SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Mark One) AMENDMENT NUMBER 1
/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, 1996
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)
Delaware 63-0857352
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
Entergy Corporation Building
639 Loyola Avenue, Suite 1700 70113
New Orleans, Louisiana (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code (504) 525-2505
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
None None
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
October 2, 1996 was 8,307,131. The aggregate market value of Common Stock held
by non-affiliates on such date was $14,952,713.
DOCUMENTS INCORPORATED BY REFERENCE
Certain sections of the registrant's definitive Proxy Statement to be filed
for the 1996 Annual Meeting of Stockholders are incorporated by reference into
Part III.
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PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) Documents filed as Part of the Report:
3. Exhibits
Information with respect to this Item is contained in
the attached Index to Exhibits.
(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 10.60, 10.65, 10.66, 10.67, 10.68, 10.72,
10.73, 10.75, 10.81, 10.83, 10.92, 10.95 and 10.97.
35
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this amendment to be signed
on its behalf by the undersigned thereunto fully authorized.
RAMSAY HEALTH CARE, INC.
Dated: 10/7/96 By /s/ Bert G. Cibran
Bert G. Cibran
President and Principal Executive Officer
Pursuant to the requirements of the Securities and Exchange Act of
1934, this amendment has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
Signature/Title
Dated: 10/7/96 By /s/ Carol C. Lang *
Carol C. Lang
Principal Financial Officer
Dated: 10/8/96 By /s/ Paul J. Ramsay *
Paul J. Ramsay
Chairman of the Board and Director
Dated: 10/7/96 By /s/ Luis E. Lamela*
Luis E. Lamela
Executive Vice Chairman of the Board and
Director
36
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Signature/Title
Dated: 10/7/96 By /s/ Aaron Beam, Jr. *
Aaron Beam, Jr.
Director
Dated: 10/7/96 By /s/ Peter J. Evans *
Peter J. Evans
Director
Dated: __________________ By__________________________________________
Robert E. Galloway
Director
Dated: 10/7/96 By /s/ Thomas M. Haythe *
Thomas M. Haythe
Director
Dated: 10/7/96 By /s/ Steven J. Shulman *
Steven J. Shulman
Director
Dated: 10/8/96 By /s/ Michael S. Siddle *
Michael S. Siddle
Director
By /s/ Bert G. Cibran
___________________
Bert G. Cibran
Attorney-in-fact
37
<PAGE>
INDEX OF EXHIBITS
Page
Number
2.1 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) ......................... --
2.2 Agreement of sale and purchase dated April 12, 1995 by
and between Mesa Psychiatric Hospital, Inc. and Capstone
Capital Corporation (incorporated by reference to
Exhibit 2.7 to the Company's Annual Report on Form 10-K for
the year ended June 30, 1995). 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 .............................................. --
2.3 Agreement of sale and purchase dated April 12, 1995 by
and between RHCI San Antonio, Inc. and Capstone Capital
Corporation (incorporated by reference to Exhibit 2.8 to
the Company's Annual Report on Form 10-K for the year ended
June 30, 1995). 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 . --
2.4 Agreement and Plan of Merger dated as of October 1, 1996
among Ramsay Managed Care, Inc., the Company and RHCI
Acquisition Corp. (incorporated by reference to Exhibit 2
to the Company's Current Report on Form 8-K dated
October 2, 1996). Pursuant to Reg. S-K, Item 601(b)(2), the
Company agrees to furnish a copy of the Disclosure
Schedules to such Agreement to the Commission upon request --
3.1 Restated Certificate of Incorporation of the Company, as
amended ...................................................
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) ................................ --
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 (incorporated
by reference to Exhibit 3.4 to the Company's Annual
Report on Form 10-K for the year ended June 30, 1994) ..... --
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) ......................... --
E-1
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Page
Number
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 .....................................................
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 Third Supplemental Trust Indenture dated as of April 12,
1995 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 Elizabeth Talley, as Trustee .....
4.5 Fourth Supplemental Trust Indenture dated as of
September 15, 1995 between the Company, Bountiful
Psychiatric Hospital, Inc., Cumberland Mental Health,
Inc., East Carolina Psychiatric Services, Havenwyck
Hospital, Inc., Mesa Psychiatric Hospital, Inc. and
Psychiatric Institute of West Virginia, Inc. and NationsBank
of Georgia, National Association and Elizabeth Talley,
as Trustee (incorporated by reference to Exhibit 10.100 to
the Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1995) ................................. --
4.6 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) --
4.7 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 4.6) ................. --
4.8 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 4.6) .................. --
4.9 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 4.6) .. --
E-2
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Page
Number
4.10 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 4.6) .................. --
4.11 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 4.6) ................... --
10.1 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
10.2 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 10.1) .......................................... --
10.3 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 10.1) ................................ --
10.4 Pledge and Security Agreement between Bountiful Psychiatric
Hospital, Inc. and The Citizens and Southern National Bank
10.5 Pledge and Security Agreement dated as of March 31, 1990,
between the Company and The Citizens and Southern National
Bank (substantially identical to Exhibit 10.4) ........... --
10.6 Pledge and Security Agreement between Michigan Psychiatric
Services, Inc. and The Citizens and Southern National
Bank (substantially identical to Exhibit 10.4) ............. --
10.7 Pledge and Security Agreement between Americare of Galax,
Inc. and The Citizens and Southern National Bank
(substantially identical to Exhibit 10.4) ............... --
10.8 Deed of Trust and Security Agreement dated as of March 31, 1990
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 ..................
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
(substantially identical to Exhibit 10.8).................. --
10.10 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 10.8) ................................ --
E-3
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Page
Number
10.11 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 ........................
10.12 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 ................................
10.13 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 10.12) ............................................ --
10.14 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. .............
10.15 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) --
10.16 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 10.15 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) --
10.17 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 10.15 above
(substantially identical to Exhibit 10.16) ................ --
10.18 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 10.15 above (substantially
identical to Exhibit 10.16) ............................... --
10.19 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 10.15 above (substantially
identical to Exhibit 10.16) ............................... --
10.20 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 10.15 above
(substantially identical to Exhibit 10.16) ................ --
E-4
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Page
Number
10.21 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 10.15 above
(substantially identical to Exhibit 10.16) ............... --
10.22 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 10.15 above (substantially
identical to Exhibit 10.16) ................................ --
10.23 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 10.15 above
(substantially identical to Exhibit 10.16) ................ --
10.24 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 10.15 above (substantially identical to Exhibit 10.16) --
10.25 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 10.15
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) ............................................ --
10.26 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 10.15 above (substantially identical to
Exhibit 10.25) ............................................ --
10.27 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 10.15 above (substantially identical to
Exhibit 10.25) ............................................ --
10.28 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 10.15 above
(substantially identical to Exhibit 10.25) ................ --
10.29 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 10.15 above (substantially identical
to Exhibit 10.25) ......................................... --
10.30 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 10.15 above (substantially identical to
Exhibit 10.25) ............................................ --
10.31 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 10.15 above (substantially
identical to Exhibit 10.25) ............................... --
E-5
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Page
Number
10.32 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 10.15 above
(substantially identical to Exhibit 10.25) ................ --
10.33 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 10.15 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) --
10.34 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 10.15
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) ............................................ --
10.35 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 10.15 above (substantially identical to
Exhibit 10.34) ............................................ --
10.36 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 10.15 above (substantially identical to
Exhibit 10.34) ............................................ --
10.37 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 10.15
above (substantially identical to Exhibit 10.34) .......... --
10.38 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 10.15 above (substantially identical to
Exhibit 10.34) ............................................ --
10.39 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
10.15 above (substantially identical to Exhibit 10.34) .. --
10.40 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 10.15 above (substantially identical to
Exhibit 10.34) ............................................ --
10.41 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 10.15 above (substantially identical to
Exhibit 10.34) ............................................ --
E-6
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Page
Number
10.42 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 10.15 above (substantially identical
to Exhibit 10.34) ......................................... --
10.43 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 10.15 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) ..... --
10.44 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 10.15 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) ..................................... --
10.45 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 10.15
above, with respect to certain real property located in
Horry County, South Carolina (substantially identical to
Exhibit 10.44) ............................................ --
10.46 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 10.15 above, with respect to
certain real property located in Vernon County, Missouri
(substantially identical to Exhibit 10.44) ................ --
10.47 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 10.15 above, with respect to certain real property
located in St. Tammany Parish, Louisiana (substantially
identical to Exhibit 10.44) ............................... --
10.48 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 10.15 above, with
respect to certain real property located in Okaloosa
County, Florida (substantially identical to Exhibit 10.44) --
10.49 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 10.15 above, with
respect to certain real property located in the City of
Houma, Parish of Terrebonne, Louisiana (substantially
identical to Exhibit 10.44) ............................... --
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Page
Nimber
10.50 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 10.15
above, with respect to certain real property located in
Garfield County, Oklahoma (substantially identical to
Exhibit 10.44) ............................................ --
--
10.51 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 Generate, individually and as
agent for the lenders which are parties to that certain
Credit Agreement described in Exhibit 10.15 above, with
respect to certain real property located in the City of
DeSoto, Dallas County, Texas (substantially identical to
Exhibit 10.44) ............................................ --
10.52 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) .................................. --
10.53 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) ....................... --
10.54 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) ................................. --
10.55 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 (incorporated by reference to
Exhibit 10.56 to the Company's Annual Report on Form 10-K
for the year ended June 30, 1994) ......................... --
10.56 Ground Lease between Facilities Management Corporation,
as landlord, and Psychiatric Institute of West Virginia,
Inc., as tenant, dated as of September 30, 1985
(incorporated by reference to Exhibit 10.57 to the
Company's Annual Report on Form 10-K for the year ended
June 30, 1994) ............................................ --
10.57 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) --
10.58 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) ............................................
10.59 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)
(incorporated by reference to Exhibit 10.60 to the Company's
Annual Report on Form 10-K for the year ended June 30, 1995) --
E-8
<PAGE>
Page
Number
10.60 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) ............................................ --
10.61 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) ....... --
10.62 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) ....................... --
10.63 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) ................................. --
10.64 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) ............................................. --
10.65 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) ............... --
10.66 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) --
10.67 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) .......................... --
10.68 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) .......................... --
10.69 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) ........................ --
10.70 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) ................................. --
10.71 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) ...................................... --
10.72 Ramsay Health Care, Inc. 1993 Stock Option Plan
(incorporated by reference to Exhibit 10.83 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended December 31, 1993) .................................. --
E-9
<PAGE>
PagE
Number
10.73 Ramsay Health Care, Inc. 1993 Employee Stock
Purchase Plan (incorporated by reference to Exhibit 10.84
to the Company's Quarterly Report on Form 10-Q for the
quarter ended December 31, 1993 ........................... --
10.74 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
(incorporated by reference to Exhibit 10.84 to the
Company's Annual Report on Form 10-K for the year ended
June 30, 1994) ............................................ --
10.75 Employment Agreement dated July 19, 1994 between the
Company and Brent J. Bryson (incorporated by reference
to Exhibit 10.85 to the Company's Annual Report on Form
10-K for the year ended June 30, 1995) .................... --
10.76 Rights Agreement dated as of August 1, 1995 between
Ramsay Health Care, Inc. and First Union National Bank of
North Carolina, as Rights Agent, which includes the form
of Right Certificate as Exhibit A and the Summary of
Rights to Purchase Common Shares as Exhibit B (incorporated
by reference to Exhibit 4.1 to the Company's Current Report
on Form 8-K dated August 1, 1995) ......................... --
10.77 Letter Agreement dated June 30, 1995 among Ramsay Health
Care, Inc., Ramsay Holdings HSA Limited and Paul Ramsay
Holdings Pty. Limited (incorporated by reference to Exhibit
4.2 to the Company's Current Report on Form 8-K dated
August 1, 1995) ........................................... --
10.78 Lease Agreement dated April 12, 1995 between Capstone
Capital Corporation and Mesa Psychiatric Hospital, Inc.
(incorporated by reference to Exhibit 10.88 to the
Company's Annual Report on Form 10-K for the year ended
June 30, 1995) ............................................ --
10.79 Lease Agreement dated April 12, 1995 between Capstone
Capital of San Antonio,LTD, d/b/a Cahaba of San Antonio,
LTD. and RHCI San Antonio, Inc. (incorporated by reference
to Exhibit 10.89 to the Company's Annual Report on Form
10-K for the year ended June 30, 1995) .................... --
10.80 Facility Lease Agreement dated June 26, 1995 by and between
Charter Canyon Behavioral Health System, Inc. and Bountiful
Psychiatric Hospital, Inc. (incorporated by reference to
Exhibit 10.90 to the Company's Annual Report on Form 10-K
for the year ended June 30, 1995) ......................... --
10.81 Employment termination letter dated September 15, 1995
between the Company and Gregory H. Browne (incorporated by
reference to Exhibit 10.91 to the Company's Annual Report
on Form 10-K for the year ended June 30, 1995) ............ --
10.82 Second Amended and Restated Distribution Agreement between
the Company and Ramsay Managed Care, Inc. ("RMCI")
(incorporated by reference to Exhibit 10.1 to RMCI's
Registration Statement on Form S-1 (Registration
No. 33-78034) filed with the Commission on April 24, 1995) --
10.83 Employee Benefit Agreement dated as of February 1, 1995
between the Company and RMCI (incorporated by reference to
Exhibit 10.4 to RMCI's Registration Statement on Form S-1
(Registration No. 33-78034) filed with the Commission on
April 24, 1995) ........................................... --
E-10
<PAGE>
Page
Number
10.84 Tax Sharing Agreement dated as of October 25, 1994 between
the Company and RMCI(incorporated by reference to Exhibit
10.5 to RMCI's Registration Statement on Form S-1
(Registration No. 33-78034) filed with the Commission
on April 24, 1995) ........................................ --
10.85 Corporate Services Agreement dated as of January 2, 1995
between the Company and RMCI (incorporated by reference to
Exhibit 10.6 to RMCI's Registration Statement on Form S-1
(Registration No. 33-78034) filed with the Commission on
April 24, 1995) ........................................... --
10.86 Form of Withholding Tax Agreement between the Company,
Ramsay Holdings HSA Limited, Paul Ramsay Holdings Pty.
Limited and Ramsay Health Care Pty. Limited (incorporated
by reference to Exhibit 10.7 to RMCI's Registration
Statement on Form S-1 (Registration No. 33-78034) filed
with the Commission on April 24, 1995) .................... --
10.87 $6,000,000 Subordinated Promissory Note of RMCI,
as amended (incorporated by reference to Exhibit 10.13
to RMCI's Registration Statement on Form S-1 (Registration
No. 33-78034) filed with the Commission on April 24, 1995) --
10.88 Consent and Amendment dated April 12, 1996 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 ..
10.89 Second Amendment to Credit Agreement dated as of
September 15, 1995 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 10.99 to the Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 1995) ............ --
10.90 Amended and Restated Stock Purchase Agreement dated
October 12, 1995 by and among Paul Ramsay Holdings Pty.
Limited, Ramsay Health Care, Inc. and, solely for the
purpose of Section I, III and VI of the agreement,
Ramsay Health Care Pty. Limited (incorporated by reference
to Exhibit 10.101 to the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1995) ....... --
10.91 Amendment to Rights Agreement, dated October 3, 1995
between Ramsay Health Care, Inc. and First Union Bank
of North Carolina, as Rights Agent (incorporated by
reference to Exhibit 10.102 to the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30,
1995) ..................................................... --
10.92 Ramsay Health Care, Inc. 1995 Long Term Incentive Plan
(incorporated by reference to Exhibit 10.103 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended December 31, 1995) .................................. --
10.93 Third Amendment to Credit Agreement dated as of August 15,
1996 among the Company and certain 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 .................................................
10.94 Stock Purchase Agreement dated as of August 13, 1996 by and
among Paul Ramsay Holdings Pty. Limited, the Company and,
solely for purposes of Sections I, III and IV thereof,
Ramsay Health Care Pty. Limited ...........................
E-11
<PAGE>
Page
Number
10.95 Amended and Restated Employment Agreement dated as of
August 15, 1996 by and between Reynold Jennings and the
Company ...............................................
10.96 Exchange Agreement dated September 10, 1996, by and among
the Company, Paul Ramsay Hospitals Pty. Limited and
Paul J. Ramsay, including a related Warrant Certificate
dated September 10, 1996 issued to Ramsay Hospital Pty.
Limited ...................................................
10.97 Consulting Agreement dated as of January 1, 1996 between
the Company and Summa Healthcare Group, Inc. ..............
10.98 Letter Agreement dated as of September 10, 1996 by and
among the Company, Ramsay Health Care Pty. Limited and Paul
Ramsay Holdings Pty. Limited, included a related Warrant
Certificate dated September 10, 1996 issued to Paul Ramsay
Holdings Pty. Limited .....................................
11 Computation of Net Income Per Share .......................
21 Subsidiaries of the Company ...............................
23 Consent of Ernst & Young LLP ..............................
27 Financial Data Schedule ...................................
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-12
RESTATED CERTIFICATE OF INCORPORATION
OF
HEALTHCARE SERVICES OF AMERICA, INC.
It is hereby certified that:
1. The present name of the corporation (hereinafter called the
"corporation") is Healthcare Services of America, Inc., which is the name under
which the corporation was originally incorporated), and the date of filing the
original certificate of incorporation of the corporation with the Secretary of
State of the State of Delaware is July 15, 1983.
2. The provisions of the certificate of incorporation of the
corporation as heretofore amended and/or supplemented, are hereby restated and
integrated into the single instrument which is hereinafter set forth, and which
is entitled Restated Certificate of Incorporation of Healthcare Services of
America, Inc., without further amendment and without any discrepancy between the
provisions of the certificate of incorporation as heretofore amended and
supplemented and the provisions of the said single instrument hereinafter set
forth.
3. The Board of Directors of the corporation has duly adopted this
Restated Certificate of Incorporation pursuant to the provisions of Section 245
of the General Corporation Law of the State of Delaware in the form set forth as
follows:
<PAGE>
Exhibit 3.1
"RESTATED CERTIFICATE OF INCORPORATION"
OF
HEALTHCARE SERVICES OF AMERICA, INC.
(1) The name of the corporation is Healthcare Services of America,
Inc.
(2) The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801, New
Castle County. The name of its registered agent at such address is The
Corporation Trust Company.
(3) The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
(4) The total number of shares of stock which the corporation shall
have authority to issue is Twenty-Nine Million One Hundred Thousand (29,100,000)
shares, of which Twenty-Five Million (25,000,000) shares, par value $1.00 per
share, amounting in the aggregate to Twenty-Five Million Dollars ($25,000,000)
shall be Common Stock; One Million One Hundred Thousand (1,100,000) shares, par
value $1.00 per share, amounting in the aggregate to One Million One Hundred
Thousand Dollars ($1,100,000) shall be Class A Preferred Stock; and Three
Million (3,000,000) shares, par value $1.00 per share, amounting in the
aggregate to Three Million Dollars ($3,000,000), shall be Class B Preferred
Stock.
Section 1. Class A Preferred Stock. Class A Preferred Stock shall not
bear interest, shall be non-voting and shall not be entitled to any preference
in liquidation or dissolution. Each share of Class A Preferred Stock is
convertible, at the option of the holder thereof, at any time after the date of
issuance, at the office of the corporation into one (1) share of Common Stock,
par value $1.00 per share (the "Conversion Rate").
(a) Adjustment to Conversion Rate for Diluting Issues.
(i) Share Dividends, Class Subscription Offering, Combinations or
Subdivisions of Shares. With the exception of that stock split effected in the
nature of a stock dividend payable to Common Stockholders of record on the
effective date of this amendment, which stock split is in connection with a plan
of recapitalization of which this amendment forms a part, no dividend or other
distribution on or in respect of Common, Class A Preferred or Class B Preferred
<PAGE>
2
Shares which is payable in securities of the corporation shall be declared or
paid, nor shall the corporation issue rights or warrants to the holders of
Common, or to holders of Class A or B Preferred Stock to subscribe for or
purchase any securities of the corporation, nor shall there be any combination
or subdivision of outstanding shares of any of the classes of stock unless (1)
any such action is taken simultaneously with respect to all shares of all
classes; (2) all shares issued as a dividend or other distribution on or in
respect of Common (or issuable upon conversion or exchange of any security
issued as such a dividend or distribution) shall be shares of Common, all shares
issued as a dividend or other distribution on or in respect of Class A Preferred
(or issuable upon conversion or exchange of any security issued as such a
dividend or distribution) shall be shares of Class A Preferred, and all shares
issued as a dividend or other distribution on or in respect of Class B Preferred
(or issuable upon conversion or exchange of any security issued as such a
dividend or distribution) shall be shares of Class B Preferred; (3) such rights
or warrants shall be issued to the holders of Common and the holders of Class A
and Class B Preferred on the same terms; and (4) any resulting increase or
decrease of Common shares or Class A or Class B Preferred shares will be in such
proportion to any resulting increase or decrease of the shares of all other
classes of capital stock so that upon any subsequent conversion of Class A
Preferred shares in to Common, the resulting number of shares received by the
holders of those shares being converted shall constitute the same percentage of
the then issued and outstanding Common shares and capital stock that would
otherwise have resulted had there not been any increase or decrease in any of
the shares of capital stock.
(ii) Adjustment for Reclassification, Exchange and Substitution.
If any class of Common shares issuable upon conversion of any shares of Class A
Preferred shares shall at any time or from time to time be changed into the same
or different number of shares of any class or classes of stock, whether by
capital reorganization, reclassification or otherwise (collectively,
"Recapitalization") other than a subdivision or combination of shares or stock
dividend provided for in Section 1(a)(i) above and subject to each and every
limitation contained in said section (collectively, "Stock Distribution"), then
and in each such event, the holder of each share of Class A Preferred Stock
shall have the right thereafter to convert such share into the kind and amount
of shares of stock and other securities and property receivable upon such
Recapitalization by a holder of the number of shares of the other classes of
Common into which such Class A Preferred shares might have been converted
immediately prior to such Recapitalization.
<PAGE>
3
(b) Adjustment to Conversion Rate for Sale of Capital Stock.
(i) If at any time, or from time to time, after the issuance of
the Class A Preferred Stock (the "Issuance Date"), the corporation issues or
sells, or is deemed by the express provisions of this subsection (i) to have
issued or sold, "Additional Shares of Capital Stock" (as hereinafter defined),
other than as a Stock Distribution, for an "Effective Price" (as hereinafter
defined) of less than Two Dollars and Two Cents ($2.02) per share, then and in
each such case, as of the opening of business on the date of such issue or sale,
Class A Preferred Stock outstanding before the issuance of Additional Shares of
Capital Stock shall be convertible into (i) the number of shares of Class A
Preferred Stock outstanding at the Issuance Date plus all Additional Shares of
Capital Stock issued after the Issuance Date, divided by (ii) the sum of (A) the
number of shares of Class A Preferred Stock outstanding at the Issuance Date,
plus (B) the number of shares of Class A Preferred Stock which the aggregate
consideration received (or by express provision thereof deemed to have been
received) by the corporation for the total number of Additional Shares of
Capital Stock issued after the Issuance Date would purchase at Two Dollars and
Two Cents ($2.02) per share. Upon determining the new number of Common shares
into which each share of Class A Preferred Stock shall be convertible, the
Conversion Rate shall be appropriately adjusted to reflect such number. There
shall be no adjustment in the number of Common shares of the class or classes
into which each such share of Class A Preferred Stock can be converted if
Additional Shares of Capital Stock are sold for an Effective Price of more than
Two Dollars and Two Cents ($2.02) per share.
(ii) "Additional Shares of Capital Stock" issued or sold shall
mean all shares of Capital Stock issued or sold by the corporation after the
Issuance Date, whether or not subsequently reacquired or retired by the
corporation, other than shares of Common Stock or Common stock issued upon
conversion of the Class A Preferred Stock. The "Effective Price" of Additional
Shares of Capital Stock shall mean the quotient determined by dividing the total
number of Additional Shares of Capital Stock issued or sold, or deemed to have
been issued or sold, by the corporation under this Section 1. into the aggregate
consideration received or deemed to have been received by the corporation for
such issue under this Section 1.
<PAGE>
4
(iii) For the purpose of making any adjustment required under
this Section 1., the consideration received by the corporation for any issue or
sale of securities shall (A) to the extent it consists of cash be computed at
the gross amount of cash received by the corporation before deducting any
expenses payable by the corporation or any underwriting or similar commissions,
compensation, or concessions paid or allowed by the corporation in connection
with such issue or sale, (B) to the extent it consists of property other than
cash, be computed at the fair value of that property as determined in good faith
by the corporation's board of directors, and (C) if Additional Shares of Capital
Stock, Convertible Securities (as hereinafter defined), or rights or options to
either are issued or sold together with other stock or securities or other
assets of the corporation for a consideration which covers both, be computed as
the portion of the consideration so received that may be reasonably determined
in good faith by the board of directors to be allocated to such Additional
Shares of Capital Stock, Convertible Securities, or rights or options.
(iv) For the purpose of the adjustment required under this
Section 1., if at any time or from time to time after the Issuance Date the
corporation issues or sells any rights or options for the purchase of, or stock
or other securities convertible into, Additional Shares of Capital Stock (such
convertible stock or securities being hereinafter referred to as "Convertible
Securities"), then in each such case the corporation shall be deemed to have
issued at the time of the issuance of such rights or options or Convertible
Securities the maximum number of Additional Shares of Capital Stock issuable
upon exercise or conversion thereof and to have received as consideration for
the issuance of such shares amounts equal to the total amount of the
consideration, if any, received by the corporation for the issuance of such
rights or options or Convertible Securities, plus in the case of such options or
rights, the minimum amounts of consideration, if any, payable to the corporation
upon the exercise of such options or rights, and, in the case of Convertible
Securities, the minimum amount of consideration, if any, payable to the
corporation upon conversion (other than by, cancellation or liabilities or
obligations evidenced by such convertible securities). No further adjustment of
the Conversion Rate following adjustment upon the issuance of such rights,
options or Convertible Securities, shall be made as a result of the actual
issuance of Additional Shares of Capital Stock on the exercise of any such
rights or options or the conversion of any such Convertible Securities. If any
such rights or options or the conversion privilege represented by any such
Convertible Securities shall expire without having been exercised, the
<PAGE>
5
Conversion Rate adjusted upon the issuance of such rights, options or
Convertible Securities shall be readjusted to the Conversion Rate which would
have been in effect had an adjustment been made on the basis that the only
Additional Shares of Capital Stock so issued were the Additional Shares of
Capital Stock, if any, actually issued or sold on the exercise of such rights or
options or rights of conversion of such Convertible Securities, and such
Additional Shares of Capital Stock, if any, were issued or sold for the
consideration actually received by the corporation upon such exercise, plus the
consideration, if any, actually received by the corporation for the granting of
all such rights or options, whether or not exercised, plus the consideration
received for issuing or selling the Convertible Securities actually converted
plus the consideration, if any, actually received by the corporation upon
conversion (other than by cancellation of liabilities or obligations evidenced
by such Convertible Securities).
(v) For the purpose of adjustment required under this Section 1.,
if at any time or from time to time after the Issuance Date the corporation
issues or sells any rights or options for the purchase of Convertible
Securities, then in each such case the corporation shall be deemed to have
issued at the time of the issuance of such rights or options the maximum number
of Additional Shares of Capital Stock issuable upon conversion of the total
number of Convertible Securities covered by such rights or options and to have
received as consideration for the issuance of such Additional Shares of Capital
Stock an amount equal to the amount of consideration, if any, received by the
corporation for the issuance of such rights or options, plus the minimum amounts
of consideration, if any, payable to the corporation (other than by cancellation
of liabilities or obligations evidenced by such Convertible Securities) upon the
conversion of such Convertible Securities. No further adjustment of the
Conversion Rate, adjusted upon the issuance of such rights or options, shall be
made as a result of the actual issuance of the Convertible Securities upon the
exercise of such rights or options or upon the actual issuance of Additional
Shares of Capital Stock upon the conversion of such Convertible Securities. The
provisions of paragraph (iv) above for the readjustment of the Conversion Rate
upon the expiration of rights or options or the rights of conversion of
Convertible Securities shall apply in as identical a fashion as is possible to
the rights, options, and Convertible Securities referred to in this paragraph
(v).
(vi) No adjustment shall be made under this Section 1.(b) for the
issuance of Additional Shares of Capital Stock if and to the extent that the
Conversion Rate will be adjusted for such issuance pursuant to Section 1 (a). If
<PAGE>
6
an issuance transaction qualifies in part for adjustment of the Conversion Rate
under subsection 1.(a) and qualifies in part for adjustment of the Conversion
Rate under subsection 1.(b), then appropriate allocation and division of the
transaction shall be made so as to properly effectuate the intention of the
provisions of this Section 1.
(c) In the case of an adjustment or readjustment of the Conversion
Rate, the corporation shall, at its own expense, compute such adjustment or
readjustment and prepare a certificate showing the same, and shall mail the
certificate by certified or registered United States mail, return receipt
requested, postage prepaid, to each holder of Class A Preferred Shares at the
holder's address as shown on the books of the corporation. The certificate shall
be certified by the corporation's chief financial officer and shall set forth
the new Conversion Rate and the facts upon which the new rate was computed. Such
notice shall be deemed given on the earlier or actual receipt or five business
days after mailing in the manner described in this subsection (c). Such notice
shall not be deemed binding on the holders of Class A Preferred Stock.
(d) Fractional Shares. No fractional shares shall be issued upon
conversion of the Class A Preferred Stock or after adjustment of the original
Conversion Rate. In lieu thereof, the corporation shall pay cash equal to such
fraction multiplied by the then market price per share of the stock issuable
upon such conversion. The market price shall be equal to the most recent
quotation on the exchange, if any, on which the Common Stock is listed, or on
the automated quotation system of the National Association of Securities
Dealers.
(e) Reservation of Stock Issuable Upon Conversion. The corporation
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the Class A Preferred Stock, such number of its shares of the classes of Common
Stock as shall from time to time be sufficient to effect the conversion of all
outstanding Class A Preferred Stock; and if at any time the number of authorized
but unissued shares of classes of Common Stock shall not be sufficient to effect
the conversion of all then outstanding Class A Preferred Stock; the corporation
will take such corporate action as may, in the opinion of its counsel, be
necessary to increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purpose.
<PAGE>
7
Section 2. Class B Preferred Stock. The board of directors shall have,
to the fullest extent possible under Section 151(g) of the Delaware General
Corporation law, the power and authority to designate the voting powers,
designations, preferences, and relative, participating, optional or other
rights, if any, and the qualifications, limitations, or restrictions of the
Class B Preferred Stock and the holders thereof. The board of directors is
authorized to issue, by resolution or resolutions, the Class B Preferred Stock
authorized herein to be issued, and by such resolution or resolutions to divide
said Preferred Stock into one or more series of Preferred Stock, and by such
resolution or resolutions, to fix the voting powers, designations, preferences,
and relative, participating, optional or other rights, or the qualifications,
limitations or restrictions thereof.
1,000,000 shares of such Class B Preferred Stock has been authorized and
subsequently designated as Class Preferred Stock, Series 1987 (the "Series 1987
Preferred Stock") and shall be described and limited as follows:
(a) For purposes of this Section 2, the following definitions shall
apply:
"Affiliate" shall mean a person that directly, or indirectly through
one or more intermediaries, controls, or is controlled by or is under common
control with a person or entity.
"Board of Directors" shall mean the board of directors of the
corporation.
"Original Issue Date" shall mean the date on which the first share of
Series 1987 Preferred Stock was originally issued.
(b) Dividend Rights. From and after the issuance of the Series 1987
Preferred Stock, the holders of outstanding Series 1987 Preferred Stock shall be
entitled to receive, and shall be paid, when and as declared by the Board, out
of funds legally available therefor, cumulative dividends at an annual rate of
$.15 per share, payable in arrears quarterly on January 15, April 15, July 15
and October 15, to stockholders of record on a date not more than 20 days prior
to the date on which such cash dividends are payable, said dividends to commence
accrual on the Original Issue Date. Such dividends shall be prior and in
preference to any declaration of payment of any dividend on the Common Stock of
the corporation. Such dividends shall be cumulative and shall accrue whether or
not declared by the Board of Directors of the corporation. No cash dividends
<PAGE>
8
shall be paid with respect to any class or series of capital stock of the
corporation, including without limitation, the Class A Preferred Stock and the
Common Stock of the corporation, until all dividends accrued on any outstanding
shares of the Series 1987 Preferred Stock, whether or not declared, have been
set apart and fully paid. No accumulation of dividends on the Series 1987
Preferred Stock shall bear interest.
(c) Liquidation Rights. In the event of liquidation, dissolution or
winding up of the corporation, whether voluntary or involuntary, the holders of
each share of the Series 1987 Preferred Stock, by reason of their ownership
thereof, shall be entitled to receive in exchange for and in redemption of their
Series 1987 Preferred Stock, prior and in preference to any distribution of any
of the assets or surplus funds of the corporation to the holders of any class or
series of capital stock of the corporation, including without limitation, the
Class A Preferred Stock and the Common Stock of the corporation, an amount equal
to $2.50 per share plus all accrued but unpaid dividends, whether or not
declared, on such share.
All of the preferential amounts to be paid to the holders of the Series 1987
Preferred Stock under this Section (c) shall be paid or set apart for payment
before the payment or setting apart for payment of any amount for, or the
distribution of any assets or surplus funds of the corporation to, the holders
of any class or series of capital stock of the corporation, including without
limitation, the Class A Preferred Stock and the Common Stock of the corporation,
in connection with such liquidation, dissolution or winding up, whether
voluntary or involuntary. If the assets or surplus funds to be distributed to
the holders of the Series 1987 Preferred Stock are insufficient to permit the
payment to such holders of their full preferential amount, the assets and
surplus funds legally available for distribution shall be distributed ratably
among the holders of the Series 1987 Preferred Stock in proportion to the full
preferential amount each such holder is otherwise entitled to receive. After the
payment or distribution to the holders of the Series 1987 Preferred Stock of the
full preferential amounts aforesaid, the holders of the Class A Preferred Stock
and the Common Stock then outstanding shall be entitled to receive ratably all
the remaining assets of the corporation.
(d) Voting Rights. Except as set forth specifically below, or as
required by law, the holder of each share of the Series 1987 Preferred Stock
shall be entitled to nine and two-tenths (9.2) votes on all matters put to a
vote of the stockholders of the corporation and shall otherwise have voting
<PAGE>
9
rights and powers equal to the voting rights and powers of the Common Stock.
Such number of votes shall be appropriately adjusted in the event of any
recapitalization, reorganization, stock dividend, stock split or similar event
affecting the capital stock of the corporation. In the event that any shares of
the Series 1987 Preferred Stock are transferred to a person or persons other
than to (a) an Affiliate of Ramsay Corporation ("Ramsay") or (b) a member of a
"group" (within the meaning of Section 13(d) of the Securities Exchange Act of
1934, as amended (the "34 Act")) which includes Ramsay and/or any Affiliate of
Ramsay and in which Ramsay and/or Affiliates of Ramsay retain all voting rights
of such Series 1987 Preferred Stock, then such transferred Series 1987 Preferred
Stock shall be entitled to only that number of votes, on all matters put to the
vote of stockholders of the corporation, equal to the number of full shares of
Common Stock into which such transferred Series 1987 Preferred Stock is
convertible. In such event, the Series 1987 Preferred Stock not so transferred
shall retain the voting rights set forth above. In the event Ramsay transfers
shares of Common Stock beneficially owned by it to a person or persons other
than to (a) an Affiliate of Ramsay or (b) a member of a "group (within the
meaning of Section 13(d) of the 34 Act) which includes Ramsay and/or any
Affiliates of Ramsay and in which Ramsay and/or Affiliates of Ramsay retain all
voting rights of such Common Stock, where following such transfer Ramsay
beneficially owns less than 2,375,000 shares of Common Stock (such number of
shares to be appropriately adjusted in the event of any recapitalization,
reorganization, stock dividend, stock split or similar event affecting the
capital stock of the corporation) then all Series 1987 Preferred Stock owned
beneficially by Ramsay shall be entitled to only that number of votes, on all
matters put to a vote of stockholders of the corporation, equal to the number of
full shares of Common Stock into which such Series 1987 Preferred Stock is
convertible at the time of taking such vote. In any and all circumstances, the
holders of the Series 1987 Preferred Stock shall be entitled to notice of any
stockholders' meeting in accordance with the bylaws of the corporation and shall
vote together with the holders of the Common Stock as one class upon any matter
submitted to a vote of stockholders, except those matters required by law to be
submitted to a class vote of the holders of Series 1987 Preferred Stock.
Fractional votes shall not, however, be permitted, and any fractions shall be
disregarded in computing voting rights.
(e) Conversion. The holders of the Series 1987 Preferred Stock shall
have conversion rights as follows:
<PAGE>
10
(i) Right to Convert.
(A) Each share of Series 1987 Preferred Stock shall be
convertible, at the option of the holder thereof, at any time
after the date of issuance of such share at the office of the
corporation or any transfer agent for the Series 1987 Preferred
Stock, into that number of fully paid and nonassessable shares of
Common Stock that results from dividing the Conversion Price per
share in effect at conversion into $2.50 and multiplying the
quotient obtained by the number of shares of Series 1987
Preferred Stock being converted. The initial Conversion Price is
$5.00 per share. The initial Conversion Price is subject to
adjustment from time to time as provided herein.
(B) No fractional shares of Common Stock shall be issued
upon conversion of Series 1987 Preferred Stock and if any shares
of Series 1987 Preferred Stock surrendered by a holder, in the
aggregate, for conversion which would otherwise result in a
fractional share of Common Stock, then such fractional share
shall be redeemed at the then effective Conversion Price per
share, payable as promptly as possible when funds are legally
available therefor.
(ii) Mechanics of Conversion. Before any holder of Series 1987
Preferred Stock shall be entitled to convert the same into shares of Common
Stock, such holder shall surrender the certificate or certificates therefor,
duly endorsed and accompanied by properly executed stock powers, at the office
of the corporation or of any transfer agent for the Series 1987 Preferred Stock,
shall give written notice to the corporation at such office of the name or names
in which such holder wishes the certificate or certificates for shares of Common
Stock to be issued if different from the name shown on the books and records of
the corporation, and shall pay any applicable transfer tax. Said conversion
notice shall also contain such representations as may reasonably be required by
the corporation to the effect that the shares to be received upon conversion are
not being acquired and will not be transferred in any way which might violate
the then applicable securities laws. The corporation shall, as soon as
practicable thereafter, issue and deliver at such office to such holder of
Series 1987 Preferred Stock, or to the nominee or nominees of such holder, a
certificate or certificates for the number of shares of Common Stock to which
such holder shall be entitled as aforesaid. Such conversion shall be deemed to
<PAGE>
11
have been made immediately prior to the close of business on the date of such
surrender of the shares of Series 1987 Preferred Stock to be converted, and the
person or persons entitled to receive the shares of Common Stock issuable upon
such conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock as of such date. All certificates issued
upon the exercise of the conversion shall contain a legend governing
restrictions upon such shares imposed by applicable securities laws.
(iii) Adjustment for Subdivisions or Combinations of Common
Stock. In the event the corporation at any time or from time to time after the
Original Issue Date effects a subdivision or combination of its outstanding
Common Stock into a greater or lesser number of shares without a proportionate
and corresponding subdivision or combination of its outstanding Series 1987
Preferred Stock, then and in each such event the Conversion Price shall be
increased or decreased proportionately.
(iv) Adjustments for Dividends, Distributions and Common Stock
Equivalents. In the event the corporation at any time or from time to time after
the Original Issue Date shall make or issue, or fix a record date for the
determination of holders of Common Stock entitled to receive, a dividend or
other distribution payable in additional shares of Common Stock or other
securities or rights convertible into or entitling the holder thereof to receive
additional shares of Common Stock (hereinafter referred to as "Common Stock
Equivalents") without payment of any consideration by such holder of such Common
Stock Equivalents or the additional shares of Common Stock, without a
proportionate and corresponding dividend or other distribution to holders of
Series 1987 Preferred Stock, then and in each such event the maximum number of
shares (as set forth in the instrument relating thereto without regard to any
provisions contained therein for subsequent adjustment of such number) of Common
Stock issuable in payment of such dividend or distribution or upon conversion or
exercise of such Common Stock Equivalents shall be deemed, for purposes of this
Subsection (e)(iv), to be issued and outstanding as of the time of such issuance
or, in the event such a record date shall have been fixed, as of the close of
business on such record date. In each such event the then applicable Conversion
Price shall be decreased as of the time of such issuance or, in the event such a
record date shall have been fixed, as of the close of business on such record
date, by multiplying the then applicable Conversion Price by a fraction,
<PAGE>
12
(A) the numerator of which shall be the total number of shares of
Common Stock issued and outstanding or deemed to be issued and outstanding
immediately prior to the time of such issuance or the close of business on
such record date; and
(B) the denominator of which shall be the total number of shares of
Common Stock (x) issued and outstanding or deemed pursuant to the terms
hereof to be issued and outstanding (not including any shares described in
clause (y) immediately below), immediately prior to the time of such
issuance or the close of business on such record date, plus (y) the number
of shares of Common Stock issuable in payment of such dividend or
distribution or upon conversion or exercise of such Common Stock
Equivalents; and provided, however, (i) if such record date shall have been
fixed and such dividend is not fully paid or if such distribution is not
fully made on the date fixed therefor, the Conversion Price shall be
recomputed accordingly as of the close of business on such record date and
thereafter the Conversion Price shall be adjusted pursuant to this
Subsection (e)(iv) as of the time of actual payment of such dividends or
distributions; or (ii) if such Common Stock Equivalents provide, with the
passage of time or otherwise, for any decrease or increase in the number of
shares of Common Stock issuable upon conversion or exercise thereof (or
upon the occurrence of a record date with respect thereto), the Conversion
Price computed upon the original issue thereof (or upon the occurrence of a
record date with respect thereto), and any subsequent adjustments based
thereon, shall, upon any such decrease or increase becoming effective, be
recomputed to reflect such decrease or increase insofar as it affects the
rights of conversion or exercise of the Common Stock Equivalents then
outstanding; or (iii) upon the expiration of any rights of conversion or
exercise under any unexercised Common Stock Equivalents, the Conversion
Price computed upon the original issue thereof (or upon the occurrence of a
record date with respect thereto), and any subsequent adjustments based
thereon, shall, upon such expiration, be recomputed as if the only
additional shares of Common Stock issued were the shares of such stock, if
any, actually issued upon the conversion or exercise of such Common Stock
Equivalents; or (iv) in the event of issuance of Common Stock Equivalents
which expire by their terms not more than sixty (60) days after the date of
issuance thereof, no adjustments of the Conversion Price shall be made
until the expiration or exercise of all such Common Stock Equivalents,
whereupon such adjustment shall be made in the manner provided in this
Subsection (e)(iv).
<PAGE>
13
(v) Adjustment of Conversion Price for Diluting Issues. Except as
otherwise provided in this Subsection (e)(v), in the event the corporation after
the Original Issue Date sells or issues any Common Stock or Common Stock
Equivalents, at a per share consideration (as defined below) less than the
Conversion Price then in effect for the Series 1987 Preferred Stock, then the
Conversion Price then in effect shall be adjusted as provided in subparagraphs
(A), (B), (C), and (D) hereof. For the purposes of the foregoing, the per share
consideration with respect to the sale or issuance of Common Stock shall be the
price per share received by the corporation, prior to the payment of any
expenses, commissions, discounts and other applicable costs. With respect to the
sale or issuance of Common Stock Equivalents which are convertible into or
exchangeable for Common Stock without further consideration, the per share
consideration shall be determined by dividing the maximum number of shares (as
set forth in the instrument relating thereto without regard to any provisions
contained therein for subsequent adjustment of such number) of Common Stock
issuable with respect to such Common Stock Equivalents into the aggregate
consideration received by the corporation upon the sale or issuance of such
common Stock Equivalents. With respect to the issuance of other Common Stock
Equivalents, the per share consideration shall be determined by dividing the
maximum number of shares (as set forth in the instrument relating thereto
without regard to any provisions contained therein for subsequent adjustment of
such number) of Common Stock issuable with respect to such Common Stock
Equivalents into the total aggregate consideration received by the corporation
upon the sale or issuance of such Common Stock Equivalents plus the total
consideration receivable by the corporation upon the conversion or exercise of
such Common Stock Equivalents. The issuance of Common Stock or Common Stock
Equivalents for no consideration or for less than $1.00 per share shall be
deemed to be an issuance at a per share consideration of $1.00. In connection
with the sale or issuance of Common Stock and/or Common Stock Equivalents for
noncash consideration, the amount of consideration shall be determined by the
Board of Directors of the corporation.
As used in this Subsection (e)(v), "Additional Shares of Common
Stock" shall mean either shares of Common Stock issued subsequent to the
Original Issue Date or, with respect to the issuance of Common Stock Equivalents
subsequent to the Original Issue Date, the maximum number of shares (as set
forth in the instrument relating thereto without regard to any provisions
<PAGE>
14
contained therein for subsequent adjustment of such number) of Common Stock
issuable in exchange for, upon conversion of, or upon exercise of such Common
Stock Equivalents.
(A) Upon each issuance of Common Stock for a per share consideration
less than the Conversion Price in effect on the date of such issuance, the
Conversion Price of the Series 1987 Preferred Stock in effect on such date
will be adjusted by multiplying it by a fraction:
(x) the numerator of which shall be the number of shares of
Common Stock outstanding immediately prior to the issuance of such
Additional Shares of Common Stock plus the number of shares of Common
Stock which the aggregate net consideration received by the
corporation for the total number of such Additional Shares of Common
Stock so issued would purchase at the Conversion Price then in effect,
and
(y) the denominator of which shall be the number of shares of
Common Stock outstanding immediately prior to the issuance of such
Additional Shares of Common Stock, plus the number of such Additional
Shares of Common Stock so issued.
(B) Upon each issuance of Common Stock Equivalents, exchangeable
without further consideration into Common Stock, for a per share
consideration less than the Conversion Price in effect on the date of such
issuance, the Conversion Price of the Series 1987 Preferred Stock in effect
on such date will be adjusted as in subparagraph (A) of this Subsection
(e)(v) on the basis that the related Additional Shares of Common Stock are
to be treated as having been issued on the date of issuance of the Common
Stock Equivalents, and the aggregate consideration received by the
corporation for such Common Stock Equivalents shall be deemed to have been
received for such Additional Shares of Common Stock.
(C) Upon each issuance of Common Stock Equivalents other than those
described in subparagraph (B) of this Subsection (e)(v), for a per share
consideration less than the Conversion Price in effect on the date of such
issuance, the Conversion Price of the Series 1987 Preferred Stock in effect
on such date will be adjusted as in subparagraph (A) of this Subsection
(e)(v) on the basis that the related Additional Shares of Common Stock are
to be treated as having been issued on the date of issuance of such Common
Stock Equivalents, and the aggregate consideration received and
<PAGE>
15
receivable by the corporation on conversion or exercise of such Common
Stock Equivalents shall be deemed to have been received for such Additional
Shares of Common Stock.
(D) Once any Additional Shares of Common Stock have been treated as
having been issued for the purposes of this Subsection (e)(v), they shall
be treated as issued and outstanding shares of Common Stock whenever any
subsequent calculations must be made pursuant hereto. On the expiration of
any options, warrants or rights to purchase Additional Shares of Common
Stock, the termination of any rights to convert or exchange for Additional
Shares of Common Stock, the expiration of any options or rights related to
such convertible or exchangeable securities on account of which an
adjustment in the Conversion Price has been made previously pursuant to
this Subsection (e)(v) or the expiration or termination of any Common Stock
Equivalents, then the Conversion Price shall forthwith be readjusted to
such Conversion Price as would have obtained had the adjustment made upon
the issuance of such options, warrants, rights, securities or options or
rights related to such securities of Common Stock Equivalents been made
upon the basis of the issuance of only the number of shares of Common Stock
actually issued upon the exercise of such options, warrants or rights, upon
the conversion or exchange of such securities or upon the exercise of the
options or rights related to such securities or upon the exercise of the
Common Stock Equivalents.
(E) The foregoing notwithstanding, no adjustment of the Conversion
Price shall be made as a result of the issuance of the following, but such
shares of Common Stock shall be deemed to be outstanding upon issuance for
all other purposes hereof:
(x) shares of Common Stock relating to (i) outstanding options
to purchase 457,683 shares of Common Stock of the corporation and
outstanding commitments to grant options to purchase 132,4000 shares
of Common Stock of the corporation, (ii) warrants to purchase shares
of Common Stock of the corporation outstanding under that certain Note
and Warrant Purchase Agreement dated as of June 15, 1985 pursuant to
which the corporation's 13% Senior Subordinated Notes due June 15,
1990 were issued, including any amendments thereto, (iii) other
warrants to purchase 378,000 shares of Common Stock of the
corporation, (iv) 948,750 shares of Class A Preferred Stock which
shares are convertible at any time and from time to time into the same
<PAGE>
16
number of shares of Common Stock, (v) the right of Charles A. Speir to
convert the demand notes of the corporation in the aggregate principal
amount of $1,000,000 into a number of shares of Common Stock
determined by dividing the principal and all accrued interest on such
notes by $7.00, (vi) the right of the holders of the corporation's 10%
Subordinated Convertible Notes issued pursuant to that certain
Purchase Agreement dated as of September 4, 1987 among the
corporation, Ramsay Corporation and Paul Joseph Ramsay, as modified by
a Supplement to Purchase Agreement dated as of October 30, 1987 among
such parties, to convert the principal amount thereof into sharer of
Common Stock or any mandatory conversion thereof, and (vii) warrants
or options to purchase up to 150,000 shares of Common Stock of the
corporation issued or to be issued to the participating banks under
the Amended and Restated Credit Agreement dated as of November 10,
1983, as amended and restated as of May 31, 1985, as further amended
and restated as of August 13, 1986, and as further amended in November
1987 among the Corporation, the Banks named therein, Security Pacific
National Bank as collateral agent and Bank of America N.T. & S.A. as
general agent (all such numbers to be appropriately adjusted in the
event of any recapitalization, reorganization, stock dividend, stock
split or similar event affecting the capital stock of the
corporation);
(y) any shares of Common Stock pursuant to which the Conversion
Price has been adjusted under Subsection (3) or (4) of this Section
(e); or
(z) any shares of Common Stock issued pursuant to the exchange,
conversion or exercise of any Common Stock Equivalents which have
previously been incorporated into computations hereunder on the date
when such Common Stock Equivalents were issued.
(vi) Reorganizations, Mergers Consolidations, or Sales of Assets.
If at any time or from time to time there shall be a capital reorganization of
the Common Stock (other than a subdivision, combination, reclassification, or
exchange of shares provided for elsewhere in this paragraph (e)) or a merger or
consolidation of the corporation with or into another corporation, or the sale
of all or substantially all of the corporation's properties and assets to any
other person which is effected so that holders of Common Stock are entitled to
<PAGE>
17
receive (either directly or upon subsequent liquidation) stock, securities or
assets with respect to or in exchange for Common Stock, then, as a part of such
reorganization, merger, consolidation, or sale, provision shall be made so that
the holders of the Series 1987 Preferred Stock shall thereafter be entitled to
receive upon conversion of the Series 1987 Preferred Stock, the number of shares
of stock, securities or assets of the corporation, or of the successor
corporation resulting from such merger or consolidation or sale, to which a
holder of Common Stock deliverable upon conversion would have been entitled on
such capital reorganization, merger, consolidation, or sale. In any such case,
appropriate adjustment shall be made in the application of the provisions of
this paragraph (e) with respect to the rights of the holders of the Series 1987
Preferred Stock after the reorganization, merger, consolidation, or sale to the
end that the provisions of this paragraph (e) (including adjustment of the
Conversion Price then in effect and the number of shares purchasable upon
conversion of the Series 1987 Preferred Stock) shall be applicable after that
event as nearly equivalent as may be practicable.
(vii) No Adjustment. No adjustment to the Conversion Price shall
be made if such adjustment would result in a change in the Conversion Price of
less than $.01. Any adjustment of less than $.01 which is not made shall be
carried forward and shall be made at the time of and together with any
subsequent adjustment which, on a cumulative basis, amounts to an adjustment of
$.01 or more in the Conversion Price.
(viii) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Section (e),
the corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and cause independent public
accountants selected by the corporation to verify such computation and prepare
and furnish to each holder of Series 1987 Preferred Stock a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based. The corporation shall, upon the
written request at any time of any holder of Series 1987 Preferred Stock,
furnish or cause to be furnished to such holder a like certificate setting forth
(i) such adjustments and readjustments, (ii) the Conversion Price at that time
in effect, and (iii) the number of shares of Common Stock and the amount, if
any, of other property which at that time would be received upon the conversion
of Series 1987 Preferred Stock.
<PAGE>
18
(ix) Notices of Record Date. In the event of any taking by the
corporation of a record of the holders of any class of securities other than
Series 1987 Preferred Stock for the purpose of determining the holders thereof
who are entitled to receive any dividend or other distribution, any Common Stock
Equivalents or any right to subscribe for, purchase or otherwise acquire any
shares of stock of any class or any other securities or property, or to receive
any other right, the corporation shall mail to each holder of Series 1987
Preferred Stock at least twenty (20) days prior to the date specified therein, a
notice specifying the date on which any such record is to be taken for the
purpose of such dividend, distribution or rights, and the amount and character
of such dividend, distribution or rights.
(x) Reservation of Stock Issuable Upon Conversion. The
corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock solely for the purpose of effecting the
conversion of the shares of the Series 1987 Preferred Stock such number of its
shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of the Series 1987 Preferred Stock; and if
at any time the number of authorized but unissued shares of Common Stock shall
not be sufficient to effect the conversion of all then outstanding shares of the
Series 1987 Preferred Stock, the corporation will take such corporate action as
may, in the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purpose.
(f) Redemption of Series 1987 Preferred Stock. The corporation on
September 30, 1997 shall redeem all of the shares of Series 1987 Preferred Stock
then outstanding by paying $2.50 per share together with all accrued and unpaid
dividends thereon (whether or not declared) to and including the date of
redemption; provided, however, that if the Board of Directors of the corporation
determines at such time by resolution duly adopted that the corporation has
insufficient funds to effect such redemption due solely to the requirements of
applicable state corporate law, then the Series 1987 Preferred Stock shall be,
at such time, automatically converted into Common Stock on the terms set forth
in Section (e) hereof. Notice of the redemption of the Series 1987 Preferred
Stock shall be mailed at least thirty (30) but not more than sixty (60) days
before the redemption to each holder of record of such shares (as of ten (10)
days prior to the date of such notice) at his address as shown by the
corporation's records. At any time after such notice has been mailed, the
corporation may deposit the aggregate redemption price with any bank or trust
company named in such notice, payable in the amounts aforesaid to the respective
<PAGE>
19
orders of the record holders of the shares to be redeemed, on endorsement (if
required) and surrender of the certificates therefor, and thereupon said holders
shall cease to be stockholders with respect to said shares, and from and after
the making of such deposit said holders shall have no interest in or claim
against the corporation with respect to said shares except only the rights of
the holders thereof to receive such moneys from said bank or trust company,
without interest, and further dividends thereon shall cease to be payable. Any
funds so deposited by the corporation which shall be unclaimed after the end of
the period established by any statute controlling the disposition of unclaimed
property shall be released or repaid to the corporation upon its request, after
which the holders of the shares so called for redemption shall look only to the
corporation for payment thereof without interest.
(g) Protective Provisions. In addition to any other rights provided
bylaw, so long as any Series 1987 Preferred Stock shall be outstanding, the
corporation shall not, without first obtaining the affirmative vote or written
consent of the holders of not less than 66-2/3% of such outstanding shares of
Series 1987 Preferred Stock and Common Stock voting together as one class, amend
or repeal any provision of, or add any provision to, the corporation's
Certificate of Incorporation or Bylaws, as amended, or file any certificate of
designations, preferences and rights of any series of Class B Preferred Stock,
$1.00 par value, of the corporation or Class A Preferred Stock, if such action
would alter or change the preferences, rights, privileges or powers of, or the
restrictions provided for the benefit of, any Series 1987 Preferred Stock.
Nothing herein shall be deemed to restrict the Board of Directors from amending
the terms hereof prior to the issuance of any Series 1987 Preferred Stock.
(h) Notices. Any notice required by the provisions hereof to be given
to the holders of shares of Series 1987 Preferred Stock shall be deemed given if
deposited in the United States Postal Service, postage prepaid, and addressed to
each holder of record at his address appearing on the books of the corporation.
For so long as Ramsay shall be the beneficial owner of any shares of the Series
1987 Preferred Stock, a copy of any such notices shall also be given to Haythe &
Curley, 437 Madison Avenue, New York, New York 10022, Attention: Bradley P.
Cost, Esq.
(5) In furtherance and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized to make, alter or repeal
the by-laws of the corporation.
<PAGE>
20
(6) Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this corporation, as the case may be,
and also on this corporation.
(7) A director of the corporation shall not be personally liable to
the corporation or its stockholders for the monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation law or (iv) for any transaction from which the director derived an
improper personal benefit.
Signed and attested to on August 31, 1988.
___________________________
President
Attest:
__________________________________
Secretary
<PAGE>
21
STATE OF ALABAMA )
: ss.
COUNTY OF JEFFERSON )
BE IT REMEMBERED that, on August 31, 1988, before me, a Notary
Public duly authorized by law to take acknowledgement of deeds, personally came
Ralph J. Watts lying] President of Healthcare Services of America, Inc., who
duly signed the foregoing instrument before me and acknowledged that such
signing is his act and deed, that such instrument as executed is the act and
deed of said corporation, and that the facts stated therein are true.
GIVEN under my hand on August 31, 1988
_________________________________________
Notary Public
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
HEALTHCARE SERVICES OF AMERICA, INC.
After Receipt of Payment for Stock
Pursuant to Section 242 of the General
Corporation Law of the State of Delaware
The undersigned, President of HEALTHCARE SERVICES OF AMERICA, INC., a
corporation organized and existing under and by virtue of the General
Corporation Law of the State of Delaware (the "Corporation"), DOES HEREBY
CERTIFY as follows:
FIRST: The Certificate of Incorporation of the Corporation is hereby
amended by deleting Paragraph (1) of the Certificate of Incorporation in its
present form and so substituting therefor a new Paragraph (1) in the following
form:
"(1) The name of the Corporation is Ramsay Health Care, Inc."
SECOND: The Certificate of Incorporation of the Corporation is hereby
amended by deleting the first sentence of paragraph (4) of the Certificate of
Incorporation in its present form and so substituting the following in lieu
thereof:
"(4) The total number of shares of stock which the Corporation
shall have the authority to issue is Sixty-Five Million Five Hundred
Thousand (65,500,000) shares, of which Sixty Million (60,000,000)
<PAGE>
2
shares, par value $1.00 per share, amounting in the aggregate to Sixty
Million Dollars ($60,000,000), shall be Common Stock; Two Million Five
Hundred Thousand (2,500,000) shares, par value $1.00 per share,
amounting in the aggregate to Two Million Five Hundred Thousand
Dollars ($2,500,000), shall be Class A Preferred Stock; and Three
Million shares, par value $1.00 per share, amounting in the aggregate
to Three Million Dollars ($3,000,000), shall be Class B Preferred
Stock."
THIRD: The amendments to the Certificate of Incorporation of the
Corporation set forth in this Certificate of Amendment have been duly adopted in
accordance with the applicable provisions of Section 242 of the General
Corporation Law of the State of Delaware, (a) the Board of Directors of the
Corporation having duly adopted a resolution setting forth such amendments and
declaring their advisability and submitting them to the stockholders of the
Corporation for their approval in conformity with the By-laws of the
Corporation, and (b) the holders of a majority of the outstanding stock of the
Corporation entitled to vote thereon, and the holders of a majority of the
outstanding stock of the Corporation of each class entitled to vote thereon as a
class having duly adopted resolutions setting forth such amendments by a vote at
a meeting of the stockholders held in conformity with the By-laws of the
Corporation.
* * *
<PAGE>
3
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to
be hereunto affixed and this Certificate of Amendment of its Certificate of
Incorporation to be signed as of the 3rd day of November 1988.
HEALTHCARE SERVICES OF
AMERICA, INC.
By _____________________
Ralph J. Watts
President
[Corporate Seal]
Attest:
_______________________
Assistant Secretary
EXHIBIT 4.1
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- --------------------------------------------------------------------------------
TRUST INDENTURE
Dated as of March 31, 1990
Between
RAMSAY HEALTH CARE, INC.
BOUNTIFUL PSYCHIATRIC HOSPITAL, INC.
CUMBERLAND MENTAL HEALTH, INC.
EAST CAROLINA PSYCHIATRIC SERVICES CORPORATION
HAVENWYCK HOSPITAL, INC.
and
PSYCHIATRIC INSTITUTE OF WEST VIRGINIA, INC.
and
THE CITIZENS AND SOUTHERN NATIONAL BANK
and
SUSAN L. ADAMS
as Trustees
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<PAGE>
TABLE OF CONTENTS
SECTION PAGE
Parties...................................................................... 1
1. INTERPRETATION OF AGREEMENT; DEFINITIONS................................ 4
1.1. Definitions............................................. 19
1.2. Directly or Indirectly.................................. 19
1.3. Accounting Principles................................... 19
2. THE NOTES.......................................................... 19
2.1. The Notes............................................... 20
2.2. Denominations; Execution of Notes:
Certificate of Authentication........................... 21
2.3. Authentication and Delivery............................. 21
2.4. Payment of the Notes.................................... 21
2.5. The Register............................................ 22
2.6. Transfer and Exchanges.................................. 22
2.7. New Notes............................................... 23
2.8. Cancellation of Notes................................... 24
2.9. Trustee as Agent........................................ 24
2.10. Ownership............................................... 25
2.11. Ranking of Notes of Each Class.......................... 25
3. PARTICULAR COVENANTS OF THE OBLIGORS............................... 25
3.1. Warranty of Title....................................... 25
3.2. Payment of Principal, Premium and Interest.............. 25
3.3. Office for Notices...................................... 25
3.4. Note Agreement, Pledge Agreement and Mortgage
Covenants............................................... 26
3.5. Maintenance of Corporate Existence, Rights.............. 26
3.6. Maintenance of Lien; Recording.......................... 26
3.7. Further Assurances; After - Acquired
Property................................................ 27
3.8. Maintenance of Property................................. 28
3.9. Right of Trustee to Perform Covenants, Etc.............. 28
3.10. Obligors to Give Notice of Default...................... 29
3.11. Money for Note Payments to be Held in Trust;
Repayment of Unclaimed Money............................ 29
3.12. Maintenance of Insurance and Licenses................... 30
3.13. Taxes, Claims for Labor and Materials, Compliance
with Laws............................................... 31
3.14. Maintenance, etc........................................ 31
3.15. Nature of Business...................................... 32
3.16. Consolidated Tangible Net Worth......................... 32
3.17. Fixed Charge Coverage................................... 32
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SECTION PAGE
3.18. Limitations on Indebtedness.............................. 32
3.19. Limitation on Liens...................................... 36
3.20. Dividends, Stock Purchases, Consolidated
Investments.............................................. 39
3.21. Mergers, Consolidations and Sales of Assets.............. 41
3.22. Guaranties............................................... 43
3.23. Repurchase of Notes...................................... 44
3.24. Transactions with Affiliates............................. 44
3.25. Investments.............................................. 44
3.26. Termination of Pension Plans............................. 46
3.27. Reports and Rights of Inspection......................... 46
3.28. Amendment and Modification of Credit Agreement
and Other Documents...................................... 49
3.29. Prepayment of Certain Subordinated Funded
Indebtedness............................................. 49
3.30. Environmental Evaluation and Remediation................. 50
3.31. Interest Rate Protection Agreements...................... 50
4. POSSESSION, USE AND RELEASE OF PROPERTY.................................. 50
4.1 Obligors' Right of Possession.............................50
4.2. Release of Mortgaged Property............................ 50
5. PREPAYMENT OF LOANS...................................................... 51
5.1. Prepayments and Manner Thereof........................... 51
5.2. Mandatory Prepayment..................................... 51
5.3. Optional Prepayment in the Event of Casualty or
Condemnation............................................. 52
5.4. Optional Prepayment With Premium......................... 52
5.5. Prepayment on Change in Control.......................... 54
5.6. Notice of Prepayments.................................... 55
5.7. Allocation of Prepayments................................ 56
6. REMEDIES OF THE TRUSTEES AND THE NOTEHOLDERS
6.1. Definition of Event of Default; Acceleration of
Maturity................................................. 56
6.2. Acceleration of Note Obligations......................... 59
6.3. Annulment of Acceleration of Note Obligations............ 61
6.4. Suits for Enforcement; Power of Sale..................... 61
6.5. Remedies Under Mortgages; Foreclosure and Sale of
Mortgaged Property....................................... 62
6.6. Adjournment of Sale...................................... 63
6.7. Trustees May Execute Conveyances and Deliver
Possession; Sale a Bar................................... 63
6.8. Receipt Sufficient Discharge for Purchaser............... 64
6.9. Sale to Accelerate Notes................................. 64
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SECTION PAGE
6.10. Application of Proceeds of Sale.......................... 64
6.11. Purchase of Trust Estate................................. 65
6.12. Trustees Entitled to Appointment of Receiver............. 66
6.13. Trustees May Enforce Rights Without Notes................ 66
6.14. Notice of Event of Default; Waiver....................... 66
6.15. Limitation on Noteholders' Right to Sue.................. 67
6.16. Remedies Cumulative...................................... 68
6.17. Delay or Omission Not a Waiver........................... 68
6.18. Waiver of Extension, Appraisement, Stay Laws............. 68
6.19. Control of Remedies by Noteholders....................... 69
6.20. Trustees May File Proofs of Claims....................... 69
6.21. Remedies Subject to Provisions of Law.................... 70
7. CONCERNING THE TRUSTEES................................................ 70
7.1. Duties of Trustees...................................... 70
7.2. Trustees' Liability..................................... 71
7.3. No Responsibility of Trustees for Recitals.............. 73
7.4. Compensation and Expenses of Trustees;
Indemnification; Lien Therefor.......................... 73
7.5. Moneys Received by Trustees; Trust Funds -
Segregation............................................. 74
7.6. Trustee May Hold Notes.................................. 74
7.7. Action by Individual Trustee............................ 74
7.8. Resignation of Trustee.................................. 75
7.9. Removal of Trustee...................................... 75
7.10. Appointment of Successor Trustee........................ 75
7.11. Succession of Successor Trustee......................... 76
7.12. Eligibility of Trustee.................................. 76
7.13. Successor Trustee by Merger............................. 76
7.14. Resignation of Individual Trustee....................... 77
7.15. Removal of Individual Trustee........................... 77
7.16. Appointment of Successor to Individual Trustee.......... 77
7.17. Succession of Successor to Individual Trustee........... 78
8. SUPPLEMENTAL INDENTURE; WAIVERS........................................ 78
8.1. Supplemental Indentures Without Noteholders,
Consent................................................. 78
8.2. Waivers and Consent by Noteholders; Supplemental
Indentures With Noteholders' Consent.................... 79
8.3. Solicitation of Noteholders............................. 80
8.4. Opinion of Counsel Conclusive as to Supplemental
Indenture............................................... 81
9. ACTION BY NOTEHOLDER................................................... 81
9.1. Evidence of Action by Noteholders....................... 81
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SECTION PAGE
9.2. Noteholders' Execution of Instruments; Proof of
Holdings........................................... 81
10. SUBORDINATION OF THE SUBORDINATED SECURED NOTES....................... 82
11. TERMINATION OF INDENTURE.............................................. 85
11.1. Termination of Indenture................................ 85
11.2. Trustee's Retention of Moneys Deposited for
Payment of Notes................................... 86
12. MISCELLANEOUS PROVISIONS.............................................. 86
12.1. Indenture for Benefit of Parties Hereto................. 86
12.2. Severability............................................ 86
12.3. Basis of Opinions of Counsel and Certificates........... 87
12.4. Addresses for Notices................................... 87
12.5. Successors and Assigns.................................. 88
12.6. Counterparts; Descriptive Headings...................... 88
12.7. Governing Law........................................... 89
Signatures...................................................................89
ATTACHMENTS TO TRUST INDENTURE:
Exhibit A - Form of Senior Secured Note
Exhibit B - Form of Subordinated Secured Note
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<PAGE>
TRUST INDENTURE
TRUST INDENTURE dated as of March 31, 1990 (herein, as the same may be
amended and supplemented from time to time, called the "Indenture") between
RAMSAY HEALTH CARE, INC., a Delaware corporation (the "Company"), BOUNTIFUL
PSYCHIATRIC HOSPITAL, INC., a Utah corporation ("Bountiful Psychiatric"),
CUMBERLAND MENTAL HEALTH, INC., a North Carolina corporation ("Cumberland"),
EAST CAROLINA PSYCHIATRIC SERVICES CORPORATION, a North Carolina corporation
("East Carolina Psychiatric"), HAVENWYCK HOSPITAL, INC., a Michigan corporation
("Havenwyck"), MESA PSYCHIATRIC HOSPITAL, INC., an Arizona corporation ("Mesa
Psychiatric"), and PSYCHIATRIC INSTITUTE OF WEST VIRGINIA, INC., a Virginia
corporation ("Psychiatric Institute"; together with the Company, Bountiful
Psychiatric, Cumberland, East Carolina Psychiatric, Havenwyck and Mesa
Psychiatric collectively being hereinafter referred to as the Obligors"), whose
post office addresses are One Poydras Plaza, 639 Loyola Avenue, Suite 1400, New
Orleans, Louisiana 70113, and The Citizens and Southern National Bank, a
national banking association (the "Trustee"), whose post office address is 33
North Avenue, N.E., Suite 700, Atlanta, Georgia 30308, Attention: Corporate
Trust Department and Susan L. Adams (the "Individual Trustee"), whose post
office address is 33 North Avenue, N.E., Suite 700, Atlanta, Georgia 30308, as
Trustees (the "Trustees").
WHEREAS, the Obligors are authorized by law, and deem in necessary
from time to time, to borrow money for their corporate purposes and to secure
such borrowings, and the Obligors have the power and propose to issue their
11.6% Senior Secured Notes due March 31, 2000 in the aggregate principal amount
of $56,500,000 (the "Senior Secured Notes") and their 15.6% Subordinated Secured
Notes due March 31, 2000 in the aggregate principal amount of $3,000,000 (the
"Subordinated Secured Notes") constituting the joint and several obligation of
the Obligors which Senior Secured Notes and Subordinated Secured Notes
(collectively, the "Notes") are to be issued under and secured by this
Indenture; and
WHEREAS, the Obligors require funds to prepay certain indebtedness for
borrowed money of the Obligor (which indebtedness was issued by or guaranteed by
each of the Obligors) and to finance capital expenditures, renovations and
construction of facilities owned by certain of the Obligors; and
<PAGE>
2
WHEREAS, all things necessary to make this Indenture the valid
obligation of the Obligors according to its tenor and effect have been done or
authorized;
NOW, THEREFORE, in consideration of the premises and of the sum of Ten
Dollars and of other good and valuable consideration, receipt whereof upon the
delivery of this Indenture the Obligors hereby acknowledge, and in order to
strengthen the financial and operating condition of each and every Obligor,
directly and indirectly, as a result of the enhanced ability of the Company to
provide financial, accounting, consulting and administrative assistance and
services to each other Obligor, and in order to secure the payment, subject to
section 10 hereof, of both the principal of and interest and premium, if any,
upon the Notes at any time outstanding hereunder according to their tenor and
the provisions hereof, and, further subject to section 10 hereof, to secure the
faithful performance and observance of all the covenants and provisions in the
Notes, the Note Agreements (hereinafter referred to), the Pledge Agreements
(hereinafter referred to), the Mortgages (hereinafter referred to) and in this
Indenture contained, and to declare the terms and conditions upon which the
Notes will be secured, authenticated, issued, transferred and exchanged, and
upon which the trusts hereof are to be administered by the Trustees, and do
hereby GRANT, CONVEY, PLEDGE, TRANSFER, ASSIGN AND DELIVER to the Trustees and
unto their successors and assigns forever, in trust for the benefit of the
holders of the Notes, subject to section 10 hereof, and do hereby grant to the
Trustees and their successors and assigns a security interest in and to all of
the hereinafter defined Trust Estate, to wit:
(a) all the right, title and interest in and to all mortgages, deeds
of trust, deeds to secure debt, acts of mortgage, security agreements or similar
security instruments granted to them by the Obligors, including without
limitation, (i) that certain Pledge and Security Agreement of the Company dated
as of March 31, 1990; (ii) that certain Deed of Trust and Security Agreement of
Bountiful Psychiatric dated as of March 31, 1990 relating to certain Property
commonly known as Benchmark Regional Hospital, Woods Cross, Utah; (iii) that
certain Deed of Trust and Security Agreement of Cumberland dated as of March 31,
1990 relating to certain Property commonly known as Cumberland Hospital,
Fayetteville, North Carolina; (iv) that certain Deed of Trust and Security
Agreement of East Carolina Psychiatric as of March 31, 1990 relating to certain
Property commonly known as Bryan Marr Hospital, Jacksonville, North Carolina;
(v) that certain Mortgage and Security Agreement of Havenwyck dated as of March
31, 1990 relating to certain Property commonly known as Havenwyck Hospital,
<PAGE>
3
Auburn Hills, Michigan; (vi) that certain Leasehold Deed of Trust, Assignment of
Rents and Security Agreement with Financing Statement (Fixture Filing) of Mesa
Psychiatric dated as of March 31, 1990 relating to certain Property commonly
known as Desert Vista Hospital, Mesa, Arizona; (vii) that certain Leasehold Deed
of Trust and Security Agreement of Psychiatric Institute dated as of March 31,
1990 relating to certain Property commonly known as Chestnut Ridge Hospital,
Morgantown, West Virginia (the Mortgage and Security Agreements described in the
foregoing clauses (ii) through (vii), inclusive, are herein collectively called
"Mortgages"); (viii) that certain Pledge and Security Agreement of Michigan
Psychiatric Services, Inc. dated as of March 31, 1990; (ix) that certain Pledge
and Security Agreement of Bountiful Psychiatric dated as of March 31, 1990; and
(x) that certain Pledge and Security Agreement of Americare of Galax, Inc. dated
as of March 31, 1990 (the Pledge and Security Agreements described in the
foregoing clauses (i), (viii), (ix) and (x) are herein collectively called the
"Pledge Agreements"), together with all right, title and interest now or
hereafter granted, conveyed, mortgaged or assigned and all proceeds and avails
thereof (all such Properties so held by the Trustees being sometimes herein
referred to as the "Mortgage Property and (b) all moneys and Securities from
time to time held by the Trustees under the terms of this Indenture (the
Mortgaged Property together with such moneys and Securities being sometimes
herein collectively referred to as the Trust Estate");
TO HAVE AND TO HOLD all and singular the Trust Estate whether now
owned or held or hereafter acquired, unto the Trustees, their successors in
trust and assigns forever;
IN TRUST, NEVERTHELESS, WITH POWER OF SALE, for the equal and ratable
benefit and security of the Notes, subject to section 10 hereof, from time to
time outstanding hereunder, without preference, priority or distinction of any
thereof over any other by reason of deference in time of issuance, sale,
authentication, delivery or otherwise, and for the enforcement of the payment of
the principal of, premium, if any, and Interest on the Notes in accordance with
their terms, and all other sums payable under this Indenture or on the Notes,
and the observance and performance of the provisions of, the Note Agreements,
the Pledge Agreements, the Mortgages and this Indenture, all as herein provided.
IT IS HEREBY COVENANTED, DECLARED AND AGREED, that the Notes are to be
issued, authenticated, delivered and secured, and that the Mortgaged Property is
<PAGE>
4
to be held, dealt with and disposed of by the Trustees, upon and subject to the
provisions of this Indenture.
SECTION 1. INTERPRETATION OF AGREEMENT; DEFINITIONS.
Section 1.1. Definitions. Unless the context otherwise requires, the
terms hereinafter set forth when used herein shall have the following meanings
and the following definitions shall be equally applicable to both the singular
and plural forms of any of the terms herein defined:
"Affiliate" shall mean any Person (other than a Consolidated
Subsidiary) (i) which directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, the Company,
(ii) which beneficially owns or holds 5% or more of any class of the Voting
Stock of the Company or (iii) 5% or more of the Voting Stock (or in the case of
a Person which is not a corporation, 5% or more of the equity interest) of which
is beneficially owned or held by the Company or a Subsidiary. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of Voting Stock, by contract or otherwise.
"Appraised Value" with respect to a Hospital shall mean the fair
market value on the date of an appraisal of such Hospital, including the Land
Parcels and Equipment subjected or to be subjected to the Mortgage related
thereto, as shown by (i) the appraisal thereof furnished to the Initial
Purchasers in accordance with the provisions of section 7(a)(vi) of the Note
Agreements or (ii) the appraisal thereof furnished to the Trustees in accordance
with the provisions of section 4.2 hereof.
"Appraiser" shall mean Valuation Counselors, Inc., or another firm of
appraisers satisfactory to the Required Holders.
"Bank Debt" shall mean (i) indebtedness for borrowed money outstanding
under the working capital facility provided under the Credit Agreement in an
aggregate principal amount not to exceed $5,000,000, (ii) indebtedness
outstanding under the term loan facility provided under the Credit Agreement in
an aggregate principal amount not to exceed $34,000,000 and (iii) indebtedness
outstanding under the letter of credit facility provided under the Credit
Agreement in an aggregate principal amount not to exceed $31,000,000.
<PAGE>
5
"Benchmark Regional Hospital" shall mean the Land Parcels, building,
improvements and Equipment comprising Benchmark Regional Hospital, Woods Cross,
Utah.
"Brynn Marr Hospital" shall mean the Land Parcels, buildings,
improvements and Equipment comprising Brynn Marr Hospital and Life Center of
Jacksonville, Jacksonville, North Carolina.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
day on which commercial banks in New York City, Atlanta, Georgia or New Orleans,
Louisiana are required or authorized to be closed.
"Capitalized Lease" shall mean (i) any lease the obligation for
Rentals with respect to which is required to be capitalized on a balance sheet
of the lessee in accordance with generally accepted accounting principles and
(ii) any lease entered into in connection with a sale and leaseback transaction.
"Capitalized Rentals" shall mean as of the date of any determination
the amount at which the aggregate Rentals due and to become due under all
Capitalized Leases under which the Company or any Consolidated Subsidiary is a
lessee.
"CHAMPUS" shall mean the Civilian Health and Medical Program of the
Uniformed Services which provides health benefits to active and retired military
personnel and their families.
"Chest Ridge Hospital" shall mean the Land Parcels, buildings,
improvements and Equipment comprising Chestnut Ridge Hospital, Morgantown, West
Virginia.
"Closing Date" shall have the meaning set forth in section 4(b) of the
Note Agreements.
"Consolidated Cash Flow" shall mean the sum of (a) Consolidated
Pre-Tax Net Income plus, to the extent deducted from the calculation of
Consolidated Pre-Tax Net Income, (b) deprecation plus (c) amortization plus (d)
Interest Expense less actual cash payments of Federal, state and local taxes of
the Company and its Consolidated Subsidiaries, all for the most recent tour
fiscal quarters, determined on a consolidated basis in accordance with generally
accepted accounting principles.
<PAGE>
6
"Consolidated Current Assets" and "Consolidated Current Liabilities"
shall mean such assets and liabilities of the Company and its Consolidated
Subsidiaries on a consolidated basis as shall be determined in accordance with
generally accepted accounting principles to constitute current assets and
current liabilities, respectively.
"Consolidated Debt Service" shall mean the sum of (i) Fixed Charges
plus (ii) scheduled mandatory principal payments of (A) Consolidated Funded
Indebtedness and (B) Subordinated Funded Indebtedness, required to be made
within twelve months following the date of any determination of Consolidated
Debt Service.
"Consolidated Net Income" for any period shall mean the gross revenues
of the Company and its Consolidated Subsidiaries for such period less all
expenses and other proper charges (including taxes on income), determined on a
consolidated basis in accordance with generally accepted accounting principles
consistently applied and after eliminating earnings or losses attributable to
outstanding Minority Interests, but excluding in any event:
(a) any gains or losses on the sale or other disposition of
investments or fixed or capital assets, and any taxes on such excluded gains and
any tax deductions or credits on account of any such excluded losses;
(b) the proceeds of any insurance policy;
(c) net earning and losses of any Consolidated Subsidiary accrued
prior to the date it became a Consolidated Subsidiary;
(d) net earnings and losses of any corporation (other than a
Consolidated Subsidiary), substantially all the assets of which have been
acquired in any manner, realized by such other corporation prior to the date of
such acquisition;
(e) net earnings and losses of any corporation (other than a
Consolidated Subsidiary) with which the Company or a Consolidated Subsidiary
shall have consolidated or which shall have merged into or with the Company or a
Consolidated Subsidiary prior to the date of such consolidation or merger;
(f) net earnings of any business entity (other than a Consolidated
Subsidiary) in which the Company or any Consolidated Subsidiary has an ownership
interest unless such net earnings shall have actually been received by the
Company or such Subsidiary in the form of cash distributions;
<PAGE>
7
(g) any portion of the net earnings of any Consolidated Subsidiary
which for any reason is unavailable for payment of dividends to the Company or
any other Consolidated Subsidiary;
(h) earnings resulting from any reappraisal, revaluation or write-up
of assets;
(i) any deferred or other credit representing any excess of the equity
in any Subsidiary at the date of acquisition thereof over the amount invested in
such Subsidiary;
(j) any gain arising from the acquisition of any Securities of the
Company or any Consolidated Subsidiary; and
(k) any reversal of any contingency reserve, except to the extent that
provision for such contingency reserve shall have been made from income arising
during such period, other than contractual adjustments under reimbursement
programs for Medicare, Medicaid, Champus and Blue Cross, all in accordance with
generally accepted accounting principles.
"Consolidated Net Tangible Assets" shall mean, as of the time of any
determination thereof, the total assets of the Company and its Consolidated
Subsidiaries appearing on a consolidated balance sheet of the Company and its
Consolidated Subsidiaries prepped in accordance with generally accepted
accounting principles as of the date of determination, after eliminating all
intercompany transactions and all amounts properly attributable to minority
interests, if any, in the stock and surplus of Consolidated Subsidiaries of the
Company and after deducting therefrom (without duplication of deductions); (a)
all Consolidated Current Liabilities; (b) the net book amount of all assets,
after deducting any reserves applicable thereto, which would be treated as
intangible under generally accepted accounting principles, including, without
limitation, such items as good will, trademarks, trade names, service marks,
brand names, copyrights, patents and licenses, and rights with respect to the
foregoing, unamortized debt discount and expense, organization expenses and the
excess of cost of purchased Subsidiaries of the Company over equity in the net
assets thereof at the date of acquisition; (c) any write-up in the book value of
any asset on the books of the Company or any of its Consolidated Subsidiaries
<PAGE>
8
resulting from a revaluation thereof subsequent to the date of this Indenture
(other than the write-up of the book value of an asset made in accordance with
generally accepted accounting principles in connection with the purchase of such
asset); (d) the amounts, if any, at which shares of stock of the Company or any
of its Consolidated Subsidiaries appear on the asset side of such balance sheet;
(e) all deterred charges (other than prepaid expenses); (f) all reserves,
including, without limitation, reserves for deferred income taxes, liabilities
(fixed or contingent), depreciation, obsolescence, insurance and inventory
valuation, which appear or under generally accepted accounting principles are
required to appear on such balance sheet; and (g) the amounts at which any
investment in any Person (other than investments permitted by section 3.25)
appears on the asset side of such balance sheet.
"Consolidated Pre-Tax Net Income" for any period shall mean the gross
revenues of the Company and its Consolidated Subsidiaries for such period less
all expenses and other proper charges (other than taxes on income), determined
on a consolidated basis in accordance with generally accepted accounting
principles consistently applied and after eliminating earnings or losses
attributable to outstanding Minority Interests, but excluding in any event:
(a) any gains or losses on the sale or other disposition of
investments or fixed or capital assets, and any taxes on such excluded gains and
any tax deductions or credits on account of any such excluded losses;
(b) the proceeds of any insurance policy;
(c) net earnings and losses of any Consolidated Subsidiary accrued
prior to the date it became a Consolidated Subsidiary;
(d) net earnings and losses of any corporation (other than a
Consolidated Subsidiary), substantially all the assets of which have been
acquired in any manner, realized by such other corporation prior to the date of
such acquisition;
(e) net earnings and losses of any corporation (other than a
Consolidated Subsidiary) with which the Company or a Consolidated Subsidiary
shall have consolidated or which shall have merged into or with the Company or a
Consolidated Subsidiary prior to the date of such consolidation or merger;
<PAGE>
9
(f) net earnings of any business entity (other than a Consolidated
Subsidiary) in which the Company or any Consolidated Subsidiary has an ownership
interest unless such net earnings shall have actually been received by the
Company or such Subsidiary in the form of cash distributions;
(g) any portion of the net earning of any Consolidated Subsidiary
which for any reason is unavailable for payment of dividends to the Company or
any other Consolidated Subsidiary;
(h) earnings resulting from any reappraisal, revaluation or write-up
of assets;
(i) any deferred or other credit representing any excess of the equity
in any Subsidiary at the date of acquisition thereof over the amount invested in
such Subsidiary;
(j) any gain arising from the acquisition of any Securities of the
Company or any Consolidated Subsidiary; and
(k) any reversal of any contingency reserve, except to the extent that
provision for such contingency reserve shall have been made from income arising
during such period, other than contractual adjustments under reimbursement
programs for Medicare, Medicaid, Champus and Blue Cross, all in accordance with
generally accepted accounting principles.
"Consolidated Subsidiary" shall mean each of the Principal
Subsidiaries and any other Subsidiary (i) which is organized under the laws of
the United States or any State thereof; (ii) which conducts all of its business
and has all of its assets within the United States; (iii) of which more than 80%
(by number of votes) of the Voting Stock is owned by the Company and/or one or
more Consolidated Subsidiaries (iv) which is engaged in the business, directly
or through a Subsidiary, of operating psychiatric hospitals in the United
States; and (v) Which is consolidated with the Company for financial reporting
purposes in accordance with generally accepted accounting principles.
"Consolidated Tangible Net Worth" shall mean, as of the date of any
determination thereof, the aggregate amount of the capital stock (less treasury
stock), surplus and retained earnings of the Company and its Consolidated
Subsidiaries after deducting Minority Interests to the extent included in the
capital stock accounts of the Company plus the aggregate principal amount of the
<PAGE>
10
Subordinated Funded Indebtedness then outstanding up to an amount not to exceed
$7,500,000 less all Intangible Assets, all as determined on a consolidated basis
by the Company and its Consolidated Subsidiaries.
"Consumer Price Index" shall mean the percentage rise in the so-called
"Consumer Price Index for All Urban Consumers" as released by the U. S.
Government's Bureau of Labor Statistics determined for the most recent
twelve-month period.
"Credit Agreement" shall mean the Credit Agreement dated as of April
20, 1990 among the Company and certain Subsidiaries, as the Borrowers, Hibernia
National Bank, as a Lender, the other Lenders named therein, First Union
National Bank of North Carolina, as Issuing Bank and Administrative Agent, and
HomeFed Bank, Federal Savings Bank, as Agent.
"Cumberland Hospital" shall mean the Land Parcels, buildings,
improvements and Equipment comprising Cumberland Hospital and Lite Center of
Fayetteville, Fayetteville, North Carolina.
"Current Indebtedness shall mean any obligation for borrowed money
(and any notes payable and drafts accepted representing extensions of credit
whether or not representing obligations for borrowed money) payable on demand or
within a period of one year from the date of the creation thereof.
"Default" shall mean any event or condition, the occurrence of which
would, with the lapse of time or the giving of notice, or both, constitute an
Event of Default.
"Desert Vista Hospital" shall mean the Land Parcels, buildings,
improvements and Equipment comprising Desert Vista Hospital, Mesa, Arizona.
"Equipment" shall mean, collectively, the personal property described
in Granting Clause II of the Mortgages.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, amended from time to time.
"Event of Default" shall mean any of the Events of Default referred to
in section 6.1 hereof.
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11
"Facility" shall mean a psychiatric hospital or healthcare facility
owned by the Company or a Consolidated Subsidiary.
"Fixed Charges" for any period shall mean on a consolidated basis the
sum of (i) all Rentals (excluding all Rentals on Capitalized Leases) payable
during such period by the Company and its Consolidated Subsidiaries, and (ii)
all Interest Expense on all Indebtedness (including interest payable under
Capitalized Leases) payable during such period by Company and its Consolidated
Subsidiaries.
"Funded Indebtedness" of any Person shall mean and include without
duplication,
(i) any obligation payable more than one year from the date of
creation thereof, which under generally accepted accounting principles is shown
on the balance sheet as a liability (including Capitalized Lease obligations but
excluding reserves for deferred income taxes and other reserves to the extent
that such reserves do not constitute an obligation),
(ii) indebtedness payable more than one year from the date of creation
thereof which is secured by any Lien on, or payable out of the proceeds of
production from, property owned by the Company or any Subsidiary, whether or not
the indebtedness secured thereby shall have been assumed by the Company or such
Subsidiary,
(iii) contingent obligations in respect of letters of credit issued
and not yet drawn upon,
(iv) Guaranties, endorsements (other than endorsements of negotiable
instruments for collection in the ordinary course of business) and other
contingent liabilities (whether direct or indirect) in connection with the
obligations, stocks or dividends of any other Person (other than Guaranties or
endorsements by the Company or a Subsidiary of, or other contingent obligations
in respect of, any obligation of a Subsidiary),
(v) obligations under any contract providing for the making of loans,
advances or capital contributions to any other Person, or for the purchase of
any property from any Person, in each case in order to enable such Person
primarily to maintain working capital, net worth or any other balance sheet
condition or to pay debts, dividends or expenses,
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12
(vi) obligations under any contract for the purchase of materials,
supplies or other property or services if such contract (or any related
document) requires that payment for such materials, supplies or other property
or services shall be made regardless of whether or not delivery of such
materials, supplies or other property or services is ever made or tendered,
(vii) obligations under any Capitalized Lease or contract to rent or
lease (as lessee) any real or personal property if such contract (or any related
document) provides that the obligation to make payments thereunder is absolute
and unconditional under conditions not customarily found in commercial leases or
requires that the lessee purchase or otherwise acquire securities or obligations
of the lessor,
(viii) obligations under any contract for the sale or use of
materials, supplies or other property or services if such contract (or any
related document) requires that payment for such materials supplies or other
property or services, or the use thereof, shall be subordinated to any
indebtedness (of the purchaser or user of such materials, supplies or other
property or the Person entitled to the benefit of such services) owed or to be
owed to any Person,
(ix) obligations under any other contract which, in economic effect,
is substantially equivalent to a guarantee, and
(x) all capital stock of Subsidiaries of such Person which has a
preference as to dividends or upon liquidation and which is not owned by such
Person, either directly or through Subsidiaries of such Person,
all as determined in accordance with generally accepted accounting principles.
Notwithstanding anything herein to the contrary, "Funded Indebtedness" shall not
include (i) Subordinated Funded Indebtedness, (ii) Indebtedness outstanding
under the working capital facility of the Credit Agreement in an amount not to
exceed $5,000,000 or (iii) Practice Guaranties. "Consolidated" when used as a
prefix to any Funded Indebtedness shall mean the aggregate amount of all such
Funded Indebtedness of the Company and its Consolidated Subsidiaries on a
consolidated basis eliminating intercompany items.
"Guaranties" by any Person shall mean all obligations (other than
endorsements in the ordinary course of business of negotiable instruments for
deport or collection) of such Person guaranteeing or in effect guaranteeing any
Indebtedness, dividend for other obligation, of any other Person (the "primary
<PAGE>
13
obligor") in any manner, whether directly or indirectly, including, without
limitation, all obligations incurred through an agreements, contingent or
otherwise, by such Person: (i) to purchase such Indebtedness or obligation or
any property or assets constituting security therefor, (ii) to advance or supply
funds (x) for the purchase or payment of such Indebtedness or obligation or (y)
to maintain working capital or other balance sheet condition or otherwise to
advance or make available funds for the purchase or payment of such Indebtedness
or obligation, or (iii) to lease property or to purchase Securities or other
property or services primarily for the purpose of assuring the owner of such
Indebtedness or obligation of the ability of the primary obligor to make payment
of the Indebtedness or obligation, or (iv) otherwise to assure the owner of the
Indebtedness or obligation of the primary obligor against loss in respect
thereof. For the purposes of all computations made under this Agreement, a
Guaranty in respect of any Indebtedness for borrowed money shall be deemed to be
Indebtedness equal to the principal amount of such Indebtedness for borrowed
money which has been guaranteed, and a Guaranty in respect of any other
obligation or liability or any dividend shall be deemed to be Indebtedness equal
to the maximum aggregate amount of such obligation, liability or dividend.
Notwithstanding anything herein to the contrary, "Guaranties" shall not include
Practice Guaranties.
"Havenwyck Hospital" shall mean the Land Parcels, buildings,
improvements and Equipment comprising Havenwyck Hospital, Auburn Hills,
Michigan.
"Hospital" shall mean (i) Benchmark Regional Hospital; or (ii) Brynn
Marr Hospital; or (iii) Chestnut Ridge Hospital; or (iv) Cumberland Hospital; or
(v) Desert Vista Hospital; or (vi) Havenwyck Hospital. The term "Hospitals"
means the facilities described in (i), (ii), (iii), (iv), (v) end (vi) of the
preceding sentence, collectively.
"Indebtedness" of any Person shall mean all Current Indebtedness and
all Funded Indebtedness of such Person.
"Initial Purchasers" shall mean the institutions listed in Schedule I
to the Note Agreements, as Purchasers under the Note Agreements, end any Person
affiliated therewith, so long as such Initial Purchaser or any such Person or
the respective nominee thereof is holder of any of the Notes.
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"Intangible Assets" shall mean as of the date of any determination
thereof, the total amount of all of the following assets of the Company and its
Consolidated Subsidiaries: good will, patents, trade names, trade marks,
copyrights, franchises, experimental expense, organization expense, unamortized
debt discount and expense, deferred assets other than prepaid insurance and
prepaid taxes, the excess of cost of shares acquired over book value of related
assets and such other assets as are properly classified as "intangible assets"
in accordance with generally accepted accounting principles.
"Intercreditor Agreement" shall mean the Intercreditor Agreement dated
as of April 27, 1990 among (i) HomeFed Bank (as "Agents") and those certain
banks and other financial institutions which are or after the date of this
Indenture become parties to the Credit Agreement and (ii) the Trustees, trustees
for the benefit of the holders of the Notes.
"Interest Expense" for any period shall mean on a consolidated basis
the sum of all Interest and all amortization of debt discount and expense on all
Indebtedness of the Company and its Consolidated Subsidiaries. Computations of
Interest Expense on a pro forma basis for Indebtedness having a variable
interest rate shall be calculated at the rate in effect on the date of any
determination.
"Land Parcels" shall mean, collectively, the real property described
in Granting Clause I of the Mortgages.
"Lien" shall mean any interest in Property securing an obligation owed
to, or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute or contract, and including but not
limited to the security interest or lien arising from a mortgage, encumbrance,
pledge, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes. The term "Lien" shall include reservations, exceptions,
encroachments, easements rights-of-way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances affecting Property. For the
purposes of this Indenture, an Obligor shall be deemed to be the owner of any
Property which it has acquired or holds subject to a conditional sale agreement,
financing lease or other arrangement pursuant to which title to the Property has
been retained by or vested in some other Person for security purposes.
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15
"Minority Interests" shall mean any shares of stock of any class of a
Consolidated Subsidiary (other than directors' qualifying shares as required by
law) that are not owned by the Company and/or one or more of its Consolidated
Subsidiaries. Minority Interests shall be valued by valuing Minority Interests
constituting preferred stock at the voluntary or involuntary liquidating value
of such preferred stock, whichever is greater, and by valuing Minority Interests
constituting common stock at the book value of capital and surplus applicable
thereto.
"Mortgaged Facility" shall mean a Hospital on which a first lien has
been created pursuant to one of the Mortgages.
"Note or Notes; Outstanding" "Note" shall mean any of, and "Notes"
shall mean all of, the then outstanding Notes. "Outstanding" when used with
reference to Notes shall mean, as of any particular time, all Notes
authenticated and delivered by the Trustee under this Indenture, except:
(a) Notes theretofore cancelled by the Trustee or delivered to the
Trustee for cancellation;
(b) Notes for the payment or prepayment of which moneys in the
necessary amount shall have been deposited in trust with the Trustee; provided,
that if such Notes are to be prepaid prior to the maturity thereof, notice of
such repayment shall have been given as provided in section 5.6, or provision
satisfactory to the Trustee shall have been made for giving such notice;
(c) Notes purchased or held by any Affiliate of any Obligor; and
(d) Notes in lieu of or in substitution for which other Notes shall
have been authenticated and delivered pursuant to the terms of section 2.5
hereof.
"Note Agreements" shall mean the separate and several Note Purchase
Agreements, each dated as of March 31, 1990 between the Company, Bountiful
Psychiatric, Cumberland, East Carolina Psychiatric, Havenwyck, Mesa Psychiatric,
Psychiatric Institute and the Initial Purchasers.
"Officers' Certificate" shall mean certificate signed by the President
and any one of the following officers of the Company any Vice President or the
Secretary.
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16
"Opinion of Counsel" shall mean an opinion in writing signed by legal
counsel who shall be satisfactory to the Trustee, and who may be counsel to the
Company.
"Overdue Rate" shall mean with respect to (i) the Senior Secured
Notes, the greater of (A) 13.6% per annum and (B) the sum of the rate of
interest publicly announced by Morgan Guaranty Trust Company of New York from
time to time in New York City as its prime rate plus 1% and (ii) the
Subordinated Secured Notes, the greater of (A) 17.6% per annum and (B) the sum
of the rate of interest publicly announced by Morgan Guaranty Trust Company of
New York from time to time in New York City as its prime rate plus 1%.
"Person" shall mean an individual, partnership, corporation, trust,
unincorporated association or other organization, or a government or any
department or agency thereof.
"Practice Guaranties" is defined in section 3.18(a)(11).
"Principal Subsidiary" shall mean Bountiful Psychiatric Hospital,
Inc., a Utah corporation, Cumberland Mental Health, Inc., a North Carolina
corporation, East Carolina Psychiatric Services Corporation, a North Carolina
corporation, Havenwyck Hospital, Inc., a Michigan corporation, Mesa Psychiatric
Hospital, Inc., an Arizona corporation, and Psychiatric Institute of West
Virginia, Inc., a Virginia corporation.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Purchaser" shall have the meaning set forth in section 1 of the Note
Agreements.
"Qualified Holder" shall mean any holder of Senior Secured Notes then
outstanding or, if no Senior Secured Notes shall be outstanding, Subordinated
Secured Notes then outstanding, which (together with the Affiliates of which),
and in either ease, owns and holds not less than $20,000,000 in aggregate
principal amount of such Senior Secured Notes or Subordinated Secured Notes, as
the case may be, and which (or an Affiliate of which) was the purchaser of such
Notes upon the original issuance thereof pursuant to this Indenture.
"Register" shall have the meaning specified in section 2.4 hereof.
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"Rentals" shall mean and include all payments (including as such all
payments which the lessee is obligated to make to the lessor on termination of
the lease or surrender of the property but excluding all payments under
Capitalized Leases) payable by the Company or a Consolidated Subsidiary, as
lessee or sublessee under a lease of real or personal property.
"Required Holders" at any time shall mean the holder or holders of not
less than 66-2/3% in aggregate principal amount of the Senior Secured Notes then
outstanding or, if no Senior Secured Notes are then outstanding, the holder or
holder of not less than 66-2/3% in aggregate principal amount of the
Subordinated Secured Notes then outstanding; provided, however, that in any
event the term "Required Holders" shall also include each Qualified Holder of
outstanding Senior Secured Notes so long as any Senior Secured Notes shall be
outstanding or, if no Senior Secured Notes are then outstanding, each Qualified
Holder of outstanding Subordinated Secured Notes.
"Restricted Investments" shall mean any investment in any Person other
than investments permitted by section 3.25(a) through section 3.25(g) hereof,
inclusive.
"Security" shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
"Senior Secured Notes" shall have the meaning set forth in the
recitals of this Indenture.
"Subordinated Convertible Promissory Note" shall have the meaning set
forth in section 7(a)(xii) of the Note Agreements.
"Subordinated Funded Indebtedness" shall mean the Subordinated Secured
Notes, the Subordinated Convertible Promissory Note, the Subordinated Promissory
Note and any other unsecured Funded Indebtedness which (i) is expressly
subordinate or junior in right of payment to the Senior Secured Notes pursuant
to subordination provisions no more favorable to the holder thereof than the
subordination provisions contained in section 10 hereof and (ii) is expressed to
mature on or after April 1, 2000.
"Subordinated Promissory Note" shall have the meaning set forth in
section 7(a)(xiii) of the Note Agreements.
"Subordinated Secured Notes" shall have the meaning set forth in the
recitals of this Indenture.
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The term "subsidiary" shall mean, as to any particular parent
corporation, any corporation of which more than 50% (by number of votes) of the
Voting Stock shall be owned by such parent corporation and/or one or more
corporations which are themselves subsidiaries of such parent corporation. The
term "Subsidiary" shall mean a subsidiary of the Company.
"Superior Indebtedness" shall mean (i) all obligations, liabilities
and indebtedness of the Obligors to the holders of the Senior Secured Notes in
an aggregate principal amount not to exceed $56,500,000 arising under the Senior
Secured Notes, the Note Purchase Agreements and this Indenture, (ii) all
obligations, liabilities and indebtedness in an aggregate principal amount not
to exceed $31,000,000 created or arising under certain industrial development
bonds of the Company or its Subsidiaries and associated letters of credit and
reimbursement obligations in connection therewith under the Credit Agreement
(including extensions, renewals and refundings thereof without increase in the
outstanding principal amount under such facility at such time, (iii) all
obligations, liabilities and indebtedness outstanding under the Credit Agreement
in an aggregate principal amount not to exceed $5,000,000 arising under the
working capital facility provided in such Credit Agreement (including
extensions, renewals and refundings thereof without increase in the outstanding
principal amount under such facility at such time), (iv) all obligations,
liabilities and indebtedness outstanding under the Credit Agreement arising
under the term loan facility provided in such Credit Agreement in an aggregate
principal amount not to exceed $34,000,000 (including extensions, renewals and
refunds thereof without increase in the outstanding principal amount under such
facility at such time), and (v) additional indebtedness incurred after the date
of this Indenture in an aggregate principal amount not to exceed $25,000,000,
provided that all proceeds of such indebtedness are used exclusively to finance
the acquisition, construction or renovation of facilities owned or acquired by
the Company or any Subsidiary. Interest accrued on the indebtedness described in
the foregoing clauses (i), (ii), (iii), (iv) and (v) shall constitute "Superior
Indebtedness" regardless of whether such interest accrues before or after the
commencement of any bankruptcy, insolvency or receivership proceeding.
"Total Capitalization" shall mean, at any date as of which the amount
thereof is to be determined, the total of (i) the aggregate principal amount of
all Consolidated Funded Indebtedness then outstanding, plus (ii) Consolidated
Tangible Net Worth as of such date.
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"Unconsolidated Subsidiary" shall mean any Subsidiary which is not a
Consolidated Subsidiary.
"Voting Stock" shall mean Securities of any class or classes, the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions).
"Wholly-owned" when used in connection with any Subsidiary shall mean
a Subsidiary of which all of the issued and outstanding shares of stock (except
shares required as directors' qualifying shares) and all Indebtedness for
borrowed money shall be owned by the Company and/or one or more of its
Wholly-owned Subsidiaries.
"Yield-Maintenance Premium" is defined in section 5.4.
Section 1.2. Directly or Indirectly. Where any provision in this
Indenture refers to action to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable whether the action in
question is taken directly or indirectly by such Person.
Section 1.3. Accounting Principles. Where the character or amount of
any asset or liability or item of income or expense is required to be determined
or any consolidation or other accounting computation is required to be made for
the purposes of this Indenture, the same shall be done in accordance with
generally accepted accounting principles, to the extent applicable, except where
such principles are inconsistent with the requirements of this Indenture.
SECTION 2. THE NOTES
Section 2.1. The Notes. (a) The Notes constitute the joint and several
obligation of the Obligors and shall be issuable as fully registered Notes. The
Notes will be dated the date of authentication and bear interest payable
quarterly on March 31, June 30, September 30 and December 31 in each year
(commencing June 30, 1990) and will mature on March 31, 2000. Interest on the
Notes will be computed on the basis of a 360-day year of twelve 30-day months.
(b) The Senior Secured Notes shall be designated the Obligors' 11.6%
Senior Secured Notes due March 31, 2000 and shall be limited to $56,500,000 in
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20
aggregate principal amount. The Senior Secured Notes will bear interest from the
date of issue until maturity at the rate of 11.6% per annum and will bear
interest on overdue principal (including any overdue required or optional
prepayment of principal) and premium, if any, and (to the extent legally
enforceable) on any overdue installment of interest at the Overdue Rate after
maturity, whether by acceleration or otherwise, until paid, and will be in
substantially the form attached hereto as Exhibit A.
(c) The Subordinated Secured Notes shall be designated the Obligors'
15.6% Subordinated Secured Notes due March 31, 2000 and shall be limited to
$3,000,000 in aggregate principal amount. The Subordinated Secured Notes will
bear interest from the date of issue until maturity at the rate of 15.6% per
annum and will bear interest on overdue principal (including any overdue
required or optional prepayment of principal) and premium, if any, and (to the
extent legally enforceable) on any overdue installment of interest at the
Overdue Rate after maturity, whether by acceleration or otherwise, until paid,
and will be in substantially the form attached hereto as Exhibit B.
(d) The Trustee's certificate of authentication to be borne by such
Notes shall be substantially of the tenor and purport as set forth in Exhibit A
and Exhibit B hereto, and the Notes may have such letters, numbers or other
marks of identification or designation and such legends or endorsements thereon
as the Obligors may deem appropriate and as are not inconsistent with the
provisions of this indenture, or as may be required to comply with any law or
any rule or regulation made pursuant thereto.
Section 2.2. Denominations; Execution of Notes: Certificate of
Authentication. Each Note issued on the Closing Date shall be in the
denomination of $100,000 or any multiple of $1,000 in excess of $100,000. The
Notes shall be signed on behalf of each Obligor by its President or any Vice
President and attested by its Secretary or an Assistant Secretary. In case any
officer who shall have signed any Note shall cease to be such officer before
such Note shall have been authenticated by the Trustee or delivered by the
Obligors, such Note may nevertheless be executed and delivered with the same
force and effect as though the Person or Persons who signed such Note had not
ceased to be such officer of an Obligor; and any Note may be signed on behalf of
an Obligor by a Person who, at the actual date of execution of such Note, shall
be a proper officer of such Obligor, although at the date of such Note, such
Person was not then such officer of such Obligor. Only such Notes as shall bear
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21
thereon a certificate of authentication substantially in the form set forth in
Exhibit A and Exhibit B hereto shall be entitled to the benefits of this
Indenture or be valid or obligatory for any purpose. Such certificate by the
Trustee upon any Note executed by the Obligors shall be conclusive evidence that
the Note so authenticated has been duly authenticated and delivered hereunder
and that the holder is entitled to the benefits of this Indenture. The
authentication by the Trustee of any Note issued hereunder shall not be
construed as a representation or warranty by the Trustees as to the validity or
security of this Indenture or of such Note, and the Trustees shall in no respect
be liable or answerable for the use made of such Note or the proceeds thereof.
Section 2.3. Authentication and Delivery. Forthwith upon the execution
and delivery of this Indenture and pursuant to the Note Agreements, the Obligors
may deliver Notes executed by the Obligors to the Trustee, together with a
request for the authentication and delivery of such Notes; and the Trustee in
accordance with such request shall authenticate and deliver Senior Secured Notes
in the aggregate principal amount of $56,500,000 and Subordinated Secured Notes
in the aggregate principal amount of $3,000,000, as in this Indenture provided
and not otherwise.
Section 2.4. Payment of the Notes. (a) The principal of, premium, if
any, and interest on the Notes shall be payable at the principal corporate trust
office of the Trustee, in lawful money of the United States of America.
(b) Notwithstanding the provisions of the preceding paragraph (a) or
the Notes, if any Note is held by an Initial Purchaser or is registered in the
name of any holder named in a written notice to the Company and the Trustee
stating that the provisions of this paragraph shall apply (without any
presentment of any such Note), the Company or the Trustee, as applicable
pursuant to section 3.11 hereof, from and after the receipt of such notice shall
make payment of interest on such Notes and shall make payments or prepayments of
the principal thereof, and any premium, by wire transfer in immediately
available Federal Reserve funds to such Bank in the continental United States as
shall be specified in Schedule I attached to the Note Agreements or otherwise in
writing to the Trustee by such holder and such holder (or the transferee of any
such holder) will, before or after selling, transferring or otherwise disposing
of such Note, present such Note to the Trustee for transfer and notation as
provided in section section 2.6 and 2.7. All payments so made shall be valid and
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22
satisfy and discharge the liability upon such Note to the extent of the sums
soeffectual to paid. Any payment or prepayment of amounts due on any Note in
accordance with the terms thereof and hereof which is due on a date which is not
a Business Day shall be payable on the next succeeding Business Day. The Trustee
is authorized to act in accordance with the foregoing provisions and shall not
be liable or responsible to any such holder or to any Obligor or to any other
Person for any act or omission on the part of the Obligor or such holder in
connection therewith except for negligence or willful misconduct on the part of
the Trustee.
Section 2.5. The Register. The Obligors shall cause the Trustee to
keep at its principal corporate trust office a register for the registration and
transfer of Notes (herein called the "Register"). The Trustee hereby accepts the
office of registrar. The names and addresses of the holders of the Notes, the
transfers of the Notes and the names and addresses of the transferees of all
Notes shall be registered in the Register.
Section 2.6. Transfers and Exchanges. (a) The holder of any Note may
transfer such Note on the books of the Trustee upon the surrender thereof by
such holder prior to such transfer or by the transferee of such Note promptly
after sued transfer at the principal corporate trust office of the Trustee.
Thereupon, the Obligor shall execute in the name of the transfer a new Note or
Notes of the same class in aggregate principal amount equal to the aggregate
unpaid principal amount of the Note so surrendered, in denominations of $100,000
or any amount in excess thereof such transferee shall specify, and the Trustee
shall authenticate end deliver such new Note or Notes to such transferee.
(b) The holder of any Note may at any time surrender such Note at the
principal corporate trust office of the Trustee in exchange for an equal
aggregate principal amount of Notes of the same class, in the denomination of
$100,000 or any amount in excess thereof as such holder shall specify.
(c) All Notes presented or surrendered for exchange or transfer shall
be accompanied by a written instrument or instruments of assignment or transfer,
in form and with appropriate signature guarantees satisfactory to the Trustee,
duly executed by the registered holder or by his attorney duly authorized in
writing.
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(d) In case any Note shall become mutilated or be destroyed, lost or
stolen, the Obligors, upon the written request of the holder thereof, shall
execute and the Trustee shall authenticate and deliver, a new Note in exchange
and substitution for the mutilated Note, or in lieu of and substitution for the
Note so destroyed, lost or stolen, which new Note shall be a Note of the same
class in an aggregate principal amount equal to the aggregate unpaid principal
amount of such destroyed, lost or stolen Note. In every case the applicant for a
substituted Note shall furnish to the Obligors and to the Trustee such security
or indemnity as may be required by them to save each of them harmless from all
risks, and the applicant shall also furnish to the Obligors and to the Trustee
evidence to their satisfaction of the mutilation, destruction, loss or theft of
the applicant's Note and of the ownership thereof. In case any Note which has
matured or will mature within 30 days shall become mutilated or be destroyed,
lost or stolen, the Obligors may, instead of issuing a substituted Note, pay or
authorize the payment of the same (without surrender thereof except in the case
of a mutilated Note), if the applicant for such payment shall furnish to the
Obligors and to the Trustees such security or indemnity as they may require to
save them harmless, and evidence to the satisfaction of the Obligors and the
Trustee of the mutilation, destruction, loss or theft of such Note and of the
ownership thereof. If the Initial Purchaser is the owner of any mutilated,
destroyed, lost or stolen Note, then the affidavit of its President, Vice
President, Assistant Vice President or Treasurer setting forth the fact of
destruction, loss or theft and such Person's ownership of the Note at the time
of such mutilation, destruction, loss or theft shall be accepted as satisfactory
evidence thereof and no indemnity shall be required as a condition to payment of
such Note or execution and delivery of a new Note other than the written
agreement of such Person to indemnify the Obligors and the Trustees.
(e) No notarial act shall be necessary for the transfer or exchange of
any Note pursuant to this section 2.6, and the holder of any Note issued as
provided in this section 2.6 shall be entitled to any and all rights and
privileges granted under this Indenture to a holder of a Note.
Section 2.7. New Notes. (a) Each new Note (herein in this section 2.7
called a "New Note") issued pursuant to section 2.6(a), (b) or (d) in exchange
for or in substitution or in lieu of an outstanding Note (herein in this section
2.7 called an "Old Note") shall be dated the date of such Old Note. The Trustee
shall mark, to the extent of any payments made by the Trustee as paying agent
and any payments made by the Obligors as their own paying agent of which the
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Trustee has received notice pursuant to section 3.11 hereof, on each New Note
(i) the date to which principal and interest have been paid on such Old Note,
and (ii) all payments and prepayments of principal previously made on such Old
Note which are allocable to such New Note. Interest shall be deemed to have been
paid on such New Note to the date on which interest shall have been paid on such
Old Note, and all payments and prepayments of principal marked on such New Note,
as provided in clause (ii) above, shall be deemed to have been made thereon.
(b) The issuance of a New Note pursuant to section 2.6(a), (b) or (d)
shall be without expense to the holder, except that the Obligors may require the
payment of a sum to reimburse them for, or to provide them with funds for, the
payment of any tax or other governmental charge which are paid or payable by the
Obligors in connection with the transfer or exchange.
(c) All New Notes issued pursuant to section 2.6(a), (b) or (d) in
exchange for in substitution or in lieu of Old Notes shall be valid obligations
of the Obligors evidencing the same outstanding debt as the Old Notes and shall
be entitled to the benefits and security of this Indenture to the same extent as
the Old Notes.
Section 2.8. Cancellation of Notes. All Notes surrendered for the
purpose of payment, redemption, transfer or exchange shall be delivered to the
Trustee for cancellation or, if surrendered to the Trustee, shall be cancelled
by it, and no Notes shall be issued in lieu thereof except as expressly required
or permitted by any of the provisions of this Indenture. The Trustee shall hold
all such cancelled Notes until this Indenture shall have been discharged, at
which time the Trustee shall either deliver such cancelled Notes in a manner
necessary to effect the discharge and release of this Indenture of record or, if
no such delivery is necessary, shall destroy such cancelled Notes and deliver a
certificate to the Company certifying such destruction. If any Obligor shall
acquire any of the Notes, however, such acquisition shall not operate as a
redemption or satisfaction of the indebtedness represented by such Notes unless
and until the same are surrendered to the trustee for cancellation.
Section 2.9. Trustee as Agent. The Trustee is hereby appointed the
agent of the Obligors for the payment, registration, transfer end exchange of
Notes. Subject to the provisions of section 2.4 and 12.5, Notes may be presented
for payment at, and notices with respect to the Notes or this Indenture may be
<PAGE>
25
served or made at, the principal corporate trust office of the Trustee, provided
that copies of all such notices shall be delivered to the Company.
Section 2.10. Ownership. The Person in whose name any Note shall be
registered shall be deemed and treated as the owner thereof for all purposes of
this Indenture and neither the Obligors nor the Trustee shall be affected by any
notice to the contrary. Payment of or on account of the principal of, premium,
if any, and interest on such Note shall be made only to or upon the order in
writing of such registered owner. For the purpose of any request, direction or
consent hereunder, the Obligors and the Trustee may deem and treat the
registered owner of any Note as the owner thereof without production of such
Note.
Section 2.11. Ranking of Notes of Each Class. As provided in section
10 hereof, Subordinated Secured Notes shall rank junior and subordinate to the
Senior Secured Notes in right of payment and in respect of certain other rights
and powers of the holders of Notes issued hereunder.
SECTION 3. PARTICULAR COVENANTS OF THE OBLIGORS
From and after the Closing Date and continuing so long as any amount
remains unpaid on any Note, the Obligors covenant with the Trustees for the
benefit of the Trustees and the holders of the Notes as follows:
Section 3.1. Warranty of Title. Subject only to the Lien of the Pledge
Agreements, the Mortgages and Liens permitted thereby, the Obligors,
respectively, have good and marketable title to and are lawfully possessed of
all of the Mortgaged Property, and have full right, power and authority to
mortgage and pledge the same for the purposes hereof; and the Obligors will
warrant and defend title thereto to the Trustees against claims of all Persons
whomsoever.
Section 3.2. Payment of Principal, Premium and Interest. Subject to
section 10 hereof, the Obligors, jointly and severally, will duly and punctually
pay the principal of, premium, if any, and interest on, each and every Note, at
the dates and the places and in the manner mentioned in the Notes and in this
Indenture, according to the true latent and meaning thereof and hereof.
Section 3.3. Office for Notices. The Obligors will keep an office
while any of the Notes issued hereunder are outstanding where notices,
presentations and/or demands to or upon the Obligors in respect of the Notes,
the Pledge Agreements, the Mortgages or this Indenture may be given or made, at
One Poydras Plaza, 639 Loyola Avenue, Suite 1400, New Orleans, Louisiana 70113
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26
until such time the Obligors shall notify the Trustee and the holders of the
Notes of any change of location of such office.
Section 3.4. Note Agreement, Pledge Agreement and Mortgage Covenants.
Each and all of the terms, provisions, restrictions, covenants and agreements
set forth in the Note Agreements, the Pledge Agreements and the Mortgages, and
in each and every supplement thereto or amendment thereof which may at any time
or from time to time be executed and delivered by the parties thereto or their
successors and assigns, are incorporated herein by reference to the same extent
as though each and all of said terms, provisions, restrictions, covenants and
agreements were fully set out herein and as though any amendment or supplement
to the Note Agreements, each Pledge Agreement and each Mortgage were fully set
out in an amendment or supplement to this indenture; and the Obligors do hereby
covenant and agree well and truly to abide by, perform and be governed and
restricted by each and all of the matters provided for by the Note Agreements,
the Pledge Agreements and the Mortgages to the same extent and with the same
force and effect as if each and all of said terms, provisions, restrictions,
covenants and agreements so incorporated herein by reference were set out and
repeated herein at length.
Section 3.5. Maintenance of Corporate Existence, Rights. Each Obligor
will at all times preserve its corporate existence (except as otherwise
permitted by section 3.21 hereon and will obtain and maintain in full force and
effect all franchises, privileges, rights, licenses and permits and all other
consents, approvals and authorizations of any governmental authority necessary
for the ownership and efficient operation and maintenance of the Mortgaged
Property.
Section 3.6. Maintenance of Lien; Recording. (a) The Obligors will, at
their expense, take all necessary action to maintain and preserve the Lien of
this Indenture and of the Pledge Agreements and the Mortgages so long as any
Notes are outstanding.
(b) The Obligors will, forthwith after the execution and delivery of
this Indenture, each Pledge Agreement and each and every Mortgage and thereafter
from time to time, cause this Indenture, each Pledge Agreement, each Mortgage
and financing statements to be filed, registered and recorded in such manner and
in such places as may be required by law in order to publish notice of and fully
<PAGE>
27
to protect the Lien hereof and of each Pledge Agreement and each Mortgage in
respect of, upon, and the title of the Trustees to, the Trust Estate; and from
time to time will perform or cause to be performed any other act as provided by
law and will execute or cause to be executed any and all further instruments,
continuation statements and similar statements that may be requested by the
Trustees or either of them for such publication and protection the Obligors
will, within 10 days after any such filing, registering, recording or other act
and in any event not less than 10 days prior to the lapse of the perfection of
any security interest granted under this Indenture, any Pledge Agreement or any
Mortgage, furnish the Trustees with an Opinion of Counsel as to the adequacy and
recitals the details of such filing, reentering, recording or other act and as
to the perfection of any security interest effected by such filing, registering,
recording or other act and specifying any rerecording or refiling required to be
effected in the future with respect to this Indenture, the Pledge Agreements,
such Mortgage or financing statement. To the extent permitted by applicable
lair, the Obligors will pay or cause to be paid all filing, registration and
recording taxes and fees incident to such filing registration and recording, and
all expenses incident to the preparation, execution and acknowledgment of this
Indenture, each Pledge Agreement, each Mortgage and each financing statement,
and of any instrument of further assurance, and all Federal or state stamp taxes
and other taxes, duties, imposts, assessments and charges arising out of or in
connection with the execution and delivery of this Indenture, each Pledge
Agreement, each Mortgage and each financing statement and such instrument of
further assurance.
Section 3.7. Further Assurances; After - Acquired Property. (a) The
Obligors will at their expense do, execute, acknowledge and deliver, or cause to
be done, executed, acknowledged and delivered, all such further acts, deeds,
conveyances, mortgages, assignments, transfers and assurances as may be required
for the perfection of the Lien being herein provided for in the Trust Estate.
(b) All right, title and interest of any Obligor in and to all
extensions, improvements, betterments, renewals, substitutes and replacements
of, and all additions and appurtenances to, a Hospital or any part thereof,
hereafter constructed or acquired by such Obligor, immediately upon such
construction or acquisition, and without any further mortgaging, conveyance or
assignment, shall become and be part of such Hospital and the Mortgaged Property
and shall be subject to the Lien of this Indenture and the Mortgages as fully
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28
and completely and with the same effect as though now owned by such Obligor, but
at any and all times the Obligors will execute and deliver to the Trustees any
and all such further insurances, mortgages, conveyances or assignments thereof
and other instruments with respect thereto as may reasonably be required for the
purpose of expressly and specifically subjecting the same to the Lien of this
Indenture and the Mortgages.
Section 3.8. Maintenance of Property. The Obligors will at all times
maintain, preserve and keep, the Hospitals and Equipment in good condition and
make all necessary renewals, replacements, additions, betterments and
improvements thereto.
Section 3.9. Right of Trustee to Perform Covenants, Etc. If the
Obligors shall fail to perform any of their covenants under this Indenture, the
Note Agreements, the Pledge Agreements or the Mortgages, the Trustee, after five
days' prior written notice to the Company and without waiving or releasing any
obligation or Default, shall, if directed by the Required Holders in writing so
to do, make advances (subject to the provisions of section 7.2(h) hereof) to
effect performance of such covenant for the account and at the expense of the
Obligors, and shall enter upon the Mortgaged Property or any part thereof for
such purpose and take all such action thereon as may be necessary or appropriate
therefor. All sums so paid by the Trustee and all costs and expenses (including
without limitation, reasonable attorneys' fees and expenses) so incurred,
together with interest thereon at a rate equal to the greater of (i) 13.6% per
annum and (ii) the sum of the rate of interest publicly announced by Morgan
Guaranty Trust Company of New York from time to time in New York City as its
prime rate plus 1% from the date of payment or incurrence, shall be secured
hereby in priority to the indebtedness evidenced by the Notes and shall be paid
by the Obligors to the Trustee on demand. The Trustee in making any payment
authorized under this Section relating to taxes or assessments may do so
according to any bill, statement or estimate procured from the appropriate
public office without inquiry into the accuracy of such bill, statement or
estimate or into the validity of any tax assessment, sale, forfeiture, tax Lien
or title or claim thereof, unless otherwise aware of any inaccuracy or
invalidity. As between the Obligors and the Trustee, the Trustee, in performing
any covenant under this Section, shall be the sole judge of whether the Obligors
are required to perform the same under the terms of this Indenture.
<PAGE>
29
Section 3.10. Obligors to Give Notice of Default. When any Event of
Default described in 6.1 has occurred, or if the holder of any Note or of any
other evidence of indebtedness in excess of $50,000 of any Obligor gives any
notice or takes any other action with respect to a claimed default, the Obligors
agree to give notice to the Trustee and each holder of any Note within three
business days after the earlier of (i) the date of discovery by any Obligors of
the occurrence of such event or (ii) the date upon which any Obligor, in the
exercise of reasonable diligence should have discovered the occurrence of such
event, such notice to be in writing and sent by registered or certified mail or
by telegram.
Section 3.11. Money for Note Payments to be Held in Trust, Repayment
of Unclaimed Money. If the Obligors shall at any time set as their own paying
agent, they will, on or before each date upon which a payment of interest or a
payment or prepayment of principal is due (a "Note Payment Date"), segregate and
hold in trust for the benefit of the holders of the Notes a sum sufficient to
pay the principal (and premium, if any) or interest becoming due on such date
until such sums shall be paid to such holders or otherwise disposed of as herein
provided, and the Obligors will promptly notify the Trustee of their action or
failure to act.
Whenever the Trustee shall act as a paying agent, the Obligors will,
prior to each Note Payment Date, deposit with the paying agent sum sufficient to
pay the principal (and premium, if any) or interest becoming due on such date,
such sum to be held in trust for the benefit of the holders of the Notes. The
Obligors will not appoint a Person, other than the Trustee, to act as paying
agent.
Moneys so segregated or deposited and held in trust shall not be part
of the Trust Estate but shall constitute a separate trust fund for the benefit
of the Persons entitled to such principal, premium or interest. Moneys held in
trust by the Trustee for the payment of the principal (or premium, if any) or
interest on the Notes need not be segregated from other funds, except to the
extent required by law.
Any money deposited with the Trustee in trust for the payment of the
principal (and premium, if any) or interest on any Notes and remaining unclaimed
for 6 years after such principal (and premium, if any) or interest has become
due and payable shall be paid to the Company; and the holder of such Note shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee with respect to such trust
money, shall thereupon cease.
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30
Section 3.12. Maintenance of Insurance and Licenses.
The Company and each Consolidated Subsidiary will:
(a) Insurance - maintain, with financially sound and reputable
insurers acceptable to the Required Holders, insurance with respect to its
properties and business against such casualties and contingencies, of such types
(including public liability, business interruption, medical malpractice,
larceny, embezzlement or other criminal misappropriation insurance) and in such
amounts as is (i) customary in the case of corporations of established
reputations engaged in the same or a similar business and similarly situated and
(ii) acceptable to the Required Holders. The Company will furnish, or cause to
be furnished, to each holder of any Note, within 30 days after the end of each
fiscal year of the Company, a report signed by an independent firm of insurance
brokers acceptable to the Required Holders describing in reasonable detail the
insurance then carried and maintained by the Obligors and stating the opinion of
such firm that such insurance complies with the terms of this section 3.12 and
of section 2.6 of each Mortgage and that such insurance together with any
self-insurance permitted hereby is adequate for the protection of the interests
of the holders of the Notes. In lieu of or supplemental to such insurance, but
subject to Section 2.6 of the Mortgages, the Company may adopt such other plan
or method of protection, whether by the establishment of an insurance fund or
reserve to be held and applied to make good losses from casualties, or
otherwise, and conforming to the practices of similar corporations maintaining
systems of self-insurance, as may be determined by the Board of Directors of the
Company and as shall be consistent with existing policies as to self-insurance
and with generally accepted accounting principles. If the Company adopts any
such other plan or method of protection, whether by the establishment of an
insurance fund or reserve, or otherwise, the Company shall, at the time of
establishment thereof, furnish to each holder of outstanding Notes a certificate
of an actuary that such plan or method of protection is adequate; and
(b) Licensed Facilities - keep and maintain all material licensing
requirements and accreditations to serve as a psychiatric facility for each
Mortgaged Facility owned or operated by any Principal Subsidiary of all local,
state and federal regulatory agencies having jurisdiction over such Mortgaged
<PAGE>
31
Facility (except to the extent such a requirement has been waived in writing by
the appropriate regulatory agency) and shall participate in, be eligible for
reimbursement under, end be in compliance with all requirements of each public
or private reimbursement program applicable to any Facility, and shall have
timely filed or caused to be timely filed completed and accurate cost and other
report required by law or otherwise to be made with respect to the purchase of
services by third party purchasers, include, but not limited to, Medicare,
Medicaid and CHAMPUS programs and other insurance carriers where applicable to
such Mortgaged Facility as set forth on Annex D to Exhibit D attached to the
Note Agreements.
Section 3.13. Taxes, Claims for Labor and Materials, Compliance with
Laws. The Company will promptly pay and discharge, and will cause each
Consolidated Subsidiary promptly to pay and discharge, all lawful taxes,
assessments and governmental charges or levies imposed upon the Company or such
Consolidated Subsidiary, respectively, or upon or in respect of all or any part
of the property or business of the Company or such Consolidated Subsidiary, all
trade accounts payable in accordance with usual and customary business terms,
and all claims for work, labor or materials, which if unpaid might become a lien
or charge upon any property of the Company or such Consolidated Subsidiary;
provided the Company or such Consolidated Subsidiary shall not be required to
pay any such tax, assessment, charge levy, account payable or claim if (i) the
validity, applicability or amount thereof is being contested in good faith by
appropriate actions or proceedings which will prevent the forfeiture or sale of
any property of the Company or such Consolidated Subsidiary or any material
interference with the use thereof by the Company or such Consolidated
Subsidiary, and (ii) the Company or such Consolidated Subsidiary shall set aside
on its books, reserves deemed by it to be adequate with respect thereto. The
Company will promptly comply and will cause each Subsidiary to comply with all
laws, ordinances or governmental rules and regulations to which it is subject
including, without limitation, the Occupation Safety and Health Act of 1970,
ERISA and all laws, ordinances, and rules and regulations relating to
environmental protection in all applicable jurisdictions, the violation of which
would materially and adversely affect the properties, business, prospects,
profits or condition of the Company and its Subsidiaries or would result in any
lien or charge upon any property of the Company or any Subsidiary.
Section 3.14. Maintenance, etc. The Company will maintain, preserve
and keep, and will cause each Consolidated Subsidiary to maintain, preserve and
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32
keep, its properties which are used or useful in the conduct of its bylines
(whether owned in fee or a leasehold interest) in good repair and working order
and from time to time will make all necessary repair replacements, renewals and
additions so that at all times the utility thereof shall not be impaired.
Section 3.15. Nature of Business. Neither the Company nor any
Consolidated Subsidiary will engage in any business if, as a result, the general
nature of the business, taken on a consolidated basis, which would then be
engaged in by the Company and its Consolidated Subsidiaries would be
substantially excluded from the business of operating psychiatric hospitals in
the United Stated
Section 3.16. Consolidated Tangible Net Worth. The Company will at all
times keep and maintain Consolidated Tangible Net Worth at an amount not less
than the sum of (i) 50% of Consolidated Net Income for the period from and after
July 1, 1990 to and including the date of determination hereunder, computed on a
cumulative basis for said entire period (if Consolidated Net Income for any
fiscal year is a deficit figure then Consolidated Net Income for such fiscal
year shall equal zero for the purposes of this section 3.16), plus (ii) either
(A) during the fiscal year ending June 30, 1990, $20,000,000 or (B) during the
fiscal year beginning July 1, 1990 and any subsequent fiscal year during which
any Notes outstanding, $25,000,000.
Section 3.17. Fixed Charge Coverage. The Company will, as of the end
of each fiscal quarter, keep and maintain the ratio of (i) sum of (A)
Consolidated Cash Flow plus (B) Rentals to (ii) Fixed Charges for the most
recent four fiscal quarters, at not less than (x) 1.5 to 1, in the case of any
determination being made hereunder on or prior to June 30, 1991, and (y) 2.0 to
1, in the case of any determination being made hereunder at any time thereafter.
Section 3.18. Limitations on Indebtedness.
(a) The Company will not, and will not permit any Consolidated
Subsidiary to, create, assume, incur or guarantee or in any manner be or become
liable in respect of any Current Indebtedness or Funded Indebtedness, except:
(1) the Note;
(2) the Bank Debt, provided that during the twelve-month period
immediately preceding the date of any determination hereunder (commencing on the
date occurring twelve months after the Closing Date), there shall have been a
<PAGE>
33
period of 45 consecutive days during which the Company and each of its
Consolidated Subsidiary shall have been free of all Indebtedness outstanding
under the working capital facility of the Credit Agreement and all other Current
Indebtedness;
(3) Funded Indebtedness of the Company and its Consolidated
Subsidiaries outstanding as of the date of this Indenture and described in Annex
B to Exhibit E attached to the Note Agreements;
(4) Funded Indebtedness issued or incurred for the purpose of
extending, renewing or refunding Funded Indebtedness (including the Bank Debt)
outstanding as of the date of this Indenture, prodded that the principal amount
of Funded Indebtedness extended, renewed or refinanced does not exceed the
outstanding principal amount of such Funded Indebtedness at such time;
(5) Guaranties entered late by the Company in the ordinary course of
business, provided that the aggregate principal amount of Indebtedness which the
Company may become obligated to pay thereunder shall not exceed $250,000 at any
one time outstanding;
(6) other Funded Indebtedness issued or incurred after July 1, 1990
provided that, at the time of the issuance or incurrence thereof and after
giving effect thereto and to the application of the proceeds thereof:
(i) Consolidated Funded Indebtedness shall not exceed the
following percentages of Total Capitalization:
Percentage of
Total
Period Capitalization
July 1, 1990 thru June 30, 1991 78%
July 1, 1991 thru June 30, 1992 74%
July 1, 1992 thru June 30, 1993 69%
July 1, 1993 and thereafter 65%
(ii) the ratio of Consolidated Funded Indebtedness to
Consolidated Cash Flow for the most recent four fiscal quarters shall not exceed
(A) 4.5 to 1, in the case of any determination being made hereunder on or prior
<PAGE>
34
to June 30, 1991, and (B) 4.0 to 1, in the case of any determination being made
hereunder at any time thereafter;
(iii) the sum of Consolidated Cash Floor plus Rentals for the
most recent four focal quarters shall be not less then 1.5 times proforma
Consolidated Debt Service for the immediately succeeding four fiscal quarters;
and
(iv) No Default or Event of Default shall have occurred and be
continuing;
(7) unsecured Current Indebtedness of the Company and its Consolidated
Subsidiaries, prodded that during the twelve-month period immediately preceding
the date of any determination hereunder (commencing on the date occurring twelve
months after the Closing Date), there shall have been a period of 45 consecutive
days during which the Company and each of its Consolidated Subsidiaries shall
have been free of all Indebtedness outstanding under the working capital
facility of the Credit Agreement and all other Current Indebtedness;
(8) Current Indebtedness or Funded Indebtedness (i) of a Principal
Subsidiary to the Company or to another principal Subsidiary and (ii) of the
Company to a Principal Subsidiary;
(9) Current Indebtedness or Funded Indebtedness (i) of a Consolidated
Subsidiary other than a Principal Subsidiary to the Company or to another
Consolidated Subsidiary other than a Principal Subsidiary and (ii) of the
Company to a Consolidated Subsidiary other than a Principal Subsidiary;
(10) Funded indebtedness representing purchase money obligations and
secured by purchase money liens permitted by section 3.19(i), provided that (i)
such Funded Indebtedness is incurred in compliance with the limitations on
Indebtedness set forth in this section 3.18 and (ii) at the time of issuance
thereof and after giving effect thereto and to the application of the proceeds
thereof, no Default or Event of Default shall have occurred and be continuing;
(11) unsecured Indebtedness of the Company or any of its Consolidated
Subsidiaries incurred in the ordinary course of business resulting from
physician or mental health practice guaranties pursuant to which the Company or
any such Consolidated Subsidiary guarantees to pay a physician or mental health
professional on the medical staff of a Hospital owned of operated by it a
minimum annual income or guaranties by the Company for such Consolidated
Subsidiary of obligations or any such physician or mental health professional
<PAGE>
35
(Practice Gustier), in an aggregate amount at any one time outstanding in
respect of Practice Guaranties for the benefit of any one physician or mental
health professional not to exceed $250,000 and in an aggregate amount at any one
time outstanding in respect of all such Practice Guaranties not to exceed
$5,000,000.
(12) Funded Indebtedness issued or incurred by the Company or any
Consolidated Subsidiary in connection with the acquisition of telephone systems
to be used at facilities owned by the Company or such Consolidated Subsidiary,
provided that the aggregate principal amount of all such Funded Indebtedness at
any one time outstanding shall not exceed $600,000;
(13) additional unsecured Subordinated Funded Indebtedness in an
aggregate principal amount not to exceed $2,000,000; provided that (i) all
proceeds of such Subordinated Funded Indebtedness shall be used exclusively to
retire the Subordinated Promissory Note, (ii) the terms of such Subordinated
Funded Indebtedness (including interest rate, covenants, defaults, subordination
provisions and related warrants if any) shall be no more favorable to the
holders thereof than the terms of the Subordinated Secured Note and all such
Subordinated Funded Indebtedness shall mature on or after April 1, 2000;
(14) Guaranties of any Consolidated Subsidiary entered into pursuant
to the Credit Agreement; provided that with respect to any such Guaranty entered
into by any Principal Subsidiary (i) the obligations guaranteed by such Guaranty
shall be limited to the amount of accounts receivable of the Principal
Subsidiaries allocated to the lenders under the Credit Agreement under the
receivable Print formula provided under the Intercreditor Agreement and (ii)
recourse under such Guaranty shall be limited solely to the accounts receivable
of such Principal Subsidiary, all subject to the accounts receivable sharing
provided under the Intercreditor Agreement; and
(15) additional Current Indebtedness incurred under the working
capital facility of the Credit Agreement in an aggregate principal amount not to
exceed $3,000,000, provided that, at the time of the issuance or incurrence
thereof and after giving effect thereto and to the application of the proceeds
thereof:
(i) Consolidated Funded Indebtedness shall not exceed the
following percentages of Total Capitalization:
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36
Percentage of
Total
Period Capitalization
July 1, 1990 thru June 30, 1991 78%
July 1, 1991 thru June 30, 1992 74%
July 1, 1992 thru June 30, 1993 69%
July 1, 1993 and thereafter 65%
(ii) the ratio of Consolidated Funded Indebtedness to
Consolidated Cash Flow for the most recent four fiscal quarters shall not exceed
(A) 4.5 to 1, in the case of any determination being made hereunder on or prior
to June 30, 1991, and (B) 4.0 to 1, in the case of any determination being made
hereunder at any time thereafter;
(iii) the sum of Consolidated Cash Flow plus Rentals for the most
recent four fiscal quarters shall be not less then 1.5 times pro-forma
Consolidated Debt Service for the immediately succeeding four fiscal quarters;
and
(iv) No Default or Event of Default shall have occurred and be
continuing;
and provided further that during the twelve-month period immediately preceding
the date of any determination hereunder (commencing on the date occurring twelve
months after the Closing Date there shall have been a period of 45 consecutive
days during which the Company and each of its Consolidated Subsidiaries shall
have been free of all Indebtedness outstanding under the working capital
facility of the Credit Agreement and all other Current Indebtedness.
(b) Any corporation which becomes a Consolidated Subsidiary after the
date hereof shall for all purposes of this section 3.18 be deemed to have
created, assumed or incurred at the time it becomes a Consolidated Subsidiary
all Current Indebtedness and Funded Indebtedness of such corporation existing
immediately after it becomes a Consolidated Subsidiary.
Section 3.19. Limitation on Liens. The Company will not, and will not
permit any Consolidated Subsidiary to, create or incur, or suffer to be incurred
or to exist, any mortgage, pledge, security interest, encumbrance, lien or choke
of any kind on its or their property or assets, whether now owned or hereafter
acquired, or upon any income or profits therefrom, or transfer any property for
the purpose of subjecting the same to the payment of obligations in priority to
<PAGE>
37
the payment of its or their general creditors, or acquire or agree to acquire,
or permit any Consolidated Subsidiary to acquire, any property or wets upon
conditional sales agreements or other title retention devices, except:
(a) liens granted pursuant to or permitted by the Mortgages, the
Indenture and the Pledge Agreements securing the Notes;
(b) liens granted pursuant to the Credit Agreement in connection with
the incurrence of any Bank Debt and described in Annex B to Exhibit E attached
to the Note Agreements;
(c) liens for property taxes and assessments or governments shares or
levies and liens securing claims or demands of mechanics and materialmen,
provided that payment thereof is not at the time required by section 3.13;
(d) liens of or resulting from any judgment or award, the time for the
appeal or petition for rehearing of which shall not have expired, or in respect
of which the Company or a Consolidated Subsidiary shall at any time in good
faith be prosecuting an appeal or proceeding for a review and in respect of
which a stay of execution pending such appeal or proceeding for review shall
have been secured.
(e) liens, charges, encumbrances and priority claims incidental to the
conduct of business or the ownership of properties and assets (including
warehousemens and attorneys' liens and statutory landlords' liens) and deposits,
pledges or liens to secure the performance of bids, tenders or trade contracts,
or to secure statutory obligations, surety or appeal bonds or other liens of
like general nature incurred in the ordinary course of business and not in
connection trite the borrowing of money, provided, in each ease, that (i) the
obligation secured is not overdue or, if overdue, is being contested in good
faith by appropriate actions or proceedings and (ii) the obligations secured by
such liens are not material in the aggregate;
(f) minor survey exceptions or minor encumbrances, easements or
reservations, or rights of other for rights-of-way, utilities and other similar
purposes, or zoning or other restrictions as to the use of real properties,
which are nicest for the conduct of the activities of the Company and its
Consolidated Subsidiaries or which customarily exist on properties of
<PAGE>
38
corporations enacted in similar activities and similarly situated and which do
not in any event materially impair their use in the operation of the business of
the Company and its Consolidated Subsidiaries;
(g) mortgages, liens or security interests (i) securing Indebtedness
of a Consolidated Subsidiary (other than a Principal Subsidiary) to the Company
or to another Consolidated Subsidiary (other than a Principal Subsidiary) or
(ii) securing Indebtedness of a Principal Subsidiary to the Company or to
another Principal Subsidiary;
(h) mortgages, conditional sale contracts, security interests or other
arrangements for the retention of title (Including Capitalized Leases) existing
of the date of this Indenture and described in Annex B to Exhibit E attached to
the Note Agreements securing Funded Indebtedness of the Company or any
Consolidated Subsidiary outstanding on such date;
(i) mortgages, conditional sale contracts, security interests or other
arrangements for the retention of title (including Capitalized Leases) incurred
after the date hereof given to secure the payment of the purchase price incurred
in connection with the acquisition of fixed assets useful and intended to be
used in carrying on the business of the Company or a Consolidated Subsidiary,
including liens existing on such fixed assets at the time of acquisition thereof
or at the time of acquisition by the Company or a Consolidated Subsidiary of any
business entity then owning such fixed assets, whether or not such existing
liens were given to secure the payment of the purchase price of the titled
assets to which they attach so long as they were not incurred, extended or
renewed in contemplation of such acquisition, provided that (i) the lien or
charge shall attach (A) solely to the property acquired or purchased and (B)
within 120 days of the incurrence of the Indebtedness secured thereby, (ii) at
the time of acquisition of such fixed assets the aggregate amount remaining
unpaid on all Indebtedness secured by liens on such fixed assets whether or not
assumed by the Company or a Consolidated Subsidiary shall not exceed an amount
equal to 100% of the lesser of the total purchase price or fair market value at
the time of acquisition of such fixed assets (as determined in good faith by the
Board of Directors of the Company), and (iii) all such indebtedness shall have
been incurred within the applicable limitations provided in section 3.18;
(j) liens on accounts receivable of Consolidated Subsidiaries other
than Principal Subsidiaries securing Current Indebtedness to banks incurred for
<PAGE>
39
working capital purposes, provided no such lien shall be granted or imposed
(with or without the Consent of the Consolidated Subsidiary concerned) if after
giving effect thereto any Default or Event of Default shall hare occurred and be
continuing;
(k) mortgages (but not by Principal Subsidiaries) associated with
construction loans or permanent financing on new developments or facilities
acquired after the date of this Indenture; prodded that (i) all Indebtedness
secured by such mortgages is incurred in compliance with the applicable
limitations contained in section 3.18, (ii) the lien of such mortgages shall
attach within 120 days of the incurrence of the Indebtedness secured thereby and
(iii) the aggregate amount of all indebtedness secured by such mortgage shall
not exceed an amount equal to (A) in the case of the acquisition of any such
facilities, 75% of the lesser of the total purchase price or fair market value
at the time of acquisition of such facilities (as determined in good faith by
the Board of Directors of the Company) or (B) in the case of the construction of
any such facilities, 100% of the lesser of the total construction cost or fair
market value at the time of construction of such facilities (as determined in
good faith by the Board of Directors of the Company);
(l) liens in addition to the liens permitted by the preceding clauses
(a) through (k), inclusive, securing Funded Indebtedness of the Company or any
Consolidated Subsidiary, provided that (i) all Funded Indebtedness secured by
such liens shall be incurred in compliance with the applicable limitations
contained in section 3.18 and (ii) the aggregate amount of all Funded
Indebtedness secured by such liens at any one time outstanding shall not exceed
15% of Consolidated Tangible Net Worth; and
(m) any extension, renewal or replacement of any lien permitted by the
preceding section 3.19(b) and (h) through (1), inclusive, in respect of the same
property theretofore subject to such lien, incurred in connection with the
extension, renewal or refunding of the Indebtedness secured thereby which is
permitted by the limitations contained in section 3.18, provided that the
principal amount of Indebtedness extended, renewed or refinanced does not exceed
the outstanding principal amount of such Indebtedness at such time.
Section 3.20. Dividends, Stock Purchases, Consolidated Investments.
The Company will not, and shall not permit any Subsidiary to, except as
hereinafter provided:
<PAGE>
40
(a) declare or pay any dividends, either in cash or property, on any
shares of its capital stock of any class (except dividends or other
distributions payable solely in shares of capital stock of the Company); or
(b) directly or indirectly, or through any Subsidiary, purchase,
redeem or retire any shares of its capital stock of any class or any warrants,
rights or options to purchase or acquire any shares of its capital stock (other
than in exchange for or out of the net cash proceeds to the Company from the
substantially concurrent issue or sale of other shares of capital stock of the
Company or warrants, rights or options to purchase or acquire any shares of its
capital stock); or
(c) make any other payment or distribution, either directly or
indirectly or through any Subsidiary, in respect of its capital stock; or
(d) make any Restricted Investment;
(such declarations or payments of dividends, purchases, redemptions or
retirements of capital stock and warrants, rights or options, Restricted
Investments, and all such other distributions being herein collectively called
"Restricted Payments" unless at the time of such Restricted Payment and after
giving effect thereto (i) no Default or Event of Default shall have occurred and
be continuing, (ii) Consolidated Funded Indebtedness shall not exceed 70% of
Total Capitalization, (iii) the ratio of Consolidated Funded Indebtedness to
Consolidated Cash Flow shall not exceed 4.0 to 1, (iv) the Company would be
permitted to incur at least $1.00 of additional Funded Indebtedness under the
provisions of section 3.18(a)(6) and (v) the aggregate amount of Restricted
Payments made during the fiscal year in question would not exceed an amount
equal to 50% of Consolidated Net Income for the immediately preceding fiscal
year (or if such Consolidated Net Income is a deficit figure, then no Restricted
Payments shall be made during the fiscal year in question).
Notwithstanding the limitations of this section 3.20, the Company may
(A) pay or declare the regular fixed dividends on shares of its Preferred Stock
outstanding as of December 31, 1989 and remaining outstanding thereafter;
provided that (i) at the time of such payment or declaration and after giving
effect thereto no Default or Event of Default shall have occurred and be
continuing and (ii) all such payments or declarations shall be included in all
computations of Restricted Payments for all other purposes and (B) redeem
capital stock of Gulf Coast Treatment Center, Inc. owned as of the date of this
<PAGE>
41
Indenture by Dr. Todd Estroff; provided that (i) at the time of redemption and
after giving effect thereto no Default or Event of Default with respect to the
payment of any principal, interest or premium on or in respect of the Notes
shall have occurred and be continuing and (ii) all such redemptions shall be
included in all computations of Restricted Payments for all other purposes.
The Company will not declare any dividend which constitutes a
Restricted Payment payable more then 60 days after the date of declaration
thereof.
For the purposes of this section 3.20 the amount of any Restricted
Payment declared, paid or distributed in property of the Company shall be deemed
to be the greater of the book value or fair market value (as determined in good
faith by the Board of Directors of the Company) of such property at the time of
the making of the Restricted Payment in question.
Section 3.21. Mergers, Consolidations and Sales of Assets.
(a) Subject to section 3.21(e) hereof, the Company will not, and will
not permit any Consolidated Subsidiary to, (i) consolidate with or be a party to
a merger with any other corporation or (ii) sell, lease or otherwise dispose of
all or any substantial part (as defined in paragraph (d) of this section 3.21)
of the assets of the Company and its Consolidated Subsidiaries, provided,
however, that:
(1) any Consolidated Subsidiary may merge or consolidate with or into
the Company or any Consolidated Subsidiary so long as (i) in any merger or
consolidation involving the Company, the Company shall be the surviving or
continuing corporation, (ii) at the time of such consolidation or merger and
after giving effect thereto no Default or Event of Default shall have occurred
and be continuing and (iii) after giving effect to such consolidation or merger
the Company would be permitted to incur at least $1.00 of additional Funded
Indebtedness under the provisions of section 3.18(a)(6); and
(2) the Company may consolidate or merge with any other corporation if
(i) such surviving or acquiring entity is a U.S. corporation, (ii) such
surviving or acquiring entity expressly assumes all obligations of the Company
under the Notes and under this Agreement by written instrument reasonably
satisfactory in form and substance to the Required Holders, (iii) at the time of
such consolidation or merger and after giving effect thereto no Default or Event
<PAGE>
42
of Default shall have occurred and be continuing, and (iv) after giving effect
to such consolidation or merger the Company would be permitted to incur at least
$1.00 of additional Funded Indebtedness under the provisions of section
3.18(a)(6).
(b) Subject to section 3.21(e) hereof, the Company will not permit any
Consolidated Subsidiary to issue or sell any shares of stock of any class
(including as "stocks" for the purpose of this section 3.22, any warrants,
rights or options to purchase or otherwise acquire stock or other Securities
exchangeable for or convertible into stock) of such Consolidated Subsidiary to
any Person other than the Company or a Wholly-owned Consolidated Subsidiary,
except for the purpose of qualifying directors, or except in satisfaction of the
validly pre-existing preemptive rights of minority shareholders in connection
with the simultaneous issuance of stock to the Company and/or a Consolidated
Subsidiary whereby the Company and/or such Consolidated Subsidiary maintain
their same proportionate interest in such Consolidated Subsidiary.
(c) Subject to section 3.21(e) hereof, the Company will not sell,
transfer or otherwise dispose of any shares of stock in any Consolidated
Subsidiary (except to qualify directors) or any Indebtedness of any Consolidated
Subsidiary, and will not permit any Consolidated Subsidiary to sell, transfer or
otherwise dispose of (except to the Company or a Wholly-owned Consolidated
Subsidiary) any shares of stock or any Indebtedness of any other Consolidated
Subsidiary, unless:
(1) simultaneously with such sale, transfer, or disposition, all
shares of stock and all Indebtedness of such Consolidated Subsidiary at the time
owned by the Company and by every other Subsidiary shall be sold, transferred or
disposed of as an entirety;
(2) the Board of Directors of the Company shall have determined, as
evidenced by a resolution thereof, that the retention of such stock and
Indebtedness is no longer in the best interests of the Company;
(3) such stock and Indebtedness Is sold, transferred or otherwise
disposed of to a Person, for a cash consideration and on terms reasonably deemed
by the Board of Directors to be adequate and satisfactory;
(4) the Consolidated Subsidiary being disposed of shall not have any
continuing investment in the Company or any other Subsidiary not being
simultaneously disposed of; and
<PAGE>
43
(5) such sale or other disposition does not involve a substantial part
(as hereinafter defined) of the assets of the Company and its Consolidated
Subsidiaries.
(d) As used in this section 3.21, a sale, lease or other disposition
of assets shall be deemed to be a "substantial part" of the assets of the
Company and its Consolidated Subsidiaries only if (i) the book value of such
assets, when added to the book value of all other assets sold, leased or
otherwise disposed of by the Company and its Consolidated Subsidiaries (other
then in the ordinary course of business) during the immediately preceding
twelve-month period exceeds 10% of the Consolidated Net Tangible Nets of the
Company of its Consolidated Subsidiaries determined as of the end of the
immediately preceding fiscal year or (ii) the assets referred to in the
foregoing clause (i) contributed more than 10% of the Consolidated Net Income of
the Company and its Consolidated Subsidiaries for the Immediately preceding
twelve-month period; provided, however, that the sale or other disposition of
any one hospital facility in any twelve-month period which (A) has a book value
in excess of 10% of the Consolidated Net Tangible Assets of the Company and its
Consolidated Subsidiaries determined as of the end of the immediately preceding
fiscal year or contributed more than 10% of the Consolidated Net Income of the
Company and its Consolidated Subsidiaries for the immediately preceding
twelve-month period and (B) constitutes security for the obligations outstanding
under the Credit Agreement shall not be included in any computation of sales or
other dispositions hereunder.
(e) The Company will not, and will not permit any Consolidated
Subsidiary to, (1) sell, lease or otherwise dispose of any asset mortgaged or
pledged pursuant to the Mortgages or the Pledge Agreements or otherwise
constituting security for the Notes or (ii) sell or otherwise dispose of any
receivables for consideration less than the stated value thereof.
Section 3.22. Guaranties. The Company will not, and will not permit
any Consolidated Subsidiary to, become or be liable in respect of any Guaranty
except Guaranties of the Company which are limited in amount to a stated maximum
dollar exposure and included in Current Indebtedness or Consolidated Funded
Indebtedness
Section 3.23. Repurchase of Notes. Neither the Company nor any
Consolidated Subsidiary or Affiliate, directly or indirectly, may repurchase or
<PAGE>
44
make any offer to repurchase Notes of either class (Senior Secured Notes or
Subordinated Secured Notes) unless the offer has been made to repurchase Notes
of such class, pro rata, from all holders of the Notes of such class at the same
time and upon the same terms. In case the Company repurchases any Notes, such
Notes shall thereafter be cancelled and no Notes shall be issued in substitution
therefor.
Section 3.24. Transactions with Affiliates. (a)The Company will not,
and will not permit any Consolidated Subsidiary to, enter into or be a party to
any transaction or arrangement with any Affiliate (including, without
limitation, the purchase from, sale to or exchange of property with, or the
rendering of any service by or for, any Affiliate), except (i) transactions in
the ordinary course of and pursuant to the reasonable requirements of the
Company's or such Consolidated Subsidiary's business and upon fair and
reasonable terms no less favorable to the Company or such Consolidated
Subsidiary than would obtain in a comparable arm's-length tradition with a
Person other than an Affiliate and (ii) the Personnel end Facility Sharing
Agreement, dated of March 31, 1988, between the Company and Ramsay Corporation
pursuant to which the Company receives fees in exchange for management services
provided to River West Medical Center. The Company shall provide prior mitten
notice to each holder of any Note of any transaction or arrangement with any
Affiliate having a value in excess of $100,000.
(b) The Company will not, and will not permit any Consolidated
Subsidiary to, pay any management fees to any Affiliate during any fiscal year
unless the aggregate amount of all management fees paid by the Company and its
Consolidated Subsidiaries during such fiscal year shall not exceed the sum of
(i) $600,000 plus (ii) the Inflation Factor. For purposes of this section 3.24,
the "Inflation Factor" shall mean $O for the fiscal years ending June 30, 1990
and June 30, 1991 and for any fiscal year thereafter shall mean an amount equal
to the product of (A) the lesser of the Consumer Price Index and 10% multiplied
by (B) the aggregate amount of management fees paid by the Company and its
Consolidated Subsidiaries during the immediately preceding fiscal year.
Section 3.25. Investments. The Company will not, and will not permit
any Consolidated Subsidiary to, make any investments in or loans, advances or
extension of credit to, any Person, except:
<PAGE>
45
(a) investments, loans and advances by the Company and its
Consolidated Subsidiaries in and to Consolidated Subsidiaries, including any
investment in a corporation engaged in the brained of operating psychiatric
hospitals in the United States which, after giving effect to such investment,
will become a Consolidated Subsidiary; provided that, at the time of such
investment and after giving effect thereto and to the application of the
proceeds thereof, no Default or Event of Default shall have occurred and be
continuing, and provided further, that no Principal Subsidiary shall make any
investment in any entity other than the Company or another Principal Subsidiary.
(b) investments in commercial paper maturing in 270 days or less from
the date of issuance which, at the time of acquisition by the Company or any
Consolidated Subsidiary, is rated A-1 or higher by Standard & Poor's
Corporation, P-1 or higher by Moody's Investors Service, Inc. or an equivalent
rating by any other nationally recognized credit rating agency of similar
standing;
(c) investments in direct obligations of the United States of America,
or any agency thereof, maturing in twelve months or less from the date of
acquisition thereof;
(d) investments in certificates of deposit maturing within one year
from the date of origin, issued by (i) a Bank or trust company organized under
the laws of the United States or any state thereof, having capital, surplus and
undivided profits aggregating at least $300,000,000 or (ii)so long as it has
capital, surplus and undivided profits aggregating at least $300,000,000 and is
rated A-3 or higher by Standard & Poor's Corporation, A- or higher by Moody's
Investors Service, Inc. or an equivalent rating by any other nationally
recognized credit rating agency of similar standing, Hibernia National Bank;
(e) loans or advances in the usual and ordinary course of business to
officers, directors and employees for expenses (including moving expenses
related to a transfer) incidental to carrying on the business of the Company or
any Consolidated Subsidiary;
(f) receivables arising from the sale of goods and services in the
ordinary course of business of the Company and its Consolidated Subsidiaries;
(g) Investments in The Bethany Pavilion, a joint venture between the
Company and Bethany General Hospital, in an aggregate amount not to exceed
$2,635,000; and
<PAGE>
46
(h) Restricted Investments permitted by section 3.20 hereof.
In valuing any investments, loans and advances for the purpose of
applying the limitations set forth in this section 3.25, such investments, loans
and advances shall be taken at the original cost thereof, without allowance for
any subsequent write-offs or appreciation or depreciation therein, but less any
amount repaid or recovered on account of capital or principal
For purposes of this section 3.25, at any time when a corporation
becomes a Consolidated Subsidiary, all investments of such corporation at such
time shall be deemed to have been made by such corporation, as a Consolidated
Subsidiary, at such time.
Section 3.26. Termination of Pension Plans. The Company will not, and
will not permit any Subsidiary to, permit any employee benefit plan maintained
by it to be terminated in a manner which could result in the imposition of a
lien on any property of the Company or any Subsidiary pursuant to Section 4068
of ERISA.
Section 3.27. Reports and Rights of Inspection. The Company will keep,
and will cause each Subsidiary to keep, proper books of record and account in
which full and correct entries will be made of all dealings or transactions of
or in relation to the business and affairs of the Company or such Subsidiary, in
accordance with generally accepted principles of accounting consistently
maintained (except for changes disclosed in the financial statements furnished
to you pursuant to this section 3.27 and concurred in by the independent public
accountants referred to in section 3.27(b) hereof) and will furnish to each
holder of any Note each other institutional holder of the then outstanding Notes
and the Trustee (in duplicate if so specified below or otherwise requested):
(a) Quarterly Statements. As soon as available and in any event within
50 days after the end of each quarterly fiscal period (except the last) of each
fiscal year, duplicate copies of:
(1) consolidated balance sheets of the Company and its
Consolidated Subsidiaries as of the close of such quarter setting forth in
comparative form the consolidated figures for the end of the preceding fiscal
year,
<PAGE>
47
(2) consolidated statements of income and retained earning of the
Company and its Consolidated Subsidiaries for such quarterly period, setting
forth in comparative form the consolidated figures for the corresponding period
of the preceding fiscal year, and
(3) consolidated statements of cash flows of the Company and its
Consolidated Subsidiaries for the portion of the fiscal year ending with such
quarter setting forth in comparative form the consolidated figures for the
corresponding period of the preceding fiscal year, all in reasonable detail and
certified as complete and correct by an authorized financial officer of the
Company;
(b) Annual Statements. As soon as available and in any event within
105 days after the close of each fiscal year of the Company duplicate copies of:
(1) consolidated balance sheets of the Company and its
Consolidated Subsidiaries as of the close of such fiscal year,
(2) consolidated statements of income and retained earnings and
cash flows of the Company and its Consolidated Subsidiaries for such fiscal
year,
(3) consolidated statements of income of the Company and in
Principal Subsidiaries for such fiscal year, and
(4) a budget for the Company and its Consolidated Subsidiaries
for the immediately succeeding fiscal year together with an analysis of (i)
changes in such budget from the budget prepared for the current fiscal year and
(ii) the variance of the projections made in the budget for the current fiscal
year from the actual budget for such fiscal year, in each case with respect to
items delivered pursuant to section 3.27(b)(1), (2) and (3) setting in
comparative form the consolidated figures for the preceding fiscal year, all in
reasonable detail and accompanied by a report thereon of a firm of independent
public accountants of recognized national standing selected by the Company to
the effect that the consolidated financial statements have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis and present fairly, in all material respects, the financial condition of
the Company and its Consolidated Subsidiaries and that the examination of such
accountants in connection with such financial statements has been made in
accordance with generally accepted auditing standards and accordingly includes
such tests of the accounting records and such other auditing procedures as were
<PAGE>
48
considered necessary to provide a reasonable basis for the opinion expressed in
the report;
(c) Audit Reports. Promptly upon receipt thereof, one copy of each
interim or special audit made by independent accountants of the books of the
Company or any Consolidated Subsidiary;
(d) SEC and Other Reports. Promptly upon their becoming available, one
copy of each financial statement, report, notice or proxy statement sent by the
Company to stockholders generally and of each regular or periodic report, and
any registration statement or prospectus filed by the Company or any Subsidiary
with any securities exchange or the Securities and Exchange Commission or any
successor agency, and copies of any orders in any proceeding to which the
Company or any of its Subsidiaries is a party, issued by any governmental
agency, Federal or state, having jurisdiction over the Company or any of its
Subsidiaries;
(e) Requested Information. With reasonable promptness, such other data
and information as any holder of any Note may reasonably request;
(f) Officers Certificates. Within the periods provided in paragraphs
(a) and (b) above, a certificate of an authorized financial officer of the
Company stating, that such officer has reviewed the provisions of this Agreement
and setting forth (i) the information and computations (in sufficient detail)
required in order to establish whether the Company was in compliance with the
requirements of section 3.16 through section 3.26, inclusive, at the end of the
period covered by the financial statements then being furnished, and (ii)
whether there existed as of the date of such financial statements and whether,
to the best of such officer's knowledge, there exists on the date of the
certificate or existed at any time during the period covered by such financial
statements any Default or Event of Default and, if any such condition or event
exists on the date the certificate, specifying the nature and period of
existence thereof and the action the Company is taking and proposes to take with
respect thereto and stating whether the Company or any other Obligor has
received any notice of possible decertification under any medical reimbursement
program, including, but not limited to, Medicare, Medicaid and CHAMPUS;
(g) Accountants' Certificates. Within the period provided in paragraph
(b) above, a certificate of the accountants who render an opinion with respect
to such financial statements, stating that they have reviewed this Agreement and
<PAGE>
49
stating further whether, in making their audit, such accountants have become
aware of any Default or Event of Default under any of the terms or provisions of
this Agreement insofar as any such terms or provisions pertain to or involve
accounting matters or determinations, and if any such condition or event then
exists, specifying the nature and period of existence thereof; and
(h) Annual Licensure Surveys. Not later than 30 days after receipt, a
copy of each annual licensure survey of the appropriate state offices of health
for each of the Hospitals.
Without limiting the foregoing, the Company will permit each Initial Purchaser,
the Trustee and each Institutional holder of the then outstanding Notes (or such
Persons as either an Initial Purchaser or such holder may designate), to visit
and inspect, under the Company's guidance, any of the properties of the Company
or any Subsidiary, to examine all their books of account, records, reports and
other papers, to make copies and extracts therefrom, and to discuss their
respective affairs, finances and accounts with their respective officers,
employees, and independent public accountants (and by this provision the Company
authorizes said accountants to discuss with the Initial Purchasers, the Trustee
or any such holder the Finances and affairs of the Company and its Subsidiaries)
all at such reasonable times and as often as may be reasonably requested. The
Company shall not be required to pay or reimburse the Initial Purchasers, the
Trustee or any such holder for expenses which the Initial Purchasers, the
Trustee or any such holder may Incur in connection with any such visitation or
inspection unless such visitation or inspection is made by the Initial
Purchasers, the Trustee or any such holder in response to the occurrence of a
Default or an Event of Default.
Section 3.28. Amendment and Modification of Credit Agreement and Other
Documents. The Company will not, and will not permit any Subsidiary to, directly
or indirectly, amend, modify or supplement any term, provision or condition of
(i) the Credit Agreement or any document ancillary or related thereto or (ii)
any agreement, document, instrument or notes evidencing any existing or future
Subordinated Funded Indebtedness without the prior written consent of the
Required Holders
Section 3.29. Prepayment of Certain Subordinated Funded Indebtedness.
The Company will not, and will not permit any Subsidiary to, (i) make any
principal payment on the Subordinated Convertible Promissory Note or (ii) make
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50
any principal payment on the Subordinated Promissory Note prior to April 1, 2000
except with the proceeds from (A) the issuance of the Subordinated Funded
Indebtedness permitted by section 3.18(a)(13) or (B) an offering of common stock
of the Company.
Section 3.30. Environmental Evaluation and Remediation. Upon written
direction from the Required Holders, the Company will promptly employ Fred C.
Hart Associates, Inc. (or other independent professional engineering firm
acceptable to such Required Holders) ("Environmental Engineers") to promptly
conduct a ground water study of all potential groundwater contamination at
Cumberland Hospital. If such study indicates groundwater contamination, the
Company agrees that it will upon written direction from the Required Holders,
immediately engage Environmental Engineers to promptly take the step necessary
to remediate such contamination. All fees and expenses in connection with such
study and remediation shall be paid by the Company. After such remediation has
been completed, the Company shall deliver to each holder of an outstanding Note
a copy of a clearance audit prepared by Environmental Engineers, which audit
shall attest to the effective remediation of such contamination.
Section 3.31. Interest Rate Protection Agreements. Within 60 days
following the Closing Date, the Company shall have provided to each Purchaser
evidence that the borrowers under the term loan facility provided in the Credit
Agreement have entered into interest rate protection agreements with one or more
of the lenders under the Credit Agreement or with other financial institutions
reasonably acceptable to the Purchasers, providing for an interest rate cap for
not less than 75% of the loans outstanding under such term loan facility or a
swap of not less than 50% of the loans outstanding under such term loan
facility.
SECTION 4. POSSESSION, USE AND RELEASE OF PROPERTY.
Section 4.1. Obligors' Right of Possession. Provided no Default or
Event of Default has occurred and is continuing, the Oblivious shall be suffered
and permitted to remain in full possession, enjoyment and control of the
Mortgaged Property, subject always to the observance and performance of the
terms of this Indenture, the Note Agreements, the Pledge Agreements and the
Mortgages.
Section 4.2. Release of Mortgaged Property. (a) So long as no Event of
Default has occurred and is continuing, the Obligors (other than the Company)
shall be permitted to make dispositions of certain Property upon compliance with
section 3.1 of the applicable Mortgage.
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51
(b) The Trustees shall release any Mortgaged Property taken by eminent
domain or sold in anticipation of a taking by eminent domain upon compliance by
the Obligor then owning such Property with the provisions of section 3.2 of the
Mortgage.
(c) In addition to the sale and release of Mortgaged Property pursuant
to section section 4.2(a) and (b), the Obligor then owning such Property may
sell or otherwise dispose of any Mortgaged Property" then subject to the Lien of
this Indenture and any of the Mortgages or any indenture supplemental hereto,
and the Trustees shall release the same from the Lien hereof or thereof to the
extent and on the terms and upon compliance with the conditions provided for in
any written consent given thereto at any time or from time to time by the holder
or holders of all of the then outstanding Notes.
SECTION 5. PREPAYMENT OF LOANS.
Section 5.1. Prepayments and Manner Thereof. Except to the extent
provided for in this section 5, the Notes shall not be subject to prepayment or
redemption in whole or in part at the option of the Obligors prior to the
expressed maturity dates thereof. Every prepayment of Notes shall be made in
accordance with the provisions of this section 5.
Section 5.2. Mandatory Prepayment. (a) The Obligors agree that they
will prepay the Senior Secured Notes at 100% of the principal amount of the
Senior Secured Notes to be prepaid on March 31 and September 30 of each of the
years and in the principal amount as follows:
Prepayment Principal Prepayment Principal
Date Amount Date Amount
- ------------------ ------------ --------------------- -------------
March 31, 1993 $2,825,000 March 31, 1997 $3,531,250
September 30, 1993 2,825,000 September 30, 1997 3,531,250
March 31, 1994 2,825,000 March 31, 1998 3,531,250
September 30, 1994 2,825,000 September 30, 1998 3,531,250
March 31, 1995 3,531,250 March 31, 1999 5,650,000
September 30, 1995 3,531,250 September 30, 1999 5,650,000
March 31, 1996 3,531,250
September 30, 1996 3,531,250
<PAGE>
52
(b) Subject to section 10 hereof, the Obligors agree that they will
prepay the Subordinated Secured Notes at 100% of the principal amount of the
Subordinated Secured Notes to be prepaid on March 31 and September 30 of each of
the years and in the principal amounts as follows:
Prepayment Principal Prepayment Principal
Date Amount Date Amount
- ---------------------- ------------- ------------------- ------------
March 31, 1994 $230,769.2 March 31, 1997 $230,769.23
September 30, 1994 230,769.2 September 30, 1997 230,769.23
March 31, 1995 230,769.2 March 31, 1998 230,769.23
September 30, 1995 230,769.2 September 30, 1998 230,769.23
March 31, 1996 230,769.2 March 31, 1999 230,769.23
September 30, 1996 230,769.2 September 30, 1999 230,769.23
(c) Subject to section 10 hereof, the Obligors agree that they will
pay the entire unpaid principal amount of the Notes at maturity on March 31,
2000. Prepayment of less than all of the Notes pursuant to the provisions of
section 5.3, or section 5.4 shall not relieve the Obligors of their obligation
pursuant to this section 5.2.
Section 5.3. Optional Prepayment in the Event of Casualty or
Condemnation. The Notes may be prepaid at any time prior to maturity, in whole
or in part, through the application of moneys received by the Trustee pursuant
to the provisions of section 3.1(b) or section 4.1 of any Mortgage upon payment
of the principal amount of the Notes so to be prepaid and accrued interest
thereon to the date of prepayment, together with a premium equal to the
Yield-Maintenance Premium.
Section 5.4. Optional Prepayment With Premium. In addition to the
right of prepayment set forth in section 5.3, the Obligors shall have the
privilege of prepaying either the Senior Secured Notes or the Subordinated
Secured Notes, or both, at any time, either in whole or in part (but if in part
in units of $100,000 or an integral multiple of $10,000 in excess thereof) by
payment of the principal amount of such Notes or the portion thereof to be
prepaid, and accrued interest thereon to the date of prepayment, together with a
premium equal to the Yield-Maintenance Premium.
"Called Principal" shall mean, with respect to any Note, the principal
of such Note that is to be prepaid pursuant to section 5.3, section 5.4 or
section 5.5 hereof (any partial prepayment being applied in satisfaction of
required payments of principal in inverse order of their scheduled due dates) or
<PAGE>
53
is declared to be immediately due and payable pursuant to section 6.2 hereof, as
the context requires.
"Discounted Value" shall mean, with respect to the Called Principal of
any Note, the amount obtained by discounting all Remaining Scheduled Payments
with respect to such Called Principal from their respective scheduled due dates
to the Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (applied on a semiannual
basis) equal to the Reinvestment Yield with respect to such Called Principal.
"Reinvestment Yield" shall mean, with respect to the Called Principal
of any Note, the yield to maturity implied by (i) the yields reported, as of
10:00 A.M. (New York City time) on the Business Day next preceding the
Settlement Date with respect to such Called Principal, on the display designated
as "Page 678" on the Tolerate Service (or such other display as may replace Page
678 on the Tolerate Service) for actively traded U.S. Treasury securities having
a maturity equal to the Remaining Average Life of such Called Principal as of
such Settlement Date, or if such yields shall not be reported as of such time or
the yields reported as of with time shall not be ascertainable, (ii) the
Treasury Constant Maturity Series yields reported, for the latest day for which
such yields shall have been so reported as of the Business Day next preceding
the Settlement Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (519) (or any comparable successor publication) for
actively traded U.S. Treasury securities having a constant maturity equal to the
Remaining Average Life of such Called Principal as of such Settlement Date. Such
implied yield shall be determined, if necessary, by (a) converting U.S. Treasury
bill quotations to bond-equivalent yields in accordance with accepted financial
practice and (b) interpolating linearly between reported yields.
"Remaining Average Life" shall mean, with respect to the Called
Principal of any Note, the number of years (calculated to the nearest
one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the
sum of the products obtained by multiplying (a) each Remaining Scheduled Payment
of such Called Principal (but not of interest thereon) by (b) the number of
years (calculated to the nearest one-twelfth year) which will elapse between the
Settlement Date with respect to such Called Principal and the scheduled due date
of such Remaining Scheduled Payment.
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54
"Remaining Scheduled Payments" shall mean, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due on or after the Settlement Date with react to such
Called Principal if no payment of such Called Principal were made prior to its
scheduled due date.
"Settlement Date" shall mean, with respect to the Called Principal of
any Note, the date on which such Called Principal is to be prepaid pursuant to
section 5.3, section 5.4 or section 5.5 hereof or is declared to be immediately
due and payable pursuant to section 6.2 hereof, as the context requires.
"Yield-Maintenance Premium" shall mean with respect to any Note, a
premium equal to the excess, if any, of the Discounted Value of the Called
Principal of such Note over the sum of (i) such Called Principal plus (ii)
interest accrued thereon as of (including interest due on) the Settlement Date
with respect to such Called Principal. The Yield-Maintenance Premium shall in no
event be less than zero.
Section 5.5. Prepayment on Charge in Control. (a) In the event that a
Change in Control Date shall occur, the Company will give immediate written
notice (a "Company Notice") of such fact to the Trustee and all holders of the
Notes. The Company Notice shall (i) describe the facts and circumstances of such
Change in Control in reasonable detail, (ii) refer to this section 5.5 and the
rights of the holders of the Notes to require prepayment of their Notes on the
terms and conditions provided for herein, (iii) contain an offer by the Obligors
to prepay all of the outstanding Notes in full together with accrued interest to
the date of prepayment and a premium equal to the Yield-Maintenance Premium, and
(iv) set forth the date, which shall be not less than 30 nor more than 60 days
following the date of the Company Notice, on which the Obligors will make such
prepayment. Each holder of the Notes shall have the right to accept such offer
and require prepayment of the Notes held by such holder in full by written
notice to the Company given within 30 days following receipt of the Company
Notice. The Obligors shall on the prepayment date set forth in the Company
Notice prepay all Notes held by holders who have accepted such offer of
prepayment.
(b) In the event the Company fails to give the Company Notice as
required above, upon the occurrence of a Change in Control Date, each holder of
Notes shall have the right to require the Obligors to prepay such holder's Notes
in full together with accrued interest thereon to the date of prepayment and a
premium equal to the Yield-Maintenance Premium. Notice of a required prepayment
<PAGE>
55
pursuant to this section 5.5(b) shall be delivered by any holder of Notes to the
Company not more than 30 days after such holder has actual knowledge of such
Change in Control Date. The date of such prepayment shall be the same date as
the Change in Control Date or, in the event the Change in Control Data shall
have occurred prior to receipt of the notice from a Noteholder, then such
prepayment together with accrued interest and a premium equal to the
Yield-Maintenance Premium, if any, thereon shall be on the date designated in,
and shall be not less than 30 nor more than 60 days following the date of, such
holders notice.
"Acquiring Person" shall mean any Person or group of two or more
Persons acting as a partnership, limited partnership, syndicate, or other group
for the purpose of acquiring, holding or disposing of Voting Stock of the
Company, together with all affiliates and associates (as defined in Rule 12b-2
under the Securities and Exchange Act of 1934, as amended) of such Persons.
"Change in Control" means any event after the occurrence of which an
Acquiring Person other than The Paul Ramsay Group of Sydney, Australia owns more
than 50% (by number of votes) of the Voting Stock of the Company.
"Change in Control Date" shall mean any date upon which a Change in
Control shall have occurred.
Section 5.6. Notice of Prepayments. The Company will give written
notice of any prepayment of any of the Notes pursuant to the provisions of
section 5.3, section 5.4 or section 5.5 to each holder of the Notes (with a copy
to the Trustee) not less than 30 days nor more than 60 days before the date
fixed for such prepayment specifying (a) such date, (b) the section of this
Indenture and/or the applicable Mortgage under which the prepayment is to be
made, (c) the aggregate principal amount of all Notes to be prepaid on such date
and the principal amount of the holder's Notes to be prepaid on such date, (d)
the accrued interest applicable to the prepayment, and (e) whether any premium
may be payable in connection with such prepayment. Such notice of prepayment
shall also certify all facts which are conditions precedent to any such
prepayment. Notice of prepayment having been so given, the aggregate principal
amount of the Notes specified in such notice, together with premium, if any, and
accrued interest thereon shall become due and payable on the prepayment date. In
the event of any prepayment in accordance with the provisions of section 5.3,
section 5.4 or section 6.2, on or prior to the prepayment date, the Company
shall provide the Trustee and each holder of the Notes written notice of the
<PAGE>
56
amount of the premium payable in connection with such prepayment, whether or not
any premium is payable, together with a reasonably detailed calculation thereof.
The Trustee shall have no responsibility to verify any such calculation.
In the event that the Company shall have given written notice in
accordance with the provisions of this section 5.6 of any prepayment of any of
the Notes pursuant to the provisions of section 5.4 and shall fail to make such
prepayment on the date specified in such notice for such prepayment, the Company
promptly shall pay to each holder of Notes an amount equal to any costs and
expenses incurred by any such holder in reliance on any such notice of
prepayment.
Section 5.7. Allocation of Prepayments. (a) The aggregate principal
amount of each optional partial prepayment of the Notes shall be made in units
of $1,000 or multiples thereof. Partial prepayments shall be credited in each
case first, against the final maturity of the Notes being prepaid and then,
against the required prepayments on such Notes in the inverse order of the
maturities thereof.
(b) In any case of the partial prepayment of Notes of either class
pursuant to section 5.2, section 5.3 or section 5.4, the aggregate principal
amount of the Notes of such class to be prepaid shall be allocated to each
holder of such Notes in the same proportion as the principal amount of the Notes
of such class of such holder bears to the aggregate principal amount of all
Notes of such class then outstanding.
SECTION 6. REMEDIES OF THE TRUSTEES AND THE NOTEHOLDERS.
Section 6.1. Definition of Event of Default; Acceleration of Maturity.
The following events are hereby defined for all purposes of this Indenture as
"Events of Default":
(a) if default shall be made in the payment of any interest payment on
any Note when and as the same shall become due and payable and any such default
shall continue for five days; or
(b) if default shall be made in the payment of any required prepayment
on any of the Notes as provided in section 5.2; or
(c) if default shall be made in the payment of the principal of any
Note or the premium thereon at the expressed or any accelerated maturity date or
at any date fixed by this Indenture for mandatory prepayment; or
<PAGE>
57
(d) if any representation or warranty of any of the Obligors set forth
in this Indenture, the Note Agreements, any Pledge Agreement or any Mortgage or
in any certificate delivered pursuant hereto or thereto or in any notice,
certificate, demand or request delivered to the Trustees or any holder of Notes
pursuant to this Indenture, the Note Agreements, any Pledge Agreement or any
Mortgage shall prove to be false or misleading in any material respect as of the
time when the same shall have been made; or
(e) If default shall be made in the due observance or performance of
any covenant or agreement contained in section 3.5 or section 3.8 and such
default shall have continued for 30 days after the earlier of (i) the giving of
notice of such default by the Obligors to the Trustee in accordance with section
3.10 or (ii) receipt of written notice thereof by the Obligors; or
(f) if default shall be made in the due performance or observance of
any covenant or agreement contained in section 3.16 through section 3.26,
inclusive, hereof; or
(g) if the Company or any Consolidated Subsidiary defaults in any
payment of principal of or interest on any other obligation for money borrowed
(or any obligation under any Capitalized Lease, any obligation under a
conditional sale or other title retention agreement, any obligation issued or
assumed as full or partial payment for property whether or not secured by a
purchase money mortgage or any obligation under notes payable or drafts accepted
representing extensions of credit) beyond any period of grace provided with
respect thereto, or the Company or any Consolidated Subsidiary fails to perform
or observe any other agreement, term or condition contained in any agreement
under which any such obligation is created (or if any other event thereunder or
under any such agreement shall occur and be continuing) and the effect of such
failure or other event is to cause, or to permit the holder or holders of such
obligation (or a trustee on behalf of such holder or holders) to cause, such
obligation to become due prior to any stated maturity, provided that the
aggregate amount of all obligations as to which such a payment default shall
occur and be continuing or such a failure or other event causing or permitting
acceleration shall occur and be continuing exceeds $1,000,000; or
(h) if default shall be made in the due observance or performance of
any other covenant, condition or agreement of the Obligors contained herein or
in the Note Agreements, the Notes, any Pledge Agreement or any Mortgage, and
<PAGE>
58
such default shall have continued for 10 days after any Obligor shall have
knowledge of such default; or
(i) if any Obligor becomes insolvent or bankrupt, is generally not
paying its debts as they become due or makes an assignment for the benefit of
creditors, or any Obligor causes or suffers an order for relief to be entered
with respect to it under applicable Federal bankruptcy law or applies for or
consents to the appointment of a custodian, trustee or receiver for any Obligor
or for the major part of its Properties; or
(j) if any decree or order for relief in respect of any Obligor is
entered under any bankruptcy, reorganization, compromise, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or similar law,
whether now or hereafter in effect (herein called the "Bankruptcy Law"), of any
jurisdiction; or
(k) If any Obligor petitions or applies to any tribunal for, or
consents to, the appointment of, or taking possession by, a trustee, receiver,
custodian, liquidator or similar official of any Obligor, or of any substantial
part of the assets of any Obligor, or commences a voluntary case under the
Bankruptcy Law of the United States or any proceeding (other than proceedings
for the voluntary liquidation and dissolution of an Obligor) relating to any
Obligor under the Bankruptcy Law of any other jurisdiction; or
(l) if any such petition or application is filed, or any such
proceedings are commenced, against any Obligor and such Obligor by any act
indicates its approval thereof, consent thereto or acquiescence therein, or an
order, judgment or decree is entered appointing any such trustee, receiver,
custodian, liquidator or similar official, or approving the petition in any such
proceeding and such order, judgment or decree remains unstayed and in effect for
more than 30 days; or
(m) any order, judgment or decree is entered in any proceedings
against any Obligor decreeing the dissolution of such Obligor and such order,
judgment or decree remains unstayed and in effect for more than 60 days; or
(n) if final judgment or judgments for the payment of money in excess
of $100,000 is or are outstanding against any Obligor or against any of its
property or assets and any one of such judgments has remained unpaid, unvacated,
<PAGE>
59
unbonded and unstayed by appeal or otherwise for a period of 30 days after the
date of its entry; or
(o) if the Company shall default (after the expiration of any
applicable grace periods) in the due and punctual observance and performance of
its agreements and undertakings set forth in the Warrants issued to the original
purchasers of the Subordinated Secured Notes pursuant to the Note Agreements, or
any such Warrant shall be held by a court or competent jurisdiction to be
invalid or unenforceable in any material respect; or
(p) if the Company or any Consolidated Subsidiary defaults in any
payment of principal of or interest on any other obligation for money borrowed
(or any obligation under any Capitalized Lease, any obligation under a
conditional sale or other title retention agreement, any obligation issued or
assumed as full or partial payment for property whether or not secured by a
purchase money mortgage or any obligation under notes payable or drafts accepted
representing extensions of credit) beyond any period of grace provided with
respect thereto and the effect of such default is to cause such obligation to
become due prior to any stated maturity, or the Company or any Consolidated
Subsidiary fails to perform or observe any other agreement, term or condition
contained in any agreement under which any such obligation is created (or if any
other event thereunder or under any such agreement shall occur and be
continuing) and the effect of such failure or other event is to cause such
obligation to become due prior to any stated maturity, provided that the
aggregate amount of all obligations as to which such a payment default shall
occur and be continuing or such a failure or other event causing acceleration
shall occur and be continuing exceeds $1,000,000.
Section 6.2. Acceleration of Note Obligations.
(a) If any Event of Default described in paragraphs (a) through (h) or
paragraph (n) of section 6.1 hereof exists, upon written request of the holder
or holders of at least 51% in aggregate principal amount of the Senior Secured
Notes then outstanding, the Trustee shall declare the entire principal of and
all interest accrued on and all other sums payable under all Senior Secured
Notes then outstanding to be, and such Notes shall thereupon become, or
(b) subject to the provisions of section 10 hereof, if any Event of
Default described in paragraphs (a) through (f) or paragraph (h), (n), (o) or
(p) of section 6.1 hereof exists, upon written request of the holder or holders
of at least 51% in aggregate principal amount of the Subordinated Secured Notes
<PAGE>
60
then outstanding, the Trustee shall declare the entire principal and all
interest accrued on all Subordinated Secured Notes then outstanding to be, and
such Subordinated Secured Notes shall thereupon become, or
(c) if any Event of Default described in paragraph (i), (j), (k), (1)
or (m) of section 6.1 hereof shall have occurred, all outstanding Notes, without
any action on the part of the Trustee or of any holder of any Notes, shall be
forthwith,
due and payable, without any presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by the Obligors,
and the Obligors will forthwith pay to the Trustee for the benefit of the holder
or holders of all the Notes which have so become due and payable the entire
principal of and interest accrued on and all other sums payable under such Notes
and, if the Notes have so become due and payable as a result of any Event of
Default described in section 6.1(a) through section 6.1(h), inclusive, section
6.1(n), section 6.1(o) or section 6.1(p), to the extent permitted by law, the
Yield-Maintenance Premium (as liquidated damages and not as a penalty), if any,
applicable to such Notes; provided, that during the existence of an Event of
Default described in section 6.1(a), (b) or (c) and irrespective of whether the
Trustee shall have declared all the Notes of either class to be due and payable
pursuant to this section 6.2 (but subject to the provisions of section 10
hereof), any holder of the Notes with respect to which such default has occurred
which has not consented to any waiver with respect to such Event of Default may,
at its option, by notice in writing to the Obligors and the Trustee, declare the
Notes then held by such holder to be, and such Notes shall thereupon become,
forthwith due and payable together with all interest accrued thereon without any
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Obligors, and the Obligors shall forthwith pay to
the Trustee for the benefit of such holder of Notes the entire principal of and
interest accrued on and all other sums payable under such Notes and, to the
extent permitted by law, the Yield-Maintenance Premium, it any, as aforesaid, in
the event that any holder of Notes shall declare any Notes to become due and
payable pursuant to the provisions of this section 6.2, the Company shall
promptly, but in any event within five Business Days of such declaration,
deliver to each other holder of Notes and the Trustee written notice of such
declaration.
In case the Obligors shall fail to pay the same forthwith, the
Trustees, in their own name or as trustees of an express trust, shall be
entitled to recover judgment for the whole amount so due and unpaid against
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61
the Obligators and/or any other obligor on the Notes. The right of the Trustees
to recover such judgment shall not be affected by the exercise of any other
right, power or remedy for the enforcement of the provisions of this Indenture.
The Trustees in their discretion may exercise in addition all other rights and
powers described herein as they may deem best for the protection and enforcement
of the interests and rights of the Trustees and of the holders of the Notes then
outstanding.
Section 6.3. Annulment of Acceleration of Note Obligation. If a
declaration of acceleration of maturity of the Notes of either class is made
pursuant to section 6.2 by the Trustee, then and in every such case, the holders
of 66-2/3% in aggregate principal amount of the Senior Secured Notes then
outstanding or, if no Senior Secured Notes are then outstanding, the holders of
66-2/3% in aggregate principal amount of the Subordinated Secured Notes then
outstanding may, by written instrument filed with the Company and the Trustee,
rescind and annul such declaration, and the consequences thereof; provided, that
at the time such declaration is annulled and rescinded:
(a) no judgment or decree has been entered for the payment of any
monies due pursuant to any Notes of either class or this Indenture;
(b) all arrears of interest upon all the Notes of all classes and all
other sums payable under the Notes and under this Indenture (except any
principal, interest, Yield-Maintenance Premium or premium on the Notes which has
become due and payable by reason of such declaration under section 6.2) shall
have been duly paid; and
(c) each and every other Default and Event of Default shall have been
waived pursuant to section 6.14 or otherwise made good or cured;
and, provided further, that no such rescission and annulment shall extend to or
affect any subsequent Default or Event of Default or impair any right consequent
thereon.
Section 6.4. Suits for Enforcement; Power of Sale. In case of the
happening of an Event of Default, the Trustees from time to time in their
discretion may exercise, subject to section 10 hereof, in addition to all other
rights and powers described herein or permitted under applicable law, all or any
of the following powers as they may deem best for the protection and enforcement
of the interests and rights of the Trustees and of the holders of the Notes then
outstanding:
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62
(a) the Trustees may in their own name and as trustees of an express
trust protect and enforce their rights and the rights of the holders of the
Notes by bringing such actions, at law or in equity or before any administrative
tribunal, as the Trustees, being advised by counsel, shall deem appropriate or
as they may be directed in writing by the Required Holders, including, without
limitation, actions for the specific performance of any covenant hereof, or of
the Notes, and for the foreclosure of any one or all of the Pledge Agreements or
any one or all of the Mortgages; and the Trustees shall be entitled, in their
own names and as trustees of an express trust, to recover judgment for any and
all sums then, or during any Default, becoming due and payable by the Obligors
under any provision hereof or of the Notes, the Pledge Agreements or Mortgages,
including, without limitation, any deficiency in the payment of all amounts due
under the provisions hereof or of the Notes, the Pledge Agreements or Mortgages,
remaining after any sale of the Mortgaged Property in foreclosure proceedings or
by virtue of the Trustees' power of sale or otherwise, and, in addition thereto,
such amounts as shall be sufficient to cover the costs and expenses of
collection, including attorneys' fees, and of other proceedings hereunder, and
to collect out of the Property of the Obligators in any manner provided by law
all amounts adjudged or decreed to be payable;
(b) the Trustees as a matter of contract right and not as a penalty
shall be entitled to the appointment of a receiver of, or may enter upon and
take possession of, all or any part of the Mortgaged Property and such receiver
or the Trustees shall thereupon be entitled to operate all or any part of the
Mortgaged Property and to make all expenditures and to take all actions
necessary or desirable therefor, and to collect and retain all income and
earnings arising from such Property or business; and
(c) the Trustees may, with or without entry as aforesaid, sell all or
any part of the Mortgaged Property at public or private sale, upon such notice,
in such manner, at such time or times, and upon such terms consistent with the
applicable laws of the respective States wherein such Mortgaged Property is
located, as the Trustees may determine.
Section 6.5. Remedies Under Mortgages; Foreclosure and Sale of
Mortgaged Property. (a) The Trustees, as Mortgagee, may exercise all or any of
the remedies under one or more of the Mortgages.
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63
(b) In the event of any sale made under or by virtue of this
Indenture, whether made under the power of sale herein granted or under or by
virtue of judicial proceedings or decree of foreclosure and sale, the whole of
the Mortgaged Property may be sold in one parcel and as an entirety, or in
separate parcels or lots, as the Trustees may reasonably determine, or as they
may be directed by the written direction of the Required Holders.
Sections 6.6. Adjournment of Sale. The Trustees may adjourn from time
to time any sale by them to be made under the provisions of this Indenture, by
announcement at the time and place appointed for such sale or for such adjourned
sale or sales; and, except as otherwise provided by law, the Trustees, without
further notice or publication, may make such sale at the time and place to which
the same shall be so adjourned.
Section 6.7. Trustees May Execute Conveyances and Deliver Possession;
Sale a Bar. Upon the completion of any sale or sales made under or by virtue of
this Indenture, the Trustees shall execute and deliver to the accepted purchaser
or purchasers a good and sufficient deed, or good and sufficient deeds, and
other instruments conveying, assigning and transferring all their estate, right,
title and interest in and to the Properties, privileges and rights so sold. The
Trustees are hereby irrevocably appointed the true and lawful attorneys-in-fact
of the Obligors, in their names and stead or in the name of the Trustees, to
make all necessary conveyances, assignments, transfers and deliveries of the
premises and the Property, privileges and rights so sold and for that purpose
the Trustees may execute all necessary deeds and instruments of assignment and
transfer, and may substitute one or more Persons with like power, the Obligors
hereby ratifying and confirming all that their said attorneys or such substitute
or substitutes shall lawfully do by virtue hereof. Nevertheless, the Obligors,
if so requested in writing by the Trustees, shall ratify and confirm any such
sale or sales by executing and delivering to the Trustees or to such purchaser
or purchasers all such instruments as may be advisable, in the judgment of the
Trustees, for the purpose and as may be designated in such request.
Any such sale or sales made under or by virtue of this Indenture,
whether made under the power of sale herein granted or under or by virtue of
judicial proceedings or of a judgment or decree of foreclosure and sale, shall
operate to divest all estate, right, title, interest, claim or demand
<PAGE>
64
whatsoever, whether at law or in equity, of the Obligors, in and to the
premises, Property, privileges and rights so sold, and shall be a perpetual bar
both at law and in equity against any Obligor, its successors and assigns, and
against any and all Persons claiming or who may claim the same, or any part
thereof from, through or under any Obligor, its successors or assigns.
Section 6.8. Receipt Sufficient Discharge for Purchaser. The receipt
of the Trustee or of the court officer conducting any such sale for the purchase
money paid at any such sale shall be a sufficient discharge therefor to any
purchaser of the Property, or any part thereof, sold as aforesaid; and no such
purchaser or his representatives, grantees or assigns, after paying such
purchase money and receiving such receipt, shall be bound to see the application
of such purchase money upon or for any trust or purpose of this Indenture, or
shall be answerable in any manner whatsoever for any loss, misapplication or
non-application of any such purchase money or any part thereof, nor shall any
such purchaser be bound to inquire as to the necessity or expediency of any such
sale.
Section 6.9. Sale to Accelerate Notes. In the event of any sale made
under or by virtue of this Indenture, whether made under the power of sale
herein granted or under or by virtue of judicial proceeding or of a valid
judgment or decree of foreclosure and sale, the principal of the Notes, if not
previously due, immediately thereupon shall become due and payable, anything in
the Notes or in this Indenture to the contrary notwithstanding.
Section 6.10. Application of Proceeds of Sale. The proceeds of any
exercise of rights with respect to any Mortgaged Property, the proceeds and the
avails received by the Trustee upon the exercise by the Trustee of any of its
rights or remedies under this Indenture, shall be paid and applied, subject to
section 10 hereof, as follows:
(a) First, to the payment of all amounts then due to the Trustee for
advances made pursuant to section 3.9 hereof and then to the payment of costs
and expenses of foreclosure or suit, if any, and of such sale, and of all
compensation and other proper expenses, liability and advances, including legal
expenses and attorneys' fees, incurred or made hereunder by the Trustee, or the
holder or holders of the Senior Secured Notes (or, with the prior consent and
approval of the Required Holders, of any Subordinated Secured Notes), in
connection with the collection of any sums due on the Notes or in otherwise
evaluating, protecting, asserting, defending or enforcing any of their rights,
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including any bankruptcy or insolvency proceedings involving any Obligor, and of
all taxes, assessments or Liens superior to the Lien of this Indenture or any of
the Mortgages, except any taxes, assessments or other superior Lien subject to
which said sale may have been made;
(b) Second, to the payment of the principal, interest and
Yield-Maintenance Premium, if any, and all other sums then due and unpaid on all
Senior Secured Notes then outstanding, without preference or priority of any of
the foregoing items over any other or of any such Note over any other and, in
case such proceeds shall be insufficient to pay in full the whole amount of
principal, interest and Yield-Maintenance Premium and all other sums so due and
unpaid on such Senior Secured Notes so outstanding, then ratably among the holds
of all Senior Secured Notes outstanding according to the aggregate amounts due
respectively for principal, interest and Yield-Maintenance Premium, if any, on
each such Senior Secured Note;
(c) Third, to the payment of costs and expenses, including legal
expenses and attorneys' fees, incurred hereunder by the holder or holders of the
Subordinated Secured Notes;
(d) Fourth, to the payment of the principal, interest and
Yield-Maintenance Premium, if any, then due and unpaid on all Subordinated
Secured Notes then outstanding, without preference or priority of any of the
foregoing items over any other or of any such Note over any other and, in case
such proceeds shall be insufficient to pay in full the whole amount of
principal, interest and Yield-Maintenance Premium and all other sums so due and
unpaid on such Subordinated Secured Notes so outstanding, then ratably according
to the amounts due respectively for principal, interest and Yield-Maintenance
Premium, it any, on each such Subordinated Secured Note; and
(e) Fifth, to the payment of the surplus, if any, to the Obligors,
their successors and assigns, or to whomsoever may be lawfully entitled to
receive the same.
Section 6.11. Purchase of Trust Estate. Upon any sale made under or by
virtue of this Indenture, whether made under the power of sale herein granted or
under or by virtue of judicial proceeding or of a judgment or decree of
foreclosure and sale, the Trustees or any Noteholder or Noteholders may bid for
and purchase the Mortgaged Property being sold, and upon compliance with the
terms of sale, may hold, retain and possess and dispose of such Property in his
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or their own absolute right without further accountability; and, subject to
section 10 hereof, any purchaser at any such sale may, in paying the purchase
price, turn in any of the Notes in lieu of cash to the amount which shall, upon
distribution of the net proceeds of such sale, be payable thereon. Said Notes,
in case the amounts so payable thereon shall be less than the amount due
thereon, shall be returned to the holders thereof after a notation of such
partial payment shall have been made thereon.
Section 6.12. Trustees Entitled to Appointment of Receiver. The
Obligors further covenant that upon the happening of any Event of Default and
thereafter during the continuance of such Event of Default unless the same shall
have been waived as hereinafter provided, the Trustees shall be entitled, as a
matter of right, if they shall so elect, (a) forthwith and without declaring the
principal of the Notes to be due and payable, or (b) after declaring the same to
be due and payable, or (c) upon the filing of a bill in equity to foreclose this
Indenture or to enforce the specific performance hereof or in aid thereof or
upon the commencement of any other judicial proceeding to enforce any right of
the Trustees or of the holders of the Notes, to the appointment of a receiver or
receivers of the Mortgaged Property and of all the earning, revenues, rents,
issues, profits and income thereof, with such powers as the court making such
appointment shall confer, which may comprise any or all of the powers which the
Trustees are authorized to exercise by the provisions of section 6.4(b). The
Obligors, if requested so to do by the Trustees, will consent to the appointment
of any such receiver as aforesaid.
Section 6.13. Trustees May Enforce Rights Without Notes. All rights of
action under this Indenture or under any of the Notes may be enforced by the
Trustees without the possession of any of the Notes and without the production
thereof at any trial or other proceedings relative thereto. Any such suit or
proceedings instituted by the Trustees shall be brought in their own names or as
Trustees, and any recovery of judgment shall be, subject to the rights of the
Trustees and subject to section 10 hereof, for the ratable benefit of the
holders of the Notes outstanding.
Section 6.14. Notice of Event of Default; Waiver. The Trustee shall
promptly after the earlier of (a) receipt of notice from the Obligors or the
holder of any Notes of the occurrence of a Default or Event of Default or (b)
obtaining actual knowledge of any Event of Default give notice thereof by
registered or certified mail, to the holders of all Notes at the time
outstanding. The Required Holders may waive any Default or Event of Default
hereunder and its consequences which result from the failure of the Obligors
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to comply with any provisions of this Indenture, compliance with which can be
waived by such holders pursuant to section 8.2; provided, however that a Default
in the payment of principal of or premium, if any, on any Notes called for
prepayment or interest on the Notes may be so waived but only if, prior to such
waiver, all arrears of principal, premium, if any, and interest, and all
expenses of the Trustees and of the holders of the Notes shall be paid or shall
be provided for by deposit with the Trustee of a sum sufficient to pay the same
and if no other Default or Event of Default shall have occurred and then be
continuing. In case of any such waiver, or in case any proceedings taken on
account of any such Default or Event of Default shall be discontinued or
abandoned or determined adversely to the Trustees, then and in every such case,
the Obligors, the Trustees and the holders of the Notes shall be restored to
their former positions and rights hereunder respectively. No such waiver shall
extend to any subsequent or other Default or Event of Default or impair any
right consequent thereon.
Section 6.15. Limitation on Noteholders' Right to Sue. No holder of
any Note shall have any right to institute any suit, action or proceeding at law
or in equity growing out of any provision of this Indenture, or for the
foreclosure or enforcement of this Indenture, unless and until an Event of
Default shall have happened and unless and until such holder shall have
previously given to the Trustee written notice of the occurrence of such Event
of Default and of the continuance thereof as above provided, and also (except as
hereinafter provided) unless and until the holders of at least 25% in principal
amount of the Senior Secured Notes then outstanding shall have made written
request upon the Trustees and shall have afforded to them a reasonable
opportunity to institute such action, suit or proceeding in their own names, and
unless also the Trustees shall have been offered security and Indemnity
satisfactory to them against the costs, expenses and liabilities to be incurred
therein or thereby, and the Trustees shall have neglected or refused to
institute any such action, suit or proceeding within a reasonable time after
receipt of such notification, request and offer of indemnity; and such
notification, request, offer of indemnity and refusal or neglect are hereby
declared in every such case to be conditions precedent to the institution by any
holder of the Notes of any such action, suit or proceeding; it being understood
and intended and being expressly covenanted by the holder of every Note with
every other holder and with the Trustees that no one or more holders of the
Notes shall be entitled to take any action or institute any such suit to enforce
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the payment of its Notes if and to the extent that the taking of such action or
the Institution or prosecution of any such suit or the entry of judgment therein
would under applicable law result in a surrender, impairment, waiver or loss of
the Lien of this Indenture upon the Mortgaged Property, or any part thereof, as
security for Notes held by any other holder of the Notes, or shall have any
right in any manner whatever to effect, disturb or prejudice the rights of the
holder of any other Notes, or to enforce any right hereunder, except in the
manner herein provided, and, subject to section 10 hereof, for the equal,
ratable and common benefit of all holders of the Notes. Subject to section 10
hereof, nothing in this section 6 or elsewhere in this Indenture or in the Notes
contained, however, shall affect or impair the obligation of the Obligors, which
is unconditional and absolute, to pay the principal of, and premium, if any, and
the interest on, the Notes to the respective holders of the Notes, in the manner
and at the time and places therein expressed, nor shall it affect or impair the
right of the holders of the Notes, by an action at law upon the promises to pay
therein contained, to enforce such payment.
Section 6.16. Remedies Cumulative. No remedy herein conferred upon or
reserved to the Trustees or to the holders of the Notes is intended to be
exclusive of any other remedy or remedies, and each and every such remedy shall
be cumulative, and shall be in addition to every other remedy given hereunder or
now or hereafter existing at law or in equity or by statute.
Section 6.17. Delay or Omission Not a Waiver. No delay or omission of
the Trustees, or of any holder of the Notes, to exercise any right or power
accruing upon any Default or Event of Default, shall impair any such right or
power, or shall be construed to be a waiver of any such Default or Event of
Default or an acquiescence therein; and every power and remedy given by this
Indenture to the Trustees or to the holders of the Notes may be exercised from
time to time and as often as may be deemed expedient by the Trustees or by the
holder of the Notes.
Section 6.18. Waiver of Extension, Appraisement, Stay Laws. The
Obligors will not at any time insist upon, or plead, or in any manner whatever
claim or take any benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
and terms of performance of this Indenture; nor claim, take or insist upon any
benefit or advantage of any law now or hereafter in force providing for the
valuation or appraisement of the Mortgaged Property, or any part thereof, prior
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to any sale or sales thereof which may be made pursuant to any provision herein
contained, or pursuant to the decree, judgment or order of any court of
competent jurisdiction; nor after any such sale or sales, claim or exercise any
right under any statute heretofore or hereafter enacted by the United States of
America or by any state or territory, or otherwise, to redeem the Property so
sold or any part thereof; and the Obligors hereby expressly waive all benefits
or advantage of any such law or laws, and covenant not to hinder, delay or
impede the execution of any power herein granted or delegated to the Trustees,
but to suffer and permit the execution of every power as though no such law or
laws had been made or enacted.
Section 6.19. Control of Remedies by Noteholders. Notwithstanding any
other provision of this section 6, the Required Holders shall have the right, by
an instrument in writing delivered to the Trustees, to determine which of the
remedies herein set forth shall be adopted and to direct the time, method and
place of conducting all proceeding to be taken under the provisions of this
Indenture for the enforcement thereof or of the Notes; provided, however, that
the Trustees shall have the right to decline to follow any such direction if the
Trustees shall be advised by an Opinion of Counsel that the action or proceeding
so directed may not lawfully be taken or would be unjustly prejudicial to
holders of Notes not parties to such direction.
Section 6.20. Trustees May File Proofs of Claims. The Trustees are
hereby appointed, and each and every holder of the Notes, by receiving and
holding the same, shall be conclusively deemed to have appointed the Trustees
the true and lawful attorney-in-fact of such holder, with authority to make or
file, in their own names as trustees of an express that or otherwise as they
shall deem advisable, in any receivership, insolvency, liquidation, bankruptcy,
arrangement, reorganization or other judicial proceeding relative to any Obligor
or any other obligor upon the Notes or to their respective creditors or
Property, any and all claims, proofs of debt, petitions, consents, other
documents and amendments of any thereof, as may be necessary or advisable in
order to have the claims of the Trustees and of the holders of the Notes allowed
in any such proceeding, and to collect and receive any moneys or other Property
payable or deliverable on any such claim, proof of debt, petition or other
document and to distribute the same after the deduction of the charges and
expenses of the Trustees, and to execute and deliver any and all other papers
and documents and to do and perform any and all other acts and things, as they
may deem necessary or advisable in order to enforce in any such proceedings any
of the claims of the Trustees and of any such holders in respect of any of the
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Notes; and any receiver, assignee, trustee or debtor in any such proceeding is
hereby authorized, and each and every holder of the Notes, by receiving and
holding the same, shall be deemed to have authorized any such receiver,
assignee, trustee or debtor, to make any such payment or delivery to or on the
order of the Trustees, and in the event that the Trustees shall consent to the
making of such payments or deliveries directly to the holders of the Notes to
pay to the Trustees any amount due them for compensation and expenses, including
counsel fees, incurred by them down to the date of such payment or delivery;
provided, however, that nothing herein contained shall be deemed to authorize or
empower the Trustees to consent to or accept or adopt, on behalf of any holder
of Notes, any plan of reorganization or readjustment of any Obligor affecting
the Notes or the rights of any holder thereof, or to authorize or empower the
Trustees to vote in respect of the claim of any holder of any Note in any such
proceedings.
Section 6.21. Remedies Subject to Provisions of Law. All rights,
remedies and power provided by this section 6 may be exercised only to the
extent that the exercise thereof does not violate any applicable provision of
law in the premises, and all the provisions of this section 6 are intended to be
subject to all applicable mandatory provisions of law which may be controlling
in the premises and to be limited to the extent necessary so that they will not
render this Indenture invalid or unenforceable under the provisions of any
applicable law.
SECTION 7. CONCERNING THE TRUSTEES.
The Trustees accept the trusts hereunder and agree to perform the
same, but only upon the terms and conditions hereof, including the following, to
all of which the Obligors and the respective holder of the Notes at any time
outstanding by their acceptance thereof agree:
Section 7.1. Duties of Trustees. The Trustees undertake (a) except
while an Event of Default shall have occurred and be continuing, to perform such
duties and only such duties as are specifically set forth in this Indenture, and
(b) while an Event of Default shall have occurred and be continuing, to exercise
such of the rights and powers as are vested in them by this Indenture, and to
use the same degree of care and skill in their exercise as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
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The Trustees upon receipt of instruments furnished to the Trustees
pursuant to the provisions of this Indenture, shall examine the same to
determine whether or not such instruments appear to conform to the requirements
of this Indenture. Unless notified in writing to the contrary by the Required
Holders, the Trustee may assume all insurance required to be maintained by the
Obligor under the term of this Indenture is acceptable to the Required Holders.
Section 7.2. Trustees' Liability. No provision of this Indenture shall
be construed to relieve the Trustees from liability for their own negligent
action, negligent failure to act, or their own willful misconduct, except that:
(a) unless an Event of Default shall have occurred and be continuing,
the Trustees shall not be liable except for the performance of such duties as
are specifically set forth in this Indenture and no implied covenants or
obligations shall be read into this Indenture against the Trustees but the
duties and obligations of the Trustees shall be determined solely by the express
provisions of this Indenture; and
(b) In the absence of bad faith on the part of the Trustees, the
Trustees may rely upon the authenticity of, and the truth of the statements and
the correctness of the opinions expressed in, and shall be protected in acting
upon, any resolution, Officers' Certificate, Opinion of Counsel, Note, request,
notice, consent, waiver, order, signature guaranty, notarial seal, stamp,
acknowledgment, verification, appraisal, report, stock certificate, or other
paper or document believed by the Trustees to be genuine and to have been
signed, affixed or presented by the proper party or parties; and
(c) in the absence of bad faith on the part of the Trustees, whenever
the Trustees, or any of their agents, representatives, experts or counsel, shall
consider it necessary or desirable that any matter be proved or established,
such matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by an
Officers' Certificate; provided, however, that the Trustees, or such agent,
representative, expert or counsel, may require such further and additional
evidence and make such further investigation as it or they may consider
reasonable; and
(d) the Trustees may consult with counsel and the advice or opinion of
such counsel shall be full and complete authorization and protection in respect
of any action taken or suffered hereunder in good faith and in accordance with
such advice or Opinion of Counsel; and
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(e) the Trustees shall not be liable with respect to any action taken
or omitted to be taken by them in good faith in accordance with any direction or
request of a holder or holders of the Notes with which the Trustees are required
by the provisions hereof to comply; and
(f) the Trustees shall not be liable for any error of judgment made in
good faith by an officer of the Trustee unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(g) neither the Trustee nor the Individual Trustee shall be deemed to
have knowledge of any Default or Event of Default unless and until in the case
of the Trustee an officer in its Corporate Trust Department, or, in the case of
the Individual Trustee, the Individual Trustee, shall have actual knowledge
thereof or have received written advice thereof from any Obligator or the holder
of a Note; and
(h) whether or not an Event of Default shall have occurred, the
Trustees shall not be under any obligation to take any action under this
Indenture (including action under section 3.9 and section 6.19 hereof) which may
involve them in any expense or liability, the payment of which within a
reasonable time is not, in their reasonable opinion, assured by the security
afforded to them by the terms of this Indenture, unless and until requested in
writing so to do by one or more of the Initial Purchasers or the Required
Holders and furnished, from time to time as the Trustees may require, with
reasonable security and indemnity; and
(i) whether or not an Event of Default shall have occurred whenever it
is provided in this Indenture that the Trustees consent to any act or omission
by any person or that the Trustees exercise their discretion in any manner, the
Trustees shall seek the written approval of the Required Holders and, unless
written evidence of such acquiescence has been received by the Trustees, they
shall be fully justified in refusing so to consent or so to exercise their
discretion;
(j) prior to entering or taking possession of, or taking any other
action with respect to any Land Parcel, the Trustees may require assurance in
the form of an Opinion of Counsel or otherwise that no liability under any law
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pertaining to hazardous substances will be imposed upon either of them as a
result of such action; and
(k) when acting in good faith, the Trustees shall not be liable for
any action or omission on the part of the Trustees in compliance with the
provisions of the Intercreditor Agreement.
Section 7.3. No Responsibility of Trustees for Recitals. The recitals
and statements contained herein and in the Notes (except for the Trustee's,
certificate of authentication endorsed on the Notes) shall be taken as the
recitals and statements of the Obligors, and the Trustees assume no
responsibility for the correctness of the same.
The Trustees make no representation as to the validity or sufficiency
of this Indenture, any of the Mortgages, any of the Pledge Agreements or of the
Notes secured hereby or thereby, the security hereby or thereby afforded, the
title of any Obligor to the Mortgaged Property or the descriptions thereof, or
the filing or recording or registering of this Indenture, the Mortgages, the
Pledge Agreements or any other related document.
The Trustees shall not be concerned with or accountable to anyone for
the use or application of any deposited moneys which shall be released or
withdrawn in accordance with the provisions of this Indenture or of any Property
or securities or the proceeds thereof which shall be released from the lien
hereof in accordance with the provisions of this Indenture.
Section 7.4. Compensation and Expenses of Trustees; Indemnification;
Lien Therefor. The Obligors covenant, jointly and severally, to pay to the
Trustees such compensation for their services hereunder as shall be agreed to by
the Obligors and the Trustees, or, in the absence of such agreement, reasonable
compensation therefor (which shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust), and to pay, or
reimburse, the Trustees for all reasonable expenses incurred hereunder,
including the reasonable compensation, expenses and disbursements of such
agents, representatives, experts and counsel as the Trustees may employ in
connection with the exercise and performance of their powers and duties
hereunder.
The Obligors also covenant, jointly and severally, that they will
indemnify and save the Trustees, their agents, employees and representatives,
harmless against any expenses (including reasonable attorneys' fees),
liabilities and damages, not arising from their own willful default or
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negligence, which they or any of them may incur in the exercise and performance
of their rights, powers, trusts, duties and obligations hereunder.
As security for the performance of the obligations of the Obligors
under this section 7.4, the Trustees shall be secured hereby in priority to the
indebtedness evidenced by the Notes.
Section 7.5. Moneys Received by Trustees; Trust Funds - Segregation.
All moneys received by the Trustees under or pursuant to any provision of this
Indenture shall constitute trust funds for the purpose for which they were paid
or are held, but need not be segregated in any manner from other moneys, and may
be held or deposited under such conditions as may be prescribed by law for trust
funds.
Section 7.6. Trustee May Hold Notes. The Trustee or any officer or
director of the Trustee may acquire and hold Notes, offset funds or deposits
with it other than funds held by it as Trustee and otherwise deal with any
Obligors or with any other corporation having relations with the Obligor, in the
same manner and to the same extent and with like effect as though it were not
Trustee or such officer or director; provided that nothing contained in this
section 7.6 shall be deemed to modify, amend or waive any of the duties and
obligations of the Trustee to the holders of the Notes as set forth in this
Indenture.
Section 7.7. Action by Individual Trustee. The Individual Trustee
shall act as and be such upon the following terms and conditions:
(a) Subject to the provisions of section 7.17, all rights, powers,
duties and obligations conferred or imposed upon the Trustees shall be conferred
or imposed solely upon and solely exercised and performed by the Trustee except
as expressly provided otherwise in this Indenture and except to the extent that
under any law of any jurisdiction in which any particular act or acts are to be
performed the Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations shall be
exercised and performed by the Individual Trustee.
(b) No power granted by this Indenture to, or which this Indenture
provides may be exercised by, the Individual Trustee shall be exercised by the
Individual Trustee except jointly with, or with the consent in writing of, the
Trustee, anything herein contained to the contrary notwithstanding.
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(c) The Individual Trustee may at any time by an instrument in
writing, constitute the Trustee or its successor in trust hereunder his agent or
attorney-in-fact, with full power and authority, to the extent which may be
permitted by law, to do any and all acts and things and exercise any and all
discretion which he authorized or permitted to do or exercise, for and in his
behalf and in his name.
Section 7.8. Resignation of Trustee. The Trustee may resign and be
discharged from the trusts created hereby by delivering notice thereof, by first
class mail, postage prepaid, to the Company and all holders of the Notes at the
time outstanding.
Such resignation shall take effect immediately upon the acceptance of
appointment by a successor Trustee appointed as provided in section 7.10.
Section 7.9. Removal of Trustee. The Trustee may be removed at any
time, for or without cause, by an instrument or instruments in writing executed
by the Required Holders and delivered to the Trustee with a copy to the Company,
specifying the removal and the date when it shall take effect and such removal
shall be effective upon such date and the Trustee's duties and obligations
hereunder shall thereupon cease except as specified in section 7.11 hereof.
Section 7.10. Appointment of Successor Trustee. In case at any time
the Trustee shall resign or be removed or become incapable of acting, a
successor Trustee may be appointed by the Required Holders, by an instrument or
instruments in writing executed by such Noteholders and filed with such
successor Trustee with a copy of such instrument or instruments to the Company.
Until a successor Trustee shall be so appointed by the Noteholders,
the Company shall appoint a successor Trustee to fill such vacancy, by an
instrument in writing executed by the President and any Vice President of the
Obligor and delivered to the successor Trustee. If all or substantially all of
the Mortgaged Property shall be in the possession of one or more receiver,
trustees, liquidators or assignees for the benefit of creditors, then such
receivers, trustees, custodians, liquidators or assignees may, by an instrument
in writing delivered to the successor Trustee, appoint a successor Trustee.
Promptly after any such appointment, the Company, or any such receiver,
trustees, custodians, liquidators or assignees, as the case may be, shall give
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notice thereof by registered or certified mail to each holder of Notes at the
time outstanding.
Any successor Trustee so appointed by the Company, or such receiver,
trustees, custodians, liquidators or assignees shall immediately and without
further act be superseded by a successor Trustee appointed by the Required
Holders.
If a successor Trustee shall not be appointed pursuant to this Section
within 90 days after a vacancy shall have occurred in the office of Trustee, the
holder of any Senior Secured Note or such retiring Trustee (unless the retiring
Trustee is being removed) may apply to any court of competent jurisdiction to
appoint a successor Trustee, and such court may thereupon, after such notice, if
any, as it may consider proper, appoint a successor Trustee.
Section 7.11. Succession of Successor Trustee. Any successor Trustee
appointed hereunder shall execute, acknowledge and deliver to the Obligors and
the predecessor Trustee an instrument accepting such appointment, and thereupon
such successor Trustee, without any further act, deed, conveyance or transfer,
shall become vested with the title to the Trust Estate, and with all the rights,
power, trusts, duties and obligations of the predecessor Trustee in the trust
hereunder, with like effect as if originally named as Trustee herein.
Upon the request of any such successor Trustee, however, the Obligors
and the predecessor Trustee shall execute and deliver such instruments of
conveyance and further assurance and do such other things as may reasonably be
required for more fully and certainly vesting and confirming in such successor
Trustee the title to the Trust Estate and all such rights, power, trusts, duties
and obligations of the predecessor Trustee hereunder, and the predecessor
Trustee shall also assign and deliver to the successor Trustee any property
subject to the Lien of this Indenture which may then be in its possession.
Any Trustee which has resigned or been removed shall nevertheless
retain all rights of indemnity, including any Lien upon the Trust Estate
afforded to it by section 7.4.
Section 7.12. Eligibility of Trustee. The Trustee and every successor
Trustee shall be a state or national Bank or trust company in good standing,
organized under the laws of the United States of America or any State thereof
and having a capital, surplus and undivided profits aggregating at least section
500,000,000.
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In case the Trustee shall cease to be eligible in accordance with the
provisions of this Section, the Trustee shall resign immediately in the manner
and with the effect specified in section 7.8.
Section 7.13. Successor Trustee by Merger. Any corporation into which
the Trustee may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Trustee
shall be a party, or state or national Bank or trust company in any manner
succeeding to the corporate trust business of the Trustee as a whole or
substantially as a whole, if eligible as provided in section 7.12, shall be the
successor of the Trustee hereunder without the execution or filing of any paper
or any further act on the part of any of the parties hereto, anything to the
contrary contained herein notwithstanding.
Section 7.14. Resignation of Individual Trustee. The Individual
Trustee or any of his successors may resign and may be discharged of the trusts
created by this Indenture by giving written notice thereof to the Company and to
the Trustee.
Such resignation shall take effect immediately upon the acceptance of
appointment by a Person succeeding to the office of Individual Trustee appointed
by the Trustee or by the Required Holders as provided in section 7.16.
Section 7.15. Removal of Individual Trustee. The Individual Trustee or
any of his successors may be removed at any time by the Required Holders or by
the Trustee, by delivery of a notice of such removal to the Individual Trustee,
to the Company, and in the case of removal by such holders, to the Trustee,
signed by such holders or the Trustee, as the case may be and such removal shall
be effective upon the date specified in such notice and the Individual Trustee's
duties and obligations hereunder shall thereupon cease except as specified in
section 7.17 thereof.
Section 7.16. Appointment of Successor to Individual Trustee. If at
any time the Individual Trustee or any of his successors shall die, resign or be
removed or otherwise become incapable of acting, or if for any reason the office
of Individual Trustee shall become vacant, a successor to the Individual Trustee
shall forthwith be appointed by the Trustee or, in the event that the Trustee
shall fail to make such appointment within 60 days after the occurrence of such
death, resignation, removal, incapacity or vacancy, by the Required Holders by
an instrument signed by the Trustee or by such holders.
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Section 7.17. Succession of Successor to Individual Trustee. Any
Person appointed as a successor to the Individual Trustee shall execute,
acknowledge and deliver to his predecessor, to the Trustee and to the Obligors,
an instrument accepting such appointment hereunder, and thereupon such Person
without any further act, deed or conveyance shall become vested with all the
estates, Properties, rights, powers, duties and trusts of his predecessor in the
trusts hereunder with like effect as if originally named as Individual Trustee
herein; but nevertheless, on the written request of the Obligors or of the
Trustee or of the Individual Trustee, the predecessor shall execute and deliver
an instrument transferring to the Individual Trustee, upon the trusts expressed
in this Indenture, all the estates, Properties, rights, powers and trusts
granted to him by this Indenture and shall duly assign, transfer, deliver and
pay over to the Individual Trustee any Property and money subject to the Lien of
this Indenture held by such predecessor. Should any instrument in writing from
the Obligors or from the Trustee be required by any Person who becomes the
Individual Trustee for more fully and certainly vesting in and confirming to
such Individual Trustee such estates, properties, rights, powers and trusts,
then, on request, any and all such instruments in writing shall be made,
executed, acknowledged and delivered by the Obligors and/or the Trustee.
Any Individual Trustee which has resigned or been removed shall
nevertheless retain all rights of indemnity, including any Lien upon the
Mortgaged Property afforded to him by section 7.4.
SECTION 8. SUPPLEMENTAL INDENTURE; WAIVERS.
Section 8.1. Supplemental Indentures Without Noteholders' Consent. The
Obligors, when authorized by resolutions of their Boards of Directors, and the
Trustees from time to time and at any time, subject to the restrictions in this
Indenture contained, may, without consent of the holders of the Note, enter into
an indenture or indentures supplemental hereto and which thereafter shall form a
part hereof for any one or more or all of the following purpose:
(a) to add to the covenants and agreements to be observed by, and to
surrender any right or power reserved to or conferred upon, the Obligors;
<PAGE>
79
(b) to evidence the succession of another corporation to any Obligor,
or successive successions, and the assumption by the successor corporation to
the covenants, agreements and obligations of any Obligors; provided that any
such succession and assumption is permitted by the terms of this Indenture;
(c) to subject to the Lien of this Indenture additional Property
hereafter acquired by any Obligor or others and intended to be subjected to the
Lien of the Indenture, and to correct or amplify the description of any Property
subject to the Lien of this Indentures; or
(d) to permit the qualification of this Indenture under the Trust
Indenture Act of 1939, as amended, or any similar Federal statute hereafter in
effect, except that nothing herein contained shall permit or authorize the
inclusion of to provisions referred to in Section 316(a)(2) of said Trust
Indenture Act of 1939 or any corresponding provision in any similar Federal
statute hereafter in effect;
and the Obligors covenant to perform all requirements of any such supplemental
indenture. No restriction or obligation imposed upon the Obligor may, except as
otherwise provided in this Indenture, be waived or modified by such supplemental
indentures, or otherwise.
Section 8.2. Waivers and Consents by Noteholders; Supplemental
Indentures With Noteholders' Consent. With the written consent of the Required
Holders, (a) the Obligors may take any action prohibited, or omit the taking of
any action required, by any of the provisions of this Indenture or any indenture
supplemented hereto, or (b) the Obligors, when authorized by resolutions of
their respective Boards of Directors, and the Trustees, may enter into an
indenture or indentures supplemental hereto for the purpose of adding, changing,
or eliminating any provisions of this Indenture or of any indenture supplemental
hereto or modifying in any manner the rights and obligations of the holders of
the Notes and the Obligors; provided that without the consent of the holder of
each Note, no such supplemental indenture shall:
(i) impair or affect the right of any holder to receive payments or
prepayments of the principal of and payments of the interest and premium, if
any, on its Note, as therein and herein provided; or
(ii) permit the creation of any Lien prior to, or on a parity with,
the Lien of this Indenture, any of the Mortgages and any of the Pledge
Agreements with respect to any of the Mortgaged Property; or
<PAGE>
80
(iii) deprive any holder of the Notes of the benefit of the Lien of
this Indenture upon all or any part of the Mortgaged Property; or
(iv) reduce the aforesaid percentage of the aggregate principal amount
of Notes, the holders of which are required to consent to any such waiver or
supplemental indenture pursuant to this Section; or
(v) modify the rights, duties or immunities of the Trustee or the
Individual Trustee without its consent.
Provided, nevertheless, that no such supplemental indenture shall modify the
duties of the Trustee or Individual Trustee without its consent.
Section 8.3. Solicitation of Noteholders. The Obligors covenant and
agree that they will not solicit, request or negotiate for or with respect to
any proposed waiver, consent or amendment of any of the provisions of this
Indenture or the Notes unless each holder of the Notes (irrespective of the
amount of Notes then owned by it) shall be informed thereof by the Company and
shall be afforded the opportunity of considering the same and shall be supplied
by the Company with sufficient information to enable it to make an informed
decision with respect thereto. Executed or true and correct copies of any waiver
or consent effected pursuant to the provisions of this section 8.3 shall be
delivered by the Company to each holder of outstanding Notes forthwith following
the date on which the same shall have been executed and delivered by the holder
or holders of the requisite percentage of outstanding Notes. The Obligors will
not, directly or indirectly, pay or cause to be paid any remuneration, whether
by way of supplemental or additional interest, fee or otherwise, or grant any
security, to any holder of the Notes as consideration for or as an inducement to
the entering into by any holder of the Notes of any waiver, consent or amendment
of any of the terms and provisions of this Indenture or the Notes unless such
remuneration is concurrently paid, or such security is granted, on the same
terms, ratably to the holders of all of the Notes outstanding.
Provided, nevertheless, that no such supplemental indenture shall
modify the duties of the Trustee or Individual Trustee without its consent.
<PAGE>
81
Section 8.4. Opinion of Counsel Conclusive as to Supplemental
Indenture. The Trustees are hereby authorized to join with the Obligors in the
execution of any such supplemental indenture authorized or permitted by the
terms of this Indenture to make the further agreements and stipulations which
may be therein contained, and the Trustees may, as a condition precedent to
their execution of any supplemented indenture, require delivery of an Opinion of
Counsel and an Officers' Certificate as conclusive evidence that any
supplemental indenture executed pursuant to the provision of this section 8
complies with the requirements of this section 8.
SECTION 9. ACTION BY NOTEHOLDERS.
Section 9.1. Evidence of Action by Noteholders. Whenever in this
Indenture, the Pledge Agreements or the Mortgages it is provided that the
holders of a specified percentage in aggregate principal amount of the Note may
take any action (including the making of any demand or request, the giving of
any notice, approval, consent or waiver or the taking of any other action), the
fact that at the time of taking any such action the holders of such specified
percentage have joined therein may be evidenced by any instrument or any number
of instruments of similar tenor executed by holders of the Notes in person or by
attorney or proxy appointed in writing.
Section 9.2. Noteholders' Execution of Instruments; Proof of Holdings.
The fact and date of the execution of any instrument by a holder of the Notes or
his attorney or proxy may be proved by the certificate under his official seal
of any notary public or other officer in any jurisdiction who, by the laws
thereof, has power to take acknowledgements or proof of deeds to be recorded
within such jurisdiction, that the Person who signed such instrument did
acknowledge before such notary public or other officer the execution thereof, or
by the affidavit of a witness to such execution; where such execution is by an
officer of a corporation or association or a member of a partnership on behalf
of such corporation, association or partnership such certificate or affidavit
shall also constitute sufficient proof of his authority.
The holding by any Person of any of the Notes shall be proved by the
Register.
<PAGE>
82
SECTION 10. SUBORDINATION OF THE SUBORDINATED SECURED NOTES.
Each Purchaser of Subordinated Secured Notes and each subsequent
holder thereof agrees that all of the indebtedness evidenced by and accruing on
or in respect of the Subordinated Secured Notes (whether for principal, premium,
Yield-Maintenance Premium, if any, interest or otherwise) and any renewals or
extensions thereof, all obligation to purchase, redeem or otherwise acquire the
Subordinated Secured Notes, together with all other amounts (including all
reasonable attorneys fees and other costs of collection or enforcement) to which
the Purchasers or holders of the Subordinated Secured Notes are or may be
entitled under the terms and provisions of this Indenture or any related
security documents shall be subordinate and junior in right of payment, to the
extent and in the manner hereinafter set forth, to the Superior Indebtedness:
(a) In the event of any insolvency or bankruptcy proceedings, and any
receivership, liquidation, reorganization, arrangement or other similar
proceedings in connection therewith, relative to the Company or to its
creditors, as such, or to its property, and in the event of any proceedings, for
voluntary liquidation, dissolution or other winding-up of the Company, whether
or not involving insolvency or bankruptcy, then the holders of Superior
Indebtedness shall be entitled to receive payment in full of all Superior
Indebtedness before the holders of the Subordinated Secured Notes are entitled
to receive any payment on the Subordinated Secured Notes, and to that end the
holders of Superior Indebtedness shall be entitled to receive for application in
payment thereof any payment or distribution of any kind or character, whether in
cash or property or securities, which may be payable or deliverable in any such
proceedings in respect of the Subordinated Secured Notes, except securities
which are subordinate and junior in right of payment, pursuant to subordination
provision which are no less favorable to the holders of Superior Indebtedness
than the provisions contained in this section 10, to the payment of all Superior
Indebtedness then outstanding;
(b) In the event that pursuant to the provisions of this Indenture the
Subordinated Secured Notes are declared or become due and payable before their
expressed maturity because of the occurrence of an Event of Default as described
in section 6.1 (under circumstances when the provisions of the foregoing
paragraph (a) shall not be applicable), no amount shall be paid by the Obligors
or the Trustee in respect of the Subordinated Secured Notes in excess of current
<PAGE>
83
interest payments as provided in this Indenture, except at the stated maturity
thereof or in accordance with the regular mandatory prepayments provided for in
section 5.2(b) (all subject to the provisions of paragraphs (a), (c) and (d) of
this section 18), nor shall any holder of the Subordinated Secured Notes
commence enforcement of its remedies with respect to such excess amounts unless
and until all Superior Indebtedness outstanding at the time the Subordinated
Secured Notes so become due and payable because of any such event shall have
been paid in full or payment thereof shall have been provided for in a manner
satisfactory to the holders of such outstanding Superior Indebtedness;
(c) In the event that any monetary default shall occur and be
continuing with respect to any Superior Indebtedness permitting the holders of
such Superior Indebtedness to accelerate the maturity thereof, the holders of
the Subordinated Secured Notes shall not be entitled to receive any payment
thereon (including any such payment which would cause such default) unless
payment in full shall have been made of all Superior Indebtedness. The Company
and the Trustee, forthwith upon receiving notice of any such default, shall
notify the holders of the Subordinated Secured Notes immediately;
(d) In the event that any default (other than a monetary default)
shall occur and be continuing with respect to any Superior Indebtedness
permitting the holders of such Superior Indebtedness to accelerate the maturity
thereof, the holders of the Subordinated Secured Notes shall not be entitled to
receive any payment thereon unless payment in full shall have been made of all
Superior Indebtedness if either (i) notice of such default, in writing or by
telegram, shall have been given to the Company and the Trustee, provided that
the holders of such Superior Indebtedness shall have commenced judicial
proceedings or enforcement of their non-judicial remedies as a secured party
under Article 9 of the Uniform Commercial Code or as a mortgagee or trustee
under applicable real estate law in respect of such default within 120 days
after the giving of such notice, and provided further that only one such notice
shall be given pursuant to this paragraph (d) in any 12-month period, or (ii)
proceeding shall be pending in respect of such default. The Company and the
Trustee, forthwith upon receipt of any notice received by it pursuant to this
paragraph (d), shall send a copy thereof by registered mail or by telegram to
the holders of the Subordinated Secured Notes; and
(e) In the event any payment or distribution of any kind or character,
whether in cash, property or securities, shall be made upon or in respect of any
<PAGE>
84
Subordinated Secured Note in contravention of any of the provisions of this
section 10 (it being understood that the failure by the holder of any
Subordinated Secured Note to receive notice of any default on any Superior
Indebtedness shall not abrogate any of the provision of this section 10) such
payment or distribution shall be held in trust and paid over by the holder or
holders of the Subordinated Secured Notes receiving the same to the holders of
outstanding Superior Indebtedness for application in payment thereof, unless and
until such Superior Indebtedness shall have been paid or satisfied in full.
Subject to the prior payment in full of all Superior Indebtedness and
to the extent that such payment is not voided and required to be returned as a
result of any bankruptcy, insolvency or similar proceeding of the Company, the
holders of the Subordinated Secured Notes shall be subrogated to the rights of
the holder of the Superior Indebtedness to receive payments or distributions of
the assets of any Obligor made on account of the Superior Indebtedness until all
amounts of principal, premium and interest due with respect to the Subordinated
Secured Notes shall be paid in full. For purposes of such subrogation, all such
payments or distributions made directly to the holders of Superior Indebtedness
or turned over thereto by the holders of the Subordinated Secured Notes which,
but for the provisions of this section 10 would have been paid to or retained by
the holders of the Subordinated Secured Notes, shall be deemed to be payments or
distributions by the Obligor on account of the Subordinated Secured Notes and
not on account of the Superior Indebtedness.
No present or future holder of Superior Indebtedness shall be
prejudiced in his right to enforce subordination of the Subordinated Secured
Notes by any act or failure to act on the part of any Obligor. The provisions of
this section 10 are solely for the purpose of defining the relative rights of
the holders of Superior Indebtedness on the one hand and the holders of the
Subordinated Secured Notes on the other hand and nothing herein shall impair as
between any Obligor and the holders of the Subordinated Secured Notes the
obligation of the Obligors, which is unconditional and absolute, to pay to the
holders the principal, premium, if any, and interest thereon in accordance with
their terms, nor shall anything herein prevent the holders of the Subordinated
Secured Notes from exercising all remedies otherwise permitted by applicable law
or under this Agreement upon default under this Indenture, subject to the rights
it any, under this Indenture of holders of Superior Indebtedness to receive
<PAGE>
85
cash, property or securities otherwise payable or deliverable to the holders of
the Subordinated Secured Notes from the Company or any of its Subsidiaries, from
any of their assets or from any other source.
For purposes of this section 10, the Superior Indebtedness shall not
be deemed to have been paid or satisfied "in full" until the holders of the
Superior Indebtedness shall have received final, irrevocable and unconditional
payment of all outstanding Superior Indebtedness in full in cash which payment
shall have been retained by such holders for a period of time one day in excess
of all preference periods under applicable bankruptcy or insolvency laws.
The Company agrees, for the benefit of the holders of Superior
Indebtedness, that in the event that the Subordinated Secured Notes shall become
due and payable before their expressed maturity because of the occurrence of an
Event of Default as described in section 6.1 the Company will give prompt notice
in writing of such happening to the holders of Superior Indebtedness.
Each and every holder of the Subordinated Secured Notes by acceptance
thereof shall undertake and agree for the benefit of each holder of Superior
Indebtedness to execute, verify, deliver and file any proofs of claim, consents,
assignments or other instruments which any holder of Superior Indebtedness may
at any time require in order to prove and realize upon any rights or claims
pertaining to the Subordinated Secured Notes and to effectuate the full benefit
of the subordination contained herein; and upon failure of any such holder of
any of the Subordinated Secured Notes so to do, any such holder of Superior
Indebtedness shall be deemed to be irrevocably appointed the agent and
attorney-in-fact of such holder of Subordinated Secured Notes to execute,
verify, deliver and file any such proofs of claim, consents, assignments or
other instruments.
Each holder on the Subordinated Secured Notes, the Trustee and each
Obligor further agree that the provisions of this section 10 will not be
amended, rescinded, cancelled or modified without the prior consent written
consent of each holder of any Superior Indebtedness.
SECTION 11. TERMINATION OF INDENTURE.
Section 11.1. Termination of Indenture. If the Obligors shall pay and
discharge the whole amount of the principal or premium it any, and interest on
all Notes outstanding and shall pay or cause to be paid all other sums payable
<PAGE>
86
hereunder, then and in that case all Property, rights and interests hereby
conveyed or assigned or pledged shall revert to the Obligors, and the estate,
right, title and interest of the Trustees and the holders of the Notes therein
shall thereupon cease, terminate and become void; and the Trustees, in such
case, on demand of the Obligors and at their cost and expense, shall execute and
deliver to the Obligors a proper instrument or proper instruments acknowledging
the satisfaction and termination of this Indenture, and shall convey, assign and
transfer, or cause to be conveyed, assigned or transferred, and shall deliver or
cause to be delivered, to the Obligors, all Property, including money and
securities, then held by the Trustees, other than moneys deposited with the
Trustee for the payment of the principal of and premium, if any, or interest on
any Notes.
The indemnities of the Obligors to the Trustees contained in section
7.4 shall survive such payment and discharge of the Notes and such satisfaction
and termination of this Indenture.
Section 11.2. Trustee's Retention of Moneys Deposited for Payment of
Notes. Payment of the Notes being so duly provided for, the Obligors shall not
be required to pay interest in respect of any period after the due date thereof
to any holder of Notes, and moneys deposited for the payment of principal or
interest or for prepayment, or otherwise, remaining unclaimed in the possession
of the Trustee for six years after the date of the maturity of the Notes or the
date fixed for the prepayment of the Notes, as the case may be, shall be repaid
to the Obligors upon their request and holders of such Notes shall thereafter be
entitled to look only to the Obligors for payment thereof.
SECTION 12. MISCELLANEOUS PROVISIONS.
Section 12.1. Indenture for Benefit of Parties Hereto. Nothing in this
Indenture, expressed or implied, is intended or shall be construed to confer
upon or to give to, any Person other than the parties hereto, and the holders of
the Notes, any right, remedy or claim under or by reason of this Indenture or
any covenant, condition or stipulation hereof; and the covenants, stipulations
and agreements in this Indenture contained are and shall be for the sole and
exclusive benefit of the parties hereto, their successors and assigns, and the
holders of the Notes.
Section 12.2. Severability. In case any one or more of the provisions
contained in this Indenture or in the Notes shall be invalid, illegal or
unenforceable in any
<PAGE>
87
respect, the validity, legality and enforceability of the remaining provisions
contained herein and therein shall not in any way be affected or impaired
thereby.
Section 12.3. Basis of Opinions of Counsel and Certificates. Any
Opinion of Counsel required to be furnished pursuant to any of the provisions of
this Indenture may, in lieu of stating the facts required by the provision
hereof, state that the required condition will be fulfilled on the execution and
delivery of designated instruments, which instruments shall be delivered in form
approved by such counsel prior to or concurrently with the taking or suffering
by the Trustee of the action as a condition precedent to which such opinion is
required to be furnished under the terms of this Indenture.
Any certificate or opinion of an officer of an Obligor or an
accountant may be based, insofar as it relates to legal matters, upon a
certificate or opinion of or upon representations by counsel, unless such
officer or accountant knows that the certificates or opinions or representations
with respect to the matters upon which his opinion may be based as aforesaid are
erroneous, or in the exercise of reasonable care should have known that the same
were erroneous.
Any certificate or Opinion of Counsel may be based, insofar as it
relates to factual matters, or information with respect to which is in the
possession of an Obligor, upon the certificate or opinion of or representations
by an officer or officers of such Obligor unless such counsel knows that the
certificate or opinion or representations with respect to the matters upon which
his opinion may be based as aforesaid are erroneous, or in the exercise of
reasonable care should have known that the same were erroneous.
Sections 12.4. Addresses for Notices. All notices or other
communications required or contemplated by the provisions hereof shall, unless
otherwise specified, be in writing and shall be deemed to have been given or
made on the fifth Business Day after deposit thereof in the United States mail,
by registered or certified mail, postage prepaid, or when received if delivered
by hand or sent by facsimile communication or overnight courier the receipt of
which is confirmed, addressed as follows:
If to the Obligors: Ramsay Health Care, Inc.
One Poydras Plaza
639 Loyola Avenue, Suite 1400
New Orleans, Louisiana 70113
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88
Attention: Chief Financial
Officer
Fax: (504) 585-0506
Telephone: (504) 525-2505
If to the Trustees: The Citizens and Southern National
Bank
33 North Avenue, N.E., Suite 700
Atlanta, Georgia 30308
Attention: Corporate Trust
Department
Fax: (404) 897-3142
Telephone: (404) 897-3147
If to any Noteholder at its address set forth in the Register.
Any party may designate an additional or different address for
subsequent notices or communications by notice duly given in accordance with
this section 12.4 to the other parties. So long as an Initial Purchaser (or any
nominee thereof) shall be the holder of a Note, all notices to such holder shall
be made in the manner provided in its Note Agreement unless it shall have
specified some additional or different address by notice given in accordance
with the preceding sentence.
If the Obligors or the Trustees mail a notice to the holders of the
Notes, they shall mail a copy to the other party hereto at the same time.
Section 12.5. Successors and Assigns. Whenever in this Indenture any
of the parties hereto is named or referred to, the successors and assigns of
such party shall be deemed to be included, and all the covenants, promises and
agreements in this Indenture contained by or on behalf of the Obligors, or by or
on behalf of the Trustees, shall bind and inure to the benefit of the respective
successors and assigns, whether so expressed or not.
Section 12.6. Counterparts; Descriptive Headings. This Indenture is
being executed in any number of counterparts, each of which is an original and
all of which are identical. Each counterpart of this Indenture is to be deemed
an original hereof and all counterparts collectively are to be deemed but one
instrument. The descriptive headings of the several Sections of and Exhibits to
this Indenture were formulated, used and inserted in this Indenture for
convenience only and shall not be deemed to affect the meaning or construction
of any of the provisions hereof.
<PAGE>
89
Section 12.7. GOVERNING LAW. THIS INDENTURE AND THE NOTES ISSUED AND
SOLD HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH ILLINOIS
LAW.
IN WITNESS WHEREOF, each Obligor has caused the Indenture to be
executed on its behalf by its President and attested by its Assistant Secretary;
and THE CITIZENS AND SOUTHERN NATIONAL BANK, in evidence of its acceptance of
the trusts hereby created, has caused this Indenture to be executed on its
behalf by one of its Corporate Trust Officers and attested by one of its Senior
Vice Presidents, and Susan L. Adams in token of her acceptance of the trusts
hereby created, has hereunto set her hand, all as of the date first above
written.
RAMSAY HEALTH CARE, INC.
By:__________________________
Its President
ATTEST:
_______________________
Assistant Secretary
BOUNTIFUL PSYCHIATRIC
HOSPITAL, INC.
By:__________________________
Its President
ATTEST:
_______________________
Assistant Secretary
CUMBERLAND MENTAL HEALTH, INC.
By:__________________________
Its President
ATTEST:
<PAGE>
90
________________________
Assistant Secretary
EAST CAROLINA PSYCHIATRIC
SERVICE CORPORATION
By:__________________________
Its President
ATTEST:
________________________
Assistant Secretary
HAVENWYCK HOSPITAL, INC.
By:__________________________
Its President
ATTEST:
________________________
Assistant Secretary
MESA PSYCHIATRIC HOSPITAL,
INC.
By:__________________________
Its President
ATTEST:
________________________
Assistant Secretary
PSYCHIATRIC INSTITUTE OF WEST
VIRGINIA, INC.
By:__________________________
Its President
ATTEST:
<PAGE>
91
________________________
Assistant Secretary
THE CITIZENS AND SOUTHERN
NATIONAL BANK, as Corporate
Trustee
By:__________________________
Its Corporate Trust Officer
ATTEST:
________________________
Senior Vice President
_____________________________
Susan L. Adams,
As Individual Trustee
<PAGE>
92
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
On this 26th day of April, 1990, before me, Joyce E. Honkisz, a Notary
Public, personally appeared Ralph J. Watts, who acknowledges himself to be the
President of Ramsay Health Care, Inc., a Delaware corporation, and that he, as
such President, being authorized so to do executed the foregoing instrument for
the purposes therein contained, by signing the name of the corporation by
himself as President.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
_____________________________
Notary Public
(Notarial Seal)
STATE OF ILLINOIS )
)SS
COUNTY OF COOK )
On this 26th day of April, 1990, before me, Joyce E. Honkisz, a Notary
Public, personally appeared Ralph J. Watts, who acknowledges himself to be the
President of Bountiful Psychiatric Hospital, Inc., a Utah corporation, and that
he, as such President, being authorized so to do executed the foregoing
instrument for the purposes therein contained, by signing the name of the
Corporation by himself as President.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
____________________________
Notary Public
(Notarial Seal)
<PAGE>
EXHIBIT A
(To Trust Indenture)
RAMSAY HEALTH CARE, INC.
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.
11.6% Senior Secured Note
Due March 31, 2000
No. RA- April_, 1990
$
RAMSAY HEALTH CARE, INC., a Delaware corporation (the "Company"),
BOUNTIFUL PSYCHIATRIC HOSPITAL, INC., a Utah corporation ("Bountiful
Psychiatric") CUMBERLAND MENTAL HEALTH, INC., a North Carolina corporation
("Cumberland"), EAST CAROLINA PSYCHIATRIC SERVICES CORPORATION, a North Carolina
corporation ("East Carolina Psychiatric"), HAVENWYCK HOSPITAL, INC., a Michigan
corporation ("Havenwyck"), MESA PSYCHIATRIC HOSPITAL, INC., an Arizona
corporation (MESA Psychiatric"), and PSYCHIATRIC INSTITUTE OF WEST VIRGINIA,
INC. a Virginia corporation ("Psychiatric Institute"; together with the Company,
Bountiful Psychiatric, Cumberland, East Carolina Psychiatric, Havenwyck and Mesa
Psychiatric collectively being hereinafter referred to as the "Obligors"), for
value received jointly and severally promise to pay to together with interest
or registered assigns
on the thirty-first day of March, 2000
the principal sum of
DOLLARS ($ )
(in each case computed on the basis of a 360-day year of twelve 30-day months)
on the principal amount from time to time remaining unpaid hereon until maturity
at the rate at 11.6% per annum, payable quarterly on March 31, June 30,
September 30 and December 31 in each year (commencing June 30, 1990), and at
maturity.
The Obligors further promise to pay interest at a rate equal to the
greater of (i) 13.6% per annum and (ii) the sum of the rate of interest publicly
announced by Morgan Guaranty Trust Company of New York from time to time in New
York City as its prime rate plus 1% on overdue principal, premium, if any, and
(to the extent legally enforceable) upon each overdue installment of interest in
each case after maturity, whether by acceleration or otherwise, until paid.
<PAGE>
2
All payments of principal, premium, if any, and interest shall be
payable upon presentation of this Note at the principal office of The Citizens
and Southern National Bank (the "Trustee"), located at 33 North Avenue, N.E.,
Suite 700, Atlanta, Georgia 30308, the corporate trustee under the Trust
Indenture dated as of March 31, 1990 (herein, together with any supplements and
amendments thereto, called the "Indenture"), from the Obligors to the Trustee
and Susan L. Adams, as Trustees, or at the office of its successor as such
Trustee, in lawful money in the United States of America.
This Note is one of the $56,500,000 aggregate principal amount of
11.6% Senior Secured Notes of the Obligors (the "Senior Secured Notes") which,
together with the Obligors' $3,000,000 aggregate principal amount of 15.6%
Subordinated Secured Notes (the "Subordinated Secured Notes"), are secured by
the Indenture. Reference is hereby made to the Indenture for a description of
the property thereby mortgaged, conveyed, assigned, affected and specially
hypothecated, the nature and extent of the security for the Senior Secured Notes
and Subordinated Secured Notes (the "Notes"), the rights of the holders of the
Notes, the Trustees and the Obligors in respect of such security and otherwise
and the terms upon which the Notes are to be authenticated and delivered. As
provided in the Indenture, the aggregate principal amount of Notes which may be
issued thereunder shall not exceed $59,500,000.
This Note and the other Notes outstanding under the Indenture may be
declared due prior to their expressed maturity dates, voluntary prepayments may
be made thereon by the Obligors and certain prepayments are required to be made
thereon, all in the events, on the terms and in the manner and amount as
provided in the Indenture.
The terms and provisions of the Indenture and the rights and
obligations of the Obligors and the rights of the holders of the Notes may be
changed and modified to the extent permitted by and be provided in the
Indenture.
This Note is registered on the books of the Trustee and transferable
only by surrender thereof at the principal office of the Trustee duly endorsed
or accompanied by a written instrument of transfer duly executed by the
registered holder of this Note or its attorney duly authorized in writing.
Payment of or on account of principal, premium, if any, and interest on this
Note shall be made only to or upon the order in writing of the registered
holder.
<PAGE>
3
This Note shall not be valid until the certificate of authentication
hereon shall have been signed by the Trustee.
<PAGE>
4
IN WITNESS WHEREOF, each Obligor has caused this Note to be duly
executed.
RAMSAY HEALTH CARE, INC.
By:_______________________
Its President
ATTEST:
_____________________________
Assistant Secretary
BOUNTIFUL PSYCHIATRIC
HOSPITAL, INC.
By:__________________________
Its President
ATTEST:
_____________________________
Assistant Secretary
CUMBERLAND MENTAL HEALTH, INC.
By:__________________________
Its President
ATTEST:
_____________________________
Assistant Secretary
<PAGE>
5
EAST CAROLINA PSYCHIATRIC
SERVICE CORPORATION
By:__________________________
Its President
ATTEST:
_____________________________
Assistant Secretary
HAVENWYCK HOSPITAL, INC.
By:__________________________
Its President
ATTEST:
_____________________________
Assistant Secretary
MESA PSYCHIATRIC HOSPITAL,
INC.
By:__________________________
Its President
ATTEST:
_____________________________
Assistant Secretary
PSYCHIATRIC INSTITUTE OF WEST
VIRGINIA, INC.
By:__________________________
Its President
<PAGE>
6
ATTEST:
_____________________________
Assistant Secretary
<PAGE>
7
(TRUSTEES CERTIFICATE OF AUTHENTICATION)
This note is one of the Notes described in the within mentioned Trust
Indenture.
THE CITIZENS AND SOUTHERN
NATIONAL BANK, as
Trustee
By:______________________
Authorized Officer
NOTATION OF PAYMENTS OF PRINCIPAL
DATE AMOUNT
_______________ _______________
_______________ _______________
_______________ _______________
_______________ _______________
_______________ _______________
_______________ _______________
_______________ _______________
_______________ _______________
_______________ _______________
_______________ _______________
<PAGE>
EXHIBIT B
(to Trust Indenture)
RAMSAY HEALTH CARE, INC.
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.
15.6% Senior Secured Note
Due March 31, 2000
No. RB- April_, 1990
$
RAMSAY HEALTH CARE, INC., a Delaware corporation (the "Company"),
BOUNTIFUL PSYCHIATRIC HOSPITAL, INC., a Utah corporation ("Bountiful
Psychiatric") CUMBERLAND MENTAL HEALTH, INC., a North Carolina corporation
("Cumberland"), EAST CAROLINA PSYCHIATRIC SERVICES CORPORATION, a North Carolina
corporation ("East Carolina Psychiatric"), HAVENWYCK HOSPITAL, INC., a Michigan
corporation ("Havenwyck"), MESA PSYCHIATRIC HOSPITAL, INC., an Arizona
corporation (MESA Psychiatric"), and PSYCHIATRIC INSTITUTE OF WEST VIRGINIA,
INC., a Virginia corporation ("Psychiatric Institute"; together with the
Company, Bountiful Psychiatric, Cumberland, East Carolina Psychiatric, Havenwyck
and Mesa Psychiatric collectively being hereinafter referred to as the
"Obligors"), for value received jointly and severally promise to pay to
or registered assigns
on the thirty-first day of March, 2000
the principal sum of
DOLLARS ($ )
together with interest (in each case computed on the basis of a 360-day year of
twelve 30-day months) on the principal amount from time to time remaining unpaid
hereon until maturity at the rate of 15.6% per annum, payable quarterly on March
31, June 30, September 30 and December 31 in each year (commencing June 30,
1990), and at maturity.
The Obligors further promise to pay interest at a rate equal to the
greater of (i) 17.6% per annum and (ii) the sum of the rate of interest publicly
announced by Morgan Guaranty Trust Company of New York from time to time in New
York City as its prime rate plus 1% on overdue principal, premium, if any, and
(to the extent legally enforceable) upon each overdue installment of interest in
each case after maturity, whether by acceleration or otherwise, until paid.
<PAGE>
2
All payments of principal, premium, if any, and interest shall be
payable upon presentation of this Note at the principal office of The Citizens
and Southern National Bank (the "Trustee"), located at 33 North Avenue, N.E.,
Suite 700, Atlanta, Georgia 30308, the corporate trustee under the Trust
Indenture dated as of March 31, 1990 (herein, together with any supplements and
amendments thereto, called the "Indenture"), from the Obligors to the Trustee
and Susan L. Adams, as Trustees, or at the office of its successor as such
Trustee, in lawful money in the United States of America.
This Note is one of the $3,000,000 aggregate principal amount of 15.6%
Subordinated Secured Notes of the Obligors (the "Subordinated Secured Notes")
which, together with the Obligors' $56,500,000 aggregate principal amount of
11.6% Senior Secured Notes (the "Senior Secured Notes") are secured by the
Indenture. Reference is hereby made to the Indenture for a description of the
property thereby mortgaged, conveyed, assigned, affected and specially
hypothecated, the nature and extent of the security for the Senior Secured Notes
and Subordinated Secured Notes (the "Notes"), the rights of the holders of the
Notes, the Trustees and the Obligors in respect of such security and otherwise
and the terms upon which the Notes are to be authenticated and delivered. As
provided in the Indenture, the aggregate principal amount of Notes which may be
issued thereunder shall not exceed $59,500,000.
All Subordinated Secured Notes issued under the Indenture are secured
thereby and are entitled to the benefits thereof. As provided in section 10 of
the Indenture, the rights of the holders of all Subordinated Secured Notes are
subordinate and junior in certain respects to the prior rights of the holders of
all Superior Indebtedness, including the right to receive payments thereon, and
rights with respect to the Mortgaged Property mortgaged and pledged under the
Indenture and any of the Mortgages. Reference is hereby made to the Indenture
for a complete statement of the express terms and provisions thereof, including
a description of the Property mortgaged and pledged thereunder as security for
the Notes of the Obligors issued and outstanding under the Indenture.
This Note and the other Notes outstanding under the Indenture may be
declared due prior to their expressed maturity dates, voluntary prepayments may
be made thereon by the Obligors and certain prepayments are required to be made
<PAGE>
3
thereon, all in the events, on the terms and in the manner and amounts as
provided in the Indenture.
The terms and provisions of the Indenture and the rights and
obligation of the Obligors and the rights of the holders of the Notes may be
changed and modified to the extent permitted by and as provided in the
Indenture.
This Note is registered on the books of the Trustee and is
transferable only by surrender thereof at the principal office of the Trustee
duly endorsed or accompanied by a written instrument of transfer duly executed
by the registered holder of this Note or its attorney duly authorized in
writing. Payment of or on account of principal, premium, if any, and interest on
this Note shall be made only to or upon the order in writing of the registered
holder.
This Note shall not be valid until the certificate of authentication
hereon shall have been signed by the Trustee.
<PAGE>
4
IN WITNESS WHEREOF, each Obligor has caused this Note to be duly
executed.
RAMSAY HEALTH CARE, INC.
By:__________________________
Its President
ATTEST:
____________________________
Assistant Secretary
BOUNTIFUL PSYCHIATRIC
HOSPITAL, INC.
By:__________________________
Its President
ATTEST:
____________________________
Assistant Secretary
CUMBERLAND MENTAL HEALTH, INC.
By:__________________________
Its President
ATTEST:
____________________________
Assistant Secretary
<PAGE>
5
EAST CAROLINA PSYCHIATRIC
SERVICES CORPORATION
By:__________________________
Its President
ATTEST:
____________________________
Assistant Secretary
HAVENWYCK HOSPITAL, INC.
By:__________________________
Its President
ATTEST:
____________________________
Assistant Secretary
MESA PSYCHIATRIC HOSPITAL,
INC.
By:__________________________
Its President
ATTEST:
____________________________
Assistant Secretary
PSYCHIATRIC INSTITUTE OF WEST
VIRGINIA, INC.
By:__________________________
Its President
<PAGE>
6
ATTEST:
_____________________________
Assistant Secretary
<PAGE>
7
(TRUSTEES CERTIFICATE OF AUTHENTICATION)
This Note is one of the Notes described in the within mentioned Trust
Indenture.
THE CITIZENS AND SOUTHERN
NATIONAL BANK, as
Trustee
By:__________________________
Authorized Officer
NOTATION OF PAYMENTS OF PRINCIPAL
DATE AMOUNT
________________ _______________
_______________ _______________
_______________ _______________
_______________ _______________
_______________ _______________
_______________ _______________
_______________ _______________
_______________ _______________
_______________ _______________
_______________ _______________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
RAMSAY HEALTH CARE, INC.
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.
______________________________________________
NOTE PURCHASE AGREEMENT
Dated as of March 31, 1990
______________________________________________
Re:
$56,500,000 11.6% Senior Secured Notes
Due March 31, 2000
and
$3,000,000 15.6% Subordinated Secured Notes
Due March 31, 2000
and
Warrants to Purchase Common Stock of Ramsay Health Care, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Section Page
Parties.......................................................................1
1. Issue of Note and Warrants...........................................2
2. Security for the Notes.............................4
3. Other Agreements...................................4
4. Sale of Notes......................................4
5. Representations of the Obligors....................5
6. Representations of the Purchasers..................5
7. Closing Conditions.................................6
8. Expenses and Taxes................................13
9. Successors and Assigns............................14
10. Survival of Covenants and Representations.........14
11. Severability......................................14
12. Communications....................................15
13. Governing Law.....................................15
14. Counterparts......................................15
15. Headings and Table of Contents....................15
ATTACHMENTS TO NOTE PURCHASE AGREEMENT:
Schedule I - Name and Address of Purchasers
Schedule II - Identification of Warrants
Exhibit A - Form of Trust Indenture
Exhibit B - Form of Mortgage and Security Agreement
Exhibit C - Form of Pledge and Security Agreement
Exhibit D - Closing Certificate of Obligors other than
the Company
Exhibit E - Closing Certificate of the Company
-i-
<PAGE>
Page
Exhibit F - Description of Special Counsel's Closing
Opinion
Exhibit G - Description of Closing Opinion of Counsel
for the Obligors
Exhibit H - Description of Closing Opinion of Local
Counsel
Exhibit I - Form of Warrant
-ii-
<PAGE>
RAMSAY HEALTH CARE, INC.
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.
NOTE PURCHASE AGREEMENT
Re:
$56,500,000 11.6% Senior Secured Notes
Due March 31, 2000
and
$3,000,000 15.6% Subordinated Secured Notes
Due March 31, 2000
Dated as of
March 31, 1990
To the Purchaser named in Schedule I
attached hereto which is a signatory
to this Agreement
Gentlemen:
The undersigned, RAMSAY HEALTH CARE, INC., a Delaware corporation (the
"Company", BOUNTIFUL PSYCHIATRIC HOSPITAL, INC., a Utah corporation ("Bountiful
Psychiatric"), CUMBERLAND MENTAL HEALTH, INC., a North Carolina corporation
("Cumberland"), EAST CAROLINA PSYCHIATRIC SERVICES CORPORATION, a North Carolina
corporation ("East Carolina Psychiatric"), HAVENWYCK HOSPITAL, INC., a Michigan
<PAGE>
2
corporation ("Havenwyck"), MESA PSYCHIATRIC HOSPITAL, INC., an Arizona
corporation ("Mesa Psychiatric"), and PSYCHIATRIC INSTITUTE OF WEST VIRGINIA,
INC., a Virginia corporation ("Psychiatric Institute"; together with the
Company, Bountiful Psychiatric, Cumberland, East Carolina Psychiatric, Havenwyck
and Mesa Psychiatric collectively being hereinafter referred to as the
"Obligors"), jointly and severally agree with you as follows:
1. Issue of Notes and Warrants. (a) The Obligors require funds to
prepay certain indebtedness for borrowed money of the Obligors (which
indebtedness was issued by or guaranteed by each of the Obligors) and to finance
capital expenditures, renovations and construction at facilities owned by
certain of the Obligors, and in order to strengthen the financial and operating
condition of each and every Obligor, directly and indirectly, as a result of the
enhanced ability of the Company to provide financial, accounting, consulting and
administrative assistance and services to each other Obligor. In order to
provide funds for such purposes, the Obligors will authorize the issue and sale
of $56,500,000 aggregate principal amount of 11.6% Senior Secured Notes due
March 31, 2000 (the "Senior Secured Notes") and $3,000,000 aggregate principal
amount of 15.6% Subordinated Secured Notes due March 31, 2000 of the Obligors
(the "Subordinated Secured Notes"). The Senior Secured Notes and the
Subordinated Secured Notes (collectively, the "Notes") will be dated the date of
issue, bear interest from the issue date, be payable quarterly on March 31, June
30, September 30 and December 31 in each year (commencing June 30, 1990) and be
expressed to mature on March 31, 2000. The Senior Secured Notes will bear
interest at the rate of 11.6% per annum prior to maturity; the Subordinated
Secured Notes will bear interest at the rate of 15.6% per annum prior to
maturity and the Notes will bear interest on overdue principal (including any
overdue required or optional prepayment of principal) and premium, if any, and
(to the extent legally enforceable) on any overdue installment of interest at a
rate equal to the greater of (i) 13.6% per annum and (ii) the sum of (y) the
rate of interest publicly announced by Morgan Guaranty Trust Company of New York
from time to time in New York City as its prime rate plus (z) 1%, in the case of
the Senior Secured Notes, and at a rate equal to the greater of (i) 17.6% per
annum and (ii) the sum of (y) the rate of interest publicly announced by Morgan
Guaranty Trust Company of New York from time to time in New York City as its
prime rate plus (z) 1%, in the case of the Subordinated Secured Notes, after
maturity, whether by acceleration or otherwise, until paid. Interest on the
Notes will be computed on the basis of a 360-day year of twelve 30-day months.
<PAGE>
3
The Senior Secured Notes will be substantially in the form attached as Exhibit A
to the Trust Indenture hereinafter referred to; the Subordinated Secured Notes
will be substantially in the form attached as Exhibit B to said Trust Indenture.
The term "Notes" as used herein shall include each Note delivered pursuant to
this Agreement, the separate Note Purchase Agreements entered into with the
other purchasers named in Schedule I and said Trust Indenture. You and the other
purchasers named in Schedule I hereto are hereinafter sometimes referred to as
the "Purchasers".
(b) (i) if you are purchasing Subordinated Secured Notes hereunder,
then, in consideration of and as an inducement to your execution and delivery of
this Agreement and your purchase of such Subordinated Secured Notes, on the
Closing Date the Company will execute and deliver to you a stock purchase
warrant substantially in the form thereof attached hereto as Exhibit I (the
"Warrants") to purchase, at the price, in the manner and upon the terms and
conditions therein set forth, the Original Number of Warrant Shares (as defined
in the Warrants) set forth opposite your name in Schedule II hereto.
(ii) The Company and you agree (as contemplated by proposed Treasury
Regulations section 1.1273-2(d)(2)(iv)) for U.S. federal income tax purposes (i)
that (a) the present value as of the closing date of all payments under the
Subordinated Secured Notes, using a discount rate based on a yield which the
Company and you agree is the original yield of comparable debt instruments not
issued as part of an investment unit (which rate is not less than the applicable
federal rate on the date the Notes are issued), is equal to $994 per $1,000
principal amount, and (b) the aggregate "issue price" under section 1273(b) of
the Internal Revenue Code of 1986, as amended (the "Code") of all of the
Subordinated Secured Notes issued hereunder and under the other Note Agreements
is $2,982,000; and (ii) that the aggregate "issue price" under section 1273(b)
of the Code of all of the Warrants to be purchased hereunder and under the other
Note Agreements is $18,000. The Company and you agree to use the foregoing issue
prices, purchase prices and values and the yields which result in such issue
prices for U.S. federal income tax purposes with respect to this transaction.
(iii) Common Stock. The rights, powers and terms of and relating to
the Common Stock (as defined in the Warrants) will be provided for in the
Company's Certificate of Incorporation as in effect as of the Closing Date, and
as otherwise provided by Delaware law.
<PAGE>
4
2. Security for the Notes. The Notes will be issued under and secured
by a Trust Indenture (the "Indenture") substantially in the form attached hereto
as Exhibit A from the Obligors, jointly and severally, to The Citizens and
Southern National Bank, as corporate trustee, and Susan L. Adams, as individual
trustee (collectively the "Trustees"). Pursuant to the Indenture, each of
Bountiful Psychiatric, Cumberland, East Carolina Psychiatric, Havenwyck, Mesa
Psychiatric and Psychiatric Institute will on or before the Closing Date
referred to in section 4(b) execute, acknowledge and deliver a Mortgage and
Security Agreement (a "Mortgage" and collectively, the "Mortgages")
substantially in the form attached hereto as Exhibit B with respect to certain
hospital facilities referred to in the Mortgages creating a first mortgage lien
and a first security interest thereon. Terms not otherwise defined herein shall
have the meanings set forth in the Indenture.
In addition, the Company, of which the other Obligors are
Subsidiaries, Michigan Psychiatric Services, Inc., a Michigan corporation and a
Subsidiary ("Michigan Psychiatric"), Americare of Galax, Inc., a Virginia
corporation and a Subsidiary ("Americare"), and Bountiful Psychiatric will
execute and deliver a Pledge and Security Agreement (a "Pledge Agreement" and
collectively, the "Pledge Agreements") substantially in the form attached hereto
as Exhibit C pledging all capital stock of such other Obligors owned by the
Company or such Subsidiary as further security for the Notes.
3. Other Agreements. Concurrently with the execution and delivery of
this Agreement, the Obligors are entering into similar agreements with the other
Purchasers under which such other Purchasers agree to purchase from the Obligors
the principal amount of Notes set opposite such Purchasers' names in Schedule I
and your obligations and the obligations of the Obligors hereunder are subject
to the execution and delivery of the similar agreements by the other Purchasers.
The obligations of each Purchaser shall be several and not joint and no
Purchaser shall be liable or responsible for the act of any other Purchaser.
4. Sale of Notes. (a) Subject to the terms and conditions herein
contained and on the basis of the representations and warranties hereinafter set
forth, the Obligors agree to issue and sell to you and you agree to purchase
from the Obligors on the Closing Date hereinafter specified, Notes of the
Obligors of the class specified in Schedule I at a price equal to 100% of the
principal amount set forth opposite your name in Schedule I.
<PAGE>
5
(b) Delivery of the Notes will be made at the offices of Chapman and
Cutler, 111 West Monroe Street, Chicago, Illinois 60603 against payment therefor
by wire transfer of Federal or other funds current and immediately available at
the principal office of Continental Bank, N.A., ABA No. 071 000 039, for credit
to Account No. 13-01536-7, at 10:00 a.m. local time on such business day (the
"Closing Date") not later than April 30, 1990 as the Company shall designate to
you by not less than three days' prior written notice.
(c) The Notes delivered to you on the Closing Date will be delivered
to you in the form of a single registered Note for the principal amount then to
be purchased by you of each class of Notes (unless different denominations are
specified by you), registered in your name or in the name of such nominee as
specified in Schedule I and in substantially the form attached to the Indenture
as Exhibits A and B, respectively.
5. Representations of the Obligors. The Obligors represent and warrant
that all representations set forth in the forms of Closing Certificates attached
hereto as Exhibits D and E are true and correct as of the date hereof and are
incorporated herein by reference with the same force and effect as though herein
set forth in full.
6. Representation of the Purchasers. You acknowledge that the Notes
(and the Warrants, if any) have not been registered under the Securities Act of
1933, as amended, and as such, constitute restricted securities that may not be
resold by you without registration under the Act or the availability of an
exemption therefrom; you represent that you shall not resell the Notes (or the
Warrants, if any) in the absence of such registration or applicable exemption;
and you represent, and in making this sale to you it is specifically understood
and agreed, that you are not acquiring the Notes (or Warrants, if any) to be
purchased by you hereunder with a view to or for sale in connection with any
distribution thereof within the meaning of the Securities Act of 1933, as
amended; provided that the disposition of your property shall at all times be
and remain within your control. You also represent that no part of the funds
being used by you to pay the purchase price of the Notes (or Warrants, if any)
being purchased by you hereunder constitutes assets allocated to any separate
account maintained by you in which any employee benefit plan, other than
employee benefit plans identified on a list which has been furnished by you to
the Company, participates to the extent of 5% or more. For the purpose of this
section 6, the terms "separate account" and "employee benefit plan" shall have
<PAGE>
6
shall have the respective meanings specified in Section 3 of the Employee
Retirement Income Security Act of 1974, as amended.
7. Closing Conditions. Your obligation to purchase and pay for the
Notes to be sold to you on the Closing Date is subject to the performance by the
Obligors of their agreements hereunder which, by the terms hereof, are to be
performed at or prior to the time of the delivery of the Notes and to the
following conditions precedent:
(a) On or prior to the Closing Date --
(i) Execution of Indenture. The Obligors and the Trustees shall
have executed, acknowledged and delivered the Indenture.
(ii) Execution of Mortgages and Financing Statements. Each of the
Obligors except the Company shall have executed, acknowledged and delivered a
Mortgage with respect to the Land Parcels, buildings, improvements and Equipment
owned by such Obligor comprising Benchmark Regional Hospital, Woods Cross, Utah
(the "Benchmark Regional Hospital"), Brynn Marr Hospital and Life Center of
Jacksonville, Jacksonville, North Carolina (the "Brynn Marr Hospital"), Chestnut
Ridge Hospital, Morgantown, West Virginia (the "Chestnut Ridge Hospital"),
Cumberland Hospital and Life Center of Fayetteville, Fayetteville, North
Carolina (the "Cumberland Hospital"), Desert Vista Hospital, Mesa, Arizona (the
"Desert Vista Hospital") and Havenwyck Hospital, Auburn Hills, Michigan (the
"Havenwyck Hospital"), respectively, as security for the Notes, in the form
necessary or appropriate for the purpose of creating a first and paramount Lien
on each such Land Parcel, the buildings, improvements and Equipment thereon; and
any Person which has or purports to have an interest in any Land Parcel in
respect of which any Obliger holds a leasehold estate shall have executed,
acknowledged and delivered an Estoppel Agreement in respect of such Land Parcel.
Each such Mortgage and financing statements with respect to the Equipment shall
have been recorded or filed for record in each public office wherein such
recording or filing is deemed necessary or appropriate by you or your special
counsel to perfect the Lien thereof as against creditors of or purchasers from
the Obligors and each such Estoppel Agreement shall have been recorded or filed
for record in each public office wherein such recording or filing is deemed
necessary or appropriate by you or your special counsel to protect the rights of
the Obligor and the Trustees created thereby.
<PAGE>
7
For purposes of this section 7(a)(ii), "Estoppel Agreement" means
any agreement between the Trustees and the fee holder/lessor under the leases of
the real property upon which the Morgantown, West Virginia and the Mesa, Arizona
properties are located (the "Ground Leases"), and any Mortgage of the fee
interest of such property providing, inter alia for notice of default under
either Ground Lease, the right to cure any defaults under either Ground Lease,
the approval of a leasehold Mortgage of the Company's interests under each
Ground Lease, if required, the right to "quiet enjoyment" of the land subject to
either Ground Lease and such other terms as are requires by your special
counsel.
(iii) Survey. The Company shall have caused a physical survey of
each Land Parcel relating to the Benchmark Regional Hospital, the Brynn Marr
Hospital, the Chestnut Ridge Hospital, the Cumberland Hospital, the Desert Vista
Hospital and the Havenwyck Hospital to be made by a registered civil engineer or
surveyor licensed in the jurisdiction in which each such Land Parcel is located
and shall have furnished to the Trustees and your special counsel a plot of
survey duly certified by such engineer or surveyor which shall show no
encroachments upon such real estate parcel by adjoining buildings or structures
and no encroachments on adjoining premises by the building or improvements
erected thereon, other then as permitted under section 3.19(f) of the Indenture.
Each survey shall be prepared in accordance with the standard detail
requirements for land surveys adopted by the American Land Title Association
("ALTA") and the American Congress on Surveying and Mapping, as revised and in
effect on the date of delivery of such survey, and shall be certified to the
Trustees.
(iv) Evidence of Title. The Company shall have obtained the
commitment of Chicago Title Insurance Company or another title insurance company
or companies of good standing selected by the Company and satisfactory to you
(collectively, the "Title Company"), to issue policies of mortgage title
insurance on a standard American Land Title Association Mortgage Title Insurance
Policy (Loan Policy-1970 Form) in the aggregate amount which will provide for
mortgage title insurance in an amount not less than the aggregate principal
amount of Notes, covering each Land Parcel relating to the Benchmark Regional
Hospital, the Brynn Marr Hospital, the Chestnut Ridge Hospital, the Cumberland
Hospital, the Desert Vista Hospital and the Havenwyck Hospital and showing
marketable record title thereto to be vested in Bountiful Psychiatric, East
Carolina Psychiatric, Psychiatric Institute, Cumberland, Mesa Psychiatric and
Havenwyck, respectively, subject only to:
<PAGE>
8
(y) the Liens, if any, permitted by the related Mortgages; and
(z) such other exceptions as shall be satisfactory to you and
your special counsel; and
agreeing to insure the Trustees and the holders of the Notes upon the proper
execution and recording of the related Mortgages against loss or damage
sustained by reason of such Mortgages not being a first and paramount Lien upon
such Land Parcels, subject only to the exceptions referred to in the foregoing
clauses (y) and (z). Risk assumed by the Title Company under the title policy or
policies will be reinsured when the Loan Value of any one individual Land Parcel
and Mortgage Facility insured pursuant to the provisions of this section
7(a)(iv) by First American Title Insurance Company shall exceed $35,000,000 and
when any such Land Parcel and Mortgaged Facility insured pursuant to the
provisions of this section 7(a)(iv) by Transamarica Title Insurance Company
shall exceed $16,600,000, with a reinsurance company satisfactory to the
Purchasers and by means of R coinsurance and direct-access agreement
satisfactory to the Purchasers.
Such title insurance shall insure over all general exceptions and
shall include the following endorsements in form and substance satisfactory to
you and your special counsel: (i) an endorsement over mechanics' and
materialmen's lien claims for all labor, materials and services, (ii) an ALTA
Form 3.1 Zoning Endorsement (including parking), (iii) an unconditional
Comprehensive Endorsement No. 1 containing a commitment by the Title company to
extend the coverage of such endorsement to cover all improvements on the Land
Parcels, (iv) a usury endorsement, (v) an endorsement to the effect that any
interest accrued and added to principal will be secured by the lien of the
Mortgage, (vi) a tie-in endorsement and (vii) such other endorsements as you or
your special counsel may require. If any Land Parcel consists of several
subparcels, the title policy must affirmatively insure the contiguity of those
subparcels and contain a perimeter endorsement. If the Survey furnished pursuant
to section 7(a)(iii) reveals that any Land Parcel makes use of any other
property as a means of, ingress and egress (or for any other purpose), then the
title policy shall specifically insure the same as easements appurtenant to the
Land Parcel, subject only to Permitted Encumbrances. If ingress and egress is by
way of a private street, then the title policy shall insure ingress and egress
via such private street subject only to Permitted Encumbrances. If any required
endorsement is unavailable due to state insurance laws or regulations applicable
<PAGE>
9
to the Title Company, then you and your special counsel may require, in lieu of
such endorsement, an opinion of counsel to the Obligors as to such matters in
form and substance and from counsel satisfactory to you and your special
counsel.
The Company will, as soon as practicable and in any event within
30 days after the Closing Date, without cost or expense to you, obtain and
deliver to you and the Trustee the policy or policies contemplated by the
commitments of the Title Company.
(v) Environmental Audit. The Company shall have furnished you
with an Environmental Agreement ("Environmental Audit") performed by Fred C.
Hart Associates, Inc. and/or Waldemar S. Nelson and Company, Inc. for each such
Hospital and a report of the engineer who performed each Environmental Audit
dated not more than 60 days prior to the Closing Date stating that except as
disclosed to you in such Environmental Audit, each such Hospital is free of
asbestos and any other hazardous material and otherwise in form and substance
satisfactory to you and your special counsel.
(vi) Appraisal. The Company shall have furnished to you an
appraisal of the Land Parcels relating to the Benchmark Regional Hospital, the
Brynn Marr Hospital, the Chestnut Ridge Hospital, the Cumberland Hospital, the
Desert Vista Hospital and the Havenwyck Hospital and such Hospitals in form and
substance satisfactory to you prepared by Valuation Counseling, Inc. (the
"Appraiser"). The appraisal shall reflect a correlated value conclusion for such
Hospitals, the related Land Parcels and Equipment, of at least $109,000.000.
(vii) Pledge Agreements. The Company, Michigan Psychiatric,
Americare and Bountiful Psychiatric shall have executed and delivered the Pledge
Agreements and the Pledge Agreements shall be in full force and effect.
(viii) Evidence of Accreditation. The Company shall have
furnished you with evidence that the Benchmark Regional Hospital, the Brynn Marr
Hospital, the Chestnut Ridge Hospital, the CumberLand Hospital, the Desert Vista
Hospital and the Havenwyck Hospital are each fully accredited by the Joint
Commission on Accreditation of Healthcare Organizations; that each of the
Benchmark Regional Hospital, the Brynn Marr Hospital, the Chestnut Ridge
Hospital, the Cumberland Hospital, the Desert Vista Hospital and the Havenwyck
Hospital is a "hospital" as defined in the Health Insurance for the Aged and
Disabled Act (Title 42, Section 1395 of the United States Code Annotated) to
<PAGE>
10
which payment for medical and other health services are permitted under the
terms and provisions of said Act, and each such Hospital is an eligible provider
for third party reimbursement programs as set forth in Annex D to Exhibit D
attached hereto.
(ix) Consent of Holders of Other Securities. Any consents or
approvals required to be obtained from any holder or holders of any (outstanding
Security of any Obligor and any amendments of agreements pursuant to which any
Security may have been issued which shall be necessary to permit the
consummation of the transactions contemplated hereby shall have been obtained
and all such consents or amendments shall be satisfactory in form and substance
to you and your special counsel.
(x) Regulatory Agency Approvals. You shall be provided with
copies of all licenses, orders, permits and approvals of all state and local
governmental licensing or regulatory agencies, having jurisdiction over the
operation of a Hospital, required under applicable laws, regulations and
ordinances for the issuance of the Notes, the mortgaging of such Hospital or the
occupancy or operation of such Hospital, including, without limitation, a
"certificate of occupancy" covering each such Hospital.
(xi) Issuance of Warrants. The Company shall have duly executed
and delivered the Warrants to the Purchasers or the Subordinated Secured Notes,
all as contemplated and provided in section 1(b) hereof.
(xii) Subordinated Convertible Promissory Note. You shall have
received evidence of the amendment of the Company's Amended and Restated 10%
Subordinated Convertible Promissory Note, dated October 27, 1988, due November
5, 1993, payable to Ramsay Corporation in the principal amount of $2,500,000 (as
amended on the Closing Date, the "Subordinated Convertible Promissory Note"),
which amendment shall be satisfactory in form and substance to you.
(xiii) Subordinated Promissory Note. You shall have received
evidence of the amendment of the Company's Amended and Restated 13% Subordinated
Promissory Note, dated October 27, 1988, due November 5, 1990, payable to Ramsay
Corporation in the principal amount of $5,000,000 (as amended on the Closing
Date, the "Subordinated Promissory Note"), which amendment shall be satisfactory
in form and substance to you and shall evidence an aggregate outstanding
principal amount thereunder of $2,000,000.
<PAGE>
11
(b) On the Closing Date --
(i) Obligors Closing Certificate. You and the Trustee shall have
received from the Obligors other than the Company a certificate dated the
Closing Date, executed by the President or any Vice President or each such
Obligor substantially in the form attached hereto as Exhibit D, the truth and
accuracy of which shall be a condition to your obligation to accept and pay for
the Notes.
(ii) Company Closing Certificate. You and the Trustee shall have
received from the Company a certificate dated the Closing Date, executed by the
President or any Vice President of the Company, substantially in the form
attached hereto as Exhibit E, the truth and accuracy of which shall be a
condition to your obligation to accept and pay for the Notes.
(iii) Insurance. You and the Trustee shall have received from the
Company a certificate dated the Closing Date executed by the President and a
Vice President or the Treasurer of the Company certifying to the existence of
the insurance required by Section 2.6 of the Mortgages covering the Hospitals
and the payment of all premiums due thereon. Copies of the policies evidencing
such insurance (or originals of the certificates with respect thereto issued by
the insurer) shall have been delivered to the Trustee.
(iv) Legal Opinions. You and, in the case of the opinions
delivered from McGlinchey, Stafford, Cellini & Lang and local counsel for the
Obligors, the Trustee shall have received from Chapman and Cutler, who are
acting as your special counsel in this transaction, from McGinchey, Stafford,
Cellini & Lang, counsel for the Obligors, and from local counsel for the
Obligors other than the Company their respective opinions dated the Closing
Date, in form and substance satisfactory to you, and covering the matters set
forth in Exhibits F, G and H, respectively, hereto.
(v) Audited Annual Financial Statements. You shall have received
from the Company the audited consolidated balance sheets, statements of
operations, changes in shareholder's equity and cash flows of the Company and
its Restricted Subsidiaries for the fiscal year ended June 30, 1989, together
with an opinion thereon of Ernst & Young to the effect set forth in section 3.27
of the Indenture.
(vi) Unaudited Quarterly Financial Statement. You shall have
received from the Company the unaudited consolidated balance sheets, statements
<PAGE>
12
of operations, changes in shareholder's equity and cash flows of the Company and
its Consolidated Subsidiaries for the fiscal quarter ended December 31, 1989,
certified as complete and correct, by an authorized financing officer of the
Company.
(vii) Release of Prior Liens. The Trustee shall have been
furnished with executed releases in recordable form of all liens upon the
Hospitals which would constitute liens prior to or on a parity with the lien of
any Mortgage, such releases to be satisfactory in form and substance to the
Title Company, to you and your special counsel.
(viii) Proceedings Satisfactory. All proceedings taken or to be
taken in connection with all of the transactions described in and contemplated
by this Agreement, and all documents necessary to the consummation thereof,
shall he satisfactory to you and your special counsel and you and your special
counsel shall have received copies (executed or certified as may be appropriate)
of all legal documents or proceedings which you and they may require in
connection with said transactions.
(ix) No legal Impediment. No change shall have occurred in
applicable laws or regulations or any interpretations thereof which might makes
it illegal for you to participate in any of the transactions contemplated by
this Agreement.
(x) Compliance with Agreements. The Obligors shall have performed
and complied with all agreements and conditions contained herein, in the
Indenture, in the Pledge Agreements and in the Mortgages which are required to
be performed or complied with by the Obligers on or prior to the Closing Date.
(xi) Commitment Fees. Aetna Life Insurance Company shall receive
a Structuring Fee by check from the Company in the amount Of $38,750. Monumental
Life Insurance Company shall receive an Commitment Fee by check from the Company
in the amount of $65,625. Connecticut Mutual Life Insurance Company shall
receive a Commitment Fee by check (payable to the order of State House Capital
Management, Inc.) from the Company in the amount of $56,250.
(xii) Special Counsel Fees. Concurrently with the delivery of the
Notes on the Closing Date, the reasonable charges and disbursements of Chapman
and Cutler, your special counsel, shall have been paid.
<PAGE>
13
(xiii) Waiver of Condition. If on the Closing Date the Obligors
fail to tender to you the Notes, or if any other Purchaser fails to take up and
pay for the Notes to be issued, or if the conditions specified in this section 7
have not been fulfilled, you may thereupon elect to be relieved of all further
obligations under this Agreement. Without limiting the foregoing, if the
conditions specified in this 57(b)(xiii) have not been fulfilled, you may waive
compliance by the Obligors with any such condition to such extent as you may in
your sole discretion determine. Nothing in this section 7(b)(xiii) shall operate
to relieve the Obligors of any of their joint and several obligations hereunder
or to waive any of your rights or remedies against the Obligors other than as
expressly waived in writing by you.
8. Expenses and Taxes. Whether or not the Notes are sold, the Company
will pay all reasonable expenses relating to this Agreement, the Indenture, the
Pledge Agreements and the Mortgages, including but not limited to;
(a) the cost of reproducing this Agreement, the Indenture, the Pledge
Agreements, the Mortgages, the Warrants, the Notes and all other documents
required or contemplated thereunder;
(b) the reasonable fees and disbursements of Chapman and Cutler, your
special counsel;
(c) your reasonable out-of-pocket expenses;
(d) the cost of delivering to your home office, insured to your
satisfaction, the Notes purchased by you on a Closing Date;
(e) the reasonable fees, costs and other expenses of the Trustees
under the Indenture or any other agreement related thereto;
(f) all recording and filing fees and stamp taxes in connection with
the recordation or filing and re-recordation or re-filing of the Mortgages and
other notices thereof;
(g) the reasonable fees and disbursements of the Title Company
referred to in section 7(a)(iv) hereof in connection with the issuance of the
title insurance policies referred to herein and the reasonable fees and
disbursements of the civil engineer or surveyor referred to in section 7(a)(iii)
hereof in connection with the preparation of the surveys referred to herein;
<PAGE>
14
(h) the reasonable fees and disbursements of Fred C. Hart Associates,
Inc. and/or Waldemar S. Nelson and Company, Inc. in connection with the
Environmental Audits referred to in section 7(a)(v) hereof;
(i) the reasonable fees and disbursements of the Appraiser in
connection with the appraisals referred to in section 7(a)(vi) hereof;
(j) the reasonable fees and disbursements of J. C. Bradford & Co., the
Obligers' investment banking firm, in connection with the sale of the Notes;
(k) the processing fee of Standard & Poors Corporation for providing
Private Placement Numbers for the Senior Secured Notes, the Subordinated Secured
Notes and the Warrants;
(l) all reasonable expenses, including without limitation attorneys'
fees, relating to any amendments, waivers or consents pursuant to the provisions
of this Agreement, the Indenture, any of the Pledge Agreements, any of the
Mortgages or any other agreement or document relating to such agreements; and
(m) expenses incurred by any Purchaser in connection with any
bankruptcy, voluntary or involuntary, or similar proceeding of any Obliger.
The obligations of the Company under this section 8 shall survive the
payment or prepayment of the Notes and the termination of this Agreement, the
Indenture, the Pledge Agreements and the Mortgages.
9. Successors and Assigns. This Agreement shall be binding upon the
Obligors and their respective successors and assigns and shall inure to your
benefit and to the benefit of your successors and assigns, including each
successive holder or holders of any Notes.
10. Survival of Covenants and Representations. All covenants,
representations and warranties made by the Obligors herein and in any
certificates delivered pursuant hereto, whether or not in connection with the
Closing Date, shall survive the issuance of the Notes and the delivery of this
Agreement and the Notes and shall survive until all of the Notes are paid in
full.
11. Severability. Should any part of this Agreement for any reason be
declared invalid, such decision shall not affect the validity of any remaining
portion, which remaining portion shall remain in force and effect as if this
<PAGE>
15
Agreement had been executed with the invalid portion thereof eliminated and it
is hereby declared the intention of the parties hereto that they would have
executed the remaining portion of this Agreement without including therein any
such part, parts or portion which may, for any reason, be hereafter declared
invalid.
12. Communications. All communications provided for hereunder shall be
in writing, and if to you, delivered or mailed by registered or certified mail,
postage prepaid, or by overnight courier, charges prepaid, addressed to you at
your address appearing on Schedule I to this Agreement or to such other address
as you may designate to the Company in writing, and, if to the Obligers,
delivered or mailed by registered or certified mail or by overnight courier to
the Company at One Poydras Plaza, 639 Loyola Avenue, Suite 1400, New Orleans,
Louisiana 70113, Attention: Chief Financial Officer, or to such other address as
the Obligors may designate to you in writing.
13. GOVERNING LAW. THIS AGREEMENT AND THE NOTES AND WARRANTS ISSUED
AND SOLD HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
ILLINOIS LAW.
14. Counterparts. This Agreement may be simultaneously executed in any
number of counterparts, each of which when so executed and delivered shall be an
original, but such counterparts together shall constitute but one and the same
instrument.
15. Headings and Table of Contents. The headings of the sections of
his Agreement and the Table of Contents are inserted for purposes of convenience
only and shall not be construed to affect the meaning or construction of any of
the provisions hereof.
* * *
<PAGE>
16
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed copy of this Agreement,
whereupon it shall become a binding agreement between us.
RAMSAY HEALTH CARE, INC.
By____________________________
Its President
BOUNTIFUL PSYCHIATRIC
HOSPITAL, INC.
By____________________________
Its President
CUMBERLAND MENTAL HEALTH, INC.
By____________________________
Its President
EAST CAROLINA PSYCHIATRIC
SERVICES CORPORATION
By____________________________
Its President
HAVENWYCK HOSPITAL, INC.
By____________________________
Its President
MESA PSYCHIATRIC HOSPITAL,
INC.
By____________________________
Its President
<PAGE>
17
PSYCHIATRIC INSTITUTE OF WEST
VIRGINIA, INC.
By____________________________
Its President
The foregoing is hereby confirmed and accepted as of the date
aforesaid.
AETNA LIFE INSURANCE COMPANY
By____________________________
Its _____________________
<PAGE>
SCHEDULE I
(to Note Purchase Agreement)
Principal Amount of Principal Amount of
Name and Address Senior Secured Notes Subordinated Secured
of Purchasers to be Purchased Notes to be Purchased
AETNA LIFE INSURANCE COMPANY $26,000,000 $1,000,000
CityPlace
Hartford, Connecticut 06156
Attention: Aetna Bond Investors,
YFC4
Denominations Denominations
Payments $20,000,000 $770,000
6,000,000 230,000
All payments on or in respect of the Notes
to be by bank wire transfer of Federal or
other immediately available funds
(identifying each payment as 11.6% Senior
Secured Notes due March 31, 2000 and/or
15.6% Subordinated Secured Notes due
March 31, 2000, principal or interest")
to:
Morgan Guaranty Trust Company
of New York
23 Wall Street
New York, New York 10015
Attention: Money Transfer Department
for credit to Aetna Life
Insurance Company's Account
No. 000-45-754
Notices
All notices and communications to be
addressed as first provided above,
except notice with respect to
payment, and written confirmation of
each such payment, to be addressed
Attention: Income Collection, YF44
and notices with respect to
quarterly and annual financial
statements addressed Attention:
Records Unit, Aetna Bond Investors,
YFC4.
Name of Nominee in which Notes are to be issued:
None.
<PAGE>
2
Principal Amount of Principal Amount of
Name and Address Senior Secured Notes Subordinated Secured
of Purchasers to be Purchased Notes to be Purchased
MONUMENTAL LIFE INSURANCE COMPANY $15,500,000 $2,000,000
c/o Monumental Corporation
1111 North Charles Street
Baltimore, Maryland 21202
Attention: Securities Department
Payments
All payments on or in respect of the
Notes to be by bank wire transfer of
Federal or other immediately
available funds (identifying each
payment as 11.6% Senior Secured
Notes due March 31, 2000 and/or
15.6% Subordinated Secured Notes due
March 31, 2000, principal or
interest") to:
Mercantile Safe-Deposit and
Trust Company
Charles and Chase Streets
Baltimore, Maryland 21201
Attention: Carl Presser
for credit to Monumental Life
Insurance Company's Account
No. 08525-1
Notices
All notices of payment, on or in
respect of the Notes and written
confirmation of each such payment
to:
Monumental Life Insurance Company
Two East Chase Street
Baltimore, Maryland 21202
Attention: Treasurer
All notices and communications other
than those in respect to payments to
be addressed as first provided
above.
Name of Nominee in which Notes are to be
issued: None.
<PAGE>
3
Principal Amount of Principal Amount of
Name and Address Senior Secured Notes Subordinated Secured
of Purchasers to be Purchased Notes to be Purchased
CONNECTICUT MUTUAL LIFE INSURANCE $15,000,000
COMPANY
140 Garden Street
Hartford, Connecticut 06154
Attention: Private Placement
Department
Payments
All payments on or in respect of the
Notes to be by bank wire transfer of
Federal or other immediately
available funds (identifying each
payment as 11.6% Senior Secured
Notes due March 31, 2000 and/or
15.6% Subordinated Secured Notes due
March 31, 2000, principal or
interest") to:
The Connecticut Bank and Trust Company
One Constitution Plaza
Hartford, Connecticut 06115
for credit to CML IND
Account No. 000-051-5
Notices
All notices and communications, to
be addressed as first provided
above, except notices with respect
to payment and written confirmation
of each such payment to be addressed
Attention: Securities Accounting.
Name of Nominee in which Notes are to be
issued: Garden St. Co.
<PAGE>
SCHEDULE II
(to Note Purchase Agreement)
Information With Respect to Warrants
Holder's Equity Original
Percentage of Number of
Purchaser Warrants Warrants Issued Warrant Valuation
AETNA LIFE INSURANCE 33-1/3% 113,302 $6,000
COMPANY
MONUMENTAL LIFE 66-2/3% 226,603 $12,000
INSURANCE COMPANY
_-------------------------------------------------------------------------------
DEED OF TRUST AND SECURITY AGREEMENT
Dated as of March 31, 1990
FROM
CUMBERLAND MENTAL HEALTH, INC.
(the "Grantor")
TO
FIRST AMERICAN TITLE INSURANCE COMPANY
(the "Security Trustee")
For the Benefit of The Citizens and Southern National Bank,
a national banking association and Susan L. Adams
as Trustees
under a Trust Indenture dated as of March 31, 1990
(the "Indenture Trustees" or the "Beneficiaries")
- --------------------------------------------------------------------------------
(Fayetteville, North Carolina) This instrument was prepared
by and when recorded return to:
______________________________
Michael G. McGee
Chapman and Cutler
111 West Monroe Street
Chicago, Illinois 60603
<PAGE>
Table of Contents
Section Page
Parties ....................................................... 1
Granting Clauses ....................................................... 2
SECTION 1. DEFINITIONS...................................................... 10
SECTION 2. GENERAL COVENANTS AND WARRANTIES................................. 13
2.1. Note Agreements and Indenture Covenants................ 13
2.2. Ownership of Granted Property.......................... 14
2.3. Further Assurances..................................... 14
2.4. Payment of Principal and Interest...................... 14
2.5. Maintenance of Granted Property, Other Liens,
Compliance with Laws, etc.............................. 14
2.6. Insurance.............................................. 16
2.7. Payment of Taxes and Other Charges..................... 18
2.8. Advances............................................... 19
2.9. Recordation............................................ 19
2.10. After-Acquired Property................................ 20
2.11. Priority of this Deed of Trust; Future Advances;
Extensions, Modifications, and Renewals................ 20
SECTION 3. POSSESSION, USE AND RELEASE OF PROPERTY................ 21
3.1. Possession by Grantor; Dispositions Without
Release................................................ 21
3.2. Eminent Domain......................................... 23
3.3. Purchaser Protected.................................... 23
3.4. Release of Granted Property - Indenture
Trustees' Consent...................................... 24
SECTION 4. APPLICATION OF INSURANCE AND CERTAIN OTHER
MONEYS RECEIVED BY THE INDENTURE TRUSTEES.............. 24
4.1. Insurance Proceeds and Condemnation Awards............. 24
4.2. Other Proceeds......................................... 26
SECTION 5. DEFAULTS AND REMEDIES THEREFOR......................... 26
5.1. Events of Default...................................... 26
5.2. Remedies............................................... 27
5.3. Application of Proceeds................................ 30
5.4. Waiver of Extension, Appraisement and Stay Laws........ 30
5.5. Effect of Discontinuance of Proceedings................ 31
5.6. Delay or Omission Not a Waiver......................... 31
-i-
<PAGE>
Page
SECTION 6. MISCELLANEOUS.......................................... 31
6.1. Successors and Assigns................................. 31
6.2. Severability........................................... 32
6.3. Addresses for Notices.................................. 32
6.4. Headings and Table of Contents......................... 32
6.5. Release of Deed of Trust............................... 33
6.6. Counterparts........................................... 33
6.7. GOVERNING LAW.......................................... 33
6.8. Substitution of Security Trustees...................... 33
Signatures................................................................... 34
ATTACHMENTS TO DEED OF TRUST:
Annex A - Legal Description of Real Property
Annex B - Excluded Property
Schedule I - Purchasers
Schedule II - Assigned Agreements
Schedule III - Pledged Shares
-ii-
<PAGE>
THIS DEED OF TRUST AND SECURITY AGREEMENT dated as of March 31, 1990
(the "Deed of Trust") from Cumberland Mental Health, Inc., a North Carolina
corporation (the "Grantor"), having its principal office at 3425 Melrose Road,
Fayetteville, North Carolina 28304 to First American Title Insurance Company,
whose post office address is c/o The Title Company of North Carolina, 130-D
McDowell Street, Charlotte, North Carolina 28204, (the "Security Trustee") for
the benefit of The Citizens and Southern National Bank, a national banking
association and Susan L. Adams, as Trustee under the hereinafter defined
Indenture (herein collectively the "Indenture Trustees" or the "Beneficiaries").
R E C I T A L S:
A. The Grantor together with the other Obligors have entered into that
certain Trust Indenture dated as of March 31, 1990 (the "Indenture") with
Citizens and Southern National Bank, a national banking association and Susan L.
Adams, as Indenture Trustees, pursuant to which the Obligors provide for, among
other things, the creation and securing of the full and prompt payment of all
amounts due with respect thereto of the 11.6% Senior Secured Notes of the
Obligors due March 31, 2000 in an aggregate principal amount of $56,500,000 (the
"Senior Secured Notes") and the 15.6% Subordinated Secured Notes, of the
Obligors due March 31, 2000 in an aggregate principal amount of $3,000,000 (the
"Subordinated Secured Notes") which Senior Secured Notes and Subordinated
Secured Notes (hereinafter collectively referred to as the "Notes") constitute
the joint and several obligation of the Obligors and are further described in
the Indenture. The holders from time to time of the Notes are hereinafter
collectively referred to as the "Noteholders". Unless herein otherwise defined,
all capitalized terms used herein shall have the same meaning as defined in the
Indenture.
B. The Obligors require funds to prepay certain indebtedness for
borrowed money of the Obligors (which indebtedness was issued by or guaranteed
by each of the Obligors) and to finance capital expenditures, renovations and
construction at facilities owned by certain of the Obligors and in order to
strengthen the financial and operating condition of each and every Obligor,
directly and indirectly, as a result of the enhanced ability of the Company to
provide financial, accounting, consulting and administrative assistance and
services to each other Obligor. In order to provide funds for such purposes, the
Obligors have entered into separate and several Note Purchase Agreements each
<PAGE>
2
dated as of March 31, 1990 (the "Note Agreements") with each of the
institutional investors (the "Purchasers") named in Schedule I thereto,
providing for the commitment of the Purchasers to purchase the Notes.
C. The Notes are further secured by the Pledge and Security Agreements
dated as of March 31, 1990 (the "Pledges") from the Company, Michigan
Psychiatric Services, Inc., Americare of Galax, Inc. and Bountiful Psychiatric
Hospital, Inc. to the Indenture Trustee.
D. The Notes and all principal thereof, premium if any, and interest
thereon and all additional amounts and other sums at any time due and owing
from, and required to be paid by the Obligors under the terms of the Notes, the
Note Agreements, the Indenture, the Pledge, this Deed of Trust or any other
mortgage or deed of trust executed and delivered by the other Obligors pursuant
to the Indenture are hereinafter sometimes referred to as the "Indebtedness
Hereby Secured".
E. The Grantor is duly authorized under all applicable provisions of
law, its charter and by-laws to issue the Notes, to execute and deliver this
Deed of Trust and to grant, convey and assign the "Granted Property" (as
hereinafter defined) to the Security Trustee as security for the Notes and other
Indebtedness Hereby Secured and all corporate action and all consents, approvals
and other authorizations and all other acts and things necessary to make this
Deed of Trust the valid, binding and legal instrument for the security of the
Notes have been done and performed.
F. The Purchasers have required as a condition to their purchase of
the Notes that the Grantor execute and deliver this Deed of Trust as security
for the payment of the Notes.
NOW, THEREFORE, THIS DEED OF TRUST WITNESSETH: That the Grantor, in
consideration of the premises, the purchase and acceptance of the Notes by the
Purchasers, and of the sum of Ten Dollars received by the Grantor from the
Purchasers, Indenture Trustees and Security Trustee and other good and valuable
consideration, receipt whereof is hereby acknowledged, and in order to
strengthen the financial and operating condition of each and every Obligor
directly and indirectly, as a result of the enhanced ability of the Company to
provide financial, accounting, consulting and administrative assistance and
services to each other Obligor, and in order to secure the payment of the
principal of, premium, if any, and interest on the Notes according to their
<PAGE>
3
tenor and effect, and to secure the payment of all other Indebtedness Hereby
Secured and the performance and observance of all the covenants, agreements and
conditions contained in the Notes, this Deed of Trust, the Note Agreements and
the Indenture, the Grantor does hereby warrant, pledge, assign, bargain,
hypothecate, convey, grant, transfer and set over unto the Security Trustee and
its successors in trust and assigns, with power of sale, in and to all and
singular the following described properties, rights, interest and privileges and
all of the Grantor's estate, right, title and interest therein, thereto and
thereunder (all of which properties hereby mortgaged, assigned and pledged or
intended so to be are hereinafter collectively referred to as the "Granted
Property"):
GRANTING CLAUSE I
The parcels of land in Cumberland County, State of North Carolina,
described in Annex A attached hereto and made a part hereof, together with the
entire interest of the Grantor in and to all buildings, structures, improvements
and appurtenances now standing, or at any time hereafter constructed or placed,
upon such land, including all right, title and interest of the Grantor, if any,
in and to all building material, building equipment, and (except as hereinafter
set forth) all fixtures of every kind and nature whatsoever on said land or in
any building, structure or improvement now or hereafter standing on said land
which are classified as fixtures under applicable law and which are used in
connection with the operation, maintenance or protection of said buildings,
structure and improvements as such (including, without limitation, all boilers,
air conditioning, ventilating, plumbing, heating, lighting and electrical
systems and apparatus, all communications equipment and intercom systems and
apparatus, all sprinkler equipment and apparatus, and all elevators and
escalators). All items included under this Deed of Trust, and the reversion or
reversions, remainder or remainders, in and to said land, and together with the
entire interest of the Grantor in and to all and singular the tenements,
hereditaments, easements, rights of way, rights, privileges and appurtenances to
said land, belonging or in anywise appertaining thereto, including, without
limitation, the entire right, title and interest of the Grantor, in, to and
under any streets, ways, alleys, gores or strips of land adjoining said land,
and all claims or demands whatsoever of the Grantor either in law or in equity,
in possession or expectancy, of, in and to said land, it being the intention of
the parties hereto that, so far as may be permitted by law, all property of the
character hereinabove described, which is now owned or is hereof acquired by the
Grantor and is affixed or attached or annexed to said land, shall be and
<PAGE>
4
remain or become and constitute a portion of said land and the security covered
by and subject to the lien of this Deed of Trust, together with all accessions,
parts and appurtenances appertaining or attached thereto and all substitutions,
renewals or replacements of and additions, improvements, accessions and
accumulations to any and all thereof, and together with all rents, income,
revenues, awards, issues and profits thereof, and the present and continuing
right to make claim for, collect, receive and receipt for any and all of such
rents, income, revenues, awards, issues and profits arising therefrom or in
connection therewith (all such property being hereinafter collectively referred
to as the "Land Parcels"). The Granted Property shall not include any personal
property or equipment not owned by the Grantor so long as the same can be
removed without causing material damage to the Granted Property (all such
property being hereinafter collectively referred to as "Excluded Property"). The
Excluded Property is described in Annex B hereto.
GRANTING CLAUSE II
All machinery and equipment in all of its forms, wherever located, now
or hereafter existing (including, but not limited to, all drugs, environmental
monitoring devices, medical supplies, hospital supplies, uniforms, x-ray or
nuclear magnetic resonance devices, imaging devices, laboratory equipment,
medical equipment, surgical equipment, quality control equipment, motors, test
equipment, computer software, data processing equipment, printers, presses,
computer test equipment, industrial machinery, equipment and fixtures,
transportation equipment, office and other machinery, video or audio
reproduction devices, stretchers, wheel-chairs, furniture, aircraft, ambulances,
rolling stock, motor vehicles, trailers, tractors, trucks, cars, tools, spare
parts and fuel, items employed in the maintenance or repair of any structure or
any grounds, all foodstuffs of any kind, drawings, books, records and equipment
containing books and records or in which books and records are stored), and all
parts thereof and all accessions thereto, together with any additional machinery
and equipment that may become part of the Granted Property or located on the
Land Parcels and less any Equipment that may be deleted from the Granted
Property or removed from the Land Parcels, all in accordance with the terms of
this Deed of Trust (any and all such machinery, equipment, parts and accessions
being the "Equipment");
<PAGE>
5
GRANTING CLAUSE III
All insurance proceeds, judgments, awards of damages, settlements and
other compensation arising out of any damage, destruction, condemnation or
taking of the Granted Property;
GRANTING CLAUSE IV
All leases and subleases belonging or otherwise appertaining to the
Land Parcels, including all extended terms and all extensions and renewals of
the term of such leases and subleases, together with all right, title and
interest of the Grantor as lessor thereunder, including, without limitation, the
present and continuing right to make claim for, collect, receive and receipt for
any and all of the rents, income, revenues, issues and profits and other sums of
money payable or receivable under such leases and subleases, whether payable as
rent or otherwise, to receive and give notices thereunder, to bring actions and
proceedings thereunder or for the enforcement thereof, and to do any and all
things which the Grantor or any other lessor is or may become entitled to do
under the leases and subleases; provided that the assignment made by this
Granting Clause IV shall not impair or diminish any obligation of the Grantor
under the leases and subleases, nor shall any such obligation be imposed upon
the Security Trustee, the Indenture Trustees or the holder of any Note;
GRANTING CLAUSE V
All inventory in all of its forms, wherever located, now or hereafter
existing (including, but not limited to (i) drugs, medical supplies, hospital
supplies, books, uniforms, medical equipment, surgical equipment, video or audio
reproduction devices and foodstuffs of any kind, (ii) goods in which the Grantor
has an interest in mass or a joint or other interest or right of any kind
(including, without limitation, goods in which the Grantor has an interest or
right as consignee), and (iii) goods that are returned to or repossessed by the
Grantor), and all accessions thereto and products thereof and documents therefor
(any and all such inventory, accessions, products and documents being the
"Inventory");
GRANTING CLAUSE VI
All agreements listed on Schedule II, as each of such agreements may
be amended, supplemented or otherwise modified and in effect from time to time
(such agreements as so amended or modified and in effect, being the "Assigned
<PAGE>
6
Agreements"), including, without limitation, (i) all rights of the Grantor to
receive moneys due and to become due under or pursuant to the Assigned
Agreements, (ii) all rights of the Grantor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect to the Assigned Agreements, (iii)
claims of the Grantor for damages arising out of or for breach of or default or
misrepresentation under the Assigned Agreements or any documents, instruments or
opinions delivered pursuant thereto, (iv) the right of the Grantor to terminate
the Assigned Agreements, to perform thereunder and to compel performance and
otherwise exercise all remedies thereunder, and (v) all rights to receive per
diem or other reimbursements and payments from private insurance companies,
federal or state governmental agencies or any other person or entity in respect
of services provided (in each case, to the extent permitted by law);
GRANTING CLAUSE VII
All of the following collateral (the "Security Collateral"):
(A) all shares (the "Pledged Shares") of stock described in Schedule
III and issued by the corporations named therein and the certificates
representing the Pledged Shares, and all dividends, cash, instruments and
other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged
Shares; and
(B) all additional shares of stock from time to time acquired by the
Grantor in any manner, and the certificates representing such additional
shares, and all dividends, cash, instruments and other property from time
to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such additional shares;
GRANTING CLAUSE VIII
To the extent not otherwise covered by Granting Clauses I through VII,
inclusive, all cash, accounts, general intangibles (including, but not limited
to, all governmental or regulatory permits or certificates to the extent
permitted by law); rights to receive per diem or other reimbursements and
payments from private insurance companies, federal or state governmental
agencies or any other person or entity in respect of services provided (in each
ease, to the extent permitted by law); tax refunds; intellectual property rights
of any kind (whether arising under federal, state or foreign law), know how,
<PAGE>
7
trade secrets, engineering plans, computer software, drawings and other
proprietary information (including without limitation any business or
organization plans, reports or projections of any kind, whether or not fixed in
any tangible medium); patents and patent applications; unpatented inventions
(whether or not patentable); copyrights; trademarks, trade names, service marks,
trademark and service mark applications, and all goodwill to which the Grantor
is entitled or of any businesses in which the Grantor is engaged, whether or not
such goodwill is associated with or related to any such mark or application;
license agreements relating to any of the foregoing and income therefrom; and
the right to sue for all past, present and future infringements of the
foregoing, contract rights to the extent a security interest or lien may be
granted in or on such contract rights pursuant to the relevant contract
(including, but not limited to, all rights of the Grantor to receive moneys due
and to become due under or pursuant to any accounts, general intangibles and
contract rights and all of the rights of the Grantor to terminate, and to
perform, compel performance and otherwise exercise all remedies under, such
accounts, general intangibles and contract rights), chattel paper, instruments
and other obligations, in each ease, of any kind, now or hereafter existing,
whether or not arising out of or in connection with the sale or lease of goods
or the rendering of services, and all rights now or hereafter existing in and to
all mortgages, security agreements, leases and other contracts securing or
otherwise relating to any such cash, accounts, general intangibles, contract
rights, chattel paper, instruments or other obligations (any and all such cash,
accounts, general intangibles, contract rights, chattel paper, instruments and
obligations being the "Receivables", and any and all such mortgages, security
agreements, leases and other contracts being the "Related Contracts"); and
GRANTING CLAUSE IX
All proceeds of any and all of the foregoing Granted Property
including, without limitation, proceeds that constitute property of the types
described in Granting Clauses I through VIII, inclusive, and, to the extent not
otherwise included, (x) all payments under insurance (whether or not the
Indenture Trustees are the loss payee thereof), or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to
any of the foregoing Granted Property, and (y) all cash, wherever located, not
included above in clause (x).
<PAGE>
8
SUBJECT, HOWEVER, to Permitted Encumbrances, as defined in section 1
hereof;
TO HAVE AND TO HOLD the Granted Property unto the Security Trustee and
its successors in trust and assigns forever for the purpose of securing
performance of each agreement, covenant and warranty of the Grantor contained
herein and payment of the Indebtedness Hereby Secured, without limitation, from
time to time issued under and pursuant to the Note Agreements and the Indenture.
It is understood and agreed that this Deed of Trust is to secure the obligation
of the Grantor to repay all sums due or to become due in respect of the Notes
executed and delivered pursuant to the Note Agreements and the Indenture,
including those heretofore executed and those of even date herewith.
IN TRUST NEVERTHELESS, WITH POWER OF SALE, upon the terms and trusts
herein set forth for the benefit and security of the present and future
Indenture Trustees and Noteholders in accordance with the terms of the Indenture
and the Notes and all other sums payable hereunder or under the Indenture and
the Notes, and for the performance and observance of the Indenture, the Notes
and this Deed of Trust, all as herein set forth.
PROVIDED, NEVERTHELESS, and these presents are upon the express
condition that if the Grantor performs the covenants herein and in the Indenture
contained and pays to the Indenture Trustees, their successors in trust and
assigns, the full amount of all principal of, and premium, if any, and interest
on the Notes and all other Indebtedness Hereby Secured, the estate, right and
interest of the Security Trustee in the Granted Property shall cease and this
Deed of Trust shall become null and void, but otherwise to remain in full force
and effect.
It is agreed and understood by the parties hereto that:
1. The Notes are to be secured by other mortgages and deeds of trust
of other Obligors on other real estate in the States or Commonwealths of
Michigan, Utah, Arizona and West Virginia. Each and all of said mortgages
and deeds of trust are intended to and shall constitute security for the
entire indebtedness represented by said Notes and other Indebtedness Hereby
Secured without allocation.
2. Any part of the security herein described, and any security
described in any other mortgage, Deed of Trust or other instrument now or
hereafter given to secure the indebtedness which is secured by this Deed
<PAGE>
9
of Trust, may be released by the Security Trustee and Indenture Trustees
without affecting the lien and security interest hereof on the remainder or
the obligations of the Grantor on and in respect of the Notes and any
person acquiring any direct or indirect interest in the security herein
described or in any security described in any other Deed of Trust or other
instrument now or hereafter given to secure the indebtedness which is
secured by this Deed of Trust shall take the same subject to all of the
provisions hereof.
3. The Grantor for itself and all who may claim through or under it
waives any and all right to have the property and estates comprising the
Granted Property marshalled upon any foreclosure of the lien hereof, or to
have the Granted Property hereunder and the property covered by any other
mortgage or deed of trust securing the Notes marshalled upon any
foreclosure of any of said mortgages or deeds of trust, and agrees that any
court having jurisdiction to foreclose such lien may order the Granted
Property sold as an entirety.
4. Upon the occurrence of an Event of Default hereunder the Security
Trustee have, among other things, the right to sell the Granted Property at
a trustee's sale and/or U.C.C. sale or foreclose on the Granted Property,
in the manner described by applicable law, and dispose of the same. The
Security Trustee's deed or other instrument of conveyance, transfer or
release (which may be executed by the Security Trustee in their own name or
as attorney-in-fact for the Grantor and the Security Trustee are hereby
irrevocably appointed attorney-in-fact for the Grantor) shall be effective
to convey and transfer to the grantee an indefeasible title to the property
covered thereby, discharged of all rights of redemption by the Grantor or
any person claiming under it, and to bar forever all claims by the Grantor
or the said Security Trustee to the property covered thereby and no grantee
from the Security Trustee shall be under any duty to inquire as to the
authority of the Security Trustee to execute the same, or to see to the
application of the purchase money.
SECURITY AGREEMENT
This Deed of Trust shall also constitute and serve as a "security
agreement" on personal property within the meaning of, and shall constitute a
<PAGE>
10
first and prior security interest under, the U.C.C. with respect to all of the
personal property described herein in Granting Clauses II, III, V, VI, VII,
VIII, and IX. To this end, the Grantor has granted, bargained, conveyed,
assigned, transferred and set over and by these presents does grant, bargain,
convey, assign, transfer and set over unto the Indenture Trustees a first and
prior security interest in all of the Grantor's right, title and interest in all
of the Granted Property not constituting real property under the laws of the
State of North Carolina to secure the full and timely payment and the full and
timely performance and discharge of the Indebtedness Hereby Secured. Upon any
default of the Grantor hereunder, the Indenture Trustees shall be entitled to
exercise with the respect to all such personal property all of the rights and
remedies set forth herein and in the Note Agreements and the Indenture or
otherwise afforded to a secured party under the terms of the U.C.C., any or all
of which remedies or rights may be pursued and exercised concurrently,
consecutively, alternatively or otherwise. The Grantor will execute, file and
refile, one or more supplemental security agreements and financing statements as
Beneficiaries may from time to time require covering any property now or
hereafter constituting a portion of the Granted Property securing the
Indebtedness Hereby Secured and such financing statements and other and further
assurances as Indenture Trustees may request to perfect or evidence the security
interest herein created and to particularize and identify the collateral. The
Grantor hereby authorizes the Indenture Trustees to file such financing
statement or statements pursuant to the U.C.C., without the signature of
Grantor, as Indenture Trustees may deem necessary, to perfect such interests or
rights in their favor. This authority shall be considered a power coupled with
an interest and shall be irrevocable until all the Indebtedness Hereby Secured
has been paid in full.
SECTION 1. DEFINITIONS.
Capitalized terms used in this Deed of Trust and not defined herein
shall have the meaning provided therefor in the Indenture. In addition to the
terms elsewhere defined in this Deed of Trust, the following terms shall have
the following meanings for all purposes of this Deed of Trust:
"Appraised Value" with respect to the Granted Property shall mean the
fair market value on the date of an appraisal of the Granted Property as shown
by (i) the appraisal thereof furnished to the Purchasers in accordance with the
provisions of Section 7(a)(vi) of the Note Agreements or Section 10.2(b)(v) or
Section 10.2(c)(vi) of the Indenture or (ii) the appraisal thereof furnished to
the Indenture Trustees in accordance with the provisions of section 4.2 of the
Indenture.
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11
"Cost" shall mean an amount equal to the sum of the following items
capitalized on the books of the Grantor in accordance with generally accepted
accounting principles: (i) the actual construction cost thereof, including cost
of land and buildings, landscaping, on and off site improvements, architectural,
engineering and other professional fees, interest and taxes during construction
and all carrying charges, but excluding the cost of Excluded Property and (ii)
fees and expenses in connection with the placement, issuance and sale of the
Notes including fees and expenses referred to in Section 8 of the Note
Agreements allocated by the Grantor to the Granted Property, the physical survey
and title charges referred to in Section 8(g) of the Note Agreements, the
charges for the environmental audit and appraisal referred to in Sections 8(h)
and (i) of the Note Agreements in respect of such Granted Property incurred by
the Grantor and debt service expenses, and all closing costs with respect to the
Granted Property.
"Default" shall mean any event or condition, the occurrence of which
would, with the lapse of time or the giving of notice, or both, constitute an
Event of Default.
"Event of Default" shall mean any events specified in section 5
hereof.
"Loan Value" of the Granted Property shall be an amount determined by
multiplying the aggregate unpaid principal amount of the Notes outstanding
immediately prior to the date on which the Loan Value is to be determined by a
fraction the numerator of which is the Appraised Value of the Granted Property
and the denominator is the Appraised Value of all property of the Obligors which
is then subject to the lien of this Deed of Trust and each and every other
mortgage and deed of trust delivered to and for the benefit of the Indenture
Trustees under and pursuant to the Note Agreements and the Indenture.
"Note" shall mean any of, and "Notes" shall mean all of, the Notes
then outstanding under the Note Agreements and the Indenture. The term
"outstanding" when used with reference to Notes shall mean, as of any particular
time, all Notes delivered by the Obligors under the Note Agree ments and the
Indenture and secured hereby and by each and every other mortgage delivered
pursuant to the Note Agreements and the Indenture, except:
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12
(a) Notes theretofore cancelled by the Indenture Trustees or
delivered to the Indenture Trustees for cancellation;
(b) Notes for the payment or prepayment of which moneys in the
necessary amount shall have been paid to the Indenture Trustees,
provided, that if such Notes are to be prepaid prior to the maturity
thereof, notice of such prepayment shall have been given as provided
in Section 5.6 of the Indenture or provision satisfactory to the
Trustee shall have been made for giving such notice; and
(c) Notes in lieu of or in substitution for which other Notes
shall have been authenticated and delivered pursuant to the terms of
Section 2.6 of the Indenture.
"Officers' Certificate" shall mean a certificate signed by the
President and by any one of the following officers of the Grantor: Vice
President or the Secretary.
"Opinion of Counsel" shall mean an opinion in writing signed by legal
counsel who shall be satisfactory to the Indenture Trustees, and who may be
counsel to the Grantor.
"Permitted Encumbrances" shall mean:
(a) liens for property taxes and assessments or governmental
charges or levies and liens securing claims or demands of mechanics
and materialmen, provided that payment thereof is not at the time
required by section 2.7;
(b) liens of or resulting from any judgment or award, the time
for the appeal or petition for rehearing of which shall not have
expired, or in respect of which the Grantor shall at any time in good
faith be prosecuting an appeal or proceeding for a review and in
respect of which a stay of execution pending such appeal or proceeding
for review shall have been secured;
(c) liens, charges, encumbrances and priority claims incidental
to the conduct of business or the ownership of properties and assets
(including warehousemen's and attorneys' liens and statutory
landlords' liens) and deposits, pledges or liens to secure the
<PAGE>
13
performance of bids, tenders or trade contracts, or to secure
statutory obligations, surety or appeal bonds or other liens of like
general nature incurred in the ordinary course of business and not in
connection with the borrowing of money, provided in each case, the
obligation secured is not overdue or, if overdue, is being contested
in good faith by appropriate actions or proceedings;
(d) minor survey exceptions or minor encumbrances, easements or
reservations, or rights of others for rights-of-way, utilities and
other similar purposes, or zoning or other restrictions as to the use
of real properties, which are necessary for the conduct of the
activities of the Grantor or which customarily exist on properties of
corporations engaged in similar activities and similarly situated and
which do not in any event materially impair their use in the operation
of the business of the Grantor;
(e) mortgages, deeds of trust, liens and security interests
securing the Notes; and
(f) leases permitted by the provisions of section 3.1(d).
"Person" shall mean an individual, partnership, corporation, trust or
unincorporated organization.
SECTION 2. GENERAL COVENANTS AND WARRANTIES.
The Grantor covenants, warrants and agrees as follows:
2.1. Note Agreements and Indenture Covenants. Each and all of the
terms, provisions, restrictions, covenants and agreements set forth in the
Notes, the Note Agreements, the Pledges and the Indenture, and in each and every
supplement thereto or amendment thereof which may at any time or from time to
time be executed and delivered by the parties thereto or their successors and
assigns, are incorporated herein by reference to the same extent as though each
and all of said terms, provisions, restrictions, covenants and agreements were
fully set out herein and as though any amendment or supplement to the Notes, the
Note Agreements, the Pledges or the Indenture, as the case may be, were fully
set out in an amendment or supplement to this Deed of Trust; and the Grantor
does hereby covenant and agree well and truly to abide by, perform and be
<PAGE>
14
governed and restricted by each and all of the matters provided for by the
Notes, the Note Agreements, the Pledges and the Indenture and so incorporated
herein to the same extent and with the same force and effect as if each and all
of said terms, provisions, restrictions, covenants and agreements so
incorporated herein by reference were set out and repeated herein at length.
Without limiting the foregoing, the Grantor covenants and agrees to pay all
taxes, assessments and governmental charges or levies imposed upon this Deed of
Trust or the Notes or any other indebtedness secured hereby.
2.2. Ownership of Granted Property. The Grantor covenants and warrants
that it has good and marketable title to the Granted Property hereinbefore
conveyed to the Security Trustee free and clear of all liens, charges and
encumbrances whatever except Permitted Encumbrances, and the Grantor has full
right, power and authority to grant, convey and transfer the same to the
Security Trustee for the uses and purposes in this Deed of Trust set forth; and
the Grantor will warrant and defend the title to the Granted Property against
all claims and demands whatsoever.
2.3. Further Assurances. The Grantor will, at its own expense, do,
execute, acknowledge and deliver all and every further act, deed, conveyance,
transfer and assurance necessary or proper for the better assuring, conveying,
assigning and confirming unto the Security Trustee all of the Granted Property,
or property intended so to be, whether now owned or hereafter acquired.
2.4. Payment of Principal and Interest. The Grantor will duly and
punctually pay the principal of, and premium, if any, and interest on all Notes
and all other amounts payable under Indebtedness Hereby Secured according to the
terms thereof.
2.5. Maintenance of Granted Property, Other Liens, Compliance with
Laws, etc. (a) Without limiting the provisions of Section 3.8 of the Indenture
and subject to section 3 hereof, the Grantor shall (i) promptly repair, restore
or rebuild any buildings, improvements or Equipment now or hereafter on the
Granted Property which may become damaged or be destroyed, (ii) keep the Granted
Property in good condition and repair, ordinary wear and tear excepted, without
waste, and free from all claims, liens, charges and encumbrances other than
Permitted Encumbrances, (iii) pay when due any indebtedness which may be secured
by a lien or charge on the Granted Property and upon request exhibit
satisfactory evidence of the discharge of such lien to the Indenture Trustees,
<PAGE>
15
(iv) comply with all requirements of law or municipal ordinances with respect to
the Granted Property and the use thereof, failure to comply with which would
result in any material interference with the use or operation of the Granted
Property by the Grantor, (v) not, without the prior written consent of the
Indenture Trustees, (A) initiate or support any zoning reclassification of the
Granted Property, seek any variance under existing zoning ordinances applicable
to the Granted Property or use or permit the use of the Granted Property in a
manner which would result in such use becoming a non-conforming use under
applicable zoning ordinances, (B) modify or amend any of the Permitted
Encumbrances, (C) impose any restrictive covenants or encumbrances upon the
Granted Property, execute or file any subdivision plat affecting the Granted
Property or consent to the annexation of the Granted Property to any
municipality or (D) permit or suffer the Granted Property to be used by the
public or any person in such manner as might make possible a claim of adverse
usage or possession or of any implied dedication or easement, and (vi) make no
material alterations in said Granted Property except as required by law or
municipal ordinance; provided, however, the Grantor may make any alterations of
any kind to the Granted Property if (A) the market value of the Granted Property
would not be impaired; (B) such alterations shall be performed in a good and a
workmanlike manner; and (C) such alterations shall be expeditiously completed in
compliance with all laws, ordinances, orders, rules, regulations and
requirements applicable thereto, including to the extent necessary to maintain
in full force and effect the policies of insurance required by section 2.6
hereof. The Grantor shall promptly pay all costs and expenses of each such
addition, alteration, substitution and replacement, discharge all liens filed
against the Granted Property arising out of the same and procure and pay for all
permits and licenses required in connection therewith. The Grantor shall notify
the Indenture Trustees and each holder of the Notes of the filing of any lien
against the Granted Property in an amount greater than $25,000.
(b) The Grantor may, at its expense, (i) construct upon the Granted
Property additional buildings, structures and other improvements and (ii)
install, assemble and place upon the Granted Property any items of machinery and
equipment used or useful in the Grantor's business, in each case upon compliance
with the provisions of paragraph (a) of this section 2.5. All such buildings,
structures and other improvements shall be and remain part of the Land Parcels
and shall be subject to this Deed of Trust unless such property shall constitute
Excluded Property. Excluded Property shall not be deemed part of the Granted
Property for purposes of condemnation or casualty, and the Grantor may remove
<PAGE>
16
the same from the Granted Property at any time prior to the expiration or
earlier termination of this Deed of Trust, provided that the Grantor, at its
expense, shall repair any damage to the Granted Property resulting from such
removal.
(c) The Granted Property is not located in an area identified by the
Secretary of Housing and Urban Development or a successor thereto as an area
having special flood hazards pursuant to the terms of the National Flood
Insurance Act of 1968, or the Flood Disaster Protection Act of 1973, as amended,
or any successor law; or if the Granted Property is located in such an area,
Grantor will obtain and maintain insurance against damage or loss by flood on
such basis and in such amounts as shall be required by Indenture Trustees.
(d) The Grantor shall use and operate the Granted Property as a
hospital.
2.6. Insurance. (a) Insurance Against Loss or Damage. The Grantor will
maintain or cause to be maintained with respect to the Granted Property
insurance against loss by fire, windstorm and explosion and with extended
coverage and against such other risks of physical loss as are customarily
insured against, and in such amounts as are customarily carried by companies
owning property of a similar character and similarly located and engaged in a
business similar to that engaged in by the Grantor; provided, however, that the
amount of such insurance with respect to the Granted Property shall not at any
time be less than the replacement value thereof.
(b) Insurance Against Public Liability and Property Damage. The
Grantor will maintain or cause to be maintained in effect, with insurers
satisfactory to the Indenture Trustees, insurance policies with respect to the
Granted Property, insuring against liability for loss or damage to the Person or
property of others from such risks and in such amounts as are customarily
carried by companies owning property of a similar character and engaged in a
business similar to that engaged in by the Grantor; provided, however, that in
no event shall the insurance maintained in accordance with this paragraph be
less than an aggregate of $25,000,000 for claims arising out of a single
occurrence and not less than $25,000,000 in the aggregate for all claims made in
any policy year. All such insurance shall protect the Indenture Trustees and the
Grantor in respect of risks arising out of the condition, maintenance, use,
ownership or operation of the Granted Property. The Grantor will indemnify the
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17
Indenture Trustees and the holders of the Notes from any and all liability
imposed against said Indenture Trustees and the holders of the Notes arising out
of the condition, maintenance, use, ownership or operation of the Granted
Property.
(c) The Grantor will maintain or cause to be maintained:
(i) all such worker's compensation or similar insurance as may be
required by law;
(ii) use and occupancy (or business interruption) insurance, covering
interruption of the Grantor's operations, in whole or in part, by reason of
the total or partial suspension of, or interruption in, the operation of
the Granted Property caused by the damage to or destruction of any part of
the Granted Property, with such exceptions as are customarily imposed by
insurers, in an amount sufficient to comply with the requirements of a
standard 50% gross earnings business interruption form; and
(iii) maintain liability insurance covering hospital operations,
including malpractice, against claims arising from professional services
performed by the Grantor with limits of not less than $20,000,000 with
respect to injuries or deaths arising out of a single occurrence and not
less than $20,000,000 in the aggregate for all claims made against the
Grantor in any policy year.
For the purposes of this Section, "policy year" means a period of twelve months
while the insurance coverage in question is in force measured from the effective
date of such coverage or any anniversary of such effective date.
(d) Form of Policies. Any insurance policies carried in accordance
with this section 2.6 shall be written by companies of recognized national
standing authorized to do business in the jurisdiction in which the Granted
Property is located (copies of which will be delivered to the Indenture Trustees
on the Closing Date) and shall provide that: (i) the Indenture Trustees and the
holders of the Notes shall be named as additional insureds, as their interest
may appear, (ii) the Indenture Trustees' interest shall be insured regardless of
any breach or violation by the Grantor of any warranties, declarations or
conditions contained in such policies, (iii) such insurance, as to the interest
of the Indenture Trustees therein, shall not be invalidated by the use or
operation of the Granted Property for purposes which are not permitted by such
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18
policies, (iv) the insurers shall waive any right of subrogation of the insurers
to any set-off or counterclaim or any other deduction, whether by attachment or
otherwise, in respect of any liability of the Grantor, (v) if any premium or
installment is not paid when due, or if such insurance would lapse or be
cancelled, terminated or materially changed for any reason whatsoever, the
insurers will promptly notify the Indenture Trustees and any such lapse,
cancellation, termination or change shall not be effective as to the Indenture
Trustees for 30 days after receipt of such notice, and (vi) appropriate
certification shall be made to the Indenture Trustees by each insurer with
respect thereto.
(e) Loss Payee. Provided no Default or Event of Default has occurred
and is continuing, the loss, if any, under any policy pertaining to loss by
reason of damage to or destruction or condemnation of any portion of the Granted
Property shall be adjusted with the insurance companies by the Grantor, subject
to the approval of the Indenture Trustees if the loss exceeds $100,000. The loss
so adjusted shall be paid to the Indenture Trustees pursuant to said loss
payable clause unless said loss is $100,000 or less in which case said loss
shall be paid directly to the Grantor, provided no Default or Event of Default
has occurred and is continuing, in which event any such loss shall be paid to
the Indenture Trustees.
2.7. Payment of Taxes and Other Charges. The Grantor will pay and
discharge, before the same shall become delinquent, together with interest and
penalties thereon, if any, (a) all taxes, assessments (including assessments for
benefits from public works or improvements whenever begun or completed), levies,
fees, water and sewer rents and charges, and all other governmental charges,
general and special, ordinary and extraordinary, and whether or not within the
contemplation of the parties hereto, which are at any time levied upon or
assessed against it or the Granted Property or any part thereof or upon this
Mortgage or the Notes secured thereby, or upon the revenues, rents, issues,
income and profits in respect of the Granted Property, or arising in respect of
the occupancy, use or possession thereof, which failure to pay would result in
the creation of a lien upon the Granted Property or any part thereof, or upon
the revenues, rents, issues, income and profits of the Granted Property or in
the diminution thereof or would result in any material interference with the use
or operation of the Granted Property by the Grantor, (b) all corporate
franchise, excise and other taxes, fees and charges assessed, levied or imposed
in respect of its corporate existence or its right to do business in any state,
(c) all income, excess profits, excise, sales, franchise, gross receipts and
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19
other taxes, duties or imposts, whether of a like or different nature, assessed,
levied or imposed by any governmental authority on it or the Granted Property,
or any portion thereof, or upon the revenues, rents, issues, income and profits
of the Granted Property whether or not the failure to pay any such tax, duty or
impost might result in the creation of a lien upon any asset of the Grantor or
the Granted Property or any part thereof or upon the revenues, rents, issues,
income and profits of the Granted Property or in the diminution thereof, and
whether or not any such tax, duty or impost is payable directly by the Grantor
or is subject to withholding at the source and (d) all lawful claims and demands
of mechanics, laborers, materialmen and others which, if unpaid, might result in
the creation of a lien on the Granted Property or upon the revenues, rents,
issues, income and profits of the Granted Property and, in general, will do or
cause to be done everything necessary so that the lien hereof shall be fully
preserved, at the cost of the Grantor, without expense to the Indenture Trustees
or the Security Trustee.
Nothing in this section 2.7 shall require the payment of any sum which
is required to be paid by the Grantor pursuant to this section 2.7 so long as
the Grantor shall in good faith contest its obligation so to do by appropriate
proceedings which will prevent the forfeiture or sale of any property of the
Grantor or any material interference with the use or operation thereof by the
Grantor, and shall set up a reserve, reasonably adequate, in the opinion of the
President or any Vice President of the Grantor against any such payment.
2.8. Advances. If the Grantor shall fail to comply with the covenants
contained herein or in the Note Agreements or the Indenture with respect to the
procuring of insurance, the payment of taxes, assessments and other charges, or
the keeping of the Granted Property in repair and free of other liens, the
Indenture Trustees may make advances to perform the same; and the Grantor agrees
to repay all sums so advanced upon demand with interest at a rate equal to the
greater of (i) 13.6% per annum and (ii) the sum of (A) the rate of interest
publicly announced by Morgan Guaranty Trust Company of New York from time to
time in New York City as its prime rate plus (B) 1% after demand; and all sums
so advanced, with interest, shall be secured hereby in priority to the
indebtedness evidenced by the Notes or any of them; but no such advance shall be
deemed to relieve the Grantor from any default hereunder.
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20
2.9. Recordation. The Grantor will, at its own expense, cause this
Deed of Trust, all supplements hereto, and any financing statements and
continuation statements required by law, including the Uniform Commercial Code,
in respect thereof at all times to be kept recorded and filed at its own expense
in such manner and in such places as may be required by law in order to fully
preserve and protect the rights of the Security Trustee and Indenture Trustees
hereunder, and will furnish to the Indenture Trustees promptly, or in any event
within thirty (30) days after the execution and delivery of this Deed of Trust
and of each supplement an Opinion of Counsel stating that in the opinion of such
counsel this Deed of Trust or such supplement or such financing statement or
continuation statement, as the case may be, has been properly recorded or filed
for record so as to make effective of record the lien intended to be created
hereby.
2.10. After-Acquired Property. Any and all property hereafter acquired
which is of the kind or nature described in the Granting Clauses hereof and is
or intended to become a part thereof, shall ipso facto, and without any further
conveyance, assignment or act on the part of the Grantor or the Security Trustee
and Indenture Trustees become and be, subject to the lien of this Deed of Trust
as fully and completely as though specifically described herein; but
nevertheless the Grantor shall from time to time, if requested by the Indenture
Trustees, execute and deliver any and all such further assurances, conveyances
and assignments thereof as the Indenture Trustees may reasonably require for the
purpose of expressly and specifically subjecting to the lien of this Deed of
Trust any and all such property.
2.11. Priority of this Deed of Trust; Future Advances; Extensions,
Modifications, and Renewals. Any portion of the Indebtedness Hereby Secured
which is incurred after the execution of this Deed of Trust pursuant to the
Indenture or any supplemental indenture referencing this Deed of Trust, or which
is evidenced by any instrument stating that the Indebtedness Hereby Secured is
secured by this Deed of Trust, shall be defined as a Future Advance. This
paragraph shall serve as notice to any subsequent encumbrances of the Granted
Property that the Security Trustee and Indenture Trustees claim the priority of
the lien of this Deed of Trust for all such Future Advances, as well as for all
other Indebtedness Hereby Secured. This paragraph shall also be notice that the
Indenture Trustees reserve the right to modify, extend, consolidate, and renew
the Indebtedness Hereby Secured, or any portions thereof, and the rates of
interest charged thereon, without affecting the priority of the lien created by
this Deed of Trust.
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21
SECTION 3. POSSESSION, USE AND RELEASE OF PROPERTY.
3.1. Possession by Grantor; Dispositions Without Release. So long as
no Default or Event of Default has occurred and is continuing, the Grantor shall
be permitted, subject to the provisions of this Section, to possess, use,
manage, operate and enjoy the Granted Property and to collect, receive, use,
invest and dispose of the rents, issues, profits, and other income from the
Granted Property, with power, in the ordinary course of business, freely and
without hindrance on the part of the Indenture Trustees, to use, consume and
dispose of any thereof except such as are subject to the lien hereof or intended
so to be, and to deal with, exercise any and all rights under, receive and
enforce performance under, and adjust and settle all matters relating to current
performance of, chases in action, leases and contracts.
The Grantor shall have the right, from time to time if no Default
exists hereunder, without any release from or consent by the Indenture Trustees,
(a) to sell or otherwise dispose of, free from the lien of this Deed
of Trust, any Equipment subject to the lien hereof which, in the judgment
of the Grantor, may have become obsolete or unfit for use or no longer
useful, necessary or profitable in the conduct of the business of the
Grantor not exceeding in value at the date of disposition thereof $50,000
in any single transaction or a total of $100,000 in any calendar year, upon
substituting for the same other Equipment of the same character and of at
least equal value, utility and useful life to the Grantor as, and costing
not less than the amount realized from, the property disposed of, which
shall forthwith become, without further action, subject to the lien of this
Deed of Trust;
(b) to grant rights-of-way and easements over or in respect of any
Granted Property, provided that such grant will not, in the opinion of the
Grantor expressed in an Officers' Certificate furnished to the Indenture
Trustees, impair the usefulness of such property in the conduct of the
Grantor's business and will not be prejudicial to the interests of the
holders of the Notes and provided, further, that any cash consideration in
excess of $50,000 received by the Grantor upon or in connection with the
granting thereof, forthwith upon its receipt by the Grantor, shall be
deposited with the Indenture Trustees;
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(c) to alter, repair, replace, change the location or position of and
add to the Granted Property, provided that no change shall be made in the
location of any such property subject to the lien of this Deed of Trust
which removes such property into a jurisdiction in which this Deed of Trust
and any required financing or continuation statement covering security
interests in such property have not been recorded, registered or filed in
the manner required by law to preserve the lien of this Indenture on such
property or otherwise impairs the lien hereof; and
(d) to lease to others from time to time offices and related areas
included in the Granted Property, other than any thereof essential to the
operations carried on at the Granted Property; provided that such lease is
(i) by its terms expressly made subject to the lien of this Deed of Trust
and (ii) assigned to the Indenture Trustees and/or the Indenture Trustees
as shall be required by the Indenture Trustees by an instrument in
recordable form and otherwise satisfactory in form and substance to the
Indenture Trustees; and further provided that the Grantor shall not lease
all or substantially all of the Granted Property without the prior written
consent of the Required Holders.
The Grantor will deliver to the Indenture Trustees, on or before July
31 in each year after the year 1989, (i) an Officers' Certificate setting forth,
with respect to transactions during the preceding calendar year pursuant to
section 3.1(a), the aggregate fair value at the date or dates of disposition of,
the aggregate amount realized from, and a general description of, any property
disposed of pursuant to section 3.1(a) (and stating that such property had
become obsolete or unfit for use or no longer useful, necessary or profitable in
the conduct of the business of the Grantor) and the aggregate fair value to the
Grantor of, the cost of, and a general description of, any property acquired in
substitution for such property sold or disposed of, (ii) such supplemental
mortgages, deeds of trust, financing statements or other instruments as may be
necessary for the purpose of effectually subjecting such acquired property to
the lien hereof and any lease assignment of a lease entered into pursuant to
section 3.1(d) and (iii) an Opinion of Counsel that such supplemental mortgages,
deeds of trust, financing statements, lease assignments or other instruments
have been duly executed and are sufficient for such purpose or that no such
supplemental mortgages, deeds of trust, financing statements, lease assignments
or instruments are necessary.
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3.2. Eminent Domain. If all or any of the Granted Property shall be
taken by eminent domain or shall be sold in lieu and in reasonable anticipation
of the taking thereof by eminent domain, the Indenture Trustees may at the
request and direction of the Indenture Trustees release the property so taken
and shall be fully protected in so doing upon being furnished with:
(a) an Officers' Certificate requesting such release, describing the
property so to be released and stating that such property has been taken by
eminent domain or that such sale has been made in lieu of and in reasonable
anticipation of a taking by eminent domain, accompanied by an appropriate
instrument of release;
(b) an Opinion of Counsel to the effect that such property has been
(i) lawfully taken by exercise of the right of eminent domain or (ii) sold
in lieu and in reasonable anticipation of the taking of such property by
eminent domain and that such property could lawfully have been taken by the
grantee by eminent domain, that the award for such property so taken has
become final or an appeal therefrom is not advisable in the interests of
the Indenture Trustees, the Security Trustee or the holders of the Notes
and that the execu tion of such instrument is appropriate to evidence such
release; and
(c) except as otherwise provided in section 4.1, cash equal to such
award to be held and applied by the Indenture Trustees under the Indenture.
3.3. Purchaser Protected. No purchaser in good faith of property
purporting to be released herefrom shall be bound to ascertain the authority of
the Security Trustee, Indenture Trustees or the holders of the Notes to execute
a release or to inquire as to the existence of any conditions herein prescribed
for the exercise of such authority. No purchaser or lessee of any property or
rights permitted by this Article to be sold, leased or otherwise disposed of by
the Grantor shall be under any obligation to ascertain or inquire into the
authority of the Grantor to make any such sale, lease or other disposition. Any
release executed by the Security Trustee, the Indenture Trustees or the holders
of the Notes under this Section shall be sufficient for the purpose of this Deed
of Trust and shall constitute a good and valid release of the property therein
described from the lien hereof.
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3.4. Release of Granted Property - Indenture Trustees' Consent. In
addition to the sales and releases pursuant to section section 3.2 and 3.3
hereof, and, to the extent and on the terms and upon compliance with the
conditions provided for in any written consent given thereto at any time or from
time to time by the holders of the Notes, the Grantor may sell or otherwise
dispose of any Granted Property then subject to the lien of this Deed of Trust
or any mortgage supplement hereto, and the Security Trustee at the request of
the Indenture Trustees shall, subject to the terms of the Indenture, release the
same from the lien hereof.
SECTION 4. APPLICATION OF INSURANCE AND CERTAIN OTHER MONEYS RECEIVED BY THE
INDENTURE TRUSTEES.
4.1. Insurance Proceeds and Condemnation Awards. (a) All proceeds of
fire and extended coverage insurance and of condemnation awards covering the
Granted Property equal to or in excess of $100,000 received by the Indenture
Trustees under the provisions of this Deed of Trust and/or the Indenture or any
instruments supplemental hereto or thereto, or under any policy or policies of
insurance covering the Granted Property or any part thereof, shall be held by
the Indenture Trustees as part of the Granted Property and shall be applied by
the Indenture Trustees as follows:
(i) If the total amount of any one loss or condemnation or taking, as
the case may be, shall equal or exceed $100,000 and the Cost of rebuilding
or restoring the Granted Property (as evidenced by an Officers' Certificate
of the Grantor detailing the same) shall be less than the proceeds of
insurance or the award or consideration received on account of condemnation
or other taking of the Granted Property, the Grantor shall prepay the Notes
pursuant to Section 5.3 of the Indenture in a principal amount equal to
such excess, together with interest accrued on the Notes to be prepaid to
the date of payment and a premium equal to the Yield-Maintenance Premium,
upon the terms and in the manner provided in Section 5.3 of the Indenture
and the balance, if any, of any such proceeds shall be released to or upon
the order of the Grantor in accordance with clause (ii) below. Any
application of moneys pursuant to this section 4.1(a)(i) shall be made by
the Grantor within 60 days after the completion of the rebuilding or
restoration of the Granted Property; and
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(ii) If the total amount in the case of any one loss or condemnation
or taking, as the case may be, shall equal or exceed $100,000, such
proceeds shall be paid to the Grantor from time to time upon a written
application signed by the President and any Vice President of the Grantor
and accompanied by an approving certificate of an architect or engineer
selected by the Grantor and approved by the Indenture Trustees, for the
purpose of paying, or reimbursing the Grantor for the payment of, the
reasonable cost, as shown by such certificate, of repairing or replacing
part or all of the property damaged or destroyed, but only if written
application is made therefor within 12 months of the receipt of such
proceeds by the Indenture Trustees, and then only for and to the extent
that the Grantor shows by such architect's or engineer's certificates or
other evidence satisfactory to the Indenture Trustees that the portion of
such proceeds remaining on deposit with the Indenture Trustees, together
with any additional funds irrevocably allocated or otherwise provided for
in a manner satisfactory to the Indenture Trustees for such purpose, shall
be sufficient to complete such repairs or replacements and restore the
Granted Property as nearly as possible to the market value and condition
which existed immediately prior to the damage, destruction, condemnation or
taking, as the case may be, free from liens or encumbrances except this
Deed of Trust and Permitted Encumbrances. Every such application for the
payment of such insurance or condemnation moneys shall state that no
Default or Event of Default has occurred and is continuing and shall be
accompanied by a date down endorsement to the lender's title insurance
policy being delivered pursuant to Section 7(a)(iv) of the Note Agreement
insuring that, as of the date of such payment, the property will be subject
to the lien of this Deed of Trust as a first lien thereon subject only to
Permitted Encumbrances. The Grantor will remain solely responsible for the
rebuilding, restoration or substitution of the Granted Property, whether or
not the proceeds of insurance maintained in accordance with the provisions
hereof are sufficient therefor.
(b) In cases involving insurance proceeds where the amount of any one
loss is less than $100,000 and no Default or Event of Default shall have
occurred and be continuing under this Deed of Trust, the amount payable in
respect of any such loss will be received by the Indenture Trustees and shall be
by the Indenture Trustees paid over immediately to the Grantor for use by the
Grantor in paying for replacement or repair of or substitutes for the damaged or
destroyed property.
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26
(c) Subject to section 2.6(e) hereof with respect to adjustments of
losses, any appraisal or adjustment of such loss or any settlement or payment of
indemnity therefor which shall be agreed upon between the Grantor and the
relevant insurance company shall be accepted by the Indenture Trustees.
(d) In the event the insurance moneys or condemnation award, as the
case may be, shall not have been applied to one or more of the purposes
specified in section 4.1(a) hereof within the 12-month period provided for
thereby, then the Indenture Trustees shall apply such insurance moneys or
condemnation award, as the case may be, to the prepayment, with premium, of the
Notes together with interest accrued thereon in an amount sufficient to exhaust
such cash as nearly as may be upon giving the Grantor 10 days' advance notice of
its intent so to do, such prepayment to be made in units of $1,000 but otherwise
to be made ratably on all outstanding Notes in accordance with the principal
amounts unpaid thereon, together with interest accrued thereon and a premium
equal to the Yield-Maintenance Premium; any balance remaining after such
prepayment to be released to the Grantor. Partial prepayments made pursuant to
this section 4.1(d) shall be paid and applied upon the terms and in the manner
provided in Section 5 of the Indenture.
4.2. Other Proceeds. Any other moneys received by the Indenture
Trustees in connection with the release of property shall be held by the
Indenture Trustees as part of the Granted Property and shall be applied by the
Indenture Trustees to the prepayment, with premium, of the Notes together with
interest accrued thereon in an amount sufficient to exhaust such cash as nearly
as may be upon giving the Grantor ten (10) days' advance notice of its intent so
to do, such prepayment to be made in units of $1,000 but otherwise to be made
ratably on all outstanding Notes in accordance with the principal amounts unpaid
thereon, together with interest accrued thereon and a premium equal to the Yield
Maintenance Premium; any balance remaining after such payment to be released to
the Grantor.
SECTION 5. DEFAULTS AND REMEDIES THEREFOR.
5.1. Events of Default. The Grantor acknowledges and agrees, without
limitation, that each and all of the terms and provisions of Section 6.1 of the
Indenture have been and are incorporated into this Deed of Trust by reference to
the same extent as though fully set out herein and that the term Event of
Default wherever used in this Deed of Trust shall mean an Event of Default as
defined in Section 6.1 of the Indenture.
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27
5.2. Remedies. When any Event of Default has occurred and is
continuing, the Indenture Trustees and/or the Security Trustee may exercise any
one or more or all, and in any order, of the remedies hereinafter set forth or
as provided for in the Indenture, it being expressly understood that no remedy
herein or in the Indenture conferred is intended to be exclusive of any other
remedy or remedies; but each and every remedy shall be cumulative and shall be
in addition to every other remedy given herein or now or hereafter existing at
law or in equity or by statute:
(a) The Indenture Trustees may, by notice in writing to the Grantor,
declare the entire unpaid balance of the Notes to be immediately due and
payable; and thereupon the entire principal and interest accrued on the
Notes and, to the extent permitted by law, the Yield-Maintenance Premium
(as defined in Section 5.4 of the Indenture) shall be and become
immediately due and payable.
(b) The Indenture Trustees and/or the Security Trustee personally or
by agents or attorneys may enter into and take possession of all or any
part of the Granted Property, and may forthwith use, operate and manage the
Granted Property, collect the earnings and income therefrom, pay all
principal charges including taxes and assessments levied thereon and
operating and maintenance expenses and all disbursements and liabilities of
the Grantor hereunder and apply the net proceeds arising from any such
operation of the Granted Property as provided in section 5.3 hereof in
respect of the proceeds of a sale of the Granted Property.
(c) (i) The Indenture Trustees and/or the Security Trustee may,
pursuant to the power of sale granted hereunder, if at the time such action
may be lawful and always subject to compliance with any mandatory legal
requirements, either with or without taking possession and either before or
after taking possession and without instituting any legal proceedings
whatsoever and having first given notice of such sale by registered or
certified mail to the Grantor once at least 20 days prior to the date of
such sale, and any other notice which may be required by law, sell and
dispose of said Granted Property or any part thereof at public auction or
private sale, as permitted by applicable law, to the highest bidder, which
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28
may be the Grantor, in one lot as an entirety or in separate lots (the
Grantor for itself and for all who may claim by, through or under it hereby
expressly waiving and releasing all rights to have the property covered by
the lien of this Deed of Trust marshalled), and either for cash or on
credit, as permitted by applicable law, and on such terms as the Indenture
Trustees may determine and at any place (whether or not it be the location
of the Granted Property or any part thereof) designated in the notice above
referred to. Any such sale or sales may be adjourned from time to time by
announcement at the time and place appointed for such sale or sales or for
any such adjourned sale or sales, without further published notice.
(ii) With respect to any Granted Property located in the State of
North Carolina, the Indenture Trustees and/or the Security Trustee are
hereby authorized and empowered by giving at least 20 days' notice by three
publications in any newspaper, daily or weekly, of general circulation
published in the County in which the Granted Property is located, to sell
the Granted Property or any part thereof, at the front door of the
Courthouse in said County to the highest bidder for cash, at public outcry,
free from all legal and equitable rights of redemption, exemptions of
homestead and all other exemptions of every kind all of which are hereby
expressly waived. The Indenture Trustees and/or the Security Trustee are
hereby further authorized and empowered to execute and deliver a deed for
the property so sold to the purchaser at any such sale.
(d) The Indenture Trustees may proceed to protect and enforce their
rights by a suit or suits in equity or at law, or for the specific
performance of any covenant or agreement contained herein or in the Notes,
or in aid of the execution of any power herein or therein granted, or for
the foreclosure of this Deed of Trust, or for the enforcement of any other
appropriate legal or equitable remedy. Upon the bringing of any suit to
foreclose this Deed of Trust or to enforce any other remedy available
hereunder, the plaintiff shall be entitled as a matter of right, without
notice and without giving bond to the Grantor or anyone claiming under, by
or through it, and without regard to the solvency or insolvency of the
Grantor or the then value of the Granted Property, to have a receiver
appointed of all the Granted Property and of the earnings, income, rents,
issues, profits and proceeds thereof, with such power as the court making
such appointment shall confer, and the Grantor does hereby irrevocably
consent to such appointment.
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29
(e) In case of any sale of the Granted Property, or of any part
thereof, pursuant to any judgment or decree of any court or otherwise in
connection with the enforcement of any of the terms of this Deed of Trust,
the principal of the Notes, if not previously due, and the interest accrued
thereon, shall at once become and be immediately due and payable; also in
the case of any such sale, the Indenture Trustees may bid and become the
purchaser, and the purchaser or purchasers, for the purpose of making
settlement for or payment of the purchase price, shall be entitled to turn
in and use the Notes and any claims for interest and premium matured and
unpaid thereon, in order that there may be credited as paid on the purchase
price the sum apportionable and applicable to the Notes, including
principal and interest and premium thereof, out of the net proceeds of such
sale after allowing for the proportion of the total purchase price required
to be paid in actual cash. If at any foreclosure proceeding or sale
pursuant to the power of sale, or U.C.C. sale the Granted Property shall be
sold for a sum less than the total amount of indebtedness for which
judgment is therein given, the Indenture Trustees shall be entitled to the
entry of a deficiency decree against the Grantor and against the property
of the Grantor for the amount of such deficiency.
(f) In addition to any other remedies provided for hereby or by law,
the Indenture Trustees shall have the rights of a secured party under the
Uniform Commercial Code of the jurisdiction in which the Granted Property
is located upon the occurrence and continuance of an Event of Default
hereunder. Any requirement of said Uniform Commercial Code for reasonable
notification shall be met by mailing written notice to the Grantor, at its
address set forth in section 6.3 hereof, at least 10 days prior to the sale
or other event for which such notice is required.
It is understood and agreed that the Notes are also secured by other
mortgages and deeds of trust and that in case of default in any of the terms,
conditions or provisions of this Deed of Trust or the Indenture, the Indenture
Trustees may resort to part or all of the security for the Notes, the Note
Agreements and the Indenture and foreclose the mortgages and deeds of trust in
any order. The pendency of any proceeding with respect to any one of the
above-mentioned mortgages and deeds of trust shall not be grounds for the
abatement of, or for hindering, staying, delaying or preventing any proceeding
with respect to foreclosure of this Deed of Trust.
<PAGE>
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5.3. Application of Proceeds. The purchase money proceeds and/or
avails of any sale of the Granted Property, or any part thereof and the proceeds
and the avails of any remedy hereunder and all insurance monies or proceeds or
awards of condemnation paid to the Indenture Trustees pursuant to the provisions
of section section 2.6 and 3.2 hereof shall be paid to the Indenture Trustees
under the Indenture and such Indenture Trustees shall apply such proceeds and
avails, and all insurance monies and proceeds or awards of condemnation held by
the Indenture Trustees during the continuation of any Event of Default, in the
manner provided in section 6.10 of the Indenture.
5.4. Waiver of Extension, Appraisement and Stay Laws. The Grantor
covenants that, to the extent that such rights may be lawfully waived, it will
not now, or at any time hereafter, insist upon or plead, or in any manner
whatever claim or take any benefit or advantage of, legal, equitable and
statutory rights of redemption, exemption or homestead, any stay or extension
law now or at any time hereafter in force or any other similar exemptions and
rights arising under or created by an applicable statute or judicial decision,
or claim, take or insist upon any benefit or advantage of or from any law now or
hereafter in force providing for the valuation or appraisement of the Granted
Property or any part thereof prior to any sale or sales thereof to be made
pursuant to any provision herein contained, or to the decree, judgment or order
of any court of competent jurisdiction or, after confirmation of any such sale
or sales claim or exercise any right under any statute now or hereafter made or
enacted by any state or otherwise to redeem the property so sold or any part
thereof, and hereby expressly waives for itself and on behalf of each and every
person who may claim under it, all benefit and advantage of any such law or laws
which would otherwise be available to any such person in connection with the
enforcement of any of the Security Trustee and the Indenture Trustees' remedies
hereunder; and covenants that it will not in connection with any such
enforcement proceedings invoke or utilize any such law or laws or otherwise
hinder, delay or impede the execution of any power herein granted and delegated
to the Security Trustee and the Indenture Trustees but will suffer and permit
the execution of every such power as though no such law or laws had been made or
enacted.
Any sale, whether under any power of sale hereby given or by virtue of
judicial proceedings, shall operate to divest all right, title, interest, claim
<PAGE>
31
and demand whatsoever, either at law or in equity, of the Grantor in and to the
property sold and shall be a perpetual bar, both at law and in equity, against
the Grantor, its successors and assigns, and against any and all persons
claiming the property sold or any part thereof under, by or through the Grantor,
its successors or assigns.
5.5. Effect of Discontinuance of Proceedings. In case the Indenture
Trustees and/or the Security Trustee shall have proceeded to enforce any right
under this Deed of Trust by foreclosure, sale, entry or otherwise, and such
proceedings shall have been discontinued or abandoned for any reason or shall
have been determined adversely, then and in every such case the Grantor and the
Indenture Trustees and/or the Security Trustee shall be restored to their
position and rights hereunder as they existed immediately prior to the
commencement of such proceedings with respect to the property subject to the
lien of this Deed of Trust.
5.6. Delay or Omission Not a Waiver. No delay or omission of the
Indenture Trustees and/or the Security Trustee to exercise any right or power
arising from any default on the part of the Grantor shall exhaust or impair any
such right or power or prevent its exercise during the continuance of such
default. No waiver by the Indenture Trustees and/or the Security Trustee of any
such default, whether such waiver be full or partial, shall extend to or be
taken to affect any subsequent default, or to impair the rights resulting
therefrom, except as may be otherwise provided herein. No remedy hereunder is
intended to be exclusive of any other remedy but each and every remedy shall be
cumulative and in addition to any and every other remedy given hereunder or
otherwise existing. Nor shall the giving, taking or enforcement of any other or
additional security, collateral or guaranty for the payment of the indebtedness
secured under this Deed of Trust operate to prejudice, waive or affect the
security of this Deed of Trust or any rights, powers or remedies hereunder; nor
shall the Indenture Trustees and/or the Security Trustee be required to first
look to, enforce or exhaust such other or additional security, collateral or
guaranties.
SECTION 6. MISCELLANEOUS.
6.1. Successors and Assigns. Whenever any of the parties hereto is
referred to, such reference shall be deemed to include the successors and
assigns of such party; and all the covenants, promises and agreements in this
Deed of Trust contained by or on behalf of the Grantor, or by or on behalf of
the Indenture Trustees and/or the Security Trustee, shall bind and inure to the
benefit of the respective successors and assigns of such parties whether so
expressed or not.
<PAGE>
32
6.2. Severability. The unenforceability or invalidity of any provision
or provisions of this Deed of Trust shall not render any other provision or
provisions herein contained unenforceable or invalid.
6.3. Addresses for Notices. All notices or other communications
required or contemplated by the provisions hereof shall, unless otherwise
specified, be in writing and shall be deemed to have been given or made on the
fifth business day after deposit thereof in the United States mail, by
registered or certified mail, postage prepaid, or when received if delivered by
hand or sent by facsimile communication the receipt of which is confirmed,
addressed as follows:
If to the Grantor:
Cumberland Mental Health, Inc.
3425 Melrose Road
Fayetteville, North Carolina 28304
Attention: Chief Financial Officer
FAX: ______________________________
Telephone: ________________________
If to the Security Trustee:
First American Title Insurance
Company of North Carolina, Inc.
130-D North McDowell Street
Charlotte, North Carolina 28204
With a copy to the
Indenture Trustees:
The Citizens and Southern National Bank,
as trustee under a Trust Indenture
dated as of March 31, 1990
33 North Avenue, N.E., Suite 700
Atlanta, Georgia 30308
Attention: Corporate Trust Department
FAX: (404) 897-3142
Telephone: (404) 897-3147
Any party may designate an additional or different address for
subsequent notices or communications by notice duly given in accordance with
this Section to the other party.
<PAGE>
33
6.4. Headings and Table of Contents. The headings of the sections of
this Deed of Trust and table of contents are inserted for purposes of
convenience only and shall not be construed to affect the meaning or
construction of any of the provisions hereof.
6.5. Release of Deed of Trust. The Indenture Trustees shall release
and discharge this Deed of Trust and the lien hereof by proper instrument or
instruments upon presentation of satisfactory evidence that all indebtedness
secured hereby has been fully paid or discharged.
6.6. Counterparts. This Deed of Trust may be executed, acknowledged
and delivered in any number of counterparts, each of such counterparts
constituting an original but all together only one Deed of Trust.
6.7. GOVERNING LAW. THIS DEED OF TRUST SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH NORTH CAROLINA LAW.
6.8. Substitution of Security Trustees. Grantor and Security Trustee
covenant and agree to and with the Indenture Trustees and the Beneficiaries that
in case the said Security Trustee, or any successor trustees, shall die, become
incapable of acting, renounce their trust, or for any reason the desire to
replace either or both of the Security Trustee or its successors and/or assigns
in trust, then the Indenture Trustees may appoint, in writing, a trustee or
trustees to take the place of the Security Trustee; and upon the probate and
registration of the same, the trustee or trustees thus appointed shall succeed
to all rights, powers, and duties of the Security Trustee.
<PAGE>
34
IN WITNESS WHEREOF, the Grantor has caused this Deed of Trust to be
executed in its behalf by its President and attested by its Assistant Secretary
and First American Title Insurance Company, as Security Trustee, has caused this
Deed of Trust to be executed on its behalf by one of its _______________________
and its corporate seal to be hereunto affixed and attested by one of its
_______________, all as of the day and year above written.
CUMBERLAND MENTAL HEALTH, INC.
By ___________________________
Its President
ATTEST:
______________________________
Assistant Secretary
FIRST AMERICAN TITLE INSURANCE
COMPANY, as Security Trustee
By ___________________________
Its _____________________
ATTEST:
By: ________________________
Its ___________________
<PAGE>
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
On this 25th day of April, 1990, before me __________, a Notary
Public, personally appeared Ralph J. Watts, who acknowledged himself to be the
President of Cumberland Mental Health, Inc., a North Carolina corporation, and
that he, as such President, being authorized so to do, executed the foregoing
instrument for the purposes therein contained, by signing the name of the
corporation by himself as President.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
_________________________
Notary Public
(Notarial Seal)
My commission expires: ______________, 199___.
<PAGE>
2
STATE OF NORTH CAROLINA )
) SS
COUNTY OF )
On this day of April, 1990, before me, ___________________, a Notary
Public, personally appeared ___________________, who acknowledged himself to be
the ___________________ of First American Title Insurance Company, and that he,
as such _____________________, being authorized so to do executed the foregoing
instrument for the purposes therein contained, by signing the name of said
corporation by himself as __________________.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
_______________________
Notary Public
(Notarial Seal)
My commission expires: ______________, 199_.
<PAGE>
ANNEX A
A certain tract or parcel of land containing 5.398 acres lying and being in
Cross Creek Township, Cumberland County, North Carolina. Bounded on the North by
proposed Melrose Road Connector and Cumberland Medical Center, Inc., on the East
by Melrose Road Associates, Inc., on the South by Cumberland County (Cape Fear
Valley Hospital), on the West by Lots 21 and 31 of Section III Welmar Heights,
Furman Drive and Lots 32 and 66 of Part II, Section III Welmar Heights, and more
particularly described as follows:
Beginning at an existing iron pipe in the southern margin of Melrose Road (60
foot RJW), the northeast corner of a 5.398 acre tract as recorded in Plat Book
66, Page 99, Cumberland County Registry; said existing iron pipe also being the
northwest corner of Melrose Road Associates, Inc. as recorded in Deed Book 2258,
Page 323, Cumberland County registry; and runs thence with the western line of
Melrose Road Associates, Inc. South 31 degrees 51 minutes East 630.19 feet to an
existing iron pipe, the southeast corner of the aforesaid 5.398 acre tract and
being in the northern line of Cumberland County (Cape Fear Valley Hospital) as
recorded in Deed Book 2363, Page 839, Cumberland County Registry; thence with
said northern line South 75 degrees 01 minutes West 409.05 feet to an existing
concrete monument, the southwest corner of aforesaid 5.398 acre tract, said
monument also being the southeast corner of Lot No. 66 of Part II Section III
Welmar Heights as recorded In Plat Book 25, Page 11, Cumberland County Registry;
thence with the eastern lines of Lots 66 and 32 of said subdivision and Lots 31
and 21 of Section III Welmar Heights as recorded in Plat Book 23, Page 58,
Cumberland County Registry, North 30 degrees 01 minutes West 573.90 feet to an
existing iron pipe in the eastern line of said Lot No. 21 and being the
northwest corner of aforesaid 5.398 acre tract, said point also being the
southwest corner of Cumberland Medical Center, Inc. as recorded In Deed Book
2626, Page 213, Cumberland County Registry; thence with the southern line of
Cumberland Medical Center, Inc. North 58 degrees 18 minutes East 188.59 feet to
an existing iron pipe where the southern line of said Medical Center intersects
the southern margin of the Proposed Melrose Road Connector; thence with the
southern margin of the Proposed Melrose Road Connector South 88 degrees 58
minutes East 22.65 feet to an existing p. k. nail; thence continuing with said
proposed road on a radius of 235.32 feet an arc distance of 90.29 feet to an
existing iron pipe; thence continuing with said Proposed Melrose Road Connector
North 69 degrees 03 minutes East 83.76 feet to the point of beginning.
<PAGE>
2
Containing 5.398 acres and being the same property of Cumberland Mental Health,
Inc. as recorded in Plat Book 66, Page 99, Cumberland County Registry.
<PAGE>
EXCLUDED PROPERTY
The property covered by the following U.C.C. Financing Statements
constitutes Excluded Property hereunder:
FILING LOCATION: SECRETARY OF STATE, NORTH CAROLINA
DEBTOR: Healthcare Services of America, Inc., Cumberland Hospital
SECURED PARTY: The Citizens and Southern National Bank
FILING NO.: 0015322
- -amended 0110085
- -continued 0515782
DATE FILED: February 20, 1984
- -amended March 18, 1985
- -continued December 2, 1988
COLLATERAL: Leased computer equipment
FILING LOCATION: SECRETARY OF STATE, NORTH CAROLINA
DEBTOR: Ramsay Health Care, Inc.
SECURED PARTY: AT&T Credit Corporation
FILING NO.: 0620481
DATE FILED: November 3, 1989
COLLATERAL: Leased office equipment
ANNEX B
(to Deed of Trust and Security Agreement)
<PAGE>
SCHEDULE I
Purchasers
Aetna Life Insurance Company
Hartford, Connecticut 06156
Monumental Life Insurance Company
c/o Monumental Corporation
Baltimore, Maryland 21202
Connecticut Mutual Life Insurance Company
Hartford, Connecticut 06154
Schedule I
(to Deed of Trust and Security Agreement)
<PAGE>
SCHEDULE II
Assigned Agreements
NONE.
Schedule II
(to Deed of Trust and Security Agreement)
<PAGE>
SCHEDULE III
Pledged Shares
NONE.
Schedule III
(to Deed of Trust and Security Agreement)
1
________________________________________________________________________________
________________________________________________________________________________
MORTGAGE AND SECURITY AGREEMENT
Dated as of March 31, 1990
FROM
HAVENWYCK HOSPITAL, INC.
(the "Mortgagor")
TO
THE CITIZENS AND SOUTHERN NATIONAL BANK,
a national banking association
and
SUSAN L. ADAMS
(the "Mortgagee")
________________________________________________________________________________
________________________________________________________________________________
This Instrument was
prepared by and when
recorded return to:
(Auburn Hills, Michigan) _________________________
Michael G. McGee
Chapman and Cutler
111 West Monroe Street
Chicago, Illinois 60603
<PAGE>
TABLE OF CONTENTS
Section Page
1. DEFINITIONS............................................................. 10
2. GENERAL COVENANTS AND WARRANTIES........................................ 14
2.1 Note Agreements and Indenture Covenants................... 14
2.2 Ownership of Mortgaged Property........................... 14
2.3 Further Assurances........................................ 15
2.4 Payment of Principal and Interest......................... 15
2.5 Maintenance of Mortgaged Property, Other
Liens, Compliance with Laws, etc.......................... 15
2.6 Insurance................................................. 17
2.7 Payment of Taxes and Other Charges........................ 19
2.8 Advances.................................................. 20
2.9 Recordation............................................... 20
2.10 After-Acquired Property................................... 21
2.11 Priority of this Deed of Trust; Future
Advances; Extensions, Modifications, and
Renewals.................................................. 21
3. POSSESSION, USE AND RELEASE OF PROPERTY................................. 21
3.1 Possession by Mortgagor; Dispositions Without
Release................................................... 21
3.2 Eminent Domain............................................ 23
3.3 Purchaser Protected....................................... 24
3.4 Release Of Mortgaged Property - Mortgagee
Consent................................................... 24
4. APPLICATION OF INSURANCE AND CERTAIN OTHER
MONEYS RECEIVED BY THE MORTGAGEE........................ 24
4.1 Insurance Proceeds and Condemnation Awards................ 24
4.2 Other Proceeds............................................ 27
5. DEFAULTS AND REMEDIES THEREFOR.......................................... 27
5.1 Events of Default......................................... 27
5.2 Remedies.................................................. 27
5.3 Application of Proceeds................................... 30
5.4 Waiver of Extension, Appraisement and Stay
Laws...................................................... 30
5.5 Waste..................................................... 31
5.6 Effect of Discontinuance of Proceedings................... 31
5.7 Delay or Omission Not a Waiver............................ 32
6. MISCELLANEOUS........................................................... 32
6.1 Successors and Assigns.................................... 32
6.2 Severability.............................................. 32
6.3 Addresses for Notices..................................... 32
6.4 Headings and Table of Contents............................ 33
6.5 Release of Mortgage....................................... 33
6.6 Counterparts.............................................. 33
6.7 GOVERNING LAW............................................. 33
i
<PAGE>
ATTACHMENTS TO MORTGAGE:
Annex A - Legal Description of Real Property
Annex B - Excluded Property
Schedule I - Purchasers
Schedule II - Assigned Agreements
Schedule III - Pledged Shares
ii
<PAGE>
Table of Contents
Section Page
Parties...................................................................... 1
Granting Clauses............................................................. 2
1. DEFINITIONS.............................................................. 10
2. GENERAL COVENANTS AND WARRANTIES......................................... 14
2.1 Note Agreements and Indenture Covenants.................... 14
2.2 Ownership of Mortgaged Property............................ 14
2.3 Further Assurances......................................... 15
2.4 Payment of Principal and Interest.......................... 15
2.5 Maintenance of Mortgaged Property, Other
Liens, Compliance with Laws, etc........................... 15
2.6 Insurance.................................................. 17
2.7 Payment of Taxes and Other Charges......................... 19
2.8 Advances................................................... 20
2.9 Recordation................................................ 20
2.10 After-Acquired Property.................................... 21
2.11 Priority of this Deed of Trust; Future
Advances; Extensions, Modifications, and
Renewals................................................... 21
3. POSSESSION, USE AND RELEASE OF PROPERTY.................................. 21
3.1 Possession by Mortgagor; Dispositions Without
Release.................................................... 21
3.2 Eminent Domain............................................. 23
3.3 Purchaser Protected........................................ 24
3.4 Release Of Mortgaged Property - Mortgagee
Consent.................................................... 24
4. APPLICATION OF INSURANCE AND CERTAIN OTHER
MONEYS RECEIVED BY THE MORTGAGEE......................... 24
4.1 Insurance Proceeds and Condemnation Awards................. 24
4.2 Other Proceeds............................................. 27
5. DEFAULTS AND REMEDIES THEREFOR........................................... 27
5.1 Events of Default.......................................... 27
5.2 Remedies................................................... 27
5.3 Application of Proceeds.................................... 30
5.4 Waiver of Extension, Appraisement and Stay
Laws....................................................... 30
5.5 Waste...................................................... 31
5.6 Effect of Discontinuance of Proceedings.................... 31
5.7 Delay or Omission Not a Waiver............................. 32
i
<PAGE>
Section Page
6. MISCELLANEOUS............................................................ 32
6.1 Successors and Assigns..................................... 32
6.2 Severability............................................... 32
6.3 Addresses for Notices...................................... 32
6.4 Headings and Table of Contents............................. 33
6.5 Release of Mortgage........................................ 33
6.6 Counterparts............................................... 33
6.7 GOVERNING LAW.............................................. 33
ii
<PAGE>
THE MORTGAGE AND SECURITY AGREEMENT dated as of March 31, 1990 (the
"Mortgage") from HAVENWYCK HOSPITAL, INC., a Michigan corporation (the
"Mortgagor"), having its principal office at 1525 University Drive, Auburn
Hills, Michigan 48057 to The Citizens and Southern National Bank, a national
banking association, whose post office address is 33 North Avenue, N.E.,
Atlanta, Georgia 30302, Attention: Corporate Trust Department and Susan L. Adams
(the "Individual Trustee") whose post office address is 33 North Avenue, N.E.,
Atlanta, Georgia 30302, as Trustees (the Trustee and the Individual Trustee
being hereinafter collectively referred to as the "Mortgagee").
R E C I T A L S:
A. The Mortgagor together with the other Obligors have entered into
that certain Trust Indenture dated as of March 31, 1990 (the "Indenture") with
The Citizens and Southern National Bank, and Susan L. Adams, as Trustees,
pursuant to which the Obligors provide for, among other things, the creation and
securing of the full and prompt payment of all amounts due with respect there to
of the 11.6% Senior Secured Notes of the Obligors due March 31, 2000 in an
aggregate principal amount of $56,500,000 (the "Senior Secured Notes") and the
15.6% Subordinated Secured Notes, of the Obligors due March 31, 2000 in an
aggregate principal amount of $3,000,000 (the "Subordinated Secured Notes")
which Senior Secured Notes and Subordinated Secured Notes (hereinafter
collectively referred to as the "Notes") constitute the joint and several
obligation of the Obligors and are further described in the Indenture. the
holders from time to time of the Notes are hereinafter collectively referred to
as the "Noteholders". Unless herein otherwise defined, all capitalized terms
used herein shall have the same meaning as defined in the Indenture.
B. The Obligors require funds to prepay certain indebtedness for
borrowed money of the obligors (which indebtedness was issued by or guaranteed
by each of the Obligors) and to finance capital expenditures, renovations and
construction at facilities owned by certain of the Obligors and in order to
strengthen the financial and operating condition of each and every Obligor,
directly and indirectly, as a result of the enhanced ability of the Company to
provide financial, accounting, consulting and administrative assistance and
services to each other Obligor. In order to provide funds for such purposes, the
Obligors have entered into separate and several Note Purchase Agreements each
dated as of March 31, 1990 (the "Note Agreements") with each of the
<PAGE>
2
institutional investors (the "Purchasers") named in Schedule I thereto,
providing for the commitment of the Purchasers to purchase the Notes.
C. The Notes are further secured by the Pledge and Security Agreements
dated as of March 31, 1990 (the "Pledges") from the Company, Michigan
Psychiatric Services, Inc., Americare of Galax, Inc. and Bountiful Psychiatric
Hospital, Inc. to the Trustee.
D. The Notes and all principal thereof, premium if any, and interest
thereon and all additional amounts and other sums at any time due and owing
from, and required to be paid by the Obligors under the terms of the Notes, the
Note Agreements, the Indenture, the Pledge, this Mortgage or any other mortgage
or deed of trust executed and delivered by the other Obligors pursuant to the
Indenture are hereinafter sometimes referred to as the "Indebtedness hereby
secured".
E. The Mortgagor is duly authorized under all applicable provisions of
law, its charter and by-laws to issue the Notes, to execute and deliver this
Mortgage and to mortgage, convey and assign the "Mortgaged Property" (as
hereinafter defined) to the Mortgagee as security for the Notes and other
indebtedness hereby secured and all corporate action and all consents, approvals
and other authorizations and all other acts and things necessary to make this
Mortgage the valid, binding and legal instrument for the security of the Notes
have been done and performed.
F. The Purchasers have required as a condition to their purchaser of
the Notes that the Mortgagor execute and deliver this Mortgage as security for
the payment of the Notes.
NOW, THEREFORE, THIS MORTGAGE WITNESSETH: That the Mortgagor, in
consideration of the premises, the purchaser and acceptance of the Notes by the
Purchasers, and of the sum of Ten Dollars received by the Mortgagor from the
Purchasers and the Mortgagee and other good and valuable consideration, receipt
whereof is hereby acknowledged, and in order to strengthen the financial and
operating condition of each and every Obligor directly and indirectly, as a
result of the enhanced ability of the Company to provide financial, accounting,
consulting and administrative assistance and service to each other Obligor, and
in order to secure the payment of the principal of, premium, if any, and
interest on the Notes according to their tenor and effect, and to secure the
payment of all other indebtedness hereby secured and the performance and
observance of all the covenants, agreements and conditions contained in the
<PAGE>
3
Notes, this Mortgage, the Note Agreements and the Indenture, the Mortgagor does
hereby warrant, mortgage, pledge, assign, bargain, hypothecate, convey, grant,
transfer and set over unto the Mortgagee and its successors in trust and
assigns, and grants to the Mortgagee and its successors in trust and assigns a
security interest with power of sale, in and to all and singular the following
described properties, rights, interest and privileges and all of the Mortgagor's
estate, right, title and interest therein, thereto and thereunder (all of which
properties hereby mortgaged, assigned and pledged or intended so to be are
hereinafter collectively referred to as the "Mortgaged Property"):
GRANTING CLAUSE I
The parcels of land in Oakland County, State of Michigan described in
Annex A attached hereto and made a part hereof, together with the entire
interest of the Mortgagor in and to all buildings, structures, improvements and
appurtenances now standing, or at any time hereafter constructed or placed, upon
such land, including all right, title and interest of the Mortgagor, if any, in
and to all building material, building equipment, and (except as hereinafter set
forth) all fixtures of every kind and nature whatsoever on said land or in any
building, structure or improvement now or hereafter standing on said land which
are classified as fixtures under applicable law and which are used in connection
with the operation, maintenance or protection of said buildings, structure and
improvements as such (including, without limitation, all boilers, air condition,
ventilating, plumbing, heating, lighting and electrical systems and apparatus,
all communications equipment and intercom systems and apparatus, all sprinkler
equipment and apparatus, and all elevators and escalators). All items included
under this Mortgage, and the reversion or reversions, remainder or remainders,
in and to said land, and together with the entire interest of the Mortgagor in
and to all and singular the tenements, hereditaments, easements, rights of way,
rights, privileges and appurtenances to said land, belonging or in anywise
appertaining thereto, including, without limitation, the entire right, title and
interest of the Mortgagor, in, to and under any streets, ways, alleys, gores or
strips of land adjoining said land, and all claims or demands whatsoever of the
Mortgagor either in law or in equity, in possession or expectancy, of, in and to
said and, it being the intention of the parties hereto that, so far as may be
permitted by law, all property of the character hereinabove described, which is
now owned or is hereafter acquired by the Mortgagor and is affixed or attached
<PAGE>
4
or annexed to said land, shall be and remain or become and constitute a portion
of said land and the security covered by and subject to the lien of this
Mortgage, together with all accessions, parts and appurtenances appertaining or
attached thereto and all substitutions, renewals or replacements of and
additions, improvements, accessions and accumulations to any and all thereof,
and together with all rents, income, revenues, awards, issues and profits
hereof, and the present and continuing right to make claim for, collect, receive
and receipt for any and all of such rents, income, revenues, awards, issues and
profits arising therefrom or in connection therewith (all such property being
hereinafter collectively referred to as the "Land Parcels"). The Mortgaged
Property shall not include any personal property or equipment not owned by the
Mortgagor so long as the same can be removed without causing material damage to
the Mortgaged Property (all such property being hereinafter collectively
referred to as "Excluded Property"). The Excluded Property is described in Annex
B hereto.
GRANTING CLAUSE II
All machinery and equipment in all of its forms, wherever located, now
or hereafter existing (including, but not limited to, all drugs, environmental
monitoring devices, medical supplies, hospital supplies, uniforms, x-ray or
nuclear magnetic resonance devices, imaging devices, laboratory equipment,
Medical equipment, surgical equipment, quality control equipment, motors, test
equipment, computer software, data processing equipment, printers, presses,
computer test equipment, industrial machinery, equipment and fixtures,
transportation equipment, office and other machinery, video or audio
reproduction devices, stretchers, wheel-chairs, furniture, aircraft, ambulances,
rolling stock, motor vehicles, trailers, tractors, trucks, cars, tools, spare
parts and fuel, items employed in the maintenance or repair of any structure of
any grounds, all foodstuffs of any kind, drawings, books, records and equipment
containing books and records or in which books and records are stored), and all
parts thereof and all accessions thereto and replacements thereof, together with
any additional machinery and equipment that may become part of the Mortgaged
Property or located on the Land Parcels and less any Equipment that may be
deleted from the Mortgaged Property or removed from the Land Parcels, all in
accordance with the terms of this Mortgage (any and all such machinery,
equipment, parts and accessions being the "Equipment");
<PAGE>
5
GRANTING CLAUSE III
All insurance proceeds, judgments, awards of damages, settlements and
other compensation arising out of any damage, destruction, condemnation or
taking of the Mortgaged Property;
All leases and subleases belonging and otherwise appertaining to the
Land Parcels, including all extended terms and all extensions and renewals of
the term of such leases and subleases, together with all right, title and
interest of th Mortgagor as lessor thereunder, including, without limitation,
the present and continuing right to make claim thereunder, including, without
limitation, the present and continuing right to make claim for, collect, receive
and receipt for any and all of the rents, income, revenues, issues and profits
and other sums of money payable or receivable under such leases and subleases,
whether payable as rent or otherwise, to receive and give notices thereunder, to
bring actions and proceedings thereunder or for the enforcement thereof, and to
do any and all things which the Mortgagor or any other lessor is or may become
entitled to do under the leases and subleases; provided that the assignment made
by this Granting Clause IV shall not impair or diminish any obligation of the
Mortgagor under the leases and subleases, nor shall any such obligation be
imposed upon the Mortgagee or the holder of any Note;
GRANTING CLAUSE V
All inventory in all of its forms, wherever located, now or hereafter
existing (including, but not limited to (i) drugs, medical supplies, hospital
supplies, books, uniforms, medical equipment, surgical equipment, video or audio
reproduction devices and foodstuffs of any kind, (ii) goods in which the
Mortgagor has an interest in mass or a joint or other interest or right of any
kind (including, without limitation, goods in which the Mortgagor has an
interest or right as consignee), and (iii) goods that are returned to or
repossessed by the Mortgagor), and all accessions thereto and products thereof
and documents therefor (any and all such inventory, accessions, products and
documents being the "Inventory");
GRANTING CLAUSE VI
All agreements listed on Schedule II, as each of such agreements may
be amended, supplemented or otherwise modified and in effect from time to time
(such agreements as so amended or modified and in effect, being the "Assigned
<PAGE>
6
Agreements"), including, without limitation, (i) all rights of the Mortgagor to
receive moneys due and to become due under or pursuant to the Assigned
Agreements, (ii) all rights of the Mortgagor to receive proceeds of any
insurance, indemnity, warranty or guaranty with respect to the Assigned
Agreements, (iii) claims of the Mortgagor for damages arising out of or for
breach of or default or misrepresentation under the Assigned Agreements or any
documents, instruments or opinions delivered pursuant thereto, (iv) the right of
the Mortgagor to terminate the Assigned Agreements, to perform thereunder and to
compel performance and otherwise exercise all remedies thereunder, and (v) all
rights to receive per diem or other reimbursements and payments from private
insurance companies, federal or state governmental agencies or any other person
or entity in respect of services provided (in each case, to the extent permitted
by law);
GRANTING CLAUSE VII
All of the following collateral (the "Security Collateral"):
(A) all shares (the "Pledge Shares") of stock described in Schedule
III and issued by the corporations named therein and the certificates
representing the Pledged Shares, and all dividends, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Pledged Shares; and
(B) all additional shares of stock from time to time acquired by the
Mortgagor in any manner, and the certificates representing such additional
shares, and all dividends, cash, instruments and other property from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all of such additional shares;
GRANTING CLAUSE VIII
To the extent not otherwise covered by Granting Clauses I through VII,
inclusive, all cash, accounts, general intangibles (including, but not limited
to, all: governmental or regulatory permits or certificate s(to the extent
permitted by law); rights to receive per diem or other reimbursements and
payments from private insurance companies, federal or state governmental
agencies or any other person or entity in respect of services provided (in each
<PAGE>
7
case, to the extent permitted by law); tax refunds; intellectual property rights
of any kind (whether arising under federal, state or foreign law), know how,
trade secrets, engineering plans, computer software, drawings and other
proprietary information (including without limitation any business or
organization plans, reports or projections of any kind, whether or not fixed in
any tangible medium); patents and patent applications; unpatented inventions
(whether or not patentable); copyrights; trademarks, trade names, service marks,
trademark and service mark applications, and all good will to which the
Mortgagor is entitled or of any businesses in which the Mortgagor is engaged,
whether or not such goodwill is associated with or related to any such mark or
application; license agreements relating to any of the foregoing and income
therefrom; and the right to sue for all past, present and future infringements
of the foregoing, contract rights to the extent a security interest or lien may
be granted in or on such contract rights pursuant to the relevant contract
(including, but not limited to, all rights of the Mortgagor to receive moneys
due and to become due under or pursuant to any accounts, general intangibles and
contract rights and all of the rights of the Mortgagor to terminate, and to
perform, compel performance and otherwise exercise all remedies under, such
accounts, general intangibles and contract rights), chattel paper, instruments
and other obligations, in each case, of any kind, now or hereafter existing,
whether or not arising out of or in connection with the sale or lease of goods
or the rendering of services, and all rights now or hereafter existing in and to
all mortgages, security agreements, leases and other contracts securing or
otherwise relating to any such cash, accounts, general intangibles, contract
rights, chattel paper, instruments and obligations (any and all such cash,
accounts, general intangibles, contract rights, chattel paper, instruments and
obligations being the "Receivables", and any and all such mortgages, security
agreements, leases and other contracts being the "Related Contracts"): and
GRANTING CLAUSE IX
All proceeds of any and all of the foregoing Mortgaged Property
including, without limitation, proceeds that constitute property of the types
described in Granting Clauses I through VIII, inclusive, and, to the extent not
otherwise included, (x) all payments under insurance (whether or not the
Mortgagee is the loss payee thereof), or any indemnity, warranty or guaranty,
payable by reason of loss or damage to or otherwise with respect to any of the
foregoing Mortgaged Property, and (y) all cash, wherever located, not included
above in clause (x).
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8
SUBJECT, HOWEVER, to Permitted Encumbrances, as defined in section 1
hereof;
TO HAVE AND TO HOLD the Mortgaged Property unto the Mortgagee and its
successors in trust and assigns forever for the purpose of securing performance
of each agreement, covenant and warranty of the Mortgagor contained herein and
payment of the indebtedness hereby secured from time to time issued under and
pursuant to the Note Agreements and the Indenture. It is understood and agreed
that this Mortgage is to secure the obligation of the Mortgagor to repay all
sums due or to become due in respect of the Notes executed and delivered
pursuant to the Note Agreements and the Indenture, including those heretofore
executed and those of even date herewith.
PROVIDED, NEVERTHELESS, and these present are upon the express
condition that if the Mortgagor performs the covenants herein and in the
indenture contained and pays to the Mortgagee, its successors in trust and
assigns, the full amount of all principal of, and premium, if any, and interest
on the Notes and all other indebtedness hereby secured, the estate, right and
interest of the Mortgagee in the Mortgaged Property shall cease and this
Mortgage shall become null and void, but otherwise to remain in full force and
effect.
It is agreed and understood by the parties hereto that:
1. The Notes are to be secured by other mortgages and deeds of trust
of other Obligors on other real estate in the States or Commonwealths of
Michigan, North Carolina, Utah, Arizona and West Virginia. Each and all of
said mortgages and deeds of trust are intended to and shall constitute
security for the entire indebtedness represented by said Notes without
allocation.
2. Any part of the security herein described, and any security
described in any other mortgage or other instrument now or hereafter given
to secure the indebtedness which is secured by this Mortgage, may be
released by the Mortgagee without affecting the lien and security interest
hereof on the remainder or the obligations of the Mortgagor on and in
respect of the Notes and any person acquiring any direct or indirect
interest in the security herein described or in any security described in
<PAGE>
9
any other mortgage or other instrument now or hereafter given to secure the
indebtedness which is secured by this Mortgage shall take the same subject
to all of the provisions hereof.
3. The Mortgagor for itself and all who may claim through or under it
waives any and all right to have the property and estates comprising the
Mortgaged Property marshalled upon any foreclosure of the lien hereof, or
to have the Mortgaged Property hereunder and the property covered by any
other mortgage or deed of trust securing the Notes marshalled upon any
foreclosure of any of said mortgages or deeds of trust, and agrees that any
court having jurisdiction to foreclose such lien may order the Mortgaged
Property sold as an entirety.
4. Upon the occurrence of an Event of Default hereunder the Mortgagee
has, among other things, the right to foreclose on the Mortgaged Property,
in the manner described by applicable law, and dispose of the same. The
Mortgagee's deed or other instrument of conveyance, transfer of release
(which may be executed by the Mortgagee in its own name or as
attorney-in-fact for the Mortgagor and the Mortgagee is hereby irrevocably
appointed attorney-in-fact for the Mortgagor) shall be effective to convey
and transfer to the grantee an indefeasible title to the property covered
thereby, discharged of all rights of redemption by the Mortgagor or any
person claiming under it, and to bar forever all claims by the Mortgagor or
the said Mortgagee to the property covered thereby and no grantee from the
Mortgagee shall be under any duty to inquire as to the authority of the
Mortgagee to execute the same, or to see the application of the purchase
money.
SECTION 1. DEFINITIONS.
Capitalized terms used in this Mortgage and not defined herein shall
have the meaning provided therefore in the Indenture. In addition to the terms
elsewhere defined in this Mortgage, the following terms shall have the following
meanings for all purposes of this Mortgage:
"Appraised Value" with respect to the Mortgaged Property shall mean
the fair market value on the date of an appraisal of the Mortgaged Property
<PAGE>
10
as shown by (i) the appraisal thereof furnished to the Purchasers in
accordance with the provisions of Section 7(a)(vi) of the Note Agreements
or Section 10.2(b)(v) or Section 10.2(c)(vi) of the Indenture or (ii) the
appraisal thereof furnished to the Mortgagee in accordance with the
provisions of section 4.2 of the Indenture.
"Cost" shall mean an amount equal to the sum of the following items
capitalizing on the books of the Mortgagor in accordance with generally
accepted accounting principles: (i) the actual construction costs thereof,
including cost of land and buildings, landscaping, on and off site
improvements, architectural, engineering and other professional fees,
interest and taxes during construction and all carrying charges, but
excluding the cost of Excluded Property and (ii) fees and expenses in
connection with the placement, issuance and sale of the Notes including
fees and expenses referred to in Section 8 of the Note Agreements allocated
by the Mortgagor to the Mortgaged Property, the physical survey and title
charges referred to in Section 8(g) of the Note Agreements, the charges for
the environmental audit and appraisal referred to in Section 8(h) and (i)
of the Note Agreements in respect of such Mortgaged Property incurred by
the Mortgagor and debt service expenses, and all closing costs with respect
to the Mortgaged Property.
"Default" shall mean any event or condition, the occurrence of which
would, with the lapse of time or the giving of notice, or both, constitute
an Event of Default.
"Event of Default" shall mean any events specified in section 5
hereof.
"Loan Value" of the Mortgaged Property shall be an amount determined
by multiplying the aggregate unpaid principal amount of the Notes
outstanding immediately prior to the date on which the Loan Value is to be
determined by a fraction the numerator of which is t he Appraised Value of
the Mortgaged Property and the denominator is the Appraised Value of all
property of the Obligors which is then subject to the lien of this Mortgage
and each and every other mortgage and deed of trust delivered to the
Mortgagee under and pursuant to the Note Agreements and the Indenture.
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11
"Note" shall mean any of, and "Notes" shall mean all of, the Noes then
outstanding under the Note Agreements and the Indenture. The term
"outstanding" when used with reference to Notes shall mean, as of any
particular time, all Notes delivered by the Obligors under the Note
Agreements and the Indenture and secured hereby and by each and every other
mortgage delivered pursuant to the Note Agreements and the Indenture,
except:
(a) Notes theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(b) Notes for the payment or prepayment of which moneys in the
necessary amount shall have been paid to the Mortgagee, provided, that
if such Notes are to be prepaid prior to the maturity thereof, notice
of such prepayment shall have been given as provided in Section 5.6 of
the Indenture or provision satisfactory to the Trustee shall have been
made for giving such notices; and
(c) Notes in lieu of or in substitution for which other Notes
shall have been authenticated and delivered pursuant to the terms of
Section 2.6 of the Indenture.
"Officers' Certificate" shall mean a certificate signed by the
President and by any one of the following officers of the Mortgagor: Vice
President or the Secretary.
"Opinion of Counsel" shall mean an opinion in writing signed by legal
counsel who shall be satisfactory to the Mortgagee, and who may be counsel
to the Mortgagor.
"Permitted Encumbrances" shall mean:
(a) liens for property taxes and assessments or governmental
charges or levies and liens securing claims or demands of mechanics
and materialmen, provided that payment thereof is not at the time
required by section 2.7;
<PAGE>
12
(b) Liens of or resulting from any judgment or award, the time
for the appeal or petition for rehearing of which shall not have
expired, or in respect of which the Mortgagor shall at any time in
good faith be prosecuting an appeal or proceeding for a review and in
respect of which a stay of execution pending such appeal or proceeding
for review shall have been secured;
(c) liens, charges, encumbrances and priority claims incidental
to the conduct of business or the ownership of properties and assets
(including warehousemen's and attorneys' liens and statutory
landlords' liens) and deposits, pledges or liens to secure the
performance of bids, tenders or trade contracts, or to secure
statutory obligations, surety or appeal bonds or other liens of like
general nature incurred in the ordinary course of business and not in
connection with the borrowing of money, provided in each case, the
obligation secured is not overdue or, if overdue, is being contested
in good faith by appropriate actions or proceedings;
(d) minor survey exceptions or minor encumbrances, easements or
reservations, or rights of others for rights-of-way, utilities and
other similar purposes, or zoning or other restrictions as to the use
of real properties, which are necessary for the conduct of the
activities of the Mortgagor or which customarily exist on properties
of corporations engaged in similar activities and similarly situated
and which do not in any event materially impair their use in the
operation of the business of the Mortgagor;
<PAGE>
13
(e) mortgages, liens and security interests securing the Notes;
and
(f) leases permitted by the provisions of section 3.1(d).
"Person" shall mean an individual, partnership, corporation,
trust or unincorporated organization.
SECTION 2. GENERAL COVENANTS AND WARRANTIES.
The Mortgagor covenants, warrants and agrees as follows:
2.1 Note Agreements and Indenture Covenants. Each and all of the
terms, provisions, restrictions, covenants and agreements set forth in the
Notes, the Note Agreements, the Pledges and the Indenture, and in each and every
supplement thereto or amendment thereof which may at any time for form time to
time be executed and delivered by the parties thereto or their successors and
assigns are incorporated herein by reference to the same extent as though each
and all of said terms, provisions, restrictions, covenants and agreements were
fully set out herein and as though any amendment or supplement to the Notes, the
Notes Agreements, the Pledges or the Indenture, as the case may be, were fully
set out in an amendment or supplement to this Mortgage; and the Mortgagor does
hereby covenant and agree well and truly to abide by, perform and be governed
and restricted by each and all of the matters provided for by the Notes, the
Notes Agreements, the Pledges and Indenture and so incorporated herein to the
same extent and with the same force and effect as if each and all of said terms,
provisions, restrictions, covenants and agreement so incorporated herein by
reference were set out and repeated herein at length. Without limiting the
foregoing, the Mortgagor covenants and agrees to pay all taxes, assessments and
governmental charges or levies imposed upon this Mortgage or the Notes or any
other indebtedness secured hereby.
2.2 Ownership of Mortgaged Property. The Mortgagor covenants and
warrants that it has good and marketable title to the Mortgaged Property
hereinbefore conveyed to the Mortgagee free and clear of all liens, charges and
encumbrances whatever except Permitted Encumbrances, and the Mortgagor has full
right, power and authority to convey, transfer and mortgage the same to the
Mortgagee for the uses and purposes in this Mortgage set forth; and the
Mortgagor will warrant and defend the title to the Mortgaged Property against
all claims and demands whatsoever.
<PAGE>
14
2.3 Further Assurances. The Mortgagor will, at its own expense, do,
execute, acknowledge and deliver all and every further act, deed, conveyance,
transfer and assurance necessary or proper for the better assuring, conveying,
assigning and confirming unto the Mortgagee all of the Mortgaged Property, or
property intended so to be, whether now owned or hereafter acquired.
2.4 Payment of Principal and Interest. The Mortgagor will duly and
punctually pay the principal of, and premium, if any, and interest on all Notes
and all other amounts payable under indebtedness hereby secured according to the
terms thereof.
2.5 Maintenance of Mortgaged Property, Other Liens, Compliance with
Laws, etc. (a) Without limiting the provisions of Section 3.8 of the Indenture
and subject to section 3 hereof, the Mortgagor shall (i) promptly repair,
restore or rebuild any buildings, improvements or Equipment now or hereafter on
the Mortgaged Property which may become damaged or be destroyed, (ii) keep the
Mortgaged Property in good condition and repair, ordinary wear and tear
excepted, without waste, and free from all claims, liens, charges and
encumbrances other than Permitted Encumbrances, (iii) pay when due any
indebtedness which may be secured by a lien or charge on the Mortgaged Property
and upon request exhibit satisfactory evidence of the discharge of such lien to
the Mortgagee, (iv) comply with all requirements of law or municipal ordinances
with respect to the Mortgaged Property and the use thereof, failure to comply
with which would result in any material interference with the use or operation
of the Mortgaged Property by the Mortgagor, (v) not, without the prior written
consent of Mortgagee, (A) initiate or support any zoning reclassification of the
Mortgaged Property, seek any variance under existing zoning ordinances
applicable to the Mortgaged Property or use or permit the use of the Mortgaged
Property in a manner which would result in such use becoming a nonconforming use
under applicable zoning ordinances, (B) modify or amend any of the Permitted
Encumbrances, (C) impose any restrictive covenants or encumbrances upon the
Mortgaged Property, execute or file any subdivision plat affecting the Mortgaged
Property or consent to the annexation of the Mortgaged Property to any
municipality or (D) permit or suffer the Mortgaged Property to be used by the
public or any person in such manner as might make possible a claim of adverse
usage or possession or of any implied dedication or easement, and (vi) make no
material alterations in said Mortgaged Property except as required by law or
<PAGE>
15
municipal ordinance; provided, however, the Mortgagor may make any alterations
of any kind to the Mortgaged Property if (A) the market value of the Mortgaged
Property would not be impaired; (B) such alterations shall be performed in a
good and a workmanlike manner; and (C) such alterations shall be expeditiously
completed in compliance with all laws, ordinances, orders, rules, regulations
and requirements applicable thereto, including to the extent necessary to
maintain in full force and effect the policies of insurance required by section
2.5 hereof. The Mortgagor shall promptly pay all costs and expenses of each such
addition, alteration, substitution and replacement, discharge all liens filed
against the Mortgaged Property arising out of the same and procure and pay for
all permits and licenses required in connection therewith. The Mortgagor shall
notify the Mortgagee and each holder of the Notes of the filing of any lien
against the Mortgaged Property in an amount greater then $25,000.
(b) The Mortgagor may, at its expense, (i) construct upon the
Mortgaged Property additional buildings, structures and other improvements and
(ii) install, assemble and place upon the Mortgaged property an items of
machinery and equipment used or useful in the Mortgagor's business, in each case
upon compliance with the provisions of paragraph (a) of this section 2.5. All
such buildings, structures and other improvements shall be and remain part of
the Land Parcels and shall be subject to this Mortgage unless such property
shall constitute Excluded Property. Excluded Property shall not be deemed part
of the Mortgaged Property for purposes of condemnation or casualty, and the
Mortgagor may remove the same from the Mortgaged Property at any time prior to
the expiration or earlier termination of this Mortgage, provided that the
Mortgagor, at its expense, shall repair any damage to the Mortgaged Property
resulting form such removal.
(c) The Mortgaged Property is not located in an area identified by the
Secretary of Housing and Urban Development or a successor thereto as an area
having special flood hazards pursuant to the terms of the National Flood
Insurance Act of 1963, or the Flood Disaster Protection Act of 1973, as amended,
or any successor law; or if the Mortgaged Property is located in such an area,
Mortgagor will obtain and maintain insurance against damage or loss by flood on
such basis and in such amounts as shall be required by Mortgagee.
(d) The Mortgagor shall use and operate the Mortgaged Property as a
hospital.
<PAGE>
16
2.6 Insurance. (a) Insurance Against Loss or Damage. The Mortgagor
will maintain or cause to be maintained with respect to the Mortgaged Property
insurance against loss by fire, windstorm and explosion and with extended
coverage and against such other risks of physical loss as are customarily
insured against, and in such amounts as are customarily carried by companies
owning property of a similar character and similarly located and engaged in a
business similar to that engaged in by the Mortgagor; provided, however, that
the amount of such insurance with respect to the Mortgaged Property shall not at
any time be less than the greater of replacement value or Loan Value thereof.
(b) Insurance Against Public Liability and Property Damage. The
Mortgagor will maintain or cause to be maintained in effect, with insurers
satisfactory to the Mortgagee, insurance policies with respect to the Mortgaged
Property, insuring against liability for loss or damage to the Person or
property of others from such risks and in such amounts as are customarily
carried by companies owning property of a similar character and engaged in a
business similar to that engaged in by the Mortgagor; provided, however, that in
no event shall the insurance maintained in accordance with this paragraph be
less than an aggregate of $25,000,000 for claims arising out of a single
occurrence and not less then $25,000,000 in the aggregate for all claims made in
any policy year. All such insurance shall protect the Mortgagee and the
Mortgagor in respect of risks arising out of the condition, maintenance, use,
ownership or operation of the Mortgaged Property. The Mortgagor will indemnify
the Mortgagee and holders of the Noes from any and all liability imposed against
said Mortgagee and holders of the Notes arising out of the condition,
maintenance, use, ownership or operation of the Mortgaged Property.
(c) The Mortgagor will maintain or cause to be maintained:
(i) all such worker's compensation or similar insurance as may be
required by law;
(ii) use and occupancy (or business interruption) insurance, covering
interruption of the Mortgagor's operations, in whole or in part, by reason
of the total or partial suspension of, or interruption in, the operation of
the Mortgaged Property caused by the damage to or destruction of any part
of the Mortgaged Property, with such exceptions as are customarily imposed
by insurers, in an amount sufficient to comply with the requirements of a
standard 50% gross earnings business interruption form; and
<PAGE>
17
(iii) maintain liability insurance covering hospital operations,
including malpractice, against claims arising from professional services
performed by the Mortgagor with limits of not less then $20,000,000 with
respect to injuries or deaths arising out of a single occurrence and not
less than $20,000,000 in the aggregate for all claims made against the
Mortgagor in any policy year.
For the purposes of this Section, "policy year" means a period of twelve months
while the insurance coverage in question is in force measured from the effective
date of such coverage or any anniversary of such effective date.
(d) Form of Policies. Any insurance policies carried in accordance
with this section 2.6 shall be written by companies of recognized national
standing authorized to do business in the jurisdiction in which the Mortgaged
Property is located (copies of which will be delivered to the Trustee on the
Closing Date) and shall provide that : (i) the Mortgagee and the holders of the
Notes shall be named as additional insureds, as their interest may appear, (ii)
the Mortgagee's interest shall be insured regardless of any breach or violation
by the Mortgagor of any warranties, declarations or conditions contained in such
policies, (iii) such insurance, as to the interest of the Mortgagee therein,
shall not be invalidated by the use or operation of the Mortgaged Property for
purposes which are not permitted by such policies, (iv) the insurers shall waive
any right of subrogation of the insurers to any set-off or counterclaim or any
other deduction, whether by attachment or otherwise, in respect of any liability
of the Mortgagor, (v) if any premium or installment is not paid when due, or if
such insurance would lapse or be cancelled, terminated or materially changed for
any reason whatsoever, the insurers will promptly notify the Mortgagee and any
such lapse, cancellation, termination or change shall not be effective as to the
Mortgagee for 30 days after receipt of such notice, and (vi) appropriate
certification shall be made to the Mortgagee by each insurer with respect
thereto.
(e) Loss Payee. Provided no Default or Event of Default has occurred
and is continuing, the loss, if any, under any policy pertaining to loss by
reason of damage to or destruction or condemnation of any portion of the
Mortgaged Property shall be adjusted with the insurance companies by the
Mortgagor, subject to the approval of the Mortgagee if the loss exceeds
$100,000. The loss so adjusted shall be paid to the Mortgagee pursuant to said
<PAGE>
18
loss payable clause. Is said loss is $100,000 or less, then said shall be paid
first to the Mortgagee, and shall be by the Mortgagee paid over immediately to
the Mortgagor for use by the Mortgagor in paying for replacement or rep[air of
or substitutes for the damaged or destroyed property, provided no Default or
Event of Default has occurred and is continuing, in which event any such loss
shall be paid to the Mortgagee.
2.7 Payment of Taxes and Other Charges. The Mortgagor will pay and
discharge, before the same shall become delinquent, together with interest and
penalties thereon, if any, (a) all taxes, assessments (including assessments for
benefits from public works or improvements whenever begun or completed), levies,
fees, water and sewer rents and charges, and all other governmental charges,
general and special, ordinary and extraordinary, and whether or not within the
contemplation of the parties hereto, which are at any time levied upon or
assessed against it or the Mortgaged Property or any part thereof or upon this
Mortgage or the Notes secured thereby, or upon the revenues, rents, issues,
income and profits in respect of the Mortgaged Property, or arising in respect
of the occupancy, use or possession thereof, which failure to pay would result
in the creation of a lien upon the Mortgaged Property or any part thereof, or
upon the revenues, rents, issues, income and profits of the Mortgaged Property
or in the diminution thereof or would result in any material interference with
the use or operation of the Mortgaged Property by the Mortgagor, (b) all
corporate franchise, excise and other taxes, fees and charges assessed, levied
or imposed in respect of its corporate existence or its right to do business in
any state, (c) all income, excess profits, excise, sales, franchise, gross
receipts and other taxes, duties or imposts, whether of a like or different
nature, assessed, levied or imposed by any governmental authority on it or the
Mortgaged Property, or any portion thereof, or upon the revenues, rents, issues,
income and profits of the Mortgaged Property whether or not the failure to pay
any such tax, duty or impost might result in the creation of a lien upon any
asset of the Mortgagor or the Mortgaged Property or any part thereof or upon the
revenues, rents, issues, income and profits of the Mortgaged Property or in the
diminution thereof, and whether or not any such tax, duty or impost is payable
directly by the Mortgagor or is subject to withholding at the source and (d) all
lawful claims and demands of mechanics, laborers, materialmen and others which,
if unpaid, might result in the creation of a lien on the Mortgaged Property or
upon the revenues, rents, issues, income and profits of the Mortgaged Property
<PAGE>
19
and, in general, will do or cause to be done everything necessary so that the
lien hereof shall be fully preserved, at the cost of the Mortgagor, without
expense to the Mortgagee.
Nothing in this section 2.7 shall require the payment of any sum which
is required to be paid by the Mortgagor pursuant to this section 2.7 so long as
the Mortgagor shall in good faith contest its obligation so to do by appropriate
proceedings which will prevent the forfeiture or sale of any property of the
Mortgagor or any material interference with the use or operation thereof by the
Mortgagor, and shall set up a reserve, reasonably adequate, in the opinion of
the President or any Vice President of the Mortgagor against any such payment.
2.8 Advances. If the Mortgagor shall fail to comply with the covenants
contained herein or in th Note Agreements or in the Indenture with respect to
the procuring of insurance, the payment of taxes, assessments and other charges,
or the keeping of the Mortgaged Property in repair and free of other liens, the
Mortgagee may make advances to perform the same; and the Mortgagor agrees to
repay all sums so advanced upon demand with interest at a rate equal to the
greater of (i) 13.6% per annum and (ii) the sum of (A) the rate of interest
publicly announced by Morgan Guaranty Trust Company of New York from time to
time in new York city as its prime rate plus (B) 1% after demand; and all sums
so advanced, with interest, shall be secured hereby in priority to the
indebtedness evidenced by the Notes or any of them; but no such advance shall be
deemed to relieve the Mortgagor from any default hereunder.
2.9 Recordation. The Mortgagor will, at its own expense, cause this
Mortgage, all supplements hereto, and any financing statements and continuation
statements required by law, including the Uniform Commercial Code, in respect
thereof at all times to be kept recorded and filed at its own expense in such
manner and in such places as may be required by law in order to fully preserve
and protect the rights of the Mortgagee hereunder, and will furnish to the
Mortgagee promptly, and in any event within thirty (30) days, after the
execution and delivery of this Mortgage and of each supplement an Opinion of
Counsel stating that in the opinion of such counsel this Mortgage or such
supplement or such financing statement or continuation statement, as the case
may be, has been properly recorded or filed for record so as to make effective
of record the lien intended to be created hereby.
<PAGE>
20
2.10 After-Acquired Property. Any and all property hereafter acquired
which is of the kind or nature described in the Granting Clauses hereof and is
or intended to become a part thereof, shall ipso facto, and without any further
conveyance, assignment or act on the part of the Mortgagor or the Mortgagee
become and be, subject to the lien of this Mortgage as fully and completely as
though specifically described herein; but nevertheless the Mortgagor shall from
time to time, if requested by the Mortgagee, execute and deliver any and all
such further assurances, conveyances and assignments thereof as the Mortgagee
may reasonably require for the purpose of expressly and specifically subjecting
to the lien of this Mortgage any and all such property.
2.11 Priority of this Deed of Trust; Future Advances; Extensions,
Modifications, and Renewals. Any portion of the indebtedness hereby secured
which is incurred after the execution of this Mortgage pursuant to the Indenture
or any supplemental indenture referencing this Mortgage, or which is evidence by
any instrument stating that the indebtedness hereby secured is secured by this
Mortgage , shall be defined as a Future Advance. This paragraph shall serve as
notice to any subsequent encumbrancer of the Mortgaged Property that the
Mortgagee claims the priority of the lien of this Mortgage for all such Future
Advances, as well as for all other indebtedness hereby secured. This paragraph
shall also be noticed that the Mortgagee reserves the right to modify, extend,
consolidate, and renew the indebtedness hereby secured, or any portions thereof,
and the rates of interest charged thereon, without affecting the priority of the
lien created by this Mortgage.
SECTION 3. POSSESSION, USE AND RELEASE OF PROPERTY.
3.1 Possession by Mortgagor; Dispositions Without Release. So long as
no Default or Event of Default has occurred and is continuing, the Mortgagor
shall be permitted, subject to the provisions of this Section, to possess, use,
manage, operate and enjoy the Mortgaged Property and to collect, receive, use,
invest and dispose of the rent, issues, profits, and other income from the
Mortgaged Property, with power, in the ordinary course of business, freely and
without hindrance on the part of the Mortgagee, to use, consume and dispose of
any thereof except such as are subject to the lien hereof or intended so to be,
and to deal with, exercise any and all rights under, receive and enforce
performance under, and adjust and settle all matters relating to current
performance of, choses in action, leases and contracts.
<PAGE>
21
The Mortgagor shall have the right, from time to time if no Default
exists hereunder, without any release from or consent by the Mortgagee,
(a) to sell or otherwise dispose of, free from the lien of this
Mortgage, any Equipment subject to the lien hereof which, in the judgment
of the Mortgagor, may have become obsolete or unfit for use or no longer
useful, necessary or profitable in the conduct of the business of the
Mortgagor not exceeding in value at the date of disposition thereof $50,000
in any single transaction or a total of $100,000 in any calendar year, upon
substituting for the same other Equipment of the same character and of at
least equal value, utility and useful life to the Mortgagor as, and costing
not less than the amount realized from, the property disposed of, which
shall forthwith become, without further action, subject to the lien of this
Mortgage;
(b) to grant rights-of-way and easements over or in respect of any
Mortgaged Property, provided that such grant will not, in the opinion of
the Mortgagor expressed in an Officers' Certificate furnished to th
Mortgagee, impair the usefulness of such property in the conduct of the
Mortgagor's business and will not be prejudicial to the interest of the
holders of the Notes and provided, further, that any cash consideration in
excess of $50,000 received by the Mortgagor upon or in connection with the
granting thereof, forthwith upon its receipt by the Mortgagor, shall be
deposited with the Mortgagee;
(c) to alter, repair, replace, change the location or position of an
add to the Mortgaged Property, provided that no change shall be made in the
location of any such property subject to the lien of this Mortgage which
removes such property into a jurisdiction in which this Mortgage and any
required financing or continuation statement covering security interests in
such property have not been recorded, registered or filed in the manner
required by law to preserve the lien of this indenture on such property or
otherwise impairs the lien hereof; and
(d) to lease to others from time to time offices and related areas
included in the Mortgaged Property, other than any thereof essential to the
<PAGE>
22
operations carried on at the Mortgaged Property; provided that such lease
is (i) by its terms expressly made subject to the lien of this Mortgage and
(ii) assigned to the Mortgagee by an instrument in recordable form and
otherwise satisfactory in form and substance to the Mortgagee; and further
provided that the Mortgagor shall not lease all or substantially all of the
Mortgaged Property without the prior written consent of the Required
Holders.
The Mortgagor will deliver to th Mortgagee, on or before July 31 in
each year after the year 1989, (i) an Officers' Certificate setting forth, with
respect to transactions during the preceding calendar year pursuant to section
3.1(a), the aggregate fair value at the date or dates of disposition of, the
aggregate amount realized from, and a general description of, any property
disposed of pursuant to section 3.1(a) (and stating that such property had
become obsolete or unfit for use or no longer useful, necessary or profitable in
the conduct of the business of the Mortgagor) and the aggregate fair value to
the Mortgagor of, the cost of, and a general description of, any property
acquired in substitution for such property sold or disposed of, (ii) such
supplemental mortgages, financing statement or other instruments as may be
necessary for the purpose of effectively subjecting such acquired property to
the lien hereof and any lease assignment of a lease entered into pursuant to
section 3.1(d) and (iii) an Opinion of Counsel that such supplemental mortgages,
financing statements, lease assignments or other instruments have been duly
executed and are sufficient for such purpose or that no such supplemental
mortgages, financing statements, lease assignments or instruments are necessary.
3.2 Eminent Domain. If all or any of the Mortgaged Property shall be
taken by eminent domain or shall be sold in lieu and in reasonable anticipation
of the taking thereof by eminent domain, the Mortgagee may release the property
so taken and shall be fully protected in so doing upon being furnished with:
(a) an Officers' Certificate requesting such release, describing the
property so to be released and stating that such property ahs been taken by
eminent domain or that such sale has been made in lieu of and in reasonable
anticipation of a taking by eminent domain, accompanied by an appropriate
instrument of release;
<PAGE>
23
(b) an Opinion of Counsel to the effect that such property has been
(i) lawfully taken by exercise of the right of eminent domain or (ii) sold
in lieu and in reasonable anticipation of the taking of such property by
eminent domain and that such property could lawfully have been taken by the
grantee by eminent domain, that the award for such property so taken has
become final or an appeal therefrom is not advisable in the interests of
the Mortgagee or the holders of the Notes and that the execution of such
instrument is appropriate to evidence such release; and
(c) except as otherwise provided in section 4.1, cash equal to such
award to be held and applied by the Mortgagee under the indenture.
3.3 Purchaser Protected. No purchaser in good faith of property
purporting to be released herefrom shall be bound to ascertain the authority of
the Mortgagee or the holders of the Notes to execute a release or to inquire as
to the existence of any conditions herein prescribed for the exercise of such
authority. No purchaser or lessee of any property or rights permitted by this
Article to be sold, leased or otherwise disposed of by the Mortgagor shall be
under any obligation to ascertain or inquire into the authority of the Mortgagor
to make any such sale, lease or other disposition. Any release executed by the
Mortgagee or the holders of the Notes under this Section shall be sufficient for
the purpose of this Mortgage and shall constitute a good and valid release of
the property therein described from the lien hereof.
3.4 Release Of Mortgaged Property - Mortgagee Consent. In addition to
the sales and releases pursuant to section section 3.2 and 3.3 hereof, and, to
the extent and on the terms and upon compliance with the conditions provided for
in any written consent given thereto at any time or form time to time by the
holders of the Notes, the Mortgagor may sell or otherwise dispose of any
Mortgaged Property then subject to the lien of this Mortgage or any mortgage
supplement hereto, and the Mortgagee shall, subject to the terms of the
indenture, release the same from the lien hereof.
SECTION 4. APPLICATION OF INSURANCE AND CERTAIN OTHER MONEYS RECEIVED BY THE
MORTGAGEE.
4.1 Insurance Proceeds and Condemnation Awards. (a) All proceeds of
fire and extended coverage insurance and of condemnation awards covering the
Mortgaged Property equal to or in excess of $100,000 received by the Mortgagee
<PAGE>
24
under the provisions of this Mortgage and/or the Indenture or any instruments
supplemental hereto or thereto, or under any policy or policies of insurance
covering the Mortgaged Property or any part thereof, shall be held by the
Mortgagee as part of the Mortgaged Property and shall be applied by the
Mortgagee as follows:
(i) If the total amount of any one loss or condemnation or taking, as
the case may be, shall equal or exceed $100,000 and the cost of rebuilding
or restoring the Mortgaged Property (as evidenced by an Officers'
Certificate of the Mortgagor detailing the same) shall be less than the
proceeds of insurance or the award or consideration received on account of
condemnation or other taking of the Mortgaged Property, the Mortgagor shall
prepay the Notes pursuant to Section 5.3 of the Indenture in a principal
amount equal to such excess, together with interest accrued on the Notes to
be prepaid to the date of payment and a premium equal to the
Yield-Maintenance Premium, upon the terms and in the manner provided in
Section 5.3 of the Indenture and the balance, if any, of any such proceeds
shall be released to or upon the order of the Mortgagor in accordance with
clause (ii) below. Any application of moneys pursuant to this section
4.1(a)(i) shall be made by the Mortgagor within 60 days after the
completion of the rebuilding or restoration of the Mortgaged Property; and
(ii) If the total amount in the case of any one loss or condemnation
or taking, as the case may be, shall equal or exceed $100,000, such
proceeds shall be paid to the Mortgagor from time to time upon a written
application signed by the President and any Vice President of the Mortgagor
and accompanied by an approving certificate of an architect or engineer
selected by the Mortgagor and approved by the Mortgagee, for the purpose of
paying, or reimbursing the Mortgagor for the payment of, the reasonable
cost, as shown by such certificate, of repairing or replacing part or all
of the property damaged or destroyed, but only if written application is
made therefor within 12 months of the receipt of such proceeds by the
Mortgagee, and then only for and to the extent hat the Mortgagor shows by
such architect's or engineer's certificates or other evidence satisfactory
to the Mortgagee that the portion of such proceeds remaining on deposit
with the Mortgagee, together with any additional funds irrevocably
allocated or otherwise provided for in a manner satisfactory to the
Mortgagee for such purpose, shall be sufficient to complete such repairs or
<PAGE>
25
replacements and restore the Mortgaged Property as nearly as possible to
the market value and condition which existed immediately prior to the
damage, destruction, condemnation or taking, as the case may be, free from
liens or encumbrances except this Mortgage and Permitted Encumbrances.
Every such application for the payment of such insurance or condemnation
moneys shall state that no Default or Event of Default has occurred and is
continuing and shall be accompanied by date down endorsement to the
lender's title insurance policy being delivered pursuant to Section
7(a)(iv) of the Note Agreement insuring that, as the date of such payment,
the property will be subject to the lien of this Mortgage as a first lien
thereon subject only to Permitted Encumbrances. The Mortgagor will remain
solely responsible for the rebuilding, restoration or substitution of the
Mortgaged Property, whether or not the proceeds of insurance maintained in
accordance with the provisions hereof are sufficient therefor.
(b) In cases involving insurance proceeds where the amount of any one
loss is less then $100,000 and no Default or Event of Default shall have
occurred and be continuing under this Mortgage, the amount payable in respect of
any such loss will be received by the Mortgagee and shall be by the Mortgagee
paid over immediately to the Mortgagor for use by the Mortgagor in paying for
replace or repair of or substitutes for the damages or destroyed property.
(c) Subject to section 2.6(c) hereof with respect to adjustments of
losses, any appraisal or adjustment of such loss or any settlement or payment of
indemnity therefor which shall be agreed upon between the Mortgagor and the
relevant insurance company shall be accepted by the Mortgagee.
(d) In the vent the insurance moneys or condemnation award, as the
case may be, shall not have been applied to one or more of the purposes
specified in section 4.1(a) hereof within the 12-month period provided for
thereby, then the Mortgagee shall apply such insurance moneys or condemnation
award, as the case may be, to the prepayment, with premium, of the Notes
together with interest accrued thereon in an amount sufficient to exhaust such
cash as nearly as may be upon giving the Mortgagor 10 days' advance notice of
its intent so to do, such prepayment to be made in units of $1,000 but otherwise
to be made ratably on all outstanding Notes in accordance with the principal
amounts unpaid thereon, together with interest accrued thereon and a premium
<PAGE>
26
equal to the Yield-Maintenance Premium; any balance remaining after such
prepayment to be released to the Mortgagor. Partial prepayments made pursuant to
this section 4.1(d) shall be paid and applied upon the terms and in the manner
provided in Section 5 of the Indenture.
4.2 Other Proceeds. Any other moneys received by the Mortgagee in
connection with the release or property shall be held by the Mortgagee as part
of the Mortgaged Property and shall be applied by the Mortgagee to the
prepayment, with premium, of the Notes together with interest accrued thereon in
an amount sufficient to exhaust such cash as nearly as may be upon giving the
mortgagor 10 days' advance notice of its intent so to do, such prepayment to be
made in units of $1,000 but otherwise to be made ratably on all outstanding
Notes in accordance with the principal amounts unpaid thereon, together with
interest accrued thereon and a premium equal to the Yield-Maintenance Premium;
any balance remaining after such payment to be released to the Mortgagor.
SECTION 5. DEFAULTS AND REMEDIES THEREFOR.
5.1 Events of Default. The Mortgagor acknowledges and agrees, without
limitation, that each and all of the terms and provisions of Section 6.1 of the
Indenture have been and are incorporated into this Mortgage by reference to the
same extent as though fully set out herein and that the term Event of Default
wherever used in this Mortgage shall man an Event of Default as defined in
Section 6.1 of the Indenture.
5.2 Remedies. When any Event of Default has occurred and is
continuing, the Mortgagee may exercise any one or more or all, and in any order,
of the remedies hereinafter set forth or as provided for in the Indenture, it
being expressly understood that no remedy herein or in the Indenture conferred
is intended to be exclusive of any other remedy or remedies; but each and every
remedy shall be cumulative and shall be in addition to every other remedy given
herein or now or hereafter existing at law or in equity or by statute:
(a) The Mortgagee may, by notice in writing to the Mortgagor, declare
the entire unpaid balance of the Notes to be immediately due and payable;
and thereupon the entire principal and interest accrued on the Notes and,
to the extent permitted by law, the Yield- Maintenance Premium (as defined
in Section 5.4 of the Indenture) shall be and become immediately due and
payable.
<PAGE>
27
(b) The Mortgagee personally and by agents or attorneys may enter into
and take possession of all or any part of the Mortgaged Property, and may
forthwith use, operate and manage the Mortgaged Property, collect the
earnings and income therefrom, pay all principal charges including taxes
and assessments levied thereon and operating and maintenance expenses and
all disbursements and liabilities of the Mortgagor hereunder and apply the
net proceeds arising from any such operation of the Mortgaged Property as
provided in section 5.3 hereof in respect of the proceeds of a sale of the
Mortgaged Property.
(c) The Mortgagee may commence foreclosure proceedings against the
Mortgaged Property as an entirety (including personal property) or
otherwise as the Mortgagee may determine, through judicial proceedings or
by advertisement, at the option of the Mortgagee, pursuant to the statutes
in such case made and provided, and may sell the Mortgaged property or
cause the same to be sold at public sale and convey the same to the
purchaser, in accordance with said statutes, in a single parcel or in
several parcels at the option of the Mortgagee. The Mortgagee is hereby
granted the power to sell any or all of the Mortgaged Property as provided
herein. The Mortgagor hereby acknowledges that this Mortgage contains a
Power of Sale and that in the event the Mortgagee elects to foreclose by
advertisement pursuant to the Power of Sale, in accordance with MCLA
600.3201 et seq., the Mortgagor expressly waives a hearing prior to sale
and any rights, constitutional or otherwise, that the Mortgagor might
otherwise have to require any judicial foreclosure. The Mortgagee shall
give at least 20 days' notice of such sale by three publications in any
newspaper, daily or weekly, of general circulation published in the County
in which the Mortgaged Property is located and all other such additional
notice, if any, required by applicable law. Further, the Mortgagee shall
give notice of such sale by registered or certified mail to Mortgagor once
at least 20 days prior to the date of such sale and any other such
additional notice, if any, required by applicable law. This Power of Sale
shall not be exhausted by any one or more such sales as to any apart of the
Mortgaged Property not theretofore lawfully sold, but shall continue
unimpaired until all the Mortgaged Property shall have been sold or the
indebtedness secured hereby shall have been fully paid and satisfied.
<PAGE>
28
WARNING: THIS MORTGAGE CONTAINS A POWER OF SALE AND UPON DEFAULT MAY
BE FORECLOSED BY ADVERTISEMENT. IN FORECLOSURE BY ADVERTISEMENT AND SALE OF
THE MORTGAGED PROPERTY IN CONNECTION THEREWITH, NO HEARING IS REQUIRED AND
THE ONLY NOTICE REQUIRED IS TO PUBLISH NOTICE IN A LOCAL NEWSPAPER AND TO
POST A COPY OF THE NOTICE ON THE PREMISES.
(d) The Mortgagee may proceed to protect and enforce its rights by a
suit or suits in equity or at law, or for the specific performance of any
covenant or agreement contained herein or in the Notes, or in aid of the
execution of any power herein or therein granted, or for the foreclosure of
this Mortgage, or for the enforcement of any other appropriate legal or
equitable remedy. Upon the bringing of any suit to foreclosure this
Mortgage or to enforce any other remedy available hereunder, the plaintiff
shall be entitled as a matter of right, without notice and without giving
bond to the Mortgagor or anyone claiming under, by or through it, and
without regard to the solvency or insolvency of the Mortgagor or the then
value of the Mortgaged Property, to have a receive appointed of all the
Mortgaged Property and of the earnings, income, rents, issues, profits and
proceeds thereof, with such power as the court making such appointment
shall confer, and the Mortgagor does hereby irrevocably consent to such
appointment.
(e) In case of any sale of the Mortgaged Property, or of any part
thereof, pursuant to any judgment or decree of any court or otherwise in
connection with the enforcement of any of the terms of this Mortgage, the
principal of the Notes, if not previously due, and the interest accrued
thereon, shall at once become and be immediately due and payable; also in
the case of any such sale, the Mortgagee may bid and become the purchaser,
and the purchaser or purchasers, for the purpose of making settlement for
or payment of the purchase price, shall be entitled to turn in and use the
Notes and any claims for interest and premium matured and unpaid thereon,
in order that there may be credited as paid on the purchase price the sum
apportionable and applicable to the Notes, including principal and interest
and premium thereof, out of the net proceeds of such sale after allowing
for the proportion of the total purchase price required to be paid in
actual cash. If at any foreclosure proceeding the Mortgaged Property shall
<PAGE>
29
be sold for a sum less than the total amount of indebtedness for which
judgment is therein given, the Mortgagee shall be entitled to the entry of
a deficiency decrees against the Mortgagor and against the property of the
Mortgagor for the amount of such deficiency.
(f) In addition to any other remedies provided for hereby or by law,
the Mortgagee shall have the rights of a secured party under the Uniform
Commercial Code of the jurisdiction in which the Mortgaged Property is
located upon the occurrence and continuance of an Event of Default
hereunder. any requirement of said Uniform Commercial Code or reasonable
notification shall be met by mailing written notice to the Mortgagor, at
its address set forth in section 6.3 hereof, at least 10 days prior to the
sale or other event for which such notice is required.
It is understood and agreed that the Notes are also secured by other
mortgages and deeds of trust and that in case of default in any of the terms,
conditions or provisions of this Mortgage or the Indenture, the Mortgagee may
resort to part or all of the security for the Notes, the Note Agreements and the
Indenture and foreclose the mortgages and deeds of trust in any order. The
pendency of any proceeding with respect to any one of the above- mentioned
mortgages and deeds of trust shall not be grounds for the abatement of, or for
hindering, staying, delaying or preventing any proceeding with respect to
foreclosure of this Mortgage.
5.3 Application of Proceeds. The purchase money proceeds and/or avails
of any sale of the Mortgaged Property, or any part hereof and the proceeds and
the avails of any remedy hereunder and all insurance monies or proceeds or
awards of condemnation paid to the Mortgagee pursuant to the provisions of
section section 2.6 and 3.2 hereof shall be paid to the Trustee under the
Indenture and such Trustee shall apply such proceeds and avails, and all
insurance monies and proceeds or awards of condemnation held by the Mortgagee
during the continuation of any Event of Default, in the manner provided in
section 6.10 of the indenture.
5.4 Waiver of Extension, Appraisement and Stay Laws. The Mortgagor
covenants that, to the extent that such rights may be lawfully waived, it will
not now, or at any time hereafter, insist upon or plead, or in any manner
whatever claim or take any benefit or advantage of, legal, equitable and
statutory rights of redemption, exemption or homestead, any stay or extension
law now or at any time
<PAGE>
30
hereafter in force or any other similar exemptions and rights arising under or
created by an applicable statute or judicial decision, or claim, take or insist
upon any benefit or advantage of or from any law now or hereafter in force
providing for the valuation or appraisement of the Mortgaged Property or any
part thereof prior to any sale or sales thereof to be made pursuant to any
provision herein contained, or to the decree, judgment or order of any court of
competent jurisdiction or, after confirmation of any such sale or sales claim or
exercise any right under any statute now or hereafter made or enacted by any
state or otherwise to redeem the property so sold or any part thereof, and
hereby expressly waives for itself and on behalf of each and every person who
may claim under it, all benefit and advantage of any such law or laws which
would otherwise be available to any such person in connection with the
enforcement of any of the Mortgagee's remedies hereunder; and covenants that it
will not in connection with any such enforcement proceedings invoke or utilize
any such law or laws or otherwise hinder, delay or impede the execution of any
power herein granted and delegated to the Mortgagee but will suffer and permit
the execution of every such power as though no such law or laws had been made or
enacted.
Any sale, whether under any power of sale hereby given or by virtue of
judicial proceedings, shall operate to divest all right, title, interest, claim
and demand whatsoever, either at law or in equity, of the Mortgagor in and to
the property sold and shall be a perpetual bar, both at law and in equity,
against the Mortgagor, its successors and assigns, and against any and all
persons claiming the property sold or any part thereof under, by or through the
Mortgagor, its successors or assigns.
5.5 Waste. The failure of the Mortgagor to pay any taxes or
assessments assessed against the Mortgaged Property or any installment thereof,
or any premiums payable with respect to any insurance policy covering the
Mortgaged Property shall constitute waste, as provided by Michigan Compiled
Laws, 194B, as amended, Section 600.2927. The Mortgagor further hereby consents
to the appointment of a receiver under said statute, should the Mortgagee elect
to seek such relief thereunder.
5.6 Effect of Discontinuance of Proceedings. In case the Mortgagee
shall have proceeded to enforce any right under this Mortgage by foreclosure,
sale, entry or otherwise, and such proceedings shall have been discontinued or
abandoned for any reason or shall have been determined adversely, then and in
every such case the Mortgagor and the Mortgagee shall be restored to their
position and rights hereunder as they existed immediately prior to the
commencement of such proceedings with respect to the property subject to the
lien of this Mortgage.
<PAGE>
31
5.7 Delay or Omission Not a Waiver. No delay or omission of the
Mortgagee to exercise any right or power arising from any default on the part of
the Mortgagor shall exhaust or impair any such right or power or prevent its
exercise during the continuance of such default. No waiver by the Mortgagee of
any such default, whether such waiver be full or partial, shall extend to or be
taken to affect any subsequent default, or to impair the rights resulting
therefrom, except as may be otherwise provided herein. No remedy hereunder is
intended to be exclusive of any other remedy but each and every remedy shall be
cumulative and in addition to any and every other remedy given hereunder or
otherwise existing. Nor shall the giving, taking or enforcement of any other or
additional security, collateral or guaranty for the payment of the indebtedness
secured under this Mortgage operate to prejudice, waive or affect the security
of this Mortgage or any rights, powers or remedies hereunder; nor shall the
Mortgagee be required to first look to, enforce or exhaust such other or
additional security, collateral or guaranties.
SECTION 6. MISCELLANEOUS.
6.1 Successors and Assigns. Whenever any of the parties hereto is
referred to, such reference shall be deemed to include the successors and
assigns of such party; and all the covenants, promises and agreements in this
Mortgage contained by or on behalf of the Mortgagor, or by or on behalf of the
Mortgagee, shall bind and inure to the benefit of the respective successors and
assigns of such parties whether so expressed or not.
6.2 Severability. The unenforceability or invalidity of any provisions
or provisions of this Mortgage shall not render any other provisions or
provisions herein contained unenforceable or invalid.
6.3 Addresses for Notices. All notices or other communications
required or contemplated by the provisions hereof shall, unless otherwise
specified, be in writing and shall be deemed to have been given or made on the
fifth business day after deposit thereof in the United States mail, by
registered or certified mail, postage prepaid, or when received if delivered by
hand or sent by facsimile communication the receipt of which is confirmed,
addressed as follows:
<PAGE>
32
If to the Mortgagor: Havenwyck Hospital, Inc.
1525 University Drive
Auburn Hills, Michigan 48057
Attention: Chief Financial
Officer
FAX: ______________________
Telephone:_________________
If to the Mortgagee: The Citizens and Southern
National Bank, as trustee
under a Trust Indenture
dated as of March 31, 1990
33 North Avenue, N.E.
Atlanta, Georgia 30308
Attention: Corporate Trust
Department
FAX: (404) 897-3142
Telephone: (404) 897-3147
Any party may designate any additional or different address for
subsequent notices or communications by notice duly given in accordance with
this Section to the other party.
6.4 Headings and Table of Contents. The headings of the sections of
this Mortgage and table of contents are inserted for purposes of convenience
only and shall not be construed to affect the meaning or construction of any of
the provisions hereof.
6.5 Release of Mortgage. The Mortgagee shall release and discharge
this Mortgage and the lien hereof by proper instrument or instruments upon
presentation of satisfactory evidence that all indebtedness secured hereby has
been fully paid or discharged.
6.6 Counterparts. This Mortgage may be executed, acknowledged and
delivered in any number of counterparts, each of such counterparts constituting
an original but all together only one Mortgage.
6.7 GOVERNING LAW. THIS MORTGAGE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH MICHIGAN LAW.
<PAGE>
IN WITNESS WHEREOF, the Mortgagor has caused this Mortgage to be
executed in its behalf by its President and attested by its Assistant Secretary
and The Citizens and Southern National Bank, a national banking association, as
Trustee, has caused this Mortgage to be executed on its behalf by one of its
Corporate Trust Officers and attested by one of its Senior Vice Presidents and
Susan L. Adams, as Individual Trustee, has hereunto set her hand, all as of the
day and year above written.
Witnesses: HAVENWYCK HOSPITAL, INC.
________________________________
Printed name:___________________
By_______________________
________________________________ Its President
Printed name:___________________
ATTEST:
________________________________
Assistant Secretary
Witnesses: THE CITIZENS AND SOUTHERN
NATIONAL BANK, a national
banking association, as
Trustee
________________________________
Printed name:___________________
By_______________________
________________________________ Its ___________________
Printed name:___________________
ATTEST:
By: ____________________________
Its_________________________
Witnesses: SUSAN L. ADAMS, as
Individual Trustee
________________________________ ________________________
Printed name:___________________
________________________________
Printed name:___________________
<PAGE>
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
On this ________ day of April, 1990, before me __________, a Notary
Public, personally appeared Ralph J. Watts, who acknowledged himself to be the
President of Havenwyck Hospitals, Inc., a Michigan corporation, and that he, as
such President, being duly authorized so to do, executed the foregoing
instrument for the purposes therein contained, by signing the name of the
corporation by himself as President.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
(Notarial Seal)
_____________________________
Notary Public
My commissions expires: _________________, 1990 ______.
<PAGE>
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
On this ________ day of _______, 1990, before me __________, a Notary
Public, personally appeared __________, who acknowledged himself to be
________________ of the Citizens and Southern National Bank, a national banking
association, and that he, as such ___________, being duly authorized so to do
executed the foregoing instrument for the purposes therein contained, by signing
the name of said bank by himself as ______________.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
(Notarial Seal)
_____________________________
Notary Public
My commissions expires: _________________, 1990 ______.
<PAGE>
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
On this ________ day of _______, 1990, before me __________, a Notary
Public, personally appeared Susan L. Adams, known to me to be the person whose
name is subscribed to the within instrument as the Individual Trustee and
acknowledged to me that she executed the same as such Individual Trustee.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
_____________________________
Notary Public
(Notarial Seal)
My commissions expires: _________________, 1990 ______.
<PAGE>
LEGAL DESCRIPTION OF REAL PROPERTY
Part of the northwest one-quarter of Section 23, Town 3 North, Range 10 East,
being more particularly described as follows: Beginning at a point which is
North 00 degrees 13 minutes 10 seconds East 1,360.94 feet along the West line of
Section 23, which is also the East line of Assessor's Plat No. 104 (Liber 49,
Page 26 and 26A, Oakland County Records) from the West one-quarter corner of
Section 23, Town 3 North, Range 10 East; thence along the West line of Section
23, 897.98 feet; thence North 69 degrees 00 minutes 00 seconds East 270.00 feet;
thence South 65 degrees 09 minutes 27 seconds East 538.14 feet; thence South 39
degrees 10 minutes 58 seconds East 292.62 feet; thence South 01 degrees 26
minutes 00 seconds West 135.00 feet; thence along the centerline of Mt. Clemens
Road (University Drive), Southwesterly 177.16 feet along a curve concave to the
Northwest (Radius of 1,084.04 feet, central angle 09 degrees 21 minutes 30
seconds, along chord bears South 67 degrees 41 minutes 35 seconds West 176.97
feet), and South 72 degrees 22 minutes 30 seconds West 817.91 feet to the point
of beginning.
Parcel Identification No. 14-23-101-007
Address of Property:
1525 University Drive
Auburn Hills, MI 48057
ANNEX A
(to Mortgage and Security Agreement)
<PAGE>
EXCLUDED PROPERTY
The property covered by the following U.C.C. Financing Statements
constitutes Excluded Property hereunder:
FILING LOCATION: SECRETARY OF STATE, MICHIGAN
DEBTOR: Havenwyck Hospital, Inc.
SECURED PARTY: Inncomp Financial Services
DATE FILED: February 24, 1989
FILING NO.: 0186614
COLLATERAL: Lease computer equipment
FILING LOCATION: SECRETARY OF STATE, MICHIGAN
DEBTOR: Havenwyck Hospital, Inc.
SECURED PARTY Lake Leasing Corporation
DATE FILED: July 24, 1987
FILING NO.: B962221
COLLATERAL: Leased office equipment
FILING LOCATION: SECRETARY OF STATE, MICHIGAN
DEBTOR: Life Center of Auburn Hills
SECURED PARTY: General Funding Corp.
DATE FILED: June 24, 1985
FILING NO.: B682584
COLLATERAL: Copy machine
ANNEX B
(to Mortgage and Security Agreement)
<PAGE>
FILING LOCATION: SECRETARY OF STATE, MICHIGAN
DEBTOR: The Life Center of Michigan,
Inc.
SECURED PARTY: The Citizens and Southern
National Bank
DATE FILED: March 26, 1985
FILING NO.: B647549
COLLATERAL: Chrysler Van
FILING LOCATION: SECRETARY OF STATE, MICHIGAN
DEBTOR: Havenwyck Hospital, Inc.
SECURED PARTY Bankers Leasing Assn., Inc.
DATE FILED: October 26, 1987
FILING NO.: B995664
COLLATERAL: Leased office equipment
ANNEX B
(to Mortgage and Security Agreement)
<PAGE>
SCHEDULE I
Purchasers
Aetna Life Insurance Company
Hartford, Connecticut 06156
Monumental Life Insurance Company
c/o Monumental Corporation
Baltimore, Maryland 21202
Connecticut Mutual Life Insurance Company
Hartford, Connecticut 06154
Schedule I
(to Mortgage and Security Agreement)
<PAGE>
SCHEDULE II
Assigned Agreements
NONE.
Schedule II
(to Mortgage and Security Agreement)
<PAGE>
SCHEDULE III
Pledged Shares
NONE.
Schedule III
(to Mortgage and Security Agreement)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
LEASEHOLD DEED OF TRUST, ASSIGNMENT OF RENTS
AND SECURITY AGREEMENT WITH FINANCING STATEMENT
(FIXTURE FILING)
Dated as of March 31, 1990
FROM
MESA PSYCHIATRIC HOSPITAL, INC.
(the "Grantor")
TO
TRANSAMERICA TITLE INSURANCE COMPANY
(the "Security Trustee")
For the Benefit of
The Citizens and Southern National Bank,
and Susan L. Adams, as trustees under
a Trust Indenture dated as of March 31, 1990
(the "Indenture Trustees" or the "Beneficiaries")
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This instrument was
prepared by and when
recorded return to:
(Mesa, Arizona)
Michael G. McGee
Chapman and Cutler
111 West Monroe Street
Chicago, Illinois 60603
<PAGE>
Table of Contents
Section Page
Parties...................................................................... 1
Granting Clauses............................................................. 2
1. DEFINITIONS.............................................................. 11
2. GENERAL COVENANTS AND WARRANTIES......................................... 15
2.1. Note Agreements and Indenture Covenants.................... 15
2.2. Ownership of Granted Property.............................. 15
2.3. Further Assurances......................................... 15
2.4. Payment of Principal and Interest.......................... 16
2.5. Maintenance of Granted Property, Other Liens,
Compliance with Laws, Etc.................................. 16
2.6. Insurance.................................................. 17
2.7. Payment of Taxes and Other Charges......................... 20
2.8. Advances................................................... 21
2.9. Recordation................................................ 21
2.10. After-Acquired Property.................................... 21
2.11. Priority of this Deed of Trust; Future
Advances; Extensions, Modifications, and
Renewals................................................... 22
3. POSSESSION, USE AND RELEASE OF PROPERTY.................................. 22
3.1. Possession by Company; Dispositions Without
Release.................................................... 22
3.2. Eminent Domain............................................. 24
3.3. Purchaser Protected........................................ 25
3.4. Release of Granted Property - Indenture
Trustees Consent........................................... 25
4. APPLICATION OF INSURANCE AND CERTAIN OTHER MONEYS
RECEIVED BY THE INDENTURE TRUSTEES.................................. 26
4.1. Insurance Proceeds and Condemnation Awards................. 26
4.2. Other Proceeds............................................. 28
5. DEFAULTS AND REMEDIES THEREFOR........................................... 28
5.1. Events of Default.......................................... 28
5.2. Remedies................................................... 28
5.3. Application of Proceeds.................................... 34
5.4. Waiver of Extension, Appraisement and Stay
Laws....................................................... 34
5.5. Effect of Discontinuance of Proceedings.................... 35
5.6. Delay or Omission Not a Waiver............................. 35
6. MISCELLANEOUS............................................................ 36
6.1. Successors and Assigns..................................... 36
-i-
<PAGE>
Section Page
6.2. Severability............................................... 36
6.3. Addresses for Notices...................................... 36
6.4. Headings and Table of Contents............................. 37
6.5. Release of Deed of Trust................................... 37
6.6. Counterparts............................................... 37
6.7. GOVERNING LAW.............................................. 37
6.8. Successor Security Trustee................................. 37
-ii-
<PAGE>
2
THIS LEASEHOLD DEED OF TRUST, ASSIGNMENT OF RENTS AND SECURITY
AGREEMENT WITH FINANCING STATEMENT (FIXTURE FILING) dated as of March 31, 1990
(the "Deed of Trust") from MESA PSYCHIATRIC HOSPITAL, INC., an Arizona
corporation (the "Grantor"), having its principal office at 570 West Brown Road,
Mesa, Arizona 85201 to TRANSAMERICA TITLE INSURANCE COMPANY, a California
corporation (the "Security Trustee"), whose post office address is 235 North 1st
Avenue, Phoenix, Arizona 85003 for the benefit of The Citizens and Southern
National Bank, a national banking association, and SUSAN L. ADAMS, as trustees
under the hereinafter defined Indenture (together, the "Indenture Trustees"),
having an address as set forth in Section 6.3 hereof.
R E C I T A L S
A. Pursuant to a Lease dated May 12, 1986 (the "Ground Lease")
Lutheran Hospitals and Homes Society of America, a North Dakota non-profit
corporation (the "Fee Owner") demised and let to the Grantor the real property
described in Annex A hereto. A memorandum of the Ground Lease was recorded on
September 26, 1986 in Document Number 86-525337 in the records of the recorder
of Maricopa County, Arizona.
B. The Grantor together with the other Obligors have entered into that
certain Trust Indenture dated as of March 31, 1990 (the "Indenture") with The
Citizens and Souther National Bank and Susan L. Adams, as Indenture Trustees,
pursuant to which the Obligors provide for, among other things, the creation and
securing of the full and prompt payment of all amounts due with respect thereto
of the 11.6% Senior Secured Notes of the Obligors due March 31, 2000 in an
aggregate principal amount of $56,500,000 (the "Senior Secured Notes") and the
15.6% Subordinated Secured Notes, of the Obligors due March 31, 2000 in an
aggregate principal amount of $3,000,000 (the "Subordinated Secured Notes")
which Senior Secured Notes and Subordinated Secured Notes (hereinafter
collectively referred to as the "Notes") constitute the joint and several
obligation of the Obligors and are further described in the Indenture. The
holders from time to time of the Notes are hereinafter collectively referred to
as the "Noteholders". Unless herein otherwise defined, all capitalized terms
used herein shall have the same meaning as defined in the Indenture.
C. The Obligors require funds to prepay certain indebtedness for
borrowed money of the Obligors (which indebtedness was issued by or guaranteed
by each of the Obligors) and to finance capital expenditures, renovations and
<PAGE>
3
construction at facilities owned by certain of the Obligors and in order to
strengthen the financial and operating condition of each and every Obligor,
directly and indirectly, as a result of the enhanced ability of the Company to
provide financial, accounting, consulting and administrative assistance and
services to each other Obligor. In order to provide funds for such purposes, the
Obligors have entered into separate and several Note Purchase Agreements each
dated as of March 31, 1990 (the "Note Agreements") with each of the
Institutional Investors (the "Purchasers") named in Schedule I thereto,
providing for the commitment of the Purchasers to purchase the Notes.
D. The Notes are further secured by the Pledge and Security Agreements
dated as of March 31, 1990 (the "Pledges") from the Company, Michigan
Psychiatric Services, Inc., Americare of Galax, Inc. and Bountiful Psychiatric
Hospital, Inc. to the Trustee.
E. The Notes and all principal thereof, premium if any, and interest
thereon and all additional amounts and other sums at any time due and owing
from, and required to be paid by the Obligors, under the terms of the Notes, the
Note Agreements, the Indenture, the Pledge, this Deed of Trust or any other
mortgage or deed of trust executed and delivered by the other Obligors pursuant
to the Indenture are hereinafter sometimes referred to as the "Indebtedness
hereby secured".
F. The Grantor is duly authorized under all applicable provisions of
law, its charter and by-laws to issue the Notes and other indebtedness hereby
secured, to execute and deliver this Deed of Trust and to grant, convey and
assign the "Granted Property" (as hereinafter defined) to the Security Trustee
as security for the Notes and all corporate action and all consents, approvals
and other authorizations and all other acts and things necessary to make this
Deed of Trust the valid, binding and legal instrument for the security of the
Notes have been done and performed.
G. The Purchasers have required as a condition to their purchase of
the Notes that the Grantor execute and deliver this Deed of Trust as security
for the payment of the Notes.
NOW, THEREFORE, THIS DEED OF TRUST WITNESSETH: That the Grantor, in
consideration of the premises, the purchase and acceptance of the Notes by the
Purchasers, and the sum of Ten Dollars received by the Grantor from the
Purchasers and the Indenture Trustees and the Security
<PAGE>
4
Trustee and other good and valuable consideration, receipt whereof is hereby
acknowledged, and in order to strengthen the financial and operating condition
of each and every Obligor directly and indirectly, as a result of the enhanced
ability of the Company to provide financial, accounting, consulting and
administrative assistance and services to each other Obligor, and in order to
secure the payment of the principal of, premium, if any, and interest on the
Notes according to their tenor and effect, and to secure the payment of all
other indebtedness hereby secured and the performance and observance of all the
covenants, agreements and conditions contained in the Notes, this Deed of Trust,
the Note Agreements and indenture, the Grantor does hereby warrant, pledge,
assign, bargain, hypothecate, convey, grant, transfer and set over unto the
Security Trustee and its successors in trust and assigns, and, where applicable,
to the Indenture Trustees for the purposes of personality, rents, issues and
profits, WITH POWER OF SALE, in and to all and singular the following described
properties, rights, interest and privileges and all of the Grantor's estate,
right, title and interest therein, thereto and thereunder (all of which
properties hereby granted, assigned and pledged or intended so to be are
hereinafter collectively referred to as the "Granted Property"):
GRANTING CLAUSE I
All the leasehold estate of the Grantor in the real property and all
the rights, privileges and franchises associated with the parcels of land in
Maricopa County, State of Arizona, described in Annex A attached hereto and made
a part hereof, including without limitation all right, title and interest of the
Grantor in, to and under the Ground Lease, together with the entire interest of
the Grantor in and to all buildings, structures, improvements and appurtenances
now standing, or at any time hereafter constructed or placed upon such land,
including all right, title and interest of the Grantor, if any, in and to all
building material, building equipment, and (except as hereinafter set forth) all
fixtures of every kind and nature whatsoever on said land or in any building,
structure or improvement now or hereafter standing on said land which are
classified as fixtures under applicable law and which are used in connection
with the operation, maintenance or protection of said buildings, structure and
improvements as such (including, without limitation, all boilers, air
conditioning, ventilating, plumbing, heating, lighting and electrical systems
and apparatus, all communications equipment and intercom systems and apparatus,
all sprinkler equipment and apparatus, and all elevators and escalators).
<PAGE>
5
All items included under this Deed of Trust, and the reversion or reversions,
remainder or remainders, in and to said land, and together with the entire
interest of the Grantor in and to all and singular the tenements, hereditaments,
easements, rights of way, rights, privileges and appurtenances to said land,
belonging or in anywise appertaining thereto, including, without limitation, the
entire right, title and interest of the Grantor, in, to and under any streets,
ways, alleys, gores or strips of land adjoining said land, and all claims or
demands whatsoever of the Grantor either in law or in equity, in possession or
expectance, of, in and to said land, it being the intention of the parties
hereto that, so far as may be permitted by law, all property of the character
hereinabove described, which is now owned or is hereafter acquired by the
Grantor and is affixed or attached or annexed to said land, shall be and remain
or become and constitute a portion of said land and the security covered by and
subject to the lien of the Deed of Trust, together with all accessions, parts
and appurtenances appertaining or attached thereto and all substitution,
renewals or replacements of and additions, improvements, accessions and
accumulations to any and all thereof, and together with all rents, income,
revenues, awards, issues and profits thereof, and the present and continuing
right to make claim for, collect, receive and receipt for any and all of such
rents, income, revenues, awards, issues and profits arising therefrom or in
connection therewith (all such property being hereinafter collectively referred
to as the "Land Parcels"). The Granted Property shall not include any personal
property or equipment not owned by the Grantor so long as the same can be
removed without causing material damage to the Granted Property (all such
property being hereafter collectively referred to as "Excluded Property"). The
Excluded Property is described in Annex B hereto.
GRANTING CLAUSE II
All machinery and equipment in all of its forms, wherever located, now
or hereafter existing (including, but not limited to, all drugs, environmental
monitoring devices, medical supplies, hospital supplies, uniforms, x-ray or
nuclear magnetic resonance devices, imaging devices, laboratory equipment,
medical equipment, surgical equipment, quality control equipment, motors, test
equipment, computer software, data processing equipment, printers, presses,
computer test equipment, industrial machinery, equipment and fixtures,
transportation equipment, office and other machinery, video or audio
reproduction devices, stretchers, wheel-chairs, furniture, aircraft, ambulances,
rolling stock, motor vehicles, trailers, tractors, trucks, cars, tools, spare
<PAGE>
6
parts and fuel, items employed in the maintenance or repair of any structure or
any grounds, all foodstuffs of any kind, drawings, books, records and equipment
containing books and records or in which books and records are stored), and all
parts thereof and all accessions thereto and replacements thereof, together with
any additional machinery and equipment that may become part of the Granted
Property or located on the Land Parcels and less any Equipment that may be
deleted from the Granted Property or removed from the Land Parcels, all in
accordance with the terms of this Deed of Trust (any and all such machinery,
equipment, parts and accessions being the "Equipment");
GRANTING CLAUSE III
All insurance proceeds, judgments, awards of damages, settlements and
other compensation arising out of any damage, destruction, condemnation or
taking of the Granted Property; GRANTING CLAUSE IV
All leases and subleases belonging or otherwise appertaining to the
Land Parcels, including all extended terms and all extensions and renewals of
the term of such leases and subleases, together with all right, title and
interest of the Grantor as lessor sublessor thereunder, including, without
limitation, the present and continuing right to make claim for, collect, receive
and receipt for any and all of the rents, income, revenues, issues and profits
and other sums of money payable or receivable under such leases and subleases,
whether payable as rent or otherwise, to receive and give notices thereunder, to
bring actions and proceedings thereunder or for the enforcement thereof, and to
do any and all things which the Grantor or any other lessor or sublessor is or
may become entitled to do under the leases and subleases; provided that the
assignment made by this Granting Clause IV shall not impair or diminish any
obligation of the Grantor under the leases and subleases, nor shall any such
obligation be imposed upon the Indenture Trustees or the holder of any Note;
<PAGE>
7
GRANTING CLAUSE V
All inventory in all of its forms, wherever located, now or hereafter
existing (including, but not limited to (i) drugs, medical supplies, hospital
supplies, books, uniforms, medical equipment, surgical equipment, video or audio
reproduction devices and foodstuffs of any kind, (ii) goods in which the Grantor
has an interest in mass or a joint or other interest or right of any kind
(including, without limitation, goods in which the Grantor has an interest or
right as consignee), and (iii) goods that are returned to or repossessed by the
Grantor), and all accessions thereto and products thereof and documents therefor
(any and all such inventory, accessions, products and documents being the
"inventory");
GRANTING CLAUSE VI
All agreements listed on Schedule II, as each of such agreements may
be amended, supplemented or otherwise modified and in effect from time to time
(such agreements as so amended or modified and in effect, being the "Assigned
Agreements"), including, without limitation, (i) all rights of the Grantor to
receive moneys due and to become due under or pursuant to the Assigned
Agreements, (ii) all rights of the Grantor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect to the Assigned Agreements, (iii)
claims of the Grantor for damages arising out of or for breach of or default or
misrepresentation under the Assigned Agreements or any documents, instruments or
opinions delivered pursuant thereto, (iv) the right of the grantor to terminate
the Assigned Agreements, to perform thereunder and to compel performance and
otherwise exercise all remedies thereunder, and (v) all rights to receive per
diem or other reimbursements and payments from private insurance companies,
federal or state governmental agencies or any other person or entity in respect
of services provided (in each case, to the extent permitted by law);
GRANTING CLAUSE VII
All of the following collateral (the "Security Collateral");
(A) all shares (the "Pledged Shares") of stock described in Schedule
III and issued by the corporations named therein and the certificates
representing the Pledged Shares, and all dividends, cash, instruments and
other property form time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged
Shares; and
<PAGE>
8
(B) all additional shares of stock from time to time acquired by the
Grantor in any manner, and the certificates representing such additional
shares, and all dividends, cash, instruments and other property from time
to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such additional shares;
GRANTING CLAUSE VIII
To the extent not otherwise covered by Granting Clauses I through VII,
inclusive, all cash, accounts, general intangibles (including, but not limited
to, all governmental or regulatory permits or certificates (to the extent
permitted by law); rights to receive per diem or other reimbursements and
payments form private insurance companies, federal or state governmental
agencies or any other person or entity in respect of services provided (in each
case, to the extent permitted by law); tax refunds; intellectual property rights
of any kind (whether arising under federal, state or foreign law), know how,
trade secrets, engineering plans, computer software, drawings and other
proprietary information (including without limitation any business or
organization plans, reports or projections of any kind, whether or not fixed in
any tangible medium); patents and patent applications; unpatented inventions
(whether or not patentable); copyrights; trademarks, trade names, service marks,
trademark and service mark applications, and all goodwill to which the Grantor
is entitled or of any businesses in which the Grantor is engaged, whether or not
such goodwill is associated with or related to any such mark or application;
license agreements relating to any of the foregoing and income therefrom; and
the right to sue for all past, present and future infringements of the
foregoing, contract rights to the extent a security interest or lien may be
granted in or on such contract rights pursuant to the relevant contract
(including, but not limited to, all rights of the Grantor to receive moneys due
and to become due under or pursuant to any accounts, general intangibles and
contract rights and all of the rights of the Grantor to terminate, and to
perform, compel performance and otherwise exercise all remedies under, such
accounts, general intangibles and contract rights), chattel paper, instruments
and other obligations, in each case, of any kind, now or hereafter existing,
whether or not arising out of or in connection with the sale or lease of goods
<PAGE>
9
or the rendering of services, and all rights now or hereafter existing in and to
all mortgages, security agreements, leases and other contracts securing or
otherwise relating to andy such cash, accounts, general intangibles, contract
rights, chattel paper, instruments or other obligations (any and all such cash,
accounts, general intangibles, contract rights, chattel paper, instruments and
obligations being the "Receivables", and any and all such mortgages, security
agreements, leases and other contracts being the "Related Contracts"); and
GRANTING CLAUSE IX
All proceeds of any and all of the foregoing Granted Property
including, without limitation, proceeds that constitute property of the types
described in Granting Clauses I through VIII, inclusive, and, to the extent not
otherwise included, (x) all payments under Insurance (whether or not the
Indenture Trustees are the loss payee thereof), or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to
any of the foregoing Granted Property, and (y) all cash, wherever located, not
included above in clause (x).
SUBJECT, HOWEVER, to Permitted Encumbrances, as defined in section 1
hereof;
TO HAVE AND TO HOLD the Granted Property unto the Security Trustee and
its successors in trust and assigns forever for the purpose of securing
performance of each agreement, covenant and warranty of the Grantor contained
herein and payment of the indebtedness hereby secured from time to time issued
under and pursuant to the Note Agreements and the Indenture. It is understood
and agreed that this Deed of Trust is to secure the obligation of the Grantor to
repay all sums due or to become due in respect of the Notes executed and
delivered pursuant to the Note Agreements and the Indenture, including those
heretofore executed and those of even date herewith.
IN TRUST, NEVERTHELESS, WITH POWER OF SALE, upon the terms and trust
herein set forth for the benefit and security of all present and future
Indenture Trustees and Noteholders in accordance with the terms of the Indenture
and the Notes and all other sums payable hereunder or under the Indenture and
the Notes, and for the performance and observance of the Indenture, the Notes
and this Deed of Trust, all as herein set forth.
<PAGE>
10
PROVIDED, NEVERTHELESS, and these presents are upon the express
condition that if the Grantor performs the covenants herein and in the Indenture
contained and pays to the Indenture Trustee, its successors in trust and
assigns, the full amount of all principal of, and premium, if any, and interest
on the Notes and all other indebtedness hereby secured, the estate, right and
interest of the Security Trustee in the Granted Property shall cease and this
Deed of Trust shall become null and void, but otherwise to remain in full force
and effect.
It is agreed and understood by the parties hereto that:
1. The Notes are to be secured by other mortgages and deeds of trust
of other Obligors on other real estate in the States or Commonwealths of
Michigan, North Carolina, Utah and West Virginia. Each and all of said
mortgages and deeds of trust are intended to and shall constitute security
for the entire indebtedness represented by said Notes without allocation.
2. Any part of the security herein described, and any security
described in any other mortgage or deed of trust or other instrument now or
hereafter given to secure the indebtedness which is secured by this Deed of
Trust, may be released by the Security Trustee without affecting the lien
and security interest hereof on the remainder or the obligations of the
Grantor on and in respect of the Notes and any person acquiring any direct
or indirect interest in the security herein described or in any security
described in any other mortgage or deed of trust or other instrument now or
hereafter given to secure the indebtedness which is secured by this Deed of
Trust shall take the same subject to all of the provisions hereof.
3. The Grantor for itself and all who may claim through or under it
waives andy and all right to have the property and estates comprising the
Granted Property marshalled upon any foreclosure of the lien hereof, or to
have the Granted Property hereunder and the property covered by any other
mortgage or deed of trust securing the Notes marshalled upon any
foreclosure of any of said mortgages or deeds of trust, and agrees that any
court having jurisdiction to foreclose such lien may order the Granted
Property sold as an entirety.
<PAGE>
11
4. Upon the occurrence of an Event of Default hereunder the Security
Trustee has, among other things, the right to sell the Granted Property at
a trustee's sale and/or U.C.C. sale or foreclose on the Granted Property,
in the manner described by applicable law, and dispose of the same. the
Security Trustee's deed or other instrument of conveyance, transfer or
release (which may be executed by the Security Trustee in its own name or
as attorney-in-fact for the Grantor and the Trustee is hereby irrevocably
appointed attorney-in- fact for the Grantor) shall be effective to convey
and transfer to the grantee an indefeasible title to the property covered
thereby, discharged of all rights of redemption by the Grantor or any
person claiming under it, and to bar forever all claims by the Grantor or
the said Security Trustee to the property covered thereby and no grantee
from the Security Trustee shall be under any duty to inquire as to the
authority of the Security Trustee to execute the same, or to see to the
application of the purchase money.
SECTION 1. DEFINITIONS.
Capitalized terms used in this Deed of Trust and not defined herein
shall have the meaning provided therefore in the Indenture. In addition to the
terms elsewhere defined in this Deed of Trust, the following terms shall have
the following meanings for all purposes of this Deed of Trust:
"Appraised Value" with respect to the Granted Property shall mean the
fair market value on the date of an appraisal of the Granted Property as
shown by (i) the appraisal thereof furnished to the Purchasers in
accordance with the provisions of Section 7(a)(vi) of the Note agreements
or Section 10.2(b)(v) or Section 10.2(c)(vi) of the Indenture or (ii) the
appraisal thereof furnished to the Indenture Trustee in accordance with the
provisions of section 4.2 of the Indenture.
"Cost" shall mean an amount equal to the sum of the following items
capitalized on the books of the Grantor in accordance with generally
accepted accounting principles: (i) the actual construction cost thereof,
including cost of land and buildings, landscaping, on and off site
improvements, architectural, engineering and other professional fees,
interest and taxes during construction and all carrying charges, but
<PAGE>
12
excluding the cost of Excluded Property and (ii) fees and expenses in
connection with the placement, issuance and sale of the Notes including
fees and expenses referred to in Section 8 of the Notes including fees and
expenses referred to in Section 8 of the Note Agreements allocated by the
Grantor to the Granted Property, the physical survey an title charges
referred to in Section B(g) of the Note Agreements, the charges for the
environmental audit and appraisal referred to in Sections 8(h) and (i) of
the Note Agreements in respect of such Granted Property incurred by the
Grantor and debt service expenses, and all closing costs with respect to
the Granted Property.
"Default" shall mean nay event or condition, the occurrence of which
would, with the lapse of time or the giving of notice, or both, constitute
an Event of Default.
"Event of Default" shall mean any events specified in section 5
hereof.
"Loan Value" of the Granted Property shall be an amount determined by
multiplying the aggregate unpaid principal amount of the Notes outstanding
immediately prior to the date on which the Loan Value is to be determined
by a fraction the numerator of which is the Appraised Value of the Granted
Property and the denominator is the Appraised Value of al property of the
Obligors which is then subject to the lien of this Deed of Trust and each
and every other mortgage and deed of trust delivered to or for the benefit
of the Indenture Trustee under and pursuant to the Note Agreements and the
Indenture.
"Note" shall mean nay of, and "Notes" shall mean all of, the Notes
then outstanding under the Note Agreements and the Indenture. The term
"outstanding" when used with reference to Notes shall mean, as of any
particular time, all Notes delivered by the Obligors under the Note
Agreements and the Indenture and secured hereby and by each and every other
mortgage delivered pursuant to the Note Agreements and the Indenture,
except:
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13
(a) Notes theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation;
(b) Notes for the payment or prepayment of which moneys in the
necessary amount shall have been paid to the Indenture Trustee,
provided, that if such Notes are to be prepaid prior to the maturity
thereof, notice of such prepayment shall have been given as provided
in Section 5.6 of the Indenture or provision satisfactory to the
Indenture Trustee shall have been made for giving such notice; and
(c) Notes in lieu of or in substitution for which other Notes
shall have been authenticated and delivered pursuant to the terms of
Section 2.6 of the Indenture.
"Officers' Certificate" shall mean a certificate signed by the
President and by any one of the following officers of the Grantor: Vice
President or the Secretary.
"Opinion of Counsel" shall mean an opinion in writing signed by legal
counsel who shall be satisfactory to the Indenture Trustees, and who may be
counsel to the Grantor.
"Permitted Encumbrances" shall mean:
(a) Liens for property taxes and assessments or governmental
charges or levies and liens securing claims or demands of mechanics
and materialmen, provided that payment thereof is not at the time
required by section 2.7;
(b) liens of or resulting form any judgment or award, the time
for the appeal or petition for rehearing of which shall not have
expired, or in respect of which the Grantor shall at any time in good
faith be prosecuting an appeal or proceeding for a review and in
respect of which a stay of execution pending such appeal or proceeding
for review shall have been secured;
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14
(c) liens, charges, encumbrances and priority claims incidental
to the conduct of business or the ownership of properties and assets
(including warehousemen's and attorneys' liens and statutory
landlords' liens) and deposits, pledges or liens to secure the
performance of bids, tenders or trade contracts, or to secure
statutory obligations, surety or appeal bonds or other liens of like
general nature incurred in the ordinary course of business and not in
connection with the borrowing of money, provided in each case, the
obligation secured is not overdue or, if overdue, is being contested
in good faith by appropriate actions or proceedings;
(d) minor survey exceptions or minor encumbrances, easements or
reservations, or rights of others for rights-of-way, utilities and
other similar purposes, or zoning or other restrictions as to the use
of real properties, which are necessary for the conduct of the
activities of the Grantor or which customarily exist on properties of
corporations engaged in similar activities and similarly situated and
which do not in any event materially impair their use in the operation
of the business of the Grantor;
(e) mortgages, deeds of trust, liens and security interests
securing the Notes;
(f) leases permitted by the provisions of section 3.1(d); and
(g) the Ground Lease.
"Person" shall mean an individual, partnership, corporation, trust or
unincorporated organization.
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15
SECTION 2. GENERAL COVENANTS AND WARRANTIES.
The Grantor covenants, warrants and agrees as follows:
2.1. Note Agreements and Indenture Covenants. Each and all of the
terms, provisions, restrictions, covenants and agreements set forth in the
Notes, the Note Agreements, the Pledges and the Indenture, and in each and every
supplement thereto or amendment thereof which may at any time or from time to
time be executed and delivered by the parties thereto or their successors and
assigns, are incorporated herein by reference to the same extent as though each
and all of said terms, provisions, restrictions, covenants and agreements were
fully set out herein and as though any amendment or supplement to the Notes, the
Note Agreements, the Pledges or the Indenture, as the case may be, were fully
set out in an amendment or supplement to this Deed of Trust; and the Grantor
does hereby covenant and agree well and truly to abide by, perform and be
governed and restricted by each and all of the matters provided for by the
Notes, the Note Agreements, the Pledges and the Indenture and so incorporated
herein to the same extent and with the same force and effect as if each and all
of said terms, provisions, restrictions, covenants and agreements so
incorporated herein by reference were set out and repeated herein at length.
Without limiting the foregoing, the Grantor covenants and agrees to pay all
taxes, assessments and governmental charges or levies imposed upon this Deed of
Trust or the Notes or any other indebtedness secured hereby.
2.2. Ownership of Granted Property. The Grantor covenants and warrants
that it has good and marketable title to the Granted Property hereinbefore
conveyed to the Security Trust free and clear of all liens, charges and
encumbrances whatever except Permitted Encumbrances, and the Grantor has full
right, power and authority to grant, convey and transfer the same to the
Security Trustee for the uses and purposes in this Deed of Trust set forth; and
the Grantor will warrant and defend the title to the Granted Property against
all claims and demands whatsoever.
2.3. Further Assurances. The Grantor will, at its own expense, do,
execute, acknowledge and deliver all and every further act, deed, conveyance,
transfer and assurance necessary or proper for the better assuring, conveying,
assigning and confirming unto the Security Trustee all of the Granted Property,
or property intended so to be, whether now owned or hereafter acquired.
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2.4. Payment of Principal and Interest. The Grantor will duly and
punctually pay the principal of, and premium, if any, and interest on all Notes
and all other amounts payable under the indebtedness hereby secured according to
the terms thereof.
2.5. Maintenance of Granted Property, Other Liens, Compliance with
Laws, Etc. (a) Without limiting the provisions of Section 3.8 of the of the
Indenture and subject to section 3 hereof, the Grantor shall (i) promptly
repair, restore or rebuild any buildings, improvements or Equipment now or
hereafter on the Granted Property which may become damages or be destroyed, (ii)
keep the Granted Property in good condition and repair, ordinary wear and tear
excepted, without waste, and free from all claims, liens, charges and
encumbrances other than Permitted Encumbrances, (iii) pay when due any
indebtedness which may be secured by a lien or charge on the Granted Property
and upon request exhibit satisfactory evidence of the discharge of such lien to
the Security Trustees, (iv) comply with all requirements of law or municipal
ordinances with respect to the Granted Property and the use thereof, failure to
comply with which would result in any material interference with the use or
operation of the Granted Property by the Grantor, (v) not, without the prior
written consent of Security Trustees, (A) initiate or support any zoning
reclassification of the Granted Property, seek any variance under existing
zoning ordinances applicable to the Granted Property or use or permit the use of
the Granted Property in a manner which would result in such use becoming a non-
conforming use under applicable zoning ordinances, (B) modify or amend any of
the Permitted Encumbrances, (C) impose any restrictive covenants or encumbrances
upon the Granted Property, execute or file any subdivision plat affecting the
Granted Property or consent to the annexation of the Granted Property to any
municipality or (D) permit or suffer the Granted Property to be used by the
public or any person in such manner as might make possible a claim of adverse
usage or possession or of any implied dedication or easement, and (vi) make no
material alterations in said Granted Property except as required by law or
municipal ordinance; provided, however, the Grantor may make any alterations of
any kind to the Granted Property if (A) the market value of the Granted Property
would not be impaired; (B) such alterations shall be performed in a good and
workmanlike manner; and (C) such alterations shall be expeditiously completed in
compliance with all laws, ordinances, orders, rules, regulations and
requirements applicable thereto, including to the extent necessary to maintain
in full force and effect the policies of insurance required by section 2.6
hereof. The Grantor shall promptly pay all costs and expenses of each such
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17
addition, alteration, substitution and replacement, discharge all liens filed
against the Granted Property arising out of the same and procure and pay for all
permits and licenses required in connection therewith. The Grantor shall notify
the Indenture Trustees and each holder of the Noes of the filing of any lien
against the Granted Property in an amount greater than $25,000.
(b) The Grantor may, at its expense, (i) construct upon the Granted
Property additional buildings, structures and other improvements and (ii)
install, assemble and place upon the Granted Property any items of machinery and
equipment used or useful in the Company's business, in each case upon compliance
with the provisions of paragraph (a) of this section 2.5. All such buildings,
structures and other improvements shall be and remain part of the Land parcels
and shall be subject to this Deed of Trust unless such property shall constitute
Excluded Property. Excluded Property shall not be deemed part of the Granted
Property for purposes of condemnation of casualty, and the Grantor may remove
the same from the Granted Property at any time prior to the expiration or
earlier termination of this Deed of Trust , provided that the Grantor, at its
expense, shall repair any damage to the Granted Property resulting from such
removal.
(c) The Granted Property is not located in an area identified by the
Secretary of Housing and Urban Development or a successor thereto as an area
having special flood hazards pursuant to the terms of the National Flood
Insurance Act of 1968, or the Flood Disaster Protection Act of 1973, as amended,
or any successor law; or if the Granted Property is located in such an area,
Grantor will obtain and maintain insurance against damage or loss by flood on
such basis and in such amounts as shall be required by Indenture Trustees.
(d) The Grantor shall use and operate the Granted Property as a
hospital.
2.6. Insurance. (a) Insurance Against Loss or Damage. The Grantor will
maintain or cause to be maintained with respect to the Granted Property
insurance against loss by fire, windstorm and explosion and with extended
coverage and against such other risks of physical loss as are customarily
insured against, and in such amounts as are customarily carried by companies
owning property of a similar character and similarly located and engaged in a
business similar to that engaged in by the Grantor; provided, however, that the
amount of such insurance with respect to the Granted Property shall not at any
time be less than the greater of replacement value or Loan Value thereof.
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(b) Insurance Against Public Liability Property Damage. The Grantor
will maintain or cause to be maintained in effect, with insurers satisfactory to
the Indenture Trustees, insurance policies with respect to the Granted Property,
insuring against liability for loss or damage to the person or property of
others from such risks and in such amounts as are customarily carried by
companies owning property of a similar character and engaged in a business
similar to that engaged in by the Company; provided, however, that in no event
shall the insurance maintained in accordance with this paragraph be less than an
aggregate of $25,000,000 for claims arising out of a single occurrence and not
less than $25,000,000 in the aggregate for all claims made in any policy year.
All such insurance shall protect the Indenture Trustees and the Grantor in
respect of risks arising out of the condition, maintenance, use, ownership or
operation of the Granted Property. The grantor will indemnify the Indenture
Trustees and holders of the Notes from any and all liability imposed against
said Indenture Trustee and said holders of the Notes arising out of the
condition, maintenance, use, ownership or operation of the Granted Property.
(c) The Grantor will maintain or cause to be maintained:
(i)all such worker's Compensation or similar insurance as may be
required by law;
(ii) use and occupancy (or business interruption) insurance, covering
interruption of the Grantor's operations, in whole or in part, by reason of
the total or partial suspension of, or interruption in, the operation of
the Granted Property caused by the damage to or destruction of any part of
the Granted Property, with such exceptions as are customarily imposed by
insurers, in an amount sufficient to comply with the requirements of a
standard 50% gross earnings business interruption form; and
(iii)maintain liability insurance covering hospital operations,
including malpractice, against claims arising from professional services
performed by the Grantor with limits of not less than $20,000,000 with
respect to injuries or deaths arising out of a single occurrence and not
less than $20,000,000 in the aggregate for all claims made against the
Grantor in any policy year.
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For the purposes of this Section, "policy year" means a period of twelve months
while the insurance coverage in question is in force measured from the effective
date of such coverage or any anniversary of such effective date.
(d) Form of Policies. Any insurance policies carried in accordance
with this section 2.6 shall be written by companies of recognized national
standing authorized to do business in the jurisdiction in which the Granted
Property is located (copies of which will be delivered to the Indenture Trustees
on the Closing Date) and shall provide that: (i) the Indenture Trustees and the
holders of the Notes shall be named as additional insureds, as their interest
may appear, (ii) the Indenture Trustees' interest shall be insured regardless of
any breach or violation by the Grantor of any warranties, declarations or
conditions contained in such policies, (iii) such insurance, as to the interest
of the Indenture Trustees therein, shall not be invalidated by the use or
operation of the Granted Property for purposes which are not permitted by such
policies, (iv) the insurers shall waive any right of subrogation of the insurers
to any set-off or counterclaim or any other deduction, whether by attachment or
otherwise, in respect of any liability of the Grantor, (v) if any premium or
installment is not paid when due, or if such insurance would lapse or be
cancelled, terminated or materially changed for any reason whatsoever, the
insurers will promptly notify the Indenture Trustees and any such lapse,
cancellation, termination or change shall not be effective as to the Indenture
Trustees for 30 days after receipt of such notice, and (vi) appropriate
certification shall be made to the Indenture Trustees by each insurer with
respect thereto.
(e) Loss Payee. Provided no Default or Even t of Default has occurred
and is continuing, the loss, if any, under any policy pertaining to loss by
reason of damage to or destruction or condemnation of any portion of the Granted
Property shall be adjusted with the insurance companies by the Grantor, subject
to the approval of the Indenture Trustees if the loss exceeds 4100,000. The loss
so adjusted shall be paid to the Indenture Trustees pursuant to said loss
payable clause unless said loss is $100,000 or less in which case said loss
shall be paid directly to the Grantor, provided no Default or Event of Default
has occurred and is continuing, in which event any such loss shall be paid to
the Indenture Trustees.
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2.7. Payment of Taxes and Other Charges. The Grantor will pay and
discharge, before the same shall become delinquent, together with interest and
penalties thereon, if any, (a) all taxes, assessments (including assessments for
benefits from public works or improvements whenever begun or completed), levies,
fees, water and sewer rent sand charges, and all other governmental charges,
general and special, ordinary and extraordinary, and whether or not within the
contemplation of the parties hereto, which are at any time levied upon or
assessed against it or the Granted Property or any part thereof or upon the real
property describe din annex A and required to be paid under the terms of the
Ground Lease or upon this Deed of Trust or the Notes secured thereby, or upon
the revenues, rents, issues, income and profits in respect of the Granted
Property, or arising in respect of the occupancy, use or possession thereof,
which failure to pay would result in the creation of a lien upon the Granted
Property or any part thereof, or upon the revenues, rents, issues, income and
profits of the Granted Property or in the diminution thereof or would result in
any material interference with the use or operation of the Granted Property by
the Grantor, (b) al corporate franchise, excise and other taxes, fees and
charges assessed, levied or imposed in respect of its corporate existence or its
right to do business in any state, (c) all income, excess profits, excise,
sales, franchise, gross receipts and other taxes, duties or imposts, whether of
a like or different nature, assessed, levied or imposed by any governmental
authority on it or the Granted Property, or any portion thereof, or upon the
revenues, rents, issues, income and profits of the Granted Property whether or
not the failure to pay any such tax, duty or impost might result in the creation
of a lien upon any assets of the Grantor or the Granted Property, or any portion
thereof, or upon the revenues, rents, issues, income and profits of the Granted
Property whether or not the failure to pay any such tax, duty or impost might
result in the creation of a lien upon any asset of the Grantor or the Granted
Property or any part thereof or upon the revenues, rents, issues, income and
profits of the Granted Property or in the diminution thereof, and whether or not
any such tax, duty or impost is payable directly by the Grantor or is subject to
withholding at the source and (d) all lawful claims and demands of mechanics,
laborers, materialmen and others which, if unpaid, might result in the creation
of a lien on the Granted Property or upon the revenues, rents, issues, income
and profits of the Granted Property and, in general, will do or cause to be done
everything necessary so that the lien hereof shall be fully preserved, at the
cost of the Grantor, without expense to the Indenture Trustees.
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Nothing in this section 2.7 shall require the payment of any sum which
is required to be paid by the Grantor pursuant to this section 2.7 so long as
the Grantor shall in good faith contest its obligation so to do by appropriate
proceedings which will prevent the forfeiture or sale of any property of the
Grantor or any material interference with the use or operation thereof by the
Grantor, and shall set up a a reserve, reasonably adequate, in the opinion of
the President or any Vice President of the Grantor against any such payment.
2.8. Advances. If the Grantor shall fail to comply with the covenants
contained herein or in the Note Agreements or the Indenture with respect to the
procuring of insurance, the payment of taxes, assessments and other charges, or
the keeping of the Granted Property in repair and free of other liens, the
Indenture Trustees may make advances to perform the same; and the Grantor agrees
to repay all sums so advanced upon demand with interest at a rate equal to the
greater of (i) 13.6% per annum and (ii) the sum of (A) the rate of interest
publicly announced by Morgan Guaranty Trust Company of New York from time to
time in New York City as its prime rate plus (B) 1% after demand; and evidenced
by the Notes or any of them; but no such advance shall be deemed to relieve the
Grantor form any default hereunder.
2.9. Recordation. The Grantor will, at its own expense, cause this
Deed of Trust, all supplements hereto, and any financing statements and
continuation statements required by law, including the Uniform Commercial Code,
in respect thereof at all times to be kept recorded and filed at its own expense
in such manner and in such places as may be required by law in order to fully
preserve and protect the rights of the Security Trustee and Indenture Trustees
hereunder, and will furnish to the Indenture Trustees promptly, and in any event
within thirty (30) days, after the execution and delivery of this Deed of Trust
and of each supplement an Opinion of Counsel stating that in the opinion of such
counsel this Deed of Trust or such supplement or such financing statement or
continuation statement, as the case may be, has been properly recorded or filed
for record so as to make effective of record the lien intended to be created
hereby.
2.10. After-Acquired Property. Any and all property hereafter acquired
which is of the kind or nature described in the Granting Clauses hereof and is
or intended to become a part thereof, shall ipso facto, and without any further
conveyance, assignment or act on the part of the Grantor or the Security Trustee
and Indenture Trustees and be, subject to the lien of this Deed of Trust as
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22
fully and completely as though specifically described herein; but nevertheless
the Grantor shall from time to time, if requested by the Indenture Trustees,
execute and deliver any and all such further assurances, conveyances and
assignments thereof as the Indenture Trustees may reasonably require for the
purpose of expressly and specifically subjecting to the lien of this Deed of
Trust any and all such property.
2.11. Priority of this Deed of Trust; Future Advances; Extensions,
Modifications, and Renewals. Any portion of the indebtedness hereby secured
which is incurred after the execution of this Deed of Trust pursuant to the
Indenture or any supplemental indenture referencing this Deed of Trust, or which
is evidenced by any instrument stating that the indebtedness hereby secured is
secured by this Deed of Trust, shall be defined as a Future Advance. This
paragraph shall serve as notice to any subsequent encumbrancer of the Granted
Property that the Security Trustee and the Indenture Trustees claim the priority
of the lien of this Deed of Trust for all such Future Advances, as well as for
all other indebtedness hereby secured. This paragraph shall also be notice that
the Indenture Trustees reserve the right to modify, extend, consolidate, and
renew the indebtedness hereby secured, or any portions thereof, and the rates of
interest charge thereon, without affecting the priority of the lien created by
this Deed of Trust.
SECTION 3. POSSESSION, USE AND RELEASE OF PROPERTY.
3.1. Possession by Company; Dispositions Without Release. So long as
no Default or Event of Default has occurred and is continuing, the Grantor shall
be permitted, subject to the provisions of this Section, to possess, use,
manage, operate and enjoy the Granted Property and to collect, receive, use,
invest and dispose of the rents, issues, profits, and other income from the
Granted Property, with power, in the ordinary course of business, freely and
without hindrance on the part of the Indenture Trustees, to use, consume and
dispose of any thereof except such as are subject to the lien hereof or intended
so to be, and to deal with, exercise any and all rights under, receive and
enforce performance under, and adjust and settle all matters relating to current
performance of, choses in action, leases and contracts.
The Grantor shall have the right, from time to time if no Default
exists hereunder, without any release from or consent by the Indenture Trustees,
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(a) to sell or otherwise dispose of, free from the lien of this
Deed of Trust, any Equipment subject to the lien hereof which, in the
judgment of the Company, may have become obsolete or unfit for use or
no longer useful, necessary or profitable in the conduct of the
business of the Grantor not exceeding in value at the date of
disposition thereof $50,000 in any single transaction or a total of
$100,000 in any calendar year, upon substituting for the same other
Equipment of the same character and of at least equal value, utility
and useful life to the Grantor as, and costing not less than the
amount realized form, the property disposed of, which shall forthwith
become, without further action, subject to the lien of this Deed of
Trust;
(b) to the extent permitted under the Ground Lease, or in
conjunction with the Fee Owner, to grant rights-of-way and easements
over or in respect of any Granted Property, provided that such grant
will not, in the opinion of the Grantor expressed in an Officers'
Certificate furnished to the Indenture Trustees, impair the usefulness
of such property in the conduct of the Grantor's business and will not
be prejudicial to the interests of the holders of the Notes and
provided, further, that any cash consideration in excess of $50,000
received by the Grantor upon or in connection with the granting
thereof, forthwith upon its receipt by the Grantor, shall be deposited
with the Indenture Trustees;
(c) to alter, repair, replace, change the location or position of
and add to the Granted Property, provided that no change shall be made
in the location of any such property subject to the lien of this Deed
of Trust which removes such property into a jurisdiction in which this
Deed of Trust and any required financing or continuation statements
covering security interests in such property have not been recorded,
registered or filed in the manner required by law to preserve the lien
of this indenture on such property or otherwise impairs the lien
hereof; and
(d) to lease and sublease to others form time to time offices and
related areas included in the Granted Property, other than any thereof
essential to the operations carried on at the Granted Property;
provided that such lease is (i) by its terms expressly made subject to
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the lien of this Deed of Trust and (ii) assigned to the Security
Trustee and/or the Indenture Trustees shall be required by the
Indenture Trustee, by an instrument in recordable form and otherwise
satisfactory in form and substance to the Indenture Trustees; and
further provided that the Grantor shall not lease or sublease all or
substantially all of the Granted Property without the prior written
consent of the Required Holders.
The Grantor will deliver to the Indenture Trustees, on or before July
31 in each year after the year 1989, (i) an Officers' Certificate setting forth,
with respect to transactions during the preceding calendar year pursuant to
section 3.1(a), the aggregate fair value at the date or dates of disposition of,
the aggregate amount realized from, and a general description of, any property
disposed of pursuant to section 3.1(a) (and stating that such property had
become obsolete or unfit for use or no longer useful, necessary or profitable in
the conduct of the business of the Grantor) and the aggregate fair value to the
Grantor of, the cost of, and a general description of, any property acquired in
substitution for such property sold or disposed of, (ii) such supplemental
mortgages, deeds of trust, financing statements or other instruments as may be
necessary for the purpose of effectually subjecting such acquired property to
the lien hereof and any lease assignment of a lease entered into pursuant to
section 3.1(d) and (iii) an Opinion of Counsel that such supplemental mortgages,
deeds of trust, financing statements, lease assignments or other instruments
have been duly executed and are sufficient for such purpose or that no such
supplemental mortgages, deeds of trust, financing statements, lease assignments
or instruments are necessary.
3.2. Eminent Domain. If all or any of the Granted Property shall be
taken by eminent domain or shall be sold in lieu and in reasonable anticipation
of the taking thereof by eminent domain, the Security Trustee at the request and
direction of the Indenture Trustees may release the property so taken and shall
be fully protected in so doing upon the Indenture Trustees being furnished with:
(a) an Officers' Certificate requesting such release, describing
the property so to be released and stating that such property has been
taken by eminent domain or that such sale has been made in lieu of and
in reasonable anticipation of a taking by eminent domain, accompanied
by an appropriate instrument of release;
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(b) an Opinion of Counsel to the effect that such property has
been (i) lawfully taken by exercise of the right of eminent domain or
(ii) sold in lieu and in reasonable anticipation of the taking of such
property by eminent domain and that such property could lawfully have
been taken by the grantee by eminent domain, that the award for such
property so taken has become final or an appeal therefrom is not
advisable in the interests of the Indenture Trustees or the holders of
the Notes and that the execution of such instrument is appropriate to
evidence such release; and
(c) except as otherwise provided in section 4.1, each equal to
such award to be held and applied by the Indenture Trustees under the
Indenture.
3.3. Purchaser Protected. No purchaser in good faith of property
purporting to be released herefrom shall be bound to ascertain the authority of
the Security Trustee, the Indenture Trustees or the holders of the Notes to
execute a release or to inquire as to the existence of any conditions herein
prescribed for the exercise of such authority. No purchaser of or lessee of any
property or rights permitted by this Article to be sold, leased or otherwise
disposed of by the Grantor shall be under any obligation to ascertain or inquire
into the authority of the Grantor to make any such sale, lease or other
disposition. Any release executed by the Security Trustee, the Indenture
Trustees or the holders of the Notes under this Section shall be sufficient for
the purpose of this Deed of Trust and shall constitute a good and valid release
of the property therein described from the lien hereof.
3.4. Release of Granted Property - Indenture Trustees Consent. In
addition to the sales and releases pursuant to section section 3.2 and 3.3
hereof, and, to the extent and on the terms and upon compliance with the
conditions provided for in any written consent given thereto at any time or from
time to time by the holders of the Notes, the Grantor may sell or otherwise
dispose of any Granted Property then subject to the lien of this Deed of Trust
or any deed of trust supplement hereto, and the Security Trustee at the request
of the Indenture Trustees shall, subject to the terms of the Indenture, release
the same from the lien hereof.
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26
SECTION 4. APPLICATION OF INSURANCE AND CERTAIN OTHER MONEYS RECEIVED BY THE
INDENTURE TRUSTEES.
4.1. Insurance Proceeds and Condemnation Awards. (a) All proceeds of
fire and extended coverage insurance and of condemnation awards covering the
Granted Property equal to or in excess of $100,000 received by the Trustee under
the provisions of this Deed of Trust and/or the Indenture or any instruments
supplemental hereto or thereto, or under any policy or policies of insurance
covering the Granted Property or any part thereof, shall be held by the
Indenture Trustees as part of the Granted Property and shall be applied by the
Indenture Trustees as follows:
(i)If the total amount of any one loss or condemnation or taking, as
the case may be, shall equal or exceed $100,000 and the Cost of rebuilding
or restoring the Granted Property (as evidenced by an Officers' Certificate
of the Grantor detailing the same) shall be less than the proceeds of
insurance or the award or consideration received on account of condemnation
or other taking of the Granted Property, the Grantor shall prepay the Notes
pursuant to Section 3.3 of the Indenture in a principal amount equal to
such excess, together with interest accrued on the Notes to be prepaid to
the date of payment and premium equal to the Yield-Maintenance Premium,
upon the terms and in the manner provided in Section 5.3 of the Indenture
and the balance, if any, of any such proceeds shall be released to or upon
the order of the Grantor in accordance with clause (ii) below. Any
application of moneys pursuant to his section 4.1(m)(i) shall be made by
the Grantor within 60 days after the completion of the rebuilding or
restoration of the Granted Property; and
(ii) If the total amount in the case of any one loss or condemnation
or taking, as the case may be, shall equal or exceed $100,000, such
proceeds shall be paid to the Grantor from time to time upon a written
application signed by the President and any Vice President of the Grantor
and accompanied by an approving certificate of an architect or engineer
selected by the Grantor and approved by the Indenture Trustees, for the
purpose of paying, or reimbursing the Grantor for the payment of, the
reasonable cost, as shown by such certificate, of repairing or replacing
part or all of the property, damaged or destroyed, but only if written
<PAGE>
27
application is made therefore within 12 months of the receipt of such
proceeds by the Indenture Trustees, and then only for an to the extent that
the Grantor shows by such architect's or engineer's certificates or other
evidence satisfactory to the Indenture Trustees that the portion of such
proceeds remaining on deposit with the Indenture Trustees, together with
any additional funds irrevocably allocated or otherwise provided for in a
manner satisfactory to the Indenture Trustees for such purpose, shall be
sufficient to complete such repairs or replacements and restore the Granted
Property as nearly as possible to the market value and condition which
existed immediately prior to the damage, destruction, condemnation or
taking, as the case may be, free form liens or encumbrances except this
Deed of Trust and Permitted Encumbrances. Every such application for the
payment f such insurance or condemnation moneys shall state that no Default
or Event of Default has occurred and is continuing and shall be accompanied
by a date down endorsement to the lender's title insurance policy being
delivered pursuant to Section 7(a)(iv) of the Note Agreement insuring that,
as of the date of such payment, the property will be subject to the lien of
this Deed of Trust as a first lien thereon subject only to Permitted
Encumbrances. The Grantor will remain solely responsible for the
rebuilding, restoration or substitution of the Granted Property, whether or
not the proceeds of insurance maintained in accordance with the provisions
hereof are sufficient therefor.
(b) In cases involving insurance proceeds where the amount of any one
loss is less than $100,00 and no Default or Event of Default shall have occurred
and be continuing under this Deed of Trust, the amount payable in respect of any
such loss will be received by the Indenture Trustees and shall be by the
Indenture Trustees paid over immediately to the Grantor for use by the Grantor
in paying for replacement or repair of or substitutes for the damaged or
destroyed property.
(c) Subject to section 2.6(e) hereof with respect to adjustments of
losses, any appraisal or adjustment of such loss or any settlement or payment of
indemnity therefore which shall be agreed upon between the Grantor and the
relevant insurance company shall be accepted by the Indenture Trustees.
<PAGE>
28
(d) In the event the insurance moneys or condemnation award, as the
case may be, shall not have been applied to one or more of the purposes
specified in section 4.1(a) hereof within the 12-month period provided for
thereby, then Indenture Trustees shall apply such insurance moneys or
condemnation award, as the case may be, to the prepayment, with premium, of the
Notes together with interest accrued thereon in an amount sufficient to exhaust
such cash as nearly as may be upon giving the Grantor 10 days's advance notice
of its intent so to do, such prepayment to be made in units of $1,000 but
otherwise to be made ratably on all outstanding Notes in accordance with the
principal amounts unpaid thereon, together with interest accrued thereon and a
premium equal to the Yield-Maintenance Premium; any balance remaining after such
prepayment to be released to the Grantor. Partial prepayments made pursuant to
this section 4.1(d) shall be paid and applied upon the terms and in the manner
provided in Section 5 of the Indenture.
4.2. Other Proceeds. Any other moneys received by the Indenture
Trustees in connection with the release of property shall be held by the
Indenture Trustees as part of the Granted Property and shall be applied by the
Indenture Trustees to the prepayment, with premium, of the Notes together with
interest accrued thereon in an amount sufficient to exhaust such cash as nearly
as may be upon giving the Grantor 10 days' advance notice of its intent so to
do, such prepayment to be made in units of $1,000 but otherwise to be made
ratably on all outstanding Notes in accordance with the principal amounts unpaid
thereon, together with interest accrued thereon and a premium equal to the
Yield-Maintenance Premium; any balance remaining after such payment to be
released to the Grantor.
SECTION 5. DEFAULTS AND REMEDIES THEREFOR.
5.1. Events of Default. The Grantor acknowledges and agrees, without
limitation, that each and all of the terms and provisions of Section 5.1 of the
Indenture have been and are incorporated into this Deed of Trust by reference to
the same extent as though fully set out herein and that the term Event of
Default wherever used in this Deed of Trust shall mean an Event of Default as
defined in Section 6.1 of the Indenture.
5.2. Remedies. When any Event of Default has occurred and is
continuing, the Indenture Trustees (or the Security Trustee as may be required
by law) may exercise any one or more or all, and in any order, of the remedies
hereinafter set forth or as provided for in the Indenture, it being expressly
<PAGE>
29
understood that no remedy herein or in the Indenture conferred is intended to be
exclusive of any other remedy or remedies; but each and every remedy shall be
cumulative and shall be in addition to every other remedy given herein or now or
hereafter existing at law or in equity or by statute:
(a) The Indenture Trustees may, by notice in writing to the Grantor,
declare the entire unpaid balance of the Notes to be immediately due and
payable; and thereupon the entire principal and interest accrued on the
Notes and, to the extent permitted by law, the Yield-Maintenance Premium
(as defined in Section 6.4 of the Indenture) shall be and become
immediately due and payable.
(b) The Indenture Trustees (or the Security trustee as may be required
by law) personally or by agents or attorneys may enter into and take
possession of all or any part of the Granted Property, and may forthwith
use, operate and manage the Granted Property, collect the earnings and
income therefrom, pay all principal charges including taxes and assessments
levied thereon and operating and maintenance expenses and all disbursements
and liabilities of the Grantor hereunder and apply the net proceeds arising
from any such operation of the Granted Property as provided in section 5.3
hereof in respect of the proceeds of a sale of the Granted Property.
(c) (i) The Indenture Trustees (or the Security Trustee as may be
required by law) may pursuant to the power of sale granted hereunder, if at
the time such action may be lawful and always subject to compliance with
any mandatory legal requirements, either with or without taking possession
and either before or after taking possession and without instituting any
legal proceedings whatsoever and having first given notice of such sale by
registered or certified mail to the grantor once at least 20 days prior to
the date of such sale, and any other notice which may be required by law,
sell and dispose of said Granted Property or any part thereof at public
auction or private sale, as permitted by applicable law, to the highest
bidder, which may be the Grantor, in one lot as an entirety or in separate
lots (the Grantor for itself and for al who may claim by, through or under
it hereby expressly waiving and releasing all rights to have the property
<PAGE>
30
covered by the lien of this Deed of Trust marshalled), and either for cash
or on credit, as permitted by applicable law, and on such terms as the
Indenture Trustees (or the Security Trustee as may be required by law) may
determine and at any place (whether or not it be the location of the
Granted Property or any part thereof) designated in the notice above
referred to. Any such sale or sales may be adjourned from time to time by
announcement at the time and place appointed for such sale or sales or for
any such adjourned sale or sales, without further published notice.
(ii) The Indenture Trustees (or the Security Trustee as may be
required by law) shall give written notice of the time and place of sale
legally describing the Granted Property to be soled by each of the
following methods:
(A) publication of such notice in a newspaper of general
circulation in the county wherein the Granted Property to be sold is
located (the "County"); such notice to be published at least once a
week for four consecutive weeks, with the last date of publication to
be not less than ten nor more than thirty days prior to the date fixed
for the sale;
(B) posting of such notice, at least twenty days before the date
of sale in come conspicuous place of the Granted Property to be sold,
if such can be accomplished without a breach of the peace, and at one
of the places provided for posting public notices at the court house
of the County;
(C) recording of such notice in the office of the recorder of the
County; and
(D) giving notice to all persons so requesting or who appear on
the records of the county recorder of the County to have an interest
in any of the Granted Property, in accordance with the requirements of
Title 33, Chapter 6.1, Section 33-809.
<PAGE>
31
The Indenture Trustees (or the Security Trustee as may be
required by law) shall also, within five days after the recordation of
such notice of sale, mail by certified or registered mail, with
postage prepaid, a copy of any notice of sale to each party to this
Deed of Trust. Notice to each such party shall contain a statement
that an Event of Default has occurred, and setting forth the nature of
such Event of Default and of the election of the Indenture Trustees
(or the Security Trustee as may be required by law) to sell or cause
to be sold the Granted Property, and such notice shall be signed by
this agent.
The sale shall be held at the time and place designated in the
notice of sale hereinabove referred to, on a day other than a
Saturday, Sunday, or legal holiday, between the hours of nine o'clock
A.M. and five o'clock P.M at a specified place on the Granted
Property, at the court house or at a specified place at the principal
place of business of the Security Trustee, in the County.
The provisions hereof with respect to posting and giving notices
of sale are intended to comply with the provisions of Title 33,
Chapter 6.1 of the Arizona Revised Statutes, as amended, and in the
event the requirement for any notice under such Title 33, Chapter 6.1,
shall be eliminated or the prescribed manner of giving same is
modified by future amendment to such Title 33, Chapter 6.1, the
requirement for such particular notice shall be stricken from or
modified in this instrument in conformity with such amendment. The
manner herein prescribed for serving or giving any notice, other than
that to be posted or caused to be posted by the Indenture Trustees (or
the Security Trustee on behalf of the Indenture Trustees), shall not
be deemed exclusive but such notice or notices may be given in any
other manner which may be permitted by applicable la.w
If at the time designated in the notice of sale, the Security
Trustee, or the attorney conducting the sale, deems it in the interest
of the Indenture Trustees or the Beneficiaries, or both, to postpone
or continue the sale, he may postpone or continue the sale, giving
notice of the new time and place by public declaration at the time and
<PAGE>
32
place last appointed for sale without further published notice. The
purchaser at the sale shall forthwith pay the price bid, either for
cash or on credit and on such terms as the Security Trustee may
determine and at any place (whether or not it be the location of the
Granted Property or any part thereof) designated in the notice above
referred to. Upon receipt of payment the Security Trustee shall
execute and deliver its deed without covenant or warranty expression
implied.
(d) In lieu of the sale pursuant to the power of sale conferred
by this Deed of Trust, at the option of the Indenture Trustees, this
Deed of Trust may be foreclosed in the same manner provided by law for
the foreclosure of mortgages on real property. The Indenture Trustees
shall also have all other rights and remedies available to them
hereunder and at law or in equity, specifically including but not
limited to those described in section 33-702.B of the Arizona Revised
Status, as amended, or any similar or successor statute for the
collection of rents, issues and profits and Arizona Revised Statutes
section 47-9101 et. seq., as amended. All rights and remedies shall be
cumulative. At any time the Indenture Trustees may declare themselves
to be a trustee and may treat this document as a mortgage. In such
event, (i) the Security Trustee shall have not authority and shall be
disregarded, (ii) the references to the "Trustee" shall be deemed to
refer to Indenture Trustees to the extent not inconsistent with
interpreting this instrument as though it were a mortgage, and (iii)
the Grantor in its capacity as mortgagor shall have been deemed to
have conveyed the Granted Property ab initio to the Indenture Trustees
as trustee, such conveyance for security and to be void upon the
condition that the Grantor pay all indebtedness hereby secured and
perform all of its obligations hereby secured.
(e) The Indenture Trustees may proceed to protect and enforce
their rights by a suit or suits in equity or at law, or for the
specific performance of any covenant or agreement contained herein or
in the Notes, or in aid of the execution of any power herein or
therein granted, or for the foreclosure of this Deed or Trust, or for
the enforcement of any other appropriate legal or equitable remedy.
<PAGE>
33
Upon the bringing of any suit to foreclose this Deed of Trust or to
enforce any other remedy available hereunder, the plaintiff shall be
entitled as a matter of right, without notice and without giving bond
to the Grantor or anyone claiming under, by or through it, and without
regard to the solvency or insolvency of the Grantor or the then value
of the Granted Property, to have a receiver appointed of all the
Granted Property and of the earnings, income, rents, issues, profits
and proceeds thereof, with such power as the court making such
appointment shall confer, and the Grantor does hereby irrevocably
consent to such appointment
(f) in case of any sale of the Granted Property, or of any part
thereof, pursuant to any judgment or decree of any court or otherwise
in connection with the enforcement of any of the terms of this Deed of
Trust, the principal of the Notes, if not previously due, and the
interest accrued thereon, shall at once become and be immediately due
and payable; also in the case of any such sale, the Indenture Trustees
may bid and become the purchaser, and the purchaser or purchasers, for
the purpose of making settlement for or payment of the purchase price,
shall be entitled to turn in and use the Notes and any claims for
interest and premium matured and unpaid thereon, in order that there
may be credited as paid on the purchase price the sum apportionable
and applicable to the Notes, including principal and interest and
premium thereof, out of the net proceeds of such sale after allowing
for the proportion of the total purchase price required to be paid in
actual cash. If at any foreclosure proceeding, or sale pursuant to the
power of sale, or U.C.C. sale, the Granted Property shall be sold for
a sum less than the total amount of indebtedness for which judgment is
therein given, the Indenture Trustees shall be entitled to the entry
of a deficiency decree against the Grantor and against the property of
the Grantor for the amount of such deficiency.
(g) In addition to any other remedies provided for hereby or by
law, the Indenture Trustees shall have the rights of a secured party
under the Uniform Commercial Code of the jurisdiction in which the
Granted Property is located upon the occurrence and continuance of an
Event of Default hereunder. Any requirement of said Uniform Commercial
Code for reasonable notification shall be met by mailing written
notice to the Grantor, at its address set forth in section 6.3 hereof,
at least 10 days prior to the sale or other event for which such
notice is required.
<PAGE>
34
It is understood and agreed that the Notes are also secured by other
mortgages and deeds of trust and that in case of default in any of the terms,
conditions or provisions of this Deed of Trust or the Indenture, the Indenture
Trustees may resort to part or all of the security for the Notes, the Note
Agreements and the Indenture and foreclose the mortgages and deeds of trust in
any order. The pendency of any proceeding with respect to any one of the
above-mentioned mortgages and deeds of trust shall not be grounds for the
abatement of, or for hindering, staying, delaying or preventing any proceeding
with respect to foreclosure of this Deed of Trust.
5.3. Application of Proceeds. The purchase money proceeds and/or
avails of any sale of the Granted Property, or any part hereof and the proceeds
and the avails of any remedy hereunder and all insurance monies or proceeds or
awards of condemnation paid to the Indenture Trustees pursuant to the provisions
of section section 2.6 and 3.2 hereof shall be paid to the Indenture Trustees
under the Indenture and such Indenture Trustees shall apply such proceeds and
avails, and all insurance monies and proceeds or awards of condemnation held by
the Indenture Trustees during the continuation of any Event of Default, in the
manner provided in section 6.10 of the Indenture or to the extent section 6.10
of the Indenture conflicts with section 33-812A of the Arizona Revised Statutes,
as amended, then in accordance with section 33-812A of the Arizona Revised
Statutes, as amended, but only to the extent required to be in compliance
therewith.
5.4. Waiver of Extension, Appraisement and Stay Laws. The Grantor
covenants that, to the extent that such rights may be lawfully waived, it will
not now, or at any time hereafter, insist upon or plead, or in any manner
whatever claim or take any benefit or advantage of, legal, equitable and
statutory rights of redemption, exemption or homestead, any stay or extension
law now or at any time hereafter in force or any other similar exemptions and
rights arising under or created by an applicable statute or judicial decision,
or claim, take or insist upon any benefit or advantage of or from any law now or
hereafter in force providing for the valuation or appraisement of the Granted
Property or any part thereof prior to any sale or sales thereof to be made
pursuant to any provision contained, or to the decree, judgment or order of any
court of competent jurisdiction or, after confirmation of any such sale or sales
claim or exercise any right under any statute now or hereafter made or enacted
by any state or otherwise to redeem the property so sold or any part thereof,
<PAGE>
35
and hereby expressly waives for itself and on behalf of each and every person
who may claim under it, all benefit and advantage of any such law or laws which
would otherwise be available to any such person in connection with the
enforcement of any of the Indenture Trustees' remedies hereunder; and covenants
that it will not in connection with any such enforcement proceedings invoke or
utilize any such law or laws or otherwise hinder, delay or impede the execution
of any power herein granted and delegated to the Indenture Trustees but will
suffer and permit the execution of every such power as though no such law or
laws had been made or enacted.
Any sale, whether under power of sale hereby given or by virtue of
judicial proceedings, shall operate to divest all right, title, interest, claim
and demand whatsoever, either at law or in equity, of the Grantor in and to the
property sold and shall be a perpetual bar, both at law and in equity, against
the Grantor, its successors and assigns, and against any and all persons
claiming the property sold or any part thereof under, by or through the Grantor,
its successors or assigns.
5.5. Effect of Discontinuance of Proceedings. In case the Indenture
Trustees (or the Security Trustee on behalf of the Indenture Trustees) shall
have proceeded to enforce any right under this Deed of Trust by foreclosure,
sale, entry or otherwise, and such proceedings shall have been discontinued or
abandoned for any reason or shall have been determined adversely, than and in
every such case the Grantor and the Indenture Trustees (or the Security Trustee
on behalf of the Indenture Trustees) shall be restored to their position and
rights hereunder as they existed immediately prior to the commencement of such
proceedings with respect to the property subject to the lien of this Deed of
Trust.
5.6. Delay or Omission Not a Waiver. No delay or omission of the
Indenture Trustee to exercise any right or power arising from any default on the
part of the Grantor shall exhaust or impair any such right or power or prevent
its exercise during the continuance of such default. No waiver by the Indenture
Trustees (or the Security Trustee on behalf of the Indenture Trustees) of any
such default whether such waiver be full or partial, shall extend to or be taken
to affect any subsequent default, or to impair the rights resulting therefrom,
except as may be otherwise provided herein. No remedy hereunder is intended to
be exclusively of any other remedy but each and every remedy shall to cumulative
and in addition to any and every remedy given hereunder or otherwise existing.
Nor shall the giving, taking or enforcement of any other or additional security,
<PAGE>
36
collateral or guaranty for the payment of the indebtedness secured under this
Deed of Trust operate to prejudice, waive or affect the security of this Deed of
rust or any rights, powers or remedies hereunder nor shall the Indenture
Trustees (or the Security Trustee on behalf of the Indenture Trustees) be
required to first look to, enforce or exhaust such other or additional security,
collateral or guaranties.
SECTION 6. MISCELLANEOUS.
6.1. Successors and Assigns. Whenever any of the parties hereto is
referred to, such reference shall be deemed to include the successors and
assigns of such party; and all the covenants, promises and agreements in this
Deed of Trust contained by or on behalf of the Grantor, or by or on behalf of
the Indenture Trustees (or the Security Trustee on behalf of the Indenture
Trustees), shall bind and inure to the benefit of the respective successors and
assigns of such parties whether so expressed or not. The Grantor expressly
waives the benefits of section section 12-1641 and 12-1642 of the Arizona
Revised Statutes, as amended, and Arizona Rule of Civil Procedure 17(f) or such
similar provisions as may hereafter be adopted or enacted.
6.2. Severability. The unenforceability or invalidity of any provision
or provisions of this Deed of Trust shall not render any other provision or
provisions herein contained unenforceable or invalid.
6.3. Addresses for Notices. All notices or other communications
required or contemplated by the provisions hereof shall, unless otherwise
specified, be in writing and shall be deemed to have been given or made on the
fifth business day after deposit thereof in the United States mail, by
registered or certified mail, postage prepaid, or when received if delivered by
hand or sent by facsimile communication the receipt of which is confirmed,
addressed as follows:
If to the Grantor: Mesa Psychiatric Hospital,
Inc.
570 West Brown Road
Mesa, Arizona 85201
Attention: Chief Financial
Officer
FAX: ________________________
Telephone: __________________
<PAGE>
37
If to the Security Transamerica Title Insurance
Trustee: Company
235 North 1st Avenue
Phoenix, Arizona 85003
Attention: __________________
FAX: (602) __________________
Telephone: __________________
If to the Indenture The Citizens and Southern
Trustees: Bank,
as trustee under an
Indenture of Trust dated
as of March 31, 1990
33 North Avenue, N.E.
Atlanta, Georgia 30302
Attention: Corporate Trust
Department
FAX: (404) 897-3142
Telephone: (404) 897-3147
Any party may designate an additional or different address for
subsequent notices or communications by notice duly given in accordance with
this Section to the other party.
6.4. Headings and Table of Contents. The headings of the sections of
this Deed of Trust and table of contents are inserted for purposes of
convenience only and shall not be construed to affect the meaning or
construction of any of the provisions hereof.
6.5. Release of Deed of Trust. The Indenture Trustees shall release
and discharge this Deed of rust and the lien hereof by proper instrument or
instruments upon presentation of satisfactory evidence that all indebtedness
secured hereby has been fully paid or discharged.
6.6. Counterparts. This Deed of Trust may be executed, acknowledged
and delivered in any number of counterparts, each of such counterparts
constituting an original but all together only one Deed of Trust.
6.7. GOVERNING LAW. THIS DEED OF TRUST SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH ARIZONA LAW.
6.8. Successor Security Trustee. The Beneficiaries may appoint a
successor Security Trustee in the manner prescribed by section 33-804 of the
Arizona Revised Statutes, as amended, or any successor statute. The Security
Trustee may resign by the giving of written notice of such registration to the
<PAGE>
38
Beneficiaries and by such further acts as are required by law. If the Security
Trustee shall resign or become disqualified from executing the obligations under
this Deed of rust or shall fail or refuse to execute the same when requested by
the Beneficiaries to do so, of if, for any reason, the Beneficiaries shall
prefer to appoint a substitute trustee, and if preferred, several substitute
trustees in succession, each such successor trustee shall succeed to all the
estates, rights, powers and duties of the aforenamed Security Trustee.
<PAGE>
39
IN WITNESS WHEREOF, the Grantor has cause this Deed of Trust to be
executed in its behalf by its President and attested by its Assistant Secretary,
all as of the day and year above written.
MESA PSYCHIATRIC HOSPITAL, INC.
By______________________________
Its President
ATTEST:
____________________________________
Assistant Secretary
<PAGE>
40
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
On this ________ day of April, 1990, before me, __________, a Notary
Public, personally appeared Ralph J. Watts, who acknowledged himself to be the
President of Mesa Psychiatric Hospital, Inc., an Arizona corporation, and that
he, as such President, being duly authorized so to do, executed the foregoing
instrument for the purposes therein contained, by signing the name of the
corporation by himself as President.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
_____________________________
Notary Public
(Notarial Seal)
<PAGE>
LEGAL DESCRIPTION OF REAL PROPERTY
PARCEL NO. 1
That part of the East half of the Northwest quarter of the Northeast quarter of
Section 16, Township 1 North, Range 5 East of the Gila and Salt River Base and
Meridian, Maricopa County, Arizona, described as follows:
COMMENCING at the Northeast corner of said Section 16;
thence South 88 degrees 40' 15" West 1253.68 feet to the
Northeast corner of the North 695.00 feet of
said East half;
thence continuing South 00 degree 10' 08" East 2.86 feet
along said East line to a point on the
Northwesterly Right-of-Way line for "Brown
Road" as set forth in instrument recorded in
Docket 9044, page 91 records of said County;
thence along said Northwesterly Right-of-Way,
along a curve to the left having a radius of
470.74 feet, a delta of 32 degrees 30' 03", and a
chord bearing and distance of South 35 degrees 19'
23" West, 263.46 feet, to a Point of Spiral
Curve;
thence continuing along said Northwesterly Right-
of-Way, along said spiral curve to the left,
having an "A" of 10 and a chord bearing and
distance of South 14 degrees 10' 49" West, 115.49
feet, to a Point of Curve;
thence continuing along said Northwesterly Right-
of-Way, along a curve to the left having a
radius of 3183.02 feet, a delta of 00 degree 52'
34" and a chord bearing and distance of South
10 degrees 25' 43" West, 48.66 feet to the most
Southerly corner of that certain parcel
described in said Memorandum of Lease;
thence along a non-tangent line North 12 degrees 58' 08"
West (Record North 12 degrees 43' West) 381.00 feet
to a point on the South line of the North
695.00 feet of said Northwest quarter of the
Northeast quarter, said point being South 88 degrees
40' 15" West, (Record South 88 degrees 47' West)
275.00 feet from the East line of said
Northwest quarter of the Northeast quarter;
thence South 88 degrees 40' 15" West 349.01 feet along
said South line of the North 695.00 feet as
set forth in said Memorandum of Lease;
<PAGE>
2
ANNEX A
(to Deed of Trust and Security Agreement)
<PAGE>
EXCLUDED PROPERTY
The property covered by the following U.C.C. filing Statements
constitutes Excluded Property hereunder:
FILING LOCATION: SECRETARY OF STATE, ARIZONA
DEBTOR: Healthcare Service America
SECURED PARTY: Comstock Leasing
FILING NO.: 481266
DATE FILED: April 10, 1987
COLLATERAL: Leased copier equipment
FILING LOCATION: SECRETARY OF STATE, ARIZONA
DEBTOR: Healthcare Services of America
SECURED PARTY: Comstock Leasing
FILING NO.: 482958
DATE FILED: April 24, 1987
COLLATERAL: Leased office equipment
<PAGE>
SCHEDULE I
Purchasers
Aetna Life Insurance Company
Hartford, Connecticut 06156
Monumental Life Insurance Company
c/o Monumental Corporation
Baltimore, Maryland 21202
Connecticut Mutual Life Insurance Company
Hartford, Connecticut 06154
<PAGE>
SCHEDULE II
Assigned Agreements
NONE.
Schedule II
(to Deed of Trust and Security Agreement)
<PAGE>
SCHEDULE III
Pledged Shares
NONE.
Schedule III
(to Deed of Trust and Security Agreement)
OBLIGOR SUBROGATION
AND CONTRIBUTION AGREEMENT
This OBLIGOR SUBROGATION AND CONTRIBUTION AGREEMENT (this "Agreement")
dated as of April __, 1990, is executed by The Citizens and Southern National
Bank, a national banking association (as Trustee under the Indenture described
below, the "Trustee") and Susan L. Adams (as Individual Trustee under the
Indenture described below, the "Individual Trustee") as Trustees (the
"Trustees") those certain subsidiaries (collectively, the "Principal
Subsidiaries," and each individually a "Principal Subsidiary") of RAMSAY HEALTH
CARE, INC., a Delaware corporation (the "Company"), which are or hereafter
become parties to this Agreement and the Company, for the benefit of each other,
the Company, those certain institutional investors (collectively, the
"Noteholders," and each individually, a "Noteholder") which are holders of the
outstanding Notes under the Indenture described below and with respect to the
following facts:
A. The Company has entered into that certain Trust Indenture (the
"Indenture") dated as of March 31, 1990, together with those certain
subsidiaries of the Company which are or hereafter become parties thereto (the
"Principal Subsidiaries", together with the Company, collectively, the
"Obligors," and each individually, an "Obligor") and the Trustees. All terms
used, but not defined, herein shall have the respective meanings set forth in
the Indenture.
B. The Noteholders have agreed to purchase the $56,500,000 aggregate
principal amount of 11.6% Senior Secured Notes of the Obligors (the "Senior
Secured Notes") and the $3,000,000 aggregate principal amount of 15.6%
Subordinated Secured Notes of the Obligors (the "Subordinated Secured Notes",
collectively with the Senior Secured Notes, the "Notes") on the terms and
subject to the conditions of the Indenture.
C. The Trustees and the Noteholders have required that the Obligors
execute and deliver this Agreement to the Trustees for the benefit of the
Noteholders as a condition to purchasing the Notes.
D. In order to induce the Noteholders to purchase the Notes on the
terms and subject to the conditions of the Indenture, and to effect an equitable
<PAGE>
2
sharing of the risks of the joint and several issuance of the Notes, the
Obligors wish to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration as set forth in Section 1 hereof, the receipt
and adequacy of which are hereby acknowledged, the Obligors hereby agree with
the Trustees and the Noteholders as follows:
1. Consideration. Each Obligor hereby acknowledges that the Company
requires funds to prepay certain indebtedness for borrowed money of the Company
(which indebtedness was issued or guaranteed by each of the Obligors) and to
finance capital expenditures, renovations and construction at facilities owned
by certain of the Obligors, and in order to strengthen the financial and
operating condition of each and every Obligor, directly and indirectly, as a
result of the enhanced ability of the Company to provide financial, accounting,
consulting and administrative assistance and services to each other Obligor and
that, as a result, each Obligor will receive direct and indirect benefits from
the purchase of the Notes contemplated by the Indenture and that the waiver set
forth in this Section 1 knowingly is made in contemplation of such benefits.
2. Contribution Rights. If any Principal Subsidiary makes a payment
with respect to the Notes, it shall have the rights of contribution set forth
below against the other Principal Subsidiaries; provided, however, that such
Principal Subsidiary shall not enforce its right to any payment by way of
exercising its right of contribution or by any other means until after all the
obligations incurred by any of the Obligors under the Indenture shall have been
fully satisfied. If any Principal Subsidiary makes a payment with respect to the
obligations under the Indenture which is smaller in proportion to its Allocable
Share, as determined by the Obligors and as set forth in Schedule A hereto (such
Principal Subsidiary's "Allocable Share"), than the payments made by the other
Principal Subsidiaries are in proportion to the respective Allocable Share, the
Principal Subsidiary making such proportionately smaller payment shall, when
permitted by the preceding sentence, pay to the other Principal Subsidiaries an
amount such that the aggregate amount of the net payments made by the Principal
Subsidiaries with respect to the obligations under the Indenture shall be shared
among the Principal Subsidiaries pro rata in proportion to their respective
Allocable Share. Notwithstanding anything to the contrary set forth in this
Agreement, no liability or obligation of any Principal Subsidiary that shall
<PAGE>
3
accrue pursuant to this Agreement shall be paid, nor shall it be deemed owed
pursuant to this Agreement, until after all of the obligations incurred by any
of the Obligors under the Indenture shall have been fully satisfied.
3. Continuing Agreement to Pay. To the extent that any Obligor makes a
payment or payments to the Trustees or any Noteholder or any Noteholder or the
Trustees receives any proceeds of collateral and a claim is made upon such
Noteholder or the Trustees at any time for repayment or recovery of any such
amount received, and the Trustees or such Noteholder repays or otherwise becomes
liable for all or any part of such claim by reason of (a) any judgment, decree
or order of any court or administrative body having competent jurisdiction, or
(b) any settlement or compromise of any such claim, the obligation or part
thereof which has been paid, reduced or satisfied by such amount shall be
reinstated and continued in full force and effect as of the date such initial
payment, reduction or satisfaction occurred, to the same extent as if such
amount never had been received by the Trustees or such Noteholder,
notwithstanding any termination hereof or the cancellation of the Indenture, the
Notes or any other document, instrument or agreement evidencing any of the
obligations incurred by the Obligors under the transactions contemplated by the
Indenture. Each Obligor shall defend and indemnify the Trustees and each
Noteholder from and against any claim or loss under this Section 3 (including
any reasonable attorneys' fees and expenses) in the defense of any such action
or other proceeding.
4. Relation to Indenture. This Agreement is executed pursuant to the
Indenture and, unless otherwise expressly set forth herein or therein, shall be
construed, administered and applied in accordance with the provisions of the
Indenture.
5. Notices. Any notice, request, demand or other communication
required or permitted under this Agreement shall be given or made in the manner
and to the appropriate address set forth in the Indenture.
6. Amendments. Except as otherwise set forth in the Indenture, the
provisions of this Agreement may not be modified, amended, restated or
supplemented, whether or not the modification, amendment, restatement or
supplement is supported by new consideration, except by a written instrument
duly executed and delivered on behalf of the Trustees and all of the
Noteholders.
<PAGE>
4
7. Waivers and Consents. Except as otherwise set forth in the
Indenture or this Agreement, any waiver of the terms and conditions of this
Agreement, or any Default or Event of Default and its consequences hereunder or
thereunder, and any consent or approval required or permitted by this Agreement
to be given by the Noteholders, may be made or given with, but only with the
written consent of the Trustees and the Required Holders on such terms and
conditions as specified in the written instrument granting such waiver, consent
or approval. A waiver, to be effective, must be in writing and signed by the
party making the waiver.
8. Headings and Captions. The headings and captions used in this
Agreement are solely for the purpose of reference and are not to be considered
as construing or interpreting the provisions hereof.
9. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS, WITHOUT REFERENCE
TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES THEREOF.
10. Necessary Acts. Each Obligor shall perform any further acts and
execute and deliver any additional agreements, assignments, documents or
instruments that may be reasonably necessary to carry out the provisions or to
effectuate the purposes of this Agreement.
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all which shall
together constitute one and the same documents.
IN WITNESS WHEREOF, the Obligors have caused this Agreement to be duly
executed and delivered to the Trustees as of the date first written above.
RAMSAY HEALTH CARE, INC.
By_________________________________
Its President
ATTEST:
_________________________
Assistant Secretary
<PAGE>
5
BOUNTIFUL PSYCHIATRIC HOSPITAL,
INC.
By_________________________________
Its President
ATTEST:
_________________________
Assistant Secretary
CUMBERLAND MENTAL HEALTH, INC.
By_________________________________
Its President
ATTEST:
_________________________
Assistant Secretary
EAST CAROLINA PSYCHIATRIC SERVICES
CORPORATION
By_________________________________
Its President
ATTEST:
_________________________
Assistant Secretary
<PAGE>
6
HAVENWYCK HOSPITAL, INC.
By_________________________________
Its President
ATTEST:
_________________________
Assistant Secretary
MESA PSYCHIATRIC HOSPITAL, INC.
By_________________________________
Its President
ATTEST:
_________________________
Assistant Secretary
PSYCHIATRIC INSTITUTE OF WEST
VIRGINIA, INC.
By_________________________________
Its President
ATTEST:
_________________________
Assistant Secretary
<PAGE>
7
THE CITIZENS AND SOUTHERN NATIONAL
BANK, as Corporate Trustee
By_________________________________
Its Corporate Trust Officer
ATTEST:
_________________________
Senior Vice President
___________________________________
Susan L. Adams,
as Individual Trustee
<PAGE>
8
STATE OF ILLINOIS )
) ss
COUNTY OF COOK )
On this _____ day of April, 1990, before me, _________________, a
Notary Public, personally appeared Ralph J. Watts, who acknowledges himself to
be the President of Ramsay Health Care, Inc., a Delaware corporation, and that
he, as such President, being authorized so to do executed the foregoing
instrument for the purposes therein contained, by signing the name of the
corporation by himself as President.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
___________________________________
Notary Public
(Notarial Seal)
STATE OF ILLINOIS )
) ss
COUNTY OF COOK )
On this _____ day of April, 1990, before me, _________________, a
Notary Public, personally appeared Ralph J. Watts, who acknowledges himself to
be the President of Bountiful Psychiatric Hospital, Inc., a Utah corporation,
and that he, as such President, being authorized so to do executed the foregoing
instrument for the purposes therein contained, by signing the name of the
corporation by himself as President.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
___________________________________
Notary Public
(Notarial Seal)
<PAGE>
9
STATE OF ILLINOIS )
) ss
COUNTY OF COOK )
On this _____ day of April, 1990, before me, _________________, a
Notary Public, personally appeared Ralph J. Watts, who acknowledges himself to
be the President of Cumberland Mental Health, Inc., a North Carolina
corporation, and that he, as such President, being authorized so to do executed
the foregoing instrument for the purposes therein contained, by signing the name
of the corporation by himself as President.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
___________________________________
Notary Public
(Notarial Seal)
STATE OF ILLINOIS )
) ss
COUNTY OF COOK )
On this _____ day of April, 1990, before me, _________________, a
Notary Public, personally appeared Ralph J. Watts, who acknowledges himself to
be the President of East Carolina Psychiatric Services Corporation, a North
Carolina corporation, and that he, as such President, being authorized so to do
executed the foregoing instrument for the purposes therein contained, by signing
the name of the corporation by himself as President.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
___________________________________
Notary Public
(Notarial Seal)
<PAGE>
10
STATE OF ILLINOIS )
) ss
COUNTY OF COOK )
On this _____ day of April, 1990, before me, _________________, a
Notary Public, personally appeared Ralph J. Watts, who acknowledges himself to
be the President of Havenwyck Hospital, Inc., a Michigan corporation, and that
he, as such President, being authorized so to do executed the foregoing
instrument for the purposes therein contained, by signing the name of the
corporation by himself as President.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
___________________________________
Notary Public
(Notarial Seal)
STATE OF ILLINOIS )
) ss
COUNTY OF COOK )
On this _____ day of April, 1990, before me, _________________, a
Notary Public, personally appeared Ralph J. Watts, who acknowledges himself to
be the President of Mesa Psychiatric Hospital, Inc., an Arizona corporation, and
that he, as such President, being authorized so to do executed the foregoing
instrument for the purposes therein contained, by signing the name of the
corporation by himself as President.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
___________________________________
Notary Public
(Notarial Seal)
<PAGE>
11
STATE OF ILLINOIS )
) ss
COUNTY OF COOK )
On this _____ day of April, 1990, before me, _________________, a
Notary Public, personally appeared Ralph J. Watts, who acknowledges himself to
be the President of Psychiatric Institute of West Virginia, Inc., a Virginia
corporation, and that he, as such President, being authorized so to do executed
the foregoing instrument for the purposes therein contained, by signing the name
of the corporation by himself as President.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
___________________________________
Notary Public
(Notarial Seal)
STATE OF ILLINOIS )
) ss
COUNTY OF COOK )
On this _____ day of April, 1990, before me, _________________, a
Notary Public, personally appeared ______________, who acknowledges himself to
be a Corporate Trust Officer of The Citizens and Southern National Bank, a
national banking association, and that he, as such Corporate Trust Officer,
being authorized so to do executed the foregoing instrument for the purposes
therein contained, by signing the name of said Bank by himself as Corporate
Trust Officer.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
___________________________________
Notary Public
(Notarial Seal)
<PAGE>
12
STATE OF ILLINOIS )
) ss
COUNTY OF COOK )
On this _____ day of April, 1990, before me, _________________, a
Notary Public, personally appeared Susan L. Adams, known to me to be the person
whose name is subscribed to the within instrument as the Individual Trustee and
acknowledged to me that she executed the same as such Individual Trustee.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
___________________________________
Notary Public
(Notarial Seal)
<PAGE>
13
Principal Subsidiary Allocable Share
Bountiful Psychiatric 5.8%
Hospital, Inc.
Cumberland Mental Health, 33.3
Inc.
East Carolina Psychiatric 17.3
Services Corporation
Havenwyck Hospital, Inc. 21.9
Mesa Psychiatric Hospital, 8.9
Inc.
Psychiatric Institute of 12.8
West Virginia, Inc.
Schedule A
(to Obligor Subrogation Waiver
and Contribution Agreement)
