<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1993
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition period from ____________________to___________________
Commission file No. 0-13849
RAMSAY HEALTH CARE, INC.
(Exact name of registrant as specified in its charter)
Delaware 63-0857352
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
One Poydras Plaza
639 Loyola Avenue, Suite 1400
New Orleans, Louisiana 70113
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (504) 525-2505
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
The number of shares of the Registrant's Common Stock outstanding at February
10, 1994 follows:
Common Stock, par value $0.01 per share - 7,699,344 shares
<PAGE> 2
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated balance sheets - December 31, 1993 (unaudited)
and June 30, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Consolidated statements of income - quarter and six months ended
December 31, 1993 (unaudited) and 1992 (unaudited) . . . . . . . . . . 3
Consolidated statements of cash flows - six months ended
December 31, 1993 (unaudited) and 1992 (unaudited) . . . . . . . . . . . 4
Notes to consolidated financial statements - December 31, 1993
(unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Part II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . 11
Item 6. Exhibits and Current Reports on Form 8-K . . . . . . . . . . . . . . 11
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31 JUNE 30
1993 1993
--------------- ---------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and short-term investments . . . . . . . . . . . . . $ 6,751,000 $ 10,682,000
Restricted cash . . . . . . . . . . . . . . . . . . . . . 6,112,000 ---
Patient accounts receivable, less allowances for doubtful
accounts of $4,354,000 and $4,955,000 at
December 31, 1993 and June 30, 1993, respectively . . . 25,404,000 26,696,000
Amounts due from third-party contractual agencies . . . . 4,860,000 4,971,000
Other accounts receivable . . . . . . . . . . . . . . . . 2,733,000 1,356,000
Other current assets . . . . . . . . . . . . . . . . . . . 2,261,000 3,385,000
--------------- ---------------
TOTAL CURRENT ASSETS . . . . . . . . . . . . . . . . . . 48,121,000 47,090,000
OTHER ASSETS
Cash held in trust . . . . . . . . . . . . . . . . . . . . 2,345,000 2,611,000
Restricted cash . . . . . . . . . . . . . . . . . . . . . 2,127,000 ---
Cost in excess of net asset value of purchased businesses 11,407,000 4,699,000
Unamortized preopening and loan costs . . . . . . . . . . 3,636,000 3,664,000
Real estate held for sale . . . . . . . . . . . . . . . . 1,150,000 1,150,000
Other non-current assets . . . . . . . . . . . . . . . . . 4,905,000 4,141,000
--------------- ---------------
25,570,000 16,265,000
PROPERTY AND EQUIPMENT
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,509,000 9,995,000
Building and improvements . . . . . . . . . . . . . . . . 121,641,000 134,468,000
Equipment, furniture and fixtures . . . . . . . . . . . . 18,962,000 18,419,000
--------------- ---------------
150,112,000 162,882,000
Less accumulated depreciation . . . . . . . . . . . . . . 35,600,000 35,867,000
--------------- ---------------
114,512,000 127,015,000
--------------- ---------------
$ 188,203,000 $ 190,370,000
=============== ===============
</TABLE>
See notes to consolidated financial statements.
1
<PAGE> 4
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31 JUNE 30
1993 1993
-------------- --------------
(UNAUDITED)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . $ 2,642,000 $ 4,790,000
Accrued salaries and wages . . . . . . . . . . . . . . . . . . . 3,617,000 3,760,000
Other accrued liabilities . . . . . . . . . . . . . . . . . . . 2,408,000 1,467,000
Amounts due to third-party contractual agencies . . . . . . . . 7,210,000 6,114,000
Current portion of long-term debt . . . . . . . . . . . . . . . 8,050,000 7,148,000
-------------- --------------
TOTAL CURRENT LIABILITIES . . . . . . . . . . . . . . . . . . 23,927,000 23,279,000
DEFERRED INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . . 6,135,000 6,120,000
LIABILITIES FOR SELF-INSURANCE CLAIMS, less
current portion . . . . . . . . . . . . . . . . . . . . . . . . 1,519,000 2,419,000
LONG-TERM DEBT, less current portion . . . . . . . . . . . . . . . 75,180,000 77,429,000
MINORITY INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . 970,000 1,126,000
STOCKHOLDERS' EQUITY
Class A Convertible Preferred Stock, $1 par value--authorized
800,000 shares; issued 313,500 shares; outstanding 22,910
shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,000 23,000
Class B Convertible Preferred Stock, Series C, $1 par value
--authorized 152,321 shares; issued 142,486 shares
(liquidation value of $7,244,000) including accrued
dividends of $91,000 at December 31, 1993 . . . . . . . . . . 233,000 142,000
Common Stock, $.01 par value--authorized 20,000,000
shares; issued 8,092,761 shares at December 31, 1993 and
8,087,926 shares at June 30, 1993 . . . . . . . . . . . . . . 81,000 81,000
Additional paid-in capital . . . . . . . . . . . . . . . . . . . 99,692,000 99,847,000
Retained earnings (deficit) . . . . . . . . . . . . . . . . . . (16,722,000) (17,805,000)
Treasury Stock, at cost--396,750 shares and 321,750
shares at December 31, 1993 and June 30, 1993,
respectively . . . . . . . . . . . . . . . . . . . . . . . . (2,835,000) (2,291,000)
-------------- --------------
80,472,000 79,997,000
-------------- --------------
$ 188,203,000 $ 190,370,000
============== ==============
</TABLE>
See notes to consolidated financial statements.
2
<PAGE> 5
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
<TABLE>
<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
DECEMBER 31 DECEMBER 31
--------------------------- ----------------------------
1993 1992 1993 1992
------------ ------------ ------------- -------------
(RESTATED) (RESTATED)
------------ -------------
<S> <C> <C> <C> <C>
NET REVENUES $ 32,561,000 $ 31,281,000 $ 64,544,000 $ 62,694,000
Operating Expenses:
Salaries, wages and benefits . . . . . . . . . . . . 15,696,000 15,361,000 31,156,000 29,804,000
Other operating expenses . . . . . . . . . . . . . . 10,232,000 9,200,000 19,550,000 19,037,000
Provision for doubtful accounts . . . . . . . . . . 1,313,000 2,198,000 3,028,000 4,063,000
Depreciation and amortization . . . . . . . . . . . 1,717,000 1,590,000 3,297,000 3,105,000
Interest and other financing charges . . . . . . . . 2,226,000 2,388,000 4,502,000 4,737,000
Loss from closure of hospital . . . . . . . . . . . --- --- --- 1,109,000
------------ ------------ ------------- -------------
TOTAL OPERATING EXPENSES . . . . . . . . . . . . 31,184,000 30,737,000 61,533,000 61,855,000
------------ ------------ ------------- -------------
INCOME BEFORE MINORITY INTERESTS, INCOME
TAXES AND CUMULATIVE EFFECT . . . . . . . . . . . . 1,377,000 544,000 3,011,000 839,000
Minority interests . . . . . . . . . . . . . . . . . . 814,000 --- 1,604,000 ---
------------ ------------ ------------- -------------
INCOME BEFORE INCOME TAXES AND
CUMULATIVE EFFECT . . . . . . . . . . . . . . . . . 563,000 544,000 1,407,000 839,000
Provision for income taxes . . . . . . . . . . . . . . 88,000 77,000 324,000 123,000
------------ ------------ ------------- -------------
INCOME BEFORE CUMULATIVE EFFECT . . . . . . . . . 475,000 467,000 1,083,000 716,000
Cumulative effect of change in accounting for
income taxes . . . . . . . . . . . . . . . . . . . . --- --- --- 2,353,000
------------ ------------ ------------- -------------
NET INCOME . . . . . . . . . . . . . . . . . . . $ 475,000 $ 467,000 $ 1,083,000 $ 3,069,000
============ ============ ============= =============
Income per common and dilutive common equivalent share:
Primary:
Before cumulative effect . . . . . . . . . . . . $0.05 $0.06 $0.11 $0.09
Cumulative effect . . . . . . . . . . . . . . . . --- --- --- 0.30
------------ ------------ ------------- -------------
$0.05 $0.06 $0.11 $0.39
============ ============ ============= =============
Fully diluted:
Before cumulative effect . . . . . . . . . . . . $0.05 $0.06 $0.11 $0.09
Cumulative effect . . . . . . . . . . . . . . . . --- --- --- 0.30
------------ ------------ ------------- -------------
$0.05 $0.06 $0.11 $0.39
============ ============ ============= =============
Weighted average number of shares outstanding:
Primary . . . . . . . . . . . . . . . . . . . . . . 9,672,000 7,885,000 9,659,000 7,889,000
Fully diluted . . . . . . . . . . . . . . . . . . . 9,672,000 7,885,000 9,714,000 7,889,000
</TABLE>
See notes to consolidated financial statements.
3
<PAGE> 6
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED DECEMBER 31
---------------------------------
1993 1992
-------------- --------------
(RESTATED)
<S> <C> <C>
Cash Flows from Operating Activities
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,083,000 $ 3,069,000
Adjustments to reconcile net income to net cash provided by
operating activities:
Cumulative effect of change in accounting for income taxes --- (2,353,000)
Depreciation and amortization . . . . . . . . . . . . . . . . 3,713,000 3,333,000
Provision for deferred income taxes . . . . . . . . . . . . . 47,000 (1,000)
Provision for doubtful accounts . . . . . . . . . . . . . . . 3,028,000 4,063,000
Minority interests . . . . . . . . . . . . . . . . . . . . . . (156,000) ---
Cash flows from (increase) decrease in operating assets:
Accounts receivable . . . . . . . . . . . . . . . . . . . . (1,563,000) (2,051,000)
Other current assets . . . . . . . . . . . . . . . . . . . 12,000 1,340,000
Other non-current assets . . . . . . . . . . . . . . . . . (314,000) (285,000)
Cash flows from increase (decrease) in operating liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . (2,368,000) (1,214,000)
Accrued salaries, wages and other liabilities . . . . . . . 264,000 (543,000)
Unpaid self-insurance claims . . . . . . . . . . . . . . . (948,000) (628,000)
Amounts due to third-party contractual agencies . . . . . . 1,096,000 (1,020,000)
-------------- --------------
Total adjustments . . . . . . . . . . . . . . . . . . . 2,811,000 641,000
-------------- --------------
Net cash provided by operating activities . . . . . . 3,894,000 3,710,000
-------------- --------------
Cash Flows from Investing Activities
Proceeds from sale of facility . . . . . . . . . . . . . . . . 11,950,000
Acquisition of Florida Psychiatric Management, Inc. . . . . . (4,207,000) ---
Expenditures for property and equipment . . . . . . . . . . . (2,359,000) (3,293,000)
Preopening costs . . . . . . . . . . . . . . . . . . . . . . . (570,000) (843,000)
-------------- --------------
Net cash provided by (used in) investing activities 4,814,000 (4,136,000)
-------------- --------------
Cash Flows from Financing Activities
Loan costs . . . . . . . . . . . . . . . . . . . . . . . . . . (211,000) (129,000)
Proceeds from sale/leaseback of equipment . . . . . . . . . . --- 1,857,000
Proceeds from exercise of options and warrants . . . . . . . . 27,000 ---
Payments on debt . . . . . . . . . . . . . . . . . . . . . . . (3,847,000) (901,000)
Payment of preferred stock dividends . . . . . . . . . . . . . (91,000) (38,000)
Purchase of treasury stock . . . . . . . . . . . . . . . . . . (544,000) (179,000)
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . (8,239,000) ---
Cash held in trust . . . . . . . . . . . . . . . . . . . . . . 266,000 126,000
-------------- --------------
Net cash used in financing activities . . . . . . . . (12,639,000) 736,000
-------------- --------------
Net increase in cash and cash equivalents . . . . . . . . . . . . (3,931,000) 310,000
Cash and cash equivalents at beginning of period . . . . . . . . 10,682,000 8,628,000
-------------- --------------
Cash and cash equivalents at end of period . . . . . . . . . . . $ 6,751,000 $ 8,938,000
============== ==============
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,703,000 $ 4,104,000
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . 140,000 652,000
</TABLE>
See notes to consolidated financial statements.
4
<PAGE> 7
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
DECEMBER 31, 1993
NOTE 1
The accompanying unaudited 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 and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and notes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all adjustments
considered necessary for a fair presentation have been included. The Company's
business is seasonal in nature and subject to general economic conditions and
other factors. Accordingly, operating results for the quarter ended December
31, 1993 are not necessary indicative of the results that may be expected for
the year. For further information, refer to the consolidated financial
statements and notes thereto included in the Company's Annual Report on Form
10-K for the year ended June 30, 1993.
NOTE 2
At December 31, 1993, the Company's credit facilities included $50.9
million in senior secured notes, approximately $27.5 million in letters of
credit (to support the Company's variable rate revenue bonds), $3.0 million in
subordinated secured notes and $4.0 million in a working capital facility. The
senior secured notes bear interest at 11.6% and are due in semi-annual
installments that began on March 31, 1993 and end on March 31, 2000. The
subordinated secured notes bear interest at 15.6% and are due in semi-annual
installments beginning March 31, 1994 and ending on March 31, 2000. Amounts
outstanding under the working capital facility bear interest at a variable
rate. There were no amounts outstanding under the working capital facility at
June 30, 1993 or December 31, 1993. As part of the acquisition of Florida
Psychiatric Management, Inc. (FPM), a managed mental health company, the
Company issued an aggregate of $2.5 million of three-year 7% debentures,
secured by shares of FPM. Restricted cash in the accompanying balance sheet
represents amounts from the sale of Cumberland Hospital that are held in trust
for the repayment of the senior secured notes. The Company has pledged as
collateral substantially all of its real property, plus restricted cash.
The Company's long-term debt is as follows:
<TABLE>
<CAPTION>
DECEMBER 31 JUNE 30
1993 1993
------------ ------------
<S> <C> <C>
11.6% Senior secured notes due March 31, 2000 . . . . . . . . . $ 50,850,000 $ 53,675,000
Variable rate revenue bonds through 2015 . . . . . . . . . . . 25,300,000 26,200,000
15.6% Subordinated secured notes due March 31, 2000 . . . . . . 3,000,000 3,000,000
7% three-year debentures . . . . . . . . . . . . . . . . . . . 2,500,000 ---
Capital lease obligation . . . . . . . . . . . . . . . . . . . 1,514,000 1,700,000
Secured notes payable . . . . . . . . . . . . . . . . . . . . . 66,000 2,000
------------ ------------
83,230,000 84,577,000
Less amounts due within one year . . . . . . . . . . . . . . . 8,050,000 7,148,000
------------ ------------
$ 75,180,000 $ 77,429,000
============ ============
</TABLE>
5
<PAGE> 8
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) - (CONTINUED)
NOTE 3
The provision for income taxes included in the consolidated statements
of income differs from the amounts computed by applying the normal statutory
rates to income before income taxes because such provision includes amounts
deducted for financial reporting purposes that are not allowable deductions for
federal and state income tax purposes and amounts for state income taxes
applicable to profitable subsidiaries which do not utilize the operating losses
generated by unprofitable subsidiaries to offset taxable income. At December
31, 1993, the Company has estimated operating loss carryforwards available to
reduce future taxable income of approximately $19.0 million subject to
significant annual limitations pursuant to Section 382 of the Internal Revenue
Code of 1986, as amended.
NOTE 4
During the fourth quarter of fiscal 1993, effective July 1, 1992, the
Company changed its method of accounting for income taxes from the deferred
method to the liability method required by FASB Statement No. 109, "Accounting
for Income Taxes". As permitted under the new rules, the previously presented
quarterly results for fiscal year 1993 have been restated. The cumulative
effect of adopting FASB Statement No. 109 was to increase net income by
$2.4 million in the six month period ended December 31, 1992.
6
<PAGE> 9
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The psychiatric health care industry continues to experience intense
pressure from governmental and private reimbursement sources to shorten
patients' lengths of stay and otherwise to reduce the cost of delivery of
psychiatric health care services. While the Company is expanding its services
through outpatient, partial hospitalization and freestanding day hospitals, it
expects these pressures to continue to impact psychiatric health care
providers' revenues and net income.
The Company is now firmly focused on developing its outpatient
business, both alongside the inpatient facilities in a further expansion of the
continuum of care, and in freestanding outpatient centers. This expansion may
include the acquisition and creation of multi-specialty practices in geographic
markets which the Company considers to be important.
In August 1993, the Company sold its Cumberland Hospital in
Fayetteville, North Carolina, with net cash proceeds of approximately $12.0
million. Proceeds from this sale have been earmarked for repayment of the
senior secured notes. A provision for loss on this transaction of
approximately $3.6 million had been recorded as of June 30, 1993.
On October 29, 1993, the Company purchased Florida Psychiatric
Management, Inc., (FPM) a managed mental health company for $6.5 million in
cash and debentures, plus contingent consideration based on the attainment of
certain earnings and revenue levels over the ensuing two years.
On February 10, 1994, the Company sold its Atlantic Shores Hospital in
Daytona Beach, Florida for $4.8 million. The Company did not recognize a loss
on the sale. The net proceeds from the sale were used to redeem the variable
rate revenue bond associated with that facility.
LIQUIDITY
CURRENT STATUS
The Company's credit facilities include $50.9 million in senior
secured notes, approximately $27.5 million in letters of credit, $3.0 million
in subordinated secured notes and $4.0 million in a working capital facility.
The senior secured notes bear interest of 11.6% and are due in semi-annual
installments that began on March 31, 1993 and end on March 31, 2000. The
subordinated secured notes bear interest at 15.6% and are due in semi-annual
installments beginning March 31, 1994 and ending March 31, 2000. Amounts
outstanding under the working capital facility bear interest at a variable
rate. There were no amounts outstanding under the working capital facility at
December 31, 1993. The Company also issued an aggregate of $2.5 million of 7%
three year debentures as part of the acquisition of FPM. At December 31,
1993, restricted cash included $8.2 million held in trust for repayment of the
senior secured notes, of which $6.1 million is classified as a current asset.
7
<PAGE> 10
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
CASH REQUIREMENTS
The Company's primary cash requirements relate to its normal operating
and debt service expenses, routine capital improvements at its facilities and
the specific development projects outlined below.
DEVELOPMENT PROJECTS
The Company's specific development projects include the expansion of
its outpatient and partial hospitalization programs (including possible
acquisitions of physician and other outpatient practices), its subacute
ventures and ongoing discussions with university-affiliated hospitals with a
view toward establishing psychiatric care facilities in association with these
universities. In addition, on October 29, 1993, the Company purchased FPM, a
managed mental health company, for $4.0 million in cash, $2.5 million in 3-year
debentures, plus contingent consideration based on the achievement of certain
earnings and revenue levels (such consideration not to exceed $2 million). The
Company may utilize this acquisition as a base for future expansion into the
managed mental health field. On the basis of its historical experience and
projected cash needs, the Company believes that its existing $4.0 million
working capital facility, together with internally generated funds from
operations, will be sufficient to fund its current cash requirements and
development projects. Over the long-term, the Company believes that its
internally generated funds from operations and its working capital facility
will be sufficient to fund its identifiable working capital, development and
other cash needs. (See Note 2 to Consolidated Financial Statements).
FINANCIAL CONDITION
In August 1993, the Company sold its Cumberland Hospital to Cape Fear
Valley Medical Center, with net cash proceeds of approximately $12.0 million.
The proceeds from this sale are earmarked for the payment of debt.
On June 30, 1993, the interests in the Company controlled by Paul J.
Ramsay, the Company's chairman, were recapitalized. The Company issued 142,486
shares of Class B Preferred Stock, Series C (the "Series C Preferred Stock") in
exchange for all outstanding shares of the Company's Class B Convertible
Preferred Stock, Series 1987, the Company's $2 million 16.1% Subordinated
Promissory Note and $500,000 in cash.
On October 29, 1993, the Company purchased the assets of Florida
Psychiatric Management, Inc. for $6.5 million, which included a cash payment of
$4.0 million and the issuance of an aggregate of $2.5 million of three-year 7%
debentures. Approximately $6.7 million of cost in excess of net asset value of
purchased businesses was recorded as a result of the transaction.
8
<PAGE> 11
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS
The following table sets forth, for the period indicated, certain
items of the Company's Consolidated Statements of Income as a percentage of the
Company's net revenues. The discussion which follows should be read in
conjunction with the Consolidated Financial Statements and the notes thereto
contained elsewhere herein.
<TABLE>
<CAPTION>
PERCENTAGE OF NET REVENUES
QUARTER ENDED SIX MONTHS ENDED
DECEMBER 31 DECEMBER 31
----------- -----------
1993 1992 1993 1992
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net revenues 100.0 % 100.0 % 100.0 % 100.0 %
----- ----- ----- -----
Operating expenses:
Salaries, wages and benefits 48.2 49.1 48.3 47.5
Other operating expenses 31.4 29.4 30.3 30.4
Provision for doubtful accounts 4.0 7.0 4.7 6.5
Depreciation and amortization 5.3 5.1 5.1 5.0
Interest and other financing charges 6.8 7.6 7.0 7.5
Loss from closure of hospital --- --- --- 1.8
Total operating expenses 95.7 98.2 95.4 98.7
----- ----- ----- -----
Income before minority interests,
income taxes and cumulative effect 4.3 % 1.8 % 4.6 % 1.3 %
===== ===== ===== =====
Net income 1.5 % 1.5 % 1.7 % 4.9 %
===== ===== ===== =====
</TABLE>
Net revenues were $32.6 million and $64.6 million for the quarter and
six months ended December 31, 1993, respectively, compared to $31.3 million and
$62.7 million for the comparable prior year periods. Net outpatient revenues
increased approximately 62% over both the prior year periods to $4.5 million
and $8.0 million for the quarter and six months ended December 31, 1993,
respectively, offsetting declines in inpatient revenues of 5% and 7%,
respectively, from the prior year quarterly and six month levels. Net
outpatient revenues comprised 17% and 15% of total net revenues for the quarter
and six months ended December 31, 1993, respectively, compared to 10% and 9%,
respectively, for the prior year periods. Same store admissions increased 1%
and 5% over the prior year quarter and six month levels while inpatient average
length of stay declined to 17.3 days for the six months ended December 31,
1993. A contractual adjustment benefit of approximately $1.3 million was
recognized in the six month period ended December 31, 1992 to reflect the
combined effects of intermediary audits and the routine evaluation of prior
year estimated settlements. There can be no assurances that any future
adjustments will be favorable or of a comparable magnitude.
Salaries, wages and benefits and other operating expenses were 79.6%
and 78.6% of net revenues for the quarter and six months ended December 31,
1993, respectively, compared to 78.5% and 77.9% for the comparable prior year
periods. Current year increases are in the 4-5% range over the prior year,
which is not unreasonable in the current health care environment.
9
<PAGE> 12
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
The provision for doubtful accounts was 4.0% and 4.7% of net revenues
for the quarter and six months ended December 31, 1993, respectively, as
compared to 7.0% and 6.5% during the same periods in 1992. The decrease
reflects the shift in payor base towards more Medicaid, fixed rate,
negotiated rate and cost based contracts.
Depreciation and amortization was 5.3% and 5.1% of net revenues for
the quarter and six months ended December 31, 1993, respectively, as compared
to 5.1% and 5.0% for the same periods in 1992. The increase relates primarily
to amortization of the preopening costs of the facility opened in January 1993.
Interest expense decreased from 7.6% of net revenues for the quarter
ended December 31, 1992 to 6.8% of net revenues for the comparable 1993
quarter. The decrease is attributable to reduced levels of debt during the
December 1993 quarter.
At December 31, 1993, the Company has estimated net operating loss
carryforwards available to reduce future taxable income of approximately $19.0
million subject to significant annual limitations pursuant to Section 382 of
the Internal Revenue Code of 1986, as amended.
10
<PAGE> 13
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Stockholders of the Company was held on November
9, 1993. At that meeting, the Ramsay Health Care, Inc. 1993 Stock Option Plan
was approved by the stockholders by a vote of 4,881,427 votes in favor, 435,034
votes against, 19,919 votes abstaining and 3,826,156 broker non-votes. The
Ramsay Health Care, Inc. 1993 Employee Stock Purchase Plan was approved by the
stockholders by a vote of 5,269,454 votes in favor, 52,952 votes against, -0-
votes abstaining and 3,840,130 broker non-votes. In addition, the Board of
Directors' selection of Ernst & Young as the Company's independent auditors for
the fiscal year ended June 30, 1994 was ratified by a vote of 7,147,481 in
favor, 10,619 against, 12,385 abstaining and 1,992,051 broker non-votes.
The affirmative vote of a majority of the shares of Company common
stock represented and voting at the meeting was required for approval.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The exhibits required to be filed as part of this Quarterly
Report on Form 10-Q are as follows:
Exhibit 2 Asset Purchase Agreement between Halifax
Hospital Medical Center and Atlantic Treatment
Center, Inc.*
Exhibit 10(a) Ramsay Health Care, Inc. 1993 Stock Option Plan
Exhibit 10(b) Ramsay Health Care, Inc. 1993 Employee Stock
Purchase Plan
Exhibit 11 Computation of net income per share
(b) Current Reports on Form 8-K
There were no Current Reports on Form 8-K filed with the
Commission during the quarter ended December 31, 1993.
* This Agreement included certain schedules referred to on
page (iii) of the Agreement which schedules have been omitted.
The Registrant hereby undertakes to furnish supplementally a
copy of such omitted schedules to the Securities and Exchange
Commission upon request.
11
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RAMSAY HEALTH CARE, INC.
Registrant
/s/ Jack V. Eumont, Jr.
___________________________
Jack V. Eumont, Jr.
Vice President and
Chief Financial Officer
Date: February 11, 1994
12
<PAGE> 1
EXHIBIT 2
================================================================================
ASSET PURCHASE AGREEMENT
BETWEEN
HALIFAX HOSPITAL MEDICAL CENTER
AND
ATLANTIC TREATMENT CENTER, INC.
================================================================================
As of January 14, 1994
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 1.
SALE AND TRANSFER OF ASSETS
1.1 Sale and Transfer of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Assets Excluded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Liabilities Assumed by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.4 Liabilities Excluded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.5 Consideration for Sale and Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.6 Further Acts and Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.7 Instruments of Conveyance and Assumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.8 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.9 Prorations on and After Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.10 Post-Closing Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.11 Licensure of Hospital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF SELLER
2.1 Organization; Corporate Power and Qualification of Seller. . . . . . . . . . . . . . . . . . . . . . . 11
2.2 Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.3 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.4 Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.5 Court Orders, Decrees and Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.6 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.7 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.8 Authority; Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.9 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.10 No Finders or Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.11 Permits and Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.12 Cost Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF BUYER
3.1 Organization; Corporate Power and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.2 Authority; Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.3 Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.4 No Finders or Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
3.5 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.6 Access to Information; Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 4.
COVENANTS OF BUYER
4.1 Best Efforts to Secure Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.2 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.3 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.4 Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.5 Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.6 Preservation and Access to Records After the Closing . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.7 Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 5.
COVENANTS OF SELLER
5.1 Access and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.2 Best Efforts to Secure Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.3 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.4 Operation of Seller's Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.5 Access to Incident Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.6 Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.7 Prior Year Financial Reports and Cost Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.8 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE 6.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER
6.1 Representations and Warranties True . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.2 Opinion of Buyer's Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.3 Regulatory Approvals and Other Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.4 No Obstructive Proceeding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.5 Delivery of Certified Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.6 Proceedings and Documents Satisfactory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE 7.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
7.1 Representations and Warranties True . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.2 Regulatory Approvals and Other Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.3 No Obstructive Proceeding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.4 Opinion of Seller's Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.5 Proceedings and Documents Satisfactory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.6 Delivery of Certified Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C> <C>
7.7 Title to Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 8.
TERMINATION
8.1 Optional Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.2 Mandatory Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8.3 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 9.
MISCELLANEOUS
9.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.3 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.4 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.5 Section Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.6 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.7 Disclaimer of Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.8 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.9 Schedules and Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.10 Binding on Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.12 Definition of "Best Efforts" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.13 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.14 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.15 Non-Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.16 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>
LIST OF SCHEDULES
<TABLE>
<CAPTION>
Number Description
<S> <C>
1 Real Property
2 Assumed Contracts
3 Prepaid expenses
4 Accrued Vacation Time
5 Permitted Liens
6 Leased real property
7 List of consents and approvals (Seller)
8 Defaults
9 Litigation
10 Taxes
11 Finders or brokers
12 Exceptions to participation in reimbursement Programs
13 List of consents and approvals (Buyer)
14 Employees
</TABLE>
-iii-
<PAGE> 5
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT ("Agreement"), dated as of January
14, 1994, between HALIFAX HOSPITAL MEDICAL CENTER, a special taxing district of
the State of Florida, d/b/a HALIFAX MEDICAL CENTER ("Buyer"), and ATLANTIC
TREATMENT CENTER, INC., a Florida corporation ("Seller").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Seller owns certain assets which are employed in the
operation of Seller's Atlantic Shores Hospital located at 841 Jimmy Ann Drive,
Daytona Beach, Florida 32117 (the "Hospital"); and
WHEREAS, Buyer wishes to purchase from Seller certain assets
at the Hospital.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements hereinafter set forth, and intending to be
legally bound, the parties hereto hereby agree as follows:
ARTICLE 1.
SALE AND TRANSFER OF ASSETS
1.1 Sale and Transfer of Assets. Subject to the terms and
conditions of this Agreement, at the Closing (as hereinafter defined), Buyer
agrees to purchase from Seller, and Seller agrees to sell to Buyer, to the
extent legally transferable, all of Seller's right, title and interest in and
to the following assets (the "Assets"):
(a) The real property described on Schedule 1 hereto,
including, without limitation, all structures,
buildings, fixtures and improvements located on said
real property and together with all easements,
privileges, rights of way and appurtenances
pertaining to or accruing to the benefit of such real
property (the "Real Property");
(b) All furniture and equipment (except for all
management information systems and related
<PAGE> 6
2
equipment, including all peripheral and other devices
of the Meditech System and the Megas equipment
(collectively, "Meditech Equipment")) owned by Seller
and (i) located at the Hospital or (ii) used in the
operation of the Hospital;
(c) All contracts, leases, manufacturer's warranties (in
respect of the furniture, equipment and inventory
included in the Assets), commitments, purchase
orders, agreements and other instruments to which
Seller is a party and which are listed on Schedule 2
hereto (the "Assumed Contracts");
(d) All certificates of need, licenses and permits, to
the extent such certificates of need, licenses and
permits are used in the business or operations of the
Hospital or are used by Seller in connection
therewith and to the extent such certificates of
need, licenses and permits are legally transferable;
(e) Except as set forth in Section 1.2, all documents,
records, operating manuals and files, including,
without limitation, all patient records, medical
records, equipment records and medical and
administrative libraries, of Seller that pertain to
the Hospital;
(f) All prepaid expenses of Seller listed on Schedule 3
hereto and, subject to Section 1.10 hereof, all
prepaid expenses of Seller existing on the Closing
Date (as hereinafter defined); and
(g) All inventory and supplies owned by Seller and (i)
located at the Hospital on the Closing Date or (ii)
which have been ordered by Seller pursuant to open
purchase orders or other agreements or commitments.
1.2 Assets Excluded. The following assets of Seller (the
"Excluded Assets") are specifically excluded from the Assets:
<PAGE> 7
3
(a) All assets not used in the operation of or in
connection with the Hospital;
(b) All cash (including all cash held in trust),
certificates of deposit, money market instruments,
securities, repurchase agreements, deposits and other
cash-equivalents;
(c) Agency Receivables (as defined below), regardless of
whether the cost and other reports related thereto
are filed on, prior to or after the Closing Date;
(d) Patient and other accounts and notes receivable
(collectively, the "Patient Accounts");
(e) All income tax, property tax and other tax refunds;
(f) All amounts due to Seller from affiliates of Seller;
(g) All trademarks, trademark registrations and trademark
applications, trade names, copyrights, patents and
patent applications, processes, formulae, trade
secrets, inventions, proprietary manuals and other
proprietary information and royalties, including all
rights to sue for past infringement;
(h) Minute books, stock record books, tax returns,
general ledgers and related corporate and financial
documents and records, incident reports and all other
books, records, documents and other writings not
specifically included in Section 1.1(e) hereof;
(i) All Assets sold, disposed of or otherwise consumed
after the date hereof in the ordinary course of
business;
(j) Prepaid insurance and workers' compensation and any
other insurance refunds (collectively, the "Prepaid
Insurance");
<PAGE> 8
4
(k) All rights and entitlements under all contracts,
leases, agreements and other instruments to which
Seller is a party which are not Assumed Contracts,
all rights and entitlements arising prior to the
Closing Date under all Assumed Contracts, and all
other assets which are not specifically included in
the Assets, including without limitation amounts
designated as Excluded Assets pursuant to Sections
1.9(b) and (c) hereof; and
(l) All Meditech Equipment.
Without limiting the foregoing, Seller shall be entitled to,
and shall be responsible for, any and all amounts due to Seller as
reimbursement or other payments from the United States government, the State of
Florida or any fiscal intermediary (collectively, the "Agency Receivables"),
including without limitation in connection with cost reports filed with the
United States government under the Medicare program, the State of Florida under
any State programs or with any fiscal intermediary, in relation to operations
of the Hospital prior to or on the Closing Date. Seller shall be responsible
for filing the Medicare provider, State provider and fiscal intermediary cost
reports for the Hospital for cost reporting periods ending before or on the
Closing Date (the "Seller Cost Reports"), including any terminating cost
reports due as a result of the transactions contemplated hereby, and Seller
shall accept full responsibility and entitlement under such Seller Cost
Reports, including without limitation, responsibility for and entitlement to
the Agency Receivables, recapture, if any, and audit and other liability for
overpayment or recoupment in connection with such Seller Cost Reports. Seller
shall be responsible for Medicare and any State provider appeals relating to
the Hospital for all periods ended on or before the Closing Date, both
individual as well as group appeals, as those terms are defined in Part I,
Section 2920 of the Provider Reimbursement Manual published by the Health Care
Financing Administration. Seller shall be entitled to receive all amounts due
from the Medicare and any State programs in respect of all such appeals. Buyer
agrees that it shall not file or cause to be filed any amended cost reports in
Seller's name or otherwise with respect to the Hospital for any period ending
on or prior to the Closing Date; it being understood and agreed that Seller
shall have the sole discretion as to the filing of such amended cost reports.
Buyer shall forward to Seller any and all correspondence relating to any and
all of the Seller
<PAGE> 9
5
Cost Reports, the Agency Receivables, the Patient Accounts and the other
Excluded Assets promptly following receipt thereof by Buyer. Buyer agrees to
remit to Seller any checks or other receipts included in or relating to the
Agency Receivables, the Patient Accounts, the Prepaid Insurance and any other
item which is an Excluded Asset immediately upon receipt by Buyer.
1.3 Liabilities Assumed by Buyer. On and as of the
Closing, in addition to its other agreements set forth herein, Buyer shall
assume and, subject to the right of Buyer to contest any such obligation in
good faith and by appropriate proceedings, Buyer shall fully and timely pay,
perform and discharge any and all debts, liabilities and obligations of and
claims against Seller (i) under the Assumed Contracts, (ii) for accrued
employee vacation leave benefits set forth on Schedule 4 hereto ("Accrued
Vacation Time"), (iii) relating to all employee liabilities and obligations
existing on or arising after the Closing Date, including without limitation all
liabilities and obligations relating to medical conditions or treatments of the
Employees (as defined in Section 4.3) existing on or arising after the Closing
Date, including liabilities relating to workers compensation, health insurance
and other medical related liabilities (notwithstanding that, in any such case,
the date of injury, initial medical treatment or other occurrence may have
occurred or existed prior to the Closing), (iv) under all open purchase orders
and other agreements for the provision of inventory, supplies, materials and
other services on order as of the Closing Date for delivery and use in the
ordinary course of business at the Hospital after the Closing Date and (v) all
payments due to the State of Florida into the Public Medical Assistance Trust
Fund ("PMATF") as set forth in Section 395.701, Florida Statutes, and payments
due into the Health Care Cost Containment Trust Fund ("HCCCTF") as set forth in
Section 408.20, Florida Statutes, in each case which payments become due and
payable after the Closing Date (collectively, the "Assumed Liabilities"). The
payments referred to in Section 1.3(v) shall be deemed to be obligations of
Buyer and not of Seller as of the Closing Date.
1.4 Liabilities Excluded. The term "Assumed Liabilities"
shall not include any debts, obligations and liabilities of Seller which are
not expressly described in Section 1.3 hereof (the "Excluded Liabilities"),
including any debts, liabilities and obligations of Seller arising out of
workers compensation, health insurance and other liabilities relating to
medical treatment of employees for the period prior to and ending on the
Closing Date. Subject
<PAGE> 10
6
to Buyer's obligations pursuant to Sections 1.9, 1.10, 1.11, 4.3, 9.1 and 9.8,
Buyer shall assume only the Assumed Liabilities expressly described in Section
1.3 hereof and no others; and any and all other debts, liabilities and
obligations of Seller (by contract or otherwise, fixed or contingent) are
Excluded Liabilities, which are specifically excluded and excepted from the
Assumed Liabilities and are to be retained by Seller in full.
1.5 Consideration for Sale and Transfer. (a) At the
Closing, subject to the terms and conditions of this Agreement, Buyer shall pay
to Seller in cash the aggregate consideration set forth in this Section 1.5
(the "Purchase Price") by wire transfer of immediately available funds to an
account designated by Seller. The Purchase Price to be paid to Seller at
Closing shall equal (i) four million eight- hundred thousand dollars
($4,800,000) (the "Base Purchase Price"), as increased, if at all, pursuant to
Section 1.5(b) below, plus (ii) the book value of all prepaid expenses as set
forth on Schedule 3 hereto, less (iii) the aggregate amount of the Accrued
Vacation Time set forth on Schedule 4 hereto; provided, however,
notwithstanding anything herein to the contrary, including Section 1.10, the
Buyer and Seller agree that Seller may at its sole option pay to one or more
Employees their respective Accrued Vacation Time as of the Closing Date, and in
each such case, the Buyer will not assume such amounts paid and, accordingly,
will not receive a credit against the Purchase Price in respect thereof (it
being understood and agreed that any such amounts paid by Seller shall be taken
into account in the post-closing adjustment under Section 1.10).
(b) In the event that the Closing does not occur prior to
April 1, 1994 (unless due solely to the fault of Seller), the aggregate Base
Purchase Price shall automatically be increased by two hundred thousand dollars
($200,000) to equal a total of five million dollars ($5,000,000).
1.6 Further Acts and Assurances. Seller shall, at any
time and from time to time at and after the Closing, upon request of Buyer,
take any and all reasonable steps necessary to place Buyer in possession of the
Assets and will do, execute, acknowledge and deliver or will cause to be done,
executed, acknowledged and delivered, all such further acts, deeds,
assignments, transfers, conveyances and assurances as may be reasonably
required for transferring to Buyer, or for reducing to Buyer's possession, the
Assets. Buyer shall, at any time and from time to time at and after
<PAGE> 11
7
the Closing, upon the request of Seller, take any and all reasonable steps
necessary to evidence the assumption of the Assumed Liabilities by Buyer, and
will do, execute, acknowledge and deliver or will cause to be done, executed,
acknowledged and delivered, all such further documents, acts and assurances as
may be reasonably required for the assumption of the Assumed Liabilities by
Buyer.
1.7 Instruments of Conveyance and Assumption. At the
Closing, (a) Seller shall convey the Assets to Buyer by delivering to Buyer
warranty deeds (with covenants against grantor's acts only), assignments and
bills of sale in form and substance reasonably acceptable to Buyer pursuant to
which Seller shall sell, assign, transfer and deliver to Buyer, as provided in
Section 1.1 hereof, all its right, title and interest in and to the Assets,
free and clear of all liens, pledges, minority interests and other
encumbrances, except for (i) liens for taxes, assessments, governmental charges
and other taxes or levies not yet due and payable, (ii) zoning ordinances,
matters of record, permits and other restrictions or limitations which do not
materially interfere with the present use of any such property by Seller and
(iii) the matters disclosed on Schedule 5 hereto (collectively, the "Permitted
Liens") and such other instruments or documents as may be reasonably necessary
to effectuate the transfer contemplated herein and (b) Seller shall assign and
Buyer shall assume the Assumed Liabilities by delivering to Seller an
assignment and assumption agreement in form and substance reasonably acceptable
to Seller.
1.8 Closing. The sale, purchase and other activities
provided for herein (the "Closing") shall occur at 10:00 a.m. on February 10,
1994, unless the closing conditions set forth in Articles 6 and 7 hereof shall
not have been satisfied (or waived) on or prior to such date, at the offices of
Haythe & Curley, 237 Park Avenue, New York, New York, or at such other
reasonable time or place as may be mutually agreeable. The date of Closing is
referred to in this Agreement as the "Closing Date."
1.9 Prorations on and After Closing Date. (a) All
county and local ad valorem and property taxes and similar impositions levied
or imposed upon or assessed against the Assets, hereinafter called the
"Property Taxes," for the fiscal year or period in which the Closing Date
occurs shall be prorated as of the Closing Date. In the event the Property
Taxes for such year are not determinable as of the Closing Date, said Property
Taxes shall be prorated and paid on the Closing Date on the basis of the
<PAGE> 12
8
best available information. In the event any of the Property Taxes are due and
payable at the Closing, the same shall be paid at such time in accordance with
the proration as hereinabove provided. Buyer shall be responsible for the
payment of the Property Taxes within the time fixed for payment thereof and
before the same shall become delinquent.
(b) As of the close of business on the Closing Date,
Seller shall prepare cut-off billings for all patients admitted to or treated
at the Hospital (whether on an inpatient, outpatient or other basis) for which
reimbursement is payable either on a per diem or cost- based basis (the
"Cost-based Patients"). Reimbursement payments received after the Closing Date
from or in respect of such Cost-based Patients, including without limitation,
payments in respect of operational and capital cost components ("Cost-based
Reimbursement Payments"), will be prorated between Buyer and Seller through the
Closing Date with the Seller's portion to be Excluded Assets. This proration
will apply to such Cost-based Patients admitted to or treated at the Hospital
through 12:01 a.m. on the day after the Closing Date and will be prorated in
the following manner:
Seller Patient Days
------------------- X Cost-based Reimbursement Payments = Seller's
Total Patient Days Cost-based
Portion
For purposes hereof (i) "Seller Patient Days" shall mean the
whole number of patient service days from and including the date of admittance
to or treatment at the Hospital through and including the Closing Date, and
(ii) "Total Patient Days" shall mean the whole number of patient service days
from and including the date of admittance to or treatment at the Hospital
through and including the date of discharge or cessation of treatment. Buyer
shall pay to Seller, Seller's Cost-based Portion (as above defined) within five
business days of receipt of Cost-based Reimbursement Payments.
(c) As of the close of business on the Closing Date,
Seller shall prepare cut-off billings for all patients admitted to or treated
at the Hospital (whether on an inpatient, outpatient or other basis) for which
reimbursement is payable on a charge-based or other basis not covered by
subsection (b) of this Section 1.9 (the "Charge-based Patients").
Reimbursement payments received after the Closing Date from or in respect of
such Charge-based Patients ("Charged-based Reimbursement Payments") will be
prorated between Buyer and Seller through the Closing Date with the Seller's
portion to be Excluded Assets. This
<PAGE> 13
9
proration will apply to such Charge-based Patients admitted to or treated
at the Hospital through 12:01 a.m. on the day after the Closing Date and
will be prorated in the following manner:
Seller Total Charges
-------------------- X Charged-based Reimbursement Payments = Seller's
Total Charges Charged-based
Portion
For purposes hereof (i) "Seller Total Charges" shall mean the
total charges for the services provided to such Charge-based Patients at the
Hospital by Seller through and including the Closing Date, and (ii) "Total
Charges" shall mean the sum of Seller Total Charges plus the total charges for
the services provided to such Patients by Buyer after the Closing Date. Buyer
shall pay to Seller, Seller's Charged-based Portion (as defined above) within
five business days of receipt of Charged-based Reimbursement Payments.
(d) If either Buyer or Seller receives any reimbursement
or other payment amount in respect of per diem, cost-based, charge-based or any
other patients which relate to services rendered by the other party at the
Hospital, the party receiving such amount shall immediately remit said full
amount to the other party.
(e) The PMATF payment made by Seller for the quarter in
which the Closing takes place shall be prorated as of the Closing Date and at
Closing Buyer shall pay to Seller Buyer's portion of said payment.
(f) Any other relevant items, including without
limitation (i) lease payments under the leases and payments under any other
agreements which are Assumed Contracts and (ii) utilities (including water,
sewer, telephone, gas, electricity and cable television service), that are
customarily prorated in connection with the purchase and sale of properties
similar to the Assets in Daytona Beach, Florida shall be prorated as of the
Closing Date, and to the extent not paid on the Closing Date, shall be taken
into account (and paid by the appropriate party) in connection with the
post-closing adjustment contemplated under Section 1.10 hereof.
1.10 Post-Closing Adjustment. Promptly after the Closing,
Buyer and Seller shall cooperate in good faith to reach an agreement within 45
days after the Closing Date regarding an adjustment, if any, to the components
of the Purchase Price determined pursuant to clauses (ii) and (iii) of Section
1.5(a) hereof in respect of the amount of prepaid expenses and Accrued Vacation
Time set forth on Schedules 3 and 4 hereto,
<PAGE> 14
10
respectively. The aggregate amount of such adjustment (the "Post-Closing
Adjustment") shall equal the difference between (a) (x) the amount of prepaid
expenses of Seller listed on Schedule 3 hereto, minus (y) the amount of Accrued
Vacation Time listed on Schedule 4 hereto (the "Estimated Amount") and (b) (x)
the actual book value of prepaid expenses of Seller as of the Closing Date,
minus (y) the actual amount of accrued employee vacation leave benefits of the
Employees as of the Closing Date, as agreed to by Buyer and Seller acting in
good faith (the "Actual Amount"). In the event that the Estimated Amount is
greater than the Actual Amount, then Seller shall pay to Buyer the Post-Closing
Adjustment by bank wire transfer of immediately available funds to a bank
account designated by Buyer promptly after the Post-Closing Adjustment is
mutually determined as provided above, but in no event later than two business
days after such determination. In the event that the Actual Amount is greater
than the Estimated Amount, then Buyer shall pay to Seller the Post-Closing
Adjustment by bank wire transfer of immediately available funds to a bank
account designated by Seller promptly after the Post-Closing Adjustment is
mutually determined as provided above, but in no event later than two business
days after such determination.
1.11 Licensure of Hospital. Buyer acknowledges and agrees
that, in order to close in a timely manner, Buyer shall apply to the State of
Florida, Agency for Health Care Administration ("Agency"), to seek approval for
a license for the Hospital, effective as of the Closing Date, as a specialty
psychiatric hospital separate from the acute care hospital owned by Buyer (the
"License"). Following the Closing, Buyer contemplates that it will apply to
the Agency to seek approval to merge the operations of the Hospital into the
existing hospital operations owned by Buyer (the "Merger"). Buyer assumes
total responsibility for and all obligations and risks associated with all
aspects of the License and the Merger. Without limiting the foregoing, Buyer
shall have no recourse against Seller with respect to any matter relating to
the License or the Merger including without limitation in the event that the
Agency refuses, for any reason, to approve the Merger. It is expressly
understood and agreed by Buyer and Seller that the consents, licenses,
certificates of need, permits, certificates and any other approvals referred to
in Sections 2.9, 2.11, 3.5, 4.1, 4.7, 5.2, 5.6, 6.3, 7.2 and 9.16 hereof or
listed on Schedule 7 or 13 hereto do not include and shall under no
circumstances be deemed to include any consent, license, certificate of need,
permit, certificate or other approval of any kind required to consummate the
Merger or otherwise relating to the Merger.
<PAGE> 15
11
ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as of the date
hereof as follows:
2.1 Organization; Corporate Power and Qualification of
Seller. Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Florida. Seller has full corporate
power and authority to own, lease and operate its properties and assets and to
carry on its business as and where it is now being conducted, to enter into
this Agreement and to consummate the transactions contemplated hereby. Seller
is duly qualified to do business in each jurisdiction in which the nature of
the properties owned or leased or the nature of the business conducted by it
requires such qualification, except where failure to be so qualified would not
have a material adverse effect on the business, properties or assets of Seller.
A copy of Seller's Articles of Incorporation and all amendments thereto as of
the date hereof and a copy of Seller's by-laws, as amended to the date hereof,
have been delivered to Buyer.
2.2 Title to Assets. Except for the Permitted Liens, and
subject to obtaining the consents and releases set forth on Schedule 7 hereto,
on the Closing Date Seller shall have good and marketable title to the Real
Property and good and valid title to all of its personal property included in
the Assets, subject to no mortgage, pledge, lien, lease, conditional sales
agreement, option, right of first refusal or to any other encumbrance or
charge. All of the real property which is owned by Seller is described in
Schedule 1 hereto and all leases of real property under which Seller is the
tenant and which are being assumed by Buyer are described in Schedule 6 hereto.
2.3 Contracts. Schedule 2 hereto lists each Assumed
Contract and a complete copy of each such written Assumed Contract will be
delivered to Buyer prior to the Closing Date. Except as noted in such
Schedule, there has been no threatened cancellation thereof (to Seller's
knowledge), there are no outstanding disputes thereunder (to Seller's
knowledge), Seller has duly performed all of its obligations thereunder (except
where the failure to perform would not have a material adverse effect on the
business, properties or assets of Seller) and, subject to the receipt of any
required consents and releases listed on Schedule 7 hereto, consummation by
Seller of the transactions contemplated by this Agreement will not (and will
not give any person a right to) terminate or modify any rights of, or
accelerate or augment any obligation of, Seller thereunder.
2.4 Defaults. Except as disclosed in Schedule 8 hereto,
the execution, delivery and performance of this Agreement
<PAGE> 16
12
by Seller and the consummation of the transactions contemplated by this
Agreement to be consummated by Seller will not:
(a) violate any provision of, or result in the
breach of, or constitute a default under, any law or any order, writ,
injunction or decree of any court, arbitration tribunal or Governmental Entity
binding on Seller or to which Seller is subject (for purposes hereof,
"Governmental Entity" means any government or any agency, bureau, board,
commission, court, department, official, political subdivision, tribunal,
licensing agency or other instrumentality of any government, whether federal,
state or local, domestic or foreign); or
(b) constitute a violation of or a default under,
or conflict with, or result in the creation or imposition of any lien upon any
of the Assets pursuant to, any term or provision of the Articles of
Incorporation or by-laws of Seller or any material contract, indenture,
mortgage or agreement to which Seller is a party (subject in each case to
obtaining any necessary consents and releases as listed on Schedule 7 hereto).
2.5 Court Orders, Decrees and Laws. Except as set forth
on Schedule 9 hereto, (a) there is not outstanding nor, to the knowledge of
Seller, threatened, any order, writ, injunction or decree of any Governmental
Entity against or affecting the Assets; (b) Seller has not received any written
notice that it is not in compliance in all material respects with all
applicable federal, state and local laws; and (c) Seller has not received any
written notice of any investigation or proceeding by a Governmental Entity
which is pending or being threatened against the Assets; except in each case
for ordinary regulatory reviews and tax inquiries conducted in the regular
course.
2.6 Litigation. To the knowledge of Seller, except as
set forth in Schedule 9 hereto, there is no litigation, arbitration,
investigation or proceeding pending or, to the knowledge of Seller, threatened
against Seller or the Hospital at law or in equity, before any Governmental
Entity, except, in any case, where an adverse judgment in respect thereof would
not have a material adverse effect on the business, properties or assets of
Seller.
2.7 Taxes. Except as set forth on Schedule 10 hereto,
Seller has withheld from each payment made to employees of Seller the amount of
all employment taxes (including, but not limited to, federal, state and local
income and employment taxes) required to be withheld therefrom pursuant to
applicable law and has set aside all other employee contributions or payments
required to be set aside pursuant to applicable law with respect to such wages
and has paid or will pay when due the same to, or
<PAGE> 17
13
has deposited or will deposit when due such payment with, the proper tax
receiving officers or other appropriate authorities. Seller has timely filed
or will file when due all required tax returns to be filed by it and has paid
or will pay when due all taxes and assessments due from it for all periods
ending on or before the Closing Date.
2.8 Authority; Binding Effect. Seller has taken all
corporate action required by law or otherwise and by its Articles of
Incorporation and by-laws to authorize the execution, delivery and performance
of this Agreement by it and the consummation by it of the transactions
contemplated hereby to be consummated by it. This Agreement constitutes the
valid and binding agreement of Seller, enforceable against Seller in accordance
with its terms (except as enforceability may be restricted, limited or delayed
by bankruptcy, insolvency, moratorium or similar laws affecting or relating to
the enforcement of creditors' rights in general and by general principles of
equity).
2.9 Consents and Approvals. Except as indicated in
Schedule 7 hereto, no consent, approval or authorization of, or declaration,
filing or registration with any Governmental Entity or other person or entity
is required to be obtained by Seller in connection with the execution, delivery
and performance of this Agreement by Seller or the consummation of the
transactions contemplated hereby by Seller.
2.10 No Finders or Brokers. Except as indicated in
Schedule 11 hereto, neither Seller nor any officer or director of Seller has
engaged any finder or broker in connection with the transactions contemplated
hereunder.
2.11 Permits and Licenses. Seller has heretofore made
available to Buyer copies of all material permits and licenses held by it
regarding the operation of the Hospital as a Class III special psychiatric
hospital. Except as set forth on Schedule 12 hereto, the Hospital is qualified
for participation in the Medicare program, has a current and valid provider
contract with the Medicare program, and is in compliance in all material
respects with the conditions of participation in such program. The Hospital is
duly accredited by the Joint Commission on Accreditation of Healthcare
Organizations for the three-year period ending September 16, 1996.
2.12 Cost Reports. Seller has heretofore made available to
Buyer all Blue Cross, Medicare and all other third-party payor program cost
reports relating to the business and operations of the Hospital by Seller since
1989.
<PAGE> 18
14
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as of the date
hereof as follows:
3.1 Organization; Corporate Power and Qualification.
Buyer is a special taxing district duly organized, validly existing and in good
standing under the laws of the State of Florida. Buyer has full corporate
power and authority to own, lease and operate its properties and assets and to
carry on its business as and where it is now being conducted, to enter into
this Agreement and to consummate the transactions contemplated hereby. Buyer
is duly qualified to do business in each jurisdiction in which the nature of
the properties owned or leased or the nature of the business conducted by it
requires such qualification, except where failure to be so qualified would not
have a material adverse effect on its business, properties or assets. A copy
of Buyer's Enabling Act (the "Act") and all amendments thereto as of the date
hereof and a copy of Buyer's by-laws, as amended to the date hereof, have been
delivered to Seller.
3.2 Authority; Binding Effect. Buyer has taken all
action required by law or otherwise and by its Act and by-laws to authorize the
execution, delivery and performance of this Agreement by Buyer and the
consummation by Buyer of the transactions contemplated hereby to be consummated
by Buyer. This Agreement constitutes the valid and binding agreement of Buyer,
enforceable in accordance with its terms (except as enforceability may be
restricted, limited or delayed by bankruptcy, insolvency, moratorium or similar
laws affecting or relating to the enforcement of creditors' rights in general
and by general principles of equity).
3.3 Defaults. The execution, delivery and performance of
this Agreement by Buyer and the consummation of the transactions contemplated
by this Agreement to be consummated by it will not (i) violate any provision
of, result in a breach of, or constitute a default under, any law or any order,
writ, injunction or decree of any Governmental Entity binding on Buyer or to
which Buyer is subject; or (ii) constitute a violation of or a default under,
or be in conflict with, any term or provision of the Act or by-laws of Buyer or
any material contract, indenture, mortgage or other agreement to which Buyer is
a party.
3.4 No Finders or Brokers. Neither Buyer nor any officer
or director of Buyer has engaged any finder or broker in connection with the
transactions contemplated hereunder.
<PAGE> 19
15
3.5 Consents and Approvals. Except for the approval of
the License and except as otherwise indicated in Schedule 13, no consent,
approval or authorization of, or declaration, filing or registration with, any
Governmental Entity or other person or entity is required to be obtained by
Buyer in connection with the execution, delivery and performance of this
Agreement by Buyer or the consummation of the transactions contemplated hereby
by Buyer.
3.6 Access to Information; Investigation. Buyer and its
affiliates are engaged in the business of managing and operating health care
facilities and are experienced in the risks associated with the operation of
health care facilities such as the Hospital. Buyer has not relied on any
representation or warranty (express or implied, written or oral) except as
expressly set forth herein and, to the knowledge of the senior management of
Buyer (including Ronald Rees, Chief Executive Officer, Edward J. Heverin, Chief
Financial Officer, David Davidson, Esq., General Counsel, Carolyn Gladding,
Administrator of Nursing and Phil Satey, Adminstrator of Human Resources), none
of the representations or warranties of Seller herein is inaccurate or false in
any material respect.
ARTICLE 4.
COVENANTS OF BUYER
Buyer hereby covenants and agrees with Seller as follows:
4.1 Best Efforts to Secure Consents. Buyer shall take
all necessary corporate and other action required to consummate the
transactions contemplated by this Agreement to be consummated by it, and shall
use its best efforts to secure before the Closing all necessary consents and
approvals required to satisfy the conditions precedent to the obligations of
Seller and Buyer specified herein.
4.2 Confidentiality. (a) Buyer shall hold in strict
confidence all non-public documents, materials and other information
(collectively, the "Confidential Information") made available to it or received
by it from Seller, Ramsay Health Care, Inc., a Delaware corporation ("Parent"),
or any other party in connection with the transactions contemplated herein,
whether received before or after the date hereof, including, without
limitation, all Confidential Information made available to or received by Buyer
under Sections 5.1, 5.5 and 5.7 hereof; provided, however, that any of such
Confidential Information may be disclosed to commissioners, officers,
employees, counsel, agents and representatives of Buyer who need to know such
<PAGE> 20
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Confidential Information for the purpose of evaluating and consummating the
transactions contemplated herein (it being understood that such commissioners,
officers, employees, agents and representatives shall be informed by Buyer of
the confidential nature of such Confidential Information, shall be directed by
Buyer to treat such Confidential Information confidentially and that Buyer
shall be responsible for any disclosure made by any such person in violation of
this Section 4.2);
(b) Such Confidential Information including all
documents, materials and agreements relating thereto and not otherwise known to
the public are confidential and proprietary and are not to be disclosed to
third persons without the prior written consent of Parent, except: (i) to the
extent necessary to comply with law or the valid order or requirement of a
governmental agency or court of competent jurisdiction or otherwise in
connection with any court action or administrative proceeding, provided,
however, that Buyer shall make all reasonable efforts to seek confidential
treatment of said Confidential Information; (ii) as part of Buyer's normal
reporting or review procedure to its auditors and its attorneys; or (iii) in
order to enforce or exercise its rights and perform its obligations in
connection with the transactions contemplated herein; and
(c) Except as otherwise required by law (as reasonably
determined by Buyer) Buyer shall not make any announcement of the transactions
contemplated herein to the employees of Buyer, Seller or Parent (other than key
management of Buyer and other persons whose knowledge thereof is required in
connection herewith), news or wire services or otherwise except with the
consent and approval of Parent.
4.3 Employees. As of the Closing Date, Buyer shall offer
employment to all those persons employed by Seller as of the Closing Date, each
of whom (as of the date hereof) is listed on Schedule 14 hereto, except for the
current chief executive officer and controller of the Hospital and certain
physician employees as designated below (all such employees other than such
chief executive officer, controller and the Physicians (as defined below), the
"Employees"). Subject to the terms of this Section 4.3, Buyer agrees to submit
to Seller within five (5) business days after the date hereof (but in no event
later than the date which is twenty (20) days prior to the Closing Date) a list
of the Hospital's employees who are physicians and any other physicians under
written contract with the Hospital, in each case who can not be credentialed at
the Buyer's hospital or will not be employed by Buyer following the Closing
(the "Physicians"). As of the Closing Date, Seller shall terminate all
Employees of
<PAGE> 21
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Seller at the Hospital, and Buyer agrees that on and as of the Closing Date,
Buyer shall offer employment to all of the Employees and any additional persons
hired at the Hospital in the ordinary course of business after the date hereof
(the "Retained Employees") and shall retain for a period of ninety (90) days
following the Closing Date such number of the Retained Employees as shall be
necessary to avoid any potential liability by any party for a violation of the
Workers Adjustment Retraining and Notification Act (the "Warn Act") including
any violation attendant to a failure to notify such Employees of a "mass
layoff" or "plant closing" as defined in the Warn Act. As of the Closing Date,
Buyer agrees, in accordance with Section 9.8 hereof, to indemnify and hold
Seller and Parent harmless from and against any Loss (as defined in Section
9.8(c) below) asserted against or suffered by Seller or Parent under the Warn
Act arising out of or resulting from the failure to comply with the provisions
of the Warn Act as of or after the Closing Date or Buyer's failure to comply
with the provisions of this Section 4.3. Nothing herein shall be deemed either
to affect or to limit in any way the management prerogatives of Buyer with
respect to Retained Employees, or to create or to grant to the Employees any
third party beneficiary rights or claims or causes of action of any kind or
nature. To the extent not inconsistent with law, the Retained Employees shall
be afforded employee benefits at least comparable to benefits provided to the
other employees of Buyer having comparable responsibility. Nothing herein
shall prevent Buyer from terminating any Retained Employee for cause as
determined by Buyer in its sole discretion. Buyer agrees to credit to each
Retained Employee an amount of sick leave time equal to the actual amount of
accrued sick leave time for such Retained Employee existing on the Closing Date
in accordance with Buyer's existing sick leave policy. Seller shall either pay
Buyer $12,500 on the Closing Date or credit Buyer $12,500 against the Purchase
Price in respect of such sick leave credit.
4.4 Other Agreements. Buyer will not enter into any
agreement which prohibits or prevents Buyer from complying with the terms of
this Agreement.
4.5 Access. After the Closing, Buyer will during normal
business hours and on reasonable notice provide Seller (and its representatives
including counsel, independent auditors and governmental agencies) with access
to all information, files, documents and records in Buyer's possession or under
Buyer's control relating to the Hospital, the Employees or any of the Assets
which Seller reasonably requires with respect to, and will cooperate with
Seller at Seller's expense with regard to, any reasonable business purpose,
including, without limitation, the preparation, filing, handling and appeal of
any tax returns or other reports for periods ending on or prior to the Closing
Date and the Seller Cost Reports and any amendments thereto,
<PAGE> 22
18
compliance with governmental requirements and regulations, and the prosecution
or defense of third party claims. In addition, during the period from the
Closing Date through the date which is three months thereafter (the "Period"),
the Buyer will provide Seller with office space in the administrative area of
the Hospital with access to a Meditech computer terminal line to be occupied by
a designee of Seller for his continued use during the Period.
4.6 Preservation and Access to Records After the Closing.
After the Closing, Buyer shall, in the ordinary course of business and as
required by law, keep and preserve all medical records and other records of the
Hospital existing as of the Closing and which constitute a part of the Assets
delivered to Buyer at Closing. Buyer acknowledges that as a result of entering
into this Agreement and operating the Hospital it will gain access to patient
and other information which is subject to rules and regulations concerning
confidentiality. Buyer agrees to abide by any such rules and regulations
relating to the confidential information it acquires. Buyer agrees to maintain
the patient records delivered to Buyer at Closing at the Hospital after Closing
in accordance with applicable law (including, if applicable, Section
1861(v)(i)(l) of the Social Security Act (42 U.S.C. Section 1395(v)(1)(l)) and
requirements of relevant insurance carriers, all in a manner consistent with
the maintenance of patient records generated at the Hospital after the Closing.
In addition to Buyer's obligations under Section 4.5 above, upon reasonable
notice, during normal business hours, Buyer will afford to the representatives
of Seller, including its counsel and accountants, full and complete access to,
and copies of (at the sole cost and expense of Seller), the patient medical
records transferred to Buyer at the Closing. Upon reasonable notice and during
normal business hours, Buyer shall also make its officers and employees
available to Seller at reasonable times and places after the Closing for
reasonable business purposes relating to such patient medical and other
records. In addition, Seller shall be entitled, at Seller's sole risk, to
remove from the Hospital any such patient medical records, but only for
purposes of pending litigation involving a patient to whom such records refer,
as attested to in writing prior to removal by counsel retained by Seller in
connection with such litigation. Any patient medical records so removed from
the Hospital shall be promptly returned to Buyer following their use by Seller.
Any access to the Hospital, its records or Buyer's personnel granted to Seller
in this Agreement shall be upon the condition that any such access not
materially interfere with the normal business operations of Buyer.
4.7 Licenses. Promptly after the execution hereof, Buyer
shall use its best efforts to secure before the Closing the License and all
other material licenses, certificates of need,
<PAGE> 23
19
permits, certificates and other approvals required to own, lease or operate the
Hospital as presently operated in accordance with applicable law, whether by
transfer of existing licenses, certificates of need, permits, certificates or
other approvals held by Seller (to the extent legally transferrable) or
otherwise. Buyer understands and agrees that obtaining the License and all
other licenses and other approvals set forth on Schedule 13 are Buyer's (and
not Seller's) responsibility and obligation.
ARTICLE 5.
COVENANTS OF SELLER
Seller hereby covenants and agrees with Buyer as follows:
5.1 Access and Information. Prior to the Closing Date,
Seller shall give to representatives of Buyer reasonable access during normal
business hours to the Hospital and to Seller's records as they relate to the
Assets and the Assumed Liabilities, and will make available copies of all such
documents and information with respect to the Assets and the Assumed
Liabilities as representatives of Buyer may from time to time reasonably
request, all at Buyer's expense (including any such review or other due
diligence activities of Buyer prior to the execution hereof) and in such a
manner as not unduly to disrupt Seller's normal business activities. All
requests for such access or consultation with employees shall be made through
an officer of Parent designated by Parent.
5.2 Best Efforts to Secure Consents. Seller shall take
all necessary corporate and other action required to consummate the
transactions contemplated by this Agreement to be consummated by it, and shall
use its best efforts to secure before the Closing all necessary consents and
approvals required to satisfy all conditions precedent to the obligations of
Seller specified herein.
5.3 Confidentiality. (a) Seller shall hold in strict
confidence all Confidential Information received from either Buyer or any other
party in connection with the transactions contemplated herein, whether received
before or after the date hereof; provided, however, that any of such
Confidential Information may be disclosed to directors, officers, employees,
counsel, agents and representatives of Seller or Parent who need to know such
Confidential Information for the purpose of evaluating and consummating the
transactions contemplated herein (it being understood that such directors,
officers, employees,
<PAGE> 24
20
agents and representatives shall be informed by Seller or Parent of the
confidential nature of such Confidential Information and shall be directed by
Seller or Parent to treat such Confidential Information confidentially and that
Seller and Parent shall be responsible for any disclosure made by any such
person in violation of this Section 5.3);
(b) Such Confidential Information including all
documents, materials and agreements relating thereto and not otherwise known to
the public are confidential and proprietary and are not to be disclosed to
third persons without the prior written consent of Buyer, except: (i) to the
extent necessary to comply with law or the valid order or requirement of a
governmental agency or court of competent jurisdiction or otherwise in
connection with any court action or administrative proceeding, provided,
however, that Seller and Parent shall make all reasonable efforts to seek
confidential treatment of said Confidential Information; (ii) as part of
Seller's or Parent's normal reporting or review procedure to its auditors and
its attorneys; or (iii) in order to enforce or exercise Seller's or Parent's
rights and perform Seller's obligations in connection with the transactions
contemplated herein; and
(c) Except as otherwise required by law (as reasonably
determined by Seller or Parent) Seller and Parent shall not make any
announcement of the transactions contemplated herein to the employees of Buyer,
Seller or Parent (other than key management and other persons whose knowledge
thereof is required in connection herewith), news or wire services or otherwise
except with the consent and prior approval of Buyer.
5.4 Operation of Seller's Business. From the date hereof
until the Closing Date, (a) Seller shall operate the Hospital in the ordinary
course of business consistent with past practice and shall notify Buyer of any
material adverse change in the Assets or in the business of the Hospital and
(b) Seller shall not consume or otherwise dispose of any individual Asset
having a fair market value of more than $5,000 without the express written
consent of Buyer.
5.5 Access to Incident Reports. After the Closing,
Seller will during normal business hours and on reasonable notice provide Buyer
(and its representatives including counsel, independent auditors and
governmental agencies) with access to all incident reports in Seller's
possession or under Seller's control relating to the Hospital or any of the
Assets which Buyer reasonably requires with respect to any reasonable business
purpose.
<PAGE> 25
21
5.6 Licenses. Promptly after the execution hereof,
Seller shall use its best efforts to assist Buyer if and as requested by Buyer
in securing before the Closing the License and all other material licenses,
certificates of need, permits, certificates and other approvals required to
own, lease or operate the Hospital as presently operated in accordance with all
applicable law, whether by transfer of existing licenses, certificates of need,
permits, certificates or other approvals held by Seller (to the extent legally
transferable) or otherwise (it being understood and agreed that securing the
License and all other licenses and other approvals referred to above is the
obligation and responsibility of Buyer).
5.7 Prior Year Financial Reports and Cost Reports. (a)
After the Closing, Seller shall prepare and deliver to Buyer, and Buyer shall
submit to the Agency those Prior Year Reports required by Rule 59E-5.202,
Florida Administrative Code (the "Prior Year Reports"). The Prior Year Reports
shall be for the period from the beginning of Seller's current fiscal year
through and including the date immediately preceding the Closing Date. The
Prior Year Reports shall be delivered to Buyer in time to allow Buyer to submit
them to the Agency in a timely manner and upon receipt Buyer hereby agrees to
forthwith submit them (without addition or other alteration) to the Agency.
Seller shall not be responsible for the preparation or filing of any other
financial or other reports to the Agency. Buyer acknowledges that it has had
the opportunity to review Seller's financial records and is satisfied that
Seller is unlikely to be subject to any penalties pursuant to Section 408.08,
Florida Statutes.
(b) After Closing, Seller shall, within the time period
required by applicable law, prepare and file the Medicare terminating Seller
Cost Reports due as a result of the transactions contemplated hereby, and
Seller shall thereafter promptly forward a copy of such terminating Seller Cost
Reports to Buyer.
5.8 Insurance. (a) From the Closing Date until the
third anniversary of the Closing Date, Seller shall, at its sole cost and
expense, maintain per annum professional liability insurance, or obtain
extended reporting period insurance, for malpractice claims against the Seller
relating to occurrences on or prior to the Closing Date at the Hospital, in the
amount of $1,000,000 per claim, $3,000,000 in the aggregate, and excess
liability (umbrella) insurance in the amount of $5,000,000 per claim and
$5,000,000 in the aggregate.
(b) The insurance policy required to be maintained by
Seller as provided in Section 5.8(a) above shall be written by
<PAGE> 26
22
Seller's present insurance carrier (or any successor or replacement thereof).
Seller shall at Closing, and thereafter within ten (10) days after written
request from Buyer, deliver to Buyer certificates of insurance evidencing
compliance with this Section 5.8.
ARTICLE 6.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER
All obligations of Seller which are to be discharged under
this Agreement at the Closing are subject to the fulfillment at or prior to the
Closing, of each of the following conditions (unless waived by Seller at any
time at or prior to the Closing):
6.1 Representations and Warranties True. All of the
representations and warranties made by Buyer contained in Article 3 of this
Agreement shall be true in all material respects as of the Closing Date; Buyer
shall have performed and complied in all material respects with all covenants
and conditions required by this Agreement to be performed or complied with by
it prior to or at the Closing; and Seller shall have been furnished with a
certificate of the Chief Executive Officer or the Chief Financial Officer of
Buyer, dated the Closing Date, in their corporate capacities, certifying to the
foregoing.
6.2 Opinion of Buyer's Counsel. Seller shall have been
furnished with an opinion dated the Closing Date of David J. Davidson, Esq.,
counsel to Buyer, in form and substance reasonably satisfactory to Seller, to
the effect set forth as Exhibit 6.2 attached hereto. In addition, Seller shall
have been furnished with an opinion dated the Closing Date of Ausley, McMullen,
McGehee, Carothers & Proctor, special counsel to Seller, in form and substance
reasonably satisfactory to Seller, covering the matters set forth in Exhibit
6.2A.
6.3 Regulatory Approvals and Other Consents. The
consummation of the transactions contemplated by this Agreement shall have been
approved by and consented to by the Governmental Entities and other persons and
entities set forth on Schedule 7.
6.4 No Obstructive Proceeding. No action or proceedings
shall have been instituted, and no order, decree or judgment of any
Governmental Entity shall be subsisting, which seeks to, or would, prevent the
consummation of, or render it unlawful as of the Closing to effect, the
transactions contemplated hereby in accordance with the terms hereof, or seeks
damages in a material amount by reason of the transactions
<PAGE> 27
23
contemplated hereby. No legal objection to the transactions contemplated by
this Agreement shall have been received from or threatened by any Governmental
Entity which has not been subsequently withdrawn.
6.5 Delivery of Certified Documents. At the Closing,
Buyer shall deliver to Seller copies of the Act of Buyer certified (not more
than 30 days prior to the Closing Date) by its Secretary and copies of Buyer's
by-laws and resolutions of the Board of Commissioners of Buyer, approving and
authorizing the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby, in each case certified by its
Secretary or Assistant Secretary.
6.6 Proceedings and Documents Satisfactory. All
corporate proceedings in connection with the transactions contemplated hereby
and all certificates and documents delivered to Seller at Closing pursuant to
this Agreement shall be satisfactory in form and substance to Seller and its
counsel acting reasonably and in good faith.
ARTICLE 7.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
All obligations of Buyer which are to be discharged under this
Agreement at the Closing are subject to the fulfillment at or prior to the
Closing of each of the following conditions (unless waived by Buyer at any time
at or prior to the Closing):
7.1 Representations and Warranties True. All of the
representations and warranties of Seller contained in Article 2 of this
Agreement shall be true in all material respects as of the Closing Date; Seller
shall have performed or complied in all material respects with all covenants
and conditions required by this Agreement to be performed or complied with by
it prior to or at the Closing; and Buyer shall be furnished with a certificate
of the President or any Vice President of Seller, dated the Closing Date, in
his corporate capacity, certifying to the foregoing.
7.2 Regulatory Approvals and Other Consents. Buyer shall
have been notified by the Agency that it will receive the License effective as
of the Closing Date and the consummation of the transactions contemplated by
this Agreement shall have otherwise been approved by and consented to by the
Governmental Entities and other persons and entities set forth on Schedule 13
hereto.
<PAGE> 28
24
7.3 No Obstructive Proceeding. No action or proceedings
shall have been instituted, and no order, decree or judgment of any
Governmental Entity shall be subsisting, which seeks to, or would, prevent the
consummation of, or render it unlawful as of the Closing to effect, the
transactions contemplated hereby in accordance with the terms hereof, or seeks
damages in a material amount by reason of the transactions contemplated hereby.
No legal objection to the transactions contemplated by this Agreement shall
have been received from or threatened by any Governmental Entity which has not
been subsequently withdrawn.
7.4 Opinion of Seller's Counsel. Seller shall have
delivered to Buyer at the Closing an opinion of Haythe & Curley, special
counsel to Seller, dated the Closing Date, in form and substance reasonably
satisfactory to Buyer, covering the matters set forth as Exhibit 7.4 attached
hereto. As to all matters of Florida law, Haythe & Curley may assume that the
laws of Florida are the same as the laws of New York or may rely on an opinion
of Florida counsel, provided that such opinion expressly permits such reliance.
7.5 Proceedings and Documents Satisfactory. All
corporate proceedings in connection with the transactions contemplated hereby
and all certificates and documents delivered to Buyer at Closing pursuant to
this Agreement shall be satisfactory in form and substance to Buyer and its
counsel acting reasonably and in good faith.
7.6 Delivery of Certified Documents. At the Closing,
Seller shall deliver to Buyer copies of its charter certified (not more than 30
days prior to the Closing Date) by the appropriate governmental authorities and
copies of its by-laws and resolutions of the Board of Directors of Seller,
approving and authorizing the execution and delivery of this Agreement by
Seller, and the consummation of the transactions contemplated hereby by Seller,
in each case certified by its Secretary or Assistant Secretary.
7.7 Title to Real Property. Buyer shall have received,
at Buyer's sole cost and expense, from a title insurance company licensed to do
business in Florida, a written commitment to issue a title insurance policy
(the "Title Policy"), naming Buyer as the insured and insuring that as of the
Closing Date Buyer is vested with fee title to the Real Property, subject only
to the Permitted Liens and standard preprinted exceptions. Consistent with the
foregoing, Buyer shall notify Seller in writing within fifteen (15) days of the
date hereof of any material objections to title which are not otherwise
permitted pursuant to the terms of this Agreement. Buyer shall
<PAGE> 29
25
be deemed to have waived its right to object to any such title matters and the
contingencies to Closing set forth in this Section 7.7 shall be deemed
satisfied if Buyer shall fail to timely notify Seller as aforesaid. In the
event that at Closing Seller's title to the Real Property shall be subject to
exceptions other than those permitted by this Agreement and as to which Buyer
shall have timely notified Seller pursuant to the preceding sentence, Seller
shall have the option, in its sole discretion, to either (x) take no action
with respect to such exceptions, in which event Buyer shall have the right to
either terminate this Agreement in accordance with Section 8.1 hereof or to
close this transaction without any abatement or other reduction in the Purchase
Price, (y) take such action as Seller shall deem to be reasonably necessary to
transfer title to the Real Property subject only to the exceptions provided for
in this Agreement, in which event Seller shall be entitled to a reasonable
adjournment of the date of Closing to eliminate such exceptions, but if Seller
shall be unsuccessful in eliminating such exceptions as of such adjourned date
and if Buyer is not willing to close, this Agreement shall automatically be
terminated, or (z) abate the Purchase Price in the amount reasonably required
by the title company to eliminate the exceptions not provided for in this
Agreement. No action taken by Seller to cure or remove any purported title
exception shall be an admission that such purported title exception is not
among the title exceptions subject to which Buyer has agreed to accept title.
ARTICLE 8.
TERMINATION
8.1 Optional Termination. This Agreement may be
terminated and the transactions contemplated hereby abandoned at any time prior
to the Closing (i) by the mutual written consent of Buyer and Seller, (ii) by
any party by notice in writing to the other party if there is a material breach
by the other party of a material representation, warranty, covenant or
agreement herein not promptly cured following written notice thereof to such
other party (it being understood and agreed that upon any such termination, the
sole remedy for any such material breach shall be termination of this Agreement
as provided in and subject to the terms of this Article 8), (iii) by Buyer as
expressly provided in Section 7.7(x) hereof, or automatically as provided in
Section 7.7(y) hereof, (iv) by either Buyer or Seller by notice in writing to
the other party if, prior to Closing, all or substantially all of the Assets or
the improvements on the Real Property are destroyed or materially damaged, or
if condemnation proceedings are commenced against the Assets or the
improvements
<PAGE> 30
26
on the Real Property (it being agreed that under no circumstances shall Seller
have any obligation to repair or restore any Assets or improvements upon any
such occurrence) or (v) by Seller by notice in writing to Buyer if the Closing
has not occurred on or before February 28, 1994.
8.2 Mandatory Termination. If the Closing has not
occurred on or before April 15, 1994, this Agreement shall automatically
terminate and no longer be of any force or effect, unless extended by the
written agreement of the parties hereto.
8.3 Termination. In the event this Agreement is
terminated as provided in this Article 8 or in Section 7.7 above, (i) Buyer
shall deliver to Seller all Confidential Information (and copies thereof in its
or its counsels', agents' or representatives' possession) concerning Seller,
its business or the Assets previously delivered or made available to Buyer or
its counsel, agents or representatives; and (ii) none of the parties nor any of
their respective shareholders, directors, officers, agents or representatives
shall have any liability to the other party for costs, expenses, loss of
anticipated profit, consequential damages, or otherwise, except for any
deliberate and material breach of any of the provisions of this Agreement,
provided that the provisions of Sections 4.2, 5.3 and 9.1 hereof shall survive
any such termination.
ARTICLE 9.
MISCELLANEOUS
9.1 Expenses. All expenses of the preparation of this
Agreement and of the transactions contemplated hereby, including, without
limitation, counsel fees, accounting fees, investment adviser's fees and
disbursements and taxes (except as set forth herein) shall be borne by the
respective parties incurring such expense, whether or not such transactions are
consummated, and, without limiting the generality of the foregoing, all
environmental audit costs and expenses, all engineering studies, costs and
expenses, the costs of title insurance covering the Real Property, the cost of
obtaining any survey of the Real Property, and all fees and expenses associated
with any other due diligence activities conducted by or on behalf of the Buyer
shall be borne by the Buyer; provided, however, that Buyer and Seller shall
each pay one-half of any sales, transfer or other taxes (other than income
taxes, Property Taxes, PMATF payments and HCCCTF payments) payable in
connection with or arising out of the transactions contemplated hereby
regardless of which party has the legal obligation for such taxes under state
law or whether such party would be exempt from such taxes under state law.
<PAGE> 31
27
Expenses related to Property Taxes shall be allocated as set forth in Section
1.9(a) and expenses related to PMATF payments and HCCCTF payments shall be
subject to Section 1.3 hereof and the PMATF payment made by Seller for the
quarter in which the Closing takes place shall be allocated as set forth in
Section 1.9(e) hereof.
9.2 Notices. All notices, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered in person, by telecopy or three business days after
mailed by certified mail, postage prepaid, return receipt requested:
To Seller: c/o Ramsay Health Care, Inc.
One Poydras Plaza
639 Loyola Avenue, Suite 1400
New Orleans, Louisiana 70113
Attention: Gregory H. Browne
Telecopy: (504) 585-0500
With a copy to: Haythe & Curley
237 Park Avenue
New York, New York 10017
Attention: Bradley P. Cost, Esq.
Telecopy: (212) 682-0200
To Buyer: Halifax Medical Center
303 North Clyde Morris Boulevard
Daytona Beach, Florida 32115
Attention: David J. Davidson, Esq.
Telecopy: (904) 254-4371
With a copy to: Halifax Medical Center
303 North Clyde Morris Boulevard
Daytona Beach, Florida 32115
Attention: Edward J. Heverin
Telecopy: (904) 254-4364
or to such other address as any of the parties may designate by notice to the
others in accordance with this Section 9.2.
9.3 Entire Agreement. This Agreement and the Schedules,
Exhibits and documents delivered pursuant hereto constitute the entire contract
between the parties hereto pertaining to the subject matter hereof and
supersede all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether written or oral, of the parties,
including without limitation the Letter of Intent dated December 9, 1993
between Parent and Buyer, and there are no representations, warranties or other
agreements (express or implied) between the
<PAGE> 32
28
parties in connection with the subject matter hereof, except as specifically
set forth herein. No supplement, modification or amendment of this Agreement
shall be binding unless executed in writing by the parties to be bound thereby.
9.4 Governing Law. The validity and construction of this
Agreement shall be governed by the laws of the State of Florida without regard
to the conflict of laws principles of such State.
9.5 Section Headings. The Section headings are for
reference only and shall not limit or control the meaning of any provision of
this Agreement.
9.6 Waiver. No delay or omission on the part of any
party hereto in exercising any right hereunder shall operate as a waiver of
such right or any other right under this Agreement.
9.7 Disclaimer of Warranties. EXCEPT AS EXPRESSLY SET
FORTH IN THIS AGREEMENT, THE PARTIES ACKNOWLEDGE AND AGREE THAT THE ASSETS WILL
BE SOLD BY SELLER AND PURCHASED BY BUYER IN THEIR PHYSICAL AND OTHER CONDITION
ON THE CLOSING DATE, "AS IS WHERE IS," WITH NO REPRESENTATION OR WARRANTY OF
HABITABILITY OR FITNESS FOR HABITATION, WITH RESPECT TO THE REAL PROPERTY, AND
WITH NO OTHER REPRESENTATIONS OR WARRANTIES OF ANY KIND, INCLUDING, WITHOUT
LIMITATION, THE REPRESENTATIONS OR WARRANTIES OF MERCHANTABILITY OR FITNESS FOR
A PARTICULAR PURPOSE, WITH RESPECT TO THE PHYSICAL AND OTHER CONDITION OF THE
ASSETS, ANY AND ALL OF WHICH REPRESENTATIONS OR WARRANTIES (BOTH EXPRESS AND
IMPLIED) THE SELLER HEREBY EXPRESSLY DISCLAIMS.
9.8 Indemnification.
(a) Indemnification of Buyer. Seller will indemnify and
hold harmless Buyer and its employees, officers, directors, agents,
representatives, successors and assigns (collectively, "Buyer Indemnified
Parties") from and after the Closing Date, from and against any Loss (as
defined in Section 9.8(c) hereof) arising out of or resulting from (i) any
inaccuracy or inaccuracies in, or any breach of, any of the representations,
warranties, covenants or agreements of Seller contained in this Agreement, (ii)
all third party claims and litigations against Buyer or any other Buyer
Indemnified Party (including, without limitation, those which involve
allegations of medical malpractice) arising out of incidents or other matters
which occurred prior to the Closing Date (other than with respect to any
Assumed Liabilities and other than with respect to the matters disclosed as
items 1 and 2 of Schedule 9 hereto) in connection with the operation or
ownership of the Hospital or relating to any of the Assets, and (iii) any
Excluded Liability;
<PAGE> 33
29
provided, however, that notwithstanding the foregoing, with respect to any Loss
arising pursuant to Section 408.08, Florida Statutes, as a result of the
operation of the Hospital by Seller prior to the Closing, Seller will only
indemnify and hold Buyer or any other Buyer Indemnified Party harmless for any
cash fines imposed pursuant to such Section 408.08, Florida Statutes (it being
understood that any other penalties, including without limitation any budget
reductions imposed pursuant to such Section 408.08, shall be borne solely by
Buyer with no indemnification from or other liability of Seller).
(b) Indemnification of Seller and Parent. Buyer will
indemnify and hold harmless Seller and Parent and each of their respective
employees, officers, directors, shareholders, agents, representatives,
successors and assigns (collectively, "Seller Indemnified Parties") from and
after the Closing Date, from and against any Loss arising out of or resulting
from (i) any inaccuracy or inaccuracies in, or any breach of, any of the
representations, warranties, covenants or agreements of Buyer contained in this
Agreement, (ii) all third party claims and litigations against Seller, Parent
or any other Seller Indemnified Party (including, without limitation, those
which involve allegations of medical malpractice) arising out of incidents or
other matters occurring or existing on or after the Closing Date (other than
with respect to any Excluded Liability) in connection with the operation or
ownership of the Hospital or relating to any of the Assets, (iii) any Assumed
Liability and (iv) workers compensation claims existing on or arising after the
Closing Date (notwithstanding that, in any such case, the date of injury,
initial medical treatment or other occurrence may have occurred or existed
prior to Closing).
(c) Definition. As used herein, "Loss" or "Losses" shall
mean any damage, liability or loss (including reasonable attorneys' fees and
other costs and expenses incident to, and amounts paid by the indemnified party
in settlement of (in accordance with the terms and conditions hereof), any
claim, suit, action or proceeding) sustained, incurred or paid or required to
be paid by the indemnified party, less (i) any payments by insurance companies
received by the indemnified party less any premiums paid in the year in which
such claims are made with respect to such insurance and (ii) any tax savings
realized by the indemnified party, in each case directly resulting from such
claim, suit, action or proceeding.
<PAGE> 34
30
(d) Limits on Indemnification.
(i) Notwithstanding anything in this Section 9.8 to
the contrary, no party shall be entitled to indemnification pursuant to Section
9.8(a)(i) or 9.8(b)(i) unless and until the aggregate amount of Losses to which
the indemnity relates sustained by such party exceeds $200,000, and then only
for the amount by which such Losses exceed $200,000.
(ii) The representations and warranties contained in or
made pursuant to this Agreement shall expire on the first anniversary of the
Closing Date, provided that if written notice is properly given under this
Section 9.8 with respect to any alleged breach of a representation or warranty
to which such party is entitled to be indemnified hereunder prior to the
applicable expiration date, such representation or warranty shall continue
indefinitely until the applicable claim is finally resolved.
(iii) Seller's aggregate liability with respect to
matters described in Section 9.8(a)(i) shall be limited to the Base Purchase
Price. Buyer's aggregate liability with respect to matters described in
Section 9.8(b)(i) shall be limited to the Base Purchase Price.
(e) Notice of Claim. In the event that any party
hereunder (the "Indemnitee") shall receive any notice of claim or proceeding
against said party that, if successful, might result in a claim under this
Section 9.8 by the Indemnitee, or shall otherwise make a claim under this
Section 9.8, the Indemnitee shall give the party upon whom a claim could be
made under this Section 9.8 (the "Indemnitor") written notice of Loss together
with a statement setting forth in reasonable detail the facts giving rise to
such Loss. The Indemnitor shall have the right to contest and defend any
action brought against the Indemnitee based thereon, and shall have the right
to contest and defend any such action in the name of the Indemnitee at the
Indemnitor's own expense, all with counsel reasonably acceptable to the
Indemnitee; provided that the Indemnitor shall not settle or compromise any
action, claim or litigation without the prior written consent of the
Indemnitee, which consent shall not be unreasonably withheld. If the
Indemnitor shall fail to notify the Indemnitee of the assumption of the defense
of any such action within ten business days of the giving of such notice by the
Indemnitee, then the Indemnitee shall have the right to take any such action as
it deems reasonable and appropriate to defend, contest, settle or compromise
any such action or assessment and claim indemnification as provided herein;
provided that the Indemnitee shall not settle or compromise any action, claim
or litigation without the prior written consent of the Indemnitor,
<PAGE> 35
31
which consent shall not be unreasonably withheld. If the Indemnitor does
defend any action for which indemnification is claimed, the Indemnitee shall be
entitled to participate at its own expense in the defense of such action.
Failure of the Indemnitee to notify the Indemnitor of any claim for which it is
entitled to indemnity hereunder shall not impair, limit or affect the
indemnification provided herein except to the extent that the ability of the
Indemnitor to contest, defend or dispute such claim has been materially and
adversely affected, subject in all cases to subsection (d) of this Section 9.8.
9.9 Schedules and Exhibits. All Schedules and Exhibits
to this Agreement are integral parts of this Agreement as if fully set forth
herein. Any item disclosed hereunder shall be deemed disclosed for all
purposes hereof irrespective of the specific representation to which it is
explicitly referenced. The parties hereby agree that the Schedules hereto may
be updated and revised by Seller upon written notice to Buyer on or prior to
the Closing Date to the extent necessary to update the information contained
therein or otherwise reflect new information which Seller becomes aware of
after the date hereof.
9.10 Binding on Successors and Assigns. This Agreement
shall inure to the benefit of and bind the respective successors and permitted
assigns of the parties hereto. Nothing expressed or referred to in this
Agreement is intended or shall be construed to give any person or entity other
than the parties to this Agreement or their respective successors or permitted
assigns any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provision contained herein, it being the intention of the
parties to this Agreement that this Agreement shall be for the sole and
exclusive benefit of such parties or such successors and permitted assigns and
not for the benefit of any other person. This Agreement shall not be assigned
by any party hereto without the prior written consent of the other party
hereto.
9.11 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall comprise one and the same instrument.
9.12 Definition of "Best Efforts". For purposes of this
Agreement, the term "best efforts" shall mean diligently, promptly and in good
faith taking all actions which are reasonable, necessary and appropriate to
accomplish the objective requiring the use of best efforts, but shall not
include any obligation (i) to make any payment, incur any costs, commit
available resources, or forego the receipt of any payment, which in any case is
material in amount in light of the required
<PAGE> 36
32
objective, (ii) to initiate any lawsuit to achieve the required objective, or
(iii) to take any action which is unlawful.
9.13 Severability. Should any part of this Agreement for
any reason be declared invalid, such decision shall not affect the validity of
any remaining portion, which remaining portion shall remain in force and effect
as if this Agreement had been executed with the invalid portion thereof
eliminated, and it is hereby declared the intention of the parties hereto that
they would have executed the remaining portion of this Agreement without
including therein any such part, parts, or portion that may, for any reason,
hereafter be declared invalid.
9.14 Interpretation. No provisions of this Agreement or
any related document shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party's having or being deemed to have structured
or drafted such provision.
9.15 Non-Competition. (a) Until the second anniversary
of the Closing Date, Seller shall not operate or own (other than an investment
of not more than 5% of the stock or equity of any corporation the capital stock
of which is publicly traded) (i) a mental health hospital which is in
competition with the Hospital and located within Volusia County, Flagler
County, Putnam County, Lake County, Seminole County or Brevard County, in each
case in the State of Florida or (ii) a mental health clinic which is in
competition with the Hospital and located within Volusia County in the State of
Florida, except in any case with respect to any clinic currently or hereafter
owned or operated by any entity in which Seller or any affiliate thereof has a
direct or indirect ownership interest on the Closing Date.
(b) In the event of a breach or threatened breach by
Seller of paragraph (a) of this Section 9.15, Seller hereby consents and agrees
that Buyer shall be entitled to an injunction or similar equitable relief
restraining Seller from committing or continuing any such breach or threatened
breach or granting specific performance of any act required to be performed by
Seller under such paragraph without the necessity of showing any actual damage
or that money damages would not afford an adequate remedy and without the
necessity of posting any bond or other security.
9.16 Consents. To the extent that any consent relating to
an Assumed Contract and listed on Schedule 7 hereto is not obtained on or
before the Closing Date, and the Closing occurs, the parties will use their
respective best efforts to obtain such consent as soon as reasonably
practicable following the Closing
<PAGE> 37
33
Date. In the event that any or all of such consents on Schedule 7 are not
obtained or are rejected within 100 days after the Closing Date, then the
applicable contracts to which such consents relate shall be automatically
deleted from Schedule 2 hereto and no longer be deemed Assumed Contracts for
purposes of this Agreement; provided, however, that during such period
beginning on the Closing Date and ending 100 days after the Closing Date (or
ending on such earlier date with respect to any such contract the consent to
which is rejected), such contracts shall in all respects be deemed Assumed
Contracts for purposes of this Agreement and Buyer shall abide by the terms and
conditions of each such contract as if it were an Assumed Contract.
* * *
<PAGE> 38
34
IN WITNESS WHEREOF, the parties hereto have duly executed this
Asset Purchase Agreement as of the day and year first above written.
ATLANTIC TREATMENT CENTER, INC.
By______________________________
Name:
Title:
HALIFAX HOSPITAL MEDICAL CENTER
By______________________________
Name:
Title:
<PAGE> 1
EXHIBIT 10(a)
RAMSAY HEALTH CARE, INC.
1993 STOCK OPTION PLAN
1. Purposes of Plan. The purposes of this Plan, which
shall be known as the Ramsay Health Care, Inc. 1993 Stock Option Plan and is
hereinafter referred to as the "Plan", are (i) to provide incentives for key
employees, directors, consultants and other individuals providing services to
Ramsay Health Care, Inc., (the "Company") and its subsidiary or parent
corporations (within the respective meanings of Sections 424(f) and 424(e) of
the Internal Revenue Code of 1986, as amended (the "Code"), and referred to
herein as "Subsidiary" and "Parent", respectively) by encouraging their
ownership of the common stock, $.01 par value, of the Company (the "Stock") and
(ii) to aid the Company in retaining such key employees, directors, consultants
and other individuals upon whose efforts the Company's success and future
growth depends, and attracting other such employees, directors, consultants and
other individuals.
2. Administration. The Plan shall be administered by a
Committee (the "Committee") of the Board of Directors, as hereinafter provided.
For purposes of administration, the Committee, subject to the terms of the
Plan, shall have plenary authority to establish such rules and regulations, to
make such determinations and interpretations, and to take such other
administrative actions as it deems necessary or advisable. All determinations
and interpretations made by the Committee shall be final, conclusive and
binding on all persons, including Optionees and their legal representatives and
beneficiaries.
The Committee shall be appointed from time to time by the
Board of Directors and shall consist of not fewer than three of its members.
Unless otherwise determined by the Board of Directors, no member of the Board
of Directors who serves on the Committee shall be eligible to participate in
the Plan. The Board of Directors shall designate one of the members of the
Committee as its Chairman. The Committee shall hold its meetings at such times
and places as it may determine. A majority of its members shall constitute a
quorum. All determinations of the Committee shall be made by a majority of its
members. Any decision or determination reduced to writing and signed by all
members shall be as effective as if it had been made by a majority vote at a
meeting duly called and held. The Committee may appoint a secretary (who need
not be a member of the Committee). No member of the Committee shall be liable
for any act or omission with respect to his service on the Committee, if he
acts in good faith and in a manner he reasonably believes to be in or not
opposed to the best interests of the Company.
3. Stock Available for Options. There shall be
available for options under the Plan a total of 350,000 shares of Stock,
subject to any adjustments which may be made pursuant to Section 5(f) hereof.
Shares of Stock used for purposes of the Plan may be either authorized and
unissued shares, or previously issued shares held in the treasury of the
<PAGE> 2
2
Company, or both. Shares of Stock covered by options which have terminated or
expired prior to exercise shall be available for further options hereunder.
4. Eligibility. Options under the Plan may be granted
to key employees of the Company or any Subsidiary or Parent, including officers
or directors of the Company or any Subsidiary or Parent, and to directors,
consultants and other individuals providing services to the Company or any
Subsidiary or Parent. Options may be granted to eligible individuals whether
or not they hold or have held options previously granted under the Plan or
otherwise granted or assumed by the Company. In selecting individuals for
options, the Committee may take into consideration any factors it may deem
relevant, including its estimate of the individual's present and potential
contributions to the success of the Company and its Subsidiaries. Service as a
director, officer or consultant of or to the Company or any Parent or
Subsidiary shall be considered employment for purposes of the Plan (and the
period of such service shall be considered the period of employment for
purposes of Section 5(d) of this Plan); provided, however, that incentive stock
options may be granted under the Plan only to an individual who is an
"employee" (as such term is used in Section 422 of the Code) of the Company or
any Subsidiary or Parent.
5. Terms and Conditions of Options. The Committee
shall, in its discretion, prescribe the terms and conditions of the options to
be granted hereunder, which terms and conditions need not be the same in each
case, subject to the following:
(a) Option Price. The price at which each share of Stock
covered by an option granted under the Plan may be purchased shall be
determined by the Committee and shall not be less than the market value per
share of Stock on the date of grant of the option. The date of grant of an
option shall be the date specified by the Committee in its grant of the option.
(b) Option Period. The period for exercise of an option
shall in no event be more than ten years from the date of grant, or in the case
of any option intended to be an incentive stock option granted to an individual
owning, on the date of grant, stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any Parent or
Subsidiary, more than five years from the date of grant. Options may, in the
discretion of the Committee, be made exercisable in installments during the
option period. Any shares not purchased on any applicable installment date may
be purchased thereafter at any time before the expiration of the option period.
(c) Exercise of Options. In order to exercise an option,
the Optionee shall deliver to the Company written notice specifying the number
of shares of Stock to be purchased, together with cash or a certified or bank
cashier's check payable to the order of the Company in the full amount of the
purchase price therefor; provided that, for the purpose of assisting an
Optionee to exercise an option, the Company may make loans to the Optionee
<PAGE> 3
3
or guarantee loans made by third parties to the Optionee, on such terms and
conditions as the Board of Directors may authorize; and provided further that
such purchase price may be paid in shares of Stock owned by the Optionee having
a market value on the date of exercise equal to the aggregate purchase price,
or in a combination of cash and Stock. For purposes of this Section 5(c), the
market value per share of Stock shall be the last sale price regular way on the
date of reference, or, in case no sale takes place on such date, the average of
the closing high bid and low asked prices regular way, in either case on the
principal national securities exchange on which the Stock is listed or admitted
to trading, or if the Stock is not listed or admitted to trading on any
national securities exchange, the last sale price reported on the National
Market System of the National Association of Securities Dealers Automated
Quotation System ("NASDAQ") on such date, or the average of the closing high
bid and low asked prices of the Stock in the over-the-counter market reported
on NASDAQ on such date, whichever is applicable, or if there are no such prices
reported on NASDAQ on such date, as furnished to the Committee by any New York
Stock Exchange member selected from time to time by the Committee for such
purpose. If there is no bid or asked price reported on any such date, the
market value shall be determined by the Committee in accordance with the
regulations promulgated under Section 2031 of the Code, or by any other
appropriate method selected by the Committee. If the Optionee so requests,
shares of Stock purchased upon exercise of an option may be issued in the name
of the Optionee or another person. An Optionee shall have none of the rights
of a stockholder until the shares of Stock are issued to him.
(d) Effect of Termination of Employment. An option may
not be exercised after the Optionee has ceased to be in the employ of the
Company or any Subsidiary or Parent, except in the following circumstances:
(i) If the Optionee's employment is terminated by action
of his employer, or by reason of disability or retirement under any
retirement plan maintained by the Company or any Subsidiary or Parent,
the option may be exercised by the Optionee within three months after
such termination, but only as to any shares exercisable on the date
the Optionee's employment so terminates;
(ii) In the event of the death of the Optionee during the
three month period after termination of employment covered by (i)
above, the person or persons to whom his rights are transferred by
will or the laws of descent and distribution shall have a period of
one year from the date of his death to exercise any options which were
exercisable by the Optionee at the time of his death;
(iii) In the event of the death of the Optionee while
employed, the option shall thereupon become exercisable in full, and
the person or persons to whom the Optionee's rights are transferred by
will or the laws of descent and distribution shall have a period of
one year from the date of the Optionee's death to exercise such
<PAGE> 4
4
option. The provisions of the foregoing sentence shall apply to any
outstanding options which are incentive stock options to the extent
permitted by Section 422(d) of the Code and such outstanding options
in excess thereof shall, immediately upon the occurrence of the event
described in the preceding sentence, be treated for all purposes of
the Plan as nonstatutory stock options and shall be immediately
exercisable as such as provided in the foregoing sentence.
In no event shall any option be exercisable more than ten
years from the date of grant thereof. Nothing in the Plan or in any option
granted pursuant to the Plan (in the absence of an express provision to the
contrary) shall confer on any individual any right to continue in the employ of
the Company or any Subsidiary or Parent or interfere in any way with the right
of the Company to terminate his employment at any time.
(e) Nontransferability of Options. During the lifetime
of an Optionee, options held by such Optionee shall be exercisable only by him.
No option shall be transferable other than by will or the laws of descent and
distribution.
(f) Adjustments for Change in Stock Subject to Plan. In
the event of a reorganization, recapitalization, stock split, stock dividend,
combination of shares, merger, consolidation, rights offering, or any other
change in the corporate structure or shares of the Company, (i) except as
provided in (ii) below, the Committee shall make such adjustments, if any, as
it deems appropriate in the number and kind of shares subject to the Plan, in
the number and kind of shares covered by outstanding options, or in the option
price per share, or both and (ii) the Board of Directors of the Company shall
make such adjustments, if any, as it deems appropriate in the maximum number of
shares which may be subject to options granted to all directors of the Company
and in the maximum number of shares which may be subject to options granted to
each director, in each case pursuant to Section 5(j), in the number and kind of
shares covered by outstanding options, or in the option price per share, or
both, with respect to options held by directors of the Company.
(g) Acceleration of Exercisability of Options Upon
Occurrence of Certain Events. In connection with any merger or consolidation
in which the Company is not the surviving corporation and which results in the
holders of the outstanding voting securities of the Company (determined
immediately prior to such merger or consolidation) owning less than a majority
of the outstanding voting securities of the surviving corporation (determined
immediately following such merger or consolidation), or any sale or transfer by
the Company of all or substantially all its assets or any tender offer or
exchange offer for or the acquisition, directly or indirectly, by any person or
group of all or a majority of the then outstanding voting securities of the
Company, all outstanding options under the Plan shall become exercisable in
full, notwithstanding any other provision of the Plan or of any outstanding
options granted thereunder, on and after (i) the fifteenth day prior to the
effective date of such merger, consolidation, sale, transfer or acquisition or
(ii) the date of
<PAGE> 5
5
commencement of such tender offer or exchange offer, as the case may be. The
provisions of the foregoing sentence shall apply to any outstanding options
which are incentive stock options to the extent permitted by Section 422(d) of
the Code and such outstanding options in excess thereof shall, immediately upon
the occurrence of the event described in clause (i) or (ii) of the foregoing
sentence, be treated for all purposes of the plan as nonstatutory stock options
and shall be immediately exercisable as such as provided in the foregoing
sentence. Notwithstanding the foregoing, in no event shall any option be
exercisable after the date of termination of the exercise period of such option
specified in Sections 5(b), 5(d) and 5(j)(2).
(h) Registration, Listing and Qualification of Shares of
Stock. Each option shall be subject to the requirement that if at any time the
Board of Directors shall determine that the registration, listing or
qualification of the shares of Stock covered thereby upon any securities
exchange or under any federal or state law, or the consent or approval of any
governmental regulatory body is necessary or desirable as a condition of, or in
connection with, the granting of such option or the purchase of shares of Stock
thereunder, no such option may be exercised unless and until such registration,
listing, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Board of Directors. The
Company may require that any person exercising an option shall make such
representations and agreements and furnish such information as it deems
appropriate to assure compliance with the foregoing or any other applicable
legal requirement.
(i) Other Terms and Conditions. The Committee may impose
such other terms and conditions, not inconsistent with the terms hereof, on the
grant or exercise of options, as it deems advisable.
(j) Terms and Conditions of Options Granted to Directors.
Notwithstanding any provision contained in the Plan to the contrary, during any
period when any member of the Committee shall not be a "disinterested person"
as defined in Rule 16b-3 under the Securities Exchange Act of 1934, as such
Rule was in effect at April 30, 1991, then, the terms and conditions of options
granted under the Plan to any director of the Company during such period shall
be as follows:
(1) The price at which each share of Stock subject to an
option may be purchased shall, subject to any adjustments which may be made
pursuant to Section 5(f), in no event be less than the market value per share
of Stock on the date of grant, and provided further that in the event the
option is intended to be an incentive stock option pursuant to Section 6 and
the Optionee owns on the date of grant securities possessing more than 10% of
the total combined voting power of all classes of securities of the Company or
of any Parent or Subsidiary, the price per share shall not be less than 110% of
the market value per share of Stock on the date of grant.
<PAGE> 6
6
(2) The option may be exercised to purchase shares of
Stock covered by the option not sooner than six months following the date of
grant. The option shall terminate and no shares of Stock may be purchased
thereunder more than ten years after the date of grant, provided that if the
option is intended to be an incentive stock option pursuant to Section 6 and
the Optionee owns on the date of grant stock possessing more than 10% of the
total combined voting power of all classes of securities of the Company or of
any Parent or Subsidiary, the option shall terminate and no shares of Stock may
be purchased thereunder more than five years after the date of grant.
(3) The maximum number of shares of Stock which may be
subject to options granted to all directors pursuant to this Section 5(j) shall
be 350,000 shares in the aggregate and the maximum number of shares of Stock
which may be subject to options granted to any director (including any options
granted under the Plan to a director in his position as an officer or employee
of the Company) shall be 200,000 shares.
(k) Reload Options. If upon the exercise of an option
granted under the Plan (the "Original Option") the Optionee pays the purchase
price for the Original Option pursuant to Section 5(c) in whole or in part in
shares of Stock owned by the Optionee for at least six months, the Company
shall grant to the Optionee on the date of such exercise an additional option
under the Plan (the "Reload Option") to purchase that number of shares of Stock
equal to the number of shares of Stock so held for at least six months
transferred to the Company in payment of the purchase price in the exercise of
the Original Option. The price at which each share of Stock covered by the
Reload Option may be purchased shall be the market value per share of Stock (as
specified in Section 5(c)) on the date of exercise of the Original Option. The
Reload Option shall not be exercisable until one year after the date the Reload
Option is granted or after the expiration date of the Original Option. Upon
the payment of the purchase price for a Reload Option granted hereunder in
whole or in part in shares of Stock held for more than six months pursuant to
Section 5(c), the Optionee is entitled to receive a further Reload Option in
accordance with this Section 5(k). Shares of Stock covered by a Reload Option
shall not reduce the number of shares of Stock available under the Plan
pursuant to Section 3 and, in the case of Reload Options granted to a director,
the number of shares of Stock available to directors, individually and in the
aggregate, under the Plan pursuant to Section 5(j)(3).
6. Additional Provisions Applicable to Incentive Stock
Options. The Committee may, in its discretion, grant options under the Plan to
eligible employees which constitute "incentive stock options" within the
meaning of Section 422 of the Code, provided, however, that (a) the aggregate
market value of the Stock with respect to which incentive stock options are
exercisable for the first time by the Optionee during any calendar year shall
not exceed the limitation set forth in Section 422(d) of the Code and (b) if
the Optionee owns on the date of grant securities possessing more than 10% of
the total combined voting power
<PAGE> 7
7
of all classes of securities of the Company or of any Parent or Subsidiary, the
price per share shall not be less than 110% of the market value per share on
the date of grant.
7. Amendment and Termination. Unless the Plan shall
theretofore have been terminated as hereinafter provided, the Plan shall
terminate on, and no option shall be granted hereunder after, November 1, 2003;
provided, however, that the Board of Directors may at any time prior to that
date terminate the Plan. The Board of Directors may at any time amend the
Plan; provided, however, that, except as contemplated in Section 5(f), the
Board of Directors shall not, without approval by a majority of the votes cast
thereon by the stockholders of the Company at a meeting of stockholders at
which a proposal to amend the Plan is voted upon, (i) increase the maximum
number of shares of Stock for which options may be granted under the Plan, (ii)
change the minimum option prices, (iii) extend the period during which options
may be granted or exercised, or (iv) except as otherwise provided in the Plan,
amend the requirements as to the class of employees eligible to receive
options. No termination or amendment of the Plan may, without the consent of
an Optionee, adversely affect the rights of such Optionee under any option held
by such Optionee.
8. Effectiveness of Plan. The Plan will not be made
effective unless approved at a meeting of stockholders of the Company duly
called and held for such purpose by a majority of the votes cast thereon by the
stockholders of the Company, and no option granted hereunder shall be
exercisable prior to such approval.
9. Withholding. It shall be a condition to the
obligation of the Company to issue shares of Stock upon exercise of an option,
that the Optionee (or any beneficiary or person entitled to act under Section
5(d) hereof) pay to the Company, upon its demand, such amount as may be
requested by the Company for the purpose of satisfying any liability to
withhold federal, state or local income or other taxes. If the amount
requested is not paid, the Company may refuse to issue such shares of Stock.
10. Other Actions. Nothing contained in the Plan shall
be construed to limit the authority of the Company to exercise its corporate
rights and powers, including but not by way of limitation, the right of the
Company to grant or assume options for proper corporate purposes other than
under the Plan with respect to any employee or other person, firm, corporation
or association.
<PAGE> 1
EXHIBIT 10(b)
P R O S P E C T U S
100,000 Shares
RAMSAY HEALTH CARE, INC.
Common Stock
($.01 Par Value)
____________
RAMSAY HEALTH CARE, INC.
1993 EMPLOYEE STOCK PURCHASE PLAN
____________
The shares of Common Stock to which this Prospectus relates
are to be offered for sale to eligible employees of Ramsay Health Care, Inc.
(the "Company") and its subsidiary corporations pursuant to the Ramsay Health
Care, Inc. 1993 Employee Stock Purchase Plan, as described herein.
_____________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE 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 December __, 1993.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information . . . . . . . . . . . . . . . . 2
General Information . . . . . . . . . . . . . . . . . 4
Federal Income Tax Consequences . . . . . . . . . . . 5
Description of the Plan . . . . . . . . . . . . . . . 6
</TABLE>
____________________
No person is authorized to give any information or to make any
representation other than as contained in this Prospectus in connection with
the offer made hereby. The delivery of this Prospectus at any time does not
imply that the information herein is correct as of any time subsequent to its
date. This Prospectus does not constitute an offer to sell, or a solicitation
of an offer to buy, any securities other than the specific registered
securities to which it relates or an offer or solicitation with respect to
those securities in any jurisdiction to any person to whom it is unlawful to
make such offer or solicitation in such jurisdiction.
____________________
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934 (the "Exchange Act") and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information may be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices
at Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois
60661; and at 75 Park Place, New York, New York 10007. Copies of such material
may be obtained from the Public Reference Section of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates.
The following documents which have been filed by the Company
with the Commission pursuant to the Exchange Act or the Securities Act of 1933
(the "Securities Act") are incorporated by reference in this Prospectus:
(a) The Company's Annual Report on Form 10-K for the year ended
June 30, 1993.
<PAGE> 3
3
(b) The Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1993.
(c) The description of the Company's Common Stock contained in
___________ (no. 34- ), filed on _____________.
In addition, all documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to the
filing of a post-effective amendment which indicates that all securities
offered have been sold or which deregisters all securities then remaining
unsold, are hereby incorporated herein by reference to be a part hereof from
the date of filing of such documents.
The Company will promptly furnish, without charge, a copy of
any of the above documents, as well as the Company's most recent Annual Report
to Stockholders, on the written or oral request of any employee receiving this
Prospectus. Such requests should be addressed to the Secretary, Ramsay Health
Care, Inc., One Poydras Plaza, 639 Loyola Avenue, Suite 1400, New Orleans,
Louisiana 70113 (Telephone: 504-525- 2505).
This Prospectus omits certain information contained in the
Registration Statement concerning the shares of Common Stock offered hereby
which is on file with the Commission pursuant to the rules and regulations of
the Commission. The information so omitted may be obtained from the principal
offices of the Commission in Washington, D.C. upon payment of the fees
prescribed by the Commission, or examined there without charge.
<PAGE> 4
4
RAMSAY HEALTH CARE, INC.
1993 EMPLOYEE STOCK PURCHASE PLAN
GENERAL INFORMATION
The Ramsay Health Care, Inc. 1993 Employee Stock Purchase Plan
(the "Plan") was adopted by the Board of Directors of the Company in September
1993 and approved by the stockholders of the Company in November 1993.
Pursuant to the Plan, the Company is offering shares of its Common Stock for
purchase by eligible employees of the Company and its "subsidiaries," as such
term is defined in Section 425(f) of the Internal Revenue Code of 1986, as
amended (the "Code"). There are 100,000 shares (subject to adjustment as
described under the caption "Description of the Plan-Effect of Changes in
Common Stock") of Common Stock available for purchase by employees in the
manner and on the terms provided in the Plan. Shares of Common Stock to be
purchased under the Plan may be presently authorized but unissued shares,
previously issued shares reacquired by the Company or any combination thereof.
The purpose of the Plan is to enable and encourage employees
of the Company and its subsidiaries to acquire the Company's stock through
payroll deductions to enable them to share in the economic prosperity of the
Company.
No restrictions are imposed under the Plan on resales of
shares of Common Stock purchased pursuant to the Plan. However, resales by
officers and directors of the Company will be subject to the "short-swing"
profits provisions of Section 16(b) of the Exchange Act and resales by
"affiliates" of the Company, as defined in Rule 405 under the Securities Act,
will be subject to the volume and reporting requirements of Rule 144 under the
Securities Act unless the Company registers their shares under the Securities
Act for resale pursuant to a separate prospectus.
The Plan is not subject to any provisions of the Employee
Retirement Income Security Act of 1974 and is not qualified under Section
401(a) of the Code.
<PAGE> 5
5
The executive offices of the Company are located at One
Poydras Plaza, 639 Loyola Avenue, Suite 1400, New Orleans, Louisiana 70113
(Telephone: 504-525-2505).
FEDERAL INCOME TAX CONSEQUENCES
The Plan is intended to qualify as an "employee stock purchase
plan" within the meaning of Section 423 of the Code. Under such provisions, an
employee who elects to participate in an offering under the Plan will not
recognize income at the Offering Date (as defined below) or the Exercise Date
(as defined below), and except as described below, the Company will not be
entitled to any deduction from income.
If an employee disposes of shares transferred to him under the
Plan after two years from the date of the offering of such shares and after one
year from the date of transfer of such shares to him, or if he dies while
owning such shares, the employee will be required to include in income as
compensation for the year in which such disposition or death occurs an amount
equal to the lesser of (i) the excess of the Fair Market Value (as defined
below) of such shares at the time of disposition or death over the purchase
price, or (ii) 15% of the Fair Market Value of such shares on the Offering Date
(as defined below) of the Offering Period (as defined below) in which such
shares were purchased by him. The employee's basis for such shares in his
hands at the time of disposition will be increased by an amount equal to the
amount so includible in his income as compensation, and any gain or loss
computed with reference to such adjusted basis which is recognized at the time
of the disposition will be long-term capital gain or loss.
If an employee disposes of such shares within the aforesaid
two-year or one-year periods, the employee will be required to include in
income as compensation for the year in which such disposition occurs an amount
equal to the excess of the Fair Market Value of such shares on the Exercise
Date over the purchase price. The employee's basis for such shares in his
hands at the time of disposition will be increased by an amount equal to the
amount includible in his income as compensation, and any gain or loss computed
with reference to such adjusted basis which is recognized at the time of
disposition will be capital gain or loss, either short-term or long-term
depending on his holding period for such shares. In the event of a disposition
within such two-year or one-year periods, the Company will be entitled to a
<PAGE> 6
6
deduction from income equal to the amount the employee is required to include
in income as compensation as a result of such disposition.
DESCRIPTION OF THE PLAN
Offering to Eligible Employees
Under the Plan, an initial offering of shares of Common Stock
is to be made during the period (the "Initial Offering Period") determined by
the Compensation and Conflict of Interest Committee (the "Committee") of the
Board of Directors of the Company to be the period beginning January 1, 1994
and ending on June 30, 1994. Separate offerings are to be made thereafter on
January 2 and July 1 of each year that the Plan is in effect (each such date,
together with the date of commencement of the Initial Offering Period, being
herein referred to as an "Offering Date") to employees of the Company or any
subsidiary who have been employed for six months or more and whose customary
employment is more than 20 hours per week and/or more than five months in any
calendar year. Persons who own stock possessing 5% or more of the outstanding
voting power or value of all classes of stock of the Company are not eligible
to participate.
As of December 1, 1993 there were approximately ___ employees
eligible to participate in the Plan.
Method of Participation
In order to purchase shares under an offering pursuant to the
Plan, an eligible employee must notify the Company in writing of his intention
to participate on the form provided for this purpose (the "Stock Purchase
Agreement") which must be filed with the Secretary of the Committee prior to
the Offering Date of the offering in question (December 28, 1993 with respect
to the Initial Offering Period). The Stock Purchase Agreement evidences the
intention of the participating employee (the "Participant") to participate in
each subsequent offering until such time as the Participant withdraws from the
Plan. Following any such withdrawal, a former Participant must execute a new
Stock Purchase Agreement in order to participate in subsequent offerings.
<PAGE> 7
7
Payroll Deductions
Under the Stock Purchase Agreement, a Participant authorizes
deductions from each payment of his compensation during the period (the
"Offering Period") commencing on an Offering Date and ending on the December 31
or June 30 (the "Exercise Date") next succeeding the Offering Date. As used
herein, "compensation" means the amount received by an employee from the
Company or a subsidiary as salary, wages or other direct remuneration for
services rendered but excluding bonus pay, overtime pay, sick pay and
contributions by the Company or any subsidiary to any employee benefit plan of
the Company or any subsidiary. A Participant may authorize the deduction of
any full dollar amount from each such payment; provided, however, that the
deduction must be at least $5 per week or $20 per month, as appropriate, and
not more than 5% of each payment of compensation during the Offering Period.
The maximum deduction from a Participant's compensation during any twelve month
period is $5,000. The amount of such deductions may not be changed during an
Offering Period. A Participant may change the amount of his deductions for a
subsequent offering by appropriate notice filed with the Secretary of the
Committee prior to the Offering Date of such offering.
The Committee is authorized to adopt alternative methods
pursuant to which Participants may make payment for shares of Common Stock
purchased under the Plan in situations in which payroll deductions are not
permitted by reason of local law. For the purposes of the Plan, payments made
under such alternative methods will be regarded as having been made through
payroll deductions.
Stock Purchase Accounts
Amounts deducted from a Participant's compensation will be
credited to a Stock Purchase Account which will be established and maintained
in the name of each Participant. No interest will accrue or be payable to any
Participant with respect to the amounts credited to his Stock Purchase Account.
Purchase Price
The purchase price of the shares of Common Stock sold to
Participants pursuant to an offering under the Plan will be 85% of the Fair
Market Value of the shares of Common Stock on the Offering Date or the Exercise
Date, whichever is less. For purposes of the Plan, the Fair Market Value
<PAGE> 8
8
per share of Common Stock shall mean the last sale price regular way on the
date of reference, or, in case no sale takes place on such day, the average of
the closing bid and asked prices regular way, in either case on the principal
national securities exchange on which the Common Stock is listed or admitted to
trading, or if the Common Stock is not listed or admitted to trading on any
national securities exchange, the last sale price reported on the National
Market System of the National Association of Securities Dealers Automated
Quotation System ("NASDAQ") on such date, or the last sale price in the
over-the-counter market reported on NASDAQ on such date, whichever is
applicable, or if there are no such prices reported on NASDAQ on such date, as
furnished to the Committee by any New York Stock Exchange member selected from
time to time by the Committee for such purpose. If the Common Stock is not
traded in the over-the-counter market, the Fair Market Value shall be
determined by the Committee in accordance with the regulations promulgated
under Section 2031 of the Code, or by any other appropriate method selected by
the Committee. As of the date of this Prospectus, the Common Stock is traded
in the over-the-counter market, and the sale prices are reported on the NASDAQ
National Market System.
Purchase of Shares
To the extent that there is credited to the Stock Purchase
Account of a Participant as of an Exercise Date an amount at least equal to the
purchase price of one whole share of Common Stock for the offering which
expires on such Exercise Date, the Company will sell to such Participant the
largest number of whole shares of Common Stock, not to exceed 500 shares
(subject to adjustment as described under the caption "Description of the
Plan-Effect of Changes in Common Stock"), which can be purchased with the
amount then credited to his Stock Purchase Account. However, if at any time
when any Participant is entitled to complete the purchase of any shares
pursuant to the Plan, taking into account such Participant's rights, if any, to
purchase stock under all other stock purchase plans of the Company or any
subsidiary, the result would be that during the then current calendar year such
Participant would have first become entitled to purchase under the Plan and all
such other plans a number of shares of stock which would exceed the maximum
number of shares permitted by the provisions of Section 423(b)(8) of the Code,
then the number of shares which such Participant shall be entitled to purchase
pursuant to the Plan shall be reduced by the number which is one more than the
number of shares which represents the excess.
<PAGE> 9
9
Expiration of Offering
The amount credited to the Stock Purchase Account of each
Participant in an offering will be charged with the aggregate purchase price of
shares of Common Stock purchased by the Participant on an Exercise Date. The
remaining balance of his Stock Purchase Account will be refunded to the
Participant if he files appropriate notice with the Secretary of the Committee
prior to the Exercise Date. If a Participant does not file such notice and he
has not withdrawn from the Plan, any remaining balance in his Stock Purchase
Account will be carried forward for the next offering.
Statements to Participants
As soon as is practicable following each Exercise Date, the
Company will issue to each Participant in the offering which expired on such
Exercise Date a statement of his Stock Purchase Account for such offering. The
statement will include the number of shares purchased during the offering and
the remaining balance in his Stock Purchase Account.
Stock Certificates
The shares of Common Stock purchased by a Participant on an
Exercise Date will be issued as of such date. Prior to that time the
Participant will have none of the rights or privileges of a stockholder of the
Company with respect to such shares. The Company will issue and deliver a
certificate for the number of shares purchased by a Participant on an Exercise
Date as soon as practicable after such date. The certificate will be
registered either in the Participant's name or jointly in the names of the
Participant and his spouse, as he shall designate in his Stock Purchase
Agreement. The Participant may change such designation at any time by filing
appropriate notice thereof.
Rights to Purchase Shares Not Transferable
A Participant's rights to purchase shares of Common Stock
under the Plan are not transferable. If a Participant attempts to transfer his
rights to purchase shares under the Plan, he will be deemed to have requested
withdrawal from the Plan. If a Participant dies, the entire credit balance in
his Stock Purchase Account shall be paid over to his estate.
<PAGE> 10
10
Voluntary Withdrawal from the Plan
A Participant may withdraw from the Plan at any time by filing
appropriate notice with the Secretary of the Committee, and the effective date
of such a withdrawal will be the date of receipt of such notice by the
Secretary. Payroll deductions from a withdrawing Participant's compensation
will be discontinued and the amount credited to the Participant's Stock
Purchase Account will be refunded to him as soon as practicable after the
effective date of withdrawal.
Termination of Employment and Other
Involuntary Withdrawals from the Plan
A Participant will be deemed to have withdrawn from the Plan
effective when his customary employment becomes 20 hours or less per week
and/or not more than five months in any calendar year. In such event, the
entire amount credited to his Stock Purchase Account, as of the effective date
of any such occurrence, will be used to purchase shares of Common Stock on the
next succeeding Exercise Date and any remaining balance credited to his Stock
Purchase Account will be refunded. If a Participant otherwise ceases to meet
the requirements of an eligible employee as set forth under the caption
"Offering to Eligible Employees," the entire credit balance in his Stock
Purchase Account will be refunded. If a Participant dies, the entire credit
balance in his Stock Purchase Account will be paid over to his estate.
Administration of the Plan
Subject to the general control and superseding action of the
Board of Directors of the Company, the Committee, in its capacity as such, will
have full power to administer the Plan in accordance with its terms. Members
of the Committee are appointed by the Board of Directors, and are removable by
the Board at any time. The present members of the Committee are Aaron Beam,
Jr., Peter J. Evans and Thomas M. Haythe, all of whose addresses for purposes
of the Plan are c/o Ramsay Health Care, Inc., One Poydras Plaza, 639 Loyola
Avenue, Suite 1400, New Orleans, Louisiana 70113. The Committee has adopted
rules for the administration of the Plan, and the Committee's interpretation
and construction of the Plan and such rules, subject as aforesaid, will be
final and conclusive.
<PAGE> 11
11
Effect of Changes in Common Stock
If at any time the Company subdivides or consolidates its
issued shares of Common Stock, pays a stock dividend, or otherwise increases or
decreases such shares without receipt of consideration, there will be an
appropriate adjustment of the aggregate number of shares available for purchase
under the Plan, the maximum number of shares which a Participant may purchase
under an offering and the calculation of the purchase price per share for an
offering.
Amendment of the Plan
The Board of Directors of the Company may amend the Plan in
any respect except that, without the approval of the Company's stockholders, no
amendment may (i) decrease the purchase price for shares set forth under the
caption "Description of the Plan-Purchase Price," (ii) make the Plan available
to any person who would not be an eligible employee as set forth under the
caption "Description of the Plan- Offering to Eligible Employees," or (iii)
change the number of shares of Common Stock available for purchase under the
Plan, except as set forth under the caption "Description of the Plan-Effect of
Changes in Common Stock."
Procedure if Insufficient Shares Available
In the event that on any Exercise Date the aggregate funds
held in the Stock Purchase Accounts of all Participants would purchase more
than the number of shares then remaining available for purchase under the Plan,
the Committee will proportionately reduce the number of shares which would
otherwise be purchased by each Participant on such Exercise Date in order to
eliminate such excess, the Plan will automatically terminate immediately after
such Exercise Date and any remaining balance credited to the Stock Purchase
Account of each Participant will be refunded to him as soon as practicable
following such termination.
Expiration or Termination of Plan
The Plan will expire on December 31, 2003, unless sooner
terminated by the Board of Directors or in the manner set forth under the
caption "Description of the Plan-Procedure if Insufficient Shares Available."
In addition, the Plan will terminate upon the liquidation or dissolution of the
Company, or upon a merger or consolidation in which the Company is not the
surviving or the resulting corporation. Upon termination or expiration of the
Plan,
<PAGE> 12
12
the amount then credited to the Stock Purchase Account of each Participant will
be refunded to him as soon as practicable thereafter.
<PAGE> 1
Exhibit 11
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER SHARE
(unaudited)
<TABLE>
<CAPTION>
QUARTER ENDED DECEMBER 31
-------------------------------
1993 1992
------------ ------------
(RESTATED)
----------
<S> <C> <C>
PRIMARY
Weighted average common shares outstanding . . . . . . . . 8,224,328 7,861,611
Class A convertible preferred stock . . . . . . . . . . . 22,910 22,910
Class B convertible preferred stock, Series C . . . . . . 1,424,860 ---
------------ ------------
TOTAL COMMON AND DILUTIVE
COMMON EQUIVALENT SHARES . . . . . . . . . . . . . . 9,672,098 7,884,521
============ ============
Net Income Available to Common Shareholders . . . . . $ 475,000 $ 467,000
============ ============
NET INCOME PER SHARE . . . . . . . . . . . . . . . . $0.05 $0.06
============ ============
FULLY DILUTED
Weighted average common shares outstanding . . . . . . . . 8,224,328 7,861,611
Class A convertible preferred stock . . . . . . . . . . . 22,910 22,910
Class B convertible preferred stock, Series C . . . . . . 1,424,860 ---
------------ ------------
TOTAL COMMON AND DILUTIVE
COMMON EQUIVALENT SHARES . . . . . . . . . . . . . . 9,672,098 7,884,521
============ ============
Net Income Available to Common Shareholders . . . . . $ 475,000 $ 467,000
============ ============
NET INCOME PER SHARE . . . . . . . . . . . . . . . . $0.05 $0.06
============ ============
SIX MONTHS ENDED DECEMBER 31
-------------------------------
1993 1992
------------ ------------
(RESTATED)
PRIMARY
Weighted average common shares outstanding . . . . . . . . 8,211,155 7,866,452
Class A convertible preferred stock . . . . . . . . . . . 22,910 22,910
Class B convertible preferred stock, Series C . . . . . . 1,424,860 ---
------------ ------------
TOTAL COMMON AND DILUTIVE
COMMON EQUIVALENT SHARES . . . . . . . . . . . . . . 9,658,925 7,889,362
============ ============
Net Income Available to Common Shareholders . . . . . $ 1,083,000 $ 3,069,000
============ ============
NET INCOME PER SHARE . . . . . . . . . . . . . . . . $0.11 $0.39
============ ============
FULLY DILUTED
Weighted average common shares outstanding . . . . . . . . 8,266,584 7,866,452
Class A convertible preferred stock . . . . . . . . . . . 22,910 22,910
Class B convertible preferred stock, Series C . . . . . . 1,424,860 ---
------------ ------------
TOTAL COMMON AND DILUTIVE
COMMON EQUIVALENT SHARES . . . . . . . . . . . . . . 9,714,354 7,889,362
============ ============
Net Income Available to Common Shareholders . . . . . $ 1,083,000 $ 3,069,000
============ ============
NET INCOME PER SHARE . . . . . . . . . . . . . . . . . . . . $0.11 $0.39
============ ============
</TABLE>
