions in its long-term debt of approximately
$692.7 million as of March 31, 1994. This debt reduction was made from a portion
of the net proceeds from the sale of the general hospitals ($310.3 million),
sale of other assets ($27.3 million), mandatory prepayments from excess cash
($108.6 million) and voluntary and scheduled payments ($246.5 million). Capital
expenditures have been funded from internally generated funds since the
Reorganization.
In connection with the Reorganization, the Company entered into the Old
Credit Agreement and issued the 7 1/2% Senior Subordinated Debentures. The Old
Credit Agreement and the indenture for the 7 1/2% Senior Subordinated Debentures
imposed severe restrictions on the Company's operations. The Old Credit
Agreement limited the Company to $15 million of additional indebtedness, other
than borrowings under the Old Credit Agreement. Other restrictions included
limitations on capital expenditures, payment of dividends on capital stock,
investments and sales of assets and stock of subsidiaries. On May 2, 1994, the
Company entered into the New Credit Agreement and issued the Old Notes. The net
proceeds from the sale of the Old Notes, together with borrowings pursuant to
the New Credit Agreement, were used to refinance the indebtedness outstanding
pursuant to the Old Credit Agreement, to retire the 7 1/2% Senior Subordinated
Debentures and to refinance certain existing mortgage indebtedness of certain of
the subsidiaries of the Company. See "Use of Proceeds."
The Company expects to obtain increased operational and financial
flexibility as a result of entering into the New Credit Agreement and issuing
the Old Notes because the covenants contained in the New Credit Agreement and
the Indenture for the Old Notes (which Indenture will also govern the New Notes)
are less restrictive than those formerly in effect. However, the New Credit
Agreement and the Indenture for the Old Notes contain a number of restrictive
covenants, which, among other things, limit the ability of the Company and its
Restricted Subsidiaries to incur other indebtedness, engage in transactions with
affiliates, incur liens, make certain restricted payments, and enter into
certain business combination and asset sale transactions. The New Credit
Agreement also limits the Company's ability to incur capital expenditures and
requires the Company to maintain certain specified financial ratios. A failure
by the Company to maintain such financial ratios or to comply with the
restrictions contained in the New Credit Agreement, the Indenture for the Old
Notes or other agreements relating to the Company's debt could cause such
indebtedness (and by reason of cross-acceleration provisions, other
indebtedness) to become immediately due and payable. See "Description of the New
Notes"; "Summary of New Credit Agreement." There are no restrictions on the
ability of the Guarantors to make distributions to the Company.
31
<PAGE>
BUSINESS
GENERAL
Charter Medical Corporation ("Charter" or the "Company") is a leading
private provider of behavioral healthcare services and one of the largest owners
and operators of private psychiatric hospitals in the United States. As of March
31, 1994, the Company operated 73 psychiatric hospitals and two free-standing
residential treatment centers with an aggregate capacity of 6,970 licensed beds.
In addition, the Company operates 120 outpatient centers staffed by behavioral
health professionals, 68 of the Company's hospitals operate partial
hospitalization programs, 40 of the Company's hospitals operate intensive
outpatient programs, and 14 hospitals operate residential treatment programs.
The Company uses the term "psychiatric hospitals" or "hospitals" to refer to
facilities licensed as acute care psychiatric hospitals and facilities licensed
as residential treatment centers. A residential treatment center offers less
intensive and longer stay services than do acute care psychiatric hospitals. The
Company will acquire 36 psychiatric hospitals, eight chemical-dependency
treatment facilities, two residential treatment centers and one physician
outpatient practice from NME in connection with the Acquisition. A
chemical-dependency treatment facility is a hospital that is licensed to treat
only substance abuse patients. The Acquisition will increase the number of
behavioral healthcare facilities operated by the Company to 121, with an
aggregate capacity of 10,466 licensed beds.
Management believes that the Acquisition will assist the Company in
implementing its strategy by increasing the Company's size, market position and
geographic coverage. For example, the Acquisition will permit the Company to
enter 16 new markets, including markets in the mid-Atlantic and northeastern
United States. Management also believes that the introduction to the Target
Hospitals of Charter's operating and financial control systems, continuum of
care and marketing efforts, will increase the utilization and profitability of
the Target Hospitals.
INDUSTRY OVERVIEW
According to industry and government estimates, mental disorders affect
approximately 40 million American adults (22% of the adult population) each
year. Severe mental disorders, such as schizophrenia, manic depressive illness
and severe depression, affect approximately five million people (2.8% of the
adult population). Substance abuse disorders affect approximately 17 million
adults (9.5% of the adult population). Smaller percentages of adolescents suffer
from mental or substance abuse disorders. Only a relatively small percentage,
15%, of the adults who suffer from mental or substance abuse disorders receive
professional treatment. Direct expenditures in 1990, the latest year for which
data are available, for treatment of persons suffering from mental and substance
abuse disorders were approximately $67 billion.
Management believes that demand for behavioral healthcare services should
increase commensurate with the increase in the percentage of persons who seek
treatment for their behavioral health disorders. Management anticipates that the
percentage of persons who seek treatment will increase because of a continuing
decline in the social stigma associated with behavioral disorders and a growing
recognition by the government and employers of the indirect costs (such as lost
productivity, work and vehicular accidents, and social welfare costs) of failing
to treat such disorders. Management further believes that direct expenditures to
private providers (including clinicians and hospitals) will increase as overall
demand for behavioral healthcare services increases. Because of the requirement
for cost-effective delivery of behavioral healthcare services, partial
hospitalization and outpatient treatment should increasingly serve as
alternatives to traditional inpatient treatment.
HOSPITAL OPERATIONS
The Company's psychiatric hospitals are primarily located in well-populated
urban and suburban locations in 26 primarily southern and western states in the
United States. Fifteen of the Company's hospitals are affiliated with medical
schools for residency and other post-graduate teaching programs. The Target
Hospitals are located in 20 states. The Company does not currently operate
psychiatric hospitals in five of these states: Colorado, Maryland, Minnesota,
New Hampshire and New Jersey.
32
<PAGE>
The financial and statistical results from operations of the Noncore
Hospitals for fiscal years 1991, 1992 and 1993 are not included in the Company's
consolidated financial statements or the following table.
<TABLE>
<CAPTION>
SELECTED PSYCHIATRIC HOSPITAL OPERATING DATA (1)
FISCAL YEAR ENDED SEPTEMBER 30,
------------------------------------------------------------------
1989 1990 1991 1992 1993
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Number of psychiatric hospitals......... 80 91 80 79 74
Average licensed beds................... 6,683 7,660 7,284 7,288 7,145
Licensed bed days....................... 2,439,247 2,795,793 2,658,760 2,667,428 2,607,996
Total inpatient days (2)................ 1,735,478 1,768,387 1,494,844 1,430,815 1,373,835
Total equivalent outpatient days (3).... 38,321 50,247 56,336 77,901 107,386
Total equivalent patient days........... 1,773,799 1,818,634 1,551,180 1,508,716 1,481,221
Occupancy Rate (4)...................... 71.1% 63.3% 56.2% 53.6% 52.7%
Admissions.............................. 66,042 74,254 73,120 81,311 86,794
Average Length of Stay (Days)........... 26.3 23.7 20.4 17.8 15.8
Psychiatric net revenue (in thousands)
(5).................................... $846,938 $893,105 $838,167 $875,776 $853,792
Net revenue per equivalent patient day
(5).................................... $477 $491 $540 $580 $576
<FN>
- ------------------------
(1) For fiscal 1989 and 1990, the Selected Psychiatric Hospital Operating Data
includes financial or statistical data for the Noncore Hospitals.
(2) Provision of care to one inpatient for one day.
(3) Represents outpatient utilization, computed by dividing gross outpatient
revenue by gross inpatient revenue per day.
(4) Inpatient days as a percentage of licensed bed days.
(5) Includes inpatient and outpatient revenue. Excludes revenue from
non-psychiatric operations.
</TABLE>
The Company's facilities provide a continuum of behavioral care for
children, adolescents and adults in their service area. These services include
crisis stabilization; acute psychiatric services; acute chemical dependency
services; partial (day and evening) hospitalization programs; intensive
adolescent weekend services; outpatient services; support group services and
aftercare, including programs such as ALCOHOLICS ANONYMOUS, NARCOTICS ANONYMOUS
and OVEREATERS ANONYMOUS; and residential treatment. A typical treatment program
of the Company integrates physicians and other patient-care professionals, and,
for those patients who do not have a personal psychiatrist or other specialist,
the hospital refers the patient to a member of its medical staff.
A significant portion of psychiatric hospital admissions are provided by
physician referrals, and physician relationships are an important aspect of the
Company's ongoing business. Management believes that the quality of the
Company's treatment programs, staff employees and physical facilities are
important factors in maintaining good physician relationships.
The Company's hospitals work closely with mental health professionals,
non-psychiatric physicians, emergency rooms and community agencies that come in
contact with individuals who may need treatment for mental illness or substance
abuse. The Company's marketing efforts are directed at increasing general
awareness of mental health and addictive disease and the services offered by the
Company's hospitals.
SEASONALITY
The Company's business is seasonal in nature, with a reduced demand for
certain services generally occurring in the fourth fiscal quarter and around
major holidays, such as Thanksgiving and Christmas. The Company believes that
business in the entire behavioral healthcare industry is seasonal and,
therefore, does not expect the Acquisition to alter this aspect of the Company's
business.
COMPETITION
Each of the Company's hospitals competes with other hospitals, including
psychiatric hospitals and general hospitals that have psychiatric units. Some of
these hospitals are larger and have greater financial resources. Some competing
hospitals are owned and operated by governmental agencies, others by nonprofit
organizations supported by endowments and charitable contributions and others by
proprietary hospital corporations. Psychiatric hospitals frequently draw
patients from areas outside their immediate locale and,
33
<PAGE>
therefore, the Company's psychiatric hospitals may, in certain markets, compete
with both local and more distant hospitals. The competitive position of a
hospital is, to a significant degree, dependent upon the number and quality of
physicians who practice at the hospital and who are members of its medical
staff.
In order to deliver cost-effective behavioral healthcare services, most of
the Company's hospitals provide a range of alternatives to traditional inpatient
treatment, including day hospitalization and on-and off-campus outpatient
services. These alternative services may compete with private practicing mental
health professionals and, in certain markets, with non-hospital facilities that
provide full-and part-day outpatient treatment.
In recent years, the competitive position of hospitals has been affected by
the ability of such hospitals to obtain contracts with Preferred Provider
Organizations ("PPO's"), Health Maintenance Organizations ("HMO's") and other
managed care programs to provide inpatient and other services. Such contracts
normally involve a discount from the hospital's established charges, but provide
a base of patient referrals. These contracts also frequently provide for
pre-admission certification and for concurrent length of stay reviews. The
importance of obtaining contracts with HMO's and PPO's varies from
market-to-market, depending on the individual market strength of the HMO's and
PPO's.
State certificate of need laws place limitations on the Company's and its
competitors' ability to build new hospitals and to expand existing hospitals.
Protection from new competition is reduced in those states where there is no
certificate of need law. The Company operates 36 hospitals in 11 states
(Arizona, Arkansas, California, Indiana, Kansas, Louisiana, Nevada, New Mexico,
South Dakota, Texas and Utah) which do not have certificate of need laws
applicable to hospitals. Sixteen of the Target Hospitals are in seven states
(Arizona, Arkansas, California, Colorado, Indiana, Louisiana and Texas) which do
not have certificate of need laws applicable to hospitals.
INDUSTRY TRENDS
The Company's psychiatric hospitals have been adversely affected by factors
influencing the entire psychiatric hospital industry. Factors which affect the
Company include (i) the imposition of more stringent length of stay and
admission criteria by non-governmental insurance and other healthcare benefit
programs; (ii) the failure of reimbursement rate increases from certain
third-party payors that reimburse on a per diem or other discounted basis to
offset increases in the cost of providing services; (iii) an increase in the
percentage of its business that the Company derives from third-party payors that
reimburse on a per diem or other discounted basis; (iv) a trend toward higher
deductibles and co-insurance for individual patients; (v) a trend toward
limiting employee health benefits, such as reductions in annual and lifetime
limits on mental health coverage; and (vi) a trend toward agreements with payors
where the Company agrees to assume the risk for the provision of treatment to
all members of a particular group for a specified revenue amount. In response to
these industry trends, the Company (i) developed a wider array of outpatient
services, such as partial hospitalization and intensive outpatient programs;
(ii) decentralized hospital management to increase the Company's responsiveness
to local market conditions; (iii) pursued joint ventures and affiliations with
other healthcare providers; and (iv) implemented more efficient operating
expense controls.
The Company's strategy is to become a nationwide integrated provider of
high-quality, cost-effective behavioral healthcare services. To implement this
strategy, management intends to expand the Company's partial hospitalization and
outpatient programs in its existing markets and to enter approximately 30 new
markets in the United States and Europe. Management also is seeking additional
strategic alliances with, and additional acquisitions of, group psychiatric
practices, mental health clinics, other behavioral healthcare providers and
behavioral managed-care firms. Management believes that this strategy will
enhance the Company's ability to obtain nationwide, area-wide and local
contracts to be the exclusive or a preferred provider of behavioral healthcare
services to major employers, third-party payors and managed-care firms.
HEALTHCARE REFORM
On October 27, 1993, President Clinton submitted to Congress the
Administration's Proposal for comprehensive healthcare reform legislation. At
present, six other comprehensive reform proposals have been introduced in the
Congress, several of which are likely to be viewed by Congress as significant
34
<PAGE>
alternatives to the Administration's Proposal. A central component of the
Administration's Proposal is the restructuring of health insurance markets
through the use of "managed competition." Under the Administration's Proposal,
states would be required to establish regional purchasing cooperatives, known as
"regional alliances," that would be the exclusive source of insurance coverage
for individuals and employers with less than 5,000 employees. All employers
would be required to make available such coverage to their employees and
contribute 80% of the premium, and all individuals would be required to enroll
in an approved health plan. Regional alliances would contract with health plans
that demonstrate an ability to provide consumers with a broad range of benefits,
including hospital services. The federal government would provide subsidies to
low income individuals and certain small businesses to help pay for the cost of
coverage. These subsidies and other costs of the Administration's Proposal would
be funded in significant part by reductions in payments by the federal Medicare
and Medicaid programs to providers, including hospitals. The Administration's
Proposal would also place stringent limits on the annual growth in health-plan
insurance premiums.
Certain aspects of the Administration's Proposal, such as reductions in
Medicare and Medicaid payments, if adopted, could adversely affect the Company's
business. In fiscal 1992 and 1993, the Company obtained 29% and 38%,
respectively, of its gross psychiatric patient service revenue from the Medicare
and Medicaid programs. Other aspects of the Administration's Proposal, such as
universal health insurance coverage, could have a positive impact on the
Company's business by reducing the amount of uncompensated care provided by the
Company's hospitals. No assurance can be given that any reform proposal will be
adopted or implemented or that any reform proposal which is ultimately adopted
will not have a material adverse effect on the Company's financial condition and
results of operations.
In addition to the Administration's Proposal and other federal reform
initiatives, state legislatures also have undertaken healthcare reform
initiatives independent of federal reform. The States of Maine, Florida,
California and Washington have adopted legislation based on managed competition.
It is not possible at this time to predict what, if any, reforms will be adopted
by the states, or when such reforms will be adopted and implemented. No
assurance can be given that any such reforms will not have a material adverse
effect upon the Company's revenues and earnings or upon the demand for the
Company's services.
SOURCES OF REVENUE
Payments are made to the Company's hospitals by patients, by various
insuring organizations (including self-insured employers), by the federal and
state governments under Medicare, Medicaid, CHAMPUS and other programs, and by
HMO's, PPO's and other managed care programs. Amounts received under government
programs, HMO, PPO and other managed care arrangements, certain self-insured
employers and certain Blue Cross plans are generally less than the hospital's
established charges. The approximate percentages of gross patient revenue (which
is revenue before deducting contractual allowances and discounts from
established billing rates) derived by the Company's psychiatric hospitals from
various payment sources for the last three fiscal years were as follows:
PERCENTAGE OF HOSPITAL GROSS REVENUE
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED SEPTEMBER ENDED
30, MARCH 31,
---------------------- -----------------
1991 1992 1993 1993 1994
---- ---- ---- ------ ------
<S> <C> <C> <C> <C> <C>
Medicare.......................................... 14% 18% 23% 21% 26%
Medicaid.......................................... 8 11 15 14 16
---- ---- ---- ------ ------
22 29 38 35 42
HMO's and PPO's................................... 6 9 11 11 14
CHAMPUS........................................... 8 6 6 7 5
Other (primarily Blue Cross and Commercial
Insurance)....................................... 64 56 45 47 39
---- ---- ---- ------ ------
Total........................................... 100% 100% 100% 100% 100%
---- ---- ---- ------ ------
---- ---- ---- ------ ------
</TABLE>
35
<PAGE>
The Company does not expect its current payor mix to be altered
significantly as a result of the Acquisition.
Most private insurance carriers reimburse their policyholders or make direct
payments to the hospitals for charges at rates specified in their policies. The
patient remains responsible to the hospital for any difference between the
insurance proceeds and the total charges. Certain Blue Cross programs have
negotiated reimbursement rates with certain of the Company's hospitals which are
less than the hospital's charges.
Most of the Company's hospitals have entered into contracts with HMO's,
PPO's, certain self-insured employers and other managed care plans which provide
for reimbursement at rates less than the hospital's normal charges. In addition
to contracts entered into by individual hospitals with such managed care plans,
the Company has entered into regional and national contracts with HMO's, PPO's,
self-insured employers and other managed care plans that apply to all of the
Company's hospitals in the geographic areas covered by a contract. The Company
is seeking to obtain additional regional and national contracts. The Company
expects its percentage of revenue from these payor sources to increase in the
future. The Company believes that the Acquisition will assist the Company to
obtain additional regional and national contracts by expanding the areas the
Company serves.
The Medicare program has changed significantly during the past years, and
these changes have had and will continue to have significant effects on the
Company's hospitals. Under the Medicare provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 ("TEFRA"), costs per Medicare case are determined for
each of the Company's psychiatric hospitals. A target cost per case is
established for each year (the "Target Rate"). If a hospital's costs per case
are less than the Target Rate, the hospital receives a bonus of 50% of the
difference between its actual costs per case and the Target Rate (limited to 5%
of the Target Rate). These limits apply only to operating costs and do not apply
to capital costs, including lease expense, depreciation and interest associated
with capital expenditures. For cost reporting years that began prior to October
1, 1991, reimbursement was generally limited to the Target Rate. Effective for
cost reporting years which began on or after October 1, 1991, hospitals with
costs which exceed the Target Rate are paid an additional amount equal to 50% of
the excess, up to 10% of the Target Rate. The Target Rate for each hospital is
increased annually by the application of an "update factor" published in
regulations and/or legislation.
Most of the Company's hospitals participate in state operated Medicaid
programs. Federal guidelines prohibit Medicaid funding for inpatient services
within freestanding psychiatric hospitals for patients between the ages of 21
and 64. Each state government is responsible for establishing the Medicaid
eligibility and coverage criteria, payment methodology and funding mechanisms
which apply in that state, subject to federal guidelines. Accordingly, the level
of Medicaid payments received by the Company's hospitals varies from state to
state. In addition to the basic payment level for patient care, several state
programs include a financial benefit for hospitals which treat a
disproportionately large volume of Medicaid patients as a percentage of the
total patient population. These "disproportionate share" benefits are subject to
annual review and revision by the related state governments and could be
substantially reduced or eliminated at any point in the future. The Omnibus
Budget Reconciliation Act of 1993 ("OBRA 93") prohibits disproportionate share
payments to hospitals which have a Medicaid utilization rate of less than 1%
effective for state fiscal years ending in 1994. Beginning in state fiscal years
ending in 1995, the amount of disproportionate share payments each hospital can
receive will be limited through the use of formulas based generally on the cost
of providing services to Medicaid and uninsured patients. The Administration's
Proposal would eliminate Medicaid disproportionate share payments. The Company
received approximately $1 million, $13 million and $15 million in Medicaid
disproportionate share payments in fiscal 1991, 1992 and 1993, respectively.
Within the statutory framework of the Medicare and Medicaid programs, there
are substantial areas subject to administrative rulings and interpretations
which may affect payments made under either or both of such programs. In
addition, federal or state governments could reduce the future funds available
under such programs or adopt additional restrictions on admissions and more
stringent requirements for utilization of services. These types of measures
could adversely affect the Company's operations. Although the Target Rates have
been increased annually, the Company does not believe these increases have been
36
<PAGE>
sufficient to offset inflation in hospital operating costs. Final determination
of amounts payable under Medicare and certain Medicaid programs are subject to
review and audit. The Company's management believes that adequate provisions
have been made for any adjustments that might result from such reviews or
audits.
Most of the Company's hospitals receive revenues from the CHAMPUS program.
CHAMPUS provides payment for civilian medical services rendered to military
dependents and retired military personnel. Effective January 1, 1989, CHAMPUS
changed its method of reimbursing providers for drug and alcohol treatment
services and inpatient psychiatric services. After that date, psychiatric
hospitals were classified into two groups, each with different payment methods.
The first group, classified as high volume CHAMPUS hospitals, are those
hospitals with 25 or more CHAMPUS discharges during federal fiscal year 1988 or
any fiscal year thereafter. (The Company has 52 hospitals included within this
group.) These hospitals receive a per diem payment, subject to a limitation of
$672 per day. The remainder of the Company's psychiatric hospitals are
classified as low volume CHAMPUS hospitals. These hospitals receive a per diem
based on a wage-adjusted regional rate.
Effective October 1, 1991, CHAMPUS patients became subject to annual limits
on the number of psychiatric days covered by the CHAMPUS program. Covered
inpatient services are generally limited to 30 days for adult acute patients, 45
days for child and adolescent acute patients, and 150 days for residential
treatment center patients. These limits have reduced the revenue the Company
receives from the CHAMPUS program.
The Company's Medicare revenue has been and may in the future be reduced
under the Balanced Budget and Emergency Deficit Control Act of 1985, as amended
by The Budget Enforcement Act of 1990 and OBRA 93 (the "Budget Acts"). These
laws remain in effect through fiscal year 1998, and require that federal
spending automatically be reduced in amounts determined by calculations set out
in the Budget Acts, if certain requirements relating to the amount of the
federal deficit are not met. Under the Budget Acts, Medicare expenditures for a
fiscal year can be reduced by no more than 4%. Medicaid funding is exempt from
reductions under the Budget Acts. There were no reductions in fiscal 1991, 1992
or 1993. Payment reductions under the Budget Acts, if implemented in future
years, could have a material adverse effect on the Company's net revenue.
However, because the actual amount of the reduction for any fiscal year may vary
according to the federal deficit, the financial impact of the Budget Acts on the
Company cannot be predicted.
REGULATION AND OTHER FACTORS
Operations of hospitals are subject to substantial federal, state and local
government regulation. Such regulations provide for periodic inspections or
other reviews by state agencies, the United States Department of Health and
Human Services (the "Department") and CHAMPUS to determine compliance with their
respective standards of medical care, staffing, equipment and cleanliness
necessary for continued licensing or participation in the Medicare, Medicaid or
CHAMPUS programs. The admission and treatment of patients at the Company's
psychiatric hospitals are also subject to substantial state regulation and to
federal regulation relating to confidentiality of medical records of drug and
alcohol abuse patients.
The obtaining of approvals for construction of new hospitals and for
renovation of and additions to existing hospitals is subject to various
governmental requirements, such as approval of sites and findings of community
need for additional hospital facilities and services. In addition, in certain
states, as a practical matter, it is necessary to pledge to provide various
amounts of uncompensated care to indigent persons in order to obtain a
certificate of need. Except for Arizona, Arkansas, California, Colorado,
Indiana, Kansas, Louisiana, Nevada, New Mexico, South Dakota, Texas and Utah,
all the states in which the Company presently operates hospitals or will operate
a hospital following the Acquisition have adopted certificate of need or similar
statutes. A certificate of need is issued for a specific maximum expenditure and
the holder is required to complete the approved project within a specified time
period.
Federal law contains numerous provisions designed to insure that services
rendered by hospitals to Medicare and Medicaid patients are medically necessary
and are of a quality which meets professionally
37
<PAGE>
recognized standards and to insure that claims for reimbursement under the
Medicare and Medicaid programs are properly filed. Among other things, services
provided at the Company's hospitals are subject to periodic review by Peer
Review Organizations ("PRO's"). All hospitals which participate in the Medicare
program are subject to review by PRO's. PRO activities include reviews of
certain admissions and services to determine medical necessity and to determine
whether quality of care meets professionally recognized standards. PRO's have
the authority to recommend to the Department that a provider who is in
substantial noncompliance with the medical necessity and quality of care
standards of a PRO or who has grossly and flagrantly violated an obligation to
render quality care be excluded from participation in the Medicare program or be
required to reimburse the federal government for certain payments previously
made to the provider under the Medicare program.
The Company's psychiatric hospitals have been subject to and have complied
with various forms of utilization review since 1970. The Company has implemented
a quality assurance program in each of its hospitals, which includes procedures
for utilization review and retrospective patient care evaluation.
The Medicare and Medicaid Patient and Program Protection Act of 1987
expanded the authority of the Department to exclude from participation in the
Medicare and Medicaid programs those hospitals which engage in defined
prohibited activities. The Department is required under this Act to exclude from
participation in the Medicare and Medicaid programs any individual or entity
that has been convicted of a criminal offense relating to the delivery of
services under Medicare and Medicaid or to the neglect or abuse of patients. In
addition, the Department has authority to exclude from participation in the
Medicare program individuals or hospitals under certain other circumstances.
These include engaging in illegal remuneration arrangements with physicians and
other healthcare providers, license revocation, exclusion from some other
government programs (such as CHAMPUS), filing claims for excess charges or for
unnecessary services, failure to comply with conditions of participation and
failure to disclose certain required information or to grant proper access to
hospital books and records.
The Department has authority to impose civil monetary penalties against any
participant in the Medicare program which makes claims for payment for services
which were not rendered or were rendered by a person or entity not properly
licensed under state law. The Department also has authority to impose a penalty
of not more than $2,000 for each improperly claimed service and an assessment
equal to not more than twice the amount claimed for each service not rendered.
Federal law makes it a felony, subject to certain exceptions, for a hospital
to make false statements relating to claims for payments under the Medicare
program, to engage in illegal remuneration arrangements with physicians and
other healthcare providers, to make false statements relating to compliance with
the Medicare conditions of participation, or to make false claims for Medicare
or Medicaid payments. A number of states have adopted laws that also make
illegal under state law certain remuneration and referral arrangements with
physicians and other healthcare providers.
The laws of certain states prohibit the corporate practice of medicine and
limit the scope of relationships between medical practitioners and other
parties. Such laws will apply to the Company's acquisition of group psychiatric
practices in such states. Under such laws, the Company is prohibited from
practicing medicine or exercising control over the provision of medical
services. Accordingly, the Company intends to enter into management agreements
that will delegate to the Company the performance of administrative management
and support functions which are required by physicians. The Company believes
that the services it intends to provide to such group practices will not
constitute the corporate practice of medicine under applicable state laws.
In order to provide guidance to healthcare providers with respect to the
statute that makes certain remuneration arrangements between hospitals and
physicians and other healthcare providers illegal, the Department, in 1991 and
1992, issued final regulations outlining certain "safe harbor" practices, which,
although potentially capable of inducing prohibited referrals of business, would
not be subject to enforcement action under the illegal remuneration statute. The
practices covered by the regulations include certain investment transactions,
lease of space and equipment, personal services and management contracts,
certain managed care contracts, sales of physician practices, referral services,
warranties, discounts, payments to
38
<PAGE>
employees, group purchasing organizations and waivers of beneficiary deductibles
and co-payments. Additional proposed safe harbors were published in 1993 by the
Department. Certain transactions and agreements of the Company do not satisfy
all the applicable criteria contained in the final and proposed safe harbor
regulations that relate to such transactions and agreements. However, the
Company believes that such transactions and agreements do not violate the
statute that makes certain remuneration arrangements illegal. There can be no
assurance that (i) government enforcement agencies will not assert that certain
of these arrangements are in violation of the illegal remuneration statute or
(ii) the statute will ultimately be interpreted by the courts in a manner
consistent with the Company's practices.
In 1989, Congress passed the Ethics in Patient Referrals Act of 1989,
commonly referred to as the Stark Bill ("Stark I"). Stark I prohibited a
physician from making a referral for clinical laboratory services for which
payment may be made under Medicare, if the physician has a "financial
relationship" with the entity to which the patient is referred. Prohibited
financial relationships include both ownership and compensation arrangements,
but are subject to several exceptions contained in such Act and its implementing
regulations. On August 7, 1993, President Clinton signed the Physician Ownership
and Referral Act of 1993 ("Stark II"), which expands the list of facilities and
services to which Stark I applies, covering virtually all medical services
except physician care. Stark II also extends the prohibition to include services
reimbursed under Medicaid in addition to Medicare. Stark II extends the
statutory provisions to the following services: inpatient and outpatient
hospital services, radiology and other diagnostic services, radiation therapy,
durable medical equipment, physical and occupational therapy, parenteral and
enteral nutrition equipment and supplies, prosthetics and orthotics, home health
services, and outpatient prescription drugs. The Act provides for civil
sanctions in the event of a violation, including possible exclusion from the
Medicare and Medicaid programs. The limitations or referrals contained in Stark
II will become effective on January 1, 1995. Regulations implementing the
statute are expected to be issued later in 1994.
In 1989, CHAMPUS adopted regulations authorizing CHAMPUS to exclude from the
CHAMPUS program any provider who has committed fraud or engaged in abusive
practices. The regulations permit CHAMPUS to make its own determination of
abusive practices without reliance on any actions of the Department. The term
"abusive practices" is defined broadly to include, among other things, the
provision of medically unnecessary services, the provision of care of inferior
quality, and the failure to maintain adequate medical or financial records.
A number of states have adopted hospital rate review legislation, which
generally provides for state regulation of rates charged for various hospital
services. Such laws are in effect in the states of Florida, Maryland and
Wisconsin. The Company operates seven hospitals and five of the Target Hospitals
are located in Florida. In Florida, the Health Care Board approves a budget for
each hospital, which establishes a permitted level of revenues per discharge. If
this level of permitted revenues per discharge is exceeded by a hospital in a
particular year by more than a specified amount, certain penalties, including
cash penalties, can be imposed. Six Target Hospitals are in Maryland. The
Maryland Health Services Cost Review Commission establishes all rates for one of
such hospitals. One Target Hospital is in Wisconsin, in which rates are reviewed
through the certificate-of-need process and rate hearings are subject to local
public hearing requirements.
In addition to hospital rate review legislation, a number of states have
adopted or are considering state healthcare reform legislation generally
designed (a) to reduce healthcare costs and insurance premiums and (b) to
mandate or encourage universal health coverage. These state legislative
initiatives contain a variety of mechanisms to achieve their goals, including
formation of purchasing cooperatives, generally similar to the "managed
competition" proposals pending in Congress.
The Company's acquisition of group practices will also be subject to federal
legislation which prohibits activities and arrangements which are designed to
provide kickbacks or to induce the referral of business under Medicare and
Medicaid programs. Many states have similar laws more broadly prohibiting
kickbacks for the referral of any medically related business. Noncompliance with
the federal anti-kickback legislation can result in exclusion from Medicare
programs and civil and criminal penalties. Civil and criminal penalties are
provided for violations of state anti-kickback laws.
39
<PAGE>
Statutes and regulations in effect in states other than those in which the
Company presently does business may impose requirements on the opening and
operation of facilities that are more burdensome than those imposed in states in
which the Company currently does business. There can be no assurance that the
Company will be able to comply with any such requirements, and, as a result, the
expansion of the Company's business into certain other states may be limited.
MEDICAL STAFFS AND EMPLOYEES
At September 30, 1993, approximately 1,200 licensed physicians were active
members of the medical staffs of the Company's hospitals. Many of these
physicians also serve on the medical staffs of other hospitals. A number of
these physicians serve in administrative capacities in the Company's hospitals.
Most of these physicians are independent contractors who have private practices
in addition to their duties for the Company, while certain of these physicians
are employees of the Company. The medical and professional affairs of each
hospital are supervised by the medical staff of the hospital, under the control
of its board of trustees. The Company recruits physicians to serve in
administrative capacities at psychiatric hospitals and to engage in private
practice in communities where the Company's hospitals are located. The Company's
agreements with recruited physicians generally provide for, among other things,
reimbursement of relocation and office startup expenses and a guarantee of a
specified level of physician income during the recruited physician's first year
of practice.
Registered nurses and certain other hospital employees are required to be
licensed under the professional licensing laws of most states. The Company's
hospital subsidiaries require such employees to maintain such professional
licenses as a condition of employment.
At September 30, 1993, the Company had approximately 6,400 full-time and
1,900 part-time employees. The Acquisition will increase the number of the
Company's full-time employees by approximately 3,700 and the number of its
part-time employees by approximately 2,900. The Company's hospitals have had
generally satisfactory labor relations. They have, like most hospitals,
experienced a high turnover among their hourly-paid employees and nurses and
also experienced rising labor costs. In common with most hospitals, the
Company's hospitals in recent years have experienced difficulty in recruiting
and retaining registered nurses.
LIABILITY INSURANCE
Effective June 1, 1993, Plymouth Insurance Company, Ltd. ("Plymouth"), a
wholly-owned Bermuda subsidiary of the Company, provides $25 million per
occurrence general and hospital professional liability insurance for the
Company's hospitals, including professional liability claims for occurrences
prior to September 30, 1993, relating to the general hospitals sold on that
date. For general hospitals the insurance coverage is subject to a $1.5 million
deductible per occurrence. Effective for the policy year beginning on June 1,
1993, the Company eliminated its self-insurance deductible for psychiatric
hospitals. Between 80% and 100% of the risk of losses from $1.5 million to $25
million per occurrence has been insured or reinsured with unaffiliated insurers;
and the percentage so insured varies by layer. The Company also insures with an
unaffiliated insurer 100% of the risk of losses between $25 million and $100
million per occurrence. The Company's general and professional liability
coverage is written on a "claims made or circumstances reported" basis.
For the five years from June 1, 1988, through May 31, 1993, the Company had
a similar general and hospital professional liability insurance program. For
those years, the per occurrence deductible for psychiatric and general hospitals
(with respect to which the Company was self-insured) was $3 million for the year
ended May 31, 1989, $2.5 million for the years ended May 31, 1990 and 1991 and
$2 million for the years ended May 31, 1992 and 1993. The Company believes that
its coverage limits are adequate.
40
<PAGE>
HOSPITAL PROPERTIES
The following table provides information relating to the 75 psychiatric
hospitals operated by the Company as of March 31, 1994. Each hospital is owned
or leased and is operated by a wholly-owned subsidiary of the Company.
<TABLE>
<CAPTION>
DATE OF
NUMBER OF ACQUISITION
STATE/ LICENSED OR OPENING
NAME COUNTRY CITY BEDS BY THE COMPANY
- --------------------------------------------- --------------- --------------- --------- --------------
<S> <C> <C> <C> <C>
Charter Woods (2)............................ Alabama Dothan 75 June 1980
Charter Academy of Mobile (2)(3)............. Alabama Mobile 72 September 1987
Charter Hospital of Mobile (4)............... Alabama Mobile 84 June 1978
Charter North (2)............................ Alaska Anchorage 80 May 1984
Charter Hospital of East Valley (2).......... Arizona Chandler 80 June 1987
Charter Hospital of Glendale (2)............. Arizona Glendale 90 May 1987
Charter Vista (2)............................ Arkansas Fayetteville 65 March 1983
Charter Hospital of Little Rock (2).......... Arkansas Maumelle 60 May 1990
Charter Hospital of Corona (2)............... California Corona 92 December 1978
Charter Oak (2).............................. California Covina 95 September 1980
Charter Hospital of Long Beach (4)........... California Long Beach 227 January 1980
Charter Hospital of Mission Viejo (2)........ California El Toro 80 April 1990
Charter Hospital of Sacramento (2)........... California Roseville 80 August 1988
Charter Hospital of San Diego (2)............ California San Diego 80 May 1988
Charter Hospital of Thousand Oaks (2)........ California Thousand Oaks 80 March 1990
Charter Clinic Chelsea (4)................... England London 45 July 1980
Charter Nightingale.......................... England London 78 February 1987
Charter Glade (2)............................ Florida Ft. Myers 154 August 1983
Charter Hospital of Jacksonville (2)......... Florida Jacksonville 64 January 1987
Charter Hospital of Orlando-South (2)........ Florida Kissimmee 60 July 1989
Charter Hospital of Pasco (2)................ Florida Lutz 72 March 1990
Charter Hospital of Miami (2)................ Florida Miami 88 October 1986
Charter Springs (2).......................... Florida Ocala 92 October 1985
Charter Hospital of Tampa Bay (2)............ Florida Tampa 146 July 1985
Charter Winds (2)............................ Georgia Athens 80 July 1985
Charter Peachford (2)........................ Georgia Atlanta 224 January 1974
Charter Hospital of Augusta (2).............. Georgia Augusta 63 January 1987
Charter Lake (2)............................. Georgia Macon 118 September 1982
Charter Hospital of Savannah (2)............. Georgia Savannah 112 July 1972
Charter By-the-Sea (2)....................... Georgia St. Simons 101 September 1982
Charter Barclay (2).......................... Illinois Chicago 123 March 1978
Charter Beacon (2)........................... Indiana Fort Wayne 97 September 1985
Charter Hospital of Northwest Indiana (2).... Indiana Hobart 60 January 1990
Charter Hospital of Indianapolis (2)......... Indiana Indianapolis 80 March 1990
Charter Hospital of Lafayette (2)............ Indiana Lafayette 64 September 1986
Charter Hospital of South Bend (2)........... Indiana Granger 60 January 1990
Charter Hospital of Terre Haute (2).......... Indiana Terre Haute 66 March 1988
Charter Hospital of Overland Park (2)........ Kansas Overland Park 80 November 1986
Charter Hospital of Wichita (2).............. Kansas Wichita 80 November 1986
Charter Ridge (2)............................ Kentucky Lexington 110 August 1982
Charter Hospital of Louisville (2)........... Kentucky Louisville 66 October 1978
Charter Hospital of Paducah (2).............. Kentucky Paducah 80 July 1985
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
DATE OF
NUMBER OF ACQUISITION
STATE/ LICENSED OR OPENING
NAME COUNTRY CITY BEDS BY THE COMPANY
- --------------------------------------------- --------------- --------------- --------- --------------
<S> <C> <C> <C> <C>
Charter Hospital of Lake Charles (2)......... Louisiana Lake Charles 60 July 1985
Charter Forest (2)........................... Louisiana Shreveport 83 July 1985
Charter Hospital of Jackson (2).............. Mississippi Jackson 111 July 1985
Charter Hospital of Columbia (2)............. Missouri Columbia 96 December 1984
Charter Hospital of Las Vegas (2)............ Nevada Las Vegas 84 April 1986
Charter Hospital of Albuquerque (1)(4)....... New Mexico Albuquerque 80 March 1985
Charter Pines (2)............................ North Carolina Charlotte 60 April 1985
Charter Hospital of Greensboro (2)........... North Carolina Greensboro 100 July 1981
Charter Northridge (2)....................... North Carolina Raleigh 85 September 1984
Charter Hospital of Winston-Salem (2)........ North Carolina Winston-Salem 99 July 1981
Charter Hospital of Toledo (2)............... Ohio Maumee 38 September 1990
Charter Fairmount Institute.................. Pennsylvania Philadelphia 169 July 1985
Charter Hospital of Charleston (2)........... South Carolina Charleston 102 January 1990
Charter Hospital of Greenville (2)........... South Carolina Greer 60 August 1989
Charter Rivers (2)........................... South Carolina West Columbia 80 February 1983
Charter Hospital of Sioux Falls (2).......... South Dakota Sioux Falls 60 July 1989
La Metairie Clinic (2)....................... Switzerland Nyon 69 June 1985
Charter Lakeside (2)......................... Tennessee Memphis 204 August 1976
Charter Hospital of Austin (2)............... Texas Austin 108 January 1986
Charter Hospital of Corpus Christi (2)....... Texas Corpus Christi 80 June 1986
Charter Hospital of Ft. Worth (2)............ Texas Ft. Worth 80 January 1987
Charter Hospital of Grapevine (2)............ Texas Grapevine 80 September 1989
Charter Hospital of Kingwood (2)............. Texas Kingwood 80 October 1986
Charter Plains (2)........................... Texas Lubbock 80 February 1984
Charter Palms (2)............................ Texas McAllen 80 May 1983
Charter Hospital of Dallas (2)............... Texas Plano 116 August 1987
Charter Real (2)............................. Texas San Antonio 106 October 1985
Charter Hospital of Sugar Land (2)........... Texas Sugar Land 80 October 1986
Charter Canyon (2)........................... Utah Salt Lake City 62 January 1986
Charter Provo Canyon School (2)(3)........... Utah Provo 210 December 1985
Charter Hospital of Charlottesville (2)...... Virginia Charlottesville 75 July 1985
Charter Westbrook (2)........................ Virginia Richmond 210 April 1970
Charter Hospital of Milwaukee................ Wisconsin West Allis 80 May 1989
<FN>
- ------------------------------
(1) Leasehold interest is mortgaged.
(2) Assets of hospital facility are mortgaged.
(3) Licensed as an intensive residential treatment center.
(4) A leased hospital facility.
</TABLE>
All of the Company's hospitals located in the United States have been
accredited by the Joint Commission on Accreditation of Healthcare Organizations
(the "Joint Commission"). The Joint Commission is a national commission which
establishes standards relating to the physical plant, administration, quality of
patient care, governing body and medical staffs of hospitals.
The Company operates five leased hospitals, including one 150-bed general
hospital, not listed above, which is managed by an unaffiliated third party. The
lease and the management agreement expire in 1997. The remaining leased
hospitals consist of four with terms expiring between 1996 and 2014, and one
with a
42
<PAGE>
term expiring in 2069. The leases for two hospitals contain options to purchase
these hospitals for nominal consideration at the end of their respective lease
terms. The Company does not have an option to purchase the other leased
hospitals.
The Company owns or leases six hospital facilities which are not operated by
the Company. These facilities are located in Torrance, California, Ft. Collins,
Colorado, Bradenton and West Palm Beach, Florida, Santa Teresa, New Mexico and
Pasadena, Texas. Two of the facilities have been leased to other operators, with
options to purchase by the lessees, and four are held for sale or lease. Five of
the six hospitals are subject to a mortgage.
Sixty-nine of the Company's hospitals listed above are subject to mortgages.
The stock of substantially all of the domestic subsidiaries of the Company has
been pledged as collateral for the New Credit Agreement.
The Company owns 11 medical office buildings (with an aggregate of
approximately 140,000 square feet), which are located near certain of the
Company's hospitals. These buildings have a total of approximately 140 tenants.
Five of the Company's medical office buildings are subject to mortgages.
The Company is primary lessee of office space for 105 outpatient centers
located in 21 states. The leases for these centers aggregate approximately
188,000 square feet of office space, and generally have lease terms of less than
five years.
The following table provides information relating to the Target Hospitals.
Each Target Hospital will be owned by a wholly-owned subsidiary of the Company.
Following the Acquisition, the Company intends to sell or close any Target
Hospital the continued operation of which is not consistent with the Company's
strategy.
<TABLE>
<CAPTION>
NUMBER OF LICENSED BEDS
--------------------------------------------
CHEMICAL RESIDENTIAL
STATE CITY PSYCHIATRIC DEPENDENCY TREATMENT TOTAL
- -------------------- -------------------- ----------- ----------- ---------- -----
<S> <C> <C> <C> <C> <C>
Arkansas Texarkana 60 -- -- 60
Arizona Tucson 40 -- 20 60
California Cathedral City 80 -- -- 80
California Lakewood 21 48 21 90
California La Mesa 88 11 -- 99
California Long Beach 80 -- -- 80
California San Jose 80 -- -- 80
California Visalia 64 -- -- 64
California Yorba Linda 80 -- -- 80
Colorado Louisville (1) 72 -- -- 72
Florida Bradenton 60 -- -- 60
Florida Largo 40 -- -- 40
Florida Largo 64 -- -- 64
Florida Orlando 60 20 -- 80
Florida Orlando 40 -- -- 40
Georgia Atlanta 40 -- -- 40
Georgia Atlanta -- -- 102 102
Georgia Smyrna (3) 108 -- -- 108
Georgia Stockbridge 50 -- -- 50
Illinois Naperville (2) 92 -- -- 92
Indiana Evansville 60 -- -- 60
Indiana Indianapolis 84 -- -- 84
Indiana Jeffersonville 100 -- -- 100
Indiana Michigan City 89 -- -- 89
Louisiana Lafayette 70 -- -- 70
Maryland Bel Air -- 51 -- 51
</TABLE>
43
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF LICENSED BEDS
--------------------------------------------
CHEMICAL RESIDENTIAL
STATE CITY PSYCHIATRIC DEPENDENCY TREATMENT TOTAL
- -------------------- -------------------- ----------- ----------- ---------- -----
<S> <C> <C> <C> <C> <C>
Maryland East New Market (3) -- 42 -- 42
Maryland Gambrills -- 60 -- 60
Maryland Rockville (1) 97 -- -- 97
Maryland Rockville (1) -- -- 60 60
Maryland Woolford (3) -- 40 -- 40
Minnesota Waverly -- 40 -- 40
North Carolina Asheville 110 20 9 139
New Hampshire Nashua 80 20 -- 100
New Jersey Lakehurst -- 24 -- 24
New Jersey Summit 122 22 -- 144
Pennsylvania Williamsburg (3) -- 95 -- 95
South Carolina Johns Island (3) 8 41 -- 49
Tennessee Memphis 134 -- -- 134
Texas Webster 106 -- 44 150
Virginia Chesapeake -- 60 -- 60
Virginia Leesburg (4) 77 -- -- 77
Virginia Norfolk 65 -- -- 65
Virginia Richmond 84 -- -- 84
Virginia Virginia Beach (3) 61 -- -- 61
Wisconsin Brown Deer 80 -- -- 80
<FN>
- ------------------------------
(1) Land lease.
(2) Joint venture.
(3) Land and building leased.
(4) Building leased.
</TABLE>
DIVESTITURES AND CLOSINGS
In addition to its sale of the general hospitals, since November, 1990, the
Company sold or closed twelve psychiatric facilities. The Company leases, with
options to purchase by the lessees, two facilities which it previously operated
prior to fiscal 1991.
<TABLE>
<CAPTION>
NUMBER OF
LOCATION PSYCHIATRIC BEDS DATE CLOSED DATE SOLD (1)
- ------------------------------------------------------- ------------------- ------------------- ------------------
<S> <C> <C> <C>
SOLD
Aurora, CO (6)......................................... 80 November, 1990 July, 1993
Redlands, CA (6)....................................... 89 January, 1991 January, 1991
Tuscon, AR (6)......................................... 60 April, 1991 April, 1991
Newport News, VA (6)................................... 60 March, 1992 March, 1992
Denver, CO (6)......................................... 60 July, 1992 October, 1993
Laredo, TX (6)......................................... 64 March, 1993 December, 1993
Bakersfield, CA........................................ 60 March, 1993 March, 1993
Decatur, AL............................................ 104 July, 1993 July, 1993
LEASED
Ft. Collins, CO (6).................................... 60 December, 1990 (2)
Santa Teresa, NM (6)................................... 72 June, 1991 (2)
CLOSED
Torrance, CA (6)....................................... 96 March, 1991 (3)
Fountain Valley, CA (6)................................ 120 May, 1992 (4)
West Palm Beach, FL (6)................................ 60 September, 1993 (5)
Bradenton, FL.......................................... 60 September, 1993 (5)
<FN>
- ------------------------------
(1) Facilities sold for an aggregate sales price of $42.7 million.
(2) Facilities leased, with options to purchase by lessees.
(3) Leased facility, held for sublease.
(4) Leased facility, lease terminated.
(5) Held for sale or lease.
(6) A non-core facility.
</TABLE>
44
<PAGE>
INTERNATIONAL OPERATIONS
The Company owns and operates two psychiatric hospitals in London, England
(a 45-bed hospital and a 78-bed hospital) and a 69-bed psychiatric hospital in
Nyon, Switzerland. In July 1991, the Company began managing three
psychiatric-substance abuse hospitals in Jeddah, Riyadh and Damman in the
Kingdom of Saudi Arabia (with 180 beds each) pursuant to a fixed-price contract
for a period of approximately three years. This contract expires during fiscal
year 1994 and will not be renewed. These activities do not represent a
significant portion of the Company's operations.
The Company's international operations also include two wholly-owned
insurance subsidiaries in Bermuda. Plymouth provides the insurance coverage
described under "Liability Insurance." The second Bermuda subsidiary has not
provided any insurance coverage since October 1, 1988.
LITIGATION AND OTHER PROCEEDINGS
Certain of the Company's subsidiaries are party to general and professional
liability claims incident to the ordinary course of their business. In addition,
a subsidiary of the Company that operates one psychiatric hospital is subject to
a federal investigation of certain of its referral practices. See "-- Regulation
and Other Factors." This subsidiary was among the Company's five largest
hospitals based on its contribution to EBITDA during fiscal 1993. In the opinion
of management, the ultimate resolution of such pending matters will not have a
material adverse effect on the Company's financial position or results of
operations.
The Resolution Trust Corporation ("RTC"), for itself or in its capacity as
conservator or receivor for 12 financial institutions, formerly held certain
debt securities that were issued by the Company prior to the Reorganization. RTC
has indicated to the Company that it believes that certain financial statements
and other disclosures made by the Company in connection with such debt
securities contained materially misleading statements or material omissions and
that such misleading statements or omissions resulted in an overvaluation of
such debt securities. The Company has agreed to a tolling of the statute of
limitations applicable to RTC's claims. Based on a review of relevant law and
the facts known to the Company, the Company believes it has a substantial
defense to a potential claim by RTC and that such claim would not have a
material adverse effect on the Company's financial position or results of
operations.
45
<PAGE>
MANAGEMENT
The following table sets forth the name, age, position and other information
with respect to the directors and executive officers of Charter.
<TABLE>
<CAPTION>
TERM EXPIRING POSITION WITH COMPANY, PRINCIPAL OCCUPATIONS
NAME AND POSITION HELD AGE (FOR DIRECTORS) DURING PAST FIVE YEARS AND OTHER DIRECTORSHIPS
- ----------------------------- --- --------------- --------------------------------------------------------------
<S> <C> <C> <C>
Edwin M. Banks 31 1996 Securities Analyst, W.R. Huff Asset Management Co., L.P.
Director (1988-present); Director since July, 1992.
E. Mac Crawford 45 1997 Chairman of the Board of Directors, President and Chief
Director, Chairman and Chief Executive Officer of the Company (since 1993); President and
Executive Officer Chief Operating Officer of the Company (1992-1993); Executive
Vice President -- Hospital Operations (1990-1992); Assistant
to the President and Chairman (1990); President (1988-1990),
Mulberry Street Investment Company; Director since 1990.
Andre C. Dimitriadis 53 1995 Chairman and Chief Executive Officer, LTC Properties (a
Director healthcare real estate investment trust) (since 1992);
Director of Sun Healthcare Group (since 1993); Director of
Home Care Management, Inc. (since 1993); Executive Vice
President and Chief Financial Officer, Beverly Enterprises,
Inc. (nursing homes) (1989-1992); Chief Financial Officer and
Director, American Medical International, Inc. (hospitals)
(1984-1989); Director since July, 1992.
Lawrence W. Drinkard 54 1996 Executive Vice President and Chief Financial Officer (since
Director, Executive Vice 1994) of the Company; Senior Vice President -- Finance
President and Chief (1990-1993); Vice President (1987-1990); Treasurer
Financial Officer (1986-1991); Director since January, 1991.
William E. Hale 48 Senior Vice President -- Operations (since 1994) of the
Senior Vice President -- Company; Chief Operating Officer of Behavioral Health
Operations Resources (1987-1993).
Raymond H. Kiefer 66 1997 Retired insurance executive (since 1992); President, Allstate
Director Insurance Company (1989-1992); President, Personal Property
and Casualty Company (1984-1989) (a subsidiary of Allstate
Insurance Company); Director since July, 1992.
Gerald L. McManis 57 1997 Chairman of the Board and President (since 1965) of McManis
Director Associates, Inc. (strategy development and management
consulting firm for healthcare and healthcare related
companies); Director of MMI Companies, Inc. (since 1994).
Director since February, 1994.
C. Clark Wingfield 43 Vice President -- Administrative Services (since 1990); Vice
Vice President -- President -- Human Resources (1990); Senior Executive Director
Administrative Services -- Compensation and Benefits (1989-1990); Executive Director
-- Compensation and Benefits (1987-1989).
</TABLE>
46
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth, for the three fiscal years ended September
30, 1993, the compensation paid by the Company to the present Chief Executive
Officer, the two other most highly compensated present executive officers and
the former Chief Executive Officer:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION ----------------------
-------------------- OTHER ANNUAL OPTION/ ALL OTHER
FISCAL SALARY COMPENSATION SARS LTIP COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) BONUS ($) ($)(1) (#)(2) PAYOUTS ($) ($)(3)
- --------------------------- ---------- --------- --------- ------------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
E. Mac Crawford 1993 $ 520,000 $ 293,280 $ 711 -- -- $ 30,049
Chairman of the Board of 1992 500,000 903,650 * 572,990 -- *
Directors, President and 1991 362,292 685,305 * -- -- *
Chief Executive Officer
Lawrence W. Drinkard 1993 350,000 197,400 $ 3,007 -- -- $ 29,806
Executive Vice President 1992 335,000 489,458 * 215,000 -- *
and 1991 235,825 365,078 * -- -- *
Chief Financial Officer
C. Clark Wingfield 1993 225,000 110,790 $ 37,820 -- -- $ 31,000
Vice President -- 1992 215,000 217,975 * 30,000 $ 15,714 *
Administrative Services
William A. Fickling, Jr. 1993 415,000 -- $ 121,011 -- -- $ 2,474,941
Former Chairman of the 1992 800,000 726,000 * 2,220,336 -- *
Board of Directors and 1991 691,696 605,234 * -- -- *
Chief Executive Officer
<FN>
- ------------------------------
* Under the rules of the Commission, no disclosure is required for these
items in 1992 and 1991.
(1) Includes, for Mr. Wingfield, country club dues of $15,998, car allowance
of $12,000 and an administrative services allowance of $7,939. The amounts
for Messrs. Crawford and Drinkard are for the reimbursement of taxes due
to the taxability of certain group life insurance coverages. The amount
for Mr. Fickling includes the payment by the Company of tax preparation
fees of $100,350.
(2) Represents the number of stock options granted under the Company's 1992
Stock Option Plan.
(3) Includes, for Mr. Fickling, severance pay of $2,075,000; an Annual
Incentive Plan bonus of $242,849, as required by his employment agreement;
$113,864 of accrued vacation pay paid to him subsequent to his
termination; the book value of his company car of $12,613; ESOP
contributions of $28,047; 401K plan contributions of $2,003; and premiums
paid for term life insurance of $565. For the current executive officers,
includes the following: (a) contributions to ESOP: $27,163, $27,734 and
$28,294 for Mr. Crawford, Mr. Drinkard and Mr. Wingfield, respectively;
(b) contributions to the Company's 401K Plan of $2,003, $1,144 and $1,969
for Mr. Crawford, Mr. Drinkard and Mr. Wingfield, respectively; and (c)
premiums paid for term life insurance of $883, $928 and $737 for Mr.
Crawford, Mr. Drinkard and Mr. Wingfield, respectively.
</TABLE>
AGGREGATED OPTION/SAR EXERCISES IN FISCAL 1993
AND OPTION/SAR VALUES AT SEPTEMBER 30, 1993
The following table provides information related to options exercised by the
executive officers during fiscal 1993, and the number and value of options held
on September 30, 1993.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
IN-THE-MONEY
NUMBER OF UNEXERCISED OPTIONS/SARS AT
OPTION/SARS AT SEPTEMBER 30, 1993
SHARES VALUE SEPTEMBER 30, 1993 ($)(2)
ACQUIRED ON REALIZED -------------------------- -------------------------
NAME EXERCISE (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------- ------------- --------- ----------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
E. Mac Crawford...................... 10,000 $ 170,775 336,244 229,196 $6,430,541 $ 4,415,461
Lawrence W. Drinkard................. 20,000 337,800 109,300 86,000 2,099,885 1,656,790
C. Clark Wingfield................... 12,000 215,430 6,150 12,000 115,590 231,180
William A. Fickling, Jr. (3)......... -- -- 2,238,861 -- 51,911,456 --
<FN>
- ------------------------------
(1) Value is calculated based on the difference between the option exercise
price and the closing market price of the Common Stock on the date of
exercise, multiplied by the number of shares to which the exercise
relates.
(2) The closing price for the Company's Common Stock as reported by the
American Stock Exchange on September 30, 1993 was $23.625. Value is
calculated on the basis of the difference between the per share option
exercise price (for in-the-money options, the per share option prices are
$4.36 for Messrs. Crawford, Drinkard and Wingfield and $0.25 for Mr.
Fickling) and $23.625, multiplied by the number of shares of Common Stock
underlying the in-the-money options.
(3) Chief Executive Officer of the Company until March 4, 1993.
</TABLE>
47
<PAGE>
EMPLOYMENT AGREEMENTS
Upon consummation of the Plan on July 21, 1992, the Company entered into
employment agreements with Messrs. Crawford and Drinkard, for terms beginning on
July 21, 1992, and ending on September 30, 1995. The agreements provide for base
salaries (Mr. Crawford - $500,000 and Mr. Drinkard - $335,000) and for bonuses
and life and disability insurance benefits that are competitive with similar
benefits for comparable positions within the investor-owned hospital industry.
The agreements also provide for severance payments upon termination without
cause (including certain constructive termination events), termination due to
death or disability and termination due to a change in control of the Company.
Upon any such termination, the employee will be paid the greater of his base
salary through September 30, 1995 or his base salary for a period of two years
and amounts accrued for the employee through the date of termination under the
Annual Incentive Plan and other bonus plans, if any. The terms of the two
employment agreements were negotiated by the Company and a committee of
unsecured creditors prior to consummation of the Plan.
DIRECTORS' FEES AND COMPENSATION
During fiscal 1993, non-employee directors received annual compensation of
$18,000 and a fee of $800 for each Board meeting attended. In addition,
non-employee directors were paid $200 for each committee meeting attended ($800
if the committee meeting was not held in conjunction with a Board meeting) and
on February 4, 1993, each director was granted an option under the Directors'
Stock Option Plan to purchase 25,000 shares of the Company's common stock for an
exercise price of $14.56 per share. Effective October 1, 1993, non-employee
directors receive annual compensation of $24,000 and a fee of $1,000 for each
board meeting or committee meeting attended.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board has an Audit Committee and a Compensation Committee. There is no
nominating committee of the Board; nominees for director are selected by the
Board of Directors.
AUDIT COMMITTEE. Audit Committee members during 1993 were Edwin M. Banks
(Chairman) and Raymond H. Kiefer. The Audit Committee recommends to the Board of
Directors the engagement of independent auditors of the Company, reviews the
scope and results of audits of the Company, reviews the Company's internal
accounting controls and the activities of the Company's internal audit staff and
reviews the professional services furnished to the Company by its independent
auditors.
COMPENSATION COMMITTEE. Compensation Committee members during 1993 were
Andre C. Dimitriadis (Chairman) and Michael D. Hernandez, whose term as a
director expired in February 1994. The Compensation Committee is responsible for
establishing the policies relating to and the components of executive officer
compensation.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 31, 1994, information concerning
ownership of shares of Common Stock by directors and officers.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF TOTAL
NAME OWNERSHIP OUTSTANDING
- ------------------------------------------------------- ------------------ -------------------
<S> <C> <C>
E. Mac Crawford........................................ 336,876(1) 1.26%
Lawrence W. Drinkard................................... 111,046(1) .42%
William E. Hale........................................ 3,000(1) (3)
C. Clark Wingfield..................................... 6,453(1) (3)
Andre C. Dimitriadis................................... 10,000(2) (3)
Raymond H. Kiefer...................................... 10,000(2) (3)
Edwin M. Banks......................................... 10,500(2) (3)
Michael D. Hernandez................................... 10,000(2) (3)
Gerald L. McManis...................................... 5,000(2) (3)
All directors and executive
officers as a group (9 persons)....................... 502,875(4) 1.88%
<FN>
- ------------------------
(1) Includes 336,594, 109,599, 3,000 and 6,201 shares that Mr. Crawford, Mr.
Drinkard, Mr. Hale and Mr. Wingfield, respectively, have the present right
to acquire upon exercise of options and warrants.
</TABLE>
48
<PAGE>
<TABLE>
<S> <C>
(2) Includes 10,000 shares for Mr. Dimitriadis, Mr. Kiefer, Mr. Banks and Mr.
Hernandez and 5,000 shares for Mr. McManis that each have the present
right to acquire upon the exercise of options. Mr. Hernandez's term as a
director of the Company expired in February 1994.
(3) Less than .1% of total outstanding.
(4) Includes 500,394 shares that the directors and executive officers have the
present right to acquire upon exercise of options and warrants.
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
MANAGEMENT SEVERANCE ARRANGEMENT. On July 21, 1992, the Company entered
into an employment agreement with William A. Fickling, Jr., the former Chairman
of the Board of Directors of the Company. The agreement provided for severance
payments upon termination of his employment without cause. Mr. Fickling's
employment was so terminated on March 4, 1993, and the Company recorded
severance expense of approximately $2.1 million and paid Mr. Fickling
approximately $243,000 in incentive bonus under the terms of the agreement. The
$2.1 million severance settlement is being paid to Mr. Fickling in semi-monthly
installments through September 1995.
Upon consummation of the Plan, the Company implemented the 1992 Stock Option
Plan. Mr. Fickling was granted options under the 1992 Stock Option Plan to
purchase approximately 2.2 million shares at exercise prices of either $4.36 per
share or $9.60 per share. Under the terms of the plan, if Mr. Fickling's
employment with the Company were terminated without cause and certain financial
targets were satisfied, the option prices would be reduced to $.25 per share and
all options would become immediately vested. On March 4, 1993, all of Mr.
Fickling's options vested and the option prices were reduced to $.25 per share.
As of December 31, 1993, Mr. Fickling exercised all such options.
AFFILIATE LEASE ARRANGEMENT. The Company owns 50% of the Charter Medical
building in Macon, Georgia, and leases approximately 88,000 square feet of
office space in such building for use as its corporate headquarters. The lease,
which expires on September 30, 1994, provides for average annual rental payments
of approximately $1,189,000 (approximately $13.50 average per square foot per
year). Mr. Fickling and his father's estate each own 12.5% of the building.
During fiscal 1993, each had an interest of approximately $149,000 in rental
payments made by the Company.
BEECH STREET. On September 15, 1993, the Company sold its 19.8% ownership
interest (plus its right to acquire an additional 9.6% interest for
approximately $2 million) in Beech Street of California, Inc. ("Beech Street")
to the children of Mr. Fickling for approximately $5.5 million, plus the right
to receive additional consideration, if certain events (i.e., a public offering
of Beech Street stock or the sale of 50% or more of Beech Street's assets) occur
within two years. The Company obtained a fairness opinion by an independent
appraisal firm stating that the financial consideration was fair. The Company
acquired its ownership interest in Beech Street in a series of related
transactions beginning in May, 1989, for a total purchase price of $2,956,000.
Beech Street was, prior to May, 1989, a wholly owned subsidiary of Beech Street,
Inc., in which Mr. Fickling beneficially owns a majority of the outstanding
capital stock. During the period of its ownership, the Company received
$1,242,000 in dividend distributions from Beech Street.
Beech Street provides, among other things, utilization review services and
operates preferred provider organizations ("PPOs") in various states. Under
agreements effective January 1, 1991, Beech Street provides utilization review
services and PPO services for the Company's self-insured medical plans. The
Company paid approximately $124,000 to Beech Street during fiscal 1993 for
utilization review services. Beech Street's PPO services permit the Company's
employees and their covered dependents to utilize a Beech Street PPO. In fiscal
1993, the Company paid Beech Street a fixed fee per enrolled participant for PPO
services (which aggregated approximately $87,000).
The Company also has agreements with Beech Street where certain of the
Company's hospitals provide services to employers (and their related employee
and covered dependent groups) who have entered into agreements with Beech Street
to utilize a Beech Street PPO for hospital and other healthcare services. Such
agreements provide for covered services to be rendered under terms (including
discounts for the hospital's normal charges) which management of the Company
believes are customary for hospital PPO agreements.
49
<PAGE>
The Beech Street PPO reviews claims and serves as an intermediary between the
Company's hospitals and the contracting employers. The Company derived
approximately $21.4 million in revenues from these agreements during fiscal
1993. The aggregate discount from customary charges was 12% in fiscal 1993.
In fiscal 1993, prior to the sale of Beech Street, Beech Street paid
approximately $160,000 in management fees and expense reimbursements to Mulberry
Street Investment Company ("Mulberry Street"). Mulberry Street provided senior
level management and financial services for Beech Street. Mr. Fickling
beneficially owns all of the capital stock of Mulberry Street.
MANAGEMENT BUSINESS RELATIONSHIPS. During fiscal 1991 the Company's Board
of Directors, with Mr. Fickling abstaining, authorized the payment by the
Company of the reasonable legal expenses and out-of-pocket disbursements of the
law firms serving as counsel to Mr. Fickling, his family and related trusts and
entities in all matters reasonably related to the Restructuring, which services
included not only matters relating to ownership of the Company's formerly
outstanding Class B Common Stock and Series B, C and D Preferred Stock, but also
services relating to other matters that were reasonable and appropriate to
resolve or consider in connection with the Restructuring. During fiscal 1993 the
Company paid aggregate fees and expenses of approximately $142,000 to such firms
for such services.
During fiscal 1993 the Company had two agreements in which Fickling & Walker
Company, a licensed real estate brokerage firm of which the estate of Mr.
Fickling's father owned 50%, represented the Company in the listing of improved
parcels of real estate for sale. Fickling & Walker Company received a $48,750
commission from one such sale and, should the remaining parcel be sold at its
estimated sales price, would receive $46,500 in additional commission.
Gerald L. McManis, who was elected director on February 18, 1994, is the
Chairman of the Board, President and owner of 92% of the stock of McManis
Associates, Inc. ("MAI"), a healthcare development and management consulting
firm. During fiscal 1993, MAI provided consulting services for the Company
related to the development of strategic plans and a review of the Company's
business processes. The Company incurred $1,003,000 in fees for such services
during fiscal 1993, and reimbursed MAI $128,000 for expenses.
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Company sold the Old Notes to the Initial Purchasers on April 22, 1994
pursuant to the Purchase Agreement. The Initial Purchasers subsequently resold
the Old Notes to "qualified institutional buyers" in reliance on Rule 144A under
the Securities Act. As a condition to the Purchase Agreement, the Company
entered into the Registration Rights Agreement, pursuant to which the Company
agreed, for the benefit of all holders of the Old Notes, that it would, at its
expense, (i) as soon as practicable after the initial issuance of the Old Notes,
file a registration statement with the Commission with respect to a registered
offer to exchange the Old Notes for the New Notes and (ii) use its best efforts
to cause such registration statement to be declared effective under the
Securities Act by August 31, 1994 and cause the New Notes to be listed on a
national securities exchange promptly after the consummation of the Exchange
Offer. Charter also agreed that upon effectiveness of the Registration
Statement, it would offer to all holders of the Old Notes an opportunity to
exchange their securities for an equal principal amount of the New Notes.
Further, Charter agreed that it would keep the Exchange Offer open for
acceptance for not less than 20 business days, but in no event longer than 30
business days (subject to any extensions required by applicable law) after the
date such Registration Statement was declared effective and would comply with
Regulation 14E and Rule 13e-4 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (other than the filing requirements of Rule 13e-4).
A copy of the Registration Rights Agreement has been filed as an exhibit to the
Registration Statement of which this Prospectus is a part. The term "Holder"
with respect to the Exchange Offer means any person in whose name Old Notes are
registered on the books of the Company or any other person who has obtained a
properly completed bond power from the registered holder. The Exchange Offer is
intended to satisfy certain of the Company's obligations under the Registration
Rights Agreement.
Based on existing interpretations of the Staff with respect to similar
transactions, the Company believes that the New Notes issued pursuant to the
Exchange Offer in exchange for Old Notes may be offered for
50
<PAGE>
resale, resold and otherwise transferred by holders thereof (other than any such
holder which is an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act) without compliance with the registration and
prospectus delivery requirements of the Securities Act; provided that such New
Notes are acquired in the ordinary course of such holders' business and such
holders have no arrangement with any person to participate in any public
distribution of the New Notes. Each broker or dealer registered as such under
Section 15 of the Exchange Act receiving New Notes in the Exchange Offer
("Participating Broker-Dealers") will be subject to a prospectus delivery
requirement with respect to resales of such New Notes. Each Participating
Broker-Dealer must acknowledge that it will deliver a resale prospectus in
connection with any resale of such New Notes. The Letter of Transmittal which
accompanies this Prospectus states that by so acknowledging and by delivering a
resale prospectus, a Participating Broker-Dealer will be deemed not to be acting
in the capacity of an "underwriter" (within the meaning of Section 2(11) of the
Securities Act). This Prospectus, as it may be amended or supplemented from time
to time, may be used by a Participating Broker-Dealer in connection with resales
of New Notes received in exchange for Old Notes where such Old Notes were
acquired by such Participating Broker-Dealer as result of market-making or other
trading activities. Pursuant to the Registration Rights Agreement, the Company
has agreed to permit Participating Broker-Dealers and other persons, if any,
subject to similar prospectus delivery requirements to use this Prospectus in
connection with the resale of such New Notes for a period of 180 days from the
date on which the Registration Statement of which this Prospectus is a part is
first declared effective.
Each holder of the Old Notes who wishes to exchange its Old Notes for New
Notes in the Exchange Offer will be required to make certain representations to
the Company in the accompanying Letter of Transmittal, including that (i) any
New Notes to be received by it will be acquired in the ordinary course of its
business, (ii) it has no arrangement with any person to participate in a public
distribution (within the meaning of the Securities Act) of the New Notes, and
(iii) it is not an "affiliate," as defined in Rule 405 of the Securities Act of
the Company, or if it is such an affiliate, that it will comply with the
registration and prospectus delivery requirements of the Securities Act to the
extent applicable to it. In addition, each holder who is not a broker-dealer
will be required to represent that it is not engaged in, and does not intend to
engage in, a public distribution of the New Notes. Each Participating
Broker-Dealer who receives New Notes for its own account in exchange for Old
Notes that were acquired by it as a result of market-making or other trading
activities, will be required to acknowledge that it will deliver this Prospectus
in connection with any resale by it of such New Notes.
As a result of both the filing and the effectiveness of the Registration
Statement of which this Prospectus forms a part and to the extent the Exchange
Offer is consummated prior to August 31, 1994, certain prospective increases in
the per annum interest rate of the Old Notes provided for in the Registration
Rights Agreement will not occur. Accordingly, subject to the aforementioned
interpretations of the Staff with respect to the free transferability of the New
Notes received by holders in exchange for their Old Notes pursuant to the
Exchange Offer and, as set forth in such interpretations, the ability of certain
holders to participate in the Exchange Offer, holders of Old Notes otherwise
eligible to participate in the Exchange Offer and receive pursuant thereto
freely tradeable New Notes but who elect not to tender their Old Notes for
exchange, will not have any further registration rights under the Registration
Rights Agreement and the Old Notes not so exchanged will remain "restricted
securities" (within the meaning of the Securities Act) and subject to
restrictions on transfer under the Securities Act.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal (together, the "Exchange Offer"),
the Company will accept for exchange and exchange any and all Old Notes validly
tendered and not withdrawn prior to 5:00 p.m., New York City time, on the
Expiration Date. The Company will issue $1,000 principal amount of New Notes in
exchange for each $1,000 principal amount of outstanding Old Notes accepted in
the Exchange Offer. Holders may tender some or all of their Old Notes pursuant
to the Exchange Offer. However, Old Notes may be tendered only in integral
multiples of $1,000.
The form and terms of the New Notes are the same as the form and terms of
the Old Notes except that (i) the New Notes have been registered under the
Securities Act and will not bear legends restricting the transfer thereof, (ii)
the holders of the New Notes will not be entitled to certain rights under the
Registration
51
<PAGE>
Rights Agreement, which rights will terminate when the Exchange Offer is
terminated and (iii) the New Notes have been given a series designation to
distinguish the New Notes from the Old Notes. The New Notes will evidence the
same debt as the Old Notes and will be entitled to the benefits of the
Indenture.
As of the date of this Prospectus, all $375,000,000 outstanding principal
amount of the Old Notes were evidenced by global securities, registered in the
name of CEDE & Co., as nominee for DTC, and held by Marine Midland Bank as
securities custodian for CEDE & Co. As indicated elsewhere in this Prospectus,
the Old Notes have been included in the PORTAL Market for trading among
"qualified institutional buyers" pursuant to Rule 144A under the Securities Act.
For purposes of administration, the Company has fixed the close of business
on , 1994 as the record date for the Exchange Offer for purposes of
determining the persons to whom this Prospectus and the accompanying Letter of
Transmittal will be mailed initially. There will be no fixed record date for
determining generally registered holders of Old Notes entitled to participate in
the Exchange Offer.
Holders of Old Notes do not have any appraisal or dissenters' rights under
the General Corporation Law of Delaware or the Indenture in connection with the
Exchange Offer. The Company intends to conduct the Exchange Offer in accordance
with Regulation 14E and Rule 13e-4 under the Exchange Act (other than the filing
requirements of Rule 13e-4).
The Company shall be deemed to have accepted validly tendered Old Notes
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering Holders
for the purpose of receiving the New Notes from the Company.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein under
"--Conditions" or otherwise, the certificates for any such unaccepted Old Notes
will be returned, without expense, to the tendering Holder thereof as promptly
as practicable after the Expiration Date. See "--Procedures for Tendering."
Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the Letter
of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. The Company will pay all charges and expenses,
other than transfer taxes in certain circumstances, in connection with the
Exchange Offer. See "-- Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
, 1994, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended.
In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral or written notice and will mail to the registered
Holders an announcement thereof, each prior to 9:00 a.m., New York City time, on
the next business day after the previously scheduled expiration date.
The Company reserves the right, in its sole discretion, (i) to delay
accepting any Old Notes, to extend the Exchange Offer or to terminate the
Exchange Offer if any of the conditions set forth below under "-- Conditions"
shall not have been satisfied, by giving oral or written notice of such delay,
extension or termination to the Exchange Agent or (ii) to amend the terms of the
Exchange Offer in any manner. Any such delay in acceptance, extension,
termination or amendment will be followed as promptly as practicable by oral or
written notice thereof to the registered Holders. If the Exchange Offer is
amended in a manner determined by the Company to constitute a material change,
the Company will promptly disclose such amendment by means of a prospectus
supplement that will be distributed to the registered Holders, and the Company
will extend the Exchange Offer, in accordance with applicable rules of the
Commission and published interpretations of the Staff, for a period of five to
ten business days, depending upon the significance of the amendment and the
manner of disclosure to the registered Holders, if the Exchange Offer would
otherwise expire during such five to ten business day period.
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Without limiting the manner in which the Company may choose to make public
announcement of any delay, extension, amendment or termination of the Exchange
Offer, the Company shall have no obligation to publish, advertise or otherwise
communicate any such public announcement, other than by making a timely release
to the Dow Jones News Service.
INTEREST ON THE NEW NOTES
Each New Note will bear interest from its date of original issuance. Holders
of Old Notes that are accepted for exchange and exchanged for New Notes will
receive, in cash, accrued interest thereon to, but not including, the original
issuance date of the New Notes. Such interest will be paid on the first interest
payment date for the New Notes. Interest on the Old Notes accepted for exchange
and exchanged in the Exchange Offer will cease to accrue on the date next
preceding the date of original issuance of the New Notes. The New Notes will
bear interest (as do the Old Notes) at a rate per annum of 11 1/4%, which
interest will be payable semi-annually on each April 15 and October 15,
commencing on October 15, 1994.
PROCEDURES FOR TENDERING
Only a Holder of Old Notes may participate in the Exchange Offer. The tender
to the Exchange Agent of Old Notes by a Holder thereof as set forth below and
the acceptance thereof by the Company will constitute a binding agreement
between the tendering Holder and the Company upon the terms and subject to the
conditions set forth in this Prospectus and in the accompanying Letter of
Transmittal. Except as set forth below, a Holder who wishes to tender Old Notes
for exchange pursuant to the Exchange Offer must transmit a properly completed
and duly executed Letter of Transmittal, including all other documents required
by such Letter of Transmittal, to the Exchange Agent at one of the addresses set
forth below under "Exchange Agent" on or prior to the Expiration Date. In
addition, either (i) certificates for such Old Notes must be received by the
Exchange Agent together with the Letter of Transmittal or (ii) a timely
Book-Entry Confirmation (as hereinafter defined) of such Old Notes, if such
procedure is available, into the Exchange Agent's account at the Depositary (the
"Book Entry Transfer Facility") pursuant to the procedure for book-entry
transfer described below, must be received by the Exchange Agent prior to the
Expiration Date, or (iii) the Holder must comply with the guaranteed delivery
procedures described below.
By executing the accompanying Letter of Transmittal, each Holder will
thereby make to the Company the representations set forth above in the third
paragraph under the heading "-- Purpose and Effect of the Exchange Offer."
The tender by a Holder and the acceptance thereof by the Company will
constitute an agreement between such Holder and the Company in accordance with
the terms and subject to the conditions set forth herein and in the accompanying
Letter of Transmittal.
THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO
LETTER OF TRANSMITTAL OR OLD NOTE SHOULD BE SENT TO THE COMPANY. HOLDERS MAY
REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR
NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose Old Notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to tender
should contact the registered Holder promptly and instruct such registered
Holder to tender on such beneficial owner's behalf. See "Instruction to
Registered Holder and/or Book-Entry Transfer Facility Participant from Owner"
included with the Letter of Transmittal.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by an Eligible Institution (as defined below) unless
the Old Notes tendered pursuant thereto are tendered (i) by a registered Holder
who has not completed the box entitled "Special Registration Instructions" or
"Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of an Eligible Institution.
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In the event that signatures on a Letter of Transmittal or a notice of
withdrawal, as the case may be, are required to be guaranteed, such guarantee
must be by a member firm of a registered national securities exchange or of the
National Association of Securities Dealers, Inc., a commercial bank or trust
company having an office or correspondent in the United States or an "eligible
guarantor institution" within the meaning of Rule 17Ad-15 under the Exchange Act
(an "Eligible Institution").
If the Letter of Transmittal is signed by a person other than the registered
Holder of any Old Notes listed therein, such Old Notes must be endorsed or
accompanied by a properly completed bond power, signed by such registered Holder
as such registered Holder's name appears on such Old Notes with the signature
thereon guaranteed by an Eligible Institution.
If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by the Company,
evidence satisfactory to the Company of their authority to so act must be
submitted with the Letter of Transmittal.
The Exchange Agent and DTC have confirmed to the Company that any financial
institution that maintains a direct account with DTC (a "Participant") may
utilize DTC's Automated Tender Offer Program ("ATOP") to tender Old Notes for
exchange in the Exchange Offer. The Exchange Agent will request that DTC
establish an account with respect to the Old Notes for purposes of the Exchange
Offer within two business days after the date of this Prospectus. Any
Participant may effect book-entry delivery of Old Notes by causing DTC to record
the transfer of the tendering Participant's beneficial interests in the global
Old Notes into the Exchange Agent's account in accordance with DTC's ATOP
procedures for such transfer. However, the exchange of New Notes for Old Notes
so tendered only will be made after timely confirmation (a "Book-Entry
Confirmation") of such book-entry transfer of Old Notes into the Exchange
Agent's account, and timely receipt by the Exchange Agent of an Agent's Message
(as defined below) and any other documents required by the Letter of
Transmittal. The term "Agent's Message" as used herein means a message,
transmitted by DTC and received by the Exchange Agent and forming part of a
Book-Entry Confirmation, which states that DTC has received an express
acknowledgment from a Participant tendering Old Notes for exchange which are the
subject of such Book-Entry Confirmation that such Participant has received and
agrees to be bound by the terms and conditions of the Letter of Transmittal, and
that the Company may enforce such agreement against such Participant.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Old Notes and withdrawal of tendered Old Notes
will be determined by the Company in its sole discretion, which determination
will be final and binding. The Company reserves the absolute right to reject any
and all Old Notes not properly tendered or any Old Notes the Company's
acceptance of which would, in the opinion of counsel for the Company, be
unlawful. The Company also reserves the right to waive any defects,
irregularities or conditions of tender as to particular Old Notes. The Company's
interpretation of the terms and conditions of the Exchange Offer (including the
instructions in the Letter of Transmittal) will be final and binding on all
parties. Unless waived, any defects or irregularities in connection with tenders
of Old Notes must be cured within such time as the Company shall determine.
Although the Company intends to notify Holders of defects or irregularities with
respect to tenders of Old Notes, neither the Company, the Exchange Agent nor any
other person shall incur any liability for failure to give such notification.
Tenders of Old Notes will not be deemed to have been made until such defects or
irregularities have been cured or waived. Any Old Notes received by the Exchange
Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering Holders, unless otherwise provided in the Letter of
Transmittal, as soon as practicable following the Expiration Date.
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GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available, (ii) who cannot deliver their Old Notes, the Letter of
Transmittal or any other required documents to the Exchange Agent or (iii) who
cannot complete the procedures for book-entry transfer, prior to the Expiration
Date, may effect a tender if:
(a) the tender is made through an Eligible Institution;
(b) prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the Holder, the certificate number(s)
of such Old Notes and the principal amount of Old Notes tendered, stating
that the tender is being made thereby and guaranteeing that, within five New
York Stock Exchange trading days after the Expiration Date, the Letter of
Transmittal (or facsimile thereof) together with the certificate(s)
representing the Old Notes (or a confirmation of book-entry transfer of such
Old Notes into the Exchange Agent's account at the Book-Entry Transfer
Facility), and any other documents required by the Letter of Transmittal
will be deposited by the Eligible Institution with the Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as the certificate(s) representing all tendered
Old Notes in proper form for transfer (or a confirmation of book-entry
transfer of such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility), and all other documents required by the
Letter of Transmittal are received by the Exchange Agent within five New
York Stock Exchange trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to Holders who wish to tender their Old Notes according to the guaranteed
delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the Expiration Date. To
withdraw a tender of Old Notes in the Exchange Offer, a written or facsimile
transmission notice of withdrawal must be received by the Exchange Agent at its
address set forth herein prior to 5:00 p.m., New York City time, on the
Expiration Date. Any such notice of withdrawal must (i) specify the name of the
person having deposited the Old Notes to be withdrawn (the "Depositor"), (ii)
identify the Old Notes to be withdrawn (including the certificate number(s) and
principal amount of such Old Notes, or, in the case of Old Notes transferred by
book-entry transfer, the name and number of the account at the Book-Entry
Transfer Facility to be credited), (iii) be signed by the Holder in the same
manner as the original signature on the Letter of Transmittal by which such Old
Notes were tendered (including any required signature guarantees) or be
accompanied by documents of transfer sufficient to have the Trustee with respect
to the Old Notes register the transfer of such Old Notes into the name of the
person withdrawing the tender and (iv) specify the name in which any such Old
Notes are to be registered, if different from that of the Depositor. All
questions as to the validity, form and eligibility (including time of receipt)
of such notices will be determined by the Company, whose determination shall be
final and binding on all parties. Any Old Notes so withdrawn will be deemed not
to have been validly tendered for purposes of the Exchange Offer and no New
Notes will be issued with respect thereto unless the Old Notes so withdrawn are
validly retendered. Any Old Notes which have been tendered but which are not
accepted for exchange, will be returned to the Holder thereof without cost to
such Holder as soon as practicable after withdrawal, rejection of tender or
termination of the Exchange Offer. Properly withdrawn Old Notes may be
retendered by following one of the procedures described above under " --
Procedures for Tendering" at any time prior to the Expiration Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Company shall not
be required to accept for exchange, or exchange New Notes for, any Old Notes,
and may terminate or amend the Exchange Offer as provided herein before the
acceptance of such Old Notes, if:
(a) any action or proceeding is instituted or threatened in any court or
by or before any governmental agency with respect to the Exchange Offer
which, in the sole judgment of the Company, might
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materially impair the ability of the Company to proceed with the Exchange
Offer or any material adverse development has occurred in any existing
action or proceeding with respect to the Company or any of its subsidiaries;
or
(b) any change, or any development involving a prospective change, in
the business or financial affairs of the Company or any of its subsidiaries
has occurred which, in the sole judgment of the Company, might materially
impair the ability of the Company to proceed with the Exchange Offer; or
(c) any law, statute, rule, regulation or interpretation by the Staff is
proposed, adopted or enacted, which, in the sole judgment of the Company,
might materially impair the ability of the Company to proceed with the
Exchange Offer or materially impair the contemplated benefits of the
Exchange Offer to the Company; or
(d) any governmental approval has not been obtained, which approval the
Company shall, in its sole discretion, deem necessary for the consummation
of the Exchange Offer as contemplated hereby.
If the Company determines in its sole discretion that any of the conditions
are not satisfied, the Company may (i) refuse to accept any Old Notes and return
all tendered Old Notes to the tendering Holders, (ii) extend the Exchange Offer
and retain all Old Notes tendered prior to the expiration of the Exchange Offer,
subject, however, to the rights of Holders to withdraw such Old Notes (see "--
Withdrawal of Tenders") or (iii) waive such unsatisfied conditions with respect
to the Exchange Offer and accept all properly tendered Old Notes which have not
been withdrawn. If such waiver constitutes a material change to the Exchange
Offer, the Company will promptly disclose such waiver by means of a prospectus
supplement that will be distributed to the registered Holders, and the Company
will extend the Exchange Offer, in accordance with applicable rules of the
Commission and published interpretation of the Staff, for a period of five to
ten business days, depending upon the significance of the waiver and the manner
of disclosure to the registered Holders, if the Exchange Offer would otherwise
expire during such five to ten business day period.
EXCHANGE AGENT
Marine Midland Bank has been appointed as Exchange Agent for the Exchange
Offer. Questions and requests for assistance, requests for additional copies of
this Prospectus or of the Letter of Transmittal and requests for Notices of
Guaranteed Delivery should be directed to the Exchange Agent addressed as
follows:
Marine Midland Bank
Corporate Trust Operations
140 Broadway - "A" Level
New York, New York 10005-1180
Telephone: (212) 658-6433
Facsimile: (212) 658-6425
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telephone or in person by officers and regular
employees of the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers or others soliciting
acceptances of the Exchange Offer. The Company, however, will pay the Exchange
Agent reasonable and customary fees for its services and will reimburse it for
its reasonable out-of-pocket expenses in connection therewith and will reimburse
the Holders of the Old Notes for the reasonable fees and expenses of not more
than one firm of counsel designated by the holders of a majority in principal
amount of the Old Notes outstanding within the meaning of the Indenture to act
as counsel for all Holders of Old Notes in connection therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company. Such expenses include fees and expenses of the Exchange
Agent and Trustee, accounting and legal fees and printing costs, among others.
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The Company will pay all transfer taxes, if any, applicable to the exchange
of Old Notes pursuant to the Exchange Offer. If, however, certificates
representing New Notes or Old Notes for principal amounts not tendered or
accepted for exchange are to be delivered to, or are to be issued in the name
of, any person other than the registered Holder of the Old Notes tendered, or if
tendered Old Notes are registered in the name of any person other than the
person signing the Letter of Transmittal, or if a transfer tax is imposed for
any reason other than the exchange of Old Notes pursuant to the Exchange Offer,
then the amount of any such transfer taxes (whether imposed on the registered
Holder or any other persons) will be payable by the tendering Holder. If
satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of such transfer taxes will
be billed directly to such tendering Holder.
ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying value as the Old Notes,
which is face value, as reflected in the Company's accounting records on the
date of the exchange. Accordingly, no gain or loss for accounting purposes will
be be recognized.
TERMINATION OF CERTAIN RIGHTS
Holders of the New Notes will not be entitled to the benefits of the
Registration Rights Agreement, pursuant to which the Company agreed, for the
benefit of holders of the Old Notes, that it would, at its expense, (i) as soon
as practicable after the initial issuance of the Old Notes, file a registration
statement with the Commission with respect to a registered offer to exchange the
Old Notes for the New Notes and (ii) use its best efforts to cause such
registration statement to be declared effective under the Securities Act by
August 31, 1994 and to cause the New Notes to be listed on a national securities
exchange promptly after the consummation of the Exchange Offer.
In addition, pursuant to the Registration Rights Agreement, in the event
that applicable interpretations of the Staff do not permit the Company to effect
the Exchange Offer or if for any other reason the Exchange Offer is not
consummated by August 31, 1994, or if the Initial Purchasers so request with
respect to Old Notes not eligible to be exchanged for New Notes in the Exchange
Offer or if any holder of Old Notes is not eligible to participate in the
Exchange Offer or does not receive freely tradeable New Notes in the Exchange
Offer, the Company will, at its expense, (a) promptly file a shelf registration
statement (a "Shelf Registration Statement") permitting resales from time to
time of the Old Notes, (b) use its best efforts to cause such registration
statement to become effective and (c) use its best efforts to keep such
registration statement current and effective until three years from the date it
becomes effective or such shorter period that will terminate when all the Old
Notes covered by such registration statement have been sold pursuant thereto.
The Company, at its expense, will provide to each holder of the Old Notes copies
of the prospectus that is a part of the Shelf Registration Statement, notify
each such holder when the Shelf Registration Statement has become effective and
take certain other actions as are required to permit unrestricted resales of the
Old Notes from time to time. A holder of Old Notes who sells such Old Notes
pursuant to the Shelf Registration Statement generally will be required to be
named as a selling security holder in the related prospectus and to deliver a
prospectus to purchasers, will be subject to certain of the civil liability
provisions under the Securities Act in connection with such sales and will be
bound by the provisions of the Registration Rights Agreement which are
applicable to such holder (including certain indemnification obligations).
In the event that the Exchange Offer is not consummated pursuant to its
terms or the Shelf Registration Statement is not declared effective on or prior
to August 31, 1994, the interest rate borne by the Old Notes shall be increased
by 50 basis points per annum following such date. Such interest rate will
increase by an additional 25 basis points per annum at the beginning of each
subsequent 60-day period, up to a maximum aggregate increase of 150 basis points
per annum. Upon the consummation of the Exchange Offer or the effectiveness of
the Shelf Registration Statement, as the case may be, the interest rate borne by
the Old Notes will be reduced from and including the date on which either event
occurs by the amount of any such increase over 11 1/4%. See "-- Resales of the
New Notes" and "-- Consequences of Failure to Exchange."
CONSEQUENCES OF FAILURE TO EXCHANGE
The Old Notes that are not exchanged for New Notes pursuant to the Exchange
Offer will remain "restricted securities" (within the meaning of the Securities
Act). Accordingly, prior to the date that is three
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years after the later of the date of the original issue thereof and the last
date on which the Company or any affiliate of the Company was the owner of such
Old Notes (the "Resale Restriction Termination Date"), such Old Notes may be
resold only (i) to the Company, (ii) to a person whom the seller reasonably
believes is a "qualified institutional buyer" purchasing for its own account or
for the account of another "qualified institutional buyer" in compliance with
the resale limitations of Rule 144A, (iii) to an "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act) that is an institution (an "Institutional Accredited Investor") that, prior
to such transfer, furnishes to the Trustee a written certification containing
certain representations and agreements relating to the restrictions on transfer
of the Notes (the form of which letter can be obtained from the Trustee), (iv)
pursuant to the limitations on resale provided by Rule 144 under the Securities
Act (if available), (v) pursuant to the resale provisions of Rule 904 of
Regulation S under the Securities Act, (vi) pursuant to an effective
registration statement under the Securities Act or (vii) pursuant to any other
available exemption from the registration requirements of the Securities Act,
subject in each of the foregoing cases to any requirement of law that the
disposition of its property or the property of such account be at all times
within its control and to compliance with applicable state securities laws. The
foregoing restrictions on resale will not apply subsequent to the Resale
Restriction Termination Date.
RESALES OF THE NEW NOTES
With respect to resales of New Notes, based on existing interpretations of
the Staff, the Company believes that the New Notes issued pursuant to the
Exchange Offer in exchange for Old Notes may be offered for resale, resold and
otherwise transferred by holders thereof (other than any such holder which is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery
requirements of the Securities Act; provided such New Notes are acquired in the
ordinary course of such holders' business and such holders have no arrangement
with any person to participate in any public distribution of the New Notes. Each
Participating Broker-Dealer receiving New Notes in the Exchange Offer will be
subject to a prospectus delivery requirement with respect to resales of such New
Notes. Each Participating Broker-Dealer must acknowledge that it will deliver a
resale prospectus in connection with any resale of such New Notes. The Letter of
Transmittal which accompanies this Prospectus states that by so acknowledging
and by delivering a resale prospectus, a Participating Broker-Dealer will be
deemed not to be acting in the capacity of an "underwriter" (within the meaning
of Section 2(11) of the Securities Act). This Prospectus, as it may be amended
or supplemented from time to time, may be used by a Participating Broker-Dealer
in connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired by such Participating Broker-Dealer as result of
market-making or other trading activities. Pursuant to the Registration Rights
Agreement, the Company has agreed to permit Participating Broker-Dealers and
other persons, if any, subject to similar prospectus delivery requirements to
use this Prospectus in connection with the resale of such New Notes for a period
of 180 days from the date on which the Registration Statement of which this
Prospectus is a part is first declared effective.
Each holder of the Old Notes who wishes to exchange its Old Notes for New
Notes in the Exchange Offer will be required to make certain representations to
the Company in the accompanying Letter of Transmittal, including that (i) any
New Notes to be received by it will be acquired in the ordinary course of its
business, (ii) it has no arrangement with any person to participate in a public
distribution (within the meaning of the Securities Act) of the New Notes, and
(iii) it is not an "affiliate," as defined in Rule 405 of the Securities Act of
the Company, or if it is such an affiliate, that it will comply with the
registration and prospectus delivery requirements of the Securities Act to the
extent applicable to it. In addition, each holder who is not a broker-dealer
will be required to represent that it is not engaged in, and does not intend to
engage in, a public distribution of the New Notes. Each Participating
Broker-Dealer who receives New Notes for its own account in exchange for Old
Notes that were acquired by it as a result of market-making or other trading
activities, will be required to acknowledge that it will deliver a prospectus in
connection with any resale by it of such Old Notes. For a description of the
procedures for certain resales by broker-dealers, see "Plan of Distribution."
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PLAN OF DISTRIBUTION
Each Participating Broker-Dealer that holds Old Notes that were acquired for
its own account as a result of market-making or other trading activities (other
than Old Notes acquired directly from the Company), may exchange such Old Notes
for New Notes pursuant to the Exchange Offer. However, a Participating
Broker-Dealer may be deemed to be an "underwriter" within the meaning of the
Securities Act and, therefore, will be required to deliver a prospectus
satisfying the requirements of the Act in connection with any resales by it of
such New Notes. This Prospectus, as it may be amended or supplemented from time
to time, may be used by a Participating Broker-Dealer in connection with resales
of New Notes received in exchange for Old Notes in satisfaction of such
prospectus-delivery requirement. The delivery by a Participating Broker-Dealer
of this Prospectus in connection with resales of New Notes shall not be deemed
to be an admission by such Participating Broker-Dealer that it is an
"underwriter" within the meaning of the Act. The Company has agreed that it
shall cause the Registration Statement of which this Prospectus is a part to
remain current and continuously effective for a period of 180 days from the date
on which such Registration Statement was first declared effective and that it
shall supplement or amend from time to time this Prospectus to the extent
necessary to permit this Prospectus (as so supplemented or amended) to be
delivered by Participating Broker-Dealers in connection with their resales of
New Notes.
The Company will not receive any proceeds from any sale of New Notes by
Participating Broker-Dealers or otherwise. New Notes received by Participating
Broker-Dealers for their own account pursuant to the Exchange Offer may be sold
from time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the New Notes or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or at negotiated
prices. Any such resale may be made directly to purchasers or to or through
dealers who may receive compensation in the form of commissions, concessions or
allowances from any such Participating Broker-Dealer and/or the purchasers of
any such New Notes. Any Broker-Dealer that resells New Notes that were received
by it for its own account pursuant to the Exchange Offer and any broker or
dealer that participates in a distribution of such New Notes may be deemed to be
an "underwriter" within the meaning of the Securities Act and any profit on any
such resale of New Notes and any commissions, concessions or allowances received
by any such persons may be deemed to be underwriting compensation under the
Securities Act. The accompanying Letter of Transmittal states that by
acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
For a period 180 days from the date on which the Registration Statement of
which this Prospectus is a part is first declared effective, the Company will
deliver to each holder of New Notes, without charge, as many copies of this
Prospectus and any amendment or supplement to this Prospectus as such person may
reasonably request. The Company has agreed to pay all expenses incident to the
Exchange Offer other than commissions, concessions or allowances of any brokers
or dealers and certain transfer taxes and will indemnify the holders of the New
Notes (including any Participating Broker-Dealers) against certain liabilities,
including liabilities under the Securities Act, or to the extent such
indemnification is unavailable or insufficient, to contribute to any payments
that such Participating Broker-Dealers may be required to make in respect
thereof.
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DESCRIPTION OF THE NEW NOTES
GENERAL
The New Notes will be issued under the Indenture, dated May 2, 1994, among
the Company, the Guarantors and Marine Midland Bank, as trustee (the "Trustee"),
pursuant to which the Old Notes were issued. For purposes of the following
summary, the Old Notes and the New Notes shall be collectively referred to as
the "Notes." The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act") and in effect on the Closing Date.
The Notes are subject to all such terms, and holders of the Notes are referred
to the Indenture and the Trust Indenture Act for a statement thereof. The
following summary of certain provisions of the Indenture does not purport to be
complete and is qualified in its entirety by reference to the Indenture,
including the definitions therein of certain terms used below. A copy of the
Indenture has been filed as an exhibit to the Registration Statement of which
this Prospectus is a part. The definitions of certain terms used in the
following summary are set forth below under "Certain Definitions." Copies of the
Indenture will be made available to prospective purchasers of the Notes upon
request.
The Notes will be general unsecured obligations of the Company, subordinate
in right of payment to all Senior Indebtedness of the Company, and senior or
PARI PASSU in right of payment to all existing and future subordinated
Indebtedness of the Company.
SUBSIDIARY GUARANTEES
The Company's payment obligations under the Notes are jointly and severally
guaranteed by the Guarantors. The obligations of each Guarantor under its
Guarantee are unconditional and absolute, irrespective of any invalidity,
illegality, unenforceability of any Note or the Indenture or any extension,
compromise, waiver or release in respect of any obligation of the Company or any
other Subsidiary Guarantor under any Note or the Indenture, or any modification
or amendment of or supplement to the Indenture.
The obligations of any Guarantor under its Guarantee are subordinated, to
the same extent as the obligations of the Company in respect of the Notes, to
the prior payment in full in cash of all Senior Indebtedness of such Guarantor,
which will include any guarantee issued by such Guarantor of any Senior
Indebtedness, including Indebtedness under the New Credit Agreement. The
obligations of each Guarantor under its Guarantee are limited to the extent
necessary to ensure that such Guarantee does not constitute a fraudulent
conveyance under applicable law. See "Investment Considerations -- Holding
Company Structure." Each Guarantor that makes a payment or distribution under
its Guarantee shall be entitled to a contribution from each other Guarantor so
long as exercise of such right does not impair the rights of holders of Notes
under any Guarantee. A Guarantor shall be released and discharged from its
obligations under its Guarantee under certain limited circumstances, including
(i) upon the sale or dissolution of such Guarantor, (ii) upon the consummation
of any transaction whereupon such Guarantor becomes a Permitted Joint Venture,
and (iii) upon the consummation of any transaction whereupon the Company's and
its Restricted Subsidiaries' Investment in such Guarantor constitutes a
Permitted Minority Interest.
Separate financial statements of the Guarantors are not included herein
because such Guarantors are jointly and severally liable with respect to the
Notes, and the aggregate consolidated net assets, earnings and equity of the
Guarantors are substantially equivalent to the net assets, earnings and equity
of the Company on a consolidated basis.
PRINCIPAL, MATURITY AND INTEREST
The Notes are limited in aggregate principal amount to $375 million and will
mature on April 15, 2004. Interest on the Notes will accrue at the rate of
11 1/4% per annum and will be payable semi-annually on each April 15 and October
15, commencing on October 15, 1994, to the holder of record on the immediately
preceding April 1 and October 1, whether or not a business day. Interest on the
Notes will accrue from the most recent date to which interest has been paid or,
if no interest has been paid, from the date of issuance. Interest will be
computed on the basis of a 360-day year, comprised of twelve 30-day months. The
Notes will be payable both as to principal and interest at the office or agency
of the Company maintained for such purpose within the City of New York, Borough
of Manhattan or, at the option of the Company, payment of
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interest may be made by check mailed to the holders of the Notes at their
respective addresses set forth in the register of holders of Notes. Unless
otherwise designated by the Company, the Company's office or agency maintained
for such purpose in the City of New York, Borough of Manhattan will be the
office of the Trustee. The Notes will be issued in denominations of $1,000 and
integral multiples thereof.
OPTIONAL REDEMPTION
The Notes are not redeemable at the option of the Company prior to April 15,
1999. Thereafter, the Notes will be subject to redemption at the option of the
Company, in whole or in part, at the redemption prices (expressed as a
percentage of the principal amount) set forth below, plus accrued and unpaid
interest thereon to the applicable redemption date, if redeemed during the
twelve-month period beginning April 15 of the years indicated below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICES
- ------------------------------------------------------------- -----------
<S> <C>
1999......................................................... 105.625%
2000......................................................... 103.750%
2001......................................................... 101.875%
2002 and thereafter.......................................... 100.000%
</TABLE>
SINKING FUND
The Notes are not subject to the benefit of any sinking fund.
SELECTION AND NOTICE
If less than all of the Notes are to be redeemed at any time, selection of
the Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed or, if the Notes are not listed on a national securities
exchange, on a pro rata basis, provided that Notes shall be redeemed in
principal amounts of $1,000 or integral multiples thereof. Notice of redemption
shall be mailed by first class mail at least 30 but not more than 60 days before
the redemption date to each holder of Notes to be redeemed at its registered
address. If any Note is to be redeemed in part only, the notice of redemption
that relates to such Note shall state the portion of the principal amount
thereof to be redeemed. A new Note in principal amount equal to the unredeemed
portion thereof will be issued in the name of the holder thereof upon
cancellation of the original Note. On and after the redemption date, interest
ceases to accrue on Notes or portions of them called for redemption.
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each holder of the Notes shall
have the right to require the repurchase of such holder's Notes in whole or in
part pursuant to the offer described below (the "Change of Control Offer") at a
purchase price equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest, if any, to the date of purchase. Within 10 days
following any Change of Control, the Company shall mail a notice to the Trustee
and to each holder stating: (i) that the Change of Control Offer is being made
pursuant to the "Change of Control" provision of the Indenture and that all
Notes tendered and not subsequently withdrawn will be accepted for payment and
paid for by the Company; (ii) the purchase price and the purchase date (which
shall not be less than 30 days nor more than 60 days after the date such notice
is mailed) (the "Change of Control Payment Date"); (iii) that any Note not
tendered will continue to accrue interest and shall continue to be governed by
the terms of the Indenture in all respects; (iv) that, unless the Company
defaults in the payment thereof, all Notes accepted for payment pursuant to the
Change of Control Offer shall cease to accrue interest on and after the Change
of Control Payment Date; (v) that holders electing to have any Notes purchased
pursuant to a Change of Control Offer will be required to surrender the Notes to
be purchased to the Paying Agent at the address specified in the notice prior to
the close of business on the business day next preceding the Change of Control
Payment Date; (vi) that holders will be entitled to withdraw their election on
the terms and conditions set forth in such notice; and (vii) that holders whose
Notes are being purchased only in part will be issued new Notes equal in
principal amount to the unpurchased portion of the Notes surrendered; provided
that each Note purchased and each such new Note issued shall be in a principal
amount of $1,000 or integral multiples thereof.
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On (or, in the case of clause (ii) of this paragraph, at the Company's
election, before) the Change of Control Payment Date, the Company shall (i)
accept for payment all Notes or portions thereof tendered and not theretofore
withdrawn, pursuant to the Change of Control Offer, (ii) deposit with the Paying
Agent immediately available funds sufficient to pay the purchase price of all
Notes or portions thereof accepted for payment, and (iii) deliver or cause to be
delivered to the Trustee all Notes so tendered, together with an officer's
certificate specifying the Notes or portions thereof tendered to the Company.
The Paying Agent shall promptly mail to each holder of Notes so tendered payment
in an amount equal to the purchase price for such Notes, and the Trustee shall
promptly authenticate and mail to such holder one or more certificates
evidencing new Notes equal in principal amount to any unpurchased portion of the
Notes surrendered; provided that each such new Note shall be in a principal
amount of $1,000 or integral multiples thereof. The Company will publicly
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date.
The Company will comply with the requirements of Regulation 14E and Rule
13e-4 (other than the filing requirements of such rule) under the Exchange Act,
and any other securities laws and regulations thereunder that are applicable in
connection with the repurchase of the Notes resulting from a Change of Control.
SUBORDINATION
The Indebtedness evidenced by the Notes (including, without limitation,
principal, premium, if any, and interest) will be subordinated in right of
payment to the prior payment in full of all Senior Indebtedness.
Upon any distribution to creditors upon any liquidation, dissolution,
winding up, bankruptcy, reorganization, assignment for the benefit of creditors,
marshalling of assets and liabilities, insolvency, receivership or similar
proceedings relating to the Company, the holders of Senior Indebtedness will be
entitled to receive payment in full of all obligations with respect to Senior
Indebtedness before the holders of Notes receive any direct or indirect payment
(excluding certain permitted equity or subordinated securities) on account of
principal of, premium, if any, or interest on the Notes.
Upon the final maturity of any Specified Senior Indebtedness by lapse of
time, acceleration (unless waived, rescinded or annulled) or otherwise, all
principal thereof and accrued and unpaid interest thereon and all accrued and
unpaid expenses, fees and other amounts in respect thereof, shall first be paid
in full in Cash, or such payment duly provided for in Cash or in a manner
otherwise satisfactory to the holders of such Specified Senior Indebtedness,
before any direct or indirect payment (excluding certain permitted equity or
subordinated securities) is made on account of principal of, premium, if any, or
interest on the Notes (other than amounts already deposited for defeasance or
redemption pursuant to applicable provisions of the Indenture).
The Company may not directly or indirectly pay principal of, premium, if
any, or interest on the Notes and may not acquire or defease any Notes for Cash
or property (in each case, excluding certain permitted equity or subordinated
securities) if (i) a default in the payment of principal of or interest on any
Specified Senior Indebtedness or in the payment of any letter of credit
commission under the New Credit Agreement occurs and is continuing that permits,
or upon the lapse of time would permit, the holders (or their agent) of such
Specified Senior Indebtedness to accelerate its maturity or the maturity of
which has been accelerated (a "Payment Default"); or (ii) a default, other than
a Payment Default, on any Specified Senior Indebtedness occurs and is continuing
that permits the holders (or the agent) of such Specified Senior Indebtedness to
accelerate its maturity (a "Non-Payment Default"), and such default is either
the subject of judicial proceedings or the Trustee or the Paying Agent receives
a notice of the default from a Person who may give it pursuant to the terms of
the Indenture. The Trustee in making any payment to the holders shall be
entitled to assume that no Payment Default or Non-Payment Default has occurred
unless it has received written notice to the contrary at least one business day
prior to such payment. A Payment Default or Non-Payment Default with respect to
Specified Senior Indebtedness does not suspend the rights of the Trustee or the
holders of the Notes to accelerate the maturity of the Notes. See "Events of
Default and Remedies."
The Trustee or the Paying Agent shall resume payments on the Notes, and the
Company may acquire the Notes, upon the earlier of (a) in the case of a Payment
Default, the date such Payment Default is cured or waived, or (b) in the case of
a Non-Payment Default, the 179th day after receipt of notice if the default is
not the subject of judicial proceedings, if otherwise permitted under the terms
of the Indenture at that time.
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During any consecutive 360-day period, only one such 179-day period may commence
during which payment of principal of or interest on the Notes may not be made.
No Non-Payment Default with respect to Specified Senior Indebtedness which
existed or was continuing on the date of the commencement of any such 179-day
period will be, or can be, made the basis for the commencement of a second such
179-day period, whether or not within a period of 360 consecutive days, unless
such default has been cured or waived for a period of not less than 90
consecutive days.
As of March 31, 1994, giving pro forma effect to the Financing Transactions,
the aggregate outstanding principal amount of Senior Indebtedness of the Company
and the Guarantors would have been approximately $232.4 million. See
"Capitalization."
CERTAIN COVENANTS
LIMITATION ON RESTRICTED PAYMENTS. The Company will not, and will not
permit any of its Restricted Subsidiaries to, directly or indirectly, (i)
declare or pay any dividend or make any distribution on account of the Company's
or any of its Restricted Subsidiaries' Capital Stock or other Equity Interests
(other than dividends or distributions payable to the Company or any of its
Restricted Subsidiaries or payable in shares of Capital Stock or other Equity
Interests of the Company other than Redeemable Stock), (ii) purchase,
repurchase, redeem or otherwise acquire or retire for value any Equity Interests
of the Company or any of its Subsidiaries from any Person (other than from the
Company or any of its Restricted Subsidiaries); (iii) purchase, repurchase,
redeem, prepay, defease, or otherwise acquire or retire for value (A) any
Indebtedness of the Company that is subordinated in right of payment to the
Notes or the Guarantees thereof, prior to scheduled maturity, repayment or
sinking fund payment or (B) any Indebtedness of any Unrestricted Subsidiary or
(iv) make Investments other than Permitted Investments (the foregoing actions
set forth in clauses (i) through (iv) being referred to as "Restricted
Payments"), if:
(a) at the time of such Restricted Payment, a Default or Event of Default
shall have occurred and be continuing or shall occur as a consequence
thereof; or
(b) such Restricted Payment, together with the aggregate of all other
Restricted Payments made on or after the Closing Date exceeds the sum of
(A) $30 million, (B) 50% of the Consolidated Net Income of the Company
accrued on a cumulative basis for the period beginning on the first day
of the first month following the Closing Date and ending on the last day
of the last month immediately preceding the month in which such
Restricted Payment occurs (or, if aggregate cumulative Consolidated Net
Income for such period is a deficit, minus 100% of such deficit), (C)
100% of the aggregate net cash proceeds received by the Company after the
Closing Date from the issuance or sale of Capital Stock or other Equity
Interests of the Company (other than such Capital Stock or other Equity
Interests issued or sold to a Subsidiary of the Company and other than
Redeemable Stock), (D) the aggregate net cash proceeds received on or
after the Closing Date by the Company from the issuance or sale of debt
securities of the Company that have subsequently been converted into or
exchanged for Capital Stock or other Equity Interests of the Company
(other than Redeemable Stock) plus the aggregate Cash received by the
Company at the time of such conversion or exchange, (E) 100% of the
aggregate Cash received by the Company after the Closing Date upon the
exercise of options or warrants (whether issued prior to or after the
Closing Date) to purchase the Company's Capital Stock and (F) 100% of the
aggregate net cash proceeds received by the Company or any Restricted
Subsidiary from its Unrestricted Subsidiaries after the Closing Date on
account of the return of Investments (other than the return of Permitted
Investments in Unrestricted Subsidiaries) in such Unrestricted
Subsidiaries; or
(c) immediately after such Restricted Payment, the Company would not be
permitted to incur $1.00 of additional Indebtedness pursuant to the first
paragraph of "-- LIMITATION ON ADDITIONAL INDEBTEDNESS" below.
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The foregoing provisions will not prohibit (i) so long as no Default or
Event of Default has occurred and is continuing or would result therefrom, the
payment of any dividend within 60 days after the date of declaration thereof, if
at said date of declaration such payment would have complied with the provisions
of the Indenture; (ii) to the extent required under applicable law, or if the
failure to do so would create a material risk of disqualification of the ESOP
under the Internal Revenue Code, the acquisition by the Company of its common
stock from the ESOP or from participants and beneficiaries of the ESOP; (iii)
the acquisition by the Company or any of its Restricted Subsidiaries of Equity
Interests of the Company or such Restricted Subsidiary, if the exclusive
consideration for such acquisition is the issuance by the Company or such
Restricted Subsidiary of its Equity Interests; (iv) the purchase, redemption or
acquisition by the Company, for nominal consideration, of rights under the
Rights Plan prior to such time as such rights have become exercisable; (v) the
redemption, repurchase, acquisition or retirement of Indebtedness of the Company
or its Restricted Subsidiaries being concurrently refinanced by Refinancing
Indebtedness permitted under "-- LIMITATION ON ADDITIONAL INDEBTEDNESS" below;
(vi) the purchase, repayment, redemption, prepayment, defeasance, acquisition or
retirement of any Indebtedness, if the exclusive consideration therefor is the
issuance by the Company of its Equity Interests; (vii) the redemption,
repurchase, acquisition or retirement of Equity Interests in a Permitted Joint
Venture, provided that (A) after giving effect to such transaction, the
Company's Consolidated Interest Coverage Ratio is at least 2.00 to 1.0x, (B) no
Default or Event of Default has occurred and is continuing or would result
therefrom, (C) if consideration for such transaction is in excess of $5 million,
such transaction is approved by a majority of the Disinterested Directors of the
Company and (D) if consideration for such transaction is in excess of $25
million, the Company has received an opinion from a nationally recognized
investment banking firm that such transaction is fair to the Company, from a
financial point of view; (viii) dividend payments to the holders of minority
interests in Permitted Joint Ventures, ratably in accordance with their
respective Equity Interests or, if not ratably, then in accordance with the
priorities set forth in the respective organizational documents for, and
agreements among holders of Equity Interests in, such Permitted Joint Ventures;
(ix) the Guarantee of Indebtedness of a Permitted Joint Venture if the
incurrence of such Indebtedness is permitted under "-- LIMITATION ON ADDITIONAL
INDEBTEDNESS" below and if such Guarantee is a Permitted Investment pursuant to
clause (f) of the definition thereof; or (x) the acquisition or retirement of
options and warrants upon the exercise thereof.
The Company shall deliver to the Trustee within 60 days after the end of
each of the Company's first three fiscal quarters (120 days after the end of the
Company's fiscal year) in which a Restricted Payment is made under the first
paragraph of this covenant, an officer's certificate setting forth each
Restricted Payment made in such fiscal quarter, stating that each such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by the "Limitation on Restricted Payments" covenant were
computed, which calculations may be based on the Company's financial statements
included in filings required under the Exchange Act for such quarter or such
year. For purposes of calculating the aggregate amount of Restricted Payments
that are permitted under clause (b) of the first paragraph of "-- LIMITATIONS ON
RESTRICTED PAYMENTS," the amounts expended for Restricted Payments permitted
under clauses (ii) through (x) above shall be excluded.
LIMITATION ON PAYMENT RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES. The
Indenture provides that the Company shall not, and shall not permit any of its
Restricted Subsidiaries to, from and after the Closing Date, directly or
indirectly, create or otherwise cause or permit to exist or become effective, or
enter into any agreement with any Person that would cause, any encumbrance or
restriction on the ability of any Restricted Subsidiary to (A) pay dividends or
make any other distributions on its Capital Stock, the Capital Stock of any of
its Restricted Subsidiaries or on any other interest or participation in, or
measured by, its profits, which interest or participation is owned by the
Company or any of its Restricted Subsidiaries, (B) pay any Indebtedness owed to
the Company or any of its Restricted Subsidiaries, (C) make loans or advances to
the Company or any of its domestic Restricted Subsidiaries, (D) transfer any of
its properties or assets to the Company or any of its domestic Restricted
Subsidiaries or (E) in the case of a Restricted Subsidiary that is required to
be a Guarantor pursuant to the "Additional Guarantors" covenant, execute a
Guarantee of the Notes or any renewals or refinancings thereof, except, in each
case, for such encumbrances or restrictions existing under or by reason of (1)
applicable law and regulation, (2) the Indenture, (3) the New Credit
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Agreement, and any replacement or substitute facility or facilities thereof, in
each case to the extent that such encumbrances and restrictions are not
materially more restrictive on the Company and its Restricted Subsidiaries than
those contained in the New Credit Agreement as in effect on the Closing Date,
(4) instruments evidencing Indebtedness of another Person which is assumed by,
or which otherwise becomes the obligation of, such Restricted Subsidiary in
connection with the acquisition by such Restricted Subsidiary of another Person
(whether pursuant to a purchase of Equity Interests or assets) or in connection
with any transaction whereby such Restricted Subsidiary becomes a Permitted
Joint Venture, provided that (a) such Indebtedness was not originally incurred
in connection with or in anticipation of such acquisition or other transaction,
(b) such restrictions apply only to such Restricted Subsidiary and its
Subsidiaries and (c) except in the case of an acquisition or other transaction
whereby such Restricted Subsidiary becomes a Permitted Joint Venture,
immediately after such acquisition or other transaction, substantially all of
such Restricted Subsidiary's operations or assets consist of those acquired, (5)
restrictions upon the transfer of property or assets subject to Liens permitted
under the "Limitation on Liens" covenant below, or (6) restrictions which are
contained in instruments evidencing Indebtedness which refinances or refunds the
Indebtedness described in clauses (3) and (4).
ANTI-LAYERING. The Indenture provides that the Company shall not incur,
create, assume, guarantee or otherwise become liable for any Indebtedness that
is subordinated in right of payment to any Senior Indebtedness and senior in any
respect in right of payment to the Notes.
LIMITATION ON ADDITIONAL INDEBTEDNESS. The Indenture provides that the
Company shall not, and shall not permit any of its Restricted Subsidiaries,
directly or indirectly, to create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable with respect to any Indebtedness, unless,
after giving PRO FORMA effect to the incurrence of such Indebtedness and the
application of any of the proceeds therefrom to repay Indebtedness, the
Consolidated Interest Coverage Ratio of the Company for the four fiscal quarters
ending immediately prior to the date such additional Indebtedness is created,
incurred, issued, assumed or guaranteed will be at least 2.25 to 1.0x, provided
that such calculation shall give PRO FORMA effect to the acquisition of any
Person, business, property or assets made since the first day of such four
fiscal quarter period as if such acquisition had occurred at the beginning of
such four quarter period.
The foregoing limitations shall not apply to (i) Indebtedness under the New
Credit Agreement or any replacement or substitute facility or facilities thereof
(provided that Indebtedness under the New Credit Agreement or any replacement or
substitute facility or facilities, including unused commitments, shall not at
any time exceed $300 million in aggregate outstanding principal amount
(including the available undrawn amount of any letters of credit issued under
the New Credit Agreement or any replacement or substitute facility or facilities
thereof)); (ii) Indebtedness of the Company and its Restricted Subsidiaries,
which Indebtedness is in existence on the Closing Date; (iii) Indebtedness
represented by the Notes and the Guarantees of the Notes; (iv) Indebtedness
created, incurred, issued, assumed or guaranteed in exchange for or the proceeds
of which are used to extend, refinance, renew, replace, substitute or refund
Indebtedness permitted by clauses (ii) and (iii) of this covenant (the
"Refinancing Indebtedness"); PROVIDED HOWEVER, that (A) the principal amount of
such Refinancing Indebtedness shall not exceed the principal amount of
Indebtedness (including unused commitments) so extended, refinanced, renewed,
replaced, substituted or refunded (plus costs of issuance), (B) such Refinancing
Indebtedness ranks, relative to the Notes, no more senior than the Indebtedness
being refinanced thereby, (C) such Refinancing Indebtedness bears interest at a
market rate and (D) such Refinancing Indebtedness (1) shall have an Average Life
equal to or greater than the Average Life of the Indebtedness being extended,
refinanced, renewed, replaced, substituted or refunded or (2) shall not have a
scheduled maturity, principal repayment, sinking fund payment or mandatory
redemption on or prior to the maturity of the Notes; (v) Indebtedness of the
Company or any Restricted Subsidiary to any Restricted Subsidiary or to the
Company; (vi) Indebtedness arising from guarantees, letters of credit, and bid
or performance bonds securing any obligations of the Company or any Restricted
Subsidiary incurred in the ordinary course of business; (vii) Indebtedness for
borrowed money denominated in foreign currencies not to exceed an aggregate
principal amount at any time equal to the equivalent in such foreign currencies
of $5 million in U.S. Dollars, (viii) Capital Lease Obligations in an aggregate
amount outstanding at any time not to exceed 5% of the Company's Consolidated
Net Assets; (ix) Non-Recourse
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Indebtedness incurred in connection with the acquisition of real property by the
Company or its Restricted Subsidiaries; (x) Guarantees of any Senior
Indebtedness, (xi) Guarantees by any Restricted Subsidiary of any Indebtedness
of the Company that is PARI PASSU with or subordinate in right of payment to the
Notes, provided that (A) in the case of a Guarantee of Indebtedness that is PARI
PASSU with the Notes, such Guarantee is PARI PASSU to the Guarantees of the
Notes, and (B) in the case of a Guarantee of Indebtedness that is subordinate to
the Notes, such Guarantee is similarly subordinated to the Guarantees of the
Notes, (xii) Guarantees by the Company of Indebtedness of any Restricted
Subsidiary that does not constitute Senior Indebtedness, provided that (A) in
the case of the Company's Guarantee of Indebtedness of a Guarantor that is
subordinate to such Guarantor's Guarantee of the Notes, the Company's Guarantee
of such Indebtedness is similarly subordinated to the Notes, and (B) in all
other cases, the Company's Guarantee of such Indebtedness is on a PARI PASSU
basis with the Notes, and (xiii) Indebtedness other than that permitted pursuant
to the foregoing clauses (i) through (xii) provided that the aggregate
outstanding amount of such additional Indebtedness does not at any time exceed
$50 million, all or any portion of which Indebtedness, notwithstanding clause
(i) above, may be incurred pursuant to the New Credit Agreement or any
replacement or substitute facility or facilities thereof.
LIMITATION ON LIENS. The Indenture provides that the Company shall not, and
shall not permit any of its Restricted Subsidiaries to, directly or indirectly,
create, incur, assume or suffer to exist any Lien on any of their respective
assets, now owned or hereinafter acquired, securing any Indebtedness that is
PARI PASSU with or subordinated in right of payment to the Notes, unless the
Notes are equally and ratably secured; PROVIDED that, if such Indebtedness which
expressly by its terms is subordinate or junior in right of payment to any other
Indebtedness of the Company is expressly subordinate to the Notes, the Lien
securing such subordinate or junior Indebtedness shall be subordinate and junior
to the Lien securing the Notes with the same relative priority as such
subordinated or junior Indebtedness shall have with respect to the Notes. The
Company and its Restricted Subsidiaries may at any time, directly or indirectly,
create, incur, assume or suffer to exist any Lien on any of their respective
assets, now owned or hereafter acquired, securing any Senior Indebtedness or any
Non-Recourse Indebtedness permitted under the "Limitation on Additional
Indebtedness" covenant.
LIMITATION ON SALE OF SUBSIDIARY SHARES. The Indenture provides that the
Company shall not (i) sell, pledge, hypothecate or otherwise convey or dispose
of any Equity Interests of a Restricted Subsidiary except to a Restricted
Subsidiary or (ii) permit a Restricted Subsidiary to issue or sell any Equity
Interests of such Restricted Subsidiary to any Person other than to the Company
or to another Restricted Subsidiary; PROVIDED that (a) the Company and its
Restricted Subsidiaries may consummate an Asset Sale of all of the Equity
Interests owned by the Company and its Restricted Subsidiaries of such
Restricted Subsidiary, (b) the Company may pledge, hypothecate or otherwise
grant a Lien on any Equity Interests of any Restricted Subsidiary to the extent
permitted under the "Limitation on Liens" covenant, and (c) the Company may sell
or otherwise convey or dispose of any Equity Interest in such Restricted
Subsidiary, and such Restricted Subsidiary may issue or sell any Equity Interest
to any Person other than to the Company or to another Restricted Subsidiary, if
(i) immediately after the consummation of such transaction such Restricted
Subsidiary is or becomes a Permitted Joint Venture, provided that (A) after
giving effect to such transaction, the Company's Consolidated Interest Coverage
Ratio is at least 2.00 to 1.0x, (B) no Default or Event of Default has occurred
and is continuing or would result therefrom, (C) if such transaction involves
the issuance or sale of Equity Interests having a fair market value in excess of
$5 million, the transaction is approved by a majority of the Disinterested
Directors of the Company, (D) if such transaction involves the issuance or sale
of Equity Interests having a fair market value in excess of $25 million, the
Company has received an opinion from a nationally recognized investment banking
firm that such transaction is fair to the Company, from a financial point of
view, and (E) the sum of (x) the Book Value of assets of such Restricted
Subsidiary immediately prior to the transaction pursuant to which it became a
Permitted Joint Venture, together with the Book Value of assets of all other
Guarantors which have become Permitted Joint Ventures (determined for each such
Guarantor as of the time immediately prior to the transaction pursuant to which
it became a Permitted Joint Venture) and (y) the aggregate Book Values of
Permitted Minority Investments of the Company and its Restricted Subsidiaries
(the Book Value of each such Permitted Minority Investment determined as of the
time such Investment was made), does not exceed $100 million; (ii) the Company's
and
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its Restricted Subsidiaries' Investment in such Person becomes a Permitted
Minority Investment, provided that (A) after giving effect to such transaction,
the Company's Consolidated Interest Coverage Ratio is at least 2.00 to 1.0x, (B)
no Default or Event of Default has occurred and is continuing or would result
therefrom, (C) the sum of (x) the Book Value of such Permitted Minority
Investment, together with the aggregate Book Values of all other Permitted
Minority Investments of the Company and its Restricted Subsidiaries (the Book
Value of each such Permitted Minority Investment determined as of the date such
Investment was made) and (y) the aggregate Book Value of assets of all
Guarantors that have become Permitted Joint Ventures (determined for each such
Guarantor as of the time immediately prior to the transaction pursuant to which
it became a Permitted Joint Venture), do not exceed $100 million, (D) if such
transaction involves the issuance or sale of Equity Interests having a fair
market value in excess of $5 million, the transaction is approved by a majority
of the Disinterested Directors of the Company, and (E) if such transaction
involves the issuance or sale of Equity Interests having a fair market value in
excess of $25 million, the Company shall have received an opinion from a
nationally recognized investment banking firm that such transaction is fair to
the Company, from a financial point of view; or (iii) the Company's and its
Restricted Subsidiaries' Investment in such Person otherwise constitutes a
Permitted Investment.
LIMITATION ON USE OF PROCEEDS FROM ASSET SALES. The Indenture provides that
the Company and its Restricted Subsidiaries shall not, directly or indirectly,
consummate any Asset Sale with or to any Person other than the Company or a
Restricted Subsidiary, unless (i) the Company or the Restricted Subsidiary, as
the case may be, receives consideration at the time of any such Asset Sale at
least equal to the fair market value of the asset sold or otherwise disposed of,
(ii) at least 60% of the net proceeds from such Asset Sale are received in Cash
at closing (unless (A) such Asset Sale is a lease, (B) such Asset Sale is in
connection with the creation of, Investment in, or issuance or sale of Equity
Interests by, a Permitted Joint Venture, or (C) such Asset Sale is in connection
with the making of, or would result in, a Permitted Minority Investment) and
(iii) with respect to any Asset Sale involving the Equity Interest of any
Restricted Subsidiary (unless (A) such Restricted Subsidiary is, or as a result
of such Asset Sale would be, a Permitted Joint Venture, or (B) as a result of
such Asset Sale, the Company's and its Restricted Subsidiaries' Investment in
such Restricted Subsidiary would constitute a Permitted Minority Investment),
the Company shall sell all of the Equity Interests of such Restricted Subsidiary
it owns. Within 270 days after the receipt of Net Cash Proceeds in respect of
any Asset Sale, the Company must use all such Net Cash Proceeds either to invest
in properties and assets in the healthcare or a healthcare related business
(including, without limitation, a capital investment in the Company or any of
its Restricted Subsidiaries) or to reduce Senior Indebtedness; PROVIDED, that
when any non-Cash proceeds are liquidated, such proceeds (to the extent they are
Net Cash Proceeds) will be deemed to be Net Cash Proceeds at that time. When the
aggregate amount of Excess Proceeds (as defined below) exceeds $10 million, the
Company shall make an offer (the "Excess Proceeds Offer") to apply the Excess
Proceeds to repurchase the Notes at a purchase price equal to 100% of the
principal amount of such Notes, plus accrued and unpaid interest to the date of
purchase. The Excess Proceeds Offer shall be made substantially in accordance
with the procedures for a Change of Control Offer described under "-- CHANGE OF
CONTROL" above. To the extent that the aggregate principal amount of the Notes
(plus accrued interest thereon) tendered pursuant to the Excess Proceeds Offer
is less than the Excess Proceeds, the Company may use such deficiency, or a
portion thereof, for general corporate purposes. If the aggregate principal
amount of the Notes surrendered by holders thereof exceeds the amount of Excess
Proceeds, the Company shall select the Notes to be purchased in accordance with
the procedures described above under "-- SELECTION AND NOTICE." "Excess
Proceeds" shall mean any Net Cash Proceeds from an Asset Sale that is not
invested or used to reduce Senior Indebtedness as provided in the second
sentence of this paragraph. Notwithstanding the foregoing, any Asset Sale which
results in Net Cash Proceeds of less than $3 million and all Asset Sales
(including any Asset Sales which results in Net Cash Proceeds of less than $3
million) in any twelve consecutive-month period which result in Net Cash
Proceeds of less than $10 million in the aggregate shall not be subject to the
requirement of clause (ii) of the first sentence above.
The Company will comply with the requirements of Regulation 14E and Rule
13e-4 (other than the filing requirements of such rule) under the Exchange Act
and any other securities laws and regulations thereunder to the extent such laws
and regulations are applicable in connection with the repurchase of the Notes
pursuant to an Excess Proceeds Offer.
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LIMITATION ON TRANSACTIONS WITH AFFILIATES. The Indenture provides that
neither the Company nor any of its Restricted Subsidiaries shall enter into any
transaction or series of related transactions with (including, without
limitation, the making of any Investment or guarantee in, to or for the benefit
of), sell, lease, transfer or otherwise dispose of any of its properties or
assets to, or for the benefit of, purchase or lease any property or assets from,
or enter into an amendment of any contract, agreement with, or for the benefit
of, any Affiliate of the Company or any of its Subsidiaries (other than the
Company or any of its Restricted Subsidiaries), unless (i) such transaction or
series of transactions is on terms that are substantially as favorable to the
Company or the relevant Restricted Subsidiary, as the case may be, as those that
could have been obtained in a comparable transaction on an arm's length basis
from a Person that is not an Affiliate and (ii) except in the case of any
transaction solely between the Company or a Restricted Subsidiary on the one
hand and a Permitted Joint Venture on the other hand, including the formation
and initial capitalization of such Permitted Joint Venture, (A) with respect to
a transaction or series of related transactions involving aggregate payments in
excess of $1 million but less than $15 million, a majority of the Disinterested
Directors of the Company shall approve by a resolution determining in good faith
that such transaction or series of related transactions comply with the clause
(i) above, and (B) with respect to a transaction or series of related
transactions involving aggregate payments in excess of $15 million (other than
cash transactions pursuant to insurance agreements with the Insurance
Subsidiaries), the Company shall have received an opinion from a nationally
recognized investment banking firm or, with respect to a transaction or a series
of related transactions requiring the valuation of real property, a nationally
recognized real estate appraisal firm, that such transaction or series of
related transactions is fair to the Company, from a financial point of view.
MERGER, CONSOLIDATION OR SALE OF ASSETS. The Indenture provides that the
Company shall not consolidate with, merge with or into, or transfer all or
substantially all of its assets (in one transaction or a series of related
transactions) to, any Person or permit any party to merge with or into it
unless: (i) the Company shall be the continuing Person, or the Person (if other
than the Company) formed by such consolidation or into or with which the Company
is merged or to which the properties and assets of the Company, substantially as
an entity, are transferred shall be a corporation organized and existing under
the laws of the United States or any State thereof or the District of Columbia
and shall expressly assume, by a supplemental indenture, executed and delivered
to the Trustee, in form satisfactory to the Trustee, all of the obligations of
the Company under the Notes and the Indenture and the Indenture remains in full
force and effect; (ii) immediately before and immediately after giving effect to
such transaction, no Event of Default and no Default shall have occurred and be
continuing; (iii) immediately after giving effect to such transaction on a pro
forma basis, the Consolidated Net Worth of the surviving entity is at least
equal to the Consolidated Net Worth of the Company immediately prior to such
transaction; and (iv) except in the case of a triangular merger for the sole
purpose of forming a holding company, the surviving entity could, after giving
pro forma effect to such transaction, incur $1.00 of Indebtedness pursuant to
the first paragraph of "-- LIMITATION ON ADDITIONAL INDEBTEDNESS" above. The
Indenture also provides that no Restricted Subsidiary shall consolidate with, or
merge with or into, any Person or permit any party to merge with or into it
unless the continuing Person, or the Person formed by such consolidation or into
or with which a Restricted Subsidiary is merged is the Company or a Restricted
Subsidiary, provided that if any Guarantor consolidates into, or merges with or
into, a Restricted Subsidiary, either (i) such Restricted Subsidiary is or
becomes a Guarantor; or (ii) immediately after the consummation of such
transaction such Guarantor is a Permitted Joint Venture, provided that (A) after
giving effect to such transaction, the Company's Consolidated Interest Coverage
Ratio is at least 2.00 to 1.0x, (B) no Default or Event of Default has occurred
and is continuing or would result therefrom, (C) if such transaction involves a
Guarantor with assets having a fair market value in excess of $5 million, the
transaction is approved by a majority of the Disinterested Directors of the
Company, (D) if such transaction involves a Guarantor having assets with a fair
market value in excess of $25 million, the Company has received an opinion from
a nationally recognized investment banking firm that such transaction is fair to
the Company, from a financial point of view, and (E) the sum of (x) the Book
Value of assets of such Guarantor immediately prior to such transaction,
together with the Book Value of assets of all other Guarantors which have become
Permitted Joint Ventures (determined for each such Guarantor as of the time
immediately prior to the transaction pursuant to which it became a Permitted
Joint Venture) and (y) the
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aggregate Book Values of Permitted Minority Investments of the Company and its
Restricted Subsidiaries (the Book Value of each such Permitted Minority
Investment determined as of the date such Investment was made), does not exceed
$100 million; or (iii) immediately after the consummation of such transaction
the Company's and its Restricted Subsidiaries' Investment in such Guarantor
becomes a Permitted Minority Investment, provided that (A) after giving effect
to such transaction, the Company's Consolidated Interest Coverage Ratio is at
least 2.00 to 1.0x, (B) no Default or Event of Default has occurred and is
continuing or would result therefrom, (C) the sum of (x) the Book Value of such
Permitted Minority Investment, together with the aggregate Book Values of all
other Permitted Minority Investments of the Company and its Restricted
Subsidiaries (the Book Value of each such Permitted Minority Investment
determined as of the date such Investment was made), and (y) the aggregate Book
Value of assets of all Guarantors that have become Permitted Joint Ventures
(determined for each such Guarantor as of the time immediately prior to the
transaction pursuant to which it became a Permitted Joint Venture), does not
exceed $100 million, (D) if such Permitted Minority Investment is in excess of
$5 million, the Permitted Minority Investment is approved by a majority of the
Disinterested Directors of the Company and (E) if such Permitted Minority
Investment is in excess of $25 million, the Company has received an opinion from
a nationally recognized investment banking firm that the Permitted Minority
Investment is fair to the Company from a financial point of view.
ADDITIONAL GUARANTORS. The Indenture provides that, after the Closing Date,
the Company shall cause any Person which shall at any time be a Subsidiary of
the Company, including any present Subsidiary of the Company which is not
included among the Guarantors executing the Indenture, to become a Guarantor
promptly after the date on which such Subsidiary first becomes a Guarantor under
the New Credit Agreement or a Significant Subsidiary; PROVIDED, HOWEVER, that
the Company shall not be required to cause any Permitted Joint Venture or any
Unrestricted Subsidiary to become a Guarantor.
PAYMENT FOR CONSENT. The Indenture provides that neither the Company nor
any of its Subsidiaries shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any holder
of any Notes for or as an inducement to obtaining any consent, waiver or
amendment of, or direction in respect of, any of the terms or provisions of the
Indenture or the Notes, unless such consideration is offered or agreed to be
paid, and paid, to all holders of the Notes which so consent, waive, agree or
direct to amend in the time frame set forth in solicitation documents relating
to such consent, waiver, agreement or direction.
PROVISIONS OF REPORTS AND OTHER INFORMATION. The Indenture provides that at
all times while any Note is outstanding, the Company shall timely file with the
Commission all such reports and other information as required by Section 13 or
15(d) of the Exchange Act, including, without limitation, Forms 10-K, 10-Q and
8-K. At such time as the Company is not subject to the reporting requirements of
the Exchange Act, within fifteen days after the same would be required to be
filed with the Commission if the Company then were subject to Section 13 or
15(d) of the Exchange Act, the Company will file with the Trustee and supply to
each holder of the Notes, without cost, copies of its financial statements and
certain other reports or information comparable to that which the Company would
have been required to report pursuant to Section 13 and 15(d) of the Exchange
Act, including, without limitation, the information that would be required by
Forms 10-K, 10-Q and 8-K.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an Event of
Default: (i) default for 30 days in payment of interest on the Notes; (ii)
default in payment when due of principal of or premium, if any, on the Notes,
whether at maturity, or upon acceleration, redemption or otherwise; (iii)
failure by the Company to comply in any respect with any of its other agreements
in the Indenture or the Notes which failure continues for 30 days after receipt
of a written notice from the Trustee or holders of at least 25% of the aggregate
principal amount of the Notes then outstanding, specifying such Default and
requiring that it be remedied; (iv) default under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness (other than Non-Recourse Indebtedness) for
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money borrowed by the Company or any of its Restricted Subsidiaries (or the
payment of which is guaranteed by the Company or any of its Restricted
Subsidiaries) whether such Indebtedness is now existing or hereafter created,
which default results from the failure to pay any such Indebtedness at its
stated final maturity or results in the acceleration of such Indebtedness prior
to its stated final maturity and the principal amount of such Indebtedness is at
least $15 million, or the principal amount of such Indebtedness, together with
the principal amount of any other such Indebtedness the maturity of which has
been accelerated, aggregates $30 million or more; (v) failure by the Company or
any Restricted Subsidiary to pay certain final judgments aggregating in excess
of $10 million which judgments are not stayed within 60 days after their entry;
(vi) except as permitted by the Indenture, the unenforceability or invalidity of
any Guarantee of the Notes, or the disaffirmance thereof by any Guarantor; and
(vii) certain events of bankruptcy or insolvency with respect to the Company and
its Restricted Subsidiaries.
If the Event of Default occurs and is continuing and if it is known to the
Trustee, the Trustee shall mail to each holder of the Notes notice of the Event
of Default within 90 days after it becomes known to the Trustee, unless such
Event of Default has been cured or waived. Except in the case of an Event of
Default in the payment of principal of, premium, if any, or interest on any
Note, the Trustee may withhold the notice if and so long as a committee of its
trust officers in good faith determines that withholding the notice is in the
interest of the holders of the Notes.
If an Event of Default (other than an Event of Default resulting from
bankruptcy, insolvency or reorganization) occurs and is continuing, the Trustee
or the holders of at least 25% of the principal amount of the Notes then
outstanding, by written notice to the Company (and to the Trustee if such notice
is given by such holders) (the "Acceleration Notice"), may, and the Trustee at
the request of such holders shall, declare all unpaid principal of, premium, if
any, and accrued interest on such Notes to be due and payable, (i) immediately
if no amount is outstanding and no commitment is in effect under the Specified
Senior Indebtedness or (ii) if any amount is outstanding or any commitment is in
effect under the Specified Senior Indebtedness, upon the earlier of (A) five
business days after delivery of the Acceleration Notice by the Trustee or the
holders, as the case may be, to the Company and the agent or another designated
representative of the holders of each and any Specified Senior Indebtedness
outstanding or (B) acceleration of the Specified Senior Indebtedness, and
thereupon the Trustee may, at its discretion, proceed to protect and enforce the
rights of the holders of the Notes by appropriate judicial proceedings. Upon a
declaration of acceleration, such principal, premium, if any, and accrued
interest shall be due and payable. If an Event of Default resulting from certain
events of bankruptcy, insolvency or reorganization occurs, all unpaid principal
of, premium, if any, and accrued interest on the Notes then outstanding shall
IPSO FACTO become and be immediately due and payable without any declaration or
other act on the part of the Company, the Trustee or any holder. The holders of
at least 66 2/3% of the aggregate principal amount of the Notes outstanding by
notice to the Trustee may rescind an acceleration and its consequences, except
an acceleration due to default in payment of principal or interest on the Notes
upon conditions provided in the Indenture. Subject to certain restrictions set
forth in the Indenture, the holders of at least a 66 2/3% of the aggregate
principal amount of the outstanding Notes by notice to the Trustee may waive an
existing Default or Event of Default and its consequences, except a Default in
the payment of principal of, premium, if any, or interest on, such Notes or a
Default under a provision which requires consent of all holders to amend. When a
Default or Event of Default is waived, it is cured and ceases to exist, but no
waiver shall extend to any subsequent or other Default or impair any consequent
right. A holder of Notes may not pursue any remedy with respect to the Indenture
or the Notes unless: (i) the holder gives to the Trustee written notice of a
continuing Event of Default; (ii) the holders of at least 25% in principal
amount of such Notes outstanding make a written request to the Trustee to pursue
the remedy; (iii) such holder or holders offer to the Trustee indemnity or
security satisfactory to the Trustee against any loss, liability or expense;
(iv) the Trustee does not comply with the request within 30 days after receipt
thereof and the offer of indemnity or security; and (v) during such 30-day
period the holders of 66 2/3% of the aggregate principal amount of the
outstanding Notes do not give the Trustee a direction which is inconsistent with
the request.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required, upon
becoming aware of any Default or Event of Default, to deliver a statement to the
Trustee specifying such Default or Event of Default.
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DEFEASANCE AND DISCHARGE OF THE INDENTURE AND THE NOTES
The Indenture provides that the Company may, at its option and at any time,
elect to have the obligations of the Company discharged with respect to the
outstanding Notes ("legal defeasance"). Such legal defeasance means that the
Company shall be deemed to have paid and discharged the entire indebtedness
represented by the outstanding Notes, except for (i) the rights of holders of
outstanding Notes to receive solely out of the trust described below payments in
respect of the principal of, premium, if any, and interests on such Notes when
such payments are due, (ii) the obligations of the Company with respect to the
Notes concerning issuing temporary Notes, registration of Notes, replacing
mutilated, destroyed, lost or stolen Notes and the maintenance of an office or
agency for payment and money for security payments held in trust, (iii) the
rights, powers, trusts, duties and immunities of the Trustee, and (iv) the
defeasance provisions of the Indenture.
The Company and the Guarantors may, at their option and at any time, elect
to have their obligations under the provisions "Certain Covenants" and "Change
of Control" discharged with respect to the outstanding Notes and the Guarantees
thereof ("covenant defeasance"). Such covenant defeasance means that, with
respect to the outstanding Notes and the Guarantees thereof, the Company and the
Guarantors may omit to comply with and shall have no liability in respect of any
term, condition or limitation set forth in any such provisions and such omission
to comply shall not constitute a Default or an Event of Default.
In order to exercise defeasance, (i) the Company must have irrevocably
deposited with the Trustee, in trust, for the benefit of the holders of the
Notes, cash in U.S. Dollars, U.S. Government Obligations (as defined in the
Indenture), or a combination thereof, in such amounts as will be sufficient, in
the opinion of a nationally recognized firm of independent public accountants,
to pay the principal of, premium, if any, and interest on the outstanding Notes
on the stated maturity of such principal (and premium, if any) or installment of
interest or upon redemption; (ii) the Company shall have delivered to the
Trustee an opinion of counsel stating that the holders of the outstanding Notes
will not recognize income, gain or loss for federal income tax purposes as a
result of such defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such defeasance had not occurred, which such opinion, in the case of legal
defeasance, will state that (A) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (B) since the Closing
Date there has been a change in the applicable federal income tax laws or
regulations or (C) there exists controlling precedent to such effect; (iii) no
Default or Event of Default shall have occurred and be continuing on the date of
such deposit; (iv) such defeasance shall not result in a breach or violation of
or constitute a default under any material agreement or instrument to which the
Company is a party or by which it is bound; and (v) the Company shall have
delivered to the Trustee an officers' certificate and an opinion of counsel,
each stating that all conditions precedent to such defeasance have been
satisfied.
TRANSFER AND EXCHANGE
A holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar may require a holder, among other things, to furnish appropriate
endorsements and transfer documents, and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar is not required to register a
transfer or exchange of any Note selected for redemption except for the
unredeemed portion of any Note being redeemed in part. Also, the Registrar is
not required to register a transfer or exchange of any Note for a period of 15
days before the mailing of a notice of redemption offer.
The registered holder of a Note will be treated as the owner of it for all
purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Subject to certain exceptions, the Indenture or the Notes may be amended or
supplemented with the consent of the holders of 66 2/3% of the aggregate
principal amount of the Notes then outstanding, and any existing Default or
compliance with any provision may be waived (other than a continuing Default or
Event of Default in the payment of principal or interest on any Note) with the
consent of the holders of 66 2/3% of the aggregate principal amount of the then
outstanding Notes.
Without the consent of each holder affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting holder of Notes) (i) reduce
the percentage of principal amount of the Notes
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whose holders must consent to an amendment or waiver, (ii) change the stated
maturity or the time or currency of payment of the principal of, premium, if
any, or any interest on, any Note or alter the redemption provisions with
respect thereto, (iii) make any change in the subordination provisions of the
Indenture that adversely affects the rights of any holder of the Notes under the
subordination provisions of the Indenture, (iv) waive a default in the payment
of the principal of, premium, if any, or interest on, any Note, (v) make any
change to the "Change of Control" provisions of the Indenture or the provisions
relating to the Excess Proceeds Offer, (vi) make any change to the
"Anti-Layering" covenant, the "Additional Guarantors" covenant or the "Payment
for Consent" covenant of the Indenture, (vii) make any change in the guarantee
provisions of this Indenture that adversely affects the rights of any holder of
the Notes or (viii) make any change in the provision of the Indenture containing
the terms described in this paragraph.
Notwithstanding the foregoing, without the consent of any holder of the
Notes, the Company, the Guarantors and the Trustee may amend or supplement the
Indenture or the Notes to cure any ambiguity, defect or inconsistency, to
provide for certificated or uncertificated Notes in addition to or in place of
certificated or uncertificated Notes, to provide for the assumption of the
Company's obligations to holders of the Notes in the case of a merger or
consolidation, to make any change that does not adversely affect the rights of
any holder of the Notes, to supplement the Indenture to provide for additional
Guarantors or to comply with any requirement of the Commission in connection
with the qualification of the Indenture or the Trustee under the Trust Indenture
Act.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest, it must
eliminate such conflict within 90 days or apply to the Commission for permission
to continue or resign.
The holders of 66 2/3% of the aggregate principal amount of the then
outstanding Notes will have the right to direct the time, method and place of
conducting any proceeding for exercising any remedy available to the Trustee,
subject to certain exceptions. The Indenture provides that in case an Event of
Default shall occur (which shall not be cured), the Trustee will be required, in
the exercise of its power, to use the degree of care and skill of a prudent man
under the circumstances in the conduct of his own affairs. Subject to such
provisions, the Trustee will be under no obligation to exercise any of its
rights or powers under the Indenture at the request of any of the holders of the
Notes, unless they shall have offered to the Trustee security or indemnity
satisfactory to it against any loss, liability or expense.
FORM AND BOOK-ENTRY PROCEDURES
GLOBAL NOTE; BOOK-ENTRY FORM. The New Notes will initially be evidenced by
three global certificates ("Global Notes") in definitive, fully registered form,
without coupons, in the name of CEDE & Co. or another designated nominee ("DTC's
Nominee") of DTC. Beneficial interests in the Global Notes will be exchangeable
for certificated Notes as set forth in the Indenture. So long as DTC or DTC's
Nominee is the registered holder and owner of a Global Note evidencing the New
Notes, DTC or DTC's Nominee, as the case may be, will be considered the sole
owner and holder of the underlying New Notes for all purposes of such New Notes
and under the Indenture.
In connection with the issuance of the New Notes, DTC will credit on its
book-entry registration and transfer system the respective principal amounts of
New Notes evidenced by the Global Notes deposited with it to the accounts of
institutions that directly maintain accounts with DTC or DTC's Nominee
("participants"). Ownership of beneficial interests in the Global Notes will be
limited to participants or Persons for whom such participants serve as nominee
or custodian. Ownership of beneficial interests in the Global Notes will be
identified on, and the transfer of those ownership interests will be effected
only through, records maintained by DTC (with respect to participants'
interests) or such participants (with respect to the beneficial owners for whom
such participants serve as nominee or custodian). Beneficial owners will not
receive written confirmation from DTC or DTC's Nominee of their purchase of
Notes, but instead, should receive written confirmations providing details of
the transaction, as well as periodic statements of their
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holdings, from the direct or indirect participant in DTC's system through which
the beneficial owner executed the purchase transaction. Transfers of beneficial
ownership interests in the Global Notes will be effected by entries made on the
books of participants acting on behalf of beneficial owners.
Payment of principal of, premium, if any, and interest on the Global Notes
will be made to DTC or DTC's Nominee, as the case may be, as the registered
owner and holder thereof.
DTC or DTC's Nominee, upon receipt of any payment of principal or interest
in respect of a Global Note evidencing any Notes held by it or DTC's Nominee,
will immediately credit direct participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of such Global Note for such Notes as reflected in the records maintained by DTC
or DTC's Nominee. Payments by participants to owners of beneficial interests in
such Global Note held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name."
Such payments will be the responsibility of such participants.
Transfers between participants in DTC will be effected in accordance with
DTC's customary procedures and will be settled in next-day funds. The laws of
certain U.S. states require that certain Persons take only physical delivery of
securities in definitive form. Consequently, the ability to transfer beneficial
interests in a Global Note to such Persons may be limited. Because DTC can act
only on behalf of its direct participants, who, in turn, act on behalf of
indirect participants and certain banks, the ability of a Person having a
beneficial interest in a Global Note to pledge such interest to Persons or
entities that do not participate directly in the DTC system, or otherwise take
actions in respect of such interest or exercise rights of beneficial ownership
in the Global Notes, may be affected by the lack of a physical certificate
evidencing such interest.
DTC will take action permitted to be taken by a holder of Notes only at the
direction of one or more participants to whose DTC account interests in the
Global Notes are credited and only in respect of such portion of the aggregate
principal amount of the Notes as to which such participant or participants has
or have given such direction.
DTC is (i) a limited purpose trust company organized under the banking laws
of the State of New York (and is a "banking organization" within the meaning of
such laws), (ii) a member of the Federal Reserve System, (iii) a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, as
amended, and (iv) a "Clearing Agency" registered pursuant to Section 17A of the
Exchange Act. DTC was created to hold securities for its participants and
facilitate the clearance and settlement of securities transactions between
participants through electronic book-entry changes to the accounts of its
participants, thereby eliminating the need for physical transfer and delivery of
certificates. Direct participants in the DTC services system include securities
brokers and dealers, commercial banks, trust companies and clearing
corporations, and may include certain other organizations. DTC is owned by a
number of its direct participants and by each of the New York Stock Exchange,
Inc., the American Stock Exchange, Inc. and the National Association of
Securities Dealers, Inc. Indirect access to the DTC system is available to other
entities such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a participant, either directly or
indirectly. The rules applicable to DTC and its participants are on file with
the Commission.
Neither DTC nor DTC's Nominee will consent or vote in any manner with
respect to the Notes. Pursuant to its customary procedures, in the case of any
matter as to which the consent or vote of holders of the Notes is sought, DTC
will mail an Omnibus Proxy to the Company as soon as practicable after the
record date for the determination of holders eligible to consent or vote on the
matter to be acted upon. The Omnibus Proxy serves to assign DTC's Nominee's
right to consent or vote to the direct participants whose accounts it maintains
as of the record date.
Notices of redemption and repurchase with respect to Notes held by direct
participants in the DTC system will be forwarded to DTC's Nominee. In the case
of a partial redemption, DTC's practice is to determine, by lot, the amount of
the beneficial interest in the Notes to be redeemed of each of its direct
participants.
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Beneficial owners who elect to participate in a tender offer or purchase of
their securities, must provide notice of such election, through its participant
(direct or indirect) in DTC's system, to the appropriate depositary, tender or
purchase agent, and effect delivery of their Notes by causing the direct
participant in DTC's system to transfer the indirect participant's interest in
the Notes, as reflected in DTC's records, to such depositary, tender or purchase
agent. The requirement for physical delivery of certificates evidencing the
Notes in connection with the aforementioned transactions will be deemed
satisfied when the beneficial ownership rights in the Global Notes are
transferred by direct participants on DTC's records.
The conveyance of all notices and other communications by DTC to its direct
participants, among DTC's participants (direct and indirect) and by DTC's
participants (direct and indirect) to owners of beneficial interests in the
Notes is governed by customary arrangements among them, subject to statutory or
regulatory requirements in effect with respect thereto from time to time.
Although DTC has agreed to the foregoing procedures to facilitate transfers
of interest in the Global Notes among participants of DTC, it is under no
obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. Neither the Company nor the Trustee
will have any responsibility for the performance by DTC or its participants of
their respective obligations under the rules and procedures governing their
operations.
The information set forth above concerning DTC and DTC's book-entry system
has been obtained from sources believed by the Company to be reliable, but the
Company assumes no responsibility for the accuracy thereof.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. A Person shall be deemed to "control"
(including the correlative meanings, the terms "controlling," "controlled by,"
and "under common control with") another Person if the controlling Person (a)
possesses, directly or indirectly, the power to direct or cause the direction of
the management or policies of the controlled Person, whether through ownership
of voting securities, by agreement or otherwise, or (b) owns, directly or
indirectly, 10% or more of any class of the issued and outstanding equity
securities of the controlled Person.
"Asset Sale" means, with respect to any Person, the sale, lease, conveyance,
disposition or other transfer by such Person of any of its assets (including by
way of a sale-and-leaseback and including the sale or other transfer of any
Equity Interests in any Restricted Subsidiary) which results in Net Cash
Proceeds of $1 million or more. However, the following shall not constitute an
Asset Sale: (i) unless part of a disposition including other assets or
operations, (A) dispositions of Cash and Cash Equivalents, (B) payments on or in
respect of non-Cash proceeds of Asset Sales, and (C) dispositions of Investments
by foreign subsidiaries of the Company in Cash and instruments or securities or
in certificates of deposit (or comparable instruments) with banks; (ii) the
lease of (A) office space in a medical building to healthcare professionals or
healthcare goods or services companies for their use or sublease to a similar
user or (B) any portion of a hospital (unless the portions of any such hospital
so leased in separate transactions constitute more than 50% of such hospital),
in the ordinary course of business and in a manner consistent with either past
practices or the healthcare industry generally, and (iii) the issuance or sale
by the Company of any Equity Interests in the Company.
"Average Life" means, as of the date of determination, with respect to any
debt security, the quotient obtained by dividing (i) the sum of the products of
the numbers of years from the date of determination to the dates of each
successive scheduled principal payment (assuming the exercise by the obligor of
such debt security of all unconditional (other than as to the giving of notice)
extension options of each such scheduled payment date) of such debt security
multiplied by the amount of such principal payment by (ii) the sum of all such
principal payments.
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"Book Value" means, with respect to the assets of any Person, the book value
of assets of such Person, net of depreciation and other charges and reserves
taken with respect to such assets in accordance with GAAP.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease which
would at such time be so required to be capitalized on the balance sheet in
accordance with GAAP.
"Capital Stock" means any and all shares, interests, participations, rights
or other equivalents (however designated) of corporate stock (including, without
limitation, common and preferred stock), excluding warrants, options or other
rights to acquire Capital Stock.
"Cash" means money or currency or a credit balance in a Deposit Account.
"Cash Equivalents" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency,
instrumentality or sponsored corporation thereof which are rated at least A or
the equivalent thereof by Standard & Poor's Corporation or at least A-2 or the
equivalent thereof by Moody's Investor Services, Inc., and in each case having
maturities of not more than one year from the date of acquisition, (ii) time
deposits and certificates of deposit of any domestic commercial bank of
recognized standing, having capital and surplus in excess of $100 million with
maturities of not more than one year from the date of acquisition, (iii)
repurchase obligations with a term of not more than thirty days for underlying
securities of the types described in clause (i) above entered into with any bank
meeting the qualifications specified in clause (ii) above or any government
securities dealer and (iii) commercial paper rated at least A-1 or the
equivalent thereof by Standard & Poor's Corporation or at least P-1 or the
equivalent thereof by Moody's Investor Services, Inc., in each case maturing
within one year after the date of acquisition.
"Change of Control" means (a) the sale, lease, transfer or other disposition
in one or more related transactions of all or substantially all of the Company's
assets, or the sale of substantially all of the Capital Stock or assets of the
Company's Subsidiaries that constitutes a sale of substantially all of the
Company's assets, to any Person or group (as such term is used in Section
13(d)(3) of the Exchange Act), (b) the merger or consolidation of the Company
with or into another corporation, or the merger of another corporation into the
Company or any other transaction, with the effect, in any such case, that the
stockholders of the Company immediately prior to such transaction hold 50% or
less of the total voting power entitled to vote in the election of directors,
managers or trustees of the surviving corporation or, in the case of a
triangular merger, the parent corporation of the surviving corporation resulting
from such merger, consolidation or such other transaction, (c) any Person
(except for the parent corporation of the surviving corporation in a triangular
merger) or group acquires beneficial ownership of a majority in interest of the
voting power or voting Capital Stock of the Company, or (d) the liquidation or
dissolution of the Company.
"Closing Date" means May 2, 1994.
"Consolidated Interest Coverage Ratio" means the ratio of (A) Consolidated
Net Income plus the sum of Interest Expense, taxes, depreciation and
amortization of the Company and its Restricted Subsidiaries (to the extent such
items were taken into account in computing the Net Incomes of the Company and
each of such Restricted Subsidiaries) for the preceding four fiscal quarters to
(B) the Interest Expense of the Company and its Restricted Subsidiaries for the
preceding four fiscal quarters; provided that if the Company or any of its
Restricted Subsidiaries incurs, assumes, guarantees, repays or redeems any
Indebtedness subsequent to the commencement of the period for which the
Consolidated Interest Coverage Ratio is being calculated but prior to the event
for which the calculation of the Consolidated Interest Coverage Ratio is made,
then the Consolidated Interest Coverage Ratio will be calculated giving pro
forma effect to any such incurrence, assumption, guarantee or redemption of
Indebtedness, or such issuances or redemption of preferred stock, as if the same
had occurred at the beginning of the applicable period. In making such
calculations on a pro forma basis, interest attributable to Indebtedness bearing
a floating interest rate shall be computed as if the rate in effect on the date
of computation had been the applicable rate for the entire period.
"Consolidated Net Assets" means, with respect to any Person, the assets of
such Person and its Subsidiaries, less intangible assets of such Person and its
Subsidiaries (including, without limitation,
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franchises, patents, patent applications, trademarks and tradenames, goodwill,
excess reorganization value, research and development expenses, and write-ups in
the book value of any assets), on a consolidated basis, determined in accordance
with GAAP.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Subsidiaries for such
period, on a consolidated basis, determined in accordance with GAAP, plus the
sum of the amount allocated to excess reorganization value, ESOP expense and
consolidated stock option expense (to the extent such items were taken into
account in computing the Net Incomes of such Person and its Subsidiaries);
provided, however, that (i) the Net Income of any Person that is not a
Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid to the referent Person or a Restricted Subsidiary, (ii) the
Net Income of any Person acquired in a pooling of interests transaction for any
period prior to the date of such acquisition shall be excluded and (iii) the
cumulative effect of a change in accounting principles shall be excluded.
"Consolidated Net Worth" of the Company means consolidated stockholders'
equity as determined in accordance with GAAP.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Deposit Account" means a demand, savings, passbook, money market or like
account with a commercial bank, savings and loan association or like
organization or a government securities dealer, other than an account evidenced
by a negotiable certificate of deposit.
"Disinterested Director" means, with respect to any specific transaction,
any director of the Company that does not have a direct or indirect interest
(other than any interest resulting solely from such director's ownership of
Equity Interests in the Company) in such transaction.
"Equity Interests" means (a) Capital Stock, warrants, options or other
rights to acquire Capital Stock (but excluding any debt security which is
convertible into, or exchangeable for, Capital Stock), and (b) limited and
general partnership interests, interests in limited liability companies, joint
venture interests and other ownership interests in any Person.
"ESOP" means the Employee Stock Ownership Plan of the Company as established
on September 1, 1988, and effective as of January 1, 1988, as from time to time
amended, and/or the trust created in accordance with such plan pursuant to the
Trust Agreement between the Company and the trustee named therein, executed as
of September 1, 1988, as the context in which the term "ESOP" is used permits.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as approved by a significant segment of the accounting profession,
as in effect on the Closing Date.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Guarantor" means (i) each of the Company's Subsidiaries on the Closing Date
(other than Permitted Joint Ventures and Unrestricted Subsidiaries) and (ii)
each other Person that executes a Guarantee of the obligations of the Company
under the Notes and the Indenture from time to time in accordance with the
provisions of the "Additional Guarantors" covenant, and their respective
successors and assigns; PROVIDED, HOWEVER, that "Guarantor" shall not include
any Person that is released from its Guarantee of the obligations of the Company
under the Notes and the Indenture as provided under "-- SUBSIDIARY GUARANTEES"
above.
"Indebtedness" of any Person means, without duplication, (i) indebtedness of
such Person for borrowed money or for the deferred purchase price of property or
services (other than trade payables on terms of 365 days or less incurred in the
ordinary course of business), (ii) all Capital Lease Obligations of such Person,
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(iii) all guarantees of such Person in respect of Indebtedness of others, (iv)
at the date of determination thereof, the aggregate amount of all unreimbursed
drawings in respect of letters of credit issued for the account of such Person
(less the amount of Cash and Cash Equivalents on deposit securing such letters
of credit) and (v) all indebtedness, obligations or other liabilities of such
person or of others for borrowed money secured by a Lien on any property of such
Person, whether or not such indebtedness, obligations or liabilities are assumed
by such Person; PROVIDED, HOWEVER, that all or any portion of Indebtedness that
becomes the subject of a defeasance (whether a legal defeasance or a "covenant"
or "in substance" defeasance) shall, at all times that such defeasance remains
in effect, cease to be treated as Indebtedness for purposes of this Indenture.
"Interest Expense" of any Person means, for any period for which the
determination thereof is to be made, (A) the sum of the aggregate amount of (i)
interest in respect of Indebtedness (including all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers'
acceptance financing), (ii) all but the principal component of rentals in
respect of Capital Lease Obligations, paid, accrued or scheduled to be paid or
accrued by such Person during such period, (iii) capitalized interest and (iv)
amortization of original issue discount and deferred financing costs, all as
determined in accordance with GAAP, less (B) interest expense attributable to
Unrestricted Subsidiaries.
"Investment" means, when used with respect to any Person, any direct or
indirect advance, loan or other extension of credit (other than the creation of
receivables in the ordinary course of business) or capital contribution by such
Person (by means of transfers of property (other than Equity Interests in the
Company) to others or payments for property or services for the account or use
of others, or otherwise) to any other Person, or any direct or indirect purchase
or other acquisition by such Person of a beneficial interest in capital stock,
bonds, notes, debentures or other securities issued by any other Person, or any
Guarantee by such Person of the Indebtedness of any other Person (in which case
such Guarantee shall be deemed an Investment in such other Person in an amount
equal to the aggregate amount of Indebtedness so guaranteed).
"Insurance Subsidiaries" means, collectively, Golden Isle Assurance Company,
Plymouth Insurance Company, Ltd., and any successors to any of the foregoing.
"Lien" means any mortgage, pledge, security interest, charge, hypothecation,
collateral assignment, deposit arrangement, encumbrance, lien (statutory or
otherwise), or security agreement of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing and the filing of any financing statement, other than notice filings
not perfecting a security interest, under the Uniform Commercial Code or
comparable law of any jurisdiction, domestic or foreign, in respect of any of
the foregoing).
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds of
such Asset Sale in the form of Cash or Cash Equivalents, including payments in
respect of deferred payment obligations (to the extent corresponding to the
principal, but not the interest, component thereof) when received in the form of
Cash or Cash Equivalents (except to the extent such obligations are financed or
sold with recourse to the Company or any Restricted Subsidiary of the Company),
casualty loss insurance proceeds, condemnation awards and proceeds from the
conversion of other property received when converted to Cash or Cash
Equivalents, net of (i) brokerage commissions and other fees and expenses
related to such Asset Sale, (ii) provision for all taxes (whether or not such
taxes will actually be paid or are payable) as a result of such Asset Sale
without regard to the consolidated results of operations of the Company and its
Subsidiaries, taken as a whole, (iii) payments made to repay Indebtedness or any
other obligation outstanding at the time of such Asset Sale that either, (A) in
the case of a sale of all of the Equity Interests in any Restricted Subsidiary,
is a direct obligation of such Restricted Subsidiary or (B) is required to be
paid in connection with such sale and (iv) appropriate amounts to be provided by
the Company or any Restricted Subsidiary of the Company as a reserve against any
liabilities associated with such Asset Sale, including, without limitation,
pension and other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under indemnification obligations
associated with such Asset Sale, all as determined in conformity with GAAP.
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"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP, excluding, however, any gain or
loss, together with any related provision for taxes on such gain or loss,
realized in connection with any Asset Sale (including, without limitation,
dispositions pursuant to sale-and-leaseback transactions), and excluding any
extraordinary gain or loss, together with any related provision for taxes on
such extraordinary gain or loss.
"New Credit Agreement" means (a) the Second Amended and Restated Credit
Agreement, dated as of the Closing Date, among the Company, the banks and other
financial institutions named therein and Bankers Trust Company, as Agent, (b)
the Second Amended and Restated Subsidiary Credit Agreement, dated as of the
Closing Date, among certain Subsidiaries of the Company named therein, the banks
and other financial institutions named therein and Bankers Trust Company, as
Agent, and (c) each note, guaranty, mortgage, pledge agreement, security
agreement and other instruments and documents from time to time entered into
pursuant to or in respect of either such credit agreement or any such guaranty,
as each such credit agreement and other documents may be amended, restated,
supplemented, extended, renewed or otherwise modified from time to time.
"Non-Recourse Indebtedness" shall mean any Indebtedness of the Company or
any of its Restricted Subsidiaries if the holder of such Indebtedness has no
recourse, direct or indirect, absolute or contingent, to the general assets of
the Company or any of its Restricted Subsidiaries.
"Permitted Investments" means (a) any Investments in the Company or in a
Restricted Subsidiary other than a Permitted Joint Venture; (b) any Investments
in Cash or Cash Equivalents; (c) Investments by the Company or any Restricted
Subsidiary in a Person, if as a result of such Investment (i) such Person
becomes a Restricted Subsidiary of the Company or (ii) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys substantially
all of its assets to, or, is liquidated into, the Company or a Restricted
Subsidiary; (d) loans and advances to employees not exceeding $500,000 per
individual at any one time and $5 million outstanding in the aggregate at any
one time; (e) Investments in Group Practice Affiliates, Inc. and its
Subsidiaries, and in the Technologies and Management Information Unit and its
Subsidiaries, not to exceed $70 million in the aggregate at any one time; (f)
Investments in a Permitted Joint Venture, provided that (A) after giving effect
to such Investment, the Company's Consolidated Interest Coverage Ratio is at
least 2.00 to 1.0x, (B) no Default or Event of Default has occurred and is
continuing or would result therefrom, (C) if such Investment in such Permitted
Joint Venture is in excess of $5 million, such Investment is approved by a
majority of the Disinterested Directors of the Company and (D) if such
Investment in such Permitted Joint Venture is in excess of $25 million, the
Company has received an opinion from a nationally recognized investment banking
firm that such Investment is fair to the Company, from a financial point of
view; (g) Permitted Minority Investments, provided that (A) after giving effect
to such Investments, the Company's Consolidated Interest Coverage Ratio is at
least 2.00 to 1.0x, (B) no Default or Event of Default has occurred and is
continuing or would result therefrom, (C) the sum of (x) the Book Value of such
Permitted Minority Investment together with the aggregate Book Values of all
other Permitted Minority Investments of the Company and its Restricted
Subsidiaries (the Book Value of each such Permitted Minority Investment
determined as of the date such Investment was made), and (y) the aggregate Book
Value of assets of all Guarantors that have become Permitted Joint Ventures
(determined for each such Guarantor as of the time immediately prior to the
transaction pursuant to which it became a Permitted Joint Venture), does not
exceed $100 million, (D) if such Permitted Minority Investment is in excess of
$5 million, the Permitted Minority Investment is approved by a majority of the
Disinterested Directors of the Company and (E) if such Permitted Minority
Investment is in excess of $25 million, the Company has received an opinion from
a nationally recognized investment banking firm that the Permitted Minority
Investment is fair to the Company, from a financial point of view; (h)
Investments constituting non-Cash proceeds of Asset Sales; (i) Investments by
foreign subsidiaries of the Company in Cash and instruments or securities of the
highest grade investment available in local currencies or in certificates of
deposit (or comparable instruments) with banks with which such Subsidiary
regularly transacts business; (j) Investments in foreign Unrestricted
Subsidiaries not to exceed at any one time the equivalent in foreign currencies
of $25 million in U.S. Dollars in the aggregate; and (k) additional Investments
not to exceed $10 million outstanding at any one time.
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"Permitted Joint Venture" means a Subsidiary of the Company (i) which is not
a Wholly-owned Subsidiary of the Company, (ii) which is in a healthcare or a
healthcare related business and (iii) in which the Company or any Restricted
Subsidiary (A) has at least a majority of the Equity Interests and (B) is
entitled to elect or appoint the directors, managers or trustees thereof, as
applicable.
"Permitted Minority Investment" means any Investment in any Person (i) which
is in the healthcare or healthcare related business and (ii) in which the
Company and its Restricted Subsidiaries (A) have less than a majority of the
Equity Interests or (B) are not entitled to elect or appoint the directors,
managers or trustees thereof, as applicable.
"Person" means any individual, corporation, partnership, joint venture,
incorporated or unincorporated association, joint-stock company, limited
liability company, trust, unincorporated organization or government or other
agency or political subdivision thereof or other entity of any kind.
"Redeemable Stock" means any Equity Interest which, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable before the stated maturity of the Notes), or upon the happening of
any event, matures or is mandatorily redeemable, in whole or in part, prior to
the stated maturity of the Notes.
"Restricted Subsidiary" means each of the Subsidiaries of the Company that
has not been designated an Unrestricted Subsidiary.
"Rights Plan" means the Company's Share Purchase Rights Plan, dated July 21,
1992, as amended, restated, supplemented or otherwise modified from time.
"Senior Indebtedness" means the principal of and premium, if any, and
interest on (such interest on Senior Indebtedness, wherever referred to in the
Indenture, is deemed to include interest accruing after the filing of a petition
initiating any proceeding pursuant to any bankruptcy law in accordance with and
at the rate (including any rate applicable upon any default or event of default,
to the extent lawful) specified in any document evidencing the Senior
Indebtedness, whether or not the claim for such interest is allowed as a claim
after such filing in any proceeding under such bankruptcy law) and other amounts
(including, but not limited to, fees, expenses, reimbursement obligations in
respect of letters of credit and indemnities) due or payable from time to time
on or in connection with any Indebtedness of the Company or any of its
Restricted Subsidiaries incurred pursuant to the first paragraph of the
"Limitations on Additional Indebtedness" covenant described above or permitted
under clauses (i), (ii), (iv), (vi), (vii), (viii), (x) and (xiii) of the second
paragraph of the "-- LIMITATIONS ON ADDITIONAL INDEBTEDNESS" described above, in
each case whether outstanding on the Closing Date or thereafter created,
incurred or assumed, unless, in the case of any particular Indebtedness, the
instrument creating or evidencing the same or pursuant to which the same is
outstanding expressly provides that such Indebtedness shall not be senior in
right of payment to the Notes. Notwithstanding anything to the contrary in the
foregoing, Senior Indebtedness shall not include (a) any Indebtedness of the
Company to any of its Subsidiaries or other Affiliates, (b) any Indebtedness
incurred after the Closing Date that is contractually subordinated in right of
payment to any Senior Indebtedness, and (c) amounts owed (except to banks and
other financial institutions) for goods, materials or services purchased in the
ordinary course of business or for compensation to employees.
"Significant Subsidiary" means any Subsidiary of the Company which has total
assets in excess of $1 million or which holds the capital stock of a Significant
Subsidiary.
"Specified Senior Indebtedness" means Senior Indebtedness under the New
Credit Agreement or any replacement or substitute facility or facilities thereof
and each single issue of other Senior Indebtedness having an outstanding
principal balance of $50 million or more.
"Subsidiary" means any corporation, association, limited or general
partnership, limited liability company, joint venture or other business entity
of which more than 50% of the total voting power of shares of Capital Stock or
other Equity Interests entitled (without regard to the occurrence of any
contingency) to vote generally in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or indirectly, by
any Person or one or more of the other Subsidiaries of that Person or a
combination thereof.
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"Technologies and Management Information Unit" means the Subsidiary of the
Company formed or to be formed for the purpose of conducting management and
information systems businesses, which may include Strategic Advantage, Inc.
"Unrestricted Subsidiary" means (i) any of Group Practice Affiliates, Inc.
and its Subsidiaries, and the Technologies and Management Information Unit and
its Subsidiaries, (ii) the Insurance Subsidiaries, (iii) certain foreign
Subsidiaries of the Company, (iv) any Subsidiary of the Company or a Restricted
Subsidiary (a) that, at the time of determination, shall be designated by the
Board of Directors of the Company as an Unrestricted Subsidiary as provided
below and (b) all of the Indebtedness of which shall be non-recourse to the
Company and its Restricted Subsidiaries and (v) any Subsidiary of an
Unrestricted Subsidiary; provided that, notwithstanding clause (iv)(b) above,
the Company or any Subsidiary of the Company may guarantee, endorse, agree to
provide funds for the payment or maintenance of, or otherwise become directly or
indirectly liable with respect to, Indebtedness of an Unrestricted Subsidiary
but only to the extent that the Company or such Subsidiary could make an
Investment in such Unrestricted Subsidiary pursuant to the "Limitation on
Restricted Payments" covenant and any such guarantee, endorsement or agreement
shall be deemed an incurrence of Indebtedness by the Company or such Subsidiary
for purposes of the "Limitation on Additional Indebtedness" covenant. The Board
of Directors may designate any newly-acquired or newly-formed Subsidiary to be
an Unrestricted Subsidiary unless such Subsidiary owns any Capital Stock of any
Restricted Subsidiary. Any such designation by the Board of Directors of the
Company shall be evidenced by filing with the Trustee a certified copy of the
resolution of the Board of Directors of the Company giving effect to such
designation and an officers' certificate certifying that such designation
complied with the foregoing conditions.
"Wholly-owned Subsidiary" of any Person means any Subsidiary of such Person
to the extent 95% or more of the entire voting share capital of such Subsidiary
is owned by such Person (either directly or indirectly through Wholly-owned
Subsidiaries).
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SUMMARY OF NEW CREDIT AGREEMENT
Concurrently with the sale of the Old Notes, the Company amended and
restated its existing credit agreement by entering into a second amended and
restated credit agreement dated as of May 2, 1994, with the banks and other
financial institutions named therein, BTCo as agent and First Union National
Bank of North Carolina ("First Union") as co-agent (the "New Company Credit
Agreement"), and certain subsidiaries of the Company ("Subsidiary Borrowers")
amended and restated their existing credit agreement by entering into a second
amended and restated subsidiary credit agreement, dated as of May 2, 1994, with
the banks and other financial institutions named therein, BTCo as agent and
First Union as co-agent (the "New Subsidiary Credit Agreement"). BTCo, the agent
under the Company and the Subsidiary Borrowers' existing credit agreements, will
continue to serve as agent (the "Agent") under the New Company Credit Agreement
and the New Subsidiary Credit Agreement. The following is a summary of the
material terms of the New Company Credit Agreement and the New Subsidiary Credit
Agreement. This summary is not a complete description of the New Company Credit
Agreement and the New Subsidiary Credit Agreement and is qualified in its
entirety by reference to the terms of the New Company Credit Agreement and the
New Subsidiary Credit Agreement, copies of which have been filed as exhibits to
the Registration Statement of which this Prospectus is a part.
THE FACILITY
The New Company Credit Agreement provides for a five-year reducing,
revolving credit facility in favor of the Company in an aggregate committed
amount of up to $300 million (the "Revolving Credit Commitment"). The Revolving
Credit Commitment also will be available to the Subsidiary Borrowers under the
New Subsidiary Credit Agreement. Extensions of credit under the Revolving Credit
Commitment will be subject to certain customary conditions precedent and may
take the form of revolving loans or letters of credit (up to an aggregate amount
for letters of credit of $275 million) and shall be used (i) to refinance
certain mortgage indebtedness of certain subsidiaries of the Company in the
principal amount of approximately $14.7 million and the loans to certain
subsidiaries of the Company outstanding under the existing credit agreements in
the principal amount of approximately $46.8 million, which refinancing occurred
on May 2, 1994, (ii) for continued credit enhancement of certain currently
outstanding variable rate demand notes issued by or for the benefit of certain
Subsidiary Borrowers, (iii) to pay the fees, costs and expenses incurred by the
Company in connection with the Acquisition, the sale of the Notes and the
entering into of the New Credit Agreement, and (iv) for working capital and
other general corporate purposes, including to finance in part the Acquisition
and to finance other permitted acquisitions and investments. At May 2, 1994,
approximately $134.6 million in loans and letters of credit were outstanding
under the Revolving Credit Commitment. The Company also expects to borrow
additional amounts under the Revolving Credit Commitment in connection with the
Acquisition. No more than $200 million of the Revolving Credit Commitment will
be available prior to the consummation of the initial closing of the
Acquisition.
COMMITMENT REDUCTIONS AND REPAYMENTS
The Revolving Credit Commitment will automatically be reduced by the amounts
and on the dates indicated below:
<TABLE>
<CAPTION>
AMOUNT DATE
- -------------- -----------------
<S> <C>
$ 25,000,000 March 31, 1996
50,000,000 March 31, 1997
50,000,000 March 31, 1998
175,000,000 March 31, 1999
</TABLE>
In addition to the scheduled reductions above and certain other mandatory
reductions, the Revolving Credit Commitment shall be reduced (i) by an amount
equal to 70% (or if a default or an event of default exists, 100%) of the net
proceeds of certain asset sales, (ii) by an amount equal to 25% (or if a default
or an event of default exists, 100%) of the net proceeds of certain issuances or
sales of the Company's capital stock or other equity interests, except that no
such reduction shall be required if the Company meets specified financial ratios
and no default or event of default has occurred and is continuing, and (iii) by
an amount equal to the principal amount of permitted subordinated indebtedness
(including, without limitation, the
81
<PAGE>
Notes) subject to a required repurchase or repurchase offer by the Company as a
result of any asset sale. All such reductions described in the foregoing clauses
(i) through (iii) shall be applied first on a PRO RATA basis to all scheduled
reductions of the Revolving Credit Commitment other than the last scheduled
reduction of the Revolving Credit Commitment, and thereafter to the last
scheduled reduction.
INTEREST
The loans outstanding under the Revolving Credit Commitment bear interest at
a rate per annum equal to (a) the sum of the Base Lending Rate plus 3/4%, or (b)
at the option of the Company, the sum of the maximum reserve-adjusted one, two,
three or six-month LIBOR plus 1 3/4%. The Base Lending Rate is the higher of (x)
the rate announced from time to time as BTCo's prime lending rate, (y) the
Federal Reserve's reported weekly average dealer offering rate for three-month
certificates of deposit, adjusted for maximum reserves, plus 1/2 of 1%, and (z)
the Federal Funds Rate plus 1/2 of 1%.
The applicable interest rates for loans bearing interest on the basis of the
Base Lending Rate or LIBOR will be reduced by 1/4 of 1% per annum if at any time
the Company meets a specified financial ratio and the Company's permitted
subordinated indebtedness is given certain specified ratings by Standard &
Poor's Corporation and Moody's Investors Services, Inc. and will be reduced by
an additional 1/4 of 1% per annum if at any time the Company meets a certain
more restrictive financial ratio and the Company's permitted subordinated
indebtedness is given certain specified higher ratings by Standard & Poor's
Corporation and Moody's Investors Services, Inc.
Overdue principal and, to the extent permitted by law, overdue interest
shall bear interest at a rate per annum equal to the greater of (i) the sum of
the Base Lending Rate plus 2.75% per annum, and (ii) the sum of the interest
rate otherwise applicable to such overdue amount plus 2.00% per annum.
COMMISSIONS, FEES AND EXPENSES
The Company and the Subsidiary Borrowers will pay, on a monthly basis in
arrears, a commitment commission equal to 1/2 of 1% per annum of the daily
average unutilized Revolving Credit Commitment. The commitment commission will
be reduced to 3/8 of 1% per annum if at any time the Company meets a specified
financial ratio and the Company's permitted subordinated indebtedness is given
specified ratings by Standard & Poor's Corporation and Moody's Investors
Services, Inc.
The Company and the Subsidiary Borrowers will pay, on a monthly basis in
arrears, a letter of credit commission equal to 1.75% per annum of the daily
average amount available to be drawn under letters of credit under the New
Company Credit Agreement or the New Subsidiary Credit Agreement. Letter of
credit commissions will be reduced at all times and to the extent that the
interest rate for Base Rate Loans provided above is reduced. The Company will
also pay customary fees to issuing banks in connection with the issuance of
letters of credit.
The Agent will receive an annual fee, payable in advance in an amount
previously agreed upon, as compensation for its services as Agent. The Company
has reimbursed the Agent for all reasonable out-of-pocket expenses and costs in
connection with the arrangement and commitment of the Revolving Credit
Commitment, the preparation, execution and delivery of documentation evidencing
the Revolving Credit Commitment, and will reimburse the Agent for such expenses
and costs in connection with the preparation, execution and delivery of
documentation relating to waivers, consents and amendments thereof, including
the reasonable attorneys' fees and expenses of the Agent's counsel. In addition
to the foregoing, the Company paid to BTCo for its account certain fees for the
arrangement and committment of the Revolving Credit Commitment.
GUARANTEES
The New Company Credit Agreement and the New Subsidiary Credit Agreement are
guaranteed by substantially all of the Company's existing subsidiaries and will
also be guaranteed by each future 95% or more owned restricted subsidiary (other
than certain foreign subsidiaries) of the Company having assets in excess of
$500,000 or owning capital stock of such a subsidiary (collectively, the
"Subsidiary Guarantors"). The Company shall continue to guarantee the
obligations of the Subsidiary Borrowers under the New Subsidiary Credit
Agreement.
82
<PAGE>
SECURITY
The Company's and the Subsidiary Borrowers' obligations under the New Credit
Agreement, and the Company's and the Subsidiary Guarantors' guarantees of such
obligations, are secured by substantially the same collateral securing the
existing credit agreements, which includes substantially all of the real and
personal property of the Company and its domestic subsidiaries, including
pledges of all or a portion of the capital stock of substantially all of the
Company's operating subsidiaries. Future Subsidiary Guarantors will be required
to secure their respective guarantees of the New Company Credit Agreement and
the New Subsidiary Credit Agreement with their respective personal property
(other than the personal property of unrestricted subsidiaries and certain
foreign subsidiaries) but, subject to certain exceptions, shall not be required
to grant liens on any of their respective real property.
AFFIRMATIVE, NEGATIVE AND FINANCIAL COVENANTS
The New Company Credit Agreement and the New Subsidiary Credit Agreement
contain affirmative covenants usual for facilities of this type and contain
negative covenants restricting the Company and its restricted subsidiaries from,
among other things, (i) incurring certain additional indebtedness and contingent
liabilities, (ii) making certain asset sales, (iii) making certain advances,
investments and loans, (iv) making certain acquisitions, (v) creating certain
liens, (vi) entering into certain mergers, consolidations, joint ventures,
partnerships, leases and sale-and-leaseback transactions, (vii) paying certain
dividends and effecting certain other transactions involving the capital stock
of the Company and its restricted subsidiaries, (viii) entering into certain
transactions with affiliates, (ix) making capital expenditures, (x) incurring
restrictions affecting dividends and other payments from subsidiaries, (xi)
issuing subsidiary stock, and (xii) making voluntary prepayments or redemptions
of subordinated indebtedness. In addition, the New Company Credit Agreement
requires the Company to comply with certain financial covenants that will be
tested on a quarterly basis.
EVENTS OF DEFAULT
The New Company Credit Agreement and the New Subsidiary Credit Agreement
contain default provisions usual for facilities of this type, and also include
an event of default for any change in control of the Company, as defined in
substantially the same manner as the definition of Change of Control contained
herein. See "Description of the New Notes."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
OF THE EXCHANGE OFFER
The exchange of Old Notes for New Notes pursuant to the Exchange Offer
should not constitute a material modification of the Old Notes and, accordingly,
such exchange should not constitute an exchange for federal income tax purposes.
Accordingly, such exchange should have no federal income tax consequences to
holders of Old Notes, either to those who exchange their Old Notes for New Notes
or those who do not so exchange their Old Notes, and each holder of Old Notes
would continue to be required to include interest on the Old Notes in its gross
income in accordance with its method of accounting for federal income tax
purposes.
If the exchange of Old Notes for New Notes constitutes an exchange for
federal income tax purposes, and both the Old Notes and the New Notes constitute
"securities" for federal income tax purposes (which determination generally is
made by reference to the initial term of the debt instrument, with debt
instruments with initial terms of ten years or more being generally treated as
securities and debt instruments with initial terms of less than five years being
generally treated as not securities), a holder of Old Notes would recognize no
gain or loss on the consummation of the Exchange Offer. If, in such event, the
Old Notes or the New Notes did not constitute securities, (i) a holder would
recognize gain or loss for federal income tax purposes in an amount equal to the
difference between (a) the "issue price" of the New Notes and (b) the holder's
adjusted tax basis in the Old Notes exchanged therefor, and (ii) (a) gain, if
any, recognized by a holder on the exchange generally would be capital gain (if
the Old Notes were held by such holder as capital assets), and would be
short-term capital gain if the holder's holding period in the Old Notes was not
more than one year, (b) a holder's initial tax basis in the New Notes would be
their "issue price" determined on the
83
<PAGE>
date of the exchange, and (c) a holder's holding period for the New Notes would
begin on the day after the date of the exchange. In each case, depending on the
issue price of the New Notes, which would be determined on the date of exchange,
a holder might be required to include original issue discount in gross income
for federal income tax purposes in advance of the receipt of cash in respect
thereof.
LEGAL MATTERS
The legality of the New Notes offered hereby will be passed upon for Charter
by King & Spalding, 191 Peachtree Street, Atlanta, Georgia 30303-1763.
EXPERTS
The consolidated financial statements and schedules of Charter included in
this Prospectus and elsewhere in this Registration Statement have been audited
by Arthur Andersen & Co., independent public accountants, as indicated in their
report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.
The combined financial statements of the Selected Psychiatric Hospitals of
National Medical Enterprises, Inc. as of May 31, 1993, and for each of the years
in the two-year period ended May 31, 1993 included herein and in the
Registration Statement have been so included in reliance upon the report of KPMG
Peat Marwick, independent certified public accountants, appearing elsewhere
herein, and upon the authority of said firm as experts in auditing and
accounting.
AVAILABLE INFORMATION
Charter has filed with the Commission a Registration Statement on Form S-4
under the Securities Act for the Registration of the New Notes offered hereby.
This Prospectus, which constitutes a part of the Registration Statement, does
not contain all of the information set forth in the Registration Statement,
certain items of which are contained in exhibits and schedules to the
Registration Statement as permitted by the rules and regulations of the
Commission. For further information with respect to the Company and the New
Notes offered hereby, reference is made to the Registration Statement, including
the exhibits thereto, and financial statements and notes filed as a part
thereof. Statements made in this Prospectus concerning the contents of any
document referred to herein are not necessarily complete. With respect to each
such document filed with the Commission as an exhibit to the Registration
Statement, reference is made to the exhibit for a more complete description of
the matter involved, and each such statement shall be deemed qualified in its
entirety by such reference.
Charter is subject to the informational requirements of the Exchange Act,
and, in accordance therewith, files reports, proxy statements and other
information with the Commission. Copies of such material can be obtained from
the Public Reference Section of the Commission, at Room 1024, Judiciary Plaza,
450 Fifth Street, NW, Washington, D.C. 20549 at prescribed rates. In addition,
such reports, proxy statements and other information can be inspected and copied
at public reference facilities referred to above and at Regional Offices of the
Commission located at Room 1400, Northwestern Atrium Center, 500 West Madison
Street, Chicago, Illinois 60661 and Seven World Trade Center, New York, New York
10048. Charter's Common Stock is listed for trading on the American Stock
Exchange and reports, proxy statements and other information concerning Charter
may be inspected at the office of the American Stock Exchange, 86 Trinity Place,
New York, New York. If, at any time, Charter is not subject to the information
requirements of the Exchange Act, Charter has agreed to furnish to holders of
the New Notes financial statements, including notes thereto and with respect to
annual reports, an auditor's report by an accounting firm of established
national reputation and a "Management's Discussion and Analysis of Financial
Condition and Results of Operations," and any other information that would be
required by Form 10-K, Form 10-Q and Form 8-K.
84
<PAGE>
CHARTER MEDICAL CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
CHARTER MEDICAL CORPORATION
Audited Consolidated Financial Statements
Report of independent public accountants............................................................... F-2
Consolidated balance sheets as of September 30, 1992 and 1993.......................................... F-3
Consolidated statements of operations for the year ended September 30, 1991, the ten months ended July
31, 1992, the two months ended September 30, 1992 and the year ended September 30, 1993............... F-4
Consolidated statements of changes in stockholders' equity (deficit) for the year ended September 30,
1991, the ten months ended July 31, 1992, the two months ended September 30, 1992 and the year ended
September 30, 1993.................................................................................... F-5
Consolidated statements of cash flows for the year ended September 30, 1991, the ten months ended July
31, 1992, the two months ended September 30, 1992 and the year ended September 30, 1993............... F-6
Notes to consolidated financial statements............................................................. F-7
Unaudited Condensed Consolidated Financial Statements
Condensed consolidated balance sheets as of September 30, 1993 and March 31, 1994...................... F-25
Condensed consolidated statements of operations for the quarters and six months ended March 31, 1993
and 1994.............................................................................................. F-26
Condensed consolidated statements of changes in stockholders' equity (deficit) for the quarter and six
months ended March 31, 1994........................................................................... F-27
Condensed consolidated statements of cash flows for the six months ended March 31, 1993 and 1994....... F-28
Notes to condensed consolidated financial statements................................................... F-29
THE TARGET HOSPITALS
Audited Combined Financial Statements as of and for the two years ended May 31, 1993
Report of independent public accountants............................................................... F-33
Combined balance sheet as of May 31, 1993.............................................................. F-34
Combined statements of operations for the years ended May 31, 1992 and 1993............................ F-35
Combined statements of cash flows for the years ended May 31, 1992 and 1993............................ F-36
Combined statements of owners' equity for the years ended May 31, 1992 and 1993........................ F-37
Notes to combined financial statements................................................................. F-38
Unaudited Combined Condensed Financial Statements
Unaudited combined condensed balance sheet as of February 28, 1994..................................... F-43
Unaudited combined condensed statements of operations for the nine months ended February 28, 1993 and
1994.................................................................................................. F-44
Unaudited combined condensed statements of cash flows for the nine months ended February 28, 1993 and
1994.................................................................................................. F-45
Note to unaudited combined condensed financial statements.............................................. F-46
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
Charter Medical Corporation:
We have audited the accompanying consolidated balance sheets of Charter
Medical Corporation (a Delaware Corporation) and subsidiaries as of September
30, 1992 and 1993, and the related consolidated statements of operations,
changes in stockholders' equity (deficit), and cash flows for the year ended
September 30, 1991, the ten months ended July 31, 1992, the two months ended
September 30, 1992 and the year ended September 30, 1993. These financial
statements and the schedules referred to below are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Charter Medical Corporation
and subsidiaries as of September 30, 1992 and 1993, and the results of their
operations and their cash flows for the year ended September 30, 1991, the ten
months ended July 31, 1992, the two months ended September 30, 1992 and the year
ended September 30, 1993, in conformity with generally accepted accounting
principles.
As discussed in Notes 1 and 2, the Company's reorganization plan was
confirmed by the U.S. Bankruptcy Court on July 8, 1992 and became effective on
July 21, 1992 (effective on July 31, 1992 for financial reporting purposes). In
accordance with Statement of Position No. 90-7 of the American Institute of
Certified Public Accountants, "Financial Reporting by Entities in Reorganization
Under the Bankruptcy Code," the Company was required to account for the
reorganization using fresh start reporting. Accordingly, all consolidated
financial statements prior to July 31, 1992 are not comparable to the
consolidated financial statements for periods after the implementation of fresh
start reporting.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in the index to the
exhibits and financial statement schedules are presented for purposes of
complying with the Securities and Exchange Commission's rules and are not part
of the basic financial statements. These schedules have been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, fairly state in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as whole.
ARTHUR ANDERSEN & CO.
Atlanta, Georgia
November 15, 1993
(except with respect to the matters
discussed in Notes 14 and 15, as
to which the date is May 13, 1994)
F-2
<PAGE>
CHARTER MEDICAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARES AND PER SHARE AMOUNTS)
ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30,
1992 1993
------------- -------------
<S> <C> <C>
Current Assets
Cash, including cash equivalents of $104,710 in 1992 and $60,242 in 1993, at cost
which approximates market........................................................... $ 140,803 $ 86,002
Accounts receivable, less allowance for doubtful accounts of $30,272 in 1992 and
$28,843 in 1993..................................................................... 127,698 119,638
Supplies............................................................................. 5,784 5,051
Other current assets................................................................. 16,457 21,224
------------- -------------
Total Current Assets............................................................... 290,742 231,915
Assets Restricted for Settlement of Unpaid Claims...................................... 67,456 81,608
Property and Equipment
Land................................................................................. 101,892 95,886
Buildings and improvements........................................................... 324,921 310,649
Equipment............................................................................ 62,940 67,421
------------- -------------
489,753 473,956
Accumulated depreciation............................................................. (4,313) (30,098)
------------- -------------
485,440 443,858
Construction in progress............................................................. 1,322 928
------------- -------------
486,762 444,786
Other Long-Term Assets................................................................. 12,891 22,676
Reorganization Value in Excess of Amounts Allocable to Identifiable Assets............. 121,709 57,201
Net Assets of Discontinued Operations.................................................. 319,638 --
------------- -------------
$ 1,299,198 $ 838,186
------------- -------------
------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable..................................................................... $ 50,735 $ 52,264
Accrued salaries and wages........................................................... 32,120 28,298
Other accrued liabilities............................................................ 127,004 109,600
Current income taxes payable......................................................... 12,329 11,479
Current maturities of long-term debt and capital lease obligations................... 73,956 70,957
------------- -------------
Total Current Liabilities.......................................................... 296,144 272,598
Long-Term Debt and Capital Lease Obligations........................................... 844,839 350,205
Deferred Income Tax Liabilities........................................................ 20,569 38,789
Reserve for Unpaid Claims.............................................................. 98,346 99,675
Deferred Credits and Other Long-Term Liabilities....................................... 28,876 19,621
Stockholders' Equity (Deficit)
Common Stock, par value $0.25 per share
Authorized -- 80,000,000 shares
Issued and outstanding -- 24,827,656 shares in 1992
and 25,001,042 shares in 1993..................................................... 6,207 6,250
Other Stockholders' Equity (Deficit)
Additional paid-in capital......................................................... 198,623 237,581
Accumulated deficit................................................................ (7,196) (59,423)
Unearned compensation under ESOP................................................... (187,128) (122,724)
Warrants outstanding............................................................... 283 274
Cumulative foreign currency adjustments............................................ (365) (4,660)
------------- -------------
10,424 57,298
Commitments and Contingencies
------------- -------------
$ 1,299,198 $ 838,186
------------- -------------
------------- -------------
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of these balance sheets.
F-3
<PAGE>
CHARTER MEDICAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
TEN MONTHS TWO MONTHS
YEAR ENDED ENDED ENDED YEAR ENDED
SEPTEMBER 30, JULY 31, SEPTEMBER 30, SEPTEMBER 30,
1991 1992 1992 1993
------------- ---------- ------------- -------------
<S> <C> <C> <C> <C>
Net revenue................................................. $ 868,264 $ 777,855 $ 142,850 $ 897,907
------------- ---------- ------------- -------------
Costs and expenses
Operating expenses........................................ 656,828 563,600 107,608 640,847
Bad debt expenses......................................... 51,617 50,403 14,804 67,300
Depreciation and amortization............................. 48,659 35,126 3,631 26,382
Amortization of reorganization value in excess of amounts
allocable to identifiable assets......................... -- -- 7,167 42,678
Interest, net............................................. 232,218 169,244 12,690 74,156
ESOP expense (credit)..................................... (3,962) 33,714 4,811 45,874
Deferred compensation expense............................. 5,061 3,190 -- --
Stock option expense (credit)............................. -- -- (789) 38,416
Provision for restructuring of operations................. 45,000 -- -- --
------------- ---------- ------------- -------------
1,035,421 855,277 149,922 935,653
------------- ---------- ------------- -------------
Loss from continuing operations before income taxes,
reorganization items and extraordinary item................ (167,157) (77,422) (7,072) (37,746)
Provision for income taxes.................................. -- 4,259 1,054 1,874
------------- ---------- ------------- -------------
Loss from continuing operations before reorganization items
and extraordinary item..................................... (167,157) (81,681) (8,126) (39,620)
Discontinued operations:
Income (Loss) from discontinued
operations (1)........................................... 37,115 24,211 930 (14,703)
Gain on disposal of discontinued operations (net of income
tax provision of $42,838)................................ -- -- -- 10,657
------------- ---------- ------------- -------------
Loss before reorganization items and extraordinary item..... (130,042) (57,470) (7,196) (43,666)
Reorganization items:
Professional fees and other expenses...................... -- (8,156) -- --
Adjust accounts to fair value............................. -- 83,004 -- --
Extraordinary item -- gain (loss) on early extinguishment or
discharge of debt (net of income tax benefit of $5,298 in
1993)...................................................... -- 730,589 -- (8,561)
------------- ---------- ------------- -------------
Net income (loss)........................................... $ (130,042) $ 747,967 $ (7,196) $ (52,227)
------------- ---------- ------------- -------------
------------- ---------- ------------- -------------
Average number of common shares outstanding (2)............. -- -- 24,828 24,875
------------- -------------
------------- -------------
Earnings (Loss) per common share (2):
Loss from continuing operations before extraordinary
item..................................................... -- -- $ (.33) $ (1.59)
Income (Loss) from discontinued operations and gain on
disposal of discontinued operations...................... -- -- .04 (.16)
------------- -------------
Loss before extraordinary item............................ -- -- (.29) (1.75)
Extraordinary loss on early extinguishment of debt........ -- -- -- (.35)
------------- -------------
Net loss.................................................. -- -- $ (.29) $ (2.10)
------------- -------------
------------- -------------
<FN>
- --------------------------
(1) Net of income tax provisions of $79, $122 and $10,708 in the ten months
ended July 31, 1992, the two months ended September 30, 1992 and fiscal
1993, respectively.
(2) Shares and per share amounts for the periods ended September 30, 1991 and
July 31, 1992 have not been presented because they are not meaningful due
to the implementation of fresh start accounting and the substantial change
in the number of shares outstanding subsequent to the consummation of the
Plan.
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.
F-4
<PAGE>
CHARTER MEDICAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
(IN THOUSANDS)
<TABLE>
<CAPTION>
TEN MONTHS TWO MONTHS
YEAR ENDED ENDED ENDED YEAR ENDED
SEPTEMBER 30, JULY 31, SEPTEMBER 30, SEPTEMBER 30,
1991 1992 1992 1993
------------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
Common Stock:
Balance, beginning of period............................... $ -- $ -- $ 6,207 $ 6,207
Consummation of the Restructuring.......................... -- 6,207 -- --
Exercise of options and warrants........................... -- -- -- 43
------------- ----------- ------------- -------------
Balance, end of period..................................... -- 6,207 6,207 6,250
------------- ----------- ------------- -------------
Class B Common Stock:
Balance, beginning of period............................... 3,679 3,537 -- --
Consummation of the Restructuring.......................... -- (3,537) -- --
Other...................................................... (142) -- -- --
------------- ----------- ------------- -------------
Balance, end of period..................................... 3,537 -- -- --
------------- ----------- ------------- -------------
Additional Paid-in Capital:
Balance, beginning of period............................... 34,830 39,891 199,412 198,623
Deferred compensation and stock option expense (credit).... 5,061 3,190 (789) 38,416
Consummation of the Restructuring.......................... -- 364,888 -- --
Adjust accounts to fair value.............................. -- 3,993 -- --
Exercise of options and warrants........................... -- -- -- 542
Fresh start equity reclassifications....................... -- (212,550) -- --
------------- ----------- ------------- -------------
Balance, end of period..................................... 39,891 199,412 198,623 237,581
------------- ----------- ------------- -------------
Accumulated Deficit:
Balance, beginning of period............................... (843,883) (945,222) -- (7,196)
Net income (loss).......................................... (130,042) 747,967 (7,196) (52,227)
Fresh start equity reclassifications....................... -- 215,479 -- --
Cumulative redeemable preferred stock dividend
requirements.............................................. (24,853) (18,224) -- --
Reversal of warrant accretion.............................. 53,526 -- -- --
Other...................................................... 30 -- -- --
------------- ----------- ------------- -------------
Balance, end of period..................................... (945,222) -- (7,196) (59,423)
------------- ----------- ------------- -------------
Unearned Compensation under ESOP:
Balance, beginning of period............................... (238,760) (240,461) (193,990) (187,128)
ESOP expense (credit)...................................... (3,962) 33,714 4,811 45,874
ESOP expense of discontinued operations.................... 2,261 12,757 2,051 18,530
------------- ----------- ------------- -------------
Balance, end of period..................................... (240,461) (193,990) (187,128) (122,724)
------------- ----------- ------------- -------------
Warrants Outstanding:
Balance, beginning of period............................... 57,519 3,993 283 283
Exercise of warrants....................................... -- -- -- (9)
Consummation of the Restructuring.......................... -- 283 -- --
Adjust accounts to fair value.............................. -- (3,993) -- --
Reversal of warrant accretion.............................. (53,526) -- -- --
------------- ----------- ------------- -------------
Balance, end of period..................................... 3,993 283 283 274
------------- ----------- ------------- -------------
Cumulative Foreign Currency Adjustments:
Balance, beginning of period............................... 1,661 (17) -- (365)
Foreign currency translation gain (loss)................... (1,678) 3,088 (365) (4,295)
Fresh start equity reclassifications....................... -- (3,071) -- --
------------- ----------- ------------- -------------
Balance, end of period..................................... (17) -- (365) (4,660)
------------- ----------- ------------- -------------
Total Stockholders' Equity (Deficit)......................... $(1,138,279) $ 11,912 $ 10,424 $ 57,298
------------- ----------- ------------- -------------
------------- ----------- ------------- -------------
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.
F-5
<PAGE>
CHARTER MEDICAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
TEN MONTHS TWO MONTHS
YEAR ENDED ENDED ENDED YEAR ENDED
SEPTEMBER 30, JULY 31, SEPTEMBER 30, SEPTEMBER 30,
1991 1992 1992 1993
------------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
Cash Flows From Operating Activities
Net income (loss).......................................... $ (130,042) $ 747,967 $ (7,196) $ (52,227)
------------- ----------- ------------- -------------
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
(Income) Loss from discontinued operations............... (37,115) (24,211) (930) 14,703
Gain on sale of discontinued operations.................. -- -- -- (10,657)
Depreciation and amortization............................ 48,659 35,126 10,798 69,060
Non-cash portion of provision for restructuring of
operations.............................................. 12,828 -- -- --
ESOP expense (credit).................................... (3,962) 33,714 4,811 45,874
Deferred compensation and stock option expense
(credit)................................................ 5,061 3,190 (789) 38,416
Non-cash interest expense................................ 78,796 38,245 917 7,866
Cash flows from changes in assets and liabilities, net of
reorganization items and effects from sales of
businesses:
Accounts receivable, net............................... 27,388 (133) 10,960 7,909
Other current assets................................... 643 (7,492) (685) (2,541)
Other long-term assets................................. 1,178 (8,761) 471 (5,239)
Accounts payable and other accrued liabilities......... 105,762 76,354 25,401 (30,443)
Income taxes payable................................... (4,858) 1,585 942 1,482
Reserve for unpaid claims.............................. 11,418 7,348 (1,479) 4,119
Reorganization items:
Professional fees and other expenses................... -- (20,208) (6,161) --
Adjust accounts to fair value.......................... -- (83,004) -- --
Extraordinary (gain) loss on early extinguishment or
discharge of debt....................................... -- (730,589) -- 8,561
Other.................................................... 6,076 7,810 1,300 (6,925)
------------- ----------- ------------- -------------
Total adjustments...................................... 251,874 (671,026) 45,556 142,185
------------- ----------- ------------- -------------
Net cash provided by operating activities............ 121,832 76,941 38,360 89,958
------------- ----------- ------------- -------------
Cash Flows From Investing Activities
Capital expenditures....................................... (11,699) (8,868) (1,430) (11,101)
Increase in assets restricted for settlement of unpaid
claims.................................................... (5,866) (1,629) (16,438) (14,152)
Proceeds from sale of assets (including discontinued
operations)............................................... 36,566 3,008 -- 354,173
Cash flows from discontinued operations.................... 33,540 33,812 10,977 42,487
------------- ----------- ------------- -------------
Net cash provided by (used in) investing activities...... 52,541 26,323 (6,891) 371,407
------------- ----------- ------------- -------------
Cash Flows From Financing Activities
Payments on debt and capital lease obligations............. (68,835) (120,197) (42,931) (533,942)
Proceeds from issuance of debt............................. -- 1,462 -- 17,200
Proceeds from exercise of stock options and warrants....... -- -- -- 576
------------- ----------- ------------- -------------
Net cash used in financing activities.................... (68,835) (118,735) (42,931) (516,166)
------------- ----------- ------------- -------------
Net increase (decrease) in cash and cash equivalents......... 105,538 (15,471) (11,462) (54,801)
Cash and cash equivalents at beginning of period............. 62,198 167,736 152,265 140,803
------------- ----------- ------------- -------------
Cash and cash equivalents at end of period................... $ 167,736 $ 152,265 $ 140,803 $ 86,002
------------- ----------- ------------- -------------
------------- ----------- ------------- -------------
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.
F-6
<PAGE>
CHARTER MEDICAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1993
1. STRUCTURE OF THE COMPANY
DISCONTINUED OPERATIONS
On September 30, 1993, the Company sold its general hospitals and the
related assets for a total sales price of approximately $338 million. The
Company retained the assets and liabilities relating to these subsidiaries for
professional liability claims incurred and cost report settlements for periods
prior to September 30, 1993. Summarized results of the operations of the general
hospitals were as follows (in thousands):
<TABLE>
<CAPTION>
TEN MONTHS TWO MONTHS
YEAR ENDED ENDED ENDED YEAR ENDED
SEPTEMBER 30, JULY 31, SEPTEMBER 30, SEPTEMBER 30,
1991 1992 1992 1993
------------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
Net revenue....................................... $ 305,650 $ 275,595 $ 57,631 $ 346,835
Operating and bad debt expenses................... 249,956 226,123 46,612 284,372
Amortization of reorganization value in excess of
amounts allocable to identifiable assets......... -- -- 5,333 32,000
Other expenses (1)................................ 18,544 25,927 4,939 45,878
------------- ----------- ------------- -------------
Net income (loss)................................. $ 37,150 $ 23,545 $ 747 $ (15,415)
------------- ----------- ------------- -------------
------------- ----------- ------------- -------------
<FN>
- ------------------------
(1) Included in these amounts are income taxes and interest expense related to
debt specifically identifiable as debt of the general hospitals. Such
interest expense is not material.
</TABLE>
On September 15, 1993, the Company sold its interest in Beech Street of
California, Inc. ("Beech Street") (see Note 12). Beech Street operates preferred
provider networks and provides utilization review services to third parties.
Immediately prior to the sale, the Company owned 71.1% of the voting stock and
19.8% of the equity ownership of Beech Street. The operations of Beech Street
were consolidated with the Company. Summarized results of Beech Street's
operations were as follows (in thousands):
<TABLE>
<CAPTION>
TWO MONTHS
YEAR ENDED TEN MONTHS ENDED YEAR ENDED
SEPTEMBER 30, ENDED JULY SEPTEMBER 30, SEPTEMBER 30,
1991 31, 1992 1992 1993
------------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
Net revenue............................................ $ 14,400 $ 16,671 $ 4,148 $ 25,596
Operating, bad debt and minority interest expenses..... 13,623 15,819 3,921 24,334
Other expenses, including income taxes................. 812 186 44 550
------------- ----------- ------ -------------
Net income (loss)...................................... $ (35) $ 666 $ 183 $ 712
------------- ----------- ------ -------------
------------- ----------- ------ -------------
</TABLE>
The net assets, results of operations and the gains on the sales of the
general hospitals and Beech Street have been reported in the accompanying
financial statements as discontinued operations. Therefore, the financial
statements for all prior periods presented have been restated to segregate these
amounts from continuing operations.
CONSUMMATION OF THE RESTRUCTURING
On June 2, 1992, the Company filed a voluntary petition under chapter 11 of
the United States Bankruptcy Code in the United States Bankruptcy Court for the
District of Delaware (the "Court"). The prepackaged plan of reorganization (the
"Plan") effected a restructuring of the Company's debt and equity capitalization
(the "Restructuring"). No subsidiaries of the Company were included in the
filing. The Court confirmed the Company's Plan on July 8, 1992, and the Plan
became effective on July 21, 1992 (the "Effective Date"). The consummation of
the Plan resulted in, among other things, (i) a reduction of
F-7
<PAGE>
CHARTER MEDICAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1993
1. STRUCTURE OF THE COMPANY (CONTINUED)
approximately $700 million in long-term debt, (ii) elimination of $233 million
of preferred stock and (iii) the issuance of approximately 24.8 million shares
of Common Stock to certain holders of debt securities, the preferred
stockholders and common stockholders.
As a result of the consummation of the Plan, the financing under the $880
Million Credit Agreement between the Company and certain banks dated September
1, 1988, was replaced by new facilities under the Amended and Restated Credit
Agreement dated July 21, 1992, among the Company and certain banks (the "Credit
Agreement"). The Credit Agreement includes the Tranche A facility (the "Tranche
A Facility"), the Tranche B facility (the "Tranche B Facility") and a new
facility (the "Tranche C Facility") in the maximum principal amount of $75
million, subject to availability.
Upon consummation of the Plan, the Company recognized an extraordinary gain
on debt discharge of approximately $731 million which represented forgiveness of
debt, principal and interest, reduced by the estimated fair value of common
stock issued to certain debtholders of the Company. The Company's long-term debt
was stated at the present value of amounts to be paid, based on market interest
rates on July 31, 1992. This adjustment to present value resulted in an
aggregate carrying amount for the Company's long-term debt which was less than
the aggregate principal amount thereof, and will result in the amortization of
the difference into interest expense over the terms of the debt instruments or,
upon extinguishment of the debt prior to scheduled maturity, will result in a
loss on debt extinguishment.
2. FRESH START REPORTING
The Company has accounted for the Restructuring by using the principles of
fresh start accounting, as required by AICPA Statement of Position 90-7,
"Financial Reporting by Entities in Reorganization Under the Bankruptcy Code."
For accounting purposes, the Company assumed that the Plan was consummated on
July 31, 1992. Under the principles of fresh start accounting, the Company's
total assets were recorded at their assumed reorganization value, with the
reorganization value allocated to identifiable tangible assets on the basis of
their estimated fair value. Accordingly, the Company's property and equipment
was reduced and its intangible assets were written off. In addition, the
Company's accumulated deficit, common stock in treasury and cumulative foreign
currency adjustments were eliminated. The excess of the reorganization value
over the value of identifiable assets is reported as "reorganization value in
excess of amounts allocable to identifiable assets" (the "Excess Reorganization
Value").
The total reorganization value assigned to the Company's assets was
estimated by calculating projected cash flows before debt service requirements,
for a five-year period, plus an estimated terminal value of the Company
(calculated using a multiple of approximately six (6) on projected EBDIT (which
is net revenue less operating and bad debt expenses)), each discounted back to
its present value using a discount rate of 12% (representing the estimated
after-tax weighted cost of capital). This amount was approximately $1.2 billion
and was increased by (i) the estimated net realizable value of assets to be sold
and (ii) estimated cash in excess of normal operating requirements. The above
calculations resulted in an estimated reorganization value of approximately $1.3
billion, of which the Excess Reorganization Value was $225 million, of which
$129 million related to continuing operations. The Excess Reorganization Value
is being amortized over three years.
As a result of the implementation of fresh start accounting, the financial
statements of the Company after consummation of the Plan are not comparable to
the Company's financial statements of prior periods.
F-8
<PAGE>
CHARTER MEDICAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1993
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The consolidated financial statements of the Company include the accounts of
the Company and its subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation. Certain prior year amounts
have been reclassified to conform with the fiscal 1993 presentation.
For accounting purposes, the Company assumed that the Plan was consummated
on July 31, 1992. The consolidated financial statements as of and for the two
months ended September 30, 1992 and the year ended September 30, 1993 are
presented for the Company after the consummation of the Plan. As discussed
above, these statements were prepared under the principles of fresh start
accounting and are not comparable to the statements of prior periods.
Accordingly, a line has been used to separate the financial statements of the
Company after the consummation of the Plan from those of the Company prior to
the consummation of the Plan.
PROPERTY AND EQUIPMENT
As a result of the adoption of fresh start accounting, property and
equipment were adjusted to their estimated fair value as of July 31, 1992 and
historical accumulated depreciation was eliminated. Expenditures for renewals
and improvements are charged to the property accounts; however, replacements,
maintenance and repairs which do not improve or extend the life of the
respective assets are expensed currently. The Company removes the cost and
related accumulated depreciation from the accounts for property sold or retired,
and any resulting gain or loss is included in operations. Amortization of
capital lease assets is included in depreciation expense. Depreciation is
provided substantially on the straight-line method for financial reporting
purposes; however, certain subsidiaries use accelerated methods for income tax
purposes. Upon implementation of fresh start accounting, the average of the
remaining useful lives of buildings and improvements was approximately 22 years.
The general range of estimated useful lives is three to ten years for equipment.
EXCESS REORGANIZATION VALUE
Excess Reorganization Value is being amortized on a straight-line basis over
three years. Amortization expense for the two months ended September 30, 1992
and the year ended September 30, 1993 was $7.2 million and $42.7 million,
respectively. The unamortized Excess Reorganization Value of $58.6 million
attributable to the general hospitals sold on September 30, 1993, reduced the
gain from the disposal of such hospitals. Excess Reorganization Value was
reduced by approximately $21 million during fiscal 1993 to reflect the
recognition of tax benefits related to pre-Plan tax loss carryforwards. (See
Note 8.)
FOREIGN CURRENCY
Changes in the cumulative translation of foreign currency assets and
liabilities are presented as a separate component of stockholders' equity
(deficit). Gains and losses resulting from foreign currency transactions, which
were not material, are included in operations as incurred.
NET REVENUE
Net revenue is based on established billing rates, less estimated allowances
for patients covered by Medicare and other contractual reimbursement programs
and discounts from established billing rates. Amounts received by the Company
for treatment of patients covered by Medicare and other contractual
reimbursement programs, which may be based on cost of services provided or
predetermined rates, are generally less than the established billing rates of
the Company's hospitals. Final determination of amounts earned under contractual
reimbursement programs is subject to review and audit by the appropriate
agencies. Management believes that adequate provision has been made for any
adjustments that may result from such reviews.
F-9
<PAGE>
CHARTER MEDICAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1993
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CHARITY CARE
The Company provides care without charge or at amounts less than its
established rates to patients who meet certain criteria under its charity care
policies. Because the Company does not pursue collection of amounts determined
to be charity care, they are not reported as revenue. For fiscal year 1991 and
the ten months ended July 31, 1992, the Company provided, at its established
billing rates, approximately $34.2 million and $30 million, respectively, of
such care. For the two months ended September 30, 1992 and the year ended
September 30, 1993, the Company provided, at its established billing rates,
approximately $5.8 million and $35.7 million, respectively, of such care.
INTEREST, NET
The Company records interest expense net of capitalized interest and
interest income. Interest income for fiscal year 1991, the ten months ended July
31, 1992, the two months ended September 30, 1992 and the year ended September
30, 1992 was approximately $8 million, $6.7 million, $.8 million, and $3.6
million, respectively.
CASH AND CASH EQUIVALENTS
Cash equivalents are short-term, highly liquid interest-bearing investments
with a maturity of three months or less when purchased, consisting primarily of
money market instruments.
ASSETS RESTRICTED FOR THE SETTLEMENT OF UNPAID CLAIMS
Assets restricted for the settlement of unpaid claims include marketable
securities which are carried at amortized cost, which approximates market value.
Transfer of such investments from the insurance subsidiaries to the Company or
any of its other subsidiaries is subject to approval under the Credit Agreement
and by certain regulatory authorities.
NET LOSS PER COMMON SHARE
Net loss per common share for the two months ended September 30, 1992 and
the year ended September 30, 1993 was computed based on the weighted average
number of shares of Common Stock outstanding during the period. Common stock
equivalents (primarily options outstanding under the 1992 Stock Option Plan)
were not dilutive and therefore were not included in the calculation.
Per share amounts for the periods ended September 30, 1991 and July 31, 1992
have not been presented because they are not meaningful due to the
implementation of fresh start accounting and the substantial change in the
number of shares outstanding subsequent to the consummation of the Plan.
4. PROVISION FOR RESTRUCTURING OF OPERATIONS
In response to its financial difficulties in fiscal 1990, the Company
developed an operating plan, which included a divestiture plan for certain
hospitals. During the fourth quarter of fiscal 1991, the Company recorded, in
addition to amounts recorded in fiscal 1990, a charge of $45 million to reflect
revised estimates of the net recoverable value, closing costs and estimated net
operating losses to the estimated disposal date of certain facilities and
additional fees for certain financial advisors and legal costs for the
Restructuring. The additional fees were the result of the additional time
required to complete the Restructuring.
Since September 1990, in addition to the general hospital sale discussed in
Note 1, the Company has sold nine facilities for an aggregate sales price of
$61.6 million. The Company also sold a substantially completed psychiatric
hospital in October 1992. The Company has leased two facilities, with options to
purchase by the lessees.
F-10
<PAGE>
CHARTER MEDICAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1993
4. PROVISION FOR RESTRUCTURING OF OPERATIONS (CONTINUED)
The Company is also attempting to sell or lease five other hospitals, the
related medical office buildings and a number of parcels of unimproved real
estate. The consolidated balance sheet as of September 30, 1993, includes the
following amounts related to assets held for disposition (in thousands):
<TABLE>
<S> <C>
Current assets..................................... $ 490
Property and equipment, net........................ 25,634
Other assets....................................... 12
Current liabilities................................ 6,964
</TABLE>
5. BENEFIT PLANS
The Company maintains an Employee Stock Ownership Plan (the "ESOP"), a
noncontributory retirement plan that enables eligible employees to participate
in the ownership of the Company. The ESOP borrowed approximately $455 million
from the Company to acquire its ownership interest. At September 30, 1993, the
ESOP owed the Company approximately $107.6 million.
The Company has recorded unearned compensation to reflect the cost of Common
Stock purchased by the ESOP but not yet allocated to participants' accounts. In
the period that shares are allocated, or projected to be allocated, to
participants, ESOP expense is recorded and unearned compensation is reduced.
Interest expense on the remaining portion of the debt incurred to finance the
ESOP transaction amounted to $26,965,000 and $16,169,000 for fiscal 1991 and the
ten months ended July 31, 1992, respectively, and $2,472,000 and $10,380,000 for
the two months ended September 30, 1992 and fiscal 1993, respectively, and is
included in interest expense in the statements of operations.
The Internal Revenue Service has ruled that the ESOP qualifies under Section
401 of the Internal Revenue Code of 1986, as amended. Such determination allows
the Company to deduct its contributions to the ESOP for federal income tax
purposes.
In settlement of a class action lawsuit in April 1992, the Company agreed to
(i) reduce by $30 million certain of the amounts owed to the Company by the
ESOP; (ii) make payments totalling approximately $12 million for certain
participants of the ESOP with such payments made through contributions to the
401-K Plan (as defined below), or in the event of the termination of such
participants, directly to the participants and (iii) pay approximately $500,000
to certain former employees. The Company included, in the provision for
restructuring of operations recorded in fiscal 1991, accruals for this
settlement.
During fiscal 1992, the Company reinstated its cash accumulation plan (the
"401-K Plan"), which had been discontinued as of January 1, 1988, upon the
adoption of the ESOP. Effective January 1, 1992, employee participants could
elect to voluntarily contribute up to 5% of their compensation to the 401-K
Plan. Upon consummation of the Restructuring, on July 21, 1992, the 401-K Plan
was amended and restated. Effective October 1, 1992, the Company began making
contributions to the 401-K Plan based on employee compensation and
contributions. The Company makes a discretionary contribution of 2% of each
employee's compensation and matches 50% of each employee's contribution up to 3%
of their compensation. During the year ended September 30, 1993, the Company
made contributions of $2,539,000 to the 401-K Plan.
F-11
<PAGE>
CHARTER MEDICAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1993
6. LONG-TERM DEBT AND LEASES
Information with regard to the Company's long-term debt and capital lease
obligations at September 30, 1992 and 1993 follows (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30,
1992 1993
------------- -------------
<S> <C> <C>
Financing under the Credit Agreement:
Tranche A Facility (6.5% at September 30, 1993) (net of discount of
$19,294 in 1992).................................................... $ 314,187 $ 93,871
Tranche B Facility (5.525% and 8.375% at September 30, 1993)
(including premium of $2,069 in 1992)............................... 138,811 67,619
Senior Secured Notes................................................... 217,061 --
7.5% Senior Subordinated Debentures due 2003 (net of discount of
$46,529 in 1992 and $43,997 in 1993).................................. 153,471 156,003
9.125% to 16% Mortgage and other collateralized notes payable through
1997.................................................................. 34,864 21,502
Variable rate secured notes due through 2013 (2.85% to 3.25% at
September 30, 1993)................................................... 49,185 64,175
7.5% Swiss Bonds due currently......................................... 6,443 6,443
3% to 11.5% Capital lease obligations due through 2014................. 7,688 11,965
------------- -------------
921,710 421,578
Less amounts due within one year..................................... 73,956 70,957
Less debt service funds.............................................. 2,915 416
------------- -------------
$ 844,839 $ 350,205
------------- -------------
------------- -------------
</TABLE>
The initial carrying values of the financing under the Credit Agreement (the
"Bank Financing") and the 7.5% Senior Subordinated Debentures due 2003 (the
"Debentures") were based on market interest rates as of July 31, 1992.
The aggregate scheduled maturities of long-term debt and capital lease
obligations during the five years subsequent to September 30, 1993, follow: 1994
- -- $70,957,000; 1995 -- $31,868,000; 1996 -- $15,138,000; 1997 -- $69,405,000;
and 1998 -- $1,638,000.
The consolidated statement of operations for the year ended September 30,
1993 includes an extraordinary after-tax loss of $8,561,000 on early
extinguishment of debt. This loss includes interest and fees incurred upon the
retirement of the Senior Secured Notes, certain debt under the Credit Agreement
and mortgages on the general hospitals and the write-off of the unamortized
discount or premium remaining on the Bank Financing as a result of the
prepayments made during 1993.
CREDIT AGREEMENT
The Bank Financing consists of the Tranche A Facility, the Tranche B
Facility and the Tranche C Facility.
TRANCHE A FACILITY
Loans outstanding under the Tranche A Facility bear interest, payable
monthly in arrears, at the following per annum rates: (i) from July 21, 1992 to
and including June 30, 1993, Bankers Trust Company's Prime Lending Rate (the
"Prime Rate", 6.0% at September 30, 1993); (ii) from July 1, 1993 to and
including June 30, 1995, the Prime Rate plus .5% per annum; (iii) from July 1,
1995 to and including June 30, 1996, the Prime Rate plus .75% per annum; and
(iv) from July 1, 1996 to September 30, 1997, the date of maturity, the Prime
Rate plus 1% per annum.
F-12
<PAGE>
CHARTER MEDICAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1993
6. LONG-TERM DEBT AND LEASES (CONTINUED)
In addition, the Tranche A Facility provides for the support of letters of
credit securing certain outstanding industrial development bonds. Borrowings
pursuant to the Tranche A Facility with respect to letter of credit drawings
will bear interest at the Prime Rate plus 1.5% per annum for the first $40
million drawn and the Prime Rate plus 1% per annum for amounts drawn in excess
of $40 million, in each case payable monthly in arrears. The Tranche A Facility
requires the payment of a commission in connection with the support of letters
of credit equal to 1.5% per annum, and the issuing banks' commitment also
provides for the payment of a commission, in each case based on the daily
average maximum aggregate amount that can be drawn under the letters of credit.
As of September 30, 1993, letters of credit totalling approximately $73 million
were outstanding under the Tranche A Facility.
TRANCHE B FACILITY
The financial institutions participating in the Tranche B Facility were
allowed to select between two interest rate options. Accordingly, approximately
75% of the borrowings outstanding pursuant to the Tranche B Facility bear
interest at a fixed rate of 8.375% per annum, with the remaining portion bearing
interest at a rate per annum equal to 85% of the interest rate applicable to the
Tranche A Facility, in each case payable monthly in arrears.
Under the federal income tax laws, certain financial institutions are
eligible to exclude from their gross income 50% of the interest received on
loans of the type contemplated by the Tranche B Facility. The Credit Agreement
provides that if an eligible holder of a loan under the Tranche B Facility loses
any right to such interest exclusion, then the Company will be required to
reimburse such holder in an amount based on the tax benefits lost by such holder
plus penalties, interest and additions to the tax assessed against such holder.
In addition, the interest rate on such loan will be increased by an amount
sufficient to reimburse such holder for the loss of any such tax benefits. In
the event mandatory principal repayments, as described below, with respect to
the Tranche B Facility exceed applicable federal income tax limitations for
purposes of deductibility, such excess will be applied instead to loans under
the Tranche A Facility.
TRANCHE C FACILITY
Borrowings pursuant to the Tranche C Facility may not exceed the lesser of
$75 million or the aggregate amount of the Company's voluntary prepayments of
loans outstanding under the Tranche A and Tranche B Facilities. Loans
outstanding under the Tranche C Facility bear interest at the same rates
applicable to the Tranche A Facility. The Company may permanently reduce the
banks' commitment with respect to the Tranche C Facility, subject to certain
minimum amounts. The conditions to borrowings under the Tranche C Facility
include the absence of any default or event of default under the Credit
Agreement and a minimum borrowing of $5 million. The Company pays a commitment
fee equal to .5% per annum on the daily average amount of available commitment
under the Tranche C Facility. The Company currently has an available commitment
of $50 million under the Tranche C Facility.
MANDATORY PREPAYMENTS
The Company is required to make certain prepayments to the Banks, which
consist of (i) 80% of Excess Cash Flow (which, as defined by the Credit
Agreement, is net income or loss adjusted for all non-cash items and certain
cash items affecting net income or loss, plus certain other cash inflows (for
example, certain asset sales proceeds), reduced by debt service requirements,
capital expenditures and certain other cash outflows (for example, cash income
tax payments) for each fiscal year), (ii) 100% of the Excess Cash (which, as
defined by the Credit Agreement, is the amount by which cash and cash
equivalents, as adjusted for certain items, exceeds $100 million as of each
September 30) and (iii) 75% of net proceeds of asset sales. On October 14, 1993,
the Company made prepayments totalling $13.9 million to the Banks which
represented
F-13
<PAGE>
CHARTER MEDICAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1993
6. LONG-TERM DEBT AND LEASES (CONTINUED)
estimated Excess Cash at September 30, 1993 and such amounts are included in
current maturities at September 30, 1993. Additionally, on October 6, 1993, the
Company made mandatory prepayments of approximately $3.2 million to the Banks
which represented asset sale proceeds.
SCHEDULED PRINCIPAL PAYMENTS
The Company is required to make principal payments, with respect to the
Tranche A Facility, of (i) $2.5 million on each March 31 and September 30
through September 30, 1995, (ii) $5 million each on March 31 and September 30,
1996, (iii) $25 million on March 31, 1997 and (iv) the remaining balance due on
September 30, 1997. The Company is also required to make payments of
approximately $23 million each on the Tranche B Facility on March 31 and
September 30, 1994, approximately $14.3 million on March 31, 1995 and the
remaining balance due on September 30, 1995.
Any mandatory prepayments made by the Company on the Tranche A Facility and
the Tranche B Facility, including the October 1993 prepayments discussed above,
are applied to the final payments, while voluntary prepayments are applied at
the option of the Company.
COVENANTS
The Credit Agreement contains certain financial tests, including amounts and
ratios related to operating income, debt service payments and net worth.
Additionally, the Credit Agreement and indenture for the Debentures place
restrictions and limitations on the Company. Restrictions and limitations are
placed on, among other things, additional indebtedness, capital expenditures,
payments of dividends on capital stock, investments and sales of assets and
stock of subsidiaries.
COLLATERAL
The obligations of the Company under the Credit Agreement are guaranteed by
substantially all of the Company's domestic subsidiaries and are secured by a
pledge of the stock of substantially all of the Company's subsidiaries, by a
pledge of accounts receivable and by mortgages on substantially all of the real
estate of the Company's domestic subsidiaries.
SENIOR SECURED NOTES
The Senior Secured Notes were issued upon consummation of the Plan in the
original principal amount of approximately $234.8 million. On September 30,
1993, the Company purchased and placed in an irrevocable trust U.S. Treasury
securities which matured in the amount of $158.8 million for the purpose of
redeeming the Senior Secured Notes. The redemption of the Senior Secured Notes
occurred on November 15, 1993. This defeasance transaction resulted in the
removal of the debt and related accrued interest from the balance sheet as of
September 30, 1993.
DEBENTURES
Upon consummation of the Plan, the Debentures were issued in the principal
amount of $200 million with a maturity date of February 15, 2003. The Debentures
bear interest at a rate of 7.5% per annum, payable semi-annually on February 15
and August 15, and are redeemable at the option of the Company, in whole or in
part, at specified redemption prices. However, the Credit Agreement prohibits
the Company from redeeming the Debentures.
The Debentures are general unsecured obligations of the Company subordinated
in right of payment to the obligations outstanding under the Credit Agreement.
The obligations of the Company under the indenture for the Debentures are
guaranteed on a subordinated basis by substantially all of the Company's
domestic subsidiaries.
F-14
<PAGE>
CHARTER MEDICAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1993
6. LONG-TERM DEBT AND LEASES (CONTINUED)
At September 30, 1993 the carrying amount and fair value of the Debentures
was $156 million and $176 million, respectively. The estimated fair value of the
Company's Debentures is based upon the bid price on September 30, 1993, from
quotes obtained by the Company. The fair value of the Company's other long-term
debt obligations approximates their respective carrying amounts.
LEASES
The Company leases certain hospital facilities, some of which may be
purchased during the term or at expiration of the leases. The book value of
capital leased assets was approximately $8.3 million at September 30, 1993. The
leases, which expire through 2069, generally require the Company to pay all
maintenance, property tax and insurance costs.
At September 30, 1993, aggregate amounts of future minimum payments under
operating leases were as follows: 1994 -- $5 million; 1995 -- $3.9 million; 1996
- -- $2.8 million; 1997 -- $1 million; 1998 -- $.6 million; subsequent to 1998 --
$31.5 million.
Operations for the year ended September 30, 1991, and the ten months ended
July 31, 1992, included rental expenses on operating leases of $13.4 million and
$10.4 million, respectively. Operations for the two months ended September 30,
1992 and the year ended September 30, 1993, included rental expenses on
operating leases of $1.9 million and $11.3 million, respectively.
7. STOCKHOLDERS' EQUITY
Pursuant to the Company's Restated Certificate of Incorporation, the Company
is authorized to issue 80 million shares of Common Stock, $.25 par value per
share, and 10 million shares of Preferred Stock, without par value. Under the
terms of the Plan, approximately 24,828,000 shares of Common Stock were issued
to certain holders of debt securities, the preferred stockholders, and common
stockholders. No shares of Preferred Stock have been issued as of September 30,
1993.
COMMON STOCK
The Company is prohibited from paying dividends (other than dividends
payable in shares of Common Stock) on its Common Stock under the terms of the
Credit Agreement and the Debentures.
The 1992 Stock Option Plan provides for the issuance of 3,437,939 options to
purchase Common Stock. A summary of changes in options outstanding and other
related information is as follows:
<TABLE>
<CAPTION>
TEN MONTHS ENDED TWO MONTHS ENDED YEAR ENDED
JULY 31, 1992 SEPTEMBER 30, 1992 SEPTEMBER 30, 1993
-------------------- -------------------- ------------------
<S> <C> <C> <C>
Balance, beginning of period...................... -- 3,416,826 3,416,826
Granted......................................... 3,416,826 -- 21,750
Cancelled....................................... -- -- (27,000)
Exercised....................................... -- -- (183,500)
---------- ---------- ------------------
Balance, end of period............................ 3,416,826 3,416,826 3,228,076
---------- ---------- ------------------
---------- ---------- ------------------
Option prices..................................... $4.36 - $9.60 $4.36 - $9.60 $.25 - $16.875
Price range of exercised options.................. -- -- $4.36
Average exercise price............................ -- -- $4.36
</TABLE>
The exercise price of certain options will be reduced if a change in control
of the Company occurs prior to July 1995 or, in the case of termination of
employment of certain optionees without cause, if certain financial targets
included in the Stock Option Plan are achieved.
Options issued pursuant to the 1992 Stock Option Plan are exercisable upon
vesting and expire through October 2000. As of September 30, 1993, 85% of the
options outstanding were vested. The remaining
F-15
<PAGE>
CHARTER MEDICAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1993
7. STOCKHOLDERS' EQUITY (CONTINUED)
options vest over the next two fiscal years if the Company achieves certain
financial targets. If a change in control of the Company occurs, all options
vest immediately prior to such event, and upon termination of employment of
certain optionees without cause, all options granted to such optionees vest
immediately, provided certain financial targets have been met.
Upon the termination of the employment of the Company's former Chairman of
the Board on March 4, 1993, and under the provisions of the 1992 Stock Option
Plan, all of the former employee's options vested and the option prices were
reduced to $.25 per share. Such options totalled 2,220,336 at September 30, 1993
and expire in April 1994. As a result, the Company recognized approximately
$21.3 million in additional stock option expense during the second quarter of
fiscal 1993.
RIGHTS PLAN
Also upon consummation of the Plan, the Company adopted a Share Purchase
Rights Plan (the "Rights Plan"). Pursuant to the Rights Plan, each share of
Common Stock also represents one Share Purchase Right (collectively, the
"Rights"). The Rights trade automatically with the underlying shares of Common
Stock. Upon becoming exercisable, but prior to the occurrence of certain events,
each Right initially entitles its holder to buy one share of Common Stock from
the Company at an exercise price of $60.00. The Rights will be distributed and
become exercisable only if a person or group acquires, or announces its
intention to acquire, Common Stock exceeding certain levels, as specified in the
Rights Plan. Upon the occurrence of such events, the exercise price of each
Right reduces to one-half of the then current market price. The Rights also give
the holder certain rights in an acquiring company's common stock. The Company is
entitled to redeem the Rights at a price of $.01 per Right at any time prior to
the distribution of the Rights. The Rights have no voting power until exercised.
COMMON STOCK WARRANTS
The Company has two series of warrants outstanding, the 2002 Warrants and
the 2006 Warrants.
In connection with the Plan, the Company issued 114,690 of the 2002 Warrants
to purchase one share each of the Company's Common Stock. These warrants, which
expire on June 30, 2002, have an exercise price of $5.24 per share. During
fiscal 1993, 3,713 shares were issued from the exercise of these warrants.
The 2006 Warrants, which expire on September 1, 2006, were subject to
certain adjustments as a result of the Plan, and accordingly, 146,791 of such
warrants are currently outstanding with an exercise price of $38.70 per share.
8. INCOME TAXES
Concurrent with the adoption of fresh start accounting, the Company adopted
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes". Deferred income taxes are provided at the enacted marginal rates on the
difference between the financial statement and income tax bases of assets and
liabilities. Deferred income tax provisions or benefits are based on the change
in the deferred tax assets and liabilities from period to period.
F-16
<PAGE>
CHARTER MEDICAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1993
8. INCOME TAXES (CONTINUED)
The provision (benefit) for income taxes attributable to continuing
operations consisted of the following (in thousands):
<TABLE>
<CAPTION>
TEN MONTHS TWO MONTHS
YEAR ENDED ENDED ENDED YEAR ENDED
SEPTEMBER 30, JULY 31, SEPTEMBER 30, SEPTEMBER 30,
1991 1992 1992 1993
------------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
Income taxes currently payable:
Federal.................................... $ 500 $ 14 $ 3 $ 181
State...................................... 1,592 1,055 113 315
Foreign.................................... 1,100 803 461 986
Deferred income taxes:
Federal.................................... (500) 2,387 477 370
State...................................... (1,592) -- -- (39)
Foreign.................................... (1,100) -- -- 61
------------- ----------- ------ ------
$ -- $ 4,259 $ 1,054 $ 1,874
------------- ----------- ------ ------
------------- ----------- ------ ------
</TABLE>
The Company's income tax provision (benefit) attributable to continuing
operations differs from that computed based on the statutory federal income tax
rate for the following reasons (in thousands):
<TABLE>
<CAPTION>
TWO MONTHS
YEAR ENDED TEN MONTHS ENDED YEAR ENDED
SEPTEMBER 30, ENDED JULY SEPTEMBER 30, SEPTEMBER 30,
1991 31, 1992 1992 1993
------------- ---------- ------------- -------------
<S> <C> <C> <C> <C>
Income tax benefit at federal statutory
income tax rate........................ $ (44,214) $ (26,323) $ (2,404) $ (13,117)
State income taxes, net of federal
income tax benefit..................... -- 699 75 180
Amortization of Excess Reorganization
Value.................................. -- -- 2,437 14,831
Losses for which no tax benefit has been
recorded............................... 44,214 26,323 -- --
Other -- net............................ -- 3,560 946 (20)
------------- ---------- ------------- -------------
Income tax provision.................... $ -- $ 4,259 $ 1,054 $ 1,874
------------- ---------- ------------- -------------
------------- ---------- ------------- -------------
</TABLE>
Under the federal income tax laws, the Company was not required to include
in its federal taxable income any cancellation of debt income as a result of the
debt forgiven pursuant to the Plan. Accordingly, no income taxes have been
provided on the $731 million extraordinary gain on debt discharge in the
statement of operations for the ten months ended July 31, 1992.
As of September 30, 1993, the Company has estimated tax net operating loss
("NOL") carryforwards of approximately $171 million available to reduce future
federal taxable income. These NOL carryforwards expire in 2006 and 2007 and are
subject to examination by the Internal Revenue Service. Due to the ownership
change which occurred as a result of the Restructuring, the Company's
utilization of NOLs generated prior to the Effective Date is significantly
limited. Based on these limitations and certain other factors, the Company has
recorded a valuation allowance against the entire amount of the NOL deferred tax
asset and other deferred tax assets that, in management's opinion, are not
likely to be recovered. During 1993, due in part to the sale of the general
hospitals, net income tax benefits of approximately $21.5 million were realized
from the utilization of the pre-Effective Date NOLs and were recorded as a
reduction in Excess Reorganization Value.
F-17
<PAGE>
CHARTER MEDICAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1993
8. INCOME TAXES (CONTINUED)
Components of the net deferred income tax liability at September 30, 1992
and 1993 are as follows (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30,
1992 1993
------------- -------------
<S> <C> <C>
Deferred tax liabilities:
Property and depreciation.................................. $ 33,803 $ 14,991
Long-term debt and interest................................ 24,626 17,049
Other...................................................... 39,765 66,968
------------- -------------
Total deferred tax liabilities............................. 98,194 99,008
------------- -------------
Deferred tax assets:
Operating loss carryforwards............................... (132,351) (66,122)
Self-insurance reserves.................................... (44,305) (47,307)
Restructuring costs........................................ (28,952) (25,397)
Stock option expense....................................... (896) (14,898)
Tax capitalization of costs expensed for book purposes..... (12,062) (10,030)
Other...................................................... (20,907) (29,879)
------------- -------------
Total deferred tax assets.................................. (239,473) (193,633)
Valuation allowance........................................ 161,848 133,414
------------- -------------
Deferred tax assets after valuation allowance.............. (77,625) (60,219)
------------- -------------
Net deferred tax liabilities................................. $ 20,569 $ 38,789
------------- -------------
------------- -------------
</TABLE>
The reduction in the valuation allowance during 1993 was primarily due to
the realization of NOL deferred tax assets discussed above.
The Revenue Reconciliation Act of 1993 increased the federal statutory
corporate tax rate from 34% to 35%, effective January 1, 1993. The effect of the
increase was not material to the Company.
The Internal Revenue Service is currently examining the Company's income tax
returns for fiscal 1989 and 1990. In management's opinion, adequate provisions
have been made for any adjustments which may result from these examinations.
9. OTHER ACCRUED LIABILITIES
Other accrued liabilities include amounts due health insurance programs of
$74.8 million and $59.4 million at September 30, 1992 and 1993, respectively.
F-18
<PAGE>
CHARTER MEDICAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1993
10. SUPPLEMENTAL CASH FLOW INFORMATION
Below is supplemental cash flow information related to the year ended
September 30, 1991, the ten months ended July 31, 1992, the two months ended
September 30, 1992 and the year ended September 30, 1993 (see Note 1 for a
discussion of the non-cash financing activities related to the consummation of
the Plan) (in thousands):
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
TEN MONTHS TWO MONTHS
YEAR ENDED ENDED ENDED YEAR ENDED
SEPTEMBER 30, JULY 31, SEPTEMBER 30, SEPTEMBER 30,
1991 1992 1992 1993
------------- ----------- ------------- -------------
Federal and state income taxes paid, net of refunds
received.............................................. $ 1,616 $ 2,944 $ 269 $ 11,136
Payments to ESOP....................................... 51,561 40,697 23,000 69,123
Interest paid, net of amounts capitalized.............. 72,723 69,658 6,803 74,167
</TABLE>
11. COMMITMENTS AND CONTINGENCIES
The Company is self-insured for a substantial portion of its general and
professional liability risks. The reserves for self-insured general and
professional liability losses, including loss adjustment expenses, are based on
actuarial estimates using the Company's historical claims experience adjusted
for current industry trends. The reserve for unpaid claims is adjusted, as such
claims mature, to reflect revised actuarial estimates based on actual
experience. While management and its actuaries believe that the present reserve
is reasonable, ultimate settlement of losses may vary from the amount provided.
In addition to general and professional liability claims, the Company is
subject to other claims, suits, surveys and investigations. This includes a
federal investigation of certain business practices of a subsidiary of the
Company that operates one psychiatric hospital. In the opinion of management,
the ultimate resolution of such other pending matters will not have a material
adverse effect on the Company's financial position or results of operations.
During 1990 a lawsuit was filed against the Company, the Company's
independent accountants and five members of the Company's Board of Directors
from September 1, 1988, until April 2, 1990 (the "Bondholder Litigation"). The
complaint alleged that certain financial statements and other disclosures filed
with the Securities and Exchange Commission contained materially misleading
financial information. During fiscal 1992, the parties to the lawsuit reached a
settlement. However, Resolution Trust Corporation ("RTC"), for itself and in its
capacity as conservator or receivor for 12 financial institutions, requested
exclusion from the Bondholder Litigation. Based on a review of relevant law and
the facts known to the Company, the Company believes that it has substantial
defenses to a potential claim by RTC and that such a claim would not have a
material adverse effect on the Company's financial position or results of
operations.
12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company owns 50% of the Charter Medical Building in Macon, Georgia, and
leases space in such building for use as its corporate headquarters. The lease,
which expires on September 30, 1994, provides for an average annual rental of
approximately $1,189,000. Mr. William A. Fickling, Jr., a former Director and
former Chairman of the Board of Directors of the Company, and his father's
estate own 25% of the building. In the opinion of management, such office space
has been leased on terms as favorable as could be obtained from an unaffiliated
party. As a result of the Company's partnership interest in the building, the
Company received distributions of approximately $300,000 in fiscal 1993.
On September 15, 1993, the Company sold its ownership interest in Beech
Street to the children of Mr. Fickling for approximately $5.5 million, plus the
right to receive additional consideration, if certain events (e.g. a public
offering of Beech Street stock or if Beech Street sells 50% or more of its
assets) occur within two years. The Company obtained a fairness opinion by an
independent appraisal firm stating that the
F-19
<PAGE>
CHARTER MEDICAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1993
12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS (CONTINUED)
financial consideration was fair. The Company acquired its ownership interest in
a series of related transactions beginning in May 1989, for a total purchase
price of $2,956,000. During the period of its ownership, the Company received
$1,242,000 in dividend distributions from Beech Street.
Beech Street was, prior to May 1989, a wholly owned subsidiary of Beech
Street, Inc., in which Mr. Fickling beneficially owns a majority of the
outstanding stock.
The Company also has agreements with Beech Street where certain of the
Company's hospitals provide services to employers (and their related employee
and covered dependent groups) who have entered into agreements with Beech Street
to utilize a Beech Street Preferred Provider Organization ("PPO") for hospital
and other healthcare services. Such agreements provide for covered services to
be rendered under terms (including discounts from the hospital's normal charges)
which management of the Company believes are customary for hospital PPO
agreements. The Beech Street PPO reviews claims and serves as an intermediary
between the Company's hospitals and the contracting employers. The Company
derived approximately $11.5 million, $14.8 million and $21.4 million in revenue
from these agreements during fiscal 1991, 1992 and 1993, respectively. The
aggregate discount from customary charges was 17% in fiscal 1991 and 1992 and
was 12% in fiscal 1993.
Stanley S. Trotman, Jr., a Director of the Company from 1978 until July
1992, is a Managing Director of Kidder, Peabody & Company, Inc. ("Kidder").
While Mr. Trotman served as a Director, Kidder provided certain financial
advisory services to the Company. During fiscal 1991 and 1992, the Company
incurred approximately $1.7 million and $4.9 million, respectively, in fees and
expenses with respect to such services.
F-20
<PAGE>
CHARTER MEDICAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1993
13. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
The following is a summary of the quarterly results of operations for the
years ended September 30, 1992 and 1993. Amounts presented below differ from
amounts previously reported in the Company's Quarterly Reports on Form 10-Q due
to the restatement of the consolidated financial statements to reflect as
discontinued operations the sale of certain subsidiaries in the fourth quarter
of fiscal 1993. Information for the fourth quarter of 1992 and loss per share
data for 1992 are not presented because they are not meaningful due to the
implementation of fresh start accounting and the consummation of the
Restructuring. See Notes 1 and 2.
<TABLE>
<CAPTION>
FISCAL QUARTERS
----------------------------------------------
FIRST SECOND THIRD FOURTH
---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
1992
Net revenue.................................................... $ 226,115 $ 241,184 $ 228,016
Loss from continuing operations................................ (41,116) (28,555) (21,477)
Income from discontinued operations............................ 5,262 6,984 9,000
Net loss....................................................... (35,854) (21,571) (12,477)
1993
Net revenue.................................................... $ 226,390 $ 233,160 $ 231,737 $ 206,620
Loss from continuing operations before extraordinary item...... (4,028) (16,879) (2,473) (16,240)
Income (Loss) from discontinued operations and gain on disposal
of discontinued operations.................................... (3,196) (2,812) (2,872) 4,834
Loss before extraordinary item................................. (7,224) (19,691) (5,345) (11,406)
Net loss....................................................... (7,224) (19,691) (5,345) (19,967)
Loss per common share:
Loss from continuing operations before extraordinary item...... $ (0.16) $ (0.68) $ (0.10) $ (0.65)
Net loss....................................................... (0.29) (0.79) (0.21) (0.80)
</TABLE>
F-21
<PAGE>
14. SEGMENT INFORMATION ON GUARANTOR SUBSIDIARIES
Separate financial statements of the Guarantors are not presented in the
accompanying financial statements because the Guarantors are jointly, severally
and unconditionally liable under the guarantee, and the Company believes the
condensed consolidating financial information presented below is more meaningful
information in understanding the financial position of the Guarantor
Subsidiaries. There are no restrictions on the ability of the Guarantor
Subsidiaries to make distributions to Charter Medical Corporation (Parent
Company). The table below shows supplemental selected financial information for
the Guarantors, which is presented for the purpose of additional segment
analysis and should be reviewed in conjunction with the consolidated financial
statements. This table reflects the Guarantors under the 11 1/4% Senior
Subordinated Notes and the New Credit Agreement consummated in May 1994 (See
Note 15).
<TABLE>
<CAPTION>
CHARTER
MEDICAL CONSOLIDATED
CORPORATION ELIMINATION
GUARANTOR NONGUARANTOR (PARENT ENTRIES CONSOLIDATED
(IN THOUSANDS) SUBSIDIARIES SUBSIDIARIES CORPORATION) (4) TOTAL
--------- ------------ -------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net Income (Loss)
Year Ended September 30, 1991......... $ (76,087) $ 4,356 $ (58,311) $ -- $ (130,042)
Ten Months Ended July 31, 1992........ (239,212) 6,565 980,614 -- 747,967
Two Months Ended September 30, 1992... (10,778) 2,765 817 -- (7,196)
Year Ended September 30, 1993......... (8,896) 9,402 (52,733) -- (52,227)
EBDITA (1)
Year Ended September 30, 1991......... 233,515 5,817 (23,042) (56,471) 159,819
Ten Months Ended July 31, 1992........ 237,087 8,511 (31,422) (50,324) 163,852
Two Months Ended September 30, 1992... 40,214 3,692 (12,220) (11,248) 20,438
Year Ended September 30, 1993......... 395,475 11,475 (99,970) (117,220) 189,760
Net Revenue
Year Ended September 30, 1991......... 1,244,221 35,144 (56,860) (354,241) 868,264
Ten Months Ended July 31, 1992........ 1,093,725 31,660 (32,104) (315,426) 777,855
Two Months Ended September 30, 1992... 206,745 6,429 (3,437) (66,887) 142,850
Year Ended September 30, 1993......... 1,373,895 42,507 (71,861) (446,634) 897,907
Current Assets
September 30, 1992.................... 334,409 10,197 46,447 (100,311) 290,742
September 30, 1993.................... 190,174 4,590 63,780 (26,629) 231,915
Noncurrent Assets
September 30, 1992.................... 1,064,481 65,299 925,888 (1,047,212) 1,008,456
September 30, 1993.................... 869,371 73,431 735,161 (1,071,692) 606,271
Current Liabilities
September 30, 1992.................... 180,843 3,666 152,969 (41,334) 296,144
September 30, 1993.................... 150,346 1,361 134,743 (13,852) 272,598
Noncurrent Liabilities (2)
September 30, 1992.................... 246,673 41,545 703,433 979 992,630
September 30, 1993.................... 137,566 47,857 335,647 (12,780) 508,290
Intercompany Transactions Asset
(Liability) (3)
September 30, 1992.................... 83,172 899 (84,063) (8) --
September 30, 1993.................... 250,707 1,269 (251,942) (34) --
Net Assets
September 30, 1992.................... 1,054,546 31,184 31,870 (1,107,176) 10,424
September 30, 1993.................... 1,022,340 30,072 76,609 (1,071,723) 57,298
<FN>
- ------------------------------
(1) Net revenue less operating and bad debt expenses.
(2) Of the debt related to the New Credit Agreement, only $63,315,000 and
$184,523,000 has been recorded on the individual subsidiaries' books at
September 30, 1993 and 1992, respectively.
(3) This column represents receivables and payables between subsidiaries in the
consolidated group, resulting from transactions between the various
entities, and is included in Net Assets.
(4) Relates primarily to Guarantor Subsidiaries whose operations were sold or
closed.
</TABLE>
F-22
<PAGE>
15. SUBSEQUENT EVENTS
On March 30, 1994 the Company announced that it had entered into an asset
purchase agreement with National Medical Enterprises, Inc. ("NME") providing for
the purchase of substantially all of the assets of 36 psychiatric hospitals,
eight chemical-dependency treatment facilities, two residential treatment
centers and one physician outpatient practice (including related outpatient
facilities and other associated assets, the "Target Hospitals"). The purchase
price for the Target Hospitals will be approximately $151.9 million in cash plus
an additional cash amount, estimated to be approximately $50 million, subject to
adjustment, for the net working capital of the Target Hospitals at the closing
of the acquisition. The Target Hospitals have an aggregate capacity of 3,496
licensed beds and are located in 20 states. During their fiscal year ended May
31, 1993 and the six month period ended November 30, 1993, the Target Hospitals
had, respectively, approximately 40,000 and 19,000 patient admissions, net
revenue of approximately $407.5 million and $177.5 million and Target Hospital
EBITDA (defined as net revenue less operating expenses and bad debt expenses) of
approximately $55.1 million and $23.9 million.
Subject to obtaining licensure and other regulatory approvals, the Company
anticipates that it will purchase the Target Hospitals in multiple closings.
On May 2, 1994 the Company entered into a Second Amended and Restated Credit
Agreement with certain financial institutions for a five-year reducing,
revolving credit facility in an aggregate committed amount of $300 million (the
"Revolving Credit Agreement"). Proceeds from the Revolving Credit Agreement were
or will be used (i) to refinance certain mortgage indebtedness of certain
subsidiaries of the Company in the principal amount of approximately $14.7
million and the loans to certain subsidiaries of the Company outstanding under
the Credit Agreement in the principal amount of approximately $46.8 million,
(ii) for continued credit enhancement of certain currently outstanding variable
rate demand notes issued by or for the benefit of certain subsidiaries of the
Company and (iii) for working capital and other general corporate purposes,
including to finance, in part, the acquisition of the Target Hospitals and to
finance other permitted acquisitions and investments. As of May 2, 1994,
approximately $134.6 million in loans and letters of credit were outstanding
under the Revolving Credit Agreement.
The Revolving Credit Agreement will be reduced by the amounts and on the
dates indicated below:
<TABLE>
<CAPTION>
AMOUNT DATE
- -------------- -----------------
<S> <C>
$ 25,000,000 March 31, 1996
50,000,000 March 31, 1997
50,000,000 March 31, 1998
175,000,000 March 31, 1999
</TABLE>
In addition to the scheduled reductions above, the Revolving Credit
Agreement shall be reduced (i) by an amount equal to 70% (or if a default or an
event of default exists, 100%) of the net proceeds of certain asset sales, (ii)
by an amount equal to 25% (or if a default or an event of default exists, 100%)
of the net proceeds of certain issuances or sales of the Company's capital stock
or other equity interests, except that no such reduction shall be required if
the Company meets specified financial ratios and no default or event of default
has occurred and is continuing, and (iii) by an amount equal to the principal
amount of permitted subordinated indebtedness (including, without limitation,
the Notes (as defined below)) subject to a required repurchase or repurchase
offer by the Company as a result of any asset sale. All such reductions
described in the foregoing clauses (i) through (iii) shall be applied first on a
pro rata basis to all scheduled reductions of the Revolving Credit Agreement
other than the last scheduled reduction of the Revolving Credit Agreement, and
thereafter to the last scheduled reduction.
The loans outstanding under the Revolving Credit Agreement will bear
interest (subject to certain potential adjustments) at a rate per annum equal to
(a) the sum of the Base Lending Rate plus 3/4%, or (b) at the option of the
Company, the sum of the maximum reserve-adjusted one, two, three or six-month
LIBOR plus 1 3/4%. The Base Lending Rate is the higher of (x) the rate announced
from time to time as Bankers Trust Company's prime lending rate, (y) the Federal
Reserve's reported weekly average dealer offering rate for three-month
certificates of deposit, adjusted for maximum reserves, plus 1/2 of 1%, and (z)
the Federal Funds Rate plus 1/2 of 1%.
Also on May 2, 1994, the Company issued $375 million of 11.25% Senior
Subordinated Notes which mature on April 15, 2004 (the "Notes") and are general
unsecured obligations of the Company. Interest on the Notes is payable
semi-annually on each April 15 and October 15, commencing on October 15, 1994.
Proceeds of $181.8 million from the sale of the Notes were used to defease, and
will be used on June 9, 1994 to redeem, the Company's outstanding 7.5% Senior
Subordinated Debentures due 2003. Certain remaining proceeds will be used, along
with proceeds from the
F-23
<PAGE>
Revolving Credit Agreement, to finance the acquisition of NME facilities
discussed above. The Notes are guaranteed on an unsecured senior subordinated
basis by substantially all of the Company's existing subsidiaries and certain
subsidiaries created after the issuance of the Notes.
The Notes are not redeemable at the option of the Company prior to April 15,
1999. Thereafter, the Notes will be subject to redemption at the option of the
Company, in whole or in part, at the redemption prices (expressed as a
percentage of the principal amount) set forth below, plus accrued and unpaid
interest thereon to the applicable redemption date, if redeemed during the
twelve-month period beginning April 15 of the years indicated below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICES
- ----------------------------------------------------- -----------
<S> <C>
1999................................................. 105.625%
2000................................................. 103.750%
2001................................................. 101.875%
2002 and thereafter.................................. 100.000%
</TABLE>
The indenture for the Notes contains certain covenants, which among other
things, restrict the Company's ability and the ability of certain of the
Company's subsidiaries to pay dividends, make unscheduled payments on
indebtedness that is subordinated in right of payment to the Notes or make
certain investments. The covenants also place limitations on the Company's
ability to incur additional indebtedness or liens and places restrictions on the
use of proceeds from asset sales.
F-24
<PAGE>
CHARTER MEDICAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARES AND PER SHARE AMOUNTS)
ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1993 1994
------------- ------------
<S> <C> <C>
Current Assets
Cash and cash equivalents...................................................... $ 86,002 $ 40,535
Cash collateral account........................................................ 5,426 8,207
Accounts receivable, net....................................................... 119,638 129,117
Supplies....................................................................... 5,051 4,933
Other current assets........................................................... 15,798 13,748
------------- ------------
Total Current Assets......................................................... 231,915 196,540
Property and Equipment
Land........................................................................... 95,886 93,850
Buildings and improvements..................................................... 310,649 307,768
Equipment...................................................................... 67,421 69,017
------------- ------------
473,956 470,635
Accumulated depreciation....................................................... (30,098) (43,109)
------------- ------------
443,858 427,526
Construction in progress....................................................... 928 2,194
------------- ------------
444,786 429,720
Other Long-Term Assets........................................................... 104,284 100,195
Reorganization Value in Excess of Amounts Allocable to Identifiable Assets,
net............................................................................. 57,201 41,601
------------- ------------
$ 838,186 $ 768,056
------------- ------------
------------- ------------
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities
Accounts payable............................................................... $ 52,264 $ 39,021
Accrued expenses and other current liabilities................................. 149,377 135,041
Current maturities of long-term debt and capital lease obligations............. 70,957 41,010
------------- ------------
Total Current Liabilities.................................................... 272,598 215,072
Long-Term Debt and Capital Lease Obligations..................................... 350,205 321,192
Deferred Income Taxes............................................................ 38,789 36,439
Reserve for Unpaid Claims........................................................ 99,675 98,268
Deferred Credits and Other Long-Term Liabilities................................. 19,621 14,976
Stockholders' Equity
Common Stock, par value $0.25 per share
Authorized -- 80,000,000 shares
Issued and outstanding -- 25,001,042 shares at September 30, 1993
and 26,750,950 shares at March 31, 1994..................................... 6,250 6,688
Other Stockholders' Equity
Additional paid-in capital................................................... 237,581 240,162
Accumulated deficit.......................................................... (59,423) (62,166)
Unearned compensation under ESOP............................................. (122,724) (98,125)
Warrants outstanding......................................................... 274 182
Cumulative foreign currency adjustments...................................... (4,660) (4,632)
------------- ------------
57,298 82,109
Commitments and Contingencies
------------- ------------
$ 838,186 $ 768,056
------------- ------------
------------- ------------
</TABLE>
The accompanying Notes to Condensed Consolidated Financial Statements
are an integral part of these balance sheets.
F-25
<PAGE>
CHARTER MEDICAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE QUARTER FOR THE SIX MONTHS
ENDED MARCH 31, ENDED MARCH 31,
-------------------- --------------------
1993 1994 1993 1994
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net Revenue........................................................ $ 233,160 $ 212,610 $ 459,550 $ 421,427
--------- --------- --------- ---------
Costs and Expenses
Operating expenses............................................... 163,613 153,147 323,367 305,589
Bad debt expense................................................. 16,493 16,159 34,870 32,288
Depreciation and amortization.................................... 6,635 6,904 13,802 13,579
Amortization of reorganization value in excess of amounts
allocable to identifiable assets................................ 10,750 7,800 21,500 15,600
Interest, net.................................................... 18,323 8,418 37,307 16,785
ESOP expense..................................................... 8,965 12,300 17,970 24,599
Stock option expense............................................. 29,016 656 31,277 6,851
--------- --------- --------- ---------
253,795 205,384 480,093 415,291
--------- --------- --------- ---------
Income (Loss) from continuing operations before income taxes....... (20,635) 7,226 (20,543) 6,136
Provision for (Benefit from) income taxes.......................... (3,756) 6,103 364 8,879
--------- --------- --------- ---------
Income (Loss) from continuing operations........................... (16,879) 1,123 (20,907) (2,743)
Loss from discontinued operations (net of income tax provision of
$3,178 and $6,123 for the quarter and six months, respectively)... (2,812) -- (6,008) --
--------- --------- --------- ---------
Net Income (Loss).................................................. $ (19,691) $ 1,123 $ (26,915) $ (2,743)
--------- --------- --------- ---------
--------- --------- --------- ---------
Average Number of Common Shares Outstanding........................ 24,857 26,743 24,842 25,936
--------- --------- --------- ---------
--------- --------- --------- ---------
Earnings per common share:
Income (Loss) from continuing operations......................... $ (.68) $ .04 $ (.84) $ (.11)
Loss from discontinued operations................................ (.11) -- (.24) --
--------- --------- --------- ---------
Net Income (Loss)................................................ $ (.79) $ .04 $ (1.08) $ (.11)
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
The accompanying Notes to Condensed Consolidated Financial Statements
are an integral part of these statements.
F-26
<PAGE>
CHARTER MEDICAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
OTHER STOCKHOLDERS' EQUITY
-------------------------------------------------------------------
CUMULATIVE
COMMON STOCK ADDITIONAL UNEARNED FOREIGN
-------------- PAID-IN ACCUMULATED COMPENSATION WARRANTS CURRENCY
SHARES AMOUNT CAPITAL DEFICIT UNDER ESOP OUTSTANDING ADJUSTMENTS
------ ------ ---------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at September 30, 1993...... 25,001 $6,250 $ 237,581 $ (59,423) $ (122,724) $ 274 $ (4,660)
Additions (Deductions):
Net loss......................... -- -- -- (3,866) -- -- --
ESOP expense..................... -- -- -- -- 12,299 -- --
Stock option expense accrual..... -- -- 6,195 -- -- -- --
Exercise of stock options........ 1,682 421 (14,096) -- -- -- --
Exercise of warrants............. 37 9 277 -- -- (91) --
Tax benefit related to exercise
of stock options................ -- -- 9,424 -- -- -- --
Foreign currency translation
loss............................ -- -- -- -- -- -- (642)
------ ------ ---------- ----------- ------------ ----- -----------
Balance at December 31, 1993....... 26,720 $6,680 $ 239,381 $ (63,289) $ (110,425) $ 183 $ (5,302)
Additions (Deductions):
Net income....................... -- -- -- 1,123 -- -- --
ESOP expense..................... -- -- -- -- 12,300 -- --
Stock option expense accrual..... -- -- 656 -- -- -- --
Exercise of stock options........ 30 8 120 -- -- -- --
Exercise of warrants............. 1 -- 5 -- -- (1) --
Foreign currency translation
gain............................ -- -- -- -- -- -- 670
------ ------ ---------- ----------- ------------ ----- -----------
Balance at March 31, 1994.......... 26,751 $6,688 $ 240,162 $ (62,166) $ (98,125) $ 182 $ (4,632)
------ ------ ---------- ----------- ------------ ----- -----------
------ ------ ---------- ----------- ------------ ----- -----------
</TABLE>
The accompanying Notes to Condensed Consolidated Financial Statements
are an integral part of these statements.
F-27
<PAGE>
CHARTER MEDICAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED MARCH 31,
---------------------
1993 1994
---------- ---------
<S> <C> <C>
Cash Flows From Operating Activities
Net loss............................................................................. $ (26,915) $ (2,743)
Adjustments to reconcile net loss to net cash provided by operating activities:
Loss from discontinued operations................................................ 6,008 --
Depreciation and amortization.................................................... 35,302 29,179
ESOP expense..................................................................... 17,970 24,599
Stock option expense............................................................. 31,277 6,851
Non-cash interest expense........................................................ 2,950 1,375
Cash flows from changes in assets and liabilities, net of effects from sales and
acquisitions of businesses:
Accounts receivable, net....................................................... (12,433) (9,475)
Other assets................................................................... (201) 4,443
Accounts payable and other accrued liabilities................................. (23,492) (21,829)
Reserve for unpaid claims...................................................... 1,659 (847)
Income taxes payable........................................................... (2,845) (9,057)
Other liabilities.............................................................. 8,436 (5,464)
Other............................................................................ (469) 1,515
---------- ---------
Total adjustments................................................................ 64,162 21,290
---------- ---------
Net cash provided by operating activities........................................ 37,247 18,547
---------- ---------
Cash Flows From Investing Activities
Acquisitions of businesses........................................................... -- (1,733)
Capital expenditures................................................................. (4,702) (6,964)
Decrease in assets restricted for settlement of unpaid claims........................ 587 4,058
Proceeds from sale of assets......................................................... 11,882 7,857
Cash flows from discontinued operations.............................................. 19,698 --
---------- ---------
Net cash provided by investing activities........................................ 27,465 3,218
---------- ---------
Cash Flows From Financing Activities
Proceeds from issuance of debt....................................................... 17,200 --
Payments on debt and capital lease obligations....................................... (117,001) (60,527)
Proceeds from exercise of stock options and warrants................................. 141 866
Tax benefit related to exercise of stock options..................................... -- 9,424
Income tax payments made on behalf of stock optionee................................. -- (14,214)
Increase in cash collateral account.................................................. (372) (2,781)
---------- ---------
Net cash used in financing activities............................................ (100,032) (67,232)
---------- ---------
Net decrease in cash and cash equivalents.............................................. (35,320) (45,467)
Cash and cash equivalents at beginning of period....................................... 140,803 86,002
---------- ---------
Cash and cash equivalents at end of period............................................. $ 105,483 $ 40,535
---------- ---------
---------- ---------
</TABLE>
The accompanying Notes to Condensed Consolidated Financial Statements
are an integral part of these statements.
F-28
<PAGE>
CHARTER MEDICAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1994
(UNAUDITED)
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments, consisting of normal recurring
adjustments considered necessary for a fair presentation, have been included.
These financial statements should be read in conjunction with the audited
consolidated financial statements of the Company for the year ended September
30, 1993, included in the Company's Annual Report on Form 10-K.
NOTE B -- NATURE OF BUSINESS
The Company's business is seasonal in nature, with a reduced demand for
certain services generally occurring in the fourth fiscal quarter and around
major holidays, such as Thanksgiving and Christmas. The Company's business is
also subject to general economic conditions and other factors. Accordingly, the
results of operations for the interim periods are not necessarily indicative of
the results expected for the year.
NOTE C -- SUPPLEMENTAL CASH FLOW INFORMATION
Below is supplemental cash flow information related to the six months ended
March 31, 1993 and 1994:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED
MARCH 31,
--------------------
1993 1994
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Income taxes paid, net of refunds received........................... $ 9,525 $ 8,532
Interest paid, net of amounts capitalized............................ 36,184 16,331
Payments to ESOP..................................................... 52,669 30,000
</TABLE>
NOTE D -- LONG-TERM DEBT AND LEASES
Information with regard to the Company's long-term debt and capital lease
obligations at September 30, 1993 and March 31, 1994 follows (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1993 1994
------------- ----------
<S> <C> <C>
Financing under the Credit Agreement:
Tranche A Facility (6.75% at March 31, 1994)............................ $ 93,871 $ 65,932
Tranche B Facility (5.7375% to 8.375% at March 31, 1994)................ 67,619 37,619
Debentures due 2003 (net of discount of $43,997 at September 30, 1993 and
$42,622 at March 31, 1994)............................................... 156,003 157,378
8% to 16% Mortgage and other collateralized notes payable through 1998.... 21,502 19,916
Variable rate secured notes due through 2013 (2.15% to 2.5% at March 31,
1994).................................................................... 64,175 63,825
7.5% Swiss Bonds due currently............................................ 6,443 6,443
2.2% to 11.5% Capital lease obligations due through 2014.................. 11,965 11,780
------------- ----------
421,578 362,893
Less amounts due within one year...................................... 70,957 41,010
Less debt service funds............................................... 416 691
------------- ----------
$ 350,205 $ 321,192
------------- ----------
------------- ----------
</TABLE>
F-29
<PAGE>
CHARTER MEDICAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1994
(UNAUDITED)
NOTE D -- LONG-TERM DEBT AND LEASES (CONTINUED)
The Company made a mandatory payment under the Credit Agreement of
approximately $3.1 million in January 1994 which represented actual excess cash
over estimated excess cash at September 30, 1993. Additionally, in January 1994
the Company made a voluntary prepayment under the Credit Agreement of $30
million.
On March 1, 1994 the Company made a mandatory prepayment under the Credit
Agreement of approximately $1.9 million which represented 75% of net proceeds
from asset sales and on March 31, 1994 made a scheduled payment of $2.5 million.
NOTE E -- CONTINGENCIES
GENERAL AND PROFESSIONAL LIABILITY
The Company is self-insured for a substantial portion of general and
professional liability risks. The reserves for self-insured general and
professional liability losses, including loss adjustment expenses, are based on
actuarial estimates using the Company's historical claims experience adjusted
for current industry trends. The reserve for unpaid claims is adjusted as such
claims mature, to reflect revised actuarial estimates based on actual
experience. While management and its actuaries believe that the present reserve
is reasonable, ultimate settlement of losses may vary from the amount provided.
LITIGATION
In addition to general and professional liability claims, the Company is
subject to other claims, suits, surveys and investigations. This includes a
federal investigation of certain business practices of a subsidiary of the
Company that operates one psychiatric hospital. In the opinion of management,
the ultimate resolution of such other pending legal proceedings will not have a
material adverse effect on the Company's financial position or results of
operations.
NOTE F -- ACQUISITION
On March 30, 1994 the Company announced that it had entered into an asset
purchase agreement with National Medical Enterprises, Inc. ("NME") providing for
the purchase of substantially all of the assets of 36 psychiatric hospitals,
eight chemical-dependency treatment facilities, two residential treatment
centers and one physician outpatient practice (including related outpatient
facilities and other associated assets, the "Target Hospitals"). The purchase
price for the Target Hospitals will be approximately $151.9 million in cash plus
an additional cash amount, estimated to be approximately $50 million, subject to
adjustment, for the net working capital of the Target Hospitals at the closing
of the acquisition. The Target Hospitals have an aggregate capacity of 3,496
licensed beds and are located in 20 states. During their fiscal year ended May
31, 1993 and the six month period ended November 30, 1993, the Target Hospitals
had, respectively, approximately 40,000 and 19,000 patient admissions, net
revenue of approximately $407.5 million and $177.5 million and Target Hospital
EBITDA (defined as net revenue less operating expenses and bad debt expenses) of
approximately $55.1 million and $23.9 million.
Subject to obtaining licensure and other regulatory approvals, the Company
anticipates that it will purchase the Target Hospitals in multiple closings.
NOTE G -- SUBSEQUENT EVENTS
On May 2, 1994 the Company entered into a Second Amended and Restated Credit
Agreement with certain financial institutions for a five-year reducing,
revolving credit facility in an aggregate committed amount of $300 million (the
"Revolving Credit Agreement"). Proceeds from the Revolving Credit Agreement were
or will be used (i) to refinance certain mortgage indebtedness of certain
subsidiaries of the Company in the principal amount of approximately $14.7
million and the loans to certain subsidiaries of the
F-30
<PAGE>
CHARTER MEDICAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1994
(UNAUDITED)
NOTE G -- SUBSEQUENT EVENTS (CONTINUED)
Company outstanding under the Credit Agreement in the principal amount of
approximately $46.8 million, (ii) for continued credit enhancement of certain
currently outstanding variable rate demand notes issued by or for the benefit of
certain subsidiaries of the Company, and (iii) for working capital and other
general corporate purposes, including to finance, in part, the acquisition of
the Target Hospitals and to finance other permitted acquisitions and
investments. As of May 2, 1994, approximately $134.6 million in loans and
letters of credit were outstanding under the Revolving Credit Agreement.
The Revolving Credit Agreement will be reduced by the amounts and on the
dates indicated below:
<TABLE>
<CAPTION>
AMOUNT DATE
- -------------- -----------------
<S> <C>
$ 25,000,000 March 31, 1996
50,000,000 March 31, 1997
50,000,000 March 31, 1998
175,000,000 March 31, 1999
</TABLE>
In addition to the scheduled reductions above, the Revolving Credit
Agreement shall be reduced (i) by an amount equal to 70% (or if a default or an
event of default exists, 100%) of the net proceeds of certain asset sales, (ii)
by an amount equal to 25% (or if a default or an event of default exists, 100%)
of the net proceeds of certain issuances or sales of the Company's capital stock
or other equity interests, except that no such reduction shall be required if
the Company meets specified financial ratios and no default or event of default
has occurred and is continuing, and (iii) by an amount equal to the principal
amount of permitted subordinated indebtedness (including, without limitation,
the Notes (as defined below)) subject to a required repurchase or repurchase
offer by the Company as a result of any asset sale. All such reductions
described in the foregoing clauses (i) through (iii) shall be applied first on a
pro rata basis to all scheduled reductions of the Revolving Credit Agreement
other than the last scheduled reduction of the Revolving Credit Agreement, and
thereafter to the last scheduled reduction.
The loans outstanding under the Revolving Credit Agreement will bear
interest (subject to certain potential adjustments) at a rate per annum equal to
(a) the sum of the Base Lending Rate plus 3/4%, or (b) at the option of the
Company, the sum of the maximum reserve-adjusted one, two, three or six-month
LIBOR plus 1 3/4%. The Base Lending Rate is the higher of (x) the rate announced
from time to time as Bankers Trust Company's prime lending rate, (y) the Federal
Reserve's reported weekly average dealer offering rate for three-month
certificates of deposit, adjusted for maximum reserves, plus 1/2 of 1%, and (z)
the Federal Funds Rate plus 1/2 of 1%.
Also on May 2, 1994, the Company issued $375 million of 11.25% Senior
Subordinated Notes which mature on April 15, 2004 (the "Notes") and are general
unsecured obligations of the Company. Interest on the Notes is payable
semi-annually on each April 15 and October 15, commencing on October 15, 1994.
Proceeds of $181.8 million from the sale of the Notes were used to defease, and
will be used on June 9, 1994 to redeem, the Company's outstanding 7.5% Senior
Subordinated Debentures due 2003. Certain remaining proceeds will be used, along
with proceeds from the Revolving Credit Agreement, to finance the acquisition of
NME facilities discussed above. The Notes are guaranteed on an unsecured senior
subordinated basis by substantially all of the Company's existing subsidiaries
and certain subsidiaries created after the issuance of the Notes.
F-31
<PAGE>
CHARTER MEDICAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1994
(UNAUDITED)
NOTE G -- SUBSEQUENT EVENTS (CONTINUED)
The Notes are not redeemable at the option of the Company prior to April 15,
1999. Thereafter, the Notes will be subject to redemption at the option of the
Company, in whole or in part, at the redemption prices (expressed as a
percentage of the principal amount) set forth below, plus accrued and unpaid
interest thereon to the applicable redemption date, if redeemed during the
twelve-month period beginning April 15 of the years indicated below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICES
--- -----------
<S> <C>
1999............................................... 105.625%
2000............................................... 103.750%
2001............................................... 101.875%
2002 and thereafter................................ 100.000%
</TABLE>
The indenture for the Notes contains certain covenants which, among other
things, restrict the Company's ability and the ability of certain of the
Company's subsidiaries to pay dividends, make unscheduled payments on
indebtedness that is subordinated in right of payment to the Notes or make
certain investments. The covenants also place limitations on the Company's
ability to incur additional indebtedness or liens and places restrictions on the
use of proceeds from asset sales.
F-32
<PAGE>
The Board of Directors
National Medical Enterprises, Inc. and
Charter Medical Corporation:
We have audited the accompanying combined balance sheets of the Selected
Psychiatric Hospitals of National Medical Enterprises, Inc. (the "Selected
Psychiatric Hospitals") as of May 31, 1993 and the related combined statements
of operations, owners' equity and cash flows for each of the years in the
two-year period ended May 31, 1993. These combined financial statements are the
responsibility of management of National Medical Enterprises, Inc. ("NME"). Our
responsibility is to express an opinion on these combined financial statements
based on our audits.
Except as discussed in the following paragraph, we conducted our audits in
accordance with generally accepted auditing standards. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the combined financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
As discussed in Note 9 to the combined financial statements, NME and certain
of its subsidiaries at May 31, 1993 were engaged in various lawsuits and were
the subject of governmental investigations concerning possible improper
practices, some of which may have involved practices of certain of the Selected
Psychiatric Hospitals. Subsequent to May 31, 1993, the majority of these
lawsuits were settled, and in April, 1994, NME reached an agreement-in-principle
with certain Federal government agencies which, upon execution, will finalize
all open investigations of NME by the federal government and its agencies. While
NME agreed to pay substantial amounts as part of these settlements and
agreements, none of these amounts have been reflected in the accompanying
combined financial statements as they have not been allocated to specific
facilities.
In our opinion, except for the effects on the combined financial statements
of such adjustments, if any, as might be necessary had the Company been able to
determine the amount of the settlements and agreements described in the
preceding paragraph that are applicable to the Selected Psychiatric Hospitals,
the combined financial statements referred to above present fairly, in all
material respects, the combined financial position of Selected Psychiatric
Hospitals of National Medical Enterprises, Inc. as of May 31, 1993 and the
results of their combined operations and their cash flows for each of the years
in the two-year period ended May 31, 1993 in conformity with generally accepted
accounting principles.
/s/ KPMG Peat Marwick
--------------------------------------
Los Angeles, California
July 19, 1993, except as to Note 9,
which is as of April 14, 1994 and
Note 10, which is as of May 13, 1994.
F-33
<PAGE>
SELECTED PSYCHIATRIC HOSPITALS OF
NATIONAL MEDICAL ENTERPRISES, INC.
COMBINED BALANCE SHEET
MAY 31, 1993
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents....................................................... $ 4,071
Accounts receivable, net of allowance for bad debts............................. 56,944
Inventories of supplies, at cost................................................ 2,265
Prepaid expenses and other assets............................................... 2,605
---------
Total current assets........................................................ 65,885
Other long term assets............................................................ 9,192
Property, plant and equipment, net................................................ 286,462
Preopening costs and other intangible assets, at cost, net of accumulated
amortization of $24,502.......................................................... 18,101
---------
$ 379,640
---------
---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt............................................... $ 198
Accounts payable................................................................ 18,667
Employee compensation and benefits.............................................. 10,137
Allowance for loss on sale of selected hospitals................................ 6,464
Other current liabilities....................................................... 9,247
---------
Total current liabilities................................................... 44,713
Long-term debt, net of current portion............................................ 6,196
Minority interest................................................................. 4,390
Other long-term liabilities....................................................... 1,925
Due to owners and affiliates...................................................... 137,395
Commitments and contingencies
Owners' equity.................................................................... 185,021
---------
$ 379,640
---------
---------
</TABLE>
See accompanying notes to combined financial statements.
F-34
<PAGE>
SELECTED PSYCHIATRIC HOSPITALS OF
NATIONAL MEDICAL ENTERPRISES, INC.
COMBINED STATEMENTS OF OPERATIONS
YEARS ENDED MAY 31, 1992 AND 1993
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1992 1993
---------- ----------
<S> <C> <C>
Net operating revenues.................................................................... $ 537,218 $ 407,525
---------- ----------
Operating and administrative expenses..................................................... 424,985 351,281
Intercompany fees and allocations......................................................... 66,962 53,252
Depreciation and amortization............................................................. 32,137 21,826
Provision for loss on sale of selected hospitals.......................................... 2,202 4,262
Minority interest in earnings of certain hospitals........................................ 1,652 1,185
Interest, net of capitalized portion of $314 in 1992 and $61 in 1993...................... 11,012 11,906
---------- ----------
Total costs and expenses.............................................................. 538,950 443,712
---------- ----------
Loss before income tax benefit............................................................ (1,732) (36,187)
Income tax benefit........................................................................ (439) (13,121)
---------- ----------
Net loss.................................................................................. $ (1,293) $ (23,066)
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to combined financial statements.
F-35
<PAGE>
SELECTED PSYCHIATRIC HOSPITALS OF
NATIONAL MEDICAL ENTERPRISES, INC.
COMBINED STATEMENTS OF CASH FLOWS
YEARS ENDED MAY 31, 1992 AND 1993
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1992 1993
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)....................................................................... $ (1,293) $ (23,066)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization......................................................... 32,137 21,826
Provisions for losses on accounts receivable.......................................... 36,812 20,273
Provision for minority interest....................................................... 1,652 1,185
Provision for loss on sale of selected hospitals...................................... 2,202 4,262
Non-cash income tax benefit........................................................... (439) (13,121)
Changes in operating assets and liabilities:
Accounts and notes receivable....................................................... 11,723 (11,232)
Inventories of supplies............................................................. 431 2
Other current assets................................................................ (486) 4,664
Accounts payable and other accrued expenses......................................... 3,904 (151)
Other current liabilities........................................................... 1,074 (3,947)
Minority interest................................................................... (1,465) (840)
Other long term liabilities......................................................... (260) (191)
---------- ----------
Net cash provided by (used in) operating activities..................................... 85,992 (336)
---------- ----------
Cash flows from investing activities:
Purchases of property, plant and equipment.............................................. (31,077) (30,421)
Intangible assets....................................................................... (18) (4,399)
---------- ----------
Net cash used in investing activities................................................... (31,095) (34,820)
---------- ----------
Cash flows from financing activities:
Proceeds from borrowings................................................................ 4,111 0
Principal payments on long term debt and capitalized leases............................. (1,688) (635)
Net change in amounts due from parent and affiliates.................................... (53,667) 41,582
Dividends paid to owners................................................................ (6,186) (3,685)
---------- ----------
Net cash provided by (used in) financing activities..................................... (57,430) 37,262
---------- ----------
Net increase (decrease) in cash and cash equivalents...................................... (2,533) 2,106
Cash and cash equivalents at beginning of period.......................................... 4,498 1,965
---------- ----------
Cash and cash equivalents at end of period................................................ $ 1,965 $ 4,071
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to combined financial statements
F-36
<PAGE>
SELECTED PSYCHIATRIC HOSPITALS OF
NATIONAL MEDICAL ENTERPRISES, INC.
COMBINED STATEMENTS OF OWNERS' EQUITY
YEARS ENDED MAY 31, 1992 AND 1993
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
TOTAL
OWNERS'
EQUITY
----------
<S> <C>
Balance, May 31, 1991................................................................................. $ 219,251
Net loss.............................................................................................. (1,293)
Dividends paid........................................................................................ (6,186)
----------
Balance, May 31, 1992................................................................................. 211,772
Net loss.............................................................................................. (23,066)
Dividends paid........................................................................................ (3,685)
----------
Balance, May 31, 1993................................................................................. $ 185,021
----------
----------
</TABLE>
See accompanying notes to combined financial statements.
F-37
<PAGE>
SELECTED PSYCHIATRIC HOSPITALS OF
NATIONAL MEDICAL ENTERPRISES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
MAY 31, 1992 AND 1993
1. SIGNIFICANT ACCOUNTING POLICIES
The combined financial statements have been prepared in connection with the
acquisition by certain subsidiaries of Charter Medical Corporation (Charter) of
substantially all of the assets of the 36 psychiatric hospitals, eight
chemical-dependency treatment facilities, two residential treatment centers and
one physician outpatient practice, including related outpatient facilities and
other associated assets, (collectively the "Selected Hospitals") from various
subsidiaries of National Medical Enterprises, Inc. ("NME"), which transaction is
described in more detail in Note 10.
The combined financial statements present the historical combined financial
position and results of operations of the Selected Hospitals and, as a result,
include certain assets and liabilities of the Selected Hospitals that Charter
will not acquire or assume as part of the transaction described in Note 10.
Several of the Selected Hospitals are owned and/or operated by partnerships
in which NME currently owns an interest. It is anticipated that NME's interest
in these partnerships will be transferred as part of the transaction described
in Note 10. These Selected Hospitals have been consolidated in the financial
statements with the respective minority interests being recorded. Significant
intercompany accounts and transactions between the Selected Hospitals have been
eliminated.
NET OPERATING REVENUES
Net operating revenues consist primarily of net patient service revenues
which are based on the hospitals' established billing rates less allowances and
discounts principally for patients covered by Medicare, Medicaid and other
contractual programs. These allowances and discounts were $324,555,000 in 1992
and $255,103,000 in 1993. Payments under these programs are based on either
predetermined rates or the costs of services. Settlements for retrospectively
determined rates are estimated in the period in which the related services are
rendered and are adjusted in future periods as final settlements are determined.
Management believes that adequate provision has been made for adjustments that
may result from final determination of amounts earned under these programs.
Approximately 19% of net operating revenues in 1992 and approximately 29% of net
operating revenues in 1993 is from the participation of the Selected Hospitals
in Medicare and Medicaid programs.
The Selected Hospitals provide care without charge or at amounts
substantially less than their established rates to patients who meet certain
financial or economic criteria. Because the Selected Hospitals do not pursue
collection of amounts determined to qualify as charity care, they are not
reported as gross revenue and are not included in deductions from revenue or in
operating and administrative expenses.
Bad debt expense for estimated uncollectible accounts receivable, net of
recoveries, is included in operating and administrative expenses and was
$36,812,000 in 1992 and $20,273,000 in 1993.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recorded at cost, net of accumulated
depreciation. The Selected Hospitals principally use the straight-line method of
depreciation for buildings, improvements and equipment over their estimated
useful lives as follows: buildings and improvements -- generally 20 to 50 years;
equipment -- 3 to 15 years.
INTANGIBLE ASSETS
Preopening costs are generally amortized over 3 to 5 years. Costs in excess
of the fair value of identifiable net assets of purchased businesses are
generally amortized over 40 years. The straight-line method is used to amortize
most intangible assets.
F-38
<PAGE>
SELECTED PSYCHIATRIC HOSPITALS OF
NATIONAL MEDICAL ENTERPRISES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1992 AND 1993
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
LEASES
Capital leases are recorded at the beginning of the lease term as assets and
liabilities at the lower of the present value of the minimum lease payments or
the fair value of the assets.
CASH EQUIVALENTS
The Selected Hospitals treat highly liquid investments with an original
maturity of three months or less as cash equivalents.
INCOME TAXES
The operations of the Selected Hospitals are included in the NME
consolidated Federal income tax return and in various unitary and consolidated
State income tax returns. NME charges or credits the Selected Hospitals for
amounts from applicable separate State income tax returns, if any, and allocates
to such hospitals a charge or credit for current and deferred income tax expense
attributable to consolidated and unitary Federal and State income taxes. Such
allocations are recorded as Due to Owners and Affiliates.
Deferred taxes assets and liabilities attributable to timing differences of
the Selected Hospitals are recorded on the books of an affiliate.
2. DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of cash, cash equivalents, accounts receivable, accounts
payable and interest payable approximates fair value because of the short
maturity of these instruments. The fair value of the Selected Hospitals'
long-term debt, (1) calculated by discounting scheduled cash flows through the
estimated maturity using estimated market discount rates that reflect the credit
and interest rate risk inherent in the loans, or (2) based on current rates
available for debt of the same remaining maturities available to NME, also
approximates carrying value.
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following at May 31, 1993 (in
thousands):
<TABLE>
<S> <C>
Land...................................................... $ 33,483
Buildings and improvements................................ 265,554
Constructions in progress................................. 2,195
Equipment................................................. 73,006
Facilities under capital leases........................... 1,548
---------
375,786
Less accumulated depreciation............................. 89,324
---------
$ 286,462
---------
---------
</TABLE>
4. RELATED PARTY TRANSACTIONS
Certain Selected Hospitals participate in the NME cash management program
which requires that cash deposits be transferred to NME-controlled bank
accounts. In this system, generally all cash accounts are zero-balance accounts.
Increases and decreases in the NME intercompany account are principally a
function of cash flow and accrued interest (10% in 1992 and 1993) and noncash
entries for certain overhead and expense transfers.
Total interest expense recognized relating to balances with NME and
NME-owned entities was $10,680,000 and $11,058,000 for the years ended May 31,
1992 and 1993, respectively.
F-39
<PAGE>
SELECTED PSYCHIATRIC HOSPITALS OF
NATIONAL MEDICAL ENTERPRISES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1992 AND 1993
4. RELATED PARTY TRANSACTIONS (CONTINUED)
Operating and administrative expenses include gross insurance premiums of
approximately $7,470,000 and $9,563,000 paid to Health Facilities Insurance
Corporation, Ltd. (HFIC), a wholly owned subsidiary of NME, for professional and
other insurance coverage for the years ended May 31, 1992 and 1993,
respectively.
NME provides certain management and administrative services to the Selected
Hospitals for which it charges a fee. Each of the Selected Hospitals is
allocated a portion of the fee based on a specified percentage of gross revenues
earned. Fees of $78,020,000 and $65,351,000 were paid to NME for the years ended
May 31, 1992 and 1993, respectively. Of these amounts, $11,058,000 and
$12,099,000 are reported as operating and administrative expenses in the
accompanying statements of operations for the years ended May 31, 1992 and 1993,
respectively.
5. LONG-TERM DEBT
Long-term debt of the Selected Hospitals at May 31, 1993 is as follows (in
thousands):
<TABLE>
<S> <C>
Notes secured by property, plant and equipment at rates
ranging from 6% to 11.25%.................................. $ 5,423
Obligations under capital leases at rates ranging from 4.8%
to 14.71%.................................................. 971
---------
6,394
Less current portion........................................ 198
---------
$ 6,196
---------
---------
</TABLE>
Minimum principal payments on long-term debt for the five years subsequent
to May 31, 1993 are as follows (in thousands):
<TABLE>
<S> <C>
1994........................................................ $ 198
1995........................................................ 730
1996........................................................ 804
1997........................................................ 841
1998........................................................ 918
Thereafter.................................................. 2,903
---------
$ 6,394
---------
---------
</TABLE>
Interest paid to third parties totaled $668,000 and $915,000 during the
years ended May 31, 1992 and 1993, respectively.
F-40
<PAGE>
SELECTED PSYCHIATRIC HOSPITALS OF
NATIONAL MEDICAL ENTERPRISES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1992 AND 1993
6. INCOME TAX BENEFIT
Income tax benefits allocated by NME for the years ended May 31 consist of
the following amounts (in thousands):
<TABLE>
<CAPTION>
1992 1993
--------- ----------
<S> <C> <C>
Current payable
Federal..................................................... $ (2,051) $ (16,219)
State....................................................... 2,247 (2,166)
--------- ----------
196 (18,385)
--------- ----------
Deferred taxes:
Federal..................................................... (6) 4,144
State....................................................... (629) 1,120
--------- ----------
(635) 5,264
--------- ----------
Total tax benefit......................................... $ (439) $ (13,121)
--------- ----------
--------- ----------
</TABLE>
Effective June 1, 1993, NME adopted Statement of Financial Accounting
Standard No. 109, "Accounting for Income Taxes" (SFAS 109). Among other
provisions, this standard requires deferred tax balances to be determined using
enacted tax rates for the years in which the taxes will actually be paid or
refunds received. At May 31, 1993, deferred tax accounts recorded by an
affiliate applicable to the Selected Hospitals' timing differences reflect the
statutory rates that were in effect when the deferrals were initiated. Upon
adoption, such deferred tax accounts applicable to the temporary differences of
Selected Hospitals will be adjusted and the affiliate will recognize an income
tax benefit on account of the change of method. Selected Hospitals will continue
receive an allocation of current and deferred income tax expense, modified to
reflect the principles contained in SFAS 109.
The main difference between the Federal statutory rate of 34% and the
effective tax rate is attributable to state income taxes, net of Federal income
tax benefit.
7. LEASE OBLIGATIONS
Future minimum lease payments for operating leases for the next five years
are as follows (in thousands):
<TABLE>
<S> <C>
1994....................................................... $ 4,489
1995....................................................... 4,935
1996....................................................... 3,383
1997....................................................... 3,388
1998....................................................... 3,025
Thereafter................................................. 3,439
---------
$ 22,659
---------
---------
</TABLE>
Rental expense under operating leases, including contingent rent expense and
short-term leases, was $10,365,000 in 1992 and $9,333,000 in 1993.
8. PROFESSIONAL AND GENERAL LIABILITY INSURANCE
The professional and comprehensive general liability risks of the Selected
Hospitals are insured by HFIC. The coverage provided is limited to $25,000,000
per occurrence with an annual aggregate limit of $25,000,000. HFIC reinsures
risks in excess of $500,000 per occurrence with major insurance carriers.
F-41
<PAGE>
SELECTED PSYCHIATRIC HOSPITALS OF
NATIONAL MEDICAL ENTERPRISES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1992 AND 1993
8. PROFESSIONAL AND GENERAL LIABILITY INSURANCE (CONTINUED)
The Selected Hospitals also have umbrella coverage with major insurance
carriers for losses above the limits provided by HFIC. The excess coverage
provided is limited to $75,000,000 per occurrence with an annual aggregate limit
of $75,000,000.
Management believes that adequate provision has been made for adjustments
that may result from final determination of amounts earned under the
Medicare/Medicaid and other contractual programs described in Note 1. Such
amounts, however, are necessarily based upon estimates and the amounts
ultimately realized may vary substantially from these estimates.
9. OTHER CONTINGENCIES
UNUSUAL LEGAL PROCEEDINGS
At May 31, 1993, NME and certain of its subsidiaries, including those that
own the Selected Hospitals, were involved in significant lawsuits and
governmental investigations concerning possible improper practices related
principally to its psychiatric business. The suits sought compensatory and
punitive damages and, in some cases, attorneys fees. At May 31, 1993, neither
the ultimate disposition of the unusual lawsuits, investigations and claims nor
the amount of liabilities or losses arising from them could be determined.
Furthermore, at May 31, 1993, NME and NME's subsidiaries expected to incur
substantial legal charges until these matters could be disposed of, for which
NME established a reserve. As of August 31, 1993, NME recorded additional
reserves to estimate the cost of the ultimate disposition of the significant
lawsuits, the majority of which have been settled subsequent to August 31, 1993.
In April, 1994, NME reached an agreement-in-principle with the Civil Division
and Criminal Division of the Department of Justice, and the Department of Health
and Human Services which upon execution will bring to a close all open
investigations of NME (and its subsidiaries and affiliates) by the federal
government and its agencies. As a result, NME recorded an additional reserve at
February 28, 1994 to estimate the costs of the ultimate disposition of all
federal and state investigations.
The aggregate amount of the reserves recorded in connection with these
settlements and agreements as of February 28, 1994 amounted to $690,000,000.
These settlements and agreements were reached in the aggregate and were not
allocated or apportioned to individual facilities. Accordingly, none of these
reserves have been reflected in the accompanying combined financial statements,
nor has any provision for any liability resulting from the ultimate disposition
of these matters been recognized in such financial statements.
10. SUBSEQUENT EVENTS
On November 30, 1993, NME decided to discontinue its psychiatric business by
disposing of substantially all of its psychiatric hospitals and substance abuse
facilities. Accordingly, the Selected Hospitals included in these financial
statements have been written down by approximately $165,000 to their realizable
value as of November 30, 1993.
On March 29, 1994, NME entered into an asset sale agreement (the "Asset Sale
Agreement") with Charter to sell substantially all the assets of the Selected
Hospitals to certain subsidiaries of Charter. The transaction is subject to
review under the Hart-Scott-Rodino Act and other regulatory approvals.
Under the terms of the Asset Sale Agreement, the aggregate purchase price
for substantially all of the assets (excluding working capital) of the Selected
Hospitals is approximately $152 million. If one or more of the Selected
Hospitals is not acquired due to certain conditions, the purchase price will be
adjusted. Pursuant to the Asset Sale Agreement, certain working capital items
also are to be sold to Charter for additional consideration equal to their net
book value as of closing.
On May 13, 1994, NME and Charter announced that they have received a request
from the Federal Trade Commission for additional information. As a result of
this request, Charter and NME expect a delay in the initial phase of the
transaction closing beyond the previously scheduled date of May 31, 1994.
F-42
<PAGE>
SELECTED PSYCHIATRIC HOSPITALS OF
NATIONAL MEDICAL ENTERPRISES, INC.
UNAUDITED COMBINED CONDENSED BALANCE SHEET
FEBRUARY 28, 1994
(DOLLARS IN THOUSANDS)
ASSETS
<TABLE>
<S> <C>
Current assets:
Cash and cash equivalents....................................................... $ 2,019
Accounts receivable, net of allowance for bad debts............................. 65,707
Inventories of supplies, at cost................................................ 2,328
Assets held for sale............................................................ 131,943
Prepaid expenses and other assets............................................... 3,122
---------
Total current assets.......................................................... 205,119
Other long-term assets............................................................ 1,553
---------
$ 206,672
---------
---------
LIABILITIES AND OWNERS' EQUITY
Current liabilities:
Current portion of long-term debt............................................... $ 680
Accounts payable................................................................ 9,107
Employee compensation and benefits.............................................. 8,529
Accrued insurance............................................................... 12,270
Other current liabilities....................................................... 9,170
---------
Total current liabilities..................................................... 39,756
Long-term debt, net of current portion............................................ 5,169
Minority interests................................................................ 4,710
Other long-term liabilities....................................................... 1,446
Due to owners and affiliates...................................................... 75,505
Owners' equity.................................................................... 80,086
---------
$ 206,672
---------
---------
</TABLE>
See accompanying note to unaudited combined condensed financial statements.
F-43
<PAGE>
SELECTED PSYCHIATRIC HOSPITALS OF
NATIONAL MEDICAL ENTERPRISES, INC.
UNAUDITED COMBINED CONDENSED STATEMENTS OF OPERATIONS
NINE MONTHS ENDED FEBRUARY 28, 1993 AND 1994
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1993 1994
---------- -----------
<S> <C> <C>
Net operating revenues................................................................... $ 309,273 $ 265,160
---------- -----------
Operating and administrative expenses.................................................... 268,206 228,326
Intercompany fees and allocations........................................................ 42,540 40,086
Depreciation and amortization............................................................ 16,396 9,274
Provision for loss on sale of selected hospitals......................................... 4,262 165,289
Minority interests in earnings of certain selected hospitals............................. 921 320
Interest, net of capitalized portion..................................................... 8,578 9,076
---------- -----------
Total costs and expenses............................................................... 340,903 452,371
---------- -----------
Loss before income tax benefit........................................................... (31,630) (187,211)
Income tax benefit....................................................................... (11,703) (69,268)
---------- -----------
Net loss................................................................................. $ (19,927) $ (117,943)
---------- -----------
---------- -----------
</TABLE>
See accompanying note to unaudited combined condensed financial statements.
F-44
<PAGE>
SELECTED PSYCHIATRIC HOSPITALS OF
NATIONAL MEDICAL ENTERPRISES, INC.
UNAUDITED COMBINED CONDENSED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED FEBRUARY 28, 1993 AND 1994
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1993 1994
---------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss............................................................................... $ (19,927) $ (117,943)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization........................................................ 16,396 9,274
Provisions for losses on accounts receivable......................................... 17,556 12,365
Minority interest in earnings of certain selected hospitals.......................... 921 320
Provision for loss on sale of selected hospitals..................................... 4,262 165,289
Non-cash income tax benefit.......................................................... (11,703) (69,268)
Changes in operating assets and liabilities:
Accounts receivable................................................................ (7,893) (21,127)
Inventories of supplies............................................................ (182) (63)
Other current assets............................................................... 4,288 (119)
Accounts payable and other accrued expenses........................................ 1,018 1,100
Other current liabilities.......................................................... (3,972) (77)
Other long term liabilities........................................................ (152) (479)
---------- -----------
Net cash provided by (used in) operating activities.................................... 612 (20,728)
---------- -----------
Cash flows from investing activities:
Purchases of property, plant and equipment............................................. (24,340) (1,875)
Intangible assets...................................................................... (2,720) (1,094)
---------- -----------
Net cash used in investing activities.................................................. (27,060) (2,969)
---------- -----------
Cash flows from financing activities:
Principal payments on long term debt and capitalized leases............................ (469) (545)
Net change in amounts due from owners and affiliates................................... 27,437 22,190
---------- -----------
Net cash provided by (used in) financing activities.................................... 26,968 21,645
---------- -----------
Net increase (decrease) in cash and cash equivalents..................................... 520 (2,052)
Cash and cash equivalents at beginning of period......................................... 1,965 4,071
---------- -----------
Cash and cash equivalents at end of period............................................... $ 2,485 $ 2,019
---------- -----------
---------- -----------
</TABLE>
See accompanying note to unaudited combined condensed financial statements.
F-45
<PAGE>
SELECTED PSYCHIATRIC HOSPITALS OF
NATIONAL MEDICAL ENTERPRISES, INC.
NOTE TO UNAUDITED COMBINED CONDENSED INTERIM FINANCIAL STATEMENTS
NINE MONTHS ENDED FEBRUARY 28, 1993 AND 1994
The unaudited combined condensed interim financial statements present the
historical combined financial position and results of operations of the Selected
Hospitals and, as a result, include certain assets and liabilities of the
Selected Hospitals that Charter will not acquire or assume as part of the
transaction. These financial statements reflect the adjustments that are, in the
opinion of NME, necessary to present fairly the combined financial position and
results of operations for the periods indicated. The adjustments are of a normal
recurring nature, except for those items discussed in Notes 6 and 9 to the
combined financial statements as of May 31, 1992 and May 31, 1993 and for the
write-down of assets to realizable value discussed below.
It is presumed that users of this interim financial information have read or
have access to the combined financial statements of the Selected Hospitals for
the preceding fiscal year (which appear elsewhere herein) and that the adequacy
of additional disclosure needed for a fair presentation may be determined in
that context. Accordingly, footnote and other disclosure which would
substantially duplicate the disclosure in the annual financial statements
contained elsewhere herein has been omitted. The interim financial information
herein is not necessarily representative of operations for a full year for
various reasons, including levels of occupancy, interest rates, facility
acquisitions and disposals, revenue allowance and discount fluctuations, the
timing of price changes, fluctuations in quarterly tax rates and the recording
of unusual reserves. These same considerations apply to all year-to-year
comparisons.
On November 30, 1993, NME decided to discontinue its psychiatric business by
disposing of substantially all of its psychiatric hospitals and substance abuse
facilities. Accordingly, the Selected Hospitals included in these financial
statements have been written down to their realizable value as of November 30,
1993.
During the nine months ended February 28, 1994, NME adopted the provisions
of Financial Accounting Standards No. 109, "Accounting for Income Taxes", and,
accordingly, changed its tax allocation method to conform with the provisions of
that statement. The allocated current and deferred income tax expense was not
materially different than that which would have been allocated under NME's
previous tax allocation methodology.
F-46
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE EXCHANGE OFFERING. IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY CHARTER OR
THE INITIAL PURCHASERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR
A SOLICITATION OF AN OFFER TO BUY THE NOTES IN ANY JURISDICTION WHERE, OR TO ANY
PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
--------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Summary........................................ 1
The Company.................................... 9
Investment Considerations...................... 9
The Acquisition................................ 14
Use of Proceeds................................ 15
Capitalization................................. 16
Selected Historical Consolidated Financial and
Statistical Information...................... 17
Target Hospital Selected Financial
Information.................................. 19
Unaudited Pro Forma Financial Information...... 20
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 25
Business....................................... 32
Management..................................... 46
Executive Compensation......................... 47
Security Ownership of Certain Beneficial Owners
and Management............................... 48
Certain Relationships and Related
Transactions................................. 49
The Exchange Offer............................. 50
Plan of Distribution........................... 59
Description of the Notes....................... 60
Summary of New Credit Agreement................ 81
Certain Federal Income Tax Consequences of the
Exchange Offer............................... 83
Legal Matters.................................. 84
Experts........................................ 84
Available Information.......................... 84
Index to Financial Statements.................. F-1
</TABLE>
$375,000,000
[LOGO]
CHARTER MEDICAL CORPORATION
OFFER TO EXCHANGE ITS
11 1/4% SERIES A
SENIOR SUBORDINATED
NOTES DUE 2004
FOR ANY AND ALL OF ITS
OUTSTANDING
11 1/4% SENIOR SUBORDINATED
NOTES DUE 2004
-----------------------------
PROSPECTUS
-----------------------------
, 1994
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company is a Delaware corporation. Section 145 of the Delaware General
Corporation Law (the "DGCL") provides that a Delaware corporation has the power
to indemnify its officers and directors in certain circumstances.
Subsection (a) of Section 145 of the DGCL empowers a corporation to
indemnify any director or officer, or former director or officer, who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of his service as director, officer, employee or agent of the
corporation, or his service, at the corporation's request, as a director,
officer, employee or agent of another corporation or enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred in connection with such action, suit
or proceeding provided that such director or officer acted in good faith and in
a manner reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding,
provided that such director or officer had no reasonable cause to believe his
conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any
director or officer, or former director or officer, who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that such person acted in any of the capacities set forth
above, against expenses (including attorneys' fees) actually and reasonably
incurred in connection with the defense or settlement of such action or suit
provided that such director or officer acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, except that no indemnification may be made in respect of any claim,
issue or matter as to which such director or officer shall have been adjudged to
be liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such director or officer is fairly and reasonably
entitled to indemnity for such expenses which the court shall deem proper.
Section 145 further provides that to the extent a director or officer of a
corporation has been successful in the defense of any action, suit or proceeding
referred to in subsections (a) or (b) or in the defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection therewith; provided
that indemnification provided for by Section 145 or granted pursuant thereto
shall not be deemed exclusive of any other rights to which the indemnified party
may be entitled; and empowers the corporation to purchase and maintain insurance
on behalf of a director or officer of the corporation against any liability
asserted against him or incurred by him in any such capacity or arising out of
his status as such whether or not the corporation would have the power to
indemnify him against such liabilities under Section 145.
Article VII of the By-laws of the Company provide in substance that the
Company shall indemnify directors and officers against all liability and related
expenses incurred in connection with the affairs of the Company if: (a), in the
case of action not by or in the right of the Company, the director or officer
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company, and (with respect to a criminal
proceeding) had no reasonable cause to believe his conduct was unlawful; and
(b), in the case of actions by or in the right of the Company, the director or
officer acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Company, provided that no
indemnification shall be made for a claim as to which the director or officer is
adjudged liable for negligence or misconduct unless (and only to the extent
that) an appropriate court determines that, in view of all the circumstances,
such person is fairly and reasonably entitled to indemnity.
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In addition, Section 102(b)(7) of the DGCL permits Delaware corporations to
include a provision in their certificates of incorporation eliminating or
limiting the personal liability of a director to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
provided that such provisions shall not eliminate or limit the liability of a
director (i) for any breach of the director's duty of loyalty to the corporation
or its stockholders, (ii) for acts or omissions not in good faith or that
involve intentional misconduct or a knowing violation of law, (iii) for unlawful
payment of dividends or other unlawful distributions, or (iv) for any
transactions from which the director derived an improper personal benefit.
Article Twelfth of the Company's Certificate of Incorporation sets for such a
provision.
For the undertaking with respect to indemnification, see Item 22 herein.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
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2(a) Incorporation, Conveyance and Stock Purchase Agreement, dated August 16,
1993, among Quorum, Inc. and Charter Medical Corporation, et al., which was
filed as Exhibit 2.1 to the Company's Current Report on Form 8-K, dated as of
September 30, 1993, and which is incorporated herein by reference.
2(b) Amendment No. 1 to the Exhibit 2.1 agreement, dated September 30, 1993, which
was filed as Exhibit 2.2 to the Company's Current Report on Form 8-K, dated
as of September 30, 1993, and which is incorporated herein by reference.
2(c) Asset Sale Agreement, dated March 29, 1994, between National Medical
Enterprises, Inc., as Seller and Charter Medical Corporation, as Buyer, which
was filed as Exhibit 10(a) to the Company's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1994, and which is incorporated herein by
reference.
Exhibits 2(a), 2(b) and 2(c) do not contain copies of the exhibits and
schedules to such agreements. Such agreements describe such exhibits and
schedules. The Company agrees to furnish supplementally to the Commission,
upon request, a copy of any omitted exhibit or schedule to such agreements.
3(a) Restated Certificate of Incorporation of the Company which was filed as
Exhibit 3(a) to the Company's Annual Report on Form 10--K dated as of
September 30, 1992, and is incorporated herein by reference.
3(b) Bylaws of the Company, as amended, which was filed as Exhibit 3(a) to the
Company's Quarterly Report on Form 10--Q dated as of March 31, 1993, and is
incorporated herein by reference.
4(a) Indenture, dated as of May 2, 1994, among the Company, the Guarantors listed
therein and Marine Midland Bank, as Trustee, relating to the 11 1/4% Senior
Subordinated Notes due April 15, 2004 of the Company.
4(b) Form of Class A Common Stock Purchase Warrant Certificate, dated September 1,
1988, for warrants sold to designee of Drexel Burnham Lambert Incorporated,
which was filed as Exhibit 4.4 to the Company's Current Report on Form 8--K,
dated September 1, 1988, and is incorporated herein by reference.
4(c) Form of Class A Common Stock Purchase Warrant Certificate, dated September 1,
1988, for warrants sold to certain institutional investors, which was filed
as Exhibit 4.3 to the Company's Current Report on Form 8--K, dated September
1, 1988, and is incorporated herein by reference.
4(d) Warrant and Common Stock Registration and Participation Rights Agreement,
dated as of September 1, 1988, among WAF Acquisition Corporation, the
Company, William A. Fickling, Jr., certain affiliates of William A. Fickling,
Jr. and the purchasers of the warrants issued on September 1, 1988, which was
filed as Exhibit 4(h) to the Company's Annual Report on Form 10--K dated as
of September 30, 1988, and is incorporated herein by reference.
4(e) Second Amended and Restated Credit Agreement, dated as of May 2, 1994, among
the Company, the financial institutions listed therein, Bankers Trust
Company, as Agent, and First Union National Bank of North Carolina, as
Co-Agent.
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4(f) Second Amended and Restated Subsidiary Credit Agreement, dated as of May 2,
1994, among certain subsidiaries of the Company, the financial institutions
listed therein, Bankers Trust Company, as Agent, and First Union National
Bank of North Carolina, as Co-Agent.
4(g) Second Amended and Restated Company Stock and Notes Pledge Agreement, dated
as of May 2, 1994, between the Company and Bankers Trust Company, as
Collateral Agent.
4(h) Second Amended and Restated Subsidiary Stock and Notes Pledge Agreement,
dated as of May 2, 1994, among various subsidiaries of the Company and
Bankers Trust Company, as Collateral Agent.
4(i) Second Amended and Restated Subsidiary Pledge and Security Agreement, dated
as of May 2, 1994, among various subsidiaries of the Company and Bankers
Trust Company, as Collateral Agent.
4(j) Second Amended and Restated Company Pledge and Security Agreement (ESOP
collateral), dated as of May 2, 1994, between the Company and Bankers Trust
Company, as Collateral Agent.
4(k) Second Amended and Restated FINCO Pledge and Security Agreement I, dated as
of May 2, 1994, between CMFC, Inc. and Bankers Trust Company, as Collateral
Agent.
4(l) Second Amended and Restated Subsidiary Guaranty, dated as of May 2, 1994,
executed by various subsidiaries of the Company.
4(m) Second Amended and Restated Company Collateral Accounts Assignment Agreement,
dated as of May 2, 1994, between the Company and Bankers Trust Company, as
Agent.
4(n) Company Pledge and Security Agreement, dated as of May 2, 1994, between the
Company and Bankers Trust Company, as Collateral Agent.
4(o) Second Amended and Restated FINCO Pledge and Security Agreement II, dated as
of May 2, 1994, between CMCI, Inc. and Bankers Trust Company, as Collateral
Agent.
4(p) Second Amended and Restated Company Guaranty, dated as of May 2, 1994,
executed by the Company.
4(q) Second Amended and Restated Subsidiary Collateral Accounts Assignment
Agreement, dated as of May 2, 1994, among various subsidiaries of the Company
and Bankers Trust Company, as Agent.
4(r) Form of Amended and Restated Indenture of Mortgage, Deed to Secure Debt, Deed
of Trust, Security Agreement and Assignment of Leases and Rents executed as
of July 21, 1992, by 44 subsidiaries of the Company for the benefit of
Bankers Trust Company, as Agent, and various trustees as shown on individual
subsidiary cover pages attached, which was filed as Exhibit 4(q) to the
Company's Current Report on Form 8-K dated as of July 21, 1992, and is
incorporated herein by reference.
4(s) Form of Indenture of Mortgage, Deed to Secure Debt, Deed of Trust, Security
Agreement and Assignment of Leases and Rents executed as of July 21, 1992, by
40 subsidiaries of the Company for the benefit of Bankers Trust Company, as
Agent, and various trustees as shown on individual subsidiary cover pages
attached, which was filed as Exhibit 4(q) to the Company's Current Report on
Form 8-K dated as of July 21, 1992, and is incorporated herein by reference.
4(t) Form of Indenture of Mortgage, Deed to Secure Debt, Deed of Trust, Security
Agreement and Assignment of Leases and Rents; Amended Indenture of Mortgage,
Deed to Secure Debt, Deed of Trust, Security Agreement and Assignment of
Leases and Rents; and Consolidated Agreement, executed as of May 2, 1994, by
71 subsidiaries of the Company and Bankers Trust Company, as Agent, and
various trustees as shown on individual subsidiary cover pages attached.
The Registrants agree, pursuant to (b)(iii) of Item 601 of Regulation S--K,
to furnish to the Commission, upon request, a copy of each agreement relating
to long-term debt not being registered, where the total amount of debt under
each such agreement does not exceed 10% of the Registrants' respective total
assets on a consolidated basis.
4(u) Purchase Agreement, dated April 22, 1994, between the Company and Bear,
Stearns & Co. Inc. and BT Securities Corporation.
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4(v) Exchange and Registration Rights Agreement, dated April 22, 1994 between the
Company and Bear, Stearns & Co. Inc. and BT Securities Corporation.
5 Opinion of King & Spalding as to the legality of the securities being
registered.
8 Opinion of King & Spalding as to tax matters.
10(a) Written description of Corporate Annual Incentive Plan for the year ended
September 30, 1993, which was filed as Exhibit 10(a) to the Company's
Quarterly Report on Form 10--Q for the quarter ended March 31, 1993, and is
incorporated herein by reference.
10(b) 1989 Non-Qualified Deferred Compensation Plan of the Company, adopted on
January 1, 1989, as amended, which was filed as Exhibit 10(f) to the
Company's Annual Report on Form 10--K dated as of September 30, 1989, and is
incorporated herein by reference.
10(c) Written description of Corporate Annual Incentive Plan for the year ended
September 30, 1993 which was filed as Exhibit 10(a) to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1993 and which
is incorporated herein by reference.
10(d) Directors' Stock Option Plan of the Company which was filed as Exhibit 10(b)
to the Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1993 and which is incorporated herein by reference.
10(e) Employment Agreement, dated July 21, 1992, between the Company and William A.
Fickling, Jr., Chairman of the Board of Directors and Chief Executive Officer
of the Company which was filed as Exhibit 10(e) to the Company's Annual
Report on Form 10-K dated September 30, 1992 and which is incorporated herein
by reference.
10(f) Employment Agreement, dated July 21, 1992, between the Company and E. Mac
Crawford, Director, President and Chief Operating Officer of the Company
which was filed as Exhibit 10(f) to the Company's Annual Report on Form 10-K
dated September 30, 1992 and which is incorporated herein by reference.
10(g) Employment Agreement, dated July 21, 1992, between the Company and Lawrence
W. Drinkard, Director and Senior Vice President - Finance (principal
financial officer) of the Company which was filed as Exhibit 10(g) to the
Company's Annual Report on Form 10-K dated September 30, 1992 and which is
incorporated herein by reference.
10(h) 1994 Stock Option Plan of the Company.
10(i) Directors' Unit Award Plan of the Company.
11 Statement regarding computation of per share earnings.
12 Statement regarding computation of ratios.
21 List of subsidiaries of the Registrants.
23(a) Consent of Arthur Andersen & Co.
23(b) Consent of KPMG Peat Marwick.
23(c) Consent of King & Spalding (included in opinion filed as Exhibit 5).
24 Powers of Attorney
25 Statement of Eligibility and Qualification on Form T--1 of Marine Midland
Bank, as Trustee, under the Indenture relating to the Senior Subordinated
Notes due April 15, 2004.
99(a) Form of Letter of Transmittal (Proof of May 18, 1994)
99(b) Form of Notice of Guaranteed Delivery (Proof of May 18, 1994)
99(c) Form of Instruction to Registered Holder and/or Book-Entry Transfer Facility
Participant from Owner (Proof of May 18, 1994)
99(d) Form of Exchange Agent Agreement between the Company and Marine Midland Bank
(Proof of May 18, 1994)
</TABLE>
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<PAGE>
(b) Financial Statement Schedules
The following financial statement schedules are set forth on pages S-1
through S-4 hereof.
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Report of Arthur Andersen & Co. regarding financial statement schedules (included in the
Report set forth on page F-2).
V -- Property and Equipment
VI -- Accumulated Depreciation, Depletion and Amortization of Property and
Equipment
VIII -- Valuation and Qualifying Accounts
X -- Supplemental Income Statement Information
</TABLE>
All other schedules are omitted as the required information is presented in
the Company's consolidated financial statements or related notes or such
schedules are not applicable.
ITEM 22. UNDERTAKINGS.
(a) The Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made,
a post-effective admendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the Registration Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The Registrants hereby undertake to respond to requests for information
that is incorporated by reference into the prospectus pursuant to Items 4,
10(b), 11 or 13 of this Form within one business day of receipt of such request,
and to send the incorporated documents by first class mail or other equally
prompt means. This includes information contained in documents filed subsequent
to the effective date of this Registration Statement through the date of
responding to the request.
(c) The Registrants hereby undertake to supply by means of a post-effective
amendment all information concerning a transaction, and the company being
acquired involved therein, that was not the subject of and included in this
Registration Statement when it became effective.
(d) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrants pursuant to the foregoing provisions, or otherwise, the
Registrants have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by a Registrant of expenses
incurred or paid by a director, officer or controlling person of such Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, such Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrants have duly caused this Registration Statement to be signed on their
behalf by the undersigned, thereunto duly authorized, in the City of Macon,
State of Georgia on May 18, 1994.
CHARTER MEDICAL CORPORATION
By:__________/s/_JOHN R. DAY__________
John R. Day
Vice President -- Controller
(Principal Accounting Officer)
For the Registrants other than Charter
Medical Corporation
By:______/s/_CHARLOTTE A. SANFORD_____
Charlotte A. Sanford
Treasurer of the
Additional Registrants as shown
below*
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons in the
capacities indicated on May 18, 1994.
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CHARTER MEDICAL CORPORATION
E. Mac Crawford ............................ President and Chairman of the Board of
Directors (principal executive officer)
Lawrence W. Drinkard ....................... Executive Vice President -- Finance and
Director (principal financial officer)
John R. Day ................................ Vice President -- Controller (principal
accounting officer)
Edwin M. Banks ............................. Director
Andre C. Dimitriadis ....................... Director
Raymond H. Kiefer .......................... Director
Gerald L. McManis .......................... Director
AMBULATORY RESOURCES, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
W. Stephen Love ............................ President
Charlotte A. Sanford ....................... Treasurer
</TABLE>
* In the case of Charter Medical of England Limited as Director
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ATLANTA MOB, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
W. Stephen Love ............................ President
Charlotte A. Sanford ....................... Treasurer
BELTWAY COMMUNITY HOSPITAL, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Joseph C. Little ........................... President
Charlotte A. Sanford ....................... Treasurer
C.A.C.O. SERVICES, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Joseph C. Little ........................... President
Charlotte A. Sanford ....................... Treasurer
CCM, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Joan Kradlak ............................... President
Charlotte A. Sanford ....................... Treasurer
CMCI, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
</TABLE>
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John C. McCauley ........................... Director and Vice President
James R. Bedenbaugh ........................ President
Charlotte A. Sanford ....................... Treasurer
CMFC, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
James R. Bedenbaugh ........................ President
Charlotte A. Sanford ....................... Treasurer
CMSF, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Jon C. O'Shaughnessy ....................... President
Charlotte A. Sanford ....................... Treasurer
CPS ASSOCIATES, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Jon C. O'Shaughnessy ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER ALVARADO BEHAVIORAL HEALTH SYSTEM, INC.
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
James M. Filush ............................ Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
</TABLE>
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CHARTER APPALACHIAN HALL BEHAVIORAL HEALTH SYSTEM, INC.
James M. Filush ............................ Director
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER ARBOR INDY BEHAVIORAL HEALTH SYSTEM, INC.
James M. Filush ............................ Director
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER AUGUSTA BEHAVIORAL HEALTH SYSTEM, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Elbert T. McQueen .......................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER BAY HARBOR BEHAVIORAL HEALTH SYSTEM, INC.
James M. Filush ............................ Director
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEACON BEHAVIORAL HEALTH SYSTEM, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
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John C. McCauley ........................... Director and Vice President
Vernon S. Westrich ......................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM AT FAIR OAKS, INC.
James M. Filush ............................ Director
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM AT HIDDEN BROOK, INC.
James M. Filush ............................ Director
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM AT LOS ALTOS, INC.
James M. Filush ............................ Director
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM AT POTOMAC RIDGE, INC.
James M. Filush ............................ Director
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
</TABLE>
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CHARTER BEHAVIORAL HEALTH SYSTEM AT WARWICK MANOR, INC.
James M. Filush ............................ Director
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF ATHENS, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Elbert T. McQueen .......................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF AUSTIN, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
David A. Richardson ........................ President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF BAYWOOD, INC.
James M. Filush ............................ Director
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF BRADENTON, INC.
James M. Filush ............................ Director
Margie M. Smith ............................ Director
</TABLE>
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Howard A. McLure ........................... Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF CANOGA PARK, INC.
James M. Filush ............................ Director
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF CENTRAL GEORGIA, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Elbert T. McQueen .......................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF CHARLESTON, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Elbert T. McQueen .......................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF CHARLOTTESVILLE, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Jon C. O'Shaughnessy ....................... President
Charlotte A. Sanford ....................... Treasurer
</TABLE>
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CHARTER BEHAVIORAL HEALTH SYSTEM OF CHICAGO, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Vernon S. Westrich ......................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF CHULA VISTA, INC.
James M. Filush ............................ Director
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF COLUMBIA, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Vernon S. Westrich ......................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF CORPUS CHRISTI, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
</TABLE>
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David A. Richardson ........................ President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF DALLAS, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
David A. Richardson ........................ President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF EVANSVILLE, INC.
James M. Filush ............................ Director
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF FORT WORTH, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Jim R. Johnson ............................. President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF JACKSON, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
David A. Richardson ........................ President
Charlotte A. Sanford ....................... Treasurer
</TABLE>
II-14
<PAGE>
<TABLE>
<C> <S>
CHARTER BEHAVIORAL HEALTH SYSTEM OF JACKSONVILLE, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Elbert T. McQueen .......................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF JEFFERSON, INC.
James M. Filush ............................ Director
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF KANSAS CITY, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Vernon S. Westrich ......................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF LAFAYETTE, INC.
James M. Filush ............................ Director
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF LAKE CHARLES, INC.
Glenn A. McRae ............................. Director
</TABLE>
II-15
<PAGE>
<TABLE>
<C> <S>
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
David A. Richardson ........................ President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF LAKEWOOD, INC.
James M. Filush ............................ Director
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF MICHIGAN CITY, INC.
James M. Filush ............................ Director
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF MOBILE, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Elbert T. McQueen .......................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF NASHUA, INC.
James M. Filush ............................ Director
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
</TABLE>
II-16
<PAGE>
<TABLE>
<C> <S>
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF NEVADA, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
William E. Hale ............................ President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF NEW MEXICO, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Daivd A. Richardson ........................ President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF NORTHERN CALIFORNIA, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
William E. Hale ............................ President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF NORTHWEST ARKANSAS, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Vernon S. Westrich ......................... President
Charlotte A. Sanford ....................... Treasurer
</TABLE>
II-17
<PAGE>
<TABLE>
<C> <S>
CHARTER BEHAVIORAL HEALTH SYSTEM OF NORTHWEST INDIANA, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Vernon S. Westrich ......................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF PADUCAH, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Vernon S. Westrich ......................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF ROCKFORD, INC.
James M. Filush ............................ Director
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF SAN JOSE, INC.
James M. Filush ............................ Director
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF SAVANNAH, INC.
Glenn A. McRae ............................. Director
</TABLE>
II-18
<PAGE>
<TABLE>
<C> <S>
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Elbert T. McQueen .......................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF SOUTHERN CALIFORNIA, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Joseph C. Little ........................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF TAMPA BAY, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Jon C. O'Shaughnessy ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF TEXARKANA, INC.
James M. Filush ............................ Director
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF THE INLAND EMPIRE, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
</TABLE>
II-19
<PAGE>
<TABLE>
<C> <S>
William E. Hale ............................ President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF TOLEDO, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Vernon S. Westrich ......................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF TUSCON, INC.
James M. Filush ............................ Director
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF VIRGINIA BEACH, INC.
James M. Filush ............................ Director
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF VISALIA, INC.
James M. Filush ............................ Director
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
</TABLE>
II-20
<PAGE>
<TABLE>
<C> <S>
CHARTER BEHAVIORAL HEALTH SYSTEM OF WASHINGTON, D.C., INC.
James M. Filush ............................ Director
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF WAVERLY, INC.
James M. Filush ............................ Director
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF WINSTON-SALEM, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Jon C. O'Shaughnessy ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF YORBA LINDA, INC.
James M. Filush ............................ Director
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEMS OF ATLANTA, INC.
James M. Filush ............................ Director
</TABLE>
II-21
<PAGE>
<TABLE>
<C> <S>
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER BRAWNER BEHAVIORAL HEALTH SYSTEM, INC.
James M. Filush ............................ Director
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER-BY-THE-SEA BEHAVIORAL HEALTH SYSTEM, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Elbert T. McQueen .......................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER CANYON BEHAVIORAL HEALTH SYSTEM, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
William E. Hale ............................ President
Charlotte A. Sanford ....................... Treasurer
CHARTER CANYON SPRINGS BEHAVIORAL HEALTH SYSTEM, INC.
James M. Filush ............................ Director
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
</TABLE>
II-22
<PAGE>
<TABLE>
<C> <S>
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER CENTENNIAL PEAKS BEHAVIORAL SYSTEM, INC.
James M. Filush ............................ Director
Howard A. McLure ........................... Director
Margie M. Smith ............................ Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER COLONIAL INSTITUTE, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Donna Y. Wood .............................. President
Charlotte A. Sanford ....................... Treasurer
CHARTER COMMUNITY HOSPITAL, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
William E. Hale ............................ President
Charlotte A. Sanford ....................... Treasurer
CHARTER COMMUNITY HOSPITAL OF DES MOINES, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
W. Stephen Love ............................ President
Charlotte A. Sanford ....................... Treasurer
</TABLE>
II-23
<PAGE>
<TABLE>
<C> <S>
CHARTER CONTRACT SERVICES, INC.
Glenn A. McRae ............................. Director
John C. McCauley ........................... Director and Vice President
Joseph M. Cobern ........................... Director
Vernon S. Westrich ......................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER COVE FORGE BEHAVIORAL HEALTH SYSTEM, INC.
James M. Filush ............................ Director
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER CRESCENT PINES BEHAVIORAL HEALTH SYSTEM, INC.
James M. Filush ............................ Director
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER FAIRBRIDGE BEHAVIORAL HEALTH SYSTEM, INC.
James M. Filush ............................ Director
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER FAIRMOUNT BEHAVIORAL HEALTH SYSTEM, INC.
Glenn A. McRae ............................. Director
</TABLE>
II-24
<PAGE>
<TABLE>
<C> <S>
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Jon C. O'Shaughnessy ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER FENWICK HALL BEHAVIORAL HEALTH SYSTEM, INC.
James M. Filush ............................ Director
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER FINANCIAL OFFICES, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
W. Stephen Love ............................ President
Charlotte A. Sanford ....................... Treasurer
CHARTER FOREST BEHAVIORAL HEALTH SYSTEM, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
David A. Richardson ........................ President
Charlotte A. Sanford ....................... Treasurer
CHARTER GRAPEVINE BEHAVIORAL HEALTH SYSTEM, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
</TABLE>
II-25
<PAGE>
<TABLE>
<C> <S>
David A. Richardson ........................ President
Charlotte A. Sanford ....................... Treasurer
CHARTER GREENSBORO BEHAVIORAL HEALTH SYSTEM, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Jon C. O'Shaughnessy ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER HEALTH MANAGEMENT OF TEXAS, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
David A. Richardson ........................ President
Charlotte A. Sanford ....................... Treasurer
CHARTER HOSPITAL OF COLUMBUS, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Joseph C. Little ........................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER HOSPITAL OF DENVER, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Joseph C. Little ........................... President
Charlotte A. Sanford ....................... Treasurer
</TABLE>
II-26
<PAGE>
<TABLE>
<C> <S>
CHARTER HOSPITAL OF FT. COLLINS, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Joseph C. Little ........................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER HOSPITAL OF LAREDO, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Joseph C. Little ........................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER HOSPITAL OF MIAMI, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Jon C. O'Shaughnessy ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER HOSPITAL OF MOBILE, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Elbert T. McQueen .......................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER HOSPITAL OF NORTHERN NEW JERSEY, INC.
Glenn A. McRae ............................. Director
</TABLE>
II-27
<PAGE>
<TABLE>
<C> <S>
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Donna Y. Wood .............................. President
Charlotte A. Sanford ....................... Treasurer
CHARTER HOSPITAL OF SANTA TERESA, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Joseph C. Little ........................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER HOSPITAL OF ST. LOUIS, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER HOSPITAL OF TORRANCE, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Joseph C. Little ........................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER INDIANAPOLIS BEHAVIORAL HEALTH SYSTEM, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
</TABLE>
II-28
<PAGE>
<TABLE>
<C> <S>
Vernon S. Westrich ......................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER LAFAYETTE BEHAVIORAL HEALTH SYSTEM, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Vernon S. Westrich ......................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER LAKEHURST BEHAVIORAL HEALTH SYSTEM, INC.
James M. Filush ............................ Director
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER LAKESIDE BEHAVIORAL HEALTH SYSTEM, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Jon C. O'Shaughnessy ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER LAUREL HEIGHTS BEHAVIORAL HEALTH SYSTEM, INC.
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
James M. Filush ............................ Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
</TABLE>
II-29
<PAGE>
<TABLE>
<C> <S>
CHARTER LAUREL OAKS BEHAVIORAL HEALTH SYSTEM, INC.
Howard A. McLure ........................... Director
Margie M. Smith ............................ Director
James M. Filush ............................ Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER LINDEN OAKS BEHAVIORAL HEALTH SYSTEM, INC.
James M. Filush ............................ Director
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER LITTLE ROCK BEHAVIORAL HEALTH SYSTEM, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Vernon S. Westrich ......................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER LOUISVILLE BEHAVIORAL HEALTH SYSTEM, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Vernon S. Westrich ......................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER MEADOWS BEHAVIORAL HEALTH SYSTEM, INC.
James M. Filush ............................ Director
</TABLE>
II-30
<PAGE>
<TABLE>
<C> <S>
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER MOB OF CHARLOTTESVILLE, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Jon C. O'Shaughnessy ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER MEDFIELD BEHAVIORAL HEALTH SYSTEM, INC.
James M. Filush ............................ Director
Howard A. McLure ........................... Director
Margie M. Smith ............................ Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER MEDICAL -- CALIFORNIA, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
David A. Richardson ........................ President
Charlotte A. Sanford ....................... Treasurer
CHARTER MEDICAL -- CLAYTON COUNTY, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
</TABLE>
II-31
<PAGE>
<TABLE>
<C> <S>
Donna Y. Wood .............................. President
Charlotte A. Sanford ....................... Treasurer
CHARTER MEDICAL -- CLEVELAND, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
W. Stephen Love ............................ President
Charlotte A. Sanford ....................... Treasurer
CHARTER MEDICAL -- DALLAS, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Joseph C. Little ........................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER MEDICAL -- LONG BEACH, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
William E. Hale ............................ President
Charlotte A. Sanford ....................... Treasurer
CHARTER MEDICAL -- NEW YORK, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
William H. Freeman, Jr. .................... President
Charlotte A. Sanford ....................... Treasurer
</TABLE>
II-32
<PAGE>
<TABLE>
<C> <S>
CHARTER MEDICAL (CAYMAN ISLANDS) LTD.
John C. McCauley ........................... Director
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER MEDICAL EXECUTIVE CORPORATION
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
C. Clark Wingfield ......................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER MEDICAL INFORMATION SERVICES, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
C. Clark Wingfield ......................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER MEDICAL INTERNATIONAL, INC.
Glenn A. McRae ............................. Director
John C. McCauley ........................... Director and Vice President
Joseph M. Cobern ........................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER MEDICAL INTERNATIONAL, S.A., INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
</TABLE>
II-33
<PAGE>
<TABLE>
<C> <S>
E. Mac Crawford ............................ President
Charlotte A. Sanford ....................... Treasurer
CHARTER MEDICAL MANAGEMENT COMPANY
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
E. Mac Crawford ............................ President
Charlotte A. Sanford ....................... Treasurer
CHARTER MEDICAL OF EAST VALLEY, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
William E. Hale ............................ President
Charlotte A. Sanford ....................... Treasurer
CHARTER MEDICAL OF ENGLAND LIMITED
James Michael Filush ....................... Director
Charlotte A. Sanford ....................... Director
Howard Alex McLure ......................... Director
CHARTER MEDICAL OF NORTH PHOENIX, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
William E. Hale ............................ President
Charlotte A. Sanford ....................... Treasurer
CHARTER MEDICAL OF ORANGE COUNTY, INC.
Glenn A. McRae ............................. Director
</TABLE>
II-34
<PAGE>
<TABLE>
<C> <S>
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
William H. Freeman, Jr. .................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER MEDICAL OF PUERTO RICO, INC.
Joseph M. Coburn ........................... Director
John C. McCauley ........................... Director
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER MENTAL HEALTH OPTIONS, INC.
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Glenn A. McRae ............................. Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER MID-SOUTH BEHAVIORAL HEALTH SYSTEM, INC.
Howard A. McLure ........................... Director
Margie M. Smith ............................ Director
James M. Filush ............................ Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER MILWAUKEE BEHAVIORAL HEALTH SYSTEM, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
</TABLE>
II-35
<PAGE>
<TABLE>
<C> <S>
Vernon S. Westrich ......................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER MISSION VIEJO BEHAVIORAL HEALTH SYSTEM, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
William E. Hale ............................ President
Charlotte A. Sanford ....................... Treasurer
CHARTER NORTH BEHAVIORAL HEALTH SYSTEM, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
David A. Richardson ........................ President
Charlotte A. Sanford ....................... Treasurer
CHARTER NORTH COUNSELING CENTER, INC.
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Glenn A. McRae ............................. Director
David A. Richardson ........................ President
Charlotte A. Sanford ....................... Treasurer
CHARTER NORTHBROOKE BEHAVIORAL HEALTH SYSTEM, INC.
James M. Filush ............................ Director
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
</TABLE>
II-36
<PAGE>
<TABLE>
<C> <S>
CHARTER NORTHRIDGE BEHAVIORAL HEALTH SYSTEM, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Jon C. O'Shaughnessy ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER NORTHSIDE HOSPITAL, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
W. Stephen Love ............................ President
Charlotte A. Sanford ....................... Treasurer
CHARTER OAK BEHAVIORAL HEALTH SYSTEM, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
William E. Hale ............................ President
Charlotte A. Sanford ....................... Treasurer
CHARTER PALMS BEHAVIORAL HEALTH SYSTEM, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
David A. Richardson ........................ President
Charlotte A. Sanford ....................... Treasurer
CHARTER PEACHFORD BEHAVIORAL HEALTH SYSTEM, INC.
Glenn A. McRae ............................. Director
</TABLE>
II-37
<PAGE>
<TABLE>
<C> <S>
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Jon C. O'Shaughnessy ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER PINES BEHAVIORAL HEALTH SYSTEM, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Jon C. O'Shaughnessy ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER PLAINS BEHAVIORAL HEALTH SYSTEM, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Jim R. Johnson ............................. President
Charlotte A. Sanford ....................... Treasurer
CHARTER PSYCHIATRIC HOSPITALS, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
William H. Freeman, Jr. .................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER REAL BEHAVIORAL HEALTH SYSTEM, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
</TABLE>
II-38
<PAGE>
<TABLE>
<C> <S>
David A. Richardson ........................ President
Charlotte A. Sanford ....................... Treasurer
CHARTER REGIONAL MEDICAL CENTER, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
W. Stephen Love ............................ President
Charlotte A. Sanford ....................... Treasurer
CHARTER RICHMOND BEHAVIORAL HEALTH SYSTEM, INC.
Howard A. McLure ........................... Director
Margie M. Smith ............................ Director
James M. Filush ............................ Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER RIDGE BEHAVIORAL HEALTH SYSTEM, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Vernon S. Westrich ......................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER RIVERS BEHAVIORAL HEALTH SYSTEM, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Elbert T. McQueen .......................... President
Charlotte A. Sanford ....................... Treasurer
</TABLE>
II-39
<PAGE>
<TABLE>
<C> <S>
CHARTER SAN DIEGO BEHAVIORAL HEALTH SYSTEM, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
William E. Hale ............................ President
Charlotte A. Sanford ....................... Treasurer
CHARTER SERENITY LODGE BEHAVIORAL HEALTH SYSTEM, INC.
James M. Filush ............................ Director
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER SIOUX FALLS BEHAVIORAL HEALTH SYSTEM, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Vernon S. Westrich ......................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER SOUTH BEND BEHAVIORAL HEALTH SYSTEM, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Vernon S. Westrich ......................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER SPRINGS BEHAVIORAL HEALTH SYSTEM, INC.
Glenn A. McRae ............................. Director
</TABLE>
II-40
<PAGE>
<TABLE>
<C> <S>
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Jon C. O'Shaughnessy ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER SPRINGWOOD BEHAVIORAL HEALTH SYSTEM, INC.
James M. Filush ............................ Director
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER SUBURBAN HOSPITAL OF MESQUITE, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Joseph C. Little ........................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER TERRE HAUTE BEHAVIORAL HEALTH SYSTEM, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Vernon S. Westrich ......................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER THOUSAND OAKS BEHAVIORAL HEALTH SYSTEM, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
</TABLE>
II-41
<PAGE>
<TABLE>
<C> <S>
William E. Hale ............................ President
Charlotte A. Sanford ....................... Treasurer
CHARTER TIDEWATER BEHAVIORAL HEALTH SYSTEM, INC.
James M. Filush ............................ Director
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER TREATMENT CENTER OF MICHIGAN, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Joseph C. Little ........................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER WESTBROOK BEHAVIORAL HEALTH SYSTEM, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Jon C. O'Shaughnessy ....................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER WHITE OAK BEHAVIORAL HEALTH SYSTEM, INC.
James M. Filush ............................ Director
Margie M. Smith ............................ Director
Howard A. McLure ........................... Director
Lawrence W. Drinkard ....................... President
Charlotte A. Sanford ....................... Treasurer
</TABLE>
II-42
<PAGE>
<TABLE>
<C> <S>
CHARTER WICHITA BEHAVIORAL HEALTH SYSTEM, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Vernon S. Westrich ......................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER WOODS BEHAVIORAL HEALTH SYSTEM, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Elbert T. McQueen .......................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER WOODS HOSPITAL, INC.
Joseph M. Cobern ........................... Director
Glenn A. McRae ............................. Director
John C. McCauley ........................... Director and Vice President
Elbert T. McQueen .......................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER OF ALABAMA, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Elbert T. McQueen .......................... President
Charlotte A. Sanford ....................... Treasurer
CHARTER-PROVO SCHOOL, INC.
Glenn A. McRae ............................. Director
</TABLE>
II-43
<PAGE>
<TABLE>
<C> <S>
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
William E. Hale ............................ President
Charlotte A. Sanford ....................... Treasurer
CHARTERTON/LAGRANGE, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Vernon S. Westrich ......................... President
Charlotte A. Sanford ....................... Treasurer
DESERT SPRINGS HOSPITAL, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
W. Stephen Love ............................ President
Charlotte A. Sanford ....................... Treasurer
EMPLOYEE ASSISTANCE SERVICES, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Elbert T. McQueen .......................... President
Charlotte A. Sanford ....................... Treasurer
FLORIDA HEALTH FACILITIES, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
</TABLE>
II-44
<PAGE>
<TABLE>
<C> <S>
Jon C. O'Shaughnessy ....................... President
Charlotte A. Sanford ....................... Treasurer
GULF COAST EAP SERVICES, INC.
Joseph M. Cobern ........................... Director
Glenn A. McRae ............................. Director
John C. McCauley ........................... Director and Vice President
William E. Hale ............................ President
Charlotte A. Sanford ....................... Treasurer
GWINNETT IMMEDIATE CARE CENTER, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
W. Stephen Love ............................ President
Charlotte A. Sanford ....................... Treasurer
HCS, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Donna Y. Wood .............................. President
Charlotte A. Sanford ....................... Treasurer
HOLCOMB BRIDGE IMMEDIATE CARE CENTER, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
W. Stephen Love ............................ President
Charlotte A. Sanford ....................... Treasurer
</TABLE>
II-45
<PAGE>
<TABLE>
<C> <S>
HOSPITAL INVESTORS, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Donna Y. Wood .............................. President
Charlotte A. Sanford ....................... Treasurer
MANDARIN MEADOWS, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
William H. Freeman, Jr. .................... President
Charlotte A. Sanford ....................... Treasurer
METROPOLITAN HOSPITAL, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
W. Stephen Love ............................ President
Charlotte A. Sanford ....................... Treasurer
MIDDLE GEORGIA HOSPITAL, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
W. Stephen Love ............................ President
Charlotte A. Sanford ....................... Treasurer
PACIFIC-CHARTER MEDICAL, INC.
Glenn A. McRae ............................. Director
</TABLE>
II-46
<PAGE>
<TABLE>
<C> <S>
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
David A. Richardson ........................ President
Charlotte A. Sanford ....................... Treasurer
PEACHFORD PROFESSIONAL, INC.
Glenn A. McRae ............................. Director
John C. McCauley ........................... Director and Vice President
Joseph M. Cobern ........................... Director
Jon C. O'Shaughnessy ....................... President
Charlotte A. Sanford ....................... Treasurer
RIVOLI, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
W. Stephen Love ............................ President
Charlotte A. Sanford ....................... Treasurer
SHALLOWFORD COMMUNITY HOSPITAL, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
W. Stephen Love ............................ President
Charlotte A. Sanford ....................... Treasurer
SISTEMAS DE TERAPIA RESPIRATORIA S.A., INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
</TABLE>
II-47
<PAGE>
<TABLE>
<C> <S>
David A. Richardson ........................ President
Charlotte A. Sanford ....................... Treasurer
STUART CIRCLE HOSPITAL CORPORATION
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
W. Stephen Love ............................ President
Charlotte A. Sanford ....................... Treasurer
TAMPA BAY BEHAVIORAL HEALTH ALLIANCE, INC.
Joseph M. Cobern ........................... Director
Glenn A. McRae ............................. Director
John C. McCauley ........................... Director and Vice President
Jon C. O'Shaughnessy ....................... President
Charlotte A. Sanford ....................... Treasurer
WESTERN BEHAVIORAL SYSTEMS, INC.
Glenn A. McRae ............................. Director
Joseph M. Cobern ........................... Director
John C. McCauley ........................... Director and Vice President
Joseph C. Little ........................... President
Charlotte A. Sanford ....................... Treasurer
</TABLE>
By: __________/s/_John R. Day_________
John R. Day
Attorney-In-Fact
II-48
<PAGE>
SCHEDULE V -- PROPERTY AND EQUIPMENT
(IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT RETIREMENTS OTHER CHANGES BALANCE AT
BEGINNING ADDITIONS AND/OR AND (DEDUCT) END OF
CLASSIFICATION OF PERIOD AT COST DISPOSITIONS -- DESCRIBE PERIOD
- --------------------------------------------- ---------- --------- ------------ ------------- ----------
<S> <C> <C> <C> <C> <C>
YEAR ENDED SEPTEMBER 30, 1993
Land....................................... $ 101,892 $ -- $ 4,824 $ (1,251)(C) $ 95,886
69(E)
Buildings and improvements................. 324,921 1,909 11,474 1,594(A) 310,649
(2,182)(C)
103(E)
(4,222)(F)
Equipment.................................. 62,940 6,792 3,043 1,001(A) 67,421
(277)(C)
8(E)
Construction in progress................... 1,322 2,400 -- (2,595)(A) 928
(116)(C)
(83)(E)
---------- --------- ------------ ------------- ----------
$ 491,075 $ 11,101 $ 19,341 $ (7,951) $ 474,884
---------- --------- ------------ ------------- ----------
---------- --------- ------------ ------------- ----------
TWO MONTHS ENDED SEPTEMBER 30, 1992 (SEE NOTE
2):
Land....................................... $ 101,727 $ -- $ -- $ 165(C) $ 101,892
Buildings and improvements................. 324,534 469 37 436(A) 324,921
(477)(C)
(4)(E)
Equipment.................................. 61,320 1,601 74 68(A) 62,940
10(C)
15(E)
Construction in progress................... 1,632 160 -- (504)(A) 1,322
34(C)
---------- --------- ------------ ------------- ----------
$ 489,213 $ 2,230 $ 111 $ (257) $ 491,075
---------- --------- ------------ ------------- ----------
---------- --------- ------------ ------------- ----------
TEN MONTHS ENDED JULY 31, 1992:
Land....................................... $ 93,052 $ -- $ 350 $ 816(C) $ 101,727
(20)(E)
8,229(B)
Buildings and improvements................. 575,877 1,227 3,540 12,848(A) 324,534
1,781(C)
(1,857)(E)
(261,802)(B)
Equipment.................................. 147,817 4,021 2,321 472(A) 61,320
444(C)
568(E)
89,681(B)
Construction in progress................... 11,091 2,820 -- (13,320)(A) 1,632
29(C)
1,270(E)
(258)(B)
---------- --------- ------------ ------------- ----------
$ 827,837 $ 8,068 $ 6,211 $(340,481) $ 489,213
---------- --------- ------------ ------------- ----------
---------- --------- ------------ ------------- ----------
YEAR ENDED SEPTEMBER 30, 1991:
Land....................................... $ 97,759 $ 42 $ 3,798 $ (813)(C) $ 93,052
(138)(E)
Buildings and improvements................. 587,741 2,681 20,031 6,291(A) 575,877
(1,418)(C)
(793)(E)
1,406(F)
Equipment.................................. 147,088 5,908 4,790 946(A) 147,817
(334)(C)
35(E)
(1,036)(F)
Construction in progress................... 18,448 3,068 -- (7,237)(A) 11,091
(57)(C)
(304)(D)
(686)(E)
(2,141)(F)
---------- --------- ------------ ------------- ----------
$ 851,036 $ 11,699 $ 28,619 $ (6,279) $ 827,837
---------- --------- ------------ ------------- ----------
---------- --------- ------------ ------------- ----------
<FN>
- ------------------------------
(A) Reclassification of completed construction to property and equipment.
(B) Adjust accounts to fair value pursuant to the implementation of fresh
start accounting.
(C) Adjustment for foreign currency translation.
(D) Write-off of construction costs of discontinued projects.
(E) Property reclassifications.
(F) Adjustment to net realizable value of assets.
</TABLE>
S-1
<PAGE>
SCHEDULE VI -- ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION
OF PROPERTY AND EQUIPMENT
(IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT RETIREMENTS OTHER CHANGES BALANCE AT
BEGINNING AND/OR AND (DEDUCT) END OF
CLASSIFICATION OF PERIOD ADDITIONS DISPOSITIONS -- DESCRIBE PERIOD
- --------------------------------------------- ---------- --------- ------------ ------------- ----------
<S> <C> <C> <C> <C> <C>
YEAR ENDED SEPTEMBER 30, 1993:
Buildings and improvements................. $ 3,399 $ 14,402 $ 287 $ (750)(A) $ 16,710
(21)(B)
(33)(C)
Equipment.................................. 914 11,980 235 750(A) 13,388
(6)(B)
(15)(C)
---------- --------- ------ ------------- ----------
$ 4,313 $ 26,382 $ 522 $ (75) $ 30,098
---------- --------- ------ ------------- ----------
---------- --------- ------ ------------- ----------
TWO MONTHS ENDED SEPTEMBER 30, 1992 (SEE NOTE
2):
Buildings and improvements................. $ -- $ 2,765 $ -- $ (72)(A) $ 3,399
(7)(B)
713(C)
Equipment.................................. -- 920 49 43(B) 914
---------- --------- ------ ------------- ----------
$ -- $ 3,685 $ 49 $ 677 $ 4,313
---------- --------- ------ ------------- ----------
---------- --------- ------ ------------- ----------
TEN MONTHS ENDED JULY 31, 1992:
Buildings and improvements................. $ 108,233 $ 14,799 $ 1,512 $ 2(A) $ --
357(B)
(713)(C)
(121,166)(D)
Equipment.................................. 74,431 12,879 1,184 70(A) --
279(B)
(86,475)(D)
---------- --------- ------ ------------- ----------
$ 182,664 $ 27,678 $ 2,696 $(207,646) $ --
---------- --------- ------ ------------- ----------
---------- --------- ------ ------------- ----------
YEAR ENDED SEPTEMBER 30, 1991:
Buildings and improvements................. $ 91,658 $ 16,741 $ 3,006 $ 3,129(A) $ 108,233
(221)(B)
(68)(C)
Equipment.................................. 62,565 15,730 2,381 (1,253)(A) 74,431
(207)(B)
(23)(C)
---------- --------- ------ ------------- ----------
$ 154,223 $ 32,471 $ 5,387 $ 1,357 $ 182,664
---------- --------- ------ ------------- ----------
---------- --------- ------ ------------- ----------
<FN>
- ------------------------
(A) Property reserve reclassifications.
(B) Adjustment for foreign currency translation.
(C) Other reclassifications and adjustments.
(D) Write-off of accumulated depreciation pursuant to the implementation of
fresh start accounting.
</TABLE>
S-2
<PAGE>
SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
CHARGED TO
BALANCE AT CHARGED TO OTHER BALANCE AT
BEGINNING COSTS AND ACCOUNTS -- DEDUCTIONS -- END OF
CLASSIFICATION OF PERIOD EXPENSES DESCRIBE DESCRIBE PERIOD
- --------------------------------------------- ---------- ---------- ----------- ------------- ----------
<S> <C> <C> <C> <C> <C>
YEAR ENDED SEPTEMBER 30, 1993:
Allowance for doubtful accounts............ $ 30,272 $ 67,300 $ 19,598(A) $ 89,272(C) $ 28,843
945(B)
---------- ---------- ----------- ------------- ----------
$ 30,272 $ 67,300 $ 20,543 $ 89,272 $ 28,843
---------- ---------- ----------- ------------- ----------
---------- ---------- ----------- ------------- ----------
TWO MONTHS ENDED SEPTEMBER 30, 1992 (SEE NOTE
2):
Allowance for doubtful accounts............ $ 31,095 $ 14,804 $ 3,044(A) $ 18,931(C) $ 30,272
260(B)
---------- ---------- ----------- ------------- ----------
$ 31,095 $ 14,804 $ 3,304 $ 18,931 30,272
---------- ---------- ----------- ------------- ----------
---------- ---------- ----------- ------------- ----------
TEN MONTHS ENDED JULY 31, 1992:
Allowance for doubtful accounts............ $ 30,734 $ 50,403 $ 15,837(A) $ 1,540(B) $ 31,095
2,513(B) 66,852(C)
---------- ---------- ----------- ------------- ----------
$ 30,734 $ 50,403 $ 18,350 $ 68,392 $ 31,095
---------- ---------- ----------- ------------- ----------
---------- ---------- ----------- ------------- ----------
YEAR ENDED SEPTEMBER 30, 1991:
Allowance for doubtful accounts............ $ 36,316 $ 51,617 $ 19,900(A) $ 77,400(C) $ 30,734
301(B)
---------- ---------- ----------- ------------- ----------
$ 36,316 $ 51,617 $ 20,201 $ 77,400 $ 30,734
---------- ---------- ----------- ------------- ----------
---------- ---------- ----------- ------------- ----------
<FN>
- ------------------------
(A) Recoveries of amounts previously charged to income.
(B) Included in provision for restructuring of operations or reorganization
items.
(C) Accounts written off.
</TABLE>
S-3
<PAGE>
SCHEDULE X -- SUPPLEMENTAL INCOME STATEMENT INFORMATION
(IN THOUSANDS)
<TABLE>
<CAPTION>
TWO MONTHS TEN MONTHS
YEAR ENDED ENDED ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, JULY 31, SEPTEMBER 30,
1993 1992 1992 1991
------------- ------------- ---------- -------------
(SEE NOTE 2)
<S> <C> <C> <C> <C>
Advertising costs....................... $39,393 $6,485 $31,996 $37,104
------------- ------ ---------- -------------
------------- ------ ---------- -------------
Amortization of intangible assets:
Capitalized preopening costs.......... (A) (A) (A) 11,500
Capitalized start-up costs............ (A) (A) (A) 764
Covenant not to compete............... (A) (A) (A) 478
Goodwill.............................. (A) (A) (A) 1,219
Other................................. (A) (A) (A) 426
-------------
$14,387
-------------
-------------
Amortization of reorganization value in
excess of amounts allocable to
identifiable assets.................... $42,678 $7,167 -- --
------------- ------ ---------- -------------
------------- ------ ---------- -------------
<FN>
- ------------------------
(A) Certain items noted in Rule 12-11 of Regulation S-X have been excluded
from the above schedule on the basis that each is less than 1% of net
revenue as reported in the related Consolidated Statements of Operations.
</TABLE>
S-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBITS PAGE
- ----------- ---------
<S> <C> <C>
2(a) Incorporation, Conveyance and Stock Purchase Agreement, dated August 16, 1993, among Quorum,
Inc. and Charter Medical Corporation, et al., which was filed as Exhibit 2.1 to the
Company's Current Report on Form 8-K, dated as of September 30, 1993, and which is
incorporated herein by reference............................................................
2(b) Amendment No. 1 to the Exhibit 2.1 agreement, dated September 30, 1993, which was filed as
Exhibit 2.2 to the Company's Current Report on Form 8-K, dated as of September 30, 1993, and
which is incorporated herein by reference...................................................
2(c) Asset Sale Agreement, dated March 29, 1994, between National Medical Enterprises, Inc., as
Seller and Charter Medical Corporation, as Buyer, which was filed as Exhibit 10(a) to the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1994, and which is
incorporated herein by reference............................................................
Exhibits 2(a), 2(b) and 2(c) do not contain copies of the exhibits and schedules to such
agreements. Such agreements describe such exhibits and schedules. The Company agrees to
furnish supplementally to the Commission, upon request, a copy of any omitted exhibit or
schedule to such agreements.................................................................
3(a) Restated Certificate of Incorporation of the Company which was filed as Exhibit 3(a) to the
Company's Annual Report on Form 10--K dated as of September 30, 1992, and is incorporated
herein by reference.........................................................................
3(b) Bylaws of the Company, as amended, which was filed as Exhibit 3(a) to the Company's
Quarterly Report on Form 10--Q dated as of March 31, 1993, and is incorporated herein by
reference...................................................................................
4(a) Indenture, dated as of May 2, 1994, among the Company, the Guarantors listed therein and
Marine Midland Bank, as Trustee, relating to the 11 1/4% Senior Subordinated Notes due April
15, 2004 of the Company.....................................................................
4(b) Form of Class A Common Stock Purchase Warrant Certificate, dated September 1, 1988, for
warrants sold to designee of Drexel Burnham Lambert Incorporated, which was filed as Exhibit
4.4 to the Company's Current Report on Form 8--K, dated September 1, 1988, and is
incorporated herein by reference............................................................
4(c) Form of Class A Common Stock Purchase Warrant Certificate, dated September 1, 1988, for
warrants sold to certain institutional investors, which was filed as Exhibit 4.3 to the
Company's Current Report on Form 8--K, dated September 1, 1988, and is incorporated herein
by reference................................................................................
4(d) Warrant and Common Stock Registration and Participation Rights Agreement, dated as of
September 1, 1988, among WAF Acquisition Corporation, the Company, William A. Fickling, Jr.,
certain affiliates of William A. Fickling, Jr. and the purchasers of the warrants issued on
September 1, 1988, which was filed as Exhibit 4(h) to the Company's Annual Report on Form
10--K dated as of September 30, 1988, and is incorporated herein by reference...............
4(e) Second Amended and Restated Credit Agreement, dated as of May 2, 1994, among the Company,
the financial institutions listed therein, Bankers Trust Company, as Agent, and First Union
National Bank of North Carolina, as Co-Agent................................................
4(f) Second Amended and Restated Subsidiary Credit Agreement, dated as of May 2, 1994, among
certain subsidiaries of the Company, the financial institutions listed therein, Bankers
Trust Company, as Agent, and First Union National Bank of North Carolina, as Co-Agent.......
4(g) Second Amended and Restated Company Stock and Notes Pledge Agreement, dated as of May 2,
1994, between the Company and Bankers Trust Company, as Collateral Agent....................
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
4(h) Second Amended and Restated Subsidiary Stock and Notes Pledge Agreement, dated as of May 2,
1994, among various subsidiaries of the Company and Bankers Trust Company, as Collateral
Agent.......................................................................................
4(i) Second Amended and Restated Subsidiary Pledge and Security Agreement, dated as of May 2,
1994, among various subsidiaries of the Company and Bankers Trust Company, as Collateral
Agent.......................................................................................
4(j) Second Amended and Restated Company Pledge and Security Agreement (ESOP collateral), dated
as of May 2, 1994, between the Company and Bankers Trust Company, as Collateral Agent.......
4(k) Second Amended and Restated FINCO Pledge and Security Agreement I, dated as of May 2, 1994,
between CMFC, Inc. and Bankers Trust Company, as Collateral Agent...........................
4(l) Second Amended and Restated Subsidiary Guaranty, dated as of May 2, 1994, executed by
various subsidiaries of the Company.........................................................
4(m) Second Amended and Restated Company Collateral Accounts Assignment Agreement, dated as of
May 2, 1994, between the Company and Bankers Trust Company, as Agent........................
4(n) Company Pledge and Security Agreement, dated as of May 2, 1994, between the Company and
Bankers Trust Company, as Collateral Agent..................................................
4(o) Second Amended and Restated FINCO Pledge and Security Agreement II, dated as of May 2, 1994,
between CMCI, Inc. and Bankers Trust Company, as Collateral Agent...........................
4(p) Second Amended and Restated Company Guaranty, dated as of May 2, 1994, executed by the
Company.....................................................................................
4(q) Second Amended and Restated Subsidiary Collateral Accounts Assignment Agreement, dated as of
May 2, 1994, among various subsidiaries of the Company and Bankers Trust Company, as
Agent.......................................................................................
4(r) Form of Amended and Restated Indenture of Mortgage, Deed to Secure Debt, Deed of Trust,
Security Agreement and Assignment of Leases and Rents executed as of July 21, 1992, by 44
subsidiaries of the Company for the benefit of Bankers Trust Company, as Agent, and various
trustees as shown on individual subsidiary cover pages attached, which was filed as Exhibit
4(q) to the Company's Current Report on Form 8-K dated as of July 21, 1992, and is
incorporated herein by reference............................................................
4(s) Form of Indenture of Mortgage, Deed to Secure Debt, Deed of Trust, Security Agreement and
Assignment of Leases and Rents executed as of July 21, 1992, by 40 subsidiaries of the
Company for the benefit of Bankers Trust Company, as Agent, and various trustees as shown on
individual subsidiary cover pages attached, which was filed as Exhibit 4(q) to the Company's
Current Report on Form 8-K dated as of July 21, 1992, and is incorporated herein by
reference...................................................................................
4(t) Form of Indenture of Mortgage, Deed to Secure Debt, Deed of Trust, Security Agreement and
Assignment of Leases and Rents; Amended Indenture of Mortgage, Deed to Secure Debt, Deed of
Trust, Security Agreement and Assignment of Leases and Rents; and Consolidated Agreement,
executed as of May 2, 1994, by 71 subsidiaries of the Company and Bankers Trust Company, as
Agent, and various trustees as shown on individual subsidiary cover pages attached..........
The Registrants agree, pursuant to (b)(iii) of Item 601 of Regulation S--K, to furnish to
the Commission, upon request, a copy of each agreement relating to long-term debt not being
registered, where the total amount of debt under each such agreement does not exceed 10% of
the Registrants' respective total assets on a consolidated basis............................
4(u) Purchase Agreement, dated April 22, 1994, between the Company and Bear, Stearns & Co. Inc.
and BT Securities Corporation...............................................................
4(v) Exchange and Registration Rights Agreement, dated April 22, 1994 between the Company and
Bear, Stearns & Co. Inc. and BT Securities Corporation......................................
5 Opinion of King & Spalding as to the legality of the securities being registered............
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
8 Opinion of King & Spalding as to tax matters................................................
10(a) Written description of Corporate Annual Incentive Plan for the year ended September 30,
1993, which was filed as Exhibit 10(a) to the Company's Quarterly Report on Form 10--Q for
the quarter ended March 31, 1993, and is incorporated herein by reference...................
10(b) 1989 Non-Qualified Deferred Compensation Plan of the Company, adopted on January 1, 1989, as
amended, which was filed as Exhibit 10(f) to the Company's Annual Report on Form 10--K dated
as of September 30, 1989, and is incorporated herein by reference...........................
10(c) Written description of Corporate Annual Incentive Plan for the year ended September 30, 1993
which was filed as Exhibit 10(a) to the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1993 and which is incorporated herein by reference..................
10(d) Directors' Stock Option Plan of the Company which was filed as Exhibit 10(b) to the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1993 and which is
incorporated herein by reference............................................................
10(e) Employment Agreement, dated July 21, 1992, between the Company and William A. Fickling, Jr.,
Chairman of the Board of Directors and Chief Executive Officer of the Company which was
filed as Exhibit 10(e) to the Company's Annual Report on Form 10-K dated September 30, 1992
and which is incorporated herein by reference...............................................
10(f) Employment Agreement, dated July 21, 1992, between the Company and E. Mac Crawford,
Director, President and Chief Operating Officer of the Company which was filed as Exhibit
10(f) to the Company's Annual Report on Form 10-K dated September 30, 1992 and which is
incorporated herein by reference............................................................
10(g) Employment Agreement, dated July 21, 1992, between the Company and Lawrence W. Drinkard,
Director and Senior Vice President - Finance (principal financial officer) of the Company
which was filed as Exhibit 10(g) to the Company's Annual Report on Form 10-K dated September
30, 1992 and which is incorporated herein by reference......................................
10(h) 1994 Stock Option Plan of the Company.......................................................
10(i) Directors' Unit Award Plan of the Company...................................................
12 Statement regarding computation of ratios...................................................
21 List of subsidiaries of the Registrants.....................................................
23(a) Consent of Arthur Andersen & Co.............................................................
23(b) Consent of KPMG Peat Marwick................................................................
23(c) Consent of King & Spalding (included in opinion filed as Exhibit 5).........................
24 Powers of Attorney..........................................................................
25 Statement of Eligibility and Qualification on Form T--1 of Marine Midland Bank, as Trustee,
under the Indenture relating to the Senior Subordinated Notes due April 15, 2004............
99(a) Form of Letter of Transmittal (Proof of May 18, 1994).......................................
99(b) Form of Notice of Guaranteed Delivery (Proof of May 18, 1994)...............................
99(c) Form of Instruction to Registered Holder and/or Book-Entry Transfer Facility Participant
from Owner (Proof of May 18, 1994)..........................................................
99(d) Form of Exchange Agent Agreement between the Company and Marine Midland Bank (Proof of May
18, 1994)...................................................................................
</TABLE>
<PAGE>
EXHIBIT A
[FORM OF FACE OF RESTRICTED SECURITY]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD TO, OR FOR
THE ACCOUNT OR BENEFIT OF, ANY PERSON EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) OR (B) IT IS AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE 5O1(a)(1), (2),
(3) OR (7) UNDER THE SECURITIES ACT) WHO IS AN INSTITUTION (AN "INSTITUTIONAL
ACCREDITED INVESTOR"), (2) AGREES THAT IT WILL NOT, PRIOR TO THE DATE WHICH IS
THREE YEARS AFTER THE LATER OF THE DATE OF ORIGINAL ISSUANCE OF THIS NOTE AND
THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER
OF THIS NOTE (THE "RESALE RESTRICTION TERMINATION DATE"), RESELL, PLEDGE OR
OTHERWISE TRANSFER THIS NOTE, EXCEPT (A) TO THE ISSUER, (B) TO A PERSON WHOM THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER PURCHASING FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH THE RESALE PROVISIONS OF RULE 144A UNDER THE SECURITIES ACT, (C)
TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES
TO THE TRUSTEE A WRITTEN CERTIFICATION CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS NOTE (THE FORM OF
WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), (D) PURSUANT TO THE RESALE
LIMITATIONS PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), (E)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR (F)
PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, SUBJECT IN EACH OF THE FOREGOING CASES TO ANY REQUIREMENT OF
LAW THAT THE DISPOSITION OF ITS PROPERTY OR THE PROPERTY OF SUCH ACCOUNT BE AT
ALL TIMES WITHIN ITS CONTROL AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES
LAWS AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IF THE
PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST,
PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE ISSUER SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
A-1
<PAGE>
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE FOREGOING RESTRICTIONS
ON RESALE WILL NOT APPLY SUBSEQUENT TO THE RESALE RESTRICTION TERMINATION DATE.
No. $_______
CUSIP No.____________
CHARTER MEDICAL CORPORATION
11 1/4% SENIOR SUBORDINATED NOTES DUE 2004
CHARTER MEDICAL CORPORATION, a Delaware corporation (the "Company"),
promises to pay to
, or registered assigns, the principal sum of Dollars on
April 15, 2004.
Interest Payment Dates: April 15 and October 15, commencing
October 15, 1994.
Record Dates: April 1 and October 1.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
A-2
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Security to be signed
manually or by facsimile by its duly authorized officers and a facsimile of its
corporate seal to be affixed hereto or imprinted hereon.
CHARTER MEDICAL CORPORATION
By: ___________________________
Name:
Title:
[Seal]
Attest:
By: _______________________
Name:
Title:
Dated:
Trustee's Certificate of Authentication
This is one of the 11 1/4% Senior Subordinated
Notes due 2004 described in
the within-mentioned Indenture.
MARINE MIDLAND BANK,
as Trustee
By: ________________________
Authorized Signatory
A-3
<PAGE>
[FORM OF REVERSE SIDE RESTRICTED SECURITY]
CHARTER MEDICAL CORPORATION
11 1/4% Senior Subordinated Notes due 2004
(1) INTEREST
Charter Medical Corporation, a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Security at the rate
per annum shown above. Interest will be payable semi-annually on each interest
payment date, commencing October 15, 1994. Interest on the Securities will
accrue from the most recent date to which interest has been paid, or if no
interest has been paid, from May 2, 1994. Interest will be computed on the
basis of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and interest on
overdue installments of interest, to the extent lawful, at the rate per annum
borne by the Securities.
(2) METHOD OF PAYMENT
The Company will pay interest on the Securities (except defaulted
interest) to the persons who are registered Holders at the close of business on
April 1 and October 1 immediately preceding the interest payment date even if
the Security is cancelled on registration of transfer or registration of
exchange (other than with respect to the purchase of Securities pursuant to an
offer to purchase Securities made in connection with Section 5.14 or 5.15 of the
Indenture after such record date). Holders must surrender Securities to a
Paying Agent to collect principal payments. The Company will pay principal,
premium, if any, and interest in money of the United States that, at the time of
payment, is legal tender for payment of public and private debts. However, the
Company may pay principal and interest by its check payable in such money. It
may mail an interest payment to a Securityholder's registered address.
(3) PAYING AGENT AND REGISTRAR
Initially, the Trustee will act as Paying Agent and Registrar. The
Company may appoint and change any
A-4
<PAGE>
Paying Agent or Registrar without notice, other than notice to the Trustee. The
Company or any Subsidiary or an Affiliate of either of them may act as Paying
Agent or Registrar.
(4) INDENTURE AND GUARANTEES
The Company issued the Securities under an Indenture, dated as of
May 2, 1994 (the "Indenture"), among the Company, the Guarantors named therein
and thereafter becoming parties thereto and the Trustee. The terms of the
Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended and as in
effect on the date of the Indenture (the "TIA") and as provided in the
Indenture. Each Security is guaranteed, jointly and severally, by the
Guarantors pursuant to Article 3 of the Indenture. The Guarantees are
subordinated to all Senior Indebtedness to the extent provided in the Indenture.
Capitalized terms used herein and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and the TIA for a statement of
those terms.
The Securities are senior subordinated, general unsecured obligations
of the Company limited to $375,000,000 aggregate principal amount. This
Security is one of the Restricted Securities referred to in the Indenture. The
Securities issued under the Indenture include the Restricted Securities and any
Unrestricted Securities, as defined below, issued in exchange for the Restricted
Securities pursuant to the Indenture. Except in certain circumstances specified
in the Indenture, the Restricted Securities and the Unrestricted Securities are
treated as a single class of securities under the Indenture.
(5) OPTIONAL REDEMPTION
The Securities are redeemable as a whole or in part, at any time on
and after April 15, 1999 at the option of the Company at the following
redemption prices (expressed as a percentage of the principal amount) together
with accrued and unpaid interest thereon to the Redemption Date if redeemed in
the twelve-month period commencing April 15 of the years indicated below:
A-5
<PAGE>
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
1999 105.625%
2000 103.750%
2001 101.875%
2002 and thereafter 100.000%
</TABLE>
(6) NOTICE OF REDEMPTION
Notice of redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each Holder of Securities to be redeemed
at the Holder's registered address. Securities in denominations larger than
$1,000 in principal amount may be redeemed in part but only in integral
multiples of $1,000 of principal amount.
(7) REQUIREMENT THAT THE COMPANY OFFER TO PURCHASE SECURITIES UNDER CERTAIN
CIRCUMSTANCES
Subject to the terms and conditions of the Indenture, the Company
shall become immediately obligated to offer to purchase the Securities pursuant
to Section 5.14 of the Indenture after the occurrence of a Change in Control of
the Company at a price equal to 101% of aggregate principal amount thereof plus
accrued and unpaid interest, if any, to the date of purchase. In addition, to
the extent that there are Net Cash Proceeds from Asset Sales which are not
reinvested in a healthcare or a healthcare-related business or used to reduce
Senior Indebtedness as provided in Section 5.15 of the Indenture, the Company
will be obliged to offer to apply such Net Cash Proceeds to the purchase of
Securities at 100% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date of purchase, in accordance with Section 5.15 of
the Indenture.
(8) SUBORDINATION
The Securities are subordinated to all Senior Indebtedness (as defined
in the Indenture). To the extent provided in the Indenture, Senior Indebtedness
must be paid before the Securities may be paid. The Company agrees, and each
Securityholder by accepting a Security agrees, to such subordination and
authorizes the Trustee to give effect thereto.
A-6
<PAGE>
(9) DENOMINATIONS; TRANSFER; EXCHANGE
The Securities are in registered form, without coupons, in
denominations of $1,000 in principal amount and integral multiples of $1,000. A
Holder may transfer or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not transfer or exchange
any Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) or any
Securities for a period of 15 days before a selection of Securities to be
redeemed.
(10) PERSONS DEEMED OWNERS
The registered Holder of this Security may be treated as the owner of
this Security for all purposes.
(11) AMENDMENT; WAIVER
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least 66-2/3% of the aggregate principal amount of the Securities
at the time outstanding and (ii) certain defaults or noncompliance with certain
provisions may be waived with the written consent of the Holders of at least
66-2/3% of the aggregate principal amount of the Securities at the time
outstanding. Subject to certain exceptions set forth in the Indenture, without
the consent of any Securityholder, the Company, the Guarantors and the Trustee
may amend the Indenture or the Securities to cure any ambiguity, defect or
inconsistency, or to comply with Article 6 of the Indenture, or to provide for
certificated or uncertificated Securities in addition to or in place of
certificated or uncertificated Securities, or to comply with any requirements of
the Securities and Exchange Commission in connection with the qualification of
the Indenture under the TIA, or to supplement the Indenture to provide for
additional Guarantors or to make any change that does not adversely affect the
rights of any Securityholder.
A-7
<PAGE>
(12) DEFAULTS AND REMEDIES
Under the Indenture, Events of Default include (i) default in payment
of the principal amount, premium, if any, or interest, in respect of the
Securities when the same becomes due and payable subject, in the case of
interest, to the grace period contained in the Indenture; (ii) failure by the
Company to comply with its other agreements in the Indenture or the Securities,
subject to notice and lapse of time; (iii) failure to pay at stated final
maturity or the acceleration prior to such maturity of certain other
indebtedness of the Company or any of its Restricted Subsidiaries; (iv) certain
final judgments against the Company or any of its Restricted Subsidiaries which
remain undischarged; (v) except as permitted by the Indenture, the
unenforceability or invalidity of any Guarantee of the Securities; or (vi)
certain events of bankruptcy or insolvency involving the Company and any of its
Restricted Subsidiaries. If an Event of Default occurs and is continuing, the
Trustee, or the Holders of at least 25% in aggregate principal amount of the
Securities at the time outstanding, may declare all the Securities to be due and
payable (i) immediately if no amount is outstanding and no commitment is in
effect under Specified Senior Indebtedness or (ii) if any amount is outstanding
or any commitment is in effect under Specified Senior Indebtedness, upon the
earlier of (A) five Business Days after delivery of the Acceleration Notice by
the Trustee or the Holders, as the case may be, to the Company and the agent or
another designated representative of the holders of each and any Specified
Senior Indebtedness outstanding or (B) acceleration of the Specified Senior
Indebtedness, and thereupon the Trustee may, at its discretion, proceed to
protect and enforce the rights of the Holders of the Securities by appropriate
judicial proceedings. Certain events of bankruptcy or insolvency are Events of
Default which will result in the Securities becoming due and payable immediately
upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the Securities except
as provided in the Indenture. The Trustee may refuse to enforce the Indenture
or the Securities unless it receives reasonable indemnity or security. Subject
to certain limitations, Holders of at least 66-2/3% of the aggregate principal
amount of the Securities at the time outstanding may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Securityholders
notice of any continuing Default (except a Default
A-8
<PAGE>
in payment of amounts specified in clause (i) above) if it determines that
withholding notice is in their interests.
(13) TRUSTEE DEALINGS WITH THE COMPANY
Subject to certain limitations imposed by the TIA, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
(14) NO RECOURSE AGAINST OTHERS
A director, Officer, employee or stockholder, as such, of the Company
shall not have any liability for any obligations of the Company under the
Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.
(15) AUTHENTICATION
This Security shall not be valid until an authorized officer of the
Trustee manually signs the Trustee's Certificate of Authentication on the
reverse side of this Security.
(16) ABBREVIATIONS
Customary abbreviations may be used in the name of a Securityholder or
an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with right of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gifts to Minors
Act).
(17) UNCLAIMED MONEY
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent will pay the money back to the
Company at its request. After that, Holders entitled to money must look to the
Company for payment.
A-9
<PAGE>
(18) DISCHARGE PRIOR TO MATURITY
If the Company deposits with the Trustee or Paying Agent money or U.S.
Government Obligations sufficient to pay the principal of and interest on the
Securities to maturity, the Company will be discharged from the Indenture except
for certain Sections thereof.
(19) SUCCESSOR
When a successor Person to the Company assumes all the obligations of
its predecessor under the Securities and the Indenture, such predecessor shall
be released from those obligations.
(20) REGISTRATION RIGHTS
Pursuant to the Exchange and Registration Rights Agreement among the
Company and the Initial Purchasers of the Securities, the Company has agreed to
file, as soon as practicable, a registration statement under the Securities Act,
and to use its best efforts to cause such registration statement to become
effective by August 31, 1994 and, upon becoming effective, to make available to
all Holders of Securities an opportunity to exchange the Restricted Securities
for the Company's 11 1/4% Senior Subordinated Notes Due 2004 (the "Unrestricted
Securities"), in like principal amounts and having identical terms as the
Restricted Securities, other than restrictions on transferability as provided on
the face of this Security and provisions relating to this paragraph. The
Holders of the Restricted Securities shall be entitled to receive certain
additional interest payments in the event such exchange offer is not consummated
and upon certain other conditions, all pursuant to and in accordance with the
terms of the Exchange and Registration Rights Agreement. Within five Business
Days after the occurrence of an event so resulting in such additional interest
payments, the Company shall provide the Trustee with an Officers' Certificate
describing such event and providing the Trustee with all necessary details
relating to the payment of such interest, including, without limitation, the
interest rate, the effective date of such interest rate and the method of
calculating interest.
(21) GOVERNING LAW
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF
A-10
<PAGE>
NEW YORK, APPLICABLE TO CONTRACTS MADE AND PERFORMED WHOLLY WITHIN THE STATE OF
NEW YORK AND WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
A-11
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below:
(I) or (we) assign and transfer this Security to:
- --------------------------------------------------------------------------------
(insert assignee's social security or tax I.D. number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________________________________
_________________________ agent to transfer this Security on the books of the
Company. The agent may substitute another to act for him.
Dated: ______________________ Signature:___________________________________
(Sign exactly as your name appears
on the other side of this Security)
Signature
Guarantee:______________________________________________________________________
In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the date that is three years after the later of
the date of original issuance of such Securities and the last date, if any, on
which such Securities were owned by the Company or any Affiliate of the Company,
the undersigned confirms that such Securities are being transferred:
A-12
<PAGE>
CHECK ONE BOX BELOW
(1) __ to the Company or a subsidiary thereof; or
(2) __ to a Qualified Institutional Buyer in compliance with Rule 144A under
the Securities Act; or
(3) __ to an "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act) that is an institution and that has
furnished to the Trustee a signed letter containing certain
representations and agreements and an opinion of counsel (the forms of
which can be obtained from the Trustee); or
(4) __ pursuant to resale limitations of Rule 144 under the Securities Act;
or
(5) __ pursuant to the resale limitations of Rule 904 of Regulation S under
the Securities Act; or
(6) __ pursuant to another available exemption from the registration
requirements of the Securities Act.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Securities evidenced by this certificate in the name of any person other
than the registered Holder thereof; PROVIDED that if box (3), (4), (5) or (6) is
checked, the assignee shall provide the Company and the Trustee with an opinion
of counsel in form and substance satisfactory to the Company and the Trustee and
the Company or the Trustee may require, prior to registering any such transfer
of the Securities, in its sole discretion, such other certifications and
information as the Trustee or the Company has reasonably requested to confirm
that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act.
----------------------------------------
Signature Guarantee: Signature
- -------------------------------- ----------------------------------------
Signature
- --------------------------------------------------------------------------------
A-13
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you receive a notice pursuant to Section 5.14 ("Change in Control
Offer") or Section 5.15 ("Excess Proceeds Offer") of the Indenture and you wish
to elect to have all or any portion of this Security purchased by Charter
pursuant to such notice, check the applicable boxes:
/ / Change in Control Offer: / / Excess Proceeds Offer:
in whole / / in whole / /
in part / / in part / /
Amount to be Amount to be
purchased: $ _______ purchased: $ _______
Dated: ____________________ Signature:______________________________
(Sign exactly as your name
appears on the other side of
this Security)
Signature
Guarantee:______________________________________________________________________
Social Security Number or
Taxpayer Identification Number:_________________________________________________
A-14
<PAGE>
EXHIBIT B
[FORM OF FACE OF UNRESTRICTED SECURITY]
No. $_______
CUSIP No.___________
CHARTER MEDICAL CORPORATION
11 1/4% SENIOR SUBORDINATED NOTES DUE 2004
CHARTER MEDICAL CORPORATION, a Delaware corporation (the "Company"),
promises to pay to
, or registered assigns, the principal sum of Dollars on April 15,
2004.
Interest Payment Dates: April 15 and October 15, commencing
October 15, 1994.
Record Dates: April 1 and October 1.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
B-1
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Security to be signed
manually or by facsimile by its duly authorized officers and a facsimile of its
corporate seal to be affixed hereto or imprinted hereon.
CHARTER MEDICAL CORPORATION
By:_____________________________________
Name:
Title:
[Seal]
Attest:
By: _______________________
Name:
Title:
Dated:
Trustee's Certificate of Authentication
This is one of the 11 1/4% Senior Subordinated
Notes due 2004 described in
the within-mentioned Indenture.
MARINE MIDLAND BANK,
as Trustee
By: ________________________
Authorized Signatory
B-2
<PAGE>
[FORM OF REVERSE SIDE UNRESTRICTED SECURITY]
CHARTER MEDICAL CORPORATION
11 1/4% Senior Subordinated Notes due 2004
1. INTEREST
Charter Medical Corporation, a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Security at the rate
per annum shown above. Interest will be payable semi-annually on each interest
payment date, commencing October 15, 1994. Interest on the Securities will
accrue from the most recent date to which interest has been paid, or if no
interest has been paid, from May 2, 1994. Interest will be computed on the
basis of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and interest on
overdue installments of interest, to the extent lawful, at the rate per annum
borne by the Securities.
2. METHOD OF PAYMENT
The Company will pay interest on the Securities (except defaulted
interest) to the persons who are registered Holders at the close of business on
April 1 and October 1 immediately preceding the interest payment date even if
the Security is cancelled on registration of transfer or registration of
exchange (other than with respect to the purchase of Securities pursuant to an
offer to purchase Securities made in connection with Section 5.14 or 5.15 of the
Indenture after such record date). Holders must surrender Securities to a
Paying Agent to collect principal payments. The Company will pay principal,
premium, if any, and interest in money of the United States that, at the time of
payment, is legal tender for payment of public and private debts. However, the
Company may pay principal and interest by its check payable in such money. It
may mail an interest payment to a Securityholder's registered address.
3. PAYING AGENT AND REGISTRAR
Initially, the Trustee will act as Paying Agent and Registrar. The
Company may appoint and change any Paying Agent or Registrar without notice,
other than notice
B-3
<PAGE>
to the Trustee. The Company or any Subsidiary or an Affiliate of either of them
may act as Paying Agent or Registrar.
4. INDENTURE AND GUARANTEES
The Company issued the Securities under an Indenture, dated as of May
2, 1994 (the "Indenture"), among the Company, the Guarantors named therein and
thereafter becoming parties thereto and the Trustee. The terms of the
Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended and as in
effect on the date of the Indenture (the "TIA") and as provided in the
Indenture. Each Security is guaranteed, jointly and severally, by the
Guarantors pursuant to Article 3 of the Indenture. The Guarantees are
subordinated to all Senior Indebtedness to the extent provided in the Indenture.
Capitalized terms used herein and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and the TIA for a statement of
those terms.
The Securities are senior subordinated, general unsecured obligations
of the Company limited to $375,000,000 aggregate principal amount. This
Security is one of the Unrestricted Securities referred to in the Indenture,
which were issued in exchange for the Restricted Securities pursuant to the
Indenture. Except in certain circumstances specified in the Indenture, the
Restricted Securities and the Unrestricted Securities are treated as a single
class of securities under the Indenture.
5. OPTIONAL REDEMPTION
The Securities are redeemable as a whole or in part, at any time on
and after April 15, 1999 at the option of the Company at the following
redemption prices (expressed as a percentage of the principal amount) together
with accrued and unpaid interest thereon to the Redemption Date if redeemed in
the twelve-month period commencing April 15 of the years indicated below:
B-4
<PAGE>
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
1999 105.625%
2000 103.750%
2001 101.875%
2002 and thereafter 100.000%
</TABLE>
6. NOTICE OF REDEMPTION
Notice of redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each Holder of Securities to be redeemed
at the Holder's registered address. Securities in denominations larger than
$1,000 in principal amount may be redeemed in part but only in integral
multiples of $1,000 of principal amount.
7. REQUIREMENT THAT THE COMPANY OFFER TO PURCHASE SECURITIES UNDER CERTAIN
CIRCUMSTANCES
Subject to the terms and conditions of the Indenture, the Company
shall become immediately obligated to offer to purchase the Securities pursuant
to Section 5.14 of the Indenture after the occurrence of a Change in Control of
the Company at a price equal to 101% of aggregate principal amount thereof plus
accrued and unpaid interest, if any, to the date of purchase. In addition, to
the extent that there are Net Cash Proceeds from Asset Sales which are not
reinvested in a healthcare or a healthcare-related business, or used to reduce
Senior Indebtedness as provided in Section 5.15 of this Indenture, the Company
will be obliged to offer to apply such Net Cash Proceeds to the purchase of
Securities at 100% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date of purchase, in accordance with Section 5.15 of
the Indenture.
8. SUBORDINATION
The Securities are subordinated to all Senior Indebtedness (as defined
in the Indenture). To the extent provided in the Indenture, Senior Indebtedness
must be paid before the Securities may be paid. The Company agrees, and each
Securityholder by accepting a Security agrees, to such subordination and
authorizes the Trustee to give effect thereto.
B-5
<PAGE>
9. DENOMINATIONS; TRANSFER; EXCHANGE
The Securities are in registered form, without coupons, in
denominations of $1,000 in principal amount and integral multiples of $1,000. A
Holder may transfer or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not transfer or exchange
any Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) or any
Securities for a period of 15 days before a selection of Securities to be
redeemed.
10. PERSONS DEEMED OWNERS
The registered Holder of this Security may be treated as the owner of
this Security for all purposes.
11. AMENDMENT; WAIVER
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least 66-2/3% of the aggregate principal amount of the Securities
at the time outstanding and (ii) certain defaults or noncompliance with certain
provisions may be waived with the written consent of the Holders of at least
66-2/3% of the aggregate principal amount of the Securities at the time
outstanding. Subject to certain exceptions set forth in the Indenture, without
the consent of any Securityholder, the Company, the Guarantors and the Trustee
may amend the Indenture or the Securities to cure any ambiguity, defect or
inconsistency, or to comply with Article 6 of the Indenture, or to provide for
certificated or uncertificated Securities in addition to or in place of
certificated or uncertificated Securities, or to comply with any requirements of
the Securities and Exchange Commission in connection with the qualification of
the Indenture under the TIA, or to supplement the Indenture to provide for
additional Guarantors or to make any change that does not adversely affect the
rights of any Securityholder.
B-6
<PAGE>
12. DEFAULTS AND REMEDIES
Under the Indenture, Events of Default include (i) default in payment
of the principal amount, premium, if any, or interest, in respect of the
Securities when the same becomes due and payable subject, in the case of
interest, to the grace period contained in the Indenture; (ii) failure by the
Company to comply with its other agreements in the Indenture or the Securities,
subject to notice and lapse of time; (iii) failure to pay at stated final
maturity or the acceleration prior to such maturity of certain other
indebtedness of the Company or any of its Restricted Subsidiaries; (iv) certain
final judgments against the Company or any of its Restricted Subsidiaries which
remain undischarged; (v) except as permitted by the Indenture, the
unenforceability or invalidity of any Guarantee of the Securities; or (vi)
certain events of bankruptcy or insolvency involving the Company and any of its
Restricted Subsidiaries. If an Event of Default occurs and is continuing, the
Trustee, or the Holders of at least 25% in aggregate principal amount of the
Securities at the time outstanding, may declare all the Securities to be due and
payable (i) immediately if no amount is outstanding and no commitment is in
effect under Specified Senior Indebtedness or (ii) if any amount is outstanding
or any commitment is in effect under Specified Senior Indebtedness, upon the
earlier of (A) five Business Days after delivery of the Acceleration Notice by
the Trustee or the Holders, as the case may be, to the Company and the agent or
another designated representative of the holders of each and any Specified
Senior Indebtedness outstanding or (B) acceleration of the Specified Senior
Indebtedness, and thereupon the Trustee may, at its discretion, proceed to
protect and enforce the rights of the Holders of the Securities by appropriate
judicial proceedings. Certain events of bankruptcy or insolvency are Events of
Default which will result in the Securities becoming due and payable immediately
upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the Securities except
as provided in the Indenture. The Trustee may refuse to enforce the Indenture
or the Securities unless it receives reasonable indemnity or security. Subject
to certain limitations, Holders of at least 66-2/3% of the aggregate principal
amount of the Securities at the time outstanding may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Securityholders
notice of any continuing Default (except a Default
B-7
<PAGE>
in payment of amounts specified in clause (i) above) if it determines that
withholding notice is in their interests.
13. TRUSTEE DEALINGS WITH THE COMPANY
Subject to certain limitations imposed by the TIA, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
14. NO RECOURSE AGAINST OTHERS
A director, Officer, employee or stockholder, as such, of the Company
shall not have any liability for any obligations of the Company under the
Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.
15. AUTHENTICATION
This Security shall not be valid until an authorized officer of the
Trustee manually signs the Trustee's Certificate of Authentication on the
reverse side of this Security.
16. ABBREVIATIONS
Customary abbreviations may be used in the name of a Securityholder or
an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with right of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gifts to Minors
Act).
17. UNCLAIMED MONEY
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent will pay the money back to the
Company at its request. After that, Holders entitled to money must look to the
Company for payment.
B-8
<PAGE>
18. DISCHARGE PRIOR TO MATURITY
If the Company deposits with the Trustee or Paying Agent money or U.S.
Government Obligations sufficient to pay the principal of and interest on the
Securities to maturity, the Company will be discharged from the Indenture except
for certain Sections thereof.
19. SUCCESSOR
When a successor Person to the Company assumes all the obligations of
its predecessor under the Securities and the Indenture, such predecessor shall
be released from those obligations.
20. GOVERNING LAW
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, APPLICABLE TO CONTRACTS MADE
AND PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK AND WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.
B-9
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below:
(I) or (we) assign and transfer this Security to:
- --------------------------------------------------------------------------------
(insert assignee's social security or tax I.D. number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________________________________
_________________ agent to transfer this Security on the books of the Company.
The agent may substitute another to act for him.
Dated: _______________________ Signature: _____________________________
(Sign exactly as your name
appears on the other side of
this Security)
Signature
Guarantee: _____________________________________________________________________
B-10
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you receive a notice pursuant to Section 5.14 ("Change in Control
Offer") or Section 5.15 ("Excess Proceeds Offer") of the Indenture and you wish
to elect to have all or any portion of this Security purchased by the Company
pursuant to such notice, check the applicable boxes:
/ / Change in Control Offer: / / Excess Proceeds Offer:
in whole / / in whole / /
in part / / in part / /
Amount to be Amount to be
purchased: $_______ purchased: $_______
Dated: ___________________ Signature:______________________________
(Sign exactly as your name
appears on the other side of
this Security)
Signature
Guarantee:______________________________________________________________________
Social Security Number or
Taxpayer Identification Number:_________________________________________________
B-11
<PAGE>
EXHIBIT C
FORM OF LEGEND FOR RESTRICTED GLOBAL SECURITIES
Any Restricted Global Security authenticated and delivered hereunder
shall bear a legend (which would be in addition to any other legends required in
the case of a Restricted Non-Global Security) in substantially the following
form:
THIS SECURITY IS A RESTRICTED GLOBAL SECURITY WITHIN THE MEANING OF
THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR
IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR
IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY
OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
C-1
<PAGE>
EXHIBIT D
FORM OF LEGEND FOR UNRESTRICTED GLOBAL SECURITIES
Any Unrestricted Global Security authenticated and delivered hereunder
shall bear a legend in substantially the following form:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
D-1
<PAGE>
EXHIBIT E
FORM OF
ACCREDITED INVESTOR LETTER
Charter Medical Corporation
577 Mulberry Street
Macon, Georgia 31298
Dear Sirs:
In connection with our proposed purchase of $ aggregate
principal amount of 11 1/4% Senior Subordinated Notes due 2004 (the "Notes") of
Charter Medical Corporation (the "Issuer"), we confirm that:
1. We have received a copy of the Offering Memorandum (the "Offering
Memorandum"), dated April 22, 1994, as amended and supplemented, relating to the
Notes and such other information as we deem necessary in order to make our
investment decision.
2. We understand that any subsequent transfer of the Notes is
subject to certain restrictions and conditions set forth in the Indenture dated
as of May 2, 1994 relating to the Notes (the "Indenture") and the undersigned
agrees to be bound by, and not to resell, pledge or otherwise transfer the Notes
except in compliance with, such restrictions and conditions and the Securities
Act of 1933, as amended (the "Securities Act").
3. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes may not be offered or
sold except as permitted in the following sentence. We agree, on our own behalf
and on behalf of any accounts for which we are acting as hereinafter stated, on
our own behalf and on behalf of any account for which we are purchasing the
Notes, and each subsequent holder of the Notes by its acceptance thereof will
agree, not to offer, sell or otherwise transfer such Notes prior to the date
which is three years after the later of the date of original issue of such Notes
and the last date on which the Issuer or any affiliate of the Issuer was the
owner of such Notes (the "Resale Restriction Termination Date"), except (A) to
the Issuer or any subsidiary thereof, (B) in accordance with Rule 144A under the
Securities Act to
E-1
<PAGE>
a "qualified institutional buyer" (as defined therein), (C) to an institutional
"accredited investor" (as defined below) that, prior to such transfer, furnishes
to the Trustee (as defined in the Indenture), a signed letter, substantially
identical to this letter, containing certain representations and agreements
relating to the restrictions on transfer of the Notes (the form of which letter
can be obtained from the Trustee), (D) pursuant to the exemption from
registration provided by Rule 144 under the Securities Act, if available, (E)
pursuant to an effective registration statement under the Securities Act or (F)
pursuant to any other available exemption from the registration requirements of
the Securities Act, subject in each of the foregoing cases to any requirement of
law that the disposition of its property or the property of such account be at
all times within its control and to compliance with applicable state securities
laws. The foregoing restrictions on resale will not apply subsequent to the
Resale Restriction Termination Date, and we further agree to provide to any
person purchasing any of the Notes from us a notice advising such purchaser that
resales of the Notes are restricted as stated herein.
4. We understand that, on any proposed resale of any Notes, we will
be required to furnish to the Trustee and the Issuer an opinion of counsel in
form and substance satisfactory to the Trustee and the Issuer, and such other
certifications and information as either of them may reasonably require to
confirm that the proposed sale complies with the foregoing restrictions. We
further understand that the Notes purchased by us will bear a legend to the
foregoing effect.
5. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment.
6. We are acquiring the Notes purchased by us for our own account
for investment purposes or for one or more accounts (each of which is an
institutional "accredited investor") as to each of which we exercise sole
investment discretion and, in any case, not with a view to any public resale,
offering or distribution of the Notes in violation of the Securities Act.
E-2
<PAGE>
You and the Trustee are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
Very truly yours,
_________________________
Name:
Title:
E-3
<PAGE>
EXHIBIT F
GUARANTORS OF THE CHARTER MEDICAL CORPORATION
SENIOR SUBORDINATED NOTES DUE 2004
DOMESTIC SUBSIDIARIES:
1. Ambulatory Resources, Inc.
2. Atlanta MOB, Inc.
3. Beltway Community Hospital, Inc.
4. CCM, Inc.
5. Charter Alvarado Behavioral Health System, Inc.
6. Charter Appalachian Hall Behavioral Health System, Inc.
7. Charter Arbor Indy Behavioral Health System, Inc.
8. Charter Augusta Behavioral Health System, Inc.
9. Charter Bay Harbor Behavioral Health System, Inc.
10. Charter Beacon Behavioral Health System, Inc.
11. Charter Behavioral Health System at Fair Oaks, Inc.
12. Charter Behavioral Health System at Hidden Brook, Inc.
13. Charter Behavioral Health System at Los Altos, Inc.
14. Charter Behavioral Health System at Potomac Ridge, Inc.
15. Charter Behavioral Health System at Warwick Manor, Inc.
16. Charter Behavioral Health System of Athens, Inc.
17. Charter Behavioral Health System of Austin, Inc.
18. Charter Behavioral Health System of Baywood, Inc.
19. Charter Behavioral Health System of Bradenton, Inc.
20. Charter Behavioral Health System of Canoga Park, Inc.
21. Charter Behavioral Health System of Central Georgia, Inc.
22. Charter Behavioral Health System of Charleston, Inc.
23. Charter Behavioral Health System of Charlottesville, Inc.
24. Charter Behavioral Health System of Chicago, Inc.
25. Charter Behavioral Health System of Chula Vista, Inc.
26. Charter Behavioral Health System of Columbia, Inc.
27. Charter Behavioral Health System of Corpus Christi, Inc.
28. Charter Behavioral Health System of Dallas, Inc.
29. Charter Behavioral Health System of Evansville, Inc.
30. Charter Behavioral Health System of Fort Worth, Inc.
31. Charter Behavioral Health System of Jackson, Inc.
32. Charter Behavioral Health System of Jacksonville, Inc.
33. Charter Behavioral Health System of Jefferson, Inc.
34. Charter Behavioral Health System of Kansas City, Inc.
35. Charter Behavioral Health System of Lafayette, Inc.
36. Charter Behavioral Health System of Lake Charles, Inc.
37. Charter Behavioral Health System of Lakewood, Inc.
38. Charter Behavioral Health System of Michigan City, Inc.
39. Charter Behavioral Health System of Mobile, Inc.
40. Charter Behavioral Health System of Nashua, Inc.
Page 1
<PAGE>
41. Charter Behavioral Health System of Nevada, Inc.
42. Charter Behavioral Health System of New Mexico, Inc.
43. Charter Behavioral Health System of Northern California, Inc.
44. Charter Behavioral Health System of Northwest Arkansas, Inc.
45. Charter Behavioral Health System of Northwest Indiana, Inc.
46. Charter Behavioral Health System of Paducah, Inc.
47. Charter Behavioral Health System of Rockford, Inc.
48. Charter Behavioral Health System of San Jose, Inc.
49. Charter Behavioral Health System of Savannah, Inc.
50. Charter Behavioral Health System of Southern California, Inc.
51. Charter Behavioral Health System of Tampa Bay, Inc.
52. Charter Behavioral Health System of Texarkana, Inc.
53. Charter Behavioral Health System of the Inland Empire, Inc.
54. Charter Behavioral Health System of Toledo, Inc.
55. Charter Behavioral Health System of Tucson, Inc.
56. Charter Behavioral Health System of Virginia Beach, Inc.
57. Charter Behavioral Health System of Visalia, Inc.
58. Charter Behavioral Health System of Washington D.C., Inc.
59. Charter Behavioral Health System of Waverly, Inc.
60. Charter Behavioral Health System of Winston-Salem, Inc.
61. Charter Behavioral Health System of Yorba Linda, Inc.
62. Charter Behavioral Health System of Atlanta, Inc.
63. Charter Brawner Behavioral Health System, Inc.
64. Charter Canyon Behavioral Health System, Inc.
65. Charter Canyon Springs Behavioral Health System, Inc.
66. Charter Centennial Peaks Behavioral Health System, Inc.
67. Charter Colonial Institute, Inc.
68. Charter Community Hospital, Inc.
69. Charter Community Hospital of Des Moines, Inc.
70. Charter Contract Services, Inc.
71. Charter Cove Forge Behavioral Health System, Inc.
72. Charter Crescent Pines Behavioral Health System, Inc.
73. Charter Fairbridge Behavioral Health System, Inc.
74. Charter Fairmount Behavioral Health System, Inc.
75. Charter Fenwick Hall Behavioral Health System, Inc.
76. Charter Financial Offices, Inc.
77. Charter Forest Behavioral Health System, Inc.
78. Charter Grapevine Behavioral Health System, Inc.
79. Charter Greeensboro Behavioral Health System, Inc.
80. Charter Health Management of Texas, Inc.
81. Charter Hospital of Columbus, Inc.
82. Charter Hospital of Denver, Inc.
83. Charter Hospital of Ft. Collins, Inc.
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84. Charter Hospital of Laredo, Inc.
85. Charter Hospital of Miami, Inc.
86. Charter Hospital of Mobile, Inc.
87. Charter Hospital of Northern New Jersey, Inc.
88. Charter Hospital of Santa Teresa, Inc.
89. Charter Hospital of St. Louis, Inc.
90. Charter Hospital of Torrance, Inc.
91. Charter Indianapolis Behavioral Health System, Inc.
92. Charter Lafayette Behavioral Health System, Inc.
93. Charter Lakehurst Behavioral Health System, Inc.
94. Charter Lakeside Behavioral Health System, Inc.
95. Charter Laurel Heights Behavioral Health System, Inc.
96. Charter Laurel Oaks Behavioral Health System, Inc.
97. Charter Linden Oaks Behavioral Health System, Inc.
98. Charter Little Rock Behavioral Health System, Inc.
99. Charter Louisville Behavioral Health System, Inc.
100. Charter Meadows Behavioral Health System, Inc.
101. Charter Medfield Behavioral Health System, Inc.
102. Charter Medical Executive Corporation
103. Charter Medical Information Services, Inc.
104. Charter Medical International, S.A., Inc.
105. Charter Medical Management Company
106. Charter Medical of East Valley, Inc.
107. Charter Medical of North Phoenix, Inc.
108. Charter Medical of Orange County, Inc.
109. Charter Medical - California, Inc.
110. Charter Medical - Clayton County, Inc.
111. Charter Medical - Cleveland, Inc.
112. Charter Medical - Dallas, Inc.
113. Charter Medical - Long Beach, Inc.
114. Charter Medical - New York, Inc.
115. Charter Mental Health Options, Inc.
116. Charter Mid-South Behavioral Health System, Inc.
117. Charter Milwaukee Behavioral Health System, Inc.
118. Charter Mission Viejo Behavioral Health System, Inc.
119. Charter MOB of Charlottesville, Inc.
120. Charter North Behavioral Health System, Inc.
121. Charter North Counseling Center, Inc.
122. Charter Northbrooke Behavioral Health System, Inc.
123. Charter Northridge Behavioral Health System, Inc.
124. Charter Northside Hospital, Inc.
125. Charter Oak Behavioral Health System, Inc.
126. Charter of Alabama, Inc.
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<PAGE>
127. Charter Palms Behavioral Health System, Inc.
128. Charter Peachford Behavioral Health System, Inc.
129. Charter Pines Behavioral Health System, Inc.
130. Charter Plains Behavioral Health System, Inc.
131. Charter Psychiatric Hospitals, Inc.
132. Charter Real Behavioral Health System, Inc.
133. Charter Regional Medical Center, Inc.
134. Charter Richmond Behavioral Health System, Inc.
135. Charter Ridge Behavioral Health System, Inc.
136. Charter Rivers Behavioral Health System, Inc.
137. Charter San Diego Behavioral Health System, Inc.
138. Charter Serenity Lodge Behavioral Health System, Inc.
139. Charter Sioux Falls Behavioral Health System, Inc.
140. Charter South Bend Behavioral Health System, Inc.
141. Charter Springs Behavioral Health System, Inc.
142. Charter Springwood Behavioral Health System, Inc.
143. Charter Suburban Hospital of Mesquite, Inc.
144. Charter Terre Haute Behavioral Health System, Inc.
145. Charter Thousand Oaks Behavioral Health System, Inc.
146. Charter Tidewater Behavioral Health System, Inc.
147. Charter Treatment Center of Michigan, Inc.
148. Charter Westbrook Behavioral Health System, Inc.
149. Charter White Oak Behavioral Health System, Inc.
150. Charter Wichita Behavioral Health System, Inc.
151. Charter Woods Behavioral Health System, Inc.
152. Charter Woods Hospital, Inc.
153. Charter - Provo School, Inc.
154. Charterton/LaGrange, Inc.
155. Charter-By-The-Sea Behavioral Health System, Inc.
156. CMCI, Inc.
157. CMFC, Inc.
158. CMSF, Inc.
159. CPS Associates, Inc.
160. C.A.C.O. Services, Inc.
161. Desert Springs Hospital, Inc.
162. Employee Assistance Services, Inc.
163. Florida Health Facilities, Inc.
164. Gulf Coast EAP Services, Inc.
165. Gwinnett Immediate Care Center, Inc.
166. HCS, Inc.
167. Holcomb Bridge Immediate Care Center, Inc.
168. Hospital Investors, Inc.
169. Mandarin Meadows, Inc.
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170. Metropolitan Hospital, Inc.
171. Middle Georgia Hospital, Inc.
172. Pacific - Charter Medical, Inc.
173. Peachford Professional Network, Inc.
174. Rivoli, Inc.
175. Shallowford Community Hospital, Inc.
176. Sistemas De Terapia Respiratoria S.A., Inc.
177. Stuart Circle Hospital Corporation
178. Tampa Bay Behavioral Health Alliance, Inc.
179. Western Behavioral Systems, Inc.
FOREIGN SUBSIDIARIES:
1. Charter Medical (Cayman Islands) Ltd.
2. Charter Medical International, Inc.
3. Charter Medical of England Limited
4. Charter Medical of Puerto Rico, Inc.
Page 5
<PAGE>
CHARTER MEDICAL CORPORATION,
Company,
The parties named herein, and to be
added hereto, as GUARANTORS,
and
MARINE MIDLAND BANK,
Trustee
______________________________
INDENTURE
Dated as of May 2, 1994
______________________________
$375,000,000
11 1/4% Senior Subordinated Notes due April 15, 2004
<PAGE>
CROSS REFERENCE TABLE[1]
TIA Indenture
Section Section
310(a)(1).............................................. 8.10
(a)(2).............................................. 8.10
(a)(3).............................................. N.A.[2]
(a)(4).............................................. N.A.
(b)................................................. 8.08; 8.10
(c)................................................. N.A.
311(a)................................................. 8.11
(b)................................................. 8.11
(c)................................................. N.A.
312(a)................................................. 2.05
(b)................................................. 12.03
(c)................................................. 12.03
313(a)................................................. 8.06
(b)(1).............................................. N.A.
(b)(2).............................................. 8.06
(c)................................................. 8.06
(d)................................................. 8.06
314(a)................................................. 5.02; 12.02
(b)................................................. N.A.
(c)(1).............................................. 12.04
(c)(2).............................................. 12.04
(c)(3).............................................. N.A.
(d)................................................. N.A.
(e)................................................. 12.05
(f)................................................. N.A.
315(a)................................................. 8.01
(b)................................................. 8.05
(c)................................................. 8.01
(d)................................................. 8.01
(e)................................................. 7.11
316(a)(last sentence).................................. 2.09
(a)(1)(A)........................................... 7.05
(a)(1)(B)........................................... 7.04
(a)(2).............................................. N.A.
(b)................................................. 7.07
317(a)(1).............................................. 7.08
(a)(2).............................................. 7.09
(b)................................................. 2.04
318(a)................................................. 12.01
- -------------------------
[1]. Note: This Cross Reference Table shall not, for any purpose, be deemed to
be part of this Indenture.
[2]. N.A. means Not Applicable.
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Page
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TABLE OF CONTENTS[3]
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Other Definitions . . . . . . . . . . . . . . . 16
SECTION 1.03. Incorporation by Reference of Trust
Indenture Act . . . . . . . . . . . . . . . . 16
SECTION 1.04. Rules of Construction . . . . . . . . . . . . . 17
SECTION 1.05. Acts of Holders . . . . . . . . . . . . . . . . 17
ARTICLE 2
THE SECURITIES
SECTION 2.01. Form and Dating . . . . . . . . . . . . . . . . 19
SECTION 2.02. Execution and Authentication; Aggregate
Principal Amount . . . . . . . . . . . . . . . 20
SECTION 2.03. Registrar and Paying Agent . . . . . . . . . . . 21
SECTION 2.04. Paying Agent To Hold Money in Trust . . . . . . 22
SECTION 2.05. Securityholder Lists . . . . . . . . . . . . . . 22
SECTION 2.06. Transfer and Exchange . . . . . . . . . . . . . 23
SECTION 2.07. Replacement Securities . . . . . . . . . . . . . 33
SECTION 2.08. Outstanding Securities . . . . . . . . . . . . . 33
SECTION 2.09. Treasury Securities . . . . . . . . . . . . . . 34
SECTION 2.10. Temporary Securities . . . . . . . . . . . . . . 34
SECTION 2.11. Cancellation . . . . . . . . . . . . . . . . . . 34
SECTION 2.12. Defaulted Interest . . . . . . . . . . . . . . . 35
SECTION 2.13. CUSIP Number . . . . . . . . . . . . . . . . . . 35
SECTION 2.14. Deposit of Moneys . . . . . . . . . . . . . . . 35
SECTION 2.15. Global Securities . . . . . . . . . . . . . . . 36
ARTICLE 3
GUARANTEE
SECTION 3.01. Guarantee . . . . . . . . . . . . . . . . . . . . 37
SECTION 3.02. Obligation of the Guarantors Unconditional . . . 38
SECTION 3.03. Waiver Relating to Guarantees . . . . . . . . . . 39
SECTION 3.04. Subordination of Guarantees . . . . . . . . . . . 39
SECTION 3.05. Waiver of Subrogation Rights . . . . . . . . . . 40
SECTION 3.06. Release of Guarantees . . . . . . . . . . . . . . 40
SECTION 3.07. Contribution of Guarantors . . . . . . . . . . . 40
SECTION 3.08. Reinstatement of Guarantees . . . . . . . . . . . 40
- -------------------------
[3]. This Table of Contents shall not, for any purpose, be deemed to be part of
this Indenture.
ii
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ARTICLE 4
REDEMPTION
SECTION 4.01. Right to Redeem; Notices to Trustee . . . . . . . 41
SECTION 4.02. Intentionally Omitted . . . . . . . . . . . . . . 41
SECTION 4.03. Selection of Securities to Be Redeemed . . . . . 41
SECTION 4.04. Notice of Redemption . . . . . . . . . . . . . . 41
SECTION 4.05. Effect of Notice of Redemption . . . . . . . . . 43
SECTION 4.06. Deposit of Redemption Price . . . . . . . . . . . 43
SECTION 4.07. Securities Redeemed in Part . . . . . . . . . . . 43
SECTION 4.08. Special Redemption Procedures . . . . . . . . . . 44
ARTICLE 5
COVENANTS
SECTION 5.01. Payment of Securities . . . . . . . . . . . . . . 45
SECTION 5.02. SEC Reports . . . . . . . . . . . . . . . . . . . 46
SECTION 5.03. Compliance Certificates . . . . . . . . . . . . . 47
SECTION 5.04. Further Instruments and Acts . . . . . . . . . . 48
SECTION 5.05. Maintenance of Office or Agency . . . . . . . . . 48
SECTION 5.06. Limitation on Restricted Payments . . . . . . . . 49
SECTION 5.07. Anti-Layering . . . . . . . . . . . . . . . . . . 52
SECTION 5.08. Limitation on Additional Indebtedness . . . . . . 52
SECTION 5.09. Additional Guarantors . . . . . . . . . . . . . . 54
SECTION 5.10. Limitation on Sale of Subsidiary Shares . . . . . 54
SECTION 5.11. Limitation on Liens . . . . . . . . . . . . . . . 56
SECTION 5.12. Limitation on Payment Restrictions Affecting
Restricted Subsidiaries . . . . . . . . . . . . 56
SECTION 5.13. Limitation on Transactions with Affiliates . . . 57
SECTION 5.14. Repurchase Upon Change in Control . . . . . . . . 58
SECTION 5.15. Limitation on Use of Proceeds from Asset Sales. . 58
SECTION 5.16. Payment of Taxes and Other Claims . . . . . . . . 59
SECTION 5.17. Corporate Existence . . . . . . . . . . . . . . . 60
SECTION 5.18. Maintenance of Properties and Insurance . . . . . 60
SECTION 5.19. Stay, Extension and Usury Laws . . . . . . . . . 61
SECTION 5.20. Payment for Consent . . . . . . . . . . . . . . . 61
SECTION 5.21. Covenant to Comply with Securities Laws
upon Purchase of Securities. . . . . . . . . . 61
ARTICLE 6
SUCCESSOR CORPORATION
SECTION 6.01. When the Company May Merge or Transfer Assets . . 62
SECTION 6.02. When Restricted Subsidiaries May Merge
or Transfer Assets . . . . . . . . . . . . . . 62
SECTION 6.03. Successor Corporation Substituted. . . . . . . . 64
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ARTICLE 7
DEFAULTS AND REMEDIES
SECTION 7.01. Events of Default . . . . . . . . . . . . . . . . 64
SECTION 7.02. Acceleration . . . . . . . . . . . . . . . . . . 66
SECTION 7.03. Other Remedies . . . . . . . . . . . . . . . . . 67
SECTION 7.04. Waiver of Past Defaults . . . . . . . . . . . . . 67
SECTION 7.05. Control by Holders . . . . . . . . . . . . . . . 67
SECTION 7.06. Limitation on Suits . . . . . . . . . . . . . . . 68
SECTION 7.07. Rights of Holders to Receive Payment . . . . . . 68
SECTION 7.08. Collection Suit by Trustee . . . . . . . . . . . 68
SECTION 7.09. Trustee May File Proofs of Claim . . . . . . . . 69
SECTION 7.10. Priorities . . . . . . . . . . . . . . . . . . . 69
SECTION 7.11. Undertaking for Costs . . . . . . . . . . . . . . 70
ARTICLE 8
TRUSTEE
SECTION 8.01. Duties of Trustee . . . . . . . . . . . . . . . . 70
SECTION 8.02. Rights of Trustee . . . . . . . . . . . . . . . . 72
SECTION 8.03. Individual Rights of Trustee . . . . . . . . . . 72
SECTION 8.04. Trustee's Disclaimer . . . . . . . . . . . . . . 72
SECTION 8.05. Notice of Defaults . . . . . . . . . . . . . . . 73
SECTION 8.06. Reports by Trustee to Holders . . . . . . . . . . 73
SECTION 8.07. Compensation and Indemnity . . . . . . . . . . . 73
SECTION 8.08. Replacement of Trustee . . . . . . . . . . . . . 74
SECTION 8.09. Successor Trustee by Merger . . . . . . . . . . . 75
SECTION 8.10. Eligibility; Disqualification . . . . . . . . . . 75
SECTION 8.11. Preferential Collection of Claims Against
the Company . . . . . . . . . . . . . . . . . . 76
ARTICLE 9
DISCHARGE OF INDENTURE; DEFEASANCE AND COVENANT DEFEASANCE
SECTION 9.01. Legal Termination . . . . . . . . . . . . . . . . 76
SECTION 9.02. Company's Option to Effect Legal Defeasance
or Covenant Defeasance . . . . . . . . . . . . 76
SECTION 9.03. Legal Defeasance and Discharge . . . . . . . . . 76
SECTION 9.04. Covenant Defeasance . . . . . . . . . . . . . . . 77
SECTION 9.05. Conditions to Legal Defeasance or Covenant
Defeasance . . . . . . . . . . . . . . . . . . 77
SECTION 9.06. Reinstatement . . . . . . . . . . . . . . . . . . 78
SECTION 9.07. Repayment to the Company . . . . . . . . . . . . 79
iv
<PAGE>
Page
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ARTICLE 10
AMENDMENTS
SECTION 10.01. Without Consent of Holders . . . . . . . . . . . 79
SECTION 10.02. With Consent of Holders . . . . . . . . . . . . 80
SECTION 10.03. Compliance with Trust Indenture Act . . . . . . 81
SECTION 10.04. Revocation and Effect of Consents, Waivers
and Actions . . . . . . . . . . . . . . . . . 81
SECTION 10.05. Notation on or Exchange of Securities . . . . . 82
SECTION 10.06. Trustee to Sign Supplemental Indentures . . . . 82
SECTION 10.07. Effect of Amendments and Supplemental Indentures 83
ARTICLE 11
SUBORDINATION
SECTION 11.01. Agreement to Subordinate . . . . . . . . . . . . 83
SECTION 11.02. Liquidation; Dissolution; Bankruptcy . . . . . . 84
SECTION 11.03. Default on Specified Senior Indebtedness . . . . 85
SECTION 11.04. No Suspension of Remedies . . . . . . . . . . . 86
SECTION 11.05. When Distribution Must Be Paid Over . . . . . . 87
SECTION 11.06. Notice by the Company . . . . . . . . . . . . . 87
SECTION 11.07. Subrogation . . . . . . . . . . . . . . . . . . 88
SECTION 11.08. Relative Rights . . . . . . . . . . . . . . . . 88
SECTION 11.09. No Waiver of Subordination Provisions . . . . . 88
SECTION 11.10. Distribution or Notice to Representative . . . . 89
SECTION 11.11. Rights of Trustee and Paying Agent . . . . . . . 90
SECTION 11.12. Authorization to Effect Subordination . . . . . 91
SECTION 11.13. Miscellaneous . . . . . . . . . . . . . . . . . 91
ARTICLE 12
MISCELLANEOUS
SECTION 12.01. Trust Indenture Act Controls . . . . . . . . . . 92
SECTION 12.02. Notices . . . . . . . . . . . . . . . . . . . . 93
SECTION 12.03. Communication by Holders with Other Holders . . 94
SECTION 12.04. Certificate and Opinion as to Conditions
Precedent . . . . . . . . . . . . . . . . . . 94
SECTION 12.05. Statements Required in Certificate or Opinion . 94
SECTION 12.06. Severability Clause . . . . . . . . . . . . . . 95
SECTION 12.07. Rules by Trustee, Paying Agent and Registrar . . 95
SECTION 12.08. Legal Holidays . . . . . . . . . . . . . . . . . 95
SECTION 12.09. GOVERNING LAW . . . . . . . . . . . . . . . . . 95
SECTION 12.10. No Recourse Against Others . . . . . . . . . . . 95
SECTION 12.11. Successors . . . . . . . . . . . . . . . . . . . 95
SECTION 12.12. Multiple Originals . . . . . . . . . . . . . . . 96
v
<PAGE>
Page
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SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
EXHIBIT A Form of Restricted Security A-1
EXHIBIT B Form of Unrestricted Security B-1
EXHIBIT C Form of Legend for Restricted Global Securities C-1
EXHIBIT D Form of Legend for Unrestricted Global Securities D-1
EXHIBIT E Form of Accredited Investor Letter E-1
EXHIBIT F Guarantors F-1
vi
<PAGE>
INDENTURE, dated as of May 2, 1994, among Charter Medical Corporation,
a Delaware corporation (the "Company"), the initial Guarantors listed on
Exhibit F, and Marine Midland Bank, a trust company organized and existing under
the laws of the State of New York (the "Trustee").
The parties agree as follows for the benefit of each other and for the
equal and ratable benefit of the Holders of the Company's Senior Subordinated
Notes due 2004 issued under this Indenture from time to time:
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. A Person shall be deemed to "control"
(including the correlative meanings, the terms "controlling," "controlled by"
and "under common control with") another Person if the controlling Person (a)
possesses, directly or indirectly, the power to direct or cause the direction of
the management or policies of the controlled Person, whether through ownership
of voting securities, by agreement or otherwise, or (b) owns, directly or
indirectly, 10% or more of any class of the issued and outstanding equity
securities of the controlled Person.
"Agent" means any Registrar or Paying Agent of the Securities.
"Asset Sale" means, with respect to any Person, the sale, lease,
conveyance, disposition or other transfer by such Person of any of its assets
(including by way of a sale-and-leaseback and including the sale or other
transfer of any Equity Interests in any Restricted Subsidiary) which results in
Net Cash Proceeds of $1,000,000 or more; however, the following shall not
constitute an Asset Sale: (i) unless part of a disposition including other
assets or operations, (A) dispositions of Cash and Cash Equivalents, (B)
payments on or in respect of non-Cash proceeds of Asset Sales, and (C)
dispositions of Investments by foreign subsidiaries of the Company in Cash and
instruments or securities or in certificates of deposit (or comparable
instruments) with banks; (ii) the lease of (A) office space in a
1
<PAGE>
medical building to healthcare professionals or healthcare goods or services
companies for their use or sublease to a similar user or (B) any portion of a
hospital (unless the portions of any such hospital so leased in separate
transactions constitute more than 50% of such hospital), in the ordinary course
of business and in a manner consistent with either past practices or the
healthcare industry generally; and (iii) the issuance or sale by the Company of
any Equity Interests in the Company.
"Average Life" means, as of the date of determination, with respect to
any debt security, the quotient obtained by dividing (i) the sum of the products
of the numbers of years from the date of determination to the dates of each
successive scheduled principal payment (assuming the exercise by the obligor of
such debt security of all unconditional (other than as to the giving of notice)
extension options of each such scheduled payment date) of such debt security
multiplied by the amount of such principal payment by (ii) the sum of all such
principal payments.
"Bankruptcy Law" means Title 11 of the United States Code, or any
similar Federal or state law for the relief of debtors.
"Board of Directors" of any corporation means the Board of Directors
of such corporation, or any duly authorized committee of such Board of
Directors.
"Book Value" means, with respect to the assets of any Person, the book
value of assets of such Person, net of depreciation and other charges and
reserves taken with respect to such assets in accordance with GAAP.
"Business Day" means any day that is not a Saturday, a Sunday or a day
on which banking institutions in New York, New York are authorized by law or
required by executive order to close.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
which would at such time be so required to be capitalized on the balance sheet
in accordance with GAAP.
"Capital Stock" means any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock (including,
without limita-
2
<PAGE>
tion, common and preferred stock), excluding warrants, options or other rights
to acquire Capital Stock.
"Cash" means money or currency or a credit balance in a Deposit
Account.
"Cash Equivalents" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency,
instrumentality or sponsored corporation thereof which are rated at least A or
the equivalent thereof by Standard & Poor's Corporation or at least A-2 or the
equivalent thereof by Moody's Investor Services, Inc., and in each case having
maturities of not more than one year from the date of acquisition, (ii) time
deposits and certificates of deposit of any domestic commercial bank of
recognized standing, having capital and surplus in excess of $100,000,000 with
maturities of not more than one year from the date of acquisition, (iii)
repurchase obligations with a term of not more than thirty days for underlying
securities of the types described in clause (i) above entered into with any bank
meeting the qualifications specified in clause (ii) above or any government
securities dealer, and (iii) commercial paper rated at least A-1 or the
equivalent thereof by Standard & Poor's Corporation or at least P-1 or the
equivalent thereof by Moody's Investor Services, Inc., in each case maturing
within one year after the date of acquisition.
"Change in Control" means (a) the sale, lease, transfer or other
disposition in one or more related transactions of all or substantially all of
the Company's assets, or the sale of substantially all of the Capital Stock or
assets of the Company's Subsidiaries that constitutes a sale of substantially
all of the Company's assets, to any Person or group (as such term is used in
Section 13(d)(3) of the Exchange Act), (b) the merger or consolidation of the
Company with or into another corporation, or the merger of another corporation
into the Company or any other transaction, with the effect, in any such case,
that the stockholders of the Company immediately prior to such transaction hold
50% or less of the total voting power entitled to vote in the election of
directors, managers or trustees of the surviving corporation or, in the case of
a Permitted Triangular Merger, the parent corporation of the surviving
corporation resulting from such merger, consolidation or such other transaction,
(c) any Person (except for the parent corporation of the surviving corporation
in a Permitted Triangular Merger) or group acquires beneficial ownership of a
majority in interest of
3
<PAGE>
the voting power or voting Capital Stock of the Company, or (d) the liquidation
or dissolution of the Company.
"Closing Date" means the date of consummation of the offering and sale
of the Securities.
"Consolidated Interest Coverage Ratio" means the ratio of (A)
Consolidated Net Income plus the sum of Interest Expense, taxes, depreciation
and amortization of the Company and its Restricted Subsidiaries (to the extent
such items were taken into account in computing the Net Incomes of the Company
and each of such Restricted Subsidiaries) for the preceding four fiscal quarters
to (B) the Interest Expense of the Company and its Restricted Subsidiaries for
the preceding four fiscal quarters; provided that if the Company or any of its
Restricted Subsidiaries incurs, assumes, guarantees, repays or redeems any
Indebtedness subsequent to the commencement of the period for which the
Consolidated Interest Coverage Ratio is being calculated but prior to the event
for which the calculation of the Consolidated Interest Coverage Ratio is made,
then the Consolidated Interest Coverage Ratio will be calculated giving pro
forma effect to any such incurrence, assumption, guarantee or redemption of
Indebtedness, or such issuances or redemption of preferred stock, as if the same
had occurred at the beginning of the applicable period. In making such
calculations on a pro forma basis, interest attributable to Indebtedness bearing
a floating interest rate shall be computed as if the rate in effect on the date
of computation had been the applicable rate for the entire period.
"Consolidated Net Assets" means, with respect to any Person, the
assets of such Person and its Subsidiaries, less intangible assets of such
Person and its Subsidiaries (including, without limitation, franchises, patents,
patent applications, trademarks and tradenames, goodwill, excess reorganization
value, research and development expenses, and write-ups in the book value of any
assets), on a consolidated basis, determined in accordance with GAAP.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP, plus
the sum of the amount allocated to excess reorganization value, ESOP expense and
stock option expense (to the extent such items were taken into account in
computing the Net Income of such Person and its Subsidiaries); PROVIDED,
HOWEVER, that (i) the Net Income of any Person that is not a
4
<PAGE>
Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid to the referent Person or a Restricted Subsidiary, (ii) the
Net Income of any Person acquired in a pooling of interests transaction for any
period prior to the date of such acquisition shall be excluded and (iii) the
cumulative effect of a change in accounting principles shall be excluded.
"Consolidated Net Worth" of the Company means consolidated
stockholders' equity as determined in accordance with GAAP.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator, custodian or similar official under any Bankruptcy Law.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Deposit Account" means a demand, savings, passbook, money market or
like account with a commercial bank, savings and loan association or like
organization or a government securities dealer, other than an account evidenced
by a negotiable certificate of deposit.
"Depository" means, with respect to any Securities issued under this
Indenture in global form, The Depository Trust Company or its nominee, which
must be a clearing agency registered under Section 17A of the Exchange Act.
"Disinterested Director" means, with respect to any specific
transaction, any director of the Company that does not have a direct or indirect
interest (other than any interest resulting solely from such director's
ownership of Equity Interests in the Company) in such transaction.
"Equity Interests" means (a) Capital Stock, warrants, options or other
rights to acquire Capital Stock (but excluding any debt security which is
convertible into, or exchangeable for, Capital Stock), and (b) limited and gen-
eral partnership interests, interests in limited liability companies, joint
venture interests and other ownership interests in any Person.
"ESOP" means the Employee Stock Ownership Plan of the Company as
established on September 1, 1988, and effective as of January 1, 1988, as from
time to time amended,
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and/or the trust created in accordance with such plan pursuant to the Trust
Agreement between the Company and the trustee named therein, executed as of
September 1, 1988, as the context in which the term "ESOP" is used permits.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and the rules and regulations of the SEC thereunder.
"Exchange and Registration Rights Agreement" means that certain
exchange and registration rights agreement relating to the Securities dated
April 22, 1994, between Bear, Stearns & Co. Inc. and BT Securities Corporation,
on the one hand, and the Company, on the other hand, as such agreement may be
amended, modified or supplemented from time to time.
"Exchange Offer" means the offer that may be made by the Company
pursuant to the Exchange and Registration Rights Agreement to exchange
Restricted Securities for Unrestricted Securities.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession, as in effect on the Closing Date.
"Global Securities" means, collectively, the Restricted Global
Securities and the Unrestricted Global Securities.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
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"Guarantor" means (i) each of the Company's Subsidiaries existing on
the Closing Date (other than Permitted Joint Ventures and Unrestricted
Subsidiaries) and (ii) each other Person that executes a Guarantee of the
obligations of the Company under the Securities and this Indenture from time to
time in accordance with the provisions of Section 5.09 hereof, and their
respective successors and assigns; PROVIDED, HOWEVER, that "Guarantor" shall not
include any Person that is released from its Guarantee of the obligations of the
Company under the Securities and this Indenture.
"Holder" or "Securityholder" means a Person in whose name a Security
is registered on the Registrar's books.
"Indebtedness" of any Person means, without duplication, (i)
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than trade payables on terms of 365 days or
less incurred in the ordinary course of business), (ii) all Capital Lease
Obligations of such Person, (iii) all guarantees of such Person in respect of
Indebtedness of others, (iv) at the date of determination thereof, the aggregate
amount of all unreimbursed drawings in respect of letters of credit issued for
the account of such Person (less the amount of Cash and Cash Equivalents on
deposit securing such letters of credit), and (v) all indebtedness, obligations
or other liabilities of such Person or of others for borrowed money secured by a
Lien on any property of such Person, whether or not such indebtedness,
obligations or liabilities are assumed by such Person; PROVIDED, HOWEVER, that
all or any portion of Indebtedness that becomes the subject of a defeasance
(whether a legal defeasance or a "covenant" or "in substance" defeasance) shall,
at all times that such defeasance remains in effect, cease to be treated as
Indebtedness for purposes of this Indenture.
"Indenture" means this Indenture, as amended or supplemented from time
to time in accordance with the terms hereof, including the provisions of the TIA
that are deemed to be a part hereof.
"Insurance Subsidiaries" means, collectively, Golden Isle Assurance
Company, Plymouth Insurance Company, Ltd. and any successors to any of the
foregoing.
"Interest Expense" of any Person means, for any period for which the
determination thereof is to be made,
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(A) the sum of the aggregate amount of (i) interest in respect of Indebtedness
(including all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing), (ii) all but
the principal component of rentals in respect of Capital Lease Obligations,
paid, accrued or scheduled to be paid or accrued by such Person during such
period, (iii) capitalized interest and (iv) amortization of original issue
discount and deferred financing costs, all as determined in accordance with
GAAP, less (B) interest expense attributable to Unrestricted Subsidiaries.
"Investment" means, when used with respect to any Person, any direct
or indirect advance, loan or other extension of credit (other than the creation
of receivables in the ordinary course of business) or capital contribution by
such Person (by means of transfers of property (other than Equity Interests in
the Company) to others or payments for property or services for the account or
use of others, or otherwise) to any other Person, or any direct or indirect
purchase or other acquisition by such Person of a beneficial interest in capital
stock, bonds, notes, debentures or other securities issued by any other Person,
or any Guarantee by such Person of the Indebtedness of any other Person (in
which case such Guarantee shall be deemed an Investment in such other Person in
an amount equal to the aggregate amount of Indebtedness so guaranteed).
"Lien" means any mortgage, pledge, security interest, charge,
hypothecation, collateral assignment, deposit arrangement, encumbrance, lien
(statutory or otherwise), or security agreement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing and the filing of any financing statement, other than
notice filings not perfecting a security interest, under the Uniform Commercial
Code or comparable law of any jurisdiction, domestic or foreign, in respect of
any of the foregoing).
"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds of such Asset Sale in the form of Cash or Cash Equivalents, including
payments in respect of deferred payment obligations (to the extent corresponding
to the principal, but not the interest, component thereof) when received in the
form of Cash or Cash Equivalents (except to the extent such obligations are
financed or sold with recourse to the Company or any Restricted Subsidiary of
the Company), casualty loss insurance proceeds, condemnation
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awards and proceeds from the conversion of other property received when
converted to Cash or Cash Equivalents, net of (i) brokerage commissions and
other fees and expenses related to such Asset Sale, (ii) provision for all taxes
(whether or not such taxes will actually be paid or are payable) as a result of
such Asset Sale without regard to the consolidated results of operations of the
Company and its Subsidiaries, taken as a whole, (iii) payments made to repay
Indebtedness or any other obligation outstanding at the time of such Asset Sale
that either (A) in the case of a sale of all of the Equity Interests in any
Restricted Subsidiary, is a direct obligation of such Restricted Subsidiary or
(B) is required to be paid in connection with such sale, and (iv) appropriate
amounts to be provided by the Company or any Restricted Subsidiary of the
Company as a reserve against any liabilities associated with such Asset Sale,
including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities under
indemnification obligations associated with such Asset Sale, all as determined
in conformity with GAAP.
"Net Income" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP, excluding, however, any gain
or loss, together with any related provision for taxes on such gain or loss,
realized in connection with any Asset Sale (including, without limitation,
dispositions pursuant to sale-and-leaseback transactions), and excluding any
extraordinary gain or loss, together with any related provision for taxes on
such extraordinary gain or loss.
"New Credit Agreement" means collectively (a) the Second Amended and
Restated Credit Agreement dated as of the Closing Date, among the Company, the
banks and other financial institutions named therein and Bankers Trust Company,
as Agent, (b) the Second Amended and Restated Subsidiary Credit Agreement dated
as of the Closing Date, among certain Subsidiaries of the Company named therein,
the banks and other financial institutions named therein and Bankers Trust
Company, as Agent, and (c) each note, guaranty, mortgage, pledge agreement,
security agreement and other instrument and document from time to time entered
into pursuant to or in respect of either such credit agreement or any such
guaranty, as each such credit agreement and other document may be amended,
restated, supplemented, extended, renewed or otherwise modified from time to
time.
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"Non-Global Securities" means, collectively, the Restricted Non-Global
Securities and the Unrestricted Non-Global Securities.
"Non-Recourse Indebtedness" shall mean any Indebtedness of the Company
or any of its Restricted Subsidiaries if the holder of such Indebtedness has no
recourse, direct or indirect, absolute or contingent, to the general assets of
the Company or any of its Restricted Subsidiaries.
"Officer" means, with respect to any corporation, the Chairman of the
Board, any Vice Chairman, the President, any Vice President, the Treasurer, the
Secretary, any Assistant Treasurer or any Assistant Secretary of such
corporation.
"Officers' Certificate" means a written certificate signed in the name
of the Company by any two of its Officers, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion rendered by legal counsel
who may be counsel to the Company and who is acceptable to the Trustee.
"Permitted Investments" means (a) any Investments in the Company or in
a Restricted Subsidiary other than a Permitted Joint Venture; (b) any
Investments in Cash or Cash Equivalents; (c) Investments by the Company or any
Restricted Subsidiary in a Person, if as a result of such Investment (i) such
Person becomes a Restricted Subsidiary of the Company or (ii) such Person is
merged, consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the Company or a
Restricted Subsidiary; (d) loans and advances to employees not exceeding
$500,000 per individual at any one time and $5,000,000 outstanding in the
aggregate at any one time; (e) Investments in Group Practice Affiliates, Inc.
and its Subsidiaries, and in the Technologies and Management Information Unit
and its Subsidiaries, not to exceed $70,000,000 in the aggregate at any one
time; (f) Investments in a Permitted Joint Venture, provided that (A) after
giving effect to such Investment, the Company's Consolidated Interest Coverage
Ratio is at least 2.00, (B) no Default or Event of Default has occurred and is
continuing or would result therefrom, (C) if such Investment in such Permitted
Joint Venture is in excess of $5,000,000, such Investment is approved by a
majority of the Disinterested Directors of the Company and (D) if such
Investment in such Permitted Joint Venture is in excess of $25,000,000, the
Company has
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received an opinion from a nationally recognized investment banking firm that
such Investment is fair to the Company, from a financial point of view; (g)
Permitted Minority Investments, provided that (A) after giving effect to such
Investments, the Company's Consolidated Interest Coverage Ratio is at least
2.00, (B) no Default or Event of Default has occurred and is continuing or would
result therefrom, (C) the sum of (x) the Book Value of such Permitted Minority
Investment together with the aggregate Book Values of all other Permitted
Minority Investments of the Company and its Restricted Subsidiaries (the Book
Value of each such Permitted Minority Investment determined as of the date such
Investment was made), and (y) the aggregate Book Value of assets of all
Guarantors that have become Permitted Joint Ventures (determined for each such
Guarantor as of the time immediately prior to the transaction pursuant to which
it became a Permitted Joint Venture), does not exceed $100,000,000, (D) if such
Permitted Minority Investment is in excess of $5,000,000, the Permitted Minority
Investment is approved by a majority of the Disinterested Directors of the
Company and (E) if such Permitted Minority Investment is in excess of
$25,000,000, the Company has received an opinion from a nationally recognized
investment banking firm that the Permitted Minority Investment is fair to the
Company, from a financial point of view; (h) Investments constituting non-Cash
proceeds of Asset Sales; (i) Investments by foreign subsidiaries of the Company
in Cash and instruments or securities of the highest grade investment available
in local currencies or in certificates of deposit (or comparable instruments)
with banks with which such Subsidiary regularly transacts business; (j)
Investments in foreign Unrestricted Subsidiaries not to exceed at any one time
the equivalent in foreign currencies of $25,000,000 in U.S. Dollars in the
aggregate; and (k) additional Investments not to exceed $10,000,000 outstanding
at any one time.
"Permitted Joint Venture" means a Subsidiary of the Company (i) which
is not a Wholly-owned Subsidiary of the Company, (ii) which is in a healthcare
or a healthcare-related business, and (iii) in which the Company or any
Restricted Subsidiary (A) has at least a majority of the Equity Interests and
(B) is entitled to elect or appoint the directors, managers or trustees thereof,
as applicable.
"Permitted Minority Investment" means any Investment in any Person (i)
which is in the healthcare or healthcare-related business and (ii) in which the
Company and its Restricted Subsidiaries (A) have less than a majority of the
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Equity Interests or (B) are not entitled to elect or appoint the directors,
managers or trustees thereof, as applicable.
"Permitted Triangular Merger" means a merger immediately after the
consummation of which all of the outstanding Capital Stock of the Company or of
the entity into which the Company is merged is owned beneficially and of record
by a parent holding company.
"Person" means any individual, corporation, partnership, joint
venture, incorporated or unincorporated association, joint-stock company,
limited liability company, trust, unincorporated organization or government or
other agency or political subdivision thereof or other entity of any kind.
"Qualified Institutional Buyer" or "QIB" shall have the meaning
specified in Rule 144A under the Securities Act.
"Redeemable Stock" means any Equity Interest which, by its terms (or
by the terms of any security into which it is convertible or for which it is
exchangeable before the Stated Maturity of the Securities), or upon the
happening of any event, matures or is mandatorily redeemable, in whole or in
part, prior to the Stated Maturity of the Securities.
"Redemption Date" or "redemption date" means the date specified for
redemption of the Securities in accordance with the terms of the Securities and
this Indenture.
"Redemption Price" or "redemption price" shall have the meaning set
forth in paragraph 5 of the Securities.
"Restricted Global Security" means a Security issued under this
Indenture in global form registered in the name of an eligible nominee of the
Depository in accordance with Section 2.01 and bearing the legends set forth in
Exhibit C.
"Restricted Non-Global Security" means a Security issued under this
Indenture in the form of and bearing the legend set forth in Exhibit A.
"Restricted Securities" means, collectively, the Restricted Non-Global
Securities and Restricted Global Securities.
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"Restricted Subsidiary" means each of the Subsidiaries of the Company
that has not been designated an Unrestricted Subsidiary.
"Rights Plan" means the Company's Share Purchase Rights Plan dated
July 21, 1992, as amended prior to the date of this Indenture and as hereafter
amended, restated, supplemented or otherwise modified from time to time.
"SEC" means the Securities and Exchange Commission and any successor
thereto.
"Securities" means collectively, unless the context expressly provides
otherwise, all 11 1/4% Senior Subordinated Notes due 2004 issued in any form
under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, and the rules and regulations of the SEC thereunder.
"Securities Custodian" means Marine Midland Bank, as custodian with
respect to the Securities in global form, or any successor entity thereto.
"Securityholder" or "Holder" means a Person in whose name a Security
is registered on the Registrar's books.
"Significant Subsidiary" means any Subsidiary of the Company which has
total assets in excess of $1,000,000 or which holds the capital stock of a
Significant Subsidiary.
"Specified Senior Indebtedness" means Senior Indebtedness under the
New Credit Agreement or any replacement or substitute facility or facilities
thereof and each single issue of other Senior Indebtedness having an outstanding
principal balance of $50,000,000 or more.
"Stated Maturity," when used with respect to any Security, means the
date specified in such Security as the fixed date on which an amount equal to
the principal of such Security is due and payable.
"Subsidiary" means any corporation, association, limited or general
partnership, limited liability company, joint venture or other business entity
of which more than 50% of the total voting power of shares of Capital Stock or
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other Equity Interests entitled (without regard to the occurrence of any
contingency) to vote generally in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or indirectly, by
any Person or one or more of the other Subsidiaries of that Person or a
combination thereof.
"Technologies and Management Information Unit" means the Subsidiary of
the Company formed or to be formed for the purpose of conducting management and
information systems businesses, which may include Strategic Advantage, Inc.
"TIA" means the Trust Indenture Act of 1939, as amended and as in
effect on the date of this Indenture; PROVIDED, HOWEVER, that in the event the
TIA is amended after such date, TIA means, to the extent required by any such
amendment, the TIA as so amended.
"Trust Officer," when used with respect to the Trustee, means the
chairman or vice-chairman of the Board of Directors, the chairman or
vice-chairman of the executive committee of the Board of Directors, the
president, any vice president, the secretary, any assistant secretary, the
treasurer, any assistant treasurer, the cashier, any assistant cashier, any
trust officer or assistant trust officer, the controller and any assistant
controller or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above-designated officers and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of his knowledge of and familiarity with
the particular subject.
"Trustee" means the party named as the "Trustee" in the first
paragraph of this Indenture until a successor replaces it pursuant to the
applicable provisions of this Indenture and, thereafter, shall mean such
successor.
"Unrestricted Global Security" means a Security issued under this
Indenture in global form registered in the name of an eligible nominee of the
Depository in accordance with Section 2.01 of this Indenture and bearing the
legend set forth in Exhibit D.
"Unrestricted Non-Global Security" means a Security issued under this
Indenture in the form of Exhibit B.
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"Unrestricted Securities" means, collectively, the Unrestricted
Non-Global Securities and the Unrestricted Global Securities.
"Unrestricted Subsidiary" means (i) any of Group Practice Affiliates,
Inc. and its Subsidiaries, and the Technologies and Management Information Unit
and its Subsidiaries, (ii) the Insurance Subsidiaries, (iii) Societe Anonyme de
La Metairie, (iv) any Subsidiary of the Company or a Restricted Subsidiary (a)
that, at the time of determination, shall be designated by the Board of
Directors of the Company as an Unrestricted Subsidiary as provided below and (b)
all of the Indebtedness of which shall be non-recourse to the Company and its
Restricted Subsidiaries, and (v) any Subsidiary of an Unrestricted Subsidiary;
provided that, notwithstanding clause (iv)(b) above, the Company or any
Subsidiary of the Company may guarantee, endorse, agree to provide funds for the
payment or maintenance of, or otherwise become directly or indirectly liable
with respect to, Indebtedness of an Unrestricted Subsidiary but only to the
extent that the Company or such Subsidiary could make an Investment in such
Unrestricted Subsidiary pursuant to Section 5.06 and any such guarantee,
endorsement or agreement shall be deemed an incurrence of Indebtedness by the
Company or such Subsidiary for purposes of Section 5.08. For up to six months
after the acquisition or formation of a Subsidiary, the Board of Directors may
designate such Subsidiary as an Unrestricted Subsidiary unless such Subsidiary
owns any Capital Stock of any Restricted Subsidiary. Any such designation by
the Board of Directors of the Company shall be evidenced by filing with the
Trustee a certified copy of the resolution of the Board of Directors of the
Company giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing conditions.
"U.S. Government Obligations" means money or direct noncallable
obligations of, or noncallable obligations guaranteed by, the United States of
America for the payment of which guarantee or obligation the full faith and
credit of the United States is pledged.
"Wholly-owned Subsidiary" of any person means any Subsidiary of such
Person to the extent 95% or more of the entire voting share capital of such
Subsidiary is owned by such Person (either directly or indirectly through
Wholly-owned Subsidiaries).
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SECTION 1.02. OTHER DEFINITIONS.
Defined in
Term Section
---- ----------
"Acceleration Notice" . . . . . . . . . . . 7.02
"Beneficial Owner" . . . . . . . . . . . . . 2.15
"Act" . . . . . . . . . . . . . . . . . . . 1.05
"Change in Control Offer" . . . . . . . . . 5.14
"Change in Control Payment Date" . . . . . . 4.08
"Change in Control Purchase Price" . . . . . 5.14
"Contributor" . . . . . . . . . . . . . . . 3.07
"DTC" . . . . . . . . . . . . . . . . . . . 2.03
"Event of Default" . . . . . . . . . . . . . 7.01
"Excess Proceeds" . . . . . . . . . . . . . 5.15
"Excess Proceeds Offer" . . . . . . . . . . 5.15
"Excess Proceeds Offer Payment Date" . . . . 4.08
"Excess Proceeds Purchase Price" . . . . . . 5.15
"Funding Party" . . . . . . . . . . . . . . 3.07
"Interest Payment Date" . . . . . . . . . . 4.05
"Legal Holiday" . . . . . . . . . . . . . . 12.08
"Non-Payment Default" . . . . . . . . . . . 11.03
"Notice of Default" . . . . . . . . . . . . 7.01
"Obligations" . . . . . . . . . . . . . . . 3.01
"Paying Agent" . . . . . . . . . . . . . . . 2.03
"Payment Default" . . . . . . . . . . . . . 11.03
"Permitted Junior Securities" . . . . . . . 11.02
"Refinancing Indebtedness" . . . . . . . . . 5.08
"Register" . . . . . . . . . . . . . . . . . 2.03
"Registrar". . . . . . . . . . . . . . . . . 2.03
"Senior Indebtedness" . . . . . . . . . . . 11.01
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, such provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"Indenture securities" means the Securities.
"Indenture security holder" means a Security-holder.
"Indenture to be qualified" means this Indenture.
"Indenture trustee" or "institutional trustee" means the Trustee.
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"Obligor" on the indenture securities means the Company.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
SECTION 1.04. RULES OF CONSTRUCTION. Unless the context otherwise
requires:
(1) A term has the meaning assigned to it herein, whether defined
expressly or by reference;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including, without limitation;
(5) words in the singular include the plural, and words in the plural
include the singular; and
(6) "herein," "hereof" and other words of similar nature refer to
this Indenture as a whole and not to any particular or individual article,
section or part of an article or section (unless the context clearly otherwise
requires).
SECTION 1.05. ACTS OF HOLDERS.
(1) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of Holders signing such
instrument or instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this
Indenture and
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conclusive in favor of the Trustee and the Company, if made in the manner
provided in this Section.
(2) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner which the Trustee deems
sufficient.
(3) The ownership of Securities shall be proved by the Register.
(4) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future Holder
of the same Security and the holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Security.
(5) If the Company shall solicit from the Holders
any request, demand, authorization, direction, notice, consent, waiver or other
act, the Company may, at its option, by or pursuant to a resolution of its Board
of Directors, fix in advance a record date for the determination of Holders
entitled to give such request, demand, authorization, direction, notice,
consent, waiver or other Act, but the Company shall have no obligation to do so.
If such a record date is fixed, such request, demand, authorization, direction,
notice, consent, waiver or other Act may be given before or after such record
date, but only the Holders of record at the close of business on such record
date shall be deemed to be Holders for the purposes of determining whether
Holders of the requisite proportion of outstanding Securities have authorized or
agreed or consented to such request, demand, authorization, direction, notice,
consent, waiver or other Act, and for that purpose the outstanding Securities
shall be computed as of such record date; provided that no such authorization,
agreement or consent by the Holders on such record date shall be deemed
effective unless it shall become effective pursuant to the provisions of this
Indenture not later than six months after the record date.
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ARTICLE 2
THE SECURITIES
SECTION 2.01. FORM AND DATING. The Restricted Non-Global Securities
and the Trustee's certificate of authentication thereon shall be substantially
in the form of Exhibit A hereto. The Unrestricted Non-Global Securities and the
Trustee's certificate of authentication thereon shall be substantially in the
form of Exhibit B. Restricted Global Securities shall be in the form of
Exhibit A hereto except that the legend on the face of such Security shall be in
the form of the legend set forth in Exhibit C hereto. Unrestricted Global
Securities shall be in the form of Exhibit B hereto and bearing the legend set
forth in Exhibit D hereto. The Securities may have notations, legends or
endorsements required by law, stock exchange rule or agreements to which the
Company is subject, if any, or usage. The Company shall approve the form of the
Securities and any notation, legend or endorsement on them, and such approval
shall be evidenced by the execution of such Securities by two Officers of the
Company. Each Security shall be dated the date of its authentication.
The Securities may be issued in global form, as either Restricted
Global Securities or Unrestricted Global Securities. Global Securities shall be
registered in the name of a nominee of the Depository and deposited with the
Trustee, at its New York office, in its capacity as Securities Custodian, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided. The Company, the Trustee and any agent thereof shall be entitled to
treat the Depository or its nominee, as the case may be, as the sole owner and
holder of such Global Securities for all purposes. Each Global Security shall
evidence such of the outstanding Securities as shall be specified therein and
each shall provide that it shall evidence the aggregate principal amount of
outstanding Securities from time to time endorsed thereon, and that the
aggregate principal amount of outstanding Securities represented thereby may
from time to time be reduced or increased, as applicable, to reflect exchanges,
redemptions, and other similar transactions. Any endorsement of a Global
Security to reflect the amount of any increase or decrease in the amount of
outstanding Securities represented thereby shall be made by the Trustee or the
Securities Custodian, at the direction of the Trustee, in accordance with
instructions given by the Holder thereof.
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Securities issued by the Company and authenticated and delivered by
the Trustee under this Indenture in reliance on Rule 144A under the Securities
Act shall be issued in the form of Restricted Securities in definitive, fully
registered form, without interest coupons, either as Restricted Global
Securities or Restricted Non-Global Securities, with such legends as appear
thereon.
The terms and provisions contained in the forms of the Securities,
annexed hereto as Exhibits A, B, C and D, shall constitute, and are hereby
expressly made, a part of this Indenture. To the extent applicable, the
Company, the Guarantors and the Trustee by their execution and delivery of this
Indenture, expressly agree to such terms and provisions and to be bound thereby.
SECTION 2.02. EXECUTION AND AUTHENTICATION; AGGREGATE PRINCIPAL
AMOUNT. Two Officers shall sign the Securities for the Company by facsimile or
manual signature. The Company's seal may be reproduced or imprinted on the
Securities, by facsimile or otherwise.
If a Person whose signature is on a Security as an Officer no longer
holds that office or position at the time the Trustee authenticates the
Security, the Security shall be valid nevertheless.
A Security shall not be valid until the Trustee manually signs the
certificate of authentication on the Security. The signature shall be
conclusive evidence that the Security has been authenticated under this
Indenture.
The Trustee shall authenticate and make available for delivery (i)
Restricted Securities for original issuance in an aggregate principal amount at
maturity of $375,000,000 and (ii) Unrestricted Securities from time to time for
issuance only in exchange for a like principal amount of Restricted Securities,
in each case upon a written order of the Company signed by an Officer of the
Company and delivered to the Trustee. The order shall specify the amount of
Securities to be authenticated, the date on which the Securities are to be
authenticated and whether the Securities are to be Restricted Securities or
Unrestricted Securities. The aggregate principal amount of Securities
outstanding at any time under this Indenture may not exceed $375,000,000, except
as provided in Section 2.07 of this Indenture.
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The Securities shall be issuable only in registered form, without
coupons, and only in minimum denominations of $1,000 and any integral multiple
thereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate the Securities, which authenticating agent shall be
compensated by the Company. Unless limited by the terms of such appointment, an
authenticating agent may authenticate Securities whenever the Trustee may do so.
Except as provided in the preceding sentence, each reference in this Indenture
to authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Agent.
SECTION 2.03. REGISTRAR AND PAYING AGENT. The Company shall maintain
an office or agency within the City of New York, Borough of Manhattan, where
Securities may be presented for registration of transfer or for exchange
("Registrar") and an office or agency where Securities may be presented for
payment ("Paying Agent"). Unless otherwise designated by the Company, the
Company's office or agency maintained for such purpose in the City of New York,
Borough of Manhattan, will be the office of the Trustee. The Securities will be
payable both as to principal and interest at the office of the Paying Agent, or,
at the option of the Company, payment of interest may be made by check mailed to
the Holders of the Securities at their respective addresses set forth in the
register of Holders of Securities. The Registrar shall keep a register of the
Securities, the names and addresses of the Securityholders and of the transfer
and exchange of the Securities (the "Register"). The Company may have one or
more co-Registrars and one or more additional Paying Agents. The term
"Registrar" includes any co-Registrar and the term "Paying Agent" includes any
additional Paying Agent. The Company or any of its Subsidiaries may act as
Paying Agent or Registrar.
The Company shall enter into an appropriate written agency agreement
with any Agent not a party to this Indenture. Each such agreement shall
implement the provisions of this Indenture that relate to such Agent. The
Company shall give prompt written notice to the Trustee of the name and address
of any such Agent and any change in the address of such Agent. The Company may
change an Agent without prior notice to the Holders. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be
entitled to receive appropriate compensation therefor in accordance with
Section 8.07 of this Indenture.
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The Company initially appoints the Trustee to act as Registrar and
Paying Agent in connection with the Securities. The Company initially appoints
The Depository Trust Company ("DTC") to act as Depository with respect to any
Restricted Global Securities and initially appoints the Trustee to act as
Securities Custodian with respect to any Restricted Global Securities.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST. The Company
shall require each Paying Agent other than the Trustee to agree in writing that
such Paying Agent shall hold in trust for the benefit of Securityholders all
money held by the Paying Agent for the payment of principal, premium, if any, or
interest on the Securities, and such Paying Agent shall notify the Trustee of
any default by the Company in making any such payment. If the Company or any of
its Subsidiaries acts as Paying Agent, it shall segregate the money and hold it
as a separate trust fund for the benefit of Securityholders. The Company at any
time may require a Paying Agent to pay all money held by it as Paying Agent to
the Trustee and account for any funds disbursed, and the Trustee may at any time
during the continuance of any Payment Default, upon written request to a Paying
Agent, require such Paying Agent to pay all money held by it as Paying Agent to
the Trustee and to account for any funds disbursed. Upon doing so, the Paying
Agent shall have no further liability for the money so paid over to the Trustee.
SECTION 2.05. SECURITYHOLDER LISTS. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Securityholders and shall otherwise comply with
the provisions of TIA Section 312(a). If the Trustee is not the Registrar, the
Company shall furnish to the Trustee at least ten Business Days before each
Interest Payment Date and at such other times as the Trustee may request in
writing a list in such form and as of such date as the Trustee may reasonably
require of the names and addresses of Securityholders, and the Company shall
otherwise comply with the provisions of TIA Section 312(a).
The Trustee shall be entitled to rely upon a certificate of the
Registrar, the Company or another Paying Agent, as the case may be, as to the
names and addresses of the Securityholders and the principal amounts and serial
numbers of the Securities.
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SECTION 2.06. TRANSFER AND EXCHANGE.
(a) TRANSFER AND EXCHANGE OF NON-GLOBAL SECURITIES. When Non-Global
Securities are presented to the Registrar with the request:
(x) to register the transfer of such Securities; or
(y) to exchange such Securities for an equal principal amount of
Non-Global Securities of other authorized denominations,
the Registrar shall register the transfer or make the exchange as requested if
its requirements for such transactions are met; PROVIDED, HOWEVER, that the
Non-Global Securities presented or surrendered for register of transfer or
exchange:
(i) shall be duly endorsed and accompanied by a written instruction
of transfer in form and substance satisfactory to the Company and
the Registrar duly executed by the Holder thereof or by its
attorney-in-fact, duly authorized in writing; and
(ii) in the case of Restricted Non-Global Securities shall be
accompanied by the following additional information and
documents, as applicable:
(A) if such Restricted Non-Global Securities are being delivered
to the Registrar by a Holder for registration in the name of
such Holder, without transfer, a certification from such
Holder to that effect (in substantially the form of the
Assignment Form provided in Exhibit A to this Indenture); or
(B) if such Restricted Non-Global Securities are being
transferred to a Qualified Institutional Buyer in accordance
with Rule 144A under the Securities Act, pursuant to the
resale limitations of Rule 144 under the Securities Act, or
pursuant to an effective registration statement under the
Securities Act, a certification to that effect from the
transferor (in substantially the form of
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the Assignment Form provided in Exhibit A to this
Indenture); and an opinion of counsel from the transferee in
form and scope reasonably acceptable to the Company and to
the Registrar to the effect that such transfer is in
compliance with the Securities Act; or
(C) if such Restricted Non-Global Securities are being
transferred (other than by the means specified in clause (B)
above) in reliance on another exemption from the
registration requirements of the Securities Act, a
certification to that effect from the transferor (in
substantially the form of the Assignment Form provided in
Exhibit A to this Indenture), and an opinion of counsel from
the transferee in form and scope reasonably acceptable to
the Company and to the Registrar to the effect that such
transfer is in compliance with the Securities Act.
(b) RESTRICTIONS ON TRANSFER OF A RESTRICTED NON-GLOBAL SECURITY FOR
A BENEFICIAL INTEREST IN A RESTRICTED GLOBAL SECURITY. A Restricted Non-Global
Security may be transferred at any time in accordance with Rule 144A under the
Securities Act to a Qualified Institutional Buyer upon satisfaction of the
requirements set forth below. Upon receipt by the Trustee of a Restricted
Non-Global Security, duly endorsed or accompanied by appropriate instruments of
transfer, in form satisfactory to the Trustee, together with:
(i) a certification from the transferor, (substantially in the form
of the Assignment Form provided in Exhibit A to this Indenture),
that such Restricted Non-Global Security is being transferred to
a Qualified Institutional Buyer in accordance with Rule 144A
under the Securities Act and an opinion of counsel from the
transferee in form and scope reasonably acceptable to the Company
and to the Registrar to the effect that such transfer is in
compliance with the Securities Act; and
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(ii) written instructions directing the Trustee or the Securities
Custodian, as applicable, to make an endorsement on the
Restricted Global Security to reflect an increase in the
aggregate principal amount of the Securities represented by the
Restricted Global Security,
then the Trustee shall cancel such Restricted Non-Global Security and cause, or
direct the Securities Custodian to cause, in accordance with the standing
instructions and procedures existing between the Depository and the Securities
Custodian, the aggregate principal amount of Securities represented by the
Restricted Global Security to be increased correspondingly and an endorsement
shall be made on such Restricted Global Security, by the Trustee or the
Securities Custodian, at the direction of the Trustee, to reflect such increase.
If no Restricted Global Securities are then outstanding, the Company shall issue
and execute and the Trustee shall authenticate and deliver to the Securities
Custodian (who, in turn, shall enter into appropriate arrangements with the
Depository) a new Restricted Global Security in the appropriate aggregate
principal amount.
(c) TRANSFER AND EXCHANGE OF GLOBAL SECURITIES. The transfer and
exchange of Global Securities or the beneficial interests therein shall be
effected through the Depository, in accordance with this Indenture (including
the restrictions on transfer set forth herein) and the procedures of the
Depository and its participants therefor.
(d) RESTRICTIONS ON THE TRANSFER AND EXCHANGE OF A BENEFICIAL
INTEREST IN A GLOBAL SECURITY FOR A NON-GLOBAL SECURITY.
(i) Except in the circumstances set forth below in subsection (f) of
this Section 2.06, any Person having a beneficial interest in a
Restricted Global Security may not exchange such beneficial
interest for a Restricted Non-Global Security.
(ii) Upon receipt by the Trustee of (A) written instructions or such
other form of instructions from the Depository or its nominee as
is customary for the Depository on behalf of any Person having a
beneficial interest in a Global Security, (B) a written order of
such
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Person requesting issuance of a Non-Global Security and
containing registration instructions and (C) in the case of
Restricted Securities only, the following additional information
and documents (all of which may be submitted by facsimile):
(a) if such beneficial interest is being transferred to a
Qualified Institutional Buyer in accordance with Rule 144A
under the Securities Act, pursuant to the resale limitations
of Rule 144 under the Securities Act, or pursuant to an
effective registration statement under the Securities Act, a
certification to that effect from the transferor (in
substantially the form of the Assignment Form provided in
Exhibit A to this Indenture) and an opinion of counsel from
the transferee in form and scope reasonably acceptable to
the Company and to the Registrar to the effect that such
transfer is in compliance with the Securities Act; or
(b) if such beneficial interest is being transferred (other than
by the means specified in clause (a) above) in reliance on
another exemption from the registration requirements of the
Securities Act, a certification to that effect from the
transferor (in substantially the form of the Assignment Form
provided in Exhibit A to this Indenture) and an opinion of
counsel from the transferee in form and scope reasonably
acceptable to the Company and to the Registrar to the effect
that such transfer is in compliance with the Securities Act,
the Trustee or the Securities Custodian, at the direction of the
Trustee, shall cause, in accordance with the standing
instructions and procedures then existing between the Depository
and the Securities Custodian, the aggregate principal amount of
the Restricted Global Security to be reduced and, following such
reduction, the Company shall issue and, upon receipt of an
authentication order
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accompanied by or in the form of an Officers' Certificate, the
Trustee shall authenticate and deliver to the transferee a
Restricted Non-Global Security.
(e) RESTRICTIONS ON TRANSFER AND EXCHANGE OF GLOBAL SECURITIES.
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth below in subsection (f) of this Section 2.06), a Global
Security may not be transferred as a whole except by the Depository to a nominee
of the Depository, by a nominee of the Depository to the Depository or another
nominee of the Depository, or by the Depository or any of its nominees to a
successor Depository or a nominee of such successor Depository, who in all cases
are eligible to serve in such capacities under Section 17A of the Exchange Act
and applicable law.
(f) EXCHANGE OF A BENEFICIAL INTEREST IN A GLOBAL SECURITY FOR A
NON-GLOBAL SECURITY.
(i) If (A) the Depository notifies the Company that it is unwilling
or unable to continue serving as Depository for such Securities
and a successor depository is not appointed by the Company
pursuant to Section 2.15 of this Indenture, (B) there is a
determination that the Depository has ceased to be a clearing
agency registered under Section 17A of the Exchange Act and a
successor Depository is not appointed by the Company pursuant to
Section 2.15 of this Indenture or (C) the Company, in its sole
discretion, elects to cause the issuance of Restricted Non-Global
Securities under this Indenture in exchange for Restricted Global
Securities, then (X) the Company shall so notify the Trustee, (Y)
the Trustee shall cause the Securities Custodian to deliver the
Global Securities held by such Depository to the Trustee and upon
receipt thereof shall cancel such Global Securities and (Z) the
Company shall issue, and upon receipt of an authentication order
accompanied by or in the form of an Officers' Certificate, the
Trustee shall authenticate and deliver Non-Global Securities to
such Persons and in such authorized denominations as the
Depository, pursuant to instructions from its direct or indirect
participants, shall instruct the Trustee.
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(ii) If an Event of Default with respect to the Securities and this
Indenture occurs and is continuing and an owner of a beneficial
interest in a Restricted Global Security notifies the Trustee of
such Event of Default and requests in writing that its interest
in the Restricted Global Security be exchanged for Restricted
Non-Global Securities, then the Trustee, or the Securities
Custodian at the direction of the Trustee, shall cause, in
accordance with the standing instructions and procedures then
existing between the Depository and the Securities Custodian, the
aggregate principal amount of the Restricted Global Security to
be reduced and, following such reduction, the Company shall issue
and, upon receipt of an authentication order accompanied by or in
the form of an Officers' Certificate, the Trustee shall
authenticate and deliver Restricted Non-Global Securities to such
Person.
(g) LEGENDS.
(i) Except as permitted by subparagraph (ii) below, each certificate
evidencing the Restricted Securities (and all Restricted
Securities issued in exchange therefor or substitution thereof)
shall bear a legend in substantially the following form:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD TO, OR FOR THE
ACCOUNT OR BENEFIT OF, ANY PERSON EXCEPT AS SET FORTH IN THE
FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER
(1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR
(B) IT IS AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) WHO IS
AN INSTITUTION (AN "INSTITUTIONAL ACCREDITED INVESTOR"), (2)
AGREES THAT IT WILL NOT PRIOR TO THE DATE WHICH IS THREE
YEARS AFTER THE LATER OF THE DATE OF ORIGINAL
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ISSUANCE OF THIS NOTE AND THE LAST DATE ON WHICH THE ISSUER
OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS NOTE
(THE "RESALE RESTRICTION TERMINATION DATE") RESELL, PLEDGE
OR OTHERWISE TRANSFER THIS NOTE, EXCEPT (A) TO THE ISSUER,
(B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER PURCHASING FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF ANOTHER QUALIFIED INSTITUTIONAL BUYER
IN COMPLIANCE WITH THE RESALE PROVISIONS OF RULE 144A UNDER
THE SECURITIES ACT, (C) TO AN INSTITUTIONAL ACCREDITED
INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE
TRUSTEE A WRITTEN CERTIFICATION CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS
ON TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE
OBTAINED FROM THE TRUSTEE), (D) PURSUANT TO THE RESALE
LIMITATIONS PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE), (E) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, OR (F) PURSUANT TO ANY
OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT, SUBJECT IN EACH OF THE FOREGOING
CASES TO ANY REQUIREMENT OF LAW THAT THE DISPOSITION OF ITS
PROPERTY OR THE PROPERTY OF SUCH ACCOUNT BE AT ALL TIMES
WITHIN ITS CONTROL AND TO COMPLIANCE WITH APPLICABLE STATE
SECURITIES LAWS AND (3) AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IF THE PROPOSED
TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE
HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE
AND THE ISSUER SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE
FOREGOING RESTRICTIONS ON RESALE WILL NOT
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APPLY SUBSEQUENT TO THE RESALE RESTRICTION TERMINATION DATE.
(ii) Upon any resale or transfer of Restricted Securities pursuant to
the resale limitations of Rule 144 under the Securities Act or an
effective registration statement under the Securities Act:
(A) in the case of any Restricted Non-Global Securities, the
Registrar shall permit the Holder thereof to exchange such
Restricted Non-Global Securities for Unrestricted Non-Global
Securities that do not bear the legend set forth in
Section 2.06(g)(i) above and rescind any restriction and
"stop" instructions on the transfer of such Restricted
Non-Global Securities; and
(B) in the case of any Restricted Global Securities, such
Restricted Global Securities shall neither be subject to the
provisions nor bear the legend set forth in Section
2.06(g)(i) above; PROVIDED, HOWEVER, that with respect to
any request for an exchange of Restricted Global Security
for an Unrestricted Security which request is made in
reliance upon Rule 144, the Holder thereof shall, in
addition to all applicable requirements set forth in this
Section 2.06, certify in writing to the Registrar that such
request is being made pursuant to Rule 144 (such
certification to be substantially in the form of the
Assignment Form provided in Exhibit A to this Indenture).
(iii) Notwithstanding the foregoing, upon consummation of the Exchange
Offer, the Company shall issue, and, upon receipt of an
authentication order in accordance with Section 2.02 hereof, the
Trustee shall authenticate and deliver, Unre-
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stricted Securities in exchange for Restricted Securities
accepted for exchange and exchanged in the Exchange Offer, which
Unrestricted Securities shall not bear the legend set forth in
Section 2.06(g)(i) above, and the Registrar shall rescind any
restriction and "stop" instructions on the transfer of such
Securities, in each case unless the Holder of such Securities is
either (A) a broker-dealer who purchased such Securities directly
from the Company to resell pursuant to Rule 144A or any other
available exemption under the Securities Act, (B) a person who
has acquired the Securities in other than the ordinary course of
business, (C) a Person participating in the distribution of the
Securities or (D) a Person who is an affiliate (as defined in
Rule 144A) of the Company.
(h) CANCELLATION AND/OR ADJUSTMENT OF RESTRICTED GLOBAL SECURITY. At
such time as all beneficial interests in a Restricted Global Security have
either been exchanged for individually denominated Securities, redeemed,
repurchased or cancelled, such Restricted Global Security shall be returned to
or retained and cancelled by the Trustee or the Securities Custodian, as
applicable. At any time prior to such cancellation, if any beneficial interest
in a Restricted Global Security is exchanged for Non-Global Restricted
Securities, redeemed, repurchased or cancelled, the aggregate principal amount
of Securities represented by such Restricted Global Security shall be reduced
correspondingly and an endorsement shall be made on such Restricted Global
Security, by the Trustee or the Securities Custodian, at the direction of the
Trustee, to reflect such reduction.
(i) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF NON-GLOBAL
SECURITIES.
(i) To permit registrations of transfers and exchanges, the
Company shall issue and the Trustee shall authenticate and
deliver Restricted Securities and Unrestricted Securities at
the Registrar's request upon satisfaction of the
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requirements for such transfer or exchange, if any.
(ii) No service charge shall be made to a Holder for any
registration or transfer or exchange, but the Company or the
Trustee may require from the Holder payment of a sum
sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith (other than any such
transfer tax or similar governmental charge payable upon
exchanges pursuant to Section 2.10, which shall be paid by
the Company).
(iii) The Registrar shall not be required to register the transfer
or exchange of any Restricted Non-Global Security or
Unrestricted Security selected for redemption in whole or in
part pursuant to Article 4, except the unredeemed portion of
any Non-Global Security being redeemed in part.
(iv) All Restricted Securities and Unrestricted Securities issued
upon any registration of transfer or exchange of Restricted
Securities and Unrestricted Securities shall be the valid
obligations of the Company, evidencing the same debt, and
entitled to the same benefits under the Indenture, as the
Securities for which they were issued upon exchange.
(v) The Company and the Registrar shall not be required
(A) to issue, register the transfer of or exchange
Securities during the period beginning at the opening
of business on the 15th day next preceding the date of
any selection of Securities for redemption and ending
at the close of business on the date of selection, or
(B) to register the transfer of any Security so selected
for redemption
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in whole or in part, except the unredeemed portion of
any Security being redeemed in part.
(vi) Prior to due presentment for registration of transfer of any
Security, the Trustee, any Paying Agent, any Registrar and
the Company may deem and treat the Person in whose name any
Security is registered as the absolute owner of such
Security for the purpose of receiving payment of principal
of, premium, if any, and interest on such Security and for
all other purposes whatsoever, whether or not such Security
is overdue, and neither the Trustee, any Paying Agent, any
Registrar nor the Company shall be affected by notice to the
contrary.
SECTION 2.07. REPLACEMENT SECURITIES. If a mutilated Security is
surrendered to the Trustee or if the Company and the Trustee receive evidence to
their satisfaction that such Security has been lost, destroyed or wrongfully
taken, the Company shall issue a replacement Security, and the Trustee shall
authenticate such replacement Security if the Trustee's requirements are met. If
required by the Trustee or the Company, an indemnity bond must be provided by
the Securityholder that is sufficient in the judgment of the Trustee and the
Company to protect the Company, the Trustee, any Agent or any authenticating
agent from any loss which any of them may suffer if a Security is replaced. The
Company and the Trustee may charge such Holder for its expenses in replacing a
Security.
Every replacement Security is an additional obligation of the Company.
SECTION 2.08. OUTSTANDING SECURITIES. Securities outstanding at any
time are all Securities that have been authenticated by the Trustee, except for
those cancelled by it, those delivered to it for cancellation and those
described in this Section 2.08 as not outstanding. A Security does not cease to
be outstanding because the Company or one of its Affiliates holds the Security.
If a Security is replaced pursuant to Section 2.07, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security
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is held by a BONA FIDE purchaser without notice of the replacement.
If the Paying Agent holds, in accordance with this Indenture, on the
Stated Maturity or any redemption date, money sufficient to pay all principal
and interest on the Securities payable on that date, then on and after that date
such Securities shall be deemed to be no longer outstanding and interest on them
shall cease to accrue.
Upon a "legal defeasance" pursuant to Article 9, the Securities shall
be deemed to be outstanding to the extent provided in the applicable Section of
Article 9.
SECTION 2.09. TREASURY SECURITIES. In determining whether the
Holders of the required principal amount of Securities have concurred in any
request, demand, authorization, direction, notice, waiver, consent or other
action, Securities owned by the Company or any of its Affiliates and the voting
rights related to such Securities shall be disregarded, except that for the
purpose of determining whether the Trustee shall be protected in relying on any
such direction, waiver or consent, only Securities which the Trustee knows are
so owned shall be so disregarded.
SECTION 2.10. TEMPORARY SECURITIES. Until definitive Securities are
ready for delivery, the Company may prepare, and the Trustee shall authenticate,
upon written order of the Company signed by an Officer thereof, temporary
Securities. Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Company considers
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare, and the Trustee shall authenticate, definitive Securities in
exchange for temporary Securities.
Until such exchange, such temporary Securities shall be entitled to
the same rights, benefits and privileges as the definitive Securities.
SECTION 2.11. CANCELLATION. The Company at any time may deliver
Securities to the Trustee for cancellation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for registration
of transfer, exchange or payment. The Trustee and no one else shall cancel all
Securities surrendered for registration of transfer, exchange, payment or
cancellation and upon request of the Company, certification of their destruction
shall be delivered to the Company unless by written order
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signed by two Officers of the Company, the Company shall direct that cancelled
securities be returned to it. The Company may not issue new Securities to
replace Securities it has paid for or delivered to the Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST. If the Company defaults in a
payment of interest on the Securities, it shall pay the defaulted interest in
any lawful manner, plus, to the extent permitted by law, any interest payable on
the defaulted interest, to the Persons who are Securityholders on a subsequent
special record date, in each case at the rate provided in the Securities. Such
special record date shall be the tenth day next preceding the date fixed by the
Company for the payment of defaulted interest, whether or not such day is a
Business Day. At least 15 days before the special record date, the Company
shall mail or cause to be mailed to each Securityholder and the Trustee a notice
that states the special record date, the payment date and the amount of
defaulted interest to be paid.
SECTION 2.13. CUSIP NUMBER. The Company in issuing the Securities
may use a "CUSIP" number. If so, the Trustee shall use "CUSIP" numbers in
notices of redemption as a convenience to Securityholders; provided that any
such notice may state that no representation is made as to the correctness of
such numbers either as printed on the Securities or as contained in any notice
of a redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers. The Company will promptly notify
the Trustee of any change in the CUSIP number.
SECTION 2.14. DEPOSIT OF MONEYS. On or before 11:00 A.M., New York
City time, on each payment date, the Company shall deposit with the Trustee or
Paying Agent in immediately available funds money sufficient to make Cash
payments, if any, due on such payment date. The interest, if any, on Book-Entry
Securities shall be payable to the Depository or its nominee, as the case may
be, as the sole registered owner and the sole holder of the Book-Entry
Securities represented thereby. The interest, if any, on Securities in
certificated form shall be payable at the office of the Paying Agent or, at the
option of the Company, payment of interest may be made by check mailed to the
Holders of the Securities at their respective addresses set forth in the
Register.
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SECTION 2.15. GLOBAL SECURITIES.
(a) The Company and the Trustee may treat the Depository as, and
shall deem the Depository to be, the absolute owner of each Security evidenced
by the Global Securities for the purpose of payment of the principal of and
premium, if any, and interest on such Security, for the purpose of all other
matters with respect to such Security, for the purpose of registering transfers
with respect to such Securities, and for all other purposes whatsoever (except
for the giving of certain Securityholder consents, in accordance with the
practices and procedures of the Depository as may be applicable thereto).
Neither the Company nor the Trustee shall have any responsibility or obligation
to any of the Depository's direct or indirect participants. Without limiting
the immediately preceding sentence, neither the Company nor the Trustee shall
have any responsibility or obligation with respect to (i) the accuracy of the
records of the Depository or its nominee or any of its direct or indirect
participants with respect to any ownership interest in the Global Securities,
(ii) the delivery to any of the Depository's direct or indirect participants or
any other person, other than the Depository of any notice with respect to the
Securities evidenced by the Global Securities, (iii) the payment to any of the
Depository's direct or indirect participants or any other person, other than the
Depository, of any amount with respect to the principal of or premium, if any,
or interest on the Securities evidenced by the Global Securities, and (iv) the
failure of the Depository to provide any information or notification on behalf
of any of the Depository's direct or indirect participants. The Trustee shall
pay all principal of and premium, if any, and interest on the Securities only to
or upon the order of the Depository, and all such payments shall be valid and
effective to fully satisfy the Company's obligations with respect to the
principal of and premium, if any, and interest on such Securities to the extent
so paid. Notwithstanding the provisions of this Indenture to the contrary
(including, without limitation, surrender of the Securities, registration
thereof and authorized denominations), as long as any Security is in the form of
a Global Security, full effect shall be given to the procedures and practices of
the Depository with respect thereto, and the Trustee shall comply therewith.
(b) Upon (i) a notification by the Depository to the Company that the
Depository is unwilling or unable to continue serving as Depository for such
Securities, (ii) a
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determination by the Depository that it has ceased to be a clearing agency
registered under Section 17A of the Exchange Act, the Company shall (A)
designate a satisfactory substitute Depository within 60 days after such
notification in accordance with Section 2.15(c) of this Indenture, or, if a
satisfactory substitute is not found, (B) provide for the exchange of the
Restricted Global Securities for Restricted Non-Global Securities pursuant to
Section 2.06 of this Indenture and in the denominations provided in Section 2.02
of this Indenture.
(c) Any substitute Depository shall be certified in writing by the
Company to the Trustee, and the Company shall also certify to the Trustee that
the substitute Depository qualifies as a Depository under this Section. Any
such substitute Depository shall be a "clearing corporation" as defined in the
New York Uniform Commercial Code and shall be qualified and registered as a
"Clearing Agency" as provided in Section 17A of the Exchange Act. The
substitute Depository shall provide for (i) immobilization and custodianship of
the Global Securities, (ii) registration and transfer of beneficial interests in
the Global Securities by book entries credited to the accounts of participants
of the Depository or the Depository's Nominee, and (iii) payment of principal
of, premium, if any, and interest on the Securities evidenced by the Global
Securities in accordance with and as such beneficial interests may appear with
respect to such book entries.
(d) So long as any Security is evidenced by a Global Security,
notwithstanding anything to the contrary in this Indenture, the principal of and
interest on such Security shall be payable by the Trustee when due by wire
transfer to the Depository. Global Securities shall not be transferable or
exchangeable for fully registered Securities of smaller denominations except in
accordance with Section 2.06 of the Indenture.
ARTICLE 3
GUARANTEE
SECTION 3.01. GUARANTEE. For value received, the Guarantors, jointly
and severally, hereby unconditionally guarantee to the Securityholders and to
the Trustee the due and punctual payment of the principal of, and premium, if
any, and interest on, the Securities, and all other amounts due and payable to
the Trustee under this Indenture by the Company (collectively, the
"Obligations"), when and as the
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same shall become due and payable, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise, according to the
terms of the Securities and this Indenture. Each Guarantee pursuant to this
Article 3 constitutes a guarantee of payment in full when due and not merely a
guarantee of collectibility. Notwithstanding the foregoing, each Guarantor's
liability under this Section 3.01 shall be limited to the maximum amount that
would not result in such Guarantor's Guarantee under this Section 3.01
constituting a fraudulent conveyance or fraudulent transfer under applicable
law.
SECTION 3.02. OBLIGATION OF THE GUARANTORS UNCONDITIONAL. Except as
provided in Section 3.06, the obligations of each Guarantor hereunder shall be
as aforesaid absolute and unconditional, and shall not be impaired, modified,
released or limited by any occurrence or condition whatsoever, including,
without limitation, (i) any compromise, settlement, release, waiver, renewal,
extension, indulgence or modification of, or any change in, any of the
obligations and liabilities of the Company contained in the Securities or this
Indenture, (ii) any impairment, modification, release or limitation of the
liability of the Company or its estate in bankruptcy, or any remedy for the
enforcement thereof, resulting from the operation of any present or future
provision of any applicable Bankruptcy Law, as amended, or other statute or from
the decision of any court, (iii) the assertion or exercise by the Company or the
Trustee of any rights or remedies under the Securities or this Indenture or
their delay in or failure to assert or exercise any such rights or remedies,
(iv) the assignment or the purported assignment of any property as additional
security for the Securities, including all or any part of the rights of the
Company under this Indenture, (v) the extension of the time for payment by the
Company of any payments or other sums or any part thereof owing or payable under
any of the terms and provisions of the Securities or this Indenture or of the
time for performance by the Company of any other obligations under or arising
out of any such terms and provisions or the extension or the renewal of any
thereof, (vi) the modification or amendment (whether material or otherwise) of
any duty, agreement or obligation of the Company set forth in this Indenture,
(vii) the voluntary or involuntary liquidation, dissolution, sale or other
disposition of all or substantially all of the assets, marshalling of assets and
liabilities, receivership, insolvency, banruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of, or other
similar proceeding affecting, the Company, or any of the
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other Guarantors or any of their respective assets, or the disaffirmance of this
Guarantee pursuant to this Article 3 or the Securities or this Indenture in any
such proceeding, (viii) the release or discharge of the Company from the
performance or observance of any agreement, covenant, term or condition
contained in any of such instruments by operation of law, (ix) the
unenforceability of the Securities or this Indenture or any Guarantee pursuant
to this Article 3 or (x) any other circumstance which might otherwise constitute
a legal or equitable discharge of a surety or guarantor.
SECTION 3.03. WAIVER RELATING TO GUARANTEES. Each Guarantor hereby
(i) waives diligence, presentment, demand of payment, filing of claims with a
court in the event of the merger, insolvency or bankruptcy of the Company, any
right to require a proceeding first against the Company or to realize on any
collateral, protest or notice with respect to the Obligations of the Company and
all demands whatsoever, (ii) acknowledges that any agreement, instrument or
document evidencing the Obligations may be transferred and that the benefit of
its obligations hereunder shall extend to each holder of any agreement,
instrument or document evidencing the Obligations without notice to them, and
(iii) covenants that its Guarantee pursuant to this Article 3 will not be
discharged except pursuant to Section 3.06 or by complete performance of the
Obligations and of its Guarantee pursuant to this Article 3. Each Guarantor
further agrees that if at any time all or any part of any payment theretofore
applied by any Person to any Obligation is, or must be, rescinded or returned
for any reason whatsoever, including, without limitation, the insolvency,
bankruptcy or reorganization of the Company, such Obligation shall for the
purposes of its Guarantee pursuant to this Article 3 to the extent that such
payment is or must be rescinded or returned, be deemed to have continued in
existence notwithstanding such application, and its Guarantee pursuant to this
Article 3 shall continue to be effective or be reinstated, as the case may be,
as to such Obligations as though such application had not been made.
SECTION 3.04. SUBORDINATION OF GUARANTEES. Each Guarantee of a
Guarantor under this Article 3 is subordinate and junior in right of payment to
the prior payment in full, in Cash, of all Senior Indebtedness of such
Guarantor, including any guarantee issued by such Guarantor of any Senior
Indebtedness, including Indebtedness described in clause (i) of Section 5.08 of
this Indenture, to the same extent and in the same manner to which the
Securities are
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subordinated pursuant to Article 11 hereof to the Senior Indebtedness of the
Company, and all provisions of Article 11 hereof applicable to the subordination
of the Securities shall similarly apply to the subordination of the Guarantees
pursuant to this Article 3.
SECTION 3.05. WAIVER OF SUBROGATION RIGHTS. Each Guarantor hereby
irrevocably waives all rights of subrogation, reimbursement, contribution,
indemnity or otherwise against the Company as a result of any payment made by
such Guarantor under its Guarantee pursuant to this Article 3.
SECTION 3.06. RELEASE OF GUARANTEES. Without any action required on
the part of Holders of the Securities, the Trustee, the Company, or the
Guarantors, a Guarantor shall be released and discharged from its obligations
under its Guarantee pursuant to this Article 3 (i) upon the sale or dissolution
of such Guarantor, (ii) upon the consummation of any transaction whereupon such
Guarantor becomes a Permitted Joint Venture, and (iii) upon the consummation of
any transaction whereupon the Company's and its Restricted Subsidiaries'
Investment in such Guarantor constitutes a Permitted Minority Interest.
SECTION 3.07. CONTRIBUTION OF GUARANTORS. In the event that any
Guarantor (such Guarantor being herein referred to as the "Funding Party") shall
make a payment under its Guarantee pursuant to this Article 3, it shall be
entitled to a contribution from each other Guarantor (each, a "Contributor") in
the amount of such Contributor's pro rata share of the amount of such payment by
such Funding Party so long as exercise of such right does not impair the rights
of Holders of Securities under any Guarantee. The failure of a Contributor to
discharge its obligations under this Section 3.07 shall not affect the
obligations of any Guarantor under its Guarantee pursuant to this Article 3. The
obligations under this Section 3.07 shall be unaffected by any of the events
described in Section 3.02 or any comparable events pertaining to the Funding
Party, its Guarantee or the undertakings in this Section 3.07.
SECTION 3.08. REINSTATEMENT OF GUARANTEES. Each Guarantee pursuant
to this Article 3 shall, to the fullest extent permitted by law, continue to be
effective or be reinstated, as the case may be, if at any time payment and
performance of the Securities, is, pursuant to applicable law, rescinded or
reduced in amount, or must otherwise be restored or returned by any Holder,
whether as a "voidable preference," "fraudulent conveyance," "fraudulent
transfer,"
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or otherwise, all as though such payment or performance had not been made. In
the event that any payment, or any part thereof, is rescinded, reduced, restored
or returned, the Securities shall, to the fullest extent permitted by law, be
reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.
ARTICLE 4
REDEMPTION
SECTION 4.01. RIGHT TO REDEEM; NOTICES TO TRUSTEE. At any time on
and after April 15, 1999, the Company, at its option, may redeem the Securities
in whole or in part for Cash in accordance with this Article 4 and the
provisions of paragraph 5 of the Securities. If the Company elects to redeem
Securities pursuant to paragraph 5 of the Securities, it shall notify the
Trustee in writing of the Redemption Date, the principal amount of Securities to
be redeemed and the Redemption Price.
The Company shall give the notice to the Trustee provided for in this
Section 4.01 at least 45 days before the Redemption Date (unless a shorter
notice shall be satisfactory to the Trustee).
SECTION 4.02. INTENTIONALLY OMITTED.
SECTION 4.03. SELECTION OF SECURITIES TO BE REDEEMED. If less than
all the outstanding Securities are to be redeemed at any time, the Trustee shall
select the Securities to be redeemed in compliance with the requirements of the
principal national securities exchange, if any, on which the Securities are
listed or, if the Securities are not listed on a national securities exchange,
on a pro rata basis. The Trustee shall make the selection at least 30 but not
more than 60 days before the Redemption Date from outstanding Securities not
previously called for redemption. Securities and portions of them selected for
redemption by the Trustee shall be in principal amounts of $1,000 or an integral
multiple of $1,000. Provisions of this Indenture that apply to Securities
called for redemption also apply to portions of Securities called for
redemption. The Trustee shall notify the Company promptly in writing of the
Securities or portions of Securities to be redeemed.
SECTION 4.04. NOTICE OF REDEMPTION. Except as otherwise provided in
Section 4.08 of this Indenture, at least 30 days but not more than 60 days
before a Redemption
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Date, the Company shall mail or cause to be mailed a notice of redemption by
first-class mail, postage prepaid, to each Holder of Securities to be redeemed
at the Holder's last address, as it shall appear on the registry book. A copy
of such notice shall be mailed to the Trustee on the same day the notice is
mailed to Holders unless the Trustee mails such notice to the Holders on behalf
of the Company.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the CUSIP number, if one exists (subject to the provisions of
Section 2.13 hereof);
(4) the name and address of the Paying Agent;
(5) that Securities called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price;
(6) if fewer than all the outstanding Securities are to be redeemed,
the identification and principal amounts of the particular Securities to be
redeemed;
(7) if any Security is being redeemed in part, the portion of the
principal amount of such Security to be redeemed and that, after the Redemption
Date, upon surrender of such Security, a new Security will be issued in the name
of the Holder thereof in principal amount equal to the unredeemed portion; and
(8) that, unless the Company defaults in making such redemption
payment, interest will cease to accrue on Securities or portions thereof called
for redemption on and after the Redemption Date.
At the Company's written request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense; provided,
however, that in all cases, the text of such notice of redemption shall be
prepared or approved by the Company and the Trustee shall have no responsibility
whatsoever with regard to such notice being accurate or correct (except for the
selection of Securities pursuant to Section 4.03).
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SECTION 4.05. EFFECT OF NOTICE OF REDEMPTION. Once notice of
redemption is given, Securities or portions thereof called for redemption become
due and payable on the Redemption Date and at the Redemption Price. Upon the
later of the Redemption Date and the date such Securities or portions thereof
are surrendered to the Paying Agent, such Securities called for redemption shall
be paid at the Redemption Price plus accrued interest to the Redemption Date, if
money sufficient for that purpose has been deposited as provided in Section 4.06
hereof. If a Redemption Date is on or before the date on which interest is
payable pursuant to the terms of the Securities (the "Interest Payment Date")
and on or after the related record date for such Interest Payment Date, any
interest accrued and unpaid to the Redemption Date shall be paid on such
Interest Payment Date to the person in whose name the Security is registered at
the close of business on such record date and the only remaining right of the
Holder of the Security called for redemption shall be to receive the Redemption
Price, excluding all accrued interest thereon, upon surrender of such Security
to the Paying Agent.
Notice of redemption shall be deemed to be given when mailed, whether
or not the Holder receives the notice. In any event, failure to give such
notice, or any defect therein, shall not affect the validity of the proceedings
for the redemption of the Securities.
SECTION 4.06. DEPOSIT OF REDEMPTION PRICE. On or prior to the
Redemption Date, the Company shall irrevocably deposit with the Paying Agent
(or if the Company or a Subsidiary or an Affiliate of either of them is the
Paying Agent, shall segregate and hold in trust) money sufficient to pay the
Redemption Price of, and all accrued interest on, all Securities to be redeemed
on that date other than Securities or portions of Securities called for
redemption which prior thereto have been delivered by the Company to the Trustee
for cancellation. The Paying Agent shall return to the Company any money not
required for these purposes.
If the Company complies with the preceding paragraph, interest on the
Securities or portions thereof to be redeemed, whether or not such Securities
are presented for payment, will cease to accrue on the applicable Redemption
Date.
SECTION 4.07. SECURITIES REDEEMED IN PART. Upon surrender of a
Security that is redeemed in part, the Company shall issue, and the Trustee
shall authenticate and
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make available for delivery to the Holder, a new Security in an authorized
denomination equal in principal amount to the unredeemed portion of the Security
surrendered.
SECTION 4.08. SPECIAL REDEMPTION PROCEDURES. The following
provisions shall apply notwithstanding any other provision of this Article 4:
Within 10 days following any Change in Control or the occurrence of an
event which mandates an Excess Proceeds Offer under Section 5.15 hereof, the
Company shall mail to the Trustee and mail or cause to be mailed to each Holder
a notice stating: (i) that the Change in Control Offer or Excess Proceeds
Offer, as the case may be, is being made pursuant to this Section 4.08 and that
all Securities tendered and not subsequently withdrawn will be accepted for
payment and paid for by the Company; (ii) the Change in Control Purchase Price
or the Excess Proceeds Purchase Price, as the case may be, and the purchase date
(which shall not be less than 30 days nor more than 60 days after the date such
notice is mailed) (the "Change in Control Payment Date" or "Excess Proceeds
Offer Payment Date," respectively); (iii) that any Securities or portions of any
Securities not tendered (or Securities which are tendered but subsequently
withdrawn by the Holder prior to acceptance for payment by the Company) will
continue to accrue interest and shall continue to be governed by the terms of
this Indenture in all respects; (iv) that, unless the Company defaults in the
payment thereof, all Securities and portions of Securities accepted for payment
pursuant to the Change in Control Offer or Excess Proceeds Offer, as the case
may be, shall cease to accrue interest on and after the Change in Control
Payment Date or Excess Proceeds Offer Payment Date, as the case may be; (v) that
Holders electing to have any Securities purchased pursuant to a Change in
Control Offer or Excess Proceeds Offer, as the case may be, will be required to
surrender the Securities to be purchased to the Paying Agent at the address
specified in the notice prior to the close of business on the Business Day next
preceding the respective Change in Control Payment Date or Excess Proceeds Offer
Payment Date; (vi) that Holders will be entitled to withdraw their election by
written notice to the Company and the Trustee to have their Securities purchased
by the Company on the terms and conditions set forth in the notice mailed by the
Company or the Trustee relating to the Change in Control Offer or the Excess
Proceeds Offer, as the case may be; and (vii) that Holders whose Securities are
being purchased only in part will be issued new Securities equal in principal
amount to the unpurchased portion of the
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Securities surrendered; provided that each portion of a Security purchased in
part and each such new Security issued shall be in a principal amount of $1,000
or integral multiples thereof.
On (or, in the case of clause (i) of this paragraph, at the Company's
election, before) the Change in Control Payment Date or Excess Proceeds Offer
Payment Date, as the case may be, (i) the Company shall deposit with the Paying
Agent immediately available funds sufficient to pay the respective Change in
Control Purchase Price or Excess Proceeds Purchase Price of all Securities or
portions thereof accepted for payment, (ii) the Paying Agent shall deliver or
cause to be delivered to the Trustee all Securities so tendered, together with
an officers' certificate executed by an Officer of the Paying Agent specifying
the Securities or portions thereof tendered to the Paying Agent and (iii) the
Trustee shall accept for payment all Securities or portions thereof tendered and
not theretofore withdrawn, pursuant to the Change in Control Offer or Excess
Proceeds Offer, as the case may be. The Paying Agent shall promptly mail to
each Holder of Securities so tendered payment in an amount equal to the Change
in Control Purchase Price or the Excess Proceeds Purchase Price, as the case may
be, for such Securities or portions thereof, and with respect to Securities
surrendered in part the Company shall issue and the Trustee shall promptly
authenticate and mail to such Holder one or more certificates evidencing new
Securities equal in principal amount to any unpurchased portion of the
Securities surrendered; provided that each such new Security shall be in a
principal amount of $1,000 or integral multiples thereof. The Company will
publicly announce (by means of Dow Jones news release or other form of
widespread public dissemination) the results of the Change in Control Offer on
or as soon as practicable after the Change in Control Payment Date.
ARTICLE 5
COVENANTS
SECTION 5.01. PAYMENT OF SECURITIES. The Company shall pay the
principal of, premium, if any, and interest (including interest accruing on or
after the filing of a petition in bankruptcy or reorganization relating to the
Company, whether or not a claim for post-filing interest is allowed in such
proceeding) on the Securities on (or prior to) the dates and in the manner
provided in the Securities or pursuant to this Indenture. An installment of
principal,
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premium, if any, or interest shall be considered paid on the applicable date due
if on such date the Trustee or the Paying Agent holds, in accordance with this
Indenture, money sufficient to pay all of such installment then due. The
Company shall pay interest on overdue principal and premium, if any, and
interest on overdue installments of interest (including interest accruing on or
after the filing of a petition in bankruptcy or reorganization relating to the
Company whether or not a claim for post-filing interest is allowed in such
proceeding), to the extent lawful, at the rate per annum borne by the
Securities, which interest on overdue interest shall accrue from the date such
amounts became overdue.
SECTION 5.02. SEC REPORTS.
(1) The Company shall file with the Trustee, without cost, within 15
days after it is required to file the same with the SEC, copies of its annual
reports and information, documents and other reports (or copies of such portions
of any of the foregoing as the SEC may by rules and regulations prescribe) which
it is required to file with the SEC pursuant to Section 13 or 15(d) of the
Exchange Act. In the event that the Company is at any time not subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, it shall
provide to the Trustee and the SEC, in accordance with rules and regulations
prescribed by the SEC, within 15 days after it would have been required to file
such reports and information with the SEC (had it been so subject to said
reporting requirements), financial statements, including any notes thereto and,
with respect to annual reports, an auditors' report by an accounting firm of
established national reputation and a "Management's Discussion and Analysis of
Financial Condition and Results of Operations," both comparable to that which
the Company would have been required to include in such annual reports,
information, documents or other reports if the Company had been subject to the
requirements of such Section 13 or 15(d) of the Exchange Act. The Company also
shall comply with the other provisions of TIA Section 314(a).
(2) So long as any Securities remain outstanding, the Company shall
cause its annual report, if any, which is provided to shareholders, and each
Form 10-K, Form 10-Q and Form 8-K filed with the SEC, to be mailed to the
Holders at their addresses appearing in the Register maintained by the Registrar
in each case at the time of such mailing or furnishing to shareholders or no
later than 120 days after the end of each of the Company's fiscal years and
within 60
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days after the end of each of the first three quarters of each fiscal year or in
the case of Form 8-K promptly upon the filing thereof. If the Company is not
required to furnish annual or quarterly reports to its stockholders pursuant to
the Exchange Act, the Company shall cause its financial statements, including
any notes thereto and with respect to annual reports, an auditors' report by an
accounting firm of established national reputation and a "Management's
Discussion and Analysis of Financial Condition and Results of Operations," and
any other information that would be required by Form 10-K, Form 10-Q and Form
8-K, to be so filed with the Trustee and mailed to the Holders within 120 days
after the end of each of the Company's fiscal years and within 60 days after the
end of each of the first three quarters of each fiscal year or in the case of
information that would be required by Form 8-K promptly on the date that such
Form 8-K would have been required to be filed.
(3) If the Company instructs the Trustee to distribute any of the
documents described in clause (2) above to the Securityholders, the Company
shall provide the Trustee with a sufficient number of copies of all reports and
other documents and information that the Company may be required to deliver to
the Securityholders under this Section 5.02.
SECTION 5.03. COMPLIANCE CERTIFICATES.
(1) The Company shall deliver to the Trustee within 120 days after
the end of each of the Company's fiscal years, an Officers' Certificate executed
by an Officer of the Company, stating whether or not the signer knows of any
Default or Event of Default. Such certificate shall contain a certification
from the principal executive officer, principal financial officer, principal
accounting officer or treasurer of the Company as to his or her knowledge of the
Company's compliance with all conditions and covenants under this Indenture. For
purposes of this Section 5.03(1), such compliance shall be determined without
regard to any period of grace or requirement of notice provided under this
Indenture. If the Officer knows of such a Default or Event of Default, the
certificate shall describe any such Default or Event of Default, and its status.
(2) So long as (i) not contrary to the then current recommendation of
the American Institute of Certified Public Accountants, and (ii) the Company's
independent
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public accountants do not have any fact or policy of general applicability with
respect to their clients, that such accountants will not prepare statements on
the subject specified below, the Company shall deliver to the Trustee within 120
days after the end of each fiscal year a written statement by the Company's
independent certified pubic accountants stating (A) that their audit examination
has included a review of the terms of this Indenture and the Securities as they
relate to accounting matters, and (B) whether, in connection with their audit
examination, any Default has come to their attention and, if such a Default has
come to their attention, specifying the nature and period of the existence
thereof; provided, however, that the independent certified public accountants
delivering such statement shall not be liable in respect of such statement by
reason of any failure to obtain knowledge of any such Default or Event of
Default that would not be disclosed in the course of an audit examination
conducted in accordance with GAAP. In the absence of actual notice to the
contrary, the Trustee shall be entitled to rely upon the aforementioned
statement of the Company's independent public accountants and shall not be
liable to anyone with respect thereto.
(3) The Company shall deliver to the Trustee as soon as possible and
in any event within 15 Business Days after the Company becomes aware of the
occurrence of each Default or Event of Default, which is continuing, an
Officers' Certificate setting forth the details of such Default or Event of
Default, and the action which the Company proposes to take with respect thereto.
(4) The Company shall deliver to the Trustee any information
reasonably requested by the Trustee in connection with the compliance by the
Trustee or the Company with the TIA.
SECTION 5.04. FURTHER INSTRUMENTS AND ACTS. Upon request of the
Trustee, the Company will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purposes of this Indenture.
SECTION 5.05. MAINTENANCE OF OFFICE OR AGENCY. The Company will
maintain or cause to be maintained, within the City of New York, Borough of
Manhattan, an office or agency (which may be an office of the Trustee, Registrar
or Paying Agent) where Securities may be presented or surrendered for payment,
where Securities may be surrendered for registration of transfer, exchange or
redemption and where
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notices and demands to or upon the Company in respect of the Securities and this
Indenture may be served. The corporate trust office of the Trustee at 140
Broadway, 12th Floor, New York, New York 10015, Attention: Corporate Trust
Department, shall initially be such office or agency for all of the aforesaid
purposes. The Company shall give prompt written notice to the Trustee of any
change of location of such office or agency. If at any time the Company shall
fail to maintain or cause to be maintained any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the address of the
Trustee set forth in Section 12.02 hereof.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and of any change in location of any such other office or agency.
SECTION 5.06. LIMITATION ON RESTRICTED PAYMENTS. The Company will
not, and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, (i) declare or pay any dividend or make any distribution on account
of the Company's or any of its Restricted Subsidiaries' Capital Stock or other
Equity Interests (other than dividends or distributions payable to the Company
or any of its Restricted Subsidiaries or payable in shares of Capital Stock or
other Equity Interests of the Company other than Redeemable Stock), (ii)
purchase, repurchase, redeem or otherwise acquire or retire for value any Equity
Interests of the Company or any of its Subsidiaries from any Person (other than
from the Company or any of its Restricted Subsidiaries); (iii) purchase,
repurchase, redeem, prepay, defease, or otherwise acquire or retire for value
(A) any Indebtedness of the Company that is subordinated in right of payment to
the Securities or the Guarantees thereof, prior to scheduled maturity, repayment
or sinking fund payment or (B) any Indebtedness of any Unrestricted Subsidiary,
or (iv) make Investments other than Permitted Investments (the foregoing actions
set forth in clauses (i) through (iv) being referred to as "Restricted
Payments"), if:
(a) at the time of such Restricted Payment, a Default or Event of Default
shall have occurred and be continuing or shall occur as a consequence
thereof; or
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(b) such Restricted Payment, together with the aggregate of all other
Restricted Payments made on or after the Closing Date exceeds the sum
of (A) $30,000,000, (B) 50% of the Consolidated Net Income of the
Company accrued on a cumulative basis for the period beginning on the
first day of the first month following the Closing Date and ending on
the last day of the last month immediately preceding the month in
which such Restricted Payment occurs (or, if aggregate cumulative
Consolidated Net Income for such period is a deficit, minus 100% of
such deficit), (C) 100% of the aggregate net cash proceeds received by
the Company after the Closing Date from the issuance or sale of
Capital Stock or other Equity Interests of the Company (other than
such Capital Stock or other Equity Interests issued or sold to a
Subsidiary of the Company and other than Redeemable Stock), (D) the
aggregate net cash proceeds received on or after the Closing Date by
the Company from the issuance or sale of debt securities of the
Company that have subsequently been converted into or exchanged for
Capital Stock or other Equity Interests of the Company (other than
Redeemable Stock) plus the aggregate Cash received by the Company at
the time of such conversion or exchange, (E) 100% of the aggregate
Cash received by the Company after the Closing Date upon the exercise
of options or warrants (whether issued prior to or after the Closing
Date) to purchase the Company's Capital Stock and (F) 100% of the
aggregate net cash proceeds received by the Company or any Restricted
Subsidiary from its Unrestricted Subsidiaries after the Closing Date
on account of the return of Investments (other than the return of
Permitted Investments in Unrestricted Subsidiaries) in such
Unrestricted Subsidiaries; or
(c) immediately after such Restricted Payment, the Company would not be
permitted to incur $1.00 of additional Indebtedness pursuant to the
first paragraph of Section 5.08 hereof.
The foregoing provisions will not prohibit (i) so long as no Default
or Event of Default has occurred and is continuing or would result therefrom,
the payment of any dividend within 60 days after the date of declaration
thereof, if at said date of declaration such payment would have
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complied with the provisions of the Indenture; (ii) to the extent required under
applicable law, or if the failure to do so would create a material risk of
disqualification of the ESOP under the Internal Revenue Code, the acquisition by
the Company of its common stock from the ESOP or from participants and
beneficiaries of the ESOP; (iii) the acquisition by the Company or any of its
Restricted Subsidiaries of Equity Interests of the Company or such Restricted
Subsidiary, if the exclusive consideration for such acquisition is the issuance
by the Company or such Restricted Subsidiary of its Equity Interests; (iv) the
purchase, redemption or acquisition by the Company, for nominal consideration,
of rights under the Rights Plan prior to such time as such rights have become
exercisable; (v) the redemption, repurchase, acquisition or retirement of
Indebtedness of the Company or its Restricted Subsidiaries being concurrently
refinanced by Refinancing Indebtedness permitted under Section 5.08 hereof; (vi)
the purchase, repayment, redemption, prepayment, defeasance, acquisition or
retirement of any Indebtedness, if the exclusive consideration therefor is the
issuance by the Company of its Equity Interests; (vii) the redemption,
repurchase, acquisition or retirement of Equity Interests in a Permitted Joint
Venture, provided that (A) after giving effect to such transaction, the
Company's Consolidated Interest Coverage Ratio is at least 2.00, (B) no Default
or Event of Default has occurred and is continuing or would result therefrom,
(C) if consideration for such transaction is in excess of $5,000,000, such
transaction is approved by a majority of the Disinterested Directors of the
Company and (D) if consideration for such transaction is in excess of
$25,000,000, the Company has received an opinion from a nationally recognized
investment banking firm that such transaction is fair to the Company, from a
financial point of view; (viii) dividend payments to the holders of minority
interests in Permitted Joint Ventures, ratably in accordance with their
respective Equity Interests or, if not ratably, then in accordance with the
priorities set forth in the respective organizational documents for, and
agreements among holders of Equity Interests in, such Permitted Joint Ventures;
(ix) the Guarantee of Indebtedness of a Permitted Joint Venture if the
incurrence of such Indebtedness is permitted under Section 5.08 hereof and if
such Guarantee is a Permitted Investment pursuant to clause (f) of the
definition thereof; or (x) the acquisition or retirement of options and warrants
upon the exercise thereof.
The Company shall deliver to the Trustee within 60 days after the end
of each of the Company's first three fiscal quarters and within 120 days after
the end of the
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Company's fiscal year in which a Restricted Payment is made under the first
paragraph of this covenant, an Officers' Certificate setting forth each
Restricted Payment made in such fiscal quarter, stating that each such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 5.06 were computed, which calculations may
be based on the Company's financial statements included in filings required
under the Exchange Act for such quarter or such year. For purposes of
calculating the aggregate amount of Restricted Payments that are permitted under
clause (b) of the first paragraph of this Section 5.06, the amounts expended for
Restricted Payments permitted under clauses (ii) through (x) of the preceding
paragraph shall be excluded.
SECTION 5.07. ANTI-LAYERING. The Company shall not incur, create,
assume, guarantee or otherwise become liable for any Indebtedness that is
subordinated in right of payment to any Senior Indebtedness and senior in any
respect in right of payment to the Securities.
SECTION 5.08. LIMITATION ON ADDITIONAL INDEBTEDNESS. The Company
shall not, and shall not permit any of its Restricted Subsidiaries, directly or
indirectly, to create, incur, issue, assume, guarantee or otherwise become
directly or indirectly liable with respect to any Indebtedness, unless, after
giving PRO FORMA effect to the incurrence of such Indebtedness and the
application of any of the proceeds therefrom to repay Indebtedness, the
Consolidated Interest Coverage Ratio of the Company for the four fiscal quarters
ending immediately prior to the date such additional Indebtedness is created,
incurred, issued, assumed or guaranteed will be at least 2.25, provided that
such calculation shall give PRO FORMA effect to the acquisition of any Person,
business, property or assets made since the first day of such four fiscal
quarter period as if such acquisition had occurred at the beginning of such
four-quarter period.
The foregoing limitations shall not apply to (i) Indebtedness under
the New Credit Agreement or any replacement or substitute facility or facilities
thereof (provided that Indebtedness under the New Credit Agreement or any
replacement or substitute facility or facilities, including unused commitments,
shall not at any time exceed $300,000,000 in aggregate outstanding principal
amount (including the available undrawn amount of any letters of credit issued
under the New Credit Agreement or any replacement or substitute facility or
facilities thereof)); (ii)
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Indebtedness of the Company and its Restricted Subsidiaries, which Indebtedness
is in existence on the Closing Date; (iii) Indebtedness represented by the
Securities and the Guarantees of the Securities; (iv) Indebtedness created,
incurred, issued, assumed or guaranteed in exchange for or the proceeds of which
are used to extend, refinance, renew, replace, substitute or refund Indebtedness
permitted by clauses (ii) and (iii) of this Section 5.08 (the "Refinancing
Indebtedness"); PROVIDED, HOWEVER, that (A) the principal amount of such
Refinancing Indebtedness shall not exceed the principal amount of Indebtedness
(including unused commitments) so extended, refinanced, renewed, replaced,
substituted or refunded (plus costs of issuance), (B) such Refinancing
Indebtedness ranks, relative to the Securities, no more senior than the
Indebtedness being refinanced thereby, (C) such Refinancing Indebtedness bears
interest at a market rate, and (D) such Refinancing Indebtedness (1) shall have
an Average Life equal to or greater than the Average Life of the Indebtedness
being extended, refinanced, renewed, replaced, substituted or refunded or (2)
shall not have a scheduled maturity, principal repayment, sinking fund payment
or mandatory redemption on or prior to the maturity of the Securities; (v)
Indebtedness of the Company or any Restricted Subsidiary to any Restricted
Subsidiary or to the Company; (vi) Indebtedness arising from guarantees, letters
of credit, and bid or performance bonds securing any obligations of the Company
or any Restricted Subsidiary incurred in the ordinary course of business; (vii)
Indebtedness for borrowed money denominated in foreign currencies not to exceed
an aggregate principal amount at any time equal to the equivalent in such
foreign currencies of $5,000,000 in U.S. Dollars; (viii) Capital Lease
Obligations in an aggregate amount outstanding at any time not to exceed 5% of
the Company's Consolidated Net Assets; (ix) Non-Recourse Indebtedness incurred
in connection with the acquisition of real property by the Company or its
Restricted Subsidiaries; (x) Guarantees of any Senior Indebtedness; (xi)
Guarantees by any Restricted Subsidiary of any Indebtedness of the Company that
is PARI PASSU with or subordinate in right of payment to the Securities,
provided that (A) in the case of a Guarantee of Indebtedness that is PARI PASSU
with the Securities, such Guarantee is PARI PASSU to the Guarantees of the
Securities; and (B) in the case of a Guarantee of Indebtedness that is
subordinate to the Securities, such Guarantee is similarly subordinated to the
Guarantees of the Securities; (xii) Guarantees by the Company of Indebtedness of
any Restricted Subsidiary that does not constitute Senior Indebtedness, provided
that (A) in the case of the Company's Guarantee of Indebtedness of a Guarantor
that is subordinate
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to such Guarantor's Guarantee of the Securities, the Company's Guarantee of such
Indebtedness is similarly subordinated to the Securities, and (B) in all other
cases, the Company's Guarantee of such Indebtedness is on a PARI PASSU basis
with the Securities; and (xiii) Indebtedness other than that permitted pursuant
to the foregoing clauses (i) through (xii) provided that the aggregate
outstanding amount of such additional Indebtedness does not at any time exceed
$50,000,000, all or any portion of which Indebtedness, notwithstanding clause
(i) above, may be incurred pursuant to the New Credit Agreement or any
replacement or substitute facility or facilities thereof.
SECTION 5.09. ADDITIONAL GUARANTORS. The Company shall cause any
Person which shall at any time be a Subsidiary of the Company, including any
present Subsidiary of the Company which is not included among the Guarantors
executing this Indenture, to become a Guarantor promptly after the date on which
such Subsidiary first becomes a Guarantor under the New Credit Agreement or a
Significant Subsidiary; PROVIDED, HOWEVER, that the Company shall not be
required to cause any Permitted Joint Venture or any Unrestricted Subsidiary to
become a Guarantor.
SECTION 5.10. LIMITATION ON SALE OF SUBSIDIARY SHARES. The Company
shall not (i) sell, pledge, hypothecate or otherwise convey or dispose of any
Equity Interests of a Restricted Subsidiary except to a Restricted Subsidiary or
(ii) permit a Restricted Subsidiary to issue or sell any Equity Interests of
such Restricted Subsidiary to any Person other than to the Company or to another
Restricted Subsidiary; PROVIDED that (a) the Company and its Restricted
Subsidiaries may consummate an Asset Sale of all of the Equity Interests owned
by the Company and its Restricted Subsidiaries of such Restricted Subsidiary,
(b) the Company may pledge, hypothecate or otherwise grant a Lien on any Equity
Interests of any Restricted Subsidiary to the extent permitted under Section
5.11 hereof, and (c) the Company may sell or otherwise convey or dispose of any
Equity Interest in such Restricted Subsidiary, and such Restricted Subsidiary
may issue or sell any Equity Interest to any Person other than to the Company or
to another Restricted Subsidiary, if (i) immediately after the consummation of
such transaction such Restricted Subsidiary is or becomes a Permitted Joint
Venture; provided that (A) after giving effect to such transaction, the
Company's Consolidated Interest Coverage Ratio is at least 2.00, (B) no Default
or Event of Default has occurred and is continuing or would result therefrom,
(C) if such transaction involves the issuance or
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sale of Equity Interests having a fair market value in excess of $5,000,000, the
transaction is approved by a majority of the Disinterested Directors of the
Company, (D) if such transaction involves the issuance or sale of Equity
Interests having a fair market value in excess of $25,000,000, the Company has
received an opinion from a nationally recognized investment banking firm that
such transaction is fair to the Company, from a financial point of view, and (E)
the sum of (x) the Book Value of assets of such Restricted Subsidiary
immediately prior to the transaction pursuant to which it became a Permitted
Joint Venture, together with the Book Value of assets of all other Guarantors
which have become Permitted Joint Ventures (determined for each such Guarantor
as of the time immediately prior to the transaction pursuant to which it became
a Permitted Joint Venture) and (y) the aggregate Book Values of Permitted
Minority Investments of the Company and its Restricted Subsidiaries (the Book
Value of each such Permitted Minority Investment determined as of the time such
Investment was made), does not exceed $100,000,000; (ii) the Company's and its
Restricted Subsidiaries' Investment in such Person becomes a Permitted Minority
Investment, provided that (A) after giving effect to such transaction, the
Company's Consolidated Interest Coverage Ratio is at least 2.00, (B) no Default
or Event of Default has occurred and is continuing or would result therefrom,
(C) the sum of (x) the Book Value of such Permitted Minority Investment,
together with the aggregate Book Values of all other Permitted Minority
Investments of the Company and its Restricted Subsidiaries (the Book Value of
each such Permitted Minority Investment determined as of the date such
Investment was made) and (y) the aggregate Book Values of assets of all
Guarantors that have become Permitted Joint Ventures (determined for each such
Guarantor as of the time immediately prior to the transaction pursuant to which
it became a Permitted Joint Venture), do not exceed $100,000,000, (D) if such
transaction involves the issuance or sale of Equity Interests having a fair
market value in excess of $5,000,000, the transaction is approved by a majority
of the Disinterested Directors of the Company, and (E) if such transaction
involves the issuance or sale of Equity Interests having a fair market value in
excess of $25,000,000, the Company shall have received an opinion from a
nationally recognized investment banking firm that such transaction is fair to
the Company, from a financial point of view; or (iii) the Company's and its
Restricted Subsidiaries' Investment in such Person otherwise constitutes a
Permitted Investment.
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SECTION 5.11. LIMITATION ON LIENS. The Company shall not, and shall
not permit any of its Restricted Subsidiaries to, directly or indirectly,
create, incur, assume or suffer to exist any Lien on any of their respective
assets, now owned or hereinafter acquired, securing any Indebtedness that is
PARI PASSU with or subordinated in right of payment to the Securities, unless
the Securities are equally and ratably secured; PROVIDED that, if such
Indebtedness which expressly by its terms is subordinate or junior in right of
payment to any other Indebtedness of the Company is expressly subordinate to the
Securities, the Lien securing such subordinate or junior Indebtedness shall be
subordinate and junior to the Lien securing the Securities with the same
relative priority as such subordinated or junior Indebtedness shall have with
respect to the Securities. The Company and its Restricted Subsidiaries may at
any time, directly or indirectly, create, incur, assume or suffer to exist any
Lien on any of their respective assets, now owned or hereafter acquired,
securing any Senior Indebtedness or any Non-Recourse Indebtedness permitted
under Section 5.08 hereof.
SECTION 5.12. LIMITATION ON PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES. The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, from and after the Closing Date, directly or indirectly, create
or otherwise cause or permit to exist or become effective, or enter into any
agreement with any Person that would cause, any encumbrance or restriction on
the ability of any Restricted Subsidiary to (A) pay dividends or make any other
distributions on its Capital Stock, the Capital Stock of any of its Restricted
Subsidiaries or on any other interest or participation in, or measured by, its
profits, which interest or participation is owned by the Company or any of its
Restricted Subsidiaries, (B) pay any Indebtedness owed to the Company or any of
its Restricted Subsidiaries, (C) make loans or advances to the Company or any of
its domestic Restricted Subsidiaries, (D) transfer any of its properties or
assets to the Company or any of its domestic Restricted Subsidiaries, or (E) in
the case of a Restricted Subsidiary that is required to be a Guarantor pursuant
to Section 5.09 hereof, execute a Guarantee of the Securities or any renewals or
refinancings thereof, except, in each case, for such encumbrances or
restrictions existing under or by reason of (1) applicable law and regulation,
(2) this Indenture, (3) the New Credit Agreement, and any replacement facility
or facilities thereof, in each case to the extent that such encumbrances and
restrictions are not materially more restrictive on the Company and its
Restricted Subsid-
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iaries than those contained in the New Credit Agreement as in effect on the
Closing Date, (4) instruments evidencing Indebtedness of another Person which is
assumed by, or which otherwise becomes the obligation of, such Restricted
Subsidiary in connection with the acquisition by such Restricted Subsidiary of
another Person (whether pursuant to a purchase of Equity Interests or assets) or
in connection with any transaction whereby such Restricted Subsidiary becomes a
Permitted Joint Venture, provided that (a) such Indebtedness was not originally
incurred in connection with or in anticipation of such acquisition or other
transaction, (b) such restrictions apply only to such Restricted Subsidiary and
its Subsidiaries and (c) except in the case of an acquisition or other
transaction whereby such Restricted Subsidiary becomes a Permitted Joint
Venture, immediately after such acquisition or other transaction, substantially
all of such Restricted Subsidiary's operations or assets consist of those
acquired, (5) restrictions upon the transfer of property or assets subject to
Liens permitted under Section 5.11 hereof, or (6) restrictions which are
contained in instruments evidencing Indebtedness which refinances or refunds the
Indebtedness described in clauses (3) and (4).
SECTION 5.13. LIMITATION ON TRANSACTIONS WITH AFFILIATES. Neither
the Company nor any of its Restricted Subsidiaries shall enter into any
transaction or series of related transactions with (including, without
limitation, the making of any Investment or guarantee in, to or for the benefit
of), sell, lease, transfer or otherwise dispose of any of its properties or
assets to, or for the benefit of, purchase or lease any property or assets from,
or enter into an amendment of any contract, agreement with, or for the benefit
of, any Affiliate of the Company or any of its Subsidiaries (other than the
Company or any of its Restricted Subsidiaries), unless (i) such transaction or
series of related transactions is on terms that are substantially as favorable
to the Company or the relevant Restricted Subsidiary, as the case may be, as
those that could have been obtained in a comparable transaction on an arm's
length basis from a Person that is not an Affiliate and (ii) except in the case
of any transaction solely between the Company or a Restricted Subsidiary on the
one hand and a Permitted Joint Venture on the other hand, including the
formation and initial capitalization of such Permitted Joint Venture, (A) with
respect to a transaction or series of related transactions involving aggregate
payments in excess of $1,000,000 but less than $15,000,000 a majority of the
Disinterested Directors of the Company shall approve by a resolution determining
in good faith that such transaction or series of
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related transactions comply with clause (i) above, and (B) with respect to a
transaction or series of related transactions involving aggregate payments in
excess of $15,000,000 (other than cash transactions pursuant to insurance
agreements with the Insurance Subsidiaries), the Company shall have received an
opinion from a nationally recognized investment banking firm or, with respect to
a transaction or series of related transactions requiring the valuation of real
property, a nationally recognized real estate appraisal firm, that such
transaction or series of related transactions is fair to the Company, from a
financial point of view.
SECTION 5.14. REPURCHASE UPON CHANGE IN CONTROL.
Upon the occurrence of a Change in Control, each Holder of the Securities shall
have the right to require the repurchase of such Holder's Securities in whole or
in part (the "Change in Control Offer") at a purchase price equal to 101% of the
aggregate principal amount of such Securities (or portion thereof) plus accrued
and unpaid interest, if any, to the date of purchase (the "Change in Control
Purchase Price"). Any redemption pursuant to this Section 5.14 shall be
conducted in accordance with the procedures set forth in Section 4.08 of this
Indenture.
SECTION 5.15. LIMITATION ON USE OF PROCEEDS FROM ASSET SALES. The
Company and its Restricted Subsidiaries shall not, directly or indirectly,
consummate any Asset Sale with or to any Person other than the Company or a
Restricted Subsidiary, unless (i) the Company or the Restricted Subsidiary, as
the case may be, receives consideration at the time of any such Asset Sale at
least equal to the fair market value of the asset sold or otherwise disposed of,
(ii) at least 60% of the net proceeds from such Asset Sale are received in Cash
at closing (unless (A) such Asset Sale is a lease, (B) such Asset Sale is in
connection with the creation of, Investment in, or issuance or sale of Equity
Interests by, a Permitted Joint Venture, or (C) such Asset Sale is in connection
with the making of, or would result in, a Permitted Minority Investment) and
(iii) with respect to any Asset Sale involving the Equity Interest of any
Restricted Subsidiary (unless (A) such Restricted Subsidiary is, or as a result
of such Asset Sale would be, a Permitted Joint Venture, or (B) as a result of
such Asset Sale, the Company's and its Restricted Subsidiaries' Investment in
such Restricted Subsidiary would constitute a Permitted Minority Investment),
the Company shall sell all of the Equity Interests of such Restricted Subsidiary
it owns. Within 270 days after the receipt of Net Cash Proceeds in respect of
any
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Asset Sale, the Company must use all such Net Cash Proceeds either to invest in
properties and assets in a healthcare or a healthcare-related business
(including, without limitation, a capital investment in the Company or any of
its Restricted Subsidiaries) or to reduce Senior Indebtedness; PROVIDED, that
when any non-Cash proceeds are liquidated, such proceeds (to the extent they are
Net Cash Proceeds) will be deemed to be Net Cash Proceeds at that time. When
the aggregate amount of Excess Proceeds (as defined below) exceeds $10,000,000,
the Company shall make an offer (the "Excess Proceeds Offer") to apply the
Excess Proceeds to repurchase the Securities at a purchase price equal to 100%
of the principal amount of such Securities, plus accrued and unpaid interest to
the date of purchase (the "Excess Proceeds Purchase Price"). Any redemption
pursuant to this Section 5.15 shall be conducted in accordance with the
procedures set forth in Section 4.08 of this Indenture.
To the extent that the aggregate principal amount of the Securities
(plus accrued interest thereon) tendered pursuant to the Excess Proceeds Offer
is less than the Excess Proceeds, the Company may use such deficiency, or a
portion thereof, for general corporate purposes. If the aggregate principal
amount of the Securities surrendered by Holders thereof exceeds the amount of
Excess Proceeds, the Company shall select the Securities to be purchased in
accordance with the procedures described in Section 4.03 hereof. "Excess
Proceeds" shall mean any Net Cash Proceeds from an Asset Sale that are not
invested or used to reduce Senior Indebtedness as provided in the second
sentence of the first paragraph of this Section 5.15. Notwithstanding the
foregoing, any Asset Sale which results in Net Cash Proceeds of less than
$3,000,000 and all Asset Sales (including any Asset Sale which results in Net
Cash Proceeds of less than $3,000,000) in any twelve consecutive-month period
which result in Net Cash Proceeds of less than $10,000,000 in the aggregate
shall not be subject to the requirement of clause (ii) of the first sentence of
the first paragraph of this Section 5.15.
SECTION 5.16. PAYMENT OF TAXES AND OTHER CLAIMS. The Company shall
pay or discharge or cause to be paid or discharged, before any penalty accrues
thereon, (i) all material taxes, assessments and governmental charges levied or
imposed upon the Company or any Restricted Subsidiary upon the income, profits
or property of the Company or any Restricted Subsidiary and (ii) all material
lawful claims for labor, materials and supplies which, if unpaid, would by law
become a Lien upon the property of the Company or any
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Restricted Subsidiary; provided that neither the Company nor any Restricted
Subsidiary shall be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claims the amount, applicability
or validity of which is being contested in good faith by appropriate proceedings
and for which adequate provision has been made or where the failure to effect
such payment or discharge is not adverse in any material respect to the Holders.
SECTION 5.17. CORPORATE EXISTENCE. Subject to Article 6 hereof, the
Company will do or cause to be done all things necessary to preserve and keep in
full force and effect its corporate existence and the corporate, partnership or
other existence of any Restricted Subsidiary in accordance with the respective
organizational documents of such Restricted Subsidiary and the rights (charter
and statutory), licenses and franchises of the Company and its Restricted
Subsidiaries; provided, however, that the Company shall not be required to
preserve any such right, license or franchise, or the corporate, partnership or
other existence of any Restricted Subsidiary, if the Company shall determine
that the preservation thereof is no longer desirable in the conduct of the
business of the Company and its Restricted Subsidiaries taken as a whole, and
that the loss thereof is not adverse in any material respect to the Holders.
SECTION 5.18. MAINTENANCE OF PROPERTIES AND INSURANCE. The Company
shall cause all material properties owned by or leased to it or any Restricted
Subsidiary and used in the conduct of its business or the business of such
Restricted Subsidiary to be maintained and kept in normal condition, repair and
working order and supplied with all necessary equipment and shall cause to be
made all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Company may be necessary so that the
business carried on in connection therewith may be properly conducted at all
times; provided, however, that nothing in this Section 5.18 shall prevent the
Company or any Restricted Subsidiary from discontinuing the maintenance of any
such properties, if such discontinuance is desirable in the conduct of its
business or the business of such Restricted Subsidiary.
The Company shall provide or cause to be provided, for itself and any
Restricted Subsidiaries, insurance (including self-insurance) against loss or
damage of the kinds customarily insured against by corporations similarly
situated and owning like properties, including, but not
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limited to, public liability insurance, in such amounts, with such deductibles
and by such methods as shall be customary for corporations similarly situated in
the industry.
SECTION 5.19. STAY, EXTENSION AND USURY LAWS. The Company covenants
(to the extent it may lawfully do so) that it will not at any time insist upon,
plead or in any manner whatsoever claim or take the benefit or advantage of, any
stay, extension or usury law wherever enacted, now or at any time hereafter
enforced, which may affect the covenants or the performance of this Indenture;
and the Company (to the extent it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and covenants that it will not, by
resort to any such law, hinder, delay or impede the execution of any power
herein granted to the Trustee, but will suffer and permit the execution of every
such power as though no such law has been enacted.
SECTION 5.20. PAYMENT FOR CONSENT. Neither the Company nor any of
its Subsidiaries shall, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder of
any Securities for or as an inducement to obtaining any consent, waiver or
amendment of, or direction in respect of, any of the terms or provisions of this
Indenture or the Securities, unless such consideration is offered or agreed to
be paid, and paid, to all Holders of the Securities which so consent, waive,
agree or direct to amend in the time frame set forth in solicitation documents
relating to such consent, waiver, agreement or direction.
SECTION 5.21. COVENANT TO COMPLY WITH SECURITIES LAWS UPON PURCHASE
OF SECURITIES. In connection with any offer to purchase or purchase of
Securities under Section 5.14 or 5.15 hereof, the Company shall (i) comply with
Rule 13e-4 (other than the filing requirements of such rule) and Regulation 14E
under the Exchange Act, and (ii) otherwise comply with all Federal and state
securities laws and regulations so as to permit the rights and obligations under
Sections 5.14 and 5.15 hereof to be exercised in the time and in the manner
specified in Sections 5.14 and 5.15 hereof.
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ARTICLE 6
SUCCESSOR CORPORATION
SECTION 6.01. WHEN THE COMPANY MAY MERGE OR TRANSFER ASSETS. The
Company shall not consolidate with, merge with or into, or transfer all or
substantially all of its assets (in one transaction or a series of related
transactions) to, any Person or permit any party to merge with or into it
unless:
(i) the Company shall be the continuing Person, or the Person (if
other than the Company) formed by such consolidation or into or with which
the Company is merged or to which the properties and assets of the Company,
substantially as an entity, are transferred shall be a corporation
organized and existing under the laws of the United States or any State
thereof or the District of Columbia and shall expressly assume, by a
supplemental indenture, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all of the obligations of the Company under
the Securities and this Indenture, and this Indenture remains in full force
and effect;
(ii) immediately before and immediately after giving effect to such
transaction, no Event of Default and no Default shall have occurred and be
continuing;
(iii) immediately after giving effect to such transaction on a pro
forma basis, the Consolidated Net Worth of the surviving entity is at least
equal to the Consolidated Net Worth of the Company immediately prior to
such transaction; and
(iv) except in the case of a Permitted Triangular Merger, the
surviving entity could, after giving pro forma effect to such transaction,
incur $1.00 of Indebtedness pursuant to the first paragraph of Section 5.08
hereof.
SECTION 6.02. WHEN RESTRICTED SUBSIDIARIES MAY MERGE OR TRANSFER
ASSETS. No Restricted Subsidiary shall consolidate with, or merge with or into,
any Person or permit any party to merge with or into it unless the continuing
Person, or the Person formed by such consolidation or into or with which a
Restricted Subsidiary is merged is the Company or a Restricted Subsidiary,
provided that if any Guarantor consolidates into, or merges with or into, a
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Restricted Subsidiary, either (i) such Restricted Subsidiary is or becomes a
Guarantor; or (ii) immediately after the consummation of such transaction such
Guarantor is a Permitted Joint Venture, provided that (A) after giving effect to
such transaction, the Company's Consolidated Interest Coverage Ratio is at least
2.00, (B) no Default or Event of Default has occurred and is continuing or would
result therefrom, (C) if such transaction involves a Guarantor with assets
having a fair market value in excess of $5,000,000, the transaction is approved
by a majority of the Disinterested Directors of the Company, (D) if such
transaction involves a Guarantor having assets with a fair market value in
excess of $25,000,000, the Company has received an opinion from a nationally
recognized investment banking firm that such transaction is fair to the Company,
from a financial point of view, and (E) the sum of (x) the Book Value of assets
of such Guarantor immediately prior to such transaction, together with the Book
Value of assets of all other Guarantors which have become Permitted Joint
Ventures (determined for each such Guarantor as of the time immediately prior to
the transaction pursuant to which it became a Permitted Joint Venture) and (y)
the aggregate Book Values of Permitted Minority Investments of the Company and
its Restricted Subsidiaries (the Book Value of each such Permitted Minority
Investment determined as of the date such Investment was made), does not exceed
$100,000,000; or (iii) immediately after the consummation of such transaction
the Company's and its Restricted Subsidiaries' Investment in such Guarantor
becomes a Permitted Minority Investment, provided that (A) after giving effect
to such transaction, the Company's Consolidated Interest Coverage Ratio is at
least 2.00, (B) no Default or Event of Default has occurred and is continuing or
would result therefrom, (C) the sum of (x) the Book Value of such Permitted
Minority Investment, together with the aggregate Book Values of all other
Permitted Minority Investments of the Company and its Restricted Subsidiaries
(the Book Value of each such Permitted Minority Investment determined as of the
date such Investment was made), and (y) the aggregate Book Values of assets of
all Guarantors that have become Permitted Joint Ventures (determined for each
such Guarantor as of the time immediately prior to the transaction pursuant to
which it became a Permitted Joint Venture), does not exceed $100,000,000, (D) if
such Permitted Minority Investment is in excess of $5,000,000, the Permitted
Minority Investment is approved by a majority of the Disinterested Directors of
the Company and (E) if such Permitted Minority Investment is in excess of
$25,000,000, the Company has received an opinion from a nationally recognized
investment banking firm
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that the Permitted Minority Investment is fair to the Company from a financial
point of view.
SECTION 6.03. SUCCESSOR CORPORATION SUBSTITUTED. Upon any
consolidation or merger or any transfer of all or substantially all of the
assets of the Company in accordance with this Article 6, the successor
corporation formed by or the surviving entity resulting from such consolidation
or into which the Company is merged or to which such transfer is made, shall
succeed to, and be substituted for, and may exercise every right and power of
the Company under this Indenture with the same effect as if such successor
corporation had been named as the Company herein; and thereafter the predecessor
company shall be discharged and released from all obligations and covenants
under this Indenture and the Securities.
ARTICLE 7
DEFAULTS AND REMEDIES
SECTION 7.01. EVENTS OF DEFAULT. An "Event of Default" occurs if one
of the following shall have occurred and be continuing:
(i) the Company defaults in the payment, when due and payable, of
(A) interest on any Security and the default continues for a period of 30 days,
or (B) the principal of or premium, if any, on any Securities when the same
becomes due and payable at maturity, acceleration, on the Redemption Date, on
the Change in Control Payment Date or on the Excess Proceeds Offer Payment Date;
(ii) the Company fails to comply with any of its covenants or
agreements in the Securities or this Indenture (other than those referred to in
clause (i) above) and such failure continues for 30 days after receipt by the
Company of a Notice of Default;
(iii) the Company or any of its Restricted Subsidiaries defaults
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any Indebtedness (other than
Non-Recourse Indebtedness) for money borrowed by the Company or any of its
Restricted Subsidiaries (or the payment of which is guaranteed by the Company or
any of its Restricted Subsidiaries) whether such Indebtedness is now existing or
hereafter created, which default results from the failure to pay any such
Indebtedness at its stated final maturity or
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results in the acceleration of such Indebtedness prior to its stated final
maturity and the principal amount of such Indebtedness is at least $15,000,000,
or the principal amount of such Indebtedness, together with the principal amount
of any other such Indebtedness the maturity of which has been accelerated,
aggregates $30,000,000 or more;
(iv) the Company or any Restricted Subsidiary pursuant to or within
the meaning of any Bankruptcy Law:
(A) commences a voluntary case or proceeding;
(B) consents to the entry of an order for relief against it
in an involuntary case or proceeding;
(C) consents to the appointment of a Custodian of it or for
all or substantially all of its property;
(D) makes a general assignment for the benefit of its
creditors; or
(E) admits in writing its inability to pay its debts
generally as they become due;
(v) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company or any Restricted
Subsidiary in an involuntary case or proceeding;
(B) appoints a Custodian of the Company or any Restricted
Subsidiary for all or substantially all of its
properties; or
(C) orders the liquidation of the Company or any Restricted
Subsidiary;
(D) and in each case the order or decree remains unstayed
and in effect for 60 days;
(vi) the Company or any Restricted Subsidiary fails to pay any
final judgments rendered against it by a court for the payment of money which in
the aggregate exceed
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$10,000,000 which judgments are not stayed within a period of 60 days after
their entry; or
(vii) except as permitted by this Indenture, any Guarantee of the
Securities becomes unenforceable or invalid or is disaffirmed, by any Guarantor.
A Default under clause (ii) of this Section 7.01 is not an Event of
Default until the Trustee notifies the Company or the Holders of at least 25% in
aggregate principal amount of the Securities at the time outstanding notify the
Company and the Trustee of the Default and the Company does not cure such
Default within the time specified in clause (ii) of this Section 7.01 after
receipt of such notice. Any such notice (a "Notice of Default") must specify
the Default, demand that it be remedied and state that such notice is a "Notice
of Default."
SECTION 7.02. ACCELERATION. If an Event of Default (other than an
Event of Default under Sections 7.01(iv) and 7.01(v)) occurs and is continuing,
the Trustee or the Holders of at least 25% of the principal amount of the
Securities then outstanding, by written notice to the Company (and to the
Trustee if such notice is given by such Holders) (the "Acceleration Notice"),
may, and the Trustee at the request of such Holders shall, declare all unpaid
principal of, premium, if any, and accrued interest on such Securities to be due
and payable, (i) immediately if no amount is outstanding and no commitment is in
effect under Specified Senior Indebtedness or (ii) if any amount is outstanding
or any commitment is in effect under Specified Senior Indebtedness, upon the
earlier of (A) five Business Days after delivery of the Acceleration Notice by
the Trustee or the Holders, as the case may be, to the Company and the agent or
another designated representative of the holders of each and any Specified
Senior Indebtedness outstanding or (B) acceleration of the Specified Senior
Indebtedness, and thereupon the Trustee may, at its discretion, proceed to
protect and enforce the rights of the Holders of the Securities by appropriate
judicial proceedings. Upon a declaration of acceleration, such principal,
premium, if any, and accrued interest shall be due and payable. If an Event of
Default under Sections 7.01(iv) and 7.01(v) occurs, all unpaid principal of,
premium, if any, and accrued interest on the Securities then outstanding shall
IPSO FACTO become and be immediately due and payable without any declaration or
other act on the part of the Company, the Trustee or any Holder. The Holders of
at least 66 2/3% of the aggregate principal amount of the Securities at the time
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outstanding by notice to the Trustee may rescind an acceleration and its
consequences, except an acceleration due to default in payment of principal or
interest on the Securities.
SECTION 7.03. OTHER REMEDIES. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy by proceeding at law or
in equity to collect the payment of principal of, premium, if any, or interest
on the Securities or to enforce the performance of any provision of the
Securities or this Indenture.
The Trustee may maintain a proceeding even if the Trustee does not
possess any of the Securities or does not produce any of the Securities in the
proceeding. A delay or omission by the Trustee or any Securityholder in
exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of, or acquiescence in, the
Event of Default. No remedy is exclusive of any other remedy. All available
remedies are cumulative.
SECTION 7.04. WAIVER OF PAST DEFAULTS. The Holders of 66 2/3% in
aggregate principal amount of the Securities at the time outstanding, by notice
to the Trustee (and without notice to any other Securityholder), may waive an
existing Default or Event of Default and its consequences except (a) an Event of
Default described in Section 7.01(i) hereof and (b) a Default in respect of a
provision that under Section 10.02 hereof can be amended only with the consent
of each Securityholder affected. When a Default or Event of Default is waived,
it is deemed cured and shall cease to exist, but no such waiver shall extend to
any subsequent or other Default or impair any consequent right.
SECTION 7.05. CONTROL BY HOLDERS. The Holders of 66 2/3% of the
aggregate principal amount of the Securities at the time outstanding may direct
the time, method and place of conducting any proceeding for any remedy available
to the Trustee or of exercising any trust or power conferred on the Trustee.
However, the Trustee may refuse to follow any direction that conflicts with law
or this Indenture or that the Trustee determines in good faith is unduly
prejudicial to the rights of other Securityholders or would involve the Trustee
in personal liability. The Trustee may take any other action deemed proper by
the Trustee which is not inconsistent with such direction.
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SECTION 7.06. LIMITATION ON SUITS. Except as provided in Section
7.07 hereof, a Securityholder may not pursue any remedy with respect to this
Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating that an
Event of Default is continuing;
(2) the Holders of at least 25% in aggregate principal amount of the
Securities at the time outstanding make a written request to the Trustee to
pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable security
or indemnity against any loss, liability or expense satisfactory to the Trustee;
(4) the Trustee does not comply with the request within 30 days after
receipt of the notice, the request and the offer of security or indemnity; and
(5) the Holders of 66 2/3% of the aggregate principal amount of the
Securities at the time outstanding do not give the Trustee a direction
inconsistent with the request during such 30-day period.
A Securityholder may not use this Indenture to prejudice the rights of
any other Securityholder or to obtain a preference or priority over any other
Securityholder.
SECTION 7.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT. Notwithstanding
any other provision of this Indenture, the right of any Holder to receive
payment of the principal amount, premium, if any, or interest, in respect of the
Securities held by such Holder, on or after the respective due dates expressed
in the Securities, any Redemption Date, any Change in Control Payment Date or
any Excess Proceeds Offer Payment Date, or to bring suit for the enforcement of
any such payment on or after such respective dates, shall not be impaired or
affected adversely without the consent of each such Holder.
SECTION 7.08. COLLECTION SUIT BY TRUSTEE. If an Event of Default
described in Section 7.01(i) hereof occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company for the whole amount owing with respect to the Securities and the
amounts provided for in Section 8.07 hereof.
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SECTION 7.09. TRUSTEE MAY FILE PROOFS OF CLAIM. In connection with
any judicial proceeding relative to the Company, its creditors or its property,
the Trustee shall be entitled and empowered, by intervention in such proceeding
or otherwise:
(1) to file and prove a claim for the whole amount of the principal
amount, premium, if any, and interest on the Securities and to file such other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and of the
Holders allowed in such judicial proceeding; and
(2) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any Custodian in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay the
Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 8.07 hereof.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
SECTION 7.10. PRIORITIES. If the Trustee collects any money pursuant
to this Article 7, it shall pay out the money in the following order:
FIRST: to the Trustee for amounts due under Section 8.07 hereof;
SECOND: to Securityholders for amounts due and unpaid on the
Securities for the principal amount, Redemption Price or interest, if any, as
the case may be, ratably, without preference or priority of any kind, according
to such amounts due and payable on the Securities; and
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THIRD: the balance, if any, to the Company.
The Trustee may fix a record date and payment date for any payment to
Securityholders pursuant to this Section 7.10.
SECTION 7.11. UNDERTAKING FOR COSTS. In any suit for the enforcement
of any right or remedy under this Indenture or in any suit against the Trustee
for any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant (other than the Trustee) in the suit of
an undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees and expenses,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section 7.11
does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section
7.07 hereof or a suit by Holders of more than 10% in aggregate principal amount
of the Securities at the time outstanding.
ARTICLE 8
TRUSTEE
SECTION 8.01. DUTIES OF TRUSTEE.
(1) If an Event of Default has occurred and is continuing, the
Trustee shall exercise the rights and powers vested in it by this Indenture and
use the same degree of care and skill in its exercise as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(2) Except during the continuance of an Event of Default:
(A) the Trustee need perform only those duties that are
specifically set forth in this Indenture and no others; and
(B) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture.
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However, in the case of any such certificate or opinion
which by any provision hereof are specifically required to
be furnished to the Trustee, the Trustee shall examine the
certificates and opinions to determine whether or not they
conform to the requirements of this Indenture.
(3) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(A) this paragraph (3) does not limit the effect of paragraph
(2) of this Section 8.01;
(B) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved
that the Trustee was negligent in ascertaining the pertinent
facts; and
(C) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 7.05 hereof.
(4) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (1), (2), (3) and (5) of this Section 8.01 and
Section 8.02.
(5) The Trustee shall be under no obligation to perform any duty or
to exercise any of the rights or powers vested in it by this Indenture or to
extend or risk its own funds or otherwise incur any financial liability at the
request or direction of any of the Holders pursuant to this Indenture, unless
such Holders shall have offered to the Trustee reasonable security and indemnity
satisfactory to it against any loss, liability or expense which might be
incurred by it in compliance with such request or direction.
(6) Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The Trustee
shall not be liable for the payment of any interest on any money deposited with
it except to the extent agreed upon with the Company in writing.
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SECTION 8.02. RIGHTS OF TRUSTEE.
(1) Subject to Section 8.01(2)(B), the Trustee may rely on any
document believed by it to be genuine and to have been signed or presented by
the proper Person. The Trustee need not investigate any fact or matter stated
in the document.
(2) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate and an Opinion of Counsel. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate and Opinion of Counsel.
(3) The Trustee may act through agents and shall not be responsible
for the misconduct or negligence of any agent appointed with due care.
(4) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers conferred upon it by the Indenture.
(5) The Trustee may consult with counsel of its selection and the
written advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in reliance thereon.
SECTION 8.03. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent or Registrar may do the
same with like rights. However, the Trustee must comply with Sections 8.10 and
8.11 hereof.
SECTION 8.04. TRUSTEE'S DISCLAIMER. The Trustee makes no
representation as to the validity or adequacy of this Indenture or the
Securities. It shall not be accountable for the Company's use of the proceeds
from the Securities, and it shall not be responsible for any statement in any
registration statement for the Securities under the Securities Act (other than
statements contained in any Form T-1 filed with the SEC under the TIA) or in
this Indenture or the Securities (other than its certificate of authentication),
or solely in its capacity as Trustee the determina-
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tion as to which beneficial owners are entitled to receive any notices
hereunder.
SECTION 8.05. NOTICE OF DEFAULTS. If a Default or Event of Default
occurs and is continuing and if it is known to the Trustee, the Trustee shall
mail to the Securityholders, as their names and addresses appear on the
Register, notice of the Default within 90 days after it becomes known to the
Trustee unless such Default shall have been cured or waived. Except in the case
of a Default described in Section 7.01(i) hereof, the Trustee may withhold such
notice if and so long as a committee of Trust Officers in good faith determines
that the withholding of such notice is in the interests of Securityholders. The
second sentence of this Section 8.05 shall be in lieu of the proviso to Section
315(b) of the TIA and said proviso is hereby expressly excluded from this
Indenture, as permitted by the TIA.
SECTION 8.06. REPORTS BY TRUSTEE TO HOLDERS. Within 60 days after
each April 15 beginning with April 15, 1995, the Trustee shall mail to each
Securityholder a brief report dated as of such April 15 in accordance with and
to the extent required under Section 313(a) of the TIA. The Trustee shall also
comply with the reporting requirements of Section 313(b) of the TIA, to the
extent applicable. All reports sent by the Trustee pursuant to this Section
8.06 will be sent in compliance with Section 313(b) of the TIA.
A copy of each report at the time of its mailing to Securityholders
shall be filed with the Company, the SEC and each stock exchange on which the
Securities are listed, if any. The Company agrees to promptly notify the
Trustee whenever the Securities become listed on any stock exchange and of any
delisting thereof.
SECTION 8.07. COMPENSATION AND INDEMNITY. The Company agrees:
(1) to pay to the Trustee from time to time such reasonable
compensation as shall be agreed in writing between the Company and the Trustee
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust);
(2) to reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the reasonable
compensation and
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the expenses, disbursements and advances of its agents and counsel), including
all reasonable expenses, disbursements and advances incurred or made by the
Trustee in connection with any membership on any creditor's committee, except
any such expense, disbursement or advance as may be attributable to its
negligence or bad faith; and
(3) to indemnify the Trustee in its capacity as such, and, in such
capacity, its officers and directors for, and to hold it harmless against, any
and all loss, liability or expense, incurred without negligence or bad faith on
its part, arising out of or in connection with the acceptance or administration
of this Indenture, including the costs and expenses of defending itself against
any claim or liability in connection with the exercise or performance of any of
its powers or duties hereunder.
The Trustee shall have a claim and lien prior to the Securities as to
all property and funds held by it hereunder for any amount owing it or any
predecessor Trustee pursuant to this Section 8.07, except with respect to funds
held in trust for the payment of principal of, premium, if any, or interest on
particular Securities.
The Company's payment obligations pursuant to this Section 8.07 are
not subject to Article 11 of this Indenture and shall survive the discharge of
this Indenture. When the Trustee renders services or incurs expenses after the
occurrence of a Default specified in Section 7.01(iv) or Section 7.01(v) hereof,
the compensation for services and expenses are intended to constitute expenses
of administration under any Bankruptcy Law.
SECTION 8.08. REPLACEMENT OF TRUSTEE. The Trustee may resign by so
notifying the Company in writing at least 30 days prior to the date of the
proposed resignation; provided, however, no such resignation shall be effective
until a successor Trustee has accepted its appointment pursuant to this Section
8.08. The Holders of at least 66 2/3% in aggregate principal amount of the
Securities at the time outstanding may remove the Trustee by so notifying the
Trustee and the Company in writing and may appoint a successor Trustee subject
to the consent of the Company. The Trustee shall resign and Company may remove
the Trustee if:
(1) the Trustee fails to comply with Section 8.10 hereof;
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(2) the Trustee is adjudged bankrupt or insolvent or an order of
relief is entered with respect to the Trustee under any Bankruptcy Law;
(3) a Custodian, receiver or public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of the Trustee for any reason, the Company shall promptly appoint a
successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. Subject to payment of all amounts owing to the
Trustee under Section 8.07 hereof and subject further to its lien under Section
8.07, the retiring Trustee shall promptly transfer all property held by it as
Trustee to the successor Trustee.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 66 2/3% in aggregate principal amount of the Securities at
the time outstanding may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee fails to comply with Section 8.10 hereof, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
SECTION 8.09. SUCCESSOR TRUSTEE BY MERGER. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets (including this Trusteeship) to,
another corporation, the resulting, surviving or transferee corporation without
any further act shall be the successor Trustee.
SECTION 8.10. ELIGIBILITY; DISQUALIFICATION. The Trustee shall at
all times satisfy the requirements of TIA Section 310(a)(1). The Trustee shall
have a combined capital and surplus of at least $50,000,000 or such other amount
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as required by the TIA hereafter, as set forth in its most recent published
annual report of condition. The Trustee shall comply with TIA Section 310(b).
In determining whether the Trustee has conflicting interests as defined in TIA
Section 310(b)(1), the provisions contained in the proviso to TIA Section
310(b)(1) shall be deemed incorporated herein. If at any time the Trustee shall
cease to be eligible in accordance with the provisions of this Section, it shall
resign immediately in the manner and with the effect specified in Section 8.08.
SECTION 8.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY.
If and when the Trustee shall be or become a creditor of the Company (or any
other obligor under the Securities), the Trustee shall be subject to the
provisions of the TIA regarding the collection of claims against the Company (or
any such other obligor). If at any time the Trustee shall cease to be eligible
in accordance with the provisions of this Section, it shall resign immediately
in the manner and with the effect specified in Section 8.08.
ARTICLE 9
DISCHARGE OF INDENTURE;
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 9.01. LEGAL TERMINATION. This Indenture shall cease to be of
further effect (except that the Company's obligations under Section 8.07 and the
Trustee's and Paying Agent's obligations under Section 9.07 shall survive), when
all Securities previously authenticated and delivered (other than destroyed,
lost or stolen Securities which have been replaced or paid) have been delivered
to the Trustee for cancellation and the Company has paid all sums payable by it
hereunder.
SECTION 9.02. COMPANY'S OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT
DEFEASANCE. The Company may, at its option at any time, elect to have either
Section 9.03 or Section 9.04 applied to the outstanding Securities upon
compliance with the conditions set forth below in this Article 9.
SECTION 9.03. LEGAL DEFEASANCE AND DISCHARGE. Upon the Company's
exercise of the option provided in Section 9.02 applicable to this Section 9.03,
the Company and the Guarantors shall be deemed to have been discharged from
their obligations with respect to the outstanding Securities (other than those
specified below), on the date the condi-
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tions set forth below are satisfied (hereinafter "legal defeasance"). For this
purpose, such legal defeasance means that the Company shall be deemed to have
paid and discharged the entire Indebtedness represented by the outstanding
Securities, which shall thereafter be deemed to be "outstanding" only for the
purposes of the sections of, and matters under, this Indenture referred to in
clauses (A) and (B) below and to have satisfied all its other obligations under
such Securities and this Indenture insofar as such Securities are concerned (and
the Trustee, at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following which shall survive until
otherwise terminated or discharged hereunder: (A) the rights of Holders of such
Securities to receive, solely from the trust fund described in Section 9.05(i)
and as more fully set forth in such Section, payments in respect of the
principal of, premium, if any, and interest on such Securities when such
payments are due, (B) the Company's obligations with respect to such Securities
under Sections 2.03, 2.06 and 2.07, (C) the rights, powers, trusts, duties and
immunities of the Trustee hereunder, and (D) this Article 9. Subject to
compliance with this Article 9, the Company may exercise its option under this
Section 9.03 notwithstanding the prior exercise of its option under Section
9.04.
SECTION 9.04. COVENANT DEFEASANCE. Upon the Company's exercise of
the option provided in Section 9.02 applicable to this Section 9.04, (i) the
Company and the Guarantors shall be released from their respective obligations
under Articles 3, 5 and 6 hereof and (ii) the occurrence of an event specified
in Section 7.01 with respect to any of the provisions of Articles 3, 5 or 6
hereof shall not be deemed to be an Event of Default on and after the date the
conditions set forth below are satisfied (hereinafter, "covenant defeasance").
SECTION 9.05. CONDITIONS TO LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The following shall be the conditions to application of either Section 9.03 or
Section 9.04 to the then outstanding Securities and Guarantees:
(i) the Company must have irrevocably deposited with the Trustee, in
trust, for the benefit of the Holders of the Securities, Cash in U.S. dollars,
U.S. Government Obligations, or a combination thereof, in such amounts as will
be sufficient, in the written opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, premium, if any, and
interest on the outstanding Securities on the Stated Maturity of the Securities
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or upon redemption and have irrevocably instructed the Trustee to apply such
money or the proceeds of such U.S. Governmental Obligations to the payment of
said principal, premium, if any, and interest with respect to the Securities;
(ii) the Company shall have delivered to the Trustee an Opinion of Counsel
stating that the Holders of the outstanding Securities will not recognize
income, gain or loss for federal income tax purposes as a result of such
defeasance and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such defeasance
had not occurred and, in the case of legal defeasance, stating that (A) the
Company has received from, or there has been published by, the Internal Revenue
Service a ruling, or (B) since the Closing Date there has been a change in the
applicable federal income tax laws or regulations, or (C) there exists
controlling precedent to such effect; (iii) no Default or Event of Default shall
have occurred and be continuing on the date of such deposit; (iv) such
defeasance shall not result in a breach or violation of or constitute a default
under any material agreement or instrument to which the Company is a party or by
which it is bound; and (v) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent to such defeasance have been satisfied.
After such irrevocable deposit made pursuant to this Section 9.05 and
satisfaction of the other applicable conditions set forth in this Section 9.05,
the Trustee upon request shall acknowledge in writing the discharge of the
Company's obligations under this Indenture except for those surviving
obligations specified above.
The Trustee shall hold in trust money or U.S. Governmental Obligations
deposited with it pursuant to this Section 9.05. It shall apply the deposited
money and the money from the U.S. Governmental Obligations through the Paying
Agent and in accordance with this Indenture to the payment of principal of,
premium, if any, and interest on the Securities.
SECTION 9.06. REINSTATEMENT. If the Trustee or Paying Agent is
unable to apply any money in accordance with Section 9.03 or Section 9.04 by
reason of any legal proceeding or of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to this Article 9
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until such time as the Trustee or Paying Agent is permitted to apply all such
money in accordance with this Article 9; provided, however, that if the Company
makes any payment of interest on or principal of any Security following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Securities to receive such payment from the money held by
the Trustee or Paying Agent.
SECTION 9.07. REPAYMENT TO THE COMPANY. Subject to Section 8.07, the
Trustee and the Paying Agent shall promptly pay to the Company upon written
request any excess money or U.S. Government Obligations or both held by them at
any time. The Trustee and the Paying Agent shall return to the Company upon
written request any money or U.S. Government Obligations held by them for the
payment of any amount with respect to the Securities that remains unclaimed for
two years after the date upon which such payment shall have become due;
provided, however, that the Trustee or such Paying Agent, before being required
to make such return, may, in the name and at the expense of the Company, cause
to be published once in THE WALL STREET JOURNAL or another daily newspaper of
national circulation or mail to each such Holder notice that such money or U.S.
Government Obligations remain unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such mailing or
publication, any unclaimed money or U.S. Government Obligations, or both, then
remaining will be returned to the Company. After the unclaimed monies or U.S.
Government Obligations are returned to the Company, Holders entitled to the
money or proceeds of the U.S. Government Obligations must look to the Company
for payment as general creditors unless an applicable abandoned property law
designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money or U.S. Government Obligations shall cease.
ARTICLE 10
AMENDMENTS
SECTION 10.01. WITHOUT CONSENT OF HOLDERS. From time to time, the
Company, the Guarantors and the Trustee, and when required pursuant to Section
5.09, a Subsidiary, without notice to or the consent of the Holders of the
Securities issued hereunder, may amend or supplement this Indenture or the
Securities as follows:
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(1) to cure any ambiguity, defect or inconsistency;
(2) to comply with Article 6 hereof; or
(3) to provide for certificated or uncertificated Securities in
addition to or in place of uncertificated or certificated Securities; or
(4) to make any other change that does not adversely affect the
rights of any Securityholder;
(5) to supplement this Indenture to provide for additional
Guarantors; or
(6) to comply with any requirement of the SEC in connection with the
qualification of this Indenture or the Trustee under the TIA.
SECTION 10.02. WITH CONSENT OF HOLDERS. With the written consent of
the Holders of at least 66 2/3% of the aggregate principal amount of the
Securities at the time outstanding, the Company, the Guarantors and the Trustee
may amend or supplement this Indenture or the Securities or may waive any
existing Default or future compliance by the Company with any provisions of this
Indenture or the Securities (other than a continuing Default or Event of Default
in the payment of principal or interest on any Security). However, without the
consent of each Securityholder affected, a waiver or an amendment to this
Indenture or the Securities may not (with respect to any Securities held by a
non-consenting Holder of Securities):
(1) reduce the percentage of principal amount of the Securities whose
Holders must consent to an amendment or waiver; or
(2) make any change to the Stated Maturity or the time or currency of
payment of the principal of, premium, if any, or interest on, the Securities, or
any Redemption Price thereof; or
(3) make any change in Article 3 or Article 11 hereof that adversely
affects the rights of any Holder of Securities or any change to any other
Section hereof that adversely affects the rights of any Holder of Securities
under Article 3 or Article 11 hereof; or
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(4) waive a default in the payment of the principal of, premium, if
any, or interest on, any Security; or
(5) make any change in the provisions of Sections 5.07, 5.09, 5.14,
5.15 or 5.20 hereof; or
(6) make any change to Section 10.02 hereof.
It shall not be necessary for the consent of the Holders under this
Section 10.02 to approve the particular form of any proposed amendment or
supplement, but it shall be sufficient if such consent approves the substance
thereof.
In the event that certain Holders are willing to defer or waive
certain obligations of the Company or the Guarantors hereunder with respect to
Securities held by them, such deferral or waiver shall not be deemed to affect
any other Holder who receives the subject payment or performance in a timely
manner.
After an amendment or waiver under this Section 10.02 becomes
effective, the Company promptly shall mail or cause to be mailed to each Holder
a notice briefly describing the amendment or waiver. Any failure of the Company
to mail such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such amendment or waiver.
SECTION 10.03. COMPLIANCE WITH TRUST INDENTURE ACT. Every amendment
to this Indenture or the Securities shall be set forth in a supplemental
indenture executed pursuant to this Article 10 which shall comply with the TIA.
SECTION 10.04. REVOCATION AND EFFECT OF CONSENTS, WAIVERS AND
ACTIONS. Until an amendment, supplement, waiver or other action by Holders
becomes effective, a consent to it or any other action by a Holder of a Security
hereunder is a continuing consent by the Holder and every subsequent Holder of
that Security or portion of the Security that evidences the same obligation as
the consenting Holder's Security, even if notation of the consent, waiver or
action is not made on the Security. However, any such Holder or subsequent
Holder may revoke the consent, waiver or action as to such Holder's Security or
portion of the Security if the Trustee receives notice of revocation before the
consent of the requisite aggregate principal amount of the Securities then
outstanding has been obtained and becomes effective. After an amendment,
supplement, waiver or action
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becomes effective, it shall bind every Securityholder, except as provided in
Section 10.02 hereof.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement, or waiver. If a record date is fixed, then, notwithstanding the
first two sentences of the immediately preceding paragraph, those Persons who
were Holders at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to consent to such amendment, supplement or
waiver or to revoke any consent previously given, whether or not such Persons
continue to be Holders after such record date. No such consent shall be valid
or effective for more than 90 days after such record date, unless consents from
Holders of the aggregate principal amount of Securities required hereunder for
such amendment, supplement or waiver to be effective shall have also been given
and not revoked within such 90 day period.
SECTION 10.05. NOTATION ON OR EXCHANGE OF SECURITIES. Securities
authenticated and made available for delivery after the execution of any
supplemental indenture pursuant to this Article 10 may, and shall, if required
by the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and made available for delivery by the Trustee in
exchange for outstanding Securities.
SECTION 10.06. TRUSTEE TO SIGN SUPPLEMENTAL INDENTURES. Upon the
request of the Company, the Trustee shall join with the Company in the execution
of any amendment or supplemental indenture authorized or permitted by the terms
of this Indenture but the Trustee shall not be obligated to execute any such
amendment or supplemental indenture which affects its own rights, duties,
liabilities or immunities under this Indenture or otherwise. In signing such
amendment or supplemental indenture the Trustee shall be entitled to receive,
and shall be fully protected in relying upon, an Officers' Certificate and
Opinion of Counsel stating that such amendment or supplemental indenture is
authorized or permitted by this Indenture.
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SECTION 10.07. EFFECT OF AMENDMENTS AND SUPPLEMENTAL INDENTURES. Upon
the execution of any amendment or supplemental indenture under this Article 10,
this Indenture shall be modified in accordance therewith, and such amendment or
supplemental indenture shall form a part of this Indenture for all purposes; and
every Holder of Securities theretofore or thereafter authenticated and made
available for delivery hereunder shall be bound thereby.
ARTICLE 11
SUBORDINATION
SECTION 11.01. AGREEMENT TO SUBORDINATE. The Company agrees, and
each Securityholder by accepting a Security agrees, that the Indebtedness
evidenced by the Securities (including, without limitation, principal, premium,
if any, and interest) is subordinated in right of payment, to the extent and in
the manner provided in this Article 11, to the prior payment in full of all
Senior Indebtedness, and that the subordination is for the benefit of the
holders of the Senior Indebtedness.
For purposes of this Indenture, including without limitation this
Section 11.01, "Senior Indebtedness" means the principal of and premium, if any,
and interest on (such interest on Senior Indebtedness, wherever referred to in
this Indenture, being deemed to include interest accruing after the filing of a
petition initiating any proceeding pursuant to any bankruptcy law in accordance
with and at the rate (including any rate applicable upon any default or event of
default, to the extent lawful) specified in any document evidencing the Senior
Indebtedness, whether or not the claim for such interest is allowed as a claim
after such filing in any proceeding under such bankruptcy law) and other amounts
(including, but not limited to, fees, expenses, reimbursement obligations in
respect of letters of credit and indemnities) due or payable from time to time
on or in connection with any Indebtedness of the Company or any of its
Restricted Subsidiaries incurred pursuant to the first paragraph of Section 5.08
or permitted under clauses (i), (ii), (iv), (vi), (vii), (viii), (x) and (xiii)
of the second paragraph of Section 5.08, in each case whether outstanding on the
Closing Date or thereafter created, incurred or assumed, unless, in the case of
any particular Indebtedness, the instrument creating or evidencing the same or
pursuant to which the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to the Securities.
Notwithstanding anything to
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the contrary in the foregoing, Senior Indebtedness shall not include (a) any
Indebtedness of the Company to any of its Subsidiaries or other Affiliates, (b)
any Indebtedness incurred after the Closing Date that is contractually
subordinated in right of payment to any Senior Indebtedness, and (c) amounts
owed (except to banks and other financial institutions) for goods, materials or
services purchased in the ordinary course of business or for compensation to
employees.
SECTION 11.02. LIQUIDATION; DISSOLUTION; BANKRUPTCY. Upon any
payment or distribution of assets or securities of the Company (i) in
bankruptcy, reorganization, insolvency, receivership or similar case or
proceeding relating to the Company or its property, (ii) upon an assignment for
the benefit of creditors or any marshalling of the assets and liabilities of the
Company, or (iii) upon distribution to creditors of the Company in a
liquidation, dissolution or other winding up of the Company, whether voluntary
or involuntary and whether or not involving insolvency or bankruptcy, holders of
Senior Indebtedness shall be entitled to receive payment in full of all
obligations in respect of all Senior Indebtedness before Securityholders shall
be entitled to receive any direct or indirect payment or distribution of assets
of the Company of any kind or character of principal of, premium, if any, or
interest on, the Securities, or on account of any purchase, defeasance, or other
acquisition of Securities (other than amounts already deposited for defeasance
or redemption pursuant to applicable provisions of this Indenture) by the
Company, any Subsidiary, the Trustee or any Paying Agent (excluding securities
of the Company or any other corporation that are equity securities or are
subordinated to the payment of all Senior Indebtedness at least to the extent
provided in this Article 11 with respect to the Securities; such securities are
hereinafter collectively referred to as "Permitted Junior Securities").
For purposes of this Article 11, a distribution may consist of Cash,
securities or other assets (excluding Permitted Junior Securities), by set-off
or otherwise.
The consolidation of the Company with, or the merger of the Company
into, another corporation or the liquidation or dissolution of the Company
following the conveyance or transfer of its properties and assets substantially
as an entirety to another Person upon the terms and conditions set forth in
Article 6 hereof shall not be deemed a dissolution, winding up, liquidation or
reorganization or
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similar proceeding, for the purposes of this Section 11.02 if the corporation
formed by such consolidation or into which the Company is merged or the Person
which acquires by conveyance or transfer such properties and assets
substantially as an entirety, as the case may be, shall, as a part of such
consolidation, merger, conveyance or transfer comply with the conditions set
forth in Article 6 hereof.
Any payment or distribution of assets of the Company of any kind or
character, whether in Cash, property or securities (excluding Permitted Junior
Securities), by set-off or otherwise, to which the Holders of the Securities or
the Trustee would be entitled but for the provisions of this Article 11, shall
be paid by the liquidating trustee or agent or other Person making such payment
or distribution, whether a trustee in bankruptcy, a receiver or liquidating
trustee or otherwise, directly to the holders of Senior Indebtedness or their
representative or to the trustee under any indenture under which any instruments
evidencing any of such Senior Indebtedness may have been issued (pro rata as to
each such holder, representative or trustee on the basis of the respective
amounts of unpaid Senior Indebtedness held or represented by each), to the
extent necessary to make payment in full of all Senior Indebtedness remaining
unpaid, after giving effect to any concurrent payment or distribution or
provision therefor to the holders of such Senior Indebtedness.
SECTION 11.03. DEFAULT ON SPECIFIED SENIOR INDEBTEDNESS. Upon the
final maturity of any principal and interest on Specified Senior Indebtedness by
lapse of time, acceleration (unless waived, rescinded or annulled) or otherwise,
all principal thereof and accrued and unpaid interest thereon and all accrued
and unpaid expenses, fees and other amounts in respect thereof shall first be
paid in full in Cash, or such payment duly provided for in Cash or in a manner
otherwise satisfactory to the holders of such Specified Senior Indebtedness,
before any direct or indirect payment or distribution of assets of the Company
of any kind or character (excluding Permitted Junior Securities) is made on
account of principal of, premium, if any, or interest on the Securities or on
account of any purchase, defeasance or other acquisition of Securities (other
than amounts already deposited for defeasance or redemption pursuant to
applicable provisions of this Indenture).
The Company may not directly or indirectly pay principal of, premium,
if any, or interest on, the Securities, or on account of the purchase,
defeasance or
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other acquisition of the Securities (other than amounts already deposited for
defeasance or redemption pursuant to applicable provisions of this Indenture)
for Cash or property (in each case, excluding Permitted Junior Securities) if
(i) a default in the payment of principal of or interest on any Specified Senior
Indebtedness or in the payment of any letter of credit commission under the New
Credit Agreement occurs and is continuing that permits, or upon the lapse of
time would permit, the holders (or their agent) of such Specified Senior
Indebtedness to accelerate its maturity or the maturity of which has been
accelerated (a "Payment Default"); or (ii) a default, other than a Payment
Default, on any Specified Senior Indebtedness occurs and is continuing that
permits the holders (or the agent) of such Specified Senior Indebtedness to
accelerate its maturity (a "Non-Payment Default"), and such default is either
the subject of judicial proceedings or the Trustee or the Paying Agent receives
a notice of the default from an agent or representative of a holder of Specified
Senior Indebtedness.
The Trustee or the Paying Agent shall resume payments on the
Securities and the Company may acquire them upon the earlier of (a) in the case
of Payment Default, the date such Payment Default is cured or waived, or (b) in
the case of a Non-Payment Default, the 179th day after receipt of notice of the
default if the default is not the subject of judicial proceedings, if otherwise
permitted under the terms of this Indenture at that time. During any
consecutive 360-day period, only one such 179-day period may commence during
which payment of principal of or interest on the Securities may not be made. No
Non-Payment Default with respect to Specified Senior Indebtedness which existed
or was continuing on the date of the commencement of any such 179-day period
will be, or can be, made the basis for the commencement of a second such 179-day
period, whether or not within a period of 360 consecutive days, unless such
default has been cured or waived for a period of not less than 90 consecutive
days.
SECTION 11.04. NO SUSPENSION OF REMEDIES. A Payment Default or
Non-Payment Default with respect to Specified Senior Indebtedness does not
suspend the rights of the Trustee or the Holders to accelerate the maturity
thereof pursuant to Section 7.02 hereof, or, subject to the rights of holders of
Senior Indebtedness under Section 11.05 hereof, to pursue any other rights or
remedies hereunder or under applicable law.
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SECTION 11.05. WHEN DISTRIBUTION MUST BE PAID OVER. In the event
that, notwithstanding the foregoing, any payment or distribution of assets of
any kind or nature (excluding Permitted Junior Securities) of the Company is
received by the Trustee in respect of the Securities at a time when such payment
or distribution is prohibited by Section 11.02, 11.03 or 11.04 hereof, such
payment or distribution, as the case may be, shall be held by the Trustee, in
trust for the benefit of, and shall be promptly paid forthwith over and
delivered to, the holders of Senior Indebtedness (pro rata as to each of such
holders on the basis of the respective amounts of Senior Indebtedness held by
them) or their representative, as their respective interests may appear, for
application to the payment of all Senior Indebtedness in full in accordance with
their terms, after giving effect to any concurrent payment or distribution to or
for the holders of Senior Indebtedness.
If a payment or distribution is made to Securityholders that because
of this Article 11 should not have been made to them, the Securityholders who
receive the payment or distribution shall hold the payment or distribution
(excluding Permitted Junior Securities) in trust for the benefit of, and shall
be promptly paid forthwith over and delivered to, the holders of Senior
Indebtedness (pro rata as to each of such holders on the basis of the respective
amounts of Senior Indebtedness held by them) or their representative, as their
respective interests may appear, for application to the payment of all Senior
Indebtedness in full in accordance with their terms, after giving effect to any
concurrent payment or distribution to or for the holders of Senior Indebtedness.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform only such covenants and obligations on the part of the
Trustee as are specifically set forth in this Article 11, and no implied
covenants or obligations with respect to the holders of Senior Indebtedness
shall be read into this Indenture against the Trustee. The Trustee shall not be
deemed to owe any fiduciary duty to the holders of Senior Indebtedness.
SECTION 11.06. NOTICE BY THE COMPANY. The Company shall promptly
notify the Trustee and the Paying Agent of any facts known to the Company that
would cause a payment or distribution on the Securities to violate this Article
11, but failure to give such notice shall not affect the subordination of the
Securities to the Senior Indebtedness provided in this Article 11. Nothing in
this Article 11
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shall apply to claims of, or payments to, the Trustee under or pursuant to
Section 8.07 hereof.
SECTION 11.07. SUBROGATION. After all Senior Indebtedness is paid in
full in Cash or, at the option of the holders of Senior Indebtedness, Cash
Equivalents and until the Securities are paid in full, Securityholders shall be
subrogated to the rights of holders of Senior Indebtedness to receive
distributions applicable to Senior Indebtedness to the extent that distributions
otherwise payable to Securityholders have been applied to the payment of Senior
Indebtedness.
SECTION 11.08. RELATIVE RIGHTS. This Article 11 defines the relative
rights of Securityholders and holders of Senior Indebtedness. Nothing in this
Indenture shall:
(1) impair, as between the Company and Securityholders, the
obligation of the Company, which is absolute and unconditional, to pay principal
of and interest on the Securities in accordance with their terms;
(2) affect the relative rights of Securityholders and creditors of
the Company other than holders of Senior Indebtedness; or
(3) prevent the Trustee or any Securityholder from exercising its
available remedies upon a Default or Event of Default, subject to the rights of
holders of Senior Indebtedness under this Article 11.
Subject to this Section, if the Company fails because of this
Article 11 to pay principal of or interest on a Security on the due date, the
failure is still a Default or Event of Default.
The provisions of this Article 11 shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any Senior
Indebtedness is rescinded or must otherwise be returned by any holder of Senior
Indebtedness upon the insolvency, bankruptcy or reorganization of the Company or
otherwise, all as though such payment had not been made.
SECTION 11.09. NO WAIVER OF SUBORDINATION PROVISIONS. No right of
any holder of Senior Indebtedness to enforce the subordination of the
Indebtedness evidenced by the Securities shall at any time in any way be
prejudiced or impaired by any act or failure to act by the Company or by
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its failure to comply with this Indenture or by any act or failure to act, in
good faith, by such holder of Senior Indebtedness, regardless of any knowledge
thereof which such holder may have or otherwise be charged with.
The holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders of the
Securities and without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article 11
or the obligations hereunder of the parties to this Indenture or of the Holders
of the Securities to the holders of Senior Indebtedness, do any one or more of
the following: (1) change the manner, place or terms of payment or extend the
time of payment of, or renew or alter, Senior Indebtedness or any document,
instrument or agreement evidencing the same or under which Senior Indebtedness
is outstanding; (2) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Indebtedness; (3) release any
Person liable in any manner for the collection or payment of Senior
Indebtedness; (4) exercise or refrain from exercising or waive any rights
against the Company or any other Person; and (5) otherwise deal freely with the
Company and each Guarantor. No provision in any supplemental indenture which
affects the superior position of the holders of Senior Indebtedness will be
effective against the holders of Senior Indebtedness who have not consented
thereto.
SECTION 11.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE. Whenever a
payment or distribution is to be made or a notice given to holders of Senior
Indebtedness, the payment or distribution may be made and the notice given to
their representative.
Upon any payment or distribution of assets of the Company referred to
in this Article 11, the Trustee and the Securityholders shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction or
upon any certificate of the representative of holders of Senior Indebtedness or
of the liquidating trustee or agent or other Person making any distribution to
the Trustee or to the Securityholders for the purpose of ascertaining the
Persons entitled to participate in such payment or distribution, the holders of
the Senior Indebtedness and other Indebtedness of the Company, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article 11.
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SECTION 11.11. RIGHTS OF TRUSTEE AND PAYING AGENT. The Trustee or
Paying Agent shall not at any time be charged with the knowledge of the
existence of any facts which would prohibit the making of any payment to or by
the Trustee unless and until the Trustee or Paying Agent shall have received
written notice thereof from the Company or any holders (or the agent) of
Specified Senior Indebtedness; and, prior to the receipt of any such written
notice, the Trustee or Paying Agent shall be entitled to assume conclusively
that no such facts exist. Notwithstanding the provisions of this Article 11, or
any other provisions of this Indenture, unless at least one Business Day prior
to the date on which by the terms of this Indenture any monies are to be
deposited by the Company with the Trustee or any Paying Agent (whether or not in
trust) for any purpose (including, without limitation, the payment of either the
principal of or the interest on any Security), the Trustee or Paying Agent shall
have received with respect to such monies the notice provided for in the
preceding sentence, the Trustee or Paying Agent shall have full power and
authority to receive such monies and shall be entitled to apply the same to the
purpose for which they were received, and shall not be affected by any notice to
the contrary which may be received by it on or after such date. The foregoing
shall not apply to the Paying Agent if the Company is acting as Paying Agent.
Nothing contained in this Section 11.11 shall limit the rights of the holders of
Senior Indebtedness under Section 11.05 hereof.
Any notice required or permitted to be given to the Trustee by a
holder of Senior Indebtedness shall be in writing and shall be sufficient for
every purpose hereunder if in writing and either (i) sent via facsimile to the
Trustee at (212) 658-6425 or at any other facsimile number furnished in writing
to such holder of Senior Indebtedness by the Trustee, the receipt of which shall
be confirmed via telephone at (212) 658-6553 or any other telephone number
furnished in writing to such holder of Senior Indebtedness by the Trustee, or
(ii) mailed, first-class postage prepaid, or sent by overnight carrier, to the
Trustee addressed to it at the address specified in Section 12.02 hereof or at
any other address furnished in writing to such holder of Senior Indebtedness by
the Trustee.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness with the same rights it would have if it were not Trustee.
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SECTION 11.12. AUTHORIZATION TO EFFECT SUBORDINATION. Each Holder of
a Security by his acceptance thereof authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to effectuate the
subordination as provided in this Article 11, and appoints the Trustee as
attorney-in-fact for any and all purposes.
If a proper claim or proof of debt in the form required in any
bankruptcy, insolvency or receivership proceeding in respect of the Company or
any Guarantor is not filed by or on behalf of all Holders prior to 30 days
before the expiration of the time to file such claims or proofs, then the
holders or a representative of any Senior Indebtedness are hereby authorized,
and shall have the right (without any duty), to file an appropriate claim for
and on behalf of the Holders.
SECTION 11.13. MISCELLANEOUS.
(a) All rights and interests under this Article 11 of the holders of
Specified Senior Indebtedness and other Senior Indebtedness, and all agreements
and obligations of the Holders, the Trustee and the Company under this
Article 11, shall remain in full force and effect irrespective of:
(i) any lack of validity or enforceability of the New Credit
Agreement, the notes or security instruments issued pursuant thereto or any
other agreement or instrument relating thereto;
(ii) any exchange, release or non-perfection of any Lien securing
Senior Indebtedness, or any release, amendment, modification or waiver of
or addition or supplement to, or deletion from, or compromise, release,
consent or other action in respect of, any of the terms of any Senior
Indebedness (including the New Credit Agreement), or any guaranty or
security agreement for all or any of the Senior Indebtedness;
(iii) any exercise or nonexercise by the holder of any Senior
Indebtedness or any representative thereof of any right, power, privilege
or remedy under or in respect of such Senior Indebtedness, or any waiver of
any such right, power, privilege or remedy or of any default in respect of
such Senior Indebtedness; or
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(iv) any requirement to provide any notice, whether by statute,
rule of law or otherwise, to preserve intact any rights of any holder of
any Senior Indebtedness against the Company, including, without limitation,
any demand, presentment and protest, proof of notice of nonpayment under
any document evidencing any Senior Indebtedness, and notice of any failure
on the part of the Company to perform and comply with any covenant,
agreement, term or condition of any document evidencing the Senior
Indebtedness;
(v) any requirement of diligence on the part of any holder of
any of the Senior Indebtedness;
(vi) any requirement on the part of any holder of any Senior
Indebtedness to mitigate damages resulting from any default under such
Senior Indebtedness;
(vii) any requirement to provide any notice of any matter referred
to above in this Section 11.13 or any sale, transfer or other disposition
of any Senior Indebtedness by any holder thereof; and
(viii) any other circumstance that might otherwise constitute a
defense available to, or a discharge of the Company in respect of Senior
Indebtedness or the Trustee in respect of this Indenture.
(b) The provisions of this Article 11 constitute a continuing
agreement and shall (i) remain in full force and effect until the Senior
Indebtedness shall have been paid in full, (ii) be binding upon the Holders and
the Trustee, the Company and their successors and assigns, and (iii) inure to
the benefit of and enforceable by each other holder of Specified Senior
Indebtedness and Senior Indebtedness and their successors, transferees and
assigns.
ARTICLE 12
MISCELLANEOUS
SECTION 12.01. TRUST INDENTURE ACT CONTROLS. If any provision of
this Indenture limits, qualifies or conflicts with the duties imposed by
operation of subsection (c) of Section 318 of the TIA, the imposed duties shall
control. The provisions of Sections 310 to 317, inclusive, of the TIA that
impose duties on any Person (including provisions automatically deemed included
in an indenture unless
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the indenture provides that such provisions are excluded) are a part of and
govern this Indenture, except as, and to the extent, expressly excluded from
this Indenture, as permitted by the TIA.
SECTION 12.02. NOTICES. Any notice or communication shall be in
writing and delivered in Person or mailed by first-class mail, postage prepaid,
addressed as follows:
if to the Company:
Charter Medical Corporation
577 Mulberry Street
Macon, Georgia 31298
Attention: Treasurer
Telecopy Number: 912 751-2375
if to the Guarantors:
c/o Charter Medical Corporation
577 Mulberry Street
Macon, Georgia 31298
Attention: Treasurer
Telecopy Number: 912 751-2375
if to the Trustee:
Marine Midland Bank
140 Broadway, 12th Floor
New York, New York 10015
Attention: Corporate Trust Department
Telecopy Number: 212 658-6425
The Company, the Guarantors or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications. The Company shall notify the holder, if any, of Specified
Senior Indebtedness of any such additional or different addresses of which the
Company receives notice from the Guarantors or the Trustee.
Any notice or communication given to a Securityholder shall be mailed
to the Securityholder at the Securityholder's address as it appears on the
registration books of the Registrar and shall be sufficiently given if so mailed
within the time prescribed.
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Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not received by the addressee.
If the Company mails a notice or communication to the Securityholders,
it shall mail a copy to the Trustee and each Registrar and Paying Agent.
SECTION 12.03. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar, the Paying Agent and
anyone else shall have the protection of TIA Section 312(c).
SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take any action
under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each
Officers' Certificate and Opinion of Counsel with respect to compliance with a
covenant or condition provided for in this Indenture shall include:
(1) a statement that each Person making such Officers' Certificate or
Opinion of Counsel has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
Officers' Certificate or Opinion of Counsel are based;
(3) a statement that, in the opinion of each such Person, he has made
such examination or investigation as is necessary to enable such Person to
express an informed opin-
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ion as to whether or not such covenant or condition has been complied with; and
(4) a statement that, in the opinion of such Person, such covenant or
condition has been complied with; provided, however, that with respect to
matters of fact, an Opinion of Counsel may rely on an Officers' Certificate or
certificates of public officials.
SECTION 12.06. SEVERABILITY CLAUSE. In case any provision in this
Indenture or in the Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 12.07. RULES BY TRUSTEE, PAYING AGENT AND REGISTRAR. The
Trustee may make reasonable rules for action by or a meeting of Securityholders.
The Registrar and Paying Agent may make reasonable rules for their functions.
SECTION 12.08. LEGAL HOLIDAYS. A "Legal Holiday" is any day other
than a Business Day. If any specified date (including a date for giving notice)
is a Legal Holiday, the action shall be taken on the next succeeding day that is
not a Legal Holiday, and, if the action to be taken on such date is a payment in
respect of the Securities, no principal, premium, if any, or interest
installment shall accrue for the intervening period.
SECTION 12.09. GOVERNING LAW. THIS INDENTURE AND THE SECURITIES
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, AS APPLIED TO INSTRUMENTS MADE AND PERFORMED WHOLLY WITHIN THE STATE
OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
SECTION 12.10. NO RECOURSE AGAINST OTHERS. A director, Officer,
employee or stockholder, as such, of the Company shall not have any liability
for any obligations of the Company under the Securities or this Indenture or for
any claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Securityholder shall waive and release
all such liability. The waiver and release shall be part of the consideration
for the issue of the Securities.
SECTION 12.11. SUCCESSORS. All agreements of the Company in this
Indenture and the Securities shall bind its successors. All agreements of the
Guarantors in this Inden-
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ture shall bind their respective successors. All agreements of the Trustee in
this Indenture shall bind its successor.
SECTION 12.12. MULTIPLE ORIGINALS. The parties may sign any number
of copies of this Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement. One signed copy is enough to prove
this Indenture.
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SIGNATURES
IN WITNESS WHEREOF, the undersigned, being duly authorized, have
executed this Indenture on behalf of the respective parties hereto as of the
date first above written.
Charter Medical Corporation
By /s/ Lawrence W. Drinkard
-------------------------------------
Name: Lawrence W. Drinkard
-----------------------------
Title: Executive Vice President
-----------------------------
and Chief Financial Officer
Marine Midland Bank
By /s/ Frank J. Godino
-------------------------------------
Name: Frank J. Godino
-----------------------------
Title: Asst. Corp. Trust Officer
-----------------------------
The Guarantors listed on Exhibit F attached hereto
By /s/ Charlotte A. Sanford
-------------------------------------
Name: Charlotte A. Sanford
-----------------------------
Title: Treasurer
-----------------------------
for each of the Guarantors
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[COMMON SEAL]
The Common Seal of
Charter Medical (Cayman Islands) Ltd.
was hereunto affixed in the presence of:
/s/ John C. McCauley
- ----------------------------------------
John C. McCauley
Director
/s/ Glenn A. McRae
- ----------------------------------------
Glenn A. McRae
Director
[COMMON SEAL]
The Common Seal of
Charter Medical International, Inc.
was hereunto affixed in the presence of:
/s/ John C. McCauley
- ----------------------------------------
John C. McCauley
Director
/s/ Glenn A. McRae
- ----------------------------------------
Glenn A. McRae
Director
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IN WITNESS WHEREOF, Charter Medical of England Limited has caused this
instrument to be duly executed as a Deed and delivered by two of its Directors
thereunto duly authorized as of the date first above written.
/s/ Charlotte A. Sanford
- ----------------------------------------
Charlotte A. Sanford
Director
/s/ James M. Filush
- ----------------------------------------
James M. Filush
Director
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- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CHARTER MEDICAL CORPORATION
____________________
$300,000,000
SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
____________________
Dated as of May 2, 1994
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
Section 1. Amount and Terms of Credit . . . . . . . . . . . . . . . . . . 2
1.1 Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Minimum Amount of Each Borrowing . . . . . . . . . . . . . . . . 5
1.3 Notice of Borrowing . . . . . . . . . . . . . . . . . . . . . . . 5
1.4 Disbursement of Funds . . . . . . . . . . . . . . . . . . . . . . 6
1.5 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.6 Conversions of Base Rate Loans and Continuations of Eurodollar
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.7 Pro Rata Borrowings . . . . . . . . . . . . . . . . . . . . . . . 11
1.8 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.9 Interest Periods . . . . . . . . . . . . . . . . . . . . . . . . 13
1.10 Increased Cost, Illegality, etc. . . . . . . . . . . . . . . . . 14
1.11 Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . 17
1.12 Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.13 Sharing of Payments, etc. . . . . . . . . . . . . . . . . . . . 18
1.14 Change of Lending Office . . . . . . . . . . . . . . . . . . . . 19
1.15 Replacement Lenders . . . . . . . . . . . . . . . . . . . . . . 19
1.16 Maturity of Borrowings. . . . . . . . . . . . . . . . . . . . . 21
Section 2. Letter of Credit Subfacility. . . . . . . . . . . . . . . . . . 22
2.1 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . 22
2.2 Notice of Issuance; Agreement to Issue. . . . . . . . . . . . . . 23
2.3 Payment of Amounts Drawn Under Letters of Credit. . . . . . . . . 25
2.4 Payment by Lenders. . . . . . . . . . . . . . . . . . . . . . . . 27
2.5 Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.6 Additional Payments; Illegality . . . . . . . . . . . . . . . 28
2.7 Subsidiary Letter of Credit. . . . . . . . . . . . . . . . . . . 30
2.8 Obligations Absolute. . . . . . . . . . . . . . . . . . . . . 30
2.9 Indemnification; Nature of L/C Banks' Duties. . . . . . . . . 31
Section 3. Commissions; Commitments. . . . . . . . . . . . . . . . . . . . 32
3.1 Commissions. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.2 Voluntary Reduction of Commitments. . . . . . . . . . . . . . . . 33
3.3 Mandatory Reduction of Commitments. . . . . . . . . . . . . . . . 34
3.4 Pro Rata Reductions; No Reinstatement. . . . . . . . . . . . . . 35
Section 4. Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.1 Voluntary Prepayments. . . . . . . . . . . . . . . . . . . . . . 35
4.2 Mandatory Prepayments and Repayments. . . . . . . . . . . . . . . 36
4.3 Application of Prepayments. . . . . . . . . . . . . . . . . . . . 40
4.4 Method and Place of Payment. . . . . . . . . . . . . . . . . . . 40
4.5 Net Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . 41
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Page
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4.6 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 5. Conditions Precedent. . . . . . . . . . . . . . . . . . . . . . 43
5.1 Conditions Precedent to Initial Loans . . . . . . . . . . . . . . 43
5.2 Conditions Precedent to Each Loan, etc. . . . . . . . . . . . . . 52
Section 6. Representations, Warranties and Agreements. . . . . . . . . . . 54
6.1 Corporate Existence; Compliance With Law. . . . . . . . . . . . . 55
6.2 Power; Authority; No Violation. . . . . . . . . . . . . . . . . . 55
6.3 Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.4 Financial Condition. . . . . . . . . . . . . . . . . . . . . . . 56
6.5 Litigation, etc. . . . . . . . . . . . . . . . . . . . . . . . . 58
6.6 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . 58
6.7 Approvals, etc. . . . . . . . . . . . . . . . . . . . . . . . . . 58
6.8 Security Interests. . . . . . . . . . . . . . . . . . . . . . . . 59
6.9 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
6.10 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
6.11 Investment Company Act; Public Utility Holding Company Act. . . 61
6.12 Closing Date Transactions. . . . . . . . . . . . . . . . . . . . 61
6.13 Related Financings. . . . . . . . . . . . . . . . . . . . . . . 62
6.14 Indenture Qualification; Senior Indebtedness. . . . . . . . . . 62
6.15 Accuracy and Completeness of Information. . . . . . . . . . . . 62
6.16 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . 63
6.17 Patents, Trademarks, etc. . . . . . . . . . . . . . . . . . . . 64
6.18 Other Transaction Documents' Representations and Conditions. . . 64
6.19 Ownership of Property. . . . . . . . . . . . . . . . . . . . . . 64
6.20 No Default under Other Agreements. . . . . . . . . . . . . . . . 65
6.21 Licenses, etc. . . . . . . . . . . . . . . . . . . . . . . . . . 65
6.22 No Burdensome Restrictions. . . . . . . . . . . . . . . . . . . 66
6.23 Refinanced Indebtedness . . . . . . . . . . . . . . . . . . . . 66
6.24 Medicare Reimbursement . . . . . . . . . . . . . . . . . . . . . 66
6.25 Certain Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 66
6.26 Environmental Protection . . . . . . . . . . . . . . . . . . . . 67
Section 7. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . 68
7.1 Information Covenants . . . . . . . . . . . . . . . . . . . . . . 68
7.2 Books, Records and Inspections . . . . . . . . . . . . . . . . . 76
7.3 Maintenance of Property; Insurance . . . . . . . . . . . . . . . 77
7.4 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
7.5 Corporate Existence; Franchises . . . . . . . . . . . . . . . . . 79
7.6 Compliance with Statutes, etc. . . . . . . . . . . . . . . . . . 79
7.7 Contributions to ESOP . . . . . . . . . . . . . . . . . . . . . . 80
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Page
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7.8 Corporate Separateness . . . . . . . . . . . . . . . . . . . . 80
7.9 Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . 81
7.10 Fiscal Years and Quarters . . . . . . . . . . . . . . . . . . . 82
7.11 Subsidiary Guaranty; Subsidiary Pledge and Security Agreements;
Certain Mortgages . . . . . . . . . . . . . . . . . . . . . . 82
7.12 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . 83
7.13 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . 84
Section 8. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . 84
8.1 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
8.2 Consolidation, Merger, Sale or Purchase of Assets, etc. . . . . . 87
8.3 Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . 91
8.4 Limitation on Restrictions Affecting Dividends and Other Payments
of Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 93
8.5 Restriction on Issuance of Subsidiary Stock . . . . . . . . . . . 95
8.6 Leases and Sale/Leaseback Transactions . . . . . . . . . . . . . 96
8.7 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . 97
8.8 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
8.9 Transactions with Affiliates; Executive Compensation . . . . . . 107
8.10 Maintenance Capital Expenditures; Facility Acquisitions . . . . 109
8.11 Limitation on Voluntary Payments and Modifications of
Transaction Documents, etc. . . . . . . . . . . . . . . . . . 111
8.12 Changes in Business . . . . . . . . . . . . . . . . . . . . . . 113
8.13 Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
8.14 Additional Negative Pledges . . . . . . . . . . . . . . . . . . 113
8.15 Accommodation Obligations . . . . . . . . . . . . . . . . . . . 114
Section 9. Events of Default . . . . . . . . . . . . . . . . . . . . . . . 116
9.1 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
9.2 Representations, etc. . . . . . . . . . . . . . . . . . . . . . . 116
9.3 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
9.4 Default Under Other Agreements . . . . . . . . . . . . . . . . . 117
9.5 Bankruptcy, etc. . . . . . . . . . . . . . . . . . . . . . . . . 117
9.6 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
9.7 Security Documents; Subsidiary Guaranty . . . . . . . . . . . . . 119
9.8 Subsidiary Credit Agreement . . . . . . . . . . . . . . . . . . . 120
9.9 Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
9.10 Change of Control . . . . . . . . . . . . . . . . . . . . . . . 120
Section 10. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 122
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Page
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Section 11. Agency Provisions . . . . . . . . . . . . . . . . . . . . . . 170
11.1 Appointments . . . . . . . . . . . . . . . . . . . . . . . . . . 170
11.2 Nature of Duties . . . . . . . . . . . . . . . . . . . . . . . . 171
11.3 Lack of Reliance on the Agent and Co-Agent. . . . . . . . . . . 172
11.4 Enforcement of Security Documents . . . . . . . . . . . . . . . 173
11.5 Certain Rights of the Agent and Co-Agent. . . . . . . . . . . . 173
11.6 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174
11.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 175
11.8 The Agent and Co-Agent in their Individual Capacities . . . . . 176
11.9 Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176
11.10 Successor Agents . . . . . . . . . . . . . . . . . . . . . . . 176
Section 12. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . 178
12.1 Payment of Expenses, etc. . . . . . . . . . . . . . . . . . . . 178
12.2 Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . . 180
12.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180
12.4 Benefit of Agreement; Limitations on Rights of Others . . . . . 180
12.5 No Waiver; Remedies Cumulative . . . . . . . . . . . . . . . . . 186
12.6 Payments Pro Rata . . . . . . . . . . . . . . . . . . . . . . . 187
12.7 Calculations; Computations; Records . . . . . . . . . . . . . . 188
12.8 Governing Law; Appointment of Agent for Service of Process;
Submission to Jurisdiction . . . . . . . . . . . . . . . . . . 189
12.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 190
12.10 Effectiveness; Funding of Master Transfer Supplement. . . . . . 190
12.11 Headings Descriptive . . . . . . . . . . . . . . . . . . . . . 192
12.12 Amendment or Waiver . . . . . . . . . . . . . . . . . . . . . . 192
12.13 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . 193
12.14 Domicile of Loans . . . . . . . . . . . . . . . . . . . . . . . 193
12.15 Independent Nature of Lenders' Rights . . . . . . . . . . . . . 194
12.16 Independence of Covenants . . . . . . . . . . . . . . . . . . . 194
12.17 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . 194
12.18 Performance of Obligations . . . . . . . . . . . . . . . . . . 195
12.19 Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . 195
12.20 Waiver of Trial by Jury . . . . . . . . . . . . . . . . . . . . 195
12.21 Certain Provisions Concerning Existing Company Credit Agreement
Restructuring. . . . . . . . . . . . . . . . . . . . . . . . . 196
12.22 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . 197
ANNEX I Schedule of Commitments
ANNEX II New Lenders
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Page
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EXHIBIT A-1 - Form of Increased Commitment Note
EXHIBIT A-2 - Form of Revolving Note
EXHIBIT A-3 - Form of Swingline Note
EXHIBIT B-1 - Form of Notice of Borrowing
EXHIBIT B-2 - Form of Certificate of an NME Acquisition
EXHIBIT B-3 - Form of Letter of Credit Request
EXHIBIT C - Form of Subsidiary Guaranty
EXHIBIT D-1 - Form of Company Stock and Notes Pledge
EXHIBIT D-2 - Form of Subsidiary Stock and Notes Pledge
EXHIBIT E-1 - Form of Company Pledge and Security Agreement
EXHIBIT E-2 - Form of Company Pledge and Security Agreement (ESOP)
EXHIBIT F - Form of FINCO Pledge and Security
Agreements
EXHIBIT G - Form of Subsidiary Pledge and Security
Agreement
EXHIBIT H - Form of Collateral Accounts Assignment
Agreement
EXHIBIT I - Form of Subsidiary Credit Agreement
EXHIBIT J-1 - Form of Opinion of King & Spalding
EXHIBIT J-2 - Form of Opinion of Skadden, Arps, Slate,
Meagher & Flom
EXHIBIT K - Form of Transfer Supplement
Schedule 6.2 Schedule of Violations of Contracts
Schedule 6.4 Schedule of Exceptions to GAAP
Schedule 6.5 Schedule of Litigation
Schedule 6.7 Schedule of Approvals
Schedule 6.10 Schedule of Employee Benefit Plans
Schedule 6.16 Schedule of Subsidiaries
Schedule 6.17 Schedule of Patents and Trademarks
Schedule 6.19 Schedule of Recently Acquired Real Property
Schedule 6.20 Schedule of Existing Defaults under
other Indebtedness
Schedule 6.25 Schedule of Certain Fees
Schedule 8.1(b) Schedule of Existing Liens
Schedule 8.1(c) Schedule of Assumed NME Liens
Schedule 8.4 Schedule of Restrictions in Debt
Documents
Schedule 8.7(d) Schedule of Assumed NME Indebtedness
Schedule 8.7(e) Schedule of Existing Indebtedness
Schedule 8.7(m) Schedule of Certain Intercompany
Indebtedness
Schedule 8.8(g) Schedule of Existing Investments
Schedule 8.8(l) Schedule of Certain Permitted
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Investments
Schedule 8.15 Schedule of Existing Accommodation
Obligations
Schedule 10.1 Schedule of Existing Subsidiary Letters
of Credit
Schedule 10.1(a) Schedule of Acquired NME Facilities
EBITDA
Schedule 10.1(b) Schedule of Excludable Foreign
Restricted Subsidiaries
Schedule 10.1(c) Schedule of Mortgage Notes
Schedule 10.1(d) Schedule of Mortgaged Properties
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SECOND AMENDED AND RESTATED CREDIT AGREEMENT dated as of May 2, 1994
among CHARTER MEDICAL CORPORATION, a Delaware corporation (the "Company"), the
banking and other financial institutions listed on Annex I hereto (each a
"Lender" and, collectively, the "Lenders"), BANKERS TRUST COMPANY, acting in
the manner and to the extent described in Section 11 (in such capacity, the
"Agent"), and FIRST UNION NATIONAL BANK OF NORTH CAROLINA, acting in the manner
and to the extent described in Section 11 (in such capacity, the "Co-Agent").
Unless otherwise defined herein, all capitalized terms used herein and defined
in Section 10 are used herein as so defined.
W I T N E S S E T H :
WHEREAS, the Company, the Existing Lenders and the Agent entered into
the Existing Company Credit Agreement, which amended and restated the Original
Company Credit Agreement;
WHEREAS, the Company intends to (i) consummate the NME Acquisition,
(ii) refinance (the "Securities Refinancing") its $200,000,000 aggregate
original face amount of 7.5% Senior Subordinated Debentures (the "Existing
Subordinated Debentures"), and (iii) refinance the Mortgage Notes (the "Debt
Refinancing");
WHEREAS, in connection with the NME Acquisitions, the Securities
Refinancing and the Debt Refinancing, the Company and the Lenders desire to
amend and restate the Existing Company Credit Agreement in order to, among other
things: (i) restructure the Existing Commitments under the Existing Company
Credit Agreement, and (ii) substitute certain of the Existing Lenders with other
financial institutions (together with the transactions described in the
foregoing clause (i), and as more fully described in Sections 1.1(a) and 12.21,
the "Existing Company Credit Agreement Restructuring");
WHEREAS, simultaneously herewith the parties hereto are executing the
Subsidiary Credit Agreement, which amends and restates the Existing Subsidiary
Credit Agreement on terms substantially similar to the amendments and
modifications to the Existing Company Credit Agreement effected hereby; and
WHEREAS, subject to and upon the terms and conditions set forth in the
Transfer Supplement dated as
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of the date hereof (the "Master Transfer Supplement") to be entered into among
the Lenders and the Existing Lenders simultaneously herewith, each Existing
Lender will transfer to the Lenders as of the Closing Date all of such Existing
Lender's rights and obligations under the Existing Credit Agreements, including,
without limitation, the Existing Loans and Existing Subsidiary Loans of each
Existing Lender outstanding under the Existing Credit Agreements, together with
each Existing Lender's Tranche A Commitment, Tranche B Commitment and Tranche C
Commitment under and as defined in the Existing Company Credit Agreement
(collectively, the "Existing Commitments"), and each Existing Lender's
Commitment under and as defined in the Existing Subsidiary Credit Agreement;
NOW, THEREFORE, the parties hereto agree that, effective as of the
Closing Date, the Existing Company Credit Agreement shall be and hereby is
amended and restated in its entirety as follows:
Section 1. AMOUNT AND TERMS OF CREDIT.
1.1 COMMITMENTS. (a) The Existing Lenders made certain types of
term loans and revolving loans to the Company pursuant to the Original Company
Credit Agreement. Under the Existing Company Credit Agreement (i) the
outstanding principal amount of such loans as of July 21, 1992 were amended and
restated as Tranche A Loans and Tranche B Loans (as such terms are defined in
the Existing Company Credit Agreement), which loans, once repaid, could not be
reborrowed, and (ii) a revolving credit facility entitling the Company to
borrow, subject to and upon the terms and conditions set forth therein, up to
$75,000,000 of revolving Tranche C Loans (as defined in the Existing Company
Credit Agreement) was established. Subject to and upon the terms and conditions
set forth in the Master Transfer Supplement, the Existing Lenders will sell and
assign to the Lenders, and the Lenders, subject to and upon the terms and
conditions set forth herein and therein, will purchase and assume from the
Existing Lenders on a ratable basis in accordance with their respective
Revolving Loan Commitments as set forth on Annex I hereto, all outstanding
rights and obligations under the Existing Company Credit Agreement of the
Existing Lenders, including, without limitation, the outstanding Existing Loans
of each Existing Lender and each Existing Lender's Existing Commitment; and, in
furtherance thereof the Existing Lenders have agreed to deliver to the Agent
their respective promissory notes
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(the "Existing Notes") evidencing the Existing Commitments of the Existing
Lenders, duly endorsed in favor of the Agent, for the benefit of the Lenders.
As of the date hereof and prior to giving effect to any of the Transactions,
$19,156,633.36 of Tranche A Loans and $37,618,703.60 of Tranche B Loans are
outstanding under the Existing Company Credit Agreement. There are no
outstanding Tranche C Loans. Subject to and upon the terms and conditions
herein set forth, as of the Closing Date, after giving effect to the assignments
contemplated by the Master Transfer Supplement, (a) each Lender's Tranche A
Commitment, Tranche B Commitment and Tranche C Commitment (as such terms are
defined in the Existing Company Credit Agreement) shall be, and hereby are,
consolidated and amended and restated as a "Revolving Loan Commitment" and shall
be increased (or decreased, as the case may be) so that, after giving effect to
such consolidation, amendment, restatement and increase (or decrease), the
Revolving Loan Commitment of each Lender will be as set forth on Annex I hereto,
and (b) the Existing Loans shall be amended and restated to be Revolving Loans
on the Closing Date. In furtherance of the foregoing, the Company shall (i)
execute and deliver to the Agent a promissory note substantially in the form of
Exhibit A-1 hereto (the "Increased Commitment Note") in the principal amount of
$48,346,030.24 payable to the order of the Agent, for the ratable benefit of the
Lenders, and representing the amount by which the Total Revolving Loan
Commitment exceeds the Existing Commitments assigned to the Lenders pursuant to
the Master Transfer Supplement, and (ii) execute and deliver to each Lender, in
accordance with Section 1.5, a Revolving Note in consolidation, renewal and
replacement of the Existing Notes assigned to the Agent for the benefit of the
Lenders pursuant to the Master Transfer Supplement and the Increased Commitment
Note.
(b) Subject to and upon the terms and conditions herein set
forth, each Lender severally agrees, at any time and from time to time on and
after the Closing Date and prior to the Final Revolving Loan Maturity Date, to
make a loan or loans (together with the Existing Loans assigned to the Lenders
pursuant to the Master Transfer Supplement, collectively, the "Revolving Loans"
and each individually a "Revolving Loan") to the Company, which Revolving Loans
(including, without limitation, such Existing Loans) (i) shall, at the option of
the Company, be made as part of one or more Borrowings, each of which Borrowings
shall, unless otherwise specifi-
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cally provided herein, consist entirely of Base Rate Loans or Eurodollar Loans,
(ii) may be repaid and reborrowed in accordance with the provisions hereof,
(iii) shall not exceed for any Lender at any time outstanding that aggregate
principal amount, which, when added to the sum of (A) such Lender's Letter of
Credit Exposure at such time, (B) the amount of such Lender's Subsidiary Credit
Extensions at such time and (C) the product of such Lender's Adjusted Percentage
and the then aggregate outstanding principal amount of Swingline Borrowings
(without duplication of any Revolving Loans made with respect thereto pursuant
to Section 1.4), equals the Unrestricted Revolving Loan Commitment of such
Lender at such time, and (iv) shall not exceed in aggregate principal amount at
any time outstanding for all of the Lenders an amount equal to (A) the Total
Revolving Loan Commitment at such time less (B) the sum of (1) the Letter of
Credit Outstandings at such time, (2) the aggregate amount of all of the
Lenders' Subsidiary Credit Extensions at such time, (3) the then aggregate
outstanding principal amount of all Swingline Borrowings (without duplication of
any Revolving Loans made with respect thereto pursuant to Section 1.4), and (4)
the Restricted Commitment Amount. Swingline Borrowings (i) shall not exceed in
aggregate principal amount at any time outstanding, when combined with the
aggregate principal amount of all Revolving Loans made by Non-Defaulting Lenders
then outstanding, the Letter of Credit Outstandings at such time and the then
aggregate amount of Subsidiary Credit Extensions of all Non-Defaulting Lenders,
an amount equal to the total of the Adjusted Total Revolving Loan Commitment
then in effect (after giving effect to any reductions or increases to the
Adjusted Total Revolving Loan Commitment on such date), and (ii) shall not
exceed in aggregate principal amount outstanding the Revolving Loan Swingline
Subcommitment.
(c) Notwithstanding the foregoing provisions of this Section 1.1
or the provisions of Section 1.3, all Borrowings made prior to the 60th day
following the Closing Date shall consist entirely of Base Rate Loans; PROVIDED
that up to one such Borrowing at any time outstanding may consist of Eurodollar
Loans having a one-month Interest Period, unless there is an outstanding
Subsidiary Borrowing consisting of Eurodollar Loans (under and as defined in the
Subsidiary Credit Agreement) that was made (or continued or converted) on a
different day than such Borrowing or has a different Interest Period than such
Borrowing.
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1.2 MINIMUM AMOUNT OF EACH BORROWING. The aggregate principal amount
of each Borrowing of Revolving Loans, together with each Subsidiary Borrowing on
the same day of each such Borrowing hereunder, shall be not less than
$10,000,000 in the case of Borrowings of Revolving Loans and $1,000,000 in the
case of Swingline Borrowings, and, if greater, shall be in an integral multiple
of $1,000,000; PROVIDED that (a) there shall be no minimum Borrowing amount for
Borrowings of Revolving Loans consisting of Base Rate Loans made to reimburse
Swingline Borrowings pursuant to Section 1.4 or drawings under Letters of Credit
pursuant to a deemed Borrowing under Section 2.3, and (b) the Company may borrow
an amount equal to the entire undrawn portion of the Adjusted Total Revolving
Loan Commitment. At no time shall the number of Swingline Borrowings
outstanding hereunder exceed three or the number of total Borrowings outstanding
hereunder, together with the number of Subsidiary Borrowings, exceed 10;
PROVIDED that for purposes of determining the number of Borrowings (other than
Swingline Borrowings) outstanding hereunder and the number of outstanding
Subsidiary Borrowings (including, without limitation, for purposes of
conversions of Base Rate Loans and continuations of Eurodollar Loans pursuant to
Section 1.6), (i) all Borrowings of Revolving Loans consisting of Base Rate
Loans and all Subsidiary Borrowings consisting of Base Rate Loans (as defined in
the Subsidiary Credit Agreement) shall, collectively, be deemed one Borrowing,
and (ii) all Borrowings of Eurodollar Loans, together with all Subsidiary
Borrowings of Eurodollar Loans (as defined in the Subsidiary Credit Agreement),
in each case continued, incurred or converted on the same day and having
identical Interest Periods shall, collectively, be deemed one Borrowing.
1.3 NOTICE OF BORROWING. (a) (i) Whenever the Company desires to
make a Borrowing hereunder (other than a conversion or continuation pursuant to
Section 1.6 or a Swingline Borrowing), it shall give the Agent (A) at least one
Business Day's prior written notice (or telephonic notice confirmed promptly in
writing) before the requested date of the making of any such Borrowing
consisting of Base Rate Loans, and (B) at least three Business Days' prior
written notice (or telephonic notice confirmed promptly in writing), before the
requested date of the making of any such Borrowing consisting of Eurodollar
Loans, each such notice to be given at the Payment Office prior to 11:00 A.M.
(New York, New York time) on the date specified; PROVIDED that, upon the notice
set
5
<PAGE>
forth in Section 2.3, the Company may make a Borrowing hereunder consisting of
Base Rate Loans, the proceeds of which shall be used solely to reimburse
drawings under Letters of Credit pursuant to the operation of Section 2.3. Each
such notice or confirmation thereof (each a "Notice of Borrowing") shall be
substantially in the form of Exhibit B-1 hereto, shall be irrevocable and shall
specify (1) the aggregate principal amount of the Loans to be made pursuant to
such Borrowing, (2) the date of such Borrowing (which shall be a Business Day),
and (3) whether such Borrowing shall consist of Base Rate Loans or Eurodollar
Loans and, in the case of Eurodollar Loans, the initial Interest Period to be
applicable thereto.
(ii) Whenever the Company desires to make a Borrowing under the
Revolving Loan Swingline Subcommitment, it shall give the Agent and BTCo written
notice (or telephonic notice confirmed promptly in writing) before 11 A.M. (New
York, New York time) on the requested date of such Borrowing (a "Notice of
Swingline Borrowing"), which date must be a Business Day (each such Borrowing, a
"Swingline Borrowing"); PROVIDED that no Swingline Borrowing may be made on or
after the date which is five Business Days prior to the Final Revolving Loan
Maturity Date. Each such notice shall be irrevocable and shall specify the
aggregate principal amount of the desired Swingline Borrowing.
(b) Without in any way limiting the Company's obligation to
confirm in writing any telephonic notice given under this Agreement, the Agent
(and, if applicable, the Lenders) may act without liability upon the basis of
telephonic notice believed by the Agent (or such Lender, as the case may be) in
good faith to be from the Company prior to receipt of written confirmation.
(c) The Agent shall promptly and, to the extent practicable, on
the same day, give each Lender written notice (or telephonic notice confirmed in
writing) of each proposed Borrowing, of such Lender's proportionate share
thereof and of the other matters covered by the applicable Notice of Borrowing
or Notice of Swingline Borrowing, as the case may be.
1.4 DISBURSEMENT OF FUNDS. (a) (i) No later than Noon (New York, New
York time) on the date specified in each Notice of Borrowing, each Lender will,
subject to the terms and conditions of this Agreement, make available its PRO
RATA portion of each such Borrowing request-
6
<PAGE>
ed to be made on such date (based on each Lender's Revolving Loan Commitment).
All such amounts shall be made available in Dollars and immediately available
funds at the Payment Office. The Agent will make available to the Company at
the Payment Office the aggregate of the amounts so made available by the
Lenders; PROVIDED that to the extent such Loan is being made pursuant to Section
2.3, the Agent shall distribute the proceeds of such Loan directly to the L/C
Bank which has honored the Letter of Credit drawing in respect of which such
Loan is being made, and to the extent such Loan is being made pursuant to
paragraph (ii) below, the Agent shall retain the proceeds thereof for its own
account.
(ii) Subject to the terms and conditions of this Agreement, BTCo
will make available to the Company at the Payment Office the amount of each
Swingline Borrowing on the date specified in each Notice of Swingline Borrowing;
PROVIDED that no Swingline Borrowing may be made on or after the date which is
five Business Days prior to the Final Revolving Loan Maturity Date. On the same
date BTCo makes available the amount of a Swingline Borrowing, each Lender
(including BTCo) shall absolutely and unconditionally be obligated to reimburse
BTCo for its Adjusted Percentage of such Swingline Borrowing by making available
to BTCo an amount equal to the product of the amount of such Swingline Borrowing
and such Lender's Adjusted Percentage no later than Noon (New York, New York
time) on the third Business Day following the date of the Notice of Swingline
Borrowing pursuant to which such Swingline Borrowing was requested unless the
Company shall have repaid such Swingline Borrowing before such date. Any such
reimbursement by a Lender shall be deemed to be the making by such Lender, as of
the date of the making of such Swingline Borrowing, of a Revolving Loan to the
Company that is a Base Rate Loan. All such amounts shall be made available in
Dollars and immediately available funds at the Payment Office. Notwithstanding
anything herein or in any of the Credit Documents to the contrary, (A) in the
event the Company has repaid a Swingline Borrowing prior to the third Business
Day following the date of the Notice of Swingline Borrowing pursuant to which
such Swingline Borrowing was requested, then such payment (together with the
payment of interest thereon) shall be retained by BTCo for its own account, (B)
any payment of interest in respect of Swingline Borrowings which accrues prior
to the reimbursement of BTCo by the Lender shall be retained by BTCo for its own
account, and (C) the outstanding principal of a Swingline
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Borrowing shall bear interest from the date of the making thereof until the
repayment or reimbursement thereof, as the case may be, at the rate of interest
from time to time applicable to Base Rate Loans pursuant to Section 1.8.
(b) (i) Unless the Agent shall have been notified by any Lender
prior to the date of a Borrowing (other than a Swingline Borrowing) that such
Lender does not intend to make available to the Agent such Lender's portion of
the Borrowing to be made on such date, the Agent may assume that such Lender has
made such amount available to the Agent on such date and the Agent may make
available to the Company a corresponding amount. If such corresponding amount
is not in fact made available to the Agent by such Lender on the date of
Borrowing, the Agent shall be entitled to recover such corresponding amount on
demand from such Lender together with interest at the customary rate set by the
Agent for the correction of errors among banks. If such Lender does not pay
such corresponding amount forthwith upon the Agent's demand therefor, the Agent
shall promptly notify the Company, and the Company shall pay such corresponding
amount (to the extent such amount is not collected from such Lender) to the
Agent promptly, and, provided the Agent has made such demand prior to 11:00
A.M., New York, New York time, on a Business Day, no later than the next
succeeding Business Day, together with interest at the rate specified for the
Borrowing which includes such amount paid. Nothing in this subsection shall be
deemed to relieve any Lender from its obligation to fulfill its Commitment
hereunder or to prejudice any rights which the Company may have against any
Lender as a result of any default by such Lender hereunder.
(ii) If any Lender does not reimburse BTCo for its Adjusted
Percentage of any Swingline Borrowing (as provided in Section 1.4(a)(ii)), BTCo
shall be entitled to recover such amount on demand from such Lender together
with interest at the customary rate set by the Agent for the correction of
errors among banks. If such Lender does not pay such amount forthwith upon
BTCo's demand therefor, BTCo shall promptly notify the Company and each other
Lender, and the Company shall pay such amount (to the extent such amount is not
collected from such Lender) to the Agent (for distribution to BTCo) promptly,
and, provided BTCo has made such demand prior to 11:00 A.M. (New York, New York
time) on a Business Day, no later than the next succeeding Business Day,
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<PAGE>
together with interest accrued on such portion of the Swingline Borrowing which
is being repaid. The portions of a Swingline Borrowing which are to be
reimbursed by the Company pursuant to this clause (ii) shall accrue interest
from and including the date of the making thereof by BTCo to but excluding such
date of reimbursement at a rate per annum equal to the sum of the Base Lending
Rate plus the Applicable Margin for Revolving Loans which are Base Rate Loans.
In the event the Company does not reimburse BTCo for such portion of such
Swingline Borrowing and accrued and unpaid interest thereon on the date required
hereby, each Non-Defaulting Lender (including BTCo) absolutely and
unconditionally agrees to reimburse BTCo, within one Business Day of a demand
therefor by BTCo, for such Non-Defaulting Lender's share of such portion of such
Swingline Borrowing by paying to the Agent (for distribution to BTCo) an amount
equal to the product of such portion of such Swingline Borrowing (and accrued
and unpaid interest thereon through but excluding such date of reimbursement)
and such Non-Defaulting Lender's then Adjusted Percentage; PROVIDED that a Non-
Defaulting Lender shall not be required to make such reimbursement to the extent
it would cause the sum of (A) the outstanding principal amount of such Lender's
Revolving Loans, (B) the Subsidiary Credit Extensions of such Lender, (C) such
Lender's Letter of Credit Exposure at such time, and (D) the product of such
Lender's Adjusted Percentage and the then outstanding principal amount of
Swingline Borrowings, to exceed such Lender's Unrestricted Commitment at such
time. Any such reimbursement by a Lender shall be deemed to be the making by
such Lender, as of the date of such reimbursement, of a Revolving Loan to the
Company that is a Base Rate Loan. Notwithstanding anything herein or in any of
the Credit Documents to the contrary (including, without limitation, Section
1.13), BTCo shall retain both the principal and interest so paid by the Company
for its own account, except to the extent a Non-Defaulting Lender has reimbursed
BTCo therefor.
(c) No Lender shall be responsible for any default by any other
Lender in its obligation to make Loans hereunder, and each Lender shall be
obligated to make the Loans provided to be made by it hereunder, regardless of
the failure of any other Lender to fulfill its Commitment hereunder.
1.5 NOTES. (a) The Company's obligation to pay the principal
of, and interest on, (i) all of the Revolving Loans made by each Lender shall be
evidenced by
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a promissory note in the form of Exhibit A-2 hereto (collectively, the
"Revolving Notes"), and (ii) all Swingline Borrowings from BTCo shall be
evidenced by a promissory note substantially in the form of Exhibit A-3 hereto
(the "Swingline Note"), in each case duly executed and delivered by the Company
with blanks appropriately completed in conformity herewith.
(b) Each Note issued to each Lender with an interest in the
Loans evidenced by such Note shall (i) be payable to the order of such Lender
and be dated the Closing Date, (ii) be in a stated principal amount equal to the
Revolving Loan Commitment or Revolving Loan Swingline Subcommitment of such
Lender, as the case may be, and be payable in the principal amount of the Loans
evidenced thereby, (iii) mature on the Final Revolving Loan Maturity Date (in
the case of the Revolving Note of such Lender) and on the fifth Business Day
prior thereto (in the case of the Swingline Note) and, in each case, be subject
to mandatory prepayment as provided herein, (iv) bear interest as provided in
the appropriate clauses of Section 1.8 in respect of the Base Rate Loans or
Eurodollar Loans, as the case may be, evidenced thereby, and (v) be entitled to
the benefits of this Agreement and the other Credit Documents.
(c) Each Lender will note on its internal records the amount of
each Loan made by it and each payment and each conversion in respect thereof and
will prior to any transfer of any of its Notes endorse on the reverse side
thereof the outstanding principal amount of Loans evidenced thereby. Failure to
make any such notation shall not affect the Company's obligations in respect of
such Loans.
1.6 CONVERSIONS OF BASE RATE LOANS AND CONTINUATIONS OF
EURODOLLAR LOANS. Subject to Section 1.1(c), the Company shall have the option
to convert PRO RATA on any Business Day all or a portion equal to at least
$10,000,000 (or if greater, an integral multiple of $1,000,000) of the
outstanding principal amount of any Base Rate Loan or Base Rate Loans made
pursuant to one or more Borrowings into one Borrowing of Eurodollar Loans;
PROVIDED that (i) Base Rate Loans may only be converted into Eurodollar Loans if
no Default or Event of Default is then in existence, and (ii) no conversion
pursuant to this Section 1.6 shall result in a greater number of Borrowings than
is permitted under Section 1.2. Each such conversion shall be effected by the
Company by
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giving the Agent at the Payment Office prior to 11:00 A.M. (New York, New York
time) at least three Business Days' prior telephonic (confirmed promptly in
writing) or written notice (a "Notice of Conversion") specifying the Base Rate
Loans to be so converted and the Interest Period to be initially applicable
thereto. The Agent shall give each Lender prompt and, to the extent
practicable, same day, written notice (or telephonic notice confirmed in
writing) of any such proposed conversion affecting any of its Revolving Loans.
Base Rate Loans converted into Eurodollar Loans pursuant to this Section 1.6,
and Revolving Loans initially made as Eurodollar Loans pursuant to Section
1.3(a)(i), shall continue as Eurodollar Loans so long as the Company elects, in
accordance with the provisions of Section 1.9, prior to the expiration of any
Interest Period applicable thereto, an Interest Period for such Loans which
shall commence on the date such current Interest Period expires.
Notwithstanding the foregoing or the provisions of Section 1.9, if a Default or
Event of Default is in existence at the time any Interest Period in respect of
any Eurodollar Loans is to expire, such Loans may not be continued as Eurodollar
Loans but instead shall be automatically converted on the last day of such
Interest Period into Base Rate Loans.
1.7 PRO RATA BORROWINGS. All Borrowings (other than a Swingline
Borrowing) under this Agreement shall be incurred from the Lenders PRO RATA on
the basis of their Revolving Loan Commitments; PROVIDED that all deemed
Borrowings pursuant to Sections 1.4 and 2.3 shall be incurred from the Lenders
PRO RATA on the basis of their respective Adjusted Percentages.
1.8 INTEREST. (a) The Company agrees to pay interest in respect of
the unpaid principal amount of each Base Rate Loan from the date of the
respective Borrowing (or deemed Borrowing) thereof until repayment in full in
cash at a rate per annum which shall be equal to the sum of the Base Lending
Rate in effect from time to time, plus the Applicable Margin.
(b) The Company agrees to pay interest in respect of the unpaid
principal amount of each Eurodollar Loan from the date of the respective
Borrowing thereof until repayment in full in cash at a rate per annum which
shall be equal to the relevant Eurodollar Rate in effect from time to time, plus
the Applicable Margin.
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(c) The "Applicable Margin" shall be (i) in the case of
Revolving Loans that are Base Rate Loans, .75 of 1%, and (ii) in the case of
Revolving Loans that are Eurodollar Loans, 1.75%; PROVIDED that, for so long as
(i) no Default or Event of Default shall have occurred and be continuing, (ii)
the Company has public senior Permitted Subordinated Indebtedness that is rated
by Standard & Poor's Corporation and Moody's Investors Service, Inc. as set
forth below, and (iii) the ratio, as of the last day of the most recently ended
fiscal quarter of the Company, of Core EBITDA to Total Interest Expense of the
Company and its Restricted Subsidiaries, in each case for the four consecutive
fiscal quarters of the Company ending on such day, exceeds the applicable ratio
set forth below, then, upon written notice thereof from the Company to the
Agent, the Applicable Margins for the Revolving Loans set forth in the preceding
proviso shall be reduced, effective as of the date of receipt of such notice by
the Agent, from the percentages specified in such proviso by the number of basis
points (with one basis point being equal to one-one hundredth of one percent)
set forth below for such ratings and ratio:
(1) If such ratio is greater than 4.0:1.0 and such Permitted Subordinated
Indebtedness is rated at least "BBB-" by Standard & Poor's Corporation
and at least Baa3 by Moody's Investors Service, Inc., then the
Applicable Margins for Base Rate Loans and Eurodollar Loans shall each
be reduced by 25 basis points; or
(2) If such ratio is greater than 4.5:1.0 and such Permitted Subordinated
Indebtedness is rated at least "BBB" by Standard & Poor's Corporation
and at least Baa2 by Moody's Investors Service, Inc., then the
Applicable Margins for Base Rate Loans and Eurodollar Loans shall each
be reduced by 50 basis points.
(d) Notwithstanding anything to the contrary contained herein,
overdue principal and, to the extent permitted by law, overdue interest in
respect of each Loan and all other overdue amounts owing hereunder shall bear
interest at a rate per annum equal to the greater of (i) the sum of 2.75% per
annum and the Base Lending Rate in effect from time to time, and (ii) the sum of
the interest rate otherwise applicable to such Loan from time to time and 2.00%
per annum.
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(e) Interest shall accrue from and including the date of any
Borrowing to but excluding the date of any repayment thereof and shall be
payable (i) in respect of each Base Rate Loan outstanding at any time during a
calendar month, monthly in arrears on the last Business Day of each month,
through and including the last calendar day of such month, (ii) in respect of
each Eurodollar Loan, on the last day of each Interest Period applicable to such
Loan and, in the case of an Interest Period of six months, on the date occurring
three months after the first day of such Interest Period, and (iii) in respect
of all Loans, on any prepayment or conversion thereof (on the principal amount
prepaid or converted), at maturity (whether by acceleration or otherwise) and,
after maturity, on demand.
(f) The Agent, upon determining the interest rate for any
Borrowing of Eurodollar Loans for any Interest Period, shall promptly notify the
Company and the Lenders thereof. The Agent shall promptly notify the Company
and the Lenders of any change in the Base Lending Rate and the effective date
thereof. Failure of the Agent to provide the Company or the Lenders with any
notice described in this clause (f) shall not affect any obligations of the
Company or the Lenders under this Agreement nor will such failure result in any
liability on the part of the Agent to the Company or any Lender.
1.9 INTEREST PERIODS. At the time it gives any Notice of Borrowing
or Notice of Conversion in respect of the making of, or conversion into, a
Borrowing of Eurodollar Loans (in the case of the initial Interest Period
applicable thereto) or on the third Business Day prior to the expiration of an
Interest Period applicable to a Borrowing of Eurodollar Loans (in the case of
subsequent Interest Periods), the Company shall have the right to elect by
giving the Agent written notice (or telephonic notice confirmed promptly in
writing) thereof, the interest period (each, an "Interest Period") to be
applicable to such Borrowing, which Interest Period shall, at the option of the
Company, be a one, two, three or six month period; PROVIDED that: (i) the
initial Interest Period for any Borrowing of Eurodollar Loans shall commence on
the date of such Borrowing (including the date of any conversion from a
Borrowing of Base Rate Loans) and each Interest Period occurring thereafter in
respect of such Borrowing shall commence on the day on which the next preceding
Interest Period expires; (ii) if any Interest Period relating to a Borrowing
consisting of
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Eurodollar Loans begins on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period, such Interest
Period shall end on the last Business Day of such calendar month; (iii) if any
Interest Period would otherwise expire on a day which is not a Business Day,
such Interest Period shall expire on the next succeeding Business Day; PROVIDED
that if any Interest Period for a Eurodollar Loan would otherwise expire on a
day which is not a Business Day but is a day of the month after which no further
Business Day occurs in such month, such Interest Period shall expire on the next
preceding Business Day; (iv) no Interest Period in respect of any Revolving Loan
shall extend beyond the Final Revolving Loan Maturity Date; (v) no Interest
Period in respect of a Revolving Loan shall extend beyond any date upon which
the Total Revolving Loan Commitment is reduced pursuant to Section 3.3(b) unless
the aggregate principal amount of Revolving Loans which are Base Rate Loans or
which have Interest Periods which will expire on or before such date, plus the
unutilized Total Revolving Loan Commitment after giving effect to the incurrence
of such Loan, is equal to or in excess of, the amount of the aggregate
prepayment of Revolving Loans required to be made on such date; and (vi) the
Interest Period for a Eurodollar Loan which is converted into a Base Rate Loan
pursuant to Section 1.10(b) shall commence on the date of such conversion and
shall expire on the date on which the Interest Periods for the Loans of the
other Lenders which were not converted expire. If upon the expiration of any
Interest Period, the Company has failed to elect a new Interest Period to be
applicable to the respective Borrowing of Eurodollar Loans as provided above,
the Company shall be deemed to have elected to convert such Borrowing into a
Borrowing of Base Rate Loans effective as of the expiration date of such current
Interest Period.
1.10 INCREASED COST, ILLEGALITY, ETC. (a) In the event that the
Agent, in the case of clause (i) below, or any Lender, in the case of clauses
(ii) and (iii) below, shall have reasonably determined (which determination
shall, absent manifest error, be final and conclusive and binding upon all
parties):
(i) on any date for determining the Eurodollar Rate for any
Interest Period, that by reason of any changes arising after the date of this
Agreement affecting the interbank Eurodollar market adequate and fair means do
not exist for ascertaining the applicable
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interest rate on the basis provided for in the definition of Eurodollar Rate; or
(ii) at any time, that the Eurodollar Rate shall not
represent the effective pricing to such Lender for funding or maintaining the
affected Eurodollar Loan, or such Lender shall incur increased costs or
reductions in the amounts received or receivable hereunder in respect thereof
that are considered by such Lender in its sole discretion to be material, in
either such case because of (x) any change since the date of this Agreement in
any applicable law or governmental rule, regulation, guideline or order (or any
interpretation thereof by any governmental agency or authority and including the
introduction of any new law or governmental rule, regulation, guideline or
order) (such as, for example, but not limited to, a change in official reserve
requirements, but, in all events, excluding reserves to the extent included in
the computation of the Eurodollar Rate), whether or not having the force of law
and whether or not failure to comply therewith would be unlawful, and/or (y)
other circumstances arising after the date of this Agreement affecting such
Lender or the interbank Eurodollar market or the position of such Lender in such
market; or
(iii) at any time, that the making or continuance of any
Eurodollar Loan has become unlawful by compliance by such Lender in good faith
with any law, governmental rule, regulation, guideline or order or request of an
applicable governmental authority enacted, adopted or made after the date of
this Agreement (whether or not having the force of law), or has become
impracticable as a result of a contingency occurring after the date of this
Agreement which materially and adversely affects the interbank Eurodollar
market;
then, and in any such event, the Agent or such Lender, as the case may be, shall
on or promptly after the date of any determination of such event give notice (by
telephone confirmed in writing) to the Company and, in the case of a Lender, to
the Agent of such determination (which notice the Agent shall promptly transmit
to each of the other Lenders). Thereafter (x) in the case of clause (i) above,
Eurodollar Loans shall no longer be available until such time as the Agent
notifies the Company and the Lenders that the circumstances giving rise to such
notice by the Agent no longer exist, and any Notice of Borrowing or Notice of
Conversion given by the Company with respect
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to Eurodollar Loans which have not yet been incurred shall be deemed rescinded
by the Company, (y) in the case of clause (ii) above, the Company, without
duplication of any amounts payable under Sections 1.11 and 2.6 or the Subsidiary
Credit Agreement, shall pay to such Lender, promptly after a written demand
therefor, such additional amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender in its
sole discretion shall determine) as shall be required to compensate such Lender
for such increased costs or reduction in amounts receivable hereunder (a written
notice as to additional amounts owed such Lender, setting forth in reasonable
detail the conditions giving rise thereto and the calculation of such amounts
(which calculations shall be made in the same manner as for similar outstanding
loans made by such Lender of a similar type and amount as those set forth herein
to Persons of a similar creditworthiness as the Company), submitted to the
Company by the Lender shall, absent manifest error, be final and conclusive and
binding upon all of the parties hereto) and (z) in the case of clause (iii)
above take one of the actions specified in Section 1.10(b) as promptly as
possible. The failure of any Lender to give any notice as provided in this
Section shall not release or diminish any of the Company's obligations to pay
any additional amounts to such Lender pursuant to clause (y) above.
(b) At any time that any Eurodollar Loans are affected by the
circumstances described in Section 1.10(a), the Company may (and in the case of
a Eurodollar Loan affected pursuant to Section 1.10(a)(iii) shall) either (x) if
the affected Eurodollar Loan is then being made pursuant to a Borrowing or a
conversion, cancel, with respect to such affected Lender, said Borrowing or
conversion by giving the Agent telephonic notice (confirmed in writing) thereof
on the same date that the Company was notified by the Lender or the Agent, as
the case may be, pursuant to Section 1.10(a) and such Lender shall make a Base
Rate Loan as part of such requested Borrowing, or (y) if the affected Eurodollar
Loan is then outstanding, upon at least 3 Business Days' written notice to the
Agent, or, in the case of a Eurodollar Loan affected pursuant to Section
1.10(a)(iii) which may no longer be lawfully maintained, immediately, require
the affected Lender to convert each such Eurodollar Loan into a Base Rate Loan;
PROVIDED that if more than one Lender is affected at any time, then all affected
Lenders must be treated the same pursuant to this Section 1.10(b).
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(c) In the event that the Agent determines at any time following
its giving of notice based on the conditions described in clause (a)(i) above
that none of such conditions exist, the Agent shall promptly give notice thereof
to the Company, whereupon the Company's right to request Eurodollar Loans from
the Lenders and the Lenders' obligation to make Eurodollar Loans shall be
restored.
(d) In the event that a Lender determines at any time following
its giving of a notice based on the conditions described in clause (a)(iii)
above that none of such conditions exist, such Lender shall promptly give notice
thereof to the Company and the Agent, whereupon the Company's right to request
Eurodollar Loans from such Lender and such Lender's obligation to make
Eurodollar Loans shall be restored.
1.11 CAPITAL ADEQUACY. If any Lender determines that any applicable
law, rule, regulation, mandatory guideline, request or directive, whether or not
having the force of law, from an applicable regulatory authority concerning
capital adequacy or reserves (excluding reserves to the extent included in the
computation of the Eurodollar Rate), or any change therein or in interpretation
or administration thereof by any governmental authority, central bank or
comparable agency has or will have the effect of reducing the rate of return on
the capital or assets of such Lender (or any corporation controlling such
Lender) as a consequence of such Lender's Commitment hereunder (including,
without limitation, its outstanding Loans) or its obligations hereunder, in an
amount considered by such Lender in its sole discretion to be material, it will
notify the Company thereof on or promptly after the date of such determination.
The Company, without duplication of any amounts payable under Sections 1.10 and
2.6 or the Subsidiary Credit Agreement, will pay to such Lender promptly after a
written demand therefor (which demand may be contained in the notice referred to
above) such additional amounts as are necessary to compensate such Lender for
the reduction to such rate of return as a result of the event described in the
first sentence of this Section 1.11. In determining such amount, such Lender
will act reasonably and in good faith and will use averaging and attribution
methods which are reasonable, and such Lender's determination of compensation
shall be conclusive, absent manifest error, if made in accordance with this
provision. Each notice delivered pursuant to this Section 1.11 shall set forth
in reason-
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able detail the conditions giving rise thereto, and each demand delivered
pursuant to this Section 1.11 shall set forth the calculation of the amounts
demanded thereby (which calculations shall be made in the same manner as for
similar outstanding loans made by such Lender of a similar type and amount as
those set forth herein to Persons of a similar creditworthiness as the Company).
The failure of any Lender to give any notice or demand as provided in this
Section shall not release or diminish any of the Company's obligations to pay
any increased costs to such Lender pursuant to this Section.
1.12 FUNDING LOSSES. The Company shall compensate each Lender, upon
its written request (which request shall set forth in reasonable detail the
basis for requesting such amounts and which request shall, absent manifest
error, be final, conclusive and binding upon all of the parties thereto), for
all losses, expenses and liabilities (including, without limitation, any
interest paid by such Lender to lenders of funds borrowed by it to make or carry
its Eurodollar Loans to the extent not reasonably able to be recovered by such
Lender in its sole discretion in connection with the re-employment of such
funds) which such Lender may sustain: (i) if for any reason (other than a
default by such Lender) a Borrowing of, or conversion from or into, Eurodollar
Loans does not occur on a date specified therefor in a Notice of Borrowing or a
Notice of Conversion (whether or not canceled, rescinded or otherwise
withdrawn); (ii) if, for any reason, any repayment (including, without
limitation, payment after acceleration) or conversion of any of its Eurodollar
Loans occurs on a date which is not the last day of an Interest Period
applicable thereto; (iii) if any prepayment of any of its Eurodollar Loans is
not made on any date specified in a notice of prepayment given by the Company;
or (iv) as a consequence of (A) any default by the Company to repay its Loans
when required by the terms of this Agreement or a Note of such Lender or (B) an
election made pursuant to Section 1.10(b).
1.13 SHARING OF PAYMENTS, ETC. If any Lender shall obtain any
payment or reduction (including, without limitation, any amounts received as
adequate protection of a deposit treated as cash collateral under the Bankruptcy
Code) of any Obligation hereunder (whether voluntary, involuntary, by
realization upon security, by counterclaim or cross action, by the enforcement
of any action under this Agreement, by the exercise of any right of set-off or
banker's lien, or otherwise) in excess of
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its ratable share of payments or reductions on account of such Obligations
obtained by all the Lenders, such Lender shall forthwith (i) notify each of the
other Lenders and the Agent of such receipt, and (ii) purchase from the other
Lenders such assignments in the affected Obligations as shall be necessary to
cause such purchasing Lender to share the excess payment or reduction, net of
costs incurred in connection therewith, ratably with each of them; PROVIDED that
if all or any portion of such excess payment or reduction is thereafter
recovered from such purchasing Lender or additional costs are incurred, the
purchase of such assignments shall be rescinded and the purchase price thereof
restored to the extent of such recovery or such additional costs, but without
interest. The Company agrees that any Lender so purchasing an assignment from
another Lender pursuant to this Section 1.13, may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off) with respect to such assignment as fully as if such Lender were the
direct creditor of the Company in the amount of such assignment.
1.14 CHANGE OF LENDING OFFICE. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), 1.11, 4.5 or 12.1 (to the extent Section 12.1 requires the payment of any
Taxes) with respect to such Lender, it will, if requested by the Company, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Loans affected by such event, provided
that such designation is made on such terms that such Lender suffers no
economic, legal, regulatory or other disadvantage, with the object of avoiding
the consequence of the event giving rise to the operation of any such Section;
PROVIDED that if such disadvantage is not material (to be determined by such
Lender in its sole discretion), such Lender shall designate another lending
office if the Company shall fully compensate such Lender for such disadvantage.
Nothing in this Section 1.14 shall affect or postpone any of the obligations of
the Company or the right of any Lender provided in Section 1.10, 1.11, 4.5 or
12.1 (to the extent Section 12.1 requires the payment of any Taxes).
1.15 REPLACEMENT LENDERS. If (a) the obligation of any Lender to
make Eurodollar Loans has been suspended pursuant to Section 1.10 as a result of
the occurrence of any event or circumstance described therein affecting Lenders
having less than 25% of the Total Com-
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mitment, (b) any Lender has demanded compensation under Section 1.10, 1.11 or
2.6 or any Taxes referred to in Section 4.5 or 12.1 have been imposed or any
Lender has sought compensation thereunder, and the amount of such compensation
or Taxes is considered by the Company, in its sole discretion, to be material,
or (c) if any Lender becomes a Defaulting Lender, the Company may, if no Default
or Event of Default then exists, with the assistance of the Agent, seek a bank
or banks or other financial institutions (which may be one or more of the
Lenders or other banks or financial institutions approved by the Agent (such
approval not to be unreasonably withheld or delayed), but none of which shall
constitute a Defaulting Lender at the time of such replacement (each, a
"Replacement Lender")) to purchase all of the Notes, Loans and Letters of Credit
Exposure, and assume the Revolving Loan Commitment and other obligations, of
such Lender (the "Replaced Lender"); PROVIDED that each such Replacement Lender
shall assume, in accordance with the Subsidiary Credit Agreement, a PRO RATA
portion of all of the obligations and rights of the Replaced Lender under the
Subsidiary Credit Agreement; and PROVIDED FURTHER that (i) at the time of any
replacement pursuant to this Section 1.15, each Replacement Lender shall execute
and deliver a Transfer Supplement pursuant to Section 12.4(e) (and with all fees
payable pursuant to Section 12.4(f) to be paid by the Company) pursuant to which
each Replacement Lender shall acquire its portion of the Revolving Loan
Commitment, outstanding Loans and participations in Letters of Credit of the
Replaced Lender and, in connection therewith, shall pay to (A) the Replaced
Lender in respect thereof, in addition to amounts payable to such Replaced
Lender, pursuant to Section 1.15 of the Subsidiary Credit Agreement, an amount
equal to the sum of (1) the outstanding principal of, and accrued and unpaid
interest on, all outstanding Loans of the Replaced Lender acquired by such
Replacement Lender, (2) an amount equal to such Replacement Lender's portion of
all drawings in respect of any Letter of Credit that have been funded by (and
not reimbursed to) such Replaced Lender pursuant to Section 2.4, together with
all accrued and unpaid interest with respect thereto, and (3) such Replacement
Lender's portion of all accrued, but theretofore unpaid, fees and commissions
owing to the Replaced Lender pursuant to Sections 2.5 and 3.1 hereof, and (B)
the Agent (for distribution to the Lenders entitled to the same) an amount equal
to such Replacement Lender's portion of the sum of (1) such Replaced Lender's
Adjusted Percentage (for this purpose, determined as if the adjustment de-
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scribed in clause (y) of the immediately succeeding sentence had been made with
respect to such Replaced Lender) of any drawing in respect of any Letter of
Credit (which at such time remains unpaid) to the extent such amount was not
theretofore funded by such Replaced Lender, and (2) any amounts owing to BTCo by
such Replaced Lender pursuant to Section 1.4; and (ii) all obligations of the
Company due and owing to the Replaced Lender at such time (other than those
specifically described in clause (i) above in respect of which the purchase
price has been, or is concurrently being, paid) shall be paid in full by the
Company to such Replaced Lender concurrently with such replacement. Upon the
execution of the respective Transfer Supplements, the payment of amounts
referred to in clauses (i) and (ii) above and Section 1.15 of the Subsidiary
Credit Agreement and, if so requested by a Replacement Lender, delivery to such
Replacement Lender of the appropriate Note or Notes or Subsidiary Note or
Subsidiary Notes executed by the Company and the Subsidiary Borrowers, as
applicable, (x) each such Replacement Lender shall become a Lender hereunder and
the Replaced Lender shall cease to constitute a Lender hereunder, except with
respect to indemnification provisions under this Agreement, which shall survive
as to such Replaced Lender and (y) the Adjusted Percentage of the Lenders shall
be automatically adjusted at such time to give effect to the replacement, if
any, of a Defaulting Lender with one or more Non-Defaulting Lenders. The
Company agrees, except in the case of the replacement of a Defaulting Lender, to
pay all reasonable costs and expenses of any such Lender which sells its Notes,
Loans, Letters of Credit Exposure and Revolving Loan Commitment pursuant to this
Section 1.15.
1.16 MATURITY OF BORROWINGS. Notwithstanding any other provision of
this Agreement to the contrary (i) all Loans will mature and become due and
payable on the Final Revolving Loan Maturity Date, and (ii) all Loans will
mature and become due and payable on the Interim Maturity Date with respect to
such Loan. Provided that no Event of Default shall have occurred and be
continuing on any Interim Maturity Date, the Lenders shall be deemed to have
made Loans ("Rollover Loans") and the Company shall be deemed to have made a
Borrowing of Loans (each such Borrowing, a "Rollover Borrowing") of the same
principal amount of Loans maturing on such Interim Maturity Date, and the
proceeds of such Rollover Loans shall be applied to the repayment of such Loans
maturing on such Interim Maturity Date. Subject to Sections 3.3 and
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4.2 hereof, no such deemed repayment of Loans shall require any cash payment by
the Company nor shall any such Rollover Borrowing require the actual delivery of
any funds by any Lender, or compliance with Sections 1.1(b), 1.2, 1.3 (unless
the Company desires that such Rollover Borrowing consist of Eurodollar Loans) or
1.4.
Section 2. LETTER OF CREDIT SUBFACILITY.
2.1 LETTERS OF CREDIT. (a) Subject to and upon the terms and
conditions, and in reliance upon the representations and warranties of the
Company, set forth in this Agreement, in addition to requesting that the Lenders
make Loans pursuant to Section 1, the Company may request, in accordance with
the provisions of this Section 2.1 and Section 2.2, that, on and after the
Closing Date and prior to the termination or expiration of the Total Revolving
Loan Commitment, any L/C Bank issue one or more Letters of Credit for the
account of the Company; PROVIDED that any Letter of Credit issued by an L/C Bank
shall be in a form customarily used by such L/C Bank or in any other form
requested by the Company and approved by such L/C Bank; PROVIDED FURTHER, that
(i) no Letter of Credit shall have an expiration date that is later than 12 (or,
if approved by the L/C Bank and the Agent, 18) months after the date of issuance
thereof; PROVIDED that a Letter of Credit may provide, on such terms and
conditions as are acceptable to the applicable L/C Bank, that it is extendible
for additional consecutive one year periods (or, with the approval of the L/C
Bank and the Agent, other consecutive periods having a duration of 18 months or
less); (ii) in no event shall any Letter of Credit issued by an L/C Bank have an
expiration date (or be extended or extendible so that it will expire) later than
the Final Revolving Loan Maturity Date; (iii) each Letter of Credit issued by an
L/C Bank shall have a stated amount of at least $500,000; (iv) the Company shall
not request that any L/C Bank issue any Letter of Credit if, after giving effect
to such issuance, the aggregate Letter of Credit Outstandings PLUS the then
outstanding aggregate principal amount of Revolving Loans made by Non-Defaulting
Lenders PLUS the then aggregate amount of Subsidiary Credit Extensions of the
Non-Defaulting Lenders PLUS the then aggregate outstanding principal amount of
all Swingline Borrowings (without duplication of any Revolving Loans made with
respect thereto pursuant to Section 1.4) would exceed the Adjusted Total
Revolving Loan Commitment then in effect (after giving effect to any reductions
or increases to the Ad-
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justed Total Revolving Loan Commitment on such date) and (v) the Company shall
not request the issuance of any Letter of Credit if, after giving effect to such
issuance, the aggregate Letter of Credit Outstandings PLUS the aggregate
Subsidiary Letter of Credit Outstandings would exceed $275,000,000; and,
PROVIDED FURTHER, that, subject to and upon the terms and conditions set forth
in the Subsidiary Credit Agreement, for all purposes of this Agreement and the
other Credit Documents, the Existing Subsidiary Letters of Credit shall be
deemed to have been issued pursuant to the Subsidiary Credit Agreement on the
Closing Date.
(b) Each Letter of Credit may provide that the L/C Bank may (but
shall not be required to) pay the beneficiary thereof upon the occurrence of an
Event of Default and the acceleration of the maturity of the Loans or, if
payment is not then due to the beneficiary, provide for the deposit of funds in
an account to secure payment to the beneficiary and that any funds so deposited
shall be paid to the beneficiary of the Letter of Credit if conditions to such
payment are satisfied or returned to the L/C Bank for distribution to the
Lenders (or, if all Obligations shall have been indefeasibly paid in full, to
the Company) if no payment to the beneficiary has been made and the final date
available for drawings under the Letter of Credit has passed. Each payment or
deposit of funds as provided in this paragraph shall be treated for all purposes
of this Agreement as a drawing duly honored by the L/C Bank under the related
Letter of Credit.
2.2 NOTICE OF ISSUANCE; AGREEMENT TO ISSUE. (a) Whenever the
Company desires the issuance of a Letter of Credit, it shall deliver to the
Agent (with a copy to its Letter of Credit Department) and the desired L/C Bank
a written notice no later than 11:00 A.M. (New York, New York time) at least
five Business Days, or such shorter period (which shall not be less than two
Business Days) as may be agreed to by the applicable L/C Bank in any particular
instance, in advance of the proposed date of issuance. Each such notice shall
be substantially in the form of Exhibit B-3 (each a "Letter of Credit Request"),
shall specify (i) the proposed date of issuance (which shall be a business day
under the laws of the jurisdiction of the applicable L/C Bank), (ii) the face
amount of the Letter of Credit, (iii) the expiration date of the Letter of
Credit, and (iv) the name and address of the beneficiary with respect to such
Letter of Credit,
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and shall be accompanied by a precise description of the documents and a
verbatim text of any certificate to be presented by the beneficiary of such
Letter of Credit, which if presented by such beneficiary prior to the expiration
date of the Letter of Credit, would require the L/C Bank to make payment under
the Letter of Credit; PROVIDED that the applicable L/C Bank may require changes
in any such documents and certificates in accordance with its customary letter
of credit practices; and, PROVIDED FURTHER, that no Letter of Credit shall
require payment against a conforming draft to be made thereunder on the same
Business Day that such draft is presented if such presentation is made after
11:00 A.M. (New York, New York time). In determining whether to pay under any
Letter of Credit, each L/C Bank shall be responsible only to determine that the
documents and certificates required to be delivered under its Letter of Credit
have been delivered and that they comply on their face with the requirements of
its Letter of Credit. Promptly after receipt of a Letter of Credit Request, the
Agent shall deliver a copy thereof to each Lender. Each L/C Bank shall furnish
to the Agent a specimen copy of each Letter of Credit issued by such L/C Bank
pursuant to this Agreement promptly upon the issuance thereof; and the Agent
shall furnish copies thereof to a Lender promptly upon such Lender's request
therefor, together with a notice of such Lender's respective participation
therein, determined in accordance with Section 2.2(b).
(b) Each L/C Bank receiving a Letter of Credit Request from the
Company agrees, subject to the terms and conditions set forth in this Agreement,
and so long as it shall not have received any notice from any Lender pursuant to
the immediately succeeding sentence, to issue for the account of the Company, on
the date specified in such Letter of Credit Request, a Letter of Credit in a
face amount equal to the face amount requested in such Letter of Credit Request.
Immediately upon the issuance of each Letter of Credit, each Lender shall be
deemed to, and hereby agrees to, have irrevocably purchased from the applicable
L/C Bank a participation in such Letter of Credit and any drawing thereunder in
an amount equal to the product of such Lender's Adjusted Percentage and the
maximum amount which is or at any time may become available to be drawn
thereunder; PROVIDED that no Lender shall have delivered a notice to such L/C
Bank prior to the issuance of such Letter of Credit (with a copy to the Agent
which shall be promptly forwarded to the other Lenders) to the effect that one
or more of the
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conditions set forth in Section 5.1 or 5.2, as applicable, are not then
satisfied or that the issuance of such Letter of Credit or purchase of a
participation therein by such Lender would violate Section 2.6(b). Upon any
change in the Commitments of the Lenders pursuant to Section 1.15 or 12.4 or in
the Adjusted Percentages of the Lenders as a result of the occurrence of a
Lender Default, it is hereby agreed that, with respect to all outstanding
Letters of Credit and drawings thereunder which are unpaid, there shall be an
automatic adjustment to the participations in the Letters of Credit pursuant to
this Section 2.2 to reflect the new Adjusted Percentages of the Lenders.
2.3 PAYMENT OF AMOUNTS DRAWN UNDER LETTERS OF CREDIT. (a) In the
event of any request for payment under any Letter of Credit by the beneficiary
thereof, the L/C Bank shall promptly notify the Company, the Agent and the
Lenders required to participate therein in accordance with Section 2.2(b) and,
in any event, unless otherwise expressly provided in such Letter of Credit or
the terms of such Letter of Credit require the honoring of a drawing thereunder
on the date of, or the Business Day after, such drawing, no later than 10:00
A.M. (New York, New York time) on the Business Day immediately preceding the
date on which such L/C Bank intends to honor such drawing; and the Company shall
reimburse such L/C Bank on the day on which such drawing is honored in same day
funds in an amount equal to the amount of such drawing; PROVIDED that, unless
the Company shall have notified the Agent and such L/C Bank prior to 11:00 A.M.
(New York, New York time) on the Business Day immediately prior to the date on
which such drawing is honored that the Company intends to reimburse such L/C
Bank for the amount of such drawing with funds other than the proceeds of
Revolving Loans, (i) the Company shall be deemed to have timely given a Notice
of Borrowing to the Agent requesting a Borrowing of Revolving Loans which are
Base Rate Loans on the date on which such drawing is honored in an amount equal
to the amount of such drawing, and (ii) subject to Section 1.1, each Lender
shall, by 1:00 P.M. (New York, New York time) on the date of the honoring of
such drawing, make a Revolving Loan which is a Base Rate Loan in an amount equal
to the product of the amount of such drawing and such Lender's Adjusted
Percentage, the proceeds of which shall be applied directly by the Agent to
reimburse such L/C Bank for the amount of such drawing (PROVIDED that, solely
for purposes of such Borrowing, the conditions precedent set forth in Section
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5.2 shall not be applicable); PROVIDED FURTHER that, if for any reason, proceeds
of Revolving Loans are not received by such L/C Bank on such date in an amount
equal to the amount of such drawing, the Company shall reimburse such L/C Bank,
on the Business Day immediately following the date of such drawing, in an amount
in Dollars and immediately available funds equal to the excess of the amount of
such drawing over the amount of such Revolving Loans, if any, which are so
received by the Agent from the Lenders, plus accrued interest on such amount at
the applicable rate of interest for Base Rate Loans which are Revolving Loans
set forth in Section 1.8. If the Company notifies the Agent and such L/C Bank
prior to 11:00 A.M. (New York, New York time) on the Business Day immediately
prior to the date on which such drawing is honored that the Company intends to
reimburse such L/C Bank for the amount of such drawing with funds other than the
proceeds of Revolving Loans, the Company shall reimburse such L/C Bank on the
day on which such drawing is honored in an amount in same day funds equal to the
amount of such drawing. Notwithstanding anything contained in this Agreement to
the contrary, to the extent the Company does not reimburse a L/C Bank in
accordance with the preceding provisions of this Section 2.3 or an Event of
Default exists at the time of the honoring of a drawing under a Letter of
Credit, amounts, if any, then held by the Agent in the L/C Cash Collateral
Account may be applied by the Agent to reimburse the applicable L/C Bank for the
honoring of such drawing, and the aggregate amount of Revolving Loans, if any,
required to be made by the Lenders pursuant to this Section 2.3 shall be reduced
by a corresponding amount.
(b) Any payments owed by the Company pursuant to this Section
2.3 which are made later than 11:00 A.M. (New York City time) shall be deemed to
have been made on the next succeeding Business Day. Whenever any payment to be
made under this Section 2.3 shall be stated to be due on a day which is not a
Business Day, the due date thereof shall be extended to the next succeeding
Business Day.
(c) Each Lender shall indemnify and hold harmless the Agent and
each L/C Bank from and against any and all losses, liabilities (including
liabilities for penalties), actions, suits, judgments, demands, costs and
expenses (including, without limitation, attorney's fees and expenses) resulting
from any failure on the part of such Lender to provide, on the same day of any
drawing
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under a Letter of Credit, the Agent with such Lender's Adjusted Percentage of
the amount of any drawing under such Letter of Credit in accordance with the
provisions of Section 2.3(a).
2.4 PAYMENT BY LENDERS. In the event that the Company shall fail to
reimburse an L/C Bank as provided in Section 2.3 by borrowing Revolving Loans or
otherwise for all or any portion, as the case may be, of any drawing honored by
such L/C Bank under a Letter of Credit issued by it, such L/C Bank shall
promptly notify each Lender of the unreimbursed amount of such drawing and the
amount of such Lender's Adjusted Percentage therein. Each Lender shall make
available to such L/C Bank an amount equal to its Adjusted Percentage of such
unreimbursed payment in Dollars and immediately available funds, at the office
of such L/C Bank specified in such notice, not later than 1:00 P.M. (New York
City time) on the business day (under the laws of the jurisdiction of such L/C
Bank and a Business Day) after the date notified by such L/C Bank. In the event
that any such Lender fails to make available to such L/C Bank the amount of such
Lender's Adjusted Percentage of such unreimbursed payment as provided in this
Section 2.4, such L/C Bank shall be entitled to recover such amount on demand
from such Lender together with interest at the interbank compensation rate set
by the Agent for three Business Days and thereafter at the Base Rate. Nothing
in Section 2.3 or this Section 2.4 shall be deemed to prejudice the right of any
Lender to recover from such L/C Bank any amounts made available by such Lender
to such L/C Bank pursuant to Section 2.3 or this Section 2.4 in the event that
the payment with respect to a Letter of Credit by such L/C Bank in respect of
which payment was made by such Lender constituted gross negligence or willful
misconduct on the part of such L/C Bank. Each L/C Bank shall distribute to each
other Lender which has paid all amounts payable by it under this Section 2.4
with respect to any Letter of Credit issued by such L/C Bank such other Lender's
share (based on the proportionate aggregate amount funded by such Lender to the
aggregate amount funded by all Lenders) of all payments received by such L/C
Bank from the Company in reimbursement of drawings honored by such L/C Bank
under such Letter of Credit when such payments are received (including interest
payable under Section 1.8 with respect to the period commencing on the date of
the funding of such participation).
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2.5 COMPENSATION. (a) The Company agrees to pay to the Agent for
distribution to each Non-Defaulting Lender in respect of all Letters of Credit
outstanding such Non-Defaulting Lender's Adjusted Percentage of (i) a commission
equal to 1.75% per annum of the difference of the daily average amount available
to be drawn from time to time under such outstanding Letters of Credit minus the
average daily cash balance on deposit from time to time in the L/C Cash
Collateral Account pursuant to Section 4.2(e)(i), and (ii) a commission equal to
0.5 of 1% per annum on the average daily cash balance on deposit from time to
time in the L/C Cash Collateral Account pursuant to Section 4.2(e)(i), in each
case payable monthly in arrears on the last Business Day of each month, through
and including the last calendar day of such month; PROVIDED that, the rate at
which the commission described in the immediately preceding clause (i) is
calculated shall be reduced at all times that, and by the same number of basis
points as, the interest rate for Base Rate Loans which are Revolving Loans is
reduced pursuant to Section 1.8(c). Promptly upon receipt by the Agent of any
amount described in this Section 2.5(a), the Agent shall distribute to each
Lender its Adjusted Percentage of such amount.
(b) The Company agrees to pay to each L/C Bank in respect of
each Letter of Credit issued by it such fees (including, without limitation,
facing, processing and transfer fees), in such amounts, and at such times, as
the Company and such L/C Bank may agree; and, notwithstanding anything to the
contrary contained herein, such L/C Bank shall not be required to issue a Letter
of Credit hereunder unless and until the Company provides such L/C Bank with a
written acknowledgement of the fees agreed to by such L/C Bank in respect of
such Letter of Credit.
2.6 ADDITIONAL PAYMENTS; ILLEGALITY. (a) Without duplication of any
amounts payable under Sections 1.10, 1.11, 4.5 and 12.1, or under the Subsidiary
Credit Agreement, if by reason of (x) any change in applicable law, regulation,
rule, regulatory requirement, guideline, request or directive, whether or not
having the force of law, or any change in the interpretation or application
thereof by any judicial or other applicable governmental or regulatory
authority, or (y) compliance by any Lender in good faith with any direction,
request or mandatory guideline of any applicable governmental or monetary
authority including, without limitation, Regulation D:
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(i) such Lender shall be subject to any tax, levy, charge or
withholding of any nature or to any variation thereof or to any penalty
with respect to the maintenance or fulfillment of its obligations under
this Section 2, whether directly or by such being imposed on or suffered by
such Lender;
(ii) any reserve, deposit or similar requirement is or shall be
applicable, imposed or modified in respect of any Letter of Credit issued
by such Lender or any participations purchased by such Lender in any Letter
of Credit (or in respect of such Lender's commitment to purchase such a
participation); or
(iii) there shall be imposed on such Lender any other condition
regarding this Section 2, any Letter of Credit or any participation
therein;
and the result of the foregoing is to directly or indirectly increase the cost
to such Lender of committing to issue, purchase, purchasing or maintaining any
participation in any Letter of Credit, or to reduce the amount receivable in
respect thereof by such Lender, then and in any such case such Lender may,
without duplication of any payments required to be made pursuant to Section
1.10, 1.11, 4.5 or 12.1, at any time after the additional cost is incurred or
the amount received is reduced, promptly notify the Company and the Company
shall pay to such Lender promptly after a written demand therefor (which demand
may be contained in such notice), such additional amounts as shall be required
to compensate such Lender for such increased costs or reduction in amounts
receivable hereunder (a written notice as to additional amounts owed such Lender
setting forth in reasonable detail the conditions giving rise thereto and the
calculation of such amounts (which calculations shall be made in the same manner
as for similar outstanding credit extensions made by such Lender of a similar
type and amount as those set forth herein to Persons of a similar
creditworthiness as the Company), submitted to the Company by such Lender shall,
absent manifest error, be final and conclusive and binding upon all parties
hereto). The failure of any Lender to give any notice or demand as provided in
this Section shall not release or diminish any of the Company's obligations to
pay any additional costs to such Lender pursuant to this Section.
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(b) Notwithstanding any other provision contained in this
Agreement, no L/C Bank shall be obligated to issue any Letter of Credit, nor
shall any Lender be obligated to purchase its participation in any Letter of
Credit to be issued hereunder, if the issuance of such Letter of Credit or
purchase of such participation shall have become unlawful or prohibited by
compliance by such L/C Bank or Lender in good faith with any law, governmental
rule, guideline, request, order, injunction, judgement or decree (whether or not
having the force of law); PROVIDED that in the case of the obligation of a
Lender to purchase such participation, such Lender shall have notified any L/C
Bank for the related Letter of Credit to such effect pursuant to Section 2.2(b).
2.7 SUBSIDIARY LETTER OF CREDIT. Notwithstanding anything to the
contrary contained in this Section 2, if any Letter of Credit is issued for the
account of a Subsidiary Borrower, the Lenders shall have no obligation to
purchase a participation in such Letter of Credit under this Agreement; it being
understood that any participation purchased by the Lenders in such a Letter of
Credit will be pursuant to the Lenders' commitments to purchase such
participations under the Subsidiary Credit Agreement.
2.8 OBLIGATIONS ABSOLUTE. The respective obligations under Sections
2.3 and 2.4 of the Company and the Lenders to reimburse each L/C Bank for
drawings made under the Letters of Credit shall be unconditional and irrevocable
and shall be paid strictly in accordance with the terms of this Agreement under
all circumstances, including, without limitation, the following circumstances:
(a) any lack of validity or enforceability of any Letter of
Credit;
(b) the existence of any claim, set-off, defense or other right
which the Company or any Subsidiary or Affiliate of the Company may have at any
time against a beneficiary or any transferee of any Letter of Credit (or any
persons or entities for whom any such beneficiary or transferee may be acting),
any Lender or any other Person, whether in connection with this Agreement, the
transactions contemplated herein or any unrelated transaction (including,
without limitation, any underlying transaction between the Company or any of its
Subsidiaries or Affiliates and the beneficiary for which
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the Letter of Credit was procured); PROVIDED that nothing in this Section 2.8
shall affect the right of the Company to seek relief against any beneficiary,
transferee, Lender or any other Person in an action or proceeding or to bring a
counterclaim in any suit involving such Persons;
(c) any draft, demand, certificate or any other document
presented under any Letter of Credit proving to be forged, fraudulent or invalid
in any respect or any statement therein being untrue or inaccurate in any
respect;
(d) payment by such L/C Bank under any Letter of Credit against
presentation of a demand, draft or certificate or other document which does not
comply with the terms of such Letter of Credit;
(e) any other circumstance or happening whatsoever, which is
similar to any of the foregoing; or
(f) the fact that a Default or an Event of Default shall have
occurred and be continuing.
2.9 INDEMNIFICATION; NATURE OF L/C BANKS' DUTIES. (a) In addition
to amounts payable as elsewhere provided in this Section 2, but without
duplication thereof, the Company hereby agrees to protect, indemnify, pay and
save each L/C Bank harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and reasonable expenses (including
reasonable attorneys' fees and disbursements and, after a Default, allocated
costs of internal counsel) which such L/C Bank may incur or be subject to as a
consequence, direct or indirect, of (i) the issuance of any Letter of Credit for
the account of the Company other than as a result of the gross negligence or
willful misconduct of such L/C Bank or (ii) the failure of such L/C Bank to
honor a drawing under any Letter of Credit due to an act or omission (whether
rightful or wrongful) of any present or future DE JURE or DE FACTO government or
governmental authority.
(b) As between the Company and each L/C Bank, the Company
assumes all risks of the acts and omissions of, or misuse of the Letters of
Credit issued by such L/C Bank, by the respective beneficiaries of such Letters
of Credit, other than losses resulting from the gross negligence or willful
misconduct of such L/C Bank.
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In furtherance and not in limitation of the foregoing, no L/C Bank shall be
responsible: (i) for the form, validity, sufficiency, accuracy, genuineness or
legal effects of any document submitted by any party in connection with the
application for and issuance of such Letters of Credit, even if it should in
fact prove to be in any or all respects insufficient, inaccurate, fraudulent or
forged or otherwise invalid; (ii) for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign any
such Letter of Credit or the rights or benefits thereunder or proceeds thereof,
in whole or in part, which may prove to be invalid or ineffective for any
reason; (iii) for failure of the beneficiary of any such Letter of Credit to
comply fully with conditions required in order to draw upon such Letter of
Credit; (iv) for errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex, telecopy or
otherwise, whether or not they be in cipher; (v) for good faith errors in
interpretation of technical terms; (vi) for any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any such Letter of Credit or of the proceeds thereof; (vii) for the
misapplication by the beneficiary of any such Letter of Credit; and (viii) for
any consequences arising from causes beyond the control of such L/C Bank,
including, without limitation, any act or omission, whether rightful or
wrongful, of any present or future DE JURE or DE FACTO government or
governmental authority. None of the above shall affect, impair, or prevent the
vesting of any such L/C Bank's rights or powers hereunder.
(c) In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted by any
L/C Bank under or in connection with the Letters of Credit issued by it or the
related certificates, if taken or omitted in the absence of gross negligence or
willful misconduct, shall not put such L/C Bank under any resulting liability to
the Company.
Section 3. COMMISSIONS; COMMITMENTS.
3.1 COMMISSIONS. (a) The Company agrees to pay to the Agent for the
account of each Non-Defaulting Lender a commitment commission (the "Commitment
Commission") for the period from and including the Execution Date until the date
upon which such Non-Defaulting
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Lender's Revolving Loan Commitment is terminated in full, computed at the rate
of .5 of 1% per annum on the daily average amount by which the Revolving Loan
Commitment of such Non-Defaulting Lender exceeds the sum of (A) the aggregate
principal amount of all outstanding Revolving Loans made by such Non-Defaulting
Lender, (B) such Non-Defaulting Lender's Letter of Credit Exposure, (C) the
amount of such Non-Defaulting Lender's Subsidiary Credit Extensions, and (D) the
product of such Non-Defaulting Lender's Adjusted Percentage and the then
aggregate outstanding principal amount of all Swingline Borrowings (without
duplication of Revolving Loans made with respect thereto pursuant to Section
1.4); PROVIDED that, for so long as (1) no Event of Default shall have occurred
and be continuing, (2) the Company has public senior Permitted Subordinated
Indebtedness that is rated at least "BBB-" by Standard & Poor's Corporation and
at least "Baa3" by Moody's Investors Service, Inc., and (3) the ratio, as of the
last day of the Company's most recent fiscal quarter, of Core EBITDA to Total
Interest Expense of the Company and its Restricted Subsidiaries, in each case
for the four fiscal quarters of the Company ending on such day, is greater than
4.0:1, then, upon written notice thereof from the Company to the Agent, the rate
at which such commission is calculated shall be, effective as of the date of the
receipt of such notice by the Agent, .375% of 1% per annum. Accrued Commitment
Commission shall be due and payable in arrears on the Closing Date, on the last
Business Day of the month in which the Closing Date occurs and on the last
Business Day of each month that occurs after the Closing Date, through and
including the last calendar day of such month, and on the date (whether before
or after the Closing Date) on which each Non-Defaulting Lender's Revolving Loan
Commitment is terminated in full.
(b) The Company shall pay directly to the Agent, when and as
payable, such fees as have been agreed to in writing by the Company and the
Agent.
3.2 VOLUNTARY REDUCTION OF COMMITMENTS. Upon at least two Business
Days' prior written notice (or telephonic notice confirmed promptly in writing)
to the Agent (which notice the Agent shall promptly and, to the extent
practicable, on the same day, transmit to each of the Lenders), the Company
shall have the right, without premium or penalty, to terminate in whole or
reduce in part the unutilized portion of the Total Revolving Loan Commitment;
PROVIDED that any partial reduction pursuant
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to this Section 3.2 of the Total Revolving Loan Commitment shall be in the
amount of $5,000,000 or, if greater, an integral multiple of $1,000,000. The
Company may elect, in such notice, to reduce the Restricted Commitment Amount by
an amount not to exceed the amount of the reduction to the Total Revolving Loan
Commitment set forth in such notice. Reductions made pursuant to this Section
3.2 to the Total Revolving Loan Commitment shall be applied, FIRST against the
reductions thereof required by Section 3.3(b) (other than the reduction thereof
required on the Final Revolving Loan Maturity Date) in the inverse order of
their occurrence, and SECOND to the reduction thereof required on the Final
Revolving Loan Maturity Date.
3.3 MANDATORY REDUCTION OF COMMITMENTS. (a) Notwithstanding
anything to the contrary herein, the Total Revolving Loan Commitment shall be
terminated on September 30, 1994, unless the Closing Date has occurred on or
prior to such date.
(b) The Total Revolving Loan Commitment shall automatically
reduce by $25,000,000 on March 31, 1996, by $50,000,000 on each of March 31,
1997 and March 31, 1998 and by $175,000,000 on the Final Revolving Loan Maturity
Date.
(c) The Total Revolving Loan Commitment shall automatically
reduce on each date on which the Company is required to make a prepayment of the
Revolving Loans pursuant to Section 4.2(a), (b), (c), (d) or (h) by the
aggregate amount of such required prepayment as determined in accordance with
Section 4.3 (whether or not there are Revolving Loans outstanding which are in
fact so prepaid). Reductions of the Total Revolving Loan Commitment required by
this Section 3.3(c) shall be applied against the scheduled reductions of the
Total Revolving Loan Commitment required by Section 3.3(b) as follows: FIRST to
all such scheduled reductions (other than the reduction required on the Final
Revolving Loan Maturity Date) on a PRO RATA basis, and SECOND to the reduction
required on the Final Revolving Loan Maturity Date.
(d) On each date on which Variable Rate Notes are refinanced
with the proceeds of fixed-rate or other Indebtedness, are defeased or are
converted into fixed-rate notes or bonds, as the case may be, in accordance with
the terms thereof, and on each date on which
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the Variable Rate Notes are otherwise paid in full (but excluding (i) any
refinancing thereof, other than a conversion to fixed-rate notes or bonds,
supported directly or indirectly by a new Letter of Credit or Subsidiary Letter
of Credit, and (ii) any refinancing or defeasance of any Variable Rate Notes
made with the proceeds of Revolving Loans), the Total Revolving Loan Commitment
shall automatically reduce on the date of such refinancing, conversion or
payment by an amount equal to the face amount of the Letter of Credit or
Subsidiary Letter of Credit directly or indirectly supporting such Variable Rate
Notes. Reductions of the Total Revolving Loan Commitment pursuant to this
Section 3.3(d) shall be applied against the scheduled reductions of the Total
Revolving Loan Commitment required by Section 3.3(b) (including the reduction
required on the Final Revolving Loan Maturity Date) in the inverse order of
their occurrence. A Letter of Credit or Subsidiary Letter of Credit shall be
considered to indirectly support any Variable Rate Notes if it supports a letter
of credit supporting such Variable Rate Notes.
(e) The Total Revolving Loan Commitment shall automatically
reduce on October 1, 1994 by the then Restricted Commitment Amount, if any.
Immediately after giving effect to such reduction, the then Restricted
Commitment Amount, if any, shall reduce to zero.
(f) The Restricted Commitment Amount shall automatically reduce
to zero simultaneously with the Initial NME Acquisition Closing.
3.4 PRO RATA REDUCTIONS; NO REINSTATEMENT. Each reduction of the
Total Revolving Loan Commitment hereunder shall be applied PRO RATA according to
the Revolving Loan Commitments of the Lenders. The Lenders' Revolving Loan
Commitments, once reduced or terminated, may not be reinstated.
Section 4. PAYMENTS.
4.1 VOLUNTARY PREPAYMENTS. The Company shall have the right to
prepay the Loans in whole or in part from time to time on the following terms
and conditions: (i) the Company shall give the Agent at the Payment Office at
least two (or, in the case of a Swingline Borrowing, one) Business Days' prior
written notice (or telephonic notice confirmed promptly in writing) of its
intent to prepay the Loans specifying the amount of such
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prepayment, whether the Loans being repaid are Revolving Loans or the
outstanding principal of any Swingline Borrowing and the Type(s) of Loans to be
prepaid, which notice the Agent shall promptly transmit to each of the Lenders
and which notice of prepayment having been given, the principal amount of the
Loans specified in such notice shall become due and payable on the prepayment
date specified therein; (ii) each partial prepayment shall be in an aggregate
principal amount of $5,000,000 or, if greater, an integral multiple of
$1,000,000; PROVIDED that no partial prepayment of Eurodollar Loans made
pursuant to a single Borrowing shall reduce the outstanding Loans made pursuant
to such Borrowing to an amount less than $10,000,000; (iii) prepayments of
Eurodollar Loans made pursuant to this Section 4.1 may only be made on the last
day of an Interest Period applicable thereto; (iv) each prepayment in respect of
any Loans made pursuant to a Borrowing shall be applied PRO RATA among such
Loans; PROVIDED that at the Company's election in connection with any prepayment
pursuant to this Section 4.1, any prepayment in respect of Revolving Loans shall
not be applied to any Revolving Loan of a Defaulting Lender; and (v) a Swingline
Borrowing may only be repaid in full. Notwithstanding anything to the contrary
contained herein, unless the Company otherwise notifies the Agent in writing at
least two Business Days prior to the Closing Date, the Company shall be deemed
to have elected to prepay on the Closing Date (after giving effect to the
assignments contemplated by the Master Transfer Supplement) all of the Existing
Loans assigned to the Lenders pursuant to the Master Transfer Supplement and
amended and restated as Revolving Loans pursuant to Section 1.1(a) hereof.
4.2 MANDATORY PREPAYMENTS AND REPAYMENTS. (a) Within two Business
Days of each date on which an Asset Sale occurs, the Company shall prepay
outstanding Loans in an aggregate principal amount equal to 70% (or, if a
Default or an Event of Default exists immediately prior or after giving effect
to such Asset Sale, 100%) of the Net Proceeds thereof.
(b) Within two Business Days of each date on which the Company
issues or sells any shares of its capital stock or any warrants, options or
other rights to purchase or acquire shares of its capital stock (other than any
such (i) options issued to directors and employees of the Company pursuant to
the New Stock Option Plan and any such capital stock issued by the Company upon
the
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exercise of any such option, and (ii) any such Stock issued by the Company as
partial or total consideration for the acquisition of any other Person), the
Company, if the proceeds of any such issuance or sale or series of related
issuances or sales exceeds $200,000, shall prepay outstanding Loans in an
aggregate principal amount equal to 25% (or, if a Default or Event of Default
exists immediately prior to or after giving effect to such issuance or sale,
100%) of the Net Proceeds thereof; PROVIDED that if, at the time of any such
issuance or sale, (i) the ratio of Core Indebtedness, before giving effect to
such issuance or sale and the use of the proceeds thereof, to Core EBITDA for
the 12-month period ending on the last day of the month preceding such issuance
or sale is less than or equal to 3.5:1.0, and (ii) no Default or Event of
Default has occurred and is continuing or would result therefrom, then the
Company shall not be required to prepay any Loans as a result of such issuance
or sale.
(c) Anything to the contrary contained in Section 4.2(a) or (b)
notwithstanding, so long as no Default or Event of Default has occurred and is
continuing, the Company shall be permitted to retain any Net Proceeds payable to
the Lenders pursuant thereto if the amount payable thereunder, when aggregated
with any other amounts payable under Section 4.2(a) or (b) during any fiscal
year but not paid as a result of this Section 4.2(c) ("Retained Net Proceeds")
shall be less than $5,000,000 in the aggregate; PROVIDED that the Company shall
prepay the Loans in an amount equal to all Retained Net Proceeds on the earlier
of (i) the last Business Day of the fiscal year in which such Retained Net
Proceeds were received by the Company or its Restricted Subsidiaries, and (ii)
the second Business Day following the day on which (A) the Company or any of its
Restricted Subsidiaries receives any such Net Proceeds, and (B) the sum of (1)
the prepayment required as a result thereof pursuant to Section 4.2(a) or (b),
and (2) the then current amount of Retained Net Proceeds equals or exceeds
$5,000,000.
(d) On the 30th day prior to any date on which the Company would
(with the lapse of time) be required to repurchase or offer to purchase any
outstanding Senior Subordinated Notes or any other Permitted Subordinated
Indebtedness as a result of any sale, lease, conveyance or other transfer or
disposition of any assets, the Company shall prepay outstanding Loans in an
aggregate principal amount equal to the aggregate principal amount of such
Permitted Subordinated Indebtedness
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that would (with the lapse of time) be required to be subject to such offer.
(e)(i) If, at any time, after giving effect to any termination
or reduction of the Adjusted Total Revolving Loan Commitment pursuant to the
terms of this Agreement, the total of (A) the aggregate principal amount of all
outstanding Revolving Loans made by Non-Defaulting Lenders at such time PLUS (B)
the then aggregate outstanding amount of Subsidiary Credit Extensions of all
Non-Defaulting Lenders PLUS (C) the aggregate Letter of Credit Outstandings at
such time PLUS (D) the aggregate amount of Swingline Borrowings outstanding at
such time (without duplication of any Revolving Loans made with respect thereto
pursuant to Section 1.4) MINUS (E) amounts on deposit in the L/C Cash Collateral
Account at such time, shall exceed the Adjusted Total Revolving Loan Commitment
at such time, the Company shall immediately prepay Revolving Loans of Non-
Defaulting Lenders (and thereafter outstanding Swingline Borrowings) in an
aggregate amount equal to such excess and, to the extent that the sum of the
aggregate Letter of Credit Outstandings and the aggregate Subsidiary Letter of
Credit Outstandings exceeds the sum of the Adjusted Total Revolving Loan
Commitment as so reduced, the Company shall deposit an amount equal to such
excess in the L/C Cash Collateral Account. The amount required hereunder to be
maintained on deposit in the L/C Cash Collateral Account shall at no time exceed
the amount, if any, by which the sum of aggregate Letter of Credit Outstandings,
aggregate Swingline Borrowings then outstanding (without duplication of any
Revolving Loans made with respect thereto pursuant to Section 1.4), aggregate
Revolving Loans of all the Non-Defaulting Lenders then outstanding and aggregate
Subsidiary Credit Extensions of all the Non-Defaulting Lenders then outstanding
exceeds the Adjusted Total Revolving Loan Commitment; any amount held in the L/C
Cash Collateral Account in excess of such required amount shall, so long as no
Default or Event of Default has occurred and is continuing, be payable to the
Company upon request.
(ii) On any day on which the aggregate outstanding principal
amount of the Revolving Loans and Subsidiary Loans made by any Defaulting Lender
exceeds the Unrestricted Revolving Loan Commitment of such Defaulting Lender,
the Company shall prepay principal of the Revolving Loans of such Defaulting
Lender in an amount equal to such excess, less any amount owed by or
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due from such Defaulting Lender to the Company or any Non-Defaulting Lender;
PROVIDED that if the Company so sets-off any amounts owed to a Non-Defaulting
Lender, the Company shall pay such amounts to such Non-Defaulting Lender
simultaneously with such set-off.
(f) Notwithstanding anything to the contrary contained in this
Section 4.2, if on any date on which the Company is required to make a
prepayment of Revolving Loans there is an unutilized portion of the Total
Revolving Loan Commitment, which unutilized portion will be reduced in
conjunction with such required prepayment pursuant to Section 3.3(b) or 3.3(c),
the Company will not be required to actually prepay Revolving Loans to the
extent such unutilized Total Revolving Loan Commitment is reduced.
(g) On each date on which there occurs a remarketing of Variable
Rate Notes which were purchased with the proceeds of a drawing under a Letter of
Credit or a letter of credit backed by a Letter of Credit, pursuant to the
exercise by the holder of such note of its rights under the indenture pursuant
to which such Variable Rate Note was issued to require such purchase, the
Company shall prepay Revolving Loans to the extent incurred to fund such
purchases in an amount equal to the aggregate principal amount of Variable Rate
Notes so remarketed. Proceeds of the remarketing of Variable Rate Notes
received by the Agent from the L/C Banks or from any trustee for the holders of
Variable Rate Notes supported by a Letter of Credit shall be applied by the
Agent to such prepayment of Revolving Loans.
(h) Within five Business Days of each date on which the Company
or any of its Subsidiaries receives any payment pursuant to Section 2.14 of the
NME Purchase Agreement or any other payment under such agreement (other than
pursuant to Section 2.6 thereof as in effect on the date hereof) which reflects
an adjustment to the purchase price paid by the Company and its Subsidiaries
pursuant to the terms thereof, the Company, if the amount of such payment, when
aggregated with all such other payments previously received by the Company and
its Subsidiaries that have not resulted in reductions of the Total Revolving
Loan Commitment, are greater than or equal to $500,000, shall prepay outstanding
Loans in an aggregate principal amount equal to the sum of such payment and the
amount of all such other payments previ-
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ously received and not resulting in a reduction to the Total Revolving Loan
Commitment.
4.3 APPLICATION OF PREPAYMENTS. With respect to each prepayment of
Loans required by Section 4.2, the Company may designate the Types of Loans
which are to be prepaid and the specific Borrowing(s) pursuant to which made;
PROVIDED that (i) Eurodollar Loans may be designated for prepayment pursuant to
this Section 4.3 only on the last day of an Interest Period applicable thereto
unless (A) all Eurodollar Loans with Interest Periods ending on such date of
required prepayment have been paid in full and (B) all Base Rate Loans have been
paid in full; (ii) if any prepayment of Eurodollar Loans made pursuant to a
single Borrowing shall reduce the outstanding Loans made pursuant to such
Borrowing to an amount less than $10,000,000, such Borrowing shall immediately
be converted into Base Rate Loans; (iii) each prepayment of any Loans made
pursuant to a Borrowing shall be applied PRO RATA among such Loans; and (iv)
notwithstanding the provisions of the preceding clause (iii), no prepayment of
Revolving Loans made pursuant to Section 4.2(e)(i) shall be applied to the
Revolving Loans of any Defaulting Lender and prepayments pursuant to Section
4.2(e)(ii) shall only be applied to the Revolving Loans of the respective
Defaulting Lender. In the absence of a designation by the Company as described
in the preceding sentence, the Agent shall apply such prepayment FIRST to Base
Rate Loans, SECOND to Eurodollar Loans with an Interest Period ending on the
date of such prepayment and THIRD, subject to the above, as the Agent may
determine in its sole discretion; PROVIDED, that such prepayment be applied to
the Eurodollar Loan with the shortest remaining time to the end of the Interest
Period. Any prepayment made pursuant to this Section 4.3 shall be made together
with all amounts payable pursuant to Section 1.12.
4.4 METHOD AND PLACE OF PAYMENT. Except as otherwise specifically
provided herein, all payments under this Agreement and the Notes shall be made
to the Agent for the ratable account of the Lenders entitled thereto not later
than 11:00 A.M. (New York, New York time) on the date when due and shall be made
in Dollars in immediately available funds at the Payment Office of the Agent.
Any payments by the Company under this Agreement or the Notes which are made
later than 11:00 A.M. (New York, New York time) shall be deemed to have been
made on the next succeeding Business Day. Whenever any payment to be made
hereunder or under any Note shall be
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stated to be due on a day which is not a Business Day, the due date thereof
shall be extended to the next succeeding Business Day and, with respect to
payments of principal, interest shall be payable at the applicable rate during
such extension. All payments made by the Company hereunder in respect of
outstanding Loans shall be applied first to outstanding interest then due and
payable and then to payments of principal.
4.5 NET PAYMENTS. (a) All payments made by the Company hereunder
and under the other Credit Documents will be made without setoff or
counterclaim. All such payments will be made free and clear of and without
deduction or withholding for or on account of any Taxes (but excluding, except
as provided in paragraph (c) hereof, any Taxes imposed on the overall net income
of a Lender pursuant to the laws of the jurisdiction in which the principal
executive office or applicable Lending Office of such Lender is located). If
any Taxes are so levied or imposed, the Company agrees (i) to pay the full
amount of such Taxes, and such additional amounts as may be necessary so that
every net payment of all amounts due hereunder and under the other Credit
Documents, after withholding or deduction for or on account of any such Taxes
(including additional sums payable under this Section 4.5), will not be less
than the amount provided for herein, (ii) to make such withholding or deduction
and (iii) to pay the full amount deducted to the relevant authority in
accordance with applicable law; PROVIDED that the Company shall not be required
to pay any additional amount on account of any Taxes of, or imposed by, the
United States pursuant to this Section 4.5(a) to any Lender or the Agent which
(A) is not entitled, on the Execution Date or Closing Date (or, in the case of
an assignee of a Lender, on the date on which the assignment to it became
effective), to submit Form 1001 or Form 4224 (or any successor forms) so as to
meet its obligations to submit such a form pursuant to Sections 12.4(h) and (i),
(B) shall have failed to submit any form or other certification which it was
required to file pursuant to Sections 12.4(h) and (i) and entitled to file under
applicable law, or (C) shall have filed any such form which is incorrect or
incomplete in any material respect and shall not have corrected or completed
such form.
(b) Within 30 days after the date on which the payment of any
Taxes required to be paid by the Company pursuant to Section 4.5(a) is due
pursuant to applicable law, the Company will furnish to the Agent
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certified copies of tax receipts evidencing such payment by the Company. The
Company will indemnify and hold harmless each Lender and reimburse each Lender
upon the written request of the Agent on behalf of such Lender (which request
the Agent shall promptly make after receiving a written request from such Lender
setting forth the basis for requesting such amount), for the amount of any such
Taxes (other than Taxes described in the proviso following Section 4.5(a)(iii)
for which the Company has no obligation thereunder) so levied or imposed and
paid by such Lender and any liability (including incremental Taxes as set forth
in Section 4.5(c), penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not such Taxes were correctly or legally asserted.
(c) The Company shall also reimburse each Lender, upon the
written request of such Lender, for any Taxes imposed on or measured by the
overall net income of such Lender or its applicable Lending Office pursuant to
the laws of the jurisdiction in which the principal executive office or
applicable Lending Office of such Lender is located or any political subdivision
or taxing authority thereof or therein as such Lender shall determine in good
faith are payable by such Lender in respect of amounts paid to or on behalf of
such Lender pursuant to paragraph (a) or (b) hereof.
(d) With respect to any Taxes which are paid by the Company in
accordance with the provisions of this Section 4.5, each Lender receiving the
benefits of such payments of Taxes hereby agrees to pay to the Company any
amounts refunded to such Lender which such Lender determines in its sole
discretion to be a refund in respect of such Taxes.
4.6 USE OF PROCEEDS. The Company shall use the proceeds of Revolving
Loans and Swingline Borrowings (a) for the purpose of repaying the Mortgage
Notes and consummating the Existing Company Credit Agreement Restructuring, (b)
to pay the fees, costs and expenses incurred by the Company in connection with
the Transactions, and/or (c) for working capital and other general corporate
purposes, including, without limitation, to finance permitted acquisitions
(including the NME Acquisition) and Investments.
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Section 5. CONDITIONS PRECEDENT.
5.1 CONDITIONS PRECEDENT TO INITIAL LOANS, ETC. The obligation of
each Lender to make its Loans, if any, on the Closing Date and consummate the
Existing Company Credit Agreement Restructuring, and the obligation of each L/C
Bank to issue any Letter of Credit on the Closing Date, is subject to the
satisfaction of the following conditions precedent prior to, on or
contemporaneously with the Closing Date:
(a) NOTES. The Agent shall have received, for the account of
each Lender, the Increased Commitment Note, the Swingline Note and the Revolving
Note of such Lender, duly completed, executed and delivered by an authorized
officer of the Company.
(b) GUARANTY. Each Wholly-Owned Restricted Subsidiary (other
than Excludable Foreign Subsidiaries) shall have duly completed, executed and
delivered to the Agent for the benefit of the Lenders a guaranty (as hereafter
amended, restated, varied, supplemented or modified from time to time, the
"Subsidiary Guaranty") of the Obligations (including, without limitation, the
Subsidiary Obligations), substantially in the form of Exhibit C hereto and
amending and restating the guaranty provided by certain of such Restricted
Subsidiaries pursuant to the Existing Company Credit Agreement, and the same
shall be in full force and effect.
(c) STOCK AND NOTES PLEDGES. The Company shall have executed
and delivered to the Collateral Agent for the benefit of the Lenders a pledge
agreement (as hereafter amended, restated, varied, supplemented or modified from
time to time, the "Company Stock and Notes Pledge"), substantially in the form
of Exhibit D-1 hereto and amending and restating the stock and notes pledge
delivered by the Company pursuant to the Existing Credit Agreements, and each
Domestic Wholly-Owned Restricted Subsidiary shall have executed and delivered to
the Collateral Agent for the benefit of the Lenders a Subsidiary Stock and Notes
Pledge, substantially in the form of Exhibit D-2 hereto and amending and
restating the stock and notes pledge delivered by such Restricted Subsidiaries
pursuant to the Existing Credit Agreements, pursuant to which each of the
Company and such Restricted Subsidiaries pledges, as security for the
Obligations (including, without limitation, the Subsidiary Obligations): (i)
all of the issued and outstanding shares of capital
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stock or equivalent interests from time to time owned by it of present and
future Domestic Subsidiaries (other than hereafter created Domestic Subsidiaries
that are not Significant Subsidiaries), (ii) all of the intercompany notes of
any direct or indirect Subsidiary of the Company (other than Excludable Foreign
Subsidiaries) now or hereafter held by it, and (iii) to the extent permitted by
applicable law, all of the outstanding capital stock or equivalent interests
owned by it of present and future Foreign Subsidiaries (other than hereafter
created Foreign Subsidiaries that are not Significant Subsidiaries); PROVIDED
that in no event shall the Company or any such Restricted Subsidiary be required
to pledge more than 65% of all of the outstanding capital stock or equivalent
interests of any Foreign Subsidiary that is an Excludable Foreign Subsidiary.
Each of the Stock and Notes Pledges shall be in full force and effect and each
pledgor under each of the Stock and Notes Pledges shall have duly delivered to
the Collateral Agent in pledge under such Stock and Notes Pledge, for the
benefit of the Lenders (A) share certificates representing all of the shares of
capital stock pledged thereunder, together with undated stock powers therefor
duly executed in blank by such pledgor, and (B) all of the intercompany notes
pledged thereunder, together with undated instruments of assignment thereof duly
executed in blank by such pledgor.
(d) PLEDGE AND SECURITY AGREEMENTS. The Company shall have
executed and delivered to the Collateral Agent for the benefit of the Lenders
(i) a pledge and security agreement (as hereafter amended, restated, varied,
supplemented or modified from time to time, the "Company Pledge and Security
Agreement") substantially in the form of Exhibit E-1 hereto, and (ii) a pledge
and security agreement (as hereafter amended, restated, varied, supplemented or
modified from time to time, the "Company Pledge and Security Agreement (ESOP)")
substantially in the form of Exhibit E-2 hereto and amending and restating the
pledge and security agreement delivered by the Company pursuant to the Existing
Credit Agreements. Each Finance Company shall have executed and delivered to
the Collateral Agent for the benefit of the Lenders a pledge and security
agreement (as hereafter amended, restated, varied, supplemented or modified from
time to time, collectively, the "FINCO Pledge and Security Agreements")
substantially in the form of Exhibit F hereto and amending and restating the
pledge and security agreements delivered by the Finance Companies pursuant to
the Existing Credit Agreements. Each Domestic Wholly-Owned Re-
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stricted Subsidiary shall have executed and delivered to the Collateral Agent
for the benefit of the Lenders a Subsidiary Pledge and Security Agreement
substantially in the form of Exhibit G hereto and amending and restating the
pledge and security agreement delivered by such Restricted Subsidiaries pursuant
to the Existing Credit Agreements. Each of the Pledge and Security Agreements
shall be in full force and effect and the Company and each Domestic Wholly-Owned
Restricted Subsidiary shall have duly delivered to the Collateral Agent in
pledge under the Pledge and Security Agreements, for the benefit of the Lenders,
all instruments and other documents evidencing collateral in which a Lien is
created thereunder to the extent necessary to perfect such security interest,
together with undated stock powers or instruments of assignment thereof duly
executed in blank by the Company or the relevant Domestic Wholly-Owned
Restricted Subsidiary.
(e) COLLATERAL ACCOUNTS ASSIGNMENT AGREEMENT. The Agent, on
behalf of the Lenders, and the Company shall have executed and delivered a
collateral accounts assignment agreement (as hereafter amended, restated,
varied, supplemented or modified from time to time, the "Collateral Accounts
Assignment Agreement"), substantially in the form of Exhibit H hereto, and the
same shall be in full force and effect.
(f) MORTGAGE DOCUMENTS. The applicable Mortgagors shall have
duly executed and delivered to the Collateral Agent for the benefit of the
Lenders such mortgages, mortgage consolidations and other documents
(collectively, the "Mortgage Documents") as the Collateral Agent or the Lenders
deem necessary or desirable to fully perfect the Liens granted pursuant to the
Mortgages as security for the Obligations; the Mortgage Documents shall be in
full force and effect; the Mortgage Documents shall have been filed in such
places as the Collateral Agent or the Lenders deem necessary or desirable for
such perfection; and all taxes, fees and expenses payable in connection with the
execution and delivery of the Mortgage Documents and such filings shall have
been paid by the Company and the Mortgagors.
(g) SUBSIDIARY CREDIT AGREEMENT. Each Subsidiary Borrower, the
Agent, the Co-Agent and the Lenders shall have executed and delivered the
Subsidiary Credit Agreement and the same shall be in full force and effect. The
Agent shall have received, for the account
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of each Lender, the Subsidiary Increased Commitment Note and a promissory note
(a "Subsidiary Note") of such Subsidiary Borrower in the form of Exhibit A to
the Subsidiary Credit Agreement and duly completed, executed and delivered by an
authorized officer of such Subsidiary Borrower. The Company shall have duly
completed, executed and delivered to the Agent for the benefit of the Lenders a
guaranty of the Subsidiary Obligations in the form of the Company Guaranty and
the same shall be in full force and effect. Each of the conditions precedent
specified in the Subsidiary Credit Agreement to the Existing Subsidiary Credit
Agreement Restructuring shall have occurred to the reasonable satisfaction of
the Lenders; and the Existing Subsidiary Credit Agreement Restructuring shall
occur simultaneously with the making of the initial Subsidiary Loans thereunder.
(h) ESOP; TRUST AGREEMENT, ETC. The Agent shall have received
(with copies for each of the Lenders) executed or conformed copies of the Trust
Agreement, the ESOP, the New Stock Option Plan and the Rights Plan and the
amendments and other modifications entered into on or as of the Closing Date to
the Company/ESOP Credit Documents, and such amendments shall be in form and
substance satisfactory to the Lenders.
(i) OFFICERS' CERTIFICATES. The Agent shall have received (with
a copy for each of the Lenders) (i) a certificate of the Secretary or an
Assistant Secretary of the Company and each of its Domestic Wholly-Owned
Restricted Subsidiaries certifying the names and true signatures of the officers
of such Person authorized to sign the Credit Documents and other Transaction
Documents to which it is a party and the other documents to be delivered
thereunder, and (ii) a certificate of the chief executive officer or chief
financial officer of the Company certifying that the conditions set forth in
Section 5.2(a) and (b) are satisfied as of the Closing Date, in each case in
form and substance reasonably satisfactory to the Lenders.
(j) OPINIONS OF THE COMPANY'S COUNSEL. The Agent shall have
received (with a copy for each of the Lenders) a favorable opinion of (i) King &
Spalding, counsel for the Company, in substantially the form of Exhibit J-1
hereto, and (ii) such local counsels of the Company and its Restricted
Subsidiaries reasonably acceptable to the Lenders addressing such matters
pertaining to the Wholly-Owned Foreign Restricted Subsidiaries
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as any Lender may reasonably request, in each case in form and substance
reasonably satisfactory to the Lenders.
(k) OPINION OF AGENT'S COUNSEL. The Agent shall have received
(with a copy for each of the Lenders) an opinion of Skadden, Arps, Slate,
Meagher & Flom, special counsel for the Agent, substantially in the form of
Exhibit J-2 hereto.
(l) ENVIRONMENTAL REPORTS. The Lenders shall have received
copies of environmental reports that are in form and substance reasonably
satisfactory to the Lenders in respect of the Facilities and the other real
property to be acquired by the Company and its Subsidiaries pursuant to the NME
Purchase Agreement and all other Facilities and other real property acquired by
the Company or any of its Subsidiaries since July 22, 1992, and updated reports
and assessments, as may be reasonably determined by the Agent to be necessary
based on responses to environmental questionnaires completed by or for the
Company or its Subsidiaries, of the most recently delivered environmental
reports in respect of other Facilities and real property of the Company and its
Subsidiaries, in each case prepared, at the cost and expense of the Company, by
a Person designated by the Company that is reasonably acceptable to the Required
Lenders.
(m) RELATED FINANCINGS. The Company shall have received
$375,000,000 of gross proceeds from the issuance and sale of the Senior
Subordinated Notes, a portion of such proceeds shall have been utilized by the
Company for the purposes of defeasing and thereafter redeeming the Existing
Subordinated Debentures and paying related costs and expenses. The Subordinated
Debt Documents pertaining to the Senior Subordinated Notes and the Defeasance
Agreement shall be in form and substance satisfactory to the Lenders and shall
have been duly executed and delivered by the parties thereto, and such
Subordinated Debt Documents and the Defeasance Agreement shall not have been
amended in any material respect without the prior written consent of the Agent
on behalf of the Lenders. The Agent shall have received (with copies for each
of the Lenders) executed copies of such Subordinated Debt Documents and the
Defeasance Agreement, certified as being true and correct copies by an
authorized officer of the Company, and such Subordinated Debt Documents and the
Defeasance Agreement shall be in full
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force and effect. The certificates and opinions delivered on or prior to the
Closing Date by or on behalf of the Company or any of its Subsidiaries pursuant
to any Subordinated Debt Document, the Existing Subordinated Debentures
Indenture or the Defeasance Agreement shall be addressed to the Lenders or shall
be accompanied by letters, in form and substance satisfactory to the Lenders,
entitling the Lenders to rely thereon.
(n) CERTAIN DEBT REPAYMENTS. The Existing Subordinated
Debentures and the Mortgage Notes and all obligations of the Company and its
Subsidiaries thereunder or in respect thereof (other than indemnities and costs
and expenses accruing thereunder after the Closing Date) shall be paid in full
or payment in full shall have been provided for in accordance with the terms
thereof or otherwise in a manner reasonably satisfactory to the Lenders. In
addition, (i) the covenants and agreements of the Company and its Subsidiaries
under the Existing Subordinated Debentures Indenture shall have been discharged
in full, other than those expressly surviving any termination or defeasance
thereof, (ii) all Liens securing the Mortgage Notes shall have been released (or
arrangements providing for such release shall have been made) to the
satisfaction of the Agent, and (iii) the Existing Participation Agreements shall
have been terminated.
(o) FINANCIAL STATEMENTS. The Agent shall have received (with
copies for each of the Lenders) each of the financial statements described in
Section 6.4, in each case certified by the chief financial officer of the
Company as having been prepared, except to the extent otherwise disclosed on
Schedule 6.4, in accordance with GAAP applied on a consistent basis throughout
the periods specified and as presenting fairly in all material respects the
financial position of the corporations or assets to which they relate as of the
respective dates specified and the results of its or their operations and its or
their cash flows for the respective periods specified, subject, in the case of
any unaudited or interim financial statements, to normal year end and quarterly
adjustments and the absence of footnotes thereto; and all such financial
statements shall be in form and substance satisfactory to the Lenders.
(p) NME PURCHASE AGREEMENT. The NME Purchase Agreement shall
not have been amended or otherwise modified in any material respect (and no
condition there-
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in to the obligations of the Company thereunder shall have been waived) without
the prior written consent of the Agent on behalf of the Lenders. The Agent
shall have received (with copies for each of the Lenders) executed copies of the
NME Purchase Agreement certified as being true and correct copies by an
authorized officer of the Company, and the NME Purchase Agreement shall be in
full force and effect.
(q) PROJECTIONS. The Agent shall have received projections
prepared by the Company demonstrating (i) the projected consolidated results of
operations of the Company and its Subsidiaries, (ii) the projected consolidated
results of operations of all of the Facilities subject to the NME Purchase
Agreement, and (iii) the projected consolidated financial condition, results of
operations and cash flows of the Company and its Subsidiaries after giving
effect to the Transactions (assuming, for such purpose, that the Company and the
Domestic Guarantors acquire all of the Facilities subject to the NME Purchase
Agreement); in each of the foregoing cases for the period commencing on April
30, 1994 and ending on September 30, 1998, and accompanied by a written
statement of the assumptions underlying such projections and a certificate of an
executive officer of the Company certifying that (A) such projections have been
prepared on the basis of the assumptions accompanying them, and (B) such
projections and assumptions, as of the date of preparation thereof and as of the
Closing Date, are reasonable and represent the Company's good faith estimate of
its and the Facilities to be acquired from NME future financial condition and
performance, it being understood that nothing contained in such certificate
shall constitute a representation or warranty that such future financial
condition or results of operations will in fact be achieved. All of the
foregoing shall be in form and substance satisfactory to the Lenders.
(r) APPROVALS. The Agent shall have received (with copies for
each of the Lenders) copies of all material orders, consents, approvals,
licenses, authorizations, validations, filings, recordings, registrations,
exemptions and notices of, by or to any governmental or public body or
authority, domestic or foreign, or any subdivision thereof, or any other Person
or group of Persons, requested by the Lenders, in each case which are required
to be obtained on or prior to the Closing Date to authorize, or are required in
connection with (i) the execution, delivery or performance of any
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Transaction Document to which a Credit Party is a party (other than the
performance of the NME Purchase Agreement), or the consummation of any of the
Transactions (other than the NME Acquisition), or (ii) the legality, validity,
binding effect or enforceability of any Transaction Document to which a Credit
Party is a party.
(s) SECURITY INTERESTS. The Lenders shall be reasonably
satisfied that the Security Documents create or will create, upon the completion
of the filings of the Security Documents, financing statements and other
instruments tendered for filing, as security for the Obligations (including,
without limitation, the Subsidiary Obligations), a valid and enforceable
perfected security interest in and Lien on all of the Collateral (other than the
collateral assignments of mortgages securing pledged intercompany notes,
Collateral covered by the Subsidiary Pledge and Security Agreement which is
located in the State of Tennessee, and Collateral covered by the Subsidiary
Pledge and Security Agreement to the extent such Collateral is not covered by
Article 9 of the Uniform Commercial Code as in effect in the relevant
jurisdiction) in favor of the Collateral Agent for the benefit of the Lenders,
superior and prior to the rights of all other Persons therein (as provided in
the Uniform Commercial Code) and subject to no other Liens other than Liens
permitted hereby. The Security Documents, or financing statements or other
instruments with respect thereto, as may be necessary, shall have been duly
filed or recorded (or tendered for filing or recording) in such manner and in
such places as are required by law to establish, perfect, preserve and protect
the security interests and Liens (other than (i) the collateral assignment of
mortgages securing pledged intercompany notes and (ii) Collateral covered by the
Subsidiary Pledge and Security Agreement which is located in the State of
Tennessee) in favor of the Collateral Agent for the benefit of the Lenders,
granted pursuant to such Security Documents, and all taxes, fees and other
charges payable in connection therewith due on or prior to the Closing Date
shall have been paid in full.
(t) MATERIAL EVENTS. No event, action or proceeding shall have
occurred or condition shall have arisen and continue to exist since September
30, 1993 with respect to any Credit Party, any Transaction Document or any of
the Transactions which the Agent, the Co-Agent or any Lender has reasonably
determined could have a Material Adverse Effect.
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(u) INTEREST; FEES; EXISTING LOANS; ETC.
(i) The Agent and the Lenders shall have received
payment in full of all fees and Commitment Commissions referred to in
Section 3.1 which are payable on or prior to the Closing Date, and all
reasonable costs and expenses payable on the Closing Date by the
Company pursuant to Section 12.1 (including, without limitation, all
reasonable fees and expenses of Skadden, Arps, Slate, Meagher & Flom,
special counsel to the Agent and the Lenders, for which the Company
has received an invoice at least two Business Days prior to the
Closing Date) shall have been paid.
(ii) Each Existing Lender shall have executed and
delivered the Master Transfer Supplement or the Existing Loans and
Existing Subsidiary Loans of such Existing Lender shall have been paid
in full by the Company and the applicable Subsidiary Borrowers; and
the Agent shall have received from the Company and the Subsidiary
Borrowers, for the account of the Existing Lenders, all accrued and
unpaid interest and fees as of the Closing Date on the Existing Loans,
the Existing Commitments, the Existing Subsidiary Letters of Credit
and the Existing Subsidiary Loans.
(v) NO ADVERSE ESOP DETERMINATIONS. Except as set forth on
Schedule 6.10, no opinion, correspondence or other communication, whether
written or otherwise, shall have been received by the Company, or any of their
respective agents, affiliates, associates, officers, directors or counsel, or
any fiduciary of the ESOP, from the United States Department of Labor, the
I.R.S. or any other federal governmental or regulatory agency, body or
authority, to the effect that the Trust or the ESOP do not meet the requirements
under Section 401(a) or 501(a) of the Code, that the ESOP does not constitute an
"employee stock ownership plan" within the meaning of Section 4975(e)(7) of the
Code, that any loan made to the Trust pursuant to the Company/ESOP Credit
Agreements or any pledge of Company Common Stock by the Trust to the Company
pursuant to the Company/ESOP Pledge Agreements will (or did) constitute a
material violation of ERISA or the Code.
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(w) INSURANCE. The Company shall have assets restricted for the
settlement of unpaid claims having a book value of not less than $45,000,000.
The Agent shall have received (with a copy for each Lender) a certificate of an
executive officer of the Company certifying that (i) such restricted assets,
together with general and professional liability insurance policies of the
Company from Affiliates and third-parties, are adequate in light of the
Company's anticipated claims arising in respect of occurrences on or prior to
the Closing Date; and (ii) the Company has recorded, in accordance with GAAP,
reserves for unpaid claims which are sufficient to cover, as of the Closing
Date, the Company's and its Subsidiaries anticipated claims arising in respect
of occurrences on or prior to the Closing Date.
(x) CORPORATE PROCEEDINGS. All corporate, partnership and legal
proceedings and all instruments and agreements (not otherwise attached as
Exhibits hereto) in connection with the transactions contemplated by this
Agreement, the other Credit Documents and the other Transaction Documents shall
be reasonably satisfactory in form and substance to the Lenders, and the Agent
shall have received (with copies for each of the Lenders) all information and
copies of all documents and papers, including records of corporate and
partnership proceedings and governmental approvals, if any, which the Agent, on
behalf of any Lender, may have reasonably requested in connection therewith.
(y) SYNDICATION MARKET. There shall have been no material
adverse change after the date hereof to the syndication market for non-
investment grade revolving credit facilities of a similar duration and nature as
the facilities set forth herein, and there shall not have occurred and be
continuing a disruption of, or an adverse change in financial, banking or
capital markets that would have a material adverse effect on such syndication
market, in each case as determined by the Agent in its sole discretion.
therewith.
5.2 CONDITIONS PRECEDENT TO EACH LOAN, ETC.
The obligation of each Lender to make any Loan or consummate the Existing
Company Credit Agreement Restructuring, the obligation of each L/C Bank to issue
(or renew or extend pursuant to Section 2.1) a Letter of Credit (including,
without limitation, the Loans, if any, to be made and Letters of Credit, if any,
to be issued on the Closing Date) and the obligation of BTCo to make a
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Swingline Borrowing is subject to its having received a copy of the Notice of
Borrowing in respect of such Loan, the Notice of Swingline Borrowing in respect
of such Swingline Borrowing or a Letter of Credit Request for such Letter of
Credit, as the case may be, in accordance with the terms hereof and the
satisfaction of the following further conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES TRUE; NO DEFAULT. On the
date of such Loan, Swingline Borrowing and/or the consummation of the Existing
Company Credit Agreement Restructuring, as the case may be, both before and
after giving effect thereto and, in the case of the making of a Loan or a
Swingline Borrowing, to the application of the proceeds thereof, or on the date
of the issuance of such Letter of Credit, as the case may be, the following
statements shall be true (and each of the giving of the applicable Notice of
Borrowing, Notice of Swingline Borrowing or the Letter of Credit Request, as the
case may be, (and, in the case of the consummation of the Existing Company
Credit Agreement Restructuring, the execution and delivery by the Company of the
Revolving Notes) shall constitute a representation and warranty by the Company
that on the date of such Loan, Swingline Borrowing, consummation of the Existing
Company Credit Agreement Restructuring or issuance of such Letter of Credit, as
the case may be, both before and after giving effect thereto and, in the case of
a Loan or a Swingline Borrowing, to the application of the proceeds thereof,
such statements are true):
(i) the representations and warranties contained in
Section 6 are true and correct on and as of the date of such Loan,
Swingline Borrowing, consummation of the Existing Company Credit
Agreement Restructuring or issuance of such Letter of Credit, as the
case may be, as though made on and as of such date except for
representations and warranties relating to a particular point in time,
and except as set forth in any supplement to Schedule 6.5, 6.7 or 6.17
delivered by the Company to the Lenders after the Closing Date; and
(ii) no event has occurred and is continuing or
condition exists, or would result from such Loan or Swingline
Borrowing or the application of the proceeds thereof, the consummation
of the Existing Company Credit
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Agreement Restructuring or the issuance of such Letter of Credit, as the
case may be, which constitutes an Event of Default or a Default;
(b) MATERIAL EVENTS. No event, action or proceeding shall have
occurred or condition shall exist with respect to the Company, any of its
Subsidiaries, any Credit Document, any transaction contemplated thereby or any
Facility of the Company or any of its Subsidiaries (including, without
limitation, any Facility acquired or proposed to be acquired from NME) which the
Agent, the Co-Agent or the Required Lenders reasonably determines is likely to
have a Material Adverse Effect;
(c) LITIGATION, APPROVALS, ETC. On the date of such Loan,
Swingline Borrowing, consummation of the Existing Company Credit Agreement or
the issuance of such Letter of Credit, as the case may be, the existence of the
litigation set forth on any supplement to Schedule 6.5 or Schedule 6.17 and the
absence of approvals set forth on any supplement to Schedule 6.7 in the
reasonable determination of the Agent, the Co-Agent or the Required Lenders
would not have a Material Adverse Effect;
(d) DOCUMENTATION WITH RESPECT TO LETTERS OF CREDIT. In the
case of the issuance of any Letter of Credit that will provide credit
enhancement for obligations of the Company or any of its Subsidiaries incurred
in connection with any acquisition, construction or mortgage financing or a
Sale/Leaseback Transaction permitted hereunder, all documentation in respect of
the issuance of such Letter of Credit and the making and honoring of drawings
thereunder shall be in form and substance reasonably satisfactory to the Agent
and the applicable L/C Bank; and
(e) OTHER. The Lenders making Loans, making a Swingline
Borrowing, participating in the Existing Company Credit Agreement Restructuring
or issuing Letters of Credit on such date shall have received such other
documents as they may reasonably request.
Section 6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. In order to
induce the Lenders to enter into this Agreement and to make available the credit
facilities contemplated hereby, the Company makes the following representations,
warranties and agreements, each of which shall survive the execution and
delivery of this Agreement and the Notes and the making of the Loans:
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6.1 CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Each of the Company
and its Subsidiaries (i) is a corporation or partnership duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, as the case may be, (ii) has the power and
authority to own its property and assets and to transact the business in which
it is engaged, (iii) has duly qualified and is authorized to do business and is
in good standing as a foreign corporation or partnership, as the case may be, in
every jurisdiction in which the failure to so qualify would have a Material
Adverse Effect, and (iv) is in full compliance with its certificate or articles
of incorporation and by-laws or other organizational or governing documents and
all laws, regulations, orders, writs, judgments, decrees, determinations or
awards, except to the extent that the failure to comply therewith would not have
a Material Adverse Effect.
6.2 POWER; AUTHORITY; NO VIOLATION. The execution, delivery and
performance by each of the Credit Parties of the Credit Documents and other
Transaction Documents to which it is a party and the consummation of the
Transactions are within such Credit Party's corporate or partnership powers, as
the case may be, have been (or in the case of the consummation of all or any
portion of any Transaction, will be by the time all or such portion of such
Transaction is consummated) duly authorized by all necessary corporate,
partnership or other action, and do not and will not contravene (i) the
certificate or articles of incorporation or by-laws or other organizational or
governing documents of any Credit Party or (ii) any law, regulation, order,
writ, judgment, decree, determination or award currently in effect or any
contractual restriction binding on or affecting any Credit Party, except where
such contravention would not have a Material Adverse Effect, or (iii) any
franchise, license, permit, certificate, authorization, qualification,
accreditation or other right, consent or approval referred to in Section 6.21,
except where such contravention would not have a Material Adverse Effect, and,
except as set forth on Schedule 6.2, do not and will not conflict with or result
in any breach of any of the terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of (or the
obligation to create or impose) any Lien (except pursuant to the Security
Documents or the Company/ESOP Pledge Agreements) upon any of the property or
assets of any Credit Party pursuant to the terms of, any indenture,
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mortgage, deed of trust, agreement or other instrument to which any Credit Party
is a party or by which it or any of its properties or assets is bound or to
which it may be subject, except to the extent such conflict, breach, default or
creation or imposition would not have a Material Adverse Effect.
6.3 BINDING EFFECT. Each of the Credit Parties has duly executed and
delivered each Credit Document and other Transaction Document to which it is a
party. Each such Credit Document and other Transaction Document is in full force
and effect and constitutes the legal, valid and binding obligation of each
Credit Party thereto, enforceable against each such Credit Party in accordance
with its terms, except to the extent that enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally, and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
6.4 FINANCIAL CONDITION. (a) The Company has furnished to the Agent
for the benefit of the Lenders prior to the date hereof (i) a copy of the
audited consolidated (and unaudited consolidating) balance sheet of the Company
and its Subsidiaries as of September 30, 1993 and the related audited
consolidated statements of operations, changes in common stockholders' equity
and cash flows of the Company and its Subsidiaries for the fiscal year then
ended and unaudited consolidating statements of operations for such period; (ii)
a copy of (A) the preliminary unaudited consolidated balance sheets of the
Company and its Subsidiaries as of March 31, 1994 and, if the Closing Date
occurs on or after May 31, 1994, as of the Measurement Date applicable to the
Closing Date, (B) the related preliminary unaudited consolidated statements of
operations and unaudited consolidated changes in common stockholders' equity and
cash flows of the Company and its Subsidiaries for the six month period ended
March 31, 1994 and for the period from September 30, 1993 to such Measurement
Date, if any, respectively, (C) the unaudited preliminary combined balance
sheets of the Domestic Guarantors and of the Wholly-Owned Restricted
Subsidiaries as of the dates referred to in the preceding clause (A), and (D)
the unaudited preliminary combined statements of operations for the Domestic
Guarantors and for the Wholly-Owned Restricted Subsidiaries for the periods
referred to in the preceding clause (B); (iii) a copy of (A) the audited
consolidated balance sheets of
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the assets of NME subject to the NME Purchase Agreement as of May 31, 1993,
together with the related audited consolidated statements of operations and cash
flows for such assets for the year ended May 31, 1993, (B) the unaudited
combined balance sheet of such assets as of November 30, 1993, and (C) the
unaudited combined statements of operations for such assets for the period from
and including June 1, 1993 to and including November 30, 1993; (iv) a copy of
the unaudited pro forma consolidated balance sheet of the Company (after giving
effect to the NME Acquisition, the other Transactions and the financing thereof)
as of December 31, 1993, and the unaudited pro forma consolidated statements of
operations for the Company (after giving effect to the NME Acquisition, the
other Transactions and the financing thereof) for the year ended September 30,
1993; and (v) a copy of (A) the unaudited internal individual balance sheets of
the assets of NME subject to the NME Purchase Agreement as of January 31, 1994,
and (B) the unaudited internal individual income statement information for such
assets for the period from and including June 1, 1993 to and including February
28, 1994, such statements described in this clause (v) not having been prepared
in accordance with GAAP. The financial statements referred to in clauses (i)
through (iv) above fairly present in all material respects the financial
condition and results of operations of the entities and assets, as the case may
be, covered thereby on the dates and/or for the periods covered thereby, all,
except as set forth in Schedule 6.4, in accordance with GAAP consistently
applied, subject, in the case of any such interim or unaudited financial
statements referred to above, to normal, recurring adjustments and the absence
of footnotes thereto, it being understood that the pro forma financial
statements included in the foregoing are not necessarily indicative of the
results which would have actually been attained had the Transactions been
completed as of the dates and for the periods presented in such pro forma
financial statements. Although the financial statements referred to in clause
(v) of this paragraph were provided to the Company by NME, the Company believes
the same were prepared in good faith and has no reason to believe the
information set forth therein is inaccurate in any material respect except as
disclosed in Schedule 6.4. As of the Closing Date, except as permitted
hereunder, no material contingent liabilities exist which are not fully
disclosed in such financial statements in all material respects or in the
related notes or schedules thereto. Since September 30, 1993, there has been no
material adverse change in
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the operations, business, assets, liabilities or condition (financial or
otherwise) of the Company and its Restricted Subsidiaries taken as a whole.
(b) On the Closing Date, after giving effect to all of the
Transactions that are to have been consummated on or prior to such date: (i)
the assets of the Company, at a fair valuation, will exceed its liabilities,
including contingent liabilities, (ii) the remaining capital of the Company will
not be unreasonably small to conduct its business and (iii) the Company will not
have incurred debts, and will not intend to incur debts, beyond its ability to
pay such debts as they mature. For purposes of this Section 6.4(b), "debt"
means any liability or a claim, and "claim" means (x) right to payment, whether
or not such right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured
or unsecured, or (y) right to an equitable remedy for breach of performance if
such breach gives rise to a right to payment, whether or not such right to an
equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured,
disputed, undisputed, secured or unsecured.
6.5 LITIGATION, ETC. Except as set forth on Schedule 6.5, there is
no pending or to the knowledge of the Company threatened action, proceeding or
investigation before any court, governmental agency or arbitrator (a) affecting
any Credit Party which could be reasonably expected to be adversely determined
against such Credit Party and, if so determined, would have a Material Adverse
Effect, or (b) with respect to this Agreement, any other Credit Document, any
other Transaction Document or any of the Transactions,
6.6 USE OF PROCEEDS. All proceeds of the Loans will be used only in
accordance with Sections 1.4, 2.3 and 4.6. No part of the proceeds of any Loan
will be used by the Company or others to purchase or carry any Margin Stock in
violation of Regulations G, U, T or X of the Board of Governors of the Federal
Reserve System.
6.7 APPROVALS, ETC. Except (i) such as have been duly obtained, made
or given and are in full force and effect, (ii) as fully disclosed on Schedule
6.7 hereto, or (iii) in the case of the performance or consummation of all or
any portion of the NME Purchase Agreement and the NME Acquisition, respectively,
such as
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will be duly obtained, made or given and be in full force and effect at the time
of such performance or consummation, as applicable, no material order, consent,
approval, license, authorization or validation of, or filing, recording or
registration with, or notice to or exemption by any governmental or public body
or authority, domestic or foreign, or any subdivision thereof, or any other
Person or group of Persons is required to authorize, or is required in
connection with (a) the execution, delivery or performance of any Credit
Document or any other Transaction Document to which a Credit Party is a party or
the consummation of any of the Transactions; or (b) the legality, validity,
binding effect or enforceability of any Credit Document or other Transaction
Document to which a Credit Party is a party.
6.8 SECURITY INTERESTS. The Security Documents create or will
create, upon proper filings and recordings of the Security Documents, financing
statements and other instruments tendered for filing, as security for the
Obligations (including, without limitation, the Subsidiary Obligations), a valid
and enforceable perfected security interest in and Lien on all of the Collateral
(other than the collateral assignments of mortgages securing pledged
intercompany notes and other than Collateral covered by the Subsidiary Pledge
and Security Agreement to the extent such Collateral is not covered by Article 9
of the Uniform Commercial Code as in effect in the relevant jurisdiction or is
located in the State of Tennessee) in favor of the Collateral Agent for the
benefit of the Lenders, superior to and prior to the rights of all other Persons
therein (as provided in the Uniform Commercial Code) and subject to no other
Liens other than Liens permitted hereby. The respective pledgor or assignor, as
the case may be, has good and marketable title to all Collateral free and clear
of all Liens other than Liens permitted hereby. The Security Documents, or
financing statements or other instruments with respect thereto, as may be
necessary, have been duly filed or recorded (or tendered for filing or
recording) in such manner and in such places as are required by law to
establish, perfect, preserve and protect the security interests and Liens, in
favor of the Collateral Agent for the benefit of the Lenders, granted pursuant
to such Security Documents and all taxes, fees and charges payable in connection
therewith shall have been paid in full when due (other than the recording of any
collateral assignment of mortgage pursuant to the FINCO Pledge and Security
Agreements and other than Collateral covered by
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the Subsidiary Pledge and Security Agreement to the extent such Collateral is
not covered by Article 9 of the Uniform Commercial Code as in effect in the
relevant jurisdiction or is located in the State of Tennessee).
6.9 TAXES. Each of the Company and its Significant Subsidiaries has
filed all material tax returns required to be filed by it and all such tax
returns are true, correct and complete in all material respects. Each of the
Company and its Subsidiaries has paid all taxes, assessments and other charges
which have become due, other than those not yet delinquent and except for those
contested in good faith by appropriate proceedings for which adequate reserves
in conformity with GAAP have been provided and other than those which
individually or in the aggregate would not have a Material Adverse Effect. No
tax liens have been filed (except with respect to real property taxes not yet
due) and no claims or assessments are being asserted with respect to any such
taxes, assessments or other charges, other than liens, claims or assessments
which individually or in the aggregate would not have a Material Adverse Effect.
6.10 ERISA. Each Plan is in compliance with ERISA in all material
respects. At the date hereof, there are no Unfunded Accrued Benefits under the
Plans, excluding any Multiemployer Plan. There are no accumulated funding
deficiencies (whether or not waived) with respect to any Plan (other than
Multiemployer Plans). The Company and each member of its ERISA Controlled Group
has complied with the applicable requirements of Section 515 of ERISA with
respect to each Multiemployer Plan. To the best knowledge of the Company, at
the date hereof, the aggregate potential total withdrawal liability of the
Company and the members of its ERISA Controlled Group as determined in
accordance with Title IV of ERISA as if the Company and the members of its ERISA
Controlled Group had completely withdrawn from all Plans which are Multiemployer
Plans is not more than $5,000,000. To the best knowledge of the Company and
each member of its ERISA Controlled Group, none of the Plans that is a
Multiemployer Plan is or is likely to be in "Reorganization" as defined in
Section 4241 of ERISA. No material liability to the PBGC, any Plan or any trust
established under Title IV of ERISA has been, or is expected by the Company or
any member of its ERISA Controlled Group to be, incurred by the Company or any
member of its ERISA Controlled Group. No lien under Section 412(n) of the Code
or 302(f) or 4068 of ERISA or requirement to provide
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security under Section 401(a)(29) of the Code or Section 307 of ERISA has been
or is expected by the Company or any member of its ERISA Controlled Group to be
imposed on the assets of the Company or any member of its ERISA Controlled
Group. All Plans as of the date hereof are listed on Schedule 6.10. The ESOP
constitutes a qualified plan within the meaning of Section 401(a) of the Code.
The Company does not provide, and has no obligation to provide at a subsequent
time, post retirement benefits under a "welfare benefit plan" as defined in
Section 3(1) of ERISA. Except as set forth in Schedule 6.10, there are no
pending, threatened or anticipated claims relating to the ESOP or the Plans,
whether against, by or on behalf of the ESOP, the Plans, any trustee of the
foregoing or the Company or any of its Subsidiaries, by any governmental agency
or instrumentality (including without limitation any claim relating to a
prohibited transaction, excise tax or other tax matter under Section 409 or
502(i) of ERISA or Section 404, 4975 or 4976 of the Code), any employee or
beneficiary covered under any such ESOP or Plan, or otherwise (other than
routine claims for benefits) for which (i) reserves for the full amount thereof
are not reflected on the audited consolidated balance sheet of the Company for
its 1993 fiscal year, and (ii) the unreserved liability therefrom could
reasonably be expected to be, individually or in the aggregate, $5,000,000 or
more.
6.11 INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY ACT.
Neither the Company nor any of its Subsidiaries is (a) an "investment company"
or a company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended, (b) a "holding company" or a
"subsidiary company" of a "holding company" or an "affiliate" of either a
"holding company" or a "subsidiary company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended, or (c) subject to any other
federal or state law or regulation which purports to restrict its ability to
borrow money.
6.12 CLOSING DATE TRANSACTIONS. On the Closing Date and immediately
prior to the making of the initial Subsidiary Loans under the Subsidiary Credit
Agreement, the Transactions (other than the making of such Subsidiary Loans)
intended to be consummated on the Closing Date under the Credit Documents and
the other Transaction Documents will have been consummated in accordance with
the terms of the relevant Transaction
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Documents and, except where the same would not have a Material Adverse Effect,
in accordance with all applicable laws.
6.13 RELATED FINANCINGS. The Senior Subordinated Notes and all other
outstanding Permitted Subordinated Indebtedness, if any, have been issued in
compliance in all material respects with all applicable law. All Subordinated
Debt Documents with respect to the Senior Subordinated Notes and such other
Permitted Subordinated Indebtedness, if any, have been duly executed and
delivered by each of the parties thereto and are in full force and effect.
6.14 INDENTURE QUALIFICATION; SENIOR INDEBTEDNESS. (a) All
indentures (including, without limitation, the Senior Subordinated Notes
Indenture) pertaining to public Permitted Subordinated Indebtedness, if any, are
qualified under the United States Trust Indenture Act of 1939, as amended. The
offering and issuance of the Senior Subordinated Notes and securities evidencing
other Permitted Subordinated Indebtedness, if any, have been registered pursuant
to effective registration statements filed pursuant to the United States
Securities Act of 1933, as amended, or are exempt from such registration under
applicable law.
(b) The obligations of the Company and the Subsidiary Borrowers
for principal of and interest (including, without limitation, post-petition
interest) on all Loans, Subsidiary Loans and other extensions of credit under
this Agreement and the Subsidiary Credit Agreement and all fees, expenses,
reimbursements, indemnities and other amounts payable hereunder or under any
other Credit Document in any case owing to the Agent or any Lender and all other
Obligations of the Company and its Restricted Subsidiaries, and any renewals,
extensions, modifications or refinancings thereof, constitute "Senior
Indebtedness" and "Specified Senior Indebtedness" (or the equivalents thereof)
within the meanings respectively ascribed to such terms in the Subordinated Debt
Documents pertaining to each and any outstanding Permitted Subordinated
Indebtedness.
6.15 ACCURACY AND COMPLETENESS OF INFORMATION. Except to the extent
disclosed in writing to the Agent for the account of the Lenders prior to the
Closing Date, on the Closing Date all factual information (taken as a whole)
heretofore or contemporaneously furnished by or on
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behalf of the Company in writing to the Agent or any Lender (in its capacity as
Agent or a Lender hereunder, as the case may be) for purposes of or in
connection with this Agreement, any other Credit Document, any other Transaction
Document to which a Credit Party is a party or any Transaction is, and all such
other factual information (taken as a whole) hereafter furnished by or on behalf
of the Company to the Agent or Lenders will be, true and accurate in all
material respects on the date as of which such information is dated or certified
and not incomplete by omitting to state any material fact necessary to make such
information (taken as a whole) not misleading at such time; PROVIDED that to the
extent any such information furnished by or on behalf of a Credit Party was
prepared by any Person other than a Credit Party, the representation contained
in this Section 6.15 is qualified in that such information prepared by a third
party is true and correct to the best knowledge and belief of the Company;
PROVIDED FURTHER, that the information contained in the budgets and the
officers' certificates required to be delivered pursuant to Sections 7.1(d) and
(e) shall be subject to the standards provided therein.
6.16 SUBSIDIARIES. All of the direct and indirect Subsidiaries of
the Company as of the Closing Date are listed on Schedule 6.16 hereto. Schedule
6.16 correctly identifies the jurisdiction of incorporation or organization, as
the case may be, capitalization and shareholding or partnership interests, as
the case may be, of each Subsidiary of the Company as of the Closing Date. All
of the outstanding shares of capital stock of each Subsidiary of the Company
that is a corporation were duly authorized and validly issued and are fully paid
and non-assessable. All shares of capital stock and partnership interests, as
the case may be, of Subsidiaries of the Company owned by the Company or any of
its Subsidiaries are held free and clear of any Lien other than Liens permitted
hereby. No Restricted Subsidiary of the Company has outstanding any securities
convertible into or exchangeable for its capital stock or other equity interests
or any rights to subscribe for or to purchase, or any warrants or options for
the purchase of, or any agreements providing for the issuance (contingent or
otherwise) of, or any calls, commitments or claims of any character relating to,
its capital stock or other equity interests or any securities convertible into
or exchangeable for its capital stock or other equity interests, as the case may
be.
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6.17 PATENTS, TRADEMARKS, ETC. Except as set forth on Schedule 6.17
hereto, the Company and its Restricted Subsidiaries have obtained and hold in
full force and effect all material patents, trademarks, servicemarks, trade
names, copyrights and other such rights, free from burdensome restrictions,
which are necessary for the operation of the respective businesses of the
Company and its Restricted Subsidiaries as presently conducted. To the
Company's knowledge (i) no material product, process, method, substance, part or
other material presently sold by or employed by the Company or any of its
Restricted Subsidiaries in connection with such business infringes any patent,
trademark, service mark, trade name, copyright, license or other right owned by
any other Person, and (ii) there is not pending or threatened any claim or
litigation against or affecting the Company or any of its Restricted
Subsidiaries contesting its right to sell or use any such product, process,
method, substance, part or other material.
6.18 OTHER TRANSACTION DOCUMENTS' REPRESENTATIONS AND CONDITIONS.
The representations and warranties of the Company set forth in the other
Transaction Documents were true and correct in all material respects as of the
date on which they were made and, to the extent required by the other
Transaction Documents, will be true and correct in all material respects as of
the Closing Date. Except as disclosed in writing to the Agent for the account
of the Lenders prior to each closing under the NME Purchase Agreement, all of
the conditions precedent to the obligations of the Company under the NME
Purchase Agreement that are required to be satisfied on or prior to such closing
have been satisfied as of such date in all material respects, without any waiver
thereof not consented to in accordance with Section 8.11.
6.19 OWNERSHIP OF PROPERTY. The Company and its Restricted
Subsidiaries have good and marketable fee simple title to or valid leasehold
interests in all of their material real property and good title to all of their
other material property (including, without limitation, all such real and other
property reflected in the consolidated balance sheet of the Company referred to
in Section 6.4 as of the most recently ended fiscal year, other than properties
disposed of in the ordinary course of business since such balance sheet date and
properties disposed of in accordance with the Existing Credit Agreement or this
Agreement, whichever was in effect at the time of the disposition of such
properties), subject to
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no Lien of any kind except Liens permitted hereby. The Company and its
Restricted Subsidiaries enjoy peaceful and undisturbed possession under all of
their respective material leases. Except as disclosed on Schedule 6.19, during
the period from and including July 22, 1992 to and including the Closing Date
(a) neither the Company nor any of its Subsidiaries has acquired any Facilities
or other real property, and (b) there has been no material addition or expansion
to, or change in the operation or use of, any of their respective Facilities or
other real property, other than changes of licensed beds and the opening and
closing of counseling centers and medical office buildings in the ordinary
course of business.
6.20 NO DEFAULT UNDER OTHER AGREEMENTS. Except as disclosed on
Schedule 6.20, neither of the Company nor any of its Subsidiaries is in default
under or with respect to any agreement, instrument or undertaking to which it is
a party or by which it or any of its property is bound in any respect which
would have a Material Adverse Effect. On and as of the Closing Date and prior
to giving effect to the consummation of the Transactions, no Default or Event of
Default under and as defined in the Existing Credit Agreements has occurred and
is continuing.
6.21 LICENSES, ETC. The Company and its Subsidiaries have obtained
and hold in full force and effect all franchises, licenses, permits,
certificates, authorizations, qualifications, accreditations, easements, rights
of way and other rights, consents and approvals (including, without limitation,
all licenses, authorizations, accreditations, consents and approvals required to
be obtained pursuant to any applicable federal or state statutes relating to
healthcare institutions and all certificates of need, state hospital licensures
and Medicare/Medicaid certifications or exemptions therefrom) which are
necessary for the operation of the respective businesses of the Company and its
Subsidiaries as presently conducted other than those the absence of which
individually or in the aggregate would not have a Material Adverse Effect.
Neither the Company nor any of its Subsidiaries is in violation of the terms of
any such franchise, license, permit, certificate, authorization, easement, right
of way, qualification, accreditation, consent, right or approval in any such
case which would have a Material Adverse Effect.
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6.22 NO BURDENSOME RESTRICTIONS. Other than the Transaction
Documents, neither the Company nor any of its Subsidiaries is a party to any
agreement or instrument or subject to any other obligation or any charter or
corporate restriction which would be reasonably likely to have, or any provision
of applicable law or governmental regulation or order or decree which would
have, a Material Adverse Effect.
6.23 REFINANCED INDEBTEDNESS. The Existing Subordinated Debentures
and the Mortgage Notes and accrued and unpaid interest thereon and fees in
respect thereof have been paid in full or provision for such payment has been
made such that, in accordance with the express provisions of the instruments
governing the same, the Company and its Subsidiaries have been released from all
liability, (or have provided cash collateral therefor) and contractual
obligations with respect thereto (other than indemnifications contained therein
which survive the payment in full of all Indebtedness evidenced thereby), and
any and all Liens securing the Existing Subordinated Debentures and the Mortgage
Notes have been effectively released or arrangements for such release promptly
after the Closing Date have been made.
6.24 MEDICARE REIMBURSEMENT. After giving effect to the NME
Acquisition and the consummation of the transactions contemplated by the Credit
Documents and the other Transaction Documents, the Restricted Subsidiaries that
participate in the Medicare program shall be entitled to Medicare reimbursement
in respect of interest expense on the Loans and other Indebtedness incurred by
the Company and its Restricted Subsidiaries under the Credit Documents and other
Transaction Documents or such lesser amount of such interest expense as would
not have a Material Adverse Effect.
6.25 CERTAIN FEES. Other than as disclosed in the offering
memorandum prepared in connection with the Senior Subordinated Notes or Schedule
6.25 hereto, no broker's or finder's fee or commission will be payable by or on
behalf of the Company or any of its Restricted Subsidiaries, or the Plan or the
Trust, with respect to the offer, issue and sale of the Notes or the
consummation of any of the other Transactions (including, without limitation,
the NME Acquisition), and the Company hereby indemnifies the Agent, the Co-Agent
and the Lenders against and agrees that it will hold the Agent, the Co-Agent and
the Lenders harmless from, any claim, demand or
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liability for broker's or finder's fees alleged to have been incurred in
connection with any such offer, issue and sale or any of the other Transactions,
and any expenses, including reasonable legal fees, arising in connection with
any such claim, demand or liability.
6.26 ENVIRONMENTAL PROTECTION. (a) Each of the Company and its
Subsidiaries has obtained all material permits, licenses and other
authorizations which are required with respect to the operation of its business
under any Environmental Law.
(b) Each of the Company and its Subsidiaries is in full
compliance with all terms and conditions of the required permits, licenses and
authorizations, and is also in full compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in the Environmental Laws, except to the
extent the failure to comply herewith would not have a Material Adverse Effect.
(c) There is no material civil, criminal or administrative
action, suit, demand, claim, hearing, notice of violation, investigation,
proceeding, notices or demand letter pending or threatened against the Company
or any of its Subsidiaries relating in any way to the Environmental Laws.
(d) There are no past or present (or, to the best of the
Company's knowledge, future) events, conditions, circumstances, activities,
practices, incidents, actions or plans which may interfere with or prevent
compliance or continued compliance with the Environmental Laws, or which may
give rise to any common law or legal liability, including, without limitation,
liability under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, or similar state, local or foreign laws, or
otherwise form the basis of any claim, action, demand, suit, proceeding,
hearing, notice of violation, study or investigation, based on or related to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling, or the emission, discharge, release or threatened release
into the environment, of any pollutant, contaminant, chemical or industrial,
toxic or hazardous substance or waste, except to the extent such non-compliance
or liability would not have a Material Adverse Effect.
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Section 7. AFFIRMATIVE COVENANTS. The Company covenants and agrees
that until the Total Revolving Loan Commitment has terminated and all
Obligations have been paid in full:
7.1 INFORMATION COVENANTS. The Company shall furnish to each Lender:
(a) MONTHLY AND QUARTERLY FINANCIAL STATEMENTS OF THE COMPANY.
(i) Within 30 (or in the case of the last month of any
fiscal quarter of the Company's fiscal year, 45) days of the close of
each of the first eleven months of each fiscal year of the Company and
within 60 days after the close of the last month of each fiscal year
of the Company, copies of the following internally generated financial
statements: (A) an unaudited consolidated balance sheet of the
Company and its Subsidiaries, an unaudited combined balance sheet of
the Wholly-Owned Restricted Subsidiaries, and an unaudited combined
balance sheet of the Domestic Guarantors, (B) unaudited consolidated
statements of operations and cash flows of the Company and its
Subsidiaries, an unaudited combined statement of operations of the
Wholly-Owned Restricted Subsidiaries and an unaudited combined
statement of operations of the Domestic Guarantors, in each case
setting forth comparative figures for such month against the budget
for the period covered thereby, (C) a list of each Person (other than
a Subsidiary of the Company) in which the Company or any Wholly-Owned
Restricted Subsidiary has an equity interest, and the amount of the
Company's and its Wholly-Owned Restricted Subsidiaries' respective
investments therein, and (D) a report of the aging of receivables
together with a summary report classifying receivables by payor type,
including separate disclosure of receivables owed by Medicare,
Medicaid, CHAMPUS, commercial insurance, Blue Cross and other payors;
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(ii) within 60 days after the close of each of the
first three fiscal quarters and within 75 days after the close of the
fourth fiscal quarter of the Company, (A) the unaudited consolidated
balance sheet of the Company and its Subsidiaries as of the end of
such quarter, (B) the consolidated statement of cash flows of the
Company and its Subsidiaries for the elapsed portion of the fiscal
year ended with the last day of such quarter, and (C) the unaudited
combined balance sheet of the Restricted Wholly-Owned Subsidiaries and
the unaudited combined balance sheet of the Domestic Guarantors, in
each case as of the end of such quarter, together with, in the case of
the balance sheets described in the foregoing clauses (A) and (C), the
related unaudited consolidated or combined, as the case may be,
statements of operations for such quarter and for the elapsed portion
of the fiscal year ended with the last day of such quarter; in each
case setting forth comparative figures for the related periods in the
prior fiscal year (except that balance sheet comparisons may be made
to the prior fiscal year end), prepared in accordance with GAAP
(subject to normal year-end and quarterly adjustments, the absence of
footnotes thereto and the other exceptions to GAAP described on
Schedule 6.4) and together with a certificate of the Company to that
effect signed by the chief financial officer of the Company;
(iii) within 45 (or, in the case of the last month of
the Company's fiscal year, 75) days after the close of each month, a
certificate setting forth Base Core EBITDA, Core EBITDA and
consolidated EBITDA of the Company and its Subsidiaries, in each case
for such month and the computations thereof in reasonable detail
(which computations shall be based on financial statements,
preliminary or otherwise); and
(iv) at the time of delivery of the financial
statements referred to in clause (i) of this Section 7.1(a),
statistical information as to occupancy and other operating
performance information, in detail consistent
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with then current disclosure practices in connection with the Company's
periodic reports under the Securities Exchange Act of 1934.
(b) ANNUAL FINANCIAL STATEMENTS OF THE COMPANY. Within 120 days
after the close of each fiscal year of the Company, the consolidated balance
sheet of the Company and its Subsidiaries as of the end of such fiscal year and
the related consolidated statements of operations and cash flows for such fiscal
year, setting forth comparative figures for the preceding fiscal year, prepared
in accordance with GAAP and audited by Arthur Andersen & Co. or such other
independent certified public accountants of recognized national standing
selected by the Company with the consent of the Required Lenders (which consent
shall not be unreasonably withheld), together with a report of such accounting
firm stating that in the course of its regular audit of the consolidated
financial statements of the Company, which audit was conducted in accordance
with generally accepted auditing standards but was not directed primarily toward
obtaining knowledge of non-compliance with this Agreement, such accounting firm
has obtained no knowledge of any Default or Event of Default which has occurred
and is continuing or, if in the opinion of such accounting firm such a Default
or Event of Default has occurred and is continuing, a statement as to the nature
thereof; PROVIDED that such accounting firm shall have no liability to the
Lenders for any failure to discover any non-compliance on the part of the
Company hereunder; and PROVIDED FURTHER that in the event such firm and other
independent certified public accountants of recognized national standing are
prohibited by applicable industry guidelines from delivering such reports, the
Company shall no longer be required to cause the delivery of such report.
(c) MANAGEMENT LETTERS. Promptly after the Company's receipt
thereof, a copy of any "management letter" received by the Company from its
certified public accountants.
(d) BUDGETS. Within 60 days after the first day of each fiscal
year of the Company (i) a budget (in form and detail consistent with the
Company's past practices) prepared by the Company for such fiscal year,
accompanied by the certificate of the Company signed by the chief financial
officer of the Company to the effect that, to the best of his knowledge, the
budget is a good faith estimate of revenue and expenditures expected to be
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realized and/or incurred by the Company and its Subsidiaries for the period
covered thereby and setting forth the respective portions of such revenues and
expenditures expected to be realized and/or incurred by (A) the Domestic
Guarantors, and (B) the other Restricted Subsidiaries, (ii) a forecast of
operations and sources and uses of cash for the three-year period beginning on
the first day of such fiscal year, accompanied by the statement of the Company
signed by the chief financial officer of the Company to the effect that, to the
best of his knowledge, the forecast is a good faith estimate of such operations
and sources and uses of cash and (iii) a specification as to the provisions of
the annual incentive compensation plan for such fiscal year, including without
limitation, targeted levels of performance and the percentages available to each
participating employee, expressed as a percentage of base salary or other
applicable basis under such plan.
(e) OFFICER'S CERTIFICATES. At the time of the delivery of the
financial statements provided for in Sections 7.1(a) and (b), a certificate of
the Company signed by the chief financial officer of the Company to the effect
that, to the best of his knowledge after due inquiry, no Default or Event of
Default exists or, if any Default or Event of Default does exist, specifying the
nature and extent thereof and the action the Company proposes to take in respect
thereof, which certificate shall set forth (i) the calculations required to
establish (A) in the case of the statements delivered pursuant to Section
7.1(a)(ii), whether the Company was in compliance with the provisions of
Sections 7.9, 8.6(a) and 8.10 at the end of the applicable fiscal quarter, and
(B) in the case of the statements delivered pursuant to Section 7.1(b), whether
the Company was in compliance with the provisions of Sections 7.9, 8.6(a) and
8.10 at the end of such fiscal year, (ii) the respective amounts of Maintenance
Capital Expenditures and Facility Acquisitions for the period covered by such
report (the "Report Period"), the respective total amounts of such types of
expenditures since the Closing Date and a description of any Facilities acquired
pursuant thereto and whether the acquiror thereof was the Company, a Domestic
Guarantor or another type of Restricted Subsidiary, (iii) each Asset Sale closed
during the Report Period and, in reasonable detail, a calculation of Net
Proceeds received therefrom and the total amount of Net Proceeds received from
all Asset Sales closed from and after the Closing Date and such other
information as may be necessary to enable the
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Agent to verify the Company's compliance with Section 4.2(a), (b) and (c) as of
the end of the Report Period, (iv) a calculation, as of the end of such Report
Period, of the respective outstanding amounts of Investments made pursuant to
Section 8.8(n), (o) and (r), a description of each such Investment (including,
without limitation, in the case of any contribution of a Facility, whether such
Facility was contributed to a majority-owned or minority-owned Permitted Joint
Venture) and its outstanding amount and a listing of any such Investments made
during such Report Period and (v) for each Report Period relating to a fiscal
quarter commencing after September 30, 1994, the Accumulated Excess Cash Flow as
of the last day of the Report Period, the supporting calculations therefor and a
description of each use, if any, of Accumulated Excess Cash Flow since the last
day of the immediately preceding Report Period and cumulative totals of each use
thereof since the Closing Date. The certificate delivered under this Section
7.1(e) in connection with the financial statements delivered pursuant to Section
7.1(b) shall also set forth a reconciliation of the claims paid and earnings
accrued on the assets restricted for the settlement of unpaid claims during such
period.
(f) NOTICE OF DEFAULT OR LITIGATION. Promptly, and in any event
within (i) five Business Days after an executive officer of the Company obtains
actual knowledge thereof, notice of the occurrence of any event which
constitutes a Default or Event of Default, and (ii) ten Business Days after an
executive officer of the Company obtains actual knowledge thereof, notice of any
pending or threatened action, proceeding or investigation of the type referred
to in Section 6.5; and, at the time of the delivery of the certificates required
pursuant to Section 7.1(e), a report in summary form on the status of any
pending action, proceeding or investigation of the type referred to in Section
6.5.
(g) SEC FILINGS. Promptly upon transmission thereof, copies of
all regular and periodic financial information, proxy materials and other
information and reports, if any, which the Company shall file with the
Securities and Exchange Commission or any governmental agencies substituted
therefor (the "SEC") or which the Company shall send to its stockholders
generally.
(h) ERISA. As soon as possible and in any event (i) within 10
calendar days after the receipt by the Company or a member of its ERISA
Controlled Group
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of (x) a demand letter from the PBGC notifying the Company or a member of its
ERISA Controlled Group of the final decision finding liability and the date by
which such liability must be paid, or (y) a notice from the PBGC that a Lien has
been or is to be imposed on any assets of the Company or a member of its ERISA
Controlled Group in favor of the PBGC or a Plan, a copy of such demand letter or
notice, together with a certificate of the chief executive officer or chief
financial officer of the Company setting forth the action which the Company or
such member of its ERISA Controlled Group proposes to take with respect thereto
and (ii) within 30 days after the Company or a member of its ERISA Controlled
Group knows that:
(A) any Termination Event with respect to a Plan has occurred or will
occur, or
(B) any condition exists with respect to a Plan which presents a
material risk of (i) termination of the Plan, (ii) imposition of an excise tax
or other liability on the Company or a member of its ERISA Controlled Group in
an amount exceeding $5,000,000 or (iii) the imposition of a Lien on any assets
of the Company or a member of its ERISA Controlled Group in favor of the PBGC or
a Plan for an amount exceeding $5,000,000, or
(C) the Company or a member of its ERISA Controlled Group has applied
for a waiver of the minimum funding standard under Section 412 of the Code and
Section 302 of ERISA, or
(D) the Company or a member of its ERISA Controlled Group has engaged
in a "prohibited transaction," as defined in Section 4975 of the Code or as
described in Section 406 of ERISA, that is not exempt under Section 4975 of the
Code and Section 408 of ERISA, and which could result in imposition of an excise
tax in an amount in excess of $5,000,000, or
(E) the aggregate present value of the Unfunded Accrued Benefits under
all Plans has in any Plan year increased by $15,000,000 or to an amount in
excess of $30,000,000, or
(F) any condition exists with respect to a Multiemployer Plan which
presents a material risk of a partial or complete withdrawal (as described in
Section 4203 or 4205 of ERISA) by the Company or a member of its
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ERISA Controlled Group from a Multiemployer Plan and the subsequent imposition
upon the Company or a member of its ERISA Controlled Group of withdrawal
liability in excess of $15,000,000, or
(G) the Company or a member of its ERISA Controlled Group is in
"default" (as defined in Section 4219(c)(5) of ERISA) with respect to payments
to a Multiemployer Plan required by reason of its complete or partial withdrawal
(as described in Section 4203 or 4205 of ERISA) from such Plan, or
(H) a Plan which is a Multiemployer Plan is in "reorganization" (as
described in Section 418 of the Code or in Title IV of ERISA), or
(I) the potential withdrawal liability (as determined in accordance
with Title IV of ERISA) of the Company and the members of its ERISA Controlled
Group with respect to all Plans which are Multiemployer Plans has increased to
an amount in excess of $30,000,000, or
(J) there is an action brought against the Company or any member of
its ERISA Controlled Group under Section 502 of ERISA with respect to its
failure to comply with Section 515 of ERISA,
a certificate of the chief executive officer or chief financial officer of the
Company setting forth the details of such event described in clause (A) through
(J) above, as applicable, and the action which the Company or such member of its
ERISA Controlled Group proposes to take with respect thereto, together with a
copy of any notice or filing from the PBGC or which may be required by the PBGC
or other agency of the United States government with respect thereto.
(i) CERTIFICATES, ETC. DELIVERED UNDER OTHER TRANSACTION
DOCUMENTS. Promptly upon the delivery thereof, copies of all material
certificates, opinions, notices (including, without limitation, notices of
defaults, events of default, accelerations and terminations) and other material
documents delivered under the terms of, and copies of each and any amendments,
modifications or supplements to, (A) the NME Purchase Agreement, (B) the Tax
Sharing Agreement, (C) any Subordinated Debt Documents, (D) any other agreements
evidencing other Indebtedness of the Company or any of its Subsidiaries which
(1) has an outstanding principal balance of
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$10,000,000 or more, or (2) so long as an event of default has occurred and is
continuing thereunder, has an outstanding principal balance of $1,000,000 or
more, and (E) the ESOP or the Trust Agreement.
(j) NME ACQUISITION CLOSING CERTIFICATES AND NOTICES. At least
two Business Days prior to any closing of all or any portion of the NME
Acquisition, a written notice setting forth (A) the Facilities and other assets
proposed to be purchased from NME at such closing, and (B) the date of such
closing. On the date of such closing, the Company shall deliver to the Agent a
certificate, substantially in the form of Exhibit B-2 hereto, executed by the
chief executive officer or a chief financial officer of the Company certifying
(A) that, except to the extent waived by the Company in accordance with Section
8.11, all of the conditions precedent to the obligations of the Company and its
Subsidiaries under the NME Purchase Agreement to consummate such closing are or
will be satisfied as of such date, (B) the Facilities and other assets to be
acquired by the Company and Domestic Guarantors on such date and the purchase
price to be paid therefor at such closing, (C) that the NME Purchase Agreement
has not been amended or otherwise modified except in accordance with Section
8.11, (D) true and correct copies of all opinions, certificates, instruments and
other documents to be delivered at such closing (which opinions and certificates
that are delivered by or on behalf of the Company and its Subsidiaries shall be
addressed to the Agent and the Lenders, or be accompanied by letters in form and
substance satisfactory to the Agent, entitling the Lenders to rely thereon), and
(E) whether such closing will be the final closing under the NME Purchase
Agreement. In addition, such certificate shall set forth in reasonable detail
the respective results of operations, and the calculations thereof, of each
Facility to be acquired at such closing, for March 31, 1994 and for each other
month not listed on Schedule 10.1(a) for which such results of operations are
available, but, in any event, for each month that has ended after February 28,
1994 and on or prior to the date that occurs 60 days prior to such closing.
(k) INSURANCE CERTIFICATE. Promptly upon receipt thereof by the
Company, but in any event prior to October 31 of each year, (i) the statement of
Tillinghast, a Subsidiary of Towers, Perrin, Foster & Crosby, William M. Mercer,
a Subsidiary of Marsh & McLennan, or such other nationally recognized actuary
se-
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lected by the Company with the consent of the Required Lenders (which consent
will not be unreasonably withheld) certifying that the Company's reserves for
unpaid claims for general and professional liability claims are currently
sufficient to cover the Company's and its Restricted Subsidiaries' anticipated
claims arising in respect of occurrences on or prior to the immediately
preceding June 30; and (ii) a certificate executed by the chief financial
officer of the Company certifying that (A) the Company and its Restricted
Subsidiaries have insurance policies with the Insurance Subsidiaries and/or
with reputable insurance companies in such aggregate amounts (after giving
effect to any deductibles and in light of assets restricted by the Company and
its Restricted Subsidiaries for the settlement of anticipated general and
professional claims) and against such risks as are customary for companies of
established reputation in the same or similar businesses and similarly situated
as the Company and its Restricted Subsidiaries, and (B) the amount of such
restricted assets, together with the coverage provided by such insurance
policies, are adequate.
(l) OTHER INFORMATION. From time to time, such other
information or documents (financial or otherwise) as any Lender may, through the
Agent, reasonably request in writing, including, without limitation,
consolidating financial statements for any fiscal year of the Company ending
after the Closing Date, but not confidential patient information or other
information required by applicable law to be kept confidential; PROVIDED that,
notwithstanding the foregoing, the Company shall not be required to deliver any
such consolidating financial statements for any such fiscal year prior to the
120th day to occur after the end of such fiscal year.
7.2 BOOKS, RECORDS AND INSPECTIONS. The Company shall keep proper
books of record and account in which entries are made in conformity with GAAP.
The Company shall cause each of its Subsidiaries to keep proper books of record
and account in which entries are made on a basis consistent with the Company's
past practices. The Company shall, and shall cause each of its Subsidiaries to,
permit officers and designated representatives of any Lender to visit and
inspect during normal business hours and subject to health, safety and insurance
guidelines regularly enforced by the Company and its Subsidiaries, under
guidance of officers of the Company, any of the properties of the Company or any
of its Sub-
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sidiaries, and to examine the books of account of the Company or any of its
Subsidiaries and discuss the affairs, finances and accounts of the Company or
any of its Subsidiaries with, and be advised as to the same by, its and their
officers and, subject to the policies of its or their independent public
accountants, the Company's and its Subsidiaries' independent public accountants,
all at such reasonable times and intervals and to such reasonable extent as such
Lender may desire; PROVIDED that the Company shall, and shall cause its
Subsidiaries to, give its or their consent to such independent public
accountants if such consent is required by such independent public accountants
prior to taking any such action; PROVIDED FURTHER that any such meeting with the
Company's independent public accountants shall be arranged by the Agent at the
request of such Lender and the Company shall be informed of such meeting prior
to its occurrence and offered the opportunity to attend.
7.3 MAINTENANCE OF PROPERTY; INSURANCE. (a) The Company shall, and
shall cause each of its Restricted Subsidiaries to, maintain or cause to be
maintained in good repair, working order and condition, ordinary wear and tear
excepted, all material properties used or owned or leased in the business of the
Company and such Restricted Subsidiaries and from time to time shall make or
cause to be made all appropriate repairs, renewals and replacements thereof in
accordance with past practices. The Company shall maintain or cause to be
maintained, with financially sound and reputable insurers (which for purposes of
maintaining workers' compensation insurance may be the Insurance Subsidiaries),
insurance with respect to its properties and business and the properties and
business of its Restricted Subsidiaries against loss or damage of the kinds
customarily insured against by business entities of established reputation
engaged in the same or similar businesses and similarly situated, of such types
and in such amounts as are customarily carried under similar circumstances by
such other business entities. The Collateral Agent shall be included in any
such property insurance as loss payee; PROVIDED that such insurance may provide
that, so long as the applicable insurer has not received a notice from the
Collateral Agent that a Default or an Event of Default has occurred and is
continuing, such insurer may pay to the Company all proceeds of such insurance
in respect of individual occurrences not involving aggregate payments for any
such incurrence in excess of $500,000. All insurance maintained by the Company
with respect to its properties and
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the properties of its Restricted Subsidiaries shall be in an amount not less
than 85% of the full replacement value thereof unless such amount is not
generally available in the industry at a commercially reasonable cost.
(b) Nothing herein shall limit the right of the Company to self-
insure (including by insurance provided by the Insurance Subsidiaries) against
general liability claims and expenses and professional liability claims and
expenses, so long as the Company shall maintain (i) reserves not less than such
amounts as may be necessary to deliver the actuary's certificate required to be
delivered pursuant to Section 7.1(k) for such fiscal year, and (ii) insurance
policies and assets restricted for the settlement of unpaid claims as may be
necessary to deliver the officer's certificate required to be delivered pursuant
to Section 7.1(k) for such fiscal year. So long as the Company and its
Insurance Subsidiaries retain sufficient capital and surplus to comply with all
laws and regulations (i) the Insurance Subsidiaries may, so long as the Company
will be able to deliver the actuary's certificates and officer's certificates
described in Section 7.1(k), use assets restricted for the settlement of unpaid
claims to pay other contractual insurance obligations and (ii) upon
certification by the Company's chief financial officer that an Insurance
Subsidiary has sufficient capital and surplus as described in this Section
7.3(b), together with a calculation thereof, the Company may cause such
Insurance Subsidiary to pay to the Company a dividend, advance or loan (in each
case to the extent lawful to do so) in the amount of any excess capital and
surplus.
(c) The Company shall give the Agent a copy of any and all
insurance policies issued in connection with the insurance required under this
Section 7.3 (or a certificate or certificates of insurers evidencing such
insurance), and each such policy shall provide for at least 30 days prior
written notice to the Agent of the cancellation thereof. The Company shall use
reasonable commercial efforts to have included in each of its insurance policies
a provision for notice to the Agent of default in the Company's obligations
thereunder and an opportunity for the Agent to cure such default prior to
cancellation thereof; PROVIDED that the Agent shall not have any obligation to
cure any such default. In addition, the Company shall, no more than 15 days
after the expiration of any such policy, provide, or cause to be provided, to
the Agent evidence satisfactory to the Agent
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that such policy or policies have been renewed or replaced in accordance with
the provisions hereof.
7.4 TAXES. The Company shall pay or cause to be paid, and shall
cause each of its Subsidiaries to pay or cause to be paid, when due, (a) all
taxes, assessments and governmental charges, except for those contested in good
faith by appropriate proceedings for which adequate reserves in conformity with
GAAP will be provided and except to the extent the failure to pay such tax,
assessment or charge would not have a Material Adverse Effect, and (b) all
material lawful claims for labor, materials and supplies which, if unpaid, might
by law become a Lien upon the property of the Company or any of its Restricted
Subsidiaries, other than materialmen's, mechanics', carriers', workmen's,
repairmen's, or other like Liens arising in good faith in the ordinary course of
the business of the Company or any of its Restricted Subsidiaries (or deposits
to obtain the release of such Liens), securing claims which are not overdue or
which are being contested in good faith by appropriate proceedings.
7.5 CORPORATE EXISTENCE; FRANCHISES. The Company shall, and, subject
to Section 8.2, shall cause each of its Subsidiaries to, do or cause to be done
all things necessary to preserve and keep in full force and effect (a) its
existence, except where the failure to preserve the existence of any such
Subsidiary would not have, either individually or in the aggregate, a Material
Adverse Effect; and (b) its patents, trademarks, servicemarks, trade names,
copyrights, franchises, licenses, permits, certificates, authorizations,
qualifications, accreditations, easements, rights of way and other rights,
consents and approvals (including, without limitation, all licenses,
authorizations, accreditations, consents and approvals required to be obtained
pursuant to any applicable federal or state statutes relating to healthcare
institutions and all certificates of need, state hospital licensures and
Medicare/Medicaid certificates or exemptions therefrom) except where the failure
to preserve any of the items specified in this clause (b) would not have, either
individually or in the aggregate, a Material Adverse Effect.
7.6 COMPLIANCE WITH STATUTES, ETC. The Company shall, and shall
cause each of its Subsidiaries to, comply with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect
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of the conduct of its business and the ownership of its property, except such
non-compliances as would not, in the aggregate, have a Material Adverse Effect.
7.7 CONTRIBUTIONS TO ESOP. The Company shall (A) contribute to the
ESOP during each fiscal year of the Company, or no later than the date on which
the Company is required to file a tax return in respect of such fiscal year, an
amount (in Cash or Cash Equivalents) equal to not less than the least of (i) the
maximum amount which is deductible for federal income tax purposes, (ii) the
maximum amount which can be contributed without violation of Section 415 of the
Code for the limitation year to which such contribution relates and (iii)
amounts required to be paid to the Company by the ESOP and the Trust pursuant to
the Company/ESOP Credit Agreements or the Company/ESOP Notes during such fiscal
year, and (B) directly pay the administrative and operating expenses of the ESOP
and the Trust during such fiscal year.
7.8 CORPORATE SEPARATENESS. The Company and its Restricted
Subsidiaries shall take all such action as is necessary to keep the operations
of the Company and its Restricted Subsidiaries separate and apart from
Unrestricted Subsidiaries, including, without limitation, ensuring that all
customary formalities regarding their corporate or partnership existence, as the
case may be, including holding regular or periodic special board of directors'
and shareholders' meetings (or actions by written consents in lieu of meetings)
and, if required by applicable law or partnership governing documents, partners
meetings and maintenance of corporate or partnership offices (if required by
applicable law) and records, are followed. All financial statements of an
Unrestricted Subsidiary or of a group of Unrestricted Subsidiaries provided to
creditors (a) shall reflect only the assets, liabilities, results of operation,
cash flows or changes in stockholders' equity of such Unrestricted Subsidiary or
such group of Unrestricted Subsidiaries, and (b) shall not reflect any assets,
liabilities, results of operations, cash flows or changes in stockholders'
equity of the Company or any of its Restricted Subsidiaries. The Company and
its Restricted Subsidiaries shall maintain their respective payroll and books of
account and bank accounts separate from Unrestricted Subsidiaries. Each of the
Company and each of its Restricted Subsidiaries shall pay, and shall continue to
pay, its respective liabilities, including all administrative expenses, from
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its own separate assets or, in the case of liabilities paid from a centralized
cash management system account, the related account records shall properly
record the identity of the obligor and the corresponding intercompany
receivables and payables entries; and in no event shall any such liabilities be
paid from assets of any Unrestricted Subsidiary. Assets of the Company and its
Restricted Subsidiaries are separately identified and segregated, and shall
continue to be separately identified and segregated, from the assets of
Unrestricted Subsidiaries. Finally, no Unrestricted Subsidiary shall take any
action, or conduct its affairs in a manner, which is likely to result in the
corporate or partnership existence of such Subsidiary being disregarded, or in
the assets and liabilities of the Company and its Restricted Subsidiaries being
substantively consolidated with any Unrestricted Subsidiary in a bankruptcy,
reorganization or other insolvency proceeding. Without limiting the generality
of the foregoing, as promptly as practicable after the Closing Date, but in any
event within 60 days thereof (i) the Company and its Unrestricted Subsidiaries
shall enter into one or more tax sharing agreements that are in form and
substance reasonably satisfactory to the Agent (each, a "Tax Sharing
Agreement"), and the Company shall deliver a copy thereof to the Agent. The
Company shall cause each hereafter created or designated Unrestricted Subsidiary
to become a party to a Tax Sharing Agreement promptly after such creation or
designation as the case may be.
7.9 FINANCIAL COVENANTS.
(a) BASE CORE EBITDA. The Company shall maintain Base Core
EBITDA, determined as of the last day of each fiscal quarter of the Company for
the 12-month period ending on such date, of not less than $130,000,000 (or, if
the Initial NME Acquisition Closing shall not have occurred prior to end of such
fiscal quarter, $100,000,000).
(b) CORE EBITDA. The Company shall maintain Core EBITDA,
determined as of the last day of each fiscal quarter of the Company for the 12-
month period ending on such date, of not less than $160,000,000 (or, if the
Initial NME Acquisition Closing shall not have occurred prior to end of such
fiscal quarter, $130,000,000).
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(c) INTEREST COVERAGE RATIO. The Company shall maintain a ratio
of Core EBITDA to consolidated Total Interest Expense of the Company and its
Restricted Subsidiaries, determined as of the last day of each fiscal quarter of
the Company for the 12-month period ending on such date, of not less than
2.5:1.0.
(d) FIXED CHARGE COVERAGE RATIO. The Company shall maintain a
Fixed Charge Coverage Ratio, determined as of the last day of each fiscal
quarter of the Company, of not less than 1.1:1.0.
(e) CORE LEVERAGE RATIO. The Company shall maintain a ratio of
Core Indebtedness to Core EBITDA, determined on the last day of each fiscal
quarter of the Company for the 12-month period ending on such day, of not more
than 4.25:1.0.
(f) GAAP INTEREST COVERAGE RATIO. The Company shall maintain a
ratio of EBITDA of the Company and its Subsidiaries on a consolidated basis to
Total Interest Expense of the Company and its Subsidiaries on a consolidated
basis, as of the last day of each fiscal quarter of the Company for the 12-month
period ending on such day, of not less than 2.50:1.0.
(g) GAAP LEVERAGE RATIO. The Company and its Subsidiaries shall
maintain a ratio of consolidated Indebtedness to consolidated EBITDA, determined
on the last day of each fiscal quarter of the Company for the 12-month period
ending on such day, of not more than 4.5:1.0.
7.10 FISCAL YEARS AND QUARTERS. The Company, unless otherwise
required by law or by order of a regulatory agency having jurisdiction over the
Company, shall cause each of its fiscal years to end on September 30 and each of
its fiscal quarters to end on December 31, March 31, June 30 and September 30.
7.11 SUBSIDIARY GUARANTY; SUBSIDIARY PLEDGE AND SECURITY AGREEMENTS;
CERTAIN MORTGAGES. The Company shall with reasonable promptness, but only to
the extent not prohibited by applicable law: (i) cause each of its Wholly-Owned
Restricted Subsidiaries (other than Excludable Foreign Subsidiaries) that
becomes a Significant Subsidiary after the Closing Date to execute the
Subsidiary Guaranty and, if such Significant Subsidiary is a Domestic Wholly-
Owned Restricted Subsidiary, a Sub-
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sidiary Pledge and Security Agreement and Subsidiary Stock and Notes Pledge;
(ii) to the extent it has not already done so, pledge, and cause each Domestic
Wholly-Owned Restricted Subsidiary that is now or hereafter becomes a
Significant Subsidiary to pledge, all the shares of capital stock and other
equity interests now or hereafter owned by the Company or such Domestic Wholly-
Owned Restricted Subsidiary of each now or hereafter existing Significant
Subsidiary (other than an Excludable Foreign Subsidiary), and all notes now or
hereafter payable to the Company or such Domestic Wholly-Owned Restricted
Subsidiary by a present Subsidiary or future Significant Subsidiary of the
Company (other than an Excludable Foreign Subsidiary), in each such case
pursuant to a duly executed and delivered Company Stock and Notes Pledge or
Subsidiary Stock and Notes Pledge, as the case may be, granting the Collateral
Agent a valid and enforceable, first priority perfected Lien in such assets as
security for the Obligations; and (iii) pledge, and cause each Domestic Wholly-
Owned Restricted Subsidiary that is now or hereafter becomes a Significant
Subsidiary to pledge, at least 65% of the capital stock and equivalent interests
owned from time to time by the Company (or any such Subsidiary, as the case may
be) of each Foreign Subsidiary that is a Significant Subsidiary.
7.12 ENVIRONMENTAL LAWS. The Company shall, and shall cause each of
its Subsidiaries to, (i) obtain all permits, licenses and other authorizations
which are required in connection with the operation of its business under any
Environmental Law and shall take all action necessary to keep such permits,
licenses and authorizations in full force and effect, except to the extent the
failure to comply therewith would not have a Material Adverse Effect, and (ii)
take all actions necessary to remain in full compliance with all terms and
conditions of all required permits, licenses, authorizations, limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in any Environmental Law applicable to the
operation of its business, except to the extent the failure to comply herewith
would not have a Material Adverse Effect. Without limiting the foregoing, the
Company shall deliver to the Agent within 60 days of the Closing Date, a Phase I
Environmental Report that is in form reasonably satisfactory to the Agent from
CH2M HILL or such other environmental consultant as is designated by the Company
and reasonably satisfactory to the Agent in respect of Charter Westbrook
Hospital (including
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Charter Westbrook Medical Office Building). Nothing in this Section 7.12 is
intended to or shall be deemed to relieve the Company or any of its Subsidiaries
of their legal obligations under the Environmental Laws or to condone or
encourage any disregard of those obligations.
7.13 FURTHER ASSURANCES. The Company shall, and shall cause each
Domestic Guarantor to, take all such further actions and execute all such
further documents and instruments as the Required Lenders or the Collateral
Agent may at any time determine may be necessary to create, perfect, preserve
and/or protect or ensure the priority of any Lien or security interest in any
Collateral. Without limiting the foregoing, the Company shall deliver or cause
to be delivered to the Agent, within 90 days of the Closing Date, opinions, in
form and substance reasonably satisfactory to the Agent and from counsels that
are designated by the Company and reasonably satisfactory to the Agent, with
respect to each Mortgage and other matters related thereto as may be reasonably
requested by the Agent.
Section 8. NEGATIVE COVENANTS. The Company covenants and agrees that
until the Total Revolving Loan Commitment has terminated and all Obligations
have been paid in full:
8.1 LIENS. The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, create, incur, assume or suffer to exist any Lien
upon or with respect to any property or assets of any kind (real or personal,
tangible or intangible) of the Company or such Restricted Subsidiary, whether
now owned or hereafter acquired, or sell any such property or assets subject to
an understanding or agreement, contingent or otherwise, to repurchase such
property or assets, or assign any right to receive income; PROVIDED, that the
provisions of this Section 8.1 shall not prevent the creation, incurrence,
assumption or existence of:
(a) Permitted Liens;
(b) Liens on the property or assets of the Company and its
Restricted Subsidiaries in existence, and in respect of obligations existing, on
the Closing Date, to the extent such Liens are disclosed on Schedule 8.1(b)
hereto;
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(c) Liens on the assets to be acquired pursuant to the NME
Acquisition to the extent such Liens are disclosed on Schedule 8.1(c);
(d) Liens created pursuant to the Security Documents;
(e) Liens not otherwise permitted in this Section 8.1 securing
Indebtedness to the extent the aggregate outstanding principal amount of all
such Indebtedness does not exceed $25,000,000 at any time outstanding; PROVIDED
that such Liens are:
(i) Liens upon property subject to a Sale/Leaseback
Transaction permitted under Section 8.6 incurred in connection with
such Sale/Leaseback Transaction, and such Liens do not extend beyond
the assets subject to such Sale/Leaseback Transaction;
(ii) purchase money security interests or similar
Liens securing purchase money Indebtedness (including Indebtedness
under capitalized leases, but excluding Indebtedness incurred pursuant
to Sale/Leaseback Transactions) of the Company's Restricted
Subsidiaries incurred in the acquisition or construction of any asset
within six months after such acquisition or completion of construction
of such asset in amounts that do not exceed the lesser of (A) the
purchase price and (B) the fair market value of the purchased or
constructed asset, and such Liens do not extend beyond the asset so
purchased or constructed;
(iii) Liens existing on assets acquired by any of the
Company's Restricted Subsidiaries (other than from NME or any of its
Subsidiaries) or upon the assets of any Person which after the
acquisition of such Person (other than NME or any of its Subsidiaries)
becomes a Restricted Subsidiary of the Company, which Liens secure
Indebtedness assumed by such Restricted Subsidiary or of such Person,
as the case may be, were in existence at the time of the acquisition
thereof and were not incurred in connection with or in anticipation of
such acquisition; and/or
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(iv) Liens on assets (other than any of the
Collateral) of the Company or any of the Company's Restricted
Subsidiaries securing Indebtedness (other than Permitted Subordinated
Indebtedness and Accommodation Obligations in respect of Permitted
Subordinated Indebtedness) of a type or types not described in the
foregoing clauses (i) through (iii) having, in the aggregate, an
outstanding principal amount of $10,000,000 or less; PROVIDED, that
the fair market value of the assets subject to any such Liens do not
exceed, at the time of the incurrence of such Indebtedness, 125% of
the principal amount of the Indebtedness secured thereby;
(f) Liens securing Indebtedness of any Restricted Subsidiary to
the Company or to any Domestic Guarantor to the extent the promissory note
evidencing such Indebtedness has been pledged as collateral for the Obligations
and otherwise complies with Section 8.7;
(g) Liens securing Indebtedness incurred to refinance the
principal amount of any Indebtedness secured by a Lien permitted hereunder
(other than the Obligations) so long as such refinancing does not increase the
principal amount of such Indebtedness so secured or extend the Lien to any
additional assets of the Company or any of its Restricted Subsidiaries;
(h) Liens on assets of Foreign Restricted Subsidiaries securing
Foreign Contracts Credit Support to the extent permitted by Section 8.7(i);
PROVIDED that the value of the assets securing such letters of credit or bonds
shall not exceed 125% of the stated amount of such letter of credit or bond at
the time such Lien attaches;
(i) Liens on the assets of the Insurance Subsidiaries securing
self insurance and reinsurance obligations and letters of credit or bonds of the
type described in Section 8.7(k) (whether or not such letters of credit or bonds
constitute Indebtedness); PROVIDED that the assets subject to such Liens shall
only be assets of the Insurance Subsidiaries;
(j) Deposits of approximately SFR 400,000 plus interest and
income earned thereon from and after July 1, 1991, securing the Company's
obligations in re-
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spect of the Swiss Bonds, which deposits are held by the agent for the Swiss
Bonds; and
(k) Deposits securing bonds and letters of credit in support of
foreign operations; PROVIDED that, at any time, the property subject to such
Liens shall be limited to (i) assets of Charter Medical (Cayman Islands) Ltd., a
Cayman Islands corporation plus (ii) assets of an aggregate value not in excess
of $50,000,000 minus the stated amount of all letters of credit then outstanding
under Section 8.7(i);
PROVIDED that this Section 8.1 shall not prevent the assignment by the Company
and its Restricted Subsidiaries of accounts receivable which have been
outstanding more than 120 days in the ordinary course of business on a basis
consistent with past collection practices of accounts receivable.
8.2 CONSOLIDATION, MERGER, SALE OR PURCHASE OF ASSETS, ETC. The
Company shall not, and shall not permit any of its Restricted Subsidiaries to,
in one or a series of related transactions, wind up, liquidate or dissolve its
affairs or enter into any transaction of merger or consolidation, or convey,
sell, lease or otherwise dispose of all or any part of its property or assets
(including without limitation accounts receivable), or purchase or otherwise
acquire all or substantially all of the property or assets (other than purchases
or other acquisitions of real estate, inventory, licenses and franchises,
materials and equipment in the ordinary course of business) of any other Person,
except that:
(a) the Company may consummate all or any portion of the NME
Acquisition subject to and upon the terms and conditions set forth in the NME
Purchase Agreement; PROVIDED that (i) except as permitted by Section 8.11,
neither the Company nor any of its Subsidiaries waives the conditions set forth
in the NME Purchase Agreement to their respective obligations thereunder, (ii)
the aggregate purchase price therefor (including, without limitation, amounts
payable for any covenant-not-to-compete from NME or any of its Subsidiaries),
whether paid in cash, by the assumption of Indebtedness or otherwise, does not
exceed $225,000,000, (iii) the Company complies with Section 7.1(j) in
connection with each closing of all or any portion of the NME Acquisition, (iv)
the Initial NME Acquisition Closing occurs prior to any other closing under the
NME Purchase Agreement, and
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(v) all acquisitions of Facilities and other assets pursuant thereto are made by
the Company and/or the Domestic Guarantors;
(b) any Restricted Subsidiary may merge into, consolidate with
or liquidate into the Company or a Domestic Guarantor; PROVIDED that the
surviving corporation is the Company or such Domestic Guarantor; and any
Restricted Subsidiary (other than a Domestic Guarantor) may merge into,
consolidate with or liquidate into a Domestic Wholly-Owned Restricted Subsidiary
that is not a Domestic Guarantor; PROVIDED that the surviving corporation is a
Domestic Wholly-Owned Restricted Subsidiary and, to the extent the surviving
corporation is a Significant Subsidiary, all of the outstanding capital stock of
such surviving corporation (and, if its parent is not the Company, its parent)
owned by the Company or any Domestic Wholly-Owned Restricted Subsidiary shall be
pledged to the Collateral Agent under a Subsidiary Stock and Notes Pledge and/or
the Company Stock and Notes Pledge, as the case may be, and such surviving
corporation (and, if its parent is not the Company, its parent) shall have
executed and delivered the Subsidiary Guaranty, the Subsidiary Stock and Notes
Pledge and the Subsidiary Pledge and Security Agreement;
(c) any Foreign Restricted Subsidiary may merge into,
consolidate with or liquidate into a Foreign Wholly-Owned Restricted Subsidiary;
PROVIDED that (i) the surviving corporation is a Foreign Wholly-Owned Restricted
Subsidiary, and (ii) to the extent the surviving corporation is a Significant
Subsidiary and the following are permitted by applicable law, (A) 65% (or, if
such surviving corporation is not an Excludable Foreign Subsidiary, 100%) of the
outstanding capital stock of such surviving corporation shall be pledged to the
Collateral Agent under a Subsidiary Stock and Notes Pledge and/or the Company
Stock and Notes Pledge, as the case may be, and (B) such surviving corporation
(unless it is an Excludable Foreign Subsidiary) shall have executed and
delivered the Subsidiary Guaranty;
(d) the Company and its Restricted Subsidiaries may convey,
sell, lease or otherwise dispose of: (i) property or assets in connection with
Sale/Leaseback Transactions permitted pursuant to Section 8.6; (ii) accounts
receivable which have been outstanding more than 120 days in the ordinary course
of business consistent with past collection practices of accounts
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receivable; and (iii) property or assets of the Company or any of its Restricted
Subsidiaries to the extent that such conveyances, sales, leases or other
dispositions are in connection with assets having a fair market value not in
excess of $1,000,000, either individually or, if sold as part of a series of
related transactions, when aggregated with other related conveyances, sales,
leases or dispositions (and, in the case of such assets with a fair market value
in excess of $200,000 but less than or equal to $1,000,000, the aggregate amount
of such sales shall not exceed $5,000,000 in any fiscal year of the Company
unless the mandatory prepayments required by Section 4.2 are made as provided
therein);
(e) so long as no Default or Event of Default has occurred and
is continuing either immediately before or after giving effect thereto, the
Company and its Restricted Subsidiaries may make sales of assets having a fair
market value greater than $1,000,000; PROVIDED that, if such sale constitutes an
Asset Sale as provided herein: (i) such sale is made for consideration that is
at least equal to the fair market value of the assets so sold, (ii) at least 70%
of the consideration therefor is the payment of Cash (and/or the assumption by
the purchaser thereof of Indebtedness (other than the Obligations) secured
solely by such asset or incurred to finance or refinance the acquisition or
construction of such asset, provided that the Company and its Restricted
Subsidiaries are released from all obligations, if any, with respect to such
Indebtedness) on or before the closing date of such sale, and such Cash is used
to make the prepayments required by Section 4.2(a) or 4.2(c), as the case may
be, (iii) if such sale is made by the Company or a Domestic Guarantor, the
Collateral Agent has a perfected Lien on any non-Cash proceeds received in such
Asset Sale, other than notes and similar instruments having, in the aggregate
for any individual Asset Sale, a principal amount of $500,000 or less, and (iv)
after assets having an aggregate fair market value of $50,000,000 have been sold
after the Closing Date pursuant to Asset Sales (including, without limitation,
Sale/Leaseback Transactions) involving assets with a fair market value exceeding
$200,000 in each instance or in a series of related transactions, neither the
Company nor any of its Restricted Subsidiaries shall be permitted to sell
pursuant to this paragraph (e) or pursuant to a Sale/Leaseback Transaction any
asset having a fair market value in excess of $5,000,000 without the prior
consent of the Required Lenders (except for a contribution permitted by
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Section 8.8 of a Facility and its related working capital to a Permitted Joint
Venture); PROVIDED that, notwithstanding the foregoing, without the consent of
the Required Lenders, neither the Company nor any of its Restricted Subsidiaries
shall sell (other than pursuant to a Sale/Leaseback Transaction permitted
hereby) more than one of the Facilities acquired pursuant to the NME Acquisition
that is, at the time of such sale, subject to a Lien securing any Indebtedness
permitted by Section 8.7(g);
(f) so long as no Default or Event of Default exists either
immediately before or after giving effect to the entering into of such lease or
sublease, the Company and its Restricted Subsidiaries may lease or sublease
assets to third parties so long as such lease or sublease is (i) a lease or
sublease of office space in a medical building to healthcare professionals or
healthcare goods or service companies for their use, or a sublease by a Person
other than the Company or any of its Restricted Subsidiaries to a similar user,
or to another Person with respect to space not constituting a significant
portion of such building; (ii) a lease or sublease of any portion of a hospital
in the ordinary course of business and in a manner consistent with either past
practices (other than practices developed through leas
es permitted pursuant to the following clause (iii)) or in the healthcare
industry generally which is not by itself or together with other leases or
subleases of portions of such hospital of more than 50% of such hospital; or
(iii) a lease or sublease of licensed beds of a hospital and non-exclusive
access to common areas of such hospital, where the portions leased or subleased
in all such lease and sublease transactions in effect at any time with respect
to such hospital do not exceed 30% of the licensed beds of such hospital plus
non-exclusive access to common areas of such hospital, and, in the case of any
lease or sublease under clause (iii): (A) if (1) such hospitals or beds are not
subject to the Lien of a Mortgage, and (2) the scheduled rental payments under
such lease or sublease exceed $500,000 in any fiscal year of the Company, or,
after giving effect to such lease or sublease the scheduled rental payments
under all such leases and subleases exceed $5,000,000 in any fiscal year, the
Collateral Agent, unless the same would violate the provisions of any mortgage
or lease (other than such lease) or related agreement to which such beds or
hospitals are subject, is granted, prior to or simultaneously with the entering
into of such lease or sublease, a valid
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and enforceable first priority Lien on such lease or sublease, as the case may
be, pursuant to documentation that is in form and substance reasonably
satisfactory to the Collateral Agent (which security documents and lease or
sublease shall include such provisions as the Collateral Agent shall reasonably
require to protect its interests in the premises and/or such lease or sublease,
as the case may be, including, without limitation, a subordination of the
lessee's leasehold interest to any and all prior liens of the Collateral Agent
if requested by the Collateral Agent), (B) the Company and its Restricted
Subsidiaries are insured with respect to the leased or subleased premises and
the businesses conducted thereon in the manner and to the extent required by
Section 7.3 as fully as if such property had not been leased or subleased by a
third party, (C) the total term of any such lease or sublease, including all
renewals and extensions, shall not exceed 10 years and the lessees and
sublessees shall have no rights, whether exercisable currently or in the future,
to acquire an interest in the premises greater than a leasehold interest
(including, without limitation, by way of an option or a right of first refusal
or first offer), (D) the hospital continues to do business as and be known as a
Charter hospital, and (E) no more than 25% of the Company's and its Restricted
Subsidiaries' hospitals shall have such leases and subleases in effect at any
one time;
(g) the Company and its Restricted Subsidiaries may make and
liquidate Investments permitted pursuant to Section 8.8; and
(h) the Company and its Restricted Subsidiaries may make
Maintenance Capital Expenditures and Facility Acquisitions to the extent
permitted by Section 8.10.
8.3 RESTRICTED PAYMENTS. The Company shall not, and shall not permit
any of its Restricted Subsidiaries to (a) declare or make any dividend payment
or other distribution (other than any dividend payment or distribution payable
solely in capital stock of the Company or such Restricted Subsidiary), directly
or indirectly, on account of any class of capital stock of the Company or any
Restricted Subsidiary, or (b) purchase, redeem or otherwise acquire or retire
for value, directly or indirectly, any shares of any class of capital stock of
the Company or such Restricted Subsidiary or any warrants, options or other
rights to acquire such shares,
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now or hereafter outstanding (each a "Restricted Payment"); PROVIDED that, so
long as no Default or Event of Default has occurred and is continuing or would
result therefrom:
(i) the Company may repurchase Company Common Stock
distributed to participants and beneficiaries of the ESOP or from the
Trust for the purpose of facilitating the distribution of cash to
participants and beneficiaries of the ESOP to the extent required by
the terms of the ESOP and the Trust or by Section 401(a)(28) or 409(h)
of the Code; PROVIDED that such repurchase rights may be exercised in
all events if the failure to exercise such rights would create a
material risk of the disqualification of the ESOP under Section 401(a)
of the Code;
(ii) the Company may acquire warrants for the purchase
of capital stock returned to it upon the exercise of such warrants;
PROVIDED that the sole consideration for any such warrants shall be
Company Common Stock;
(iii) the Company may purchase, redeem or otherwise
acquire for nominal consideration rights in connection with the Rights
Plan;
(iv) so long as no Default or Event of Default has
occurred and is continuing, the Company may declare and pay in each
and any of its fiscal years PRO RATA cash dividends on its capital
stock in a cumulative amount not to exceed 6% of the cash proceeds
received by the Company, net of underwriter's and broker's fees and
commissions and costs and expenses incurred in connection therewith
and less all amounts spent by the Company to repurchase any shares of
its capital stock or any warrants, options or other rights to acquire
such shares since the Closing Date (other than pursuant to clause (i),
(ii) or (iii) above), from issuances of its capital stock after the
Closing Date pursuant to public offerings;
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(v) so long as no Default or Event of Default shall
have occurred and be continuing, the Company may, in addition to the
dividends permitted to be declared and paid by the Company pursuant to
clause (iv) above and purchases pursuant to clauses (i) and (ii)
above, pay an amount not to exceed the then Accumulated Excess Cash
Flow in order to declare and pay dividends on, and repurchase, for a
price not to exceed the market value thereof, its capital stock;
PROVIDED that in no event shall the sum of all such dividends paid and
declared, and all such repurchases of capital stock, by the Company
pursuant to this clause (v) exceed $2,000,000 in the aggregate in any
fiscal year of the Company or $10,000,000 in the aggregate;
(vi) any Restricted Subsidiary may make PRO RATA
dividends and PRO RATA distributions of profits, earnings and capital
to its shareholders, partners or other equity holders, as the case may
be;
(vii) any Restricted Subsidiary of the Company may
make Restricted Payments to the Company or any Domestic Guarantor;
(viii) any Domestic Wholly-Owned Restricted Subsidiary
that is not a Domestic Guarantor may make Restricted Payments to any
other Domestic Wholly-Owned Restricted Subsidiary; and
(ix) any Foreign Restricted Subsidiary of the Company
may make Restricted Payments to any Foreign Wholly-Owned Subsidiary.
8.4 LIMITATION ON RESTRICTIONS AFFECTING DIVIDENDS AND OTHER PAYMENTS
OF SUBSIDIARIES. (a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary of the Company to: (i) make (A) dividends
or any other distributions on its capital stock or any other interest or
participation in, or measured by, its profits, or pay any Indebtedness owed, to
the Company or any of its Restricted Subsidiaries, or (B)
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loans or advances to the Company or any of its Restricted Subsidiaries, except,
in each such case, for such encumbrances or restrictions, if any, (A) imposed by
law, (B) contained in the Senior Subordinated Notes Indenture, or (C) contained
in any agreement, lease, indenture, security agreement or other form of
financing document to which the Company or a Restricted Subsidiary may be a
party in connection with a Sale/Leaseback Transaction permitted by Section 8.6
or the incurrence of Indebtedness secured by Liens described in Section
8.1(e)(iii), which restrictions are applicable only to the lessee or borrower,
as the case may be, and are effective only upon the occurrence and continuance
of an event of default under such agreement; or (ii) to the extent not covered
in clause (i) above, transfer, directly or indirectly, to the Company or to any
Restricted Subsidiary of the Company, any property or assets (except as provided
in Section 8.4(b)).
(b) Notwithstanding the provisions of Section 8.4(a)(ii), the
Company may, and may permit its Restricted Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
of the following encumbrances and restrictions on the ability of any Restricted
Subsidiary of the Company to transfer, directly or indirectly, to the Company or
any other Restricted Subsidiary any property or assets:
(i) restrictions which are contained in instruments
evidencing (and in all related collateral documents) Indebtedness of
another Person which is assumed by a Restricted Subsidiary of the
Company in connection with such Restricted Subsidiary's acquisition of
such Person (whether pursuant to a purchase of capital stock or
assets); PROVIDED that (A) such Indebtedness was not originally
incurred in connection with or in anticipation of such acquisition or,
unless identified on Schedule 8.4, assumed in connection with the NME
Acquisition, (B) such restrictions apply only to such Restricted
Subsidiary or Restricted Subsidiaries acquired in such acquisition and
(C) immediately after such acquisition substantially all of such
Restricted Subsidiary's operations or assets consist of those so
acquired;
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(ii) restrictions which are contained in instruments
evidencing (and in all related collateral documents) Indebtedness
which refinances or refunds the Indebtedness described in clause (i)
above; PROVIDED, that the restrictions with respect to such
refinancing are not more restrictive in any material respect than
those with respect to the Indebtedness being refinanced or refunded;
(iii) restrictions which are contained in instruments
evidencing (and in all related collateral documents) Indebtedness set
forth in Schedule 8.4;
(iv) encumbrances or restrictions, if any, imposed by law;
and
(v) encumbrances or restrictions contained in any
agreement, lease, indenture, security agreement or other form of
financing document to which the Company or a Restricted Subsidiary may
be a party in connection with a Sale/Leaseback Transaction permitted
under Section 8.6, the incurrence of Indebtedness pursuant to Section
8.7(k) or 8.7(l), or the incurrence of purchase money or similar
Indebtedness pursuant to Section 8.7(g) that is secured by a Lien
permitted by Section 8.1(e)(ii); PROVIDED that such restrictions and
encumbrances are applicable only to the lessee or borrower, as the
case may be, and are effective only upon the occurrence and
continuance of an event of default under such agreement;
in each case, to the extent such Indebtedness or refinancing or other
transaction is otherwise permitted hereunder.
8.5 RESTRICTION ON ISSUANCE OF SUBSIDIARY STOCK. The Company shall
not permit any of its Restricted Subsidiaries to, directly or indirectly, issue,
contingently or otherwise, any shares of its capital stock, or warrants, options
or other rights to purchase or acquire shares of its capital stock, now or
hereafter authorized for issuance, except: (a) to the Company or any Domes-
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tic Guarantor; (b) an issuance of capital stock of such Restricted Subsidiary
for fair value to any Person other than the Company or any Domestic Guarantor so
long as the Company together with one or more other Domestic Guarantors holds,
after giving effect thereto, at least 95% of the issued and outstanding shares
of capital stock (on a fully diluted basis) of such Restricted Subsidiary; (c)
in the case of any Foreign Restricted Subsidiary, to any Wholly-Owned Foreign
Restricted Subsidiary; and (d) so long as no Default or Event of Default would
result therefrom under Section 9.10 and the Company complies with Section 4.2,
the Company may issue its capital stock for fair value.
8.6 LEASES AND SALE/LEASEBACK TRANSACTIONS. The Company shall not:
(a) permit the aggregate payments (including any property taxes
or other amounts paid by the Company and its Restricted Subsidiaries as
additional rent or lease payments, but excluding amounts (i) payable under any
capitalized lease (other than a capitalized lease entered into in connection
with a Sale/Leaseback Transaction), or (ii) payable in respect of any event of
loss under any agreements to rent or lease any real or personal property) by the
Company and its Restricted Subsidiaries on a consolidated basis under agreements
to rent or lease any real or personal property to exceed $65,000,000 during any
fiscal year of the Company; or
(b) enter, or permit any of its Restricted Subsidiaries to
enter, into any Sale/Leaseback Transaction unless: (i) the terms of such
Sale/Leaseback Transaction shall be consistent with, and would not violate, the
requirements set forth in Section 8.2(e) (including, without limitation, the
limitation therein on the aggregate permitted amount of Asset Sales), (ii) the
purchase price received for any property sold pursuant to such transaction shall
be Cash in an amount not less than the fair market value of such property as of
the closing of such transaction as determined in good faith by the Board of
Directors of the Company (it being understood that in determining such fair
market value the Company may make such determination based on the then-current
sale-leaseback mar-
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ket), (iii) no Defaults or Events of Default shall have occurred and be
continuing both before and immediately after giving effect to such
Sale/Leaseback Transaction, (iv) in the case of a Sale/Leaseback Transaction
involving a capitalized lease, the Indebtedness incurred thereunder is permitted
by Section 8.7, and (v) 70% of the Net Proceeds of such Sale/Leaseback
Transaction shall be applied in accordance with Sections 4.2(a) and 4.2(c).
8.7 INDEBTEDNESS. The Company shall not, and shall not permit any of
its Restricted Subsidiaries to, contract, create, incur, assume or suffer to
exist any Indebtedness, except:
(a) Indebtedness incurred under the Credit Documents;
(b) Indebtedness of the Company represented by the Senior
Subordinated Notes, and, so long as no Default or Event of Default has occurred
and is continuing, any refinancing of the Senior Subordinated Notes with the
proceeds of new Permitted Subordinated Indebtedness; PROVIDED that (i) the
aggregate principal amount of such new Permitted Subordinated Indebtedness shall
not exceed the principal amount of the Senior Subordinated Notes being
refinanced, and (ii) the Debt Service Coverage Tests are satisfied at the time
of incurrence of any such new Permitted Subordinated Indebtedness;
(c) Accommodation Obligations to the extent permitted by Section
8.15;
(d) Indebtedness to be assumed in connection with the NME
Acquisition and disclosed on Schedule 8.7(d), and any refinancing of such
Indebtedness to the extent such refinancing does not involve an increase in (i)
the outstanding principal amount of such Indebtedness plus costs of issuance, or
(ii) scheduled debt service obligations with respect to such Indebtedness in any
given year (including principal and interest expense) that commences prior to
the Final Revolving Loan Maturity Date;
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(e) Indebtedness of the Company and its Restricted Subsidiaries
which was in existence and not refinanced on the Closing Date, to the extent
such Indebtedness is disclosed on Schedule 8.7(e) hereto, and any refinancing of
such Indebtedness (other than the Swiss Bonds) to the extent such refinancing
does not involve an increase in (i) the outstanding principal amount of such
Indebtedness plus costs of issuance, or (ii) scheduled debt service obligations
with respect to such Indebtedness in any given year (including principal and
interest expense) that commences prior to the Final Revolving Loan Maturity
Date; PROVIDED that (A) in the case of the conversion of any Variable Rate Notes
into fixed rate notes or bonds, as the case may be, in accordance with the terms
thereof, (1) any increase to the interest expense portion of the scheduled debt
service obligations applicable thereto as a result of any such conversion shall
be permitted so long as the fixed interest rate to be applicable thereto is a
market rate of interest at the time of such conversion, and (2) the principal
payment portion of the scheduled debt service obligations applicable thereto may
increase as a result of such conversion or conversions by an amount not to
exceed, in the aggregate for all such conversions, $1,000,000 in any consecutive
twelve month period;
(f) Permitted Subordinated Indebtedness of the Company incurred
in an aggregate principal amount not to exceed, at any time outstanding, the
difference of $125,000,000 over the aggregate principal amount of Permitted
Subordinated Indebtedness prepaid, purchased, redeemed, defeased or otherwise
acquired pursuant to the proviso to Section 8.11(a); PROVIDED that the Debt
Service Coverage Tests are satisfied at the time of each incurrence of all or
any portion of such Indebtedness and no Default or Event of Default exists at
such time;
(g) Indebtedness (including, without limitation, Indebtedness
under Sale/Leaseback Transactions and purchase money Indebtedness) of the
Company and its Wholly-Owned Restricted Subsidiaries incurred after the Closing
Date in an aggregate principal amount not to exceed $75,000,000 at any time
outstanding; PROVIDED that (i) the Debt
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Service Coverage Tests are satisfied at the time of each incurrence of all or
any portion of such Indebtedness, (ii) the Wholly-Owned Restricted Subsidiaries
shall not have more than $25,000,000 of such Indebtedness at any time
outstanding, and (iii) the aggregate principal amount of any single issue of
such Indebtedness shall not exceed $45,000,000;
(h) Subject to any limitations on the aggregate amount thereof
pursuant to Section 8.8, Indebtedness of the Company or any Domestic Guarantor
to any Subsidiary of the Company or Indebtedness of any Subsidiary of the
Company to the Company or any Domestic Guarantor; PROVIDED that: (i) all such
Indebtedness of the Company or any Domestic Guarantor to a Domestic Guarantor
shall be evidenced by promissory notes, such promissory notes shall provide that
the obligations thereunder shall be subordinated in right of payment to the
payment in full of the Obligations and such promissory notes shall be delivered
to the Collateral Agent pursuant to a Stock and Notes Pledge, (ii) all such
Indebtedness of any Subsidiary of the Company (other than (A) an Excludable
Foreign Subsidiary, and (B) a Domestic Guarantor) to the Company or a Domestic
Guarantor shall be evidenced by promissory notes, and such promissory notes
shall be delivered to the Agent pursuant to a Stock and Notes Pledge and such
promissory notes shall provide for a waiver by such Subsidiary of any and all
right to offset amounts owed by the Company or a Domestic Guarantor to such
Subsidiary against amounts owed by such Subsidiary under such promissory note,
and (iii) all Indebtedness of the Company or any Domestic Guarantor to any
Subsidiary of the Company (other than a Domestic Guarantor) shall be evidenced
by promissory notes and each such promissory note shall provide that the
obligations of the Company or such Domestic Guarantor thereunder shall be
subordinated in right of payment to the payment in full of all the Obligations
of the Company or such Domestic Guarantor, as the case may be;
(i) Indebtedness of Foreign Restricted Subsidiaries in respect
of letters of credit (including, without limitation, Letters of Credit) or bonds
obtained in connection with con-
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tracts for foreign projects ("Foreign Contracts Credit Support") not to exceed
$50,000,000 at any time outstanding;
(j) Indebtedness of a Foreign Restricted Subsidiary to a Wholly-
Owned Foreign Restricted Subsidiary;
(k) Indebtedness of the Insurance Subsidiaries in respect of
letters of credit or bid or performance bonds which are issued in support of
insurance and reinsurance obligations; PROVIDED that no other Credit Party or
Restricted Subsidiary shall be an account party or guarantor of the
reimbursement obligations in respect of such letters of credit or performance
bonds;
(l) Indebtedness incurred after the Closing Date by a less than
95% owned Restricted Subsidiary as a result of the contribution therein by a
Person that is not an Affiliate of the Company of assets securing such
Indebtedness, and any other Indebtedness incurred by a less than 95% owned
Restricted Subsidiary in an aggregate principal amount for all such less than
95% owned Restricted Subsidiaries not to exceed $75,000,000 outstanding at any
time; PROVIDED that (i) other than as the result of a guaranty permitted by
Section 8.15, all such Indebtedness shall be without recourse (by law and
contract) to the Company, its other Restricted Subsidiaries and their respective
assets (other than, in the case of a joint venture that is a partnership, a
special purpose corporation which is the general partner thereof and whose
assets consist predominantly of the Investment in such joint venture); and (ii)
prior to the incurrence of any such Indebtedness pursuant to this Section
8.7(l), the Company, if (A) such Indebtedness has an original principal amount
of $2,500,000 or more, or (B) prior to or after giving effect to the incurrence
of any such Indebtedness, the aggregate amount of all such Indebtedness having,
individually, an outstanding principal amount of less than $2,500,000 would
exceed $10,000,000, delivers to the Agent a legal opinion reasonably acceptable
to the Agent to the effect that, subject to customary qualifications and
exceptions, such Indebtedness is without recourse as provided herein; and
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(m) Indebtedness existing as of the Closing Date of the Company
to any of its Subsidiaries, or from any such Subsidiary to the Company or any
other such Subsidiary, to the extent such Indebtedness (i) is disclosed on
Schedule 8.7(m) hereto; (ii) was incurred after the date set forth in such
Schedule and prior to the Closing Date in the ordinary course of business and,
in the case of all such subsequent Indebtedness between the Company or any
Domestic Guarantor and a Subsidiary of the Company that is not a Domestic
Guarantor, does not exceed $5,000,000 in the aggregate principal amount
outstanding on the Closing Date; or (iii) is Indebtedness that is otherwise
permitted by Section 8.7(h).
8.8 INVESTMENTS. The Company shall not, and shall not permit any of
its Restricted Subsidiaries to, make any Investment, except that:
(a) subject to compliance with the proviso to Section 8.7(h),
the Company and its Restricted Subsidiaries may make intercompany loans to the
Company or any of its Domestic Guarantors;
(b) the Company and its Restricted Subsidiaries may make equity
Investments in Domestic Guarantors; PROVIDED that, after giving effect thereto,
no more than 5% of the outstanding shares of any class of capital stock of any
Domestic Guarantor, on a fully diluted basis, would be directly owned by Persons
other than the Company and other Domestic Guarantors;
(c) subject to compliance with the proviso to Section 8.7(h),
the Company and its Domestic Restricted Subsidiaries may make loans and advances
to Foreign Restricted Subsidiaries after the Closing Date in an aggregate amount
not to exceed $50,000,000 outstanding at any time; PROVIDED that all such loans
and advances are used to provide cash collateral for Foreign Contracts Credit
Support;
(d) Foreign Wholly-Owned Restricted Subsidiaries of the Company
may make Investments in one or more other Foreign Wholly-Owned Restricted
Subsidiaries;
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(e) (i) the Company and its Restricted Subsidiaries on a
consolidated basis may make loans and advances to (A) their directors, officers
and employees in the ordinary course of business in amounts not exceeding
$500,000 per individual and $5,000,000 outstanding at any one time in the
aggregate for all such individuals, and (B) physicians and other health care
professionals in the ordinary course of business not exceeding $10,000,000 in
the aggregate outstanding at any one time for all such individuals; and (ii) the
Company and its Restricted Subsidiaries may acquire and maintain Investments,
consistent with their past business practices, in real estate and dwellings
thereon in connection with the transfer of its officers and employees in the
ordinary course of business so long as such real estate and dwelling has been,
is being or will be used by such officer or employee primarily as a residence;
PROVIDED, that the amount of such Investments permitted pursuant to the
foregoing clause (ii) shall not exceed $5,000,000 at any time outstanding;
(f) the Company and its Restricted Subsidiaries may acquire and
hold Cash or Cash Equivalents;
(g) the Company and its Restricted Subsidiaries may own
Investments existing on the Closing Date, to the extent such Investments are
disclosed on Schedule 8.8(g) hereto;
(h) the Company may make contributions to the ESOP and the
Trust; PROVIDED that (i) such contributions will not adversely affect the
qualification of the ESOP under Sections 401(a) and 4975(e)(7) of the Code or
the tax-exempt status of the Trust under Section 501(a) of the Code, or result
in the imposition of a material excise tax under Section 4972 or 4975 of the
Code; and (ii) the proceeds of such contributions shall be applied solely to the
payment of principal of and interest on the Company/ESOP Loan, administrative
and operating expenses of the ESOP and the Trust to the extent that such
administrative and operating expenses are paid by the ESOP or the Trust
(excluding distributions of benefits to participants and beneficiaries) and
repurchases of Company Common Stock distributed to participants and
beneficiaries of
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the ESOP required by the terms of the ESOP and the Trust or by Section
401(a)(28) or 409(h) of the Code;
(i) the Company and its Restricted Subsidiaries may acquire
Investments in connection with Asset Sales permitted by Section 8.2(e) to the
extent such Investments are non-Cash proceeds permitted under such Section;
PROVIDED that the Collateral Agent shall have a valid and enforceable first
priority perfected security interest in each and any such Investments, other
than notes and similar instruments having, in the aggregate for any individual
Asset Sale, a principal amount of $500,000 or less;
(j) the Company and its Restricted Subsidiaries may make
Facility Acquisitions to the extent permitted by Section 8.10(b) hereof;
(k) the Company and its Restricted Subsidiaries may in the
ordinary course of business receive and hold as Investments evidences of
Indebtedness or securities issued by debtors or property of such debtors as part
of the reorganization of such debtors; PROVIDED that any such evidence of
Indebtedness or securities are received in exchange for evidence of Indebtedness
or securities originally issued when such debtors were solvent and are obtained
in the ordinary course of business;
(l) the Insurance Subsidiaries may invest assets restricted for
the settlement of unpaid claims in Investments of the types identified on
Schedule 8.8(l) for such purpose, and the Company may invest amounts deposited
prior to the Closing Date with the agent for the Swiss Bonds as permitted or
otherwise directed by such agent for the Swiss Bonds;
(m) Foreign Subsidiaries may make Investments in Cash and
instruments or securities of the highest grade investment available in local
currencies or in certificates of deposit (or comparable instruments) of any bank
with which such Subsidiary regularly transacts business;
(n) so long as no Default or Event of Default has occurred and is
continuing or would
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result therefrom, the Company and its Wholly-Owned Restricted Subsidiaries may
make contributions of Facilities (together with the working capital of such
Facilities) to Permitted Joint Ventures; PROVIDED that no such contribution to a
Permitted Joint Venture shall be permitted unless:
(i) the Minimum Income Tests and Debt Service Coverage
Tests are satisfied with respect thereto;
(ii) after giving effect to such contribution the
Company or such Wholly-Owned Restricted Subsidiary, as the case may
be, shall have a majority equity interest in such Permitted Joint
Venture and shall be entitled to elect or appoint the directors,
managers or trustees thereof, as applicable (or the additional
requirements in clause (v) below shall be satisfied)
(iii) such Permitted Joint Venture is not restricted
by its governing documents or otherwise from making cash distributions
to the Company or such Wholly-Owned Restricted Subsidiary, as the case
may be;
(iv) the Collateral Agent is granted, for the benefit
of the Lenders, as security for the Obligations, a perfected first
priority security interest in all of the Company's or such Wholly-
Owned Restricted Subsidiary's, as the case may be, right, title and
interest in such Permitted Joint Venture; and
(v) after giving effect to such contribution,
Facilities having, in the aggregate, a fair market value (or, if
higher, book value) of more than $100,000,000 have not been
contributed by the Company and its Wholly-Owned Subsidiaries to
Permitted Joint Ventures for which the Company and its Wholly-Owned
Restricted Subsidiaries do not have a majority of the equity interests
thereof or are not entitled to elect or appoint
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the directors, managers or trustees thereof, as applicable (for
purposes of the foregoing, a Facility's fair market value shall be
deemed to be equal to the product of 4.5 and the EBITDA of the Company
and its Wholly-Owned Restricted Subsidiaries attributable to such
Facility for the 12-month period preceding the Test Date applicable to
the date on which such Facility is contributed to such joint venture);
(o) so long as no Default or Event of Default has occurred and
is continuing, the Company and its Restricted Subsidiaries may make up to, in
the aggregate, $70,000,000 of Investments of Cash and other assets (other than
Facilities) in the Clinical Services Unit and the MIS Unit, collectively;
PROVIDED that the amount of Investments permitted to be made at any time
pursuant to this Section 8.8(o) shall be increased by the lesser of (i)
$30,000,000, and (ii) the then Accumulated Excess Cash Flow; PROVIDED FURTHER
that no more than $70,000,0000 of such Investments in the aggregate may be made
at any time prior to the first anniversary of the Closing Date, no more than
$80,000,000 of such Investments in the aggregate may be made at any time prior
to the second anniversary of the Closing Date, no more than $90,000,000 of such
Investments in the aggregate may be made at any time prior to the third
anniversary of the Closing Date and no more than $100,000,000 of such
Investments may be made in the aggregate; PROVIDED FURTHER that no such
Investment shall be permitted unless the Minimum Income Tests and the Debt
Service Coverage Tests are satisfied with respect thereto; and, PROVIDED
FURTHER, that the aggregate amount of Investments otherwise permitted by this
Section 8.7(o) at any time shall be reduced by (i) the then aggregate
outstanding amounts (as determined in accordance with the definition of
Accommodation Obligations) of all guaranties made by the Company and the
Domestic Guarantors of Indebtedness and other obligations of the Clinical
Services Unit and/or the MIS Unit, and (ii) the aggregate amount of Investments
that were made by the Company and its Restricted Subsidiaries in the Clinical
Services Unit and/or the MIS Unit prior to the Closing Date;
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(p) Investments made by the Company or any of its Restricted
Subsidiaries in any Subsidiary of the Company (other than the Clinical Services
Unit and MIS Unit) prior to the Closing Date to the extent the same are (i)
outstanding on the Closing Date, and (ii) in the case of any such Investments
constituting loans and advances, permitted by Section 8.7;
(q) Accommodation Obligations permitted by Section 8.15; and
(r) so long as no Default or Event of Default has occurred and
is continuing, the Company and its Restricted Subsidiaries may make up to
$60,000,000 of any other types of Investments of Cash and other assets (other
than Facilities) outstanding at any time; PROVIDED that the amount of
Investments permitted to be made at any time pursuant to this Section 8.8(r)
shall be increased by $10,000,000 on each of the first and second anniversaries
of the Closing Date; PROVIDED FURTHER that the aggregate amount of all
Investments made pursuant to this Section 8.8(r) shall not exceed $80,000,000 at
any time outstanding; and PROVIDED FURTHER that no such Investment shall be
permitted to be made unless (i) the Minimum Income Tests and Debt Service
Coverage Tests are satisfied with respect thereto, and (ii) after giving effect
to any such Investment, the aggregate amount of all such Investments does not
exceed the difference of (A) the then Permitted Facility Acquisition Amount, and
(B) the sum of (1) the actual amount of Facility Acquisitions (other than the
NME Acquisition) made by the Company and its Domestic Guarantors on or after the
Closing Date, and (2) the aggregate outstanding amounts (as determined in
accordance with the definition of Accommodation Obligations) of all guaranties
made by the Company and its Domestic Guarantors of Indebtedness and other
obligations of other types of Restricted Subsidiaries and Unrestricted
Subsidiaries;
PROVIDED that, notwithstanding anything to the contrary contained in this
Section 8.8 or Section 8.15, no Investment of any nature whatsoever may be made
by the Company or any of its Restricted Subsidiaries in any Domestic Wholly-
Owned Restricted Subsidiary that is not a Domestic Guarantor if,
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either immediately before or after giving effect thereto, more than $10,000,000
of Investments have been made on or after the Closing Date by the Company and
its Restricted Subsidiaries in all such types of Domestic Wholly-Owned
Restricted Subsidiaries.
In connection with any permitted contribution of a Facility to a
Permitted Joint Venture pursuant to Section 8.8(n), any Lien on such Facility
that secures the Obligations shall be released by the Collateral Agent if so
requested by the Company, unless such Permitted Joint Venture has incurred
recourse Indebtedness as a result of the contribution to it by any Person (other
than the Company or any Wholly-Owned Restricted Subsidiary) of assets securing
such Indebtedness.
8.9 TRANSACTIONS WITH AFFILIATES; EXECUTIVE COMPENSATION. The
Company shall not, and shall not permit any of its Restricted Subsidiaries to:
(a) enter into any transaction, whether or not in the ordinary course of
business, with any Affiliate of the Company or any of its Subsidiaries or any
"beneficial owner" (as such term is used in Section 13(d) of the United States
Securities Exchange Act of 1934 and the regulations thereunder, as in effect on
the date hereof) of 5% or more of any class of capital stock of the Company
(each such person being referred to as a "Restricted Person" and each such
transaction being referred to as a "Restricted Transaction"), other than on
terms and conditions substantially as favorable to the Company or such
Restricted Subsidiary as would be obtainable by the Company or such Restricted
Subsidiary at the time in a comparable arm's-length transaction with a Person
other than a Restricted Person (or in the case of an employment or consulting
arrangement with a Restricted Person other than an Affiliate of the Company or
any of the Company's Restricted Subsidiaries, on terms considered appropriate
for the services provided); or (b) increase or agree to increase the aggregate
compensation or benefits (including severance benefits) payable to its
Affiliates or key employees in any fiscal year by an amount exceeding that which
is comparable for similarly situated key employees in the health care industry,
which compensation will be determined solely upon the contribution, determined
by the
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Board of Directors of the Company or such Restricted Subsidiary, as the case may
be, made by such employee to the Company or such Restricted Subsidiary without
regard to any Investment in the Company or such Restricted Subsidiary by such
employee; PROVIDED that, so long as the following would not breach or contravene
the provisions of any other Section of this Agreement, (i) the Company may make
awards of the Company's Common Stock pursuant to the New Stock Option Plan and
distributions under the ESOP; (ii) the Company and its Restricted Subsidiaries
may lease or contribute hospitals to Permitted Joint Ventures in which it or a
Restricted Subsidiary is a partner or to corporations which are Affiliates, so
long as the Board of Directors of the Company determines in good faith that the
business purpose achieved by such arrangement renders the terms of any such
lease or contribution reasonable; (iii) the Company may enter into transactions
with its Wholly-Owned Restricted Subsidiaries, and Wholly-Owned Restricted
Subsidiaries may enter into transactions with other Wholly-Owned Restricted
Subsidiaries; (iv) the Company or its Restricted Subsidiaries may increase or
agree to increase the aggregate compensation or benefits (including severance
benefits) payable to its Affiliates or key employees in any fiscal year by an
amount exceeding that which is comparable for similarly situated key employees
in the health care industry if and to the extent that the compensation or
benefits (including severance benefits) of any such key employee was, at the
beginning of any fiscal year, below that which would be comparable for similarly
situated key employees in the health care industry; (v) the Company or any
Restricted Subsidiary may (A) pay a bonus or incentive compensation to any key
employee in any fiscal year under the Company's or such Restricted Subsidiary's
respective annual and long term incentive compensation plans, on a basis which
is consistent with past practices, and (B) make such other payments to employees
pursuant to other employee compensation plans approved by the compensation
committee of the Board of Directors to the extent no member of such committee is
an officer or employee of the Company or any of its Subsidiaries or has any
direct or indirect interest therein (other than any interest resulting solely
from such director's ownership of Company Common Stock or other equity interests
in
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the Company); and (vi) Permitted Joint Ventures may make PRO RATA dividends and
other distributions of capital and earnings to their respective equity holders.
8.10 MAINTENANCE CAPITAL EXPENDITURES; FACILITY ACQUISITIONS. (a)
The Company shall not, and shall not permit any of its Restricted Subsidiaries
to, make Maintenance Capital Expenditures in excess of (on an aggregate basis
for the Company and its Restricted Subsidiaries) $35,000,000 in any fiscal year
of the Company. Notwithstanding the foregoing:
(i) to the extent that the aggregate amount of
Maintenance Capital Expenditures made by the Company and its
Restricted Subsidiaries during any fiscal year of the Company is less
than $35,000,000, the unused amount may be carried forward to make
Maintenance Capital Expenditures in excess of $35,000,000 in the
Company's next fiscal year; PROVIDED that the maximum amount which may
be carried forward from any fiscal year of the Company to the next
fiscal year of the Company shall be $10,000,000; and
(ii) if, in any fiscal year of the Company, the
Company and its Restricted Subsidiaries make Maintenance Capital
Expenditures in an aggregate amount equal to the maximum amount of
Maintenance Capital Expenditures that is permitted by the foregoing
provisions of this Section 8.10(a), then, so long as no Default or
Event of Default has occurred and is continuing, the Company and its
Restricted Subsidiaries shall be permitted to make additional
Maintenance Capital Expenditures during such fiscal year in an
aggregate amount not to exceed the lesser of $20,000,000 and the
Accumulated Excess Cash Flow at the time of such expenditures;
PROVIDED that the aggregate amount of Maintenance Capital Expenditures
that the Company and its Restricted Subsidiaries shall be permitted to
make
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in any such fiscal year of the Company shall be limited to
$50,000,000.
(b) The Company shall not, and shall not permit its Restricted
Subsidiaries to, make any Facility Acquisition; PROVIDED that, so long as (i) no
Default or Event of Default has occurred and is continuing or would result
therefrom, and (ii) each of the Minimum Income Tests and Debt Service Coverage
Tests shall be satisfied with respect thereto, the Company and its Wholly-Owned
Restricted Subsidiaries may, subject to the limitations set forth in clause (c)
below, make, in addition to the NME Acquisition, up to $75,000,000 (as increased
from time to time pursuant to the following proviso, the "Permitted Facility
Acquisition Amount") of expenditures in connection with Facility Acquisitions in
the aggregate; PROVIDED that the aggregate amount of expenditures for Facility
Acquisitions that the Company and its Restricted Subsidiaries shall be entitled
to make shall be increased by $30,000,000 on each of the first and second
anniversary of the Closing Date and, at any time on or after the third
anniversary of the Closing Date, by an amount equal to the lesser of $40,000,000
and the Accumulated Excess Cash Flow at such time; PROVIDED FURTHER that (A) the
aggregate amount of all Facility Acquisition expenditures that are made prior to
the fourth anniversary of the Closing Date shall not exceed $155,000,000, and
(B) the aggregate amount of all expenditures made for Facility Acquisitions
shall not exceed at any time the lesser of $175,000,000 and the difference of
the then Permitted Facility Acquisition Amount less the sum of (i) the aggregate
amount of Investments made by the Company and its Restricted Subsidiaries
pursuant to Section 8.8(r), and (ii) the aggregate outstanding amounts (as
determined in accordance with the definition of Accommodation Obligations) of
all guaranties made by the Company and Domestic Guarantors of Indebtedness and
other obligations of other types of Restricted Subsidiaries and Unrestricted
Subsidiaries (other than the Clinical Services Unit and the MIS Unit) pursuant
to Section 8.15(a)(ix).
(c) Notwithstanding anything to the contrary in paragraph (b)
above, (i) the expenditures made for any individual Facility Acquisition or
series of related Facility Acquisitions shall
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not exceed $100,000,000; and (ii) if, prior to or after giving effect to any
Facility Acquisition, the total amount of expenditures incurred by the Company
and its Wholly-Owned Restricted Subsidiaries to make Facility Acquisitions shall
exceed $100,000,000, then, such Facility Acquisition shall only be permitted if
the ratios of the actual Core EBITDA (without giving effect to such Facility
Acquisition) and the Pro Forma Core EBITDA, in each case for the 12-month period
preceding the Test Date applicable to the date on which such Facility
Acquisition occurs, to the Pro Forma Interest Charges (without giving effect to
such Facility Acquisition) and the Pro Forma Interest Charges (after giving
effect to such Facility Acquisition), respectively, for the 12-month period
commencing with such Test Date, each exceed 3.5:1.0.
8.11 LIMITATION ON VOLUNTARY PAYMENTS AND MODIFICATIONS OF
TRANSACTION DOCUMENTS, ETC. The Company shall not, and shall not permit any of
its Restricted Subsidiaries to:
(a) make, other than pursuant to a refinancing thereof permitted
by Section 8.7, any voluntary or optional payment or prepayment on, or any
redemption or acquisition for value of (including, without limitation, by way of
depositing with the trustee with respect thereto money or securities before due
for the purpose of paying when due, but excluding any exchange of notes upon the
registration of the offering thereof and the conversion into capital stock of
the Company of any convertible Permitted Subordinated Indebtedness in accordance
with the terms thereof) any Permitted Subordinated Indebtedness; PROVIDED that
the Company shall be permitted to otherwise pay, purchase, redeem, defease or
otherwise acquire for value any Permitted Subordinated Indebtedness at any time
so long as (i) no Default or Event of Default has occurred and is then
continuing, and (ii) the aggregate amount of all such payments, purchases,
redemptions, defeasances and other acquisitions that are not financed with the
proceeds of Permitted Subordinated Indebtedness pursuant to Section 8.7 do not
exceed, in the aggregate, the lesser of $50,000,000 and the then Accumulated
Excess Cash Flow;
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(b) amend, modify or waive any Company/ESOP Credit Document, the
ESOP or the Trust in any material respect that is adverse to the interests of
the Collateral Agent or the Lenders; PROVIDED that in no event shall the Company
permit any amendment or modification of the ESOP or the Trust (other than such
technical amendments or modifications requested by the I.R.S. which do not
affect (directly or indirectly) provisions of the ESOP or the Trust relating to
participation, contributions by the Company, allocation of Company Common Stock,
vesting of benefits, distributions or rights and options of participants and
beneficiaries under the ESOP) without the prior written consent of the Required
Lenders (which consent shall not be unreasonably withheld);
(c) amend, modify or waive in any respect any Subordinated Debt
Document, except amendments or modifications which (A) cure ambiguities, defects
or inconsistencies in such documents, (B) are made to comply with qualification
under the United States Trust Indenture Act of 1939, as amended, if applicable,
(C) provide for uncertificated rather than certificated securities thereunder or
(D) make, to the extent required by such Subordinated Debt Documents, any
Domestic Guarantor, or any Foreign Restricted Subsidiary that is a party to the
Subsidiary Guaranty, a guarantor of the Permitted Subordinated Indebtedness
issued pursuant to such Subordinated Debt Documents;
(d) amend, modify or waive the NME Purchase Agreement or any Tax
Sharing Agreement in any material respect; PROVIDED that, without the consent of
the Agent, the Company shall not waive any of the conditions under the NME
Purchase Agreement to its obligations to consummate all or any part of the NME
Acquisition; or
(e) amend, modify or change the Certificate of Incorporation
(including, without limitation, by the filing of any certificate of designation)
or By-Laws of the Company in any manner which the Agent reasonably determines to
be materially adverse to the interests of the Agent, the Collateral Agent or the
Lenders.
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8.12 CHANGES IN BUSINESS. The Company shall not, and shall not
permit any of its Subsidiaries to, enter into any business other than health
care or health care related businesses.
8.13 PLANS. The Company shall not, nor permit any member of its
ERISA Controlled Group to, (i) take any action which would increase the
aggregate Unfunded Accrued Benefits under all Plans to an amount in excess of
$30,000,000; (ii) cause or permit any Plan to (x) engage in any non-exempt
"prohibited transaction" as such term is defined in Section 4975 of the Code or
Section 406 of ERISA which could result in a material liability for the Company
or any member of its ERISA Controlled Group or (y) incur any material
"accumulated funding deficiency," as such term is defined in Section 412 of the
Code or Section 302 of ERISA, whether or not waived; (iii) terminate any ERISA
Plan in a manner or take any other action which could result in the imposition
of a Lien on the assets of the Company under Title IV of ERISA in excess of
$5,000,000; or (iv) establish or maintain any Plan other than such Plans set
forth on Schedule 6.10 hereto without the prior written consent of the Required
Lenders (which consent shall not be unreasonably withheld).
8.14 ADDITIONAL NEGATIVE PLEDGES. The Company shall not, and shall
not permit any of its Restricted Subsidiaries to, create or otherwise cause or
suffer to exist or become effective, directly or indirectly, any prohibition or
restriction on the creation or existence of any Lien upon any asset of the
Company or any of its Restricted Subsidiaries, other than pursuant to (i) the
Transaction Documents, (ii) the terms of any Subordinated Debt Documents or any
instrument evidencing Indebtedness of Restricted Subsidiaries existing on the
Closing Date that is disclosed on Schedule 8.7(e) hereto (and specifically
identified on such Schedule 8.7(e) as containing such a prohibition or
restriction), (iii) any requirement of applicable law or any regulatory
authority having jurisdiction over the Company or its Restricted Subsidiaries,
and (iv) any agreement, instrument or other document pursuant to which any
Indebtedness permitted under this Agreement is incurred (including, without
limitation, Indebtedness incurred in a permitted Sale/Leaseback Transaction) so
long as the
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prohibition or restriction extends only to assets or property financed by such
Indebtedness.
8.15 ACCOMMODATION OBLIGATIONS. (a) The Company shall not, and
shall not permit any of its Restricted Subsidiaries to, directly or indirectly,
create or become or be liable with respect to any Accommodation Obligation other
than: (i) guaranties resulting from endorsement of negotiable instruments for
collection in the ordinary course of business; (ii) any guaranty of the
Obligations of the Company by any Restricted Subsidiary and any guaranty of the
Obligations of any Restricted Subsidiary by the Company or any other Restricted
Subsidiary; (iii) unsecured obligations, warranties and indemnities, not
relating to Indebtedness of any Person, which have been or are undertaken or
made pursuant to the requirements of the Transaction Documents and, so long as
the same would continue to be Permitted Subordinated Indebtedness after giving
effect thereto, unsecured subordinated guaranties by the Company's Restricted
Subsidiaries of Permitted Subordinated Indebtedness; (iv) unsecured
Accommodation Obligations of the Company in existence on the Closing Date with
respect to any Indebtedness of any of its Restricted Subsidiaries permitted by
Section 8.7(e) to the extent such Indebtedness is indicated on such Schedule as
being so guaranteed on the Closing Date, and any unsecured guaranty by the
Company of any permitted refinancing of such guarantied Indebtedness or any
fixed-rate notes or bonds into which the Charleston Variable Rate Notes are
converted in accordance with terms thereof, (v) Accommodation Obligations of the
Company and its Restricted Subsidiaries in existence on the Closing Date to the
extent such Accommodation Obligations are disclosed on Schedule 8.15 hereto;
(vi) Accommodation Obligations of the Company and its Restricted Subsidiaries
incurred in the ordinary course of business (including, without limitation,
guaranties of income and loans for physicians and other healthcare professionals
associated or to be associated with Facilities, and indemnities of directors and
officers of the Company and its Restricted Subsidiaries in connection with their
service as such); (vii) Accommodation Obligations made by the Company and its
Restricted Subsidiaries in the ordinary course of business in
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respect of any obligation or liability of a Restricted Subsidiary (other than
Indebtedness) incurred in the ordinary course of business (including, without
limitation, indemnification obligations which are customary in any transaction
permitted hereunder); (viii) any guaranty by: (A) the Company of Indebtedness
of any Domestic Guarantor, (B) any Domestic Guarantor of Indebtedness of any
other Domestic Guarantor, and (C) any Foreign Wholly-Owned Restricted Subsidiary
of Indebtedness of any other Foreign Wholly-Owned Subsidiary; and (ix) any
guaranty by the Company or any Domestic Guarantor of Indebtedness and other
obligations of any other type of Restricted Subsidiary or any Unrestricted
Subsidiary, to the extent that such guaranty (A) would be at the time of the
making thereof a permitted Investment pursuant to Section 8.8 if it were a cash
Investment in the Person whose Indebtedness and other obligations is being
guaranteed, and (B) such guaranty reduces the amounts of cash Investments
permitted to be made by the Company and its Domestic Subsidiaries in such Person
pursuant to Section 8.8 by an amount equal to the outstanding principal amount
of the Indebtedness and other obligations guaranteed thereby.
(b) Except to the extent otherwise permitted by Section 8.15(a),
the Company shall not permit any of its Unrestricted Subsidiaries to incur or
suffer to exist any Indebtedness or other obligations unless (i) such
Indebtedness is without recourse (by law and contract) to the Company, its
Restricted Subsidiaries and their respective assets, and (ii) prior to the
incurrence by an Unrestricted Subsidiary of any such Indebtedness, the Company,
if (A) such Indebtedness has an original principal amount of $2,500,000 or more,
or (B) prior to or after giving effect to the incurrence of such Indebtedness,
the aggregate amount of all such Indebtedness having, individually, an
outstanding principal amount of less than $2,500,000 would exceed $10,000,000,
delivers to the Agent a legal opinion reasonably acceptable to the Agent to the
effect that, subject to customary qualifications and exceptions, such
Indebtedness is without recourse as provided herein.
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Section 9. EVENTS OF DEFAULT. Upon the occurrence of any of the
following specified events (each an "Event of Default"):
9.1 PAYMENTS. The Company shall default in the payment (a) when due
of any principal of any Loan (including, without limitation, any Swingline
Borrowing that is not repaid by a Revolving Loan pursuant to Section 1.4), (b)
within two Business Days of when due, of any reimbursement obligation in respect
of the honoring of any drawing under any Letter of Credit, any interest on any
principal of any Loans or any Commitment Commission or Letter of Credit
commission, or (c) any other fees or amounts of any nature whatsoever owing by
the Company or any other Credit Party hereunder or under any other Credit
Document (other than those referred to in the preceding clauses (a) and (b)) is
not paid by the Company or such Credit Party within 15 Business Days after the
receipt by the Company or such Credit Party of a written demand thereof from any
Lender; or
9.2 REPRESENTATIONS, ETC. Any representation, warranty or statement
made or deemed made by the Company or any other Credit Party or any of their
respective officers herein or in any other Credit Document or in any certificate
delivered pursuant hereto or thereto shall prove to be untrue in any material
respect on the date as of which made or deemed made; or
9.3 COVENANTS. (a) The Company or any of its Restricted Subsidiaries
shall default in the due performance or observance by it of any term, covenant
or agreement contained in Section 7.1(f)(i), 7.5(a), 7.8, 7.9 or 8; or (b) the
Company or any of its Subsidiaries shall default in the due performance or
observance by it of any term, covenant or agreement (other than those referred
to in Sections 9.1 and 9.2 and clause (a) of this Section 9.3) contained in this
Agreement or any other Credit Document (other than those referred to in Section
9.7), and such default shall continue unremedied for a period of 30 days after
the earlier of (i) an executive officer of the Company obtaining actual
knowledge thereof and (ii) written notice thereof to the Company by the Agent or
any Lender; or
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9.4 DEFAULT UNDER OTHER AGREEMENTS. The Company or any of its
Restricted Subsidiaries shall default in the payment when due (subject to any
applicable grace period), whether by acceleration or otherwise, of any other
Indebtedness, in an individual outstanding principal amount of $12,500,000 or
more or items of Indebtedness having an aggregate outstanding principal amount
of $30,000,000 or more on a consolidated basis, of the Company or any of its
Restricted Subsidiaries or the Company or such Restricted Subsidiary shall
default in the performance or observance of any obligation or condition with
respect to any such Indebtedness or any other event shall occur or condition
shall exist if the effect of such default, event or condition is to accelerate
the maturity of any such Indebtedness or to permit the holder or holders
thereof, or any trustee or agent for such holders, to cause such Indebtedness to
become due and payable prior to its stated maturity or any such Indebtedness
shall become due and payable prior to its stated maturity; or
9.5 BANKRUPTCY, ETC. The Company or any of its Restricted
Subsidiaries, including, without limitation, any Subsidiary Borrower, shall
commence a voluntary case concerning itself under Title 11 of the United States
Code entitled "Bankruptcy" as now or hereafter in effect, or any successor
thereto (the "Bankruptcy Code"); or an involuntary case is commenced against the
Company or any of its Restricted Subsidiaries, including, without limitation,
any Subsidiary Borrower, and the petition is not dismissed within 60 days, after
commencement of the case; or a custodian (as defined in the Bankruptcy Code) is
appointed for, or takes charge of, all or any substantial part of the property
of the Company or any of its Restricted Subsidiaries, or the Company or any of
its Restricted Subsidiaries commences any other proceedings under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to the Company or any of its Restricted
Subsidiaries, or there is commenced against the Company or any of its Restricted
Subsidiaries any such proceeding which remains undismissed for a period of 60
days, or the Company or any of its Restricted Subsidiaries is adjudi-
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cated insolvent or bankrupt; or any order of relief or other order approving any
such case or proceeding is entered; or the Company or any of its Restricted
Subsidiaries suffers any appointment of any custodian or the like for it or any
substantial part of its property to continue undischarged or unstayed for a
period of 60 days; or the Company or any of its Restricted Subsidiaries makes a
general assignment for the benefit of creditors; or the Company or any of its
Restricted Subsidiaries shall fail to pay, or shall state that it is unable to
pay, or shall be unable to pay, its debts generally as they become due; or the
Company or any of its Restricted Subsidiaries shall call a meeting of its
creditors with a view to arranging a composition or adjustment of its debts; or
the Company or any of its Restricted Subsidiaries shall by any act or failure to
act indicate its consent to, approval of or acquiescence in any of the
foregoing; or any corporate action shall be taken by the Company or any of its
Restricted Subsidiaries for the purpose of effecting any of the foregoing; or
9.6 ERISA. (i) Any Termination Event with respect to an ERISA Plan
shall occur which could result in the imposition of a Lien on the assets of the
Company under Title IV of ERISA in excess of $5,000,000, or (ii) any Plan shall
incur a material "accumulated funding deficiency" (as defined in Section 412 of
the Code or Section 302 of ERISA) whether or not waived, or (iii) the Company or
a member of its ERISA Controlled Group or any fiduciary with respect to a Plan
shall have engaged in a non-exempt prohibited transaction under Section 4975 of
the Code or Section 406 of ERISA which could result in the imposition of a
material liability on the Company or any member of its ERISA Controlled Group,
or (iv) the Company or any member of its ERISA Controlled Group shall fail to
pay when due a material amount which it shall have become liable to pay to the
PBGC, a Plan or a trust established under Title IV of ERISA, or (v) a condition
shall exist by reason of which the PBGC would be entitled to obtain a decree
adjudicating that an ERISA Plan must be terminated or have a trustee appointed
to administer such Plan, and the liabilities under such Plan are material, or
(vi) a material Lien shall be imposed on any assets of the Company or a member
of its ERISA Controlled Group
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in favor of the PBGC or a Plan, or (vii) the Company or a member of its ERISA
Controlled Group shall suffer a partial or complete withdrawal from a
Multiemployer Plan which withdrawal presents a material risk of the imposition
of withdrawal liability in excess of $10,000,000 or shall be in "default" (as
defined in Section 4219(c)(5) of ERISA) with respect to payments of more than
$5,000,000 to a Multiemployer Plan resulting from the Company's or a member of
its ERISA Controlled Group's complete or partial withdrawal (as described in
Section 4203 or 4205 of ERISA) from such Plan; or
9.7 SECURITY DOCUMENTS; SUBSIDIARY GUARANTY. (a) The Subsidiary
Guaranty, the Company Guaranty or any Security Document shall for any reason
cease to be in full force and effect, or the Security Documents shall cease to
give the Collateral Agent for the benefit of the Lenders the Liens, rights,
powers and privileges intended to be created thereby (including, without
limitation, with respect to the Security Documents (other than the FINCO Pledge
and Security Agreements in accordance with the terms thereof), a perfected
security interest in, and Lien on, all of the Collateral in favor of the
Collateral Agent for the benefit of the Lenders to the extent contemplated
therein), (b) any Credit Party shall default in the due performance or
observance of any material term, covenant or agreement on its part to be
performed or observed pursuant to the Subsidiary Guaranty, the Company Guaranty
or any Security Document and such default shall continue for a period of 30 days
following the earlier of (i) the date on which an executive officer of the
Company obtains actual knowledge thereof and (ii) the date on which the Agent or
any Lender gives notice to the Company of the existence of such default, or (c)
any Credit Party shall contest in any manner that the Subsidiary Guaranty, the
Company Guaranty or any Security Document to which it is a party constitutes its
valid and enforceable agreement or any Credit Party shall assert in any manner
that it has no further obligation or liability under the Subsidiary Guaranty,
Company Guaranty or any Security Document to which it is a party; PROVIDED that
to the extent any Credit Party has been released from the Subsidiary Guaranty,
Company Guaranty or any Security
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Document the foregoing will not constitute an Event of Default to the extent the
same relates to such Credit Party and such agreement; or
9.8 SUBSIDIARY CREDIT AGREEMENT. An Event of Default (as defined
therein) shall have occurred under the Subsidiary Credit Agreement; or
9.9 JUDGMENTS. One or more judgments or orders for the payment of
money (to the extent not covered by insurance) in an amount in excess of
$7,500,000, individually or in the aggregate, shall be rendered against the
Company or any of its Restricted Subsidiaries and such judgment(s) or order(s)
shall continue undischarged for a period of 30 days during which execution shall
not be effectively stayed, bonded or deferred (whether by action of a court, by
agreement or otherwise); or
9.10 CHANGE OF CONTROL. (i) The sale, lease, transfer or other
disposition in one or more related transactions of all or substantially all of
the Company's assets, or the sale of substantially all of the Company's stock or
assets of the Company's Subsidiaries that constitute a sale of substantially all
of the Company's assets, to any person or group (as such term is used in Section
13(d) (3) of the Exchange Act), (ii) the merger or consolidation of the Company
with or into another corporation, or the merger of another corporation into the
Company or any other transaction, with the effect, in any such case, that the
stockholders of the Company immediately prior to such transaction hold less than
50% of the total voting power entitled to vote in the election of directors,
managers or trustees of the surviving corporation or, in the case of a
triangular merger in which the Company becomes a wholly-owned Subsidiary of
another corporation, the parent corporation of the surviving corporation
resulting from such merger, consolidation or such other transaction, (iii) any
person (except for the parent corporation of the surviving corporation in a
triangular merger) or group acquires beneficial ownership of a majority in
interest of the voting power or voting stock of the Company or, in the case of a
triangular merger, the parent corporation of the surviving corporation of such
merger, or (iv) the liquidation or dissolution of the Company;
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then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Agent may, and, upon the written request of the
Required Lenders, shall, by written notice to the Company, take any or all of
the following actions, without prejudice to the rights of the Agent, the Co-
Agent, the Collateral Agent, any Lender or the holder of any Note to enforce its
claims against the Company or any other Credit Party (provided, that, if an
Event of Default specified in Section 9.5 shall occur with respect to the
Company or any other Credit Party or an Event of Default specified in Section
9.8 shall occur with respect to the Subsidiary Credit Agreement and the
Indebtedness thereunder shall have been accelerated, the result which would
occur upon the giving of written notice by the Agent to the Company as specified
in clauses (i) and (ii) below shall occur automatically without the giving of
any such notice): (i) declare the Total Revolving Loan Commitment terminated,
whereupon the Revolving Loan Commitment of each Lender shall forthwith terminate
immediately and all accrued Commitment Commission shall forthwith become due and
payable without any other notice of any kind; (ii) declare the principal of and
any accrued interest in respect of all Loans PLUS an amount equal to the maximum
amount which would be available at any time to be drawn under all Letters of
Credit then outstanding (whether or not any beneficiary under any Letter of
Credit shall have presented, or shall be entitled at such time to present, the
drafts or other documents required to draw under such Letter of Credit), and all
obligations owing hereunder and under the other Credit Documents, to be,
whereupon the same shall become, forthwith due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Company; and (iii) exercise any rights or remedies in its capacity as
Collateral Agent under the Security Documents. So long as any Letter of Credit
shall remain outstanding, any amounts described in clause (ii) above with
respect to Letters of Credit, when received by the Agent shall be deposited in
the L/C Cash Collateral Account as cash collateral for the obligations of the
Company under Section 2 in the event of any drawing under a Letter of Credit,
and upon drawing under any outstanding Letter of Credit in respect of which the
Agent has
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deposited in the L/C Cash Collateral Account any amounts described in clause
(ii) above, the Agent shall pay such amounts held in the L/C Cash Collateral
Account to the L/C Banks to reimburse the L/C Banks for the amount of such
drawing.
Section 10. DEFINITIONS. As used herein, the following terms shall
have the meanings herein specified unless the context otherwise requires.
Defined terms in this Agreement shall include in the singular number the plural
and in the plural number the singular:
"ACCOMMODATION OBLIGATION" as applied to any Person, shall mean any
obligation of such Person guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other obligations ("primary obligations") of
any other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent, (a) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (b) to advance or
supply funds (i) for the purchase or payment of any such primary obligation or
(ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (c) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (d) otherwise to assure or hold
harmless the owner of such primary obligation against loss in respect thereof.
The amount of any Accommodation Obligation shall be deemed to be an amount equal
to the stated or determinable amount of the primary obligation in respect of
which such Accommodation Obligation is made or, if not stated or determinable,
the maximum reasonably anticipated liability in respect thereof (assuming such
Person is required to perform thereunder) as determined by such Person in good
faith.
"ACCUMULATED EXCESS CASH FLOW" shall mean (a) for any date of
determination occurring prior to the date of the delivery to the Lenders of the
financial statements required by Section 7.1(b) for the Company's 1994 fiscal
year, zero, and (b) for
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any date of determination occurring on or after such date of delivery, the total
of (i) the Core EBITDA for the period from and excluding the last day of the
month in which the Closing Date occurs to and including the last day of the
Company's most recently ended fiscal year for which audited financial statements
of the Company and its Subsidiaries have been delivered to the Lenders, PLUS
(ii) unless the same is required to be used to prepay Obligations pursuant to
Section 4.2(b), 75% of the Net Proceeds received by the Company in Cash from the
issuance of its capital stock and similar equity securities (other than any
Permitted Subordinated Indebtedness convertible into the capital stock of the
Company) during the period from and excluding the last day of the month in which
the Closing Date occurs through but including such date of determination, MINUS
(iii) the sum, without duplication, of (A) Total Interest Expense of the Company
and its Restricted Subsidiaries on a consolidated basis, (B) all Maintenance
Capital Expenditures actually made by the Company and its Restricted
Subsidiaries, (C) scheduled mandatory repayments and voluntary prepayments of
Indebtedness of the Company and its Restricted Subsidiaries (other than (1)
voluntary prepayments of revolving loans that are not made in connection with a
reduction of the commitment applicable thereto, and (2) scheduled mandatory
reductions of a revolving loan commitment to the extent a cash repayment of the
Indebtedness incurred pursuant thereto is not required to be made in connection
with such reduction), (D) income taxes paid in cash by the Company and its
Restricted Subsidiaries, (E) expenditures made by the Company and its Restricted
Subsidiaries in connection with Facility Acquisitions, (F) Investments made by
the Company and its Restricted Subsidiaries in Persons other than Domestic
Guarantors, (G) cash dividends paid by the Company and amounts paid by the
Company to repurchase any of its capital stock or similar equity securities, and
(H) amounts paid by the Company or any of its Restricted Subsidiaries to repay,
repurchase, redeem or defease all or any portion of any Permitted Subordinated
Indebtedness of the Company or any of its Restricted Subsidiaries; in each case
for the period from but excluding the last day of the month in which the Closing
Date occurs to and including such date of determination; PROVIDED that clauses
(C) and (H)
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above shall not include repayments or prepayments of such Indebtedness with the
proceeds of refinancings thereof permitted by this Agreement.
"ACQUIRED NME FACILITIES EBITDA" shall mean, for any period, the sum
of the respective "EBITDA's" of each Facility acquired by the Company or the
Domestic Guarantors pursuant to the NME Purchase Agreement during such period,
determined, for each such Facility (a) for the portion of such period that
precedes the date on which such Facility was so acquired, and (b) in accordance
with the following provisions of this definition. For purposes of the
foregoing, (i) each such Facility shall be deemed to have been so acquired as of
the end of the month in which it was so acquired, and (ii) the "EBITDA" of any
such Facility for the portion of such period described in the foregoing clause
(a) shall be deemed to be the sum of the respective amounts listed for such
Facility as such Facility's "EBITDA" on Schedule 10.1(a) for each month that
occurs during such portion of such period. In the event that a month which
occurs during such portion of such period is not listed for any such Facility on
Schedule 10.1(a), the "EBITDA" of such Facility for such month shall be
calculated on the basis of the actual results of operations of such Facility for
such month and in a manner consistent with the calculations of the "EBITDA's"
listed on such Schedule for such Facility; PROVIDED that, in the event such
results of operations have not been made available in writing to the Lenders in
reasonable detail at least five Business Days prior to the date of determination
of Acquired NME Facilities EBITDA, the "EBITDA" of such Facility for such month
shall be deemed to be the EBITDA listed on Schedule 10.1(a) hereto for the
corresponding month in the prior year.
"ADJUSTED CERTIFICATE OF DEPOSIT RATE" shall mean, on any day, the sum
(rounded to the nearest 1/100 of 1%) of (a) the rate obtained by dividing (i)
the most recent weekly average dealer offering rate for negotiable certificates
of deposit with a three-month maturity in the secondary market as published in
the most recent Federal Reserve System publication entitled "Select Interest
Rates," published weekly on Form H.15 as of the date hereof, or if such
publication or a substitute
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containing the foregoing rate information shall not be published by the Federal
Reserve System for any week, the weekly average offering rate determined by the
Agent on the basis of quotations for such certificates received by it from three
certificate of deposit dealers in New York of recognized standing or, if such
quotations are unavailable, then on the basis of other sources reasonably
selected by the Agent, by (ii) a percentage equal to 100% minus the stated
maximum rate of all reserve requirements as specified in Regulation D applicable
on such day to a three-month certificate of deposit of a member bank of the
Federal Reserve System in excess of $100,000 (including, without limitation, any
marginal, emergency, supplemental, special or other reserves), plus (b) the then
daily net annual assessment rate as estimated by the Agent for determining the
current annual assessment payable by the Agent to the Federal Deposit Insurance
Corporation for insuring three-month certificates of deposit.
"ADJUSTED PERCENTAGE" shall mean (a) at a time when no Lender Default
exists, for each Lender such Lender's Revolving Loan Percentage, and (b) at a
time when a Lender Default exists (i) for each Lender that is a Defaulting
Lender, zero, and (ii) for each Lender that is a Non-Defaulting Lender, the
percentage determined by dividing such Lender's Unrestricted Revolving Loan
Commitment at such time by the Adjusted Total Revolving Loan Commitment at such
time, it being understood that all references herein to the Unrestricted
Revolving Loan Commitments and the Adjusted Total Revolving Loan Commitment at a
time when the Total Revolving Loan Commitment or the Adjusted Total Revolving
Loan Commitment, as the case may be, has been terminated shall be references to
the Unrestricted Revolving Loan Commitments or the Adjusted Total Revolving Loan
Commitment, as the case may be, in effect immediately prior to such termination;
PROVIDED that (A) no Lender's Adjusted Percentage shall change upon the
occurrence of a Lender Default from that in effect immediately prior to such
Lender Default if after giving effect to such Lender Default, and any repayment
of the Revolving Loans at such time pursuant to Section 4.2(e) or otherwise, the
sum of (1) the aggregate outstanding principal amount of the Revolving Loans
made by all the Non-Defaulting Lenders, (2) the aggregate amount of
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Subsidiary Credit Extensions of all the Non-Defaulting Lenders, (3) the
aggregate outstanding principal amount of Swingline Borrowings (without
duplication of any Revolving Loan made with respect thereto pursuant to Section
1.4), and (4) the aggregate Letter of Credit Outstandings, exceed the Adjusted
Total Revolving Loan Commitment; (B) the changes to the Adjusted Percentage that
would have become effective upon the occurrence of a Lender Default but that did
not become effective as a result of the preceding clause (A) shall become
effective on the first date after the occurrence of the relevant Lender Default
on which the sum of the amounts described in clauses (1) through (4) of such
clause (A) is equal to or less than the Adjusted Total Revolving Loan
Commitment; and (C) if (1) a Non-Defaulting Lender's Adjusted Percentage is
changed pursuant to the preceding clause (B), and (2) any repayment of any
Swingline Borrowing or any of such Lender's Revolving Loans or Subsidiary Loans
or any reimbursement of any honoring of any drawings with respect to Letters of
Credit or Subsidiary Letters of Credit, in each case that were made by the
Company or any other Credit Party during the period commencing after the date of
the relevant Lender Default and ending on the date of such change to its
Adjusted Percentage, must be returned or paid to the Company, any other Credit
Party or any other Person as a preferential or similar payment in any bankruptcy
or similar proceeding of the Company or such Credit Party, then the change to
such Non-Defaulting Lender's Adjusted Percentage effected pursuant to said
clause (B) shall be reduced to that positive change, if any, as would have been
made to its Adjusted Percentage if (x) such repayments or reimbursements had not
been made, and (y) the maximum change of its Adjusted Percentage would have
resulted in the sum of the outstanding principal amount of Revolving Loans and
Subsidiary Loans made by such Lender plus such Lender's new Adjusted Percentage
of the outstanding principal amount of Swingline Borrowings, Letter of Credit
Outstandings and Subsidiary Letter of Credit Outstandings equalling such
Lender's Revolving Loan Commitment at such time.
"ADJUSTED TOTAL REVOLVING LOAN COMMITMENT" shall mean, at any time,
the sum of each Non-
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Defaulting Lender's Unrestricted Revolving Loan Commitments at such time.
"AFFILIATE" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all directors
and executive officers of such Person), controlled by or under direct or
indirect common control with such Person. A Person shall be deemed to control a
corporation if such Person possesses, directly or indirectly, the power (a) to
vote 10% or more of the securities having ordinary voting power for the election
of directors of such corporation or (b) to direct or cause the direction of the
management and policies of such corporation, whether through the ownership of
voting securities, by contract or otherwise; PROVIDED that the term Affiliate
shall not include the ESOP or the ESOP Trustee.
"AGENT" shall have the meaning provided in the first paragraph of this
Agreement.
"AGREEMENT" shall mean this Second Amended and Restated Credit
Agreement, as the same may hereafter be amended, restated, supplemented or
otherwise modified from time to time in accordance with its terms.
"APPLICABLE MARGIN" shall have the meaning provided in Section 1.8(c).
"ASSET SALE" shall mean each sale, lease, conveyance or other
disposition or transfer (including, without limitation, Sale/Leaseback
Transactions) by the Company or any of its Restricted Subsidiaries of assets
(including capital stock of another Restricted Subsidiary or any other Person
that is owned by the Company or any such Restricted Subsidiary) (a) having,
individually, a fair market value in excess of $1,000,000 or (b) having, in the
aggregate, during any fiscal year of the Company, a fair market value in excess
of $5,000,000 (aggregating for purposes of this clause (b), such sales, or
series of related sales, leases and other dispositions, of assets having a fair
market value in excess of $200,000 and less than or equal to $1,000,000);
PROVIDED that in the case of clause (b), only such portion of such value in
excess of
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$5,000,000 shall be subject to Sections 4.2(a) and 4.2(c); PROVIDED FURTHER,
that Asset Sales shall not include (i) the sale of Cash, Cash Equivalents or
Investments permitted by Section 8.8(l), (ii) payments on or in respect of non-
Cash proceeds of Asset Sales that are notes or similar instruments or any sale
or other disposition of any such notes or similar instruments, (iii)
contributions of Facilities permitted by Section 8.8 hereof, (iv) sales, leases
and other dispositions of assets by the Company to any Domestic Guarantor or by
any Domestic Guarantor to the Company or any other Domestic Guarantor, (v)
sales, leases and other dispositions of assets by any Foreign Restricted
Subsidiary to another Foreign Restricted Subsidiary, (vi) leases permitted by
Section 8.2, and (vii) the sale or issuance by the Company of any of its capital
stock or any warrants, options or other rights to purchase or acquire any shares
of capital stock of the Company (subject to compliance with Sections 4.2(b) and
4.2(c)).
"BANKRUPTCY CODE" shall have the meaning provided in Section 9.5.
"BASE CORE EBITDA" shall mean, for any period, the total of (a)
consolidated EBITDA of the Company and the Domestic Guarantors for such period,
excluding, to the extent included therein, the income (or loss) of any Person
(other than a Domestic Guarantor) in which the Company or any Domestic Guarantor
has an ownership interest, whether or not any such income has been actually
received by the Company or any Domestic Guarantor in the form of dividends or
similar distributions, MINUS (b) the excess, if any, of (i) income taxes paid by
the Company or any Domestic Guarantor during such period in respect of its PRO
RATA share of any Subsidiary's (other than a Wholly-Owned Restricted
Subsidiary's) Net Income, over (ii) the amount of distributions made by such
Subsidiary to the Company or any Domestic Guarantor during such period, PLUS,
without duplication, (c) the Acquired NME Facilities EBITDA, if any.
"BASE LENDING RATE" shall mean, at any particular date, the higher of
(a) the rate of interest publicly announced by BTCo in New York, New York from
time to time as its prime lending
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rate, as in effect from time to time, (b) the rate that is 1/2 of 1% in excess
of the Adjusted Certificate of Deposit Rate, and (c) the rate that is 1/2 of 1%
in excess of the Federal Funds Rate. The prime lending rate is a reference rate
and does not necessarily represent the lowest or best rate actually charged to
any customer. BTCo may make commercial loans or other loans at rates of
interest at, above or below the prime lending rate.
"BASE RATE LOANS" shall mean Loans (other than the unreimbursed
portion of the principal of any outstanding Swingline Borrowing) bearing
interest at rates based on the Base Lending Rate.
"BORROWING" shall mean the incurrence of one Type of Loan from all of
the Lenders funding such Loan on a given date (or resulting from conversions or
continuations on a given date), having in the case of Eurodollar Loans the same
Interest Period (except as otherwise provided in Section 1.10), and shall
include, unless specified to the contrary, a Swingline Borrowing.
"BTCO" shall mean Bankers Trust Company in its individual capacity,
and not in its capacity as Agent.
"BUSINESS DAY" shall mean (a) for all purposes other than as covered
by clause (b) below, any day excluding Saturday, Sunday and any day which shall
be in the City of New York a legal holiday or a day on which banking
institutions are authorized or required by law or other government actions to
close and (b) with respect to all notices and determinations in connection with,
and payments of principal and interest on, Eurodollar Loans, any day which is a
Business Day described in clause (a) and which is also a day for trading by and
between banks in Dollar deposits in the interbank Eurodollar market.
"CASH" shall mean money, currency or a credit balance in a Deposit
Account.
"CASH EQUIVALENTS" shall mean (a) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency,
instrumentality or sponsored corporation
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thereof which are rated at least A or the equivalent thereof by Standard &
Poor's Corporation or at least A2 or the equivalent thereof by Moody's Investors
Service, Inc., and in each case having maturities of not more than one year from
the date of acquisition, (b) time deposits and certificates of deposit of any
Lender or any domestic commercial bank of recognized standing having capital and
surplus in excess of $300,000,000 with maturities of not more than one year from
the date of acquisition, (c) repurchase obligations with a term of not more than
seven days for underlying securities of the types described in clause (a) above
entered into with any Lender or any bank meeting the qualifications specified in
clause (b) above or any government securities dealer, and (d) commercial paper
rated at least A-1 or the equivalent thereof by Standard & Poor's Corporation or
at least P-1 or the equivalent thereof by Moody's Investors Service, Inc. and in
each case maturing within one year after the date of acquisition.
"CHARLESTON VARIABLE RATE NOTES" shall mean the Variable Rate Notes
issued by Charleston County, South Carolina.
"CLINICAL SERVICES UNIT" shall mean Group Practice Affiliates, Inc., a
Delaware corporation and a Subsidiary of the Company, and its Subsidiaries.
"CLOSING DATE" shall mean the date of the initial Subsidiary Borrowing
under the Subsidiary Credit Agreement, which date shall be between and including
May 2, 1994 and September 30, 1994, unless otherwise consented to by the
Required Lenders.
"CO-AGENT" Shall have the meaning provided in Section 11.1.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COLLATERAL" shall mean all of the collateral from time to time
subject to, and as more fully described in each of, the Security Documents.
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"COLLATERAL ACCOUNTS ASSIGNMENT AGREEMENT" shall have the meaning
provided in Section 5.1(e).
"COLLATERAL AGENT" shall mean BTCo as collateral agent for the Lenders
and the L/C Banks pursuant to the Security Documents, and any successor thereto.
"COMMITMENT COMMISSION" shall have the meaning provided in Section
3.1(a).
"COMPANY" shall have the meaning provided in the first paragraph of
this Agreement.
"COMPANY COMMON STOCK" shall mean the common stock, $0.25 par value
per share, of the Company.
"COMPANY/ESOP CREDIT AGREEMENTS" shall mean, collectively, the
Company/ESOP Mirror Credit Agreement and the Company/ESOP Non-Mirror Credit
Agreement.
"COMPANY/ESOP CREDIT DOCUMENTS" shall mean, collectively, the (i)
Company/ESOP Credit Agreements, (ii) Company/ESOP Notes and (iii) Company/ESOP
Pledge Agreements.
"COMPANY/ESOP LOANS" shall mean, collectively, the Company/ESOP Mirror
Loan and the Company/ESOP Non-Mirror Loan.
"COMPANY/ESOP MIRROR CREDIT AGREEMENT" shall mean the credit agreement
executed and delivered in connection with the Original Credit Agreement between
the Company and the Trust, as amended by a First Amendment, dated July 21, 1992
and a Second Amendment dated the date hereof, upon the terms and conditions of
which the Company made a loan, in the aggregate principal amount of
$275,000,000, to the Trust which enabled the Trust to purchase shares of the
Company's common stock from certain Persons, as it may be amended from time to
time to conform to the requirements of changes in ERISA, the Code or the rules
and regulations promulgated under either thereof, or as amended in accordance
with the Existing Company Credit Agreement and this Agreement.
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"COMPANY/ESOP MIRROR LOAN" shall mean the loan made by the Company to
the Trust pursuant to the Company/ESOP Mirror Credit Agreement.
"COMPANY/ESOP MIRROR NOTE" shall mean the promissory note dated
September 1, 1988, as amended by a First Amendment dated July 21, 1992 and a
Second Amendment dated the date hereof, evidencing the Company/ESOP Mirror Loan,
as it may be amended from time to time to conform to the requirements of changes
in ERISA, the Code or the rules and regulations promulgated under either
thereof, or as amended in accordance with the Existing Company Credit Agreement
and this Agreement.
"COMPANY/ESOP NON-MIRROR CREDIT AGREEMENT" shall mean the credit
agreement dated September 1, 1988, as amended by a First Amendment dated July
21, 1992 and a Second Amendment dated the date hereof, between the Company and
the Trust upon the terms and conditions of which the Company made a loan, in the
aggregate principal amount of $80,000,000, to the Trust which enabled the Trust
to purchase shares of Company common stock from certain Persons, as it may be
amended from time to time to conform to the requirements of changes in ERISA,
the Code or the rules and regulations promulgated under either thereof, or as
amended in accordance with the Existing Company Credit Agreement and this
Agreement.
"COMPANY/ESOP NON-MIRROR LOAN" shall mean the loan made by the Company
to the Trust pursuant to the Company/ESOP Non-Mirror Credit Agreement.
"COMPANY/ESOP NON-MIRROR NOTE" shall mean the promissory note,
originally dated February 15, 1990, as amended by a First Amendment dated July
21, 1992, as restated by the Second Amended and Restated Non-Recourse
Company/ESOP Non-Mirror Tranche B Note dated September 22, 1992, and as amended
by a First Amendment dated the date hereof, evidencing the Company/ESOP Non-
Mirror Loan, as it may be amended from time to time to conform to the
requirements of changes in ERISA, the Code or the rules and regulations
promulgated under either thereof, or as amended in accordance with the Existing
Company Credit Agreement and this Agreement.
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"COMPANY/ESOP NOTES" shall mean, collectively, the Company/ESOP Mirror
Note and the Company/ESOP Non-Mirror Note.
"COMPANY/ESOP PLEDGE AGREEMENTS" shall mean the pledge agreements (and
all amendments and restatements thereof) executed and delivered by the Trust to
the Company in connection with the Company/ESOP Non-Mirror Credit Agreement and
the Company/ESOP Mirror Credit Agreement.
"COMPANY GUARANTY" shall mean a second amended and restated guaranty
agreement, substantially in the form of Exhibit C-2 to the Subsidiary Credit
Agreement, as such agreement may hereafter be amended, restated, supplemented or
otherwise modified from time to time in accordance with the terms thereof.
"COMPANY PLEDGE AND SECURITY AGREEMENT" shall have the meaning
provided in Section 5.1(d).
"COMPANY PLEDGE AND SECURITY AGREEMENT (ESOP)" shall have the meaning
provided in Section 5.1(d).
"COMPANY STOCK AND NOTES PLEDGE" shall have the meaning provided in
Section 5.1(c).
"CONTINUING LENDERS" shall mean each Existing Lender with a Commitment
under this Agreement (after giving effect to the consummation of the Existing
Company Credit Agreement Restructuring).
"CORE EBITDA" shall mean, for any period, the total of (a)
consolidated EBITDA of the Company and its Wholly-Owned Restricted Subsidiaries
for such period, excluding, to the extent included therein, the income (or loss)
of any Person (other than a Wholly-Owned Restricted Subsidiary) in which the
Company or any Wholly-Owned Restricted Subsidiary has an equity interest,
whether or not any such income has been actually received by the Company or any
Wholly-Owned Restricted Subsidiary in the form of dividends or similar
distributions, PLUS (b) to the extent the same does not exceed the product of
(i) the Net Income of the payor thereof for such period or for the immediately
preceding
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period and not previously received, and (ii) the Company's and its Wholly-Owned
Restricted Subsidiaries aggregate percentage ownership interest therein, cash
dividends and other cash distributions of profits and capital received in such
period by the Company and its Wholly-Owned Restricted Subsidiaries from (i)
Unrestricted Subsidiaries, (ii) joint ventures which are not Subsidiaries, and
(iii) other Restricted Subsidiaries, MINUS (c) the Company's and its Wholly-
Owned Restricted Subsidiaries' PRO RATA share of net losses of Unrestricted
Subsidiaries and other Restricted Subsidiaries for such period PLUS, without
duplication, (d) the Acquired NME Facilities EBITDA, if any.
"CORE INDEBTEDNESS" shall mean, as of any date of determination, the
sum, without duplication, of (a) the Indebtedness of the Company and its Wholly-
Owned Restricted Subsidiaries on a consolidated basis (including unused portions
of the Total Revolving Loan Commitment as then in effect, but only to the extent
the amount of such unused portion exceeds the Restricted Commitment Amount, if
any), and (b) the summation of the product of (i) the Indebtedness of each other
Restricted Subsidiary, and (ii) the Company's direct or indirect equity interest
(expressed as a percentage) in such other Restricted Subsidiary.
"CREDIT DOCUMENTS" shall mean, collectively, this Agreement, each
Note, the Subsidiary Credit Agreement, each Subsidiary Note, the Company
Guaranty, each of the Security Documents, the Subsidiary Guaranty, each Letter
of Credit, and each Supplement and Subsidiary Letter of Credit (as such terms
are defined in the Subsidiary Credit Agreement). Each reference in this
Agreement or any of the other Credit Documents to any of the foregoing Credit
Documents shall be to such Credit Document as in effect on the Closing Date, and
as the same may thereafter be amended, restated, supplemented or otherwise
modified in accordance with the provisions hereof and thereof.
"CREDIT PARTIES" means, collectively, all of the Persons (other than
the Agent, the Co-Agent, the Collateral Agent and the Lenders (including,
without limitation, the L/C Banks)) which are a party to one or more of the
Credit Documents.
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"CURRENT ASSETS" shall mean, as at the date of determination, the
current assets of the Company and its Restricted Subsidiaries on a consolidated
basis determined in conformity with GAAP; PROVIDED that there shall be excluded
therefrom all Cash, Cash Equivalents and other marketable securities.
"CURRENT LIABILITIES" shall mean, as at the date of determination, the
current liabilities of the Company and its Restricted Subsidiaries determined on
a consolidated basis in conformity with GAAP; PROVIDED that there shall be
excluded therefrom all payments of principal due under the terms of any Funded
Debt of the Company and its Restricted Subsidiaries within 12 months after the
date of determination, all outstanding principal amounts of Loans and Subsidiary
Loans classified as notes payable or current maturities in accordance with GAAP,
and interest accrued and payable on or in respect of any Loan, Subsidiary Loan
or any Permitted Subordinated Indebtedness.
"DEBT REFINANCING" has the meaning provided in the second "Whereas"
clause to this Agreement.
"DEBT SERVICE COVERAGE TESTS" shall mean, with respect to any
applicable Subject Transaction, each of the following requirements:
(a) the ratio of the actual Core EBITDA (without giving effect to
such Subject Transaction or the use of the proceeds thereof) to the Total
Interest Expense (without giving effect to such Subject Transaction or the
use of the proceeds thereof), in each case for the 12-month period
preceding the Test Date applicable to the date on which such Subject
Transaction occurs, exceeds 3.0:1.0;
(b) the ratio of the Pro Forma Core EBITDA (after giving effect to
such Subject Transaction and in the case of a Subject Transaction pursuant
to Section 8.7 or 8.8, the use of the proceeds thereof), for the 12-month
period preceding the Test Date applicable to the date on which such Subject
Transaction occurs, to the Pro Forma Interest Charges
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(after giving effect to such Subject Transaction and, in the case of a
Subject Transaction pursuant to Section 8.7 or 8.8, the use of the proceeds
thereof), determined, in the case of such Pro Forma Interest Charges, as of
such Test Date, exceeds 3.0:1.0; and
(c) the ratios of Core Indebtedness (both before and after giving
effect to such Subject Transaction and, in the case of a Subject
Transaction pursuant to Section 8.7 or 8.8, the use of the proceeds
thereof) to Core EBITDA and Pro Forma Core EBITDA, respectively, for the
12-month period preceding the Test Date applicable to the date on which
such Subject Transaction occurs, is less than 4.0:1.0.
"DEFAULT" shall mean any event, act or condition which, with notice or
lapse of time, or both, would constitute an Event of Default.
"DEFAULTING LENDER" shall mean any Lender with respect to which a
Lender Default is in effect.
"DEFEASANCE AGREEMENT" shall mean the Deposit and Irrevocable Trust
Agreement dated as of the Closing Date among the Company, certain Subsidiaries
of the Company and Society National Bank, as trustee under the Existing
Subordinated Debentures Indenture, concerning the defeasance and redemption by
the Company of the Existing Subordinated Debentures.
"DEPOSIT ACCOUNT" shall mean a demand, savings, passbook, money market
or like account with a commercial bank, savings and loan association or like
organization or a government securities dealer, other than an account evidenced
by a negotiable certificate of deposit.
"DOLLARS" or "$" shall mean dollars of the United States of America.
"DOMESTIC GUARANTORS" shall mean each Domestic Wholly-Owned Restricted
Subsidiary (a) that is a party to each of the Subsidiary Guaranty, the
Subsidiary Stock and Notes Pledge and the Subsidiary Pledge and Security
Agreement, and (b) all
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of whose outstanding shares of capital stock, to the extent owned by the Company
or a Domestic Wholly-Owned Restricted Subsidiary, is pledged to the Collateral
Agent pursuant to the Stock and Note Pledges.
"DOMESTIC RESTRICTED SUBSIDIARY" shall mean each Restricted Subsidiary
that is a Domestic Subsidiary.
"DOMESTIC SUBSIDIARY" shall mean each Subsidiary of the Company which
is not a Foreign Subsidiary.
"DOMESTIC WHOLLY-OWNED RESTRICTED SUBSIDIARY" shall mean each Wholly-
Owned Restricted Subsidiary of the Company which is a Domestic Subsidiary.
"EBITDA" shall mean, for any Person and any specified Subsidiaries of
such Person, for any period, an amount equal to the total, determined for such
Person on a consolidated basis with such Subsidiaries in conformity with GAAP,
of (a) Net Income for such period, plus (to the extent deducted in computing
such Net Income), (b) the sum, without duplication, of (i) provisions for taxes
(including cash taxes paid for the benefit of William A. Fickling, Jr. pursuant
to the exercise of any stock options in the Company's 1994 fiscal year), (ii)
Total Interest Expense, (iii) depreciation and amortization (including excess
reorganization value), (iv) expenses accrued for contributions by the Company to
the ESOP that are deductible for federal income tax purposes, (v) stock option
expense, (vi) any loss from the early extinguishment of Indebtedness, (vii) any
loss, together with any related provision for income taxes, realized upon any
sale of assets other than in the ordinary course of business, (viii) any other
non-cash charges for items (other than accounts receivable) made in accordance
with GAAP, and (ix) any loss reported as an extraordinary item or as a change in
accounting principle under and in accordance with GAAP, MINUS (to the extent
included in computing such Net Income) (c) the sum, without duplication, of (i)
any gain resulting from the early extinguishment of Indebtedness, (ii) any
gains, together with related provisions for income
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taxes, realized upon any sale of assets other than in the ordinary course of
business, and (iii) any gain reported as an extraordinary item or as a change in
accounting principle under and in accordance with GAAP MINUS (d) any reversal of
reserves (other than accounts receivable) made during such period.
"ENVIRONMENTAL LAWS" means federal, state, local and foreign laws or
regulations, codes, plans, orders, decrees, judgments, injunctions, notices or
demand letters issued, promulgated, approved or entered thereunder relating to
pollution or protection of the environment, including, without limitation, laws
relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes into the environment (including, without limitation,
ambient air, surface water, ground water, land surface or subsurface strata) or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants, chemicals
or industrial, toxic or hazardous substances or wastes.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time. Section references to ERISA are to ERISA,
as in effect at the date of this Agreement and any subsequent provisions of
ERISA, amendatory thereof, supplemental thereto or substituted therefor.
"ERISA CONTROLLED GROUP" shall mean, when used with respect to a Plan,
ERISA, the PBGC or a provision of the Code pertaining to employee benefit plans,
a group consisting of any Person and all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control with such Person that, together with such Person, are treated as
a single employer under Sections 414(b), (c), (m), (n) and (o) of the Code.
"ERISA PERSON" when used with respect to a Plan, ERISA, the PBGC or a
provision of the Code pertaining to employee benefit plans, shall have
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the meaning set forth in Section 3(9) of ERISA for the term "Person."
"ERISA PLAN" shall mean (a) any Plan (i) that is not a Multiemployer
Plan and (ii) the fair market value of the assets of which is less than or equal
to 90% of the present value of all benefit liabilities, as defined in Section
4001(a)(16) of ERISA, all determined as of the then most recent annual valuation
date for such Plan (on the basis of assumptions prescribed by the PBGC for the
purpose of Section 4044 of ERISA), and (b) any Plan that is a Multiemployer
Plan.
"ESOP" means the Charter Medical Corporation Employee Stock Ownership
Plan.
"ESOP TRUSTEE" means South Carolina National Bank in its capacity as
trustee for the ESOP under the Trust Agreement, or any successor thereto.
"EURODOLLAR LOANS" shall mean Loans bearing interest at rates based on
the Eurodollar Rate.
"EURODOLLAR RATE" shall mean, with respect to each Interest Period for
a Eurodollar Loan, the rate determined by the Agent to be (a) the offered
quotation to first-class banks in the interbank Eurodollar market by the Agent
for Dollar deposits of amounts in immediately available funds comparable to the
principal amount of the aggregate amount of Eurodollar Loans comprising such
Borrowing for which an interest rate is then being determined with maturities
comparable to the Interest Period to be applicable to such Eurodollar Loans,
determined as of 10:00 A.M. (New York, New York time) on the date which is two
Business Days prior to the commencement of such Interest Period, divided (and
rounded upward to the next whole multiple of 1/16 of 1%) by (b) a percentage
equal to 1 MINUS the then average stated maximum rate (stated as a decimal) of
all reserve requirements (including without limitation any marginal, emergency,
supplemental, special or other reserves) applicable to any member bank of the
Federal Reserve System in respect of Eurocurrency liabilities as defined in
Regulation D (or any successor category of liabilities under Regulation D).
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"EVENT OF DEFAULT" shall have the meaning provided in Section 9.
"EXCLUDABLE FOREIGN SUBSIDIARY" shall mean any Foreign Wholly-Owned
Restricted Subsidiary listed on Schedule 10.1(b) and each other Foreign
Subsidiary that is not required to be a guarantor of any Permitted Subordinated
Indebtedness pursuant to the terms of any Subordinated Debt Document.
"EXECUTION DATE" shall have the meaning provided in Section 12.10.
"EXISTING COMMITMENTS" shall have the meaning provided in the fifth
"Whereas" clause to this Agreement.
"EXISTING COMPANY CREDIT AGREEMENT" shall mean the Amended and
Restated Credit Agreement dated as of July 21, 1992, as amended prior to the
Closing Date, among the Company, the banking and other financial institutions
party thereto and the Agent.
"EXISTING COMPANY CREDIT AGREEMENT RESTRUCTURING" shall have the
meaning provided in the third "Whereas" clause hereto.
"EXISTING CREDIT AGREEMENTS" shall mean, collectively, the Existing
Company Credit Agreement and the Existing Subsidiary Credit Agreement.
"EXISTING INTERCREDITOR AGREEMENT" shall have the meaning set forth
for the term "Intercreditor Agreement" in the Existing Company Credit Agreement.
"EXISTING LENDERS" shall mean the banking and other financial
institutions party to the Existing Company Credit Agreement.
"EXISTING LOANS" shall mean, collectively, the Tranche A Loans, the
Tranche B Loans and the Tranche C Loans (as such terms are defined in the
Existing Company Credit Agreement).
"EXISTING NOTES" shall have the meaning provided in Section 1.1(a).
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"EXISTING PARTICIPATION AGREEMENTS" shall mean all of the outstanding
participation agreements entered into by the Existing Lenders pursuant to the
Existing Credit Agreements in respect of letters of credit issued pursuant
thereto (including, without limitation, the Existing Subsidiary Letters of
Credit).
"EXISTING SUBORDINATED DEBENTURES" shall have the meaning provided in
the second "Whereas" clause to this Agreement.
"EXISTING SUBORDINATED DEBENTURES INDENTURE" shall mean the Indenture
dated as of July 21, 1992, as amended, between the Company and Society National
Bank, as Trustee, pursuant to which the Existing Subordinated Debentures were
issued.
"EXISTING SUBSIDIARY CREDIT AGREEMENT" shall mean the Amended and
Restated Credit Agreement dated as of July 21, 1992, as amended prior to the
Closing Date, among certain Subsidiaries of the Company, the banking and other
financial institutions party thereto and BTCo as agent for such institutions.
"EXISTING SUBSIDIARY CREDIT AGREEMENT RESTRUCTURING" shall have the
meaning provided in the Subsidiary Credit Agreement.
"EXISTING SUBSIDIARY LETTERS OF CREDIT" means the letters of credit
outstanding on the date hereof for the account of certain of the Subsidiary
Borrowers that are set forth on Schedule 10.1 hereto.
"EXISTING SUBSIDIARY LOANS" shall have the meaning provided for the
term "Existing Loans" in the Subsidiary Credit Agreement.
"FACILITIES" shall mean hospitals and related medical facilities and
residential treatment centers, schools, day hospitals, professional office
buildings and similar tangible health care assets.
"FACILITY ACQUISITION" shall mean (a) the direct or indirect purchase
or other acquisition (including, without limitation, by way of the pur-
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chase or other acquisition of capital stock or other equity interests, but
excluding the NME Acquisition) by any Person of any Facility and any other
health care related asset to be used in connection with such Facility, (b) any
expenditure made by any Person for the construction of a new Facility or any
other health care related asset to be used in connection with such Facility, or
(c) the purchase, directly or indirectly, of all or substantially all of the
assets or capital stock of any health care or health care related business.
"FEDERAL FUNDS RATE" shall mean, for any period, a fluctuating
interest rate per annum equal for each day during such period to the weighted
average of the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Agent from three federal funds brokers of
recognized standing selected by the Agent.
"FINAL REVOLVING LOAN MATURITY DATE" shall mean March 31, 1999.
"FINANCE COMPANIES" shall mean, collectively, (a) CMFC, Inc. and (b)
CMCI, Inc., each a Nevada corporation.
"FINCO PLEDGE AND SECURITY AGREEMENTS" shall have the meaning provided
in Section 5.1(d).
"FIXED CHARGE COVERAGE RATIO" shall mean, as of any date of
determination, the ratio of (a) the sum of Core EBITDA and consolidated
operating lease rental expenses of the Company and its Wholly-Owned Restricted
Subsidiaries, in each case for the four consecutive fiscal quarters of the
Company ending on such date, to (b) the sum of (i) Total Interest Expense, (ii)
income taxes paid in cash (other than up to $17,000,000 of income taxes and
interest paid in cash during the Company's 1996 fiscal year as a result of the
settlement with the I.R.S. and various state taxing authorities pursu-
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ant to revenue agent reports of the income taxes payable by the Company in
respect of its 1989, 1990, 1991 and 1992 fiscal years), (iii) Maintenance
Capital Expenditures, (iv) operating lease rental expenses, and (v) scheduled
repayments of Indebtedness, in each case for the Company and its Restricted
Subsidiaries on a consolidated basis for the four consecutive fiscal quarters of
the Company ending on such date; PROVIDED that "scheduled repayments of
Indebtedness" shall not include (A) any scheduled reductions of a revolving loan
commitment to the extent a cash repayment of the Indebtedness incurred pursuant
thereto is not required to be made in connection with such reduction, or (B) any
repayments of Indebtedness not listed on Schedule 8.7(e) hereto that are made by
the Company or any of its Wholly-Owned Restricted Subsidiaries on or prior to
the Closing Date.
"FOREIGN CONTRACTS CREDIT SUPPORT" shall have the meaning provided in
Section 8.7(i).
"FOREIGN RESTRICTED SUBSIDIARY" shall mean each Restricted Subsidiary
that is a Foreign Subsidiary.
"FOREIGN SUBSIDIARY" shall mean each direct or indirect Subsidiary of
the Company which is organized under the laws of any jurisdiction other than the
United States or any State thereof (including the District of Columbia).
"FOREIGN WHOLLY-OWNED RESTRICTED SUBSIDIARY" shall mean each Wholly-
Owned Restricted Subsidiary of the Company which is a Foreign Subsidiary.
"FUNDED DEBT" shall mean, as applied to the Company and its Restricted
Subsidiaries, all Indebtedness (other than Indebtedness that may be repaid and
reborrowed under the terms of any revolving credit or similar agreement) of such
Persons, on a consolidated basis, which by its terms or by the terms of any
instrument or agreement relating thereto matures, or which is otherwise payable
or unpaid, more than one year from, or is directly or indirectly renewable or
extendible at the option of the debtor to a date more than one year from the
date of the creation thereof.
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"GAAP" means United States generally accepted accounting principles as
in effect as of the date of determination; PROVIDED that compliance by the
Company with the financial covenants and other requirements set forth in Section
7.9 shall be calculated, to the extent the same contemplate the use of GAAP, in
accordance with GAAP as in effect on the date hereof applied on a basis
consistent with the preparation of the financial statements referred to in
Section 6.4(a)(i).
"INCREASED COMMITMENT NOTE" shall have the meaning provided in Section
1.1(a).
"INDEBTEDNESS" of any Person means, without duplication: (a)
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than trade payables on terms of 365 days or
less incurred in the ordinary course of business), (b) the principal portion of
obligations of such Person as lessee under leases which have been or should be,
in accordance with GAAP, recorded as capital leases, (c) all Accommodation
Obligations of such Person in respect of Indebtedness of others of the types
described in the preceding clauses (a) and (b) or clause (d) below, (d) at the
date of determination thereof, the aggregate amount which may then be drawn
under, PLUS the aggregate amount of all unreimbursed drawings in respect of,
letters of credit issued for the account of such Person (MINUS, other than for
purposes of Section 8.7(i), the lesser of $75,000,000 and the amount of Cash or
Cash Equivalents on deposit securing such letters of credit), and (e) all
indebtedness, obligations or other liabilities of such Person or of others for
borrowed money secured by a Lien on any property of such Person, whether or not
such indebtedness, obligations or liabilities are assumed by such Person;
PROVIDED that all or any portion of any Indebtedness of the Company and its
Restricted Subsidiaries that is defeased (whether pursuant to a legal defeasance
or a "covenant" or "in kind substance" defeasance) by Cash and Cash Equivalents
in accordance which the documents governing such Indebtedness and the defeasance
thereof shall, at all times such defeasance remains in effect, cease to be
treated, to the extent of such defeasance, as Indebtedness for purposes of this
Agreement if (i)
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in the case of any defeasance of any Permitted Subordinated Indebtedness, such
defeasance is not made with the proceeds of any Indebtedness other than new
Permitted Subordinated Indebtedness of the Company, (ii) in the case of any
defeasance of any such Indebtedness that is made in connection with or in
anticipation of a refinancing of such Indebtedness, the Agent receives, at the
sole cost and expense of the Company, a legal opinion, addressed to the Agent
and the Lenders, reasonably acceptable to the Agent to the effect that (A) such
defeasance has been made in accordance with the terms of the documents governing
such Indebtedness, (B) the Indebtedness so defeased is secured by a perfected
first priority Lien on such Cash and Cash Equivalents, and (C) such Cash and
Cash Equivalents will not be subject to the rights of creditors other than the
holders of such Indebtedness, and (iii) if at the time of such defeasance or any
time thereafter the Indebtedness so defeased may be redeemed, repurchased or
otherwise acquired by the Company or any of its Restricted Subsidiaries pursuant
to the provisions of the documents governing the same, the Company or any such
Subsidiary, at the time of such defeasance, provides for the delivery of a
notice of redemption to the holders of such Indebtedness on the date of such
defeasance or the earliest permitted date thereafter, as the case may be, in
accordance with the terms of the documents governing such Indebtedness, and
redeems, repurchases or otherwise acquires such Indebtedness (or causes such
Indebtedness to be redeemed, repurchased or otherwise acquired) on the earliest
date that is permitted by the documents governing such Indebtedness.
"INITIAL NME ACQUISITION CLOSING" shall mean the consummation in
accordance with the NME Purchase Agreement of the purchase by the Company and
the Domestic Guarantors of (i) at least seven of the Facilities described on
Schedule 2.13A to the NME Purchase Agreement as in effect on March 29, 1994, and
(ii) Facilities having the aggregate results of operations described in Section
2.13(a)(ii) of the NME Purchase Agreement as in effect on March 29, 1994.
"INSURANCE SUBSIDIARIES" means, collectively, (a) Golden Isle
Assurance Company, and (b)
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Plymouth Insurance Company, Ltd., each a corporation organized under the laws of
Bermuda, and their respective successors and permitted assigns.
"INTEREST PERIOD" shall have the meaning provided in Section 1.9.
"INTERIM MATURITY DATE" shall mean, with respect to any Loan
outstanding on March 31, 1996 or March 31, 1998, (a) if such Loan is a Base Rate
Loan, such date, and (b) if such Loan is a Eurodollar Loan, the last day of the
then applicable Interest Period for such Eurodollar Loan.
"I.R.S." means the Internal Revenue Service of the United States of
America.
"INVESTMENT" means, when used with respect to any Person, (a) any
direct or indirect advance, loan or other extension of credit (other than the
creation of receivables which are current assets arising in the ordinary course
of business) or capital contribution by such Person (by means of transfers of
property to others or payments for property or services for the account or use
of others, or otherwise) to any other Person; (b) any direct or indirect
purchase or other acquisition by such Person of, or of a beneficial interest in,
capital stock, bonds, notes, debentures or other securities or ownership
interests issued by any other Person; or (c) any direct or indirect guaranty by
such Person of any Indebtedness or other obligations of any other Person. In
computing the amount involved in any Investment at the time outstanding, (a)
undistributed earnings of, and interest accrued in respect of Indebtedness owing
by, such other Person accrued after the date of such Investment shall not be
included, (b) there shall not be deducted from the amounts invested in such
other Person any amounts received as earnings (in the form of dividends,
interest or otherwise) on such Investment or as loans from such other Person,
(c) unrealized increases or decreases in value, or write-ups, write-downs or
write-offs, of Investments in such other Person shall be disregarded (d) amounts
received by such Person representing a return of capital with respect to such
Investment (determined in accordance with GAAP) shall be deducted, and (e) the
foregoing to the contrary not-
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withstanding, in the case of an Investment in a corporation, partnership or
other entity (including, without limitation, a Restricted Subsidiary or an
Unrestricted Subsidiary) in respect of which such Person is liable for taxes
based upon the income of such corporation, partnership or other entity, such
Investment shall be deemed to increase by the amount, if any, equal to the
excess of taxes paid by such Person in respect of such income over cash
distributions received by such Person from such corporation, partnership or
other entity in respect of such income or pursuant to a Tax Sharing Agreement,
if applicable. For the purposes of Section 8.8, the amount involved in
Investments made during any period shall be the aggregate cost to such Person of
all such Investments made during such period, determined in accordance with
GAAP, but without regard to unrealized increases or decreases in value, or
write-ups, write-downs or write-offs, of such Investments and without regard to
the existence of any undistributed earnings or accrued interest with respect
thereto accrued after the respective dates on which such Investments were made,
less any net return of capital realized during such period upon the sale,
repayment, payment of extraordinary dividends, or other liquidation of such
Investments (determined in accordance with GAAP, but without regard to any
amounts received during such period as earnings (in the form of dividends,
interest or otherwise) on such Investments or as loans from any Persons in whom
such Investments have been made); PROVIDED that for purposes of Sections 8.8(n),
(o) and (r), the original amount of any Investment of any asset made pursuant
thereto shall be deemed to be the greater of the book value and fair market
value (determined (except as otherwise set forth in Section 8.8(n) for
contributions of Facilities to Permitted Joint Ventures) by the Company in good
faith and in a reasonable manner) of such property at the time such Investment
is made.
"L/C BANK" shall mean BTCo and each other Lender with a Revolving Loan
Commitment that agrees in writing with the Company and the Agent to issue
Letters of Credit from time to time.
"L/C CASH COLLATERAL ACCOUNT" shall mean the cash collateral account
established under the
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Collateral Accounts Assignment Agreement (and designated thereunder as the L/C
Cash Collateral Account) in favor of the Agent for the benefit of the Lenders.
"LENDER" shall have the meaning provided in the first paragraph of
this Agreement.
"LENDER DEFAULT" shall mean (a) the refusal (which has not been
retracted) or continued failure of a Lender to (i) make available its portion of
any Borrowing, or (ii) comply with its obligations under Section 1.4 or Section
2 hereof or under Section 2 of the Subsidiary Credit Agreement, (b) any takeover
of a Lender by any regulatory authority or agency, or (c) the occurrence and
continuance of any event of the type described in Section 9.5 with respect to a
Lender.
"LENDING OFFICE" shall mean, for each Lender, the office specified
opposite such Lender's name on the signature pages hereof with respect to each
Type of Loan, or such other office as such Lender may designate in writing from
time to time to the Company and the Agent with respect to such Type of Loan.
"LETTER OF CREDIT" shall mean each letter of credit issued by an L/C
Bank on or after the Closing Date in accordance with Section 2 for the purpose
of (a) supporting Indebtedness of the Company or any of its Restricted
Subsidiaries in respect of the industrial revenue or development bonds listed on
Schedule 8.7(e), or any refunding bonds issued in respect thereof, (b) providing
credit enhancement in respect of obligations incurred in connection with any
acquisition, construction or mortgage financing or a Sale/Leaseback Transaction
permitted hereunder, (c) providing Foreign Contracts Credit Support; PROVIDED
that the stated amount of Letters of Credit issued for the purpose set forth in
this clause (c), together with Subsidiary Letters of Credit, as defined in the
Subsidiary Credit Agreement, issued for the same purpose, shall not exceed, at
any time outstanding, $50,000,000 minus the aggregate stated amount of letters
of credit then outstanding under Section 8.7(i) which are not supported by a
Letter of Cred-
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it or a Subsidiary Letter of Credit, and (d) supporting appeal bonds or similar
surety obligations.
"LETTER OF CREDIT EXPOSURE" shall mean, at any time, with respect to
any Lender, the product of its then Adjusted Percentage and the then Letter of
Credit Outstandings.
"LETTER OF CREDIT OUTSTANDINGS" means, with respect to Letters of
Credit, as at any date of determination, the sum of (a) the maximum aggregate
amount which at such date of determination is available to be drawn (assuming
the conditions for drawing thereunder have been met) under all Letters of Credit
then outstanding, plus (b) the aggregate amount of all drawings under Letters of
Credit and honored by the applicable L/C Bank not theretofore reimbursed by the
Company (it being understood that for purposes of any request for a Loan
pursuant to Section 2.3, there shall be excluded from the amount determined in
accordance with the preceding clause (b) an amount equal to the proceeds of such
Loan).
"LETTER OF CREDIT REQUEST" shall have the meaning provided in Section
2.2(a).
"LIEN" means any mortgage, pledge, security interest, charge,
hypothecation, collateral assignment, deposit arrangement, encumbrance, lien
(statutory or other), or other security agreement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing and the filing of any financing statement, other
than notice filings not perfecting a security interest, under the Uniform
Commercial Code or comparable law of any jurisdiction, domestic or foreign, in
respect of any of the foregoing).
"LOANS" shall mean, collectively, the Revolving Loans and any
outstanding principal of any outstanding Swingline Borrowing.
"MAINTENANCE CAPITAL EXPENDITURES" means, for any period, the sum,
without duplication, of expenditures (whether paid in cash or accrued as a
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liability, including the portion of capital leases originally incurred during
such period that is capitalized on the consolidated balance sheet of Company and
its Restricted Subsidiaries) by the Company and its Restricted Subsidiaries
during that period that, in conformity with GAAP, are included in "capital
expenditures", "additions to property, plant or equipment" or comparable items
in the statement of cash flows of the Company and its Restricted Subsidiaries
(including, without limitation, expansions of, and additions to, then existing
Facilities and additions of beds to any such Facilities); PROVIDED that
Maintenance Capital Expenditures shall not include Facility Acquisitions.
"MARGIN STOCK" shall have the meaning provided for such term in
Regulation U of the Board of Governors of the Federal Reserve System.
"MASTER TRANSFER SUPPLEMENT" shall have the meaning provided in the
fifth "Whereas" clause to this Agreement.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on (a)
the business, property, assets, condition (financial or otherwise), liabilities
or operations, of the Company and its Restricted Subsidiaries taken as a whole,
(b) the ability of the Company and the Domestic Guarantors, taken as a whole, to
perform the Obligations, (c) the rights and remedies of the Lenders, the L/C
Banks, the Collateral Agent and the Agent under the Credit Documents, taken as a
whole, or (d) the validity or enforceability of any of the Credit Documents or
the Liens created thereby on any material portion of the Collateral.
"MEASUREMENT DATE" shall mean, with respect to any date, (a) if such
date is a day of a month that occurs prior to the 30th day of such month, the
last day of the penultimate month, and (b) if such date is a day of a month that
occurs on or after the 30th day of such month, the last day of the immediately
preceding month.
"MINIMUM INCOME TESTS" shall mean, with respect to any applicable
Subject Transaction, each
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(except as otherwise noted) of the following requirements:
(a) in the case of a contribution of a Facility to a Permitted Joint
Venture pursuant to Section 8.8(n) or a Facility Acquisition only:
(i) each of the actual Base Core EBITDA (without giving effect to
such Subject Transaction), and the Pro Forma Base Core EBITDA (after giving
effect to such Subject Transaction), in each case for the 12-month period
preceding the Test Date applicable to the date on which such Subject
Transaction occurs, exceeds $130,000,000 (or, if the Initial NME
Acquisition Closing shall not have occurred prior to such Test Date,
$100,000,000); and
(ii) each of the actual Core EBITDA (without giving effect to
such Subject Transaction), and the Pro Forma Core EBITDA (after giving
effect to such Subject Transaction), in each case for the 12-month period
preceding the Test Date applicable to the date on which such Subject
Transaction occurs, exceeds $160,000,000 (or, if the Initial NME
Acquisition Closing shall not have occurred prior to such Test Date,
$130,000,000); and
(b) in the case of any other applicable Subject Transaction:
(i) the actual Base Core EBITDA for the 12-month period preceding
the Test Date applicable to the date on which such Subject Transaction
occurs, without giving effect to such Subject Transaction, exceeds
$130,000,000(or, if the Initial NME Acquisition Closing shall not have
occurred prior to such Test Date, $100,000,000); and
(ii) the actual Core EBITDA for the 12-month period preceding the
Test Date applicable to the date on which such Subject Transaction occurs,
without giving effect to such Subject Transaction, exceeds $160,000,000
(or, if the Initial NME Acquisition Closing shall
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not have occurred prior to such Test Date, $130,000,000).
"MIS UNIT" shall mean the Subsidiaries of the Company formed or to be
formed for the purpose of conducting health care related management and
information systems businesses (which may include Strategic Advantage, Inc.),
the names of which Subsidiaries are provided to the Agent promptly after the
formation thereof.
"MORTGAGE DOCUMENTS" shall have the meaning provided in Section
5.1(f).
"MORTGAGE NOTES" means the notes of certain Subsidiaries of the
Company listed in Schedule 10.1(c) hereto.
"MORTGAGED PROPERTIES" shall mean all of the real properties of each
Mortgagor, which real properties are listed in Schedule 10.1(d) hereto, and
including all additional property, if any, to become Mortgaged Property in
accordance with Section 8.2.
"MORTGAGES" shall mean the mortgages by the Mortgagors in favor of the
Collateral Agent for the benefit of the Lenders with respect to the Mortgaged
Properties, as consolidated, in certain cases, by certain of the Mortgage
Documents, as such mortgages may be otherwise amended or modified by the
Mortgage Documents and as such mortgages may be further amended, supplemented or
modified from time to time.
"MORTGAGORS" shall mean the Subsidiaries of the Company listed in
Schedule 10.1(d) hereto and all Subsidiaries, if any, which are required to
deliver Mortgages or Mortgaged Properties after the Closing Date in accordance
with Section 8.2.
"MULTIEMPLOYER PLAN" has the meaning set forth in Section 4001(a)(3)
of ERISA.
"NET INCOME" shall mean for any Person, for any period, the net income
(or loss) of such Person and any specified Subsidiaries of such Person for such
period (taken as a single accounting period) after deducting all operating
expenses,
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provisions for all taxes (including provisions for deferred income taxes, but
net of tax benefits) and all other proper deductions, all determined in
conformity with GAAP on a consolidated basis with such specified Subsidiaries,
after eliminating all intercompany transactions and after deducting portions of
income properly attributable to minority interests, if any, in the stock and
surplus of such specified Subsidiaries, excluding (to the extent otherwise
included therein) (a) any gains or losses, together with any related provision
for taxes, realized upon any sale of assets other than in the ordinary course of
business, (b) the income (or loss) of any acquired Person accrued prior to the
date such acquired Person becomes such a specified Subsidiary of such Person or
is merged into or consolidated with such Person or any of such specified
Subsidiaries or such acquired Person's assets are acquired by such Person or any
of such specified Subsidiaries, (c) any gain (or loss) realized upon the
termination of any Interest Rate Contract or currency protection agreement, and
(d) the undistributed earnings of any such specified Subsidiary to the extent
that the declaration or payment of dividends or similar distributions by such
specified Subsidiary is not at the time restricted in any manner by the terms of
its charter or any agreement, instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to such specified Subsidiary.
"NET PROCEEDS" shall mean: (a) with respect to any Asset Sale, all
Cash (including Cash receivable (when received) by way of deferred payment
pursuant to a promissory note, a receivable or otherwise (other than interest
payable thereon)) and other property received by the Company or any of its
Restricted Subsidiaries as a result of or in connection with such transaction,
net of expenses, fees and commissions incurred and taxes paid or expected to be
payable in connection therewith and net of any payment of the outstanding
principal amount of, premium or penalty, if any, and interest on any
Indebtedness (other than the Loans and any Indebtedness subordinated to the
Loans, including, without limitation, Permitted Subordinated Indebtedness)
required to be repaid under the terms of such Indebtedness as a result of such
Asset Sale; PROVIDED that, in the case of any Asset Sale made
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by a Restricted Subsidiary other than a Wholly-Owned Restricted Subsidiary, Net
Proceeds shall only include the Company's and its Wholly-Owned Restricted
Subsidiaries' PRO RATA share of the Net Proceeds of such Asset Sale; and (b) in
the case of the issuance or sale of any shares of any capital stock or any
warrants, options or other rights to purchase or acquire any shares of any
capital stock of the Company (other than any Permitted Subordinated Indebtedness
convertible into capital stock of the Company), all Cash and other property
received by the Company in connection therewith, net of broker's fees and
commissions and reasonable costs and expenses incurred in connection therewith.
"NEW LENDERS" shall mean each of the Persons listed on Annex II.
"NEW STOCK OPTION PLAN" shall mean, collectively, the Company's 1992
Stock Option Plan, 1994 Stock Option Plans, 1994 Directors Unit Award Plan, 1994
Employee Stock Purchase Plan, the Director's Stock Option Plan existing on the
date hereof and future stock option and employee stock purchase plans approved
by duly adopted resolutions of the shareholders of the Company.
"NME" shall mean National Medical Enterprises, Inc., a Nevada
corporation.
"NME ACQUISITION" shall mean the acquisition by the Company and its
Domestic Wholly-Owned Restricted Subsidiaries of up to 47 facilities and related
health care assets from NME upon the terms and conditions set forth in the NME
Purchase Agreement.
"NME PURCHASE AGREEMENT" shall mean the Asset Sale Agreement dated as
of March 29, 1994 between NME, as seller, and the Company, as purchaser
(including, without limitation, the schedules and exhibits thereto), as the same
may be amended, supplemented or otherwise modified from time to time in
accordance with Section 8.11.
"NON-CONTINUING LENDER" shall mean each Existing Lender which is not a
party to this Agreement on and as of the Closing Date.
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"NON-DEFAULTING LENDER" shall mean and include each Lender other than
a Defaulting Lender.
"NOTES" shall mean the Revolving Notes and the Swingline Note.
"NOTICE OF BORROWING" shall have the meaning provided in Section
1.3(a)(i).
"NOTICE OF CONVERSION" shall have the meaning provided in Section
1.6(ii).
"NOTICE OF SWINGLINE BORROWING" shall have the meaning provided in
Section 1.3(a)(ii).
"OBLIGATIONS" shall mean all amounts owing to the Agent, the Co-Agent,
the Collateral Agent, an L/C Bank or any Lender pursuant to the terms of this
Agreement or any other Credit Document.
"ORIGINAL COMPANY CREDIT AGREEMENT" shall mean the Credit Agreement
dated as of September 1, 1988, as amended prior to July 21, 1992, among the
Company (as successor by merger to WAF Acquisition Corporation), the banking and
other financial institutions party thereto, the Agent, and Wells Fargo Bank,
N.A., and Bank of America National Trust and Savings Association, as co-agents.
"PAYMENT OFFICE" shall mean the office of the Agent located at 280
Park Avenue, New York, New York 10017, or such other office of the Agent as the
Agent may hereafter designate in writing as such to the other parties hereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
under ERISA, or any successor thereto.
"PERMITTED FACILITY ACQUISITION AMOUNT" shall have the meaning
provided in Section 8.10(b).
"PERMITTED JOINT VENTURE" shall mean any joint venture, whether in the
form of a corporation, partnership or otherwise, that is in the health care or a
health care related business.
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"PERMITTED LIENS" means (i) Liens for Taxes not yet due, or Liens for
Taxes being contested in good faith by appropriate proceedings and for which
adequate reserves in conformity with GAAP have been established, (ii) Liens in
respect of any property of the Company or any of its Restricted Subsidiaries
which were incurred in the ordinary course of business and not in connection
with the borrowing of money or the obtaining of credit, such as carriers',
warehousemen's, landlords' and mechanics' liens, and other similar liens arising
in the ordinary course of business, and which do not individually or in the
aggregate materially detract from the value of any material property or
materially impair the use thereof in the operation of the business of the
Company and its Restricted Subsidiaries (taken as a whole), (iii) bankers' liens
and Liens (other than any Lien imposed by ERISA) incurred or deposits made in
the ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security, title insurance,
purchase contracts, agreements governing Indebtedness permitted under Section
8.7 (other than to secure the Indebtedness incurred thereby or any other
Indebtedness), judgments liens (if released, bonded or stayed within 60 days)
and subleases, or to secure the performance of tenders, statutory obligations,
surety and appeal bonds, bids, leases, government contracts, performance and
return-of-money bonds and other similar obligations (exclusive of obligations
for the payment of Indebtedness and Foreign Contracts Credit Support) which do
not individually or in the aggregate have a Material Adverse Effect; (iv)
easements, rights-of-way, restrictions and other similar charges or encumbrances
which do not individually or in the aggregate have a Material Adverse Effect;
(v) any interest or title of a lessor under any operating lease permitted by
Section 8.6; (vi) the interest of any issuer of a letter of credit or bonds
(other than Foreign Contracts Credit Support and letters of credit and bonds
issued in support of foreign projects) in any Cash or Cash Equivalent deposited
with said issuer as collateral for the letters of credit or bonds so issued by
such issuer; and (vii) prejudgment liens in respect of property of a Foreign
Restricted Subsidiary which is incurred in connection with a claim or action
against such Foreign Restricted
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Subsidiary before a court or other tribunal in a jurisdiction outside of the
United States, which liens individually or in the aggregate do not have a
Material Adverse Effect.
"PERMITTED SUBORDINATED INDEBTEDNESS" shall mean (a) the Senior
Subordinated Notes, together with all guarantees of the Senior Subordinated
Notes made by any Domestic Guarantor or Foreign Restricted Subsidiary that is a
party to the Subsidiary Guaranty, whether such guarantees are made on the
Closing Date or thereafter; and (b) any other unsecured Indebtedness of the
Company which: (i) has a final maturity subsequent to the sixth anniversary of
the Closing Date; (ii) is not guaranteed by any Person, unless such guaranty is
from a Domestic Guarantor or a Foreign Restricted Subsidiary that is a party to
the Subsidiary Guaranty, is unsecured and is subordinated, pursuant to
provisions reasonably satisfactory to the Required Lenders, to the Obligations;
(iii) does not provide for any scheduled repayments, required prepayments, fixed
sinking fund payments, serial maturities, required offers to purchase or similar
payments in respect of all of any of the principal of such Indebtedness prior to
the sixth anniversary of the Closing Date (but excluding any conversion into
capital stock of the Company of any convertible Permitted Subordinated
Indebtedness in accordance with the terms thereof); (iv) does not permit any
holder of such Indebtedness to declare all or any part of such Indebtedness to
be paid or purchased before the date referred to in clause (b)(i) of this
definition for any reason other than the occurrence of a default in respect
thereof (but excluding any conversion into capital stock of the Company of any
convertible Permitted Subordinated Indebtedness); (v) does not contain any
financial maintenance covenants or a cross-default (although it may contain a
cross-acceleration to, and a cross-default to a payment default upon the express
final maturity of, Indebtedness having an outstanding aggregate principal amount
of no less than $15,000,000, individually, and $30,000,000 in the aggregate);
(vi) is subordinated, pursuant to provisions reasonably satisfactory to the
Required Lenders; (vii) bears interest at a rate, and has payment dates for such
interest, that are reasonably satisfactory to the Required Lenders; and
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(viii) is incurred pursuant to documentation containing terms, conditions,
covenants, events of default and other provisions that are in form and substance
acceptable to the Required Lenders; PROVIDED that, notwithstanding the
foregoing, such Indebtedness may contain provisions requiring the Company to
make an offer to purchase all or any of the principal thereof as a result of the
occurrence of (i) a change of control of the Company so long as (A) the making
of any such offer to purchase could not occur prior to the occurrence of a
change of control described in Section 9.10, and (B) such offer is not required
to be made prior to the tenth day to occur after such change of control, and
(ii) sales, leases, conveyances and other dispositions and transfers of property
so long as the Company has at least 180 days to avoid making such offer by, at
the Company's election, either repaying the Obligations or other unsubordinated
Indebtedness with the net cash proceeds thereof, and/or re-investing such net
cash proceeds in the Company's and/or its Subsidiaries' business.
"PERSON" shall mean and include any individual, partnership, joint
venture, firm, corporation, association, trust or other enterprise or entity or
any government or political subdivision or agency, department or instrumentality
thereof.
"PLAN" means any employee benefit plan covered by Title IV of ERISA,
the funding requirements of which:
(i) were the responsibility of the Company or a member
of its ERISA Controlled Group at any time within the five years
immediately preceding the date hereof,
(ii) are currently the responsibility of the Company
or a member of its ERISA Controlled Group, or
(iii) hereafter becomes the responsibility of the
Company or a member of its ERISA Controlled Group, including any such
plans as may, within the last five years prior to the Closing
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Date, have been, or may hereafter be, terminated for whatever reason.
"PLEDGE AND SECURITY AGREEMENTS" means the Company Pledge and Security
Agreement, the Company Pledge and Security Agreement (ESOP), the FINCO Pledge
and Security Agreements and the Subsidiary Pledge and Security Agreement.
"PRO FORMA BASE CORE EBITDA" shall mean, for any period, with respect
to any Subject Transaction, the total, without duplication, of (a) Base Core
EBITDA for such period, PLUS (b) the EBITDA for such period of (i) any Person
acquired by the Company and which becomes a Domestic Guarantor, or (ii) any
Facility (determined as if such Facility was a separate Person) acquired by the
Company or any Domestic Guarantor, in either such case as part of such Subject
Transaction, MINUS (c) in the case of a contribution by the Company or any
Domestic Guarantor of a Facility to a Permitted Joint Venture pursuant to
Section 8.8(n), the portion of the Base Core EBITDA for such period attributable
to the contributed Facility. In the case of a Subject Transaction involving the
acquisition of a Person or a Facility that, as of the time of such acquisition
has been in existence for less than 12-months, the EBITDA for such Person or
Facility, as the case may be, for such period shall be deemed to be the product
of (1) its actual EBITDA, and (2) the quotient, expressed as percentage, of the
number of months in such period divided by the number of months for which such
Person or Facility, as the case may be, has any EBITDA.
"PRO FORMA CORE EBITDA" shall mean, for any period, with respect to
any Subject Transaction, the total, without duplication, of (a) Core EBITDA for
such period, PLUS (b) the EBITDA for such period of (i) any Person which is
acquired by the Company and becomes a Wholly-Owned Restricted Subsidiary of the
Company, or (ii) any Facility (determined as if such Facility was a separate
Person) acquired by the Company or any of its Wholly-Owned Restricted
Subsidiaries, in either such case as part of such Subject Transaction, MINUS (c)
in the case of a contribution by the Company or any of its Wholly-Owned
Subsidiaries of a Facility to a Permitted Joint Venture pursuant to Section
8.8(n),
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the product of (i) the portion of the Core EBITDA for such period attributable
to the contributed Facility, and (ii) the excess of 100% over the Company's and
its Wholly-Owned Restricted Subsidiaries aggregate percentage ownership interest
in such Permitted Joint Venture after giving effect to such contribution. In
the case of a Subject Transaction involving the acquisition of a Person or a
Facility that, as of the time of such acquisition has been in existence for less
than 12-months, the EBITDA for such Person or Facility, as the case may be, for
such period shall be deemed to be the product of (1) its actual EBITDA, and (2)
the quotient, expressed as a percentage, of the number of months in such period
divided by the number of months for which such Person or Facility, as the case
may be, has any EBITDA.
"PRO FORMA INTEREST CHARGES" shall mean, as of any date of
determination, the sum, without duplication, for the Company and its Restricted
Subsidiaries, on a consolidated basis, of (a) the amount actually scheduled to
be paid during the period of 12 months next succeeding such date in respect of
interest charges (including amortization of debt discount and expense (except as
excluded below) and imputed interest attributable to capitalized leases in
accordance with GAAP and assuming, in the case of fluctuating interest rates
which cannot be determined in advance, that the rate in effect on such date will
remain in effect throughout such period) on all Funded Debt outstanding on such
date of determination, (b) the aggregate interest charges on all Short-Term
Borrowing for the most recently completed period of 12 months (other than any
such interest charges on Short-Term Borrowings refinanced during such period
with Funded Debt), and (c) the greater of (i) the aggregate interest charges for
the most recently completed period of 12 months on Indebtedness that may
(assuming all conditions to reborrowing thereof are satisfied and there is no
termination date therefor) be repaid and reborrowed pursuant to the terms of a
revolving credit or similar agreement (other than any such interest charges on
Indebtedness that has been refinanced during such period with Funded Debt or
interest charges on the Existing Loans prior to the Closing Date to the extent
such Existing Loans are repaid on the Closing
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Date), and (ii) the aggregate scheduled interest charges that would be payable
during the period of 12 months next succeeding such date in respect of
Indebtedness described in the preceding clause (i), assuming, for such purpose,
that the principal amount of such Indebtedness that would be outstanding during
such period is equal to the principal amount of such Indebtedness outstanding on
such date; but excluding, however, any amounts referred to in Section 3.1
payable to the Agent and the Lenders on or before the Closing Date, debt
discount or premium, if any, on the Senior Subordinated Notes and commissions,
underwriting discounts and other transaction fees and charges relating to the
initial issuance of any Permitted Subordinated Indebtedness, and amortization of
any such debt discount or premium, if any, on the Senior Subordinated Notes and
such commissions, underwriting discounts and other transaction fees and charges,
all as determined in conformity with GAAP.
"REGULATION D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing reserve requirements.
"REPLACED LENDER" shall have the meaning provided in Section 1.15.
"REPLACEMENT LENDER" shall have the meaning provided in Section 1.15.
"REPORT PERIOD" shall have the meaning provided in Section 7.1(e).
"REPORTABLE EVENT" has the meaning set forth in Section 4043(b) of
ERISA (other than a Reportable Event as to which the provision of 30 days notice
to the PBGC is waived under applicable regulations), or is the occurrence of the
events described in Section 4068(f) or 4063(a) of ERISA.
"REQUIRED LENDERS" shall mean Non-Defaulting Lenders holding 51% or
more of the sum of the outstanding principal amount of Loans of all Non-
Defaulting Lenders, or if no such Loans are outstanding, Non-Defaulting Lenders
holding 51% or more of the Adjusted Total Revolving Loan Commit-
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ment; PROVIDED that, for purposes of this definition, (i) the "outstanding
principal amount of Loans" shall include, without duplication, the Letter of
Credit Outstandings, the aggregate amount of Swingline Borrowings outstanding
(without duplication of Revolving Loans made with respect thereto pursuant to
Section 1.4) and the Subsidiary Credit Extensions, and (ii) a Non-Defaulting
Lender is deemed to hold all outstanding Loans and Subsidiary Loans funded by
it, its Adjusted Percentage of Letter of Credit Outstandings, its Adjusted
Percentage (as defined in the Subsidiary Credit Agreement) of Subsidiary Letter
of Credit Outstandings and its Adjusted Percentage of Swingline Borrowings
outstanding.
"RESTRICTED COMMITMENT AMOUNT" shall mean $100,000,000, as such amount
may be reduced from time to time pursuant to this Agreement.
"RESTRICTED PAYMENT" shall have the meaning provided in Section 8.3.
"RESTRICTED SUBSIDIARIES" shall mean each Subsidiary of the Company
that is not an Unrestricted Subsidiary.
"RETAINED NET PROCEEDS" shall have the meaning provided in Section
4.2(c).
"REVOLVING LOAN COMMITMENT" shall mean, at any time for any Lender,
the amount set forth opposite such Lender's name on Annex I hereto under the
heading "Revolving Loan Commitment," as such amount may be reduced from time to
time pursuant to the terms of this Agreement.
"REVOLVING LOAN PERCENTAGE" of any Lender at any time shall mean a
fraction (expressed as a percentage) the numerator of which is the Revolving
Loan Commitment of such Lender at such time and the denominator of which is the
Total Revolving Loan Commitment at such time; PROVIDED that if the Percentage of
any Lender is to be determined after the Total Revolving Loan Commitment has
been terminated, then the Percentages of the Lenders shall be determined
immediately prior (and without giving effect) to such termination.
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"REVOLVING LOAN SWINGLINE SUBCOMMITMENT" shall mean, at any time, the
lesser of (a) $10,000,000, and (b) the then Total Adjusted Revolving Loan
Commitment.
"REVOLVING LOANS" shall have the meaning provided in Section 1.1(b).
"REVOLVING NOTES" shall have the meaning provided in 1.5(a).
"RIGHTS PLAN" shall mean the Rights Agreement dated as of July 21,
1992 between the Company and First Union Bank of North Carolina, as Rights Agent
(as defined therein).
"SALE/LEASEBACK TRANSACTION" means an arrangement with any bank,
insurance company or other lender or investor or to which any such lender or
investor is a party, providing for the leasing by the Company or a Restricted
Subsidiary of the Company of any property, whether now owned or hereafter
acquired, which has been or is to be sold or transferred by the Company or any
Restricted Subsidiary of the Company to such lender or investor or to any Person
to whom funds have been or are to be advanced by such lender or investor on the
security of such property; PROVIDED that Sale/Leaseback Transactions shall not
include sale/leaseback transactions that are between (a) the Company and any
Domestic Guarantor, (b) any Domestic Guarantor and another Domestic Guarantor,
or (c) any Foreign Restricted Subsidiary and another Foreign Restricted
Subsidiary.
"SEC" shall have the meaning provided in Section 7.1(g).
"SECURITIES REFINANCING" shall have the meaning provided in the second
"Whereas" clause to this Agreement.
"SECURITY DOCUMENTS" shall mean the Stock and Notes Pledges, the
Pledge and Security Agreements, the Collateral Accounts Assignment Agreement,
the Subsidiary Collateral Accounts Assignment Agreement (as defined in the
Subsidiary Credit Agreement) and the Mortgages.
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"SENIOR SUBORDINATED NOTES" shall mean the $375,000,000 aggregate
principal amount of 11-1/4% Senior Subordinated Notes Due 2004 issued by the
Company pursuant to the Senior Subordinated Notes Indenture, and shall include,
without limitation, the Unrestricted Securities (as defined in the Senior
Subordinated Notes Indenture).
"SENIOR SUBORDINATED NOTES INDENTURE" shall mean the Indenture dated
as of the Closing Date among the Company, the Subsidiaries of the Company named
therein and Marine Midland Bank, as trustee, pursuant to which the Senior
Subordinated Notes were issued, as the same may hereafter be amended,
supplemented or otherwise modified in accordance with the terms hereof and
thereof.
"SHORT-TERM BORROWING" shall mean, as applied to the Company and its
Restricted Subsidiaries, all Indebtedness (other than Indebtedness that may be
repaid and reborrowed under the terms of any revolving credit or similar
agreement) of such Persons, on a consolidated basis, for borrowed money which by
its terms or by the terms of any instrument or agreement relating thereto
matures on demand or within one year from the date of the creation thereof and
is not directly or indirectly renewable or extendible at the option of the
debtor to a date more than one year from the date of the creation thereof.
"SIGNIFICANT SUBSIDIARY" shall mean any Subsidiary of the Company
which has total assets in excess of $500,000 or which holds capital stock or
other equity interests of a Subsidiary of the Company which has total assets in
excess of $500,000.
"STOCK AND NOTES PLEDGES" means, collectively, the Company Stock and
Notes Pledge and the Subsidiary Stock and Notes Pledges.
"SUBJECT TRANSACTIONS" shall mean, collectively, (a) any contribution
of a Facility to a Permitted Joint Venture pursuant to Section 8.8(n), (b) any
incurrence of any Permitted Subordinated Indebtedness (other than the Senior
Subordinated Notes), (c) any incurrence of Indebtedness pursuant to Section
8.7(g), (d) any Facility Acquisition,
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and (e) any Investment pursuant to Section 8.8(o) or (r).
"SUBORDINATED DEBT DOCUMENTS" shall mean the Senior Subordinated
Notes, the Senior Subordinated Notes Indenture and all other securities,
instruments, agreements and other documents from time to time evidencing,
guaranteeing, setting forth the terms of or providing for the issuance or sale
by, or advance to, the Company of the Senior Subordinated Notes or any other
Permitted Subordinated Indebtedness.
"SUBSIDIARY" shall mean, with respect to any Person, any corporation,
association or other business entity a majority (by number of votes) of the
stock of any class or classes (or equivalent interests) of which is at the time
directly or indirectly owned by such Person, if the holders of the stock of such
class or classes (or equivalent interests) (a) are ordinarily, in the absence of
contingencies, entitled to vote for the election of a majority of the directors
(or persons performing similar functions) of such business entity, even though
the right so to vote has been suspended by the happening of such a contingency,
or (b) are at the time entitled, as such holders, to vote for the election of a
majority of the directors (or persons performing similar functions) of such
business entity, whether or not the right so to vote exists by reason of the
happening of a contingency.
"SUBSIDIARY BORROWER" shall mean a "Borrower" under and as defined in
the Subsidiary Credit Agreement.
"SUBSIDIARY BORROWING" shall mean a "Borrowing" under and as defined
in the Subsidiary Credit Agreement.
"SUBSIDIARY CREDIT AGREEMENT" shall mean the Second Amended and
Restated Subsidiary Credit Agreement, substantially in the form of Exhibit I
hereto, entered into between the Lenders and certain of the Domestic Guarantors,
as such agreement may be amended, restated, supplemented or otherwise modified
from time to time.
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"SUBSIDIARY CREDIT DOCUMENTS" shall have the meaning provided in the
Subsidiary Credit Agreement.
"SUBSIDIARY CREDIT EXTENSIONS" shall mean, at any time, with respect
to any Lender, the sum of (a) the then aggregate outstanding principal amount of
Subsidiary Loans made by such Lender, and (b) the product of such Lender's
Adjusted Percentage (as defined in the Subsidiary Credit Agreement) and the
Subsidiary Letter of Credit Outstandings at such time.
"SUBSIDIARY GUARANTY" shall have the meaning provided in Section
5.1(b).
"SUBSIDIARY INCREASED COMMITMENT NOTE" shall have the meaning provided
in the Subsidiary Credit Agreement.
"SUBSIDIARY LETTER OF CREDIT OUTSTANDINGS" shall have the meaning
provided for such term in the Subsidiary Credit Agreement.
"SUBSIDIARY LOANS" shall mean the loans made by the Lenders under the
Subsidiary Credit Agreement.
"SUBSIDIARY NOTES" shall have the meaning provided in Section 5.1(g).
"SUBSIDIARY OBLIGATIONS" shall mean all amounts owing to the Agent,
the Co-Agent, the Collateral Agent or any Lender pursuant to the terms of the
Subsidiary Credit Documents.
"SUBSIDIARY PLEDGE AND SECURITY AGREEMENT" shall mean the Second
Amended and Restated Subsidiary Pledge and Security Agreement referred to in
Section 5.1(d), as such agreement may be amended, supplemented or otherwise
modified from time to time and shall include any other Subsidiary Pledge and
Security Agreement executed and delivered from time to time after the Closing
Date by any Significant Subsidiary to the Collateral Agent to the extent
required by Section 7.11.
"SUBSIDIARY STOCK AND NOTES PLEDGE" shall mean the Second Amended and
Restated Subsidiary
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Stock and Notes Pledge referred to in Section 5.1(c), as such agreement may be
amended, supplemented or otherwise modified from time to time and shall include
any other Subsidiary Stock and Notes Pledge executed and delivered from time to
time after the Closing Date by any Significant Subsidiary to the Collateral
Agent to the extent required by Section 7.11.
"SWINGLINE BORROWING" shall have the meaning provided in Section
1.3(a)(ii).
"SWINGLINE NOTE" shall have the meaning provided in Section 1.5(a).
"SWISS BONDS" shall mean Charter Medical Corporation Public Issue of
7.5% Dual Currency Swiss Franc Bonds dated 1986 due 1998/2001.
"TAX SHARING AGREEMENT" shall have the meaning provided in Section
7.8, as such agreement may be amended, supplemented or otherwise modified from
time to time in accordance with the terms of Section 8.11 hereof.
"TAXES" shall mean any present or future taxes, including any change
in the basis of taxation (except a change in the rate of overall net income),
levies, imposts, duties, fees, assessments, deductions, withholdings or other
charges of whatever nature, including, without limitation, income, gross
receipts, excise, property, sales, transfer, license, payroll, withholding,
social security and franchise taxes now or hereafter imposed or levied by the
United States, or any state, local or foreign government or by any department,
agency or other political subdivision or taxing authority thereof or therein and
all interest, penalties, additions to tax or similar liabilities with respect
thereto.
"TERMINATION EVENT" means (i) a Reportable Event, or (ii) the
initiation of any action by the Company, any member of the Company's ERISA
Controlled Group or any ERISA Plan fiduciary to terminate an ERISA Plan or the
treatment of an amendment to an ERISA Plan as a termination under ERISA, or
(iii) the institution of proceedings by the PBGC under Section 4042 of ERISA to
terminate
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an ERISA Plan or to appoint a trustee to administer any ERISA Plan.
"TEST DATE" shall mean, with respect to any date, (a) if such date is
a day of a month that occurs prior to the day on which the monthly financial
statements for the immediately preceding month required by Section 7.1(a) should
have been delivered pursuant to such Section, the first day of the immediately
preceding month, and (b) in all other cases, the first day of the month in which
such date occurs.
"TOTAL INTEREST EXPENSE" means, for any Person and its specified
Subsidiaries, for any period, total interest expense (including, without
limitation, amortization of debt discount and expense and imputed interest
expense attributable to capitalized leases in accordance with GAAP) of such
Person and such specified Subsidiaries on a consolidated basis, but excluding,
however, any amounts referred to in Section 3.1 payable to the Agent and the
Lenders on or before the Closing Date, debt discount or premium, if any, on the
Senior Subordinated Notes and commissions, underwriting discounts and other
transaction fees and charges relating to the initial issuance of any permitted
Indebtedness, and amortization of any such debt discount or premium, if any, on
the Senior Subordinated Notes and such commissions, underwriting discounts and
other transaction fees and charges, all as determined in conformity with GAAP.
"TOTAL REVOLVING LOAN COMMITMENT" shall mean, at any time, the sum of
the Revolving Loan Commitments of each of the Lenders at such time.
"TRANSACTIONS" shall mean the transactions contemplated by the
Transaction Documents, including, without limitation, the Securities
Refinancing, the NME Acquisition, the Debt Refinancing, the Existing Company
Credit Agreement Restructuring, the Existing Subsidiary Credit Agreement
Restructuring and the making of the Loans.
"TRANSACTION DOCUMENTS" shall mean, collectively, the Credit
Documents, the Subsidiary Credit Documents, the Master Transfer Supplement, the
Increased Commitment Note, the Subsidiary In-
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creased Commitment Note, the NME Purchase Agreement, the Subordinated Debt
Documents pertaining to the Senior Subordinated Notes, the Defeasance Agreement
and all other similar agreements, instruments, certificates, and other documents
executed, issued or delivered pursuant to or in connection with any of the
foregoing. Each reference in this Agreement or any of the other Credit
Documents to any of the foregoing Transaction Documents shall be to such
Transaction Document as in effect on the Closing Date, and as the same may
thereafter be amended, supplemented or otherwise modified in accordance with
Section 8.11.
"TRANSFER SUPPLEMENT" shall have the meaning provided in Section
12.4(e).
"TRUST" means the trust established pursuant to the Trust Agreement.
"TRUST AGREEMENT" means the Charter Medical Corporation Employee Stock
Ownership Trust Agreement between the Company and the ESOP Trustee.
"TYPE" shall mean any type of Loan determined with respect to the
interest option applicable thereto, i.e., whether a Base Rate Loan or Eurodollar
Loan.
"UNFUNDED ACCRUED BENEFITS" means with respect to any Plan at any
time, the amount (if any) by which (i) the present value of benefit liabilities
as defined in Section 4001(a)(16) of ERISA, together with any subsidized or
ancillary benefits under such Plan (whether or not vested), exceeds (ii) the
fair market value of all Plan assets allocable to such benefits, all determined
as of the then most recent valuation date for such Plan (on the basis of
assumptions prescribed by the PBGC for the purpose of Section 4044 of ERISA).
"UNRESTRICTED REVOLVING LOAN COMMITMENT" shall mean, for any Lender,
at any time, an amount equal to (a) the Revolving Loan Commitment of such Lender
at such time, MINUS (b) the product of the then Restricted Commitment Amount, if
any, and such Lender's Revolving Loan Percentage.
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"UNRESTRICTED SUBSIDIARY" shall mean, collectively: (a) each of the
Clinical Services Unit and the MIS Unit; (b) Strategic Advantage, Inc.; (c) each
Subsidiary of the Company created or acquired after the Closing Date that is
designated as an Unrestricted Subsidiary by the Company to the Agent in writing
within 90 days after the creation or acquisition thereof; and (d) each other
Subsidiary of the Company that is designated as such by the Company with the
prior written approval of the Required Lenders; PROVIDED that in no event shall
any Subsidiary of the Company be an Unrestricted Subsidiary if such Subsidiary
(i) has a 5% or more equity interest in a Restricted Subsidiary, or (ii)
constitutes a "Restricted Subsidiary" (or the equivalent thereof) under any
Subordinated Debt Document.
"VARIABLE RATE NOTES" shall mean the tax exempt variable rate demand
notes or bonds issued by industrial revenue or development authorities or
municipalities on behalf of the Company or any of its Subsidiaries and
identified as such on Schedule 8.7(e) hereto, or as otherwise permitted by
Section 8.7(e) or 8.7(g), all of which notes and bonds, except as otherwise set
forth on Schedule 8.7(e) hereto, are directly or indirectly supported by the
Subsidiary Letters of Credit.
"WHOLLY-OWNED RESTRICTED SUBSIDIARY" shall mean each Restricted
Subsidiary to the extent 95% or more (on a fully diluted basis) of the
outstanding shares of each class of capital stock thereof is directly or
indirectly owned by the Company or another Wholly-Owned Restricted Subsidiary.
"WORKING CAPITAL" means, at any time, Current Assets MINUS Current
Liabilities.
Section 11. AGENCY PROVISIONS
11.1 APPOINTMENTS. The Lenders hereby ratify and confirm that,
notwithstanding the consummation of the Existing Company Credit Agreement
Restructuring, the Existing Subsidiary Credit Agreement Restructuring and the
termination of the non-appointment provisions of the existing Intercreditor
Agreement pursuant to Section 12.21,
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BTCo shall continue to act as Collateral Agent (the "Collateral Agent") under
the Security Documents for the benefit of the agents and the lenders (including,
without limitation, the banks and other financial institutions issuing Letters
of Credit and Subsidiary Letters of Credit) from time to time under this
Agreement and the Subsidiary Credit Agreement, and hereby authorize and ratify
the authority of BTCo to act, in such capacity, as specified herein and in the
Security Documents. The Lenders hereby designate BTCo as Agent (for purposes of
this Section 11, the term "Agent" shall include BTCo in its capacity as
Collateral Agent) to act as specified herein and in the other Credit Documents.
The Lenders hereby designate First Union National Bank of North Carolina as Co-
Agent (the "Co-Agent") to act as specified herein. Each Lender hereby
irrevocably authorizes, and each holder of any Note by the acceptance of such
Note shall be deemed irrevocably to authorize, the Agent and the Co-Agent to
take such action on its behalf under the provisions of this Agreement, the other
Credit Documents and any other instruments and agreements referred to herein or
therein and to exercise such powers and to perform such duties hereunder and
thereunder as are specifically delegated to or required of the Agent and the Co-
Agent by the terms hereof and thereof and such other powers as are reasonably
incidental thereto. The Agent or the Co-Agent may perform any of its duties
hereunder by or through its agents or employees.
11.2 NATURE OF DUTIES. (a) Neither the Agent nor the Co-Agent shall
have any duties or responsibilities except those expressly set forth in this
Agreement and in the other Credit Documents. Neither the Agent, the Co-Agent
nor any of its officers, directors, employees or agents shall be liable to the
Lenders for any action taken or omitted by them as such hereunder or under any
other Credit Document or in connection herewith or therewith, unless caused by
their gross negligence or willful misconduct. The duties of the Agent and the
Co-Agent shall be mechanical and administrative in nature; neither the Agent nor
the Co-Agent shall have by reason of this Agreement or any Credit Document a
fiduciary relationship in respect of any Lender; and nothing in this Agreement
or any Credit Document, expressed or implied, is intended to or
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shall be so construed as to impose upon the Agent or the Co-Agent any
obligations in respect of this Agreement or any Credit Document except as
expressly set forth herein.
(b) The Agent shall not be under any duty to give the Collateral held
by it under the Security Documents any greater degree of care than that given to
its own similar property and shall have no duty to take any affirmative steps
with respect to the collection of amounts payable with respect to the Collateral
and shall not be required to invest any Cash held as Collateral except as
directed hereunder or under the Security Documents. Uninvested funds held as
Collateral shall not earn or accrue interest. The Agent shall have no duty to
see to or give notice with respect to any required filing, registration,
recording, refiling, reregistration or rerecording in respect of any of the
Security Documents or the Collateral or to the payment of any fees, charges or
taxes in connection therewith.
11.3 LACK OF RELIANCE ON THE AGENT AND CO-AGENT. Independently and
without reliance upon the Agent or the Co-Agent, each Lender, to the extent it
deems appropriate, has made and shall continue to make (i) its own independent
investigation of the financial condition and affairs of the Company and its
Subsidiaries in connection with the making and the continuance of the Loans
hereunder and the taking or not taking of any action in connection herewith, and
(ii) its own appraisal of the creditworthiness of the Company and its
Subsidiaries, and, except as expressly provided in this Agreement or in any
other Credit Document, neither the Agent nor the Co-Agent shall have any duty or
responsibility, either initially or on a continuing basis, to provide any Lender
with any credit or other information with respect thereto, whether coming into
its possession before the making of the Loans, or at any time or times
thereafter. Neither the Agent nor the Co-Agent shall be responsible to any
Lender for any recitals, statements, information, representations or warranties
herein or in any other Credit Document or in any document, certificate or other
writing delivered in connection herewith or therewith or for the execution,
effectiveness, genuineness, validity, enforceability,
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perfection, collectibility, priority or sufficiency of this Agreement or any
other Credit Document or the financial condition of the Company and its
Subsidiaries or any other Person or be required to make any inquiry concerning
either the performance or observance of any of the terms, provisions or
conditions of this Agreement or any other Credit Document, or the financial
condition of the Company, its Subsidiaries or any other Person or the existence
or possible existence of any Default or Event of Default.
11.4 ENFORCEMENT OF SECURITY DOCUMENTS. After the Agent has received
written notice from the Required Lenders that an Event of Default has occurred
and is continuing, the Agent shall, subject to the terms of the Security
Documents, take such steps with respect to collection or enforcement of any
Security Document and the Collateral (or any portion thereof), including without
limitation any action to foreclose upon any Collateral, as may be instructed in
writing by the Required Lenders; PROVIDED that in no event shall the Agent be
required, and in all cases it shall be fully justified in failing or refusing,
to take any action under or pursuant to any Security Document which, in the
reasonable opinion of the Agent, (a) would be contrary to the terms of any
Security Document or would subject it or its officers, employees or directors to
liability, unless and until the Agent shall be indemnified or tendered security
to its satisfaction by the Lenders against any and all loss, cost, expense or
liability in connection therewith, or (b) would be contrary to law, in each case
anything herein or elsewhere contained to the contrary notwithstanding. Except
as expressly provided in this Section 11.4, the Agent shall not be required to
take steps toward the collection of any amounts becoming payable upon any
Collateral, or to take any action towards enforcing any Security Document or to
institute, appear in or defend any action, suit or other proceeding in
connection therewith.
11.5 CERTAIN RIGHTS OF THE AGENT AND CO-AGENT. (a) If the Agent or
the Co-Agent shall request instructions from the Required Lenders with respect
to any act or action (including failure to act) in connection with this
Agreement or any other
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Credit Document, the Agent or the Co-Agent shall be entitled to refrain from
such act or taking such action unless and until the Agent or the Co-Agent shall
have received instructions from the Required Lenders; and neither the Agent nor
the Co-Agent shall incur liability to any Person by reason of so refraining.
The Agent and the Co-Agent shall be fully justified in failing or refusing to
take any action hereunder or under any Credit Document (i) if such action would,
in the opinion of the Agent or the Co-Agent, as the case may be, be contrary to
law or the terms of this Agreement or the Credit Documents, (ii) if it shall not
receive such advice or concurrence of the Required Lenders as it deems
appropriate, or (iii) if it shall not first be indemnified to its satisfaction
by the Lenders against any and all liability and expense which may be incurred
by it by reason of taking or continuing to take any such action. Without
limiting the foregoing, no Lender shall have any right of action whatsoever
against the Agent or the Co-Agent (absent such Person's gross negligence or
willful misconduct) as a result of it acting or refraining from acting hereunder
or under any other Credit Document in accordance with the instructions of the
Required Lenders.
(b) Notwithstanding the immediately preceding paragraph of this
Section 11.5, no provision of any Credit Document shall require the Agent or the
Co-Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or under any Credit
Document, or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it. The
Agent and the Co-Agent may at any time request written instructions from the
Lenders with respect to the interpretation of any Credit Document or in respect
of any action to be taken or not taken hereunder or thereunder.
11.6 RELIANCE. The Agent and the Co-Agent shall be entitled to rely,
and shall be fully protected in relying, upon any note, writing, resolution,
notice, statement, certificate, telex, teletype or telecopier message,
cablegram, radio-
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gram, order or other documentary, teletransmission or telephone message believed
by it to be genuine and correct and to have been signed, sent or made by the
proper Person. In the absence of its gross negligence or willful misconduct,
the Agent and the Co-Agent may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Agent and conforming to the
requirements of any Credit Document. The Agent or the Co-Agent may consult with
counsel satisfactory to it (including counsel for the Company), independent
public accountants and other experts selected by it and the advice of such
counsel, accountants or experts shall be full and complete authorization and
protection in respect of, and neither the Agent nor the Co-Agent shall be liable
for any action taken or omitted or suffered by it in accordance with, such
advice. Whenever in connection with the performance of its duties and
responsibilities under the Credit Documents the Agent or the Co-Agent shall deem
it necessary or desirable that a matter be proved or established in connection
with the taking, suffering or omitting of any action hereunder or under any
Credit Document by the Agent or the Co-Agent, such matter (unless other evidence
in respect thereof is specifically prescribed herein or in the relevant Credit
Document) may be deemed to be conclusively proved or established by a
certificate of an officer of the appropriate party, and such certificate shall
be full warranty to the Agent and the Co-Agent for any action taken, suffered or
omitted in reliance thereon.
11.7 INDEMNIFICATION. To the extent the Agent or the Co-Agent is not
reimbursed and indemnified by or on behalf of the Company, the Lenders will
reimburse and indemnify the Agent and the Co-Agent, in proportion to their
respective initial Revolving Loan Commitments, for and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including counsel fees and expenses) or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by or asserted
against the Agent or the Co-Agent in performing its duties hereunder or under
any other Credit Document or in any way relating to or arising out of this
Agreement or any other Credit Document; PROVIDED
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that no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements, finally determined by a court of competent jurisdiction and not
subject to any appeal to be resulting from the Agent's or the Co-Agent's, as the
case may be, gross negligence or willful misconduct.
11.8 THE AGENT AND CO-AGENT IN THEIR INDIVIDUAL CAPACITIES. With
respect to its obligations to make Loans under this Agreement, and with respect
to the Loans made by it and the Notes issued to it, the Agent and the Co-Agent
shall have the same rights and powers as any other Lender or holder of a Note
and may exercise the same as though it were not performing the duties specified
herein; and the term "Lenders," "Required Lenders," "holders of Notes," or any
similar terms shall, unless the context clearly otherwise indicates, include the
Agent and the Co-Agent in their respective individual capacities. The Agent and
the Co-Agent may accept deposits from, lend money to, and generally engage in
any kind of banking, trust, financial advisory or other business with the
Company or any of its Subsidiaries or any Affiliate of the Company or any of its
Subsidiaries as if it were not performing the duties specified herein, and may
accept fees and other consideration from the Company for services in connection
with this Agreement and otherwise without having to account for the same to the
Lenders.
11.9 HOLDERS. The Agent may deem and treat the payee of any Note as
the owner thereof for all purposes hereof unless and until a written notice of
the assignment, transfer or endorsement thereof, as the case may be, shall have
been filed with the Agent. Any request, authority or consent of any Person or
entity who, at the time of making such request or giving such authority or
consent, is the holder of any Note shall be conclusive and binding on any
subsequent holder, transferee, assignee or endorsee, as the case may be, of such
Note or of any Note(s) issued in exchange therefor.
11.10 SUCCESSOR AGENTS. (a) The Agent may resign from the
performance of all its functions and duties hereunder and/or under the other
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Credit Documents at any time by giving five Business Days' prior written notice
to the Company, the Co-Agent and the Lenders or may be removed, with or without
cause, by the Required Lenders, and, so long as no Event of Default has occurred
and is continuing, with the consent (which consent shall not be unreasonably
withheld) of the Company, at any time by giving five Business Days' prior
written notice to the Company, the Co-Agent and the Agent. Such resignation or
removal, as the case may be, shall take effect upon the appointment of a
successor Agent pursuant to clauses (b) and (c) below or as otherwise provided
below. The Co-Agent may resign at any time by giving 30 days prior written
notice thereof to the Company, the Agent and the Lenders.
(b) Upon any such notice of resignation or removal (and, in the
case of removal, so long as no Event of Default has occurred and is continuing,
upon the consent of the Company), as the case may be, the Required Lenders
shall, so long as no Event of Default has occurred and is continuing, with the
consent of the Company (which consent shall not be unreasonably withheld),
appoint a successor Agent hereunder or thereunder who may be the Co-Agent or
shall be a commercial bank, trust company or other financial institution with a
combined capital and surplus in excess of $1,000,000,000.
(c) If a successor Agent shall not have been so appointed within
fifteen Business Days of the Agent's notice of resignation or the Required
Lenders' notice of removal (and, in the case of removal, upon the consent of the
Company), as the case may be, the Agent, by five Business Days' notice to the
Company and the Lenders, may then, on behalf of the Lenders, appoint a successor
Agent (which shall be a commercial bank, trust company or other financial
institution with a combined capital and surplus in excess of $1,000,000,000) who
shall serve as Agent hereunder or thereunder until such time, if any, as the
Required Lenders appoint a successor Agent as provided above.
(d) If no successor Agent has been appointed pursuant to clause
(b) or (c) above by the 30th Business Day after the date such notice of
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resignation was given by the Agent or notice of removal was given by the
Required Lenders, as the case may be, the Agent's resignation or removal, as the
case may be, shall become effective and the Co-Agent and Lenders shall
thereafter perform all the duties of the Agent hereunder and/or under the other
Credit Documents until such time, if any, as the Required Lenders appoint a
successor Agent as provided above.
(e) Upon the acceptance of any appointment as Agent hereunder by
a successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations under
this Agreement. After any retiring Agent's resignation or removal, as the case
may be, hereunder as Agent, the provisions of this Section 11 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement.
Section 12. MISCELLANEOUS.
12.1 PAYMENT OF EXPENSES, ETC. The Company shall: (i) (A) whether
or not the transactions hereby contemplated are consummated, pay all reasonable
out-of-pocket costs and expenses of the Agent actually incurred in connection
with the administration (both before and after the execution hereof and
including advice of counsel as to the rights and duties of the Agent, the Co-
Agent and the Lenders with respect thereto) of, and in connection with the
preparation, execution and delivery of, the Credit Documents and the documents
and instruments referred to therein (including, without limitation, the
reasonable fees and disbursements of Skadden, Arps, Slate, Meagher & Flom) and
(B) pay all reasonable out-of-pocket costs and expenses of the Agent and each
Lender actually incurred in connection with the preservation of rights under,
enforcement of, and, after an Event of Default, the refinancing, renegotiation
or restructuring of the Credit Documents and the documents and instruments
referred to therein and any amendment, waiver or consent relating thereto
(including, without limitation, the reasonable fees and disbursements of counsel
for the Agent and the Lenders); (ii) pay
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and hold each of the Lenders harmless from and against any and all present and
future stamp or documentary taxes or any other excise or property taxes, charges
or similar levies which arise from any payment made hereunder (without
duplication of Section 4.5) or from the execution, delivery or registration of,
or otherwise with respect to, this Agreement or any of the other Credit
Documents and save each Lender harmless from and against any and all liabilities
with respect to or resulting from any delay or omission by the Company or any of
its Subsidiaries to pay any such taxes, charges or levies; and (iii) indemnify
the Agent, the Co-Agent and each Lender, its officers, directors, employees,
representatives and agents from and hold each of them harmless against any and
all costs, losses, liabilities, claims, damages or expenses actually incurred by
any of them (whether or not any of them is designated a party thereto) arising
out of or by reason of any investigation, litigation or other proceeding related
to any actual or proposed use by the Company or any Subsidiary of the Company of
the proceeds of any Loan or to any Credit Document or other Transaction Document
or any Transaction or other transaction contemplated hereby or thereby,
including, without limitation, the reasonable fees and disbursements of counsel
actually incurred in connection with any such investigation, litigation or other
proceeding. Notwithstanding anything in this Agreement to the contrary, the
Company shall not be responsible to the Agent, the Co-Agent, the Lenders or any
officer, director, employee, representative or agent of the foregoing (an
"Indemnified Party") for any losses, damages, liabilities or expenses which
result from such Indemnified Party's gross negligence or willful misconduct. It
is understood that the Company shall not, in connection with any single action,
suit, proceeding or claim or separate but substantially similar or related
actions, suits, proceedings or claims, arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys at the same time for the Indemnified Parties
(which firm shall be designated by the Agent) except that, if any Indemnified
Party other than the Agent shall determine, in its sole discretion, that there
may be a conflict in such firm representing the Agent and such Indemnified
Party, then the Company shall
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be liable for the reasonable fees and expenses of an additional firm for such
Indemnified Party whose interests may be in conflict. The Company's obligations
under this Section 12.1 shall survive any termination of this Agreement or any
other Credit Document.
12.2 RIGHT OF SETOFF. In addition to and not in limitation of all
rights of offset that any Lender or other holder of a Note may have under
applicable law, each Lender or other holder of a Note shall, subject to Section
1.13, upon the occurrence of any Event of Default and whether or not such Lender
or such holder has made any demand or the Company's obligations are matured,
have the right to appropriate and apply to the payment of the Obligations, all
deposits (general or special, time or demand, provisional or final) then or
thereafter held by and other indebtedness or property then or thereafter owing
by such Lender or other holder, whether or not related to this Agreement or any
transaction hereunder.
12.3 NOTICES. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including telex or telecopier) and mailed, telexed, telecopied or delivered, if
to any party, at its address specified opposite its signature below or at such
other address as shall be designated by such party in a written notice to the
other parties hereto. All such notices and communications shall, when mailed,
telexed, telecopied, or sent by reputable overnight courier, be effective (i)
when received or (ii) three Business Days after being deposited, postage
prepaid, in the mails, the Business Day following delivery, freight prepaid, to
an overnight courier or the same Business Day of transmission by telex or
telecopier, whichever of (i) or (ii) shall be earlier, except that notices and
communications to the Agent shall not be effective until received by the Agent.
12.4 BENEFIT OF AGREEMENT; LIMITATIONS ON RIGHTS OF OTHERS. (a)
This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto and their respective successors and permitted
assigns; PROVIDED that the Company may not assign or transfer any of
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its interest or obligations hereunder without the prior written consent of the
Lenders. Nothing in this Agreement (except for the proviso to the last sentence
of Section 12.21), whether express or implied, shall be construed to give to any
Person other than the Company, the Lenders, the Agent, the Co-Agent, the
Collateral Agent and their respective successors and permitted assigns any legal
or equitable right, remedy or claim under or in respect of this Agreement or any
commitments, covenants, conditions or other provisions contained herein, and the
same shall be for the sole and exclusive benefit of the Company, the Lenders,
the Agent, the Co-Agent, the Collateral Agent and their respective successors
and permitted assigns, as the case may be.
(b) Each Lender shall have the right at any time, upon the
Agent's, each L/C Bank's and the Company's consent (which consents shall not be
unreasonably withheld), to assign all or any part of its Loans, Notes, Revolving
Loan Commitment or Letter of Credit Exposure to one or more Lenders or other
commercial banks, insurance companies, savings and loan associations, savings
banks or other financial institutions; PROVIDED that any assignment shall
represent an aggregate principal amount of not less than $1,000,000 of Revolving
Loan Commitments, Loans, Notes and Letter of Credit Exposure in the case of any
such assignment to another Lender and not less than $5,000,000 in the case of
any other such assignment; PROVIDED FURTHER, that if such assigning Lender has
Loans and a Revolving Loan Commitment outstanding in an amount less than that
required for any such assignment, such assignment may be made in the entire
amount of such Loans and Revolving Loan Commitment; and, PROVIDED, FURTHER, that
the limitations on assignments and participations in this Section 12.4 and on
participations in clause (c) below shall not, nor shall they be deemed to, apply
to, limit or modify in any way, the obligations of each Lender to purchase
assignments or participations, as the case may be, in each other's Loans, Notes,
Letter of Credit Exposure and Revolving Loan Commitment pursuant to Section 1.13
and 2.4. In the case of any assignment of all or part of the Loans, the Notes,
the Revolving Loan Commitments or Letter of Credit Exposure authorized under
this Section
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12.4(b), the assignee shall have, to the extent of such assignment, the same
rights, benefits and obligations as it would if it were a Lender with respect to
such Loans, Note, Revolving Loan Commitment, or Letter of Credit Exposure,
including, without limitation, (x) the right to vote as a Lender, and (y) the
obligation to fund Loans (including deemed Loans made for the purpose of
reimbursing Swingline Borrowings) directly to the Agent pursuant to Section 1 or
issue Letters of Credit or purchase participations therein pursuant to Section 2
and, provided the assignee thereunder has assumed such assigning Lender's
obligations hereunder and provided the Agent shall have received the processing
fee from the assignor Lender referred to in Section 12.4(f), such assigning
Lender shall be relieved of its obligations hereunder to the extent of such
assignment and assumption.
(c) Notwithstanding Section 12.4(b), each Lender may grant
participations in all or any part of its Loans, Notes, Revolving Loan Commitment
or Letter of Credit Exposure to one or more commercial banks, insurance
companies, savings and loan associations, savings banks or other financial
institutions, pension funds or mutual funds; PROVIDED that: (i) any such
disposition shall not, without the consent of the Company, require the Company
to file a registration statement with the SEC or under the blue sky law of any
state; (ii) the holder of any such participation, other than an Affiliate of
such Lender, shall not be entitled to require such Lender to take or omit to
take any action hereunder except action directly affecting the extension of the
final maturity of the principal amount of, or any payment date for interest on,
a Loan allocated to such participation or the reduction in the principal amount
of, or the rate of interest payable on, the Loans or postponing any date fixed
for any payment in respect of principal of a Loan (including, without
limitation, any date on which mandatory prepayments under Section 4.2 are due),
allocated to such participation or the reduction in the principal amount of, or
the rate of interest payable on, such Loan or any fee payable hereunder, (iii)
such Lender shall require the holder of any such participation to agree in
writing to comply with the provisions of Section 12.17; (iv) the Company shall
not incur any addi-
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tional costs or expenses solely as a result of such grant of a participation;
and (v) the Lender selling such participation shall be able at any time such
Lender is to be replaced pursuant to Section 1.15 to repurchase such
participation. The Company hereby acknowledges and agrees that any such
disposition will give rise to a direct obligation of the Company to the
participant, and the participant shall be considered to be a "Lender" for
purposes of, Sections 1.10, 1.11, 1.12, 1.13, 7.1 and 12.2, and shall be
entitled to the benefits thereto to the extent that such Lender selling such
participation would be entitled to such benefits if the participation had not
been entered into or sold.
(d) Notwithstanding the foregoing provisions of this Section
12.4, (i) each Lender may, at any time sell, assign, transfer or negotiate all
or any part of its Loans, Revolving Loan Commitment, Notes or Letter of Credit
Exposure to any Affiliate of such Lender; PROVIDED that such Affiliate will not
be treated as a "Lender" for purposes of Section 4.5 or 12.12 hereof (unless
such assignment is made in accordance with Section 12.4(b)) but shall be treated
as a "Lender" for purposes of Sections 1.10, 1.11, 1.12, 1.13, 7.1 and 12.2;
PROVIDED FURTHER that the Company shall not incur any additional expenses as a
result of such sale, assignment, transfer or negotiation; and (ii) no Lender may
assign or grant a participation in its Revolving Loans, Letter of Credit
Exposure or Revolving Loan Commitment unless it is assigning or granting a
participation, on a PRO RATA basis, in its Subsidiary Credit Extensions and such
Lender's Commitment under and as defined in the Subsidiary Credit Agreement.
(e) For transfers effected by assignment of an interest in the
Loans, Notes, Revolving Loan Commitments and Letter of Credit Exposure, the
transferor and the transferee shall deliver to the Company and the Agent, a
transfer supplement (a "Transfer Supplement") executed by an officer of each of
the transferor and the transferee in the form of Exhibit K. Such Transfer
Supplement shall be deemed to amend this Agreement to the extent, and only to
the extent, necessary to reflect the addition of such transferee as a Lender and
the resulting adjustment of the Loans, the
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Notes, and the Revolving Loan Commitments or Letter of Credit Exposure arising
from the purchase by such transferee (and such amendment shall not require the
consent of any Person). Promptly after the consummation of any transfer to a
transferee pursuant hereto, the Lender, the Agent and the Company shall make
appropriate arrangements so that a replacement Note is issued to such Lender and
a new Note is issued to such transferee, in each case in principal amounts
reflecting such transfer.
(f) In the case of an assignment, concurrently with delivery of
the Transfer Supplement, the assignor Lender shall deliver to the Agent, for the
Agent's account, $3,500 as a processing fee; PROVIDED that in the case of an
assignment by a Lender to another Lender such fee shall be $1,500.
(g) Notwithstanding any other provision set forth in this
Agreement to the contrary, any Lender may at any time and from time to time
pledge as collateral for advances, assign or endorse for discount, or otherwise
transfer all or any portion of its rights under this Agreement and its Note to
any Federal Reserve Bank pursuant to the Federal Reserve Act and related
regulations of the Board of Governors of the Federal Reserve System (as such act
or regulations are then or thereafter in effect or any successor act or
regulations), as well as any applicable operating circular or other requirements
of such Board of Governors or Federal Reserve Bank (as then or thereafter in
effect). Any Federal Reserve Bank may at any time and from time to time
subsequently transfer all or any portion of the rights acquired by such Lender
pursuant to this subsection to any Person. No such pledge, assignment,
endorsement or other transfer shall have the effect of releasing the Agent, any
Lender or the Company from its respective obligations or conferring any
obligations on the pledgee, assignee, endorsee or transferee, as the case may
be, under this Agreement or the Note. The requirements of subsections (b), (c),
(d), (e) and (f) of this Section 12.4 shall be deemed inapplicable to pledges,
assignments, endorsements or other transfers permitted by this subsection.
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(h) If, pursuant to this subsection, any interest in this
Agreement or any Note is transferred to any assignee which is organized under
the laws of any jurisdiction other than the United States or any state thereof,
or the District of Columbia, the transferor Lender shall cause such assignee
concurrently with the effectiveness of such transfer, (i) to represent to the
transferor Lender (for the benefit of the transferor Lender, the Agent and the
Company) that it is either (A) entitled to the benefits of an income tax treaty
with the United States which provides for an exemption from United States
withholding tax on interest and other payments which may be made by the Company
to such Lender pursuant to the terms of this Agreement or any other Credit
Document; or (B) is engaged in the trade or business within the United States,
(ii) to furnish to the transferor Lender, the Agent and the Company either U.S.
Internal Revenue Service Form 4224 or U.S. Internal Revenue Service Form 1001
(wherein such assignee claims entitlement to complete exemption from U.S.
federal withholding tax on all payments hereunder), and (iii) to agree (for the
benefit of the transferor Lender, the Agent and the Company) to provide to the
transferor Lender, the Agent and the Company a new Form 4224 or Form 1001 upon
the obsolescence of any previously delivered form and comparable statements in
accordance with applicable U.S. laws and regulations and amendments duly
executed and completed by such assignee, and to comply from time to time with
all applicable U.S. laws and regulations with regard to such withholding tax
exemption.
(i) Each Lender represents and warrants to the Company and the
Agent that it is either (A) a United States person (as defined in Section
7701(a)(30) of the Code); (B) entitled to the benefits of an income tax treaty
with the United States which provides for an exemption from United States
withholding tax on interest and other payments which may be made by the Company
to such Lender pursuant to the terms of this Agreement or any other Credit
Document; or (C) engaged in trade or business within the United States. Each
Lender that is organized under the laws of any jurisdiction other than the
United States or any State thereof (including the District of Columbia) agrees
to furnish to the Agent and the Company, prior to
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the date of the first interest payment hereunder, two copies of either U.S.
Internal Revenue Service Form 4224 or U.S. Internal Revenue Service Form 1001
(wherein such Lender claims entitlement to complete exemption from U.S. federal
withholding tax on all payments hereunder) and to provide to the Agent and the
Company a new Form 4224 or Form 1001 (or, if necessary, any successor forms)
upon the obsolescence of any previously delivered form and comparable statements
in accordance with applicable U.S. laws and regulations and amendments duly
executed and completed by such Lender, and to comply from time to time with all
applicable U.S. laws and regulations with regard to such withholding tax
exemptions. Notwithstanding any other provisions of this Agreement, the
representations, warranties and obligations of the Lenders set forth in Section
12.4(h) and this Section 12.4(i) shall survive the termination of the Lenders'
Revolving Loan Commitment, the borrowing of the Loans and the assignment, sale,
repayment or other disposition of the Loans or any interest therein.
(j) Except pursuant to an assignment, but only to the extent set
forth in such assignment, no Lender shall, as between the Company and that
Lender, be relieved of any of its obligations hereunder as a result of any sale,
transfer or negotiation of, or granting of participations in, all or any part of
the Revolving Loan Commitment, Loans, Notes or Letter of Credit Exposure of that
Lender or other obligations owed to such Lender.
12.5 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the part
of the Agent, the Co-Agent, the Collateral Agent or any Lender or any holder of
a Note in exercising any right, power or privilege hereunder or under any other
Credit Document and no course of dealing between the Company and the Agent, the
Co-Agent, the Collateral Agent or any Lender or the holder of any Note shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder or under any other Credit Document preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege hereunder or thereunder. The rights and remedies herein expressly
provided are cumulative and not
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exclusive of any rights or remedies which the Agent, the Co-Agent, the
Collateral Agent or any Lender or the holder of any Note would otherwise have.
No notice to or demand on the Company in any case shall entitle the Company to
any other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Agent, the Co-Agent, the Collateral
Agent, the Lenders or the holder of any Note to any other or further action in
any circumstances without notice or demand.
12.6 PAYMENTS PRO RATA. (a) The Agent agrees that upon receipt of
each payment from or on behalf of the Company in respect of any Obligations of
the Company hereunder, it shall promptly thereafter (on the same day if such
payment was received by the Agent prior to 11:00 A.M. (New York, New York time)
or on the next Business Day if received thereafter) distribute funds in the form
received relating to such payment to the Lenders PRO RATA based upon their
respective shares, if any, of the Obligations with respect to which such payment
was received after giving effect to the purchase of assignments and
participations effected pursuant to Section 1.13 and 2.4 hereof.
(b) Each of the Lenders agrees, for the benefit of all other
Lenders, that if, at any time following the acceleration of any of the
Obligations, it should receive any amount payable under any Credit Document
(including without limitation any voluntary payment, realization upon security,
exercise of the right of setoff or banker's lien, counterclaim or cross action,
enforcement of any right under the Credit Documents (including without
limitation the Subsidiary Credit Agreement, or otherwise) which is applicable to
the payment of any of the Obligations, of a sum which with respect to the
related sum or sums received by other Lenders is in a greater proportion than
the total of the Obligations then owed and due to such Lender bears to the total
of the Obligations then owed and due to all the Lenders immediately prior to
such receipt, then such Lender receiving such excess payment shall purchase for
cash without recourse or warranty from the other Lenders an interest in the
Obligations of the Company and each Subsidiary Borrower, as the case may be, to
such Lenders in such
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amount as shall result in a proportional participation by all of the Lenders in
such amount; PROVIDED that if all or any portion of such excess amount is
thereafter recovered from such Lender, such purchase shall be rescinded and the
purchase price restored to the extent of such recovery, but without interest.
Each of the Lenders hereby agrees that by accepting the benefits of Section
12.6(b) of the Subsidiary Credit Agreement it shall be bound by the terms of
said Section.
(c) Notwithstanding anything to the contrary contained herein,
the provisions of the preceding Sections 12.6(a) and (b) shall be subject to the
express provisions of this Agreement which require, or permit, differing
payments to be made to Non-Defaulting Lenders as opposed to Defaulting Lenders.
12.7 CALCULATIONS; COMPUTATIONS; RECORDS. (a) All financial
statements to be furnished to the Lenders pursuant hereto shall be made and
prepared in accordance with GAAP, except as otherwise provided herein. All
accounting terms not specifically defined herein shall be construed in
accordance with GAAP and all financial calculations to be made hereunder shall
be made on the basis of and in accordance with GAAP (except as provided herein).
(b) All determinations of interest and Commitment Commission and
other fees hereunder shall be made on the basis of the actual number of days
elapsed (including the first day but excluding the last day) over a year of 360
days. Each such determination by the Agent of an interest rate or amount of
Commitment Commission or other fee or amounts hereunder shall, except in the
case of manifest error, be final, conclusive and binding for all purposes.
(c) If the Company is required by law or by order of a
regulatory agency having jurisdiction over the Company to change its fiscal
quarters or fiscal year, the parties hereto agree to enter into negotiations in
order to amend the financial covenants, standards or terms found in Sections 4,
7, 8 and 10 so as to equitably reflect such changes with the desired result that
the cri-
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teria for evaluating the Company's financial condition shall be the same after
such changes as if such changes had not been made.
(d) The Agent shall maintain records of all Borrowings and all
payments received by the Agent in respect of Obligations; PROVIDED that the
Agent shall not be liable in any manner to any Lender or the Company for any
error or omissions in respect of such records.
12.8 GOVERNING LAW; APPOINTMENT OF AGENT FOR SERVICE OF PROCESS;
SUBMISSION TO JURISDICTION. THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE
CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK
(WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF). ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT, ANY OTHER CREDIT DOCUMENT
OR ANY DOCUMENT RELATED THERETO MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW
YORK OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK,
AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE COMPANY HEREBY CONSENTS,
FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE JURISDICTION OF THE AFORESAID
COURTS SOLELY FOR THE PURPOSE OF ADJUDICATING ITS RIGHTS OR THE RIGHTS OF THE
AGENT, THE CO-AGENT AND THE LENDERS WITH RESPECT TO THIS AGREEMENT, ANY OTHER
CREDIT DOCUMENT OR ANY DOCUMENT RELATED THERETO. THE COMPANY HEREBY IRREVOCABLY
DESIGNATES CT CORPORATION SYSTEM, LOCATED AT 1633 BROADWAY, NEW YORK, NEW YORK
10019 AS THE DESIGNEE, APPOINTEE AND AGENT OF THE COMPANY TO RECEIVE, FOR AND ON
BEHALF OF THE COMPANY, SERVICE OF PROCESS IN SUCH JURISDICTIONS IN ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT, ANY OTHER CREDIT DOCUMENT,
OR ANY DOCUMENT RELATED THERETO AND SUCH SERVICE SHALL, TO THE EXTENT PERMITTED
BY APPLICABLE LAW, BE DEEMED COMPLETED TEN DAYS AFTER DELIVERY THEREOF TO SAID
AGENT. IT IS UNDERSTOOD THAT A COPY OF SUCH PROCESS SERVED ON SUCH AGENT WILL
BE PROMPTLY FORWARDED BY MAIL TO THE COMPANY AT ITS ADDRESS SET FORTH OPPOSITE
ITS SIGNATURE BELOW, BUT THE FAILURE OF THE COMPANY TO RECEIVE SUCH COPY SHALL
NOT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, AFFECT IN ANY WAY THE SERVICE OF
SUCH PROCESS. THE COMPANY HEREBY IRREVOCABLY WAIVES, TO THE EXTENT PERMITTED BY
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APPLICABLE LAW, ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO
THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
RESPECTIVE JURISDICTIONS IN RESPECT OF THIS AGREEMENT, ANY OTHER CREDIT DOCUMENT
OR ANY DOCUMENT RELATED THERETO. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE
AGENT, THE CO-AGENT, ANY LENDER OR ANY HOLDER OF A NOTE TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.
12.9 COUNTERPARTS. This Agreement 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, but all of which
shall together constitute one and the same instrument. A complete set of
counterparts shall be lodged with the Company, the Co-Agent and the Agent.
12.10 EFFECTIVENESS; FUNDING OF MASTER TRANSFER SUPPLEMENT. This
Agreement shall become effective on the later of (i) the date (the "Execution
Date") on which each of the Company, the Subsidiary Borrowers, the Co-Agent, the
Agent and each Lender shall have signed a counterpart of the Master Transfer
Supplement and this Agreement, as applicable (whether the same or different
counterparts), and shall have delivered the same to the Agent or, in the case of
the Lenders, shall have given to the Agent telephonic (confirmed in writing),
written or telex notice (actually received) that the same has been signed and
mailed to it, and (ii) the date on which the conditions contained in Sections 5
and 12.10(b) are met to the satisfaction of the Agent and the Required Lenders.
Unless the Agent has received actual notice from any Lender that the conditions
contained in Section 5 have not been met to its satisfaction, then, upon the
satisfaction of the condition described in clause (i) of the immediately
preceding sentence and upon the Agent's good faith determination that the
conditions described in clause (ii) of the immediately preceding sentence have
been met, the Existing Company Credit Agreement Restructuring and the amendment
and restatement of the Existing Company Credit Agreement set forth herein shall
have been
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deemed to have occurred, regardless of any subsequent determination that one or
more of the conditions thereto had not been met (although the occurrence of the
Existing Company Credit Agreement Restructuring and the amendment and
restatement of the Existing Company Credit Agreement set forth herein shall not
release the Company from any liability for failure to satisfy one or more of the
applicable conditions contained in Section 5). The Agent will give the Company,
the Co-Agent and each Lender prompt written notice of the occurrence of the
consummation of the Existing Company Credit Agreement Restructuring.
(b) On the date specified in the initial Notice of Borrowing
(under and as defined in the Subsidiary Credit Agreement) for the initial
borrowing of Subsidiary Loans, each Lender shall have delivered to the Agent for
the account of the Existing Lenders that are party to the Master Transfer
Supplement, as transferors, an amount equal to (i) in the case of each New
Lender, the Existing Loans and Existing Subsidiary Loans to be purchased by such
New Lender on such date pursuant to the Master Transfer Supplement and (ii) in
the case of each Continuing Lender, the amount, if any, by which Existing Loans
to be purchased by such Continuing Lender on such date pursuant to the Master
Transfer Supplement exceed the amount of all of such Continuing Lender's
Existing Loans outstanding on such date before giving effect to any of the
Transactions. Notwithstanding anything to the contrary contained in this
Section 12.10(b), in satisfying the foregoing condition, unless the Agent shall
have been notified by any Lender prior to the occurrence of such date that such
Lender does not intend to make available to the Agent such Lender's share of the
purchase price for the Existing Loans and Existing Subsidiary Loans required to
be paid by such Lender on such date pursuant to the Master Transfer Supplement,
then the Agent may, in reliance on such assumption, make available to the
Existing Lenders the corresponding amounts in accordance with the provisions of
the Master Transfer Supplement, and the making available by the Agent of such
amounts shall satisfy the condition contained in this Section 12.10(b).
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12.11 HEADINGS DESCRIPTIVE. The headings of the several sections and
subsections of this Agreement and the Table of Contents are inserted for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Agreement.
12.12 AMENDMENT OR WAIVER. (a) No amendment or waiver of any
provision of this Agreement or the other Credit Documents, nor consent to any
departure by the Company or any of its Subsidiaries therefrom, shall in any
event be effective unless the same shall be in writing and signed by the
Required Lenders, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; PROVIDED that no
amendment, waiver or consent shall, unless in writing and signed by all the Non-
Defaulting Lenders, do any of the following: (i) waive any of the conditions
specified in Section 5.1, (ii) increase the Revolving Loan Commitments of the
Lenders or subject the Lenders to any additional monetary obligations
(including, without limitation, extending the periods of the Revolving Loan
Commitments during which the Lenders are obligated to make Loans), (iii) reduce
the principal of, or interest on, the Loans outstanding or any Commitment
Commission or other fees hereunder, (iv) postpone any date fixed for any payment
in respect of principal of, or interest on, the Loans or any Commitment
Commission or other fees hereunder (including, without limitation, any date on
which mandatory prepayments under Section 4.2 are due), (v) change the
percentage of the Revolving Loan Commitments or the aggregate unpaid principal
amount of the Notes, or the number or identity of Lenders, which shall be
required for the Lenders or any of them to take any action hereunder, (vi) amend
or waive this Section 12.12 or any of Sections 1.10, 1.11, 1.12, 1.13, 4.5, 9.1
and 12.1 or the definitions of any terms to the extent used in such Sections, or
(vii) release all or substantially all of the guarantors from their obligations
under the Subsidiary Guaranty or release all or substantially all of the
Collateral under the Security Documents; PROVIDED FURTHER that, notwithstanding
the foregoing, any Lender may agree to reduce or postpone the due date of any
amounts (other than principal of, and interest on, Loans
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and Commitment Commissions and other fees) payable to it hereunder by the
Company; and, PROVIDED FURTHER, that no amendment, waiver or consent shall,
unless in writing and signed by the Agent in addition to the Lenders required
hereinabove to take such action, affect the rights or duties of the Agent under
this Agreement or any Credit Document. For purposes hereof, "Loans", shall
include, without duplication, the Letter of Credit Outstandings and outstanding
Swingline Borrowings.
(b) Each Lender, the Agent and the Co-Agent hereby authorizes
the Collateral Agent to (i) release any Restricted Subsidiary from its
obligation under the Subsidiary Guaranty if all of the capital stock of such
Restricted Subsidiary that is owned by the Company or any of its other
Restricted Subsidiaries is disposed of by the Company and/or such Restricted
Subsidiaries pursuant to any Asset Sale which is consented to by the Required
Lenders or is otherwise permitted hereby; PROVIDED that prior to or
simultaneously with such release such Restricted Subsidiary is released from its
guaranty, if any, of each and any Permitted Subordinated Indebtedness; and (ii)
release any Collateral under any Security Document to the extent such Collateral
(A) is disposed of by the Company or any of its Subsidiaries pursuant to an
Asset Sale consented to by the Required Lenders or otherwise permitted hereby,
(B) is required to be released pursuant to Section 8.8 hereof as a result of a
contribution of Facility to a Permitted Joint Venture in accordance therewith,
(C) is owned by a guarantor that is released from the Subsidiary Guaranty
pursuant to clause (i), or (D) is otherwise expressly required to be released
pursuant to any provision of the Credit Documents.
12.13 SURVIVAL. All indemnities set forth herein including, without
limitation, in Sections 1.10, 1.11, 2.5, 4.5, 11.7 and 12.1 shall survive the
execution and delivery of this Agreement and the Notes and the making and
repayment of the Loans hereunder.
12.14 DOMICILE OF LOANS. Subject to the provisions of Section 1.14
hereof, each Lender may make, transfer or carry its Loans at, to or for the
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account of any branch office, subsidiary or affiliate of such Lender.
12.15 INDEPENDENT NATURE OF LENDERS' RIGHTS. The amounts payable at
any time hereunder to each Lender shall be a separate and independent debt, and
each Lender shall be entitled to protect and enforce its rights arising out of
this Agreement, and it shall not be necessary for any other Lender to be joined
as an additional party in any proceeding for such purpose.
12.16 INDEPENDENCE OF COVENANTS. All covenants hereunder shall be
given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitations of, another covenant shall
not avoid the occurrence of a Default or Event of Default if such action is
taken or condition exists.
12.17 CONFIDENTIALITY. Subject to Section 12.4(c), the Lenders shall
hold all non-public information, which has been identified as such by the
Company, obtained in connection with or pursuant to the negotiation, preparation
or requirements of this Agreement or any of the Credit Documents in accordance
with the customary procedures for handling confidential information of this
nature and in accordance with safe and sound banking practices and in any event,
subject to Section 12.4(c), may make any disclosure reasonably required by any
prospective bona fide transferee or participant in connection with the
contemplated transfer of any Revolving Loan Commitment, Note, Loan or rights and
obligations in respect of any Letter of Credit or participation therein so long
as any such contemplated assignee or participant has agreed in writing (with a
copy to each of the Company and the Agent) to be bound by the provisions of this
Section 12.17 or as required by any governmental agency or representative
thereof or pursuant to legal process; PROVIDED that, unless specifically
prohibited by applicable law or court order, each Lender shall notify the
Company of any request by any governmental agency or representative thereof
(other than any such request in connection with an examination of the financial
condition of such
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Lender by such governmental agency) for disclosure of any such non-public
information prior to disclosure of such information; and PROVIDED FURTHER that
in no event shall any Lender be obligated or required to return any materials
furnished by the Company or any of its Subsidiaries.
12.18 PERFORMANCE OF OBLIGATIONS. The Company agrees that the Agent,
upon the direction of the Required Lenders may, but shall have no obligation to,
make any payment or perform any act required of the Company under the Credit
Documents or any of them, or take any other action which such party in its
reasonable discretion deems necessary or desirable to protect or preserve the
Collateral, including, without limitation, any action to (i) pay or discharge
taxes, Liens or other encumbrances levied or placed on or threatened against any
Collateral, and (ii) effect any repairs or obtain any insurance called for by
the terms of any of the Credit Documents and to pay all or any part of the
premiums therefor and the costs thereof. The Company hereby agrees to pay, on
demand, to the Agent (i) any and all sums incurred by the Agent pursuant to this
Section 12.18, and (ii) interest on all such sums (A) prior to the occurrence of
an Event of Default, at the applicable rate provided for in Section 1.8 for
Revolving Loans that are Base Rate Loans, and (B) upon the occurrence and during
the continuance of an Event of Default, at the rate provided for in Section
1.8(d) hereof for such type of Loans, in each case, during the period beginning
on the date on which each such sum is paid by the Agent and ending on the date
on which the Agent actually receives payment therefor.
12.19 COLLATERAL. It is the intention and understanding of each of
the parties hereto that the payment and performance in full of the Obligations
shall be secured by the Collateral. Reference is hereby made to all of the
Security Documents for a statement of the terms and provisions thereof and for a
complete description of the Collateral.
12.20 WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, EACH OF THE COMPANY, THE AGENT, THE CO-AGENT AND THE LENDERS HEREBY
IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY
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JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT OR ANY MATTER ARISING HEREUNDER
OR THEREUNDER.
12.21 CERTAIN PROVISIONS CONCERNING EXISTING COMPANY CREDIT AGREEMENT
RESTRUCTURING. (a) On and as of the occurrence of the Existing Company Credit
Agreement Restructuring in accordance with Section 12.10 hereof, each New Lender
shall become a "Lender" under, and for all purposes of, this Agreement and the
other Credit Documents.
(b) The parties hereto acknowledge that no Existing Lender is
obligated to enter into the Master Transfer Supplement, as a transferee, or to
become a Continuing Lender. By their execution and delivery hereof, the Company
and the Required Lenders (under and as defined in the Existing Company Credit
Agreement after giving effect to the assignments contemplated by the Master
Transfer Supplement) consent to (i) the voluntary repayment by the Company on
the Closing Date of all Existing Loans of the Non-Continuing Lenders that do not
become parties to the Master Transfer Supplement, as transferees, (ii) the
voluntary termination by the Company of the Existing Commitments of each such
Non-Continuing Lender, (iii) the amendment, restatement, consolidation and
increase or decrease, as the case may be, of each Continuing Lender's Existing
Commitments pursuant to Section 1.1(a) hereof, (iv) the amendment and
restatement of the Existing Company Credit Agreement as set forth herein, and
(v) the termination of the Existing Intercreditor Agreement (other than the
provisions thereof appointing BTCo as Collateral Agent and the provisions
thereof which expressly survive the termination of such agreement); in each case
to be effective on, and contemporaneously with the occurrence of, the Closing
Date.
(c) Notwithstanding anything to the contrary contained in the
Existing Company Credit Agreement or any Credit Document as in effect
immediately prior to the Closing Date, the Company, the Agent, the Co-Agent, the
Collateral Agent and each of the Lenders hereby agrees that effective as of the
Closing Date, (i) the Existing Intercreditor Agreement, other than the
appointment therein of
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BTCo as Collateral Agent and the provisions thereof that expressly survive the
termination of such agreement, shall be terminated, and (ii) the Existing
Commitment of each Non-Continuing Lender that does not become a party to the
Master Transfer Supplement, as a transferee, shall be terminated, and such Non-
Continuing Lender shall no longer constitute a "Lender" under this Agreement and
the other Credit Documents; PROVIDED that all indemnities of the Credit Parties
under the Existing Company Credit Agreement, the Original Company Credit
Agreement and the other Credit Documents (as in effect immediately prior to the
Closing Date) for the benefit of such Non-Continuing Lender shall survive in
accordance with the terms thereof for the benefit of such Non-Continuing Lender.
12.22 ENTIRE AGREEMENT. This Agreement, and the Notes, Security
Documents, and other instruments and documents executed and delivered in
connection herewith and therewith, constitute the entire understanding between
the parties hereto with respect to the transactions contemplated hereby, and,
except to the extent specified to the contrary below, all prior agreements,
understandings, representations and statements with respect to such transactions
are, as of the Closing Date, merged with and into this Agreement and the other
Credit Documents. Notwithstanding the foregoing, (a) indemnification
obligations of the Company under Sections 1.08(h) and 12.01 of the Existing
Company Credit Agreement and the Original Company Credit Agreement shall survive
the execution and effectiveness of this Agreement and, in the case of the Agent,
the Collateral Agent and the Continuing Lenders, shall be deemed to be
Obligations hereunder, and (b) the agreements and indemnities of the Company in
favor of BTCo under the commitment letter and the fee letter, as either of the
same may be modified, concerning the Transactions and the agreement of BTCo to
pay certain up-front fees to the Lenders in connection with their commitments,
shall, to the extent the matters set forth therein are not specifically covered
hereby, survive the execution and effectiveness of this Agreement and the making
of the Loans.
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IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Second Amended and Restated
Credit Agreement as of the date first above written.
ADDRESS:
BORROWER:
577 Mulberry Street CHARTER MEDICAL CORPORATION
Macon, Georgia 31298
Attn: James R. Bedenbaugh, By
Treasurer ----------------------------------------------
Name: James R. Bedenbaugh
Title: Treasurer
LENDER PARTIES:
AGENT:
280 Park Avenue BANKERS TRUST COMPANY,
New York, NY 10017 Individually and as Agent
Attn: Michael Shraga,
Managing Director; By
-----------------------------------------------
Name:
Title:
with copies to:
Bankers Trust Company
130 Liberty Street
30th Floor
New York, New York 10006
Attn: Mary Kay Coyle,
Vice President
CO-AGENT:
First Union National Plaza FIRST UNION NATIONAL BANK OF
301 S. College St. NORTH CAROLINA, Individually
Charlotte, NC 28288 and as Co-Agent
By
-----------------------------------------------
Name:
Title:
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LEAD MANAGERS:
1230 Peachtree Street BANK OF AMERICA NATIONAL
Suite 3600 TRUST AND SAVINGS ASSOCIATION
Atlanta, GA 30309
By
-----------------------------------------------
Name:
Title:
75 Wall Street DRESDNER BANK AG, New York
New York, NY 10005-2889 Branch and Grand Caymen Branch
By
-----------------------------------------------
Name:
Title:
By
-----------------------------------------------
Name:
Title:
5665 New Northside GENERAL ELECTRIC CAPITAL
Suite 200 CORPORATION
Atlanta, GA 30328;
By
-----------------------------------------------
Name:
Title:
Two World Financial Center THE MITSUBISHI BANK, LIMITED
225 Liberty Street New York Branch
New York, NY 10281
By
-----------------------------------------------
Name:
Title:
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Annex I to
Second Amended and Restated
Credit Agreement
---------------------------
<TABLE>
<CAPTION>
SCHEDULE OF COMMITMENTS
-----------------------
REVOLVING LOAN LENDER'S REVOLVING
COMMITMENT LOAN PERCENTAGE
-------------- ------------------
<S> <C> <C>
LENDERS
Bankers Trust Company $ 60,000,000 20.00000000%
First Union National Bank of 55,000,000 18.33333333
North Carolina
General Electric Capital 50,000,000 16.66666667
Corporation
Bank of America National 45,000,000 15.00000000
Trust and Savings Association
Dresdner Bank AG, New York 45,000,000 15.00000000
Branch and Grand Cayman Branch
The Mitsubishi Bank, Limited 45,000,000 15.00000000
------------ -------------
Total $300,000,000 100.00000000%
------------ -------------
------------ -------------
</TABLE>
<PAGE>
Annex II to
Second Amended and Restated
Credit Agreement
---------------------------
NEW LENDERS
-----------
First Union National Bank of North Carolina
<PAGE>
SCHEDULE 6.2
SCHEDULE OF VIOLATIONS OF CONTRACTS
NONE
<PAGE>
SCHEDULE 6.4
SCHEDULE OF EXCEPTIONS TO GAAP
The statement of cash flows does not begin with net income and disclose all
reconciling items to arrive at a net increase or decrease in cash. Additional-
ly, the statement of cash flows does not classify cash flows into the three
categories (operating, investing and financing) required by GAAP.
The balance sheet presents stockholders' deficit as one condensed caption,
rather than showing all classifications making up stockholders' deficit.
The statements also do not include footnote disclosures required by GAAP.
Statement of changes in stockholders' equity is not included as required by
GAAP.
The NME interim EBITDA information, income statements and balance sheets for the
assets subject to the NME Acquisition that are described in Section 6.4, 7.1(j)
and 10.1(a) have not been prepared in accordance with GAAP. As originally
prepared by NME, such information did not include expenses for chief executive
officer and chief financial officer bonuses, management information services
costs, allocated intercompany management fees and income taxes. The data in
Schedule 10.1(a) includes, and the data to be delivered pursuant to Section
10.1(a) will include, the Company's good faith estimates of such bonuses and
management information services as calculated by the Company in a reasonable
manner.
<PAGE>
SCHEDULE 6.5
SCHEDULE OF LITIGATION
NONE
<PAGE>
SCHEDULE 6.7
SCHEDULE OF APPROVALS
1.) Filings required in connection with the perfection of Liens under the
Security Documents.
<PAGE>
SCHEDULE 6.10
SCHEDULE OF EMPLOYEE BENEFIT PLANS
DEFINED BENEFIT PLANS
1. Charter Lake Hospital Pension Plan.
2. Charter Northside Hospital Pension Plan.
3. Middle Georgia Hospital Pension Plan.
DEFINED CONTRIBUTION PLANS
1. Charter Medical Corporation Cash Accumulation Plan
(as amended and restated effective January 1, 1992).
2. Charter Medical Corporation Employee Stock Ownership Plan (ESOP).
<PAGE>
SCHEDULE 6.16
SCHEDULE OF SUBSIDIARIES
DIRECT AND INDIRECT SUBSIDIARIES OF CHARTER MEDICAL CORPORATION
<TABLE>
<CAPTION>
Jurisdiction Authorized Capital Common Stock
Name of Corporation of Incorporation (All Common Stock)(1) Issued and Outstanding
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Ambulatory Resources, Inc. Georgia 1,000 shares 550 shares
Subsidiary:
Gwinnett Immediate Care Center, Inc. Georgia 1,000 shares 500 shares
Holcomb Bridge Immediate Care Center, Inc. Georgia 1,000 shares 100 shares
Atlanta MOB, Inc. Georgia 1,000 shares 500 shares
Beltway Community Hospital, Inc. Texas 10,000 shares 1,000 shares
CCM, Inc. Nevada 1,000 shares 100 shares Ch. Med. Corp.
100 shares CMCI, Inc.
Charter Alvarado Behavioral Health System, Inc. California 1,000 shares 1,000 shares
Charter Appalachian Hall Behavioral Health System, Inc. North Carolina 1,000 shares 1,000 shares
Charter Arbor Indy Behavioral Health System, Inc. Indiana 1,000 shares 1,000 shares
Charter Augusta Behavioral Health System, Inc. Georgia 1,000 shares 500 shares
Charter Bay Harbor Behavioral Health System, Inc. Florida 1,000 shares 500 shares
Charter Beacon Behavioral Health System, Inc. Indiana 1,000 shares 1,000 shares
Charter Behavioral Health System at Fair Oaks, Inc. New Jersey 1,000 shares 1,000 shares
Charter Behavioral Health System at Hidden Brook, Inc. Maryland 1,000 shares 1,000 shares
Charter Behavioral Health System at Los Altos, Inc. California 1,000 shares 1,000 shares
Charter Behavioral Health System at Potomac Ridge, Inc. Maryland 1,000 shares 1,000 shares
Charter Behavioral Health System at Warwick Manor, Inc. Maryland 1,000 shares 1,000 shares
Charter Behavioral Health System of Athens, Inc. Georgia 1,000 shares 500 shares
Charter Behavioral Health System of Austin, Inc. Texas 1,000 shares 1,000 shares
Charter Behavioral Health System of Baywood, Inc. Texas 1,000 shares 1,000 shares
Charter Behavioral Health System of Bradenton, Inc. Florida 1,000 shares 500 shares
Charter Behavioral Health System of Canoga Park, Inc. California 1,000 shares 1,000 shares
Charter Behavioral Health System of Central Georgia, Inc. Georgia 1,000 shares 500 shares
Charter Behavioral Health System of Charleston, Inc. South Carolina 1,000 shares 1,000 shares
Charter Behavioral Health System of Charlottesville, Inc. Virginia 1,000 shares 500 shares
Charter Behavioral Health System of Chicago, Inc. Illinois 1,200 shares 1,100 shares
Charter Behavioral Health System of Chula Vista, Inc. California 1,000 shares 1,000 shares
Charter Behavioral Health System of Columbia, Inc. Missouri 30,000 shares 600 shares
Charter Behavioral Health System of Corpus Christi, Inc. Texas 1,000 shares 1,000 shares
Charter Behavioral Health System of Dallas, Inc. Texas 1,000 shares 1,000 shares
Charter Behavioral Health System of Evansville, Inc. Indiana 1,000 shares 1,000 shares
Charter Behavioral Health System of Fort Worth, Inc. Texas 1,000 shares 1,000 shares
Charter Behavioral Health System of Jackson, Inc. Mississippi 1,000 shares 1,000 shares
Charter Behavioral Health System of Jacksonville, Inc. Florida 1,000 shares 500 shares
Charter Behavioral Health System of Jefferson, Inc. Indiana 1,000 shares 1,000 shares
Charter Behavioral Health System of Kansas City, Inc. Kansas 1,000 shares 500 shares
Charter Behavioral Health System of Lafayette, Inc. Louisiana 1,000 shares 1,000 shares
Charter Behavioral Health System of Lake Charles, Inc. Louisiana 2,500 shares(2) 1 share
</TABLE>
Page 1
<PAGE>
SCHEDULE 6.16
SCHEDULE OF SUBSIDIARIES
DIRECT AND INDIRECT SUBSIDIARIES OF CHARTER MEDICAL CORPORATION
<TABLE>
<CAPTION>
Jurisdiction Authorized Capital Common Stock
Name of Corporation of Incorporation (All Common Stock)(1) Issued and Outstanding
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Charter Behavioral Health System of Lakewood, Inc. California 1,000 shares 1,000 shares
Charter Behavioral Health System of Michigan City, Inc. Indiana 1,000 shares 1,000 shares
Charter Behavioral Health System of Mobile, Inc. Alabama 1,000 shares 1,000 shares
Charter Behavioral Health System of Nashua, Inc. New Hampshire 1,000 shares 1,000 shares
Charter Behavioral Health System of Nevada, Inc. Nevada 10,000 shares 100 shares
Charter Behavioral Health System of New Mexico, Inc. New Mexico 1,000 shares 1,000 shares
Charter Behavioral Health System of Northwest Arkansas 1,000 shares 1,000 shares
Arkansas, Inc.
Charter Behavioral Health System of Northwest Indiana 1,000 shares 1,000 shares
Indiana, Inc.
Charter Behavioral Health System of Paducah, Inc. Kentucky 1,000 shares(6) 1,000 shares
Charter Behavioral Health System of Rockford, Inc. Illinois 1,000 shares 1,000 shares
Charter Behavioral Health System of San Jose, Inc. California 1,000 shares 1,000 shares
Charter Behavioral Health System of Southern California 1,000 shares 500 shares
California, Inc.
Charter Behavioral Health System of Tampa Bay, Inc. Florida 1,000 shares 500 shares
Charter Behavioral Health System of Texarkana, Inc. Arkansas 1,000 shares 1,000 shares
Charter Behavioral Health System of Toledo, Inc. Ohio 1,000 shares 1,000 shares
Charter Behavioral Health System of Tucson, Inc. Arizona 1,000 shares 1,000 shares
Charter Behavioral Health System of Virginia Beach, Inc. Virginia 1,000 shares 1,000 shares
Charter Behavioral Health System of Visalia, Inc. California 1,000 shares 1,000 shares
Charter Behavioral Health System of District of Columbia 1,000 shares 1,000 shares
Washington D.C., Inc.
Charter Behavioral Health System of Waverly, Inc. Minnesota 1,000 shares 1,000 shares
Charter Behavioral Health System of Winston-Salem, Inc. North Carolina 100,000 shares 1,000 shares
Charter Behavioral Health System of Yorba Linda, Inc. California 1,000 shares 1,000 shares
Charter Behavioral Health Systems of Atlanta, Inc. Georgia 1,000 shares 500 shares
Charter Brawner Behavioral Health System, Inc. Georgia 5,000 shares(2) 1,000 shares
Subsidiary:
Charter Behavioral Health System of Savannah, Inc. Georgia 1,000 shares 500 shares
Charter-By-The-Sea Behavioral Health System, Inc. Georgia 1,000 shares 100 shares
Charter Canyon Behavioral Health System, Inc. Utah 1,000 shares 1,000 shares
Charter Canyon Springs Behavioral Health System, Inc. California 1,000 shares 1,000 shares
Charter Centennial Peaks Behavioral Health System, Inc. Colorado 1,000 shares 500 shares
Charter Colonial Institute, Inc. Virginia 1,000 shares 500 shares
Charter Community Hospital, Inc. California 1,000 shares 1,000 shares
Charter Community Hospital of Des Moines, Inc. Iowa 10,000 shares 1,000 shares
Charter Contract Services, Inc. Georgia 1,000 shares 1,000 shares
Charter Cove Forge Behavioral Health System, Inc. Pennsylvania 1,000 shares 1,000 shares
Charter Crescent Pines Behavioral Health System, Inc. Georgia 1,000 shares 500 shares
Charter Fairbridge Behavioral Health System, Inc. Maryland 1,000 shares 1,000 shares
Charter Fairmount Behavioral Health System, Inc. Pennsylvania 1,000 shares 500 shares
Charter Fenwick Hall Behavioral Health System, Inc. South Carolina 1,000 shares 1,000 shares
Charter Financial Offices, Inc. Georgia 1,000 shares 500 shares
</TABLE>
Page 2
<PAGE>
SCHEDULE 6.16
SCHEDULE OF SUBSIDIARIES
DIRECT AND INDIRECT SUBSIDIARIES OF CHARTER MEDICAL CORPORATION
<TABLE>
<CAPTION>
Jurisdiction Authorized Capital Common Stock
Name of Corporation of Incorporation (All Common Stock)(1) Issued and Outstanding
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Charter Forest Behavioral Health System, Inc. Louisiana 1,000 shares 500 shares
Charter Grapevine Behavioral Health System, Inc. Texas 1,000 shares 1,000 shares
Charter Greensboro Behavioral Health System, Inc. North Carolina 1,000 shares 100 shares
Charter Health Management of Texas, Inc. Texas 1,000 shares 1,000 shares
Charter Hospital of Columbus, Inc. Ohio 1,000 shares 500 shares
Charter Hospital of Denver, Inc. Colorado 1,000 shares 500 shares
Charter Hospital of Ft. Collins, Inc. Colorado 1,000 shares 500 shares
Charter Hospital of Laredo, Inc. Texas 1,000 shares 1,000 shares
Charter Hospital of Mobile, Inc. Alabama 1,000 shares 1,000 shares
Charter Hospital of Northern New Jersey, Inc. New Jersey 1,000 shares 1,000 shares
Charter Hospital of Santa Teresa, Inc. New Mexico 1,000 shares 1,000 shares
Charter Hospital of St. Louis, Inc. Missouri 1,000 shares 500 shares
Subsidiary:
Charter Hospital of Miami, Inc. Florida 1,000 shares 1,000 shares
Charter Hospital of Torrance, Inc. California 1,000 shares 1,000 shares
Charter Indianapolis Behavioral Health System, Inc. Indiana 1,000 shares 1,000 shares
Charter Lafayette Behavioral Health System, Inc. Indiana 1,000 shares 1,000 shares
Charter Lakehurst Behavioral Health System, Inc. New Jersey 1,000 shares 1,000 shares
Charter Lakeside Behavioral Health System, Inc. Tennessee 100,000 shares 833 shares
Charter Laurel Heights Behavioral Health System, Inc. Georgia 1,000 shares 500 shares
Charter Laurel Oaks Behavioral Health System, Inc. Florida 1,000 shares 500 shares
Charter Linden Oaks Behavioral Health System, Inc. Illinois 1,000 shares 1,000 shares
Charter Little Rock Behavioral Health System, Inc. Arkansas 1,000 shares 1,000 shares
Charter Louisville Behavioral Health System, Inc. Kentucky 1,000 shares 1,000 shares
Charter Meadows Behavioral Health System, Inc. Maryland 1,000 shares 1,000 shares
Charter Medfield Behavioral Health System, Inc. Florida 1,000 shares 1,000 shares
Charter Medical Executive Corporation Georgia 1,000 shares 1,000 shares
Charter Medical Information Services, Inc. Georgia 1,000 shares 500 shares
Charter Medical International, S.A., Inc. Nevada 1,000 shares 100 shares
Charter Medical Management Company Georgia 500 shares 500 shares
Charter Medical of East Valley, Inc. Arizona 1,000 shares 500 shares
Charter Medical of North Phoenix, Inc. Arizona 1,000 shares 500 shares
Charter Medical of Orange County, Inc. Florida 1,000 shares 500 shares
Charter Medical - California, Inc. Georgia 1,000 shares 100 shares
Subsidiary:
Charter Behavioral Health System of Northern California 1,000 shares 1,000 shares
California, Inc.
Charter Medical - Clayton County, Inc. Georgia 1,000 shares 500 shares
Charter Medical - Cleveland, Inc. Texas 1,000 shares 1,000 shares
Subsidiary:
Charter Regional Medical Center, Inc. Texas 1,000 shares(4) 100 shares
</TABLE>
Page 3
<PAGE>
SCHEDULE 6.16
SCHEDULE OF SUBSIDIARIES
DIRECT AND INDIRECT SUBSIDIARIES OF CHARTER MEDICAL CORPORATION
<TABLE>
<CAPTION>
Jurisdiction Authorized Capital Common Stock
Name of Corporation of Incorporation (All Common Stock)(1) Issued and Outstanding
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Charter Medical - Dallas, Inc. Texas 1,000 shares 1,000 shares
Charter Medical - Long Beach, Inc. California 1,000 shares 510 shares
Charter Medical - New York, Inc. New York 1,000 shares 1,000 shares
Charter Mental Health Options, Inc. Florida 28,000 shares--A(7) 0 shares
56,000 shares--B(7) 1,000 shares
Charter Mid-South Behavioral Health System, Inc. Tennessee 1,000 shares 1,000 shares
Charter Milwaukee Behavioral Health System, Inc. Wisconsin 1,000 shares 1,000 shares
Charter Mission Viejo Behavioral Health System, Inc. California 1,000 shares 1,000 shares
Charter MOB of Charlottesville, Inc. Virginia 1,000 shares 1,000 shares
Charter North Behavioral Health System, Inc. Alaska 1,000 shares 500 shares
Subsidiary:
Charter North Counseling Center, Inc. Alaska 1,000 shares 1,000 shares
Charter Northbrooke Behavioral Health System, Inc. Wisconsin 1,000 shares 1,000 shares
Charter Northridge Behavioral Health System, Inc. North Carolina 1,000 shares 500 shares
Charter Northside Hospital, Inc. Georgia 1,000 shares 500 shares
Charter Oak Behavioral Health System, Inc. California 1,000 shares 1,000 shares
Charter of Alabama, Inc. Alabama 150,000 shares 1,800 shares
Charter Palms Behavioral Health System, Inc. Texas 1,000 shares 1,000 shares
Charter Peachford Behavioral Health System, Inc. Georgia 1,000,000 shares(3) 149,950 shares
Charter Pines Behavioral Health System, Inc. North Carolina 1,000 shares 500 shares
Charter Plains Behavioral Health System, Inc. Texas 1,000 shares 1,000 shares
Charter Psychiatric Hospitals, Inc. Delaware 1,000 shares 1,000 shares
Charter Real Behavioral Health System, Inc. Texas 1,000 shares 1,000 shares
Charter Richmond Behavioral Health System, Inc. Virginia 1,000 shares 1,000 shares
Charter Ridge Behavioral Health System, Inc. Kentucky 1,000 shares 100 shares
Charter Rivers Behavioral Health System, Inc. South Carolina 1,000 shares 1,000 shares
Charter San Diego Behavioral Health System, Inc. California 1,000 shares 1,000 shares
Charter Serenity Lodge Behavioral Health System, Inc. Virginia 1,000 shares 1,000 shares
Charter Sioux Falls Behavioral Health System, Inc. South Dakota 1,000 shares 1,000 shares
Charter South Bend Behavioral Health System, Inc. Indiana 1,000 shares 1,000 shares
Charter Springs Behavioral Health System, Inc. Florida 1,000 shares 500 shares
Charter Springwood Behavioral Health System, Inc. Virginia 1,000 shares 1,000 shares
Charter Surburban Hospital of Mesquite, Inc. Texas 10,000 shares 6,510 shares
Charter Terre Haute Behavioral Health System, Inc. Indiana 1,000 shares 1,000 shares
Charter Thousand Oaks Behavioral Health System, Inc. California 1,000 shares 1,000 shares
Charter Tidewater Behavioral Health System, Inc. Virginia 1,000 shares 1,000 shares
Charter Treatment Center of Michigan, Inc. Michigan 1,000 shares 1,000 shares
Charter Westbrook Behavioral Health System, Inc. Virginia 1,000 shares 100 shares
Subsidiary:
CPS Associates, Inc. Virginia 1,000 shares 1,000 shares
</TABLE>
Page 4
<PAGE>
SCHEDULE 6.16
SCHEDULE OF SUBSIDIARIES
DIRECT AND INDIRECT SUBSIDIARIES OF CHARTER MEDICAL CORPORATION
<TABLE>
<CAPTION>
Jurisdiction Authorized Capital Common Stock
Name of Corporation of Incorporation (All Common Stock)(1) Issued and Outstanding
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Charter White Oak Behavioral Health System, Inc. Maryland 1,000 shares 1,000 shares
Charter Wichita Behavioral Health System, Inc. Kansas 1,000 shares 500 shares
Charter Woods Behavioral Health System, Inc. Alabama 1,000 shares 1,000 shares
Subsidiary:
Charter Woods Hospital, Inc. Alabama 1,000 shares 1,000 shares
Charter - Provo School, Inc. Utah 1,000 shares 1,000 shares
Charterton/LaGrange, Inc. Kentucky 1,100 shares(4) 1,100 shares
CMSF, Inc. Florida 10,000 shares 500 shares
C.A.C.O. Services, Inc. Ohio 1,000 shares 1,000 shares
Desert Springs Hospital, Inc. Nevada 1,000 shares 1,000 shares
Subsidiary:
CMCI, Inc. Nevada 1,000 shares 1,000 shares
CMFC, Inc. Nevada 1,000 shares 100 shares
Employee Assistance Services, Inc. Georgia 1,000 shares 500 shares
Florida Health Facilities, Inc. Florida 500 shares 500 shares
Group Practice Affiliates, Inc. Delaware 2,000,000 shares(9) 1,000 shares
Gulf Coast EAP Services, Inc. Alabama 1,000 shares 1,000 shares
HCS, Inc. Georgia 1,000 shares 500 shares
Hospital Investors, Inc. Georgia 200,000 shares(5) 2,000 shares
Mandarin Meadows, Inc. Florida 1,000 shares 1,000 shares
Metropolitan Hospital, Inc. Georgia 1,000 shares 100 shares
Middle Georgia Hospital, Inc. Georgia 1,000 shares 100 shares
Pacific - Charter Medical, Inc. California 1,000 shares 1,000 shares
Subsidiary:
Charter Behavioral Health System of the Inland
Empire, Inc. California 500,000 shares 18,353 shares
Peachford Professional Network, Inc. Georgia 1,000 shares 1,000 shares
Rivoli, Inc. Georgia 1,000 shares 500 shares
Shallowford Community Hospital, Inc. Georgia 5,000 shares 1,000 shares
Sistemas De Terapia Respiratoria S.A., Inc. Georgia 500,000 shares 12,000 shares
Strategic Advantage, Inc. Minnesota 25,000 shares(7) 25,000 shares
Stuart Circle Hospital Corporation Virginia 1,000 shares 100 shares
Tampa Bay Behavioral Health Alliance, Inc. Florida 1,000 shares 1,000 shares
Western Behavioral Systems, Inc. California 1,000 shares 1,000 shares
</TABLE>
Page 5
<PAGE>
SCHEDULE 6.16
SCHEDULE OF SUBSIDIARIES
DIRECT AND INDIRECT SUBSIDIARIES OF CHARTER MEDICAL CORPORATION
<TABLE>
<CAPTION>
Jurisdiction Authorized Capital Common Stock
Name of Corporation of Incorporation (All Common Stock)(1) Issued and Outstanding
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FOREIGN SUBSIDIARIES:
Charter Medical (Cayman Islands) Ltd. Cayman Islands 900,000 shares 100,000 shares
Charter Medical International, Inc. Cayman Islands 900,000 shares 4,375 shares
Charter Medical of England Limited United Kingdom 1,510,000 shares(10) 1,510,000 shares
Charter Medical of Puerto Rico, Inc. Commonwealth of 1,000 shares 500 shares
Puerto Rico
Golden Isle Assurance Company Ltd. Bermuda 3,500 shares(4) 3,500 shares
Plymouth Insurance Company, Ltd. Bermuda 1,200 shares(4) 1,200 shares
Societe Anonyme De La Metairie Switzerland 300 shares(8) 300 shares
<FN>
(1) Par Value $1.00 per share unless otherwise noted.
(2) $10 par value.
(3) $.50 par value.
(4) $100 par value.
(5) $.10 par value
(6) No par value.
(7) $.01 par value
(8) SF 1,000 par value
(9) $.25 par value
(10) 1 pound par value
</TABLE>
Page 6
<PAGE>
SCHEDULE 6.17
SCHEDULE OF PATENTS AND TRADEMARKS
NONE
<PAGE>
SCHEDULE 6.19
SCHEDULE OF RECENTLY ACQUIRED REAL PROPERTY
1.) Charter-Provo School, Inc. has added a 64 bed dormitory
addition
2.) The following hospitals are no longer operating but are still owned:
a.) Beltway Community Hospital
b.) Charter Hospital of West Palm Beach
c.) Charter Hospital of Bradenton
d.) Charter Brook Facility
3.) The following facilities were sold since July 21, 1992:
a.) Charter Hospital of Denver
b.) Charter Hospital of Aurora
c.) Charter Hospital of Rockford
d.) Charter Hospital of Bakersfield
e.) Charter Retreat Hospital
f.) Charter Hospital of Laredo
g.) Charter-Provo School-South Campus
h.) Land Parcels at Beltway Community Hospital
i.) Charterton
j.) Sale of 10 general hospitals to Quorum on September 30, 1993
<PAGE>
SCHEDULE 6.20
SCHEDULE OF EXISTING DEFAULTS UNDER
OTHER INDEBTEDNESS
1.) On April 9, 1991 S.G. Warburg Soditic, SA, the trustee for the 7.5% Swiss
Bonds due 2001, accelerated the bonds pursuant to their interpretation of
Section 11(c) of the Public Bond Issue Agreement dated March 4, 1986. The
bonds are still outstanding in the amount of $6,443,280.
Charter Medical Corporation has continued to pay interest on the bonds in
accordance with their terms.
<PAGE>
SCHEDULE 6.25
SCHEDULE OF CERTAIN FEES
NONE
<PAGE>
SECTION 8.1(b)
SCHEDULE OF EXISTING LIENS
1. Liens listed in Schedule 8.7(e)
2. Permitted Liens as defined herein
3. Judgment filed against Charter Broad Oaks Hospital, as garnishee, on
April 15, 1988, entered on General Execution Docket 139, page 195.
4. Judgment filed against Shallowford Community Hospital, as garnishee, on
March 3, 1986, entered on General Execution Docket 514, page 260.
5. Claim of Lien filed by Norca Air Conditioning and Refrigeration Corporation
filed September 8, 1986, in Official Records Book 13010, page 2464; Clerk's
Certificate transferring said Claim of Lien to Security, as recorded in
Official Records Book 13403, at page 3818; Notice of Lis Pendens filed in
case styled Norca Air Conditioning and Refrigeration Corporation v.
Southern Mechanical Contractors, Inc., et al., in Case No. 87-22437.
6. State of Florida Department of Revenue Tax Warrant against Charter Medical
Corporation, d/b/a Charter Hospital of Miami filed June 17, 1988, in
Official Records Book 13720, at Page 667.
7. State of Florida Department of Revenue Tax Warrant against Charter Medical
Corporation, d/b/a Charter Hospital of Miami filed June 13, 1988, in
Official Records Book 13712, at Page 2672.
8. Final Judgment in favor of Bryan Miller against Charter Hospital of Miami,
Inc., filed September 21, 1990 in Official Records Book 14711, at page
2508.
9. Liens revealed by searches, undertaken in 1992 in certain jurisdictions, of
Uniform Commercial Code filings, judgements, state tax lien filings and
<PAGE>
federal tax lien filings, as such liens are described on ANNEX I to this
List.
10. Liens revealed by searches undertaken in 1994 in certain jurisdictions of
Uniform Commercial Code filings, judgments, state tax lien filings and
federal tax lien filings, as such liens are described on ANNEX II to this
List.
<PAGE>
ANNEX I
CHARTER MEDICAL CORPORATION
AND ITS SUBSIDIARIES
SUMMARY OF LIENS
<TABLE>
<CAPTION>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
<S> <C> <C> <C>
DEBTOR: CHARTER ACADEMY OF MOBILE
American Business Alabama 92-09627 Leased Savin copy equipment
Credit Corporation Secretary of State 3-17-92 (Debtor is Charter Medical
Corporation/Charter Academy of
Mobile)
DEBTOR: CHARTER BAY WOOD HOSPITAL
Paramount Medical California 82230927 All personal property,
Development Co. Secretary of State 12-13-82 fixtures, and equipment on or
about Long Beach
Neuropsychiatric Institute
(Charter Baywood Hospital),
the name Long Beach
Neuropsychiatric Institute,
the health facility license,
inventory, other licenses,
insurance proceeds. (Debtors
are Charter Medical-Long
Beach, Inc.; Charter Medical
Corporation and trade names
Long Beach Neuropsychiatric
Institute/Charter Baywood
Hospital)
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
82230927 Continuation of File
11-16-87 No. 82230927
DEBTOR: CHARTER BEACON HOSPITAL
Kimco Leasing; Indiana 1420104 One Sharp copier
Summit Bank Secretary of State 10-23-87
Kimco Leasing, Inc. Indiana 1511975 Sharp copy equipment
(Secured Party) Secretary of State 8-1-88
Summit Bank
(Assignee)
Kimco Leasing, Inc. Indiana 1660553 Sharp copy equipment
(Secured Party) Secretary of State 7-10-90
Lincoln National
Bank (Assignee)
DEBTOR: CHARTER COLONIAL INSTITUTE, INC.
** Peninsula Ports Virginia State 910110534 Fixtures, machinery and
Authority of Corporation 1-3-91 equipment owned or hereafter
Virginia Commission leased by the Secured Party to
(Secured Party) the Debtor pursuant to the
Crestar Bank 11/1/78 Lease Agreement for
(Assignee) use in the hospital facility
in Newport News (fixture
filing, but filed with SCC)
-2-
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
DEBTOR: CHARTER COMMUNITY HOSPITAL
Baxter Scientific Iowa K193511 Autoscan 4 microbiology system
Products Secretary of State 12-7-90 with printer and IBM PSII 60
computer
Hewlett Packard Iowa K161998 Leased Hewlett Packard
Company Secretary of State 10-5-90 equipment including Ambulatory
Egg System, memory module and
laserjet printer
Business Equipment Iowa H891438 Toshiba copy equipment
Lease (Secured Secretary of State 8-3-88
Party)
Midland Bank
(Assignee)
Business Equipment Iowa K236116 Leased Toshiba copy equipment
Leasing, Inc. Secretary of State 4-12-91
C&J Leasing Corp. Iowa K017597 Leased Toshiba copy equipment
(Secured Party) Secretary of State 8-18-89
Bankers Trust
Company (Assignee)
Bankers Trust Iowa K144306 Assignment of File No. K017597
Company (Secured Secretary of State 8-16-90 to Sanwa Leasing Corporation
Party)
Sanwa Leasing
Corporation
(Assignee)
-3-
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
Sanwa Leasing Iowa K320632 Assignment of File No. K017597
Corporation Secretary of State 1-3-92 to Norwest Bank Iowa National
(Secured Party) Association
Norwest Bank Iowa
National
Association
(Assignee)
DEBTOR: CHARTER COMMUNITY HOSPITAL, INC.
Beckman California 89257770 Leased Synchron analyzer and
Instruments, Inc. Secretary of State 10-2-89 refielded Astra w/enzymes
(Debtor's trade name is
Medicalab Management
Corporation)
E I DuPont De California 91033007 DuPont discrete clinical
Nemours & Co. Secretary of State 2-25-91 analyzer (Debtor is FHP Inc.
for Charter Community
Hospital)
Better Beverages California 91041618 Soda dispensing system
Secretary of State 2-25-91
DEBTOR: CHARTER FOREST HOSPITAL, INC.
M&H Leasing Corp. Caddo Parish, 850098 Leased IBM Actionwriter I
(Lessor) Louisiana 9-25-87 typewriter
M&H Leasing Corp. Caddo Parish, 844129 Leased IBM Actionwriter I
(Lessor) Louisiana 6-15-87 typewriter
M&H Leasing Corp. Caddo Parish, 838933 Leased IBM Actionwriter I
(Lessor) Louisiana 3-19-87 typewriters
-4-
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
** Louisiana Dept. of Caddo Parish, 1332700 $2,022.96 tax lien in favor of
Labor Louisiana 2-3-92 the Office of Employment
Security
** Louisiana Dept. of Caddo Parish, 1322667 $8,471.23 tax lien in favor of
Labor Louisiana Mort. Book the Office of Employment
2144, P. 645 Security
10-23-91
* Louisiana Dept. of Caddo Parish, 01295082 $1,799.83 tax lien in favor of
Labor Louisiana Mort. Book the Office of Employment
2100, P. 733 Security
2-7-91
** Louisiana Dept. of Caddo Parish, 01176357 $369.46 tax lien in favor of
Labor Louisiana Mort. Book the Office of Employment
1910, P. 476 Security
2-18-88
DEBTOR: CHARTER GLADE HOSPITAL
** Lee County Lee County, OR 1972 Fixture filing covering
Industrial Florida Pg 0018 machinery, equipment, fixtures
Development 2-20-90 and other personal property
Authority (Secured acquired with the Bonds
Party) proceeds (Debtor is CMSF,
Barnett Banks Trust Inc.)
Company, N.A.
(Assignee)
-5-
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
DEBTOR: CHARTER HOSPITAL OF ALBUQUERQUE, INC.
Lanier Business New Mexico 900301037 Dictation equipment
Products, Inc. Secretary of State 3-1-90
(Secured Party)
Lanier Financial
Services (Assignee)
Lanier Business New Mexico 900521069 Dictation equipment
Products, Inc. Secretary of State 5-21-90
(Secured Party)
Lanier Financial
Services (Assignee)
** New Mexico Bernalillo County, 8011475 $364.65 tax lien for the
Employment Security New Mexico 2-14-89 quarter ending 9-30-88
Dept. (Debtors are Charter Sunrise
Hospital, Inc. and Charter
Hospital of Albuquerque)
DEBTOR: CHARTER HOSPITAL OF AURORA, INC.
GranTree Colorado 892016117 Rental Agreement dated
Secretary of State 2-24-89 10/18/88 including rental
accounts
-6-
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
DEBTOR: CHARTER HOSPITAL OF AUSTIN, INC.
** State of Texas Travis County, 9218211 Film State tax lien for $2,585.79
Texas Code for 4/1/88 - 12/31/91
Book 00687
Page 0225
6-15-92
DEBTOR: CHARTER HOSPITAL OF CHARLESTON, INC.
Republic Leasing South Carolina 92-012132 Mita copiers and copy
Co. Secretary of State 92-012179 equipment
(Secured Party) 3-11-92
Republic National
Bank (Assignee)
* SCE&G Charleston County, 91-08027 Fixture filing for four
South Carolina 6-11-91 commercial W/H's and
installation (water heaters?)
DEBTOR: CHARTER HOSPITAL OF CHARLOTTESVILLE, INC.
The CIT Virginia State 920610377 Equipment, fixtures and other
Group/Equipment Corporation 6-2-92 goods (other than inventory),
Financing, Inc. Commission relating to two parcels of the
real property in
Charlottesville
SYSCO of Virginia City of 10929 Fixture filing for Alco juice
Food Services, Inc. Charlottesville, 11-19-90 generator (Debtor is Charter
Virginia Hospital of Virginia/Charter
Hospital of Charlottesville)
-7-
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
DEBTOR: CHARTER HOSPITAL OF COLUMBIA, INC.
The Industrial Missouri 2005200 Fixtures, furnishings,
Development Secretary of State 5-24-91 machinery and equipment
Authority of Boone acquired with the proceeds of
County, Mo. the Series 1983 Bonds; leases
(Secured Party) of the Mortgaged Property; and
Boatmen's Trust rents, profits, proceeds and
Company, Trustee products
(Assignee)
The Industrial Boone County, 126273 Fixture filing covering
Development Missouri Book 824 fixtures, furnishings,
Authority of Boone Page 1 machinery and equipment
County, Mo. 5-24-91 acquired with the proceeds of
(Secured Party) the Series 1983 Bonds; leases
Boatmen's Trust of the Mortgaged Property; and
Company, Trustee rents, profits, proceeds and
(Assignee) products
DEBTOR: CHARTER HOSPITAL OF CORONA, INC.
Advanta Leasing California 90293340 Leased computer equipment
Corp. Secretary of State 12-4-90
-8-
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
DEBTOR: CHARTER HOSPITAL OF CORPUS CHRISTI, INC.
* CMCI, Inc. Texas 098011 Blanket lien related to real
Secretary of State 4-25-88 property in Corpus Christi,
Texas
Southwestern Bell Texas 098778 Norstar Telecommunication
Telecommunications, Secretary of State 5-18-92 System
Inc. d/b/a
Southwestern Bell
Telecom
DEBTOR: CHARTER HOSPITAL OF DALLAS, INC.
Waste Compaction Texas 016527 McClasin MVP-6 Vertical
Systems, Inc. d/b/a Secretary of State 1-22-90 Compactor
Advanced Waste
Systems, Inc.
(Secured Party)
Guardian Bank
(Assignee)
* CMCI, Inc. Collin County, 22532 Deed of Trust
Texas Bk 3049
Pg 697
5-8-89
* CMCI, Inc. Collin County, 44019 Deed of Trust
Texas Bk 2895
Pg 871
8-11-88
-9-
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
* CMCI, Inc. Collin County, 44018 Deed of Trust
Texas Bk 2895
Pg 866
8-11-88
DEBTOR: CHARTER HOSPITAL OF DENVER, INC.
Grantree Furniture Colorado 882083601 Furniture rental agreement
Secretary of State 10-2-88 dated 9-6-88
Citibank, N.A., Colorado 892072219 Blanket lien relating to real
individually and as Secretary of State 8-31-89 property in Jefferson County,
Agent Colorado
Orix Credit Colorado 892103300 Leased soft serve ice cream
Alliance, Inc., and Secretary of State 12-28-89 machine
First Interstate
Credit Alliance,
Inc.
Savin Credit Colorado 912021050 Leased computer equipment
Corporation Secretary of State 3-22-91
(Secured Party)
Sanwa Leasing
Corporation
(Assignee)
Finzer Leasing, Colorado 912070241 Ricoh 2800L
Inc. Secretary of State 9-23-91
-10-
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
DEBTOR: CHARTER HOSPITAL OF THE EAST VALLEY
Saratoga Leasing Arizona 596953 One Taylor W/C Yogurt Machine
Secretary of State 10-23-89 (Debtor is Charter Medical
Corp. d/b/a Charter Hospital)
DEBTOR: CHARTER HOSPITAL OF FORT WORTH
Denitech Texas 070335 Leased Ricoh FT7870, LCT and
Corporation Secretary of State 4-9-92 menu reader
Terry Shupp d/b/a Tarrant County, Vol. 8798 $5,050.00 Mechanic's and
Sunnyvale Fence Co. Texas Pg 106 Materialman's Lien
1-2-87
DEBTOR: CHARTER HOSPITAL OF GLENDALE
Walsh Bros. Arizona 442950 Office equipment and furniture
Secretary of State 6-25-86
Walsh Bros. Arizona 455528 Rented office equipment and
Secretary of State 10-1-86 furniture
Orix Credit Arizona 683729 Leased Electro Freeze
Alliance, Inc. Secretary of State 10-28-91
DEBTOR: CHARTER HOSPITAL OF GREENSBORO, INC.
GE Capital North Carolina 0794116 Key wall brackets and cable
Secretary of State 6-17-91 runs
-11-
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
GE Capital North Carolina 0783851 Station and DSS console cards,
Secretary of State 5-10-91 voice processing system, CRT
console, key telephones, etc.
REH Leasing Company Guilford County, 385228 2 Canon copy systems (Debtor
(Secured Party) North Carolina 10-11-91 is Charter Hospital)
Central Carolina
Bank & Trust
(National
Association)
(Assignee)
GE Capital Guilford County, 378971 Station & DSS console cards,
North Carolina 5-10-91 voice processing system, CRT
console, key telephones, etc.
GE Capital Guilford County, 380536 Key wall brackets and cable
North Carolina 6-18-91 runs
DEBTOR: CHARTER HOSPITAL OF GREENVILLE
Advanced Business South Carolina 91-014650 Leased Sharp copier
Systems Secretary of State 91-014665
(Secured Party) 3-21-91
Springs Leasing
Corporation
(Assignee)
Lanier Worldwide, South Carolina 92-009764 Specific equipment identified
Inc. Secretary of State 92-009765 by serial numbers
2-27-92
-12-
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
Modern Office South Carolina 91-009029 Specific equipment identified
Leasing Secretary of State 91-009030 by serial numbers
(Secured Party) 2-19-91
Eaton Financial
(Assignee)
Advanced Business South Carolina 89-053952 Sharp copy equipment
Systems Secretary of State 89-053955
(Secured Party) 10-23-89
Springs Leasing
Corporation
(Assignee)
Atlantic States South Carolina 90-023117 Leased mailing machine and
Leasing Secretary of State 4-30-90 electronic scale
Atlantic States South Carolina 90-023117 Leased Xerox memorywriter
Leasing Secretary of State 90-023118 typewriter
4-30-90
Modern Office South Carolina 90-002011 Canon copy system
Machines Secretary of State 90-002014
(Secured Party) 1-11-90
Fiduciary Leasco,
Inc.
(Assignee)
DEBTOR: CHARTER HOSPITAL OF INDIANAPOLIS
Mid Continent Indiana 1658353 Leased Soft Serve ice cream
Financial Corp. Secretary of State 6-28-90 machine
Midwest Commerce Indiana 1753102 Computer equipment and
Leasing (ILS) Secretary of State 12-13-91 printers
Dana Commercial Indiana 1754155 IBM monochrome monitor, IBM
Credit Corporation Secretary of State 12-19-91 DOS 4.01, IBM PC Model and
accounts, general intangibles
and insurance proceeds
relating to the equipment
DEBTOR: CHARTER HOSPITAL OF JACKSONVILLE
Datamatic Leasing, Florida 90-0000071122 Leased Canon copy equipment
Inc. Department of State 3-19-90
-13-
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
Universal Fleet Florida 88-0000040009 Ricoh copy equipment (Debtor
Leasing Inc. Department of State 11-3-88 is Charter Medical -
(Secured Party) Jacksonville d/b/a Charter
San Jacinto Savings Hospital of Jacksonville)
Association
(Assignee)
DEBTOR: CHARTER HOSPITAL OF LAREDO, INC.
* CMCI, Inc. Texas, 096390 Blanket fixture filing
Secretary of State 4-21-88
DEBTOR: CHARTER HOSPITAL OF LOUISVILLE
Federal Leasing Jefferson County, 25266 Leased computer EKG system
Corp. Kentucky 4-19-92
Commonwealth of Jefferson County, Book 6091 Deed of Easement
Kentucky, Kentucky Page 56
Transportation 5-24-91
Cabinet, Dept. of
Highways
DEBTOR: CHARTER HOSPITAL OF MIAMI, INC.
Charter Medical Dade County, 85R079238 Mortgage Deed and Security
Corporation Florida OR 12448 Agreement (Debtor is Dade
Pg 761 County Psychiatric Hospital,
3-19-85 Inc.)
-14-
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
Charter Medical Dade County, 85R079239 Fixture filing covering
Corporation Florida OR 12448 fixtures, equipment,
Pg 769 easements, rents, issues and
3-19-85 profits
DEBTOR: CHARTER HOSPITAL OF MOBILE
Danka Industries Alabama A318930R Leased Konica copy equipment
Secretary of State 5-1-89
DEBTOR: CHARTER HOSPITAL OF PADUCAH
AT&T McCracken County, 13311 Horizon System and associated
Kentucky 3-14-88 products (Debtor is Charter
Medical Hospital d/b/a Health
Group Inc.)
DEBTOR: CHARTER HOSPITAL OF REDLANDS
Grantree Furniture California 87148717 Leased office furniture
Rental Corp. Secretary of State 6-19-87
(Lessor)
DEBTOR: CHARTER HOSPITAL OF REDLANDS, INC.
Grantree Furniture California 87148717 Leased office furniture
Rental Corp. Secretary of State 6-19-87
-15-
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
DEBTOR: CHARTER HOSPITAL OF SACRAMENTO
RTC Communications California 88063802 Premier telephone system
Secretary of State 3-18-88
DEBTOR: CHARTER HOSPITAL OF SACRAMENTO, INC.
RTC Communications California 92100876 NEC Electra Mark II
Secretary of State 5-5-92 telecommunication system
Citibank, N.A., California 89233095 Blanket lien relating to real
individually and as Secretary of State 9-1-89 property in Placer County, CA
Agent (Debtor's trade name is
Charter Medical-California,
Inc.)
DEBTOR: CHARTER HOSPITAL OF SAN DIEGO, INC.
Citibank, N.A., California 89233094 Blanket lien relating to real
individually and as Secretary of State 9-1-89 property in San Diego County,
Agent California
DEBTOR: CHARTER HOSPITAL OF SANTA TERESA, INC.
C Leasing Company, New Mexico 870720017 Leased Motorola portable
a division of Secretary of State 7-20-87 telephones
Price's Producers,
Inc.
C Leasing, a Texas 190548 Leased Motorola portable
division of Price's Secretary of State 7-20-87 telephones
Producers, Inc.
-16-
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
DEBTOR: CHARTER HOSPITAL OF SAVANNAH, INC.
* CMCI, Inc. Chatham County, 238594 Blanket fixture filing
Georgia 9-14-88
DEBTOR: CHARTER HOSPITAL OF SIOUX FALLS, INC.
Advance Acceptance South Dakota 893241105459 Leased equipment (camera with
Corporation Secretary of State 11-20-89 photo die cutter, laminator
and lettering machine)
Advanta Leasing South Dakota 900991301485 Specific equipment (1 BMA
Corp. Secretary of State 4-9-90 2590, IBM E915D, IBM K7449,
etc.)
DEBTOR: CHARTER HOSPITAL OF SUGAR LAND
Xerox Corporation Texas 098946 Leased Xerox copy equipment
Secretary of State 4-25-89
Lane Equipment Texas 192177 1 152.12A Taylor (Equipment)
Company (Secured Secretary of State 8-23-89
Party)
Texas Commerce Bank
(Assignee)
Xerox Corporation Texas 022620 1 Xerox 5065 RDH/FIN
Secretary of State 2-5-92 (Equipment)
DEBTOR: CHARTER HOSPITAL OF TAMPA BAY, INC.
Chesterfield Florida 91-0000147420 Leased equipment
Financial Secretary of State 7-8-91
Corporation
-17-
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
Chesterfield Florida 91-0000194272 Assignment of File
Financial Secretary of State 9-9-91 No. 91-0000147420
Corporation
(Secured Party)
Fleet Credit Corp.
Denrich Leasing G
(Assignee)
** Fleet Mortgage Hillsborough 901116-3 Judgment Lien - $74,065.53
Corporation County, Florida OR 5986 Case No. 90-85(F)
Page 377
5-23-90
Colonial Mortgage Hillsborough 91-2588 Pending Suit No. 91-2588;
Corporation County, Florida OR 6219 Notice of Lis Pendens re
Page 240 foreclosure of mortgage
3-15-91
DEBTOR: CHARTER HOSPITAL OF TERRE HAUTE
Hoosier Copy Indiana 1754069 Leased Canon copier equipment
Systems, Inc. Secretary of State 12-19-91 (Debtor is Charter Hospital)
(Secured Party)
Lease America
Corporation
(Assignee)
DEBTOR: CHARTER HOSPITAL OF THOUSAND OAKS
Wellmark Inc. California 91216770 Leased equipment pursuant to a
Secretary of State 10-7-91 certain Member's Agreement
** California Dept. of California 92108241 State tax lien for $2,669.43
Employment Secretary of State 5-13-92 for 10/1/90 - 6/30/91
-18-
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
DEBTOR: CHARTER HOSPITAL OF TORRANCE
** State of California California 92128192 $1,532.31 state tax lien for
Employment Secretary of State 6-9-92 the tax period of 10-1/90-
Development Dept. 12/31/90
DEBTOR: CHARTER HOSPITAL OF WICHITA, INC.
Commercial Capital Sedgwick County, 88-04921 Equipment (2 GE portable
Corporation Kansas 4-25-88 radios) (Debtor is Charter
(Secured Party) Medical Corp d/b/a Charter
First National Bank Hospital)
of Shawnee Mission
(Assignee)
Business Systems Sedgwick County, 92-05179 Canon copy equipment
Leasing Kansas 6-11-92
Business Systems Sedgwick County, 92-05180 Canon copy equipment
Leasing Kansas 6-11-92
DEBTOR: CHARTER LAKE HOSPITAL, INC.
Argo Financial Bibb County, 196634 Canon and Minolta copy
Services (Secured Georgia 4-7-89 equipment
Party)
First Macon Bank &
Trust Company
(Assignee)
-19-
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
First United Bibb County, 197799 Leased facsimile machines
Leasing Corp. Georgia 7-24-89
G.D.P. Leasing Bibb County, 188195 Leased copying equipment
Company Georgia 3-17-87 (maturity date 7-31-90)
Georgia Duplicating Bibb County, 191309 Copying equipment
Products Georgia 1-25-88
DEBTOR: CHARTER LAKESIDE HOSPITAL, INC.
National Bank of Mississippi 0486320 Panasonic telephone system and
Commerce Secretary of State 4-25-90 four telephones
National Bank of Tennessee 933488 Leased Panasonic copying
Commerce Secretary of State 11-18-91 equipment
National Bank of Tennessee 909466 Leased Panasonic copying
Commerce Secretary of State 8-21-91 equipment
Eaton Financial Tennessee 751905 Leased office furniture
Corporation Secretary of State 3-19-90
National Bank of Tennessee 785477 Leased Panasonic telephone
Commerce Secretary of State 6-26-90 system
National Bank of Tennessee 835230 Leased Panasonic telephone
Commerce Secretary of State 12-11-90 system
National Bank of Tennessee 696903 Leased Panasonic telephone
Commerce Secretary of State 9-22-89 system
National Bank of Tennessee 725211 Leased Panasonic telephone
Commerce Secretary of State 12-28-89 system
-20-
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
Pitney Bowes Credit Tennessee 471881 Leased business
Corp. (Lessor) Secretary of State 9-28-87 equipment/machines
* CMCI, Inc. Fort Bend County, 8923914 Deed of Trust
Texas Bk. 2123
Pg. 2418
5-22-89
* CMCI, Inc. Fort Bend County, 8923916 Deed of Trust
Texas Bk. 2123
Pg. 2430
5-22-89
DEBTOR: CHARTER MEDICAL - CALIFORNIA, INC.
Citibank, N.A., California 89233095 Blanket lien relating to real
individually and as Secretary of State 9-1-89 property in Placer County, CA
Agent (Debtor is Charter Hospital of
Sacramento, Inc. d/b/a Charter
Medical-California, Inc.)
DEBTOR: CHARTER MEDICAL - JACKSONVILLE, INC.
Universal Fleet Florida 880000040009 Leased copying equipment
Leasing Inc. Secretary of State 11-3-88
(Secured Party)
San Jacinto Savings
Association
(Assignee)
-21-
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
San Jacinto Florida 890000000112 Assignment of File No.
Savings Association Secretary of State 1-3-89 880000040009 to Lease America
(Secured Party) Corporation
Lease America
(Assignee)
DEBTOR: CHARTER MEDICAL - LONG BEACH, INC.
Mutual Service Life Pima County, 91050353 Subordination Agreement
Insurance Company Arizona Docket 9029 regarding property leased by
Page 584 Charter Counseling Center, a
5-1-91 Division of Charter Hospital
Long Beach d/b/a Charter
Hospital of Tucson
Tucson Psychiatric Pima County, 91035545 Special Warranty Deed from
Institute, Inc. Arizona Docket 9007 Charter Medical-Long Beach,
Page 1075 Inc. to Tucson Psychiatric
4-1-91 Hospital, Inc.
91041411 Warranty Deed re-recorded to
Docket 9017 correct the Grantee's name to
Page 849 Tucson Psychiatric Institute,
4-15-91 Inc.
** CMFC, Inc. Pima County, Docket 7786, Realty Mortgage (Mortgagor is
Arizona Page 831 Charter Medical - Tucson,
Fee No. 62007 Inc.)
5-16-86
Paramount Medical California 82230927 All personal property,
Development Co. Secretary of State 12-13-82 fixtures and equipment on or
about Long Beach
Neuropsychiatric Institute
(Charter Baywood Hospital),
the name Long Beach
-22-
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
Neuropsychiatric Institute,
the health facility license,
inventory, other licenses,
insurance proceeds (Additional
Debtors are Charter Medical
Corportion and trade name Long
Beach Neuropsychiatric
Institute/Charter Baywood
Hospital)
82230927 Continuation of File No.
11-16-87 82230927
DEBTOR: CHARTER MEDICAL - VIGO COUNTY, INC.
Citibank, N.A., Indiana 1601311 Blanket lien relating to real
individually and as Secretary of State 9-5-89 property in Vigo County,
Agent Indiana
DEBTOR: CHARTER MEDICAL CORPORATION
Georgia Duplicating Bibb County, 194245 Canon Facsimile equipment
Products, Inc. Georgia 9-14-88
United States Bibb County, 193163 Leased equipment identified by
Leasing Corp. Georgia 6-28-88 serial number
-23-
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
Unicom Computer Bibb County, 191495 Leased computer equipment
Corporation Georgia 2-12-88
(Secured Party)
Westinghouse Credit
Corporation
(Assignee)
Beckman Bibb County, 195805 Equipment (Astra 8)
Instruments, Inc. Georgia 1-20-89
DEBTOR: CHARTER MEDICAL CORPORATION OF RALEIGH, INC.
First Leasing North Carolina 0764321 Canon copier
Company Secretary of State 3-6-91
(Secured Party)
Eaton Financial
Corp. (Assignee)
DCL Leasing Company Wake County, 88-18860 Canon copier (Debtor is
North Carolina 11-22-88 Charter Northridge Hospital)
DEBTOR: CHARTER MEDICAL OF EAST VALLEY, INC.
* CMFC, Inc. Arizona 440897 Blanket fixtures filing
Secretary of State 6-9-86 (maturity date is 5-1-98)
* CMFC, Inc. Maricopa County, 86-287999 Blanket fixture filing
Arizona 6-10-86
* CMFC, Inc. Maricopa County, 86-304864 Realty Mortgage
Arizona 6-18-86
-24-
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
DEBTOR: CHARTER MEDICAL OF FT. WORTH, INC.
American Network Texas 085637 Leased telephone equipment
Leasing Partnership Secretary of State 4-18-90
No. A-6
** CMCI, Inc. Tarrant County, 415359 Blanket fixture filing
Texas BK 09134
Page 0189
12-1-87
** CMCI, Inc. Tarrant County, BK 09134 Deed of Trust (maturity date
Texas Page 0194 is January 31, 2002)
12-1-87
** CMCI, Inc. Tarrant County, BK 09357 Deed of Trust
Texas Page 1971
8-18-88
Johnson Controls, Tarrant County, Vol. 8806 Mechanic's lien ($25,907.00)
Inc. Texas Pg. 802
1-8-87
Public Easement Tarrant County, 42311 Utility easement
Texas Vol. 8734,
Page 101
10-31-86
Texas Electric Tarrant County, 353073 Easement and Agreement of
Service Company Texas BK 8595 Underground Facilities
Page 01
6-27-86
-25-
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
DEBTOR: CHARTER MEDICAL OF RICHMOND COUNTY, INC.
** CMCI, Inc. Richmond County, Reel 293 Fixture filing
Georgia Page 2043;
Reel 1003
Page 73
8-23-88
DEBTOR: CHARTER NORTH HOSPITAL, INC.
A.L. French Co. Alaska UCC 285024 Two Lancer juice machines
Central File 3-10-88
System
A.L. French Co. Alaska UCC 291011 One Lancer juice machine
Central File 7-11-88
System
DEBTOR: CHARTER NORTHRIDGE HOSPITAL
First Leasing North Carolina 0764321 Canon copy equipment (Debtor
Company (Secured Secretary of State 3-6-91 is Charter Medical of Raleigh,
Party) Inc. d/b/a Charter Northridge
Eaton Financial Hospital)
Corp. (Assignee)
DLC Leasing Company North Carolina 0512642 Leased Canon copy equipment
Secretary of State 11-22-88
DLC Leasing Company Wake County, North 88-18860 Leased Canon copy equipment
Carolina 11-22-88
-26-
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
DEBTOR: CHARTER NORTHSIDE HOSPITAL, INC.
First Union Bibb County, 27559 Landlord's Waiver regarding
National Bank of Georgia Bk 1926 property leased by Debtor to
Georgia Pg 126 M.R.I. of Middle Georgia, Inc.
10-23-90 waiving rights to magnetic
resonance imaging system and
custom modular building
located on the property
AT&T Credit Bibb County, 203938 Leased AT&T 6486 PC equipment
Corporation Georgia 1-29-91
(Lessor)
203938 Amendment to File No. 203938
6-27-91 changing the Debtor's address
DEBTOR: CHARTER OAK HOSPITAL, INC.
Wellmark Inc. California 91216771 Leased equipment pursuant to a
Secretary of State 10-7-91 certain Member's Agreement
DEBTOR: CHARTER PALMS HOSPITAL, INC.
Aloha Leasing, a Texas 281684 Leased office furniture
Division of The Secretary of State 11-2-87
Bennett Funding
Group, Inc.
-27-
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
** CMCI, Inc. Texas 096394 Blanket fixture filing (The
Secretary of State 4-21-88 termination of this filing was
erroneously filed in Hidalgo
County, Texas. This filing
remains active.)
Xerox Corporation Texas 174223 Xerox copying system
Secretary of State 9-9-91
AT&T Texas 038403 AT&T telecommunications
Secretary of State 2-28-92 equipment sold under contract
dated 1/27/92
AT&T (Secured Texas 00662177 Assignment of File No. 038403
Party) AT&T Credit Secretary of State 4-29-92 to AT&T Credit Corp. (Lessor)
Corp. (Assignee)
** CMCI, Inc. Hildalgo County, 182593 Termination of File No. 096394
Texas Vol. 2980 filed 4/21/88. This should
Pg. 495 have been filed with the Texas
10-15-90 Secretary of State.
DEBTOR: CHARTER PINES HOSPITAL
Springs Leasing North Carolina 0769395 Leased Fox Pollution Packers
Corporation Secretary of State 3-22-91
Springs Leasing Mecklenburg County, 003651 Leased Fox Pollution Packers
Corporation North Carolina 3-20-91
U.S. General Mecklenburg County, Bk 319 Notice of Materialman's Lien
Roofing, Inc. North Carolina Pg 43 for $20,000
3-15-89
-28-
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
DEBTOR: CHARTER PLAINS HOSPITAL, INC.
American State Bank Texas 295159 Minolta copy equipment
Secretary of State 11-17-87
** CMCI, Inc. Texas 096393 Blanket fixture filing
Secretary of State 4-21-88
** CMCI, Inc. Lubbock County, 23382 Blanket fixture filing
Texas Vol. 2881
Pg. 332
8-11-88
DEBTOR: CHARTER REAL HOSPITAL
Professional Texas 166780 Telephone equipment
Telephone Systems, Secretary of State 6-24-87
Inc. (Secured
Party)
Westinghouse Credit
Corp. (Assignee)
Lane Equipment Texas 227198 Taylor Freezer
Company (Secured Secretary of State 9-2-87
Party)
Texas Commerce Bank
(Assignee)
Commercial Texas 250731 Leased office furniture
Equipment Leasing Secretary of State 9-28-87
Company (Secured
Party)
NBC Bank - San
Antonio, National
Association
(Assignee)
-29-
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
Professional Texas 275302 Telephone equipment
Telephone Systems, Secretary of State 10-26-87
Inc.
Commercial Texas 270933 Leased office furniture
Equipment Leasing Secretary of State 11-23-88
Company (Secured
Party)
NBC Bank - San
Antonio, National
Association
(Assignee)
NBC Bank - San Texas 742590 Assignment of File No. 270933
Antonio, National Secretary of State 8-2-89 to Commercial Equipment
Association Leasing Company
(Secured Party)
Commercial
Equipment Leasing
Company (Assignee)
Commercial Texas 270989 Leased office furniture
Equipment Leasing Secretary of State 11-23-88
Company (Secured
Party)
NBC Bank - San
Antonio, National
Association
(Assignee)
NBC Bank - San Texas 742500 Assignment of File No. 270989
Antonio, National Secretary of State 8-2-89 to Commercial Equipment
Association Leasing Company
(Secured Party)
Commercial
Equipment Leasing
Company (Assignee)
-30-
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
Commercial Equipment Texas 099921 Leased office furniture
Leasing Company Secretary of State 5-2-89
(Secured Party)
NBC Bank - San
Antonio, National
Association
(Assignee)
NBC Bank - San Texas 742513 Assignment of File No. 099921
Antonio, National Secretary of State 8-2-89 to Commercial Equipment
Association Leasing Company
(Secured Party)
Commercial
Equipment Leasing
Company (Assignee)
Professional Texas 126857 Leased telephone equipment
Telephone Systems, Secretary of State 6-5-89
Inc.
Professional Texas 061529 Leased telephone equipment
Telephone Systems, Secretary of State 3-20-90
Inc.
Commercial Texas 114177 Leased furniture
Equipment Leasing Secretary of State 5-22-90
Company, Inc.
(Lessor)
Commercial Texas 114179 Leased ______________
Equipment Leasing Secretary of State 5-22-90 [the referenced Schedule A
Company, Inc. describing the collateral is
(Lessor) not of record]
Lane Equipment Texas 202824 Leased Taylor Freezer
Company (Secured Secretary of State 9-21-90
Party)
Sanwa Leasing
(Assignee)
-31-
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
DEBTOR: CHARTER RIDGE HOSPITAL, INC.
Cap-Co Leasing Co. Fayette County, 9005206 Embosser
(Secured Party) Kentucky 6-27-90
Capitol Leasing
Company (Assignee)
DEBTOR: CHARTER RIVERS HOSPITAL, INC.
Modern Office South Carolina 88-052260 Canon copier
Machines (Secured Secretary of State 10-3-88
Party)
Fiduciary Leasco,
Inc. (Assignee)
DEBTOR: CHARTER SPRINGS HOSPITAL, INC.
** Southeast Bank, Marion County, 84-056015 Blanket fixture filing (the
N.A. Florida OR 1249 corresponding Mortgage and
Pg 0668 Security Agreement was
11-7-84 terminated on 10-28-88)
DEBTOR: CHARTER SUBURBAN HOSPITAL
Monex Leasing Texas 077507 Computer equipment
(Secured Party) Secretary of State 4-9-90
YTB Leasing
(Assignee)
-32-
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
Baxter Scientific Texas 287191 Stratus and sample handler
Products Secretary of State 12-16-88 equipment
Baxter Scientific Texas 124973 Stratus II immunoassay system
Products Secretary of State 6-6-90
DEBTOR: CHARTER SUBURBAN HOSPITAL, INC.
Picker Interna- California 88198080 Mechanical sector probe
tional, Inc. Secretary of State 8-15-88
United States California 88249690 Leased ultrasound equipment
Leasing Corporation Secretary of State 10-6-88
GranTree Furniture California 89235463 Leased office furniture and
Rental Secretary of State 9-5-89 equipment
Vitek Systems, Inc. California 91033002 Leased computer equipment
Secretary of State 2-25-91
Cura Financial California 91030181 Four IVAC 310 PCA Pumps
Group Secretary of State 2-13-91 (Debtor is Charter Suburban
Hospital - Paramount)
Cura Financial California 91143895 Two IVAC PCA Pumps (Debtor is
Group Secretary of State 7-1-91 Charter Suburban Hospital -
Paramount)
Internal Revenue California 85193553 Federal tax lien for $2,022.49
Service Secretary of State 8-8-85 (Taxpayer is Charter Suburban
Hospital)
DEBTOR: CHARTER SUBURBAN HOSPITAL OF MESQUITE, INC.
Circle Business Texas 223771 Trash compactor
Credit, Inc. Secretary of State 10-3-89
DEBTOR: CHARTER SUNRISE HOSPITAL
** New Mexico Bernalillo County, 8911475 $374.65 lien for unemployment
Employment New Mexico MS713A compensation contributions for
Security Dept. Pg. 343 the quarter ended 9/30/88
2-14-89
-33-
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
DEBTOR: CHARTER WINDS HOSPITAL, INC.
Citizens and Bibb County, 204854 Fixtures, equipment and
Southern Trust Georgia 5-6-91 personal property that is part
Company (Georgia) of the Project pursuant to the
National Indenture with Athens-Clarke
Association County Industrial Development
Authority
The Citizens and Bibb County, 175880 Fixtures, equipment and
Southern National Georgia 5-8-84 personal property that is part
Bank, as Trustee of the Project pursuant to the
Indenture with Athens-Clarke
County Industrial Development
Authority (Debtor is Charter
Medical-Athens, Inc.)
The Citizens and Bibb County, 175880 Assignment of File No. 175880
Southern National Georgia 5-2-89 to Citizens and Southern Trust
Bank, as Trustee Company (Georgia) National
(Secured Party) Association
Citizens and
Southern Trust
Company (Georgia)
National
Association
(Assignee)
-34-
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
Citizens and Bibb County, 175880 Continuation of File
Southern Trust Georgia 5-2-89 No. 175880
Company (Georgia)
National
Association
175880 Amendment to File No. 175880
5-6-91 changing the Debtor's name to
Charter Winds Hospital, Inc.
Inland Finance Clarke County, 901086 Microwave oven
Company Georgia 5-30-90
Citizens and Clarke County, 911026 Fixtures, equipment and
Southern Trust Georgia 5-3-91 personal property that is part
Company (Georgia) of the Project pursuant to the
National Indenture with Athens-Clarke
Association County Industrial Development
Authority
DEBTOR: CHARTER WOODS HOSPITAL, INC.
AT&T Credit Alabama B90-31655 AT&T Sale In Place Spirit
Corporation Secretary of State 8-31-90 equipment sold under a certain
Lease
Xerox Corporation Alabama 90-13056 Xerox copy machine
Secretary of State 4-8-91
-35-
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
DEBTOR: DESERT SPRINGS HOSPITAL, INC.
NFB Leasing, a Nevada 88-06852 Leased equipment (Aqua Matic
division of Nevada Secretary of State 6-23-88 and Automatic Battery Charger)
First Bank (Lessor)
CooperVision CILCO, Nevada 88-07205 Series 10,000 Master and
as part of Cooper Secretary of State 7-8-88 ultrasonic handpiece
Companies
Datascope Corp Nevada 90-03560 Balloon pump machine
Secretary of State 3-30-90
Fuji Medical Nevada 90-04190 Inventory and equipment
Systems U.S.A., Secretary of State 4-16-90 manufactured or distributed by
Inc. Secured Party/Consignor to any
of Debtor/Consignee's
locations
Valleylab, Inc. Nevada 90-12736 Valleylab medical equipment
Secretary of State 11-13-90 pursuant to Accessories
Purchase Agreement
Instrumentation Nevada 91-09486 Blood gas analyzer, CO
Laboratory Secretary of State 10-15-91 oximeter, BGM2 software and
hardware, IBM workstation
Charter Medical Clark County, Book 1627 Fixture filing for medical
Corporation Nevada 1586236 equipment (defibrillator,
(Secured Party) 9-28-82 monitors, peristalic pumps,
Manufacturers etc.)
Hanover Leasing
Corporation
(Assignee)
-36-
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
BK 870811 Continuation of Book 1627,
IN 00453 No. 1586236
8-11-87
BK 880217 Assignment of Book 1627,
IN 00694 No. 1586236 to The CIT
2-17-88 Group/Equipment Financing,
Inc.
Charter Medical Clark County, Book 1518 Fixture filing for specific
Corporation Nevada 1477828 equipment (M20CR Processor,
(Secured Party) 2-3-82 IBM recorders, transcribers,
Manufacturers tone control units, convection
Hanover Leasing steamer)
Corporation
(Assignee)
BK 870203 Continuation of Book 1518,
IN 00896 No. 1477828
2-3-87
NFB Leasing, a Clark County, BK 880630 Leased equipment (Aqua Matic
Division of Nevada Nevada IN 00819 and Automatic Battery Charger)
First Bank 6-30-88
(Lessor)
CooperVision CILCO, Clark County, BK 880712 Equipment (10,000 Master and
a part of Cooper Nevada IN 00632 ultrasonic handpiece)
Companies 7-12-88
Fuji Medical Clark County, BK 900510 Inventory and equipment
Systems Nevada IN 00856 manufactured or distributed by
U.S.A., Inc. 5-10-90 Secured Party/Consignor to any
of Debtor/Consignee's
locations
-37-
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
DEBTOR: EAS, INC.
Republic Leasing North Carolina 0701075 Caterpillar Lift
Co. (Secured Party) Secretary of State 7-27-90
Republic National
Bank (Assignee)
Sunox, Inc. North Carolina 0397187 Equipment (Miller Dialarc HF
Secretary of State 11-30-87 package)
DEBTOR: EMPLOYEE ASSISTANCE SERVICES, INC.
Town & County, Inc. Virginia State 880811676 Computer and laser printer
(Secured Party) Corporation 8-8-88
Bank of Lancaster Commission
County, N.A.
(Assignee)
Town & Country, Virginia State 890310967 Miscellaneous computer
Inc. Corporation 3-1-89 equipment
(Secured Party) Commission
Bank of Lancaster
County, N.A.
(Assignee)
Town & Country, Virginia State 920130019 Panasonic copier and copy
Inc. Corporation 1-23-92 equipment
(Secured Party) Commission
Bank of Lancaster
County, N.A.
(Assignee)
-38-
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
DEBTOR: METROPOLITAN HOSPITAL, INC.
Alcon Surgical Inc. Fulton County, 751460 Medical equipment listed on
Georgia 1-8-91 Financing Agreement (Debtor is
Metropolitan Eye & Ear d/b/a
Metropolitan Hospital)
Apple Funding Fulton County, 727015 Kin-Com Computer System
Group, Inc. Georgia 11-13-89
(Secured Party)
Citicorp North
America, Inc.
(Assignee)
LeaseAmerica Fulton County, 708703 Leased surgical laser
Corporation Georgia 12-8-88
(Lessor)
DEBTOR: MIDDLE GEORGIA HOSPITAL, INC.
IMED Corporation Bibb County, 205713 Volumetric infusion pumps
Georgia 7-26-91
Sherwin-Williams Bibb County, 204549 Equipment (pressure washer,
Co. Georgia 4-3-91 chemical injector, hose,
extension wand)
Georgia Duplicating Bibb County, 191281 Copy equipment
Products, Inc. Georgia 1-25-88
-39-
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
DEBTOR: NATIONAL RECOVERY NETWORK
Grantree Furniture California 87231486 Leased office furniture and
Rental Corp. Secretary of State 9-22-87 equipment
(Lessor)
Continental California 87232631 Telephone system
Telephone Co. of Secretary of State 9-24-87
Ca.
AVCO Financial California 87261640 Leased office furniture and
Services of Secretary of State 10-28-87 equipment
Southern
California, Inc.
** Internal Revenue California 89253642 Federal tax lien for $6556.68
Service Secretary of State 9-26-89 for period ending 12/31/86
** Internal Revenue Los Angeles County, 891566137 Federal tax lien for $6556.68
Service California 9-28-89 for period ending 12/31/86
DEBTOR: PHYSICIANS & SURGEONS HOSPITAL, INC.
General Electric Caddo Parish, 899049 Leased General Electric Sytec
Company (Lessor) Louisiana 12-6-90 3000 Whole Body CT Scanner
Baxter Diagnostics, Caddo Parish, 901690 Stratus Analyzer
Inc. Louisiana 6-3-91
E.I. Du Pont De Caddo Parish, 905314 Du Pont Discrete Clinical
Nemours & Co. Louisiana 2-26-92 Analyzer
Americorp Caddo Parish, 872697 Leased equipment (Model 2080A
Financial, Inc. Louisiana 11-21-88 Thermometers)
(Secured Party)
Charter National
Bank (Assignee)
-40-
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
Charter National Caddo Parish, 883975 Assignment of File No. 872697
Bank (Secured Louisiana 7-21-89 to Colonial Pacific Leasing
Party) Colonial
Pacific Leasing
(Assignee)
Edwin H. Poole Caddo Parish, Case Judgment of $100,000 plus
(Plaintiff) Louisiana No. 01217195 one-half future medical care
Case filed and related benefits of
1-24-89 Timothy Edwin Poole. The
search reports that it was
satisfied.
* The Travelers Caddo Parish, Mort. Bk. 1155 Act of Mortgage securing
Insurance Company Louisiana Page 724 $6,100,000 note with real
Chattel property in Shreveport, rents
No. 570804 and profits therefrom,
5-20-77 equipment and fixtures thereon
(chattel)
5-10-77
(mortgage)
* The Travelers Caddo Parish, Mort. Bk. 1223 Act of Amendment to Mortgage
Insurance Company Louisiana Page 555 recorded in Mort. Bk. 1155,
Chattel Page 724 revising the legal
No. 603425 description of the real
8-7-78 property
* The Travelers Caddo Parish, Mort. Bk. 1223 Act of Supplemental Mortgage
Insurance Company Louisiana Page 560 supplementing the Act of
Chattel Mortgage recorded in Mort.
No. 603426 Bk. 1155, Page 724
8-7-78
* The Travelers Caddo Parish, Mort. Bk. 1155 Assignment of Leases
Insurance Company Louisiana Page 745
5-10-77
-41-
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
The Travelers Caddo Parish, No. 857945 Partial Release of Mortgage
Insurance Company Louisiana 1-29-88
DEBTOR: SHALLOWFORD COMMUNITY HOSPITAL
Technicon DeKalb County, 88-08769 Hematology analyzer
Instruments Corp. Georgia 9-30-88
DEBTOR: STUART CIRCLE HOSPITAL CORPORATION
Baxter Diagnostics Virginia State 911020413 Stratus II immunochemistry
Corporation 10-15-91 analyzer
Commission
Beckman Virginia State 920111906 Leased equipment (Synchron CX-
Instruments, Inc. Corporation 1-9-92 7 and CX-5)
Commission
DEBTOR: TAMPA HEIGHTS HOSPITAL
** Fleet Mortgage Hillsborough 90111643 Summary Final Judgment of
Corp. (Plaintiff) County, Florida OR 5986 Foreclosure for $74,065.53
Page 377 regarding real property in
5-23-90 Hillsborough County, Case
No. 90-85(F), against Mr. and
Mrs. Charles McAfee, Jr.,
Karen Hedler, John Larrimer as
trustee of Health Group
Incorporated of Tampa d/b/a
Tampa Heights Hospital, a
dissolved corporation
-42-
<PAGE>
FILE NO./
SECURED PARTY LOCATION DATE FILED COLLATERAL
------------------- --------------------- ---------- -----------------------------------
Colonial Mortgage Hillsborough 91050399 Notice of Lis Pendens
Company (Plaintiff) County, Florida 91-2588 regarding real property in
OR 6219 Hillsborough County for suit
Page 240 filed 3/12/91 (Charter
3-15-91 Hospital of Tampa Bay formerly
Health Group Incorporated of
Tampa d/b/a Tampa Heights
Hospital is one of several
codefendants)
DEBTOR: THE FAIRMOUNT INSTITUTE
Xerox Corporation Pennsylvania 20540314 Duplicating System (5065)
Department of State 2-20-92
Xerox Corporation Pennsylvania 20540315 Duplicating System (1090)
Department of State 2-20-92
Xerox Corporation Philadelphia 88-865 Xerox 1090 copier
County, 2-4-88
Pennsylvania
</TABLE>
-43-
<PAGE>
ANNEX II
LIEN SUMMARY
<TABLE>
<CAPTION>
File No./
Secured Party Location Date Filed Collateral
- ------------- -------- ---------- ----------
<S> <C> <C> <C>
DEBTOR: CHARTER ACADEMY OF MOBILE
American Business Alabama, 92-09627 Leased Savin Copy
Credit Corporation Secretary of State 03/17/92 Equipment
DEBTOR: CHARTER BAY WOOD HOSPITAL
Paramount Medical
Development Co. California 82230927 Personal Property, Fixtures
Secretary of State 12/13/82 and Equipment
Paramount Medical California 11/16/87 Debtor-Charter Medical
Development Co. Secretary of State Long Beach, Additional
Debtor-Charter Medical Corporation)
Continuation of File No. 82230927.
Paramount Medical California 11/02/92 (Debtor-Charter Medical
Development Co. Secretary of State Long Beach, Additional Debtor-Charter
Medical Corporation) Continuation of
File No. 82230927.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
File No./
Secured Party Location Date Filed Collateral
- ------------- -------- ---------- ----------
<S> <C> <C> <C>
DEBTOR: CHARTER BEACON HOSPITAL
Kimco Leasing, Inc. Indiana, 1660553 (1) SF-8300 Sharp copier
Secretary of State 07/10/90 with cabinet
DEBTOR: CHARTER COMMUNITY HOSPITAL
C&J Leasing Corp. Iowa, K017597 Leased copies and other
Secretary of State 08/18/89 equipment
Sanwa Leasing Corporation Iowa, K144306 Assignment of K017597
(Assignee) Secretary of State 08/16/90
Norwest Bank Iowa Iowa, K320532 Assignment of K017597
(Assignee) Secretary of State 01/03/92
Hewlett Packard Corporation Iowa, K161998 Hewlett Packard equipment
Secretary of State 10/05/90 leased under Lease No.
4126-48102
Business Equipment Leasing Inc. Iowa, K236116 (7) Leased Toshiba copiers
Secretary of State 04/12/91
DEBTOR: CHARTER COMMUNITY HOSPITAL, INC.
E.I. DuPont California, 91033007 (Debtor-FHP Inc. for
DeNemours & Co. Secretary of State 02/25/91 Charter Community Hospital)
DuPont 710ACA(R)IV discrete
clinical analyzer
Better Beverages California, 91041618 Soda Dispensing Equipment
Secretary of State 02/25/91
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
File No./
Secured Party Location Date Filed Collateral
- ------------- -------- ---------- ----------
<S> <C> <C> <C>
Baxter Scientific California, 92174036 Coagulation Analyzer
Products Secretary of State 08/10/92
Beckman Instruments, California, 89257770 (Debtors Trade Name or
Inc., (Lessor) Secretary of State 10/02/89 Style-Beckman Instruments,
Inc.) Leased Medical
Equipment
DEBTOR: CHARTER COMMUNITY HOSPITAL OF DES MOINES, INC.
Biomerieux Vitek, Inc. Iowa, K440247 Biomerieux Vitek Model
Secretary of State 02/25/93 Vitek-JR/MS with accessories
DEBTOR: CHARTER FAIRMOUNT INSTITUTE, INC.
AT&T Credit Corporation Pennsylvania, 21801429 AT&T Definity Generic 3.1 equipment
(Lessor) Secretary of State 04/02/93
DEBTOR: CHARTER FOREST HOSPITAL, INC.
M&H Leasing Corp. Caddo Parish 838933 (2) IBM Actionwriter 1 Typewriters
Louisiana 03/19/87
(Chattel Mortgage)
M&H Leasing Corp. Caddo Parish 844129 (1) IBM Actionwriter 1 Typewriter
Louisiana 06/15/89
(Chattel Mortgage)
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
File No./
Secured Party Location Date Filed Collateral
- ------------- -------- ---------- ----------
<S> <C> <C> <C>
M&H Leasing Corp. Caddo Parish 850098 (1) IBM Actionwriter 1 Typewriter
Louisiana 09/25/87
(Chattel Mortgage)
State of Louisiana Office of Caddo Parish 01295082 Notice of Tax Assessment: $1,799.83
Employment Security Louisiana 02/07/92
State of Louisiana Office of Caddo Parish 1322667 Notice of Tax Assessment: $8,468.83
Employment Security Louisiana 10/23/91
State of Louisiana Office of Caddo Parish 1332700 Notice of Tax Assessment: $2,022.96
Employment Security Louisiana 02/03/92
Barbara Loftis, Petitioner Caddo Parish 359320 Petition
Louisiana 01/19/90
Elaine S. and Brian B. Haloubek, Caddo Parish 393810 Original Petition
Petitioners Louisiana 10/29/93
Alice Gentry Caddo Parish 329653 Judgment: $4,000.00
Louisiana 10/21/87
Alice Gentry Caddo Parish 329653 Petition for Worker's Compensation
Louisiana 01/06/87 Benefits $264.67 per week from
08/21/86 continuing throughout the
period of her disability
</TABLE>
-4-
<PAGE>
<TABLE>
<CAPTION>
File No./
Secured Party Location Date Filed Collateral
- ------------- -------- ---------- ----------
<S> <C> <C> <C>
DEBTOR: CHARTER HOSPITAL OF ALBUQUERQUE, INC.
Lanier Business Products, Inc. New Mexico, 900301037 Dictation equipment
Secretary of State 03/01/90
Lanier Business Products, Inc. New Mexico, 900521069 Dictation equipment
Secretary of State 05/21/90
DEBTOR: CHARTER HOSPITAL OF CHARLESTON, INC.
Republic Leasing Co. South Carolina, 92-012179 Equipment, fixtures and other
Secretary of State 03/11/92 goods (other than inventory),
relating to 2 parcels of real
property in Charlottesville
DEBTOR: CHARTER HOSPITAL OF CHARLOTTESVILLE, INC.
The CIT Group/Equipment Virginia, 920610377 Blanket lien
Financing, Inc. State Corporation Commission 06/02/92
DEBTOR: CHARTER HOSPITAL OF CORPUS CHRISTI, INC.
Amrex Investment Co. Texas, 9100099046 All property located in leased
Secretary of State 05/22/91 premises known as 4101 Hwy. 77,
Suite #L-4, Corpus Christi, TX 78410
in the Five Points Shopping Center
Southwestern Bell Texas, 9200098778 One Norstar Telecommunication
Telecommunications Inc. d/b/a Secretary of State 05/18/92 System
Southwestern Bell Telecom
</TABLE>
-5-
<PAGE>
<TABLE>
<CAPTION>
File No./
Secured Party Location Date Filed Collateral
- ------------- -------- ---------- ----------
<S> <C> <C> <C>
AT&T Credit Corp. Texas, 9300206813 AT&T upgrade to Definity Generic 31
(Lessor) Secretary of State 10/29/93
Xerox Corp. Texas, 90000157220 (Debtor name: Charter Hospital One)
Secretary of State 07/19/90 Xerox 1090 Marathon copier
DEBTOR: CHARTER HOSPITAL OF CORONA, INC.
Advanta Leasing Corp. California, 90293340 Leased Apple Computer
Secretary of State 12/04/90 Equipment
DEBTOR: CHARTER HOSPITAL OF THE EAST VALLEY
Norwest Financial Leasing, Arizona, 756166 Leased Sharp Copy Equipment
Inc. Secretary of State 08/26/93
DEBTOR: CHARTER HOSPITAL OF FORT WORTH
Denitech Corp. Texas, 9200070335 Ricoh FT7870
(Lessor) Secretary of State 04/09/92 LCT, Menu Reorder
DEBTOR: CHARTER HOSPITAL OF GLENDALE
Orix Credit Alliance, Inc. Arizona, 683729 Leased Electric Freezer
Secretary of State 10/28/91
</TABLE>
-6-
<PAGE>
<TABLE>
<CAPTION>
File No./
Secured Party Location Date Filed Collateral
- ------------- -------- ---------- ----------
<S> <C> <C> <C>
DEBTOR: CHARTER HOSPITAL OF GRAPEVINE, INC.
Eaton Financial Corp. Texas, 9400058987 Ricoh FT 3313 DF 40 Feeder, stand
Secretary of State 03/28/94
Coca-Cola Fountain Division Texas, 92000333 (not (Debtor: Charter Hospital)
Secretary of State legible) 1-BC Ice/Drink Combo 6-V
02/20/92
Coca-Cola Bottling Company of Texas, 91000154675 (Debtor: Charter Hospital)
North Texas Fountain Div. Secretary of State equipment
DEBTOR: CHARTER HOSPITAL OF GREENVILLE
Advanced Business Systems South Carolina, 89-053955 Copier equipment
Secretary of State 10/23/89
Modern Office Machines Assignee: South Carolina, 90-002014 Canon Copy System equipment
Fiduciary Leasco Inc. Secretary of State 01/11/90 located at 243 E. Blackstock Rd.,
Spartanburg, S.C. 29301
Modern Office Leasing Assignee: South Carolina, 91-009030 equipment
Eaton Financial Secretary of State 02/19/91
Advanced Business Systems South Carolina, 91-014665 Leased copier
Assignee: Springs Leasing Corp. Secretary of State 03/21/91
Lanier Worldwide, Inc. South Carolina, 92-009765 equipment
Secretary of State 02/27/92
</TABLE>
-7-
<PAGE>
<TABLE>
<CAPTION>
File No./
Secured Party Location Date Filed Collateral
- ------------- -------- ---------- ----------
<S> <C> <C> <C>
DEBTOR: CHARTER HOSPITAL OF INDIANAPOLIS
Midwest Commercial Leasing Indiana, 1753102 (2) Ultra 386 SX 20 Notebook
Secretary of State 12/13/91 computers
(2) Panasonic KXP1180 9-Pin
printers
Dana Commercial Credit Indiana, 1754155 (1) IBM Monochrome monitor
Corporation Secretary of State 12/19/91 (1) IBM 50Z-031 PC
(1) IBM DOS 4.01
DEBTOR: CHARTER HOSPITAL OF JACKSONVILLE
Datamatic Leasing, Inc. Florida, 900000071122 Leased Canon Copy
Secretary of State 03/19/90 Equipment
DEBTOR: CHARTER HOSPITAL OF LAKE CHARLES, INC.
Joseph Samuel Hudson, Petitioner Calcasieu Parish 88-5166 Petition for Damages ($450,000.00)
Louisiana 11/16/88
DEBTOR: CHARTER HOSPITAL OF MIAMI, INC.
Lease America Corporation, Florida, 920000048493 Leased Copy Equipment
(Lessor) Secretary of State 03/10/92
</TABLE>
-8-
<PAGE>
<TABLE>
<CAPTION>
File No./
Secured Party Location Date Filed Collateral
- ------------- -------- ---------- ----------
<S> <C> <C> <C>
DEBTOR: CHARTER HOSPITAL OF MOBILE
Danka Industries Alabama, A31830R Leased Konica Copy
Secretary of State 05/01/89 Equipment
DEBTOR: CHARTER HOSPITAL OF SACRAMENTO
Citibank, N.A. California, 89233095 (Debtor Trade Name or Style-
Secretary of State 09/01/89 Charter Medical
California, Inc.) Blanket
Lien pertaining to Real
Property located in the
County of Placer, California
Citibank, N.A. California, 03/09/93 Amendment to File
Secretary of State No. 89233095 removing
"Charter Medical-
California, Inc." as Debtor's
Trade Name or Style
Citibank, N.A. California, 03/04/94 Continuation of File
Secretary of State No. 89233095
RTC Communications- California, 92100876 NEC Electra Mark II
A Division of Roseville Secretary of State 05/05/92 Telecommunication
Telephone Company Equipment
</TABLE>
-9-
<PAGE>
<TABLE>
<CAPTION>
File No./
Secured Party Location Date Filed Collateral
- ------------- -------- ---------- ----------
<S> <C> <C> <C>
DEBTOR: CHARTER HOSPITAL OF SACRAMENTO, INC.
Citibank, N.A. California, 89233095 (Debtor Trade Name or Style-
Secretary of State 09/01/89 Charter Medical-California,
Inc.) Blanket Lien pertaining
to Real Property located in Placer
County, California
Citibank, N.A. California, 03/09/93 Amendment to File
Secretary of State No. 89233095 removing
"Charter Medical-
California, Inc." as Debtor's
Trade Name or Style
Citibank, N.A. California, 04/04/94 Continuation of File
Secretary of State No. 89233095
RTC Communications- California, 92100876 NEC Electra Mark II
A Division of Roseville Secretary of State 05/05/92 Telecommunications
Telephone Company Equipment
DEBTOR: CHARTER HOSPITAL OF SAN DIEGO, INC.
Citibank, N.A. California, 89233094 [Copy not available as of
Secretary of State 09/01/89 04/25/94]
Citibank, N.A. California, 04/04/94 Continuation of File
Secretary of State No. 89233094
</TABLE>
-10-
<PAGE>
<TABLE>
<CAPTION>
File No./
Secured Party Location Date Filed Collateral
- ------------- -------- ---------- ----------
<S> <C> <C> <C>
DEBTOR: CHARTER HOSPITAL OF SANTA TERESA, INC.
Grantee Furniture Rental Corp. Texas, 8900270333 Rental of office furniture and
(Lessor) Secretary of State 12/05/89 equipment
DEBTOR: CHARTER HOSPITAL OF SIOUX FALLS, INC.
Advance Acceptance Corp. South Dakota, 893241105459 Leased Super 4 Economy Camera,
(Lessor) Secretary of State 11/20/89 and Kroy Lettering Machine
equipment
Advance Leasing Corp. South Dakota, 900991301485 equipment
Secretary of State 04/09/90
AT&T Credit Corp. South Dakota, 930501000756 AT&T Definity Generic equipment
Secretary of State 02/19/93
Eaton Financial Corp. Tennessee, 751905 Leased equipment
(Lessor) Secretary of State 03/19/90
National Bank of Commerce Tennessee, 113725 Leased
(Lessor) Secretary of State 08/18/92 1-Panasonic copier
National Bank of Commerce Tennessee, 113726 Leased 1-Konica 4045 Duplicator
(Lessor) Secretary of State 03/18/92 System and 1-Panasonic copier
National Bank of Commerce Tennessee, 142772 Leased 1-Panasonic copier
(Lessor) Secretary of State 12/01/92
</TABLE>
-11-
<PAGE>
<TABLE>
<CAPTION>
File No./
Secured Party Location Date Filed Collateral
- ------------- -------- ---------- ----------
<S> <C> <C> <C>
Pitney Bowes Credit Corp. Tennessee, 195203 All Pitney Bowes, Inc. Monarch
Secretary of State 05/18/93 Marketing Systems, Pitney Bowes
Credit Corp. and Dictaphone Corp.
equipment sold or distributed subject to
lease #7152283-501
DEBTOR: CHARTER HOSPITAL OF SUGARLAND
Lane Equipment Co. Texas, 8900192177 Equipment
Assignee: Texas Commerce Bank Secretary of State 08/23/89
Xerox Corporation Texas, 9200022620 One Xerox 5065 RDH/FIN
Secretary of State 02/05/92
DEBTOR: CHARTER HOSPITAL OF TAMPA BAY, INC.
Chesterfield Financial Florida, 910000147420 Leased Data Card Cardwriter
Corp. Secretary of State 07/08/91 I Embossing System
Chesterfield Financial Florida, 910000194272 Full Assignment of File No.
Corp. Secretary of State 09/09/91 910000147420 to Fleet
Credit Corporation, Denrich
Leasing Group
DEBTOR: CHARTER HOSPITAL OF THOUSAND OAKS
Wellmark, Inc. California, 9126770 Leased Equipment
Secretary of State 10/07/91
</TABLE>
-12-
<PAGE>
<TABLE>
<CAPTION>
File No./
Secured Party Location Date Filed Collateral
- ------------- -------- ---------- ----------
<S> <C> <C> <C>
DEBTOR: CHARTER HOSPITAL OF WINSTON-SALEM, INC.
AT&T Credit Corporation North Carolina, 0984498 AT&T Definity Generic 3.1 equipment
(Lessor) Secretary of State 04/02/93
DEBTOR: CHARTER LAKE HOSPITAL, INC.
First United Leasing Corp. Bibb County 197799 Four Pitney Bowes
(Lessor) Georgia 07/24/89 facsimile machines
DEBTOR: CHARTER LAKESIDE HOSPITAL, INC.
National Bank of Commerce Mississippi, 486320 (Debtor: Charter Lakeside Hospital)
Secretary of State 06/25/90 Panasonic Telephone System and 4
telephones
DEBTOR: CHARTER MEDICAL CORPORATION
American Business Credit Alabama, 92-09627 Leased Savin Copy
Corporation Secretary of State 03/17/92 Equipment
Saratoga Leasing Arizona, 596953 (dba Charter Hospital)
Secretary of State 10/23/89 Leased Cafeteria Equipment
Nicolet Instrument Arizona, 616932 Nicolet BEAM II System
Corporation Secretary of State 04/10/90 S/3000 and EEG System
Cerritos Gardens General California, 80-091831 [Copy not available as of 4/25/94]
Hospital Company, a California Secretary of State 05/27/80
Ltd. Partnership
</TABLE>
-13-
<PAGE>
<TABLE>
<CAPTION>
File No./
Secured Party Location Date Filed Collateral
- ------------- -------- ---------- ----------
<S> <C> <C> <C>
Cerritos Gardens General California, 05/10/90 (Debtor - Charter Community Hospital
Hospital Company, a California Secretary of State Inc., additional debtor - Charter
Ltd. Partnership Medical Corporation) Continuation of
File No. 80-091831
Paramount General Hospital California, 80-091826 (Debtor - Charter Suburban Hospital,
Company, a California Secretary of State 05/27/80 Inc., formerly known as Ziggurat, Inc.)
Ltd. Partnership [Not available as of 04/25/94]
Paramount General Hospital California, 05/10/90 (Debtor - Charter Suburban Hospital,
Company, a California Secretary of State Inc., formerly known as Ziggurat, Inc.)
Ltd. Partnership Continuation of File No. 80-091826
Paramount General Hospital California, 80-091829 (Debtor - Charter Suburban Hospital,
Company, a California Secretary of State 05/27/80 Inc., formerly known as Ziggurat, Inc.)
Ltd. Partnership [Not available as of 04/25/94]
Paramount General Hospital California, 05/10/90 (Debtor - Charter Suburban Hospital,
Company, a California Secretary of State Inc., formerly known as Ziggurat, Inc.)
Ltd. Partnership Continuation of File No. 809-091829
Cerritos Gardens General California, 80-091830 (Debtor - Charter Suburban Hospital,
Hospital Company, a California Secretary of State 05/27/80 Inc., formerly known as Ziggurat, Inc.)
Ltd. Partnership [Not available as of 04/25/94]
Cerritos Gardens General California, 05/10/90 Continuation of File No. 80-091830
Hospital Company, a California Secretary of State
Ltd. Partnership
Paramount Medical California, 82230927 (Debtor - Charter Medical Long Beach,
Development Company Secretary of State 12/13/82 Additional Debtor, Charter Medical
Corporation)
[Not available as of 04/25/94]
</TABLE>
-14-
<PAGE>
<TABLE>
<CAPTION>
File No./
Secured Party Location Date Filed Collateral
- ------------- -------- ---------- ----------
<S> <C> <C> <C>
Paramount Medical California, 11/02/92 Continuation of File No. 82230927
Development Company Secretary of State
Paramount Medical California, 82230927 (Debtor - Charter Medical Long Beach,
Development Company Secretary of State 12/13/80 Inc., Additional Debtor, Charter
Medical Corporation)
[Not available as of 04/25/94]
Paramount Medical California, 11/16/87 Continuation of 82230927
Development Company Secretary of State
Riviera Medical Development California 80-114688 (Debtor - Charter Pacific Hospital,
Company, a California Ltd. Secretary of State 07/02/80 Inc., formerly known as Cal-Rivers,
Partnership Inc., Additional Debtor, Charter
Medical Corporation)
[Not available as of 04/25/94]
Riviera Medical Development California, 07/02/90 Continuation of File No. 80-114688
Company, a California Ltd. Secretary of State
Partnership
Unicom Computer Corporation Bibb County 191495 Equipment Lease Schedule 28200-04,
(Lessor) Georgia 02/12/88 Control Unit, Magnetic Tape Unites,
Assignee: Westinghouse Credit Total monthly rent of $4,194.00 for
Corporation initial term of 36 months
United States Leasing Corp. Bibb County 193163 Lease 4/29/88 S#084965
(Lessor) Georgia 06/28/88 98-034940-001: equipment
Beckman Instruments, Inc. Bibb County 195805 One, Astra 8
Georgia 01/20/89
</TABLE>
-15-
<PAGE>
<TABLE>
<CAPTION>
File No./
Secured Party Location Date Filed Collateral
- ------------- -------- ---------- ----------
<S> <C> <C> <C>
AT&T Credit Corporation Bibb County 210685 AT&T Audix leased under Lease No.
(Lessor) Georgia 09/03/92 5502008
Value Added Distributors Inc. Bibb County 210854 Datacommunication Equipment
Georgia 09/22/92
State of Georgia Department of Bibb County Bk 59 p. 039 Delinquent tax liability of $96,970.21
Revenue Georgia 40990
02/04/94
Nicolet Instrument Corporation Kentucky, 127527 Nicolet BEAM II System S/3000 and
Secretary of State 03/22/90 EEG system
AT&T Credit Corporation Kentucky, 134239 AT&T Merlin Legend leased under
Secretary of State 12/09/93 Lease No. S502088 with attachments
and accessories
Christa Friedman, Plaintiff Caddo Parish 346228 Judgment: $75,000.00
Louisiana 09/01/88
Jo Alice Seymour, Petitioner Calcasieu Parish 89-2786 Petitioner ($13,485.32) (additional
Louisiana 06/14/89 defendant-Beech Street, Inc.)
Donald A. Sigur, Petitioner Calcasieu Parish 93-3627 Petition (additional defendants-Life
Louisiana 07/21/93 Insurance Company of North America
and Cigna Insurance Company)
Donald A. Sigur, Petitioner Calcasieu Parish 93-3627 Answer of Life Insurance Company of
Louisiana 08/23/93 North America and Cigna Insurance
Company to the Petition of Donald A.
Sigur
</TABLE>
-16-
<PAGE>
<TABLE>
<CAPTION>
File No./
Secured Party Location Date Filed Collateral
- ------------- -------- ---------- ----------
<S> <C> <C> <C>
Atlantic States Leasing South Carolina, 91-013655 IBM W.W.30 Typewriter
Secretary of State 03/15/91
Cash Register Specialities, Inc. Wisconsin, 1074246 (1) Leased Omron RS3010 cash
Secretary of State 08/01/89 register
DEBTOR: CHARTER MEDICAL OF FT. WORTH, INC.
American Network Leasing Texas, 90085637 leased equipment
Partnership Secretary of State 04/18/90
DEBTOR: CHARTER MEDICAL INFORMATION SERVICES, INC.
State of Georgia Department Bibb County Bk 59, pg. 040 Delinquent tax liability
of Revenue Georgia 40991 of $199,867.41
02/04/94
State of Georgia Department Bibb County Bk 59, pg. 041 Delinquent tax liability
of Revenue Georgia 40992 of $67,708.50
02/04/94
DEBTOR: CHARTER MEDICAL-TIPPECANOE CO., INC.
AT&T Credit Corporation Indiana, 1849514 AT&T Merlin Legend with attachments
Secretary of State 5/28/93 leased with Lease No. S503052
</TABLE>
-17-
<PAGE>
<TABLE>
<CAPTION>
File No./
Secured Party Location Date Filed Collateral
- ------------- -------- ---------- ----------
<S> <C> <C> <C>
DEBTOR: CHARTER MEDICAL-VIGO COUNTY, INC.
Citibank, N.A. Indiana, 1601311 Certain real estate in Vigo County,
Secretary of State 09/05/89 Indiana and rights pertaining thereto
Merchants National Bank of Terre Indiana, 1856465 (1) Leased Canon 2020 copier with
Haute Secretary of State 07/07/93 accessories
DEBTOR: CHARTER NORTHSIDE HOSPITAL, INC.
AT&T Credit Corporation Bibb County 203938 AT&T 6486 PC equipment
(Lessor) Georgia 01/29/91 leased under
Lease No. 0011895
AT&T Credit Corporation Bibb County 203938 Amending Lessee headquarter
Georgia 06/27/91 address to 400 Charter Blvd.,
Macon, Georgia 31210
Baxter Diagnostics Inc. Bibb County 209506 Stratus II Analyzer
Georgia 06/22/92
I Dupont Denemourse & Co. Bibb County 209559 ("This filing is missing from
Georgia 06/26/92 the jurisdiction's files.
A copy is not available.")
Curtis Matheson Scientific Bibb County 212038 Mistral Centrifuge
Georgia 12/28/92
AT&T Credit Corporation Bibb County 212192 AT&T Definity Generic 3.1
Georgia 01/08/93 Equipment
</TABLE>
-18-
<PAGE>
<TABLE>
<CAPTION>
File No./
Secured Party Location Date Filed Collateral
- ------------- -------- ---------- ----------
<S> <C> <C> <C>
DEBTOR: CHARTER OAK HOSPITAL, INC.
Wellmark, Inc. California, 91216771 Leased equipment pursuant to a
certain Member's Agreement
Secretary of State 10/07/91
DEBTOR: CHARTER PALMS HOSPITAL, INC.
Xerox Corp. Texas, 9100174223 Xerox 5065 copying system
Secretary of State 09/09/91
AT&T Texas, 9200038403 AT&T Telecommunication equipment
Assignee: AT&T Credit Corp. Secretary of State 02/28/92 sold under contract of January 27,
1992
AT&T Credit Corp. Texas, 00662177 Assignment to AT&T Credit Corp.
Secretary of State 04/29/92
DEBTOR: CHARTER PEACHFORD HOSPITAL, INC.
Paul & Sharon Best DeKalb County 92-12202-6 Judgment: $10,000.00
(Plaintiffs) Georgia 12/16/92 plus court costs
</TABLE>
-19-
<PAGE>
<TABLE>
<CAPTION>
File No./
Secured Party Location Date Filed Collateral
- ------------- -------- ---------- ----------
<S> <C> <C> <C>
DEBTOR: CHARTER REAL HOSPITAL
Commercial Equipment Leasing Co. Texas, 8900099921 Leased office furniture
Assignee: NBC Bank-San Antonio, Secretary of State 05/02/89
Natl Association Texas, 89000742513 Total assignment of original file no.
Assignee: Commercial Equipment Secretary of State 08/02/89 8900099921
Leasing Co.
Professional Telephone Systems, Texas, 89000126857 Rental of 10 Button Sets and Premise
Inc. Secretary of State 06/05/89
Professional Telephone Systems, Texas, 9000061529 Rental Buscom, Line cards, Direct
Inc. Secretary of State 03/20/90 Station Selector, Button telephones
Commercial Equipment Leasing Texas, 90000114177 Leased office furniture
Company, Inc. Secretary of State 05/22/90
Commercial Equipment Leasing Texas, 90000114179 equipment
Company, Inc. Secretary of State 05/22/90
Lane Equipment Company Texas, 90000202824 150 Taylor Freezer
Assignee: Sanwa Leasing Secretary of State 09/21/90 S/N H4065444
DEBTOR: CHARTER RIVERS HOSPITAL, INC.
Toshiba America Information South Carolina, 930430-151125A Toshiba 5020
System, Inc. Assignee: Bell Secretary of State 04/30/92 Toshiba 2500's
Atlantic Leasing Corp.
</TABLE>
-20-
<PAGE>
<TABLE>
<CAPTION>
File No./
Secured Party Location Date Filed Collateral
- ------------- -------- ---------- ----------
<S> <C> <C> <C>
DEBTOR: CHARTER SPRINGS HOSPITAL, INC.
Advance Acceptance Florida, 930000149578 Various Maintenance
Corporation Secretary of State 07/19/93 Equipment
DEBTOR: CHARTER SUBURBAN HOSPITAL
Monex Leasing Texas, 9000077507 Computer equipment
Lessee: YTB Leasing Secretary of State 04/09/90
Baxter Scientific Products Texas, 90000124973 Stratus II Immunoassory System
Division Secretary of State 06/06/90
DEBTOR: CHARTER SUBURBAN HOSPITAL, INC.
Baxter Scientific California, 92197050 Stratus II Analyzer
Products Secretary of State 09/10/92
Baxter Scientific California, 94037483 Medical and Computer
Products Secretary of State 02/25/94 Equipment
Vitek Systems, Inc. California, 91033002 (dba Subsidiary of
Secretary of State 02/25/91 Charter Medical Corp.,
of Macon, Ga.)
Leased Computer
Equipment
</TABLE>
-21-
<PAGE>
<TABLE>
<CAPTION>
File No./
Secured Party Location Date Filed Collateral
- ------------- -------- ---------- ----------
<S> <C> <C> <C>
DEBTOR: CHARTER SUBURBAN HOSPITAL OF MESQUITE, INC.
Circle Business Credit, Inc. Texas, 89-223771 Marathon Ram Jet V.I.P.
Secretary of State 10/03/89
DEBTOR: CHARTER SUMMIT HOSPITAL
Young Electric Sign Company Utah, 366956 Parts and labor required for the
Secretary of State 07/20/93 refinishing of two lexan-faced signs,
worth approximately $12,000.00
DEBTOR: CHARTER WINDS HOSPITAL, INC.
Inland Finance Co. Clarke County 901086 Class A SMIII 3627
Georgia 05/30/90
DEBTOR: CHARTER WOODS HOSPITAL, INC.
AT&T Credit Corporation Alabama, 90-31655 AT&T Spirit
Secretary of State 08/31/90 Communication Equipment
Xerox Corporation Alabama, 91-13056 Xerox Copy Equipment
Secretary of State 04/08/91
</TABLE>
-22-
<PAGE>
<TABLE>
<CAPTION>
File No./
Secured Party Location Date Filed Collateral
- ------------- -------- ---------- ----------
<S> <C> <C> <C>
DESERT SPRINGS HOSPITAL, INC.
CooperVision CILCO a part of the Nevada, 88-07205 Series 10,000 Master Seconf
Cooper Companies Secretary of State 07/08/88 Ultrasonic Handpiece
CooperVision CILCO a part of the Nevada, 88-07205 Continuation of original file no.
Cooper Companies Secretary of State 02/03/93 88-07205
Datascope Corp. Nevada, 90-03560 System 90T Balloon Pump Machine
Secretary of State 03/30/90
Fuji Medical Systems U.S.A. Inc. Nevada, 90-04190 All inventory of goods, merchandise,
(Consignor) Secretary of State 04/16/90 and all equipment to any of
Consignee's locations as per certain
agreement
Instrumentation Laboratory Nevada, 91-09486 Blood Gas Analyzer Oximeter, BCM2
Secretary of State 10/15/91 software and hardware and IBM PS2
Model 30 workstation
Hewlett-Packard Co. Nevada, 93-01686 Leased Hewlett-Packard equipment
(Lessor) Secretary of State 02/19/93
KCI Financial Services, Inc. Nevada, 93-07152 MEMS System equipment pursuant to
Secretary of State 07/15/93 an Equipment Rental Agreement
E.I. Dupont De Nemours & Co. Nevada, 93-10667 Dupont LP-400 Laser, Dupont Linx
Assignee: Dupont Capital Secretary of State 10/13/93 network and processor
DEBTOR: EMPLOYEE ASSISTANCE SERVICES, INC.
Town & Country, Inc. Virginia, 920130019 (1) Panasonic Copier with
State Corporation Commission 01/21/92 accessories, valued at $6,740.00
</TABLE>
-23-
<PAGE>
<TABLE>
<CAPTION>
File No./
Secured Party Location Date Filed Collateral
- ------------- -------- ---------- ----------
<S> <C> <C> <C>
DEBTOR: FLORIDA HEALTH FACILITIES
Indian River County Florida, 920000022720 Blanket Lien pertaining to
Florida, Assignee- Secretary of State 02/08/92 Real Property Located in
Barnett Banks Trust the County of Indian River,
Co. N.A. Florida
Polk County Industrial Florida, 1840214521 Blanket Lien
Development Authority, Secretary of State 12/21/84
Assignee-Barnett
Banks Trust Co. N.A.
Polk County Industrial Florida, 11/20/89 Continuation of File No.
Development Authority, Secretary of State 1840214521 and Amendment of
Assignee-Barnett File No. 1840214521 changing
Banks Trust Co. N.A. address of Assignee
DEBTOR: INTERNAL MEDICINE
Macon-Bibb County Hospital Bibb County 214494 (Debtor: Internal Medicine
d/b/a Medical Center of Georgia 07/30/93 of Central Georgia, P.C.)
Central GA All furniture, equipment
located at 555 North Camellia
Blvd., Fort Valley, GA
</TABLE>
-24-
<PAGE>
<TABLE>
<CAPTION>
File No./
Secured Party Location Date Filed Collateral
- ------------- -------- ---------- ----------
<S> <C> <C> <C>
DEBTOR: METROPOLITAN HOSPITAL, INC.
Apple Funding Group, Inc. Fulton County 727015 (1) Kin-Computer System with
Georgia 11/13/89 all accessories and attachments
Alcon Surgical, Inc. Fulton County 751460 Equipment listed on Alcon
Georgia 01/08/91 Surgical, Inc. Contract No.
15151C, dated 11/26/90
DEBTOR: MIDDLE GEORGIA HOSPITAL, INC.
IMED Corporation Bibb County 205713 Volumetric Infusion Pumps
Georgia 07/26/91
Sherwin-Williams Co. Bibb County 204549 Equipment
Georgia 04/03/91
Baxter Diagnostics Bibb County 211957 Stratus II Analyzer
Georgia 12/17/92
AT&T Credit Corporation Bibb County 213011 AT&T Definity Generic
(Lessor) Georgia 04/02/93 3.1 Equipment
DEBTOR: PHYSICIANS & SURGEONS HOSPITAL, INC.
The Travelers Insurance Company Caddo Parish 01174100 Partial Release of Mortgage
Louisiana 8S7945
Americorp Financial, Inc. Caddo Parish 872697 Leased Medical Equipment
Assignee-Charter National Bank Louisiana 11/21/88
</TABLE>
-25-
<PAGE>
<TABLE>
<CAPTION>
File No./
Secured Party Location Date Filed Collateral
- ------------- -------- ---------- ----------
<S> <C> <C> <C>
Americorp Financial, Inc. Caddo Parish 878618 Leased Medical Equipment
Assignee-Manufacturers National Louisiana 04/20/89
Bank
Charter National Bank Caddo Parish 07/21/89 Assignment of File No. 872697 to
Louisiana Colonial Pacific Leasing
General Electric (Lessor) Caddo Parish 899049 Leased General Electric Whole Body
Louisiana 12/06/90 Scanner including laser camera and
all present and future attachments
E.I. DuPont De NeMours & Co. Caddo Parish 905314 DuPont 710 ACA IV Discrete Clinical
Louisiana 02/26/92 Analyzer
Space Labs Medical, Inc. (Lessor) Caddo Parish 09-918446 Lease Space Labs patient monitoring
Louisiana 01/13/94 equipment
Joel Hollis Hunt, Plaintiff Caddo Parish 387412-A Motion to Produce
Louisiana 02/16/93
Kathy A. Maxwell and Terry Caddo Parish 387608 Petition for Damages
Carpenter, Plaintiffs Louisiana 02/23/93
Shirley W. Fatheree Caddo Parish 395130 Petition for Damages
Louisiana 01/07/94
Roosevelt Singleton, Plaintiff Caddo Parish 310429 Judgment: $32,500.00
Louisiana 01/02/85
Ethyl Joyce Willingsworth Lewis, Caddo Parish 308445 Judgment: $9,000.00
Plaintiff Louisiana 09/05/86
</TABLE>
-26-
<PAGE>
<TABLE>
<CAPTION>
File No./
Secured Party Location Date Filed Collateral
- ------------- -------- ---------- ----------
<S> <C> <C> <C>
Douglas Logan, Plaintiff Caddo Parish 312795 Judgment: $2,500.00
Louisiana 10/09/86
Morie Woodall Caddo Parish 330500 Judgment: $10,000.00
Louisiana 02/10/88
Rosie Randal and Ernest Randal Caddo Parish 375859 Judgment: Dismissing
Louisiana 06/30/93 plaintiff's actions
Board of Trustees, State Caddo Parish 319309 Pending Suit
Employees Group Benefits Louisiana 12/20/85
Program (Plaintiff)
Annie Griffin (Plaintiff) Caddo Parish 352746 Pending Suit
Louisiana 5/2/89
Janis Rudd Ellis (Plaintiff) Caddo Parish 373022 Pending Suit
Louisiana 07/03/91
M.D. Anesthesia, P.C. et al. Caddo Parish 374112 Pending Suit
(Plaintiffs) Louisiana 08/21/91
Betty and Kenneth Skaggs Caddo Parish 377916 Pending Suit
(Plaintiffs) Louisiana 02/07/92
Betty Skaggs et al. (Plaintiffs) Caddo Parish 378381 Pending Suit
Louisiana 03/02/92
Betty and Kenneth Skaggs Caddo Parish 379772 Pending Suit
(Plaintiffs) Louisiana 04/18/92
</TABLE>
-27-
<PAGE>
<TABLE>
<CAPTION>
File No./
Secured Party Location Date Filed Collateral
- ------------- -------- ---------- ----------
<S> <C> <C> <C>
Shirley Ward Fatheree, Caddo Parish 380905 Pending Suit
Charles M. Ward, et al. Louisiana 05/26/92
(Plaintiffs)
Shirley Ward Fatheree et al. Caddo Parish 381201 Pending Suit
(Plaintiffs) Louisiana 06/03/92
DEBTOR: SHALLOWFORD COMMUNITY HOSPITAL, INC.
R. Wayne Wehunt and Amanda DeKalb County 93-12187-3 Pending Suit
Wehunt Georgia 12/17/93
Richard Turner DeKalb County 92-11540-1 Judgment: $20,000.00
Georgia 02/15/94
Continental Assurance DeKalb County 178378 Blanket Lien pertaining to
Company Georgia 08/15/77* all goods at and proceeds from
4575 N. Shallowford Rd.,
Chamblee, GA 30341
Continental Assurance DeKalb County 9300268 Land contained in Land Lot 344 of
Company Georgia 01/11/93 the 18th District of DeKalb
County, Georgia
DEBTOR: STUART CIRCLE HOSPITAL
Beckman Instruments, Inc. Virginia, 920111906 Leased Computer equipment
State Corporation Commission 01/09/92
</TABLE>
-28-
<PAGE>
<TABLE>
<CAPTION>
DRAFT
04/28/94
TAX SEARCH
----------
File No./
Secured Party Location Date Filed Collateral
- ------------- -------- ---------- ----------
<S> <C> <C> <C>
DEBTOR: CHARTER HOSPITAL OF ALBUQUERQUE
New Mexico Department Bernalillo 8911475 Warrant of Levy
of Labor County, 02/14/89 and Lien: $364.65
New Mexico
DEBTOR: CHARTER HOSPITAL OF CORONA, INC.
Julia E. Marshall Salt Lake County, 2188810 Judgment: $3,508.88
(Plaintiff) Utah 01/12/94
DEBTOR: CHARTER HOSPITAL OF LOUISVILLE, INC.
Margaret M. Hennessey Jefferson County, 93-CI-0384 Pending Suit
(Plaintiff) Kentucky 01/25/93
Jeanette M. Young Jefferson County, 90-CI-07670 Judgment: Amount not
(Plaintiff) Kentucky 12/15/93 available
CMCI, Inc. Jefferson County, Bk 2/239 Fixture Blanket Lien
Kentucky 08/11/89 property known as Tract 3
Farrer-Hislop
<PAGE>
DEBTOR: CHARTER RIDGE HOSPITAL, INC.
Cap-Co Leasing Fayette County, 9005206 (1) Model 120 Embosser
Company Kentucky 06/27/90
Canon Financial Fayette County, 9301846 (1) Canon NP6060 Copier
Services, Inc. Kentucky 05/21/93 (1) Canon NP6650 Copier
DEBTOR: CHARTER SUNRISE HOSPITAL
New Mexico Department Bernalillo 8911475 Warrant of Levy
of Labor County, 02/14/89 and Lien: $364.65
New Mexico
DEBTOR: EAS, INC.
U.S. Government Shelby County, AY9268 Federal Tax Lien: $1,785.38
Tennessee 03/27/89
State of Tennessee Shelby County, AN2588 State Tax Lien: Amount not
Tennessee 07/08/88 Provided
DEBTOR: KENTUCKY INSTITUTE FOR STRESS AND ADDICTION, INC.
Lee Bolen McCracken County, 93-CI-00610 Pending Suit
(Plaintiff) Kentucky 08/25/93
</TABLE>
<PAGE>
SCHEDULE 8.1(c)
SCHEDULE OF ASSUMED NME LIENS
1.) SEE ATTACHED EXHIBIT A
2.) SEE ATTACHED EXHIBIT B
3.) LIENS LISTED ON SCHEDULE 8.7(d)
<PAGE>
EXHIBIT A
1. With respect to Facility No. 2, Tucson Psychiatric Institute, Tucson, Pima
County, Arizona:
a. Settlement Agreement recorded in Docket 7440, page 836, Pima County,
Arizona.
2. With respect to Facility No. 4, Los Altos Hospital, Long Beach, Los Angeles
County, California:
a. Ground Lease from NME Hospitals, Inc. to Union Bank and Paul Allen, as
trustees, recorded July 26, 1985 as Instrument No. 85-862196.
b. Lease from Union Bank and Paul Allen, as trustees, to NME Hospitals,
Inc., recorded July 26, 1985 as Instrument No. 85-862197.
c. Deed of Trust from NME Hospitals, Inc. to Ticor Title Insurance
Company of California for the benefit of the First National Bank of
Boston and Paul Allen, as trustees, recorded July 26, 1985 as
Instrument No. 85-862198, as modified by Agreement executed by Union
Bank, Kelly Caldwell, as successor trustee, RST Holding Corporation,
State Street Bank and Trust Company and Lese Amato recorded February
28, 1992 as Instrument No. 92-332922, as further amended by Agreement
executed by Union Bank, Kelly Caldwell, as trustees, RST Holding
Corporation and State Street Bank and Trust Company, recorded December
10, 1992 as Instrument No. 92-2316780.
d. Assignment of Lessor's Interests under Leases recorded July 26, 1985
as Instrument No. 85-862201.
e. Assignment of Lessor's Interests under Leases recorded July 26, 1985,
as Instrument No. 85-862204.
f. Deed of Trust from Union Bank and Paul D. Allen, as trustees, to Ticor
Title Insurance Company for the benefit of RST Holding Corporation
recorded July 26, 1985 as Instrument No. 85-862199, as assigned by
Assignment of Beneficial Interest under Deed of Trust to the
Connecticut Bank and Trust Company, National Association and F.H.
Kaham, as trustees, recorded July 26, 1985 as Instrument No. 85-
862202.
g. Assignment of Lessor's Interests under Leases recorded July 26, 1985
as Instrument No. 85-862200.
h. Assignment of Lessor's Interests under Leases recorded July 26, 1985
as Instrument No. 85-862203.
<PAGE>
i. Financing Statement showing SGE (New York) Associates, as debtor, and
General Electric Credit and Leasing Corporation, as secured party,
recorded December 30, 1991 as Instrument No. 91-2043294 as partially
released pursuant to Instrument No. 92-332926 recorded February 28,
1992.
3. With respect to Facility No. 6, Yorba Hills Hospital, Yorba Linda, Orange
County, California:
a. Easement recorded in Book 5804, page 177.
b. Right of Way recorded in Book 203, page 291.
c. Easement recorded in Book 495, page 41.
d. Oil and Gas Lease recorded in Book 3090, page 10.
e. Easement recorded in Book 264, page 146.
f. Instrument recorded January 19, 1990 as Instrument No. 90-034494.
4 With respect to Facility No. 8, Oak Creek Hospital, San Jose, Santa Clara
County, California:
a. Diagram assessments to be collected with County taxes, a lien not yet
due and payable.
5. With respect to Facility No. 11, Bay Harbour RTC and Facility No. 14,
Medfield Hospital, Largo, Pinnellas County, Florida:
a. Easements for utilities granted to Florida Power Corporation by
Instruments recorded in Official Records Book 437, page 636, Official
Records Book 1524, page 263, Official Records Book 7204, page 2334 and
Official Records Book 302, page 361.
6. With respect to Facility No. 12, Manatee Palms RTC, Bradenton, Manatee
County, Florida:
a. Easement for drainage canal right of way as depicted on Manatee County
Property Appraisers Map, of the South 1/2 of Section 1, Township 35
South, Range 17 East.
b. Easement to Florida Power & Light Company recorded in Official Records
Book 1160, page 2629.
7. With respect to Facility No. 13, Laurel Oaks Hospital, and Facility No. 59,
Laurel Oaks RTC, Orlando, Orange County, Florida:
a. Distribution Easement to Florida Power Corporation filed in Official
Records Book 3792, page 2598.
-2-
<PAGE>
8. With respect to Facility No. 15, Laurel Heights Hospital, Atlanta, Cobb
County, Georgia:
a. Permit for anchors, guy poles and wires to Georgia Power Company
recorded in Deed Book 2214, page 544.
b. Permit to trim trees to Georgia Power Company recorded in Deed Book
2289, page 724.
c. Permit for anchors and wires to Georgia Power Company recorded in Deed
Book 2289, page 725.
d. Easement to Georgia Power Company recorded in Deed Book 7243, page
433.
e. Rights of others in 10-foot alleyway along southern property line.
9. With respect to Facility No. 17, Psychiatric Institute of Atlanta, Atlanta,
Cobb County, Georgia:
a. Indemnity Agreement to City of Atlanta recorded in Book 13929, page
322.
10. With respect to Facility No. 22, Acadian Oaks, Lafayette, Lafayette Parish,
Louisiana:
a. Water Line Easement under Entry No. 93-17226.
b. Gas Pipe Line Easements recorded under Entry Nos. 542518 and 548918.
11. With respect to Facility No. 23, New Beginnings at Hidden Brook, Bel Air,
Harford County, Maryland:
a. Right of Way to Baltimore Gas & Electric Company recorded in LIBER
453, Folio 207.
12. With respect to Facility No. 24, New Beginnings at Meadows, Gambrills, Anne
Aurndel County, Maryland:
a. Right of Way to Consolidated Gas, Electric, Light and Power Company of
Baltimore recorded in Book 232, page 352.
b. Rights of Way to Baltimore Gas & Electric Company recorded in LIBER
1197, page 245 and LIBER 2306, page 534.
-3-
<PAGE>
13. With respect to Facility No. 28, Appalachian Hall, Asheville, Buncombe
County, North Carolina:
a. Easement to Carolina Power and Light Company recorded in Book 1148,
page 86.
b. Sewer Easement recorded in Book 427, page 467.
14. With respect to Facility No. 30, New Beginnings at Lakehurst, Lakehurst,
Ocean County, New Jersey:
a. Easement contained in Deed Book 1761, page 90.
15. With respect to Facility No. 34, Psychiatric Institute of Richmond,
Richmond, Goochland County, Virginia:
a. Water System Agreement with County of Goochland recorded in Deed Book
259, page 342.
b. Waste Water Agreement recorded in Deed Book 259, page 359.
c. Easement to Chesapeake and Potomac Telephone Company recorded in Deed
Book 128, page 120.
d. Easement to Commonwealth of Virginia recorded in Deed Book 128, page
122.
e. Agreement with Commonwealth of Virginia recorded in Deed Book 144,
page 224.
16. With respect to Facility No. 35, Tidewater Psychiatric Institute, Norfolk,
Virginia:
a. Easements granted Virginia Electric and Power Company by Instruments
recorded in Deed Book 247, page 411; Deed Book 1289, page 303; Deed
Book 1460, page 168; Deed Book 1155, page 316; Deed Book 1659, page
956; Deed Book 2003, page 336; and Deed Book 2234, page 679.
17. With respect to Facility No. 36, New Beginnings at Serenity Lodge,
Chesepeake, Virginia:
a. Easement granted Virginia Electric and Power Company recorded in Deed
Book 568, page 138.
b. Easement granted Norfolk and Carolina Telephone and Telegraph Company
of Virginia recorded in Deed Book 556, page 456.
c. 100-ft. Virginia Electric and Power Company easement recorded in Plat
Book 57, page 3.
-4-
<PAGE>
18. With respect to Facility No. 38, New Beginnings at Lakewood, Lakewood, Los
Angeles County, California:
a. Lease dated August 1, 1956 between Lakewood Park and Lakewood Building
Corp. recorded as Instrument No. 4201 in Book 52381, page 372 as
assigned to National Medical Hospital of Long Beach, Inc. by
Instrument No. 79-357333.
19. With respect to Facility No. 39, Southwood Hospital and RTC, Chula Vista,
San Diego County, California:
a. Easement granted to Sweetwater Water Company recorded in Book 320,
page 364.
b. Easement granted to San Diego Gas and Electric Company recorded as
File No. 76-317602.
c. Easement granted to San Diego Gas and Electric Company recorded as
File No. 84-411024.
d. Easement granted to San Diego Gas and Electric Company recorded as
File No. 85-044170.
20. With respect to Facility No. 40, Centennial Peaks, Louisville, Boulder
County, Colorado:
a. Deed of Trust from Rocky Mountain Affiliated Adventist Health Service,
Inc. to the Public Trustee of Boulder County for the benefit of Carol
Rose Spicer Briggs Wealth Accumulation Trust, et al. recorded on Film
1450 at Reception No. 816850.
b. Unrecorded Lease dated July 27, 1987 between Rocky Mountain Affiliated
Adventist Health Services and PIA Colorado Inc. d/b/a Boulder
Psychiatric Institute, as amended by First Amendment to Lease dated
August 1, 1989 between Arista Hospital and PIA Colorado, Inc.
c. Easement to Mountain States Telephone and Telegraph Company recorded
in Book 942, page 348.
d. Site Plan for Louisville Psychiatric Hospital recorded on Film 1482 at
Reception No. 859722, as revised.
e. Subdivision Agreement for Health Park Subdivision recorded on Film
1482 at Reception 859723.
f. Easement as shown on the recorded plat of Health Park Subdivision,
Filing No. 2 in Plan File P-22 F-3 #34 and rerecorded on Film 1554 at
Reception No. 952938.
-5-
<PAGE>
g. Plat of Centennial Health Park Preliminary P.U.D. recorded on Film
1553 at Reception No. 950959, as amended.
h. Plat of Centennial Health Park Preliminary P.U.D. Landscape Concept
recorded on Film 1553, at Reception 950960.
i. Plat of Health Park Subdivision Filing No. 3 recorded on Film 1609 at
Reception No. 1021645.
j. Plat for Health Park Subdivision Filing No. 4 recorded on Film 1626 at
Reception No. 1041906.
21. With respect to Facility No. 42, Brawner Psychiatric Institute, Smyrna,
Cobb County, Georgia:
a. Lease between Health Care Property Partners and PIA Brawner Realty,
Inc. recorded in Deed Book 3570, page 386.
b. Sanitary Sewer Easements and a Colonial Pipeline Easement as shown on
a previous plat of the property.
c. Supplemental Right of Way Agreement to Colonial Pipeline Company
recorded in Deed Book 1259, page 99.
d. Sanitary Sewer Easement to City of Smyrna recorded in Deed Book 473,
page 368.
e. Right of Way Easement to Colonial Pipeline Company recorded in Deed
Book 675, page 707.
f. Right of Way Easement to Georgia Power Company recorded in Deed Book
587, page 592.
g. Easement to Southern Bell Telephone and Telegraph recorded in Deed
Book 374, page 512.
h. Easement to Atlanta Gas Light Company recorded in Deed Book 105, page
243.
22. With respect to Facility No. 44, New Beginnings at Warwick Manor, East New
Market, Dorchester County, Maryland:
a. Lease between J. Edward Powell and Recovery Centers of America, Inc.
dated December 19, 1984 (5 acres); lease between J. Edward Powell and
Recovery Center of America, Inc. dated November 1, 1987 (1 acre).
b. Deed of Trust and Security Agreement from J. Edward Powell to Jon P.
Sherwell and Amos T. Meredith, trustees securing the First National
Bank of Maryland recorded in LIBER 288, Folio 781 and further secured
by financing
-6-
<PAGE>
statement recorded in LIBER 288, Folio 804 and Assignment of Lessor's
Interest in Leases and Rents recorded in LIBER 288, Folio 812.
c. Right of Way to ChopTank Co-Operative, Inc. recorded in LIBER 43,
Folio 189.
d. Right of Way to ChopTank Co-Operative recorded in LIBER 43, Folio 269.
e. Right of Way easement to ChopTank Electric Cooperative, Inc. recorded
in LIBER 119, Folio 499.
f. Right of Way to County Commissioners of Dorchester County recorded in
LIBER 192, Folio 528.
g. Right of Way Easement to ChopTank Electric Cooperative, Inc. recorded
in LIBER 199, Folio 165.
h. Right of Way Easement to the County Commissioners of Dorchester County
recorded in LIBER 214, Folio 704.
23. With respect to Facility No. 45, Potomac Ridge Treatment Center and
Facility No. 47 PI Montgomery County RTC, Rockville, Montgomery County,
Maryland:
a. Lease dated December 15, 1977 between Montgomery County and
Psychiatric Institute of Montgomery County recorded in LIBER 5406,
Folio 127.
b. Right of Way to Chesapeake and Potomac Telephone Company recorded in
LIBER 324, Folio 451.
c. Right of Way Agreement to TransContinnental Gas Pipe Line Corporation
recorded in LIBER 3984, Folio 820.
d. Right of Way Agreement to TransContinnental Gas Pipe Line Corporation
recorded in LIBER 4188, Folio 864.
e. Agreement with Colonial Pipeline Company recorded in LIBER 5558, Folio
810.
f. Agreement with Washington Suburban Sanitary Commission recorded in
LIBER 6668, Folio 43 and rerecorded in LIBER 7037, Folio 737.
g. Right of Way to Washington Suburban Sanitary Commission recorded in
LIBER 5616, Folio 331.
h. Right of Way to Washington Suburban Sanitary Commission recorded in
LIBER 5627, Folio 785.
i. Right of Way to Washington Suburban Sanitary Commission recorded in
LIBER 5883, Folio 417.
-7-
<PAGE>
j. Right of Way to Washington Suburban Sanitary Commission recorded in
LIBER 8293, Folio 845.
k. Easement to Potomac Electric Power Company recorded in LIBER 7537,
Folio 410.
l. Utility Easement shown on Plat recorded in Plat Book 101 at Plat No.
11464.
24. With respect to Facility No. 46, New Beginnings at White Oak, Woolford,
Dorchester County, Maryland:
a. Lease between Charles C. Powell and White Oak Center, Inc., dated May
7, 1985.
b. Lease Agreement between White Oak Center, Inc. and Addiction Treatment
Centers of Maryland, dated July 31, 1986.
c. Mortgage from Charles C. Powell securing W. Michel Pierson and Darlene
Cohen, trustees under U/A with Irving Cohen, dated April 19, 1988
recorded in LIBER 283, Folio 202.
d. Easements to Delmarva Power & Light Company recorded in LIBER 254,
Folio 581; LIBER 254, Folio 556; LIBER 159, Folio 1; and LIBER 159,
Folio 6.
e. Rights acquired by the State of Maryland contained in Deed recorded in
LIBER 136, Folio 41.
f. Right of Way to Eastern Shore Public Service recorded in LIBER 57,
Folio 686.
25. With respect to Facility No. 48, Fair Oaks Hospital, Summitt, Union County,
New Jersey:
a. Easements contained in Deed Book 2296, page 368 and Deed Book 3290,
page 847.
26. With respect to Facility No. 49, New Beginnings at Cove Forge, Woodbury,
Blair County, Pennsylvania:
a. Lease Agreement dated December 19, 1984 between Charles C. Powell and
Recovery Centers of America, Inc. as amended by First Amendment to
Lease dated October 30, 1985.
b. Lease Agreement, dated May 1, 1986 between Charles C. Powell and
Addictive Treatment Centers of Maryland, Inc.
c. Mortgage from Charles C. Powell to Mellon Bank (Central) N.A. recorded
in Mortgage Book Volume 893, page 162.
-8-
<PAGE>
d. Mortgage from Charles C. Powell to Mellon Bank (Central) N.A. recorded
in Mortgage Book Volume 932, page 443.
e. Mortgage from Charles C. Powell to Hollidaysburg Trust Co. recorded in
Mortgage Book Volume 1012, page 498.
f. Mortgage from Charles C. Powell to Suzanne Elliott recorded in
Mortgage Book Volume 1060, page 127.
g. Rights granted to The United Telephone Company of Pennsylvania in Deed
Book Volume 991, page 144.
h. Rights granted to Pennsylvania Electric Company in Deed Book Volume
994, page 148; Deed Book Volume 699, page 313; Deed Book Volume 662,
page 79; and Deed Book Volume 614, page 97.
i. Rights granted to Pennsylvania Edison Company as in Deed Book Volume
473, page 329.
j. Agreement as to Water System between Camp Manahath, Inc. et al. and
Borough of Williamsburg recorded in Deed Book Volume 681, page 485.
k. Agreement between Camp Manahath, Inc. and Borough of Williamsburg
recorded in Deed Book Volume 679, page 552.
l. Assignment of Water Right Agreements between Camp Manahath, Inc., Anna
Breckbill, William Breckbill, Jr. and Charles C. Powell recorded in
Deed Book Volume 988, page 458.
m. Agreement in Deed Book Volume 166, page 167.
n. Any and all matters revealed by a current and accurate survey of the
subject property.
27. With respect to Facility No. 50, Fenwick Hall, Johns Island, Charleston
County, South Carolina:
a. Lease dated March 31, 1980 between the Valley Vista Apartments Limited
Partnership and Fenwick Hall, Inc. This leasehold interest will be
insured.
b. Mortgage from the Valley Vista Apartments Limited Partnership to
American Security Bank, N.A. recorded in Book S-122, page 82, as
assigned to First Washington Group, Inc. and recorded in Book T-128,
page 143; as further assigned to American Security Bank, N.A. recorded
in Boot T-128, page 133, as further assigned to First Washington
Group, Inc. recorded in Book D-129, page 133.
-9-
<PAGE>
c. Assignment of Lessor's Interest in Lease from the Valley Vista
Apartments Limited Partnership to American Security Bank, N.A.
recorded in Book S-122, page 270, as assigned to First Washington
Group, Inc. recorded in Boot T-128, page 265, as further assigned to
American Security Bank, N.A. recorded in Boot T-128, page 266, as
further assigned to First Washington Group, Inc. recorded in Book D-
129, page 201.
d. Easement to Southern Bell Telephone and Telegraph Company recorded in
Book Q-32, page 539.
e. Easement to South Carolina Electric and Gas Company recorded in Book
K-66, page 587.
f. Easement to State Rural Electrification Authority recorded in Book B-
40, page 139.
g. Easement recorded in Book W-114, page 187.
h. Easement to St. John's Water Company, Inc. recorded in Book V-120,
page 397.
28. With respect to Facility No. 52, Springwood Psychiatric Institute,
Leesburg, Loudoun County, Virginia:
a. Deed of Lease between Charles M. Davis and Phil Collins and Leesburg
Institute, Inc. recorded in Deed Book 647, page 376, as amended and
extended and as assigned to Docsley Associates Limited Partnership by
Assignment recorded in Deed Book 647, page 380.
b. Sublease between Docsley Associates Limited Partnership and Leesburg
Institute, Inc. recorded in Deed Book 647, page 384.
c. Deed of Trust from Docsley Associates Limited Partnership securing
Benjamin R. Jacobs, Joseph B. Gildenhorn and Donald A. Brown recorded
in Deed Book 647, page 390, as affected by Recognition and Attornment
Agreement by and between Benjamin R. Jacobs, Joseph B. Gildenhorn and
Donald A. Brown and Leesburg Institute, Inc. recorded in Deed Book
647, page 419.
29. With respect to Facility No. 53, Tidewater Psychiatric Institute of
Virginia Beach, Virginia Beach, Virginia:
a. Lease Agreement between I.P.T. Associates and Tidewater Psychiatric
Institute, Inc. as amended by Amendment Number One and Amendment
Number Two.
-10-
<PAGE>
b. Deed of Trust from I.P.T. Associates to First American Bank of
Virginia securing Peoples Life Insurance Company, Washington, D.C.
recorded in Deed Book 1818, page 723.
30. With respect to Facility No. 55, Linden Oaks Hospital, Naperville, DuPage
County, Illinois:
a. Lease dated July 1, 1984 between Edward Hospital District and Edward
Hospital Association, recorded as document R88-063155 as amended by
First Amendment and Second Amendment.
b. Ground Sublease dated November 1, 1988 between Edward Hospital
Association and Naperville Health Ventures, recorded as Document No.
R92-042946 and rerecorded as Document R93-060724.
c. Subsublease dated November 1, 1988 between Naperville Health Ventures
and Naperville Psychiatric Ventures.
d. Leasehold Mortgage made by Naperville Psychiatric Ventures to Harris
Bank Naperville recorded as Document R92-042948.
e. Collateral Assignment of Lease made by Naperville Psychiatric Ventures
to Harris Bank Naperville, recorded as Document R92-042949.
f. Assignment of Leases and Rents made by Naperville Psychiatric Ventures
to Harris Bank Naperville recorded as Document No. R92-042950.
31. With respect to Facility No. 70, Alvarado, La Mesa, San Diego County,
California:
a. Easement recorded in Book 7580, page 158.
-11-
<PAGE>
EXHIBIT B
Schedule 3.8(a)
Page 2
Draft - 3/27/94
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
FACILITY DEBTOR OR SECURED PROPERTY
NO. FACILITY NAME TRADENAME PARTY DESCRIPTION DATE OF FILING
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C>
1 Pinewood Hospital National Medical Southwestern Bell Telephone system 1/24/91
Enterprises, Inc. dba Telecommunications, Inc. equipment and Panasonic
Pinewood Psychiatric dba Southwestern Bell fax machine.
Hospital Telecom
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
FACILITY DEBTOR OR SECURED PROPERTY
NO. FACILITY NAME TRADENAME PARTY DESCRIPTION DATE OF FILING
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C>
4 Los Altos Hospital and Los Altos Hospital Pitney Bowes Credit Corp. Leased equipment subject 6/21/91
Mental Health Center to lease #6591200-002
dated 4/25/91.
- -----------------------------------------------------------------------------------------------------------------------------------
NME Hospitals Inc, dba Uni-Copy Corporation Leased equipment: 12/18/92
Los Altos Hospital (Assignee: Norwest 3 pieces of Sharp
Financial Leasing, Inc.) equipment.
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
FACILITY DEBTOR OR SECURED PROPERTY
NO. FACILITY NAME TRADENAME PARTY DESCRIPTION DATE OF FILING
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C>
5 Mill Creek Hospital National Medical Pricketts Dist. Inc. Juice dispenser. 11/20/92
Enterprises dba Mill Creek
Hospital
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Schedule 3.8(a)
Page 3
Draft - 3/27/94
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
FACILITY DEBTOR OR SECURED PROPERTY
NO. FACILITY NAME TRADENAME PARTY DESCRIPTION DATE OF FILING
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C>
8 Oak Creek Hospital Oak Creek Hospital Datascope Corp. Leased equipment: 2 5/8/92
Assembly 3000A Monitors
and 2 Finger Probes.
- -----------------------------------------------------------------------------------------------------------------------------------
Psychiatric Institute of San Diversey Corp. Dishmachine. 4/19/93
Jose Inc. dba
Oak Creek Mental Health
Recovery Services
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
FACILITY DEBTOR OR SECURED PROPERTY
NO. FACILITY NAME TRADENAME PARTY DESCRIPTION DATE OF FILING
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C>
12 Manatee Palms Residential Manatee Palms Residential Pitney Bowes Credit Dictaphone equipment 1/22/91
Treatment Center Treatment Corporation with all accessories and
attachments.
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
FACILITY DEBTOR OR SECURED PROPERTY
NO. FACILITY NAME TRADENAME PARTY DESCRIPTION DATE OF FILING
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C>
19 Jefferson Hospital Jefferson Hospital Moceri Leasing, Inc. Surge Suppressors (12) 9/23/91
and Temper Sensors (7)
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
FACILITY DEBTOR OR SECURED PROPERTY
NO. FACILITY NAME TRADENAME PARTY DESCRIPTION DATE OF FILING
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C>
20 Kingwood Hospital Kingwood Hospital Citicorp Leasing, Inc. 1 Mac 6. 4/8/93
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Schedule 3.8(a)
Page 4
Draft - 3/27/94
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
FACILITY DEBTOR OR SECURED PROPERTY
NO. FACILITY NAME TRADENAME PARTY DESCRIPTION DATE OF FILING
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C>
28 Appalachian Hall PIA Asheville dba Lanier Worldwide, Inc. Office equipment. 10/26/92
Appalachian Hall
- -----------------------------------------------------------------------------------------------------------------------------------
Highland Hall Diversey Corp. Dishmachine 3/11/94
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
FACILITY DEBTOR OR SECURED PROPERTY
NO. FACILITY NAME TRADENAME PARTY DESCRIPTION DATE OF FILING
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C>
32 The MidSouth Hospital Mid-South Hospital Hardin's - SYSCO Food Equipment (dishes). 4/6/89
Services, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
Mid-South Hospital Hardin's - SYSCO Food Equipment (dishes). 4/6/89
Services, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
Mid-South Hospital Hardin's - SYSCO Food Equipment (dishes). 4/6/88
Services, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
FACILITY DEBTOR OR SECURED PROPERTY
NO. FACILITY NAME TRADENAME PARTY DESCRIPTION DATE OF FILING
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C>
33 Baywood Hospital National Medical Texas Commerce Bank, Office furniture and 5/22/89
Enterprises, Inc. N.A. furnishings.
- -----------------------------------------------------------------------------------------------------------------------------------
Baywood Hospital Pitney Bowes Credit Copier Equipment. 12/20/90
Corporation
- -----------------------------------------------------------------------------------------------------------------------------------
Baywood Hospital Pitney Bowes Credit All leased equipment 12/18/92
Corporation subject to lease
#3694437-007 dated
September 30, 1992.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Schedule 3.8(a)
Page 5
Draft - 3/27/94
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
FACILITY DEBTOR OR SECURED PROPERTY
NO. FACILITY NAME TRADENAME PARTY DESCRIPTION DATE OF FILING
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C>
34 Psychiatric Institute of Psychiatric Institute of The Equipment Leasing 2 Royal copiers with 3/13/91
Richmond Richmond, Inc. Company ADF, 2 cabinets and
2 Danyl Units.
- -----------------------------------------------------------------------------------------------------------------------------------
Psychiatric Institute of Bell Atlanticom Systems, Meridian Option 21: 2/5/92
Richmond Inc. telephone,
communications and/or
data equipment with
associated ancillary
equipment and wiring.
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
FACILITY DEBTOR OR SECURED PROPERTY
NO. FACILITY NAME TRADENAME PARTY DESCRIPTION DATE OF FILING
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C>
35 Tidewater Psychiatric Tidewater Psychiatric Bell Atlantic Tricon Leased equipment subject 6/29/90
Institute - Norfolk Institute Leasing Corporation to lease #7059645
(Canon office equipment).
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
FACILITY DEBTOR OR SECURED PROPERTY
NO. FACILITY NAME TRADENAME PARTY DESCRIPTION DATE OF FILING
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C>
37 Northbrooke Hospital of Northbrooke Hostpial Norwest Financial Leasing, Not specified. 6/29/90
Milwaukee Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Schedule 3.8(a)
Page 6
Draft - 3/27/94
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
FACILITY DEBTOR OR SECURED PROPERTY
NO. FACILITY NAME TRADENAME PARTY DESCRIPTION DATE OF FILING
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C>
38 New Beginnings at National Medical Eaton Financial Leased equipment: Xerox 9/3/92
Lakewood Regional Enterprises, Inc. Corporation copier.
Medical Center
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
FACILITY DEBTOR OR SECURED PROPERTY
NO. FACILITY NAME TRADENAME PARTY DESCRIPTION DATE OF FILING
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C>
44 New Beginnings at New Beginnings Salisbury Chesapeake Industrial Canon copier, cabinet, 3/23/92
Warwick Manor Leasing Co. Inc. RADF and bin sorter.
(Assignee: Chesapeake
Federal S&L)
- -----------------------------------------------------------------------------------------------------------------------------------
New Beginnings Ecolab, Inc. Specified office 5/10/93
equipment.
- -----------------------------------------------------------------------------------------------------------------------------------
Addiction Treatment 1. Professional Leasing, Pana-Fax. 9/4/92
Centers of MD, Inc. Inc.
2. PLP Financial
(Assignee: Bank of
Delaware)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Schedule 3.8(a)
Page 7
Draft - 3/27/94
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
FACILITY DEBTOR OR SECURED PROPERTY
NO. FACILITY NAME TRADENAME PARTY DESCRIPTION DATE OF FILING
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C>
45 Potomac Ridge Treatment Psychiatric Institute of BC Leasing Associates Leased office furniture 3/26/86
Center Montgomery County, Inc. (Assignee: Security subject to lease
National Bank) #16-1592-1 dated
3/12/86.
- -----------------------------------------------------------------------------------------------------------------------------------
Psychiatric Institute of Lanier Business Products, Key Service Unit and 3/31/86
Montgomery dba The Inc. all related items.
Lakewood Center Sch.
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
FACILITY DEBTOR OR SECURED PROPERTY
NO. FACILITY NAME TRADENAME PARTY DESCRIPTION DATE OF FILING
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C>
48 Fair Oaks Hospital P.I.A. New Jersey, Inc. Citicorp North America, Spectrum Software 5/15/90
dba Fair Oaks Hospital Inc. Package.
- -----------------------------------------------------------------------------------------------------------------------------------
Fair Oaks Hospital Pitney Bowes Credit Dictaphone equipment 8/1/90
Corporation including all
accessories and
attachments.
- -----------------------------------------------------------------------------------------------------------------------------------
Psychiatric Institute of Spenser Capital Group, Computer equipment. 3/27/91
New Jersey, Inc. dba Fair Inc. (Assignee:
Oaks Hospital Germantown Savings
Bank)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Schedule 3.8(a)
Page 8
Draft - 3/27/94
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
FACILITY DEBTOR OR SECURED PROPERTY
NO. FACILITY NAME TRADENAME PARTY DESCRIPTION DATE OF FILING
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C>
49 New Beginnings at Cove 1. New Beginnings at Keystone Financial Leasing Bridge 24 Port Channel 6/8/92
Forge Cove Forge Corp. Bank (1) with all parts
2. Recovery Center of and accessories.
America, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
Addiction Treatment Meridian Leasing, Inc. Voice mail system. 8/3/92
Centers of MD dba New
Beginnings at Cove Forge
- -----------------------------------------------------------------------------------------------------------------------------------
New Beginnings at Cove Keystone Financial Leasing Ricoh office equipment 11/6/92
Forge Corp. (feeder, sorter & laser
fax) and all parts and
accessories.
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
FACILITY DEBTOR OR SECURED PROPERTY
NO. FACILITY NAME TRADENAME PARTY DESCRIPTION DATE OF FILING
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C>
52 Springwood Psychiatric Leesburg Institute, Inc. Orix Credit Alliance, Inc. Leased equipment subject 5/8/92
Institute to lease #3-1-1283 dated
April 28, 1992.
- -----------------------------------------------------------------------------------------------------------------------------------
Springwood Psychiatric Pitney Bowes Credit Leased equipment subject 10/8/93
Institute Corporation to lease #5048244-308
dated 8/11/93.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Schedule 3.8(a)
Page 9
Draft - 3/27/94
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
FACILITY DEBTOR OR SECURED PROPERTY
NO. FACILITY NAME TRADENAME PARTY DESCRIPTION DATE OF FILING
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C>
53 Tidewater Psychiatric National Medical Diversey Corp. Dishmachine. 2/24/93
Institute-Virginia Beach Enterprises dba Tidewater
Psychiatric Inst.
- -----------------------------------------------------------------------------------------------------------------------------------
Tidewater Psychiatric Bell Atlantic Tricon Leased equipment subject 6/29/90
Institute Leasing Corporation to lease #7059647.
(Canon office equipment).
- -----------------------------------------------------------------------------------------------------------------------------------
Tidewater Psychiatric AT & T Generic I. 9/4/90
Institute, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
FACILITY DEBTOR OR SECURED PROPERTY
NO. FACILITY NAME TRADENAME PARTY DESCRIPTION DATE OF FILING
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C>
55 Linden Oaks Hospital Naperville Psychiatric Harris Bank Naperville Equipment, fixtures and 3/13/92
Ventures, an Illinois personal property located
General Partnership at Facility address.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Schedule 8-4
SCHEDULE OF RESTRICTIONS IN DEBT DOCUMENTS
1. Indenture of Mortgage from Naperville Psychiatric Ventures to Harris
Bank Naperville in the amount of four million dollars ($4,000,000.00) dated
February 28, 1992 (P.I.A. Naperville, Inc.-Linden Oaks Hospital).
2. Deed of Trust from I.P.T. Associates to Peoples Life Insurance
Company, Washington, D.C. in the amount of five hundred eighty thousand dollars
($580,000.00) dated August 31, 1978 (P.I.A. Tidewater Realty, Inc. - Tidewater
Psychiatric Institute).
3. Deed of Trust from I.P.T. Associates to Peoples Life Insurance
Company, Washington, D.C. in the amount of one million seven hundred fifty
thousand dollars ($1,750,000.00) dated August 31, 1978 (P.I.A. Tidewater Realty,
Inc. - Tidewater Psychiatric Institute).
<PAGE>
<TABLE>
<CAPTION>
Schedule 8.7(d)
SCHEDULE OF ASSUMED NME INDEBTEDNESS
- ------------------------------------------------------------------------------------------------------------------------------------
BORROWER LENDER DEBT BOOK MATURITY SECURITY
DESCRIPTION BALANCE AT DATE
JANUARY
31, 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Psychiatric Facility at Florida National Bank Mortgage $ 79,000 07/09/94 Hospital land and
Medfield, Inc. equipment
- ------------------------------------------------------------------------------------------------------------------------------------
Leesburg Institute, Inc. Docsley Associates Limited Capital Lease $ 874,000 12/04/2071 Buildings,
Partnership (Buildings) improvements,
personal property
- ------------------------------------------------------------------------------------------------------------------------------------
Medfield Residential Safeco Utility one $ 1,000 07/09/94 N/A
Treatment Center, year bond
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Psychiatric Facility at Safeco Health & $ 2,000 09/17/94 N/A
Palm Springs, Inc. Welfare
Agency Bond
- ------------------------------------------------------------------------------------------------------------------------------------
Alvarado Parkway Safeco Health & $ 3,000 07/17/94 N/A
Institute, Inc. Welfare
Agency one
year bond
- ------------------------------------------------------------------------------------------------------------------------------------
P.I.A. Safeco Health & $ 3,000 07/07/94 N/A
Long Beach, Inc. Welfare
Agency one
year bond
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
P.I.A., Safeco Health & $ 5,000 07/17/94 N/A
Visalia, Inc. Welfare
Agency one year
bond
- ------------------------------------------------------------------------------------------------------------------------------------
Psychiatric Institute Safeco Health & $ 5,000 07/17/94 N/A
of San Jose, Inc. Welfare
Agency one year
bond
- ------------------------------------------------------------------------------------------------------------------------------------
Psychiatric Institute Safeco Proprietary $ 5,000 07/01/94 N/A
of Richmond, Inc. School bond -
one year
- ------------------------------------------------------------------------------------------------------------------------------------
Leesburg Institute, Safeco Proprietary $ 5,000 07/01/94 N/A
Inc. School bond -
one year
- ------------------------------------------------------------------------------------------------------------------------------------
Psychiatric Facility at Safeco Health & $ 5,000 01/17/95 N/A
Yorba Linda, Inc. Welfare
Agency one
year bond
- ------------------------------------------------------------------------------------------------------------------------------------
Tidewater Psychiatric Safeco Health & $ 10,000 09/17/94 N/A
Institute, Inc. Welfare
Agency
School for
handicapped
bond
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
P.I.A. Colorado, Inc. First National Bank of To cover $ 20,000 02/01/95 N/A
Louisville operating
expenses
of new city
project
- ------------------------------------------------------------------------------------------------------------------------------------
Naperville Psychiatric Harris Bank Mortgage $4,000,000 2/01/99 Land and
Ventures<FN>1 Naperville face building
amount
- ------------------------------------------------------------------------------------------------------------------------------------
I.P.T. Associates<FN>2 Peoples Life Deed of Trust $ 580,000 10/31/99 Land and
Insurance Company face building
amount
- ------------------------------------------------------------------------------------------------------------------------------------
I.P.T. Associates Peoples Life Deed of Trust $1,170,000 07/31/03 Land and
Insurance Company face building
amount
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
- -----------------------------------
1 P.I.A. Naperville, Inc. own a 75% interest in this joint venture.
2 P.I.A. Tidewater Realty, Inc. owns a 50% interest in this real estate
partnership.
</TABLE>
3
<PAGE>
SCHEDULE 8.7(e)
SCHEDULE OF EXISTING INDEBTEDNESS
---------------------------------
<TABLE>
<CAPTION>
Debt Book Balance at Maturity Charter Negative
Borrower Lender Description March 31, 1994 Date Security Guaranty Pledge
- -------- ------ ----------- -------------- ---------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Charter Behavioral Public IRB $2,600,000 May, 1997 Hospital, Yes No
Health System of Columbia, Land &
Inc. Equipment
Charter Hospital of Public IRB $5,345,000 Nov. 2007 Hospital, Yes Yes
Mobile, Inc. Land &
Equipment
Charter Medical New York Life Mortgage $52,793 July 1994 Corporate 50% Yes
Corporation Insurance Company Office Building
Rents & Ground
Lease
Charter Medical* Public Debentures- $6,443,280 March 1998/ None - -
Corporation Swiss 7.5% 2001
Charter Medical of The Golden Capital $34,459 July 2019 Clinic Yes No
England Limited (Chelsea) Egg Properties Lease (London, England)
<FN>
- --------------------------------------
* These bonds were accelerated on April 9, 1991
</TABLE>
1
<PAGE>
SCHEDULE 8.7(e)
SCHEDULE OF EXISTING INDEBTEDNESS
<TABLE>
<CAPTION>
Debt Book Balance at Maturity Charter Negative
Borrower Lender Description March 31, 1994 Date Security Guaranty Pledge
- -------- ------ ----------- -------------- ---------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Societe Anonyme de Banque Cantonale Mortgage $1,120,568 July 2033 Hospital & No No
La Metairie Vaudoise Land (Nyon,
Switzerland)
Charter Behavioral The CIT Group/ Mortgage $707,897 Sep. 1994 Hospital, Yes Yes
Health System of Equipment Land &
Charlottesville, Inc. Financing, Inc. Equipment
Charter Medical Corporation Strategic Advantage, Note $439,762 Nov. 1998 None - No
Corporation Inc.
</TABLE>
2
<PAGE>
SCHEDULE 8.7(e)
SCHEDULE OF EXISTING INDEBTEDNESS
VARIABLE RATE BONDS WITH SUBSIDIARY LETTERS OF CREDIT
<TABLE>
<CAPTION>
Debt L/C Book Balance at Letters of Credit at
Borrower Description Bank March 31, 1994 Maturity March 31, 1994
- -------- ----------- ---- --------------- -------- --------------------
<S> <C> <C> <C> <C> <C>
Charter Behavioral Health VRDN Bankers Trust $4,800,000 March 2005 $5,006,861.00
System of Central Georgia, Inc. Company*
Charter Palms VRDN Bankers Trust $5,650,000 March 2007 $5,820,273.98
Behavioral Health System, Inc. Company*
Charter Behavioral Health VRDN Bankers Trust $3,750,000 March 2007 $3,874,315.06
System of Northwest Arkansas, Inc. Company*
Charter Rivers VRDN Bankers Trust $4,400,000 June 2007 $4,559,123.29
Behavioral Health Company*
System, Inc.
CMSF, Inc. VRDN Bankers Trust $5,150,000 Aug. 2007 $5,320,726.03
(Charter Glade Hospital) Company*
<FN>
- --------------------------------------
*Subsidiary Letters of Credit issued by Bankers Trust Company on the Closing
Date to back-up letters of credit issued by Mitsubishi Bank, Limited in support
of such VRDN'S.
</TABLE>
3
<PAGE>
SCHEDULE 8.7(e)
SCHEDULE OF EXISTING INDEBTEDNESS
VARIABLE RATE BONDS WITH SUBSIDIARY LETTERS OF CREDIT
<TABLE>
<CAPTION>
Debt L/C Book Balance at Letters of Credit at
Borrower Description Bank March 31, 1994 Maturity March 31, 1994
- -------- ----------- ---- --------------- -------- --------------------
<S> <C> <C> <C> <C> <C>
Charter Forest Behavioral VRDN Bankers Trust $5,100,000 Dec. 2013 $5,269,068.49
Health System, Inc. Company
Charter Behavioral Health VRDN Bankers Trust $6,400,000 March 2014 $6,612,164.38
System of New Mexico, Inc. Company
Charter Plains Behavioral VRDN Bankers Trust $5,700,000 Oct. 2013 $5,888,958.90
Health System, Inc. Company
Charter Fairmount Behavioral VRDN Bankers Trust $8,175,000 Jan. 2001 $8,512,527.00
Health System, Inc. Company
Charter Ridge Behavioral VRDN Bankers Trust $4,525,000 March 2005 $4,711,827.00
Health System, Inc. Company
Charter Springs VRDN Bankers Trust $4,150,000 July 2004 $4,287,575.34
Hospital, Inc. Company
Charter Hospital of St. VRDN Bankers Trust $5,225,000 Nov. 2009 $5,398,212.33
Louis, Inc. (Charter Hospital Company
of Greenville)
Charter Hospital of VRDN Bankers Trust $7,200,000 June 2011 $7,842,000.00
Charleston, Inc. Company
</TABLE>
4
<PAGE>
SCHEDULE 8.7(m)
SCHEDULE OF CERTAIN INTERCOMPANY INDEBTEDNESS
<TABLE>
<CAPTION>
AMOUNTS AMOUNTS
(DUE TO CHARTER) (DUE TO CCM, INC.)
DUE FROM CHARTER DUE FROM CCM, INC.
COMPANY @ 3/31/94 @ 3/31/94
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
CH WESTBROOK (23,156,986.67) 28,201,436.86
CH HOSP GREENSBORO (24,492,496.35) 14,963,863.24
CH HOSP ST LOUIS (598,946.17) 0.00
CH SUB MESQUITE 78,160.78 393,328.07
CH HOSP WINSTON-SALEM (13,732,610.67) 10,542,791.16
BELTWAY COMMUNITY (3,468,357.57) 3,406,687.03
CH LAKE (13,171,916.58) 10,428,096.30
CH BARCLAY (5,864,574.27) 7,349,099.15
CH RIDGE (14,827,631.14) 12,471,219.60
CH HOSP SAVANNAH (15,618,958.47) 10,840,218.82
CH HOSP WICHITA (4,763,430.93) 903,054.92
CH REAL (5,289,373.38) 6,263,691.69
CH HOSP TUCSON 1,295,951.43 0.00
CH BY THE SEA (13,585,413.56) 10,154,699.35
CH HOSP KINGWOOD (3,544,039.16) 6,757,510.89
CH HOSP SUGAR LAND (1,873,073.00) 1,255,370.50
CH LAKESIDE (11,368,363.06) 14,368,988.74
CH HOSP FORT WORTH 2,655,678.01 6,199,488.32
CH PINES (15,495,913.25) 10,209,206.59
CH HOSP MIAMI (17,733,939.76) 8,790,142.90
CH RIVERS (9,772,210.71) 9,062,003.22
CH HOSP DALLAS (8,618,158.22) 18,168,357.80
CH HOSP EAST VALLEY (2,165,314.02) 2,073,469.02
UHC MID FLA INC (32,769.17) 0.00
CH PEACHFORD (28,002,275.73) 35,604,634.92
CH HOSP GLENDALE (5,776,835.76) 4,132,893.50
CH SPRINGS (7,766,136.19) 5,500,220.95
CH HOSP JACKSONVILLE (12,280,823.05) 5,087,013.31
CH HOSP MILWAUKEE (14,903,944.64) 9,165,578.25
CH HOSP FOUNTAIN VALLEY 21,660,654.22 937,221.51
CH HOSP TOLEDO (1,569,263.38) 3,166,819.47
CH BEACON (18,655,320.05) 11,968,131.46
CH RETREAT (4,850,897.36) 3,956,727.93
CH MED CLAYTON COUNTY (416,432.52) 0.00
CH FOREST (6,278,214.57) 5,688,382.99
CH HOSP LOUISVILLE (7,832,969.61) 5,515,285.40
CH VISTA (6,129,824.38) 3,491,785.74
CH HOSP MOBILE (6,708,711.10) 6,357,649.96
CH HOSP CHARLESTON (6,489,450.59) 8,500,966.11
CH HOSP REDLANDS (1,575,863.82) (355.00)
CH ACADEMY MOBILE (11,924,244.08) 7,214,918.53
CH HOSP AURORA 310,138.30 0.00
CH HOSP COLUMBUS (419,584.20) 0.00
CH MED FT LAUDERDALE (888,635.10) 0.00
CH PALMS (2,638,718.11) 7,251,179.17
CH HOSP BAKERSFIELD (2,476,081.02) 1,989,300.45
CH HOSP SANTA TERESA (2,907,191.21) 0.00
CH HOSP FT COLLINS (3,124,879.45) 0.00
CH HOSP SAN DIEGO (2,237,070.29) 7,156,993.70
<PAGE>
AMOUNTS AMOUNTS
(DUE TO CHARTER) (DUE TO CCM, INC.)
DUE FROM CHARTER DUE FROM CCM, INC.
COMPANY @ 3/31/94 @ 3/31/94
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
CH HOSP GRAPEVINE (9,240,283.72) 9,828,314.58
CH WOODS (6,961,312.51) 4,771,012.25
CH HOSP SACRAMENTO (1,374,321.25) 3,654,060.72
CH WINDS (14,845,881.22) 8,435,766.92
CH HOSP DENVER 2,695,998.50 (1,193,102.76)
CH GLADE (12,785,282.61) 11,947,699.45
CH HOSP LITTLE ROCK (3,074,187.32) 3,798,038.61
CH HOSP NORTHWEST INDIANA (9,280,386.89) 11,997,537.41
CH CANYON (720,449.87) 319,732.93
CH HOSP SIOUX FALLS (9,525,635.86) 5,577,995.02
CH HOSP SOUTH BEND (10,774,012.13) 10,497,580.67
CH HOSP MISSION VIEJO (6,349,328.35) 12,705,172.82
CH HOSP LONG BEACH (10,589,505.93) 6,941,499.92
CH SUMMIT (2,810,090.50) 1,364,269.43
CH HOSP THOUSAND OAKS (14,813,514.27) 7,309,164.09
CH HOSP INDIANAPOLIS (9,027,786.11) 13,311,885.36
CH HOSP AUSTIN 1,400,235.53 2,081,523.99
CH HOSP LAS VEGAS (14,985,619.75) 10,100,610.15
CH HOSP CORONA (27,567,878.85) 7,908,963.13
CH HOSP COLUMBIA (7,380,334.97) 4,727,661.24
CH NORTH (16,624,612.75) 9,853,746.44
CH N COUNSEL CTR INC 96,924.50 (56,765.50)
CH MED SOUTHEAST (462,871.96) 0.00
CH HOSP BRADENTON (8,108,795.38) 3,260,594.82
CHARTERTON 211,716.55 0.00
CH HOSP TERRE HAUTE (7,717,305.67) 11,639,135.53
CH MED ORANGE CO (FL) 276,021.00 0.00
CH PLAINS (2,833,197.60) 6,032,786.56
CH CLINIC CHELSEA 658,726.90 0.00
CH HOSP TAMPA BAY (23,404,376.46) 10,813,004.34
CH NORTHRIDGE (12,217,010.11) 6,067,467.14
CH HOSP PADUCAH (7,962,630.02) 5,726,722.75
CH COM HAWAIIAN GARDENS (49,314,251.83) 43,119,567.53
CH HOSP JACKSON (29,147,394.98) 23,489,421.80
CH COLONIAL 2,039,042.16 (97,384.02)
FAIRMOUNT INSTITUTE (13,167,066.74) 18,200,979.77
CH HOSP CHARLOTTESVILLE (5,492,657.69) 3,205,440.45
CH HOSP LAKE CHARLES (11,035,169.21) 5,585,472.38
CH HOSP WEST PALM BEACH 747,355.58 169,114.12
CH HOSP TORRANCE 238,726.01 0.00
CH HOSP CORPUS CHRISTI (7,714,294.49) 9,653,210.74
CH HOSP LAREDO (10,042,574.09) 3,733,047.50
CH HOSP ORLANDO SOUTH (3,508,643.45) 5,950,396.69
CH HOSP GREENVILLE (11,069,051.66) 11,385,667.82
CH HOSP AUGUSTA (15,474,379.13) 10,456,139.00
CH HOSP LAFAYETTE (6,535,721.80) 9,203,625.55
CH HOSP ALBUQUERQUE (4,626,685.82) 6,996,436.02
CH HOSP OVERLAND PK (2,784,201.99) 902,169.69
CH HOSP PASCO COUNTY (5,085,932.51) 8,718,593.69
<PAGE>
AMOUNTS AMOUNTS
(DUE TO CHARTER) (DUE TO CCM, INC.)
DUE FROM CHARTER DUE FROM CCM, INC.
COMPANY @ 3/31/94 @ 3/31/94
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
CH OAK (9,375,494.37) 9,032,975.42
LA METAIRIE CLINIC (125,172.78) 0.00
CH CLINIC NIGHTINGALE (55,574.00) 0.00
CH MED MGT CO 898,260.00 0.00
CH MED CLEVELAND (70.00) 0.00
CH MED PUERTO RICO 2,306,900.11 0.00
PLYMOUTH INS LTD 1,364,421.03 0.00
GOLDEN ISLE LTD 16,923.04 0.00
MANDARIN MEADOWS (217,530.00) 0.00
CH MED CAYMAN (3,039,254.79) 0.00
ATLANTA MOB 1,456,716.35 0.00
CH MED INTL 825,530.93 0.00
CH MED DALLAS 1,383,307.49 0.00
EMPLOYEE ASSISTANCE 290,560.58 0.00
BELTWAY MOB 652,968.01 0.00
WESTBROOK MOB (292,263.74) 0.00
HEALTH CARE SERV 36,302.00 0.00
HOSP INVESTORS 1,166,800.26 0.00
SISTEMAS 1,281,956.71 (25,733.60)
CH MED EXEC CORP 5,694,074.89 (5,762,368.58)
CH MED INFO SERVICES (677,267.58) 0.00
HAWAIIAN GARDENS MOB (482,190.16) 0.00
CH HEALTH CENTER (CBS) (1,974,163.81) 31,907.75
CMMC ENGLAND 2,212.74 0.00
CM-CAL ENGLAND DIV (1,583,758.00) 0.00
CH MED CERRITOS (975,710.58) 0.00
CH MED INTL S A (6,397,488.78) 0.00
CH HOSP ST LOUIS-ENGLAND DIV (7,802,971.00) 0.00
CMCI INC (56,724,078.95) 0.00
PACIFIC CMC 25.00 0.00
RIDGE MOB (336,405.49) 0.00
PEACHFORD DRS BLDG (1,371,749.78) 0.00
CM CALIFORNIA 493,943.35 0.00
WESTERN BEHAVIOR SYSTEMS 417,338.62 0.00
CHARLOTTESVILLE MOB (511,561.77) 0.00
TAMPA BAY MOB (78,495.41) 0.00
CH CANYON MOB (592,358.86) 0.00
CMFC (13,082,325.10) 0.00
PROVO CANYON SCHOOL (19,334,056.11) 10,161,690.48
CH MED SACRAMENTO 693,375.85 0.00
WICHITA MOB (755,953.49) 0.00
CPS ASSOCIATES (WESTBROOK) (725,632.62) 929,977.97
CH NATIONAL LAB 561,667.00 0.00
CLAIMS MANAGEMENT-DIV CMC 53,795,300.49 0.00
C.A.C.O., INC. (458,982.97) 0.00
STRUCTURED HEALTHCARE SYSTEMS 597,888.00 0.00
FLA RESIDENT TREATMENT CTR (340.00) 0.00
CM CAYMAN-AL AMAL PROJ 495,771.53 0.00
STRATEGIC ADVANTAGE (2,064,056.12) 0.00
<PAGE>
AMOUNTS AMOUNTS
(DUE TO CHARTER) (DUE TO CCM, INC.)
DUE FROM CHARTER DUE FROM CCM, INC.
COMPANY @ 3/31/94 @ 3/31/94
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
MIDWEST SERVICE CTR-CAO 45,584.43 (162,744.18)
GULF CBO (108,134.52) (28,771.12)
CMC HLTH MGT-CBO-SAN ANTON (107,485.94) 0.00
GROUP PRACTICE AFFILIATES INC (57,623.99) 0.00
CANYON BUILDING DIVISION (2,883,476.03) 0.00
DISC OPERATIONS OFFSET 4,917,032.24 0.00
CCM INC 752,558,865.64
CORPORATE OFFICE (19,837,529.61)
CMC STUART CIRCLE (7,018,346.39) 13,565,208.24
CMC PHYSICIANS AND SURGEONS (951,325.20) 2,433,732.61
CMC MIDDLE GEORGIA (915,188.26) 2,828,772.27
CMC SHALLOWFORD 1,910,699.51 4,000,606.94
CMC DESERT SPRINGS 48,507,187.45 53,784,506.63
CMC COMMUNITY DES MOINES 4,832,152.71 1,135,560.06
CMC METROPOLITAN (5,046,087.26) 6,567,345.96
CMC REGIONAL MD CTR-CLEVLND 8,916,531.01 (4,567,602.81)
CMC SUBURBAN-PARAMOUNT 23,868,740.46 (10,289,740.93)
CMC NORTHSIDE-MACON (8,386,380.63) 11,046,862.58
CMC AMBULATORY RESOURCES (6,417,766.71) 6,784,420.44
CMC HOLCOMB BRIDGE ICC 329,477.32 0.00
CMC GWINNETT ICC (109,546.32) 0.00
CMC DUNWOODY INTERNAL MED (29,560.32) 0.00
CMC SATELITE FAM PRACT (7,909.31) 0.00
CMC NORTHSIDE MOB II 1,492,017.55 0.00
CMC RICHMOND MOB INC 4,920,089.83 0.00
CORPORATE ELIMINATIONS (102,582.30) 0.00
-------------------- -------------------
8,457,152.39 757,211,125.78
-------------------- -------------------
-------------------- -------------------
</TABLE>
<PAGE>
SCHEDULE 8.8(g)
SCHEDULE OF EXISTING INVESTMENTS
1.) Ownership of 50% of Capital Area PsySystems, Inc.
by Group Practice Affiliates, Inc.
<PAGE>
SCHEDULE 8.8(1)
SCHEDULE OF CERTAIN PERMITTED INVESTMENTS
(1) Cash and Cash Equivalents as defined.
(2) Corporate notes and bonds rated "A" or better with remaining
maturities of ten years or less.
(3) Municipal bonds rated "A" or better with remaining maturities of ten
years or less except issues which are putable at par within one year
or less in which case there shall be no limitation on the final
maturity.
(4) Money market preferred stock rated "A" or better (auctionable at par
each 49 days).
(5) Direct obligations of the United States of America, or any agency,
instrumentality or sponsored corporation thereof, which are rated at
least A or the equivalent thereof by Standard & Poor's Corporation or
at least A2 or the equivalent thereof by Moody's Investor Services,
Inc., and in each case having maturities of ten years or less from the
date of acquisition.
(6) Obligations, including deposits, denominated in Swiss francs in any
bank having capital and surplus in excess of $500,000,000 U.S. dollar
equivalent, the maturity of which shall not exceed the final stated
maturity of the remaining outstanding Swiss Bonds.
(7) Certificates of deposit issued by banks of recognized standing rated
at least A or the equivalent thereof by Standard & Poor's Corporation
or at least A2 or the equivalent thereof by Moody's Investor Services,
Inc., and having maturities of ten years or less from the date of
acquisition.
<PAGE>
SCHEDULE 8.15
SCHEDULE OF EXISTING ACCOMMODATION OBLIGATIONS
1.) Accommodation Obligations listed on Schedules 8.7(d) and 8.7(e).
<PAGE>
Schedule 10.1
SCHEDULE OF EXISTING SUBSIDIARY LETTERS OF CREDIT
<TABLE>
<CAPTION>
Debt L/C Book Balance at Letters of Credit at
Borrower Description Bank March 31, 1994 Maturity March 31, 1994
- -------- ----------- ---- -------------- -------- --------------------
<S> <C> <C> <C> <C> <C>
Charter Forest Behavioral VRDN Bankers Trust $5,100,000 Dec. 2013 $5,269,068.49
Health System, Inc. Company
Charter Behavioral Health VRDN Bankers Trust $6,400,000 March 2014 $6,612,164.38
System of New Mexico, Inc. Company
Charter Plains Behavioral VRDN Bankers Trust $5,700,000 Oct. 2013 $5,888,958.90
Health System, Inc. Company
Charter Fairmount Behavioral VRDN Bankers Trust $8,175,000 Jan. 2001 $8,512,527.00
Health System, Inc. Company
Charter Ridge Behavioral VRDN Bankers Trust $4,525,000 March 2005 $4,711,827.00
Health System, Inc. Company
Charter Springs Behavioral VRDN Bankers Trust $4,150,000 July 2004 $4,287,575.34
Health System, Inc. Company
Charter Hospital of St. VRDN Bankers Trust $5,225,000 Nov. 2009 $5,398,212.33
Louis, Inc. (Charter Hospital Company
of Greenville)
Charter Behavioral Health VRDN Bankers Trust $7,200,000 June 2011 $7,842,000.00
System of Charleston, Inc. Company
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Schedule 10.1(a)
SCHEDULE OF ACQUIRED NME FACILITIES EBITDA
--------------------------------------------
MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER
1993 1993 1993 1993 1993 1993 1993
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
53 TPI-VA BEACH EBITDA 145,000 126,000 280,000 75,000 77,000 (152,000) (73,000)
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA 123,548 104,548 258,548 68,372 70,372 (158,628) (79,628)
----------- ---------- ---------- ---------- ---------- ---------- ----------
2 TUCSON PSY INST EBITDA (53,000) (90,000) 73,000 67,000 89,000 64,000 42,000
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA (74,452) (111,452) 51,548 60,372 82,372 57,372 35,372
----------- ---------- ---------- ---------- ---------- ---------- ----------
6 YORBA HILLS HOSP EBITDA 191,000 132,000 142,000 108,000 85,000 (61,000) (60,000)
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA 169,548 110,548 120,548 101,372 78,372 (67,628) (66,628)
----------- ---------- ---------- ---------- ---------- ---------- ----------
52 SPRINGWOOD PSY INST EBITDA 239,000 220,000 454,000 196,000 173,000 135,000 95,000
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA 217,548 198,548 432,548 189,372 166,372 128,372 88,372
----------- ---------- ---------- ---------- ---------- ---------- ----------
35 TPI-NORFOLK EBITDA 92,000 91,000 294,000 101,000 61,000 72,000 (141,000)
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA 70,548 69,548 272,548 94,372 54,372 65,372 (147,628)
----------- ---------- ---------- ---------- ---------- ---------- ----------
45 POTOMAC RIDGE EBITDA 28,000 76,000 595,000 187,000 122,000 63,000 50,000
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA 6,548 54,548 573,548 180,372 115,372 56,372 43,372
----------- ---------- ---------- ---------- ---------- ---------- ----------
17 PSY INST OF ATLANTA EBITDA 126,000 100,000 382,000 93,000 68,000 65,000 82,000
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA 104,548 78,548 360,548 86,372 61,372 58,372 75,372
----------- ---------- ---------- ---------- ---------- ---------- ----------
12 MONTHS
OCTOBER NOVEMBER DECEMBER JANUARY FEBRUARY ENDED
1993 1993 1993 1994 1994 2/28/94
--------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
53 TPI-VA BEACH EBITDA 100,000 111,000 (86,000) 81,000 146,000 830,000
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA 93,372 104,372 (92,628) 74,372 139,372 705,992
---------- ---------- ---------- ---------- ---------- ------------
2 TUCSON PSY INST EBITDA 83,000 (55,000) (91,000) (163,000) 28,000 (6,000)
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA 76,372 (61,628) (97,628) (169,628) 21,372 (130,008)
---------- ---------- ---------- ---------- ---------- ------------
6 YORBA HILLS HOSP EBITDA (55,000) (152,000) 20,000 7,000 107,000 464,000
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA (61,628) (158,628) 13,372 372 100,372 339,992
---------- ---------- ---------- ---------- ---------- ------------
52 SPRINGWOOD PSY INST EBITDA 99,000 166,000 97,000 99,000 97,000 2,070,000
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA 92,372 159,372 90,372 92,372 90,372 1,945,992
---------- ---------- ---------- ---------- ---------- ------------
35 TPI-NORFOLK EBITDA (49,000) 0 42,000 42,000 61,000 666,000
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA (55,628) (6,628) 35,372 35,372 54,372 541,992
---------- ---------- ---------- ---------- ---------- ------------
45 POTOMAC RIDGE EBITDA 11,000 172,000 129,000 51,000 88,000 1,572,000
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA 4,372 165,372 122,372 44,372 81,372 1,447,992
---------- ---------- ---------- ---------- ---------- ------------
17 PSY INST OF ATLANTA EBITDA (9,000) 127,000 52,000 59,000 77,000 1,222,000
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA (15,628) 120,372 45,372 52,372 70,372 1,097,992
---------- ---------- ---------- ---------- ---------- ------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Schedule 10.1(a)
SCHEDULE OF ACQUIRED NME FACILITIES EBITDA
--------------------------------------------
MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER
1993 1993 1993 1993 1993 1993 1993
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
34 PSY INST OF RICHMOND EBITDA 35,000 47,000 312,000 219,000 224,000 94,000 140,000
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA 13,548 25,548 290,548 212,372 217,372 87,372 133,372
----------- ---------- ---------- ---------- ---------- ---------- ----------
37 NORTHBROOKE HOSP EBITDA 364,000 447,000 204,000 98,000 74,000 0 85,000
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA 342,548 425,548 182,548 91,372 67,372 (6,628) 78,372
----------- ---------- ---------- ---------- ---------- ---------- ----------
8 OAK CREEK HOSP EBITDA 146,000 114,000 231,000 126,000 121,000 131,000 124,000
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA 124,548 92,548 209,548 119,372 114,372 124,372 117,372
----------- ---------- ---------- ---------- ---------- ---------- ----------
47 PIMC RTC EBITDA 8,000 38,000 148,000 (13,000) 53,000 61,000 59,000
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA (13,452) 16,548 126,548 (19,628) 46,372 54,372 52,372
----------- ---------- ---------- ---------- ---------- ---------- ----------
1 PINEWOOD EBITDA 53,000 78,000 165,000 41,000 64,000 29,000 62,000
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA 31,548 56,548 143,548 34,372 57,372 22,372 55,372
----------- ---------- ---------- ---------- ---------- ---------- ----------
24 NB@MEADOWS EBITDA 54,000 47,000 28,000 (5,000) (48,000) 5,000 (28,000)
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA 32,548 25,548 6,548 (11,628) (54,628) (1,628) (34,628)
----------- ---------- ---------- ---------- ---------- ---------- ----------
36 NB@SERENITY LODGE EBITDA 33,000 31,000 21,000 (30,000) (34,000) 24,000 (57,000)
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA 11,548 9,548 (452) (36,628) (40,628) 17,372 (63,628)
----------- ---------- ---------- ---------- ---------- ---------- ----------
12 MONTHS
OCTOBER NOVEMBER DECEMBER JANUARY FEBRUARY ENDED
1993 1993 1993 1994 1994 2/28/94
--------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
34 PSY INST OF RICHMOND EBITDA 120,000 120,000 251,000 159,000 234,000 1,955,000
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA 113,372 113,372 244,372 152,372 227,372 1,830,992
---------- ---------- ---------- ---------- ---------- ------------
37 NORTHBROOKE HOSP EBITDA 235,000 57,000 178,000 118,000 146,000 2,006,000
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA 228,372 50,372 171,372 111,372 139,372 1,881,992
---------- ---------- ---------- ---------- ---------- ------------
8 OAK CREEK HOSP EBITDA 214,000 142,000 172,000 287,000 136,000 1,944,000
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA 207,372 135,372 165,372 280,372 129,372 1,819,992
---------- ---------- ---------- ---------- ---------- ------------
47 PIMC RTC EBITDA 42,000 9,000 4,000 3,000 (14,000) 398,000
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA 35,372 2,372 (2,628) (3,628) (20,628) 273,992
---------- ---------- ---------- ---------- ---------- ------------
1 PINEWOOD EBITDA (8,000) 14,000 39,000 (167,000) 35,000 405,000
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA (14,628) 7,372 32,372 (173,628) 28,372 280,992
---------- ---------- ---------- ---------- ---------- ------------
24 NB@MEADOWS EBITDA 51,000 65,000 11,000 (27,000) (10,000) 143,000
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA 44,372 58,372 4,372 (33,628) (16,628) 18,992
---------- ---------- ---------- ---------- ---------- ------------
36 NB@SERENITY LODGE EBITDA (6,000) (2,000) (46,000) (26,000) (59,000) (151,000)
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA (12,628) (8,628) (52,628) (32,628) (65,628) (275,008)
---------- ---------- ---------- ---------- ---------- ------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Schedule 10.1(a)
SCHEDULE OF ACQUIRED NME FACILITIES EBITDA
--------------------------------------------
MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER
1993 1993 1993 1993 1993 1993 1993
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
44 NB@WARWICK EBITDA (24,000) (61,000) 93,000 (3,000) 14,000 48,000 (4,000)
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA (45,452) (82,452) 71,548 (9,628) 7,372 41,372 (10,628)
----------- ---------- ---------- ---------- ---------- ---------- ----------
26 NB@WAVERLY EBITDA 76,000 103,000 93,000 58,000 45,000 140,000 64,000
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA 54,548 81,548 71,548 51,372 38,372 133,372 57,372
----------- ---------- ---------- ---------- ---------- ---------- ----------
46 NB@WHITE OAK EBITDA 30,000 (21,000) 18,000 9,000 (55,000) (5,000) (12,000)
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA 8,548 (42,452) (3,452) 2,372 (61,628) (11,628) (18,628)
----------- ---------- ---------- ---------- ---------- ---------- ----------
69 NEPA EBITDA 110,000 91,000 79,000 143,000 84,000 104,000 96,000
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA 88,548 69,548 57,548 136,372 77,372 97,372 89,372
----------- ---------- ---------- ---------- ---------- ---------- ----------
29 NASHUA BROOKSIDE EBITDA 537,000 611,000 931,000 359,000 288,000 286,000 253,000
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA 515,548 589,548 909,548 352,372 281,372 279,372 246,372
----------- ---------- ---------- ---------- ---------- ---------- ----------
49 NB@COVE FORGE EBITDA (26,000) 40,000 (30,000) 42,000 72,000 70,000 56,000
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA (47,452) 18,548 (51,452) 35,372 65,372 63,372 49,372
----------- ---------- ---------- ---------- ---------- ---------- ----------
23 NB@HIDDEN BROOK EBITDA 48,000 (8,000) 32,000 44,000 64,000 59,000 58,000
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA 26,548 (29,452) 10,548 37,372 57,372 52,372 51,372
----------- ---------- ---------- ---------- ---------- ---------- ----------
12 MONTHS
OCTOBER NOVEMBER DECEMBER JANUARY FEBRUARY ENDED
1993 1993 1993 1994 1994 2/28/94
--------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
44 NB@WARWICK EBITDA 15,000 14,000 0 (7,000) 65,000 150,000
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA 8,372 7,372 (6,628) (13,628) 58,372 25,992
---------- ---------- ---------- ---------- ---------- ------------
26 NB@WAVERLY EBITDA 87,000 18,000 41,000 74,000 64,000 863,000
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA 80,372 11,372 34,372 67,372 57,372 738,992
---------- ---------- ---------- ---------- ---------- ------------
46 NB@WHITE OAK EBITDA (10,000) (1,000) 38,000 51,000 33,000 75,000
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA (16,628) (7,628) 31,372 44,372 26,372 (49,008)
---------- ---------- ---------- ---------- ---------- ------------
69 NEPA EBITDA 93,000 155,000 105,000 22,000 73,000 1,155,000
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA 86,372 148,372 98,372 15,372 66,372 1,030,992
---------- ---------- ---------- ---------- ---------- ------------
29 NASHUA BROOKSIDE EBITDA 352,000 455,000 161,000 127,000 344,000 4,704,000
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA 345,372 448,372 154,372 120,372 337,372 4,579,992
---------- ---------- ---------- ---------- ---------- ------------
49 NB@COVE FORGE EBITDA 24,000 34,000 45,000 98,000 126,000 551,000
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA 17,372 27,372 38,372 91,372 119,372 426,992
---------- ---------- ---------- ---------- ---------- ------------
23 NB@HIDDEN BROOK EBITDA 48,000 87,000 38,000 2,000 60,000 532,000
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA 41,372 80,372 31,372 (4,628) 53,372 407,992
---------- ---------- ---------- ---------- ---------- ------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Schedule 10.1(a)
SCHEDULE OF ACQUIRED NME FACILITIES EBITDA
--------------------------------------------
MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER
1993 1993 1993 1993 1993 1993 1993
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
30 NB@LAKEHURST EBITDA (13,000) (37,000) (24,000) 45,000 20,000 8,000 32,000
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA (34,452) (58,452) (45,452) 38,372 13,372 1,372 25,372
----------- ---------- ---------- ---------- ---------- ---------- ----------
38 NB@LAKEWOOD EBITDA 122,000 43,000 323,000 125,000 56,000 91,000 26,000
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA 100,548 21,548 301,548 118,372 49,372 84,372 19,372
----------- ---------- ---------- ---------- ---------- ---------- ----------
4 LOS ALTOS HOSP EBITDA 32,000 (210,000) (85,000) 77,000 18,000 (297,000) (94,000)
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA 10,548 (231,452) (106,452) 70,372 11,372 (303,628) (100,628)
----------- ---------- ---------- ---------- ---------- ---------- ----------
12 MANATEE PALMS RTC EBITDA 65,000 69,000 155,000 41,000 43,000 23,000 54,000
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA 43,548 47,548 133,548 34,372 36,372 16,372 47,372
----------- ---------- ---------- ---------- ---------- ---------- ----------
14 MEDFIELD HOSP EBITDA 170,000 186,000 419,000 162,000 112,000 95,000 81,000
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA 148,548 164,548 397,548 155,372 105,372 88,372 74,372
----------- ---------- ---------- ---------- ---------- ---------- ----------
32 MID-SOUTH HOSP EBITDA 142,000 102,000 321,000 73,000 51,000 50,000 100,000
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA 120,548 80,548 299,548 66,372 44,372 43,372 93,372
----------- ---------- ---------- ---------- ---------- ---------- ----------
5 MILLCREEK HOSP EBITDA 113,000 (68,000) (223,000) 38,000 (50,000) (61,000) 98,000
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA 91,548 (89,452) (244,452) 31,372 (56,628) (67,628) 91,372
----------- ---------- ---------- ---------- ---------- ---------- ----------
12 MONTHS
OCTOBER NOVEMBER DECEMBER JANUARY FEBRUARY ENDED
1993 1993 1993 1994 1994 2/28/94
--------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
30 NB@LAKEHURST EBITDA 14,000 36,000 15,000 19,000 75,000 190,000
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA 7,372 29,372 8,372 12,372 68,372 65,992
---------- ---------- ---------- ---------- ---------- ------------
38 NB@LAKEWOOD EBITDA 46,000 87,000 48,000 126,000 16,000 1,109,000
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA 39,372 80,372 41,372 119,372 9,372 984,992
---------- ---------- ---------- ---------- ---------- ------------
4 LOS ALTOS HOSP EBITDA 170,000 0 22,000 21,000 31,000 (315,000)
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA 163,372 (6,628) 15,372 14,372 24,372 (439,008)
---------- ---------- ---------- ---------- ---------- ------------
12 MANATEE PALMS RTC EBITDA 56,000 (27,000) 49,000 80,000 (8,000) 600,000
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA 49,372 (33,628) 42,372 73,372 (14,628) 475,992
---------- ---------- ---------- ---------- ---------- ------------
14 MEDFIELD HOSP EBITDA 88,000 179,000 48,000 58,000 65,000 1,663,000
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA 81,372 172,372 41,372 51,372 58,372 1,538,992
---------- ---------- ---------- ---------- ---------- ------------
32 MID-SOUTH HOSP EBITDA 226,000 89,000 157,000 61,000 155,000 1,527,000
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA 219,372 82,372 150,372 54,372 148,372 1,402,992
---------- ---------- ---------- ---------- ---------- ------------
5 MILLCREEK HOSP EBITDA 75,000 200,000 (16,000) 98,000 231,000 435,000
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA 68,372 193,372 (22,628) 91,372 224,372 310,992
---------- ---------- ---------- ---------- ---------- ------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Schedule 10.1(a)
SCHEDULE OF ACQUIRED NME FACILITIES EBITDA
--------------------------------------------
MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER
1993 1993 1993 1993 1993 1993 1993
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
19 JEFFERSON HOSP EBITDA 171,000 117,000 19,000 58,000 99,000 40,000 143,000
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA 149,548 95,548 (2,452) 51,372 92,372 33,372 136,372
----------- ---------- ---------- ---------- ---------- ---------- ----------
20 KINGWOOD HOSP EBITDA (44,000) 92,000 268,000 16,000 (38,000) 14,000 96,000
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA (65,452) 70,548 246,548 9,372 (44,628) 7,372 89,372
----------- ---------- ---------- ---------- ---------- ---------- ----------
15 LAUREL HEIGHTS RTC EBITDA 295,000 284,000 406,000 216,000 208,000 186,000 124,000
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA 273,548 262,548 384,548 209,372 201,372 179,372 117,372
----------- ---------- ---------- ---------- ---------- ---------- ----------
13 LAUREL OAKS HOSP EBITDA (172,000) (135,000) (349,000) 119,000 38,000 134,000 105,000
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA (193,452) (156,452) (370,452) 112,372 31,372 127,372 98,372
----------- ---------- ---------- ---------- ---------- ---------- ----------
59 LAUREL OAKS RTC EBITDA 162,000 133,000 339,000 (71,000) (34,000) (45,000) (33,000)
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA 140,548 111,548 317,548 (77,628) (40,628) (51,628) (39,628)
----------- ---------- ---------- ---------- ---------- ---------- ----------
55 LINDEN OAKS HOSP EBITDA 655,000 500,000 546,000 367,000 388,000 361,000 355,000
LESS:
CEO/CFO SALARIES & BONUSES 13,624 13,624 13,624 1,972 1,972 1,972 1,972
MIS COSTS 7,834 7,834 7,834 4,640 4,640 4,640 4,640
MINORITY INTEREST 98,750 98,750 98,750 45,500 45,500 45,500 45,500
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA 534,792 379,792 425,792 314,888 335,888 308,888 302,888
----------- ---------- ---------- ---------- ---------- ---------- ----------
48 FAIR OAKS HOSP EBITDA 65,000 (106,000) 446,000 98,000 202,000 560,000 305,000
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA 43,548 (127,452) 424,548 91,372 195,372 553,372 298,372
----------- ---------- ---------- ---------- ---------- ---------- ----------
12 MONTHS
OCTOBER NOVEMBER DECEMBER JANUARY FEBRUARY ENDED
1993 1993 1993 1994 1994 2/28/94
-------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
19 JEFFERSON HOSP EBITDA (109,000) 97,000 365,000 420,000 427,000 1,847,000
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA (115,628) 90,372 358,372 413,372 420,372 1,722,992
---------- ---------- ---------- ---------- ---------- ------------
20 KINGWOOD HOSP EBITDA 40,000 83,000 (9,000) 191,000 234,000 943,000
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA 33,372 76,372 (15,628) 184,372 227,372 818,992
---------- ---------- ---------- ---------- ---------- ------------
15 LAUREL HEIGHTS RTC EBITDA 275,000 286,000 266,000 279,000 195,000 3,020,000
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA 268,372 279,372 259,372 272,372 188,372 2,895,992
---------- ---------- ---------- ---------- ---------- ------------
13 LAUREL OAKS HOSP EBITDA 91,000 34,000 (139,000) (112,000) 39,000 (347,000)
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA 84,372 27,372 (145,628) (118,628) 32,372 (471,008)
---------- ---------- ---------- ---------- ---------- ------------
59 LAUREL OAKS RTC EBITDA (48,000) 32,000 (14,000) 2,000 (10,000) 413,000
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA (54,628) 25,372 (20,628) (4,628) (16,628) 288,992
---------- ---------- ---------- ---------- ---------- ------------
55 LINDEN OAKS HOSP EBITDA 424,000 350,000 316,000 167,000 289,000 4,718,000
LESS:
CEO/CFO SALARIES & BONUSES 1,972 1,972 1,972 1,972 1,972 58,620
MIS COSTS 4,640 4,640 4,640 4,640 4,640 65,262
MINORITY INTEREST 45,500 45,500 45,500 45,500 45,500 705,750
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA 371,888 297,888 263,888 114,888 236,888 3,888,368
---------- ---------- ---------- ---------- ---------- ------------
48 FAIR OAKS HOSP EBITDA 215,000 671,000 310,000 (490,000) 182,000 2,458,000
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA 208,372 664,372 303,372 (496,628) 175,372 2,333,992
---------- ---------- ---------- ---------- ---------- ------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Schedule 10.1(a)
SCHEDULE OF ACQUIRED NME FACILITIES EBITDA
--------------------------------------------
MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER
1993 1993 1993 1993 1993 1993 1993
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
50 FENWICK HALL EBITDA 174,000 92,000 212,000 59,000 73,000 75,000 45,000
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA 152,548 70,548 190,548 52,372 66,372 68,372 38,372
----------- ---------- ---------- ---------- ---------- ---------- ----------
33 BAYWOOD HOSP EBITDA (307,000) (106,000) 80,000 162,000 87,000 98,000 129,000
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA (328,452) (127,452) 58,548 155,372 80,372 91,372 122,372
----------- ---------- ---------- ---------- ---------- ---------- ----------
42 BRAWNER PSY INST EBITDA (28,000) (134,000) 109,000 (145,000) 6,000 37,000 23,000
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA (49,452) (155,452) 87,548 (151,628) (628) 30,372 16,372
----------- ---------- ---------- ---------- ---------- ---------- ----------
7 CANYON SPRINGS HOSP EBITDA 51,000 54,000 369,000 (29,000) 65,000 72,000 68,000
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA 29,548 32,548 347,548 (35,628) 58,372 65,372 61,372
----------- ---------- ---------- ---------- ---------- ---------- ----------
40 CENTENNIAL PEAKS EBITDA 62,000 112,000 (14,000) 68,000 129,000 63,000 (7,000)
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA 40,548 90,548 (35,452) 61,372 122,372 56,372 (13,628)
----------- ---------- ---------- ---------- ---------- ---------- ----------
16 CRESCENT PINES HOSP EBITDA (26,000) 6,000 50,000 (47,000) 38,000 1,000 51,000
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA (47,452) (15,452) 28,548 (53,628) 31,372 (5,628) 44,372
----------- ---------- ---------- ---------- ---------- ---------- ----------
22 ACADIAN OAKS EBITDA 119,000 80,000 247,000 79,000 58,000 138,000 84,000
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA 97,548 58,548 225,548 72,372 51,372 131,372 77,372
----------- ---------- ---------- ---------- ---------- ---------- ----------
12 MONTHS
OCTOBER NOVEMBER DECEMBER JANUARY FEBRUARY ENDED
1993 1993 1993 1994 1994 2/28/94
--------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
50 FENWICK HALL EBITDA 25,000 50,000 119,000 32,000 25,000 981,000
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA 18,372 43,372 112,372 25,372 18,372 856,992
---------- ---------- ---------- ---------- ---------- ------------
33 BAYWOOD HOSP EBITDA 144,000 53,000 (130,000) (174,000) 23,000 59,000
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA 137,372 46,372 (136,628) (180,628) 16,372 (65,008)
---------- ---------- ---------- ---------- ---------- ------------
42 BRAWNER PSY INST EBITDA 134,000 276,000 113,000 53,000 238,000 682,000
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA 127,372 269,372 106,372 46,372 231,372 557,992
---------- ---------- ---------- ---------- ---------- ------------
7 CANYON SPRINGS HOSP EBITDA 52,000 127,000 50,000 45,000 54,000 978,000
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA 45,372 120,372 43,372 38,372 47,372 853,992
---------- ---------- ---------- ---------- ---------- ------------
40 CENTENNIAL PEAKS EBITDA 291,000 78,000 (122,000) 98,000 91,000 849,000
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA 284,372 71,372 (128,628) 91,372 84,372 724,992
---------- ---------- ---------- ---------- ---------- ------------
16 CRESCENT PINES HOSP EBITDA 60,000 129,000 107,000 93,000 101,000 563,000
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA 53,372 122,372 100,372 86,372 94,372 438,992
---------- ---------- ---------- ---------- ---------- ------------
22 ACADIAN OAKS EBITDA 91,000 149,000 18,000 98,000 64,000 1,225,000
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA 84,372 142,372 11,372 91,372 57,372 1,100,992
---------- ---------- ---------- ---------- ---------- ------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Schedule 10.1(a)
SCHEDULE OF ACQUIRED NME FACILITIES EBITDA
--------------------------------------------
MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER
1993 1993 1993 1993 1993 1993 1993
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
70 ALVARADO PARKWAY EBITDA 264,000 211,000 549,000 198,000 (1,000) 160,000 84,000
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA 242,548 189,548 527,548 191,372 (7,628) 153,372 77,372
----------- ---------- ---------- ---------- ---------- ---------- ----------
28 APPALACHIAN HALL EBITDA 134,000 162,000 322,000 193,000 196,000 349,000 252,000
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA 112,548 140,548 300,548 186,372 189,372 342,372 245,372
----------- ---------- ---------- ---------- ---------- ---------- ----------
21 ARBOR HOSP EBITDA 95,000 52,000 21,000 (60,000) (62,000) (142,000) (24,000)
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA 73,548 30,548 (452) (66,628) (68,628) (148,628) (30,628)
----------- ---------- ---------- ---------- ---------- ---------- ----------
18 ARBOR HOSP EBITDA 107,000 119,000 93,000 (188,000) (141,000) (128,000) (118,000)
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA 85,548 97,548 71,548 (194,628) (147,628) (134,628) (124,628)
----------- ---------- ---------- ---------- ---------- ---------- ----------
11 BAY HARBOR RTC EBITDA 164,000 183,000 173,000 125,000 138,000 113,000 91,000
LESS:
CEO/CFO SALARIES & BONUSES 13,606 13,606 13,606 1,968 1,968 1,968 1,968
MIS COSTS 7,846 7,846 7,846 4,660 4,660 4,660 4,660
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA 142,548 161,548 151,548 118,372 131,372 106,372 84,372
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL UNADJUSTED EBITDA 4,784,000 4,013,000 9,317,000 3,694,000 3,340,000 3,227,000 2,961,000
TOTAL CEO/CFO SALARIES & BONUSES 639,500 639,500 639,500 92,500 92,500 92,500 92,500
TOTAL MIS COSTS 368,750 368,750 368,750 219,000 219,000 219,000 219,000
TOTAL MINORITY INTEREST 98,750 98,750 98,750 45,500 45,500 45,500 45,500
----------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EBITDA 3,677,000 2,906,000 8,210,000 3,337,000 2,983,000 2,870,000 2,604,000
----------- ---------- ---------- ---------- ---------- ---------- ----------
----------- ---------- ---------- ---------- ---------- ---------- ----------
12 MONTHS
OCTOBER NOVEMBER DECEMBER JANUARY FEBRUARY ENDED
1993 1993 1993 1994 1994 2/28/94
--------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
70 ALVARADO PARKWAY EBITDA 311,000 186,000 36,000 71,000 75,000 2,144,000
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA 304,372 179,372 29,372 64,372 68,372 2,019,992
---------- ---------- ---------- ---------- ---------- ------------
28 APPALACHIAN HALL EBITDA 191,000 286,000 (18,000) 176,000 102,000 2,345,000
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA 184,372 279,372 (24,628) 169,372 95,372 2,220,992
---------- ---------- ---------- ---------- ---------- ------------
21 ARBOR HOSP EBITDA (56,000) (81,000) 57,000 (26,000) 117,000 (109,000)
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA (62,628) (87,628) 50,372 (32,628) 110,372 (233,008)
---------- ---------- ---------- ---------- ---------- ------------
18 ARBOR HOSP EBITDA (117,000) (241,000) 235,000 338,000 606,000 565,000
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA (123,628) (247,628) 228,372 331,372 599,372 440,992
---------- ---------- ---------- ---------- ---------- ------------
11 BAY HARBOR RTC EBITDA 88,000 154,000 113,000 89,000 116,000 1,547,000
LESS:
CEO/CFO SALARIES & BONUSES 1,968 1,968 1,968 1,968 1,968 58,530
MIS COSTS 4,660 4,660 4,660 4,660 4,660 65,478
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA 81,372 147,372 106,372 82,372 109,372 1,422,992
---------- ---------- ---------- ---------- ---------- ------------
TOTAL UNADJUSTED EBITDA 4,214,000 4,819,000 3,196,000 2,703,000 5,370,000 51,638,000
TOTAL CEO/CFO SALARIES & BONUSES 92,500 92,500 92,500 92,500 92,500 2,751,000
TOTAL MIS COSTS 219,000 219,000 219,000 219,000 219,000 3,077,250
TOTAL MINORITY INTEREST 45,500 45,500 45,500 45,500 45,500 705,750
---------- ---------- ---------- ---------- ---------- ------------
TOTAL EBITDA 3,857,000 4,462,000 2,839,000 2,346,000 5,013,000 45,104,000
---------- ---------- ---------- ---------- ---------- ------------
---------- ---------- ---------- ---------- ---------- ------------
</TABLE>
<PAGE>
SCHEDULE 10.1(b)
SCHEDULE OF EXCLUDABLE FOREIGN RESTRICTED SUBSIDIARIES
Golden Isle Assurance Company, Ltd.
Plymouth Insurance Company, Ltd.
Societe Anonyme De La Metairie
<PAGE>
SCHEDULE 10.1(c)
SCHEDULE OF MORTGAGE NOTES
<TABLE>
<CAPTION>
BORROWER LENDER AMOUNT OUTSTANDING AT APRIL 1, 1994
- -------- ------ -----------------------------------
<S> <C> <C>
Charter Behavioral Health Citibank, N.A. $6,070,833.15
System of Northern California, Inc.
(f/k/a Charter Hospital of Sacramento, Inc.)
Charter Terre Haute Behavioral Health Citibank, N.A. $4,333,333.15
Systems, Inc.
(f/k/a Charter Medical - Vigo County, Inc.)
Charter San Diego Behavioral Health Citibank, N.A. $4,333,333.15
System, Inc.
(f/k/a Charter Hospital of San Diego, Inc.)
</TABLE>
<PAGE>
Schedule 10.1(d)
SCHEDULE OF MORTGAGED PROPERTIES
<TABLE>
<CAPTION>
MORTGAGORS MORTGAGED PROPERTY
<S> <C>
1. Charter Peachford Behavioral Health System, Inc. 2151 Peachford Road
Atlanta, Georgia 30338
2. Charter Oak Behavioral Health System, Inc. 1161 East Covina Boulevard
Covina, California 91724
3. Charter Behavioral Health System of Chicago, Inc. 4700 North Clarendon Avenue
Chicago, Illinois 60640
4. Charter Westbrook Behavioral Health System, Inc. 1500 Westbrook Avenue
P.O. Box 9127
Richmond, VA 23227
5. Charter Behavioral Health System of Tampa Bay, Inc. 4004 North Riverside Drive
Tampa, FL 33603
6. Charter North Behavioral Health System, Inc. 2530 DeBarr Road
Anchorage, AK 99508-2996
7. Charter Behavioral Health System of Savannah, Inc. 1150 Cornell Avenue
P.O. Box 13817
(P.O. Zip 31416)
Savannah, GA 31406
8. Charter-by-the-Sea Behavioral Health System, Inc. 2927 Demere Road
St. Simons Island, GA 31522
(includes Charter Klubhaus)
9. Charter Behavioral Health System of Jackson, Inc. East Lakeland Drive
Jackson, MS 39208
10. Charter Hospital of Miami, Inc. 11100 N.W. 27th Street
Miami, FL 33172
11. Charter Behavioral Health System of Dallas, Inc. 6800 Preston Road
Plano, TX 75024
12. Charter Real Behavioral Health System, Inc. 8550 Huebner Road
San Antonio, TX 78240
13. Charter - Provo School, Inc. 4501 North University Avenue
(d/b/a Provo Canyon School) Provo, UT 84603
14. Charter Wichita Behavioral Health System, Inc. 8901 East Orme
Wichita, KS 67207
15. Charter Behavioral Health System of Paducah, Inc. 435 Berger Road
Paducah, KY 42002
1
<PAGE>
Schedule 10.1(d)
SCHEDULE OF MORTGAGED PROPERTIES
16. Charter Northridge Behavioral Health System, Inc. 400 Newton Road
Raleigh, NC 27615
17. Charter Woods Behavioral Health System, Inc. 700 Cottonwood Road
P.O. Box 6138
Dothan, AL 36302
18. Charter Behavioral Health System of Austin, Inc. 8402 Cross Park Drive
P.O. Box 140585
(P.O. Zip 78714)
Austin, TX 78754
19. Charter Behavioral Health System of Fort Worth, Inc. 6201 Overton Ridge Boulevard
Fort Worth, TX 76132
20. Charter Medical of East Valley, Inc. 2190 N. Grace Boulevard
Chandler, AZ 85224
21. Charter Hospital of Mobile, Inc. 251 Cox Street
(d/b/a Charter Academy of Mobile) Mobile, AL 36604
22. Charter Fairmount Behavioral Health System, Inc. 2001 Ladbrook Drive
(in Texas, d/b/a Charter Behavioral Health System of Kingwood) Kingwood, TX 77339
23. Charter Lakeside Behavioral Health System, Inc. 2911 Brunswick Road
Charter Medical Corporation Memphis, TN 38134
24. Charter Lakeside Behavioral Health System, Inc. 1550 First Colony Boulevard
(d/b/a Charter Behavioral Health System of Suglarland) Sugarland, TX 77487
25. Charter Behavioral Health System of Kansas City, Inc. 8000 West 127th Street
Overland Park, KS 66213
26. Charter Canyon Behavioral Health System, Inc. 1350 East 750 North
Orem, UT 84057
27. Charter Canyon Behavioral Health System, Inc. 175 West 7200 South
Midvale, UT 84047
28. Charter Hospital of Santa Teresa, Inc. 100 Charter Lane
Santa Teresa, NM 88008
29. Charter Behavioral Health System of Central Georgia, Inc. 3500 Riverside Drive
Macon, GA 31210
30. Charter Rivers Behavioral Health System, Inc. 2900 Sunset Boulevard
West Columbia, SC 29171
31. Charter Ridge Behavioral Health System, Inc. 3050 Rio Dosa Drive
Lexington, KY 40509
32. Charter Springs Behavioral Health System, Inc. 3130 S.W. 27th Avenue
Ocala, FL 32678
2
<PAGE>
Schedule 10.1(d)
SCHEDULE OF MORTGAGED PROPERTIES
33. CMSF, Inc. 3550 Colonial Boulevard
(d/b/a Charter Glade Hospital) P.O. Box 06120
Fort Myers, FL 33906
34. Charter Medical Corporation (The Glade Center) 10140 Deer Run Farms Road
Fort Myers, FL 33906
35. Charter Forest Behavioral Health System, Inc. 9320 Linwood Avenue
Shreveport, LA 71106
36. Charter Plains Behavioral Health System, Inc. 801 N. Quaker Avenue
P.O. Box 10560
Lubbock, TX 79408
37. Charter Behavioral Health System of Northwest Arkansas, Inc. 4253 Crossover Road
P.O. Box 1906
Fayetteville, AR 72703
38. Charter Palms Behavioral Health System, Inc. 1421 East Jackson Avenue
P.O. Box 5239
McAllen, TX 78502
39. Charter Hospital of St. Louis, Inc. 2700 E. Phillips Road
(in South Carolina, d/b/a Charter Hospital of Greenville) Greer, SC 29651
40. Charter Behavioral Health System of Charleston, Inc. 2777 Speissegger Drive
Charleston, SC 29405
41. Charter Behavioral Health System of New Mexico, Inc. 5901 Zuni Road, S.E.
Albuquerque, NM 87108
42. Pacific - Charter Medical, Inc. 2055 Kellogg Drive
Charter Behavioral Health System of the Corona, CA 91720
Inland Empire, Inc.
43. Charter Hospital of Ft. Collins, Inc. 4601 Corbett Drive
Ft. Collins, CO 80525
44. Charter Bay Harbor Behavioral Health System, Inc. 4480 51st Street West
Bradenton, FL 34210
45. Charter Hospital of St. Louis, Inc. 206 Park Place Drive
(d/b/a Charter Behavioral Health System of Orlando South) Kissimmee, FL 34741
46. Charter Medfield Behavioral Health System, Inc. 1950 Benoist Farms Road
(d/b/a Charter Hospital of West Palm Beach) West Palm Beach, FL 33411
Charter Laurel Oaks Behavioral Health System, Inc.
(holds land)
3
<PAGE>
Schedule 10.1(d)
SCHEDULE OF MORTGAGED PROPERTIES
47. Charter Behavioral Health System of Lake Charles, Inc. 4250 Fifth Avenue, South
Lake Charles, LA 70605
48. Charter Behavioral Health System of Toledo, Inc. 1725 Timberline Road
Maumee, OH 43537
49. Charter Grapevine Behavioral Health System, Inc. 2300 William D. Tate Avenue
Grapevine, TX 76051
50. Charter Peachford Behavioral Health System, Inc. 3913 N. Peachtree Road
Atlanta, GA 30341
51. Charter Indianapolis Behavioral Health System, Inc. 5602 Caito Drive
Indianapolis, IN 46226
52. Charter Behavioral Health System of Nevada, Inc. 7000 West Spring Mountain Road
Las Vegas, NV 89180
53. Charter Behavioral Health System of Winston-Salem, Inc. 3637 Old Vineyard Road
Winston-Salem, NC 27104
54. Charter Beacon Behavioral Health System, Inc. 1720 Beacon Street
Fort Wayne, IN 46805
55. Charter Augusta Behavioral Health System, Inc. 3100 Perimeter Parkway
Augusta, GA 30909
56. Charter Behavioral Health System of Corpus Christi, Inc. 3126 Rodd Field Road
Corpus Christi, TX 78414
57. Charter Medical of North Phoenix, Inc. 6015 W. Peoria Avenue
(d/b/a Charter Hospital of Glendale) Glendale, AZ 85311
58. Charter Behavioral Health System of Jacksonville, Inc. 3947 Salisbury Road
Jacksonville, FL 32216
59. Charter Little Rock Behavioral Health System, Inc. 1601 Murphy Drive
Maumelle, AR 72118
60. Charter Louisville Behavioral Health System , Inc. 1405 Browns Lane
Louisville, KY 40207
61. Charter Mission Viejo Behavioral Health System, Inc. 23228 Madero
Mission Viejo, CA 92691
4
<PAGE>
Schedule 10.1(d)
SCHEDULE OF MORTGAGED PROPERTIES
62. Charter Behavioral Health System of Northwest Indiana, Inc. 101 West 61st Avenue
State Road 51
Hobart, IN 46342
63. Charter Sioux Falls Behavioral Health System , Inc. 2812 South Louise Avenue
Sioux Falls, SD 57106
64. Charter South Bend Behavioral Health System, Inc. 6704 North Gumwood Drive
Granger, IN 46530
65. Charter Thousand Oaks Behavioral Health System, Inc. 150 Via Merida
Thousand Oaks, CA 91361
66. Charter Pines Behavioral Health System, Inc. 3621 Randolph Road
Charlotte, NC 28211
67. Charter Behavioral Health System of Athens, Inc. 240 Mitchell Bridge Road
Athens, GA 30606
68. Charter Behavioral Health System of Charlottesville, Inc. 2101 Arlington Boulevard
Charlottesville, VA 22903
69. Charter Greensboro Behavioral Health System, Inc. 700 Walter Reed Drive
Greensboro, NC 27403
70. Florida Health Facilities, Inc. 21808 State Road 54
(d/b/a Charter Hospital of Pasco) Lutz, FL 33549
71. Charter Lafayette Behavioral Health System, Inc. 3700 Rome Drive
Lafayette, IN 47905
</TABLE>
5
<PAGE>
- -------------------------------------------------------------------------------
SUBSIDIARY BORROWERS
OF CHARTER MEDICAL CORPORATION
____________________
$300,000,000
SECOND AMENDED AND RESTATED
SUBSIDIARY CREDIT AGREEMENT
____________________
Dated as of May 2, 1994
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
----
Section 1. Amount and Terms of Credit............................... 2
1.1 Commitments............................................... 2
1.2 Minimum Amount of Each Borrowing.......................... 4
1.3 Notice of Borrowing....................................... 5
1.4 Disbursement of Funds..................................... 6
1.5 Notes..................................................... 7
1.6 Conversions of Base Rate Loans and Continuations
of Eurodollar Loans................................... 8
1.7 Pro Rata Borrowings....................................... 9
1.8 Interest.................................................. 9
1.9 Interest Periods.......................................... 11
1.10 Increased Cost, Illegality, etc.......................... 12
1.11 Capital Adequacy......................................... 15
1.12 Funding Losses........................................... 16
1.13 Sharing of Payments, etc................................. 16
1.14 Change of Lending Office................................. 17
1.15 Replacement Lenders...................................... 18
1.16 Maturity of Borrowings................................... 19
Section 2. Subsidiary Letter of Credit Subfacility.................. 20
2.1 Subsidiary Letters of Credit.............................. 20
2.2 Notice of Issuance; Agreement to Issue.................... 22
2.3 Payment of Amounts Drawn Under Subsidiary Letters
of Credit............................................ 23
2.4 Payment by Lenders........................................ 25
2.5 Compensation.............................................. 26
2.6 Additional Payments; Illegality.................. 27
2.7 Obligations Absolute...................................... 29
2.8 Indemnification; Nature of L/C Banks' Duties.............. 30
Section 3. Commitments.............................................. 31
3.1 Voluntary Reduction of Commitments........................ 31
3.2 Mandatory Reduction of Commitments........................ 32
3.3 Pro Rata Reductions; No Reinstatement..................... 32
Section 4. Payments................................................. 32
4.1 Voluntary Prepayments..................................... 32
4.2 Mandatory Prepayments..................................... 33
4.3 Method and Place of Payment............................... 35
4.4 Net Payments.............................................. 35
4.5 Use of Proceeds........................................... 37
Section 5. Conditions Precedent..................................... 37
5.1 Conditions Precedent To Initial Loans..................... 37
5.2 Conditions Precedent to Each Loan......................... 44
5.3 Conditions Precedent to Initial Loans to
Supplemental Borrowers................................. 47
i
<PAGE>
PAGE
----
Section 6. Representations, Warranties and Agreements............... 47
6.1 Corporate Existence; Compliance With Law.................. 47
6.2 Power; Authority; No Violation............................ 47
6.3 Binding Effect............................................ 48
6.4 Litigation, etc........................................... 49
6.5 Use of Proceeds........................................... 49
6.6 Approvals, etc............................................ 49
6.7 Security Interests........................................ 49
6.8 Taxes..................................................... 50
6.9 Investment Company Act; Public Utility Holding
Company Act........................................... 51
6.10 No Default under Other Agreements........................ 51
6.11 Refinanced Indebtedness.................................. 51
6.12 Medicare Reimbursement................................... 51
Section 7. Certain Covenants........................................ 52
7.1 Information Covenant...................................... 52
7.2 Affirmative Covenants Concerning Variable Rate Note
Documents............................................. 53
7.3 Amendments, etc. to Variable Rate Notes Documents......... 53
Section 8. Company Credit Agreement Covenants....................... 53
Section 9. Events of Default........................................ 54
9.1 Payments.................................................. 54
9.2 Representations, etc...................................... 54
9.3 Covenants................................................. 54
9.4 Default Under Other Agreements............................ 54
9.5 Bankruptcy, etc........................................... 55
9.6 Security Documents; Subsidiary Guaranty................... 56
9.7 Company Credit Agreement.................................. 56
9.8 Judgments................................................. 56
Section 10. Definitions............................................. 58
10.1 Certain Definitions...................................... 58
10.2 Other Definitions........................................ 67
Section 11. Agency Provisions....................................... 68
11.1 Appointments............................................. 68
11.2 Nature of Duties......................................... 68
11.3 Lack of Reliance on the Agent and Co-Agent............... 69
11.4 Enforcement of Security Documents........................ 70
11.5 Certain Rights of the Agent and Co-Agent................. 70
11.6 Reliance................................................. 71
11.7 Indemnification.......................................... 72
11.8 The Agent and Co-Agent in their Individual Capacities.... 73
11.9 Holders.................................................. 73
11.10 Successor Agents........................................ 73
ii
<PAGE>
PAGE
----
Section 12. Miscellaneous........................................... 76
12.1 Payment of Expenses, etc................................. 76
12.2 Right of Setoff.......................................... 77
12.3 Notices.................................................. 77
12.4 Benefit of Agreement; Limitation on Rights of Others..... 78
12.5 No Waiver; Remedies Cumulative........................... 83
12.6 Payments Pro Rata........................................ 84
12.7 Calculations; Computations............................... 85
12.8 Governing Law; Appointment of Agent for Service of
Process; Submission to Jurisdiction.................. 85
12.9 Counterparts............................................. 86
12.10 Effectiveness; Funding of Master Transfer Supplement.... 87
12.11 Headings Descriptive.................................... 88
12.12 Amendment or Waiver..................................... 88
12.13 Survival................................................ 90
12.14 Domicile of Loans....................................... 90
12.15 Independent Nature of Lenders' Rights................... 90
12.16 Independence of Covenants............................... 90
12.17 Confidentiality......................................... 91
12.18 Performance of Obligations.............................. 91
12.19 Collateral.............................................. 92
12.20 Waiver of Trial by Jury................................. 92
12.21 Certain Provisions Concerning Existing Subsidiary
Company Credit Agreement Restructuring.............. 92
12.22 Entire Agreement........................................ 93
12.23 Company Actions......................................... 94
ANNEX I Borrowers
ANNEX II Schedule of Commitments
ANNEX III New Lenders
EXHIBIT A-1 Form of Subsidiary Increased Commitment Note
EXHIBIT A-2 Form of Note
EXHIBIT B-1 Form of Notice of Borrowing
EXHIBIT B-2 Form of Subsidiary Letter of Credit Request
EXHIBIT C Form of Subsidiary Collateral Accounts Assignment Agreement
EXHIBIT D Form of Company Guaranty
EXHIBIT E Form of Company Credit Agreement
EXHIBIT F Form of Supplement
EXHIBIT G Form of Transfer Supplement
iii
<PAGE>
SECOND AMENDED AND RESTATED SUBSIDIARY CREDIT AGREEMENT dated as of May
2, 1994 among the corporations listed on Annex I hereto as "Borrowers" (each a
"Borrower" and, collectively, the "Borrowers"), the banking institutions and
other financial institutions signatory hereto (each a "Lender" and,
collectively, the "Lenders"), BANKERS TRUST COMPANY, acting in the manner and to
the extent described in Section 11 (in such capacity, the "Agent"), and FIRST
UNION NATIONAL BANK OF NORTH CAROLINA, acting in the manner and to the extent
described in Section 11 (in such capacity, the "Co-Agent"). Unless otherwise
defined herein, all capitalized terms used herein and defined in Section 10 are
used herein as so defined.
W I T N E S S E T H :
WHEREAS, certain of the Borrowers (among certain other Subsidiaries of
the Company that no longer have any obligations under the Existing Subsidiary
Credit Agreement), the Existing Lenders and the Agent entered into the Existing
Subsidiary Credit Agreement, which amended and restated the Original Subsidiary
Credit Agreement;
WHEREAS, the Company intends to (i) consummate the NME Acquisition,
(ii) refinance the Existing Subordinated Debentures, and (iii) refinance the
Mortgage Notes;
WHEREAS, in connection with the NME Acquisition and the refinancing of
the Existing Subordinated Debentures, the Company and the Lenders desire to
consummate the Existing Company Credit Agreement Restructuring;
WHEREAS, in connection with the Existing Company Credit Agreement
Restructuring and the refinancing of the Mortgage Notes, the Borrowers and the
Lenders desire to amend and restate the Existing Subsidiary Credit Agreement in
order to, among other things: (i) restructure the Existing Loans, Existing
Subsidiary Letters of Credit and Existing Commitments under the Existing
Subsidiary Credit Agreement, (ii) substitute certain of the Existing Lenders
with other financial institutions, and (iii) add certain Subsidiaries of the
Company as Borrowers (together with the transactions described in the foregoing
clause (i), and as more fully described in
<PAGE>
Sections 1.1(a) and 12.21, the "Existing Subsidiary Credit Agreement
Restructuring"); and
WHEREAS, subject to and upon the terms and conditions set forth in the
Master Transfer Supplement, the Existing Lenders will transfer to the Lenders as
of the Closing Date all of the Existing Lenders' respective rights and
obligations under the Existing Credit Agreements, including, without limitation,
the Existing Loans of the Existing Lenders outstanding under the Existing Credit
Agreements, together with each Existing Lender's Commitment under and as defined
in the Existing Subsidiary Credit Agreement (collectively, the "Existing
Commitments");
NOW, THEREFORE, the parties hereto agree that, effective as of the
Closing Date, the Existing Subsidiary Credit Agreement shall be and hereby is
amended and restated in its entirety as follows:
Section 1. AMOUNT AND TERMS OF CREDIT.
1.1 COMMITMENTS. (a) The Existing Lenders made certain revolving loans
to the Borrowers pursuant to the Original Subsidiary Credit Agreement. Under the
Existing Subsidiary Credit Agreement the outstanding principal amount of such
loans as of July 21, 1992 were amended and restated so that, once repaid, such
loans could not, subject to certain exceptions, be reborrowed (the "Existing
Loans"). Subject to and upon the terms and conditions set forth in the Master
Transfer Supplement, the Existing Lenders will sell and assign to the Lenders,
and the Lenders, subject to and upon the terms and conditions set forth herein
and therein, will purchase and assume from the Existing Lenders on a ratable
basis in accordance with their respective Commitments as set forth on Annex II
hereto, all outstanding rights and obligations under the Existing Subsidiary
Credit Agreement of the Existing Lenders, including, without limitation, the
outstanding Existing Loans and each Existing Lender's Existing Commitment; and,
in furtherance thereof the Existing Lenders have agreed to deliver to the Agent
their respective promissory notes (the "Existing Notes") evidencing the Existing
Commitments of the Existing Lenders, duly endorsed in favor of the Agent, for
the benefit of the Lenders. As of the date hereof and prior to giving effect to
any of the Transactions, $46,775,000 of
2
<PAGE>
the Existing Loans are outstanding under the Existing Subsidiary Credit
Agreement. Subject to and upon the terms and conditions herein set forth, as of
the Closing Date, after giving effect to the assignments contemplated by the
Master Transfer Supplement, (a) each Lender's Commitment (as such term is
defined in the Existing Subsidiary Credit Agreement) shall be, and hereby is,
consolidated and amended and restated as a "Commitment" and shall be increased
(or decreased, as the case may be) so that, after giving effect to such
consolidation, amendment, restatement and increase (or decrease), the Commitment
of each Lender will be as set forth on Annex II hereto and (b) the Existing
Loans shall be amended and restated to be Loans on the Closing Date. In
furtherance of the foregoing, the Company shall (i) execute and deliver to the
Agent a promissory note substantially in the form of Exhibit A-1 hereto (the
"Subsidiary Increased Commitment Note") in the principal amount of
$160,964,733.84 payable to the order of the Agent, for the ratable benefit of
the Lenders, and representing the amount by which the Total Commitment exceeds
the Existing Commitments assigned to the Lenders pursuant to the Master Transfer
Supplement, and (ii) execute and deliver to each Lender, in accordance with
Section 1.5, a Note in consolidation, renewal and replacement of the Existing
Notes assigned to the Agent for the benefit of the Lenders pursuant to the
Master Transfer Supplement and the Subsidiary Increased Commitment Note.
(b) Subject to and upon the terms and conditions herein set
forth, each Lender severally agrees, at any time and from time to time on and
after the Closing Date and prior to the Final Maturity Date, to make a loan or
loans (together with the Existing Loans assigned to the Lenders pursuant to the
Master Transfer Supplement, collectively, the "Loans"; and each individually a
"Loan") to each and any Borrower, which Loans to a Borrower (including, without
limitation, such Existing Loans) (i) shall, at the option of such Borrower, be
made as part of one or more Borrowings, each of which Borrowings shall, unless
otherwise specifically provided herein, consist entirely of Base Rate Loans or
Eurodollar Loans, (ii) may be repaid and reborrowed in accordance with the
provisions hereof, (iii) shall not exceed for any Lender at any time outstanding
that aggregate principal amount, which, when added to the sum of (A) such
Lender's Subsidiary Letter of Credit Exposure at such
3
<PAGE>
time and (B) the amount of such Lender's Company Credit Extensions at such time,
equals the Unrestricted Commitment of such Lender at such time, and (iv) shall
not exceed in aggregate principal amount at any time outstanding for all of the
Lenders an amount equal to (A) the Total Commitment at such time less (B) the
sum of (1) the Subsidiary Letter of Credit Outstandings at such time, (2) the
aggregate amount of all the Lenders' Company Credit Extensions at such time and
(3) the Restricted Commitment Amount.
(c) Notwithstanding the foregoing provisions of this Section 1.1
or the provisions of Section 1.3, all Borrowings made prior to the 60th day
following the Closing Date shall consist entirely of Base Rate Loans; PROVIDED
that up to one such Borrowing at any time outstanding may consist of Eurodollar
Loans having a one-month Interest Period, unless there is an outstanding Company
Borrowing consisting of Eurodollar Loans (under and as defined in the Company
Credit Agreement) that was made (or continued or converted) on a different day
than such Borrowing or has a different Interest Period than such Borrowing.
1.2 MINIMUM AMOUNT OF EACH BORROWING. Except as set forth in Section
12.12(c) with respect to minimum amounts of the initial Borrowings hereunder for
Supplemental Borrowers, the aggregate principal amount of each Borrowing of
Loans by one or more Borrowers, together with a Company Borrowing of Revolving
Loans on the same day of each such Borrowing hereunder, shall be not less than
$10,000,000 and, if greater, shall be in an integral multiple of $1,000,000.
Notwithstanding the foregoing limitations, (i) there shall be no minimum
Borrowing amount for Borrowings consisting of Base Rate Loans made to reimburse
drawings under Subsidiary Letters of Credit pursuant to a deemed Borrowing under
Section 2.3, and (ii) the Borrowers may borrow an amount equal to the entire
undrawn portion of the Adjusted Total Commitment. At no time shall the number of
Borrowings outstanding hereunder, together with the number of Company
Borrowings, exceed 10; PROVIDED that for purposes of determining the number of
Borrowings outstanding hereunder and the number of outstanding Company
Borrowings (including, without limitation, for purposes of conversions of Base
Rate Loans and continuations of Eurodollar Loans pursuant to Section 1.6), (i)
all Borrowings of
4
<PAGE>
Loans consisting of Base Rate Loans, together with all Company Loans consisting
of Base Rate Loans (as defined in the Company Credit Agreement) shall,
collectively, be deemed one Borrowing and (ii) all Borrowings of Eurodollar
Loans, together with all Company Borrowings of Eurodollar Loans (as defined in
the Company Credit Agreement), in each case continued, incurred or converted on
the same day and having identical Interest Periods, shall, collectively, be
deemed one Borrowing.
1.3 NOTICE OF BORROWING. (a) Whenever a Borrower (or Borrowers)
desires to make a Borrowing hereunder (other than a conversion or continuation
pursuant to Section 1.6), the Company shall, on behalf of each such Borrower,
give the Agent (i) at least one Business Day's prior written notice (or
telephonic notice confirmed promptly in writing) before the requested date of
the making of any such Borrowing consisting of Base Rate Loans, and (ii) at
least three Business Days' prior written notice (or telephonic notice confirmed
promptly in writing), before the requested date of the making of any such
Borrowing consisting of Eurodollar Loans, each such notice to be given at the
Payment Office prior to 11:00 A.M. (New York, New York time) on the date
specified; PROVIDED that, upon the notice set forth in Section 2.3, a Borrower
may make a Borrowing hereunder consisting of Base Rate Loans, the proceeds of
which shall be used solely to reimburse drawings under Subsidiary Letters of
Credit pursuant to the operation of Section 2.3. Each such notice or
confirmation thereof (each a "Notice of Borrowing") shall be substantially in
the form of Exhibit B-1 hereto, shall be irrevocable and shall specify (A) the
aggregate principal amount of the Loans to be made pursuant to such Borrowing,
(B) the name or names of the Borrower or Borrowers making such Borrowing, (C)
the date of such Borrowing (which shall be a Business Day), and (D) whether such
Borrowing shall consist of Base Rate Loans or Eurodollar Loans and, in the case
of Eurodollar Loans, the initial Interest Period to be applicable thereto.
Notwithstanding anything to the contrary contained herein, the Existing Loans
assigned to the Lenders pursuant to the Master Transfer Supplement and the Loans
made on the Closing Date shall be Base Rate Loans from and including the Closing
Date until such date as the same are converted to Eurodollar Loans in accordance
with Section 1.9 hereof.
5
<PAGE>
(b) Without in any way limiting the Company's obligation to
confirm in writing any telephonic notice given under this Agreement, the Agent
may act without liability upon the basis of telephonic notice believed by the
Agent in good faith to be from the Company prior to receipt of written
confirmation.
(c) The Agent shall promptly and, to the extent practicable, on
the same day, give each Lender written notice (or telephonic notice confirmed in
writing) of each proposed Borrowing, of such Lender's proportionate share
thereof and of the other matters covered by the applicable Notice of Borrowing.
1.4 DISBURSEMENT OF FUNDS. (a) No later than Noon (New York, New
York time) on the date specified in each Notice of Borrowing, each Lender will,
subject to the terms and conditions of this Agreement, make available its PRO
RATA portion of each such Borrowing requested to be made on such date (based on
each Lender's respective Commitment) to the relevant Borrower. All such amounts
shall be made available in Dollars and immediately available funds at the
Payment Office. The Agent will make available to such Borrower or to the Company
on behalf of the relevant Borrower at the Payment Office the aggregate of the
amounts so made available by the Lenders; PROVIDED that, to the extent such Loan
is being made pursuant to Section 2.3, the Agent shall distribute the proceeds
of such Loan directly to the L/C Bank which has honored the Subsidiary Letter of
Credit in respect of which such Loan is being made.
(b) Unless the Agent shall have been notified by any Lender prior
to the date of a Borrowing that such Lender does not intend to make available to
the Agent such Lender's portion of the Borrowing to be made on such date, the
Agent may assume that such Lender has made such amount available to the Agent on
such date and the Agent may make available to the relevant Borrower a
corresponding amount. If such corresponding amount is not in fact made available
to the Agent by such Lender on the date of Borrowing, the Agent shall be
entitled to recover such corresponding amount on demand from such Lender
together with interest at the customary rate set by the Agent for the correction
of errors among banks. If such Lender does not pay such corresponding amount
forthwith upon the Agent's demand therefor, the Agent
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shall promptly notify such Borrower, and such Borrower shall pay such
corresponding amount (to the extent such amount is not collected from such
Lender) to the Agent promptly, and, provided the Agent has made such demand
prior to 11:00 A.M. on a Business Day, no later than the next succeeding
Business Day, together with interest at the rate specified for the Borrowing
which includes such amount paid. Nothing in this subsection shall be deemed to
relieve any Lender from its obligation to fulfill its Commitment hereunder or to
prejudice any rights which the Borrowers may have against any Lender as a result
of any default by such Lender hereunder.
(c) No Lender shall be responsible for any default by any other
Lender in its obligation to make Loans hereunder, and each Lender shall be
obligated to make the Loans provided to be made by it hereunder, regardless of
the failure of any other Lender to fulfill its Commitment hereunder.
1.5 NOTES. (a) Each Borrower's obligation to pay the principal
of, and interest on, all of the Loans made by each Lender shall be evidenced by
a promissory note (collectively, the "Notes") duly executed and delivered by the
Borrowers substantially in the form of Exhibit A-2 hereto with blanks
appropriately completed in conformity herewith.
(b) The Notes issued to each Lender by the Borrowers shall (i) be
payable to the order of such Lender and be dated the Closing Date or the date on
which such Borrower executes a Supplement hereto, (ii) be in a stated principal
amount equal to the Commitment of such Lender to the Borrowers and be payable in
the principal amount of the Loans evidenced thereby, (iii) mature on the Final
Maturity Date and be subject to mandatory prepayment as provided herein, (iv)
bear interest as provided in the appropriate clause of Section 1.8 in respect of
the Base Rate Loans and Eurodollar Loans, as the case may be, evidenced thereby,
and (v) be entitled to the benefits of this Agreement and the other Credit
Documents.
(c) Each Lender will note on its internal records the amount of
each Loan made by it and each payment and each conversion in respect thereof and
will prior to any transfer of its Note endorse on the reverse
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side thereof the outstanding principal amount of Loans evidenced thereby.
Failure to make any such notation shall not affect any Borrower's obligations in
respect of such Loans.
1.6 CONVERSIONS OF BASE RATE LOANS AND CONTINUATIONS OF
EURODOLLAR LOANS. Subject to Section 1.1(c), one or more Borrowers shall have
the option to convert PRO RATA on any Business Day all or a portion equal to at
least $10,000,000 (including in such amount the amount of conversions of Company
Loans converted on the same day pursuant to Section 1.6 of the Company Credit
Agreement) (or if greater, an integral multiple of $1,000,000) of the aggregate
outstanding principal amount of any Base Rate Loan or Base Rate Loans made
pursuant to one or more Borrowings to such Borrowers into one Borrowing of
Eurodollar Loans; PROVIDED that (i) Base Rate Loans may only be converted into
Eurodollar Loans if no Default or Event of Default is then in existence, and
(ii) no conversion pursuant to this Section 1.6 shall result in a greater number
of Borrowings than is permitted under Section 1.2. Each such conversion shall be
effected by the Company, on behalf of each such Borrower, giving the Agent at
the Payment Office prior to 11:00 A.M. (New York , New York time) at least three
Business Days' prior telephonic (confirmed promptly in writing) or written
notice (a "Notice of Conversion") specifying the Base Rate Loans to be so
converted and the Interest Period to be initially applicable thereto. The Agent
shall give each Lender prompt and, to the extent practicable, same day, written
notice (or telephonic notice confirmed in writing) of any such proposed
conversion affecting any of its Loans. Base Rate Loans to a Borrower converted
into Eurodollar Loans pursuant to this Section 1.6 shall continue as Eurodollar
Loans so long as the Company, on behalf of such Borrower, elects, in accordance
with the provisions of Section 1.9, prior to the expiration of any Interest
Period applicable thereto, an Interest Period for such Loans which shall
commence on the date such current Interest Period expires. Notwithstanding the
foregoing or the provisions of Section 1.9, if a Default or Event of Default is
in existence at the time any Interest Period in respect of any Eurodollar Loans
is to expire, such Loans may not be continued as Eurodollar Loans but instead
shall be automatically converted on the last day of such Interest Period into
Base Rate Loans.
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1.7 PRO RATA BORROWINGS. All Borrowings by each Borrower under
this Agreement shall be incurred from the Lenders PRO RATA on the basis of their
respective Commitments applicable to all Borrowers; PROVIDED that all deemed
Borrowings pursuant to Section 2.3 shall be incurred from the Lenders PRO RATA
on the basis of their respective Adjusted Percentages.
1.8 INTEREST. (a) Each Borrower agrees to pay interest in respect
of the unpaid principal amount of each Base Rate Loan incurred by it from the
date of the respective Borrowing (or deemed Borrowing) thereof until repayment
thereof in full in cash at a rate per annum which shall be equal to the sum of
the Base Lending Rate in effect from time to time, plus the Applicable Margin.
(b) Each Borrower agrees to pay interest in respect of the unpaid
principal amount of each Eurodollar Loan incurred by it from the date of the
respective Borrowing until repayment thereof in full in cash at a rate per annum
which shall be equal to the sum of the relevant Eurodollar Rate, plus the
Applicable Margin.
(c) The "Applicable Margin" shall be (i) in the case of Loans
that are Base Rate Loans, .75 of 1%, and (ii) in the case of Loans that are
Eurodollar Loans, 1.75%; PROVIDED that, for so long as (i) no Default or Event
of Default shall have occurred and be continuing, (ii) the Company has public
senior Permitted Subordinated Indebtedness that is rated by Standard & Poor's
Corporation and Moody's Investors Service, Inc. as set forth below, and (iii)
the ratio, as of the last day of the most recently ended fiscal quarter of the
Company, of Core EBITDA to Total Interest Expense of the Company and its
Restricted Subsidiaries, in each case for the four consecutive fiscal quarters
of the Company ending on such day, exceeds the applicable ratio set forth below,
then, upon written notice thereof from the Company to the Agent, the Applicable
Margins for the Loans set forth in the preceding proviso shall be reduced,
effective as of the date of receipt of such notice by the Agent, from the
percentages specified in such proviso by the number of basis points (with one
basis point being equal to one-one hundredth of one percent) set forth below for
such ratings and ratio:
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(1) If such ratio is greater than 4.0:1.0 and such Permitted
Subordinated Indebtedness is rated at least "BBB-" by Standard
& Poor's Corporation and at least Baa3 by Moody's Investors
Service, Inc., then the Applicable Margins for Base Rate Loans
and Eurodollar Loans shall each be reduced by 25 basis points;
or
(2) If such ratio is greater than 4.5:1.0 and such Permitted
Subordinated Indebtedness is rated at least "BBB" by Standard &
Poor's Corporation and at least Baa2 by Moody's Investors
Service, Inc., then the Applicable Margins for Base Rate Loans
and Eurodollar Loans shall each be reduced by 50 basis points.
(d) Notwithstanding anything to the contrary contained herein,
overdue principal and, to the extent permitted by law, overdue interest in
respect of each Loan and all other overdue amounts owing hereunder shall bear
interest at a rate per annum equal to the greater of (i) the sum of 2.75% per
annum and the Base Lending Rate in effect from time to time, and (ii) the sum
of the interest rate otherwise applicable to such Loan from time to time and
2.00% per annum.
(e) Interest shall accrue from and including the date of any
Borrowing to but excluding the date of any repayment thereof and shall be
payable (i) in respect of each Base Rate Loan outstanding at any time during a
calendar month, monthly in arrears on the last Business Day of each month,
through and including the last day of such month, (ii) in respect of each
Eurodollar Loan, on the last day of each Interest Period applicable to such
Loan and, in the case of an Interest Period of six months, on the date
occurring three months after the first day of such Interest Period, and (iii)
in respect of all Loans, on any prepayment or conversion thereof (on the
principal amount prepaid or converted), at maturity (whether by acceleration
or otherwise) and, after maturity, on demand.
(f) The Agent, upon determining the interest rate for any
Borrowing of Eurodollar Loans for any Interest Period, shall promptly notify
the relevant
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Borrowers, through the Company, and the Lenders thereof. The Agent shall
promptly notify the Borrowers, through the Company, and the Lenders, of any
change in the Base Lending Rate and the effective date thereof. Failure of
the Agent to provide the Company, the Borrowers or the Lenders with any notice
described in this clause (f) shall not affect any obligations of the Company,
the Borrowers or the Lenders under this Agreement nor will such failure result
in any liability on the part of the Agent to the Company, the Borrowers or any
Lender.
1.9 INTEREST PERIODS. At the time it gives any Notice of
Borrowing or Notice of Conversion in respect of the making of, or conversion
into, a Borrowing (which Borrowing may be part of a Company Borrowing) of
Eurodollar Loans (in the case of the initial Interest Period applicable
thereto) or on the third Business Day prior to the expiration of an Interest
Period applicable to a Borrowing of Eurodollar Loans (in the case of
subsequent Interest Periods), the Company, on behalf of each and any Borrower,
shall have the right to elect by giving the Agent written notice (or
telephonic notice confirmed promptly in writing) thereof, the interest period
(each, an "Interest Period") to be applicable to such Borrowing, which
Interest Period shall, at the option of the Company, on behalf of such
Borrowers, be a one, two, three or six month period; PROVIDED that: (i) the
initial Interest Period for any Borrowing of Eurodollar Loans shall commence
on the date of such Borrowing (including the date of any conversion from a
Borrowing of Base Rate Loans) and each Interest Period occurring thereafter in
respect of such Borrowing shall commence on the day on which the next
preceding Interest Period expires; (ii) if any Interest Period relating to a
Borrowing consisting of Eurodollar Loans begins on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period, such Interest Period shall end on the last Business Day of
such calendar month, (iii) if any Interest Period would otherwise expire on a
day which is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; PROVIDED that if any Interest Period for a
Eurodollar Loan would otherwise expire on a day which is not a Business Day
but is a day of the month after which no further Business Day occurs in such
month, such Interest Period shall expire on the next preceding Business Day;
(iv) no Interest Period in respect of any Loan shall
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extend beyond the Final Maturity Date; (v) no Interest Period in respect of
any Loan shall extend beyond any date upon which the Total Commitment is
reduced pursuant to Section 3.2(b) unless the aggregate principal amount of
Loans which are Base Rate Loans or which have Interest Periods which will
expire on or before such date, plus the unutilized Total Commitment after
giving effect to the incurrence of such Loan, is equal to or in excess of, the
amount of the aggregate prepayment of Loans required to be made on such date;
and (vi) the Interest Period for a Eurodollar Loan which is converted into a
Base Rate Loan pursuant to Section 1.10(b) shall commence on the date of such
conversion and shall expire on the date on which the Interest Periods for the
Loans of the other Lenders which were not converted expire. If upon the
expiration of any Interest Period, the Company, on behalf of a Borrower, has
failed to elect a new Interest Period to be applicable to the respective
Borrowing of Eurodollar Loans as provided above, such Borrower shall be deemed
to have elected to convert such Borrowing into a Borrowing of Base Rate Loans
effective as of the expiration date of such current Interest Period.
1.10 INCREASED COST, ILLEGALITY, ETC. (a) In the event
that the Agent, in the case of clause (i) below, or any Lender, in the case of
clauses (ii) and (iii) below, shall have reasonably determined (which
determination shall, absent manifest error, be final and conclusive and
binding upon all parties):
(i) on any date for determining the Eurodollar Rate for any
Interest Period, that by reason of any changes arising after the date of this
Agreement affecting the interbank Eurodollar market adequate and fair means do
not exist for ascertaining the applicable interest rate on the basis provided
for in the definition of Eurodollar Rate; or
(ii) at any time, that the Eurodollar Rate shall not
represent the effective pricing to such Lender for funding or maintaining the
affected Eurodollar Loan, or such Lender shall incur increased costs or
reductions in the amounts received or receivable hereunder in respect thereof
that are considered by such Lender in its sole discretion to be material, in
either such case because of (x) any change since the date of this Agreement in
any applicable law or governmental rule,
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regulation, guideline or order (or any interpretation thereof by any
governmental agency or authority and including the introduction of any new law
or governmental rule, regulation, guideline or order) (such as, for example,
but not limited to, a change in official reserve requirements, but, in all
events, excluding reserves to the extent included in the computation of the
Eurodollar Rate), whether or not having the force of law and whether or not
failure to comply therewith would be unlawful, and/or (y) other circumstances
arising after the date of this Agreement affecting such Lender or the
interbank Eurodollar market or the position of such Lender in such market; or
(iii) at any time, that the making or continuance of any
Eurodollar Loan has become unlawful by compliance by such Lender in good faith
with any law, governmental rule, regulation, guideline or order or request of
an applicable governmental authority enacted, adopted or made after the date
of this Agreement (whether or not having the force of law), or has become
impracticable as a result of a contingency occurring after the date of this
Agreement which materially and adversely affects the interbank Eurodollar
market;
then, and in any such event, the Agent or such Lender, as the case may be,
shall on or promptly after the date of any determination of such event, give
notice (by telephone confirmed in writing) to the Borrowers, through the
Company, and, in the case of a Lender, to the Agent of such determination
(which notice the Agent shall promptly transmit to each of the other Lenders).
Thereafter (x) in the case of clause (i) above, Eurodollar Loans shall no
longer be available until such time as the Agent notifies the Borrowers,
through the Company, and the Lenders that the circumstances giving rise to
such notice by the Agent no longer exist, and any Notice of Borrowing or
Notice of Conversion given by any Borrower or by the Company on behalf of any
Borrower with respect to Eurodollar Loans which have not yet been incurred
shall be deemed rescinded by such Borrower, (y) in the case of clause (ii)
above, the Borrowers, without duplication of any amounts payable under Section
1.11 and 2.6 or the Company Credit Agreement, shall pay to such Lender,
promptly after a written demand therefor, such additional amounts (in the form
of an increased rate of, or a different method of calculating, interest or
otherwise as
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such Lender in its sole discretion shall determine) as shall be required to
compensate such Lender for such increased costs or reduction in amounts
receivable hereunder (a written notice as to additional amounts owed such
Lender, setting forth in reasonable detail the conditions giving rise thereto
and the calculation of such amounts (which calculations shall be made in the
same manner as for similar outstanding loans made by such Lender of a similar
type and amount as those set forth herein to Persons of a similar
creditworthiness as the Company), submitted to the Borrowers, through the
Company, by such Lender shall, absent manifest error, be final and conclusive
and binding upon all of the parties hereto) and (z) in the case of clause
(iii) above take one of the actions specified in Section 1.10(b) as promptly
as possible. The failure of any Lender to give any notice as provided in
this Section shall not release or diminish any of the Borrowers' obligations
to pay any additional amounts to such Lender pursuant to clause (y) above.
(b) At any time that any Eurodollar Loans are affected by the
circumstances described in Section 1.10(a), the Company, on behalf of each and
any Borrower, may (and in the case of a Eurodollar Loan affected pursuant to
Section 1.10(a)(iii) shall) either (x) if the affected Eurodollar Loan is then
being made pursuant to a Borrowing or a conversion, cancel, with respect to
such affected Lender, said Borrowing or conversion by giving the Agent
telephonic notice (confirmed in writing) thereof on the same date that the
Company, for the benefit of such Borrower, was notified by the Lender or the
Agent, as the case may be, pursuant to Section 1.10(a) and such Lender shall
make a Base Rate Loan to such Borrower as part of such requested Borrowing, or
(y) if the affected Eurodollar Loan is then outstanding, upon at least 3
Business Days' written notice to the Agent, or, in the case of a Eurodollar
Loan affected pursuant to Section 1.10(a)(iii) which may no longer be lawfully
maintained, immediately, require the affected Lender to convert each such
Eurodollar Loan into a Base Rate Loan; PROVIDED that if more than one Lender
is affected at any time, then all affected Lenders must be treated the same
pursuant to this Section 1.10(b).
(c) In the event that the Agent determines at any time
following its giving of notice based on the conditions described in clause
(a)(i) above that none of
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such conditions exist, the Agent shall promptly give notice thereof to the
Borrowers, through the Company, whereupon the Borrowers' rights to request
Eurodollar Loans from the Lenders and the Lenders' obligations to make
Eurodollar Loans shall be restored.
(d) In the event that a Lender determines at any time
following its giving of a notice based on the conditions described in clause
(a)(iii) above that none of such conditions exist, such Lender shall promptly
give notice thereof to the Agent and the Borrowers, through the Company,
whereupon the Company's and the Borrowers' rights to request Eurodollar Loans
from such Lender and such Lender's obligation to make Eurodollar Loans shall
be restored.
1.11 CAPITAL ADEQUACY. If any Lender determines that any
applicable law, rule, regulation, mandatory guideline, request or directive,
whether or not having the force of law, from an applicable regulatory
authority concerning capital adequacy or reserves (excluding reserves to the
extent included in the computation of the Eurodollar Rate), or any change
therein or in interpretation or administration thereof by any governmental
authority, central bank or comparable agency has or will have the effect of
reducing the rate of return on the capital or assets of such Lender (or any
corporation controlling such Lender) based on the existence of such Lender's
Commitment hereunder (including, without limitation, its outstanding Loans) or
its obligations hereunder, in an amount considered by such Lender to be
material in its sole discretion, it will notify the Borrowers, thereof,
through the Company, on or promptly after the date of such determination. The
relevant Borrower, without duplication of any amounts payable under Sections
1.10 and 2.6 or the Company Credit Agreement, will pay to such Lender promptly
after a written demand therefor made upon the Company or such Borrower (which
demand may be contained in the notice referred to above) such additional
amounts as are necessary to compensate such Lender for the reduction to such
rate of return as a result of the event described in the first sentence of
this Section 1.11. In determining such amount, such Lender will act
reasonably and in good faith and will use averaging and attribution methods
which are reasonable, and such Lender's determination of compensation shall be
conclusive, absent manifest error, if made in accordance with
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this provision. Each notice delivered pursuant to this Section 1.11 shall set
forth in reasonable detail the conditions giving rise thereto, and each demand
delivered pursuant to this Section 1.11 shall set forth the calculations of
the amounts demanded thereby (which calculations shall be made in the same
manner as for similar outstanding loans made by such Lender of a similar type
and amount as those set forth herein to Persons of a similar creditworthiness
as the Company). The failure of any Lender to give any notice or demand as
provided in this Section 1.11 shall not release or diminish any of the
Borrowers' obligations to pay any increased costs to such Lender pursuant to
this Section.
1.12 FUNDING LOSSES. Each Borrower shall compensate each
Lender, upon its written request (which request shall set forth in reasonable
detail the basis for requesting such amounts and which request shall, absent
manifest error, be final, conclusive and binding upon all the parties hereto),
for all losses, expenses and liabilities (including, without limitation, any
interest paid by such Lender to lenders of funds borrowed by it to make or
carry its Eurodollar Loans to the extent not reasonably able to be recovered
by such Lender in its sole discretion in connection with the re-employment of
such funds) which such Lender may sustain: (i) if for any reason (other than
a default by such Lender) a Borrowing of, or conversion from or into,
Eurodollar Loans to such Borrower does not occur on a date specified therefor
in a Notice of Borrowing or a Notice of Conversion (whether or not withdrawn);
(ii) if any repayment (including, without limitation, payment after
acceleration) or conversion of any of its Eurodollar Loans to such Borrower
occurs on a date which is not the last day of an Interest Period applicable
thereto; (iii) if any prepayment of any of its Eurodollar Loans to such
Borrower is not made on any date specified in a notice of prepayment given by
such Borrower or the Company on behalf of such Borrower; or (iv) as a
consequence of (A) any default by such Borrower to repay its Loans when
required by the terms of this Agreement or a Note of such Lender or (B) an
election made pursuant to Section 1.10(b).
1.13 SHARING OF PAYMENTS, ETC. If any Lender shall obtain
any payment or reduction (including, without limitation, any amounts received
as adequate
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protection of a deposit treated as cash collateral under the Bankruptcy Code)
of any Obligation hereunder (whether voluntary, involuntary, through the
exercise of any right of set-off, or otherwise) in excess of its ratable share
of payments or reductions on account of such Obligations obtained by all the
Lenders, such Lender shall forthwith (i) notify each of the other Lenders and
the Agent of such receipt, and (ii) purchase from the other Lenders such
assignments in the affected Obligations as shall be necessary to cause such
purchasing Lender to share the excess payment or reduction, net of costs
incurred in connection therewith, ratably with each of them; PROVIDED that
if all or any portion of such excess payment or reduction is thereafter
recovered from such purchasing Lender or additional costs are incurred, the
purchase of such assignment shall be rescinded and the purchase price thereof
restored to the extent of such recovery or such additional costs, but without
interest. Each Borrower agrees that any Lender so purchasing an assignment
from another Lender pursuant to this Section 1.13, may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off) with respect to such assignment as fully as if such Lender were the
direct creditor of such Borrower in the amount of such assignment.
1.14 CHANGE OF LENDING OFFICE. Each Lender agrees that,
upon the occurrence of any event giving rise to the operation of Section
1.10(a)(ii) or (iii), 1.11, 4.4 or 12.1 (to the extent Section 12.1 requires
the payment of any Taxes) with respect to such Lender, it will, if requested
by the Company on behalf of the Borrowers, use reasonable efforts (subject to
overall policy considerations of such Lender) to designate another lending
office for any Loans affected by such event, provided that such designation is
made on such terms that such Lender suffers no economic, legal or regulatory
disadvantage, with the object of avoiding the consequence of the event giving
rise to the operation of any such Section; PROVIDED that if such
disadvantage is not material (to be determined by such Lender in its sole
discretion), such Lender shall designate another lending office if the Company
and/or the Borrowers shall fully compensate such Lender for such disadvantage.
Nothing in this Section 1.14 shall affect or postpone any of the obligations
of any Borrower or the right of any Lender provided
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in Section 1.10, 1.11 or 4.4 or 12.1 (to the extent such Section 12.1 requires
the payment of any Taxes).
1.15 REPLACEMENT LENDERS. If (a) the obligation of any
Lender to make Eurodollar Loans has been suspended pursuant to Section 1.10 as
a result of the occurrence of any event or circumstance described therein
affecting Lenders having less than 25% of the Total Commitment, (b) any Lender
has demanded compensation under Section 1.10, 1.11, 2.6 or any Taxes referred
to in Section 4.4 or 12.1 have been imposed or any Lender has sought
compensation thereunder, and the amount of such compensation or Taxes is
considered by the Company, in its sole discretion, to be material, or (c) if
any Lender becomes a Defaulting Lender, the Company, on behalf of the
Borrowers, may, if no Default or Event of Default then exists, with the
assistance of the Agent, seek a bank or banks or other financial institutions
(which may be one or more of the Lenders or other banks or financial
institutions approved by the Agent (such approval not to be unreasonably
withheld or delayed), but none of which shall constitute a Defaulting Lender
at the time of such replacement (each, a "Replacement Lender")), to purchase
all of the Notes, Loans and Subsidiary Letter of Credit Exposure, and assume
the Commitment and other obligations, of such Lender (the "Replaced Lender");
PROVIDED that each such Replacement Lender shall assume a pro rata portion
of all of the obligations and rights of the Replaced Lender under the Company
Credit Agreement; and PROVIDED FURTHER that (i) at the time of any
replacement pursuant to this Section 1.15, each Replacement Lender shall
execute and deliver a Transfer Supplement pursuant to Section 12.4(e) (and
with all fees payable pursuant to Section 12.4(f) of the Company Credit
Agreement to be paid by the Company) pursuant to which each Replacement Lender
shall acquire its portion of the Commitment, outstanding Loans and
participations in Subsidiary Letters of Credit of the Replaced Lender and, in
connection therewith, shall pay to (A) the Replaced Lender in respect thereof
an amount equal to the sum of (1) the outstanding principal of, and accrued
and unpaid interest on, all outstanding Loans of the Replaced Lender acquired
by such Replacement Lender, (2) an amount equal to such Replacement Lender's
portion of all drawings in respect of any Subsidiary Letter of Credit that
have been funded by (and not reimbursed to) such Replaced Lender pursuant to
Section 2.4, together with all accrued and
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unpaid interest with respect thereto, and (3) such Replacement Lender's
portion of all accrued, but theretofore unpaid, fees and commissions owing to
the Replaced Lender pursuant to Section 2.5 hereof, and (B) the Agent (for
distribution to the Lenders entitled to the same) an amount equal to such
Replacement Lender's portion of such Replaced Lender's Adjusted Percentage
(for this purpose, determined as if the adjustment described in clause (y) of
the immediately succeeding sentence had been made with respect to such
Replaced Lender) of any drawing in respect of any Subsidiary Letter of Credit
(which at such time remains unpaid) to the extent such amount was not
theretofore funded by such Replaced Lender; and (ii) all obligations of the
Borrowers due and owing to the Replaced Lender at such time (other than those
specifically described in clause (i) above in respect of which the purchase
price has been, or is concurrently being, paid) shall be paid in full by the
Company to such Replaced Lender concurrently with such replacement. Upon the
execution of the respective Transfer Supplements, the payment of amounts
referred to in clauses (i) and (ii) above and Section 1.15 of the Company
Credit Agreement and, if so requested by a Replacement Lender, delivery to
such Replacement Lender of the appropriate Note or Notes and Revolving Note or
Revolving Notes executed by the appropriate Borrowers and the Company, as
applicable, (x) each such Replacement Lender shall become a Lender hereunder
and the Replaced Lender shall cease to constitute a Lender hereunder, except
with respect to indemnification provisions under this Agreement, which shall
survive as to such Replaced Lender and (y) the Adjusted Percentage of the
Lenders shall be automatically adjusted at such time to give effect to the
replacement, if any, of a Defaulting Lender with one or more Non-Defaulting
Lenders. Without duplication of any amounts paid to a Lender pursuant to
Section 1.15 of the Company Credit Agreement, each Borrower jointly and
severally agrees, except in the case of the replacement of a Defaulting
Lender, to pay all reasonable costs and expenses of any such Replaced Lender
which sells its Notes, Loans, Subsidiary Letter of Credit Exposure and
Commitment pursuant to this Section 1.15.
1.16 MATURITY OF BORROWINGS. Notwithstanding any other
provision of this Agreement to the contrary (i) all Loans will mature and
become due and payable on the Final Maturity Date, and (ii) all Loans will
mature
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and become due and payable on the Interim Maturity Date with respect to such
Loan. Provided that no Event of Default shall have occurred and be continuing
on any Interim Maturity Date, the Lenders shall be deemed to have made Loans
("Rollover Loans") and the Borrowers shall be deemed to have made a Borrowing
of Loans (each such Borrowing, a "Rollover Borrowing") of the same principal
amount of Loans maturing on such Interim Maturity Date, and the proceeds of
such Rollover Loans shall be applied to the repayment of such Loans maturing
on such Interim Maturity Date. Subject to Sections 3.2 and 4.2 hereof, no
such deemed repayment of Loans shall require any cash payment by the Borrowers
nor shall any such Rollover Borrowing require the actual delivery of any funds
by any Lender, or compliance with Section 1.1(b), 1.2, 1.3 (unless such
Borrower desires that such Rollover Borrowing consist of Eurodollar Loans) or
1.4.
Section 2. SUBSIDIARY LETTER OF CREDIT SUBFACILITY.
2.1 SUBSIDIARY LETTERS OF CREDIT. (a) Subject to and upon
the terms and conditions, and in reliance upon the representations and
warranties of the Borrowers, set forth in this Agreement, in addition to
requesting that the Lenders make Loans pursuant to Section 1, each Borrower,
or the Company on behalf of a Borrower, may request, in accordance with the
provisions of this Section 2.1 and Section 2.2, that, on and after the Closing
Date and prior to the termination or expiration of the Total Commitment, any
L/C Bank issue one or more Subsidiary Letters of Credit for the account of
such Borrower; PROVIDED that any Subsidiary Letter of Credit issued by an
L/C Bank shall be in a form customarily used by such L/C Bank or in any other
form requested by such Borrower or the Company on behalf of such Borrower and
approved by such L/C Bank; PROVIDED FURTHER, that (i) no Subsidiary Letter
of Credit shall have an expiration date that is later than 12 (or, if approved
by the L/C Bank and Agent, 18) months after the date of issuance thereof;
PROVIDED that a Subsidiary Letter of Credit may provide that it is
extendible for additional consecutive one year periods (or, with the approval
of the L/C Bank and the Agent, other consecutive periods having a duration of
18 months or less); (ii) in no event shall any Subsidiary Letter of Credit
issued by an L/C Bank have an expiration date (or be extended or extendible so
that it will ex-
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pire) later than the Final Maturity Date; (iii) each Subsidiary
Letter of Credit issued by an L/C Bank shall have a stated amount of at least
$500,000; (iv) neither a Borrower nor the Company, on behalf of a Borrower,
shall request that any L/C Bank issue any Subsidiary Letter of Credit if,
after giving effect to such issuance, the aggregate Subsidiary Letter of
Credit Outstandings PLUS the then outstanding aggregate principal amount of
Loans made by Non-Defaulting Lenders PLUS the then aggregate outstanding
amount of Company Credit Extensions of the Non-Defaulting Lenders would exceed
the total of the Adjusted Total Commitment then in effect (after giving effect
to any reductions or increases to the Adjusted Total Commitment on such date);
and (v) neither a Borrower nor the Company, on behalf of a Borrower, shall
request the issuance of any Subsidiary Letter of Credit if, after giving
effect to such issuance, the aggregate Subsidiary Letter of Credit
Outstandings PLUS the aggregate Letter of Credit Outstandings would exceed
$275,000,000; and, PROVIDED FURTHER, that, subject to and upon the terms
and conditions set forth herein, for all purposes of this Agreement and the
other Credit Documents, the Existing Subsidiary Letters of Credit previously
issued by BTCo shall be deemed to have been issued by BTCo, as the L/C Bank
therefor, pursuant to this Agreement on the Closing Date.
(b) Each Subsidiary Letter of Credit may provide that the
L/C Bank may (but shall not be required to) pay the beneficiary thereof upon
the occurrence of an Event of Default and the acceleration of the maturity of
the Loans or, if payment is not then due to the beneficiary, provide for the
deposit of funds in an account to secure payment to the beneficiary and that
any funds so deposited shall be paid to the beneficiary of the Subsidiary
Letter of Credit if conditions to such payment are satisfied or returned to
the L/C Bank for distribution to the Lenders (or, if all Obligations shall
have been indefeasibly paid in full, to the applicable Borrower) if no payment
to the beneficiary has been made and the final date available for drawings
under the Subsidiary Letter of Credit has passed. Each payment or deposit of
funds as provided in this paragraph shall be treated for all purposes of this
Agreement as a drawing duly honored by the L/C Bank under the related
Subsidiary Letter of Credit.
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2.2 NOTICE OF ISSUANCE; AGREEMENT TO ISSUE. (a) Whenever a
Borrower desires the issuance of a Subsidiary Letter of Credit, such Borrower,
or the Company on behalf of such Borrower, shall deliver to the Agent (with a
copy to its Letter of Credit Department) and the desired L/C Bank a written
notice no later than 11:00 A.M. (New York, New York time) at least five
Business Days, or such shorter period (which shall not be less than two
Business Days) as may be agreed to by the applicable L/C Bank in any
particular instance, in advance of the proposed date of issuance. Each such
notice shall be substantially in the form of Exhibit B-2 (each a "Subsidiary
Letter of Credit Request"), shall specify (i) the proposed date of issuance
(which shall be a business day under the laws of the jurisdiction of the
applicable L/C Bank), (ii) the face amount of the Subsidiary Letter of Credit,
(iii) the expiration date of the Subsidiary Letter of Credit, and (iv) the
name and address of the beneficiary with respect to such Subsidiary Letter of
Credit, and shall be accompanied by a precise description of the documents and
a verbatim text of any certificate to be presented by the beneficiary of such
Subsidiary Letter of Credit, which if presented by such beneficiary prior to
the expiration date of the Subsidiary Letter of Credit, would require the L/C
Bank to make payment under the Subsidiary Letter of Credit; PROVIDED that
the applicable L/C Bank may require changes in any such documents and
certificates in accordance with its customary letter of credit practices; and,
PROVIDED FURTHER, that no Subsidiary Letter of Credit shall require
payment against a conforming draft to be made thereunder on the same Business
Day that such draft is presented if such presentation is made after 11:00 A.M.
(New York, New York time); PROVIDED FURTHER that the Subsidiary Letters of
Credit identified with an asterisk on Schedule 8.7(e) to the Company Credit
Agreement may require payment on the same day a conforming draft is presented
if such presentment is made prior to 1:00 p.m. In determining whether to pay
under any Subsidiary Letter of Credit, each L/C Bank shall be responsible only
to determine that the documents and certificates required to be delivered
under its Subsidiary Letter of Credit have been delivered and that they comply
on their face with the requirements of its Subsidiary Letter of Credit.
Promptly after receipt of a Subsidiary Letter of Credit Request, the Agent
shall deliver a copy thereof to each Lender. Each L/C Bank shall furnish to
the Agent a specimen copy of each Sub-
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sidiary Letter of Credit issued by such L/C Bank pursuant to this Agreement
promptly upon the issuance thereof; and the Agent shall furnish copies thereof
to a Lender promptly upon such Lender's request therefor, together with a notice
of such Lender's respective participation therein, determined in accordance with
Section 2.2(b).
(b) Each L/C Bank receiving a Subsidiary Letter of Credit
Request from a Borrower or from the Company on behalf of a Borrower agrees,
subject to the terms and conditions set forth in this Agreement, and so long
as it shall not have received any notice from any Lender pursuant to the
immediately succeeding sentence, to issue for the account of such Borrower, on
the date specified in such Subsidiary Letter of Credit Request, a Subsidiary
Letter of Credit in a face amount equal to the face amount requested in such
Subsidiary Letter of Credit Request. Immediately upon the issuance of each
Subsidiary Letter of Credit, each Lender shall be deemed to, and hereby agrees
to, have irrevocably purchased from the applicable L/C Bank a participation in
such Subsidiary Letter of Credit and any drawing thereunder in an amount equal
to the product of such Lender's Adjusted Percentage and the maximum amount
which is or at any time may become available to be drawn thereunder; PROVIDED
that no Lender shall have delivered a notice to such L/C Bank prior to the
issuance of such Subsidiary Letter of Credit (with a copy to the Agent which
shall be promptly forwarded to the other Lenders) to the effect that one or
more of the conditions set forth in Section 5.1 or 5.2, as applicable, are not
then satisfied or that the issuance of such Subsidiary Letter of Credit or
purchase of a participation therein by such Lender would violate Section
2.6(b). Upon any change in the Commitments of the Lenders pursuant to Section
1.15 or 12.4 or in the Adjusted Percentages of the Lenders as a result of the
occurrence of a Lender Default, it is hereby agreed that, with respect to all
outstanding Subsidiary Letters of Credit and drawings thereunder which are
unpaid, there shall be an automatic adjustment to the participations in the
Subsidiary Letters of Credit pursuant to this Section 2.2(b) to reflect the
new Adjusted Percentages of the Lenders.
2.3 PAYMENT OF AMOUNTS DRAWN UNDER SUBSIDIARY LETTERS OF
CREDIT. (a) In the event of any request for payment under any Subsidiary
Letter of Credit by the beneficiary thereof, the L/C Bank shall promptly
notify
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the applicable Borrower (through the Company), the Agent and the Lenders
required to participate therein in accordance with Section 2.2(b) and, in any
event, unless otherwise expressly provided in such Subsidiary Letter of Credit
or the terms of such Subsidiary Letter of Credit require the honoring of a
drawing thereunder on the date of, or the Business Day after, such drawing, no
later than 10:00 A.M. (New York, New York time) on the Business Day
immediately preceding the date on which such L/C Bank intends to honor such
drawing; and the applicable Borrower shall reimburse such L/C Bank on the day
on which such drawing is honored in same day funds in an amount equal to the
amount of such drawing; PROVIDED that, unless the applicable Borrower or the
Company, on behalf of such Borrower, shall have notified the Agent and such
L/C Bank prior to 11:00 A.M. (New York, New York time) on the Business Day
immediately prior to the date on which such drawing is honored that such
Borrower or the Company, on behalf of such Borrower, intends to reimburse such
L/C Bank for the amount of such drawing with funds other than the proceeds of
Loans, (i) such Borrower shall be deemed to have timely given a Notice of
Borrowing to the Agent requesting a Borrowing of Loans which are Base Rate
Loans on the date on which such drawing is honored in an amount equal to the
amount of such drawing, and (ii) subject to Section 1.1, each Lender shall, by
1:00 P.M. (New York, New York time) on the date of the honoring of such
drawing, make a Loan to such Borrower which is a Base Rate Loan in an amount
equal to the product of the amount of such drawing and such Lender's Adjusted
Percentage, the proceeds of which shall be applied directly by the Agent to
reimburse such L/C Bank for the amount of such drawing (PROVIDED that,
solely for purposes of such Borrowing, the conditions precedent set forth in
Section 5.2 shall not be applicable); PROVIDED FURTHER that, if for any
reason, proceeds of Loans are not received by such L/C Bank on such date in an
amount equal to the amount of such drawing, such Borrower shall reimburse such
L/C Bank, on the Business Day immediately following the date of such drawing,
in an amount in Dollars and immediately available funds equal to the excess of
the amount of such drawing over the amount of such Loans, if any, which are so
received by the Agent from the Lenders, plus accrued interest on such amount
at the applicable rate of interest for Base Rate Loans set forth in Section
1.8. If the applicable Borrower or the Company, on behalf of such Borrower,
notifies the Agent and such L/C Bank prior to
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11:00 A.M. (New York, New York time) on the Business Day immediately prior to
the date on which such drawing is honored that such Borrower or the Company,
on behalf of such Borrower, intends to reimburse such L/C Bank for the amount
of such drawing with funds other than the proceeds of Loans, such Borrower or
the Company, on behalf of such Borrower, shall reimburse such L/C Bank on the
day on which such drawing is honored in an amount in same day funds equal to
the amount of such drawing. Notwithstanding anything contained in this
Agreement to the contrary, to the extent such Borrower or the Company in
accordance with the preceding provisions of this Section 2.3 or an Event of
Default exists at the time of the honoring of a drawing under a Subsidiary
Letter of Credit does not reimburse a L/C Bank, amounts, if any, then held by
the Agent in the Subsidiary L/C Cash Collateral Account may be applied to
reimburse the applicable L/C Bank for the honoring of such drawing, and the
aggregate amount of Revolving Loans, if any, required to be made by the
Lenders pursuant to this Section 2.3 shall be reduced by a corresponding
amount.
(b) Any payments owed by a Borrower pursuant to this
Section 2.3 which are made later than 11:00 A.M. (New York, New York time)
shall be deemed to have been made on the next succeeding Business Day.
Whenever any payment to be made under this Section 2.3 shall be stated to be
due on a day which is not a Business Day, the due date thereof shall be
extended to the next succeeding Business Day.
(c) Each Lender shall indemnify and hold harmless the Agent
and each L/C Bank from and against any and all losses, liabilities (including
liabilities for penalties), actions, suits, judgments, demands, costs and
expenses (including, without limitation, attorney's fees and expenses)
resulting from any failure on the part of such Lender to provide, on the same
day of any drawing under a Subsidiary Letter of Credit, the Agent with such
Lender's Adjusted Percentage of the amount of any drawing under such
Subsidiary Letter of Credit in accordance with the provisions of Section
2.3(a).
2.4 PAYMENT BY LENDERS. In the event that a Borrower shall
fail to reimburse an L/C Bank as provided in Section 2.3 by borrowing Loans or
otherwise for all or any portion, as the case may be, of any drawing
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honored by such L/C Bank under a Subsidiary Letter of Credit issued by it,
such L/C Bank shall promptly notify each Lender of the unreimbursed amount of
such drawing and the amount of such Lender's Adjusted Percentage therein.
Each Lender shall make available to such L/C Bank an amount equal to its
Adjusted Percentage of such unreimbursed payment in Dollars and immediately
available funds, at the office of such L/C Bank specified in such notice, not
later than 1:00 P.M. (New York City time) on the business day (under the laws
of the jurisdiction of such L/C Bank and a Business Day) after the date
notified by such L/C Bank. In the event that any such Lender fails to make
available to such L/C Bank the amount of such Lender's Adjusted Percentage of
such unreimbursed payment as provided in this Section 2.4, such L/C Bank shall
be entitled to recover such amount on demand from such Lender together with
interest at the interbank compensation rate set by the Agent for three
Business Days and thereafter at the Base Rate. Nothing in Section 2.3 or this
Section 2.4 shall be deemed to prejudice the right of any Lender to recover
from such L/C Bank any amounts made available by such Lender pursuant to
Section 2.3 or this Section 2.4 in the event that the payment with respect to
a Subsidiary Letter of Credit by such L/C Bank in respect of which payment was
made by such Lender constituted gross negligence or willful misconduct on the
part of such L/C Bank. Each L/C Bank shall distribute to each other Lender
which has paid all amounts payable by it under this Section 2.4 with respect
to any Subsidiary Letter of Credit issued by such L/C Bank such other Lender's
share (based on the proportionate aggregate amount funded by such Lender to
the aggregate amount funded by all Lenders) of all payments received by such
L/C Bank from the applicable Borrower or the Company, on behalf of such
Borrower, in reimbursement of drawings honored by such L/C Bank under such
Subsidiary Letter of Credit when such payments are received (including
interest payable under Section 1.8 with respect to the period commencing on
the date of the funding of such participation).
2.5 COMPENSATION. (a) Each Borrower agrees to pay to the
Agent for distribution to each Non-Defaulting Lender in respect of all
Subsidiary Letters of Credit outstanding for the account of such Borrower such
Non-Defaulting Lender's Adjusted Percentage of (i) a commission equal to 1.75%
per annum of the difference of the
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daily average amount available to be drawn from time to time under such
outstanding Subsidiary Letters of Credit minus the average daily cash balance
on deposit from time to time in the Subsidiary L/C Cash Collateral Account
pursuant to Section 4.2(a)(i), and (ii) a commission equal to 0.5 of 1% per
annum on the average daily cash balance on deposit from time to time in the
Subsidiary L/C Cash Collateral Account pursuant to Section 4.2(a)(i), in each
case payable monthly in arrears on the last Business Day of each month,
through and including the last calendar day of such month; PROVIDED, that
the rate at which the commission described in clause (i) above is calculated
shall be reduced at all times that, and by the same number of basis points as,
the interest rate for Base Rate Loans is reduced pursuant to Section 1.8(c).
Promptly upon receipt by the Agent of any amount described in this Section
2.5(a), the Agent shall distribute to each Lender its Adjusted Percentage of
such amount.
(b) Each Borrower agrees to pay to each L/C Bank in respect
of each Subsidiary Letter of Credit issued by it such fees (including, without
limitation, facing, processing and transfer fees), in such amounts, and at
such times, as the Company and such L/C Bank may agree; and, notwithstanding
anything to the contrary contained herein, such L/C Bank shall not be required
to issue a Subsidiary Letter of Credit hereunder for the account of such
Borrower unless and until such Borrower provides such L/C Bank with a written
acknowledgement of the fees agreed to by such L/C Bank in respect of such
Subsidiary Letter of Credit.
2.6 ADDITIONAL PAYMENTS; ILLEGALITY. (a) Without
duplication of any amounts payable under Sections 1.10, 1.11, 4.5 and 12.1 or
under the Company Credit Agreement, if by reason of (x) any change in
applicable law, regulation, rule, regulatory requirement, guideline, request
or directive, whether or not having the force of law, or any change in the
interpretation or application thereof by any judicial or other applicable
governmental or regulatory authority, or (y) compliance by any Lender in good
faith with any direction, request or mandatory guideline of any applicable
governmental or monetary authority including, without limitation,
Regulation D:
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(i) such Lender shall be subject to any tax, levy, charge
or withholding of any nature or to any variation thereof or to any
penalty with respect to the maintenance or fulfillment of its
obligations under this Section 2, whether directly or by such being
imposed on or suffered by such Lender;
(ii) any reserve, deposit or similar requirement is or
shall be applicable, imposed or modified in respect of any Subsidiary
Letter of Credit issued by such Lender or any participations purchased
by such Lender in any Subsidiary Letter of Credit (or in respect of such
Lender's commitment to purchase such a participation); or
(iii) there shall be imposed on such Lender any other
condition regarding this Section 2, any Subsidiary Letter of Credit or
any participation therein;
and the result of the foregoing is to directly or indirectly increase the cost
to such Lender of committing to issue, purchase, purchasing or maintaining any
participation in any Subsidiary Letter of Credit, or to reduce the amount
receivable in respect thereof by such Lender, then and in any such case such
Lender may, without duplication of any payments required to be made pursuant
to Section 1.10, 1.11, 4.5 or 12.1, at any time after the additional cost is
incurred or the amount received is reduced, promptly notify the Borrowers,
through the Company, and the Borrowers shall pay to such Lender promptly after
a written demand therefor (which demand may be contained in such notice), such
additional amounts as shall be required to compensate such Lender for such
increased costs or reduction in amounts receivable hereunder (a written notice
as to additional amounts owed such Lender setting forth in reasonable detail
the conditions giving rise thereto and the calculation of such amounts (which
calculations shall be made in the same manner as for similar outstanding
credit extensions made by such Lender of a similar type and amount as those
set forth herein to Persons of a similar creditworthiness as the Company),
submitted to the Borrowers, through the Company, by such Lender shall, absent
manifest error, be final and conclusive and binding upon all parties hereto).
The failure of any Lender to give any notice or demand as provided in this
Section shall not release or diminish any of the
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Borrowers' obligations to pay any additional costs to such Lender pursuant to
this Section.
(b) Notwithstanding any other provision contained in this
Agreement, no L/C Bank shall be obligated to issue any Subsidiary Letter of
Credit, nor shall any Lender be obligated to purchase its participation in any
Subsidiary Letter of Credit to be issued hereunder, if the issuance of such
Subsidiary Letter of Credit or purchase of such participation shall have
become unlawful or prohibited by compliance by such L/C Bank or Lender in good
faith with any law, governmental rule, guideline, request, order, injunction,
judgement or decree (whether or not having the force of law); PROVIDED that
in the case of the obligation of a Lender to purchase such participation, such
Lender shall have notified any L/C Bank for the related Subsidiary Letter of
Credit to such effect pursuant to Section 2.2(b).
2.7 OBLIGATIONS ABSOLUTE. The respective obligations under
Sections 2.3 and 2.4 of the Borrowers and the Lenders to reimburse each L/C
Bank for drawings made under the Subsidiary Letters of Credit shall be
unconditional and irrevocable and shall be paid strictly in accordance with
the terms of this Agreement under all circumstances, including, without
limitation, the following circumstances:
(a) any lack of validity or enforceability of any
Subsidiary Letter of Credit;
(b) the existence of any claim, set-off, defense or other
right which any Borrower, the Company or any other Subsidiary or Affiliate of
the Company may have at any time against a beneficiary or any transferee of
any Subsidiary Letter of Credit (or any persons or entities for whom any such
beneficiary or transferee may be acting), any Lender or any other Person,
whether in connection with this Agreement, the transactions contemplated
herein or any unrelated transaction (including, without limitation, any
underlying transaction between any Borrower, the Company or any of its other
Subsidiaries or Affiliates and the beneficiary for which the Subsidiary Letter
of Credit was procured); PROVIDED that nothing in this Section 2.8 shall
affect the right of any Borrower or the Company, on behalf of the Borrowers,
to seek relief against any beneficiary, transferee, Lender
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or any other Person in an action or proceeding or to bring a counterclaim in
any suit involving such Persons;
(c) any draft, demand, certificate or any other document
presented under any Subsidiary Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect;
(d) payment by such L/C Bank under any Subsidiary Letter of
Credit against presentation of a demand, draft or certificate or other
document which does not comply with the terms of such Subsidiary Letter of
Credit;
(e) any other circumstance or happening whatsoever, which
is similar to any of the foregoing; or
(f) the fact that a Default or an Event of Default shall
have occurred and be continuing.
2.8 INDEMNIFICATION; NATURE OF L/C BANKS' DUTIES. (a) In
addition to amounts payable as elsewhere provided in this Section 2, but
without duplication thereof, each Borrower hereby agrees to protect,
indemnify, pay and save each L/C Bank harmless from and against any and all
claims, demands, liabilities, damages, losses, costs, charges and reasonable
expenses (including reasonable attorneys' fees and disbursements and, after a
Default, allocated costs of internal counsel) which such L/C Bank may incur or
be subject to as a consequence, direct or indirect, of (i) the issuance of any
Subsidiary Letter of Credit other than as a result of the gross negligence or
willful misconduct of such L/C Bank or (ii) the failure of such L/C Bank to
honor a drawing under any Subsidiary Letter of Credit due to an act or
omission (whether rightful or wrongful) of any present or future DE JURE
or DE FACTO government or governmental authority.
(b) As between each Borrower and each L/C Bank, the
Borrowers assume all risks of the acts and omissions of, or misuse of the
Subsidiary Letters of Credit issued by such L/C Bank, by the respective
beneficiaries of such Subsidiary Letters of Credit, other than losses
resulting from the gross negligence or willful misconduct of such L/C Bank.
In furtherance and not in limitation of the foregoing, no L/C Bank shall be
respon-
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sible: (i) for the form, validity, sufficiency, accuracy, genuineness
or legal effects of any document submitted by any party in connection with the
application for and issuance of such Subsidiary Letters of Credit, even if it
should in fact prove to be in any or all respects insufficient, inaccurate,
fraudulent or forged or otherwise invalid; (ii) for the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any such Subsidiary Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove
to be invalid or ineffective for any reason; (iii) for failure of the
beneficiary of any such Subsidiary Letter of Credit to comply fully with
conditions required in order to draw upon such Subsidiary Letter of Credit;
(iv) for errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex, telecopy or
otherwise, whether or not they be in cipher; (v) for good faith errors in
interpretation of technical terms; (vi) for any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any such Subsidiary Letter of Credit or of the proceeds thereof; (vii)
for the misapplication by the beneficiary of any such Subsidiary Letter of
Credit; and (viii) for any consequences arising from causes beyond the control
of such L/C Bank, including, without limitation, any act or omission, whether
rightful or wrongful, of any present or future DE JURE or DE FACTO
government or governmental authority. None of the above shall affect, impair,
or prevent the vesting of any such L/C Bank's rights or powers hereunder.
(c) In furtherance and extension and not in limitation of
the specific provisions hereinabove set forth, any action taken or omitted by
any L/C Bank under or in connection with the Subsidiary Letters of Credit
issued by it or the related certificates, if taken or omitted in the absence
of gross negligence or willful misconduct, shall not put such L/C Bank under
any resulting liability to any Borrower.
Section 3. COMMITMENTS.
3.1 VOLUNTARY REDUCTION OF COMMITMENTS. Upon at least two
Business Days' prior written notice (or telephonic notice confirmed promptly
in writing) to the Agent (which notice the Agent shall promptly and, to the
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extent practicable, on the same day, transmit to each of the Lenders), the
Borrowers or the Company, on behalf of the Borrowers, shall have the right,
without premium or penalty, to terminate in whole or reduce in part the
unutilized portion of the Total Commitment available to the Borrowers;
PROVIDED that any partial reduction of the Total Commitment pursuant to this
Section 3.1 shall be in the aggregate amount of $5,000,000 or, if greater, an
integral multiple of $1,000,000.
3.2 MANDATORY REDUCTION OF COMMITMENTS.
(a) Notwithstanding anything to the contrary herein, the Total
Commitment shall be terminated on September 30, 1994 unless the Closing Date
has occurred on or prior to such date.
(b) The Total Commitment shall automatically reduce on each
date on which the Total Revolving Loan Commitment is reduced pursuant to
Section 3.2 or 3.3 of the Company Credit Agreement by an amount equal to the
reduction on such date to the Total Revolving Loan Commitment.
3.3 PRO RATA REDUCTIONS; NO REINSTATEMENT. Each reduction
of the Total Commitment shall be applied PRO RATA according to the
respective Commitments of the Lenders. The Lenders' Commitments, once reduced
or terminated, may not be reinstated.
Section 4. PAYMENTS.
4.1 VOLUNTARY PREPAYMENTS. Each Borrower shall have the
right to prepay Loans incurred by it in whole or in part from time to time on
the following terms and conditions: (i) such Borrower or the Company, on
behalf of such Borrower, shall give the Agent at the Payment Office at least
two Business Days' prior written notice (or telephonic notice confirmed
promptly in writing) of such Borrower's intent to prepay such Loans specifying
the amount of such prepayment and the Type(s) of Loans to be prepaid, which
notice the Agent shall promptly transmit to each of the Lenders and which
notice of prepayment having been given, the principal amount of the Loans
specified in such notice shall become due and payable on the prepayment date
specified therein; (ii) each partial prepayment of any Borrowing by one or
more
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Borrowers shall be in an aggregate principal amount of $5,000,000 (including
any Company Borrowing simultaneously repaid) or, if greater, shall be in an
integral multiple of $1,000,000; PROVIDED that no partial prepayment of
Eurodollar Loans made pursuant to a single Borrowing shall reduce the
outstanding Loans made pursuant to such Borrowing (together with a Company
Borrowing made on the same date of such Borrowing) to an amount less than
$10,000,000; (iii) prepayments of Eurodollar Loans made pursuant to this
Section 4.1 may only be made on the last day of an Interest Period applicable
thereto; and (iv) each prepayment by a Borrower in respect of any Loans to
such Borrower made pursuant to a Borrowing shall be applied PRO RATA among
such Loans; PROVIDED that at such Borrower's or the Company's on behalf of
such Borrower, election in connection with any prepayment pursuant to this
Section 4.1, any prepayment in respect of Loans shall not be applied to any
Loan of a Defaulting Lender.
4.2 MANDATORY PREPAYMENTS. (a) (i) If, at any time, after
giving effect to any termination or reduction of the Adjusted Total Commitment
pursuant to the terms of this Agreement, the total of (A) the aggregate
principal amount of all outstanding Loans made by Non-Defaulting Lenders at
such time PLUS (B) the aggregate Subsidiary Letter of Credit Outstandings at
such time MINUS (C) amounts on deposit in the Subsidiary L/C Cash Collateral
Account, shall exceed the Adjusted Total Commitment at such time the Borrowers
shall immediately prepay Loans of Non-Defaulting Lenders in an aggregate
amount equal to such excess and, to the extent that the sum of the aggregate
Subsidiary Letter of Credit Outstandings exceeds the Adjusted Total Commitment
as so reduced, the Borrowers shall deposit an amount equal to such excess in
the Subsidiary L/C Cash Collateral Account. The amount required hereunder to
be maintained on deposit in the Subsidiary L/C Cash Collateral Account shall
at no time exceed the amount, if any, by which the sum of aggregate Subsidiary
Letter of Credit Outstandings plus the aggregate Loans of all the
Non-Defaulting Lenders then outstanding exceeds the Adjusted Total Commitment;
any amount held in the Subsidiary L/C Cash Collateral Account in excess of
such required amount shall, so long as no Default or Event of Default has
occurred and is continuing, be payable to the Borrowers, PRO RATA in
respect of the Subsidiary Letters of Credit issued on
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such Borrowers' behalf, upon request of such Borrowers or the Company, on
behalf of such Borrowers.
(ii) On any day on which the aggregate outstanding
principal amount of the Loans made by any Defaulting Lender exceeds the
Unrestricted Commitment of such Defaulting Lender, the Borrowers shall prepay
principal of Loans of such Defaulting Lender in an amount equal to such
excess, less any amount owed by or due from such Defaulting Lender to the
Borrowers or any Non-Defaulting Lender; PROVIDED that if the Borrowers so
set-off any amounts owed to a Non-Defaulting Lender, the Borrowers shall pay
such amounts to such Non-Defaulting Lender simultaneously with such set-off.
(b) With respect to each prepayment of Loans required by this
Section 4.2, the Company, on behalf of each Borrower, may designate the Types
of Loans which are to be prepaid and the specific Borrowing(s) pursuant to
which made; PROVIDED that (i) Eurodollar Loans may be designated for
prepayment pursuant to this Section 4.2 only on the last day of an Interest
Period applicable thereto unless (A) all Loans incurred by such Borrower which
are Eurodollar Loans with Interest Periods ending on such date of required
prepayment have been paid in full and (B) all Loans incurred by such Borrower
which are Base Rate Loans have been paid in full; (ii) if any prepayment of
Eurodollar Loans made pursuant to a single Borrowing shall reduce the
outstanding Loans made pursuant to such Borrowing to an amount less than
$10,000,000 (including any Company Borrowing made on the same date of such
Borrowing), such Borrowing shall immediately be converted into Base Rate
Loans; and (iii) each prepayment of any Loans made pursuant to a Borrowing
shall be applied PRO RATA among such Loans; PROVIDED that no prepayment
of Loans made pursuant to Section 4.2(a)(i) shall be applied to the Loans of
any Defaulting Lender and prepayments pursuant to Section 4.2(a)(ii) shall
only be applied to the Loans of the Defaulting Lenders. In the absence of a
designation by such Borrower as described in the preceding sentence, the Agent
shall apply such prepayment FIRST to Base Rate Loans, SECOND to Eurodollar
Loans with Interest Period ending on the date of such prepayment and THIRD,
subject to the above, as the Agent may determine in its sole discretion;
PROVIDED, that such prepayment be applied to the Eurodollar Loan with the
shortest remaining time to the end of the Interest Peri-
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od. Any prepayment made pursuant to Section 4.2 shall be made together with all
amounts payable pursuant to Section 1.12.
(c) On each date on which there occurs a remarketing of
Variable Rate Notes which were purchased with the proceeds of a drawing under
a Subsidiary Letter of Credit or a letter of credit backed by a Subsidiary
Letter of Credit, pursuant to the exercise by the holder of such note of its
rights under the indenture pursuant to which such Variable Rate Note was
issued to require such purchase, such Borrower shall prepay Loans to the
extent incurred to fund such purchases in an amount equal to the aggregate
principal amount of Variable Rate Notes so remarketed. Proceeds of the
remarketing of Variable Rate Notes received by the Agent from the L/C Banks or
from any trustee for the holders of Variable Rate Notes supported by a
Subsidiary Letter of Credit shall be applied by the Agent to such prepayment
of Loans.
4.3 METHOD AND PLACE OF PAYMENT. Except as otherwise
specifically provided herein, all payments under this Agreement and the Notes
shall be made to the Agent for the ratable account of the Lenders entitled
thereto not later than 11:00 A.M. (New York, New York time) on the date when
due and shall be made in Dollars in immediately available funds at the Payment
Office of the Agent. Any payments by a Borrower under this Agreement or the
Notes which are made later than 11:00 A.M. (New York, New York time) shall be
deemed to have been made on the next succeeding Business Day. Whenever any
payment to be made hereunder or under any Note shall be stated to be due on a
day which is not a Business Day, the due date thereof shall be extended to the
next succeeding Business Day and, with respect to payments of principal,
interest shall be payable at the applicable rate during such extension. All
payments made by a Borrower hereunder in respect of outstanding Loans shall be
applied first to outstanding interest then due and payable and then to
payments of principal.
4.4 NET PAYMENTS. (a) All payments made by the Borrowers
hereunder and under the other Credit Documents will be made without setoff or
counterclaim. All such payments will be made free and clear of and without
deduction or withholding for any Taxes (but excluding, except as provided in
paragraph (c) hereof,
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any Taxes imposed on the overall net income of a Lender pursuant to the laws
of the jurisdiction in which the principal executive office or applicable
Lending Office of such Lender is located). If any Taxes are so levied or
imposed, each Borrower agrees (i) to pay the full amount of such Taxes, and
such additional amounts as may be necessary so that every net payment of all
amounts due hereunder and under the other Credit Documents, after withholding
or deduction for or on account of any such Taxes (including additional sums
payable under this Section 4.4), will not be less than the amount provided for
herein, (ii) to make such withholding or deduction and (iii) to pay the full
amount deducted to the relevant authority in accordance with applicable law;
PROVIDED that no Borrower shall be required to pay any additional amount on
account of any Taxes of, or imposed by, the United States pursuant to this
Section 4.4(a) to any Lender or the Agent which (A) is not entitled, on the
Execution Date or Closing Date (or, in the case of an assignee of a Lender, on
the date on which the assignment to it became effective), to submit Form 1001
or Form 4224 (or any successor forms) so as to meet its obligations to submit
such a form pursuant to Sections 12.4(g) and (h), (B) shall have failed to
submit any form or other certification which it was required to file pursuant
to Sections 12.4(g) and (h) and entitled to file under applicable law, or (C)
shall have filed any such form which is incorrect or incomplete in any
material respect and shall not have corrected or completed such form.
(b) Each Borrower will indemnify and hold harmless each Lender
and reimburse each Lender upon the written request of the Agent on behalf of
such Lender (which request the Agent shall promptly make after receiving a
written request from such Lender setting forth the basis for requesting such
amount), for the amount of any such Taxes (other than Taxes described in the
proviso following Section 4.4(a)(iii) for which the Borrowers have no
obligation thereunder) so levied or imposed and paid by such Lender and any
liability (including incremental Taxes as set forth in Section 4.4(c),
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes were correctly or legally asserted.
(c) Each Borrower shall also reimburse each Lender, upon the
written request of such Lender, for any
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Taxes imposed on or measured by the overall net income of such Lender or its
applicable Lending Office pursuant to the laws of the jurisdiction in which
the principal executive office or applicable Lending Office of such Lender is
located or any political subdivision or taxing authority thereof or therein as
such Lender shall determine in good faith are payable by such Lender in
respect of amounts paid to or on behalf of such Lender pursuant to paragraph
(a) or (b) hereof.
(d) With respect to any Taxes which are paid by a Borrower in
accordance with the provisions of this Section 4.4, each Lender receiving the
benefits of such payments of Taxes hereby agrees to pay to such Borrower any
amounts refunded to such Lender which such Lender determines in its sole
discretion to be a refund in respect of such Taxes.
4.5 USE OF PROCEEDS. Each Borrower shall use all of the
proceeds of the Loans made to it (a) for the purpose of repaying the Mortgage
Notes of such Borrower and consummating the Existing Subsidiary Credit
Agreement Restructuring, and (b) for working capital and other general
corporate purposes, including, without limitation, to finance permitted
acquisitions (including the NME Acquisition) and Investments.
Section 5. CONDITIONS PRECEDENT.
5.1 CONDITIONS PRECEDENT TO INITIAL LOANS. The obligation
of each Lender to make its Loans, if any, on the Closing Date and consummate
the Existing Subsidiary Credit Agreement Restructuring, and the obligation of
each L/C Bank to issue any Subsidiary Letter of Credit (including, without
limitation, the Existing Subsidiary Letters of Credit deemed to be issued
hereunder as of the Closing Date) on the Closing Date, is subject to the
satisfaction of the following conditions precedent prior to, on or
contemporaneously with the Closing Date:
(a) NOTES. The Agent shall have received, for the account
of each Lender, the Subsidiary Increased Commitment Note and the Notes of such
Lender, in each case duly completed, executed and delivered by an authorized
officer of each Borrower.
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(b) GUARANTIES. Each Wholly-Owned Restricted Subsidiary
(other than Excludable Foreign Subsidiaries) shall have duly completed,
executed and delivered to the Agent for the benefit of the Lenders a guaranty
(as hereafter amended, restated, varied, supplemented or modified from time to
time, the "Subsidiary Guaranty") of the Obligations, substantially in the form
of Exhibit C to the Company Credit Agreement and amending and restating the
guaranty provided by certain of such Restricted Subsidiaries pursuant to the
Existing Company Credit Agreement, and the same shall be in full force and
effect. The Company shall have executed and delivered the Company Guaranty
and the same shall be in full force and effect.
(c) STOCK AND NOTES PLEDGES. The Company shall have
executed and delivered to the Collateral Agent for the benefit of the Lenders
a pledge agreement (as hereafter amended, restated, varied, supplemented or
modified from time to time, the "Company Stock and Notes Pledge"),
substantially in the form of Exhibit D-1 to the Company Credit Agreement and
amending and restating the stock and notes pledge delivered by the Company
pursuant to the Existing Credit Agreements, and each Domestic Wholly-Owned
Restricted Subsidiary shall have executed and delivered to the Collateral
Agent for the benefit of the Lenders a Subsidiary Stock and Notes Pledge,
substantially in the form of Exhibit D-2 to the Company Credit Agreement and
amending and restating the stock and notes pledge delivered by such Restricted
Subsidiaries pursuant to the Existing Credit Agreements, pursuant to which
each of the Company and such Restricted Subsidiaries pledges, as security for
the Obligations: (i) all of the issued and outstanding shares of capital
stock or equivalent interests from time to time owned by it of present and
future Domestic Subsidiaries (other than hereafter created Domestic
Subsidiaries that are not Significant Subsidiaries), (ii) all of the
intercompany notes of any direct or indirect Subsidiary of the Company (other
than Excludable Foreign Subsidiaries) now or hereafter held by it, and (iii)
to the extent permitted by applicable law, all of the outstanding capital
stock or equivalent interests owned by it of present and future Foreign
Subsidiaries (other than hereafter created Foreign Subsidiaries that are not
Significant Subsidiaries); PROVIDED that in no event shall the Company or
any such Restricted Subsidiary be required to pledge more than 65%
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of all of the outstanding capital stock or equivalent interests of any Foreign
Subsidiary that is an Excludable Foreign Subsidiary. Each of the Stock and
Notes Pledges shall be in full force and effect and each pledgor under each of
the Stock and Notes Pledges shall have duly delivered to the Collateral Agent
in pledge under such Stock and Notes Pledge, for the benefit of the Lenders
(A) share certificates representing all of the shares of capital stock pledged
thereunder, together with undated stock powers therefor duly executed in blank
by such pledgor, and (B) all of the intercompany notes pledged thereunder,
together with undated instruments of assignment thereof duly executed in blank
by such pledgor.
(d) PLEDGE AND SECURITY AGREEMENTS. The Company shall have
executed and delivered to the Collateral Agent for the benefit of the Lenders
(i) a pledge and security agreement (as hereafter amended, restated, varied,
supplemented or modified from time to time, the "Company Pledge and Security
Agreement") substantially in the form of Exhibit E-1 to the Company Credit
Agreement, and (ii) a pledge and security agreement (as hereafter amended,
restated, varied, supplemented or modified from time to time, the "Company
Pledge and Security Agreement (ESOP)") substantially in the form of Exhibit
E-2 to the Company Credit Agreement and amending and restating the pledge and
security agreement delivered by the Company pursuant to the Existing Credit
Agreements. Each Finance Company shall have executed and delivered to the
Collateral Agent for the benefit of the Lenders a pledge and security
agreement (as hereafter amended, restated, varied, supplemented or modified
from time to time, collectively, the "FINCO Pledge and Security Agreements")
substantially in the form of Exhibit F to the Company Credit Agreement and
amending and restating the pledge and security agreements delivered by the
Finance Companies pursuant to the Existing Credit Agreements. Each Domestic
Wholly-Owned Restricted Subsidiary shall have executed and delivered to the
Collateral Agent for the benefit of the Lenders a Subsidiary Pledge and
Security Agreement substantially in the form of Exhibit G to the Company
Credit Agreement and amending and restating the pledge and security agreement
delivered by such Restricted Subsidiaries pursuant to the Existing Credit
Agreements. Each of the Pledge and Security Agreements shall be in full force
and effect and the Company and each Domestic Wholly-Owned Restricted
Subsidiary shall have
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duly delivered to the Collateral Agent in pledge under the Pledge and Security
Agreements, for the benefit of the Lenders, all instruments and other
documents evidencing collateral in which a Lien is created thereunder to the
extent necessary to perfect such security interest, together with undated
stock powers or instruments of assignment thereof duly executed in blank by
the Company or the relevant Domestic Wholly-Owned Restricted Subsidiary.
(e) SUBSIDIARY COLLATERAL ACCOUNTS ASSIGNMENT AGREEMENT.
The Agent, on behalf of the Lenders, and each Borrower shall have executed and
delivered a collateral accounts assignment agreement (as hereafter amended,
restated, varied, supplemented or modified from time to time, the "Subsidiary
Collateral Accounts Assignment Agreement"), substantially in the form of
Exhibit C hereto, and the same shall be in full force and effect.
(f) MORTGAGE DOCUMENTS. The applicable Mortgagors shall
have duly executed and delivered to the Collateral Agent for the benefit of
the Lenders such mortgages, mortgage consolidations and other documents
(collectively, the "Mortgage Documents") as the Collateral Agent or the
Lenders deem necessary or desirable to fully perfect the Liens granted
pursuant to the Mortgages as security for the Obligations; the Mortgage
Documents shall be in full force and effect; the Mortgage Documents shall have
been filed in such places as the Collateral Agent or the Lenders deem
necessary or desirable for such perfection; and all taxes, fees and expenses
payable in connection with the execution and delivery of the Mortgage
Documents and such filings shall have been paid by the Company and the
Mortgagors.
(g) COMPANY CREDIT AGREEMENT. The Company, the Agent, the
Co-Agent and the Lenders shall have executed and delivered the Company Credit
Agreement and the same shall be in full force and effect. Each of the
conditions precedent specified in the Company Credit Agreement to the Existing
Company Credit Agreement Restructuring shall have occurred to the reasonable
satisfaction of the Lenders; and the Existing Company Credit Agreement
Restructuring shall occur simultaneously with the making of the initial Loans.
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(h) OFFICERS' CERTIFICATES. The Agent shall have received
(with a copy for each of the Lenders) (i) a certificate of the Secretary or an
Assistant Secretary of each of the Borrowers certifying the names and true
signatures of the officers of such corporation authorized to sign the Credit
Documents to which it is a party and the other documents to be delivered
thereunder, and (ii) a certificate of the chief executive officer, chief
financial officer, any vice president or treasurer of each of the Borrowers
certifying that the conditions set forth in Section 5.2(a) and (b) are
satisfied as of the Closing Date, in each case in form and substance
satisfactory to the Lenders.
(i) OPINIONS OF THE BORROWERS' COUNSEL. The Agent shall
have received (with a copy for each of the Lenders) a favorable opinion of (i)
King & Spalding, counsel for the Borrowers, in substantially the form of
Exhibit J-1 to the Company Credit Agreement, and (ii) such local counsels of
the Company and its Restricted Subsidiaries reasonably acceptable to the
Lenders addressing such matters pertaining to the Wholly-Owned Foreign
Restricted Subsidiaries as any Lender may reasonably request, in each case in
form and substance reasonably satisfactory to the Lenders.
(j) OPINION OF AGENT'S COUNSEL. The Agent shall have
received (with a copy for each of the Lenders) an opinion of Skadden, Arps,
Slate, Meagher & Flom, special counsel for the Agent, substantially in the
form of Exhibit J-2 to the Company Credit Agreement.
(k) APPROVALS. The Agent shall have received (with copies
for each of the Lenders) copies of all material orders, consents, approvals,
licenses, authorizations, validations, filings, recordings, registrations,
exemptions and notices of, by or to any governmental or public body or
authority, domestic or foreign, or any subdivision thereof, or any other
Person or group of Persons requested by the Lenders, in each case which are
required to be obtained on or prior to the Closing Date to authorize, or are
required in connection with (i) the execution, delivery or performance of any
Transaction Document to which a Credit Party is a party (other than the
performance of the NME Purchase Agreement), or consummation of any of the
Transactions (other than the NME Acquisition), or (ii) the legality, validity,
binding
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effect or enforceability of any Transaction Document to which a Credit Party
is a party.
(l) ENVIRONMENTAL REPORTS. The Lenders shall have received
copies of environmental reports that are in form and substance reasonably
satisfactory to the Lenders in respect of the Facilities and the other real
property to be acquired by the Company and its Subsidiaries pursuant to the
NME Purchase Agreement and all other Facilities and other real property
acquired by the Company or any of its Subsidiaries since July 22, 1992, and
updated reports and assessments, as may be reasonably determined by the Agent
to be necessary based on responses to environmental questionnaires completed
by or for the Company or its Subsidiaries, of the most recently delivered
environmental reports in respect of other Facilities and real property of the
Company and its Subsidiaries, in each case prepared, at the cost and expense
of the Company, by a Person designated by the Company that is reasonably
acceptable to the Required Lenders.
(m) SECURITY INTERESTS. The Lenders shall be reasonably
satisfied that the Security Documents create or will create, upon the
completion of the filings of the Security Documents, financing statements and
other instruments tendered for filing, as security for the Obligations
(including, without limitation, the Subsidiary Obligations), a valid and
enforceable perfected security interest in and Lien on all of the Collateral
(other than the collateral assignments of mortgages securing pledged
intercompany notes, Collateral covered by the Subsidiary Pledge and Security
Agreement which is located in the State of Tennessee, and Collateral covered
by the Subsidiary Pledge and Security Agreement to the extent such Collateral
is not covered by Article 9 of the Uniform Commercial Code as in effect in the
relevant jurisdiction) in favor of the Collateral Agent for the benefit of the
Lenders, superior and prior to the rights of all other Persons therein (as
provided in the Uniform Commercial Code) and subject to no other Liens other
than Liens permitted hereby. The Security Documents, or financing statements
or other instruments with respect thereto, as may be necessary, shall have
been duly filed or recorded (or tendered for filing or recording) in such
manner and in such places as are required by law to establish, perfect,
preserve and protect the security
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interests and Liens (other than (i) the collateral assignment of mortgages
securing pledged intercompany notes and (ii) Collateral covered by the
Subsidiary Pledge and Security Agreement which is located in the State of
Tennessee) in favor of the Collateral Agent for the benefit of the Lenders,
granted pursuant to such Security Documents, and all taxes, fees and other
charges payable in connection therewith due on or prior to the Closing Date
shall have been paid in full.
(n) MATERIAL EVENTS. No event, action or proceeding shall
have occurred or condition shall have arisen and continue to exist since
September 30, 1993 with respect to any Credit Party, any Transaction Document
or any of the Transaction which the Agent, the Co-Agent or any Lender has
reasonably determined could have a Material Adverse Effect.
(o) INTEREST; FEES; EXISTING LOANS, ETC.
(i) The Agent and the Lenders shall have received payment in
full of all fees and Commitment Commissions referred to in Section 3.1
of the Company Credit Agreement which are payable on or prior to the
Closing Date, and all reasonable costs and expenses payable on the
Closing Date by the Company pursuant to Section 12.1 of the Company
Credit Agreement (including, without limitation, all reasonable fees and
expenses of Skadden, Arps, Slate, Meagher & Flom, special counsel to the
Agent and the Lenders, for which the Company has received an invoice at
least two Business Days prior to the Closing Date) shall have been paid.
(ii) Each Existing Lender shall have executed and delivered the
Master Transfer Supplement or the Existing Loans of such Existing
Lenders shall have been paid in full by the applicable Borrowers; and
the Agent shall have received from the applicable Borrowers, for the
account of the Existing Lenders, all accrued and unpaid interest and
fees as of the Closing Date on the Existing Loans, the Existing
Commitments and the Existing Subsidiary Letters of Credit, and the
Company, the Borrowers and BTCo
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shall have agreed in writing to the fees and other amounts to be payable
to BTCo in respect of the Existing Subsidiary Letters of Credit from and
after the Closing Date.
(p) CERTAIN DEBT REPAYMENTS. The Mortgage Notes and all
obligations of the Borrowers thereunder or in respect thereof (other than
indemnities and costs and expenses accruing thereunder after the Closing Date)
shall be paid in full or payment in full shall have been provided for in
accordance with the terms thereof or otherwise in a manner reasonably
satisfactory to the Lenders, and all Liens securing the Mortgage Notes shall
have been released (or arrangements providing for such release shall have been
made) to the satisfaction of the Agent. In addition, the Existing
Participation Agreements shall have been terminated.
(q) CORPORATE PROCEEDINGS. All corporate, partnership and
legal proceedings and all instruments and agreements (not otherwise attached
as Exhibits hereto or to the Company Credit Agreement) in connection with the
transactions contemplated by this Agreement, the other Credit Documents and
the other Transaction Documents shall be reasonably satisfactory in form and
substance to the Lenders, and the Agent shall have received (with copies for
each of the Lenders) all information and copies of all documents and papers,
including records of corporate proceedings and governmental approvals, if any,
which any Lender may have reasonably requested in connection therewith.
(r) SYNDICATION MARKET. There shall have been no material
adverse change after the date hereof to the syndication market for
non-investment grade revolving credit loan facilities of a similar duration
and nature as the facilities set forth herein and in the Company Credit
Agreement, and there shall not have occurred and be continuing a disruption
of, or an adverse change in financial, banking or capital markets that would
have a material adverse effect on such syndication market, in each case as
determined by the Agent in its sole discretion.
5.2 CONDITIONS PRECEDENT TO EACH LOAN. The obligation of
each Lender to make any Loan (including the obligation of any Continuing
Lender to convert all or any
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portion, as the case may be, of its Existing Loans) or consummate the Existing
Subsidiary Credit Agreement Restructuring, and the obligation of each L/C Bank
to issue (or renew or extend pursuant to Section 2.1) any Subsidiary Letter of
Credit (including, without limitation, the Loans to be made and Subsidiary
Letters of Credit to be issued on the Closing Date) is subject to its having
received a copy of the Notice of Borrowing in respect of such Loan or a
Subsidiary Letter of Credit Request for such Subsidiary Letter of Credit, as
the case may be, in accordance with the terms hereof and the satisfaction of
the following further conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES TRUE; NO DEFAULT. On the
date of such Loan and/or the consummation of the Existing Subsidiary Credit
Agreement Restructuring, as the case may be, both before and after giving
effect thereto and, in the case of the making of a Loan, to the application of
the proceeds thereof, or on the date of the issuance of such Subsidiary Letter
of Credit, as the case may be, the following statements shall be true (and
each of the giving of the applicable Notice of Borrowing or the Subsidiary
Letter of Credit Request, as the case may be, (and, in the case of the
consummation of the Existing Subsidiary Credit Agreement Restructuring, the
execution and delivery by the Borrowers of the Notes) shall constitute a
representation and warranty by such Borrower that on the date of such Loan,
consummation of the Existing Subsidiary Credit Agreement Restructuring, or
issuance of such Subsidiary Letter of Credit, as the case may be, both before
and after giving effect thereto and, in the case of a Loan, to the application
of the proceeds thereof, such statements are true):
(i) the representations and warranties contained in Section 6
hereof and Section 6 of the Company Credit Agreement are true and
correct on and as of the date of such Loan, consummation of the Existing
Subsidiary Credit Agreement Restructuring or issuance of such Subsidiary
Letter of Credit, as the case may be, as though made on and as of such
date except for representations and warranties relating to a particular
point in time; and
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(ii) no event has occurred and is continuing or condition
exists, or would result from such Loan or the application of the
proceeds thereof, the consummation of the Existing Subsidiary Credit
Agreement Restructuring or the issuance of such Subsidiary Letter of
Credit, as the case may be, which constitutes an Event of Default or a
Default;
(b) MATERIAL EVENTS. No event, action or proceeding shall
have occurred or condition shall exist with respect to the Company, any of its
Subsidiaries, any Credit Document, any transaction contemplated thereby or any
Facility of the Company or any of its Subsidiaries (including, without
limitation, any such Facility acquired or proposed to be acquired from NME)
which the Agent, the Co-Agent or the Required Lenders reasonably determines is
likely to have a Material Adverse Effect;
(c) LITIGATION, APPROVALS, ETC. On the date of such Loan,
consummation of the Existing Subsidiary Credit Agreement or the issuance of
such Subsidiary Letter of Credit, as the case may be, the existence of the
litigation set forth on any supplement to Schedule 6.5 or Schedule 6.17 of the
Company Credit Agreement and the absence of approvals set forth on any
supplement to Schedule 6.7 of the Company Credit Agreement in the reasonable
determination of the Agent, the Co-Agent or the Required Lenders would not
have a Material Adverse Effect;
(d) COMPANY CREDIT AGREEMENT. The Company Credit Agreement
shall be in full force and effect;
(e) DOCUMENTATION WITH RESPECT TO SUBSIDIARY LETTERS OF
CREDIT. In the case of the issuance of any Subsidiary Letter of Credit that
will provide credit enhancement for obligations of a Borrower or any of its
Subsidiaries incurred in connection with any acquisition, construction or
mortgage financing or a Sale/Leaseback Transaction, all documentation in
respect of the issuance of such Subsidiary Letter of Credit and the making and
honoring of drawings thereunder shall be in form and substance satisfactory to
the Agent and the applicable L/C Bank; and
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(f) OTHER. The Lenders making Loans, participating in the
Existing Subsidiary Credit Agreement Restructuring or issuing Subsidiary
Letters of Credit on such date shall have received such other documents as
they may reasonably request.
5.3 CONDITIONS PRECEDENT TO INITIAL LOANS TO SUPPLEMENTAL
BORROWERS. The obligation of each Lender to make any Loan to, and each L/C
Bank to issue any Subsidiary Letter of Credit for the account of, a
Supplemental Borrower is subject to such Supplemental Borrower having
delivered a Note to each Lender in a principal amount equal to such Lender's
Commitment hereunder and a supplement, in the form of Exhibit F hereto (a
"Supplement"), to the Agent, in each case executed by such Supplemental
Borrower.
Section 6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. In
order to induce the Lenders to enter into this Agreement and to make available
the credit facilities contemplated hereby, each Borrower makes the following
representations, warranties and agreements, each of which shall survive the
execution and delivery of this Agreement and the Notes and the making of the
Loans:
6.1 CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Each Borrower
and its Subsidiaries (i) is a corporation or partnership duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its incorporation or organization, as the case may be, (ii) has the power and
authority to own its property and assets and to transact the business in which
it is engaged, (iii) has duly qualified and is authorized to do business and
is in good standing as a foreign corporation or partnership, as the case may
be, in every jurisdiction in which the failure to so qualify would have a
Material Adverse Effect, and (iv) is in full compliance with its certificate
or articles of incorporation and by-laws or other organizational or governing
documents and all laws, regulations, orders, writs, judgments, decrees,
determinations or awards, except to the extent that the failure to comply
therewith would not have a Material Adverse Effect.
6.2 POWER; AUTHORITY; NO VIOLATION. The execution, delivery
and performance by each of the Credit Parties of the Credit Documents and
other Transaction
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Documents to which it is a party and the consummation of the Transactions are
within such Credit Party's corporate or partnership powers, as the case may
be, have been (or, in the case of the consummation of all or any portion of
any Transaction, will be by the time all or such portion of such Transaction
is consummated) duly authorized by all necessary corporate, partnership or
other action, and do not and will not contravene (i) the certificate or
articles of incorporation or by-laws or other organizational or governing
documents of any Credit Party or (ii) any law, regulation, order, writ,
judgment, decree, determination or award currently in effect or any
contractual restriction binding on or affecting any Credit Party, except where
such contravention would not have a Material Adverse Effect, or (iii) any
franchise, license, permit, certificate, authorization, qualification,
accreditation or other right, consent or approval referred to in Section 6.21
of the Company Credit Agreement, except where such contravention would not
have a Material Adverse Effect and, except as set forth on Schedule 6.2 to the
Company Credit Agreement, do not and will not conflict or result in any breach
of any of the terms, covenants, conditions or provisions of, or constitute a
default under, or result in the creation or imposition of (or the obligation
to create or impose) any Lien (except pursuant to the Security Documents) upon
any of the property or assets of any Credit Party pursuant to the terms of,
any indenture, mortgage, deed of trust, agreement or other instrument to which
any Credit Party is a party or by which it or any of its properties or assets
is bound or to which it may be subject, except to the extent such conflict,
breach, default or creation or imposition would not have a Material Adverse
Effect.
6.3 BINDING EFFECT. Each of the Credit Parties has duly
executed and delivered each Credit Document and other Transaction Document to
which it is a party. Each such Credit Document and other Transaction Document
is in full force and effect and constitutes the legal, valid and binding
obligation of each Credit Party thereto, enforceable against each such Credit
Party in accordance with its terms, except to the extent that enforcement may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally, and by
general principles of equity (regardless of wheth-
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er enforcement is sought in a proceeding in equity or at law).
6.4 LITIGATION, ETC. Except as set forth on Schedule 6.5 to
the Company Credit Agreement, to the knowledge of each of the Borrowers, there
is no pending or threatened action, proceeding or investigation before any
court, governmental agency or arbitrator (a) affecting any Credit Party which
could be reasonably expected to be adversely determined against such Credit
Party and, if so determined, would have a Material Adverse Effect, or (b) with
respect to this Agreement, any other Credit Document or Transaction Document
or any of the Transactions.
6.5 USE OF PROCEEDS. All proceeds of the Loans will be used
only in accordance with Sections 2.3 and 4.5. No part of the proceeds of any
Loan will be used by the Borrowers or others to purchase or carry any Margin
Stock in violation of Regulations G, U, T or X of the Board of Governors of
the Federal Reserve System.
6.6 APPROVALS, ETC. To the knowledge of each of the
Borrowers, except (i) such as have been duly obtained, made or given and are
in full force and effect, (ii) as fully disclosed on Schedule 6.7 to the
Company Credit Agreement, and (iii) in the case of the performance or
consummation of all or any portion of the NME Purchase Agreement and the NME
Acquisition, respectively, such as will be duly obtained, made or given and be
in full force and effect at the time of such performance or consummation, as
applicable, no material order, consent, approval, license, authorization or
validation of, or filing, recording or registration with, or notice to or
exemption by any governmental or public body or authority, domestic or
foreign, or any subdivision thereof, or any other Person or group of Persons
is required to authorize, or is required in connection with (a) the execution,
delivery or performance of any Credit Document or any other Transaction
Document or the consummation of any of the Transactions; or (b) the legality,
validity, binding effect or enforceability of any Credit Document or other
Transaction Document to which a Credit Party is a party.
6.7 SECURITY INTERESTS. (a) The Security Documents create
or will create, upon proper filings and
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recordings of the Security Documents, financing statements and other
instruments tendered for filing, as security for the Obligations (including,
without limitation, the obligations of the Company under the Credit
Documents), a valid and enforceable perfected security interest in and Lien on
all of the Collateral (other than the collateral assignments of mortgages
securing pledged intercompany notes and other than Collateral covered by the
Subsidiary Pledge and Security Agreement to the extent such Collateral is not
covered by Article 9 of the Uniform Commercial Code as in effect in the
relevant jurisdiction or is located in the State of Tennessee) in favor of the
Collateral Agent for the benefit of the Lenders, superior to and prior to the
rights of all other Persons therein (as provided in the Uniform Commercial
Code) and subject to no other Liens other than Liens permitted hereby. The
respective pledgor or assignor, as the case may be, has good and marketable
title to all Collateral free and clear of all Liens other than Liens permitted
hereby. The Security Documents or financing statements or other instruments
with respect thereto, as may be necessary, have been duly filed or recorded
(or tendered for filing or recording) in such manner and in such places as are
required by law to establish, perfect, preserve and protect the security
interests and Liens, in favor of the Collateral Agent for the benefit of the
Lenders, granted pursuant to such Security Documents and all taxes, fees and
charges payable in connection therewith shall have been paid in full when due
(other than the recording of any collateral assignment of mortgage pursuant to
the FINCO Pledge and Security Agreements and other than Collateral covered by
the Subsidiary Pledge and Security Agreement to the extent such Collateral is
not covered by Article 9 of the Uniform Commercial Code as in effect in the
relevant jurisdiction or is located in the State of Tennessee).
6.8 TAXES. Each of the Borrowers and its Subsidiaries has
filed all material tax returns required to be filed by it and all such tax
returns are true, correct and complete in all material respects. Each of the
Borrowers and its Subsidiaries has paid all taxes, assessments and other
charges which have become due, other than those not yet delinquent and except
for those contested in good faith by appropriate proceedings for which
adequate reserves in conformity with GAAP have been provided and other than
those which individually or in
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the aggregate would not have a Material Adverse Effect. No tax liens have
been filed (except with respect to real property taxes not yet due) and no
claims or assessments are being asserted with respect to any such taxes,
assessments or other charges, other than liens, claims or assessments which
individually or in the aggregate would not have a Material Adverse Effect.
6.9 INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY
ACT. None of the Borrowers nor any of their respective Subsidiaries is (a)
an "investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended, (b) a
"holding company" or a "subsidiary company" of a "holding company" or an
"affiliate" of either a "holding company" or a "subsidiary company" within the
meaning of the Public Utility Holding Company Act of 1935, as amended or (c)
subject to any other federal or state law or regulation which purports to
restrict its ability to borrow money.
6.10 NO DEFAULT UNDER OTHER AGREEMENTS. None of the
Borrowers nor any of their respective Subsidiaries is in default under or with
respect to any agreement, instrument or undertaking to which it is a party or
by which it or any of its property is bound in any respect which would have a
Material Adverse Effect. On and as of the Closing Date and prior to giving
effect to the consummation of the Transactions, no Default or Event of Default
under and as defined in the Existing Credit Agreements has occurred and is
continuing.
6.11 REFINANCED INDEBTEDNESS. The Mortgage Notes and
accrued and unpaid interest thereon and fees in respect thereof have been paid
in full or provision for such payment has been made such that, in accordance
with the express provisions of the instruments governing the same, the
Borrowers have been released from all liability and contractual obligations
with respect thereto (other than indemnifications contained therein which
survive the payment in full of all Indebtedness evidenced thereby), and any
and all Liens securing the Mortgage Notes have been effectively released or
arrangements for such release promptly after the Closing Date have been made.
6.12 MEDICARE REIMBURSEMENT. After giving effect to the
consummation of the transactions contem-
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plated by the Credit Documents and the other Transaction Documents, the
Borrowers and their respective Subsidiaries that participate in the Medicare
program shall be entitled to Medicare reimbursement in respect of interest
expense on the Loans and other Indebtedness incurred by the Borrowers and their
respective Subsidiaries under the Credit Documents and the other Transaction
Documents or such lesser amount of such interest expense as would not have a
Material Adverse Effect.
Section 7. CERTAIN COVENANTS. Each Borrower covenants and
agrees that until the Total Commitment has terminated and all Obligations of
such Borrower have been paid in full:
7.1 INFORMATION COVENANT. (a) Upon any redemption,
cancellation or defeasance of any or all of a series of Variable Rate Notes or
any conversion of the interest rate under a series of Variable Rate Notes to a
fixed interest rate, the Borrower that is a party to the Variable Rate
Documents relating to such series of Variable Rate Notes shall, or shall use
its best efforts to cause the trustee for the holders of such series of
Variable Rate Notes to, furnish to the L/C Bank which issued a Subsidiary
Letter of Credit in direct or indirect support of such series of Variable Rate
Notes: (i) in the case of any such redemption, cancellation or defeasance, a
notice of the reduction in the available credit under the Subsidiary Letter of
Credit issued in direct or indirect support of such series of Variable Rate
Notes, and (ii) in the case of any such conversion, a notice of conversion
stating that, upon such conversion, the Subsidiary Letter of Credit directly
or indirectly supporting such Variable Rate Notes shall terminate.
(b) In the event that any series of Variable Rate Notes has
been put to the remarketing agent therefor and such Variable Rate Notes have
not been successfully remarketed on the first day of such agent's remarketing
effort, the Borrower that is a party to the Variable Rate Notes Documents
relating to such series of Variable Rate Notes shall promptly notify the Agent
and the L/C Bank which issued a Subsidiary Letter of Credit in direct or
indirect support of such series of Variable Rate Notes of such occurrence;
PROVIDED that such obligation shall apply only so long as such Borrower is
entitled to receive notice of such an occurrence, and shall
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have received such notice from the applicable remarketing agent or shall
otherwise have actual knowledge thereof.
(c) Each Borrower will promptly furnish to each Lender such
other information or documents (financial or otherwise) as any Lender may,
through the Agent, reasonably request from time to time, but not confidential
patient information or other information required by applicable law to be kept
confidential.
7.2 AFFIRMATIVE COVENANTS CONCERNING VARIABLE RATE NOTE
DOCUMENTS. Each Borrower shall cause all Variable Rate Notes that the
Company, such Borrower or any of their respective Subsidiaries acquires to be
registered in the name of the Company, such Borrower or such Subsidiary, as
the case may be, in accordance with the indenture pursuant to which such
Variable Rate Notes were issued.
7.3 AMENDMENTS, ETC. TO VARIABLE RATE NOTES DOCUMENTS. So
long as a drawing is available under any Subsidiary Letter of Credit issued in
direct or indirect support of any series of Variable Rate Notes, no Borrower
shall, without the prior written consent of the Required Lenders, enter into
or consent to any material amendment or other modification of any Variable
Rate Notes Documents relating to such Variable Rate Notes (including, without
limitation, any such amendment or other modification that would adversely
affect any Lender); PROVIDED that the Borrowers may convert the interest
rates and/or principal amortization applicable to such Variable Rate Notes in
accordance with Section 8.7(e) of the Company Credit Agreement and in
accordance with the terms of such Variable Rate Notes Documents without the
prior written consent of the Required Lenders.
Section 8. COMPANY CREDIT AGREEMENT COVENANTS. Each
Borrower covenants and agrees that, until the Total Commitment has terminated
and all Obligations have been paid in full, it shall, and shall cause each of
its Subsidiaries to, comply with the covenants set forth in Sections 7 and 8
of the Company Credit Agreement (subject to all standards of materiality and
reasonableness set forth therein) to the extent such covenants apply to
actions, obligations and restrictions applicable to such Borrower or any of
such Subsidiaries and will not engage in any activities which would cause a
breach or violation
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of any such covenant. For purposes of compliance with this Section 8, defined
terms used in Sections 7 and 8 of the Company Credit Agreement shall have the
meanings ascribed to such terms in the Company Credit Agreement.
Section 9. EVENTS OF DEFAULT. Upon the occurrence of any of
the following specified events (each an "Event of Default"):
9.1 PAYMENTS. Any Borrower shall default in the payment (a)
when due of any principal of any Loan, (b) within two Business Days of when
due, of any reimbursement obligation in respect of the honoring of any drawing
under any Subsidiary Letter of Credit, any interest on any principal of any
Loans or any Subsidiary Letter of Credit commission, or (c) of any other fees
or amounts owing of any nature whatsoever owing by the Borrowers or any other
Credit Party hereunder or under any other Credit Document (other than those
referred to in the preceding clauses (a) and (b)) which is not paid by such
Borrower or such Credit Party within 15 Business Days after the receipt by
such Borrower or such Credit Party of a written demand thereof from any
Lender; or
9.2 REPRESENTATIONS, ETC. Any representation, warranty or
statement made or deemed made by any Borrower or any other Credit Party or any
of their respective officers herein or in any other Credit Document or in any
certificate delivered pursuant hereto or thereto shall prove to be untrue in
any material respect on the date as of which made or deemed made; or
9.3 COVENANTS. Without limitation in any respect on the
occurrence of an Event of Default pursuant to Section 9.7, a Borrower shall
default in the due performance or observance by it of any term, covenant or
agreement (other than those referred to in Sections 9.1 and 9.2) contained in
this Agreement or any other Credit Document (other than those referred to in
Section 9.6) to which it is a party and such default shall continue unremedied
for a period of 30 days after the earlier of (i) an executive officer of the
Company obtaining actual knowledge thereof and (ii) written notice thereof to
the Company by the Agent or any Lender; or
9.4 DEFAULT UNDER OTHER AGREEMENTS. Any Borrower or any of
its Subsidiaries shall default in the
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payment when due (subject to any applicable grace period), whether by
acceleration or otherwise, of any other Indebtedness, in an individual
outstanding principal amount of $12,500,000 or more or items of Indebtedness
having an aggregate outstanding principal amount of $30,000,000 or more, of
such Borrower or any of its Subsidiaries or such Borrower or such Subsidiary
shall default in the performance or observance of any obligation or condition
with respect to any such Indebtedness or any other event shall occur or
condition shall exist if the effect of such default, event or condition is to
accelerate the maturity of any such Indebtedness or to permit the holder or
holders thereof, or any trustee or agent for such holders, to cause such
Indebtedness to become due and payable prior to its stated maturity or any
such Indebtedness shall become due and payable prior to its stated maturity;
9.5 BANKRUPTCY, ETC. Any Borrower shall commence a
voluntary case concerning itself under the Bankruptcy Code; or an involuntary
case is commenced against any Borrower and the petition is not dismissed
within 60 days, after commencement of the case; or a custodian (as defined in
the Bankruptcy Code) is appointed for, or takes charge of, all or any
substantial part of the property of any Borrower, or any Borrower commences
any other proceedings under any reorganization, arrangement, adjustment of
debt, relief of debtors, dissolution, insolvency or liquidation or similar law
of any jurisdiction whether now or hereafter in effect relating to such
Borrower, or there is commenced against any Borrower any such proceeding which
remains undismissed for a period of 60 days, or any Borrower is adjudicated
insolvent or bankrupt; or any order of relief or other order approving any
such case or proceeding is entered; or any Borrower suffers any appointment of
any custodian or the like for it or any substantial part of its property to
continue undischarged or unstayed for a period of 60 days; or any Borrower
makes a general assignment for the benefit of creditors; or any Borrower shall
fail to pay, or shall state that it is unable to pay, or shall be unable to
pay, its debts generally as they become due; or any Borrower shall call a
meeting of its creditors with a view to arranging a composition or adjustment
of its debts; or any Borrower shall by any act or failure to act indicate its
consent to, approval of or acquiescence in any of the foregoing; or any
corporate action shall be
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taken by any Borrower for the purpose of effecting any of the foregoing; or
9.6 SECURITY DOCUMENTS; SUBSIDIARY GUARANTY. (a) The
Subsidiary Guaranty, Company Guaranty or any Security Document shall for any
reason cease to be in full force and effect, or the Security Documents shall
cease to give the Collateral Agent for the benefit of the Lenders, the Liens,
rights, powers and privileges created thereby (including, without limitation,
with respect to the Security Documents (other than the FINCO Pledge and
Security Agreements in accordance with the terms thereof), a perfected
security interest in, and Lien on, all of the Collateral in favor of the
Collateral Agent for the benefit of the Lenders, to the extent contemplated
therein), (b) any Credit Party shall default in the due performance or
observance of any material term, covenant or agreement on its part to be
performed or observed pursuant to the Subsidiary Guaranty, the Company
Guaranty or any Security Document and such default shall continue for a period
of 30 days following the earlier of (i) the date on which an executive officer
of the Company obtains actual knowledge thereof and (ii) the date on which the
Agent or any Lender gives notice to the Company of the existence of such
default or (c) any Credit Party shall contest in any manner that the
Subsidiary Guaranty, Company Guaranty or any Security Document to which it is
a party constitutes its valid and enforceable agreement or any Credit Party
shall assert in any manner that it has no further obligation or liability
under the Subsidiary Guaranty, Company Guaranty or Security Document to which
it is a party; PROVIDED, that to the extent any Credit Party has been
released from the Subsidiary Guaranty, Company Guaranty or any Security
Document the foregoing will not constitute an Event of Default to the extent
the same relates to such Credit Party and such agreement; or
9.7 COMPANY CREDIT AGREEMENT. An Event of Default (under
and as defined in the Company Credit Agreement) shall have occurred; or
9.8 JUDGMENTS. One or more judgments or orders for the
payment of money (to the extent not covered by insurance) in an amount in
excess of $7,500,000, individually or in the aggregate, shall be rendered
against a Borrower or any of its Subsidiaries and such
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judgment(s) or order(s) shall continue undischarged for a period of 30 days
during which execution shall not be effectively stayed, bonded or deferred
(whether by action of a court, by agreement or otherwise);
then, and in any such event, and at any time thereafter, if any Event of
Default shall then be continuing, the Agent may, and, upon the written request
of the Required Lenders, shall, by written notice to the Borrowers (or to the
Company, for the benefit of the Borrowers), take any or all of the following
actions, without prejudice to the rights of the Agent, the Co-Agent, the
Collateral Agent, any Lender, or the holder of any Note to enforce its claims
against the Borrowers or any other Credit Party (provided, that, if an Event
of Default specified in Section 9.5 shall occur with respect to any Borrower
or any other Credit Party, the result which would occur upon the giving of
written notice by the Agent to the Borrowers or the Company as specified in
clauses (i) and (ii) below shall occur automatically without the giving of any
such notice): (i) declare the Total Commitment terminated, whereupon the
Commitment of each Lender shall forthwith terminate immediately and all
accrued fees shall forthwith become due and payable without any other notice
of any kind; (ii) declare the principal of and any accrued interest in respect
of all Loans PLUS an amount equal to the maximum amount which would be
available at any time to be drawn under all Subsidiary Letters of Credit then
outstanding (whether or not any beneficiary under any Subsidiary Letter of
Credit shall have presented, or shall be entitled at such time to present, the
drafts or other documents required to draw under such Subsidiary Letter of
Credit), and all obligations owing hereunder and under the other Credit
Documents, to be, whereupon the same shall become, forthwith due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Borrowers; and (iii) exercise any rights or remedies
in its capacity as Collateral Agent under the Security Documents. So long as
any Subsidiary Letter of Credit shall remain outstanding, any amounts
described in clause (ii) above with respect to Subsidiary Letters of Credit,
when received by the Agent shall be deposited in the Subsidiary L/C Cash
Collateral Account as cash collateral for the obligations of the Borrowers
under Section 2 in the event of any drawing under a Subsidiary Letter of
Credit, and upon drawing under any outstanding Subsidiary Letter of Credit
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in respect of which the Agent has deposited in the Subsidiary L/C Cash
Collateral Account any amounts described in clause (ii) above, the Agent shall
pay such amounts held in the Subsidiary L/C Cash Collateral Account to the L/C
Banks to reimburse the L/C Banks for the amount of such drawing.
Section 10. DEFINITIONS.
10.1 CERTAIN DEFINITIONS. As used herein, the following
terms shall have the meanings herein specified unless the context otherwise
requires. Defined terms in this Agreement shall include in the singular
number the plural and in the plural number the singular:
"ADJUSTED PERCENTAGE" shall mean (a) at a time when no Lender
Default exists, for each Lender such Lender's Percentage and (b) at a time
when a Lender Default exists (i) for each Lender that is a Defaulting Lender,
zero, and (ii) for each Lender that is a Non-Defaulting Lender, the percentage
determined by dividing such Lender's Unrestricted Commitment at such time by
the Adjusted Total Commitment at such time, it being understood that all
references herein to the Unrestricted Commitments and the Adjusted Total
Commitment at a time when the Total Commitment or the Adjusted Total
Commitment, as the case may be, has been terminated shall be references to the
Unrestricted Commitments or the Adjusted Total Commitment, as the case may be,
in effect immediately prior to such termination; PROVIDED that (A) no
Lender's Adjusted Percentage shall change upon the occurrence of a Lender
Default from that in effect immediately prior to such Lender Default if after
giving effect to such Lender Default, and any repayment of the Loans at such
time pursuant to Section 4.2(a) or otherwise, the sum of (1) the aggregate
outstanding principal amount of the Loans made by all the Non-Defaulting
Lenders, (2) the aggregate amount of Company Credit Extensions of all the
Non-Defaulting Lenders, (3) the aggregate Subsidiary Letter of Credit
Outstandings, exceed the Adjusted Total Commitment; (B) the changes to the
Adjusted Percentage that would have become effective upon the occurrence of a
Lender Default but that did not become effective as a result of the preceding
clause (A) shall become effective on the first date after the occurrence of
the relevant Lender Default on which the sum of the amounts described in
clauses (1) through (3) of such clause (A) is equal to
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or less than the Adjusted Total Commitment; and (C) if (1) a Non-Defaulting
Lender's Adjusted Percentage is changed pursuant to the preceding clause (B),
and (2) any repayment of such Lender's Loans or Company Loans, any
reimbursement of any honoring of any drawings with respect to Subsidiary
Letters of Credit or Letters of Credit, in each case that were made by the
Company or any other Credit Party during the period commencing after the date
of the relevant Lender Default and ending on the date of such change to its
Adjusted Percentage, must be returned or paid to the Company, a Borrower, any
other Credit Party or any other Person as a preferential or similar payment in
any bankruptcy or similar proceeding of the Company, such Borrower, or any
other Credit Party then the change to such Non-Defaulting Lender's Adjusted
Percentage effected pursuant to said clause (B) shall be reduced to that
positive change, if any, as would have been made to its Adjusted Percentage if
(x) such repayments or reimbursements had not been made, and (y) the maximum
change of its Adjusted Percentage would have resulted in the sum of the
outstanding principal amount of Loans and Revolving Loans made by such Lender
plus such Lender's new Adjusted Percentage of the outstanding principal amount
of Swingline Borrowings, Subsidiary Letter of Credit Outstandings and Letter
of Credit Outstandings equalling such Lender's Commitment at such time.
"ADJUSTED TOTAL COMMITMENT" shall mean, at any time, the sum
of each Non-Defaulting Lenders' Unrestricted Commitment at such time.
"AGENT" shall have the meaning provided in the first
paragraph of this Agreement.
"AGREEMENT" shall mean this Second Amended and Restated
Credit Agreement as the same may hereafter be amended, restated, supplemented
or otherwise modified from time to time in accordance with its terms.
"APPLICABLE MARGIN" shall have the meaning provided in
Section 1.8(c).
"BASE RATE LOANS" shall mean Loans bearing interest at the
rates provided in Section 1.8(a).
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"BORROWER" and "BORROWERS" shall mean each of the entities
identified as a Borrower in the first paragraph of this Agreement and each
Supplemental Borrower which becomes a party hereto in accordance with Section
12.12(c) hereof.
"BORROWING" shall mean the incurrence by one or more
Borrowers of one Type of Loan from all of the Lenders on a given date (or
resulting from conversions or continuations on a given date), having in the
case of Eurodollar Loans, the same Interest Period (except as otherwise
provided in Section 1.10).
"BTCo" shall mean Bankers Trust Company in its individual
capacity, and not in its capacity as Agent.
"CLOSING DATE" shall mean the date of the initial Borrowing
hereunder, which date shall be between and including May 2, 1994 and September
30, 1994, unless otherwise consented to by the Required Lenders.
"CO-AGENT" shall have the meaning provided in Section 11.1.
"COLLATERAL AGENT" shall have the meaning provided in
Section 11.1.
"COMMITMENT" shall mean, at any time for any Lender to the
Borrowers, the amount set forth opposite such Lender's name on Annex II hereto
under the heading "Commitment," as such amount may be reduced from time to
time pursuant to the terms of this Agreement.
"COMPANY" shall mean Charter Medical Corporation, a Delaware
corporation.
"COMPANY BORROWING" shall mean a "Borrowing" under and as
defined in the Company Credit Agreement.
"COMPANY CREDIT AGREEMENT" shall mean the Second Amended and
Restated Credit Agreement, substantially in the form of Exhibit E hereto,
entered into between the Company, the Lenders and BTCo, as agent for the
Lenders, as such agreement may be amended, supplemented or otherwise modified
from time to time.
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"COMPANY CREDIT EXTENSIONS" shall mean, at any time, with
respect to any Lender, the sum of (a) the then aggregate outstanding principal
amount of Revolving Loans made by such Lender, and (b) the product of (i) such
Lender's Adjusted Percentage (as defined in the Company Credit Agreement), and
(ii) the sum of (A) the Letter of Credit Outstandings at such time, and (B)
the then outstanding aggregate principal amount of Swingline Borrowings
pursuant to Section 1.4(b) of the Company Credit Agreement (without
duplication of Revolving Loans made by the Lenders to reimburse a Swingline
Borrowing pursuant to Section 1.4 of the Company Credit Agreement).
"COMPANY GUARANTY" shall mean a second amended and restated
guaranty agreement, substantially in the form of Exhibit D hereto as such
agreement may at any time be amended, restated, varied, supplemented or
otherwise modified from time to time in accordance with the terms thereof.
"COMPANY LOANS" shall mean the loans made from time to time
by the Lenders under the Company Credit Agreement.
"COMPANY PLEDGE AND SECURITY AGREEMENT" shall have the
meaning provided in Section 5.1(d), as such agreement may be amended,
supplemented or otherwise modified from time to time.
"COMPANY STOCK AND NOTES PLEDGE" shall have the meaning
provided in Section 5.1(c), as such agreement may be amended, supplemented or
otherwise modified from time to time.
"CONTINUING LENDERS" shall mean each Existing Lender with a
Commitment under this Agreement (after giving effect to the consummation of
the Existing Subsidiary Credit Agreement Restructuring).
"DEFAULT" shall mean any event, act or condition which, with
notice or lapse of time, or both, would constitute an Event of Default.
"EURODOLLAR LOANS" shall mean Loans bearing interest at the
rates provided in Section 1.8(b).
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"EURODOLLAR RATE" shall mean, with respect to each Interest
Period for a Eurodollar Loan, the rate determined by the Agent to be (a) the
offered quotation to first-class banks in the interbank Eurodollar market by
the Agent for Dollar deposits of amounts in immediately available funds
comparable to the principal amount of the aggregate amount of Eurodollar Loans
comprising such Borrowing for which an interest rate is then being determined
with maturities comparable to the Interest Period to be applicable to such
Eurodollar Loans, determined as of 10:00 A.M. (New York, New York time) on the
date which is two Business Days prior to the commencement of such Interest
Period, divided (and rounded upward to the next whole multiple of 1/16 of 1%)
by (b) a percentage equal to 1 MINUS the then average stated maximum rate
(stated as a decimal) of all reserve requirements (including without
limitation any marginal, emergency, supplemental, special or other reserves)
applicable to any member bank of the Federal Reserve System in respect of
Eurocurrency liabilities as defined in Regulation D (or any successor category
of liabilities under Regulation D).
"EVENT OF DEFAULT" shall have the meaning provided in
Section 9.
"EXECUTION DATE" shall have the meaning provided in
Section 12.10.
"EXISTING COMMITMENTS" shall have the meaning provided in the
fifth "Whereas" clause to this Agreement.
"EXISTING LENDERS" shall mean the banking and other financial
institutions party to the Existing Subsidiary Credit Agreement.
"EXISTING LOANS" shall have the meaning provided in
Section 1.1(a).
"EXISTING NOTES" shall have the meaning provided in
Section 1.1(a).
"EXISTING SUBSIDIARY CREDIT AGREEMENT" shall mean the Amended
and Restated Subsidiary Credit Agreement dated as of July 21, 1992, as amended
prior to the Closing Date, among certain Subsidiaries of the Company, the
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banking and other financial institutions party thereto and BTCo as agent for
such institutions.
"EXISTING SUBSIDIARY CREDIT AGREEMENT RESTRUCTURING" shall
have the meaning provided in the fifth "Whereas" clause hereto.
"EXISTING SUBSIDIARY LETTERS OF CREDIT" means the letters of
credit outstanding on the date hereof for the account of certain of the
Borrowers that are set forth on Schedule 10.1 to the Company Credit Agreement.
"FINAL MATURITY DATE" shall mean March 31, 1999.
"FINCO PLEDGE AND SECURITY AGREEMENTS" shall have the meaning
provided in Section 5.1(d).
"INTEREST PERIOD" shall have the meaning provided in
Section 1.9.
"INTERIM MATURITY DATE" shall mean, with respect to any Loan
outstanding on March 31, 1996 or March 31, 1998, (a) if such Loan is a Base
Rate Loan, such date, and (b) if such Loan is a Eurodollar Loan, the last day
of the then applicable Interest Period for such Eurodollar Loan.
"L/C BANK" shall mean BTCo and each other Lender with a
Commitment that agrees in writing with the Company and the Agent to issue
Subsidiary Letters of Credit from time to time.
"LENDER" shall have the meaning provided in the first
paragraph of this Agreement.
"LENDING OFFICE" shall mean, for each Lender, the office
specified opposite such Lender's name on the signature pages hereof with
respect to each Type of Loan, or such other office as such Lender may
designate in writing from time to time to the Borrowers and the Agent with
respect to such Type of Loan.
"LOAN" shall have the meaning provided in Section 1.1(b).
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"MORTGAGE NOTES" shall mean the notes of certain Subsidiaries
of the Company listed on Schedule 10.1 to the Company Credit Agreement.
"NEW LENDERS" shall mean each of the Persons listed on
Annex III.
"NON-CONTINUING LENDER" shall mean each Existing Lender which
is not a party to this Agreement on and as of the Closing Date.
"NOTES" shall have the meaning provided in Section 1.5(a).
"NOTICE OF BORROWING" shall have the meaning provided in
Section 1.3.
"NOTICE OF CONVERSION" shall have the meaning provided in
Section 1.6.
"ORIGINAL SUBSIDIARY CREDIT AGREEMENT" shall mean the Credit
Agreement dated as of September 1, 1988, as amended prior to July 21, 1992,
among the Subsidiaries of the Company party thereto, the banking and other
financial institutions party thereto, the Agent, and Wells Fargo Bank, N.A.,
and Bank of America National Trust and Savings Association, as co-agents.
"PAYMENT OFFICE" shall mean the office of the Agent located
at 280 Park Avenue, New York, New York 10017, or such other office of the
Agent as the Agent may hereafter designate in writing as such to the other
parties hereto.
"PERCENTAGE" of any Lender at any time shall mean a fraction
(expressed as a percentage) the numerator of which is the Commitment of such
Lender at such time and the denominator of which is the Total Commitment at
such time; PROVIDED that if the Percentage of any Lender is to be determined
after the Total Commitment has been terminated, then the Percentages of the
Lenders shall be determined immediately prior (and without giving effect) to
such termination.
"PLEDGE AND SECURITY AGREEMENTS" means the FINCO Pledge and
Security Agreements and the Subsidiary Pledge and Security Agreement.
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"REPLACED LENDER" shall have the meaning provided in
Section 1.15.
"REPLACEMENT LENDER" shall have the meaning provided in
Section 1.15.
"ROLLOVER BORROWING" shall have the meaning provided in
Section 1.16.
"ROLLOVER LOANS" shall have the meaning provided in
Section 1.16.
"SUBSIDIARY COLLATERAL ACCOUNTS ASSIGNMENT AGREEMENT" shall
have the meaning provided in Section 5.1(e).
"SUBSIDIARY CREDIT DOCUMENTS" shall mean, collectively, this
Agreement, each Note, the Company Guaranty, each of the Security Documents,
each Subsidiary Letter of Credit and each Supplement. Each reference in this
Agreement or any of the other Credit Documents to any of the foregoing Credit
Documents shall be to such Credit Document as in effect on the Closing Date,
and as the same may thereafter be amended, restated, supplemented or otherwise
modified in accordance with the provisions hereof and thereof.
"SUBSIDIARY GUARANTY" shall have the meaning provided in
Section 5.1(b).
"SUBSIDIARY INCREASED COMMITMENT NOTE" shall have the meaning
provided in Section 1.1(a).
"SUBSIDIARY L/C CASH COLLATERAL ACCOUNT" shall mean the cash
collateral account established under the Subsidiary Collateral Accounts
Assignment Agreement (and designated thereunder as the Subsidiary L/C Cash
Collateral Account) in favor of the Agent.
"SUBSIDIARY LETTER OF CREDIT" shall mean each Existing
Subsidiary Letter of Credit and any letter of credit issued by an L/C Bank in
accordance with Section 2 for the purpose of (a) supporting Indebtedness of
the Borrowers in respect of industrial revenue or development bonds listed on
Schedule 8.7(e) to the Company Credit Agreement, or any refunding bonds issued
in respect thereof, (b) providing credit enhancement in re-
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spect of lease obligations incurred in connection with any acquisition,
construction or mortgage financing or a Sale/Leaseback Transaction permitted
under the Company Credit Agreement, (c) providing Foreign Contracts Credit
Support; PROVIDED that the stated amount of Subsidiary Letters of Credit issued
for the purpose set forth in this clause (c), together with Letters of Credit,
as defined in the Company Credit Agreement, issued for the same purpose, shall
not exceed, at any time outstanding, $50,000,000 minus the aggregate stated
amount of letters of credit then outstanding under Section 8.7(i) of the Company
Credit Agreement which are not supported by a Subsidiary Letter of Credit or
Letter of Credit, and (d) supporting appeal bonds or similar surety obligations.
"SUBSIDIARY LETTER OF CREDIT EXPOSURE" shall mean, at any
time, with respect to any Lender, the product of its Adjusted Percentage and
the Subsidiary Letter of Credit Outstandings.
"SUBSIDIARY LETTER OF CREDIT OUTSTANDINGS" shall mean, with
respect to Subsidiary Letters of Credit, at any date of determination, the sum
of (a) the maximum aggregate amount which at such date of determination is
available to be drawn (assuming the conditions for drawing thereunder have
been met) under all Subsidiary Letters of Credit then outstanding, plus (b)
the aggregate amount of all drawings under Subsidiary Letters of Credit
honored by the applicable L/C Bank and not theretofore reimbursed by such
Borrower (it being understood that for purposes of any request for a Loan
pursuant to Section 2.3, there shall be excluded from the amount determined in
accordance with the preceding clause (b) an amount equal to the proceeds of
such Loan).
"SUBSIDIARY LETTER OF CREDIT REQUEST" shall have the meaning
provided in Section 2.2(a).
"SUBSIDIARY PLEDGE AND SECURITY AGREEMENT" shall mean the
Subsidiary Pledge and Security Agreement referred to in Section 5.1(d), as
such agreement may be amended, supplemented or otherwise modified from time to
time and shall include any other Subsidiary Pledge and Security Agreement
executed and delivered from time to time after the Closing Date by any
Significant Subsidiary to the Collateral Agent.
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"SUBSIDIARY STOCK AND NOTES PLEDGE" shall mean the Subsidiary
Stock and Notes Pledge referred to in Section 5.1(c), as such agreement may be
amended, supplemented or otherwise modified from time to time, and shall
include any other Subsidiary Stock and Notes Pledge executed and delivered
from time to time after the Closing Date by any Significant Subsidiary to the
Collateral Agent.
"SUPPLEMENT" shall have the meaning provided in Section 5.3.
"SUPPLEMENTAL BORROWER" shall mean each Subsidiary of the
Company which becomes a Borrower hereunder pursuant to Section 12.12(c).
"TOTAL COMMITMENT" shall mean, at any time, the sum of the
Commitments of each of the Lenders at such time.
"TRANSFER SUPPLEMENT" shall have the meaning provided in
Section 12.4(e).
"TYPE" shall mean any type of Loan determined with respect to
the interest option applicable thereto, I.E., whether a Base Rate Loan or
Eurodollar Loan.
"UNRESTRICTED COMMITMENT" shall mean, for any Lender, at any
time, an amount equal to (a) the Commitment of such Lender at such time,
MINUS (b) the product of the then Restricted Commitment Amount, if any, and
such Lender's Adjusted Percentage.
"VARIABLE RATE NOTES DOCUMENTS" shall mean, collectively,
each agreement, instrument and other documents (including, without limitation,
any loan agreements, trust indenture, letter of credit and guaranty) relating
to any series of Variable Rate Notes, as any such documents may be amended,
restated, supplemented or otherwise modified from time to time.
10.2 OTHER DEFINITIONS. Capitalized terms used herein and
not otherwise defined in Section 10.1 or elsewhere in this Agreement, shall
have the meaning assigned thereto in the Company Credit Agreement.
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Section 11. AGENCY PROVISIONS.
11.1 APPOINTMENTS. The Lenders, the Agent and the Co-Agent
hereby ratify and confirm that, notwithstanding the consummation of the
Existing Subsidiary Credit Agreement Restructuring, the Existing Company
Credit Agreement Restructuring and the termination of the non-appointment
provisions of the Existing Intercreditor Agreement pursuant to Section 12.21,
BTCo shall continue to act as Collateral Agent (the "Collateral Agent") under
the Security Documents for the benefit of the agents and lenders (including,
without limitation, the banks and other financial institutions issuing Letters
of Credit and Subsidiary Letters of Credit) from time to time under this
Agreement and the Company Credit Agreement and hereby authorize and ratify the
authority of BTCo to act, in such capacity, as specified herein and in the
Security Documents. The Lenders hereby designate BTCo as Agent (for purposes
of this Section 11, the term "Agent" shall include BTCo in its capacity as
Collateral Agent) to act as specified herein and in the other Credit
Documents. The Lenders hereby designate First Union National Bank of North
Carolina as Co-Agent (the "Co-Agent") to act as specified herein. Each Lender
hereby irrevocably authorizes, and each holder of any Note by the acceptance
of such Note shall be deemed irrevocably to authorize, the Agent and the
Co-Agent to take such action on its behalf under the provisions of this
Agreement, the other Credit Documents and any other instruments and agreements
referred to herein or therein and to exercise such powers and to perform such
duties hereunder and thereunder as are specifically delegated to or required
of the Agent by the terms hereof and thereof and such other powers as are
reasonably incidental thereto. The Agent or the Co-Agent may perform any of
its duties hereunder by or through its agents or employees.
11.2 NATURE OF DUTIES. (a) Neither the Agent nor the
Co-Agent shall have any duties or responsibilities except those expressly set
forth in this Agreement and in the other Credit Documents. Neither the Agent,
the Co-Agent nor any of its officers, directors, employees or agents shall be
liable to the Lenders for any action taken or omitted by them as such
hereunder or under any other Credit Document or in connection herewith or
therewith, unless caused by their gross negligence or willful misconduct. The
duties of the Agent and the Co-
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Agent shall be mechanical and administrative in nature; neither the Agent nor
the Co-Agent shall have by reason of this Agreement or any Credit Document a
fiduciary relationship in respect of any Lender; and nothing in this Agreement
or any Credit Document, expressed or implied, is intended to or shall be so
construed as to impose upon the Agent or the Co-Agent any obligations in respect
of this Agreement or any Credit Document except as expressly set forth herein.
(b) The Agent shall not be under any duty to give the
Collateral held by it under the Security Documents any greater degree of care
than that given to its own similar property and shall have no duty to take any
affirmative steps with respect to the collection of amounts payable with
respect to the Collateral and shall not be required to invest any Cash held as
Collateral except as directed hereunder or under the Security Documents.
Uninvested funds held as Collateral shall not earn or accrue interest. The
Agent shall have no duty to see to or give notice with respect to any required
filing, registration, recording, refiling, reregistration or rerecording in
respect of any of the Security Documents or the Collateral or to the payment
of any fees, charges or taxes in connection therewith.
11.3 LACK OF RELIANCE ON THE AGENT AND CO-AGENT.
Independently and without reliance upon the Agent or the Co-Agent, each
Lender, to the extent it deems appropriate, has made and shall continue to
make (i) its own independent investigation of the financial condition and
affairs of the Company, the Borrowers and their respective Subsidiaries in
connection with the making and the continuance of the Loans hereunder and the
taking or not taking of any action in connection herewith, and (ii) its own
appraisal of the creditworthiness of the Company, the Borrowers and their
respective Subsidiaries, and, except as expressly provided in this Agreement
or in any other Credit Document, neither the Agent nor the Co-Agent shall have
any duty or responsibility, either initially or on a continuing basis, to
provide any Lender with any credit or other information with respect thereto,
whether coming into its possession before the making of the Loans, or at any
time or times thereafter. Neither the Agent nor the Co-Agent shall be
responsible to any Lender for any recitals, statements, information,
representations or warranties herein or in any other Credit Docu-
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ment or in any document, certificate or other writing delivered in connection
herewith or therewith or for the execution, effectiveness, genuineness,
validity, enforceability, perfection, priority or sufficiency of this Agreement
or any other Credit Document or the financial condition of the Company, the
Borrowers and their respective Subsidiaries or any other Person or be required
to make any inquiry concerning either the performance or observance of any of
the terms, provisions or conditions of this Agreement or any other Credit
Document, or the financial condition of the Company, the Borrowers, their
respective Subsidiaries or any other Person or the existence or possible
existence of any Default or Event of Default.
11.4 ENFORCEMENT OF SECURITY DOCUMENTS. After the Agent has
received written notice from the Required Lenders that an Event of Default has
occurred and is continuing, the Agent shall, subject to the terms of the
Security Documents, take such steps with respect to collection or enforcement
of any Security Document and the Collateral (or any portion thereof),
including without limitation any action to foreclose upon any Collateral, as
may be instructed in writing by the Required Lenders; PROVIDED that in no
event shall the Agent be required, and in all cases it shall be fully
justified in failing or refusing, to take any action under or pursuant to any
Security Document which, in the reasonable opinion of the Agent, (a) would be
contrary to the terms of any Security Document or would subject it or its
officers, employees or directors to liability, unless and until the Agent
shall be indemnified or tendered security to its satisfaction by the Lenders
against any and all loss, cost, expense or liability in connection therewith,
or (b) would be contrary to law, in each case anything herein or elsewhere
contained to the contrary notwithstanding. Except as expressly provided in
this Section 11.4, the Agent shall not be required to take steps toward the
collection of any amounts becoming payable upon any Collateral, or to take any
action towards enforcing any Security Document or to institute, appear in or
defend any action, suit or other proceeding in connection therewith.
11.5 CERTAIN RIGHTS OF THE AGENT AND CO-AGENT. (a) If the
Agent or the Co-Agent shall request instructions from the Required Lenders
with respect to
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any act or action (including failure to act) in connection with this Agreement
or any other Credit Document, the Agent or the Co-Agent shall be entitled to
refrain from such act or taking such action unless and until the Agent or the
Co-Agent shall have received instructions from the Required Lenders; and
neither the Agent nor the Co-Agent shall incur liability to any Person by
reason of so refraining. The Agent and the Co-Agent shall be fully justified
in failing or refusing to take any action hereunder or under any Credit
Document (i) if such action would, in the opinion of the Agent or the
Co-Agent, as the case may be, be contrary to law or the terms of this
Agreement or the Credit Documents, (ii) if it shall not receive such advice or
concurrence of the Required Lenders as it deems appropriate, or (iii) if it
shall not first be indemnified to its satisfaction by the Lenders against any
and all liability and expense which may be incurred by it by reason of taking
or continuing to take any such action. Without limiting the foregoing, no
Lender shall have any right of action whatsoever against the Agent or the
Co-Agent (absent such Person's gross negligence or willful misconduct) as a
result of it acting or refraining from acting hereunder or under any other
Credit Document in accordance with the instructions of the Required Lenders.
(b) Notwithstanding the immediately preceding paragraph of
this Section 11.5, no provision of any Credit Document shall require the Agent
or the Co-Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder or under
any Credit Document, or in the exercise of any of its rights or powers, if it
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it. The Agent and the Co-Agent may at any time request written instructions
from the Lenders with respect to the interpretation of any Credit Document or
in respect of any action to be taken or not taken hereunder or thereunder.
11.6 RELIANCE. Each of the Agent and the Co-Agent shall be
entitled to rely, and shall be fully protected in relying, upon any note,
writing, resolution, notice, statement, certificate, telex, teletype or
telecopier message, cablegram, radiogram, order or other documentary,
teletransmission or telephone message be-
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lieved by it to be genuine and correct and to have been signed, sent or made by
the proper Person. In the absence of its gross negligence or willful
misconduct, the Agent and the Co-Agent may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Agent and conforming to the
requirements of any Credit Document. The Agent or the Co-Agent may consult with
counsel satisfactory to it (including counsel for the Borrower), independent
public accountants and other experts selected by it and the advice of such
counsel, accountants or experts shall be full and complete authorization and
protection in respect of, and neither the Agent nor the Co-Agent shall be liable
for any action taken or omitted or suffered by it in accordance with, such
advice. Whenever in connection with the performance of its duties and
responsibilities under the Credit Documents the Agent or the Co-Agent shall deem
it necessary or desirable that a matter be proved or established in connection
with the taking, suffering or omitting of any action hereunder or under any
Credit Document by the Agent or the Co-Agent, such matter (unless other evidence
in respect thereof is specifically prescribed herein or in the relevant Credit
Document) may be deemed to be conclusively proved or established by a
certificate of an officer of the appropriate party, and such certificate shall
be full warranty to the Agent and the Co-Agent for any action taken, suffered or
omitted in reliance thereon.
11.7 INDEMNIFICATION. To the extent the Agent or the
Co-Agent is not reimbursed and indemnified by or on behalf of the Borrowers,
the Lenders will reimburse and indemnify the Agent and the Co-Agent, in
proportion to their respective initial Commitments, for and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses (including counsel fees and expenses) or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by or
asserted against the Agent or the Co-Agent in performing its duties hereunder
or under any other Credit Document or in any way relating to or arising out of
this Agreement or any other Credit Document; PROVIDED that no Lender shall
be liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements,
finally determined by a court of compe-
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tent jurisdiction and not subject to any appeal resulting from the Agent's or
the Co-Agent's, as the case may be, gross negligence or willful misconduct.
11.8 THE AGENT AND CO-AGENT IN THEIR INDIVIDUAL CAPACITIES.
With respect to its obligations to make Loans under this Agreement, and with
respect to the Loans made by it and the Note issued to it, each of the Agent
and the Co-Agent shall have the same rights and powers as any other Lender or
holder of a Note and may exercise the same as though it were not performing
the duties specified herein; and the term "Lenders," "Required Lenders,"
"holders of Notes," or any similar terms shall, unless the context clearly
otherwise indicates, include the Agent and the Co-Agent in their respective
individual capacities. The Agent and the Co-Agent may accept deposits from,
lend money to, and generally engage in any kind of banking, trust, financial
advisory or other business with the Company, the Borrowers or any of their
respective Subsidiaries or any Affiliate of the Company, the Borrowers or any
of their respective Subsidiaries as if it were not performing the duties
specified herein, and may accept fees and other consideration from the
Company, the Borrowers for services in connection with this Agreement and
otherwise without having to account for the same to the Lenders.
11.9 HOLDERS. The Agent may deem and treat the payee of any
Note as the owner thereof for all purposes hereof unless and until a written
notice of the assignment, transfer or endorsement thereof, as the case may be,
shall have been filed with the Agent. Any request, authority or consent of
any Person or entity who, at the time of making such request or giving such
authority or consent, is the holder of any Note shall be conclusive and
binding on any subsequent holder, transferee, assignee or endorsee, as the
case may be, of such Note or of any Note(s) issued in exchange therefor.
11.10 SUCCESSOR AGENTS. (a) The Agent may resign from the
performance of all its functions and duties hereunder and/or under the other
Credit Documents at any time by giving five Business Days' prior written
notice to the Borrowers, the Co-Agent and the Lenders or may be removed, with
or without cause, by the Required Lenders and, so long as no Default or Event
of Default has occurred and is continuing, the consent of the Compa-
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ny on behalf of the Borrowers (which consent shall not be unreasonably
withheld), at any time by giving five Business Days' prior written notice to the
Agent, the Co-Agent and the Company on behalf of the Borrowers. Such
resignation or removal, as the case may be, shall take effect upon the
appointment of a successor Agent pursuant to clauses (b) and (c) below or as
otherwise provided below. The Co-Agent may resign at any time by giving 30
days' prior written notice thereof to the Borrowers (through the Company), the
Agent and the Lenders.
(b) Upon any such notice of resignation or removal (and, in
the case of removal, so long as no Default or Event of Default has occurred
and is continuing, upon the consent of the Company on behalf of the
Borrowers), as the case may be, the Required Lenders shall with the consent of
the Company on behalf of the Borrowers (which consent shall not be
unreasonably withheld) appoint a successor Agent hereunder or thereunder who
may be the Co-Agent or shall be a commercial bank, trust company or other
financial institution with a combined capital and surplus in excess of
$1,000,000,000.
(c) If a successor Agent shall not have been so appointed
within fifteen Business Days of the Agent's notice of resignation or the
Required Lender's notice of removal (and, in the case of removal, upon the
consent (which consent shall not be unreasonably withheld) of the Company on
behalf of the Borrowers), as the case may be, the Agent, by five Business
Days' notice to the Company on behalf of the Borrowers and the Lenders, may
then, on behalf of the Lenders, appoint a successor Agent (which shall be a
commercial bank, trust company or other financial institution with a combined
capital and surplus in excess of $1,000,000,000) who shall serve as Agent
hereunder or thereunder until such time, if any, as the Required Lenders
appoint a successor Agent as provided above.
(d) If no successor Agent has been appointed pursuant to
clause (b) or (c) by the 20th Business Day after the date such notice of
resignation was given by the Agent or notice of removal was given by the
Required Lenders, as the case may be, the Agent's resignation or removal, as
the case may be, shall become effective and the Co-Agent and the Lenders shall
thereafter perform all the duties of the Agent hereunder and/or under the
other
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Credit Documents until such time, if any, as the Required Lenders appoint a
successor Agent as provided above.
(e) Upon the acceptance of any appointment as Agent hereunder
by a successor Agent, such successor Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Agent's resignation or
removal, as the case may be, hereunder as Agent, the provisions of this
Section 11 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.
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Section 12. MISCELLANEOUS.
12.1 PAYMENT OF EXPENSES, ETC. The Borrowers shall jointly
and severally, without duplication of any amounts the Company has paid under
the terms of the Company Credit Agreement or any other Credit Document: (i)
(A) whether or not the transactions hereby contemplated are consummated, pay
all reasonable out-of-pocket costs and expenses of the Agent actually incurred
in connection with the administration (both before and after the execution
hereof and including advice of counsel as to the rights and duties of the
Agent, the Co-Agent and the Lenders with respect thereto) of, and in
connection with the preparation, execution and delivery of, the Credit
Documents and the documents and instruments referred to therein (including,
without limitation, the reasonable fees and disbursements of Skadden, Arps,
Slate, Meagher & Flom) and (B) pay all reasonable out-of-pocket costs and
expenses of the Agent and each Lender actually incurred in connection with the
preservation of rights under, and enforcement of, and, after an Event of
Default, any refinancing, renegotiation or restructuring of the Credit
Documents and the documents and instruments referred to therein and any
amendment, waiver or consent relating thereto (including, without limitation,
the reasonable fees and disbursements of counsel for the Agent and the
Lenders); (ii) pay and hold each of the Lenders harmless from and against any
and all present and future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies which arise from any payment made
hereunder (without duplication of Section 4.4) or from the execution, delivery
or registration of, or otherwise with respect to, this Agreement or any of the
other Credit Documents and save each Lender harmless from and against any and
all liabilities with respect to or resulting from any delay or omission by the
Borrowers or any of their Subsidiaries to pay any such taxes, charges or
levies; and (iii) indemnify the Agent, the Co-Agent and each Lender, its
officers, directors, employees, representatives and agents from and hold each
of them harmless against any and all costs, losses, liabilities, claims,
damages or expenses actually incurred by any of them (whether or not any of
them is designated a party thereto) arising out of or by reason of any
investigation, litigation or other proceeding related to any actual or
proposed use by any Borrower or
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any Subsidiary of such Borrower of the proceeds of any Loan or to any Credit
Document or any Transaction or other transaction contemplated hereby or
thereby, including, without limitation, the reasonable fees and disbursements
of counsel actually incurred in connection with any such investigation,
litigation or other proceeding. Notwithstanding anything in this Agreement to
the contrary, the Borrowers shall not be responsible to the Agent, the
Co-Agent, the Lenders or any officer, director, employee, representative or
agent of the foregoing (an "Indemnified Party") for any losses, damages,
liabilities or expenses which result from such Indemnified Party's gross
negligence or willful misconduct. It is understood that the Borrowers shall
not, in connection with any single action, suit, proceeding or claim or
separate but substantially similar or related actions, suits, proceedings or
claims, arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys
at the same time for the Indemnified Parties (which firm shall be designated
by the Agent) except that, if any Indemnified Party other than the Agent shall
determine, in its sole discretion, that there may be a conflict in such firm
representing the Agent and such Indemnified Party, then the Borrower shall be
liable for the reasonable fees and expenses of an additional firm for such
Indemnified Party whose interests may be in conflict. Each Borrower's
obligations under this Section 12.1 shall survive any termination of this
Agreement or any other Credit Document.
12.2 RIGHT OF SETOFF. In addition to and not in limitation
of all rights of offset that any Lender or other holder of a Note may have
under applicable law, each Lender or other holder of a Note shall, subject to
Section 1.13, upon the occurrence of any Event of Default and whether or not
such Lender or such holder has made any demand or any Borrower's obligations
are matured, have the right to appropriate and apply to the payment of the
Obligations, all deposits (general or special, time or demand, provisional or
final) then or thereafter held by and other indebtedness or property then or
thereafter owing by such Lender or other holder, whether or not related to
this Agreement or any transaction hereunder.
12.3 NOTICES. Except as otherwise expressly provided
herein, all notices and other communications
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provided for hereunder shall be in writing (including telex or telecopier) and
mailed, telexed, telecopied or delivered, if to any party, at its address
specified opposite its signature below or at such other address as shall be
designated by such party in a written notice to the other parties hereto. All
such notices and communications shall, when mailed, telexed, telecopied, or
sent by reputable overnight courier, be effective (i) when received or (ii)
three Business Days after being deposited, postage prepaid, in the mails, the
Business Day following delivery, freight prepaid, to an overnight courier or
the same Business Day of transmission by telex or telecopier, whichever of (i)
or (ii) shall be earlier, except that notices and communications to the Agent
shall not be effective until received by the Agent.
12.4 BENEFIT OF AGREEMENT; LIMITATION ON RIGHTS OF OTHERS.
(a) This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto and their respective permitted successors
and assigns; PROVIDED that the Borrowers may not assign or transfer any of
their respective interests or obligations hereunder without the prior written
consent of the Lenders. Nothing in this Agreement (except for the proviso to
the last sentence of Section 12.21), whether express or implied, shall be
construed to give to any Person other than the Company, the Borrowers, the
Lenders, the Agent, the Co-Agent, the Collateral Agent and their respective
successors and permitted assigns any legal or equitable right, remedy or claim
under or in respect of this Agreement or any commitments, covenants,
conditions or other provisions contained herein, and the same shall be for the
sole and exclusive benefit of the Company, the Borrowers, the Lenders, the
Agent, the Co-Agent, the Collateral Agent and their respective successors and
permitted assigns, as the case may be.
(b) Each Lender shall have the right at any time, upon the
Agent's, each L/C Bank's and the Company's, on behalf of the Borrowers,
consent (which consents shall not be unreasonably withheld), to assign all or
any part of its Loans, Notes, Commitments or Subsidiary Letter of Credit
Exposure to one or more Lenders or other commercial banks, insurance
companies, savings and loan associations, savings banks or other financial
institutions; PROVIDED that any assignment shall represent an aggregate
principal amount of not less than
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$1,000,000 of Commitments, Loans, Notes and Subsidiary Letter of Credit
Exposure in the case of any such assignment to another Lender and not less
than $5,000,000 in the case of any other such assignment; PROVIDED
FURTHER, that if such assigning Lender has Loans and a Commitment
outstanding in an amount less than that required for any such assignment, such
assignment may be made in the entire amount of such Loans and Commitments;
and; PROVIDED FURTHER, that the limitations on assignments and
participations in this Section 12.4 and on participations in clause (c) below
shall not, nor shall they be deemed to, apply to, limit or modify in any way,
the obligations of each Lender to purchase assignments or participations, as
the case may be, in each other's Loans, Notes, Subsidiary Letter of Credit
Exposure and Commitments pursuant to Section 1.13 and 2.4. In the case of any
assignment of all or part of the Loans, the Notes, Commitments or Subsidiary
Letter of Credit Exposure authorized under this Section 12.4(b), the assignee
shall have, to the extent of such assignment, the same rights, benefits and
obligations as it would if it were a Lender with respect to such Loans, Notes,
Commitments, or Subsidiary Letter of Credit Exposure, including, without
limitation, (x) the right to vote as a Lender, and (y) the obligation to fund
Loans directly to the Agent pursuant to Section 1 or issue Subsidiary Letters
of Credit or purchase participations therein pursuant to Section 2 and,
provided the assignee thereunder has assumed such assigning Lender's
obligations hereunder and provided the Agent shall have received the
processing fee from the assignor Lender referred to in Section 12.4(f) of the
Company Credit Agreement, such assigning Lender shall be relieved of its
obligations hereunder to the extent of such assignment and assumption.
(c) Notwithstanding Section 12.4(b), each Lender may grant
participations in all or any part of its Loans, Notes, Commitment or
Subsidiary Letter of Credit Exposure to one or more commercial banks,
insurance companies, savings and loan associations, savings banks or other
financial institutions, pension funds or mutual funds; PROVIDED that: (i)
any such disposition shall not, without the consent of the Company on behalf
of the Borrowers, require the Borrowers to file a registration statement with
the SEC or under the blue sky law of any state; (ii) the holder of any such
participation, other than an Affiliate of such Lender, shall not be entitled
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to require such Lender to take or omit to take any action hereunder except
action directly affecting the extension of the final maturity of the principal
amount of, or any payment date for interest on, a Loan allocated to such
participation or the reduction in the principal amount of, or the rate of
interest payable on, the Loans or postponing any date fixed for any payment in
respect of principal of a Loan (including, without limitation, any date on
which mandatory prepayments under Section 4.2 are due), allocated to such
participation or the reduction in the principal amount of, or the rate of
interest payable on, such Loan or any fee payable hereunder, (iii) such Lender
shall require the holder of any such participation to agree in writing to
comply with the provisions of Section 12.17; (iv) the Borrowers shall not
incur any additional costs or expenses solely as a result of such grant of a
participation; and (v) the Lender selling such participation shall be able at
any time such Lender is to be replaced pursuant to Section 1.15 to repurchase
such participation. Each Borrower hereby acknowledges and agrees that any
such disposition will give rise to a direct obligation of the Borrowers to the
participant, and the participant shall be considered to be a "Lender" for
purposes of, Sections 1.10, 1.11, 1.12, 1.13, 7.1 and 12.2, and shall be
entitled to the benefits thereto to the extent that such Lender selling such
participation would be entitled to such benefits if the participation had not
been entered into or sold.
(d) Notwithstanding the foregoing provisions of this
Section 12.4, (i) each Lender may, at any time sell, assign, transfer or
negotiate all or any part of its Loans, Commitment, Notes or Subsidiary Letter
of Credit Exposure to any Affiliate of such Lender; PROVIDED that such
Affiliate will not be treated as a "Lender" for purposes of Section 4.4 or
12.12 hereof (unless such assignment is made in accordance with Section
12.4(b)) but shall be treated as a "Lender" for purposes of Sections 1.10,
1.11, 1.12, 1.13, 7.1 and 12.2; PROVIDED FURTHER that the Borrowers shall
not incur any additional expenses as a result of such sale, assignment,
transfer or negotiation; and (ii) no Lender may assign or grant a
participation in its Loans, Subsidiary Letter of Credit Exposure or Commitment
unless it is assigning or granting a participation, on a PRO RATA basis,
in its Company Credit Extensions and such Lender's Revolving Loan Com-
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mitment under and as defined in the Company Credit Agreement.
(e) For transfers effected by assignment of an interest in
the Loans, Notes, Commitments and Subsidiary Letter of Credit Exposure, the
transferor and the transferee shall deliver to the Borrowers and the Agent, a
transfer supplement (a "Transfer Supplement") executed by an officer of each
of the transferor and the transferee in the form of Exhibit G. Such Transfer
Supplement shall be deemed to amend this Agreement to the extent, and only to
the extent, necessary to reflect the addition of such transferee as a Lender
and the resulting adjustment of the Loans, the Notes, and the Commitments or
Subsidiary Letter of Credit Exposure arising from the purchase by such
transferee (and such amendment shall not require the consent of any Person).
Promptly after the consummation of any transfer to a transferee pursuant
hereto, the Lender, the Agent and the Borrowers shall make appropriate
arrangements so that replacement Notes are issued to such Lender and new Notes
are issued to such transferee, in each case in principal amounts reflecting
such transfer.
(f) Notwithstanding any other provision set forth in this
Agreement to the contrary, any Lender may at any time and from time to time
pledge as collateral for advances, assign or endorse for discount, or
otherwise transfer all or any portion of its rights under this Agreement and
its Note to any Federal Reserve Bank pursuant to the Federal Reserve Act and
related regulations of the Board of Governors of the Federal Reserve System
(as such act or regulations are then or thereafter in effect or any successor
act or regulations), as well as any applicable operating circular or other
requirements of such Board of Governors or Federal Reserve Bank (as then or
thereafter in effect). Any Federal Reserve Bank may at any time and from time
to time subsequently transfer all or any portion of the rights acquired by
such Lender pursuant to this subsection to any Person. No such pledge,
assignment, endorsement or other transfer shall have the effect of releasing
the Agent, any Lender or the Company from its respective obligations or
conferring any obligations on the pledgee, assignee, endorsee or transferee,
as the case may be, under this Agreement or the Note. The requirements of
subsections (b), (c), (d) and (e) of this Section 12.4 shall be deemed
inappli-
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cable to pledges, assignments, endorsements or other transfers permitted by this
subsection.
(g) If, pursuant to this subsection, any interest in this
Agreement or any Note is transferred to any assignee which is organized under
the laws of any jurisdiction other than the United States or any state
thereof, or the District of Columbia, the transferor Lender shall cause such
assignee concurrently with the effectiveness of such transfer, (i) to
represent to the transferor Lender (for the benefit of the transferor Lender,
the Agent and the Borrowers) that it is either (A) entitled to the benefits of
an income tax treaty with the United States which provides for an exemption
from United States withholding tax on interest and other payments which may be
made by the Borrowers to such Lender pursuant to the terms of this Agreement
or any other Credit Document; or (B) is engaged in trade or business within
the United States, (ii) to furnish to the transferor Lender, the Agent and the
Borrowers either U.S. Internal Revenue Service Form 4224 or U.S. Internal
Revenue Service Form 1001 (wherein such assignee claims entitlement to
complete exemption from U.S. federal withholding tax on all payments
hereunder), and (iii) to agree (for the benefit of the transferor Lender, the
Agent and the Borrowers) to provide to the transferor Lender, the Agent and
the Borrowers a new Form 4224 or Form 1001 upon the obsolescence of any
previously delivered form and comparable statements in accordance with
applicable U.S. laws and regulations and amendments duly executed and
completed by such assignee, and to comply from time to time with all
applicable U.S. laws and regulations with regard to such withholding tax
exemption.
(h) Each Lender represents and warrants to the Borrowers
and the Agent that it is either (A) a United States person (as defined in
Section 7701(a)(30) of the Code); (B) entitled to the benefits of an income
tax treaty with the United States which provides for an exemption from United
States withholding tax on interest and other payments which may be made by the
Borrowers to such Lender pursuant to the terms of this Agreement or any other
Credit Document; or (C) engaged in trade or business within the United States.
Each Lender that is organized under the laws of any jurisdiction other than
the United States or any State thereof (including the
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District of Columbia) agrees to furnish to the Agent and the Borrowers, prior
to the date of the first interest payment hereunder, two copies of either U.S.
Internal Revenue Service Form 4224 or U.S. Internal Revenue Service Form 1001
(wherein such Lender claims entitlement to complete exemption from U.S.
federal withholding tax on all payments hereunder) and to provide to the Agent
and the Borrowers a new Form 4224 or Form 1001 (or, if necessary, any
successor forms) upon the obsolescence of any previously delivered form and
comparable statements in accordance with applicable U.S. laws and regulations
and amendments duly executed and completed by such Lender, and to comply from
time to time with all applicable U.S. laws and regulations with regard to such
withholding tax exemptions. Notwithstanding any other provisions of this
Agreement, the representations, warranties and obligations of the Lenders set
forth in Section 12.4(g) and this Section 12.4(h) shall survive the
termination of the Lenders' Commitments, the borrowing of the Loans and the
assignment, sale, repayment or other disposition of the Loans or any interest
therein.
(i) Except pursuant to an assignment, but only to the
extent set forth in such assignment, no Lender shall, as between the Borrowers
and that Lender, be relieved of any of its obligations hereunder as a result
of any sale, transfer or negotiation of, or granting of participations in, all
or any part of the Commitment, Loans, Notes or Subsidiary Letter of Credit
Exposure of that Lender or other obligations owed to such Lender.
12.5 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on
the part of the Agent, the Co-Agent, the Collateral Agent or any Lender or any
holder of a Note in exercising any right, power or privilege hereunder or
under any other Credit Document and no course of dealing between any Borrower
and the Agent, the Co-Agent, the Collateral Agent or any Lender or the holder
of any Note shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or under any other Credit
Document preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder or thereunder. The rights and
remedies herein expressly provided are cumulative and not exclusive of any
rights or remedies which the Agent, the Co-Agent, the Collateral
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Agent or any Lender or the holder of any Note would otherwise have. No notice
to or demand on any Borrower in any case shall entitle any Borrower to any
other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Agent, the Co-Agent, the Collateral
Agent, the Lenders or the holder of any Note to any other or further action in
any circumstances without notice or demand.
12.6 PAYMENTS PRO RATA. (a) The Agent agrees that upon
receipt of each payment from or on behalf of a Borrower in respect of any
Obligations of such Borrower hereunder, it shall promptly thereafter (on the
same day if such payment was received by the Agent prior to 11:00 A.M. (New
York, New York time) or on the next Business Day if received thereafter)
distribute funds in the form received relating to such payment to the Lenders
PRO RATA based upon their respective shares, if any, of the Obligations
with respect to which such payment was received after giving effect to the
purchase of assignments and participations effected pursuant to Sections 1.13
and 2.4 hereof.
(b) Each of the Lenders agrees, for the benefit of all other
Lenders, that if, at any time following the acceleration of any of the
Obligations, it should receive any amount payable under any Credit Document
(including without limitation any voluntary payment, by realization upon
security, exercise of the right of setoff or banker's lien, counterclaim or
cross action, the enforcement of any right under the Credit Documents,
including without limitation the Company Credit Agreement or otherwise) which
is applicable to the payment of any of the Obligations, of a sum which with
respect to the related sum or sums received by other Lenders is in a greater
proportion than the total of the Obligations then owed and due to such Lender
bears to the total of the Obligations then owed and due to all of the Lenders
immediately prior to such receipt, then such Lender receiving such excess
payment shall purchase for cash without recourse or warranty from the other
Lenders an interest in the Obligations of the Company and each Borrower, as
the case may be, to such Lenders in such amount as shall result in a
proportional participation by all of the Lenders in such amount; PROVIDED
that if all or any portion of such excess amount is thereafter recovered from
such Lender, such purchase shall be rescinded and
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the purchase price restored to the extent of such recovery, but without
interest. Each of the Lenders hereby agrees that by accepting the benefits of
Section 12.6(b) of the Company Credit Agreement it shall be bound by the terms
of said Section.
(c) Notwithstanding anything to the contrary contained herein,
the provisions of the preceding Sections 12.6(a) and (b) shall be subject to
the express provisions of this Agreement which require, or permit, differing
payments to be made to Non-Defaulting Lenders as opposed to Defaulting
Lenders.
12.7 CALCULATIONS; COMPUTATIONS. (a) All financial
statements to be furnished to the Lenders pursuant hereto shall be made and
prepared in accordance with GAAP, except as otherwise provided herein or in
the Company Credit Agreement. All accounting terms not specifically defined
herein or in the Company Credit Agreement shall be construed in accordance
with GAAP and all financial calculations to be made hereunder shall be made on
the basis of and in accordance with GAAP, except as otherwise provided herein
or in the Company Credit Agreement.
(b) All determinations of interest and other fees hereunder
shall be made on the basis of the actual number of days elapsed (including the
first day but excluding the last day) over a year of 360 days. Each such
determination by the Agent of an interest rate or amount of other fees or
amounts hereunder shall, except in the case of manifest error, be final,
conclusive and binding for all purposes.
(c) The Agent shall maintain records of all Borrowings and all
payments received by the Agent in respect of Obligations; PROVIDED that the
Agent shall not be liable in any manner to any Lender, any Borrower or the
Company for any error or omissions in respect of such records.
12.8 GOVERNING LAW; APPOINTMENT OF AGENT FOR SERVICE OF
PROCESS; SUBMISSION TO JURISDICTION. THIS AGREEMENT AND THE OTHER CREDIT
DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND
THEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF
THE STATE OF NEW YORK (WITHOUT GIVING EFFECT
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TO THE CONFLICT OF LAW PRINCIPLES THEREOF). ANY LEGAL ACTION OR PROCEEDING
WITH RESPECT TO THIS AGREEMENT, ANY OTHER CREDIT DOCUMENT OR ANY DOCUMENT
RELATED THERETO MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF
THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH BORROWER HEREBY CONSENTS, FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE JURISDICTION OF THE AFORESAID
COURTS SOLELY FOR THE PURPOSE OF ADJUDICATING ITS RIGHTS OR THE RIGHTS OF THE
AGENT, THE CO-AGENT AND THE LENDERS WITH RESPECT TO THIS AGREEMENT, ANY OTHER
CREDIT DOCUMENT OR ANY DOCUMENT RELATED THERETO. EACH BORROWER HEREBY
IRREVOCABLY DESIGNATES CT CORPORATION SYSTEM, LOCATED AT 1633 BROADWAY, NEW
YORK, NEW YORK 10019 AS THE DESIGNEE, APPOINTEE AND AGENT OF SUCH BORROWER TO
RECEIVE, FOR AND ON BEHALF OF SUCH BORROWER, SERVICE OF PROCESS IN SUCH
JURISDICTIONS IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT, ANY OTHER CREDIT DOCUMENT, OR ANY DOCUMENT RELATED THERETO AND SUCH
SERVICE SHALL, TO THE EXTENT PERMITTED BY APPLICABLE LAW, BE DEEMED COMPLETED
TEN DAYS AFTER DELIVERY THEREOF TO SAID AGENT. IT IS UNDERSTOOD THAT A COPY
OF SUCH PROCESS SERVED ON SUCH AGENT WILL BE PROMPTLY FORWARDED BY MAIL TO
EACH BORROWER AT ITS ADDRESS SET FORTH OPPOSITE ITS SIGNATURE BELOW, BUT THE
FAILURE OF SUCH BORROWER TO RECEIVE SUCH COPY SHALL NOT, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS.
EACH BORROWER HEREBY IRREVOCABLY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING
OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
RESPECTIVE JURISDICTIONS IN RESPECT OF THIS AGREEMENT, ANY OTHER CREDIT
DOCUMENT OR ANY DOCUMENT RELATED THERETO. NOTHING HEREIN SHALL AFFECT THE
RIGHT OF THE AGENT, THE CO-AGENT, ANY LENDER OR ANY HOLDER OF A NOTE TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS
OR OTHERWISE PROCEED AGAINST A BORROWER IN ANY OTHER JURISDICTION.
12.9 COUNTERPARTS. This Agreement 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, but all of which shall together constitute one and the same
instrument. A complete set of counterparts
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shall be lodged with the Borrowers, the Co-Agent and the Agent.
12.10 EFFECTIVENESS; FUNDING OF MASTER TRANSFER SUPPLEMENT.
(a) This Agreement shall become effective on the later of (i) the date (the
"Execution Date") on which each Borrower, the Company, the Co-Agent, the Agent
and each Lender shall have signed a counterpart of the Master Transfer
Supplement and this Agreement, as applicable (whether the same or different
counterparts), and shall have delivered the same to the Agent or, in the case
of the Lenders, shall have given to the Agent telephonic (confirmed in
writing), written or telex notice (actually received) that the same has been
signed and mailed to it, and (ii) the date on which the conditions contained
in Sections 5 and 12.10(b) are met to the satisfaction of the Agent and the
Required Lenders. Unless the Agent has received actual notice from any Lender
that the conditions contained in Section 5 have not been met to its
satisfaction, then, upon the satisfaction of the condition described in clause
(i) of the immediately preceding sentence and upon the Agent's good faith
determination that the conditions described in clause (ii) of the immediately
preceding sentence have been met, then the Existing Subsidiary Credit
Agreement Restructuring and the amendment and restatement of the Existing
Subsidiary Credit Agreement set forth herein shall have been deemed to have
occurred, regardless of any subsequent determination that one or more of the
conditions thereto had not been met (although the occurrence of the Existing
Subsidiary Credit Agreement Restructuring and the amendment and restatement of
the Existing Subsidiary Credit Agreement set forth herein shall not release
any Borrower from any liability for failure to satisfy one or more of the
applicable conditions contained in Section 5). The Agent will give the
Company, the Co-Agent and each Lender prompt written notice of the occurrence
of the consummation of the Existing Subsidiary Credit Agreement Restructuring.
(b) On the date specified in the initial Notice of
Borrowing for the initial borrowing of Loans, each Lender shall have delivered
to the Agent for the account of the Existing Lenders that are party to the
Master Transfer Supplement, as transferors, an amount equal to (i) in the case
of each New Lender, the Existing Loans (under and as defined in each of the
Company Credit
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Agreement and this Agreement), to be purchased by such New Lender on such date
pursuant to the Master Transfer Supplement, and (ii) in the case of each
Continuing Lender, the amount, if any, by which Existing Loans to be purchased
by such Continuing Lender on such date pursuant to the Master Transfer
Supplement exceed the amount of all of such Continuing Lender's Existing Loans
outstanding on such date before giving effect to any of the Transactions.
Notwithstanding anything to the contrary contained in this Section 12.10(b),
in satisfying the foregoing condition, unless the Agent shall have been
notified by any Lender prior to the occurrence of such date that such Lender
does not intend to make available to the Agent such Lender's share of the
purchase price for the Existing Loans (under and as defined in each of the
Company Credit Agreement and this Agreement) required to be paid by such
Lender on such date pursuant to the Master Transfer Supplement, then the Agent
may, in reliance on such assumption, make available to the Existing Lenders
the corresponding amounts in accordance with the provisions of the Master
Transfer Supplement, and the making available by the Agent of such amounts
shall satisfy the condition contained in this Section 12.10(b).
12.11 HEADINGS DESCRIPTIVE. The headings of the several
sections and subsections of this Agreement and the Table of Contents are
inserted for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
12.12 AMENDMENT OR WAIVER. (a) No amendment or waiver of
any provision of this Agreement or the other Credit Documents, nor consent to
any departure by any Borrower therefrom, shall in any event be effective
unless the same shall be in writing and signed by the Required Lenders, and
then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; PROVIDED that no amendment,
waiver or consent shall, unless in writing and signed by all the
Non-Defaulting Lenders, do any of the following: (i) waive any of the
conditions specified in Section 5.1, (ii) increase the Commitments of the
Lenders or subject the Lenders to any additional monetary obligations
(including, without limitation, extending the periods of the Commitments
during which the Lenders are obligated to make Loans), (iii) reduce the
principal of, or interest on, the Loans outstanding or any fees hereun-
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der, (iv) postpone any date fixed for any payment in respect of principal of, or
interest on, the Loans or any fees hereunder (including, without limitation, any
date on which mandatory prepayments under Section 4.2 are due), (v) change the
percentage of the Commitments or the aggregate unpaid principal amount of the
Notes, or the number or identity of Lenders, which shall be required for the
Lenders or any of them to take any action hereunder, (vi) amend or waive this
Section 12.12 or any of Sections 1.10, 1.11, 1.12, 1.13, 4.4, 9.1 and 12.1 or
the definitions of any terms used in such Sections, or (vii) release all or
substantially all of the guarantors from their obligations under the Subsidiary
Guaranty, release the Company from its obligations under the Company Guaranty or
release all or substantially all of the Collateral under the Security Documents;
PROVIDED FURTHER that, notwithstanding the foregoing, any Lender may agree to
reduce or postpone the due date of any amounts (other than principal of, and
interest on, Loans and fees) payable to it hereunder by the Borrowers; and,
PROVIDED FURTHER, that no amendment, waiver or consent shall, unless in writing
and signed by the Agent in addition to the Lenders required hereinabove to take
such action, affect the rights or duties of the Agent under this Agreement or
any Credit Document. For purposes hereof, the "Loans", shall include, without
duplication, the Subsidiary Letter of Credit Outstandings and the Company Credit
Extensions.
(b) Each Lender, the Agent and the Co-Agent hereby authorizes
the Collateral Agent to (i) release any Restricted Subsidiary from its
obligation under the Subsidiary Guaranty if all of the capital stock of such
Restricted Subsidiary that is owned by the Company or any of its other
Restricted Subsidiaries is disposed of by the Company and/or such Restricted
Subsidiary pursuant to any Asset Sale which is consented to by the Required
Lenders or is otherwise permitted hereby; PROVIDED that prior to or
simultaneously with such release such Restricted Subsidiary is released from
its guaranty, if any, of each and any Permitted Subordinated Indebtedness; and
(ii) release any Collateral under any Security Document to the extent such
Collateral (A) is disposed of by the Company or any of its Subsidiaries
pursuant to an Asset Sale consented to by the Required Lenders or otherwise
permitted by the Company Credit Agreement, (B) is owned by a guarantor that is
released from the Subsidiary
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Guaranty pursuant to clause (i), or (C) is otherwise expressly required to be
released pursuant to any provision of the Credit Documents.
(c) The Lenders and the Borrowers agree that, from time to
time, the Company and the Borrowers may designate other Domestic Guarantors
which are Significant Subsidiaries to become Borrowers hereunder. Upon
execution of a Supplement and the satisfaction of the conditions in Section
5.3, such Domestic Guarantor shall become a "Borrower" hereunder. Each
Supplemental Borrower will execute and deliver to each Lender a Note in a
principal amount equal to the amount of such Lender's Commitment. Each
Supplement shall become effective upon the written acknowledgement of receipt
thereof by the Agent. Notwithstanding the provisions of Section 1.2, the
minimum amount of the initial Borrowing hereunder by each Domestic Guarantor
which becomes a Borrower hereunder after the date hereof shall be $1,000,000
and shall be made without regard to integral multiples.
12.13 SURVIVAL. All indemnities set forth herein including,
without limitation, in Sections 1.10, 1.11, 2.5, 4.4, 11.6 and 12.1 shall
survive the execution and delivery of this Agreement and the Notes and the
making and repayment of the Loans hereunder.
12.14 DOMICILE OF LOANS. Subject to the provisions of
Section 1.14 hereof, each Lender may make, transfer or carry its Loans at, to
or for the account of any branch office, subsidiary or affiliate of such
Lender.
12.15 INDEPENDENT NATURE OF LENDERS' RIGHTS. The amounts
payable at any time hereunder to each Lender shall be a separate and
independent debt, and each Lender shall be entitled to protect and enforce its
rights arising out of this Agreement, and it shall not be necessary for any
other Lender to be joined as an additional party in any proceeding for such
purpose.
12.16 INDEPENDENCE OF COVENANTS. All covenants hereunder
shall be given independent effect so that if a particular action or condition
is not permitted by any of such covenants, the fact that it would be permitted
by an exception to, or be otherwise within the limitations of, another
covenant shall not avoid the occur-
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<PAGE>
rence of a Default or Event of Default if such action is taken or condition
exists.
12.17 CONFIDENTIALITY. Subject to Section 12.4(c), the
Lenders shall hold all non-public information, which has been identified as
such by the Borrowers, obtained in connection with or pursuant to the
negotiation, preparation or requirements of this Agreement or any of the
Credit Documents in accordance with the customary procedures for handling
confidential information of this nature and in accordance with safe and sound
banking practices and in any event, subject to Section 12.4(c), may make any
disclosure reasonably required by any bona fide transferee or participant in
connection with the contemplated transfer of any Commitment, Note, Loan or
rights and obligations in respect of any Subsidiary Letter of Credit or
participation therein so long as any such contemplated assignee or participant
has agreed in writing (with a copy to the Company on behalf of the Borrowers)
to be bound by the provisions of this Section 12.17 or as required by any
governmental agency or representative thereof or pursuant to legal process;
PROVIDED that, unless specifically prohibited by applicable law or court
order, each Lender shall notify the Borrowers, through the Company, of any
request by any governmental agency or representative thereof (other than any
such request in connection with an examination of the financial condition of
such Lender by such governmental agency) for disclosure of any such non-public
information prior to disclosure of such information; and PROVIDED,
FURTHER, that in no event shall any Lender be obligated or required to
return any materials furnished by the Borrowers or any of their respective
Subsidiaries.
12.18 PERFORMANCE OF OBLIGATIONS. Each Borrower agrees that
the Agent, upon the direction of the Required Lenders may, but shall have no
obligation to, make any payment or perform any act required of such Borrower
under the Credit Documents or any of them, or take any other action which such
party in its reasonable discretion deems necessary or desirable to protect or
preserve the Collateral, including, without limitation, any action to (i) pay
or discharge taxes, liens, security interests or other encumbrances levied or
placed on or threatened against any Collateral and (ii) effect any repairs or
obtain any insurance called for by the terms of any of the Credit Documents
and to pay all or any part
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<PAGE>
of the premiums therefor and the costs thereof. Each Borrower hereby agrees
on a joint and several basis to pay, on demand, to the Agent (i) any and all
sums incurred by the Agent pursuant to this Section 12.18 and (ii) interest on
all such sums (A) prior to the occurrence of an Event of Default, at the rate
provided for in Section 1.8(a) for Loans that are Base Rate Loans and (B) upon
the occurrence and during the continuance of an Event of Default, at the
highest rate provided for in Section 1.8(d) hereof for such type of Loans, in
each case, during the period beginning on the date on which each such sum is
paid by the Agent and ending on the date on which the Agent actually receives
payment therefor.
12.19 COLLATERAL. It is the intention and understanding of
each of the parties hereto that the payment and performance in full of the
Obligations shall be secured by the Collateral. Reference is hereby made to
all of the Security Documents for a statement of the terms and provisions
thereof and for a complete description of the Collateral.
12.20 WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF THE BORROWERS, THE AGENT, THE CO-AGENT AND THE LENDERS
HEREBY IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY
OTHER CREDIT DOCUMENT OR ANY MATTER ARISING HEREUNDER OR THEREUNDER.
12.21 CERTAIN PROVISIONS CONCERNING EXISTING SUBSIDIARY
COMPANY CREDIT AGREEMENT RESTRUCTURING. (a) On and as of the occurrence of
the Closing Date in accordance with Section 12.10 hereof, each New Lender
shall become a "Lender" under, and for all purposes of, this Agreement and the
other Credit Documents.
(b) The parties hereto acknowledge that no Existing Lender is
obligated to enter into the Master Transfer Supplement, as a transferee, or to
become a Continuing Lender. By their execution and delivery hereof, the
Borrowers and the Required Lenders (under and as defined in the Existing
Subsidiary Credit Agreement after giving effect to the assignments
contemplated by the Master Transfer Supplement) hereby consent to (i) the
voluntary repayment by the Borrowers on the Closing Date of all outstanding
Existing Loans of the Non-Continuing
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<PAGE>
Lenders that do not become parties to the Master Transfer Supplement, as
transferors, (ii) the voluntary termination by the Borrowers on the Closing
Date of the Existing Commitments of each such Non-Continuing Lender, (iii) the
amendment, restatement, consolidation and increase or decrease, as the case
may be, of each Continuing Lender's Existing Commitments pursuant to Section
1.1(a) hereof, (iv) the amendment and restatement of the Existing Subsidiary
Credit Agreement as set forth herein, in each case to be effective on, and
contemporaneously with the occurrence of, the Closing Date, and (v) the
termination of the Existing Intercreditor Agreement (other than the provisions
thereof appointing BTCo as Collateral Agent and the provisions thereof which
expressly survive the termination of such agreement); in each case to be
effective on, and contemporaneously with the occurrence of, the Closing Date.
(c) Notwithstanding anything to the contrary contained in the
Existing Subsidiary Agreement or any Credit Document as in effect immediately
prior to the Closing Date, each Borrower, the Agent, the Co-Agent, the
Collateral Agent and each of the Lenders hereby agree that effective as of the
Closing Date, (i) the Existing Intercreditor Agreement, other than the
appointment therein of BTCo as Collateral Agent and the provisions thereof
that expressly survive the termination of such agreement, shall be terminated,
and (ii) the Existing Commitment of each Non-Continuing Lender that does not
become a party to the Master Transfer Supplement, as a transferee, shall be
terminated, and such Non-Continuing Lender shall no longer constitute a
"Lender" under this Agreement and the other Credit Documents; PROVIDED that
all indemnities of the Credit Parties under the Existing Subsidiary Credit
Agreement, the Original Subsidiary Credit Agreement and the other Credit
Documents (as in effect immediately prior to the Closing Date) for the benefit
of such Existing Lender shall survive in accordance with the terms thereof for
the benefit of such Existing Lender.
12.22 ENTIRE AGREEMENT. This Agreement, and the Notes,
Security Documents, and other instruments and documents executed and delivered
in connection herewith and therewith, constitute the entire understanding
between the parties hereto with respect to the transactions contemplated
hereby, and, except to the extent
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<PAGE>
specified to the contrary below, all prior agreements, understandings,
representations and statements with respect to such transactions are, as of
the Closing Date, merged with and into this Agreement and the other Credit
Documents. Notwithstanding the foregoing, indemnification obligations of the
Borrowers under Section 12.01 of the Existing Subsidiary Credit Agreement and
the Original Subsidiary Credit Agreement shall survive the execution and
effectiveness of this Agreement and, in the case of the Agent, the Collateral
Agent and the Continuing Lenders, shall be deemed to be Obligations hereunder.
12.23 COMPANY ACTIONS. All actions which may be taken by
the Borrowers may be taken by the Company on behalf of the Borrowers.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Second Amended and Restated
Subsidiary Credit Agreement as of the date first above written.
ADDRESS:
BORROWERS:
577 Mulberry Street BORROWERS
Macon, Georgia 31298
By__________________________________
Attn: Charlotte A. Sanford Charlotte A. Sanford, in her
Treasurer capacity as Treasurer for the
corporations listed on Annex I
hereto
LENDER PARTIES:
AGENT:
280 Park Avenue BANKERS TRUST COMPANY,
New York, NY 10017 Individually and as Agent
Attn: Michael Shraga,
Managing Director;
By_________________________________
with copies to: Name:
Title:
Bankers Trust Company
130 Liberty Street
30th Floor
New York, New York 10006
Attn: Mary Kay Coyle,
Vice President
CO-AGENT:
First Union National Plaza FIRST UNION NATIONAL BANK OF
301 S.College St. NORTH CAROLINA, Individually
Charlotte, NC 28288 and as Co-Agent
By__________________________________
Name:
Title:
95
<PAGE>
LEAD MANAGERS:
1230 Peachtree Street BANK OF AMERICA NATIONAL
Suite 3600 TRUST AND SAVINGS ASSOCIATION
Atlanta, GA 30309
By__________________________________
Name:
Title:
75 Wall Street DRESDNER BANK AG, New York
New York, NY 10005-2889 Branch and Grand Caymen Branch
By__________________________________
Name:
Title:
By__________________________________
Name:
Title:
5665 New Northside GENERAL ELECTRIC CAPITAL
Suite 200 CORPORATION
Atlanta, GA 30328
By__________________________________
Name:
Title:
Two World Financial Center THE MITSUBISHI BANK, LIMITED
225 Liberty Street New York Branch
New York, NY 10281
By__________________________________
Name:
Title:
96
<PAGE>
Annex I to
Second Amended and Restated
Subsidiary Credit Agreement
-----------------------------------
BORROWERS
I. LETTERS OF CREDIT
Charter Behavioral Health System of New Mexico, Inc. (formerly known as
Charter Hospital of Albuquerque, Inc.)
Charter Behavioral Health System of Charleston, Inc. (formerly known as
Charter Hospital of Charleston, Inc.)
Charter Behavioral Health System of Northwest Arkansas, Inc. (formerly known
as Charter Vista Hospital, Inc.)
Charter Behavioral Health System of Central Georgia, Inc. (formerly known as
Charter Lake Hospital, Inc.)
Charter Fairmont Behavioral Health System, Inc. (formerly known as Charter
Fairmount Institute, Inc.)
Charter Forest Behavioral Health System, Inc. (formerly known as Charter
Forest Hospital, Inc.)
Charter Hospital of St. Louis, Inc. (Greenville)
Charter Palms Behavioral Health System, Inc. (formerly known as Charter Palms
Hospital, Inc.)
Charter Plains Behavioral Health System, Inc. (formerly known as Charter
Plains Hospital, Inc.)
Charter Ridge Behavioral Health System, Inc. (formerly known as Charter Ridge
Hospital, Inc.)
Charter Rivers Behavioral Health System, Inc. (formerly known as Charter
Rivers Hospital, Inc.)
Charter Springs Behavioral Health System, Inc. (formerly known as Charter
Springs Hospital, Inc.)
CMSF, Inc. (Glade)
II. SUBSIDIARY LOANS
Charter Behavioral Health System of Northern California, Inc. (formerly known
as Charter Hospital of Sacramento, Inc.)
<PAGE>
Charter Behavioral Health System of Northwest Indiana, Inc. (formerly known as
Charter Medical - Lake County, Inc.)
Charter Hospital of St. Louis, Inc. (Orlando South)
Charter San Diego Behavioral Health System, Inc. (formerly known as Charter
Hospital of San Diego, Inc.)
Charter Lakeside Behavioral Health System, Inc. (formerly known as Charter
Lakeside Hospital, Inc.)
Charter Mission Viejo Behavorial Health System, Inc. (formerly known as
Charter Mission Viejo, Inc.)
Charter Indianapolis Behavioral Health System, Inc. (formerly known as Charter
Medical - Marion County, Inc.)
Charter South Bend Behavioral Health System, Inc. (formerly known as Charter
Medical - St. Joseph County, Inc.)
Charter Terre Haute Behavioral Health System, Inc. (formerly known as Charter
Medical - Vigo County, Inc.)
Charter Woods Behavioral Health System, Inc. (formerly known as Charter Woods
Hospital, Inc.)
<PAGE>
Annex II to
Second Amended and Restated
Subsidiary Credit Agreement
--------------------------------
SCHEDULE OF COMMITMENTS
<TABLE>
<CAPTION>
LENDER'S REVOLVING
COMMITMENT LOAN PERCENTAGE
---------- ------------------
<S> <C> <C>
LENDERS
Bankers Trust Company $60,000,000 20.00000000%
First Union National Bank
of North Carolina 55,000,000 18.33333333%
General Electric Capital Corporation 50,000,000 16.66666667%
Bank of America National Trust and
Savings Association 45,000,000 15.00000000%
Dresdner Bank AG, New York
Branch and Grand Cayman Branch 45,000,000 15.00000000%
The Mitsubishi Bank, Limited 45,000,000 15.00000000%
Total ___________ _____________
$300,000,000 100%
____________ _____________
____________ _____________
</TABLE>
<PAGE>
Annex III to
Second Amended and Restated
Subsidiary Credit Agreement
NEW LENDERS
First Union National Bank of North Carolina
<PAGE>
SECOND AMENDED AND RESTATED
COMPANY STOCK AND NOTES PLEDGE AGREEMENT
SECOND AMENDED AND RESTATED COMPANY STOCK AND NOTES PLEDGE AGREEMENT,
dated as of May 2, 1994 (as the same may be amended, modified or supplemented
from time to time, this "Agreement"), made by Charter Medical Corporation, a
Delaware corporation (the "Company" or the "Pledgor"), to Bankers Trust Company,
a New York banking corporation, in its capacity as collateral agent (the
"Collateral Agent" or the "Pledgee", and as agent under the Credit Agreements,
as hereinafter defined, the "Agent") for the financial institutions from time to
time parties to the Credit Agreements (the "Lenders"), First Union National Bank
of North Carolina, as co-agent (the "Co-Agent"), and the Agent.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the parties hereto (or their predecessors) entered into the
Company Stock and Notes Pledge dated as of September 1, 1988, as supplemented by
Supplement No. 1 dated as of October 4, 1990, which was amended and restated by
the Amended and Restated Company Stock and Notes Pledge dated as of July 21,
1992 (the "1992 Company Stock and Notes Pledge"), in favor of the Collateral
Agent for the benefit of the Lenders, the Trustee and the Issuing Banks (as such
terms are defined in the 1992 Company Stock and Notes Pledge), and now desire to
amend and restate such pledge in its entirety; and
WHEREAS, the Company (as successor to WAF Acquisition Corporation, a
Delaware corporation), certain of the Lenders, the Agent and Wells Fargo Bank,
National Association and Bank of America National Trust and Savings Association,
as co-agents (the "Original Co-Agents"), entered into that certain Credit
Agreement dated as of September 1, 1988 which was amended and restated by the
Amended and Restated Credit Agreement dated as of July 21, 1992 (the "1992
Credit Agreement"), which is being amended and restated by the Second Amended
and Restated Credit Agreement dated as of the date hereof (as the same may be
further amended, restated, supplemented or otherwise modified from time to time,
the "Company Credit Agreement"), pursuant to which certain of the Lenders made
certain loans and commitments to the Company, the
<PAGE>
terms of which are being amended and restated pursuant to the Company Credit
Agreement; and
WHEREAS, pursuant to the terms and conditions of the Company Credit
Agreement, the Lenders have made certain commitments to make additional loans
to, and participate in and/or issue letters of credit for the account of, the
Company; and
WHEREAS, the Subsidiary Borrowers, certain of the Lenders, the Agent
and the Original Co-Agents entered into a Credit Agreement, dated as of
September 1, 1988 which was amended and restated by the Amended and Restated
Subsidiary Credit Agreement dated as of July 21, 1992 (the "1992 Subsidiary
Credit Agreement"; and, together with the 1992 Company Credit Agreement, the
"1992 Credit Agreements"), which is being amended and restated by the Second
Amended and Restated Subsidiary Credit Agreement dated as of the date hereof (as
the same may be further amended, restated, supplemented or otherwise modified
from time to time, the "Subsidiary Credit Agreement"; and, together with the
Company Credit Agreement, each a "Credit Agreement" and collectively the "Credit
Agreements"), pursuant to which certain of the Lenders made certain loans and
commitments to, and participated in certain letters of credit for the benefit
of, the Subsidiary Borrowers, the terms of which are being amended and restated
pursuant to the Subsidiary Credit Agreement; and
WHEREAS, pursuant to the terms and conditions of the Subsidiary Credit
Agreement, the Lenders have made certain commitments to make additional loans
to, and participate in and/or issue letters of credit for the account of, the
Subsidiary Borrowers; and
WHEREAS, the Company has executed and delivered the Company Guaranty
dated as of the date hereof (as the same may be further amended, restated,
supplemented or otherwise modified from time to time, the "Company Guaranty"),
pursuant to which the Company agreed to guarantee all of the obligations of each
Subsidiary Borrower under the Subsidiary Credit Agreement and the other Credit
Documents; and
WHEREAS, the Lenders have agreed to amend and restate the 1992 Credit
Agreements upon terms and conditions acceptable to the Company and the
Subsidiary Borrowers; and
WHEREAS, it was a condition precedent to the incurrence of loans and
the participation in letters of credit under the 1992 Credit Agreements that the
Pledgor execute and deliver to
2
<PAGE>
the Agent the 1992 Company Stock and Notes Pledge and it is a condition
precedent to the incurrence of loans and issuance of the letters of credit under
the Credit Agreements that the Pledgor execute and deliver to the Collateral
Agent this Agreement; and
WHEREAS, (a) the Senior Secured Notes (as defined in the 1992 Company
Stock and Notes Pledge) have been irrevocably paid in full; (b) each Issuing
Bank has agreed, among other things, that the Reimbursement Agreements (as
defined in the 1992 Company Stock and Notes Pledge) to which it is a party
(other than the Credit Documents to the extent the same could be considered
Reimbursement Agreements) shall no longer be entitled to the security interests
and other benefits of this Agreement; and (c) the Intercreditor Agreement (as
defined in the 1992 Company Stock and Notes Pledge) has been terminated, except
for the appointment by the Lenders of Bankers Trust Company as Collateral Agent,
which appointment has been ratified and confirmed in the Credit Agreements;
NOW, THEREFORE, in consideration of the benefits accruing to the
Pledgor, the receipt and sufficiency of which are hereby acknowledged, the
Pledgor hereby makes the following representations and warranties to the Pledgee
and hereby covenants and agrees with the Pledgee as follows:
1. DEFINITIONS. Except as otherwise defined herein, including in
the recital paragraphs, capitalized terms used herein and defined in the Company
Credit Agreement shall be used herein as so defined.
2. SECURITY FOR OBLIGATIONS ETC. This Agreement is for the benefit
of the Agent, the Co-Agent and the Lenders and their respective successors and
assigns (collectively, the "Secured Creditors") to secure, pursuant to Section 4
hereof, the payment in full when due, whether at stated maturity, by
acceleration or otherwise, of all obligations of the Company, each Subsidiary
Borrower and each other Subsidiary of the Company now or hereafter existing
under the Credit Agreements, the Company Guaranty or any other Credit Document,
whether for principal, premium, interest, fees, expenses or otherwise
(including, without limitation, the Obligations under the Credit Agreements of
the Pledgor and the Subsidiary Borrowers to reimburse drawings honored under
Letters of Credit and Subsidiary Letters of Credit), and all obligations now or
hereafter existing under this Agreement (all such obligations being the
"Obligations").
3
<PAGE>
3. DEFINITION OF SECURITIES; REPRESENTATIONS AND WARRANTIES. As
used herein, the term "Securities" shall mean (i) (x) all of the issued and
outstanding shares of every class of capital stock from time to time legally and
beneficially owned by the Pledgor of each of the present and future Domestic
Subsidiaries of the Pledgor (other than future Domestic Subsidiaries that are
not or do not become Significant Subsidiaries), and (y) to the extent permitted
by applicable law, all of the issued and outstanding shares of every class of
capital stock from time to time owned by the Pledgor of the present and future
Foreign Subsidiaries of the Pledgor (other than future Foreign Subsidiaries that
are not or do not become Significant Subsidiaries), in each case, other than
shares released pursuant to Section 22 hereof (collectively, the "Pledged
Stock"; and the issuers of such Pledged Stock, collectively, the "Pledged
Companies"); PROVIDED that in no event shall Securities or Pledged Stock include
more than 65% of all of the outstanding shares of capital stock of any
Excludable Foreign Subsidiary; and (ii) all promissory notes (the "Pledged
Notes") at any time (a) issued to the Pledgor by any present and future
Subsidiary of the Pledgor (other than by any Excludable Foreign Subsidiary) or
(b) held by or issued to the Pledgor by any Person in connection with any Asset
Sale. The Pledgor represents and warrants that on the date hereof (a) the
Pledged Stock consists of the number and type of shares of the common stock of
the Pledged Companies as described in Annex A attached hereto and the Pledged
Notes consist of those described in Annex B attached hereto; (b) the Pledgor is
(i) the legal and sole beneficial owner of such Pledged Stock and (ii) the payee
with respect to the Pledged Notes; and (c) such Pledged Stock constitutes the
respective amount of the issued and outstanding capital stock of each Pledged
Company set forth opposite the name of such Pledged Company on Annex A attached
hereto.
4. PLEDGE OF SECURITIES, ASSIGNMENT
OF CERTAIN AGREEMENTS, ETC.
4.1 PLEDGE. To secure the Obligations, the Pledgor hereby pledges and
deposits with the Pledgee the Securities owned by the Pledgor on the date
hereof, and delivers to the Pledgee (i) the certificates representing such
Pledged Stock accompanied by stock powers duly executed in blank by the Pledgor
and (ii) the instruments evidencing the Pledged Notes accompanied by assignment
forms duly executed in blank by the Pledgor; and hereby assigns, transfers,
hypothecates and sets over to the Pledgee all of the Pledgor's right, title and
interest in, to and under any and all Securities now owned or hereafter acquired
by
4
<PAGE>
the Pledgor, and all principal, interest, dividends, cash, certificates,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any and all of such
Securities and all proceeds of the foregoing, all to be held by the Pledgee,
upon the terms and conditions set forth in this Agreement; PROVIDED that the
Pledged Notes (a) issued to the Pledgor by any Subsidiary of the Pledgor that is
not a Significant Subsidiary or (b) held by or issued to the Pledgor by any
Person in connection with an Asset Sale which are in an aggregate original
principal amount, for any individual Asset Sale, of $500,000 or less, shall not
be required to be deposited with the Pledgee, unless, in either such case, an
Event of Default shall have occurred and be continuing and the Pledgor shall
have received from the Pledgee a written request or requests that the Pledgor
deliver such Pledged Notes to the Pledgee.
4.2 SUBSEQUENTLY ACQUIRED SECURITIES. If at any time or from time to
time after the date hereof, the Pledgor shall acquire any additional Securities
(by purchase, stock dividend or otherwise) or the Pledgor shall possess any
additional Securities by virtue of possessing capital stock of a Person which
becomes a Significant Subsidiary, the Pledgor will, forthwith (i) pledge and
deposit with the Pledgee such Securities, provided that in no event shall the
Pledgor be required to pledge more than 65% of all of the outstanding shares of
capital stock of any Excludable Foreign Subsidiary; and (ii) deliver to the
Pledgee the certificates or instruments therefor, accompanied by assignment
forms or stock powers duly executed in blank by the Pledgor to the extent that
the Pledgor would have been required pursuant to Section 5.1(c) of the Company
Credit Agreement and Section 4.1 of this Agreement to pledge such Securities if
they had been possessed as of the date hereof, and will promptly thereafter
deliver to the Pledgee a certificate (which shall be deemed to supplement Annex
A attached hereto) executed by an authorized officer of the Pledgor describing
such Securities and certifying that the same has been duly pledged with the
Pledgee hereunder; PROVIDED that the Pledged Notes (a) issued to the Pledgor by
any Subsidiary of the Pledgor that is not a Significant Subsidiary or (b) held
by or issued to the Pledgor by any person in connection with an Asset Sale which
are in an aggregate original principal amount, for any individual Asset Sale, of
$500,000 or less shall not be required to be deposited with the Pledgee, unless,
in either such case, an Event of Default shall have occurred and be continuing
and the Pledgor shall have received from the Pledgee a written request or
requests that the Pledgor deliver such Pledged Notes to the Pledgee.
5
<PAGE>
4.3 DEFINITIONS OF PLEDGED SECURITIES AND COLLATERAL. All Securities
at any time pledged or required to be pledged hereunder are hereinafter called
the "Pledged Securities," and the Pledged Securities, together with all other
securities and moneys received and at the time held by the Pledgee hereunder and
any Proceeds of any of the foregoing, are hereinafter called the "Collateral."
5. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. The Pledgee shall
have the right to appoint one or more sub-agents for the purpose of retaining
physical possession of the Pledged Securities, which may be held (if applicable
and in the discretion of the Pledgee) in the name of the Pledgor, endorsed or
assigned in blank or in favor of the Pledgee or any nominee or nominees of the
Pledgee or a sub-agent appointed by the Pledgee. The Pledgee agrees to give the
Company prompt notice of any such appointment; PROVIDED that the failure of the
Pledgee to give such notice shall not affect the effectiveness of any such
appointment.
6. VOTING, ETC. Unless and until an Event of Default (such term to
mean an Event of Default under, and as defined in, either Credit Agreement)
shall have occurred and be continuing, the Pledgor shall be entitled to vote any
and all Pledged Stock and to give consents, waivers or ratifications in respect
thereof; PROVIDED that no vote shall be cast or any consent, waiver or
ratification given or any action taken which would violate or be inconsistent
with any of the terms of this Agreement or any instrument or agreement relating
to the Obligations, or which would have the effect of materially impairing the
position or interests of the Pledgee or any other Secured Creditor, except to
the extent not prohibited by the Company Credit Agreement, and the Pledgor shall
give the Pledgee at least five Business Days' written notice of the manner in
which it intends to exercise, or the reasons for refraining from exercising, any
such right if the exercise or non-exercise of such right potentially may violate
or be inconsistent with the aforementioned agreements or may materially impair
the position or interests of the Pledgee or any other Secured Creditor;
PROVIDED, FURTHER, nothing herein contained shall be deemed to limit or restrict
the Pledgor's right to take any such actions in connection with the issuance by
any Unrestricted Subsidiary of any equity interests or debt obligations. All
such rights of the Pledgor to vote and to give consents, waivers and
ratifications shall cease in case an Event of Default shall occur and be
continuing, and Section 8 hereof shall become applicable. The Pledgor will not,
at any time, amend, restate, supplement, waive or otherwise modify in any
respect adverse to
6
<PAGE>
the interests of the Secured Creditors any provision of any Pledged Note, nor
take any action which would release or render unenforceable any of the
obligations of any Subsidiary of the Pledgor or any other Person under its
respective Pledged Note.
7. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless an Event of Default
shall have occurred and be continuing, all principal, interest and cash
dividends payable in respect of the Pledged Securities shall be paid to the
Pledgor. The Pledgee shall be entitled to receive directly, and to retain as
part of the Collateral:
(a) all other or additional stock or securities and, after the
occurrence and during the continuance of an Event of Default, property
(including cash) paid or distributed by way of dividend in respect of the
Pledged Securities;
(b) all other or additional stock or other securities and, after
the occurrence and during the continuance of an Event of Default, property
(including cash) paid or distributed in respect of the Pledged Securities by way
of stock-split, spin-off, split-up, reclassification, combination of shares or
similar rearrangement; and
(c) all other or additional stock or other securities and, after
the occurrence and during the continuance of an Event of Default, property which
may be paid in respect of the Pledged Securities by reason of any consolidation,
merger, exchange of stock, conveyance of assets, liquidation or similar
corporate reorganization or other disposition of Collateral.
8. REMEDIES IN CASE OF EVENT OF DEFAULT. In case an Event of
Default shall have occurred and be continuing, the Pledgee shall be entitled to
exercise all of the rights, powers and remedies (whether vested in it by this
Agreement, any other Credit Document or by law and including, without
limitation, all rights and remedies of a secured party of a debtor in default
under the Uniform Commercial Code (the "Code") in effect in any relevant
jurisdiction at that time) for the protection and enforcement of its rights in
respect of the Collateral, and to the extent permitted by applicable law the
Pledgee shall be entitled, without limitation, to exercise the following rights,
which the Pledgor hereby agrees to be commercially reasonable:
(a) to receive all amounts payable in respect of the Collateral
otherwise payable under Section 7 to the Pledgor and to enforce the payment of
the Pledged Notes and to exercise
7
<PAGE>
all of the rights, powers, and remedies of the Pledgor thereunder;
(b) to transfer all or any part of the Collateral into the
Pledgee's name or the name of its nominee or nominees;
(c) to vote all or any part of the Collateral (whether or not
transferred into the name of the Pledgee) and give all consents, waivers and
ratifications in respect of the Collateral and otherwise act with respect
thereto as though it were the outright owner thereof;
(d) at any time or from time to time to sell, assign and
deliver, or grant options to purchase, all or any part of the Collateral in one
or more parcels, or any interest therein, at any public or private sale at any
exchange, broker's board or at any of the Pledgee's offices or elsewhere,
without demand of performance, advertisement or notice of intention to sell or
of the time or place of sale or adjournment thereof or to redeem or otherwise
(all of which are hereby expressly and irrevocably waived by the Pledgor), for
cash, on credit or for other property, for immediate or future delivery without
any assumption of credit risk, and for such price or prices and on such terms as
the Pledgee in its absolute discretion may determine. The Pledgee agrees that
to the extent that notice of sale shall be required by law, at least 10 days'
notice to the Pledgor of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable notification.
The Pledgee shall not be obligated to make any sale of Collateral regardless of
notice of sale having been given. The Pledgee may adjourn any public or private
sale from time to time by announcement at the time and place fixed therefor, and
any such sale may, without further notice, be made at the time and place to
which it was so adjourned. The Pledgor hereby waives and releases to the
fullest extent permitted by law any right or equity of redemption with respect
to the Collateral, whether before or after sale hereunder, and all rights, if
any, of marshalling the Collateral and any other security for the Obligations or
otherwise. At any such sale, unless prohibited by applicable law, the Pledgee,
on behalf of the Secured Creditors or any Secured Creditor, may bid for and
purchase all or any part of the Collateral so sold free from any such right or
equity of redemption. Neither the Pledgee nor any Secured Creditor shall be
liable for failure to collect or realize upon any or all of the Collateral or
for any delay in so doing nor shall any of them be under any obligation to take
any action whatsoever with regard thereto;
8
<PAGE>
(e) to settle, adjust, compromise and arrange all accounts,
controversies, questions, claims and demands whatsoever in relation to all or
any part of the Collateral;
(f) in respect of the Collateral, to execute all such contracts,
agreements, deeds, documents and instruments; to bring, defend and abandon all
such actions, suits and proceedings, and to take all actions in relation to all
or any part of the Collateral as the Pledgee in its absolute discretion may
determine;
(g) to appoint managers, sub-agents, officers and servants for
any of the purposes mentioned in the foregoing provisions of this Section 8 and
to dismiss the same, all as the Pledgee in its absolute discretion may
determine; and
(h) generally, to take all such other action as the Pledgee in
its absolute discretion may determine as incidental or conducive to any of the
matters or powers mentioned in the foregoing provisions of this Section 8 and
which the Pledgee may or can do lawfully and to use the name of the Pledgor for
the purposes aforesaid and in any proceedings arising therefrom.
9. REMEDIES, ETC., CUMULATIVE. Each right, power and remedy of the
Pledgee provided for in this Agreement or any other Credit Document or now or
hereafter existing at law or in equity or by statute shall be cumulative and
concurrent and shall be in addition to every other such right, power or remedy.
The exercise or beginning of the exercise by the Pledgee or any Secured Creditor
of any one or more of the rights, powers or remedies provided for in this
Agreement or any other Credit Document or now or hereafter existing at law or in
equity or by statute or otherwise shall not preclude the simultaneous or later
exercise by the Pledgee or any Secured Creditor of all such other rights, powers
or remedies, and no failure or delay on the part of the Pledgee or any Secured
Creditor to exercise any such right, power or remedy shall operate as a waiver
thereof.
10. APPLICATION OF PROCEEDS. All moneys collected by the Pledgee
upon any sale or other disposition of the Collateral, together with all other
moneys received by the Pledgee hereunder shall be applied as follows:
(a) first, to the payment of any and all expenses and fees
(including reasonable attorney's fees) actually incurred by the Pledgee in
obtaining, taking possession of, removing, storing and disposing of Collateral
and any and all amounts
9
<PAGE>
incurred by the Pledgee in connection therewith or owing to the Pledgee
hereunder;
(b) next, any surplus then remaining, to the payment of the
other Obligations; and
(c) if the Total Revolving Loan Commitment is then terminated,
all Loans (under and as defined in each Credit Agreement) have been paid in
full, no Letters of Credit or Subsidiary Letters of Credit are outstanding and
no other Obligation is outstanding, any surplus then remaining shall be paid to
the Company, subject, however, to the rights of the holder of any then existing
Lien of which the Collateral Agent has actual notice (without investigation);
it being understood that the Company shall remain liable to the extent of any
deficiency between the amount of the proceeds of the Collateral and the
aggregate amount of the sums referred to in clauses (a) and (b) of this
Section 10.
11. PURCHASERS OF COLLATERAL. Upon any sale of any of the Collateral
hereunder (whether by virtue of the power of sale herein granted, pursuant to
judicial process or otherwise), the receipt of the Pledgee or the officer making
the sale shall be a sufficient discharge to the purchaser or purchasers of the
Collateral so sold, and such purchaser or purchasers shall not be obligated to
see to the application of any part of the purchase money paid over to the
Pledgee or such officer or be answerable in any way for the misapplication or
nonapplication thereof.
12. INDEMNITY. Without duplication of any amounts payable under
Section 12.1 of each Credit Agreement or any other similar indemnity provision
set forth in any other Credit Document, the Pledgor shall: (i) whether or not
the transactions hereby contemplated are consummated, pay all reasonable out-of-
pocket costs and expenses of the Pledgee actually incurred in connection with
the administration (both before and after the execution hereof and including
advice of counsel as to the rights and duties of the Pledgee with respect
thereto) of and in connection with the preparation, execution and delivery of
this Agreement (including, without limitation, the reasonable fees and
disbursements of Skadden, Arps, Slate, Meagher & Flom and of the Pledgee
actually incurred in connection with the preservation of rights under, and
enforcement of, and, after an Event of Default, any renegotiation or
restructuring of this Agreement and any amendment, waiver or consent relating
thereto (including, without limitation, the reasonable fees and disbursements of
counsel for
10
<PAGE>
the Pledgee); (ii) pay and hold the Pledgee harmless from and against any and
all present and future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies which arise from any payment made
hereunder or from the execution, delivery or registration of, or otherwise with
respect to this Agreement and save the Pledgee harmless from and against any and
all liabilities with respect to or resulting from any delay or omission to pay
any such taxes, charges or levies; and (iii) indemnify the Pledgee, its
officers, directors, employees, representatives and agents from and hold each of
them harmless against any and all costs, losses, liabilities, claims, damages or
expenses actually incurred by any of them (whether or not any of them is
designated a party thereto) arising out of or by reason of any investigation,
litigation or other proceeding related to this Agreement or any transaction
contemplated hereby, including, without limitation, the reasonable fees and
disbursements of counsel incurred in connection with any such investigation,
litigation or other proceeding. Notwithstanding anything in this Agreement to
the contrary, the Pledgor shall not be responsible to the Pledgee or any
officer, director, employee, representative or agent of the foregoing (an
"Indemnified Party") for any losses, damages, liabilities or expenses which
result from such Indemnified Party's gross negligence or willful misconduct. It
is understood that the Pledgor shall not, in connection with any single action,
suit, proceeding or claim or separate but substantially similar or related
actions, suits, proceedings or claims, arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys at the same time for the Indemnified Parties
(which firm shall be designated by the Pledgee) except that, if any Indemnified
Party other than the Pledgee shall determine, in its sole discretion, that there
may be a conflict in such firm representing the Pledgee and such Indemnified
Party, then the Pledgor shall be liable for the reasonable fees and expenses of
an additional firm for such Indemnified Party whose interests may be in
conflict. The Pledgor's obligations under this Section 12 shall survive any
termination of this Agreement.
13. FURTHER ASSURANCES. The Pledgor agrees that it will join with
the Pledgee in executing and, at its own expense, file and refile under the Code
such financing statements, continuation statements and other documents in such
offices as the Pledgee may deem necessary or appropriate and wherever required
or permitted by law in order to perfect and preserve the Pledgee's security
interest in the Collateral and hereby authorizes the Pledgee to file financing
statements and amendments thereto relative to all or any part of the Collateral
without the
11
<PAGE>
signature of the Pledgor and to sign the same in the name of the Pledgor, in
each case where permitted by law, and agrees to do such further acts and things
and to promptly execute and deliver to the Pledgee such additional conveyances,
assignments, agreements and instruments as the Pledgee may reasonably require or
deem advisable to carry into effect the purposes of this Agreement or to further
assure and confirm unto the Pledgee its rights, powers and remedies hereunder.
14. THE PLEDGEE AS AGENT. (a) The Pledgee will hold in accordance
with this Agreement all items of the Collateral at any time received under this
Agreement. It is expressly understood and agreed that the obligations of the
Pledgee as holder of the Collateral and interests therein and with respect to
the disposition thereof, and otherwise under this Agreement, are only those
expressly set forth in this Agreement.
(b) The Pledgee shall be deemed to have exercised reasonable
care in the custody and preservation of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that which the Pledgee
accords its own property, it being understood that neither the Pledgee nor any
Secured Creditor shall have responsibility for (i) ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or other
matters relative to any Collateral, whether or not the Pledgee or any Secured
Creditor has or is deemed to have knowledge of such matters, or (ii) taking any
necessary steps to preserve rights against any parties with respect to any
Collateral.
15. TRANSFER BY THE PLEDGOR. The Pledgor will not sell or otherwise
dispose of, grant any option with respect to, or mortgage, pledge or otherwise
encumber any of the Collateral or any interest therein (except pursuant to
Section 22 of this Agreement or as otherwise expressly permitted by the Credit
Agreements).
16. REPRESENTATIONS AND WARRANTIES. The Pledgor hereby represents
and warrants that (a) it is the legal and beneficial owner of, and has good and
marketable title to, the Securities described in Section 3 hereof, subject to no
pledge, lien, mortgage, hypothecation, security interest, charge, option or
other encumbrance whatsoever, except the liens and security interests created by
this Agreement or permitted by the Credit Documents; (b) it has full power,
authority and legal right to pledge and assign all the Collateral pursuant to
this Agreement; (c) except as set forth in Schedule 6.7 of the Company Credit
12
<PAGE>
Agreement, no consent of any other party (including, without limitation, any
stockholder or creditor of the Pledgor or any of its Subsidiaries) and no order,
consent, license, permit, approval, validation or authorization of, exemption
by, notice to or registration, recording, filing or declaration with, any
governmental or public body or authority is required to be obtained by the
Pledgor in connection with the execution, delivery or performance of this
Agreement or consummation of the transactions contemplated hereby, including,
without limitation, the exercise by the Pledgee of the voting or other rights
provided for in this Agreement or the remedies in respect of the Collateral
pursuant to this Agreement (except as may be required (i) from stockholders of
the Pledgor's Subsidiaries other than the Pledgor and (ii) in connection with
the disposition of the Pledged Securities by laws affecting the offering and
sale of securities generally); (d) all shares of Pledged Stock have been duly
and validly issued, are fully paid and nonassessable and the Pledgor is a holder
in due course of the Pledged Notes which it acquired for value, and in good
faith and without notice of any claim or defense thereto on the part of any
person; and (e) the pledge, assignment and delivery of the Securities, pursuant
to this Agreement creates a valid and perfected security interest in the
Securities and the proceeds thereof superior to and prior to the rights of all
other Persons therein (as provided in the Uniform Commercial Code) (except as
permitted by the Credit Agreements).
17. COVENANTS OF THE PLEDGOR. The Pledgor covenants and agrees that
(a) the Pledgor will defend the Pledgee's right, title and security interest in
and to the Collateral against the claims and demands of all persons whomsoever
(except as against Persons holding liens, security interests, or other
encumbrances permitted by the Credit Agreements having priority over the
security interest granted hereunder pursuant to applicable law); (b) the Pledgor
will have like title to and right to pledge any other property at any time
hereafter constituting Collateral and will likewise defend the right thereto and
security interest therein of the Pledgee and the Secured Creditors; and (c) the
Pledgor will not, with respect to any Collateral, enter into any shareholder
agreements, voting agreements, voting trusts, trust deeds, irrevocable proxies
or any other similar agreements or instruments, except for any contained in the
Transaction Documents.
18. PLEDGOR'S OBLIGATIONS ABSOLUTE, ETC. The obligations of the
Pledgor under this Agreement shall be absolute and unconditional in accordance
with its terms and shall remain in full force and effect without regard to, and
shall not be re-
13
<PAGE>
leased, suspended, discharged, terminated or otherwise affected by, any
circumstance or occurrence whatsoever, including, without limitation: (a) any
change in the time, place or manner of payment of, or in any other term of, all
or any of the Obligations, any waiver, indulgence, renewal, extension, amendment
or modification of or addition, consent or supplement to or deletion from or any
other action or inaction under or in respect of either Credit Agreement, any
Note, any other Credit Document or any of the other documents, instruments or
agreements relating to the Obligations or any other instrument or agreement
referred to therein or any assignment or transfer of any thereof; (b) any lack
of validity or enforceability of either Credit Agreement, any other Credit
Document or any other documents, instruments or agreement referred to therein or
any assignment or transfer of any thereof; (c) any furnishing of any additional
security to the Pledgee, the Secured Creditors or their assignees or any
acceptance thereof or any release of any security by the Pledgee, the Secured
Creditors or their assignees; (d) any limitation on any party's liability or
obligations under any such instrument or agreement or any invalidity or
unenforceability, in whole or in part, of any such instrument or agreement or
any term thereof; (e) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceeding relating to the
Pledgor or any Subsidiary of the Pledgor, or any action taken with respect to
this Agreement by any trustee or receiver, or by any court, in any such
proceeding, whether or not the Pledgor shall have notice or knowledge of any of
the foregoing; (f) any exchange, release or nonperfection of any other
collateral, or any release, or amendment or waiver of or consent to departure
from any guaranty or security, for all or any of the Obligations; or (g) any
other circumstance which might otherwise constitute a defense available to, or a
discharge of the Pledgor.
19. REGISTRATION, ETC. (a) If an Event of Default shall have
occurred and be continuing and the Pledgor shall have received from the Pledgee
a written request or requests that the Pledgor cause any registration,
qualification or compliance under any Federal or state securities law or laws to
be effected with respect to all or any part of the Pledged Securities, the
Pledgor as soon as practicable and at its own expense will use its best efforts
to cause such registration to be effected (and be kept effective) and will use
its best efforts to cause such qualification and compliance to be effected (and
be kept effective) as may be so requested and as would permit or facilitate the
sale and distribution of such Pledged Securities, including, without limitation,
registration under the Securities Act of 1933 as then in effect (or any similar
statute then in effect), appropriate
14
<PAGE>
qualifications under applicable blue sky or other state securities laws and
appropriate compliance with any other government requirements, and reasonably do
or cause to be done all such other reasonable acts and things as may be
necessary to make such sale of the Pledged Securities valid and binding in
compliance with applicable laws; PROVIDED, that the Pledgee shall furnish to the
Pledgor such information regarding the Pledgee as the Pledgor may reasonably
request in writing and as shall be required in connection with any such
registration, qualification or compliance. The Pledgor will cause the Pledgee
to be kept reasonably advised in writing as to the progress of each such
registration, qualification or compliance and as to the completion thereof, will
furnish to the Pledgee such number of prospectuses, offering circulars or other
documents incident thereto as the Pledgee from time to time may reasonably
request, and will indemnify the Pledgee and all others participating in the
distribution of such Pledged Securities against all claims, losses, damages and
liabilities caused by any untrue statement (or alleged untrue statement) of a
material fact contained therein (or in any related registration statement,
notification or the like) or by any omission (or alleged omission) to state
therein (or in any related transaction statement, notification or the like) a
material fact required to be stated therein or necessary to make the statements
not misleading, except insofar as the same may have been caused by an untrue
statement or omission based upon information furnished in writing to the Pledgor
by the Pledgee expressly for use therein.
(b) If at any time when the Pledgee shall determine to exercise
its right to sell all or any part of the Pledged Securities pursuant to Section
8, such Pledged Securities or the part thereof to be sold shall not, for any
reason whatsoever, be effectively registered under the Securities Act of 1933,
as then in effect, the Pledgee may, in its sole and absolute discretion, sell
such Pledged Securities or part thereof by private sale in such manner and under
such circumstances as the Pledgee may deem necessary or advisable in order that
such sale may legally be effected without such registration. Without limiting
the generality of the foregoing, in any such event the Pledgee, in its sole and
absolute discretion (i) may proceed to make such private sale notwithstanding
that a registration statement for the purpose of registering such Pledged
Securities or part thereof shall have been filed under such Securities Act, (ii)
may approach and negotiate with a single possible purchaser to effect such sale,
and (iii) may restrict such sale to a purchaser who will represent and agree
that such purchaser is purchasing for its own account, for investment, and not
with a view to the
15
<PAGE>
distribution or sale of such Pledged Securities or part thereof. In the event
of any such sale, the Pledgee shall incur no responsibility or liability for
selling all or any part of the Pledged Securities at a price which the Pledgee,
in its sole and absolute discretion, may in good faith deem reasonable under the
circumstances, notwithstanding the possibility that a substantially higher price
might be realized if the sale were deferred until after registration as
aforesaid.
20. NOTICES, ETC. All notices and other communications hereunder
shall be given to the Pledgor, the Pledgee and the Agent at the addresses and in
the manner specified in the Company Credit Agreement.
21. POWER OF ATTORNEY. The Pledgor hereby absolutely and irrevocably
constitutes and appoints the Pledgee as the Pledgor's true and lawful agent and
attorney-in-fact, with full power of substitution, in the name of the Pledgor
upon the occurrence and during the continuance of an Event of Default: (a) to
execute and do all such assurances, acts and things which the Pledgor ought to
do but has failed to do under the covenants and provisions contained in this
Agreement; (b) to take any and all such action as the Pledgee or any of its sub-
agents or attorneys may, in its or their sole and absolute discretion,
reasonably determine as necessary or advisable for the purpose of maintaining,
preserving or protecting the security constituted by this Agreement or any of
the rights, remedies, powers or privileges of the Pledgee under this Agreement;
and (c) generally, in the name of the Pledgor exercise all or any of the powers,
authorities, and discretions conferred on or reserved to the Pledgee by or
pursuant to this Agreement, and (without prejudice to the generality of any of
the foregoing) to seal and deliver or otherwise perfect any deed, assurance,
agreement, instrument or act as the Pledgee may deem proper in or for the
purpose of exercising any of such powers, authorities or discretions. The
Pledgor hereby ratifies and confirms, and hereby agrees to ratify and confirm,
whatever lawful acts the Pledgee or any of the Pledgee's sub-agents or attorneys
shall do or purport to do in the exercise of the power of attorney granted to
the Pledgee pursuant to this Section 21, which power of attorney, being given
for security, is irrevocable and coupled with an interest.
22. TERMINATION, RELEASE. (a) any time and from time to time, at
the request and expense of the Pledgor, the Pledgee shall release to the Pledgor
shares of Pledged Stock to enable the Pledgor to take actions permitted pursuant
to the terms and conditions of the Company Credit Agreement, including,
16
<PAGE>
without limitation, to effect Asset Sales and sales of such shares of Pledged
Stock so long as the Pledgor shall remain in compliance with Section 8.2 of the
Company Credit Agreement.
(b) After full payment and performance of all of the Obligations
(other than indemnities which by their terms survive the repayment of the Loans
or the Subsidiary Loans) and irrevocable termination of the commitment of the
Lenders under the Credit Agreements, this Agreement, so long as no Letter of
Credit or Subsidiary Letter of Credit is outstanding, shall terminate, and the
Pledgee, at the request and expense of the Pledgor, will execute and deliver to
the Pledgor a proper instrument or instruments acknowledging the satisfaction
and termination of this Agreement, and will duly assign, transfer and deliver to
the Pledgor (without recourse and without any representation or warranty) such
of the Collateral as may be in the possession of the Pledgee and as has not
theretofore been sold or otherwise applied or released pursuant to this
Agreement, together with any moneys at the time held by the Pledgee hereunder.
23. MISCELLANEOUS. The Pledgor agrees with the Pledgee that each of
the obligations and liabilities of the Pledgor to the Pledgee under this
Agreement may be enforced against the Pledgor without the necessity of joining
any Subsidiary of the Pledgor or any other Person as a party. This Agreement
shall create a continuing security interest in the Collateral and shall be
binding upon the successors and assigns of the Pledgor and shall inure to the
benefit of and be enforceable by the Pledgee, the Secured Creditors and their
respective permitted successors and assigns. Without limiting the generality of
the foregoing sentence, any Secured Creditor may assign or otherwise transfer
any note held by it to any other Person or entity in accordance with the
provisions of the Credit Agreements to the extent permitted by such agreement,
and such other Person or entity shall thereupon become vested with all the
benefits in respect thereof granted to such Secured Creditor herein. This
Agreement may be changed, waived, discharged or terminated only in accordance
with the provisions of the Credit Agreements or as provided in Section 22.
Unless otherwise defined herein or in the Company Credit Agreement, terms
defined in Article 9 of the Uniform Commercial Code in the State of New York are
used herein as therein defined. The headings in this Agreement are for purposes
of reference only and shall not limit or define the meaning hereof. This
Agreement may be executed in any number of counterparts, each of which shall be
an original, but all of which shall constitute one instrument. In the event
that any provision of this Agreement shall prove to be invalid or unen-
17
<PAGE>
forceable, such provision shall be deemed to be severable from the other
provisions of this Agreement which shall remain binding on all parties hereto.
24. COLLATERAL AGENT. The appointment of the Collateral Agent as
Collateral Agent hereunder pursuant to the Intercreditor Agreement has been
ratified and confirmed by the Lenders in the Credit Agreements, and the
Collateral Agent shall be entitled to the benefits of the Credit Agreements. The
Collateral Agent shall be obligated, and shall have the right hereunder to make
demands, to give notices, to exercise or refrain from exercising any rights, and
to take or refrain from taking action (including, without limitation, the
release or substitution of Collateral) solely in accordance with this Agreement
and the Credit Agreements. The Collateral Agent may resign and a successor
Collateral Agent may be appointed in the manner provided in the Credit
Agreements. Upon the acceptance of any appointment as a Collateral Agent by a
successor Collateral Agent, that successor Collateral Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Collateral Agent under this Agreement, and the retiring
Collateral Agent shall thereupon be discharged from its duties and obligations
under this Agreement. After any retiring Collateral Agent's resignation the
provisions of this Agreement shall inure to its benefit as to any actions taken
or omitted to be taken by it under this Agreement while it was Collateral Agent.
25. GOVERNING LAW; APPOINTMENT OF AGENT FOR SERVICE OF PROCESS;
SUBMISSION TO JURISDICTION. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW
PRINCIPLES THEREOF). ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO MAY BE BROUGHT IN THE COURTS OF THE
STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT
OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE PLEDGOR
HEREBY CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE JURISDICTION
OF THE AFORESAID COURTS SOLELY FOR THE PURPOSE OF ADJUDICATING ITS RIGHTS OR THE
RIGHTS OF THE COLLATERAL AGENT, THE AGENT, THE TRUSTEE OR THE SECURED CREDITORS
WITH RESPECT TO THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE PLEDGOR
HEREBY IRREVOCABLY DESIGNATES CT CORPORATION SYSTEM, LOCATED AT 1633 BROADWAY,
NEW YORK, NEW YORK 10019 AS THE DESIGNEE, APPOINTEE AND AGENT OF THE PLEDGOR, TO
RECEIVE, FOR AND ON BEHALF OF THE PLEDGOR, SERVICE OF PROCEEDING WITH RESPECT TO
THIS AGREEMENT OR ANY DOCUMENT RELATED
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<PAGE>
HERETO AND SUCH SERVICE SHALL, TO THE EXTENT PERMITTED BY APPLICABLE LAW, BE
DEEMED COMPLETED TEN DAYS AFTER DELIVERY THEREOF TO SAID AGENT. IT IS
UNDERSTOOD THAT A COPY OF SUCH PROCESS SERVED ON SUCH AGENT WILL BE PROMPTLY
FORWARDED BY MAIL TO THE PLEDGOR AT ITS ADDRESS SET FORTH IN THE COMPANY CREDIT
AGREEMENT, BUT THE FAILURE OF THE PLEDGOR TO RECEIVE SUCH COPY SHALL NOT, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, AFFECT IN ANY WAY THE SERVICE OF SUCH
PROCESS. THE PLEDGOR HEREBY IRREVOCABLY WAIVES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO
THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
RESPECTIVE JURISDICTIONS IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED
THERETO. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE PLEDGEE TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST THE PLEDGOR IN ANY OTHER JURISDICTION.
26. WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED BY APPLICABLE
LAW THE PLEDGOR HEREBY IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR ANY MATTER ARISING IN CONNECTION HEREUNDER.
27. AMENDMENT AND RESTATEMENT. This Agreement constitutes an
amendment and restatement of the 1992 Company Stock and Notes Pledge amended
hereby (the "Original Instrument"), and such Original Instrument shall continue
in effect on and after the date hereof as so amended and restated. The parties
do not intend that this Agreement constitute a novation, termination, release or
satisfaction of the Original Instrument, or constitute payment or satisfaction
of any indebtedness or other obligation secured by the Original Instrument.
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<PAGE>
Charter Medical Corporation
Company Stock and Notes Pledge Agreement
May 2, 1994
IN WITNESS WHEREOF, the Pledgor and the Pledgee have caused this
Agreement to be executed by their duly elected officers duly authorized as of
the date first above written.
CHARTER MEDICAL CORPORATION, as Pledgor
By /s/ James R. Bedenbaugh
-----------------------------------------
Name: James R. Bedenbaugh
Title: Treasurer
BANKERS TRUST COMPANY, in its capacity
as Collateral Agent, as Pledgee
By /s/ Mary Kay Coyle
-----------------------------------------
Name: Mary Kay Coyle
Title: Vice President
<PAGE>
Page 1
ANNEX A
SECOND AMENDED AND RESTATED COMPANY STOCK AND NOTES PLEDGE AGREEMENT
<TABLE>
<CAPTION>
Authorized
Capital Common Common
(All Common Stock Stock
Certificate Jurisdiction Stock) Issued and Pledged
Name of Corporation Certificate Name Number of Incorp. (1) Outstanding (in Shares)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ambulatory Resources, #2 - 500 Georgia 1,000 shares 550 shares 550 shares
Inc.
#3 - 50
Atlanta MOB, Inc. Charter #1 Georgia 1,000 shares 500 shares 500 shares
Medical-South
Atlanta, Inc.
Beltway Community CMWF, Inc. #1 Texas 10,000 shares 1,000 shares 1,000 shares
Hospital, Inc.
CCM, Inc. Charter Medical #1 - 100 CMC Nevada 1,000 shares 200 shares 200 shares
France, Inc.
CCM, Inc.(fka #2 - 100 CMCI
Charter Medical
France, Inc.)
Charter Alvarado Ziggurat, Inc. #01 California 1,000 shares 1,000 shares 1,000 shares
Behavioral Health
System, Inc.
Charter Appalachian #1 N Carolina 1,000 shares 1,000 shares 1,000 shares
Hall Behavioral Health
System, Inc.
Charter Arbor Indy #1 Indiana 1,000 shares 1,000 shares 1,000 shares
Behavioral Health
System, Inc.
Charter Augusta Charter Medical #1 Georgia 1,000 shares 500 shares 500 shares
Behavioral Health of Richmond
System, Inc. County, Inc.
Charter Bay Harbor Charter Hospital #1 Florida 1,000 shares 500 shares 500 shares
Behavioral Health of Bradenton,
System, Inc. Inc.
Charter Beacon Charter Medical #1 Indiana 1,000 shares 1,000 shares 1,000 shares
Behavioral Health - Fort Wayne,
System, Inc. Inc.
Charter Behavioral #1 New Jersey 1,000 shares 1,000 shares 1,000 shares
Health System at Fair
Oaks, Inc.
Charter Behavioral #1 Maryland 1,000 shares 1,000 shares 1,000 shares
Health System at Hidden
Brook, Inc.
Charter Behavioral #1 California 1,000 shares 1,000 shares 1,000 shares
Health System at Los
Altos, Inc.
Charter Behavioral #1 Maryland 1,000 shares 1,000 shares 1,000 shares
Health System at
Potomac Ridge, Inc.
Charter Behavioral #1 Maryland 1,000 shares 1,000 shares 1,000 shares
Health System at
Warwick Manor, Inc.
Charter Behavioral Charter Medical #1 Georgia 1,000 shares 500 shares 500 shares
Health System of - Athens, Inc.
Athens, Inc.
Charter Behavioral Shallowford #1 Georgia 1,000 shares 500 shares 500 shares
Health Systems of Providers, Inc.
Atlanta, Inc.
Charter Behavioral Charter Medical #1 Texas 1,000 shares 1,000 shares 1,000 shares
Health System of - Central Texas,
Austin, Inc. Inc.
Charter Behavioral #1 Texas 1,000 shares 1,000 shares 1,000 shares
Health System of
Baywood, Inc.
Charter Behavioral Charter Medical #1 Florida 1,000 shares 500 shares 500 shares
Health System of - Ft. Lauderdale,
Bradenton, Inc. Inc.
Charter Behavioral #1 California 1,000 shares 1,000 shares 1,000 shares
Health System of Canoga
Park, Inc.
Charter Behavioral Charter Medical #01 Georgia 1,000 shares 500 shares 500 shares
Health System of - Macon, Inc.
Central Georgia, Inc.
Charter Behavioral Charter #1 S Carolina 1,000 shares 1,000 shares 1,000 shares
Health System of Counseling
Charleston, Inc. Center of South
Carolina, Inc.
Charter Behavioral Charter Hospital #1 Virginia 1,000 shares 500 shares 500 shares
Health System of of Charlottesville,
Charlottesville, Inc. Inc.
Charter Behavioral Barclay Hospital #1 - 100 Illinois 1,200 shares 1,100 shares 1,100 shares
Health System of (formerly Illinois
Chicago, Inc. Illinois Health
Services, Inc.)
Illinois Health #2 - 900
Services, Inc.
Charter Barclay #3 - 100
Hospital, Inc.
Charter Behavioral Charter Medical #1 California 1,000 shares 1,000 shares 1,000 shares
Health System of Chula Cerritos, Inc.
Vista, Inc.
Charter Behavioral Excepticon #2 - 100 Missouri 30,000 shares 600 shares 600 shares
Health System of Midwest, Inc.
Columbia, Inc.
Charter Hospital #3 - 500
of Columbia,
Inc.
Charter Behavioral Charter Bay #1 Texas 1,000 shares 1,000 shares 1,000 shares
Health System of Corpus Hospital, Inc.
Christi, Inc.
</TABLE>
<PAGE>
Page 2
ANNEX A
SECOND AMENDED AND RESTATED COMPANY STOCK AND NOTES PLEDGE AGREEMENT
<TABLE>
<CAPTION>
Authorized
Capital Common Common
(All Common Stock Stock
Certificate Jurisdiction Stock) Issued and Pledged
Name of Corporation Certificate Name Number of Incorp. (1) Outstanding (in Shares)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Charter Behavioral Charter Garland #1 Texas 1,000 shares 1,000 shares 1,000 shares
Health System of Hospital, Inc.
Dallas, Inc.
Charter Behavioral #1 Indiana 1,000 shares 1,000 shares 1,000 shares
Health System of
Evansville, Inc.
Charter Behavioral Charter Medical #1 Texas 1,000 shares 1,000 shares 1,000 shares
Health System of Fort of Ft. Worth,
Worth, Inc. Inc.
Charter Behavioral Charter Hospital #1 Mississippi 1,000 shares 1,000 shares 1,000 shares
Health System of of Jackson, Inc.
Jackson, Inc.
Charter Behavioral Charter Medical #1 Florida 1,000 shares 500 shares 500 shares
Health System of - Jacksonville,
Jacksonville, Inc. Inc.
Charter Behavioral #1 Indiana 1,000 shares 1,000 shares 1,000 shares
Health System of
Jefferson, Inc.
Charter Behavioral Charter Medical #1 Kansas 1,000 shares 500 shares 500 shares
Health System of Kansas of Johnson
City, Inc. County, Inc.
Charter Behavioral Physicians & #3 Louisiana 1,000 shares 1,000 shares 1,000 shares
Health System of Surgeons
Lafayette, Inc. Hospital, Inc.
Charter Behavioral Meadowview #3 Louisiana 2,500 shares(2) 1 share 1 share
Health System of Lake Hospital, Inc.
Charles, Inc.
Charter Behavioral #1 California 1,000 shares 1,000 shares 1,000 shares
Health System of
Lakewood, Inc.
Charter Behavioral #1 Indiana 1,000 shares 1,000 shares 1,000 shares
Health System of
Michigan City, Inc.
Charter Behavioral CMHS, Inc. #1 Alabama 1,000 shares 1,000 shares 1,000 shares
Health System of
Mobile, Inc.
Charter Behavioral #1 New Hampshire 1,000 shares 1,000 shares 1,000 shares
Health System of
Nashua, Inc.
Charter Behavioral CMC of Nevada, #1 Nevada 10,000 shares 100 shares 100 shares
Health System of Inc.
Nevada, Inc.
Charter Behavioral Charter Medical #1 New Mexico 1,000 shares 1,000 shares 1,000 shares
Health System of New New Mexico, Inc.
Mexico, Inc.
Charter Behavioral Charter Vista #1 Arkansas 1,000 shares 1,000 shares 1,000 shares
Health System of Hospital, Inc.
Northwest Arkansas,
Inc.
Charter Behavioral Charter Medical #1 Indiana 1,000 shares 1,000 shares 1,000 shares
Health System of - Lake County,
Northwest Indiana, Inc. Inc.
Charter Behavioral Kentucky #24 Kentucky 1,000 shares(6) 1,000 shares 1,000 shares
Health System of Institute for
Paducah, Inc. Stress and
Addiction, Inc.
Charter Behavioral #1 Illinois 1,000 shares 1,000 shares 1,000 shares
Health System of
Rockford, Inc.
Charter Behavioral Charter Hospital #1 California 1,000 shares 1,000 shares 1,000 shares
Health System of San of Newport
Jose, Inc. Beach, Inc.
Charter Behavioral Charter Medical #1 California 1,000 shares 500 shares 500 shares
Health System of - Ventura, Inc.
Southern California,
Inc.
Charter Behavioral Charter Hospital #1 Florida 1,000 shares 500 shares 500 shares
Health System of Tampa of Tampa, Inc.
Bay, Inc.
Charter Behavioral #1 Arkansas 1,000 shares 1,000 shares 1,000 shares
Health System of
Texarkana, Inc.
Charter Behavioral Charter Hospital #1 Ohio 1,000 shares 1,000 shares 1,000 shares
Health System of of Toledo, Inc.
Toledo, Inc.
Charter Behavioral #1 Arizona 1,000 shares 1,000 shares 1,000 shares
Health System of
Tucson, Inc.
Charter Behavorial #1 Virginia 1,000 shares 1,000 shares 1,000 shares
Health System of
Virginia Beach, Inc.
Charter Behavioral #1 California 1,000 shares 1,000 shares 1,000 shares
Health System of
Visalia, Inc.
Charter Behavioral #1 District of 1,000 shares 1,000 shares 1,000 shares
Health System of Columbia
Washington, D.C., Inc.
Charter Behavioral #1 Minnesota 1,000 shares 1,000 shares 1,000 shares
Health System of
Waverly, Inc.
Charter Behavioral Mandala Center, #4 N Carolina 100,000 shares 1,000 shares 1,000 shares
Health System of Inc.
Winston-Salem, Inc.
Charter Behavioral #1 California 1,000 shares 1,000 shares 1,000 shares
Health System of Yorba
Linda, Inc.
Charter Brawner Medical Arts #6 Georgia 5,000 shares(2) 1,000 shares 1,000 shares
Behavioral Health Convalescent
System, Inc. Center, Inc.
</TABLE>
<PAGE>
Page 3
ANNEX A
SECOND AMENDED AND RESTATED COMPANY STOCK AND NOTES PLEDGE AGREEMENT
<TABLE>
<CAPTION>
Authorized
Capital Common Common
(All Common Stock Stock
Certificate Jurisdiction Stock) Issued and Pledged
Name of Corporation Certificate Name Number of Incorp. (1) Outstanding (in Shares)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Charter By-the-Sea Charter Medical #1 Georgia 1,000 shares 100 shares 100 shares
Behavioral Health St. Simons, Inc.
System, Inc.
Charter Canyon Charter Canyon #1 Utah 1,000 shares 1,000 shares 1,000 shares
Behavioral Health Hospital, Inc.
System, Inc.
Charter Canyon Springs #1 California 1,000 shares 1,000 shares 1,000 shares
Behavioral Health
System, Inc.
Charter Centennial Charter Hospital #1 Colorado 1,000 shares 500 shares 500 shares
Peaks Behavioral Health of Arapahoe
System, Inc. County, Inc.
Charter Colonial Charter #1 Virginia 1,000 shares 500 shares 500 shares
Institute, Inc. Colonial, Inc.
Charter Community California #01 California 1,000 shares 1,000 shares 1,000 shares
Hospital, Inc. B.E.D.S., Inc.
Charter Community Health Care #2 Iowa 10,000 shares 1,000 shares 1,000 shares
Hospital of Des Moines, Holding
Inc. Corporation
Charter Contract #1 Georgia 1,000 shares 1,000 shares 1,000 shares
Services, Inc.
Charter Cove Forge #1 Pennsylvania 1,000 shares 1,000 shares 1,000 shares
Behavioral Health
System, Inc.
Charter Crescent Pines Charter Medical #1 Georgia 1,000 shares 500 shares 500 shares
Behavioral Health International,
System, Inc. Inc.
Charter Fairbridge #1 Maryland 1,000 shares 1,000 shares 1,000 shares
Behavioral Health
System, Inc.
Charter Fairmount Charter Hospital #1 Pennsylvania 1,000 shares 500 shares 500 shares
Behavioral Health of Philadelphia,
System, Inc. Inc.
Charter Fenwick Hall #1 S Carolina 1,000 shares 1,000 shares 1,000 shares
Behavioral Health
System, Inc.
Charter Financial Charter Imaging, #1 Georgia 1,000 shares 500 shares 500 shares
Offices, Inc. Inc.
Charter Forest Charter Forest #1 Louisiana 1,000 shares 500 shares 500 shares
Behavioral Health Hospital, Inc.
System, Inc.
Charter Grapevine Charter Hospital #1 Texas 1,000 shares 1,000 shares 1,000 shares
Behavioral Health of Grapevine,
System, Inc. Inc.
Charter Greensboro CMG, Inc. #1 N. Carolina 1,000 shares 100 shares 100 shares
Behavioral Health
System, Inc.
Charter Health #1 Texas 1,000 shares 1,000 shares 1,000 shares
Management of Texas,
Inc.
Charter Hospital of #1 Ohio 1,000 shares 500 shares 500 shares
Columbus, Inc.
Charter Hospital of #1 Colorado 1,000 shares 500 shares 500 shares
Denver, Inc.
Charter Hospital of Ft. Charter Medical #001 Colorado 1,000 shares 500 shares 500 shares
Collins, Inc. of Larimer
County, Inc.
Charter Hospital of Charter Rio #1 Texas 1,000 shares 1,000 shares 1,000 shares
Laredo, Inc. Grande, Inc.
Charter Hospital of Charter Medical #1 Alabama 1,000 shares 1,000 shares 1,000 shares
Mobile, Inc. - Alabama, Inc.
Charter Hospital of #1 New Jersey 1,000 shares 1,000 shares 1,000 shares
Northern New Jersey,
Inc.
Charter Hospital of Charter Medical #1 New Mexico 1,000 shares 1,000 shares 1,000 shares
Santa Teresa, Inc. - Santa Teresa,
Inc.
Charter Hospital of St. #1 Missouri 1,000 shares 500 shares 500 shares
Louis, Inc.
Charter Hospital of Cal-Riviera, #01 California 1,000 shares 1,000 shares 1,000 shares
Torrance, Inc. Inc.
Charter Indianapolis Charter Medical #1 Indiana 1,000 shares 1,000 shares 1,000 shares
Behavioral Health - Marion County,
System, Inc. Inc.
Charter Lafayette Charter Medical #1 Indiana 1,000 shares 1,000 shares 1,000 shares
Behavioral Health - Tippecanoe
System, Inc. County, Inc.
Charter Lakehurst #1 New Jersey 1,000 shares 1,000 shares 1,000 shares
Behavioral Health
System, Inc.
Charter Lakeside Charter Lakeside #47 Tennessee 100,000 shares 833 shares 833 shares
Behavioral Health Hospital, Inc.
System, Inc.
Charter Laurel Heights Charter Medical #1 Georgia 1,000 shares 500 shares 500 shares
Behavioral Health Teaching
System, Inc. Faculty, Inc.
Charter Laurel Oaks Charter Medical #1 Florida 1,000 shares 500 shares 500 shares
Behavioral Health - Southeast,
System, Inc. Inc.
Charter Linden Oaks #1 Illinois 1,000 shares 1,000 shares 1,000 shares
Behavioral Health
System, Inc.
</TABLE>
<PAGE>
Page 4
ANNEX A
SECOND AMENDED AND RESTATED COMPANY STOCK AND NOTES PLEDGE AGREEMENT
<TABLE>
<CAPTION>
Authorized
Capital Common Common
(All Common Stock Stock
Certificate Jurisdiction Stock) Issued and Pledged
Name of Corporation Certificate Name Number of Incorp. (1) Outstanding (in Shares)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Charter Little Rock Charter Hospital #1 Arkansas 1,000 shares 1,000 shares 1,000 shares
Behavioral Health of Little Rock,
System, Inc. Inc.
Charter Louisville Charter Falls #1 Kentucky 1,000 shares 1,000 shares 1,000 shares
Behavioral Health Hospital, Inc.
System, Inc.
Charter Meadows #1 Maryland 1,000 shares 1,000 shares 1,000 shares
Behavioral Health
System, Inc.
Charter Medfield Florida #1 Florida 1,000 shares 1,000 shares 1,000 shares
Behavioral Health Residential
System, Inc. Treatment
Centers, Inc.
Charter Medical CMMC, Inc. #1 Georgia 1,000 shares 1,000 shares 1,000 shares
Executive Corporation
Charter Medical #1 Georgia 1,000 shares 500 shares 500 shares
Information Services,
Inc.
Charter Medical #1 Nevada 1,000 shares 100 shares 100 shares
International, S.A.,
Inc.
Charter Medical #1 Georgia 500 shares 500 shares 500 shares
Management Company
Charter Medical of East #1 Arizona 1,000 shares 500 shares 500 shares
Valley, Inc.
Charter Medical of #1 Arizona 1,000 shares 500 shares 500 shares
North Phoenix, Inc.
Charter Medical of #1 Florida 1,000 shares 500 shares 500 shares
Orange County, Inc.
Charter Medical - Charter Medical #1 Georgia 1,000 shares 100 shares 100 shares
California, Inc. U.K., Inc.
Charter Medical - #1 Georgia 1,000 shares 500 shares 500 shares
Clayton County, Inc.
Charter Medical - Charter Medical #1 Texas 1,000 shares 1,000 shares 1,000 shares
Cleveland, Inc. - Tyler, Inc.
Charter Medical - #1 Texas 1,000 shares 1,000 shares 1,000 shares
Dallas, Inc.
Charter Medical - Long #1 - 500 California 1,000 shares 510 shares 510 shares
Beach, Inc.
#2 - 10
Charter Medical - New #2 New York 1,000 shares 1,000 shares 1,000 shares
York, Inc.
Charter Mental Health #1 Florida 28,000 shares 0 shares 0 shares
Options, Inc. A (7)
56,000 shares 1,000 shares 1,000 shares
B (7)
Charter Mid-South Charter National #1 Tennessee 1,000 shares 1,000 shares 1,000 shares
Behavioral Health Laboratory, Inc.
System, Inc.
Charter Milwaukee Charter Hospital #001 Wisconsin 1,000 shares 1,000 shares 1,000 shares
Behavioral Health of Milwaukee,
System, Inc. Inc.
Charter Mission Viejo Charter Hospital #1 California 1,000 shares 1,000 shares 1,000 shares
Behavioral Health of Orange
System, Inc. County, Inc.
Charter MOB of #1 Virginia 1,000 shares 1,000 shares 1,000 shares
Charlottesville, Inc.
Charter North Charter North #2 Alaska 1,000 shares 500 shares 500 shares
Behavioral Health Hospital, Inc.
System, Inc.
Charter Northbrooke #1 Wisconsin 1,000 shares 1,000 shares 1,000 shares
Behavioral Health
System, Inc.
Charter Northridge Charter Medical #1 N Carolina 1,000 shares 500 shares 500 shares
Behavioral Health Corporation of
System, Inc. Raleigh, Inc.
Charter Northside Charter Medical #1 Georgia 1,000 shares 500 shares 500 shares
Hospital, Inc. - Bibb County,
Inc.
Charter Oak Behavioral California - #1 California 1,000 shares 1,000 shares 1,000 shares
Health System, Inc. Charter Medical,
Inc.
Charter of Alabama, Charter Retreat #10 Alabama 150,000 shares 1,800 shares 1,800 shares
Inc. Hospital, Inc.
Charter Palms Charter Medical #01 Texas 1,000 shares 1,000 shares 1,000 shares
Behavioral Health - Southwest,
System, Inc. Inc.
Charter Peachford Peachford See Last Page Georgia 1,000,000 shares 149,950 shares 149,950 shares
Behavioral Health Hospital, Inc. (3)
System, Inc.
Charter Pines Charter Medical #1 N Carolina 1,000 shares 500 shares 500 shares
Behavioral Health of Charlotte,
System, Inc. Inc.
</TABLE>
<PAGE>
Page 5
ANNEX A
SECOND AMENDED AND RESTATED COMPANY STOCK AND NOTES PLEDGE AGREEMENT
<TABLE>
<CAPTION>
Authorized
Capital Common Common
(All Common Stock Stock
Certificate Jurisdiction Stock) Issued and Pledged
Name of Corporation Certificate Name Number of Incorp. (1) Outstanding (in Shares)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Charter Plains Charter #1 Texas 1,000 shares 1,000 shares 1,000 shares
Behavioral Health Medical-Lubbock,
System, Inc. Inc.
Charter Psychiatric #1 Delaware 1,000 shares 1,000 shares 1,000 shares
Hospitals, Inc.
Charter Real Behavioral Charter Real, #1 Texas 1,000 shares 1,000 shares 1,000 shares
Health System, Inc. Inc.
Charter Richmond Richmond MOB, #1 Virginia 1,000 shares 1,000 shares 1,000 shares
Behavioral Health Inc.
System, Inc.
Charter Ridge Charter Medical #1 Kentucky 1,000 shares 100 shares 100 shares
Behavioral Health - Lexington,
System, Inc. Inc.
Charter Rivers Charter #01 S Carolina 1,000 shares 1,000 shares 1,000 shares
Behavioral Health Medical-Columbia,
System, Inc. Inc.
Charter San Diego Charter Hospital #1 California 1,000 shares 1,000 shares 1,000 shares
Behavioral Health of San Diego,
System, Inc. Inc.
Charter Serenity Lodge #1 Virginia 1,000 shares 1,000 shares 1,000 shares
Behavioral Health
System, Inc.
Charter Sioux Falls Charter Hospital #1 S Dakota 1,000 shares 1,000 shares 1,000 shares
Behavioral Health of Sioux Falls,
System, Inc. Inc.
Charter South Bend Charter Medical #1 Indiana 1,000 shares 1,000 shares 1,000 shares
Behavioral Health - St. Joseph
System, Inc. County, Inc.
Charter Springs Charter Medical #1 Florida 1,000 shares 500 shares 500 shares
Behavioral Health - Ocala, Inc.
System, Inc.
Charter Springwood #1 Virginia 1,000 shares 1,000 shares 1,000 shares
Behavioral Health
System, Inc.
Charter Surburban Mesquite #39 Texas 10,000 shares 6,510 shares 6,510 shares
Hospital of Mesquite, Memorial
Inc. Hospital, Inc.
Charter Terre Haute Charter Medical #1 Indiana 1,000 shares 1,000 shares 1,000 shares
Behavioral Health - Vigo County,
System, Inc. Inc.
Charter Thousand Oaks Charter Medical #1 California 1,000 shares 1,000 shares 1,000 shares
Behavioral Health of Thousand
System, Inc. Oaks, Inc.
Charter Tidewater #1 Virginia 1,000 shares 1,000 shares 1,000 shares
Behavioral Health
System, Inc.
Charter Treatment #1 Michigan 1,000 shares 1,000 shares 1,000 shares
Center of Michigan,
Inc.
Charter Westbrook W.P.H. #1 Virginia 1,000 shares 100 shares 100 shares
Behavioral Health Corporation
System, Inc.
Charter White Oak #1 Maryland 1,000 shares 1,000 shares 1,000 shares
Behavioral Health
System, Inc.
Charter Wichita Charter Medical #1 Kansas 1,000 shares 500 shares 500 shares
Behavioral Health of Wichita, Inc.
System, Inc.
Charter Woods Charter Medical #1 Alabama 1,000 shares 1,000 shares 1,000 shares
Behavioral Health - Dothan, Inc.
System, Inc.
Charter - Provo School, #1 Utah 1,000 shares 1,000 shares 1,000 shares
Inc.
Charterton/LaGrange, Shalomwald, #5-1,000 Kentucky 1,100 shares(4) 1,100 shares 1,100 shares
Inc. Incorporated
Charterton/Lagra #6-100
nge
CMSF, Inc. CMSP, Inc. #1 Florida 10,000 shares 500 shares 500 shares
C.A.C.O. Services, Inc. #1 Ohio 1,000 shares 1,000 shares 1,000 shares
Desert Springs #1 - 500 Nevada 1,000 shares 1,000 shares 1,000 shares
Hospital, Inc.
#2 - 500
Employee Assistance #1 Georgia 1,000 shares 500 shares 500 shares
Services, Inc.
Florida Health #16 Florida 500 shares 500 shares 500 shares
Facilities, Inc.
Group Practice #1 Delaware 2,000,000 shares(9) 1,000 shares 1,000 shares
Affiliates, Inc. (9)
Gulf Coast EAP #1 Alabama 1,000 shares 1,000 shares 1,000 shares
Services, Inc.
HCS, Inc. #1 Georgia 1,000 shares 500 shares 500 shares
</TABLE>
<PAGE>
Page 6
ANNEX A
SECOND AMENDED AND RESTATED COMPANY STOCK AND NOTES PLEDGE AGREEMENT
<TABLE>
<CAPTION>
Authorized
Capital Common Common
(All Common Stock Stock
Certificate Jurisdiction Stock) Issued and Pledged
Name of Corporation Certificate Name Number of Incorp. (1) Outstanding (in Shares)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Hospital Investors, #2 Georgia 200,000 shares(5) 2,000 shares 2,000 shares
Inc.
Mandarin Meadows, Inc. #1 Florida 1,000 shares 1,000 shares 1,000 shares
Metropolitan Hospital, Metropolitan Eye #2 Georgia 1,000 shares 100 shares 100 shares
Inc. Hospital, Inc.
Middle Georgia #2 Georgia 1,000 shares 100 shares 100 shares
Hospital, Inc.
Pacific - Charter #1 California 1,000 shares 1,000 shares 1,000 shares
Medical, Inc.
Peachford Professional #1 Georgia 1,000 shares 1,000 shares 1,000 shares
Network, Inc.
Rivoli, Inc. #1 Georgia 1,000 shares 500 shares 500 shares
Shallowford Community #1 - 500 Georgia 5,000 shares 1,000 shares 1,000 shares
Hospital, Inc.
#2 - 500
Sistemas De Terapia #7 Georgia 500,000 shares 12,000 shares 12,000 shares
Respiratoria S.A., Inc.
Strategic Advantage, #2 Minnesota 25,000 shares(7) 25,000 shares 25,000 shares
Inc.
Stuart Circle Hospital S.C.H. of #1 Virginia 1,000 shares 100 shares 100 shares
Corporation Richmond Corp.
Tampa Bay Behavioral #1 Florida 1,000 shares 1,000 shares 1,000 shares
Health Alliance, Inc.
Western Behavioral Charter Hospital #1 California 1,000 shares 1,000 shares 1,000 shares
Systems, Inc. of Bakersfield,
Inc.
FOREIGN SUBSIDIARIES:
Charter Medical (Cayman Issued to #1 - 1 share Cayman Isls. 900,000 shares 100,000 shares 99,998 shares
Islands) Ltd. Caledonian Bank
& Trust Ltd.
Issued to David #7 - 1 share BWI
G. Bird-Caledonian
Bank Issued to #5 - 1,998
Charter Medical shares
Corporation
Issued to #8 - 65,000
Charter Medical shares
Corporation
Issued to #9 - 33,000
Charter Medical shares
Corporation
Charter Medical Issued to #4 - 2,844 Cayman Isls. 900,000 shares 4,375 shares 4,375 shares
International, Inc. Charter Medical sh.
Corporation
Issued to #5 - 1,531 BWI
Charter Medical sh.
Corporation
Charter Medical of Issued to CMC & #4 - 1 sh United 1,510,000 shares(10) 1,510,000 sh. 1,509,999 sh.
England Limited WAF, Jr. Kingdom
Issued to #6 - 981,500
Charter Medical shares
Corporation
Issued to #7 - 528,499
Charter Medical shares
Corporation
</TABLE>
<PAGE>
Page 7
ANNEX A
SECOND AMENDED AND RESTATED COMPANY STOCK AND NOTES PLEDGE AGREEMENT
<TABLE>
<CAPTION>
Authorized
Capital Common Common
(All Common Stock Stock
Certificate Jurisdiction Stock) Issued and Pledged
Name of Corporation Certificate Name Number of Incorp. (1) Outstanding (in Shares)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Garden Isle Assurance Issued to 7 cert - Bermuda 3,500 shares(4) 3,500 shares 2,275 shares
Company Ltd. Directors & CMC 1 share
#8,11,12,
13,14,15,16
Issued to #17 - 2,275
Charter Medical shares
Corporation
Issued to #18 - 1,216
Charter Medical shares
Corporation
Plymouth Insurance Issued to 7 cert - Bermuda 1,200 shares(4) 1,200 shares 780 shares
Company, Ltd. Directors 1 share
#16,17,18,
20,21,22,23
Issued to #25 - 780
Charter Medical shares
Corporation
Issued to #26 - 413
Charter Medical shares
Corporation
Charter Medical of #2 - 325 sh. Cmnwth of 1,000 shares 500 shares 500 shares
Puerto Rico, Inc.
#3 - 175 sh. Puerto Rico
<FN>
- -------------------
(1) Par Value $1.00 per share unless otherwise noted.
(2) $10 par value. Peachford Certificates: AU3 300
(3) $.50 par value. AU60 58,782
(4) $100 par value. AU61 37,881
(5) $.10 par value AU62 7,900
(6) No par value. AU108 31,087
(7) $.01 par value. AU109 1,200
(8) SF 1,000 par value. AU110 1,600
(9) $.25 par value AU111 600
(10) 1 POUND STERLING par value AU112 600
AU119 10,000
-------
149,950
</TABLE>
<PAGE>
ANNEX B
-------
SECOND AMENDED AND RESTATED SUBSIDIARY STOCK
--------------------------------------------
AND NOTES PLEDGE AGREEMENT
--------------------------
DOMESTIC SUBSIDIARIES:
----------------------
1. Ambulatory Resources, Inc.
2. Atlanta MOB, Inc.
3. Beltway Community Hospital, Inc.
4. CCM, Inc.
5. Charter Alvarado Behavioral Health System, Inc.
6. Charter Appalachian Hall Behavioral Health System, Inc.
7. Charter Arbor Indy Behavioral Health System, Inc.
8. Charter Augusta Behavioral Health System, Inc.
9. Charter Bay Harbor Behavioral Health System, Inc.
10. Charter Beacon Behavioral Health System, Inc.
11. Charter Behavioral Health System at Fair Oaks, Inc.
12. Charter Behavioral Health System at Hidden Brook, Inc.
13. Charter Behavioral Health System at Los Altos, Inc.
14. Charter Behavioral Health System at Potomac Ridge, Inc.
15. Charter Behavioral Health System at Warwick Manor, Inc.
16. Charter Behavioral Health System of Athens, Inc.
17. Charter Behavioral Health System of Austin, Inc.
18. Charter Behavioral Health System of Baywood, Inc.
19. Charter Behavioral Health System of Bradenton, Inc.
20. Charter Behavioral Health System of Canoga Park, Inc.
21. Charter Behavioral Health System of Central Georgia, Inc.
22. Charter Behavioral Health System of Charleston, Inc.
23. Charter Behavioral Health System of Charlottesville, Inc.
24. Charter Behavioral Health System of Chicago, Inc.
25. Charter Behavioral Health System of Chula Vista, Inc.
26. Charter Behavioral Health System of Columbia, Inc.
27. Charter Behavioral Health System of Corpus Christi, Inc.
28. Charter Behavioral Health System of Dallas, Inc.
29. Charter Behavioral Health System of Evansville, Inc.
30. Charter Behavioral Health System of Fort Worth, Inc.
31. Charter Behavioral Health System of Jackson, Inc.
32. Charter Behavioral Health System of Jacksonville, Inc.
33. Charter Behavioral Health System of Jefferson, Inc.
34. Charter Behavioral Health System of Kansas City, Inc.
35. Charter Behavioral Health System of Lafayette, Inc.
36. Charter Behavioral Health System of Lake Charles, Inc.
37. Charter Behavioral Health System of Lakewood, Inc.
38. Charter Behavioral Health System of Michigan City, Inc.
39. Charter Behavioral Health System of Mobile, Inc.
40. Charter Behavioral Health System of Nashua, Inc.
Page 1
<PAGE>
ANNEX B
-------
SECOND AMENDED AND RESTATED SUBSIDIARY STOCK
--------------------------------------------
AND NOTES PLEDGE AGREEMENT
--------------------------
41. Charter Behavioral Health System of Nevada, Inc.
42. Charter Behavioral Health System of New Mexico, Inc.
43. Charter Behavioral Health System of Northern California, Inc.
44. Charter Behavioral Health System of Northwest Arkansas, Inc.
45. Charter Behavioral Health System of Northwest Indiana, Inc.
46. Charter Behavioral Health System of Paducah, Inc.
47. Charter Behavioral Health System of Rockford, Inc.
48. Charter Behavioral Health System of San Jose, Inc.
49. Charter Behavioral Health System of Savannah, Inc.
50. Charter Behavioral Health System of Southern California, Inc.
51. Charter Behavioral Health System of Tampa Bay, Inc.
52. Charter Behavioral Health System of Texarkana, Inc.
53. Charter Behavioral Health System of the Inland Empire, Inc.
54. Charter Behavioral Health System of Toledo, Inc.
55. Charter Behavioral Health System of Tucson, Inc.
56. Charter Behavioral Health System of Virginia Beach, Inc.
57. Charter Behavioral Health System of Visalia, Inc.
58. Charter Behavioral Health System of Washington D.C., Inc.
59. Charter Behavioral Health System of Waverly, Inc.
60. Charter Behavioral Health System of Winston-Salem, Inc.
61. Charter Behavioral Health System of Yorba Linda, Inc.
62. Charter Behavioral Health Systems of Atlanta, Inc.
63. Charter Brawner Behavioral Health System, Inc.
64. Charter Canyon Behavioral Health System, Inc.
65. Charter Canyon Springs Behavioral Health System, Inc.
66. Charter Centennial Peaks Behavioral Health System, Inc.
67. Charter Colonial Institute, Inc.
68. Charter Community Hospital, Inc.
69. Charter Community Hospital of Des Moines, Inc.
70. Charter Contract Services, Inc.
71. Charter Cove Forge Behavioral Health System, Inc.
72. Charter Crescent Pines Behavioral Health System, Inc.
73. Charter Fairbridge Behavioral Health System, Inc.
74. Charter Fairmount Behavioral Health System, Inc.
75. Charter Fenwick Hall Behavioral Health System, Inc.
76. Charter Financial Offices, Inc.
77. Charter Forest Behavioral Health System, Inc.
78. Charter Grapevine Behavioral Health System, Inc.
79. Charter Greensboro Behavioral Health System, Inc.
80. Charter Health Management of Texas, Inc.
81. Charter Hospital of Columbus, Inc.
82. Charter Hospital of Denver, Inc.
83 . Charter Hospital of Ft. Collins, Inc.
Page 2
<PAGE>
ANNEX B
-------
SECOND AMENDED AND RESTATED SUBSIDIARY STOCK
--------------------------------------------
AND NOTES PLEDGE AGREEMENT
--------------------------
84. Charter Hospital of Laredo, Inc.
85. Charter Hospital of Miami, Inc.
86. Charter Hospital of Mobile, Inc.
87. Charter Hospital of Northern New Jersey, Inc.
88. Charter Hospital of Santa Teresa, Inc.
89. Charter Hospital of St. Louis, Inc.
90. Charter Hospital of Torrance, Inc.
91. Charter Indianapolis Behavioral Health System, Inc.
92. Charter Lafayette Behavioral Health System, Inc.
93. Charter Lakehurst Behavioral Health System, Inc.
94. Charter Lakeside Behavioral Health System, Inc.
95. Charter Laurel Heights Behavioral Health System, Inc.
96. Charter Laurel Oaks Behavioral Health System, Inc.
97. Charter Linden Oaks Behavioral Health System, Inc.
98. Charter Little Rock Behavioral Health System, Inc.
99. Charter Louisville Behavioral Health System, Inc.
100. Charter Meadows Behavioral Health System, Inc.
101. Charter Medfield Behavioral Health System, Inc.
102. Charter Medical Executive Corporation
103. Charter Medical Information Services, Inc.
104. Charter Medical International, S.A., Inc.
105. Charter Medical Management Company
106. Charter Medical of East Valley, Inc.
107. Charter Medical of North Phoenix, Inc.
108. Charter Medical of Orange County, Inc.
109. Charter Medical - California, Inc.
110. Charter Medical - Clayton County, Inc.
111. Charter Medical - Cleveland, Inc.
112. Charter Medical - Dallas, Inc.
113. Charter Medical - Long Beach, Inc.
114. Charter Medical - New York, Inc.
115. Charter Mental Health Options, Inc.
116. Charter Mid-South Behavioral Health System, Inc.
117. Charter Milwaukee Behavioral Health System, Inc.
118. Charter Mission Viejo Behavioral Health System, Inc.
119. Charter MOB of Charlottesville, Inc.
120. Charter North Behavioral Health System, Inc.
121. Charter North Counseling Center, Inc.
122. Charter Northbrooke Behavioral Health System, Inc.
123. Charter Northridge Behavioral Health System, Inc.
124. Charter Northside Hospital, Inc.
125. Charter Oak Behavioral Health System, Inc.
126. Charter of Alabama, Inc.
Page 3
<PAGE>
ANNEX B
-------
SECOND AMENDED AND RESTATED SUBSIDIARY STOCK
--------------------------------------------
AND NOTES PLEDGE AGREEMENT
--------------------------
127. Charter Palms Behavioral Health System, Inc.
128. Charter Peachford Behavioral Health System, Inc.
129. Charter Pines Behavioral Health System, Inc.
130. Charter Plains Behavioral Health System, Inc.
131. Charter Psychiatric Hospitals, Inc.
132. Charter Real Behavioral Health System, Inc.
133. Charter Regional Medical Center, Inc.
134. Charter Richmond Behavioral Health System, Inc.
135. Charter Ridge Behavioral Health System, Inc.
136. Charter Rivers Behavioral Health System, Inc.
137. Charter San Diego Behavioral Health System, Inc.
138. Charter Serenity Lodge Behavioral Health System, Inc.
139. Charter Sioux Falls Behavioral Health System, Inc.
140. Charter South Bend Behavioral Health System, Inc.
141. Charter Springs Behavioral Health System, Inc.
142. Charter Springwood Behavioral Health System, Inc.
143. Charter Surburban Hospital of Mesquite, Inc.
144. Charter Terre Haute Behavioral Health System, Inc.
145. Charter Thousand Oaks Behavioral Health System, Inc.
146. Charter Tidewater Behavioral Health System, Inc.
147. Charter Treatment Center of Michigan, Inc.
148. Charter Westbrook Behavioral Health System, Inc.
149. Charter White Oak Behavioral Health System, Inc.
150. Charter Wichita Behavioral Health System, Inc.
151. Charter Woods Behavioral Health System, Inc.
152. Charter Woods Hospital, Inc.
153. Charter - Provo School, Inc.
154. Charterton/LaGrange, Inc.
155. Charter-By-The-Sea Behavioral Health System, Inc.
156. CMCI, Inc.
157. CMFC, Inc.
158. CMSF, Inc.
159. CPS Associates, Inc.
160. C.A.C.O. Services, Inc.
161. Desert Springs Hospital, Inc.
162. Employee Assistance Services, Inc.
163. Florida Health Facilities, Inc.
164. Group Practice Affiliates, Inc.
165. Gulf Coast EAP Services, Inc.
166. Gwinnett Immediate Care Center, Inc.
167. HCS, Inc.
168. Holcomb Bridge Immediate Care Center, Inc.
169. Hospital Investors, Inc.
Page 4
<PAGE>
ANNEX B
-------
SECOND AMENDED AND RESTATED SUBSIDIARY STOCK
--------------------------------------------
AND NOTES PLEDGE AGREEMENT
--------------------------
170. Mandarin Meadows, Inc.
171. Metropolitan Hospital, Inc.
172. Middle Georgia Hospital, Inc.
173. Pacific - Charter Medical, Inc.
174. Peachford Professional Network, Inc.
175. Rivoli, Inc.
176. Shallowford Community Hospital, Inc.
177. Sistemas De Terapia Respiratoria S.A., Inc.
178. Strategic Advantage, Inc.
179. Stuart Circle Hospital Corporation
180. Tampa Bay Behavioral Health Alliance, Inc.
181. Western Behavioral Systems, Inc.
Foreign Subsidiaries:
---------------------
1. Charter Medical (Cayman Islands) Ltd.
2. Charter Medical International, Inc.
3. Charter Medical of England Limited
4. Charter Medical of Puerto Rico, Inc.
Page 5
<PAGE>
SECOND AMENDED AND RESTATED
SUBSIDIARY STOCK AND NOTES PLEDGE AGREEMENT
SECOND AMENDED AND RESTATED SUBSIDIARY STOCK AND NOTES PLEDGE
AGREEMENT, dated as of May 2, 1994 (as the same may be amended, modified or
supplemented from time to time, this "Agreement"), made by each of the
corporations listed on Annex A hereto (individually, a "Pledgor" and
collectively, the "Pledgors"), to Bankers Trust Company, a New York banking
corporation, in its capacity as collateral agent (the "Collateral Agent" or the
"Pledgee" and as agent under the Credit Agreements, as hereinafter defined, the
"Agent") for the financial institutions from time to time parties to the Credit
Agreements (the "Lenders"), First Union National Bank of North Carolina, as co-
agent (the "Co-Agent") and the Agent.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, certain of the parties hereto (or their predecessors) entered
into the Subsidiary Stock and Notes Pledge dated as of September 1, 1988, as
supplemented by Supplement No. 1 dated as of October 4, 1990, which was amended
and restated by the Amended and Restated Subsidiary Stock and Notes Pledge dated
as of July 21, 1992 (the "1992 Subsidiary Stock and Notes Pledge"), in favor of
the Collateral Agent for the benefit of the Lenders, the Trustee and the Issuing
Banks (as such terms are defined in the 1992 Subsidiary Stock and Notes Pledge)
and now desire to amend and restate such pledge in its entirety; and
WHEREAS, Charter Medical Corporation, a Delaware corporation (as
successor to WAF Acquisition Corporation, a Delaware corporation, the
"Company"), certain of the Lenders, the Agent and Wells Fargo Bank, National
Association and Bank of America National Trust and Savings Association, as co-
agents (the "Original Co-Agents"), entered into that certain Credit Agreement
dated as of September 1, 1988 which was amended and restated by the Amended and
Restated Credit Agreement
<PAGE>
dated as of July 21, 1992 (the "1992 Company Credit Agreement"), which is being
amended and restated by the Second Amended and Restated Credit Agreement dated
as of the date hereof (as the same may be further amended, restated,
supplemented or otherwise modified from time to time, the "Company Credit
Agreement"), pursuant to which certain of the Lenders made certain loans and
commitments to the Company, the terms of which are being amended and restated
pursuant to the Company Credit Agreement; and
WHEREAS, pursuant to the terms and conditions of the Company Credit
Agreement, the Lenders have made certain commitments to make additional loans
to, and participate in and/or issue letters of credit for the account of, the
Company; and
WHEREAS, certain Borrowers, certain of the Lenders, the Agent and the
Original Co-Agents entered into a Credit Agreement, dated as of September 1,
1988 which was amended and restated by the Amended and Restated Subsidiary
Credit Agreement dated as of July 21, 1992 (the "1992 Subsidiary Credit
Agreement; and, together with the 1992 Credit Agreement, the "1992 Credit
Agreements"), which is being amended and restated by the Second Amended and
Restated Subsidiary Credit Agreement dated as of the date hereof (as the same
may be further amended, restated, supplemented or otherwise modified from time
to time, the "Subsidiary Credit Agreement"; and, together with the Company
Credit Agreement, each a "Credit Agreement" and collectively the "Credit
Agreements"), pursuant to which certain of the Lenders made certain loans and
commitments to, and participated in letters of credit for the benefit of, the
Borrowers, the terms of which are being amended and restated pursuant to the
Subsidiary Credit Agreement; and
WHEREAS, pursuant to the terms and conditions of the Subsidiary Credit
Agreement, the Lenders have made certain commitments to make additional loans
to, and participate in and/or issue letters of credit for the account of, the
Borrowers; and
WHEREAS, the Pledgors have executed and delivered the Subsidiary
Guaranty dated as of the date hereof (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the "Subsidiary Guaranty")
pursuant to which such Pledgors agreed jointly
2
<PAGE>
and severally to guarantee all of the obligations of the Company under the
Company Credit Agreement and the other Credit Documents, and the Borrowers under
the Subsidiary Credit Agreement and the other Credit Documents; and
WHEREAS, the Lenders have agreed to amend and restate the 1992 Credit
Agreements upon terms and conditions acceptable to the Company and the
Borrowers; and
WHEREAS, it was a condition to the incurrence of loans and the
participation in letters of credit under the 1992 Credit Agreements that each
Pledgor execute and deliver to the Agent the 1992 Subsidiary Stock and Notes
Pledge and it is a condition precedent to the incurrence of loans and the
issuance of the letters of credit under the Credit Agreements that each Pledgor
execute and deliver to the Collateral Agent this Agreement; and
WHEREAS, (a) the Senior Secured Notes (as defined in the 1992
Subsidiary Stock and Notes Pledge) have been irrevocably paid in full; (b) each
Issuing Bank has agreed, among other things, that the Reimbursement Agreements
(as defined in the 1992 Subsidiary Stock and Notes Pledge) to which it is a
party (other than the Credit Documents to the extent the same could be
considered Reimbursement Agreements) shall no longer be entitled to the security
interests and other benefits of this Agreement; and (c) the Intercreditor
Agreement (as defined in the 1992 Subsidiary Stock and Notes Pledge) has been
terminated, except for the appointment by the Lenders of Bankers Trust Company
as Collateral Agent, which appointment has been ratified and confirmed in the
Credit Agreements;
NOW, THEREFORE, in consideration of the benefits accruing to the
Pledgors, the receipt and sufficiency of which are hereby acknowledged, each
Pledgor hereby makes the following representations and warranties to the Pledgee
and hereby covenants and agrees with the Pledgee as follows:
1. DEFINITIONS. Except as otherwise defined herein, capitalized
terms used herein, including in the recital paragraphs, and defined in the
Subsidiary Credit Agreement (by reference to the Company Credit Agreement or
otherwise) shall be used herein as so defined.
3
<PAGE>
2. SECURITY FOR OBLIGATIONS ETC. This Agreement is for the benefit
of the Agent, the Co-Agent and the Lenders and their respective successors and
assigns (collectively, the "Secured Creditors") to secure, pursuant to Section 4
hereof, the prompt payment in full when due, whether at stated maturity, by
acceleration or otherwise, of all obligations of the Company, any Borrower or
any other Subsidiary of the Company now or hereafter existing under the Credit
Agreements, the Notes, the Subsidiary Guaranty or any other Credit Document,
whether for principal, premium, interest, fees, expenses or otherwise
(including, without limitation, the Obligations under the Credit Agreements of
the Company and the Subsidiary Borrowers to reimburse drawings honored under
Letters of Credit and Subsidiary Letters of Credit), and all obligations of each
Pledgor now or hereafter existing under this Agreement (all of the foregoing
being herein collectively called the "Obligations").
3. DEFINITION OF SECURITIES; REPRESENTATIONS AND WARRANTIES. As
used herein, the term "Securities" shall mean (i) (x) all of the issued and
outstanding shares of every class of the capital stock from, time to time
legally and beneficially owned by such Pledgor of each of the present and future
Domestic Subsidiaries of the Company (other than future Domestic Subsidiaries
that are not or do not become Significant Subsidiaries), and (y) to the extent
permitted by applicable law, all of the issued and outstanding shares of every
class of capital stock from time to time owned by such Pledgor of the present
and future Foreign Subsidiaries of the Company (other than future Foreign
Subsidiaries that are not or do not become Significant Subsidiaries), in each
case, other than shares released pursuant to Section 22 hereof (collectively,
the "Pledged Stock"; and the issuers of such Pledged Stock, collectively, the
"Pledged Companies"); PROVIDED that in no event shall Securities or Pledged
Stock include more than 65% of all of the outstanding shares of capital stock of
any Excludable Foreign Subsidiary; and (ii) all promissory notes (the "Pledged
Notes") at any time (a) issued to any Pledgor by any present and future
Subsidiary of the Company (other than by any Excludable Foreign Subsidiary)
(collectively, the "Charter Subsidiaries") or (b) held by or issued to the
Pledgor by any Person in connection with any Asset Sale (as defined in the
Company Credit Agreement). Each Pledgor represents and warrants that on the
date hereof
4
<PAGE>
(a) the Pledged Stock consists of the number and type of shares of the common
stock of the Pledged Companies as described in Annex B attached hereto and the
Pledged Notes as described in Annex C attached hereto; (b) each Pledgor is (i)
the legal and sole beneficial owner of such Pledged Stock and (ii) the payee
with respect to the Pledged Notes; and (c) such Pledged Stock constitutes the
respective amount of the issued and outstanding capital stock of each Pledged
Company set forth opposite the name of such Pledged Company on Annex B attached
hereto.
4. PLEDGE OF SECURITIES, ETC.
4.1 PLEDGE. To secure the Obligations, each Pledgor hereby pledges
and deposits with the Pledgee the Securities owned by each Pledgor on the date
hereof, and delivers to the Pledgee (i) the certificates representing the
Pledged Stock accompanied by stock powers duly executed in blank by each Pledgor
and (ii) the instruments evidencing the Pledged Notes accompanied by assignment
forms duly executed in blank by each Pledgor or duly endorsed in blank or in
favor of the Pledgee by each Pledgor; and hereby assigns, transfers,
hypothecates and sets over to the Pledgee all of each Pledgor's right, title and
interest in, to and under any and all Securities now owned or hereafter acquired
by any Pledgor, and all principal, interest, dividends, cash, certificates,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any and all of such
securities, and all proceeds of the foregoing, all to be held by the Pledgee,
upon the terms and conditions set forth in this Agreement; PROVIDED that the
Pledged Notes (a) issued to any Pledgor by any Subsidiary of the Company that is
not a Significant Subsidiary or (b) held by or issued to a Pledgor by any person
in connection with an Asset Sale which are in an aggregate original principal
amount, for any individual Asset Sale, of $500,000 or less, shall not be
required to be deposited with the Pledgee, unless, in either such case, an Event
of Default shall have occurred and be continuing and any Pledgor shall have
received from the Pledgee a written request or requests that such Pledgor
deliver such Pledged Notes to the Pledgee.
4.2 SUBSEQUENTLY ACQUIRED SECURITIES. If at any time or from time to
time after the date hereof, any Pledgor shall acquire any additional Securities
(by pur-
5
<PAGE>
chase, stock dividend or otherwise) or any Pledgor shall possess any additional
Securities by virtue of possessing capital stock of a Person which becomes a
Significant Subsidiary, such Pledgor will, forthwith (i) pledge and deposit with
the Pledgee such Securities, provided that in no event shall the Pledgor be
required to pledge any promissory note issued to it by, or more than 65% of all
of the outstanding shares of capital stock of, any Excludable Foreign
Subsidiary; and (ii) deliver to the Pledgee the certificates or instruments
therefor, accompanied by stock powers or assignment forms duly executed in blank
by such Pledgor to the extent such Pledgor would have been required pursuant to
Section 5.1(c) of the Company Credit Agreement and Section 4.1 of this Agreement
to pledge such securities if they had been possessed as of the date hereof, and
will promptly thereafter deliver to the Pledgee a certificate executed by an
authorized officer of such Pledgor describing such Securities and certifying
that the same has been duly pledged with the Pledgee hereunder; PROVIDED that
the Pledged Notes (a) issued to any Pledgor by any Subsidiary of the Company
that is not a Significant Subsidiary or (b) held by or issued to a Pledgor by
any person in connection with an Asset Sale which are in an aggregate original
principal amount, for any individual Asset Sale, of $500,000 or less, shall not
be required to be deposited with the Pledgee, unless, in either such case, an
Event of Default shall have occurred and be continuing and any Pledgor shall
have received from the Pledgee a written request or requests that such Pledgor
deliver such Pledged Notes to the Pledgee.
4.3 DEFINITIONS OF PLEDGED SECURITIES AND COLLATERAL. All Securities
at any time pledged or required to be pledged hereunder are hereinafter called
the "Pledged Securities," and the Pledged Securities, together with all other
securities and moneys received and at the time held by the Pledgee hereunder and
any proceeds of any of the foregoing, are hereinafter called the "Collateral."
5. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. The Pledgee shall
have the right to appoint one or more subagents for the purpose of retaining
physical possession of the Collateral, which may be held (if applicable and in
the discretion of the Pledgee) in the name of each Pledgor, endorsed or assigned
in blank or in
6
<PAGE>
favor of the Pledgee or any nominee or nominees of the Pledgee or a sub-agent
appointed by the Pledgee. The Pledgee agrees to give the Company prompt notice
of any such appointment; PROVIDED that the failure of the Pledgee to give such
notice shall not affect the effectiveness of any such appointment.
6. VOTING, ETC. Unless and until an Event of Default (such term to
mean an Event of Default under, and as defined in, either Credit Agreement)
shall have occurred and be continuing, each Pledgor shall be entitled to vote
any and all of its Pledged Stock and to give consents, waivers or ratifications
in respect thereof; PROVIDED that no vote shall be cast or any consent, waiver
or ratification given or any action taken which would violate or be inconsistent
with any of the terms of this Agreement or any instrument or agreement relating
to the Obligations, or which would have the effect of materially impairing the
position or interests of the Pledgee or any other Secured Creditor, except to
the extent not prohibited by the Company Credit Agreement, and each Pledgor
shall give the Pledgee at least five Business Days' written notice of the manner
in which it intends to exercise, or the reasons for refraining from exercising,
any such right if the exercise or non-exercise of such right potentially may
violate or be inconsistent with the aforementioned agreements or may materially
impair the position or interests of the Pledgee or any other Secured Creditor;
PROVIDED, further, nothing herein contained shall be deemed to limit or restrict
each Pledgor's right to take any such actions in connection with the issuance by
any Unrestricted Subsidiary of any equity interests or debt obligations. All
such rights of the Pledgors to vote and to give consents, waivers and
ratifications shall cease in case an Event of Default shall occur and be
continuing, and Section 8 hereof shall become applicable. No Pledgor will, at
any time, amend, restate, supplement, waive or otherwise modify in any respect
adverse to the interests of the Secured Creditors any provision of any Pledged
Note, nor take any action which would release or render unenforceable any of the
obligations of any of the Subsidiaries or any other Person under its respective
Pledged Note.
7. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless an Event of Default
shall have occurred and be continuing, all principal, interest and cash
dividends payable
7
<PAGE>
in respect of the Pledged Securities shall be paid to each respective Pledgor.
The Pledgee shall be entitled to receive directly, and to retain as part of the
Collateral:
(a) all other or additional stock or securities and, after the
occurrence and during the continuance of an Event of Default, property
(including cash) paid or distributed by way of dividend in respect of the
Pledged Securities;
(b) all other or additional stock or other securities and, after
the occurrence and during the continuance of an Event of Default, property
(including cash) paid or distributed in respect of the Pledged Securities by way
of stock-split, spin-off, split-up, reclassification, combination of shares or
similar rearrangement; and
(c) all other or additional stock or other securities and, after
the occurrence and during the continuance of an Event of Default, property
(including cash) which may be paid in respect of the Pledged Securities by
reason of any consolidation, merger, exchange of stock, conveyance of assets,
liquidation or similar corporate reorganization or other disposition of
Collateral.
8. REMEDIES IN CASE OF EVENT OF DEFAULT. In case an Event of
Default shall have occurred and be continuing, the Pledgee shall be entitled to
exercise all of the rights, powers and remedies (whether vested in it by this
Agreement, any other Credit Document or by law and including, without
limitation, all rights and remedies of a secured party of a debtor in default
under the Uniform Commercial Code (the "Code") in effect in any relevant
jurisdiction at that time) for the protection and enforcement of its rights in
respect of the Collateral, and to the extent permitted by applicable law the
Pledgee shall be entitled, without limitation, to exercise the following rights,
which each Pledgor hereby agrees to be commercially reasonable:
(a) to receive all amounts payable in respect of the Collateral
otherwise payable under Section 7 to the Pledgors and to enforce the payment of
the
8
<PAGE>
Pledged Notes and to exercise all of the rights, powers, and remedies of each
Pledgor thereunder;
(b) to transfer all or any part of the Collateral into the
Pledgee's name or the name of its nominee or nominees;
(c) to vote all or any part of the Collateral (whether or not
transferred into the name of the Pledgee) and give all consents, waivers and
ratifications in respect of the Collateral and otherwise act with respect
thereto as though it were the outright owner thereof;
(d) at any time or from time to time to sell, assign and
deliver, or grant options to purchase, all or any part of the Collateral in one
or more parcels, or any interest therein, at any public or private sale at any
exchange, broker's board or at any of the Pledgee's offices or elsewhere,
without demand of performance, advertisement or notice of intention to sell or
of the time or place of sale or adjournment thereof or to redeem or otherwise
(all of which are hereby expressly and irrevocably waived by each Pledgor), for
cash, on credit or for other property, for immediate or future delivery without
any assumption of credit risk, and for such price or prices and on such terms as
the Pledgee in its absolute discretion may determine. The Pledgee agrees that
to the extent that notice of sale shall be required by law that at least 10
days' notice to each Pledgor of the time and place of any public sale or the
time after which any private sale is to be made shall constitute reasonable
notification. The Pledgee shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Pledgee may adjourn any
public or private sale from time to time by announcement at the time and place
fixed therefor, and any such sale may, without further notice, be made at the
time and place to which it was so adjourned. Each Pledgor hereby waives and
releases to the fullest extent permitted by law any right or equity of
redemption with respect to the Collateral, whether before or after sale
hereunder, and all rights, if any, of marshaling the Collateral and any other
security for the obligations or otherwise. At any such sale, unless prohibited
by applicable law, the Pledgee, on behalf of the Secured Creditors or any
Secured Creditor, may bid for and purchase all or any part
9
<PAGE>
of the Collateral so sold free from any such right or equity of redemption.
Neither the Pledgee nor any Secured Creditor shall be liable for failure to
collect or realize upon any or all of the Collateral or for any delay in so
doing nor shall any of them be under any obligation to take any action
whatsoever with regard thereto;
(e) to settle, adjust, compromise and arrange all accounts,
controversies, questions, claims and demands whatsoever in relation to all or
any part of the Collateral;
(f) in respect of the Pledged Securities, to execute all such
contracts, agreements, deeds, documents and instruments; to bring, defend and
abandon all such actions, suits and proceedings, and to take all actions in
relation to all or any part of the Collateral as the Pledgee in its absolute
discretion may determine;
(g) to appoint managers, sub-agents, officers and servants for
any of the purposes mentioned in the foregoing provisions of this Section 8 and
to dismiss the same, all as the Pledgee in its absolute discretion may
determine; and
(h) generally, to take all such other action as the Pledgee in
its absolute discretion may determine as incidental or conducive to any of the
matters or powers mentioned in the foregoing provisions of this Section 8 and
which the Pledgee may or can do lawfully and to use the name of any Pledgor for
the purposes aforesaid and in any proceedings arising therefrom.
9. REMEDIES, ETC., CUMULATIVE. Each right, power and remedy of the
Pledgee provided for in this Agreement or any other Credit Document or now or
hereafter existing at law or in equity or by statute shall be cumulative and
concurrent and shall be in addition to every other such right, power or remedy.
The exercise or beginning of the exercise by the Pledgee or any Secured Creditor
of any one or more of the rights, powers or
10
<PAGE>
remedies provided for in this Agreement or any other Credit Document or now or
hereafter existing at law or in equity or by statute or otherwise shall not
preclude the simultaneous or later exercise by the Pledgee or any Secured
Creditor of all such other rights, powers or remedies, and no failure or delay
on the part of the Pledgee or any Secured Creditor to exercise any such right,
power or remedy shall operate as a waiver thereof.
10. APPLICATION OF PROCEEDS. All moneys collected by the Pledgee
upon any sale or other disposition of the Collateral, together with all other
moneys received by the Pledgee hereunder shall be applied as follows:
(a) first, to the payment of any and all expenses and fees
(including reasonable attorneys' fees) actually incurred by the Pledgee in
obtaining, taking possession of, removing, storing and disposing of Collateral
and any and all amounts incurred by the Pledgee in connection therewith or owing
to the Pledgee hereunder;
(b) next, any surplus then remaining, to the payment of the
other Obligations; and
(c) if the Total Commitment is then terminated, all Loans (under
and as defined in each Credit Agreement) have been paid in full, no Letters of
Credit or Subsidiary Letters of Credit are outstanding and no other Obligation
is outstanding, any surplus then remaining shall be paid to the Company,
subject, however, to the rights of the holder of any then existing Lien of which
the Agent has actual notice (without investigation);
it being understood that the Pledgor shall remain liable to the extent of any
deficiency between the amount of the proceeds of the Collateral and the
aggregate amount of the sums referred to in clauses (a) and (b) of this Section
10.
Notwithstanding the foregoing, in no event shall moneys attributable
to a given Pledgor (when aggregated with all other amounts contemporaneously
received from such Pledgor under any other Security Document in respect of the
Obligations) be applied pursuant to the foregoing clause in excess of its
Maximum Guaranty Liability (as defined in the Subsidiary Guaranty), with any
excess to be paid to such Pledgor or to whomever may be lawfully entitled to
receive the same.
11
<PAGE>
11. PURCHASERS OF COLLATERAL. Upon any sale of any of the Collateral
hereunder (whether by virtue of the power of sale herein granted, pursuant to
judicial process or otherwise), the receipt of the Pledgee or the officer making
the sale shall be a sufficient discharge to the purchaser or purchasers of the
Collateral so sold, and such purchaser or purchasers shall not be obligated to
see to the application of any part of the purchase money paid over to the
Pledgee or such officer or be answerable in any way for the misapplication or
nonapplication thereof.
12. INDEMNITY. Without duplication of any amounts payable under
Section 12.1 of each Credit Agreement, each Pledgor shall jointly and severally,
subject, with respect to each Pledgor, to the last paragraph of Paragraph 10:
(i) whether or not the transactions hereby contemplated are consummated, pay all
reasonable out-of-pocket costs and expenses of the Pledgee actually incurred in
connection with the administration (both before and after the execution hereof
and including advice of counsel as to the rights and duties of the Pledgee with
respect thereto) of and in connection with the preparation, execution and
delivery of this Agreement (including, without limitation, the reasonable fees
and disbursements of Skadden, Arps, Slate, Meagher & Flom and of the Pledgee
actually incurred in connection with the preservation of rights under, and
enforcement of, and, after an Event of Default, the renegotiation or
restructuring of this Agreement and any amendment, waiver or consent relating
thereto (including, without limitation, the reasonable fees and disbursements of
counsel for the Pledgee); (ii) pay and hold the Pledgee harmless from and
against any and all present and future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies which arise from any payment
made hereunder or from the execution, delivery or registration of, or otherwise
with respect to this Agreement and save the Pledgee harmless from and against
any and all liabilities with respect to or resulting from any delay or omission
to pay any such taxes, charges or levies; and (iii) indemnify the Pledgee, its
officers, directors, employees, representatives and agents from and hold each of
them harmless against any and all costs, losses, liabilities, claims, damages or
expenses actually incurred by any of them (whether or not any of them is
designated a party thereto) arising out of or by reason
12
<PAGE>
of any investigation, litigation or other proceeding related to this Agreement
or any transaction contemplated hereby, including, without limitation, the
reasonable fees and disbursements of counsel incurred in connection with any
such investigation, litigation or other proceeding. Notwithstanding anything in
this Agreement to the contrary, no Pledgor shall be responsible to the Pledgee,
or any officer, director, employee, representative or agent of the foregoing (an
"Indemnified Party") for any losses, damages, liabilities or expenses which
result from such Indemnified Party's gross negligence or willful misconduct. It
is understood that no Pledgor shall, in connection with any single action, suit,
proceeding or claim or separate but substantially similar or related actions,
suits, proceedings or claims, arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys at the same time for the Indemnified Parties (which firm shall
be designated by the Pledgee) except that, if any Indemnified Party other than
the Pledgee shall determine, in its sole discretion, that there may be a
conflict in such firm representing the Pledgee and such Indemnified Party, then
the Pledgors shall be liable for the reasonable fees and expenses of an
additional firm for such Indemnified Party whose interests may be in conflict.
The Pledgors' obligations under this Section 12 shall survive any termination of
this Agreement.
13. FURTHER ASSURANCES. Each Pledgor agrees that it will join
with the Pledgee in executing and, at its own expense, file and refile under the
Uniform Commercial Code such financing statements, continuation statements and
other documents in such offices as the Pledgee may deem necessary or appropriate
and wherever required or permitted by law in order to perfect and preserve the
Pledgee's security interest in the Collateral and hereby authorizes the Pledgee
to file financing statements and amendments thereto relative to all or any part
of the Collateral without the signature of such Pledgor and to sign the same in
the name of such Pledgor, in each case where permitted by law, and agrees to do
such further acts and things and to promptly execute and deliver to the Pledgee
such additional conveyances, assignments, agreements and instruments as the
Pledgee may reasonably require or deem advisable to carry into effect the
purposes of this Agreement or to further
13
<PAGE>
assure and confirm unto the Pledgee its rights, powers and remedies hereunder.
14. THE PLEDGEE AS AGENT. (a) The Pledgee will hold in accordance
with this Agreement all items of the Collateral at any time received under this
Agreement. It is expressly understood and agreed that the obligations of the
Pledgee as holder of the Collateral and interests therein and with respect to
the disposition thereof, and otherwise under this Agreement, are only those
expressly set forth in this Agreement.
(b) The Pledgee shall be deemed to have exercised reasonable
care in the custody and preservation of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that which the Pledgee
accords its own property, it being understood that neither the Pledgee nor any
Secured Creditor shall have responsibility for (i) ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or other
matters relative to any Collateral, whether or not the Pledgee or any Secured
Creditor has or is deemed to have knowledge of such matters, or (ii) taking any
necessary steps to preserve rights against any parties with respect to any
Collateral.
15. TRANSFER BY THE PLEDGORS. No Pledgor will sell or otherwise
dispose of, grant any option with respect to, or mortgage, pledge or otherwise
encumber any of the Collateral or any interest therein (except pursuant to
Section 21 of this Agreement or as otherwise expressly permitted by the Credit
Agreements).
16. REPRESENTATIONS AND WARRANTIES. Each Pledgor hereby represents
and warrants that (a) it is the legal and beneficial owner of, and has good and
marketable title to, the Securities described in Section 3 hereof, subject to no
pledge, lien, mortgage, hypothecation, security interest, charge, option or
other encumbrance whatsoever, except the liens and security interests created by
this Agreement and as permitted by the Credit Agreements; (b) it has full power,
authority and legal right to pledge all the Securities pursuant to this
Agreement; (c) except as set forth in Schedule 6.7 of the Company Credit
Agreement, no consent of any other party (including, without limitation, any
stockholder or creditor of such Pledgor, any Pledged Company or any Charter
14
<PAGE>
Subsidiary) and no order, consent, license, permit, approval, validation or
authorization of, exemption by, notice to, or registration, recording, filing or
declaration with, any governmental or public body or authority is required to be
obtained by such Pledgor in connection with the execution, delivery or
performance of this Agreement or consummation of the transactions contemplated
hereby, including, without limitation, the exercise by the Pledgee of the voting
or other rights provided for in this Agreement or the remedies in respect of the
Collateral pursuant to this Agreement (except as may be required (i) from
stockholders of the Pledgor's Subsidiaries other than the Pledgor and (ii) in
connection with the disposition of the Pledged Securities by laws affecting the
offering and sale of securities generally); (d) all shares of Pledged Stock have
been duly and validly issued, are fully paid and nonassessable and such Pledgor
is a holder in due course of the Pledged Notes which it acquired for value, and
in good faith and without notice of any claim or defense thereto on the part of
any person; and (e) the pledge, assignment and delivery of the Securities
pursuant to this Agreement creates a valid and perfected security interest in
the Securities and the proceeds thereof superior to and prior to the rights of
all other Persons therein (as provided in the Uniform Commercial Code) (except
as permitted by the Credit Agreements).
17. COVENANTS OF THE PLEDGORS. Each Pledgor covenants and agrees
that (a) such Pledgor will defend the Pledgee's right, title and security
interest in and to the Collateral against the claims and demands of all persons
whomsoever (except as against Persons holding liens, security interests, or
other encumbrances permitted by the Credit Agreements having priority over the
security interest granted hereunder pursuant to applicable law); (b) such
Pledgor will have like title to and right to pledge any other property at any
time hereafter constituting Collateral and will likewise defend the right
thereto and security interest therein of the Pledgee and the Secured Creditors;
and (c) such Pledgor will not, with respect to any Collateral, enter into any
shareholder agreements, voting agreements, voting trusts, trust deeds,
irrevocable proxies or any other similar agreements or instruments, except for
any contained in the Transaction Documents.
15
<PAGE>
18. PLEDGORS' OBLIGATIONS ABSOLUTE, ETC. The obligations of each
Pledgor under this Agreement shall be joint, several, absolute and unconditional
in accordance with its terms and shall remain in full force and effect without
regard to, and shall not be released, suspended, discharged, terminated or
otherwise affected by, any circumstance or occurrence whatsoever, including,
without limitation: (a) any change in the time, place or manner of payment of,
or in any other term of, all or any of the Obligations, any waiver, indulgence,
renewal, extension, amendment or modification of or addition, consent or
supplement to or deletion from or any other action or inaction under or in
respect of either Credit Agreement, any Note, any other Credit Document or any
other documents, instruments or agreements relating to the Obligations or any
other instrument or agreement referred to therein or any assignment or transfer
of any thereof; (b) any lack of validity or enforceability of either Credit
Agreement, any Note, any other Credit Document, or any other documents,
instruments or agreements referred to therein or any assignment or transfer of
any thereof; (c) any furnishing of any additional security to the Pledgee, the
Secured Creditors or their assignees or any acceptance thereof or any release of
any security by the Pledgee, the Secured Creditors or their assignees; (d) any
limitation on any party's liability or obligations under any such instrument or
agreement or any invalidity or unenforceability, in whole or in part, of any
such instrument or agreement or any term thereof; (e) any bankruptcy,
insolvency, reorganization, composition, adjustment, dissolution, liquidation or
other like proceeding relating to such Pledgor or any subsidiary or stockholder
of such Pledgor, or any action taken with respect to this Agreement by any
trustee or receiver, or by any court, in any such proceeding, whether or not
such Pledgor shall have notice or knowledge of any of the foregoing; (f) any
exchange, release or nonperfection of any other collateral, or any release, or
amendment or waiver of or consent to departure from any guaranty or security,
for all or any of the Obligations; or (g) any other circumstance which might
otherwise constitute a defense available to, or a discharge of, such Pledgor.
19. REGISTRATION, ETC. (a) If an Event of Default shall have
occurred and be continuing and any Pledgor shall have received from the Pledgee
a written request or requests that such Pledgor cause any registra-
16
<PAGE>
tion, qualification or compliance under any Federal or state securities law or
laws to be effected with respect to all or any part of the Pledged Securities,
such Pledgor as soon as practicable and at its own expense will use its best
efforts to cause such registration to be effected (and be kept effective) and
will use its best efforts to cause such qualification and compliance to be
effected (and be kept effective) as may be so requested and as would permit or
facilitate the sale and distribution of such Pledged Securities, including,
without limitation, registration under the Securities Act of 1933 as then in
effect (or any similar statute then in effect), appropriate qualifications under
applicable blue sky or other state securities laws and appropriate compliance
with any other government requirements, and reasonably do or cause to be done
all such other reasonable acts and things as may be necessary to make such sale
of the Pledged Securities valid and binding in compliance with applicable laws;
PROVIDED, that the Pledgee shall furnish to such Pledgor such information
regarding the Pledgee as such Pledgor may reasonably request in writing and as
shall be required in connection with any such registration, qualification or
compliance. Each Pledgor will cause the Pledgee to be kept reasonably advised in
writing as to the progress of each such registration, qualification or
compliance and as to the completion thereof, will furnish to the Pledgee such
number of prospectuses, offering circulars or other documents incident thereto
as the Pledgee from time to time may reasonably request, and will indemnify the
Pledgee and all others participating in the distribution of such Pledged
Securities against all claims, losses, damages and liabilities caused by any
untrue statement (or alleged untrue statement) of a material fact contained
therein (or in any related registration statement, notification or the like) or
by any omission (or alleged omission) to state therein (or in any related
transaction statement, notification or the like) a material fact required to be
stated therein or necessary to make the statements not misleading, except
insofar as the same may have been caused by an untrue statement or omission
based upon information furnished in writing to such Pledgor by the Pledgee
expressly for use therein.
(b) If at any time when any Pledgee shall determine to exercise
its right to sell all or any part of the Pledged Securities pursuant to Section
8, such
17
<PAGE>
Pledged Securities or the part thereof to be sold shall not, for any reason
whatsoever, be effectively registered under the Securities Act of 1933, as then
in effect, the Pledgee may, in its sole and absolute discretion, sell such
Pledged Securities or part thereof by private sale in such manner and under such
circumstances as the Pledgee may deem necessary or advisable in order that such
sale may legally be effected without such registration. Without limiting the
generality of the foregoing, in any such event the Pledgee, in its sole and
absolute discretion (i) may proceed to make such private sale notwithstanding
that a registration statement for the purpose of registering such Pledged
Securities or part thereof shall have been filed under such Securities Act, (ii)
may approach and negotiate with a single possible purchaser to effect such sale,
and (iii) may restrict such sale to a purchaser who will represent and agree
that such purchaser is purchasing for its own account, for investment, and not
with a view to the distribution or sale of such Pledged Securities or part
thereof. In the event of any such sale, the Pledgee shall incur no
responsibility or liability for selling all or any part of the Pledged
Securities at a price which the Pledgee, in its sole and absolute discretion,
may in good faith deem reasonable under the circumstances, notwithstanding the
possibility that a substantially higher price may be realized if the sale were
deferred until after registration as aforesaid.
20. NOTICES, ETC. All notices and other communications hereunder
shall be given to the Company (on behalf of each Pledgor), the Pledgee and the
Agent at the addresses and in the manner specified in the Credit Agreements.
21. POWER OF ATTORNEY. Each Pledgor hereby absolutely and
irrevocably constitutes and appoints the Pledgee such Pledgor's true and lawful
agent and attorney-in-fact, with full power of substitution, in the name of such
Pledgor upon the occurrence and during the continuance of an Event of Default:
(a) to execute and do all such assurances, acts and things which such Pledgor
ought to do (but has failed to do) under the covenants and provisions contained
in this Agreement; (b) to take any and all such action as the Agent or any of
its sub-agents or attorneys may, in its or their sole and absolute discretion,
reasonably determine as necessary or advisable for the purpose of maintaining,
preserving or
18
<PAGE>
protecting the security constituted by this Agreement or any of the rights,
remedies, powers or privileges of the Pledgee under this Agreement; and (c)
generally, in the name of such Pledgor exercise all or any of the powers,
authorities, and discretions conferred on or reserved to the Pledgee by or
pursuant to this Agreement, and (without prejudice to the generality of any of
the foregoing) to seal and deliver or otherwise perfect any deed, assurance,
agreement, instrument or act as the Pledgee may deem proper in or for the
purpose of exercising any of such powers, authorities or discretions. Each
Pledgor hereby ratifies and confirms, and hereby agrees to ratify and confirm,
whatever lawful acts the Pledgee or any of the Pledgee's sub-agents or attorneys
shall do or purport to do in the exercise of the power of attorney granted to
the Pledgee pursuant to this Section 21, which power of attorney, being given
for security, is irrevocable and coupled with an interest.
22. TERMINATION, RELEASE. (a) At any time and from time to time, at
the request and expense of any Pledgor, the Pledgee shall release to such
Pledgor shares of Pledged Stock to enable such Pledgor to take actions permitted
pursuant to the terms and conditions of the Company Credit Agreement, including,
without limitation, to effect Asset Sales and sales of such shares of Pledged
Stock so long as the Company and the Pledgors shall remain in compliance with
Section 8.2 of the Company Credit Agreement.
(b) After full payment and performance of all of the Obligations
(other than indemnities which by their terms survive the repayment of the Loans
and the Revolving Loans) and the irrevocable termination of the commitments of
the Lenders under the Credit Agreements, this Agreement, so long as no Letter of
Credit or Subsidiary Letter of Credit is outstanding, shall terminate, and the
Pledgee, at the request and expense of each Pledgor, will execute and deliver to
the Pledgor a proper instrument or instruments acknowledging the satisfaction
and termination of this Agreement, and will duly assign, transfer and deliver to
each respective Pledgor (without recourse and without any representation or
warranty) such of the Collateral as may be in the possession of the Pledgee and
as has not theretofore been sold or otherwise applied or released pursuant to
this Agreement, together
19
<PAGE>
with any moneys at the time held by the Pledgee hereunder.
23. MISCELLANEOUS. Each Pledgor agrees with the Pledgee that each of
the obligations and liabilities of each Pledgor to the Pledgee under this
Agreement may be enforced against each Pledgor without the necessity of joining
any Pledged Company, any other Subsidiary of the Company or any other Person as
a party. This Agreement shall create a continuing security interest in the
Collateral and shall be binding upon the successors and assigns of each Pledgor
and shall inure to the benefit of and be enforceable by the Pledgee, the Secured
Creditors and their respective permitted successors and assigns. Without
limiting the generality of the foregoing sentence, any Secured Creditor may
assign or otherwise transfer any note held by it to any other person or entity
in accordance with the provisions of either of the Credit Agreements, to the
extent permitted by such agreement, and such other person or entity shall
thereupon become vested with all the benefits in respect thereof granted to such
Secured Creditor herein. This Agreement may be changed, waived, discharged or
terminated only in accordance with the provisions of the Credit Agreements or as
provided in Section 22. Unless otherwise defined herein or in the Company
Credit Agreement, terms defined in Article 9 of the Uniform Commercial Code in
the State of New York are used herein as defined. The headings in this
Agreement are for purposes of reference only and shall not limit or define the
meaning hereof. This Agreement may be executed in any number of counterparts,
each of which shall be an original, but all of which shall constitute one
instrument. In the event that any provision of this Agreement shall prove to be
invalid or unenforceable, such provision shall be deemed to be severable from
the other provisions of this Agreement which shall remain binding on all parties
hereto.
24. COLLATERAL AGENT. The appointment of the Collateral Agent as
Collateral Agent hereunder pursuant to the Intercreditor Agreement has been
ratified and confirmed by the Lenders in the Credit Agreements, and the
Collateral Agent shall be entitled to the benefits of the Credit Agreements. The
Collateral Agent shall be obligated, and shall have the right hereunder, to make
demands, to give notices, to exercise or refrain from exercising any rights, and
to take or refrain from taking
20
<PAGE>
action (including, without limitation, the release or substitution of
Collateral) solely in accordance with this Agreement and the Credit Agreements.
The Collateral Agent may resign and a successor Collateral Agent may be
appointed in the manner provided in the Credit Agreements. Upon the acceptance
of any appointment as a Collateral Agent by a successor Collateral Agent, that
successor Collateral Agent shall thereupon succeed to and become vested with all
the rights, powers, privileges and duties of the retiring Collateral Agent under
this Agreement, and the retiring Collateral Agent shall thereupon be discharged
from its duties and obligations under this Agreement. After any retiring
Collateral Agent's resignation, the provisions of this Agreement shall inure to
its benefit as to any actions taken or omitted to be taken by it under this
Agreement while it was Collateral Agent.
25. GOVERNING LAW; APPOINTMENT OF AGENT FOR SERVICE OF PROCESS;
SUBMISSION TO JURISDICTION. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW
PRINCIPLES THEREOF). ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO MAY BE BROUGHT IN THE COURTS OF THE
STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT
OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PLEDGOR
HEREBY CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE JURISDICTION
OF THE AFORESAID COURTS SOLELY FOR THE PURPOSE OF ADJUDICATING ITS RIGHTS OR THE
RIGHTS OF THE COLLATERAL AGENT OR THE AGENT WITH RESPECT TO THIS AGREEMENT OR
ANY DOCUMENT RELATED HERETO. EACH PLEDGOR HEREBY IRREVOCABLY DESIGNATES CT
CORPORATION SYSTEM, LOCATED AT 1633 BROADWAY, NEW YORK, NEW YORK 10019 AS THE
DESIGNEE, APPOINTEE AND AGENT OF SUCH PLEDGOR, TO RECEIVE, FOR AND ON BEHALF OF
SUCH PLEDGOR, SERVICE OF PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
DOCUMENT RELATED HERETO AND SUCH SERVICE SHALL, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, BE DEEMED COMPLETED TEN DAYS AFTER DELIVERY THEREOF TO SAID
AGENT. IT IS UNDERSTOOD THAT A COPY OF SUCH PROCESS SERVED ON SUCH AGENT WILL
BE PROMPTLY FORWARDED BY MAIL TO THE COMPANY (ON BEHALF OF THE RESPECTIVE
PLEDGOR) AT ITS ADDRESS SET FORTH IN THE COMPANY CREDIT AGREEMENT, BUT THE
FAILURE OF THE COMPANY (ON BEHALF OF SUCH PLEDGOR) TO RECEIVE SUCH
21
<PAGE>
COPY SHALL NOT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, AFFECT IN ANY WAY THE
SERVICE OF SUCH PROCESS. EACH PLEDGOR HEREBY IRREVOCABLY WAIVES, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS IN RESPECT OF THIS AGREEMENT OR ANY
DOCUMENT RELATED THERETO. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE PLEDGEE
TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY PLEDGOR IN ANY OTHER JURISDICTION.
26. WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, EACH PLEDGOR HEREBY IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT, OR ANY MATTER ARISING IN CONNECTION HEREUNDER.
27. AMENDMENT AND RESTATEMENT. This Agreement constitutes an
amendment and restatement of the 1992 Subsidiary Stock and Notes Pledge amended
hereby (the "Original Instrument"), and such Original Instrument shall continue
in effect on and after the date hereof as so amended and restated. The parties
do not intend that this Agreement constitute a novation, termination, release or
satisfaction of the Original Instrument, or constitute payment or satisfaction
of any indebtedness or other obligation secured by the Original Instrument.
22
<PAGE>
Charter Medical Corporation
Subsidiary Stock and Notes Pledge Agreement
May 2, 1994
IN WITNESS WHEREOF, each Pledgor and the Pledgee have caused this
Agreement to be executed by their duly elected officers duly authorized as of
the date first above written.
BANKERS TRUST COMPANY,
in its capacity as
Collateral Agent, as
Pledgee
By /s/ Mary Kay Coyle
------------------------------------
Name: Mary Kay Coyle
Title: Vice President
PLEDGORS:
By /s/ Charlotte A. Sanford
--------------------------------------
Charlotte A. Sanford,
in her capacity as
Treasurer for each of
the Corporations list-
ed on Annex A
<PAGE>
IN WITNESS WHEREOF, Charter Medical of England Limited has caused this
instrument to be duly executed as a Deed and delivered by two of its Directors
thereunto duly authorized as of the date first above written.
/s/ Charlotte A. Sanford
- ------------------------------------
Charlotte A. Sanford
Director
/s/ James M. Filush
- ------------------------------------
James M. Filush
Director
<PAGE>
[COMMON SEAL]
The Common Seal of
Charter Medical (Cayman Islands) Ltd.
was hereunto affixed in the presence of:
/s/ John C. McCauley
- ------------------------------------
John C. McCauley
Director
/s/ Glenn A. McRae
- ------------------------------------
Glenn A. McRae
Director
[COMMON SEAL]
The Common Seal of
Charter Medical International, Inc.
was hereunto affixed in the presence of:
/s/ John C. McCauley
- ------------------------------------
John C. McCauley
Director
/s/ Glenn A. McRae
- ------------------------------------
Glenn A. McRae
Director
<PAGE>
ANNEX A
-------
SECOND AMENDED AND RESTATED SUBSIDIARY STOCK
--------------------------------------------
AND NOTES PLEDGE AGREEMENT
--------------------------
DOMESTIC SUBSIDIARIES:
- ----------------------
1. Ambulatory Resources, Inc.
Subsidiary:
2. Gwinnett Immediate Care Center, Inc.
3. Holcomb Bridge Immediate Care Center, Inc.
4. Atlanta MOB, Inc.
5. Beltway Community Hospital, Inc.
6. CCM, Inc. (50%-Charter Medical Corporation and 50%-CMCI,Inc.)
7. Charter Alvarado Behavioral Health System, Inc.
8. Charter Appalachian Hall Behavioral Health System, Inc.
9. Charter Arbor Indy Behavioral Health System, Inc.
10. Charter Augusta Behavioral Health System, Inc.
11. Charter Bay Harbor Behavioral Health System, Inc.
12. Charter Beacon Behavioral Health System, Inc.
13. Charter Behavioral Health System at Fair Oaks, Inc.
14. Charter Behavioral Health System at Hidden Brook, Inc.
15. Charter Behavioral Health System at Los Altos, Inc.
16. Charter Behavioral Health System at Potomac Ridge, Inc.
17. Charter Behavioral Health System at Warwick Manor, Inc.
18. Charter Behavioral Health System of Athens, Inc.
19. Charter Behavioral Health System of Austin, Inc.
20. Charter Behavioral Health System of Baywood, Inc.
21. Charter Behavioral Health System of Bradenton, Inc.
22. Charter Behavioral Health System of Canoga Park, Inc.
23. Charter Behavioral Health System of Central Georgia, Inc.
24. Charter Behavioral Health System of Charleston, Inc.
25. Charter Behavioral Health System of Charlottesville, Inc.
26. Charter Behavioral Health System of Chicago, Inc.
27. Charter Behavioral Health System of Chula Vista, Inc.
28. Charter Behavioral Health System of Columbia, Inc.
29. Charter Behavioral Health System of Corpus Christi, Inc.
30. Charter Behavioral Health System of Dallas, Inc.
31. Charter Behavioral Health System of Evansville, Inc.
32. Charter Behavioral Health System of Fort Worth, Inc.
33. Charter Behavioral Health System of Jackson, Inc.
34. Charter Behavioral Health System of Jacksonville, Inc.
35. Charter Behavioral Health System of Jefferson, Inc.
36. Charter Behavioral Health System of Kansas City, Inc.
37. Charter Behavioral Health System of Lafayette, Inc.
38. Charter Behavioral Health System of Lake Charles, Inc.
39. Charter Behavioral Health System of Lakewood, Inc.
Page 1
<PAGE>
ANNEX A
-------
SECOND AMENDED AND RESTATED SUBSIDIARY STOCK
--------------------------------------------
AND NOTES PLEDGE AGREEMENT
--------------------------
40. Charter Behavioral Health System of Michigan City, Inc.
41. Charter Behavioral Health System of Mobile, Inc.
42. Charter Behavioral Health System of Nashua, Inc.
43. Charter Behavioral Health System of Nevada, Inc.
44. Charter Behavioral Health System of New Mexico, Inc.
45. Charter Behavioral Health System of Northwest Arkansas, Inc.
46. Charter Behavioral Health System of Northwest Indiana, Inc.
47. Charter Behavioral Health System of Paducah, Inc.
48. Charter Behavioral Health System of Rockford, Inc.
49. Charter Behavioral Health System of San Jose, Inc.
50. Charter Behavioral Health System of Southern California, Inc.
51. Charter Behavioral Health System of Tampa Bay, Inc.
52. Charter Behavioral Health System of Texarkana, Inc.
53. Charter Behavioral Health System of Toledo, Inc.
54. Charter Behavioral Health System of Tucson, Inc.
55. Charter Behavioral Health System of Virginia Beach, Inc.
56. Charter Behavioral Health System of Visalia, Inc.
57. Charter Behavioral Health System of Washington D.C., Inc.
58. Charter Behavioral Health System of Waverly, Inc.
59. Charter Behavioral Health System of Winston-Salem, Inc.
60. Charter Behavioral Health System of Yorba Linda, Inc.
61. Charter Behavioral Health Systems of Atlanta, Inc.
62. Charter Brawner Behavioral Health System, Inc.
Subsidiary:
63. Charter Behavioral Health System of Savannah, Inc.
64. Charter-By-The-Sea Behavioral Health System, Inc.
65. Charter Canyon Behavioral Health System, Inc.
66. Charter Canyon Springs Behavioral Health System, Inc.
67. Charter Centennial Peaks Behavioral Health System, Inc.
68. Charter Colonial Institute, Inc.
69. Charter Community Hospital, Inc.
70. Charter Community Hospital of Des Moines, Inc.
71. Charter Contract Services, Inc.
72. Charter Cove Forge Behavioral Health System, Inc.
73. Charter Crescent Pines Behavioral Health System, Inc.
74. Charter Fairbridge Behavioral Health System, Inc.
75. Charter Fairmount Behavioral Health System, Inc.
76. Charter Fenwick Hall Behavioral Health System, Inc.
77. Charter Financial Offices, Inc.
78. Charter Forest Behavioral Health System, Inc.
79. Charter Grapevine Behavioral Health System, Inc.
80. Charter Greensboro Behavioral Health System, Inc.
81. Charter Health Management of Texas, Inc.
Page 2
<PAGE>
ANNEX A
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SECOND AMENDED AND RESTATED SUBSIDIARY STOCK
--------------------------------------------
AND NOTES PLEDGE AGREEMENT
--------------------------
82. Charter Hospital of Columbus, Inc.
83. Charter Hospital of Denver, Inc.
84. Charter Hospital of Ft. Collins, Inc.
85. Charter Hospital of Laredo, Inc.
86. Charter Hospital of Mobile, Inc.
87. Charter Hospital of Northern New Jersey, Inc.
88. Charter Hospital of Santa Teresa, Inc.
89. Charter Hospital of St. Louis, Inc.
Subsidiary:
90. Charter Hospital of Miami, Inc.
91. Charter Hospital of Torrance, Inc.
92. Charter Indianapolis Behavioral Health System, Inc.
93. Charter Lafayette Behavioral Health System, Inc.
94. Charter Lakehurst Behavioral Health System, Inc.
95. Charter Lakeside Behavioral Health System, Inc.
96. Charter Laurel Heights Behavioral Health System, Inc.
97. Charter Laurel Oaks Behavioral Health System, Inc.
98. Charter Linden Oaks Behavioral Health System, Inc.
99. Charter Little Rock Behavioral Health System, Inc.
100. Charter Louisville Behavioral Health System, Inc.
101. Charter Meadows Behavioral Health System, Inc.
102. Charter Medfield Behavioral Health System, Inc.
103. Charter Medical Executive Corporation
104. Charter Medical Information Services, Inc.
105. Charter Medical International, S.A., Inc.
106. Charter Medical Management Company
107. Charter Medical of East Valley, Inc.
108. Charter Medical of North Phoenix, Inc.
109. Charter Medical of Orange County, Inc.
110. Charter Medical - California, Inc.
Subsidiary:
111. Charter Behavioral Health System of Northern California, Inc.
112. Charter Medical - Clayton County, Inc.
113. Charter Medical - Cleveland, Inc.
Subsidiary:
114. Charter Regional Medical Center, Inc.
115. Charter Medical - Dallas, Inc.
116. Charter Medical - Long Beach, Inc.
117. Charter Medical - New York, Inc.
118. Charter Mental Health Options, Inc.
119. Charter Mid-South Behavioral Health System, Inc.
120. Charter Milwaukee Behavioral Health System, Inc.
121. Charter Mission Viejo Behavioral Health System, Inc.
Page 3
<PAGE>
ANNEX A
-------
SECOND AMENDED AND RESTATED SUBSIDIARY STOCK
--------------------------------------------
AND NOTES PLEDGE AGREEMENT
--------------------------
122. Charter MOB of Charlottesville, Inc.
123. Charter North Behavioral Health System, Inc.
Subsidiary:
124. Charter North Counseling Center, Inc.
125. Charter Northbrooke Behavioral Health System, Inc.
126. Charter Northridge Behavioral Health System, Inc.
127. Charter Northside Hospital, Inc.
128. Charter Oak Behavioral Health System, Inc.
129. Charter of Alabama, Inc.
130. Charter Palms Behavioral Health System, Inc.
131. Charter Peachford Behavioral Health System, Inc.
132. Charter Pines Behavioral Health System, Inc.
133. Charter Plains Behavioral Health System, Inc.
134. Charter Psychiatric Hospitals, Inc.
135. Charter Real Behavioral Health System, Inc.
136. Charter Richmond Behavioral Health System, Inc.
137. Charter Ridge Behavioral Health System, Inc.
138. Charter Rivers Behavioral Health System, Inc.
139. Charter San Diego Behavioral Health System, Inc.
140. Charter Serenity Lodge Behavioral Health System, Inc.
141. Charter Sioux Falls Behavioral Health System, Inc.
142. Charter South Bend Behavioral Health System, Inc.
143. Charter Springs Behavioral Health System, Inc.
144. Charter Springwood Behavioral Health System, Inc.
145. Charter Surburban Hospital of Mesquite, Inc.
146. Charter Terre Haute Behavioral Health System, Inc.
147. Charter Thousand Oaks Behavioral Health System, Inc.
148. Charter Tidewater Behavioral Health System, Inc.
149. Charter Treatment Center of Michigan, Inc.
150. Charter Westbrook Behavioral Health System, Inc.
Subsidiary:
151. CPS Associates, Inc.
152. Charter White Oak Behavioral Health System, Inc.
153. Charter Wichita Behavioral Health System, Inc.
154. Charter Woods Behavioral Health System, Inc.
Subsidiary:
155 Charter Woods Hospital, Inc.
156. Charter - Provo School, Inc.
157. Charterton/LaGrange, Inc.
158. CMSF, Inc.
159. C.A.C.O. Services, Inc.
160. Desert Springs Hospital, Inc.
Page 4
<PAGE>
ANNEX A
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SECOND AMENDED AND RESTATED SUBSIDIARY STOCK
--------------------------------------------
AND NOTES PLEDGE AGREEMENT
--------------------------
161. CMCI, Inc.
162. CMFC, Inc.
163. Employee Assistance Services, Inc.
164. Florida Health Facilities, Inc.
165. Gulf Coast EAP Services, Inc.
166. HCS, Inc.
167. Hospital Investors, Inc.
168. Mandarin Meadows, Inc.
169. Metropolitan Hospital, Inc.
170. Middle Georgia Hospital, Inc.
171. Pacific - Charter Medical, Inc.
Subsidiary:
172. Charter Behavioral Health System of the Inland Empire, Inc.
173 Peachford Professional Network, Inc.
174. Rivoli, Inc.
175. Shallowford Community Hospital, Inc.
176. Sistemas De Terapia Respiratoria S.A., Inc.
177. Stuart Circle Hospital Corporation
178. Tampa Bay Behavioral Health Alliance, Inc.
179. Western Behavioral Systems, Inc.
Page 5
<PAGE>
SECOND AMENDED AND RESTATED
SUBSIDIARY PLEDGE AND SECURITY AGREEMENT
SECOND AMENDED AND RESTATED SUBSIDIARY PLEDGE AND SECURITY AGREEMENT,
dated as of May 2, 1994 (as the same may be amended, restated, supplemented or
otherwise modified from time to time, this "Agreement"), made by each of the
corporations listed on Schedule 1 hereto (individually, an "Assignor" and
collectively, the "Assignors") to Bankers Trust Company, a New York banking
corporation, in its capacity as Collateral Agent (as hereinafter defined) for
the Secured Creditors (as hereinafter defined). Certain capitalized terms are
defined in Article VII hereof.
W I T N E S S E T H:
WHEREAS, certain of the parties hereto (or their predecessors) (other
than certain Assignors which executed mortgages in favor of the Agent) entered
into the Subsidiary Pledge and Security Agreement dated as of September l, 1988,
as supplemented by Supplement No. l dated as of October 4, 1990, and the
Subsidiary Security Agreement (Mortgaged Property) dated as of September 1,
1988, as supplemented by Supplement No. l dated as of October 4, 1990, each of
which was amended and restated by the Amended and Restated Subsidiary Pledge and
Security Agreement dated as of July 21, 1992 (the "1992 Subsidiary Pledge and
Security Agreement"), in favor of the Collateral Agent for the benefit of the
Lenders, the Trustee and the Issuing Banks (as such terms are defined in the
1992 Subsidiary Pledge and Security Agreement) and now desire to amend and
restate such agreement in its entirety; and
WHEREAS, Charter Medical Corporation, a Delaware corporation (as
successor to WAF Acquisition Corporation, a Delaware corporation, the
"Company"), certain of the Lenders (as hereinafter defined), Bankers Trust
Company, as Agent, and Wells Fargo Bank, National Association and Bank of
America National Trust and Savings Association, as co-agents (the "Original
Co-Agents"),
<PAGE>
entered into that certain Credit Agreement dated as of September l, 1988 which
was amended and restated by the Amended and Restated Credit Agreement dated as
of July 21, 1992 (the "1992 Company Credit Agreement"), which is being amended
and restated by the Second Amended and Restated Credit Agreement dated as of the
date hereof (as the same may be further amended, restated, supplemented or
otherwise modified from time to time, the "Company Credit Agreement"), pursuant
to which certain of the Lenders made certain loans and commitments to the
Company, the terms of which are being amended and restated pursuant to the
Company Credit Agreement; and
WHEREAS, pursuant to the terms and conditions of the Company Credit
Agreement, the Lenders have made certain commitments to make additional loans
to, and participate in and/or issue letters of credit for the account of, the
Company; and
WHEREAS, certain Subsidiary Borrowers, certain of the Lenders, the
Agent and the Original Co-Agents entered into a Credit Agreement, dated as of
September l, 1988, which was amended and restated by the Amended and Restated
Subsidiary Credit Agreement dated as of July 21, 1992 (the "1992 Subsidiary
Credit Agreement"; and, together with the 1992 Company Credit Agreement, the
"1992 Credit Agreements"), which is being amended and restated by the Second
Amended and Restated Subsidiary Credit Agreement dated as of the date hereof (as
the same may be further amended, restated, supplemented or otherwise modified
from time to time, the "Subsidiary Credit Agreement"; and, together with the
Company Credit Agreement, each a "Credit Agreement" and collectively the "Credit
Agreements"), pursuant to which certain of the Lenders made certain loans and
commitments to, and participated in certain letters of credit for the benefit
of, the Subsidiary Borrowers, the terms of which are being amended and restated
pursuant to the Subsidiary Credit Agreement; and
WHEREAS, pursuant to the terms and conditions of the Subsidiary Credit
Agreement, the Lenders have made certain commitments to make additional loans
to, and participate in and/or issue letters of credit for the account of, the
Subsidiary Borrowers; and
2
<PAGE>
WHEREAS, the Assignors have executed and delivered a Second Amended
and Restated Subsidiary Guaranty dated as of the date hereof (as the same may be
amended, restated, supplemented or otherwise modified from time to time, the
"Subsidiary Guaranty") pursuant to which such Assignors have agreed jointly and
severally to guarantee all of (i) the Obligations (as defined in the Company
Credit Agreement) of the Company and (ii) the Obligations of the Subsidiary
Borrowers; and
WHEREAS, the Company has guaranteed the Obligations of each Subsidiary
Borrower; and
WHEREAS, the Lenders have agreed to amend and restate the 1992 Credit
Agreements upon terms and conditions acceptable to the Company and the
Subsidiary Borrowers; and
WHEREAS, it was a condition precedent to the incurrence of loans and
the participation in letters of credit under the 1992 Credit Agreements that
each Assignor execute and deliver to the Agent the 1992 Subsidiary Pledge and
Security Agreement and it is a condition precedent to the incurrence of loans
and the issuance of letters of credit under the Credit Agreements that each
Assignor execute and deliver to the Collateral Agent this Agreement; and
WHEREAS, (a) the Senior Secured Notes (as defined in the 1992
Subsidiary Pledge and Security Agreement) have been irrevocably paid in full;
(b) each Issuing Bank has agreed, among other things, that the Reimbursement
Agreements (as defined in the 1992 Subsidiary Pledge and Security Agreement) to
which it is a party (other than the Credit Documents to the extent the same
could be considered Reimbursement Agreements) shall no longer be entitled to the
security interests and other benefits of this Agreement; and (c) the
Intercreditor Agreement (as defined in the 1992 Subsidiary Pledge and Security
Agreement) has been terminated, except for the appointment by the Lenders of
Bankers Trust Company as Collateral Agent, which appointment has been ratified
and confirmed in the Credit Agreements;
NOW, THEREFORE, in consideration of the benefits accruing to the
Assignors, the receipt and sufficiency of which are hereby acknowledged, the
Assignors
3
<PAGE>
hereby make the following representations and warranties and covenant and agree
as follows:
ARTICLE I
SECURITY INTERESTS
1.1. GRANT OF SECURITY INTERESTS. (a) As collateral security for
the prompt and complete payment and performance when due of all of the
Obligations, each Assignor does hereby sell, assign and transfer as collateral
security unto, and does hereby grant to, the Collateral Agent for the benefit of
the Secured Creditors, a continuing security interest in all of such Assignor's
right, title and interest in, to and under all of the following, now existing or
hereafter from time to time arising or acquired, (i) each and every Receivable,
except (x) to the extent prohibited by the Medicare and Medicaid programs
pursuant to 42 U.S.C. sections 1395 and 1396(a) (and any successor to such
Sections) and (y) Receivables from the United States Government to the extent
such Receivables are prohibited by law to be subject to a security interest or
Lien, (ii) all Inventory, Equipment, other Goods, Chattel Paper, Documents,
Fixtures and Instruments; (iii) to the extent not prohibited by applicable law,
all Contracts, Contract Rights arising under such Contracts and all other
General Intangibles; (iv) to the extent permitted under such agreements, any and
all interest rate or currency exchange agreements, including without limitation,
cap, collar, floor, forward or similar agreements or other rate protection
arrangements and all other hedging arrangements; (v) any and all books and
records relating to any of the property described in the foregoing clauses (i)
through (iv) except to the extent such books and records are acquired under a
license from a third party which prohibits the granting of a security interest
therein; and (vi) in each instance, together with all accessions, attachments
and additions thereto, substitutions therefor and replacements, Proceeds and
products of any and all of the foregoing items described in clauses (i) through
(v) (all of the above collectively, the "Collateral"); PROVIDED, HOWEVER, that,
with the exception of the Collateral described in clause (i) and any Collateral
constituting intercompany notes, the foregoing grant of a security interest
shall not include a security interest in, and
4
<PAGE>
the Collateral shall not include, any property of an Assignor to the extent (but
only to the extent) that the granting of a security interest in such property is
prohibited or otherwise restricted by the terms of the agreements listed on the
attached Schedule 1.1 (the "Excluded Property"); PROVIDED, FURTHER, that upon
the termination or expiration of such prohibition or restriction, the Excluded
Property shall become subject to the security interest hereunder and shall be
deemed to be Collateral.
(b) The pledges, liens and security interests of the Collateral Agent
under this Agreement extend to all Collateral now existing or hereafter
acquired, of the kind which is the subject of this Agreement which any Assignor
may acquire at any time during the continuation of this Agreement. Except as
otherwise set forth in the Credit Agreements (including, without limitation,
Section 8.8 of the Company Credit Agreement), upon the sale or disposition by
any Assignor of all of its right, title and interest in and to any Collateral
pursuant to Sections 8.2, 8.6 or 8.8 of the Company Credit Agreement, to a
Person other than another Assignor, the security interest with respect to such
Collateral shall be released; PROVIDED that, at such time, no Default or Event
of Default shall have occurred and be continuing.
(c) In the event that the grant of a security interest
hereunder in any Collateral (other than any Collateral described in Section
1.1(a)(i) and any intercompany notes) is prohibited by any agreement to which an
Assignor is a party, the Collateral Agent, promptly after a written request
therefor from such Assignor or the Company, shall release the security interest
granted hereunder in such Collateral if (i) no Default or Event of Default has
occurred and is then continuing, (ii) the replacement cost of such Collateral is
less than $500,000, (iii) such Assignor and the Company have used all reasonable
efforts (other than the payment of any significant sum of money) to obtain a
consent from the other parties to such agreement to the Collateral Agent's
security interest in such Collateral, and (iv) after giving effect to such
release, Collateral and Company Collateral having an aggregate replacement cost
in excess of $3,000,000 shall not have been released pursuant to this Section
1.1(c) and/or Section 1.1(c) of the Company Pledge and Security Agreement. For
purposes
5
<PAGE>
of the foregoing clauses (ii) and (iv), the replacement cost of any Collateral
or Company Collateral requested from time to time to be released pursuant to
this Section 1.1(c) or Section 1.1(c) of the Company Pledge and Security
Agreement shall be the replacement cost of such Collateral or Company
Collateral, as the case may be, at the time of the request for such release as
determined by the Company at such time in good faith and in a reasonable manner.
1.2. POWER OF ATTORNEY. Each Assignor hereby constitutes and
appoints the Collateral Agent its true and lawful attorney, with full power (in
the name of Assignor or otherwise), upon the occurrence and during the
continuance of an Event of Default to act, require, demand, receive, compound
and give acquittance for any and all monies and claims for monies due or to
become due to such Assignor under or arising out of the Collateral, to endorse
any checks or other instruments or orders in connection therewith and to file
any claims or take any action or institute any proceedings, consistent with the
Collateral Agent's rights under this Agreement, which the Collateral Agent may
deem to be necessary or advisable in the premises, which appointment as attorney
is coupled with an interest and is irrevocable.
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Assignor represents, warrants and covenants, which
representation, warranties and covenants shall survive execution and delivery of
this Agreement, as follows:
2.1. NECESSARY FILINGS. All filings, registrations and recordings
necessary or appropriate to create, preserve, protect and perfect the security
interest granted by each Assignor to the Collateral Agent hereby in respect of
the Collateral have been accomplished and the security interest granted to the
Collateral Agent pursuant to this Agreement in and to the Collateral constitutes
a perfected security interest therein (as provided in the Uniform Commercial
Code), which is superior and prior to the rights of all other Persons therein
(subject, however, to Permitted Encum-
6
<PAGE>
brances that are prior to the security interests granted hereunder pursuant to
applicable law), and is entitled to all the rights, priorities and benefits
afforded by the Uniform Commercial Code as enacted in any relevant jurisdiction
to perfected security interests.
2.2. NO LIENS. Each Assignor is, and as to Collateral acquired by it
from time to time after the date hereof, such Assignor will be, the owner of all
Collateral free from any Lien, security interest, encumbrance, assignment or
other right, title or interest of any Person other than as created under the
Security Documents, except as otherwise permitted pursuant to the terms and
provisions of the Company Credit Agreement ("Permitted Encumbrances") and,
except as to Permitted Encumbrances, such Assignor shall defend the Collateral
against all claims and demands of all Persons at any time claiming the same or
any interest therein adverse to the Collateral Agent.
2.3. OTHER FINANCING STATEMENTS. Except for Permitted Encumbrances,
there is no financing statement (or similar statement or instrument of
registration under the law of any jurisdiction) covering any interest of any
kind in the Collateral and so long as any of the Obligations remain unpaid, no
Assignor will execute or authorize to be filed in any public office any
financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) or statements relating to the Collateral, except
financing statements filed or to be filed in respect of and covering the
security interests granted hereby by the Assignors and Permitted Encumbrances.
2.4. CHIEF EXECUTIVE OFFICE; CORPORATE NAME; RECORDS. The chief
executive office of each Assignor is located at the addresses specified for such
Assignor on Annex A attached hereto. No Assignor will move its chief executive
office except to such new location such Assignor may establish in accordance
with the last sentence of this Section 2.4. No Assignor will change its
corporate name nor carry on business under any name other than its corporate
name or the name specified for such Assignor on Annex A attached hereto except
after having complied with the requirements of the last sentence of this
Section 2.4. The originals of all documents evidencing all Receivables of each
Assignor and the only original books
7
<PAGE>
of account and records of such Assignor relating thereto are, and will continue
to be, kept at such chief executive office, or at such new location for such
chief executive office as such Assignor may establish in accordance with the
last sentence of this Section 2.4 or such other location as listed on Annex A
hereto, PROVIDED that all actions necessary to perfect or continue to perfect
the security interests granted hereunder in such documents, books of account and
records have been taken. All Receivables of each Assignor are, and will
continue to be controlled and directed (including, without limitation, for
general accounting purposes) from, such chief executive office location as set
forth on Annex A attached hereto, or such new location as such Assignor may
establish in accordance with the last sentence of this Section 2.4 or such other
location as listed on Annex A attached hereto. No Assignor shall establish a
new location for its chief executive office or change its corporate name or the
names under which it presently conducts its business unless (i) it shall give to
the Collateral Agent written notice clearly describing such new location or
specifying such new corporate name, as the case may be, and providing such other
information in connection therewith as the Collateral Agent may reasonably
request, and (ii) with respect to such new location or such new corporate name,
as the case may be, it shall have taken all action, satisfactory to the
Collateral Agent, to maintain the security interest of the Collateral Agent in
the Collateral intended to be granted hereby at all times fully perfected and in
full force and effect.
2.5. LOCATION OF EQUIPMENT. (a) All Significant Equipment held on
the date hereof by each Assignor is located at the address shown for such
Assignor on Annex A attached hereto. Except as otherwise permitted pursuant to
the Mortgages, each Assignor agrees that all Significant Equipment owned or
leased by it from time to time shall be kept at (or shall be in transport to)
the location shown on Annex A attached hereto for such Assignor, or such new
location as each Assignor may establish in accordance with the last sentence of
this Section 2.5; PROVIDED that any Significant Equipment of such Assignor may
at any time be in transport to, or located on a temporary basis at, any other
location set forth on Annex A attached hereto. No Assignor may otherwise
establish a new location for any Significant Equipment unless (i) it shall have
given to the Collateral Agent
8
<PAGE>
written notice clearly describing such new location and providing such other
information in connection therewith as the Collateral Agent may reasonably
request, and (ii) with respect to such new location, it shall have taken all
action satisfactory to the Collateral Agent to maintain the security interest of
the Collateral Agent in the Collateral intended to be granted hereby at all
times fully perfected and in full force and effect.
ARTICLE III
SPECIAL PROVISIONS CONCERNING RECEIVABLES
3.1. ADDITIONAL REPRESENTATIONS AND WARRANTIES. As of the time when
each of its Receivables arises, each Assignor shall be deemed to have
represented and warranted that such Receivable and all records, papers and
documents relating thereto (if any) are genuine and in all respects are what
they purport to be, and that all papers and documents (if any) relating thereto
(i) will be the only original writings evidencing and embodying such obligation
of the account debtor named therein (other than copies created for purposes
other than general accounting purposes), (ii) will evidence true and valid
obligations, enforceable in accordance with their respective terms (except as
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws and by principles of equity) arising out of the performance of
labor or services or the sale or lease and delivery of the merchandise listed
therein, or both, not subject to the fulfillment of any contract or condition
whatsoever or to any defenses, set-offs or counterclaims (except (a) with
respect to refunds, returns, adjustments and allowances in the ordinary course
of business with respect to damaged merchandise and similar practices arising in
the ordinary course of business relating to payments under Medicare and other
health insurance programs and (b) accounts that have not yet been earned by
performance), or stamp or other taxes, and (iii) will be in compliance in all
material respects and will conform with all applicable and material federal,
state and local laws.
3.2. MAINTENANCE OF RECORDS. Each Assignor will keep and maintain at
its own cost and expense satisfactory and complete records of its Receivables,
includ-
9
<PAGE>
ing, but not limited to, records of all payments received, all credits granted
thereon, all merchandise returned and all other dealings therewith, and each
Assignor will make the same available to the Collateral Agent, for inspection at
such Assignor's place of business, in accordance with the terms set forth for
the inspection of such types of records in the Company Credit Agreement (except
such records constituting confidential patient information, the release of which
information is prohibited by law). After the occurrence and continuance of an
Event of Default, each Assignor shall, at its own cost and expense, deliver all
tangible evidence that the Collateral Agent may reasonably request of its
Receivables (including, without limitation, all documents evidencing the
Receivables) and such books and records to the Collateral Agent or to its
representatives (copies of which evidence and books and records may be retained
by such Assignor) at any time upon its demand; PROVIDED, THAT, nothing set forth
herein shall require the delivery of confidential patient information to the
extent the release of such information (if any) is prohibited by law until all
such consents or approvals for such release shall have been obtained (which
consents and approvals each Assignor agrees to promptly take reasonable action
to obtain in any such event). If the Collateral Agent so directs, each Assignor
shall legend, in form and manner reasonably satisfactory to the Collateral
Agent, the Receivables and other books, records and documents of such Assignor
evidencing or pertaining to the Receivables with an appropriate reference to the
fact that the Receivables have been assigned to the Collateral Agent and that
the Collateral Agent has a security interest therein.
3.3. MODIFICATION OF TERMS; ETC. No Assignor shall rescind or cancel
any indebtedness evidenced by any Receivable or modify any term thereof or make
any adjustment with respect thereto, or extend or renew the same, or compromise
or settle any dispute, claim, suit or legal proceeding relating thereto, or sell
any Receivable or interest therein, without the prior written consent of the
Collateral Agent, except as permitted by Section 3.4 hereof. Each Assignor will
duly fulfill all obligations on its part to be fulfilled under or in connection
with the Receivables and will do nothing to impair the rights of the Collateral
Agent in the Receivables.
10
<PAGE>
3.4. COLLECTION. Each Assignor shall endeavor to cause to be
collected from the account debtor named in each of its Receivables, as and when
due (including, without limitation, Receivables which are delinquent, such
Receivables to be collected in accordance with past business practices and
generally accepted collection procedures in accordance with all applicable
laws), any and all amounts owing under or on account of such Receivable subject
to adjustments made in the ordinary course of business and in sound business
judgment relating to payments under Medicare and other health insurance programs
or made in respect of charitable programs for indigent care in accordance with
such Assignor's past practices, and apply forthwith upon receipt thereof all
such amounts as are so collected to the outstanding balance of such Receivable,
except that, prior to the occurrence and continuance of an Event of Default,
such Assignor may (i) convey, sell, lease or otherwise dispose of accounts
receivable which have been outstanding more than 120 days in the ordinary course
of business in accordance with such Assignor's past collection practices of
accounts receivable and (ii) allow in the ordinary course of business as
adjustments to amounts owing under its Receivables (A) an extension or renewal
of the time or times of payment, or settlement for less than the total unpaid
balance, which such Assignor finds appropriate in accordance with sound business
judgment and (B) a refund or credit due as a result of returned or damaged
merchandise. The costs and expenses (including, without limitation, attorneys'
fees) of collection, whether incurred by any Assignor or the Collateral Agent,
shall be borne by the Assignors.
3.5. INSTRUMENTS. Upon the occurrence and during the continuance of
an Event of Default and upon the written request of the Collateral Agent, if any
of the Receivables of any Assignor becomes evidenced by an Instrument, such
Assignor will within 10 days notify the Collateral Agent thereof, and upon
written request by the Collateral Agent promptly deliver such Instrument to the
Collateral Agent appropriately endorsed to the order of the Collateral Agent as
further security hereunder.
3.6. FURTHER ACTIONS. Each Assignor will, at its own expense, make,
execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from
time to time such vouchers, invoices, schedules, confirmatory
11
<PAGE>
assignments, conveyances, financing statements, transfer endorsements, powers of
attorney, certificates, reports, notices and other assurances or instruments and
take such further steps relating to its Receivables and other property or rights
covered by the security interest hereby granted, as the Collateral Agent may
reasonably require in order to create, preserve, perfect or validate (under the
Assignment of Claims Act of 1940, as amended, or similar state laws, in each
case for Receivables under a contract with a book value greater than $50,000)
any security interest granted pursuant to this Agreement or to enable the
Collateral Agent to exercise and enforce its rights under this Agreement with
respect to such security interest; PROVIDED, HOWEVER, the Collateral Agent
agrees that notwithstanding anything to the contrary set forth in this Section
3.6, unless an Event of Default shall have occurred and be continuing, each
Assignor may retain in its possession all Collateral which would otherwise
require possession by the Collateral Agent for perfection of the security
interest therein granted by such Assignor under this Agreement.
ARTICLE IIIA
SPECIAL PROVISIONS CONCERNING CHATTEL
PAPER AND INSURANCE PROCEEDS
Section 3A.1. CHATTEL PAPER. Upon the occurrence and during the
continuance of an Event of Default, each Assignor will, upon request by the
Collateral Agent, (i) legend all Chattel Paper with an appropriate reference to
the fact that such Chattel Paper has been assigned to the Collateral Agent and
that the Collateral Agent has a security interest therein and (ii) promptly
deliver all Chattel Paper to the Collateral Agent.
Section 3A.2. INSURANCE PROCEEDS. The Collateral Agent may apply any
proceeds of insurance received by it with respect to any Equipment in accordance
with the terms and provisions set forth in the Mortgages, regardless of whether
such Equipment is subject thereto. Each Assignor assumes all liability and
responsibility in connection with the Collateral acquired by it and the
liability of any Assignor to pay the Obligations shall in no way be affected or
diminished by reason of the fact that such Collateral may be lost, destroyed,
stolen,
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damaged or for any reason whatsoever unavailable to any Assignor.
ARTICLE IV
FURTHER ASSURANCES
Except as permitted hereby, no Assignor will do anything to materially
impair the rights of the Collateral Agent in the Collateral. Each Assignor
will, at its own expense, make, execute, endorse, acknowledge, file and/or
deliver to the Collateral Agent from time to time such lists, descriptions and
designations of its Collateral, warehouse receipts, receipts in the nature of
warehouse receipts, bills of lading, documents of title, vouchers, invoices,
schedules, confirmatory assignments, conveyances, financing statements, transfer
endorsements, powers of attorney, certificates, reports and other assurances or
instruments and take such further steps relating to the Collateral and other
property or rights covered by the security interest hereby granted, which the
Collateral Agent deems reasonably appropriate or advisable to perfect, preserve
or protect its security interest in the Collateral; PROVIDED, HOWEVER, the
Collateral Agent agrees that notwithstanding anything to the contrary set forth
in this Agreement, unless an Event of Default shall have occurred and be
continuing, each Assignor may retain in its possession all Collateral which
would otherwise require possession by the Collateral Agent for perfection of the
security interest therein granted by such Assignor under this Agreement. Each
Assignor agrees to sign and deliver to the Collateral Agent such financing
statements, in form acceptable to the Collateral Agent, as the Collateral Agent
may from time to time reasonably request or as are necessary or desirable in the
reasonable opinion of the Collateral Agent to establish and maintain a valid and
enforceable security interest in the Collateral as provided herein and having
the priority as contemplated hereunder and the other rights and security
contemplated hereby all in accordance with the Uniform Commercial Code as
enacted in any and all relevant jurisdictions or any other relevant law. Each
Assignor will pay any applicable filing fees and related expenses. To the
extent permitted by applicable law, each Assignor authorizes the Collateral
Agent to file any such financing statements without the signa-
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ture of such Assignor and to sign such financing statement on behalf of, and in
the name of, the Assignor.
ARTICLE V
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT
5.1. REMEDIES; OBTAINING THE COLLATERAL UPON DEFAULT. Each Assignor
agrees that, if any Event of Default shall have occurred and be continuing, then
and in every such case, the Collateral Agent shall be entitled to exercise all
rights and remedies of a secured party under the Uniform Commercial Code as in
effect in any relevant jurisdiction to enforce the assignments and security
interests contained herein, and, in addition, to the extent permitted by
applicable law, the Collateral Agent may:
(a) personally, or by agents or attorney, immediately take possession
of the Collateral or any part thereof, from any Assignor or any other Person who
then has possession of any part thereof with or without notice or process of
law, and for that purpose may enter upon any Assignor's or such other Person's
premises where any of the Collateral is located and remove the same and use in
connection with such removal any and all services, supplies, aids and other
facilities of such Assignor; and
(b) instruct the obligor or obligors on any agreement, instrument or
other obligation (including, without limitation, the Receivables) constituting
the Collateral to make any payment required by the terms of such instrument or
agreement directly to the Collateral Agent;
it being understood that each Assignor's obligation so to deliver the Collateral
is of the essence of this Agreement and that, accordingly, upon application to a
court of equity having jurisdiction, the Collateral Agent shall be entitled to
apply for a decree requiring, specific performance by any Assignor of said
obligation.
5.2. REMEDIES; DISPOSITION OF THE COLLATERAL. In connection with the
exercise by the Collateral Agent of any of its rights or remedies at any time an
Event of Default has occurred and is continuing, any Collateral
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may be sold, leased or otherwise disposed of under one or more contracts or as
an entirety, and without the necessity of gathering at the place of sale the
property to be sold, and in general in such manner, at such time or times, at
such place or places and on such terms as the Collateral Agent may, in
compliance with any mandatory requirements of applicable law, determine to be
commercially reasonable. Any such disposition which shall be a private sale or
other private proceedings permitted by such requirements shall be made upon not
less than 10 days' written notice to the respective Assignor specifying the time
at which such disposition is to be made and the intended sale price or other
consideration therefor, and shall be subject, for 10 days after the giving of
such notice, to the right of such Assignor or any nominee of such Assignor to
acquire the Collateral involved at a price or for such other consideration at
least equal to the intended sale price or other consideration so specified. Any
such disposition which shall be a public sale permitted by such requirements
shall be made upon not less than l0 days' written notice to the respective
Assignor specifying the time and place of such sale and, in the absence of
applicable requirements of law, shall be by public auction (which may, at the
Collateral Agent's option, be subject to reserve), after publication of notice
of such auction not less than l0 days prior thereto in two newspapers in general
circulation in the applicable city listed on Annex A. To the extent permitted
by any such requirement of law, the Collateral Agent (or any Secured Party) may
itself bid for and become the purchaser of the Collateral or any item thereof
offered for sale in accordance with this Section without accountability to any
Assignor (except to the extent of surplus money received as provided in Section
5.4). In the payment of the purchase price of the Collateral, the purchaser
shall be entitled to have credit on account of the purchase price thereof of
amounts owing to such purchaser on account of any of the Obligations which would
be payable to it in accordance with the terms and provisions of the Credit
Agreements, and any such purchaser may deliver notes, claims for interest, or
claims for other payment with respect to such obligations in lieu of cash up to
the amount which would, upon distribution of the net proceeds of such sale, be
payable thereon. Such notes, if the amount payable hereunder shall be less than
the amount due thereon, shall be returned to the holder thereof after being
appropriately stamped to
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show partial payment. If, under mandatory requirements of applicable law, the
Collateral Agent shall be required to make disposition of the Collateral within
a period of time which does not permit the giving of notice to the respective
Assignor as herein above specified, the Collateral Agent need give such Assignor
only such notice of disposition as shall be reasonably practicable in view of
such mandatory requirements of applicable law.
5.3. WAIVER OF CLAIMS. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT, EACH ASSIGNOR HEREBY WAIVES
NOTICE OR JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENT'S TAKING
POSSESSION OR THE COLLATERAL AGENT'S DISPOSITION OF ANY OF THE COLLATERAL,
INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY
PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH ASSIGNOR WOULD OTHERWISE
HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES OR OF ANY STATE,
and each Assignor hereby further waives to the extent permitted by applicable
law:
(a) all damages occasioned by such taking of possession except any
damages which are the direct result of the Collateral Agent's gross negligence
or willful misconduct;
(b) all other requirements as to the time, place and terms of sale or
other requirements with respect to the enforcement of the Collateral Agent's
rights hereunder; and
(c) all rights of redemption, appraisal, valuation, stay, extension
or moratorium now or hereafter in force under any applicable law in order to
prevent or delay the enforcement of this Agreement or the absolute sale of the
Collateral or any portion thereof, and each Assignor, for itself and all who may
claim under it, insofar as it or they may now or hereafter lawfully do so,
hereby waives the benefit of such laws.
Any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of each Assignor therein and thereto, and
shall be a perpetual bar both at law and in equity against each Assignor and
against any and all
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Persons claiming or attempting to claim the Collateral so sold, optioned or
realized upon, or any part thereof, from, through and under such Assignor.
5.4. APPLICATION OF PROCEEDS; ASSIGNOR LIABLE FOR DEFICIENCY. The
proceeds of any Collateral obtained pursuant to Section 5.1 or disposed of
pursuant to Section 5.2 shall be applied as follows:
(a) first, to the payment of any and all expenses and fees (including
reasonable attorney's fees) actually incurred by the Collateral Agent in
obtaining, taking possession of, removing, storing and disposing of Collateral
and any and all amounts incurred by the Collateral Agent in connection therewith
or owing to the Collateral Agent hereunder;
(b) next, any surplus then remaining, to the payment of the other
Obligations; and
(c) if the Total Commitment is then terminated, all Loans (under and
as defined in each of the Credit Agreements) have been paid in full, no Letters
of Credit or Subsidiary Letters of Credit are outstanding and no Obligation is
outstanding, any surplus then remaining shall be paid to the Assignors, subject,
however, to the rights of the holder of any then existing Lien of which the
Collateral Agent has actual notice (without investigation);
it being understood that Assignor shall remain liable to the extent of any
deficiency between the amount of the proceeds of the Collateral and the
aggregate amount of the sums referred to in clauses (a) and (b) of this Section
5.4.
5.5. REMEDIES CUMULATIVE. Each and every right, power and remedy
hereby specifically given to the Collateral Agent shall be in addition to every
other right, power and remedy specifically given under this Agreement or under
any other Credit Document or now or hereafter existing at law or in equity, or
by statute and each and every right, power and remedy whether specifically
herein given or otherwise existing may be exercised from time to time or
simultaneously and as often and in such order as may be deemed expedient by the
Collateral Agent. All such rights, powers and remedies shall be
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cumulative and the exercise or the beginning of exercise of one shall not be
deemed a waiver of the right to exercise of any other or others. No delay or
omission of the Collateral Agent in the exercise of any such right, power or
remedy and no renewal or extension of any of the Obligations shall impair any
such right, power or remedy or shall be construed to be a waiver of any Default
(as defined in either of the Credit Agreements) or Event of Default or an
acquiescence therein.
5.6. DISCONTINUANCE OF PROCEEDINGS. In case the Collateral Agent
shall have instituted any proceeding to enforce any right, power or remedy under
this Agreement by foreclosure, sale, entry or otherwise, and such proceeding
shall have been discontinued or abandoned for any reason or shall have been
determined adversely to the Collateral Agent, then and in every such case each
Assignor and the Collateral Agent shall be restored to their former positions
and rights hereunder with respect to the Collateral subject to the security
interest created under this Agreement, and all rights, remedies and powers of
the Collateral Agent shall continue as if no such proceeding had been
instituted.
ARTICLE VI
INDEMNITY
6.1. Without duplication of any amounts payable under Section 12.1 of
each Credit Agreement and any similar indemnity provision under any other Credit
Document, each Assignor shall: (i) whether or not the transactions hereby
contemplated are consummated, pay all reasonable out-of-pocket costs and
expenses of the Collateral Agent actually incurred in connection with the
administration (both before and after the execution hereof and including advice
of counsel as to the rights and duties of the Collateral Agent with respect
thereto) of and in connection with the preparation, execution and delivery of
this Agreement (including, without limitation, the reasonable fees and
disbursements of Skadden, Arps, Slate, Meagher & Flom) and of the Collateral
Agent actually incurred in connection with the preservation of rights under, and
enforcement of, and, after an Event of Default, any renegotiation or
restructuring of this Agreement and any amendment, waiver or consent relating
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thereto (including, without limitation, the reasonable fees and disbursements of
counsel for the Collateral Agent); (ii) pay and hold the Collateral Agent
harmless from and against any and all present and future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to this Agreement and save the
Collateral Agent harmless from and against any and all liabilities with respect
to or resulting from any delay or omission to pay any such taxes, charges or
levies; and (iii) indemnify the Collateral Agent, its officers, directors,
employees, representatives and agents from and hold each of them harmless
against any and all costs, losses, liabilities, claims, damages or expenses
actually incurred by any of them (whether or not any of them is designated a
party, thereto) arising out of or by reason of any investigation, litigation or
other proceeding related to this Agreement or any transaction contemplated
hereby, including, without limitation, the reasonable fees and disbursements of
counsel incurred in connection with any such investigation, litigation or other
proceeding. Notwithstanding anything in this Agreement to the contrary, no
Assignor shall be responsible to the Collateral Agent or any officer, director,
employee, representative or agent of the foregoing (an "Indemnified Party") for
any losses, damages, liabilities or expenses which result from such Indemnified
Party's gross negligence or willful misconduct. It is understood that no
Assignor shall, in connection with any single action, suit, proceeding or claim
or separate but substantially similar or related actions, suits, proceedings or
claims, arising out of the same general allegations or circumstances, be liable
for the fees and expenses of more than one separate firm of attorneys at the
same time for the Indemnified Parties (which firm shall be designated by the
Collateral Agent) except that, if any Indemnified Party other than the
Collateral Agent shall determine, in its sole discretion, that there may be a
conflict in such firm representing the Collateral Agent and such Indemnified
Party, then the Assignors shall be liable for the reasonable fees and expenses
of an additional firm for such Indemnified Party whose interests may be in
conflict. The Assignors' obligations under this Article VI shall survive any
termination of this Agreement.
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ARTICLE VII
DEFINITIONS
7.1. DEFINITIONS. The following terms shall have the meanings herein
specified unless the context otherwise requires. Such definitions shall be
equally applicable to the singular and plural forms of the terms defined. Except
as otherwise defined herein, including in the recital paragraphs, capitalized
terms used herein and defined in the Company Credit Agreement shall be used
herein as so defined.
"Agreement" shall have the meaning specified in the first paragraph
hereof.
"Assignor" shall have the meaning specified in the first paragraph
hereof.
"Chattel Paper" shall have the meaning assigned that term under the
Uniform Commercial Code as in effect on the date hereof in the State of New
York.
"Collateral" shall have the meaning specified in Section 1.1(a).
"Collateral Agent" shall mean Bankers Trust Company, a New York
banking corporation, in its capacity as collateral agent for the Secured
Creditors or any of its successors in such capacity.
"Company" shall have the meaning specified in the second "Whereas"
clause of this Agreement.
"Company Collateral" shall have the meaning provided for the term
"Collateral" in the Company Pledge and Security Agreement.
"Company Credit Agreement" shall have the meaning specified in the
second "Whereas" clause of this Agreement.
"Contract Rights" shall mean all rights of any Assignor (including,
without limitation, all rights to payment) under each Contract.
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"Contracts" shall mean all contracts between any Assignor and one or
more additional parties as any such Contract may be amended, modified or
supplemented from time to time.
"Credit Agreements" shall have the meaning specified in the fourth
"Whereas" clause of this Agreement.
"Default" shall mean and include any "Default" under either Credit
Agreement.
"Documents" shall have the meaning assigned that term under the
Uniform Commercial Code as in effect on the date hereof in the State of New
York.
"Equipment" shall mean all machinery, all manufacturing, distribution,
selling, data processing and office equipment, all computers, all furniture,
furnishings, appliances, trade fixtures, CAT scanners, X-ray machines, vehicles
(other than vehicles the title to which is required to be registered pursuant to
state motor vehicle registration statutes); all other equipment, including, in
any event, and without limitation, all "equipment" as defined in the Uniform
Commercial Code as in effect on the date hereof in the State of New York and any
attachments, components, parts, equipment and accessories installed thereon or
affixed thereto.
"Event of Default" shall mean and include any "Event of Default" under
either Credit Agreement.
"Excluded Property" shall have the meaning specified in Section 1.1(a)
of this Agreement.
"Fixtures" shall have the meaning assigned to that term under the
Uniform Commercial Code as in effect on the date hereof in the State of New
York.
"General Intangibles" shall have the meaning assigned that term under
the Uniform Commercial Code as in effect on the date hereof in the State of New
York including, in any event, but not limited to, all rights, interests, choses
in action, causes of actions, claims and all other intangible property of every
kind and nature (other than Receivables and Instruments), including, without
limitation, all loans, royalties and other
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obligations receivable; all inventions, designs, trade secrets, know-how,
computer programs, printouts and other computer materials, goodwill,
registrations, licenses (other than licenses with respect to which any Assignor
is a licensee and which by their terms or by law are not assignable),
franchises, patient lists, credit files, correspondence and advertising
materials; all customer, insurance and supplier contracts, rights under license
and franchise agreements and other contracts and contract rights; all interests
in partnerships and joint ventures; all tax refunds and tax refund claims; all
payments due or made to any Assignor in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of any property by any person
or governmental authority; all credits with and other claims against carriers
and shippers; all rights to indemnification; other proprietary rights of every
kind and description; all rights under or in connection with any pledge
agreement or security agreement securing any obligation owed to any Assignor;
and all other intangible property.
"Goods" shall have the meaning assigned that term under the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Indemnified Party" shall have the meaning specified in Article VI of
this Agreement.
"Instruments" shall mean all notes, drafts, stocks, bonds and debt and
equity securities, whether or not certificated, and warrants, options, puts and
calls and other rights to acquire or otherwise relating to the same and all
other writings which evidence a right to payment for money, including, in any
event, and without limitation, all "instruments," "certificated securities" or
"uncertificated securities" each as defined in the Uniform Commercial Code as in
effect on the date hereof in the State of New York, and all payments thereunder
and instruments and other property from time to time delivered in respect
thereof or in exchange therefor, together with all security pledged, assigned,
hypothecated, granted or held to secure the foregoing.
"Inventory" shall mean all goods (whether in the possession of any
Assignor or of a bailee or other person for sale, storage, transit, processing,
use or otherwise and whether consisting of whole goods, spare
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parts, components, supplies, materials or consigned, returned or repossessed
goods), including, without limitation, all such goods which are held for sale or
lease or are to be furnished (or which have been furnished) or consumed in such
Assignor's business and including all other inventory, including, in any event
and without limitation, all "inventory" as such term is defined in the Uniform
Commercial Code as in effect on the date hereof in the State of New York, now or
hereafter owned by any Assignor.
"Lenders" shall mean the financial institutions from time to time
signatories to either or both of the Credit Agreements.
"1992 Company Credit Agreement" shall have the meaning specified in
the second "Whereas" clause of this Agreement.
"1992 Credit Agreements" shall have the meaning specified in the
fourth "Whereas" clause of this Agreement.
"1992 Subsidiary Credit Agreement" shall have the meaning specified in
the fourth "Whereas" clause of this Agreement.
"Obligations" shall mean (a) all indebtedness, obligations, and
liabilities (including, without limitation, guarantees, reimbursement
obligations in respect of Subsidiary Letters of Credit, and other contingent
liabilities) of each Assignor to the Collateral Agent, the Agent and any Lender,
arising under or in connection with (i) in the case of any Assignor which is a
Subsidiary Borrower, direct obligations of such Assignor under the Subsidiary
Credit Agreement, (ii) the Subsidiary Guaranty, and/or (iii) this Agreement; (b)
any and all sums advanced by the Collateral Agent in order to preserve the
Collateral or preserve its security interest in the Collateral; and (c) in the
event of any proceeding for the collection or enforcement of any indebtedness,
obligations, or liabilities of Assignor referred to in clause (a), after an
Event of Default shall have occurred and be continuing, the reasonable expenses
of the Collateral Agent and the other Secured Creditors of retaking, holding,
preparing for sale or lease, selling or otherwise disposing or realizing on the
Collateral, or of any
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exercise by the Collateral Agent of its rights hereunder, together with
reasonable attorneys' fees of the Collateral Agent and the other Secured
Creditors actually incurred and court costs.
"Original Co-Agents" shall have the meaning specified in the second
"Whereas" clause of this Agreement.
"Permitted Encumbrances" shall have the meaning specified in Section
2.2.
"Premises" shall mean, with respect to any Assignor, the premises
located at the addresses specified for such Assignor on Annex A attached hereto.
"Proceeds" shall mean "proceeds" as such term is defined in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York.
"Receivables" shall mean all of each Assignor's "accounts" as such
term is defined in the Uniform Commercial Code as in effect on the date hereof
in the State of New York.
"Secured Creditors" shall mean, collectively, the Lenders, the Agent,
the Co-Agent, the Collateral Agent, and their respective successors and assigns.
"Significant Equipment" shall mean Equipment with an aggregate fair
market value of $200,000 or greater.
"Subsidiary Credit Agreement" shall have the meaning specified in the
second "Whereas" clause of this Agreement.
"Subsidiary Guaranty" shall have the meaning specified in the third
"Whereas" clause of this Agreement.
"Total Commitment" shall mean the Total Revolving Loan Commitment.
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ARTICLE VIII
MISCELLANEOUS
8.1. NOTICES. All notices and other communications hereunder shall
be given to the Company (on behalf of any Assignor) and the Collateral Agent at
the addresses and in the manner specified in the Company Credit Agreement.
8.2. WAIVER; AMENDMENT. No delay on the part of the Collateral Agent
in exercising any of its rights, remedies, powers and privileges hereunder or
partial or single exercise thereof, shall constitute a waiver thereof. None of
the terms and conditions of this Agreement may be changed, waived, modified or
varied in any manner whatsoever unless executed and delivered in accordance with
the terms of the Credit Agreements. No notice to or demand on any Assignor in
any case shall entitle it to any other or further notice or demand in similar or
other circumstances or constitute a waiver of any of the rights of the
Collateral Agent to any other or further action in any circumstances without
notice or demand.
8.3. OBLIGATIONS ABSOLUTE. The obligations of each Assignor under
this Agreement shall be joint, several, absolute and unconditional in accordance
with its terms and shall remain in full force and effect without regard to, and
shall not be released, suspended, discharged, terminated or otherwise affected
by, any circumstance or occurrence whatsoever, including, without limitation:
(a) any change in the time, place or manner of payment of, or in any other term
of, all or any of the Obligations, any waiver, indulgence, renewal, extension,
amendment or modification of or addition, consent or supplement to or deletion
from or any other action or inaction under or in respect of the Subsidiary
Guaranty, either Credit Agreement, any Note, any other Credit Document or any
other documents, instruments or agreements relating to the Obligations or any
other instrument or agreement referred to therein or any assignment or transfer
of any thereof; (b) any lack of validity or enforceability of the Subsidiary
Guaranty, either Credit Agreement, any Note, any other Credit Document or any
other documents, instruments or agreement referred to therein or any assignment
or transfer of any thereof; (c) any furnishing of any additional security to the
Collat-
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eral Agent, the other Secured Creditors or their assignees or any acceptance
thereof or any release of any security by the Collateral Agent, the other
Secured Creditors or their assignees; (d) any limitation on any party's
liability or obligations under any such instrument or agreement or any
invalidity or unenforceability, in whole or in part, of any such instrument or
agreement or any term thereof; (e) any bankruptcy, insolvency, reorganization,
composition, adjustment, dissolution, liquidation or other like proceeding
relating to such Assignor or any Subsidiary of such Assignor, or any action
taken with respect to this Agreement by any trustee or receiver, or by any
court, in any such proceeding, whether or not such Assignor shall have notice or
knowledge of any of the foregoing; (f) any exchange, release or nonperfection of
any other collateral, or any release, or amendment or waiver of or consent to
departure from any guaranty or security, for all or any of the Obligations; or
(g) any other circumstance which might otherwise constitute a defense available
to, or a discharge of such Assignor. The rights and remedies of the Collateral
Agent herein provided are cumulative and not exclusive of any rights or remedies
which the Collateral Agent would otherwise have.
8.4. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
each Assignor and its successors and assigns and shall inure to the benefit of
each Secured Creditor and its permitted successors and assigns, provided that
each Assignor may not transfer or assign any or all of its rights or obligations
hereunder without the written consent of the Collateral Agent.
8.5. HEADINGS DESCRIPTIVE. The headings of the several sections of
this Agreement are inserted for convenience only and shall not in any way affect
the meaning or construction of any provision of this Agreement.
8.6. SEVERABILITY. To the extent permitted by applicable law, any
provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invali-
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date or render unenforceable such provision in any other jurisdiction.
8.7. GOVERNING LAW; APPOINTMENT OF AN AGENT FOR SERVICE OF
PROCESS; SUBMISSION TO JURISDICTION. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAW PRINCIPLES THEREOF). ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO MAY BE BROUGHT IN THE
COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
EACH ASSIGNOR HEREBY CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
JURISDICTION OF THE AFORESAID COURTS SOLELY FOR THE PURPOSE OF ADJUDICATING ITS
RIGHTS OR THE RIGHTS OF THE AGENT WITH RESPECT TO THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO. EACH ASSIGNOR HEREBY IRREVOCABLY DESIGNATES CT CORPORATION
SYSTEM, LOCATED AT 1633 BROADWAY, NEW YORK, NEW YORK 10019 AS THE DESIGNEE,
APPOINTEE AND PROCESS AGENT OF SUCH ASSIGNOR, TO RECEIVE, FOR AND ON BEHALF OF
SUCH ASSIGNOR, SERVICE OF PROCESS IN SUCH JURISDICTIONS IN ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO AND
SUCH SERVICE SHALL, TO THE EXTENT PERMITTED BY APPLICABLE LAW, BE DEEMED
COMPLETED TEN DAYS AFTER DELIVERY THEREOF TO SAID COLLATERAL AGENT. IT IS
UNDERSTOOD THAT A COPY OF SUCH PROCESS SERVED ON SUCH PROCESS AGENT WILL BE
PROMPTLY FORWARDED BY MAIL TO THE COMPANY (ON BEHALF OF THE RESPECTIVE ASSIGNOR)
AT ITS ADDRESS SET FORTH IN THE COMPANY CREDIT AGREEMENT, BUT THE FAILURE OF THE
COMPANY (ON BEHALF OF SUCH ASSIGNOR) TO RECEIVE SUCH COPY SHALL NOT, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, AFFECT IN ANY WAY THE SERVICE OF SUCH
PROCESS. EACH ASSIGNOR HEREBY IRREVOCABLY WAIVES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO
THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
RESPECTIVE JURISDICTIONS IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED
THERETO. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE COLLATERAL AGENT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST ANY ASSIGNOR IN ANY OTHER JURISDICTION.
27
<PAGE>
8.8. ASSIGNORS' DUTIES. It is expressly agreed, anything herein
contained to the contrary notwithstanding, that each Assignor shall remain
liable to perform all of the obligations, if any, assumed by it with respect to
the Collateral and the Collateral Agent shall not have any obligations or
liabilities with respect to any Collateral by reason of or arising out of this
Agreement (except for actions arising from the Collateral Agent's gross
negligence or willful misconduct or for acts which are not commercially
reasonable), nor shall the Collateral Agent be required or obligated in any
manner to perform or fulfill any of the obligations of Assignor under or with
respect to any Collateral.
8.9. TERMINATION; RELEASE. When the Total Commitment is terminated,
all Loans (under and as defined in each of the Credit Agreements) are
indefeasibly paid in full, no Letter of Credit or Subsidiary Letter of Credit is
outstanding and all other Obligations (other than indemnities which by their
terms survive the repayment of the Loans) are irrevocably paid in full, this
Agreement shall terminate. Any Assignor which is released from the Subsidiary
Guaranty shall automatically be released from its obligations under this
Agreement. Upon the termination of this Agreement or the release of any
Assignor pursuant to the preceding sentence, the Collateral Agent, at the
request and expense of each Assignor in the case of a termination, or the
Assignor being released in the case of a release of an Assignor from the
Subsidiary Guaranty, will promptly execute and deliver to such Assignor the
proper instruments (including Uniform Commercial Code termination statements on
form UCC-3) acknowledging the termination of this Agreement or the release of
such Assignor, as the case may be, and will duly assign, transfer and deliver to
such Assignor (without recourse and without any representation or warranty) such
of the Collateral as may be in the possession of the Collateral Agent and has
not theretofore been sold or otherwise applied or released pursuant to this
Agreement.
8.10. COLLATERAL AGENT. The appointment of the Collateral Agent as
Collateral Agent hereunder pursuant to the Intercreditor Agreement has been
ratified and confirmed by the Lenders in the Credit Agreements, and the
Collateral Agent shall be entitled to the benefits of the Credit Agreements. The
Collateral Agent shall be
28
<PAGE>
obligated, and shall have the right hereunder to make demands, to give notices,
to exercise or refrain from exercising any rights, and to take or refrain from
taking action (including, without limitation, the release or substitution of
Collateral) solely in accordance with this Agreement and the Credit Agreements.
The Collateral Agent may resign and a successor Collateral Agent may be
appointed in the manner provided in the Credit Agreements. Upon the acceptance
of any appointment as a Collateral Agent by a successor Collateral Agent, that
successor Collateral Agent shall thereupon succeed to and become vested with all
the rights, powers, privileges and duties of the retiring Collateral Agent under
this Agreement, and the retiring Collateral Agent shall thereupon be discharged
from its duties and obligations under this Agreement. After any retiring
Collateral Agent's resignation, the provisions of this Agreement shall inure to
its benefit as to any actions taken or omitted to be taken by it under this
Agreement while it was Collateral Agent and the retiring Collateral Agent shall
take all steps necessary to transfer to the new Collateral Agent the rights and
interest granted under this Agreement.
8.11. WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, EACH ASSIGNOR HEREBY IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT, OR ANY MATTER ARISING IN CONNECTION HEREUNDER.
8.12. AMENDMENT AND RESTATEMENT. This Agreement constitutes an
amendment and restatement of the 1992 Subsidiary Pledge and Security Agreement
amended hereby (the "Original Instrument"), and such Original Instrument shall
continue in effect on and after the date hereof as so amended and restated. The
parties do not intend that this Agreement constitute a novation, termination,
release or satisfaction of the Original Instrument, or constitute payment or
satisfaction of any indebtedness or other obligation secured by the Original
Instrument.
29
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date first
above written.
BANKERS TRUST COMPANY, in its
capacity as Collateral Agent
By: /s/ Mary Kay Coyle
-----------------------------------
Name: Mary Kay Coyle
Title: Vice President
ASSIGNORS:
By: /s/ Charlotte A. Sanford
-----------------------------------
Charlotte A. Sanford, in her
capacity as Treasurer for
each of the corporations,
each as an Assignor, listed
on Schedule 1 hereto
<PAGE>
SCHEDULE 1.1
SECOND AMENDED AND RESTATED SUBSIDIARY
PLEDGE AND SECURITY AGREEMENT
EXCLUDED COLLATERAL
1. Lease Agreement, dated November 1, 1983, between Charter Southland Hospital
and The Medical Clinic Board of the City of Mobile, Alabama - Psychiatric.
(Charter Hospital of Mobile, Inc.)
2. Loan Agreement, dated May 15, 1983, by and between Excepticon Midwest, Inc.
and The Industrial Development Authority of Boone County, Missouri.
(Charter Hospital of Columbia, Inc.)
3. Amended Hospital Lease, dated January 14, 1980, between Paramount Medical
Development Company and Charter Medical - Long Beach, Inc. (Charter Medical
- Long Beach, Inc.)
4. Amended and Restated Hospital Lease, dated August 1, 1986, between Riviera
Medical Development Company and Charter Pacific Hospital, Inc. (Charter
Hospital of Torrance, Inc.)
5. Amended Hospital Lease, dated May 21, 1980, between Cerritos Gardens
General Hospital Company and California B.E.D.S., Inc. and the Master Lease
Agreement, dated May 21, 1980, between Cerritos Gardens General Hospital
Company and California B.E.D.S., Inc.
6. Sublease of improvements and sub-sublease of ground lease to be executed at
closing of sale from National Medical Enterprises to Charter Medical
Corporation of all right, title and interest of NME Hospitals, Inc. in the
improvements, lease and ground sublease from GECC with respect to medical
office buildings at Los Altos Hospital and Medical Center.
7. Lease Agreement dated December 1, 1972 between I.P.T. Associates and
Tidewater Psychiatric Institute, Inc.
8. Lease Agreement dated June 18, 1980 between Valley Vista Apartments Limited
Partnership and Fenwick Hall, Inc.
9. Sub-sublease Agreement dated November 1, 1988 between Naperville Health
Ventures and Naperville Psychiatric Ventures (Linden Oaks).
<PAGE>
10. Mortgage Agreement between Psychiatric Facility at Medfield, Inc. and
Florida National Bank which matures on July 9, 1994.
11. Lease agreement dated December 5, 1972 between Leesburg Institute, Inc. and
Docsley Associates Limited Partnership which has a maturity date of
December 4, 2071.
2
<PAGE>
ANNEX A
SECOND AMENDED AND RESTATED
SUBSIDIARY PLEDGE AND SECURITY AGREEMENT
<TABLE>
<CAPTION>
NAME ADDRESS OTHER NAMES
- ---- ------- -----------
<S> <C> <C>
1. Ambulatory Resources, Inc. 577 Mulberry Street
Macon, GA 31298
2. Atlanta MOB, Inc. 577 Mulberry Street f/k/a Charter Medical - South Atlanta, Inc.
Macon, GA 31298
3. Beltway Community Hospital, Inc. 577 Mulberry Street f/k/a CMWF, Inc.
Macon, GA 31298
4040 Red Bluff Road
Pasadena, TX 77503
4. C.A.C.O. Services, Inc. 577 Mulberry Street
Macon, GA 31298
5. CCM, Inc. 577 Mulberry Street f/k/a Charter Medical France, Inc.
Macon, GA 31298
</TABLE>
Page 1
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
6. Charter of Alabama, Inc. 2205 Beltline Rd., SW f/k/a Charter Retreat Hospital, Inc.
Decatur, Alabama 35601 f/k/a Retreat Mental Health Hospital, Inc.
f/k/a Health Services, Inc.
7. Charter Alvarado Behavioral 577 Mulberry Street f/k/a Charter Suburban Hospital, Inc.
Health System, Inc. Macon, GA 31298 f/k/a Ziggurat, Inc.
Parkway Drive (1)
La Mesa, CA 92042
8. Charter Appalachian Hall Behavioral 577 Mulberry Street
Health System, Inc. Macon, GA 31298
60 Caledonia Road (1)
Asheville, NC 28803
9. Charter Arbor Indy Behavioral 577 Mulberry Street
Health System, Inc. Macon, GA 31298
11075 N Pennsylvania (1)
Indianapolis, IN 46280
10. Charter Augusta Behavioral 3100 Perimeter Parkway d/b/a Charter Hospital of Augusta
Health System, Inc. Augusta, GA 30909 f/k/a Charter Medical of Richmond County, Inc.
</TABLE>
Page 2
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
11. Charter Bay Harbor Behavioral 577 Mulberry Street f/k/a Charter Hospital of Bradenton, Inc.
Health System, Inc. Macon, GA 31298
12895 Seminole Blvd. (1)
Largo, FL 34648
12. Charter Beacon Behavioral 1720 Beacon Street d/b/a Charter Beacon Hospital
Health System, Inc. Fort Wayne, IN 46805 d/b/a Charter Counseling Center of Defiance
f/k/a Charter Medical - Fort Wayne, Inc.
13. Charter Behavioral Health System 240 Mitchell Bridge Rd. d/b/a Charter Winds Hospital
of Athens, Inc. Athens, GA 30604 f/k/a Charter Winds Behavioral Health System, Inc.
f/k/a Charter Winds Hospital
d/b/a Charter Medical - Athens, Inc.
14. Charter Behavioral Health Systems 577 Mulberry Street f/k/a Shallowford Providers, Inc.
of Atlanta, Inc. Macon, GA 31298
811 Juniper Street, NE (1)
Atlanta, GA 30308
15. Charter Behavioral Health System 8402 Cross Park Drive d/b/a Charter Hospital of Austin
of Austin, Inc. Austin, TX 78754 f/k/a Charter Hospital of Austin, Inc.
f/k/a Charter Lane Hospital, Inc.
f/k/a Charter Medical - Central Texas, Inc.
16. Charter Behavioral Health System 577 Mulberry Street
of Baywood, Inc. Macon, GA 31298
709 Medical Center Blvd. (1)
Webster, TX 77598
</TABLE>
Page 3
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
17. Charter Behavioral Health System 577 Mulberry Street f/k/a Charter Medical - Ft. Lauderdale, Inc.
of Bradenton, Inc. Macon, GA 31298
1324 37th Avenue East
Bradenton, FL 34208
18. Charter Behavioral Health System 577 Mulberry Street
of Canoga Park, Inc. Macon, GA 31298
19. Charter Behavioral Health System 3500 Riverside Drive f/k/a Charter Medical - Macon, Inc.
of Central Georgia, Inc. Macon, GA 31209 f/k/a Charter Lake Hospital, Inc.
f/k/a Charter Lake Behavioral Health System, Inc.
d/b/a Charter Lake Hospital
20. Charter Behavioral Health System 2777 Speissegger Drive d/b/a Charter Hospital of Charleston
of Charleston, Inc. Charleston, SC 29405 f/k/a Charter Hospital of Charleston, Inc.
f/k/a Ch. Counseling Ctr. of South Carolina, Inc.
21. Charter Behavioral Health System 2101 Arlington Boulevard d/b/a Charter Hospital of Charlottesville
of Charlottesville, Inc. Charlottesville, VA f/k/a Charter Hospital of Charlottesville, Inc.
22903-1593
22. Charter Behavioral Health System 4700 North Clarendon Ave. d/b/a Charter Barclay Hospital
of Chicago, Inc. Chicago, IL 60640 f/k/a Charter Barclay Hospital, Inc.
f/k/a Barclay Hospital
f/k/a Illinois Health Services, Inc.
23. Charter Behavioral Health System 577 Mulberry Street f/k/a Charter Medical Cerritos, Inc.
of Chula Vista, Inc. Macon, GA 31298
</TABLE>
Page 4
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
24. Charter Behavioral Health System 200 Portland Street d/b/a Charter Hospital of Columbia
of Columbia, Inc. Columbia, MO 65201 f/k/a Charter Hospital of Columbia, Inc.
f/k/a Excepticon Midwest, Inc. dba Charter Hillside
25. Charter Behavioral Health System 3126 Rodd Field Road d/b/a Charter Hospital of Corpus Christi
of Corpus Christi, Inc. Corpus Christi, TX 78414 f/k/a Charter Hospital of Corpus Christi, Inc.
f/k/a Charter Bay Hospital, Inc.
26. Charter Behavioral Health System 6800 Preston Road d/b/a Charter Hospital of Dallas
of Dallas, Inc. Plano, TX 75024 f/k/a Charter Hospital of Dallas, Inc.
f/k/a Charter Hospital of Plano, Inc.
f/k/a Charter Garland Hospital, Inc.
27. Charter Behavioral Health System 577 Mulberry Street
of Evansville, Inc. Macon, GA 31298
7200 East Indiana (1)
Evansville, IN 47715
28. Charter Behavioral Health System 577 Mulberry Street
at Fair Oaks, Inc. Macon, GA 31298
19 Prospect Street (1)
Summit, NJ 07901
29. Charter Behavioral Health System 6201 Overton Ridge Blvd. d/b/a Charter Hospital of Ft. Worth
of Fort Worth, Inc. Ft. Worth, TX 76132 f/k/a Charter Medical of Ft. Worth, Inc.
</TABLE>
Page 5
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
30. Charter Behavioral Health System 577 Mulberry Street
at Hidden Brook, Inc. Macon, GA 31298
522 Thomas Run Road (1)
Bel Air, MD 21014
31. Charter Behavioral Health System 2055 Kellogg Drive d/b/a Charter Hospital of Corona
of the Inland Empire, Inc. Corona, CA 91720 f/k/a Charter Hospital of Corona, Inc.
f/k/a Charter Grove Hospital, Inc.
f/k/a Kellogg Psychiatric Hospital
d/b/a Charter Counseling Center of Utah
d/b/a Charter Summit Hospital
d/b/a Charter Behavioral Health System of
Southern California
32. Charter Behavioral Health System East Lakeland Drive d/b/a Charter Hospital of Jackson
of Jackson, Inc. Jackson, MS 39208 f/k/a Charter Hospital of Jackson, Inc.
f/d/b/a Riverside Hospital
33. Charter Behavioral Health System 3947 Salisbury Road d/b/a Charter Hospital of Jacksonville
of Jacksonville, Inc. Jacksonville, FL 32216 f/k/a Charter Medical-Jacksonville, Inc.
34. Charter Behavioral Health System 577 Mulberry Street
of Jefferson, Inc. Macon, GA 31298
2700 River City Park Dr. (1)
Jeffersonville, IN 47130
</TABLE>
Page 6
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
35. Charter Behavioral Health System 8000 W. 127th St. d/b/a Charter Hospital of Overland Park
of Kansas City, Inc. Overland Park, KS 66213 f/k/a Charter Hospital of Overland Park, Inc.
f/k/a Charter Medical of Johnson County, Inc.
36. Charter Behavioral Health System 577 Mulberry Street f/k/a Physicians & Surgeons Hospital, Inc.
of Lafayette, Inc. Macon, GA 31298
310 Youngsville Hwy. (1)
Lafayette, LA 70508
37. Charter Behavioral Health System 4250 Fifth Avenue, South d/b/a Charter Hospital of Lake Charles
of Lake Charles, Inc. Lake Charles, LA 70605 f/k/a Charter Hospital of Lake Charles, Inc.
f/k/a Meadowview Hospital, Inc.
f/k/a Lake Charles Institute for Children &
Adolescents, Inc.
38. Charter Behavioral Health System 577 Mulberry Street
System at Lakewood, Inc. Macon, GA 31298
5300 N. Clark Avenue (1)
Lakewood, CA 90712
39. Charter Behavioral Health System 577 Mulberry Street
System at Los Altos, Inc. Macon, GA 31298
3340 Los Coyotes Diagonal (1)
Long Beach, CA 90808
</TABLE>
Page 7
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
40. Charter Behavioral Health System 577 Mulberry Street
of Michigan City, Inc. Macon, GA 31298
3714 South Franklin Street (1)
Michigan City, IN 46360
41. Charter Behavioral Health System 5800 Southland Drive f/k/a CMHS, Inc.
of Mobile, Inc. Mobile, AL 36609
42. Charter Behavioral Health System 577 Mulberry Street
of Nashua, Inc. Macon, GA 31298
11 Northwest Blvd. (1)
Nashua, NH 03063
43. Charter Behavioral Health System 7000 W. Spring Mountain Rd. d/b/a Charter Hospital of Las Vegas
of Nevada, Inc. Las Vegas, NV 89180 f/k/a Charter Hospital of Las Vegas, Inc.
f/k/a CMC of Nevada, Inc.
44. Charter Behavioral Health System 5901 Zuni Rd. S.E. d/b/a Charter Hospital of Albuquerque
of New Mexico, Inc. Albuquerque, NM 87108 f/k/a Charter Hospital of Albuquerque, Inc.
f/k/a Charter Sunrise Hospital, Inc.
f/k/a Charter Medical New Mexico, Inc.
45. Charter Behavioral Health System 101 Cirby Hills Drive d/b/a Charter Hospital of Sacramento
of Northern California, Inc. Roseville, CA 95678 f/k/a Charter Hospital of Sacramento, Inc.
</TABLE>
Page 8
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
46. Charter Behavioral Health System 4253 Crossover Road d/b/a Charter Vista Hospital of Northwest
Arkansas, Inc. Fayetteville, AK 72701 f/k/a Charter Vista Hospital, Inc.
47. Charter Behavioral Health System 101 West 61st Avenue f/k/a Charter Medical - Lake County, Inc.
of Northwest Indiana, Inc. State Road 51 d/b/a Charter Hospital of Northwest Indiana
Hobart, IN 46342
48. Charter Behavioral Health System 435 Berger Road d/b/a Charter Hospital of Paducah
of Paducah, Inc. Paducah, Kentucky 42002 f/k/a Kentucky Institute for Stress and Addiction, Inc.
f/k/a Goodman Hill
49. Charter Behavioral Health System 577 Mulberry Street
at Potomac Ridge, Inc. Macon, GA 31298
14901 Broschart Road (1)
Rockville, MD 20850
50. Charter Behavioral Health System 577 Mulberry Street
of Rockford, Inc. Macon, GA 31298
51. Charter Behavioral Health System 577 Mulberry Street f/k/a Charter Hospital of Fountain Valley, Inc.
of San Jose, Inc. Macon, GA 31298 f/k/a Charter Hospital of Newport Beach
455 Silicon Valley Blvd. (1)
San Jose, CA 95138
</TABLE>
Page 9
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
52. Charter Behavioral Health System 1150 Cornell Avenue f/k/a NBOH, Inc.
Savannah, Inc. Savannah, GA 31406 f/k/a Charter Hospital of Savannah, Inc.
d/b/a Charter Hospital of Savannah
53. Charter Behavioral Health System 577 Mulberry Street f/k/a Charter Medical of Sacramento, Inc.
of Southern California, Inc. Macon, GA 31298 f/k/a Charter Medical - Ventura, Inc.
54. Charter Behavioral Health System 4004 North Riverside Drive d/b/a Charter Hospital of Tampa Bay
of Tampa Bay, Inc. Tampa, FL 33603 f/k/a Charter Hospital of Tampa Bay, Inc.
f/k/a Charter Hospital of Tampa, Inc.
55. Charter Behavioral Health System 577 Mulberry Street
of Texarkana, Inc. Macon, GA 31298
801 Arkansas Blvd. (1)
Texarkana, AR 75502
56. Charter Behavioral Health System 1725 Timberline Road f/k/a Charter Hospital of Toledo, Inc.
of Toledo, Inc. Maumee, OH 43537 d/b/a Charter Hospital of Toledo
57. Charter Behavioral Health System 577 Mulberry Street
of Tucson, Inc. Macon, GA 31298
355 North Wilmot Rd. (1)
Tucson, AZ 85711
</TABLE>
Page 10
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
58. Charter Behavioral Health System 577 Mulberry Street
of Virginia Beach, Inc. Macon, GA 31298
1701 Will-O-Wisp Drive (1)
Virginia Beach, VA 23454
59. Charter Behavioral Health System 577 Mulberry Street
of Visalia, Inc. Macon, GA 31298
1100 South Akers (1)
Visalia, CA 93227
60. Charter Behavioral Health System 577 Mulberry Street
at Warwick Manor, Inc. Macon, GA 31298
Warwick Road, Route 1 (1)
East New Market, MD 21631
61. Charter Behavioral Health System 577 Mulberry Street
of Washington, D.C., Inc. Macon, GA 31298
62. Charter Behavioral Health System 577 Mulberry Street
of Waverly, Inc. Macon, GA 31298
Route 1 Box 86 (1)
Waverly, MN 55390
</TABLE>
Page 11
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
63. Charter Behavioral Health System 3637 Old Vineyard Road f/k/a Charter Mandala Center, Inc.
of Winston-Salem, Inc. Winston-Salem, NC 27104 f/k/a Mandala Center, Inc.
f/k/a Charter Hospital of Winston-Salem, Inc.
d/b/a Charter Hospital of Winston-Salem
64. Charter Behavioral Health System of 577 Mulberry Street
Yorba Linda, Inc. Macon, GA 31298
16850 Bastanchury Avenue (1)
Yorba Linda, CA 92686
65. Charter Brawner Behavioral Health 577 Mulberry Street f/k/a Charter Hospital of Redlands, Inc.
System, Inc. Macon, GA 31298 f/k/a Charter Hospital of Savannah, Inc.
f/k/a Charter Broad Oaks Hospital, Inc.
3180 Atlanta St., SE f/k/a Broad Oaks Hospital, Inc.
Smyrna, GA 30080 f/k/a Medical Arts Convalescent Center, Inc.
f/d/b/a Charter Hospital of Redlands
f/d/b/a Charter Counseling Center of Victorville
66. Charter By-The-Sea Behavioral 2929 Demere Rd. f/k/a Charter By-The-Sea, Inc.
Health System, Inc. St. Simons Island, GA 31522 f/k/a Charter Medical St. Simons, Inc.
Trade Name: Charter Health Center
2929 Demere Road
St. Simons Island, GA 31522
67. Charter Canyon Behavioral Health 175 West 7200 South d/b/a Charter Canyon Hospital
System, Inc. 195 West 7200 South d/b/a Charter Canyon Health Services Network
Midvale, UT 84047 Trade Name: Charter Counseling Center of
Northeastern Nevada
1350 East 750 North f/k/a Charter Canyon Hospital, Inc.
Orem, UT 84057 f/d/b/a Charter Counseling Center of Western Colorado
Inc.
</TABLE>
Page 12
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
68. Charter Canyon Springs Behavioral 577 Mulberry Street
Health System, Inc. Macon, GA 31298
69696 Ramon Road (1)
Cathedral City, CA 92234
69. Charter Centennial Peaks Behavioral 577 Mulberry Street f/k/a Charter Hospital of Aurora, Inc.
Health System, Inc. Macon, GA 31298 f/k/a Charter Hospital of Arapahoe County, Inc.
2255 South 88th St. (1)
Louisville, CO 80027
70. Charter Colonial Institute, Inc. 577 Mulberry Street f/k/a Charter Colonial, Inc.
Macon, GA 31298
71. Charter Community Hospital, Inc. 21530 S. Pioneer Blvd. f/k/a California B.E.D.S., Inc.
Hawaiian Gardens, CA 90716
72. Charter Community Hospital of 577 Mulberry Street Assumed Name: Charter Community Hospital
Des Moines, Inc. Macon, GA 31298 f/k/a Health Care Holding Corporation
73. Charter Contract Services, Inc. 577 Mulberry Street
Macon, GA 31298
74. Charter Cove Forge Behavioral 577 Mulberry Street
Health System, Inc. Macon, GA 31298
Route 1 Box 79 (1)
Williamsburg, PA 16693
</TABLE>
Page 13
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
75. Charter Crescent Pines Behavioral 577 Mulberry Street f/k/a Charter Medical International, Inc.
Health System, Inc. Macon, GA 31298
1000 Eagles Landing Parkway (1)
Stockbridge, GA 30281
76. Charter Fairbridge Behavioral 577 Mulberry Street
Health System, Inc. Macon, GA 31298
14907 Broschart Road (1)
Rockville, MD 20850
77. Charter Fairmount Behavioral 561 Fairthorne Avenue f/d/b/a The Fairmount Institute
Health System, Inc. Philadelphia, PA 19128 f/k/a Charter Hospital of Philadelphia, Inc.
f/k/a Charter Fairmount Institute, Inc.
2001 Ladbrook Drive d/b/a Charter Fairmount Institute
Kingwood, TX 77339 Assumed Name: Charter Hospital of Kingwood
Assumed Name: Charter Behavioral Health System
of Kingwood
d/b/a Charter Counseling Center of Wilmington
78. Charter Fenwick Hall Behavioral 577 Mulberry Street
Health System, Inc. Macon, GA 31298
1709 River Road (1)
Johns Island, SC 29455
</TABLE>
Page 14
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
79. Charter Financial Offices, Inc. 577 Mulberry Street f/k/a Charter Imaging, Inc.
Macon, GA 31298 Also called: Charter Midwest Service Ctr.
9200 Shelbyvill Rd., Suite 300
Louisville, KY 40222
80. Charter Forest Behavioral 9320 Linwood Avenue d/b/a Charter Forest Hospital
Health System, Inc. Shreveport, LA 71106 f/k/a Charter Forest Hospital, Inc.
f/d/b/a Charter Counseling Center of Longview
81. Charter Grapevine Behavioral 2300 William D. Tate Ave. d/b/a Charter Hospital of Grapevine
Health System, Inc. Grapevine, TX 76051 f/k/a Charter Hospital of Grapevine, Inc.
f/k/a Charter Hospital of Dallas/Ft. Worth, Inc.
f/k/a Charter Hospital of Grapevine, Inc.
82. Charter Greensboro Behavioral 700 Walter Reed Drive f/k/a Charter Hills Hospital, Inc.
Health System, Inc. Greensboro, NC 27403 f/k/a CMG, Inc.
f/k/a Charter Hospital of Greensboro, Inc.
d/b/a Charter Hospital of Greensboro
83. Charter Health Management of Texas, 577 Mulberry Street Trade Name: Metroplex Behavioral Health Care
Inc. Macon, GA 31298 Group
7418 John Smith Dr. Suite D
San Antonio, TX 78229
84. Charter Hospital of Columbus, Inc. 577 Mulberry Street
Macon, GA 31298
</TABLE>
Page 15
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
85. Charter Hospital of Denver, Inc. 577 Mulberry Street f/k/a Charter Hospital of Lakewood, Inc.
Macon, GA 31298 f/k/a Charter Hospital of Denver, Inc.
86. Charter Hospital of Ft. Collins, Inc. 577 Mulberry Street f/k/a Charter Medical of Larimer County, Inc.
Macon, GA 31298
4601 Corbett Drive
Ft. Collins, CO.
87. Charter Hospital of Laredo, Inc. 577 Mulberry Street f/k/a Charter Rio Grande, Inc.
Macon, GA 31298
88. Charter Hospital of Miami, Inc. 11100 N.W. 27th St. f/k/a Dade County Psychiatric Hospital, Inc.
Miami, FL 33172 d/b/a Charter Behavioral Health System of
South Florida
89. Charter Hospital of Mobile, Inc. 5800 Southland Drive d/b/a Charter Hospital of Mobile
Mobile, AL 36693 d/b/a Charter Academy of Mobile
f/d/b/a Charter Pines Recovery Center
251 Cox Street f/k/a Charter Southland Hospital, Inc.
Mobile, AL 36604 f/k/a Southland Hospital, Inc.
f/k/a Charter Medical - Alabama, Inc.
90. Charter Hospital of Northern 577 Mulberry Street
New Jersey, Inc. Macon, GA 31298
</TABLE>
Page 16
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
91. Charter Hospital of Santa Teresa, Inc. 577 Mulberry Street f/k/a Charter Medical - Santa Teresa, Inc.
Macon, GA 31298 f/d/b/a Charter Counseling Center of East El Paso
100 Charter Lane
Santa Teresa, NM 88008
92. Charter Hospital of St. Louis, Inc. 577 Mulberry Street d/b/a Charter Behavioral Health System of
Macon, GA 31298 Orlando South
d/b/a Charter Hospital of Greenville
2700 E. Phillips Road Trade Name: Charter Hospital of Orlando South
Greer, SC 29651 Trade Name: Charter Hospital of Greenville
206 Park Place Blvd.
Kissimmee, FL 32741
93. Charter Hospital of Torrance, Inc. 577 Mulberry Street f/k/a Charter Pacific Hospital, Inc.
Macon, GA 31298 f/k/a Cal-Riviera, Inc.
4025 W. 226th St.
Torrance, CA
94. Charter Indianapolis Behavioral 5602 Caito Drive d/b/a Charter Hospital of Indianapolis
Health System, Inc. Indianapolis, IN 46226 f/k/a Charter Medical - Marion County, Inc.
95. Charter Lafayette Behavioral 3700 Rome Drive d/b/a Charter Hospital of Lafayette
Health System, Inc. Lafayette, IN 47905 f/k/a Charter Medical-Tippecanoe County, Inc.
</TABLE>
Page 17
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
96. Charter Lakehurst Behavioral 577 Mulberry Street
Health System, Inc. Macon, GA 31298
440 Beckerville Road (1)
Lakehurst, NJ 08733
97. Charter Lakeside Behavioral 2911 Brunswick Rd. d/b/a Charter Lakeside Hospital
Health System, Inc. Memphis, TN 38134 f/k/a Charter Lakeside Hospital, Inc.
f/k/a Lakeside Hospital, Inc.
1550 First Colony Blvd. f/k/a Psychron, Inc.
Sugarland, TX 77487 Assumed Name: Charter Behavioral Health System
of Sugarland
Assumed Name: Charter Hospital of Sugarland
98. Charter Laurel Heights Behavioral 577 Mulberry Street f/k/a Structured Healthcare Systems, Inc.
Health System, Inc. Macon, GA 31298 f/k/a Charter Caribe Hospital, Inc.
f/k/a Charter Medical Teaching Faculty, Inc.
934 Briarcliff Road, NE (1)
Atlanta, GA 30306
99. Charter Laurel Oaks Behavioral 577 Mulberry Street f/k/a Charter Medical-Southeast, Inc.
Health System, Inc. Macon, GA 31298
1950 Benoist Farms Rd.
West Palm Beach, FL 33411
6601 Central Florida Parkway (1)
Orlando, FL 32821
</TABLE>
Page 18
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
100. Charter Linden Oaks Behavioral 577 Mulberry Street
Health System, Inc. Macon, GA 31298
852 West Street (1)
Naperville, IL 60540
101. Charter Little Rock Behavioral 1601 Murphy Drive d/b/a Charter Hospital of Little Rock
Health System, Inc. Maumelle, AR 72118 f/k/a Charter Hospital of Little Rock, Inc.
102. Charter Louisville Behavioral 1405 Browns Lane d/b/a Charter Hospital of Louisville
Health System, Inc. Louisville, KY 40207 f/k/a Charter Hospital of Louisville, Inc.
f/k/a Charter Falls Hospital, Inc.
103. Charter Meadows Behavioral 577 Mulberry Street
Health System, Inc. Macon, GA 31298
730 Maryland Route 3 (1)
Gambrills, MD 21054
104. Charter Medfield Behavioral 577 Mulberry Street f/k/a Florida Residential Treatment Centers, Inc.
Health System, Inc. Macon, GA 31298 d/b/a Charter Hospital of West Palm Beach
f/d/b/a Charter Hospital of Bradenton
1950 Benoist Farms Rd.
West Palm Beach, FL 33411
12891 Seminole Blvd. (1)
Largo, FL 34648
105. Charter Medical - California, Inc. 577 Mulberry Street f/k/a Charter Medical U.K., Inc.
Macon, GA 31298 f/d/b/a Charter Hospital of Bakersfield
f/d/b/a Charter Hospital of Sacramento
</TABLE>
Page 19
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
106. Charter Medical - Clayton County, Inc. 577 Mulberry Street
Macon, GA 31298
107. Charter Medical - Cleveland, Inc. 577 Mulberry Street f/k/a Charter Medical - Tyler, Inc.
Macon, GA 31298
108. Charter Medical - Dallas, Inc. 577 Mulberry Street
Macon, GA 31298
109. Charter Medical of East Valley, Inc. 2190 N. Grace Blvd. d/b/a Charter Hospital of the East Valley, Inc.
Chandler, AZ 85224 d/b/a Charter Behavioral Health System of Arizona
110. Charter Medical Executive Corporation 577 Mulberry Street f/k/a CMMC, Inc.
Macon, GA 31298 d/b/a CMMC Corporation of Georgia
Assumed Name: CMEC
111. Charter Medical Information Services, 577 Mulberry Street
Inc. Macon, GA 31298
112. Charter Medical International, S.A., 577 Mulberry Street
Inc. Macon, GA 31298
113. Charter Medical - Long Beach, Inc. 6060 Paramount Blvd. d/b/a Charter Hospital of Long Beach
Long Beach, CA 90805 formerly d/b/a Charter Baywood Hospital
f/d/b/a National Recovery Network
d/b/a Charter Behavioral Health System of
Southern California
d/b/a Charter Hospital of Tucson
</TABLE>
Page 20
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
114. Charter Medical Management Company 577 Mulberry Street
Macon, GA 31298
115. Charter Medical - New York, Inc. 577 Mulberry Street
Macon, GA 31298
116. Charter Medical of North Phoenix, Inc. 6015 W. Peoria Avenue d/b/a Charter Hospital of Glendale
Glendale, AZ 85311 d/b/a Charter Behavioral Health System of Arizona
117. Charter Medical of Orange County, Inc. 577 Mulberry Street
Macon, GA 31298
118. Charter Mental Health Options, Inc. 577 Mulberry Street
Macon, GA 31298
119. Charter Mid-South Behavioral 577 Mulberry Street f/k/a Charter National Laboratory, Inc.
Health System, Inc. Macon, GA 31298
135 North Pauline
Memphis, TN 38105
120. Charter Milwaukee Behavioral 11101 West Lincoln Avenue d/b/a Charter Hospital of Milwaukee
Health System, Inc. West Allis, WI 53227 f/k/a Charter Hospital of Milwaukee, Inc.
121. Charter Mission Viejo Behavioral 23228 Madero d/b/a Charter Hospital of Mission Viejo
Health System, Inc. Mission Viejo, CA 92691 f/k/a Charter Hospital of Mission Viejo, Inc.
f/k/a Charter Hospital of Orange County, Inc.
122. Charter MOB of Charlottesville, Inc. 1023 Millmont Avenue
Charlottesville, VA 22901
</TABLE>
Page 21
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
123. Charter North Counseling Center, Inc. 2530 DeBarr Road
Anchorage, Alaska 99508-2996
124. Charter North Behavioral Health 2530 DeBarr Road d/b/a Charter North Hospital
System, Inc. Anchorage, Alaska 99508-2996 f/k/a Charter North Hospital, Inc.
125. Charter Northbrooke Behavioral 577 Mulberry Street
Health System, Inc. Macon, GA 31298
46000 W. Schroeder Drive
Brown Deer, WI 53223
126. Charter Northridge Behavioral 400 Newton Road d/b/a Charter Northridge Hospital
Health System, Inc. Raleigh, NC 27615 f/k/a Charter Medical Corp. of Raleigh, Inc.
127. Charter Northside Hospital, Inc. 577 Mulberry Street f/k/a Charter Medical - Bibb County, Inc.
Macon, GA 31298
128. Charter Oak Behavioral Health 1161 East Covina Blvd. d/b/a Charter Oak Hospital
System, Inc. Covina, CA 91724 d/b/a Charter Behavioral Health System of
Southern California
f/k/a Charter Oak Hospital, Inc.
f/k/a California-Charter Medical, Inc.
129. Charter Palms Behavioral Health 1421 E. Jackson Avenue d/b/a Charter Palms Hospital
System, Inc. McAllen, TX 78502 f/k/a Charter Palms Hospital, Inc.
f/k/a Charter Medical - Southwest, Inc.
</TABLE>
Page 22
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
130. Charter Peachford Behavioral 2151 Peachford Rd. f/k/a Peachford Hospital, Inc
Health System, Inc. Atlanta, GA 30338 f/k/a Charter Peachford Hospital, Inc.
d/b/a Charter Peachford Hospital
3913 North Peachtree Road
Atlanta, GA 30341
131. Charter Pines Behavioral Health 3621 Randolph Road d/b/a Charter Pines Hospital
System, Inc. Charlotte, NC 28211 f/k/a Charter Medical of Charlotte, Inc.
132. Charter Plains Behavioral Health 801 N. Quaker Avenue d/b/a Charter Plains Hospital
System, Inc. Lubbock, TX 79408 d/b/a Employee Assistance Services (EAS)
d/b/a Behavioral Healthcare Systems
f/k/a Charter Plains Hospital, Inc.
f/k/a Charter Medical - Lubbock, Inc.
133. Charter - Provo School, Inc. 4501 N. University Ave. d/b/a Provo Canyon School
Provo, UT 84603
134. Charter Psychiatric Hospitals, Inc. 577 Mulberry Street
Macon, GA 31298
135. Charter Real Behavioral Health 8550 Huebner Road d/b/a Charter Real Hospital
System, Inc. San Antonio, TX 78240 f/k/a Charter Real, Inc.
7418 John Smith Dr., Suite D
San Antonio, TX 78229
6800 Park Ten Blvd., Suite 275-W
San Antonio, TX 78213
</TABLE>
Page 23
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
136. Charter Regional Medical Center, Inc. 577 Mulberry Street f/k/a Charter Community Hospital of Cleveland, Inc.
Macon, GA 31298 Assumed name: Charter Community Hospital Inc.
f/k/a Leggett Memorial Hospital, Inc.
137. Charter Richmond Behavioral Health 577 Mulberry Street f/k/a Richmond MOB, Inc.
System, Inc. Macon, GA 31298
12800 West Creek Parkway (1)
Richmond, VA 23238
138. Charter Ridge Behavioral Health 3050 Rio Dosa Drive d/b/a Charter Ridge Hospital
System, Inc. Lexington, KY 40509 f/k/a Charter Ridge Hospital, Inc.
f/k/a Charter Medical - Lexington, Inc.
139. Charter Rivers Behavioral Health 2900 Sunset Blvd. d/b/a Charter Rivers Hospital
System, Inc. West Columbia, SC 29171 f/k/a Charter Rivers Hospital, Inc.
f/k/a Charter Medical - Columbia, Inc.
140. Charter San Diego Behavioral 11878 Avenue of Industry d/b/a Charter Hospital of San Diego
Health System, Inc. San Diego, CA 92128 f/k/a Charter Hospital of San Diego, Inc.
141. Charter Serenity Lodge Behavioral 577 Mulberry Street
Health System, Inc. Macon, GA 31298
2097 S. Military Highway (1)
Chesapeake, VA 23320
142. Charter Sioux Falls Behavioral 2812 South Louise Avenue d/b/a Charter Hospital of Sioux Falls
Health System, Inc. Sioux Falls, SD 57106 f/k/a Charter Hospital of Sioux Falls, Inc.
</TABLE>
Page 24
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
143. Charter South Bend Behavioral 6704 N. Gumwood Drive d/b/a Charter Hospital of South Bend
Health System, Inc. Granger, IN 46530 f/k/a Charter Medical - St. Joseph County, Inc.
Assumed Name: Charter Counseling Center at Niles
144. Charter Springs Behavioral 3130 S.W. 27th Avenue f/k/a Charter Medical - Ocala, Inc.
Health System, Inc. Ocala, FL 32678 f/k/a Charter Springs Hospital, Inc.
d/b/a Charter Springs Hospital
145. Charter Springwood Behavioral 577 Mulberry Street
Health System, Inc. Macon, GA 31298
Route 4 Box 50 (1)
Leesburg, VA 22075
146. Charter Suburban Hospital of 577 Mulberry Street Assumed Name: Charter Suburban Hospital
Mesquite, Inc. Macon, GA 31298 f/k/a Mesquite Memorial Hospital, Inc.
147. Charter Terre Haute Behavioral 1400 Crossing Boulevard d/b/a Charter Hospital of Terre Haute
Health System, Inc. Terre Haute, IN 47802 f/k/a Charter Medical - Vigo County, Inc.
148. Charter Thousand Oaks Behavioral 150 Via Merida d/b/a Charter Hospital of Thousand Oaks
Health System, Inc. Thousand Oaks, CA 91361 f/k/a Charter Medical of Thousand Oaks, Inc.
d/b/a Charter Behavioral Health System of
Southern California
149. Charter Tidewater Behavioral 577 Mulberry Street
Health System, Inc. Macon, GA 31298
860 Kempsville Road (1)
Norfolk, VA 23502
</TABLE>
Page 25
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
150. Charterton/LaGrange, Inc. 577 Mulberry Street f/k/a Shalomwald, Inc.
Macon, GA 31298
151. Charter Treatment Center of 577 Mulberry Street
Michigan, Inc. Macon, GA 31298
152. Charter Westbrook Behavioral Health 1500 Westbrook Avenue d/b/a Charter Westbrook Hospital
System, Inc. Richmond, VA 23227 f/k/a Charter Westbrook Hospital, Inc.
f/k/a Westbrook Hospital, Inc.
f/k/a Westbrook Psychiatric Hospital, Incorporated
f/k/a W.P.H. Corporation
153. Charter White Oak Behavioral Health 577 Mulberry Street
System, Inc. Macon, GA 31298
Route 16 at White Oak Lane (1)
Woolford, MD 21677
154. Charter Wichita Behavioral Health 8901 East Orme d/b/a Charter Hospital of Wichita
System, Inc. Wichita, KS 67207 f/k/a Charter Hospital of Wichita, Inc.
f/k/a Charter Medical of Wichita, Inc.
155. Charter Woods Behavioral Health 700 Cottonwood Road f/k/a Charter Woods Hospital, Inc.
System, Inc. Dothan, AL 36302 f/k/a Charter Medical - Dothan, Inc.
156. Charter Woods Hospital, Inc. 577 Mulberry Street
Macon, GA 31298
157. CMCI, Inc. 1061 E. Flamingo Rd. Suite One
Las Vegas, NV 89119
</TABLE>
Page 26
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
158. CMFC, Inc. 1061 E. Flamingo Rd. Suite One
Las Vegas, NV 89119
159. CMSF, Inc. 3550 Colonial Blvd. d/b/a Charter Glade Hospital
Fort Myers, FL 33906 f/k/a CMSP, Inc.
d/b/a Charter Glade Behavioral Health System, Inc.
10140 Deer Run Farms Rd.
Ft. Myers, FL 33906
160. CPS Associates, Inc. 577 Mulberry Street d/b/a Peninsula Professional Services
Macon, GA 31298 d/b/a Jefferson Professional Services
161. Desert Springs Hospital, Inc. 577 Mulberry Street d/b/a Charter Family Practice Center
Macon, GA 31298
162. Employee Assistance Services, Inc. 577 Mulberry Street f/d/b/a EAS, Inc.
Macon, GA 31298 f/d/b/a "EAS Employee Assistance Services, Inc."
163. Florida Health Facilities, Inc. 21808 State Road 54 d/b/a Charter Hospital of Pasco
Lutz, FL 33549
164. Gulf Coast EAP Services, Inc. 577 Mulberry Street
Macon, GA 31298
165. Gwinnett Immediate Care Center, Inc. 577 Mulberry Street
Macon, GA 31298
166. HCS, Inc. 577 Mulberry Street f/d/b/a CMHCS, Inc.
Macon, GA 31298 f/d/b/a CHCS, Inc.
</TABLE>
Page 27
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
167. Holcomb Bridge Immediate Care 577 Mulberry Street f/k/a Charter Medical Management International, Inc.
Center, Inc. Macon, GA 31298 f/k/a Peachford Medical Building, Inc.
168. Hospital Investors, Inc. 577 Mulberry Street
Macon, GA 31298
169. Mandarin Meadows, Inc. 577 Mulberry Street
Macon, GA 31298
170. Metropolitan Hospital, Inc. 577 Mulberry Street f/k/a Metropolitan Eye & Ear Hospital, Inc.
Macon, GA 31298 f/k/a Metropolitan Eye Hospital, Inc.
f/k/a MEH, Inc.
Trade Name: Charter Metropolitan Health Center
171. Middle Georgia Hospital, Inc. 577 Mulberry Street f/k/a MGH, Inc.
Macon, GA 31298 Trade Name: Middle Georgia Family Health Center
Trade Name: Priority Plus
172. Pacific - Charter Medical, Inc. 577 Mulberry Street
Macon, GA 31298
173. Peachford Professional Network, Inc. 577 Mulberry Street
Macon, GA 31298
174. Rivoli, Inc. 577 Mulberry Street
Macon, GA 31298
175. Shallowford Community Hospital, Inc. 577 Mulberry Steet
Macon, GA 31298
</TABLE>
Page 28
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
176. Sistemas De Terapia Respiratoria 577 Mulberry Street
S.A., Inc. Macon, GA 31298
177. Stuart Circle Hospital Corporation 577 Mulberry Street f/k/a S.C.H. of Richmond Corp.
Macon, GA 31298
178. Tampa Bay Behavioral Health Alliance, 577 Mulberry Street
Inc. Macon, GA 31298
179. Western Behavioral Systems, Inc. 577 Mulberry Street f/k/a Charter Hospital of Bakersfield, Inc.
Macon, GA 31298
<FN>
(1) Refers to address of NME Hospital if such hospital is purchased by a
subsidiary of Charter Medical Corporation.
</TABLE>
Page 29
<PAGE>
ANNEX A
SECOND AMENDED AND RESTATED SUBSIDIARY PLEDGE AND SECURITY AGREEMENT
<TABLE>
<CAPTION>
STATE LEGAL NAME D/B/A NAME TO BE REQUESTED
NME
<S> <C> <C>
AZ CHARTER BEHAVIORAL HEALTH SYSTEM OF TUCSON, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF ARIZONA/TUCSON
AR CHARTER BEHAVIORAL HEALTH SYSTEM OF TEXARKANA, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF TEXARKANA
CA CHARTER BEHAVIORAL HEALTH SYSTEM OF VISALIA, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF CENTRAL CALIFORNIA/VISALIA
CA CHARTER BEHAVIORAL HEALTH SYSTEM OF SAN JOSE, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF NORTHERN CALIFORNIA/SAN JOSE
CA CHARTER ALVARADO BEHAVIORAL HEALTH SYSTEM, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF SAN DIEGO/API
CA CHARTER CANYON SPRINGS BEHAVIORAL HEALTH SYSTEM, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF SOUTHERN CALIFORNIA/CATHEDRAL CITY
CA CHARTER BEHAVIORAL HEALTH SYSTEM OF LAKEWOOD, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF SOUTHERN CALIFORNIA/LAKEWOOD
CA CHARTER BEHAVIORAL HEALTH SYSTEM AT LOS ALTOS, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF SOUTHERN CALIFORNIA/LOS ALTOS
CA CHARTER BEHAVIORAL HEALTH SYSTEM OF YORBA LINDA, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF SOUTHERN CALIFORNIA/YORBA LINDA
CO CHARTER CENTENNIAL PEAKS BEHAVIORAL HEALTH SYSTEM, INC. CHARTER BEHAVIORAL HEALTH SYSTEM AT CENTENNIAL PEAKS
FL CHARTER BEHAVIORAL HEALTH SYSTEM OF BRADENTON, INC. CHARTER BEHAVIORAL HEALTH SYSTEM AT MANATEE PALMS
FL CHARTER MEDFIELD BEHAVIORAL HEALTH SYSTEM, INC. CHARTER BEHAVIORAL HEALTH SYSTEM AT MEDFIELD
FL CHARTER BAY HARBOR BEHAVIORAL HEALTH SYSTEM, INC. CHARTER BEHAVIORAL HEALTH SYSTEM AT BAY HARBOR
FL CHARTER LAUREL OAKS BEHAVIORAL HEALTH SYSTEM, INC. CHARTER BEHAVIORAL HEALTH SYSTEM AT LAUREL OAKS
GA CHARTER BEHAVIORAL HEALTH SYSTEMS OF ATLANTA, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF ATLANTA AT MIDTOWN
GA CHARTER LAUREL HEIGHTS BEHAVIORAL HEALTH SYSTEM, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF ATLANTA AT LAUREL HEIGHTS
GA CHARTER BRAWNER BEHAVIORAL HEALTH SYSTEM, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF ATLANTA AT BRAWNER
GA CHARTER CRESCENT PINES BEHAVIORAL HEALTH SYSTEM, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF ATLANTA AT CRESCENT PINES
IL CHARTER LINDEN OAKS BEHAVIORAL HEALTH SYSTEM, INC. CHARTER BEHAVIORAL HEALTH SYSTEM AT LINDEN OAKS
IN CHARTER BEHAVIORAL HEALTH SYSTEM OF EVANSVILLE, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF INDIANA/EVANSVILLE
IN CHARTER ARBOR INDY BEHAVIORAL HEALTH SYSTEM, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF INDIANA AT ARBOR
IN CHARTER BEHAVIORAL HEALTH SYSTEM OF JEFFERSON, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF INDIANA AT JEFFERSON
IN CHARTER BEHAVIORAL HEALTH SYSTEM OF MICHIGAN CITY, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF INDIANA/MICHIGAN CITY
LA CHARTER BEHAVIORAL HEALTH SYSTEM OF LAFAYETTE, INC. CHARTER BEHAVIORAL HEALTH SYSTEM AT ACADIAN OAKS
MA CHARTER BEHAVIORAL HEALTH SYSTEM AT HIDDEN BROOK, INC. CHARTER BEHAVIORAL HEALTH SYSTEM AT HIDDEN BROOK
MA CHARTER BEHAVIORAL HEALTH SYSTEM AT WARWICK MANOR, INC. CHARTER BEHAVIORAL HEALTH SYSTEM AT WARWICK MANOR
MA CHARTER MEADOWS BEHAVIORAL HEALTH SYSTEM, INC. CHARTER BEHAVIORAL HEALTH SYSTEM AT MEADOWS
MA CHARTER FAIRBRIDGE BEHAVIORAL HEALTH SYSTEM, INC. CHARTER BEHAVIORAL HEALTH SYSTEM AT FAIRBRIDGE
MA CHARTER BEHAVIORAL HEALTH SYSTEM AT POTOMAC RIDGE, INC. CHARTER BEHAVIORAL HEALTH SYSTEM AT POTOMAC RIDGE
MA CHARTER WHITE OAK BEHAVIORAL HEALTH SYSTEM, INC. CHARTER BEHAVIORAL HEALTH SYSTEM AT WHITE OAK
MN CHARTER BEHAVIORAL HEALTH SYSTEM OF WAVERLY, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF WAVERLY
NH CHARTER BEHAVIORAL HEALTH SYSTEM OF NASHUA, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF NEW ENGLAND AT BROOKSIDE
NJ CHARTER LAKEHURST BEHAVIORAL HEALTH SYSTEM, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF LAKEHURST
NJ CHARTER BEHAVIORAL HEALTH SYSTEM AT FAIR OAKS, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF SUMMIT
NC CHARTER APPALACHIAN HALL BEHAVIORAL HEALTH SYSTEM, INC. CHARTER BEHAVIORAL HEALTH SYSTEM AT APPALACHIAN HALL
PA CHARTER COVE FORGE BEHAVIORAL HEALTH SYSTEM, INC. CHARTER BEHAVIORAL HEALTH SYSTEM AT COVE FORGE
SC CHARTER FENWICK HALL BEHAVIORAL HEALTH SYSTEM, INC. CHARTER BEHAVIORAL HEALTH SYSTEM AT FENWICK HALL
TN CHARTER MID-SOUTH BEHAVIORAL HEALTH SYSTEM, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF TENNESSEE AT MID-SOUTH
</TABLE>
<PAGE>
ANNEX A
SECOND AMENDED AND RESTATED SUBSIDIARY PLEDGE AND SECURITY AGREEMENT
<TABLE>
<CAPTION>
STATE LEGAL NAME D/B/A NAME TO BE REQUESTED
NME
<S> <C> <C>
TX CHARTER BEHAVIORAL HEALTH SYSTEM OF BAYWOOD, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF CLEAR LAKE
VA CHARTER SERENITY LODGE BEHAVIORAL HEALTH SYSTEM, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF CHESAPEAKE
VA CHARTER SPRINGWOOD BEHAVIORAL HEALTH SYSTEM, INC. CHARTER BEHAVIORAL HEALTH SYSTEM AT SPRINGWOOD
VA CHARTER TIDEWATER BEHAVIORAL HEALTH SYSTEM, INC. CHARTER BEHAVIORAL HEALTH SYSTEM AT TIDEWATER
VA CHARTER RICHMOND BEHAVIORAL HEALTH SYSTEM, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF RICHMOND
VA CHARTER BEHAVIORAL HEALTH SYSTEM OF VIRGINIA BEACH, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF VIRGINIA BEACH
WI CHARTER NORTHBROOKE BEHAVIORAL HEALTH SYSTEM, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF MILWAUKEE/BROWN DEER
CMC
AR CHARTER LITTLE ROCK BEHAVIORAL HEALTH SYSTEM, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF LITTLE ROCK
AZ CHARTER MEDICAL OF EAST VALLEY, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF ARIZONA/EAST VALLEY
AZ CHARTER MEDICAL OF NORTH PHOENIX, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF ARIZONA/GLENDALE
CA CHARTER SAN DIEGO BEHAVIORAL HEALTH SYSTEM, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF SAN DIEGO
CA CHARTER BEHAVIORAL HEALTH SYSTEM OF THE INLAND EMPIRE,
INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF SOUTHERN CALIFORNIA/CORONA
CA CHARTER MEDICAL - LONG BEACH, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF SOUTHERN CALIFORNIA/LONG BEACH
CA CHARTER OAK BEHAVIORAL HEALTH SYSTEM, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF SOUTHERN CALIFORNIA/OAK
CA CHARTER MISSION VIEJO BEHAVIORAL HEALTH SYSTEM, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF SOUTHERN CALIFORNIA/MISSION VIEJO
CA CHARTER THOUSAND OAKS BEHAVIORAL HEALTH SYSTEM, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF SOUTHERN CALIFORNIA/THOUSAND OAKS
FL CHARTER HOSPITAL OF ST. LOUIS, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF ORLANDO
FL FLORIDA HEALTH FACILITIES, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF TAMPA BAY/PASCO
GA CHARTER PEACHFORD BEHAVIORAL HEALTH SYSTEM, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF ATLANTA
CHARTER BEHAVIORAL HEALTH SYSTEM OF ATLANTA AT PEACHFORD
GA CHARTER CRESCENT PINES BEHAVIORAL HEALTH SYSTEM, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF ATLANTA
GA CHARTER BEHAVIORAL HEALTH SYSTEMS OF ATLANTA, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF ATLANTA
GA CHARTER LAUREL HEIGHTS BEHAVIORAL HEALTH SYSTEM, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF ATLANTA
GA CHARTER BRAWNER BEHAVIORAL HEALTH SYSTEM, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF ATLANTA
NC CHARTER GREENSBORO BEHAVIORAL HEALTH SYSTEM, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF GREENSBORO
SC CHARTER HOSPITAL OF ST. LOUIS, INC. CHARTER GREENVILLE BEHAVIORAL HEALTH SYSTEM
UT CHARTER - PROVO SCHOOL, INC. CHARTER PROVO CANYON SCHOOL
WI CHARTER MILWAUKEE BEHAVIORAL HEALTH SYSTEM, INC. CHARTER BEHAVIORAL HEALTH SYSTEM OF MILWAUKEE/WEST ALLIS
</TABLE>
NOTE: LIST REPRESENTS D/B/A FILINGS WHICH WILL BE FILED AFTER THE CLOSING DATE.
<PAGE>
ANNEX A
SECOND AMENDED AND RESTATED SUBSIDIARY PLEDGE AND SECURITY AGREEMENT
<TABLE>
<CAPTION>
BUSINESS/ACCOUNTING OFFICE SUBSIDIARY
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
ATLANTA OFFICE CHARTER Charter-By-The Sea Behavioral Health System, Inc.
2153 Peachford Road Charter Behavioral Health System of Athens, Inc.
Atlanta, GA 30538 Charter Augusta Behavioral Health System, Inc.
Charter Behavioral Health System of Savannah, Inc.
Charter Behavioral Health System of Central Georgia, Inc.
Charter Peachford Behavioral Health System, Inc.
CMSF, Inc. (Glade)
Charter Northridge Behavioral Health System, Inc.
Charter Behavioral Health System of Jacksonville, Inc.
Charter Hospital of St. Louis (Orlando South)
Florida Health Facilities, Inc. (Pasco)
Charter Behavioral Health System of Tampa Bay, Inc.
Charter Behavioral Health System of Winston-Salem, Inc.
Charter Pines Behavioral Health System, Inc.
Charter Greensboro Behavioral Health System, Inc.
Charter Springs Behavioral Health System, Inc.
NME Charter Behavioral Health System of Atlanta, Inc.
Charter Behavioral Health System of Bradenton, Inc.
Charter Laurel Heights Behavioral Health System, Inc.
Charter Bay Harbor Behavioral Health System, Inc.
Charter Brawner Behavioral Health System, Inc.
Charter Laurel Oaks Behavioral Health System, Inc.
Charter Medfield Behavioral Health System, Inc.
Charter Crescent Pines Behavioral Health System, Inc.
</TABLE>
Page 1
<PAGE>
ANNEX A
SECOND AMENDED AND RESTATED SUBSIDIARY PLEDGE AND SECURITY AGREEMENT
<TABLE>
<CAPTION>
BUSINESS/ACCOUNTING OFFICE SUBSIDIARY
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORONA OFFICE CHARTER Charter Canyon Behavioral Health System, Inc.
2055 Kellog Drive Charter Medical of East Valley, Inc.
Corona, CA 91719 Charter Medical of North Phoenix, Inc. (Glendale)
Charter Behavioral Health System of Nevada, Inc.
Charter Medical - Long Beach, Inc.
Charter Mission Viejo Behavioral Health System, Inc.
Charter Behavioral Health System of Northern California, Inc.
Charter San Diego Behavioral Health System, Inc.
Charter Thousand Oaks Behavioral Health System, Inc.
Charter Oak Behavioral Health System, Inc.
Charter North Behavioral Health System, Inc.
Charter - Provo School, Inc.
Charter Behavioral Health System of the Inland Empire, Inc.
NME Charter Canyon Springs Behavioral Health System, Inc.
Charter Behavioral Health System of Visalia, Inc.
Charter Behavioral Health System of San Jose, Inc.
Charter Behavioral Health System of Lakewood, Inc.
Charter Behavioral Health System of Los Altos, Inc.
Charter Behavioral Health System of Yorba Linda, Inc.
Charter Alvarado Behavioral Health System, Inc.
GREENVILLE OFFICE CHARTER Charter Behavioral Health System of Charleston, Inc.
181 Johns Road, Suite C Charter Rivers Behavioral Health System, Inc.
Greer, SC 29651 Charter Hospital of St. Louis, Inc. (Greenville)
</TABLE>
Page 2
<PAGE>
ANNEX A
SECOND AMENDED AND RESTATED SUBSIDIARY PLEDGE AND SECURITY AGREEMENT
<TABLE>
<CAPTION>
BUSINESS/ACCOUNTING OFFICE SUBSIDIARY
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
NME Charter Fenwick Hall Behavioral Health System, Inc.
Charter Appalachian Hall Behavioral Health System, Inc.
CHARTER FINANCIAL OFFICES, CHARTER Charter Louisville Behavioral Health System, Inc.
INC. Charter Ridge Behavioral Health System, Inc.
9200 Shelbyville Road Charter Behavioral Health System of Paducah, Inc.
Suite 300 Charter Behavioral Health System of Columbia, Inc.
Louisville, KY 40222 Charter Wichita Behavioral Health System, Inc.
Charter Terre Haute Behavioral Health System, Inc.
Charter Behavioral Health System of Northwest Indiana, Inc.
Charter Lafayette Behavioral Health System, Inc.
Charter Milwaukee Behavioral Health System, Inc.
Charter Behavioral Health System of Kansas City, Inc.
Charter Behavioral Health System of Chicago, Inc.
Charter South Bend Behavioral Health System, Inc.
Charter Little Rock Behavioral Health System, Inc.
Charter Behavioral Health System of Northwest Arkansas, Inc.
Charter Beacon Behavioral Health System, Inc.
Charter Behavioral Health System of Toledo, Inc.
Charter Indianapolis Behavioral Health System, Inc.
Charter Westbrook Behavioral Health System, Inc.
Charter Behavioral Health System of Charlottesville, Inc.
Charter Fairmont Behavioral Health System, Inc.
Charter Sioux Falls Behavioral Health System, Inc.
NME Charter Arbor Indy Behavioral Health System, Inc.
Charter Behavioral Health System of Michigan City, Inc.
</TABLE>
Page 3
<PAGE>
ANNEX A
SECOND AMENDED AND RESTATED SUBSIDIARY PLEDGE AND SECURITY AGREEMENT
<TABLE>
<CAPTION>
BUSINESS/ACCOUNTING OFFICE SUBSIDIARY
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Charter Behavioral Health System of Nashua, Inc.
Charter Behavioral Health System of Waverly, Inc.
Charter Springwood Behavioral Health System, Inc.
Charter Northbrooke Behavioral Health System, Inc.
Charter Centennial Peaks Behavioral Health System, Inc.
Charter Behavioral Health System of Virginia Beach, Inc.
Charter Behavioral Health System of Evansville, Inc.
Charter Serenity Lodge Behavioral Health System, Inc.
Charter Behavioral Health System of Jefferson, Inc.
Charter Richmond Behavioral Health System, Inc.
Charter Tidewater Behavioral Health System, Inc.
Charter Linden Oaks Behavioral Health System, Inc.
Charter Behavioral Health System of Texarkana, Inc.
Charter Lakehurst Behavioral Health System, Inc.
Charter Behavioral Health System at Fair Oaks, Inc.
Charter Cove Forge Behavioral Health System, Inc.
CHARTER HEALTH MANAGEMENT CHARTER Charter Behavioral Health System of Austin, Inc.
OF TEXAS, INC. Charter Behavioral Health System of Corpus Christi, Inc.
7418 John Smith Drive Charter Behavioral Health System of Dallas, Inc.
Suite D Charter Forest Behavioral Health System, Inc.
San Antonio, TX 76229 Charter Behavioral Health System of Fort Worth, Inc.
Charter Grapevine Behavioral Health System, Inc.
6800 Park Ten Blvd., Suite 275-W Charter Behavioral Health System of Jackson, Inc.
San Antonio, TX 76213 Charter Fairmount Behavioral Health System, Inc. (Kingwood)
(new lease signed for this location) Charter Hospital of Miami, Inc.
Charter Lakeside Behavioral Health System, Inc.
</TABLE>
Page 4
<PAGE>
ANNEX A
SECOND AMENDED AND RESTATED SUBSIDIARY PLEDGE AND SECURITY AGREEMENT
<TABLE>
<CAPTION>
BUSINESS/ACCOUNTING OFFICE SUBSIDIARY
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Charter Palms Behavioral Health System, Inc.
Charter Plains Behavioral Health System, Inc.
Charter Real Behavioral Health System, Inc.
Charter Lakeside Behavioral Health System, Inc. (Sugarland)
Charter Behavioral Health System of New Mexico, Inc.
Charter Hospital of Mobile, Inc. (Charter of Academy)
Charter Woods Behavioral Health System, Inc.
Charter Hospital of Mobile, Inc.
Charter Behavioral Health System of Lake Charles, Inc.
NME Charter Behavioral Health System of Baywood, Inc.
Charter Behavioral Health System of Lafayette, Inc.
Charter Meadows Behavioral Health System, Inc.
Charter Behavioral Health System of Warwick Manor, Inc.
Charter Behavioral Health System of Potomac Ridge, Inc.
Charter White Oak Behavioral Health System, Inc.
Charter Fairbridge Behavioral Health System, Inc.
Charter Behavioral Health System at Hidden Brook, Inc.
Charter Mid-South Behavioral Health System, Inc.
</TABLE>
Page 5
<PAGE>
SCHEDULE I
SECOND AMENDED AND RESTATED SUBSIDIARY PLEDGE
AND SECURITY AGREEMENT
DOMESTIC SUBSIDIARIES:
1. Ambulatory Resources, Inc.
2. Atlanta MOB, Inc.
3. Beltway Community Hospital, Inc.
4. CCM, Inc.
5. Charter Alvarado Behavioral Health System, Inc.
6. Charter Appalachian Hall Behavioral Health System, Inc.
7. Charter Arbor Indy Behavioral Health System, Inc.
8. Charter Augusta Behavioral Health System, Inc.
9. Charter Bay Harbor Behavioral Health System, Inc.
10. Charter Beacon Behavioral Health System, Inc.
11. Charter Behavioral Health System at Fair Oaks, Inc.
12. Charter Behavioral Health System at Hidden Brook, Inc.
13. Charter Behavioral Health System at Los Altos, Inc.
14. Charter Behavioral Health System at Potomac Ridge, Inc.
15. Charter Behavioral Health System at Warwick Manor, Inc.
16. Charter Behavioral Health System of Athens, Inc.
17. Charter Behavioral Health System of Austin, Inc.
18. Charter Behavioral Health System of Baywood, Inc.
19. Charter Behavioral Health System of Bradenton, Inc.
20. Charter Behavioral Health System of Canoga Park, Inc.
21. Charter Behavioral Health System of Central Georgia, Inc.
22. Charter Behavioral Health System of Charleston, Inc.
23. Charter Behavioral Health System of Charlottesville, Inc.
24. Charter Behavioral Health System of Chicago, Inc.
25. Charter Behavioral Health System of Chula Vista, Inc.
26. Charter Behavioral Health System of Columbia, Inc.
27. Charter Behavioral Health System of Corpus Christi, Inc.
28. Charter Behavioral Health System of Dallas, Inc.
29. Charter Behavioral Health System of Evansville, Inc.
30. Charter Behavioral Health System of Fort Worth, Inc.
31. Charter Behavioral Health System of Jackson, Inc.
32. Charter Behavioral Health System of Jacksonville, Inc.
33. Charter Behavioral Health System of Jefferson, Inc.
34. Charter Behavioral Health System of Kansas City, Inc.
35. Charter Behavioral Health System of Lafayette, Inc.
36. Charter Behavioral Health System of Lake Charles, Inc.
37. Charter Behavioral Health System of Lakewood, Inc.
38. Charter Behavioral Health System of Michigan City, Inc.
39. Charter Behavioral Health System of Mobile, Inc.
40. Charter Behavioral Health System of Nashua, Inc.
Page 1
<PAGE>
SCHEDULE I
SECOND AMENDED AND RESTATED SUBSIDIARY PLEDGE
AND SECURITY AGREEMENT
41. Charter Behavioral Health System of Nevada, Inc.
42. Charter Behavioral Health System of New Mexico, Inc.
43. Charter Behavioral Health System of Northern California, Inc.
44. Charter Behavioral Health System of Northwest Arkansas, Inc.
45. Charter Behavioral Health System of Northwest Indiana, Inc.
46. Charter Behavioral Health System of Paducah, Inc.
47. Charter Behavioral Health System of Rockford, Inc.
48. Charter Behavioral Health System of San Jose, Inc.
49. Charter Behavioral Health System of Savannah, Inc.
50. Charter Behavioral Health System of Southern California, Inc.
51. Charter Behavioral Health System of Tampa Bay, Inc.
52. Charter Behavioral Health System of Texarkana, Inc.
53. Charter Behavioral Health System of the Inland Empire, Inc.
54. Charter Behavioral Health System of Toledo, Inc.
55. Charter Behavioral Health System of Tucson, Inc.
56. Charter Behavioral Health System of Virginia Beach, Inc.
57. Charter Behavioral Health System of Visalia, Inc.
58. Charter Behavioral Health System of Washington D.C., Inc.
59. Charter Behavioral Health System of Waverly, Inc.
60. Charter Behavioral Health System of Winston-Salem, Inc.
61. Charter Behavioral Health System of Yorba Linda, Inc.
62. Charter Behavioral Health Systems of Atlanta, Inc.
63. Charter Brawner Behavioral Health System, Inc.
64. Charter Canyon Behavioral Health System, Inc.
65. Charter Canyon Springs Behavioral Health System, Inc.
66. Charter Centennial Peaks Behavioral Health System, Inc.
67. Charter Colonial Institute, Inc.
68. Charter Community Hospital, Inc.
69. Charter Community Hospital of Des Moines, Inc.
70. Charter Contract Services, Inc.
71. Charter Cove Forge Behavioral Health System, Inc.
72. Charter Crescent Pines Behavioral Health System, Inc.
73. Charter Fairbridge Behavioral Health System, Inc.
74. Charter Fairmount Behavioral Health System, Inc.
75. Charter Fenwick Hall Behavioral Health System, Inc.
76. Charter Financial Offices, Inc.
77. Charter Forest Behavioral Health System, Inc.
78. Charter Grapevine Behavioral Health System, Inc.
79. Charter Greensboro Behavioral Health System, Inc.
80. Charter Health Management of Texas, Inc.
81. Charter Hospital of Columbus, Inc.
82. Charter Hospital of Denver, Inc.
83. Charter Hospital of Ft. Collins, Inc.
Page 2
<PAGE>
SCHEDULE I
SECOND AMENDED AND RESTATED SUBSIDIARY PLEDGE
AND SECURITY AGREEMENT
84. Charter Hospital of Laredo, Inc.
85. Charter Hospital of Miami, Inc.
86. Charter Hospital of Mobile, Inc.
87. Charter Hospital of Northern New Jersey, Inc.
88. Charter Hospital of Santa Teresa, Inc.
89. Charter Hospital of St. Louis, Inc.
90. Charter Hospital of Torrance, Inc.
91. Charter Indianapolis Behavioral Health System, Inc.
92. Charter Lafayette Behavioral Health System, Inc.
93. Charter Lakehurst Behavioral Health System, Inc.
94. Charter Lakeside Behavioral Health System, Inc.
95. Charter Laurel Heights Behavioral Health System, Inc.
96. Charter Laurel Oaks Behavioral Health System, Inc.
97. Charter Linden Oaks Behavioral Health System, Inc.
98. Charter Little Rock Behavioral Health System, Inc.
99. Charter Louisville Behavioral Health System, Inc.
100. Charter Meadows Behavioral Health System, Inc.
101. Charter Medfield Behavioral Health System, Inc.
102. Charter Medical Executive Corporation
103. Charter Medical Information Services, Inc.
104. Charter Medical International, S.A., Inc.
105. Charter Medical Management Company
106. Charter Medical of East Valley, Inc.
107. Charter Medical of North Phoenix, Inc.
108. Charter Medical of Orange County, Inc.
109. Charter Medical - California, Inc.
110. Charter Medical - Clayton County, Inc.
111. Charter Medical - Cleveland, Inc.
112. Charter Medical - Dallas, Inc.
113. Charter Medical - Long Beach, Inc.
114. Charter Medical - New York, Inc.
115. Charter Mental Health Options, Inc.
116. Charter Mid-South Behavioral Health System, Inc.
117. Charter Milwaukee Behavioral Health System, Inc.
118. Charter Mission Viejo Behavioral Health System, Inc.
119. Charter MOB of Charlottesville, Inc.
120. Charter North Behavioral Health System, Inc.
121. Charter North Counseling Center, Inc.
122. Charter Northbrooke Behavioral Health System, Inc.
123. Charter Northridge Behavioral Health System, Inc.
124. Charter Northside Hospital, Inc.
125. Charter Oak Behavioral Health System, Inc.
126. Charter of Alabama, Inc.
Page 3
<PAGE>
SCHEDULE I
SECOND AMENDED AND RESTATED SUBSIDIARY PLEDGE
AND SECURITY AGREEMENT
127. Charter Palms Behavioral Health System, Inc.
128. Charter Peachford Behavioral Health System, Inc.
129. Charter Pines Behavioral Health System, Inc.
130. Charter Plains Behavioral Health System, Inc.
131. Charter Psychiatric Hospitals, Inc.
132. Charter Real Behavioral Health System, Inc.
133. Charter Regional Medical Center, Inc.
134. Charter Richmond Behavioral Health System, Inc.
135. Charter Ridge Behavioral Health System, Inc.
136. Charter Rivers Behavioral Health System, Inc.
137. Charter San Diego Behavioral Health System, Inc.
138. Charter Serenity Lodge Behavioral Health System, Inc.
139. Charter Sioux Falls Behavioral Health System, Inc.
140. Charter South Bend Behavioral Health System, Inc.
141. Charter Springs Behavioral Health System, Inc.
142. Charter Springwood Behavioral Health System, Inc.
143. Charter Surburban Hospital of Mesquite, Inc.
144. Charter Terre Haute Behavioral Health System, Inc.
145. Charter Thousand Oaks Behavioral Health System, Inc.
146. Charter Tidewater Behavioral Health System, Inc.
147. Charter Treatment Center of Michigan, Inc.
148. Charter Westbrook Behavioral Health System, Inc.
149. Charter White Oak Behavioral Health System, Inc.
150. Charter Wichita Behavioral Health System, Inc.
151. Charter Woods Behavioral Health System, Inc.
152. Charter Woods Hospital, Inc.
153. Charter - Provo School, Inc.
154. Charterton/LaGrange, Inc.
155. Charter-By-The-Sea Behavioral Health System, Inc.
156. CMCI, Inc.
157. CMFC, Inc.
158. CMSF, Inc.
159. CPS Associates, Inc.
160. C.A.C.O. Services, Inc.
161. Desert Springs Hospital, Inc.
162. Employee Assistance Services, Inc.
163. Florida Health Facilities, Inc.
164. Gulf Coast EAP Services, Inc.
165. Gwinnett Immediate Care Center, Inc.
166. HCS, Inc.
167. Holcomb Bridge Immediate Care Center, Inc.
168. Hospital Investors, Inc.
169. Mandarin Meadows, Inc.
Page 4
<PAGE>
SCHEDULE I
SECOND AMENDED AND RESTATED SUBSIDIARY PLEDGE
AND SECURITY AGREEMENT
170. Metropolitan Hospital, Inc.
171. Middle Georgia Hospital, Inc.
172. Pacific - Charter Medical, Inc.
173. Peachford Professional Network, Inc.
174. Rivoli, Inc.
175. Shallowford Community Hospital, Inc.
176. Sistemas De Terapia Respiratoria S.A., Inc.
177. Stuart Circle Hospital Corporation
178. Tampa Bay Behavioral Health Alliance, Inc.
179. Western Behavioral Systems, Inc.
Page 5
<PAGE>
SECOND AMENDED AND RESTATED COMPANY PLEDGE
AND SECURITY AGREEMENT (ESOP COLLATERAL)
SECOND AMENDED AND RESTATED COMPANY PLEDGE AND SECURITY AGREEMENT
(ESOP COLLATERAL), dated as of May 2, 1994 (as the same may be amended,
restated, supplemented or otherwise modified from time to time in accordance
with its terms, this "Agreement") made by CHARTER MEDICAL CORPORATION, a
Delaware corporation (the "Company"), to Bankers Trust Company, a New York
banking corporation, in its capacity as Collateral Agent (as hereinafter
defined) for the Secured Parties (as hereinafter defined). Certain capitalized
terms are defined in Article VIII hereof.
W I T N E S S E T H:
--------------------
WHEREAS, the parties hereto (or their predecessors) entered into the Pledge
and Security Agreement (ESOP Collateral) dated as of September l, 1988, as
amended, which was amended and restated by the Amended and Restated Company
Pledge and Security Agreement (ESOP Collateral) dated as of July 21, 1992 (the
"1992 Pledge and Security Agreement (ESOP Collateral)") in favor of the
Collateral Agent, the Lenders and the Issuing Banks (as defined in the 1992
Pledge and Security Agreement (ESOP Collateral)), and now desire to amend and
restate such agreement in its entirety; and
WHEREAS, the Company (as successor to WAF Acquisition Corporation, a
Delaware corporation), certain of the Lenders, Bankers Trust Company, as Agent,
Wells Fargo Bank, National Association and Bank of America National Trust and
Savings Association, as co-agents (the "Original Co-Agents") entered into that
certain Credit Agreement dated as of September l, 1988 which was amended and
restated by the Amended and Restated Credit Agreement dated as of July 21, 1992
(the "1992 Company Credit Agreement"), which is being amended and restated by
the Second Amended and Restated Credit Agreement dated as of the date hereof (as
the same may be further amended, restated, supplemented or otherwise modified
from time to time, the "Company Credit Agreement"), pursuant to which certain of
the Lenders made certain loans and commitments to the Company, the terms of
which are being amended and restated pursuant to the Company Credit Agreement;
and
WHEREAS, pursuant to the terms and conditions of the Company Credit
Agreement, the Lenders have made certain commitments to make additional loans
to, and participate in and/or issue letters of credit for the account of, the
Company; and
WHEREAS, certain Subsidiary Borrowers, certain of the Lenders, the
Agent and the Original Co-Agents entered into a Credit Agreement, dated as of
September 1, 1988 which was amended and restated by the Amended and Restated
Subsidiary Credit Agreement dated as of July 21, 1992 (the "1992 Subsidiary
Credit Agreement"; and, together with the 1992 Company Credit Agreement, the
"1992 Credit Agreements") party thereto which is being amended and restated by
the Second Amended and Restated Subsidiary Credit Agreement dated as of the date
hereof (as the same may be further amended, restated, supplemented or otherwise
modified from time to
<PAGE>
time, the "Subsidiary Credit Agreement"; and, together with the Company Credit
Agreement, each a "Credit Agreement" and collectively the "Credit Agreements"),
pursuant to which certain of the Lenders made certain loans and commitments to,
and participated in certain letters of credit for the benefit of, the Subsidiary
Borrowers, the terms of which are being amended and restated pursuant to the
Subsidiary Credit Agreement; and
WHEREAS, pursuant to the terms and conditions of the Subsidiary Credit
Agreement, the Lenders have made certain commitments to make additional loans
to, and participate in and/or issue letters of credit for the account of, the
Subsidiary Borrowers; and
WHEREAS, the Company has executed and delivered a Guaranty dated as of
September 1, 1988 which was amended and restated by the Amended and Restated
Guaranty dated as of July 21, 1992 which is being amended and restated by the
Second Amended and Restated Guaranty dated as of the date hereof (as the same
may be further amended, restated, supplemented or otherwise modified from time
to time, the "Company Guaranty"), pursuant to which the Company has agreed to
guarantee all of the
2
<PAGE>
Obligations (as defined in the Subsidiary Credit Agreement) of each Subsidiary
Borrower under the Subsidiary Credit Agreement; and
WHEREAS, the Company and South Carolina National Bank, on behalf of
the Charter Medical Corporation Employee Stock Ownership Plan (the "ESOP") and
the related trust (the "Trust"), entered into the Company/ESOP Mirror Credit
Agreement dated as of September 1, 1988, as amended and restated on July 21,
1992 and as amended on the date hereof (as the same may be further amended,
supplemented or modified from time to time, the "Company/ESOP Mirror Credit
Agreement") pursuant to which the Company made a loan in the aggregate principal
amount of $275,000,000 (the "ESOP Mirror Loan") to the ESOP, which loan is
evidenced by the Company/ESOP Mirror Note; and
WHEREAS, the Company and South Carolina National Bank, on behalf of
the ESOP and the Trust, entered into the Company/ESOP Non-Mirror Tranche B
Credit Agreement dated as of September 1, 1988, as amended and restated on July
21, 1992 and as amended on the date hereof (as the same may be further amended,
supplemented or modified from time to time, the "Company/ESOP Non-Mirror Credit
Agreement"; and together with the Company/ESOP Mirror Credit Agreement, the
"Company/ESOP Credit Agreements") pursuant to which the Company made a loan in
the aggregate principal amount of $80,000,000 (the "ESOP Non-Mirror Loan; and
together with the ESOP Mirror Loan, the "Company/ESOP Loans") to the ESOP, which
loan is evidenced by the Company/ESOP Non-Mirror Note; and
WHEREAS, the Trust used the proceeds of the Company/ESOP Loans to
finance the purchase of common stock of the Company (collectively, the "Pledged
Shares"); and
WHEREAS, pursuant to pledge agreements, each dated as of September l,
1988 (and all amendments and restatements thereof) between the Trust and the
Company (the "Company/ESOP Pledge Agreements"), the Trust pledged to the Company
the Pledged Shares as collateral for its obligations in respect of the
Company/ESOP Loans, the Company/ESOP Credit Agreements and the Company/ESOP
Notes; and
3
<PAGE>
WHEREAS, it was a condition precedent to the incurrence of loans and
the participation in letters of credit under the 1992 Credit Agreements that the
Company execute and deliver to the Collateral Agent the 1992 Pledge and Security
Agreement (ESOP Collateral) and it is a condition precedent to the incurrence of
loans and the issuance of letters of credit under the Credit Agreements that the
Company execute and deliver to the Collateral Agent this Agreement; and
WHEREAS, (a) the Senior Secured Notes (as defined in the 1992
Company Pledge and Security Agreement (ESOP Collateral)) have been irrevocably
paid in full; (b) each Issuing Bank has agreed, among other things, that the
Reimbursement Agreements (as defined in the 1992 Pledge and Security Agreement
(ESOP Collateral)) to which it is a party (other than the Credit Documents to
the extent the same could be considered Reimbursement Agreements) shall no
longer be entitled to the security interests and other benefits of this Agree-
ment; and (c) the Intercreditor Agreement (as defined in the 1992 Pledge and
Security Agreement (ESOP Collateral)) has been terminated, except for the
appointment by the Lenders of Bankers Trust Company as Collateral Agent, which
appointment has been ratified and confirmed in the Credit Agreements;
NOW, THEREFORE, in consideration of the benefits accruing to the
Company the receipt and sufficiency of which are hereby acknowledged, the
Company hereby makes the following representations and warranties to the
Collateral Agent and hereby covenants and agrees with the Collateral Agent as
follows:
ARTICLE I
SECURITY INTERESTS
1.1 SECURITY FOR OBLIGATIONS ETC. This Agreement is for the benefit
of the Secured Parties to secure the payment in full when due, whether at stated
maturity, by acceleration or otherwise, of all Obligations.
4
<PAGE>
1.2 ASSIGNMENT AND PLEAGE.
(a) ASSIGNMENT. The Company hereby assigns to the Collateral
Agent for the benefit of the Secured Parties, and hereby grants to the
Collateral Agent for the benefit of the Secured Parties a security interest in,
all of the Company's right, title and interest in, to and under the following
(the "Assigned Collateral"): (i) the Company/ESOP Credit Agreements, the
Company/ESOP Pledge Agreements, any other security agreement and other contracts
securing the Company/ESOP Notes or Company/ESOP Loans or entered into in
connection there with and all rights now or hereafter existing in, to and under
all such Company/ESOP Credit Agreements, Company/ESOP Pledge Agreements, other
security agreements and other such contracts as the same may be amended,
restated, supplemented or otherwise modified from time to time (as so amended,
restated, supplemented or modified, the "Assigned Agreements") and (ii) all
Proceeds of any and all of the foregoing.
(b) PLEDGE. The Company hereby pledges and deposits with the
Collateral Agent the Company/ESOP Notes and delivers to the Collateral Agent the
Company/ESOP Notes accompanied by assignment forms duly executed in blank by the
Company, and hereby assigns, transfers, hypothecates and sets over to the
Collateral Agent, and grants to the Collateral Agent a security interest in, all
of the Company's right, title and interest in, to and under the following,
whether now owned or hereafter acquired by the Company, all for its benefit and
the benefit of the Secured Parties (the "Pledged Collateral") (the Assigned
Collateral and the Pledged Collateral being referred to collectively herein as
the "Collateral"):
(i) the Company/ESOP Notes and, subject to the provisions
of Section 3.2, all interest, cash, instruments and other property from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all of the Company/ESOP Notes; and
(i) all Proceeds of the foregoing items described in clause
(i).
(C) COLLATERAL. The security interest of the Collateral Agent under
this Agreement extends to all
5
<PAGE>
Collateral now existing or hereafter acquired, of the kind which is the subject
of this Agreement which the Company may acquire at any time during the
continuation of this Agreement.
1.3 POWER OF ATTORNEY. The Company hereby constitutes and appoints
the Collateral Agent its true and lawful attorney, irrevocably, with full power
(in the name of the Company or otherwise), upon the occurrence and during the
continuance of an Event of Default, to act, require, demand, receive, compound
and give acquittance for any and all monies and claims for monies due or to
become due to the Company under or arising out of the Collateral, to endorse any
checks or other instruments or orders in connection therewith and to file any
claims or take any action or institute any proceedings, consistent with the
Collateral Agent's rights under this Agreement, which the Collateral Agent may
deem to be necessary or advisable in the premises, which appointment as attorney
is coupled with an interest and is irrevocable.
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
The Company represents, warrants and covenants, which
representations, warranties and covenants shall survive execution and delivery
of this Agreement, as follows:
2.1 NECESSARY FILINGS. All filings, registrations and recordings
necessary or appropriate to create, preserve, protect and perfect the security
interest granted by the Company to the Collateral Agent hereby in respect of the
Collateral have been accomplished and, except as otherwise provided under ERISA,
the security interest granted to the Collateral Agent pursuant to this Agreement
in and to the Collateral constitutes a perfected security interest therein
superior and prior to the rights of all other Persons (except for Liens
permitted under the Company Credit Agreement that are prior to the security
interests granted hereunder pursuant to applicable law) therein (as provided in
the Uniform Commercial Code) and is entitled to all the rights, priorities and
benefits afforded by the Uniform Commercial Code as
6
<PAGE>
enacted in any relevant jurisdiction to perfected security interests.
2.2 NO LIENS. The Company is, and as to Collateral acquired by it
from time to time after the date hereof, the Company will be, the owner of all
Collateral as to which the Company has and will maintain a first priority
security interest granted by the ESOP as the owner of the Pledged Collateral
(except for Liens permitted under the Company Credit Agreement that are prior to
the security interests granted hereunder pursuant to applicable law). The
Collateral is, and as to Collateral acquired by it from time to time after the
date hereof will be, except as provided in the Credit Agreements, free from any
Lien, security interest, encumbrance or other right, title or interest of any
Person (other than as created under the Security Documents) and the Company
shall defend the Collateral against all claims and demands of all Persons at any
time claiming the same or any interest therein adverse to the Collateral Agent
or any other Secured Party (except for Liens permitted under the Company Credit
Agreement that are prior to the security interests granted hereunder pursuant to
applicable law).
2.3 OTHER FINANCING STATEMENTS. Except as permitted by the Company
Credit Agreement, there is no financing statement (or similar statement or
instrument of registration under the law of any jurisdiction) covering any
interest of any kind in the Collateral and so long as any of the Obligations
remain unpaid, the Company will not execute or authorize to be filed in any
public office any financing statement (or similar statement or instrument of
registration under the law of any jurisdiction) or statements relating to the
Collateral, except financing statements filed or to be filed in respect of and
covering the security interests granted to the Company and pledged hereunder or
granted to the Collateral Agent by the Company hereunder.
2.4 CHIEF EXECUTIVE OFFICE; CORPORATE NAME; RECORDS. The chief
executive office of the Company is located at 577 Mulberry Street, Macon,
Georgia 31298. The Company will not move its chief executive office except to
such new location the Company may establish in accordance with the last sentence
of this Section 2.4. The Company will not change its corporate name nor carry
on business under any name other than its corporate name
7
<PAGE>
except after having complied with the requirements of the last sentence of this
Section 2.4. The Company shall not establish a new location for its chief
executive office or change its corporate name or the name under which it
presently conducts its business until (i) it shall promptly give to the
Collateral Agent written notice clearly describing such new location or
specifying such new corporate name, as the case may be, and providing such other
information in connection therewith as the Collateral Agent may reasonably
request, and (ii) with respect to such new location or such new corporate name,
as the case may be, it shall have taken all action, satisfactory to the
Collateral Agent, to maintain the security interest of the Collateral Agent in
the Collateral intended to be granted hereby at all times fully perfected and in
full force and effect.
2.5 COLLATERAL. (a) The Company/ESOP Notes are described on Schedule
I attached hereto and have been duly authorized, authenticated or issued and
delivered, and are the legal, valid and binding obligations of the Trust and are
not in default.
(b) Each of the Assigned Agreements has been duly authorized,
executed and delivered by each Credit Party party thereto, has not been amended,
restated, supplemented or otherwise modified and is in full force and effect and
is binding upon and enforceable against each Credit Party thereto in accordance
with its terms. There exists no default under any of the Assigned Agreements by
any of the parties thereto. The Company has delivered original copies of the
Assigned Agreements to the Collateral Agent pursuant hereto.
ARTICLE III
SPECIAL PROVISIONS
CONCERNING PLEDGED COLLATERAL
3.1 MODIFICATIONS, ETC. Except as permitted by the Company Credit
Agreement, the Company will not, at any time, amend, restate, supplement or
otherwise modify any provision of the Company/ESOP Notes or Company/ESOP Credit
Agreements. The Company will not take any action which would release or render
unenforceable any of the
8
<PAGE>
obligations under the Company/ESOP Notes or Company/ESOP Credit Agreements other
than for payment thereof.
3.2 DISTRIBUTIONS. So long as no Event of Default shall have
occurred and be continuing, all principal and interest payable in respect of the
Pledged Collateral shall be paid to the Company. The Collateral Agent shall
also be entitled to receive directly, and to retain as part of the Collateral:
(a) all other or additional debt instruments and, after the
occurrence and during the continuance of an Event of Default, property
(including cash) paid or distributed in respect of the Pledged Collateral; and
(a) all other or additional debt instruments and, after the
occurrence and during the continuance of an Event of Default, property
(including cash) which may be paid in respect of the Pledged Collateral by
reason of any disposition of Collateral.
ARTICLE IV
SPECIAL PROVISIONS
CONCERNING ASSIGNED AGREEMENTS
4.1 ASSIGNMENT OF RIGHTS. The Company hereby assigns, transfers,
delivers, pledges and sets over to the Collateral Agent, and grants to the
Collateral Agent a security interest in, all of its right, title and interest in
and to each and all of the Assigned Agreements, including but not limited to:
(a) all payments due and to become due under any Assigned
Agreement, whether as contractual obligations, damages or otherwise;
(b) all of its claims, rights, powers, or privileges and
remedies under any Assigned Agreement; and
(c) all of its rights under any Assigned Agreement to make
determinations, to exercise any election (including, but not limited to,
election of remedies) or option or to give or receive any notice, consent,
waiver or approval together with full power and
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authority with respect to any Assigned Agreement to demand, receive, enforce,
collect or receipt for any of the foregoing rights or any property the subject
of any of the Assigned Agreements, to enforce or execute any checks, or other
instruments or orders, to file any claims and to take any action which (in the
opinion of the Collateral Agent) may be necessary or advisable in connection
with any of the foregoing (the Assigned Agreements, together with all of the
foregoing in this Section 4.1, the "Assigned Agreement Rights"); PROVIDED,
HOWEVER, that so long as no Event of Default has occurred and is continuing, the
Company may exclusively exercise all of the Company's rights, powers, privileges
and remedies under the Assigned Agreements, provided that without the prior
written consent of the Collateral Agent, the Company will not enter into any
amendment, modification, waiver or termination of any provision of the Assigned
Agreements other than those which do not have a material adverse effect on the
value of such Assigned Agreement; PROVIDED, HOWEVER, that the Company will give
the Collateral Agent written notice of any such amendment, modification, waiver
or termination not requiring the prior written consent of the Collateral Agent
hereunder.
The Company hereby grants the Collateral Agent full power and
authority to take all actions as the Collateral Agent deems necessary or
advisable to forever defend the title to the Assigned Agreement Rights against
the claims and demands of any Person in the event the Company fails to do so.
Furthermore, the Company hereby covenants and agrees to execute and deliver to
the Collateral Agent such other and further instruments of transfer, assignment
and conveyance, and all such other documents and instruments as may be
reasonably requested by the Collateral Agent more fully to transfer, assign and
convey to and vest in the Agent the Assigned Agreement Rights hereby
transferred, assigned and conveyed or intended to be so.
4.2 PERFORMANCE OF ASSIGNED AGREEMENTS. The Company will at its
expense (i) perform and observe all the terms and provisions of the Assigned
Agreements to be performed or observed by it, maintain the Assigned Agreements
in full force and effect, enforce each of the Assigned Agreements in accordance
with its terms, and take all such reasonable action to such end as may be from
time to time requested by the Collateral Agent; and
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(ii) furnish to the Collateral Agent promptly upon receipt thereof copies of all
material notices, requests and other documents received by the Company under or
pursuant to the Assigned Agreements, and from time to time (A) furnish to the
Collateral Agent such information and reports regarding the Assigned Collateral
as the Collateral Agent may reasonably request and (B) upon request of the
Collateral Agent make to any party thereto such demands and requests for
information and reports or for action as the Company is entitled to make under
the Assigned Agreements.
ARTICLE V
FURTHER ASSURANCES
The Company will not do anything to materially impair the rights of
the Collateral Agent in the Collateral. The Company will, at its own expense,
make, execute, endorse, acknowledge, file and/or deliver to the Collateral Agent
from time to time such lists, descriptions and designations of its Collateral,
financing statements, transfer endorsements, powers of attorney, certificates,
reports and other assurances or instruments and take such further steps relating
to the Collateral and other property or rights covered by the security interest
hereby granted, which the Collateral Agent deems reasonably appropriate or
advisable to perfect, preserve or protect its security interest in the
Collateral. The Company agrees to sign and deliver to the Collateral Agent such
financing statements, in form acceptable to the Collateral Agent, as the
Collateral Agent may from time to time reasonably request or as are necessary or
desirable in the opinion of the Collateral Agent to establish and maintain a
valid and enforceable security interest in the Collateral superior to and prior
to the rights of all other Persons therein (as provided in the Uniform
Commercial Code) and the other rights and security contemplated hereby in
accordance with the Uniform Commercial Code as enacted in any and all relevant
jurisdictions. The Company will pay any applicable filing fees and related
expenses. To the extent permitted by applicable law, the Company authorizes the
Collateral Agent to file any such financing statements without the signature of
the Company and to sign such financing statement on behalf of, and in the name
of, the Company.
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ARTICLE VI
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT
6.1 REMEDIES; OBTAINING THE COLLATERAL UPON DEFAULT. The Company
agrees that, if any Event of Default shall have occurred and be continuing, then
and in every such case, the Collateral Agent shall be entitled to exercise all
rights and remedies of a secured party under the Uniform Commercial Code as in
effect in any relevant jurisdiction to enforce the assignments and security
interests contained herein, and, to the extent permitted by law, the Collateral
Agent may:
(a) exercise any and all rights, powers and remedies of the
Company under or in connection with the Pledged Collateral or the Assigned
Agreements or otherwise in respect of the Assigned Collateral, including,
without limitation, any and all rights of the Company to demand, otherwise
require or receive payment of any amount under, or performance of any provision
of, the Assigned Agreements;
(b) receive all payments under, in connection with or otherwise
in respect of the Collateral which are otherwise payable to the Company; all
payments received by the Company under or in connection with or otherwise in
respect of the Collateral shall be received in trust for the benefit of the
Collateral Agent, shall be segregated from other funds of the Company and shall
be forthwith paid over to the Collateral Agent in the same form as so received
(with any necessary endorsement);
(c) exercise, with respect to the Pledged Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all the rights and remedies of a secured party on default under the
Uniform Commercial Code in effect in any relevant jurisdiction at that time, and
the Collateral Agent may also in its sole discretion, without notice except as
specified below at any time or from time to time, sell, assign and deliver, or
grant options to purchase, all or any part of the Collateral in one or more
parcels, or any interest therein, at any public or private sale at any exchange,
broker's board or at any of the Collateral
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Agent's offices or elsewhere, without demand of performance, advertisement or
notice of intention to sell or of the time or place of sale or adjournment
thereof or to redeem or otherwise (all of which are hereby expressly and
irrevocably waived by the Company), for cash, on credit or for other property,
for immediate or future delivery without any assumption of credit risk, and for
such price or prices and on such terms as the Collateral Agent in its absolute
discretion may determine. The Collateral Agent agrees that to the extent that
notice of sale shall be required by law that at least 10 days' notice to the
Company of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. The
Collateral Agent shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Collateral Agent may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and any such sale may, without further notice, be made at
the time and place to which it was so adjourned. The Company hereby waives and
releases to the fullest extent permitted by law any right or equity of
redemption with respect to the Collateral, whether before or after sale
hereunder, and all rights, if any, of marshalling the Collateral and any other
security for the Obligations or otherwise. At any such sale, unless prohibited
by applicable law, the Collateral Agent or any Secured Party, may bid for and
purchase all or any part of the Collateral so sold free from any such right or
equity of redemption. Neither the Collateral Agent nor any Secured Party shall
be liable for failure to collect or realize upon any or all of the Collateral or
for any delay in so doing nor shall any of them be under any obligation to take
any action whatsoever with regard thereto;
(d) transfer all or any part of the Collateral into the
Collateral Agent's name or the name of its nominee or nominees;
(e) settle, adjust, compromise and arrange all accounts,
controversies, questions, claims and demands whatsoever in relation to all or
any part of the Collateral;
(f) in respect of the Collateral, execute all such contracts,
agreements, deeds, documents and
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instruments; to bring, defend and abandon all such actions, suits and
proceedings; and to take all actions in relation to all or any part of the
Collateral as the Collateral Agent in its absolute discretion may determine;
(g) appoint managers, sub-agents, officers and servants for any
of the purposes mentioned in the foregoing provisions of this Section 6.1 and to
dismiss the same, all as the Collateral Agent in its absolute discretion may
determine; and
(h) generally take all such other action as the Collateral Agent
in its absolute discretion may determine as incidental or conducive to any of
the matters or powers mentioned in the foregoing provisions of this Section 6.1
and which the Collateral Agent may or can do lawfully and to use the name of the
Company for the purposes aforesaid and in any proceedings arising therefrom.
6.2 DISPOSITION OF THE COLLATERAL. The Company recognizes that, by
reason of certain prohibitions contained in the Securities Act of 1933, as
amended (the "Securities Act"), and applicable state securities laws, the
Collateral Agent may be compelled, with respect to any sale of all or any part
of the Collateral pursuant to Section 6.1(c), to limit purchasers to those who
will agree, among other things, to acquire the Collateral for their own account,
for investment and not with a view to the distribution or resale thereof. The
Company acknowledges that any such private sales may be at prices and on terms
less favorable to the Collateral Agent than those obtainable through a public
sale without such restrictions (including, without limitation, a public offering
made pursuant to a registration statement under the Securities Act), and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner and that the
Collateral Agent shall have no obligation to engage in public sales and no
obligation to delay the sale of any Collateral for the period of time necessary
to permit the issuer thereof to register it for a form of public sale requiring
registration under the Securities Act or under applicable state securities laws,
even if the Company would agree to do so.
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6.3 WAIVER OF CLAIMS. EXCEPT AS OTHERWISE PROVIDED IN THIS
AGREEMENT, THE COMPANY HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
NOTICE OR JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENT'S TAKING
POSSESSION OR THE COLLATERAL AGENT'S DISPOSITION OF ANY OF THE COLLATERAL,
INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY
PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH THE COMPANY WOULD
OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES OR OF
ANY STATE, and the Company hereby further waives to the extent permitted by
applicable law:
(a) all damages occasioned by such taking of possession except
any damages which are the direct result of the Collateral Agent's gross
negligence or willful misconduct;
(b) all other requirements as to the time, place and terms of
sale or other requirements with respect to the enforcement of the Collateral
Agent's rights hereunder; and
(c) all rights of redemption, appraisal, valuation, stay,
extension or moratorium now or hereafter in force under any applicable law in
order to prevent or delay the enforcement of this Agreement or the absolute sale
of the Collateral or any portion thereof, and the Company, for itself and all
who may claim under it, insofar as it or they may now or hereafter lawfully do
so, hereby waives the benefit of such laws.
Any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of the Company therein and thereto, and
shall be a perpetual bar both at law and in equity against the Company and
against any and all Persons claiming or attempting to claim the Collateral so
sold, optioned or realized upon, or any part thereof, from, through and under
the Company.
6.4 APPLICATION OF PROCEEDS; COMPANY LIABLE FOR DEFICIENCY. All
moneys collected by the Collateral Agent upon any sale or other disposition of
the Collateral, together with all other moneys received by the Collateral Agent
hereunder shall be applied as follows:
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(a) first, to the payment of any and all expenses and fees
(including reasonable attorney's fees) incurred by the Collateral Agent in
obtaining, taking possession of, removing, storing and disposing of Collateral
and any and all amounts incurred by the Collateral Agent in connection therewith
or owing to the Collateral Agent hereunder.
(b) next, any surplus then remaining, to the payment of the
other Obligations; and
(c) if the Total Commitment is then terminated, all Loans (under
and as defined in each Credit Agreement) have been paid in full, no Letters of
Credit or Subsidiary Letters of Credit are outstanding and no other Obligation
is outstanding, any surplus then remaining shall be paid to the Company,
subject, however, to the rights of the holder of any then existing Lien of which
the Collateral Agent has actual notice (without investigation);
it being understood that the Company shall remain liable to the extent of any
deficiency between the amount of the proceeds of the Collateral and the
aggregate amount of the sums referred to in clause (a) and (b) of this Section
6.4.
6.5 REMEDIES CUMULATIVE. Each and every right, power and remedy
hereby specifically given to the Collateral Agent shall be in addition to every
other right, power and remedy specifically given under this Agreement or under
any other Credit Document or now or hereafter existing at law or in equity, or
by statute and each and every right, power and remedy whether specifically
herein given or otherwise existing may be exercised from time to time or
simultaneously and as often and in such order as may be deemed expedient by the
Collateral Agent. All such rights, powers and remedies shall be cumulative and
the exercise or the beginning of exercise of one shall not be deemed a waiver of
the right to exercise of any other or others. No delay or omission of the
Collateral Agent in the exercise of any such right, power or remedy and no
renewal or extension of any of the Obligations shall impair any such right,
power or remedy or shall be construed to be a waiver of any Default or Event of
Default or an acquiescence therein.
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6.6 DISCONTINUANCE OF PROCEEDINGS. In case the Collateral Agent
shall have instituted any proceeding to enforce any right, power or remedy under
this Agreement by foreclosure, sale, entry or otherwise, and such proceeding
shall have been discontinued or abandoned for any reason or shall have been
determined adversely to the Collateral Agent, then and in every such case the
Company and the Collateral Agent shall be restored to their former positions and
rights hereunder with respect to the Collateral subject to the security interest
created under this Agreement, and all rights, remedies and powers of the
Collateral Agent shall continue as if no such proceeding had been instituted.
ARTICLE VII
INDEMNITY
Without duplication of any amounts payable under Section 12.1 of each
Credit Agreement, and any similar indemnity provision contained in any other
Credit Document, the Company shall: (i) whether or not the transactions hereby
contemplated are consummated, pay all reasonable out-of-pocket costs and
expenses of the Collateral Agent actually incurred in connection with the
administration (both before and after the execution hereof and including advice
of counsel as to the rights and duties of the Collateral Agent with respect
thereto) of and in connection with the preparation, execution and delivery of
this Agreement (including, without limitation, the reasonable fees and
disbursements of Skadden, Arps, Slate, Meagher & Flom) and of the Collateral
Agent actually incurred in connection with the preservation of rights under, and
enforcement of, and, after an Event of Default, the renegotiation or
restructuring of this Agreement and any amendment, waiver or consent relating
thereto (including, without limitation, the reasonable fees and disbursements of
counsel for the Collateral Agent); (ii) pay and hold the Collateral Agent
harmless from and against any and all present and future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to this Agreement and save the
Collateral Agent harmless from and against any and all liabilities with respect
to or resulting from
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any delay or omission to pay any such taxes, charges or levies; and (iii)
indemnify the Collateral Agent, its officers, directors, employees,
representatives and agents from and hold each of them harmless against any and
all costs, losses, liabilities, claims, damages or expenses actually incurred by
any of them (whether or not any of them is designated a party thereto) arising
out of or by reason of any investigation, litigation or other proceeding related
to this Agreement or any transaction contemplated hereby, including, without
limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation, litigation or other proceeding.
Notwithstanding anything in this Agreement to the contrary, the Company shall
not be responsible to the Collateral Agent or any officer, director, employee,
representative or agent of the foregoing (an "Indemnified Party") for any
losses, damages, liabilities or expenses which result from such Indemnified
Party's gross negligence or willful misconduct. It is understood that the
Company shall not, in connection with any single action, suit, proceeding or
claim or separate but substantially similar or related actions, suits,
proceedings or claims, arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys at the same time for the Indemnified Parties (which firm shall
be designated by the Collateral Agent) except that, if any Indemnified Party
other than the Collateral Agent shall determine, in its sole discretion, that
there may be a conflict in such firm representing the Collateral Agent and such
Indemnified Party, then the Company shall be liable for the reasonable fees and
expenses (actually incurred) of an additional firm for such Indemnified Party
whose interests may be in conflict. The Company's obligations under this
Article VII shall survive any termination of this Agreement.
ARTICLE VIII
DEFINITIONS
8.1 DEFINITIONS. The following terms shall have the meanings herein
specified unless the context otherwise requires. Such definitions shall be
equally applicable to the singular and plural forms of the terms defined.
Except as otherwise defined herein, including
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in the recital paragraphs, capitalized terms used herein and defined in the
Company Credit Agreement shall be used herein as so defined.
"Agreement" shall have the meaning specified in the first paragraph
hereof.
"Assigned Agreements" shall have the meaning specified in Section
1.2(a).
"Assigned Collateral" shall have the meaning specified in Section
1.2(a).
"Collateral" shall have the meaning specified in Section 1.2(b).
"Collateral Agent" shall mean Bankers Trust Company, a New York
banking corporation, in its capacity as collateral agent for the Secured Parties
or any of its successors in such capacity.
"Company Credit Agreement" shall have the meaning specified in the
second "Whereas" clause of this Agreement.
"Company/ESOP Credit Agreements" shall have the meaning specified in
the eighth "Whereas" clause of this Agreement.
"Company/ESOP Loans" shall have the meaning specified in the eighth
"Whereas" clause of this Agreement.
"Company/ESOP Mirror Credit Agreement" shall have the meaning
specified in the seventh "Whereas" clause of this Agreement.
"Company/ESOP Mirror Note" shall mean a promissory note by the ESOP,
originally dated September 1, 1988, as amended by a First Amendment thereto,
dated July 21, 1992, and as amended on the date hereof, evidencing the ESOP
Mirror Loan as it may be amended from time to time to conform to the
requirements of changes in ERISA, the Code or the rules and regulations
promulgated under either thereof, or as amended in accordance with the
Company/ESOP Mirror Credit Agreement.
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"Company/ESOP Non-Mirror Credit Agreement" shall have the meaning
specified in the eighth "Whereas" clause of this Agreement.
"Company/ESOP Non-Mirror Note" shall mean a promissory note by the
ESOP, originally dated February 15, 1990, as amended by a First Amendment
thereto, dated July 21, 1992, as restated by a Second Amended and Restated Non-
Recourse Company/ESOP Non-Mirror Tranche B Note dated as of September 22, 1992,
and as amended on the date hereof, evidencing the ESOP Non-Mirror Loan as it may
be amended from time to time to conform to the requirements of changes in ERISA,
the Code or the rules and regulations promulgated under either thereof, or as
amended in accordance with the Company/ESOP Non-Mirror Credit Agreement.
"Company/ESOP Notes" shall mean the Company/ESOP Mirror Note and the
Company/ESOP Non-Mirror Note.
"Company/ESOP Pledge Agreements" shall have the meaning specified in
the tenth "Whereas" clause of this Agreement.
"Company Guaranty" shall have the meaning specified in the sixth
"Whereas" clause of this Agreement.
"Credit Agreements" shall have the meaning specified in the fourth
"Whereas" clause of this Agreement.
"ESOP" shall have the meaning specified in the fifth "Whereas" clause
of this Agreement.
"Event of Default" shall mean and include any "Event of Default" under
either Credit Agreement.
"Indemnified Party" shall have the meaning specified in Article VII.
"Lenders" shall mean, collectively, the financial institutions from
time to time parties to either or both of the Credit Agreements.
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"1992 Company Credit Agreement" shall have the meaning specified in
the second "Whereas" clause of this Agreement.
"1992 Credit Agreements" shall have the meaning specified in the
fourth "Whereas" clause of this Agreement.
"1992 Pledge and Security Agreement (ESOP Collateral)" shall have the
meaning specified in the first "Whereas" clause of this Agreement.
"1992 Subsidiary Credit Agreement" shall have the meaning specified in
the fourth "Whereas" clause of this Agreement.
"Obligations" shall mean (a) all indebtedness, obligations, and
liabilities (including without limitation, guarantees, reimbursement obligations
in respect of Letters of Credit and other contingent liabilities) of the Company
to any Secured Party arising under or in connection with the Credit Agreements,
the Company Guaranty, this Agreement, or any other Credit Document, as the same
may be amended, restated, supplemented or otherwise modified from time to time;
(b) any and all sums advanced by the Collateral Agent in order to preserve the
Collateral or preserve its security interest in the Collateral; and (c) in the
event of any proceeding for the collection or enforcement of any indebtedness,
obligations, or liabilities of the Company referred to in clause (a), after an
Event of Default shall have occurred and be continuing, the reasonable expenses
of the Collateral Agent and the other Secured Creditors retaking, holding,
preparing for sale, selling or otherwise disposing or realizing on the
Collateral, or of any exercise by the Collateral Agent of its rights hereunder,
together with reasonable attorneys' fees of the Collateral Agent and the other
Secured Creditors actually incurred and court costs.
"Original Co-Agents" shall have the meaning specified in the second
"Whereas" clause of this Agreement.
"Pledged Collateral" shall have the meaning specified in Section
1.2(b) of this Agreement.
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"Proceeds" shall mean "Proceeds" as such term is defined in the
Uniform Commercial Code as in effect in the State of New York.
"Secured Parties" shall mean the Lenders, the Agent, the Co-Agent, and
the Collateral Agent and their respective successors and assigns.
"Subsidiary Credit Agreement" shall have the meaning specified in the
fourth "Whereas" clause of this Agreement.
"Total Commitment" shall mean the Total Revolving Loan Commitment.
"Trust" shall have the meaning specified in the seventh "Whereas"
clause of this Agreement.
ARTICLE IX
MISCELLANEOUS
9.1 NOTICES. All notices and other communications hereunder shall be
given to the Company, the Collateral Agent and the Trustee at the addresses and
in the manner specified in the Company Credit Agreement.
9.2 WAIVER; AMENDMENT. No delay on the part of the Collateral Agent
in exercising any of its rights, remedies, powers and privileges hereunder or
partial or single exercise thereof, shall constitute a waiver thereof. None of
the terms and conditions of this Agreement may be changed, waived, modified or
varied in any manner whatsoever unless executed in accordance with the
provisions of the Credit Agreements. No notice to or demand on the Company in
any case shall entitle it to any other or further notice or demand in similar or
other circumstances or constitute a waiver of any of the rights of the
Collateral Agent to any other or further action in any circumstances without
notice or demand.
9.3 OBLIGATIONS ABSOLUTE. The obligations of the Company under this
Agreement shall be absolute and unconditional in accordance with its terms and
shall remain in full force and effect without regard to, and shall not be
released, suspended, discharged, terminated
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or otherwise affected by, any circumstance or occurrence whatsoever, including,
without limitation: (a) any change in the time, place or manner of payment of,
or in any other term of, all or any of the Obligations, any waiver, indulgence,
renewal, extension, amendment or modification of or addition, consent or
supplement to or deletion from or any other action or inaction under or in
respect of either Credit Agreement, any Note, any other Credit Document or any
of the other documents, instruments or agreements relating to the Obligations or
any other instrument or agreement referred to therein or any assignment or
transfer of any thereof; (b) any lack of validity or enforceability of either
Credit Agreement, any other Credit Document or any other documents, instruments
or agreements referred to therein or any assignment or transfer of any thereof;
(c) any furnishing of any additional security to the Collateral Agent, the
Secured Parties or their assignees or any acceptance thereof or any release of
any security by the Collateral Agent, the Secured Parties or their assignees;
(d) any limitation on any party's liability or obligations under any such
instrument or agreement or any term thereof; (e) any bankruptcy, insolvency,
reorganization, composition, adjustment, dissolution, liquidation or other like
proceeding relating to the Company or any Subsidiary of the Company, or any
action taken with respect to this Agreement by any trustee or receiver, or by
any court, in any such proceeding, whether or not the Company shall have notice
or knowledge of any of the foregoing; (f) any exchange, release or nonperfection
of any other collateral, or any release, or amendment or waiver of or consent to
departure from any guaranty or security, for all or any of the Obligations; or
(g) any other circumstance which might otherwise constitute a defense available
to, or a discharge of the Company.
9.4 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Company and its successors and assigns and shall inure to the benefit of each
Secured Party and its permitted successors and assigns, provided that the
Company may not transfer or assign any or all of its rights or obligations
hereunder without the written consent of the Collateral Agent.
9.5 HEADINGS DESCRIPTIVE. The headings of the several sections of
this Agreement are inserted for convenience only and shall not in any way affect
the
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meaning or construction of any provision of this Agreement.
9.6 SEVERABILITY. To the extent permitted by applicable law, any
provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
9.7 GOVERNING LAW; APPOINTMENT OF AN AGENT FOR SERVICE OF PROCESS;
SUBMISSION TO JURISDICTION. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW
PRINCIPLES THEREOF). ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO MAY BE BROUGHT IN THE COURTS OF THE
STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT
OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE COMPANY
HEREBY CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE JURISDICTION
OF THE AFORESAID COURTS SOLELY FOR THE PURPOSE OF ADJUDICATING ITS RIGHTS OR THE
RIGHTS OF THE SECURED PARTIES WITH RESPECT TO THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO. THE COMPANY HEREBY IRREVOCABLY DESIGNATES CT CORPORATION
SYSTEM, LOCATED AT 1633 BROADWAY, NEW YORK, NEW YORK 10019 AS THE DESIGNEE,
APPOINTEE AND PROCESS AGENT OF THE COMPANY, TO RECEIVE, FOR AND ON BEHALF OF THE
COMPANY, SERVICE OF PROCESS IN SUCH JURISDICTION IN ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO AND
SUCH SERVICE SHALL, TO THE EXTENT PERMITTED BY APPLICABLE LAW, BE DEEMED
COMPLETED TEN DAYS AFTER DELIVERY THEREOF TO SAID PROCESS AGENT. IT IS
UNDERSTOOD THAT A COPY OF SUCH PROCESS SERVED ON SUCH PROCESS AGENT WILL BE
PROMPTLY FORWARDED BY MAIL TO THE COMPANY AT ITS ADDRESS SET FORTH IN THE
COMPANY CREDIT AGREEMENT, BUT THE FAILURE OF THE COMPANY TO RECEIVE SUCH COPY
SHALL NOT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, AFFECT IN ANY WAY THE
SERVICE OF SUCH PROCESS. THE COMPANY HEREBY IRREVOCABLY WAIVES, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM
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NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION
OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS IN RESPECT OF THIS AGREEMENT OR
ANY DOCUMENT RELATED THERETO. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE
COLLATERAL AGENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER
JURISDICTION.
9.8 THE COMPANY'S DUTIES. It is expressly agreed, anything herein
contained to the contrary notwithstanding, that the Company shall remain liable
to perform all of the obligations, if any, assumed by it with respect to the
Collateral and the Collateral Agent shall not have any obligations or
liabilities with respect to any Collateral by reason of or arising out of this
Agreement, nor shall the Collateral Agent be required or obligated in any manner
to perform or fulfill any of the obligations of the Company under or with
respect to any Collateral.
9.9 COLLATERAL AGENT. The appointment of the Collateral Agent as
Collateral Agent hereunder pursuant to the Intercreditor Agreement has been
ratified and confirmed by the Lenders in the Credit Agreements, and the
Collateral Agent shall be entitled to the benefits of the Credit Agreements.
The Collateral Agent shall be obligated, and shall have the right, hereunder to
make demands, to give notices, to exercise or refrain from exercising any
rights, and to take or refrain from taking action (including, without
limitation, the release or substitution of Collateral) solely in accordance with
this Agreement and the Credit Agreements. The Collateral Agent may resign and a
successor Collateral Agent may be appointed in the manner provided in the Credit
Agreements. Upon the acceptance of any appointment as a Collateral Agent by a
successor Collateral Agent, that successor Collateral Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Collateral Agent under this Agreement, and the retiring
Collateral Agent shall thereupon be discharged from its duties and obligations
under this Agreement. After any retiring Collateral Agent's resignation, the
provisions of this Agreement shall inure to its benefit as to any actions taken
or omitted to be taken by it under this Agreement while it was Collateral Agent.
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9.10 TERMINATION; RELEASE. Upon the earlier of (i) full payment and
performance of all of the Obligations (other than indemnities which by their
terms survive the repayment of the Loans and the Subsidiary Loans) and
irrevocable termination of the commitments of the Lenders under the Credit
Agreements, and (ii) the indefeasible payment in full of the Company/ESOP Notes,
this Agreement shall terminate. Upon the termination of this Agreement, the
Collateral Agent, at the request and expense of the Company, will promptly
execute and deliver to the Company the proper instruments (including Uniform
Commercial Code termination statements on form UCC-3) acknowledging the
termination of this Agreement and will duly assign, transfer and deliver to the
Company (without recourse and without any representation or warranty) such of
the Collateral as may be in the possession of the Collateral Agent and has not
theretofore been sold or otherwise applied or released pursuant to this
Agreement; PROVIDED, HOWEVER, that the Collateral Agent may release Collateral
from the lien and security interest of this Agreement in accordance with the
provisions of the Credit Agreements.
9.11 WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, THE COMPANY HEREBY IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR ANY MATTER ARISING IN CONNECTION HEREUNDER.
9.12 AMENDMENT AND RESTATEMENT. This Agreement constitutes an
amendment and restatement of the 1992 Pledge and Security Agreement (ESOP
Collateral) amended hereby (the "Original Instrument"), and such Original
Instrument shall continue in effect on and after the date hereof as so amended
and restated. The parties do not intend that this Agreement constitute a
novation, termination, release or satisfaction of the Original Instrument, or
constitute payment or satisfaction of any indebtedness or other obligation
secured by the Original Instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date first
above written.
CHARTER MEDICAL CORPORATION
By: __________________________
Name: James R. Bedenbaugh
Title: Treasurer
BANKERS TRUST COMPANY,
as Collateral Agent
By: ___________________________
Name: Mary Kay Oyle
Title: Vice President
<PAGE>
SCHEDULE I
----------
AMENDED AND RESTATED
COMPANY PLEDGE AND SECURITY AGREEMENT
Description of ESOP Notes
COMPANY/ESOP NOTES shall mean, collectively, the Company/ESOP Mirror Note and
the Company/ESOP Non-Mirror Note.
COMPANY/ESOP MIRROR NOTE shall mean the promissory note, dated September 1,
1988, as amended by a First Amendment thereto, dated July 21, 1992, and a second
Amendment dated the date hereof evidencing the Company/ESOP Mirror Loan, as it
may be amended from time to time to conform to the requirements of changes in
ERISA, the Code or the rules and regulations promulgated under either thereof,
or as amended in accordance with the Credit Agreement.
COMPANY/ESOP NON-MIRROR NOTE shall mean the promissory note, originally dated
February 15, 1990, as amended by a First Amendment dated July 21, 1992, as
restated by the Second Amended and Restated Non-Recourse Company/ESOP Non-Mirror
Tranche B Note dated September 22, 1992, and a Second Amendment dated the date
hereof evidencing the Company/ESOP Non-Mirror Loan, as it may be amended from
time to time to conform to the requirements of changes in ERISA, the Code or the
rules and regulations promulgated under either thereof, or as amended in
accordance with the Credit Agreement.
<PAGE>
SECOND AMENDED AND RESTATED
FINCO PLEDGE AND SECURITY AGREEMENT I
SECOND AMENDED AND RESTATED FINCO PLEDGE AND SECURITY AGREEMENT I,
dated as of May 2, 1994 (as the same may be amended, supplemented or modified
from time to time, this "Agreement") made by CMFC, Inc., a Nevada corporation
(the "Company"), to Bankers Trust Company, a New York banking corporation, in
its capacity as collateral agent (the "Collateral Agent", and as agent under the
Credit Agreements, as hereinafter defined, the "Agent") for the financial
institutions from time to time parties to the Credit Agreements (the "Lenders"),
First Union National Bank of North Carolina, as co-agent (the "Co-Agent"), and
the Agent. Capitalized terms, unless otherwise defined in the recitals hereto,
shall have the meanings assigned thereto in Article VIII hereof.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the parties hereto (or their predecessors) entered into the
FINCO Pledge and Security Agreement dated as of September 1, 1988 which was
amended and restated by the Amended and Restated FINCO Pledge and Security
Agreement dated as of July 21, 1992 (the "1992 FINCO Pledge and Security
Agreement") in favor of the Collateral Agent, the Lenders and the Issuing Banks
(as defined in the 1992 FINCO Pledge and Security Agreement), and now desire to
amend and restate such agreement in its entirety; and
WHEREAS, Charter Medical Corporation, a Delaware corporation (as
successor to WAF Acquisition Corporation, a Delaware corporation, "Charter"),
certain of the Lenders, the Agent, Wells Fargo Bank, National Association and
Bank of America National Trust and Savings Association, as co-agents (the
"Original Co-Agents") are parties to that certain Credit Agreement dated as of
September l, 1988 which was amended and restated by the
<PAGE>
Amended and Restated Credit Agreement dated as of July 21, 1992 (the "1992
Company Credit Agreement"), which is being amended and restated by the Second
Amended and Restated Credit Agreement dated as of the date hereof (as the same
may be further amended, restated, supplemented or otherwise modified from time
to time, the "Company Credit Agreement"), pursuant to which certain of the
Lenders made certain loans and commitments to Charter, the terms of which are
being amended and restated pursuant to the Company Credit Agreement; and
WHEREAS, pursuant to the terms and conditions of the Company Credit
Agreement, the Lenders have made certain commitments to make additional loans
to, and participate in and/or issue letters of credit for the account of,
Charter; and
WHEREAS, certain Subsidiary Borrowers, certain of the Lenders, the
Agent and the Original Co-Agent entered into a Credit Agreement, dated as of
September 1, 1988 which was amended and restated by the Amended and Restated
Subsidiary Credit Agreement dated as of July 21, 1992 (the "1992 Subsidiary
Credit Agreement"; and, together with the 1992 Company Credit Agreement, the
"1992 Credit Agreements"), which is being amended and restated by the Second
Amended and Restated Subsidiary Credit Agreement dated as of the date hereof (as
the same may be further amended, restated, supplemented or otherwise modified
from time to time, the "Subsidiary Credit Agreement"; and, together with the
Company Credit Agreement, each a "Credit Agreement" and collectively the "Credit
Agreements"), pursuant to which certain of the Lenders made certain loans and
commitments to, and participated in letters of credit for the benefit of,
certain Subsidiary Borrowers, the terms of which are being amended and restated
pursuant to the Subsidiary Credit Agreement; and
WHEREAS, pursuant to the terms and conditions of the Subsidiary Credit
Agreement, the Lenders have made certain commitments to make additional loans
to, and issue letters of credit for the account of, the Subsidiary Borrowers;
and
WHEREAS, the Company has executed and delivered a Subsidiary Guaranty
dated as of the date hereof (as the same may be amended, supplemented or
otherwise modified from time to time, the "Subsidiary Guaranty") pursuant to
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which the Company has agreed jointly and severally to guarantee all of the
obligations of Charter and each Subsidiary Borrower under the Credit Agreements
and the other Credit Documents; and
WHEREAS, the Lenders have agreed to amend and restate the 1992 Credit
Agreements upon terms and conditions acceptable to Charter and the Subsidiary
Borrowers; and
WHEREAS, it was a condition precedent to the incurrence of loans and
the participation in letters of credit under the 1992 Credit Agreements that the
Company execute and deliver to the Collateral Agent the 1992 FINCO Pledge and
Security Agreement and it is a condition precedent to the incurrence of loans
and the issuance of letters of credit under the Credit Agreements that the
Company execute and deliver to the Collateral Agent this Agreement; and
WHEREAS, (a) the Senior Secured Notes (as defined in the 1992 FINCO
Pledge and Security Agreement) have been irrevocably paid in full; (b) each
Issuing Bank has agreed, among other things, that the Reimbursement Agreements
(as defined in the 1992 FINCO Pledge and Security Agreement) to which it is a
party (other than the Credit Documents to the extent the same could be consid-
ered Reimbursement Agreements) shall no longer be entitled to the security
interests and other benefits of this Agreement; and (c) the Intercreditor
Agreement (as defined in the 1992 FINCO Pledge and Security Agreement) has been
terminated, except for the appointment by the Lenders of Bankers Trust Company
as Collateral Agent, which appointment has been ratified and confirmed in the
Credit Agreements;
NOW, THEREFORE, in consideration of the benefits accruing to the
Company, the receipt and sufficiency of which are hereby acknowledged, the
Company hereby makes the following representations and warranties to the
Collateral Agent and hereby covenants and agrees with the Collateral Agent as
follows:
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ARTICLE I
SECURITY INTERESTS
1.1 SECURITY FOR OBLIGATIONS, ETC. This Agreement is for the benefit
of the Secured Parties to secure the payment in full when due, whether at stated
maturity, by acceleration or otherwise, of all Obligations.
1.2 ASSIGNMENT AND PLEDGE.
(a) ASSIGNMENT. The Company hereby assigns to the Collateral Agent
for the benefit of the Secured Parties, and hereby grants to the Collateral
Agent for the benefit of the Secured Parties a security interest in, all of the
Company's right, title and interest in and to the following (together with the
Assigned Agreement Rights (as hereinafter defined), the "Assigned Collateral"):
(i) the mortgage notes in the aggregate amount listed on Schedule I attached
hereto and all other mortgage notes payable to the Company and held by the
Company from time to time (collectively, the "Mortgage Notes"), any other
mortgage, security agreement or other instrument, contract or document securing,
evidencing or otherwise relating to all or any of the Mortgage Notes whether now
existing or hereafter entered into and all rights now or hereafter existing in,
to and under each such document, other security agreements and other such
contracts as the same may be amended, restated, supplemented or otherwise
modified from time to time (as so amended, restated, supplemented or modified,
the "Assigned Agreements") and (ii) all Proceeds of any and all of the forego-
ing.
(b) PLEDGE. The Company hereby pledges, deposits with, and delivers
to, the Collateral Agent for the benefit of the Secured Parties the Mortgage
Notes accompanied by assignment forms duly executed in blank by the Company and
hereby assigns, transfers, hypothecates and sets over to the Collateral Agent
for the benefit of the Secured Parties, and grants to the Collateral Agent for
the benefit of the Secured Parties a security interest in, all of the Company's
right, title and interest in, to and under the following, whether now owned or
hereafter acquired by the Company, all for its benefit and the benefit of the
Secured Parties (the "Pledged
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Collateral") (the Assigned Collateral and the Pledged Collateral being referred
to collectively herein as the "Collateral"):
(i) the Mortgage Notes and all interest, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Mortgage Notes; and
(ii) all Proceeds of the foregoing items described in clause (i).
(c) COLLATERAL. The security interest of the Collateral Agent under
this Agreement extends to all Collateral, now existing or hereafter acquired, of
the kind which is the subject of this Agreement, which the Company may acquire
at any time during the continuation of this Agreement.
1.3. POWER OF ATTORNEY. The Company hereby constitutes and appoints
the Collateral Agent its true and lawful attorney, irrevocably, with full power
(in the name of the Company or otherwise), upon the occurrence and during the
continuance of an Event of Default, to act, require, demand, receive, compound
and give acquittance for any and all monies and claims for monies due or to
become due to the Company under or arising out of the Collateral, to endorse any
checks or other instruments or orders in connection therewith and to file any
claims or take any action or institute any proceedings, consistent with the
Collateral Agent's rights under this Agreement, which the Collateral Agent may
deem to be necessary or advisable in the premises, which appointment as attorney
is coupled with an interest and is irrevocable.
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
The Company represents, warrants and covenants, which representations,
warranties and covenants shall survive execution and delivery of this Agreement,
as follows:
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2.1. NO LIENS. The Company is, and as to Collateral acquired by it
from time to time after the date hereof, the Company will be, the owner of all
Collateral free from any Lien, security interest, encumbrance or other right,
title or interest of any Person (other than as created under the Security
Documents and other than in favor of the Company and except for Liens permitted
by the Company Credit Agreement ("Permitted Liens")), and, except as to Permit-
ted Liens, the Company shall defend the Collateral against all claims and
demands of all Persons at any time claiming the same or any interest therein
adverse to the Collateral Agent or any other Secured Party.
2.2. OTHER FINANCING STATEMENTS. Except for Permitted Liens, there is
no financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) covering any interest of any kind in the Collateral
and so long as any of the Obligations remain unpaid, the Company will not
execute or authorize to be filed in any public office any financing statement
(or similar statement or instrument of registration under the law of any
jurisdiction) or statements relating to the Collateral, except financing
statements filed or to be filed (i) in respect of and covering the security
interests granted hereby by the Company, (ii) by the Company in respect of its
interest in the Collateral and (iii) in respect of Permitted Liens.
2.3 CHIEF EXECUTIVE OFFICE; CORPORATE NAME; RECORDS. The chief
executive office of the Company is located at 1061 East Flamingo Road, Suite
One, Las Vegas, Nevada 89119. The Company will not move its chief executive
office except to such new location the Company may establish in accordance with
the last sentence of this Section 2.3. The Company will not change its corpo-
rate name nor carry on business under any name other than its corporate name
except after having complied with the requirements of the last sentence of this
Section 2.3. The Company shall not establish a new location for its chief
executive office or change its corporate name or the name under which it
presently conducts its business until (i) it shall give to the Collateral Agent
written notice clearly describing such new location or specifying such new
corporate name, as the case may be, and providing such other information in
connection therewith as the Collateral Agent may reasonably request, and (ii)
with
6
<PAGE>
respect to such new location or such new corporate name, as the case may be, it
shall have taken all action, satisfactory to the Collateral Agent, to maintain
the security interest of the Collateral Agent in the Collateral intended to be
granted hereby at all times fully perfected and in full force and effect.
2.4. COLLATERAL. (a) As of the date hereof, all of the Mortgage
Notes are described on Schedule II attached hereto and are not in default. Such
Mortgage Notes had the respective aggregate balances of at least the amounts
listed on Schedule I attached hereto on March 31, 1994.
(b) Each of the existing Assigned Agreements has been duly
authorized, executed and delivered by each Credit Party party thereto, and is in
full force and effect and is binding upon and enforceable against each Credit
Party thereto in accordance with its terms, except to the extent that
enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally, and by general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law). As of the date
hereof, there exists no default under any of the Assigned Agreements by any of
the parties thereto. The Company has delivered original copies of the Assigned
Agreements (including all modifications thereof and amendments and supplements
thereto) to the Collateral Agent pursuant hereto.
ARTICLE III
SPECIAL PROVISIONS
CONCERNING PLEDGED COLLATERAL
3.1. SUBSEQUENTLY ACQUIRED MORTGAGE NOTES. If the Company shall
acquire any additional Mortgage Notes at any time or from time to time after the
date hereof, the Company will forthwith pledge and deposit such Mortgage Notes
with the Collateral Agent and deliver to the Collateral Agent instruments of
transfer therefor, endorsed in blank by the Company, and will promptly thereaf-
ter deliver to the Collateral Agent a certificate executed by an authorized
officer of the Company describ-
7
<PAGE>
ing such Mortgage Notes and certifying that the same has been duly pledged with
the Collateral Agent hereunder.
3.2 COMPANY ACTIONS. The Company will not, at any time, amend,
restate, supplement or otherwise modify any material provision of any Mortgage
Note or Assigned Agreement in any manner that is adverse to the interests of the
Lenders, nor take any action which would release or render unenforceable any of
the obligations of any Mortgage Note or Assigned Agreement.
3.3 DIVIDENDS AND OTHER DISTRIBUTIONS. Unless an Event of Default
shall have occurred and be continuing, all principal, interest and cash divi-
dends payable in respect of the Pledged Collateral shall be paid to the Company.
The Collateral Agent shall be entitled to receive directly, and to retain as
part of the Collateral:
(a) all stock or other or additional securities and, after the
occurrence and during the continuance of an Event of Default, property (includ-
ing cash) paid or distributed by way of dividend in respect of the Pledged
Collateral;
(b) all stock or other or additional other securities and, after the
occurrence and during the continuance of an Event of Default, property
(including cash) paid or distributed in respect of the Pledged Collateral by way
of stock-split, spin-off, split-up, reclassification, combination of shares or
similar rearrangement; and
(c) all stock or other or additional other securities and, after the
occurrence and during the continuance of an Event of Default, property
(including cash) which may be paid in respect of the Pledged Collateral by
reason of any consolidation, merger, exchange of stock, conveyance of assets,
liquidation or similar corporate reorganization or other disposition of
Collateral.
8
<PAGE>
ARTICLE IV
SPECIAL PROVISIONS
CONCERNING ASSIGNED AGREEMENTS
4.1. ASSIGNMENT OF RIGHTS. The Company hereby assigns, transfers,
delivers, pledges and sets over to the Collateral Agent, and grants to the
Collateral Agent a security interest in, all of its right, title and interest in
and to each and all of the Assigned Agreements, including but not limited to:
(a) all payments due and to become due under any Assigned Agreement,
whether as contractual obligations, damages or otherwise;
(b) all of its claims, rights, powers, or privileges and remedies
under any Assigned Agreement; and
(c) all of its rights under any Assigned Agreement to make determina-
tions, to exercise any election (including, but not limited to, election of
remedies) or option or to give or receive any notice, consent, waiver or
approval together with full power and authority with respect to any Assigned
Agreement to demand, receive, enforce, collect or receipt for any of the
foregoing rights or any property the subject of any of the Assigned Agreements,
to enforce or execute any checks, or other instruments or orders, to file any
claims and to take any action which (in the opinion of the Collateral Agent) may
be necessary or advisable in connection with any of the foregoing (the Assigned
Agreements, together with all of the foregoing in this Section 4.1, the
"Assigned Agreement Rights"); PROVIDED, HOWEVER, that until the occurrence and
continuance of an Event of Default, the Company may exclusively exercise all of
the Company's rights, powers, privileges and remedies under the Assigned
Agreements, subject to Section 3.2 herein.
The Company hereby grants the Collateral Agent full power and
authority to take all actions as the Collateral Agent deems necessary or
advisable to defend the Collateral against all claims and demands of all Persons
at any time claiming the same or any interest therein adverse to the Collateral
Agent or any other Secured Party in the event the Company fails to do so.
Furthermore, the Company hereby covenants and agrees to
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execute and deliver to the Collateral Agent such other and further instruments
of transfer, assignment and conveyance, and all such other documents and
instruments as may be reasonably requested by the Collateral Agent more fully to
transfer, assign and convey to and vest in the Collateral Agent the Assigned
Agreement Rights hereby transferred, assigned and conveyed or intended to be so.
4.2. PERFORMANCE OF ASSIGNED AGREEMENTS. The Company will at its
expense (i) perform and observe all the terms and provisions of the Assigned
Agreements to be performed or observed by it, maintain the Assigned Agreements
in full force and effect, enforce each of the Assigned Agreements in accordance
with its terms, and take all such action to such end as may, after the
occurrence and during the continuance of an Event of Default, be from time to
time requested in writing by the Collateral Agent; and (ii) furnish to the
Collateral Agent promptly upon receipt thereof copies of all notices, requests
and other documents (if any) received by the Company under or pursuant to the
Assigned Agreements, and from time to time (A) furnish to the Collateral Agent
such information and reports regarding the Assigned Collateral as the Collateral
Agent may reasonably request in writing and (B) upon the written request of the
Collateral Agent make to any party thereto such demands and requests for
information and reports or for action as the Company is entitled to make under
the Assigned Agreements.
ARTICLE V
FURTHER ASSURANCES
The Company will, subject to the provisions of the last sentence of
this Article V, at its own expense, make, execute, endorse, acknowledge, file
and/or deliver to the Collateral Agent from time to time such lists,
descriptions and designations of its Collateral, financing statements,
collateral assignments, transfer endorsements, powers of attorney, certificates,
reports and other assurances or instruments and take such further steps relating
to the Collateral and other property or rights covered by the security interest
hereby granted, which the Collateral Agent deems reasonably appropriate or
advisable to perfect, preserve or protect its security
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<PAGE>
interest in the Collateral. The Company agrees to sign and deliver to the
Collateral Agent such financing statements and collateral assignments, in form
acceptable to the Collateral Agent, as the Collateral Agent may from time to
time reasonably request or as are necessary or desirable in the opinion of the
Collateral Agent to establish and maintain a valid and enforceable perfected
security interest in the Collateral as provided herein and the other rights and
security contemplated hereby all in accordance with the Uniform Commercial Code
as enacted in any and all relevant jurisdictions or any other relevant law. To
the extent permitted by applicable law, the Company will pay any applicable
filing fees and related expenses. The Company authorizes the Collateral Agent,
to the extent permitted by applicable law, to file any such financing statements
without the signature of the Company and to sign such financing statement on
behalf of, and in the name of, the Company. Notwithstanding anything to the
contrary set forth herein, the Collateral Agent will not take any actions
requiring any filing or recording to perfect the security interest in the
Assigned Collateral hereunder except during the occurrence and continuance of an
Event of Default. Upon the recording of any collateral assignment in accordance
with the provisions hereof, the Company agrees to take all actions requested by
the Collateral Agent to record and perfect the security interest granted
pursuant to any such collateral assignment and the Company also agrees to pay
any mortgage recording tax or other fees or tax in connection with the recording
of such collateral assignment or any underlying mortgage deed of trust or
similar instrument.
ARTICLE VI
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT
6.1. REMEDIES; OBTAINING THE COLLATERAL UPON DEFAULT. The Company
agrees that, if any Event of Default shall have occurred and be continuing, then
and in every such case, the Collateral Agent shall be entitled to exercise all
rights and remedies of a secured party under the Uniform Commercial Code as in
effect in any relevant jurisdiction to enforce the assignments and security
interests contained herein, and, to the extent permitted by applicable law, the
Collateral Agent may:
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(a) exercise any and all rights, powers and remedies of the Company
under or in connection with the Pledged Collateral or the Assigned Collateral,
including, without limitation, any and all rights of the Company to demand,
otherwise require or receive payment of any amount under, or performance of any
provision of, the Assigned Agreements;
(b) receive all payments under, in connection with or otherwise in
respect of the Collateral which are otherwise payable to the Company, all
payments received by the Company under or in connection with or otherwise in
respect of the Collateral shall be received in trust for the benefit of the
Collateral Agent, shall be segregated from other funds of the Company and shall
be forthwith paid over to the Collateral Agent in the same form as so received
(with any necessary endorsement);
(c) in its sole discretion, without notice except as specified below
at any time or from time to time, sell, assign and deliver, or grant options to
purchase, all or any part of the Collateral in one or more parcels, or any
interest therein, at any public or private sale at any exchange, broker's board
or at any of the Collateral Agent's offices or elsewhere, without demand of
performance, advertisement or notice of intention to sell or of the time or
place of sale or adjournment thereof or to redeem or otherwise (all of which are
hereby expressly and irrevocably waived by the Company), for cash, on credit or
for other property, for immediate or future delivery without any assumption of
credit risk, and for such price or prices and on such terms as the Collateral
Agent in its absolute discretion may determine. The Collateral Agent agrees
that to the extent that notice of sale shall be required by law that at least 10
days' notice to the Company of the time and place of any public sale or the time
after which any private sale is to be made shall constitute reasonable notifica-
tion. The Collateral Agent shall not be obligated to make any sale of Collater-
al regardless of notice of sale having been given. The Collateral Agent may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and any such sale may, without further notice, be made
at the time and place to which it was so adjourned. The Company hereby waives
and releases to the fullest extent permitted by law any right or equity of
redemption with respect to the
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Collateral, whether before or after sale hereunder, and all rights, if any, of
marshalling the Collateral and any other security for the Obligations or
otherwise. At any such sale, unless prohibited by applicable law, the
Collateral Agent or any Secured Party, may bid for and purchase all or any part
of the Collateral so sold free from any such right or equity of redemption.
Neither the Collateral Agent nor any Secured Party shall be liable for failure
to collect or realize upon any or all of the Collateral or for any delay in so
doing nor shall any of them be under any obligation to take any action
whatsoever with regard thereto;
(d) transfer all or any part of the Collateral into the Collateral
Agent's name or the name of its nominee or nominees and to notify the obligor of
any Assigned Agreement Right or Mortgage Note (the Company hereby agreeing to
deliver any such notice at the request of the Collateral Agent) that all
payments and performance under the relevant Assigned Agreement or Mortgage Note
shall be made or rendered to the Collateral Agent or its nominee or nominees;
(e) vote all or any part of the Pledged Collateral (whether or not
transferred into the name of the Collateral Agent) and give all consents,
waivers and ratifications in respect of the Collateral and otherwise act with
respect thereto as though it were a party thereto or outright owner thereof;
(f) settle, adjust, compromise and arrange all accounts,
controversies, questions, claims and demands whatsoever in relation to all or
any part of the Collateral;
(g) in respect of the Collateral, execute all such contracts,
agreements, deeds, documents and instruments; to bring, defend and abandon all
such actions, suits and proceedings, and to take all actions in relation to all
or any part of the Collateral as the Collateral Agent in its absolute discretion
may determine;
(h) appoint managers, sub-agents, officers and servants for any of
the purposes mentioned in the foregoing provisions of this Section 6.1 and to
dismiss the same, all as the Collateral Agent in its absolute discretion may
determine; and
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(i) generally take all such other action as the Collateral Agent in
its reasonable discretion may determine as incidental or conducive to any of the
matters or powers mentioned in the foregoing provisions of this Section 6.1 and
which the Collateral Agent may or can do lawfully and to use the name of the
Company for the purposes aforesaid and in any proceedings arising therefrom.
The Company hereby expressly agrees that no Secured Party other than
the Collateral Agent shall have any obligations or liabilities in connection
with this Agreement.
6.2. DISPOSITION OF THE COLLATERAL. The Company recognizes that, by
reason of certain prohibitions contained in the Securities Act of 1933, as
amended (the "Securities Act"), and applicable state securities laws, the
Collateral Agent may be compelled, with respect to any sale of all or any part
of the Collateral pursuant to Section 6.1(c), to limit purchasers to those who
will agree, among other things, to acquire the Collateral for their own account,
for investment and not with a view to the distribution or resale thereof. The
Company acknowledges that any such private sales may be at prices and on terms
less favorable to the Collateral Agent than those obtainable through a public
sale without such restrictions (including, without limitation, a public offering
made pursuant to a registration statement under the Securities Act), and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner and that the
Collateral Agent shall have no obligation to engage in public sales and no
obligation to delay the sale of any Collateral for the period of time necessary
to permit the issuer thereof to register it for a form of public sale requiring
registration under the Securities Act or under applicable state securities laws,
even if the Company would agree to do so.
6.3. WAIVER OF CLAIMS. EXCEPT AS OTHERWISE PROVIDED IN THIS
AGREEMENT, THE COMPANY HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
NOTICE OR JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENT'S TAKING
POSSESSION OR THE COLLATERAL AGENT'S DISPOSITION OF ANY OF THE COLLATERAL,
INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY
PREJUDGMENT
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REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH THE COMPANY WOULD OTHERWISE HAVE
UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES OR OF ANY STATE, and
the Company hereby further waives to the extent permitted by applicable law:
(a) all damages occasioned by such taking of possession except any
damages which are the direct result of the Collateral Agent's gross negligence
or willful misconduct;
(b) all other requirements as to the time, place and terms of sale or
other requirements with respect to the enforcement of the Collateral Agent's
rights hereunder; and
(c) all rights of redemption, appraisal, valuation, stay, extension
or moratorium now or hereafter in force under any applicable law in order to
prevent or delay the enforcement of this Agreement or the absolute sale of the
Collateral or any portion thereof, and the Company, for itself and all who may
claim under it, insofar as it or they may now or hereafter lawfully do so,
hereby waives the benefit of such laws.
Any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of the Company therein and thereto, and
shall be a perpetual bar both at law and in equity against the Company and
against any and all Persons claiming or attempting to claim the Collateral so
sold, optioned or realized upon, or any part thereof, from, through and under
the Company.
6.4. APPLICATION OF PROCEEDS; COMPANY LIABLE FOR DEFICIENCY. All
moneys collected by the Collateral Agent upon any sale or other disposition of
the Collateral, together with all other moneys received by the Collateral Agent
hereunder shall be applied as follows:
(a) first, to the payment of any and all expenses and fees (including
reasonable attorneys' fees) actually incurred by the Collateral Agent in
obtaining, taking possession of, removing, storing and disposing of Collateral
and any and all amounts incurred by the Col-
15
<PAGE>
lateral Agent in connection therewith or owing to the Collateral Agent
hereunder;
(b) next, any surplus then remaining, to the payment of the other
Obligations; and
(c) if the Total Commitment is then terminated, all Loans (under and
as defined in each Credit Agreement) have been indefeasibly paid in full, no
Letters of Credit or Subsidiary Letters of Credit or other Obligations are
outstanding, any surplus then remaining shall be paid to the Company, subject,
however, to the rights of the holder of any then existing Lien of which the
Collateral Agent has actual notice (without investigation);
it being understood that the Company shall remain liable to the extent of any
deficiency between the amount of the proceeds of the Collateral and the aggre-
gate amount of the sums referred to in clauses (a) and (b) of this Section 6.4.
Notwithstanding the foregoing, in no event shall moneys be applied
pursuant to the foregoing clause (b) (when aggregated with all other amounts
contemporaneously received from the Company under any other Security Document in
respect of the Obligations) in excess of the Company's Maximum Guaranty
Liability (as defined in the Subsidiary Guaranty) with any excess to be paid to
the Company or to whomever may be lawfully entitled to receive the same.
6.5. REMEDIES CUMULATIVE. Each and every right, power and remedy
hereby specifically given to the Collateral Agent shall be in addition to every
other right, power and remedy specifically given under this Agreement or under
any other Credit Document or now or hereafter existing at law or in equity, or
by statute and each and every right, power and remedy whether specifically
herein given or otherwise existing may be exercised from time to time or
simultaneously and as often and in such order as may be deemed expedient by the
Collateral Agent. All such rights, powers and remedies shall be cumulative and
the exercise or the beginning of exercise of one shall not be deemed a waiver of
the right to exercise of any other or others. No delay or omission of the
Collateral Agent in the exercise of any such right, power
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<PAGE>
or remedy and no renewal or extension of any of the Obligations shall impair any
such right, power or remedy or shall be construed to be a waiver of any Event of
Default or an acquiescence therein.
6.6. DISCONTINUANCE OF PROCEEDINGS. In case the Collateral Agent
shall have instituted any proceeding to enforce any right, power or remedy under
this Agreement by foreclosure, sale, entry or otherwise, and such proceeding
shall have been discontinued or abandoned for any reason or shall have been
determined adversely to the Collateral Agent, then and in every such case the
Company and the Collateral Agent shall be restored to their former positions and
rights hereunder with respect to the Collateral subject to the security interest
created under this Agreement, and all rights, remedies and powers of the
Collateral Agent shall continue as if no such proceeding had been instituted.
ARTICLE VII
INDEMNITY
Without duplication of any amounts payable under Section 12.1 of the
Company Credit Agreement and any similar indemnity provision under any other
Credit Document, the Company shall: (i) whether or not the transactions hereby
contemplated are consummated, pay all reasonable out-of-pocket costs and
expenses of the Collateral Agent actually incurred in connection with the
administration (both before and after the execution hereof and including advice
of counsel as to the rights and duties of the Collateral Agent with respect
thereto) of and in connection with the preparation, execution and delivery of
this Agreement (including, without limitation, the reasonable fees and
disbursements of Skadden, Arps, Slate, Meagher & Flom) and of the Collateral
Agent actually incurred in connection with the preservation of rights under, and
enforcement of, and, after an Event of Default, the renegotiation or
restructuring of this Agreement and any amendment, waiver or consent relating
thereto (including, without limitation, the reasonable fees and disbursements of
counsel for the Collateral Agent); (ii) pay and hold the Collateral Agent
harmless from and against any and all present and future stamp or documentary
taxes or any other excise or property taxes,
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<PAGE>
charges or similar levies which arise from any payment made hereunder or from
the execution, delivery or registration of, or otherwise with respect to this
Agreement and save the Collateral Agent harmless from and against any and all
liabilities with respect to or resulting from any delay or omission to pay any
such taxes, charges or levies; and (iii) indemnify the Collateral Agent, its
officers, directors, employees, representatives and agents from and hold each of
them harmless against any and all costs, losses, liabilities, claims, damages or
expenses actually incurred by any of them (whether or not any of them is
designated a party thereto) arising out of or by reason of any investigation,
litigation or other proceeding related to this Agreement or any transaction
contemplated hereby, including, without limitation, the reasonable fees and
disbursements of counsel incurred in connection with any such investigation,
litigation or other proceeding. Notwithstanding anything in this Agreement to
the contrary, the Company shall not be responsible to the Collateral Agent or
any officer, director, employee, representative or agent of the foregoing (an
"Indemnified Party") for any losses, damages, liabilities or expenses which
result from such Indemnified Party's gross negligence or willful misconduct. It
is understood that the Company shall not, in connection with any single action,
suit, proceeding or claim or separate but substantially similar or related
actions, suits, proceedings or claims, arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys at the same time for the Indemnified Parties
(which firm shall be designated by the Collateral Agent) except that, if any
Indemnified Party other than the Collateral Agent shall determine, in its sole
discretion, that there may be a conflict in such firm representing the
Collateral Agent and such Indemnified Party, then the Company shall be liable
for the reasonable fees and expenses of an additional firm for such Indemnified
Party whose interests may be in conflict. The Company's obligations under this
Article VII shall survive any termination of this Agreement.
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<PAGE>
ARTICLE VIII
DEFINITIONS
8.1. DEFINITIONS. The following terms shall have the meanings herein
specified unless the context otherwise requires. Such definitions shall be
equally applicable to the singular and plural forms of the terms defined.
Except as otherwise defined herein, including in the recital paragraphs,
capitalized terms used herein and defined in the Company Credit Agreement shall
be used herein as so defined.
"Agreement" shall mean this Second Amended and Restated FINCO Pledge
and Security Agreement as the same may be amended, restated, supplemented or
otherwise modified from time to time in accordance with its terms.
"Assigned Agreement Rights" shall have the meaning specified in
Section 4.1(c).
"Assigned Agreements" shall have the meaning specified in Section
1.2(a).
"Assigned Collateral" shall have the meaning specified in Section
1.2(a).
"Collateral" shall have the meaning specified in Section 1.2(b).
"Event of Default" shall mean and include any "Event of Default" under
either Credit Agreement.
"Indemnified Party" shall have the meaning specified in Article VII.
"Mortgage Notes" shall mean, collectively, all promissory notes from
time to time made to the Company by Charter or a Subsidiary of Charter.
"Obligations" shall mean (a) all indebtedness, obligations, and
liabilities (including without limitation, guarantees, reimbursement obligations
in respect of Letters of Credit and Subsidiary Letters of Credit and other
contingent liabilities) of the Company, Charter, any Subsidiary Borrower and any
other Subsidiary of Charter to any Secured Party arising under or in connec-
19
<PAGE>
tion with the Credit Agreements, the Subsidiary Guaranty, this Agreement, or any
other Credit Document, as the same may be amended, restated, supplemented or
otherwise modified from time to time; (b) any and all sums advanced by the
Collateral Agent in order to preserve the Collateral or preserve its security
interest in the Collateral; and (c) in the event of any proceeding for the
collection or enforcement of any indebtedness, obligations, or liabilities of
the Company referred to in clause (a), after an Event of Default shall have
occurred and be continuing, the reasonable expenses of retaking, holding,
preparing for sale, selling or otherwise disposing or realizing on the
Collateral, or of any exercise by the Collateral Agent of its rights hereunder,
together with reasonable attorneys' fees and court costs.
"Permitted Liens" shall have the meaning specified in Section 2.1
hereof.
"Pledged Collateral" shall have the meaning specified in Section
1.2(b).
"Proceeds" shall mean "Proceeds" as such term is defined in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York.
"Secured Parties" shall mean the Lenders, the Agent, the Co-Agent, and
the Collateral Agent and their respective successors and assigns.
"Securities Act" shall have the meaning specified in Section 6.2.
"Total Commitment" shall mean the Total Revolving Loan Commitment.
ARTICLE IX
MISCELLANEOUS
9.1. NOTICES. All notices and other communications hereunder shall be
given to the Company (at the address for Charter), the Collateral Agent and the
Agent at the addresses and in the manner specified in the Company Credit
Agreement.
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9.2. WAIVER; AMENDMENT. No delay on the part of the Collateral Agent
in exercising any of its rights, remedies, powers and privileges hereunder or
partial or single exercise thereof, shall constitute a waiver thereof. None of
the terms and conditions of this Agreement may be changed, waived, modified or
varied in any manner whatsoever unless executed in accordance with the
provisions of the Credit Agreements. No notice to or demand on the Company in
any case shall entitle it to any other or further notice or demand in similar or
other circumstances or constitute a waiver of any of the rights of the
Collateral Agent to any other or further action in any circumstances without
notice or demand.
9.3. OBLIGATIONS ABSOLUTE. The obligations of the Company under this
Agreement shall be absolute and unconditional in accordance with its terms and
shall remain in full force and effect without regard to, and shall not be
released, suspended, discharged, terminated or otherwise affected by, any
circumstance or occurrence whatsoever, including, without limitation: (a) any
change in the time, place or manner of payment of, or in any other term of, all
or any of the Obligations, any waiver, indulgence, renewal, extension, amendment
or modification of or addition, consent or supplement to or deletion from or any
other action or inaction under or in respect of either Credit Agreement, any
Note, any other Credit Document or any of the other documents, instruments or
agreements relating to the Obligations or any other instrument or agreement
referred to therein or any assignment or transfer of any thereof; (b) any lack
of validity or enforceability of either Credit Agreement, any other Credit
Document or any other documents, instruments or agreements referred to therein
or any assignment or transfer of any thereof; (c) any furnishing of any
additional security to the Collateral Agent, the other Secured Parties or their
assignees or any acceptance thereof or any release of any security by the
Collateral Agent, the other Secured Parties or their assignees; (d) any
limitation on any party's liability or obligations under any such instrument or
agreement or any term thereof; (e) any bankruptcy, insolvency, reorganization,
composition, adjustment, dissolution, liquidation or other like proceeding
relating to the Company or any Subsidiary of the Company, or any action taken
with respect to this Agreement by any trustee or receiver, or by any court, in
any such proceeding, whether or not the
21
<PAGE>
Company shall have notice or knowledge of any of the foregoing; (f) any
exchange, release or nonperfection of any other collateral, or any release, or
amendment or waiver of or consent to departure from any guaranty or security,
for all or any of the Obligations; or (g) any other circumstance which might
otherwise constitute a defense available to, or a discharge of the Company.
9.4. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Company and its successors and assigns and shall inure to the benefit of each
Secured Party and its permitted successors and assigns, provided that the
Company may not transfer or assign any or all of its rights or obligations
hereunder without the written consent of the Collateral Agent.
9.5. HEADINGS DESCRIPTIVE. The headings of the several sections of
this Agreement are inserted for convenience only and shall not in any way affect
the meaning or construction of any provision of this Agreement.
9.6. SEVERABILITY. To the extent permitted by applicable law, any
provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
9.7. GOVERNING LAW; APPOINTMENT OF AGENT FOR SERVICE OF PROCESS;
SUBMISSION TO JURISDICTION. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW
PRINCIPLES THEREOF). ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO MAY BE BROUGHT IN THE COURTS OF THE
STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT
OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE COMPANY
HEREBY CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE JURISDICTION
OF THE AFORESAID COURTS SOLELY FOR THE PURPOSE OF ADJUDICATING ITS RIGHTS OR THE
RIGHTS OF THE SECURED PARTIES WITH RESPECT TO THIS AGREE-
22
<PAGE>
MENT OR ANY DOCUMENT RELATED HERETO THE COMPANY HEREBY IRREVOCABLY DESIGNATES
CT CORPORATION SYSTEM, LOCATED AT 1633 BROADWAY, NEW YORK, NEW YORK 10019 AS THE
DESIGNEE, APPOINTEE AND AGENT OF THE COMPANY, TO RECEIVE, FOR AND ON BEHALF OF
THE COMPANY, SERVICE OF PROCESS IN SUCH JURISDICTION IN ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO AND
SUCH SERVICE SHALL, TO THE EXTENT PERMITTED BY APPLICABLE LAW, BE DEEMED
COMPLETED TEN DAYS AFTER DELIVERY THEREOF TO SAID AGENT. IT IS UNDERSTOOD THAT
A COPY OF SUCH PROCESS SERVED ON SUCH AGENT WILL BE PROMPTLY FORWARDED BY MAIL
TO THE COMPANY AT THE ADDRESS FOR CHARTER SET FORTH IN THE COMPANY CREDIT
AGREEMENT, BUT THE FAILURE OF THE COMPANY TO RECEIVE SUCH COPY SHALL NOT, TO
THE EXTENT PERMITTED BY APPLICABLE LAW, AFFECT IN ANY WAY THE SERVICE OF SUCH
PROCESS. THE COMPANY HEREBY IRREVOCABLY WAIVES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO
THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
RESPECTIVE JURISDICTIONS IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED
THERETO. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE COMPANY TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.
9.8. THE COMPANY'S DUTIES. It is expressly agreed, anything herein
contained to the contrary notwithstanding, that the Company shall remain liable
to perform all of the obligations, if any, assumed by it with respect to the
Collateral and the Collateral Agent shall not have any obligations or
liabilities with respect to any Collateral by reason of or arising out of this
Agreement, nor shall the Company be required or obligated in any manner to
perform or fulfill any of the obligations of Collateral Agent under or with
respect to any Collateral.
9.9. COLLATERAL AGENT. The appointment of the Collateral Agent as
Collateral Agent hereunder pursuant to the Intercreditor Agreement has been
ratified and confirmed by the Lenders in the Credit Agreements and the
Collateral Agent shall be entitled to the benefits of the Credit Agreements.
The Collateral Agent shall be obligated, and shall have the right hereunder to
make de-
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<PAGE>
mands, to give notices, to exercise or refrain from exercising any rights, and
to take or refrain from taking action (including, without limitation, the
release or substitution of Collateral) solely in accordance with this Agreement
and the Credit Agreements. The Collateral Agent may resign and a successor
Collateral Agent may be appointed in the manner provided in the Credit
Agreements. Upon the acceptance of any appointment as a Collateral Agent by a
successor Collateral Agent, that successor Collateral Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Collateral Agent under this Agreement, and the retiring
Collateral Agent shall thereupon be discharged from its duties and obligations
under this Agreement. After any retiring Collateral Agent's resignation, the
provisions of this Agreement shall inure to its benefit as to any actions taken
or omitted to be taken by it under this Agreement while it was Collateral Agent.
9.10. TERMINATION; RELEASE. When the Total Commitment is
terminated, no Letters of Credit or Subsidiary Letters of Credit are outstanding
and all Loans (under and as defined in each Credit Agreement) and other
Obligations are irrevocably paid in full, this Agreement shall terminate. Upon
the termination of this Agreement, the Collateral Agent, at the request and
expense of the Company will promptly execute and deliver to the Company the
proper instruments (including Uniform Commercial Code termination statements on
form UCC-3, if necessary) acknowledging the termination of this Agreement and
will duly assign, transfer and deliver to the Company (without recourse and
without any representation or warranty) such of the Collateral as may be in the
possession of the Collateral Agent and has not theretofore been sold or
otherwise applied or released pursuant to this Agreement. Notwithstanding
anything therein to the contrary, the Collateral Agent shall release the
Collateral to the extent that the Company shall be required to release the same
in accordance with the terms of the Mortgage Notes or Assigned Agreements;
PROVIDED, HOWEVER, that the Collateral Agent may release Collateral from the
lien and security interest of this Agreement in accordance with the provisions
of the Credit Agreements.
9.11. WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE COMPANY HEREBY IRREVOCA-
24
<PAGE>
BLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF IN CONNECTION WITH THIS AGREEMENT OR ANY MATTER ARISING IN
CONNECTION HEREUNDER.
9.12. AMENDMENT AND RESTATEMENT. This Agreement constitutes an
amendment and restatement of the 1992 FINCO Pledge and Security Agreement
amended hereby (the "Original Instrument"), and such Original Instrument shall
continue in effect on and after the date hereof as so amended and restated. The
parties do not intend that this Agreement constitute a novation, termination,
release or satisfaction of the Original Instrument, or constitute payment or
satisfaction of any indebtedness or other obligation secured by the Original
Instrument.
25
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Charter Medical Corporation
FINCO Pledge and Security Agreement I
May 2, 1994
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date first
above written.
CMFC, INC.
By: -----------------------------
Name:
Title:
BANKERS TRUST COMPANY,
as Collateral Agent
By: /s/ Mary Kay Coyle
-----------------------------
Name: Mary Kay Coyle
Title: Vice President
<PAGE>
SCHEDULE I
SECOND AMENDED AND RESTATED FINCO PLEDGE AND SECURITY
AGREEMENT I (CMFC, INC.)
The notes payable balances due to CMFC, Inc. at March 31, 1994 are as follows:
Charter Medical Corporation - $124,066,000.00
<PAGE>
SCHEDULE II
SECOND AMENDED AND RESTATED FINCO PLEDGE AND SECURITY
AGREEMENT I (CMFC. INC.)
A. The Charter Medical Corporation and CMCI, Inc. notes each have
Credit agreement and Borrowing Resolutions.
<PAGE>
SECOND AMENDED AND RESTATED SUBSIDIARY GUARANTY
SECOND AMENDED AND RESTATED SUBSIDIARY GUARANTY, dated as of May 2,
1994 (as the same may be amended, modified or supplemented from time to time,
the "Subsidiary Guaranty"), made by each of the corporations listed on Annex A
attached hereto (individually, a "Guarantor" and collectively, the
"Guarantors"), in favor of the financial institutions from time to time
signatories to the Credit Agreements (as hereinafter defined) (the "Lenders"),
Bankers Trust Company, as agent (the "Agent") for the Lenders, and First Union
National Bank of North Carolina, as co-agent (the "Co-Agent") for the Lenders
(the Lenders, the Agent and the Co-Agent, together with their permitted
successors and assigns, individually, a "Guaranteed Party" and collectively, the
"Guaranteed Parties").
W I T N E S S E T H:
WHEREAS, certain of the parties hereto (or their predecessors) entered
into the Subsidiary Guaranty dated as of September l, 1988 which was amended and
restated by the Amended and Restated Subsidiary Guaranty dated as of July 21,
1992 (the "1992 Subsidiary Guaranty") in favor of the Agent, the Lenders and the
Issuing Banks (as defined in the 1992 Company Guaranty), and now desire to amend
and restate the 1992 Subsidiary Guaranty in its entirety; and
WHEREAS, Charter Medical Corporation, a Delaware corporation (as
successor to WAF Acquisition Corporation, a Delaware corporation, the
"Company"), certain of the Lenders, the Agent, Wells Fargo Bank, National
Association and Bank of America National Trust and Savings Association, as co-
agents (the "Original Co-Agents"), entered into that certain Credit Agreement
dated as of September 1, 1988 which was amended and restated by the Amended and
Restated Credit Agreement dated as of July 21, 1992 (the "1992 Company Credit
Agreement"), which is being amended and restated by the Second Amended and
Restated Credit Agreement dated as of the
<PAGE>
date hereof (as the same may be further amended, restated, supplemented or
otherwise modified from time to time, the "Company Credit Agreement"), pursuant
to which certain of the Lenders made certain loans and commitments to the
Company, the terms of which are being amended and restated pursuant to the
Company Credit Agreement; and
WHEREAS, pursuant to the terms and conditions of the Company Credit
Agreement, the Lenders have made certain commitments to make additional loans
to, and participate in and/or issue letters of credit for the account of, the
Company; and
WHEREAS, certain Subsidiary Borrowers, certain of the Lenders, the
Agent and the Original Co-Agents entered into a Credit Agreement dated as of
September 1, 1988 which was amended and restated by the Amended and Restated
Subsidiary Credit Agreement dated as of July 21, 1992 (the "1992 Subsidiary
Credit Agreement"; and, together with the 1992 Company Credit Agreement, the
"1992 Credit Agreements"), which is being amended and restated by the Second
Amended and Restated Subsidiary Credit Agreement dated as of the date hereof (as
the same may be further amended, restated, supplemented or otherwise modified
from time to time, the "Subsidiary Credit Agreement"; and, together with the
Company Credit Agreement, each a "Credit Agreement" and collectively, the
"Credit Agreements"), pursuant to which certain of the Lenders made certain
loans and commitments to, and participated in certain letters of credit for the
benefit of, the Subsidiary Borrowers, the terms of which are being amended and
restated pursuant to the Subsidiary Credit Agreement; and
WHEREAS, pursuant to the terms and conditions of the Subsidiary Credit
Agreement, the Lenders have made certain commitments to make additional loans
to, and participate in and/or issue letters of credit for the account of, the
Subsidiary Borrowers; and
WHEREAS, the Company and the Guarantors share an identity of interests
as members of a consolidated group of companies engaged in substantially similar
businesses, the Company provides centralized financial, accounting and
management services to each of the Guarantors and arranges the necessary
licensing and accreditation of the hospitals operated by the Guarantors, and the
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<PAGE>
making of the loans and the issuance of the letters of credit under the Credit
Agreements will facilitate expansion of, and enhance the overall financial
strength and stability of the Company's corporate group; and
WHEREAS, the Lenders have agreed to amend and restate the 1992 Credit
Agreements upon terms and conditions acceptable to the Company and the
Guarantors; and
WHEREAS, it was a condition precedent to the incurrence of loans and
the participation in letters of credit under the 1992 Credit Agreements that the
Guarantors execute and deliver to the Guaranteed Parties the 1992 Subsidiary
Guaranty and it is a condition precedent to the incurrence of loans and issuance
of letters of credit under the Credit Agreements, that the Guarantors execute
and deliver to the Guaranteed Parties this Subsidiary Guaranty; and
WHEREAS, each Issuing Bank has agreed, among other things, that the
Reimbursement Agreements (as defined in the 1992 Credit Agreements) to which it
is a party (other than the Credit Documents to the extent the same could be
considered Reimbursement Agreements) shall no longer be entitled to the benefits
of this Subsidiary Guaranty;
NOW, THEREFORE, in consideration of the premises contained herein and
in order to induce the Lenders to make loans and issue letters of credit under
the Credit Agreements, the Guarantors hereby jointly and severally agree as
follows:
SECTION 1. DEFINITIONS. Except as otherwise defined herein,
including in the recital paragraphs, capitalized terms used herein and defined
in the Company Credit Agreement shall be used herein as so defined.
SECTION 2. GUARANTY. (a) The Guarantors hereby jointly and
severally unconditionally guarantee the punctual payment when due, whether at
stated maturity, by acceleration or otherwise, of all (i) Obligations (other
than Obligations arising under this Subsidiary Guaranty, and, in the case of a
Guarantor which is a Subsidiary Borrower, the direct Obligations of such
Guarantor under and as defined in the Subsidiary Credit Agreement) of the
Company and its Subsidiaries now or
3
<PAGE>
hereafter existing, whether for principal, interest (including any interest
accruing during a Proceeding (as hereinafter defined) whether or not the claim
for such interest is allowable or discharged in such Proceeding), fees, expenses
or otherwise (including, without limitation, the Obligations under the Credit
Agreements of the Company and the Subsidiary Borrowers (other than in the case
of a Guarantor that is a Subsidiary Borrower, the direct Obligations of such
Guarantor under the Subsidiary Credit Agreement) to reimburse drawings honored
under a Letter of Credit or a Subsidiary Letter of Credit), and (ii) any and all
reasonable expenses (including counsel fees and expenses) incurred by any
Guaranteed Party in enforcing any rights under this Subsidiary Guaranty (all of
the foregoing, collectively, the "Guaranteed Obligations"); PROVIDED, HOWEVER,
that the maximum liability of each Guarantor herein as of any date shall in no
event exceed the Maximum Guaranty Liability (as hereinafter defined) of such
Guarantor as of such date. It is the intention of the parties hereto that in no
event shall any Guarantor's obligations under this Subsidiary Guaranty
constitute or result in a violation of any applicable fraudulent conveyance or
similar law of any relevant jurisdiction. Therefore, in the event that this
Subsidiary Guaranty would, but for the preceding sentence, constitute or result
in such violation, then the liability of a Guarantor under this Subsidiary
Guaranty shall be reduced to the maximum amount permissible under the applicable
fraudulent conveyance or similar laws. Any and all payments by the Guarantors
hereunder shall be made free and clear of and without deduction for any set-off
or counterclaim.
(b) "Maximum Guaranty Liability" of a Guarantor as of any date
shall mean the greater of the following amounts as of such date: (i) the sum of
the following amounts as of such date: (A) the outstanding amount of all loans,
advances, capital contributions or other investments made by the Company or a
Subsidiary Borrower to or in such Guarantor with the proceeds of loans made to
the Company or a Subsidiary Borrower under the Credit Agreements (such proceeds
being referred to herein as "Senior Financing Proceeds"), PLUS (without
duplication) (B) the fair market value of all property acquired with Senior
Financing Proceeds transferred to such Guarantor, PLUS (C) with respect to each
transfer of Senior Financing Proceeds referred to in the foregoing
4
<PAGE>
clauses (A) and (B), an amount equal to the amount of interest under either
Credit Agreement allocable to such Senior Financing Proceeds until the same is
repaid to the Company or the pertinent Subsidiary Borrower; and (ii) the
greatest of the Fair Value Net Worth (as hereinafter defined) of such Guarantor
as of the Closing Date, each fiscal quarter-end of such person thereafter
occurring on or prior to the date of determination of Maximum Guaranty
Liability, the date on which enforcement of this Subsidiary Guaranty is sought,
and the date on which a case under the Bankruptcy Code is commenced with respect
to the Company or such Guarantor or Subsidiary Borrower. "Fair Value Net Worth"
of a Guarantor as of any date shall mean (i) the fair value or fair saleable
value (as the case may be, determined in accordance with applicable federal and
state laws affecting creditors' rights and governing determinations of
insolvency of debtors (collectively, "Insolvency Laws")) of such Guarantor's
assets as of such date, MINUS (ii) the amount of all liabilities of such
Guarantor (determined in accordance with Insolvency Laws) as of such date,
excluding (x) this Subsidiary Guaranty and (y) liabilities under a Credit
Agreement effectively assumed by such Guarantor by hypothecation of such
Guarantor's assets, MINUS (iii) $1.00.
(c) Each Guarantor agrees that the Guaranteed Obligations may at
any time and from time to time exceed the Maximum Guaranty Liability of such
Guarantor, and may exceed the aggregate Maximum Guaranty Liability of all
Guarantors, without impairing this Subsidiary Guaranty or affecting the rights
and remedies of any Guaranteed Party hereunder.
SECTION 3. GUARANTY ABSOLUTE. The Guarantors guarantee that the
Guaranteed Obligations will be paid strictly in accordance with the terms of the
Credit Agreements, the Notes and the other Credit Documents, regardless of any
law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of any Guaranteed Party with respect
thereto. This is a guaranty of payment and not of collection, and the liability
of the Guarantors under this Subsidiary Guaranty shall be joint, several,
absolute and unconditional, in accordance with its terms and shall remain in
full force and effect without regard to, and shall not be released, suspended,
discharged, terminated or otherwise affected by, any circumstance or occurrence
5
<PAGE>
whatsoever, including, without limitation: (a) any change in the time, place or
manner of payment of, or in any other term of, all or any of the Guaranteed
Obligations, any waiver, indulgence, renewal, extension, amendment or
modification of, or addition, consent or supplement to, or deletion from, or any
other action or inaction under, or in respect of either Credit Agreement, any
Note, any other Credit Document or any documents, instruments or agreements
relating to the Guaranteed Obligations or any other instrument or agreement
referred to therein or any assignment or transfer of any thereof; (b) any lack
of validity or enforceability of either Credit Agreement, any Note, any other
Credit Document or any other documents, instruments or agreements referred to
therein or any assignment or transfer of any thereof; (c) any furnishing of any
additional security to the Guaranteed Parties or their assignees or any
acceptance thereof or any release of any security by the Guaranteed Parties, or
their assignees; (d) any limitation on any party's liability or obligations
under any such instrument or agreement (other than as set forth in Section 2
hereof) or any invalidity or unenforceability, in whole or in part, of any such
instrument or agreement, or any term thereof; (e) any bankruptcy, insolvency,
reorganization, composition, adjustment, dissolution, liquidation or other like
proceeding relating to the Company or any Subsidiary Borrower, or any action
taken with respect to this Subsidiary Guaranty by any trustee or receiver, or by
any court, in any such proceeding, whether or not any Guarantor shall have
notice or knowledge of any of the foregoing; (f) any exchange, release or
nonperfection of any other collateral, or any release, or amendment or waiver
of, or consent to, departure from any guaranty or security, for all or any of
the Guaranteed Obligations; or (g) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, any Guarantor. This
Subsidiary Guaranty shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of any of the Guaranteed Obligations is
rescinded or must otherwise be returned by any Guaranteed Party upon the
insolvency, bankruptcy or reorganization of the Company, any Subsidiary Borrower
or any Guarantor or otherwise, all as though such payment had not been made.
SECTION 4. WAIVER. To the extent permitted by applicable law, the
Guarantors hereby waive promptness,
6
<PAGE>
diligence, notice of acceptance and any other notice with respect to any of the
Guaranteed Obligations and this Subsidiary Guaranty and any requirement that any
Guaranteed Party protect, secure, perfect or insure any security interest or
lien or any property subject thereto or exhaust any right or take any action
against the Company, any Subsidiary Borrower or any other Person or any
collateral.
SECTION 5. WAIVER OF SUBROGATION. Each Guarantor hereby irrevocably
waives any right of subrogation, reimbursement, exoneration, contribution or
indemnification, any right to participate in any claim or remedy of the
Guaranteed Parties or any collateral which the Agent, any other Guaranteed Party
or the Collateral Agent now has or hereafter acquires in connection with the
payment, performance or enforcement of such Guarantor's obligations under this
Subsidiary Guaranty or any Credit Document, whether or not such claim, remedy or
right arises in equity, or under contract, statute or common law, including the
right to take or receive, directly or indirectly, in cash or other property or
by set-off or in any other manner, payment or security on account of such claim
or other rights. If any amount shall be paid to any Guarantor in violation of
the preceding sentence and the Guaranteed Obligations shall not have been paid
in full or any commitment of any Guaranteed Party under either Credit Agreement
shall not have been irrevocably terminated, such amount shall be deemed to have
been paid to such Guarantor for the benefit of, and held in trust for, the Agent
for the benefit of the Guaranteed Parties, and shall forthwith be paid to the
Agent to be credited and applied to the Obligations, whether matured or
unmatured. Each Guarantor acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated by the Credit Agreements
and that the waiver set forth in this Section is knowingly made in contemplation
of such benefits.
SECTION 6. REPRESENTATIONS AND WARRANTIES. Each Guarantor hereby
represents and warrants as follows:
(a) Each representation, warranty and agreement made by the
Company in Section 6 of the Company Credit Agreement concerning such Guarantor
is confirmed to be true and correct as to such Guarantor, except where the
failure thereof to be so true and correct would not
7
<PAGE>
impair the legality, validity, binding effect or enforceability hereof or have a
Material Adverse Effect.
(b) On the Closing Date, after giving effect to all the
transactions contemplated by the Credit Agreements, including, without
limitation, the execution and delivery of the Credit Agreements, and the
incurrence by such Guarantor of liabilities under this Subsidiary Guaranty, (i)
the assets of such Guarantor, at a fair valuation, will exceed its liabilities,
including contingent liabilities (but excluding any intercompany liabilities,
including contingent intercompany liabilities), (ii) the remaining capital of
such Guarantor will not be unreasonably small to conduct its business and (iii)
such Guarantor has not incurred debts, and does not intend to incur debts,
beyond its ability to pay such debts as they mature. For purposes of this
Section 6(b), "debt" means any liability on a claim, and "claim" means (x) right
to payment, whether or not such right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured, or unsecured, or (y) right to an equitable remedy for
breach of performance if such breach gives rise to a right to payment, whether
or not such right to an equitable remedy is reduced to judgment, fixed,
contingent, matured, unmatured, disputed, undisputed, secured, or unsecured.
SECTION 7. ADDITIONAL GUARANTORS. In accordance with the provisions
of Section 7.11 of the Company Credit Agreement, any Wholly-Owned Restricted
Subsidiary (other than Excludable Foreign Subsidiaries) of the Company which
becomes a Significant Subsidiary after the Closing Date (an "Additional
Guarantor") shall execute and deliver to the Agent a counterpart (substantially
in the form of Annex B hereto) of this Subsidiary Guaranty. Upon such
execution, such Additional Guarantor shall be liable to the Guaranteed Parties
and the Guarantors pursuant to Section 2 hereof and Annex A hereto shall be
deemed to be amended to include such Additional Guarantor.
SECTION 8. NOTICES. All notices and other communications provided
for hereunder shall be given to the Company (on behalf of any relevant
Guarantor) and the Agent at the addresses and in the manner specified in the
Company Credit Agreement.
8
<PAGE>
SECTION 9. NO WAIVER; REMEDIES. No failure on the part of any
Guaranteed Party 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. The remedies herein provided are cumulative and
not exclusive of any remedies provided by law.
SECTION 10. RIGHT OF SET-OFF. In addition to, and not in limitation
of, all rights of offset that any Lender or other holder of a Note may have
under applicable law, each Lender or other holder of a Note shall, upon the
occurrence of any Event of Default and whether or not such Lender or such holder
has made any demand or any Guarantor's obligations hereunder have matured, have
the right to appropriate and apply to the payment of the Guaranteed Obligations,
all deposits (general or special, time or demand, provisional or final) then or
thereafter held by, and other indebtedness or property then or thereafter owing
by, such Lender or other holder, whether or not related to this Subsidiary
Guaranty or any transaction hereunder.
SECTION 11. CONTINUING GUARANTY; TRANSFER OF OBLIGATIONS. This
Subsidiary Guaranty is a continuing guaranty and shall (i) remain in full force
and effect until payment in full of the Guaranteed Obligations and all other
amounts payable under this Subsidiary Guaranty, (ii) be binding upon each
Guarantor, its successors and assigns, and (iii) inure to the benefit of and be
enforceable by each Guaranteed Party and its permitted successors, transferees
and assigns; PROVIDED that the Company may not assign or transfer any of its
interests or obligations hereunder without the prior written consent of the
Lenders. Without limiting the generality of the foregoing clause (iii), any
Lender may, in accordance with the terms and provisions of the applicable Credit
Agreement, assign to one or more banks or other entities all or any part of, or
may grant participations to one or more banks or other entities in or to all or
any part of, any of the Guaranteed Obligations, whereupon each such bank or
entity shall become vested with all the rights in respect thereof granted to
such Lender herein or otherwise in respect hereof; PROVIDED, HOWEVER, that
except as otherwise permitted by the terms and provisions of each of the Credit
Agreements, no participant in the Guaran-
9
<PAGE>
teed Obligations shall be permitted to exercise any right under Section 10
hereof.
SECTION 12. GOVERNING LAW; APPOINTMENT OF AGENT FOR SERVICE OF
PROCESS; SUBMISSION TO JURISDICTION. THIS SUBSIDIARY GUARANTY AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH
AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAW PRINCIPLES THEREOF). ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS SUBSIDIARY GUARANTY OR ANY DOCUMENT RELATED HERETO MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF
AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF
THIS SUBSIDIARY GUARANTY, EACH GUARANTOR HEREBY CONSENTS, FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, TO THE JURISDICTION OF THE AFORESAID COURTS SOLELY FOR
THE PURPOSE OF ADJUDICATING ITS RIGHTS OR THE RIGHTS OF THE GUARANTEED PARTIES
WITH RESPECT TO THIS SUBSIDIARY GUARANTY OR ANY DOCUMENT RELATED HERETO. EACH
GUARANTOR HEREBY IRREVOCABLY DESIGNATES CT CORPORATION SYSTEM, LOCATED AT 1633
BROADWAY, NEW YORK, NEW YORK 10019 AS THE DESIGNEE, APPOINTEE AND AGENT OF SUCH
GUARANTOR TO RECEIVE, FOR AND ON BEHALF OF SUCH GUARANTOR, SERVICE OF PROCESS IN
SUCH JURISDICTION IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
SUBSIDIARY GUARANTY OR ANY DOCUMENT RELATED HERETO AND SUCH SERVICE SHALL BE
DEEMED, TO THE EXTENT PERMITTED BY APPLICABLE LAW, COMPLETED TEN DAYS AFTER
DELIVERY THEREOF TO SAID AGENT. IT IS UNDERSTOOD THAT A COPY OF SUCH PROCESS
SERVED ON SUCH AGENT WILL BE PROMPTLY FORWARDED BY MAIL TO THE COMPANY (ON
BEHALF OF THE RESPECTIVE GUARANTOR) AT ITS ADDRESS SET FORTH IN THE COMPANY
CREDIT AGREEMENT, BUT THE FAILURE OF THE COMPANY (ON BEHALF OF SUCH GUARANTOR)
TO RECEIVE SUCH COPY SHALL NOT, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS. EACH GUARANTOR HEREBY
IRREVOCABLY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION,
INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS IN RESPECT
OF THIS SUBSIDIARY GUARANTY OR ANY DOCUMENT RELATED THERETO. NOTHING HEREIN
SHALL AFFECT THE RIGHT OF THE COLLATERAL AGENT TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST ANY GUARANTOR IN ANY OTHER JURISDICTION.
10
<PAGE>
SECTION 13. SUBORDINATION OF COMPANY'S AND SUBSIDIARY BORROWERS'
OBLIGATIONS TO GUARANTORS. As an independent covenant, each Guarantor hereby
expressly covenants and agrees for the benefit of each Guaranteed Party that all
obligations and liabilities of the Company and each Subsidiary Borrower to such
Guarantor of whatsoever description including, without limitation, all
intercompany receivables of such Guarantor from the Company or a Subsidiary
Borrower ("Junior Claims") shall be subordinate and junior in right of payment
to all Obligations of the Company and each Subsidiary Borrower to the Guaranteed
Parties, including, without limitation, interest accrued during any Proceeding
(as hereinafter defined) on the Obligations whether or not the claim for such
interest is allowable or discharged in such Proceeding) ("Senior Claims").
If an Event of Default shall occur and the Senior Claims shall have
been declared due and payable, then no direct or indirect payment (in cash,
property, securities by setoff or otherwise) shall be made by the Company or any
Subsidiary Borrower to any Guarantor on account of, or in any manner in respect
of, any Junior Claim except such payments and distributions the proceeds of
which shall be applied to the Senior Claims.
Notwithstanding anything to the contrary set forth in the immediately
preceding paragraph of this Section 13, in the event of a Proceeding, all Senior
Claims shall first be paid in full before any direct or indirect payment or
distribution (in cash, property, or securities, by setoff or otherwise) shall be
made to any Guarantor on account of or in any manner in respect of any Junior
Claim except such payments and distributions the proceeds of which shall be
applied to the Senior Claims. "Proceeding" means the occurrence of any of the
following: the Company or any Subsidiary Borrower shall commence a voluntary
case concerning itself under Title 11 of the United States Code entitled
"Bankruptcy" as now or hereafter in effect, or any successor thereto (the
"Bankruptcy Code"); or any involuntary case is commenced against the Company or
any Subsidiary Borrower; or a custodian (as defined in the Bankruptcy Code) is
appointed for, or takes charge of, all or any substantial part of the property
of the Company or any Subsidiary Borrower, or the Company or any Subsidiary
Borrower commences any other proceedings under any reorganization arrange-
11
<PAGE>
ment, adjustment of debt, relief of debtor, dissolution, insolvency or
liquidation or similar law of any jurisdiction whether now or hereafter in
effect relating to the Company or any Subsidiary Borrower, or the Company or any
Subsidiary Borrower is adjudicated insolvent or bankrupt; or any order of relief
or other order approving any such case or proceeding is entered; or the Company
or any Subsidiary Borrower suffers any appointment of any custodian or the like
for it or any substantial part of its property; or the Company or any Subsidiary
Borrower makes a general assignment for the benefit of creditors; or the Company
or any Subsidiary Borrower shall fail to pay, or shall state that it is unable
to pay, or shall be unable to pay, its debts generally as they become due; or
the Company or any Subsidiary Borrower shall call a meeting of its creditors
with a view to arranging a composition or adjustment of its debts; or the
Company or any Subsidiary Borrower shall by any act or failure to act indicate
its consent to, approval of, or acquiescence in, any of the foregoing; or any
corporate action shall be taken by the Company or any Subsidiary Borrower for
the purpose of effecting any of the foregoing.
In the event any direct or indirect payment or distribution is made to
a Guarantor in contravention of this Section 13, such payment or distribution
shall be deemed received in trust for the benefit of the Guaranteed Parties and
shall be immediately paid over to the Agent for application in accordance with
the terms of the Credit Agreements.
Each Guarantor agrees to execute such additional documents as the
Agent may request to evidence the subordination provided for in this Section 13.
By its execution and delivery of this Subsidiary Guaranty, the Company
and each of the Subsidiary Borrowers hereby acknowledge and agree to the
subordination provided for in this Section 13.
SECTION 14. SEVERABILITY. To the extent permitted by applicable law,
any provision of this Subsidiary Guaranty which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or
12
<PAGE>
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 15. AMENDMENTS. ETC. No amendment or waiver of any provision
of this Subsidiary Guaranty nor consent to any departure by any Guarantor
therefrom shall in any event be effective unless the same shall be executed in
accordance with the terms of the Credit Agreements.
SECTION 16. AMENDMENT AND RESTATEMENT. This Subsidiary Guaranty
constitutes an amendment and restatement of the 1992 Subsidiary Guaranty amended
hereby (the "Original Instrument"), and such Original Instrument shall continue
in effect on and after the date hereof as so amended and restated. The parties
do not intend that this instrument constitute a novation, termination, release
or satisfaction of the Original Instrument, or constitute payment or
satisfaction of any indebtedness or other obligation secured by the Original
Instrument.
SECTION 17. WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE COMPANY AND EACH GUARANTOR HEREBY IRREVOCABLY WAIVE ALL
RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF,
OR IN CONNECTION WITH, THIS SUBSIDIARY GUARANTY OR ANY OTHER CREDIT DOCUMENT OR
ANY MATTER ARISING IN CONNECTION HEREUNDER OR THEREUNDER.
13
<PAGE>
IN WITNESS WHEREOF, each of the Guarantors, the Company and the
Subsidiary Borrowers has caused this Subsidiary Guaranty to be duly executed and
delivered by its officer thereunto duly authorized as of the date first above
written.
GUARANTORS:
By
-----------------------------------
Charlotte A. Sanford, in her
capacity as Treasurer for
corporations listed on Annex A
(except Charter Medical of England
Limited and Charter Medical (Cayman
Islands) Ltd.)
By
-----------------------------------
Charlotte A. Sanford, in
her capacity as Director
of Charter Medical of
England Limited
ACKNOWLEDGED AND AGREED TO
AS APPLICABLE TO THE COMPANY:
CHARTER MEDICAL CORPORATION
By
---------------------------
Name: James R. Bedenbaugh
Title: Treasurer
14
<PAGE>
ANNEX B
ADDITIONAL GUARANTOR
The undersigned hereby acknowledges that it has read this Subsidiary
Guaranty and agrees to be liable to the Guaranteed Parties pursuant to Section 2
of this Subsidiary Guaranty and to be bound by the terms and provisions thereof.
IN WITNESS WHEREOF, the undersigned has caused this Subsidiary
Guaranty to be duly executed and delivered by its officer thereunto duly
authorized as of the day of , 19 .
---- -------- --
Notice Address: [Name of Guarantor], a
[State of Incorporation]
Corporation
By
----------------------------
Title:
15
<PAGE>
ANNEX A
SECOND AMENDED AND RESTATED SUBSIDIARY GUARANTY
DOMESTIC SUBSIDIARIES:
1. Ambulatory Resources, Inc.
2. Atlanta MOB, Inc.
3. Beltway Community Hospital, Inc.
4. CCM, Inc.
5. Charter Alvarado Behavioral Health System, Inc.
6. Charter Appalachian Hall Behavioral Health System, Inc.
7. Charter Arbor Indy Behavioral Health System, Inc.
8. Charter Augusta Behavioral Health System, Inc.
9. Charter Bay Harbor Behavioral Health System, Inc.
10. Charter Beacon Behavioral Health System, Inc.
11. Charter Behavioral Health System at Fair Oaks, Inc.
12. Charter Behavioral Health System at Hidden Brook, Inc.
13. Charter Behavioral Health System at Los Altos, Inc.
14. Charter Behavioral Health System at Potomac Ridge, Inc.
15. Charter Behavioral Health System at Warwick Manor,Inc.
16. Charter Behavioral Health System of Athens, Inc.
17. Charter Behavioral Health System of Austin, Inc.
18. Charter Behavioral Health System of Baywood, Inc.
19. Charter Behavioral Health System of Bradenton, Inc.
20. Charter Behavioral Health System of Canoga Park, Inc.
21. Charter Behavioral Health System of Central Georgia, Inc.
22. Charter Behavioral Health system of Charleston, Inc.
23. Charter Behavioral Health System of Charlottesville, Inc.
24. Charter Behavioral Health System of Chicago, Inc.
25. Charter Behavioral Health System of Chula Vista, Inc.
26. Charter Behavioral Health System of Columbia, Inc.
27. Charter Behavioral Health System of Corpus Christi, Inc.
28. Charter Behavioral Health System of Dallas, Inc.
29. Charter Behavioral Health System of Evansville, Inc.
30. Charter Behavioral Health System of Fort Worth, Inc.
31. Charter Behavioral Health System of Jackson, Inc.
32. Charter Behavioral Health System of Jacksonville, Inc.
33. Charter Behavioral Health System of Jefferson, Inc.
34. Charter Behavioral Health System of Kansas City, Inc.
35. Charter Behavioral Health System of Lafayette, Inc.
36. Charter Behavioral Health System of Lake Charles, Inc.
37. Charter Behavioral Health System of Lakewood, Inc.
38. Charter Behavioral Health System of Michigan City, Inc.
39. Charter Behavioral Health System of Mobile, Inc.
40. Charter Behavioral Health System of Nashua, Inc.
Page 1
<PAGE>
ANNEX A
SECOND AMENDED AND RESTATED SUBSIDIARY GUARANTY
41. Charter Behavioral Health System of Nevada, Inc.
42. Charter Behavioral Health System of New Mexico, Inc.
43. Charter Behavioral Health System of Northern California, Inc.
44. Charter Behavioral Health System of Northwest Arkansas, Inc.
45. Charter Behavioral Health System of Northwest Indiana, Inc.
46. Charter Behavioral Health System of Paducah, Inc.
47. Charter Behavioral Health System of Rockford, Inc.
48. Charter Behavioral Health System of San Jose, Inc.
49. Charter Behavioral Health System of Savannah, Inc.
50. Charter Behavioral Health System of Southern California, Inc.
51. Charter Behavioral Health System of Tampa Bay, Inc.
52. Charter Behavioral Health System of Texarkana, Inc.
53. Charter Behavioral Health System of the Inland Empire, Inc.
54. Charter Behavioral Health System of Toledo, Inc.
55. Charter Behavioral Health System of Tucson, Inc.
56. Charter Behavioral Health System of Virginia Beach, Inc.
57. Charter Behavioral Health System of Visalia, Inc.
58. Charter Behavioral Health System of Washington D.C., Inc.
59. Charter Behavioral Health System of Waverly, Inc.
60. Charter Behavioral Health System of Winston-Salem, Inc.
61. Charter Behavioral Health System of Yorba Linda, Inc.
62. Charter Behavioral Health Systems of Atlanta, Inc.
63. Charter Brawner Behavioral Health System, Inc.
64. Charter Canyon Behavioral Health System, Inc.
65. Charter Canyon Springs Behavioral Health System, Inc.
66. Charter Centennial Peaks Behavioral Health System, Inc.
67. Charter Colonial Institute, Inc.
68. Charter Community Hospital, Inc.
69. Charter Community Hospital of Des Moines, Inc.
70. Charter Contract Services, Inc.
71. Charter Cove Forge Behavioral Health System, Inc.
72. Charter Crescent Pines Behavioral Health System, Inc.
73. Charter Fairbridge Behavioral Health System, Inc.
74. Charter Fairmount Behavioral Health System, Inc.
75. Charter Fenwick Hall Behavioral Health System, Inc.
76. Charter Financial Offices, Inc.
77. Charter Forest Behavioral Health System, Inc.
78. Charter Grapevine Behavioral Health System, Inc.
79. Charter Greensboro Behavioral Health System, Inc.
80. Charter Health Management of Texas, Inc.
81. Charter Hospital of Columbus, Inc.
82. Charter Hospital of Denver, Inc.
83. Charter Hospital of Ft. Collins, Inc.
Page 2
<PAGE>
ANNEX A
SECOND AMENDED AND RESTATED SUBSIDIARY GUARANTY
84. Charter Hospital of Laredo, Inc.
85. Charter Hospital of Miami, Inc.
86. Charter Hospital of Mobile, Inc.
87. Charter Hospital of Northern New Jersey, Inc.
88. Charter Hospital of Santa Teresa, Inc.
89. Charter Hospital of St. Louis, Inc.
90. Charter Hospital of Torrance, Inc.
91. Charter Indianapolis Behavioral Health System, Inc.
92. Charter Lafayette Behavioral Health System, Inc.
93. Charter Lakehurst Behavioral Health System, Inc.
94. Charter Lakeside Behavioral Health System, Inc.
95. Charter Laurel Heights Behavioral Health System, Inc.
96. Charter Laurel Oaks Behavioral Health System, Inc.
97. Charter Linden Oaks Behavioral Health System, Inc.
98. Charter Little Rock Behavioral Health System, Inc.
99. Charter Louisville Behavioral Health System, Inc.
100. Charter Meadows Behavioral Health System, Inc.
101. Charter Medfield Behavioral Health System, Inc.
102. Charter Medical Executive Corporation
103. Charter Medical Information Services, Inc.
104. Charter Medical International, S.A., Inc.
105. Charter Medical Management Company
106. Charter Medical of East Valley, Inc.
107. Charter Medical of North Phoenix, Inc.
108. Charter Medical of Orange County, Inc.
109. Charter Medical -- California, Inc.
110. Charter Medical -- Clayton County, Inc.
111. Charter Medical -- Cleveland, Inc.
112. Charter Medical -- Dallas, Inc.
113. Charter Medical -- Long Beach, Inc.
114. Charter Medical -- New York, Inc.
115. Charter Mental Health Options, Inc.
116. Charter Mid-South Behavioral Health System, Inc.
117. Charter Milwaukee Behavioral Health System, Inc.
118. Charter Mission Viejo Behavioral Health System, Inc.
119. Charter MOB of Charlottesville, Inc.
120. Charter North Behavioral Health System, Inc.
121. Charter North Counseling Center, Inc.
122. Charter Northbrooke Behavioral Health System, Inc.
123. Charter Northridge Behavioral Health System, Inc.
124. Charter Northside Hospital, Inc.
125. Charter Oak Behavioral Health System, Inc.
126. Charter of Alabama, Inc.
Page 3
<PAGE>
ANNEX A
SECOND AMENDED AND RESTATED SUBSIDIARY GUARANTY
127. Charter Palms Behavioral Health System, Inc.
128. Charter Peachford Behavioral Health System, Inc.
129. Charter Pines Behavioral Health System, Inc.
130. Charter Plains Behavioral Health System, Inc.
131. Charter Psychiatric Hospitals, Inc.
132. Charter Real Behavioral Health System, Inc.
133. Charter Regional Medical Center, Inc.
134. Charter Richmond Behavioral Health System, Inc.
135. Charter Ridge Behavioral Health System, Inc.
136. Charter Rivers Behavioral Health System, Inc.
137. Charter San Diego Behavioral Health System, Inc.
138. Charter Serenity Lodge Behavioral Health System, Inc.
139. Charter Sioux Falls Behavioral Health System, Inc.
140. Charter South Bend Behavioral Health System, Inc.
141. Charter Springs Behavioral Health System, Inc.
142. Charter Springwood Behavioral Health System, Inc.
143. Charter Suburban Hospital of Mesquite, Inc.
144. Charter Terre Haute Behavioral Health System, Inc.
145. Charter Thousand Oaks Behavioral Health System, Inc.
146. Charter Tidewater Behavioral Health System, Inc.
147. Charter Treatment Center of Michigan, Inc.
148. Charter Westbrook Behavioral Health System, Inc.
149. Charter White Oak Behavioral Health System, Inc.
150. Charter Wichita Behavioral Health System, Inc.
151. Charter Woods Behavioral Health System, Inc.
152. Charter Woods Hospital, Inc.
153. Charter -- Provo School, Inc.
154. Charterton/LaGrange, Inc.
155. Charter-By-The-Sea Behavioral Health System, Inc.
156. CMCI, Inc.
157. CMFC, Inc.
158. CMSF, Inc.
159. CPS Associates, Inc.
160. C.A.C.O. Services, Inc.
161. Desert Springs Hospital, Inc.
162. Employee Assistance Services, Inc.
163. Florida Health Facilities, Inc.
164. Gulf Coast EAP Services, Inc.
165. Gwinnett Immediate Care Center, Inc.
166. HCS, Inc.
167. Holcomb Bridge Immediate Care Center, Inc.
168. Hospital Investors, Inc.
169. Mandarin Meadows, Inc.
Page 4
<PAGE>
ANNEX A
SECOND AMENDED AND RESTATED SUBSIDIARY GUARANTY
170. Metropolitan Hospital, Inc.
171. Middle Georgia Hospital, Inc.
172. Pacific -- Charter Medical, Inc.
173. Peachford Professional Network, Inc.
174. Rivoli, Inc.
175. Shallowford Community Hospital, Inc.
176. Sistemas De Terapia Respiratoria S.A., Inc.
177. Stuart Circle Hospital Corporation
178. Tampa Bay Behavioral Health Alliance, Inc.
179. Western Behavioral Systems, Inc.
FOREIGN SUBSIDIARIES:
1. Charter Medical (Cayman Islands) Ltd.
2. Charter Medical International, Inc.
3. Charter Medical of England Limited
4. Charter Medical of Puerto Rico, Inc.
Page 5
<PAGE>
SECOND AMENDED AND RESTATED
COMPANY COLLATERAL ACCOUNTS ASSIGNMENT AGREEMENT
This SECOND AMENDED AND RESTATED COMPANY COLLATERAL ACCOUNTS
ASSIGNMENT AGREEMENT is dated as of May 2, 1994 (as the same may be amended,
supplemented or modified from time to time, this "Agreement"), and made between
CHARTER MEDICAL CORPORATION, a Delaware corporation (the "Company" or the
"Pledgor") and BANKERS TRUST COMPANY, as Agent (the "Agent") for the financial
institutions from time to time parties to the Company Credit Agreement (as
hereinafter defined)(the "Lenders").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the parties hereto are parties to the Collateral Accounts
Assignment Agreement dated as of September 1, 1988 which was amended and
restated by the Amended and Restated Collateral Accounts Assignment Agreement
dated as of July 21, 1992 (the "1992 Collateral Accounts Assignment Agreement"),
and now desire to amend and restate such agreement in its entirety; and
WHEREAS, the Company (as successor to WAF Acquisition Corporation),
the Agent, certain of the Lenders, and Wells Fargo Bank, National Association
and Bank of America National Trust and Savings Association, as co-agents (the
"Co-Agents"), are parties to a Credit Agreement, dated as of September 1, 1988
which was amended and restated by the Amended and Restated Credit Agreement
dated as of July 21, 1992 (the "1992 Company Credit Agreement"), which is being
amended and restated by the Second Amended and Restated Credit Agreement dated
as of the date hereof (as the same may be further amended, restated,
supplemented or otherwise modified from time to time, the "Company Credit
Agreement"), pursuant to which certain of the Lenders made certain loans and
commitments to the Company, the terms of which are being amended and restated
pursuant to the Company Credit Agreement; and
<PAGE>
WHEREAS, pursuant to the terms and conditions of the Company Credit
Agreement, the Lenders have made certain commitments to make additional loans
to, and participate in and/or issue letters of credit for the account of, the
Company; and
WHEREAS, the Lenders have agreed to amend and restate the 1992 Company
Credit Agreement upon terms and conditions acceptable to the Company; and
WHEREAS, it was a condition precedent to the incurrence of loans and
the participation in letters of credit under the 1992 Company Credit Agreement
that the Pledgor execute and deliver to the Agent the 1992 Collateral Accounts
Assignment Agreement and it is a condition precedent to the incurrence of loans
and the issuance of letters of credit under the Company Credit Agreement that
the Pledgor execute and deliver to the Agent this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the agreements,
provisions and covenants contained herein, the Pledgor and the Agent hereby
agree as follows:
SECTION 1. DEFINITIONS. (a) The terms defined in the Company Credit
Agreement and not otherwise defined herein, including in the recital paragraphs,
are used herein as defined therein.
(b) The following terms used in this Agreement shall have the
following meanings:
"COLLATERAL" means (a) all funds from time to time on deposit in
the L/C Cash Collateral Account, (b) all Investments in the L/C Cash
Collateral Account and all certificates and instruments from time to time
representing or evidencing such Investments, (c) all notes, certificates of
deposit, checks and other instruments from time to time hereafter delivered
to or otherwise possessed by the Agent for or on behalf of the Pledgor in
substitution for or in addition to any or all of the Collateral, (d) all
interest, dividends, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange
for any or all of the Collateral, and
2
<PAGE>
(e) to the extent not covered by clauses (a) through (d) above, all
proceeds of any or all of the foregoing Collateral.
"INVESTMENTS" means those investments, if any, made by the Agent
pursuant to Section 5 hereof.
"L/C CASH COLLATERAL ACCOUNT" means the cash collateral account
established and maintained pursuant to Section 2(a) hereof.
"OBLIGATIONS" means all obligations of the Pledgor under the
Company Credit Agreement and the other Credit Documents.
SECTION 2. ESTABLISHMENT OF L/C CASH COLLATERAL ACCOUNT.
(a) If, at any time, the Pledgor is required to deposit any
amounts into the L/C Cash Collateral Account pursuant to Section 4.2(e) of
the Company Credit Agreement, the Agent and the Pledgor shall, and at all
other times the Agent may, and upon the request of the Agent the Pledgor
shall, establish and maintain at the Payment Office, in the name of the
Pledgor but under the sole dominion and control of the Agent, a cash
collateral account bearing interest only as a result of investments
permitted by Section 5. The Pledgor hereby agrees to deposit in the L/C
Cash Collateral Account each amount, if any, required to be so deposited in
respect of Letters of Credit pursuant to Section 4.2(e) of the Company
Credit Agreement.
(b) Any amounts deposited in the L/C Cash Collateral Account
shall be (A) applied to the reimbursement of payments made by the L/C Banks
and the other Lenders in respect of drawings under Letters of Credit in
accordance with and subject to Sections 2.3 and 2.4 of the Company Credit
Agreement or Section 9 of the Company Credit Agreement, (B) applied in
accordance with Section 12 hereof or (C) released to the Pledgor pursuant
to Section 4.2(e) of the Company Credit Agreement.
SECTION 3. CONDITIONAL ASSIGNMENT OF COLLATERAL. The Company hereby
assigns to the Agent for its
3
<PAGE>
benefit and the benefit of the Lenders, and grants to the Agent for its benefit
and the benefit of such Lenders a lien and security interest in, the Collateral.
In accordance with Section 12 hereof, upon the failure of the Company to pay the
Obligations in accordance with the provisions of the Company Credit Agreement
and the other Credit Documents, the Agent may apply any and all amounts
constituting and in respect of Collateral in satisfaction of the payment in full
of the Obligations. Upon payment in full of all Obligations, the Agent agrees
to re-assign to the Pledgor the remaining Collateral.
SECTION 4. DELIVERY OF COLLATERAL. All certificates or instruments,
if any, representing or evidencing the Collateral shall be delivered to and held
by the Agent pursuant hereto and shall be in suitable form for transfer by
delivery, or shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance reasonably satisfactory to the
Agent. In the event any Collateral is not evidenced by a certificate, a
notation, reflecting title in the name of the Agent or the security interest of
the Agent shall be made in the records of the issuer of such Collateral or in
such other appropriate records as the Agent may require, all in form and
substance reasonably satisfactory to the Agent. The Agent shall have the right,
upon the occurrence and during the continuance of an Event of Default to
transfer to or to register in the name of the Agent or any of its nominees any
or all of the Collateral. In addition, the Agent shall have the right at any
time to exchange certificates or instruments representing or evidencing
Collateral for certificates or instruments of smaller or larger denominations.
SECTION 5. INVESTING OF AMOUNTS IN THE COLLATERAL ACCOUNTS. Cash
held by the Agent in the L/C Cash Collateral Account shall not be invested or
reinvested except as provided in this Section 5.
(a) Except as otherwise provided in Section 12 hereof, the
Company (i) may direct the Agent to (A) invest cash (including the proceeds of
sales of Cash Equivalents) in the L/C Cash Collateral Account from time to time
in Cash Equivalents and (B) deliver to the Company any interest accrued on the
amounts deposited in the L/C Cash Collateral Account; PROVIDED, that the Agent
shall not be obligated to deliver any such interest (x)
4
<PAGE>
more often than once every calendar month, (y) to the extent that either before
or after such delivery of interest, the Company would be required to deposit any
amount in the L/C Cash Collateral Account pursuant to Section 4.2(e) of the
Company Credit Agreement, or (z) upon the occurrence and during the continuance
of an Event of Default; and (ii) shall direct the Agent to sell any such Cash
Equivalents from time to time to the extent necessary such that the amount of
cash held in the L/C Cash Collateral Account is sufficient to permit any
application thereof to the payment of the Obligations as provided in the Company
Credit Agreement.
(b) The Agent is hereby authorized to sell or set-off, and shall
sell, all or any designated part of the Collateral (i) so long as no Event of
Default shall have occurred and be continuing, upon the receipt of appropriate
written or tested telex instructions from the Company, or (ii) in any event (but
only with prior written notice to the Company) if such sale is necessary to
permit the Agent to perform its duties hereunder or under the Company Credit
Agreement, PROVIDED, HOWEVER that the Agent shall have no responsibility for any
loss in the value of the Collateral resulting from a fluctuation in interest
rates or otherwise as a result of any such sale or any sale pursuant to Section
12. Except as provided in paragraph (a) above, any interest on securities
constituting part of the Collateral and the net proceeds of the sale or payment
of any such securities shall be held in the L/C Cash Collateral Account by the
Agent.
SECTION 6. REPRESENTATIONS AND WARRANTIES. In addition to its
representations and warranties made pursuant to Section 6 of the Company Credit
Agreement, the Pledgor represents and warrants to the Agent for the benefit of
the Lenders that the following statements are true, correct and complete:
(a) On and after the Closing Date, the Company will be the legal
and beneficial owner of the Collateral free and clear of any Lien except for the
lien and security interest created by this Agreement; and
(b) The pledge, assignment and possession of the Collateral
pursuant to this Agreement creates a valid assignment of, and a valid and
perfected first
5
<PAGE>
priority security interest in the Collateral, securing the payment of the
Obligations.
SECTION 7. FURTHER ASSURANCES. The Pledgor agrees that at any time
and from time to time, at its expense, it will promptly execute and deliver to
the Agent any further instruments and documents, and take any further actions,
that may be necessary or that the Agent may reasonably request, in order to
protect the assignment given hereby or to perfect and protect any security
interest granted hereby or to enable the Agent to exercise and enforce its
rights and remedies hereunder with respect to any Collateral.
SECTION 8. TRANSFERS AND OTHER LIENS. Except as permitted hereunder,
the Pledgor agrees that it will not (a) sell or otherwise dispose of any
Collateral or any interest in the Collateral, or (b) create or permit to exist
any Lien upon or with respect to any of the Collateral, except for the lien and
security interest created by this Agreement and for Permitted Liens.
SECTION 9. THE AGENT APPOINTED ATTORNEY-IN-FACT. The Pledgor hereby
irrevocably appoints the Agent as its attorney-in-fact, coupled with an interest
and with full authority in the place and stead of the Pledgor and in the name of
the Pledgor or otherwise, from time to time in Agent's reasonable discretion
after the occurrence and during the continuance of an Event of Default to take
any action and to execute any instrument which the Agent may reasonably deem
necessary or advisable to accomplish the purposes of this Agreement, including,
without limitation, to receive, endorse and collect all instruments made payable
to the Pledgor representing any payment, dividend, or other distribution in
respect of the Collateral or any part thereof and to give full discharge for the
same. In performing its functions and duties under this Agreement, the Agent
shall act solely as the agent of the Lenders and the Agent has not assumed and
shall not be deemed to have assumed any obligation towards or relationship of
agency or trust with or for the Pledgor.
SECTION 10. THE AGENT MAY PERFORM. If the Pledgor fails to perform
any agreement contained herein, after notice to the Pledgor, the Agent may
itself perform, or cause performance of, such agreement, and the
6
<PAGE>
expenses of the Agent, as the case may be, incurred in connection therewith
shall be payable by the Pledgor under Section 13 hereof.
SECTION 11. STANDARD OF CARE; NO RESPONSIBILITY FOR CERTAIN MATTERS.
In dealing with the Collateral in its possession, the Agent shall exercise the
same care which it would exercise in dealing with its own property of a similar
nature, but it shall not be responsible for (a) ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or other
matters relative to any Collateral whether or not the Agent has or is deemed to
have knowledge of such matters, (b) taking any steps to preserve rights against
any parties with respect to any Collateral (other than steps taken in accordance
with the standard of care set forth above to maintain possession of the
Collateral), (c) the collection of any proceeds, (d) any loss resulting from
Investments made pursuant to Section 5 hereof, except for a loss resulting from
the Agent's gross negligence or willful misconduct in complying with said
Section 5, or (e) determining (i) the correctness of any statement or
calculation made by the Pledgor in any written or telex (tested or otherwise)
instructions, or (ii) whether any deposit in the L/C Cash Collateral Account is
proper.
SECTION 12. REMEDIES UPON DEFAULT. If any Default or Event of
Default shall have occurred and be continuing:
(a) the Agent may sell all or any portion of the Collateral and
apply the cash proceeds thereof and any other cash in the L/C Cash Collateral
Account to the payment of any of the Obligations, whether or not due, in such
order as the Required Lenders may determine in their sole discretion; any
surplus of such cash or cash proceeds held by the Agent and remaining after
payment in full of all Obligations shall be paid over to the Pledgor or to
whomsoever may be lawfully entitled to receive such surplus; and
(b) anything contained herein to the contrary notwithstanding,
any of the Collateral consisting of investments in call deposits of the Lenders
shall be subject to the Lenders' rights of set-off under Section 12.2 of the
Company Credit Agreement.
7
<PAGE>
SECTION 13. INDEMNITY. Without duplication of any amounts payable
under Section 12.1 of each of the Company Credit Agreement and the Subsidiary
Credit Agreement and any other similar indemnity provision contained in any
other Credit Document, the Pledgor shall (i) whether or not the transactions
hereby contemplated are consummated, pay all reasonable out-of-pocket costs and
expenses of the Agent actually incurred in connection with the administration
(both before and after the execution hereof and including advice of counsel as
to the rights and duties of the Agent with respect thereto) of and in connection
with the preparation, execution and delivery of this Agreement (including,
without limitation, the reasonable fees and disbursements of Skadden, Arps,
Slate, Meagher & Flom) and of the Agent and each Lender actually incurred in
connection with the preservation of rights under, and enforcement of, and, after
an Event of Default, renegotiation or restructuring of this Agreement and any
amendment, waiver or consent relating thereto (including, without limitation,
the reasonable fees and disbursements of counsel for the Agent and each Lender);
(ii) pay and hold the Agent and each of the Lenders harmless from and against
any and all present and future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies which arise from any payment made
hereunder or from the execution, delivery or registration of, or otherwise with
respect to this Agreement and save the Agent and each Lender harmless from and
against any and all liabilities with respect to or resulting from any delay or
omission to pay any such taxes, charges or levies; and (iii) indemnify the Agent
and each Lender, its officers, directors, employees, representatives and agents
from and hold each of them harmless against any and all costs, losses,
liabilities, claims, damages or expenses actually incurred by any of them
(whether or not any of them is designated a party thereto) arising out of or by
reason of any investigation, litigation or other proceeding related to this
Agreement or any transaction contemplated hereby, including, without limitation,
the reasonable fees and disbursements of counsel incurred in connection with any
such investigation, litigation or other proceeding. Notwithstanding anything in
this Agreement to the contrary, the Pledgor shall not be responsible to the
Agent, or any officer, director, employee, representative or agent of the
foregoing (an "Indemnified Party") for any losses, damages, liabilities or
expenses which result
8
<PAGE>
from such Indemnified Party's gross negligence or willful misconduct. It is
understood that the Pledgor shall not, in connection with any single action,
suit, proceeding or claim or separate but substantially similar or related
actions, suits, proceedings or claims, arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys at the same time for the Indemnified Parties
(which firm shall be designated by the Agent) except that, if any Indemnified
Party other than the Agent shall determine, in its sole discretion, that there
may be a conflict in such firm representing the Agent and such Indemnified
Party, then the Pledgor shall be liable for the reasonable fees and expenses of
an additional firm for such Indemnified Party whose interests may be in
conflict. The Pledgor's obligations under this Section 13 shall survive any
termination of this Agreement.
SECTION 14. NO WAIVER. No failure on the part of the Agent to
exercise, and no course of dealing with respect to, and no delay in exercising,
any right, power or remedy hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise by the Agent of any right, power or remedy
hereunder preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies herein provided are to the fullest
extent permitted by law cumulative and are not exclusive of any remedies
provided by law, in equity or under any other Credit Document.
SECTION 15. AMENDMENTS, ETC. No amendment, modification, termination
or waiver of any provision of this Agreement, or consent to any departure by the
Pledgor therefrom, shall in any event be effective unless the same shall be
executed in accordance with the terms of the Company Credit Agreement.
SECTION 16. NOTICES. Except as otherwise specifically provided
herein, any notice or other communication herein required or permitted to be
given shall be given to the parties hereto at the addresses and in the manner
specified in the Company Credit Agreement.
SECTION 17. CONTINUING SECURITY INTEREST; TERMINATION. Except as
provided hereunder and under the Company Credit Agreement, neither the Pledgor
nor any Person claiming on behalf of or through the Pledgor shall
9
<PAGE>
have any right to withdraw any of the funds held in the L/C Cash Collateral
Account until the termination of the Total Revolving Loan Commitment,
indefeasible payment has been made in full of all of the Obligations and no
Letters of Credit or Subsidiary Letters of Credit are outstanding. This
Agreement shall create a continuing security interest in the Collateral and
shall (a) remain in full force and effect until the termination of the Total
Revolving Loan Commitment, indefeasible payment in full of all Obligations and
no Letters of Credit or Subsidiary Letters of Credit are outstanding, (b) be
binding upon the Pledgor, its successors and assigns, and (c) inure to the
benefit of the Agent, the Lenders and their respective successors, transferees
and assigns; PROVIDED that the Pledgor may not assign or transfer any of its
interests or obligations hereunder without the written consent of the Required
Lenders. Without limiting the generality of the foregoing clause (c) and
subject to the provisions of Section 12.4 of the Company Credit Agreement, any
Lender may assign or otherwise transfer any Note held by it to any other person
or entity, and such other person or entity shall thereupon become vested with
all the benefits in respect thereof granted to such Lender herein or otherwise.
Upon the termination of the Total Revolving Loan Commitment, indefeasible
payment in full of the Obligations and the cancellation or expiration of all
outstanding Letters of Credit and Subsidiary Letters of Credit, the Pledgor
shall be entitled to the return, upon its request and at its expense, of such of
the Collateral as shall not have been sold or otherwise applied pursuant to the
terms hereof.
SECTION 18. GOVERNING LAW; APPOINTMENT OF AGENT FOR SERVICE OF
PROCESS; SUBMISSION TO JURISDICTION. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAW PRINCIPLES THEREOF). ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO MAY BE BROUGHT IN THE
COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
THE PLEDGOR HEREBY CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
JURISDICTION OF THE AFORESAID COURTS SOLELY FOR THE PURPOSE OF ADJUDICATING ITS
RIGHTS OR THE RIGHTS OF THE AGENT WITH RESPECT TO THIS AGREEMENT OR ANY
10
<PAGE>
DOCUMENT RELATED HERETO. THE PLEDGOR HEREBY IRREVOCABLY DESIGNATES CT
CORPORATION SYSTEM, LOCATED AT 1633 BROADWAY NEW YORK, NEW YORK 10019 AS THE
DESIGNEE, APPOINTEE AND AGENT OF THE PLEDGOR, TO RECEIVE, FOR AND ON BEHALF OF
THE PLEDGOR, SERVICE OF PROCESS IN SUCH JURISDICTIONS IN ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO AND
SUCH SERVICE SHALL, TO THE EXTENT PERMITTED BY APPLICABLE LAW, BE DEEMED
COMPLETED TEN DAYS AFTER DELIVERY THEREOF TO SAID AGENT. IT IS UNDERSTOOD THAT
A COPY OF SUCH PROCESS SERVED ON SUCH AGENT WILL BE PROMPTLY FORWARDED BY MAIL
TO THE PLEDGOR AT ITS ADDRESS SET FORTH IN THE COMPANY CREDIT AGREEMENT, BUT THE
FAILURE OF THE PLEDGOR TO RECEIVE SUCH COPY SHALL NOT, TO THE EXTENT PERMITTED
BY APPLICABLE LAW, AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS. THE PLEDGOR
HEREBY IRREVOCABLY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY
OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH RESPECTIVE
JURISDICTIONS IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST THE PLEDGOR IN ANY OTHER JURISDICTION.
SECTION 19. WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE PLEDGOR HEREBY IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT OR ANY MATTER ARISING IN CONNECTION HEREUNDER.
SECTION 20. AMENDMENT AND RESTATEMENT. This Agreement constitutes an
amendment and restatement of the 1992 Collateral Accounts Assignment Agreement
amended hereby (the "Original Instrument"), and such Original Instrument shall
continue in effect on and after the date hereof as so amended and restated. The
parties do not intend that this Agreement constitute a novation, termination,
release or satisfaction of the Original Instrument, or constitute payment or
satisfaction of any indebtedness or other obligation secured by the Original
Instrument.
11
<PAGE>
Charter Medical Corporation
Company Collateral Accounts
Assignment Agreement
May 2, 1994
IN WITNESS WHEREOF, the Pledgor and the Agent have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first above written.
BANKERS TRUST COMPANY, as Agent
By /s/ Mary Kay Coyle
-----------------------------------------
Name: Mary Kay Coyle
Title: Vice President
CHARTER MEDICAL CORPORATION
By /s/ James R. Bedenbaugh
-----------------------------------------
Name: James R. Bedenbaugh
Title: Treasurer
<PAGE>
SCHEDULE I
----------
SECOND AMENDED AND RESTATED SUBSIDIARY COLLATERAL ACCOUNTS
----------------------------------------------------------
ASSIGNMENT AGREEMENT
--------------------
I. LETTERS OF CREDIT
Charter Behavioral Health System of New Mexico, Inc.
Charter Behavioral Health System of Charleston, Inc.
Charter Behavioral Health System of Northwest Arkansas, Inc.
Charter Behavioral Health System of Central Georgia, Inc.
Charter Fairmount Behavioral Health System, Inc.
Charter Forest Behavioral Health System, Inc.
Charter Hospital of St. Louis, Inc. (Greenville)
Charter Palms Behavioral Health System, Inc.
Charter Plains Behavioral Health System, Inc.
Charter Ridge Behavioral Health System, Inc.
Charter Rivers Behavioral Health System, Inc.
Charter Springs Behavioral Health System, Inc.
CMSF, Inc. (Glade)
II. SUBSIDIARY LOANS
Charter Behavioral Health System of Northern California, Inc.
Charter Behavioral Health System of Northwest Indiana, Inc.
Charter Hospital of St. Louis, Inc. (Orlando South)
Charter Indianapolis Behavioral Health System, Inc.
Charter Lakeside Behavioral Health System, Inc.
Charter Mission Viejo Behavioral Health System, Inc.
Charter San Diego Behavioral Health System, Inc.
Charter South Bend Behavioral Health System, Inc.
Charter Terre Haute Behavioral Health System, Inc.
Charter Woods Behavioral Health System, Inc.
<PAGE>
Exhibit E-1 to
SECOND AMENDED AND RESTATED CREDIT
COMPANY PLEDGE AND SECURITY AGREEMENT
COMPANY PLEDGE AND SECURITY AGREEMENT, dated as of May 2, 1994 (as the
same may be amended, restated, supplemented or otherwise modified from time to
time, this "Agreement"), made by Charter Medical Corporation, a Delaware
corporation (the "Company" or the "Assignor"), to Bankers Trust Company, a New
York banking corporation, in its capacity as Collateral Agent (as hereinafter
defined) for the Secured Creditors (as hereinafter defined). Certain capital-
ized terms are defined in Article VII hereof.
W I T N E S S E T H:
WHEREAS, the Company (as successor to WAF Acquisition Corporation, a
Delaware corporation), certain of the Lenders (as hereinafter defined), Bankers
Trust Company, as Agent, and Wells Fargo Bank, National Association and Bank of
America National Trust and Savings Association, as co-agents (the "Original Co-
Agents"), entered into that certain Credit Agreement dated as of September l,
1988 which was amended and restated by the Amended and Restated Credit Agreement
dated as of July 21, 1992 (the "1992 Company Credit Agreement"), which is being
amended and restated by the Second Amended and Restated Credit Agreement dated
as of the date hereof (as the same may be further amended, restated, supple-
mented or otherwise modified from time to time, the "Company Credit Agreement"),
pursuant to which certain of the Lenders made certain loans and commitments to
the Company, the terms of which are being amended and restated pursuant to the
Company Credit Agreement; and
WHEREAS, pursuant to the terms and conditions of the Company Credit
Agreement, the Lenders have made certain commitments to make additional loans
to, and participate in and/or issue letters of credit for the account of, the
Company; and
WHEREAS, certain Subsidiary Borrowers, certain of the Lenders, the
Agent and the Original Co-Agents en-
<PAGE>
tered into a Credit Agreement, dated as of September l, 1988, which was amended
and restated by the Amended and Restated Subsidiary Credit Agreement dated as of
July 21, 1992 (the "1992 Subsidiary Credit Agreement"; and, together with the
1992 Company Credit Agreement, the "1992 Credit Agreements"), which is being
amended and restated by the Second Amended and Restated Subsidiary Credit Agree-
ment dated as of the date hereof (as the same may be further amended, restated,
supplemented or otherwise modified from time to time, the "Subsidiary Credit
Agreement"; and, together with the Company Credit Agreement, each a "Credit
Agreement" and collectively the "Credit Agreements"), pursuant to which certain
of the Lenders made certain loans and commitments to, and participated in cer-
tain letters of credit for the benefit of, the Subsidiary Borrowers, the terms
of which are being amended and restated pursuant to the Subsidiary Credit Agree-
ment; and
WHEREAS, pursuant to the terms and conditions of the Subsidiary Credit
Agreement, the Lenders have made certain commitments to make additional loans
to, and participate in and/or issue letters of credit for the account of the
Subsidiary Borrowers; and
WHEREAS, the Company has executed and delivered a Second Amended and
Restated Company Guaranty dated as of the date hereof (as the same may be
amended, restated, supplemented or otherwise modified from time to time, the
"Company Guaranty") pursuant to which the Company has agreed to guarantee all of
the Obligations (as defined in the Subsidiary Credit Agreement) of each Subsid-
iary Borrower under the Subsidiary Credit Agreement; and
WHEREAS, the Lenders have agreed to amend and restate the 1992 Credit
Agreements upon terms and conditions acceptable to the Company and the Subsid-
iary Borrowers; and
WHEREAS, it is a condition precedent to the incurrence of loans and
the issuance of letters of credit under the Credit Agreements that the Company
execute and deliver to the Collateral Agent this Agreement;
NOW, THEREFORE, in consideration of the benefits accruing to the
Assignor, the receipt and sufficiency of which are hereby acknowledged, the
Assignor
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hereby makes the following representations and warranties and covenants and
agrees as follows:
ARTICLE I
SECURITY INTERESTS
1.1. GRANT OF SECURITY INTERESTS. (a) As collateral security for
the prompt and complete payment and performance when due of all of the Obliga-
tions, the Assignor does hereby sell, assign and transfer as collateral security
unto, and does hereby grant to, the Collateral Agent for the benefit of the
Secured Creditors, a continuing security interest in all of the Assignor's
right, title and interest in, to and under all of the following, now existing or
hereafter from time to time arising or acquired, (i) each and every Receivable,
except (x) to the extent prohibited by the Medicare and Medicaid programs
pursuant to 42 U.S.C. Sections 1395 and 1396(a) (and any successor to such
Sections) and (y) Receivables from the United States Government to the extent
such Receivables are prohibited by law to be subject to a security interest or
Lien, (ii) all Inventory, Equipment, other Goods, Chattel Paper, Documents,
Fixtures and Instruments; (iii) to the extent not prohibited by applicable law,
all Contracts, Contract Rights arising under such Contracts and all other
General Intangibles; (iv) to the extent permitted under such agreements, any and
all interest rate or currency exchange agreements, including without limitation,
cap, collar, floor, forward or similar agreements or other rate protection
arrangements and all other hedging arrangements (the "Assigned Agreements"); (v)
any and all books and records relating to any of the property described in the
foregoing clauses (i) through (iv) except to the extent such books and records
are acquired under a license from a third party which prohibits the granting of
a security interest therein; and (vi) in each instance, together with all acces-
sions, attachments and additions thereto, substitutions therefor and replace-
ments, Proceeds and products of any and all of the foregoing items described in
clauses (i) through (v) (all of the above collectively, the "Collateral"); PRO-
VIDED, HOWEVER, that, with the exception of the Collateral described in clause
(i) and any Collateral constituting intercompany notes, the foregoing grant of a
security interest shall not include
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a security interest in, and the Collateral shall not include, any property of
the Assignor to the extent (but only to the extent) that the granting of a
security interest in such property is prohibited or otherwise restricted by the
terms of the agreements listed on the attached Schedule 1 (the "Excluded
Property"); PROVIDED, FURTHER, that upon the termination or expiration of such
prohibition or restriction, the Excluded Property shall become subject to the
security interest hereunder and shall be deemed to be Collateral.
(b) The pledges, liens and security interests of the Collateral Agent
under this Agreement extend to all Collateral now existing or hereafter ac-
quired, of the kind which is the subject of this Agreement which the Assignor
may acquire at any time during the continuation of this Agreement. Except as
otherwise set forth in the Credit Agreements (including, without limitation,
Section 8.8 of the Company Credit Agreement), upon the sale or disposition by
the Assignor of all of its right, title and interest in and to any Collateral
pursuant to Sections 8.2, 8.6 or 8.8 of the Company Credit Agreement, the secu-
rity interest with respect to such Collateral shall be released; PROVIDED that,
at such time, no Default or Event of Default shall have occurred and be continu-
ing.
(c) In the event that the grant of a security interest hereunder in
any Collateral (other than any Collateral described in Section 1.1(a)(i) and any
intercompany notes) is prohibited by any agreement to which the Company is a
party, the Collateral Agent, promptly after a written request therefor from the
Assignor, shall release the security interest granted hereunder in such Collat-
eral if (i) no Default or Event of Default has occurred and is then continuing,
(ii) the replacement cost of such Collateral is less than $500,000, (iii) the
Company has used all reasonable efforts (other than the payment of any signifi-
cant sum of money) to obtain a consent from the other parties to such agreement
to the Collateral Agent's security interest in such Collateral, and (iv) after
giving effect to such release, Collateral and Subsidiary Collateral having an
aggregate replacement cost in excess of $3,000,000 shall not have been released
pursuant to this Section 1.1(c) and/or Section 1.1(c) of the Subsidiary Pledge
and Security Agreement. For purposes of the foregoing clauses (ii) and (iv),
the re-
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placement cost of any Collateral or Subsidiary Collateral requested from time to
time to be released pursuant to this Section 1.1(c) or Section 1.1(c) of the
Subsidiary Pledge and Security Agreement shall be the replacement cost of such
Collateral or Subsidiary Collateral, as the case may be, at the time of the re-
quest for such release as determined by the Company at such time in good faith
and in a reasonable manner.
1.2. POWER OF ATTORNEY. The Assignor hereby constitutes and appoints
the Collateral Agent its true and lawful attorney, with full power (in the name
of the Assignor or otherwise), upon the occurrence and during the continuance of
an Event of Default to act, require, demand, receive, compound and give acquit-
tance for any and all monies and claims for monies due or to become due to the
Assignor under or arising out of the Collateral, to endorse any checks or other
instruments or orders in connection therewith and to file any claims or take any
action or institute any proceedings, consistent with the Collateral Agent's
rights under this Agreement, which the Collateral Agent may deem to be necessary
or advisable in the premises, which appointment as attorney is coupled with an
interest and is irrevocable.
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
The Assignor represents, warrants and covenants, which representation,
warranties and covenants shall survive execution and delivery of this Agreement,
as follows:
2.1. NECESSARY FILINGS. All filings, registrations and recordings
necessary or appropriate to create, preserve, protect and perfect the security
interest granted by the Assignor to the Collateral Agent hereby in respect of
the Collateral have been accomplished and the security interest granted to the
Collateral Agent pursuant to this Agreement in and to the Collateral constitutes
a perfected security interest therein (as provided in the Uniform Commercial
Code), which is superior and prior to the rights of all other Persons therein
(subject, however, to Permitted Encumbrances that are prior to the security
interest granted
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hereunder pursuant to applicable law), and is entitled to all the rights, prior-
ities and benefits afforded by the Uniform Commercial Code as enacted in any
relevant jurisdiction to perfected security interests.
2.2. NO LIENS. The Assignor is, and as to Collateral acquired by it
from time to time after the date hereof, the Assignor will be, the owner of all
Collateral free from any Lien, security interest, encumbrance, assignment or
other right, title or interest of any Person other than as created under the
Security Documents, except as otherwise permitted pursuant to the terms and
provisions of the Company Credit Agreement ("Permitted Encumbrances") and,
except as to Permitted Encumbrances, the Assignor shall defend the Collateral
against all claims and demands of all Persons at any time claiming the same or
any interest therein adverse to the Collateral Agent.
2.3. OTHER FINANCING STATEMENTS. Except for Permitted Encumbrances,
there is no financing statement (or similar statement or instrument of regis-
tration under the law of any jurisdiction) covering any interest of any kind in
the Collateral and so long as any of the Obligations remain unpaid, the Assignor
will not execute or authorize to be filed in any public office any financing
statement (or similar statement or instrument of registration under the law of
any jurisdiction) or statements relating to the Collateral, except financing
statements filed or to be filed in respect of and covering the security inter-
ests granted hereby by the Assignor.
2.4. CHIEF EXECUTIVE OFFICE; CORPORATE NAME; RECORDS. The chief
executive office of the Assignor is located at 557 Mulberry Street, Macon,
Georgia 31298. The Assignor will not move its chief executive office except to
such new location the Assignor may establish in accordance with the last sen-
tence of this Section 2.4. The Assignor will not change its corporate name nor
carry on business under any name other than its corporate name except after
having complied with the requirements of the last sentence of this Section 2.4.
The originals of all documents evidencing all Receivables of the Assignor and
the only original books of account and records of the Assignor relating thereto
are, and will continue to be, kept at such chief executive office, or at such
new location for such chief executive office as the Assignor
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may establish in accordance with the last sentence of this Section 2.4. All
Receivables of the Assignor are, and will continue to be, controlled and direct-
ed (including, without limitation, for general accounting purposes) from, such
chief executive office location as set forth in the first sentence of this
Section 2.4, or such new location as the Assignor may establish in accordance
with the last sentence of this Section 2.4. The Assignor shall not establish a
new location for its chief executive office or change its corporate name or the
names under which it presently conducts its business unless (i) it shall give to
the Collateral Agent written notice clearly describing such new location or
specifying such new corporate name, as the case may be, and providing such other
information in connection therewith as the Collateral Agent may reasonably
request, and (ii) with respect to such new location or such new corporate name,
as the case may be, it shall have taken all action, satisfactory to the Collat-
eral Agent, to maintain the security interest of the Collateral Agent in the
Collateral intended to be granted hereby at all times fully perfected and in
full force and effect.
2.5. LOCATION OF EQUIPMENT. (a) All Significant Equipment held on
the date hereof by the Assignor is located at the address set forth in the first
sentence of Section 2.4 hereof. The Assignor agrees that all Significant Equip-
ment now held or subsequently acquired by it shall be kept at (or shall be in
transport to) the chief executive office of the Assignor, or such new location
as the Assignor may establish in accordance with the last sentence of this
Section 2.5 or, so long as all actions necessary to perfect or continue to
perfect the security interests have been taken granted hereunder in such
Significant Equipment, such other locations as are listed on Annex A to the
Subsidiary Pledge and Security Agreement. The Assignor may not otherwise estab-
lish a new location for any Significant Equipment unless (i) it shall have given
to the Collateral Agent written notice clearly describing such new location and
providing such other information in connection therewith as the Collateral Agent
may reasonably request, and (ii) with respect to such new location, it shall
have taken all action satisfactory to the Collateral Agent to maintain the
security interest of the Collateral Agent in the Collateral intended to be
granted hereby at all times fully perfected and in full force and effect.
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ARTICLE III
SPECIAL PROVISIONS CONCERNING RECEIVABLES
3.1. ADDITIONAL REPRESENTATIONS AND WARRANTIES. As of the time when
each of its Receivables arises, the Assignor shall be deemed to have represented
and warranted that such Receivable and all records, papers and documents
relating thereto (if any) are genuine and in all respects are what they purport
to be, and that all papers and documents (if any) relating thereto (i) will be
the only original writings evidencing and embodying such obligation of the
account debtor named therein (other than copies created for purposes other than
general accounting purposes), (ii) will evidence true and valid obligations,
enforceable in accordance with their respective terms (except as may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
and by principles of equity) arising out of the performance of labor or services
or the sale or lease and delivery of the merchandise listed therein, or both,
not subject to the fulfillment of any contract or condition whatsoever or to any
defenses, set-offs or counterclaims (except (a) with respect to refunds, re-
turns, adjustments and allowances in the ordinary course of business with
respect to damaged merchandise and similar practices arising in the ordinary
course of business relating to payments under Medicare and other health insur-
ance programs and (b) accounts that have not yet been earned by performance), or
stamp or other taxes, and (iii) will be in compliance in all material respects
and will conform with all applicable and material federal, state and local laws.
3.2. MAINTENANCE OF RECORDS. The Assignor will keep and
maintain at its own cost and expense satisfactory and complete records of its
Receivables, including, but not limited to, records of all payments received,
all credits granted thereon, all merchandise returned and all other dealings
therewith, and the Assignor will make the same available to the Collateral
Agent, for inspection at the Assignor's place of business, in accordance with
the terms set forth for the inspection of such types of records in the Company
Credit Agreement (except such records constituting confidential patient informa-
tion, the release of which information is
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prohibited by law). After the occurrence and continuance of an Event of
Default, the Assignor shall, at its own cost and expense, deliver all tangible
evidence that the Collateral Agent may reasonably request of its Receivables
(including, without limitation, all documents evidencing the Receivables) and
such books and records to the Collateral Agent or to its representatives (copies
of which evidence and books and records may be retained by the Assignor) at any
time upon its demand; PROVIDED, THAT, nothing set forth herein shall require the
delivery of confidential patient information to the extent the release of such
information (if any) is prohibited by law until all such consents or approvals
for such release shall have been obtained (which consents and approvals the
Assignor agrees to promptly take reasonable action to obtain in any such event).
If the Collateral Agent so directs, the Assignor shall legend, in form and
manner reasonably satisfactory to the Collateral Agent, the Receivables and
other books, records and documents of the Assignor evidencing or pertaining to
the Receivables with an appropriate reference to the fact that the Receivables
have been assigned to the Collateral Agent and that the Collateral Agent has a
security interest therein.
3.3. MODIFICATION OF TERMS; ETC. The Assignor shall not
rescind or cancel any indebtedness evidenced by any Receivable or modify any
term thereof or make any adjustment with respect thereto, or extend or renew the
same, or compromise or settle any dispute, claim, suit or legal proceeding
relating thereto, or sell any Receivable or interest therein, without the prior
written consent of the Collateral Agent, except as permitted by Section 3.4
hereof. The Assignor will duly fulfill all obligations on its part to be
fulfilled under or in connection with the Receivables and will do nothing to
impair the rights of the Collateral Agent in the Receivables.
3.4. COLLECTION. The Assignor shall endeavor to cause to
be collected from the account debtor named in each of its Receivables, as and
when due (including, without limitation, Receivables which are delinquent, such
Receivables to be collected in accordance with generally accepted collection
procedures in accordance with past business practices and all applicable laws),
any and all amounts owing under or on account of such Receivable subject to
adjustments made in the ordinary course of business and in sound business
judgment relat-
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ing to payments under Medicare and other health insurance programs or made in
respect of charitable programs for indigent care in accordance with the
Assignor's past practices, and apply forthwith upon receipt thereof all such
amounts as are so collected to the outstanding balance of such Receivable,
except that, prior to the occurrence and continuance of an Event of Default, the
Assignor may (i) convey, sell, lease or otherwise dispose of accounts receivable
which have been outstanding more than 120 days in the ordinary course of
business in accordance with the Assignor's past collection practices of accounts
receivable and (ii) allow in the ordinary course of business as adjustments to
amounts owing under its Receivables (A) an extension or renewal of the time or
times of payment, or settlement for less than the total unpaid balance, which
the Assignor finds appropriate in accordance with sound business judgment and
(B) a refund or credit due as a result of returned or damaged merchandise. The
costs and expenses (including, without limitation, attorneys' fees) of collec-
tion, whether incurred by the Assignor or the Collateral Agent, shall be borne
by the Assignor.
3.5. INSTRUMENTS. Upon the occurrence and during the con-
tinuance of an Event of Default and upon the written request of the Collateral
Agent, if any of the Receivables of the Assignor becomes evidenced by an
Instrument, the Assignor will within 10 days notify the Collateral Agent
thereof, and upon written request by the Collateral Agent promptly deliver such
Instrument to the Collateral Agent appropriately endorsed to the order of the
Collateral Agent as further security hereunder.
3.6. FURTHER ACTIONS. The Assignor will, at its own ex-
pense, make, execute, endorse, acknowledge, file and/or deliver to the Collater-
al Agent from time to time such vouchers, invoices, schedules, confirmatory
assignments, conveyances, financing statements, transfer endorsements, powers of
attorney, certificates, reports, notices and other assurances or instruments and
take such further steps relating to its Receivables and other property or rights
covered by the security interest hereby granted, as the Collateral Agent may
reasonably require in order to create, preserve, perfect or validate (under the
Assignment of Claims Act of 1940, as amended, or similar state laws, in each
case for Receivables under a contract with a book value greater than $50,000)
any
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security interest granted pursuant to this Agreement or to enable the Collateral
Agent to exercise and enforce its rights under this Agreement with respect to
such security interest; PROVIDED, HOWEVER, the Collateral Agent agrees that
notwithstanding anything to the contrary set forth in this Section 3.6, unless
an Event of Default shall have occurred and be continuing, the Assignor may
retain in its possession all Collateral which would otherwise require possession
by the Collateral Agent for perfection of the security interest therein granted
by the Assignor under this Agreement.
ARTICLE IIIA
SPECIAL PROVISIONS CONCERNING CHATTEL
PAPER AND EQUIPMENT
Section 3A.1. CHATTEL PAPER. Upon the occurrence and
during the continuance of an Event of Default, the Assignor will, upon request
by the Collateral Agent, (i) legend all Chattel Paper with an appropriate refer-
ence to the fact that such Chattel Paper has been assigned to the Collateral
Agent and that the Collateral Agent has a security interest therein and (ii)
promptly deliver all Chattel Paper to the Collateral Agent.
Section 3A.2. INSURANCE PROCEEDS. The Collateral Agent may
apply any proceeds of insurance with respect to Equipment received by it in
accordance with the terms and provisions set forth in the Mortgages, regardless
of whether such Equipment is subject thereto. The Assignor assumes all lia-
bility and responsibility in connection with the Collateral acquired by it and
the liability of the Assignor to pay the Obligations shall in no way be affected
or diminished by reason of the fact that such Collateral may be lost, destroyed,
stolen, damaged or for any reason whatsoever unavailable to the Assignor.
ARTICLE IIIB
SPECIAL PROVISIONS CONCERNING
ASSIGNED AGREEMENTS
Section 3B.1. EXERCISE OF RIGHTS. So long as no Event of
Default has occurred and is continuing, the
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Assignor may exclusively exercise all of the Assignor's rights, powers, privi-
leges and remedies under the Assigned Agreements, PROVIDED that without the
prior written consent of the Collateral Agent, the Assignor will not enter into
any amendment, modification, waiver or termination of any provision of the
Assigned Agreements other than those which do not have a material adverse effect
on the value of such Assigned Agreement; PROVIDED, further however, that the
Assignor will give the Collateral Agent written notice of any such amendment,
modification, waiver or termination not requiring the prior written consent of
the Collateral Agent hereunder.
Section 3B.2. FURTHER ACTIONS. The Assignor will at its
expense (i) perform and observe all the terms and provisions of the Assigned
Agreements to be performed or observed by it, maintain the Assigned Agreements
in full force and effect, enforce each of the Assigned Agreements in accordance
with its terms, and take all such reasonable action to such end as may be from
time to time requested by the Collateral Agent; except where the failure to take
any of the foregoing actions would not have a material adverse effect on the
value of the Assigned Agreements; and (ii) furnish to the Collateral Agent
promptly upon receipt thereof copies of all notices, requests and other docu-
ments received by the Assignor under or pursuant to the Assigned Agreements, and
from time to time (A) furnish to the Collateral Agent such information and
reports regarding the Assigned Agreements as the Collateral Agent may reasonably
request in writing and (B) upon written request of the Collateral Agent, make to
any party thereto such demands and requests for information and reports or for
action as the Assignor is entitled to make under the Assigned Agreements.
ARTICLE IV
FURTHER ASSURANCES
Except as permitted hereby, the Assignor will not do
anything to materially impair the rights of the Collateral Agent in the Collat-
eral. The Assignor will, at its own expense, make, execute, endorse, acknowl-
edge, file and/or deliver to the Collateral Agent from time to time such lists,
descriptions and designations of its Collateral, warehouse receipts, receipts in
the nature of
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warehouse receipts, bills of lading, documents of title, vouchers, invoices,
schedules, confirmatory assignments, conveyances, financing statements, transfer
endorsements, powers of attorney, certificates, reports and other assurances or
instruments and take such further steps relating to the Collateral and other
property or rights covered by the security interest hereby granted, which the
Collateral Agent deems reasonably appropriate or advisable to perfect, preserve
or protect its security interest in the Collateral; PROVIDED, HOWEVER, the Col-
lateral Agent agrees that notwithstanding anything to the contrary set forth in
this Agreement, unless an Event of Default shall have occurred and be continu-
ing, the Assignor may retain in its possession all Collateral which would
otherwise require possession by the Collateral Agent for perfection of the
security interest therein granted by the Assignor under this Agreement. The As-
signor agrees to sign and deliver to the Collateral Agent such financing state-
ments, in form acceptable to the Collateral Agent, as the Collateral Agent may
from time to time reasonably request or as are necessary or desirable in the
reasonable opinion of the Collateral Agent to establish and maintain a valid and
enforceable security interest in the Collateral as provided herein and having
the priority as contemplated hereunder and the other rights and security
contemplated hereby all in accordance with the Uniform Commercial Code as
enacted in any and all relevant jurisdictions or any other relevant law. The
Assignor will pay any applicable filing fees and related expenses. To the
extent permitted by applicable law, the Assignor authorizes the Collateral Agent
to file any such financing statements without the signature of the Assignor and
to sign such financing statement on behalf of, and in the name of, the Assignor.
ARTICLE V
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT
5.1. REMEDIES; OBTAINING THE COLLATERAL UPON DEFAULT. The
Assignor agrees that, if any Event of Default shall have occurred and be
continuing, then and in every such case, the Collateral Agent shall be entitled
to exercise all rights and remedies of a secured party under the Uniform
Commercial Code as in effect in any relevant jurisdiction to enforce the
assignments and
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security interests contained herein, and, in addition, to the extent permitted
by applicable law, the Collateral Agent may:
(a) personally, or by agents or attorney, immediately take
possession of the Collateral or any part thereof, from the Assignor or any other
Person who then has possession of any part thereof with or without notice or
process of law, and for that purpose may enter upon the Assignor's or such other
Person's premises where any of the Collateral is located and remove the same and
use in connection with such removal any and all services, supplies, aids and
other facilities of the Assignor; and
(b) instruct the obligor or obligors on any agreement, in-
strument or other obligation (including, without limitation, the Receivables)
constituting the Collateral to make any payment required by the terms of such
instrument or agreement directly to the Collateral Agent;
it being understood that the Assignor's obligation so to deliver the Collateral
is of the essence of this Agreement and that, accordingly, upon application to a
court of equity having jurisdiction, the Collateral Agent shall be entitled to
apply for a decree requiring, specific performance by the Assignor of said
obligation.
5.2. REMEDIES; DISPOSITION OF THE COLLATERAL. In connec-
tion with the exercise by the Collateral Agent of any of its rights or remedies
at any time an Event of Default has occurred and is continuing, any Collateral
may be sold, leased or otherwise disposed of under one or more contracts or as
an entirety, and without the necessity of gathering at the place of sale the
property to be sold, and in general in such manner, at such time or times, at
such place or places and on such terms as the Collateral Agent may, in compli-
ance with any mandatory requirements of applicable law, determine to be commer-
cially reasonable. Any such disposition which shall be a private sale or other
private proceedings permitted by such requirements shall be made upon not less
than 10 days' written notice to the Assignor specifying the time at which such
disposition is to be made and the intended sale price or other consideration
therefor, and shall be subject, for 10 days after the giving of such notice, to
the right of the Assignor or any nominee of the Assignor
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to acquire the Collateral involved at a price or for such other consideration at
least equal to the intended sale price or other consideration so specified. Any
such disposition which shall be a public sale permitted by such requirements
shall be made upon not less than 10 days' written notice to the Assignor
specifying the time and place of such sale and, in the absence of applicable
requirements of law, shall be by public auction (which may, at the Collateral
Agent's option, be subject to reserve), after publication of notice of such
auction not less than 10 days prior thereto in one newspaper in general circula-
tion in Macon, Georgia and one newspaper in general circulation in Atlanta,
Georgia. To the extent permitted by any such requirement of law, the Collateral
Agent (or any Secured Party) may itself bid for and become the purchaser of the
Collateral or any item thereof offered for sale in accordance with this Section
without accountability to the Assignor (except to the extent of surplus money
received as provided in Section 5.4). In the payment of the purchase price of
the Collateral, the purchaser shall be entitled to have credit on account of the
purchase price thereof of amounts owing to such purchaser on account of any of
the Obligations which would be payable to it in accordance with the terms and
provisions of the Credit Agreements, and any such purchaser may deliver notes,
claims for interest, or claims for other payment with respect to such obliga-
tions in lieu of cash up to the amount which would, upon distribution of the net
proceeds of such sale, be payable thereon. Such notes, if the amount payable
hereunder shall be less than the amount due thereon, shall be returned to the
holder thereof after being appropriately stamped to show partial payment. If,
under mandatory requirements of applicable law, the Collateral Agent shall be
required to make disposition of the Collateral within a period of time which
does not permit the giving of notice to the Assignor as herein above specified,
the Collateral Agent need give the Assignor only such notice of disposition as
shall be reasonably practicable in view of such mandatory requirements of
applicable law.
5.3. WAIVER OF CLAIMS. TO THE EXTENT PERMITTED BY APPLICA-
BLE LAW, EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT, THE ASSIGNOR HEREBY
WAIVES NOTICE OR JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENT'S
TAKING POSSESSION OR THE COLLATERAL AGENT'S
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DISPOSITION OF ANY OF THE COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL
PRIOR NOTICE AND HEARING FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH
RIGHT WHICH THE ASSIGNOR WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY
STATUTE OF THE UNITED STATES OR OF ANY STATE, and the Assignor hereby further
waives to the extent permitted by applicable law:
(a) all damages occasioned by such taking of possession
except any damages which are the direct result of the Collateral Agent's gross
negligence or willful misconduct;
(b) all other requirements as to the time, place and terms
of sale or other requirements with respect to the enforcement of the Collateral
Agent's rights hereunder; and
(c) all rights of redemption, appraisal, valuation, stay,
extension or moratorium now or hereafter in force under any applicable law in
order to prevent or delay the enforcement of this Agreement or the absolute sale
of the Collateral or any portion thereof, and the Assignor, for itself and all
who may claim under it, insofar as it or they may now or hereafter lawfully do
so, hereby waives the benefit of such laws.
Any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of the Assignor therein and thereto, and
shall be a perpetual bar both at law and in equity against the Assignor and
against any and all Persons claiming or attempting to claim the Collateral so
sold, optioned or realized upon, or any part thereof, from, through and under
the Assignor.
5.4. APPLICATION OF PROCEEDS; ASSIGNOR LIABLE FOR DEFICIEN-
CY. The proceeds of any Collateral obtained pursuant to Section 5.1 or disposed
of pursuant to Section 5.2 shall be applied as follows:
(a) first, to the payment of any and all expenses and fees
(including reasonable attorney's fees) actually incurred by the Collateral
Agent in obtaining, taking possession of, removing, storing and disposing of
Collateral and any and all amounts incurred by the Col-
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lateral Agent in connection therewith or owing to the Collateral Agent
hereunder;
(b) next, any surplus then remaining, to the payment of the
other Obligations; and
(c) if the Total Commitment is then terminated, all Loans
(under and as defined in each of the Credit Agreements) have been paid in full,
no Letters of Credit or Subsidiary Letters of Credit are outstanding and no
Obligation is outstanding, any surplus then remaining shall be paid to the
Assignor, subject, however, to the rights of the holder of any then existing
Lien of which the Collateral Agent has actual notice (without investigation);
it being understood that the Assignor shall remain liable to the extent of any
deficiency between the amount of the proceeds of the Collateral and the aggre-
gate amount of the sums referred to in clauses (a) and (b) of this Section 5.4.
5.5. REMEDIES CUMULATIVE. Each and every right, power and
remedy hereby specifically given to the Collateral Agent shall be in addition to
every other right, power and remedy specifically given under this Agreement or
under any other Credit Document or now or hereafter existing at law or in
equity, or by statute and each and every right, power and remedy whether
specifically herein given or otherwise existing may be exercised from time to
time or simultaneously and as often and in such order as may be deemed expedient
by the Collateral Agent. All such rights, powers and remedies shall be cumula-
tive and the exercise or the beginning of exercise of one shall not be deemed a
waiver of the right to exercise of any other or others. No delay or omission of
the Collateral Agent in the exercise of any such right, power or remedy and no
renewal or extension of any of the Obligations shall impair any such right,
power or remedy or shall be construed to be a waiver of any Default (as defined
in either of the Credit Agreements) or Event of Default or an acquiescence
therein.
5.6. DISCONTINUANCE OF PROCEEDINGS. In case the Collateral
Agent shall have instituted any proceeding to enforce any right, power or remedy
under this Agreement by foreclosure, sale, entry or otherwise, and such
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proceeding shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Collateral Agent, then and in every such
case the Assignor and the Collateral Agent shall be restored to their former
positions and rights hereunder with respect to the Collateral subject to the
security interest created under this Agreement, and all rights, remedies and
powers of the Collateral Agent shall continue as if no such proceeding had been
instituted.
ARTICLE VI
INDEMNITY
6.1. Without duplication of any amounts payable under Sec-
tion 12.1 of each Credit Agreement and any similar indemnity provision under any
other Credit Document, the Assignor shall: (i) whether or not the transactions
hereby contemplated are consummated, pay all reasonable out-of-pocket costs and
expenses of the Collateral Agent actually incurred in connection with the admin-
istration (both before and after the execution hereof and including advice of
counsel as to the rights and duties of the Collateral Agent with respect
thereto) of and in connection with the preparation, execution and delivery of
this Agreement (including, without limitation, the reasonable fees and disburse-
ments of Skadden, Arps, Slate, Meagher & Flom) and of the Collateral Agent actu-
ally incurred in connection with the preservation of rights under, and enforce-
ment of, and, after an Event of Default, any renegotiation or restructuring of
this Agreement and any amendment, waiver or consent relating thereto (including,
without limitation, the reasonable fees and disbursements of counsel for the
Collateral Agent); (ii) pay and hold the Collateral Agent harmless from and
against any and all present and future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies which arise from any payment
made hereunder or from the execution, delivery or registration of, or otherwise
with respect to this Agreement and save the Collateral Agent harmless from and
against any and all liabilities with respect to or resulting from any delay or
omission to pay any such taxes, charges or levies; and (iii) indemnify the
Collateral Agent, its officers, directors, employees, representatives and agents
from and hold each of them harmless against any
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and all costs, losses, liabilities, claims, damages or expenses actually in-
curred by any of them (whether or not any of them is designated a party,
thereto) arising out of or by reason of any investigation, litigation or other
proceeding related to this Agreement or any transaction contemplated hereby,
including, without limitation, the reasonable fees and disbursements of counsel
incurred in connection with any such investigation, litigation or other proceed-
ing. Notwithstanding anything in this Agreement to the contrary, the Assignor
shall not be responsible to the Collateral Agent or any officer, director,
employee, representative or agent of the foregoing (an "Indemnified Party") for
any losses, damages, liabilities or expenses which result from such Indemnified
Party's gross negligence or willful misconduct. It is understood that the
Assignor shall not, in connection with any single action, suit, proceeding or
claim or separate but substantially similar or related actions, suits, proceed-
ings or claims, arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys at
the same time for the Indemnified Parties (which firm shall be designated by the
Collateral Agent) except that, if any Indemnified Party other than the Collater-
al Agent shall determine, in its sole discretion, that there may be a conflict
in such firm representing the Collateral Agent and such Indemnified Party, then
the Assignor shall be liable for the reasonable fees and expenses of an addi-
tional firm for such Indemnified Party whose interests may be in conflict. The
Assignor's obligations under this Article VI shall survive any termination of
this Agreement.
ARTICLE VII
DEFINITIONS
7.1. DEFINITIONS. The following terms shall have the mean-
ings herein specified unless the context otherwise requires. Such definitions
shall be equally applicable to the singular and plural forms of the terms
defined. Except as otherwise defined herein, including in the recital para-
graphs, capitalized terms used herein and defined in the Company Credit Agree-
ment shall be used herein as so defined.
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"Agreement" shall have the meaning specified in the first
paragraph hereof.
"Assigned Agreements" shall have the meaning specified in
Section 1.1 hereof.
"Assignor" shall have the meaning specified in the first
paragraph hereof.
"Chattel Paper" shall have the meaning assigned that term
under the Uniform Commercial Code as in effect on the date hereof in the State
of New York.
"Collateral" shall have the meaning specified in Section
1.1(a).
"Collateral Agent" shall mean Bankers Trust Company, a
New York banking corporation, in its capacity as collateral agent for the
Secured Creditors or any of its successors in such capacity.
"Company" shall have the meaning specified in the first
paragraph of this Agreement.
"Company Credit Agreement" shall have the meaning specified
in the first "WHEREAS" clause of this Agreement.
"Company Guaranty" shall have the meaning specified in the
fifth "Whereas" clause of this Agreement.
"Contract Rights" shall mean all rights of the Assignor
under each Contract (including, without limitation, all rights to payment).
"Contracts" shall mean all contracts (including, without
limitation, the NME Purchase Agreement) between the Assignor and one or more
additional parties as any such Contract may be amended, modified or supplemented
from time to time.
"Credit Agreements" shall have the meaning specified in the
third "Whereas" clause of this Agreement.
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"Default" shall mean and include any "Default" under either
Credit Agreement.
"Documents" shall have the meaning assigned that term under
the Uniform Commercial Code as in effect on the date hereof in the State of New
York.
"Equipment" shall mean all machinery, all manufacturing,
distribution, selling, data processing and office equipment, all computers, all
furniture, furnishings, appliances, trade fixtures, CAT scanners, X-ray ma-
chines, vehicles (other than vehicles the title to which is required to be
registered pursuant to state motor vehicle registration statutes); all other
equipment, including, in any event, and without limitation, all "equipment" as
defined in the Uniform Commercial Code as in effect on the date hereof in the
State of New York and any attachments, components, parts, equipment and accesso-
ries installed thereon or affixed thereto.
"Event of Default" shall mean and include any "Event of
Default" under either Credit Agreement.
"Excluded Property" shall have the meaning specified in
Section 1.1(a) of this Agreement.
"Fixtures" shall have the meaning assigned to that term
under the Uniform Commercial Code as in effect on the date hereof in the State
of New York.
"General Intangibles" shall have the meaning assigned that
term under the Uniform Commercial Code as in effect on the date hereof in the
State of New York including, in any event, but not limited to, all rights,
interests, choses in action, causes of actions, claims and all other intangible
property of every kind and nature (other than Receivables and Instruments),
including, without limitation, all loans, royalties and other obligations
receivable; all inventions, designs, trade secrets, know-how, computer programs,
printouts and other computer materials, goodwill, registrations, licenses (other
than licenses with respect to which the Assignor is a licensee and which by
their terms or by law are not assignable), franchises, patient lists, credit
files, correspondence and advertising materials; all customer, insurance and
supplier contracts, rights under license and franchise agreements and other
contracts and contract
21
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rights; all interests in partnerships and joint ventures; all tax refunds and
tax refund claims; all payments due or made to the Assignor in connection with
any requisition, confiscation, condemnation, seizure or forfeiture of any
property by any person or governmental authority; all credits with and other
claims against carriers and shippers; all rights to indemnification; other
proprietary rights of every kind and description; all rights under or in
connection with any pledge agreement or security agreement securing any obliga-
tion owed to the Assignor; and all other intangible property.
"Goods" shall have the meaning assigned that term under the
Uniform Commercial Code as in effect on the date hereof in the State of New
York.
"Indemnified Party" shall have the meaning specified in
Article VI of this Agreement.
"Instruments" shall mean all notes, drafts, stocks, bonds
and debt and equity securities, whether or not certificated, and warrants,
options, puts and calls and other rights to acquire or otherwise relating to the
same and all other writings which evidence a right to payment for money,
including, in any event, and without limitation, all "instruments," "certificat-
ed securities" or "uncertificated securities" each as defined in the Uniform
Commercial Code as in effect on the date hereof in the State of New York, and
all payments thereunder and instruments and other property from time to time
delivered in respect thereof or in exchange therefor, together with all security
pledged, assigned, hypothecated, granted or held to secure the foregoing.
"Inventory" shall mean all goods (whether in the possession
of the Assignor or of a bailee or other person for sale, storage, transit,
processing, use or otherwise and whether consisting of whole goods, spare parts,
components, supplies, materials or consigned, returned or repossessed goods),
including, without limitation, all such goods which are held for sale or lease
or are to be furnished (or which have been furnished) or consumed in the
Assignor's business and including all other inventory, including, in any event
and without limitation, all "inventory" as such term is defined in the Uniform
Commercial Code as in effect on the date
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hereof in the State of New York, now or hereafter owned by the Assignor.
"Lenders" shall mean the financial institutions from time to
time signatories to either or both of the Credit Agreements.
"1992 Company Credit Agreement" shall have the meaning
specified in the first "Whereas" clause of this Agreement.
"1992 Credit Agreements" shall have the meaning specified in
the third "Whereas" clause of this Agreement.
"1992 Subsidiary Credit Agreement" shall have the meaning
specified in the third "Whereas" clause of this Agreement.
"Obligations" shall mean (a) all indebtedness, obliga-
tions, and liabilities (including, without limitation, guarantees, reimbursement
obligations in respect of Letters of Credit and other contingent liabilities) of
the Assignor to the Collateral Agent, the Agent and any Lender, arising under or
in connection with (i) the Company Credit Agreement, (ii) the Company Guaranty,
and/or (iii) this Agreement; (b) any and all sums advanced by the Collateral
Agent in order to preserve the Collateral or preserve its security interest in
the Collateral; and (c) in the event of any proceeding for the collection or
enforcement of any indebtedness, obligations, or liabilities of the Assignor
referred to in clause (a), after an Event of Default shall have occurred and be
continuing, the reasonable expenses of the Collateral Agent and the other
Secured Creditors of retaking, holding, preparing for sale or lease, selling or
otherwise disposing or realizing on the Collateral, or of any exercise by the
Collateral Agent of its rights hereunder, together with reasonable attorneys'
fees of the Collateral Agent and the other Secured Creditors actually incurred
and court costs.
"Original Co-Agents" shall have the meaning specified in the
first "Whereas" clause of this Agreement.
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"Permitted Encumbrances" shall have the meaning specified in
Section 2.2.
"Proceeds" shall mean "proceeds" as such term is defined in
the Uniform Commercial Code as in effect on the date hereof in the State of New
York.
"Receivables" shall mean all of the Assignor's "accounts" as
such term is defined in the Uniform Commercial Code as in effect on the date
hereof in the State of New York.
"Secured Creditors" shall mean, collectively, the Lenders,
the Agent, the Co-Agent, the Collateral Agent, and their respective successors
and assigns.
"Significant Equipment" shall mean Equipment with an
aggregate fair market value of $200,000 or greater.
"SUBSIDIARY COLLATERAL" shall have the meaning provided for
the term "Collateral" in the Subsidiary Pledge and Security Agreement.
"Subsidiary Credit Agreement" shall have the meaning
specified in the second "Whereas" clause of this Agreement.
"Subsidiary Guaranty" shall have the meaning specified in
the third "Whereas" clause of this Agreement.
"Total Commitment" shall mean the Total Revolving Loan
Commitment.
ARTICLE VIII
MISCELLANEOUS
8.1. NOTICES. All notices and other communications here-
under shall be given to the Assignor or the Collateral Agent at the addresses
and in the manner specified in the Company Credit Agreement.
8.2. WAIVER; AMENDMENT. No delay on the part of the Co-
llateral Agent in exercising any of its rights,
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remedies, powers and privileges hereunder or partial or single exercise thereof,
shall constitute a waiver thereof. None of the terms and conditions of this
Agreement may be changed, waived, modified or varied in any manner whatsoever
unless executed and delivered in accordance with the terms of the Credit
Agreements. No notice to or demand on the Assignor in any case shall entitle it
to any other or further notice or demand in similar or other circumstances or
constitute a waiver of any of the rights of the Collateral Agent to any other or
further action in any circumstances without notice or demand.
8.3. OBLIGATIONS ABSOLUTE. The obligations of the Assignor
under this Agreement shall be absolute and unconditional in accordance with its
terms and shall remain in full force and effect without regard to, and shall not
be released, suspended, discharged, terminated or otherwise affected by, any
circumstance or occurrence whatsoever, including, without limitation: (a) any
change in the time, place or manner of payment of, or in any other term of, all
or any of the Obligations, any waiver, indulgence, renewal, extension, amendment
or modification of or addition, consent or supplement to or deletion from or any
other action or inaction under or in respect of the Company Guaranty, either
Credit Agreement, any Note, any other Credit Document or any other documents,
instruments or agreements relating to the Obligations or any other instrument or
agreement referred to therein or any assignment or transfer of any thereof; (b)
any lack of validity or enforceability of the Company Guaranty, either Credit
Agreement, any Note, any other Credit Document or any other documents, instru-
ments or agreement referred to therein or any assignment or transfer of any
thereof; (c) any furnishing of any additional security to the Collateral Agent,
the other Secured Creditors or their assignees or any acceptance thereof or any
release of any security by the Collateral Agent, the other Secured Creditors or
their assignees; (d) any limitation on any party's liability or obligations
under any such instrument or agreement or any invalidity or unenforceability, in
whole or in part, of any such instrument or agreement or any term thereof; (e)
any bankruptcy, insolvency, reorganization, composition, adjustment, dissolu-
tion, liquidation or other like proceeding relating to the Assignor or any
Subsidiary of the Assignor, or any action taken with respect to this Agreement
by any trustee or receiver, or by any court, in any such
25
<PAGE>
proceeding, whether or not the Assignor shall have notice or knowledge of any of
the foregoing; (f) any exchange, release or nonperfection of any other collater-
al, or any release, or amendment or waiver of or consent to departure from any
guaranty or security, for all or any of the Obligations; or (g) any other
circumstance which might otherwise constitute a defense available to, or a dis-
charge of the Assignor. The rights and remedies of the Collateral Agent herein
provided are cumulative and not exclusive of any rights or remedies which the
Collateral Agent would otherwise have.
8.4. SUCCESSORS AND ASSIGNS. This Agreement shall be bind-
ing upon the Assignor and its successors and assigns and shall inure to the
benefit of each Secured Creditor and its permitted successors and assigns, pro-
vided that the Assignor may not transfer or assign any or all of its rights or
obligations hereunder without the written consent of the Collateral Agent.
8.5. HEADINGS DESCRIPTIVE. The headings of the several
sections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
8.6. SEVERABILITY. To the extent permitted by applicable
law, any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining provi-
sions hereof, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction.
8.7. GOVERNING LAW; APPOINTMENT OF AN AGENT FOR SERVICE OF
PROCESS; SUBMISSION TO JURISDICTION. THIS AGREEMENT AND THE RIGHTS AND OBLIGA-
TIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAW OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAW PRINCIPLES THEREOF). ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO MAY BE BROUGHT IN THE
COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
THE
26
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ASSIGNOR HEREBY CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
JURISDICTION OF THE AFORESAID COURTS SOLELY FOR THE PURPOSE OF ADJUDICATING ITS
RIGHTS OR THE RIGHTS OF THE AGENT WITH RESPECT TO THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO. THE ASSIGNOR HEREBY IRREVOCABLY DESIGNATES CT CORPORATION
SYSTEM, LOCATED AT 1633 BROADWAY, NEW YORK, NEW YORK 10019 AS THE DESIGNEE,
APPOINTEE AND PROCESS AGENT OF THE ASSIGNOR, TO RECEIVE, FOR AND ON BEHALF OF
THE ASSIGNOR, SERVICE OF PROCESS IN SUCH JURISDICTIONS IN ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO AND
SUCH SERVICE SHALL, TO THE EXTENT PERMITTED BY APPLICABLE LAW, BE DEEMED COM-
PLETED TEN DAYS AFTER DELIVERY THEREOF TO SAID COLLATERAL AGENT. IT IS UNDER-
STOOD THAT A COPY OF SUCH PROCESS SERVED ON SUCH PROCESS AGENT WILL BE PROMPTLY
FORWARDED BY MAIL TO THE ASSIGNOR AT ITS ADDRESS SET FORTH IN THE COMPANY CREDIT
AGREEMENT, BUT THE FAILURE OF THE ASSIGNOR TO RECEIVE SUCH COPY SHALL NOT, TO
THE EXTENT PERMITTED BY APPLICABLE LAW, AFFECT IN ANY WAY THE SERVICE OF SUCH
PROCESS. THE ASSIGNOR HEREBY IRREVOCABLY WAIVES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO
THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
RESPECTIVE JURISDICTIONS IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED
THERETO. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE COLLATERAL AGENT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST THE ASSIGNOR IN ANY OTHER JURISDICTION.
8.8. ASSIGNOR'S DUTIES. It is expressly agreed, anything
herein contained to the contrary notwithstanding, that the Assignor shall remain
liable to perform all of the obligations, if any, assumed by it with respect to
the Collateral and the Collateral Agent shall not have any obligations or
liabilities with respect to any Collateral by reason of or arising out of this
Agreement (except for actions arising from the Collateral Agent's gross negli-
gence or willful misconduct or for acts which are not commercially reasonable),
nor shall the Collateral Agent be required or obligated in any manner to perform
or fulfill any of the obligations of the Assignor under or with respect to any
Collateral.
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8.9. TERMINATION; RELEASE. When the Total Commitment is
terminated, all Loans (under and as defined in each of the Credit Agreements)
are indefeasibly paid in full, no Letters of Credit or Subsidiary Letters of
Credit are outstanding and all other Obligations (other than indemnities which
by their terms survive the repayment of the Loans) are irrevocably paid in full,
this Agreement shall terminate. Upon the termination of this Agreement, the
Collateral Agent, at the request and expense of the Assignor will promptly exe-
cute and deliver to the Assignor the proper instruments (including Uniform Com-
mercial Code termination statements on form UCC-3) acknowledging the termination
of this Agreement and will duly assign, transfer and deliver to the Assignor
(without recourse and without any representation or warranty) such of the
Collateral as may be in the possession of the Collateral Agent and has not
theretofore been sold or otherwise applied or released pursuant to this Agree-
ment.
8.10. COLLATERAL AGENT. The appointment of the Collateral
Agent as Collateral Agent hereunder pursuant to the Intercreditor Agreement (as
defined in the 1992 Company Credit Agreement) has been ratified and confirmed by
the Lenders in the Credit Agreements, and the Collateral Agent shall be entitled
to the benefits of the Credit Agreements. The Collateral Agent shall be obli-
gated, and shall have the right hereunder to make demands, to give notices, to
exercise or refrain from exercising any rights, and to take or refrain from
taking action (including, without limitation, the release or substitution of
Collateral) solely in accordance with this Agreement and the Credit Agreements.
The Collateral Agent may resign and a successor Collateral Agent may be appoint-
ed in the manner provided in the Credit Agreements. Upon the acceptance of any
appointment as a Collateral Agent by a successor Collateral Agent, that succes-
sor Collateral Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Collateral Agent under
this Agreement, and the retiring Collateral Agent shall thereupon be discharged
from its duties and obligations under this Agreement. After any retiring
Collateral Agent's resignation, the provisions of this Agreement shall inure to
its benefit as to any actions taken or omitted to be taken by it under this
Agreement while it was Collateral Agent and the retiring Collateral Agent shall
take all
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<PAGE>
steps necessary to transfer to the new Collateral Agent the rights and interest
granted under this Agreement.
8.11. WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE ASSIGNOR HEREBY IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT, OR ANY MATTER ARISING IN CONNECTION HEREUNDER.
29
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered by their duly authorized officers as of
the date first above written.
BANKERS TRUST COMPANY, in its
capacity as Collateral Agent
By: /s/ Mary Kay Coyle
_______________________________
Name: Mary Kay Coyle
Title: Vice President
CHARTER MEDICAL CORPORATION,
as Assignor
By: /s/ James R. Bedenbaugh
______________________________
Name: James R. Bedenbaugh
Title: Treasurer
<PAGE>
SCHEDULE 1
COMPANY PLEDGE AND SECURITY AGREEMENT
EXCLUDED PROPERTY
1. Charter Medical Building Mortgate -- Note and Security Deed dated as of June
26, 1969 among William A. Fickling, B. Sanders Walker, William A. Flickling,
Jr., B. Sanders Walker, Jr., W.S. Stuckey, Jr., Lynda Stuckey Franklin, H.W.
Polley and New York Life Insurance Company. (On October 16, 1981, Charter
Medical Corporation purchased a 50% undivided interest in the building and
assumed a 50% share of the New York Life Insurance Company mortgage loan on
the building.)
<PAGE>
SECOND AMENDED AND RESTATED
FINCO PLEDGE AND SECURITY AGREEMENT II
SECOND AMENDED AND RESTATED FINCO PLEDGE AND SECURITY AGREEMENT
II, dated as of May 2, 1994 (as the same may be amended, supplemented or
modified from time to time, this "Agreement"), made by CMCI, Inc., a Nevada
corporation (the "Company"), to Bankers Trust Company, a New York banking
corporation, in its capacity as collateral agent (the "Collateral Agent", and
as agent under the Credit Agreements, as hereinafter defined, the "Agent") for
the financial institutions from time to time parties to the Credit Agreements
(the "Lenders"), First Union National Bank of North Carolina, as co-agent (the
Co-Agent"), and the Agent. Capitalized terms, unless otherwise defined in the
recitals hereto, shall have the meanings assigned thereto in Article VIII
hereof.
W I T N E S S E T H:
WHEREAS, the parties hereto (or their predecessors) entered into
the FINCO Pledge and Security Agreement dated as of September 1, 1988 which
was amended and restated by the Amended and Restated FINCO Pledge and Security
Agreement dated as of July 21, 1992 (the "1992 FINCO Pledge and Security
Agreement") in favor of the Collateral Agent, the Lenders and the Issuing
Banks (as defined in the 1992 FINCO Pledge Security Agreement), and now desire
to amend and restate such agreement in its entirety; and
WHEREAS, Charter Medical Corporation, a Delaware corporation (as
successor to WAF Acquisition Corporation, a Delaware corporation, "Charter"),
certain of the Lenders, the Agent, Wells Fargo Bank, National Association and
Bank of America National Trust and Savings Association, as co-agents (the
"Original Co-Agents") are parties to that certain Credit Agreement dated as of
September 1, 1988 which was amended and restated by the Amended and Restated
Credit Agreement dated as of July
<PAGE>
21, 1992 (the "1992 Company Credit Agreement"), which is being amended and
restated by the Second Amended and Restated Credit Agreement dated as of the
date hereof (as the same may be further amended, restated, supplemented or
otherwise modified from time to time, the "Company Credit Agreement"),
pursuant to which the Lenders made certain loans and commitments to Charter,
the terms of which are being amended and restated pursuant to the Company
Credit Agreement; and
WHEREAS, pursuant to the terms and conditions of the Company
Credit Agreement, the Lenders have made certain commitments to make additional
loans to, and issue letters of credit for the account of, Charter; and
WHEREAS, certain Subsidiary Borrowers, certain of the Lenders, the
Agent and the Original Co-Agents entered into a Credit Agreement, dated as of
September l, 1988 which was amended and restated by the Amended and Restated
Subsidiary Credit Agreement dated as of July 21, 1992 (the "1992 Subsidiary
Credit Agreement"; and, together with the 1992 Company Credit Agreement, the
"1992 Credit Agreements"), which is being amended and restated by the Second
Amended and Restated Subsidiary Credit Agreement dated as of the date hereof
(as the same may be further amended, restated, supplemented or otherwise
modified from time to time, the "Subsidiary Credit Agreement"; and, together
with the Company Credit Agreement, each a "Credit Agreement" and collectively
the "Credit Agreements"), pursuant to which certain of the Lenders made
certain loans and commitments to, and participated in letters of credit for
the benefit of, certain Subsidiary Borrowers, the terms of which are being
amended and restated pursuant to the Subsidiary Credit Agreement; and
WHEREAS, pursuant to the terms and conditions of the Subsidiary
Credit Agreement, the Lenders have made certain commitments to make additional
loans to, and participate in and/or issue letters of credit for the account
of, the Subsidiary Borrowers; and
WHEREAS, the Company has executed and delivered a Second Amended
and Restated Subsidiary Guaranty dated as of the date hereof (as the same may
be amended, supplemented or otherwise modified from time to time, the
"Subsidiary Guaranty") pursuant to which the Company has agreed jointly and
severally to guarantee all of the
2
<PAGE>
obligations of Charter and each Subsidiary Borrower under the Credit
Agreements and the other Credit Documents; and
WHEREAS, the Lenders have agreed to amend and restate the 1992
Credit Agreements upon terms and conditions acceptable to Charter and the
Subsidiary Borrowers; and
WHEREAS, it was a condition precedent to the incurrence of loans
and the participation in letters of credit under the 1992 Credit Agreements
that the Company execute and deliver to the Collateral Agent the 1992 FINCO
Pledge and Security Agreement and it is a condition precedent to the
incurrence of loans and the issuance of letters of credit under the Credit
Agreements that the Company execute and deliver to the Collateral Agent this
Agreement; and
WHEREAS, (a) the Senior Secured Notes (as defined in the 1992
FINCO Pledge and Security Agreement) have been irrevocably paid in full; (b)
each Issuing Bank has agreed, among other things, that the Reimbursement
Agreements (as defined in the 1992 FINCO Pledge and Security Agreement) to
which it is a party (other than the Credit Documents to the extent the same
could be considered Reimbursement Agreements) shall no longer be entitled to
the security interests and other benefits of this Agreement; and (c) the
Intercreditor Agreement (as defined in the 1992 FINCO Pledge and Security
Agreement) has been terminated, except for the appointment by the Lenders of
Bankers Trust Company as Collateral Agent, which appointment has been ratified
and confirmed in the Credit Agreements;
NOW, THEREFORE, in consideration of the benefits accruing to the
Company, the receipt and sufficiency of which are hereby acknowledged, the
Company hereby makes the following representations and warranties to the
Collateral Agent and hereby covenants and agrees with the Collateral Agent as
follows:
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ARTICLE I
SECURITY INTERESTS
1.1. SECURITY FOR OBLIGATIONS, ETC. This Agreement is for the
benefit of the Secured Parties to secure the payment in full when due, whether
at stated maturity, by acceleration or otherwise, of all Obligations.
1.2. ASSIGNMENT AND PLEDGE.
(a) ASSIGNMENT. The Company hereby assigns to the Collateral
Agent for the benefit of the Secured Parties, and hereby grants to the
Collateral Agent for the benefit of the Secured Parties a security interest
in, all of the Company's right, title and interest in and to the following
(together with the Assigned Agreement Rights (as hereinafter defined), the
"Assigned Collateral"): (i) the mortgage notes in the aggregate amount listed
on Schedule I attached hereto and all other mortgage notes payable to the
Company and held by the Company from time to time (collectively, the "Mortgage
Notes"), any other mortgage, security agreement or other instrument, contract
or document securing, evidencing or otherwise relating to all or any of the
Mortgage Notes whether now existing or hereafter entered into and all rights
now or hereafter existing in, to and under each such document, other security
agreements and other such contracts as the same may be amended, restated,
supplemented or otherwise modified from time to time (as so amended, restated,
supplemented or modified, the "Assigned Agreements") and (ii) all Proceeds of
any and all of the foregoing.
(b) PLEDGE. The Company hereby pledges, deposits with, and
delivers to, the Collateral Agent for the benefit of the Secured Parties the
Mortgage Notes accompanied by assignment forms duly executed in blank by the
Company and hereby assigns, transfers, hypothecates and sets over to the
Collateral Agent for the benefit of the Secured Parties, and grants to the
Collateral Agent for the benefit of the Secured Parties a security interest
in, all of the Company's right, title and interest in, to and under the
following, whether now owned or hereafter acquired by the Company, all for its
benefit and the benefit of the Secured Parties (the "Pledged
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Collateral") (the Assigned Collateral and the Pledged Collateral being
referred to collectively herein as the "Collateral"):
(i) the Mortgage Notes and all interest, cash, instruments
and other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Mortgage
Notes; and
(ii) all Proceeds of the foregoing items described in
clause (i).
(c) COLLATERAL. The security interest of the Collateral Agent
under this Agreement extends to all Collateral, now existing or hereafter
acquired, of the kind which is the subject of this Agreement, which the
Company may acquire at any time during the continuation of this Agreement.
1.3. POWER OF ATTORNEY. The Company hereby constitutes and
appoints the Collateral Agent its true and lawful attorney, irrevocably, with
full power (in the name of the Company or otherwise), upon the occurrence and
during the continuance of an Event of Default, to act, require, demand,
receive, compound and give acquittance for any and all monies and claims for
monies due or to become due to the Company under or arising out of the
Collateral, to endorse any checks or other instruments or orders in connection
therewith and to file any claims or take any action or institute any
proceedings, consistent with the Collateral Agent's rights under this
Agreement, which the Collateral Agent may deem to be necessary or advisable in
the premises, which appointment as attorney is coupled with an interest and is
irrevocable.
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
The Company represents, warrants and covenants, which
representations, warranties and covenants shall survive execution and delivery
of this Agreement, as follows:
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2.1. NO LIENS. The Company is, and as to Collateral acquired
by it from time to time after the date hereof, the Company will be, the owner
of all Collateral free from any Lien, security interest, encumbrance or other
right, title or interest of any Person (other than as created under the
Security Documents and other than in favor of the Company and except for Liens
permitted under Section 8.1 of the Company Credit Agreement ("Permitted
Liens"), and, except as to Permitted Liens, the Company shall defend the
Collateral against all claims and demands of all Persons at any time claiming
the same or any interest therein adverse to the Collateral Agent or any other
Secured Party.
2.2. OTHER FINANCING STATEMENTS. Except for Permitted Liens,
there is no financing statement (or similar statement or instrument of
registration under the law of any jurisdiction) covering any interest of any
kind in the Collateral and so long as any of the Obligations remain unpaid,
the Company will not execute or authorize to be filed in any public office any
financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) or statements relating to the Collateral, except
financing statements filed or to be filed (i) in respect of and covering the
security interests granted hereby by the Company, (ii) by the Company in
respect of its interest in the Collateral and (iii) in respect of Permitted
Liens.
2.3. CHIEF EXECUTIVE OFFICE; CORPORATE NAME; RECORDS. The
chief executive office of the Company is located at 1061 East Flamingo Road,
Suite One, Las Vegas, Nevada 89119. The Company will not move its chief
executive office except to such new location the Company may establish in
accordance with the last sentence of this Section 2.3. The Company will not
change its corporate name nor carry on business under any name other than its
corporate name except after having complied with the requirements of the last
sentence of this Section 2.3. The Company shall not establish a new location
for its chief executive office or change its corporate name or the name under
which it presently conducts its business until (i) it shall give to the
Collateral Agent written notice clearly describing such new location or
specifying such new corporate name, as the case may be, and providing such
other information in connection therewith as the Collateral Agent may
reasonably request, and (ii) with
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respect to such new location or such new corporate name, as the case may be,
it shall have taken all action, satisfactory to the Collateral Agent, to
maintain the security interest of the Collateral Agent in the Collateral
intended to be granted hereby at all times fully perfected and in full force
and effect.
2.4. COLLATERAL. (a) As of the date hereof, all of the
Mortgage Notes are described on Schedule II attached hereto and are not in
default. Such Mortgage Notes had the respective aggregate balances of at
least the amounts listed on Schedule I attached hereto on March 31, 1994.
(b) Each of the existing Assigned Agreements has been duly
authorized, executed and delivered by each Credit Party party thereto, and is
in full force and effect and is binding upon and enforceable against each
Credit Party thereto in accordance with its terms, except to the extent that
enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally, and by general principles of equity (regardless
of whether enforcement is sought in a proceeding in equity or at law). As of
the date hereof, there exists no default under any of the Assigned Agreements
by any of the parties thereto. The Company has delivered original copies of
the Assigned Agreements (including all modifications thereof and amendments
and supplements thereto) to the Collateral Agent pursuant hereto.
ARTICLE III
SPECIAL PROVISIONS
CONCERNING PLEDGED COLLATERAL
3.1. SUBSEQUENTLY ACQUIRED MORTGAGE NOTES. If the Company
shall acquire any additional Mortgage Notes at any time or from time to time
after the date hereof, the Company will forthwith pledge and deposit such
Mortgage Notes with the Collateral Agent and deliver to the Collateral Agent
instruments of transfer therefor, endorsed in blank by the Company, and will
promptly thereafter deliver to the Collateral Agent a certificate executed by
an authorized officer of the Company describ-
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ing such Mortgage Notes and certifying that the same has been duly pledged with
the Collateral Agent hereunder.
3.2. COMPANY ACTIONS. The Company will not, at any time,
amend, restate, supplement or otherwise modify any material provision of any
Mortgage Note or Assigned Agreement in any manner that is adverse to the
interests of the Lenders nor take any action which would release or render
unenforceable any of the obligations of any Mortgage Note or Assigned
Agreement.
3.3. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless an Event of
Default shall have occurred and be continuing, all principal, interest and
cash dividends payable in respect of the Pledged Collateral shall be paid to
the Company. The Collateral Agent shall be entitled to receive directly, and
to retain as part of the Collateral:
(a) all stock or other or additional securities and, after the
occurrence and during the continuance of an Event of Default, property
(including cash) paid or distributed by way of dividend in respect of the
Pledged Collateral;
(b) all stock or other or additional other securities and, after
the occurrence and during the continuance of an Event of Default, property
(including cash) paid or distributed in respect of the Pledged Collateral by
way of stock-split, spin-off, split-up, reclassification, combination of
shares or similar rearrangement; and
(c) all stock or other or additional other securities and, after
the occurrence and during the continuance of an Event of Default, property
(including cash) which may be paid in respect of the Pledged Collateral by
reason of any consolidation, merger, exchange of stock, conveyance of assets,
liquidation or similar corporate reorganization or other disposition of
Collateral.
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ARTICLE IV
SPECIAL PROVISIONS
CONCERNING ASSIGNED AGREEMENTS
4.1. ASSIGNMENT OF RIGHTS. The Company hereby assigns,
transfers, delivers, pledges and sets over to the Collateral Agent, and grants
to the Collateral Agent a security interest in, all of its right, title and
interest in and to each and all of the Assigned Agreements, including but not
limited to:
(a) all payments due and to become due under any Assigned
Agreement, whether as contractual obligations, damages or otherwise;
(b) all of its claims, rights, powers, or privileges and remedies
under any Assigned Agreement; and
(c) all of its rights under any Assigned Agreement to make
determinations, to exercise any election (including, but not limited to,
election of remedies) or option or to give or receive any notice, consent,
waiver or approval together with full power and authority with respect to any
Assigned Agreement to demand, receive, enforce, collect or receipt for any of
the foregoing rights or any property the subject of any of the Assigned
Agreements, to enforce or execute any checks, or other instruments or orders,
to file any claims and to take any action which (in the opinion of the
Collateral Agent) may be necessary or advisable in connection with any of the
foregoing (the Assigned Agreements, together with all of the foregoing in this
Section 4.1, the "Assigned Agreement Rights"); PROVIDED, HOWEVER, that
until the occurrence and continuance of an Event of Default, the Company may
exclusively exercise all of the Company's rights, powers, privileges and
remedies under the Assigned Agreements, subject to Section 3.2 herein.
The Company hereby grants the Collateral Agent full power and
authority to take all actions as the Collateral Agent deems necessary or
advisable to defend the Collateral against all claims and demands of all
Persons at any time claiming the same or any interest therein adverse to the
Collateral Agent or any other Secured Party in the event the Company fails to
do so. Furthermore, the Company hereby covenants and agrees to
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execute and deliver to the Collateral Agent such other and further instruments
of transfer, assignment and conveyance, and all such other documents and
instruments as may be reasonably requested by the Collateral Agent more fully
to transfer, assign and convey to and vest in the Collateral Agent the
Assigned Agreement Rights hereby transferred, assigned and conveyed or
intended to be so.
4.2. PERFORMANCE OF ASSIGNED AGREEMENTS. The Company will at
its expense (i) perform and observe all the terms and provisions of the
Assigned Agreements to be performed or observed by it, maintain the Assigned
Agreements in full force and effect, enforce each of the Assigned Agreements
in accordance with its terms, and take all such action to such end as may,
after the occurrence and during the continuance of an Event of Default, be
from time to time requested in writing by the Collateral Agent; and (ii)
furnish to the Collateral Agent promptly upon receipt thereof copies of all
notices, requests and other documents (if any) received by the Company under
or pursuant to the Assigned Agreements, and from time to time (A) furnish to
the Collateral Agent such information and reports regarding the Assigned
Collateral as the Collateral Agent may reasonably request in writing and (B)
upon the written request of the Collateral Agent make to any party thereto
such demands and requests for information and reports or for action as the
Company is entitled to make under the Assigned Agreements.
ARTICLE V
FURTHER ASSURANCES
The Company will, subject to the provisions of the last sentence
of this Article V, at its own expense, make, execute, endorse, acknowledge,
file and/or deliver to the Collateral Agent from time to time such lists,
descriptions and designations of its Collateral, financing statements,
collateral assignments, transfer endorsements, powers of attorney,
certificates, reports and other assurances or instruments and take such
further steps relating to the Collateral and other property or rights covered
by the security interest hereby granted, which the Collateral Agent deems
reasonably appropriate or advisable to perfect, preserve or protect its
security
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interest in the Collateral. The Company agrees to sign and deliver to the
Collateral Agent such financing statements and collateral assignments, in form
acceptable to the Collateral Agent, as the Collateral Agent may from time to
time reasonably request or as are necessary or desirable in the opinion of the
Collateral Agent to establish and maintain a valid and enforceable perfected
security interest in the Collateral as provided herein and the other rights
and security contemplated hereby all in accordance with the Uniform Commercial
Code as enacted in any and all relevant jurisdictions or any other relevant
law. To the extent permitted by applicable law, the Company will pay any
applicable filing fees and related expenses. The Company authorizes the
Collateral Agent, to the extent permitted by applicable law, to file any such
financing statements without the signature of the Company and to sign such
financing statement on behalf of, and in the name of, the Company.
Notwithstanding anything to the contrary set forth herein, the Collateral
Agent will not take any actions requiring any filing or recording to perfect
the security interest in the Assigned Collateral hereunder except during the
occurrence and continuance of an Event of Default. Upon the recording of any
collateral assignment in accordance with the provisions hereof, the Company
agrees to take all actions requested by the Collateral Agent to record and
perfect the security interest granted pursuant to any such collateral
assignment and the Company also agrees to pay any mortgage recording tax or
other fees or tax in connection with the recording of such collateral
assignment or any underlying mortgage deed of trust or similar instrument.
ARTICLE VI
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT
6.1. REMEDIES; OBTAINING THE COLLATERAL UPON DEFAULT. The
Company agrees that, if any Event of Default shall have occurred and be
continuing, then and in every such case, the Collateral Agent shall be
entitled to exercise all rights and remedies of a secured party under the
Uniform Commercial Code as in effect in any relevant jurisdiction to enforce
the assignments and security interests contained herein, and, to the extent
permitted by applicable law, the Collateral Agent may:
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(a) exercise any and all rights, powers and remedies of the
Company under or in connection with the Pledged Collateral or the Assigned
Collateral, including, without limitation, any and all rights of the Company
to demand, otherwise require or receive payment of any amount under, or
performance of any provision of, the Assigned Agreements;
(b) receive all payments under, in connection with or otherwise
in respect of the Collateral which are otherwise payable to the Company, all
payments received by the Company under or in connection with or otherwise in
respect of the Collateral shall be received in trust for the benefit of the
Collateral Agent, shall be segregated from other funds of the Company and
shall be forthwith paid over to the Collateral Agent in the same form as so
received (with any necessary endorsement);
(c) in its sole discretion, without notice except as specified
below at any time or from time to time, sell, assign and deliver, or grant
options to purchase, all or any part of the Collateral in one or more parcels,
or any interest therein, at any public or private sale at any exchange,
broker's board or at any of the Collateral Agent's offices or elsewhere,
without demand of performance, advertisement or notice of intention to sell or
of the time or place of sale or adjournment thereof or to redeem or otherwise
(all of which are hereby expressly and irrevocably waived by the Company), for
cash, on credit or for other property, for immediate or future delivery
without any assumption of credit risk, and for such price or prices and on
such terms as the Collateral Agent in its absolute discretion may determine.
The Collateral Agent agrees that to the extent that notice of sale shall be
required by law that at least 10 days' notice to the Company of the time and
place of any public sale or the time after which any private sale is to be
made shall constitute reasonable notification. The Collateral Agent shall not
be obligated to make any sale of Collateral regardless of notice of sale
having been given. The Collateral Agent may adjourn any public or private
sale from time to time by announcement at the time and place fixed therefor,
and any such sale may, without further notice, be made at the time and place
to which it was so adjourned. The Company hereby waives and releases to the
fullest extent permitted by law any right or equity of redemption with respect
to the
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Collateral, whether before or after sale hereunder, and all rights, if any, of
marshalling the Collateral and any other security for the Obligations or
otherwise. At any such sale, unless prohibited by applicable law, the
Collateral Agent or any Secured Party, may bid for and purchase all or any
part of the Collateral so sold free from any such right or equity of
redemption. Neither the Collateral Agent nor any Secured Party shall be
liable for failure to collect or realize upon any or all of the Collateral or
for any delay in so doing nor shall any of them be under any obligation to
take any action whatsoever with regard thereto;
(d) transfer all or any part of the Collateral into the
Collateral Agent's name or the name of its nominee or nominees and to notify
the obligor of any Assigned Agreement Right or Mortgage Note (the Company
hereby agreeing to deliver any such notice at the request of the Collateral
Agent) that all payments and performance under the relevant Assigned Agreement
or Mortgage Note shall be made or rendered to the Collateral Agent or its
nominee or nominees;
(e) vote all or any part of the Pledged Collateral (whether or
not transferred into the name of the Collateral Agent) and give all consents,
waivers and ratifications in respect of the Collateral and otherwise act with
respect thereto as though it were a party thereto or outright owner thereof;
(f) settle, adjust, compromise and arrange all accounts,
controversies, questions, claims and demands whatsoever in relation to all or
any part of the Collateral;
(g) in respect of the Collateral, execute all such contracts,
agreements, deeds, documents and instruments; to bring, defend and abandon all
such actions, suits and proceedings, and to take all actions in relation to
all or any part of the Collateral as the Collateral Agent in its absolute
discretion may determine;
(h) appoint managers, sub-agents, officers and servants for any
of the purposes mentioned in the foregoing provisions of this Section 6.1 and
to dismiss the same, all as the Collateral Agent in its absolute discretion
may determine; and
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(i) generally take all such other action as the Collateral Agent
in its reasonable discretion may determine as incidental or conducive to any
of the matters or powers mentioned in the foregoing provisions of this Section
6.1 and which the Collateral Agent may or can do lawfully and to use the name
of the Company for the purposes aforesaid and in any proceedings arising
therefrom.
The Company hereby expressly agrees that no Secured Party other than the
Collateral Agent shall have any obligations or liabilities in connection with
this Agreement.
6.2. DISPOSITION OF THE COLLATERAL. The Company recognizes
that, by reason of certain prohibitions contained in the Securities Act of
1933, as amended (the "Securities Act"), and applicable state securities laws,
the Collateral Agent may be compelled, with respect to any sale of all or any
part of the Collateral pursuant to Section 6.1(c), to limit purchasers to
those who will agree, among other things, to acquire the Collateral for their
own account, for investment and not with a view to the distribution or resale
thereof. The Company acknowledges that any such private sales may be at
prices and on terms less favorable to the Collateral Agent than those
obtainable through a public sale without such restrictions (including, without
limitation, a public offering made pursuant to a registration statement under
the Securities Act), and, notwithstanding such circumstances, agrees that any
such private sale shall be deemed to have been made in a commercially
reasonable manner and that the Collateral Agent shall have no obligation to
engage in public sales and no obligation to delay the sale of any Collateral
for the period of time necessary to permit the issuer thereof to register it
for a form of public sale requiring registration under the Securities Act or
under applicable state securities laws, even if the Company would agree to do
so.
6.3. WAIVER OF CLAIMS. EXCEPT AS OTHERWISE PROVIDED IN THIS
AGREEMENT, THE COMPANY HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, NOTICE OR JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENT'S
TAKING POSSESSION OR THE COLLATERAL AGENT'S DISPOSITION OF ANY OF THE
COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND
HEARING FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH THE
COMPANY
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WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED
STATES OR OF ANY STATE, and the Company hereby further waives to the extent
permitted by applicable law:
(a) all damages occasioned by such taking of possession except
any damages which are the direct result of the Collateral Agent's gross
negligence or willful misconduct;
(b) all other requirements as to the time, place and terms of
sale or other requirements with respect to the enforcement of the Collateral
Agent's rights hereunder; and
(c) all rights of redemption, appraisal, valuation, stay,
extension or moratorium now or hereafter in force under any applicable law in
order to prevent or delay the enforcement of this Agreement or the absolute
sale of the Collateral or any portion thereof, and the Company, for itself and
all who may claim under it, insofar as it or they may now or hereafter
lawfully do so, hereby waives the benefit of such laws.
Any sale of, or the grant of options to purchase, or any other realization
upon, any Collateral shall operate to divest all right, title, interest, claim
and demand, either at law or in equity, of the Company therein and thereto,
and shall be a perpetual bar both at law and in equity against the Company and
against any and all Persons claiming or attempting to claim the Collateral so
sold, optioned or realized upon, or any part thereof, from, through and under
the Company.
6.4. APPLICATION OF PROCEEDS; COMPANY LIABLE FOR DEFICIENCY.
All moneys collected by the Collateral Agent upon any sale or other
disposition of the Collateral, together with all other moneys received by the
Collateral Agent hereunder shall be applied as follows:
(a) first, to the payment of any and all expenses and fees
(including reasonable attorneys' fees) actually incurred by the Collateral
Agent in obtaining, taking possession of, removing, storing and disposing of
Collateral and any and all amounts incurred by the Collateral Agent in
connection therewith or owing to the Collateral Agent hereunder;
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(b) next, any surplus then remaining, to the payment of the other
Obligations; and
(c) if the Total Commitment is then terminated, all Loans (under
and as defined in each Credit Agreement) have been indefeasibly paid in full,
no Letters of Credit or Subsidiary Letters of Credit or other Obligations are
outstanding, any surplus then remaining shall be paid to the Company, subject,
however, to the rights of the holder of any then existing Lien of which the
Collateral Agent has actual notice (without investigation);
it being understood that the Company shall remain liable to the extent of any
deficiency between the amount of the proceeds of the Collateral and the
aggregate amount of the sums referred to in clauses (a) and (b) of this
Section 6.4.
Notwithstanding the foregoing, in no event shall moneys be applied
pursuant to the foregoing clause (b) (when aggregated with all other amounts
contemporaneously received from the Company under any other Security document
in respect of the Obligations) in excess of the Company's Maximum Guaranty
Liability (as defined in the Subsidiary Guaranty) with any excess to be paid
to the Company or to whomever may be lawfully entitled to receive the same.
6.5. REMEDIES CUMULATIVE. Each and every right, power and
remedy hereby specifically given to the Collateral Agent shall be in addition
to every other right, power and remedy specifically given under this Agreement
or under any other Credit Document or now or hereafter existing at law or in
equity, or by statute and each and every right, power and remedy whether
specifically herein given or otherwise existing may be exercised from time to
time or simultaneously and as often and in such order as may be deemed
expedient by the Collateral Agent. All such rights, powers and remedies shall
be cumulative and the exercise or the beginning of exercise of one shall not
be deemed a waiver of the right to exercise of any other or others. No delay
or omission of the Collateral Agent in the exercise of any such right, power
or remedy and no renewal or extension of any of the Obligations shall impair
any such right, power or remedy
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or shall be construed to be a waiver of any Event of Default or an
acquiescence therein.
6.6. DISCONTINUANCE OF PROCEEDINGS. In case the Collateral
Agent shall have instituted any proceeding to enforce any right, power or
remedy under this Agreement by foreclosure, sale, entry or otherwise, and such
proceeding shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Collateral Agent, then and in every such
case the Company and the Collateral Agent shall be restored to their former
positions and rights hereunder with respect to the Collateral subject to the
security interest created under this Agreement, and all rights, remedies and
powers of the Collateral Agent shall continue as if no such proceeding had
been instituted.
ARTICLE VII
INDEMNITY
Without duplication of any amounts payable under Section 12.1 of
the Company Credit Agreement and any similar indemnity provision under any
other Credit Document, the Company shall: (i) whether or not the transactions
hereby contemplated are consummated, pay all reasonable out-of-pocket costs
and expenses of the Collateral Agent actually incurred in connection with the
administration (both before and after the execution hereof and including
advice of counsel as to the rights and duties of the Collateral Agent with
respect thereto) of and in connection with the preparation, execution and
delivery of this Agreement (including, without limitation, the reasonable fees
and disbursements of Skadden, Arps, Slate, Meagher & Flom) and of the
Collateral Agent actually incurred in connection with the preservation of
rights under, and enforcement of, and, after an Event of Default, the
renegotiation or restructuring of this Agreement and any amendment, waiver or
consent relating thereto (including, without limitation, the reasonable fees
and disbursements of counsel for the Collateral Agent); (ii) pay and hold the
Collateral Agent harmless from and against any and all present and future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from the
execution, delivery or regis-
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tration of, or otherwise with respect to this Agreement and save the Collateral
Agent harmless from and against any and all liabilities with respect to or
resulting from any delay or omission to pay any such taxes, charges or levies;
and (iii) indemnify the Collateral Agent, its officers, directors, employees,
representatives and agents from and hold each of them harmless against any and
all costs, losses, liabilities, claims, damages or expenses actually incurred by
any of them (whether or not any of them is designated a party thereto) arising
out of or by reason of any investigation, litigation or other proceeding related
to this Agreement or any transaction contemplated hereby, including, without
limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation, litigation or other proceeding.
Notwithstanding anything in this Agreement to the contrary, the Company shall
not be responsible to the Collateral Agent or any officer, director, employee,
representative or agent of the foregoing (an "Indemnified Party") for any
losses, damages, liabilities or expenses which result from such Indemnified
Party's gross negligence or willful misconduct. It is understood that the
Company shall not, in connection with any single action, suit, proceeding or
claim or separate but substantially similar or related actions, suits,
proceedings or claims, arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys at the same time for the Indemnified Parties (which firm shall
be designated by the Collateral Agent) except that, if any Indemnified Party
other than the Collateral Agent shall determine, in its sole discretion, that
there may be a conflict in such firm representing the Collateral Agent and such
Indemnified Party, then the Company shall be liable for the reasonable fees and
expenses of an additional firm for such Indemnified Party whose interests may be
in conflict. The Company's obligations under this Article VII shall survive any
termination of this Agreement.
ARTICLE VIII
DEFINITIONS
8.1. DEFINITIONS. The following terms shall have the meanings
herein specified unless the context
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otherwise requires. Such definitions shall be equally applicable to the
singular and plural forms of the terms defined. Except as otherwise defined
herein, capitalized terms used herein, including in the recital paragraphs,
and defined in the Company Credit Agreement shall be used herein as so
defined.
"Agreement" shall mean this Second Amended and Restated FINCO
Pledge and Security Agreement as the same may be amended, restated,
supplemented or otherwise modified from time to time in accordance with its
terms.
"Assigned Agreements" shall have the meaning specified in Section
1.2(a).
"Assigned Agreement Rights" shall have the meaning specified in
Section 4.1(c).
"Assigned Collateral" shall have the meaning specified in
Section 1.2(a).
"Collateral" shall have the meaning specified in Section 1.2(b).
"Event of Default" shall mean and include any "Event of Default"
under either Credit Agreement.
"Indemnified Party" shall have the meaning specified in Article
VII.
"Mortgage Notes" shall mean, collectively, all promissory notes
from time to time made to the Company by Charter or a Subsidiary of Charter.
"Obligations" shall mean (a) all indebtedness, obligations, and
liabilities (including without limitation, guarantees, reimbursement
obligations in respect of Letters of Credit and Subsidiary Letters of Credit
and other contingent liabilities) of the Company, Charter, any Subsidiary
Borrower and any other Subsidiary of Charter to any Secured Party arising
under or in connection with the Credit Agreements, the Subsidiary Guaranty,
this Agreement, or any other Credit Document, as the same may be amended,
restated, supplemented or otherwise modified from time to time; (b) any and
all sums advanced by the Collateral Agent in order to preserve the Collateral
or preserve its security interest in the Collateral;
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<PAGE>
and (c) in the event of any proceeding for the collection or enforcement of
any indebtedness, obligations, or liabilities of the Company referred to in
clause (a), after an Event of Default shall have occurred and be continuing,
the reasonable expenses of retaking, holding, preparing for sale, selling or
otherwise disposing or realizing on the Collateral, or of any exercise by the
Collateral Agent of its rights hereunder, together with reasonable attorneys'
fees and court costs.
"Permitted Liens" shall have the meaning specified in Section 2.1
hereof.
"Pledged Collateral" shall have the meaning specified in
Section 1.2(b).
"Proceeds" shall mean "Proceeds" as such term is defined in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York.
"Secured Parties" shall mean the Lenders, the Agent, the Co-Agent,
and the Collateral Agent and their respective successors and assigns.
"Securities Act" shall have the meaning specified in Section 6.2.
"Total Commitment" shall mean the Total Revolving Loan Commitment.
ARTICLE IX
MISCELLANEOUS
9.1. NOTICES. All notices and other communications hereunder
shall be given to the Company (at the address for Charter), the Collateral
Agent and the Agent at the addresses and in the manner specified in the
Company Credit Agreement.
9.2. WAIVER; AMENDMENT. No delay on the part of the Collateral
Agent in exercising any of its rights, remedies, powers and privileges
hereunder or partial or single exercise thereof, shall constitute a waiver
thereof. None of the terms and conditions of this Agreement may be changed,
waived, modified or varied in any manner
20
<PAGE>
whatsoever unless executed in accordance with the provisions of the Credit
Agreements. No notice to or demand on the Company in any case shall entitle
it to any other or further notice or demand in similar or other circumstances
or constitute a waiver of any of the rights of the Collateral Agent to any
other or further action in any circumstances without notice or demand.
9.3. OBLIGATIONS ABSOLUTE. The obligations of the Company
under this Agreement shall be absolute and unconditional in accordance with
its terms and shall remain in full force and effect without regard to, and
shall not be released, suspended, discharged, terminated or otherwise affected
by, any circumstance or occurrence whatsoever, including, without limitation:
(a) any change in the time, place or manner of payment of, or in any other
term of, all or any of the Obligations, any waiver, indulgence, renewal,
extension, amendment or modification of or addition, consent or supplement to
or deletion from or any other action or inaction under or in respect of either
Credit Agreement, any Note, any other Credit Document or any other documents,
instruments or agreements relating to the Obligations or any other instrument
or agreement referred to therein or any assignment or transfer of any thereof;
(b) any lack of validity or enforceability of either Credit Agreement, any
other Credit Document or any other documents, instruments or agreements
referred to therein or any assignment or transfer of any thereof; (c) any
furnishing of any additional security to the Collateral Agent, the other
Secured Parties or their assignees or any acceptance thereof or any release of
any security by the Collateral Agent, the other Secured Parties or their
assignees; (d) any limitation on any party's liability or obligations under
any such instrument or agreement or any term thereof; (e) any bankruptcy,
insolvency, reorganization, composition, adjustment, dissolution, liquidation
or other like proceeding relating to the Company or any Subsidiary of the
Company, or any action taken with respect to this Agreement by any trustee or
receiver, or by any court, in any such proceeding, whether or not the Company
shall have notice or knowledge of any of the foregoing; (f) any exchange,
release or nonperfection of any other collateral, or any release, or amendment
or waiver of or consent to departure from any guaranty or security, for all or
any of the Obligations; or (g) any
21
<PAGE>
other circumstance which might otherwise constitute a defense available to, or
a discharge of the Company.
9.4. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon the Company and its successors and assigns and shall inure to the benefit
of each Secured Party and its permitted successors and assigns, provided that
the Company may not transfer or assign any or all of its rights or obligations
hereunder without the written consent of the Collateral Agent.
9.5. HEADINGS DESCRIPTIVE. The headings of the several
sections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
9.6. SEVERABILITY. To the extent permitted by applicable law,
any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
9.7. GOVERNING LAW; APPOINTMENT OF AGENT FOR SERVICE OF PROCESS;
SUBMISSION TO JURISDICTION. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW
PRINCIPLES THEREOF). ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO MAY BE BROUGHT IN THE COURTS OF THE
STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT
OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE COMPANY
HEREBY CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
JURISDICTION OF THE AFORESAID COURTS SOLELY FOR THE PURPOSE OF ADJUDICATING
ITS RIGHTS OR THE RIGHTS OF THE SECURED PARTIES WITH RESPECT TO THIS AGREEMENT
OR ANY DOCUMENT RELATED HERETO. THE COMPANY HEREBY IRREVOCABLY DESIGNATES CT
CORPORATION SYSTEM, LOCATED AT 1633 BROADWAY, NEW YORK, NEW YORK 10019 AS THE
DESIGNEE, APPOINTEE AND AGENT OF THE COMPANY, TO RECEIVE, FOR AND ON BEHALF OF
THE COMPANY, SERVICE OF PROCESS IN SUCH
22
<PAGE>
JURISDICTION IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
OR ANY DOCUMENT RELATED HERETO AND SUCH SERVICE SHALL, TO THE EXTENT PERMITTED
BY APPLICABLE LAW, BE DEEMED COMPLETED TEN DAYS AFTER DELIVERY THEREOF TO SAID
AGENT. IT IS UNDERSTOOD THAT A COPY OF SUCH PROCESS SERVED ON SUCH AGENT WILL
BE PROMPTLY FORWARDED BY MAIL TO THE COMPANY AT THE ADDRESS FOR CHARTER SET
FORTH IN THE COMPANY CREDIT AGREEMENT, BUT THE FAILURE OF THE COMPANY TO
RECEIVE SUCH COPY SHALL NOT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, AFFECT
IN ANY WAY THE SERVICE OF SUCH PROCESS. THE COMPANY HEREBY IRREVOCABLY
WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION, INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO
THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS IN
RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED THERETO. NOTHING HEREIN
SHALL AFFECT THE RIGHT OF THE COMPANY TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
THE COMPANY IN ANY OTHER JURISDICTION.
9.8. THE COMPANY'S DUTIES. It is expressly agreed, anything
herein contained to the contrary notwithstanding, that the Company shall
remain liable to perform all of the obligations, if any, assumed by it with
respect to the Collateral and the Collateral Agent shall not have any
obligations or liabilities with respect to any Collateral by reason of or
arising out of this Agreement, nor shall the Company be required or obligated
in any manner to perform or fulfill any of the obligations of Collateral Agent
under or with respect to any Collateral.
9.9. COLLATERAL AGENT. The appointment of the Collateral Agent
as Collateral Agent hereunder pursuant to the Intercreditor Agreement has been
ratified and confirmed by the Lenders in the Credit Agreements and the
Collateral Agent shall be entitled to the benefits of the Credit Agreements.
The Collateral Agent shall be obligated, and shall have the right hereunder to
make demands, to give notices, to exercise or refrain from exercising any
rights, and to take or refrain from taking action (including, without
limitation, the release or substitution of Collateral) solely in accordance
with this Agreement and the Credit Agreements. The Collateral
23
<PAGE>
Agent may resign and a successor Collateral Agent may be appointed in the
manner provided in the Credit Agreements. Upon the acceptance of any
appointment as a Collateral Agent by a successor Collateral Agent, that
successor Collateral Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Collateral Agent
under this Agreement, and the retiring Collateral Agent shall thereupon be
discharged from its duties and obligations under this Agreement. After any
retiring Collateral Agent's resignation, the provisions of this Agreement
shall inure to its benefit as to any actions taken or omitted to be taken by
it under this Agreement while it was Collateral Agent.
9.10. TERMINATION; RELEASE. When the Total Commitment is
terminated, no Letters of Credit and Subsidiary Letters of Credit are
outstanding and all Loans (under and as defined in each Credit Agreement) and
other Obligations are irrevocably paid in full, this Agreement shall
terminate. Upon the termination of this Agreement, the Collateral Agent, at
the request and expense of the Company will promptly execute and deliver to
the Company the proper instruments (including Uniform Commercial Code
termination statements on form UCC-3, if necessary) acknowledging the
termination of this Agreement and will duly assign, transfer and deliver to
the Company (without recourse and without any representation or warranty) such
of the Collateral as may be in the possession of the Collateral Agent and has
not theretofore been sold or otherwise applied or released pursuant to this
Agreement. Notwithstanding anything therein to the contrary, the Collateral
Agent shall release the Collateral to the extent that the Company shall be
required to release the same in accordance with the terms of the Mortgage
Notes or Assigned Agreements; PROVIDED, HOWEVER, that the Collateral Agent
may release Collateral from the lien and security interest of this Agreement
in accordance with the provisions of the Credit Agreements.
9.11. WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE COMPANY HEREBY IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF IN CONNECTION
WITH THIS AGREEMENT OR ANY MATTER ARISING IN CONNECTION HEREUNDER.
24
<PAGE>
9.12. AMENDMENT AND RESTATEMENT. This Agreement constitutes an
amendment and restatement of the 1992 FINCO Pledge and Security Agreement
amended hereby (the "Original Instrument"), and such Original Instrument shall
continue in effect on and after the date hereof as so amended and restated.
The parties do not intend that this Agreement constitute a novation,
termination, release or satisfaction of the Original Instrument, or constitute
payment or satisfaction of any indebtedness or other obligation secured by the
Original Instrument.
25
<PAGE>
Charter Medical Corporation
FINCO Pledge and Security Agreement II
May 2, 1994
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed and delivered by their duly authorized officers as of the date
first above written.
CMCI, INC.
By: /s/ Charlotte A. Sanford
------------------------------
Name: Charlotte A. Sanford
Title: Treasurer
BANKERS TRUST COMPANY,
as Collateral Agent
By: /s/ Mary Kay Coyle
-----------------------------
Name: Mary Kay Coyle
Title: Vice President
<PAGE>
SCHEDULE I
SECOND AMENDED AND RESTATED
FINCO PLEDGE AND SECURITY AGREEMENT II
The notes payable balances due to CMCI, Inc. at March 31, 1994 were as
follows:
Beltway Community Hospital, Inc. $ 16,689,095.60
Charter Behavioral Health System of Austin, Inc. 13,132,792.17
Charter Behavioral Health System of Corpus Christi, Inc. 9,374,792.34
Charter Behavioral Health System of Dallas, Inc. 19,534,721.08
Charter Medical of East Valley, Inc. 6,194,454.06
Charter Behavioral Health System of Fort Worth, Inc. 17,468,623.69
Charter Medical of North Phoenix, Inc. 5,358,052.41
Charter Grapevine Behavioral Health System, Inc. 10,600,000.00
Charter Fairmount Behavioral Health System, Inc. 7,086,872.59
(d/b/a Charter Behavioral Health System of Kingwood)
Charter Lafayette Behavioral Health System, Inc. 3,033,434.98
Charter Little Rock Behavioral Health System, Inc. 4,561,819.73
Charter Louisville Behavioral Health System, Inc. 4,303,703.53
Charter Behavioral Health System of Kansas City, Inc. 5,803,717.26
Florida Health Facilities, Inc.
(d/b/a Charter Hospital of Pasco) 7,498,493.98
Charter Lakeside Behavioral Health System, Inc.
(d/b/a Charter Behavioral Health System of
Sugarland) 7,365,126.32
Charter Behavioral Health System of Toledo, Inc. 6,567,103.22
Charter Medfield Behavioral Health System, Inc.
(d/b/a Charter Hospital of West Palm Beach) 5,008,351.72
Charter Wichita Behavioral Health System, Inc. 4,498,911.63
Charter Lakeside Behavioral Health System, Inc. 16,000,000.00
Charter Laurel Oaks Behavioral Health System, Inc.
(f/k/a Charter Medical - Southeast, Inc.) 2,538,993.43
<PAGE>
SCHEDULE I
SECOND AMENDED AND RESTATED
FINCO PLEDGE AND SECURITY AGREEMENT II
Charter Palms Behavioral Health System, Inc. 2,877,832.71
Charter Plains Behavioral Health System, Inc. 3,302,962.94
Charter Real Behavioral Health System, Inc. 7,471,909.06
Charter Medical Corporation 238,933,000.00
Charter Fairmount Behavioral Health System, Inc. 9,000,000.00
----------------
Total $ 434,204,764.45
----------------
----------------
<PAGE>
SCHEDULE II
SECOND AMENDED AND RESTATED FINCO PLEDGE AND SECURITY
AGREEMENT II (CMCI, INC.)
A. Many facilities listed on Schedule I have more than one loan
aggregating the total shown for such facilities. Each orginal loan is
supported by a Loan Agreement with corresponding Borrowing Resolutions
and Resolution Adopted by Consent on behalf of CMCI, Inc.
B. Generally each facility with multiple loans has excuted an Annual Draw
Credit Agreement with resolutions as described above under which
additional loans are made.
C. The Charter Medical Corporation and CCM, Inc. notes each have Credit
Agreements and Borrowing Resolutions.
<PAGE>
SECOND AMENDED AND RESTATED COMPANY GUARANTY
SECOND AMENDED AND RESTATED COMPANY GUARANTY, dated as of
May 2, 1994 (as the same may be amended, modified or supplemented from time to
time, the "Company Guaranty"), made by Charter Medical Corporation, a Delaware
corporation (the "Company" or the "Guarantor"), in favor of the financial
institutions from time to time signatories to the Subsidiary Credit Agreement
(as hereinafter defined)(the "Lenders"), Bankers Trust Company, as agent (the
"Agent") for the Lenders, and First Union National Bank of North Carolina, as
co-agent (the "Co-Agent") for the Lenders (the Lenders, the Agent and the
Co-Agent, together with their permitted successors and assigns, individually, a
"Guaranteed Party" and collectively, the "Guaranteed Parties").
W I T N E S S E T H:
WHEREAS, the Company entered into the Company Guaranty dated as of
September 1, 1988 which was amended and restated by the Amended and Restated
Company Guaranty dated as of July 21, 1992 (the "1992 Company Guaranty") in
favor of the Agent, the Lenders and the Issuing Banks (as defined in the 1992
Company Guaranty), and now desire to amend and restate the 1992 Company Guaranty
in its entirety; and
WHEREAS, the Company (as successor to WAF Acquisition Corporation, a
Delaware corporation), certain of the Lenders, the Agent, Wells Fargo Bank
National Association and Bank of America National Trust and Savings Association,
as co-agents (the "Original Co-Agents"), entered into that certain Credit
Agreement dated as of September 1, 1988 which was amended and restated by the
Amended and Restated Credit Agreement dated July 21, 1992 (the "1992 Company
Credit Agreement"), which is being amended and restated by the Second Amended
and Restated Credit Agreement dated as of the date hereof (as the same may be
further amended, restated, supplemented or otherwise modified from time to time,
the "Company Credit Agreement"), pursuant to which certain of the Lenders made
certain loans and commitments to the Company, the terms of which are being
amended and restated pursuant to the Company Credit Agreement; and
WHEREAS, pursuant to the terms and conditions of the Company Credit
Agreement, the Lenders have made certain commitments to make additional loans
to, and participate in
<PAGE>
and/or issue letters of credit for the account of, the Company; and
WHEREAS, certain Subsidiaries of the Guarantor, certain of the
Lenders, the Agent and the Original Co-Agents entered into a Credit Agreement
dated as of September 1, 1988 which was amended and restated by the Amended and
Restated Subsidiary Credit Agreement dated as of July 21, 1992 (the "1992
Subsidiary Credit Agreement"; and together with the 1992 Company Credit
Agreement, the "1992 Credit Agreements"), which is being amended and restated by
the Second Amended and Restated Subsidiary Credit Agreement dated as of the date
hereof (as the same may be further amended, restated, supplemented or otherwise
modified from time to time, the "Subsidiary Credit Agreement"; and, together
with the Company Credit Agreement, each a "Credit Agreement" and collectively
the "Credit Agreements"), pursuant to which certain of the Lenders made certain
loans and commitments to, and participated in certain letters of credit for the
benefit of, the Borrowers, the terms of which are being amended and restated
pursuant to the Subsidiary Credit Agreement; and
WHEREAS, pursuant to the terms and conditions of the Subsidiary
Credit Agreement, the Lenders have made certain commitments to make additional
loans to, and participate in and/or issue letters of credit for the account of,
the Borrowers; and
WHEREAS, the Lenders have agreed to amend and restate the 1992
Credit Agreements upon terms and conditions acceptable to the Company and the
Borrowers; and
WHEREAS, it was a condition precedent to the incurrence of loans and
the participation in letters of credit under the 1992 Credit Agreements that the
Guarantor execute and deliver to the Guaranteed Parties the 1992 Company
Guaranty and it is a condition precedent to the incurrence of loans and the
issuance of letters of credit under the Credit Agreements that the Guarantor
execute and deliver to the Guaranteed Parties this Company Guaranty; and
WHEREAS, each Issuing Bank has agreed, among other things, that the
Reimbursement Agreements (as defined in the 1992 Credit Agreements) to which it
is a party (other than the Credit Documents to the extent the same could be
considered Reimbursement Agreements) shall no longer be entitled to the benefits
of this Company Guaranty;
NOW, THEREFORE, in consideration of the premises contained therein
and in order to induce the Lenders to make
2
<PAGE>
loans and issue letters of credit under the Credit Agreements, the Guarantor
hereby agrees as follows:
SECTION 1. DEFINITIONS. Except as otherwise defined herein,
capitalized terms used herein, including in the recital paragraphs, and defined
in the Subsidiary Credit Agreement (by reference to the Company Credit Agreement
or otherwise) shall be used herein as so defined.
SECTION 2. GUARANTY. The Guarantor hereby unconditionally
guarantees the punctual payment when due, whether at stated maturity, by
acceleration or otherwise, of all Obligations of each Borrower now or hereafter
existing, whether for principal, interest (including any interest accruing
during a Proceeding (as hereinafter defined) whether or not the claim for such
interest is allowable or discharged in such Proceeding), fees, expenses or
otherwise (including, without limitation, the Obligation under the Subsidiary
Credit Agreement of a Borrower to reimburse drawings honored under a Subsidiary
Letter of Credit) and any and all reasonable expenses (including counsel fees
and expenses) incurred by the Agent or any Lender in enforcing any rights under
this Company Guaranty (collectively, the "Guaranteed Obligations"). Any and all
payments by the Guarantor hereunder shall be made free and clear of and without
deduction for any set-off or counterclaim, subject to the requirements of the
Subsidiary Credit Agreement.
SECTION 3. GUARANTY ABSOLUTE. The Guarantor guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the terms of the
Subsidiary Credit Agreement, the Notes and the other Credit Documents,
regardless of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of the Agent or any
Lender with respect thereto. This is a guaranty of payment and not of
collection, and the liability of the Guarantor under this Company Guaranty shall
be absolute and unconditional in accordance with its terms and shall remain in
full force and effect without regard to, and shall not be released, suspended,
discharged, terminated or otherwise affected by, any circumstance or occurrence
whatsoever, including, without limitation: (a) any change in the time, place or
manner of payment of, or in any other term of, all or any of the Guaranteed
Obligations, any waiver, indulgence, renewal, extension, amendment or
modification of, or addition, consent or supplement to, or deletion from or any
other action or inaction under, or in respect of, either Credit Agreement, any
Note, any other Credit Document, or any documents, instruments or agreements
relating to the Guaranteed Obligations or any other instrument or agreement
referred to therein or any assignment or transfer of any thereof; (b) any lack
of validity or en-
3
<PAGE>
forceability of either Credit Agreement, any Note, any other Credit Document or
any other documents, instruments or agreements referred to therein or any
assignment or transfer of any thereof; (c) any furnishing of any additional
security to the Guaranteed Parties or their assignees or any acceptance thereof
or any release of any security by the Guaranteed Parties, or their assignees;
(d) any limitation on any party's liability or obligations under any such
instrument or agreement or any invalidity or unenforceability, in whole or in
part, of any such instrument or agreement or any term thereof; (e) any
bankruptcy, insolvency, reorganization, composition, adjustment, dissolution,
liquidation or other like proceeding relating to the Company or any Borrower, or
any action taken with respect to this Company Guaranty by any trustee or
receiver, or by any court, in any such proceeding, whether or not the Guarantor
shall have notice or knowledge of any of the foregoing; (f) any exchange,
release or nonperfection of any other collateral, or any release, or amendment
or waiver of, or consent to, departure from any guaranty or security, for all or
any of the Guaranteed Obligations; or (g) any other circumstance which might
otherwise constitute a defense available to, or a discharge of, the Guarantor.
This Company Guaranty shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any of the Guaranteed Obligations is
rescinded or must otherwise be returned by any Guaranteed Party upon the
insolvency, bankruptcy or reorganization of any Borrower or the Guarantor or
otherwise, all as though such payment had not been made.
SECTION 4. WAIVER. To the extent permitted by applicable law,
the Guarantor hereby waives promptness, diligence, notice of acceptance and any
other notice with respect to any of the Guaranteed Obligations and this Company
Guaranty and any requirement that the Guaranteed Parties 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 Borrower or any other Person
or any collateral.
SECTION 5. WAIVER OF SUBROGATION. The Guarantor hereby
irrevocably waives any claim or right of subrogation, reimbursement,
exoneration, contribution or indemnification, any right to participate in any
claim or remedy of the Guaranteed Parties or any collateral which the Agent, any
other Guaranteed Party or the Collateral Agent now has or hereafter acquires in
connection with the payment, performance or enforcement of such Guarantor's
obligations under this Company Guaranty or any other Credit Document whether or
not such claim, remedy or right arises in equity, or under contract, statute or
common law, including the right to take or receive, directly or indirectly, in
cash or other
4
<PAGE>
property or by set-off or in any other manner, payment or security on account of
such claim or other rights. If any amount shall be paid to the Guarantor in
violation of the preceding sentence and the Guaranteed Obligations shall not
have been paid in full or any commitment of any Guaranteed Party under either
Credit Agreement shall not have been irrevocably terminated, such amount shall
be deemed to have been paid to the Guarantor for the benefit of, and held in
trust for, the Agent for the benefit of the Guaranteed Parties, and shall
forthwith be paid to the Agent to be credited and applied to the Obligations,
whether matured or unmatured. The Guarantor acknowledges that it will receive
direct and indirect benefits from the financing arrangements contemplated by the
Credit Agreements and that the waiver set forth in this Section 5 is knowingly
made in contemplation of such benefits.
SECTION 6. SEVERABILITY. To the extent permitted by applicable
law, any provision of this Company Guaranty which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 7. AMENDMENTS, ETC. No amendment or waiver of any
provision of this Company Guaranty nor consent to any departure by the Guarantor
therefrom shall in any event be effective unless the same shall be executed in
accordance with the terms of the Credit Agreements.
SECTION 8. ADDRESSES FOR NOTICES. All notices and other
communications provided for hereunder shall be given to the Company and the
Agent at the addresses and in the manner specified in the Company Credit
Agreement.
SECTION 9. NO WAIVER; REMEDIES. No failure on the part of the
Guaranteed Parties 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. The remedies herein provided are cumulative and
not exclusive of any remedies provided by law.
SECTION 10. RIGHT OF SET-OFF. In addition to, and not in
limitation of, all rights of offset that any Lender or other holder of a Note
may have under applicable law, each Lender or other holder of a Note shall, upon
the occurrence of any Event of Default and whether or not such
5
<PAGE>
Lender or such holder has made any demand or the Guarantor's obligations
hereunder have matured, have the right to appropriate and apply to the payment
of the Guaranteed Obligations, all deposits (general or special, time or demand,
provisional or final) then or thereafter held by, and other indebtedness or
property then or thereafter owing by, such Lender or other holder, whether or
not related to this Company Guaranty or any transaction hereunder.
SECTION 11. CONTINUING GUARANTY; TRANSFER OF OBLIGATIONS. This
Company Guaranty is a continuing guaranty and shall (i) remain in full force and
effect until payment in full of the Guaranteed Obligations and all other amounts
payable under this Company Guaranty, (ii) be binding upon the Guarantor, its
successors and assigns, and (iii) inure to the benefit of and be enforceable by
each of the Guaranteed Parties and its permitted successors, transferees and
assigns; PROVIDED that the Company may not assign or transfer any of its
interests or obligations hereunder without the prior written consent of the
Lenders. Without limiting the generality of the foregoing clause (iii), any
Lender may assign in accordance with the terms and provisions of the Subsidiary
Credit Agreement to one or more banks or other entities all or any part of, or
may grant participations to one or more banks or other entities in or to all or
any part of, any of the Guaranteed Obligations, whereupon each such bank or
entity shall become vested with all the rights in respect thereof granted to
such Lender herein or otherwise in respect hereof; PROVIDED, HOWEVER, that
except as otherwise permitted by the terms and provisions of each of the Credit
Agreements, no participant in the Guaranteed Obligations shall be permitted to
exercise any right under Section 10 hereof.
SECTION 12. GOVERNING LAW; APPOINTMENT OF AGENT FOR SERVICE OF
PROCESS; SUBMISSION TO JURISDICTION. THIS COMPANY GUARANTY AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAW PRINCIPLES THEREOF). ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS COMPANY GUARANTY OR ANY DOCUMENT RELATED HERETO MAY BE BROUGHT
IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR
THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS
COMPANY GUARANTY, THE GUARANTOR HEREBY CONSENTS, FOR ITSELF AND IN RESPECT OF
ITS PROPERTY, TO THE JURISDICTION OF THE AFORESAID COURTS SOLELY FOR THE PURPOSE
OF ADJUDICATING ITS RIGHTS OR THE RIGHTS OF THE GUARANTEED PARTIES WITH RESPECT
TO THIS COMPANY GUARANTY OR ANY DOCUMENT RELATED HERETO. THE GUARANTOR HEREBY
IRREVOCABLY DESIGNATES CT CORPORATION SYSTEM, LOCATED AT 1633 BROADWAY, NEW
YORK, NEW YORK 10019 AS THE DESIGNEE, APPOINTEE AND
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AGENT OF THE GUARANTOR OR SUCH BORROWER, TO RECEIVE, FOR AND ON BEHALF OF THE
GUARANTOR OR SUCH BORROWER, SERVICE OF PROCESS IN SUCH JURISDICTION IN ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS COMPANY GUARANTY OR ANY DOCUMENT
RELATED HERETO AND SUCH SERVICE SHALL, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, BE DEEMED COMPLETED TEN DAYS AFTER DELIVERY THEREOF TO SAID AGENT. IT IS
UNDERSTOOD THAT A COPY OF SUCH PROCESS SERVED ON SUCH AGENT WILL BE PROMPTLY
FORWARDED BY MAIL TO THE GUARANTOR AT ITS ADDRESS SET FORTH IN THE COMPANY
CREDIT AGREEMENT, BUT THE FAILURE OF THE GUARANTOR TO RECEIVE SUCH COPY SHALL
NOT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, AFFECT IN ANY WAY THE SERVICE OF
SUCH PROCESS. THE GUARANTOR HEREBY IRREVOCABLY WAIVES, TO THE EXTENT PERMITTED
BY APPLICABLE LAW, ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION
TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS,
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING
IN SUCH RESPECTIVE JURISDICTIONS IN RESPECT OF THIS COMPANY GUARANTY OR ANY
DOCUMENT RELATED THERETO. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY
GUARANTEED PARTY TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE GUARANTOR IN ANY
OTHER JURISDICTION.
SECTION 13. SUBORDINATION OF BORROWER'S OBLIGATIONS TO THE
GUARANTOR. As an independent covenant, the Guarantor hereby expressly
covenants and agrees for the benefit of the Guaranteed Parties that all
obligations and liabilities of each Borrower to the Guarantor of whatsoever
description including, without limitation, all intercompany receivables of the
Guarantor from a Borrower ("Junior Claims") shall be subordinate and junior in
right of payment to all Obligations of each Borrower and the Company, as the
case may be, to the Guaranteed Parties, including, without limitation, interest
accrued during any Proceeding (as hereinafter defined) on the Obligations
whether or not the claim for such interest is allowable or discharged in such
Proceeding ("Senior Claims").
If an Event of Default shall occur and the Senior Claims shall have
been declared due and payable then, unless and until such Event of Default shall
have been cured or shall have ceased to exist, no direct or indirect payment (in
cash, property, securities by setoff or otherwise) shall be made by any Borrower
to the Guarantor on account of, or in any manner in respect of, any Junior Claim
except such payments and distributions the proceeds of which shall be applied to
the payment of Senior Claims.
Notwithstanding anything to the contrary set forth in the
immediately preceding paragraph of this Section 13, in the event of a
Proceeding, all Senior Claims shall first
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be paid in full before any direct or indirect payment or distribution (in cash,
property, or securities, by setoff or otherwise) shall be made to the Guarantor
on account of or in any manner in respect of any Junior Claim except such
payments and distributions the proceeds of which shall be applied to the payment
of Senior Claims. For the purposes of this Agreement, "Proceeding" means the
occurrence of any of the following events: the Company or any Borrower shall
commence a voluntary case concerning itself under Title 11 of the United States
Code entitled "Bankruptcy" as now or hereafter in effect, or any successor
thereto (the "Bankruptcy Code"); or any involuntary case is commenced against
the Company or any Borrower; or a custodian (as defined in the Bankruptcy Code)
is appointed for, or takes charge of, all or any substantial part of the
property of the Company or any Borrower, or the Company or any Borrower
commences any other proceedings under any reorganization arrangement, adjustment
of debt, relief of debtor, dissolution, insolvency or liquidation or similar law
of any jurisdiction whether now or hereafter in effect relating to the Company
or any Borrower; or the Company or any Borrower is adjudicated insolvent or
bankrupt; or any order of relief or other order approving any such case or
proceeding is entered; or the Company or any Borrower suffers any appointment of
any custodian or the like for it or any substantial part of its property; or the
Company or any Borrower makes a general assignment for the benefit of creditors;
or the Company or any Borrower shall fail to pay, or shall state that it is
unable to pay, or shall be unable to pay, its debts generally as they become
due; or the Company or any Borrower shall call a meeting of its creditors with a
view to arranging a composition or adjustment of its debts or the Company or any
Borrower shall by any act or failure to act indicate its consent to, approval
of, or acquiescence in, any of the foregoing; or any corporate action shall be
taken by the Company or any Borrower for the purpose of effecting any of the
foregoing.
In the event any direct or indirect payment or distribution is made
to the Guarantor in contravention of this Section 13, such payment or
distribution shall be deemed received in trust for the benefit of the Agent and
the Lenders and shall be immediately paid over to the Agent for application in
accordance with the terms of the Credit Agreements.
The Guarantor agrees to execute such additional documents as the
Agent may request to evidence the subordination provided for in this Section l3.
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By its execution and delivery of this Company Guaranty, each
Borrower hereby acknowledges and agrees to the subordination provided for in
this Section l3.
14. AMENDMENT AND RESTATEMENT. This Company Guaranty constitutes
an amendment and restatement of the 1992 Company Guaranty amended hereby (the
"Original Instrument"), and such Original Instrument shall continue in effect on
and after the date hereof as so amended and restated. The parties do not intend
that this Company Guaranty constitute a novation, termination, release or
satisfaction of the Original Instrument, or constitute payment or satisfaction
of any indebtedness or other obligation secured by the Original Instrument.
SECTION 15. WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE GUARANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF, OR IN CONNECTION
WITH, THIS COMPANY GUARANTY OR ANY OTHER CREDIT DOCUMENT OR ANY MATTER ARISING
IN CONNECTION HEREUNDER OR THEREUNDER.
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IN WITNESS WHEREOF, the Guarantor has caused this Company Guaranty
to be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.
CHARTER MEDICAL CORPORATION
By /s/ James R. Bedenbaugh
---------------------------
Name: James R. Bedenbaugh
Title: Treasurer
ACKNOWLEDGED AND AGREED TO
AS APPLICABLE TO THE BORROWERS:
EACH OF THE BORROWERS LISTED ON
ANNEX I HERETO
By /s/ Charlotte A. Sanford
-------------------------
Charlotte A. Sanford, in
her capacity as Treasurer
for each of the Borrowers
listed on Annex I hereto
<PAGE>
ANNEX I
SECOND AMENDED AND RESTATED COMPANY GUARANTY
I. LETTERS OF CREDIT
Charter Behavioral Health System of New Mexico, Inc.
Charter Behavioral Health System of Charleston, Inc.
Charter Behavioral Health System of Northwest Arkansas, Inc.
Charter Behavioral Health System of Central Georgia, Inc.
Charter Fairmount Behavioral Health System, Inc.
Charter Forest Behavioral Health System, Inc.
Charter Hospital of St. Louis, Inc. (Greenville)
Charter Palms Behavioral Health System, Inc.
Charter Plains Behavioral Health System, Inc.
Charter Ridge Behavioral Health System, Inc.
Charter Rivers Behavioral Health System, Inc.
Charter Springs Behavioral Health System, Inc.
CMSF, Inc. (Glade)
II. SUBSIDIARY LOANS
Charter Behavioral Health System of Northern California, Inc.
Charter Behavioral Health System of Northwest Indiana, Inc.
Charter Hospital of St Louis, Inc. (Orlando South)
Charter Indianapolis Behavioral Health System, Inc.
Charter Lakeside Behavioral Health System, Inc.
Charter Mission Viejo Behavioral Health System, Inc.
Charter San Diego Behavioral Health System, Inc.
Charter South Bend Behavioral Health System, Inc.
Charter Terre Haute Behavioral Health System, Inc.
Charter Woods Behavioral Health System, Inc.
<PAGE>
SECOND AMENDED AND RESTATED
SUBSIDIARY COLLATERAL ACCOUNTS ASSIGNMENT AGREEMENT
This SECOND AMENDED AND RESTATED SUBSIDIARY COLLATERAL ACCOUNTS
ASSIGNMENT AGREEMENT (this "Agreement") is dated as of May 2, 1994, and made
between each corporation listed on Schedule I hereto (the "Subsidiary Borrowers"
or the "Pledgors") and BANKERS TRUST COMPANY, as Agent (the "Agent") for the
financial institutions from time to time parties to the Subsidiary Credit
Agreement (as hereinafter defined)(the "Lenders").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, certain of the parties hereto are parties to the Subsidiary
Collateral Accounts Assignment Agreement dated as of September 1, 1988 which was
amended and restated by the Amended and Restated Subsidiary Collateral Accounts
Assignment Agreement dated as of July 21, 1992 (the "1992 Subsidiary Collateral
Accounts Assignment Agreement"), and now desire to amend and restate such
agreement in its entirety; and
WHEREAS, Charter Medical Corporation, a Delaware corporation (as
successor to WAF Acquisition Corporation, a Delaware corporation, the
"Company"), certain of the Lenders, the Agent, Wells Fargo Bank, National
Association and Bank of America National Trust and Savings Association, as co-
agents (the "Original Co-Agents"), entered into that certain Credit Agreement
dated as of September l, 1988 which was amended and restated by the Amended and
Restated Credit Agreement dated as of July 21, 1992 (the "1992 Company Credit
Agreement"), which is being amended and restated by the Second Amended and
Restated Credit Agreement dated as of the date hereof (as the same may be
further amended, restated, supplemented or otherwise modified from time to time,
the "Company Credit Agreement"), pursuant to which certain of the Lenders made
certain loans and commitments to the Company, the terms of which are being
amended and restated pursuant to the Company Credit Agreement; and
<PAGE>
WHEREAS, pursuant to the terms and conditions of the Company Credit
Agreement, the Lenders have made certain commitments to make additional loans
to, and participate in and/or issue letters of credit for the account of, the
Company; and
WHEREAS, certain Borrowers, certain of the Lenders, the Original Co-
Agents and the Agent entered into a Credit Agreement, dated as of September l,
1988 which was amended and restated by the Amended and Restated Subsidiary
Credit Agreement dated as of July 21, 1992 (the "1992 Subsidiary Credit
Agreement"; and, together with the 1992 Company Credit Agreement, the "1992
Credit Agreement"), which is being amended and restated by the Second Amended
and Restated Subsidiary Credit Agreement dated as of the date hereof (as the
same may be further amended, restated, supplemented or otherwise modified from
time to time, the "Subsidiary Credit Agreement"; and, together with the Company
Credit Agreement, each a "Credit Agreement" and collectively the "Credit
Agreements"), pursuant to which certain of the Lenders made certain loans and
commitments to, and issued letters of credit for the benefit of, the Borrowers,
the terms of which are being amended and restated pursuant to the Subsidiary
Credit Agreement; and
WHEREAS, pursuant to the terms and conditions of the Subsidiary Credit
Agreement, the Lenders have made certain commitments to make additional loans
to, and participate in and/or issue letters of credit for the account of, the
Borrowers; and
WHEREAS, the Lenders have agreed to amend and restate the 1992 Credit
Agreements upon terms and conditions acceptable to the Company and the
Borrowers; and
WHEREAS, it was a condition precedent to the incurrence of loans and
participation in letters of credit under the 1992 Credit Agreements that the
Pledgors execute and deliver to the Agent the 1992 Subsidiary Collateral
Accounts Assignment Agreement and it is a condition precedent to the incurrence
of loans and the issuance of letters of credit under the Credit Agreements that
each Pledgor executes and delivers to the Agent this Agreement;
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NOW, THEREFORE, in consideration of the foregoing and the agreements,
provisions and covenants contained herein, each Pledgor and the Agent hereby
agree as follows:
SECTION 1. DEFINITIONS. (a) The terms defined in the Subsidiary
Credit Agreement (by reference to the Company Credit Agreement or otherwise) and
not otherwise defined herein, including in the recital paragraphs, are used
herein as defined therein.
(b) The following terms used in this Agreement shall have the
following meanings:
"COLLATERAL" means (a) all funds from time to time on deposit in the
Subsidiary L/C Cash Collateral Account, (b) all investments in the
Subsidiary L/C Cash Collateral Account and all certificates and instruments
from time to time representing or evidencing such Investments, (c) all
notes, certificates of deposit, checks and other instruments from time to
time hereafter delivered to or otherwise possessed by the Agent for or on
behalf of the Pledgors in substitution for or in addition to any or all of
the Collateral, (d) all interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Collateral, and (e) to the
extent not covered by clauses (a) through (d) above, all proceeds of any or
all of the foregoing Collateral.
"INVESTMENTS" means those investments, if any, made by the Agent
pursuant to Section 5 hereof.
"OBLIGATIONS" means all obligations of each Pledgor under the
Subsidiary Credit Agreement and the other Credit Documents.
"SUBSIDIARY L/C CASH COLLATERAL ACCOUNT" means the cash collateral
account established and maintained pursuant to Section 2 hereof.
SECTION 2. ESTABLISHMENT OF COLLATERAL ACCOUNT. (a) If, at any
time, any Subsidiary Borrower is required to deposit any amounts into the L/C
Cash Collateral Account pursuant to Section 4.2(a) of the Subsidiary
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Credit Agreement, the Agent and the Subsidiary Borrowers shall , and at all
other times the Agent may, and upon the request of the Agent the Borrowers
shall, establish and maintain at the Payment Office, in the name of the Pledgors
but under the sole dominion and control of the Agent, a cash collateral account
bearing interest only as a result of investments permitted by Section 5. The
Pledgors hereby jointly and severally agree to deposit in the Subsidiary L/C
Cash Collateral Account each amount, if any, required to be so deposited in
respect of Subsidiary Letters of Credit pursuant to Section 4.2(a) of the
Subsidiary Credit Agreement.
(b) Any amounts deposited in the Subsidiary L/C Cash Collateral
Account shall be (A) applied to the reimbursement of payments made by the L/C
Banks and the other Lenders in respect of drawings under Subsidiary Letters of
Credit in accordance with and subject to Sections 2.3 and 2.4 of the Subsidiary
Credit Agreement or Section 9 of the Credit Agreements, (B) applied in
accordance with Section 12 hereof or (C) released to the Pledgors pursuant to
Section 4.2(a) of the Subsidiary Credit Agreement.
SECTION 3. CONDITIONAL ASSIGNMENT OF COLLATERAL. Each Pledgor hereby
assigns to the Agent for its benefit and the benefit of the Lenders, and grants
to the Agent for its benefit and the benefit of the Lenders a lien and security
interest in, the Collateral. In accordance with Section 12 hereof, upon the
failure of any Pledgor to pay the Obligations in accordance with the provisions
of the Subsidiary Credit Agreement and the other Credit Documents, the Agent may
apply any and all amounts constituting and in respect of Collateral in
satisfaction of the payment in full of the Obligations. Upon payment in full of
the Obligations, the Agent agrees to re-assign to the Pledgors the remaining
Collateral.
SECTION 4. DELIVERY OF COLLATERAL. All certificates or instruments,
if any, representing or evidencing the Collateral shall be delivered to and held
by the Agent pursuant hereto and shall be in suitable form for transfer by
delivery, or shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance reasonably satisfactory to the
Agent. In the event any Collateral is not evidenced by a certificate, a
notation, reflecting title in the name of
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the Agent or the security interest of the Agent shall be made in the records of
the issuer of such Collateral or in such other appropriate records as the Agent
may require, all in form and substance reasonably satisfactory to the Agent.
The Agent shall have the right, upon the occurrence and during the continuance
of an Event of Default to transfer to or to register in the name of the Agent or
any of its nominees any or all of the Collateral. In addition, the Agent shall
have the right at any time to exchange certificates or instruments representing
or evidencing Collateral for certificates or instruments of smaller or larger
denominations.
SECTION 5. INVESTING OF AMOUNTS IN THE SUBSIDIARY L/C CASH COLLATERAL
ACCOUNT. Cash held by the Agent in the Subsidiary L/C Cash Collateral Account
shall not be invested or reinvested except as provided in this Section 5.
(a) Except as otherwise provided in Section 12 hereof, the Company
(i) may direct the Agent to (A) invest cash (including the proceeds of sales of
Cash Equivalents) in the Subsidiary L/C Cash Collateral Account from time to
time in Cash Equivalents and (B) deliver to the Company for distribution to the
respective Pledgors any interest accrued on the amounts deposited in the
Subsidiary L/C Cash Collateral Account; PROVIDED, that the Agent shall not be
obligated to deliver any such interest (x) more often than once every calendar
month, (y) to the extent that either before or after such delivery of interest,
the Company would be required to deposit any amount in the Subsidiary L/C Cash
Collateral Account pursuant to Section 4.2(a) of the Subsidiary Credit Agree-
ment, or (z) upon the occurrence and during the continuance of an Event of
Default; and (ii) shall direct the Agent to sell any such Cash Equivalents from
time to time to the extent necessary such that the amount of cash held in the
Subsidiary L/C Cash Collateral Account is sufficient to permit any application
thereof to the payment of the Obligations as provided in the Subsidiary Credit
Agreement.
(b) The Agent is hereby authorized to sell or set-off, and shall
sell, all or any designated part of the Collateral (i) so long as no Event of
Default shall have occurred and be continuing, upon the receipt of appropriate
written or tested telex instructions from the
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Company, or (ii) in any event (but only with prior written notice to the
Company) if such sale is necessary to permit the Agent to perform its duties
hereunder or under the Subsidiary Credit Agreement, PROVIDED, HOWEVER that the
Agent shall have no responsibility for any loss in the value of the Collateral
resulting from a fluctuation in interest rates or otherwise as a result of any
such sale or any sale pursuant to Section 12. Except as provided in paragraph
(a) above, any interest on securities constituting part of the Collateral and
the net proceeds of the sale or payment of any such securities shall be held in
the Subsidiary L/C Cash Collateral Account by the Agent.
SECTION 6. REPRESENTATIONS AND WARRANTIES. In addition to its
representations and warranties made pursuant to Section 6 of the Subsidiary
Credit Agreement, each Pledgor represents and warrants to the Agent for the
benefit of the Lenders that the following statements are true, correct and
complete:
(a) On and after the Closing Date, the Pledgors will be the legal and
beneficial owner of the Collateral free and clear of any Lien except for the
lien and security interest created by this Agreement; and
(b) The pledge, assignment and possession of the Collateral pursuant
to this Agreement creates a valid assignment of, and a valid and perfected first
priority security interest in the Collateral, securing the payment of the
Obligations.
SECTION 7. FURTHER ASSURANCES. Each Pledgor agrees that at any time
and from time to time, at its expense, it will promptly execute and deliver to
the Agent any further instruments and documents, and take any further actions,
that may be necessary or that the Agent may reasonably request, in order to
protect the assignment given hereby or to perfect and protect any security
interest granted hereby or to enable the Agent to exercise and enforce its
rights and remedies hereunder with respect to any Collateral.
SECTION 8. TRANSFERS AND OTHER LIENS. Except as permitted hereunder,
each Pledgor agrees that it will not (a) sell or otherwise dispose of any
Collateral or any interest in the Collateral, or (b) create or permit
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to exist any Lien upon or with respect to any of the Collateral, except for the
lien and security interest created by this Agreement and Permitted Liens.
SECTION 9. THE AGENT APPOINTED ATTORNEY-IN-FACT. Each Pledgor hereby
irrevocably appoints the Agent as its attorney-in-fact, coupled with an interest
and with full authority in the place and stead of such Pledgor and in the name
of such Pledgor or otherwise, from time to time in Agent's reasonable discretion
after the occurrence and during the continuance of an Event of Default to take
any action and to execute any instrument which the Agent may reasonably deem
necessary or advisable to accomplish the purposes of this Agreement, including,
without limitation, to receive, endorse and collect all instruments made payable
to such Pledgor representing any payment, dividend, or other distribution in
respect of the Collateral or any part thereof and to give full discharge for the
same. In performing its functions and duties under this Agreement, the Agent
shall act solely as the agent of the Lenders and the Agent has not assumed and
shall not be deemed to have assumed any obligation towards or relationship of
agency or trust with or for any Pledgor.
SECTION 10. THE AGENT MAY PERFORM. If any Pledgor fails to perform
any agreement contained herein, after notice to such Pledgor, the Agent may
itself perform, or cause performance of, such agreement, and the expenses of the
Agent, as the case may be, incurred in connection therewith shall be payable by
the Pledgors under Section l3 hereof.
SECTION 11. STANDARD OF CARE; NO RESPONSIBILITY FOR CERTAIN MATTERS.
In dealing with the Collateral in its possession, the Agent shall exercise the
same care which it would exercise in dealing with its own property of a similar
nature, but it shall not be responsible for (a) ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or other
matters relative to any Collateral whether or not the Agent has or is deemed to
have knowledge of such matters, (b) taking any steps to preserve rights against
any parties with respect to any Collateral (other than steps taken in accordance
with the standard of care set forth above to maintain possession of the
Collateral), (c) the collection of any proceeds, (d) any loss resulting from
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Investments made pursuant to Section 5 hereof, except for a loss resulting from
the Agent's gross negligence or willful misconduct in complying with said
Section 5, or (e) determining (i) the correctness of any statement or
calculation made by any Pledgor in any written or telex (tested or otherwise)
instructions, or (ii) whether any deposit in the Subsidiary L/C Cash Collateral
Account is proper.
SECTION 12. REMEDIES UPON DEFAULT. If any Default or Event of
Default shall have occurred and be continuing:
(a) the Agent may sell all or any portion of the Collateral and apply
the cash proceeds thereof and any other cash in the Subsidiary L/C Cash
Collateral Account to the payment of any of the Obligations, whether or not due,
in such order as the Required Lenders may determine in their sole discretion;
any surplus of such cash or cash proceeds held by the Agent and remaining after
payment in full of all Obligations shall be paid over to the Pledgors or to
whomsoever may be lawfully entitled to receive such surplus; and
(b) anything contained herein to the contrary notwithstanding, any of
the Collateral consisting of investments in call deposits of the Lenders shall
be subject to the Lenders' rights of set-off under Section 12.2 of the
Subsidiary Credit Agreement.
SECTION 13. INDEMNITY. Without duplication of any amounts payable
under Section 12.1 of each of the Company Credit Agreement and the Subsidiary
Credit Agreement and any other similar indemnity provision contained in any
other Credit Document, the Pledgors shall (i) whether or not the transactions
hereby contemplated are consummated, pay all reasonable out-of-pocket costs and
expenses of the Agent actually incurred in connection with the administration
(both before and after the execution hereof and including advice of counsel as
to the rights and duties of the Agent with respect thereto) of and in connection
with the preparation, execution and delivery of this Agreement (including,
without limitation, the reasonable fees and disbursements of Skadden, Arps,
Slate, Meagher & Flom) and of the Agent and each Lender actually incurred in
connection with the preservation of rights under, and enforcement of, and, after
an
8
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Event of Default, renegotiation or restructuring of this Agreement and any
amendment, waiver or consent relating thereto (including, without limitation,
the reasonable fees and disbursements of counsel for the Agent and each Lender);
(ii) pay and hold the Agent and each of the Lenders harmless from and against
any and all present and future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies which arise from any payment made
hereunder or from the execution, delivery or registration of, or otherwise with
respect to this Agreement and save the Agent and each Lender harmless from and
against any and all liabilities with respect to or resulting from any delay or
omission to pay any such taxes, charges or levies; and (iii) indemnify the Agent
and each Lender, its officers, directors, employees, representatives and agents
from and hold each of them harmless against any and all costs, losses,
liabilities, claims, damages or expenses actually incurred by any of them
(whether or not any of them is designated a party thereto) arising out of or by
reason of any investigation, litigation or other proceeding related to this
Agreement or any transaction contemplated hereby, including, without limitation,
the reasonable fees and disbursements of counsel incurred in connection with any
such investigation, litigation or other proceeding. Notwithstanding anything in
this Agreement to the contrary, the Pledgors shall not be responsible to the
Agent, or any officer, director, employee, representative or agent of the
foregoing (an "Indemnified Party") for any losses, damages, liabilities or
expenses which result from such Indemnified Party's gross negligence or willful
misconduct. It is understood that the Pledgors shall not, in connection with
any single action, suit, proceeding or claim or separate but substantially
similar or related actions, suits, proceedings or claims, arising out of the
same general allegations or circumstances, be liable for the fees and expenses
of more than one separate firm of attorneys at the same time for the Indemnified
Parties (which firm shall be designated by the Agent) except that, if any
Indemnified Party other than the Agent shall determine, in its sole discretion,
that there may be a conflict in such firm representing the Agent and such
Indemnified Party, then the Pledgors shall be liable for the reasonable fees and
expenses of an additional firm for such Indemnified Party whose interests may be
in conflict. The Pledgors' obligations under
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this Section 13 shall survive any termination of this Agreement.
SECTION 14. NO WAIVER. No failure on the part of the Agent to
exercise, and no course of dealing with respect to, and no delay in exercising,
any right, power or remedy hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise by the Agent of any right, power or remedy
hereunder preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies herein provided are to the fullest
extent permitted by law cumulative and are not exclusive of any remedies
provided by law, in equity or under any other Credit Document.
SECTION 15. AMENDMENTS, ETC. No amendment, modification, termination
or waiver of any provision of this Agreement, or consent to any departure by any
Pledgor therefrom, shall in any event be effective unless the same shall be
executed in accordance with the terms of the Subsidiary Credit Agreement.
SECTION 16. NOTICES. Except as otherwise specifically provided
herein, any notice or other communication herein required or permitted to be
given shall be given to the parties hereto at the addresses and in the manner
specified in the Subsidiary Credit Agreement.
SECTION 17. CONTINUING SECURITY INTEREST; TERMINATION. Except as
provided hereunder and under the Subsidiary Credit Agreement, none of the
Pledgors nor any Person claiming on behalf of or through the Pledgors shall have
any right to withdraw any of the funds held in the Subsidiary L/C Cash
Collateral Account until the termination of the Total Revolving Loan Commitment,
indefeasible payment in full of all of the Obligations and no Letters of Credit
or Subsidiary Letters of Credit are outstanding. This Agreement shall create a
continuing security interest in the Collateral and shall (a) remain in full
force and effect until the termination of the Total Revolving Loan Commitment,
indefeasible payment in full of all Obligations and no Letters of Credit or
Subsidiary Letters of Credit are outstanding, (b) be binding upon each Pledgor,
its successors and assigns, and (c) inure to the benefit of the Agent, the
Lenders, and their respective successors, transferees and assigns; PROVIDED that
no Pledgor may assign or transfer any of
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its interests or obligations hereunder without the written consent of the
Required Lenders. Without limiting the generality of the foregoing clause (c)
and subject to the provisions of Section 12.4 of the Subsidiary Credit
Agreement, any Lender may assign or otherwise transfer any Note held by it to
any other person or entity, and such other person or entity shall thereupon
become vested with all the benefits in respect thereof granted to such Lender
herein or otherwise. Upon the termination of the Total Revolving Loan
Commitment, indefeasible payment in full of the Obligations and the cancellation
or expiration of all outstanding Letters of Credit and Subsidiary Letters of
Credit, each Pledgor shall be entitled to the return, upon its request and at
its expense, of such of the Collateral as shall not have been sold or otherwise
applied pursuant to the terms hereof.
SECTION 18. GOVERNING LAW; APPOINTMENT OF AGENT FOR SERVICE OF
PROCESS; SUBMISSION TO JURISDICTION. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAW PRINCIPLES THEREOF). ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO MAY BE BROUGHT IN THE
COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
EACH PLEDGOR HEREBY CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
JURISDICTION OF THE AFORESAID COURTS SOLELY FOR THE PURPOSE OF ADJUDICATING ITS
RIGHTS OR THE RIGHTS OF THE AGENT WITH RESPECT TO THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO. EACH PLEDGOR HEREBY IRREVOCABLY DESIGNATES CT CORPORATION
SYSTEM LOCATED AT 1633 BROADWAY, NEW YORK, NEW YORK 10019 AS THE DESIGNEE,
APPOINTEE AND AGENT OF SUCH PLEDGOR, TO RECEIVE, FOR AND ON BEHALF OF SUCH
PLEDGOR, SERVICE OF PROCESS IN SUCH JURISDICTIONS IN ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO AND
SUCH SERVICE SHALL, TO THE EXTENT PERMITTED BY APPLICABLE LAW, BE DEEMED
COMPLETED TEN DAYS AFTER DELIVERY THEREOF TO SAID AGENT. IT IS UNDERSTOOD THAT
A COPY OF SUCH PROCESS SERVED ON SUCH AGENT WILL BE PROMPTLY FORWARDED BY MAIL
TO SUCH PLEDGOR AT ITS ADDRESS SET FORTH IN THE SUBSIDIARY CREDIT AGREEMENT, BUT
THE FAILURE OF ANY PLEDGOR TO RECEIVE SUCH COPY SHALL NOT, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, AFFECT IN ANY WAY THE SER-
11
<PAGE>
VICE OF SUCH PROCESS. EACH PLEDGOR HEREBY IRREVOCABLY WAIVES, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS IN RESPECT OF THIS AGREEMENT OR ANY
DOCUMENT RELATED HERETO. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY PLEDGOR IN ANY OTHER JURISDICTION.
SECTION 19. WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH PLEDGOR HEREBY IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT OR ANY MATTER ARISING IN CONNECTION HEREUNDER.
SECTION 20. AMENDMENT AND RESTATEMENT. This Agreement constitutes an
amendment and restatement of the 1992 Subsidiary Collateral Accounts Assignment
Agreement amended hereby (the "Original Instrument"), and such Original
Instrument shall continue in effect on and after the date hereof as so amended
and restated. The parties do not intend that this Agreement constitute a
novation, termination, release or satisfaction of the Original Instrument, or
constitute payment or satisfaction of any indebtedness or other obligation
secured by the Original Instrument.
12
<PAGE>
Charter Medical Corporation
Subsidiary Collateral
Accounts Assignment Agreement
May 2, 1994
IN WITNESS WHEREOF, each Pledgor and the Agent have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first above written.
BANKERS TRUST COMPANY,
as Agent
By /s/ Mary Kay Coyle
--------------------------------
Name: Mary Kay Coyle
Title: Vice President
PLEDGORS:
By /s/ Charlotte A. Sanford
--------------------------------
Charlotte A. Sanford in her
capacity as Treasurer for each of
the corporations, each as a
Pledgor, listed on Schedule I
hereto
13
<PAGE>
SCHEDULE I
SECOND AMENDED AND RESTATED SUBSIDIARY COLLATERAL ACCOUNTS
ASSIGNMENT AGREEMENT
I. LETTERS OF CREDIT
Charter Behavioral Health System of New Mexico, Inc.
Charter Behavioral Health System of Charleston, Inc.
Charter Behavioral Health System of Northwest Arkansas, Inc.
Charter Behavioral Health System of Central Georgia, Inc.
Charter Fairmount Behavioral Health System, Inc.
Charter Forest Behavioral Health System, Inc.
Charter Hospital of St. Louis, Inc. (Greenville)
Charter Palms Behavioral Health System, Inc.
Charter Plains Behavioral Health System, Inc.
Charter Ridge Behavioral Health System, Inc.
Charter Rivers Behavioral Health System, Inc.
Charter Springs Behavioral Health System, Inc.
CMSF, Inc. (Glade)
II. SUBSIDIARY LOANS
Charter Behavioral Health System of Northern California, Inc.
Charter Behavioral Health System of Northwest Indiana, Inc.
Charter Hospital of St. Louis, Inc. (Orlando South)
Charter Indianapolis Behavioral Health System, Inc.
Charter Lakeside Behavioral Health System, Inc.
Charter Mission Viejo Behavioral Health System, Inc.
Charter San Diego Behavioral Health System, Inc.
Charter South Bend Behavioral Health System, Inc.
Charter Terre Haute Behavioral Health System, Inc.
Charter Woods Behavioral Health System, Inc.
<PAGE>
39 (M-30)
INDENTURE OF MORTGAGE, DEED TO
SECURE DEBT, DEED OF TRUST, SECURITY
AGREEMENT AND ASSIGNMENT OF LEASES AND RENTS; AMENDED
INDENTURE OF MORTGAGE, DEED TO SECURE DEBT,
DEED OF TRUST, SECURITY AGREEMENT AND
ASSIGNMENT OF LEASES AND RENTS; AND
CONSOLIDATION AGREEMENT
from
CHARTER HOSPITAL OF ST. LOUIS, INC.
2700 E. Phillips Road
Greer, South Carolina 29651
as DEBTOR, GRANTOR, TRUSTOR
and MORTGAGOR
to
BANKERS TRUST COMPANY, as Agent,
as GRANTEE, SECURED PARTY
BENEFICIARY and MORTGAGEE
280 Park Avenue
New York, New York 10015
Dated as of May 2, 1994
________________________________________________________________________________
The total outstanding principal amount of indebtedness secured by this
instrument shall not exceed Three Hundred Million and 00/100 Dollars
($300,000,000.00). This instrument contains after acquired property provisions.
This instrument is intended to secure the debts and obligations referred to
herein.
________________________________________________________________________________
This document was prepared by:
Kenneth Kraus, Esq.
Skadden, Arps, Slate,
Meagher & Flom
1440 New York Ave., N.W.
Washington, D.C. 20005
<PAGE>
INDENTURE OF MORTGAGE, DEED TO SECURE DEBT, DEED OF TRUST, SECURITY
AGREEMENT AND ASSIGNMENT OF LEASES AND RENTS; AMENDED INDENTURE OF MORTGAGE,
DEED TO SECURE DEBT, DEED OF TRUST, SECURITY AGREEMENT AND ASSIGNMENT OF LEASES
AND RENTS; AND CONSOLIDATION AGREEMENT dated as of May 2, 1994 (herein, together
with all amendments and supplements hereto, called this "Mortgage"), made by the
entity identified as "Debtor, Grantor, Trustor and Mortgagor" on the cover page
hereof (herein together with any corporation succeeding thereto by merger,
consolidation or acquisition of its assets substantially as an entirety, the
"Mortgagor"), and BANKERS TRUST COMPANY ("Agent"), a New York banking
corporation, as collateral agent for the Banks (as hereinafter defined) and the
Co-Agent (as hereinafter defined), as grantee, secured party, beneficiary and
mortgagee (each of the Agent, the Co-Agent and the Banks is sometimes
individually referred to as a "Beneficiary" and, collectively "Beneficiaries"),
having its principal office at 280 Park Avenue, New York, New York 10015 and the
person or entity identified as "Trustee" on the cover page hereof (herein
together with his or its successors and assigns, the "Individual Trustee" (in
the case of an individual) or the "Jurisdictional Trustee" (in the case of an
entity)) (the Individual Trustee, together with the Jurisdictional Trustee and
all separate trustees and co-trustees appointed as provided in Section 4.4,
sometimes collectively referred to as the "Trustees").
R E C I T A L S:
1. Mortgagor is (i) either the owner in fee simple absolute of or
the holder of a leasehold estate in the real property described in SCHEDULE A
hereto, (ii) either the owner in fee simple absolute of, or the holder of a
leasehold estate in the Improvements and Personal Property (each as hereinafter
defined) and (iii) the owner either of the landlord's interest or sublandlord's
interest in any and all leases of all or any portion of the Trust Estate (as
hereinafter defined).
2. WAF Acquisition Corporation, a Delaware corporation (as
succeeded by Charter Medical Corporation as the surviving corporation pursuant
to the Merger (as
<PAGE>
defined in the Original Company Credit Agreement referred to below), the
"Company"), the institutions who are party to that Credit Agreement (the
"Original Banks"), the Agent and Wells Fargo Bank, National Association ("Wells
Fargo") and Bank of America National Trust and Savings Association ("Bank of
America"), as Co-Agents entered into that certain Credit Agreement dated as of
September 1, 1988 (as amended through July 20, 1992, the "Original Company
Credit Agreement"), pursuant to which the Original Banks made loans to the
Company (the "Original Credit Agreement Loans") which are evidenced by certain
promissory notes (the "Original Credit Agreement Notes")
3. The Company, the Original Banks and the Agent entered into
that certain Amended and Restated Credit Agreement, dated as of July 21, 1992
(the "1992 Credit Agreement Amendment"), pursuant to which the Original Banks
made amended, consolidated and restated loans to the Company (the "1992 Loans")
which are evidenced by certain promissory notes (the "1992 Notes")
4. The Company, certain of the Original Banks and certain other
financial institutions (collectively, the "Banks"), the Agent and First Union
National Bank (NC), as co-agent (the "Co-Agent") have entered into that certain
Second Amended and Restated Credit Agreement, dated as of the date hereof (the
"Amended Credit Agreement"). The Original Company Credit Agreement as amended
by the 1992 Credit Agreement Amendment and as amended and restated in its
entirety pursuant to the Amended Credit Agreement and as the same may hereafter
be amended, restated, supplemented or otherwise modified is hereinafter referred
to as the "Company Credit Agreement".
5. Pursuant to the Company Credit Agreement some or all of the
loans and letter of credit obligations outstanding under the Original Credit
Agreement as amended by the 1992 Credit Agreement Amendment will be continued,
and the Banks have made loans to and will make further loans to the Company,
have participated in letters of credit and may issue and participate in
additional letters of credit for the account of the Company. The Original
Credit Agreement Loans, the 1992 Loans and the loans made and to be made
pursuant to the Company Credit Agreement are hereinafter collectively referred
to as the "Credit Agreement Loans". The Original Credit Agreement Notes, as
amended and restated by the 1992 Notes, are
2
<PAGE>
contemporaneously herewith being amended, restated and consolidated to include
loans made and to be made pursuant to the Company Credit Agreement pursuant to
new promissory notes (the "1994 Notes"). The Original Credit Agreement Notes,
as amended and restated by the 1992 Notes and as amended, restated and
consolidated contemporaneously herewith by the 1994 Notes, as all of the
foregoing may hereafter be amended, restated, supplemented or otherwise
modified, together with each and every other note executed and delivered from
time to time pursuant to the Company Credit Agreement, are hereinafter referred
to as the "Credit Agreement Notes".
6. Certain of the Original Banks, the Agent, Bank of America and
Wells Fargo entered into that certain Credit Agreement, dated as of September 1,
1988 (as amended through July 20, 1992, the "Original Subsidiary Credit
Agreement") with each of the subsidiary borrowers a party thereto, pursuant to
which the Original Banks made loans to the subsidiary borrowers (collectively,
the "Original Subsidiary Loans") and purchased participations in letters of
credit issued for the account of the subsidiary borrowers (the "Original
Subsidiary Letters of Credit")
7. The 1992 Banks and the Agent entered into that certain Amended
and Restated Subsidiary Credit Agreement, dated as of July 21, 1992, with each
of the subsidiary borrowers (the "1992 Subsidiary Credit Agreement Amendment"),
pursuant to which the Original Banks made loans to the subsidiary borrowers (the
"1992 Subsidiary Loans") which are evidenced by certain promissory notes (the
"1992 Subsidiary Notes").
8. The Banks, the Agent and the Co-Agent have entered into that
certain Second Amended and Restated Subsidiary Credit Agreement, dated as of the
date hereof, with each of the subsidiary borrowers a party thereto (the "Amended
Subsidiary Credit Agreement"). The Original Subsidiary Credit Agreement as
amended by the 1992 Subsidiary Credit Agreement Amendment and as amended and
restated in its entirety pursuant to the Amended Subsidiary Credit Agreement and
as the same may hereafter be amended, restated, supplemented or otherwise
modified is hereinafter referred to as the "Subsidiary Credit Agreement"). The
Company Credit Agreement and the Subsidiary
3
<PAGE>
Credit Agreement are hereinafter together referred to as the "Agreements" and
individually as an "Agreement".
9. Pursuant to the Subsidiary Credit Agreement the loans and
letter of credit obligations outstanding under the Original Subsidiary Credit
Agreement as amended by the 1992 Subsidiary Credit Agreement Amendment will be
continued, and the Banks have made loans to and will make further loans to the
subsidiary borrowers and have participated in letters of credit and may issue
and participate in additional letters of credit for the accounts of the
subsidiary borrowers. The Original Subsidiary Loans, the 1992 Subsidiary Loans
and the loans made and to be made pursuant to the Subsidiary Credit Agreement
are hereinafter collectively referred to as the "Subsidiary Loans". The Credit
Agreement Loans and the Subsidiary Loans are hereinafter collectively referred
to as the "Loans". The Original Subsidiary Notes, as amended and restated by
the 1992 Subsidiary Notes, are contemporaneously herewith being amended and
restated to include loans made and to be made pursuant to the Subsidiary Credit
Agreement pursuant to new promissory notes (the "1994 Subsidiary Notes"). The
Original Subsidiary Notes, as amended and restated by the 1992 Subsidiary Notes
and as amended and restated contemporaneously herewith by the 1994 Subsidiary
Notes, as all of the foregoing may hereafter be amended, restated, supplemented
or otherwise modified, together with each and every other note executed and
delivered from time to time pursuant to the Subsidiary Credit Agreement, are
hereinafter referred to as the "Subsidiary Notes". The Credit Agreement Notes
and the Subsidiary Notes are hereinafter collectively referred to as the "Notes"
and individually as a "Note".
10. The Loans are in the form of revolving credit loans under
which advances, payments and readvances may be made from time to time, and the
Loans will bear interest at variable rates which are described in the Notes and
Agreements.
11. Mortgagor is a wholly-owned subsidiary of the Company or of
another wholly-owned subsidiary of the Company, and has and will benefit,
directly or indirectly, from the Loans.
4
<PAGE>
12. Mortgagor executed and delivered to the Agent that certain
Indenture of Mortgage, Deed to Secure Debt, Deed of Trust, Security Agreement,
and Assignment of Leases and Rents, dated as of September 30, 1988, and recorded
on October 15, 1990 in the RMC Office of Greenville County in Book 2107, at
Page 162 (the "Original Mortgage"), covering the Trust Estate and securing,
among other things, (i) payment of all principal and interest and other sums due
or becoming due in respect of the Original Subsidiary Loans and the Original
Subsidiary Notes; and (ii) payment by the Company of all principal and interest
and other sums due or becoming due under the Original Credit Agreement Loans and
the Original Credit Agreement Notes.
13. Mortgagor executed and delivered to the Agent that certain
Amended and Restated Indenture of Mortgage, Deed to Secure Debt, Deed of Trust,
Security Agreement and Assignment of Leases and Rents, dated as of July 21,
1992, and recorded on July 22, 1992, in the RMC Office of Greenville County in
Book 2275, at Page 284 (the "1992 Mortgage"), covering the Trust Estate and
securing, among other things, (i) payment of all principal and interest and
other sums due or becoming due in respect of the Original Subsidiary Loans, the
1992 Subsidiary Loans, the Original Subsidiary Notes and the 1992 Subsidiary
Notes; and (ii) payment by the Company of all principal and interest and other
sums due or becoming due under the Original Credit Agreement Loans, the 1992
Loans, the Original Credit Agreement Notes and the 1992 Notes.
14. The Original Mortgage and the 1992 Mortgage were executed and
delivered to the Agent for the benefit of the Issuing Banks party to the
Intercreditor Agreement and the Trustee for the Senior Secured Notes (as such
terms are defined in the 1992 Mortgage) and for the benefit of the Banks. The
Senior Secured Notes have been irrevocably paid in full; and each Issuing Bank
has terminated as of the date hereof the Reimbursement Agreements (as defined in
the 1992 Mortgage) to which it is a party (other than the Credit Documents to
the extent the same could be considered Reimbursement Agreements). The
Intercreditor Agreement has been terminated, except for
5
<PAGE>
the appointment thereunder by the Banks of the Agent as collateral agent, which
appointment has been ratified and confirmed in the Company Credit Agreement and
the Subsidiary Credit Agreement.
15. This Mortgage is being given by Mortgagor to secure, subject
to the provisions hereof, (i) payment of all principal and interest and other
sums due or becoming due in respect of the Subsidiary Loans and the Subsidiary
Notes; (ii) payment of all reimbursement obligations arising under the
Agreements in respect of Letters of Credit and Subsidiary Letters of Credit (as
such terms are defined in the Company Credit Agreement); (iii) payment by the
Company of all principal and interest and other sums due or becoming due under
the Credit Agreement Loans and the Credit Agreement Notes; (iv) the payment of
any further or subsequent advances made to preserve the lien of this Mortgage
and any other sums due or becoming due under this Mortgage; and (v) performance
of all terms, covenants, conditions, agreements and liabilities contained in
this Mortgage, the Company Credit Agreement, the Subsidiary Credit Agreement,
the Notes, the Guaranty (as hereinafter defined), the Other Mortgages (as
hereinafter defined) and any other mortgage, or deed of trust or other security
instrument or agreement given to secure payment of any of the foregoing
(collectively, the "Loan Documents"). This Mortgage secures future obligations
as well as obligations that currently exist. All of the foregoing payment and
performance obligations in clauses (i), (ii), (iii), (iv) and (v) of the
preceding sentence are hereinafter called the "Indebtedness."
16. The parties intend that all advances of portions of any of the
Loans which are revolving loans shall constitute obligatory advances; subject,
however, to the terms and conditions of the applicable Agreement.
G R A N T I N G C L A U S E S:
NOW, THEREFORE, THIS MORTGAGE WITNESSETH: that the terms,
covenants and conditions of the Original Mortgage and the 1992 Mortgage are
hereby amended by this Mortgage; that the liens of the Original Mortgage, the
1992 Mortgage and this Mortgage be and the same hereby are consolidated as a
joint and single lien covering the Trust Estate; and that the Mortgagor, in
consideration of
6
<PAGE>
the Trust Estate, the acceptance by the Agent of the trusts created hereby and
by the Agreements, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged (a) has mortgaged, warranted,
granted, bargained, sold, conveyed, pledged, and assigned and (b) by these
presents does hereby mortgage, warrant, grant, bargain, sell, convey, pledge,
and assign unto the Agent and Trustees and their successors and assigns forever,
in the trusts created hereby and by the Agreements to secure payment and
performance of the Indebtedness, all and singular, for the benefit of the
Beneficiaries, all its estate, right, title and interest in, to and under any
and all of the property (herein called the "Trust Estate") described in the
following Granting Clauses; PROVIDED, HOWEVER, the maximum liability of the
Mortgagor hereunder shall not at any time exceed the sum of its Maximum Guaranty
Liability (as defined in the Guaranty and "Guaranty" shall mean that certain
Second Amended and Restated Subsidiary Guaranty, dated as of the date hereof,
made by the Mortgagor and certain affiliates of the Mortgagor in favor of the
Agent and the Banks, as the same shall hereafter be amended, restated,
supplemented or otherwise modified from time to time) less the sum of any
amounts, if any, collected by or on behalf of the Agent from the Mortgagor
pursuant to any Loan Documents executed by Mortgagor, and provided further,
however, notwithstanding anything herein to the contrary, the total Indebtedness
secured by this Mortgage shall not exceed Three Hundred Million Dollars
($300,000,000):
I. Each parcel of land described in Schedule A hereto (herein collectively
called the "Land Parcels") together with the entire right, title and interest
of the Mortgagor in and to such Land Parcels, together with (a) all right, title
and interest of the Mortgagor in and to all buildings, structures and other
improvements now standing, or at any time hereafter constructed or placed, upon
the Land Parcels, including all of the Mortgagor's right, title and interest in
and to all equipment and fixtures of every kind and nature on the Land Parcels
or in any such buildings, structures or other improvements (such buildings,
structures, other improvements, equipment and fixtures being herein collectively
called the "Improvements"), (b) all right, title and interest of the Mortgagor
in and to all tenements, hereditaments, easements, rights of way, rights,
privileges and appurtenances in
7
<PAGE>
and to each Land Parcel belonging or in any way appertaining thereto, including
without limitation all right, title and interest of the Mortgagor in, to and
under any streets, ways, alleys, vaults, gores or strips of land adjoining each
Land Parcel and (c) all claims or demands of the Mortgagor, in law or in equity,
in possession or expectancy of, in and to the Land Parcels together with rents,
income, revenues, issues and profits from and in respect of the property
described above in this Granting Clause I and the present and continuing right
to make claim for, collect, receive and receipt for the same as hereinafter
provided. It is the intention of the parties hereto that, so far as may be
permitted by law, all of the foregoing, whether now owned or hereafter acquired
by the Mortgagor, affixed, attached or annexed to each Land Parcel shall be and
remain or become and constitute a part of the Trust Estate and the security
covered by and subject to the lien of this Mortgage. All such right, title and
interest of the Mortgagor in and to a Land Parcel, the interest of the Mortgagor
in and to the Improvements located thereon and such other property with respect
thereto described in Granting Clause I is herein called a "Property" and all
such Properties are herein collectively called the "Properties."
II. All right, title and interest of the Mortgagor in and to (i) all
extensions, improvements, betterments, renewals, substitutes and replacements of
and on the Property described in the foregoing Granting Clause I and (ii) all
additions and appurtenances thereto not presently leased to or owned by the
Mortgagor and hereafter leased to, acquired by or released to the Mortgagor or
constructed, assembled or placed upon the Properties (including, but not limited
to, the fee estate in any Land Parcel) immediately upon such leasing,
acquisition, release, construction, assembling or placement, and without any
further grant or other act by the Mortgagor.
III. All the estate, right, title and interest of the Mortgagor in and to
(i) all judgments, insurance proceeds, awards of damages and settlements
resulting from condemnation proceedings or the taking of the Properties, or any
part thereof, under the power of eminent domain or for any damage (whether
caused by such taking or otherwise) to the Properties, or any part thereof, or
to any rights appurtenant thereto, and all proceeds of any sales or other
dispositions of the Properties or any part
8
<PAGE>
thereof; and the Agent, subject to Sections 4.2 and 8.2 of the Company Credit
Agreement, is hereby authorized to collect and receive said awards and proceeds
and to give proper receipts and acquittances thereto and (ii) all contract
rights (except for such rights contained in any government or Medicare contracts
which according to their terms or pursuant to law cannot be assigned), general
intangibles, actions and rights in action, relating to the Properties including,
without limitation, all rights to insurance proceeds and unearned premiums
arising from or relating to damage to the Properties; and (iii) all proceeds,
products, replacements, additions, substitutions, renewals and accessions of and
to the Properties.
IV. As additional security for the obligations secured hereby, the Mortgagor
does hereby pledge and presently and absolutely assign to the Agent from and
after the date hereof (including any period of redemption), primarily and on a
parity with said Properties, and not secondarily, all the rents, issues and
profits of the real property and all rents, issues, profits, revenues,
royalties, bonuses, rights, and benefits due, payable or accruing (including all
deposits of money as advance rent, for security or as earnest money or as down
payment for the purchase of all or any part of the Properties) (the "Rents")
under any and all present and future leases, subleases, lettings and licenses of
and all other contracts or other agreements affecting, or relative to, the
ownership or occupancy of all or any portion of the Properties and does hereby
transfer and assign to the Agent all such leases, subleases and agreements (the
"Leases"). The Agent hereby grants to the Mortgagor the right to collect and
use the Rents as they become due and payable under the Leases, until an Event of
Default (as hereinafter defined) has occurred and is continuing PROVIDED that
the existence of such right shall not operate to subordinate this assignment to
any subsequent assignment, in whole or in part by the Mortgagor, and any such
subsequent assignment shall be subject to the rights of the Agent under this
Mortgage. The Mortgagor further agrees to execute and deliver such assignments
of Leases as the Agent may from time to time request. Upon the occurrence and
during the continuance of an Event of Default (1) the Mortgagor agrees, upon
demand, to deliver to the Agent all of the Leases with such additional
assignments thereof as the Agent may request and agrees that the Agent may
assume the management of the real
9
<PAGE>
property, and collect the Rents, applying the same upon the Indebtedness and
(2) the Mortgagor hereby authorizes and directs all tenants, purchasers or other
persons occupying or otherwise acquiring any interest in any part of the real
property to pay the Rents due under the Leases to the Agent upon request of the
Agent. The Mortgagor hereby appoints the Agent as its true and lawful attorney
in fact to manage said property and collect the Rents, with full power to bring
suit for collection of the Rents and possession of the Properties, giving and
granting unto said Agent and unto its agent or attorney full power and authority
to do and perform all and every act and thing whatsoever requisite and necessary
to be done in the protection of the security hereby conveyed; PROVIDED, HOWEVER,
that (i) this power of attorney and assignment of rents shall not be construed
as an obligation upon the Agent to make or cause to be made any repairs that may
be needful or necessary and (ii) the Agent agrees that until such Event of
Default has occurred and is continuing as aforesaid, the Agent shall permit the
Mortgagor to perform the aforementioned management responsibilities. Upon the
Agent's receipt of the Rents, at Agent's option, it may pay: (1) reasonable
charges for collection hereunder, costs of necessary repairs and other costs
requisite and necessary during the continuance of this power of attorney and
assignment of rents and (2) general and special taxes and assessments and
insurance premiums. This power of attorney and assignment of leases and rents
shall be irrevocable until this Mortgage shall have been satisfied and all of
the Trust Estate released of record and the releasing of this Mortgage shall act
as a revocation of this power of attorney and assignment of leases and rents
with respect to such portion of the Trust Estate so released. The Agent shall
have and hereby expressly reserves the right and privilege (but assumes no
obligation) to demand, collect, sue for, receive and recover the Rents, or any
part thereof, now existing or hereafter made, and apply the same in accordance
with law.
V. All of the Mortgagor's right, title and interest in and to all personal
property and equipment of every nature whatsoever now or hereafter located in or
on the Trust Estate (collectively, the "Personal Property"), including but not
limited to (a) all screens, window shades, blinds, wainscoting, storm doors and
windows, floor coverings, and awnings; (b) all apparatus, machin-
10
<PAGE>
ery, equipment and appliances not included as fixtures; (c) all items of
furniture, furnishings, and personal property; and (d) all extensions,
additions, improvements, betterments, renewals, substitutions, and replacements
to or of any of the foregoing (a) - (c); (e) all accounts receivable arising
from the sale or other disposition of all or any of the Mortgagor's real
property, buildings, structures and other improvements, fixtures, furniture,
furnishings, apparatus, machinery, appliances or other equipment, and all
extensions, renewals, improvements, substitutions and replacements thereto
whether owned or leased, now or hereafter acquired, and (f) all cash or monies
of the Mortgagor, wherever located, whether in the form of cash or checks, and
all cash equivalents including, without limitation, all deposits and
certificates of deposit, instruments, whether negotiable or non-negotiable, debt
notes both certificated and uncertificated, repurchase obligations for
underlying notes of the types described herein, and commercial paper received in
connection with the sale or other disposition of all or any of the Mortgagor's
real property, buildings, structures and other improvements, fixtures,
furniture, furnishings, apparatus, machinery, appliances or other equipment, and
all extensions, renewals, improvements, substitutions and replacements thereto
whether owned or leased, now or hereafter acquired; it being mutually agreed,
intended and declared, that the Trust Estate and all of the foregoing property
rights and fixtures owned by the Mortgagor shall, so far as permitted by law, be
deemed to form a part and parcel of the Land and for the purpose of this
Mortgage to be real estate and covered by this Mortgage, it being also agreed
that if any of the property herein mortgaged is of a nature so that a security
interest therein can be perfected under the Uniform Commercial Code, this
instrument shall constitute a security agreement, and the Mortgagor agrees to
execute, deliver and file or refile any financing statement, continuation
statement, or other instruments the Agent may reasonably require from time to
time to perfect or renew such security interest under the Uniform Commercial
Code. To the extent permitted by law, (i) all of the fixtures are or are to
become fixtures on Land Parcels; and (ii) this instrument or an appropriate
financing statement, upon recording or registration in the real estate records
of the proper office, shall constitute a "fixture-filing" within the meaning of
Sections 9-313 and 9-402 of the Uniform Commercial Code.
11
<PAGE>
The remedies for any violation of the covenants, terms and conditions of the
agreements herein contained shall be as prescribed herein or by general law, or,
as to that part of the security in which a security interest may be perfected
under the Uniform Commercial Code, by the specific statutory consequences now or
hereafter enacted and specified in the Uniform Commercial Code, all at the
Agent's sole election.
VI. All of the Mortgagor's right, title and interest in, to and under (i) all
contracts and agreements relating to the Properties, and other documents, books
and records related solely to the operation of the Properties except for such
government, Medicare or other contracts which, according to their terms or
pursuant to law cannot be so assigned; (ii) all permits, certificates, approvals
and authorizations however characterized, issued or in any way furnished,
whether necessary or not for the operation of Mortgagor's business, including,
without limitation, consents, licenses, warranties, guaranties and building
permits required for the construction, completion, occupancy and operation of
each and every Property, environmental certificates, hospital or other licenses
or permits but excluding such government, Medicare or other permits,
certificates, approvals, authorizations and licenses which, according to their
terms or pursuant to law cannot be so assigned; and (iii) all engineering
reports, land planning, maps, surveys, and any other reports, exhibits or plans
and specifications used or to be used in connection with the construction,
operation or maintenance of each and every Property, together with all
amendments and modifications thereof.
VII. All of Mortgagor's rights and interest as lessee under the lease, if any,
which may be described in Schedule A hereto (the "Net Lease"), including,
without limitation, Mortgagor's right of first refusal or other option to
purchase the Property leased under any such Net Lease.
TO HAVE AND TO HOLD THE TRUST ESTATE, whether now owned or held or hereafter
acquired, unto the Agent and Trustees and their successors and assigns, forever.
IN TRUST FOREVER, with power of sale (to the extent permitted by applicable
law), upon the terms and trusts herein set forth for the benefit and security of
the
12
<PAGE>
Agent and Trustees and their successors and assigns, to secure the payment and
performance of, and compliance with, the obligations, covenants and conditions
of this Mortgage and the Indebtedness, all as herein set forth.
IT IS HEREBY COVENANTED, DECLARED AND AGREED that the Trust Estate is to be held
by the Agent or the Trustees upon and subject to the covenants, conditions, uses
and trusts set forth in this Mortgage.
C O V E N A N T S:
Mortgagor hereby covenants and agrees as follows:
ARTICLE I.
SECTION 1.1 PAYMENT OF LOANS AND GUARANTY. Mortgagor shall duly
and punctually pay or cause to be paid within any applicable grace period set
forth in the applicable Agreement covering the same and in the manner specified
in the Notes the principal, interest, and all other sums due or to become due or
required to be paid under or in respect of any Loan or any of the Agreements or
the Notes, and shall perform all of the Mortgagor's obligations under the
Guaranty and shall perform all the conditions, covenants and obligations on the
part of the Mortgagor to be performed hereunder.
SECTION 1.2 GOOD TITLE. Mortgagor represents, warrants and
covenants that: (i) on and as of the date hereof, it has good and marketable
title to an indefeasible fee simple estate in the portions of the Trust Estate
constituting real property (or leasehold title with respect to any Property
which is leased pursuant to the Net Lease, if any, indicated in Schedule A
hereto) and rights in the portions of the Trust Estate constituting personal
property, subject to no mortgage, pledge, security interest, charge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other) or other security agreement of any kind or nature whatsoever, including,
without limitation, any conditional sale or other title retention agreement, any
financing lease in the nature thereof, any filing or agreement to file a
financing statement as debtor under the Uniform Commercial Code or any similar
statute of any jurisdiction, domestic or foreign, other than notice filings not
per-
13
<PAGE>
fecting a security interest (collectively, "Liens"; each, a "Lien"), except only
for (x) Permitted Liens (as such term is defined in the Company Credit
Agreement) and those liens permitted pursuant to Sections 8.1 of the Company
Credit Agreement, and (y) those Liens on Schedule B attached hereto
(collectively, "Permitted Encumbrances"); (ii) it will keep in effect all
material rights and appurtenances to or that constitute a part of the Trust
Estate; and (iii) on and as of the date hereof this Mortgage creates and
constitutes a valid and enforceable first mortgage lien on each Property to the
extent it constitutes real estate under applicable law and a perfected security
interest in so much of the Trust Estate as is governed by the Uniform Commercial
Code as adopted in the states where the Land Parcels are located, subject only
to Permitted Encumbrances, and Mortgagor does now and will forever warrant and
defend to Agent and the Beneficiaries such title and the validity and priority
of the Lien hereby created and evidenced against the claims of all persons and
parties whomsoever, subject to the provisions of this Mortgage.
SECTION 1.3 INCORPORATION OF TERMS OF 1992 MORTGAGE. The terms,
covenants and conditions of the 1992 Mortgage shall be, and the same hereby are,
incorporated herein by this reference thereto except as modified by this
Mortgage and except that:
(a) The reference to Section 1.08(e) of the Company Credit
Agreement in Section 1.5 of the 1992 Mortgage shall be, and hereby is, amended
to be a reference to Section 1.8(d) of the Company Credit Agreement;
(b) The references to Section 7.03 of the Company Credit Agreement
in Sections 1.7 and 1.10 of the 1992 Mortgage shall be, and hereby are, amended
to be references to Section 7.3 of the Company Credit Agreement;
(c) Section 1.14(a) of the 1992 Mortgage shall be, and hereby is,
amended to read as follows:
"(a) CASUALTY; ASSIGNMENT OF PROCEEDS. In case of
any material damage to, or loss or destruction of, any
material Improvements and Personal Property or any
part thereof
14
<PAGE>
(each, a "Destruction"), Mortgagor shall promptly send
to Agent a notice setting forth the nature and extent
of such Destruction. The proceeds of any insurance
payable in respect of such Destruction are hereby
assigned and shall be paid to Agent; provided,
however, that insurance proceeds which do not exceed
$500,000 for any individual occurrence shall be paid
to Mortgagor unless the applicable insurer shall have
received a notice from the Agent that a default or an
Event of Default (as defined in Section 3.1 hereof)
has occurred and is continuing. All insurance
proceeds, less the amount of any expenses incurred in
litigating, arbitrating, compromising or settling any
claim arising out of such Destruction to the extent
such amount is greater than $200,000 ("Net Proceeds")
, shall be applied in accordance with the provisions
of Sections 1.14(c) and 1.14(d)."
(d) Section 1.14(d) of the 1992 Mortgage shall be, and hereby is,
amended to read as follows:
"(d) DISTRIBUTION OF NET AWARD OR NET PROCEEDS. In
the event Mortgagor does not elect Restoration in
accordance with the terms of Section 1.14(c), or,
having made such election, Mortgagor fails to commence
Restoration within 180 days from the Taking or
Destruction or fails to diligently pursue such
Restoration to completion, such Net Award or Net
Proceeds shall be deemed "Net Proceeds" (as defined in
the Company Credit Agreement") of an "Asset Sale" (as
defined in the Company Credit Agreement); subject,
however, to the amount of such Net Award or Net
Proceeds satisfying the applicable mone-
15
<PAGE>
tary threshold set forth in the definition of that
term);"
(e) The references to the "Senior Note Indenture" in
Sections 1.14(c), 1.14(e) and 5.13 of the 1992 Mortgage shall be, and hereby
are, deleted;
(f) The references to the "Intercreditor Agreement" in
Sections 2.1(b), 3.2(b), 3.3(c), 4.2(c), 4.2(d), 4.6(a), 4.6(b), 5.6, 5.15 and
5.16 of the 1992 Mortgage shall be, and hereby are, deemed to be references to
the "Agreements" as defined herein; and
(g) The reference to "Reimbursement" in Section 3.3(c) of the 1992
Mortgage shall be, and hereby is, deleted.
(h) All references to "Holders" in the 1992 Mortgage shall be, and
hereby are, deleted.
SECTION 1.4 NO NOVATION. This Mortgage constitutes an amendment
and continuation of the instrument amended hereby (the "Original Instrument"),
and such Original Instrument shall continue in effect on and after the date
hereof as so amended and continued. The parties do not intend that this
Mortgage constitute a novation, termination, release or satisfaction of the
Original Instrument, and shall not constitute payment or satisfaction of any
indebtedness or other obligation secured by the Original Instrument.
16
<PAGE>
IN WITNESS WHEREOF, the undersigned, by their duly elected officers
and pursuant to proper authority of their respective boards of directors have
duly executed, sealed, acknowledged and delivered this instrument as of the date
first written above.
WITNESSES: CHARTER HOSPITAL OF
ST LOUIS INC.
/s/ Mark Lewis By: /s/ Charlotte A. Sanford
- -------------------------- --------------------------
Name: Mark Lewis Name: Charlotte A. Sanford
Title: Treasurer
/s/ Linton Newlin [SEAL]
- --------------------------
Name: Linton Newlin
Attest: /s/ James R. Bedenbaug
----------------------
Name: James R. Bedenbaug
Title: Assistant Secretary
WITNESS: BANKERS TRUST COMPANY,
as Agent
/s/ Tina Henderson By: /s/ Robert E. Megan
- -------------------------- --------------------------
Name: Tina Henderson Name: Robert E. Megan
Title: Vice President
/s/ Fiona Salmon [SEAL]
- --------------------------
Name: Fiona Salmon
Attest: /s/ Mary Kay Coyle
----------------------
Name: Mary Kay Coyle
Title: Vice President
17
<PAGE>
CORPORATE ACKNOWLEDGMENT
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 1st day of May, 1994 before me, the undersigned officer,
personally appeared Charlotte A. Sanford and James R. Bedenbaug, personally
known and acknowledged themselves to me to be the Treasurer and Assistant
Secretary respectively of CHARTER HOSPITAL OF ST. LOUIS, INC. and that as such
officers, being duly authorized to do so pursuant to its by-laws or a resolution
of its board of directors, executed and acknowledged the foregoing instrument
for the purposes therein contained, by signing the name of the corporation by
themselves as such officer(s) as their free and voluntary act and deed and the
voluntary act and deed of said corporation.
IN WITNESS WHEREOF, I hereunder set my hand and official seal.
/s/ Robert L. Montgomery
----------------------------
Notary Public
My Commission Expires:
[NOTARIAL SEAL]
18
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 1st day of May, 1994 before me, the undersigned officer,
personally appeared Robert Megan, personally known and acknowledged himself to
me to be the Vice President of Bankers Trust Company, and that as such officer,
being duly authorized to do so pursuant to its by-laws or a resolution of its
board of directors, executed and acknowledged the foregoing instrument for the
purposes therein contained, by signing the name of the corporation by himself as
such officer as his free and voluntary act and deed and the voluntary act and
deed of said corporation.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Robert L. Montgomery
----------------------------
Notary Public
My Commission Expires:
[NOTARIAL SEAL]
19
<PAGE>
SCHEDULE A
DESCRIPTION OF LAND PARCEL
The plot(s), pieces(s) and parcel(s) of land
described as follows:
ALL that certain piece, parcel or tract of land, situate, lying and being in the
State of South Carolina, County of Greenville, on the western side of Phillips
Road, as shown on plat entitled "United HealthCare, Inc., dated January 9, 1984,
prepared by Enwright Associates Inc., recorded in the RMC Office for Greenville
County, S.C. in Plat Book 10-Z, at Page 34, and being further shown as Lots 13,
14 and 15 in Riverbanks Energy Center on plat entitled "As Built Survey for
Park Brierwood Hospital, Inc., Park Health Care Psychiatric Company", dated
June 16, 1989, prepared by Freeland-Clinkscales & Associates, Inc., and having,
according to said more recent plat, the following courses and distances:
BEGINNING at a point of beginning, being an iron pin located on the western
right of way of Phillips Road, and being 867.39 feet south of the intersection
of the southern right of way of Shelter Drive, also being known as the front
adjoining property corner of Lots 5 and 15 as shown on the subdivision plat
entitled "Riverbanks Energy Center, Phase II", and running thence along the
western right of way of Phillips Road, S. 04-32 W, 933.58 feet to an iron pin;
thence leaving said right of way along a joint property line with property now
or formerly of R.J. Roach, N. 84-37 W. 700.00 feet to an iron pin, being a joint
property corner of Lots 13 and 15; thence continuing, N. 84-37 W. 98.88 feet to
a point at the property corner of Lots 12 and 13; thence along the joint
property line with Lots 12 and 13, N. 33-24 W. 670.08 feet to an iron pin
located on the eastern right of way of Shelter Drive, being the joint front
corner of Lots 12 and 13; thence along the eastern right of way of Shelter Drive
along a radius of 823.52 feet with an arc of 185.02 feet and a chord of N. 42-48
E. 184.70 feet to an iron pin, being the joint front corner of Lots 13 and 14;
thence continuing along said right of way on a radius of 823.52 feet with an arc
of 265.25 feet and a chord of N. 27-05 E. 264.10 feet to an iron pin; thence
continuing along said right of way, N. 17-52 E. 183.99 feet to an iron pin,
being the joint front corner of Lots 6 and 14; thence leaving said right of way
along the joint property line of Lots 6 and 14, S. 56-32 E. 309.99 feet to an
iron pin, being a joint property corner of Lots 6, 14, and 15; thence, along a
joint property line with Lots 13, 6, and 5, S. 84-36 E. 699.95 feet to an iron
pin, being the point of beginning. Said tract contains 22.989 acres.
<PAGE>
SCHEDULE B
PERMITTED ENCUMBRANCES
1. Taxes, constituting a lien on the Trust Estate, which are not yet due and
payable.
2. Rights or claims of parties in possession, as tenants only, not shown in
the public records.
3. Easements or claims of Easements not shown by the public records.
4. Rights of the public and/or government agencies in public rights of way
dedicated pursuant to instruments appearing of record or otherwise
affecting the Property, if any.
5. Restrictive Covenants recorded in the RMC Office for Greenville County,
S.C. in Deed Book 1224, at Page 636, on October 23, 1984.
6. Amendment to Restrictive Covenants and Easements recorded in the RMC Office
for Greenville County, S.C. in Deed Book 1225, at Page 747, on November 6,
1984.
7. 75 foot front, 50 foot rear, and 25 foot side building set back lines as
shown on plat recorded in the RMC Office for Greenville County, S.C. in
Plat Book 10-Z, at Page 34.
8. Twenty-five foot utility easement along the southern properly line of the
subject property as shown on said plat referred to hereinabove.
9. Twenty foot public water line easement located on the eastern portion of
the subject property as shown on plat dated June 16, 1989, prepared by
Freeland-Clinkscales Associates, Inc., referred to hereinabove.
10. Drainage and utility easement five feet each side of all side lot lines and
ten feet on inside of rear lot lines, as shown on plat dated June 16, 1989,
prepared by Freeland-Clinkscales & Associates, Inc., referred to
hereinabove.
11. Twenty-five foot public utility easement along the southern property line
of the subject property as shown on plat dated June 16, 1989, prepared by
Freeland-Clinkscales & Associates, Inc., referred to hereinabove.
12. Overhead electrical lines along the eastern property line of the subject
property as shown on said plat referred to hereinabove.
<PAGE>
$375,000,000
CHARTER MEDICAL CORPORATION
11 1/4% Senior Subordinated Notes due 2004
PURCHASE AGREEMENT
April 22, 1994
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
BT Securities Corporation
130 Liberty Street, 30th Floor
New York, New York 10006
Ladies and Gentlemen:
Charter Medical Corporation, a Delaware corporation (the "Company"),
proposes to issue and sell to Bear, Stearns & Co. Inc. and BT Securities
Corporation (the "Initial Purchasers") upon the terms and subject to the
conditions hereinafter set forth, $375,000,000 aggregate principal amount of its
11 1/4% Senior Subordinated Notes due 2004 (the "Notes"). The Notes will be
issued pursuant to an indenture (the "Indenture") to be dated as of the Closing
Date (as hereinafter defined), between the Company, the guarantors party thereto
(the "Guarantors") and Marine Midland Bank, as trustee (the "Trustee"). The
Indenture and the Notes will be substantially in the forms previously furnished
to you and are more fully described in the Offering Memoranda referred to below.
All capitalized terms used and not defined herein have the respective meanings
ascribed to them in the Offering Memoranda.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to you as follows:
(a) The Company has prepared and furnished to you a preliminary
offering memorandum, dated April 5, 1994, with respect to the Notes that
is subject to completion, together with the Supplement, dated April
1
<PAGE>
16, 1994, to such preliminary memorandum (collectively, the "Preliminary
Memorandum") and also has prepared and proposes to furnish to you a final
offering memorandum, dated April 22, 1994, with respect to the Notes that
includes definitive information with respect to the rate of interest on
and the offering price of the Notes, the use by the Company of the net
proceeds from the sale thereof to you, and other data derived therefrom
(hereafter, the "Definitive Memorandum" and collectively with the
Preliminary Memorandum, the "Offering Memoranda"). The Preliminary
Memorandum and the Definitive Memorandum, at the respective dates thereof
and at all times subsequent thereto to and including the Closing Date do
not and will not, as of their respective dates, contain an untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading;
PROVIDED, HOWEVER, no representation or warranty is made in this
subsection (a) with respect to any information contained in or omitted
from the Definitive Memorandum or the Preliminary Memorandum in reliance
upon and in conformity with information with respect to you that has been
furnished in writing to the Company by you expressly for use in connection
with the preparation thereof.
(b) Neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included in the
Definitive Memorandum any loss or interference with its business from
fire, explosion, flood or other calamity (whether or not covered by
insurance) or from any labor dispute or court or governmental action,
order or decree, other than as set forth in the Definitive Memorandum,
which loss or interference would, individually or in the aggregate, have a
"Material Adverse Effect" (as defined in subsection (e) below).
Subsequent to the respective dates as of which information is provided in
the Definitive Memorandum and except as set forth in the Definitive
Memorandum, there has not been any change in the capital stock (except for
the exercise by grantees of outstanding options to purchase shares of
Common Stock, $.25 par value, of the Company in accordance with the terms
of such options and the plans under which they were issued) or long-term
debt (except for scheduled principal payments, repayments and reductions
of indebtedness with the net proceeds from the sale of
2
<PAGE>
assets of the Company or its subsidiaries and excess cash from operations
and one principal prepayment in respect of the Company's presently
outstanding bank term loan) of the Company or any of its subsidiaries, any
material adverse change in the business, prospects, properties, condition
(financial or otherwise) or results of operations of the Company and its
subsidiaries taken as a whole (a "Material Adverse Change"), or any
development or event involving a prospective Material Adverse Change,
whether or not arising from transactions in the ordinary course of
business, and since the date of the latest balance sheet included in the
Definitive Memorandum, neither the Company nor any of its subsidiaries has
incurred or undertaken any liabilities or obligations, direct or
contingent, that are material to the Company and its subsidiaries taken as
a whole, except for those that are fully disclosed in the Definitive
Memorandum.
(c) This Agreement, the New Credit Agreement (and the "Credit
Documents" as therein defined) and the Exchange and Registration Rights
Agreement being entered into concurrently herewith, which shall be
substantially in the form of Exhibit A hereto (the "Registration Rights
Agreement"), have been duly and validly authorized, executed and delivered
by the Company and each is a valid and binding agreement of the Company
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws affecting creditors' rights and remedies generally,
and to general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity), and except
insofar as rights to indemnification and contribution contained therein
may be limited by federal or state securities laws or related public
policy. This Agreement, the Registration Rights Agreement and the New
Credit Agreement (and the Credit Documents) conform to the general
descriptions thereof set forth in the Offering Memoranda, which general
descriptions do not purport to describe all provisions of such documents.
(d) The execution, delivery, and performance by the Company and
the Guarantors of this Agreement, the Registration Rights Agreement, the
Indenture, the Notes and the New Credit Agreement (and the Credit
3
<PAGE>
Documents), in each case to the extent a party thereto, and the
consummation of the transactions contemplated hereby and thereby,
including, without limitation, the issuance, sale and delivery of the
Notes and the application of the net proceeds therefrom as set forth in
the Offering Memoranda under the caption "Use of Proceeds," will not (i)
conflict with or result in a breach of any of the terms and provisions of,
or constitute a default (or an event that with notice, lapse of time, or
both, would constitute a default) or require consent under, or result in
the creation (except for the liens expressly contemplated by and created
under the New Credit Agreement and the Credit Documents) or imposition of
any lien, charge or encumbrance upon any property or assets of the Company
or any of its subsidiaries, pursuant to the terms of any agreement,
instrument, franchise, license or permit to or by which the Company or any
of its subsidiaries is a party or may be bound (other than those as to
which requisite waivers or consents have been obtained by the Company and
furnished to you, and other than the agreements and instruments identified
on Schedule 1(d) hereto relating to outstanding indebtedness of the
Company and/or its subsidiaries which indebtedness shall be paid or
redeemed in full or for which full provision for repayment in full shall
irrevocably have been made on or prior to the Closing Date, or (ii)
violate or conflict with any provision of the certificate of
incorporation, by-laws, or equivalent instruments, of the Company or any
of its subsidiaries (as amended and/or restated through the date hereof)
or any judgment, decree, order, law, rule or regulation of any court or
any public or governmental authority having jurisdiction over the Company
or any of its subsidiaries or any of their respective properties or
assets. No consent, approval, authorization, order, registration, filing,
qualification, license or permit of or with any court or any public or
governmental authority having jurisdiction over the Company or any of its
subsidiaries or any of their respective properties or assets is required
for the execution, delivery and performance of this Agreement, the
Registration Rights Agreement, the New Credit Agreement (and the Credit
Documents), the Indenture or the Notes, except for such filings as may be
required by, and compliance with, federal and state securities laws in
connection with the performance of the Company's obligations under the
Registration Rights Agreement.
4
<PAGE>
(e) Each of the Company and its subsidiaries has been duly
organized, is validly existing as a corporation in good standing under the
laws of its respective jurisdiction of incorporation and has the requisite
corporate power and authority to conduct its business as described in the
Offering Memoranda and to own, lease and operate its properties, and each
is duly qualified and in good standing as a foreign corporation authorized
to conduct business in each jurisdiction in which the nature of its
business or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified or in good
standing would not have a material adverse effect on the business,
prospects, properties, condition (financial or otherwise) or results of
operations of the Company and its subsidiaries, taken as a whole or
adversely affect the validity or enforceability of the Notes (a "Material
Adverse Effect").
(f) All of the outstanding shares of capital stock of each
subsidiary of the Company have been duly and validly authorized and issued
and are fully paid and non-assessable (except for assessments that may be
imposed by the laws of governmental authorities of the State of New York
with respect to back wages due to employees), and are owned directly or
indirectly by the Company (except that the subsidiaries of the Company
identified on Schedule 1(f) hereto may not be wholly owned, directly or
indirectly, by the Company because of applicable statutory requirements of
the jurisdictions set forth on such schedule), free and clear of any
security interest, claim, lien, or encumbrance, except for (i) those in
favor of a wholly owned domestic subsidiary or of a foreign subsidiary of
the Company, (ii) those created in connection with the acquisition of a
wholly owned domestic or a foreign subsidiary of the Company, the
obtaining of first mortgage financing and the issuance of municipal,
industrial development or similar tax exempt securities by certain
subsidiaries of the Company and (iii) those to be created or permitted
pursuant to the New Credit Agreement and the Credit Documents, and there
are no preemptive, subscription or other rights granted to or in favor of
any person other than the Company or one of its wholly owned subsidiaries
to acquire any such capital stock.
(g) The Company has an authorized capitalization as set forth in
the Offering Memoranda. At the Closing
5
<PAGE>
Date, all of the outstanding capital stock of the Company will have been
duly authorized and will be validly issued, fully paid and non-assessable
and will not have been issued in violation of any preemptive, subscription
or similar rights.
(h) The Notes have been duly and validly authorized for issuance
by all necessary corporate action on the part of the Company and, when
executed and delivered by the Company (assuming the due authorization,
execution and delivery of the Indenture by the Trustee and the execution
and delivery of certificates of authentication by one of the Trustee's
duly authorized officers), will have been duly and validly executed,
authenticated, issued and delivered and will constitute valid and binding
obligations of the Company entitled to the benefits of the Indenture and
enforceable against the Company in accordance with their terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting creditors' rights and remedies
generally, and to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of
whether enforcement is sought in a proceeding at law or in equity). The
Notes, when issued, will conform in all material respects to the
description thereof set forth in the Offering Memoranda.
(i) The Indenture conforms in all material respects to the
description thereof set forth in the Offering Memoranda and conforms in
all material respects with the requirements of the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"), applicable to indentures to
be qualified thereunder. The Indenture has been duly and validly
authorized by all necessary corporate action by the Company and the
Guarantors and, when executed and delivered by the Company, the Guarantors
and the Trustee (assuming the due authorization, execution and delivery
thereof by the Trustee), will constitute a valid and binding agreement of
the Company and the Guarantors, enforceable against them in accordance
with its terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws affecting
creditors' rights and remedies generally, and to general principles of
equity, including principles of commercial
6
<PAGE>
reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(j) Neither the Company nor any of its subsidiaries is in
violation of its certificate of incorporation or by-laws (as amended
and/or restated and in effect through the date hereof) or is in default in
the performance of any obligation, agreement or condition contained in any
bond, mortgage, debenture, note, deed of trust or contained in any other
evidence of indebtedness or any other agreement, indenture or instrument
to which it is a party or by which it or any of its property is bound,
except for those defaults that, individually or in the aggregate, would
not have a Material Adverse Effect.
(k) Other than as set forth in the Definitive Memorandum, there
are no legal or governmental proceedings (including, without limitation,
proceedings relating to human health or the environment) pending to which
the Company or any of its subsidiaries is a party or of which any of their
respective properties or assets is the subject which, if determined
adversely to the Company or any of its subsidiaries would, individually or
in the aggregate, have a Material Adverse Effect, and, to the Company's
knowledge, no such proceedings are threatened or contemplated. There is
no contract, document, statute or regulation that is not described in the
Offering Memoranda which is of a character that would be required to be
described in the Offering Memoranda if the Offering Memoranda were a
prospectus included in a registration statement on Form S-1 under the Act.
(l) Each of the Company and its subsidiaries possesses all
necessary licenses, consents, authorizations, approvals, orders,
certificates and permits (including, without limitation, those relating to
human health and/or the environment) (collectively, "Licenses") of and
from, has made all declarations and filings with, and has satisfied all of
its material obligations, including, without limitation, eligibility and
other similar requirements imposed by, all federal, state, local and other
public and governmental authorities, all self-regulatory organizations,
including, without limitation, the Joint Commission on Accreditation of
Health Care Organizations, and all courts and other tribunals, in each
case as required
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<PAGE>
for the conduct of the business in which it is engaged, except where the
failure to obtain any such License, to make any such declaration or filing
or to satisfy any such requirement would not, individually or in the
aggregate, have a Material Adverse Effect. Each License is in full force
and effect, each of the Company and its subsidiaries is operating in
compliance with such Licenses, and there are no proceedings pending or, to
the Company's knowledge, threatened against the Company or any of its
subsidiaries which seek to cause any such License that is material to the
conduct and/or prospects of the business of the Company and its
subsidiaries to be revoked, withdrawn, canceled, suspended or not renewed,
except where the failure of such License to be in full force or effect or
the non-compliance with such License would not, individually or in the
aggregate, have a Material Adverse Effect. No event has occurred which
allows, or after notice or lapse of time, or both, would allow, revocation
or termination of any such License or result in any other material
impairment of the rights of the holder of any such License, except where
the revocation or termination of any such License or any such impairment
would not, individually or in the aggregate, have a Material Adverse
Effect.
(m) Each of the Company and its subsidiaries has conducted and
presently is conducting its business in compliance with all applicable
foreign, federal, state, and local laws, rules, regulations, codes and
ordinances relating to (i) zoning, land use, protection of the
environment, human health and safety, and hazardous or toxic substances,
wastes, pollutants or contaminants, (ii) employee or occupational safety,
employment discrimination, employee hours and wages and employee benefits,
and (iii) payments for services rendered (A) from private insurers or
federal, state or local payment or reimbursement programs or (B) directly
from patients for psychiatric, behavioral and general healthcare services
furnished to patients (whether treated on an inpatient or outpatient
basis), except for such noncompliance which would not, individually or in
the aggregate, have a Material Adverse Effect.
(n) Arthur Andersen & Co., whose reports are included in the
Offering Memoranda, are independent public accountants for the Company
under Rule 101 of the American Institute of Certified Public Accountants'
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Code of Professional Conduct and its official interpretations and rulings.
(o) The financial statements of the Company and its subsidiaries
and related notes thereto included in the Offering Memoranda present
fairly, in all material respects, the consolidated financial position,
results of operations, cash flows and changes in stockholders' equity of
the Company and its subsidiaries or affiliates (as reflected in such
financial statements) in conformity with United States generally accepted
accounting principles ("GAAP") on the basis stated in the Offering
Memoranda at the respective dates and for the respective periods to which
they apply. Such financial statements and notes have been prepared in
accordance with GAAP consistently applied throughout the periods
presented, except as disclosed therein; and the other financial,
accounting and statistical information and data related to the Company set
forth in the Offering Memoranda present fairly, in all material respects,
the information purported to be shown thereby at the respective dates and
for the respective periods to which they apply and, in the case of
financial but not statistical information and data, have been prepared on
a basis consistent with such financial statements and the books and
records of the Company (which have been maintained in a manner consistent
with GAAP) and the other entities as to which such information is shown.
(p) Neither the Company nor any of its affiliates is (i) an
"investment company" or a company "controlled" by an "investment company"
within the meaning of, and is not registered or otherwise required to be
registered under, the Investment Company Act of 1940, as amended (the
"Investment Company Act"), or (ii) a "holding company" or a "subsidiary
company" of a "holding company" or an "affiliate" thereof within the
meaning of the Public Utility Holding Company Act of 1935, as amended (the
"Public Utility Act").
(q) The Notes, when issued, will not be of the same class (within
the meaning of Rule 144A under the Act) as other securities of the Company
that are listed on a national securities exchange registered under Section
6 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
or quoted in a U.S. automated interdealer quotation system of a registered
national securities association.
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<PAGE>
(r) Neither the Company nor, assuming the accuracy of your
representations contained in Section 3 hereof, any person acting on its
behalf has offered the Notes for sale by means of any general solicitation
or general advertising within the meaning of Rule 502(c) of Regulation D
under the Act or in any manner involving a public offering or distribution
of the Notes within the meaning of the Act.
(s) Neither the Company nor any affiliate (as defined in Rule
501(b) of Regulation D under the Act) thereof has directly, or indirectly
through any agent, within the six months next preceding the date hereof,
sold, offered for sale or solicited offers to buy any "security" (as
defined in the Act) of the same or a similar class as the Notes.
(t) Assuming the accuracy of your representations contained in
Section 3 hereof and your compliance with your covenants therein set
forth, it is not necessary, in connection with the sale and delivery of
the Notes to you and the offer and resale of the Notes by you, in each
case in the manner specified in this Agreement and as contemplated by the
Offering Memoranda, to register the Notes under the Act or to qualify the
Indenture under the Trust Indenture Act.
(u) Neither the Company nor any of its officers, directors or
employees has employed any broker or finder or incurred any liability for
any brokerage fees, commissions or finders' fees in connection with the
issuance of the Notes.
(v) Each of the Company and its subsidiaries has filed all
material tax returns required to be filed by it and all such tax returns
are true and complete in all material respects. Each of the Company and
its subsidiaries has paid all taxes, assessments and other charges which
have become due, other than those not yet delinquent and except for those
contested in good faith by appropriate proceedings for which adequate
reserves in conformity with GAAP have been provided and other than those
which, individually or in the aggregate, would not have a Material Adverse
Effect. No tax liens have been filed (except with respect to real
property taxes not yet due) and no claims or assessments are being
asserted with respect to any such taxes, assessments or other charges,
other than liens, claims
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<PAGE>
or assessments which, individually or in the aggregate, would not have a
Material Adverse Effect.
(w) The description of the Company's liability insurance set forth
in the Offering Memorandum under the caption "Business--Liability
Insurance" is a fair and accurate description thereof. The Company
regularly accrues, and the financial statements of the Company reflect the
accrual of, adequate reserves against loss contingencies arising from
known and incurred claims against the Company and its subsidiaries.
Management of the Company believes that its insurance coverage limits are
adequate.
(x) No labor dispute by the employees of the Company or any of its
subsidiaries exists or, to the knowledge of the Company, has been
threatened which would, individually or in the aggregate, have a Material
Adverse Effect. No collective bargaining agreement exists with respect to
any of the employees of the Company or its subsidiaries.
(y) Each of the Company and its subsidiaries owns or possesses
adequate rights to use all material trademarks, service marks and trade
names owned or used by it or which are necessary for the conduct of its
business; the Company and its subsidiaries have not received any notice
of, and have no knowledge of, any infringement of or conflict with
asserted rights of others with respect to any such trademarks, service
marks or trade names which, individually or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would have a
Material Adverse Effect.
(aa) Each of the Company and its subsidiaries has timely filed all
requisite cost reports and other reports required to be filed in
connection with federal Medicare and all applicable state Medicaid
programs due on or before the date hereof, all of which are true and
complete in all material respects. There are no claims, actions or
appeals pending (and the Company and its subsidiaries have not filed any
claims or reports that would result in any such claims, actions or
appeals) before any commission, board or agency, including, without
limitation, any intermediary or insurance carrier, the Provider
Reimbursement Review Board or the Administrator of the Health Care
Financing Administration, with respect to any state or federal
11
<PAGE>
Medicare or Medicaid cost reports or claims filed by the Company or any of
its subsidiaries on or before the date hereof, or with respect to any
disallowances by any commission, board or agency in connection with any
audit of such cost reports, which, if adversely determined, could have a
Material Adverse Effect. No validation review or program integrity review
related to the Company or any of its subsidiaries has been conducted by
any commission, board or agency in connection with state or federal
Medicare or Medicaid programs, and no such reviews are scheduled, pending
or, to the Company's best knowledge, threatened against or affecting the
Company or any of its subsidiaries. Each of the Company and its
subsidiaries has timely filed all material reports, data and other
information required by other regulatory agencies, including, without
limitation, the Florida Health Care Cost Containment Board. Except as
disclosed in the Offering Memoranda, each of the Company and its
subsidiaries is in compliance in all material respects with all rules,
regulations and requirements of such agencies, except where such
non-compliance would not have a Material Adverse Effect. Except as
disclosed in the Offering Memoranda, the conduct of the business of each
of the Company and its subsidiaries, including, without limitation, any
presently existing transactions and agreements with physicians, does not
violate the Medicare and Medicaid antifraud and abuse amendments codified
under Section 1128B(b) of the Social Security Act or the Stark
anti-referral provisions codified at 42 U.S.C. Section 1395nn, including
all amendments thereto to the extent effective on the date hereof, except
where such non-compliance would not have a Material Adverse Effect.
(bb) Each of the Company and its subsidiaries has good and
marketable fee simple title to or valid leasehold interests in all of its
material real property and good title to all of its other material
property (including, without limitation, all such real and other property
reflected in the consolidated balance sheet of the Company as of September
30, 1993, other than properties included within the classification "Net
Assets of Discontinued Operations" and other than properties disposed of
in the ordinary course of business since such balance sheet date and other
dispositions made in accordance with the Existing Credit Agreement, free
and clear of all security interests, charges, pledges, mortgages, liens,
12
<PAGE>
encumbrances, hypothecations, collateral assignments and similar
restrictions on and impairments and imperfections of title (collectively,
"Liens"), other than Liens permitted under the Existing Credit Agreement
and under outstanding industrial revenue bond obligations and hospital
facility mortgages.
(cc) The Company and its subsidiaries have not violated any
federal, state or local law relating to discrimination in employment nor
any applicable wage or hour laws, nor any provisions of the Employee
Retirement Income Security Act of 1974, as amended, or the rules and
regulations promulgated thereunder ("ERISA"), nor has the Company or any
of its subsidiaries engaged in any unfair labor practice, which in each
case would result, singly or in the aggregate, in a Material Adverse
Effect. There is (i) no significant unfair labor practice complaint
pending against the Company or any of its subsidiaries or, to the best
knowledge of the Company and its subsidiaries, threatened against any of
them, before the National Labor Relations Board or any state or local
labor relations board, and no significant grievance or significant
arbitration proceeding arising out of or under any collective bargaining
agreement is so pending against the Company or any of its subsidiaries or,
to the best knowledge of the Company and its subsidiaries, threatened
against any of them, (ii) no significant strike, labor dispute, slowdown
or stoppage pending against the Company or any of its subsidiaries or, to
the best knowledge of the Company and its subsidiaries, threatened against
any of them and (iii) to the best knowledge of the Company and its
subsidiaries, no union representation question existing with respect to
the employees of the Company or any of its subsidiaries and, to the best
knowledge of the Company, no union organizing activities are taking place,
except (with respect to any matter specified in clause (i), (ii) or (iii)
above, singly or in the aggregate) such as would not have a Material
Adverse Effect.
2. PURCHASE, SALE AND DELIVERY OF THE SECURITIES.
(a) On the basis of your representations, warranties and
covenants set forth in Section 3 hereof, the Company agrees to sell to each of
you and, each of you, severally and not jointly, agrees to purchase from the
Company the principal amount of Notes set forth opposite
13
<PAGE>
your name below at a purchase price equal to 97.5% of the principal amount
thereof; PROVIDED, HOWEVER, the Company shall not be obligated to sell the
Notes to either of you unless each of you purchases on the Closing Date the
respective principal amount of the Notes set forth opposite your name below.
Bear, Stearns & Co. Inc............................. $225,000,000
BT Securities Corporation........................... $150,000,000
(b) Delivery of the Notes against payment of the purchase price
therefor shall be made at the offices of Bear, Stearns & Co. Inc., located at
245 Park Avenue, New York, New York 10167, or such other location as may be
mutually acceptable to each of you and the Company. Such delivery and payment
shall be made at 9:30 a.m., New York time, on the fifth full business day next
following the date of this Agreement, or at such other time as shall be agreed
upon by each of you and the Company. The time and date of such delivery and
payment are herein called the "Closing Date." Certificates evidencing
beneficial interests in the Notes, in definitive form, without interest coupons,
registered in the name of Cede & Co., as nominee of The Depository Trust Company
("DTC"), or in the name of such other eligible nominee of DTC identified by you
to the Company in writing at least three full business days prior to the Closing
Date, in the principal amounts corresponding to the aggregate principal amount
of the Notes sold to QIBs (as defined in Section 3 below) (the "Global Notes"),
and certificates evidencing one or more individually denominated Notes, each in
definitive form, without interest coupons, registered in such names and in such
denominations as you may request in writing at least three full business days
prior to the Closing Date, in the principal amounts corresponding to the
aggregate principal amount of the Notes sold to Accredited Institutions (as
defined in Section 3 below) who are not QIBs (the "Non-global Notes"), shall be
delivered to you by the Company, against payment by you of the aggregate
purchase price therefor by wire transfer of immediately available funds in
accordance with the instructions set forth in that certain letter agreement of
even date herewith between the Company and each of you. The Company shall
reimburse you for the incremental cost of such funds at the then prevailing
federal funds effective overnight rate, plus 150 basis points and the amount of
any applicable bank charges incurred by you.
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<PAGE>
(c) The Company will permit you to examine and package the Global
Notes and the Non-global Notes for delivery at least two full business days
prior to the Closing Date.
(d) It is understood that each certificate evidencing the Notes
shall bear a legend substantially to the following effect:
"This Note has not been registered under the Securities Act of 1933,
as amended (the "Securities Act"), and, accordingly, may not be
offered or sold to, or for the account or benefit of, any person
except as set forth in the following sentence. By its acquisition
hereof, the holder (1) represents that (a) it is a "Qualified
Institutional Buyer" (as defined in Rule 144A under the Securities
Act) or (b) it is an "Accredited Investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act that is an
institution (an "Institutional Accredited Investor"), (2) agrees
that it will not prior to the date which is three years after the
later of the date of original issuance of this Note and the last
date on which the issuer or any affiliate of the issuer was the
owner of this Note (the "Resale Restriction Termination Date")
resell, pledge or otherwise transfer this Note, except (a) to the
issuer, (b) to a person whom the seller reasonably believes is a
Qualified Institutional Buyer purchasing for its own account or for
the account of another Qualified Institutional Buyer in compliance
with the resale provisions of Rule 144A under the Securities Act,
(c) to an Institutional Accredited Investor that, prior to such
transfer, furnishes to the Trustee a written certification
containing certain representations and agreements relating to the
restrictions on transfer of this Note (the form of which letter can
be obtained from the Trustee), (d) pursuant to the resale
limitations provided by Rule 144 under the Securities Act (if then
available), (e) pursuant to an effective registration statement
under the Securities Act, or (f) pursuant to any other available
exemption
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<PAGE>
from the registration requirements of the Securities Act, subject in
each of the foregoing cases to any requirement of law that the
disposition of such holder's property or the property of such
account at all times be within its control and to compliance with
applicable state securities laws, and (3) agrees that it will
deliver to each person to whom this Note is transferred a notice
substantially to the effect of this legend. If the proposed
transferee is an Institutional Accredited Investor, the holder must,
prior to any such transfer, furnish to each of the Trustee and the
issuer such certifications, legal opinions and other information as
either of them reasonably may require to confirm that such transfer
is being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act.
The foregoing restrictions on resale shall not apply subsequent to
the resale Restriction Termination Date."
3. OFFERING AND RESALE OF THE NOTES. You have advised the
Company that it is your intention, as promptly as you deem appropriate after the
Company shall have furnished you with copies of the Definitive Memorandum (as
specified in Section 4(b) hereof), to resell the Notes pursuant to the
procedures and upon the terms and subject to the conditions set forth in the
Definitive Memorandum. Each of you hereby represents and warrants to the
Company that you are a Qualified Institutional Buyer and an Accredited Investor
(within the meaning of Rule 501(a) of Regulation D under the Act). In
connection therewith, you represent and warrant to and agree with the Company
that the Notes have been and will be offered for sale and will be sold by you
solely to (i) persons reasonably believed by you to be "Qualified Institutional
Buyers" purchasing for their own account or for the account of other Qualified
Institutional Buyers within the meaning of Rule 144A under the Act ("QIBs") and
(ii) a limited number of persons who are "Accredited Investors" within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the Act that are institutions
(each, an "Accredited Institution"), and who provide to you a letter in the form
of Exhibit A to the Offering Memorandum, that you have not and will not offer
the Notes for sale by means of any general solicitation or general advertising
within the meaning of Rule 502(c) of Regulation D under the
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<PAGE>
Act or in any manner involving a public distribution or offering of the Notes
within the meaning of the Act. You agree that, prior to or simultaneously with
the confirmation of sale by you to any purchaser of any of the Notes purchased
by you from the Company pursuant hereto, you shall furnish to that purchaser a
copy of the Definitive Memorandum (and any amendment thereof or supplement
thereto that the Company shall have furnished to you prior to the date of such
confirmation of sale).
4. AGREEMENTS OF THE COMPANY. The Company agrees with you as
follows:
(a) The Company will advise you promptly (and, if so requested by
you, will confirm such advice in writing) of the occurrence, during the
period referred to in paragraph (d) below, of any event of which the
Company has knowledge that makes any statement of a material fact made in
the Definitive Memorandum untrue or that requires the addition of any
statement of a material fact to, or other material change in, the
Definitive Memorandum in order to make the statements therein, in light of
the circumstances existing when it is delivered to a purchaser of the
Notes, not misleading.
(b) The Company will furnish to you and to those persons whom you
identify to the Company such number of copies of the Definitive
Memorandum, and any amendments of or supplements thereto, as you
reasonably may request.
(c) The Company will not make any amendment of or supplement to
the Offering Memoranda of which you shall not previously have been
consulted or use any such proposed amendment or supplement to which you
shall reasonably and in good faith object.
(d) If, during the period from the date of the Definitive
Memorandum through the Closing Date, and for so long thereafter as in the
opinion of your counsel the Definitive Memorandum is required to be
delivered in connection with resales of the Notes by you, any event shall
occur as a result of which it becomes necessary to amend or supplement the
Definitive Memorandum in order to make the statements therein, in light of
the circumstances existing when the Definitive Memorandum is delivered to
a purchaser, not misleading, or if it becomes necessary to amend or
supplement the
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<PAGE>
Definitive Memorandum to comply with any law, the Company promptly will
prepare an appropriate amendment of or supplement to the Definitive
Memorandum so that the statements in the Definitive Memorandum, as so
amended or supplemented, will not, in light of the circumstances existing
when it is so delivered, be misleading, or so that the Definitive
Memorandum will comply with law, and the Company will furnish to you such
number of copies thereof as you reasonably may request.
(e) The Company will cooperate with you and your counsel in
connection with the registration or qualification of the Notes under the
securities or "Blue Sky" laws of such jurisdictions as you may request,
will continue such qualification in effect for so long as required to
permit the continuance of sales of and dealings in the Notes within such
jurisdictions to complete the resale by you of all of the Notes as
specified in Section 3 hereof, and will file such consents to service of
process or other documents as may be necessary in order to effect such
registration or qualification; PROVIDED, HOWEVER, that in connection
therewith the Company shall not be required to qualify as a foreign
corporation or to file any general consent to service of process in any
jurisdiction in which it is not already so qualified or subject.
(f) For a period of three years following the date hereof and
thereafter for so long as you are making a market in the Notes, the
Company will furnish to you, upon request, a copy of each report mailed by
the Company to holders of the Notes and/or holders of the Company's
capital stock or filed by the Company with the Commission and such other
publicly available information concerning the Company and its subsidiaries
as you reasonably may request.
(g) For so long as and at any time that the Notes are outstanding
and are "restricted securities" within the meaning of Rule 144(a)(3) under
the Act and the Company is not subject to Section 13 or 15(d) of the
Exchange Act, the Company, upon request of any holder of the Notes, will
furnish to such holder, and to any prospective purchaser or purchasers of
Notes designated by such holder, information satisfying the requirements
of subsection (d)(4)(i) of Rule 144A under the Act.
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<PAGE>
(h) If you so request, the Company will use its best efforts, and
will cooperate with you, to cause the Notes to be eligible for inclusion
in the Private Offerings, Resales and Trading through Automated Linkages
("PORTAL") market of the National Association of Securities Dealers, Inc.
("NASD").
(i) The Company will not, and will not authorize or knowingly
permit any person acting on its behalf to, offer to buy or offer to sell
any of the Notes by means of any form of general solicitation or general
advertising within the meaning of Section 502(c) of Regulation D under the
Act or in any manner involving a public offering or distribution of the
Notes within the meaning of the Act.
(j) The Company shall not take any action or omit to take any
action (and shall cause its subsidiaries not to take any action or omit to
take any action) which taking or omission, as the case may be, would
result in the Company becoming an "investment company" or a company
controlled by an "investment company" within the meaning of, or require
the Company to register as an "investment company" under, the Investment
Company Act.
(k) Whether or not the transactions contemplated by this Agreement
are consummated or this Agreement is terminated, the Company will pay all
costs, expenses and fees incident to (i) the preparation, printing, and
distribution (as applicable) of this Agreement, the Preliminary
Memorandum, the Definitive Memorandum and all amendments thereof and
supplements thereto, (ii) the reproduction and delivery of all other
agreements, instruments and documents printed and delivered in connection
with the offering and sale of the Notes, (iii) the registration or
qualification of the Notes under the securities or "Blue Sky" laws of the
several states (including, in each case, the reasonable fees and
disbursements of your counsel relating to such registration or
qualification and the preparation of a "Blue Sky" Memorandum relating
thereto), (iv) the inclusion of the Notes in the PORTAL market of the
NASD, (v) the engagement of the Trustee and its agents and the reasonable
fees and disbursements of counsel for such Trustee in connection with the
Indenture, (vi) the assignment to the Notes of an investment rating by all
statistical rating agencies, including, without limitation, Standard &
Poor's and Moody's Investors
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<PAGE>
Services, and (vii) the performance by the Company of its other
obligations under this Agreement.
(l) The Company will apply the net proceeds from the sale of the
Notes as set forth under the caption "Use of Proceeds" in the Definitive
Memorandum.
(m) The Company will use its best efforts to do and perform all
things required or necessary to be done and performed under this Agreement
by the Company prior to the Closing Date and to satisfy all conditions
precedent to the delivery of the Notes.
(n) The Company will not (and will direct its affiliates not to)
take, directly or indirectly, any action that is designed, or constitutes
or might reasonably be expected to cause or result in the stabilization or
manipulation of the price of any security of the Company to facilitate the
sale or resale of the Notes.
(o) During the period beginning from the date hereof and continuing
to and including the date which is six months after the Closing Date,
neither the Company nor any Affiliate (as defined in Rule 501(b) under the
Act) thereof shall sell, offer for sale, solicit offers to buy or
otherwise negotiate in respect of the sale of any "security" (as defined
in Section 2(1) of the Act) of the same or a similar class as the Notes,
other than as contemplated by the Registration Rights Agreement.
(p) The Company will use its best efforts to cause the Exchange
Notes to be listed on a national securities exchange (registered as such
under Section 6 of the Exchange Act) as promptly as practicable after
consummation of the Exchange Offer.
5. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless you and
each person, if any, who controls you within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act, from and against any and all losses,
claims, damages, awards, liabilities and judgments ("Losses") arising out of or
based upon any untrue statement or alleged untrue statement of a material fact
contained in the Offering Memoranda or any amendments thereof or
20
<PAGE>
supplements thereto (including, without limitation, the financial statements,
accounting and statistical data included therein and all schedules and the
related notes thereto) or by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except insofar as such Losses arise out of or are based upon any
such untrue statement or omission or alleged untrue statement or omission based
upon the information relating to you furnished by you in writing to the Company
expressly for use therein and used in conformity therewith; PROVIDED,
HOWEVER, that the indemnity obligations arising under this Section 5(a) shall
not inure to your benefit or that of any such controlling person if the person
asserting any such Losses purchased the Notes from you and if a copy of the
Definitive Memorandum was not sent or given by you or on your behalf to such
person at or prior to the written confirmation of the sale of the Notes to such
person, and if the Definitive Memorandum would have cured the defect giving rise
to such Losses.
(b) In case any action or proceeding (including any governmental
investigation or inquiry) shall be brought against you or any person controlling
you based upon the Offering Memoranda or any amendment thereof or supplement
thereto and with respect to which indemnity may be sought against the Company,
you shall promptly notify the Company in writing and the Company shall assume
the defense thereof, including the employment of counsel (reasonably
satisfactory to you) and the payment of all fees and expenses of such defense;
PROVIDED THAT your failure (or the failure by any person controlling you) so
to notify the Company shall not relieve the Company of its indemnification
obligations under Sections 5(a) and (b) hereof, except to the extent that the
Company is materially prejudiced or forfeits substantive rights and defenses by
reason of such failure. You or any such controlling person shall have the right
to employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be the responsibility
of you or of such controlling person, unless (i) the employment of such counsel
has been authorized in writing by the Company, (ii) the Company has failed
promptly to assume the defense and employ counsel (reasonably satisfactory to
you), or (iii) the named parties to any such action (including any impleaded
parties) include both you or such controlling person and the Company, and you or
such controlling person shall have been advised by such counsel that there may
be one or more legal defenses
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<PAGE>
available to you or such controlling person that are different from or
additional to those available to the Company (in all of which cases the Company
shall not have the right to assume the defense of such action on behalf of you
or such controlling person; it being understood, however, that the Company shall
not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys (in addition to any local
counsel) for you and all such controlling persons, which firm shall be
designated in writing by you and that all such fees and expenses shall be
reimbursed promptly as they are billed). The Company shall not be liable for
any settlement of any such action or proceeding effected without its written
consent (not to unreasonably be withheld) and if settled with its written
consent or if there is a final judgment for the plaintiff, the Company agrees to
indemnify and hold harmless you and each such controlling person from and
against any loss or liability by reason of such settlement or judgment. Without
limiting the generality of the foregoing, no indemnifying party shall, without
the prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
has been threatened to be made a party where indemnity could have been sought
hereunder by such indemnified party; PROVIDED, HOWEVER, that an indemnifying
party may effect such a settlement without the consent of the indemnified party
if such settlement includes an unconditional release of such indemnified party
from all liability for claims that are the subject matter of such proceeding or
the indemnifying party indemnifies the indemnified party in writing for an
amount equal to the maximum liability for all such claims as contemplated above.
(c) You agree, severally and not jointly, to indemnify and hold
harmless the Company, its directors, its officers and each person, if any,
controlling the Company within the meaning of Section 15 of the Act or Section
20 of the Exchange Act, from and against any and all Losses to the same extent
as the foregoing indemnity from the Company to you but only with respect to
information relating to you furnished in writing by you expressly for use in the
Offering Memoranda or any amendment thereof or supplement thereto and used in
conformity therewith. In case any action or proceeding shall be brought against
the Company, any of its directors, any such officer or any such controlling
person based on the Offering Memoranda or any
22
<PAGE>
amendment or supplement thereto and in respect of which indemnity may be sought
against you, you shall have the same rights and duties as are given to the
Company by Section 5(b) hereof (except that if the Company shall have assumed
the defense thereof, you shall not be required to do so, and in such case you
may employ separate counsel therein and participate in the defense thereof but
the fees and expenses of such counsel shall be at your expense), and the
Company, its directors, each such officer and each such controlling person shall
have the same rights and duties as are given to you by Section 5(b) hereof.
(d) If the indemnification provided for in this Section 5 is
unavailable to or otherwise insufficient to hold harmless an indemnified party
in respect of any Losses, then each indemnifying party, in lieu of, or in
addition to, indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such Losses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and you on the other hand from the offering of the Notes
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company and you in connection with the statements or omissions which
resulted in such Losses, as well as any other relevant equitable considerations.
The relative benefits received by the Company and you shall be deemed to be in
the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company, and the total discounts and
commissions received by you, bear to the total price of the Notes to investors,
in each case as set forth in the table on the cover page of the Definitive
Memorandum. The relative fault of the Company and you shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or you and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and you agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an
23
<PAGE>
indemnified party as a result of Losses shall be deemed to include, subject to
the limitations set forth above, any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 5, neither of
you shall be required to contribute any amount in excess of the amount by which
the total price at which the Notes were offered by you to investors exceeds the
amount of any damages that you otherwise were required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. Your obligations under this paragraph to
contribute are several in proportion to your respective purchase obligations and
not joint.
6. CONDITIONS OF YOUR OBLIGATIONS. Your obligations to purchase
and pay for the Notes shall be subject to (i) the accuracy of the
representations and warranties of the Company herein contained as of the date
hereof and as of the Closing Date, (ii) the presence in any certificates,
opinions, written statements or letters furnished pursuant to this Section 6 to
you or to your counsel, of any qualification or limitation not previously
approved by you, (iii) the performance by the Company of its obligations
hereunder required to be performed on or prior to the Closing Date, and (iv) the
following additional conditions:
(a) (i) Since the date of the latest balance sheet included in the
Offering Memoranda, there shall not have occurred any Material Adverse
Change, or any development involving a prospective Material Adverse
Change, whether or not arising in the ordinary course of business, or any
change in the capital stock or in the long-term debt of the Company or any
of its subsidiaries from that set forth in or contemplated by the Offering
Memoranda, (ii) neither the Company nor any of its subsidiaries shall have
incurred any liability or obligation, direct or contingent, that is
material to the Company and its subsidiaries, taken as a whole, other than
those reflected in or contemplated by the Offering Memoranda, and (iii) on
the Closing Date, you shall have received a certificate dated the Closing
Date, signed by each of the Chief Executive Officer and the Chief
Financial Officer of the Company, and such other certificates of executive
officers of
24
<PAGE>
the Company as you may specify in a memorandum of Closing to be delivered
to the Company prior to the Closing Date confirming the matters set forth
in the introduction to, and this paragraph (a) of, this Section 6.
(b) On the Closing Date, you shall have received the opinion of
King & Spalding, counsel to the Company, dated the Closing Date and
addressed to you, and in form and scope satisfactory to you, substantially
to the effect that:
(i) Each of the Company and its subsidiaries is duly
organized, validly existing and in good standing under the laws of
its respective jurisdiction of incorporation and is duly qualified
and is in good standing as a foreign corporation in the
jurisdictions identified in such opinion based on a review by such
counsel of corporate statutes set forth in official statutory
compilations. The Company has all requisite corporate power and
authority to own or lease and operate its properties and to conduct
the business in which it is engaged as described in the Offering
Memoranda.
(ii) As of the Closing Date, the authorized capital stock of
the Company consists of 80,000,000 shares of Common Stock, $.25 par
value. All of the outstanding shares of the Company's capital stock
have been duly authorized and validly issued, are fully paid and
non-assessable (except for assessments that may be imposed by the
laws of governmental authorities of the State of New York with
respect to back wages due to employees) and were not issued in
violation of or subject to any preemptive, subscription or other
similar rights. All of the outstanding shares of capital stock of
each subsidiary of the Company owned directly or indirectly of
record and, to the knowledge of such counsel, beneficially by the
Company (except that the subsidiaries of the Company identified on
Schedule 1(f) hereto may not be wholly owned directly or indirectly
by the Company because of applicable statutory requirements of the
jurisdictions set forth in such schedule) free and clear of all
liens, claims, limitations on voting rights, options, security
interests and other encumbrances except
25
<PAGE>
for (i) those in favor of a wholly owned domestic or of a foreign
subsidiary of the Company, (ii) those created in connection with the
acquisition of a wholly owned domestic or a foreign subsidiary of
the Company, the obtaining of first mortgage financing and the
issuance of municipal, industrial development or similar tax exempt
securities by certain subsidiaries of the Company and (iii) those to
be created or permitted pursuant to the New Credit Agreement and the
Credit Documents. To the knowledge of such counsel, there are no
outstanding securities of any subsidiary convertible into or
evidencing the right to purchase or subscribe for any shares of
capital stock of such subsidiary, there are no outstanding or
authorized options, warrants, calls, subscriptions, rights,
commitments or any other agreements of any character obligating any
subsidiary to issue any shares of its capital stock or any
securities convertible into or evidencing the right to purchase or
subscribe for any shares of such capital stock, and there are no
agreements with respect to the voting, sale or transfer of any
shares of capital stock of any subsidiary to which such subsidiary
is a party.
(iii) The Indenture has been duly and validly authorized by
the Company and the Guarantors and, when executed and delivered by
the Company and the Guarantors (assuming the due authorization,
execution and delivery thereof by the Trustee), will constitute a
valid and binding agreement of the Company and the Guarantors,
enforceable against them in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally, and to general principles of equity,
including principles of commercial reasonableness, good faith and
fair dealing (whether enforcement is sought in a proceeding at law
or in equity), and except insofar as the usury waiver therein may be
deemed to be unenforceable. The Notes have been duly and validly
authorized for issuance and, when executed and delivered by the
Company (assuming the due authorization, execution and delivery of
the Indenture by the Trustee and the execution and delivery of
certificates of authentication by one of the Trustee's duly
26
<PAGE>
authorized officers), will be duly and validly executed, issued,
authenticated and delivered and will constitute valid and binding
obligations of the Company, entitled to the benefits of the
Indenture and enforceable against the Company in accordance with
their terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and to general
principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (whether enforcement is
sought in a proceeding at law or in equity). The Indenture and the
Notes conform in all material respects to the descriptions thereof
contained in the Offering Memoranda.
(iv) This Agreement, the Registration Rights Agreement and
the New Credit Agreement (and the Credit Documents) have been duly
and validly authorized, executed and delivered by the Company, and
each is a valid and binding agreement of the Company enforceable
against it in accordance with its terms (except for certain
provisions of the New Credit Agreement), subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies
generally, and to general principles of equity, including principles
of commercial reasonableness, good faith and fair dealing
(regardless of whether enforcement is sought in a proceeding at law
or in equity) and except to the extent that rights to
indemnification and contribution contained herein and therein may be
limited by federal or state securities laws or public policy
relating thereto.
(v) The execution, delivery and performance by the Company
and the Guarantors of this Agreement, the Registration Rights
Agreement, the New Credit Agreement (and the Credit Documents), the
Indenture and the Notes, in each case to the extent a party thereto,
and the consummation of the transactions contemplated hereby and
thereby, including the issuance, sale and delivery of the Notes,
will not (A) conflict with or result in a breach of any of the terms
and provisions of, or constitute a default (or an event which with
notice, lapse of time, or both, would constitute a
27
<PAGE>
default) or require consent under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company pursuant to the terms of any agreement,
indenture or other instrument that has been specified to such
counsel in writing by an officer of the Company or of which they
otherwise are aware or (B) violate or conflict with any provision of
the certificate of incorporation or by-laws of the Company (as
amended and/or restated to date) or, to the knowledge of such
counsel, any judgment, decree, order, law, rule or regulation of any
court or any public or governmental authority having jurisdiction
over the Company or any of its subsidiaries or any of their
respective properties or assets.
(vi) Neither the Company nor any of its affiliates is (i) an
"investment company" or a company "controlled" by an "investment
company" within the meaning of, and is not registered or otherwise
required to be registered under, the Investment Company Act, or (ii)
a "holding company" or an "affiliate" thereof within the meaning of
the Public Utility Act.
(vii) Assuming the accuracy of the representations and
warranties of the Company contained in paragraphs (r), (s) and (t)
of Section 1 of this Agreement and your representations and
warranties contained in Section 3 of this Agreement, assuming
compliance by the Company of its agreements in Section 4(i) of this
Agreement and compliance by each of you with your covenants
contained in Section 3 of this Agreement, and other than with
respect to the transactions contemplated by the Registration Rights
Agreement, the issuance and sale of the Notes to you and the
reoffering, resale and delivery of the Notes by you, in each case in
the manner contemplated in this Agreement and the Offering
Memoranda, are exempt from the registration requirements of the Act
and it is not necessary to qualify the Indenture under the Trust
Indenture Act.
(viii) The statements in the Offering Memoranda under the
caption "Description of the Notes", "Summary of New Credit
Agreement", and
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<PAGE>
"Exchange Offer; Registration Rights", insofar as they describe the
provisions of documents and instruments therein described,
constitute fair summaries thereof, accurate in all material
respects. The statements in the Offering Memoranda under the
captions "Notice to Investors", "Business - Sources of Revenue;
Regulation and Other Factors" and "Certain Federal Income Tax
Consequences of the Exchange Offer" insofar as they purport to
describe federal laws of the United States fairly present in all
material respects the information set forth therein.
(ix) No consent, approval, waiver, license or other
authorization by or filing with any public or governmental authority
of the federal government of the United States of America, or the
States of Delaware, Georgia, or New York is required for the issue
and sale of the Notes or the consummation by the Company and the
Guarantors of the transactions contemplated by this Agreement, the
Registration Rights Agreement, the New Credit Agreement (and the
Credit Documents), or the Indenture, except for such as may be
required by state securities or "Blue Sky" laws and by federal
securities laws in connection with performance of the Company's
obligations under the Registration Rights Agreement, and except for
those consents, approvals, waivers, licenses or authorizations which
heretofore have been obtained or made.
(x) To such counsel's knowledge, other than as disclosed in
the Offering Memoranda, there is no litigation or governmental
proceeding pending or overtly threatened against the Company or any
of its subsidiaries which if determined adversely to the Company or
any of its subsidiaries would, individually or in the aggregate,
have a material adverse effect on the business, properties,
condition (financial or otherwise) or results of operations of the
Company and its subsidiaries, taken as a whole.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company,
representatives of the independent certified public accountants of the
29
<PAGE>
Company and your representatives and counsel at which conferences the
contents of the Offering Memoranda and any amendment thereof or supplement
thereto and related matters were discussed and, although such counsel have
not undertaken to investigate or verify independently, and do not assume
any responsibility for, the accuracy, completeness or fairness of the
statements contained in the Offering Memoranda or any amendment thereof or
supplement thereto (except as to matters referred to in the last sentence
of clause (iii) and in clause (viii) above), no facts have come to the
attention of such counsel that would lead them to believe that the
Definitive Memorandum (or any amendment thereof or supplement thereto made
prior to the Closing Date), as of its date or as of the Closing Date,
contained an untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading (it being understood that no view need be expressed
by such counsel with respect to the financial statements and other
financial, accounting and related statistical data included in the
Definitive Memorandum or any amendment thereof or supplement thereto).
In furnishing the foregoing opinion, such counsel may rely (A) as to
matters involving the application of laws other than the federal laws of
the United States, the laws of the State of Georgia, the laws of the State
of New York, and the general corporation laws of the State of Delaware (to
the extent such counsel deems proper and to the extent specified in such
opinion, if at all), upon an opinion or opinions (in form and scope
satisfactory to your counsel) of other counsel qualified to opine with
respect to the applicable laws or upon a review of corporate statutes set
forth in official statutory compilations; and (B) as to matters of fact,
to the extent such counsel deems proper and to the extent specified in
such opinion, on certificates of responsible officers and other
representatives of the Company and the Guarantors, certificates of public
officials, and certificates or other written statements of officers of
departments of various jurisdictions having custody of documents
respecting the corporate existence or good standing of the Company and its
subsidiaries, provided that copies of any such statements or certificates
shall be delivered to your counsel. The opinion of counsel for the
Company shall state that the opinion of any such other counsel is in
30
<PAGE>
form and scope satisfactory to such counsel and, in such counsel's
opinion, you and your counsel are justified in relying thereon.
(c) On the Closing Date, you shall have received from your
counsel, Weil, Gotshal & Manges, an opinion, dated the Closing Date and
addressed to you, with respect to matters as you reasonably may require,
and the Company shall have furnished to your counsel such documents as
they may reasonably request for the purpose of enabling them to opine upon
such matters. In furnishing the foregoing opinion, such counsel may rely
on opinions of other counsel and certificates in the same respect and to
the same extent as counsel in subsection (b) above.
(d) Concurrently with the execution and delivery of this
Agreement, and on the Closing Date you shall have received from Arthur
Andersen & Co., a letter addressed to you, dated the date of its delivery,
in form and substance satisfactory to you, to the effect set forth in
Annex I hereto.
(e) As of the Closing Date, the Company shall have performed and
complied in all material respects with each of its agreements herein
contained and required to be performed or complied with by the Company at
or prior to the Closing Date.
(f) Prior to or concurrently with the delivery of the Notes to you
(i) the Company and each lender that is party to the New Credit Agreement
(and the Credit Documents), shall have executed and delivered the
agreements governing the same (except Credit Documents not required to be
executed in connection with the Initial Loans), all conditions to any
borrowing by the Company thereunder on the Closing Date as contemplated by
the Definitive Memorandum shall have been satisfied or waived and the
lenders shall have advanced the funds contemplated to be borrowed by the
Company under the New Credit Agreement, on the Closing Date as described
in the Offering Memoranda and (ii) all conditions precedent requisite for
the defeasance and subsequent redemption (except the furnishing of notice
of redemption to holders which shall be mailed to holders of the 7 1/2%
Debentures on May 3, 1994) by the Company of its 7-1/2% Debentures and the
retirement of certain senior indebtedness as contemplated by the
Definitive Memorandum shall have been satisfied.
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<PAGE>
(g) On or prior to the Closing Date, the Company shall have
furnished to you such further information, certificates and documents as
you reasonably may request in a memorandum of Closing furnished to the
Company prior to the Closing Date.
(h) Concurrently with the execution and delivery of this Agreement
and on or prior to the Closing Date, you shall have received from KPMG
Peat, Marwick, a "comfort letter" addressed to you, with respect to the
Target Hospitals, in form and substance reasonably satisfactory to you.
If any of the conditions specified in this Section 6 shall not have
been fulfilled when and as required by this Agreement, all of your obligations
hereunder may be canceled by you at, or at any time prior to, the Closing Date.
7. EFFECTIVE DATE OF AGREEMENT AND TERMINATION.
(a) This Agreement shall become effective upon its execution.
(b) This Agreement may be terminated at any time prior to the
Closing Date by you upon notice to the Company if any of the following has
occurred: (i) since the respective dates as of which information is provided in
the Definitive Memorandum, any adverse change or development involving a
prospective adverse change in, or affecting particularly the condition
(financial or otherwise) of the Company, any of its subsidiaries, or the
earnings, affairs, or business prospects of the Company or any of its
subsidiaries, whether or not arising in the ordinary course of business, which
would, in your reasonable judgment, make it impracticable to market the Notes on
the terms and in the manner specified in the Offering Memoranda, (ii) any
outbreak or escalation of hostilities or other national or international
calamity or crisis or change in economic conditions, if the effect of such
outbreak, escalation, calamity, crisis or change on the financial markets of the
United States or elsewhere would, in your reasonable judgment, make it
impracticable to market the Notes on the terms and in the manner specified in
the Offering Memoranda, (iii) any suspension of trading in securities on the New
York Stock Exchange, Inc., the American Stock Exchange or the National
Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or
the imposition of any limitation on prices (other than limitations on hours or
numbers of days of trading) for securities on any such
32
<PAGE>
exchange or NASDAQ, (iv) the enactment, publication, decree or other
promulgation of any federal or state statute, regulation, rule or order of any
court or other governmental authority which in your reasonable judgment
materially and adversely affects, or will materially and adversely affect, the
business or operations of the Company and its subsidiaries, taken as a whole,
(v) the declaration of a banking moratorium by either federal or New York State
authorities, or (vi) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs which in your
reasonable judgment could have a material adverse effect on the financial
markets in the United States.
8. MISCELLANEOUS.
(a) Notices given pursuant to any provision of this Agreement
shall be given by telex or facsimile transmission or by notice in writing hand
delivered or by certified mail, postage prepaid, return receipt requested. All
such notices shall be sent to the telex number, facsimile transmission number or
address (as the case may be) as follows: (i) if to the Company, to Charter
Medical Corporation, 577 Mulberry Street, Macon, Georgia 31298, Attention:
Chief Financial Officer (facsimile transmission no. (912) 751-2832), with a copy
to King & Spalding, 191 Peachtree Street, Atlanta, Georgia 30303-1763,
Attention: Philip A. Theodore, Esq. (facsimile transmission no. (404) 572-5145)
and (ii) if to you, to Bear, Stearns & Co. Inc., 245 Park Avenue, New York, New
York 10167, Attention: Corporate Finance Department (facsimile transmission no.
(212) 272-3092), with copies to Weil, Gotshal & Manges, 767 Fifth Avenue, New
York, New York 10153, Attention: Clifford E. Neimeth, Esq. (facsimile
transmission no. (212) 310-8007); and to BT Securities Corporation, 130 Liberty
Street, 30th Floor, New York, New York 10006, Attention: Corporate Finance
Department (facsimile transmission no. (212) 250-7218).
(b) The respective indemnities, contribution agreements,
representations, warranties and other statements of the Company, its officers
and directors and each of you set forth in or made pursuant to this Agreement
shall remain operative and in full force and effect, and will survive delivery
of and payment for the Notes, regardless of (i) any investigation, or statement
as to the results thereof, made by or on behalf of you or by or on behalf of the
officers or directors of the Company or any controlling person of the
33
<PAGE>
Company, (ii) acceptance of the Notes and payment for them hereunder, and (iii)
termination of this Agreement.
(c) If this Agreement shall be terminated by you because of any
failure or refusal on the part of the Company to comply with the terms or to
fulfill any of the conditions of this Agreement, the Company shall reimburse you
for all out-of-pocket expenses (including the fees and disbursements of your
counsel) reasonably incurred by you.
(d) Except as otherwise provided, this Agreement has been and is
made solely for the benefit of and shall be binding upon the Company, you, any
controlling persons referred to herein and their respective successors and
assigns, all as and to the extent provided in this Agreement, and no other
person shall acquire or have any right under or by virtue of this Agreement and
the term "successors and assigns" shall not include a purchaser of any of the
Notes from you merely because of such purchase. Notwithstanding the foregoing,
it is expressly understood and agreed that each purchaser of the Notes from you
is intended to be a beneficiary of the Company's covenants contained in the
Registration Rights Agreement to the same extent as if the Notes were sold and
those covenants were made directly to such purchaser by the Company, and each
such purchaser shall have the right to take action against the Company to
enforce, and obtain monetary recovery for damages resulting from any breach of,
those covenants.
(e) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to instruments made
and performed wholly in such state and without regard to the choice of law
provisions of such state.
(f) This Agreement may be signed in counterparts, all of which
taken together shall constitute but one and the same original instrument.
34
<PAGE>
Please confirm that the foregoing correctly sets forth the mutual
agreement and understanding between the Company and you as to the subject matter
herein set forth.
Very truly yours,
CHARTER MEDICAL CORPORATION
By: /s/ Lawrence W. Drinkard
-----------------------------------
Lawrence W. Drinkard
Executive Vice President
Accepted in New York, New York
April 22, 1994
BEAR, STEARNS & CO. INC.
By: /s/ Curtis S. Lane
-------------------------------------
Name: Curtis S. Lane
Title: Senior Managing Director
BT SECURITIES CORPORATION
By: /s/ Edmund H. Driggs
--------------------------------------
Name: Edmund H. Driggs
Title: Managing Director
35
<PAGE>
SCHEDULE 1 (d) TO PURCHASE AGREEMENT
1. Indenture, dated as of July 21, 1992, among Charter Medical Corporation, as
Issuer of 7 1/2% Senior Subordinated Debentures due 2003, the parties named
therein, as Guarantors, and Society National Bank, as Trustee.
2. Amended and Restated Credit Agreement, dated July 21, 1992, among Charter
Medical Corporation and certain financial institutions.
3. Amended and Restated Credit Agreement, dated July 21, 1992, among certain
subsidiaries of Charter Medical Corporation and certain financial
institutions.
4. Mortgage, Deed of Trust, Trust Deed, Assignment, Security Agreement and
Fixture Filing, dated as of August 30, 1989, by Charter Hospital of
Sacramento, Inc. (subsequently Charter Behavioral Health System of Northern
California, Inc.) to Chicago Title Insurance Company, the trustee
thereunder to the extent that the Mortgage operates as a deed of trust or
trust deed to public trustee; and for the benefit of Citibank, N.A., as
agent (in such capacity, the "Agent") for the "Lenders" party to the Credit
Agreement (as such term is defined in the Mortgage) to the extent the
Mortgage operates as a mortgage and the beneficiary thereunder to the
extent the Mortgage operates as a deed of trust, trust deed or deed of
trust to public trustee (collectively, the "Mortgagee"); recorded in Series
No. 48463, filed in Placer County, California on August 31, 1989.
5. Mortgage, Deed of Trust, Trust Deed, Assignment, Security Agreement and
Fixture Filing, dated as of August 30, 1989, by Charter Hospital of San
Diego, Inc. (subsequently Charter San Diego Behavioral Health System, Inc.)
to the Mortgagee; recorded [as file No. 89-47153], filed in San Diego
County, California on August 31, 1989.
6. Mortgage, Deed of Trust, Trust Deed, Assignment, Security Agreement and
Fixture Filing, dated as of August 30, 1989, by Charter Medical-Vigo
County, Inc. (subsequently Charter Terre Haute Behavioral Health System,
Inc.) to the Mortgagee; recorded in Book X-19, page 360, filed in the
Recorder's Office of Vigo County, Indiana on August 31, 1989.
<PAGE>
SCHEDULE 1(f) TO PURCHASE AGREEMENT
COUNTRY OF
NAME OF FOREIGN SUBSIDIARY INCORPORATION
- -------------------------- -------------
Charter Medical (Cayman Islands) Ltd. Cayman Islands, BWI
Golden Isle Assurance Company Ltd. Bermuda
Plymouth Insurance Company, Ltd. Bermuda
Societe Anonyme de la Metairie Switzerland
<PAGE>
ANNEX I
Pursuant to Section 6(d) of the Purchase Agreement, Arthur Andersen
& Co. shall furnish letters to the Representatives (as defined below) to the
effect that:
(i) They are independent certified public accountants with respect to the
Company and its subsidiaries within the meaning of Rule 101 of the published
Rules of Conduct of the American Institute of Certified Public Accountants;
(ii) In their opinion, the financial statements (including, in the
footnotes thereto, the combined Subsidiary Guarantors and the combined
non-guarantor affiliates of the Company (collectively, the "SAB 53
Information")) and any supplementary financial information and schedules which
have been audited by them and included in the Offering Memoranda comply as to
form in all material respects with generally accepted accounting principles;
and, to the extent applicable, they have made a review in accordance with
standards established by the American Institute of Certified Public Accountants
of the unaudited consolidated interim financial statements of the Company
included in the Offering Memoranda;
(iii) The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Company for the
five most recent fiscal years included in the Offering Memoranda agrees with the
corresponding amounts (after restatements where applicable) in the audited
consolidated financial statements for such five fiscal years;
(iv) On the basis of limited procedures, not constituting an audit in
accordance with generally accepted auditing standards, consisting of a reading
of the unaudited financial statements and other information referred to below, a
reading of the latest available interim financial statements of the Company and
its subsidiaries, inspection of the minute books of the Company and its
subsidiaries since the date of the latest audited financial statements included
in the Offering Memoranda, inquiries of officials of the Company and its
subsidiaries responsible for financial, internal audit and control and
accounting matters, and such other inquiries and procedures as may be specified
in such letter, nothing came to their attention that caused them to believe
that:
<PAGE>
(A) the unaudited consolidated statements of income, consolidated
balance sheets, consolidated statements of cash flows and consolidated
statement of stockholder equity included in the Offering Memoranda are not
in conformity with generally accepted accounting principles applied on a
basis consistent in all material respects with the basis for the audited
consolidated statements of income, consolidated balance sheets,
consolidated statements of cash flows and consolidated statements of
changes in equity included in the Offering Memoranda;
(B) any other unaudited income statement data and balance sheet
items included in the Offering Memoranda do not agree with the
corresponding items in the unaudited consolidated financial statements
from which such data and items were derived, and any such unaudited data
and items were not determined on a basis consistent in all material
respects with the basis for the corresponding amounts in the audited
consolidated financial statements included in the Offering Memoranda;
(C) the unaudited financial statements which were not included in
the Offering Memoranda but from which were derived any unaudited condensed
financial statements of the type referred to in clause (A) above and any
unaudited income statement data and balance sheet items included in the
Offering Memoranda and of the type referred to in clause (B) above were
not determined on a basis consistent in all material respects with the
basis for the audited consolidated financial statements included in the
Offering Memoranda;
(D) any unaudited pro forma consolidated condensed financial
statements included in the Offering Memoranda are not in conformity with
generally accepted accounting principles as described in the requirements
of Rule 11-02 of Regulation S-X or the pro forma adjustments with regard
to the Refinancing adjustments have not been properly applied to the
historical amounts in the compilation of those statements;
(E) as of a specified date disclosed in such letter, there have
been any changes in the consolidated capitalization (other than issuances
of capital stock upon the exercise of stock options and stock appreciation
rights, upon earn-outs of performance shares and upon conversions of
convertible securities,
<PAGE>
in each case which were outstanding on the date of the latest financial
statements included in the Offering Memoranda) or any increase in the
consolidated long-term indebtedness of the Company and its subsidiaries,
or any decreases in consolidated net current assets or net assets or other
items specified by the Representatives or any increases in any items
specified by the Representatives, in each case as compared with amounts
shown in the latest balance sheet included in the Offering Memoranda,
except in each case for changes, increases or decreases which the Offering
Memoranda discloses have occurred or may occur or which are described in
such letter; and
(F) for the period from the date of the latest financial statements
included in the Offering Memoranda to the specified date referred to in
clause (E) above there were any decreases in consolidated net revenues or
operating income or the total or per share amounts of consolidated net
income or other items specified by the Representatives, or any increases
in any items specified by the Representatives, in each case as compared
with the comparable period of the preceding year and with any other period
of corresponding length specified by the Representatives, except in each
case for decreases or increases which the Offering Memoranda discloses
have occurred or may occur or which are described in such letter; and
(v) In addition to the audit referred to in their report(s) included in
the Offering Memoranda and the aforementioned limited procedures, inspection of
minute books, inquiries and other procedures referred to in paragraphs (iii) and
(iv) above, they have carried out certain customary specified procedures, not
constituting an audit in accordance with generally accepted auditing standards,
with respect to certain amounts, percentages and financial information specified
by the Representatives, which are derived from the general accounting books and
records of the Company and its subsidiaries, which appear in the Offering
Memoranda, or in exhibits and schedules thereto specified by the
Representatives, and have compared certain of such amounts, percentages and
financial information with the accounting records of the Company and its
subsidiaries and have found them to be in agreement.
<PAGE>
EXHIBIT A
$375,000,000
CHARTER MEDICAL CORPORATION
11 1/4% Senior Subordinated Notes due 2004
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
April 22, 1994
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
BT Securities Corporation
130 Liberty Street
30th Floor
New York, New York 10006
Dear Sirs:
Charter Medical Corporation, a Delaware corporation (the "Company"),
proposes to issue and sell to Bear, Stearns & Co. Inc. and BT Securities
Corporation (the "Initial Purchasers"), upon the terms and subject to the
conditions set forth in the purchase agreement of even date and executed
concurrently herewith (the "Purchase Agreement"), $375,000,000 aggregate
principal amount of its 11 1/4% Senior Subordinated Notes due 2004 (the
"Notes"). The Notes will be issued pursuant to an indenture (the "Indenture") to
be dated as of the Closing Date, between the Company, the guarantors party
thereto (the "Guarantors") and Marine Midland Bank, as trustee (the "Trustee"),
in each case substantially in the form previously furnished to you. All
capitalized terms used and not defined herein have the respective meanings
ascribed thereto in the Purchase Agreement. As an inducement to you to enter
into the Purchase Agreement and in satisfaction of a condition to your
obligations thereunder, the Company agrees with you, for the benefit of the
holders of the Notes (including you as the Initial Purchasers thereof), as
follows:
A-1
<PAGE>
1. REGISTERED EXCHANGE OFFER.
(a) The Company shall prepare and, as soon as practicable after the
Closing Date, file with the Securities and Exchange Commission (the
"Commission") a registration statement (the "Exchange Registration Statement")
on an appropriate form under the Securities Act of 1933, as amended (the "Act"),
with respect to a proposed offer (the "Registered Exchange Offer") to the
holders of the Notes to issue and deliver to such holders, in exchange for the
Notes, a corresponding principal amount of senior subordinated debt securities
of the Company identical in all material respects (except with respect to
legends which restrict the transfer thereof) to the Notes (the "Exchange
Notes"), shall use its best efforts to cause the Exchange Registration Statement
to become effective under the Act no later than 90 days after the Closing Date
and, upon the effectiveness of such registration statement, shall commence the
Registered Exchange Offer and shall cause the same to remain open for acceptance
for not less than 20 business days (but in no event longer than 30 days after
the date the Exchange Registration Statement is declared effective subject to
any extensions required by applicable law), and to be conducted in accordance
with such procedures, as may be required by applicable provisions of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), including,
without limitation, the requirements of Rule 13e-4 (other than the filing
requirements of such Rule) and Regulation 14E under the Exchange Act; it being
the objective of such Registered Exchange Offer to enable each holder of Notes
electing to exchange its Notes for Exchange Notes (assuming that such holder is
not an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act, acquires the Exchange Notes in the ordinary course of such
holder's business and has no arrangements with any person to participate in a
public distribution of the Exchange Notes within the meaning of the Act) to
trade in such Exchange Notes from and after their receipt without any
limitations or restrictions on transfer under the Act or the Exchange Act and
without material restrictions on transfer under the securities and "Blue Sky"
laws of a substantial proportion of the several states of the United States.
The Initial Purchasers acknowledge and agree that the foregoing statement of the
objective of the Registered Exchange Offer is based upon existing
interpretations of the staff of the Commission's Division of Corporation Finance
(the "Staff"), which interpretations are subject to change without notice.
A-2
<PAGE>
(b) Subject to interpretations of the Staff then applicable, the
Company shall indicate in a "Plan of Distribution" section contained in the
final prospectus filed pursuant to Rule 424 under the Act and constituting a
part of the Exchange Registration Statement that any broker or dealer registered
as such under Section 15 of the Exchange Act (each a "Broker-Dealer") who holds
Notes that were acquired for its own account as a result of market-making or
other trading activities (other than Notes acquired directly from the Company),
may exchange such Notes for Exchange Notes pursuant to the Registered Exchange
Offer; PROVIDED, HOWEVER, that such Broker-Dealer may be deemed to be an
"underwriter" within the meaning of the Act and, therefore, must deliver a
prospectus satisfying the requirements of the Act in connection with any resales
of the Exchange Notes received by it in the Registered Exchange Offer, which
prospectus delivery requirement may be satisfied by the delivery by such
Broker-Dealer of the final prospectus contained in the Exchange Registration
Statement. Such "Plan of Distribution" section also shall state that the
delivery by a Broker-Dealer of the final prospectus relating to the Registered
Exchange Offer in connection with resales of Exchange Notes shall not be deemed
to be an admission by such Broker-Dealer that it is an "underwriter" within the
meaning of the Act, and shall contain all other information with respect to
resales of the Exchange Notes by Broker-Dealers that the Commission may require
in connection therewith, but such "Plan of Distribution" shall not name any such
Broker-Dealer or disclose the principal amount of Exchange Notes held by any
such Broker-Dealer, except to the extent required by the Staff as a result of a
change in its interpretations with respect thereto after the date of this
Agreement.
(c) In connection with the Registered Exchange Offer and the offer
and sale of Exchange Notes by Broker-Dealers as contemplated in Section 1(b)
above, the Company shall take all such other and further action, including
making appropriate filings under state securities and "Blue Sky" laws and
delivering such number of copies of the final prospectus relating to the
Registered Exchange Offer as any Broker-Dealer proposing to deliver the same in
connection with its resales of Exchange Notes reasonably may request, as may be
necessary to realize the foregoing objectives. The Company shall cause the
Exchange Registration Statement to remain current and continuously effective for
a period of 180 days from the date on which such registration statement is first
declared effective, and shall supplement or amend from time to time the
prospectus contained therein to the extent necessary to permit such prospectus
(as so
A-3
<PAGE>
supplemented or amended) to be delivered by Broker-Dealers in connection with
their resales of Exchange Notes as aforesaid.
2. SHELF REGISTRATION.
In the event that applicable interpretations of the Staff do not permit
the Company to effect the Registered Exchange Offer or if for any other reason
the Registered Exchange Offer is not consummated within 120 days after the
Closing Date, or if the Initial Purchasers so request with respect to Notes not
eligible to be exchanged for Exchange Notes in the Registered Exchange Offer or
if any holder of Notes determines that it is not eligible to participate in the
Registered Exchange Offer or does not receive freely tradeable Exchange Notes in
the Registered Exchange Offer and so requests, the following provisions shall
apply:
(a) The Company shall promptly file with the Commission and
thereafter shall use its best efforts to cause to be declared effective a
registration statement on an appropriate form under the Act relating to the
offer and sale of the Notes by the holders thereof from time to time in
accordance with the methods of distribution set forth in such registration
statement and Rule 415 under the Act (hereafter, a "Subordinated Notes Shelf
Registration Statement").
(b) The Company agrees to use its best efforts to keep the
Subordinated Notes Shelf Registration Statement current and continuously
effective in order to permit the prospectus included therein to be usable by the
holders of the Notes for a period of three years from the date such registration
statement is declared effective by the Commission or such shorter period that
shall terminate when all the Notes covered by the Subordinated Notes Shelf
Registration Statement have been sold pursuant thereto; PROVIDED that the
Company shall be deemed not to have used its best efforts to keep the
Subordinated Notes Shelf Registration Statement effective during the requisite
period if it voluntarily takes any action that would result in holders of the
Notes covered thereby not being able to offer and sell such Notes during that
period, unless such action is required by applicable law, and PROVIDED,
FURTHER, that the foregoing shall not apply to actions taken by the Company in
good faith and for valid business reasons (not including avoidance of the
Company's obligations hereunder), including, without limitation, the acquisition
or divestiture of a material portion of its assets, so long as the Company
promptly thereafter complies with the
A-4
<PAGE>
requirements of Section 3(i) hereof, if applicable. Any such period during
which the Company fails to keep the Subordinated Notes Shelf Registration
Statement effective and usable for offers and sales of Notes is hereafter
referred to as a "Suspension Period." A Suspension Period shall commence on and
include the date on which the Company provides notice that the Subordinated
Notes Shelf Registration Statement is no longer effective or that the prospectus
included therein is no longer usable for offers and sales of Notes and shall end
on the date when each seller of Notes covered by the Subordinated Notes Shelf
Registration Statement either receives the copies of the supplemented or amended
prospectus contemplated by Section 3(i) hereof or is advised in writing by the
Company that use of the prospectus may be resumed. If one or more Suspension
Periods occur, the three-year time period referenced above shall be extended by
a period which is not less than the aggregate number of days included in all
Suspension Periods.
(c) Notwithstanding any other provisions of this Agreement to the
contrary, the Company shall cause the Subordinated Notes Shelf Registration
Statement and the related prospectus and any amendment or supplement thereto, as
of the effective date of such registration statement, amendment or supplement,
(i) to comply in all material respects with the applicable requirements of the
Act and the rules and regulations of the Commission promulgated thereunder and
(ii) not to contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading.
3. REGISTRATION PROCEDURES. In connection with any Subordinated
Notes Shelf Registration Statement to be filed pursuant to Section 2 hereof,
and, to the extent applicable, any Exchange Offer Registration Statement
pursuant to Section 1 hereof, the following provisions shall apply:
(a) The Company shall furnish to you, prior to the filing thereof
with the Commission, a copy of the applicable registration statement and each
amendment thereof and each supplement, if any, to the prospectus included
therein and shall use its best efforts to reflect in each such document, when so
filed with the Commission, such comments as you reasonably may propose.
(b) The Company shall advise you and the holders of the Notes or
the Exchange Notes, and, if requested by you or any such holder, confirm such
advice in writing:
A-5
<PAGE>
(i) when the registration statement and any amendment thereto
has been filed with the Commission and when the registration
statement or any post-effective amendment thereto has become
effective;
(ii) of any request by the Commission for amendments or
supplements to the registration statement or the prospectus included
therein or for additional information (including schedules and
exhibits);
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement or the
initiation of any proceedings for that purpose;
(iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Notes or the
Exchange Notes for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and
(v) of the occurrence of any event that requires the making of
any changes in the registration statement or the prospectus
necessary in order to make the statements contained therein not
misleading (which advice shall be accompanied by an instruction to
suspend the use of the prospectus until the requisite changes have
been made).
(c) The Company shall use its best efforts to obtain the withdrawal
of any order suspending the effectiveness of the registration statement at the
earliest possible time.
(d) The Company shall furnish to each holder of the Notes or the
Exchange Notes included within the coverage of the Exchange Offer Registration
Statement or the Subordinated Notes Shelf Registration Statement, as the case
may be, without charge, at least one copy of the applicable registration
statement and any post-effective amendment thereto, including financial
statements and schedules, and, if the holder so requests in writing, all
exhibits (including those incorporated by reference).
(e) The Company shall deliver to each holder of Notes or Exchange
Notes included within the coverage of the
A-6
<PAGE>
Exchange Offer Registration Statement or the Subordinated Notes Shelf
Registration Statement, as the case may be, without charge, as many copies of
the prospectus (including each preliminary prospectus) included in the
registration statement and any amendment or supplement thereto as such persons
reasonably may request; the Company consents to the use of the prospectus or any
amendment or supplement thereto by each of the selling holders of the Notes or
the Exchange Notes in connection with the offering and sale of the Notes or the
Exchange Notes covered by the prospectus or any amendment or supplement thereto.
(f) Prior to any public distribution of the Notes or the Exchange
Notes pursuant to the Exchange Offer Registration Statement or the Subordinated
Notes Shelf Registration Statement, as the case may be, the Company shall
register or qualify or cooperate with the holders of the Notes or the Exchange
Notes included therein and their respective counsel in connection with the
registration or qualification of such Notes or Exchange Notes for offer and sale
under the securities or "Blue Sky" laws of such jurisdictions as any seller
reasonably requests in writing and shall do any and all other acts or things
necessary or advisable to enable the offer and sale in such jurisdictions of the
Notes or the Exchange Notes covered by the Registered Exchange Offer or the
Subordinated Notes Shelf Registration Statement, as the case may be; PROVIDED
that the Company shall not be required to qualify generally to conduct business
in any jurisdiction where it is not then so qualified or to post any bond or to
take any action which would subject it to general service of process or to
taxation in any such jurisdiction where it is not then so subject.
(g) The Company shall make available at reasonable times for
inspection by (i) each of the selling holders of the Notes or the Exchange Notes
included within the coverage of the Registered Exchange Offer or the
Subordinated Notes Shelf Registration Statement, as the case may be, (ii) any
underwriter participating in any distribution pursuant to the Registered
Exchange Offer or the Subordinated Notes Shelf Registration Statement, as the
case may be, and (iii) any attorney or accountant retained by such holder or
underwriter, all financial and other records, pertinent corporate documents and
properties of the Company, and shall cause the Company's officers, directors and
employees to supply all information reasonably requested by any such holder,
underwriter, attorney or accountant in connection with the Registered Exchange
Offer or the Subordinated Notes Shelf Registration Statement, as the case
A-7
<PAGE>
may be, subsequent to the filing thereof and prior to its effectiveness.
(h) The Company shall cooperate with the holders of the Notes or
the Exchange Notes to facilitate the timely preparation and delivery of
certificates evidencing the Notes or the Exchange Notes free of any restrictive
legends thereon and in such denominations and registered in such names as the
holders may request prior to sales of the Notes or the Exchange Notes pursuant
to the Exchange Offer Registration Statement or the Subordinated Notes Shelf
Registration Statement, as the case may be.
(i) Upon the occurrence of any event contemplated by paragraph
3(b)(v) above, the Company promptly shall prepare a post-effective amendment to
the applicable registration statement or a supplement to the related prospectus
and/or file any other required document so that, as thereafter delivered to
purchasers of the Notes or the Exchange Notes, the prospectus will not contain
an untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein not misleading.
(j) Not later than the effective date of the applicable
registration statement, the Company shall have obtained and shall communicate to
you a CUSIP number for the Notes or the Exchange Notes, as the case may be, and
provide the Trustee with printed certificates for the Notes or Exchange Notes,
as the case may be, in a form eligible for deposit with CEDE & Co. or an
otherwise eligible securities custodian, and trading through The Depositary
Trust Company book-entry transfer and delivery system.
(k) The Company shall use its best efforts to comply with all
applicable rules and regulations of the Commission and shall make generally
available to its security holders an earnings statement satisfying the
provisions of Section 11(a) of the Act, no later than 45 days after the end of a
12-month period (or 90 days, if such period is a fiscal year) beginning with the
first month of the Company's first fiscal quarter next following the effective
date of each of the Exchange Registration Statement or the Subordinated Notes
Shelf Registration Statement, which statements shall cover such 12-month period.
The Company may, at its option, satisfy such requirement by complying with Rule
158 under the Act.
(l) The Company shall cause the Indenture to be qualified under the
Trust Indenture Act of 1939, as amended.
A-8
<PAGE>
(m) The Company may require each holder of Notes to be sold
pursuant to the Subordinated Notes Shelf Registration Statement to furnish to
the Company such information regarding the holder and the intended method of
distribution by such holder of such Notes as the Company may from time to time
reasonably require for inclusion in such registration statement. The Company
may also require each such holder to provide to the Company an undertaking
confirming the holder's obligations to the Company pursuant to this Section
3(m), Section 3(n), Section 3(o) and Section 5(b) hereof.
(n) In the case of a Shelf Registration Statement, each holder
agrees that, upon receipt of any notice from the Company of the occurrence of
any event of the kind described in Section 3(b)(v) hereof, such holder shall
promptly discontinue any resale of the Notes pursuant to the Shelf Registration
Statement until such holder's receipt of the copies of the supplemented or
amended prospectus contemplated by Sections 3(d) and 3(e) hereof. If the
Company shall give any such notice to suspend any resale of Notes pursuant to
the Shelf Registration Statement, the Company shall extend the period during
which the Shelf Registration Statement shall be maintained effective pursuant to
this Agreement by the number of days during the period from and including the
date of the giving of such notice to and including the date when the holder
shall have received copies of the supplemented or amended prospectus necessary
to resume such dispositions.
(o) In case of an Exchange Offer Registration Statement, each
holder agrees that, prior to its exchange of Notes for Exchange Notes, it shall
make certain representations to the Company, including (i) any Exchange Notes to
be received by it will be acquired in the ordinary course of its business, (ii)
it has no arrangement with any person to participate in a public distribution
(within the meaning of the Act) of the Exchange Notes, and (iii) it is not an
"affiliate", as defined in Rule 405 of the Act, of the Company, or if it is such
an affiliate, that it shall comply with the registration and prospectus delivery
requirements of the Act to the extent applicable to it. In addition, each
holder who is not a Broker-Dealer shall represent that it is not engaged in, and
does not intend to engage in, a public distribution of the Exchange Notes.
4. REGISTRATION EXPENSES. The Company shall bear all expenses
incurred in connection with the performance of its obligations under Sections 1
through 3 hereof and, in the event of a Subordinated Notes Shelf Registration
A-9
<PAGE>
Statement, shall bear or reimburse the holders of the Notes for the reasonable
fees and disbursements of one firm of counsel designated by the holders of a
majority in principal amount of the Notes (outstanding within the meaning of the
Indenture) to act as counsel for all holders of the Notes in connection
therewith.
5. INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. In the event of a
Subordinated Notes Shelf Registration Statement, the Company agrees to indemnify
and hold harmless each holder of Notes and in the case of the Registered
Exchange Offer, the Company agrees to indemnify and hold harmless each
Broker-Dealer who holds Exchange Notes acquired for its own account pursuant to
the Exchange Offer, and, in each such case, agrees to further indemnify and hold
harmless such holder's or Broker-Dealer's officers, directors, employees and
agents and each person who controls such holder within the meaning of Section 15
of the Act or Section 20 of the Exchange Act (each such person being sometimes
hereafter referred to as an "Indemnified Holder") from and against any and all
losses, claims, damages, liabilities, awards and judgments (collectively,
"Losses") arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in any registration statement or
prospectus or in any amendment thereof or supplement thereto or in any
preliminary prospectus relating to the Subordinated Notes Shelf Registration
Statement, the Registered Exchange Offer or the delivery by Broker-Dealers who
are required to do so of the final prospectus contained in the Exchange
Registration Statement in connection with their resales of the Exchange Notes,
as the case may be, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, except insofar as such Losses are caused
by any such untrue statement or omission based upon information relating to such
holder furnished in writing to the Company by such holder expressly for use
therein and used in conformity therewith; PROVIDED, HOWEVER, that the
indemnity obligations of the Company arising under this Section 5(a) with
respect to the Subordinated Notes Shelf Registration Statement and Registered
Exchange Offer, shall not inure to your benefit or that of any such controlling
person if the person asserting any such Losses purchased the Notes or the
Exchange Notes from you and if a copy of the final prospectus contained in the
Subordinated Notes Shelf Registration Statement or Exchange Offer Registration
A-10
<PAGE>
Statement, as the case may be, was not sent or given by you or on your behalf to
such person at or prior to the written confirmation of the sale of the Notes or
the Exchange Notes to such person, and if such final prospectus would have cured
the defect giving rise to such Losses. This indemnity is and will be in
addition to any liability which the Company otherwise may have. The Company
also will indemnify underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the distribution, their
officers and directors and each person who controls such persons (within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act) to the same
extent as provided above with respect to the indemnification of the holders of
the Notes or the Exchange Notes, as the case may be, if so requested of the
Company.
In case any action shall be brought or asserted against an
Indemnified Holder in respect of which indemnity may be sought from the Company,
such Indemnified Holder shall promptly notify the Company in writing, and the
Company shall assume the defense thereof, including the employment of counsel
(reasonably satisfactory to such Indemnified Holder) and the payment of all fees
and expenses of such defense; PROVIDED, HOWEVER, that the failure to so
notify the Company shall not relieve the Company of its indemnification
obligations pursuant to this Section 5 except to the extent the Company is
materially prejudiced or forfeits substantive rights and defenses by reason of
such failure. Such Indemnified Holder shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Holder
unless (a) the employment of such counsel has been authorized in writing by the
Company or (b) the Company has failed promptly to assume the defense and to
employ counsel (reasonably satisfactory to such Indemnified Holder) or (c) the
named parties to any such action (including any impleaded parties) include both
such Indemnified Holder and the Company, and such Indemnified Holder shall have
been advised by such counsel that there may be one or more legal defenses
available to such Indemnified Holder which are different from or additional to
those available to the Company (in all of which cases the Company shall not have
the right to assume the defense of such action on behalf of such Indemnified
Holder; it being understood, however, that the Company shall not, in connection
with any one such action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm
A-11
<PAGE>
of attorneys (in addition to any local counsel) for such Indemnified Holder and
any other Indemnified Holders, which firm shall be designated in writing by such
Indemnified Holders and that all such fees and expenses shall be reimbursed as
they are billed). The Company shall not be liable for any settlement of any
such action effected without its written consent (not to be unreasonably
withheld) and if settled with its written consent, the Company agrees to
indemnify and hold harmless such Indemnified Holders from and against any loss
or liability by reason of such settlement. Without limiting the generality of
the foregoing, the Company shall not, without the prior written consent of the
Indemnified Holder, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Holder is a party where indemnity
could have been sought hereunder by such Indemnified Holder; PROVIDED,
HOWEVER, that the Company may effect such a settlement without the consent of
any Indemnified Holder if such settlement includes an unconditional release of
such Indemnified Holder from all liability for claims that are the subject
matter of such proceeding or the Company indemnifies the Indemnified Holder in
writing for an amount equal to the maximum liability for all such claims as
contemplated above.
(b) INDEMNIFICATION BY HOLDERS. In the event of a Subordinated
Notes Shelf Registration Statement, each holder of Notes agrees to indemnify and
hold harmless the Company, its directors and officers, employees and agents and
each person, if any, who controls the Company within the meaning of either
Section 15 of the Act or Section 20 of the Exchange Act from and against any and
all Losses to the same extent as the foregoing indemnity from the Company to
such holder, but only with respect to information relating to such holder or the
plan of distribution furnished in writing by such holder expressly for use in
any registration statement or prospectus or any amendment or supplement thereto
or any preliminary prospectus relating to the Subordinated Notes Shelf
Registration Statement; PROVIDED, HOWEVER, that no such holder shall be
liable for any indemnity claims hereunder in excess of the amount of net
proceeds received by such holder from the sale of Notes pursuant to the
Subordinated Notes Shelf Registration Statement. In case any action shall be
brought against the Company or its directors, officers, employees or agents or
any such controlling person, in respect of which indemnity may be sought against
a holder of Notes, such holder shall have the rights and duties given to the
Company, and the Company or its directors, officers, employees or agents or such
controlling person shall have the same rights and
A-12
<PAGE>
duties given to each holder by Section 5(a) hereof. The Company shall be
entitled to receive indemnification from underwriters, selling brokers, dealer
managers and similar securities industry professionals participating in the
distribution, to the same extent as provided above with respect to information
so furnished in writing by such persons specifically for inclusion in any
prospectus or registration statement or any amendment or supplement thereto or
any preliminary prospectus.
(c) CONTRIBUTION. If the indemnification provided for in this
Section 5 is unavailable or otherwise insufficient to hold harmless an
indemnified party under Section 5(a) or Section 5(b) hereof (other than by
reason of exceptions provided in those Sections) in respect of any Losses, then
each applicable indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such Losses (i) in such proportion as is appropriate to reflect
the relative benefits received by the Company on the one hand, and the
Indemnified Holder on the other hand or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company and the Indemnified Holder in
connection with the statements or omissions which resulted in such Losses, as
well as any other relevant equitable considerations. The relative fault of the
Company and of the Indemnified Holder shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Indemnified Holder and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Company and you, on behalf of the holders of the Notes and the
Exchange Notes, agree that it would not be just and equitable if contribution
pursuant to this Section 5(c) were determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by a party as a result of the Losses shall be deemed to include,
subject to the limitations set forth in the second paragraph of Section 5(a),
any legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any action or claim. No person
guilty of fraudulent misrepresentation (within the meaning
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<PAGE>
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
6. ADDITIONAL INTEREST UNDER CERTAIN CIRCUMSTANCES; REMEDIES. In
the event that (i) the Exchange Registration Statement is not filed with the
Commission on or prior to June 30, 1994, or (ii) the Registered Exchange Offer
is not consummated pursuant to its terms or the Subordinated Notes Shelf
Registration Statement is not declared effective on or prior to August 31, 1994,
the interest rate borne by the Notes shall be increased by 50 basis points per
annum following such June 30, 1994 date in the case of clause (i) above, or such
August 31, 1994 date in the case of clause (ii) above. Such interest rate shall
increase by an additional 25 basis points per annum at the beginning of each
subsequent 30-day period in the case of clause (i) above (commencing with the
period beginning on July 1, 1994), or 60-day period in the case of clause (ii)
above (commencing with the period beginning on September 1, 1994), up to a
maximum aggregate increase of 150 basis points per annum. Upon (x) the filing
of the Exchange Offer Registration Statement in the case of clause (i) above,
or (y) the consummation of the Registered Exchange Offer or the effectiveness of
the Subordinated Notes Shelf Registration Statement in the case of clause (ii)
above, the interest rate borne by the Notes shall be reduced from and including
the date on which any of the events specified in clause (x) or (y) occur by the
amount of any increase in such rate (by reason of this Section 6) from the
interest rate of the Notes existing on the date of original issuance thereof.
For all purposes of this Section 6, interest on the Notes shall
accrue and be calculated on the basis of a 360-day year comprised of twelve,
30-day months.
7. MISCELLANEOUS.
(a) AMENDMENTS AND WAIVERS. The provisions of this Agreement may
not be amended, modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given, unless the Company has obtained the
written consent from the holders of a majority in outstanding principal amount
of the Notes (insofar as such matters relate to the Notes) or the Exchange Notes
(insofar as such matters relate to the Exchange Notes).
(b) NOTICES. All notices and other communications provided for
or permitted hereunder shall be
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<PAGE>
made in writing by hand-delivery, first-class mail, telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a holder of Notes or Exchange Notes, at the most
current address given by such holder to the Company in accordance
with the provisions of this Section 7(b), which address initially
is, with respect to each holder, the address of such holder to which
confirmation of the sale of Notes was first sent by you, with a copy
in like manner to you at your address first above written,
Attention: Corporate Finance Department, in the case of Bear,
Stearns & Co. Inc. and Attention: Corporate Finance Department, in
the case of BT Securities Corporation;
(ii) if to you, to your address first above written,
Attention: Corporate Finance Department, in the case of Bear,
Stearns & Co. Inc. and Attention: Corporate Finance Department, in
the case of BT Securities Corporation; and
(iii) if to the Company, initially at its address set forth
in the Purchase Agreement.
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt acknowledged by recipient's
telecopy operator, if telecopied; and on the day delivered, if sent by overnight
air courier guaranteeing next day delivery.
(c) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including, without limitation, and without the need for an express
assignment, subsequent holders of the Notes.
(d) COUNTERPARTS. This agreement may be executed in
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute but one and the same agreement.
(e) HEADINGS. The headings in this agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
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<PAGE>
(f) GOVERNING LAW. This agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
instruments made and performed wholly in such state but without regard to the
conflicts of laws provisions thereof.
(g) SEVERABILITY. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.
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<PAGE>
Please confirm that the foregoing correctly sets forth the mutual
agreement and understanding between the Company and you with respect to the
subject matter hereof.
Very truly yours,
CHARTER MEDICAL CORPORATION
By: /S/ Lawrence W. Drinkard
------------------------------------
Lawrence W. Drinkard
Executive Vice President
Accepted in New York, New York
April 22, 1994
BEAR, STEARNS & CO. INC.
By: /S/ Curtis S. Lane
-------------------------------
Name: Curtis S. Lane
Title: Senior Managing Director
BT SECURITIES CORPORATION
By: /S/ Edmund H. Driggs
-------------------------------
Name: Edmund H. Driggs
Title: Managing Director
<PAGE>
$375,000,000
CHARTER MEDICAL CORPORATION
11 1/4% Senior Subordinated Notes due 2004
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
April 22, 1994
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
BT Securities Corporation
130 Liberty Street
30th Floor
New York, New York 10006
Dear Sirs:
Charter Medical Corporation, a Delaware corporation (the "Company"),
proposes to issue and sell to Bear, Stearns & Co. Inc. and BT Securities
Corporation (the "Initial Purchasers"), upon the terms and subject to the
conditions set forth in the purchase agreement of even date and executed
concurrently herewith (the "Purchase Agreement"), $375,000,000 aggregate
principal amount of its 11 1/4% Senior Subordinated Notes due 2004 (the
"Notes"). The Notes will be issued pursuant to an indenture (the "Indenture")
to be dated as of the Closing Date, between the Company, the guarantors party
thereto (the "Guarantors") and Marine Midland Bank, as trustee (the "Trustee"),
in each case substantially in the form previously furnished to you. All
capitalized terms used and not defined herein have the respective meanings
ascribed thereto in the Purchase Agreement. As an inducement to you to enter
into the Purchase Agreement and in satisfaction of a condition to your
obligations thereunder, the Company agrees with you, for the benefit of the
holders of the Notes (including you as the Initial Purchasers thereof), as
follows:
<PAGE>
1. REGISTERED EXCHANGE OFFER.
(a) The Company shall prepare and, as soon as practicable after the
Closing Date, file with the Securities and Exchange Commission (the
"Commission") a registration statement (the "Exchange Registration Statement")
on an appropriate form under the Securities Act of 1933, as amended (the "Act"),
with respect to a proposed offer (the "Registered Exchange Offer") to the
holders of the Notes to issue and deliver to such holders, in exchange for the
Notes, a corresponding principal amount of senior subordinated debt securities
of the Company identical in all material respects (except with respect to
legends which restrict the transfer thereof) to the Notes (the "Exchange
Notes"), shall use its best efforts to cause the Exchange Registration Statement
to become effective under the Act no later than 90 days after the Closing Date
and, upon the effectiveness of such registration statement, shall commence the
Registered Exchange Offer and shall cause the same to remain open for acceptance
for not less than 20 business days (but in no event longer than 30 days after
the date the Exchange Registration Statement is declared effective subject to
any extensions required by applicable law), and to be conducted in accordance
with such procedures, as may be required by applicable provisions of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), including,
without limitation, the requirements of Rule 13e-4 (other than the filing
requirements of such Rule) and Regulation 14E under the Exchange Act; it being
the objective of such Registered Exchange Offer to enable each holder of Notes
electing to exchange its Notes for Exchange Notes (assuming that such holder is
not an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act, acquires the Exchange Notes in the ordinary course of such
holder's business and has no arrangements with any person to participate in a
public distribution of the Exchange Notes within the meaning of the Act) to
trade in such Exchange Notes from and after their receipt without any
limitations or restrictions on transfer under the Act or the Exchange Act and
without material restrictions on transfer under the securities and "Blue Sky"
laws of a substantial proportion of the several states of the United States.
The Initial Purchasers acknowledge and agree that the foregoing statement of the
objective of the Registered Exchange Offer is based upon existing
interpretations of the staff of the Commission's Division of Corporation Finance
(the "Staff"), which interpretations are subject to change without notice.
2
<PAGE>
(b) Subject to interpretations of the Staff then applicable, the
Company shall indicate in a "Plan of Distribution" section contained in the
final prospectus filed pursuant to Rule 424 under the Act and constituting a
part of the Exchange Registration Statement that any broker or dealer registered
as such under Section 15 of the Exchange Act (each a "Broker-Dealer") who holds
Notes that were acquired for its own account as a result of market-making or
other trading activities (other than Notes acquired directly from the Company),
may exchange such Notes for Exchange Notes pursuant to the Registered Exchange
Offer; PROVIDED, HOWEVER, that such Broker-Dealer may be deemed to be an
"underwriter" within the meaning of the Act and, therefore, must deliver a
prospectus satisfying the requirements of the Act in connection with any resales
of the Exchange Notes received by it in the Registered Exchange Offer, which
prospectus delivery requirement may be satisfied by the delivery by such Broker-
Dealer of the final prospectus contained in the Exchange Registration Statement.
Such "Plan of Distribution" section also shall state that the delivery by a
Broker-Dealer of the final prospectus relating to the Registered Exchange Offer
in connection with resales of Exchange Notes shall not be deemed to be an
admission by such Broker-Dealer that it is an "underwriter" within the meaning
of the Act, and shall contain all other information with respect to resales of
the Exchange Notes by Broker-Dealers that the Commission may require in
connection therewith, but such "Plan of Distribution" shall not name any such
Broker-Dealer or disclose the principal amount of Exchange Notes held by any
such Broker-Dealer, except to the extent required by the Staff as a result of a
change in its interpretations with respect thereto after the date of this
Agreement.
(c) In connection with the Registered Exchange Offer and the offer
and sale of Exchange Notes by Broker-Dealers as contemplated in Section 1(b)
above, the Company shall take all such other and further action, including
making appropriate filings under state securities and "Blue Sky" laws and
delivering such number of copies of the final prospectus relating to the
Registered Exchange Offer as any Broker-Dealer proposing to deliver the same in
connection with its resales of Exchange Notes reasonably may request, as may be
necessary to realize the foregoing objectives. The Company shall cause the
Exchange Registration Statement to remain current and continuously effective for
a period of 180 days from the date on which such registration statement is first
declared effective, and shall supplement or amend from time to time the
prospectus contained therein to the
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<PAGE>
extent necessary to permit such prospectus (as so supplemented or amended) to be
delivered by Broker-Dealers in connection with their resales of Exchange Notes
as aforesaid.
2. SHELF REGISTRATION.
In the event that applicable interpretations of the Staff do not permit the
Company to effect the Registered Exchange Offer or if for any other reason the
Registered Exchange Offer is not consummated within 120 days after the Closing
Date, or if the Initial Purchasers so request with respect to Notes not eligible
to be exchanged for Exchange Notes in the Registered Exchange Offer or if any
holder of Notes determines that it is not eligible to participate in the
Registered Exchange Offer or does not receive freely tradeable Exchange Notes in
the Registered Exchange Offer and so requests, the following provisions shall
apply:
(a) The Company shall promptly file with the Commission and
thereafter shall use its best efforts to cause to be declared effective a
registration statement on an appropriate form under the Act relating to the
offer and sale of the Notes by the holders thereof from time to time in
accordance with the methods of distribution set forth in such registration
statement and Rule 415 under the Act (hereafter, a "Subordinated Notes Shelf
Registration Statement").
(b) The Company agrees to use its best efforts to keep the
Subordinated Notes Shelf Registration Statement current and continuously
effective in order to permit the prospectus included therein to be usable by the
holders of the Notes for a period of three years from the date such registration
statement is declared effective by the Commission or such shorter period that
shall terminate when all the Notes covered by the Subordinated Notes Shelf
Registration Statement have been sold pursuant thereto; PROVIDED that the
Company shall be deemed not to have used its best efforts to keep the
Subordinated Notes Shelf Registration Statement effective during the requisite
period if it voluntarily takes any action that would result in holders of the
Notes covered thereby not being able to offer and sell such Notes during that
period, unless such action is required by applicable law, and PROVIDED, FURTHER,
that the foregoing shall not apply to actions taken by the Company in good faith
and for valid business reasons (not including avoidance of the Company's
obligations hereunder), including, without limitation, the acquisition or
4
<PAGE>
divestiture of a material portion of its assets, so long as the Company promptly
thereafter complies with the requirements of Section 3(i) hereof, if applicable.
Any such period during which the Company fails to keep the Subordinated Notes
Shelf Registration Statement effective and usable for offers and sales of Notes
is hereafter referred to as a "Suspension Period." A Suspension Period shall
commence on and include the date on which the Company provides notice that the
Subordinated Notes Shelf Registration Statement is no longer effective or that
the prospectus included therein is no longer usable for offers and sales of
Notes and shall end on the date when each seller of Notes covered by the
Subordinated Notes Shelf Registration Statement either receives the copies of
the supplemented or amended prospectus contemplated by Section 3(i) hereof or is
advised in writing by the Company that use of the prospectus may be resumed. If
one or more Suspension Periods occur, the three-year time period referenced
above shall be extended by a period which is not less than the aggregate number
of days included in all Suspension Periods.
(c) Notwithstanding any other provisions of this Agreement to the
contrary, the Company shall cause the Subordinated Notes Shelf Registration
Statement and the related prospectus and any amendment or supplement thereto, as
of the effective date of such registration statement, amendment or supplement,
(i) to comply in all material respects with the applicable requirements of the
Act and the rules and regulations of the Commission promulgated thereunder and
(ii) not to contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading.
3. REGISTRATION PROCEDURES. In connection with any Subordinated
Notes Shelf Registration Statement to be filed pursuant to Section 2 hereof,
and, to the extent applicable, any Exchange Offer Registration Statement
pursuant to Section 1 hereof, the following provisions shall apply:
(a) The Company shall furnish to you, prior to the filing thereof
with the Commission, a copy of the applicable registration statement and each
amendment thereof and each supplement, if any, to the prospectus included
therein and shall use its best efforts to reflect in each such document, when so
filed with the Commission, such comments as you reasonably may propose.
5
<PAGE>
(b) The Company shall advise you and the holders of the Notes or the
Exchange Notes, and, if requested by you or any such holder, confirm such advice
in writing:
(i) when the registration statement and any amendment thereto
has been filed with the Commission and when the registration statement
or any post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or
supplements to the registration statement or the prospectus included
therein or for additional information (including schedules and
exhibits);
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement or the
initiation of any proceedings for that purpose;
(iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Notes or the
Exchange Notes for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and
(v) of the occurrence of any event that requires the making of
any changes in the registration statement or the prospectus necessary
in order to make the statements contained therein not misleading
(which advice shall be accompanied by an instruction to suspend the
use of the prospectus until the requisite changes have been made).
(c) The Company shall use its best efforts to obtain the withdrawal
of any order suspending the effectiveness of the registration statement at the
earliest possible time.
(d) The Company shall furnish to each holder of the Notes or the
Exchange Notes included within the coverage of the Exchange Offer Registration
Statement or the Subordinated Notes Shelf Registration Statement, as the case
may be, without charge, at least one copy of the applicable registration
statement and any post-effective amendment thereto, including financial
statements and schedules, and,
6
<PAGE>
if the holder so requests in writing, all exhibits (including those incorporated
by reference).
(e) The Company shall deliver to each holder of Notes or Exchange
Notes included within the coverage of the Exchange Offer Registration Statement
or the Subordinated Notes Shelf Registration Statement, as the case may be,
without charge, as many copies of the prospectus (including each preliminary
prospectus) included in the registration statement and any amendment or
supplement thereto as such persons reasonably may request; the Company consents
to the use of the prospectus or any amendment or supplement thereto by each of
the selling holders of the Notes or the Exchange Notes in connection with the
offering and sale of the Notes or the Exchange Notes covered by the prospectus
of any amendment or supplement thereto.
(f) Prior to any public distribution of the Notes or the Exchange
Notes pursuant to the Exchange Offer Registration Statement or the Subordinated
Notes Shelf Registration Statement, as the case may be, the Company shall
register or qualify or cooperate with the holders of the Notes or the Exchange
Notes included therein and their respective counsel in connection with the
registration or qualification of such Notes or Exchange Notes for offer and sale
under the securities or "Blue Sky" laws of such jurisdictions as any seller
reasonably requests in writing and shall do any and all other acts or things
necessary or advisable to enable the offer and sale in such jurisdictions of the
Notes or the Exchange Notes covered by the Registered Exchange Offer or the
Subordinated Notes Shelf Registration Statement, as the case may be; PROVIDED
that the Company shall not be required to qualify generally to conduct business
in any jurisdiction where it is not then so qualified or to post any bond or to
take any action which would subject it to general service of process or to
taxation in any such jurisdiction where it is not then so subject.
(g) The Company shall make available at reasonable times for
inspection by (i) each of the selling holders of the Notes or the Exchange
Notes included within the coverage of the Registered Exchange Offer or the
Subordinated Notes Shelf Registration Statement, as the case may be, (ii) any
underwriter participating in any distribution pursuant to the Registered
Exchange Offer or the Subordinated Notes Shelf Registration Statement, as the
case may be, and (iii) any attorney or accountant retained by such holder or
underwriter, all financial and other
7
<PAGE>
records, pertinent corporate documents and properties of the Company, and shall
cause the Company's officers, directors and employees to supply all information
reasonably requested by any such holder, underwriter, attorney or accountant in
connection with the Registered Exchange Offer or the Subordinated Notes Shelf
Registration Statement, as the case may be, subsequent to the filing thereof and
prior to its effectiveness.
(h) The Company shall cooperate with the holders of the Notes or the
Exchange Notes to facilitate the timely preparation and delivery of certificates
evidencing the Notes or the Exchange Notes free of any restrictive legends
thereon and in such denominations and registered in such names as the holders
may request prior to sales of the Notes or the Exchange Notes pursuant to the
Exchange Offer Registration Statement or the Subordinated Notes Shelf
Registration Statement, as the case may be.
(i) Upon the occurrence of any event contemplated by paragraph
3(b)(v) above, the Company promptly shall prepare a post-effective amendment to
the applicable registration statement or a supplement to the related prospectus
and/or file any other required document so that, as thereafter delivered to
purchasers of the Notes or the Exchange Notes, the prospectus will not contain
an untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein not misleading.
(j) Not later than the effective date of the applicable registration
statement, the Company shall have obtained and shall communicate to you a CUSIP
number for the Notes or the Exchange Notes, as the case may be, and provide the
Trustee with printed certificates for the Notes or Exchange Notes, as the case
may be, in a form eligible for deposit with CEDE & Co. or an otherwise eligible
securities custodian, and trading through The Depositary Trust Company
book-entry transfer and delivery system.
(k) The Company shall use its best efforts to comply with all
applicable rules and regulations of the Commission and shall make generally
available to its security holders an earnings statement satisfying the
provisions of Section 11(a) of the Act, no later than 45 days after the end of a
12-month period (or 90 days, if such period is a fiscal year) beginning with the
first month of the Company's first fiscal quarter next following the effective
date of each of the Exchange Registration
8
<PAGE>
Statement or the Subordinated Notes Shelf Registration Statement, which
statements shall cover such 12-month period. The Company may, at its option,
satisfy such requirement by complying with Rule 158 under the Act.
(l) The Company shall cause the Indenture to be qualified under the
Trust Indenture Act of 1939, as amended.
(m) The Company may require each holder of Notes to be sold pursuant
to the Subordinated Notes Shelf Registration Statement to furnish to the Company
such information regarding the holder and the intended method of distribution by
such holder of such Notes as the Company may from time to time reasonably
require for inclusion in such registration statement. The Company may also
require each such holder to provide to the Company an undertaking confirming the
holder's obligations to the Company pursuant to this Section 3(m), Section 3(n),
Section 3(o) and Section 5(b) hereof.
(n) In the case of a Shelf Registration Statement, each holder agrees
that, upon receipt of any notice from the Company of the occurrence of any event
of the kind described in Section 3(b)(v) hereof, such holder shall promptly
discontinue any resale of the Notes pursuant to the Shelf Registration Statement
until such holder's receipt of the copies of the supplemented or amended
prospectus contemplated by Sections 3(d) and 3(e) hereof. If the Company shall
give any such notice to suspend any resale of Notes pursuant to the Shelf
Registration Statement, the Company shall extend the period during which the
Shelf Registration Statement shall be maintained effective pursuant to this
Agreement by the number of days during the period from and including the date of
the giving of such notice to and including the date when the holder shall have
received copies of the supplemented or amended prospectus necessary to resume
such dispositions.
(o) In case of an Exchange Offer Registration Statement, each holder
agrees that, prior to its exchange of Notes for Exchange Notes, it shall make
certain representations to the Company, including (i) any Exchange Notes to be
received by it will be acquired in the ordinary course of its business, (ii) it
has no arrangement with any person to participate in a public distribution
(within the meaning of the Act) of the Exchange Notes, and (iii) it is not an
"affiliate", as defined in Rule 405 of the Act, of the Company, or if it is
such an affiliate, that it shall comply with the registration and prospectus
delivery
9
<PAGE>
requirements of the Act to the extent applicable to it. In addition, each
holder who is not a Broker-Dealer shall represent that it is not engaged in, and
does not intend to engage in, a public distribution of the Exchange Notes.
4. REGISTRATION EXPENSES. The Company shall bear all expenses
incurred in connection with the performance of its obligations under Sections 1
through 3 hereof and, in the event of a Subordinated Notes Shelf Registration
Statement, shall bear or reimburse the holders of the Notes for the reasonable
fees and disbursements of one firm of counsel designated by the holders of a
majority in principal amount of the Notes (outstanding within the meaning of the
Indenture) to act as counsel for all holders of the Notes in connection
therewith.
5. INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. In the event of a Subordinated
Notes Shelf Registration Statement, the Company agrees to indemnify and hold
harmless each holder of Notes and in the case of the Registered Exchange Offer,
the Company agrees to indemnify and hold harmless each Broker-Dealer who holds
Exchange Notes acquired for its own account pursuant to the Exchange Offer, and,
in each such case, agrees to further indemnify and hold harmless such holder's
or Broker-Dealer's officers, directors, employees and agents and each person who
controls such holder within the meaning of Section 15 of the Act or Section 20
of the Exchange Act (each such person being sometimes hereafter referred to as
an "Indemnified Holder") from and against any and all losses, claims, damages,
liabilities, awards and judgments (collectively, "Losses") arising out of or
based upon any untrue statement or alleged untrue statement of a material fact
contained in any registration statement or prospectus or in any amendment
thereof or supplement thereto or in any preliminary prospectus relating to the
Subordinated Notes Shelf Registration Statement, the Registered Exchange Offer
or the delivery by Broker-Dealers who are required to do so of the final
prospectus contained in the Exchange Registration Statement in connection with
their resales of the Exchange Notes, as the case may be, or arising out of or
based upon any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
insofar as such Losses are caused by any such untrue statement or omission based
upon information relating to such holder furnished in writing to the Company
10
<PAGE>
by such holder expressly for use therein and used in conformity therewith;
PROVIDED, HOWEVER, that the indemnity obligations of the Company arising under
this Section 5(a) with respect to the Subordinated Notes Shelf Registration
Statement and Registered Exchange Offer, shall no inure to your benefit or that
of any such controlling person if the person asserting any such Losses purchased
the Notes or the Exchange Notes from you and if a copy of the final prospectus
contained in the Subordinated Notes Shelf Registration Statement or Exchange
Offer Registration Statement, as the case may be, was not sent or given by you
or on your behalf to such person at or prior to the written confirmation of the
sale of the Notes or the Exchange Notes to such person, and if such final
prospectus would have cured the defect giving rise to such Losses. This
indemnity is and will be in addition to any liability which the Company
otherwise may have. The Company also will indemnify underwriters, selling
brokers, dealer managers and similar securities industry professionals
participating in the distribution, their officers and directors and each person
who controls such persons (within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act) to the same extent as provided above with
respect to the indemnification of the holders of the Notes or the Exchange
Notes, as the case may be, if so requested of the Company.
In case any action shall be brought or asserted against an Indemnified
Holder in respect of which indemnity may be sought from the Company, such
Indemnified Holder shall promptly notify the Company in writing, and the Company
shall assume the defense thereof, including the employment of counsel
(reasonably satisfactory to such Indemnified Holder) and the payment of all fees
and expenses of such defense; PROVIDED, HOWEVER, that the failure to so notify
the Company shall not relieve the Company of its indemnification obligations
pursuant to this Section 5 except to the extent the Company is materially
prejudiced or forfeits substantive rights and defenses by reason of such
failure. Such Indemnified Holder shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Holder
unless (a) the employment of such counsel has been authorized in writing by the
Company or (b) the Company has failed promptly to assume the defense and to
employ counsel (reasonably satisfactory to such Indemnified Holder) or (c) the
named parties to any such action (including any impleaded parties) include both
such Indemnified Holder and the Company, and such Indemnified Holder shall have
been
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<PAGE>
advised by such counsel that there may be one or more legal defenses available
to such Indemnified Holder which are different from or additional to those
available to the Company (in all of which cases the Company shall not have the
right to assume the defense of such action on behalf of such Indemnified Holder;
it being understood, however, that the Company shall not, in connection with any
one such action or separate but substantially similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances,
be liable for the reasonable fees and expenses of more than one separate firm of
attorneys (in addition to any local counsel) for such Indemnified Holder and any
other Indemnified Holders, which firm shall be designated in writing by such
Indemnified Holders and that all such fees and expenses shall be reimbursed as
they are billed). The Company shall not be liable for any settlement of any
such action effected without its written consent (not to be unreasonably
withheld) and if settled with its written consent, the Company agrees to
indemnify and hold harmless such Indemnified Holders from and against any loss
or liability by reason of such settlement. Without limiting the generality of
the foregoing, the Company shall not, without the prior written consent of the
Indemnified Holder, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Holder is a party where indemnity
could have been sought hereunder by such Indemnified Holder; PROVIDED, HOWEVER,
that the Company may effect such a settlement without the consent of any
Indemnified Holder if such settlement includes an unconditional release of such
Indemnified Holder from all liability for claims that are the subject matter of
such proceeding or the Company indemnifies the Indemnified Holder in writing for
an amount equal to the maximum liability for all such claims as contemplated
above.
(b) INDEMNIFICATION BY HOLDERS. In the event of a Subordinated Notes
Shelf Registration Statement, each holder of Notes agrees to indemnify and hold
harmless the Company, its directors and officers, employees and agents and each
person, if any, who controls the Company within the meaning of either Section 15
of the Act or Section 20 of the Exchange Act from and against any and all Losses
to the same extent as the foregoing indemnity from the Company to such holder,
but only with respect to information relating to such holder or the plan of
distribution furnished in writing by such holder expressly for use in any
registration statement or prospectus or any amendment or supplement thereto or
any preliminary prospectus relating to the
12
<PAGE>
Subordinated Notes Shelf Registration Statement; PROVIDED, HOWEVER, that no such
holder shall be liable for any indemnity claims hereunder in excess of the
amount of net proceeds received by such holder from the sale of Notes pursuant
to the Subordinated Notes Shelf Registration Statement. In case any action
shall be brought against the Company or its directors, officers, employees or
agents or any such controlling person, in respect of which indemnity may be
sought against a holder of Notes, such holder shall have the rights and duties
given to the Company, and the Company or its directors, officers, employees or
agents or such controlling person shall have the same rights and duties given to
each holder by Section 5(a) hereof. The Company shall be entitled to receive
indemnification from underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the distribution, to the same
extent as provided above with respect to information so furnished in writing by
such persons specifically for inclusion in any prospectus or registration
statement or any amendment or supplement thereto or any preliminary prospectus.
(c) CONTRIBUTION. If the indemnification provided for in this
Section 5 is unavailable or otherwise insufficient to hold harmless an
indemnified party under Section 5(a) or Section 5(b) hereof (other than by
reason of exceptions provided in those Sections) in respect of any Losses, then
each applicable indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such Losses (i) in such proportion as is appropriate to reflect
the relative benefits received by the Company on the one hand, and the
Indemnified Holder on the other hand or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company and the Indemnified Holder in
connection with the statements or omissions which resulted in such Losses, as
well as any other relevant equitable considerations. The relative fault of the
Company and of the Indemnified Holder shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Indemnified Holder and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
13
<PAGE>
The Company and you, on behalf of the holders of the Notes and the
Exchange Notes, agree that it would not be just and equitable if contribution
pursuant to this Section 5(c) were determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by a party as a result of the Losses shall be deemed to include,
subject to the limitations set forth in the second paragraph of Section 5(a),
any legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any action or claim. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
6. ADDITIONAL INTEREST UNDER CERTAIN CIRCUMSTANCES; REMEDIES. In
the event that (i) the Exchange Registration Statement is not filed with the
Commission on or prior to June 30, 1994, or (ii) the Registered Exchange Offer
is not consummated pursuant to its terms or the Subordinated Notes Shelf
Registration Statement is not declared effective on or prior to August 31, 1994,
the interest rate borne by the Notes shall be increased by 50 basis points per
annum following such June 30, 1994 date in the case of clause (i) above, or
such August 31, 1994 date in the case of clause (ii) above. Such interest rate
shall increase by an additional 25 basis points per annum at the beginning of
each subsequent 30-day period in the case of clause (i) above (commencing with
the period beginning on July 1, 1994), or 60-day period in the case of clause
(ii) above (commencing with the period beginning on September 1,1994), up to a
maximum aggregate increase of 150 basis points per annum. Upon (x) the filing
of the Exchange Offer Registration Statement in the case of clause (i) above, or
(y) the consummation of the Registered Exchange Offer or the effectiveness of
the Subordinated Notes Shelf Registration Statement in the case of clause (ii)
above, the interest rate borne by the Notes shall be reduced from and including
the date on which any of the events specified in clause (x) or (y) occur by the
amount of any increase in such rate (by reason of this Section 6) from the
interest rate of the Notes existing on the date of original issuance thereof.
For all purposes of this Section 6, interest on the Notes shall accrue
and be calculated on the basis of a 360-day year comprised of twelve, 30-day
months.
14
<PAGE>
7. MISCELLANEOUS
(a) AMENDMENTS AND WAIVERS. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, unless the Company has obtained the
written consent from the holders of a majority in outstanding principal amount
of the Notes (insofar as such matters relate to the Notes) or the Exchange Notes
(insofar as such matters relate to the Exchange Notes).
(b) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telex, telecopier, or air courier guaranteeing overnight delivery;
(i) if to a holder of Notes or Exchange Notes, at the most
current address given by such holder to the Company in accordance with
the provisions of this Section 7(b), which address initially is, with
respect to each holder, the address of such holder to which
confirmation of the sale of Notes was first sent by you, with a copy
in like manner to you at your address first above written, Attention:
Corporate Finance Department, in the case of Bear, Stearns & Co. Inc.
and Attention: Corporate Finance Department, in the case of BT
Securities Corporation;
(ii) if to you, to your address first above written, Attention:
Corporate Finance Department, in the case of Bear, Stearns & Co. Inc.
and Attention: Corporate Finance Department, in the case of BT
Securities Corporation; and
(iii) if to the Company, initially at its address set forth in
the Purchase Agreement.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged by recipient's telecopy
operator, if telecopied; and on the day delivered, if sent by overnight air
courier guaranteeing next day delivery.
(c) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors
15
<PAGE>
and assigns of each of the parties, including, without limitation, and without
the need for an express assignment, subsequent holders of the Notes.
(d) COUNTERPARTS. This agreement may be executed in counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute but one and the same agreement.
(e) HEADINGS. The headings in this agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(f) GOVERNING LAW. This agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable to instruments
made and performed wholly in such state but without regard to the conflicts of
laws provisions thereof.
(g) SEVERABILITY. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.
16
<PAGE>
Please confirm that the foregoing correctly sets forth the mutual
agreement and understanding between the Company and you as to the subject matter
herein set forth.
Very truly yours,
CHARTER MEDICAL CORPORATION
By: /s/ Lawrence W. Drinkard
-----------------------------------
Lawrence W. Drinkard
Executive Vice President
Accepted in New York, New York
April 22, 1994
BEAR, STEARNS & CO. INC.
By: /s/ Curtis S. Lane
------------------------------
Name: Curtis S. Lane
Title: Senior Managing Director
BT SECURITIES CORPORATION
By: /s/ Edmund H. Driggs
------------------------------
Name: Edmund H. Driggs
Title: Managing Director
17
<PAGE>
EXHIBIT 5
[KING & SPALDING LETTERHEAD]
May 18, 1994
Charter Medical Corporation
577 Mulberry Street
Macon, Georgia 31298
Re: Charter Medical Corporation
Registration Statement on Form S-4
----------------------------------
Gentlemen:
We have acted as counsel to Charter Medical Corporation, a Delaware
corporation ("Charter") and certain subsidiaries thereof (the "Guarantors"), in
connection with the registration, pursuant to the above-captioned registration
statement (the "Registration Statement"), of Charter's 11 1/4% Series A Senior
Subordinated Notes due 2004 (the "Notes"). The Notes are to be issued pursuant
to the terms of an Indenture, dated as of May 2, 1994 (the "Indenture"), among
Charter, the Guarantors and Marine Midland Bank, as Trustee, in substantially
the form filed as Exhibit 4(a) to the Registration Statement.
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of the form of the
Indenture, such records of Charter and the Guarantors and all such agreements,
certificates of officers or representatives of Charter, the Guarantors and
others, and such other documents, certificates and corporate or other records as
we have deemed necessary or appropriate as a basis for the opinions set forth
herein. In our examination we have assumed the genuineness of all signatures,
the legal capacity of natural persons, the conformity to original documents of
all documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such copies. As to any facts material to this
opinion which we did not independently establish or verify, we have relied upon
statements and representations of representatives of Charter and the Guarantors
and of public
<PAGE>
Charter Medical Corporation
May 17, 1994
Page 2
- ---------------------------
officials. We have no reason to believe that such statements and
representations are untrue.
Based upon and subject to the foregoing, it is our opinion that the Notes,
when executed by duly authorized officers of Charter, authenticated by duly
authorized officers of the Trustee and delivered in accordance with the terms of
the Indenture, will constitute the legal, valid and binding obligations of
Charter, enforceable against Charter in accordance with their respective terms.
Our opinion is subject to the following qualifications:
(a) The enforceability of the Indenture and Notes against Charter and the
Guarantors may be limited by (i) bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and by general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforceability is sought in a proceeding in law or at equity). Such principles
of equity are of general application, and in applying such principles, a court,
among other things, might not allow a creditor to accelerate maturity of a debt
upon the occurrence of a default deemed immaterial or for non-credit reasons or
might decline to order a debtor to perform covenants.
We hereby consent to the reference to our firm under the caption "Legal
Matters" in the prospectus included in the Registration Statement and to the
filing of this opinion as an exhibit to the Registration Statement.
Very truly yours,
KING & SPALDING
<PAGE>
May 18, 1994
Charter Medical Corporation
577 Mulberry Street
Macon, Georgia 31298
Re: Charter Medical Corporation
REGISTRATION STATEMENT ON FORM S-4
Gentlemen:
We have acted as counsel to Charter Medical Corporation, a Delaware
corporation ("Charter"), in connection with the preliminary Prospectus (the
"Prospectus") dated May 18, 1994 that forms a part of the Registration Statement
on Form S-4 that will be filed by the Company on May 18, 1994 with the
Securities and Exchange Commission under the Securities Act of 1933, as amended
(the "Registration Statement"), relating to the registration of the Company's
11 1/4% Series A Senior Subordinated Notes due 2004 (the "Notes").
All capitalized terms used herein without definition have the respective
meanings specified in the Prospectus.
You have requested our opinion with respect to the description contained in
the Prospectus of the federal income tax consequences of the exchange (the
"Exchange") of the Notes for the Company's outstanding 11 1/4% Senior
Subordinated Notes due 2004 (the "Old Notes").
We understand that our opinion will be attached as an Exhibit to the
Registration Statement and that our opinion will be referred to in the
Prospectus. We hereby consent to such use of our opinion.
In rendering the opinion expressed herein, we have examined such documents
as we have deemed appropriate, including the Prospectus. In our examination of
documents, we have assumed, with your consent, that all documents submitted to
us are
<PAGE>
Charter Medical Corporation
May 18, 1994
Page 2
- ---------------------------
authentic originals, or if submitted as photocopies, that they faithfully
reproduce the originals thereof, that all such documents have been or will be
duly executed to the extent required, that all representations and statements
set forth in such documents are true and correct, and that all obligations
imposed by any such documents on the parties thereto have been or will be
performed or satisfied in accordance with their terms. We have also obtained
such additional information and representations as we have deemed relevant and
necessary through consultation with the officers and directors of the Company.
Based upon and subject to the foregoing, it is our opinion that the
material federal income tax consequences of the Exchange to the holders of the
Old Notes and to the Company are fairly and accurately described in the
Prospectus under the caption "Certain Federal Income Tax Consequences of the
Exchange Offer."
The opinion expressed herein is based upon existing statutory, regulatory
and judicial authority, any of which may be changed at any time with retroactive
effect to the detriment of the holders. In addition, as noted above, our
opinion is based solely on the documents that we have examined, the additional
information that we have obtained, and the representations that have been made
to us. Our opinion cannot be relied upon if any of the facts contained in such
documents or if such additional information is, or later becomes, inaccurate or
if any of the representations made to us is, or later becomes, inaccurate.
Finally, our opinion is limited to the tax matters specifically discussed
under the caption "Certain Federal Income Tax Considerations of the Exchange
Offer" in the Prospectus, and we have not been asked to address, nor have we
addressed, any other tax consequences relating to the issuance or sale of the
Securities.
Very truly yours,
/s/ King & Spalding
KING & SPALDING
<PAGE>
CHARTER MEDICAL CORPORATION
1994 STOCK OPTION PLAN
1. PURPOSE. The purpose of the Charter Medical Corporation 1994 Stock
Option Plan is to motivate and retain officers and other key employees of
Charter Medical Corporation and its Subsidiaries who have major responsibility
for the attainment of the primary long-term performance goals of Charter Medical
Corporation.
2. DEFINITIONS. The following terms shall have the following meanings:
"Board" means the Board of Directors of the Corporation.
"Code" means the Internal Revenue Code of 1986, as amended, and the
rules promulgated thereunder.
"Committee" means a committee of two or more members of the Board
constituted and empowered by the Board to administer the Plan in accordance
with its terms.
"Corporation" means Charter Medical Corporation, a Delaware
corporation.
"Director" means a member of the Board.
"Disability" means a physical or mental condition under which the
Participant qualifies for (or will qualify for after expiration of a
waiting period) disability benefits under the long-term disability plan of
the Corporation or Subsidiary that employs such Participant.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules promulgated thereunder.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means: (1) If the Stock is listed on a national
securities exchange (as such term is defined by the Exchange Act) or is
traded on the Nasdaq National Market System on the date of determination,
the price equal to the mean between the high and low sales prices of a
share of Stock on said national securities exchange or on said Nasdaq
National Market System on that day (or if no shares of the Stock are traded
on that date but there were shares traded on dates within a reasonable
period both before and after such
<PAGE>
date, the Fair Market Value shall be the weighted average of the means
between the high and low sales prices of the Stock on the nearest date
before and the nearest date after that date on which shares of the Stock
are traded); (2) If the Stock is traded both on a national securities
exchange and in the over-the-counter market, the Fair Market Value shall be
determined by the prices on the national securities exchange; and (3) If
the Stock is not listed for trading on a national securities exchange and
is not traded on the Nasdaq National Market System or otherwise in the
over-the-counter market, then the Committee shall determine the Fair Market
Value of the Stock from time to time in its sole discretion.
"Option" means an Option granted pursuant to Section 6.
"Participant" means an employee of the Corporation or any of its
Subsidiaries who is selected to participate in the Plan in accordance with
Section 4.
"Plan" means the Charter Medical Corporation 1994 Stock Option Plan.
"Stock" means the common stock, par value $0.25 per share, of the
Corporation.
"Stock Option Agreement" means the written agreement or instrument
which sets forth the terms of an Option granted to a Participant under this
Plan.
"Subsidiary" means any corporation, as defined in Section 7701 of the
Internal Revenue Code of 1986, as amended, and the regulations promulgated
thereunder, of which the Corporation, at the time, directly or indirectly,
owns 50% or more of the outstanding securities having ordinary voting power
to elect directors (other than securities having voting power only by
reason of a contingency).
3. ADMINISTRATION. The Plan shall be administered by the Committee.
Subject to the provisions of the Plan, the Committee, acting in its absolute
discretion, shall exercise such powers and take such action as expressly called
for under this Plan and, further, the Committee shall have the power to
interpret the Plan, to determine the terms of each Stock Option Agreement
(subject to the provisions of the Plan) and (subject to Section 18 and Rule
16b-3 under the Exchange Act, if applicable) to take such other action in the
administration and operation of this Plan as the Committee deems equitable under
the circumstances. All actions of the Committee shall be binding on the
Corporation, on each affected Participant and on each other person directly or
indirectly affected by such action. No member of the Board shall serve as a
member of the Committee unless such member is a
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<PAGE>
"disinterested person" within the meaning of Rule 16b-3 under the Exchange Act.
The Committee shall have the right to delegate to the chief executive officer of
the Corporation the authority to select Participants and to grant Options
(except to any person subject to Section 16 of the Exchange Act), subject to any
review, approval, or notification required by the Committee or as may otherwise
be required by law.
4. PARTICIPATION. Participants in the Plan shall be limited to those
officers and employees of the Corporation or any of its Subsidiaries who have
been selected to participate in the Plan by the Committee acting in its absolute
discretion.
5. MAXIMUM NUMBER OF SHARES SUBJECT TO OPTIONS. Subject to the
provisions of Section 9, there shall be 1,300,000 shares of Stock reserved for
use under this Plan, and such shares of Stock shall be reserved to the extent
that the Committee and the Board deems appropriate from authorized but unissued
shares of Stock or from shares of Stock which have been reacquired by the
Corporation. Any shares of Stock subject to any Option which remain after the
cancellation, expiration, exchange or forfeiture of such Option thereafter shall
again become available for use under this Plan. All authorized and unissued
shares issued upon exercise of Options under the Plan shall be fully paid and
nonassessable shares.
6. GRANT OF OPTIONS. The Committee, acting in its absolute discretion,
shall have the right to grant Options to Participants under this Plan from time
to time; provided, however, that the maximum number of shares of Stock issuable
upon exercise of Options shall not exceed 1,300,000, subject to adjustment as
provided in Section 9. No Option shall be granted after December 31, 1996. The
maximum number of Options that are granted to any Participant shall not exceed
150,000, subject to adjustment as provided in Section 9.
7. TERMS AND CONDITIONS OF OPTIONS. Options granted pursuant to the Plan
shall be evidenced by Stock Option Agreements in such form as the Committee from
time to time shall approve and including such terms and conditions not
inconsistent with the provisions set forth in the Plan as the Committee may
determine; provided, that such Stock Option Agreements and the Options granted
shall comply with and be subject to the following terms and conditions:
(a) EMPLOYMENT. Each Participant shall agree to remain in the employ
of and to render services to the Corporation or a Subsidiary thereof for
such period as the Committee may require in the Stock Option Agreement;
provided, however,
-3-
<PAGE>
that such agreement shall not impose upon the Corporation or any Subsidiary
thereof any obligation to retain the Participant in its employ for any
period.
(b) NUMBER OF SHARES. Each Stock Option Agreement shall state the
total number of shares of Stock to which it pertains.
(c) EXERCISE PRICE. The exercise price per share for Options shall
be Fair Market Value of the Stock on the date of grant, subject to
adjustment as contemplated by Section 9.
(d) MEDIUM AND TIME OF PAYMENT. The exercise price shall be payable
upon the exercise of the Option in an amount equal to the number of shares
then being purchased times the per share exercise price. Payment shall be
in cash; except that the Corporation, in its sole discretion, may permit
payment by delivery to the Corporation of a certificate or certificates for
shares of Stock duly endorsed for transfer to the Corporation with
signature guaranteed by a member firm of the New York Stock Exchange or by
a national banking association. In the event of any payment by delivery of
shares of Stock, such shares shall be valued on the basis of their Fair
Market Value determined as of the day prior to the date of delivery. If
payment is made by delivery of shares of Stock, the value of such Stock may
not exceed the total exercise price payment; but the preceding clause shall
not prevent delivery of a stock certificate for a number of shares having a
greater value, if the number of shares to be applied to payment of the
exercise price is designated by the Participant and the Participant
requests that a certificate for the remainder shares be delivered to the
Participant.
In addition to the payment of the purchase price of the shares of
Stock then being purchased, a Participant shall also, pursuant to
Section 15, pay to the Corporation or otherwise provide for payment of an
amount equal to the amount, if any, which the Corporation at the time of
exercise is required to withhold under the income tax withholding
provisions of the Code and other applicable income tax laws.
(e) METHOD OF EXERCISE. All Options shall be exercised by written
notice directed to the Secretary of the Corporation at its principal place
of business, accompanied by payment made in accordance with the foregoing
subsection (d) of the option exercise price for the number of shares
specified in the notice of exercise and by any documents required by
Section 13. The Corporation shall make delivery of such shares within a
reasonable period of time; provided, however, that if any law or regulation
requires the Corporation to take any action (including but not limited to
-4-
<PAGE>
the filing of a registration statement under the Securities Act of 1933 and
causing such registration statement to become effective) with respect to
the shares specified in such notice before their issuance, then the date of
delivery of such shares shall be extended for the period necessary to take
such action.
(f) TERM OF OPTIONS. Except as otherwise specifically provided in
the Plan, the terms of all Options shall commence on the date of grant and
shall expire ten years after the date of grant.
(g) EXERCISE OF OPTIONS. Options are exercisable only to the extent
they are vested as provided in Section 8. After Options have vested in
accordance with Section 8, such Options are exercisable at any time, in
whole or in part during their terms if the Participant is at the time of
exercise employed by the Company or a Subsidiary. If a Participant's
employment with the Corporation or any Subsidiary is terminated for any
reason other than death or disability, the vested portion of each Option
held by such Participant on the date of such termination may be exercised
for 90 days following the date of termination of employment (but not after
expiration of the term of the option). In the event of the death or
Disability of a Participant, the vested portion of each Option held by such
Participant on the date of such event may be exercised within twelve months
of the date of such event (but not after the expiration of the term of the
option).
In the event of the death of a Participant, the vested portion of each
Option previously held by such Participant may be exercised within the time
set forth above by the executor, other legal representative or, if none,
the heir or legatee of such Participant.
(h) ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. Upon a change in
capitalization pursuant to Section 9, the number of shares covered by an
Option and the per share option exercise price shall be adjusted in
accordance with the provisions of Section 9.
(i) TRANSFERABILITY. No Option shall be assignable or transferable
by the Participant except by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined
by the Code or ERISA. The designation of a beneficiary shall not
constitute a transfer; and, during the lifetime of a Participant, all
Options held by such Participant shall be exercisable only by him or his
lawful representative in the event of his incapacity.
-5-
<PAGE>
(j) RIGHTS AS A STOCKHOLDER. A Participant shall have no rights as a
stockholder with respect to shares covered by his Option until the date of
the issuance of the shares to him and only after such shares are fully
paid. Unless specified in Section 9, no adjustment will be made for
dividends or other rights for which the record date is prior to the date of
such issuance.
(k) MISCELLANEOUS PROVISIONS. The Stock Option Agreements authorized
under the Plan may contain such other provisions not inconsistent with the
terms of this Plan as the Committee shall deem advisable.
8. VESTING. Options granted under this Plan shall be exercisable only to
the extent such Options have become vested pursuant to this Section 8. An
Option shall vest at the rate of 33-1/3% of the shares covered by the Option on
each of the first three anniversary dates of the grant of the Option if the
Participant is an employee of the Company or a Subsidiary on such dates.
9. CHANGE IN CAPITALIZATION. If the Stock should, as a result of a stock
split or stock dividend, combination of shares, recapitalization or other change
in the capital structure of the Corporation or exchange of Stock for other
securities by reclassification or otherwise, be increased or decreased or
changed into, or exchanged for, a different number or kind of shares or other
securities of the Corporation, or any other corporation, then the number of
shares covered by Options, the number and kind of shares which thereafter may be
distributed or issued under the Plan and the per share option price of Options
shall be appropriately adjusted consistent with such change in such manner as
the Committee may deem equitable to prevent dilution of or increase in the
rights granted to, or available for, Participants.
10. FRACTIONAL SHARES. In the event that any provision of this Plan or a
Stock Option Agreement would create a right to acquire a fractional share of
Stock, such fractional share shall be disregarded.
11. SUCCESSOR CORPORATION. If the Company is merged or consolidated with
another corporation or other legal entity and the Company is not the surviving
corporation or legal entity, or in the event all or substantially all of the
property or common stock of the Company is acquired by another corporation or
legal entity, or in case of a dissolution, reorganization or liquidation of the
Company, the Board of Directors of the Company, or the board of directors or
governing body of any corporation or other legal entity assuming the obligations
of the Company hereunder,
-6-
<PAGE>
shall either: (i) make appropriate provision for the preservation of
Participants' rights under the Plan in any agreement or plan it may enter into
or adopt to effect any of the foregoing transactions; or (ii) upon written
notice to each Participant, provide that all Options, whether or not vested, may
be exercised within thirty days of the date of such notice and if not so
exercised, shall be terminated.
12. NON-ALIENATION OF BENEFITS. Except insofar as applicable law may
otherwise require, (i) no Options, rights or interest of Participants or Stock
deliverable to any Participant at any time under the Plan shall be subject in
any manner to alienation by anticipation, sale, transfer, assignment,
bankruptcy, pledge, attachment, charge of encumbrance of any kind, and any
attempt to so alienate, sell, transfer, assign, pledge, attach, charge or
otherwise encumber any such amount, whether presently or thereafter payable,
shall be void; and (ii), to the fullest extent permitted by law, the Plan shall
in no manner be liable for, or subject to, claims, liens, attachments or other
like proceedings or the debts, liabilities, contracts, engagements, or torts of
any Participant or beneficiary. Nothing in this Section 12 shall prevent a
Participant's rights and interests under the Plan from being transferred by will
or by the laws of descent and distribution or pursuant to a qualified domestic
relations order as defined by the Code or ERISA; provided, however, that no
transfer by will or by the laws of descent and distribution shall be effective
to bind the Corporation unless the Committee or its designee shall have been
furnished before or after the death of such Participant with a copy of such will
or such other evidence as the Committee may deem necessary to establish the
validity of the transfer.
13. LISTING AND QUALIFICATION OF SHARES. The Corporation, in its
discretion, may postpone the issuance or delivery of shares of Stock until
completion of any stock exchange listing, or other qualification or registration
of such shares under any state or federal law, rule or regulation, as the
Corporation may consider appropriate, and may require any Participant to make
such representations, including, but not limited to, a written representation
that the shares are to be acquired for investment and not for resale or with a
view to the distribution thereof, and furnish such information as it may
consider appropriate in connection with the issuance or delivery of the shares
in compliance with applicable laws, rules and regulations. The Corporation may
cause a legend or legends to be placed on such certificates to make appropriate
reference to such representation and to restrict transfer in the absence of
compliance with applicable federal or state securities laws.
-7-
<PAGE>
14. NO CLAIM OR RIGHT UNDER THE PLAN. No employee of the Corporation or
any Subsidiary shall at any time have the right to be selected as a Participant
in the Plan nor, having been selected as a Participant and granted an Option, to
be granted any additional Option. Neither the action of the Corporation in
establishing the Plan, nor any action taken by it or by the Board or the
Committee thereunder, nor any provision of the Plan, nor participation in the
Plan, shall be construed to give, and does not give, to any person the right to
be retained in the employ of the Corporation or any Subsidiary, or interfere in
any way with the right of the Corporation or any Subsidiary to discharge or
terminate any person at any time without regard to the effect such discharge or
termination may have upon such person's rights, if any, under the Plan.
15. TAXES. The Corporation may make such provisions and take such steps
as it may deem necessary or appropriate for the withholding of all federal,
state, local and other taxes required by law to be withheld with respect to
Options under the Plan, including, but not limited to, (i) deducting the amount
required to be withheld from salary or any other amount then or thereafter
payable to a Participant, beneficiary or legal representative or (ii) requiring
a Participant, beneficiary or legal representative to pay to the Corporation the
amount required to be withheld as a condition of releasing the Stock.
16. NO LIABILITY OF DIRECTORS. No member of the Board or Committee shall
be personally liable by reason of any contract or other instrument executed by
such member on his behalf in his capacity as a member of the Board or Committee,
nor for any mistake of judgment made in good faith, and the Corporation shall
indemnify and hold harmless each employee, officer and Director of the
Corporation, to whom any duty or power relating to the administration or
interpretation of the Plan may be allocated or delegated, against any cost or
expense (including counsel fees) or liability (including any sum paid in
settlement of a claim with the approval of the Board) arising out of any act or
omission to act in connection with the Plan to the fullest extent permitted or
required by the Corporation's governing instruments and, in addition, to the
fullest extent of any applicable insurance policy purchased by the Corporation.
17. OTHER PLANS. Nothing contained in the Plan is intended to amend,
modify or rescind any previously approved compensation plans or programs entered
into by the Corporation or its Subsidiaries. The Plan shall be construed to be
in addition to any and all such plans or programs. No award of Options under
the Plan shall be construed as compensation under any other executive
compensation or employee benefit plan of the Corporation or any of its
Subsidiaries, except as specifically provided in any such plan or as otherwise
provided by the Committee. The adoption of the
-8-
<PAGE>
Plan by the Board shall not be construed as creating any limitations on the
power or authority of the Board to adopt such additional compensation or
incentive arrangements as the Board may deem necessary or desirable.
18. AMENDMENT OR TERMINATION. This Plan may be amended by the Board from
time to time to the extent that the Board deems necessary or appropriate;
provided, however, no such amendment shall be made absent the approval of the
stockholders of the Corporation: (1) if stockholder approval of such amendment
is required for continued compliance with Rule 16b-3 of the Exchange Act, or (2)
if stockholder approval of such amendment is required by any other applicable
laws or regulations or by the rules of any stock exchange as long as the Stock
is listed for trading on such exchange. The Committee also may suspend the
granting of Options under this Plan at any time and may terminate this Plan at
any time; provided, however, the Corporation shall not have the right to modify,
amend or cancel any Option granted before such suspension or termination unless
(1) the Participant consents in writing to such modification, amendment or
cancellation or (2) there is a dissolution or liquidation of the Corporation or
a transaction described in Section 11 of this Plan.
19. CAPTIONS. The captions preceding the sections of the Plan have been
inserted solely as a matter of convenience and shall not, in any manner, define
or limit the scope or intent of any provisions of the Plan.
20. GOVERNING LAW. The Plan and all rights thereunder shall be governed
by, and construed in accordance with, the laws of the State of Georgia, without
reference to the principles of conflicts of law thereof.
21. EXPENSES. All expenses of administering the Plan shall be borne by
the Corporation.
22. EFFECTIVE DATE. The Plan shall be effective as of the date of its
adoption by the Board, subject to approval of this Plan by the stockholders of
the Corporation after the date of its adoption in accordance with the
requirements of Rule 16b-3 under the Exchange Act.
-9-
<PAGE>
CHARTER MEDICAL CORPORATION
DIRECTORS' UNIT AWARD PLAN
1. PURPOSE. The purpose of the Charter Medical Corporation Directors'
Unit Award Plan is to provide an incentive and a means of encouraging stock
ownership by non-employee directors.
2. DEFINITIONS. The following terms shall have the following meanings:
"Award" means the grant of a number of Units to a Participant.
"Board" means the Board of Directors of the Corporation.
"Committee" means the Compensation Committee of the Board or any other
committee of the Board that is authorized by the Board to administer the
Plan.
"Common Stock" means the $0.25 par value common stock of the
Corporation.
"Corporation" means Charter Medical Corporation, a Delaware
corporation.
"Unit" means a unit of measurement equivalent to one share of Common
Stock (without any adjustment pursuant to Sections 10 or 12), with none of
the attendant rights of a holder of such stock, such as, but not limited
to, the right to vote such stock and the right to receive dividends
thereon.
"Director" means a member of the Board.
"Disability" means a physical or mental condition that would qualify
the Participant for disability benefits under the long-term disability plan
of the Corporation if the Participant were an employee of the Corporation.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Participant" means a non-employee Director of the Corporation who
participates in the Plan in accordance with Section 5.
"Plan" means the Charter Medical Corporation Directors' Unit Award
Plan.
<PAGE>
3. ADMINISTRATION. The Plan is intended to be self-executing. To the
extent the Plan or any provision of the Plan needs to be construed or
interpreted, the Committee shall construe or interpret the Plan; and any such
construction or interpretation of the Plan or of any Award made under the Plan
shall be final, conclusive and binding on the Corporation and each Participant.
4. ELIGIBILITY. Members of the Board of Directors who are not employees
of the Corporation or any subsidiary shall be granted Awards of Units under and
pursuant to the terms of the Plan.
5. AWARDS OF UNITS. Each eligible Participant shall be granted, on the
later of February 18, 1994, or the date he or she first becomes a non-employee
Director, an Award of 2,500 Units, for so long as Units are available under the
Plan. Units shall not be awarded after February 18, 1998. Units shall be
evidenced solely by a letter from the Corporation to the Participant stating
that 2,500 Units have been awarded to the Participant under the Plan and shall
not be represented by any stock certificate, agreement or other document that
creates any obligation on the part of the Corporation other than as are
specifically provided in the Plan.
6. MAXIMUM NUMBER OF UNITS AVAILABLE FOR AWARDS. The maximum aggregate
number of Units awarded under the Plan shall not exceed 15,000.
7. VESTING. Units awarded under the Plan shall vest on the date the
Participant ceases to be a non-employee Director of the Corporation, subject to
adjustment as follows:
(a) IF a Participant ceases to be a non-employee Director of the
Corporation prior to the fifth anniversary of the Award of Units to such
Participant due to voluntary resignation as a Director, voluntary decision
not to stand for reelection or removal as a Director by the stockholders
for a cause, THEN the number of Units vested in such Participant shall be
the product of 500 times the number of anniversary dates of the Award of
Units to such Participant that occur prior to such Participant's ceasing to
be a non-employee Director of the Corporation.
(b) IF a Participant ceases to be a non-employee Director of the
Corporation prior to the fifth anniversary of the Award of Units to such
Participant due to such Participant's becoming an employee of the
Corporation or any subsidiary of the Corporation, THEN the number of Units
vested in such Participant shall be the product of 500 times the number of
anniversary dates of the Award of Units to
-2-
<PAGE>
Participant that occur prior to the date such Participant becomes an
employee of the Corporation or any subsidiary.
If a Participant ceases to be a non-employee Director of the Corporation
prior to the fifth anniversary of the Award of Units to such Participant for any
reason other than those stated in (a) and (b) above, including but not limited
to death or Disability of the Participant, then the number of Units vested in
such Participant on the date the Participant ceases to be a non-employee
Director of the Corporation shall be the number of Units awarded to such
Participant.
8. SETTLEMENT OF UNITS. Within thirty days after a Participant becomes
vested in the number of Units provided by the vesting provisions of Section 7,
the Corporation shall settle the Units by issuing and delivering to the
Participant a certificate for a number of shares of the Corporation's Common
Stock equal to the number of Units vested in such Participant pursuant to the
vesting provisions of Section 7. The number of shares of Common Stock payable
in settlement of Units shall be subject to adjustment pursuant to the provisions
of Sections 10 and 12. The shares of Common Stock issued by the Corporation in
settlement of Unit may, at the election of the Corporation, be either shares of
Common Stock held in treasury or authorized but unissued shares of Common Stock;
provided, however, that the Corporation shall not be required to reserve out of
its authorized but unissued shares of Common Stock any shares of Common Stock
for issuance upon settlement of Units under the Plan.
9. UNSECURED CREDITOR STATUS. A Participant shall have no right, title
or interest whatsoever in or to any assets of the Corporation as a result of
being granted Units under the Plan. To the extent that any person acquires the
right to have Units settled by the Corporation under the Plan, such rights shall
be no greater than the right of an unsecured general creditor of the
Corporation.
10. CHANGE IN CAPITALIZATION. If after February 18, 1994, the Common
Stock should, as a result of a stock split or stock dividend, combination of
shares, recapitalization or other change in the capital structure of the
Corporation or exchange of Common Stock for other securities by reclassification
or otherwise, be increased or decreased or changed into, or exchanged for, a
different number or kind of shares or other securities of the Corporation, or
any other corporation, then the number of shares issuable upon settlement of
Units shall be appropriately adjusted consistent with such change in such manner
as the Committee may deem equitable to prevent dilution of or increase in the
rights granted to, or available for, Participants.
-3-
<PAGE>
11. FRACTIONAL SHARES. If any provision of this Plan would create upon
vesting pursuant to Section 7 a right to acquire a fractional share of Common
Stock, such fractional share shall be disregarded.
12. SUCCESSOR CORPORATION. If the Corporation is merged or consolidated
with another corporation or other legal entity and the Corporation is not the
surviving corporation or legal entity, or in the event all or substantially all
of the property or Common Stock of the Corporation is acquired by another
corporation or legal entity, or in case of a dissolution, reorganization or
liquidation of the Corporation, the Board of Directors of the Corporation, or
the board of directors or governing body of any corporation or other legal
entity assuming the obligations of the Corporation hereunder, shall either:
(i) make appropriate provision for the preservation of Participants' rights
under the Plan in any agreement or plan it may enter into or adopt to effect any
of the foregoing transactions; or (ii) upon written notice to each Participant,
provide that all Units, whether or not vested, shall be settled by the
Corporation within thirty days of the date of such notice.
13. NON-ALIENATION OF BENEFITS. Except insofar as applicable law may
otherwise require, (i) no Units awarded or Common Stock deliverable (but not yet
delivered) to any Participant at any time under the Plan shall be subject in any
manner to alienation by anticipation, sale, transfer, assignment, bankruptcy,
pledge, attachment, charge or encumbrance of any kind, and any attempt to so
alienate, sell, transfer, assign, pledge, attach, charge or otherwise encumber
any such amount, whether presently or thereafter payable, shall be void; and
(ii), to the fullest extent permitted by law, the Plan shall in no manner be
liable for, or subject to, claims, liens, attachments or other like proceedings
or the debts, liabilities, contracts, engagements, or torts of any Participant
or beneficiary. Nothing in this Section 13 shall prevent a Participant's rights
and interests under the Plan from being transferred by will or by the laws of
descent and distribution or pursuant to a qualified domestic relations order as
defined by the Internal Revenue Code or ERISA; provided, however, that no
transfer by will or by the laws of descent and distribution shall be effective
to bind the Corporation unless the Corporation shall have been furnished before
or after the death of such Participant with a copy of such will or such other
evidence as the Corporation may deem necessary to establish the validity of the
transfer.
14. LISTING AND QUALIFICATION OF SHARES. The Corporation, in its
discretion, may postpone the issuance or delivery of shares of Common Stock
until completion of any stock exchange listing, or other qualification or
registration of such shares under any state or federal law, rule or regulation,
as the Corporation may consider appropriate, and may require any Participant to
make such
-4-
<PAGE>
representations, including, but not limited to, a written representation that
the shares are to be acquired for investment and not for resale or with a view
to the distribution thereof, and furnish such information as it may consider
appropriate in connection with the issuance or delivery of the shares in
compliance with applicable laws, rules and regulations. The Corporation may
cause a legend or legends to be placed on such certificates to make appropriate
reference to such representation and to restrict transfer in the absence of
compliance with applicable federal or state securities laws.
15. TAXES. The Corporation may make such provisions and take such steps
as it may deem necessary or appropriate for the withholding of all federal,
state, local and other taxes required by law to be withheld upon settlement of
Units under the Plan, including, but not limited to, requiring a Participant,
beneficiary or legal representative to pay to the Corporation the amount
required to be withheld as a condition of delivering shares of Common Stock.
16. NO LIABILITY OF DIRECTORS. No member of the Board or Committee shall
be personally liable by reason of any contract or other instrument executed by
such member on his behalf in his capacity as a member of the Board or Committee,
nor for any mistake of judgment made in good faith, and the Corporation shall
indemnify and hold harmless each employee, officer and Director of the
Corporation, to whom any duty or power relating to the administration or
interpretation of the Plan may be allocated or delegated, against any cost or
expense (including counsel fees) or liability (including any sum paid in
settlement of a claim with the approval of the Board) arising out of any act or
omission to act in connection with the Plan to the fullest extent permitted or
required by the Corporation's governing instruments and, in addition, to the
fullest extent of any applicable insurance policy purchased by the Corporation.
17. AMENDMENT OR TERMINATION. This Plan may be amended by the Board from
time to time to the extent that the Board deems necessary or appropriate;
provided, however, no such amendment shall be made absent the approval of the
stockholders of the Corporation: (1) if stockholder approval of such amendment
is required for continued compliance with Rule 16b-3 of the Exchange Act, or (2)
if stockholder approval of such amendment is required by any other applicable
laws or regulations or by the rules of any stock exchange as long as the Common
Stock is listed for trading on such exchange. The Corporation also may suspend
the awarding of Units under this Plan at any time and may terminate this Plan at
any time; provided, however, the Corporation shall not have the right to modify,
amend or cancel any Award granted before such suspension or termination unless
(1) the Participant consents in
-5-
<PAGE>
writing to such modification, amendment or cancellation or (2) there is a
dissolution or liquidation of the Corporation or a transaction described in
Section 12 of this Plan.
18. CAPTIONS. The captions preceding the sections of the Plan have been
inserted solely as a matter of convenience and shall not, in any manner, define
or limit the scope or intent of any provisions of the Plan.
19. GOVERNING LAW. The Plan and all rights thereunder shall be governed
by, and construed in accordance with, the laws of the State of Georgia, without
reference to the principles of conflicts of law thereof.
20. EXPENSES. All expenses of administering the Plan shall be borne by
the Corporation.
21. EFFECTIVE DATE. The Plan shall be effective as of the date of its
adoption by the Board, subject to approval of this Plan by the stockholders of
the Corporation after the date of its adoption in accordance with the
requirements of Rule 16b-3 under the Exchange Act.
-6-
<PAGE>
EXHIBIT 12
CHARTER MEDICAL CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS BEFORE FIXED
CHARGES TO FIXED CHARGES
(IN THOUSANDS)
The following computations for each of the five years in the period ended
September 30, 1993, and the six months ended March 31, 1993 and 1994, and pro
forma results for the year and six months ended September 30, 1993 and March 31,
1994, respectively, reflect income available for fixed charges, fixed charges
and the resultant ratios. The computations should be read in conjunction with
the financial information and discussions contained in "Unaudited Pro Forma
Financial Information" and the Company's consolidated historical statements and
related notes thereto included in this Registration Statement.
<TABLE>
<CAPTION>
TEN MONTHS TWO MONTHS
YEAR ENDED SEPTEMBER 30, ENDED ENDED YEAR ENDED
-------------------------------- JULY 31, SEPTEMBER 30, SEPTEMBER 30,
1989 1990 1991 1992 1992 1993
-------- ---------- ---------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INCOME:
Income (loss) from continuing operations
before reorganization items, income taxes,
extraordinary items and cumulative effect
of a change in accounting principle....... $(77,832) $ (365,475) $ (167,157) $ (77,422) $ (7,072) $ (37,746)
Fixed charges as adjusted (1).............. 204,242 225,497 246,504 180,452 14,097 81,538
-------- ---------- ---------- ---------- ------------- -------------
INCOME (LOSS)............................ $126,410 $ (139,978) $ 79,347 $ 103,030 $ 7,025 $ 43,792
-------- ---------- ---------- ---------- ------------- -------------
-------- ---------- ---------- ---------- ------------- -------------
FIXED CHARGES:
Interest expenses (before deducting
capitalized interest)..................... $170,604 $ 188,348 $ 206,117 $ 147,429 $ 12,958 $ 69,825
Amortization of deferred financing costs,
discounts and premiums.................... 32,232 35,108 34,165 28,635 997 7,866
Interest components of rentals (2)......... 6,100 7,496 6,252 4,543 601 3,847
-------- ---------- ---------- ---------- ------------- -------------
FIXED CHARGES............................ $208,936 $ 230,952 $ 246,534 $ 180,607 $ 14,556 $ 81,538
-------- ---------- ---------- ---------- ------------- -------------
-------- ---------- ---------- ---------- ------------- -------------
RATIO OF EARNINGS BEFORE FIXED CHARGES TO
FIXED CHARGES...............................
DEFICIENCY OF EARNINGS BEFORE FIXED CHARGES
TO FIXED CHARGES............................ $(82,526) $ (370,930) $ (167,187) $ (77,577) $ (7,531) $ (37,746)
-------- ---------- ---------- ---------- ------------- -------------
-------- ---------- ---------- ---------- ------------- -------------
<CAPTION>
PRO FORMA
SIX MONTHS FOR THE
ENDED PRO FORMA SIX MONTHS
MARCH 31, YEAR ENDED ENDED
--------------------- SEPTEMBER 30, MARCH 31,
1993 1994 1993 1994
--------- --------- ------------- -------------
<S> <C> <C> <C> <C>
INCOME:
Income (loss) from continuing operations
before reorganization items, income taxes,
extraordinary items and cumulative effect
of a change in accounting principle....... $ (20,543) $ 6,136 $ 16,461 $ 12,400
Fixed charges as adjusted (1).............. 41,066 19,622 66,215 32,401
--------- --------- ------------- -------------
INCOME (LOSS)............................ $ 20,523 $ 25,758 $ 82,676 $ 44,801
--------- --------- ------------- -------------
--------- --------- ------------- -------------
FIXED CHARGES:
Interest expenses (before deducting
capitalized interest)..................... $ 36,211 $ 16,665 $ 58,006 $ 28,917
Amortization of deferred financing costs,
discounts and premiums.................... 2,950 1,379 2,003 994
Interest components of rentals (2)......... 1,905 1,592 6,206 2,504
--------- --------- ------------- -------------
FIXED CHARGES............................ $ 41,066 $ 19,636 $ 66,215 $ 32,415
--------- --------- ------------- -------------
--------- --------- ------------- -------------
RATIO OF EARNINGS BEFORE FIXED CHARGES TO
FIXED CHARGES............................... 1.31:1 1.25:1 1.38:1
--------- ------------- -------------
--------- ------------- -------------
DEFICIENCY OF EARNINGS BEFORE FIXED CHARGES
TO FIXED CHARGES............................ $ (20,543)
---------
---------
<FN>
- ------------------------------
(1) Represents actual fixed charges as determined above, less interest expense
capitalized of $4,694,000 in 1989; $5,455,000 in 1990; $30,000 in 1991;
$155,000 for the ten months ended July 31, 1992, $459,000 for the two
months ended September 30, 1992 and $14,000 for the six months ended March
31, 1994, actual and pro forma.
(2) With respect to estimating the interest component of rentals for operating
leases, explicit interest rates, where applicable, have been utilized.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
State of
Corporation Name Jurisdiction Doing-Business-As Name
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Ambulatory Resource, Inc. Georgia
Atlanta MOB, Inc. Georgia
Beltway Community Hospital, Inc. Texas
C.A.C.O. Service, Inc. Ohio
CCM, Inc. Nevada
Charter of Alabama, Inc. Alabama
Charter Alvarado Behavioral Health System, Inc. California
Charter Appalachian Hall Behavioral Health System, Inc. North Carolina
Charter Arbor Indy Behavioral Health System, Inc. Indiana
Charter Augusta Behavioral Health System, Inc. Georgia Charter Hospital of Augusta
Charter Bay Harbor Behavioral Health System, Inc. Florida
Charter Beacon Behavioral Health System, Inc. Indiana Charter Beacon Hospital
Charter Behavioral Health System of Athens, Inc. Georgia Charter Winds Hospital
Charter Behavioral Health Systems of Atlanta, Inc. Georgia
Charter Behavioral Health System of Austin, Inc. Texas Charter Hospital of Austin
Charter Behavioral Health System of Baywood, Inc. Texas
Charter Behavioral Health System of Bradenton, Inc. Florida
Charter Behavioral Health System of Canoga Park, Inc. California
Charter Behavioral Health System of Central Georgia, Inc. Georgia Charter Lake Hospital
Charter Behavioral Health System of Charleston, Inc. South Carolina Charter Hospital of Charleston
Charter Behavioral Health System of Charlottesville, Inc. Virginia Charter Hospital of Charlottesville
Charter Behavioral Health System of Chicago, Inc. Illinois Charter Barclay Hospital
Charter Behavioral Health System of Chula Vista, Inc. California
Charter Behavioral Health System of Columbia, Inc. Missouri Charter Hospital of Columbia
Charter Behavioral Health System of Corpus Christi, Inc. Texas Charter Hospital of Corpus Christi
Charter Behavioral Health System of Dallas, Inc. Texas Charter Hospital of Dallas
Charter Behavioral Health System of Evansville, Inc. Indiana
Charter Behavioral Health System at Fair Oaks, Inc. New Jersey
Charter Behavioral Health System of Fort Worth, Inc. Texas Charter Hospital of Fort Worth
Charter Behavioral Health System at Hidden Brook, Inc. Maryland
Charter Behavioral Health System of the Inland Empire, Inc. California Charter Hospital of Corona
Charter Behavioral Health System
of Southern California
Charter Behavioral Health System
of Southern California/Corona
Charter Behavioral Health System of Jackson, Inc. Mississippi Charter Hospital of Jackson
Charter Behavioral Health System of Jacksonville, Inc. Florida Charter Hospital of Jacksonville
Charter Behavioral Health System of Jefferson, Inc. Indiana
Charter Behavioral Health System of Kansas City, Inc. Kansas Charter Hospital of Overland Park
Charter Behavioral Health System of Lafayette, Inc. Louisiana
<PAGE>
State of
Corporation Name Jurisdiction Doing-Business-As Name
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Charter Behavioral Health System of Lake Charles, Inc. Louisiana Charter Hospital of Lake Charles
Charter Behavioral Health System of Lakewood, Inc. California
Charter Behavioral Health System at Los Altos, Inc. California
Charter Behavioral Health System of Michigan City, Inc. Indiana
Charter Behavioral Health System of Mobile, Inc. Alabama Charter Hospital of Mobile
Charter Behavioral Health System of Nashua, Inc. New Hampshire
Charter Behavioral Health System of Nevada, Inc. Nevada Charter Hospital of Las Vegas
Charter Behavioral Health System of New Mexico, Inc. New Mexico Charter Hospital of Albuquerque
Charter Behavioral Health System of Northern California, Inc. California Charter Hospital of Sacramento
Charter Behavioral Health System of Northwest Arkansas, Inc. Arkansas Charter Vista Hospital
Charter Behavioral Health System of Northwest Indiana, Inc. Indiana Charter Hospital of Northwest Indiana
Charter Behavioral Health System of Paducah, Inc. Kentucky Charter Hospital of Paducah
Charter Behavioral Health System at Potomac Ridge, Inc. Maryland
Charter Behavioral Health System of Rockford, Inc. Illinois
Charter Behavioral Health System of San Jose, Inc. California
Charter Behavioral Health System of Savannah, Inc. Georgia Charter Hospital of Savannah
Charter Behavioral Health System of Southern California, Inc. California
Charter Behavioral Health System of Tampa Bay, Inc. Florida Charter Hospital of Tampa Bay
Charter Behavioral Health System of Texarkana, Inc. Arkansas
Charter Behavioral Health System of Toledo, Inc. Ohio Charter Hospital of Toledo
Charter Behavioral Health System of Tucson, Inc. Arizona
Charter Behavioral Health System of Virginia Beach, Inc. Virginia
Charter Behavioral Health System of Visalla, Inc. California
Charter Behavioral Health System at Warwick Manor, Inc. Maryland
Charter Behavioral Health System of Washington, D.C., Inc. District of Columbia
Charter Behavioral Health System of Waverly, Inc. Minnesota
Charter Behavioral Health System of Winston -- Salem, Inc. North Carolina Charter Hospital of Winston -- Salem
Charter Behavioral Health System of Yorba Linda, Inc. California
Charter Brawner Behavioral Health System, Inc. Georgia
Charter-By-The-Sea Behavioral Health System, Inc. Georgia Charter-By-The-Sea
Charter Health Center
Charter Canyon Behavioral Health System, Inc. Utah Charter Canyon Hospital
Charter Canyon Springs Behavioral Health System, Inc. California
Charter Centennial Peaks Behavioral Health System, Inc. Colorado
Charter Colonial Institute, Inc. Virginia
Charter Community Hospital, Inc. California
Charter Community Hospital of Des Moines, Inc. Iowa
Charter Contract Services, Inc. Georgia
Charter Cove Forge Behavioral Health System, Inc. Pennsylvania
Charter Crescent Pines Behavioral Health System, Inc. Georgia
<PAGE>
State of
Corporation Name Jurisdiction Doing-Business-As Name
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Charter Fairbridge Behavioral Health System, Inc. Maryland
Charter Fairmount Behavioral Health System, Inc. Pennsylvania The Fairmount Institute
Charter Hospital of Kingwood
Charter Behavioral Health
System of Kingwood
Charter Fenwick Hall Behavioral Health System, Inc. South Carolina
Charter Financial Offices, Inc. Georgia
Charter Forest Behavioral Health System, Inc. Louisiana Charter Forest Hospital
Charter Grapevine Behavioral Health System, Inc. Texas Charter Hospital of Grapevine
Charter Greensboro Behavioral Health System, Inc. North Carolina Charter Hospital of Greensboro
Charter Behavioral Health System
of Greensboro
Charter Health Management of Texas, Inc. Texas
Charter Hospital of Columbus, Inc. Ohio
Charter Hospital of Denver, Inc. Colorado
Charter Hospital of Ft. Collins, Inc. Colorado
Charter Hospital of Laredo, Inc. Texas
Charter Hospital of Miami, Inc. Florida Charter Behavioral Health System
of South Florida
Charter Hospital of Mobile, Inc. Alabama Charter Academy of Mobile
Charter Hospital of Northern New Jersey, Inc. New Jersey
Charter Hospital of Santa Teresa, Inc. New Mexico
Charter Hospital of St. Louis, Inc. Missouri Charter Hospital Orlando South
Charter Behavioral Health System
of Orlando
Charter Behavioral Health System
Orlando South
Charter Hospital of Greenville
Charter Greenville Behavioral
Health System
Charter Hospital of Torrance, Inc. California
Charter Indianapolis Behavioral Health System, Inc. Indiana Charter Hospital of Indianapolis
Charter Lafayette Behavioral Health System, Inc. Indiana Charter Hospital Lafayette
Charter Lakehurst Behavioral Health System, Inc. New Jersey
Charter Lakeside Behavioral Health System, Inc. Tennessee Charter Lakeside Hospital
Charter Hospital of Sugarland
Charter Behavioral Health System
of Sugarland
Charter Laurel Heights Behavioral Health System, Inc. Georgia
Charter Laurel Oaks Behavioral Health System, Inc. Florida
Charter Linden Oaks Behavioral Health System, Inc. Illinois
Charter Little Rock Behavioral Health System, Inc. Arkansas Charter Hospital of Little Rock
Charter Behavioral Health System
of Little Rock
Charter Louisville Behavioral Health System, Inc. Kentucky Charter Hospital of Louisville
Charter Meadows Behavioral Health System, Inc. Maryland
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
State of
Corporation Name Jurisdiction Doing-Business-As Name
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Charter Medfield Behavioral Health System, Inc. Florida
Charter Medical - California, Inc. Georgia
Charter Medical (Cayman Islands)Ltd. Cayman Islands,B.W.I.
Charter Medical - Clayton County, Inc. Georgia
Charter Medical - Cleveland, Inc. Texas
Charter Medical - Dallas, Inc. Texas
Charter Medical of East Valley, Inc. Arizona Charter Hospital of the East Valley
Charter Behavioral Health System of Arizona
Charter Behavioral Health System
of Arizona/East Valley
Charter Medical of England Limited United Kingdom Charter Clinic Chelsea
Charter Nightingale
Charter Medical Executive Corporation Georgia
Charter Medical Information Services, Inc. Georgia
Charter Medical International, Inc. Cayman Islands, B.W.I.
Charter Medical International, S.A., Inc. Nevada
Charter Medical - Long Beach, Inc. California Charter Hospital of Long Beach
Charter Behavioral Health System
of Southern California
Charter Behavioral Health System
of Southern California/Long Beach
Charter Medical Management Company Georgia
Charter Medical - New York, Inc. New York
Charter Medical of North Phoenix, Inc. Arizona Charter Hospital of Glendale
Charter Behavioral Health System of Arizona
Charter Behavioral Health System
of Arizona/Glendale
Charter Medical of Orange County, Inc. Florida
Charter Medical of Puerto Rico, Inc. Puerto Rico
Charter Mental Health Options, Inc. Florida
Charter Mid-South Behavioral Health System, Inc. Tennessee
Charter Milwaukee Behavioral Health System, Inc. Wisconsin Charter Hospital of Milwaukee
Charter Behavioral Health System
of Milwaukee/West Allis
Charter Mission Viejo Behavioral Health System, Inc. California Charter Hospital of Mission Viejo
Charter Behavioral Health System
of Southern California/Mission Viejo
Charter MOB of Charlottesville, Inc. Virginia
Charter North Behavioral Health System, Inc. Alaska Charter North Hospital
Charter North Counseling Center, Inc. Alaska
<PAGE>
State of
Corporation Name Jurisdiction Doing-Business-As Name
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Charter Northbrooke Behavioral Health System, Inc. Wisconsin
Charter Northridge Behavioral Health System, Inc. North Carolina Charter Northridge Hospital
Charter Northside Hospital, Inc. Georgia
Charter Oak Behavioral Health System, Inc. California Charter Oak Hospital
Charter Behavioral Health System
of Southern California/Oak
Charter Palms Behavioral Health System, Inc. Texas Charter Palms Hospital
Charter Peachford Behavioral Health System, Inc. Georgia Charter Peachford Hospital
Charter Behavioral Health System of Atlanta
Charter Behavioral Health System
of Atlanta at Peachford
Charter Pines Behavioral Health System, Inc. North Carolina Charter Pines Hospital
Charter Plains Behavioral Health System, Inc. Texas Charter Plains Hospital
Charter Provo - School, Inc. Utah Provo Canyon School
Charter Provo Canyon School
Charter Psychiatric Hospitals, Inc. Delaware
Charter Real Behavioral Health System, Inc. Texas Charter Real Hospital
Charter Regional Medical Center, Inc. Texas
Charter Richmond Behavioral Health System, Inc. Virginia
Charter Ridge Behavioral Health System, Inc. Kentucky Charter Ridge Hospital
Charter Rivers Behavioral Health System, Inc. South Carolina Charter Rivers Hospital
Charter San Diego Behavioral Health System, Inc. California Charter Hospital of San Diego
Charter Behavioral Health System of San Diego
Charter Serenity Lodge Behavioral Health System, Inc. Virginia
Charter Sioux Falls Behavioral Health System, Inc. South Dakota Charter Hospital of Sioux Falls
Charter South Bend Behavioral Health System, Inc. Indiana Charter Hospital of South Bend
Charter Springs Behavioral Health System, Inc. Florida Charter Springs Hospital
Charter Springwood Behavioral Health System, Inc. Virginia
Charter Suburban Hospital of Mesquite, Inc. Texas
Charter Terre Haute Behavioral Health System, Inc. Indiana Charter Hospital of Terre Haute
Charter Thousand Oaks Behavioral Health System, Inc. California Charter Hospital of Thousand Oaks
Charter Behavioral Health System
of Southern California/Thousand Oaks
Charter Tidewater Behavioral Health System, Inc. Virginia
Charterton/LaGrange, Inc. Kentucky
Charter Treatment Center of Michigan, Inc. Michigan
Charter Westbrook Behavioral Health System, Inc. Virginia Charter Westbrook Hospital
Charter White Oak Behavioral Health System, Inc. Maryland
Charter Wichita Behavioral Health System, Inc. Kansas Charter Hospital of Wichita
Charter Woods Behavioral Health System, Inc. Alabama Charter Woods Hospital
<PAGE>
State of
Corporation Name Jurisdiction Doing-Business-As Name
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Charter Woods Hospital, Inc. Alabama
CMCI, Inc. Nevada
CMFC, Inc. Nevada
CMSF, Inc. Florida Charter Glade Hospital
Charter Glade Behavioral Health System
CPS Associates, Inc. Virginia
Desert Springs Hospital, Inc. Nevada
Employee Assistance Services, Inc. Georgia
Florida Health Facilities, Inc. Florida Charter Hospital of Pasco
Charter Behavioral Health System
of Tampa Bay/Pasco
Golden Isle Assurance Company Ltd. Bermuda
Group Practice Affiliates, Inc. Delaware
Gulf Coast EAP Services, Inc. Alabama
Gwinnette Immediate Care Center, Inc. Georgia
HCS, Inc. Georgia
Holcomb Bridge Immediate Care Center, Inc. Georgia
Hospital Investors, Inc. Georgia
Mandarin Meadows, Inc. Florida
Metropolitan Hospital, Inc. Georgia
Middle Georgia Hospital, Inc. Georgia
Pacific - Charter Medical, Inc. California
Peachford Professional Network, Inc. Georgia
Rivoli, Inc. Georgia
Schizophrenia Treatment and Rehabilitation, Inc. Georgia STAR
Shallowford Community Hospital, Inc. Georgia
Sistemas De Terapia Respiratoria S.A., Inc. Georgia
Societe Anonyme De La Metaire Switzerland La Metairie Clinic
Strategic Advantage, Inc. Minnesota
Stuart Circle Hospital Corporation Virginia
Tampa Bay Behavioral Health Alliance, Inc. Florida
Western Behavioral Systems, Inc. California
</TABLE>
<PAGE>
ARTHUR ANDERSEN & CO. EXHIBIT 23(a)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
(and to all references to our Firm) included in or made a part of this
registration statement.
/s/ Arthur Andersen & Co.
Atlanta, Georgia
May 13, 1994
<PAGE>
EXHIBIT 23B
ACCOUNTANTS' CONSENT
The Boards of Directors
Charter Medical Corporation and
National Medical Enterprises, Inc.
Our report, dated July 19, 1993 except as to Note 9, which is as of April
14, 1994, and Note 10, which is as of May 13, 1994, was qualified for the
effects on the combined financial statements of such adjustments, if any, as
might be necessary had the Company been able to determine the amount of the
settlements and agreements described in Note 9 to the combined financial
statements that are applicable to the Selected Psychiatric Hospitals.
We consent to the use of our qualified reports included herein and to the
reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick
--------------------------------------
Los Angeles, California
May 17, 1994
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints E. Mac Crawford,
Lawrence W. Drinkard and John R. Day, and each of them, his true
and lawful attorney-in-fact and agent, with full power of
substitution, for him and in his name, in any and all capacities,
to sign the Registration Statement to which this power of attorney
is attached, to sign all amendments (including post-effective
amendments) to the Registration Statement to which this power of
attorney is attached, and to file such Registration Statement, all
those amendments, and exhibits to them and other documents to be
filed in connection with them, with the Securities and Exchange
Commission.
Signature Title Date
--------- ----- ----
/s/ E. Mac Crawford President, Chairman of May 18, 1994
- ------------------------ the Board of Directors and
(E. Mac Crawford) Chief Executive Officer
/s/ Lawrence W. Drinkard Executive Vice President- May 18, 1994
- ------------------------ Finance (Chief Financial
(Lawrence W. Drinkard) Officer)
/s/ John R. Day Vice President and May 18, 1994
- ------------------------ Controller (Principal
(John R. Day) Accounting Officer)
/s/ Edwin M. Banks Director May 18, 1994
- ------------------------
(Edwin M. Banks)
/s/ Andre C. Dimitriadis Director May 18, 1994
- ------------------------
(Andre C. Dimitriadis)
/s/ Raymond H. Kiefer Director May 18, 1994
- ------------------------
(Raymond H. Kiefer)
/s/ Gerald L. McManis Director May 13, 1994
- ------------------------
(Gerald L. McManis)
<PAGE>
POWER OF ATTORNEY
The undersigned director or officer or both, as the case may be, of each of the
corporations listed on Exhibit A hereto (singularly, the "Company" and together,
the "Companies"), serving in the capacities listed opposite the name of each
Company on Exhibit A hereto, hereby constitutes and appoints Charlotte A.
Sanford, Lawrence W. Drinkard, and John R. Day his true and lawful attorneys and
agents, each with full power to act without the others and each of said
attorneys having full power of substitution and resubstitution, to do any and
all acts and things and to execute in his name, place or stead in his capacity
as an officer or director or both of each of the Companies, any and all
instruments which they may deem necessary or advisable to enable each Company to
comply with the Securities Act of 1933, as amended, and the Trust Indenture Act
of 1939, as amended (collectively, the "Acts") and any rules, regulations and
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing under the Acts of all such registration statements,
amendments, post-effective amendments or supplements thereto, and any new or
revised prospectuses, as may be necessary or desirable in connection with the
registration of $375,000,000 aggregate principal amount of 11 1/4% Senior
Subordinated Notes due 2004 of Charter Medical Corporation, and the guarantees
thereof by the Companies, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign the name of the
undersigned in his capacity as an officer or director or both of each of the
Companies to all such registration statements, amendments, post-effective
amendments or supplements thereto, and any new or revised prospectuses; and the
undersigned hereby ratifies and approves the acts of said attorneys and each of
them.
IN WITNESS WHEREOF, the undersigned director or officer or both, as the
case may be, of each of the Companies listed on Exhibit A hereof, has executed
this instrument on this 18th day of May, 1994.
/s/ W. Stephen Love
-------------------------------
W. Stephen Love
<PAGE>
EXHIBIT A
POWER OF ATTORNEY
W. STEPHEN LOVE
<TABLE>
<CAPTION>
<S> <C>
Ambulatory Resources, Inc..................................... President
Atlanta MOB, Inc.............................................. President
Charter Community Hospital of Des Moines, Inc................. President
Charter Financial Offices, Inc................................ President
Charter Medical - Cleveland, Inc.............................. President
Charter Northside Hospital, Inc............................... President
Charter Regional Medical Center, Inc.......................... President
Desert Springs Hospital, Inc.................................. President
Gwinnett Immediate Care Center, Inc........................... President
Holcomb Bridge Immediate Care Center, Inc..................... President
Metropolitan Hospital, Inc.................................... President
Middle Georgia Hospital, Inc.................................. President
Rivoli, Inc................................................... President
Shallowford Community Hospital, Inc........................... President
Stuart Circle Hospital Corporation............................ President
</TABLE>
<PAGE>
POWER OF ATTORNEY
The undersigned director or officer or both, as the case may be, of each of the
corporations listed on Exhibit A hereto (singularly, the "Company" and together,
the "Companies"), serving in the capacities listed opposite the name of each
Company on Exhibit A hereto, hereby constitutes and appoints Charlotte A.
Sanford, Lawrence W. Drinkard, and John R. Day his true and lawful attorneys and
agents, each with full power to act without the others and each of said
attorneys having full power of substitution and resubstitution, to do any and
all acts and things and to execute in his name, place or stead in his capacity
as an officer or director or both of each of the Companies, any and all
instruments which they may deem necessary or advisable to enable each Company to
comply with the Securities Act of 1933, as amended, and the Trust Indenture Act
of 1939, as amended (collectively, the "Acts") and any rules, regulations and
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing under the Acts of all such registration statements,
amendments, post-effective amendments or supplements thereto, and any new or
revised prospectuses, as may be necessary or desirable in connection with the
registration of $375,000,000 aggregate principal amount of 11 1/4% Senior
Subordinated Notes due 2004 of Charter Medical Corporation, and the guarantees
thereof by the Companies, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign the name of the
undersigned in his capacity as an officer or director or both of each of the
Companies to all such registration statements, amendments, post-effective
amendments or supplements thereto, and any new or revised prospectuses; and the
undersigned hereby ratifies and approves the acts of said attorneys and each of
them.
IN WITNESS WHEREOF, the undersigned director or officer or both,
as the case may be, of each of the Companies listed on Exhibit A hereof, has
executed this instrument on this 12th day of May, 1994.
/s/ Vernon S. Westrich
-------------------------------
Vernon S. Westrich
<PAGE>
EXHIBIT A
POWER OF ATTORNEY
VERNON S. WESTRICH
<TABLE>
<CAPTION>
<S> <C>
Charter Beacon Behavioral Health System, Inc.................. President
Charter Behavioral Health System of Chicago, Inc.............. President
Charter Behavioral Health System of Columbia, Inc............. President
Charter Behavioral Health System of Kansas City, Inc.......... President
Charter Behavioral Health System of Northwest Arkansas, Inc... President
Charter Behavioral Health System of Northwest Indiana, Inc.... President
Charter Behavioral Health System of Paducah, Inc.............. President
Charter Behavioral Health System of Toledo, Inc............... President
Charter Contract Services, Inc................................ President
Charter Indianapolis Behavioral Health System, Inc............ President
Charter Lafayette Behavioral Health System, Inc............... President
Charter Little Rock Behavioral Health System, Inc............. President
Charter Louisville Behavioral Health System, Inc.............. President
Charter Milwaukee Behavioral Health System, Inc............... President
Charter Ridge Behavioral Health System, Inc................... President
Charter Sioux Falls Behavioral Health System, Inc............. President
Charter South Bend Behavioral Health System, Inc.............. President
Charter Terre Haute Behavioral Health System, Inc............. President
Charter Wichita Behavioral Health System, Inc................. President
Charterton/LaGrange, Inc...................................... President
</TABLE>
<PAGE>
POWER OF ATTORNEY
The undersigned director or officer or both, as the case may be, of each of the
corporations listed on Exhibit A hereto (singularly, the "Company" and together,
the "Companies"), serving in the capacities listed opposite the name of each
Company on Exhibit A hereto, hereby constitutes and appoints Charlotte A.
Sanford, Lawrence W. Drinkard, and John R. Day his true and lawful attorneys and
agents, each with full power to act without the others and each of said
attorneys having full power of substitution and resubstitution, to do any and
all acts and things and to execute in his name, place or stead in his capacity
as an officer or director or both of each of the Companies, any and all
instruments which they may deem necessary or advisable to enable each Company to
comply with the Securities Act of 1933, as amended, and the Trust Indenture Act
of 1939, as amended (collectively, the "Acts") and any rules, regulations and
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing under the Acts of all such registration statements,
amendments, post-effective amendments or supplements thereto, and any new or
revised prospectuses, as may be necessary or desirable in connection with the
registration of $375,000,000 aggregate principal amount of 11 1/4% Senior
Subordinated Notes due 2004 of Charter Medical Corporation, and the guarantees
thereof by the Companies, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign the name of the
undersigned in his capacity as an officer or director or both of each of the
Companies to all such registration statements, amendments, post-effective
amendments or supplements thereto, and any new or revised prospectuses; and the
undersigned hereby ratifies and approves the acts of said attorneys and each of
them.
IN WITNESS WHEREOF, the undersigned director or officer or both,
as the case may be, of each of the Companies listed on Exhibit A hereof, has
executed this instrument on this 18th day of May, 1994.
/s/ Margie M. Smith
-------------------------------
Margie M. Smith
<PAGE>
EXHIBIT A
POWER OF ATTORNEY
MARGIE M. SMITH
<TABLE>
<CAPTION>
<S> <C>
Charter Alvarado Behavioral Health System, Inc................ Director
Charter Appalachian Hall Behavioral Health System, Inc........ Director
Charter Arbor Indy Behavioral Health System, Inc.............. Director
Charter Bay Harbor Behavioral Health System, Inc.............. Director
Charter Behavioral Health System of Atlanta, Inc.............. Director
Charter Behavioral Health System of Baywood, Inc.............. Director
Charter Behavioral Health System of Bradenton, Inc............ Director
Charter Behavioral Health System of Canoga Park, Inc.......... Director
Charter Behavioral Health System of Chula Vista, Inc.......... Director
Charter Behavioral Health System of Evansville, Inc........... Director
Charter Behavioral Health System at Fair Oaks, Inc............ Director
Charter Behavioral Health System at Hidden Brook, Inc......... Director
Charter Behavioral Health System of Jefferson, Inc............ Director
Charter Behavioral Health System of Lafayette, Inc............ Director
Charter Behavioral Health System of Lakewood, Inc............. Director
Charter Behavioral Health System at Los Altos, Inc............ Director
Charter Behavioral Health System of Michigan City, Inc........ Director
Charter Behavioral Health System of Nashua, Inc............... Director
Charter Behavioral Health System at Potomac Ridge, Inc........ Director
Charter Behavioral Health System of Rockford, Inc............. Director
Charter Behavioral Health System of San Jose, Inc............. Director
Charter Behavioral Health System of Texarkana, Inc............ Director
Charter Behavioral Health System of Tucson, Inc............... Director
Charter Behavioral Health System of Virginia Beach, Inc....... Director
Charter Behavioral Health System of Visalia, Inc.............. Director
Charter Behavioral Health System at Warwick Manor, Inc........ Director
Charter Behavioral Health System of Washington, D.C., Inc..... Director
Charter Behavioral Health System of Waverly, Inc.............. Director
Charter Behavioral Health System of Yorba Linda, Inc.......... Director
Charter Brawner Behavioral Health System, Inc................. Director
Charter Canyon Springs Behavioral Health System, Inc.......... Director
Charter Centennial Peaks Behavioral Health System, Inc........ Director
Charter Cove Forge Behavioral Health System, Inc.............. Director
Charter Crescent Pines Behavioral Health System, Inc.......... Director
Charter Fairbridge Behavioral Health System, Inc.............. Director
Charter Fenwick Hall Behavioral Health System, Inc............ Director
Charter Lakehurst Behavioral Health System, Inc............... Director
Charter Laurel Heights Behavioral Health System, Inc.......... Director
Charter Laurel Oaks Behavioral Health System, Inc............. Director
Charter Linden Oaks Behavioral Health System, Inc............. Director
Charter Meadows Behavioral Health System, Inc................. Director
Charter Medfield Behavioral Health System, Inc................ Director
Charter Mid-South Behavioral Health System, Inc............... Director
Charter Northbrooke Behavioral Health System, Inc............. Director
Charter Richmond Behavioral Health System, Inc................ Director
Charter Serenity Lodge Behavioral Health System, Inc.......... Director
Charter Springwood Behavioral Health System, Inc.............. Director
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Charter Tidewater Behavioral Health System, Inc............... Director
Charter White Oak Behavioral Health System, Inc............... Director
</TABLE>
Page 2
<PAGE>
POWER OF ATTORNEY
The undersigned director or officer or both, as the case may be, of each of the
corporations listed on Exhibit A hereto (singularly, the "Company" and together,
the "Companies"), serving in the capacities listed opposite the name of each
Company on Exhibit A hereto, hereby constitutes and appoints Charlotte A.
Sanford, Lawrence W. Drinkard, and John R. Day his true and lawful attorneys and
agents, each with full power to act without the others and each of said
attorneys having full power of substitution and resubstitution, to do any and
all acts and things and to execute in his name, place or stead in his capacity
as an officer or director or both of each of the Companies, any and all
instruments which they may deem necessary or advisable to enable each Company to
comply with the Securities Act of 1933, as amended, and the Trust Indenture Act
of 1939, as amended (collectively, the "Acts") and any rules, regulations and
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing under the Acts of all such registration statements,
amendments, post-effective amendments or supplements thereto, and any new or
revised prospectuses, as may be necessary or desirable in connection with the
registration of $375,000,000 aggregate principal amount of 11 1/4% Senior
Subordinated Notes due 2004 of Charter Medical Corporation, and the guarantees
thereof by the Companies, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign the name of the
undersigned in his capacity as an officer or director or both of each of the
Companies to all such registration statements, amendments, post-effective
amendments or supplements thereto, and any new or revised prospectuses; and the
undersigned hereby ratifies and approves the acts of said attorneys and each of
them.
IN WITNESS WHEREOF, the undersigned director or officer or both,
as the case may be, of each of the Companies listed on Exhibit A hereof, has
executed this instrument on this 18th day of May, 1994.
/s/ Lawrence W. Drinkard
-------------------------------
Lawrence W. Drinkard
<PAGE>
EXHIBIT A
POWER OF ATTORNEY
LAWRENCE W. DRINKARD
<TABLE>
<CAPTION>
<S> <C>
Charter Alvarado Behavioral Health System, Inc................ President
Charter Appalachian Behavioral Health System, Inc............. President
Charter Arbor Indy Behavioral Health System, Inc.............. President
Charter Bay Harbor Behavioral Health System, Inc.............. President
Charter Behavioral Health System at Fair Oaks, Inc............ President
Charter Behavioral Health System at Hidden Brook, Inc......... President
Charter Behavioral Health System at Los Altos, Inc............ President
Charter Behavioral Health System at Potomac Ridge, Inc........ President
Charter Behavioral Health System at Warwick Manor, Inc........ President
Charter Behavioral Health System of Baywood, Inc.............. President
Charter Behavioral Health System of Bradenton, Inc............ President
Charter Behavioral Health System of Canoga Park, Inc.......... President
Charter Behavioral Health System of Chula Vista, Inc.......... President
Charter Behavioral Health System of Evansville, Inc........... President
Charter Behavioral Health System of Jefferson, Inc............ President
Charter Behavioral Health System of Lafayette, Inc............ President
Charter Behavioral Health System of Lakewood, Inc............. President
Charter Behavioral Health System of Michigan City, Inc........ President
Charter Behavioral Health System of Nashua, Inc............... President
Charter Behavioral Health System of Rockford, Inc............. President
Charter Behavioral Health System of San Jose, Inc............. President
Charter Behavioral Health System of Texarkana, Inc............ President
Charter Behavioral Health System of Tucson, Inc............... President
Charter Behavioral Health System of Virginia Beach, Inc....... President
Charter Behavioral Health System of Visalia, Inc.............. President
Charter Behavioral Health System of Washington, D.C., Inc..... President
Charter Behavioral Health System of Waverly, Inc.............. President
Charter Behavioral Health System of Yorba Linda, Inc.......... President
Charter Behavioral Health Systems of Atlanta, Inc............. President
Charter Brawner Behavioral Health System, Inc................. President
Charter Canyon Springs Behavioral Health System, Inc.......... President
Charter Centennial Peaks Behavioral Health System, Inc........ President
Charter Cove Forge Behavioral Health System, Inc.............. President
Charter Crescent Pines Behavioral Health System, Inc.......... President
Charter Fairbridge Behavioral Health System, Inc.............. President
Charter Fenwick Hall Behavioral Health System, Inc............ President
Charter Hospital of St. Louis, Inc............................ President
Charter Lakehurst Behavioral Health System, Inc............... President
Charter Laurel Heights Behavioral Health System, Inc.......... President
Charter Laurel Oaks Behavioral Health System, Inc............. President
Charter Linden Oaks Behavioral Health System, Inc............. President
Charter Meadows Behavioral Health System, Inc................. President
Charter Medfield Behavioral Health System, Inc................ President
Charter Mid-South Behavioral Health System, Inc............... President
Charter Northbrooke Behavioral Health System, Inc............. President
Charter Richmond Behavioral Health System, Inc................ President
Charter Serenity Lodge Behavioral Health System, Inc.......... President
Charter Springwood Behavioral Health System, Inc.............. President
Charter Tidewater Behavioral Health System, Inc............... President
Charter White Oak Behavioral Health System, Inc............... President
</TABLE>
<PAGE>
POWER OF ATTORNEY
The undersigned director or officer or both, as the case may be, of each of the
corporations listed on Exhibit A hereto (singularly, the "Company" and together,
the "Companies"), serving in the capacities listed opposite the name of each
Company on Exhibit A hereto, hereby constitutes and appoints Charlotte A.
Sanford, Lawrence W. Drinkard, and John R. Day his true and lawful attorneys and
agents, each with full power to act without the others and each of said
attorneys having full power of substitution and resubstitution, to do any and
all acts and things and to execute in his name, place or stead in his capacity
as an officer or director or both of each of the Companies, any and all
instruments which they may deem necessary or advisable to enable each Company to
comply with the Securities Act of 1933, as amended, and the Trust Indenture Act
of 1939, as amended (collectively, the "Acts") and any rules, regulations and
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing under the Acts of all such registration statements,
amendments, post-effective amendments or supplements thereto, and any new or
revised prospectuses, as may be necessary or desirable in connection with the
registration of $375,000,000 aggregate principal amount of 11 1/4% Senior
Subordinated Notes due 2004 of Charter Medical Corporation, and the guarantees
thereof by the Companies, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign the name of the
undersigned in his capacity as an officer or director or both of each of the
Companies to all such registration statements, amendments, post-effective
amendments or supplements thereto, and any new or revised prospectuses; and the
undersigned hereby ratifies and approves the acts of said attorneys and each of
them.
IN WITNESS WHEREOF, the undersigned director or officer or both,
as the case may be, of each of the Companies listed on Exhibit A hereof, has
executed this instrument on this 18th day of May, 1994.
/s/ Jim R. Johnson
-------------------------------
Jim R. Johnson
<PAGE>
EXHIBIT A
POWER OF ATTORNEY
JIM R. JOHNSON
<TABLE>
<CAPTION>
<S> <C>
Charter Behavioral Health System of Fort Worth, Inc........... President
Charter Plains Behavioral Health System, Inc.................. President
</TABLE>
<PAGE>
POWER OF ATTORNEY
The undersigned director or officer or both, as the case may be, of each of the
corporations listed on Exhibit A hereto (singularly, the "Company" and together,
the "Companies"), serving in the capacities listed opposite the name of each
Company on Exhibit A hereto, hereby constitutes and appoints Charlotte A.
Sanford, Lawrence W. Drinkard, and John R. Day his true and lawful attorneys and
agents, each with full power to act without the others and each of said
attorneys having full power of substitution and resubstitution, to do any and
all acts and things and to execute in his name, place or stead in his capacity
as an officer or director or both of each of the Companies, any and all
instruments which they may deem necessary or advisable to enable each Company to
comply with the Securities Act of 1933, as amended, and the Trust Indenture Act
of 1939, as amended (collectively, the "Acts") and any rules, regulations and
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing under the Acts of all such registration statements,
amendments, post-effective amendments or supplements thereto, and any new or
revised prospectuses, as may be necessary or desirable in connection with the
registration of $375,000,000 aggregate principal amount of 11 1/4% Senior
Subordinated Notes due 2004 of Charter Medical Corporation, and the guarantees
thereof by the Companies, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign the name of the
undersigned in his capacity as an officer or director or both of each of the
Companies to all such registration statements, amendments, post-effective
amendments or supplements thereto, and any new or revised prospectuses; and the
undersigned hereby ratifies and approves the acts of said attorneys and each of
them.
IN WITNESS WHEREOF, the undersigned director or officer or both,
as the case may be, of each of the Companies listed on Exhibit A hereof, has
executed this instrument on this 13th day of May, 1994.
/s/ William H. Freeman, Jr.
-------------------------------
William H. Freeman, Jr.
<PAGE>
EXHIBIT A
POWER OF ATTORNEY
WILLIAM H. FREEMAN, JR.
<TABLE>
<CAPTION>
<S> <C>
Charter Medical - New York, Inc............................... President
Charter Medical of Orange County, Inc......................... President
Charter Psychiatric Hospitals, Inc............................ President
Mandarin Meadows, Inc......................................... President
</TABLE>
<PAGE>
POWER OF ATTORNEY
The undersigned director or officer or both, as the case may be, of each of the
corporations listed on Exhibit A hereto (singularly, the "Company" and together,
the "Companies"), serving in the capacities listed opposite the name of each
Company on Exhibit A hereto, hereby constitutes and appoints Charlotte A.
Sanford, Lawrence W. Drinkard, and John R. Day his true and lawful attorneys and
agents, each with full power to act without the others and each of said
attorneys having full power of substitution and resubstitution, to do any and
all acts and things and to execute in his name, place or stead in his capacity
as an officer or director or both of each of the Companies, any and all
instruments which they may deem necessary or advisable to enable each Company to
comply with the Securities Act of 1933, as amended, and the Trust Indenture Act
of 1939, as amended (collectively, the "Acts") and any rules, regulations and
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing under the Acts of all such registration statements,
amendments, post-effective amendments or supplements thereto, and any new or
revised prospectuses, as may be necessary or desirable in connection with the
registration of $375,000,000 aggregate principal amount of 11 1/4% Senior
Subordinated Notes due 2004 of Charter Medical Corporation, and the guarantees
thereof by the Companies, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign the name of the
undersigned in his capacity as an officer or director or both of each of the
Companies to all such registration statements, amendments, post-effective
amendments or supplements thereto, and any new or revised prospectuses; and the
undersigned hereby ratifies and approves the acts of said attorneys and each of
them.
IN WITNESS WHEREOF, the undersigned director or officer or both,
as the case may be, of each of the Companies listed on Exhibit A hereof, has
executed this instrument on this 18th day of May, 1994.
/s/ Joseph M. Cobern
-------------------------------
Joseph M. Cobern
<PAGE>
EXHIBIT A
POWER OF ATTORNEY
JOSEPH M. COBERN
<TABLE>
<CAPTION>
<S> <C>
Ambulatory Resources, Inc..................................... Director
Atlanta MOB, Inc.............................................. Director
Beltway Community Hospital, Inc............................... Director
Charter of Alabama, Inc....................................... Director
C.A.C.O. Services, Inc........................................ Director
CCM, Inc...................................................... Director
Charter Augusta Behavioral Health System, Inc................. Director
Charter Beacon Behavioral Health System, Inc.................. Director
Charter Behavioral Health System of Athens, Inc............... Director
Charter Behavioral Health System of Austin, Inc............... Director
Charter Behavioral Health System of Central Georgia, Inc...... Director
Charter Behavioral Health System of Charleston, Inc........... Director
Charter Behavioral Health System of Charlottesville, Inc...... Director
Charter Behavioral Health System of Chicago, Inc.............. Director
Charter Behavioral Health System of Columbia, Inc............. Director
Charter Behavioral Health System of Corpus Christi, Inc....... Director
Charter Behavioral Health System of Dallas, Inc............... Director
Charter Behavioral Health System of Fort Worth, Inc........... Director
Charter Behavioral Health System of Jackson, Inc.............. Director
Charter Behavioral Health System of Jacksonville, Inc......... Director
Charter Behavioral Health System of Kansas City, Inc.......... Director
Charter Behavioral Health System of Lake Charles, Inc......... Director
Charter Behavioral Health System of Mobile, Inc............... Director
Charter Behavioral Health System of Nevada, Inc............... Director
Charter Behavioral Health System of New Mexico, Inc........... Director
Charter Behavioral Health System of Northern California, Inc.. Director
Charter Behavioral Health System of Northwest Arkansas, Inc... Director
Charter Behavioral Health System of Northwest Indiana, Inc.... Director
Charter Behavioral Health System of Paducah, Inc.............. Director
Charter Behavioral Health System of Savannah, Inc............. Director
Charter Behavioral Health System of Southern California, Inc.. Director
Charter Behavioral Health System of Tampa Bay, Inc............ Director
Charter Behavioral Health System of Toledo, Inc............... Director
Charter Behavioral Health System of the Inland Empire, Inc.... Director
Charter Behavioral Health System of Winston-Salem, Inc........ Director
Charter-By-The-Sea Behavioral Health System, Inc.............. Director
Charter Canyon Behavioral Health System, Inc.................. Director
Charter Colonial Institute, Inc............................... Director
Charter Community Hospital, Inc............................... Director
Charter Community Hospital of Des Moines, Inc................. Director
Charter Contract Services, Inc................................ Director
Charter Fairmount Behavioral Health System, Inc............... Director
Charter Financial Offices, Inc................................ Director
Charter Forest Behavioral Health System, Inc.................. Director
Charter Grapevine Behavioral Health System, Inc............... Director
Charter Greensboro Behavioral Health System, Inc.............. Director
Charter Health Management of Texas, Inc....................... Director
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Charter Hospital of Columbus, Inc............................. Director
Charter Hospital of Denver, Inc............................... Director
Charter Hospital of Ft. Collins, Inc.......................... Director
Charter Hospital of Laredo, Inc............................... Director
Charter Hospital of Miami, Inc................................ Director
Charter Hospital of Mobile, Inc............................... Director
Charter Hospital of Northern New Jersey, Inc.................. Director
Charter Hospital of Santa Teresa, Inc......................... Director
Charter Hospital of St. Louis, Inc............................ Director
Charter Hospital of Torrance, Inc............................. Director
Charter Indianapolis Behavioral Health System, Inc............ Director
Charter Lafayette Behavioral Health System, Inc............... Director
Charter Lakeside Behavioral Health System, Inc................ Director
Charter Little Rock Behavioral Health System, Inc............. Director
Charter Louisville Behavioral Health System, Inc.............. Director
Charter Medical - California, Inc............................. Director
Charter Medical - Clayton County, Inc......................... Director
Charter Medical - Cleveland, Inc.............................. Director
Charter Medical - Dallas, Inc................................. Director
Charter Medical Executive Corporation......................... Director
Charter Medical Information Services, Inc..................... Director
Charter Medical International, S.A., Inc...................... Director
Charter Medical - Long Beach, Inc............................. Director
Charter Medical Management Company............................ Director
Charter Medical - New York, Inc............................... Director
Charter Medical of East Valley, Inc........................... Director
Charter Medical of North Phoenix, Inc......................... Director
Charter Medical of Orange County, Inc......................... Director
Charter Mental Health Options, Inc............................ Director
Charter Milwaukee Behavioral Health System, Inc............... Director
Charter Mission Viejo Behavioral Health System, Inc........... Director
Charter MOB of Charlottesville, Inc........................... Director
Charter North Behavioral Health System, Inc................... Director
Charter North Counseling Center, Inc.......................... Director
Charter Northridge Behavioral Health System, Inc.............. Director
Charter Northside Hospital, Inc............................... Director
Charter Oak Behavioral Health System, Inc..................... Director
Charter Palms Behavioral Health System, Inc................... Director
Charter Peachford Behavioral Health System, Inc............... Director
Charter Pines Behavioral Health System, Inc................... Director
Charter Plains Behavioral Health System, Inc.................. Director
Charter - Provo School, Inc................................... Director
Charter Psychiatric Hospitals, Inc............................ Director
Charter Real Behavioral Health System, Inc.................... Director
Charter Regional Medical Center, Inc.......................... Director
Charter Ridge Behavioral Health System, Inc................... Director
Charter Rivers Behavioral Health System, Inc.................. Director
Charter San Diego Behavioral Health System, Inc............... Director
Charter Sioux Falls Behavioral Health System, Inc............. Director
Charter South Bend Behavioral Health System, Inc.............. Director
Charter Springs Behavioral Health System, Inc................. Director
Charter Surburban Hospital of Mesquite, Inc................... Director
Charter Terre Haute Behavioral Health System, Inc............. Director
Charter Thousand Oaks Behavioral Health System, Inc........... Director
Charterton/LaGrange, Inc...................................... Director
</TABLE>
Page 2
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Charter Treatment Center of Michigan, Inc..................... Director
Charter Westbrook Behavioral Health System, Inc............... Director
Charter Wichita Behavioral Health System, Inc................. Director
Charter Woods Behavioral Health System, Inc................... Director
Charter Woods Hospital, Inc................................... Director
CMCI, Inc..................................................... Director
CMFC, Inc..................................................... Director
CMSF, Inc..................................................... Director
CPS Associates, Inc........................................... Director
Desert Springs Hospital, Inc.................................. Director
Employee Assistance Services, Inc............................. Director
Florida Health Facilities, Inc................................ Director
Gulf Coast EAP Services, Inc.................................. Director
Gwinnett Immediate Care Center, Inc........................... Director
HCS, Inc...................................................... Director
Holcomb Bridge Immediate Care Center, Inc..................... Director
Hospital Investors, Inc....................................... Director
Mandarin Meadows, Inc......................................... Director
Metropolitan Hospital, Inc.................................... Director
Middle Georgia Hospital, Inc.................................. Director
Pacific - Charter Medical, Inc................................ Director
Peachford Professional Network, Inc........................... Director
Rivoli, Inc................................................... Director
Shallowford Community Hospital, Inc........................... Director
Sistemas De Terapia Respiratoria S.A., Inc.................... Director
Stuart Circle Hospital Corporation............................ Director
Tampa Bay Behavioral Health Alliance, Inc..................... Director
Western Behavioral Systems, Inc............................... Director
Charter Medical of Puerto Rico, Inc........................... Director
</TABLE>
Page 3
<PAGE>
POWER OF ATTORNEY
The undersigned director or officer or both, as the case may be, of each of the
corporations listed on Exhibit A hereto (singularly, the "Company" and together,
the "Companies"), serving in the capacities listed opposite the name of each
Company on Exhibit A hereto, hereby constitutes and appoints Charlotte A.
Sanford, Lawrence W. Drinkard, and John R. Day his true and lawful attorneys and
agents, each with full power to act without the others and each of said
attorneys having full power of substitution and resubstitution, to do any and
all acts and things and to execute in his name, place or stead in his capacity
as an officer or director or both of each of the Companies, any and all
instruments which they may deem necessary or advisable to enable each Company to
comply with the Securities Act of 1933, as amended, and the Trust Indenture Act
of 1939, as amended (collectively, the "Acts") and any rules, regulations and
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing under the Acts of all such registration statements,
amendments, post-effective amendments or supplements thereto, and any new or
revised prospectuses, as may be necessary or desirable in connection with the
registration of $375,000,000 aggregate principal amount of 11 1/4% Senior
Subordinated Notes due 2004 of Charter Medical Corporation, and the guarantees
thereof by the Companies, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign the name of the
undersigned in his capacity as an officer or director or both of each of the
Companies to all such registration statements, amendments, post-effective
amendments or supplements thereto, and any new or revised prospectuses; and the
undersigned hereby ratifies and approves the acts of said attorneys and each of
them.
IN WITNESS WHEREOF, the undersigned director or officer or both,
as the case may be, of each of the Companies listed on Exhibit A hereof, has
executed this instrument on this 18th day of May, 1994.
/s/ Joan Kradlak
-------------------------------
Joan Kradlak
<PAGE>
EXHIBIT A
POWER OF ATTORNEY
JOAN KRADLAK
<TABLE>
<S> <C>
CCM, Inc................................................ President
</TABLE>
<PAGE>
POWER OF ATTORNEY
The undersigned director or officer or both, as the case may be, of each of the
corporations listed on Exhibit A hereto (singularly, the "Company" and together,
the "Companies"), serving in the capacities listed opposite the name of each
Company on Exhibit A hereto, hereby constitutes and appoints Charlotte A.
Sanford, Lawrence W. Drinkard, and John R. Day his true and lawful attorneys and
agents, each with full power to act without the others and each of said
attorneys having full power of substitution and resubstitution, to do any and
all acts and things and to execute in his name, place or stead in his capacity
as an officer or director or both of each of the Companies, any and all
instruments which they may deem necessary or advisable to enable each Company to
comply with the Securities Act of 1933, as amended, and the Trust Indenture Act
of 1939, as amended (collectively, the "Acts") and any rules, regulations and
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing under the Acts of all such registration statements,
amendments, post-effective amendments or supplements thereto, and any new or
revised prospectuses, as may be necessary or desirable in connection with the
registration of $375,000,000 aggregate principal amount of 11 1/4% Senior
Subordinated Notes due 2004 of Charter Medical Corporation, and the guarantees
thereof by the Companies, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign the name of the
undersigned in his capacity as an officer or director or both of each of the
Companies to all such registration statements, amendments, post-effective
amendments or supplements thereto, and any new or revised prospectuses; and the
undersigned hereby ratifies and approves the acts of said attorneys and each of
them.
IN WITNESS WHEREOF, the undersigned director or officer or both,
as the case may be, of each of the Companies listed on Exhibit A hereof, has
executed this instrument on this 18th day of May, 1994.
/s/ James R. Bedenbaugh
--------------------------------
James R. Bedenbaugh
<PAGE>
EXHIBIT A
POWER OF ATTORNEY
JAMES R. BEDENBAUGH
<TABLE>
<S> <C>
CMCI, Inc................................................President
CMFC, Inc................................................President
</TABLE>
<PAGE>
POWER OF ATTORNEY
The undersigned director or officer or both, as the case may be, of each of the
corporations listed on Exhibit A hereto (singularly, the "Company" and together,
the "Companies"), serving in the capacities listed opposite the name of each
Company on Exhibit A hereto, hereby constitutes and appoints Charlotte A.
Sanford, Lawrence W. Drinkard, and John R. Day his true and lawful attorneys and
agents, each with full power to act without the others and each of said
attorneys having full power of substitution and resubstitution, to do any and
all acts and things and to execute in his name, place or stead in his capacity
as an officer or director or both of each of the Companies, any and all
instruments which they may deem necessary or advisable to enable each Company to
comply with the Securities Act of 1933, as amended, and the Trust Indenture Act
of 1939, as amended (collectively, the "Acts") and any rules, regulations and
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing under the Acts of all such registration statements,
amendments, post-effective amendments or supplements thereto, and any new or
revised prospectuses, as may be necessary or desirable in connection with the
registration of $375,000,000 aggregate principal amount of 11 1/4% Senior
Subordinated Notes due 2004 of Charter Medical Corporation, and the guarantees
thereof by the Companies, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign the name of the
undersigned in his capacity as an officer or director or both of each of the
Companies to all such registration statements, amendments, post-effective
amendments or supplements thereto, and any new or revised prospectuses; and the
undersigned hereby ratifies and approves the acts of said attorneys and each of
them.
IN WITNESS WHEREOF, the undersigned director or officer or both,
as the case may be, of each of the Companies listed on Exhibit A hereof, has
executed this instrument on this 18th day of May, 1994.
/s/ James M. Filush
--------------------------------
James M. Filush
<PAGE>
EXHIBIT A
POWER OF ATTORNEY
JAMES M. FILUSH
<TABLE>
<CAPTION>
<S> <C>
Charter Alvarado Behavioral Health System, Inc................ Director
Charter Appalachian Hall Behavioral Health System, Inc........ Director
Charter Arbor Indy Behavioral Health System, Inc.............. Director
Charter Bay Harbor Behavioral Health System, Inc.............. Director
Charter Behavioral Health Systems of Atlanta, Inc............. Director
Charter Behavioral Health System of Baywood, Inc.............. Director
Charter Behavioral Health System of Bradenton, Inc............ Director
Charter Behavioral Health System of Canoga Park, Inc.......... Director
Charter Behavioral Health System of Chula Vista, Inc.......... Director
Charter Behavioral Health System of Evansville, Inc........... Director
Charter Behavioral Health System at Fair Oaks, Inc............ Director
Charter Behavioral Health System at Hidden Brook, Inc......... Director
Charter Behavioral Health System of Jefferson, Inc............ Director
Charter Behavioral Health System of Lafayette, Inc............ Director
Charter Behavioral Health System of Lakewood, Inc............. Director
Charter Behavioral Health System at Los Altos, Inc............ Director
Charter Behavioral Health System of Michigan City, Inc........ Director
Charter Behavioral Health System of Nashua, Inc............... Director
Charter Behavioral Health System at Potomac Ridge, Inc........ Director
Charter Behavioral Health System of Rockford, Inc............. Director
Charter Behavioral Health System of San Jose, Inc............. Director
Charter Behavioral Health System of Texarkana, Inc............ Director
Charter Behavioral Health System of Tucson, Inc............... Director
Charter Behavioral Health System of Virginia Beach, Inc....... Director
Charter Behavioral Health System of Visalia, Inc.............. Director
Charter Behavioral Health System at Warwick Manor, Inc........ Director
Charter Behavioral Health System of Washington, D.C., Inc..... Director
Charter Behavioral Health System of Waverly, Inc.............. Director
Charter Behavioral Health System of Yorba Linda, Inc.......... Director
Charter Brawner Behavioral Health System, Inc................. Director
Charter Canyon Springs Behavioral Health System, Inc.......... Director
Charter Centennial Peaks Behavioral Health System, Inc........ Director
Charter Cove Forge Behavioral Health System, Inc.............. Director
Charter Crescent Pines Behavioral Health System, Inc.......... Director
Charter Fairbridge Behavioral Health System, Inc.............. Director
Charter Fenwick Hall Behavioral Health System, Inc............ Director
Charter Lakehurst Behavioral Health System, Inc............... Director
Charter Laurel Heights Behavioral Health System, Inc.......... Director
Charter Laurel Oaks Behavioral Health System, Inc............. Director
Charter Linden Oaks Behavioral Health System, Inc............. Director
Charter Meadows Behavioral Health System, Inc................. Director
Charter Medfield Behavioral Health System, Inc................ Director
Charter Mid-South Behavioral Health System, Inc............... Director
Charter Northbrooke Behavioral Health System, Inc............. Director
Charter Richmond Behavioral Health System, Inc................ Director
Charter Serenity Lodge Behavioral Health System, Inc.......... Director
Charter Springwood Behavioral Health System, Inc.............. Director
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Charter Tidewater Behavioral Health System, Inc............... Director
Charter White Oak Behavioral Health System, Inc............... Director
Charter Medical of England Limited............................ Director
</TABLE>
Page 2
<PAGE>
POWER OF ATTORNEY
The undersigned director or officer or both, as the case may be, of each of the
corporations listed on Exhibit A hereto (singularly, the "Company" and together,
the "Companies"), serving in the capacities listed opposite the name of each
Company on Exhibit A hereto, hereby constitutes and appoints Charlotte A.
Sanford, Lawrence W. Drinkard, and John R. Day his true and lawful attorneys and
agents, each with full power to act without the others and each of said
attorneys having full power of substitution and resubstitution, to do any and
all acts and things and to execute in his name, place or stead in his capacity
as an officer or director or both of each of the Companies, any and all
instruments which they may deem necessary or advisable to enable each Company to
comply with the Securities Act of 1933, as amended, and the Trust Indenture Act
of 1939, as amended (collectively, the "Acts") and any rules, regulations and
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing under the Acts of all such registration statements,
amendments, post-effective amendments or supplements thereto, and any new or
revised prospectuses, as may be necessary or desirable in connection with the
registration of $375,000,000 aggregate principal amount of 11 1/4% Senior
Subordinated Notes due 2004 of Charter Medical Corporation, and the guarantees
thereof by the Companies, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign the name of the
undersigned in his capacity as an officer or director or both of each of the
Companies to all such registration statements, amendments, post-effective
amendments or supplements thereto, and any new or revised prospectuses; and the
undersigned hereby ratifies and approves the acts of said attorneys and each of
them.
IN WITNESS WHEREOF, the undersigned director or officer or both,
as the case may be, of each of the Companies listed on Exhibit A hereof, has
executed this instrument on this 18th day of May, 1994.
Jon C. O'Shaughnessy
-------------------------------
Jon C. O'Shaughnessy
<PAGE>
EXHIBIT A
POWER OF ATTORNEY
JON C. O'SHAUGHNESSY
<TABLE>
<CAPTION>
<S> <C>
CMSF, Inc..................................................... President
CPS Associates, Inc........................................... President
Charter Behavioral Health System of Charlottesville, Inc...... President
Charter Behavioral Health System of Tampa Bay, Inc............ President
Charter Behavioral Health System of Winston-Salem, Inc........ President
Charter Fairmount Behavioral Health System, Inc............... President
Charter Greensboro Behavioral Health System, Inc.............. President
Charter Hospital of Miami, Inc................................ President
Charter Lakeside Behavioral Health System, Inc................ President
Charter MOB of Charlottesville, Inc........................... President
Charter Mental Health Options, Inc............................ President
Charter Northridge Behavioral Health System, Inc.............. President
Charter Peachford Behavioral Health System, Inc............... President
Charter Pines Behavioral Health System, Inc................... President
Charter Springs Behavioral Health System, Inc................. President
Charter Westbrook Behavioral Health System, Inc............... President
Florida Health Facilities, Inc................................ President
Peachford Professional Network, Inc........................... President
Tampa Bay Behavioral Health Alliance, Inc..................... President
</TABLE>
<PAGE>
POWER OF ATTORNEY
The undersigned director or officer or both, as the case may be, of each of the
corporations listed on Exhibit A hereto (singularly, the "Company" and together,
the "Companies"), serving in the capacities listed opposite the name of each
Company on Exhibit A hereto, hereby constitutes and appoints Charlotte A.
Sanford, Lawrence W. Drinkard, and John R. Day his true and lawful attorneys and
agents, each with full power to act without the others and each of said
attorneys having full power of substitution and resubstitution, to do any and
all acts and things and to execute in his name, place or stead in his capacity
as an officer or director or both of each of the Companies, any and all
instruments which they may deem necessary or advisable to enable each Company to
comply with the Securities Act of 1933, as amended, and the Trust Indenture Act
of 1939, as amended (collectively, the "Acts") and any rules, regulations and
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing under the Acts of all such registration statements,
amendments, post-effective amendments or supplements thereto, and any new or
revised prospectuses, as may be necessary or desirable in connection with the
registration of $375,000,000 aggregate principal amount of 11 1/4% Senior
Subordinated Notes due 2004 of Charter Medical Corporation, and the guarantees
thereof by the Companies, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign the name of the
undersigned in his capacity as an officer or director or both of each of the
Companies to all such registration statements, amendments, post-effective
amendments or supplements thereto, and any new or revised prospectuses; and the
undersigned hereby ratifies and approves the acts of said attorneys and each of
them.
IN WITNESS WHEREOF, the undersigned director or officer or both,
as the case may be, of each of the Companies listed on Exhibit A hereof, has
executed this instrument on this 18th day of May, 1994.
/s/ E. Mac Crawford
-------------------------------
E. Mac Crawford
<PAGE>
EXHIBIT A
POWER OF ATTORNEY
E. MAC CRAWFORD
<TABLE>
<CAPTION>
<S> <C>
Charter Medical International, S.A., Inc...................... President
Charter Medical Management Company............................ President
</TABLE>
<PAGE>
POWER OF ATTORNEY
The undersigned director or officer or both, as the case may be, of each of the
corporations listed on Exhibit A hereto (singularly, the "Company" and together,
the "Companies"), serving in the capacities listed opposite the name of each
Company on Exhibit A hereto, hereby constitutes and appoints Charlotte A.
Sanford, Lawrence W. Drinkard, and John R. Day his true and lawful attorneys and
agents, each with full power to act without the others and each of said
attorneys having full power of substitution and resubstitution, to do any and
all acts and things and to execute in his name, place or stead in his capacity
as an officer or director or both of each of the Companies, any and all
instruments which they may deem necessary or advisable to enable each Company to
comply with the Securities Act of 1933, as amended, and the Trust Indenture Act
of 1939, as amended (collectively, the "Acts") and any rules, regulations and
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing under the Acts of all such registration statements,
amendments, post-effective amendments or supplements thereto, and any new or
revised prospectuses, as may be necessary or desirable in connection with the
registration of $375,000,000 aggregate principal amount of 11 1/4% Senior
Subordinated Notes due 2004 of Charter Medical Corporation, and the guarantees
thereof by the Companies, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign the name of the
undersigned in his capacity as an officer or director or both of each of the
Companies to all such registration statements, amendments, post-effective
amendments or supplements thereto, and any new or revised prospectuses; and the
undersigned hereby ratifies and approves the acts of said attorneys and each of
them.
IN WITNESS WHEREOF, the undersigned director or officer or both,
as the case may be, of each of the Companies listed on Exhibit A hereof, has
executed this instrument on this 18th day of May, 1994.
/s/ David A. Richardson
-------------------------------
David A. Richardson
<PAGE>
EXHIBIT A
POWER OF ATTORNEY
DAVID A. RICHARDSON
<TABLE>
<CAPTION>
<S> <C>
Charter Behavioral Health System of Austin, Inc............... President
Charter Behavioral Health System of Corpus Christi, Inc....... President
Charter Behavioral Health System of Dallas, Inc............... President
Charter Behavioral Health System of Jackson, Inc.............. President
Charter Behavioral Health System of Lake Charles, Inc......... President
Charter Behavioral Health System of New Mexico, Inc........... President
Charter Forest Behavioral Health System, Inc.................. President
Charter Grapevine Behavioral Health System, Inc............... President
Charter Health Management of Texas, Inc....................... President
Charter Medical - California, Inc............................. President
Charter North Behavioral Health System, Inc................... President
Charter North Counseling Center, Inc.......................... President
Charter Palms Behavioral Health System, Inc................... President
Charter Real Behavioral Health System, Inc.................... President
Pacific - Charter Medical, Inc................................ President
Sistemas De Terapia Respiratoria S.A., Inc.................... President
</TABLE>
<PAGE>
POWER OF ATTORNEY
The undersigned director or officer or both, as the case may be, of each of the
corporations listed on Exhibit A hereto (singularly, the "Company" and together,
the "Companies"), serving in the capacities listed opposite the name of each
Company on Exhibit A hereto, hereby constitutes and appoints Charlotte A.
Sanford, Lawrence W. Drinkard, and John R. Day his true and lawful attorneys and
agents, each with full power to act without the others and each of said
attorneys having full power of substitution and resubstitution, to do any and
all acts and things and to execute in his name, place or stead in his capacity
as an officer or director or both of each of the Companies, any and all
instruments which they may deem necessary or advisable to enable each Company to
comply with the Securities Act of 1933, as amended, and the Trust Indenture Act
of 1939, as amended (collectively, the "Acts") and any rules, regulations and
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing under the Acts of all such registration statements,
amendments, post-effective amendments or supplements thereto, and any new or
revised prospectuses, as may be necessary or desirable in connection with the
registration of $375,000,000 aggregate principal amount of 11 1/4% Senior
Subordinated Notes due 2004 of Charter Medical Corporation, and the guarantees
thereof by the Companies, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign the name of the
undersigned in his capacity as an officer or director or both of each of the
Companies to all such registration statements, amendments, post-effective
amendments or supplements thereto, and any new or revised prospectuses; and the
undersigned hereby ratifies and approves the acts of said attorneys and each of
them.
IN WITNESS WHEREOF, the undersigned director or officer or both,
as the case may be, of each of the Companies listed on Exhibit A hereof, has
executed this instrument on this 13th day of May, 1994.
/s/ Donna Y. Wood
-------------------------------
Donna Y. Wood
<PAGE>
EXHIBIT A
POWER OF ATTORNEY
DONNA Y. WOOD
<TABLE>
<CAPTION>
<S> <C>
Charter Colonial Institute, Inc............................... President
Charter Hospital of Northern New Jersey, Inc.................. President
Charter Medical - Clayton County, Inc......................... President
HCS, Inc...................................................... President
Hospital Investors, Inc....................................... President
</TABLE>
<PAGE>
POWER OF ATTORNEY
The undersigned director or officer or both, as the case may be, of each of the
corporations listed on Exhibit A hereto (singularly, the "Company" and together,
the "Companies"), serving in the capacities listed opposite the name of each
Company on Exhibit A hereto, hereby constitutes and appoints Charlotte A.
Sanford, Lawrence W. Drinkard, and John R. Day his true and lawful attorneys and
agents, each with full power to act without the others and each of said
attorneys having full power of substitution and resubstitution, to do any and
all acts and things and to execute in his name, place or stead in his capacity
as an officer or director or both of each of the Companies, any and all
instruments which they may deem necessary or advisable to enable each Company to
comply with the Securities Act of 1933, as amended, and the Trust Indenture Act
of 1939, as amended (collectively, the "Acts") and any rules, regulations and
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing under the Acts of all such registration statements,
amendments, post-effective amendments or supplements thereto, and any new or
revised prospectuses, as may be necessary or desirable in connection with the
registration of $375,000,000 aggregate principal amount of 11 1/4% Senior
Subordinated Notes due 2004 of Charter Medical Corporation, and the guarantees
thereof by the Companies, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign the name of the
undersigned in his capacity as an officer or director or both of each of the
Companies to all such registration statements, amendments, post-effective
amendments or supplements thereto, and any new or revised prospectuses; and the
undersigned hereby ratifies and approves the acts of said attorneys and each of
them.
IN WITNESS WHEREOF, the undersigned director or officer or both,
as the case may be, of each of the Companies listed on Exhibit A hereof, has
executed this instrument on this 18th day of May, 1994.
/s/ C. Clark Wingfield
-------------------------------
C. Clark Wingfield
<PAGE>
EXHIBIT A
POWER OF ATTORNEY
C. CLARK WINGFIELD
<TABLE>
<CAPTION>
<S> <C>
Charter Medical Executive Corporation......................... President
Charter Medical Information Services, Inc..................... President
</TABLE>
<PAGE>
POWER OF ATTORNEY
The undersigned director or officer or both, as the case may be, of each of the
corporations listed on Exhibit A hereto (singularly, the "Company" and together,
the "Companies"), serving in the capacities listed opposite the name of each
Company on Exhibit A hereto, hereby constitutes and appoints Charlotte A.
Sanford, Lawrence W. Drinkard, and John R. Day his true and lawful attorneys and
agents, each with full power to act without the others and each of said
attorneys having full power of substitution and resubstitution, to do any and
all acts and things and to execute in his name, place or stead in his capacity
as an officer or director or both of each of the Companies, any and all
instruments which they may deem necessary or advisable to enable each Company to
comply with the Securities Act of 1933, as amended, and the Trust Indenture Act
of 1939, as amended (collectively, the "Acts") and any rules, regulations and
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing under the Acts of all such registration statements,
amendments, post-effective amendments or supplements thereto, and any new or
revised prospectuses, as may be necessary or desirable in connection with the
registration of $375,000,000 aggregate principal amount of 11 1/4% Senior
Subordinated Notes due 2004 of Charter Medical Corporation, and the guarantees
thereof by the Companies, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign the name of the
undersigned in his capacity as an officer or director or both of each of the
Companies to all such registration statements, amendments, post-effective
amendments or supplements thereto, and any new or revised prospectuses; and the
undersigned hereby ratifies and approves the acts of said attorneys and each of
them.
IN WITNESS WHEREOF, the undersigned director or officer or both,
as the case may be, of each of the Companies listed on Exhibit A hereof, has
executed this instrument on this 18th day of May, 1994.
/s/ Charlotte A. Sanford
-------------------------------
Charlotte A. Sanford
<PAGE>
EXHIBIT A
POWER OF ATTORNEY
CHARLOTTE A. SANFORD
<TABLE>
<CAPTION>
<S> <C>
Ambulatory Resources, Inc......................................... Treasurer
Atlanta MOB, Inc.................................................. Treasurer
Beltway Community Hospital, Inc................................... Treasurer
CCM, Inc.......................................................... Treasurer
Charter Alvarado Behavioral Health System, Inc.................... Treasurer
Charter Appalachian Hall Behavioral Health System, Inc............ Treasurer
Charter Arbor Indy Behavioral Health System, Inc.................. Treasurer
Charter Augusta Behavioral Health System, Inc..................... Treasurer
Charter Bay Harbor Behavioral Health System, Inc.................. Treasurer
Charter Beacon Behavioral Health System, Inc...................... Treasurer
Charter Behavioral Health System at Fair Oaks, Inc................ Treasurer
Charter Behavioral Health System at Hidden Brook, Inc............. Treasurer
Charter Behavioral Health System at Los Altos, Inc................ Treasurer
Charter Behavioral Health System at Potomac Ridge, Inc............ Treasurer
Charter Behavioral Health System at Warwick Manor, Inc............ Treasurer
Charter Behavioral Health System of Athens, Inc................... Treasurer
Charter Behavioral Health System of Austin, Inc................... Treasurer
Charter Behavioral Health System of Baywood, Inc.................. Treasurer
Charter Behavioral Health System of Bradenton, Inc................ Treasurer
Charter Behavioral Health System of Canoga Park, Inc.............. Treasurer
Charter Behavioral Health System of Central Georgia, Inc.......... Treasurer
Charter Behavioral Health System of Charleston, Inc............... Treasurer
Charter Behavioral Health System of Charlottesville, Inc.......... Treasurer
Charter Behavioral Health System of Chicago, Inc.................. Treasurer
Charter Behavioral Health System of Chula Vista, Inc.............. Treasurer
Charter Behavioral Health System of Columbia, Inc................. Treasurer
Charter Behavioral Health System of Corpus Christi, Inc........... Treasurer
Charter Behavioral Health System of Dallas, Inc................... Treasurer
Charter Behavioral Health System of Evansville, Inc............... Treasurer
Charter Behavioral Health System of Fort Worth, Inc............... Treasurer
Charter Behavioral Health System of Jackson, Inc.................. Treasurer
Charter Behavioral Health System of Jacksonville, Inc............. Treasurer
Charter Behavioral Health System of Jefferson, Inc................ Treasurer
Charter Behavioral Health System of Kansas City, Inc.............. Treasurer
Charter Behavioral Health System of Lafayette, Inc................ Treasurer
Charter Behavioral Health System of Lake Charles, Inc............. Treasurer
Charter Behavioral Health System of Lakewood, Inc................. Treasurer
Charter Behavioral Health System of Michigan City, Inc............ Treasurer
Charter Behavioral Health System of Mobile, Inc................... Treasurer
Charter Behavioral Health System of Nashua, Inc................... Treasurer
Charter Behavioral Health System of Nevada, Inc................... Treasurer
Charter Behavioral Health System of New Mexico, Inc............... Treasurer
Charter Behavioral Health System of Northern California, Inc...... Treasurer
Charter Behavioral Health System of Northwest Arkansas, Inc....... Treasurer
Charter Behavioral Health System of Northwest Indiana, Inc........ Treasurer
Charter Behavioral Health System of Paducah, Inc.................. Treasurer
Charter Behavioral Health System of Rockford, Inc................. Treasurer
Charter Behavioral Health System of San Jose, Inc................. Treasurer
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Charter Behavioral Health System of Southern California, Inc...... Treasurer
Charter Behavioral Health System of Tampa Bay, Inc................ Treasurer
Charter Behavioral Health System of Texarkana, Inc................ Treasurer
Charter Behavioral Health System of the Inland Empire, Inc........ Treasurer
Charter Behavioral Health System of Toledo, Inc................... Treasurer
Charter Behavioral Health System of Tucson, Inc................... Treasurer
Charter Behavioral Health System of Virginia Beach, Inc........... Treasurer
Charter Behavioral Health System of Visalia, Inc.................. Treasurer
Charter Behavioral Health System of Washington, D.C., Inc......... Treasurer
Charter Behavioral Health System of Waverly, Inc.................. Treasurer
Charter Behavioral Health System of Winston-Salem, Inc............ Treasurer
Charter Behavioral Health System of Yorba Linda, Inc.............. Treasurer
Charter Behavioral Health Systems of Atlanta, Inc................. Treasurer
Charter Brawner Behavioral Health System, Inc..................... Treasurer
Charter Canyon Behavioral Health System, Inc...................... Treasurer
Charter Canyon Springs Behavioral Health System, Inc.............. Treasurer
Charter Centennial Peaks Behavioral Health System, Inc............ Treasurer
Charter Colonial Institute, Inc................................... Treasurer
Charter Community Hospital, Inc................................... Treasurer
Charter Community Hospital of Des Moines, Inc..................... Treasurer
Charter Contract Services, Inc.................................... Treasurer
Charter Cove Forge Behavioral Health System, Inc.................. Treasurer
Charter Crescent Pines Behavioral Health System, Inc.............. Treasurer
Charter Fairbridge Behavioral Health System, Inc.................. Treasurer
Charter Fairmount Behavioral Health System, Inc................... Treasurer
Charter Fenwick Hall Behavioral Health System, Inc................ Treasurer
Charter Financial Offices, Inc.................................... Treasurer
Charter Forest Behavioral Health System, Inc...................... Treasurer
Charter Grapevine Behavioral Health System, Inc................... Treasurer
Charter Greensboro Behavioral Health System, Inc.................. Treasurer
Charter Health Management of Texas, Inc........................... Treasurer
Charter Hospital of Columbus, Inc................................. Treasurer
Charter Hospital of Denver, Inc................................... Treasurer
Charter Hospital of Ft. Collins, Inc.............................. Treasurer
Charter Hospital of Laredo, Inc................................... Treasurer
Charter Hospital of Miami, Inc.................................... Treasurer
Charter Hospital of Mobile, Inc................................... Treasurer
Charter Hospital of Northern New Jersey, Inc...................... Treasurer
Charter Hospital of Santa Teresa, Inc............................. Treasurer
Charter Behavioral Health System of Savannah, Inc................. Treasurer
Charter Hospital of St. Louis, Inc................................ Treasurer
Charter Hospital of Torrance, Inc................................. Treasurer
Charter Indianapolis Behavioral Health System, Inc................ Treasurer
Charter Lafayette Behavioral Health System, Inc................... Treasurer
Charter Lakehurst Behavioral Health System, Inc................... Treasurer
Charter Lakeside Behavioral Health System, Inc.................... Treasurer
Charter Laurel Heights Behavioral Health System, Inc.............. Treasurer
Charter Laurel Oaks Behavioral Health System, Inc................. Treasurer
Charter Linden Oaks Behavioral Health System, Inc................. Treasurer
Charter Little Rock Behavioral Health System, Inc................. Treasurer
Charter Louisville Behavioral Health System, Inc.................. Treasurer
Charter Meadows Behavioral Health System, Inc..................... Treasurer
Charter Medfield Behavioral Health System, Inc.................... Treasurer
Charter Medical Executive Corporation............................. Treasurer
</TABLE>
Page 2
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Charter Medical Information Services, Inc......................... Treasurer
Charter Medical International, S.A., Inc.......................... Treasurer
Charter Medical Management Company................................ Treasurer
Charter Medical of East Valley, Inc............................... Treasurer
Charter Medical of North Phoenix, Inc............................. Treasurer
Charter Medical of Orange County, Inc............................. Treasurer
Charter Medical - California, Inc................................. Treasurer
Charter Medical - Clayton County, Inc............................. Treasurer
Charter Medical - Cleveland, Inc.................................. Treasurer
Charter Medical - Dallas, Inc..................................... Treasurer
Charter Medical - Long Beach, Inc................................. Treasurer
Charter Medical - New York, Inc................................... Treasurer
Charter Mental Health Options, Inc................................ Treasurer
Charter Mid-South Behavioral Health System, Inc................... Treasurer
Charter Milwaukee Behavioral Health System, Inc................... Treasurer
Charter Mission Viejo Behavioral Health System, Inc............... Treasurer
Charter MOB of Charlottesville, Inc............................... Treasurer
Charter North Behavioral Health System, Inc....................... Treasurer
Charter North Counseling Center, Inc.............................. Treasurer
Charter Northbrooke Behavioral Health System, Inc................. Treasurer
Charter Northridge Behavioral Health System, Inc.................. Treasurer
Charter Northside Hospital, Inc................................... Treasurer
Charter Oak Behavioral Health System, Inc......................... Treasurer
Charter of Alabama, Inc........................................... Treasurer
Charter Palms Behavioral Health System, Inc....................... Treasurer
Charter Peachford Behavioral Health System, Inc................... Treasurer
Charter Pines Behavioral Health System, Inc....................... Treasurer
Charter Plains Behavioral Health System, Inc...................... Treasurer
Charter Psychiatric Hospitals, Inc................................ Treasurer
Charter Real Behavioral Health System, Inc........................ Treasurer
Charter Regional Medical Center, Inc.............................. Treasurer
Charter Richmond Behavioral Health System, Inc.................... Treasurer
Charter Ridge Behavioral Health System, Inc....................... Treasurer
Charter Rivers Behavioral Health System, Inc...................... Treasurer
Charter San Diego Behavioral Health System, Inc................... Treasurer
Charter Serenity Lodge Behavioral Health System, Inc.............. Treasurer
Charter Sioux Falls Behavioral Health System, Inc................. Treasurer
Charter South Bend Behavioral Health System, Inc.................. Treasurer
Charter Springs Behavioral Health System, Inc..................... Treasurer
Charter Springwood Behavioral Health System, Inc.................. Treasurer
Charter Surburban Hospital of Mesquite, Inc....................... Treasurer
Charter Terre Haute Behavioral Health System, Inc................. Treasurer
Charter Thousand Oaks Behavioral Health System, Inc............... Treasurer
Charter Tidewater Behavioral Health System, Inc................... Treasurer
Charter Treatment Center of Michigan, Inc......................... Treasurer
Charter Westbrook Behavioral Health System, Inc................... Treasurer
Charter White Oak Behavioral Health System, Inc................... Treasurer
Charter Wichita Behavioral Health System, Inc..................... Treasurer
Charter Woods Behavioral Health System, Inc....................... Treasurer
Charter Woods Hospital, Inc....................................... Treasurer
Charter - Provo School, Inc....................................... Treasurer
Charterton/LaGrange, Inc.......................................... Treasurer
Charter-By-The-Sea Behavioral Health System, Inc.................. Treasurer
</TABLE>
Page 3
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
CMCI, Inc......................................................... Treasurer
CMFC, Inc......................................................... Treasurer
CMSF, Inc......................................................... Treasurer
CPS Associates, Inc............................................... Treasurer
C.A.C.O. Services, Inc............................................ Treasurer
Desert Springs Hospital, Inc...................................... Treasurer
Employee Assistance Services, Inc................................. Treasurer
Florida Health Facilities, Inc.................................... Treasurer
Gulf Coast EAP Services, Inc...................................... Treasurer
Gwinnett Immediate Care Center, Inc............................... Treasurer
HCS, Inc.......................................................... Treasurer
Holcomb Bridge Immediate Care Center, Inc......................... Treasurer
Hospital Investors, Inc........................................... Treasurer
Mandarin Meadows, Inc............................................. Treasurer
Metropolitan Hospital, Inc........................................ Treasurer
Middle Georgia Hospital, Inc...................................... Treasurer
Pacific - Charter Medical, Inc.................................... Treasurer
Peachford Professional Network, Inc............................... Treasurer
Rivoli, Inc....................................................... Treasurer
Shallowford Community Hospital, Inc............................... Treasurer
Sistemas De Terapia Respiratoria S.A., Inc........................ Treasurer
Stuart Circle Hospital Corporation................................ Treasurer
Tampa Bay Behavioral Health Alliance, Inc......................... Treasurer
Western Behavioral Systems, Inc................................... Treasurer
Carter Medical (Cayman Islands) Ltd............................... Treasurer
Charter Medical International, Inc................................ Treasurer
Charter Medical of England Limited................................ Director
Charter Medical of Puerto Rico, Inc............................... Treasurer
</TABLE>
Page 4
<PAGE>
POWER OF ATTORNEY
The undersigned director or officer or both, as the case may be, of each of the
corporations listed on Exhibit A hereto (singularly, the "Company" and together,
the "Companies"), serving in the capacities listed opposite the name of each
Company on Exhibit A hereto, hereby constitutes and appoints Charlotte A.
Sanford, Lawrence W. Drinkard, and John R. Day his true and lawful attorneys and
agents, each with full power to act without the others and each of said
attorneys having full power of substitution and resubstitution, to do any and
all acts and things and to execute in his name, place or stead in his capacity
as an officer or director or both of each of the Companies, any and all
instruments which they may deem necessary or advisable to enable each Company to
comply with the Securities Act of 1933, as amended, and the Trust Indenture Act
of 1939, as amended (collectively, the "Acts") and any rules, regulations and
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing under the Acts of all such registration statements,
amendments, post-effective amendments or supplements thereto, and any new or
revised prospectuses, as may be necessary or desirable in connection with the
registration of $375,000,000 aggregate principal amount of 11 1/4% Senior
Subordinated Notes due 2004 of Charter Medical Corporation, and the guarantees
thereof by the Companies, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign the name of the
undersigned in his capacity as an officer or director or both of each of the
Companies to all such registration statements, amendments, post-effective
amendments or supplements thereto, and any new or revised prospectuses; and the
undersigned hereby ratifies and approves the acts of said attorneys and each of
them.
IN WITNESS WHEREOF, the undersigned director or officer or both,
as the case may be, of each of the Companies listed on Exhibit A hereof, has
executed this instrument on this 18th day of May, 1994.
/s/ Elbert T. McQueen
-------------------------------
Elbert T. McQueen
<PAGE>
EXHIBIT A
POWER OF ATTORNEY
ELBERT T. McQUEEN
<TABLE>
<CAPTION>
<S> <C>
Charter Augusta Behavioral Health System, Inc................. President
Charter Behavioral Health System of Athens, Inc............... President
Charter Behavioral Health System of Central Georgia, Inc...... President
Charter Behavioral Health System of Charleston, Inc........... President
Charter Behavioral Health System of Jacksonville, Inc......... President
Charter Behavioral Health System of Mobile, Inc............... President
Charter Behavioral Health System of Savannah, Inc............. President
Charter-By-The-Sea Behavioral Health System, Inc.............. President
Charter Hospital of Mobile, Inc............................... President
Charter of Alabama, Inc....................................... President
Charter Rivers Behavioral Health System, Inc.................. President
Charter Woods Behavioral Health System, Inc................... President
Charter Woods Hospital, Inc................................... President
Employee Assistance Services, Inc............................. President
</TABLE>
<PAGE>
POWER OF ATTORNEY
The undersigned director or officer or both, as the case may be, of each of the
corporations listed on Exhibit A hereto (singularly, the "Company" and together,
the "Companies"), serving in the capacities listed opposite the name of each
Company on Exhibit A hereto, hereby constitutes and appoints Charlotte A.
Sanford, Lawrence W. Drinkard, and John R. Day his true and lawful attorneys and
agents, each with full power to act without the others and each of said
attorneys having full power of substitution and resubstitution, to do any and
all acts and things and to execute in his name, place or stead in his capacity
as an officer or director or both of each of the Companies, any and all
instruments which they may deem necessary or advisable to enable each Company to
comply with the Securities Act of 1933, as amended, and the Trust Indenture Act
of 1939, as amended (collectively, the "Acts") and any rules, regulations and
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing under the Acts of all such registration statements,
amendments, post-effective amendments or supplements thereto, and any new or
revised prospectuses, as may be necessary or desirable in connection with the
registration of $375,000,000 aggregate principal amount of 11 1/4% Senior
Subordinated Notes due 2004 of Charter Medical Corporation, and the guarantees
thereof by the Companies, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign the name of the
undersigned in his capacity as an officer or director or both of each of the
Companies to all such registration statements, amendments, post-effective
amendments or supplements thereto, and any new or revised prospectuses; and the
undersigned hereby ratifies and approves the acts of said attorneys and each of
them.
IN WITNESS WHEREOF, the undersigned director or officer or both,
as the case may be, of each of the Companies listed on Exhibit A hereof, has
executed this instrument on this 18th day of May, 1994.
/s/ Glenn A. McRae
-------------------------------
Glenn A. McRae
<PAGE>
EXHIBIT A
POWER OF ATTORNEY
GLENN A. McRAE
<TABLE>
<CAPTION>
<S> <C>
Ambulatory Resources, Inc..................................... Director
Atlanta MOB, Inc.............................................. Director
Beltway Community Hospital, Inc............................... Director
Charter of Alabama, Inc....................................... Director
C.A.C.O. Services, Inc........................................ Director
CCM, Inc...................................................... Director
Charter Augusta Behavioral Health System, Inc................. Director
Charter Beacon Behavioral Health System, Inc.................. Director
Charter Behavioral Health System of Athens, Inc............... Director
Charter Behavioral Health System of Austin, Inc............... Director
Charter Behavioral Health System of Central Georgia, Inc...... Director
Charter Behavioral Health System of Charleston, Inc........... Director
Charter Behavioral Health System of Charlottesville, Inc...... Director
Charter Behavioral Health System of Chicago, Inc.............. Director
Charter Behavioral Health System of Columbia, Inc............. Director
Charter Behavioral Health System of Corpus Christi, Inc....... Director
Charter Behavioral Health System of Dallas, Inc............... Director
Charter Behavioral Health System of Fort Worth, Inc........... Director
Charter Behavioral Health System of Jackson, Inc.............. Director
Charter Behavioral Health System of Jacksonville, Inc......... Director
Charter Behavioral Health System of Kansas City, Inc.......... Director
Charter Behavioral Health System of Lake Charles, Inc......... Director
Charter Behavioral Health System of Mobile, Inc............... Director
Charter Behavioral Health System of Nevada, Inc............... Director
Charter Behavioral Health System of New Mexico, Inc........... Director
Charter Behavioral Health System of Northern California, Inc.. Director
Charter Behavioral Health System of Northwest Arkansas, Inc... Director
Charter Behavioral Health System of Northwest Indiana, Inc.... Director
Charter Behavioral Health System of Paducah, Inc.............. Director
Charter Behavioral Health System of Savannah, Inc............. Director
Charter Behavioral Health System of Southern California, Inc.. Director
Charter Behavioral Health System of Tampa Bay, Inc............ Director
Charter Behavioral Health System of Toledo, Inc............... Director
Charter Behavioral Health System of the Inland Empire, Inc.... Director
Charter Behavioral Health System of Winston-Salem, Inc........ Director
Charter-By-The-Sea Behavioral Health System, Inc.............. Director
Charter Canyon Behavioral Health System, Inc.................. Director
Charter Colonial Institute, Inc............................... Director
Charter Community Hospital, Inc............................... Director
Charter Community Hospital of Des Moines, Inc................. Director
Charter Contract Services, Inc................................ Director
Charter Fairmount Behavioral Health System, Inc............... Director
Charter Financial Offices, Inc................................ Director
Charter Forest Behavioral Health System, Inc.................. Director
Charter Grapevine Behavioral Health System, Inc............... Director
Charter Greensboro Behavioral Health System, Inc.............. Director
Charter Health Management of Texas, Inc....................... Director
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Charter Hospital of Columbus, Inc............................. Director
Charter Hospital of Denver, Inc............................... Director
Charter Hospital of Ft. Collins, Inc.......................... Director
Charter Hospital of Laredo, Inc............................... Director
Charter Hospital of Miami, Inc................................ Director
Charter Hospital of Mobile, Inc............................... Director
Charter Hospital of Northern New Jersey, Inc.................. Director
Charter Hospital of Santa Teresa, Inc......................... Director
Charter Hospital of St. Louis, Inc............................ Director
Charter Hospital of Torrance, Inc............................. Director
Charter Indianapolis Behavioral Health System, Inc............ Director
Charter Lafayette Behavioral Health System, Inc............... Director
Charter Lakeside Behavioral Health System, Inc................ Director
Charter Little Rock Behavioral Health System, Inc............. Director
Charter Louisville Behavioral Health System, Inc.............. Director
Charter Medical - California, Inc............................. Director
Charter Medical - Clayton County, Inc......................... Director
Charter Medical - Cleveland, Inc.............................. Director
Charter Medical - Dallas, Inc................................. Director
Charter Medical Executive Corporation......................... Director
Charter Medical Information Services, Inc..................... Director
Charter Medical International, S.A., Inc...................... Director
Charter Medical - Long Beach, Inc............................. Director
Charter Medical Management Company............................ Director
Charter Medical - New York, Inc............................... Director
Charter Medical of East Valley, Inc........................... Director
Charter Medical of North Phoenix, Inc......................... Director
Charter Medical of Orange County, Inc......................... Director
Charter Mental Health Options, Inc............................ Director
Charter Milwaukee Behavioral Health System, Inc............... Director
Charter Mission Viejo Behavioral Health System, Inc........... Director
Charter MOB of Charlottesville, Inc........................... Director
Charter North Behavioral Health System, Inc................... Director
Charter North Counseling Center, Inc.......................... Director
Charter Northridge Behavioral Health System, Inc.............. Director
Charter Northside Hospital, Inc............................... Director
Charter Oak Behavioral Health System, Inc..................... Director
Charter Palms Behavioral Health System, Inc................... Director
Charter Peachford Behavioral Health System, Inc............... Director
Charter Pines Behavioral Health System, Inc................... Director
Charter Plains Behavioral Health System, Inc.................. Director
Charter - Provo School, Inc................................... Director
Charter Psychiatric Hospitals, Inc............................ Director
Charter Real Behavioral Health System, Inc.................... Director
Charter Regional Medical Center, Inc.......................... Director
Charter Ridge Behavioral Health System, Inc................... Director
Charter Rivers Behavioral Health System, Inc.................. Director
Charter San Diego Behavioral Health System, Inc............... Director
Charter Sioux Falls Behavioral Health System, Inc............. Director
Charter South Bend Behavioral Health System, Inc.............. Director
Charter Springs Behavioral Health System, Inc................. Director
Charter Surburban Hospital of Mesquite, Inc................... Director
Charter Terre Haute Behavioral Health System, Inc............. Director
Charter Thousand Oaks Behavioral Health System, Inc........... Director
Charterton/LaGrange, Inc...................................... Director
</TABLE>
Page 2
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Charter Treatment Center of Michigan, Inc..................... Director
Charter Westbrook Behavioral Health System, Inc............... Director
Charter Wichita Behavioral Health System, Inc................. Director
Charter Woods Behavioral Health System, Inc................... Director
Charter Woods Hospital, Inc................................... Director
CMCI, Inc..................................................... Director
CMFC, Inc..................................................... Director
CMSF, Inc..................................................... Director
CPS Associates, Inc........................................... Director
Desert Springs Hospital, Inc.................................. Director
Employee Assistance Services, Inc............................. Director
Florida Health Facilities, Inc................................ Director
Gulf Coast EAP Services, Inc.................................. Director
Gwinnett Immediate Care Center, Inc........................... Director
HCS, Inc...................................................... Director
Holcomb Bridge Immediate Care Center, Inc..................... Director
Hospital Investors, Inc....................................... Director
Mandarin Meadows, Inc......................................... Director
Metropolitan Hospital, Inc.................................... Director
Middle Georgia Hospital, Inc.................................. Director
Pacific - Charter Medical, Inc................................ Director
Peachford Professional Network, Inc........................... Director
Rivoli, Inc................................................... Director
Shallowford Community Hospital, Inc........................... Director
Sistemas De Terapia Respiratoria S.A., Inc.................... Director
Stuart Circle Hospital Corporation............................ Director
Tampa Bay Behavioral Health Alliance, Inc..................... Director
Western Behavioral Systems, Inc............................... Director
Charter Medical (Cayman Islands) Ltd.......................... Director
Charter Medical of International, Inc......................... Director
Charter Medical of Puerto Rico, Inc........................... Director
</TABLE>
Page 3
<PAGE>
POWER OF ATTORNEY
The undersigned director or officer or both, as the case may be, of each of the
corporations listed on Exhibit A hereto (singularly, the "Company" and together,
the "Companies"), serving in the capacities listed opposite the name of each
Company on Exhibit A hereto, hereby constitutes and appoints Charlotte A.
Sanford, Lawrence W. Drinkard, and John R. Day his true and lawful attorneys and
agents, each with full power to act without the others and each of said
attorneys having full power of substitution and resubstitution, to do any and
all acts and things and to execute in his name, place or stead in his capacity
as an officer or director or both of each of the Companies, any and all
instruments which they may deem necessary or advisable to enable each Company to
comply with the Securities Act of 1933, as amended, and the Trust Indenture Act
of 1939, as amended (collectively, the "Acts") and any rules, regulations and
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing under the Acts of all such registration statements,
amendments, post-effective amendments or supplements thereto, and any new or
revised prospectuses, as may be necessary or desirable in connection with the
registration of $375,000,000 aggregate principal amount of 11 1/4% Senior
Subordinated Notes due 2004 of Charter Medical Corporation, and the guarantees
thereof by the Companies, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign the name of the
undersigned in his capacity as an officer or director or both of each of the
Companies to all such registration statements, amendments, post-effective
amendments or supplements thereto, and any new or revised prospectuses; and the
undersigned hereby ratifies and approves the acts of said attorneys and each of
them.
IN WITNESS WHEREOF, the undersigned director or officer or both,
as the case may be, of each of the Companies listed on Exhibit A hereof, has
executed this instrument on this 18th day of May, 1994.
/s/ Howard A. McLure
-------------------------------
Howard A. McLure
<PAGE>
EXHIBIT A
POWER OF ATTORNEY
HOWARD A. MCLURE
<TABLE>
<CAPTION>
<S> <C>
Charter Alvarado Behavioral Health System, Inc................ Director
Charter Appalachian Hall Behavioral Health System, Inc........ Director
Charter Arbor Indy Behavioral Health System, Inc.............. Director
Charter Bay Harbor Behavioral Health System, Inc.............. Director
Charter Behavioral Health Systems of Atlanta, Inc............. Director
Charter Behavioral Health System of Baywood, Inc.............. Director
Charter Behavioral Health System of Bradenton, Inc............ Director
Charter Behavioral Health System of Canoga Park, Inc.......... Director
Charter Behavioral Health System of Chula Vista, Inc.......... Director
Charter Behavioral Health System of Evansville, Inc........... Director
Charter Behavioral Health System at Fair Oaks, Inc............ Director
Charter Behavioral Health System at Hidden Brook, Inc......... Director
Charter Behavioral Health System of Jefferson, Inc............ Director
Charter Behavioral Health System of Lafayette, Inc............ Director
Charter Behavioral Health System of Lakewood, Inc............. Director
Charter Behavioral Health System at Los Altos, Inc............ Director
Charter Behavioral Health System of Michigan City, Inc........ Director
Charter Behavioral Health System of Nashua, Inc............... Director
Charter Behavioral Health System at Potomac Ridge, Inc........ Director
Charter Behavioral Health System of Rockford, Inc............. Director
Charter Behavioral Health System of San Jose, Inc............. Director
Charter Behavioral Health System of Texarkana, Inc............ Director
Charter Behavioral Health System of Tucson, Inc............... Director
Charter Behavioral Health System of Virginia Beach, Inc....... Director
Charter Behavioral Health System of Visalia, Inc.............. Director
Charter Behavioral Health System at Warwick Manor, Inc........ Director
Charter Behavioral Health System of Washington, D.C., Inc..... Director
Charter Behavioral Health System of Waverly, Inc.............. Director
Charter Behavioral Health System of Yorba Linda, Inc.......... Director
Charter Brawner Behavioral Health System, Inc................. Director
Charter Canyon Springs Behavioral Health System, Inc.......... Director
Charter Centennial Peaks Behavioral Health System, Inc........ Director
Charter Cove Forge Behavioral Health System, Inc.............. Director
Charter Crescent Pines Behavioral Health System, Inc.......... Director
Charter Fairbridge Behavioral Health System, Inc.............. Director
Charter Fenwick Hall Behavioral Health System, Inc............ Director
Charter Lakehurst Behavioral Health System, Inc............... Director
Charter Laurel Heights Behavioral Health System, Inc.......... Director
Charter Laurel Oaks Behavioral Health System, Inc............. Director
Charter Linden Oaks Behavioral Health System, Inc............. Director
Charter Meadows Behavioral Health System, Inc................. Director
Charter Medfield Behavioral Health System, Inc................ Director
Charter Mid-South Behavioral Health System, Inc............... Director
Charter Northbrooke Behavioral Health System, Inc............. Director
Charter Richmond Behavioral Health System, Inc................ Director
Charter Serenity Lodge Behavioral Health System, Inc.......... Director
Charter Springwood Behavioral Health System, Inc.............. Director
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Charter Tidewater Behavioral Health System, Inc............... Director
Charter White Oak Behavioral Health System, Inc............... Director
Charter Medical of England Limited............................ Director
</TABLE>
Page 2
<PAGE>
POWER OF ATTORNEY
The undersigned director or officer or both, as the case may be, of each of the
corporations listed on Exhibit A hereto (singularly, the "Company" and together,
the "Companies"), serving in the capacities listed opposite the name of each
Company on Exhibit A hereto, hereby constitutes and appoints Charlotte A.
Sanford, Lawrence W. Drinkard, and John R. Day his true and lawful attorneys and
agents, each with full power to act without the others and each of said
attorneys having full power of substitution and resubstitution, to do any and
all acts and things and to execute in his name, place or stead in his capacity
as an officer or director or both of each of the Companies, any and all
instruments which they may deem necessary or advisable to enable each Company to
comply with the Securities Act of 1933, as amended, and the Trust Indenture Act
of 1939, as amended (collectively, the "Acts") and any rules, regulations and
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing under the Acts of all such registration statements,
amendments, post-effective amendments or supplements thereto, and any new or
revised prospectuses, as may be necessary or desirable in connection with the
registration of $375,000,000 aggregate principal amount of 11 1/4% Senior
Subordinated Notes due 2004 of Charter Medical Corporation, and the guarantees
thereof by the Companies, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign the name of the
undersigned in his capacity as an officer or director or both of each of the
Companies to all such registration statements, amendments, post-effective
amendments or supplements thereto, and any new or revised prospectuses; and the
undersigned hereby ratifies and approves the acts of said attorneys and each of
them.
IN WITNESS WHEREOF, the undersigned director or officer or both,
as the case may be, of each of the Companies listed on Exhibit A hereof, has
executed this instrument on this 18th day of May, 1994.
/s/ John C. McCauley
-------------------------------
John C. McCauley
<PAGE>
EXHIBIT A
POWER OF ATTORNEY
JOHN C. McCAULEY
<TABLE>
<CAPTION>
<S> <C>
Ambulatory Resources, Inc..................................... Director and Vice President
Atlanta MOB, Inc.............................................. Director and Vice President
Beltway Community Hospital, Inc............................... Director and Vice President
Charter of Alabama, Inc....................................... Director and Vice President
C.A.C.O. Services, Inc........................................ Director and Vice President
CCM, Inc...................................................... Director and Vice President
Charter Augusta Behavioral Health System, Inc................. Director and Vice President
Charter Beacon Behavioral Health System, Inc.................. Director and Vice President
Charter Behavioral Health System of Athens, Inc............... Director and Vice President
Charter Behavioral Health System of Austin, Inc............... Director and Vice President
Charter Behavioral Health System of Central Georgia, Inc...... Director and Vice President
Charter Behavioral Health System of Charleston, Inc........... Director and Vice President
Charter Behavioral Health System of Charlottesville, Inc...... Director and Vice President
Charter Behavioral Health System of Chicago, Inc.............. Director and Vice President
Charter Behavioral Health System of Columbia, Inc............. Director and Vice President
Charter Behavioral Health System of Corpus Christi, Inc....... Director and Vice President
Charter Behavioral Health System of Dallas, Inc............... Director and Vice President
Charter Behavioral Health System of Fort Worth, Inc........... Director and Vice President
Charter Behavioral Health System of Jackson, Inc.............. Director and Vice President
Charter Behavioral Health System of Jacksonville, Inc......... Director and Vice President
Charter Behavioral Health System of Kansas City, Inc.......... Director and Vice President
Charter Behavioral Health System of Lake Charles, Inc......... Director and Vice President
Charter Behavioral Health System of Mobile, Inc............... Director and Vice President
Charter Behavioral Health System of Nevada, Inc............... Director and Vice President
Charter Behavioral Health System of New Mexico, Inc........... Director and Vice President
Charter Behavioral Health System of Northern California, Inc.. Director and Vice President
Charter Behavioral Health System of Northwest Arkansas, Inc... Director and Vice President
Charter Behavioral Health System of Northwest Indiana, Inc.... Director and Vice President
Charter Behavioral Health System of Paducah, Inc.............. Director and Vice President
Charter Behavioral Health System of Savannah, Inc............. Director and Vice President
Charter Behavioral Health System of Southern California, Inc.. Director and Vice President
Charter Behavioral Health System of Tampa Bay, Inc............ Director and Vice President
Charter Behavioral Health System of Toledo, Inc............... Director and Vice President
Charter Behavioral Health System of the Inland Empire, Inc.... Director and Vice President
Charter Behavioral Health System of Winston-Salem, Inc........ Director and Vice President
Charter-By-The-Sea Behavioral Health System, Inc.............. Director and Vice President
Charter Canyon Behavioral Health System, Inc.................. Director and Vice President
Charter Colonial Institute, Inc............................... Director and Vice President
Charter Community Hospital, Inc............................... Director and Vice President
Charter Community Hospital of Des Moines, Inc................. Director and Vice President
Charter Contract Services, Inc................................ Director and Vice President
Charter Fairmount Behavioral Health System, Inc............... Director and Vice President
Charter Financial Offices, Inc................................ Director and Vice President
Charter Forest Behavioral Health System, Inc.................. Director and Vice President
Charter Grapevine Behavioral Health System, Inc............... Director and Vice President
Charter Greensboro Behavioral Health System, Inc.............. Director and Vice President
Charter Health Management of Texas, Inc....................... Director and Vice President
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Charter Hospital of Columbus, Inc............................. Director and Vice President
Charter Hospital of Denver, Inc............................... Director and Vice President
Charter Hospital of Ft. Collins, Inc.......................... Director and Vice President
Charter Hospital of Laredo, Inc............................... Director and Vice President
Charter Hospital of Miami, Inc................................ Director and Vice President
Charter Hospital of Mobile, Inc............................... Director and Vice President
Charter Hospital of Northern New Jersey, Inc.................. Director and Vice President
Charter Hospital of Santa Teresa, Inc......................... Director and Vice President
Charter Hospital of St. Louis, Inc............................ Director and Vice President
Charter Hospital of Torrance, Inc............................. Director and Vice President
Charter Indianapolis Behavioral Health System, Inc........... Director and Vice President
Charter Lafayette Behavioral Health System, Inc............... Director and Vice President
Charter Lakeside Behavioral Health System, Inc................ Director and Vice President
Charter Little Rock Behavioral Health System, Inc............. Director and Vice President
Charter Louisville Behavioral Health System, Inc.............. Director and Vice President
Charter Medical - California, Inc............................. Director and Vice President
Charter Medical - Clayton County, Inc......................... Director and Vice President
Charter Medical - Cleveland, Inc.............................. Director and Vice President
Charter Medical - Dallas, Inc................................. Director and Vice President
Charter Medical Executive Corporation......................... Director and Vice President
Charter Medical Information Services, Inc..................... Director and Vice President
Charter Medical International, S.A., Inc...................... Director and Vice President
Charter Medical - Long Beach, Inc............................. Director and Vice President
Charter Medical Management Company............................ Director and Vice President
Charter Medical - New York, Inc............................... Director and Vice President
Charter Medical of East Valley, Inc........................... Director and Vice President
Charter Medical of North Phoenix, Inc......................... Director and Vice President
Charter Medical of Orange County, Inc......................... Director and Vice President
Charter Mental Health Options, Inc............................ Director and Vice President
Charter Milwaukee Behavioral Health System, Inc............... Director and Vice President
Charter Mission Viejo Behavioral Health System, Inc........... Director and Vice President
Charter MOB of Charlottesville, Inc........................... Director and Vice President
Charter North Behavioral Health System, Inc................... Director and Vice President
Charter North Counseling Center, Inc.......................... Director and Vice President
Charter Northridge Behavioral Health System, Inc.............. Director and Vice President
Charter Northside Hospital, Inc............................... Director and Vice President
Charter Oak Behavioral Health System, Inc..................... Director and Vice President
Charter Palms Behavioral Health System, Inc................... Director and Vice President
Charter Peachford Behavioral Health System, Inc............... Director and Vice President
Charter Pines Behavioral Health System, Inc................... Director and Vice President
Charter Plains Behavioral Health System, Inc.................. Director and Vice President
Charter - Provo School, Inc................................... Director and Vice President
Charter Psychiatric Hospitals, Inc............................ Director and Vice President
Charter Real Behavioral Health System, Inc.................... Director and Vice President
Charter Regional Medical Center, Inc.......................... Director and Vice President
Charter Ridge Behavioral Health System, Inc................... Director and Vice President
Charter Rivers Behavioral Health System, Inc.................. Director and Vice President
Charter San Diego Behavioral Health System, Inc............... Director and Vice President
Charter Sioux Falls Behavioral Health System, Inc............. Director and Vice President
Charter South Bend Behavioral Health System, Inc.............. Director and Vice President
Charter Springs Behavioral Health System, Inc................. Director and Vice President
Charter Surburban Hospital of Mesquite, Inc................... Director and Vice President
Charter Terre Haute Behavioral Health System, Inc............. Director and Vice President
Charter Thousand Oaks Behavioral Health System, Inc........... Director and Vice President
Charterton/LaGrange, Inc...................................... Director and Vice President
</TABLE>
Page 2
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Charter Treatment Center of Michigan, Inc..................... Director and Vice President
Charter Westbrook Behavioral Health System, Inc............... Director and Vice President
Charter Wichita Behavioral Health System, Inc................. Director and Vice President
Charter Woods Behavioral Health System, Inc................... Director and Vice President
Charter Woods Hospital, Inc................................... Director and Vice President
CMCI, Inc..................................................... Director and Vice President
CMFC, Inc..................................................... Director and Vice President
CMSF, Inc..................................................... Director and Vice President
CPS Associates, Inc........................................... Director and Vice President
Desert Springs Hospital, Inc.................................. Director and Vice President
Employee Assistance Services, Inc............................. Director and Vice President
Florida Health Facilities, Inc................................ Director and Vice President
Gulf Coast EAP Services, Inc.................................. Director and Vice President
Gwinnett Immediate Care Center, Inc........................... Director and Vice President
HCS, Inc...................................................... Director and Vice President
Holcomb Bridge Immediate Care Center, Inc..................... Director and Vice President
Hospital Investors, Inc....................................... Director and Vice President
Mandarin Meadows, Inc......................................... Director and Vice President
Metropolitan Hospital, Inc.................................... Director and Vice President
Middle Georgia Hospital, Inc.................................. Director and Vice President
Pacific - Charter Medical, Inc................................ Director and Vice President
Peachford Professional Network, Inc........................... Director and Vice President
Rivoli, Inc................................................... Director and Vice President
Shallowford Community Hospital, Inc........................... Director and Vice President
Sistemas De Terapia Respiratoria S.A., Inc.................... Director and Vice President
Stuart Circle Hospital Corporation............................ Director and Vice President
Tampa Bay Behavioral Health Alliance, Inc..................... Director and Vice President
Western Behavioral Systems, Inc............................... Director and Vice President
Charter Medical (Cayman Islands) Ltd.......................... Director and Vice President
Charter Medical of Puerto Rico, Inc........................... Director and Vice President
Charter Medical International, Inc............................ Director and Vice President
</TABLE>
Page 3
<PAGE>
POWER OF ATTORNEY
The undersigned director or officer or both, as the case may be, of each of the
corporations listed on Exhibit A hereto (singularly, the "Company" and together,
the "Companies"), serving in the capacities listed opposite the name of each
Company on Exhibit A hereto, hereby constitutes and appoints Charlotte A.
Sanford, Lawrence W. Drinkard, and John R. Day his true and lawful attorneys and
agents, each with full power to act without the others and each of said
attorneys having full power of substitution and resubstitution, to do any and
all acts and things and to execute in his name, place or stead in his capacity
as an officer or director or both of each of the Companies, any and all
instruments which they may deem necessary or advisable to enable each Company to
comply with the Securities Act of 1933, as amended, and the Trust Indenture Act
of 1939, as amended (collectively, the "Acts") and any rules, regulations and
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing under the Acts of all such registration statements,
amendments, post-effective amendments or supplements thereto, and any new or
revised prospectuses, as may be necessary or desirable in connection with the
registration of $375,000,000 aggregate principal amount of 11 1/4% Senior
Subordinated Notes due 2004 of Charter Medical Corporation, and the guarantees
thereof by the Companies, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign the name of the
undersigned in his capacity as an officer or director or both of each of the
Companies to all such registration statements, amendments, post-effective
amendments or supplements thereto, and any new or revised prospectuses; and the
undersigned hereby ratifies and approves the acts of said attorneys and each of
them.
IN WITNESS WHEREOF, the undersigned director or officer or both,
as the case may be, of each of the Companies listed on Exhibit A hereof, has
executed this instrument on this 18th day of May, 1994.
/s/ William E. Hale
-------------------------------
William E. Hale
<PAGE>
EXHIBIT A
POWER OF ATTORNEY
WILLIAM E. HALE
<TABLE>
<CAPTION>
<S> <C>
Charter Behavioral Health System of Nevada, Inc............... President
Charter Behavioral Health System of Northern California, Inc.. President
Charter Behavioral Health System of the Inland Empire, Inc.... President
Charter Canyon Behavioral Health System, Inc.................. President
Charter Community Hospital, Inc............................... President
Charter Medical - Long Beach, Inc............................. President
Charter Medical of East Valley, Inc........................... President
Charter Medical of North Phoenix, Inc......................... President
Charter Mission Viejo Behavioral Health System, Inc........... President
Charter Oak Behavioral Health System, Inc..................... President
Charter San Diego Behavioral Health System, Inc............... President
Charter Thousand Oaks Behavioral Health System, Inc........... President
Charter - Provo School, Inc................................... President
Gulf Coast EAP Services, Inc.................................. President
</TABLE>
<PAGE>
POWER OF ATTORNEY
The undersigned director or officer or both, as the case may be, of each of the
corporations listed on Exhibit A hereto (singularly, the "Company" and together,
the "Companies"), serving in the capacities listed opposite the name of each
Company on Exhibit A hereto, hereby constitutes and appoints Charlotte A.
Sanford, Lawrence W. Drinkard, and John R. Day his true and lawful attorneys and
agents, each with full power to act without the others and each of said
attorneys having full power of substitution and resubstitution, to do any and
all acts and things and to execute in his name, place or stead in his capacity
as an officer or director or both of each of the Companies, any and all
instruments which they may deem necessary or advisable to enable each Company to
comply with the Securities Act of 1933, as amended, and the Trust Indenture Act
of 1939, as amended (collectively, the "Acts") and any rules, regulations and
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing under the Acts of all such registration statements,
amendments, post-effective amendments or supplements thereto, and any new or
revised prospectuses, as may be necessary or desirable in connection with the
registration of $375,000,000 aggregate principal amount of 11 1/4% Senior
Subordinated Notes due 2004 of Charter Medical Corporation, and the guarantees
thereof by the Companies, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign the name of the
undersigned in his capacity as an officer or director or both of each of the
Companies to all such registration statements, amendments, post-effective
amendments or supplements thereto, and any new or revised prospectuses; and the
undersigned hereby ratifies and approves the acts of said attorneys and each of
them.
IN WITNESS WHEREOF, the undersigned director or officer or both,
as the case may be, of each of the Companies listed on Exhibit A hereof, has
executed this instrument on this 13th day of May, 1994.
/s/ Joseph C. Little
-------------------------------
Joseph C. Little
<PAGE>
EXHIBIT A
POWER OF ATTORNEY
JOSEPH C. LITTLE
<TABLE>
<CAPTION>
<S> <C>
Beltway Community Hospital, Inc............................... President
Charter Behavioral Health System of Southern California, Inc.. President
Charter Hospital of Columbus, Inc............................. President
Charter Hospital of Denver, Inc............................... President
Charter Hospital of Ft. Collins, Inc.......................... President
Charter Hospital of Laredo, Inc............................... President
Charter Hospital of Santa Teresa, Inc......................... President
Charter Hospital of Torrance, Inc............................. President
Charter Medical - Dallas, Inc................................. President
Charter Surburban Hospital of Mesquite, Inc................... President
Charter Treatment Center of Michigan, Inc..................... President
C.A.C.O. Services, Inc........................................ President
Western Behavioral Systems, Inc............................... President
</TABLE>
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
________________
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
________________
MARINE MIDLAND BANK
(Exact name of trustee as specified in its charter)
16-1057879
(I.R.S. Employer
Identification No.)
140 Broadway, New York, N.Y. 10005-1180
(212) 658-1000 (Zip Code)
(Address of principal executive offices)
CHARTER MEDICAL CORPORATION
(Exact name of obligor as specified in its charter)
Delaware 58-1076937
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
577 Mulberry Street
Macon, Georgia 31298
(Address of principal executive offices) (Zip Code)
________________
See Table of Additional Obligors below
________________
11 1/4% SERIES A SENIOR SUBORDINATED NOTES DUE 2004
(Title of Indenture Securities)
<PAGE>
ADDITIONAL OBLIGORS(1)
<TABLE>
<CAPTION>
ADDRESS INCLUDING ZIP CODE,
STATE OR OTHER AND TELEPHONE NUMBER
EXACT NAME OF JURISDICTION OF I.R.S. EMPLOYER INCLUDING AREA CODE,
OBLIGOR AS SPECIFIED INCORPORATION IDENTIFICATION OF OBLIGOR'S PRINCIPAL
IN ITS CHARTER OR ORGANIZATION NUMBER EXECUTIVE OFFICES
- ------------------------------------------ -------------------- ---------------- ------------------------------------
<S> <C> <C> <C>
Ambulatory Resources, Inc. Georgia 58-1456102 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Atlanta MOB, Inc. Georgia 58-1558215 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Beltway Community Hospital, Inc. Texas 58-1324281 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
C.A.C.O. Services, Inc. Ohio 58-1751511 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
CCM, Inc. Nevada 58-1662418 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
CMCI, Inc. Nevada 88-0224620 1061 East Flamingo Road
Suite One
Las Vegas, NV 89119
(702) 737-0282
CMFC, Inc. Nevada 88-0215629 1061 East Flamingo Road
Suite One
Las Vegas, NV 89119
(702) 737-0282
CMSF, Inc. Florida 58-1324269 3550 Colonial Boulevard
Fort Myers, FL 33906
(813) 939-0403
CPS Associates, Inc. Virginia 58-1761039 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Alvarado Behavioral Health System, California 58-1394959 577 Mulberry Street
Inc. Macon, GA 31298
(912) 742-1161
Charter Appalachian Hall Behavioral Health North Carolina 58-2097827 577 Mulberry Street
System, Inc. Macon, GA 31298
(912) 742-1161
Charter Arbor Indy Behavioral Health Indiana 35-1916340 577 Mulberry Street
System, Inc. Macon, GA 31298
(912) 742-1161
Charter Augusta Behavioral Health System, Georgia 58-1615676 3100 Perimeter Parkway
Inc. Augusta, GA 30909
(404) 868-6625
Charter Bay Harbor Behavioral Health Florida 58-1640244 577 Mulberry Street
System, Inc. Macon, GA 31298
(912) 742-1161
Charter Beacon Behavioral Health System, Indiana 58-1524996 1720 Beacon Street
Inc. Fort Wayne, IN 46805
(219) 423-3651
Charter Behavioral Health System at Fair New Jersey 58-2097832 577 Mulberry Street
Oaks, Inc. Macon, GA 31298
(912) 742-1161
</TABLE>
i
<PAGE>
ADDITIONAL OBLIGORS(1) (CONTINUED)
<TABLE>
<CAPTION>
ADDRESS INCLUDING ZIP CODE,
STATE OR OTHER AND TELEPHONE NUMBER
EXACT NAME OF JURISDICTION OF I.R.S. EMPLOYER INCLUDING AREA CODE,
OBLIGOR AS SPECIFIED INCORPORATION IDENTIFICATION OF OBLIGOR'S PRINCIPAL
IN ITS CHARTER OR ORGANIZATION NUMBER EXECUTIVE OFFICES
- ------------------------------------------ -------------------- ---------------- --------------------------------------
<S> <C> <C> <C>
Charter Behavioral Health System at Hidden Maryland 52-1866212 577 Mulberry Street
Brook, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System at Los California 33-0606642 577 Mulberry Street
Altos, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System at Maryland 52-1866221 577 Mulberry Street
Potomac Ridge, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System at Maryland 52-1866214 577 Mulberry Street
Warwick Manor, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System of Georgia 58-1513304 240 Mitchell Bridge Road
Athens, Inc. Athens, GA 30604
(404) 546-7277
Charter Behavioral Health System of Texas 58-1440665 8402 Cross Park Drive
Austin, Inc. Austin, TX 78754
(512) 837-1800
Charter Behavioral Health System of Texas 76-0430571 577 Mulberry Street
Baywood, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System of Florida 58-1527678 577 Mulberry Street
Bradenton, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System of Canoga California 95-4470774 577 Mulberry Street
Park, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System of Georgia 58-1408670 3500 Riverside Drive
Central Georgia, Inc. Macon, GA 31209
(912) 474-6200
Charter Behavioral Health System of South Carolina 58-1761157 2777 Speissegger Drive
Charleston, Inc. Charleston, SC 29405-8299
(803) 747-5830
Charter Behavioral Health System of Virginia 58-1616917 2101 Arlington Boulevard
Charlottesville, Inc. Charlottesville, VA 22903-1593
(804) 977-1120
Charter Behavioral Health System of Illinois 58-1315760 4700 North Clarendon Avenue
Chicago, Inc. Chicago, IL 60640
(312) 728-7100
Charter Behavioral Health System of Chula California 58-1473063 577 Mulberry Street
Vista, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System of Missouri 61-1009977 200 Portland Street
Columbia, Inc. Columbia, MO 65201
(314) 876-8000
Charter Behavioral Health System of Corpus Texas 58-1513305 3126 Rodd Field Road
Christi, Inc. Corpus Christi, TX 78414
(512) 993-8893
</TABLE>
ii
<PAGE>
ADDITIONAL OBLIGORS(1) (CONTINUED)
<TABLE>
<CAPTION>
ADDRESS INCLUDING ZIP CODE,
STATE OR OTHER AND TELEPHONE NUMBER
EXACT NAME OF JURISDICTION OF I.R.S. EMPLOYER INCLUDING AREA CODE,
OBLIGOR AS SPECIFIED INCORPORATION IDENTIFICATION OF OBLIGOR'S PRINCIPAL
IN ITS CHARTER OR ORGANIZATION NUMBER EXECUTIVE OFFICES
- ------------------------------------------ -------------------- ---------------- -------------------------------------
<S> <C> <C> <C>
Charter Behavioral Health System of Texas 58-1513306 6800 Preston Road
Dallas, Inc. Plano, TX 75024
(214) 964-3939
Charter Behavioral Health System of Indiana 35-1916338 577 Mulberry Street
Evansville, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System of Fort Texas 58-1643151 6201 Overton Ridge Blvd.
Worth, Inc. Fort Worth, TX 76132
(817) 292-6844
Charter Behavioral Health System of Mississippi 58-1616919 East Lakeland Drive
Jackson, Inc. Jackson, MS 39208
(601) 939-9030
Charter Behavioral Health System of Florida 58-1483015 3947 Salisbury Road
Jacksonville, Inc. Jacksonville, FL 32216
(904) 296-2447
Charter Behavioral Health System of Indiana 35-1916342 577 Mulberry Street
Jefferson, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System of Kansas Kansas 58-1603154 8000 West 127th Street
City, Inc. Overland Park, KS 66213
(913) 897-4999
Charter Behavioral Health System of Louisiana 72-0686492 577 Mulberry Street
Lafayette, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System of Lake Louisiana 62-1152811 4250 Fifth Avenue, South
Charles, Inc. Lake Charles, LA 70605
(318) 474-6133
Charter Behavioral Health System of California 33-0606647 577 Mulberry Street
Lakewood, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System of Indiana 35-1916343 577 Mulberry Street
Michigan City, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System of Alabama 58-1569921 5800 Southland Drive
Mobile, Inc. Mobile, AL 36609
(205) 661-3001
Charter Behavioral Health System of New Hampshire 02-0470752 577 Mulberry Street
Nashua, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System of Nevada 58-1321317 7000 West Spring Mountain Road
Nevada, Inc. Las Vegas, NV 89180
(702) 876-4357
Charter Behavioral Health System of New New Mexico 58-1479480 5901 Zuni Road, SE
Mexico, Inc. Albuquerque, NM 87108
(505) 265-8800
Charter Behavioral Health System of California 58-1857277 101 Cirby Hills Drive
Northern California, Inc. Roseville, CA 95678
(916) 969-4666
</TABLE>
iii
<PAGE>
ADDITIONAL OBLIGORS(1) (CONTINUED)
<TABLE>
<CAPTION>
ADDRESS INCLUDING ZIP CODE,
STATE OR OTHER AND TELEPHONE NUMBER
EXACT NAME OF JURISDICTION OF I.R.S. EMPLOYER INCLUDING AREA CODE,
OBLIGOR AS SPECIFIED INCORPORATION IDENTIFICATION OF OBLIGOR'S PRINCIPAL
IN ITS CHARTER OR ORGANIZATION NUMBER EXECUTIVE OFFICES
- ------------------------------------------ -------------------- ---------------- ------------------------------------
<S> <C> <C> <C>
Charter Behavioral Health System of Arkansas 58-1449455 4253 Crossover Road
Northwest Arkansas, Inc. Fayetteville, AR 72701
(501) 521-5731
Charter Behavioral Health System of Indiana 58-1603160 101 West 61st Avenue
Northwest Indiana, Inc. State Road 51
Hobart, IN 46342
(219) 947-4464
Charter Behavioral Health System of Kentucky 61-1006115 435 Berger Road
Paducah, Inc. Paducah, KY 42002-7609
(502) 444-0444
Charter Behavioral Health System of Illinois 36-3946945 577 Mulberry Street
Rockford, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System of San California 58-1747020 577 Mulberry Street
Jose, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System of Georgia 58-1750583 1150 Cornell Ave
Savannah, Inc. Savannah, GA 31416
(912) 354-3911
Charter Behavioral Health System of California 58-1366605 577 Mulberry Street
Southern California, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System of Tampa Florida 58-1616916 4004 North Riverside Drive
Bay, Inc. Tampa, FL 33603
(813) 238-8671
Charter Behavioral Health System of Arkansas 71-0752815 577 Mulberry Street
Texarkana, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System of the California 95-2685883 2055 Kellogg Drive
Inland Empire, Inc. Corona, CA 91720
(714) 735-2910
Charter Behavioral Health System of Ohio 58-1731068 1725 Timberline Road
Toledo, Inc. Maumee, Ohio 43537
(419) 891-9333
Charter Behavioral Health System of Arizona 86-0757462 577 Mulberry Street
Tucson, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System of Virginia 54-1703071 577 Mulberry Street
Virginia Beach, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System of California 33-0606644 577 Mulberry Street
Visalia, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System of District of Columbia 52-1866204 577 Mulberry Street
Washington, D.C., Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health System of Minnesota 41-1775626 577 Mulberry Street
Waverly, Inc. Macon, GA 31298
(912) 742-1161
</TABLE>
iv
<PAGE>
ADDITIONAL OBLIGORS(1) (CONTINUED)
<TABLE>
<CAPTION>
ADDRESS INCLUDING ZIP CODE,
STATE OR OTHER AND TELEPHONE NUMBER
EXACT NAME OF JURISDICTION OF I.R.S. EMPLOYER INCLUDING AREA CODE,
OBLIGOR AS SPECIFIED INCORPORATION IDENTIFICATION OF OBLIGOR'S PRINCIPAL
IN ITS CHARTER OR ORGANIZATION NUMBER EXECUTIVE OFFICES
- ------------------------------------------ -------------------- ---------------- ------------------------------------
<S> <C> <C> <C>
Charter Behavioral Health System of North Carolina 56-1050502 3637 Old Vineyard Road
Winston-Salem, Inc. Winston-Salem, NC 27104
(919) 768-7710
Charter Behavioral Health System of Yorba California 33-0606646 577 Mulberry Street
Linda, Inc. Macon, GA 31298
(912) 742-1161
Charter Behavioral Health Systems of Georgia 58-1900736 577 Mulberry Street
Atlanta, Inc. Macon, GA 31298
(912) 742-1161
Charter Brawner Behavioral Health System, Georgia 58-0979827 577 Mulberry Street
Inc. Macon, GA 31298
(912) 742-1161
Charter-By-The-Sea Behavioral Health Georgia 58-1351301 2927 Demere Road
System, Inc. St. Simons Island, GA 31522
(912) 638-1999
Charter Canyon Behavioral Health System, Utah 58-1557925 175 West 7200 South
Inc. Midvale, UT 84047
(801) 561-8181
Charter Canyon Springs Behavioral Health California 33-0606640 577 Mulberry Street
System, Inc. Macon, GA 31298
(912) 742-1161
Charter Centennial Peaks Behavioral Health Colorado 58-1761037 577 Mulberry Street
System, Inc. Macon, GA 31298
(912) 742-1161
Charter Colonial Institute, Inc. Virginia 58-1492652 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Community Hospital, Inc. California 58-1398708 21530 South Pioneer Boulevard
Hawaiian Gardens, CA 90716
(310) 860-0401
Charter Community Hospital of Des Moines, Iowa 58-1523702 577 Mulberry Street
Inc. Macon, GA 31298
(912) 742-1161
Charter Contract Services, Inc. Georgia 58-2100699 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Cove Forge Behavioral Health Pennsylvania 25-1730464 577 Mulberry Street
System, Inc. Macon, GA 31298
(912) 742-1161
Charter Crescent Pines Behavioral Health Georgia 58-1249663 577 Mulberry Street
System, Inc. Macon, GA 31298
(912) 742-1161
Charter Fairbridge Behavioral Health Maryland 52-1866218 577 Mulberry Street
System, Inc. Macon, GA 31298
(912) 742-1161
Charter Fairmount Behavioral Health Pennsylvania 58-1616921 561 Fairthorne Avenue
System, Inc. Philadelphia, PA 19128
(215) 487-4000
</TABLE>
v
<PAGE>
ADDITIONAL OBLIGORS(1) (CONTINUED)
<TABLE>
<CAPTION>
ADDRESS INCLUDING ZIP CODE,
STATE OR OTHER AND TELEPHONE NUMBER
EXACT NAME OF JURISDICTION OF I.R.S. EMPLOYER INCLUDING AREA CODE,
OBLIGOR AS SPECIFIED INCORPORATION IDENTIFICATION OF OBLIGOR'S PRINCIPAL
IN ITS CHARTER OR ORGANIZATION NUMBER EXECUTIVE OFFICES
- ------------------------------------------ -------------------- ---------------- --------------------------------------
<S> <C> <C> <C>
Charter Fenwick Hall Behavioral Health South Carolina 57-0995766 577 Mulberry Street
System, Inc. Macon, GA 31298
(912) 742-1161
Charter Financial Offices, Inc. Georgia 58-1527680 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Forest Behavioral Health System, Louisiana 58-1508454 9320 Linwood Avenue
Inc. Shreveport, LA 71106
(318) 688-3930
Charter Grapevine Behavioral Health Texas 58-1818492 2300 William D. Tate Ave.
System, Inc. Grapevine, TX 76051
(817) 481-1900
Charter Greensboro Behavioral Health North Carolina 58-1335184 700 Walter Reed Drive
System, Inc. Greensboro, NC 27403
(919) 852-4821
Charter Health Management of Texas, Inc. Texas 58-2025056 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Hospital of Columbus, Inc. Ohio 58-1598899 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Hospital of Denver, Inc. Colorado 58-1662413 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Hospital of Ft. Collins, Inc. Colorado 58-1768534 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Hospital of Laredo, Inc. Texas 58-1491620 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Hospital of Miami, Inc. Florida 61-1061599 11100 N.W. 27th Street
Miami, FL 33172
(305) 591-3230
Charter Hospital of Mobile, Inc. Alabama 58-1318870 251 Cox Street
Mobile, AL 36604
(205) 432-4111
Charter Hospital of Northern New Jersey, New Jersey 58-1852138 577 Mulberry Street
Inc. Macon, GA 31298
(912) 742-1161
Charter Hospital of Santa Teresa, Inc. New Mexico 58-1584861 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Hospital of St. Louis, Inc. Missouri 58-1583760 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Hospital of Torrance, Inc. California 58-1402481 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
</TABLE>
vi
<PAGE>
ADDITIONAL OBLIGORS(1) (CONTINUED)
<TABLE>
<CAPTION>
ADDRESS INCLUDING ZIP CODE,
STATE OR OTHER AND TELEPHONE NUMBER
EXACT NAME OF JURISDICTION OF I.R.S. EMPLOYER INCLUDING AREA CODE,
OBLIGOR AS SPECIFIED INCORPORATION IDENTIFICATION OF OBLIGOR'S PRINCIPAL
IN ITS CHARTER OR ORGANIZATION NUMBER EXECUTIVE OFFICES
- ------------------------------------------ -------------------- ---------------- -------------------------------------
<S> <C> <C> <C>
Charter Indianapolis Behavioral Health Indiana 58-1674291 5602 Caito Drive
System, Inc. Indianapolis, IN 46226
(317) 545-2111
Charter Lafayette Behavioral Health Indiana 58-1603158 3700 Rome Drive
System, Inc. Lafayette, IN 47905
(317) 448-6999
Charter Lakehurst Behavioral Health New Jersey 22-3286879 577 Mulberry Street
System, Inc. Macon, GA 31298
(912) 742-1161
Charter Lakeside Behavioral Health System, Tennessee 62-0892645 2911 Brunswick Road
Inc. Memphis, TN 38134
(901) 377-4700
Charter Laurel Heights Behavioral Health Georgia 58-1558212 577 Mulberry Street
System, Inc. Macon, GA 31298
(912) 742-1161
Charter Laurel Oaks Behavioral Health Florida 58-1483014 577 Mulberry Street
System, Inc. Macon, GA 31298
(912) 742-1161
Charter Linden Oaks Behavioral Health Illinois 36-3943776 577 Mulberry Street
System, Inc. Macon, GA 31298
(912) 742-1161
Charter Little Rock Behavioral Health Arkansas 58-1747019 1601 Murphy Drive
System, Inc. Haumelle, AR 72118
(501) 851-8700
Charter Louisville Behavioral Health Kentucky 58-1517503 1405 Browns Lane
System, Inc Louisville, KY 40207
(502) 896-0495
Charter Meadows Behavioral Health System, Maryland 52-1866216 577 Mulberry Street
Inc. Macon, GA 31298
(912) 742-1161
Charter MOB of Charlottesville, Inc. Virginia 58-1761158 1023 Millmont Avenue
Charlottesville, VA 22901
(804) 977-1120
Charter Medfield Behavioral Health System, Florida 58-1705131 577 Mulberry Street
Inc. Macon, GA 31298
(912) 742-1161
Charter Medical -- California, Inc. Georgia 58-1357345 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Medical -- Clayton County, Inc. Georgia 58-1579404 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Medical -- Cleveland, Inc. Texas 58-1448733 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Medical -- Dallas, Inc. Texas 58-1379846 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
</TABLE>
vii
<PAGE>
ADDITIONAL OBLIGORS(1) (CONTINUED)
<TABLE>
<CAPTION>
ADDRESS INCLUDING ZIP CODE,
STATE OR OTHER AND TELEPHONE NUMBER
EXACT NAME OF JURISDICTION OF I.R.S. EMPLOYER INCLUDING AREA CODE,
OBLIGOR AS SPECIFIED INCORPORATION IDENTIFICATION OF OBLIGOR'S PRINCIPAL
IN ITS CHARTER OR ORGANIZATION NUMBER EXECUTIVE OFFICES
- ------------------------------------------ -------------------- ---------------- -----------------------------------
<S> <C> <C> <C>
Charter Medical -- Long Beach, Inc. California 58-1366604 6060 Paramount Boulevard
Long Beach, CA 90805
(310) 220-1000
Charter Medical -- New York, Inc. New York 58-1761153 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Medical (Cayman Islands) Ltd. Cayman Islands 58-1841857
Charter Medical Executive Corporation Georgia 58-1538092 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Medical Information Services, Inc. Georgia 58-1530236 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Medical International, Inc. Cayman Islands applied for P.O. Box 1043
Swiss Bank Building
Caledonian House,
Georgetown, Grand Cayman,
Cayman Islands
(809) 949-0050
Charter Medical International, S.A., Inc. Nevada 58-1605110 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Medical Management Company Georgia 58-1195352 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Medical of East Valley, Inc. Arizona 58-1643158 2190 N. Grace Boulevard
Chandler, AZ 85224
(602) 809-8989
Charter Medical of England Limited United Kingdom applied for 111 Kings Road, Box 323
London SW3 4PB, England
Charter Medical of North Phoenix, Inc. Arizona 58-1643154 6015 W. Peoria Avenue
Glendale, AZ 85311
(602) 878-7878
Charter Medical of Orange County, Inc. Florida 58-1615673 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Medical of Puerto Rico, Inc. Puerto Rico 58-1208667 1225 Ponce de Leon Avenue
Santuree, Puerto Rico 00907
(809) 723-8666
Charter Mental Health Options, Inc. Florida 58-2100704 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Mid-South Behavioral Health Tennessee 58-1860496 577 Mulberry Street
System, Inc. Macon, GA 31298
(912) 742-1161
Charter Milwaukee Behavioral Health Wisconsin 58-1790135 11101 West Lincoln Avenue
System, Inc. West Allis, WI 53227
(414) 327-3000
</TABLE>
viii
<PAGE>
ADDITIONAL OBLIGORS(1) (CONTINUED)
<TABLE>
<CAPTION>
ADDRESS INCLUDING ZIP CODE,
STATE OR OTHER AND TELEPHONE NUMBER
EXACT NAME OF JURISDICTION OF I.R.S. EMPLOYER INCLUDING AREA CODE,
OBLIGOR AS SPECIFIED INCORPORATION IDENTIFICATION OF OBLIGOR'S PRINCIPAL
IN ITS CHARTER OR ORGANIZATION NUMBER EXECUTIVE OFFICES
- ------------------------------------------ -------------------- ---------------- -------------------------------------
<S> <C> <C> <C>
Charter Mission Viejo Behavioral Health California 58-1761156 23228 Madero
System, Inc. Mission Viejo, CA 92691
(714) 830-4800
Charter North Behavioral Health System, Alaska 58-1474550 2530 DeBarr Road
Inc. Anchorage, AK 99508-2996
(907) 258-7575
Charter North Counseling Center, Inc. Alaska 58-2067832 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Northbrooke Behavioral Health Wisconsin 39-1784461 577 Mulberry Street
System, Inc. Macon, GA 31298
(912) 742-1161
Charter Northridge Behavioral Health North Carolina 58-1463919 400 Newton Road
System, Inc. Raleigh, NC 27615
(919) 847-0008
Charter Northside Hospital, Inc. Georgia 58-1440656 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Oak Behavioral Health System, Inc. California 58-1334120 1161 East Covina Boulevard
Covina, GA 91724
(818) 966-1632
Charter Palms Behavioral Health System, Texas 58-1416537 1421 E. Jackson Avenue
Inc. McAllen, TX 78502
(512) 631-5421
Charter Peachford Behavioral Health Georgia 58-1086165 2151 Peachford Road
System, Inc. Atlanta, GA 30338
(404) 455-3200
Charter Pines Behavioral Health System, North Carolina 58-1462214 3621 Randolph Road
Inc. Charlotte, NC 28211
(704) 365-5368
Charter Plains Behavioral Health System, Texas 58-1462211 801 N. Quaker Avenue
Inc. Lubbock, TX 79408
(806) 744-5505
Charter Psychiatric Hospitals, Inc. Delaware 58-1852072 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Real Behavioral Health System, Texas 58-1485897 8550 Huebner Road
Inc. San Antonio, TX 78240
(512) 699-8585
Charter Regional Medical Center, Inc. Texas 74-1299623 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter Richmond Behavioral Health System, Virginia 58-1761160 577 Mulberry Street
Inc. Macon, GA 31298
(912) 742-1161
Charter Ridge Behavioral Health System, Kentucky 58-1393063 3050 Rio Dosa Drive
Inc. Lexington, KY 40509
(606) 269-2325
</TABLE>
ix
<PAGE>
ADDITIONAL OBLIGORS(1) (CONTINUED)
<TABLE>
<CAPTION>
ADDRESS INCLUDING ZIP CODE,
STATE OR OTHER AND TELEPHONE NUMBER
EXACT NAME OF JURISDICTION OF I.R.S. EMPLOYER INCLUDING AREA CODE,
OBLIGOR AS SPECIFIED INCORPORATION IDENTIFICATION OF OBLIGOR'S PRINCIPAL
IN ITS CHARTER OR ORGANIZATION NUMBER EXECUTIVE OFFICES
- ------------------------------------------ -------------------- ---------------- -------------------------------------
<S> <C> <C> <C>
Charter Rivers Behavioral Health System, South Carolina 58-1408623 2900 Sunset Boulevard
Inc. West Columbia, SC 29171
(803) 796-9911
Charter San Diego Behavioral Health California 58-1669160 11878 Avenue of Industry
System, Inc. San Diego, CA 92128
(619) 487-3200
Charter Serenity Lodge Behavioral Health Virginia 56-1703066 577 Mulberry Street
System, Inc. Macon, GA 31298
(912) 742-1161
Charter Sioux Falls Behavioral Health South Dakota 58-1674278 2812 South Louise Avenue
System, Inc. Sioux Falls, SD 57106
(605) 341-8111
Charter South Bend Behavioral Health Indiana 58-1674287 6704 North Gumwood Drive
System, Inc. Granger, IN 46530
(219) 272-9799
Charter Springs Behavioral Health System, Florida 58-1517461 3130 S.W. 27th Avenue
Inc. Ocala, FL 32678
(904) 237-7293
Charter Springwood Behavioral Health Virginia 58-2097829 577 Mulberry Street
System, Inc. Macon, GA 31298
(912) 742-1161
Charter Suburban Hospital of Mesquite, Texas 75-1161721 577 Mulberry Street
Inc. Macon, GA 31298
(912) 742-1161
Charter Terre Haute Behavioral Health Indiana 58-1674293 1400 Crossing Boulevard
System, Inc. Terre Haute, IN 47802
(812) 299-4196
Charter Thousand Oaks Behavioral California 58-1731069 150 Via Merida
Health System, Inc. Thousand Oaks, CA 91361
(805) 495-3292
Charter Tidewater Behavioral Virginia 54-1703069 577 Mulberry Street
Health System, Inc. Macon, GA 31298
(912) 742-1161
Charter Treatment Center of Michigan 58-2025057 577 Mulberry Street
Michigan, Inc. Macon, GA 31298
(912) 742-1161
Charter Westbrook Behavioral Virginia 54-0858777 1500 Westbrook Avenue
Health System, Inc. Richmond, VA 23227
(804) 266-9671
Charter White Oak Behavioral Maryland 52-1866223 577 Mulberry Street
Health System, Inc. Macon, GA 31298
(912) 742-1161
Charter Wichita Behavioral Kansas 58-1634296 8901 East Orme
Health System, Inc. Wichita, KS 67207
(316) 686-5000
Charter Woods Behavioral Alabama 58-1330526 700 Cottonwood Road
Health System, Inc. Dothan, AL 36302
(205) 794-4357
</TABLE>
x
<PAGE>
ADDITIONAL OBLIGORS(1) (CONTINUED)
<TABLE>
<CAPTION>
ADDRESS INCLUDING ZIP CODE,
STATE OR OTHER AND TELEPHONE NUMBER
EXACT NAME OF JURISDICTION OF I.R.S. EMPLOYER INCLUDING AREA CODE,
OBLIGOR AS SPECIFIED INCORPORATION IDENTIFICATION OF OBLIGOR'S PRINCIPAL
IN ITS CHARTER OR ORGANIZATION NUMBER EXECUTIVE OFFICES
- ------------------------------------------ -------------------- ---------------- -------------------------------------
<S> <C> <C> <C>
Charter Woods Hospital, Inc. Alabama 58-2102628 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter of Alabama, Inc. Alabama 63-0649546 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Charter-Provo School, Inc. Utah 58-1647690 4501 North University Ave.
Provo, UT 84603
(801) 227-2000
Charterton/LaGrange, Inc. Kentucky 61-0882911 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Desert Springs Hospital, Inc. Nevada 88-0117696 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Employee Assistance Services, Inc. Georgia 58-1501282 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Florida Health Facilities, Inc. Florida 58-1860493 21808 State Road 54
Lutz, FL 33549
(813) 948-2441
Gulf Coast EAP Services, Inc. Alabama 58-2101394 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Gwinnett Immediate Care Center, Inc. Georgia 58-1456097 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
HCS, Inc. Georgia 58-1527679 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Holcomb Bridge Immediate Care Center, Inc. Georgia 58-1374463 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Hospital Investors, Inc. Georgia 58-1182191 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Mandarin Meadows, Inc. Florida 58-1761155 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Metropolitan Hospital, Inc. Georgia 58-1124268 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Middle Georgia Hospital, Inc. Georgia 58-1121715 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Pacific-Charter Medical, Inc. California 58-1336537 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
</TABLE>
xi
<PAGE>
ADDITIONAL OBLIGORS(1) (CONTINUED)
<TABLE>
<CAPTION>
ADDRESS INCLUDING ZIP CODE,
STATE OR OTHER AND TELEPHONE NUMBER
EXACT NAME OF JURISDICTION OF I.R.S. EMPLOYER INCLUDING AREA CODE,
OBLIGOR AS SPECIFIED INCORPORATION IDENTIFICATION OF OBLIGOR'S PRINCIPAL
IN ITS CHARTER OR ORGANIZATION NUMBER EXECUTIVE OFFICES
- ------------------------------------------ -------------------- ---------------- -----------------------------------
<S> <C> <C> <C>
Peachford Professional Network, Inc. Georgia 58-2100700 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Rivoli, Inc. Georgia 58-1686160 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Shallowford Community Hospital, Inc. Georgia 58-1175951 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Sistemas De Terapia Respiratoria S.A., Georgia 58-1181077 577 Mulberry Street
Inc. Macon, GA 31298
(912) 742-1161
Stuart Circle Hospital Corporation Virginia 54-0855184 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Tampa Bay Behavioral Health Alliance, Inc. Florida 58-2100703 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
Western Behavioral Systems, Inc. California 58-1662416 577 Mulberry Street
Macon, GA 31298
(912) 742-1161
<FN>
- ------------------------------
(1) The Additional Registrants listed are wholly-owned subsidiaries of the
Registrant and are guarantors of the Registrant's 11 1/4% Senior
Subordinated Notes due 2004 and will be guarantors of the Registrant's
11 1/4% Series A Senior Subordinated Notes due 2004 to be issued pursuant
to the Exchange Offer described in the attached Registration Statement.
The Additional Registrants have been conditionally exempted, pursuant to
Section 12(h) of the Securities Exchange Act of 1934, from filing reports
under Sections 13 or 15(d) of the Securities Act of 1934.
</TABLE>
xii
<PAGE>
General
Item 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervisory
authority to which it is subject.
State of New York Banking Department, Albany, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C.
Board of Governors of the Federal Reserve System,
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. AFFILIATIONS WITH OBLIGOR.
If the obligor is an affiliate of the trustee, describe
each such affiliation.
None
<PAGE>
Item 16. LIST OF EXHIBITS.
EXHIBIT
T1A(i) - Copy of the Organization
Certificate of Marine Midland Bank.
T1A(ii) - Copy of Certificate of the State of
New York Banking Department dated
December 31, 1993 as to the authority
of Marine Midland Bank to commence
business.
T1A(iii) - Copy of authorization of Marine
Midland Bank to exercise corporate
trust powers. See Item T1A(ii).
T1A(iv) - Copy of the existing By-Laws of
Marine Midland Bank as adopted on
January 20, 1994.
T1A(v) - Not applicable.
T1A(vi) - Consent of Marine Midland Bank
required by Section 321(b) of the Trust
Indenture Act of 1939.
T1A(vii) - Copy of the latest report of
condition of the trustee (December 31,
1993).
T1A(viii) - Not applicable.
T1A(ix) - Not applicable.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, Marine Midland Bank, a trust company organized under the laws of the
State of New York, has duly caused this statement of eligibility to be signed on
its behalf by the undersigned, thereunto duly authorized, all in the City of New
York and State of New York on the __th day of May, 1994.
MARINE MIDLAND BANK
By:/s/ Frank J. Godino
--------------------
Frank J. Godino
Assistant Corporate Trust Officer
<PAGE>
EXHIBIT T1A(i)
ORGANIZATION CERTIFICATE
of
"MARINE MIDLAND BANK"
We, the undersigned, all being of full age, all but one of us being
citizens of the United States and all of us being residents of the State of New
York, having associated ourselves together for the purpose of forming a trust
company under and pursuant to the Banking Law of the State of New York, do
hereby certify:
FIRST. That the name by which the corporation is to be known is
Marine Midland Bank.
SECOND. That the place where its principal office is to be located
is Buffalo, New York.
THIRD. That the amount of its capital stock is to be One Hundred
Eighty-five Million and no/100 Dollars ($185,000,000.00) and the number of
shares into which such capital stock is to be divided is 1,850,000 with a par
value of $100.00 each.
FOURTH. The shares are not to be classified as preferred and common.
If the shares are to be so classified,
(a) The number and par value of shares to be included in each
class are as follows: not applicable.
(b) All the designations, preferences, privileges and voting
powers of the shares of each class, and the restrictions or qualifications
thereof are as follows: not applicable.
(c) The number of shares of common stock which are to be
reserved for issuance in exchange for preferred shares or otherwise to
replace any capital stock represented by preferred shares is none.
FIFTH. The name, place of residence and citizenship of each
incorporator, and the number of shares subscribed for by each are:
<PAGE>
<TABLE>
<CAPTION>
No. of
Full Name Residence *Citizenship Shares
--------- --------- ------------ ------
<S> <C> <C> <C>
James H. Cleave New York Canada 0
John M. Endries New York New York 0
Bernard J. Kennedy New York New York 0
Northrup R. Knox New York New York 0
Henry J. Nowak New York New York 0
<FN>
- ---------------------
* If a citizen of New York or a contiguous state, insert name of such state.
</TABLE>
SIXTH. The term of existence of the corporation is to be perpetual.
SEVENTH. The number of directors is to be not less than seven or
more than thirty.
EIGHTH. The names of the incorporators who shall be the directors
until the first annual meeting of stockholders are: James H. Cleave, John M.
Endries, Bernard J. Kennedy, Northrup R. Knox and Henry J. Nowak.
NINTH. The corporation is to exercise the powers conferred by
Section 100 of the Banking Law.
<PAGE>
IN WITNESS WHEREOF, We have made, signed and acknowledged this
certificate in duplicate, this 16th day of September, 1993.
/s/ James H. Cleave
--- ------------------
/s/ John M. Endries
--- ------------------
/s/ Bernard J. Kennedy
--- ------------------
/s/ Northrup R. Knox
--- ------------------
/s/ Henry J. Nowak
--- ------------------
STATE OF NEW YORK )
) ss.:
COUNTY OF ERIE )
On this 16th day of September, 1993, personally appeared before me
James H. Cleave, John M. Endries, Bernard J. Kennedy, Northrup R. Knox and Henry
J. Nowak, to me known to be the persons described in and who executed the
foregoing certificate and severally acknowledged that they executed the same.
/s/ Helen Kujawa
-----------------------
Notary Public
(Attach County Clerk's certificate
authenticating signature of Notary [NOTARIAL SEAL]
Public who takes acknowledgement)
<PAGE>
NINTH. The corporation is to exercise the powers conferred by
Section 100 of the Banking Law.
IN WITNESS WHEREOF, We have made, signed and acknowledged this
certificate in duplicate, this 16th day of September, 1993.
/s/ James H. Cleave
- --- ---------------
/s/ John M. Endries
- --- ---------------
/s/ Bernard J. Kennedy
- --- ------------------
/s/ Northrup R. Knox
- --- ---------------
/s/ Henry J. Nowak
- --- ---------------
STATE OF NEW YORK )
) ss.:
COUNTY OF ERIE )
I, David J. Swarts, Clerk of the County of Erie, and also Clerk of
the Supreme and County Courts for said County, the same being Courts of Record,
do hereby certify that HELEN KUJAWA, whose name is subscribed to the deposition
certificate of acknowledgement of proof of the annexed instrument, was at the
time of taking the same a NOTARY PUBLIC in and for the State of New York, duly
commissioned and sworn and qualified to act as such throughout the State of New
York; that pursuant to law a commission, or a certificate of his appointment and
qualifications and his autograph signature, have been filed in my office; that
as such Notary Public he was duly authorized by the laws of the State of New
York to administer oaths and affirmations to receive and certify that
acknowledgement of proof of deeds, mortgages, powers of attorney and other
written instruments for lands, tentaments and heriditaments to be read in
evidence or recorded in this State, to protect notes and to take and certify
affidavits and depositions; and that I am well acquainted with the handwriting
of such Notary Public, or have compared the signature on the annexed instrument
and with his autograph signature deposited in my office, and believe that the
signature is genuine.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal
of said County and Courts at Buffalo, this 17th day of September, 1993.
[SEAL]
N.P. No. 7502 /s/ David S. Swarts
-------------------------
Clerk
<PAGE>
ORGANIZATION CERTIFICATE
of
"MARINE MIDLAND BANK"
Received this _____ day of ______________, 19____.
Superintendent of Banks
Filed for examination this _____ day of ______________, 19____.
Superintendent of Banks
________________________ by the Banking Board at a meeting held on
the _____ day of ______________, 19____.
Secretary of the Banking Board
_____________________________________________________ this _____ day
of ______________, 19____.
Superintendent of Banks
<PAGE>
Filed in the office of _______________________________ this _____ day
of ______________, 19____.
Recorded in the office of ____________________________ this _____ day
of ______________, 19____.
<PAGE>
EXHIBIT T1A(ii)
STATE OF NEW YORK
BANKING DEPARTMENT
KNOW ALL MEN BY THESE PRESENTS,
WHEREAS, the organization certificate of MARINE MIDLAND BANK of
Buffalo, New York has heretofore been duly approved and said MARINE MIDLAND BANK
has complied with the provisions of Chapter 2 of the Consolidated Laws, in
respect of the conversion of MARINE MIDLAND BANK, N.A. into a State trust
company under the name MARINE MIDLAND BANK,
NOW THEREFORE, I, DERICK D. CEPHAS, as Superintendent of Banks of the
State of New York, do hereby authorize the said MARINE MIDLAND BANK to transact
the business of a Trust Company at One Marine Midland Center, Buffalo, Erie
County, within this State.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the
official seal of the Banking Department, this 31st day of December in the year
one thousand nine hundred and ninety-three.
[SEAL]
/s/ Derrick D. Cephas
---------------------------
Superintendent
<PAGE>
EXHIBIT T1A(ii)
STATE OF NEW YORK
BANKING DEPARTMENT
KNOW ALL MEN BY THESE PRESENTS,
WHEREAS, the organization certificate of MARINE MIDLAND BANK of
Buffalo, New York has heretofore been duly approved and said MARINE MIDLAND BANK
has complied with the provisions of Chapter 2 of the Consolidated Laws, in
respect of the conversion of MARINE MIDLAND BANK, N.A. into a State trust
company under the name MARINE MIDLAND BANK,
NOW THEREFORE, I, DERICK D. CEPHAS, as Superintendent of Banks of the
State of New York, do hereby authorize the said MARINE MIDLAND BANK to transact
the business of a Trust Company at One Marine Midland Center, Buffalo, Erie
County, within this State.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the
official seal of the Banking Department, this 31st day of December in the year
one thousand nine hundred and ninety-three.
[SEAL]
/s/ Derrick D. Cephas
---------------------------
Superintendent
<PAGE>
(Adopted January 20, 1994)
EXHIBIT T1A (iv)
BY-LAWS
of
MARINE MIDLAND BANK
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1.1 ANNUAL MEETING. The annual meeting of the stockholders
for the election of directors and the transaction of such other business as may
properly come before the meeting shall be held in April each year at the office
of the Bank, One Marine Midland Center, City of Buffalo, State of New York.
Section 1.2 SPECIAL MEETINGS. Except as otherwise specifically
provided by statute, special meetings of the stockholders may be called for any
purpose at any time by the Board of Directors, the Chairman of the Board, the
President, the Chief Executive Officer or the Secretary at such place and time
and on such day as may be designated in the notice of meeting. Business
transacted at all special meetings of stockholders shall be confined to the
purposes stated in the notice of meeting.
Section 1.3 QUORUM. The holders of a majority of the stock issued
and outstanding, and entitled to vote thereat, present in person or represented
by proxy, shall constitute a quorum at all meetings of stockholders, unless
otherwise provided by law.
Section 1.4 VOTING.
a. At any meeting of the stockholders each stockholder may vote in
person or by proxy duly authorized in writing. Each stockholder shall at every
meeting of stockholders be entitled to one vote for each share of stock held by
such stockholder. A majority of the votes cast shall decide every question or
matter submitted to the stockholders at any meeting, unless otherwise provided
by law or by the Organization Certificate.
b. Any action required to be taken at an annual or special meeting
of stockholders may be taken without a meeting by written consent setting forth
the action and signed by the holders of all of outstanding shares entitled to
vote thereon.
Section 1.5 NOTICE OF MEETING. Written notice of each meeting of
stockholders stating the place, date and hour of the meeting and, in the case of
a special meeting, the
<PAGE>
purpose or purposes for which the meeting is called and the person or
persons calling the meeting, shall be delivered personally or shall be mailed
postage prepaid to each stockholder entitled to vote at such meeting, directed
to the stockholder at his or her address as it appears on the records of the
Bank, not less than ten or more than 50 days before the date of the meeting.
ARTICLE II
DIRECTORS
Section 2.1 BOARD OF DIRECTORS. The Board of Directors (the
"Board") shall have power to manage and administer the business and affairs of
the Bank and, except as expressly limited by law, all corporate powers of the
Bank shall be vested in and may be exercised by the Board unless such powers are
required by statute, the Organization Certificate or these By-Laws to be
exercised by the stockholders.
Section 2.2 NUMBER AND TERM. The Board shall consist of not less
than seven or more than thirty directors, the exact number within such minimum
and maximum limits to be fixed and determined from time to time by resolution of
a majority of the entire Board or by resolution of the stockholders at any
meeting of stockholders. Unless sooner removed or disqualified, each director
shall hold office until the next annual meeting of the stockholders and until
the director's successor has been elected and qualified.
Section 2.3 ORGANIZATION MEETING. At its first meeting after each
annual meeting of stockholders, the Board shall choose a Chairman of the Board,
a President and a Chief Executive Officer from its own members and otherwise
organize the new Board and appoint officers of the Bank for the succeeding year.
Section 2.4 CHAIRMAN OF THE BOARD. The Chairman of the Board shall
preside at all meetings of the Board and of stockholders and perform such duties
as shall be assigned from time to time by the Board. In the absence of the
Chairman of the Executive Committee, the Chairman of the Board shall act as
Chairman of the Executive Committee. Except as may be otherwise provided by the
By-Laws or the Board, the Chairman of the Board shall be a member EX OFFICIO of
all committees authorized by these By-Laws or the Board. The Chairman of the
Board shall be kept informed by the executive officers about the affairs of the
Bank.
Section 2.5 REGULAR MEETINGS. The regular meetings of the Board
shall be held each month at the time and location designated by the Board. No
notice of a regular meeting shall be required if the meeting is held according
to a schedule of regular meetings approved by the Board.
Section 2.6 SPECIAL MEETINGS. Special meetings of the Board may be
called by the Chairman of the Board, the President, the Chief Executive Officer
or the Secretary or at the written request of any three or more directors. Each
member of the Board shall be
<PAGE>
given notice stating the time and place of each such special meeting by
telegram, telephone or similar electronic means or in person at least one day
prior to such meeting, or by mail at least three days prior.
Section 2.7 QUORUM. One third of the entire Board shall constitute
a quorum at any meeting, except when otherwise provided by law. If a quorum is
not present at any meeting, a majority of the directors present may adjourn the
meeting, and the meeting may be held, as adjourned, without further notice
provided that a quorum is then present. The act of a majority of the directors
present at any meeting at which there is a quorum shall be the act of the Board,
unless otherwise specifically provided by statute, the Organization Certificate
or these By-Laws.
Section 2.8 VACANCIES. When any vacancy occurs among the directors,
the remaining members of the Board may appoint a director to fill each such
vacancy at any regular meeting of the Board or at a special meeting called for
that purpose. Any director so appointed shall hold office until the next annual
meeting of the stockholders and until the director's successor has been elected
and qualified, unless sooner displaced.
Section 2.9 REMOVAL OF DIRECTORS. Any director may be removed
either with or without cause, at any time, by a vote of the holders of a
majority of the shares of the Bank at any meeting of stockholders called for
that purpose. A director may be removed for cause by vote of a majority of the
entire Board.
Section 2.10 COMPENSATION OF DIRECTORS. The Board shall fix the
amounts to be paid directors for their services as directors and for their
attendance at the meetings of the Board or of committees or otherwise. No
director who receives a salary from the Bank shall receive any fee for attending
meetings of the Board or of any of its committees.
Section 2.11 ACTION BY THE BOARD. Except as otherwise provided by
law, corporate action to be taken by the Board shall mean such action at a
meeting of the Board or the Executive Committee of the Board. Any one or more
members of the Board or any committee may participate in a meeting of the Board
or committee by means of a conference telephone or similar communications
equipment allowing all persons participating in the meeting to hear each other
at the same time. Participation by such means shall constitute presence in
person at a meeting.
Section 2.12 WAIVER OF NOTICE. Notice of a meeting need not be
given to any director who submits a signed waiver of notice before or after the
meeting or who attends the meeting without protesting the lack of such notice
prior to or at the commencement of the meeting.
Section 2.13 ADVISORY AND REGIONAL BOARDS. The Board, the Chairman
of the Board, the President, the Chief Executive Officer or any Regional
President may establish Advisory Boards or Regional Boards and committees
thereof for any one or more of the Bank's regions, offices, or departments and
make or authorize appointments to be made thereto. Appointees to such boards
and committees need not be stockholders, directors or
<PAGE>
officers of the Bank, and they shall have and perform only such functions as may
be assigned to them by, shall serve at the pleasure of, and shall be compensated
by fees fixed by the Board, the Chairman of the Board, the President, the Chief
Executive Officer or the Regional President making the appointment.
ARTICLE III
COMMITTEES OF THE BOARD
Section 3.1 EXECUTIVE COMMITTEE.
a. There shall be an Executive Committee which shall be composed of
at least five members elected by the Board from among its members at its first
meeting following the annual meeting of stockholders to serve for the ensuing
year and shall include the Chairman of the Board, the President, the Chief
Executive Officer and the Chairman of the Executive Committee, all of which
offices may be held by one person. The Chairman of the Board may appoint one or
more directors as alternate members to serve in place of any absent members of
the Executive Committee. Any vacancy in the Executive Committee shall be filled
by the Board, but until its next regular Board meeting may be filled temporarily
by the Chairman of the Board.
b. The Executive Committee shall possess and exercise all of the
powers of the Board except (i) when the latter is in session and (ii) as
provided otherwise in the New York Banking Law.
Section 3.2 CHAIRMAN OF THE EXECUTIVE COMMITTEE. The Board shall
appoint one of its members to be Chairman of the Executive Committee. The
Chairman of the Board, the President or the Chief Executive Officer may at the
same time be appointed Chairman of the Executive Committee. The Chairman of the
Executive Committee shall preside at all meetings of the Executive Committee,
and the Chairman of the Executive Committee shall, in the absence of the
Chairman of the Board, the President and the Chief Executive Officer, preside at
all meetings of stockholders and the Board. The Chairman of the Executive
Committee shall also perform such other duties and be vested with such other
powers as may from time to time be conferred upon him or her by these By-Laws or
as shall be assigned to him or her from time to time by the Board or the Chief
Executive Officer.
Section 3.3 MEETINGS OF THE EXECUTIVE COMMITTEE. Meetings of the
Executive Committee may be called by the Chairman of the Board, the Chairman of
the Executive Committee, the President, the Chief Executive Officer or the
Secretary and may be held at any place and at any time designated in the notice
thereof. Each member of the Executive Committee shall be given notice stating
the time and place of each such meeting, by telegram, telephone or similar
electronic means or in person at least one day prior to such meeting, or by mail
at least three days prior.
Section 3.4 EXAMINING COMMITTEE. The Board shall designate an
Examining
<PAGE>
Committee, which shall hold office until the next annual meeting of the Board
following the annual meeting of stockholders, consisting of not less than three
of its members, other than officers of the Bank, and whose duty it shall be to
make an examination at least once during each calendar year and within 15 months
of the last such examination into the affairs of the Bank including the
administration of fiduciary powers, or cause suitable examinations to be made by
auditors responsible only to the Board and to report the result of such
examination in writing to the Board. Such report shall state whether the Bank
is in a sound condition, whether adequate internal controls and procedures are
being maintained and shall recommend to the Board such changes in the manner of
conducting the affairs of the Bank as shall be deemed advisable. The Committee
shall at such time ascertain whether the Bank's fiduciary responsibilities have
been administered in accordance with law and sound fiduciary principles.
Section 3.5 OTHER COMMITTEES. The Board may appoint, from time to
time, from its own members, committees of the Board of three or more persons,
for such purposes and with such powers as the Board may determine.
ARTICLE IV
OFFICERS
Section 4.1 APPOINTMENT OF OFFICERS. At its annual meeting
following the annual meeting of stockholders, the Board shall appoint from among
its members a Chairman of the Board, a President, a Chief Executive Officer and
a Secretary. The Chairman of the Board or the President may also be appointed
as the Chief Executive Officer. At such meeting, the Board shall also appoint
one or more Vice Presidents, and may at such meeting or at other meetings of the
Board appoint such other officers as it may determine from time to time. The
Board may also authorize a committee of the Board to appoint such officers as
are not required to be appointed by the Board at a meeting.
Section 4.2 DUTIES OF PRESIDENT. In the absence of the Chairman of
the Board, the President shall preside at all meetings of the Board and of
stockholders and in the absence of the Chairman of the Executive Committee and
the Chairman of the Board shall preside at all meetings of the Executive
Committee. Except as may be otherwise provided by the By-Laws or the Board, the
President shall be a member EX OFFICIO of all committees authorized by these By-
Laws or the Board. The President shall have general executive powers, shall
participate actively in all major policy decisions and shall have and may
exercise any and all other powers and duties pertaining by law, regulation or
practice to the Office of President or imposed by these By-Laws. The President
shall also have and may exercise such further powers and duties as from time to
time may be conferred or assigned by the Board or the Chief Executive Officer.
Section 4.3 DUTIES OF CHIEF EXECUTIVE OFFICER. The Chief Executive
Officer shall exercise general supervision over the policies and business
affairs of the Bank and the carrying out of the policies adopted or approved by
the Board. Except as otherwise
<PAGE>
provided by these By-Laws, the Chief Executive Officer shall have the power to
determine the duties of the officers of the Bank and to employ and discharge
officers and employees. Except as otherwise provided by the By-Laws or the
Board, the Chief Executive Officer shall be a member EX OFFICIO of all
committees authorized by these By-Laws or created by the Board. In the absence
of the Chairman of the Board and the President, the Chief Executive Officer
shall preside at all meetings of the Board and of stockholders.
Section 4.4 DUTIES OF VICE PRESIDENTS. Each Vice President shall
have such titles, seniority, powers and duties as may be assigned by the Board,
a committee of the Board, the President or the Chief Executive Officer.
Section 4.5 SECRETARY. The Secretary shall be Secretary of the
Board and of the Bank and shall keep accurate minutes of all meetings of
stockholders and of the Board. The Secretary shall attend to the giving of all
notices required to be given by these By-Laws; shall be custodian of the
corporate seal, records, documents and papers of the Bank; shall provide for the
keeping of proper records of all transactions of the Bank; shall have and may
exercise any and all other powers and duties pertaining by law, regulation or
practice to the office of Secretary or imposed by these By-Laws; and shall also
perform such other duties as may be assigned from time to time by the Board, the
president or the Chief Executive Officer.
Section 4.6 OTHER OFFICERS. The President or the Chief Executive
Officer or his or her designee may appoint all officers whose appointment does
not require approval by the Board or a committee of the Board and assign to them
such titles as from time to time may appear to be required or desirable to
transact the business of the Bank. Each such officer shall have such powers and
duties as may be assigned by the Board, the president or the Chief Executive
Officer.
Section 4.7 TENURE OF OFFICE. The Chairman of the Board, the
President, the Chief Executive Officer, the Chairman of the Executive Committee,
the Secretary and the Vice Presidents shall hold office for the current year for
which the Board was elected and until their successors have been appointed and
qualified, unless they shall resign, become disqualified or be removed. All
other officers shall hold office until their successors have been appointed and
qualify, unless they shall resign, become disqualified or be removed. The Board
shall have the power to remove the Chairman of the Board, the President, the
Chief Executive Officer, the Chairman of the Executive Committee and the
Secretary. The Board or the Chief Executive Officer or his or her designee
shall have the power to remove all other officers and employees. Any vacancy
occurring in the offices of Chairman of the Board, President or Chief Executive
Officer shall be filled promptly by the Board.
Section 4.8 COMPENSATION. The Board shall by resolution determine
from time to time the officers whose compensation will require approval by the
Board or a committee of the Board. The Chief Executive Officer shall fix the
compensation of all officers and employees whose compensation does not require
approval by the Board or a committee of the Board.
<PAGE>
Section 4.9 AUDITOR. The Board or the Chief Executive Officer shall
appoint an officer to fill the position of Auditor for the Bank and assign to
such officer such title as is deemed appropriate. The Auditor shall perform all
duties incident to the audit of all departments and offices and of all affairs
of the Bank. The Auditor shall be responsible to the Chief Executive Officer.
The Auditor may at any time report to the Board any matter concerning the
affairs of the Bank that, in the Auditor's judgment, should be brought to its
attention.
Section 4.10 REGIONAL PRESIDENTS. The Board may appoint one or more
Regional Presidents. Each Regional President shall have such powers and duties
as may be assigned by the Board or the Chief Executive Officer.
ARTICLE V
FIDUCIARY POWERS
Section 5.10 FIDUCIARY RESPONSIBILITY. The Board shall appoint an
officer or officers or a committee or committees of this Bank whose duties shall
be to manage, supervise and direct the fiduciary activities of the Bank as
assigned by the Board. Such officer or committee shall do or cause to be done
all things necessary or proper in carrying on the assigned activities in
accordance with provisions of law and applicable regulations and shall act
pursuant to opinion of counsel where such opinion is deemed necessary. Opinions
of counsel shall be retained on file in connection with all important matters
pertaining to fiduciary activities. The officer or committee shall be
responsible for all assets and documents held by the Bank in connection with
fiduciary matters assigned by the Board.
Section 5.11 FIDUCIARY FILES. Files shall be maintained containing
all fiduciary records necessary to assure that fiduciary responsibilities have
been properly undertaken and discharged.
Section 5.12 FIDUCIARY INVESTMENTS. Funds held in a fiduciary
capacity shall be invested in accordance with the instrument establishing the
fiduciary relationship and applicable law. Where such instrument does not
specify the character and class of investments to be made and does not vest in
the Bank a discretion in the matter, funds held pursuant to such instrument
shall be invested in investments in which corporate fiduciaries may invest under
applicable law.
ARTICLE VI
STOCK AND STOCK CERTIFICATES
Section 6.1 TRANSFERS. Shares of the stock of the Bank shall be
transferable on the books of the Bank, only by the person named in the
certificate or by an attorney, lawfully constituted in writing, and upon
surrender of the certificate therefor. Every person
<PAGE>
becoming a stockholder by such transfer shall, in proportion to his or her
shares, succeed to all rights of the prior holder of such shares.
Section 6.2 STOCK CERTIFICATES. The certificates of stock of the
Bank shall be numbered and shall be entered in the books of the Bank as they are
issued. They shall exhibit the holder's name and number of shares and shall be
signed by the Chairman of the Board, the President, the Chief Executive Officer
or any Vice President and by the Secretary or an Assistant Secretary.
ARTICLE VII
CORPORATE SEAL
Section 7.1 CORPORATE SEAL. The Chairman of the Board, the
President, the Chief Executive Officer, the Secretary or any Assistant
Secretary, a Vice President or Assistant Vice President or other officer
designated by the Board or the Chief Executive Officer or his or her designee
shall have authority to affix the corporate seal to any document requiring such
seal and to attest the same. Such seal shall be substantially in the following
form:
(impression)
( of )
( seal )
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.1 FISCAL YEAR. The fiscal year of the Bank shall be the
calendar year.
Section 8.2 EXECUTION OF INSTRUMENTS.
a. All agreements, indentures, mortgages, deeds, conveyances,
transfers, certificates, declarations, receipts, discharges, releases,
satisfactions, settlements, petitions, schedules, accounts, affidavits, bonds,
undertakings, proxies and other instruments or documents may be signed,
executed, acknowledged, verified, delivered or accepted in behalf of the Bank or
in connection with the exercise of the fiduciary powers of the Bank, by the
Chairman of the Board, the President, the Chief Executive Officer, the Secretary
or any other officer or employee (other than the Auditor) designated by the
Board or the Chief Executive Officer or his or her designee. Any such
instruments may also be executed, acknowledged, verified, delivered or accepted
in behalf of the Bank in such other manner and by such other officers as the
Board may from time to time direct. The provisions of this Section 8.2 are
supplementary to any other provision of these By-Laws.
<PAGE>
b. When required, the Secretary or any officer or agent designated
by the Board or the Chief Executive Officer or his designee shall countersign
and certify all bonds or certificates issued by the Bank as trustee, transfer
agent, registrar or depository. The Chief Executive Officer or any officer
designated by the Board or the Chief Executive Officer or his or her designee
shall have the power to accept in behalf of the Bank any guardianship,
receivership, executorship or other special or general trust permitted by law.
Each of the foregoing authorizations shall be at the pleasure of the Board, and
each such authorization by the Chief Executive Officer or his or her designee
also shall be at the pleasure of the Chief Executive Officer.
Section 8.3 RECORDS. The By-Laws and the proceedings of all
meetings of the stockholders, the Board and standing committees of the Board
shall be recorded in appropriate minute books provided for the purpose. The
minutes of each meeting shall be signed by the Secretary or other officer
appointed to act as secretary of the meeting.
Section 8.4 EMERGENCY OPERATIONS. In the event of war or warlike
damage or disaster of sufficient severity to prevent the conduct and management
of the affairs, business and property of the Bank by its directors and officers
as contemplated by these By-Laws, any two or more available members of the then-
incumbent Executive Committee shall constitute a quorum of that committee for
the full conduct and management of the affairs, business and property of the
Bank. In the event of the unavailability at such time of a minimum of two
members of the then-incumbent Executive Committee, any three available directors
shall constitute the Executive Committee for the full conduct and management of
the affairs, business and property of the Bank. This by-law shall be subject to
implementation by resolutions of the Board passed from time to time for that
purpose, and any provisions of these By-Laws (other than this section) and any
resolutions which are contrary to the provisions of this section or to the
provisions of any such implementary resolutions shall be suspended until it
shall be determined by any interim Executive Committee acting under this section
that it shall be to the advantage of the Bank to resume the conduct and
management of its affairs, business and property under all of the other
provisions of these By-Laws.
Section 8.5 INDEMNIFICATION.
a. The Bank shall indemnify each person made or threatened to be
made a party to any action or proceeding, whether civil or criminal, by reason
of the fact that such person or such person's testator or intestate is or was a
director or officer of the Bank, or, while a director or officer, serves or
served, at the request of the Bank, any other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise in any capacity,
against judgments, fines, penalties, amounts paid in settlement and reasonable
expenses, including attorney's fees, incurred in connection with such action or
proceeding, or any appeal therein, provided that no such indemnification shall
be made if a judgment or other final adjudication adverse to such director or
officer establishes that his or her acts were committed in bad faith or were the
result of active and deliberate dishonesty and were material to the cause of
action so adjudicated, or that he or she personally gained in fact a financial
profit or other advantage to which he or she was not legally entitled, and
provided further that no such indemnification shall be required with respect to
any settlement or
<PAGE>
other nonjudicated disposition of any threatened or pending action or proceeding
unless the Bank has given its prior consent to such settlement or other
disposition.
b. The Bank shall advance or promptly reimburse upon request any
director or officer seeking indemnification hereunder for all expenses,
including attorneys' fees, reasonably incurred in defending any action or
proceeding in advance or the final disposition thereof upon receipt of an
undertaking by or on behalf of such person to repay such amount if such person
is ultimately found not to be entitled to indemnification or, where
indemnification is granted, to the extent the expenses so advanced or reimbursed
exceed the amount to which such person is entitled.
c. This Section 8.5 shall be given retroactive effect, and the full
benefits hereof shall be available in respect of any alleged or actual
occurrences, acts or failures to act prior to the date of the adoption of this
Section 8.5. The right to indemnification of advancement of expenses under this
Section 8.5 shall be a contract right.
Section 8.6 AMENDMENTS. These By-Laws may be added to, amended,
altered or repealed at any regular meeting of the Board by a vote of a majority
of the total number of the directors, or at any meeting or stockholders, duly
called and held, by a majority of the stock represented at such meeting.
<PAGE>
I, __________________, CERTIFY that I am the duly appointed Secretary
of Marine Midland Bank and, as such officer, have access to its official records
and the foregoing By-Laws are the By-Laws of the Bank, and all of them are now
lawfully in force and effect.
IN TESTIMONY WHEREOF, I have hereunto affixed my official signature
and the seal of the Bank, in New York, on ___________________________.
Secretary
[SEAL]
<PAGE>
EXHIBIT T1A(vi)
Securities and Exchange Commission
Washington, D.C. 20549
Dear Sirs:
Pursuant to Section 321(b) of the Trust Indenture Act of 1939 and
subject to the qualifications and limitation of 321(b) and the other provisions
of the Trust Indenture Act of 1939, the undersigned Marine Midland Bank consents
that reports of examination by Federal, State, Territorial or District
authorities may be furnished by such authorities to the Commission upon request
therefor.
Yours very truly,
MARINE MIDLAND BANK
By:
Metin Caner
Assistant Vice President
Attest:
By:
Eileen M. Hughes
Corporate Trust Officer
<PAGE>
Exhibit T1A(vii)
REPORT OF CONDITION
Consolidated Report of Condition of Marine Midland Bank of Buffalo, New York and
Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at
the close of business on December 31,1993, published in accordance with a call
made by the Federal Reserve Bank of this District pursuant to the provisions of
the Federal Reserve Act.
<TABLE>
<CAPTION>
(Dollar Amounts in Thousands)
<S> <C> <C>
ASSETS
Cash and balances due from depositary institutions:
Noninterest-bearing balances and currency and coin . . . . . . . . . . . . . . . . $1,071,645
Interest-bearing balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,492,007
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,919,704
Federal funds sold and securities purchased under agreements to
resell in domestic offices of the bank and of its Edge and Agreement
subsidiaries, and in IBF's Federal funds sold . . . . . . . . . . . . . . . . . . . 357,000
Securities purchased under agreements to resell . . . . . . . . . . . . . . . . . . 593,002
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . . . . . . . . . . . . . . . . 9,930,891
<PAGE>
LESS: Allowance for loan and lease losses . . . . . . . . . . . . . . . . . . . . . 342,089
LESS: Allocated transfer risk reserve . . . . . . . . . . . . . . . . . . . . . . . 0
Loans and lease, net of unearned income, allowance, and reserve. . . . . . . . . . . . 9,588,802
Assets held in trading accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,615,072
Premises and fixed assets (including capitalized leases) . . . . . . . . . . . . . . . 193,194
Other real estate owned. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142,240
Investments in unconsolidated subsidiaries and associated companies. . . . . . . . . . 0
Customers' liability to this bank on acceptances outstanding . . . . . . . . . . . . . 15,007
Intangible assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69,056
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 428,500
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,485,229
LIABILITIES
Deposits:
In domestic offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,377,782
Noninterest-bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,259,659
Interest-bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,118,123
In foreign offices, Edge and Agreement Subsidiaries, and IBF's . . . . . . . . . . . . 1,002,884
Noninterest-bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Interest-bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,002,884
Federal funds purchased securities sold un-
<PAGE>
der agreements to repurchase in domestic offices of the bank and of its Edge and
Agreement subsidiaries, and in IBF's Federal funds purchased . . . . . . . . . . . 1,115,269
Securities sold under agreements to repurchase. . . . . . . . . . . . . . . . . . . 260,530
Demand notes issued to the US Treasury . . . . . . . . . . . . . . . . . . . . . . . . 300,000
Other borrowed money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 510,549
Mortgage indebtedness and obligations under capitalized leases . . . . . . . . . . . . 41,852
Bank's liability on acceptances executed and outstanding . . . . . . . . . . . . . . . 17,591
Subordinated notes and debentures. . . . . . . . . . . . . . . . . . . . . . . . . . . 225,000
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317,656
Total Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,169,113
Limited-Life preferred stock and related surplus . . . . . . . . . . . . . . . . . . . 0
EQUITY CAPITAL
Perpetual preferred stock and related surplus. . . . . . . . . . . . . . . . . . . . . 0
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185,000
Surplus. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,182,745
Undivided profits and capital reserves . . . . . . . . . . . . . . . . . . . . . . . . (51,629)
LESS: Net unrealized loss on marketable equity securities. . . . . . . . . . . . . . . 0
Cumulative foreign currency translation adjustments. . . . . . . . . . . . . . . . . . 0
Total equity capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,316,116
<PAGE>
Total Liabilities, limited-life preferred stock and equity capital . . . . . . . . . . 17,485,229
</TABLE>
I, Gerald A Ronning, Executive Vice President & Controller of the above-named
bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
GERALD A RONNING
We the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true
and correct.
James H. Cleave
Director
Bernard J. Kennedy
Director
Northrup R. Knox
Director
<PAGE>
EXHIBIT 99.(A)
FORM OF
LETTER OF TRANSMITTAL
CHARTER MEDICAL CORPORATION
OFFER TO EXCHANGE ITS 11 1/4% SERIES A SENIOR SUBORDINATED NOTES DUE 2004
FOR ANY AND ALL OF ITS OUTSTANDING
11 1/4% SENIOR SUBORDINATED NOTES DUE 2004
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
5:00 P.M., NEW YORK CITY TIME, ON , 1994,
UNLESS THE OFFER IS EXTENDED.
To Marine Midland Bank
(the "Exchange Agent")
<TABLE>
<CAPTION>
BY REGISTERED OR CERTIFIED MAIL: BY HAND:
<S> <C>
Marine Midland Bank Marine Midland Bank
Corporate Trust Operations Corporate Trust Operations
140 Broadway 140 Broadway
"A" Level "A" Level
New York, New York, 10005-1180 New York, New York, 10005-1180
BY FACSIMILE TRANSMISSION: BY OVERNIGHT COURIER:
Marine Midland Bank Marine Midland Bank
Corporate Trust Operations Corporate Trust Operations
(212) 658-6425 140 Broadway
"A" Level
New York, New York, 10005-1180
</TABLE>
TELEPHONE NUMBER:
(212) 658-6433
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS
LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL
IS COMPLETED.
The undersigned hereby acknowledges receipt of the Prospectus dated ,
1994 (the "Prospectus") of Charter Medical Corporation (the "Company") and this
Letter of Transmittal (the "Letter of Transmittal"), which together constitute
the Company's offer (the "Exchange Offer") to exchange $1,000 principal amount
of its 11 1/4% Series A Senior Subordinated Notes due 2004 (the "New Notes")
which have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to a Registration Statement of which the Prospectus
is a part, for each $1,000 principal amount of its outstanding 11 1/4% Senior
Subordinated Notes due 2004 (the "Old Notes"). The term "Expiration Date" shall
mean 5:00 p.m., New York City time, on , 1994, unless the Company, in
its sole discretion, extends the Exchange Offer, in which case the term shall
mean the latest date and time to which the Exchange Offer is extended.
Capitalized terms used but not defined herein have the meaning given to them in
the Prospectus.
This Letter of Transmittal is to be used by holders of Old Notes if (i)
certificates representing the Old Notes are to be physically delivered to the
Exchange Agent herewith, (ii) tender of the Old Notes is to be made by book-
entry transfer to the Exchange Agent's account at The Depository Trust Company
(the "Book-Entry Transfer Facility") pursuant to the procedures set forth in the
Prospectus under the caption "The Exchange Offer -- Procedures for Tendering" by
any financial institution that is a participant in the Book-Entry Transfer
Facility and whose name appears on a security position listing as the owner of
Old Notes (such participants, acting on behalf of holders, are referred to
herein, together with such holders, as "Acting Holders") or (iii) tender of the
Old Notes is to be made according to the guaranteed delivery procedures
described in the Prospectus under the caption "The Exchange Offer -- Guaranteed
Delivery Procedures." See Instruction 2. Delivery of documents to the Book-Entry
Transfer Facility does not constitute delivery to the Exchange Agent.
<PAGE>
The term "Holder" with respect to the Exchange Offer means any person in
whose name Old Notes are registered on the books of the Company or any other
person who has obtained a properly completed bond power from the registered
holder. The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Exchange Offer. Holders who wish to tender their Old Notes must complete
this letter in its entirety.
/ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution: ________________________________________________
Account Number: _______________________________________________________________
Transaction Code Number: ______________________________________________________
Principal Amount of Tendered Old Notes: _______________________________________
If Holders desire to tender Old Notes pursuant to the Exchange Offer and (i)
time will not permit this Letter of Transmittal, certificates representing Old
Notes or other required documents to reach the Exchange Agent prior to the
Expiration Date, or (ii) the procedures for book-entry transfer cannot be
completed prior to the Expiration Date, such Holders may effect a tender of such
Old Notes in accordance with the guaranteed delivery procedures set forth in the
Prospectus under the caption "The Exchange Offer -- Guaranteed Delivery
Procedures." See Instruction 2 below.
/ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY DELIVERED TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING (SEE INSTRUCTION 2):
Name of Registered or Acting Holder(s): _______________________________________
Window Ticket No. (if any): ___________________________________________________
Date of Execution of Notice of Guaranteed Delivery: ___________________________
Name of Eligible Institution
that Guaranteed Delivery: _____________________________________________________
If Delivered by Book-Entry Transfer,
the Account Number: ___________________________________________________________
Transaction Code Number: ______________________________________________________
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name: _________________________________________________________________________
Address: ______________________________________________________________________
______________________________________________________________________
Attention: ____________________________________________________________________
<PAGE>
List below the Old Notes to which this Letter of Transmittal relates. If the
space provided below is inadequate, the certificate numbers and principal amount
of Old Notes should be listed on a separate signed schedule affixed hereto.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING THE BOXES
<TABLE>
<CAPTION>
BOX 1
DESCRIPTION OF 11 1/4% SENIOR SUBORDINATED NOTES DUE 2004*
- ----------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
NAME(S) AND ADDRESS(ES) OF AGGREGATE PRINCIPAL TENDERED (MUST BE
REGISTERED HOLDER(S) CERTIFICATE AMOUNT REPRESENTED IN INTEGRAL MULTIPLE
(PLEASE FILL IN, IF BLANK) NUMBER(S) BY CERTIFICATE(S) OF $1,000)**
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
TOTAL
- ----------------------------------------------------------------------------------------------------
* Need not be completed by Holders tendering by book-entry transfer.
** Unless indicated in the column labeled "Principal Amount Tendered," any tendering Holder of
11 1/4% Senior Subordinated Notes due 2004 will be deemed to have tendered the entire
aggregate principal amount represented by the column labeled "Aggregate Principal Amount
Represented by Certificate(s)."
If the space provided above is inadequate, list the certificate numbers and principal amounts
on a separate signed schedule and affix the list to this Letter of Transmittal.
The minimum permitted tender is $1,000 in principal amount of 11 1/4% Senior Subordinated
Notes due 2004. All other tenders must be in integral multiples of $1,000.
</TABLE>
<PAGE>
BOX 2
SPECIAL REGISTRATION INSTRUCTIONS
(See Instructions 4, 5 and 6)
To be completed ONLY if certificates for Old Notes in a principal amount not
tendered, or New Notes issued in exchange for Old Notes accepted for exchange,
are to be issued in the name of someone other than the undersigned.
Issue certificate(s) to:
Name __________________________________________________________________________
(Please Print)
Address _______________________________________________________________________
________________________________________________________________________________
(Include Zip Code)
________________________________________________________________________________
(Tax Identification or Social Security Number)
BOX 3
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 4, 5 and 6)
To be completed ONLY if certificates for Old Notes in a principal amount not
tendered, or New Notes issued in exchange for Old Notes accepted for exchange,
are to be sent to someone other than the undersigned, or to the undersigned at
an address other than that shown above.
Deliver certificate(s) to:
Name __________________________________________________________________________
(Please Print)
Address _______________________________________________________________________
________________________________________________________________________________
(Include Zip Code)
________________________________________________________________________________
(Tax Identification or Social Security Number)
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Subject to the terms and conditions of the Exchange Offer, the undersigned
hereby tenders to the Company, the principal amount of Old Notes indicated in
Box 1 above.
Subject to and effective upon the acceptance for exchange of the principal
amount of Old Notes tendered in accordance with this Letter of Transmittal, the
undersigned sells, assigns and transfers to, or upon the order of, the Company
all right, title and interest in and to the Old Notes tendered hereby. The
undersigned hereby irrevocably constitutes and appoints the Exchange Agent as
its agent and attorney-in-fact (with full knowledge that the Exchange Agent also
acts as the agent of the Company) with respect to the tendered Old Notes with
full power of substitution to (i) present such Old Notes and all evidences of
transfer and authenticity to, or transfer ownership of, such Old Notes on the
account books maintained by the Book-Entry Transfer Facility to, or upon the
order of, the Company, (ii) deliver certificates for such Old Notes to the
Company and deliver all accompanying evidences of transfer and authenticity to,
or upon the order of, the Company and (iii) present such Old Notes for transfer
on the books of the Company and receive all benefits and otherwise exercise all
rights of beneficial ownership of such Old Notes, all in accordance with the
terms of the Exchange Offer.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Old Notes tendered
hereby and that the Company will acquire good and unencumbered title thereto,
free and clear of all liens, restrictions, charges and encumbrances and not
subject to any adverse claims, when the same are acquired by the Company. The
undersigned hereby further represents that any New Notes acquired in exchange
for Old Notes tendered hereby will have been acquired in the ordinary course of
business of the person receiving such New Notes, whether or not such person is
the undersigned, that neither the undersigned nor any such other person is
participating, intends to participate or has an arrangement or understanding
with any person to participate in the distribution of such New Notes and that
neither the undersigned nor any such other person is an "affiliate," as defined
in Rule 405 under the Securities Act, of the Company, or if it is such an
affiliate, that it will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable to it. In addition,
the undersigned and any such person acknowledge that (a) any person
participating in the Exchange Offer for the purpose of making a public
distribution of the New Notes must, in the absence of an exemption therefrom,
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with a secondary resale of the New Notes and cannot
rely on the position of the staff of the Securities and Exchange Commission
enunciated in EXXON CAPITAL HOLDINGS CORPORATION (available April 13, 1989) or
similar no-action letters and (b) failure to comply with such requirements in
such instance could result in the undersigned or such person incurring liability
under the Securities Act for which the undersigned or such person is not
indemnified by the Company. The undersigned will, upon request, execute and
deliver any additional documents deemed by the Exchange Agent or the Company to
be necessary or desirable to complete the assignment, transfer and purchase of
the Old Notes tendered hereby. If the undersigned is not a broker-dealer, the
undersigned represents that it is not engaged in, and does not intend to engage
in, a public distribution of New Notes. If the undersigned is a broker-dealer
that will receive New Notes for its own account in exchange for Old Notes that
were acquired as a result of market-making activities or other trading
activities, it acknowledges that it will deliver a prospectus in connection with
any resale of such New Notes; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For purposes of the Exchange Offer, the Company shall be deemed to have
accepted validly tendered Old Notes when, as and if the Company has given oral
or written notice thereof to the Exchange Agent.
If any Old Notes tendered herewith are not accepted for exchange pursuant to
the Exchange Offer for any reason, certificates for any such unaccepted Old
Notes will be returned, without expense, to the undersigned at the address shown
below or to a different address as may be indicated herein in Box 3 under
"Special Delivery Instructions" as promptly as practicable after the Expiration
Date.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death, incapacity or dissolution of the
undersigned, and every obligation of the undersigned under this Letter of
Transmittal shall be binding upon the undersigned's heirs, personal
representatives, successors and assigns.
<PAGE>
The undersigned understands that tenders of Old Notes pursuant to the
procedures described under the caption "The Exchange Offer -- Procedures for
Tendering" in the Prospectus and in the instructions hereto will constitute a
binding agreement between the undersigned and the Company upon the terms and
subject to the conditions of the Exchange Offer, subject only to withdrawal of
such tenders on the terms set forth in the Prospectus under the caption "The
Exchange Offer -- Withdrawal of Tenders."
Unless otherwise indicated in Box 2 under "Special Registration
Instructions," please issue the certificates (or electronic transfers)
representing the New Notes issued in exchange for the Old Notes accepted for
exchange and any certificates (or electronic transfers) for Old Notes not
tendered or not exchanged, in the name(s) of the undersigned. Similarly, unless
otherwise indicated in Box 3 under "Special Delivery Instructions," please send
the certificates representing the New Notes issued in exchange for the Old Notes
accepted for exchange and any certificates for Old Notes not tendered or not
exchanged (and accompanying documents, as appropriate) to the undersigned at the
address shown below. In the event that both "Special Registration Instructions"
and "Special Delivery Instructions" are completed, please issue the certificates
representing the New Notes issued in exchange for the Old Notes accepted for
exchange in the name(s) of, and return any certificates for Old Notes not
tendered or not exchanged to, the person(s) so indicated. The undersigned
understands that the Company has no obligation pursuant to the "Special
Registration Instructions" and "Special Delivery Instuctions" to transfer any
Old Notes from the name of the registered holder(s) thereof if the Company does
not accept for exchange any of the Old Notes so tendered.
Holders who wish to tender their Old Notes but (i) whose Old Notes are not
immediately available or (ii) who cannot deliver the Old Notes, this Letter of
Transmittal or any other documents required hereby to the Exchange Agent prior
to the Expiration Date, may tender their Old Notes according to the guaranteed
delivery procedures set forth in the Prospectus under the caption "The Exchange
Offer -- Guaranteed Delivery Procedures." See Instruction 2 regarding the
completion of this Letter of Transmittal printed below.
PLEASE SIGN HERE WHETHER OR NOT
OLD NOTES ARE BEING PHYSICALLY TENDERED HEREBY
<TABLE>
<C> <S> <C>
X _____________________________________________ _________________________
Date
X _____________________________________________ _________________________
Date
Area Code and Telephone Number: _________________
</TABLE>
The above lines must be signed by the registered holder(s) exactly as their
name(s) appear(s) on the Old Notes or by a participant in the Book-Entry
Transfer Facility, exactly as such participant's name appears on a security
position listing as the owner of the Old Notes, or by person(s) authorized to
become registered holder(s) by a properly completed bond power from the
registered holder(s), a copy of which must be transmitted with this Letter of
Transmittal. If Old Notes to which this Letter of Transmittal relate are held of
record by two or more joint holders, then all such holders must sign this Letter
of Transmittal. If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, then such person must (i) set forth his or her full
title below and (ii) unless waived by the Company, submit evidence satisfactory
to the Company of such person's authority so to act. See Instruction 5 regarding
the completion of this Letter of Transmittal printed below.
Name(s): ______________________________________________________________________
(Please Print)
Capacity: _____________________________________________________________________
Address: ______________________________________________________________________
(Include Zip Code)
________________________________________________________________________________
<PAGE>
SIGNATURE GUARANTEE
(IF REQUIRED BY INSTRUCTION 5)
CERTAIN SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION
Signature(s) Guaranteed by an Eligible Institution: ___________________________
(Authorized Signature)
________________________________________________________________________________
(Title)
________________________________________________________________________________
(Name of Firm)
________________________________________________________________________________
(Address, Include ZIP Code)
________________________________________________________________________________
(Area Code and Telephone Number)
Dated: ________________________________________________________________________
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES FOR OLD NOTES OR
BOOK-ENTRY CONFIRMATIONS. Certificates representing the tendered Old Notes (or a
confirmation of book-entry transfer into the Exchange Agent's account with the
Book-Entry Transfer Facility for tendered Old Notes transferred electronically),
as well as a properly completed and duly executed copy of this Letter of
Transmittal (or facsimile thereof), a Substitute Form W-9 (or facsimile thereof)
and any other documents required by this Letter of Transmittal must be received
by the Exchange Agent at its address set forth herein prior to the Expiration
Date. The method of delivery of certificates for Old Notes and all other
required documents is at the election and risk of the tendering holder and
delivery will be deemed made only when actually received by the Exchange Agent.
If delivery is by mail, registered mail with return receipt requested, properly
insured, is recommended. Instead of delivery by mail, it is recommended that the
holder use an overnight or hand delivery service. In all cases, sufficient time
should be allowed to assure timely delivery. Neither the Company nor the
Exchange Agent is under an obligation to notify any tendering holder of the
Company's acceptance of tendered Old Notes prior to the Closing of the Exchange
Offer.
2. GUARANTEED DELIVERY PROCEDURES. Holders who wish to tender their Old
Notes but whose Old Notes are not immediately available and who cannot deliver
their certificates for Old Notes (or comply with the procedures for book-entry
transfer prior to the Expiration Date), the Letter of Transmittal and any other
documents required by the Letter of Transmittal to the Exchange Agent prior to
the Expiration Date must tender their Old Notes according to the guaranteed
delivery procedures set forth below. Pursuant to such procedures:
(i) such tender must be made by or through a firm which is a member of a
registered national securities exchange or of the National Association of
Securities Dealers, Inc., or is a commercial bank or trust company having an
office or correspondent in the United States (an "Eligible Institution");
(ii) prior to the Expiration Date, the Exchange Agent must have received
from the holder and the Eligible Institution a properly completed and duly
executed Notice of Guaranteed Delivery (by facsimile transmission, mail or
hand delivery) setting forth the name and address of the holder, the
certificate number or numbers of the tendered Old Notes and the principal
amount of tendered Old Notes, and stating that the tender is being made
thereby and guaranteeing that, within five New York Stock Exchange trading
days after the Expiration Date, the Letter of Transmittal (or facsimile
thereof), together with the tendered Old Notes (or a confirmation of
book-entry transfer into the Exchange Agent's account with the Book-Entry
Transfer Facility for Old Notes transferred electronically) and any other
required documents will be deposited by the Eligible Institution with the
Exchange Agent; and
(iii) such properly completed and executed Letter of Transmittal (or
facsimile thereof) and certificates representing the tendered Old Notes in
proper form for transfer (or a confirmation of book-entry transfer into the
Exchange Agent's account with the Book-Entry Transfer Facility for Old Notes
transferred electronically) and all other documents required by the Letter
of Transmittal must be received by the Exchange Agent within five New York
Stock Exchange trading days after the Expiration Date.
Any holder who wishes to tender Old Notes pursuant to the guaranteed
delivery procedures described above must ensure that the Exchange Agent receives
the Notice of Guaranteed Delivery relating to such Old Notes prior to the
Expiration Date. Failure to complete the guaranteed delivery procedures outlined
above will not, of itself, affect the validity or effect a revocation of any
Letter of Transmittal form properly completed and executed by a Holder who
attempted to use the guaranteed delivery process.
3. TENDER BY HOLDER. Only a holder of Old Notes may tender such Old Notes
in the Exchange Offer. Any beneficial owner of Old Notes who is not the
registered holder and who wishes to tender should arrange with such holder to
execute and deliver this Letter of Transmittal on such owner's behalf or must,
prior to completing and executing this Letter of Transmittal and delivering such
Old Notes, either make appropriate arrangements to register ownership of the Old
Notes in such owner's name or obtain a properly completed bond power from the
registered holder.
4. PARTIAL TENDERS. Tenders of Old Notes will be accepted only in integral
multiples of $1,000 in principal amount. If less than the entire principal
amount of Old Notes is tendered, the tendering holder should fill in the
<PAGE>
principal amount tendered in the column labeled "Aggregate Principal Amount
Tendered" of the box entitled "Description of Old Notes" (Box 1) above. The
entire principal amount of Old Notes delivered to the Exchange Agent will be
deemed to have been tendered unless otherwise indicated. If the entire principal
amount of all Old Notes is not tendered, Old Notes for the principal amount of
Old Notes not tendered and New Notes exchanged for any Old Notes tendered will
be sent to the holder at his or her registered address (or transferred to the
account of the Book-Entry Facility designated above), unless a different address
(or account) is provided in the appropriate box on this Letter of Transmittal,
as soon as practicable following the Expiration Date.
5. SIGNATURES ON THE LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS;
GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed by the
registered holder of the Old Notes tendered herewith, the signature must
correspond with the name as written on the face of the tendered Old Notes
without alteration, enlargement or any change whatsoever. If this Letter of
Transmittal is signed by a participant in the Book-Entry Transfer Facility, the
signature must correspond with the name as it appears on the security position
listing as the owner of the Old Notes.
If any of the tendered Old Notes are owned of record by two or more joint
owners, all such owners must sign this Letter of Transmittal. If any tendered
Old Notes are held in different names on several Old Notes, it will be necessary
to complete, sign and submit as many separate copies of the Letter of
Transmittal documents as there are names in which tendered Old Notes are held.
If this Letter of Transmittal is signed by the registered holder or Acting
Holder, and New Notes are to be issued and any untendered or unaccepted
principal amount of Old Notes are to be reissued or returned to the registered
holder or Acting Holder, then the registered holder or Acting Holder need not
and should not endorse any tendered Old Notes nor provide a separate bond power.
In any other case (including if this Letter of Transmittal is not signed by the
Acting Holder), the registered holder or Acting Holder must either properly
endorse the Old Notes tendered or transmit a properly completed separate bond
power with this Letter of Transmittal (in either case, executed exactly as the
name of the registered holder appears on such Old Notes, and, with respect to a
participant in the Book-Entry Transfer Facility whose name appears on a security
position listing as the owner of Old Notes, exactly as the name of the
participant appears on such security position listings), with the signature on
the endorsement or bond power guaranteed by an Eligible Institution unless such
certificates or bond powers are signed by an Eligible Institution.
If this Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by the Company,
evidence satisfactory to the Company of their authority to so act must be
submitted with this Letter of Transmittal.
No signature guarantee is required if (i) this Letter of Transmittal is
signed by the registered holder of the Old Notes tendered herewith (or by a
participant in the Book-Entry Transfer Facility whose name appears on a security
position listing as the owner of the tendered Old Notes) and the issuance of New
Notes (and any Old Notes not tendered or not accepted) are to be issued directly
to such registered holder (or, if signed by a participant in the Book-Entry
Transfer Facility, any New Notes or Old Notes not tendered or not accepted are
to be deposited to such participant's account at such Book-Entry Transfer
Facility) and neither the "Special Delivery Instructions" (Box 3) nor the
"Special Registration Instructions" (Box 2) has been completed, or (ii) such Old
Notes are tendered for the account of an Eligible Institution. In all other
cases, all signatures on this Letter of Transmittal must be guaranteed by an
Eligible Institution.
6. SPECIAL REGISTRATION AND DELIVERY INSTRUCTIONS. Tendering holders
should indicate, in the applicable box, the name and address (or account at the
Book-Entry Transfer Facility) to which the New Notes and/or substitute Old Notes
for principal amounts not tendered or not accepted for exchange are to be sent
(or deposited) if different from the name and address or account of the person
signing this Letter of Transmittal. In the case of issuance in a different name,
the employer identification number or social security number of the person named
must also be indicated and the tendering holders should complete the applicable
box.
If no such instructions are given, the New Notes (and any Old Notes not
tendered or not accepted) will be issued in the name of and sent to the Acting
Holder of the Old Notes or deposited at such Acting Holder's account at the
Book-Entry Transfer Facility.
7. TRANSFER TAXES. The Company will pay all transfer taxes, if any,
applicable to the sale and transfer of Old Notes to it or its order pursuant to
the Exchange Offer. If, however, a transfer tax is imposed for any reason
<PAGE>
other than the transfer and sale of Old Notes to the Company or its order
pursuant to the Exchange Offer, then the amount of any such transfer taxes
(whether imposed on the registered holder or on any other person) will be
payable by the tendering holder. If satisfactory evidence of payment of such
taxes or exemption from taxes therefrom is not submitted with this Letter of
Transmittal, the amount of transfer taxes will be billed directly to such
tendering holder.
Except as provided in this Instruction 7, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes listed in this Letter of
Transmittal.
8. TAX IDENTIFICATION NUMBER. Federal income tax law requires that a
holder of any Old Notes which are accepted for exchange must provide the Company
(as payor) with its correct taxpayer identification number ("TIN"), which, in
the case of a holder who is an individual, is his or her social security number.
If the Company is not provided with the correct TIN, the holder may be subject
to a $50 penalty imposed by Internal Revenue Service. (If withholding results in
an over-payment of taxes, a refund may be obtained.) Certain holders (including,
among others, all corporations and certain foreign individuals) are not subject
to these backup withholding and reporting requirements. See the enclosed
"Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9" for additional instructions.
To prevent backup withholding, each tendering holder must provide such
holder's correct TIN by completing the Substitute Form W-9 set forth herein,
certifying that the TIN provided is correct (or that such holder is awaiting a
TIN), and that (i) the holder has not been notified by the Internal Revenue
Service that such holder is subject to backup withholding as a result of failure
to report all interest or dividends or (ii) the Internal Revenue Service has
notified the holder that such holder is no longer subject to backup withholding.
If the Old Notes are registered in more than one name or are not in the name of
the actual owner, see the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for information on which TIN to
report.
The Company reserves the right in its sole discretion to take whatever steps
are necessary to comply with the Company's obligation regarding backup
withholding.
9. VALIDITY OF TENDERS. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of tendered Old Notes
will be determined by the Company, in its sole discretion, which determination
will be final and binding. The Company reserves the right to reject any and all
Old Notes not properly tendered or any Old Notes, the Company's acceptance of
which would, in the opinion of the Company or its counsel, be unlawful. The
Company also reserves the right to waive any defects or irregularities in or
conditions of tenders of Old Notes. The interpretation of the terms and
conditions of the Exchange Offer (including this Letter of Transmittal and the
instructions hereto) by the Company shall be final and binding on all parties.
Unless waived, any defects or irregularities in connection with tenders of Old
Notes must be cured within such time as the Company shall determine. The Company
will use reasonable efforts to give notification of defects or irregularities
with respect to tenders of Old Notes, but shall not incur any liability for
failure to give such notification.
10. WAIVER OF CONDITIONS. The Company reserves the absolute right to
amend, waive or modify specified conditions in the Exchange Offer in the case of
any tendered Old Notes.
11. NO CONDITIONAL TENDER. No alternative, conditional, irregular or
contingent tender of Old Notes on transmittal of this Letter of Transmittal will
be accepted.
12. MUTILATED, LOST, STOLEN OR DESTROYED OLD NOTES. Any tendering holder
whose Old Notes have been mutilated, lost, stolen or destroyed should contact
the Exchange Agent at the address indicated above for further instruction.
13. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance and requests for additional copies of the Prospectus may be
directed to the Exchange Agent at the address specified in the Prospectus.
Holders may also contact their broker, dealer, commercial bank, trust company or
other nominee for assistance concerning the Exchange Offer.
14. ACCEPTANCES OF TENDERED OLD NOTES AND ISSUANCE OF NEW NOTES; RETURN OF
OLD NOTES. Subject to the terms and conditions of the Exchange Offer, the
Company will accept for exchange all validly tendered Old Notes as soon as
practicable after the Expiration Date and will issue New Notes therefor as soon
as practicable thereafter. For purposes of the Exchange Offer, the Company shall
be deemed to have accepted tendered Old Notes when, as and if the Company has
given written or oral notice thereof to the Exchange Agent. If any
<PAGE>
tendered Old Notes are not exchanged pursuant to the Exchange Offer for any
reason, such unexchanged Old Notes will be returned, without expense, to the
undersigned at the address shown above (or credited to the undersigned's account
at the Book-Entry Transfer Facility designated above) or at a different address
as may be indicated under "Special Delivery Instructions."
15. WITHDRAWAL. Tenders may be withdrawn only pursuant to the limited
withdrawal rights set forth in the Prospectus under the caption "The Exchange
Offer -- Withdrawal of Tenders."
<TABLE>
<C> <S> <C>
- ----------------------------------------------------------------------------------------------------
PAYOR'S NAME: CHARTER MEDICAL CORPORATION
- ----------------------------------------------------------------------------------------------------
Name (if joint names, list first and
circle the name of the person or
SUBSTITUTE entity whose number you enter in Part
1 below. See instructions if your
name has changed.)
------------------------------------------------------------
FORM W-9 Address
------------------------------------------------------------
DEPARTMENT OF THE TREASURY City, State and ZIP Code
------------------------------------------------------------
List account number(s) here
(optional)
------------------------------------------------------------
INTERNAL REVENUE SERVICE Part 1 -- PLEASE PROVIDE YOUR Social Security
TAXPAYER IDENTIFICATION NUMBER Number or TIN
("TIN") IN THE BOX AT RIGHT AND
CERTIFY BY SIGNING AND DATING BELOW
------------------------------------------------------------
Part 2 -- Check the box if you are NOT subject to backup
withholding under the provisions of Section 3408(a)(1)(C)
of the Internal Revenue Code because (1) you have not been
notified that you are subject to backup withholding as a
result of failure to report all interest or dividends or
(2) the Internal Revenue Service has notified you that you
are no longer subject to backup withholding. / /
------------------------------------------------------------
PAYOR'S REQUEST FOR TIN CERTIFICATION -- UNDER THE PENALTIES Part 3--
OF PERJURY, I CERTIFY THAT THE AWAITING TIN
INFORMATION PROVIDED ON THIS FORM IS / /
TRUE, CORRECT AND COMPLETE.
SIGNATURE --> DATE -->
- ----------------------------------------------------------------------------------------------------
Note
FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS
MADE TO YOU PURSUANT TO THE EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION
OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
</TABLE>
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 1 OF 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- An international organization or any agency, or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- An entity registered at all times under the Investment Company Act of
1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals.
Note: You may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payor.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations
- Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible
erroneous backup withholding. FILE THIS FORM WITH THE PAYOR, FURNISH YOUR
TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND
RETURN IT TO THE PAYOR. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE
DIVIDENDS, ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE -- Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payors
who must report the payments to the IRS. The IRS uses the number for
identification purposes. Payors must be given the numbers whether or not
recipients are required to file tax returns. Payors must generally withhold 20%
of taxable interest, dividend, and certain other payments to a payee who does
not furnish a taxpayer identification number to a payor. Certain penalties may
also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER -- If you
fail to furnish your taxpayer identification number to a payer, you are subject
to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS -- If you fail
to include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an
under-payment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING -- If
you make a false statement with no reasonable basis which results in no
imposition of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION -- Falsifying certifications
or affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2 OF 2
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYOR. Social Security numbers have nine digits separated by two hyphens: e.g.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: 00-0000000. The table below will help determine the number to give
the Payor.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
GIVE THE
EMPLOYER IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF:
- --------------------------------------------------------------------------------
<C> <S> <C>
1. An individual account The individual
2. Two or more individuals (joint The actual owner of the account
account) or, if combined funds, any one of
the individuals (1)
3. Husband and wife (joint account) The actual owner of the account
or, if joint funds, either person
(1)
4. Custodian account of a minor The minor (2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if the minor is the
only contributor, the minor (1)
6. Account in the name of guardian or The ward, minor, or incompetent
committee for a designated ward, person (3)
minor, or incompetent person
7. a. The usual revocable savings The grantor-trustee (1)
trust account (grantor is also
trustee)
b. So-called trust account that is The actual owner (1)
not a legal or valid trust
under State law
<CAPTION>
- --------------------------------------------------------------------------------
GIVE THE
EMPLOYER IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF:
- --------------------------------------------------------------------------------
<C> <S> <C>
8. Sole proprietorship account The owner (4)
9. A valid trust, estate, or pension The legal entity (Do not furnish
trust the identifying number of the
personal representative or trustee
unless the legal entity itself is
not designated in the account
title) (5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization account
12. Partnership account held in the The partnership
name of the business
13. Association, club, or other tax- The organization
exempt organization
14. A broker or registered nominee The broker or nominee
15. Account with the Department of The public safety
Agriculture in the name of a
public entity (such as a State or
local government, school district,
or prison) that receives
agricultural program payments
<FN>
- -----------------------------------------------------
- -----------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
Note: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
</TABLE>
<PAGE>
EXHIBIT 99(B)
<PAGE>
NOTICE OF GUARANTEED DELIVERY
WITH RESPECT TO
CHARTER MEDICAL CORPORATION
11 1/4% SENIOR SUBORDINATED NOTES DUE 2004
This form must be used by a holder of the 11 1/4% Senior Subordinated Notes
due 2004 (the "Old Notes") of Charter Medical Corporation (the "Company") who
wishes to tender Old Notes to the Exchange Agent pursuant to the guaranteed
delivery procedures described in "The Exchange Offer -- Guaranteed Delivery
Procedures" of the Prospectus dated , 1994 (the "Prospectus") and in
Instruction 2 to the Letter of Transmittal. Any holder who wishes to tender Old
Notes pursuant to such guaranteed delivery procedures must ensure that the
Exchange Agent receives this Notice of Guaranteed Delivery prior to the
Expiration Date of the Exchange Offer. Capitalized terms not defined herein have
the meanings ascribed to them in the Prospectus or the Letter of Transmittal.
To: Marine Midland Bank, Exchange Agent
<TABLE>
<S> <C>
BY REGISTERED OR CERTIFIED MAIL: BY FACSIMILE TRANSMISSION:
Marine Midland Bank Marine Midland Bank
Corporate Trust Operations Corporate Trust Operations
140 Broadway (212) 658-6425
"A" Level
New York, New York 10005-1180
BY OVERNIGHT COURIER: BY HAND:
Marine Midland Bank Marine Midland Bank
Corporate Trust Operations Corporate Trust Operations
140 Broadway 140 Broadway
"A" Level "A" Level
New York, New York 10005-1180 New York, New York 10005-1180
</TABLE>
TELEPHONE NUMBER:
(212) 658-6433
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION VIA A FACSIMILE NUMBER OTHER THAN AS SET FORTH ABOVE
WILL NOT CONSTITUTE A VALID DELIVERY.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, upon the terms and subject to
the conditions set forth in the Prospectus and the related Letter of
Transmittal, receipt of which is hereby acknowledged, the principal amount of
Old Notes specified below pursuant to the guaranteed delivery procedures set
forth in the Prospectus and in Instruction 2 of the Letter of Transmittal. The
undersigned hereby tenders the Old Notes listed below:
<TABLE>
<CAPTION>
CERTIFICATE NUMBER(S) (IF KNOWN)
OF OLD NOTES AGGREGATE PRINCIPAL AGGREGATE PRINCIPAL
OR ACCOUNT NUMBER AT THE BOOK-ENTRY FACILITY AMOUNT REPRESENTED AMOUNT TENDERED
- -------------------------------------------------------------------------------------------
<S> <C> <C>
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SIGN HERE
Name of Registered or Acting Holder: ___________________________________________
Signature(s): __________________________________________________________________
Name(s) (please print): ________________________________________________________
Address: _______________________________________________________________________
________________________________________________________________________________
Telephone number: ______________________________________________________________
Date: __________________________________________________________________________
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
or is a commercial bank or trust company having an office or correspondent in
the United States, or is otherwise an "eligible guaranteed institution" within
the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended, guarantees deposit with the Exchange Agent of the Letter of Transmittal
(or facsimile thereof), together with the Old Notes tendered hereby in proper
form for transfer (or confirmation of the book-entry transfer of such Old Notes
into the Exchange Agent's account at the Book-Entry Transfer Facility described
in the Prospectus under the caption "The Exchange Offer -- Guaranteed Delivery
Procedures" and in the Letter of Transmittal) and any other required documents,
all by 5:00 p.m., New York City time, on the fifth New York Stock Exchange
trading day following the Expiration Date.
SIGN HERE
Name of firm: __________________________________________________________________
Authorized signature: __________________________________________________________
Name (please print): ___________________________________________________________
Address: _______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Telephone number: ______________________________________________________________
Date: __________________________________________________________________________
DO NOT SEND OLD NOTES WITH THIS FORM. ACTUAL SURRENDER OF OLD NOTES MUST BE
MADE PURSUANT TO, AND BE ACCOMPANIED BY, AN EXECUTED LETTER OF TRANSMITTAL.
INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY
1. DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY. A properly completed
and duly executed copy of this Notice of Guaranteed Delivery and any other
documents required by this Notice of Guaranteed Delivery must be received by the
Exchange Agent at its address set forth herein prior to the Expiration Date. The
method of delivery of this Notice of Guaranteed Delivery and any other required
documents to the Exchange Agent is at the election and risk of the holder, and
the delivery will be deemed made only when actually received by the Exchange
Agent. If delivery is by mail, registered mail with return receipt requested,
properly insured, is recommended. Instead of delivery by mail, it is recommended
that the holders use an overnight or hand delivery service. In all cases,
sufficient time should be allowed to assure timely delivery. For a description
of the guaranteed delivery procedures, see Instruction 2 of the Letter of
Transmittal.
<PAGE>
2. SIGNATURES ON THIS NOTICE OF GUARANTEED DELIVERY. If this notice of
Guaranteed Delivery is signed by the registered holder of the Old Notes referred
to herein, the signature must correspond with the name written on the face of
the Old Notes without alteration, enlargement, or any change whatsoever. If this
Notice of Guaranteed Delivery is signed by a participant of the Book-Entry
Transfer Facility whose name appears on a security position listing as the owner
of Old Notes, the signature must correspond with the name shown on the security
position listing as the owner of the Old Notes.
If this Notice of Guaranteed Delivery is signed by a person other than the
registered holder of any Old Notes listed or a participant of the Book-Entry
Transfer Facility, this Notice of Guaranteed Delivery must be accompanied by
appropriate bond powers, signed as the name of the registered holder appears on
the Old Notes or signed as the name of the participant shown on the Book-Entry
Transfer Facility's security position listing.
If this Notice of Guaranteed Delivery is signed by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or other
person acting in fiduciary or representative capacity, such person should so
indicate when signing, and unless waived by the Company, submit with the Letter
of Transmittal evidence satisfactory to the Company of such person's authority
to so act.
3. REQUESTS FOR ASSISTANCE OF ADDITIONAL COPIES. Questions and requests
for assistance and requests for additional copies of the Prospectus may be
directed to the Exchange Agent at the address specified in the Prospectus.
Holders may also contact their broker, dealer, commercial bank, trust company or
other nominee for assistance concerning the Exchange Offer.
<PAGE>
EXHIBIT 99(C)
<PAGE>
INSTRUCTION TO REGISTERED HOLDER AND/OR
BOOK-ENTRY TRANSFER FACILITY PARTICIPANT FROM OWNER
OF
CHARTER MEDICAL CORPORATION
11 1/4% SENIOR SUBORDINATED NOTES DUE 2004
To Registered Holder and/or Participant of the Book-Entry Transfer Facility:
The undersigned hereby acknowledges receipt of the Prospectus, dated ,
1994 (the "Prospectus") of Charter Medical Corporation, a Delaware corporation
(the "Company"), and the accompanying Letter of Transmittal (the "Letter of
Transmittal"), that together constitute the Company's offer (the "Exchange
Offer"). Capitalized terms used but not defined herein have the meanings
ascribed to them in the Prospectus.
This will instruct you, the registered holder and/or book-entry transfer
facility participant, as to the action to be taken by you relating to the
Exchange Offer with respect to the 11 1/4% Senior Subordinated Notes due 2004
(the "Old Notes") held by you for the account of the undersigned.
The aggregate face amount of the Old Notes held by you for the account of
the undersigned is (fill in amount): $ of the 11 1/4% Senior
Subordinated Notes due 2004.
With respect to the Exchange Offer, the undersigned hereby instructs you
(CHECK APPROPRIATE BOX):
/ / TO TENDER the following Old Notes held by you for the account of the
undersigned (INSERT PRINCIPAL AMOUNT OF OLD NOTES TO BE TENDERED, IF
ANY):
$ of the 11 1/4% Senior Subordinated Notes due 2004.
/ / NOT TO TENDER any Old Notes held by you for the account of the
undersigned.
If the undersigned instructs you to tender the Old Notes held by you for the
account of the undersigned, it is understood that you are authorized (a) to
make, on behalf of the undersigned (and the undersigned, by its signature below,
hereby makes to you), the representation and warranties contained in the Letter
of Transmittal that are to be made with respect to the undersigned as a
beneficial owner, including but not limited to the representations that (i) the
undersigned's principal residence is in the state of (FILL IN
STATE) , (ii) the undersigned is acquiring the Company's 11 1/4%
Series A Senior Subordinated Notes due 2004 (the "New Notes") in the ordinary
course of business of the undersigned, (iii) the undersigned is not
participating, does not intend to participate, and has no arrangement or
understanding with any person to participate in a public distribution (within
the meaning of the Securities Act) of the New Notes, (iv) the undersigned
acknowledges that any person participating in the Exchange Offer for the purpose
of making a public distribution of the New Notes must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction of the New Notes acquired by such
person and cannot rely on the position of the Staff of the Securities and
Exchange Commission set forth in no-action letters that are discussed in the
section of the Prospectus entitled "The Exchange Offer -- Resales of the New
Notes" and (v) the undersigned is not an "affiliate," as defined in Rule 405 of
the Securities Act of the Company, or if it is such an affiliate, that it will
comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable to it; (b) to agree, on behalf of the
undersigned, as set forth in the Letter of Transmittal, including, without
limitation, to agree that if the undersigned is a broker or dealer registered as
such pursuant to Section 15 of the Exchange Act that it will deliver a copy of
the Prospectus in connection with any resale by it of such New Notes; and (c) to
take such other action as necessary under the Prospectus or the Letter of
Transmittal to effect the valid tender of such Old Notes.
- --------------------------------------------------------------------------------
SIGN HERE
Name of beneficial owner(s): _________________________________________________
Signature(s): ________________________________________________________________
Name (PLEASE PRINT): _________________________________________________________
Address: _____________________________________________________________________
________________________________________________________________________
________________________________________________________________________
Telephone number: ____________________________________________________________
Taxpayer Identification or Social Security Number: ___________________________
Date: ________________________________________________________________________
- --------------------------------------------------------------------------------
<PAGE>
May ___, 1994
Marine Midland Bank
Corporate Trust Department
140 Broadway
New York, New York 10015
Ladies and Gentlemen:
Charter Medical Corporation, a Delaware corporation (the "Company"),
is offering to issue, upon the terms and subject to the conditions set forth in
the Prospectus dated May ____, 1994 (the "Prospectus"), and the related Letter
of Transmittal (which together constitute the "Offer"), $1,000 principal amount
of the Company's 11 1/4% Series A Senior Subordinated Notes due 2004 which have
been registered under the Securities Act of 1933, as amended (the "New Notes"),
in exchange for each outstanding $1,000 principal amount of its unregistered
11 1/4% Senior Subordinated Notes due 2004, (the "Old Notes"). The New Notes
will be issued only in minimum denominations of $1,000 and integral multiples
thereof to each tendering holder of Old Notes whose Old Notes are accepted by
the Company for exchange in the Offer.
You are hereby appointed and authorized to act as agent for the
Company (the "Exchange Agent") to effectuate the exchange of Old Notes for New
Notes, on the terms and subject to the conditions of this agreement (the
"Agreement"). In that connection, you acknowledge receipt of the following
documents:
(i) the Prospectus;
(ii) the Letter of Transmittal to be used by the
registered holders of the Old Notes;
(iii) Instruction to Registered Holder and/or Book-
Entry Transfer Facility Participant from
Owner or the Company; and
<PAGE>
(iv) Notice of Guaranteed Delivery, to be used by any
registered holder of the Old Notes when the Old
Notes are not immediately available for delivery
to you or time will not permit a Letter of
Transmittal and the accompanying documents to
reach you prior to the expiration of the Offer.
The Offer shall expire at the time and on the date specified in the
Prospectus (the "Initial Expiration Date") or at any subsequent time and date to
which the Company may extend the Offer. The later of the Initial Expiration
Date and the latest time and date to which the Offer is so extended is referred
to herein as "Expiration Date."
You are hereby requested, and you hereby agree, to act as follows:
1. You are to accept, subject to any withdrawal rights as described
in the Prospectus, Old Notes that are accompanied by the Letter of Transmittal
(or a manually signed facsimile thereof), properly completed and duly executed
in accordance with the instructions thereon and any requisite collateral
documents and all other instruments and communications submitted to you in
connection with the Offer and to hold the same upon the terms and conditions set
forth in this Agreement.
2. You are to examine the Letters of Transmittal, the Old Notes, and
the other documents delivered or mailed to you by or on behalf of the holders of
the Old Notes as soon as practicable after receipt by you to ascertain whether
(i) the Letters of Transmittal are properly completed and duly executed in
accordance with the instructions set forth therein, (ii) the Old Notes have
otherwise been properly tendered and (iii), if applicable, the other documents
are properly completed and duly executed. You need not pass on the legal
sufficiency of any signature or verify any signature guarantee.
3. In the event any Letter of Transmittal or other document has been
improperly executed or completed or any of the Old Notes are not in proper form
or have been improperly tendered, or if some other irregularity in connection
with the delivery of Old Notes by a registered holder thereof exists, you shall
promptly report such information to the Company and you are authorized, upon
consultation with the Company and its counsel, to endeavor to take such lawful
action as may be necessary to cause such irregularity to be corrected. You are
authorized to request from any person tendering Old Notes such additional
documents or undertakings as you may deem appropriate. All questions as to the
form of all documents and the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Old Notes will be determined by
the Company, in its sole discretion, whose determinations will be final and
binding. The Company reserves the absolute right to reject any or all tenders
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<PAGE>
that are not in proper form or the acceptance of any particular Old Notes that
would, in the opinion of the Company's counsel, be unlawful. Subject to
applicable law, the Company also reserves the absolute right to waive any of the
conditions of the Offer or any defect or irregularity in the tender of any Old
Notes, and the Company's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the instructions set forth therein)
will be final and binding. No tender of Old Notes will be deemed to have been
properly made until all defects and irregularities have been cured or waived as
determined by the Company in its sole discretion.
4. Tenders of Old Notes shall be made only as set forth in the
Prospectus and the Letter of Transmittal, and Old Notes shall be considered
properly tendered to you only when:
(a) a properly completed and duly executed Letter of Transmittal
(or a manually signed facsimile thereof), with any required signature guarantee
and any other required documents, are received by you at one of your addresses
set forth in the Prospectus or in the Letter of Transmittal and Old Notes are
received by you at one of such addresses; or a properly completed and duly
executed Notice of Guaranteed Delivery substantially in the form provided by the
Company, with an appropriate guarantee of signature and delivery from an
Eligible Guarantor Institution within the meaning of Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), is received by
you at or prior to the Expiration Date. For purposes of this Agreement, an
"Eligible Guarantor Institution" within the meaning of Rule 17Ad-15 under the
Exchange Act shall mean a member of a registered national securities exchange or
of the National Association of Securities Dealers, Inc., or a commercial bank or
trust company having an office or correspondent in the United States. The
Notice of Guaranteed Delivery may be delivered to you by hand or transmitted by
telegram, facsimile transmission or letter;
(b) Old Notes (in respect of which there has been delivered to
you prior to the Expiration Date a properly completed and duly executed Notice
of Guaranteed Delivery) in proper form for transfer together with a properly
completed and duly executed Letter of Transmittal (or a manually signed
facsimile thereof), and any other required documents, are received by you within
five (5) trading days of The New York Stock Exchange, Inc. after the date of
execution of such Notice of Guaranteed Delivery; and
(c) the adequacy of the items relating to Old Notes, and the
Letters of Transmittal therefor and any Notice of Guaranteed Delivery has been
favorably passed upon by the Company as above provided.
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Notwithstanding the provisions of the preceding paragraph, Old Notes
that the Company otherwise shall approve as having been properly tendered shall
be considered to be properly tendered for all purposes of the Offer.
5. (a) A tendering holder of Old Notes may withdraw tendered Old
Notes in accordance with the procedures set forth in the Prospectus at any time
on or prior to a 5:00 p.m. New York City time on the Expiration Date, in which
event, except as may be otherwise specified in the holder's notice of
withdrawal, all items in your possession that shall have been received from such
holder with respect to those Old Notes shall be promptly returned to or upon the
order of the holder and the Old Notes covered by those items shall no longer be
considered to be properly tendered.
(b) A withdrawal of tender of Old Notes may not be rescinded and
any Old Notes withdrawn will thereafter be deemed not validly tendered for
purposes of the Offer, provided, however, that withdrawn Old Notes may be
retendered by again following one of the procedures therefor described in the
Prospectus at any time on or prior to the Expiration Date.
(c) All questions as to the validity (including time of receipt)
of notices of withdrawal will be determined by the Company, whose determination
will be final and binding.
6. You are to record and to hold all tenders received by you and to
promptly notify by telephone (with confirmation by facsimile transmission)
Ms. Charlotte A. Sanford of the Company (phone: 912/751-2395;
fax: 912/751-2375), on a weekly basis during any week that you receive any new
tenders, or more frequently if so requested by the Company, as to the total
number of Old Notes tendered during such week or other period and the
cumulative numbers with respect to the Old Notes tendered and not withdrawn
through the time of such notice. Each weekly report should indicate
separately the number of Old Notes represented by (i) certificates and (ii)
Notices of Guaranteed Delivery actually received by you through the time of
the report. The foregoing information should also be sent to the Company in a
weekly written report. Each report should also indicate the number of Old
Notes tendered in good form. In addition, you will also provide, and
cooperate in making available to the Company, such other information as it may
reasonably request upon oral request made from time to time. Your cooperation
shall include, without limitation, the granting by you to the Company, and
such other persons as it may reasonably request, of access to those persons on
your staff who are responsible for receiving tenders of Old Notes in order to
insure that immediately prior to the Expiration Date, the Company shall have
received information in sufficient detail to enable it to decide whether to
extend the Expiration Date of the Offer.
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<PAGE>
7. Each Letter of Transmittal, Old Note, Notice of Guaranteed
Delivery and any other documents received by you in connection with the Offer
shall be stamped by you to show the date and time of receipt and if defective,
the date and time the last defect was waived by the Company or cured. Each
Letter of Transmittal and Old Note that is accepted by the Company shall be
retained in your possession until the Expiration Date. As promptly as
practicable thereafter, you will deliver by registered mail with proper
insurance those items, together with all properly tendered and cancelled Old
Notes, to Charter Medical Corporation, Attention: Ms. Charlotte A. Sanford,
Senior Director - Debt and Analysis.
8. You are to satisfy requests of brokers, dealers, commercial
banks, trust companies and other persons for copies of the documents and other
materials specified in items (i) through (iv) of the introduction to this
Agreement. You are not authorized to offer any concessions or to pay any
commissions to any brokers, banks or other persons or to engage or to utilize
any persons to solicit tenders.
9. You are to follow up and to act upon all amendments,
modifications or supplements to these instructions, and upon any further
information in connection with the terms of the Offer, which may be given to you
by the Company, including instructions with respect to any extension or of the
modification of the Offer and the cancellation of the Offer.
10. No exchange shall be made as to any Old Notes until you
physically receive a certificate or certificates representing those Old Notes, a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) and any other required documents.
11. For performing your services hereunder, you shall be entitled to
receive from the Company a fee in accordance with EXHIBIT A attached hereto.
You shall also be reimbursed by the Company for all reasonable counsel fees, if
any, that you may incur in connection with the performance of your duties
hereunder.
12. As Exchange Agent hereunder, you:
(a) shall not have duties or obligations other than those
specifically set forth herein or as may subsequently be agreed to by you and the
Company;
(b) shall not be obligated to take any legal action hereunder
that might in your reasonable judgment involve any expense or liability unless
you have been furnished with reasonable indemnification;
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<PAGE>
(c) may rely on and shall be protected in acting upon any
certificate, instrument, opinion, notice, letter, facsimile transmission, telex,
telegram or other document or any security delivered to you and reasonably
believed by you to be genuine and to have been signed by the proper party or
parties;
(d) may rely on and shall be protected in acting upon the terms
and conditions of (i) this Agreement, (ii) the documents relating to the Offer,
(iii) any instructions given to you orally or in writing by the Company by
Ms. Charlotte A. Sanford, Senior Director - Debt and Analysis of the Company
with respect to any matter relating to your activities as Exchange Agent covered
by this Agreement; and (iv) as to any matter not covered by any of the
foregoing, your usual and customary practice when acting as an exchange agent;
and
(e) may consult with counsel satisfactory to you (including
counsel to the Company), and the opinion of such counsel shall be full and
complete authorization and protection with respect to any action taken,
suffered, or omitted by you hereunder in good faith and in accordance with the
opinion of such counsel.
13. You undertake the duties and obligations imposed herein upon the
following additional terms and conditions:
(a) you shall perform your duties and obligations hereunder as a
fiduciary of the Company acting with due care; and
(b) except as set forth in paragraph 3 of the introduction to
this Agreement, you shall not be under any responsibility in respect of the
validity or sufficiency of any Letter of Transmittal, certificate for Old Notes
or Notice of Guaranteed Delivery.
14. You are not authorized to make any recommendation on behalf of
the Company as to whether a holder of Old Notes of the Company should or should
not tender his securities.
15. All New Notes shall be forwarded by you to the persons at the
addresses so indicated in the Letter of Transmittal by (i) first-class mail
under a blanket surety bond protecting you and the Company from loss or
liability arising out of the non-receipt or non-delivery of such certificate, or
(ii) registered mail, insured separately for the replacement value of such
certificates.
16. The Company covenants and agrees to reimburse, indemnify and hold
you harmless against any costs, expenses (including reasonable expenses of your
legal counsel), losses or damages which, without negligence, willful misconduct
or bad faith on your part or arising out of or attributable thereto, may be
paid, incurred or suffered by you or to which you may become subject by reason
of or as a result of the administration of your
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<PAGE>
duties hereunder or by reason of or as a result of your compliance with the
instructions set forth herein or with any written or oral instructions delivered
to you pursuant hereto, or liability resulting from your actions as Exchange
Agent pursuant hereto, including any claims against you by any holder tendering
Old Notes for exchange. The Company shall be entitled to participate at its own
expense in the defense, and if the Company so elects at any time after receipt
of such notice, the Company shall assume the defense of any suit brought to
enforce any such claim. In the event that the Company assumes the defense of
any such suit, the Company shall not be liable for the fees and expenses of any
additional counsel thereafter retained by you, unless in the reasonable judgment
of the Company's counsel it is advisable for you to be represented by separate
counsel. In no case shall the Company be liable under this indemnity with
respect to any claim or action against you, unless the Company shall be notified
by you, by letter or by cable or telex confirmed by letter, of the written
assertion of a claim against you or of any action commenced against you,
promptly after you shall have received any such written assertion of a claim or
shall have been served with a summons or other first legal process giving
information as to the nature and basis of an action, but failure so to notify
the Company shall not relieve the Company from any liability which it may have
otherwise than on account of this indemnity, except to the extent the Company is
materially prejudiced or forfeits substantial rights and defenses by reason of
such failure.
17. You hereby acknowledge receipt of each of the documents listed in
items (i) through (iv) of the introduction to this Agreement and further
acknowledge that you have examined the same. Any inconsistency between this
Agreement on the one hand and the Prospectus and Letter of Transmittal, as they
may from time to time be amended, on the other, shall be resolved in favor of
and governed by the latter, except with respect to the duties, liabilities and
indemnification of you as Exchange Agent.
18. In the event that any of the terms of the Offer are amended, the
Company shall give you prompt written notice thereof describing such amendment.
The parties shall amend this Agreement to the extent necessary to reflect any
material changes to the terms hereof caused by any amendment of the Offer.
19. You may resign at any time on 30 days' prior written notice
thereof delivered to the Company. Promptly after receipt of your written
notice, the Company shall take such action as may be necessary to appoint a
successor Exchange Agent. If within 30 days of such written notice no successor
Exchange Agent has been appointed, you or any party to this Agreement may
petition any court having jurisdiction for the appointment of a successor
Exchange Agent. Your resignation shall not be effective until a successor
Exchange Agent has been appointed. Upon the effectiveness of your resignation,
you shall turn over to the successor all property held by you as Exchange Agent
hereunder
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<PAGE>
upon presentation to you of evidence of appointment of such successor and its
acceptance thereof.
20. Upon the later of A. the completion of your duties pursuant to
this Agreement, or B. September 1, 1994 (as such date may be extended by written
agreement between you and the Company) your designation as Exchange Agent and
your obligations hereunder will terminate provided that your rights under
Paragraphs 11, 12 and 16 above and your liabilities under this Agreement for
acts or omissions theretofore occurring shall survive the termination of your
appointment. Notwithstanding the foregoing, it is understood that if, during
the period of thirty (30) days following the termination of your obligations
hereunder pursuant to this paragraph 20, you receive any Letters of Transmittal
(or functional equivalent thereof), you shall return the same together with all
enclosures to the party from whom such documents were received and shall be
reimbursed by the Company for your fees and expenses in connection therewith.
In addition, notwithstanding the termination of this Agreement, you shall
preserve, and shall provide the Company access to, all records pertaining to the
Offer and shall permit it to make reproductions of same, at its expense during
normal business hours, for a period of five (5) years following the termination
of this Agreement.
21. This Agreement is effective as of May ____, 1994, and is binding
upon and inures to the benefit of the parties' respective successors. This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York, without regard to the conflicts of law principles of such
State.
22. These instructions may be reasonably modified or supplemented by
the Company or by any officer thereof authorized to give notice, approval or
waiver on its behalf.
23. This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original, but all of which together shall
constitute one and the same document.
If the foregoing is acceptable to you, please countersign below to
acknowledge receipt of this letter and to confirm your agreement to the
arrangements herein provided.
Very truly yours,
CHARTER MEDICAL CORPORATION
By:____________________________
Name: James R. Bedenbaugh
Title: Treasurer
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ACCEPTED AS OF
May ____, 1994
MARINE MIDLAND BANK,
as Exchange Agent
By:_____________________________
Name:___________________________
Title:__________________________
Enclosures
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