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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED JUNE 30, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE TRANSITION PERIOD FROM ____________TO___________
COMMISSION FILE NUMBER 0-13849
RAMSAY HEALTH CARE, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 63-0857352
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
ONE POYDRAS PLAZA
639 LOYOLA AVENUE, SUITE 1700 70113
NEW ORLEANS, LOUISIANA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (504) 525-2505
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
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TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
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NONE NONE
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SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, $0.01 PAR VALUE
(TITLE OF CLASS)
Indicate by a 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, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. / /
The number of shares of the registrant's Common Stock outstanding as of
September 22, 1994 was 7,719,749. The aggregate market value of Common Stock
held by non-affiliates on such date was $46,496,160.
DOCUMENTS INCORPORATED BY REFERENCE
Certain sections of the registrant's definitive Proxy Statement to be
filed for the 1994 Annual Meeting of Stockholders are incorporated by reference
into Part III.
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PART I
ITEM 1. BUSINESS.
GENERAL
Ramsay Health Care, Inc. ("RHCI" or the "Company") is one of the leading
providers of behavioral health services in the country. RHCI has two business
units: a facilities division offering patient care through integrated networks
of mental health delivery systems in eleven states principally in the southeast
and southwest built around 15 inpatient hospitals with 1,264 beds, day
hospitals, subacute units, outpatient centers, and residential treatment
centers; and a managed care division providing utilization control and cost
management services. The Company also operates mental health programs for
public sector and private owners under management contracts.
FACILITIES DIVISION
The following table provides information concerning the 15 inpatient
facilities owned and/or operated by the Company at June 30, 1994.
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DATE OPENED LICENSED
HOSPITAL (3) OR ACQUIRED BEDS
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Havenwyck Hospital
Auburn Hills, MI . . . . . . . . . . . . . November 1983 120
Brynn Marr Hospital
Jacksonville, NC . . . . . . . . . . . . . December 1983 76
Hill Crest Hospital
Birmingham, AL . . . . . . . . . . . . . . January 1984 130
Heartland Hospital
Nevada, MO . . . . . . . . . . . . . . . . April 1984 128
Greenbrier Hospital
Covington, LA . . . . . . . . . . . . . . . October 1984 61
Coastal Carolina Hospital
Conway, SC . . . . . . . . . . . . . . . . November 1984 98
Bayou Oaks Hospital
Houma, LA(1) . . . . . . . . . . . . . . . November 1985 98
The Bethany Pavilion
Bethany, OK(2) . . . . . . . . . . . . . . December 1985 43
Meadowlake Hospital
Enid, OK . . . . . . . . . . . . . . . . . February 1986 50
Benchmark Regional Hospital
Woods Cross, UT . . . . . . . . . . . . . . August 1986 56
Desert Vista Hospital
Mesa, AZ . . . . . . . . . . . . . . . . . February 1987 102
Chestnut Ridge Hospital
Morgantown, WV . . . . . . . . . . . . . . November 1987 70
The Haven Hospital
DeSoto, TX . . . . . . . . . . . . . . . . April 1990 102
Mission Vista Hospital
San Antonio, TX . . . . . . . . . . . . . . November 1991 66
Three Rivers Hospital
Covington, LA (2) . . . . . . . . . . . . . January 1993 64
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Total 1,264
=====
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(1) A leased hospital facility. See "Item 2. Properties."
(2) A joint venture or partnership. See "Ownership Arrangements and
Operating Agreements."
(3) Excludes Harbor Oaks Hospital, a 98 bed facility in Fort Walton
Beach, FL, that is owned by the Company but is being leased to another
health care provider.
See "Acquisitions and Sales" for information concerning certain acquisitions
and sales which occurred during the last three fiscal years.
The Company's facilities are dedicated to the treatment of psychiatric and
chemical dependency disorders. Substance abuse treatment is provided to
patients who have a primary diagnosis of alcohol or substance abuse; however,
many of these patients have a secondary diagnosis of, and are treated for,
mental illness. Each of the Company's facilities also conducts outpatient
programs at the facilities and in clinics in the surrounding area. The
Company's current strategy is to expand its outpatient network in its continued
effort to provide intermediate mental health care for patients who do not
require inpatient care.
The initial goal of acute psychiatric hospitalization treatment is to
evaluate and stabilize the patient so that effective treatment can be continued
either on an inpatient, partial hospitalization or an outpatient basis. Under
the direction of a psychiatrist, the patient's condition is assessed, a
diagnosis is made and prescribed treatment follows, utilizing, where
appropriate, medication, individual and group therapy, adjunctive therapy, and
family therapy.
The most common disorders for which adult patients are admitted to the
Company's hospitals are mood and affective disorders (such as depression),
schizophrenia, situational crises and alcohol and drug dependency. For children
and adolescents, common disorders include those seen in adult patients, as well
as attention deficit disorders and conduct disorders. Many of these disorders
are often associated with child abuse. The Company has evaluation and treatment
programs designed specifically for adults, adolescents or children. Specialized
programs focusing upon neuropsychiatric disorders and pain and sleep disorders
have also been developed. All units and programs emphasize family involvement
in the evaluation and treatment process.
Each psychiatric hospital has a multidisciplinary team of health care
professionals, including psychiatrists, psychologists, social workers, nurses,
mental health and substance abuse counselors and therapists. Generally,
physician members of the professional staffs maintain a private practice. In
certain situations the Company guarantees minimum incomes, usually for one
year, to psychiatrists willing to relocate to certain facilities. All of the
Company's hospitals also have a medical director who acts as liaison between
the professional staff and the hospital administration staff. In addition, each
clinical program has a medical unit administrator.
Each of the Company's hospitals has a consulting board, comprised of
hospital executives, consulting physicians and other members of the local
community, which is responsible for standards of patient care. A hospital CEO
supervises and is responsible for the day-to-day operations of each hospital.
The Company emphasizes frequent communication, the setting of operational and
financial goals and the monitoring of actual results against targeted goals. To
this end, the Company collects and analyzes information on key indicators such
as admissions by treatment program and payor category, daily census, full-time
equivalent employees per patient day and average length of stay. On the basis
of this information, the administrative staff of each hospital together with
the corporate staff of the Company adopts new programs and modifies existing
programs to improve performance.
All of the Company's hospitals have been accredited by the Joint Commission
on Accreditation of Healthcare Organizations ("JCAHO"). The JCAHO is a
voluntary national organization which undertakes a comprehensive review for
purposes of accreditation of health care facilities. In general, hospitals and
certain other health care facilities are initially surveyed by JCAHO within 12
months after the commencement of operations and resurveyed at appropriate
intervals thereafter. Ten of the Company's fifteen hospitals were resurveyed
in fiscal 1994 and retained their JCAHO accreditation for an additional three
years.
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MANAGED CARE DIVISION
RHCI entered the managed mental healthcare business in October 1993 with
the acquisition of Florida Psychiatric Management, Inc. ("FPM") for a purchase
price of $6.5 million. The managed care division expanded in June 1994 with
the acquisition of a Phoenix, Arizona-based managed mental health business.
The managed care division provides a comprehensive range of managed mental
healthcare services to the commercial market as well as to insurance companies
and health maintenance organizations. The Company is considering various
options regarding the expansion of its managed care operations. Any such
expansion would require additional capital and there can be no assurances that
the Company will expand its managed care operations. See "Acquisitions and
Sales" below and "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources."
COMPETITION
Each of the Company's facilities competes with other facilities including
proprietary hospitals and psychiatric units of general hospitals, some of which
are larger and have greater financial resources than the Company's hospitals.
These competing hospitals are owned or supported by governmental agencies,
nonprofit agencies, or proprietary hospital companies. Some of these competing
hospitals are substantially exempt from income and property taxation. The
Company's hospitals often draw patients from areas outside their immediate
locale, and therefore compete with both local and distant hospitals.
The ability of a psychiatric facility to compete with other facilities
depends on the number and quality of psychiatrists and clinical psychologists
practicing at the facility, and the number, type and quality of other
psychiatric facilities in the area. Another factor affecting the
competitiveness of psychiatric facilities is the extent to which the facility's
clinical programs satisfy community needs in an effective manner from both a
clinical and an economic standpoint. The Company believes that the quality of
its professional staff as well as the quality and effectiveness of its programs
permit it to compete effectively with the other providers of psychiatric and
chemical dependency care in the communities served by the Company's facilities.
In addition, the Company's facilities actively seek relationships with managed
care companies, which are increasingly responsible for steering patients to
high quality, cost-effective providers of behavioral health care.
The Company's managed care businesses compete directly with independent
local and national entities that offer managed mental health care services, as
well as with large insurance companies, health maintenance organizations and
other provider groups that have established or acquired managed mental health
care capabilities. In addition, the Company competes with not-for-profit
health plan corporations, preferred provider organizations and other provider
networks as well as third party administrators, which also offer services to
manage mental health care costs. Certain of these operations and facilities
have substantially greater financial resources than the Company and offer a
wider range of services than the Company.
SOURCES OF REVENUE
The Company's facilities receive payments from third-party reimbursement
sources, including commercial insurance carriers, Medicare, Medicaid, the
Civilian Health and Medical Program of the Uniformed Services ("CHAMPUS") and
Blue Cross, in addition to payments directly from patients.
Third-party reimbursement programs generally reimburse facilities either on
the basis of facility charges (charge-based), on the basis of the facility's
cost as audited or projected by the third-party payor (cost-based), or on the
basis of negotiated rates (per diem-based). Generally, charge-based programs
are more profitable to the Company. The following table sets
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forth, by category, the approximate percentages of the Company's consolidated
gross patient revenues charged by the Company's facilities derived from various
sources for the periods indicated.
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YEAR ENDED JUNE 30
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1994 1993 1992
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Charge-based programs:
Commercial Insurance . . . . . . . . . . . . 14 % 20 % 24 %
Blue Cross . . . . . . . . . . . . . . . . . 1 3 3
Other Private Pay . . . . . . . . . . . . . 5 2 2
--- --- ---
Sub-total . . . . . . . . . . . . . . . 20 25 29
--- --- ---
Cost based and per diem-based programs:
Blue Cross . . . . . . . . . . . . . . . . . 6 9 8
CHAMPUS . . . . . . . . . . . . . . . . . . 7 10 17
Medicare/Medicaid . . . . . . . . . . . . . 54 47 37
State, HMO and PPO . . . . . . . . . . . . . 13 9 9
--- --- ---
Sub-total . . . . . . . . . . . . . . . 80 75 71
--- --- ---
Total . . . . . . . . . . . . . . 100 % 100 % 100 %
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Most commercial insurance carriers reimburse their policyholders or make
direct payment to facilities for charges at rates and limits specified in their
policies. Patients generally remain responsible to the facilities for any
amounts not covered under their insurance policies. The trend in reimbursement
for psychiatric inpatient and chemical dependency care by commercial insurance
carriers is to limit inpatient days to a maximum number per year or for the
patient's lifetime, or to limit the maximum dollar amount expended for a
patient in a given period.
Most third-party payors and other commercial carriers have also expanded
benefit coverage to include partial hospitalization and other outpatient
services. Partial hospitalization is formally recognized by Medicare and
CHAMPUS as a covered service. In addition, managed care companies are seeking
to contract with providers that offer the full spectrum of psychiatric care.
Medicare is the federal health insurance program for the aged and disabled.
Medicare reimbursement is typically less than the Company's facilities'
established charges for services provided to Medicare patients. Patients are
not responsible for the difference between the reimbursed amount and the
facilities' established charges other than for applicable noncovered charges,
coinsurance and deductibles. In 1983, Congress changed the Medicare law
applicable to Medicare reimbursement for medical/surgical services from a
retrospectively determined reasonable cost system to a prospectively determined
diagnosis-related grouping ("DRGs") system. Psychiatric and chemical dependency
hospitals and units are exempt from this change in the Medicare law. To date,
no DRG implementation or conversion date has been proposed for psychiatric and
chemical dependency facilities. However, excluded hospitals and units are
subject to the payment limitations and incentives established in the Tax Equity
and Fiscal Responsibility Act of 1982 ("TEFRA"). They are paid on the basis of
each facility's historical costs trended forward, with a limit placed on the
rate of increase in per case reimbursable costs. These TEFRA target rates are
updated annually. Facilities with costs less than the target rate per discharge
are reimbursed based on allowable Medicare costs plus an additional payment.
Beginning in the federal fiscal year 1992, providers with costs exceeding their
target rates are subject to a payment ceiling of the target amount plus the
lesser of 5% of the target amount or 50% of the amount in excess of the target
amount. Exemptions and exceptions are available to hospitals when events beyond
the hospitals' control result in an increase in costs for a reporting period.
Moreover, "new hospitals" are eligible to be exempt from the limits until they
have been in operation for three years. At June 30, 1994, 14 of the Company's
facilities were subject to the TEFRA provisions. The Health Care Financing
Administration ("HCFA") has implemented changes to Medicare covering inpatient
services which are reimbursed under TEFRA. These changes provide for an
increase to the TEFRA payment limitations, subject to annual revision.
However, since 13 of the Company's 14 facilities which are subject to the TEFRA
payment limitations are currently operating at cost levels below their
respective TEFRA payment limitations, any increase in the TEFRA payment
limitations should have a minimal effect on the Company's results of
operations. In
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addition, HCFA has implemented changes to Medicare covering fee reimbursement
schedules for physician services. While these changes affect Medicare
reimbursement paid directly to physicians, they do not directly affect the rate
of Medicare reimbursement paid to the Company since most of the physicians
practicing at the Company's facilities bill their fees directly. Accordingly,
these changes have had only a minimal effect on the Company's results of
operations.
Medicaid is the federal/state health insurance program for the
underprivileged. Subject to certain minimum federal requirements, each state
defines the extent and duration of the services covered by its Medicaid
program. Moreover, although there are certain federal requirements governing
the payment levels for Medicaid services, each state has its own methodology
for making payment for services provided to Medicaid patients. The Medicaid
program covers payment for services provided to Medicaid patients at 14 of the
Company's facilities. The Company received significant payments pursuant to
enhanced reimbursement rates in 1994, 1993 and 1992 under certain state
programs. Statutory changes will decrease the level of these payments in the
future. See "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations."
In November 1991, Congress passed the Medicaid Voluntary Contribution and
Provider-Specific Tax Amendments of 1991. The effect of this legislation was
to restrict the states' abilities to generate federal matching funds for
Medicaid through the use of provider tax and donation programs. Existing
donation and taxation programs were allowed to continue into 1992 with exact
expiration dates based on the individual state's fiscal year end. The
legislation specified that provider taxation programs are eligible for federal
matching funds only if the tax applies to all providers in a class and if those
providers are not held harmless from the cost of the tax by compensating
payments from the state. The legislation limits the amount of the states'
funding for Medicaid that could come from provider taxes to the greater of the
existing level as of November 1991 or 25% of provider tax generated funds.
This cap will expire on September 30, 1995.
Acute psychiatric services for CHAMPUS patients are reimbursed on a
prospectively determined per diem basis. For the Company's high volume
facilities (as defined by CHAMPUS), 1991-1992 rates were fixed at 1988 levels
subject to an all-inclusive cap of $714 per day. This capped rate is higher
than the Company's net revenue per patient day for all of the Company's acute
psychiatric services. The Company's low volume facilities (as defined by
CHAMPUS) are reimbursed at prospectively determined per diem rates established
on a regional basis. These regional rates are lower than the hospitals'
established charges. CHAMPUS revenues in these low volume facilities did not
represent a significant portion of the Company's consolidated gross revenues
for the fiscal years ended June 30, 1994, 1993, or 1992.
RTC reimbursement for CHAMPUS patients is currently capped on a per diem
basis at the lesser of $477 per day or an inflation adjusted hospital-specific
rate based on per diem rates generally paid as of June 30, 1988. These rates
are adjusted annually each October 1 for inflation. This capped rate is higher
than the Company's net revenue per patient day for all of the Company's RTC
services. Neither of the Company's two CHAMPUS certified RTCs currently have
rates at the $477 per day maximum.
Effective October 1, 1991, CHAMPUS patients became subject to limits on the
number of psychiatric days covered by the CHAMPUS program. These limits have
reduced the revenue the Company receives from the CHAMPUS program. See "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations."
Blue Cross plans in all areas in which the Company presently operates
facilities, except Alabama and Michigan, reimburse based on charges or
negotiated rates. In many states in which the Company operates, Blue Cross
charges are approved through a rate-setting process and, therefore, Blue Cross
may reimburse the Company at a rate less than billed charges. Under cost-based
Blue Cross programs, such as those in Alabama and Michigan, direct
reimbursement to hospitals typically is lower than the hospital's charges, and
patients are not responsible for the difference between the reimbursement
amount and the hospital's charges.
With respect to its managed mental health care programs, the Company
typically charges each customer a monthly fee for each beneficiary enrolled in
the customer's mental health benefit program. Depending upon both the type of
program from which a customer contracts and the benefits covered under such
program, the fee arrangement is designed so that, with
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respect to both inpatient and outpatient care, the Company accepts either full
risk (all service capitated), as is generally the case, partial risk (selected
services capitated) or limited risk (full risk up to a maximum amount), in each
case for costs that exceed the fees attributable to such program.
MARKETING
The Company's marketing programs are directed to referral sources within a
selected service area rather than to the general public and are designed to
increase awareness of a facility's programs and services. Referral sources
include psychiatrists, medical practitioners, managed mental health
organizations, courts and probationary officers, law enforcement agencies,
schools and clergy. Each facility's marketing staff, together with other
facility personnel, maintains direct contact with referral sources to meet the
needs of the referral sources. These needs may be related to a desired
treatment program, the desires of the patient's family, hospital policies or
the timely receipt of accurate information. Each facility establishes admission
targets for each referral source and results are monitored and evaluated at the
facility and by the corporate staff.
The Company focuses its marketing and sales efforts for its managed care
businesses primarily on insurance carriers, nonprofit health care corporations,
HMOs, government employee groups and self-insured employers. The Company has
also targeted employee benefit consulting firms, representing employers and
groups of employers in the selection and purchase of managed mental health care
benefit programs. Typically, the Company markets its services to the potential
customer's senior operating and marketing staff, medical directors or health
care managers.
REGULATION
Operations of the Company's facilities are subject to extensive federal,
state and local government regulation, including periodic inspection and
licensing requirements. This regulation is primarily concerned with the fitness
and adequacy of the facility, equipment and personnel, standards of medical
care provided, the dispensing of drugs, the adequacy of fire prevention
measures and other building standards and the confidentiality of medical
records of drug and alcohol abuse patients.
The Company believes that federal and state regulation may become more
comprehensive and restrictive in the future, particularly with respect to
reimbursement rates. In addition, legislative initiatives aimed at a
comprehensive overhaul of the U.S. health care system have been introduced in
Congress. The Company cannot predict the form or timing of any prospective
legislation or regulation, nor the effect which any legislation or regulation
might have on its revenues or profitability.
Capital expenditures for the construction of new facilities, the addition
of beds or the acquisition of facilities or medical equipment are reviewable by
governmental authorities in certain states which place limits or restrictions
on construction and acquisition of hospitals and the expansion of existing
hospitals and services. State certificate of need statutes provide generally
that prior to the construction of new beds or facilities or the introduction of
a new service, a state agency must determine that a need exists for those beds,
facilities or services. A certificate of need is generally issued for a
specific maximum amount of expenditures, number of beds or services to be
provided and the holder is generally required to implement the approved project
within a specific time period. Certificate of need proceedings for new
facilities are extremely competitive, often with several applicants for a
single license. Except for Arizona, Texas and Utah, all of the states in which
the Company operates facilities have adopted certificate of need statutes or
other statutes which limit the development of new beds.
The Social Security Act contains a number of provisions designed to ensure
that services rendered by health care facilities to Medicare and Medicaid
patients are medically necessary and meet professionally recognized standards.
These provisions include a requirement that admissions of Medicare and Medicaid
patients to hospitals must be reviewed in a timely manner to determine the
medical necessity of the admissions. In addition, the Peer Review Improvement
Act of 1982 ("Peer Review Act") provides that a hospital may be required by the
federal government to reimburse the government for the cost of Medicare paid
services determined by a peer review organization to have been medically
unnecessary. Each of the Company's hospitals has developed and implemented a
quality assurance program and implemented procedures for utilization review and
retrospective patient care evaluation to meet its obligations under the Peer
Review Act. As a result of new legislation passed in Texas as described below,
Peer Review Organizations in that state are applying extremely restrictive
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interpretations to the medical necessity of admissions and other services.
Consequently, significant amounts of the Texas facilities' charges have been
denied by such organizations.
To be covered by CHAMPUS, RTC services must be preauthorized as being
medically necessary. Effective October 1, 1991, hospital psychiatric services
also have had to be preauthorized. If the criteria for establishing medical
necessity are not met, CHAMPUS will not pay for the services provided.
The Defense Appropriations Act of 1991 provides that no funds will be
appropriated for CHAMPUS care when a patient is referred to a provider of
inpatient mental health care or residential treatment care by a medical or
health care professional having an economic interest in the facility to which
the patient is referred. The Medicare and Medicaid Anti-Fraud and Abuse
Amendments (the "Amendments") to the Social Security Act prohibit individuals
or entities participating in the Medicare or Medicaid programs from knowingly
and willfully offering, paying, soliciting, or receiving remuneration in order
to induce referrals for items or services reimbursed under those programs. The
policy objective of the Amendments is to ensure that the purpose for a referral
is quality of care and not monetary gain by the referring individual. The
Amendments' prohibitions only apply to Medicare and Medicaid patients and
impose felony criminal penalties and civil sanctions, as well as exclusion from
the Medicare or Medicaid programs. In 1989, CHAMPUS adopted regulations
authorizing it to exclude from the CHAMPUS program any provider who has
committed fraud or engaged in abusive practices. The Company believes that it
is in compliance with all aspects of the regulations.
The Company has entered into various types of agreements with physicians
and other health care providers in the ordinary course of operating its
facilities, many of which provide for payments to physicians or other health
care providers by the Company as compensation for services or other
consideration by the providers. On July 29, 1991, the Office of Inspector
General published final regulations establishing "safe harbors" for
relationships between health care providers and referral sources. Any
relationship that complies with the terms of a safe harbor would not be subject
to enforcement action under the Social Security Act. Although a relationship
that fails to satisfy a safe harbor is not necessarily illegal, that
relationship will not be exempt from scrutiny under the Amendments. The Company
believes that its agreements and arrangements in this area comply with the
Amendments. The Company intends to comply with any and all other similar
legislation that may be adopted in the future in this regard.
Several states have been investigating whether psychiatric hospitals have
engaged in fraudulent practices such as inflated bills for medications and
services, bills for services never rendered and admitting patients, especially
children, who do not require hospitalization. In 1991, the Texas Attorney
General disclosed that several of the Company's competitors doing business in
Texas were under investigation for fraudulent practices and a lawsuit seeking
injunctive relief was filed against one of those competitors. New legislation
was passed in Texas that placed severe restrictions on the marketing of
behavioral health care services. In June 1993, the Company signed an agreement
with the Texas Attorney General whereby it agreed to continue to comply with
Texas statutes regarding the delivery of mental health care.
As a managed health care services business and a health care provider, the
Company is also currently subject to extensive and frequently changing federal,
state and local government regulation. This regulation is primarily concerned
with licensure, conduct of operations, financial solvency, standards of medical
care provided, the confidentiality of medical records of drug and alcohol abuse
patients, and the direct employment of psychiatrists, psychologists, and other
licensed professionals by business corporations. The various types of
regulatory activity affect the Company's business either by controlling its
operations, restricting licensure of the business entity or by controlling the
reimbursement for services provided.
See also "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Sources of Revenue."
ACQUISITIONS AND SALES
In August 1991, the Company purchased a 72-bed hospital facility in San
Antonio, Texas and other personal property for a cash purchase price of
$2,100,000. After refurbishment and renovations totalling approximately
$1,800,000, the facility, Mission Vista Hospital, opened as a 66-bed facility
in November 1991.
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In December 1991, the Company entered into a one-year lease for a 36-bed
facility in Concord, California. The Company had an option to purchase this
facility for $1,050,000, which option expired in December 1992. The Company
terminated operations at this facility in September 1992 and allowed this
option to lapse.
In November 1992, the Company purchased a 64-bed hospital facility in
Covington, Louisiana for $2,000,000. The facility, Three Rivers Hospital,
opened in January 1993. The hospital is operated by a limited partnership in
which the Company is the general partner. See "Ownership Arrangements and
Operating Agreements."
In January 1993, the Company leased Harbor Oaks Hospital in Fort Walton
Beach, Florida to another health care provider. The lease gives the lessee the
option to purchase the facility at a fixed price through January 1996.
In August 1993, Cumberland Hospital in Fayetteville, North Carolina was
sold to Cape Fear Valley Medical Center for approximately $12.3 million.
In October 1993, the Company purchased the stock of Florida Psychiatric
Management, Inc., a regional provider of mental health care cost management
services based in Orlando, Florida for a cash payment of $4.0 million, the
issuance of an aggregate of $2.5 million of three-year 7% debentures, and
contingent consideration based upon the attainment of certain earnings and
revenue levels over the ensuing two years.
In February 1994, the Company sold its 50-bed Atlantic Shores Hospital in
Daytona Beach, Florida to Halifax Medical Center for $4.8 million.
In June 1994, the Company purchased the assets and assumed certain
liabilities of Human Dynamics Institute, a Phoenix, Arizona- based managed
mental health business for a cash payment of $1 million, a three-year, $1
million note bearing interest at 8.25%, 172,850 shares of common stock of
Ramsay Managed Care, Inc., a subsidiary of the Company, and contingent
consideration based upon the attainment of certain revenue levels over the
ensuing two years.
OWNERSHIP ARRANGEMENTS AND OPERATING AGREEMENTS
One physician owns a 5% interest in the subsidiary which owns the Company's
Harbor Oaks Hospital. The Company may be required to repurchase, and the
minority shareholder may be required to sell, the minority interest at a
formula price dependent upon many factors, including the earnings per share of
the subsidiary which owns the subject hospital and the price/earnings multiple
of the Company, after a fixed period of time. Although the amount of the
Company's repurchase obligation cannot be precisely determined, the Company
does not believe that this obligation will require a material payment by the
Company in the foreseeable future.
In 1985, the Company and Bethany General Hospital in Bethany, Oklahoma
entered into a joint development project. The general hospital and the Company
hold a joint certificate of need by which they have converted 23
medical/surgical beds to psychiatric beds, and constructed a psychiatric
pavilion containing an additional 20 psychiatric beds. Pursuant to a joint
venture agreement entered into in December 1985, the Company began managing the
23 existing beds in December 1985 and completed construction of the 20-bed
pavilion in October 1986. Under the joint venture agreement, the Company is
obligated to provide working capital to operate the 43-bed psychiatric unit.
There are no outstanding working capital advances at June 30, 1994. The
Company is operating the unit under the agreement for a three-year term (with
four additional three-year terms, at the Company's option) for an annual
management fee of 5% of the unit's gross revenues and 65% of the net profits or
losses of the unit. The agreement also provides that the Company will recover
construction costs amortized over 15 years and working capital advances from
operating revenue, unless the Company does not renew or breaches the agreement.
In November 1992, the Company formed a limited partnership to operate Three
Rivers Hospital, the 64-bed facility acquired in November 1992. The limited
partners have a 45% interest in the venture. In addition to its 55% share of
the profits as general partner, the Company leases the 64-bed facility to the
partnership for an annual rental of $276,000, subject to annual inflationary
adjustments.
8
<PAGE> 10
INSURANCE
The Company and its facilities are insured on a "claims made" basis for
professional and general liability in the aggregate amount of $25,000,000, with
self-insured retentions of $500,000 per claim. The Company's self-insurance
program also includes "tail" coverage for prior acts retroactive to the date on
which the Company became responsible for such acts. This prior occurrence
coverage operates with the same self-insured retention levels. It is the
Company's policy to record the liability for uninsured losses related to
asserted and unasserted claims arising from reported incidents and losses
related to unreported incidents based upon an actuarial valuation of the
Company's past experience and other relevant information.
EMPLOYEES
As of June 30, 1994, the Company employed approximately 1,695 full-time and
578 part-time employees at its facilities, including approximately 762 nurses.
In addition, the Company has a corporate headquarters staff of approximately
35, including persons who specialize in various areas of hospital operations to
assist facilities with particular management issues. The Company considers its
relationship with its employees to be good.
EXECUTIVE OFFICERS OF THE REGISTRANT
Certain information with respect to the executive officers of the Company
is set forth below:
<TABLE>
<CAPTION>
POSITION WITH THE COMPANY AND
PRINCIPAL OCCUPATIONS DURING
NAME OF EXECUTIVE OFFICER AGE THE PAST FIVE YEARS
------------------------- --- -------------------
<S> <C> <C>
Gregory H. Browne . . . . . . . . . . . . 41 Chief Executive Officer of the Company since January
1992; President of the Company from January 1992 until September 1994; Chief
Executive Officer of Ramsay-HMO, Inc. from November 1989 to January 1992;
Chief Financial Officer of Ramsay-HMO, Inc. from January 1989 to January
1992; various executive positions with corporations controlled by Paul J.
Ramsay since prior to 1989.
Reynold J. Jennings . . . . . . . . . . . 48 President and Chief Operating Officer of the Company
since September 1994; Executive Vice President and
Chief Operating Officer of the Company from November 1993 until September
1994; various management and administrative positions with National Medical
Enterprises, Inc. since prior to 1989 to October 1993.
Bruce R. Soden . . . . . . . . . . . . . 40 Senior Vice President of the Company since prior to 1989;
Chief Financial Officer of the Company from
September 1991 to September 1993.
Wallace E. Smith . . . . . . . . . . . . 51 Senior Vice President of the Company since June 1992.
Vice President--Regional Operations of the Company
from prior to 1989 to June 1992.
John A. Quinn . . . . . . . . . . . . . . 40 Vice President--Regional Operations of the Company since
September 1991; various administrative and
management positions with Community Psychiatric Centers, Inc. from prior to
1989 to September 1991.
</TABLE>
9
<PAGE> 11
<TABLE>
<S> <C> <C>
Curtis L. Dosch . . . . . . . . . . . . . 42 Vice President--Finance of the Company since August
1993. Regional controller of the Company from prior
to 1989 to July 1993.
William N. Nyman . . . . . . . . . . . . 41 Vice President--Finance of the Company since August
1993. Regional controller of the Company from prior
to 1989 to July 1993.
</TABLE>
Effective September 30, 1994, Jack V. Eumont, Jr. resigned from his
position as Vice President and Chief Financial Officer of the Company.
ITEM 2. PROPERTIES.
Information relating to the Company's owned and leased hospital facilities,
their locations and licensed bed capacity is contained under the caption "Item
1. Business -- Facilities Division." Such information is incorporated herein by
reference.
The building in which the Company's facility at Houma, Louisiana is located
is leased for an initial period ending January 31, 2005 (with an option to
renew for 20 years). The Company has entered into a 50-year ground lease for
the property on which its 70-bed facility at Morgantown, West Virginia is
located. For the Bethany, Oklahoma facility, the Company has one year remaining
on a three-year lease with options to renew totaling an additional 9 years.
The Company leases its corporate headquarters in New Orleans, Louisiana for
a term of five years ending in April 1999, and leases other space for various
clinics and regional offices.
See Item 1. Business--Acquisitions and Sales.
ITEM 3. LEGAL PROCEEDINGS.
The Company is subject to claims and suits arising in the ordinary course
of business. In the opinion of management, the ultimate resolution of such
pending legal proceedings will not have a material adverse effect on the
Company's financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
10
<PAGE> 12
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The Company's Common Stock is traded in the over-the-counter market and is
quoted on the NASDAQ National Market System under the symbol RHCI. On September
22, 1994 there were 667 holders of record of the Company's Common Stock. No
dividends have been declared on the Common Stock since the Company was
organized. Under the terms of its current credit agreement, the Company is
limited as to the amount of dividends it can pay on its Common Stock unless
certain conditions are met. The following table sets forth the range of high
and low closing sales prices per share of the Common Stock for each of the
quarters during the years ended June 30, 1994 and 1993, as reported on the
NASDAQ National Market System:
<TABLE>
<CAPTION>
HIGH LOW
---------- ---------
<S> <C> <C>
Year ended June 30, 1994
First Quarter . . . . . . . $ 8 7/8 $ 6 3/8
Second Quarter . . . . . . . 9 3/4 6 3/4
Third Quarter . . . . . . . 9 7/16 7 1/8
Fourth Quarter . . . . . . . 8 1/8 6 5/8
Year ended June 30, 1993
First Quarter . . . . . . . $ 8 $ 4 7/8
Second Quarter . . . . . . . 6 1/8 4 5/8
Third Quarter . . . . . . . 6 4 3/4
Fourth Quarter . . . . . . . 6 7/8 5
</TABLE>
On September 22, 1994, the closing sales price of the Company's Common
Stock was $ 7 3/8 per share.
11
<PAGE> 13
ITEM 6. SELECTED FINANCIAL DATA.
The following table sets forth selected consolidated financial
information for the periods shown and is qualified by reference to, and should
be read in conjunction with, the Consolidated Financial Statements and Notes
thereto and "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations" appearing elsewhere in this Annual Report
on Form 10-K.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
------------------------------------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Net revenues . . . . . . . . . . . . $ 137,002 $ 136,354 $ 136,946 $ 132,739 $ 122,124
Salaries, wages and benefits . . . . 64,805 63,810 60,626 55,524 51,665
Other operating expenses . . . . . . 42,907 40,454 40,161 37,086 33,893
Provision for doubtful accounts . . . 5,846 8,148 8,628 6,992 5,782
Depreciation and amortization . . . . 6,836 6,605 5,439 5,545 5,311
Interest and other financing charges 8,906 9,494 10,488 14,462 15,448
Loss on sales and closure of
facilities. . . . . . . . . . . . . . 802 7,524 --- --- ---
Restructuring and other charges . . . --- 1,367 2,283 --- ---
---------- --------- --------- --------- ---------
130,102 137,402 127,625 119,609 112,099
---------- --------- --------- --------- ---------
Income (loss) before minority interests,
income taxes, extraordinary items and
cumulative effect of accounting
change . . . . . . . . . . . . . . . 6,900 (1,048) 9,321 13,130 10,025
Minority interests . . . . . . . . . 4,824 1,126 --- --- ---
---------- --------- --------- --------- ---------
Income (loss) before income taxes,
extraordinary items and cumulative
effect of accounting change . . . . 2,076 (2,174) 9,321 13,130 10,025
Income taxes . . . . . . . . . . . 599 159 3,974 5,126 4,260
---------- --------- --------- --------- ---------
Income (loss) before extraordinary items
and cumulative effect of accounting
change . . . . . . . . . . . . . . 1,477 (2,333) 5,347 8,004 5,765
Extraordinary items:
Loss from early extinguishment of debt,
net of income tax benefit of $103 in
1994, $312 in 1992 and $1,032 in
1990 . . . . . . . . . . . . . . (155) (1,580) (366) --- (1,874)
Income tax benefit from net
operating loss carryovers . . . . --- --- 953 922 1,158
Cumulative effect of change in
accounting for income taxes. . . . --- 2,353 --- --- ---
---------- --------- --------- --------- ---------
Net income (loss) . . . . . . . . . $ 1,322 $ (1,560) $ 5,934 $ 8,926 $ 5,049
========== ========= ========= ========= =========
Primary earnings per share:
Income (loss) per common share before
extraordinary items and cumulative
effect of accounting change . . . . $ .15 $ (.29) $ .68 $ 1.57 $ 1.15
Net income (loss) . . . . . . . . . $ .14 $ (.20) $ .75 $ 1.75 $ 1.01
Weighted average shares
outstanding(1) . . . . . . . . . . 9,641 7,932 7,886 5,091 5,009
</TABLE>
(1) Includes common and dilutive common equivalent shares outstanding.
<TABLE>
<CAPTION>
JUNE 30
---------------------------------------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Working capital $ 21,148 $ 23,811 $ 26,718 $ 24,913 $ 11,722
Total assets 183,168 190,370 194,357 196,158 186,294
Long-term debt 67,707 77,429 84,879 119,188 124,876
Class B preferred stock, Series 1987 --- --- 2,500 2,537 2,537
Stockholders' equity 80,468 79,997 76,068 40,550 28,816
</TABLE>
12
<PAGE> 14
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
Operating revenues of the facilities are affected by changes in the rates
the Company charges or by changes in the number of patient days in the period.
Additionally, increases in one factor can offset decreases in the other.
Patient days are primarily a function of the number of admissions multiplied by
the average length of stay by all patients. Accordingly, increases in
admissions can offset, in whole or in part, decreases in average length of
stay.
Generally, charges for each facility's services are reimbursed under
third-party reimbursement programs at the amount billed or at a rate which can
be less than the facility's charges. This lower rate can be based on a
negotiated per diem amount or based on the facility's costs as audited or
projected by the third-party payors. When operating revenues (charges) per
patient day are higher than the negotiated per diem rate or the facility's
costs, the difference is added to contractual adjustments. Bad debts consist
primarily of the uncollectible commercial and self-pay accounts receivable.
The Company records amounts due to or from third-party reimbursement
sources based on its best estimates of amounts to be ultimately received or
paid under cost reports filed with appropriate intermediaries, such as Blue
Cross. The final determination of amounts earned under reimbursement programs
is subject to review and audit by these intermediaries. Differences between
amounts recorded as estimated settlements and the audited amounts are reflected
as adjustments to the Company's net revenues in the period the final
determination is made. During the years ended June 30, 1992, 1993, and 1994 the
Company recorded contractual adjustment benefits of approximately $2,400,000,
$2,300,000, and $1,400,000 respectively. The adjustments were made 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 of a favorable nature or of a magnitude comparable to those
made in fiscal 1992, 1993, or 1994.
Under certain state Medicaid programs, the Company received significant
payments pursuant to enhanced reimbursement rates under disproportionate share
programs in fiscal 1994, 1993 and 1992. Statutory changes will decrease the
level of disproportionate share payments in the future. The Company is
investigating certain cost saving and other measures to attempt partially to
offset the effects of this decrease. In addition, many state Medicaid programs
are seeking to control costs through relationships with managed care
organizations. As a result, there can be no assurance as to the amounts or
forms of disproportionate share payments or other Medicaid payments in future
periods.
In recent years, approximately 7% to 17% of the Company's patient revenues
have come from CHAMPUS since some of the Company's hospitals are in close
proximity to major military installations in the United States. Congress has
imposed a reduction in the annual reimbursable length of stay for patients
covered by the mental health benefits of CHAMPUS, a federal government health
benefit program for the members (active and retired) of all seven uniformed
services and their families. Effective October 1, 1991, CHAMPUS began to limit
its coverage for hospital psychiatric services to 30 days for adult patients,
45 days for child and adolescent patients and 150 days for RTC services,
subject to waivers which will be available under limited circumstances if an
extension of the length of stay can be justified. The lengths of stay currently
experienced by the Company for adult, child and adolescent hospital programs
for CHAMPUS beneficiaries have usually been within the new limits applicable to
hospital stays. See "Item 1. Business -- Sources of Revenue."
13
<PAGE> 15
The following table sets forth, for the periods indicated, certain items of
the Company's Consolidated Statements of Operations as a percentage of the
Company's net revenues.
<TABLE>
<CAPTION>
AS A PERCENTAGE OF NET REVENUES
YEAR ENDED JUNE 30,
-------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Net revenues . . . . . . . . . . . . . . 100.0 % 100.0 % 100.0 %
Salaries, wages and benefits . . . . . . 47.3 46.8 44.3
Other operating expenses . . . . . . . . 31.3 29.7 29.3
Provision for doubtful accounts . . . . 4.3 6.0 6.3
Depreciation and amortization . . . . . 5.0 4.8 4.0
Interest and other financing charges . . 6.5 7.0 7.6
Loss on sales and closure of facilities 0.6 5.5 ---
Restructuring and other charges . . . . --- 1.0 1.7
----- ----- -----
Income (loss) before minority interests,
income taxes, extraordinary items and
cumulative effect of accounting change 5.0 % (0.8) % 6.8 %
===== ====== =====
Net income (loss) . . . . . . . . . . . 1.0 % (1.1) % 4.3 %
===== ====== =====
</TABLE>
1994 COMPARED TO 1993
Net revenues for fiscal 1994 were $137.0 million compared to $136.4 million
in fiscal 1993. Net outpatient revenues increased to $18.2 million for fiscal
1994, an increase of 43% over fiscal 1993, offsetting a decline in inpatient
revenues of 9.6% from the prior year. Also, revenues from the managed care
division (which began in October 1993) offset the revenues lost from the
facilities that were sold during fiscal 1994. See "Item 1.
Business--Acquisitions and Sales." Net outpatient revenues comprised 14.2% of
total net patient revenues for fiscal 1994 compared to 9.5% for the prior year.
Same store admissions increased 5% over the prior year while inpatient average
length of stay declined from 18.3 days in fiscal 1993 to 17.6 days for fiscal
1994. Contractual adjustment benefits of approximately $1.4 and $2.3 million
were recognized in fiscal 1994 and 1993, respectively, 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 78.6% of net
revenues for fiscal 1994 compared to 76.5% for the prior year. Additional
costs associated with the managed care operations and the start-up phase of
subacute ventures exceeded the cost savings derived from the containment
measures at the Company's inpatient facilities.
The provision for doubtful accounts was 4.3% of net revenues for fiscal
1994 compared to 6.0% in fiscal 1993. The decrease reflects the shift in payor
base toward more Medicaid, fixed rate, negotiated rate and cost-based
contracts, as well as the increase in managed care revenues which are less
susceptible to uncollectibility.
Depreciation and amortization was 5.0% of net revenues for fiscal 1994 as
compared to 4.8% in fiscal 1993. The increase relates primarily to
depreciation and amortization of the preopening costs of the facility opened in
January 1993, the amortization of cost in excess of net asset value and other
intangibles associated with the acquisition of Florida Psychiatric Management,
Inc., offset in part by the effect of the sales of the two facilities in fiscal
1994. See "Item 1. Business--Acquisitions and Sales."
Interest and other financing charges decreased from 7.0% of net revenues
for fiscal 1993 to 6.5% of net revenues for fiscal 1994. The decrease is
attributable to reduced levels of debt during fiscal 1994.
14
<PAGE> 16
The Company recorded net charges totaling $802,000 in 1994 relating to the
sale of certain inpatient facilities and closure of certain outpatient
operations. The Company recorded a loss of $1,109,000 during 1993 from the
closure of its leased facility, Oak Grove Hospital, in Concord, California.
The loss includes provisions for severance expense and other expenses incurred
with the termination of this lease. In addition, the Company recorded a
provision for loss at June 30, 1993 for the potential sales of Cumberland
Hospital in Fayetteville, NC and Harbor Oaks Hospital in Fort Walton Beach, FL
of $6,415,000. The estimated losses were based on a letter of intent relating
to the sale of the Cumberland facility and the existence of a lease with an
option to purchase for the Harbor Oaks facility. The Cumberland facility was
subsequently sold in August 1993. See "Item 1. Business--Acquisitions and
Sales."
The Company recorded a non-recurring charge of $1,367,000 in 1993 resulting
primarily from a decision not to proceed with the development of additional
inpatient psychiatric facilities in certain markets.
Minority interests reflects the limited partners of Three Rivers Hospital's
share of income before income taxes at that facility. See "Item 1.
Business--Ownership Arrangements and Operating Agreements."
The Company recognized an after-tax loss of $155,000 in 1994 from early
extinguishment of the industrial revenue bonds in connection with the sale of
Atlantic Shores Hospital. The Company recognized a loss of $1,580,000 on early
extinguishment of a 16.1% subordinated note in fiscal 1993. These losses are
reflected as extraordinary items in the consolidated statements of operations.
See "Liquidity and Capital Resources" below.
The Company had net income of $1,322,000 in fiscal 1994 compared to a net
loss of $1,560,000 in fiscal 1993. Excluding the non- recurring charges noted
above, the Company's operations continued to be adversely affected by
reductions in third party reimbursement levels.
1993 COMPARED TO 1992
Net revenues for fiscal 1993 were $136.4 million compared to $136.9 million
in fiscal 1992. Same store patient days remained constant during the two years
as increases in admissions of 10% were offset by reduced lengths of stay from
19.8 days to 18.3 days. Expanded outpatient and day treatment programs offset
the declining reimbursement levels for inpatient care, allowing the Company to
maintain approximately the same level of net revenues in 1993 and 1992.
Contractual adjustment benefits from prior years totaling $2.3 million and $2.4
million are reflected in net revenues for 1993 and 1992, respectively, 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 76.5% of net
revenues for 1993, as compared to 73.6% in 1992. A principal reason for the
increase relates to the incremental costs associated with the development of
outpatient revenue sources.
The provision for doubtful accounts was 6.0% of net revenues for 1993, as
compared to 6.3% for 1992. Although higher insurance deductibles and
coinsurance levels resulted in increased amounts due from patients, increased
emphasis on receivables allowed the Company to control this expense component.
Depreciation and amortization was 4.8% of net revenues for 1993, as
compared to 4.0% for 1992. The increase relates to depreciation of the
Company's new management information system and amortization of preopening
costs relating to the new facilities opened in the second quarter of fiscal
1992 and the third quarter of fiscal 1993. See "Item 1. Business--Acquisitions
and Sales."
Interest and other financing charges were 7.0% of net revenues for 1993 as
compared to 7.6% in 1992. The decrease is attributable to reduced levels of
debt during fiscal 1993.
The Company recorded a loss of $1,109,000 during 1993 from the closure of
its leased facility, Oak Grove Hospital, in Concord, California. The loss
includes provisions for severance expense and other expenses incurred with the
termination of this lease. In addition, the Company recorded a provision for
loss at June 30, 1993 for the
15
<PAGE> 17
potential sales of Cumberland Hospital in Fayetteville, NC and Harbor Oaks
Hospital in Fort Walton Beach, FL of $6,415,000. The estimated losses were
based on a letter of intent relating to the sale of the Cumberland facility and
the existence of a lease with an option to purchase for the Harbor Oaks
facility. The Cumberland facility was subsequently sold in August 1993. See
"Item 1. Business--Acquisitions and Sales."
The Company recorded a non-recurring charge of $1,367,000 in 1993 resulting
primarily from a decision not to proceed with the development of additional
inpatient psychiatric facilities in certain markets. The Company recorded a
non-recurring restructuring charge of $2,283,000 during 1992 resulting from the
Company's reassessment of its strategic direction to meet the changing demands
of both payors and the public. The 1992 charge included provisions for
severance packages and for the potentially unrecoverable portion of an
investment in a hospital joint venture. See "Item 1. Business--Ownership
Arrangements and Operating Agreements."
Minority interests reflect the limited partners of Three Rivers Hospital's
share of income before income taxes at that facility for the 1993 fiscal year.
The Company recognized a loss of $1,580,000 on the early extinguishment of
a 16.1% subordinated note in fiscal 1993, which is reflected as an
extraordinary item in the consolidated statements of operations. In fiscal
1992, the Company wrote off deferred loan costs of $678,000 ($366,000 after
applicable income tax benefit) which is reflected as an extraordinary item in
the consolidated statements of operations. The write-off resulted from the
early retirement of the Company's $34 million bank term debt. See "Liquidity
and Capital Resources" below. The Company realized income tax benefits of
$953,000 in fiscal 1992 relating to the utilization of net operating loss
carryovers of prior years, which is also reflected as an extraordinary item in
the consolidated statements of operations.
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". The cumulative effect of
adopting Statement No. 109 as of July 1, 1992 was to increase net income for
the fiscal year ended June 30, 1993 by $2,353,000.
The Company had a net loss of $1,560,000 in fiscal 1993 compared to net
income of $5,934,000 in fiscal 1992. In addition to the charges noted above,
the decrease resulted from disproportionate increases in salaries and certain
operating costs.
IMPACT OF INFLATION
The psychiatric hospital industry is labor intensive, and wages and related
expenses increase in inflationary periods. Additionally, suppliers generally
seek to pass along rising costs to the Company in the form of higher prices.
The Company monitors the operations of its facilities to mitigate the effect of
inflation and the increase in costs of health care. To the extent possible,
the Company seeks to offset increased costs through increased rates, new
programs, and operating efficiencies. However, changes in reimbursement
patterns may hinder the Company's ability to realize the full effect of rate
increases. To date, inflation has not had a significant impact on operations.
LIQUIDITY AND CAPITAL RESOURCES
On February 10, 1994, the Company sold its Atlantic Shores Hospital for
$4.8 million. The $4.3 million outstanding balance of the industrial revenue
bonds associated with that facility was repaid with the proceeds from such
sale.
On August 31, 1993, the Company sold its Cumberland Hospital for $12.3
million. Of the total proceeds, $10.9 million was restricted for the repayment
of debt as such amounts become due. At June 30, 1994, $5.3 million was still
available and is included in restricted cash on the consolidated balance sheet.
16
<PAGE> 18
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 Preferred Stock,
Series 1987, the Company's $2 million 16.1% Subordinated Promissory Note and
$500,000 in cash. The Series C Preferred Stock has ten votes per share and is
convertible at the option of the holder into ten shares of the Company's common
stock. It pays a 5% per annum dividend and has a $50.84 liquidation
preference.
On May 21, 1993, the Company finalized a credit facility for letters of
credit (to support the Company's outstanding variable rate industrial revenue
bonds) and working capital (the "1993 Credit Facility"). The 1993 Credit
Facility includes $27.5 million in letters of credit and a $4 million working
capital facility, which replace similar components of the 1990 Credit
Facilities described below. The 1993 Credit Facility expires on May 15, 1996.
There were no amounts outstanding under the working capital facility at June
30, 1994 or 1993.
On July 30, 1991, the Company completed a public offering (the "Public
Offering") of 2,700,000 shares of Common Stock from which it received net
proceeds (after payment of expenses) of $31,038,000 (including proceeds
received by the Company from the exercise of certain warrants by certain of the
selling stockholders in such offering). The net proceeds from this offering,
together with approximately $1,250,000 of the Company's internally generated
funds, were used to repay in full the remaining unpaid principal of the Bank
Term Debt referred to below.
On April 30, 1990, the Company completed the refinancing of its then
existing senior debt and a portion of its subordinated debt and entered into
new credit agreements (the "1990 Credit Facilities") with a group of insurance
companies and with a group of banks. The 1990 Credit Facilities included
$56,500,000 in senior secured notes, $34,000,000 in bank term debt (the "Bank
Term Debt"), approximately $31,000,000 in letters of credit (the "Bank Letters
of Credit"), $3,000,000 in subordinated secured notes and $5,000,000 in a
working capital facility (the "Bank Working Capital Facility"). The senior
secured notes bear interest at 11.6% and are due in semi-annual installments
beginning March 31, 1993 and ending on March 31, 2000. The Bank Term Debt bore
interest at a variable rate, which at June 30, 1991 was 9.75%, and was due in
quarterly installments beginning March 31, 1991 with the balance due on April
30, 1998. The Bank Term Debt was repaid with the Company's net proceeds from
the Public Offering and the Company's internally generated funds. 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.
The Company's current primary cash requirements relate to its normal
operating and debt service expenses, routine capital improvements at its
facilities and the expansion of its outpatient programs. In addition, at the
current time, the Company's specific development projects include ongoing
expansion of its subacute ventures, its management contract operations and its
network of affiliations with medical/surgical hospitals and other healthcare
providers. At the current time, the Company does not have any commitments to
make any material capital expenditures. In connection with any future
acquisitions, the Company may determine to make capital improvements at the
acquired facilities, although it is the Company's intention to acquire
facilities requiring low capital investment. On the basis of its historical
experience and projected cash needs, the Company believes that its internally
generated funds from operations, together with its $4,000,000 working capital
facility and funds derived from any future asset sales will be sufficient to
fund its current cash requirements and future identifiable needs. At the
present time, the Company does not have any agreement to sell any of its
assets.
The Company is also considering various options regarding the expansion of
its managed care operations. Additional sources of capital would be required to
undertake this expansion. There can be no assurances that the Company will
expand its managed care operations.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Financial statements of the Company and its consolidated subsidiaries are
set forth herein beginning on page F-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND FINANCIAL DISCLOSURE.
Not applicable.
17
<PAGE> 19
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information with respect to the Company's executive officers is contained
in Part I under "Item 1. Business -- Executive Officers of the Registrant." The
information required by this Item with respect to directors will be contained
in the Company's definitive Proxy Statement ("Proxy Statement") for its 1994
Annual Meeting of Stockholders to be held on November 28, 1994 and is
incorporated herein by reference. Such Proxy Statement will be filed with the
Securities and Exchange Commission not later than 120 days subsequent to June
30, 1994.
ITEM 11. EXECUTIVE COMPENSATION.
The information required with respect to this Item will be contained in the
Proxy Statement, and such information is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required with respect to this Item will be contained in the
Proxy Statement, and such information is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required with respect to this Item will be contained in the
Proxy Statement, and such information is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(A) DOCUMENTS FILED AS PART OF THE REPORT:
1. FINANCIAL STATEMENTS
Information with respect to this Item is contained on Pages F-1 to F-19 of
this Annual Report on Form 10-K.
2. FINANCIAL STATEMENT SCHEDULES
Information with respect to this Item is contained on Pages S-1 to S-5 of
this Annual Report on Form 10-K.
3. EXHIBITS
Information with respect to this Item is contained in the attached Index to
Exhibits.
(B) REPORTS ON FORM 8-K:
There were no reports on Form 8-K filed by the Company for the quarter ended
June 30, 1994.
(C) EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-K:
Exhibits required to be filed by the Company pursuant to Item 601 of
Regulation S-K are contained in Exhibits listed in response to Item 14(a)3,
and are incorporated herein by reference. The management contracts and
compensatory plans and arrangements required to be filed as an Exhibit to
this Form 10-K are listed in Exhibits 10.71, 10.72, 10.73, 10.74, 10.75,
10.81, 10.82 and 10.83.
18
<PAGE> 20
POWER OF ATTORNEY
The registrant, and each person whose signature appears below, hereby
appoints Gregory H. Browne and Thomas M. Haythe as attorneys-in-fact with full
power of substitution, severally, to execute in the name and on behalf of the
registrant and each such person, individually and in each capacity stated
below, one or more amendments to the annual report which amendments may make
such changes in the report as the attorney-in-fact acting deems appropriate and
to file any such amendment to the report with the Securities and Exchange
Commission.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto fully authorized.
Dated:
RAMSAY HEALTH CARE, INC.
OCTOBER 3, 1994 By /s/ GEREGORY H. BROWNE
GREGORY H. BROWNE
CHIEF EXECUTIVE OFFICER, PRINCIPAL
FINANCIAL AND ACCOUNTING OFFICER
AND DIRECTOR
Pursuant to the requirements of the Securities and Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
DATE SIGNATURE/TITLE
- - - ---- ---------------
Dated:
October 3, 1994 By /s/ PAUL J. RAMSAY
Paul J. Ramsay
Chairman of the Board
and Director
Dated:
October 3, 1994 By /s/ GREGORY H. BROWNE
Gregory H. Browne
Chief Executive Officer, Principal
Financial and Accounting Officer
and Director
Dated:
October 3, 1994 By /s/ AARON BEAM, JR.
Aaron Beam, Jr.
Director
19
<PAGE> 21
DATE SIGNATURE/TITLE
- - - ---- ---------------
Dated:
By____________________________
Peter J. Evans
Director
Dated:
October 3, 1994 By /s/ ROBERT E. GALLOWAY
Robert E. Galloway
Director
Dated:
October 3, 1994 By /s/ THOMAS M. HAYTHE
Thomas M. Haythe
Director
Dated:
October 3, 1994 By /s/ STEVEN J. SHULMAN
Steven J. Shulman
Director
Dated:
October 3, 1994 By /s/ MICHAEL S. SIDDLE
Michael S. Siddle
Director
Dated:
By__________________________
Bruce R. Soden
Senior Vice President and
Director
20
<PAGE> 22
(THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE> 23
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statements of the Registrant and its
subsidiaries are submitted herewith in response to Item 8 and Item 14(a)(1):
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C>
Report of Independent Auditors . . . . . . . . . . . . . . . . . . F-3
Consolidated Balance Sheets -- June 30, 1994 and 1993 . . . . . . . F-4
Consolidated Statements of Operations-- For the Years Ended . . . .
June 30, 1994, 1993 and 1992 . . . . . . . . . . . . . . . . . . F-6
Consolidated Statements of Stockholders' Equity -- For
the Years Ended June 30, 1994, 1993 and 1992 . . . . . . . . . . F-7
Consolidated Statements of Cash Flows -- For the Years
Ended June 30, 1994, 1993 and 1992 . . . . . . . . . . . . . . . F-8
Notes to Consolidated Financial Statements . . . . . . . . . . . . F-9
</TABLE>
The following Financial Statement Schedules of the Registrant and its
subsidiaries are submitted herewith in response to Item 14(a)(2):
<TABLE>
<S> <C> <C>
IV -- Indebtedness of and to Related Parties -- Not Current S-1
V -- Property and Equipment. . . . . . . . . . . . . . . . . . S-2
VI -- Accumulated Depreciation, Depletion and Amortization of
Property and Equipment . . . . . . . . . . . . . . . . . S-3
VIII -- Valuation and Qualifying Accounts . . . . . . . . . . . . S-4
X -- Supplementary Income Statement Information. . . . . . . . S-5
</TABLE>
All other schedules have been omitted because they are inapplicable or the
information is provided in the consolidated financial statements including the
notes thereto.
F-1
<PAGE> 24
(THIS PAGE INTENTIONALLY LEFT BLANK)
F-2
<PAGE> 25
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
RAMSAY HEALTH CARE, INC.
We have audited the accompanying consolidated balance sheets of Ramsay
Health Care, Inc. and Subsidiaries as of June 30, 1994 and 1993, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the three years in the period ended June 30, 1994. Our
audits also included the financial statement schedules listed in the Index at
Item 14(a). These financial statements and schedules are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Ramsay Health Care, Inc. and Subsidiaries at June 30, 1994 and 1993, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended June 30, 1994, in conformity with generally
accepted accounting principles. Also, in our opinion, the related financial
statement schedules, when considered in relation to the basic financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.
As discussed in the Note on Income Taxes on page F-13 to the consolidated
financial statements, the Company changed its method of accounting for income
taxes in 1993.
ERNST & YOUNG LLP
New Orleans, Louisiana
September 1, 1994
F-3
<PAGE> 26
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30
----------------------------
1994 1993
---- ----
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents . . . . . . . . . . . . . . $ 6,207,000 $ 10,682,000
Restricted cash . . . . . . . . . . . . . . . . . . . 5,311,000 ---
Patient accounts receivable, less allowances for
doubtful accounts of $3,925,000 and $4,955,000
at June 30, 1994 and 1993, respectively . . . . . . 23,019,000 26,696,000
Amounts due from third-party contractual agencies . . 6,604,000 4,971,000
Other accounts receivable . . . . . . . . . . . . . . 2,139,000 1,356,000
Other current assets . . . . . . . . . . . . . . . . . 3,040,000 3,385,000
-------------- ---------------
Total current assets . . . . . . . . . . . . . . . . 46,320,000 47,090,000
Other assets
Cash held in trust . . . . . . . . . . . . . . . . . . 1,805,000 2,611,000
Cost in excess of net asset value of purchased
businesses . . . . . . . . . . . . . . . . . . . . . 12,042,000 4,699,000
Unamortized preopening and loan costs . . . . . . . . 3,731,000 3,664,000
Other intangible assets . . . . . . . . . . . . . . . 3,048,000 ---
Real estate held for sale . . . . . . . . . . . . . . 1,150,000 1,150,000
Other non-current assets . . . . . . . . . . . . . . . 4,911,000 4,141,000
-------------- ---------------
26,687,000 16,265,000
Property and equipment
Land . . . . . . . . . . . . . . . . . . . . . . . . . 9,009,000 9,995,000
Building and improvements . . . . . . . . . . . . . . 118,555,000 134,468,000
Equipment, furniture and fixtures . . . . . . . . . . 20,626,000 18,419,000
-------------- ---------------
148,190,000 162,882,000
Less accumulated depreciation . . . . . . . . . . . . 38,029,000 35,867,000
-------------- ---------------
110,161,000 127,015,000
-------------- ---------------
$ 183,168,000 $ 190,370,000
============== ===============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-4
<PAGE> 27
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30
-----------------------
1994 1993
---- ----
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable . . . . . . . . . . . . . . . . . . . $ 2,306,000 $ 4,790,000
Accrued salaries and wages . . . . . . . . . . . . . . 4,291,000 3,760,000
Other accrued liabilities . . . . . . . . . . . . . . 4,386,000 1,467,000
Amounts due to third-party contractual agencies . . . 4,729,000 6,114,000
Current portion of long-term debt . . . . . . . . . . 9,460,000 7,148,000
-------------- --------------
Total current liabilities . . . . . . . . . . . . 25,172,000 23,279,000
Deferred income taxes . . . . . . . . . . . . . . . . . . . 4,932,000 6,120,000
Liabilities for unpaid self-insurance claims,
less current portion . . . . . . . . . . . . . . . . . 1,341,000 2,419,000
Long-term debt, less current portion . . . . . . . . . . . 67,707,000 77,429,000
Minority interests . . . . . . . . . . . . . . . . . . . . 3,548,000 1,126,000
Stockholders' equity
Class A convertible preferred stock, $1 par value--
authorized 800,000 shares; issued 22,910 shares . . 23,000 23,000
Class B convertible preferred stock, $1 par value,
authorized 152,321 shares--Series C, issued 142,486
shares (liquidation value of $7,244,000) including
accrued dividends of $91,000 at June 30, 1994 . . . 233,000 142,000
Common stock, $.01 par value--authorized 20,000,000
shares; issued 8,200,760 shares at June 30, 1994 and
8,087,926 shares at June 30, 1993 . . . . . . . . . 82,000 81,000
Additional paid-in capital . . . . . . . . . . . . . . 100,048,000 99,847,000
Retained earnings (deficit) . . . . . . . . . . . . . (16,483,000) (17,805,000)
Treasury stock--481,750 common shares at June 30, 1994
and 321,750 common shares at June 30,
1993, at cost. . . . . . . . . . . . . . . . . (3,435,000) (2,291,000)
-------------- --------------
Total stockholders' equity . . . . . . . . . . . 80,468,000 79,997,000
-------------- --------------
$ 183,168,000 $ 190,370,000
============== ==============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-5
<PAGE> 28
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
NET REVENUES . . . . . . . . . . . . . . . . . . . . $137,002,000 $ 136,354,000 $ 136,946,000
Operating expenses:
Salaries, wages and benefits . . . . . . . . . . 64,805,000 63,810,000 60,626,000
Other operating expenses . . . . . . . . . . . . 42,907,000 40,454,000 40,161,000
Provision for doubtful accounts . . . . . . . . . 5,846,000 8,148,000 8,628,000
Depreciation and amortization . . . . . . . . . . 6,836,000 6,605,000 5,439,000
Interest and other financing charges . . . . . . 8,906,000 9,494,000 10,488,000
Loss on sales and closure of facilities . . . . . 802,000 7,524,000 ---
Restructuring and other charges . . . . . . . . . --- 1,367,000 2,283,000
------------ ------------- -------------
TOTAL OPERATING EXPENSES . . . . . . . . . . . . . . 130,102,000 137,402,000 127,625,000
------------ ------------- -------------
INCOME (LOSS) BEFORE MINORITY INTERESTS,
INCOME TAXES, EXTRAORDINARY ITEMS AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGE . . . . . 6,900,000 (1,048,000) 9,321,000
Minority interests . . . . . . . . . . . . . . . . . 4,824,000 1,126,000 ---
------------ ------------- -------------
INCOME (LOSS) BEFORE INCOME TAXES,
EXTRAORDINARY ITEMS AND CUMULATIVE
EFFECT OF ACCOUNTING CHANGE . . . . . . . . . . . 2,076,000 (2,174,000) 9,321,000
Provision for income taxes . . . . . . . . . . . . . 599,000 159,000 3,974,000
------------ ------------- -------------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGE . . . . . 1,477,000 (2,333,000) 5,347,000
Extraordinary items:
Loss from early extinguishment of debt, less
applicable income tax benefit of $103,000 in 1994 and
$312,000 in 1992 . . . . . . . . . . . . . . . (155,000) (1,580,000) (366,000)
Reduction in federal and state income taxes from
utilization of net operating loss carryovers . --- --- 953,000
------------ ------------- -------------
(155,000) (1,580,000) 587,000
Cumulative effect of change in accounting for
income taxes . . . . . . . . . . . . . . . . . --- 2,353,000 ---
------------ ------------- -------------
NET INCOME (LOSS) . . . . . . . . . . . . . . . . . . $ 1,322,000 $ (1,560,000) $ 5,934,000
============ ============= =============
Income (loss) per common and dilutive common
equivalent share:
Primary:
Before extraordinary items and cumulative
effect of accounting change . . . . . . . . . . $ 0.15 $ (0.29) $ 0.68
Extraordinary items:
Loss from early extinguishment of debt . . . (0.01) (0.20) (0.05)
Utilization of net operating loss carryovers --- --- 0.12
------------ ------------- ------------
(0.01) (0.20) 0.07
Cumulative effect of change in accounting for
income taxes . . . . . . . . . . . . . . . . --- 0.29 ---
------------ ------------- -------------
$ 0.14 $ (0.20) $ 0.75
============ ============= =============
Fully diluted:
Before extraordinary items and cumulative effect of
accounting change . . . . . . . . . . . . . . . $ 0.15 $ (0.29) $ 0.66
Extraordinary items:
Loss from early extinguishment of debt . . . (0.01) (0.20) (0.05)
Utilization of net operating loss carryovers --- --- 0.12
------------ ------------- ------------
(0.01) (0.20) 0.07
Cumulative effect of change in accounting for
income taxes . . . . . . . . . . . . . . . . --- 0.29 ---
------------ ------------- -------------
$ 0.14 $ (0.20) $ 0.73
============ ============= =============
Weighted average number of shares outstanding:
Primary . . . . . . . . . . . . . . . . . . . . . 9,641,000 7,932,000 7,886,000
Fully diluted . . . . . . . . . . . . . . . . . . 9,679,000 7,932,000 8,159,000
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-6
<PAGE> 29
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
CLASS B
CLASS A CONVERTIBLE
CONVERTIBLE PREFERRED ADDITIONAL RETAINED
PREFERRED STOCK COMMON PAID-IN EARNINGS TREASURY
STOCK SERIES C STOCK CAPITAL (DEFICIT) STOCK
----- -------- ----- ------- --------- -----
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT JULY 1, 1991 . . . . . . . . . $313,000 $ --- $ 50,000 $ 62,366,000 $(22,179,000) $ ---
Exercise of stock options (28,833 shares) --- --- --- 281,000 --- ---
Dividends accrued on Class B redeemable
convertible preferred stock . . . . . --- --- --- (150,000) --- ---
Purchase of treasury stock (201,750
shares). . . . . . . . . . . . . . . . --- --- --- --- --- (1,585,000)
Issuance of common stock (2,700,000
shares) . . . . . . . . . . . . . . . --- --- 27,000 30,158,000 --- ---
Exercise of warrants (90,832 shares) . . --- --- 1,000 852,000 --- ---
Conversion of Class A convertible
preferred stock (290,590 shares) . . . (290,000) --- 3,000 287,000 --- ---
Net income . . . . . . . . . . . . . . . --- --- --- --- 5,934,000 ---
-------- --------- -------- ------------ ------------ -----------
BALANCE AT JUNE 30, 1992 . . . . . . . . 23,000 --- 81,000 93,794,000 (16,245,000) (1,585,000)
Dividends accrued on Class B redeemable
convertible preferred stock . . . . . --- --- --- (150,000) --- ---
Purchase of treasury stock (120,000 shares) --- --- --- --- --- (706,000)
Issuance of Class B preferred stock,
Series C (142,486 shares) . . . . . . --- 142,000 --- 6,203,000 --- ---
Net loss . . . . . . . . . . . . . . . . --- --- --- --- (1,560,000) ---
-------- --------- -------- ------------ ------------ -----------
BALANCE AT JUNE 30, 1993 . . . . . . . . 23,000 142,000 81,000 99,847,000 (17,805,000) (2,291,000)
Exercise of stock options (112,834 shares) --- --- 1,000 565,000 --- ---
Dividends accrued on Class B
convertible preferred stock, Series C --- 91,000 --- (364,000) --- ---
Purchase of treasury stock (160,000 shares) --- --- --- --- (1,144,000)
Net income . . . . . . . . . . . . . . . --- --- --- --- 1,322,000 ---
-------- --------- -------- ------------ ------------ -----------
BALANCE AT JUNE 30, 1994 . . . . . . . . $ 23,000 $ 233,000 $ 82,000 $100,048,000 $(16,483,000) $(3,435,000)
======== ========= ======== ============ ============ ===========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-7
<PAGE> 30
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended June 30
-----------------------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities
Net income (loss) . . . . . . . . . . . . . . . . . . $ 1,322,000 $ (1,560,000) $ 5,934,000
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Cumulative effect of change in accounting for
income taxes . . . . . . . . . . . . . . . . . --- (2,353,000) ---
Depreciation and amortization . . . . . . . . . 7,638,000 7,173,000 5,955,000
Loss on early extinguishment of debt . . . . . . 258,000 1,580,000 678,000
Write-off of development and other costs . . . . --- 1,367,000 ---
(Gain) loss on disposal of assets . . . . . . . 722,000 (121,000) ---
Provision for deferred income taxes . . . . . . (1,188,000) (696,000) 1,890,000
Provision for doubtful accounts . . . . . . . . 5,846,000 8,148,000 8,628,000
Provision for loss on sales and closure of
facilities . . . . . . . . . . . . . . . . . . --- 6,415,000 ---
Minority interests . . . . . . . . . . . . . . . 4,824,000 1,126,000 ---
Cash flows from (increase) decrease in operating
assets:
Patient accounts receivable . . . . . . . . . (2,169,000) (8,833,000) (8,690,000)
Other current assets . . . . . . . . . . . . . (2,071,000) 1,233,000 (150,000)
Other non-current assets . . . . . . . . . . . (554,000) 164,000 257,000
Cash flows from increase (decrease) in
operating liabilities:
Accounts payable . . . . . . . . . . . . . . . (2,484,000) 940,000 (814,000)
Accrued salaries, wages and other liabilities 3,150,000 (674,000) (2,664,000)
Unpaid self-insurance claims . . . . . . . . . (1,078,000) (456,000) 203,000
Amounts due to third-party contractual agencies (1,385,000) 724,000 (1,580,000)
------------- -------------- -------------
Total adjustments . . . . . . . . . . . . . 11,509,000 15,737,000 3,713,000
------------- -------------- -------------
Net cash provided by operating activities 12,831,000 14,177,000 9,647,000
------------- -------------- -------------
Cash flows from investing activities
Proceeds from sale of assets . . . . . . . . . . 16,422,000 300,000 ---
Acquisitions of businesses . . . . . . . . . . . (6,022,000) --- ---
Expenditures for property and equipment . . . . (5,070,000) (3,569,000) (5,206,000)
Purchase of facilities . . . . . . . . . . . . . --- (2,000,000) (2,100,000)
Development project costs . . . . . . . . . . . (388,000) (1,878,000) ---
Preopening costs . . . . . . . . . . . . . . . . (2,195,000) (905,000) (661,000)
------------- -------------- -------------
Net cash provided by (used in)
investing activities. . . . . . . . . . 2,747,000 (8,052,000) (7,967,000)
------------- -------------- -------------
Cash flows from financing activities
Loan costs . . . . . . . . . . . . . . . . . . . (222,000) (1,619,000) (711,000)
Proceeds from sale/leaseback of equipment . . . --- 1,857,000 ---
Distribution to minority interests . . . . . . . (2,741,000) --- ---
Proceeds from exercise of options and warrants . 566,000 --- 1,134,000
Payment on debt . . . . . . . . . . . . . . . . (11,734,000) (3,884,000) (34,317,000)
Payment of preferred stock dividends . . . . . . (273,000) (150,000) (187,000)
Issuance of Class B Preferred Stock, Series C . --- 265,000 ---
Issuance of common stock . . . . . . . . . . . . --- --- 30,185,000
Purchase of treasury stock . . . . . . . . . . . (1,144,000) (706,000) (1,585,000)
Restricted cash . . . . . . . . . . . . . . . . (5,311,000) --- ---
Cash held in trust . . . . . . . . . . . . . . . 806,000 166,000 329,000
------------- -------------- -------------
Net cash used in financing activities . (20,053,000) (4,071,000) (5,152,000)
------------- -------------- -------------
Net increase (decrease) in cash and
cash equivalents . . . . . . . . . . . . . . . . (4,475,000) 2,054,000 (3,472,000)
Cash and cash equivalents at beginning of year . . 10,682,000 8,628,000 12,100,000
------------- -------------- -------------
Cash and cash equivalents at end of year . . . . . $ 6,207,000 $ 10,682,000 $ 8,628,000
============= ============== =============
Supplemental disclosures of cash flow information
Cash paid during the year for:
Interest (net of amount capitalized) . . . . . . $ 8,064,000 $ 8,788,000 $ 11,740,000
Income taxes . . . . . . . . . . . . . . . . . . 398,000 1,780,000 1,096,000
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-8
<PAGE> 31
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- - - ------------------------------------------
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of the Company
and its majority-owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation.
INDUSTRY
The Company is a provider of a full continuum of behavioral health
services. Its facilities division operates private, free-standing acute care
psychiatric hospitals as well as outpatient day hospitals, freestanding day
treatment centers, subacute units, and residential treatment centers. Its
managed care division provides managed mental health care services.
AFFILIATED COMPANIES
Ramsay Holdings HSA Limited ("Holdings") owns approximately 18% of the
outstanding Common Stock of the Company and 50% of the outstanding Class B
Convertible Preferred Stock, Series C of the Company. Paul Ramsay Holdings
Pty. Limited owns the remaining 50% of the outstanding Class B Convertible
Preferred Stock, Series C. Together, these two entities affiliated with Paul
J. Ramsay own common stock and preferred stock in the Company which in total
represents an approximate 31% voting interest.
MEDICARE AND OTHER CONTRACTED REIMBURSEMENT PROGRAMS
Net revenues include estimated reimbursable amounts from Medicare and
other contracted reimbursement programs. Amounts received by the Company for
treatment of patients covered by such programs, which may be based on the cost
of services provided or predetermined rates, are generally less than the
established billing rates of the Company's hospitals. Final determination of
amounts earned under contracted reimbursement programs is subject to review and
audit by the appropriate agencies. See Note on Reimbursement from Third-Party
Contractual Agencies.
CHARITY CARE
The Company provides care to patients who meet certain criteria under its
charity care policy without charge or at amounts less than its established
rates. Because the Company does not pursue collection of amounts determined to
qualify as charity care, they are not reported as revenue.
INTANGIBLE ASSETS
Cost in excess of net asset value of purchased businesses is amortized on
a straight-line basis, over periods ranging from fifteen to forty years. Other
intangible assets, principally the value assigned to acquired clinical protocols
and contracts related to the managed care division, are amortized on a
straight-line basis over a fifteen year period.
Preopening costs, principally salaries and other costs incurred prior to
opening a new facility or program, are deferred and amortized on a
straight-line basis over two years.
Loan costs are amortized ratably over the life of the loan and are
included in interest expense. In fiscal 1994, the Company wrote off $258,000 of
deferred loan costs ($155,000 after applicable income tax benefit) in
connection with the early retirement of the bonds associated with Atlantic
Shores Hospital which was sold in February 1994. In fiscal 1993, the Company
incurred approximately $1,573,000 in deferred loan costs in connection with the
refinancing of its debt under the 1993 Credit Facilities. In fiscal 1992, the
Company wrote off $678,000 of deferred loan costs ($366,000 after applicable
income tax benefit) in connection with the early retirement of its $34 million
bank term debt.
F-9
<PAGE> 32
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Accumulated amortization of the Company's intangible assets as of June 30,
1994 and 1993 was $9,896,000 and $10,311,000, respectively.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. The Company capitalizes
interest, salaries and other costs for site selection and design incurred
during the construction period. Upon sale or retirement of property or
equipment, the cost and related accumulated depreciation are removed from the
accounts and the resulting gain or loss is included in operations.
Depreciation is computed substantially on the straight-line method for
financial reporting purposes and on accelerated methods for income tax
purposes. The general range of estimated useful lives is twenty to forty years
for buildings and five to twenty years for equipment.
PROFESSIONAL AND GENERAL LIABILITY INSURANCE
The Company maintains a self-insurance program for its hospital
professional liability insurance and commercial and general liability
insurance. The Company and its facilities are insured for professional and
general liability in the aggregate amount of $25 million with self-insured
retentions of $500,000 per claim. It is the Company's policy to record the
liability for uninsured losses related to asserted and unasserted claims
arising from reported incidents and losses related to unreported incidents
based upon an actuarial valuation of the Company's past experience and other
relevant information.
INCOME TAXES
The Company recognizes deferred income taxes on significant temporary
differences between financial statement and income tax reporting. The Company
adopted FASB Statement No. 109 as of July 1, 1992 (See note on Income Taxes on
page F-13).
RESTRUCTURING AND OTHER CHARGES
In 1993, the Company recorded a non-recurring charge of $1,367,000
resulting primarily from a decision not to develop additional inpatient
psychiatric facilities in certain markets. In 1992, the Company recorded a
charge against earnings of $2,283,000 reflecting the reassessment of its
strategic direction. The 1992 charge included provisions for severance
packages and for the potential unrecoverable portion of an investment in a
hospital joint venture.
EARNINGS PER SHARE
Primary earnings per share are calculated by dividing income before
extraordinary items and cumulative effect of accounting change and net income
by the weighted average number of common and dilutive common equivalent shares
outstanding during each period. The Company's common stock equivalents include
Class A Convertible Preferred Stock, Class B Convertible Preferred Stock,
Series C and stock options and warrants to purchase Common Stock. Fully
diluted earnings per share are calculated assuming the conversion of the Class
B redeemable convertible preferred stock prior to its exchange on June 30,
1993; see note on Related Party Transactions.
MINORITY INTERESTS
The equity of minority shareholders or partners in Company subsidiaries is
reported on the balance sheet as minority interests. Minority interests
reflect changes for the respective share of income of the subsidiaries
attributable to the minority shareholders or partners, the effect of which is
also reflected in the results of operations of the Company, and for
distributions made to the minority shareholders or partners.
F-10
<PAGE> 33
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CASH EQUIVALENTS
Cash equivalents include short-term, highly liquid interest-bearing
investments, consisting primarily of certificates of deposit, commercial paper
and money market mutual funds. The carrying values of these cash equivalents
approximate fair value.
RESTRICTED CASH
Restricted cash represents the remaining proceeds from the sale of
Cumberland Hospital that are held in trust for the repayment of debt. The
carrying value of restricted cash approximates fair value.
CASH HELD IN TRUST
Cash held in trust is revocable by the Company under certain circumstances
and includes cash and short-term investments for payment of self-insurance
losses. The carrying value of this cash held in trust approximates fair value.
ACQUISITIONS AND SALES
- - - ----------------------
In August 1991, the Company purchased a 72-bed hospital facility in San
Antonio, Texas and other personal property for a cash purchase price of
$2,100,000. After refurbishments and renovations totaling approximately
$1,800,000, the facility, Mission Vista Hospital, opened as a 66-bed facility
in November 1991.
In December 1991, the Company entered into a one-year lease for a 36-bed
facility in Concord, California. The Company had an option to purchase this
facility for $1,050,000, which expired in December 1992. The Company did not
exercise this option, terminated operations at this facility in September 1992,
and recognized a loss of $1,109,000 on closure.
In November 1992, the Company purchased a 64-bed facility in Covington,
Louisiana for $2,000,000. The facility, Three Rivers Hospital, opened in
January 1993.
In January 1993, the Company terminated operations at its facility in
Fort Walton Beach, Florida and subsequently leased that facility to another
health care provider. That lease gives the lessee the option to purchase the
facility at a fixed price. The Company recognized a provision for loss on
potential sale of this facility of approximately $2.8 million in 1993. The
cost and accumulated depreciation relating to this facility are approximately
$8,900,000 and $4,800,000, respectively, at June 30, 1994.
In June 1993, the Company signed a letter of intent to sell its Cumberland
Hospital in Fayetteville, North Carolina for approximately $12.3 million. In
connection with this sale, the Company wrote off approximately $4 million of
costs in excess of net asset value of purchased businesses and recorded an
overall provision for loss of approximately $3.6 million in 1993. The sale of
the facility was completed in August 1993.
In October 1993, the Company purchased the stock of Florida Psychiatric
Management, Inc., a regional provider of mental health care cost management
services based in Orlando, Florida for a cash payment of $4.0 million, the
issuance of an aggregate of $2.5 million of three-year 7% debentures, and
contingent consideration based on the attainment of certain earnings and
revenue levels over the ensuing two years. In connection with this
acquisition, the Company recorded cost in excess of net asset value of
purchased businesses and other intangible assets of approximately $3.9 million
and $3 million, respectively.
In February 1994, the Company sold its 50-bed Atlantic Shores Hospital in
Daytona Beach, Florida for $4.8 million.
F-11
<PAGE> 34
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
In June 1994, the Company purchased the assets and assumed certain
liabilities of Human Dynamics Institute, a Phoenix Arizona- based managed
mental health business for a cash payment of $1.0 million, a three-year, $1.0
million note bearing interest at 8.25%, 172,850 shares of common stock of
Ramsay Managed Care, Inc., a subsidiary of the Company, and contingent
consideration based upon the attainment of certain revenue levels over the
ensuing two years. In connection with this acquisition, the Company recorded
cost in excess of net asset value of purchased businesses totalling
approximately $3 million.
The operations of Florida Psychiatric Management, Inc. and Human Dynamics
Institute are included in the consolidated statements of operations from the
dates of acquisition. Unaudited pro forma consolidated operating results of
the Company as if the acquisitions had occurred as of July 1, 1992, are as
follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
------------------------
1994 1993
---- ----
<S> <C> <C>
Net revenues . . . . . . . . . . . . . . . . . . . $ 142,970,000 $ 145,818,000
Income (loss) before extraordinary items and
cumulative effect of accounting change . . . . . 797,000 (2,691,000)
Net income (loss) . . . . . . . . . . . . . . . . . 642,000 (1,918,000)
Per share amounts (primary and fully diluted):
Income (loss) before extraordinary items and
cumulative effect of accounting change . . . . $0.08 $(0.34)
Net income (loss) . . . . . . . . . . . . . . . 0.07 (0.24)
</TABLE>
LONG-TERM DEBT
- - - --------------
The Company's long-term debt is as follows: . .
<TABLE>
<CAPTION>
JUNE 30
-----------------------
1994 1993
---- ----
<S> <C> <C>
11.6% Senior secured notes due March 31, 2000 . . . . . $ 48,025,000 $ 53,675,000
Variable rate revenue bonds through 2015 . . . . . . . . 21,000,000 26,200,000
15.6% Subordinated secured notes due March 31, 2000 . . 2,769,000 3,000,000
7% debentures due quarterly through October 31, 1996 . . 2,292,000 ---
8.25% note payable due monthly through June 30, 1997 . . 1,000,000 ---
Capital lease obligation . . . . . . . . . . . . . . . . 1,318,000 1,700,000
Other notes payable . . . . . . . . . . . . . . . . . . 763,000 2,000
-------------- -------------
77,167,000 84,577,000
Less amounts due within one year . . . . . . . . . . . . 9,460,000 7,148,000
-------------- -------------
$ 67,707,000 $ 77,429,000
============== =============
</TABLE>
The aggregate scheduled maturities of long-term debt during the five years
subsequent to June 30, 1994 follow: 1995 -- $9,460,000; 1996 -- $10,610,000;
1997 -- $9,383,000; 1998 -- $8,325,000; and 1999 -- $10,443,000.
The Company has pledged as collateral substantially all of its real
property.
On May 21, 1993, the Company finalized a credit facility (the "1993 Credit
Facility") for letters of credit (to support the variable rate revenue bonds)
and working capital with a group of banks. The 1993 Credit Facility includes
approximately $27.5 million in letters of credit and $4.0 million in a working
capital facility which replaced the $31.0 million in letters of credit and the
$5.0 million working capital facility included in the 1990 Credit Facilities.
The 1993 Credit Facility expires on May 15, 1996. There were no amounts
outstanding under the working capital facility at June 30, 1994 or 1993.
F-12
<PAGE> 35
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
On April 30, 1990, the Company entered into credit facilities (the "1990
Credit Facilities") with a group of insurance companies and banks. The 1990
Credit Facilities included $56.5 million in Senior Secured Notes, $34.0 million
in bank term debt (the "Bank Term Debt"), approximately $31.0 million in
letters of credit, $3.0 million in Subordinated Secured Notes and $5.0 million
in a working capital facility. The Senior Secured Notes bear interest at 11.6%
and are due in semi-annual installments through March 31, 2000. The Bank Term
Debt was paid out in September 1991 from the proceeds of the Company's stock
offering and internally generated funds. The Bank Term Debt bore interest at a
variable rate and was due in quarterly installments that began on March 31,
1991 with the balance due on April 30, 1998. The Subordinated Secured Notes
bear interest at 15.6% and are due in semi-annual installments through March
31, 2000.
Under the 1993 and 1990 Credit Facilities, the Company is required to meet
certain covenants, including: (1) the maintenance of a minimum level of
consolidated tangible net worth; (2) the maintenance of a working capital
ratio; and (3) the maintenance of certain fixed charge coverage and debt
service ratios. At June 30, 1994 the Company was in compliance with each such
covenant.
The Company has entered into loan agreements with various state and local
governmental agencies for the purpose of financing or providing reimbursement
for the construction costs of certain of the Company's psychiatric hospitals or
treatment facilities within respective states. Each state governmental agency
funded its loan with proceeds of tax-exempt variable rate demand revenue bonds
in the same amount as its loan. These loans, which have a term generally of 30
years, have an outstanding balance at June 30, 1994 totalling $21 million. The
interest rate will be the same as the applicable revenue bonds which ranged
from 2.5% to 5.5% at June 30, 1994. The Company is required to deliver an
irrevocable standby letter of credit for each bond in an amount equal to the
total principal payments due under the bond, plus a stipulated number of days
interest. Such letters of credit are provided in the 1993 Credit Facility.
In December 1992, the Company completed a sale and leaseback of its
management information systems, with a cost of $1,857,000 and accumulated
depreciation of $185,000 at the time of the transaction, with net proceeds from
the transaction approximating $1,857,000. The lease was accounted for as a
capital lease.
FASB Statement No. 107, "Disclosures about Fair Value of Financial
Instruments", requires disclosure of fair value information about financial
instruments. The fair values of the Company's long-term debt (excluding
capital lease obligations) are estimated using discounted cash flow analyses,
based on the Company's estimated current incremental borrowing rates for
similar types of borrowing arrangements. The carrying amounts of all long-term
debt are the same as the estimated fair values with the exception of the
$48,025,000 and $2,769,000 borrowings. The fair values of these two notes are
estimated to be $51,463,000 and $3,227,000, respectively, at June 30, 1994 and
$56,319,000 and $3,500,000, respectively, at June 30, 1993.
INCOME TAXES
- - - ------------
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, prior years' financial
statements were not restated. The cumulative effect of adopting Statement No.
109 as of July 1, 1992 was to increase net income in 1993 by $2,353,000.
F-13
<PAGE> 36
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of the Company's deferred tax liabilities and assets are as follows:
<TABLE>
<CAPTION>
JUNE 30
---------------------
1994 1993
---- ----
<S> <C> <C>
Deferred tax liabilities:
Tax over book depreciation . . . . . . . . . . $ 9,494,000 $ 9,154,000
Change in tax accounting methods . . . . . . . 1,435,000 1,753,000
Other-net . . . . . . . . . . . . . . . . . . . 999,000 647,000
------------ ------------
Total deferred tax liabilities . . . . . . 11,928,000 11,554,000
Deferred tax assets:
Allowance for doubtful accounts . . . . . . . . 723,000 630,000
General and professional liability insurance . 584,000 908,000
Estimated losses on development projects . . . --- 678,000
Accrued employee benefits . . . . . . . . . . . 312,000 180,000
Investment in nonconsolidated subsidiaries . . 460,000 ---
Net operating loss carryovers . . . . . . . . . 5,752,000 6,333,000
Alternative minimum tax credit carryovers . . . 1,668,000 1,205,000
------------ ------------
Total deferred tax assets . . . . . . . . . 9,499,000 9,934,000
Valuation allowance for deferred tax assets . . (2,503,000) ( 4,500,000)
------------ ------------
Net deferred tax assets . . . . . . . . . . 6,996,000 5,434,000
------------ ------------
Net deferred tax liabilities . . . . . . . $ 4,932,000 $ 6,120,000
============ ============
</TABLE>
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
--------------------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Income taxes currently payable:
Federal . . . . . . . . . . . . . . . . $ 810,000 $ 686,000 $ 344,000
State . . . . . . . . . . . . . . . . . 874,000 169,000 475,000
Deferred income taxes:
Federal . . . . . . . . . . . . . . . . (1,196,000) (621,000) 1,722,000
State . . . . . . . . . . . . . . . . . 8,000 (75,000) 168,000
------------ ------------ -------------
$ 496,000 $ 159,000 $ 2,709,000
============ ============ =============
</TABLE>
The provision for income taxes is reported in the consolidated statements of
operations as follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
--------------------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Provision for income taxes . . . . . . . . $ 599,000 $ 159,000 $ 3,974,000
Income tax benefit from loss on early
extinguishment of debt . . . . . . . . . (103,000) --- (312,000)
Income tax benefit from net operating loss
carryovers . . . . . . . . . . . . . . . --- --- (953,000)
------------ ------------ ------------
$ 496,000 $ 159,000 $ 2,709,000
============ ============ ============
</TABLE>
F-14
<PAGE> 37
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The provision for income taxes included in the consolidated statements of
operations differs from the amounts computed by applying the statutory rate to
income before income taxes, as follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
----------------------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C>
Income (loss) before income taxes, extraordinary
items and cumulative effect of accounting
change . . . . . . . . . . . . . . . . . $ 2,076,000 $ (2,174,000) $ 9,321,000
Federal statutory income tax rate . . . . . 34% 34% 34%
------------ ------------- ------------
706,000 (739,000) 3,169,000
Benefit of net operating loss recognized . (921,000) (944,000) (953,000)
Write-off of cost in excess of net asset value
of purchased businesses . . . . . . . . --- 1,357,000 ---
Income tax benefit from loss on early
extinguishment of debt . . . . . . . . (103,000) --- (312,000)
Amortization of cost in excess of net asset
value of purchased businesses . . . . . 327,000 264,000 231,000
State income taxes . . . . . . . . . . . . 582,000 175,000 526,000
Other . . . . . . . . . . . . . . . . . . . (95,000) 46,000 48,000
------------ ------------- ------------
$ 496,000 $ 159,000 $ 2,709,000
============ ============= ============
</TABLE>
The sources of timing differences on which deferred taxes have been
provided and the related income tax effects for the year ended June 30, 1992
are as follows:
<TABLE>
<S> <C>
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 799,000
Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . (587,000)
General and professional liability insurance . . . . . . . . . . . . (125,000)
Cash to accrual method of accounting . . . . . . . . . . . . . . . . (477,000)
Preopening costs . . . . . . . . . . . . . . . . . . . . . . . . . . 163,000
Employee termination accruals . . . . . . . . . . . . . . . . . . . . (136,000)
Accrued employee benefits . . . . . . . . . . . . . . . . . . . . . . (14,000)
Net operating loss carryover . . . . . . . . . . . . . . . . . . . . 2,157,000
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110,000
------------
Deferred income tax expense . . . . . . . . . . . . . . . . . . $ 1,890,000
============
</TABLE>
At June 30, 1994, net operating loss carryovers of approximately $17
million, which expire from 2000 to 2003, and alternative minimum tax credit
carryovers of approximately $1,668,000, are available to reduce future federal
income taxes subject to certain annual limitations.
STOCKHOLDERS' EQUITY
- - - --------------------
The Class A Convertible Preferred Stock is not entitled to receive
dividends, is not redeemable, does not have any liquidation preference, has no
voting rights and is convertible at any time into Common Stock on a
share-for-share basis. The conversion rate of the Class A Convertible Preferred
Stock may be adjusted if the Company effects diluting issues such as share
dividends, combinations and reclassifications, as well as if the Company sells
Common Stock for an effective price of less than $6.06 per share.
The Certificate of Incorporation of the Company, as amended, authorizes
the issuance of 1,000,000 shares of Class B Convertible Preferred Stock, $1.00
par value.
F-15
<PAGE> 38
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
In March 1993, the Board of Directors authorized 152,321 shares of the
Class B Convertible Preferred Stock as Class B Preferred Stock, Series C.
These shares are entitled to cumulative dividends at a rate of 5% per annum
payable quarterly in arrears. These shares are entitled to a liquidation
preference of $50.84 per share under certain circumstances. The shares are
convertible into that number of fully paid and nonassessable shares of Common
Stock that results from dividing the conversion price in effect at conversion
into $50.84 and multiplying the quotient obtained by the number of shares of
Series C Preferred Stock being converted. The current conversion price is
$5.084 per share. Each share of Series C Preferred Stock is entitled to ten
(10) votes on all matters put to a vote of the shareholders of the Company and
otherwise has voting rights and powers equal to the voting rights and powers of
the Common Stock.
On June 30, 1993, the Company issued 142,486 shares of Class B Preferred
Stock, Series C in a recapitalization of the interests of Paul J. Ramsay, the
Company's chairman. (See note on Related Party Transactions.)
On July 30, 1991, the Company completed a public offering (the "Offering")
of 2,700,000 shares of its Common Stock. An additional 405,000 shares of
Common Stock were sold by selling stockholders upon the exercise of the
underwriters' over-allotment option, including 90,832 shares issued upon the
exercise by certain selling stockholders of warrants to purchase Common Stock
and 4,590 shares issued upon the conversion of Class A Preferred Stock by a
selling stockholder. The net proceeds from the Offering (after expenses and
including amounts received from the exercise of warrants by certain selling
stockholders) of $31,038,000, together with internally generated funds, were
used to pay off the unpaid portion of the Bank Term Debt.
At June 30, 1994, an aggregate 1,675,672 options were outstanding under
the Company's various option plans. These are set forth below:
<TABLE>
<CAPTION>
EXPIRATION NUMBER OF OPTION
TYPE OF OPTION DATE SHARES PRICE
-------------- ---- ------ -----
<S> <C> <C> <C>
Employee stock options . . . . . . . May 1995 21,164 $ 5.00
Employee stock options . . . . . . . May 1997 10,000 $ 5.00
Employee stock options . . . . . . . August 2001 60,834 $ 5.00
Employee stock options . . . . . . . February 2002 60,000 $ 5.00
Employee stock options . . . . . . . June 2002 4,667 $ 5.00
Employee stock options . . . . . . . March 2003 168,669 $ 5.31
Employee stock options . . . . . . . November 2003 113,000 $ 7.88
Employee stock options . . . . . . . May 2004 101,500 $ 6.88
Employee stock options . . . . . . . November 2003 140,000 $ 6.88
Director stock options . . . . . . . August 1995 80,000 $ 5.00
Director stock options . . . . . . . September 1995 26,666 $ 5.00
Director stock options . . . . . . . August 2001 91,672 $ 5.00
Director stock options . . . . . . . August 2001 100,000 $ 5.00
Director stock options . . . . . . . February 2002 225,000 $ 5.00
Director stock options . . . . . . . March 2002 250,000 $ 5.00
Director stock options . . . . . . . March 2003 140,000 $ 5.31
Director stock options . . . . . . . April 2003 15,000 $ 6.25
Director stock options . . . . . . . May 2004 67,500 $ 6.88
---------
1,675,672
=========
</TABLE>
At June 30, 1994, 1,034,334 shares were exercisable under the terms of the
plans. At June 30, 1994, 1,774,338 shares were reserved for issuance under the
Company's stock option plans.
In connection with a 1988 refinancing, the Company issued to Citibank, N.A.
warrants to purchase 166,667 shares of the Company's Common Stock at $10.50 per
share. The warrants contain an antidilution provision requiring adjustment to
the purchase price and the number of shares upon occurrence of certain
transactions. The issuance of the Class B
F-16
<PAGE> 39
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Preferred Stock Series C and the granting and repricing of stock options
resulted in an adjustment in the Purchase Price to $9.30. Warrants for a total
of 138,417 shares are still outstanding. These warrants are exercisable on or
before April 1, 1995. As part of the 1990 refinancing, the Company issued
warrants to Aetna Life Insurance Company and Monumental Life Insurance Company
to purchase an aggregate of 113,301 shares of the Company's Common Stock at
$9.61 per share. As a result of antidilution provision adjustments, the
Purchase Price is currently $8.39 per share and warrants for a total of 106,986
shares are still outstanding. These warrants are exercisable on or before
March 31, 2000.
On January 8, 1992, in consideration of the release of certain rights by
the Company's former President and Chief Executive Officer, the Company issued
non-transferable five-year warrants to purchase 200,000 shares of Common Stock
at an exercise price per share of $9.50. These warrants were surrendered in
December, 1992 at a cash amount equal to $2.00 times the number of warrants
surrendered.
Under the Company's current credit agreements, the Company is presently
limited as to the amount of dividends it can pay to the holders of its Common
Stock and Class B Convertible Preferred Stock, Series C.
REIMBURSEMENT FROM THIRD-PARTY CONTRACTUAL AGENCIES
- - - ---------------------------------------------------
The Company records amounts due to or from third-party contractual agencies
based on its best estimates of amounts to be ultimately received or paid under
cost reports filed with the appropriate intermediaries. Final determination of
amounts earned under contractual reimbursement programs is subject to review
and audit by the appropriate intermediaries. Differences between amounts
recorded as estimated settlements and the audited amounts are reflected as
adjustments to net revenues in the period the final determination is made.
During the years ended June 30, 1994, 1993 and 1992, the Company recorded
contractual reimbursement benefits of approximately $1,400,000, $2,300,000 and
$2,400,000, respectively, for the combined effects of intermediary audits and
the routine evaluation of prior year estimated settlements. Management
believes that adequate provision has been made for any adjustments that may
result from future intermediary reviews or audits.
LITIGATION
- - - ----------
The Company is subject to claims and suits arising in the ordinary course
of business. In the opinion of management, the ultimate resolution of such
pending legal proceedings will not have a material adverse effect on the
Company's financial position.
PENSION PLAN
- - - ------------
On December 1, 1985, the Company established a 401(k) tax deferred savings
plan, administered by an independent trustee, covering substantially all
employees over age twenty-one meeting a one-year minimum service requirement.
The plan was adopted for the purpose of supplementing employees' retirement,
death and disability benefits. The Company may, at its option, contribute to
the plan through an Employer Matching Account, but is under no obligation to do
so. An employee becomes vested in his Employer Matching Account over a
four-year period.
The Company contributed $160,000, $175,000, and $195,000 to the plan during
the years ended June 30, 1994, 1993 and 1992, respectively.
RELATED PARTY TRANSACTIONS
- - - --------------------------
In connection with the Paul Ramsay Group's cash investment in 1987, the
Company issued 333,333 shares of Class B Convertible Preferred Stock, Series
1987. Dividends were at an annual rate of 6%, were cumulative and payable
quarterly in arrears.
F-17
<PAGE> 40
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
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 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 to affiliate and
$500,000 in cash. The early extinguishment of the $2 million 16.1%
subordinated promissory note resulted in an extraordinary loss of $1,580,000 in
1993.
The Company expensed $698,000, $678,000, and $657,000 in management fees to
Holdings during the years ended June 30, 1994, 1993 and 1992, respectively.
There were no significant amounts due to or from related parties at June 30,
1994 or 1993.
F-18
<PAGE> 41
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
QUARTERLY RESULTS OF OPERATIONS AND OTHER SUPPLEMENTAL INFORMATION (UNAUDITED)
Following is a summary of the Company's quarterly results of operations for
the years ended June 30, 1994 and 1993.
<TABLE>
<CAPTION>
QUARTER ENDED
------------------------------------------------------
SEPTEMBER 30 DECEMBER 31 MARCH 31 JUNE 30
------------ ----------- -------- -------
1994
----
<S> <C> <C> <C> <C>
Net revenues . . . . . . . . . . . . . . . . $ 31,983,000 $ 32,561,000 $ 36,179,000 $ 36,279,000
Income (loss) before income taxes and
extraordinary items . . . . . . . . . . . . 844,000 563,000 1,163,000 (494,000)
Income (loss) before extraordinary items . . 608,000 475,000 822,000 (428,000)
Net income (loss) . . . . . . . . . . . . . . 608,000 475,000 667,000 (428,000)
Income (loss) per common and dilutive common
- - - --------------------------------------------
equivalent share(1)
----------------
Primary:
Before extraordinary items . . . . . . . $ 0.06 $ 0.05 $ 0.09 $ (0.04)
Extraordinary items . . . . . . . . . . . --- --- (0.02) ---
------------ ------------- ------------ ------------
Income (loss) per common share . . . . . $ 0.06 $ 0.05 $ 0.07 $ (0.04)
============ ============= ============ ============
Fully diluted:
Before extraordinary items . . . . . . . $ 0.06 $ 0.05 $ 0.09 $ (0.04)
Extraordinary items . . . . . . . . . . . --- --- (0.02) ---
------------ ------------- ------------ -----------
Income (loss) per common share . . . . . $ 0.06 $ 0.05 $ 0.07 $ (0.04)
============ ============= ============ ============
1993
----
Net revenues . . . . . . . . . . . . . . . . $ 31,413,000 $ 31,281,000 $ 35,827,000 $37,833,000
Income (loss) before income taxes,
extraordinary items and cumulative
effect of accounting change . . . . . . . 294,000 544,000 2,167,000 (5,179,000)
Income (loss) before extraordinary items and
cumulative effect of accounting change . . 248,000 467,000 1,765,000 (4,813,000)
Net income (loss) . . . . . . . . . . . . . . 2,601,000 467,000 1,765,000 (6,393,000)
Income (loss) per common and dilutive common
- - - --------------------------------------------
equivalent share(1)
----------------
Primary:
Before extraordinary items and
cumulative effect of accounting change $ 0.03 $ 0.06 $ 0.23 $ (0.62)
Extraordinary items and cumulative effect of
accounting change . . . . . . . . . . . 0.30 --- --- (0.20)
------------ ------------- ------------- -----------
Income (loss) per common share . . . . . $ 0.33 $ 0.06 $ 0.23 $ (0.82)
============ ============= ============= ===========
Fully diluted:
Before extraordinary items and
cumulative effect of accounting change $ 0.03 $ 0.06 $ 0.23 $ (0.62)
Extraordinary items and cumulative effect of
accounting change . . . . . . . . . . 0.30 --- --- (0.20)
------------ ------------- ------------- -----------
Income (loss) per common share . . . . . $ 0.33 $ 0.06 $ 0.23 $ (0.82)
============ ============= ============= ===========
</TABLE>
(1) The quarterly earnings per share amounts may not equal the annual amounts
due to changes in the average common and dilutive common equivalent shares
outstanding during the year.
In the quarter ended June 30, 1993, the Company recorded provisions for losses
on sales and closure of hospitals and restructuring and other charges totaling
$7,782,000.
F-19
<PAGE> 42
FINANCIAL STATEMENT SCHEDULES
<PAGE> 43
SCHEDULE IV
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
INDEBTEDNESS OF AND TO RELATED PARTIES--NOT CURRENT
<TABLE>
<CAPTION>
BALANCE AT BALANCE AT
BEGINNING END
NAME OF PERSON OF PERIOD ADDITIONS DEDUCTIONS OF PERIOD
- - - -------------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Year ended June 30, 1994: NONE --- --- ---
Year ended June 30, 1993:
Ramsay Holdings HSA Limited (1) $ 2,000,000 $ --- $ 2,000,000 $ ---
============ ============ ============ ============
Year ended June 30, 1992:
Ramsay Holdings HSA Limited (1) $ 2,000,000 $ --- $ --- $ 2,000,000
============ ============ ============ ============
</TABLE>
________________________
(1) Represents a 16.1% Subordinated Promissory Note due April 1, 2000. The
Note was subordinated to bank and investor obligations. On June 30, 1993, the
Note was eliminated in conjunction with the recapitalization of the interests
of Paul J. Ramsay.
S-1
<PAGE> 44
SCHEDULE V
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
BALANCE AT OTHER CHANGES BALANCE
BEGINNING ADDITIONS ADD (DEDUCT) AT END
CLASSIFICATION OF PERIOD AT COST RETIREMENTS DESCRIBE OF PERIOD
-------------- --------- ------- ----------- -------- ---------
<S> <C> <C> <C> <C> <C>
Year ended June 30, 1994:
Land . . . . . . . . . . . . $ 9,995,000 $ --- $ --- $ (986,000)(1) $ 9,009,000
Building and improvements . 134,468,000 1,626,000 (152,000)(2) (17,387,000)(1) 118,555,000
Equipment, furniture and
fixtures . . . . . . . . . 18,419,000 4,154,000 (199,000)(2) (1,748,000)(1) 20,626,000
------------ ----------- ---------- ------------ ------------
Total . . . . . . . . . $162,882,000 $ 5,780,000 $ (351,000) $(20,121,000) $148,190,000
============ =========== ========== ============ ============
Year ended June 30, 1993:
Land . . . . . . . . . . . . $ 9,867,000 $ 22,000 $ --- $ 106,000 (3) $ 9,995,000
Building and improvements . 131,363,000 1,554,000 --- (213,000)(4) 134,468,000
1,764,000 (3)
Equipment, furniture and
fixtures . . . . . . . . . 16,296,000 2,051,000 (58,000)(2) 130,000 (3) 18,419,000
------------ ----------- ---------- ------------ ------------
Total . . . . . . $157,526,000 $ 3,627,000 $ (58,000) $ 1,787,000 $162,882,000
============ =========== ========== ============ ============
Year ended June 30, 1992:
Land . . . . . . . . . . . . $ 8,983,000 $ --- $ --- $ 884,000 (3) $ 9,867,000
Building and improvements . 127,789,000 2,358,000 --- 1,216,000 (3) 131,363,000
Equipment, furniture and
fixtures . . . . . . . . . 13,448,000 2,865,000 (17,000)(2) --- 16,296,000
------------ ----------- ---------- ------------ ------------
Total . . . . . . . . . $150,220,000 $ 5,223,000 $ (17,000) $ 2,100,000 $157,526,000
============ =========== ========== ============ ============
</TABLE>
_______________
(1) Sale of hospitals.
(2) Routine retirements.
(3) Purchase of hospital.
(4) Write-off of certificate of need (CON) costs.
S-2
<PAGE> 45
SCHEDULE VI
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF
PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
ADDITIONS OTHER
BALANCE AT CHARGED TO CHANGES BALANCE AT
BEGINNING COSTS AND ADD (DEDUCT) END
DESCRIPTION OF PERIOD EXPENSES RETIREMENTS DESCRIBE OF PERIOD
----------- --------- -------- ----------- -------- ---------
<S> <C> <C> <C> <C> <C>
Year ended June 30, 1994:
Building and improvements. . $ 27,079,000 $ 3,653,000 $(118,000)(1) $ (2,939,000)(3) $ 27,675,000
Equipment, furniture
and fixtures. . . . . . . 8,788,000 2,143,000 (199,000)(1) (1,054,000)(3) 10,354,000
--- --- --- 676,000 (4) ---
------------- ----------- --------- ------------ ------------
Total . . . . . . . . $ 35,867,000 $ 5,796,000 $(317,000) $ (3,317,000) $ 38,029,000
============= =========== ========= ============ ============
Year ended June 30, 1993:
Building and improvements. . $ 21,119,000 $ 3,783,000 $ --- $ 2,177,000 (2) $ 27,079,000
Equipment, furniture
and fixtures. . . . . . . 6,857,000 1,966,000 (35,000)(1) --- 8,788,000
------------- ----------- --------- ------------ ------------
Total . . . . . . . . $ 27,976,000 $ 5,749,000 $ (35,000) $ 2,177,000 $ 35,867,000
============= =========== ========= ============ ============
Year ended June 30, 1992:
Building and improvements. . $ 17,566,000 $ 3,553,000 $ --- $ --- $ 21,119,000
Equipment, furniture
and fixtures . . . . . . . 5,618,000 1,251,000 (12,000)(1) --- 6,857,000
------------- ----------- --------- ------------ ------------
Total . . . . . . . . $ 23,184,000 $ 4,804,000 $ (12,000) $ --- $ 27,976,000
============= =========== ========= ============ ============
</TABLE>
_______________
(1) Routine retirements.
(2) Allowance for loss on potential sale of hospital.
(3) Sale of hospitals.
(4) Accumulated depreciation on acquisitions.
S-3
<PAGE> 46
SCHEDULE VIII
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO CHARGED TO BALANCE
BEGINNING COST AND OTHER ACCOUNTS DEDUCTIONS END OF
OF PERIOD EXPENSES --DESCRIBE --DESCRIBE PERIOD
--------- -------- ---------- ---------- ------
<S> <C> <C> <C> <C> <C>
Year ended June 30, 1994:
Allowance for doubtful
accounts . . . . . . . . $ 4,955,000 $ 5,846,000 $ --- $ 6,876,000(1) $ 3,925,000
============ =========== ========== ============ ===========
Year ended June 30, 1993:
Allowance for doubtful
accounts . . . . . . . . $ 4,459,000 $ 8,148,000 $ --- $ 7,652,000(1) $ 4,955,000
============ =========== ========== ============ ===========
Year ended June 30, 1992:
Allowance for doubtful
accounts . . . . . . . . . $ 3,204,000 $ 8,628,000 $ --- $ 7,373,000(1) $ 4,459,000
============ =========== ========== ============ ===========
</TABLE>
_______________
(1) Write-offs of uncollectible patient accounts receivable.
S-4
<PAGE> 47
SCHEDULE X
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
<TABLE>
<CAPTION>
CHARGED TO COSTS AND EXPENSES
------------------------------------------
YEAR ENDED JUNE 30
------------------------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Taxes, other than payroll and
income taxes . . . . . . . . . . . . . $ 2,040,000 $ 1,789,000 $ 1,934,000
Advertising . . . . . . . . . . . . . . . 2,112,000 2,264,000 1,907,000
</TABLE>
Amounts for amortization of intangible assets, maintenance and repairs and
royalties are not presented, as such amounts are less than 1% of net revenues.
S-5
<PAGE> 48
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
Page
Number
------
<S> <C> <C>
2. Agreement and Plan of Merger dated as of June 27, 1991 among
the Company, New Ramcorp Inc. and Ramsay Corporation
(incorporated by reference to Exhibit 2 to the Company's
Registration Statement on Form S-2, Registration No.
33-40762) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --
2.1 Certificate of Merger of New Ramcorp Inc. into the Company
filed on June 27, 1991 (incorporated by reference to Exhibit
2.1 to the Company's Registration Statement on Form S-2,
Registration No. 33-40762) . . . . . . . . . . . . . . . . . . . . --
2.2 Recapitalization Agreement dated as of June 30, 1993 by and
among the Company, Ramsay Holdings HSA Limited and Paul
Ramsay Holdings Pty. Limited (incorporated by reference to
Exhibit 2.2 to the Company's Annual Report on Form 10-K for
the year ended June 30, 1994) . . . . . . . . . . . . . . . . . . . --
2.3 Asset Purchase Agreement dated as of August 25, 1993 among
the Company and Cumberland County Hospital System, Inc. and
Cumberland Mental Health, Inc. Pursuant to Reg. S-K, Item
601(b)(2), the Company agrees to furnish a copy of the
Schedules to such Agreement to the Commission upon request
(incorporated by reference to Exhibit 2.3 to the Company's
Annual Report on Form 10-K for the year ended June 30, 1994) . . . --
2.4 Asset Purchase Agreement dated as of October 22, 1992 among
Louisiana Psychiatric Company, Inc., HCA Psychiatric Company
and Ramsay Louisiana, Inc. Pursuant to Reg. S-K, Item
601(b)(2), the Company agrees to furnish a copy of the
Disclosure Schedule to such Agreement to the Commission upon
request (incorporated by reference to Exhibit 2.4 to the
Company's Annual Report on Form 10-K for the year ended June
30, 1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --
2.5 Agreement dated as of October 12, 1993 by and among Florida
Psychiatric Management, Inc., the stockholders of Florida
Psychiatric Management, Inc., Ramsay Health Care, Inc. and
Ramsay Managed Mental Health Services, Inc. . . . . . . . . . . . . --
2.6 Asset Purchase Agreement dated as of January 14, 1994 between
Halifax Hospital Medical Center and Atlantic Treatment
Center, Inc. Pursuant to Reg. S-K, Item 601(b)(2), the
Company agrees to furnish a copy of the Schedules and
Exhibits to such Agreement to the Commission upon request
(incorporated by reference to Exhibit 2 to the Company's
Quarterly Report on Form 10-Q for the quarter ended December
31, 1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --
3.1 Restated Certificate of Incorporation of the Company, as
amended (incorporated by reference to Exhibit 3.1 to the
Company's Annual Report on Form 10-K for the year ended June
30, 1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --
3.2 Certificate of Amendment of Restated Certificate of
Incorporation of the Company filed on April 17, 1991
(incorporated by reference to Exhibit 3.2 to the Company's
Registration Statement on Form S-2, Registration No.
33-40762) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --
</TABLE>
E-1
<PAGE> 49
<TABLE>
<CAPTION>
Page
Number
------
<S> <C> <C>
3.3 Certificate of Correction to Certificate of Amendment of
Restated Certificate of Incorporation of the Company filed on
April 18, 1991 (incorporated by reference to Exhibit 3.3 to
the Company's Registration Statement on Form Registration No.
33-40762) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --
3.4 By-Laws of the Company, as amended to date . . . . . . . . . . . .
3.5 Certificate of Designation of Preferred Stock of the Company
filed on June 27, 1991 (incorporated by reference to Exhibit
3.5 to the Company's Registration Statement on Form S-2,
Registration No. 33-40762) . . . . . . . . . . . . . . . . . . . . --
3.6 Certificate of Designation of Preferred Stock of the Company
filed on July 9, 1991 (incorporated by reference to Exhibit
3.6 to the Company's Registration Statement on Form S-2,
Registration No. 33-40762) . . . . . . . . . . . . . . . . . . . . --
3.7 Certificate of Designation of Preferred Stock of the Company
filed on June 29, 1993 (incorporated by reference to Exhibit
3.7 to the Company's Annual Report on Form 10-K for the year
ended June 30, 1994) . . . . . . . . . . . . . . . . . . . . . . . --
4.1 Trust Indenture dated as of March 31, 1990, between the
Company, Bountiful Psychiatric Hospital, Inc., Cumberland
Mental Health, Inc., East Carolina Psychiatric Services
Corporation, Havenwyck Hospital, Inc., Mesa Psychiatric
Hospital, Inc., Psychiatric Institute of West Virginia, Inc.,
and The Citizens and Southern National Bank and Susan L.
Adams (incorporated by reference to Exhibit 4.1 to the
Company's Annual Report on Form 10-K for the year ended June
30, 1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --
4.2 First Supplemental Trust Indenture dated as of June 15, 1991
between the Company, Bountiful Psychiatric Hospital, Inc.,
Cumberland Mental Health, Inc., East Carolina Psychiatric
Services Corporation, Havenwyck Hospital, Inc., Mesa
Psychiatric Hospital, Inc. and Psychiatric Hospital of West
Virginia, Inc. and The Citizens and Southern National Bank, a
national banking association, and an individual trustee, as
Trustees (incorporated by reference to Exhibit 4.4 to the
Company's Registration Statement on Form S-2, Registration
No.33-40762) . . . . . . . . . . . . . . . . . . . . . . . . . . . --
4.3 Second Supplemental Trust indenture dated as of May 15, 1993
between the Company, Bountiful Psychiatric Hospital, Inc.,
Cumberland Mental Health, Inc., East Carolina Psychiatric
Services Corporation, Havenwyck Hospital, Inc., Mesa
Psychiatric Hospital, Inc. and Psychiatric Hospital of West
Virginia, Inc. and NationsBank of Georgia, National
Association and Susan L. Adams (incorporated by reference to
Exhibit 4.3 to the Company's Annual Report on Form 10-K for
the year ended June 30, 1994) . . . . . . . . . . . . . . . . . . . --
4.4 Revolving Credit Note of the Company dated May 21, 1993 in
the principal amount of $4,000,000 payable to Societe
Generale, New York Branch (incorporated by reference to
Exhibit 4.4 to the Company's Annual Report on Form 10-K for
the year ended June 30, 1994) . . . . . . . . . . . . . . . . . . . --
4.5 Subsidiary Borrower Note of Atlantic Treatment Center, Inc.
dated May 21, 1993 in the principal amount of $4,607,945
payable to the order of Societe Generale, New York Branch
(incorporated by reference to Exhibit 4.5 to the Company's
Annual Report on Form 10-K for the year ended June 30, 1994) . . . --
</TABLE>
E-2
<PAGE> 50
<TABLE>
<CAPTION>
Page
Number
------
<S> <C> <C>
4.6 Subsidiary Borrower Note of Carolina Treatment Center, Inc.
dated May 21, 1993 in the principal amount of $5,030,000
payable to the order of Societe Generale, New York Branch
(substantially identical to Exhibit 4.5) . . . . . . . . . . . . . --
4.7 Subsidiary Borrower Note of Greenbrier Hospital, Inc. dated
May 21, 1993 in the principal amount of $5,973,125 payable to
the order of Societe Generale, New York Branch (substantially
identical to Exhibit 4.5) . . . . . . . . . . . . . . . . . . . . . --
4.8 Subsidiary Borrower Note of Gulf Coast Treatment Center, Inc.
dated May 21, 1993 in the principal amount of $4,392,500
payable to the order of Societe Generale, New York Branch
(substantially identical to Exhibit 4.5) . . . . . . . . . . . . . --
4.9 Subsidiary Borrower Note of Houma Psychiatric Hospital, Inc.
dated May 21, 1993 in the principal amount of $3,979,589
payable to the order of Societe Generale, New York Branch
(substantially identical to Exhibit 4.5) . . . . . . . . . . . . . --
4.10 Subsidiary Borrower Note of HSA of Oklahoma, Inc. dated
May 21, 1993 in the principal amount of $3,445,562 payable to
the order of Societe Generale, New York Branch (substantially
identical to Exhibit 4.5) . . . . . . . . . . . . . . . . . . . . . --
10.1 Asset Purchase Agreement, effective April 27, 1990, among the
Company, The Haven Hospital, Inc., The Ramsay Hospital
Corporation of Texas, and Ramsay Hospitals (Texas) Limited
(incorporated by reference to Exhibit 10.1 to the Company's
Annual Report on Form 10-K for the year ended June 30, 1990) . . . --
10.2 Note Purchase Agreement dated as of March 31, 1990, among the
Company, Bountiful Psychiatric Hospital, Inc., Cumberland
Mental Health, Inc., East Carolina Psychiatric Services
Corporation, Havenwyck Hospital, Inc., Mesa Psychiatric
Hospital, Inc., Psychiatric Institute of West Virginia, Inc.,
and Aetna Life Insurance Company regarding the purchase by
Aetna Life Insurance Company of $26,000,000 principal amount
of 11.6% Senior Secured $1,000,000 principal amount of 15.6%
Subordinated Secured Notes, and Warrants to Purchase Common
Stock of the Company (incorporated by reference to Exhibit
10.2 to the Company's Annual Report on Form 10-K the year
ended June 30, 1990) . . . . . . . . . . . . . . . . . . . . . . . --
10.3 Note Purchase Agreement pursuant to which Monumental Life
Insurance Company purchased $15,500,000 principal amount of
11.6% Senior Secured Notes, $2,000,000 principal amount of
15.6% Subordinated Secured Notes, and Warrants to Purchase
Common Stock of the Company (substantially identical to
Exhibit 10.2) . . . . . . . . . . . . . . . . . . . . . . . . . . . --
10.4 Note Purchase Agreement pursuant to which Connecticut Mutual
Life Insurance Company purchased $15,000,000 principal amount
of 11.6% Senior Secured Notes (substantially identical to
Exhibit 10.2) . . . . . . . . . . . . . . . . . . . . . . . . . . . --
10.5 Pledge and Security Agreement dated as of March 31, 1990,
between the Company and The Citizens and Southern National
Bank (incorporated by reference to Exhibit 10.5 to the
Company's Annual Report on Form 10-K for the year ended June
30, 1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --
10.6 Pledge and Security Agreement between Michigan Psychiatric
Services, Inc. and The Citizens and Southern National Bank
(substantially identical to Exhibit 10.5) . . . . . . . . . . . . . --
</TABLE>
E-3
<PAGE> 51
<TABLE>
<CAPTION>
Page
Number
------
<S> <C> <C>
10.7 Pledge and Security Agreement between Americare of Galax,
Inc. and The Citizens and Southern National Bank
(substantially identical to Exhibit 10.5) . . . . . . . . . . . . . --
10.8 Pledge and Security Agreement between Bountiful Psychiatric
Hospital, Inc. and The Citizens and Southern National Bank
(substantially identical to Exhibit 10.5) . . . . . . . . . . . . . --
10.9 Deed of Trust, Security Agreement, and Financing Statement
dated as of March 31, 1990 from Bountiful Psychiatric
Hospital, Inc. to Merrill Title Company for the benefit of
The Citizens and Southern National Bank and Susan L. Adams
covering certain property in Woods Cross, Utah (incorporated
by reference to Exhibit 10.9 to the Company's Annual Report
on Form 10-K for the year ended June 30, 1990) . . . . . . . . . . --
10.10 Deed of Trust and Security Agreement from Cumberland Mental
Health, Inc. to First American Title Insurance Company for
the benefit of The Citizens and Southern National Bank and
Susan L. Adams covering certain property in Fayetteville,
North Carolina (substantially identical to Exhibit 10.9) . . . . . --
10.11 Deed of Trust and Security Agreement from East Carolina
Psychiatric Services Corporation to First American Title
Insurance Company for the benefit of The Citizens and
Southern National Bank and Susan L. Adams covering certain
property in Jacksonville, North Carolina (substantially
identical to Exhibit 10.9) . . . . . . . . . . . . . . . . . . . . --
10.12 Mortgage and Security Agreement dated as of March 31, 1990
from Havenwyck Hospital, Inc. to The Citizens and Southern
National Bank and Susan L. Adams covering certain property in
Auburn Hills, Michigan (incorporated by reference to Exhibit
10.12 to the Company's Annual Report on Form 10-K for the
year ended June 30, 1990) . . . . . . . . . . . . . . . . . . . . . --
10.13 Leasehold Deed of Trust, Assignment of Rents and Security
Agreement with Financing Statement dated as of March 31, 1990
from Mesa Psychiatric Hospital, Inc. to Transamerica Title
Insurance Company for the benefit of The Citizens and
Southern National Bank and Susan L. Adams covering certain
property in Mesa, Arizona (incorporated by reference to
Exhibit 10.13 to the Company's Annual Report on Form 10-K for
the year ended June 30, 1990) . . . . . . . . . . . . . . . . . . . --
10.14 Leasehold Deed of Trust and Security Agreement from
Psychiatric Institute of West Virginia, Inc. to J. Nicholas
Barth, Esq., for the benefit of The Citizens and Southern
National Bank and Susan L. Adams covering certain property in
Morgantown, West Virginia (substantially identical to Exhibit
10.13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --
10.15 Obligor Subrogation and Contribution Agreement dated as of
April 30, 1990 among The Citizens and Southern National Bank,
Susan L. Adams, the Company, Bountiful Psychiatric Hospital,
Inc., Cumberland Mental Health, Inc., East Carolina
Psychiatric Services Corporation, Havenwyck Hospital, Inc.,
Mesa Psychiatric Hospital, Inc., and Psychiatric Institute of
West Virginia, Inc. (incorporated by reference to Exhibit
10.15 to the Company's Annual Report on Form 10-K for the
year ended June 30,1990) . . . . . . . . . . . . . . . . . . . . . --
</TABLE>
E-4
<PAGE> 52
<TABLE>
<CAPTION>
Page
Number
------
<S> <C> <C>
10.16 Credit Agreement dated as of May 15, 1993 among the Company
and certain of its subsidiaries named therein, Societe
Generale, New York Branch, First Union National Bank of North
Carolina and Hibernia National Bank, as lenders, and Societe
Generale, as issuing bank and agent (incorporated by
reference to Exhibit 10.16 to the Company's Annual Report on
Form 10-K for the year ended June 30, 1994) . . . . . . . . . . . . --
10.17 Security Agreement dated as of May 15, 1993 by Atlantic
Treatment Center, Inc. in favor of Societe Generale, as agent
for the lenders which are parties to that certain Credit
Agreement described in Exhibit 10.16 above, and covering
certain property in Daytona Beach, Florida (incorporated by
reference to Exhibit 10.17 to the Company's Annual Report on
Form 10-K for the year ended June 30, 1994) . . . . . . . . . . . . --
10.18 Security Agreement dated as of May 15, 1993 by Carolina
Treatment Center, Inc. in favor of Societe Generale, as agent
for the lenders which are parties to that certain Credit
Agreement described in Exhibit 10.16 above (substantially
identical to Exhibit 10.17) . . . . . . . . . . . . . . . . . . . . --
10.19 Security Agreement dated as of May 15, 1993 by Great Plains
Hospital, Inc. in favor of Societe Generale, as agent for the
lenders which are parties to that certain Credit Agreement
described in Exhibit 10.16 above (substantially identical to
Exhibit 10.17) . . . . . . . . . . . . . . . . . . . . . . . . . . --
10.20 Security Agreement dated as of May 15, 1993 by Greenbrier
Hospital, Inc. in favor of Societe Generale, as agent for the
lenders which are parties to that certain Credit Agreement
described in Exhibit 10.16 above (substantially identical to
Exhibit 10.17) . . . . . . . . . . . . . . . . . . . . . . . . . . --
10.21 Security Agreement dated as of May 15, 1993 by Gulf Coast
Treatment Center, Inc. in favor of Societe Generale, as agent
for the lenders which are parties to that certain Credit
Agreement described in Exhibit 10.16 above (substantially
identical to Exhibit 10.17) . . . . . . . . . . . . . . . . . . . . --
10.22 Security Agreement dated as of May 15, 1993 by Houma
Psychiatric Hospital, Inc. in favor of Societe Generale, as
agent for the lenders which are parties to that certain
Credit Agreement described in Exhibit 10.16 above
(substantially identical to Exhibit 10.17) . . . . . . . . . . . . --
10.23 Security Agreement dated as of May 15, 1993 by HSA of
Oklahoma, Inc. in favor of Societe Generale, as agent for the
lenders which are parties to that certain Credit Agreement
described in Exhibit 10.16 above (substantially identical to
Exhibit 10.17) . . . . . . . . . . . . . . . . . . . . . . . . . . --
10.24 Security Agreement dated as of May 15, 1993 by The Haven
Hospital, Inc. in favor of Societe Generale, as agent for the
lenders which are parties to that certain Credit Agreement
described in Exhibit 10.16 above (substantially identical to
Exhibit 10.17) . . . . . . . . . . . . . . . . . . . . . . . . . . --
10.25 Security Agreement dated as of May 15, 1993 by the Company in
favor of Societe Generale, as agent for the lenders which are
parties to that certain Credit Agreement described in Exhibit
10.16 above (substantially identical to Exhibit 10.17) . . . . . . --
</TABLE>
E-5
<PAGE> 53
<TABLE>
<CAPTION>
Page
Number
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10.26 Accounts Receivable Security Agreement dated as of May 15,
1993 by Americare of Galax, Inc. in favor of Societe
Generale, as agent for the lenders which are parties to that
certain Credit Agreement described in Exhibit 10.16 above
(incorporated by reference to Exhibit 10.26 to the Company's
Annual Report on Form 10-K for the year ended June 30, 1994) . . . --
10.27 Accounts Receivable Security Agreement dated as May 15, 1993
by Bountiful Psychiatric Hospital, Inc. in favor of Societe
Generale, as agent for the lenders which are parties to that
certain Credit Agreement described in Exhibit 10.16 above
(substantially identical to Exhibit 10.26) . . . . . . . . . . . . --
10.28 Accounts Receivable Security Agreement dated as of May 15,
1993 by Cumberland Mental Health, Inc. in favor of Societe
Generale, New York Branch, as agent for the lenders which are
parties to that certain Credit Agreement described in Exhibit
10.16 above (substantially identical to Exhibit 10.26) . . . . . . --
10.29 Accounts Receivable Security Agreement dated as of May 15,
1993 by East Carolina Psychiatric Services Corporation in
favor of Societe Generale, New York Branch, as agent for the
lenders which are parties to that certain Credit Agreement
described in Exhibit 10.16 above (substantially identical to
Exhibit 10.26) . . . . . . . . . . . . . . . . . . . . . . . . . . --
10.30 Accounts Receivable Security Agreement dated as of May 15,
1993 by Havenwyck Hospital, Inc. in favor of Societe
Generale, New York Branch as agent for the lenders which are
parties to that certain Credit Agreement described in Exhibit
10.16 above (substantially identical to Exhibit 10.26) . . . . . . --
10.31 Accounts Receivable Security Agreement dated as of May 15,
1993 by Mesa Psychiatric Hospital, Inc. in favor of Societe
Generale, New York Branch, as agent for the lenders which are
parties to that certain Credit Agreement described in Exhibit
10.16 above (substantially identical to Exhibit 10.26) . . . . . . --
10.32 Accounts Receivable Security Agreement dated as of May 15,
1993 by Michigan Psychiatric Services, Inc. in favor of
Societe Generale, New York Branch, as agent for the lenders
which are parties to that certain Credit Agreement described
in Exhibit 10.16 above (substantially identical to Exhibit
10.26) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --
10.33 Accounts Receivable Security Agreement dated as of May 15,
1993 by Psychiatric Institute of West Virginia, Inc. in favor
of Societe Generale, New York Branch, as agent for the
lenders which are parties to that certain Credit Agreement
described in Exhibit 10.16 above (substantially identical to
Exhibit 10.26) . . . . . . . . . . . . . . . . . . . . . . . . . . --
10.34 Stock Pledge Agreement dated as of May 15, 1993, among the
Company in favor of Societe Generale, New York Branch, as
agent for the lenders which are parties to that certain
Credit Agreement described in Exhibit 10.16 above
(incorporated by reference to Exhibit 10.34 to the Company's
Annual Report on Form 10-K for the year ended June 30, 1994) . . . --
</TABLE>
E-6
<PAGE> 54
<TABLE>
<CAPTION>
Page
Number
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<S> <C> <C>
10.35 Revolving Credit Guarantee dated as of May 15, 1993 by
Americare of Galax, Inc. in favor of Societe Generale, New
York Branch, as agent for the lenders which are parties to
that certain Credit Agreement described in Exhibit 10.16
above (incorporated by reference to Exhibit 10.35 to the
Company's Annual Report on Form 10-K for the year ended June
30, 1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --
10.36 Revolving Credit Guarantee dated as of May 15, 1993 by
Bethany Psychiatric Hospital, Inc. in favor of Societe
Generale, New York Branch, as agent for the lenders which are
parties to that certain Credit Agreement described in Exhibit
10.16 above (substantially identical to Exhibit 10.35) . . . . . . --
10.37 Revolving Credit Guarantee dated as of May 15, 1993 by
Bountiful Psychiatric Hospital, Inc. in favor of Societe
Generale, New York Branch, as agent for the lenders which are
parties to that certain Credit Agreement described in Exhibit
10.16 above (substantially identical to Exhibit 10.35) . . . . . . --
10.38 Revolving Credit Guarantee dated as of May 15, 1993 by
Cumberland Mental Health, Inc. in favor of Societe Generale,
New York Branch, as agent for the lenders which are parties
to that certain Credit Agreement described in Exhibit 10.16
above (substantially identical to Exhibit 10.35) . . . . . . . . . --
10.39 Revolving Credit Guarantee dated as of May 15, 1993 by East
Carolina Psychiatric Services Corporation in favor of Societe
Generale, New York Branch, as agent for the lenders which are
parties to that certain Credit Agreement described in Exhibit
10.16 above (substantially identical to Exhibit 10.35) . . . . . . --
10.40 Revolving Credit Guarantee dated as of May 15, 1993 by
Havenwyck Hospital, Inc. in favor of Societe Generale, New
York Branch, as agent for the lenders which are parties to
that certain Credit Agreement described in Exhibit 10.16
above (substantially identical to Exhibit 10.35) . . . . . . . . . --
10.41 Revolving Credit Guarantee dated as of May 15, 1993 by Mesa
Psychiatric Hospital, Inc. in favor of Societe Generale, New
York Branch, as agent for the lenders which are parties to
that certain Credit Agreement described in Exhibit 10.16
above (substantially identical to Exhibit 10.35) . . . . . . . . . --
10.42 Revolving Credit Guarantee dated as of May 15, 1993 by
Michigan Psychiatric Services, Inc. in favor of Societe
Generale, New York Branch, as agent for the lenders which are
parties to that certain Credit Agreement described in Exhibit
10.16 above (substantially identical to Exhibit 10.35) . . . . . . --
10.43 Revolving Credit Guarantee dated as of May 15, 1993 by
Psychiatric Institute of West Virginia, Inc. in favor of
Societe Generale, New York Branch, as agent for the lenders
which are parties to that certain Credit Agreement described
in Exhibit 10.16 above (substantially identical to Exhibit
10.35) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --
10.44 Management Fee Subordination Agreement dated May 15, 1993,
among Paul J. Ramsay and Ramsay Health Care Pty. Ltd. in
favor of Societe Generale, New York Branch, as agent for the
lenders which are parties to that certain Credit Agreement
described in Exhibit 10.16 above (incorporated by reference
to Exhibit 10.44 to the Company's Annual Report on Form 10-K
for the year ended June 30, 1994) . . . . . . . . . . . . . . . . . --
</TABLE>
E-7
<PAGE> 55
<TABLE>
<CAPTION>
Page
Number
------
<S> <C> <C>
10.45 Mortgage and Fixture Filing and Assignment of Leases and
Rents dated as of May 15, 1993 granted by Atlantic Treatment
Center, Inc. to Societe Generale, individually and as agent
for the lenders which are parties to that certain Credit
Agreement described in Exhibit 10.16 above, with respect to
certain real property located in Volusia County, Florida
(incorporated by reference to Exhibit 10.45 to the Company's
Annual Report on Form 10-K for the year ended June 30, 1994) . . . --
10.46 Mortgage and Fixture Filing and Assignment of Leases and
Rents dated as of May 15, 1993 granted by Carolina Treatment
Center, Inc. to Societe Generale, individually and as agent
for the lenders which are parties to that certain Credit
Agreement described in Exhibit 10.16 above, with respect to
certain real property located in Horry County, South Carolina
(substantially identical to Exhibit 10.45) . . . . . . . . . . . . --
10.47 Deed of Trust and Fixture Filing and Assignment of Leases and
Rents dated as of May 15, 1993 granted by Great Plains
Hospital, Inc. to Jacob W. Bayer, Jr. as Trustee for the
benefit of Societe Generale, individually and as agent for
the lenders which are parties to that certain Credit
Agreement described in Exhibit 10.16 above, with respect to
certain real property located in Vernon County, Missouri
(substantially identical to Exhibit 10.45) . . . . . . . . . . . . --
10.48 Mortgage, Security and Assignment of Leases and Rents dated
as of May 15, 1993 by Greenbrier Hospital, Inc. to Societe
Generale individually and as agent for the lenders which are
parties to that certain Credit Agreement described in Exhibit
10.16 above, with respect to certain real property located in
St. Tammany Parish, Louisiana (substantially identical to
Exhibit 10.45) . . . . . . . . . . . . . . . . . . . . . . . . . . --
10.49 Mortgage and Fixture Filing and Assignment of Leases and
Rents dated as of May 15, 1993 granted by Gulf Coast
Treatment Center, Inc. to Societe Generale, individually and
as agent for the lenders which are parties to that certain
Credit Agreement described in Exhibit 10.16 above, with
respect to certain real property located in Okaloosa County,
Florida (substantially identical to Exhibit 10.45) . . . . . . . . --
10.50 Mortgage, Security Agreement and Assignment of Leases and
Rents dated as of May 15, 1993 granted by Houma Psychiatric
Hospital, Inc. to Societe Generale, individually and as agent
for the lenders which are parties to that certain Credit
Agreement described in Exhibit 10.16 above, with respect to
certain real property located in the City of Houma, Parish of
Terrebonne, Louisiana (substantially identical to Exhibit
10.45) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --
10.51 Mortgage with Power of Sale and Fixture Filing and Assignment
of Leases and Rents dated as of May 15, 1993 granted by HSA
of Oklahoma, Inc. to Societe Generale, individually and as
agent for the lenders which are parties to that certain
Credit Agreement described in Exhibit 10.16 above, with
respect to certain real property located in Garfield County,
Oklahoma (substantially identical to Exhibit 10.45) . . . . . . . . --
</TABLE>
E-8
<PAGE> 56
<TABLE>
<CAPTION>
Page
Number
------
<S> <C> <C>
10.52 Deed of Trust and Fixture Filing and Assignment of Leases and
Rents dated as of May 15, 1993 granted by The Haven Hospital,
Inc. to Societe Generale, individually and as agent for the
lenders which are parties to that certain Credit Agreement
described in Exhibit 10.16 above, with respect to certain
real property located in the City of DeSoto, Dallas County,
Texas (substantially identical to Exhibit 10.45) . . . . . . . . . --
10.53 Loan Agreement between Okaloosa County, Florida and Gulf
Coast Treatment Center, Inc. dated October 1, 1984, relating
to the issuance of bonds for Gulf Coast Treatment Center,
Inc. (incorporated by reference to Exhibit 10.16 to the
Company's Registration Statement on Form S-1, Registration
No. 2-9892) . . . . . . . . . . . . . . . . . . . . . . . . . . . . --
10.54 Loan Agreement between Louisiana Public Facilities Authority
and Greenbrier Hospital, Inc. dated November 1, 1984,
relating to the issuance of bonds for Greenbrier Hospital,
Inc. (incorporated by reference to Exhibit 10.17 to the
Company's Registration Statement on Form S-1, Registration
No. 2-98921) . . . . . . . . . . . . . . . . . . . . . . . . . . . --
10.55 Loan Agreement between Horry County, South Carolina and
Carolina Treatment Center, Inc. dated December 1, 1984,
relating to the issuance of bonds for Carolina Treatment
Center, Inc. (incorporated by reference to Exhibit 10.18 to
the Company's Registration Statement on Form S-1,
Registration No. 2-98921) . . . . . . . . . . . . . . . . . . . . . --
10.56 Loan Agreement between Louisiana Public Facilities Authority
and Houma Psychiatric Hospital, Inc. dated as of September 1,
1985, relating to the issuance of bonds for HSA Bayou Oaks
Hospital . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10.57 Ground Lease between Facilities Management Corporation, as
landlord, and Psychiatric Institute of West Virginia, Inc.,
as tenant, dated as of September 30, 1985 . . . . . . . . . . . . .
10.58 Lease Agreement between Houma Psychiatric Hospital, Inc. and
Hospital Service District No. 1 of the Parish of Terrebonne,
State of Louisiana, effective February 1, 1985 (incorporated
by reference to Exhibit 10.38 to the Company's Registration
Statement on Form S-1, Registration No. 2-98921) . . . . . . . . . --
10.59 Lease among Bethany Psychiatric Hospital, Inc., Bethany
General Hospital, the City of Bethany, Oklahoma and the
Bethany General Hospital Trust dated December 9, 1985 (ground
lease) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10.60 Loan Agreement between The Enid Development Authority and HSA
of Oklahoma, Inc. dated as of October 1, 1985, relating to
The Enid Development Authority Variable Rate Demand Revenue
Bonds (Meadowlake Hospital Project) . . . . . . . . . . . . . . . .
10.61 Option Agreement dated September 11, 1989, between the
Company and The Ramsay Hospital Corporation of Texas
(incorporated by reference to Exhibit 10.44 to the Company's
Annual Report on Form 10-K for the year ended June 30, 1989) . . . --
</TABLE>
E-9
<PAGE> 57
<TABLE>
<CAPTION>
Page
Number
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10.62 Ramsay Health Care, Inc. 1990 Stock Option Plan, as amended
to date (incorporated by reference to Exhibit 4.3 to the
Company's Registration Statement on Form S-8 filed on March
6, 1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --
10.63 Lease Agreement dated August 30, 1988 between the Company and
Ayshire Land Dome Joint Venture relating to office space at
One Poydras Plaza, New Orleans, Louisiana (incorporated by
reference to Exhibit 10.78 to the Company's Registration
Statement on Form S-2, Registration No. 33-40762) . . . . . . . . . --
10.64 Ramsay Health Care, Inc. Deferred Compensation and Retirement
Plan (incorporated by reference to Exhibit 10.79 to the
Company's Registration Statement on Form S-2, Registration
No. 33-40762) . . . . . . . . . . . . . . . . . . . . . . . . . . . --
10.65 Personnel and Facility Sharing Agreement dated as of June 27,
1991 between the Company and Ramsay Holdings HSA Limited
(incorporated by reference to Exhibit 10.83 to the Company's
Registration Statement on Form S-2, Registration No.
33-40762) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --
10.66 Indemnity Agreement dated as of June 1991 between the Company
and Ramsay Holdings HSA Limited (incorporated by reference to
Exhibit 10.84 to the Company's Registration Statement on Form
S-2, Registration No. 33-40762) . . . . . . . . . . . . . . . . . . --
10.67 Agreement dated January 7, 1992 between the Company and Ralph
J. Watts (incorporated by reference to Exhibit 10(a) to the
Company's Quarterly Report on Form 10-Q for the quarter ended
December 31, 1991) . . . . . . . . . . . . . . . . . . . . . . . . --
10.68 Warrant Certificate dated January 8, 1992 issued to Ralph J.
Watts (incorporated by reference to Exhibit 10(b) to the
Company's Quarterly Report on form 10-Q for the quarter ended
December 31, 1991) . . . . . . . . . . . . . . . . . . . . . . . . --
10.69 Management Agreement dated as of June 25, 1992 between the
Company and Ramsay Health Care Pty. Limited (incorporated by
reference to Exhibit 10.90 to the Company's Annual Report on
Form 10-K for the year ended June 30, 1992) . . . . . . . . . . . . --
10.70 Ramsay Health Care, Inc. 1991 Stock Option Plan (incorporated
by reference to Exhibit 10.91 to the Company's Annual Report
on Form 10-K for the year ended June 30, 1992) . . . . . . . . . . --
10.71 Employment Agreement dated as of January 7, 1992 between the
Company and Gregory H. Browne (incorporated by reference to
Exhibit 10.92 to the Company's Annual Report on Form 10-K for
the year ended June 30, 1992) . . . . . . . . . . . . . . . . . . . --
10.72 Employment Agreement dated as of July 7, 1992 between the
Company and Bruce R. Soden (incorporated by reference to
Exhibit 10.93 to the Company's Annual Report on Form 10-K for
the year ended June 30, 1992) . . . . . . . . . . . . . . . . . . . --
10.73 Employment Agreement dated January 23, 1992 between the
Company and Wallace E. Smith (incorporated by reference to
Exhibit 10.94 to the Company's Annual Report on Form 10-K for
the year ended June 30, 1992) . . . . . . . . . . . . . . . . . . . --
10.74 Employment Agreement dated January 23, 1992 between the
Company and John A. Quinn (incorporated by reference to
Exhibit 10.95 to the Company's Annual Report on Form 10-K for
the year ended June 30, 1992) . . . . . . . . . . . . . . . . . . . --
</TABLE>
E-10
<PAGE> 58
<TABLE>
<CAPTION>
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Number
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10.75 Employment Agreement dated as of October 7, 1992 between the
Company and Rea A. Oliver (incorporated by reference to
Exhibit 10.79 to the Company's Annual Report on Form 10-K for
the year ended June 30, 1994) . . . . . . . . . . . . . . . . . . . --
10.76 Lease dated April 4, 1992 between The Union Labor Life
Insurance Company and the Company (incorporated by reference
to Exhibit 10.98 to the Company's Annual Report on Form 10-K
for the year ended June 30, 1992) . . . . . . . . . . . . . . . . . --
10.77 Lease dated May 27, 1992 between Gail Buy and Bountiful
Psychiatric Hospital (incorporated by reference to Exhibit
10.99 to the Company's Annual Report on Form 10-K for the
year ended June 30, 1992) . . . . . . . . . . . . . . . . . . . . . --
10.78 Lease Agreement dated as of February 12, 1993 by and between
Gulf Coast Treatment Center, Inc and Vendell of Florida, Inc.
(incorporated by reference to Exhibit 10.82 to the Company's
Annual Report on Form 10-K for the year ended June 30, 1994) . . . --
10.79 Ramsay Health Care, Inc. 1993 Stock Option Plan (incorporated
by reference to Exhibit 10.83 to the Company's Quarterly
Report on Form 10Q for the quarter ended December 31, 1993) . . . . --
10.80 Ramsay Health Care, Inc. 1993 Employee Stock Purchase Plan
(incorporated by reference to Exhibit 10.84 to the Company's
Quarterly Report on Form 10Q for the quarter ended December
31, 1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --
10.81 Employment Agreement dated as of October 2, 1993 between the
Company and Reynold Jennings . . . . . . . . . . . . . . . . . . .
10.82 Letter Agreement dated May 26, 1994 between the Company and Reynold
Jennings amending Mr. Jennings' Employment Agreement . . . . . . .
10.83 Letter Agreement dated June 3,1994 between the Company and Reynold
Jennings amending Mr. Jennings' Employment Agreement . . . . . . .
10.84 Fourth Modification, Extension and Amendment of Lease
Agreement dated November 15, 1993 between the Company and One
Poydras Plaza Venture relating to the Company's office space
at One Poydras Plaza, New Orleans, Louisiana . . . . . . . . . . .
11 Computation of Net Income Per Share . . . . . . . . . . . . . . . .
21 Subsidiaries of the Company . . . . . . . . . . . . . . . . . . . .
23 Consent of Ernst & Young . . . . . . . . . . . . . . . . . . . . .
27 Financial Data Schedule . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
Copies of exhibits filed with this Annual Report on Form 10-K or incorporated
herein by reference do not accompany copies hereof for distribution to
stockholders of the Company. The Company will furnish a copy of any of such
exhibits to any stockholder requesting it.
E-11
<PAGE> 1
EXHIBIT 3.4
HEALTHCARE SERVICES OF AMERICA, INC.
BYLAWS
(Incorporated Under the Laws of the State of Delaware)
Adopted: August 19, 1983
Restated: August 7, 1985
Restated: February 12, 1986
Restated: August 12, 1986
Restated: October 28, 1986
Restated: April 6, 1987
Restated: June 18, 1987
Restated: October 8, 1987
Restated: March 3, 1988
Restated: July 20, 1988
Amended: September 3, 1990
Amended: September 22, 1994
<PAGE> 2
HEALTHCARE SERVICES OF AMERICA, INC.
BYLAWS
INDEX
<TABLE>
<S> <C> <C>
ARTICLE I
Offices
-------
SECTION 1.1 Principal Registered Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
Stockholders' Meetings
----------------------
SECTION 2.1 Annual Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.2 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.3 Notice and Purpose of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.4 Waiver of Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.5 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.6 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.7 Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.8 Proxies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE III
Directors
---------
SECTION 3.1 Powers, Number, Qualification, Term, Quorum and Vacancies . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.2 Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.3 Action by Consent in Lieu of a Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.4 Waiver of Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.5 Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE IV
Indemnification Insurance
-------------------------
SECTION 4.1 Indemnification Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE V
Officers
--------
SECTION 5.1 Officers of the Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.2 Term and Removal of Officers of the Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.3 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.4 Chairman of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.4A Vice Chairman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.4B Chief Executive Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.5 President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.6 Vice Presidents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 5.7 Secretary and Assistant Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.8 Treasurer and Assistant Treasurers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE VI
General
-------
SECTION 6.1 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 6.2 Corporate Seal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 6.3 Voting Corporation's Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.4 Robert's Rules of Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 6.5 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 6.6 Lost Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 6.7 Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
</TABLE>
<PAGE> 4
ARTICLE I
Section 1.1
ARTICLE I
Offices
SECTION 1.1. Principal Registered Office
The address of the registered office of the corporation
Delaware shall be 100 W. 10th Street, Wilmington, Delaware 198. The principal
office and place of business of the corporation shall be 2000 Southbridge
Parkway, Suite 200, Birmingham, Alabama 35203.
<PAGE> 5
ARTICLE II
Section 2.1
ARTICLE II
Stockholders' Meetings
SECTION 2.1. Annual Meetings
(a) The Board of Directors may designate any place within
or without the State of Delaware as the place of meeting of the annual meeting
of stockholders.
(b) The regular annual meeting of the stockholders of the
corporation shall be held at 10:00 a.m., (i) on the second Wednesday of May of
each year, or, if that be a holiday, then at the same hour on the next
succeeding business day or (ii) at such other date and time as shall be
designated from time to time by the board of directors, and the notice of the
meeting shall state that it is for the purpose of electing directors and for
the transaction of such other business as may come before the meeting.
(c) If the election of directors shall not be held on the
day designated herein for any annual meeting, or at any adjournment thereof,
the board of directors shall cause the election to be held at a special meeting
of the stockholders as soon thereafter as is convenient. At such meeting, the
stockholders may elect the directors and transact such other business with the
same force and effect as at an annual meeting duly called and held.
Amended: 4/6/87
2
<PAGE> 6
ARTICLE II
Section 2.2
SECTION 2.2. Special Meetings
Special meetings may be called by the board of directors, by
the Chairman of the Board, or by the President.
Amended: 02/12/86
Amended: 10/23/86
3
<PAGE> 7
ARTICLE II
Section 2.3
SECTION 2.3. Notice and Purpose of Meetings
Notice of the place, date and hour of every meeting of
stockholders, and, in the case of a special meeting, the purpose or purposes
for which the meeting is called, shall be in writing and a copy thereof shall
be served, either personally or by regular mail, or by any other lawful means,
not less than ten (10) nor more than sixty (60) days before the date of the
meeting to each stockholder entitled to vote at such meeting. If mailed,
notice shall be deemed to be given when deposited in the United States mail,
postage prepaid, directed to each stockholder at the address of such
stockholder as it appears on the stock transfer books of the corporation. Such
other notice or notices shall be given as may be required by law.
Except where otherwise required by law, notice of any
adjourned meeting of the stockholders of the corporation shall not be required
to be given except by oral announcement of the time and place at the meeting at
which the adjournment is taken.
Amended: 2/12/86
4
<PAGE> 8
ARTICLE II
Section 2.4
SECTION 2.4. Waiver of Notice
Notice of a meeting need not be given to any stockholder who
signs a written waiver of notice, either before or after the time stated
therein; and a stockholder's waiver shall be deemed equivalent to notice.
Attendance of a stockholder at a meeting shall constitute a waiver of notice of
such meeting, except when the stockholder attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of
any business because the meeting is not lawfully called or convened. Neither
the business to be transacted at, nor the purpose of, any regular or special
meeting of the stockholders need be specified in any written waiver of notice.
Added: 2/12/86
5
<PAGE> 9
ARTICLE II
Section 2.5
SECTION 2.5. Quorum
A quorum at all meetings of stockholders shall consist of
holders of one-half (1/2) of the shares of the capital stock of corporation
entitled to vote in any such meeting, represented person or by proxy.
Amended: 02/12/86
Amended: 10/28/86
6
<PAGE> 10
ARTICLE II
Section 2.6
SECTION 2.6. Organization
Meetings of the stockholders shall be presided over by the
Chairman of the Board, or, if the Chairman of the Board is not present, by the
President, or if neither the Chairman of the Board nor the President is present
then by a Vice President. The Secretary of the corporation shall act as
Secretary of every meeting, but if the Secretary is not present the senior
Assistant Secretary present at the meeting shall act as Secretary of the
meeting.
Amended: 10/28/86
7
<PAGE> 11
ARTICLE II
Section 2.7
SECTION 2.7. Voting
At any meeting of the stockholders, each holder of record of
the voting stock of the corporation shall have one vote for each such share of
stock held of record, unless otherwise provided by law or by the Articles of
Incorporation of the Corporation.
8
<PAGE> 12
ARTICLE II
Section 2.8
SECTION 2.8. Proxies.
A stockholder entitled to vote at a meeting of stockholders or
to express consent or dissent to corporate action in writing without a meeting
may authorize another person or persons to act for him by proxy. A proxy may
not be voted or acted upon after three years from its date, unless the proxy
provides for a longer period.
Added: 2/12/86
9
<PAGE> 13
ARTICLE III
Section 3.1
ARTICLE III
Directors
SECTION 3.1. Powers, Number, Qualification, Term, Quorum and Vacancies
(a) The property, affairs and business of the corporation
shall be managed and its corporate powers exercised by its board of directors.
The number of directors which shall constitute the whole board shall not be
less than five (5) nor more than ten (10). Within such limits, the number of
directors may be fixed from time to time by vote of the board of directors, at
any regular or special meeting, subject to the provisions of the Certificate of
Incorporation. Directors need not be stockholders. Directors shall be elected
at the annual meeting of the stockholders of the corporation to serve until the
next annual meeting of stockholders and until their respective successors are
duly elected and have been qualified.
In addition to the powers by these ByLaws expressly conferred upon
them, the board may exercise all such powers of the corporation as are not by
the laws of the State of
10
<PAGE> 14
Delaware, the Certificate of Incorporation of these ByLaws required to be
exercised or done by the stockholders.
Amended: 10/10/84
Amended: 8/07/85
Amended: 10/28/86
Amended: 10/08/87
Restated: 7/20/88
(b) One-half (1/2) of the total number of directors shall
constitute a quorum. The vote of the majority of the directors present at a
meeting at which a quorum is present shall be the act of the board of
directors.
Amended: 2/12/86
Amended: 10/28/86
Amended: 10/18/87
11
<PAGE> 15
ARTICLE III
Section 3.2
SECTION 3.2. Meetings
Meetings of the board of directors, regular or special, may be
held either within or without the State of Delaware. A regular annual meeting
of the board of directors shall be held immediately following the annual
meeting of the stockholders of the corporation. Regular quarterly meetings
shall be held at 1:00 o'clock p.m. on the second Wednesday of November,
February and August of each year, or, if that be a holiday, then at the same
hour on the next succeeding business day; provided, however, that no such
regular quarterly meeting shall be held on the second Wednesday of November,
1985. Other regular meetings of the board of directors or of any committee
designated thereby shall be held on such date and at such time and place as may
be specified by telegraphic, written or oral notice duly served on, sent,
mailed, or otherwise communicated to each director, not less than 48 hours
before such regular meeting. Special meetings may be held without notice upon
the call of the Chairman of the Board at the request of any two directors.
Amended: 10/24/85
Amended: 10/28/86
12
<PAGE> 16
ARTICLE III
Section 3.3
SECTION 3.3. Action by Consent in Lieu of a Meeting
Unless otherwise restricted by the Certificate of
Incorporation of these ByLaws, any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof may be taken
without a meeting if all members of the board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board, or committee.
Amended: 2/12/86
13
<PAGE> 17
ARTICLE III
Section 3.4
SECTION 3.4. Waiver of Notice
Notice of a meeting need not be given to any director who
signs a written waiver of notice, either before or after the time stated
therein: and a director's waiver shall be deemed equivalent to notice.
Attendance of a director at a meeting shall constitute a waiver of notice of
such meeting, except when the director attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of
any business because the meeting is not lawfully called or convened. Neither
the business to be transacted at, nor the purpose of, any regular or special
meeting of the directors need be specified in any written waiver of notice.
Added: 2/12/86
14
<PAGE> 18
ARTICLE III
Section 3.5
SECTION 3.5. Committee
The board of directors may, by resolution passed by a majority
of the whole board, designate one or more committee, each committee to consist
of one or more of the directors of the corporation. The board may designate
one or more directors as alternate members of any committee, who may replace
any absent or disqualified member at any meeting of the committee. Any such
committee, to the extent provided in the resolution of the board of directors,
shall have and may exercise all the powers of the board of directors in the
management of the business and affairs of the corporation, and may authorize
the seal of the corporation to be affixed to all papers which may require it;
provided, however, that in the absence or disqualification of any member of
such committee or committees, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they constitute
a quorum, may unanimously appoint another member of the board of directors to
act at the meeting in the place of any such absent or disqualified member; and
provided further that no such committee shall have the power or authority in
reference to amending the Certificate of Incorporation (except that a committee
may, to the extent
15
<PAGE> 19
authorized in the resolution or resolutions providing for the issuance of
shares of stock adopted by the board of directors, fix any of the preferences
or rights of such shares relating to dividends, redemption, dissolution, any
distribution of assets of the corporation or the conversion into, or the
exchange of such shares for, shares of any other class or classes or any other
series of the same or any other class or classes of stock of the corporation),
adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or revocation of a dissolution, amending the
ByLaws of the corporation, and, unless the resolution expressly so provides,
declaring a dividend, authorizing the issuance of stock, or adopting a
certificate of ownership and merger.
Notice of a meeting need not be given to any members of a
committee of directors who sign a written waiver of notice, either before or
after the time stated therein; and a committee member's waiver shall be deemed
equivalent to notice. Attendance of a committee member at a meeting shall
constitute a waiver of notice of such meeting, except when the committee member
attends a meeting for the express purpose of objecting, at the beginning of the
16
<PAGE> 20
meeting, to the transaction of any business because the meeting is not lawfully
called or convened. Neither the business to be transaction at, nor the purpose
of, any regular or special meeting of the members of a committee of directors
need be specified in any written waiver of notice.
Amended: 2/12/86
17
<PAGE> 21
ARTICLE IV
Section 4.1
ARTICLE IV
Indemnification Insurance
SECTION 4.1. Indemnification Insurance
(a) Each person who was or is a party or is threatened to
be made a party or is involved in any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative, or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director or officer of the corporation, or is or was
serving at the request of the corporation as a director, officer or fiduciary
of another corporation, partnership, joint venture, trust of other enterprise,
shall be indemnified and held harmless by the corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended, (but, in the case of any such amendment, only to the
extent that such amendment permits the corporation to provide broader
indemnification rights than said Law permitted the corporation to provide prior
to such amendment), against all expenses, liability and loss, (including
attorneys' fees, judgments, fines and amounts paid in settlement) actually and
reasonably incurred by him in connection with such
18
<PAGE> 22
action, suit or proceeding if he acted in good faith and in a manner he
reasonable believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The terminations of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon
a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interest of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful. Such right shall be
a contract right and shall include the right to be paid by the corporation
reasonable expenses incurred in defending any such action, suit or proceeding
in advance of its final disposition; provided, however, that the payment of
such expenses in advance of the final disposition of such action, suit or
proceeding shall be made only upon delivery to the corporation of an
undertaking by or on behalf of such person to repay all amounts so advanced if
it should be determined ultimately that such person is not entitled to be
indemnified under this Section or otherwise.
(b) Each person who was or is a party or is threatened to
be made a party or is involved in any
19
<PAGE> 23
threatened, pending or competed action or suit by or in the right of the
corporation to procure a judgement in its favor by reason of the fact that he
is or was a director or officer of the corporation, or is or was serving at the
request of the corporation as a director, officer or fiduciary of another
corporation, partnership, joint venture, trust or other enterprise shall be
indemnified and held harmless by the corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended, (but, in the case of any such amendment, only to the
extent that such amendment permits the corporation to provide broader
indemnification rights than said Law permitted the corporation to provide prior
to such amendment), against all expenses, liability and less, (including
attorneys' fees, judgments, fines, and amounts paid in settlement), actually
and reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interest of the corporation and
except that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable for
negligence or misconduct in the performance of his duty to the corporation
unless and only to the extent that the Court of Chancery or the court
20
<PAGE> 24
in which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.
Such right shall be a contract right and shall include the right to be paid by
the corporation reasonable expenses incurred in defending any such action or
suit in advance of its final disposition; provided, however, that the payment
of such expenses in advance of the final disposition of such action or suit
shall be made only upon delivery to the corporation of an undertaking by or on
behalf of such person to repay all amounts so advanced it should be determined
ultimately that such person is not entitled to be indemnified under this
Section or otherwise.
(c) To the extent that a director, officer, employee or
agent of the corporation has been successful on the merits or otherwise defense
of any action, suit or proceeding referred to in paragraph (a) and (b), or in
defense of any claim, issue or matter therein to shall be indemnified against
expenses (including attorney's fees) actually and reasonably incurred by him in
connection therewith.
21
<PAGE> 25
(d) Subject only to the right to be paid reasonable
expenses incurred in defending certain action, suits or proceedings in advance
of their final disposition under paragraphs (a) and (b), any indemnification
under paragraphs (a) and (b) (unless ordered by a court) shall be made by the
corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth
in paragraphs (a) and (b). Such determination shall be made (1) by the board
of directors by a majority vote of a quorum consisting of directors who were
not parties to such action, suit or proceeding, or (2) if such a quorum is not
obtainable, or, even if obtainable, a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (3) by the
stockholders.
(e) If a claim under paragraphs (a) or (b) is not paid by
the corporation within ninety (90) days after a written claim has been received
by the corporation, the claimant may at any time thereafter bring suit bring
against the corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant shall be entitled to be paid also
the expenses of prosecuting such claim. It shall be a defense to any action
(including an
22
<PAGE> 26
action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking
has been tendered to the corporation) that the claimant did not meet the
standards of conduct which make it permissible under paragraphs (a) and (b) and
the Delaware General Corporation Law for the corporation to indemnify the
claimant for the amount claimed, but the burden of proving such defense shall
be on the corporation. Neither the failure of the corporation (including its
Board of Directors, independent legal counsel, or its stockholders) to have
made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he or
she has met the applicable standard of conduct set forth in the Delaware
General Corporation Law, nor an actual determination by the corporation
(including its Board of Directors, independent legal counsel, or its
stockholders), that the claimant had not met the such applicable standard of
conduct, shall be a defense to the actions or create a presumption that the
claimant had not met the applicable standard of conduct.
(f) The indemnification provided by this Article shall
not be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any ByLaw, agreement, vote of
stockholders or disinterested
23
<PAGE> 27
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to
a person who has ceased to be a director, officer or fiduciary and shall inure
to the benefit of the heirs, executors and administrators of such a person.
(g) The corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a director or officer
of the corporation, or is or was serving at the request of the corporation as a
director, officer or fiduciary of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under the provisions of the Article.
(h) For purposes of this Article, reference to the
"corporation" shall include, in addition to the resulting corporation, any
constituent corporation (including any constituent of a constituent) absorbed
in a consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors and officers, so
that any person who is or was a director or officer of such constituent
corporation, or is or was serving at the request of such constituent
24
<PAGE> 28
corporation as a director, officer or fiduciary of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under the provisions of this Article with respect to the resulting or
surviving corporation as he would have with respect to such constituent
corporation if separate existence has continued.
(i) For purposes of this Article, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on a person with respect to an employee
benefit plan; and references to "serving at the request of the corporation"
shall include any service as director, officer or fiduciary of the corporation
which imposes duties on, or involves services by, such director, officer or
fiduciary with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interest of the corporation" as referred to in this
Article.
(j) For the purposes of this Article, references to an
individual serving "at the request of the corporation as a director, officer or
fiduciary of another corporation, partnership, joint venture, trust, or other
enterprise"
25
<PAGE> 29
shall include the directors, officers and members of the National Clinical
Advisory Board for Psychiatric Services, an Alabama non- profit corporation.
(k) Any amendment or repeal of this ByLaw shall not
affect any rights than existing. The rights of the directors and officers and
fiduciaries set forth in the by-law shall be deemed to be established pursuant
to a contract between the corporation and each such director, officer or
fiduciary.
Amended: 08/12/86
Amended: 10/28/86
26
<PAGE> 30
ARTICLE V
Section 5.1
ARTICLE V
Officers
SECTION 5.1. Officers of the Corporation
The board of directors at the regular annual meeting thereof
shall elect a Chairman of the Board, a Chief Executive Officer, a President, a
Chief Operating Officer, a Corporate Medical Director, a Secretary, a General
Counsel, a Controller; and, if the board of directors so choose, one or more
Executive Vice Presidents and one or more Vice Presidents, with such
designation, if any, as the board of directors, the Chairman of the Board and
Chief Executive Officer or the President and Chief Operation Officer may
determine, and such other officers as the board of directors may choose.
Amended: 2/12/86
Amended: 9/22/94
27
<PAGE> 31
ARTICLE V
Section 5.2
SECTION 5.2. Term and Removal of Officers of the Corporation
The term of office of all officers shall be one year and until
their respective successors are elected and qualified. Any officer may be
removed by the board of directors whenever, in its judgment, the best interest
of the corporation will be served thereby; but such removal shall be without
prejudice to the contract rights, if any, of the person so removed.
28
<PAGE> 32
ARTICLE V
Section 5.3
SECTION 5.3. Vacancies
A vacancy in any office because of death, resignation, or
otherwise, may be filled by the board of directors of the unexpired portion of
the term.
29
<PAGE> 33
ARTICLE V
Section 5.4
SECTION 5.4. Chairman of the Board
The Chairman of the Board, when present, shall preside at all
meetings of the stockholders and directors and shall perform such other duties
as may be assigned to him by the Board of Directors.
The Chairman of the Board may execute bonds mortgages, and
bills of sale, assignments, conveyances, and all other contracts under the seal
of Company, if required or appropriate, except that required by law to be other
signed or executed or except when the signing or execution thereof (when
permitted by law) shall be expressly delegated by the Board of Directors to,
some other officer or agent the Company, and may vote stock held in the name of
the Company.
Restated: 3/3/88
30
<PAGE> 34
ARTICLE V
Section 5.4A
SECTION 5.4A Vice Chairman
The Vice Chairman, in the absence of the Chairman of the
Board, shall preside at all meetings of the stockholders and directors shall
have chief executive responsibility for corporate policy and strategic planning
and shall perform such other executive duties as may be assigned to him by the
Board of Directors.
The Vice Chairman may execute bonds, mortgages, and bills of
sale, assignments, conveyances, and all other contracts under the seal of the
corporation, if required or appropriate, except those required by law to be
otherwise signed or executed thereof (when permitted by law) shall be expressly
delegated by the Board of Directors to, some other officer or agent of the
corporation, and may vote stock held in the name of the corporation
Added: September 3, 1990
31
<PAGE> 35
ARTICLE V
Section 5.4B
SECTION 5.4B Chief Executive Officer.
The Chief Executive Officer of the corporation shall have
general and active management of the business of the corporation, and shall see
that all orders and resolutions of the Board are carried into effect. The
Chief Executive Officer, in the absence of the Chairman of the Board and Vice
Chairman, shall preside at all meetings of the stockholders and directors.
The Chief Executive Officer may execute bonds, mortgages, and
bills of sale, assignments, conveyances, and all other contracts under the seal
of the corporation, if required or appropriate, except those required by law to
be otherwise signed or executed by, or except when the signing or execution
thereof (when permitted by law) shall be expressly delegated by the Board of
Directors to, some other officer or agent of the corporation, and may vote
stock held in the name of the corporation.
The Chief Executive Officer shall appoint and remove, employ
and discharge, and fix the compensation of all servants, agents, employees and
clerks of the corporation other than the duly elected or appointed officers,
subject to the approval of the Board of Directors. In addition to the powers
and duties expressly conferred
32
<PAGE> 36
upon him by these By Laws, he shall, except as otherwise specifically provided
by the laws of the State of Delaware, have such other powers and duties as
shall from time to time be assigned to him by the Board of Directors.
Added: September 22, 1994
33
<PAGE> 37
ARTICLE V
Section 5.5
SECTION 5.5. President
The President shall be the chief operating officer of the
corporation and shall, subject to the authority and direction the Chairman of
Board and, in his absence, the Vice Chairman, and in his absence, the Chief
Executive Officer, have general charge of and control over affairs of the
corporation and have direct responsibility for initiating those actions
essential to the corporation's growth. In the absence the Chairman of the
Board, the Vice Chairman, and the Chief Executive Officer, he shall preside at
all meetings of the stockholders and directors. He shall perform such other
duties as may be assigned to him by the Board of Directors.
The President may execute bonds, mortgages, and bills of sale,
assignments, conveyances, and all other contracts under the seal of the
corporation, if required or appropriate, except those required by law to be
otherwise signed or executed by or except those required by law to be otherwise
signed or executed by, or except where the signing or execution thereof (when
permitted by law) shall be expressly delegated by the Board of Directors to,
some other officer or agent of the corporation, and may vote stock held in the
name of the corporation.
34
<PAGE> 38
Amended: September 3, 1990
Amended: September 22, 1994
35
<PAGE> 39
ARTICLE V
Section 5.6
SECTION 5.6. Vice President
Each Vice President of the Company shall, subject to the
authority and direction of the Chief Executive Officer and the President, have
general and active management of such operations, areas, or divisions of the
business of the Company as may be designated by the Board of Directors the
Chief Executive Officer or the President. The regular powers and duties of the
President in areas and divisions may, upon delegation by the President, be
exercised and performed by the Vice President to whom delegated, subject to the
authority and direction of the President.
Each of the Vice Presidents may execute bond mortgages, and
bills of sale, assignments, conveyances, and all other contracts under the seal
the Company, if required or appropriate, except when required by law to be
otherwise signed and executed or except where the signing and execution thereof
(when permitted by law) shall be expressly delegated by the Board of Directors
to, some other officer or agent of the Company, and may vote stock held in the
name of the Company.
Restated: 3/3/88
Amended: September 22, 1994
36
<PAGE> 40
ARTICLE V
Section 5.7
SECTION 5.7. Secretary and Assistant Secretaries
(a) The Secretary shall keep complete and correct minutes
of the proceedings of the stockholders and board of directors and committees of
the board of directors. The Secretary shall give notices and shall keep at the
registered office or principal place of business of the corporation, or at the
office of its transfer agent or registrar, a record of the stockholders of the
corporation, giving the names and addresses of all stockholders and the number
and class of the shares held by each.
(b) The Assistant Secretaries shall perform duties
prescribed by these By-Laws, or as may, from time to time, be assigned by the
board of directors, or by the Secretary. At the request of the Secretary, or
in the absence or disability of the Secretary, an Assistant Secretary
designated by the Secretary (or, in the absence of such designation, the senior
Assistant Secretary) shall perform the duties and exercise the powers of the
Secretary.
37
<PAGE> 41
ARTICLE V
Section 5.8
SECTION 5.8. Treasurer and Assistant Treasurers
(a) The Treasurer shall keep account of all monies of the
corporation received or disbursed, shall deposit all monies in the name of, and
the credit of the corporation, in such banks and depositories as may be
designated in writing by the board of directors, and shall safely care for all
properties of value of the corporation. The Treasurer shall keep correct and
complete books and records of account and correct and complete records of all
transactions of the corporation.
(b) The Assistant Treasurers shall perform duties
prescribed by these ByLaws, or as may, from time to time, be assigned by the
board of directors or by the Treasurer. At the request of the Treasurer, or in
the absence or disability of the Treasurer, an Assistant Treasurer designated
by the Treasurer (or in the absence of such designation, the Senior Assistant
Treasurer) shall perform the duties and exercise the powers of the Treasurer.
38
<PAGE> 42
ARTICLE VI
Section 6.1
ARTICLE VI
General
SECTION 6.1. Fiscal Year
The fiscal year of the corporation shall begin the
first day of July of each year and shall and on the 30th day of June next
following, unless otherwise determined by the board of directors.
Amended: 7/20/88
39
<PAGE> 43
ARTICLE VI
Section 6.2
SECTION 6.2. Corporate Seal
The corporate seal of the corporation shall have inscribed
thereon the name of the corporation. "Healthcare Services of America, Inc.,"
and the word "Corporate Seal Delaware, 1983".
40
<PAGE> 44
ARTICLE VI
Section 6.3
SECTION 6.3. Voting Corporation's Securities
Unless otherwise ordered by the board of directors, the
Chairman of the Board, or, in the event of his inability to act at the
President, shall have full power and authority on behalf of the corporation to
attend, and to act and to vote, and to execute a proxy or proxies empowering
others to attend, and to act and to vote, at any meetings of security holders
of any of the corporations in which the corporation may hold securities and, at
such meetings, such officer shall possess and may exercise any and all rights
and powers incident to the ownership of such securities which, as the owner
thereof, the corporation might have possessed and exercised, if present.
The Secretary may affix the corporate seal to any such proxy
or proxies so executed by the Chairman of the Board, or the President, and
attest the same.
Amended: 10/28/86
41
<PAGE> 45
ARTICLE VI
Section 6.4
SECTION 6.4. Robert's Rules of Order
All meetings of the board of directors, or committees of the
board of directors, and of stockholders of the corporation shall be conducted
in accordance with the procedures stated in Robert's Rules or Order (published
originally under the copyright of Henry M. Robert, III, Trustee for The
Robert's Rules Association) as such rules exist on the date of any such
meeting.
42
<PAGE> 46
ARTICLE VI
Section 6.5
SECTION 6.5. Certificates
The shares of the corporation shall be represented by
certificates, provided that the board of directors of the corporation may
provide by resolution or resolutions that some or all of any or all classes or
series of its stock shall be uncertified shares. Any such resolution shall not
apply to shares represented by a certificate until such certificate is
surrendered to the corporation. Notwithstanding the adoption of such a
resolution by the board of directors, every holder of stock represented by
certificates and upon request every holder of uncertified shares shall be
entitled to have a certificate signed by, or in the name of the corporation by
the Chairman of the Board, or the President or Vice-President, and by the
Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary
of the corporation representing the number of shares registered in certificate
form. Any or all of the signatures on the certificate may be a facsimile. In
case any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent or
43
<PAGE> 47
registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer, transfer agent or
registrar at the date of issue.
Added: 2/12/86
Amended: 10/28/86
44
<PAGE> 48
ARTICLE VI
Section 6.6
SECTION 6.6. Lost Certificates
The corporation may issue a new certificate of stock or
uncertified shares in place of any certificate therefore issued by it, alleged
to have been lost, stolen or destroyed, and the corporation may require the
owner of the lost, stolen or destroyed certificate, or his legal
representative, to give the corporation a bond sufficient to indemnify it
against any claim that may be made against it on account of the alleged loss,
theft or destruction of any such certificate or the issuance of such new
certificate or uncertificated shares.
Added: 2/12/86
45
<PAGE> 49
ARTICLE VI
Section 6.7
SECTION 6.7. Record Date
The board of directors may fix, in advance, a record date, for
a determination of stockholders entitled to notice or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock
or for the purpose of any other lawful action. Such record date shall not be
less than ten (10) nor more than sixty (60) days before the date of such
meeting, nor more than sixty (60) days prior to any other action.
Added: 2/12/86
46
<PAGE> 1
EXHIBIT 10.56
LOAN AGREEMENT
between
LOUISIANA PUBLIC FACILITIES AUTHORITY
AND
HOUMA PSYCHIATRIC HOSPITAL, INC.
Dated as of September 1, 1985
<PAGE> 2
TABLE OF CONTENTS
(The Table of Contents is not a part of the Loan Agreement but
is for convenience of reference only.)
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.01. Representations by Issuer . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.02. Representations by Company . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III
THE PROJECT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.01. Certificates and Permits . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.02. Acquisition and Construction . . . . . . . . . . . . . . . . . . . . . 9
Section 3.03. Construction Fund . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE IV
TITLE AND OPERATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4.01. Due Diligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4.02. Cost of the Project . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4.03. Compliance With Applicable Regulations . . . . . . . . . . . . . . . 11
Section 4.04. Operation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.05. Indemnities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.06. Issuer's Limited Liability . . . . . . . . . . . . . . . . . . . . . 12
Section 4.07. Use of the Project . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.08. Recording . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.09. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE V
THE BONDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 5.01. Issuance of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 5.02. Refunding of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 5.03. Redemption of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 5.04. Payments to Issuer . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 5.05. Tax-Exempt Status of Interest on the Bonds . . . . . . . . . . . . . 17
Section 5.06. No Arbitrage . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE VI
COVENANTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 6.01. Covenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 6.02. Assignment of Payments to Trustee . . . . . . . . . . . . . . . . . . 22
Section 6.03. General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 6.04. Amendment of Agreement . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE VII
SPECIAL COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 7.01. Company To Maintain Its Corporate Existence; Conditions Under
Which Exceptions Permitted . . . . . . . . . . . . . . . . . . . . . 24
Section 7.02. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 7.03. Financial Reports . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE VIII
ADDITIONAL SECURITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 8.01. Letter of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 8.02. Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE IX
TERMINATION; NOTICES; SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 9.01. Term of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 9.02. Termination of Agreement . . . . . . . . . . . . . . . . . . . . . . 28
Section 9.03. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 9.04. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
EXECUTION BY ISSUER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
EXECUTION BY COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
EXHIBIT A -- Description of the Project . . . . . . . . . . . . . . . . . . . . . .
EXHIBIT B -- Form of Initial Letter of Credit . . . . . . . . . . . . . . . . . . .
</TABLE>
-ii-
<PAGE> 4
LOAN AGREEMENT
between
LOUISIANA PUBLIC FACILITIES AUTHORITY
and
HOUMA PSYCHIATRIC HOSPITAL, INC.
THE STATE OF LOUISIANA )
LOUISIANA PUBLIC FACILITIES AUTHORITY )
THIS AGREEMENT is made and entered into as of September 1,
1985 by and between Louisiana Public Facilities AuthoritY (hereinafter called
the "Issuer"), a public trust and public corporation established for the
benefit of the state of Louisiana by a certain Indenture of Trust dated August
21, 1974, and Houma Psychiatric Hospital, Inc., a corporation organized and
existing under and by virtue of the laws of the State of Louisiana (hereinafter
called the "Company"),
W I T N E S S E T H:
WHEREAS, pursuant to its powers under the Act, as hereinafter
defined, the Issuer desires to loan to the Company the amount necessary to
enable the Company to finance or provide reimbursement for the Cost of
Construction, and the Company desires to borrow such amount from the Issuer
subject to the terms and conditions of and for the purposes set forth in this
Loan Agreement; and
WHEREAS, the Issuer will fund the loan with proceeds of its
$4,000,000 Variable Rate Demand Revenue Bonds (Houma Psychiatric Hospital, Inc.
Project) Series 1985 (the "Bonds") issued under a Trust Indenture dated as of
September l, 1985 (the "Trust Indenture"); and
WHEREAS, because of currently high long-term interest rates,
the Company has requested that the Bonds be issued with provisions allowing the
owners thereof the right to sell their Bonds for par plus accrued interest at
any time, thus allowing the Bonds to bear lower interest rates; and
WHEREAS, in furtherance thereof, the Company, Bank of America
National Trust and Savings Association (as the
<PAGE> 5
2
"Remarketing Agent"), BankAmerica Trust Company of New York (as the "Paying
Agent/Registrar") and The First National Bank of Shreveport (the "Trustee")
have entered into a Remarketing Agreement dated as of September l, 1985 (the
"Remarketing Agreement"), and the Company and Bank of America National Trust
and Savings Association have entered into a Reimbursement Agreement dated as of
September 1, 1985 (the Reimbursement Agreement"); and
WHEREAS, unless otherwise defined herein, the terms used
herein, shall have the meanings given said terms in the Trust Indenture;
NOW, THEREFORE, in consideration of the covenants and
agreements herein made, and subject to the conditions herein set forth, the
Issuer and the Company contract and agree as follows:
ARTICLE I
DEFINITIONS
In addition to all other words and terms defined herein, and
unless a different meaning or intent clearly appears from the context, the
following words and terms shall have the following meanings, respectively,
whenever they are used in this Agreement:
"Act" means Louisiana Public Trust Act, Chapter 2-A of Title
9, being Louisiana Revised Statutes 9:2341-2347, inclusive, of 1950, as from
time to time amended.
"Act of Bankruptcy" shall mean the filing of a petition
commencing a case under the Federal Bankruptcy Code.
"Additional Bonds" has the same meaning as defined in the
Trust Indenture.
"Agreement" means this Loan Agreement dated as of September l,
1985, together with Exhibit A and Exhibit B attached to this Agreement, and all
amendments and supplements to this Agreement.
"Article" means any subdivision of this Agreement designated
with a Roman numeral.
"Board" or "Board of Trustees" means the lawfully qualified
Board of Trustees of the Issuer.
<PAGE> 6
3
"Bond Counsel" means an attorney or firm of attorneys of
recognized standing in the field of law relating to tax exempt revenue bonds,
selected by the Issuer and satisfactory to the Trustee, the Paying
Agent/Registrar and the Company.
"Bonds" means any and all revenue bonds (including "Bonds" as
defined in the Trust Indenture) of the issuer issued and delivered to pay all
or any part of the cost of acquisition, construction and improvement of the
Project pursuant to the Act and this Agreement, including the initial series or
issue of bonds and bonds issued to pay all or any part of the cost of
completing the acquisition, construction and improvement of the Project, and
any revenue bonds issued for the purpose of refunding or replacing any Bonds.
"Business Day" means a day which, in the city where the
principal corporate trust office of the Trustee or the Paying Agent/Registrar
is located (or during the Variable Period where the office of the Credit Bank
where the Letter of credit is issued is located), is not a Saturday or Sunday
or a day on which banking institutions are authorized or required by law to
close.
"Closing Date" means the date the Bonds are delivered to the
initial purchasers thereof.
"Code" means the Internal Revenue Code of 1954, as amended,
and the valid and applicable regulations thereunder.
"Company" means Houma Psychiatric Hospital, Inc., a
corporation organized and existing under the laws of the State of Louisiana,
and its successors and assigns as permitted by Section 7.01 or 7.02 hereof.
"Company Representative" means any person at the time
designated to act on behalf of the Company in matters relating to this
Agreement by written certificates furnished to the Issuer, the Paying
Agent/Registrar and the Trustee containing the specimen signature of any such
person and signed on behalf of the Company by an officer of the Company. Such
certificates may designate an alternate or alternates. The Company
Representative may be an employee of the Company.
"Construction Fund" means the segregated account or accounts
into which certain proceeds from the sale and
<PAGE> 7
4
delivery of the Bonds will be deposited as provided in the Trust Indenture.
"Cost" or "Cost of Construction," as applied to the hospital
facility being financed or refinanced by the Bonds, means and includes any and
all costs of the Project and, without limiting the generality of the foregoing,
shall include the following:
(a) the cost of the construction, repair, renovation,
remodeling or improvement of all buildings and structures to be used as or in
conjunction with the Project;
(b) the cost of architectural, engineering, legal and related
services; the cost of the preparation of plans, specifications, studies,
surveys and estimates of cost and of revenue; and all other expenses necessary
or incident to planning, providing or determining the feasibility and
practicability of the Project;
(c) the cost of all machinery, equipment, furnishings and
facilities necessary or incident to the equipping of the Project so that it may
be placed in operation;
(d) the cost of financing charges and interest subsequent to
April 12, 1985;
(e) any and all costs paid or incurred in connection with the
financing of the Project including, without limitation, the cost of financing,
legal, accounting, financial advisory and appraisal fees, expenses and
disbursements; the cost of any policy or policies of title insurance; the cost
of printing, engraving and reproduction services; and the cost of the initial
or acceptance fee of any trustee or paying agent; and
(f) all direct and indirect costs of the Issuer, as herein
defined, incurred in connection with financing the Project, including without
limitation reasonable sums to reimburse the Issuer for time spent by its agents
or employees with respect to financing the Project.
"Credit Bank" means Bank of America National Trust and Savings
Association, New York, New York, which issued the initial Letter of Credit,
together with the issuers of each successive Letter of Credit or any Letter of
Credit issued in connection with the issuance of any "Additional Bonds," as
defined in the Trust Indenture.
<PAGE> 8
5
"Debt Service Fund" means the segregated account or Accounts
into which certain Loan Payments will be deposited as provided in the Trust
Indenture.
"Issuer" means Louisiana Public Facilities Authority, a public
trust and public corporation established for the benefit of the State of
Louisiana by a certain Indenture of Trust dated August 21, 1974, created and
existing under the Act, and its successors and assigns.
"Letter of Credit" means each irrevocable Letter of Credit,
including each Substitute Letter of Credit, as defined in Section 8.01 hereof,
issued to the Trustee for the Account of the Company by the Credit Bank as
additional Support and liquidity for the Bonds as described and further defined
in Section 8.01 hereof. A form of the initial Letter Of Credit is attached
hereto as Exhibit B.
"Loan Payment" means each payment required to amortize or pay
each series or issue of Bonds issued pursuant to this Agreement, as provided in
the applicable Bond Resolution and the Trust Indenture, including the principal
of (regardless of whether due upon maturity, by acceleration or otherwise),
redemption premium, if any, and interest on such Bonds, and all fees and
expenses of each Trustee, registrar and paying agent for such Bonds, together
with any other payments required by such Bond Resolution or the Trust
Indenture.
"Optional Variable Period" means the period as defined in the
Trust Indenture.
"Paying Agent/Registrar" means BankAmerica Trust Company of
New York, New York, New York and its successors and assigns.
"Permitted Encumbrances" shall mean, as of any particular
time, (a) liens for ad valorem taxes and special assessments not then
delinquent or which are being contested in good faith as permitted hereby; (b)
easements for roads, alleys, walkways, railways, public utilities and like
purposes which do not, when taken together, materially detract from the value
of the Project; (c) liens, charges and encumbrances which are not substantial
in amount and do not ln the aggregate materially detract from the value of the
Project; (d) zoning laws, ordinances or regulations or building and use
restrictions; (e) statutory rights under Section 291, Title 42 of the United
Slates Code, as a result of what are commonly known as Hill-Burton grants and
any other similar rights under other federal or state law;
<PAGE> 9
6
(f) this Agreement and the Indenture; (g) mechanics', materialmen's, laborers',
suppliers' and similar liens which are unfiled or which are being contested in
good faith as permitted hereby; (h) liens to secure indebtedness to the extent
that such liens are specifically permitted in accordance with this Agreement;
and (i) exceptions noted in the commitment to issue a title insurance policy;
all of which do not, in the opinion of an independent architect employed by the
Company, materially interfere with or impair the construction or operation of
the Project.
"Project" means the facilities described in Exhibit A to this
Agreement, as amended from time to time as provided herein.
"Reimbursement Agreement" means the Reimbursement Agreement
between the Credit Bank and the Company dated as of September 1, 1985, together
with any permitted amendments or supplements thereto.
"Remarketing Agreement" means the Remarketing Agreement dated
as of September 1, 1985 among the Company, the Remarketing Agent, the Paying
Agent/Registrar and the Trustee.
"Section" means any subdivision of this Agreement designated
by Arabic numerals.
"Trustee" means the corporate trustee named under the Trust
Indenture, and its successors or assigns as provided in the Trust Indenture.
"Trust Indenture" means the trust indenture, including all
supplements and amendments thereto, prescribed in and executed and delivered
pursuant to the Bond Resolution among The First National Bank of Shreveport, as
Trustee, the Paying Agent/Registrar and the Issuer, dated as of September 1,
1985.
References in the singular number in this Agreement shall be
considered to include the plural, if and when appropriate. Words and terms not
defined herein shall have the meanings set forth in the Indenture.
<PAGE> 10
7
ARTICLE II
REPRESENTATIONS
Section 2.01. Representations by Issuer. The Issuer makes
the following representations as the basis for the undertakings on its part
herein contained:
(a) The Issuer has the power to enter into the
transactions contemplated by this Agreement and to carry out its obligations
hereunder. The Issuer has been duly authorized to execute and deliver this
Agreement, and by proper action of the Board has duly authorized the execution
and delivery hereof.
(b) The Issuer is not in default under any of the
provisions of the laws of Louisiana which would impair, interfere with or
otherwise adversely affect the ability of the Issuer to make and perform the
provisions of this Agreement, the Trust Indenture and the Bonds.
(c) All requirements and conditions specified in the
Act and all other laws and regulations applicable to the adoption of the Bond
Resolution, the execution and delivery of this Agreement, the Trust Indenture
and the execution, delivery and issuance of the Bonds have been fulfilled.
(d) The Attorney General of the State of Louisiana
and the Louisiana State Bond Commission have or will have approved, for
purposes of 103(k) of the Internal Revenue Code of 1954, as amended (the
"Code"), the Project and the issuance of the Bonds prior to the delivery
thereof to the original purchaser.
Section 2.02. Representations by Company. The Company makes
the following representations, as of the date hereof, as the basis for the
undertakings on its part herein contained.
(a) The Company is a corporation duly organized
under the laws of the State of Louisiana, and it is in good standing under the
laws of the State of Louisiana, and is duly authorized to do business in the
State of Louisiana; the Company is not in default under any provisions of the
laws of the State of Louisiana in a manner which materially impairs its ability
to perform its obligations hereunder or under its Articles of Incorporation; it
has been authorized to enter into and deliver this Agreement by all necessary
and proper corporate
<PAGE> 11
8
action; and the execution and delivery by it of this Agreement and the
agreements herein contained do not contravene or constitute a default under any
existing agreement, indenture, mortgage, loan agreement, commitment, provision
of its Articles of Incorporation or its Bylaws or other requirements of law, or
any other agreement of any kind to which it is a party or by which it is or may
be bound, including specifically the Reimbursement Agreement and the
Remarketing Agreement.
(b) All statements of facts or other information
furnished by the Company to Bond Counsel in connection with Bond Counsel's
opinion on the Bonds were true and correct when made and nothing has come to
the Company's attention that would change the truth or correctness of such
statements of facts or other information furnished to Bond Counsel.
(c) The Company will not default under, misperform
or fail to perform with respect to any representation, covenant or undertaking
of the Company contained in this Agreement which would impair the exemption of
interest on the Bonds from federal income taxation, except for any Bond for any
period during which such Bond is held by any person who is a "substantial user"
of the Project or a "related person" as defined in Section 103(b)(6) of the
Code.
(d) The Company represents that the Project is a
"hospital facility" as referred to in the Act and that the Company has received
the appropriate Section 1122 approval from the Division of Health Planning and
Development of the State of Louisiana.
ARTICLE III
THE PROJECT
Section 3.01. Certificates and Permits. The Company has
received Section 1122 approval for the Project from the Division of Health
Planning and Development of the State of Louisiana. The Company shall obtain
all permits necessary with respect to the acquisition, construction,
improvement and operation of the Project, and the Company covenants that the
performance of this Agreement shall be subject to the provisions of all
applicable federal and State of Louisiana laws and all governmental
regulations. The Company covenants and agrees that the Project will be placed
into service as soon as practicable.
<PAGE> 12
9
Section 3.02. Acquisition and Construction.
(a) The Project shall be acquired, constructed and
improved with all reasonable dispatch, and the Company will diligently pursue
such acquisition, construction and improvement in order that it may be
completed as soon as practicable, delays incident to strikes, riots, acts of
God or the public enemy, or other causes beyond the reasonable control of the
parties only excepted; but if for any reason there should be delays in such
acquisition, construction and improvement, there shall be no diminution in or
postponement of the Loan Payments to be made by the Company hereunder, and no
resulting liability on the part of the Issuer.
(b) The Company shall acquire, construct and improve
the Project or cause the Project to be acquired, constructed and improved in
the manner provided in this Agreement. As permitted by the Act and this
Agreement, the Company has entered into and executed and will enter into and
execute all agreements and contracts necessary to assure and cause the
acquisition, construction and improvement of the Project (and the Issuer shall
not execute any such agreements or contracts other than this Agreement), and
the Company will carry out, pay, supervise and enforce all such agreements and
contracts, and will provide for such insurance on and in connection with the
Project as it deems necessary or advisable or as is required by law. No
contract shall be construed as creating any contractual relationship between
the contractor and the Issuer and nothing in this Agreement shall constitute
any consent by the Issuer, or otherwise confer on the Company, any right, power
or authority of the Company to contract for, or permit the performance of, any
labor or services or the furnishing of any materials or property in such
fashion as would permit the making of any claim against the Issuer. The
Company shall carry out its obligations under and enforce the terms of such
contracts, and the Company shall have the full benefit of all representations
contained therein and shall have the power and authority to take any actions
necessary to enforce the provisions of such contracts. In the event of default
of any contractor under any contract made by it in connection with the Project
or in the event of a breach of warranty with respect to any materials,
workmanship or performance guaranty, the Company may proceed, either separately
or in conjunction with others, to pursue such remedies against the contractor
so in default and against each surety, if any, for the performance of such
contract as it may deem advisable. Any amounts attributable to the Cost of
Construction of the Project recovered by way of direct
<PAGE> 13
10
damages, refunds, adjustments or otherwise in connection with the foregoing
prior to the completion of all the Project, after payment of reasonable
expenses, shall be paid into the Construction Fund. Amounts recovered by way
of direct or indirect consequential damages suffered by the Company shall be
paid to the Company.
(c) The Company shall pay the Cost of Construction
of the Project to the full extent provided in this Agreement. It is recognized
that certain agreements and contracts previously may have been entered into or
executed by the Company with respect to the acquisition, construction and
improvement of the Project and that the Company may be reimbursed by the Issuer
for any payments made by the Company under such agreements and contracts, in
the manner and from the sources provided above for paying the Cost of
Construction.
(d) The Issuer shall loan certain proceeds from the
sale of the Bonds to the Company to be used by the Company to pay all or part
of the Cost of Construction, in accordance with procedures to be established in
the Trust Indenture, including provisions for reimbursing the Company for
paying all or any part of such Cost of Construction under agreements and
contracts for the acquisition, construction, equipping and furnishing of the
Project. It is specifically provided, however, that none of the proceeds from
the sale of the Bonds will be used to reimburse the Company for, or to pay (and
the Company hereby covenants and agrees not to request reimbursement of or
payment for) any part of the Cost of the Project if such use or payment would
result in a violation of any of the covenants contained in Section 5.05 or 5.06
hereof.
Section 3.03. Construction Fund. The Trust Indenture shall
contain appropriate provisions with respect to a Construction Fund, to be drawn
on and administered as provided in the Trust Indenture.
ARTICLE IV
TITLE AND OPERATION
Section 4.01. Due Diligence. The Company shall cause the
Project to be acquired, constructed and improved with due diligence by
September 1, 1988.
Section 4.02. Cost of the Project. The Company represents
and warrants that lt will construct or cause the
<PAGE> 14
11
construction of the Project at a price which will permit completion of the
Project within the amount of the funds to be deposited in the Construction Fund
and other available funds.
Section 4.03. Compliance With Applicable Regulations. The
Company agrees that the Project shall be constructed strictly in accordance
with all applicable ordinances and statutes, and in accordance with the
requirements of all regulatory authorities, and any rating or inspection
organization, bureau, association or office having jurisdiction, and it will
comply with all of the foregoing and all laws, regulations, orders and other
governmental requirements.
Section 4.04. Operation. The Company shall pay all costs and
expenses of operation and maintenance of the Project, including all applicable
taxes. It is understood and agreed that the Issuer shall have no duties or
responsibilities whatsoever with respect to the operation or maintenance of the
Project, or the performance of the Project, for their designed purposes.
Section 4.05. Indemnities. The Company releases the Issuer,
its officers, trustees, employees and agents, and the Louisiana State Bond
Commission and its members, officers, employees and agents (collectively, the
"Indemnified Parties") from, and the Indemnified Parties shall not be liable
for, and the Company agrees and shall protect, indemnify, defend and hold the
Indemnified Parties harmless from, any and all liability, cost, expense, damage
or loss of whatever nature (including, but not limited to, attorneys' fees,
litigation and court costs, amounts paid in settlement, and amounts paid to
discharge judgments) directly or indirectly resulting from, arising out of, in
connection with, or related to (i) the issuance, offering, sale or delivery of
the Bonds, this Agreement and the Letter of Credit, including but not limited
to any violation of the securities laws in any jurisdiction and including but
not limited to the use and distribution of any official statement or private
placement memorandum; the Trust Indenture, the Letter of Credit and this
Agreement and the obligations imposed on the Issuer hereby and thereby; the
Reimbursement Agreement or the Remarketing Agreement; or the design,
construction, installation, operation, use, occupancy, maintenance or ownership
of the Project; (ii) any statements or representations made or given by the
Company or any of its officers or employees to the Indemnified Parties, the
Trustee or any underwriters, placement agents or purchasers of any of the Bonds
with respect to the
<PAGE> 15
12
Issuer, the Company, the Project, the Letter of Credit, the Credit Bank, the
Reimbursement Agreement or the Remarketing Agreement; or the Bonds, including,
but not limited to, statements or representations of facts, financial
information or corporate affairs; (iii) damage to property or any injury to or
death of any person that may be occasioned by any cause whatsoever pertaining
to the project; and (iv) any loss or damage incurred by the Issuer as a result
of violation by the Company of the provisions of Sections 5.05 or 5.06 hereof.
The provisions of the preceding sentence shall remain and be in full force and
effect even if any such liability, cost, expense, damage or loss or claim
therefor by any person, directly or indirectly, results from, arises out of, or
relates to or is asserted to have resulted from, arisen out of, or related to,
in whole or in part, one or more negligent acts or omissions, but not the
willful misconduct, of one of the Indemnified Parties. The Indemnified Parties
shall give the Company prompt written notice of any claim for indemnification
of the Indemnified Parties made by the Indemnified Parties pursuant to this
Section 4.05 and agree that the Company shall have the opportunity to control
the defense of any claim against the Indemnified Parties, and the Indemnified
Parties agree to reasonably cooperate with the Company in connection with any
action taken by the Company in defense of the Indemnified Parties.
Section 4.06. Issuer's Limited Liability. It is recognized
that the Issuer's only source of funds with which to carrY out its commitments
under this Agreement will be from the proceeds from the sale of the Bonds or
from any available income or earnings derived therefrom, or from any funds
which otherwise might be made available by the Company; and it is expressly
agreed that the Issuer shall have no liability, obligation or responsibility
with respect to this Agreement or the Project, except to the extent of funds
available from such sources. If, for any reason, the proceeds from the sale of
the Bonds are not sufficient to pay all the costs of completing the
acquisition, construction and improvement of the Project, the Company shall
complete the acquisition, construction and improvement of the Project, and the
Company shall pay such additional costs from its own funds, but it shall not be
entitled to reimbursement therefor unless additional Bonds are issued for such
purpose, or to any diminution in or postponement of any payments required to be
made by the Company hereunder.
Section 4.07. Use of the Project. The Company covenants that
no more than 25% of the proceeds of the Bonds will be used to provide a
facility the primary purpose of
<PAGE> 16
13
which is one of the following: retail food and beverage services, automobile
sales or service or the provision of recreation or entertainment. The Company
further covenants that no part of the proceeds of the Bonds will be used to
provide any of the following and that no part of the Project will be used for
any of the following purposes or activities: any private or commercial golf
course, country club, massage parlor, tennis club, skating facility (including
roller skating, skateboard and/or ice skating), racquet sports facility
(including any handball or racquetball court), hot tub facility, suntan
facility, racetrack, airplane, skybox or other private luxury box, any health
club facility, any facility used primarily for gambling (unless the provisions
of Section 63(f)(2)(C) of the Tax Reform Act of 1984 are applicable) or any
store the principal business of which is the sale of alcoholic beverages for
consumption off premises. Such services and facilities referred to in this
Section 4.07 shall have the same meaning as defined in the Tax Equity and
Fiscal ResponsibilitY Act of 1982 and the Tax Reform Act of 1984.
Section 4.08. Recording. The Company shall notify the
Trustee of each memorandum, financing statement, continuation statement or any
other instrument which the Trustee shall cause to be filed, registered and
recorded pursuant to Section 16.01 of the Indenture.
Section 4.09. Insurance. The Company shall cause the Project
to be kept insured against fire and other risks to the extent usually insured
against by companies owning and operating similar property, by reputable
insurance companies, or, at the Company's election, by means of self-insurance.
All proceeds of such insurance shall be for the account of the Company.
ARTICLE V
THE BONDS
Section 5.01. Issuance of Bonds.
(a) In consideration of the covenants and agreements
set forth in this Agreement, and to enable the Issuer to issue the Bonds to
carry out the intents and purposes hereof, this Agreement is executed to assure
the issuance of such Bonds, and the Company hereby covenants and agrees to
provide for and guarantee the due and punctual payment to the Issuer, or to the
Trustee or Paying Agent/Registrar under the Trust Indenture securing the
<PAGE> 17
14
Bonds, of amounts not less than those required to pay, when due, all of the
principal of, redemption premium, if any, and interest on the Bonds, and all
other payments required in connection with such Bonds, any Bond Resolution and
the Trust Indenture, including the payment of the fees and expenses of the
Trustee, the Paying Agent/Registrar, and any other paying agents for the Bonds.
Each such payment is hereby designated as a "Loan Payment," and collectively
such payments are hereby designated as "Loan Payments." Such payments shall be
made for the benefit of the Bonds into the Debt Service Fund as provided in the
Trust Indenture. The Company hereby expressly covenants and agrees and
pursuant to the Reimbursement Agreement has provided that during the Variable
Period the interest portion of the Loan Payments as provided by the
Reimbursement Agreement shall be made by the Credit Bank on the Company's
behalf and not by the Company. The Company hereby requests the Issuer to
instruct the Trustee to request of the Credit Bank that it make such interest
portion of the Loan Payments as provided by the Reimbursement Agreement.
(b) Upon the request of the Company, and only upon
its request, the Issuer may, if in the Issuer's sole discretion it is deemed
necessary and advisable, and with the consent of the Credit Bank during the
Variable Period, authorize and use its best efforts to sell and deliver
Additional Bonds, in one or more series or issues in aggregate principal
amounts sufficient to pay the Cost of Construction of the Project, including
the costs of issuance. It is hereby agreed by the Company that the Bonds, when
issued, sold and delivered as provided in the Trust Indenture, will be issued
in accordance with and in compliance with this Agreement, notwithstanding any
other provisions of this Agreement or any other contract or agreement to the
contrary. Any owner of the Bonds is entitled to rely fully and unconditionally
on the Company's approval. The resolutions of the board of directors of the
Company authorizing the execution of this Agreement shall be deemed to
authorize such officer to approve the Trust Indenture on behalf of the Company.
Notwithstanding any provisions of this Agreement or any other contract or
agreement to the contrary, all covenants and provisions in the Trust Indenture
shall become absolute, unconditional, valid and binding covenants and
obligations of the Company so long as the Bonds and interest thereon are
outstanding and unpaid. Particularly, the obligation of the Company to make,
promptly when due, all Loan Payments shall be absolute and unconditional, and
said obligation may be enforced as provided in the Trust Indenture, regardless
of any other provisions of this Agreement or any other contract or
<PAGE> 18
15
agreement to the contrary. It is further the intention of this Agreement that
the approval of the Company of the Trust Indenture shall constitute and be the
equivalent of the approval of the Trust Indenture by the Company and its board
of directors, and the provisions of the Trust Indenture affecting the Company
shall constitute the absolute and unconditional obligations of, and be binding
upon, the Company with the effect described above.
(c) Recognizing that the Loan Payments will be used
to pay when due the principal of, redemption premium, if any, and interest on
the Bonds, and the fees and expenses of the Trustee, the Paying Agent/Registrar
and any other paying agent for the Bonds, it is hereby agreed that, if and when
any Bonds are delivered, the Company shall be absolutely and unconditionally
obligated to make and pay, or cause to be made and paid, each Loan Payment
regardless of whether or not the Issuer or the Company actually acquires,
constructs, improves or completes the Project, or whether or not the Company
actually approves, purchases, receives, accepts or uses the Project; and such
payments shall not be subject to any abatement, setoff or counterclaim (subject
only to the provisions of Sections 7.01 and 7.02 hereof regarding merger,
consolidation and assignment); and the owners of the Bonds shall be entitled to
rely on this Agreement and representation, notwithstanding any provisions of
this Agreement or any other contract or agreement to the contrary, and
regardless of the validity of, or the performance of, the remainder of this
Agreement or any other contract or agreement.
Section 5.02. Refunding of Bonds. After the issuance of any
Bonds, the Issuer shall not refund any of the Bonds or change or modify the
Bonds in any way, except as provided for in the Trust Indenture, without the
prior written approval of the Company; nor shall the Issuer redeem any Bonds
prior to their scheduled maturities, or change or modify the Trust Indenture,
without the prior written approval of the Company, unless such redemption is
required by the Trust Indenture.
Section 5.03. Redemption of Bonds. The Issuer, upon the
written request of the Company (and provided that the affected Bonds are
subject to redemption prior to maturity at the option of the Issuer, or the
Company, and provided that such request is received in sufficient time prior to
the date upon which such redemption is proposed), forthwith shall take or cause
to be taken all action that may be necessary under the applicable redemption
provisions to effect such redemption prior to maturity, to the full
<PAGE> 19
16
extent of funds either made available for such purpose by the Company or
already on deposit in the Debt Service Fund and available for such purpose.
The redemption of any Outstanding Bonds prior to maturity at any time shall not
relieve the Company of its absolute and unconditional obligation to pay each
remaining Loan Payment, with respect to any Outstanding Bonds, as specified in
the Trust Indenture.
Section 5.04. Payments to Issuer. Out of money from the
proceeds from the sale and delivery of each series or issue of Bonds, there
shall be paid all of the Issuer's reasonable actual out-of-pocket expenses and
costs of issuance in connection with such series of Bonds, including without
limitation all financing, legal, financial, advisory, printing and other
expenses and costs of issuing the Bonds, pluS an amount of money equal to the
compensation paid to any employees Of the Issuer for the time such employees
have Spent on activities relating to the issuance, sale and delivery of the
Bonds, and provided further that the Company shall pay such aforementioned
costs of issuance and taxes paid or incurred as a result of the Issuer's
observance, performance or enforcement of any term or condition under the Bonds
or related legal documents to the extent such costs and expenses are not or
cannot be paid or reimbursed from the proceeds of the Bonds. In connection
with the Bonds, the Company agrees to reimburse the Issuer a one-time fee equal
to 1/10 of 1% of the Bonds. The Company further agrees it will pay all
administrative expenses of the Issuer. The Company agrees to pay the
administrative expenses of the Issuer directly to the Issuer. The Company
agrees to make administrative payments directly to the Issuer in an amount
equal to 1/20 of 1% of the Outstanding Bonds on September 1 of each year,
provided that, if at any time Additional Bonds shall be issued under the Trust
Indenture, the Company shall be obligated to pay an additional amount of
administrative payments mutually agreeable to the Issuer and the Company. The
administrative payments shall be used for the purpose of paying administrative
and related costs of the Issuer, but shall not include Trustee fees or expenses
incurred by the Issuer in enforcing the provisions of this Agreement.
Notwithstanding the foregoing, the Issuer has determined to waive the
administrative payments for the calendar year ending December 31, 1985 and
agrees that it will notify the Company in writing prior to March 20 of each
year thereafter whether it shall waive such administrative payments for such
year. The Company further agrees to pay the administrative expenses of the
Trustee under the Trust Indenture directly to the Trustee, and the Trustee
shall receive and disburse such payments as provided
<PAGE> 20
17
in the Trust Indenture. In the event the Company should fail to pay any
administrative expenses, the payment so in default shall continue as an
obligation of the Company until the amount in default shall have been fully
paid, and the Company agrees to pay the same with interest thereon (to the
extent legally enforceable) at a rate per annum equal to the interest rate on
the Bonds, until paid.
Section 5.05. Tax-Exempt Status of Interest on the Bonds.
(a) It is intended by the Company that the interest
on each of the Bonds will be excludable from the gross income of the recipients
thereof for federal income tax purposes by reason of Section 103(a)(1) of the
Code (except for any period during which such Bond is held by a person who is a
"substantial user" of the Project or a "related person" within the meaning of
Section 103(b)(13) of the Code).
(b) The Issuer covenants that it shall, prior to the
issuance of the Bonds, duly elect to have the provisions of Section
103(b)(6)(D) of the Code apply to such issue, and such election shall be made
in accordance with the applicable Regulations. The Company covenants that it
shall furnish to the Issuer whatever information is necessary for the Issuer to
make any such election and the Company shall file with the Internal Revenue
Service such supplemental statements and other information as are required by
the applicable Regulations with respect to such capital expenditures made, paid
or incurred by or on behalf of the Company or any person related to the
Company, within the meaning of Section 103(b)(6)(C) of the Code, in the City of
Houma, Louisiana, and in any other political jurisdiction contiguous thereto
with respect to any facilities contiguous to or integrated with any facilities
in the City of Houma, Louisiana within the meaning of Sections
1.102-10(b)(2)(ii) (e) and 1.103-10(d)(2)(i) of the Regulations (collectively,
the "Project Area").
(c) The Company hereby covenants that (i)
substantially all of the proceeds (within the meaning of Section 103(b)(6) of
the Code) from the sale of the Bonds will be used and expended for amounts paid
or incurred after April 12, 1985 (the "Inducement Date") for the acquisition,
construction, reconstruction or improvement of land or property of a character
subject to the allowance for depreciation under the Code, and (ii) except as
otherwise set forth in a certificate or statement furnished to the Issuer and
its Bond Counsel prior to the issuance of Bonds,
<PAGE> 21
18
the acquisition, construction, reconstruction or improvement of the Project did
not begin before the Inducement Date, nor was any work performed or any costs
paid or incurred by the Company or any other entity in connection with such
acquisition, construction, reconstruction or improvement before the Inducement
Date.
(d) The Company represents (i) that all of the
proceeds of the Bonds are to be used with respect to the Project, which will be
located wholly within the corporate limits of the City of Houma, Louisiana;
(ii) that, except for any person related to the Company within the meaning of
Section 103(b)(6)(C) of the Code, the Company will be the only principal user
of the Project within the meaning of Section 103(b)(6) of the Code; and (iii)
that, except for the Bonds, there will not be outstanding on the date of
delivery of the Bonds any obligations of any state, territory or possession of
the United States or any political subdivision of the foregoing or of the
District of Columbia constituting "exempt small issues" within the meaning of
Section 1.103-10 of the Regulations, the proceeds of which have been or are to
be used primarily with respect to facilities located in the City of Houma,
Louisiana, or in any contiguous political jurisdiction with respect to any
contiguous or integrated facilities, and which are to be used principally by
the Company (including any person related to the Company within the meaning of
Section 103(b)(6)(C) of the Code).
(e) The Company further covenants and represents
that it has not made, paid or incurred and will not make, pay or incur any
capital expenditures which would cause the interest on the Bonds to become
subject to federal income taxes pursuant to the provisions of Section 103(b) of
the Code. The Company further covenants that it has not taken any action or
permitted any action to be taken, and that it will not take any action or
permit any action to be taken, which would result in a Taxable Event, as
hereinafter defined, and that the Company has not failed to take and will not
fail to take any action required to prevent the occurrence of such Taxable
Event.
(f) The Company acknowledges that the capital
expenditures referred to in the preceding paragraphs include all capital
expenditures within the Project Area and all capital expenditures incurred
elsewhere relating to the Project, including, without limitation, research and
development costs, which may, under any rule or election under the Code, be
treated as a capital expenditure (whether or not such expenditure is so
treated).
<PAGE> 22
19
(g) The Company further covenants that it shall
furnish to the Issuer and its Bond Counsel, prior to the issuance of the Bonds,
a certificate or statement of the aggregate amount of capital expenditures
(other than those to be financed from the proceeds of the Bonds) made, paid or
incurred in the Project Area or made, paid or incurred elsewhere with respect
to the Project ("Included Capital Expenditures") during the period beginning
three years before the date of delivery of such issue. The Company covenants
that it will furnish to the Trustee (i) a copy of supplemental statements
required to be filed with the Internal Revenue Service by Section 1.103-10 of
the Regulations listing by date and amount any Included Capital Expenditures
(other than those mentioned in Section 103(b)(6)(F) of the Code) during the
three-year period beginning as of the date of issuance of the Bonds, including
all such Included Capital Expenditures not listed on the capital expenditure
certificate filed with the Internal Revenue Service prior to the issuance of
the Bonds, and (ii) within 30 days after it has made, paid or incurred the
maximum amount of capital expenditures permitted under Section 103(b)(6)(D) of
the Code, a statement to that effect. Such supplemental statements shall be
filed with the District Director of the Internal Revenue Service or the
director of the regional service center of the Internal Revenue Service with
whom the Company's federal income tax return is required to be filed on the due
date prescribed for filing such return (without regard to any extensions of
time). Each such supplemental statement shall set forth a description of those
capital expenditures which are capital expenditures under Section
103(b)(6)(D)(ii) of the Code and shall take into account facilities referred to
in Section 103(b)(6)(E) of the Code in computing such capital expenditures.
This covenant shall survive the termination of this Agreement.
(h) The Company covenants that no portion of the
proceeds of the Bonds will be used (directly or indirectly) for the acquisition
of land (or an interest therein).
(i) The Company covenants that no portion of the
proceeds of the Bonds is to be used for the acquisition of any building and the
equipment therefor (or an interest therein) unless (i) the first use of such
property is pursuant to such acquisition, or (ii) the rehabilitation
expenditures (within the meaning of Section 103(b)(17)(C) of the Code) with
respect to such building equal or exceed 15% of the portion of the cost of
acquiring such building (and equipment) financed with the proceeds of the Bonds
and said
<PAGE> 23
20
rehabilitation expenditures are incurred within two years after the later of
(A) the date on which said property was acquired or (B) the date of delivery of
the Bonds to the initial purchasers thereof.
(j) The Company covenants that no portion of the
proceeds of the Bonds is to be used for the acquisition of any property not
described in subsection (i) hereof (or an interest therein) unless (i) the
first use of such property is pursuant to such acquisition, or (ii) the
rehabilitation expenditures (within the meaning of Section 103(b)(17)(C) of the
Code) with respect to such property equal or exceed 100% of the portion of the
cost of acquiring such property financed with the proceeds of the Bonds and
said rehabilitation expenditures are incurred within two years after the later
of (A) the date on which said property was acquired or (B) the date of delivery
of the Bonds to the initial purchasers thereof.
(k) The Company will not, for a period of three
years from the later of (i) the date the Project is placed in service or (ii)
the date of delivery of the Bonds to the initial purchasers thereof, enter into
any lease or rental of more than 10% of the Project by square footage or value,
unless it shall first have furnished to the Trustee a statement in writing of
such prospective lessee or renter listing the outstanding "industrial
development bonds" within the meaning of the Code which must be allocated to
such lessee or renter under the provisions of Section 103(b)(15) of the Code,
along with a statement of such prospective lessee or renter that the existence
of such bonds (if any) will not cause the Bonds to lose their tax exemption.
(l) Neither the Company nor any "related person,"
within the meaning of the Code and the applicable Treasury Regulations
thereunder (the "Regulations"), is an owner or "principal user," within the
meaning of the Code or the Regulations, of facilities which were financed with
any issue of industrial development bonds within the meaning of Section 103(b)
of the Code other than
(m) As used herein, a "Taxable Event" shall mean:
(i) the application of the proceeds of the Bonds in
such manner that the Bonds become "arbitrage bonds" within the
meaning of Section 103(c) of the Code, with the result that
interest
<PAGE> 24
21
on the Bonds is or becomes includable in the gross income of
any Bondholder; or
(ii) the application of the proceeds of the Bonds in such
manner, or the occurrence or nonoccurrence of any event, with
the result that, under the Code and the Regulations, the
interest on the Bonds is or becomes includable in the gross
income of any Bondholder (other than a Bondholder who is a
"substantial user" or a "related person" within the meaning of
Section 103(b) of the Code); or
(iii) the violation by the Company of a representation or
covenant contained in this Agreement with the result that,
under the Code and the Regulations, the interest on the Bonds
is or becomes includable in the gross income of any Bondholder
(other than a Bondholder who is a "substantial user" or a
"related person" within the meaning of Section 103(b) of the
Code).
Section 5.06. No Arbitrage. The Issuer and the Company, as
applicable, shall not take any action, or approve the Trustee's or the Paying
Agent/Registrar's making any investment or use of the proceeds of any Bonds or
taking any other action which would cause any Bonds to be "arbitrage bonds"
within the meaning of Section 103(c) of the Code. Neither the Issuer nor the
Company, barring unforeseen circumstances, shall request or approve the use of
the proceeds from the sale of any Bonds otherwise than in accordance with the
"Issuer's General Certificate" and the "No-Arbitrage Certificate" given
concurrently with the issuance and delivery of the Bonds.
ARTICLE VI
COVENANTS AND REMEDIES
Section 6.01. Covenant. The Company absolutely and
unconditionally agrees and covenants with the Issuer, the Trustee and the
Paying Agent/Registrar, regardless of and notwithstanding any provision of this
Agreement, other than Sections 7.01 and 7.02 hereof relating to merger,
consolidation and transfer of assets, and assignment, and regardless of the
provisions of any other agreement or contract to the contrary, that it will
pay, or cause to be paid, when due, each Loan Payment required and prescribed
to
<PAGE> 25
22
be paid by it pursuant to the Trust Indenture. The Company further absolutely
and unconditionally agrees and covenants to pay all reasonable expenses and
charges (including court costs and attorneys' fees) paid or incurred by the
Issuer, the Trustee and the Paying Agent/Registrar in realizing upon any of the
said payments to be made by the Company or in enforcing the provisions of this
Agreement or the Trust Indenture. The Company further covenants that it will
continue to lease the property leased to the Company by Hospital Service
District No. 1 of the Parish of Terrebonne, State of Louisiana and Terrebonne
Parish Consolidated Government pursuant to that Lease Agreement dated as of
February 1, 1985, for so long as the Bonds remain outstanding and that failure
to maintain such lease for such period shall constitute a default hereunder.
Section 6.02. Assignment of Payments to Trustee. The Company
is advised and recognizes that the Issuer hereby assigns its rights to the Loan
Payments required to be made pursuant to this Agreement, and the right to
receive and collect same, to the Trustee under the Trust Indenture securing the
Bonds. It is further understood that pursuant to the Trust Indenture the
Trustee shall (among other things) act on behalf of the Issuer and the owners
of the Bonds as custodian Of the Debt Service Fund, and Loan Payments made for
deposit into the Debt Service Fund pursuant to the Trust Indenture may be made
directly to the Trustee, or the Paying Agent/ Registrar if so instructed by the
Trustee. All rights against the Company existing under this Agreement or the
Trust Indenture may be enforced by the Issuer; or, to the extent provided in
the Trust Indenture, the Trustee or the Bondholders shall be entitled to bring
any suit, action or proceeding against the Company for the enforcement of this
Agreement or the Trust Indenture, and it shall not be necessary in any such
suit, action or proceeding to make the Issuer a party thereto.
Section 6.03. General Provisions.
(a) The terms of this Agreement may be enforced as
to one or more breaches either separately or cumulatively.
(b) No remedy conferred upon or reserved to the
Issuer, any Trustee or Paying Agent/Registrar or the Bondholders in this
Agreement is intended to be exclusive of any other available remedy or
remedies, but each and every such remedy shall be cumulative and shall be in
addition to every other remedy now or hereafter existing at law or in equity or
by statute. No delay or omission to exercise any
<PAGE> 26
23
right or power accruing upon any default, omission or failure of performance
hereunder shall impair any such right or power or shall be construed to be a
waiver thereof, but any such right and power may be exercised from time to time
and as often as may be deemed expedient. In the event any provision contained
in this Agreement should be breached by the Company and thereafter duly waived,
such waiver shall be limited to the particular breach so waived and shall not
be deemed to waive any other breach of this Agreement. No waiver by either
party of any breach by the other party of any of the provisions of this
Agreement shall be construed as a waiver of any subsequent breach, whether of
the same or of a different provision of this Agreement.
(c) Headings of the Articles and the Sections of
this Agreement have been inserted for convenience of reference only and in no
way shall they affect the interpretation of any of the provisions of this
Agreement.
(d) This Agreement is made for the exclusive benefit
of the Issuer, the Trustee, the Paying Agent/ Registrar, the owners of the
Bonds and the Company, and their respective successors and assigns herein
permitted, and not for any other third party or parties; and nothing in this
Agreement, expressed or implied, is intended to confer upon any party or
parties other than the Issuer, the Trustee, the Paying Agent/Registrar, the
owners of the Bonds and the Company, and their respective successors and
assigns herein permitted, any rights or remedies under or by reason of this
Agreement.
(e) The validity, interpretations and performance of
this Agreement shall be governed by the laws of the State of Louisiana. This
Agreement is made and is to be performed in Terrebonne Parish, Louisiana and it
is the intention of the parties hereto that venue for all actions brought under
this Agreement shall lie in said Parish.
Section 6.04. Amendment of Agreement. No amendment, change,
addition to, or waiver of any of the provisions of this Agreement shall be
binding upon the parties hereto unless in writing signed by the Company
Representative and the Chairman or Vice Chairman of the Issuer; provided,
however, that the written consent of the Trustee, and during the Variable
Period the Credit Bank, to any such amendment, change, addition or waiver must
be obtained before the same becomes effective. In addition to amendments for
any other purpose, it is specifically understood that this Agreement may be
amended, if deemed
<PAGE> 27
24
necessary or advisable by the Company and the Issuer, to change the definition
and scope of the term "Project," as used herein, so as to permit the Company to
acquire and construct or improve, or cause to be acquired and constructed or
improved, additional health facilities hereto pursuant to this Agreement and in
accordance with applicable laws, with the same effect as if they had been
described originally in Exhibit A. Notwithstanding any of the foregoing, it is
covenanted and agreed, for the benefit of the owners of the Bonds and any
Trustee or Paying Agent/Registrar that the provisions of this Agreement shall
not be amended, changed, added to, or waived in any way which would relieve or
abrogate the obligations of the Company to make or pay, or cause to be made or
paid, when due, all Loan Payments with respect to any then Outstanding Bonds
which have been issued and delivered pursuant to this Agreement, in the manner
and under the terms and conditions provided herein, in the Bond Resolution or
Trust Indenture, or which would change or affect Sections 5.05, 5.06, 6.01,
7.01 or 7.02 hereof, unless approved by each owner of the Bonds affected by
such amendment, change, addition or waiver. Notice of any amendment, change,
addition to or waiver to this Agreement or any provision hereof shall be given
to the Trustee and the Paying Agent/Registrar by the Issuer.
ARTICLE VII
SPECIAL COVENANTS
Section 7.01. Company To Maintain Its Corporate Existence;
Conditions Under Which Exceptions Permitted. The Company agrees that during
the term of this Agreement it will maintain its corporate existence, will not
dissolve or otherwise dispose of all or substantially all of its assets and
will not consolidate with or merge into another corporation or permit one or
more other corporations to consolidate with or merge into it; provided that the
Company may, without violating the agreement contained in this Section,
consolidate with or merge into another domestic corporation (i.e., a
corporation incorporated and existing under the laws of one of the states of
the United States of America or under the laws of the United States of
America), or permit one or more such domestic corporations to consolidate with
or merge into it, or sell or otherwise transfer to another such domestic
corporation all or substantially all of its assets as an entirety and
thereafter dissolve, if the surviving, resulting or transferee entity: (i) is
authorized to transact business in
<PAGE> 28
25
the State of Louisiana, (ii) shall have, immediately after such transaction, a
consolidated net worth at least equal to 90% of the net worth of the Company
immediately prior to such transaction, with net worth being determined in
accordance with generally accepted accounting principles, and (iii) shall have,
concurrently with such transaction (unless the entity is the Company),
irrevocably and unconditionally assumed, in an instrument delivered to the
Issuer, the Trustee and the Paying Agent/Registrar, the due and prompt
performance of all of the obligations of the Company under this Agreement. If
any consolidation, merger, or sale or other transfer is made as provided in
this Section, the provisions of this Section shall continue in full force and
effect and no further consolidation, merger or sale or other transfer shall be
made except in compliance with the provisions of this Section.
Section 7.02. Assignment. The Company shall not assign its
interest in this Agreement or any of its rights or obligations hereunder except
as specifically provided in this Agreement. The Company may assign its
interest in this Agreement to another party, provided that the Company, under
the terms of any such assignment, shall remain and be primarily responsible and
liable for all of its obligations hereunder, including particularly the making
of all payments required hereunder, when due. As permitted in Section 7.01,
the Company may assign its interest in this Agreement to another party in
connection with a merger or consolidation of the Company, or in connection with
the transfer of all or substantially all of its assets, and such successor or
transferee shall succeed to and be substituted for it under this Agreement with
the same effect as if such successor or transferee had been named as a party
herein. However, no such assignment or transfer shall be effective unless the
surviving corporation, successor corporation or transferee of such assets shall
have irrevocably and unconditionally assumed, in an instrument delivered to the
Issuer, the Trustee and the Paying Agent/Registrar the due and prompt
performance of the obligations of the assignor or transferor under this
Agreement.
Section 7.03. Financial Reports. The Company agrees to
provide, or in lieu thereof to have Healthcare Services of America, Inc.
provide, an annual audit made by its regular independent certified public
accountants and within 120 days after the end of each fiscal year shall furnish
the Issuer and the Trustee either a copy of the audit report or a copy of the
annual report to shareholders of the Company or of Healthcare Services of
America, Inc.,
<PAGE> 29
26
as the case may be, if such annual report shall contain financial statements in
substantially similar detail.
ARTICLE VIII
ADDITIONAL SECURITY
Section 8.01. Letter of Credit. Prior to the initial
delivery of any series of Bonds to the purchasers thereof, the Company shall
secure and deliver to the Trustee, for the benefit of the owners of the Bonds,
an irrevocable Letter of Credit of the Credit Bank the terms of which shall
allow the Trustee to comply with its obligations under Articles XI and XII of
the Trust Indenture and which shall be in an amount at any date not less than
the total of (i) the sum of the principal amount of the Bonds Outstanding and
(ii) interest to accrue on such Bonds at an assumed rate of 15% per annum for a
110-day period as required by this Agreement and the Trust Indenture. The
Letter of Credit shall be in the original aggregate amount of $4,180,822.
After the initial delivery of the Letter of Credit, and at all times thereafter
during the Variable Period, while any of the Bonds are Outstanding, the Company
shall continuously secure the Bonds by either extensions of the initial Letter
of Credit or by the securing and delivery of any successive Letter of Credit
(the "Substitute Letter of Credit").
(a) The initial Letter of Credit shall be in the
form attached hereto as Exhibit B. Any Substitute Letter of Credit shall
contain substantially the same provisions (other than a reduction of commitment
provision) as the initial Letter of Credit and must, at a minimum, meet the
following criteria:
(1) The Credit Bank must be a national banking
association organized under the National Bank Act or a bank organized
under the laws of one of the states of the United States of America or
the Trustee must have received an opinion of counsel satisfactory to
the Trustee that no registration of such Letter of Credit is required
by the federal securities laws.
(2) The Trustee must have received a written
statement signed by an officer of the rating agency which rated the
Bonds to the effect that the rating of the Bonds will not be adversely
affected by the replacement of the initial Letter of Credit with the
Substitute Letter of Credit.
<PAGE> 30
27
(3) The Letter of Credit must be in an amount, in
the opinion of the Trustee, at any date not less than the amount
required by the first paragraph of this Section 8.01.
(b) The initial Letter of Credit secured and
delivered under this Section shall be for a term which expires on September 15,
1987. Upon receipt of a reissued or Substitute Letter of Credit, the Trustee
shall cancel and return the preceding Letter of Credit to the Credit Bank. If,
for any reason, the Credit Bank shall be unwilling or unable to maintain the
Letter of Credit, the Company shall provide to the Trustee within 15 Business
Days of receiving notice of the termination or repudiation of the Letter of
Credit a Substitute Letter of Credit issued by another bank meeting all of the
requirements of Section 8.01 of this Agreement.
(c) Each Letter of Credit secured and delivered to
the Trustee pursuant to this Section must be accompanied by an opinion of
counsel to the Credit Bank or counsel to the Company and addressed to the
Trustee to the effect that:
(1) The Letter of Credit is a legal, valid and
binding obligation of the Credit Bank, except as limited by
bankruptcy, insolvency, reorganization, moratorium and other laws
relating to, or affecting generally, the enforcement of creditors'
rights and remedies against national banking associations, as the same
may be applied in the event of the bankruptcy, insolvency,
reorganization or similar situation of the Credit Bank or a moratorium
applicable to the Credit Bank;
(2) The Credit Bank is duly organized and existing
under the National Bank Act or the laws of one of the states of the
United States of America or that no registration of such Letter of
Credit is required by the federal securities laws;
(3) The Letter of Credit qualifies as an obligation
which the Credit Bank is permitted to issue under the National Bank
Act:
(4) Payments made by the Credit Bank to the Trustee
on behalf of the Bondholders on account of the Credit Bank's
obligations under the Letter of Credit will not be recoverable from
the Bondholders by the Company or its trustee as voidable preferences
under
<PAGE> 31
28
Section 547(b) of the Bankruptcy Reform Act of 1978 (11 U.S.C. 101 et
seq.) or any successor provision (the "Bankruptcy Act") in the event
of the commencement of a proceeding by or against the Company under
the Bankruptcy Act.
(d) The Company shall notify the Trustee in writing
at least 180 days prior to the expiration of an existing Letter of Credit
whether or not the Credit Bank intends to extend such Letter of Credit or
whether a binding obligation to secure a Substitute Letter of Credit has been
entered into.
(e) The Company, the Trustee and the Credit Bank,
with the written consent of the Issuer, may, without the consent of the
Bondholders, amend, change or modify the Letter of Credit to cure any
ambiguity, formal defect, inconsistency or minor omission.
Section 8.02. Other Agreements. At the direction of the
Company, certain provisions relating to the Reimbursement Agreement and the
Remarketing Agreement and the rights, duties and obligations relating thereto
shall be set forth in the Bond Resolution, the Trust Indenture and the Bonds or
attached thereto as appropriate.
ARTICLE IX
TERMINATION; NOTICES; SEVERABILITY
Section 9.01. Term of Agreement. The term of this Agreement
shall be from the date hereof until the date all payments required to be made
by the Company pursuant hereto shall have been made or the date on which the
Bonds shall have been paid in full; provided, however, that the provisions of
Sections 4.05, 5.04, 5.05, 5.06 and 7.01 shall survive the termination of this
Agreement and shall continue in effect regardless of the termination of this
Agreement. But in no event shall the Agreement remain in force for more than 50
years.
Section 9.02. Termination of Agreement. This Agreement may
be terminated by mutual agreement at any time prior to the delivery of and
payment for any Bonds. However, if any Bonds have been issued and delivered,
the term of this Agreement shall be as set forth in Section 9.01, and this
Agreement may not and shall not be sooner terminated by either or both parties
hereto.
<PAGE> 32
29
Section 9.03. Notices.
(a) Any notice, request or other communication under
this Agreement shall be given in writing and shall be deemed to have been given
by either party to the other party upon either of the following dates:
(i) Three days after the date of the mailing
thereof, as shown by the post office receipt if mailed to the
other party hereto by registered mail at the applicable
address as follows:
LOUISIANA PUBLIC FACILITIES AUTHORITY
1925 One American Place
Baton Rouge, LA 70825
Attention: Director
HOUMA PSYCHIATRIC HOSPITAL, INC.
c/o Healthcare Services of America, Inc.
2001 Park Place
Birmingham, AL 35203
Attention: Executive Vice President--Finance
THE FIRST NATIONAL BANK OF SHREVEPORT
400 Texas Street
Shreveport, LA 71101
Attention: Corporate Trust Department
BANKAMERICA TRUST COMPANY OF NEW YORK
40 Broad Street
New York, NY 10004
Attention: Corporate Trust Department
or the latest address specified by such other party in writing; or
(ii) The date of the receipt thereof by such other
party if not so mailed by registered mail.
(b) Any notice required to be given hereunder shall
also be given to the Credit Bank at the following address or at such later
address specified in writing by the Credit Bank.
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
10th Floor
555 California Street
San Francisco, CA 94137
Attention: Bank Investment Securities Division
<PAGE> 33
30
Section 9.04. Severability. If any clause, provision or
Section of this Agreement should be held illegal or invalid by any court, the
invalidity of such clause, provision or Section shall not affect any of the
remaining clauses, provisions or Sections hereof and this Agreement shall be
construed and enforced as if such illegal or invalid clause, provision or
Section had not been contained herein. In case any agreement or obligation
contained in this Agreement should be held to be in violation of law, then such
agreement or obligation shall be deemed to be the agreement or obligation of
the Company or the Issuer, as the case may be, to the full extent permitted by
law.
<PAGE> 34
31
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed in multiple counterparts, each of shall be considered an
original for all purposes, as of the date and year first set out above.
LOUISIANA PUBLIC FACILITIES AUTHORITY
HOUMA PSYCHIATRIC HOSPITAL, INC.
<PAGE> 35
STATE OF LOUISIANA
PARISH OF EAST BATON ROUGE
BE IT KNOWN, that on this 13th day of September, 1985, before
me, the undersigned authority, duly commissioned, qualified and sworn within
and for the State and County aforesaid, personally came and appeared:
1. THOMAS A. ANTOON
2. C. C. DABADIE
to me known to be the identical persons who executed the above and foregoing
instrument, who declared and acknowledged to me, Notary, in the presence of the
undersigned competent witnesses, that they are respectively a (1) Vice Chairman
and (2) Secretary-Treasurer of the Louisiana Public Facilities Authority (the
"Authority"); that the seal impressed beside their respective signatures on the
foregoing instrument is the official seal of the Authority; that the aforesaid
instrument was signed and sealed by them on behalf of the Authority by
authority of a resolution adopted by the Board of Trustees of the Authority on
August 23, 1985; and that the said Thomas A. Antoon and
<PAGE> 36
2
C. C. Dabadie acknowledge said instrument to be the free act and deed of the
Authority.
1.___________________________
WITNESSES: Vice Chairman
_______________________ 2.___________________________
Secretary-Treasurer
_______________________
________________________
Notary Public
<PAGE> 37
STATE OF LOUISIANA
PARISH OF ORLEANS
BE IT KNOWN, that on this 18th day of September, 1985, before
me, the undersigned authority, duly commissioned, qualified and sworn within
and for the State and Parish aforesaid, personally came and appeared:
1. CARL M. HOLDEN, JR.
2. ARTHUR P. BOLTON, III
to me known to be the identical persons who executed the above and foregoing
instrument, who declared and acknowledged to me, Notary, in the presence of the
undersigned competent witnesses, that they are respectively a (1) Vice
President and (2) Secretary of Houma Psychiatric Hospital, Inc, (the
"Company"); that the aforesaid instrument was signed by them on behalf of the
Company by authority of a resolution adopted by the Board of Directors of the
Company on September 17, 1985; and that the said Carl M. Holden, Jr. and Arthur
P. Bolton, III acknowledge said instrument to be the free act and deed of the
Company.
1.___________________________
Title:
WITNESSES:
2.___________________________
______________________ Title: Secretary
______________________
____________________________
Notary Public
<PAGE> 38
EXHIBIT A
The Project consists of the acquisition, construction and
equipping of a 100-bed acute and intermediate care psychiatric in-patient
hospital for adolescents and adults located at 936 East Main Street, in the
City of Houma, Terrebonne Parish, Louisiana. The initial owner and operator
will be Houma Psychiatric Hospital, Inc.
<PAGE> 39
EXHIBIT B
IRREVOCABLE LETTER OF CREDIT
No. __________
September 19, 1985
To: The First National Bank
of Shreveport, as Trustee
Re: Louisiana Public Facilities Authority Adjustable Rate Demand
Revenue Bonds (Houma Psychiatric Hospital) Series 1985
Gentlemen:
We hereby establish our Irrevocable Letter of Credit in your
favor as Trustee for the holders of the bonds (the "Bonds") issued by the
Louisiana Public Facilities Authority (the "Issuer") pursuant to the trust
indenture (the "Indenture") dated as of September 1, 1985 among you as
Trustee, the Issuer and BankAmerica Trust Company of New York, as Paying
Agent/Registrar, for the account of Houma Psychiatric Hospital, Inc. (the
"Company") in the amount of $4,180,822 (such amount as from time to time
adjusted as provided below being hereinafter referred to as the "Available
Credit"), available by your draft(s) drawn at sight on a Business Day (as
hereinafter defined) on Bank of America National Trust and Savings
Association, 555 South Flower Street, Los Angeles, California 90071, Attention:
Letter of Credit Department, accompanied by your drawing certificate in the
form attached hereto as Annex A, Annex B, Annex C or Annex D and made a part
hereof (each a "Drawing Certificate") (x) in the form of a letter on your
letterhead signed by a purported Senior Trust Officer, Trust Officer, Vice
President, Assistant Vice President or Assistant Secretary of your bank, or (y)
in the form of a tested telex, sent by a purported Senior Trust Officer, Trust
Officer, Vice President, Assistant Vice President or Assistant Secretary of
your bank (to telex no. 674-555). In the case of telex demand, the draft
requirement is waived.
The amount of this Letter of Credit will be reduced
automatically by the amount of any drawing hereunder: provided, however, that
the amount of any Interest Drawing in the form of Annex B hereto shall be
automatically reinstated effective the 6th calendar day from the date of such
drawing unless we shall have notified you by tested telex within five (5)
calendar days of the date of any Interest Drawing that the Letter of Credit
will not be so reinstated, and provided, further, that the amount of any
<PAGE> 40
Liquidity Drawing in the form of Annex C hereto will be rejected by amendment,
in whole or in part, upon your receipt of our notice to you by tested telex
that the amount available for drawing hereunder has been increased by the
amount set forth in such notice.
The Available Credit as from time to time in effect will be
reduced after receipt of, and pursuant to, notice from you, in the form of
Annex G hereto, of a redemption or cancellation of less than all of the Bonds
outstanding, by an amount equal to the amount stated in said notice.
Demand for payment may be made by you under this Letter of
Credit prior to the expiration hereof at any time during our business hours at
our aforesaid address, on a Business Day (a day which in New York, New York or
Los Angeles, California is not a Saturday or Sunday or a day on which banking
institutions are authorized or required by law to close). If a drawing in
respect of payment is made by you hereunder at or before 12:00 noon (New York
City time) on the Payment Date (as defined in the Drawing Certificate) and
provided that such drawing and the documents presented in connection therewith
conform to the terms and conditions hereof, payment shall be made to you of the
amount specified, in immediately available funds, at or before 4:00 p.m. (New
York City time), on the Payment Date. If a drawing in respect of payment is
made by you hereunder after 12:00 noon (New York City time) on the Payment Date
and provided that such drawing and the documents presented in connection
therewith conform to the terms and conditions hereof, payment shall be made to
you of the amount specified, in immediately available funds, at or before 2:30
p.m. (New York City time), on the next succeeding Business Day.
This Letter of Credit shall expire at our close of business in
Los Angeles, California, on the earliest to occur of the following: (i)
September 15, 1987; (ii) fifteen (15) days (or if such 15th day is not a
Business Day, on the next following Business Day) following the date you
receive notice from us in the form of Annex E hereto; (iii) the date on which
we receive written notice from you, in the form of Annex F hereto, of the
occurrence of a Company Purchase (as defined in the Indenture); (iv) the date
on which an Acceleration Drawing in the form of Annex A hereto made hereunder
is honored by us; and (v) the date you surrender this Letter of Credit to us
for cancellation.
This Letter of Credit is transferable in its entirety (but not
in part) to any transferee who has
-2-
<PAGE> 41
succeeded you as Trustee under the Indenture. Such transfer shall be effected
by the presentation to us of this Letter of Credit accompanied by a certificate
substantially in the form of Annex H hereto and our standard transfer fee (as
of such time).
We hereby agree with the drawer of a sight draft drawn and
accompanied by a certificate completed in compliance with the terms of this
Letter of Credit that the same will be duly honored on presentation to the
drawee.
Partial drawings are permitted.
Except as otherwise expressly stated herein, this Letter of
Credit is subject to the Uniform Customs and Practices for Documentary Credits
(1983 Revision), International Chamber of Commerce, Publication No. 400 (the
"UCP"). As to matters not covered by the UCP, and to the extent not
inconsistent with the UCP, this Letter of Credit shall be governed by and
construed in accordance with the laws of the State of California.
This Letter of Credit sets forth in full our undertaking, and
such undertaking shall not in any way be modified, amended, amplified or
limited by reference to any document, instrument or agreement referred to
herein (including, without limitation, the Bonds), except the certificates and
the sight draft(s) referred to herein; and any such reference shall not be
deemed to incorporate herein by reference any document, instrument or agreement
except for such certificates and such sight draft(s).
-3-
<PAGE> 42
ANNEX A
TRUSTEE'S CERTIFICATE - ACCELERATION DRAWING
______________________
Bank of America National Trust
and Savings Association
555 South Flower Street
Los Angeles, California 90071
Attention: Letter of Credit Department
Re: Irrevocable Letter of Credit No. _______ issued by Bank of
America National Trust and Savings Association
The undersigned, a duly authorized officer of The First
National Bank of Shreveport in its capacity as trustee (the "Trustee") hereby
certifies to Bank of America National Trust and Savings Association (the
"Bank") with reference to the Irrevocable Letter of Credit referred to above
(the "Letter of Credit") issued in favor of the Trustee that
(1) The Trustee is the Trustee under the Trust Indenture dated as
of September 1, 1985 among the Louisiana Public Facilities
Authority, the Trustee and BankAmerica Trust Company of New
York, as Paying Agent/Registrar (the "Indenture") for the
holders of the Bonds.
(2) The Trustee is making a drawing under the Letter of Credit in
the amount of $___ __ pursuant to Section 11.01 of the
Indenture with respect to the payment of (i) the principal
amount of Bonds outstanding on _______ (insert date of
acceleration) (the "Payment Date") other than (A) Pledged
Bonds or (B) Bonds registered in the name of the Company plus
(ii) interest on such Bonds accrued to the Payment Date. An
"Event of Default" has occurred under Subsection ___ (specify
applicable Subsection) of Section 7.02 of the Indenture and
the Trustee has declared the principal amount of all Bonds
outstanding and interest accrued thereon immediately due and
payable.
(3) (a) The amount of the drawing was computed in
compliance with the terms and conditions of the Indenture and
does not exceed the Available Credit as presently in effect.
<PAGE> 43
(b) Of the amount stated in (2) above:
(i) $______ is demanded in respect of the
principal amount of the Bonds referred to in (2)
above: and
(ii) $______ is demanded in respect of
accrued interest on the Bonds referred to in (2)
above, computed at a rate or rates not exceeding
fifteen percent (15%) per annum for an aggregate
period of _ days (which is not more than one hundred
ten (110) days).
(4) The Trustee has not received more than fifteen (15) days
before the date of this certificate any written notice from
the Bank in the form of Annex E to the Letter of Credit.
(5) The Trustee was not prior to the date of this drawing required
to surrender the Letter of Credit to the Bank for cancellation
in accordance with the terms of the Indenture.
Any capitalized term used herein and not defined shall have
its respective meaning as set forth in the Letter of Credit or the Indenture.
IN WITNESS WHEREOF, the Trustee has executed and delivered
this Certificate as of the ____ day of _________, ____.
THE FIRST NATIONAL BANK
OF SHREVEPORT
as Trustee
By:__________________________
Title:_______________________
-2-
<PAGE> 44
ANNEX B
TRUSTEE'S CERTIFICATE - INTEREST DRAWING
_______________________
Bank of America National Trust
and Savings Association
555 South Flower Street
Los Angeles, California 90071
Attention: Letter of Credit Department
Re: Irrevocable Letter of Credit No. ___ issued by Bank of
America National Trust and Savings Association
The undersigned, a duly authorized officer of The First
National Bank of Shreveport in its capacity as trustee (the "Trustee") hereby
certifies to Bank of America National Trust and Savings Association (the
"Bank") with reference to the Irrevocable Letter of Credit referred to above
(the "Letter of Credit") issued in favor of the Trustee that:
(1) The Trustee is the Trustee under the Trust Indenture dated as
of September 1, 1985 among the Louisiana Public Facilities
Authority, the Trustee and BankAmerica Trust Company of New
York, as Paying Agent/Registrar (the "Indenture") for the
holders of the Bonds.
(2) The Trustee is making a drawing under the Letter of Credit in
the amount of $___ pursuant to Section 3.01(c)(1)(A) of the
Indenture with respect to the payment of interest due on all
Bonds outstanding on the Interest Payment Date occurring on
______________ (insert applicable date) (the "Payment Date")
other than (i) (A) Pledged Bonds or (B) Bonds registered in
the name of the Company and (ii) Bonds to be purchased or
redeemed on the Payment Date pursuant to Annex C or Annex D
to the Letter of Credit.
(3) The amount of the drawing was computed in compliance with the
terms and conditions of the Indenture and, when added to the
amount of any other drawing under the Letter of Credit made
simultaneously herewith, does not exceed the Available Credit
as presently in effect. The amount of interest drawn
hereunder was computed at
<PAGE> 45
a rate or rates not exceeding fifteen percent (15%) per annum
for an aggregate period of ______ (__) days (which is not more
than one hundred ten (110) days) on Bonds in the principal
amount of ___________________ dollars ($_______).
(4) The Trustee has not received more than fifteen (15) days
before the date of this certificate any written notice in the
form of Annex E to the Letter of Credit.
(5) The Trustee was not prior to the date of this drawing required
to surrender the Letter of Credit to the Bank for cancellation
in accordance with the terms of the Indenture.
Any capitalized term used herein and not defined shall have
its respective meaning as set forth in the Letter of Credit or the Indenture.
IN WITNESS WHEREOF, the Trustee has executed and delivered
this Certificate as of the ____ day of _________, ____.
THE FIRST NATIONAL BANK
OF SHREVEPORT
as Trustee
By:___________________________
Title:________________________
-2-
<PAGE> 46
ANNEX C
TRUSTEE'S CERTIFICATE - LIQUIDITY DRAWING
__________________
Bank of America National Trust
and Savings Association
555 South Flower Street
Los Angeles, California 90071
Attention: Letter of Credit Department
Re: Irrevocable Letter of Credit No. ___ issued by Bank of America
National Trust and Savings Association
The undersigned, a duly authorized officer of The First
National Bank of Shreveport in its capacity as trustee (the "Trustee") hereby
certifies to Bank of America National Trust and Savings Association (the
"Bank") with reference to the Irrevocable Letter of Credit referred to above
(the "Letter of credit") issued in favor of the Trustee that:
(1) The Trustee is the Trustee under the Trust Indenture dated as
of September 1, 1985 among the Louisiana Public Facilities
Authority, the Trustee and BankAmerica Trust Company of New
York (the "Indenture") for the holders of the Bonds.
(2) The Trustee is making a drawing under the Letter of Credit in
the amount of $___ __ pursuant to Section 11.04 of the
Indenture with respect to the payment of the purchase price of
Bonds tendered or deemed tendered by the holders thereof in
accordance with Section __ (specify applicable Section) of the
Indenture and to be purchased on ______________ (insert
applicable date) (the "Payment Date").
(3) No Bond in respect of which a drawing is made hereunder is
registered in the name of the Company.
(4) (a) The amount of the drawing was computed in
compliance with the terms and conditions of the Indenture and,
when added to the amount of any other drawing under the Letter
of Credit made
<PAGE> 47
simultaneously herewith, does not exceed the Available Credit
as presently in effect.
(b) Of the amount stated in (2) above:
(i) $_______ is demanded in respect of the
principal portion of the purchase price of the Bonds
referred to in (2) above; and
(ii) $_______ is demanded in respect of
payment of the interest portion of the purchase price
of the Bonds referred to in (2) above, computed at a
rate or rates not exceeding fifteen percent (15%) per
annum for an aggregate period of ______ days (which
is not more than one hundred ten days (110) days).
(5) The Trustee has not received more than fifteen (15) days
before the date of this certificate any written notice from
the Bank in the form of Annex E to the Letter of Credit.
(6) The Trustee was not prior to the date of this drawing required
to surrender the Letter of Credit to the Bank for cancellation
in accordance with the terms of the Indenture.
Any capitalized term used herein and not defined shall have
its respective meaning as set forth in the Letter of Credit or the Indenture.
IN WITNESS WHEREOF, the Trustee has executed and delivered
this Certificate as of the ____ day of _________, ____.
THE FIRST NATIONAL BANK
OF SHREVEPORT
as Trustee
By:__________________________
Title:_______________________
-2-
<PAGE> 48
ANNEX D
TRUSTEE'S CERTIFICATE - REDEMPTION DRAWING
____________________
Bank of America National Trust
and Savings Association
555 South Flower Street
Los Angeles, California 90071
Attention: Letter of Credit Department
Re: Irrevocable Letter of Credit No. ___ issued by Bank of America
National Trust and Savings Association
The undersigned, a duly authorized officer of The First
National Bank of Shreveport in its capacity as trustee (the "Trustee") hereby
certifies to Bank of America National Trust and Savings Association (the
"Bank") with reference to the Irrevocable Letter of Credit referred to above
(the "Letter of Credit") issued in favor of the Trustee that:
(1) The Trustee is the Trustee under the Trust Indenture dated as
of September 1, 1985 among the Louisiana Public Facilities
Authority, the Trustee and BankAmerica Trust Company of New
York, as Paying Agent/Registrar (the "Indenture") for the
holders of the Bonds.
(2) The Trustee is making a drawing under the Letter of Credit in
the amount of $___ _ pursuant to Section 3.01(c)(1)(B) of the
Indenture with respect to the payment of (i) the principal
amount of Bonds to be redeemed in accordance with Section __
(specify applicable Section) of the Indenture on
_________________ (insert applicable date) (the "Payment
Date") other than (A) Pledged Bonds or (B) Bonds registered in
the name of the Company plus (ii) interest on such Bonds
accrued to the Payment Date.
(3) (a) The amount of the drawing was computed in
compliance with the terms and conditions of the Indenture and,
when added to the amount of any other drawing under the Letter
of Credit made simultaneously herewith, does not exceed the
Available Credit as presently in effect.
<PAGE> 49
(b) Of the amount stated in (2) above:
(i) $______ is demanded in respect of
the principal amount of the Bonds referred to
in (2) above: and
(ii) $______ is demanded in respect of
accrued interest on the Bonds referred to in
(2) above, computed at a rate or rates not
exceeding fifteen percent (15%) per annum for
an aggregate period of __ days (which is not
more than one hundred ten (110) days).
(4) The Trustee has not received more than fifteen (15) days
before the date of this certificate any written notice from
the Bank in the form of Annex E to the Letter of Credit.
(5) The Trustee was not prior to the date of this drawing required
to surrender the Letter of Credit to the Bank for cancellation
in accordance with the terms of the Indenture.
Any capitalized term used herein and not defined shall have
its respective meaning as set forth in the Letter of Credit or the Indenture.
IN WITNESS WHEREOF, the Trustee has executed and delivered
this Certificate as of the ___ day of _________, ____.
THE FIRST NATIONAL BANK
OF SHREVEPORT
as Trustee
By:__________________________
Title:_______________________
-2-
<PAGE> 50
ANNEX E
NOTICE OF DIRECTION TO TRUSTEE TO MAKE
A DRAWING UNDER LETTER OF CREDIT
______________________
To: The First National Bank
of Shreveport, as Trustee
Re: Irrevocable Letter of Credit No. ___ issued by Bank of America
National Trust and Savings Association
Gentlemen:
Reference is made to the Reimbursement Agreement dated as of
September 1, 1985 between Houma Psychiatric Hospital, Inc. (the "Company") and
Bank of America National Trust and Savings Association (the "Agreement")
pursuant to which there exists an Event of Default (as defined in the
Agreement) under (insert section reference and a specific description of the
Event of Default).
Please be advised (i) that in accordance with the Trust
Indenture dated as of September 1, 1985 among the Louisiana Public Facilities
Authority, BankAmerica Trust Company of New York, as Paying Agent/Registrar and
you as Trustee (the "Indenture"), we are directing you, as the beneficiary of
the Letter of Credit referred to above (the "Letter of Credit"), to make a
drawing under the Letter of Credit for the principal amount of all outstanding
Bonds (other than (A) Pledged Bonds or (B) Bonds registered in the name of the
Company) together with interest accrued thereon and (ii) that as a consequence
of such direction you may make a drawing under the Letter of Credit no later
than fifteen (15) days after your receipt of this notice, after which day the
Letter of Credit will expire.
Yours very truly,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By:___________________________
Title:________________________
<PAGE> 51
ANNEX F
NOTICE OF OCCURRENCE OF COMPANY PURCHASE
____________, __
Bank of America National Trust
and Savings Association
555 South Flower Street
Los Angeles, California 90071
Attention: Letter of Credit Department
Re: Irrevocable Letter of Credit No. ___ issued by Bank of America
National Trust and Savings Association
Gentlemen:
The undersigned, a duly authorized officer of The First
National Bank of Shreveport in its capacity as trustee (the "Trustee") hereby
certifies to Bank of America National Trust and Savings Association (the
"Bank") with reference to the Irrevocable Letter of Credit referred to above
(the "Letter of Credit") issued in favor of the Trustee that:
(1) The Trustee is the Trustee under the Trust Indenture
dated as of September 1, 1985 among the Louisiana Public Facilities Authority,
the Trustee and BankAmerica Trust Company of New York, as Paying
Agent/Registrar (the "Indenture") for the holders of the Bonds.
(2) The Company Purchase occurred on __________________
(which is not less than fifteen (15) days prior to the date of this notice).
(3) Upon your receipt of this notice the Letter of Credit
shall expire.
Any capitalized term used herein and not defined shall have
its respective meaning as set forth in the Letter of Credit or the Indenture.
IN WITNESS WHEREOF, the Trustee has executed and delivered
this Certificate as of the ____ day of _________, ____.
Yours very truly,
THE FIRST NATIONAL BANK
OF SHREVEPORT
as Trustee
By:___________________________
Title:________________________
<PAGE> 52
ANNEX G
NOTICE OF REDUCTION OF AVAILABLE CREDIT
___________________, __
Bank of America National Trust
and Savings Association
555 South Flower Street
Los Angeles, California 90071
Attention: Letter of Credit Department
Re: Irrevocable Letter of Credit No. ___ issued by Bank of America
National Trust and Savings Association
Gentlemen:
The undersigned, a duly authorized officer of The First
National Bank of Shreveport in its capacity as trustee (the "Trustee") hereby
certifies to Bank of America National Trust and Savings Association (the
"Bank") with reference to the Irrevocable Letter of Credit referred to above
(the "Letter of Credit") issued in favor of the Trustee that:
(1) The Trustee is the Trustee under the Trust Indenture
dated as of September 1, 1985 among the Louisiana Public Facilities Authority,
the Trustee and BankAmerica Trust Company of New York as Paying Agent/Registrar
(the "Indenture") for the holders of the Bonds.
(2) On the date of this notice _________ dollars ($_________)
principal amount of Bonds have been redeemed or cancelled in accordance with
the terms of the Indenture. In accordance with the Letter of Credit, the
Available Credit is reduced to __________ dollars ($_________) upon your
receipt of this notice.
(3) Following the redemption or cancellation referred to
above, the aggregate principal amount of all the Bonds which are outstanding
within the meaning of the Indenture is __________ dollars ($_________) and the
maximum amount of interest, computed in accordance with the terms and
conditions of the Bonds and the Indenture, which could accrue on such Bonds for
a period of one hundred ten (110) days at a rate of fifteen percent (15%) per
annum is $_________________. The sum of such amount in respect of principal
and such amount in respect of interest does not exceed the Available Credit
following the reduction thereof pursuant to this notice of Reduction.
<PAGE> 53
Any capitalized term used herein and not defined shall have
its respective meaning set forth in the Letter of Credit or the Indenture.
IN WITNESS WHEREOF, the Trustee has executed and delivered
this Certificate as of the ____ day of _____________, ____.
Yours very truly,
THE FIRST NATIONAL BANK
OF SHREVEPORT
as Trustee
By:__________________________
Title:_______________________
-2-
<PAGE> 54
ANNEX H
FORM OF TRANSFER INSTRUCTION
Date: _____________
Bank of America National Trust
and Savings Association
555 South Flower Street
Los Angeles, California 90071
Attention: Letter of Credit Department
Re: Irrevocable Letter of Credit No. ____ issued by Bank of
America National Trust and Savings Association
Gentlemen:
For value received, the undersigned beneficiary hereby
irrevocably transfers to:
(Name of Transferee)
(Address)
which is the successor Trustee under the Trust Indenture dated as of September
1, 1985 among the Louisiana Public Facilities Authority, The First National
Bank of Shreveport and BankAmerica Trust Company of New York, as Paying
Agent/Registrar, all rights of the undersigned beneficiary to draw under the
Irrevocable Letter of Credit referred to above (the "Letter of Credit").
By this transfer, all rights of the undersigned beneficiary in
the Letter of Credit are transferred to the transferee and the transferee shall
have the sole rights as beneficiary thereof, including sole rights relating to
any amendments, whether increases or extensions or other amendments and whether
now existing or hereafter made. All amendments are to be advised directly to
the transferee without necessity of any consent of or notice to the undersigned
beneficiary.
The Letter of Credit is returned herewith, and we ask you to
endorse the transfer on the reverse thereof and forward it directly to the
transferee with your customary notice of transfer.
Yours very truly,
_____________________________
Signature of Beneficiary
as predecessor Trustee
<PAGE> 1
EXHIBIT 10.57
GROUND LEASE
THIS LEASE AGREEMENT (the "Lease"), is made by and between
Facilities Management Corporation, a West Virginia corporation (hereinafter
referred to as "Landlord") and Psychiatric Institute of West Virginia, Inc., a
Virginia corporation (a wholly owned subsidiary of the HSA Americare
Corporation) (hereinafter referred to as "Tenant") as of the 30th day of
September, 1985.
W I T N E S S E T H:
WHEREAS, the West Virginia Board of Regents, an agency and
body corporate of the State of West Virginia (the "Board") owned a hospital and
clinic at the West Virginia University Medical Center in Morgantown, West
Virginia (excluding those clinics at the Medical Center owned by the Board
which are used for student health and family practice, the "Existing
Facilities") for the purposes of facilitating the clinical education and
research of the health science schools of West Virginia University (the
"University") and to provide patient care, including specialized services not
widely available elsewhere in West Virginia.
WHEREAS, the Existing Facilities require substantial
renovation and the Board will be fiscally unable to continue to operate said
Existing Facilities and to provide said specialized services beyond 1984.
WHEREAS, the Legislature of West Virginia and the Board
determined that it is fiscally desirable to separate the business and service
functions of certain health care services of the Board from the educational
functions of the health science schools of the University, to cease operations
of the Existing Facilities, to transfer said business and service functions to
a non-stock, not-for-profit corporation, and to have such corporation build and
operate a new hospital facility and out-patient clinic, appurtenant facilities,
equipment and services (the "New Facilities") on property owned by the Board
within Monongalia County, West Virginia, so as to provide a teaching hospital
for the health sciences schools, related educational programs of the University
and specialized services for patient care.
WHEREAS, pursuant to the authorization and empowerment of the
Board by Chapter 18, Article 11(c) of the Code of West Virginia, 1931, as
amended (the "Act"), and
<PAGE> 2
2
other statutes of West Virginia, the Board entered into a Lease and Agreement
dated as of July 1, 1984 between the Board, as lessor, and west Virginia
University Hospitals, Inc., a West Virginia non-stock, not-for-profit
corporation (the "Hospital"), as lessee, to effectuate the accomplishment of
the above stated purposes and acts (the "Primary Lease").
WHEREAS, pursuant to a Sublease Agreement dated as of
September 9, 1985 between the Hospital, as sublessor, and Landlord, as
sublessee, (the "Sublease") landlord is the owner of a portion of the leasehold
estate created by the Primary Lease on the terms, covenants, conditions and
provisions set forth in the Sublease.
WHEREAS, this Ground Lease is expressly subject to the
covenants, terms and conditions of said Act and Primary Lease.
WHEREAS, Tenant shall construct and operate an acute
psychiatric care hospital and chemical/substance dependency center (the
"Center") on the Demised Premises, as hereinafter defined, to effectuate the
purposes and goals set forth in the Act and Primary Lease.
WHEREAS, Landlord has agreed to lease to Tenant a portion of
the leasehold estate created by the Sublease, and Tenant has agreed to lease
from Landlord said portion of the leasehold estate of the Sublease on the
terms, covenants, and conditions hereinafter set forth:
ARTICLE 1
DEMISED PREMISES - TERM OF LEASE
That Landlord hereby demises and leases to Tenant, and Tenant
hereby hires and takes from Landlord, the following described premises
(hereinafter called the "Demised Premises"):
All that certain plot, piece or parcel of land containing two
and four-tenths (2.4) acres, more or less, lying and being in Monongalia
County, West Virginia, such parcel of land being a portion of that parcel of
land described and designated in the Sublease as being sublet to Landlord and
being more particularly described and outlined in red on the plat attached
hereto as Exhibit A and made a part hereof (the "Land").
<PAGE> 3
3
TOGETHER with the buildings and improvements erected or to be
erected thereon.
TOGETHER with all non-exclusive rights, alleys, ways, waters,
easements, privileges, appurtenances and advantages belonging or appertaining
thereto.
TOGETHER with all fixtures attached to and used in connection
with the use, occupation and operation of the Land and improvements to the Land
and all alterations, additions and improvements hereafter made to the Land and
improvements to the Land title to which may vest in Landlord which are
specifically transferred to Tenant by an instrument executed by Landlord.
TO HAVE AND TO HOLD for a term which shall begin on the date
of this Lease and shall expire at midnight on the date fifty (50) years
subsequent to the date hereof (the "Term").
SUBJECT, however, to the following:
(a) The Act, zoning laws, ordinances, resolutions
and regulations of Monongalia County and all regulations,
requirements and orders of the Board and University of general
application and all ordinances, laws, regulations,
requirements and orders of all other boards, bureaus,
commissions and bodies of any municipal, county, state or
federal government now or hereafter having or acquiring
jurisdiction of the Demised Premises and the use and
improvement thereof;
(b) The applicable terms, conditions, covenants,
reservations and restrictions of the Primary Lease, the
Sublease and the Easements and Services Agreement more
particularly described in ARTICLE 33 hereof;
(c) Any state of facts which an accurate survey may
show;
(d) Easements, covenants and restrictions, of
record, if any;
(e) Condition and state of repair of the Demised
Premises as the same may be on the date of the commencement of
the Term;
<PAGE> 4
4
(f) The reservation more particularly described in
ARTICLE 25 hereof.
This Lease is granted and accepted upon the foregoing and upon
the following covenants and conditions, and subject to the following
restrictions, to all and every one of which the parties consent; and each of
the parties hereby expressly covenants and agrees to keep, perform and observe
all the terms, covenants and conditions herein contained on its part to be
kept, performed and observed.
ARTICLE 2
RENT
Section 2.01 Tenant shall pay to Landlord, in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for the payment of public and private debts, in immediately
available funds, in the manner and at the address specified in Section 2.2
hereof, the following amounts as annual or prepaid ground rent in the manner
specified (the "Net Rent"):
(a) an annual ground rent of One Dollar ($1.00) on or within
thirty (30) days prior to each anniversary of this Lease;
(b) prepaid ground rent of One Million Five Hundred Thousand
Dollars ($1,500,000) to be paid in the following two (2) installments:
(i) prepaid ground rent of Three Hundred Thousand
Dollars ($300,000) upon the execution of this Lease and
Exhibits B, C and D hereto by the parties thereto;
(ii) prepaid ground rent of One Million Two Hundred
Thousand Dollars ($1,200,000) upon the earlier of the
commencement of construction of the Center by Tenant or twelve
(12) months from the date of obtaining a final, non-
appealable Certificate of Need for the Center by Tenant.
Landlord shall promptly refund to Tenant all payments received from Tenant
under this Section 2.01 in the event that Tenant fails to obtain a final,
non-appealable Certificate of Need for the Center. In the event that Tenant
obtains a final, non-appealable Certificate of Need, but fails to secure
requisite financing for the construction
<PAGE> 5
5
of the Center or, having secured such financing, fails to complete the
construction of the Center as described in this Lease (except for reasons
beyond the control of Tenant) Landlord shall promptly refund to Tenant the
amounts paid to Landlord by Tenant pursuant to this Section 2.1 except that
Landlord shall retain Two Hundred Thousand Dollars ($200,000) thereof. The
failure to complete the construction of the Center by Tenant described in this
Section 2.1 shall not constitute a default or grounds for termination of this
Ground Lease, except and until the procedures and prerequisites of Section
19.1(f) are fulfilled. With the exception of returning a portion of the
prepaid ground rent as specified above or in Sections 17.2 or 37.1 hereof, the
prepaid ground rent shall not be pro-rated or pro-ratable in the event of a
termination of this Ground Lease prior to the expiration of the term of this
Lease as herein defined.
Section 2.02 Tenant shall pay the Net Rent to Landlord at the
address specified in, or pursuant to, ARTICLE 22.
Section 2.03 It is the purpose and intent of Landlord and
Tenant that this is a net lease and that the Net Rent shall, except as herein
otherwise provided, be absolutely net to Landlord, so that this Lease shall
yield, net, to Landlord, the Net Rent hereof during the term, and that all
costs, expenses and obligations of every kind and nature whatsoever relating to
the Demised Premises, except as herein otherwise provided, which may arise or
become due during or out of the term of this Lease shall be paid by Tenant, and
that Landlord shall be indemnified and saved harmless by Tenant from and
against the same.
Section 2.04 The Net Rent shall be paid to Landlord without
notice or demand and without abatement, deduction, counterclaim, defense,
reduction, recoupment or set-off, except as herein otherwise provided.
Section 2.05 Except as herein otherwise provided, Tenant
shall also pay without notice, except as may be required in this Lease, and
without any abatement, deduction, counterclaim, defense, reduction, recoupment
or set-off, as additional rent, all sums, Impositions (as defined in ARTICLE 3
hereof), costs, expenses and other payments which Tenant in any of the
provisions of this Lease assumes or agrees to pay, and, in the event of any
non- payment thereof, Landlord shall have (in addition to all other rights and
remedies) all the rights and remedies
<PAGE> 6
6
provided for herein or by law in the case of non-payment of the Net Rent.
ARTICLE 3
PAYMENT OF IMPOSITIONS, ASSESSMENTS, ETC.
Section 3.01 Tenant shall pay or cause to be paid (except as
in Section 3.02 hereof provided), before any fine, penalty, interest or cost
may be added thereto for the non- payment thereof, all taxes (including,
without limitation, real estate taxes, occupation and use taxes including the
City of Morgantown Business and Occupation Tax, ad valorem taxes and excise
taxes on rents), assessments, water and sewer rents, rates and charges, levies,
license and permit fees and other governmental charges, general and special,
ordinary and extraordinary, foreseen and unforeseen, of any kind and nature
whatsoever which at any time during the Term may be assessed, levied,
confirmed, imposed upon, or grow or become due and payable out of or in respect
of, or become a lien on, the Demised Premises, or any part thereof or any
appurtenance thereto (all such taxes, assessments, water and sewer rents, rates
and charges, levies, license and permit fees and other governmental charges
being hereinafter referred to as "Impositions" and any of the same being
hereinafter referred to as in "Imposition"); provided however, that
(a) If, by law, any Imposition may at the option of
the taxpayer be paid in installments, Tenant may, at Tenant's
election, pay the same in equal installments as permitted by
law but in no event over a period of more than ten years or
the remaining Term, whichever is less. Tenant shall pay only
such installments as shall become due during the Term of this
Lease; and
(b) All Impositions for the fiscal or tax years in
which the Term of this Lease shall begin and end shall be
apportioned so that Tenant shall pay only those portions
thereof which correspond with the portion of said years as are
within the Term.
Section 3.02 Nothing herein contained shall require Tenant to
pay municipal, state or federal income taxes assessed against Landlord,
municipal, state or federal capital levy, gift, estate, succession, inheritance
or transfer taxes of Landlord, or corporation excess profits or
<PAGE> 7
7
franchise taxes imposed upon any corporate owner of the fee of the Demised
Premises, or any income, profits, or revenue tax, assessment or charge imposed
upon rent as such, payable by Tenant under this Lease; provided, however, that
if at any time during the Term of this Lease the methods of taxation prevailing
at the commencement of the Term hereof shall be altered so that in lieu of or
as a substitute for the whole or any part of the taxes, assessments, levies,
impositions or charges now levied, assessed or imposed on real estate and the
improvements thereon, there shall be levied, assessed and imposed a tax,
assessment, levy, imposition or charge, wholly or partially as a capital levy
or otherwise, on the rents received therefrom, or measured by or based in whole
or in part upon the Demised Premises and imposed upon Landlord, then all such
taxes, assessments, levies, impositions or charges or the part thereof so
measured or based, shall be deemed to be included within the term "Impositions"
for the purpose hereof (but only to the extent that such substitution shall
relieve Tenant in whole in part from the payment of any Imposition enumerated
in Section 3.01 hereof), to the extent that such Impositions would be payable
if the Demised Premises were the only property of Landlord subject to such
Impositions, and Tenant shall pay and discharge the same as herein provided in
respect of the payment of Impositions. Tenant shall, in addition to the
foregoing, pay any new tax of a nature not presently in effect, but which may
be hereafter levied, assessed, or imposed upon Landlord or the Demised
Premises, if such tax shall be based on or arise out of the ownership, use or
operation of the Demised Premises. For the purpose of computing Tenant's
liability for such type of tax, the Demised Premises shall be deemed the only
property of Landlord.
Section 3.03 Tenant, upon request of Landlord, shall furnish
to Landlord within thirty (30) days after the date when any Imposition would
become delinquent, official receipts of the appropriate taxing authority, or
other evidence satisfactory to Landlord, evidencing the payment thereof.
Section 3.04 Tenant shall be privileged to seek a reduction
in the valuation of the Demised Premises for tax purposes and to contest in
good faith by appropriate proceedings, at Tenant's expense, the amount or
validity in whole or in part of any Imposition. Tenant may defer payment of
any such Imposition, provided that Tenant (unless Tenant shall have posted a
bond or other security, as required by the applicable governmental body, in
connection with such proceedings) shall deposit with Landlord (which
<PAGE> 8
8
deposit may be in cash or a letter of credit) a sum which shall be at least
twenty-five percent (25%) greater than the amount of the item so contested, and
also, from time to time, on demand of Landlord, such additional sum as may be
reasonably required to cover interest or penalties accrued or to accrue on any
such item or items, and Landlord may, on ten (10) days' prior notice to Tenant,
pay such contested item or items out of any sums so deposited in case of undue
delay in the prosecution of such proceedings, or if the protection of the
property or of Landlord's interest therein shall, in the reasonable judgment of
Landlord, require such payment. When any such contested items shall have been
paid or cancelled, any sums so deposited to cover them and not applied by
Landlord as aforesaid shall be repaid to Tenant.
Section 3.05 Landlord shall have a right to seek a reduction
in the valuation of the Demised Premises assessed for tax purposes and to
prosecute any action or proceeding theretofore commenced by Tenant, if such
assessed valuation or valuations shall in whole or in part relate and pertain
to any period of time subsequent to the expiration or termination of this
Lease. To the extent to which any tax refund payable as a result of any
proceeding which Landlord or Tenant may institute, or payable by reason of
compromise or settlement of any such proceeding, may be based upon a payment
made by anyone other than Landlord and shall not relate to a period as to which
apportionment thereof has been made with Landlord. Tenant shall be authorized
to collect the same, subject, however, to Tenant's obligation to reimburse
Landlord forthwith for any expense incurred by Landlord in connection
therewith.
Section 3.06 Landlord shall not be required to join in any
proceedings referred to in Section 3.04 hereof unless the provisions of any
law, rule or regulation at the time in effect shall require that such
proceedings be brought by or in the name of Landlord or any owner of the
Demised Premises, in which event Landlord shall join in such proceedings or
permit the same to be brought in its name. Landlord shall not ultimately be
subjected to any liability for the payment of any costs or expenses in
connection with any such proceedings, and Tenant shall indemnify and save
harmless Landlord from any such costs and expenses. Tenant shall be entitled
to any refund of any Imposition and penalties or interest thereon received by
Landlord which have been paid by Tenant, or which have been paid by Landlord
but previously reimbursed in full by Tenant.
Section 3.07 The certificate, advice, receipt or bill of the
appropriate official designated by law to make
<PAGE> 9
9
or issue the same or to receive payment of any Imposition, of non-payment or
payment of such Imposition, as the case may be, shall be prima facie evidence
that such Imposition is due and unpaid or has been paid, as the case may be, at
the time of the making or issuance of such certificate, advice, receipt or
bill.
Section 3.08 Landlord appoints Tenant the attorney-in-fact of
Landlord with power of substitution as to any subtenant permitted pursuant to
ARTICLE 18 for the purpose of making all payments to be made by Tenant pursuant
to any of the provisions of this Lease to persons or entities other than
Landlord. In case any person or entity to whom any sum is directly payable by
Tenant under any of the provisions of this Lease shall refuse to accept payment
of such sum from Tenant, Tenant shall thereupon give written notice of such
fact to Landlord and shall pay such sum directly to Landlord at the address
specified in, or pursuant to, ARTICLE 22 hereof, and Landlord shall thereupon
pay such person or entity.
ARTICLE 4
SURRENDER
Section 4.01 Except as is herein otherwise provided, Tenant
shall on the last day of the Term or upon any earlier termination of this
Lease, well and truly surrender and deliver up the Demised Premises to the
possession and use of Landlord without fraud or delay and in good order,
condition and repair, except for ordinary wear and tear after the last
necessary repair, replacement, restoration or renewal made by Tenant, pursuant
to its obligations hereunder, free and clear of all lettings and occupancies
other than subleases to which Landlord shall have specifically given written
consent pursuant to ARTICLE 18, and free and clear of all liens and
encumbrances other than those, if any, presently existing or created or
suffered by Landlord, without any payment or allowance whatever by Landlord on
account of any improvements which may be in the Demised Premises. Except as
otherwise provided in ARTICLE 17 and Section 37.02 hereof, in the event of
surrender as herein provided, Tenant shall transfer to Landlord all of Tenant's
stock in Tenant and interest in Center, or, at Landlord's election, all of
Tenant's assets in the Center. Any liabilities of Tenant may be assumed by
Landlord at Landlord's election or shall be discharged by Tenant on or before
the date of the transfer to the Landlord
<PAGE> 10
10
of Tenant's stock interest and/or assets which shall occur within thirty (30)
days of such surrender.
Section 4.02 Where furnished by or at the expense of Tenant
(or any subtenant permitted pursuant to ARTICLE 18), furniture, trade fixtures,
business equipment and any other personal property of Tenant or any subtenant
may be removed by Tenant at or prior to the termination of this Lease or by
such subtenant at or prior to the termination of its sublease or, at the
election of Tenant or such subtenant, abandoned, in whole or in part, provided,
however, that if the removal thereof injures the Demised Premises or
necessitates changes in or repairs to the same, Tenant shall pay or cause to be
paid to Landlord the cost of repairing any damage arising from such removal and
restoration of the Demised Premises to their condition prior to such removal.
Section 4.03 Anything to the contrary herein notwithstanding,
Tenant shall be responsible for obtaining and maintaining, in its name, any and
all licenses, permits or other governmental or agency approvals necessary or
desirable for the operation of the Center as a seventy (70) bed, at a minimum,
acute psychiatric hospital and alcohol and substance dependency facility (the
"Licenses") (subject to alternative uses pursuant to ARTICLE 12) and this Lease
shall not be held or construed to convey any property interest or right of
removal in the Licenses.
Section 4.04 Any personal property of Tenant or any subtenant
which shall remain in the Demised Premises after the termination of this Lease
and the removal of Tenant or such subtenant from the Demised Premises, may, at
the option of Landlord, be deemed to have been abandoned by Tenant or such
subtenant and either may be retained by Landlord as its property or be disposed
of, without accountability, in such manner as Landlord may see fit, or if
Landlord shall give written notice to Tenant to such effect, such property
shall be removed by Tenant at Tenant's sole cost and expense.
Section 4.05 If this Lease shall terminate pursuant to
ARTICLES 15 or 16 hereof, then, notwithstanding Sections 4.02 and 4.04 hereof,
Tenant or any subtenant shall have a reasonable time thereafter to remove any
property which it shall be entitled to remove pursuant to Section 4.02 hereof.
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Section 4.06 After surrender, Landlord shall not be
responsible for any loss or damage occurring to any property owned by Tenant or
any subtenant.
Section 4.07 The provisions of this ARTICLE shall survive any
termination of this Lease.
ARTICLE 5
INSURANCE
Section 5.01 Tenant, at its sole cost and expense, shall keep
the improvements on the Demised Premises insured, during the Term of this
Lease, against loss or damage by fire, lightning and other risks included under
"extended coverage" policies as shall from time to time be customary for
premises similarly situated in Monongalia County with replacement cost
endorsement, in amounts sufficient to prevent Landlord or Tenant from being or
becoming a co- insurer within the terms of the policy or policies in question
and in no event less than one hundred percent (100%) of the actual replacement
value of the improvements on the Demised Premises exclusive of the cost of
foundations, excavations, and footings below the lowest basement floor, without
any deduction being made for depreciation. Such replacement value shall be an
amount determined from time to time, but not more frequently than once in any
thirty-six (36) consecutive calendar months, at the request of Landlord, by an
appraiser, architect or contractor who shall be mutually and reasonably
acceptable to Landlord and Tenant. No omission on the part of Landlord to
request any such determination shall relieve Tenant of its obligation
hereunder.
Section 5.02 Tenant, at its sole cost and expense, shall
maintain:
(a) for the mutual benefit of Landlord and Tenant
and at Tenant's election, for such other persons as Tenant may
deem prudent, general public liability insurance against
claims for bodily injury, death or property damage, occurring
upon, in or about the Demised Premises, and on, in or about
the adjoining sidewalks and streets (including, without
limitation, personal injury, death or property damage
resulting directly or indirectly from any change, alteration,
improvement or repair thereof) for at least $5,000,000 for any
one accident, $1,000,000 for
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bodily injury or death to any one individual and $1,000,000
for damage to property and in such greater or lesser limits as
may be determined pursuant to Section 5.07 hereof;
(b) insurance against professional malpractice
consistent with industry practice in the area;
(c) boiler and pressure vessel insurance, including
pressure pipes, if there by any such vessel or pipes in the
Demised Premises, in an amount not less than $1,000,000;
(d) workers' compensation insurance to the extent
required by the law of West Virginia and to the extent
necessary to protect Landlord and the Demised Premises against
workers' compensation claims in respect to any work or other
operations on, in connection with, or about the Demised
Premises;
(e) insurance against interruption of Tenant's
business in such amount as is appropriate to Tenant's
business, including without limitation, all debt service of
Tenant pertaining to the Demised Premises and fixtures,
equipment, improvement and personalty placed thereon, and, in
any event, no less than the total amount of Net Rent,
Impositions and other sums payable by Tenant under this Lease
and Exhibits hereto over a one year period commencing with the
effective date of such business interruption insurance (as
adjusted as such insurance is annually renewed);
(f) such other insurance and in such amounts as may
from time to time be reasonably required by Landlord or any
Mortgagee, as hereinafter defined, against other insurable
hazards which at the time are customarily insured against in
the case of premises similarly situated in Monongalia County
due regard being, or to be, given to the height and type of
building, its construction, use and occupancy.
Section 5.03 (a) All insurance provided for in this ARTICLE
shall be effected under valid and enforceable policies, issued by insurers of
nationally recognized financial standing and legally qualified to issue such
insurance in West Virginia. Upon the execution of this
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Lease or such later time as the parties hereto have an insurable interest, and
thereafter not less than fifteen (15) days prior to the expiration dates of the
expiring policies theretofore furnished pursuant to this ARTICLE, originals of
the policies (or, in the case of blanket insurance policies and general public
liability insurance policies, certificates of the insurers) bearing notations
evidencing the payment of premiums or accompanied by other evidence of such
payment satisfactory to Landlord, shall be delivered by Tenant to Landlord.
(b) Nothing in this ARTICLE 5 shall prevent Tenant from
taking out insurance of the kind and in the amounts provided for under this
ARTICLE under a blanket insurance policy or policies covering other properties
as well as the Demised Premises; provided, however, that any such policy or
policies of blanket insurance (i) shall specify therein, or Tenant shall
furnish Landlord with a written statement from the insurers under such policy
or policies specifying, the amount of the total insurance allocated to the
Demised Premises, which amounts shall not be less than the amounts required by
Sections 5.01 and 5.02 hereof, and (ii) such amounts so specified shall be
sufficient to prevent any one of the assureds from becoming a co- insurer
within the terms of the applicable policy or policies; and provided further,
however, that any such policy or policies of blanket insurance shall, as to the
Demised Premises, otherwise comply as to endorsements and coverage with the
provisions of this ARTICLE.
Section 5.04 Except with respect to the insurance required by
subdivision (a) of Section 5.02 hereof, neither Landlord nor Tenant shall take
out separate insurance concurrent in form or contributing in the event of loss
with that required in this ARTICLE to be furnished by, or which may reasonably
be required to be furnished by, Tenant unless Landlord and Tenant are included
herein as the insureds, with loss payable as in this Lease provided. Each
party shall immediately notify the other of the placing of any such separate
insurance and shall cause the same to be delivered as in Section 5.03 hereof
required.
Section 5.05 (a) All policies of insurance provided for in
Section 5.01 and 5.02 hereof shall name Landlord and Tenant as the insured as
their respective interests may appear.
(b) Each such policy shall, to the extent obtainable from
West Virginia insurance companies generally, contain a provision that no act or
omission of Tenant or
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Landlord shall affect or limit the obligation of the insurance company so to
pay the amount of any loss sustained.
Section 5.06 Each such policy or certificate therefor issued
by the insurer shall, to the extent obtainable, contain an agreement by the
insurer that such policy shall not be cancelled or materially modified without
at least thirty (30) days' prior written notice to Landlord. In addition, each
such policy shall provide that such policy shall not be invalidated because of
occupancy of the Demised Premises for purposes more hazardous than permitted by
such policy, nor by any foreclosure or other proceedings relating to the
Demised Premises, or by change in title to the Demised Premises, to the extent
such insurance is commercially available.
Section 5.07 Either Landlord or Tenant may request a change
in the amounts or limits of the insurance to be maintained hereunder pursuant
to subdivisions (a), (b) and (c) of Section 5.02 hereof and any dispute with
respect thereto shall be resolved by Landlord selecting an insurance consultant
of national reputation acceptable to Tenant (such acceptance shall not be
unreasonably withheld or delayed) and said insurance consultant shall determine
the amounts or limits of insurance to be maintained hereunder. Landlord may
request from Tenant such other insurance as is referred to in Section 5.02(e)
hereof, and any dispute with respect thereto shall be resolved by the selection
of an insurance consultant by Landlord as set forth in this Section 5.07 for
resolving disputes pursuant to subdivisions (a), (b) and (c) of Section 5.02
hereof. Pending such dispute resolution Tenant shall supply Landlord with such
further or increased insurance as Landlord shall then demand and shall pay the
premiums thereon. If the determination of such dispute resolution shall be
that Landlord was not entitled to the insurance or increase so requested,
Landlord shall reimburse Tenant for the amount of premiums so paid by Tenant,
in which event Tenant shall surrender such policies to Landlord and Landlord
shall have the option of continuing such further or increased insurance or
cancelling the same, in which latter event the unearned premiums shall be
property of Landlord.
<PAGE> 15
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ARTICLE 6
RIGHT OF LANDLORD TO PERFORM TENANT'S COVENANTS
Section 6.01 If Tenant shall at any time fail to pay any
Imposition in accordance with the provisions of ARTICLE 3 hereof, or to take
out, pay for, maintain or deliver any of the insurance policies or certificates
therefor as provided for in ARTICLE 5 hereof, or shall fail to make any other
payment or perform any other act on its part to be made or performed, then
Landlord, after ten (10) days' notice to Tenant (or without notice in case of
an emergency) and without waiving or releasing Tenant from any obligation of
Tenant contained in this Lease or from any default by Tenant and without
waiving Landlord's right to take such action as may be permissible under this
Lease as a result of such default, may (but shall be under no obligation to)
(a) pay any Imposition payable by Tenant pursuant to
the provisions of ARTICLE 3 hereof, or
(b) take out, pay for and maintain any of the
insurance policies provided for in ARTICLE 5 hereof, or
(c) make any other payment or perform any other act
on Tenant's part to be made or performed as provided in this
Lease.
and may enter upon the Demised Premises for any such purpose, and take all such
action thereon, as may be necessary therefor.
Section 6.02 All sums so paid by Landlord, and all costs and
expenses incurred by Landlord, including reasonable attorney's fees, in
connection with the performance of any such act, together with interest thereon
at the Default Rate (hereinafter defined) from the date of such payment or
incurrence by Landlord, of such cost and expense shall constitute additional
rent payable by Tenant under this Lease and shall be paid by Tenant to Landlord
on demand.
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ARTICLE 7
REPAIRS AND MAINTENANCE OF THE DEMISED PREMISES
Section 7.01 Throughout the Term of this Lease, Tenant, at
its sole cost and expense, shall take good care of the Demised Premises, and
all improvements thereon and all landscaping, grounds, roads and walkways and
parking areas thereon and shall keep the same in good order and condition,
except for ordinary wear and tear after the last necessary repair, replacement,
restoration or renewal made by Tenant pursuant to its obligations hereunder,
and make all necessary changes and repairs thereto, interior and exterior,
structural and non- structural, ordinary and extraordinary, and foreseen and
unforeseen and subsequent to any such necessary changes and repairs thereto,
keep the same in good order and condition, ordinary wear and tear after the
last necessary change or repair excepted. All repairs made by Tenant shall be
at least equal in quality and class to the original work. Tenant shall do or
cause others to do all necessary shoring of foundations and walls of any
structures on the Demised Premises and every other act or thing for the safety
and preservation thereof which may be necessary by reason of any excavation or
other building operation upon any adjoining property or street, alleyway or
passageway.
Section 7.02 Tenant shall put, keep and maintain all portions
of the Demised Premises and all improvements thereon and all landscaping,
grounds, roads and walkways and parking areas thereon in a clean an orderly
condition, free of dirt, rubbish, and unlawful obstructions and shall keep
roads, walkways and parking areas free of snow and ice.
Section 7.03 Landlord shall not be required to furnish to
Tenant any facilities or services of any kind whatsoever (other than those
services and agreements set forth in ARTICLE 33 hereof) during the Term, such
as, but not limited to, water, sewerage, steam, fuel, heat, gas, hot water,
electricity, light and power. Landlord shall in no event be required to make
any alterations, rebuildings, replacements, changes, additions, improvements or
repairs on or to the Demised Premises during the Term of this Lease except any
such repairs or replacements necessitated by Landlord's negligence on the
Adjacent Land as defined in ARTICLE 25 hereof.
Section 7.04 Tenant need not keep or maintain any
improvements on the Demised Premises in a better condition than that existing
at the time the Landlord's
<PAGE> 17
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architect or engineer certifies that such improvements have been substantially
completed.
Section 7.05 In the event that Tenant desires to make
non-structural, non- exterior additions or alterations to any one or more of
the improvements once completed pursuant to ARTICLE 9, Tenant may do so without
Landlord's prior consent provided that the aggregate cost of any such
non-structural, non-exterior additions or alterations shall not exceed the sum
of $100,000 for any single item, or $250,000 during any twelve (12) month
period and shall not, in any event, result in any diminution in value of the
affected improvements. In the event the Tenant desires to make structural
additions or alterations to any one or more of the improvements, or to make
non-structural, non-exterior additions or alterations not expressly permitted
by the immediately preceding sentence, Tenant shall not do so without first
obtaining Landlord's prior written consent. Any additions or alterations
permitted or allowed pursuant to this Section 7.05 shall be made at Tenant's
sole risk, cost and expense and Tenant shall indemnify and hold Landlord, the
Board, the Hospital and the University harmless against any all claims, cost
and expense (including, without limitation, reasonable attorneys' fees) paid or
incurred by or for Landlord, the Board, the Hospital and the University in
connection with or arising out of any such alterations or additions by or for
Tenant.
Section 7.06 Notwithstanding any reference in this Lease to
Tenant's obligations to maintain any sidewalks, curbs, alleyways and
passageways adjoining the Demised Premises, Tenant shall not have any such
obligation insofar as the maintenance of any such sidewalks, curbs, alleyways
and passageways is the responsibility of Monongalia County, or another
governmental authority (other than the Board or University).
ARTICLE 8
COMPLIANCE WITH LAWS, ORDINANCES, ETC.
Section 8.01 Throughout the Term of this Lease, Tenant, at
its sole cost and expense, shall promptly observe and comply with all
regulations, requirements or orders of the Board and University of general
application and all present and future laws, ordinances, orders, rules,
regulations and requirements of all federal, state and municipal governments,
departments, commissions, and other boards and officers, and all orders, rules
and regulations
<PAGE> 18
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of the National Board of Fire Underwriters, the West Virginia Board of Fire
Underwriters or any other body or bodies exercising similar functions, foreseen
or unforeseen, ordinary as well as extraordinary, which may be applicable to
the Demised Premises (the "Laws") including all improvements thereon and all
landscaping, grounds, roads and walkways and parking areas thereon or to the
use or manner of use of the Demised Premises by Tenant, including licensure and
accreditation, whether or not such Laws shall affect the interior or exterior
of improvements on the Demised Premises, necessitate structural changes or
improvements or interfere with the use and enjoyment of the Demised Premises,
and whether or not such compliance is required by reason of any condition,
event or circumstance existing prior to or after the commencement of the Term
of this Lease, provided that Tenant shall not be deemed to be in default
hereunder for failure to comply with the provisions of this Section 8.01 if it
fails to comply with Laws which apply only to Tenant or the Demised Premises
(other than the Act or any amendment or successor statute thereto) and if such
non-compliance does not adversely affect the operation and maintenance of the
Demised Premises as the Center.
Section 8.02 Tenant shall likewise observe and comply with
the requirements of all policies of public liability, fire and all other
policies of insurance required to be supplied by Tenant at any time in force
with respect to the Demised Premises, whether or not such observance or
compliance is required by reason of any condition, event or circumstance
existing prior to or after the commencement of the Term of this Lease and
Tenant shall, in the event of any violation or any attempted violation of the
provisions of this Section by any subtenant, take steps, immediately upon
knowledge of such violation or attempted violation, to remedy or to prevent the
same as the case may be. In any case Tenant shall be privileged to substitute
policies of other insurance companies which satisfy the requirements of this
Lease.
Section 8.03 Tenant shall have the right, after prior written
notice to Landlord, to contest by appropriate legal proceedings diligently
conducted in good faith, in the name of Tenant or Landlord or both, without
cost or expense to Landlord, the validity or application of any law, ordinance,
order, rule, regulation or requirement of the nature referred to in Section
8.01 hereof, subject to the following:
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(a) If by the terms of any such law, ordinance,
order, rule, regulation or requirement, compliance therewith
pending the prosecution of any such proceeding may legally be
delayed without the incurrence of any lien, charge or
liability of any kind against the Demised Premises or any part
thereof and without subjecting Tenant or Landlord to any
liability, civil or criminal, for failure so to comply
therewith, Tenant may delay compliance therewith until the
final determination of such proceeding; or
(b) If any lien, charge or civil liability would be
incurred by reason of any such delay, Tenant nevertheless may
contest as aforesaid and delay as aforesaid, provided that
such delay would not subject Landlord to criminal liability or
fine, and Tenant (i) furnishes to Landlord security,
reasonably satisfactory to Landlord, against any loss or
injury by reason of such contest or delay, and (ii) prosecutes
the contest with due diligence.
Landlord, without cost to it, shall, subject to the foregoing, execute and
deliver any appropriate papers which may be necessary or proper to permit
Tenant so to contest the validity or application of any such law, ordinance,
order, rule, regulation or requirement.
ARTICLE 9
IMPROVEMENTS-ALTERATIONS-ADDITIONS
Section 9.01 Tenant shall complete construction of the Center
on the Land as a part of the New Facilities, said Center being more
particularly described in the development agreement to be entered into between
Landlord and Tenant as of even date herewith and attached hereto as Exhibit B
(the "Development Agreement"), in accordance with the Development Agreement.
Section 9.02 It is understood by the parties that pursuant to
the Act and the Primary Lease, the Hospital will be constructing health science
and patient care facilities, in addition to the Center to be constructed by
Tenant, on the property adjacent to or near the Land. Landlord shall have the
right (subject to requisite approvals of the Hospital, Board and University) to
approve or reject the plans, specifications, materials, design or
<PAGE> 20
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other aspects of the Center in its sole discretion except that electrical,
mechanical, structural and plumbing materials utilized in non-public interior
spaces of the Center and any such materials used in construction of utility
lines to the Center shall be subject to the reasonable approval or rejection of
Landlord.
Section 9.03 All manner of costs and expenses, including, but
not limited to, federal, state and local property, use and ad valorem taxes,
incurred as a result of the Development Agreement shall be the sole
responsibility of Tenant. Tenant covenants to pay any and all such costs and
expenses when due.
Section 9.04 Tenant may during the Term, erect additional
improvements on the Demised Premises and demolish or otherwise remove the
improvements constructed in accordance with the Development Agreement and erect
new improvements thereon, all subject to, and in compliance with, the
provisions of this ARTICLE. Before beginning any such additional improvements
or demolition or removal and construction Tenant shall submit to Landlord a
copy of the plans and specifications, including schematic design, design
development and construction documents for such new improvements, and any
amendments thereto, together with an estimate which shall show in reasonable
detail, allocated among the various trades, the approximate net cost of such
improvements. Such plans and specifications shall comply with all relevant
legal requirements. Landlord's written approval of such plans, specifications
and amendments thereto shall be necessary prior to any demolition, addition or
alteration of the improvements except as specified in Section 7.05 hereof.
Landlord shall have ten (10) days from receipt of any schematic design
documents, fifteen (15) days from receipt of any design development documents,
and forty-five (45) days from receipt of any construction documents from Tenant
in which to approve or disapprove such documents or Tenant may assume
Landlord's approval of the submitted documents.
Section 9.05 Before beginning the demolition of any
improvements which may at any time be on the Demised Premises, or letting any
contract relating to the construction of new or additional improvements, Tenant
will deliver to Landlord a bond of a surety company. Such surety company shall
be a stock company authorized to do business in West Virginia and of recognized
responsibility acceptable to Landlord. Such bond shall be conditioned on the
completion of the improvements substantially in accordance with the plans and
specifications mentioned in the
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Development Agreement, within the time set forth herein, subject, however, to
Unavoidable Delays, in compliance with all relevant legal requirements, and
free and clear of all liens, chattel mortgages and conditional bills of sale
except as permitted hereunder. The amount of such bond shall be equal to the
estimated net cost of construction.
Section 9.06 For the purpose of this ARTICLE the net cost of
an improvement shall be deemed to be the aggregate of the funds paid by Tenant
for labor, services and materials, cost of demolition and insurance and bond
premiums, and shall not include overhead of Tenant or wages and other
compensation of officers, employees or agents of Tenant, taxes, rent and
additional rent, and operating expenses of the Demised Premises during the
course of construction or any expense of financing the cost of construction.
Section 9.07 Before making any alteration or before beginning
the demolition of any improvements which may at any time be on the Demised
Premises or letting any contracts relating to the construction of new or
additional improvements, Tenant shall supply Landlord with such endorsements to
the existing insurance policies as shall be necessary to cover the contemplated
work.
Section 9.08 Any building construction on the Demised
Premises shall be built wholly within the lot lines and applicable set back
restrictions of the Demised Premises and shall be a complete self-contained
unit with independent facilities of its own and shall not be tied in to or have
any physical connection with any structure located on other property except as
set forth in the Easements and Services Agreement pursuant to ARTICLE 33
hereof.
Section 9.09 Any improvements erected by Tenant shall be
constructed and completed in compliance with all requirements of the law and
with all ordinances, regulations or orders of the town, any State, or other
public authority relating thereto, including, without limitation, all zoning
and building laws and requirements, and with the orders, rules and regulations
of the West Virginia Board of Fire Underwriters, any licensing authority having
jurisdiction over the Demised Premises, the Board, the University or any other
body or bodies having similar functions. On completion of any improvement
requiring the same, Tenant will procure a final Certificate of Occupancy and
deliver to Landlord the original or a copy thereof.
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Section 9.10. Any and all buildings, structures, alterations,
additions and improvements upon the Demised Premises are the property of Tenant
and at the expiration or sooner termination of this Lease shall then become
property of Landlord and shall be surrendered at that time in accordance with
the provisions of Section 4.01 hereof.
ARTICLE 10
DISCHARGE OF LIENS
Section 10.01 Tenant shall not create or permit to be created
or to remain, and shall discharge, any mechanic's, laborer's or materialman's
lien or any conditional sale, title retention agreement or chattel mortgage,
which might be or become a lien, encumbrance or charge upon the Demised
Premises or any part thereof having any priority or preference over or ranking
on a parity with the estate, rights and interest of Landlord in the Demised
Premises or any part thereof. This Section 10.01 shall not be construed as
prohibiting Tenant from financing any items of personal property belonging to
Tenant (such as equipment, inventory, or accounts receivable) and arising out
of or relating to the operation of Tenant's business on or at the Demised
Premises; provided, however, that Landlord shall have no liability for or in
connection with any such financing of Tenant's personal property and Tenant
shall indemnify and hold Landlord harmless from and against any and all claims,
cost and expenses (including reasonable attorneys' fees) arising out of, or in
connection with any such financing. Landlord shall, at Tenant's expense,
execute waiver of Landlord's liens as may be reasonably required by the lenders
providing financing for Tenant's personal property.
Section 10.02 If any mechanic's, laborer's or materialman's
lien shall at any time be filed against the Demised Premises or any part
thereof, Tenant, within thirty (30) days after notice of the filing thereof,
shall cause the same to be discharged of record by payment, deposit, bond,
order of a court of competent jurisdiction or otherwise. If Tenant shall fail
to cause such lien to be discharged within the period aforesaid, then, in
addition to any other right or remedy, Landlord, may, after ten (10) days'
notice to Tenant, but shall not be obligated to, discharge the same either by
paying the amount claimed to be due or by procuring the discharge of such lien
by deposit or by bonding proceedings, and in any such event Landlord shall be
entitled, if Landlord so elects, to dispel the
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prosecution of an action for the foreclosure of such lien by the lienor and to
pay the amount or the judgment in favor of the lienor with interest, costs and
allowances. Any amount so paid by Landlord and all costs and expenses incurred
by Landlord in connection therewith, together with interest thereon at the rate
of interest at the Default Rate, from the respective dates of Landlord making
of the payment or incurring of the cost and expense, shall constitute
additional rent payable by Tenant under this Lease and shall be paid by Tenant
to Landlord, on demand.
Section 10.03 Nothing in this Lease contained shall be deemed
or construed in any way as constituting the consent or request of Landlord,
express or implied by inference or otherwise, to any contractor, subcontractor,
laborer or materialman for the performance of any labor or the furnishing of
any materials for any specific improvement, alteration to or repair of the
Demised Premises or any part thereof.
ARTICLE 11
NO WASTE
Section 11.01 Tenant shall not commit, do or suffer any waste
or damage, disfigurement or injury to the Demised Premises or any part thereof,
but this shall not be deemed to prevent alterations or additions pursuant to
other provisions of this Lease.
ARTICLE 12
USE OF PROPERTY
Section 12.01 (a) Tenant shall not use or allow the Demised
Premises to be used for any purposes other than an acute care psychiatric
hospital and alcohol and chemical dependency center (including in-patient and
out-patient psychiatric hospital and alcohol and chemical dependency services),
and purposes ancillary or incidental thereto; provided that if the uses
permitted hereunder would, in the written opinion (supported by a feasibility
study) of an independent management consultant of national reputation, selected
by Landlord and acceptable to Tenant (such acceptance shall not be unreasonably
withheld or delayed), at Tenant's expense, not permit the Center to remain
financially feasible, Tenant may use the Demised Premises for such other
medical uses as (i) are acceptable to and
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approved by a two-third (2/3) majority vote of each of the Tenant's Board of
Directors and the organized medical staff of the Center; (ii) do not at the
time compete, directly or indirectly, with services offered by the Hospital or
any entity in which the Hospital has an interest; and (iii) are consistent with
the policies and goals of the University then in effect. Such uses will be
subject to the approval of Landlord, which approval shall not be unreasonably
withheld. Tenant shall not permit any use for an unlawful purpose or in
violation of any license or certificate of occupancy covering or affecting the
use of the Demised Premises or any part thereof or which may, in law,
constitute a nuisance, public or private, or which may make void or voidable
any insurance then in force with respect thereto. Tenant shall not use or
allow the Demised Premises to be used as a general acute care hospital.
(b) If a new building or buildings are constructed pursuant
to the provisions of ARTICLE 9 or of Section 15.04 hereof, the same shall be
used only for purposes which shall be legal.
Section 12.02 Tenant shall not suffer or permit the Demised
Premises or any portion thereof to be used by the public, as such, without
restriction or in such manner as might reasonably tend to impair Landlord's
title to the Demised Premises or any portion thereof, or in such manner as
might reasonably make possible a claim or claims of adverse usage, adverse
possession or prescription by the public, as such, or of implied dedication, of
the Demised Premises or any portion thereof. Tenant hereby acknowledges that
Landlord does not hereby consent, expressly or by implication, to the
unrestricted use or possession of the whole or any portion of the Demised
Premises by the public, as such.
ARTICLE 13
ENTRY ON DEMISED PREMISES BY LANDLORD
Section 13.01 Tenant shall permit Landlord and its authorized
representatives to enter the Demised Premises at all reasonable times for the
purpose of (a) inspecting the same, and (b) making any necessary repairs
thereto and performing any work therein that may be necessary by reason of
Tenant's failure to make any such repairs or perform any such work or to
commence the same for ten (10) days after written notice from Landlord (or
without notice in case of emergency). Nothing herein shall imply any duty upon
the
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part of Landlord to do any such work; and performance thereof by Landlord or
any Mortgagee shall not constitute a waiver of Tenant's default in failing to
perform the same.
Section 13.02 During the progress of any work in the Demised
Premises performed by Landlord pursuant to the provisions of Section 13.01
hereof, Landlord may keep and store therein all necessary materials, tools,
supplies and equipment. Landlord shall not be liable for inconvenience,
annoyance, disturbance, loss of business or other damage of Tenant or any
subtenant by reason of making such repairs or the performance of any such work,
or on account of bringing materials, tools, supplies and equipment into the
Demised Premises during the course thereof and the obligations of Tenant under
this Lease shall not be affected thereby.
Section 13.03 Landlord shall have the right to enter the
Demised Premises at all reasonable times after reasonable notice to Tenant
during usual business hours for the purpose of showing the same to prospective
purchasers of the Demised Premises (any sale shall be subject to this Lease),
and, at any time within two (2) years prior to the expiration of the Term of
this Lease for the purpose of showing the same to prospective tenants. Any
such entries shall be in a manner calculated to minimize any interruption of
the Tenant's activities on the Demised Premises.
ARTICLE 14
INDEMNIFICATION
Section 14.01 Tenant and the HSA Americare Corporation shall
indemnify and save harmless Landlord, the Hospital, the University and the
Board against and from all liabilities, obligations, damages, penalties,
claims, costs, charges and expenses, including reasonable architects' and
attorneys' fees, which may be imposed upon or incurred by or asserted against
Landlord, the Hospital, the University or the Board by reason of any of the
following occurrences during the Term:
(a) any work or thing done in, on or about the
Demised Premises or any part thereof by Tenant or any party
other than the party indemnified;
(b) any use, non-use, possession, occupation,
condition, operation, maintenance or management of the Demised
Premises or any part thereof or any alley, sidewalk, curb,
vault,
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passageway or space adjacent thereto in control of Tenant;
(c) any negligence on the part of Tenant or any of
its agents, contractors, servants, employees, subtenants,
licensees or invitees;
(d) any accident, injury or damage to any person or
property occurring in, on or about the Demised Premises or any
part thereof, or any alley, sidewalk, curb, vault, passageway
or space adjacent thereto in control of Tenant; or
(e) any failure on the part of Tenant to perform or
comply with any of the covenants, agreements, terms,
provisions, conditions or limitations contained in this Lease
on its part to be performed or complied with.
In case any action or proceeding is brought against Landlord, the Hospital, the
University or the Board by reason of any such claim, Tenant and/or the HSA
Americare Corporation, upon written notice from Landlord or other party
entitled to indemnification, shall at Tenant's expense resist or defend such
action or proceeding by counsel approved by Landlord, or such other party
entitled to indemnification, as the case may be, in writing, which approval
Landlord, or such other party entitled to indemnification, shall not withhold
unreasonably.
Section 14.02 Anything to the contrary and notwithstanding
herein, in the event that (a) the Tenant shall fulfill all of its obligations
to complete the Center pursuant to the Development Agreement, (b) the Tenant is
not in default hereunder, and (c) the HSA Americare Corporation holds a minimum
of twenty percent (20%) equity interest in the improvements to the Demised
Premises, the Americare Corporation shall be relieved of its indemnity
obligations pursuant to this Section. The parties' intent under this Section
14.02(c) is to release HSA Americare Corporation of its indemnity obligations
hereunder only if the total debt (long-term and current portion of long-term)
shown on the balance sheet of Tenant does not exceed eighty percent (80%) of
the value of net property plant and equipment (fixed assets minus depreciation)
of Tenant as shown on the balance sheets in the audited financial statements of
Tenant prepared by Tenant's regular independent certified public accountant.
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ARTICLE 15
DAMAGE OR DESTRUCTION
Section 15.01 In case of damage to or partial destruction of
any improvements on the Demised Premises or any part thereof by fire or
otherwise, Tenant shall promptly give written notice thereof to Landlord, and
Tenant shall, at Tenant's sole cost and expense, and whether or not the
insurance proceeds, if any, shall be sufficient for the purpose, restore,
repair, replace, rebuild or alter the same as nearly as possible to its value
immediately prior to such damage or destruction, with such changes or
alterations as may be made by Tenant in conformity with and subject to the
conditions of Sections 9.02 and 9.07 inclusive hereof, except that the surety
company bond as referred to in Section 9.05 hereof shall be in an amount equal
to the excess of the estimated cost of the work over the amount of insurance
proceeds received in respect to such loss. Such restorations, repairs,
replacements, rebuilding or alterations shall be commenced within ninety (90)
days from the date of occurrence of such damage or destruction, which time
shall be extended by a time commensurate with any delays due to adjustment of
insurance, preparation and approval of Landlord of plans and specifications,
and applications for zoning variances and rezoning, and shall thereafter be
prosecuted with reasonable diligence, Unavoidable Delays excepted. Tenant
shall submit schematic design documents to Landlord within ten (10) days of
such damage or destruction and Landlord shall have ten (10) days to respond.
Tenant shall submit design development documents within fifteen (15) days of
Landlord's approval of the schematic design documents and Landlord shall have
fifteen (15) days to respond. Tenant shall submit construction documents
within twenty (20) days of Landlord's approval of the design development
documents and Landlord shall have forty-five (45) days to respond. Landlord's
failure to respond within the prescribed period shall be deemed an approval of
the documents as submitted to Landlord. The proceeds of any insurance in
excess of $15,000 payable by reason of such damage or destruction shall be paid
to Landlord for the benefit of Tenant in the manner provided in Section 15.02
hereof (and if such proceeds are $15,000 or less they shall be paid to Tenant
to be used to the extent necessary for repairs or restoration as aforesaid).
Section 15.02 (a) Except for insurance proceeds relating to
loss of business or to damage or destruction to Tenant's personal property
which Tenant would otherwise be
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permitted to remove upon the termination of this Lease (hereinafter "Tenant's
Insurance Proceeds"), which Tenant's Insurance Proceeds shall be paid to
Tenant, all insurance money, including any interest accrued thereon, paid on
account of such damage or destruction to the Demised Premises less the
reasonable cost, if any, incurred in connection with adjustment of the loss and
the collection thereof shall be paid to Landlord as Trustee for Tenant and
shall be held in a separate account or accounts to be managed and invested
according to Tenant's reasonable instructions. Said insurance proceeds held in
trust by Landlord shall not be commingled with Landlord's funds without
Tenant's written instruction and shall be held solely for the payment of the
cost of the aforesaid restoration, repairs, replacement, rebuilding or
alterations, including the cost of temporary repairs or for the protection of
property pending the completion of permanent restoration, repairs,
replacements, rebuilding or alterations (all of which temporary repairs,
protection of property and permanent restoration, repairs, replacement,
rebuilding or alterations are hereinafter collectively referred to as the
"Restoration"), and shall be paid out to, or at the direction of, Tenant from
time to time as Restoration progresses, in installments equal to the percentage
of the work completed and materials furnished (less any retainages held back
from the contractors), and shall be received by Tenant for the purposes of
paying the cost of Restoration upon the written request of Tenant which shall
be accompanied by the following:
(i) a verified certificate signed by Tenant, or an executive
officer of Tenant, or a certificate signed by the architect or engineer in
charge of such construction, dated not more than thirty (30) days prior to such
request, setting forth the following:
(A) that the sum then requested either has been paid
by Tenant, or is justly due to contractors, subcontractors,
materialmen, engineers, architects or other persons who have
rendered services or furnished materials for the restoration
therein specified, and giving a brief description of such
services and materials and the several amounts so paid or due
to each of said persons in respect thereof, and stating that
no part of such expenditures has been or is being made the
basis, in any previous or then pending request, for the
withdrawal of insurance money or has been made out of the
proceeds of insurance received by Tenant, and that the sum
then
<PAGE> 29
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requested does not exceed the value of the services and
materials described in the certificate;
(B) that except for the amount, if any, stated
(pursuant to the foregoing subclause (i)(A)) in such
certificate to be due for services or materials, there is no
outstanding indebtedness shown on Tenant's books or known to
the persons signing such certificate, after due inquiry, which
is due on the date of such certificate for labor, wages,
materials, supplies or services in connection with such
restoration which, if unpaid, might become the basis of a
vendor's, mechanic's, laborer's or materialman's statutory or
similar lien upon such restoration or upon the Demised
Premises or any part thereof, or, if there are such amounts
claimed by materialmen, suppliers, contractors or
subcontractors to be due, but which have not been paid, that
non-payment thereof is the subject of a bona fide dispute and
that adequate reserves have been set aside to bond off any
mechanics or materialmen's lien and make such payment if it is
ultimately determined that such amounts are due and payable;
and
(C) that the cost, as estimated by the persons
signing such certificate, of the restoration required to be
done subsequent to the date of such certificate in order to
complete the same, does not exceed the aggregate of the
insurance money remaining in the hands of the Landlord, after
payment of the sum requested in such certificate and the
amount of the bond deposited pursuant to Section 15.01 hereof.
(ii) an official search of the public records or a search of a
title insurance company doing business in Monongalia County showing that there
has not been filed with respect to the Demised Premises or any part thereof any
vendor's, mechanic's, laborer's, materialman's or like lien, which has not been
discharged of record, except such as will be discharged by payment of the
amount then requested.
In the event that any such Restoration involves expenditures in excess of
$100,000, the certificate required by subclause (i)(A) of this Section 15.02(a)
shall be a certificate signed by the architect or engineer in charge of the
Restoration, who shall be selected by Tenant and approved in writing by
Landlord, which approval Landlord shall not
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unreasonably withhold. Upon compliance with the foregoing provisions of this
Section, Landlord shall, out of such insurance money, pay or cause to be paid
to Tenant or the persons named (pursuant to subclause (i)(A) of this Section
15.02(a)) in such certificate the respective amounts stated therein to have
been paid by Tenant or to be due to them, as the case may be.
(b) If the net insurance money as aforesaid at the time held
by Landlord shall be insufficient to pay the entire cost of such Restoration,
Tenant shall pay the deficiency and such deficiency shall be paid prior to
payment by Landlord to Tenant of the proceeds of insurance.
(c) Upon receipt by Landlord of satisfactory evidence, of the
character required by any provision of this Section 15.02, that the Restoration
has been completed and paid for in full and that there are no liens of the
character referred to therein, any balance of the insurance money at the time
held by Landlord shall be paid to Tenant.
(d) Anything herein contained to the contrary
notwithstanding, in the event of the termination of this Lease pursuant to
Section 15.04 or ARTICLE 19, any and all insurance proceeds then on hand with
the Landlord shall be paid to the Landlord. If the Lease is terminated
pursuant to ARTICLE 19, any and all insurance proceeds shall be paid to the
Landord and Tenant shall have no right, title, interest or claim thereto or
therein whatsoever. If this Lease is terminated pursuant to ARTICLE 17, any
and all insurance proceeds shall be paid to the Tenant who shall assign the
same to the Landlord on Landlord's payment to Tenant of the Fair Market Value
of Tenant's Leasehold Interest (hereinafter defined).
Section 15.03 No destruction of or damage to the improvements
on the Demised Premises or any part thereof by fire or any other casualty shall
permit Tenant to surrender this Lease or shall relieve Tenant from its
liability to pay the full Net Rent and additional rent and other charges
payable under this Lease or from any of its other obligations under this Lease
and Tenant waives any rights now or hereafter conferred upon it by statute or
otherwise to quit or surrender this Lease or the Demised Premises or any part
thereof, or to any suspension, diminution, abatement or reduction of rent on
account of any such destruction or damage.
Section 15.04 (a) If during the Term the improvements on the
Demised Premises shall be damaged by
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fire or otherwise, and if Tenant is not then in default of any or its
obligations under this Lease (including, without limitation, its obligations to
maintain insurance under ARTICLE 5 hereof), and if the cost of Restoration
exceeds, by more than $250,000, the net amount of insurance proceeds available
for Restoration or (b) if the improvements shall be damaged or destroyed during
the last three years of the Term, then:
(i) Landlord may elect to cancel this Lease on at
least thirty (30) days' notice, given within sixty (60) days
after such damage or destruction, and this Lease shall come to
an end on the date in such notice specified; provided,
however, that Landlord may not elect to cancel this Lease upon
the occurrence of the events specified in Section 15.04(a) if,
within thirty (30) days after the damage or destruction
specified therein, Tenant notifies Landlord that Tenant is
willing to pay the full cost of Restoration notwithstanding
the fact that such cost exceeds by more than $250,000, the net
amount of insurance proceeds available for restoration; or
(ii) Unless Tenant has previously elected to pay the
full costs of Restoration as provided in Section 15.04(i),
Tenant may elect to cancel this Lease on at least thirty (30)
days notice, given within sixty (60) days after such damage or
destruction, and this Lease shall come to an end on the date
in such notice specified; provided, however, that
simultaneously with the giving of its notice (or upon receipt
of Landlord's notice pursuant to Section 15.04(i)) Tenant
shall deliver to Landlord an assignment duly executed and
acknowledged by Tenant, transferring to Landlord all of the
rights and claims of Tenant in, to and under all insurance
proceeds covering such damage or destruction except for
Tenant's Insurance Proceeds to which Tenant is entitled.
In the event of any such cancellation, Tenant shall not be obligated to perform
any Restoration, this Lease and the Term hereof shall terminate as of the
effective date of such cancellation as specified in the notice and all such
insurance proceeds shall be paid as set forth above. No such cancellation or
termination shall release Tenant from any obligation hereunder for rent,
Impositions, insurance premiums or other sums due hereunder accrued or payable
for or during any period prior to the effective date of such
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cancellation, and any prepaid rent, Impositions, insurance premiums, or other
sums beyond the effective date of such cancellation shall be adjusted.
Section 15.05 Anything herein to the contrary and
notwithstanding, if during the initial thirty (30) years of the Term all, or
substantially all, of the improvements on the Demised Premises shall be
destroyed or damaged by fire or otherwise, Tenant shall promptly give written
notice thereof to Landlord, and Tenant shall, at Tenant's sole cost and
expense, and whether or not the insurance proceeds, if any, shall be sufficient
for such purpose, restore, repair, replace, rebuild or alter the same as nearly
as possible to its value immediately prior to such destruction or damage, with
such redesign, changes or alterations as may be desired by Tenant which are
consented to in writing by Landlord and are in conformity with and subject to
the conditions of Sections 9.02 to 9.07 inclusive hereof, except that the
survey company bond referred to in Section 9.03 hereof shall be in an amount
equal to the excess of the estimated cost of the work over the amount of
insurance proceeds received in respect of such loss.
Such restorations, repairs, replacements, rebuilding or
alterations shall be commenced within ninety (90) days from the date of
occurrence of such damage or destruction, which time shall be extended by a
time commensurate with any delays due to adjustment of insurance, preparation
and approval of Landlord of plans and specifications, and for zoning variances
and rezoning, and shall thereafter be prosecuted with reasonable diligence,
Unavoidable Delays excepted. The submission by Tenant and approval by Landlord
of the schematic design documents, design development documents and
construction documents shall be in the manner provided in Section 15.01 hereof.
The proceeds of any insurance payable by reason of such damage or destruction
shall be paid to Landlord for the benefit of Tenant in the manner provided in
Section 15.02 hereof. For the purposes of this Section 15.05, "substantially
all" of the Demised Premises shall be deemed destroyed or damaged if the
undamaged portion of the Demised Premises shall be insufficient for the
economic and feasible operation thereof by Tenant, and "insufficient for the
economic and feasible operation thereof by Tenant" shall be determined by a
financial consultant(s) of national reputation acceptable to both Tenant and
Landlord. If Tenant and Landlord are unable to agree on such a financial
consultant(s), Tenant and Landlord shall follow procedures equivalent to those
set forth in ARTICLE 20 for the selection of appraisers.
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If all or substantially all of the improvements on the Demised
Premises are destroyed or damaged subsequent to the initial thirty (30) years
of the Term, Tenant shall not be required to restore, repair, or replace the
same if it is determined that the restored Demised Premises would be
insufficient for the economic and feasible operation thereof by Tenants. In
such an event, all insurance money paid on account of such damage or
destruction shall be applied to the Landlord and Tenant according to the
appraised value of their respective interests in the Demised Premises (Tenant
shall specifically have no interest or set off in the Demised Premises based
upon the Net Rent) according to the procedures and provisions of ARTICLE 20
hereof. Anything to the contrary and notwithstanding, in the event that such
insurance proceeds equal less than the appraised interest of Landlord, Tenant
shall pay to Landlord the amount of any such deficiency within sixty (60) days
of the conclusion of the appraisal procedure.
ARTICLE 16
CONDEMNATION
Section 16.01 If all, or substantially all, of the Demised
Premises shall be taken in condemnation proceedings or by exercise of any right
of eminent domain or by agreement between Landlord and those authorized to
exercise such right, this Lease shall terminate on the date title or the right
of possession, whichever is earlier; vests in the condemning authority, in
which event all sums due hereunder shall be apportioned as of the termination
date except that there shall be no apportionment of the Net Rent, which remain
the exclusive property of Landlord. For the purposes of this ARTICLE,
"substantially all" of the Demised Premises shall be deemed to have been taken
if the untaken part of the Demised Premises shall be insufficient for the
economic and feasible operation hereof by Tenant.
Section 16.02 If the Demised Premises are condemned in part,
this Lease shall continue and Tenant, subject to Unavoidable Delays, shall
restore the remaining Demised Premises as a complete architectural unit (in
which event Landlord shall make available to Tenant the net proceeds from the
partial condemnation...(illegible) restoration); provided, however, that
notwithstanding the foregoing if the cost of such restoration exceeds the
amount of the net proceeds (specifically excluding Net Rent) from the partial
condemnation that Landlord is willing to make available for such restoration or
if such partial
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condemnation occurs during the last three years of the Term, then either party
may terminate this Lease in accordance with the procedures specified in
Sections 15.04(i) and (ii) above. Any net proceeds of a partial condemnation
not required hereunder to be made available to Tenant by Landlord shall belong
to Landlord.
Section 16.03 In the event of any condemnation of part of the
Demised Premises, whether resulting in the termination of the Lease or not,
Tenant shall be entitled to share in any part of the condemnation award
(including consequential damages) for the taking of its leasehold estate or any
of its rights, licenses or easements in or appurtenant to the Demised Premises,
and Tenant shall be entitled to have standing or participate in any legal
proceedings, settlement negotiations or participate in any legal proceedings,
settlement negations or closing pertaining to any said condemnation, separate
and distinct from the participation of Landlord in such proceedings or
procedures, to the extent permitted by applicable law; provided, however, that
notwithstanding the foregoing, Tenant shall be entitled to receive a separate
award from the condemning authority (or receive from Landlord, if included in
Landlord's award) damages for moving expenses, loss of trade fixtures, loss of
leasehold improvements and loss of business and business goodwill and shall be
entitled to be reimbursed from the net proceeds of a partial condemnation to
the extent provided in Section 16.02.
Section 16.04 In the event of any condemnation of all or
substantially all of the Demised Premises, all condemnation awards to Landlord
or Tenant shall be applied to Landlord and Tenant according to the appraised
value of their respective interests in the Demised Premises according to the
procedures and provisions of ARTICLE 20 hereof, except that Tenant shall have
no interest in the Demised Premises resulting from the payment of Net Rent.
Section 16.05 As used herein the terms "condemned" and
"condemnation" includes sale by Landlord to a condemning authority or third
party under threat of condemnation.
ARTICLE 17
LANDLORD'S RIGHT OF TERMINATION
Section 17.01 In addition to the right of the Landlord to
terminate this Lease pursuant to other ARTICLES
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hereof, Landlord, with the approval of the Board, shall have the right to
terminate this Lease, for reasons which are not arbitrary or capricious,
subsequent to the seventh (7th) anniversary of the date the Center commences
operation by the following procedure:
(a) In the event that such a determination that this
Lease should terminate is made, Landlord shall provide Tenant
with written notice of Landlord's election to terminate this
Lease specifying an effective date of termination, not to be
less than two hundred ten (210) days from the date of the
notice. Such notice shall provide Tenant with a statement of
the reason(s) or condition(s), in reasonable detail, for
Landlord's determination that this Lease shall terminate.
(b) Tenant shall have the right to remedy, cure or
alleviate the condition(s) or reason(s) for Landlord's
election to terminate this Lease as provided in the notice of
termination.
(c) In the event that Tenant has not remedied, cured
or alleviated said condition(s) or reason(s) to the
satisfaction of the Landlord within sixty (60) days of the
notice, as shown by Landlord's written cancellation of the
notice of termination, Tenant shall have the right to request
judicial review of the decision of Landlord and the Board to
terminate the Lease by instituting a civil action in a court
of the State of West Virginia in Monongalia County, West
Virginia within one hundred eighty (180) days of the notice of
termination. Tenant and Landlord agree that the sole standard
of review to be applied in any judicial review of the decision
of the Landlord and the Board to terminate the Lease is
whether such decision was arbitrary and capricious. Landlord
and Tenant further agree that in the event Tenant elects to
commence such a civil action, termination of the Lease shall
be stayed pending the court's decision and any appeals of said
civil action. If Tenant does not elect to commence such a
civil action, Tenant thereby waives any and all right to
appeal the decision of the Landlord and Board to any agency,
court, or governmental entity. Landlord and Tenant expressly
waive any rights or relief available pursuant to the
Administrative
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Procedures Act of West Virginia or any successor statute
thereto.
(d) In the event that the Lease is terminated as
provided in this ARTICLE 17, Tenant shall be paid by Landlord
one hundred twenty-five percent (125%) of the Fair Market
Value of Tenant's Leasehold Interest, as described in Section
17.02.
Section 17.02 As used herein the term "Fair Market Value of
Tenant's Leasehold Interest" means the price which a willing Buyer would pay to
the Tenant for the Tenant's interest in the Demised Premises, including any and
all improvements thereon, the value of the Tenant's business enterprise
operated thereon, and the value of the Tenant's share of any insurance proceeds
payable to Tenant pursuant to Section 15.02(d) hereof, subject to this Lease
and subject to any sublease or subleases of the Demised Premises then in
effect, free and clear of the lien of any Mortgage. Anything to the contrary
herein notwithstanding, in no event shall the payment of the Fair Market Value
of Tenant's Leasehold Interest to Tenant pursuant to this ARTICLE 17 be less
than the value of Tenant's capital expenditures for the Center, including, but
not limited to the then unpaid principal, interest, reasonable prepayment
penalties, fees, costs, expenses and other amounts of Tenant's mortgages for
the Center permitted pursuant to ARTICLE 18, the prorated return of any amounts
paid to Landlord for prepaid rent or services, and Tenant's development costs.
Landlord also agrees to assume all of Tenant's operating contracts for the
Center which are reasonable and customary in the ordinary course of business
(including Exhibits B, C and D hereto or successor documents thereto) except
for contracts with entities affiliated with Tenant; pensions, profit sharing or
other retirement plan (whether or not such plan is or is intended to be
qualified under the Internal Revenue Code of 1954, as amended), any severance
pay plan, any plan of deferred compensation, or any other plan, agreement or
understanding (oral or written) which is similar to the foregoing; and any
executive employment agreements which require funding of any financial
obligation which continues for more than one year from the date of the
termination of the Lease. The Fair Market Value of Tenant's Leasehold Interest
to Tenant pursuant to this ARTICLE 17 shall not include the amount of contract
liability for the Center assumed by Landlord from Tenant, nor the value of
Tenant's accounts receivable or accounts payable to the extent accrued as of
the date of transfer of Tenant's leasehold interest to Landlord. In the event
the Landlord and Tenant
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are unable to agree on the Fair Market Value of the Tenant's Leasehold Interest
within one hundred twenty days (120) prior to the date of termination, the Fair
Market Value of the Tenant's Leasehold Interest shall be determined by an
appraisal in accordance with ARTICLE 20 of this Lease.
Section 17.03 On the date of transfer of Tenant's leasehold
interest to Landlord, the Landlord shall pay to the Tenant an amount equal to
One Hundred Twenty-Five Percent (125%) of the Fair Market Value of the Tenant's
Leasehold Interest, in cash (except that Landlord shall have the right to pay
all liens, claims and encumbrances, if any, chargeable to Tenant and to deduct
all sums then owed by Tenant under any provision hereof, except payments as set
forth in Section 32.01(b) hereof, from the amount of cash otherwise payable to
Tenant). Upon receipt of payment, the Tenant shall assign to Landlord, or
Landlord's nominee, the Tenant's interest as Tenant under this Lease, and as
lessor under any sublease or subleases of all or any portion of the Demised
Premises, and Landlord, or Landlord's nominee shall assume the obligations of
the Tenant thereafter to be performed by the Tenant under the sublease or
subleases and shall accept the sublessee or sublesses as the direct tenant or
tenants of Landlord. Tenant shall also deliver to Landlord a bill of sale to
any improvements on the Demised Premises and any other instruments necessary to
assign Tenant's interest and assets included in the appraisal of the Fair
Market Value of Tenant's Leasehold Interest to Landlord, including property or
rights held by Tenant which are necessary or useful for the operation of the
Center as a going concern to the extent such transfers are permitted by law.
Rent under any such sublease or subleases shall be apportioned between Landlord
and Tenant as of the date of termination. Any Impositions not payable by a
sublessee or sublesses shall likewise be apportioned between Landlord and
Tenant as of the date of termination, as shall all other items normally
apportioned in similar transactions.
ARTICLE 18
ASSIGNMENTS, MORTGAGES AND SUBLEASES OF TENANT'S INTEREST
Section 18.01 Tenant shall not have the right to sell or
assign this Lease (except as provided in Section 18.03 hereof), by operation
of law or otherwise, nor to sublet the Demised Premises, in whole or in part,
without the prior written consent of Landlord which may be withheld in
Landlord's sole discretion. Any form of transfer, conveyance or assignment of
fifty percent (50%) or more of
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the interest (by stock or other alteration of controlling interest) of the HSA
Americare Corporation in Tenant or any intervening subsidiaries or entities
shall constitute a prohibited transfer for the purposes of this ARTICLE 18. It
is expressly understood and agreed that, notwithstanding any permitted
assignment or subletting by Tenant, Tenant shall be and remain primarily liable
for the performance of all obligations imposed upon Tenant or any assignee or
sublessee of Tenant hereunder. Landlord's consent to any particular assignment
or subletting shall not constitute a waiver of this Section 18.01 or a consent
to any subsequent assignment or subletting and Landlord's written consent shall
be required for each and every assignment of subletting pursuant to this
Section 18.01.
Section 18.02 In the event that Tenant shall seek to or be
required to transfer, convey, or assign any of its interest hereunder, by
operation of law or otherwise, Tenant shall notify Landlord, as provided
herein, of the terms and conditions of any such proposed transfer, conveyance
or assignment. Landlord shall have the right within thirty (30) days of such
notice to accept such terms and conditions of the proposed transfer, conveyance
or assignment in its own name or that of a parent company, subsidiary or an
affiliate of Landlord, by notice of such acceptance to Tenant as provided
herein. If Landlord so exercises its right of first refusal to accept such a
transfer, conveyance or assignment, Tenant shall enter into a written agreement
with Landlord including the terms and conditions set forth in the offering
provided by Tenant to landlord. If Landlord does not so elect within the
thirty (30) day acceptance period, Tenant is then subject to the conditions of
Section 18.01 hereof regarding the proposed transfer, conveyance or assignment.
Section 18.03 Tenant shall not have the right to mortgage,
pledge, hypothecate, encumber or otherwise transfer this Lease, or its
leasehold estate hereunder, in whole or in part, as security for indebtedness
without the prior consent of Landlord which may be withheld in Landlord's sole
discretion, except that Landlord's consent to Tenant's encumbrance of its
leasehold estate shall not be unreasonably withheld or delayed for the purpose
of Tenant's financing of the construction and operation of the Improvements in
conformity with the Development Agreement and/or the Management Agreement. In
no event shall Landlord have any obligation to subordinate its reversionary
interest in the Demised Premises or its interest in this Lease to any mortgage
or other encumbrance of Tenant's leasehold estate placed with Landlord's
consent as required hereby.
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ARTICLE 19
CONDITIONAL LIMITATIONS - DEFAULT PROVISIONS
Section 19.01 If any one or more of the following events
(herein referred to as "Events of Default") shall happen:
(a) if default shall be made in the due and punctual
payment of any Net Rent, or additional rent payable under this
Lease or any part thereof, when and as the same shall become
due and payable, and such default shall continue for a period
of ten (10) days after notice from Landlord to Tenant
specifying the items in default; or
(b) if default shall be made by Tenant in the
performance or compliance with any of the agreements, terms,
covenants or conditions in this Lease provided other than
those referred to in the foregoing paragraph (a) of this
Section for a period of thirty (30) days after notice from
Landlord to Tenant specifying the items in default, or in the
case of a default or a contingency which cannot with due
diligence be cured within said thirty (30) day period, Tenant
fails to proceed within said period to cure the same and
thereafter to prosecute the curing of such default with due
diligence (it being intended in connection with a default not
susceptible of being cured with due diligence within said
thirty (30) day period that the time of Tenant within which to
cure the same shall be extended for such period as may be
necessary to complete the same with all due diligence); or
(c) if Tenant shall file a voluntary petition in
bankruptcy or shall be adjudicated a bankrupt or insolvent, or
shall file any petition or answer seeking any reorganization,
arrangement, composition, readjustment, liquidation,
dissolution or similar relief under the present or any future
federal banckruptcy act or any other present or future
federal, state or other bankruptcy or insolvency statute or
law, or shall seek or consent to or acquiesce in the
appointment of any bankruptcy or insolvency trustee, receiver
or liquidator of Tenant or of all or any substantial part of
its properties or of the Demised Premises; or
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(d) if within sixty (60) days after the commencement
of any proceeding against Tenant seeking any reorganization,
arrangement, composition, readjustment, liquidation,
dissolution or similar relief under the present or any future
federal bankruptcy act or any other present or future federal,
state or other bankruptcy or insolvency statue or law, such
proceeding shall not have been dismissed, or if, within sixty
(60) days after the appointment, without the consent or
acquiescence of Tenant, of any trustee, receiver or liquidator
of Tenant or of all or substantially all of its properties or
of the Demised Premises, such appointment shall not have been
vacated; or
(e) default pursuant to the terms of the Management
Agreement, as hereinafter defined in ARTICLE 32, shall
concurrently constitute an Event of Default under this Lease
without any notice to Tenant other than that provided in the
Management Agreement; or
(f) default pursuant to the terms of the Development
Agreement described in ARTICLE 9 hereof shall concurrently
constitute an Event of Default under this Lease without any
notice to Tenant other than that provided in the Contract; or
(g) default pursuant to the terms of the Easements
and Service Agreement, as hereinafter defined in ARTICLE 33,
shall concurrently constitute an Event of Default under this
Lease without any notice to Tenant other than provided in the
Easements and Service Agreement;
(h) Tenant shall have decertified its certificate of
need to construct the Center, or, following construction of
the Center, shall at any time thereafter have its license to
operate the Center as a psychiatric/alcohol and substance
dependency hospital, suspended, withdrawn, or failed to be
renewed, or its accreditation from the Joint Commission on
Accreditation of Hospitals (or any successor or similar
accrediting body) withdrawn and Tenant has exhausted all
reasonable remedial procedures and appeals unless Tenant is
unable to continue to operate the Center and provide services
as set forth in the Management
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Agreement, in which case any available or pending remedial
procedure or appeal shall be irrelevant and default hereunder
shall automatically occur;
...and in any such event, Landlord at any time thereafter shall give written
notice to Tenant specifying such Event of Default or Events of Default and
stating that this Lease and the Term hereby demised shall expire and terminate
on the date specified in such notice, which shall be at least ten (10) days
after the giving of such notice, and upon the date specified in such notice
this Lease and the term hereby demised and all ... of Tenant under this Lease,
shall expire and terminate, and Tenant shall remain liable as hereinafter
provided. Any leasehold mortgagee of Tenant shall have the right, within the
notice period provided in this ARTICLE for Tenant, to remedy or cause to be
remedied the Event(s) of Default contained in said notice and Landlord shall
accept such performance by or at the instigation of such leasehold mortgagee of
Tenant as if the same had been done by Tenant. No action or failure to act by
Landlord, Hospital or Board which places the Tenant in a condition which would
otherwise constitute a default as described herein shall be considered a
default, except to the extent that such action or failure to act by Landlord,
Hospital or Board is caused by a prior or contemporaneous act or failure to act
by Tenant in violation of the terms and conditions of this Lease.
Section 19.02 Upon any such expiration or termination of this
Lease, Tenant shall quit and peacefully surrender the Demised Premises to
Landlord, and Landlord, upon or at any time after any such expiration or
termination, may without further notice, enter upon and re-enter the Demised
Premises and possess and repossess itself thereof, by force, summary
proceedings, ejectment or otherwise, and may dispossess Tenant and remove
Tenant and all other persons and property from the Demised Premises and may
have, hold and enjoy the Demised Premises and the right to receive all rental
income of and from the same. The terms "enter", "re-enter", "entry" or
"re-entry" as used in this Lease are not restricted to their technical legal
meanings.
Section 19.03 At any time or from time to time after any such
expiration or termination, Landlord may relet the Demised Premises or any part
thereof for such term or terms which may be greater or less than the period
which would otherwise have constituted the balance of the Term of the Lease)
and on such conditions (which may include concessions or free rent and
alterations of the Demised Premises) as Landlord, in its uncontrolled
discretion, may
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determine and may collect and receive the rents therefor. Landlord shall in no
way be responsible or liable for any failure to relet the Demised Premises or
any part thereof, or for any failure to collect any rent due upon such
reletting.
Section 19.04 (a) No such expiration or termination of
this Lease shall relieve Tenant of its liability and obligations under this
Lease, and such liability and obligations shall survive any such expiration or
termination. In the event of any such expiration or termination, whether or
not the Demised Premises or any part thereof shall have been relet, Tenant
shall pay to Landlord the New Rent, any additional rent and all other charges
required to be paid by Tenant up to the time of such expiration or termination
of this Lease, and thereafter Tenant, until the end of what would have been the
Term of this Lease in the absence of such expiration or termination, shall be
liable to Landlord for, and shall pay to Landlord, as and for liquidated and
agreed current damages for Tenant's default, the equivalent of the amount of
the Net Rent and the other rent and charges which would be payable under this
Lease by Tenant if this Lease were still in effect, less the net proceeds of
any reletting effected pursuant to the provisions of Section 19.03 hereof,
after deducting all Landlord's expenses in connection with such reletting,
including, without limitation, all repossession costs, brokerage and management
commissions, operating expenses, legal expenses, reasonable attorneys' fees,
alteration costs in a maximum amount of twenty percent (20%) of the
construction costs accrued prior to the completion of the Center as adjusted in
accordance with the increases for new construction of hospital facilities
similar to the Center as set forth in the Dodge Report, its successor or, if
the Dodge Report ceases, a similar report or service acceptable to Landlord,
and expenses of preparation for such reletting, together with interest on all
such expenses from and after the date of their incurrence at the Default Rate.
(b) Tenant shall pay such current damages (herein called
"deficiency"), to Landlord on the days on which the Net Rent would have been
payable under this Lease if this Lease were still in effect, and Landlord shall
be entitled to recover from Tenant each deficiency as the same shall arise.
(c) At any time after any such expiration or termination, in
lieu of collecting any further deficiencies as aforesaid, Landlord shall be
entitled to recover from Tenant, and Tenant shall pay to Landlord, on demand,
as and
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for liquidated and agreed final damages for Tenant's default, an amount equal
to the then fair value of the excess of the Net Rent, specifically excluding
the Net Rent described in Section 2.01(b)(i) and (ii) hereof, and all
additional rent reserved hereunder for the unexpired portion of the Term
demised over the then fair and reasonable rental value of the Demised Premises
for the time period, minus any such deficiencies previously recovered from
Tenant.
(d) If the Demised Premises or any part thereof be sublet by
Landlord for the unexpired Term of this Lease, or any part thereof, before
presentation of proof of such liquidated damages to any court, commission or
tribunal, the amount of ... reserved upon such reletting shall prima facie be
the fair and reasonable rental value for the part or whole of the premises so
relet during the term of the reletting. Nothing herein contained shall limit
or prejudice the right of Landlord to move for and obtain as liquidated damages
by reason of such termination, an amount equal to the maximum allowed by any
statute or rule of law in effect at the same time when, and governing the
proceedings in which, such damages are to be proved, whether or not such amount
be greater, equal to, or less than the amount of the differences referred to
above.
Section 19.05 Tenant hereby expressly waives, so far as
permitted by law, the service of any notice of intention to re-enter provided
for in any statute, and except as is herein otherwise provided Tenant, for and
on behalf of itself and all persons claiming through or under Tenant, also
waives any and all right of redemption or re-entry or re-possession in case
Tenant shall be dispossessed by a judgment or by warrant of any court or judge
or in case of re-entry or re-possession by Landlord or in case of any
expiration or termination of this Lease.
Section 19.06 No failure by Landlord to insist upon the
strict performance of any agreement, term, covenant or condition hereof or to
exercise any right or remedy consequent upon a breach thereof, and no
acceptance of full or partial rent during the continuance of any such breach,
shall constitute a waiver of any such breach or of such agreement, term,
covenant or condition. No agreement, term, covenant or condition hereof to be
performed or complied with by Tenant, and no breach thereof, shall be waived,
altered or modified except by a written instrument executed by Landlord and
Mortgagee, if any, as specified and provided by Landlord to Tenant pursuant to
ARTICLE 22 hereof. No waiver of any breach shall affect or alter this Lease,
but each and every agreement, term, covenant and condition
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hereof shall continue in full force and effect with respect to any other then
existing or subsequent breach thereof.
Section 19.07 In the event of any breach or threatened breach
by Tenant of any of the agreements, terms, covenants or conditions contained in
this Lease or the Exhibits hereto, Landlord shall be entitled to enjoin such
breach or threatened breach and shall have the right to invoke any right and
remedy allowed at law or in equity or by statute or otherwise as though
re-entry, summary proceedings, and other remedies were not provided for in this
Lease.
Section 19.08 Each right and remedy provided for in this
Lease shall be cumulative and shall be in addition to every other right or
remedy provided for in this Lease or now or hereafter existing at law or in
equity or by statute or otherwise, and the exercise or beginning of the
exercise by Landlord or Tenant of any one or more of the rights or remedies
provided for in this Lease or now or hereafter existing at law or in equity or
by statute or otherwise shall not preclude the simultaneous or later exercise
by the party in question of any or all other rights or remedies provided for in
this Lease or now or hereafter existing at law or in equity or by statute or
otherwise.
Section 19.09 Any leasehold mortgagee of Tenant specified by
Tenant and provided to Landlord pursuant to ARTICLE 22 hereof shall have the
right, within the cure period provided in this ARTICLE for Tenant, to remedy or
cause to be remedied the failure of Tenant contained in said notice and
Landlord shall accept such performance by or at the instigation of such
leasehold mortgagee of Tenant as if the same had been done by Tenant. Notice
provided to Tenant by Landlord pursuant to this ARTICLE 19 shall be provided to
such leasehold mortgagee of Tenant, if any, concurrently with the notice
provided to Tenant.
ARTICLE 20
APPRAISAL PROCEDURE
Section 20.01 In the event the parties are unable to agree
upon the Fair Market Value of the Tenant's Leasehold Interest (as required in
ARTICLE 17), the same shall be determined by an appraisal made as hereinafter
provided, by a Board of three (3) reputable real estate appraisers, each of
which shall be a member of the American Institute of Real Estate Appraisers or
a successor body
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exercising a similar function. One real estate appraiser appointed by
Landlord, one shall be appointed by Tenant and the third appointed by the first
two appraisers. The cost and expenses of each appraiser appointed separately
by the Landlord and Tenant, respectively, shall be borne by the party who
appointed the appraiser. The cost and expense of the third appraiser shall be
shared equally between the Landlord and Tenant. The appraisal process required
pursuant to this Lease may be commenced by Landlord or Tenant (the "Initiating
Party") by notice to the other (the "Other Party") in which the Initiating
Party appoints its appraiser. The Other Party shall appoint its appraiser by
notice given to the Initiating Party within thirty (30) days after the
Initiating Party's notice. The appraisers appointed by the Initiating Party
and the Other Party shall select the third appraiser within thirty (30) days of
the appointment of the appraiser appointed by the Other Party. If the first
two appraisers are unable to agree on the third appraiser, such third appraiser
shall be appointed by the then President of the American Institute of Real
Estate Appraisers or its successor organization, and if such selection is not
possible, then the then President of the West Virginia State Bar (or any
organization then successor thereto) shall select an entity which shall select
the third appraiser, or in his absence, refusal, failure or inability to act,
the then President of the Real Estate Board of West Virginia, Inc. (or any
organization successor thereto shall select.... act, a justice or judge or any
Court in the State of West Virginia having jurisdiction shall select an entity
which shall select the third appraiser. The appraisers shall notify Landlord
and Tenant by written notice within thirty (30) days of the date of their
appointment of their determinations, which notices shall be accompanied by
copies of the appraisal reports. If the determination of the relevant Fair
Market Value of any two or all three of the appraisers shall be identical in
amounts, said amount shall be determined to be the relevant Fair Market Value,
but if such determinations of all three appraisers shall be different in
amounts, the highest of the three appraised values shall be averaged with the
middle of said values (said average being herein referred to as "Sum A"), the
lowest of said values shall be averaged with the middle of said values (said
average being hereinafter referred to as "Sum B"), and the relevant Fair Market
Value shall be determined as follows:
(1) if neither Sum A or Sum B differs from the middle
value by more than five percent (5%) of the middle value then
the relevant Fair Market
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Value shall be determined to be the average of the three
appraisals.
(ii) if either Sum A or Sum B (but not both of said
Sums) differs from the middle value by more than five percent
(5%) of such middle value, then the relevant Fair Market Value
shall be deemed to be the average of such middle value and the
value closest in amount to such middle value.
(iii) if both Sum A and Sum B differ from such middle
value by more than five percent (5%) of such middle value,
then the original appraisals shall be disregarded and the
relevant Fair Market Value shall be determined by another
panel of three (3) appraisers appointed and acting as provided
in this Section.
The relevant Fair Market Value determined in accordance with
the provisions of this Section, shall be binding and conclusive on Landlord and
Tenant. Notwithstanding the foregoing, if the Other Party shall fail to
appoint the appraiser to be appointed by such Other Party within thirty (30)
days after the Initiating Party's notice requiring the Other Party to do so,
the Initiating Party may serve a second notice on the Other Party requiring the
Other Party to appoint its appraiser, and stating with reference to this
Section that the Other Party's failure to do so will allow the Initiating Party
to have its appraiser act as the sole appraiser; then, if the Other Party fails
to appoint its appraisers within thirty (30) days after such second notice ...
only by the appraiser appointed by the Initiating Party, and the relevant Fair
Market Value, as determined by the appraiser appointed by the Initiating Party,
shall be binding and conclusive upon Landlord and Tenant.
ARTICLE 21
INVALIDITY OF PARTICULAR PROVISIONS
Section 21.01 If any term of provision of this Lease or the
application thereof to any person or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Lease, or the application of
such term or provision to persons or
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circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby, and each term and provision of this Lease shall
be valid and be enforced to the fullest extent permitted by law.
ARTICLE 22
NOTICES
Section 22.01 Any and all notices, demands, requests,
submissions, approvals, consents, disapprovals, objections, offers or other
communications or documents required to be given, delivered or served or which
may be given, delivered or served under or by the terms and provisions of this
Lease or pursuant to law or otherwise, shall be in writing and shall be deemed
to have been duly given, delivered or served if and when hand delivered with
receipt given or sent by registered or certified mail, return receipt
requested, enclosed in a wrapper with the proper postage prepaid thereon and
deposited with the Clerk of any United States Post Office, branch Post Office,
Post Office Station or Sub-Station regularly maintained, addressed as follows:
(a) If to the Landlord:
Facilities Management Corporation
Medical Center, Box 6401
Morgantown, West Virginia 26506
Att'n: President
(b) If to Tenant:
Psychiatric Institute of West Virginia, Inc.
c/o Healthcare Services of America, Inc.
2000 Southbridge Parkway
Suite 200
Birmingham, Alabama 35209-1303
Att'n: ...
Each party shall have the right to designate a different
address or addressee other than as set forth above by a notice meeting the
requirements of this ARTICLE 22 and given to the other party at least three (3)
business days prior to its effective date.
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Each notice or other writing referred to in this ARTICLE 22
shall be deemed to have been given and received on the date it is receipted for
(if hand delivered) or on the second business day from the date deposited in
the United States mail (if mailed).
ARTICLE 23
SUBORDINATION
Section 23.01 Landlord shall have the right to mortgage,
hypothecate, pledge or otherwise encumber its reversionary interest in the
Demised Premises or under this Lease, except that any mortgage or other lien
upon the Landlord's reversionary interest in the Demised Premises shall be
subject and subordinate to any mortgage of Tenant now existing or hereinafter
placed by Tenant upon the Demised Premises.
Section 23.02 Landlord and Tenant agree to modify this Lease
in any manner reasonably requested by any Mortgagee or assignee of Landlord
provided that any such modification does not materially and adversely affect
the respective rights of Landlord and Tenant hereunder.
ARTICLE 24
QUIET ENJOYMENT
Section 24.01 Tenant, upon paying the Net Rent and all
additional rent and other charges herein provided for and observing and keeping
all covenants, agreements and conditions of this Lease on its part to be kept,
shall quietly have and enjoy the Demised Premises during the term of this Lease
without hindrance or molestation by anyone claiming by, through or under
Landlord as such, subject, however, to the exceptions, reservations and
conditions of this Lease.
ARTICLE 25
IMPROVEMENTS ON ADJACENT LAND
Section 25.01 The New Facilities, including appurtenant
facilities, will be constructed on land adjacent to the Demised Premises as
more particularly described and outlined in ...on Exhibit A (the "Adjacent
Land"). Landlord
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and Tenant hereby acknowledge the mutual benefit and necessity of maintaining
and operating the improvements on the Demised Premises and Adjacent Land in a
cooperative manner to avoid conflict of operations and inconsistency in
appearance. Landlord and Tenant hereby agree to refrain from any activity
which materially and adversely affects the appearance or operations of Tenant
on the Demised Premises or of Landlord, Hospital, Board or University on the
Adjacent Land, except that Landlord and Tenant hereby acknowledge that the
construction of the Center and New Facilities may cause temporary obstructions
or delays for either party, but not to the extent that the operations of the
Center or New Facilities would be prohibited.
Section 25.02 Landlord shall take good care of the Adjacent
Land and improvements, landscaping, grounds, roads, walkways and parking areas
thereon within its control and shall keep the same in good order and condition,
ordinary wear and tear excepted, and free of dirt, rubbish and unlawful
obstructions. Tenant shall not be required to make any alterations, additions,
improvements or repairs on or to the Adjacent Land except for any repairs,
replacements, alterations, additions or improvements necessitated by Tenant's
negligence, or pursuant to obligations of Tenant set fort herein, in Exhibits
hereto, or in other fully executed agreements of Tenant.
ARTICLE 26
NO RENT ABATEMENT
Section 26.01 Except as in this Lease otherwise expressly
provided, no abatement, diminution or reduction of rent or charges shall be
claimed by or allowed to Tenant, or any person claiming under it, under any
circumstances, whether for inconvenience, discomfort, interruption of business,
or otherwise, arising from the making of alterations, changes, additions,
improvements or repairs to any building or buildings ... which may hereafter
be erected on the Demised Premises by virtue or because of any present or
future governmental laws, ordinances, requirements, orders, directions, rules
or regulations or for any other cause or reason.
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ARTICLE 27
ESTOPPEL CERTIFICATES
Section 27.01 Tenant shall, without charge, at any time and
from time to time, within ten (10) days after request of Landlord, certify by
written instrument, duly executed, acknowledged and delivered, to Landlord, or
any other person, ...corporation specified by Landlord:
(a) that this Lease is unmodified and full force and
effect, or if there have been any modifications, that the same
is in full force and effect as modified and stating the
modifications;
(b) whether or not there are then existing any set-
offs or defenses against the enforcement of any of the
agreements, terms, covenants or conditions hereof and any
modifications hereof upon the part of Tenant to be performed
or complied with, and, if so, specifying the same;
(c) the dates, if any, to which the Net Rent and
additional rent and other charges hereunder have been paid in
advance;
(d) the date of expiration of the Term; and
(e) the Net Rent then payable under this Lease.
Section 27.02 Landlord shall, without charge, at any time and
from time to time, within ten (10) days after request by Tenant, a leasehold
mortgagee of Tenant, Mortgagee or any permitted subtenant of the Leased
Premises certify by written instrument, duly executed, acknowledged and
delivered, to the effect that this Lease is unmodified and in full force and
effect (or if there shall have been any modifications that the same is in full
force and effect as modified and stating the modifications) and the dates to
which the Net Rent, additional rent and other charges have been paid, the date
of expiration of the Term, the Net Rent then payable under this Lease, and
stating whether or not, to the best knowledge of the officer executing such
certificate on behalf of Landlord, Tenant is in default in
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performance of any covenant, agreement or condition contained in this Lease
and, if so, specifying each such default of which the person executing such
certificate may have knowledge.
ARTICLE 28
WAIVER OF COUNTERCLAIMS
Section 28.01 In case Landlord shall commence summary
proceedings or an action for non-payment of rent or additional rent hereunder
against Tenant, Tenant shall not interpose any counterclaim of any nature or
description in any ( ) proceeding or action, but shall be relegated
to an independent action at law.
ARTICLE 29
DEFINITION OF CERTAIN TERMS
Section 29.01 For purposes of this Lease, unless the context
otherwise enquiries:
(a) The term "Landlord" as used herein shall mean
only the then lessor under this Lease, so that in the event of
a sale, transfer, conveyance or other termination or
Landlord's interest in the Demised Premises, Landlord shall be
and hereby is entirely freed and relieved of all liability of
Landlord hereunder arising from and after the date of such
sale, transfer, conveyance or other termination of Landlord's
interest, and in such event Landlord shall remit to the
successor Landlord any funds held by Landlord in which Tenant
has an interest. Landlord shall remain liable for any such
money not so remitted. It shall be deemed and construed
without further agreement between the parties or their
successors in interest, or between the parties and such
successor owner of the Demised Premises, that such successor
owner has assumed and agreed to carry out any and all
agreements, covenants and obligations of Landlord hereunder.
(b) Any reference herein to the termination of this
Lease shall be deemed to include any termination hereof by
expiration, or pursuant to ARTICLE 15, 16, 17 or 19 hereof, or
otherwise.
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(c) The term "Unavoidable Delays" shall mean delays,
disruptions or other events substantially due to strikes, acts
of God, inability to obtain labor or materials, governmental
restrictions, enemy action, civil commotion, fire, unavoidable
casualty or similar causes beyond the reasonable control of
Tenant.
(d) The term "mortgage", whether or not used in
combination with other qualifying words, shall include a deed
of trust to a trustee to secure an issue of bonds, debentures,
notes or other obligations. The term "Mortgagee" shall
include the trustee under a deed of trust and, when
appropriate, the holder or holders of the bonds, debentures,
notes or other obligations secured thereby. Wherever used in
this Lease, the term "mortgage" and "Mortgagee" shall only be
deemed to refer, respectively, to a mortgage placed by the
Landlord or to a party secured by a mortgage placed by the
Landlord unless otherwise designated.
(e) The term "Default Rate" shall mean an annual
rate equal to the annual prime interest rate used by the
Manufactures Hanover Trust Company, Inc. of New York, New
York, or the successors thereof, at the time the Default Rate
is being computed, plus three percent (3%).
(f) The term "improvements" or "Improve-ments" shall
be deemed to include all improvements at any time constructed
or to be constructed on the Land pursuant to any provision
hereof (including, without limitation, all Tenant's
improvements and finishes, and all on or off-site work
necessary or appropriate to complete all such improvements).
ARTICLE 30
BROKERS
Section 30.01 Landlord and Tenant each warrant and represent
to the other that it has not used the services of any broker, agent or finder
who would be entitled to a commission on account of this Lease or the
consummation of the transactions contemplated hereby. Each party agrees to
defend, indemnify and save the other harmless from any
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commission or fee which may be payable to any broker, agent or finder with whom
the indemnifying party has dealt in connection with this Lease.
ARTICLE 31
COMPUTATION OF TIME
Section 31.01 In computing any period of time prescribed or
allowed by any provision of this Lease, the day of the act, event, or default
from which the designated period of time begins to run shall not be included.
The last day of the period so computed shall be included, unless it is a
Saturday, Sunday, or a legal holiday, in which event the period runs until the
end of the next day which is not a Saturday, Sunday, or such legal holiday.
Unless otherwise provided herein, all ... or other periods expire as of 5:00
p.m. (local time in Monongalia County, West Virginia) on the last day of the
notice in other periods.
ARTICLE 32
CLINICAL MANAGEMENT AND SERVICES AGREEMENT
Section 32.01 Tenant shall be responsible for the operation
and management of the Center during the Term of this Lease as set forth in the
clinical management and services agreement to be entered into and attached
hereto as Exhibit C (the "Management Agreement").
ARTICLE 33
EASEMENTS AND SERVICES AGREEMENT
Section 33.01 The Landlord and Tenant shall enter into an
easement and services agreement as set forth in Exhibit D attached hereto and
made a part hereof (the "Easements and Services Agreement").
ARTICLE 34
AMENDMENT
Section 34.01 All prior understandings and agreements between
the parties are merged within this Lease, which alone fully and completely sets
forth the
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54
understanding of the parties. This Lease may not be changed or terminated
orally or in any manner other than by an agreement in writing and signed by the
party against whom enforcement of the change or termination is sought.
ARTICLE 35
COVENANTS TO BIND AND BENEFIT RESPECTIVE PARTIES
EFFECT OF GROUND LEASE
Section 35.01 The covenants and agreements herein contained
shall bind and inure to the benefit of Landlord, its successors and assigns,
and Tenant, its permitted successors and assigns.
ARTICLE 36
CAPTIONS AND TABLE OF CONTENTS
Section 36.01 The captions of this lease are for convenience
and reference only and in no way define, limit or describe the scope or intent
of this Lease nor in any way ... this Lease.
Section 36.02 The table of contents preceding this Lease, but
under the same cover, is for the purpose of convenience and reference only and
is not to be deemed or construed in any way as part of this Lease, nor as
supplemental thereto or amendatory thereof.
ARTICLE 37
CONDITIONS PERTAINING TO
CONSTRUCTION BY TENANT
Section 37.01 The parties intend that Tenant shall use the
Demised Premises exclusively for the construction and operation of the Center,
a facility for the care and treatment of psychiatric/alcohol and chemical
dependency illnesses and purposes reasonably incident to such uses. Therefore,
the following condition shall be satisfied on or before the dates listed below,
or such later date as the parties may mutually agree, or either party at its
option may terminate this Lease:
(a) Tenant shall have obtained a final certificate
of public need issued under Ch. 16,
<PAGE> 55
55
Art. 2D of the West Virginia Code ("CON") for the Center for
the construction and operation of not less than forty (40)
acute psychiatric and thirty (30) chemical/substance
dependency beds, as to which the time for appeal has lapsed,
by January 1, 1986 and as to which, as of the date the CON is
issued, there are no laws or regulations of general
applicability that would delay or prohibit the effectiveness
of the CON beyond two hundred seventy (270) days.
(b) As of the date the CON is issued, all
governmental regulations affecting and relating to the Demised
Premises shall permit the construction, occupancy and use of
the Center for the purposes intended. Tenant shall not be
entitled to rely on this condition unless it submits in
writing, an opinion of its counsel specifying the governmental
regulation relied upon and the reasons for impossibility
within thirty (30) days following receipt of CON.
(c) There shall be available within reasonable
access of the Demised Premises, by the planned opening date
for the Center specified in the construction documents
relating to the Center: (i) water with adequate flow for fire
protection and potable water adequate for service to the
Center; (ii) sanitary and (if required) storm sewers adequate
to serve the Center; and (iii) telephone and electrical
service adequate to serve the Center. Tenant shall be
entitled to connect to such utilities subject to normal
connection fees and usage charges for the utilities and the
reasonable connection fees of Landlord, the Hospital or the
University, which charges shall be paid by Tenant.
(d) As of the earlier of ninety (90) days from the
execution hereof or the date a building permit is issued for
the Center, there shall be no judicial, quasi-judicial,
administrative or other orders, injunctions or pending
proceedings, statutes, ordinances, rules or regulations that
would preclude or delay for a period in excess of nine (9)
months the construction and/or operation of the Center, the
furnishing of utility service thereto, or access to the
Demised Premises, other than those resulting from the fault of
Tenant.
<PAGE> 56
56
(e) Tenant shall have obtained title insurance of
its leasehold interest from a title insurance company of its
choice without exceptions impairing marketability; provided
that Tenant shall not be entitled to rely upon, and shall
forfeit, this condition unless it (a) applies for such title
insurance within thirty (30) days of the date hereof, and (b)
is unable to procure such title insurance, having applied to
at least two reputable title insurance companies, or a
reputable title insurance company designated by Landlord.
Tenant shall forfeit this condition unless it exercises its
right under this subsection within three (3) months of the
date of this Ground Lease.
(f) Tenant shall within sixty (60) days of the
execution hereof, have submitted to the Board and the Hospital
nondisturbance agreements governing the affect of the Primary
Lease and the Sublease upon the rights of Tenant pursuant to
this Lease. The Board and Hospital approval of the
nondisturbance agreements shall be received no later than the
third regularly scheduled meeting of the Board following the
meeting of the Board at which the request for the
nondisturbance agreement was first considered by the Board,
except that in no event shall said Board and Hospital approval
be received later than six (6) months after the first
regularly scheduled meeting of the Board at which Tenant's
request for the nondisturbance agreement was first considered
by the Board.
(g) The parties shall execute all Exhibits referred
to in this Ground Lease within sixty (60) days of the
execution of this Ground Lease.
In the event of failure of any of the above conditions, either party may at its
option terminate this Ground Lease by written notice to the other party, and
all obligations of Tenant and Landlord hereunder and all obligations under the
Exhibits hereto shall cease. In the event of failure of the conditions
regarding the obtaining of title insurance described in subparagraph (e),
Landlord shall return to Tenant monies in accordance with and as set forth in
ARTICLE 2 hereof.
Section 37.02 Landlord shall assist Tenant in obtaining the
nondisturbance agreements described in Section 37.01(f) above. If the
nondisturbance agreements are not
<PAGE> 57
57
obtained within the time period specified above, or obtained in a form
unsatisfactory to Tenant's lenders which would render financing of the Center
unfeasible, then Tenant, at Tenant's election, shall have the right to waive
the requirement and conditions of Section 37.10(f) regarding the obtaining of
the nondisturbance agreements and shall have ninety (90) days from the end of
the period set forth in Section 37.01(f) for the obtaining of the approval of
the nondisturbance agreements in which to obtain a commitment for alternative
financing which does not require such nondisturbance agreements. In the event
that Tenant is unable to obtain such a commitment for alternative financing in
the period specified, Tenant shall transfer to Landlord or Landlord's designee,
and Landlord or Landlord's designee shall purchase from Tenant, all of Tenant's
stock in Center and interest in Center (or, at Landlord's election, all of
Tenant's assets in the Center) for the payment by Landlord to Tenant of One
Hundred Thousand Dollars ($100,000.00) and the return to Tenant of all prepaid
and service deposits made to Landlord pursuant to this Lease. Upon such
purchase and transfer this Lease shall be null and void and of no further force
and effect. It is the express intention of Landlord and Tenant that any
liabilities of Tenant assumed by Landlord pursuant to said purchase shall be
off-set dollar-for- dollar against the purchase price paid to Tenant. Any
liabilities of Tenant in ...of said purchase price, if any, shall be discharged
by Tenant on or before the date of the transfer to the Landlord of Tenant's
stock, interest and/or assets which shall occur within sixty (60) days of the
expiration of the ninety (90) day period provided to Tenant to obtain
alternative financing described ...
ARTICLE 38
MISCELLANEOUS PROVISIONS
Section 38.01 Nothing contained in this Lease shall be
construed in any manner to create any relationship between the Landlord and the
Tenant other than the relationship of landlord and tenant and the Landlord and
the Tenant shall not be considered partners or co- venturers for any purpose on
account of this Lease.
Section 38.02 The covenants, terms, provisions and conditions
of this Lease are intended solely and exclusively for the benefit of the
parties hereto and their respective permitted successors and assigns, and no
other person shall have standing to require the satisfaction of any of the same
or be entitled to assume strict compliance
<PAGE> 58
58
with the terms hereof or be deemed to be a beneficiary (other than the Board,
University and Hospital) of any of such covenants, terms or conditions.
Section 38.03 Any condition of this Lease which required the
submission of evidence of the existence or nonexistence of the specified fact
or facts implies as a condition the existence or non-existence, as the
circumstances may require, or such fact or facts and the Landlord shall, at all
times, be free independently to establish to its satisfaction the existence or
non-existence of such fact or facts.
Section 38.04 This Lease may be executed in any number of
counterparts, each of which shall be considered an original for all purposes;
provided, however, that all such counterparts shall, together, constitute one
and the same instrument.
Section 38.05 Whenever required by the context of this Lease,
the singular number shall include the plural and the plural shall include the
singular, and the use of any gender shall include all genders.
Section 38.06 This Lease and the agreements referred to
herein shall be governed by and construed, interpreted and enforced in
accordance with the laws of the State of West Virginia. Landlord and Tenant
hereby expressly waive any right or privilege to initiate a cause of action in
the courts of the United States, or remove an action from the courts or
agencies of the State of West Virginia to the courts of the United States and
affirmatively agree and covenant that all venue for ... or administrative
action, hearing or proceeding of ... shall be Monongalia County, West
Virginia.
Section 38.07 The parties shall, if requested by either,
agree to the recording of this Lease or execute a memorandum of this Lease for
recording purposes. The requesting party shall pay all costs for recording.
If both parties require the recordation of this Lease, any memorandum,
agreement or certificate, the costs for recordation shall be borne equally by
the parties.
Section 38.08 The recitals hereto are incorporated herein by
the parties as their general statement of intent and understanding.
<PAGE> 59
59
IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease
to be executed by their duly authorized signatories and their respective
corporate seals, if appropriate, to be hereunto affixed.
FACILITIES MANAGEMENT CORPORATION
PSYCHIATRIC INSTITUTE OF WEST
VIRGINIA, INC.
The HSA Americare Corporation, a Virginia Corporation certified to do
business in West Virginia, has caused this Lease to be executed by its duly
authorized signatories and its Seal if appropriate, to be affixed hereto for
the sole purpose of consenting to and agreeing to be bound by the terms and
conditions of the indemnification by the Americare Corporation set forth in
ARTICLE 14 hereof and for no other purpose.
HSA AMERICARE CORPORATION
This instrument was prepared by Stephen F. Bisbee, Esq., Venable, Baetjer and
Howard, 2 Hopkins Plaza, Baltimore, Maryland 21201.
<PAGE> 1
EXHIBIT 10.59
================================================================================
THE CITY OF BETHANY, OKLAHOMA
and
THE BETHANY HOSPITAL TRUST
and
BETHANY GENERAL HOSPITAL through the HOSPITAL
BOARD OF THE CITY OF BETHANY, OKLAHOMA
Lessor
and
BETHANY PSYCHIATRIC HOSPITAL, INC.
Lessee
L E A S E
Dated as of December 9, 1985
Property Located at Bethany, Oklahoma
================================================================================
<PAGE> 2
L E A S E
LEASE, dated as of December 9, 1985, between THE CITY OF BETHANY,
OKLAHOMA, a municipal corporation ("City"), THE BETHANY HOSPITAL TRUST, a
Public Trust created under the laws of the State of Oklahoma ("Trust"), and
BETHANY GENERAL HOSPITAL through THE HOSPITAL BOARD OF THE CITY OF BETHANY,
OKLAHOMA, a body created by ordinance of the City pursuant to 11 O.S. Section
30-102 ("Board"), with City, Trust and Board being hereinafter collectively
called "Lessor" and BETHANY PSYCHIATRIC HOSPITAL, INC., an Oklahoma corporation
("Lessee").
RECITALS:
WHEREAS, City is the owner of the real property in Oklahoma County,
Oklahoma, described on Exhibit "A" attached hereto (the "Land"), and
WHEREAS, by Amended Lease Agreement dated September 16, 1969 (the
"City Lease"), City leased the Land to the Trust, and
WHEREAS, the Trust and the Board entered into a Contract dated March
23, 1967 (the "Contract") relating to the management of Bethany General
Hospital (the "Hospital") located on the Land, and
WHEREAS, under date of August 29, 1985, the Trust, the City and the
Board entered into a Management Agreement with Lessee (the "Management
Agreement") pertaining to the construction of a twenty bed psychiatric pavilion
on a part of the Land, the remodeling of 6,442 square feet of the Hospital and
the operation of the pavilion and the remodeled portion of the hospital as a
forty bed psychiatric unit, and
WHEREAS, pursuant to the terms of and as partial consideration for the
Management Agreement, the City, the Trust and the Board agree to lease a
portion of the Land to the Lessee.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, the
receipt of which is hereby acknowledged, it is agreed as follows:
1. Definitions. Capitalized terms used herein which are defined in
the Management Agreement shall have the respective meanings set forth in the
Management Agreement, unless otherwise defined herein. Terms defined in the
foregoing recitals shall have the meanings set forth therein and, in addition,
the following terms shall have the following meanings:
Building Area: The term Building Area shall mean the tract
of land containing 14,578.29 square feet or .34 acres, more or less,
described on Exhibit "B" attached hereto upon which Lessee is to
construct the psychiatric pavilion as provided in the Management
Agreement.
Parking Area: The term Parking Area shall mean the tract of
land described on Exhibit "C" attached hereto which is adjacent to the
Building Area and is to be used for parking in connection with the
psychiatric pavilion.
<PAGE> 3
Common Areas: The term Common Areas shall mean parking areas,
roadways, pedestrian sidewalks, landscape areas, and all other areas
or improvements on the Land which may, from time to time, be provided
by the Lessor for the convenience and use of patients, visitors and
tenants of the Hospital and their respective invitees.
Leased Premises: The term Leased Premises shall mean: (a) the
Building Area, (b) the Parking Area, (c) all the rights, easements and
appurtenances belonging and usually had and enjoyed in connection with
the Building Area and the Parking Area, and (d) the use, in common
with others to whom Lessor has granted or may hereafter grant rights
to use the same, of the Common Areas.
Depositary: The Depositary shall be a bank or trust company,
appointed by Lessor, having its principal office in Oklahoma City or
Bethany, Oklahoma, and having at combined capital, surplus and
undistributed profits (according to its most recent published
statement) of at least $5,000,000.
First Mortgagee: the holder, from time to time, of the First
Mortgage.
Insurance Requirements: all terms of an insurance policy
covering or applicable to the Leased Premises or any part thereof, all
requirements of the issuer of any such policy and all orders, rules,
regulations and other requirements of the National Board of Fire
Underwriters (or any other body exercising similar functions)
applicable to or affecting the Leased Premises or any part thereof or
any use or condition of the Leased Premises or any part thereof.
Lease: this Lease, as at the time amended, modified or
supplemented.
Lease Term: as defined in Section 2.
Legal Requirements: all laws, statutes, codes, acts,
ordinances, orders, judgments, decrees, injunctions, rules,
regulations, permits, licenses, authorizations, directions and
requirements of all governments, departments, commissions, boards,
courts, authorities, agencies, officials and officers, foreseen or
unforeseen, ordinary or extraordinary, which now or at any time
hereafter may be applicable to the Leased Premises or any part
thereof.
Lessee's Equipment: all equipment, furniture and furnishings
and any additions or replacement thereto which are owned by the Lessee,
for which the Lessee has not been repaid under the Terms of the
Management Agreement and are to be located on the Land.
First Mortgage: a first mortgage of Lessee's interest under
this Lease as provided for in section 19.
Taking: a taking during the Lease Term of all or any part of
the Leased Premises or any leasehold or other interest therein or
right accruing thereto, as the result or in lieu or in anticipation of
the exercise of the right of condemnation or
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<PAGE> 4
eminent domain, or a change of grade affecting the Leased Premises or
any part thereof.
Unavoidable Delays: Delays due to strikes, acts of God,
governmental restrictions, enemy action, riot, civil commotion, fire,
unavoidable casualty or other causes beyond the control of Lessee.
Improvements: As defined in Section 4.
Impositions: As defined in Section 8.
2. Property; Lease Term. Upon and subject to the conditions and
limitations set forth below, Lessor leases to Lessee, and Lessee rents from
Lessor, the Leased Premises.
TO HAVE AND TO HOLD for a term commencing on December 9, 1985, and
expiring at midnight on December 9, 1988, unless the term of this Lease
("Lease Term") shall sooner terminate as hereinafter provided. Provided,
however, the term of this Lease shall be automatically extended for five (5)
additional three (3) year periods unless Lessee gives written notice to Board
no later than one hundred twenty (120) days prior to the end of the initial
term or any three (3) year extension that it does not wish there to be an
automatic extension.
3. Rent. The execution and delivery by Lessee of the Management
Agreement and the completion of construction of the psychiatric pavilion as
therein provided constitutes prepaid rent for the entire term hereof, including
all renewals. PROVIDED, HOWEVER, in the event the Management Agreement shall
terminate prior to the end of the Lease Term then beginning with the first day
of the first calendar month following termination of the Management Agreement,
the Lessee shall pay as additional rent monthly in advance on the first day of
each calendar month the sum of Four Thousand One Hundred Sixty-Six and 67/100
Dollars ($4,166.67).
4. Ownership of Improvements. Prior to termination of this Lease
the improvements constructed by Lessee on the Land (the Improvements) shall be
and remain the property of Lessee. On termination of the Lease Term, whether by
expiration of time or otherwise, title to the Improvements shall be surrendered
to and the Improvements shall become the full and absolute property of the City
without further action by the Lessor or the Lessee. The Lessee's interest in
this Lease and all of the Lessee's right, title and interest in and to the
Improvements shall be non-separable, and any attempt to transfer, mortgage,
assign, convey or otherwise encumber in whole or in part either of such
interests shall be void and ineffective (whether by act of the Lessee, judicial
decrees, judgment or otherwise) unless there shall be a complete transfer,
mortgage, assignment or encumbrance to the same party of the Lessee's interest
under this Lease and the Lessee's interest in the Improvements. Any severance
resulting from the Lessee's title to the Improvements shall not change the
character of the Improvements as real property.
5. Use of Property. Prior to the termination of the Management
Agreement, Lessee shall use the Leased Premises for the purposes of providing
psychiatric and chemical dependency services and psychiatric and chemical
dependency ancillary therapy and office space, as provided for in the ion of
the Management Agreement. After termintation of the Management Agreement, the
Leased Premises may be used for any lawful hospital related purpose.
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<PAGE> 5
6. Maintenance and Repairs. Lessor, at its expense and as a Direct
Operating Expense billable to the Unit in accordance with the Management
Agreement, will keep the Building Area and Improvements in good safe and clean
order and condition and will promptly make all necessary or appropriate repairs,
replacements and renewals thereof, whether interior or exterior, structural or
non-structural, ordinary or extraordinary, foreseen or unforeseen. In the event
the Management Agreement shall terminate prior to the end of the Lease Term,
such maintenance and repair shall be the responsibility of Lessee, and the cost
thereof shall be a credit against rent due hereunder. Lessee will give Lessor
ten (10) days prior written notice before incurring an expense in excess of
$5,000.00 which it intends to credit against rent.
7. Removal or Demolition of Improvements; Alterations and
Additions. Lessee shall have the right to make alterations, additions and
changes in any of the Improvements so long as such do not materially or
substantially decrease the value of the same.
8. Impositions. Subject to section 11 relating to contests, Lessor
and Lessee will pay as a Direct Operating Expense payable from the revenues of
the Unit all taxes and assessments ("Impositions") against their respective
interests in the Leased Premises during the term hereof before any interest,
penalty, fine or cost may be added for non-payment, and will furnish to the
other party for inspection within 30 days after written request, official
receipts of the appropriate taxing authority or other proof satisfactory to such
other party evidencing such payment. In the event the Management Agreement shall
terminate prior to the end of the Lease term, such taxes and assessments shall,
subject to Section 11, be paid by Lessee. In the event the Management Agreement
is terminated prior to the end of the Lease Term, if by law any Imposition may
be paid in installments, Lessee shall be obligated to pay only those
installments as they become due from time to time before any interest, penalty,
fine or cost may be added thereto; and any Imposition relating to the fiscal
period of the taxing authority, part of which is included within the term of
this Lease and a part of which extends beyond such term shall be apportioned
between Lessor and Lessee as of the expiration of the term of this Lease.
9. Compliance with Requirements, etc. Subject to section 11
relating to contests, each of Lessor and Lessee, at its own expense, will, to
the extent applicable to their respective use of and activities in, and
obligations hereunder with respect to, the Leased Premises, promptly and
diligently (a) comply with all Legal Requirements and Insurance Requirements,
and (b) procure, maintain and comply with all permits, licenses, franchises and
other authorizations required for any use of the Leased Premises or any part
thereof then being made, and for the proper erection, installation, operation
and maintenance of the Improvements.
10. Liens, etc. Lessee will not directly or indirectly create or
permit to remain, and will discharge any mortgage, lien, security interest,
encumbrance or charge on, pledge of or conditional sale or other title
retention agreement with respect to the Leased Premises or any part thereof,
other than (a) this Lease (b) a First Mortgage, and related security documents
in accordance with section 19, (c) while the Management Agreement is in effect,
liens for any Impositions and thereafter, liens for Impositions not yet
payable, or payable without the addition of any fine, penalty, interest or cost
for non-payment, or being contested as
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<PAGE> 6
permitted by section 11, (d) subject to section 11, liens of mechanics,
materialmen, suppliers or vendors, or rights thereto, incurred in the ordinary
course of business for sums which under the terms of the related contracts are
not at the time due, provided that adequate provision for the payment thereof
shall have been made, and (e) liens created by Lessor.
11. Permitted Contests. Lessor or Lessee, at its own expense, may
contest by appropriate legal proceedings conducted in good faith and with due
diligence, the amount or validity or application, in whole or in part, of any
Imposition or any Legal Requirement or Insurance Requirement provided that (a)
such party shall first make all contested payments, under protest if it
desires, unless such proceedings shall suspend the collection thereof from
Lessor, and from the Leased Premises, (b) neither the Leased Premises nor any
part thereof or interest therein would be in any danger of being sold,
forfeited, lost or interfered with, and (c) in the case of any Legal
Requirement, Lessor and/or Lessee would not be in any danger of any additional
civil or any criminal liability for failure to comply therewith and the Leased
Premises would not be subject to the imposition of any lien as a result of such
failure.
12. Utility Services; Lessor Maintenance. Subject to Section VIC.
of the Management Agreement, Lessor will pay or cause to be paid all charges
for all public or private utility services and protective services at any time
rendered to or in connection with the Leased Premises or any part thereof, will
comply with all contracts relating to any such services, and will do all other
things required for the maintenance and continuance of all such services. After
termination of the Management Agreement, Lessee will reimburse Lessor monthly,
within ten (10) days after written request, for Lessor's actual cost of
providing such services. Lessor's request for reimbursement shall contain
supporting calculations and other information reasonably requested by Lessee,
have attached thereto invoices and other supporting data and be certified as
correct by a Certified Public Accountant acceptable to Lessee. Lessor will
maintain the Common Area and the Parking Area.
13. Quiet Enjoyment. Lessor covenants that Lessor is the owner of
fee simple title to the Leased Premises free of all liens and encumbrances and
that Lessee, upon performing and complying with all covenants, agreements,
terms and conditions of this Lease on its part to be performed or complied
with, shall not to hindered or molested in its enjoyment of the Leased
Premises.
14. Insurance.
14.1 Risks. The Lessee shall keep all Improvements
insured against loss or damage by fire and other hazards. Each of Lessor and
Lessee shall provide liability insurance for personal injury and death and
property damage for the benefit of Lessor and Lessee. Lessee shall provide
appropriate workmen's compensation or other insurance against liability arising
from claims of workmen in respect of and during the period of any work on or
about the Leased Premises. During the term of the Management Agreement, costs
of such insurance shall be Direct Operating Expenses payable from the revenue
of the Unit.
14.2 Coverage. The Lessee shall maintain fire and extended
coverage insurance in an amount of full replacement cost with "agreed amount"
and "inflation guard" endorsements and with deductible not to exceed $1,000, or
in such
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<PAGE> 7
greater amount or other terms as First Mortgage may require, which policy shall
be written by a company or companies having a Best's rating of A:IX or better.
The cost of such insurance shall be a Direct Operating Expense payable from the
revenue of the Unit. Each of Lessor and Lessee shall carry liability insurance
in the amount required by the Oklahoma Political Subdivisions Tort Claims Act.
14.3 Policy Forms. All policies of insurance to be
furnished hereunder shall be in forms, companies and amounts satisfactory to
First Mortgagee, with Standard Mortgage Clauses attached to all policies in
favor of and in form satisfactory to First Mortgagee, including provisions
requiring that the coverage evidenced thereby shall not be terminated or
materially modified without thirty (30) days' prior written notice to Lessor,
Lessee and First Mortgagee.
14.4 Policy Provisions. All insurance maintained pursuant
to this section shall (a) include an effective waiver by the insurer of all
rights of subrogation against any named insured or such insured's interest in
the Leased Premises or any income derived therefrom; and (b) provide that any
losses shall be payable notwithstanding any act or failure to act or negligence
of Lessor or Lessee or any other Person.
All policies of insurance provided for shall name Lessor, Lessee and
the First Mortgagee as insureds as their respective interests may appear.
Lessee, at its sole cost and expense, shall maintain such other
insurance and in such amounts as may from time to time be reasonably required
by First Mortgagee.
A Standard Mortgagee Clause naming each Leasehold Mortgagee as
additional insured (on its own behalf and on behalf of any Institutional
Lenders which it may represent) and the Leasehold Mortgagee whose Leasehold
Mortgage is prior in lien as sole loss payee shall be added to any and all
insurance policies required to be carried by Lessee hereunder. At or prior to
the commencement of the Lease term and thereafter not less than fifteen (15)
days prior to the expiration dates of the expiring policies theretofore
furnished pursuant to this Agreement, originals of the policies (or, in the
case of blanket insurance policies and general public liability insurance
policies, certificates of the insurers) bearing notations evidencing the
payment of premiums or accompanied by other evidence of such payment
satisfactory to Lessor or Lessee, as the case may be, and First Mortgagee,
shall be delivered to First Mortgagee with copies thereof certified as true and
correct delivered to Lessor or Lessee, as the case may be.
15. Damage to or Destruction of Property.
15.1 Lessee to Give Notice. In case of any material
damage to or destruction of the Leased Premises or any part thereof, Lessee
will promptly give written notice thereof to Lessor and First Mortgagee,
generally describing the nature and extent of such damage or destruction.
15.2 Restoration. Except as provided in Section 15.4
below, in case of any damage to or destruction of the Improvements or any part
thereof, Lessee, at its expense, shall promptly commence and complete (subject
to Unavoidable Delays) the restoration, replacements or rebuilding of the
Improvements as nearly as possible to its value, condition and character
immediately prior to such damage or destruction, with such alterations and
additions as
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<PAGE> 8
may be made at Lessee's election pursuant to and subject to the terms of
section 7 (such restoration, replacement, rebuilding, alterations and
additions, together with any temporary repairs and property protection pending
completion of the work, being herein called "Restoration").
15.3 Application of Insurance Proceeds. Insurance
proceeds received on account of any damage to or destruction of the Leased
Premises or any part thereof shall be paid to the First Mortgagee, if any, to
be applied in accordance with the then existing credit agreement between
Lessee, First Mortgagee and other creditors named therein. If there is no First
Mortgage, then said proceeds shall be held by a Depositary and applied as
follows:
(a) If Lessee is obligated to or elects to
rebuild, the proceeds shall be paid to Lessee or as Lessee may
direct, from time to time as Restoration progresses, to pay
(or reimburse Lessee for) the cost of Restoration in the
manner and under the conditions that the Lessor may require,
including, without limitation; (i) approval of plans and
specifications of such work before such work shall be
commenced, (ii) suitable completion or performance bonds and
Builder's All Risk insurance, (iii) The Improvements shall be
so restored or rebuilt as to be of at least equal value as
prior to such damage or destruction, and (iv) written request
of Lessee accompanied by evidence, satisfactory to Lessor,
that the amount requested has been paid or is then due and
payable and is properly a part of such cost. Upon receipt by
Lessor of evidence satisfactory to it that Restoration has
been completed and the cost thereof paid in full, and that
there are no mechanics' or similar liens for labor or
materials supplied in connection therewith, the balance, if
any, of such proceeds shall be paid to the Lessee or as Lessee
may direct.
(b) If Lessee is not obligated to and does not
elect to rebuild, said insurance proceeds shall be paid to
Lessee, or as Lessee may direct.
15.4 Limits on Obligation to Restore.
(a) In the event of damage or destruction of 50%
or greater at any time or damage or destruction of 25% or
greater during the last year of the initial term or any
renewal term, Lessee at its option may terminate! this Lease
by written notice to Lessor within sixty (60) days following
such damage or destruction as of a date specified in such
notice within ninety (90) days of such damage or destruction.
Upon such termination, Lessee shall hive no liability to
restore the Leased Premises.
(b) So long as there is a First Mortgagee,
Lessee's obligation in Section 15.2 shall only apply if and to
the extent said First Mortgagee shall make funds for such
purpose available to Lessee in accordance with the terms of
the then existing credit agreement between Lessee and such
First Mortgagee, and other creditors named therein. If Lessee
is not obligated to restore the Leased Premises as a result of
the operation of this paragraph 3.5.4(b) then (i) this Lease
shall terminate at the option of either party and upon such
termination Lessee shall remove to the surface elevation of
the adjoining ground
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<PAGE> 9
all debris and restore the Leased Premises as nearly as
practical to their condition prior to the erection of the
Improvements. Provided, however, Lessee shall not be
responsible for removal of concrete slab, paving or
underground utility lines.
16. Taking.
16.1 Lessee to Give Notice, etc. In case of a Taking of
all or any part of the Leased Premises or the commencement of any proceedings
or negotiations which might result in such Taking, Lessee will promptly give
written notice thereof to Lessor and First Mortgagee, generally describing the
nature and extent of such Taking or the nature of such proceedings and
negotiations and the nature and extent of the Taking which might result
therefrom, as the case may be. Lessor and Lessee may each file and prosecute
their respective claims for an award, but all awards and other payments on
account of a Taking shall be paid to the Depositary, except as provided in the
first sentence of Section 16.4 below.
16.2 Total Taking. In case of a Taking (other than for
temporary use) of the fee of the entire Leased Premises, this Lease shall
terminate as of the date of such Taking. In case of a Taking (other than for
temporary use) of, (a) such perpetual easement on the entire Leased Premises,
or (b) such a substantial part of the Leased Premises, as shall result, in the
good faith judgment of Lessee, in the Leased Premises remaining after such
Taking (even if Restoration were made) being unsuitable for Lessee's use, or
(c) a Taking of 25% or greater during the last year of the initial term or any
renewal term, Lessee may, at its option, terminate this Lease by written notice
to Lessor given within 60 days after such Taking, as of a date specified in
such notice within 90 days after such Taking. Any Taking of the character
referred to in this Section 16.2, which results in the termination of this
Lease, is referred to as a "Total Taking". No such termination shall terminate
the right of Lessee or First Mortgage with respect to awards or other payments
on account of a Taking.
16.3 Partial Taking. In case of a Taking of the Leased
Premises other than a Total Taking, (a) this Lease shall remain in full force
and effect as to the portion of the Leased Premises remaining immediately after
such Taking, (b) rent shall be reduced pro-rata, based on the Lessee's reduced
interest based on the number of operational beds, and (c) Lessee, at its
expense, will promptly commence and complete, subject to Unavoidable Delays,
Restoration of the Leased Premises as nearly as possible to its value,
condition and character immediately prior to such Taking, except for any
reduction in area caused thereby, provided that, in case of a Taking for
temporary use, Lessee shall not be required to effect Restoration until such
Taking is terminated. So long as there is a First Mortgagee, Lessee's
obligation to restore shall only apply if and to the extent that said First
Mortgagee shall make funds for such purpose available to Lessee in accordance
with the terms of the then existing credit agreement between Lessee and such
First Mortgagee.
16.4 Application of Awards and Other Payments. Awards and
other payments on account of a Taking shall be paid to the First Mortgagee, if
any, to be applied in accordance with the then existing credit agreement
between Lessee, First Mortgagee and other creditors named therein. If there is
no First Mortgagee, then said awards and other payments shall be applied as
follows:
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<PAGE> 10
(a) Net awards and payments received on account
of a Taking other than a Taking for temporary use or a Total Taking
shall be held and applied to pay the cost of Restoration of the
Property, such application to be made substantially as provided in
paragraph (a) of section 15.3, with respect to insurance proceeds. The
balance, if any, shall be paid to Lessee.
(b) Net awards and payments received on account
of a Taking for temporary use shall be paid to the Lessee, provided
that, if any portion of any such award or payment is made by reason of
any damage to or destruction of the Leased Premises such portion
shall be held and applied as provided in the first sentence of
paragraph (a) of this section 16.4.
(c) Net awards and payments received on account
of a Total Taking shall be allocated as follows:
First: There shall be paid to Lessor an amount equal to the
fair market value of the improved Building Area as determined by an
appraisal.
Second: Any remaining balance shall be paid to Lessee.
Not more than thirty (30) days after any Taking referred to in
paragraph (c) of this Section 16.4, Lessor shall cause a member of The American
Institute of Real Estate Appraisers, or an organization that is a successor
thereto, or in the event no such organization exists, an organization of
appraisers substantially similar thereto, (hereinafter "MAI Appraiser") to
determine the value of the interest of Lessor as required by the provisions of
such paragraph. Lessor's appraisal shall be the value if Lessee does not (a)
within ten (10) days after receipt of notice of Lessor's appraisal employ an
MAI Appraiser to determine the value and (b) within thirty (30) days after the
effective date of notice of such objection submit to Lessor Lessee's appraisal
and a written summary of the methods used and data collected to make the
determination. If Lessor's and Lessee's appraisal differ by less than ten
percent (10%), they shall be averaged. If they differ by more than ten percent
(10%), the two appraisers shall jointly appoint a third MAI Appraiser. The
appraisal that among the three is furthest from the median of the appraisals
shall be disregarded and the mean average of the other two shall be the value
and binding upon Lessor and Lessee. Lessor and Lessee shall each pay one-half
(1/2) of the expense of all appraisals.
16.5 First Mortgagee Participation. The First Mortgagee,
if any, shall have the right to participate in all proceedings and negotiations
described in Section 16.1.
17. Right to Perform Lessee's Covenants. In the event that Lessee
shall fail to perform any act required hereunder to be performed by Lessee,
then Lessor or First Mortgagee may, but shall be under no obligation to, after
such notice to Lessee, if any, as may be reasonable under the circumstances,
perform such act with the same effect as if made or performed by Lessee. Entry
by Lessor or First Mortgagee upon the Leased Premises for such purpose shall
not waive or release Lessee from any obligation or default hereunder (except in
the case of any obligation or default which shall have been fully performed or
cured by Mortgagee). Lessee shall reimburse Lessor and First Mortgagee for all
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<PAGE> 11
sums so paid by Lessor or First Mortgagee and all costs and expenses incurred
by Lessor and First Mortgagee in connection with the performance of any such
act. Any amount not reimbursed to the Lessor within ten (10) days after demand
may be deducted from payments due to the Lessee under the Management Agreement.
18. Right to Perform Lessor's Covenants. In the event that Lessor
shall fail to pay any sum or perform any act required hereunder to be paid or
performed by Lessor, then Lessee may, but shall be under no obligation to,
after such notice to Lessor as may be reasonable under the circumstances, pay
such sum or perform such act with the same effect as if performed by Lessor.
Lessor shall reimburse Lessee for all sums so paid by Lessee and all costs and
expenses incurred by Lessee in the performance of any such act. Any amount not
reimbursed within ten (10) days after demand may be deducted from rent, or from
payments due to Lessor under the Management Agreement.
19. Leasehold Mortgages.
(a) Leasehold Mortgage Authorized
Without Lessor's prior consent Lessee may mortgage or
otherwise encumber Lessee's leasehold estate created by this Lease and
including all, Improvements (the "Leasehold Estate") to or for the
benefit of the Lenders, to secure an amount not to exceed the amount
of $1,700,000.00 plus accrued interest, or to replace, restructure,
refinance, refund or renew such mortgage (including, without
limitation such replacement, restructure or refinancing involving a
mortgagee as trustee, agent or other representative capacity to secure
notes or bonds or other obligations issued by Lessee), under a
Leasehold Mortgage and assign this Lease as security for such Mortgage
or Mortgages. Any other Leasehold Mortgage shall require prior written
consent of the Board.
(b) Notice to Lessor
(i) (1) If Lessee shall on one or
more occasions mortgage or otherwise encumber Lessee's Leasehold
Estate to or for the benefit of one or more Institutional Lenders, and
if the holder of such Leasehold Mortgage shall provide Lessor with
notice of such Leasehold Mortgage together with a copy of such
Leasehold Mortgage and the name and address of the Leasehold
Mortgagee, Lessor and Lessee agree that, following receipt of such
notice by Lessor, the provisions of this Section 19 shall apply in
respect to each such Leasehold Mortgage.
(2) In the event of any assignment
of a Leasehold Mortgage or in the event of a change of address of a
Leasehold Mortgagee or of any Assignee of such Leasehold Mortgage,
notice of the new name and address shall be provided to Lessor.
(ii) Lessor shall promptly upon receipt
of a communication purporting to constitute the notice provided for by
subsection (b)(i) above acknowledge receipt of such communication as
constituting the notice provided for by subsection
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<PAGE> 12
(b)(i) above and agree to be bound by the provisions of the Lease for
the benefit of the Leasehold Mortgagee by an instrument in recordable
form or, in the alternative, notify the Lessee and the Leasehold
Mortgagee of the rejection of such communication as not conforming
with the provisions of subsection (b)(i) and specify the specific
basis of such rejection.
(iii) After Lessor has received the
notice provided for by subsection (b)(i) above, the Lessee, upon being
requested to do so by Lessor, shall with reasonable promptness provide
Lessor with copies of the note or other obligation secured by such
Leasehold Mortgage and of any other documents pertinent to the
Leasehold Mortgage as specified by the Lessor. If requested to do so
by Lessor, the Lessee shall thereafter also provide the Lessor from
time to time with a copy of each amendment or other modification or
supplement to such instruments. All recorded documents shall be
accompanied by the appropriate certification of the applicable
Recording Office as to their authenticity as true and correct copies
of official records and all nonrecorded documents shall be accompanied
by a certification by Lessee that such documents are true and correct
copies of the originals. From time to time upon being requested to do
so by Lessor, Lessee shall also notify Lessor of the date and place of
recording and other pertinent recording data with respect to such
instruments as have been recorded. Neither Lessee's failure to provide
any of the documents described above certified as so provided, nor any
other act or omission by Lessee shall affect the validity of a
Leasehold Mortgage or the Leasehold Mortgagee's exercise of its rights
under this Lease or the Leasehold Mortgage.
(c) Definitions
(i) The term "Institutional Lender(s)"
as used in this Section 19 shall refer to a savings bank, savings and
loan association, commercial bank, trust company, credit union,
insurance company, educational institution, real estate investment
trust or pension fund, in each case whether acting for itself or as
agent or trustee or other representative capacity for the holders of
notes, bonds or other obligations of Lessee. The term "Institutional
Lender(s)" shall also include other lenders of substance which perform
functions similar to any of the foregoing, and which have assets in
excess of fifty million dollars ($50,000,000) at the time the
Leasehold Mortgage loan or obligation is made or incurred.
(ii) The term "Leasehold Mortgage" as
used in this Section 19 shall include a mortgage, a deed of trust, a
deed to secure debt, assignment of rents and profits or other security
instrument by which Lessee's Leasehold Estate is mortgaged, conveyed,
assigned, or otherwise encumbered, to secure a debt or other
obligation.
(iii) The term "Leasehold Mortgagee" as
used in this Section 19 shall refer to any holder of a Leasehold
Mortgage, whether for itself or in a representative capacity, in
respect to
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<PAGE> 13
which the notice provided for by subsection (b) of this Section 19 has
been given and received and as to which the provisions (of this
Section 19 are applicable.
(d) Consent of Leasehold Mortgagee Required
No termination, surrender or modification of this
Lease by Lessor and/or Lessee whether pursuant to Section 2, 15 or 16
or otherwise (other than a termination by Lessor after an Event of
Default made in accordance with the provisions of this Section 19)
shall be effective unless consented to in writing by all Leasehold
Mortgagees.
(e) Default Notice
Lessor, upon providing Lessee any notice of: (i)
default under this Lease, or (ii) a termination of this Lease, or
(iii) a matter on which Lessor may predicate or claim a default, shall
at the same time provide a copy of such notice to every Leasehold
Mortgagee. No such notice by Lessor to Lessee shall be deemed to have
been duly given unless and until a copy thereof has been so received
by every Leasehold Mortgagee. From and after such notice has been
received by every Leasehold Mortgagee, such Leasehold Mortgagee shall
have the same period, after the giving of such notice upon it, for
remedying any default or acts or omissions which are the subject
matter of such notice or causing the same to be remedied, as is given
Lessee after the giving of such notice to Lessee, plus in each
instance, the additional period of time specified in subsections (f)
and (g) of this Section 19 to remedy, commence remedying or cause to
be remedied the defaults or acts or omissions which are the subject
matter of such notice specified in any such notice. Lessor shall
accept such performance by or at the instigation of such Leasehold
Mortgagee as if the same had been done by Lessee. Lessee authorizes
each Leasehold Mortgagee to take any such action at such Leasehold
Mortgagee's option and does hereby authorize entry upon the Leased
Premises by the Leasehold Mortgagee for such purpose.
(f) Notice to Leasehold Mortgagee
(i) Anything contained in this Lease to
the contrary notwithstanding, if any default shall occur which
entitles Lessor to terminate this Lease, Lessor shall have no right to
terminate this Lease unless, following the expiration of the period of
time given Lessee to cure such default or the act or omission which
gave rise to such default, Lessor shall notify every Leasehold
Mortgagee of Lessor's intent to so terminate at least 30 days in
advance of the proposed effective date of such termination if such
default is capable of being cured by the payment of money, and at
least 45 days in advance of the proposed effective date of such
termination if such default is, not capable of being cured by the
payment of money. The provisions of subsection (g) below of this
Section 19 shall apply if, during such 30- or 45- day termination
notice period, any Leasehold Mortgagee shall:
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(1) notify Lessor of such Leasehold
Mortgagee's desire to nullify such notice, and
(2) pay or cause to be paid all
rent, additional rent, and other payments then due and in arrears as
specified in the Termination Notice to such Leasehold Mortgagee and
which may become due during such 30- or 45-day period, and
(3) comply or in good faith, with
reasonable diligence and continuity, commence to comply with all
nonmonetary requirements of this Lease then in default and reasonably
susceptible of being complied with by such Leasehold Mortgagee;
provided, however, that such Leasehold Mortgagee shall not be required
during such 45-day period to cure or commence to cure any default
consisting of Lessee's failure to satisfy and discharge any lien,
charge or other encumbrance against the Lessee's interest in this
Lease or the Leased Premises junior in priority to the lien of the
Leasehold Mortgage held by such Leasehold Mortgagee.
(ii) Any notice to be given by Lessor to
a Leasehold Mortgagee pursuant to any provision of this Section 19
shall be deemed properly addressed if sent to the Leasehold Mortgagee
who served the notice referred to in subsection (b)(i)(1) unless
notice of a change of Leasehold Mortgage ownership has been given to
Lessor pursuant to subsection (b)(i)(2).
(g) Procedure On Default
(i) If Lessor shall elect to terminate
this Lease by reason of any default of Lessee, and a Leasehold
Mortgagee shall have proceeded in the manner provided for by
subsection (f) of this Section 19, the specified date for the
termination of this Lease as fixed by Lessor in its Termination Notice
shall be extended for a period of six months, provided that such
Leasehold Mortgagee shall, during such six-month period:
(1) Pay or cause to be paid the
rent, additional rent and other monetary obligations of Lessee under
this Lease as the same become due, and continue its good faith efforts
to perform all of Lessee's other obligations under this Lease,
excepting (A) obligations of Lessee to satisfy or otherwise discharge
any lien, charge or other encumbrance against Lessee's interest in
this Lease or the Leased Premises junior in priority to the lien of
the Leasehold Mortgage held by such Leasehold Mortgagee and (B)
nonmonetary obligations then in default and not reasonably susceptible
of being cured by such Leasehold Mortgagee (which shall include
Section 20(c) and 20(d), without limitation)
(2) if not enjoined or stayed or
otherwise prohibited by legal process, take steps to acquire or sell
Lessee's interest in this Lease by foreclosure of the Leasehold
Mortgage or other appropriate means and prosecute the same to
completion with due diligence.
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<PAGE> 15
(ii) If at the end of such six (6) month
period such leasehold Mortgagee is complying with subsection (g)(i),
this Lease shall not then terminate, and the time for completion by
such Leasehold Mortgagee of its proceedings shall continue so long as
such Leasehold Mortgagee is enjoined or stayed or otherwise prohibited
by legal process and thereafter for so long as such Leasehold
Mortgagee proceeds to complete steps to acquire or sell Lessee's
interest in this Lease by foreclosure of the Leasehold Mortgage or by
other appropriate means with reasonable diligence and continuity.
Nothing in this subsection (g) of this Section 19, however, shall be
construed to extend this Lease beyond the original term thereof as
extended by any options to extend the term of this Lease properly
exercised by Lessee or a Leasehold Mortgagee in accordance with
Section 19, nor to require a Leasehold Mortgagee to continue such
foreclosure proceedings after the default has been cured. If the
default shall be cured and the Leasehold Mortgagee shall discontinue
such foreclosure proceedings, this Lease shall continue in full force
and effect as if Lessee had not defaulted under this Lease.
(iii) If a Leasehold Mortgagee is
complying with subsection (g)(i) of this Section 19, upon the
acquisition of Lessee's Leasehold Estate herein by such Leasehold
Mortgagee or its designee or any other purchaser at a foreclosure sale
or otherwise, this Lease shall continue in full force and effect as if
Lessee had not defaulted under this Lease.
(iv) For the purposes of this Section 19,
the making of a Leasehold Mortgage shall not be deemed to constitute
an assignment or transfer of this Lease or of the Leasehold Estate
hereby created, nor shall any Leasehold Mortgagee, as such, be deemed
to be an assignee or transferee of this Lease or of the Leasehold
Estate hereby created so as to require such Leasehold Mortgagee, as
such, to assume the performance of any of the terms, covenants or
conditions on the part of the Lessee to be performed hereunder, but
the purchaser at any sale of this Lease and of the Leasehold Estate
hereby created in any proceedings for the foreclosure of any Leasehold
Mortgage, or the assignee or transferee of this Lease and of the
Leasehold Estate hereby created under any instrument of assignment or
transfer in lieu of the foreclosure of any Leasehold Mortgage shall be
deemed to be an assignee or transferee within the meaning of this
Section 19, and shall be deemed to have agreed to perform all of the
terms, covenants and conditions on the part of the Lessee to be
performed hereunder from and after the date of such purchase and
assignment, but only for so long as such purchaser or assignee is the
owner of the Leasehold Estate. If the Leasehold Mortgagee shall become
holder of the Leasehold Estate and if the Improvements shall have been
or become materially damaged on, before or after the date of such
purchase and assignment, the Leasehold Mortgagee or its designee shall
be obligated to repair, replace
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<PAGE> 16
or reconstruct the Improvements if Lessee is obligated to do so under
Section 15, only to the extent of the net insurance proceeds received
by the Leasehold Mortgagee or its designee by reason of such damage.
However, should such net insurance proceeds be insufficient to repair,
replace or reconstruct the building or other improvements to the
extent required by Section 15 and should the Leasehold Mortgagee or
its designee choose not to fully reconstruct the Improvements to the
extent required by said Section 15 such failure shall constitute an
event of default under this Lease.
(v) Any Leasehold Mortgagee or other
acquirer of the Leasehold Estate of Lessee pursuant to foreclosure,
assignment in lieu of foreclosure or other proceedings may, upon
acquiring Lessee's Leasehold Estate, without further consent of
Lessor, sell and assign the Leasehold Estate on such terms and to such
persons and organizations as are acceptable to such Leasehold
Mortgagee or acquirer and thereafter be relieved of all obligations
under this Lease; provided that such assignee has delivered to Lessor
its written agreement to be bound by all of the provisions of this
Lease.
(vi) Notwithstanding any other provisions
of this Lease, any sale of this Lease and of the Leasehold Estate
hereby created in any proceedings for the foreclosure of any Leasehold
Mortgage, or the assignment or transfer of this Lease and of the
Leasehold Estate hereby created in lieu of the foreclosure of any
Leasehold Mortgage shall be deemed to be a permitted sale, transfer or
assignment of this Lease and of the Leasehold Estate hereby created.
(h) New Lease
In the event of the termination of this Lease for any
reason whatsoever, including, without limitation, due to a default by
Lessee under this Lease or a rejection of this Lease by Lessee as
debtor-in-possession or by Lessee's trustee in bankruptcy, Lessor
shall, in addition to providing the notices of default and termination
as required by subsections (e) and (f) above of this Section 19,
provide each Leasehold Mortgagee with written notice that the Lease
has been terminated, together with a statement of all sums which would
at that time be due under this Lease but for such termination, and of
all other defaults, if any, then known to Lessor. Lessor agrees to
enter into a new lease ("New Lease") of the Leased Premises with such
Leasehold Mortgagee or its designee for the remainder of the term of
this Lease, effective as of the date of termination, at the rent and
additional rent, and upon the terms, covenants and conditions
(including all options to renew but excluding requirements which are
not applicable or which have already been fulfilled) of this Lease,
provided:
(i) Such Leasehold Mortgagee shall make
written request upon Lessor for such New Lease within 60 days after
the date such Leasehold
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Mortgagee receives Landlord's Notice of Termination of this Lease
given pursuant to this subsection (h).
(ii) Such Leasehold Mortgagee or its
designee shall pay or cause to be paid to Lessor at the time of the
execution and delivery of such New. Lease, any and all sums which
would at the time of execution and delivery thereof be due pursuant to
this Lease but for such termination and, in addition thereto, all
reasonable expenses, including reasonable attorneys' fees, which
Lessor shall have incurred by reason of such termination and the
execution and delivery of the New Lease and which have not otherwise
been received by Lessor from Lessee or other party in interest under
Lessee. Upon the execution of such New Lease, Lessor shall allow to
the Lessee named therein as an offset against the sums otherwise due
under this subsection (h)(ii) or under the New Lease, an amount equal
to the net income derived by Lessor from the Leased Premises during
the period from the date of termination of this Lease to the date of
the beginning of the Lease term of such New Lease. In the event of a
controversy as to the amount to be paid to Lessor pursuant to this
subsection (h)(ii), the payment obligation shall be satisfied if
Lessor shall be paid the amount not in controversy, and the Leasehold
Mortgagee or its designee shall agree to pay any additional sum
ultimately determined to be due plus interest at the rate of 10% per
annum.
(iii) Such Leasehold Mortgagee or its
designee shall agree to remedy any of Lessee's defaults of which said
Leasehold Mortgagee was notified by Lessor's Notice of Termination and
which are reasonably susceptible of being so cured by Leasehold
Mortgagee or its designee. Provided, however, that such Leasehold
Mortgagee or its designee shall not be required to cure any default
consisting of Lessee's failure to satisfy and discharge any lien,
charge or other encumbrance against the Lessee's interest in this
Lease or the Leased Premises junior in priority to the lien of the
Leasehold Mortgage held by the Leasehold Mortgagee.
(iv) Any New Lease made pursuant to this
subsection (h) and any renewal lease entered into with a Leasehold
Mortgagee shall be prior to any mortgage or other lien, charge or
encumbrance on the fee of the Leased Premises and the Lessee under
such New Lease shall have the same right, title and interest in and to
the Leased Premises and the buildings, improvements and fixtures
thereon as Lessee had under this Lease.
(v) The Lessee under any such New Lease
shall be liable to perform the obligations imposed on the Lessee by
such New Lease only during the period such person has ownership of
such Leasehold Estate.
(i) New Lease Priorities
If more than one Leasehold Mortgagee shall request a
New Lease pursuant to subsection (h)(i) of this Section 19, Lessor
shall enter into such New Lease with the Leasehold Mortgagee whose
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<PAGE> 18
Leasehold Mortgage is prior in lien, or with the designee of such
Leasehold Mortgagee. Lessor, without liability to Lessee or any
Leasehold Mortgagee with an adverse claim, may rely upon a mortgagee
title insurance policy issued by a responsible title insurance company
doing business within the state in which the Leased Premises are
located as the basis for determining the appropriate Leasehold
Mortgagee who is entitled to such New Lease.
(j) Leasehold Mortgagee Need Not Cure Specified
Defaults
Nothing herein contained shall require any Leasehold
Mortgagee or its designee as a condition to its exercise of right
hereunder to cure any default of Lessee not reasonably susceptible of
being cured by such Leasehold Mortgagee or its designee, or a
subsequent owner of the Leasehold Estate through foreclosure hereof
(including, without limitation, Sections 20(c) and 20(d)), in order to
comply with the provisions of subsection (f) or (g) of this Section
19, or as a condition of entering into the New Lease provided for by
subsection (h) of this Section 19.
(k) No Merger
So long as any Leasehold Mortgage is in existence,
unless all Leasehold Mortgagees shall otherwise expressly consent in
writing, the fee title to the Leased Premises and the Leasehold Estate
of Lessee therein created by this Lease shall not merge but shall
remain separate and distinct, notwithstanding the acquisition of said
fee title and said Leasehold Estate by Lessor or by Lessee or by a
third party, by purchase or otherwise.
(l) Future Amendments
In the event Lessee seeks to mortgage its Leasehold
Estate, Lessor agrees to amend this Lease from time to time to the
extent reasonably requested by an Institutional Lender proposing to
make Lessee a loan secured by a first lien upon Lessee's Leasehold
Estate, provided that such proposed amendments do not materially and
adversely affect the rights of Lessor or its interest in the Leased
Premises. All reasonable expenses incurred by Lessor in connection
with any such amendment shall be paid by Lessee.
(m) Estoppel Certificate
Lessor shall, without charge, at any time and from
time to time hereafter, but not more frequently than twice in any
one-year period (or more frequently if such request is made in
connection with any sale or mortgaging of Lessee's Leasehold interest
or permitted subletting by Lessee), within 10 days after written
request of Lessee to do so, certify by written instrument duly
executed and acknowledged to any Leasehold Mortgagee or purchaser, or
proposed Leasehold Mortgagee or proposed purchaser, or any other
person, firm or corporation specified in such request: (A) as to
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whether this Lease has been supplemented or amended, and if so, the
substance and manner of such supplement or amendment; (B) as to the
validity and force and effect of this Lease, in accordance with its
tenor; (C) as to the existence of any default hereunder; (D) as to the
existence of any offsets, counterclaims or defenses hereto on the part
of the Lessee; (E) as to the commencement and expiration dates of the
term of this Lease; and (F) as to any other matters as may be
reasonably so requested. Any such certificate may be relied upon by
the Lessee and any other person, firm or corporation to whom the same
may be exhibited or delivered, and the contents of such certificate
shall be binding on the Lessor.
(n) Notices
Notices from Lessor to the Leasehold Mortgagee shall
be mailed or personally delivered to the address furnished
Lessor pursuant to subsection (b) of this Section 19, and
those from the Leasehold Mortgagee to Lessor shall be mailed
or personally delivered to the address designated pursuant to
the provisions of Section 26 hereof. Such notices, demands
and requests shall be given in the manner described in Section
26 and shall in all respects be governed by the provisions of
that Section.
(o) Erroneous Payments
No payment made to Lessor by a Leasehold Mortgagee
shall constitute agreement that such payment was, in fact,
due under the terms of this Lease; and a Leasehold Mortgagee
having made any payment to Lessor pursuant to Lessor's
wrongful, improper or mistaken notice or demand shall be
entitled to the return of any such payment or portion thereof
provided he shall have made demand therefor not later than
one year after the date of its payment.
(p) Performance of Leasehold Mortgagee
Leasehold Mortgagee shall have the right, but not the
obligation, at any time prior to termination of this Lease to
pay all rents (tie hereunder, to effect any insurance, to pay
any taxes or assessments, to make any repair or improvements
or otherwise to do any act or thing required of the Lessee
hereunder or necessary or proper to prevent the termination of
this Lease, and Leasehold Mortgagee is authorized to enter the
Leased Premises for any such purpose. All such acts and things
shall be effective to prevent a termination of this Lease as
if done by Lessee instead of Leasehold Mortgagee.
(q) Survival
The provisions of this section 19 shall survive any
termination of this Lease.
20. Events of Default; Termination. If any one or more of the
following events ("Events of Default") shall occur:
-18-
<PAGE> 20
(a) if Lessee shall fail to pay any rent and such failure
shall continue for more than twenty (20) days after notice thereof
from Lessor; or
(b) if Lessee shall fail to perform or comply with any
term hereof, such failure shall continue for more than 90 days after
notice thereof from Lessor, and Lessee shall not, subject to
Unavoidable Delays, within such period commence with due diligence and
dispatch the curing of such default, or, having so commenced, shall
thereafter fail or neglect, for reasons other than Unavoidable Delays,
to prosecute or complete with due diligence and dispatch the curing of
such default; or
(c) if Lessee shall make a general assignment for the
benefit of creditors, or shall admit in writing its inability to pay
its debts as they become due or shall file a petition in bankruptcy,
or shall be adjudicated a bankrupt or insolvent, or shall file a
petition seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any
present or future statute, law or regulation, or shall file an answer
admitting or shall fail seasonably to contest the material allegations
of a petition filed against it in any such proceeding, or shall seek
or consent to or acquiesce in the appointment of any trustee, receiver
or liquidator of Lessee or any material part of its properties; or
(d) if, within 90 days after the commencement of any
proceeding against Lessee seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief
under any present or future statute, law or regulation, such
proceeding shall not have been dismissed, or if, within 90 days after
the appointment without the consent or acquiescence of Lessee, of any
trustee, receiver or liquidator of Lessee or of any material part of
its properties, such appointment shall not have been vacated;
then, and in any such event (regardless of the pendency of any proceeding which
has or might have the effect of preventing Lessee from complying with the terms
of this Lease), Lessor, at any time thereafter may give a written termination
notice to Lessee, and, subject to Section 19, on the date specified in such
notice this Lease shall terminate and, the Lease Term shall expire and
terminate by limitation, and all rights of Lessee under this Lease shall cease,
unless before such date (i) all arrears of Rent, (together with interest
thereon at the rate of 10% per annum) and all reasonable costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses)
incurred by or on behalf of Lessor hereunder, shall have been paid by Lessee,
and (ii) all other defaults at the time existing under this Lease shall have
been fully remedied to the reasonable satisfaction of Lessor.
21. No Waiver, etc., by Lessor or Lessee. No failure by
Lessor or Lessee to insist upon the strict performance of any term hereof or to
exercise any right, power or remedy consequent upon a breach thereof, and no
submission by Lessee or acceptance by Lessor of full or partial rent during the
continuance of any such breach, shall constitute a waiver of any such breach or
of any such term. No waiver of any breach shall effect or alter this Lease,
which shall continue
-19-
<PAGE> 21
in full force and effect, or the respective rights of Lessor or Lessee with
respect to any other then existing or subsequent breach. No foreclosure, sale
or other proceeding under any Mortgage or any other mortgage with respect to
the Leased Premises shall discharge or otherwise affect the obligations of
Lessee hereunder.
22. Acceptance of Surrender. No modification, termination or
surrender of this Lease or surrender of the Leased Premises or any part thereof
whether pursuant to Sections 15 or 16 or otherwise, or of any interest therein
by Lessee shall be valid or effective unless agreed to and accepted in writing
by Lessor and First Mortgagee, if any, and no act by any representative or
agent of Lessor or First Mortgagee, other than such a written agreement and
acceptance by Lessor and First Mortgagee, shall constitute an acceptance
thereof.
23. Estoppel Certificate by Lessee. Lessee will execute,
acknowledge and deliver to Lessor, promptly upon request, a certificate
certifying that (a) this Lease is unmodified and in full force and effect (or,
if there have been modifications, that the Lease is in full force and effect,
as modified, and stating the modifications), (b) the dates, if any, to which
Rent, has been paid, and (c) no notice has been received by Lessee of any
default which has not been cured, except as to defaults specified in said
certificate. Any such certificate may be relied upon by any prospective
purchaser or mortgagee of the Leased Premises or any part thereof.
24. End of Lease Term. Upon the expiration or other
termination of the term of this Lease, Lessee shall quit and surrender to
Lessor the Leased Premises ordinary wear and tear and damage by fire and other
casualty excepted, and shall remove all Lessee's Equipment therefrom.
25. Provisions Subject to Applicable Law. All rights, powers
and remedies provided herein may be exercised only to the extent that the
exercise thereof does not violate any applicable law, and are intended to be
limited to the extent necessary so that they will not render this Lease
invalid, unenforceable or not entitled to be recorded under any applicable law.
If any term of this Lease shall be held to be invalid, illegal or
unenforceable, the validity of the other terms of this Lease shall in no way be
affected thereby.
26. Notices, etc. All notices and other communications
hereunder shall be in writing and shall be deemed to have been given when
mailed by first class registered or certified mail, postage prepaid, or
personally delivered addressed (a) if to Lessee, 2000 Southbridge Parkway,
Suite 200, Birmingham, Alabama 35209, with a copy to the Leased Premises, or at
such other address as Lessee shall have furnished in writing to Lessor, or (b)
if the Lessor, at 7600 N.W. 23rd St., Bethany, Oklahoma or at such other
address as Lessor shall have furnished in writing to Lessee.
27. Easements. If requested by Lessee, Lessor will join in
any easements, licenses, plats or restrictions determined by Lessee to be
necessary or desirable for the operation of the Lease Premises; provided,
however, the form of any such instruments is subject to the approval of Lessor
which will not be unreasonably withheld or delayed.
28. Assignment. The Lessee shall have the right to assign
this Lease, with the consent of the Lessor, which shall not be unreasonably
withheld or delayed, to any
-20-
<PAGE> 22
transferee of substantially all of Lessee's assets (including the Lessee's
rights under the Management Agreement if still in effect) provided such
transferree expressly assumes, by writing delivered to Lessor, all of the
obligations of the transferring party under this Lease.
29. Miscellaneous. This Lease may be changed, waived, discharged
or terminated only by an instrument in writing signed by the party against
which enforcement of such change, waiver, discharge or termination is sought.
This Lease shall be binding upon and inure to the benefit of and be enforceable
by the respective successors and assigns of the parties hereto. The headings in
this Lease are for purposes of reference only and shall not limit or define the
meaning hereof. This Lease may be executed in any number of counterparts, each
of which is an original, but all of which shall constitute one instrument. In
the event of a conflict between the terms of this Lease and the terms of the
City Lease or the Contract, the terms of this Lease shall control. City joins
in this Lease as owner of the Leased Premises to lease the Leased Premises to
Lessee and to evidence its approval of and ratify the terms and provisions
hereof, however, nothing herein contained shall create an indebtedness of the
City.
IN WITNESS WHEREOF, the parties hereto have caused this Lease to be
executed and their respective seals to be hereunto affixed and attested by
their respective officers thereunto duly authorized.
<TABLE>
<S> <C>
BETHANY PSYCHIATRIC HOSPITAL, INC.,
ATTEST: an Oklahoma corporation
/s/ JOANNE E. BOYD By: /s/ CHARLES ATPIN
Its Assistant Secretary Its President
BETHANY GENERAL HOSPITAL
By: THE HOSPITAL BOARD OF THE
ATTEST: CITY OF BETHANY, OKLAHOMA
/s/ JIM F. WRIGHT By: /s/ MARK ERMLELY
Its Secretary Its Chairman
THE CITY OF BETHANY, OKLAHOMA
ATTEST:
/s/ LOIS M. MAIN By: /s/ JAMES L. FALKNER
Its Clerk Its Mayor
THE BETHANY HOSPITAL TRUST,
ATTEST: a Public Trust
/s/ LOIS M. MAIN By: /s/ JAMES L. FALKNER
Its Secretary Its Chairman
</TABLE>
-21-
<PAGE> 23
STATE OF ALABAMA )
) SS.
COUNTY OF Jefferson )
The foregoing instrument was acknowledged before me this 4th day of
January, 1986 by Charles A. Speir, as President of Bethany Psychiatric
Hospital, Inc. , an Oklahoma corporation, on behalf of the corporation.
/s/ Trey W. Frou
Notary Public
My Commission Expires:
1-11-88
(SEAL)
STATE OF OKLAHOMA )
) SS.
COUNTY OF Oklahoma )
The foregoing instrument was acknowledged before me this 12th day of
December, 1985, by Mark Eudaley as Chairman of The Hospital Board of the City
of Bethany, Oklahoma, on behalf of Bethany General Hospital.
/s/ JUDY RUNYAN
Notary Public
My Commission Expires:
5-23-87
(SEAL)
STATE OF OKLAHOMA )
) SS.
COUNTY OF Oklahoma )
The foregoing instrument was acknowledged before me this 11th day of
December, 1985, by James L. Falkner as , Chairman of The Bethany Hospital
Trust, a public trust, on behalf of the Trust.
/s/ J. RENEE WALL
Notary Public
My Commission Expires:
10-31-88
(SEAL)
-22-
<PAGE> 24
STATE OF OKLAHOMA )
) SS.
COUNTY OF Oklahoma )
The foregoing instrument was acknowledged before me this 11 day of
December, 1985, by James L. Falkner as Mayor of The City of Bethany, Oklahoma,
on behalf of The City of Bethany, Oklahoma.
/s/ J. RENEE WALL
Notary Public
My Commission Expires:
10-31-88
(SEAL)
JFH07285
-23-
<PAGE> 25
(LOGO) COMMONWEALTH LAND
TITLE INSURANCE COMPANY
A Reliance Group Holdings Company
File No. 2398-7/C Policy No.
Commitment No. 817-259991
Schedule A
A part of the Northwest Quarter (NW/4) of Section TWENTY-NINE (29), Township
TWELVE (12) North, Range FOUR (4) West of the Indian Meridian, more
particularly described as follows, to-wit: Beginning at a point in the North
line of said Northwest Quarter (NW/4) 685 feet West of the Northeast corner of
said Northwest Quarter (NW/4) for the point or place of beginning; thence South
and at right angles to the North line of said Northwest Quarter (NW/4) a
distance of 50 feet to the point of a curvature; thence to the left along the
arc of a curve having a radius of 775.06 feet for a distance of 533.35 feet to
the point of a reverse curve; thence to the right and along an arc of a curve
having a radius of 707.78 feet for a distance of 198.69 feet to the point of a
compound tangency; thence Southwesterly and to the right along the arc of a
curve having a radius of 329.36 feet for a distance of 134.18 feet to the point
of a tangency; thence West and parallel with the North line of said Northwest
Quarter (NW/4) a distance of 735 feet to the point of a curvature; thence to
the right and along the arc of a curve having a radius of 444.71 feet for a
distance of 39.33 feet to the point of a compound tangency; thence
Northeasterly and to the right along the arc of a curve having a radius of
379.66 feet for a distance of 195.56 feet to the point of a reverse curve;
thence to the left along the arc of a curve having a radius of 770.95 feet for
a distance of 551.77 feet to the point of a tangency; thence North and at right
angles to the North line of said Northwest Quarter (NW/4) a distance of 50 feet
to a point on the North line of said Northwest Quarter (NW/4) 1,085 feet West
of the Northeast corner of said Northwest Quarter (NW/4); thence East along the
North line of said Northwest Quarter (NW/4) a distance of 400 feet to the point
or place of beginning.
(NOTE: Subject to requirement No. 6)
EXHIBIT "A"
<PAGE> 26
(MAP)
<PAGE> 27
EXHIBIT "B"
7716 N.W. Melrose Lane
(LOGO) DAVILA Oklahoma City, Okla. 73127
ENGINEERING COMPANY 405-789-3583
December 20, 1985
LEGAL DESCRIPTION of property from
Bethany General Hospital Tract for use as
Psychiatric Ward Addition
A part of the Northwest Quarter (NW1/4) of Section Twenty-nine (29), Township
Twelve (12) North, Range Four (4) West of the Indian Meridian, more
particularly described as follows. to wit:
COMMENCING at a point in the North line of said Northwest Quarter
(NW1/4) 685.00 feet West of the Northeast corner of said Northwest
Quarter (NW1/4); THENCE South and at right angles to the North line of
said Northwest Quarter (NW1/4) a distance of 50.00 feet to the point of
a curvature; THENCE to the left along the arc of a curve having a radius
of 775.06 feet for a distance of 533.35 feet to the point of a reverse
curve; THENCE to the right and along an arc of a curve having a radius
of 707.78 feet for a distance of 198.69 feet to the point of a compound
tangency; THENCE Southwesterly and to the right along the arc of a curve
having a radius of 329.36 feet for a distance of 134.18 feet to the
point of a tangency; THENCE West and parallel with the North line of
said Northwest Quarter (NW1/4) a distance of 521.84 feet; THENCE North
74.19 feet to the point of BEGINNING; THENCE North 00 degrees 00'00"
East a distance of 168.00 feet; THENCE North 90 degrees 00'00" West a
distance of 6.50 feet; THENCE North 00 degrees 00'00" East a distance of
26.00 feet to a point on the South building line of the Bethany General
Hospital, THENCE North 90 degrees 00'00" West along said South building
line a distance of 61.59 feet; THENCE South 00 degrees 00'00" West a
distance of 25.17 feet; THENCE North 90 degrees 00'00" West a distance
of 24.33 feet; THENCE South 00 degrees 00'00" West a distance of 37.25
feet; THENCE North 90 degrees 00'00" West a distance of 12.00 feet;
THENCE South 00 degrees 00'OO" West a distance of 25.00 feet; THENCE
South 90 degrees 00'00" East a distance of 12.00 feet; THENCE South 00
degrees 00'00" West a distance of 21.75 feet; THENCE South 90 degrees
00'00" East a distance of 27.08 feet; THENCE South 00 degrees 00'00"
West a distance of 84.83 feet; THENCE South 90 degrees 00'00" East a
distance of 65.33 feet to the point or place of BEGINNING containing
15149.92 square feet or .3478 acres more or less.
/s/ CARLOS DAVILA
---------------------------------
Carlos Davila P.E. #4409
L.S. #37
<PAGE> 28
EXHIBIT "C"
7716 N.W. Melrose Lane
(LOGO) DAVILA Oklahoma City, Okla. 73127
ENGINEERING COMPANY 405-789-3583
December 20, 1985
LEGAL DESCRIPTION of property from
Bethany General Hospital Tract for use as
Psychiatric Ward Addition
Parking Lot
A part of the Northwest Quarter (NW1/4) of Section Twenty-nine (29), Township
Twelve (12) North, Range Four (4) West of the Indian Meridian, more
particularly described as follows, to wit:
COMMENCING at a point in the North line of said Northwest Quarter
(NW1/4) 685.00 feet West of the Northeast corner of said Northwest
Quarter (NW1/4); THENCE South and at right angles to the North line of
said Northwest Quarter (NW1/4) a distance of 50.00 feet to the point
of a curvature; THENCE to the left along the arc of a curve having a
radius of 775.06 feet for a distance of 533.35 feet to the point of a
reverse curve; THENCE to the right and along an arc of a curve having
a radius of 707.78 feet for a distance of 198.69 feet to the point of
a compound tangency; THENCE Southwesterly and to the right along the
arc of a curve having a radius of 329.36 feet for a distance of 134.18
feet to the point of a tangency; THENCE West and parallel with the
North line of said Northwest Quarter (NW1/4) a distance of 614.26
feet; THENCE North 118.70 feet to the point of BEGINNING; THENCE North
00 degrees 00'00" East a distance of 62.02 feet; THENCE North
90 degrees 00'00" West a distance of 12.00 feet; THENCE North
00 degrees 00'00" East a distance of 25.00 feet; THENCE South
90 degrees 00'00" East a distance of 12.00 feet; THENCE North
00 degrees 00'00" East a distance of 36.50 feet; THENCE North
90 degrees 00'00" West a distance of 40.39 feet to a point on the
East Right-of-way line of Tompkins Avenue; THENCE Southwesterly
along said Right-of-way line on a curve to the right having a radius
of 800.95 feet a distance of 100.25 feet having a chord length and
bearing of 100.18 feet South 37 degrees 25'16" West to a point of a
reverse curve; THENCE on a curve to the left having a radius of
349.66 feet a distance of 54.75 feet having a chord length and
bearing of 54.70 feet South 36 degrees 31'15" West; THENCE South
90 degrees 00'00" East a distance of 133.82 feet to the point or
place of BEGINNING containing 10440.29 square feet or .2397 acres
more or less.
/s/ CARLOS DAVILA
-----------------------------
Carlos Davila P.E. #4409
L.S. #37
<PAGE> 1
EXHIBIT 10.60
LOAN AGREEMENT
THE ENID DEVELOPMENT AUTHORITY
and
HSA OF OKLAHOMA, INC.
relating to
THE ENID DEVELOPMENT AUTHORITY
VARIABLE RATE DEMAND REVENUE BONDS
(MEADOWLAKE HOSPITAL PROJECT)
SERIES 1985
Dated as of October 1, 1985
<PAGE> 2
TABLE OF CONTENTS
(The Table of Contents is not a part of the Loan Agreement but is for
convenience of reference only.)
<TABLE>
<S> <C>
PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.01. Representations by Issuer. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.02. Representations by Company. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III
THE PROJECT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.01. Certificates and Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.02. Acquisition and Construction. . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.03. Construction Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE IV
TITLE AND OPERATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.01. Due Diligence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.02. Cost of the Project. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.03. Compliance with Applicable Regulations. . . . . . . . . . . . . . . . . . . . . 12
Section 4.04. Operation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.05. Indemnities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.06. Issuer's Limited Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.07. Immunity of Officers and Employees of the Issuer. . . . . . . . . . . . . . . . 14
Section 4.08. Intercreditor Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.09. Use of the Project. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.10. Recording. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.11. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE V
THE BONDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 5.01. Issuance of Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 5.02. Refunding of Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.03. Redemption of Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 5.04. Payment of Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 5.05. Tax-Exempt Status of Interest on the Bonds. . . . . . . . . . . . . . . . . . . 19
Section 5.06. No Arbitrage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE VI
COVENANTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 6.01. Covenant to Pay Loan Payments, Administrative Fee, Costs and Expenses. . . . . 23
Section 6.02. Assignment of Payments to Trustee. . . . . . . . . . . . . . . . . . . . . . . 24
Section 6.03. General Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 6.04. Amendment of Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE VII
SPECIAL COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 7.01. Company to Maintain its Corporate Existence; Conditions Under Which
Exceptions Permitted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 7.02. Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 7.03. Financial Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE VIII
ADDITIONAL SECURITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 8.01. Letter of Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 8.02. Other Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE IX
TERMINATION; NOTICES; SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 9.01. Term of Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 9.02. Termination of Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 9.03. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 9.04. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
EXECUTION BY ISSUER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EXECUTION BY COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EXHIBIT A--Description of the Project
</TABLE>
iii
<PAGE> 5
LOAN AGREEMENT
THIS AGREEMENT is made and entered into as of October 1, 1985
by and between THE ENID DEVELOPMENT AUTHORITY (hereinafter called the
"Issuer"), a public trust created under authority of Title 60 Oklahoma Statutes
1981, Sections 176-180.3, inclusive, as amended, (the "Act") for the use and
benefit of the City of Enid, Oklahoma pursuant to a Declaration of Trust dated
the 16th day of October, 1973, as amended by Amendments thereto dated as of the
23rd day of December, 1980, and the 7th day of March, 1985, and HSA OF
OKLAHOMA, INC. (hereinafter called the "Company"), a corporation organized and
existing under and by virtue of the laws of the State of Oklahoma and having
its principal corporate offices located in the City of Enid, Oklahoma, d/b/a
Meadowlake Hospital.
W I T N E S S E T H:
WHEREAS pursuant to its powers under the Act, and Declaration
of Trust described hereinabove, the Issuer desires to loan to the Company the
amount necessary to enable the Company to finance or provide reimbursement for
the Cost of Construction, as hereinafter defined, and the Company desires to
borrow such amount from the Issuer subject to the terms and conditions of and
for the purposes set forth in this Loan Agreement; and
WHEREAS, the Issuer will fund the loan above referenced with
proceeds of its $3,600,000 Variable Rate Demand Revenue Bonds (Meadowlake
Hospital Project), Series 1985 (the "Bonds") issued under a certain Trust
Indenture dated as of October 1, 1985 (the "Indenture"); and
WHEREAS, in furtherance thereof, the Company, BankAmerica
Capital Markets Group, Bank of America NT&SA (as the "Remarketing Agent"),
BankAmerica Trust Company of New York (as the "Paying Agent/Registrar") and
Central National Bank and Trust Company of Enid, Enid, Oklahoma, as Trustee
(the "Trustee") have entered into a Remarketing Agreement dated as of October
1, 1985 (the "Remarketing Agreement"), and the Company and Security Pacific
National Bank have entered into a Reimbursement Agreement dated as of October
1, 1985 (the "Reimbursement Agreement"); and
WHEREAS, unless otherwise defined herein, the terms used
herein shall have the meanings given said terms in the Indenture;
NOW, THEREFORE, in consideration of the covenants and
agreements herein made, and subject to the conditions herein set forth, the
Issuer and the Company contract and agree as follows (provided, that in the
performance of the agreements of the Issuer herein
<PAGE> 6
contained, any obligation it may thereby incur for the payment of money shall
not create a pecuniary liability or charge against its general credit or the
general credit or taxing power of its beneficiary, the City of Enid, Oklahoma):
ARTICLE I
DEFINITIONS
In addition to all other words and terms defined herein, and
unless a different meaning or intent clearly appears from the context, the
following words and terms shall have the following meanings, respectively,
whenever they are used in this Agreement:
"Act" means Title 60 Oklahoma Statutes 1981, Sections
176-180.3, inclusive, as amended, or any successor statute.
"Act of Bankruptcy means the filing of a petition commencing a
case under the Federal Bankruptcy Code.
"Additional Bonds" has the same meaning as defined in the
Indenture.
"Agreement" means this Loan Agreement dated as of October 1,
1985, together with Exhibit A and Exhibit B attached hereto, and all amendments
and supplements to this Agreement.
"Article" means any subdivision of this Agreement designated
with a Roman numeral.
"Board" means the Board of Trustees of the Issuer, and any
successor body.
"Bond Counsel" means an attorney or firm of attorneys of
recognized standing in the field of law relating to tax-exempt revenue bonds,
selected by the Issuer and satisfactory to the Trustee, the Paying
Agent/Registrar and the Company.
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"Bond Resolution" means the Bond Resolution adopted by the
Board on October 8, 1985 authorizing the issuance and delivery of The Enid
Development Authority Variable Rate Demand Revenue Bonds (Meadowlake Hospital
Project), Series 1985 in the aggregate principal amount of $3,600,000.
"Bondholder" means the registered owner on any Bond issued and
outstanding under the Indenture.
"Bonds" means any and all revenue bonds (including "Additional
Bonds" as defined in the Indenture) of the Issuer issued and delivered to pay
all or any part of the Cost of acquisition, construction and improvement of the
Project pursuant to the Act and this Agreement, including the initial series or
issue of bonds and bonds issued to pay all or any part of the cost of
completing the acquisition, construction and improvement of the Project, and
any revenue bonds issued for the purpose of refunding or replacing any Bonds.
"Business Day" means a day which, in the city where the
principal corporate trust office of the Trustee or the Paying Agent/Registrar
is located (or during the Variable Period where the principal office of the
Credit Bank is located), is not a Saturday or Sunday or a day on which banking
institutions are authorized or required by law to close.
"Closing Date" means the date the Bonds are delivered to the
initial purchasers thereof.
"Code" means the Internal Revenue Code of 1954, as amended,
and the valid and applicable regulations thereunder.
"Company" means HSA of Oklahoma, Inc., a wholly owned
subsidiary of Healthcare services of America, Inc., d/b/a/ Meadowlake Hospital,
a corporation organized and existing under the laws of the State of Oklahoma
and its successors and assigns as permitted by Section 7.01 or 7.02 hereof.
"Company Representative" means any person at the time
designated to act on behalf of the Company in matters relating to this
Agreement by written certificates furnished to the Issuer, the Paying
Agent/Registrar and the Trustee containing the specimen signature of any such
person and signed on behalf of the Company by an officer Of the Company.
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<PAGE> 8
Such certificates may designate an alternate or alternates. The Company
Representative may be an employee of the Company.
"Construction Fund" means the segregated account or accounts
into which certain proceeds from the sale and delivery of the Bonds will be
deposited as provided in the Indenture.
"Cost" or "Cost of Construction," as applied to a hospital
facility being financed or refinanced by the Bonds, means and includes any and
all costs of such hospital facility and, without limiting the generality of the
foregoing, shall include the following:
(a) the cost of the acquisition of all land, rights-of-way,
options to purchase land, easements, leasehold estates in land, and interests
of all kinds in land related to such hospital facility;
(b) the cost of the acquisition, construction, repair,
renovation, remodeling or improvement of all buildings and structures to be
used as or in conjunction with such hospital facility;
(c) the cost of site preparation, including the cost of
demolishing or removing any buildings or structures the removal of which is
necessary or incident to providing such hospital facility;
(d) the cost of architectural, engineering, legal and related
services; the cost of the preparation of plans, specifications, studies,
surveys and estimates of cost and of revenue; and all other expenses necessary
or incident to planning, providing or determining the feasibility and
practicability of the Project;
(e) the cost of all machinery, equipment, furnishings and
facilities necessary or incident to the equipping of the Project so that it may
be placed in operation;
(f) the cost of financing charges and interest subsequent to
March 15, 1985;
(g) any and all costs paid or incurred in connection with the
financing of the Project including, without limitation, the cost of financing,
legal, accounting, financial advisory and appraisal fees, expenses and
disbursements; the cost of any policy or policies of
4
<PAGE> 9
title insurance; the cost of printing, engraving and reproduction services; and
the cost of the initial or acceptance fee of any trustee or paying agent; and
(h) all direct and indirect costs of the Issuer, as herein
defined, incurred in connection with financing the Project; including without
limitation reasonable sums to reimburse the Issuer for time spent by its agents
or employees with respect to financing the Project.
"Credit Bank" means Security Pacific National Bank, Los
Angeles, California, which issued the initial Letter of Credit, together with
the issuers of each successive Letter of Credit or any Letter of Credit issued
in connection with the issuance of any "Additional Bonds", as defined in the
Indenture.
"Debt Service Fund" means the segregated account or accounts
into which certain Loan payments will be deposited as provided in the
Indenture.
"Indenture" means the Trust Indenture, dated October 1, 1985
by and between the Issuer, the Central National Bank and Trust Company of Enid,
Enid, Oklahoma, as Trustee, and the Paying Agent/Registrar, as amended or
supplemented from time to time.
"Issuer" means The Enid Development Authority, a public trust
under the laws of the State of Oklahoma and its successors and assigns.
"Letter of Credit" means each irrevocable Letter of Credit,
including each Substitute Letter of Credit, as defined in Section 8.01 hereof,
issued to the Trustee for the account of the Company by the Credit Bank as
additional support and liquidity for the Bonds as described and further defined
in Section 8.01 hereof.
"Loan Payment" means each payment required to amortize or pay
each series or issue of bonds issued pursuant to this Agreement, as provided in
the Indenture, including the principal of (regardless of whether due upon
maturity, by acceleration or otherwise), redemption premium, if any, and
interest on such Bonds, and all fees and expenses of each Trustee, registrar
and paying agent for such Bonds, together with any other payments required by
the Indenture.
"Optional Variable Period" means the period as defined in the
Indenture.
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<PAGE> 10
"Paying Agent/Registrar" means BankAmerica Trust Company of
New York, New York, New York and its successors and assigns.
"Permitted Encumbrances" shall mean, as of any particular
time, (a) liens for ad valorem taxes and special assessments not then
delinquent or which are being contested in good faith as permitted hereby; (b)
easements for roads, alleys, walkways, railways, public utilities and like
purposes which do not, when taken together, materially detract from the value
of the Project; (c) liens, charges and encumbrances which are not substantial
in amount and do not in the aggregate materially detract from the value of the
Project; (d) zoning laws, ordinances or regulations or building and use
restrictions; (e) statutory rights under Section 291, Title 42 of the United
States Code, as a result of what are commonly known as Hill-Burton grants and
any other similar rights under other federal or state law; (f) this Agreement
and the Indenture; (g) mechanics', materialmen's, laborers', suppliers' and
similar liens which are unfiled or which are being contested in good faith as
permitted hereby; (h) liens to secure indebtedness to the extent that such
liens are specifically permitted in accordance with this Agreement; and (i)
exceptions noted in the commitment to issue a title insurance policy; all of
which do not, in the opinion of an independent architect employed by the
Company, materially interfere with or impair the construction or operation of
the Project.
"Project" means the facilities described in Exhibit A to this
Agreement, as amended from time to time as provided herein.
"Reimbursement Agreement" means the Reimbursement Agreement
between the Company and the Credit Bank dated as of October 1, 1985, together
with any permitted amendments or supplements thereto.
"Remarketing Agreement" means the Remarketing Agreement dated
as of October 1, 1985 among the Company, the Remarketing Agent, the Paying
Agent/Registrar and the Trustee.
"Section" means any subdivision of this Agreement designated
by Arabic numerals.
"Trustee" means the corporate Trustee named under the
Indenture, and its successors or assigns as provided in the Indenture.
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<PAGE> 11
"Variable Period" means the period commencing on the date the
Bonds are issued and ending on and including the Company Purchase Date.
References in the singular number in this Agreement shall be
considered to include the plural, if and when appropriate. Words and terms not
defined herein shall have the meanings set forth In the Indenture.
ARTICLE II
REPRESENTATIONS
Section 2.01. Representations by Issuer.
The Issuer makes the following representations as the basis for the
undertakings on its part herein contained:
(a) The Issuer has the power to enter into the transactions
contemplated by this Agreement and to carry out its obligations hereunder. The
Issuer has been duly authOrized to execute and deliver this Agreement, and by
proper action of the Board has duly authorized the execution and delivery
hereof.
(b) The Issuer is not in default under any of the provisions of the
laws of oklahoma which would impair, interfere with or otherwise adversely
affect the ability of the Issuer to make and perform the provisions of this
Agreement, the Indenture and the Bonds.
(c) All requirements and conditions specified in the Act and all other
laws and regulations applicable to the adoption of the Bond Resolution, the
execution and delivery of this Agreement, the Indenture and the execution,
delivery and issuance of the Bonds have been fulfilled.
Section 2.02. Representations by Company.
The Company makes the following representations, as of the date
hereof, as the basis for the undertakings on its part herein contained.
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<PAGE> 12
(a) The Company is a corporation duly organized under the laws of the
State of Oklahoma, and is in good standing and duly authorized to do business
in the State of Oklahoma; the Company is not in default under any provisions of
the laws of the State of Oklahoma in a manner which materially impairs its
ability to perform its obligations hereunder or under its Articles of
Incorporation; it has been authorized to enter into and deliver this Agreement
by all necessary and proper corporate action; and the execution and delivery by
it of this Agreement and the agreements herein contained do not contravene or
constitute a default under any existing agreement, indenture, mortgage, loan
agreement, commitment, provisions of its Articles of Incorporation or its
Bylaws or other requirements of law, or any other agreement of any kind to
which it is a party or by which it is or may be bound, including specifically
the Reimbursement Agreement and the Remarketing Agreement.
(b) All statements of fact or other information furnished by the
Company to Bond Counsel in connection with Bond Counsel's opinion on the Bonds
were true and correct when made and nothing has come to the Company's attention
that would change the truth or correctness of such statements of facts or other
information furnished to Bond Counsel.
(c) The Company will not default under, misperform or fail to perform
with respect to any representation, covenant or undertaking of the Company
contained in this Agreement which would impair the exemption of interest on the
Bonds from federal income taxation, except for any Bond for any period during
which such Bond is held by any person who is a "substantial user" of the
Project or a "related person" as defined in Section 103(b)(6) of the Code.
(d) During the term of this Agreement, the Company intends to
construct and Operate the Project consisting of land, buildings, fixtures and
equipment constituting a 50-bed psychiatric hospital which will provide
inpatient psychotherapy programs for adults and adolescents and treatment of
chemical dependency, including alcOholism on an inpatient basis, to be located
at 2216 South Van Buren Street in the City of Enid, Oklahoma.
(e) The proceeds of the Bonds will be used to defray the costs
incurred in Connection with the acquisition, construction and installation of
the Project.
(f) The Bonds are not one lot of multiple lots of obligations which
are being sold at substantially the same time, under a common plan of
marketing, at substantially the same
8
<PAGE> 13
rate of interest and for which there is a common or pooled security which will
be either used or available to pay debt service thereon.
(g) The aggregate amount of outstanding tax exempt industrial
development Bonds of which the Company is the beneficiary, including the Bonds,
does not exceed $40,000,000.
(h) No part of the Project reached a degree of completion which would
permit operation at substantially the level for which it was designed and was,
in fact, in operation at such level more than one (1) year prior to the date of
delivery of the Bonds.
(i) No part of the proceeds of the Bonds will be used to provide
facilities described in Section 103(b)(6)(J), 103(b)(6)(0) or 103(b)(18) of the
Code.
ARTICLE III
THE PROJECT
Section 3.01. Certificates and Permits.
The Oklahoma Health Planning Commission has issued Certificate of Need
No. 84-77 effective March 28, 1984, to the Company authorizing the construction
of the project. The Company shall obtain all permits necessary with respect to
the acquisition, construction improvement and operation of the Project, and the
Company covenants that the performance of this Agreement shall be subject to
the provisions of all applicable federal and State of Oklahoma laws and all
governmental regulations. The Company covenants and agrees that the Project
will be placed into service as soon as practicable.
Section 3.02. Acquisition and Construction.
(a) The Project shall be acquired, constructed and improved with all
reasonable dispatch, and the Company will diligently pursue such acquisition,
construction and improvement in order that it may be completed as soon as
practicable, delays incident to strikes, riots, acts of God or the public
enemy, or other causes beyond the reasonable control of the parties only
excepted; but if for any reason there should be delays in such acquisition,
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<PAGE> 14
construction and improvement, there shall be no diminution in or postponement
of the Loan Payments to be made by the Company hereunder, and no resulting
liability on the part of the Issuer.
(b) The Company shall acquire, construct and improve the Project or
cause the Project to be acquired, constructed and improved in the manner
provided in this Agreement. As permitted by the Act and this Agreement, the
Company has entered into and executed and will enter into and execute all
agreements and contracts necessary to assure and cause the acquisition,
construction and improvement of the Project (and the Issuer shall not execute
any such agreements or contracts other than this Agreement), and the Company
will carry out, pay, supervise and enforce all such agreements and contracts,
and will provide for such insurance on and in connection with the Project as it
deems necessary or advisable or as is required by law. No contract shall be
construed as creating any contractual relationship between the contractor and
the Issuer and nothing in this Agreement shall constitute any consent by the
Issuer, or otherwise confer on the Company, any right, power or authority of
the Company to contract for, or permit the performance of, any labor or
services or the furnishing of any materials or property in such fashion as
would permit the making of any claim against the Issuer. The Company shall
carry out its obligations under and enforce the terms of such contracts, and
the Company shall have the full benefit of all representations contained
therein and shall have the power and authority to take any actions necessary to
enforce the provisions of such contracts. In the event of default of any
contractor under any contract made by it in connection with the Project or in
the event of a breach of warranty with respect to any materials, workmanship or
performance guaranty, the Company may proceed, either separately or in
conjunction with others, to pursue such remedies against the contractor so in
default and against each surety, if any, for the performance of such contract
as it may deem advisable. Any amounts attributable to the Cost of Construction
of the Project recovered by way of direct damages, refunds, adjustments or
otherwise in connection with the foregoing prior to the completion of all the
Project, after payment of reasonable expenses, shall be paid into the
Construction Fund. Amounts recovered by way of direct or indirect consequential
damages suffered by the Company shall be paid to the Company.
(c) The Company shall pay the Cost of Construction of the Project to
the full tent provided in this Agreement. It is recognized that certain
agreements and contracts previously have been entered into or executed by the
Company with respect to the acquisition, construction and improvement of the
Project and that the Company may be reimbursed by the Issuer for any payments
made by the Company under such
10
<PAGE> 15
agreements and contracts, in the manner and from the sources provided above for
paying the Cost of Construction.
(d) The Issuer shall loan certain proceeds from the sale of the Bonds
to the Company to be used by the Company to pay all or part of the Cost of
Construction, in accordance with procedures to be established in the Indenture,
including provisions for reimbursing the Company for paying all or any part of
such Cost of Construction under agreements and contracts for the acquisition,
construction, equipping and furnishing of the Project. It is specifically
provided, however, that none of the proceeds from the sale of the Bonds will be
used to reimburse the Company for, or to pay (and the Company hereby covenants
and agrees not to request reimbursement of or payment for) any part of the Cost
of the Project if such use or payment would result in a violation of any of the
covenants contained in Section 5.05 or 5.06 hereof.
Section 3.03. Construction Fund.
The Indenture shall contain appropriate provisions with respect to a
Construction Fund, to be drawn on and administered as provided in the
Indenture.
ARTICLE IV
TITLE AND OPERATION
Section 4.01. Due Diligence.
The Company shall, with due diligence, cause the Project to be
acquired, constructed, improved and substantially completed and expects the
Project to be placed n service on or before March 31, 1986.
Section 4.02. Cost of the Project.
The Company represents and warrants that it will construct or cause
the Construction of the Project at a price which will permit completion of the
Project within the amount of the funds to be deposited in the Construction Fund
and other available funds. In the event the
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<PAGE> 16
moneys in the Construction Fund available for payment of the Costs of
Construction shall not be sufficient to pay such Costs of Construction in full,
the Company agrees to complete the acquisition, construction and improvement of
the Project and to pay all that portion of the Costs of Construction as may be
in excess of the moneys in the Construction Fund. The Issuer does not make any
warranty, either express or implied, that the moneys which will be paid into
the Construction Fund and which under the provisions of this Agreement, will be
available for payment of the Costs of Construction will be sufficient to pay
all the costs which will be incurred in that connection. The Company agrees
that if after exhaustion of the moneys in the Construction Fund the Company
should pay any portion of the Costs of Construction pursuant to the provisions
of this Section, it shall not be entitled to any reimbursement therefor from
the Issuer or from the Trustee, nor shall it be entitled to any postponement,
abatement or diminution of the amounts payable hereunder. The obligation of the
Company to complete the acquisition, construction and improvement of the
Project shall survive any termination of this Agreement.
Section 4.03. Compliance with Applicable Regulations.
The Company agrees that the Project shall be constructed strictly in
accordance with all applicable regulations, ordinances and statues, and in
accordance with the requirements of all regulatory authorities, and any rating
or inspection organization, bureau, association or office having jurisdiction,
and it will comply with all of the foregoing and all laws, regulations, orders
and other governmental requirements.
Section 4.04. Operation.
The Company shall pay all costs and expenses of operation and
maintenance of the Project, including all applicable taxes and the cost of
keeping the Project properly insured. It is understood and agreed that the
Issuer shall have no duties or responsibilities whatsoever with respect to the
operation or maintenance of the Project, or the performance of the Project, for
their designed purposes.
Section 4.05. Indemnities.
(a) The Company shall, and hereby agrees to, indemnify and save the
Issuer harmless against and from all claims, or any action or proceeding
brought thereon, by or on behalf of any person arising from the conduct or
management of, or from any work or thing done on,
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<PAGE> 17
the Project during the term of this Agreement and against and from all claims,
or any action or proceeding brought thereon, arising during the term of this
Agreement from:
(1) Any condition of the Project;
(2) Any breach or default on the part of the Company in the
performance of any of its obligations hereunder;
(3) Any act of negligence of the Company or of any of its agents,
contractors, servants, employees or licensees with respect to the Project; and
(4) Any act of negligence of any assignee of the Company, or of any
agents, Contractors, servants, employees or licensees of any assignee of the
Company with respect to the Project.
The Company shall indemnify and save the Issuer harmless from and against all
costs and expenses incurred in or in connection with any such claim arising as
aforesaid or in Connection with any action or proceeding brought thereon, and
upon notice from the Issuer, the Company shall defend it in any such action or
proceeding.
(b) Notwithstanding that it is the intention of the parties that the
Issuer shall not incur pecuniary liability by reason of the terms of this
Agreement, or the undertakings required of the Issuer hereunder, by reason of
the issuance of the Bonds, by reason of the performance of any act requested of
it by the Company, including all claims, liabilities or losses arising in
connection with the violation of any statutes or regulations pertaining to the
foregoing, nevertheless, if the Issuer should incur any such pecuniary
liability, then in such event the Company shall indemnify and hold harmless the
Issuer against all claims by or on behalf of any person, firm or corporation,
arising out of the same, and all costs and expenses incurred in connection with
any such claim or in connection with any action or proceeding brought thereon,
and upon notice from the Issuer, the Company shall defend it against any claim
described in subsection (a) of this Section, or any action or proceeding
brought thereon.
Section 4.06. Issuer's Limited Liability.
It is recognized that the Issuer's only source of funds with which to
carry out its commitments under this Agreement will be from the proceeds from
the sale of the Bonds or from any available income or earnings derived
therefrom, or from any funds which otherwise
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<PAGE> 18
might be made available by the Company; and it is expressly agreed that the
Issuer shall have no liability, obligation or responsibility with respect to
this Agreement or the Project, except to the extent of funds available from
such sources. If, for any reason, the proceeds from the sale of the Bonds are
not sufficient to pay all the costs of completing the acquisition, construction
and improvement of the Project, the Company shall complete the acquisition,
construction and improvement of the Project, and the Company shall pay such
additional costs from its own funds, but it shall not be entitled to
reimbursement therefor unless additional Bonds are issued for such purpose, or
to any diminution in or postponement of any payments required to be made by the
Company hereunder.
Section 4.07. Immunity of Officers and Employees of the Issuer.
No recourse shall be had for the enforcement of any obligation,
covenant, promise or agreement of the Issuer contained in this Agreement or the
Bonds, against any officer or employee, as such, in his or her individual
capacity, past, present or future, of the Issuer, either directly or through
the Issuer, whether by virtue of any constitutional provision, statute or rule
of law, or by the enforcement of any assessment or penalty or otherwise, it
being expressly agreed and understood that this Agreement and the Bonds are
solely corporate obligations, and that no personal liability whatsoever shall
attach to, or be incurred by, any officer or employee as such, past, present or
future, of the Issuer, either directly or by reason of any of the obligations,
covenants, promises, or agreements entered into between the Issuer and the
Trustee or the Company to be implied therefrom as being supplemental hereto or
thereto, and that all personal liability of that character against every such
officer and employee is, by the execution of this Agreement and the Bonds, and
as a condition of, and as a part of the consideration for, the execution of
this Agreement and the Bonds, expressly waived and released. The immunity of
officers and employees of the Issuer under the provisions contained in this
Section shall survive the Completion of the Project and the termination of this
Agreement.
Section 4.08. Intercreditor Agreement.
At or prior to the Closing Date, as security (during the period of the
existence of ny Letter of Credit issued by Security Pacific National Bank) for
the performance by the Company of its obligations under this Agreement during
the Variable Period, the Company shall execute the Intercreditor Agreement (as
defined in the Indenture).
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<PAGE> 19
Section 4.09. Use of the Project.
The Company covenants that no more than 25% of the proceeds of the
Bonds will be used to provide a facility the primary purpose of which is one of
the following: retail food and beverage services, automobile sales or service
or the provision of recreation or entertainment. The Company further covenants
that no part of the proceeds of the Bonds will be used to provide any of the
following and that no part of the Project will be used for any of the following
purposes or activities: any private or commercial golf course, country club,
massage parlor, tennis club, skating facility (including roller skating,
skateboard and/or ice skating), racquet sports facility (including any handball
or racquetball court), hot tub facility, suntan facility, racetrack, airplane,
skybox or other private luxury box, any health club facility, any facility used
primarily for gambling (unless the provisions of Section 63(f)(2)(C) of the Tax
Reform Act of 1984 are applicable) or any store the principal business of which
is the sale of alcoholic beverages for consumption off premises. Such services
and facilities referred to in this Section 4.09 shall have the same meaning as
defined in the Tax Equity and Fiscal Responsibility Act of 1982 and the Tax
Reform Act of 1984.
Section 4.10. Recording.
The Company shall notify the Trustee of each memorandum, financing
statement, continuation statement or any other instrument which the Trustee
shall cause to be filed, registered and recorded pursuant to Section 16.01 of
the Indenture.
Section 4.11. Insurance.
The Company shall cause the Project to be kept insured against fire
and other risks to the extent usually insured against by companies owning and
operating similar property, by reputable insurance companies, or, at the
Company's election, by means of self-insurance. All proceeds of such insurance
shall be for the account of the Company.
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ARTICLE V
THE BONDS
Section 5.01. Issuance of Bonds.
(a) In consideration of the covenants and agreements set forth in this
Agreement, and to enable the Issuer to issue the Bonds to carry out the intents
and purposes hereof, his Agreement is executed to assure the issuance of such
Bonds, and the Company hereby covenants and agrees to provide for and guarantee
the due and punctual payment ho the Issuer or to the Trustee or Paying
Agent/Registrar under the Indenture securing the bonds, of amounts not less
than those required to pay, when due, all of the principal of redemption
premium, if any, and interest on the Bonds, and all other payments required in
connection with such Bonds, the Bond Resolution and the Indenture, including
the payment of the fees and expenses of the Trustee, the Paying
Agent/Registrar, and any other paying agents for the Bonds. Each such payment
is hereby designated as a Loan Payment and collectively such payments are
hereby designated as "Loan payments". Such payments shall be made for the
benefit of the Bonds into the Debt Service Fund as provided in the Indenture.
The Company hereby expressly covenants and agrees and pursuant to the
Reimbursement Agreement has provided that during the Variable Period the
interest portion of the Loan Payments as provided by the Reimbursement
Agreement shall be made by the Credit Bank on the Company's behalf and not by
the Company. The Company hereby requests the Issuer to instruct the Trustee to
request of the Credit Bank that it make such interest portion of the Loan
Payments as provided by the Reimbursement Agreement.
(b) Simultaneously with the authorization of this Agreement by the
Issuer, the Issuer has adopted the Bond Resolution authorizing the issuance of
Bonds for the purpose of providing fund to pay the Cost of Construction of the
Project. Upon the request of the Company, and only upon its request, the Issuer
may, if in the Issuer's sole discretion it is deemed necessary and advisable,
authorize and use its best efforts to sell and deliver Additional Bonds, in one
or more series or issues in aggregate principal amounts sufficient to pay the
Cost of Construction of the Project, including the costs of issuance. It is
hereby agreed by the Company that the Bonds, when issued, sold and delivered as
provided in the Bond Resolution, will be issued in accordance with and in
compliance with the Indenture, notwithstanding any other provisions of this
Agreement or any other contract or agreement to
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<PAGE> 21
the contrary. Notwithstanding any provisions of this Agreement or any other
contract or agreement to the contrary, all covenants and provisions in the Bond
Resolution and Indenture shall become absolute, unconditional, valid and
binding covenants and obligations of the Company so long as the Bonds and
interest thereon are outstanding and unpaid. Particularly, the obligation of
the Company to make, promptly when due, all Loan Payments shall be absolute and
unconditional, and said obligation may be enforced as provided in the
Indenture, regardless of any other provisions of this Agreement or any other
contract or agreement to the contrary. It is further the intention of this
Agreement that the approval of the Company of the Bond Resolution and the
Indenture shall constitute and be the equivalent of the approval of the Bond
Resolution and the Indenture by the Company and its board of directors, and the
provisions of the Bond Resolution and the Indenture affecting the Company shall
constitute the absolute and unconditional obligations of, and be binding upon,
the Company with the effect described above.
(c) Recognizing that the Loan Payments will be used to pay when due
the principal of, redemption premium, if any, and interest on the Bonds, and
the fees and expenses of the Trustee, the Paying Agent/Registrar and any other
paying agent for the Bonds, it is agreed hereby that, if and when any Bonds are
delivered, the Company shall be absolutely and unconditionally obligated to
make and pay, or cause to be made and paid, each Loan and Payment regardless of
whether or not the Issuer or the Company actually acquires, constructs,
improves or completes the Project, or whether or not the Company actually
approves, purchases, receives, accepts or uses the Project; and such payments
shall not be subject to any abatement, setoff or counterclaim (subject only to
the provisions of Sections 7.01 and 7.02 hereof regarding merger, consolidation
and assignment); and the owners of the Bonds shall be entitled to rely on this
Agreement and representation, withstanding any provisions of this Agreement or
any other contract or agreement to the contrary and regardless of the validity
of, or the performance of, the remainder of this Agreement or any other
contract or agreement.
Section 5.02. Refunding of Bonds.
After the issuance of any Bonds, the Issuer shall not refund any of
the Bonds or change or modify the Bonds in any way, except as provided for in
the Indenture, without the prior written approval of the Company; nor shall the
Issuer redeem any Bonds prior to their scheduled maturities, or change or
modify the Indenture, without the prior written approval of the Company, unless
such redemption is required by the Indenture.
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Section 5.03. Redemption of Bonds.
The Issuer, upon the written request of the Company (and provided that
the affected Bonds are subject to redemption prior to maturity at the option of
the Issuer, or the Company and provided that such request is received in
sufficient time prior to the date upon which such redemption is proposed),
forthwith shall take or cause to be taken all action that may be necessary
under the applicable redemption provisions to effect such redemption prior to
maturity, to the full extent of funds either made available for such purpose by
the Company or already on deposit in the Debt Service Fund and available for
such purpose. The redemption of any Outstanding Bonds prior to maturity at any
time shall not relieve the Company of its absolute and unconditional obligation
to pay each remaining Loan Payment, with respect to any Outstanding Bonds, as
specified in the Indenture.
Section 5.04. Payment of Expenses.
Out of money from the proceeds from the sale and delivery of each
series or issue of Bonds, there shall be paid all of the Issuer's reasonable
actual out-of-pocket expenses and costs of issuance in connection with such
series of Bonds, including without limitation all financing, legal, financial,
advisory, printing and other expenses and costs of issuing the Bonds, plus an
amount of money equal to the compensation paid to any employees of the Issuer
for the time such employees have spent on activities relating to the issuance,
sale and delivery of the Bonds, and provided further that the Company shall pay
such aforementioned costs of issuance and taxes paid or incurred as a result of
the Issuer's observance, performance or enforcement of any term or condition
under the Bonds or related legal documents to the extent such costs and
expenses are not or cannot be paid or reimbursed from the proceeds of the
Bonds. The Company further agrees to pay the administrative expenses of the
Trustee under the Indenture directly to the Trustee, and the Trustee shall
receive and disburse such payments as provided in the Indenture. In the event
the Company should fail to pay any administrative expenses, the payment so in
default shall continue as an obligation of the Company until the amount in
default shall have been fully paid, and the Company agrees to pay the same with
interest thereon (to the extent legally enforceable) at a rate per annum equal
to the interest rate on the Bonds, until paid.
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Section 5.05. Tax-Exempt Status of Interest on the Bonds.
(a) It is intended by the Company that the interest on each of the
Bonds will be excludable from the gross income of the recipients thereof for
federal income tax purposes by reason of Section 103(a)(1) of the Code (except
for any period during which such Bonds are held by a person who is a
"substantial user" of the Project or a "related person within the meaning of
Section 103(b)(13) of the Code).
(b) The Issuer covenants that it shall, prior to the issuance of the
Bonds, duly elect the provisions of Section 103(b)(6)(D) of the Code apply to
such issue, and such election shall be made in accordance with the applicable
Regulations. The Company covenants that it shall furnish to the Issuer
whatever information is necessary for the Issuer to make any such election, and
the Company shall file with the Internal Revenue service such supplemental
statements and other information as are required by the applicable RegUlations
with respect to such capital expenditures made, paid or incurred appear on
behalf of the Company or any person related to the Company, within the meaning
of Section 103(b)(6)(C) of the Code, in the City of Enid, Oklahoma, and in any
other political jurisdiction contiguous thereto with respect to any facilities
contiguous to integrated with any facilities in the City of Enid, Oklahoma
within the meaning of sections 1.103-10(b)(2)(ii)(e) and 1.103-10(d)(2)(i) of
the Regulations (collectively, the "Project Area").
(c) The Company hereby covenants that (i) substantially all of the
proceeds (within the meaning of Section 103(b)(6) of the Code) from the sale of
the Bonds will be used and expended for amounts paid or incurred after March
15, 1985 (the "Inducement Date") for the acquisition construction,
reconstruction or improvement of land or property of a character subject to the
allowance for depreciation under Section 167 of the Code, and (ii) except as
otherwise set forth in a certificate or statement furnished to the Issuer and
Bond counsel prior to the issuance of Bonds, the acquisition, construction,
reconstruction or improvement of the Project did not begin before the
Inducement Date, nor was any work performed or any costs paid or incurred by
the Company or any other entity in connection with such acquisition,
construction, reconstruction or improvement before the Inducement Date.
(d) The Company represents (i) that all of the proceeds of the Bonds
are to be used with respect to the Project, which will be located wholly within
the incorporated area of the City of Enid, Oklahoma; (ii) that, except for any
person related to the Company within the meaning of Section 103(b)(6)(C) of the
Code, the Company will be the only principal user of
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the Project within the meaning of Section 103(b)(6) of the Code; and (iii)
that, except for the Bonds, there will not be outstanding on the date of
delivery of the Bonds any obligations of any state, territory or possession of
the United States or any political subdivision of the foregoing or of the
District of Columbia constituting "exempt small issues" within the meaning of
Section 1.103-10 of the Regulations, the proceeds of which have been or are to
be used primarily with respect to facilities located in the City of Enid,
Oklahoma or in any contiguous political jurisdiction with respect to any
contiguous or integrated facilities, and which are to be used principally by
the Company (including any person related to the Company within the meaning of
Section 103(b)(6)(C) of the Code.
(e) The Company further covenants and represents that it has not made,
paid or incurred and will not make, pay or incur any capital expenditures which
would cause the interest on the Bonds to become subject to federal income taxes
pursuant to the provisions of Section 103(b) of the Code. The Company further
covenants that it has not taken any action or permitted any action to be taken
and that it will not take any action or permit any action to be taken, which
would result in a Taxable Event, as hereinafter or defined, and that the
Company has not failed to take and will not fail to take any action required to
prevent the occurrence of such Taxable Event.
(f) The Company acknowledges that the capital expenditures referred to
in the preceding paragraphs include all capital expenditures within the Project
Area and all capital expenditures incurred elsewhere relating to the Project,
including, without limitation, research and development costs, which may, under
any rule or election under the code, be treated as a capital expenditure
(whether or not such expenditure is so treated).
(g) The Company further covenants that it shall furnish to the Issuer
and Bond counsel prior to the issuance of the Bonds, a certificate or statement
of the aggregate Amount of capital expenditures (other than those to be
financed from the proceeds of the Bonds) made, paid or incurred in the Project
Area or made, paid or incurred elsewhere with respect to the Project ("Included
Capital Expenditures") during the period beginning three years before the date
of delivery of such issue. The Company covenants that it will furnish to the
Trustee (i) a copy of supplemental statements required to be filed with the
Internal Revenue Service by Section 1.103-10 of the Regulations listing by date
and amount any Included Capital Expenditures (other than those mentioned in
Section 103(b)(6)(F) of the Code) during the three-year period beginning as of
the date of issuance of the Bonds, including all such Included Capital
Expenditures not listed on the capital expenditures certificate filed with the
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Internal Revenue Service prior to the issuance of the bonds, and (ii) within 30
days after it has made, paid or incurred the maximum amount of capital
expenditures permitted under Section 103(b)(6)(D) of the Code, a statement to
that effect. Such supplemental statements shall be filed with the District
Director of the Internal Revenue Service or the director of the regional
service center of the Internal Revenue Service with whom the Company's federal
income tax return is required to be filed on the due date prescribed for filing
such return (without regard to any extensions of time). Each such supplemental
statement shall set forth a description of those capital expenditures which are
capital expenditures under Section 103(b)(6)(D)(ii) of the Code and shall take
into account facilities referred to in Section 103(b)(6)(E) of the Code in
computing such capital expenditures. This covenant shall survive the
termination of this Agreement.
(h) The Company covenants that less than 25% of the proceeds of the
bonds will be used (directly or indirectly) for the acquisition of land (or an
interest therein) and that no portion of the proceeds will be used (directly or
indirectly) for the acquisition of land (or an interest therein) to be used for
farming purposes.
(i) The Company covenants that no portion of the proceeds of the Bonds
is to be used for the acquisition of any building and the equipment therefor
(or an interest therein) unless (i) the first use of such property is pursuant
to such acquisition, or (ii) the rehabilitation expenditures (within the
meaning of Section 103(b)(17)(C) of the Code) with respect to such building
equal or exceed 15% of the portion of the cost of acquiring such building (and
equipment) financed with the proceeds of the Bonds and said rehabilitation
expenditures are incurred within two years after the later of (A) the date on
which said property was acquired or (B) the date of delivery of the Bonds to
the initial purchasers thereof.
(j) The Company covenants that no portion of the proceeds of the Bonds
is to be used for the acquisition of any property not described in subsection
(i) above, unless (i) the first use of such property is pursuant to such
acquisition, or (ii) the rehabilitation expenditures (within the meaning of
Section 103(b)(17)(C) of the Code) with respect to such property equal or
exceed 100% of the portion of the cost of acquiring such property financed with
the proceeds of the Bonds and said rehabilitation expenditures are incurred
within two years after the later of (A) the date on which said property was
acquired or (B) the date of delivery of the Bonds to the initial purchasers
thereof.
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(k) The Company will not, for a period of three years from the later
of (i) the date project is placed in service or (ii) the date of delivery of
the Bonds to the initial purchasers thereof enter into any lease or rental of
more than 10% of the Project by square footage or value, unless it shall first
have furnished to the Trustee a statement in writing of such prospective lessee
or renter listing the outstanding "industrial development bonds" within the
meaning of the Code which must be allocated to such lessee or renter under the
provisions of Section 103(b)(15) of the Code, along with a statement of such
prospective lessee or renter that the existence of such bonds (if any) will not
cause the Bonds to lose their tax exemption.
(l) The aggregate amount of outstanding tax exempt industrial
development bonds of which the Company is the beneficiary, including the Bonds,
does not exceed the sum of $40,000,000.
(m) Neither the Company nor any "related person", within the meaning
of the Code and the applicable Treasury Regulations thereunder (the
"Regulations"), is an owner or "principal user", within the meaning of the Code
or the Regulations, of facilities which were financed with any issue of
industrial development bonds within the meaning of action 103(b) of the Code.
(n) As used herein, a "Taxable Event" shall mean:
(1) The application of the proceeds of the Bonds in such
manner that the Bonds become "arbitrage bonds" within the meaning of Section
103(c) of the Code, with the result that interest on the Bonds is or becomes
includable in the gross income of any Bondholder; or
(2) The application of the proceeds of the Bonds in such
manner, or the occurrence or non-occurrence of any event, with the result that,
under the Code and the Regulations, the interest on the Bonds is or becomes
includable in the gross income of any Bondholder (other than a Bondholder who
is a "substantial user" or a "related person" within the meaning of Section
103(b) of the Code); or
(3) The violation by the Company of a representation or
covenants contained in this Agreement with the result that, under the Code and
the Regulations, the interest on the Bonds is or becomes includable in the
gross income of any Bondholder (other than a
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Bondholder who is a "substantial user" or a "related person" within the meaning
of Section 103(b) of the Code).
Section 5.06. No Arbitrage.
The Issuer and the Company, as applicable, shall not take any action,
or approve the Trustee's or the Paying Agent/Registrar's making any investment
or use of the proceeds of any Bonds or taking any other action which would
cause any Bonds to be "arbitrage bonds" within the meaning of Section 103(c) of
the Code. Neither the Issuer nor the Company, barring unforeseen circumstances,
shall request or approve the use of the proceeds from the sale of any Bonds
otherwise than in accordance with the "Issuer's General Certificate" and the
"No-Arbitrage Certificate" given concurrently with the issuance and delivery of
the Bonds.
ARTICLE VI
COVENANTS AND REMEDIES
Section 6.01. Covenant to Pay Loan Payments, Administrative Fee, Costs
and Expenses.
The Company absolutely and unconditionally agrees and covenants with
the Issuer, Trustee and the Paying Agent/Registrar, regardless of and
notwithstanding any the provisions of this Agreement, other than Sections 7.01
and 7.02 hereof relating to merger, consolidation and transfer of assets, and
assignment, and regardless of the provisions of any other agreement or contract
to the contrary, that it will pay, or cause to be paid, when due, each Loan
Payment required and prescribed to be paid by it pursuant to the Indenture. The
Company further absolutely and unconditionally agrees and Covenants to pay (a)
directly to the Issuer, annually, beginning on the date of issuance of the
Bonds and thereafter on the anniversary date of the issuance of the Bonds the
sum of one-eighth of one percent (1/8 of 1%) of the outstanding principal
amount of the bonds as an administrative fee; (b) directly to the Issuer, upon
receipt of a statement therefor, the amount required to pay Company's
proportionate share of the costs of the annual audit required of the Issuer
under the Act; and (c) all reasonable expenses and charges (including court
costs and attorneys' fees) paid or incurred by the Issuer, the Trustee and the
Paying Agent/Registrar in realizing upon any of
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the said payments to be made by the Company or in enforcing the provisions of
this Agreement or the Indenture.
Section 6.02. Assignment of Payments to Trustee.
The Company is advised and recognizes that the Issuer hereby assigns
its rights to the Loan Payments required to be made pursuant to this Agreement,
and the right to receive and collect same, to the Trustee under the Indenture
securing the Bonds. It is further understood that pursuant to the Indenture the
Trustee shall (among other things) act on behalf of the Issuer and the owners
of the Bonds as custodian of the Debt Service Fund, and Loan Payments made for
deposit into the Debt Service Fund pursuant to the Indenture may be made
directly to the Trustee, or the Paying Agent/Registrar if so instructed by the
Trustee. All rights against the Company existing under this Agreement or the
Indenture may be enforced by the Issuer; or, to the extent provided in the
Indenture the Trustee or the Bondholders shall be entitled to bring any suit,
action or proceeding against the Company for the enforcement of this Agreement
or the Indenture, and it shall not be necessary in any such suit, action or
proceeding to make the Issuer a party thereof.
Section 6.03. General Provisions.
(a) The terms of this Agreement may be enforced as to one or more
breaches either separately or cumulatively.
(b) No remedy conferred upon or reserved to the Issuer, any Trustee or
Paying Agent/Registrar or the Bondholders in this Agreement is intended to be
exclusive of any other available remedy or remedies, but each and every such
remedy shall be cumulative and shall be in addition to every other remedy now
or hereafter existing at law or in equity or by statute. No delay or omission
to exercise any right or power accruing upon any default, omission or failure
of performance hereunder shall impair any such right or power or shall be
construed to be a waiver thereof, but any such right and power may be exercised
from time to time and as often as may be deemed expedient. In the event any
provision contained in this Agreement should be breached by the Company and
thereafter duly waived, such waiver shall be limited to the particular breach
so waived and shall not be deemed to waive any other breach of this Agreement.
No waiver by either party of any breach by the other party of any of the
provisions of this Agreement shall be construed as a waiver of any subsequent
breach, whether of the same or of different provisions of this Agreement.
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(c) Headings of the Article and the Sections of this Agreement have
been inserted for convenience of reference only and in no way shall they affect
the interpretation of any of the provisions of this Agreement.
(d) This Agreement is made for the exclusive benefit of the Issuer,
the Trustee, the Paying Agent/Registrar the owners of the Bonds and the
Company, and their respective successors and assigns herein permitted, and not
for any other third party or parties; and nothing in this Agreement, expressed
or implied, is intended to confer upon any party or parties other than the
Issuer, the Trustee, the Paying Agent/Registrar, the owners of the Bonds and
the Company, and their respective successors and assigns herein permitted, any
rights or remedies under or by reason of this Agreement.
(e) The validity, interpretations and performance of this Agreement
shall be overnight by the laws of the State of Oklahoma. This Agreement is made
and is to be performed in Garfield County, Oklahoma and it is the intention of
the parties hereto that venue for all actions brought under this Agreement
shall be in said County.
Section 6.04. Amendment of Agreement.
No amendment, change, addition to, or waiver of any of the provisions
of this Agreement shall be binding upon the parties hereto unless in writing
signed by the Company Representative and the Chairman or Vice Chairman of the
Board; provided, however, that the written consent of the Trustee, and during
the Variable Period the Credit Bank, to any such amendment, change, addition or
waiver must be obtained before the same becomes effective. In addition to
amendments for any other purpose, it is specifically understood that this
Agreement may be amended, if deemed necessary or advisable by the Company and
the Issuer, to change the definition and scope of the term "Project", as used
herein, so as to permit the Company to acquire and construct or improve, or
cause to be acquired and constructed or improved, additional hospital health
facilities pursuant to this Agreement and in accordance with applicable laws,
with the same effect as if they had been described originally in Exhibit A.
Notwithstanding any of the foregoing, it is covenanted and agreed, for the
benefit of the owners of the Bonds and any Trustee or Paying Agent/Registrar,
that the provisions of this Agreement shall not be amended, changed, added to,
or waived in any way which would relieve or abrogate the obligations of the
Company to make or pay, or cause to be made or paid, when due, all Loan
Payments with respect to any then Outstanding Bonds which have been issued and
delivered pursuant to this Agreement, in the manner and
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under the terms and conditions provided herein, in the Bond Resolution or the
Indenture, or which would change or affect Section 5.05, 5.06, 6.01, 7.01 or
7.02 hereof, unless approved by each owner of the Bonds affected by such
amendment, change, addition or waiver. Notice of any amendment, change,
addition to or waiver to this Agreement or any provisions hereof shall be given
to the Trustee and the Paying Agent/Registrar by the Company.
ARTICLE VII
SPECIAL COVENANTS
Section 7.01. Company to Maintain its Corporate Existence; Conditions
Under Which Exceptions Permitted.
The Company agrees that during the term of this Agreement it will
maintain its Corporate existence, will not dissolve or otherwise dispose of all
or substantially all of its assets and will not consolidate with or merge into
another corporation or permit one or ore Other corporations to consolidate with
or merge into it; provided that the Company may, without violating the
agreement contained in this Section, consolidate with or merge into another
domestic corporation (i.e., a corporation incorporated and existing under the
laws of one of the states of the United States of America or under the laws of
the United States of America), or permit one or more such domestic corporations
to consolidate with or merge into it, or sell or otherwise transfer to another
such domestic Corporation all or substantially all of its assets as an entirety
and thereafter dissolve, if the surviving, resulting or transfer entity; (i) is
authorized to transact business in the State of Oklahoma, (ii) shall have,
immediately after such transaction, a consolidated net worth at least equal to
90% of the net worth of the Company immediately prior to such transaction, with
net worth being determined in accordance with generally accepted accounting
principles, and (iii) shall have, concurrently with such transaction (unless
the entity is the Company), irrevocably and unconditionally assumed, in an
instrument delivered to the Issuer, the Trustee and the Paying Agent/Registrar,
the due and prompt performance of all of the obligations of the Company under
this Agreement. If any consolidation, merger, or sale or other transfer is
made as provided in this Section, the provisions of this Section shall continue
in full force and effect and no further consolidation merger or sale or other
transfer shall be made except in compliance with the provisions of this
Section.
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Section 7.02. Assignment.
The Company shall not assign its interest in this Agreement or any of
its rights or obligations hereunder except as specifically provided in this
Agreement. The Company may assign its interest in this Agreement to another
party, provided that the Company, under the terms of any such assignment, shall
remain and be primarily responsible and liable for all of its obligations
hereunder, including particularly the making of all payments required
hereunder, when due. As permitted in Section 7.01, the Company may assign its
interest in this Agreement to another party in connection with a merger or
consolidation of the Company, or in connection with the transfer of all or
substantially all of its assets, and such successor or transferee shall succeed
to and be substituted for it under this Agreement with the same effect as if
such successor or transferee had been named as a party herein. However, no such
assignment or transfer shall be effective unless the surviving corporation,
successor corporation or transferee of such assets shall have irrevocably and
unconditionally assumed, in an instrument delivered to the Issuer, the Trustee
and the Paying Agent/Registrar, the due and prompt performance of the
obligations of the assignor or transferor under this Agreement.
Section 7.03. Financial Reports.
The Company agrees to provide, or in lieu thereof to have Healthcare
Services of America, Inc. provide, an annual audit made by its regular
independent certified public accountants and within 120 days after the end of
each fiscal year shall furnish the Issuer and the Trustee either a copy of the
audit report or a copy of the annual report to shareholders of the Company or
of Healthcare Services of America, Inc., as the case may be, if such annual
report shall contain financial statements in substantially similar detail.
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ARTICLE VIII
ADDITIONAL SECURITY
Section 8.01. Letter of Credit.
(a) Prior to the initial delivery of any series of Bonds to the
purchasers thereof, the Company shall secure and deliver to the Trustee, for
the benefit of the owners of the Bonds, an irrevocable Letter of Credit of the
Credit Bank the terms of which shall allow the Trustee to comply with its
obligations under Article XI and XII of the Indenture and which shall be in an
amount at any date not less than the total of (i) the sum of the principal
amount of the Bonds Outstanding and (ii) interest to accrue on such Bonds at a
Presumed rate of 14% per annum for a 110-day period as required by this
Agreement and the Indenture. The Letter of Credit shall be in the original
aggregate amount of $3,751,891. After the initial delivery of the Letter of
Credit, and at all times thereafter during the Variable Period, while any of
the Bonds are Outstanding, the Company shall Continuously secure the Bonds by
either extensions of the initial Letter of Credit or by the securing and
delivery of any successive Letter of Credit (a "Substitute Letter of Credit").
(b) Any Substitute Letter of Credit shall contain substantially the
same provisions other than a reduction of commitment provisions) as the initial
Letter of Credit and must, at a minimum, meet the following criteria:
(1) The Credit Bank must be a national banking association
organized under the National Bank Act or a bank organized under the
laws of one of the states of the United States of America or the
Trustee must have received an opinion of counsel satisfactory to the
Trustee that no registration of such Letter of Credit is required by
the federal securities laws.
(2) The Trustee must have received a written statement signed
by an officer of the rating agency which rated the Bonds to the effect
that the rating of the Bonds will not be adversely affected by the
replacement of the initial Letter of Credit with the Substitute Letter
of Credit.
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(3) The Letter of Credit must be in an amount, in the opinion
of the Trustee, at any date not less than the amount required by the
first paragraph of this Section 8.01.
(c) The initial Letter of Credit secured and delivered under this
Section shall be for a term which expires on December 31, 1987. Upon receipt of
a reissued or Substitute Letter of Credit, the Trustee shall cancel and return
the preceding Letter of Credit to the Credit Bank. If, for any reason, the
Credit Bank shall be unwilling or unable to maintain the Letter of Credit, the
Company shall provide to the Trustee within 15 Business Days of receiving
notice of the termination or repudiation of the Letter of Credit a Substitute
Letter of Credit issued by another bank meeting all of the requirements of
Section 8.01 of this Agreement.
(d) Each Letter of Credit secured and delivered to the Trustee
pursuant to this Section must be accompanied by an opinion of counsel to the
Credit Bank or counsel to the Company or, with respect to subsection (4), an
opinion of counsel nationally recognized in bankruptcy law and related matters,
and addressed to the Trustee to the effect that:
(1) The Letter of Credit is a legal, valid and binding
obligation of the Credit Bank, except as limited by bankruptcy,
insolvency, reorganization, moratorium and Other laws relating to, or
affecting generally, the enforcement of creditors' rights and remedies
against national banking associations, as the same may be applied in
the event of the bankruptcy, insolvency, reorganization or similar
situation of the Credit Bank or a moratorium applicable to the Credit
Bank;
(2) The Credit Bank is duly organized and existing under the
National Bank Act or the laws of one of the states of the United
States of America or that no registration of such Letter of Credit is
required by the federal securities laws;
(3) The Letter of Credit qualifies as an obligation which the
Credit Bank is permitted to issue under the National Bank Act or under
applicable state law in the event of a state chartered Credit Bank;
(4) Payments made by the Credit Bank to the Trustee on behalf
of the bondholders on account of the Credit Bank's obligations under
the Letter of Credit will not be recoverable from the Bondholders by
the Company or its trustee as voidable preferences under Section
547(b) of the Bankruptcy Reform Act of 1978 (11
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U.S.C. Section 101 et seq.) or any successor provisions (the
"Bankruptcy Act") in the event of the commencement of a proceeding by
or against the Company under the Bankruptcy Act.
(e) The Company shall notify the Trustee in writing at least 180 days
prior to the expiration of an existing Letter of Credit whether or not the
Credit Bank intends to extend such Letter of Credit or whether a binding
obligation to secure a Substitute Letter of Credit has been entered into.
(f) The Company, the Trustee and the Credit Bank, with the written
consent of the Issuer, may, without the consent of the Bondholders, amend,
change or modify the Letter of Credit to cure any ambiguity, formal defect,
inconsistency or minor omission.
Section 8.02. Other Agreements.
At the direction of the Company, certain provisions relating to the
Reimbursement Agreement and the Remarketing Agreement and the rights, duties
and obligations relating thereto shall be set forth in the Bond Resolution, the
Indenture and the Bonds or attached thereto as appropriate.
ARTICLE IX
TERMINATION; NOTICES; SEVERABILITY
Section 9.01. Term of Agreement.
The term of this Agreement shall be from the date hereof until the
date all payments required to be made by the Company pursuant hereto shall have
been made or the date on which the Bonds shall have been paid in full;
provided, however, that the provisions of Sections 4.05, 5.04, 5.05, 5.06 and
7.01 shall survive the termination of this Agreement and shall continue in
effect regardless of the termination of this Agreement, but in no event shall
the Agreement remain in force for more than 50 years.
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Section 9.02. Termination of Agreement.
This Agreement may be terminated by mutual agreement at any time prior
to the delivery of and payment for any Bonds. However, if any Bonds have been
issued and delivered, the term of this Agreement shall be as set forth in
Section 9.01, and this Agreement may not and shall not be sooner terminated by
either or both parties hereto.
Section 9.03. Notices.
(a) Any notice, request or other communication under this Agreement
shall be given in writing and shall be deemed to have been given by either
party to the other party upon either of the following dates:
(1) Three days after the date of the mailing thereof, as shown
by the post office receipt if mailed to the other party hereto by
registered mail at the applicable address as follows:
(A) If to the Issuer, to The Enid Development
Authority (Attention: Chairman), P.O. Box 855, Enid, Oklahoma
73702;
(B) If to the Company, c/o Healthcare Services of
America, Inc. (Attention: Executive Vice President Chief
Financial Officer), 2000 Southbridge Parkway, Suite 200
Birmingham, Alabama 35209-1303;
(C) If to the Trustee, to Central National Bank and
Trust Company of Enid, 324 W. Broadway, Enid, Oklahoma, 73702,
Attention: Corporate Trust Department;
(D) If to the Paying Agent/Registrar to BankAmerica
Trust Company of New York (Attention: Corporate Trust
Department), 40 Broad Street, New York, New York 10004;
or the latest address specified by such other party in writing; or
(2) The date of the receipt thereof by such other party if not
so mailed by registered mail.
31
<PAGE> 36
(b) Any notice required to be given hereunder shall also be given to
the Credit Bank at the following address or at such later address specified in
writing by the Credit Bank, Security Pacific National Bank (Attention: Lucy
Johnson, Vice President, H32-4), Security Pacific Plaza, 333 South Hope Street,
Los Angeles. California 90071.
Section 9.04. Severability.
If any clause, provisions or section of this Agreement should be held
illegal or invalid by any court, the invalidity of such clause, provisions or
action shall not affect any other remaining clauses, provisions or sections
hereof and this Agreement shall be construed and enforced as if such illegal ar
invalid clause, provisions or Section had not been contained herein. In cage
any agreement or obligation contained in this Agreement should be held to be in
violation of law, then such agreement or obligation shall be deemed to be the
agreement or obligation of the Company or the issuer, as the case may be, to
the full extent permitted by law.
32
<PAGE> 37
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed in multiple counterparts, each of which shall be considered an
original for ail purposes as of the date and year first set out above.
THE ENID DEVELOPMENT AUTHORITY
HSA OF OKLAHOMA, INC.
33
<PAGE> 38
EXHIBIT A
DESCRIPTION OF THE PROJECT
The Project consists of land, buildings, fixtures and equipment
constituting a 50-bed psychiatric hospital which will provide inpatient
psychotherapy programs for adults nd adolescents and treatment of chemical
dependency, including alcoholism, on an patient basis, to be located at 2216
South Van Buren Street in the City of Enid, Oklahoma.
34
<PAGE> 1
EXHIBIT 10.81
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 2nd day of October, 1993 by and
between RAMSAY HEALTH CARE, INC., a Delaware corporation (the "Company"), and
REYNOLD JENNINGS (the "Employee").
W I T N E S S E T H :
WHEREAS, the Company wishes to retain the services of the
Employee, and the Employee wishes to serve in the employ of the Company, upon
the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements hereinafter set forth, the parties hereto hereby agree as
follows:
1. Employment.
1.1 The Company agrees to employ the Employee, and the
Employee agrees to serve in the employ of the Company, for the term set forth
in Section 1.2, in the position and with the responsibilities, duties and
authority set forth in Section 2 and on the other terms and conditions set
forth in this Agreement.
1.2 The term of the Employee's employment under this
Agreement (the "term of this Agreement") shall commence on such date (the
"Commencement Date") not later than November 17, 1993 as shall be agreed upon
by the Employee and the Company, and shall terminate on the third anniversary
of the Commencement Date, unless sooner terminated in accordance with this
Agreement.
2. Position; Duties.
2.1 During the term of this Agreement, the Employee shall
serve in the position of Executive Vice President and Chief Operating Officer
of the Company. The Employee shall perform, faithfully and diligently, such
duties, and shall have such responsibilities, appropriate to such positions, as
shall be assigned to him from time to time by the Chief Executive Officer of
the Company or the Board of Directors of the Company. The Employee shall
report directly to the Chief Executive Officer of the Company. The Employee
shall devote his complete and undivided attention to the performance of his
duties and
<PAGE> 2
2
responsibilities hereunder during the normal working hours of executive
employees of the Company.
2.2 The Employee covenants and agrees that during the
term of this Agreement he will not render professional services of any type
for, to or on behalf of any other individual, firm or corporation (other than
an educational or charitable entity) and will not engage, directly or
indirectly, in any activity competitive with the Company's business, whether
alone or as a partner, officer, director, employee, agent, consultant,
shareholder, trustee, fiduciary or other representative of any other
individual, firm or corporation, without the express prior written consent of
the Company.
2.3 The Employee shall relocate to New Orleans, Louisiana
not later than August 1, 1994.
3. Salary; Bonus; Signing Bonus; Stock Options.
3.1 During the term of this Agreement, in consideration
of the performance by the Employee of the services set forth in Section 2 and
his observance of the other covenants set forth herein, the Company shall pay
the Employee, and the Employee shall accept, a base salary at the rate of
$225,000 per annum, payable in accordance with the standard payroll practices
of the Company.
3.2 (a) In addition to the base salary provided for in
Section 3.1, the Company shall pay to the Employee with respect to each fiscal
year of the Company (or portion thereof in the case of the fiscal years of the
Company in which the Employee's employment with the Company shall begin and
shall terminate) during the term of this Agreement, subject to the provisions
of Section 3.2(c) hereof, a bonus in an amount equal to two percent (2%) of any
increase in "operating income" (as hereinafter defined) for such fiscal year
(or for such portion thereof) over the corresponding operating income for the
preceding fiscal year (or for such corresponding portion thereof).
(b) For purposes of this Section 3.2, "operating income"
shall mean income from operations (calculated in accordance with generally
accepted accounting principles), but excluding (i) income from any operations
over which the Employee has no administrative control; (ii) the amount of the
bonus determined in accordance with this Section 3.2; and (iii) any material
accounting adjustments relating to the period prior to June 30, 1993. The
foregoing shall be calculated on a "same store" basis.
<PAGE> 3
3
(c) In the event of the termination of the employment of
the Employee pursuant to Section 6.3 (Due Cause) or Section 6.5 (Termination by
Employee) of this Agreement, the Employee shall not be entitled to a bonus for
the fiscal year of the Company in which such termination takes place. The
Employee shall not be entitled to a bonus for any fiscal year of the Company
subsequent to the fiscal year in which the termination of his employment takes
place.
(d) In addition to the bonus provided for in Section
3.2(a), the Company shall each year during the term of this Agreement pay the
Employee an additional bonus in such amount as shall be determined by the Board
of Directors of the Company, which bonus may be based in part on additional
activities of the Employee and quality matters.
3.3 The Company shall pay the Employee a signing bonus in
the amount of $25,000 on the first anniversary of the Commencement Date,
provided that the Employee is employed by the Company on such first anniversary
date.
3.4 As of the date of the first meeting of the Company's
Compensation and Conflict of Interest Committee (the "Grant Date") following
the Commencement Date, the Company shall grant to the Employee options (the
"Options") to purchase 100,000 shares of the Company's common stock, par value
$.01 per share ("Common Stock"), under and subject to the terms of the
Company's 1991 Stock Option Plan (the "Option Plan") at an exercise price per
share equal to the market value of the Common Stock on the Grant Date. The
Options shall be exercisable as of the Grant Date as to 25% of the shares
covered thereby and shall become exercisable as to an additional 25% of such
shares on each of the first three anniversaries of the Grant Date.
4. Expense Reimbursement. During the term of this
Agreement, the Company shall reimburse the Employee for all reasonable and
necessary out-of-pocket expenses incurred by him in connection with the
performance of his duties hereunder, upon the presentation of proper accounts
therefor in accordance with the Company's policies.
5. Benefits.
5.1 Benefit Plans. During the term of this Agreement,
the Employee will be eligible to participate in all employee benefit plans and
programs of the Company, including, without limitation, group life insurance,
disability, 401(k), group hospitalization, surgical and major medical insurance
plans of the Company, in accordance
<PAGE> 4
4
with the provisions of such plans and programs as in effect from time to time.
5.2 Vacation and Sick Days. The Employee shall be
entitled to four weeks' paid vacation and to paid sick days, all in accordance
with Company policies in effect from time to time for its executive employees.
5.3 Relocation Allowance. The Company shall pay or
reimburse the Employee for reasonable moving expenses incurred by the Employee
in moving from Dallas, Texas to New Orleans, Louisiana (including costs of
temporary housing as approved by the Chief Executive Officer of the Company),
subject to the presentation of proper accounts therefor in accordance with the
Company's policies.
5.4 Automobile. During the term of this Agreement, the
Company shall provide the Employee with an automobile and the Company shall pay
or reimburse the Employee for the costs associated with insuring, operating and
maintaining such automobile.
5.5 Split Dollar Life Insurance. In addition to any
other insurance which may now or hereafter be provided by the Company on the
life of the Employee under any group contract or otherwise, the Company shall,
during the term of this Agreement, pay premiums of up to $100,000 per year
($300,000 in the aggregate) for a split-dollar life insurance policy on the
life of the Employee. Premiums shall be payable by the Company at a rate not
greater than $50,000 semi-annually. Such policy shall be owned by the Employee
or by a trust for the benefit of the Employee or members of the immediate
family of the Employee, and shall be obtained promptly following the
Commencement Date. The aggregate amount of premiums paid by the Company shall
constitute indebtedness of the Employee to the Company (i) to be repaid by the
Employee not later than upon the first to occur of (A) the date of termination
of his employment with the Company or (B) the fifth anniversary of the
Commencement Date and (ii) to be secured by (A) the death benefit or cash value
of such policy as hereinafter set forth, (B) any bonus payable to the Employee
pursuant to Section 3.2 hereof and (C) any amount payable to the Employee
pursuant to Section 6.4 hereof. The Employee or the trust, as the case may be,
will execute and deliver to the Company a collateral assignment of the policy
on a form approved by the insurance company issuing such policy. The Company
will be entitled to satisfy the indebtedness owed to it (A) when and to the
extent that the policy is surrendered or the proceeds thereof are paid at death
and the Company
<PAGE> 5
5
shall release the collateral assignment pro tanto upon such satisfaction or (B)
at any time by offset against any bonus payable to the Employee pursuant to
Section 3.2 and (C) at any time by offset against any amount payable to the
Employee pursuant to Section 6.4 hereof.
The Employee agrees that (i) upon his death, the portion of
such death benefit equal to the aggregate amount of premiums paid by the
Company prior to his death shall be paid to the Company; (ii) neither the
Company, the Employee nor the trust shall terminate or surrender the policy or
any part thereof or withdraw from or be loaned any part of the cash value of
such policy prior to the Company's receipt of payment of the aggregate amount
of premiums paid by the Company for such policy; (iii) neither the Employee nor
the trust shall transfer legal or beneficial ownership of the policy or use the
policy as security for any loan; (iv) he shall, to the extent possible, take
such action as is necessary to cause: (a) the terms of the policy to satisfy
the requirements of this Section 5.5, (b) the issuer of the policy to pay the
amounts in the manner described above, and (c) the trust to satisfy and be
bound by the provisions of this Section 5.5.
The Company and the Employee shall enter into a Split Dollar
Agreement embodying the foregoing terms and other standard terms and
conditions.
6. Termination of Employment.
6.1 Death. In the event of the death of the Employee
during the term of this Agreement, the Company shall pay to the estate or other
legal representative of the Employee (a) the base salary provided for in
Section 3 accrued to the date of death and not theretofore paid to the Employee
and (b) any bonus payable pursuant to Section 3.2. Rights and benefits of the
estate or other legal representative of the Employee under the benefit plans
and programs of the Company shall be determined in accordance with the
provisions of such plans and programs. Neither the estate or other legal
representative of the Employee nor the Company shall have any further rights or
obligations under this Agreement, except as provided in Section 5.5.
6.2 Disability. If, during the term of this Agreement,
the Employee shall become incapacitated by reason of sickness, accident or
other physical or mental disability and shall be unable to perform his normal
duties hereunder for a cumulative period of three (3) months in any period of
six (6) consecutive months, the employment of the
<PAGE> 6
6
Employee hereunder may be terminated by the Company or the Employee. In the
event of such termination, the Company shall (a) pay to the Employee any bonus
payable pursuant to Section 3.2 and (b) continue to pay to the Employee the
base salary provided for in Section 3 until the first to occur of (i) the
expiration of a period of six months from the date of such termination, (ii)
the commencement of payment of benefits to the Employee under any disability
plan or policy maintained by the Company or (iii) the death of the Employee.
Rights and benefits of the Employee under the benefit plans and programs of the
Company shall be determined in accordance with the provisions of such plans and
programs. Neither the Employee nor the Company shall have any further rights
or obligations under this Agreement, except as provided in Sections 5.5, 7, 8,
9 and 10.
6.3 Due Cause. The employment of the Employee hereunder
may be terminated by the Company at any time during the term of this Agreement
for Due Cause (as hereinafter defined). In the event of such termination, the
Company shall pay to the Employee (a) the base salary provided for in Section 3
accrued to the date of such termination and not theretofore paid to the
Employee and (b) any bonus payable pursuant to Section 3.2(d). Rights and
benefits of the Employee under the benefit plans and programs of the Company
shall be determined in accordance with the provisions of such plans and
programs. For purposes hereof, "Due Cause" shall mean (a) the Employee's
material breach, by willful action or inaction, of any of the provisions of
this Agreement, or (b) the Employee's conviction in a court of law of any
felony, or of any crime or offense concerning money or property of the Company.
Neither the Employee nor the Company shall have any further rights or
obligations under this Agreement, except as provided in Sections 5.5, 7, 8, 9
and 10.
6.4 Other Termination by the Company. The Company may
terminate the Employee's employment at any time for whatever reason it deems
appropriate or without reason upon nine (9) months' prior written notice to the
Employee (the "Notice of Termination Period"). In the event of such
termination, the Company shall (a) pay to the Employee any bonus payable
pursuant to Section 3.2 and (b) pay the base salary provided for in Section 3
(at the annual rate then in effect) accrued to the date of such termination and
not theretofore paid to the Employee. Notwithstanding the foregoing provisions
of this Section 6.4, the Company may require, in its sole discretion, that the
Employee cease performance of any duties at any time during the Notice of
Termination Period provided that the Company shall continue
<PAGE> 7
7
to pay to the Employee the base salary provided for in Section 3 (at the annual
rate then in effect) for the remaining portion of the Notice of Termination
Period and shall pay to the Employee any bonus payable pursuant to Section 3.2;
and provided, further, that the Company shall have the right to offset against
such payment of salary and bonus the amount of any compensation payable to the
Employee in respect of other full-time employment or full-time consulting
activities of the Employee during the Notice of Termination Period. Rights and
benefits of the Employee under the benefit plans and programs of the Company
shall be determined in accordance with the provisions of such plans and
programs. Neither the Employee nor the Company shall have any further rights
or obligations under this Agreement, except as provided in Sections 5.5, 7, 8,
9 and 10.
6.5 Termination by the Employee. The Employee may
terminate his employment with the Company during the term of this Agreement
upon six (6) months' prior written notice to the Company. In the event of such
termination, the Company shall pay to the Employee (a) the base salary provided
for in Section 3 accrued to the date of termination and not theretofore paid to
the Employee and (b) any bonus payable pursuant to Section 3.2(d). Rights and
benefits of the Employee under the benefit plans and programs of the Company
shall be determined in accordance with the provisions of such plans and
programs. Neither the Employee nor the Company shall have any further rights
or obligations under this Agreement, except as provided in Sections 5.5, 7, 8,
9 and 10.
7. Confidential Information.
7.1 The Employee shall, during the term of this Agreement
and at all times thereafter, treat as confidential and, except as required in
the performance of his duties and responsibilities under this Agreement, not
disclose, publish or otherwise make available to the public or to any
individual, firm or corporation any confidential material (as hereinafter
defined). The Employee agrees that all confidential material, together with
all notes and records of the Employee relating thereto, and all copies or
facsimiles thereof in the possession of the Employee, are the exclusive
property of the Company and the Employee agrees to return such material to the
Company promptly upon the termination of the Employee's employment with the
Company.
7.2 For the purposes hereof, the term "confidential
material" shall mean all information acquired
<PAGE> 8
8
by the Employee in the course of the Employee's employment with the Company in
any way concerning the products, projects, activities, business or affairs of
the Company or the Company's customers, including, without limitation, all
information concerning trade secrets and the products or projects of the
Company and/or any improvements therein, all sales and financial information
concerning the Company, all customer and supplier lists, all information
concerning projects in research and development or marketing plans for any such
products or projects, and all information in any way concerning the products,
projects, activities, business or affairs of customers of the Company which is
furnished to the Employee by the Company or any of its agents or customers, as
such; provided, however, that the term "confidential material" shall not
include information which (a) becomes generally available to the public other
than as a result of a disclosure by the Employee, (b) was available to the
Employee on a non-confidential basis prior to his employment with the Company
or (c) becomes available to the Employee on a non-confidential basis from a
source other than the Company or any of its agents or customers provided that
such source is not bound by a confidentiality agreement with the Company or any
of such agents or customers.
8. Interference With the Company.
8.1 The Employee acknowledges that the services to be
rendered by him to the Company are of a special and unique character. The
Employee agrees that, in consideration of his employment hereunder, the
Employee will not (a) for a period of one year commencing on the date of
termination of his employment with the Company, (i) solicit or endeavor to
solicit patient referrals, either on his own account or for any person, firm,
corporation or other organization, from (x) any person, including any
physician, clinical psychologist, social worker or consultant to the Company,
who, during the period of the Employee's employment with the Company, made
patient referrals to the Company, or (y) any employee of the Company, or (ii)
solicit or entice or endeavor to solicit or entice away from the Company any
person who was a director, officer, employee or consultant of the Company,
either on his own account or for any person, firm, corporation or other
organization, whether or not such person would commit any breach of his
contract of employment by reason of leaving the service of the Company, and the
Employee agrees not to employ, directly or indirectly, any person who was a
director, officer or employee of the Company or who by reason of such position
at any time is or may be likely to be in possession of any confidential
information or trade secrets relating to the businesses or
<PAGE> 9
9
products of the Company or (b) at any time, take any action or make any
statement the effect of which would be, directly or indirectly, to impair the
good will of the Company or the business reputation or good name of the Company
or be otherwise detrimental to the interests of the Company, including any
action or statement intended, directly or indirectly, to benefit a competitor
of the Company.
8.2 The Employee and the Company agree that if, in any
proceeding, the court or other authority shall refuse to enforce the covenants
herein set forth because such covenants cover too extensive a geographic area
or too long a period of time, any such covenant shall be deemed appropriately
amended and modified in keeping with the intention of the parties to the
maximum extent permitted by law.
9. Inventions. Any and all inventions, innovations or
improvements ("inventions") made, developed or created by the Employee (whether
at the request or suggestion of the Company or otherwise, whether alone or in
conjunction with others, and whether during regular hours of work or otherwise)
during the period of his employment with the Company which may be directly or
indirectly useful in, or relate to, the business of the Company, shall be
promptly and fully disclosed by the Employee to the Board of Directors of the
Company and shall be the Company's exclusive property as against the Employee,
and the Employee shall promptly deliver to an appropriate representative of the
Company as designated by the Board of Directors all papers, drawings, models,
data and other material relating to any inventions made, developed or created
by him as aforesaid. The Employee shall, at the request of the Company and
without any payment therefor, execute any documents necessary or advisable in
the opinion of the Company's counsel to direct issuance of patents or
copyrights to the Company with respect to such inventions as are to be the
Company's exclusive property as against the Employee or to vest in the Company
title to such inventions as against the Employee. The expense of securing any
such patent or copyright shall be borne by the Company.
10. Equitable Relief. In the event of a breach or
threatened breach by the Employee of any of the provisions of Sections 7, 8 or
9 of this Agreement, the Employee hereby consents and agrees that the Company
shall be entitled to an injunction or similar equitable relief from any court
of competent jurisdiction restraining the Employee from committing or
continuing any such breach or threatened breach or granting specific
performance of any
<PAGE> 10
10
act required to be performed by the Employee under any of such provisions,
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. Nothing herein shall be construed as prohibiting the Company
from pursuing any other remedies at law or in equity which it may have. For
purposes of Sections 7, 8, 9 and 10 of this Agreement, the term "Company" shall
be deemed to include the subsidiaries and affiliates of the Company.
11. Successors and Assigns.
11.1 Assignment by the Company. The Company shall require
any successors (whether direct or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all of the business and/or assets of the
Company to assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform if no such
succession had taken place. As used in this Section, "the Company" shall mean
the Company as hereinbefore defined and any successor to its business and/or
assets as aforesaid which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law and this Agreement shall be
binding upon, and inure to the benefit of, the Company, as so defined.
11.2 Assignment by the Employee. The Employee may not
assign this Agreement or any part thereof without the prior written consent of
a majority of the Board of Directors of the Company; provided, however, that
nothing herein shall preclude one or more beneficiaries of the Employee from
receiving any amount that may be payable following the occurrence of his legal
incompetency or his death and shall not preclude the legal representative of
his estate from receiving such amount or from assigning any right hereunder to
the person or persons entitled thereto under his will or, in the case of
intestacy, to the person or persons entitled thereto under the laws of
intestacy applicable to his estate. The term "beneficiaries", as used in this
Agreement, shall mean a beneficiary or beneficiaries so designated to receive
any such amount or, if no beneficiary has been so designated, the legal
representative of the Employee (in the event of his incompetency) or the
Employee's estate.
12. Governing Law. This Agreement shall be deemed a
contract made under, and for all purposes shall be construed in accordance
with, the laws of the State of Delaware applicable to contracts to be performed
entirely
<PAGE> 11
11
within such State. In the event that a court of any jurisdiction shall hold
any of the provisions of this Agreement to be wholly or partially unenforceable
for any reason, such determination shall not bar or in any way affect the
Company's right to relief as provided for herein in the courts of any other
jurisdiction. Such provisions, as they relate to each jurisdiction, are, for
this purpose, severable into diverse and independent covenants. Service of
process on the parties hereto at the addresses set forth herein shall be deemed
adequate service of such process.
13. Entire Agreement. This Agreement contains all the
understandings and representations between the parties hereto pertaining to the
subject matter hereof and supersedes all undertakings and agreements, whether
oral or in writing, if any there be, previously entered into by them with
respect thereto.
14. Amendment; Modification; Waiver. No provision of
this Agreement may be amended or modified unless such amendment or modification
is agreed to in writing and signed by the Employee and by a duly authorized
representative of the Company other than the Employee. Except as otherwise
specifically provided in this Agreement, no waiver by either party hereto of
any breach by the other party hereto of any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of a
similar or dissimilar provision or condition at the same or any prior or
subsequent time, nor shall the failure of or delay by either party hereto in
exercising any right, power or privilege hereunder operate as a waiver thereof
to preclude any other or further exercise thereof or the exercise of any other
such right, power or privilege.
15. Arbitration. Any controversy or claim arising out of
or relating to this Agreement, or any breach thereof, shall, except as provided
in Section 10, be settled by arbitration in accordance with the rules of the
American Arbitration Association then in effect and judgment upon such award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof. The arbitration shall be held in the area where the Company then has
its principal place of business. The arbitration award may include an award of
attorneys' fees and costs.
16. Notices. Any notice to be given hereunder shall be
in writing and delivered personally or sent by certified mail, postage prepaid,
return receipt requested, addressed to the party concerned at the address
indicated
<PAGE> 12
12
below or at such other address as such party may subsequently designate by like
notice:
If to the Company:
Ramsay Health Care, Inc.
One Poydras Plaza
639 Loyola Avenue, Suite 1400
New Orleans, Louisiana 70113
Attention: Chief Executive Officer
If to the Employee:
Mr. Reynold Jennings
c/o Ramsay Health Care, Inc.
One Poydras Plaza
639 Loyola Avenue, Suite 1400
New Orleans, Louisiana 70113
17. Severability. Should any provision of this Agreement
be held by a court or arbitration panel of competent jurisdiction to be
enforceable only if modified, such holding shall not affect the validity of the
remainder of this Agreement, the balance of which shall continue to be binding
upon the parties hereto with any such modification to become a part hereof and
treated as though originally set forth in this Agreement. The parties further
agree that any such court or arbitration panel is expressly authorized to
modify any such unenforceable provision of this Agreement in lieu of severing
such unenforceable provision from this Agreement in its entirety, whether by
rewriting the offending provision, deleting any or all of the offending
provision, adding additional language to this Agreement, or by making such
other modifications as it deems warranted to carry out the intent and agreement
of the parties as embodied herein to the maximum extent permitted by law. The
parties expressly agree that this Agreement as so modified by the court or
arbitration panel shall be binding upon and enforceable against each of them.
In any event, should one or more of the provisions of this Agreement be held to
be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provisions hereof,
and if such provision or provisions are not modified as provided above, this
Agreement shall be construed as if such invalid, illegal or unenforceable
provisions had never been set forth herein.
18. Withholding. Anything to the contrary
notwithstanding, all payments required to be made by the Company hereunder to
the Employee or his beneficiaries,
<PAGE> 13
13
including his estate, shall be subject to withholding of such amounts relating
to taxes as the Company may reasonably determine it should withhold pursuant to
any applicable law or regulation.
19. Survivorship. The respective rights and obligations
of the parties hereunder shall survive any termination of this Agreement to the
extent necessary to the intended preservation of such rights and obligations.
20. Titles. Titles of the sections of this Agreement are
intended solely for convenience and no provision of this Agreement is to be
construed by reference to the title of any section.
* * *
<PAGE> 14
14
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
RAMSAY HEALTH CARE, INC.
Reynold Jennings
<PAGE> 1
EXHIBIT 10.82
RAMSAY HEALTH CARE, INC.
One Poydras Plaza
639 Loyola Avenue
Suite 1400
New Orleans, Louisiana 70113
May 26, 1994
Mr. Reynold Jennings
c/o Ramsay Health Care, Inc.
One Poydras Plaza
639 Loyola Avenue, Suite 1400
New Orleans, Louisiana 70113
Dear Mr. Jennings:
Reference is made to the Employment Agreement (the "Employment
Agreement") dated as of October 2, 1993 between you and Ramsay Health Care,
Inc. (the "Company"). The Employment Agreement is hereby amended as follows:
1. Section 3 of the Employment Agreement is hereby
amended by adding a new Section 3.5 at the end thereof which shall read as
follows:
"3.5 If the Employee shall remain in the employment of the
Company until December 31, 1994, or if prior to such date his employment with
the Company shall be terminated by the Company other than pursuant to Section
6.1, 6.2 or 6.3 of this Agreement, the Company shall pay to the Employee a
bonus in the amount of $50,000. Such bonus shall be in addition to any bonus
payable to the Employee pursuant to Section 3 of this Agreement and shall be
paid to the Employee in cash within ten (10) days following the first occur of
December 31, 1994 or the date of such termination of employment."
2. Section 4 of the Employment Agreement is hereby
amended by adding the following at the end thereof:
"The Company shall pay on behalf of the Employee, or reimburse
the Employee for, reasonable and customary brokerage commissions and other
costs incurred by the Employee in
<PAGE> 2
2
connection with the sale of his home in Texas, up to a maximum aggregate amount
of $35,000."
3. Section 5.5 of the Employment Agreement is hereby
amended to read as follows:
"5.5. Split Dollar Life Insurance. In addition to any other
insurance which may now or hereafter be provided by the Company on the life of
the Employee under any group contract or otherwise, the Company shall, during
the term of this Agreement and thereafter as herein provided, pay premiums of
up to $50,000 per year (up to $150,000 in the aggregate over the three-year
period beginning with the date of the first premium payment hereunder) for a
split-dollar life insurance policy on the life of the Employee. Premiums shall
be payable by the Company at a rate not greater than $25,000 semi-annually.
Such policy shall be owned by the Employee or by a trust for the benefit of the
Employee or members of the immediate family of the Employee, and shall be
obtained promptly following the Commencement Date. The aggregate amount of
premiums paid by the Company shall constitute indebtedness of the Employee to
the Company (i) to be repaid by the Employee not later than the fifth
anniversary of the Commencement Date or, if the employment of the Employee
shall be terminated by the Company pursuant to Section 6.3 of this Agreement or
by the Employee other than pursuant to Section 6.2 or 6.6 of this Agreement,
the date of termination of his employment with the Company, and (ii) to be
secured by (A) the death benefit or cash value of such policy as hereinafter
set forth, (B) any bonus payable to the Employee pursuant to Section 3.2 hereof
and (C) any amount payable to the Employee pursuant to Section 6.4 or Section
6.6 hereof. The Employee or the trust, as the case may be, will execute and
deliver to the Company a collateral assignment of the policy on a form approved
by the insurance company issuing such policy. The Company will be entitled to
satisfy the indebtedness owed to it (A) when and to the extent that the policy
is surrendered or the proceeds thereof are paid at death and the Company shall
release the collateral assignment pro tanto upon such satisfaction, (B) at any
time by offset against any bonus payable to the Employee pursuant to Section
3.2 and (C) at any time by offset against any amount payable to the Employee
pursuant to Section 6.4 or 6.6 hereof.
In the event of termination of employment of the Employee
pursuant to Section 6.4 or Section 6.6 of this Agreement, notwithstanding any
provision of Section 6 of this Agreement to the contrary, the Company shall
continue to pay the premiums referred to above, at the semiannual rate referred
to
<PAGE> 3
3
above, until there shall have been paid an aggregate of $150,000 in premiums
subsequent to the Commencement Date.
The Employee agrees that (i) upon his death, the portion of
such death benefit equal to the aggregate amount of premiums paid by the
Company prior to his death shall be paid to the Company; (ii) neither the
Company, the Employee nor the trust shall terminate or surrender the policy or
any part thereof or withdraw from or be loaned any part of the cash value of
such policy prior to the Company's receipt of payment of the aggregate amount
of premiums paid by the Company for such policy; (iii) neither the Employee nor
the trust shall transfer legal or beneficial ownership of the policy or use the
policy as security for any loan; (iv) he shall, to the extent possible, take
such action as is necessary to cause: (a) the terms of the policy to satisfy
the requirements of this Section 5.5, (b) the issuer of the policy to pay the
amounts in the manner described above, and (c) the trust to satisfy and be
bound by the provisions of this Section 5.5.
The Company and the Employee shall enter into a Split Dollar
Agreement embodying the foregoing terms and other standard terms and
conditions."
4. Section 6 of the Employment Agreement is hereby
amended by adding at the end thereof a new Section 6.6 and a new Section 6.7
which shall read as follows:
"6.6 Change in Control. If, within a period of six (6)
months following a change in control of the Company, the employment of the
Employee hereunder is terminated for any reason whatsoever, whether by the
Employee or the Company, the Company shall pay to the Employee (a) any bonus
payable to the Employee pursuant to Section 3 and any amounts payable pursuant
to Section 4 or 5 and (b) severance pay in an amount equal to twelve (12)
months' base salary (at the highest annual rate in effect during the one-year
period ending on the date of termination of employment). Such severance
payment shall be made to the Employee in a cash lump sum on the date of
termination of employment. For purposes of this Agreement, a change in control
of the Company shall be deemed to have occurred if:
(A) a "person" (meaning an individual, a
partnership, or other group or association as defined in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934) acquires fifty percent (50%) or
more of the combined voting power of the outstanding securities of the Company
having a right to vote in elections of directors; or
<PAGE> 4
4
(B) Continuing Directors (as hereinafter defined)
shall for any reason cease to constitute a majority of the Board of Directors
of the Company; or
(C) all or substantially all of the business of
the Company is disposed of by the Company to a party or parties other than a
subsidiary or other affiliate of the Company, in which the Company owns less
than a majority of the equity, pursuant to a partial or complete liquidation of
the Company, sale of assets (including stock of a subsidiary of the Company) or
otherwise.
For purposes of this Agreement, the term "Continuing Director"
shall mean a member of the Board of Directors of the Company who either was a
member of the Board of Directors on the date hereof or who subsequently became
a Director and whose election was voted for by Ramsay Holdings HSA Limited
("RHHL") or by a Continuing Director with the acquiescence of RHHL. A Director
shall not be considered a Continuing Director for purposes of this Agreement if
his election was voted for by RHHL, or by a Continuing Director with the
acquiescence of RHHL, (i) pursuant to an agreement with, or at the direction,
request or suggestion of, any individual, firm or corporation in connection
with the purchase or other acquisition or receipt by such individual, firm or
corporation of all or any shares of capital stock of the Company or (ii) in
anticipation of the sale or other disposition by RHHL of all or any of its
shares of capital stock of the Company.
6.7 Stock Options. In the event of termination of the
Employee's employment with the Company pursuant to Section 6.4 or 6.6 of this
Agreement, the Company shall cause each stock option theretofore granted by the
Company to the Employee to become fully exercisable (and to remain exercisable
for the maximum period permitted by the plan or agreement pursuant to which
such option was granted), unless such action, in the opinion of counsel to the
Company, would violate, or adversely affect the status of such option or the
plan (if any) pursuant to which such option was granted under, Rule 16b-3 under
Section 16 of the Securities Exchange Act of 1934."
5. The Employment Agreement as hereby amended continues
in full force and effect.
* * *
<PAGE> 5
5
Please indicate your acceptance of and agreement with the
foregoing by signing the enclosed counterpart of this letter and returning it
to the Company, whereupon this shall be a binding amendment to the Employment
Agreement.
Very truly yours,
RAMSAY HEALTH CARE, INC.
Accepted and Agreed:
Reynold Jennings
<PAGE> 1
EXHIBIT 10.83
RAMSAY HEALTH CARE, INC.
One Poydras Plaza
639 Loyola Avenue
Suite 1400
New Orleans, Louisiana 70113
June 3, 1994
Mr. Reynold Jennings
c/o Ramsay Health Care, Inc.
One Poydras Plaza
639 Loyola Avenue, Suite 1400
New Orleans, Louisiana 70113
Dear Mr. Jennings:
Reference is made to the Employment Agreement dated as of
October 2, 1993 between you and Ramsay Health Care, Inc. (the "Company") as
amended by letter agreement dated May 26, 1994 (the Employment Agreement, as so
amended, being herein referred to as the "Employment Agreement").
This will confirm that the exercise price of the options (the
"Options") to purchase 100,000 shares of Common Stock of the Company referred
to in Section 3.4 of the Employment Agreement has been reduced to $6.9375 per
share, which is the closing price of the Common Stock on May 25, 1994. The
other terms of the Options remain unchanged.
In addition, you shall have the right, upon written notice
from you delivered to the Company (Attention: President), at any time during
the fifteen (15) day period commencing on the Effective Date (as hereinafter
defined), to surrender to the Company for cancellation all or any of the
Options and, upon such surrender, the Company shall pay to you in cash an
amount equal to the product of (x) $4.00 multiplied by (y) the number of shares
of Common Stock underlying the Options so surrendered (subject to applicable
Federal, state and local withholding). The reference in this paragraph to
"$4.00" shall be appropriately adjusted for any stock split, stock dividend or
similar event affecting the Common Stock occurring after the date hereof and on
or prior to the date of surrender.
<PAGE> 2
2
As used herein, the term "Effective Date" shall mean the first
to occur of (i) May 31, 1998 if you are then employed by the Company, or (ii)
the date of termination of your employment with the Company, if employment is
terminated by the Company other than pursuant to Section 6.1 (Death), 6.2
(Disability) or 6.3 (Due Cause) of the Employment Agreement.
Please indicate your acceptance of and agreement with the
foregoing by signing the enclosed counterpart of this letter and returning it
to the Company, whereupon this shall be a binding agreement between you and the
Company.
Very truly yours,
RAMSAY HEALTH CARE, INC.
Accepted and Agreed:
Reynold Jennings
<PAGE> 1
EXHIBIT 10.84
FOURTH MODIFICATION, EXTENSION
AND AMENDMENT OF LEASE
This Fourth Modification Extension and Amendment of Lease is entered
into this 15th day of November, 1993, between:
POYDRAS PLAZA VENTURE, a Louisiana partnership organized
pursuant to a joint venture agreement dated September 28,
1972, as amended, represented herein by the undersigned
authorized agent (hereinafter referred to as "Lessor");
AND
RAMSAY HEALTH CARE, INC., a Delaware corporation, represented
herein by the undersigned authorized agent (hereinafter
referred to as "Lessee").
WITNESSETH THAT:
WHEREAS, a Lease Agreement by and between Ayrshire Land Dome (now
known as One Poydras Plaza Venture) as Lessor, Ire Services of America, Inc.,
now known as Ramsay Inc., as Lessee, was entered into on August 30, 1988 (the
"Lease Agreement"), as supplemented by First Addendum to Lease dated of even
date therewith (the "Addendum"), as amended by Second Amendment to Lease dated
April 12, 1990 (the "Second Amendment") and Third Amendment to Lease dated
October 1, 1991 (the "Third Amendment"), whereby Lessee leases from Lessor
11,715 square feet of net rentable area on the fourteenth floor of One Poydras
Plaza (the "Old Leased Premises");
WHEREAS, Lessor and Lessee desire to relocate Lessee to 11,817 square
feet of net rentable area on the seventeenth floor of One Poydras Plaza (the
"Leased Premises") and to make certain other amendments in the Lease Agreement,
Addendum, Second Amendment and Third Amendment;
NOW THEREFORE, in consideration of the premises, Lessor and Lessee do
hereby agree to amend and extend the Lease Agreement, Second Amendment and the
Third Amendment effective (except as otherwise provided in Paragraph 3 below),
in the following particulars to-wit:
<PAGE> 2
2
1. LEASED PREMISES
The second paragraph of Section 1 (Leased Premises) of the Lease
Agreement is deleted and the following two paragraphs are added in place
thereof:
A certain portion of the seventeenth floor containing
approximately 11,817 square feet of Net Rentable Area (herein
referred to as "Leased Premises"). The location of the area
to be occupied is shown on the floor plan attached hereto, as
Exhibit A.
Lessee shall be entitled to occupy the Old Leased Premises
until such time as the tenant improvements in the Leased
Premises are substantially complete, but no later than April
1, 1994 (the "Move Date") provided, however, that to the
extent the completion of the tenant improvements in the Leased
Premises are delayed due to the fault of Lessor, the Move Date
shall be delayed for a period of time equal to the time they
were delayed due to the fault of the Lessor. In no event
shall the Lessor be liable or responsible for any claims,
damages or liabilities in connection with or by reason of the
delayed delivery of the Leased Premises. Once Lessee has
moved to the Leased Premises, the Old Leased Premises shall no
longer be subject to this Lease and shall be released to
Landlord.
2. TERM
Section 4 (Term) of the Lease Agreement is amended to read in full as
follows:
This Lease commenced on October 1, 1988, and, subject to the
terms and conditions set forth herein, shall continue in force
for a term of five (5) years, beginning on the first day of
April, 1994 (the "Commencement Date"), and ending on the
thirty-first day of March, 1999.
<PAGE> 3
3
3. BASE RENTAL
Effective October 1, 1993, Section 5 (Rental) of the Lease Agreement
as supplemented by the Addendum to Lease and as amended by the Second Amendment
and the Third Amendment is hereby further amended to state Lessee's monthly
rental payments to be as follows:
10/1/93 - 4/1/94: $9,762.50 per month.
($10.00 per rentable square foot in Old Leased Premises per
annum).
4/1/94 - 3/31/96: $12,801.75 per month.
($13.00 per rentable square foot in Leased Premises per annum).
4/1/96 - 5/31/97: $13, 294.13 per month.
($13.50 per rentable square foot in Leased Premises per annum).
4/1/97 - 3/31/99: $13,786.50 per month.
($14.00 per rentable square foot in Leased Premises per annum).
4. RENTAL ADJUSTMENT
Paragraph 6 (Rental Adjustment) of the Lease Agreement is hereby
amended to substitute the year "1994" for "1988" on the second line thereof:
5. COST SAVING IMPROVEMENTS
The provisions of Section 24 (Cost Saving Improvements) of the Lease
Agreement are amended in whole to provide as follows:
In the event Lessor hereafter installs equipment,
devices or materials designed or intended to reduce labor or
energy operating expenses of the Building ("Equipment") or
makes any capital improvement (the "Improvements") to the
Common Areas (as hereinafter defined) that is required under
interpretations or regulations issued from time to time by any
political subdivision having jurisdiction over the Building or
under the provisions of the Americans With Disabilities Act of
1990, 42 U.S.C. Sections 12101-12213 (collectively, the
"Disability Acts"), the cost of such Equipment or
Improvements may be
<PAGE> 4
4
amortized over a period of time determined by Lessor (but not shorter
than the maximum time allowed for depreciation of such equipment or
capital improvements by the Internal Revenue Service) together with
interest at the rate of ten (10%) percent per annum on the unamortized
balance, and shall be paid to Lessor in addition to the rental
adjustment, at the times as set forth in paragraph 6 hereof. With
respect to the cost of Equipment only, in no event shall such
amortization expense and interest for all such Equipment for any
single lease year exceed the operating expense savings generated by
such Equipment. Operating expense savings will be determined by (1)
calculating the actual operating expense as if no such Equipment had
been installed, and (2) subtracting from this amount the "total cost
of operating" the Building for the lease year in question. The term
"Common Areas" as used herein means all areas, spaces, facilities and
equipment (whether or not located within the Building) made available
by Lessor for the common and joint use of Lessor, Lessee and others
designated by Lessor using or occupying space in the Building,
including but not limited to, tunnels, walkways, sidewalks and
driveways necessary for access to the Building, Building's lobbies,
landscaped areas, public corridors, public restrooms, Building's
stairs, elevators open to the public, service elevators (provided that
such service elevators shall be available only for tenants of the
Building and other designated by Lessor), drinking fountains and any
such other areas and facilities, if any, as are designated by Lessor
from time to time as Common Areas. Common Areas shall not include the
parking garage. With respect to the cost of the Improvements only, in
no event shall such amortization expense and interest for all such
improvements for any single lease year exceed fifteen cents per square
foot of net rentable area of the Leased Premises.
6. RELOCATION
The provisions of Section 25 (Relocation) of the Agreement are amended
in whole to provide as follows:
<PAGE> 5
5
Lessor reserves the right on a one time basis, at its
option, to require Lessee to move from its Leased Premises,
and relocate to other space on floors seventeen through
twenty-eight in this Building. If Lessor exercises this
option, it shall give Lessee six (6) months prior written
notice and shall provide Lessee with such other space as is
equal to or larger than the Leased Premises and of the same
approximate quality. Lessor shall pay all actual expenses of
such relocation including expenses of moving, shall give
Lessee a six (6) month abatement of base rental payments
provided under Paragraph 5, and shall provide Lessee with
comparable tenant finish improvements. In such event of
relocation, this Lease shall otherwise continue in full force
and effect, without interruption, as to all of its terms and
conditions.
7. DELETED PROVISIONS
The provisions of Sections 2, Renewal Option; Section 3, Additional
Terms of Right of Renewal; Section 4, Letter of Credit Security; Section 5,
Parking; and Section 6, Moving Allowance, of the Addendum are hereby deleted.
8. ADDITIONAL PROVISIONS
The Lease Agreement is amended to delete Section 31 to the Lease
Agreement and to add the following as Sections 31, 32, 33, 34 and 35 of the
Lease Agreement:
31. LIMITATION OF LESSOR'S LIABILITY
If Lessor, its employees, officers, or partners are
ordered to pay Lessee a money judgment because of Lessor's
default, then Lessee's sole remedy to satisfy the judgment
shall be (a) Lessor's interest in the Building and Land
including the rental income and proceeds from sale; and (b)
any insurance or condemnation proceeds received because of
damage or condemnation to, or of, the Building or Land that
are available for use by Lessor.
<PAGE> 6
6
32. HAZARDOUS AND TOXIC MATERIALS
(a) Studies. Lessee acknowledges that Lessor has
made available at Lessor's offices or Lessee's inspection and
copying, a copy of a letter of review by 3D/International
dated April 1, 1987, a copy of an Asbestos Containing Material
Survey by BCM Engineers, Inc. dated August 12, 1992, and a
Phase I Environmental Assessment conducted by BCM Engineers,
Inc. dated October, 1992 (collectively hereinafter referred to
as "Asbestos Review"). The purpose of the Asbestos Review is
to indicate the presence or absence of toxic or hazardous
materials (as defined hereafter) at the Building based on the
present levels or content of said toxic or hazardous materials
as presently set by the U.S. Environmental Protection Agency
("EPA") or the U.S. Occupational Safety and Health
Administration ("OSHA"). Lessor makes no representations or
warranties whatsoever (express or implied) to Lessee
regarding: (i) the Asbestos Review (including, without
limitation, the contents, accuracy and/or scope thereof) and
Lessor has informed Lessee that said Asbestos Review is not a
comprehensive survey of the Building for all forms of
hazardous or toxic materials, including but not limited to
asbestos containing materials, and cannot be relied upon as a
representation that there are no hazardous or toxic materials
at the Leased Premises or Building, whether addressed therein
or not, or (ii) the presence or absence of toxic or hazardous
materials in, at, or under the Leased Premises, the Building
or the land on which the Building is located (the "Land").
Lessee: (x) shall not rely on, and Lessee hereby represents to
Lessor that it has not relied on, the Asbestos Review, the
same having been provided for informational purposes only; and
(y) acknowledges that Lessee has taken such actions as Lessee
deems appropriate to fairly evaluate the Leased Premises and
any risk from hazardous or toxic materials and has otherwise
satisfied itself that the Leased Premises are acceptable and
suitable from an environmental perspective. Prior to
<PAGE> 7
7
commencement of construction of Lessee's improvements, Lessee
shall have ten (10) days to engage such specialists, and to
make such studies and investigations, and conduct such tests
and surveys of the Leased Premises from an environmental
standpoint as Lessee deems necessary and appropriate: subject
to the condition that all such studies and investigations
shall be completed prior to the commencement of construction
of Lessee's Improvements. Lessee shall restore the Leased
Premises and hold Lessor harmless from and indemnify Lessor
against all loss, damages and claims resulting from or
relating to Lessee's studies, tests and investigations. If
such studies, tests, investigations or surveys evidence
hazardous or toxic materials with respect to the Leased
Premises, Lessee shall have the right to terminate this Lease
provided such rights shall be exercised, if at all, prior to
the commencement of construction of Lessee's Improvements and
within five (5) days after Lessee receives the evidence of
hazardous or toxic materials. If Lessee does not exercise
such right prior to commencement of construction of Lessee's
Improvements and within such five (5) day period, Lessee's
right to terminate this Lease shall be null and void and of no
further force or effect.
Lessee shall furnish Lessor with a complete and
legible copy of any study, report, test, survey or
investigation performed by or on behalf of Lessee at any time
involving the Leased Premises, and, shall fully restore all
areas and improvements where samples were taken or work
performed, and repair all damage resulting from any of the
same, and shall indemnify and hold Lessor harmless from and
against all claims, actions, liabilities, damages, losses,
injuries or deaths in connection with or arising out of, or
from any inspection, testing, sampling, or similar or
dissimilar activity conducted by Lessee, Lessee's agents or
contractors at the Leased Premises or the Building for
hazardous or toxic materials, whether under this Paragraph or
otherwise under or in connection with this Lease.
<PAGE> 8
8
(b) Inspections. Lessor shall have the right, upon
giving reasonable notice to Lessee, to periodically inspect,
take samples for testing, and otherwise investigate the Leased
Premises for the presence of hazardous or toxic materials
including such studies and investigations, tests and surveys,
and engage such specialists as Lessor deems appropriate to
fairly evaluate the Leased Premises and any risk from
hazardous or toxic materials. In connection with any
inspections, samples, surveys or tests to be performed by
Lessor, Lessor shall not unreasonably interfere with Lessee's
business operations at the Leased Premises, and shall repair
any damage to Lessee's property, inventory or fixtures damaged
as a result of such inspections, samples, surveys or tests,
and, shall furnish Lessee on request with a true and complete
copy of any resulting report, survey or study.
(c) Prohibition on Placement or Disposal. Lessee
shall not knowingly incorporate into, use, or otherwise place
or dispose of at the Leased Premises or in the Building or on
the Land any hazardous or toxic materials, except for use and
storage of cleaning and office supplies used in the ordinary
course of Lessee's business and then only if (i) such
materials are in small quantities, properly labeled and
contained, (ii) such materials are handled and disposed of in
accordance with the highest accepted industry standards for
safety, storage, use and disposal, (iii) notice of and a copy
of the current material safety data sheet is provided to
Lessor for each such hazardous or toxic material and (iv) such
materials are used, transported, stored, handled and disposed
of in accordance with all applicable governmental laws, rules
and regulations. Lessor shall not knowingly dispose of at the
Leased Premises, Building or the Land, any hazardous or toxic
materials and shall otherwise deal with all hazardous or toxic
materials at the Leased Premises, Building or Land in a manner
that will not materially and adversely affect Lessee's access,
use or occupancy of the Leased Premises. If Lessor
<PAGE> 9
9
or Lessee ever has knowledge of the presence in the Leased
Premises, or the Building or the Land of hazardous or toxic
materials which affect the Leased Premises, the party having
knowledge shall notify the other party thereof in writing
promptly after obtaining such knowledge. For purposes of this
Lease, hazardous or toxic materials shall mean asbestos
containing materials ("ACM") and all other materials,
substances, wastes and chemicals classified as hazardous or
toxic substances, materials, waste or chemicals under
then-current applicable governmental laws, rules or
regulations or that are subject to any right-to-know laws or
requirements.
(d) Lessee's Covenants to Remove. If Lessee or its
employees, agents, or contractors shall ever violate the
provisions of Paragraph (c) above or otherwise contaminate the
Leased Premises or the Building or the Land, or if Lessee's
acts, negligence, breach of this provision or business
operations directly and materially expand the scope of or
materially worsen any contamination from toxic or hazardous
materials, then Lessee shall clean-up, remove and dispose of
the materials causing the violation, in compliance with all
applicable governmental standards, laws, rules and
regulations, and repair any damage to the Leased Premises or
Building within such period of time as may be reasonable under
the circumstances after written notice by Lessor, provided
that such work shall commence not later than thirty (30) days
from such notice and be diligently and continuously carried to
completion by Lessee or Lessee's designated contractors.
Lessee shall notify Lessor of its method, time and procedure
for any cleanup or removal of toxic or hazardous materials
under this provision; and Lessor shall have the right to
require reasonable changes in such method, time or procedure
or to require the same to be done after normal business hours
or when the Building is otherwise closed (i.e., weekends or
holidays). Lessee's obligations under this Paragraph (d)
shall survive the termination of this Lease.
<PAGE> 10
10
Lessee represents to Lessor that, except as has been disclosed
to Lessor, Lessee has never been cited for or convicted of any
hazardous or toxic materials violations under applicable laws,
rules or regulations, related to the Leased Premises.
33. LEASING COMMISSION
Lessor and Lessee acknowledge and represent that
there are no leasing commissions or bonuses due under this
Lease Agreement, for which either party would be responsible,
except for those which may be payable by Lessor to Premises
Real Estate Services, Inc. in the amount of 2% of rentals due
from April 1, 1994, to March 31, 1999, and to SRSA Commercial
Real Estate, Inc. in the amount of 4% of rentals due from
April 1, 1994, to March 31, 1999.
Lessor and Lessee warrant that the total commission
due said broker is set forth above and that there are no other
real estate brokers or agents who are or might be entitled to
a commission in connection with this Lease. Lessor and Lessee
agree to indemnify and hold each other harmless from and
against any liability or claim, whether meritorious or not,
arising in respect of brokers and/or agents hired by the
indemnitor and not so named.
34. LESSEE'S RIGHTS IN RESPECT OF LESSOR DEFAULT
Lessee is granted no contractual right of termination
by this Lease, except to the extent and only to the extent set
forth in Sections 15 and 21 hereof. If Lessee shall recover a
money judgment against Lessor, such judgment shall be
satisfied only out of the right, title and interest of Lessor
in the Building and the Land as the same may then be
encumbered and Lessor shall not be liable for any deficiency.
If Lessor is found to be in default hereunder by reason of its
failure to give a consent that it is required to give
hereunder, Lessee's sole remedy will be an action for specific
performance or injunction. The foregoing sentence shall in
<PAGE> 11
11
no event be construed as mandatorily requiring Lessor to give
consent under this Lease. In no event shall Lessor be liable
to Lessee for consequential or special damages by reason of a
failure to perform (or default) by Lessor hereunder or
otherwise. In no event shall Lessee have the right to levy
execution against any property of Lessor other than its
interest in the Building and Land as herein before expressly
provided.
35. LIABILITY OF PREMISES REAL ESTATE SERVICES, INC.
This Lease is executed by Premises Real Estate
Services, Inc. ("Premises") as property manager for Lessor.
Premises warrants it is duly authorized to execute this Lease
pursuant to a written agreement with Lessor. Except for the
warranty of authorization contained in this paragraph,
Premises shall have no liability for any provision, condition,
statement or warranty provided for in this Lease.
9. RENEWAL OPTION
The Lease Agreement is hereby amended to add the following as Section
36:
36. RENEWAL OPTION
Lessee is hereby granted the right in option to renew
and extend the Lease Term pursuant to all the terms and
conditions of this Lease Agreement as amended, subject to the
following conditions:
a. At the expiration of the original term of the
lease, this Lease will be in full force and
effect and Lessee must not be in default in
the performance of its obligations hereunder.
b. The basic rental under Section 5 of the Lease
Agreement for such
<PAGE> 12
12
renewal period shall be the then current
market rate for like or similar office space
in the same building or in other Class A
office buildings in the Central Business
District of New Orleans. In no event,
however, will the new base rent be less than
that which was in effect during the final
year of the initial lease term.
c. Upon the request of Lessee, Lessor shall give
Lessee notice of the rate it considers to be
the then current market rate referred to
above. Lessee may exercise its right to
renew hereunder by giving Lessor written
notice on or before July 1, 1998. A failure
by Lessee to timely exercise any available
renewal right shall render such right null
and void without further notice from Lessor.
10. PARKING
The Lease Agreement is hereby amended to add the following as Section
37:
37. PARKING
Lessor shall make available to Lessee up to one (1)
non-reserved parking contract in the Poydras Plaza garage for
each one thousand (1,000) square feet of Net Rentable Area of
Leased Premises.
In addition to the above, Lessor will make available
to Lessee, up to two (2) 24-hour reserved spaces. These two
(2)
<PAGE> 13
13
reserved spaces shall be at 50% of market rates for the first
two years of the lease term, and at 90% of market rates for
the remainder of the lease term.
Except for the two (2) reserved spaces designated as
reserved, all parking contracts provided for herein will be
paid for by Lessee at market rates for said garage as they
exist from time to time.
11. EXPANSION RIGHTS
The Lease Agreement is hereby amended to add the following as Section
38:
38. EXPANSION RIGHTS
Lessee is granted the right to lease all unoccupied
space, as same may exist from time to time, on the 17th floor
of the Building at "market rates" or any other rate mutually
agreed by the parties. "Market rates" shall be that rental
rate then currently being charged in this Building, or any
like or similar Class "A" Office Buildings located in the
Central Business District of the City of New Orleans.
The unoccupied space consists of two parts, the
"Expansion Space" as shown on Exhibit A hereto and any other
vacant space on the 17th floor (the "Other Vacant Space").
Should Lessor desire to lease all or a portion of the
Expansion Space to a prospective tenant, it shall first give
Lessee written notice of its intent to lease such space to
said tenant, which notice shall contain the location and size
of space it wishes to lease. Lessee may elect, within ten
(10) days of receipt of notice from Lessor, to exercise its
right to lease such space by written notice to Lessor provided
Lessee is not then in default under the Lease. Should Lessee
decline to so lease, or should it fail to respond within ten
(10) days after receiving notice from Lessor of
<PAGE> 14
14
its intent to lease to a prospective tenant, then it shall
forfeit its right to lease such space and Lessor may proceed
to lease such space on any terms and conditions it may deem
appropriate.
If Lessor does not consummate a lease of such space
with six (6) months to said prospective tenant, then the space
shall revert to and become a part of the space subject to this
right of first refusal granted to Lessee.
Lessor shall have the right to lease the Other Vacant
Space without notice to Lessee in which event it shall no
longer be Other Vacant Space. If Lessee desires to lease
Other Vacant Space, it shall so notify Lessor.
On April 1, 1996, Lessee shall have the following
option to lease the Expansion Space, subject to the terms and
conditions hereinafter set forth:
(i) If Lessee desires to lease such Expansion
Space, then it shall give written notice to
Lessor not later than October 1, 1995, of the
exercise of its option;
(ii) Said Expansion Space shall be added to and
included in the Leased Premises, and the
rental rate for such space shall be charged
at the then current Market Rate, or any other
rate mutually agreed by the parties, taking
into account the terms specified in (iii)
below;
(iii) The Expansion Space, if not previously
improved, shall be improved to building
standard specifications at Lessor's cost, and
said space shall otherwise be subject to the
same Rental Adjustments, term, and other
conditions and provisions as contained in the
Lease Agreement;
<PAGE> 15
15
(iv) At the time Lessee exercises its option, this
Lease must be in full force and effect and
subject to no existing or impending defaults.
12. CONDITIONS OF LEASED PREMISES AND TENANT IMPROVEMENTS; MOVING
ALLOWANCE
Lessee acknowledges that it is satisfied with the condition of the
Leased Premises, and hereby accepts the Leased Premises "as is" in its present
state of condition and repair, with no obligation on the Lessor to improve same
except as otherwise provided in a Work Letter between Lessor and Lessee.
Lessor shall also provide Lessee with a relocation allowance of $1.00 per
rentable square foot as a contribution toward Lessee's moving and relocation
costs within two weeks of Lessee's occupancy of the Leased Premises.
Lessor makes no warranties as to its fitness or adequacy for the
intended uses of the Leased Premises.
13. SUPPLEMENTAL AIR CONDITIONING
The Lease Agreement is hereby amended to add the following as Section
39:
39. SUPPLEMENTAL AIR CONDITIONING
Lessor will install a supplemental air conditioning
unit to provide additional cooling to a portion of the Leased
Premises. The electricity used by the supplemental air
conditioning unit shall be separately metered and charged to
Lessee at Lessor's cost. Any and all repairs made to the
supplemental air conditioning unit shall be made at Lessee's
cost.
14. MISCELLANEOUS PROVISIONS
The Lease Agreement Addendum and Amendment, as amended hereby, are
hereby ratified and confirmed by the parties and continue in full force and
effect as to all of its terms and conditions. The provisions hereof shall
extend to and be binding upon the respective successors and permitted assigns
of the parties hereto.
<PAGE> 16
16
IN WITNESS WHEREOF, this Amendment and Extension of Lease Agreement is
executed on the date first above written.
ONE POYDRAS PLAZA VENTURE, Lessor
RAMSAY HEALTH CARE, INC., Lessee
<PAGE> 1
EXHIBIT 11
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER SHARE
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
--------------------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
PRIMARY
Weighted average common shares outstanding . . . 7,738,422 7,841,818 7,774,228
Class A convertible preferred stock . . . . . . 22,910 22,910 55,286
Class B convertible preferred stock, Series C . 1,424,860 --- ---
Net effect of dilutive stock options and warrants--
based on the treasury stock method using
average market price . . . . . . . . . . . . . 454,911 67,455 56,474
------------ ------------ -------------
Total . . . . . . . . . . . . . . . . . . 9,641,103 7,932,183 7,885,988
============ ============ =============
Income (loss) before extraordinary items and
cumulative effect . . . . . . . . . . . . . . $ 1,477,000 $ (2,333,000) $ 5,347,000
Extraordinary items . . . . . . . . . . . . . . (155,000) (1,580,000) 587,000
Cumulative effect . . . . . . . . . . . . . . . --- 2,353,000 ---
------------ ------------ -------------
Net income (loss) . . . . . . . . . . . . . . . $ 1,322,000 $ (1,560,000) $ 5,934,000
============ ============ =============
Per Share amounts:
Income (loss) before extraordinary items and
cumulative effect . . . . . . . . . . . . . $ 0.15 $(0.29) $ 0.68
Extraordinary items . . . . . . . . . . . . . (0.01) (0.20) 0.07
Cumulative effect . . . . . . . . . . . . . . --- 0.29 ---
------------ ------------ -------------
Net income (loss) . . . . . . . . . . . . . . $ 0.14 $ (0.20) $ 0.75
============ ============ =============
FULLY DILUTED
Weighted average common shares outstanding . . . 7,738,422 7,841,818 8,045,674
Class A convertible preferred stock . . . . . . 22,910 22,910 22,910
Class B convertible preferred stock, Series C . 1,424,860 --- ---
Net effect of dilutive stock options and warrants--
based on the treasury stock method using the
year-end market price, if higher than average
market price . . . . . . . . . . . . . . . . . 492,793 67,455 90,780
------------ ------------ -------------
Total . . . . . . . . . . . . . . . . . . . 9,678,985 7,932,183 8,159,364
============ ============ =============
Income (loss) before extraordinary items and
cumulative effect . . . . . . . . . . . . . . $ 1,477,000 $ (2,333,000) $ 5,347,000
Extraordinary items . . . . . . . . . . . . . . (155,000) (1,580,000) 587,000
Cumulative effect . . . . . . . . . . . . . . . --- 2,353,000 ---
------------ ------------ -------------
Net income (loss) . . . . . . . . . . . . . . . $ 1,322,000 $ (1,560,000) $ 5,934,000
============ ============ =============
Per share amounts:
Income (loss) before extraordinary items
and cumulative effect . . . . . . . . . . . $ 0.15 $ (0.29) $ 0.66
Extraordinary items . . . . . . . . . . . . . (0.01) (0.20) 0.07
Cumulative effect . . . . . . . . . . . . . . --- 0.29 ---
------------ ------------ -------------
Net income (loss) . . . . . . . . . . . . . . $ 0.14 $ (0.20) $ 0.73
============ ============ =============
</TABLE>
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF RAMSAY HEALTH CARE, INC.
Americare of Galax, Inc.
Atlantic Treatment Center, Inc.
Behavioral Medicine Services of West Virginia, Inc.
Bethany Psychiatric Hospital, Inc.
Bountiful Psychiatric Hospital, Inc.
Carolina Treatment Center, Inc.
Cumberland Mental Health, Inc.
East Carolina Psychiatric Services Corporation
Flagstaff Psychiatric Hospital, Inc.
FPM Behavioral Health, Inc.
FPM/Hawaii, Inc.
Florida Psychiatric Management, Inc.
Florida Psychiatric Associates of South Florida, Inc.
Florida Psychiatric Associates, Inc.
Great Plans Hospital, Inc.
Greenbrier Hospital, Inc.
Gulf Coast Treatment Center, Inc.
Havenwyck Hospital, Inc.
H.C. Corporation
Health Group of Las Cruces, Inc.
Houma Psychiatric Hospital, Inc.
<PAGE> 2
HSA Hill Crest Corporation
HSA Lynnhaven, Inc.
HSA Medical Offices of Mesa, Inc.
HSA of Oklahoma, Inc.
Integrated Behavioral Services, Inc.
Life Centers of Michigan, Inc.
Mainstream, Inc.
Manhattan Psychiatric Hospital, Inc.
Meadowlake/Western Alliance, LLC
Mesa Psychiatric Hospital, Inc.
Michigan Psychiatric Services, Inc.
Psychiatric Institute of West Virginia, Inc.
PsychOptions, Inc.
Ramsay Arizona Health Management Services, Inc.
Ramsay Chicago, Inc.
Ramsay HDI, Inc.
Ramsay Louisiana, Inc.
Ramsay Management Services of West Virginia, Inc.
Ramsay New Orleans, Inc.
Ramsay Nevada, Inc.
Ramsay Nursing Home Services, Inc.
Ramsay Research & Education Institute, Inc.
2
<PAGE> 3
RHCI Concord, Inc.
RHCI San Antonio, Inc.
Rural Health Care Centers of America
The Haven Hospital, Inc.
Transitional Care Ventures, Inc.
Transitional Care Ventures (Arizona), Inc.
Transitional Care Ventures (Florida), Inc.
Transitional Care Ventures (North Texas), Inc.
Transitional Care Ventures (South Carolina), Inc.
Transitional Care Ventures (Texas), Inc.
3
<PAGE> 1
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-52991) pertaining to the Ramsay Health Care, Inc. 1993 Stock
Option Plan and the Ramsay Health Care, Inc. 1993 Employee Stock Purchase Plan,
in the Registration Statement (Form S-8 No. 33-47997) pertaining to the Ramsay
Health Care, Inc. 1992 Employee Warrants Plan, in the Registration Statement
(Form S-8 No. 33-44697) pertaining to the Ramsay Health Care, Inc. 1991 Stock
Option Plan, and in the Registration Statement (Form S-8 No. 33-39260)
pertaining to the Ramsay Health Care, Inc. 1990 Stock Option Plan, of our
report dated September 1, 1994, with respect to the consolidated financial
statements and schedules of Ramsay Health Care, Inc. included in the Annual
Report (Form 10-K) for the year ended June 30, 1994.
Ernst & Young LLP
New Orleans, Louisiana
September 29, 1994
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1994
<PERIOD-START> JUL-1-1993
<PERIOD-END> JUN-30-1994
<CASH> 11,518,000
<SECURITIES> 0
<RECEIVABLES> 26,944,000
<ALLOWANCES> 3,925,000
<INVENTORY> 0
<CURRENT-ASSETS> 46,320,000
<PP&E> 148,190,000
<DEPRECIATION> 38,029,000
<TOTAL-ASSETS> 183,168,000
<CURRENT-LIABILITIES> 25,172,000
<BONDS> 67,707,000
<COMMON> 82,000
0
256,000
<OTHER-SE> 80,130,000
<TOTAL-LIABILITY-AND-EQUITY> 183,168,000
<SALES> 0
<TOTAL-REVENUES> 137,002,000
<CGS> 0
<TOTAL-COSTS> 107,712,000
<OTHER-EXPENSES> 12,462,000
<LOSS-PROVISION> 5,846,000
<INTEREST-EXPENSE> 8,906,000
<INCOME-PRETAX> 2,076,000
<INCOME-TAX> 599,000
<INCOME-CONTINUING> 1,477,000
<DISCONTINUED> 0
<EXTRAORDINARY> 155,000
<CHANGES> 0
<NET-INCOME> 1,322,000
<EPS-PRIMARY> 0.14
<EPS-DILUTED> 0.14
</TABLE>
