<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998
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 of) (I.R.S. Employer
incorporation or organization Identification No.)
COLUMBUS CENTER
ONE ALHAMBRA PLAZA, SUITE 750
CORAL GABLES, FLORIDA 33134
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (305) 569-6993
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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ].
The number of shares of the Registrant's Common Stock outstanding as of
November 9, 1998, follows:
Common Stock, par value $0.01 per share - 14,522,429 shares
<PAGE> 2
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed consolidated balance sheets - September 30, 1998 and June 30, 1998
(unaudited)........................................................................... 1
Condensed consolidated statements of operations - quarter ended
September 30, 1998 and 1997 (unaudited)............................................... 3
Condensed consolidated statements of cash flows - quarter ended September 30,
1998 and 1997 (unaudited)............................................................. 4
Notes to condensed consolidated financial statements - September 30, 1998 (unaudited).......... 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................................. 11
PART II. OTHER INFORMATION
Item 5. Other Information..................................................................... 15
Item 6. Exhibits and Current Reports on Form 8-K.............................................. 16
SIGNATURES..................................................................................... 18
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
1998 1998
----------- -----------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents ....................................... $ 6,008,000 $ 2,907,000
Accounts receivable, less allowances for doubtful
accounts of $2,602,000 and $2,395,000 at September 30,
1998 and June 30, 1998, respectively ........................ 11,527,000 12,023,000
Amounts due from third-party contractual agencies ............... 6,570,000 7,114,000
Other receivables ............................................... 2,231,000 2,138,000
Other current assets ............................................ 936,000 1,084,000
Net assets held for sale ........................................ -- 25,768,000
----------- -----------
Total current assets ........................................ 27,272,000 51,034,000
Other assets
Cash held in trust ............................................... 1,835,000 1,964,000
Cost in excess of net asset value of purchased businesses ........ 1,235,000 1,318,000
Unamortized loan costs ........................................... 1,831,000 2,397,000
----------- -----------
Total other assets .......................................... 4,901,000 5,679,000
Property and equipment
Land .............................................................. 2,925,000 2,648,000
Buildings and improvements ........................................ 30,209,000 29,698,000
Equipment, furniture and fixtures ................................. 12,479,000 11,422,000
----------- -----------
45,613,000 43,768,000
Less accumulated depreciation ..................................... 16,590,000 15,390,000
----------- -----------
29,023,000 28,378,000
----------- -----------
$61,196,000 $85,091,000
=========== ===========
</TABLE>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
1
<PAGE> 4
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
1998 1998
------------- -------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable ................................................................. $ 6,564,000 $ 6,040,000
Accrued salaries and wages ....................................................... 3,277,000 3,973,000
Other accrued liabilities ........................................................ 7,923,000 9,609,000
Amounts due to third-party contractual agencies .................................. 9,913,000 8,853,000
Current portion of long-term debt ................................................ 429,000 21,219,000
------------- -------------
Total current liabilities .................................................. 28,106,000 49,694,000
Noncurrent liabilities
Other accrued liabilities ........................................................ 12,976,000 13,071,000
Long-term debt, less current portion ............................................. 15,098,000 14,398,000
------------- -------------
Total noncurrent liabilities ............................................... 28,074,000 27,469,000
Commitments and contingencies
Class B convertible redeemable preferred stock, Series 1997, $1 par value -
authorized 100,000 shares; issued 100,000 shares (liquidation value of
$2,500,000 plus accrued dividends), net of issuance costs of $100,000
and including accrued dividends of $69,000 at June 30, 1998 .................. -- 2,469,000
Class B redeemable preferred stock, Series 1997-A,
$1 par value - authorized 4,000 shares; issued 4,000 shares (liquidation
value of $4,000,000 plus accrued dividends) including
accrued dividends of $361,000 at September 30, 1998
and $271,000 at June 30, 1998 ................................................ 4,361,000 4,271,000
Stockholders' equity
Class B convertible preferred stock, Series C, $1 par value-authorized
152,321 shares; issued 142,486 shares (liquidation value of $7,244,000),
including accrued dividends of $363,000 at September 30, 1998 and
$272,000 at June 30, 1998 .................................................... 505,000 414,000
Class B convertible preferred stock, Series 1996,
$1 par value - authorized 100,000 shares; issued 100,000 shares
(liquidation value of $3,000,000), including accrued dividends of
$150,000 at September 30, 1998 and $113,000 at June 30, 1998 ................. 3,150,000 3,113,000
Common stock $.01 par value--authorized
30,000,000 shares; issued 11,459,532 shares at September 30,
1998 and 11,453,400 shares at June 30, 1998 .................................. 115,000 115,000
Additional paid-in capital ...................................................... 106,536,000 107,016,000
Accumulated deficit ............................................................. (105,752,000) (105,571,000)
Treasury stock--581,550 common shares at September 30, 1998
and June 30, 1998, at cost ................................................... (3,899,000) (3,899,000)
------------- -------------
Total stockholders' equity ............................................... 655,000 1,188,000
------------- -------------
$ 61,196,000 $ 85,091,000
============= =============
</TABLE>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
2
<PAGE> 5
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED SEPTEMBER 30,
-------------------------------
1998 1997
------------ ------------
<S> <C> <C>
Revenues:
Provider-based revenue ................................ $ 28,987,000 $ 31,561,000
Managed care revenue .................................. -- 6,132,000
Gain on sale of assets ................................ 2,039,000 --
Investment income and other ........................... 94,000 62,000
------------ ------------
TOTAL REVENUES ........................................... 31,120,000 37,755,000
------------ ------------
Expenses:
Salaries, wages and benefits .......................... 17,162,000 19,347,000
Managed care provider expenses ........................ -- 2,387,000
Other operating expenses .............................. 10,232,000 11,566,000
Provision for doubtful accounts ....................... 1,101,000 1,099,000
Depreciation and amortization ......................... 703,000 1,638,000
Interest and other financing charges .................. 1,215,000 1,320,000
------------ ------------
TOTAL EXPENSES ........................................... 30,413,000 37,357,000
------------ ------------
INCOME BEFORE INCOME TAXES AND EXTRAORDINARY ITEM......... 707,000 398,000
Provision for income taxes ............................... -- --
------------ ------------
INCOME BEFORE EXTRAORDINARY ITEM ......................... 707,000 398,000
Extraordinary item:
Loss from early extinguishment of debt ................ (888,000) (3,574,000)
------------ ------------
NET LOSS ................................................. $ (181,000) $ (3,176,000)
============ ============
Income (loss) per common share:
Basic:
Before extraordinary item ........................... $ 0.04 $ 0.03
Extraordinary item:
Loss from early extinguishment of debt ............ (0.08) (0.34)
============ ============
$ (0.04) $ (0.31)
============ ============
Diluted:
Before extraordinary item ........................... $ 0.04 $ 0.02
Extraordinary item:
Loss from early extinguishment of debt .......... (0.07) (0.28)
------------ ------------
$ (0.03) $ (0.26)
============ ============
Weighted average number of common shares outstanding:
Basic ................................................. 10,875,916 10,575,563
============ ============
Diluted ............................................... 11,875,916 12,562,141
============ ============
</TABLE>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
3
<PAGE> 6
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED SEPTEMBER 30,
-------------------------------
1998 1997
------------ ------------
<S> <C> <C>
Cash flows from operating activities
Net loss ........................................................ $ (181,000) $ (3,176,000)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization, including loan costs .......... 812,000 1,638,000
Loss from early extinguishment of debt ....................... 888,000 3,574,000
Provision for doubtful accounts .............................. 1,101,000 1,099,000
Gain on sale of assets ....................................... (2,039,000) --
Change in operating assets and liabilities:
Accounts receivable ...................................... (605,000) (230,000)
Other current assets ..................................... 599,000 (30,000)
Other noncurrent assets .................................. -- (141,000)
Accounts payable ......................................... 524,000 (1,729,000)
Accrued salaries, wages and other accrued liabilities .... (4,270,000) (526,000)
Hospital and medical claims payable ...................... -- (225,000)
Amounts due to third-party contractual agencies .......... 1,060,000 48,000
------------ ------------
Total adjustments ....................................... (1,930,000) 3,478,000
------------ ------------
Net cash provided by (used in) operating activities.... (2,111,000) 302,000
------------ ------------
Cash flows from investing activities
Proceeds from sale of assets ..................................... 29,600,000 --
Expenditures for property and equipment .......................... (1,261,000) (1,398,000)
Preopening costs ................................................. -- (35,000)
Cash held in trust ............................................... 129,000 --
------------ ------------
Net cash provided by (used in) investing activities.... 28,468,000 (1,433,000)
------------ ------------
Cash flows from financing activities
Loan costs ....................................................... (437,000) (2,325,000)
Amounts received from affiliate .................................. 1,071,000 --
Net proceeds from exercise of options and stock purchases ........ 10,000 47,000
Proceeds from issuance of debt ................................... 2,000,000 41,100,000
Payments on debt ................................................. (23,161,000) (38,256,000)
Payments related to early extinguishment of debt ................. -- (2,229,000)
Payment of preferred stock dividends ............................. (114,000) --
Proceeds from issuance of preferred stock ........................ -- 5,284,000
Payment of costs related to issuance of stock .................... -- (100,000)
Redemption of preferred stock .................................... (2,625,000) --
------------ ------------
Net cash provided by (used in) financing activities.... (23,256,000) 3,521,000
------------ ------------
Net increase in cash and cash equivalents ........................... 3,101,000 2,390,000
Cash and cash equivalents at beginning of period .................... 2,907,000 1,723,000
------------ ------------
Cash and cash equivalents at end of period .......................... $ 6,008,000 $ 4,113,000
============ ============
Cash paid during the period for:
Interest ......................................................... $ 1,032,000 $ 1,034,000
============ ============
Income taxes ..................................................... $ 293,000 $ 458,000
============ ============
</TABLE>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4
<PAGE> 7
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, 1998
NOTE 1 - GENERAL
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and notes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all adjustments
considered necessary for a fair presentation of the interim information are,
unless otherwise discussed in this report, of a normal recurring nature and have
been included. The Company's business is seasonal in nature and subject to
general economic conditions and other factors. Accordingly, operating results
for the quarter ended September 30, 1998 are not necessarily indicative of the
results that may be expected for the year. For further information, refer to the
consolidated financial statements and notes thereto included in the Company's
Annual Report or Form 10-K for the year ended June 30, 1998.
NOTE 2 - CHANGE IN STRATEGIC DIRECTION AND ASSET SALES
During the quarter ended March 31, 1998, the Company changed its
strategic direction from an organization which provides and manages a full range
of behavioral healthcare services to an organization engaged in providing
services for at-risk and adjudicated youth with special needs. In connection
with its revised strategic initiative, the Company identified for divestiture
certain of its psychiatric inpatient facilities, its managed care operations and
other non-youth service businesses.
On September 28, 1998, the Company consummated a sale/leaseback
transaction whereby the Company sold the land, building and fixed equipment of
its Havenwyck facility in Auburn Hills, Michigan for the land, building and
fixed equipment of its leased Desert Vista facility in Mesa, Arizona and
$1,350,000 in cash. In connection with the sale/leaseback, the Company agreed to
leaseback the Havenwyck facility over a term of approximately 12 years. The
lease, which will be treated as an operating lease under generally accepted
accounting principles, currently requires annual minimum lease payments of
approximately $1,263,000, payable monthly.
On September 28, 1998, the Company also completed its previously
announced sale of its management contract services division and behavioral
health care facilities in Conway, South Carolina, Houma, Louisiana, Mesa,
Arizona and DeSoto, Texas for a cash purchase price of $13,500,000 to an
unrelated third party. In connection with the sale, the Company agreed to sell
its medical subacute and behavioral healthcare facility in San Antonio, Texas,
to the purchaser for no additional consideration other than the assumption of
liabilities if the purchaser obtains consent for the sale from the lessor of the
facility within 90 days.
On September 30, 1998, the Company completed its previously announced
sale of its behavioral health care facility in Morgantown, West Virginia for a
cash purchase price of $14,800,000 also to an unrelated third party.
The Company realized a gain on this transaction of approximately $2,000,000.
5
<PAGE> 8
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
At June 30, 1998, the assets and liabilities relating to the
aforementioned transactions are reflected in the accompanying balance sheet as
net assets held for sale. The following is a summary of these assets and
liabilities:
<TABLE>
<S> <C>
Accounts receivable, less allowance for
doubtful accounts of $1,742,000 $ 11,005,000
Other receivables 1,264,000
Other current assets 732,000
Other noncurrent assets 2,016,000
Property and equipment 49,895,000
Less: accumulated depreciation (17,124,000)
Less: valuation allowance on property and equipment (17,576,000)
Accounts payable (1,889,000)
Accrued salaries and wages (1,796,000)
Other accrued liabilities (703,000)
Notes payable (56,000)
------------
Total $ 25,768,000
============
</TABLE>
For the quarter ended September 30, 1998, revenues and net loss before
taxes for the aforementioned assets totaled approximately $14,000,000 and
$1,300,000, respectively. During fiscal 1998, the Company recorded asset
impairment charges of $17,576,000 in connection with the assets held for sale at
June 30, 1998.
NOTE 3 - BORROWINGS
The Company's long-term debt at September 30, 1998 is as follows:
<TABLE>
<S> <C>
Revolver, due September 30, 1999 $ 8,014,000
Bridge Facility to affiliate, due September 30, 2005 2,500,000
Junior Subordinated Note Agreement to
affiliate, due September 30, 2006 5,000,000
Other 13,000
-----------
15,527,000
Less current portion 429,000
-----------
$15,098,000
===========
</TABLE>
In connection with the change in strategic direction and asset sales,
the Company's credit agreement and subordinated note purchase agreements were
amended and restated on March 27, 1998, May 20, 1998, June 29, 1998 and
September 30, 1998 (the "Amended and Restated Credit Facility"). The Amended and
Restated Credit Facility also extended the maturity of the debt to September 30,
1999.
As required by the Amended and Restated Credit Facility, in September
1998, the Company used the net proceeds from the sales of assets to (i) repay
the total outstanding principal and interest on the term loans of approximately
$3,704,000, (ii) repay the total outstanding principal and interest on the
series A bridge loans of approximately $15,151,000, (iii) redeem all of the
outstanding shares of the Series 1997 Preferred Stock for $2,739,000, including
accrued interest and a redemption premium, (iv) pay $1,500,000 in previously
accrued fees to the financial institution and (v) repay approximately
$4,031,000 of the outstanding balance of the revolving credit loan. At September
30, 1998, after the allocation of the aforementioned proceeds, the balance of
the revolving credit loan was $8,014,000.
In conjunction with the partial prepayment of indebtedness, during
September 1998, the Company recorded a loss from early extinguishment of debt of
$888,000.
6
<PAGE> 9
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
On October 30, 1998, the Company refinanced the Amended and Restated
Credit Facility with proceeds from a credit facility consisting of term and
revolving credit debt of $22,000,000 (the "Senior Credit Facility").
Under the terms of the Senior Credit Facility, the Company was provided
with (i) a term loan of $8,000,000 (the "Term Loan"), payable in 54 monthly
installments ranging from $83,000 to $208,000, beginning May 1, 1999, with a
final installment of $1,000,000 due on October 30, 2003, (ii) a revolving credit
facility (the "Revolver") for an amount up to the lesser of $8,000,000 or the
borrowing base of the Company's receivables (as defined in the agreement) and
(iii) an acquisition loan (the "Acquisition Loan") commitment of up to
$6,000,000, beginning March 1, 1999. As of November 9, 1998, no amounts had been
drawn under the Revolver or Acquisition Loan.
As a result of the refinancing, the amount due under the then existing
revolving credit agreement of $8,014,000 at September 30, 1998 has been excluded
from current liabilities since the refinancing resulted in this amount being
outstanding for an uninterrupted period extending beyond one year from the
balance sheet date.
Interest on the Term Loan and the Revolver varies, and at the option of
the Company, would equal (i) a function of a base rate plus a margin ranging
from 0.5% to 2.0% (9% at October 30, 1998), based on the Company's ratio of
total indebtedness to EBITDA or (ii) a function of the Eurodollar rate plus a
margin ranging from 2.0% to 3.5%, based on the Company's ratio of total
indebtedness to EBITDA.
Interest on the Acquisition Loan varies, and at the option of the
Company, would equal (i) a function of a base rate plus a margin ranging from
0.75% to 2.25%, based on the Company's ratio of total indebtedness to EBITDA or
(ii) a function of the Eurodollar rate plus a margin ranging from 2.25% to
3.75%, based on the Company's ratio of total indebtedness to EBITDA.
Additionally, the Company is obligated to pay to the financial
institution an amount equal to one half of 1% of the unused portion of the
Revolver and the Acquisition Loan.
The Senior Credit Facility requires that the Company meet certain
covenants, including (i) the maintenance of certain fixed charge coverage,
interest coverage and leverage ratios, (ii) the maintenance of certain proforma
availability levels (as defined in the credit agreement) and (iii) a limitation
on capital expenditures. The Senior Credit Facility also prohibits (i) the
payment of cash dividends to common stockholders of the Company and (ii) the
payment of cash dividends to preferred stockholders and interest on the Bridge
Note (as defined below) and the Note (as defined below) all owed to an
affiliate, until the Company's EBITDA (as defined in the credit agreement)
exceeds $7,800,000.
The Company and its subsidiaries have pledged substantially all of
their real property, receivables and other assets as collateral for the Senior
Credit Facility.
In connection with the aforementioned refinancing, the Company expects
to incur a loss from early extinguishment of debt of approximately $1,800,000,
which will be recorded in October 1998.
On September 30, 1997, the Company entered into a $2,500,000
subordinated bridge facility with an affiliate of Mr. Paul J. Ramsay, Chairman
of the Board of the Company, and a significant shareholder (the "Bridge Note").
The Bridge Note, which is unsecured and is subordinated and junior in right of
payment to the Senior Credit Facility, is due and payable in September 2005, and
bears interest at a rate of 13.0% per annum beginning on October 1, 1998. The
Senior Credit Facility prohibits the payment of interest on the Bridge Note
until the Company's EBITDA (as defined in the agreement) reaches $7,800,000.
On March 25, 1998, the Company entered into a Junior Subordinated Note
Purchase Agreement (the "Note"), with a corporate affiliate of Mr. Ramsay in an
aggregate principal amount of $5,000,000, plus
7
<PAGE> 10
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
accrued interest. Proceeds from any borrowings made under the Note are
restricted, and may be used by the Company solely to (i) acquire and renovate a
youth services facility in Dothan, Alabama, (ii) acquire and renovate a youth
services facility in Palm Bay, Florida and (iii) meet the working capital needs
of these facilities. During the quarter ended September 30, 1998, the Company
requested and received the remaining $1,071,000 of the Note in order to fund the
working capital needs of the Dothan, Alabama and Palm Bay, Florida facilities.
Borrowings under the Note bear interest at 13.5% per annum beginning on October
1, 1998. Interest due under the Note will be accrued and added to the unpaid
principal balance. Beginning November 1, 1999, interest is payable quarterly, in
arrears, provided that the Company's EBITDA (as defined in the agreement)
exceeds $7,800,000. The Note matures on September 30, 2006.
The Note is unsecured and is subordinated and junior in right of
payment to the Senior Credit Facility or to any refinancing thereof.
NOTE 4 - PRIVATE PLACEMENT AND RECAPITALIZATION
On October 26, 1998, the Company entered into an exchange agreement
with a corporate affiliate of Mr. Paul J. Ramsay for the partial
recapitalization of certain preferred stock and subordinated debt (the "Partial
Recapitalization"). In connection with the Partial Recapitalization, the Company
agreed to exchange all of the outstanding shares of Class B Preferred Stock,
Series 1997-A, including accrued dividends thereon, and $1,000,000 of the
outstanding principal balance of the Bridge Note, for shares of the Company's
common stock valued at $1 1/8 per share (the closing bid price per share as
reported on the Nasdaq Stock Market on October 26, 1998).
On October 30, 1998, the Company completed the exchange of $600,000 of
the Bridge Note for 533,334 shares of common stock. The closing of the remaining
balance of $400,000 of the Bridge Note and the Class B Preferred Stock, Series
1997-A contemplated in the Partial Recapitalization is subject to certain
closing conditions, including the receipt of all necessary governmental
approvals under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as
amended.
On October 30, 1998, the Company completed a private placement of
$3,500,000 of common stock. The private placement consisted of the issuance of
(i) 888,889 shares of common stock to the Company's Chief Executive Officer,
(ii) 480,000 shares of common stock to a corporate affiliate of Mr. Paul J.
Ramsay and a significant shareholder and (iii) 1,742,222 shares of common stock
to unaffiliated third parties. The shares were issued at a purchase price of $1
1/8 per share (the closing bid price on October 26, 1998, the date of the
subscription agreements).
The following unaudited pro forma information has been prepared
assuming the Company's private placement and Partial Recapitalization had been
consummated on September 30, 1998.
Assets
Current assets $30,772,000
Other assets 4,901,000
Property and equipment, net 29,023,000
-----------
Total $64,696,000
===========
Liabilities and stockholders' equity
Current liabilities $28,106,000
Noncurrent liabilities 27,074,000
Stockholders' equity 9,516,000
-----------
Total $64,696,000
===========
8
<PAGE> 11
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
NOTE 5 - LEASES
On September 28, 1998, the Company sold and leased back the land,
buildings and fixed equipment of its Havenwyck facility in Auburn Hills,
Michigan (see Note 2). The lease has a term of 12 years and currently requires
annual minimum lease payments of approximately $1,263,000, payable monthly.
Effective April 1 of each year, the lease payments are subject to upward
adjustments (not to exceed 3% annually) in the consumer price index over the
preceding twelve months.
In April 1995, the Company sold and leased back the land, buildings and
fixed equipment of its Desert Vista facility in Mesa, Arizona and its Mission
Vista facility in San Antonio, Texas. The lease of the Desert Vista facility was
released and the facility was sold with the asset sale transactions described in
Note 2. The lease at the Mission Vista facility has a primary term of 15 years
(with three successive renewal options of 5 years each) and at September 30,
1998 had aggregate annual minimum rentals of approximately $549,000, payable
monthly.
Effective April 1995, the Company agreed to lease an 80-bed facility
near Salt Lake City, Utah for four years, with an option to renew for an
additional three years. The lease requires annual base rental payments of
$456,000, payable monthly, and percentage rental payments equal to 2% of the net
revenues of the facility, payable quarterly. On November 3, 1998, the Company
was released from its obligations under this lease. The Company will cease
operations at this facility by December 3, 1998.
The Company leases office space for various other purposes over terms
ranging from one to five years. Annual rent expense related to noncancellable
operating leases totals approximately $3,000,000.
In August 1997, the Company leased its Meadowlake facility in Oklahoma
to an independent healthcare provider for an initial term of three years, with
four three-year renewal options. Lease payments during the initial term total
$360,000 per year and at each renewal option are subject to adjustment based on
the change in the consumer price index during the preceding lease period. In
accordance with the terms of the lease agreement, the tenant is responsible for
all costs of ownership, including taxes, insurance, maintenance and repairs. In
addition, the tenant has the option to purchase the facility at any time during
the initial term for $3,000,000, less $15,417 for each month of occupancy.
Subsequent to the initial term, the tenant has the option to purchase the
facility at any time for $2,500,000. The book value of the facility was
$2,169,000 on September 30, 1998.
NOTE 6 - INCOME TAXES
Income taxes are accounted for in accordance with SFAS No. 109. SFAS
No. 109 requires recognition of deferred tax assets and liabilities for the
expected future tax consequences of temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes. At September 30, 1998, the Company had net
operating loss carryovers of approximately $18,400,000 and alternative minimum
tax credit carryovers of approximately $1,100,000 available to reduce future
federal income taxes, subject to certain annual limitations. The net operating
loss carryovers expire in the years 2001 through 2003.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Previously, the Company evaluated the
realizability of its deferred tax assets and the need for a valuation allowance
by considering the effects of implementing tax planning strategies that
contemplated the sales of certain appreciated property. In connection with the
Company's change in strategic direction, during the quarter ended March 31,
1998, the Company re-evaluated its tax planning strategies and determined that
such strategies will not be realized. Consequently, the Company's net operating
loss carryforwards were no longer considered realizable, pursuant to the
provisions of SFAS No. 109.
9
<PAGE> 12
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
NOTE 7 - EARNINGS PER SHARE
In February 1997, the FASB issued SFAS No. 128, EARNINGS PER SHARE.
SFAS No 128, which applies to entities with publicly held common stock,
simplifies and replaces the standards for computing earnings per share
previously required in APB Opinion No. 15, EARNINGS PER SHARE, and makes them
comparable to international earnings per share standards. SFAS No. 128, which
became effective for financial statements issued for periods ending after
December 15, 1997, requires a restatement of prior year earnings (loss) per
share calculations. Accordingly, the Company changed the method used to compute
earnings (loss) per share and has restated all prior periods. Under the new
requirements for calculating earnings per share, the dilutive effect of stock
options is excluded. The adoption of the provisions of SFAS No. 128 did not have
a material impact on the calculation of earnings (loss) per share.
The following table sets forth the computation of basic and diluted
earnings per share:
<TABLE>
<CAPTION>
QUARTER ENDED SEPTEMBER 30,
------------ ------------
1998 1997
------------ ------------
<S> <C> <C>
Numerator:
Net income before extraordinary item, as reported ................ $ 707,000 $ 398,000
Dividends, Class B convertible preferred stock, Series C .......... (91,000) (91,000)
Dividends, Class B convertible preferred stock, Series 1996 ....... (38,000) (38,000)
Dividends, Class B convertible preferred stock, Series 1997 ....... (69,000) (1,000)
Dividends, Class B preferred stock, Series 1997-A ................. (90,000) (1,000)
------------ ------------
Numerator for basic earnings per share - income attributable
to common stockholders, before extraordinary item ............. 419,000 267,000
Effect of dilutive securities:
Convertible preferred stock...................................... 38,000 1,000
------------ ------------
38,000 1,000
------------ ------------
Numerator for diluted earnings per share - income
attributable to common stockholders after assumed ............. $ 457,000 $ 268,000
conversions
============ ============
Denominator:
Denominator for basic earnings per share - weighted-average
shares .......................................................... 10,875,916 10,575,563
Effect of dilutive securities:
Employee stock options and warrants ............................. -- 1,591,633
Convertible preferred stock ..................................... 1,000,000 394,945
------------ ------------
1,000,000 1,986,578
------------ ------------
Denominator for diluted earnings per share - adjusted
weighted-average shares and assumed conversions ................. 11,875,916 12,562,141
============ ============
Basic earnings per share, before extraordinary item .................. $ .04 $ .03
Extraordinary item ................................................... (.08) (.34)
------------ ------------
Basic loss per share ................................................. $ (.04) $ (.31)
============ ============
Diluted earnings per share before extraordinary item ................. $ .04 $ .02
Extraordinary item ................................................... (.07) (.28)
------------ ------------
Diluted loss per share ............................................... $ (.03) $ (.26)
============ ============
</TABLE>
10
<PAGE> 13
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company is a leading operator and manager of diversified treatment
and education programs for at-risk and troubled youth in residential and
non-residential settings nationwide. During the fiscal year ended June 30, 1998
and the quarter ended September 30, 1998, the Company also operated as a
provider and manager of behavioral healthcare services.
On February 19, 1998, the Company announced a change in strategic
direction in order to focus on becoming a leader in the at-risk youth industry.
To that end, management identified for divestiture those businesses and
facilities which were not essential to its strategic objectives in the youth
services field (the "Divested Assets"). In June 1998, the Company sold its
behavioral managed care business and in September 1998, the Company completed
the sales of non-strategic inpatient psychiatric hospitals. The net proceeds for
these divestitures were applied to reduce indebtedness and to redeem preferred
stock, all held by an unaffiliated financial institution. The remaining business
(the "Retained Assets") represents the Company's youth service operations and is
comprised of seven youth facilities with 713 beds and six group homes with 66
beds. The Company also provides a range of outpatient services and day treatment
programs tailored for the at-risk and troubled youth population.
IN CONNECTION WITH THE "SAFE-HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995, THE COMPANY NOTES THAT THIS QUARTERLY
REPORT ON FORM 10-Q CONTAINS FORWARD-LOOKING STATEMENTS ABOUT THE COMPANY. THE
COMPANY IS HEREBY SETTING FORTH CAUTIONARY STATEMENTS IDENTIFYING IMPORTANT
FACTORS THAT MAY CAUSE THE COMPANY'S ACTUAL RESULTS TO DIFFER MATERIALLY FROM
THOSE SET FORTH IN ANY FORWARD-LOOKING STATEMENTS OR INFORMATION MADE BY OR ON
BEHALF OF OR CONCERNING THE COMPANY. SOME OF THE MOST SIGNIFICANT FACTORS
INCLUDE (i) ACCELERATING CHANGES OCCURRING IN THE AT-RISK YOUTH INDUSTRY,
INCLUDING COMPETITION FORM CONSOLIDATING AND INTEGRATED PROVIDER SYSTEMS AND
LIMITATIONS ON REIMBURSEMENT RATES, (ii) FEDERAL AND STATE GOVERNMENTAL
BUDGETARY CONSTRAINTS WHICH COULD HAVE THE EFFECT OF LIMITING THE AMOUNT OF
FUNDS AVAILABLE TO SUPPORT GOVERNMENTAL PROGRAMS, (iii) STATUTORY, REGULATORY
AND ADMINISTRATIVE CHANGES OR INTERPRETATIONS OF EXISTING STATUTORY AND
REGULATORY PROVISIONS AFFECTING THE CONDUCT OF THE COMPANY'S BUSINESS AND
AFFECTING CURRENT AND PRIOR REIMBURSEMENT FOR THE COMPANY'S SERVICES AND (iv)
THE COMPANY'S INABILITY TO SUCCESSFULLY IMPLEMENT ITS NEW STRATEGIC DIRECTION OF
PROVIDING TREATMENT AND EDUCATION PROGRAMS FOR AT-RISK AND TROUBLED YOUTH. THERE
CAN BE NO ASSURANCE THAT ANY ANTICIPATED FUTURE RESULTS WILL BE ACHIEVED. AS A
RESULT OF THE FACTORS IDENTIFIED ABOVE AND OTHER FACTORS, THE COMPANY'S ACTUAL
RESULTS OR FINANCIAL OR OTHER CONDITION COULD VARY SIGNIFICANTLY FROM THE
PERFORMANCE OR FINANCIAL OR OTHER CONDITION SET FORTH IN ANY FORWARD-LOOKING
STATEMENTS OR INFORMATION.
RESULTS OF OPERATIONS
Revenues from provider-based operations decreased from $31.5 million in
the quarter ended September 30, 1997 to $28.9 million in the quarter ended
September 30, 1998. Of this amount, revenues related to Retained Assets totalled
$14.4 million in the quarter ended September 30, 1998 as compared to $11.3
million in the comparable quarter of the prior fiscal year. Revenues related to
Divested Assets totalled $14.5 million in the quarter ended September 30, 1998
compared to $20.2 million in the comparable quarter of the prior fiscal year.
The increase in provider-based revenues related to Retained Assets from
1997 to 1998 of $3.1 million is primarily attributable to (i) revenues of $0.8
million from a new contract in Puerto Rico, (ii) revenues of $0.5 million
generated by the Company's new facility located in Dothan, Alabama, (iii) $0.5
million in revenues from Gulf Coast Treatment Center primarily attributable to
its juvenile assignment center business which began in fiscal 1998, (iv)
revenues of $0.1 million from the newly formed Ramsay Youth Services of South
Carolina, and (v) an increase in revenues at the Company's other retained assets
of approximately $1.3 million due to an increase in total census between
periods.
The decrease in provider-based revenues related to Divested Assets from
1997 to 1998 of $5.7 million is attributable to (i) a decrease in the Company's
medical subacute unit revenues of $1.1 million attributable to a decrease in
total census between periods, (ii) a decrease in revenues at the Company's
11
<PAGE> 14
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
Greenbrier facility of $1.8 million due to the closure and sale of the facility
in fiscal 1998, (iii) a decrease in revenues at the Company's management
contracts division of $0.3 million due to the loss of certain contracts, and
(iv) a decrease in the revenues of the Company's other Divested Assets of $2.5
million primarily due to a decrease in total census between periods.
The decrease in managed care revenues of $6.1 million, when comparing
the quarter ended September 30, 1997 to the quarter ended September 30, 1998,
was a result of the sale of the Company's managed behavioral health care
business in June 1998.
In September 1998, the Company completed the sale of its behavioral
health care facility in Morgantown, West Virginia and realized a gain of $2.0
million. See "Item 1 - Financial Statements, Note 2".
Total salaries, wages and benefits decreased from $19.3 million in the
quarter ended September 30, 1997 to $17.1 million in the quarter ended September
30, 1998. Of this amount, salaries, wages and benefits related to Retained
Assets totalled $8.4 million in the quarter ended September 30, 1998 as compared
to $6.1 million in the comparable quarter of the prior fiscal year. Salaries,
wages and benefits related to Divested Assets totalled $8.1 million in the
quarter ended September 30, 1998 as compared to $12.4 million in the comparable
quarter of the prior fiscal year. Corporate salaries, wages and benefits
totalled $0.6 million in the quarter ended September 30, 1998 as compared to
$0.8 million in the comparable quarter of the prior fiscal year.
The increase in salaries, wages and benefits related to Retained Assets
from 1997 to 1998 of $2.3 million is attributable to (i) an increase in
salaries, wages and benefits of $0.3 million at Gulf Coast Treatment Center due
to services provided to its juvenile assignment center business which began in
fiscal 1998, (ii) an increase of $0.9 million due to the initial hiring of
personnel for the Dothan, Puerto Rico and South Carolina Group Home operations,
and (iii) an increase in salaries, wages and benefits in other Retained Assets
facilities of $1.1 million due to an increase in total census from the
comparable period of the prior fiscal year.
The decrease in salaries, wages and benefits related to the Divested
Assets from 1997 to 1998 of $4.3 million is attributable to (i) a decrease in
salaries, wages and benefits of the Company's managed care operations of $2.2
million due to its sale in June 1998, (ii) a decrease of $0.2 million
attributable to a decrease in total census between periods at the Company's
medical subacute units, (iii) a decrease in contract management salaries, wages
and benefits of $0.2 million due to the loss of contracts, (iv) a decrease in
salaries, wages and benefits of the Company's facilities located in Houma,
Louisiana, Conway, South Carolina and San Antonio, Texas by an aggregate of $0.3
million due to reductions in total census, and (v) a decrease in the Greenbrier
facility of $1.4 million due to its sale on June 2, 1998.
The decrease in salaries, wages and benefits related to the corporate
office from 1997 to 1998 of $0.2 million is attributable to the Company's
restructuring at its corporate headquarters initiated during the third quarter
of fiscal 1998.
Other operating expenses decreased from $11.6 million in the quarter
ended September 30, 1997 to $10.2 million in the quarter ended September 30,
1998. Of this amount, other operating expenses related to Retained Assets
totalled $3.6 million in the quarter ended September 30, 1998 as compared to
$3.0 million in the comparable quarter of the prior fiscal year. Other operating
expenses related to Divested Assets totalled $5.4 million in the quarter ended
September 30, 1998 as compared to $7.8 million in the comparable quarter of the
prior fiscal year. Other operating expenses related to the Company's corporate
office totalled $1.2 million in the quarter ended September 30, 1998 as compared
to $0.8 million in the comparable quarter of the prior fiscal year.
The increase in other operating expenses related to Retained Assets
from 1997 to 1998 of $0.6 million is attributable to (i) an increase in other
operating expenses of $0.1 million at Gulf Coast Treatment Center, (ii) other
operating expenses of the new Dothan and Palm Bay facilities and expenses
related to a
12
<PAGE> 15
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
new contract in Puerto Rico of $0.3 million and (iii) an increase
in other operating expenses of $0.2 million due to an increase in total census
between years at the remainder of the Company's Retained Assets.
The decrease in other operating expenses related to Divested Assets
from 1997 to 1998 of $2.4 million is primarily attributable to (i) a decrease of
$1.0 million in other operating expenses of the Company's managed care
operations which were sold in June of 1998, (ii) a decrease of $1.0 million
attributable to a decrease in census at the Company's medical subacute units and
(iii) a decrease in other operating expenses at the Greenbrier facility of $0.4
million due to its sale in June of 1998.
The increase in corporate other operating expenses of $0.4 million from
fiscal 1997 to fiscal 1998 is primarily attributable to professional fees
incurred in connection with the Company's restructuring efforts and related
asset sales.
The provision for doubtful accounts remained relatively constant
between the quarter ended September 30, 1998 and the comparable quarter of the
prior fiscal year (the provision for doubtful accounts as a percentage of
provider-based revenues was 3.8% in the quarter ended September 30, 1998 and
3.5% for the comparable quarter of the prior fiscal year).
Depreciation and amortization decreased from $1.6 million in the
quarter ended September 30, 1997 to $0.7 million in the quarter ended September
30, 1998 primarily due to the recording of asset impairment charges during
fiscal 1998 and the cessation of depreciation expense on assets sold and assets
held for sale.
Interest and other financing charges decreased from $1.3 million in the
quarter ended September 30, 1997 to $1.2 million in the quarter ended September
30, 1998. The decrease was primarily due to a reduction of debt between periods
due to the application of proceeds from asset sales.
FINANCIAL CONDITION
The Company's consolidated balance sheet as of September 30, 1998
reflects the impact of the sale of the Three Rivers facility in May 1998, the
Greenbrier facility and managed care operations in June 1998, and the Company's
non-youth services business in September 1998. Net proceeds from the sales were
used to partially prepay the Company's debt.
The Company records amounts due to or from third-party contractual
agencies (Medicare, Medicaid and Blue Cross) based on its best estimate, using
the principles of cost reimbursement, of amounts to be ultimately received or
paid under current and prior years' cost reports filed (or to be filed) with the
appropriate intermediaries. Ultimate settlements and other lump sum adjustments
due from and paid to these intermediaries occur at various times during the
fiscal year. At September 30, 1998, amounts due from Medicare, Medicaid and Blue
Cross totalled approximately $4.4 million, $1.0 million and $1.1 million,
respectively. Also, at September 30, 1998, amounts due to Medicare, Medicaid and
Blue Cross totalled approximately $8.3 million, $1.0 million and $0.6 million,
respectively. Changes in these amounts since June 30, 1998 are the result of
fiscal intermediary lump sum adjustments, prior year cost report settlements and
current year estimated settlements recorded during the quarter ended September
30, 1998.
Other current accrued liabilities decreased from $9.6 million at June
30, 1998 to $7.7 million at September 30, 1998 primarily as a result of (i)
severance payments of $0.5 million made in connection with the Company's
corporate restructuring and (ii) the payment of $1.3 million in previously
accrued fees to the Company's former lender.
Other noncurrent accrued liabilities remained relatively constant
during the three months ended September 30, 1998.
On October 26, 1998, the Company entered into an exchange agreement
with a corporate affiliate of Mr. Paul J. Ramsay for the partial
recapitalization of certain preferred stock and subordinated debt (the
13
<PAGE> 16
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
"Partial Recapitalization"). In connection with the Partial Recapitalization,
the Company agreed to exchange all of the outstanding shares of Class B
Preferred Stock, Series 1997-A, including accrued dividends thereon, and $1.0
million of the outstanding principal balance of the Bridge Note, for shares of
the Company's common stock valued at $1 1/8 per share (the closing bid price per
share as reported on the Nasdaq Stock Market on October 26, 1998).
On October 30, 1998, the Company completed the exchange of $0.6 million
of the Bridge Note for 533,334 shares of common stock. The closing of the
remaining balance of $0.4 million of the Bridge Note and the Class B Preferred
Stock, Series 1997-A contemplated in the Partial Recapitalization is subject to
certain closing conditions, including the receipt of all necessary governmental
approvals under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as
amended.
LIQUIDITY AND CAPITAL RESOURCES
As mentioned previously, in connection with the change in strategic
direction and asset sales, the Company's credit agreement and subordinated note
purchase agreements were amended and restated on March 27, 1998, May 20, 1998,
and June 29, 1998 and September 30, 1998 (the "Amended and Restated Credit
Facility"). The Amended and Restated Credit Facility also extended the maturity
of the Revolver to September 30, 1999.
As required by the Amended and Restated Credit Facility, in September
1998, the Company used the net proceeds from the sales of assets to (i) repay
the total outstanding principal and interest on the term loans of approximately
$3.7 million, (ii) repay the total outstanding principal and interest on the
series A bridge loans of approximately $15.1 million, (iii) redeem all of the
outstanding shares of the Series 1997 Preferred Stock for $2.7 million,
including accrued interest and a redemption premium, (iv) pay $1.5 million in
previously incurred fees to the financial institution and (v) repay
approximately $4.0 million of the outstanding balance of the revolving credit
loan. At September 30, 1998, after the allocation of the aforementioned, the
balance of the revolving credit loan was $8.0 million.
On October 30, 1998, the Company refinanced the Amended and Restated
Credit Facility with proceeds from a credit facility consisting of term and
revolving credit debt of $22,000,000 (the "Senior Credit Facility").
Under the terms of the Senior Credit Facility, the Company was provided
(i) a $8.0 million term loan (the "Term Loan"), payable in 54 monthly
installments ranging from $.083 million to $.208 million, beginning May 1, 1999,
with a final installment of $1.0 million due on October 30, 2003, (ii) a
revolving credit facility (the "Revolver") for an amount up to the lesser of
$8.0 million or the borrowing base of the Company's receivables (as defined in
the agreement) and (iii) an acquisition loan (the "Acquisition Loan") commitment
of up to $6.0 million, beginning March 1, 1999. As of November 9, 1998, no
amounts had been drawn under the Revolver or Acquisition Loan.
On October 30, 1998, the Company completed a private placement of $3.5
million of common stock. The private placement consisted of the issuance of (i)
888,889 shares of common stock to the Company's Chief Executive Officer, (ii)
480,000 shares of common stock to a corporate affiliate of Mr. Paul J. Ramsay
and a significant shareholder and (iii) 1,742,222 shares of common stock to
unaffiliated third parties. The shares were issued at a purchase price of $1 1/8
per share (the closing bid price on October 26, 1998, the date of the
subscription agreements).
During the three months ended September 30, 1998, net cash provided by
the operating activities of the Company decreased approximately $2.4 million.
The decrease is primarily a result of the decreases in operating performance at
certain of the Divested Assets and changes in working capital between periods.
The Company's current cash requirements relate to its normal operating
expenses and routine capital improvements at its youth service facilities, the
expansion of its youth service business, the payment
14
<PAGE> 17
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
of restructuring charges, principally severance, and the payment of liabilities
associated with the sales of its Divested Assets.
Management of the Company believes that it can meet its current cash
requirements and future identifiable needs with (i) internally generated funds
from operations, (ii) the Senior Credit Facility and (iii) its ability to obtain
debt or equity capital through other sources.
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
The Company is party to certain claims, suits and complaints, including
those matters described below, whether arising from the acts or omissions of its
employees, providers or others, which arise in the ordinary course of business.
The Company has established reserves at September 30, 1998 for the estimated
amounts which might be recovered from the Company as a result of all outstanding
legal proceedings. In the opinion of management, the ultimate resolution of
these pending legal proceedings is not expected to have a material adverse
effect on the Company's financial position, results of operations or liquidity.
In March 1997, a former executive vice president of the Company
commenced arbitration and court proceedings against the Company in which he
claims his employment was wrongfully terminated by the Company and seeks damages
of approximately $2.3 million. Subsequently, the court proceedings have been
stayed and arbitration proceedings are pending. The Company intends to
vigorously defend the proceedings.
Prior to the merger with the Company, RMCI sold its subsidiary which,
as a licensed HMO in Louisiana, Alabama and Mississippi, managed and provided
prepaid healthcare services to its members. On September 29, 1997, RMCI received
a demand for indemnification by the purchaser of this subsidiary in an amount
totalling approximately $5.8 million. The Company intends to vigorously defend
any proceedings which may result from this matter. In addition, on September 30,
1997, the Company demanded indemnification from the purchaser for various
matters in an amount exceeding $2.0 million.
During fiscal 1996, the State of Louisiana requested repayment of
disproportionate share payments received by two of the Company's Louisiana
facilities in fiscal years 1995 and 1994 totaling approximately $5.5 million.
The repayment requested related primarily to alleged overpayments received by a
former facility of the Company. The Company believes that this matter may be
settled for an amount less than Louisiana's initial request. The Company intends
to vigorously contest any position by Louisiana which it considers adverse.
15
<PAGE> 18
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The Exhibits required to be filed as part of this Quarterly
Report on Form 10-Q are as follows:
Exhibit 4.13 Amended and Restated Subscription Agreement
dated October 26, 1998 between the Company
and Paul Ramsay Holdings Pty. Limited
("Holdings Pty."). 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 ....................................
Exhibit 4.14 Amended and Restated Subscription Agreement
dated October 26, 1998 between the Company
and Luis E. Lamela. 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.....................................
Exhibit 4.15 Subscription Agreement dated October 26,
1998 between the Company and Haythe &
Curley. 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.....................................
Exhibit 4.16 Subscription Agreement dated as of October
26, 1998 between the Company and Dauphin
Capital Partners I, LP. 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.....................................
Exhibit 4.17 Subscription Agreement dated as of October
26, 1998 between the Company and Moises
Hernandez, M.D. 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.....................................
Exhibit 4.18 Subscription Agreement dated as of October
26, 1998 between the Company and Tom Hodapp.
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.................
Exhibit 4.19 Subscription Agreement dated as of October
26, 1998 between the Company and Aaron Beam.
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.................
Exhibit 4.20 Subscription Agreement dated as of October
26, 1998 between the Company and Sanford R.
Robertson. 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....
Exhibit 4.21 Revolving Credit Note dated October 30, 1998
by the Company in the aggregate principal
amount of $8,000,000 payable to the order of
Fleet Capital Corporation...................
Exhibit 4.22 Secured Promissory Note (Term Note) by
the Company in the aggregate principal
amount of $8,000,000 payable to the order of
Fleet Capital Corporation...................
16
<PAGE> 19
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
Exhibit 4.23 Secured Promissory Note (Acquisition Note)
by the Company in the aggregate principal
amount of $6,000,000 payable to the order of
Fleet Capital Corporation...................
Exhibit 10.126 Amendment No. 3 to Rights Agreement dated as
of October 15, 1998 between the Company and
First Union National Bank of North Carolina,
as Rights Agent.............................
Exhibit 10.127 Loan and Security Agreement dated as of
October 30, 1998 by and among the Company,
certain subsidiaries of the Company on the
signature pages thereto, Fleet Capital
Corporation, as a Lender and as Agent, and
the Lenders from time to time party thereto.
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.................
Exhibit 10.128 Subordination Agreement dated October 30,
1998 by and among Holdings Pty., Paul Ramsay
Hospitals Pty. Limited, Ramsay Holdings HSA
Limited and Fleet Capital Corporation, as
Agent, and consented to by the Company and
certain of its subsidiaries on the signature
pages thereto...............................
Exhibit 10.129 Junior Subordinated Loan and Exchange
Agreement dated as of October 30, 1998 by
and between Holdings Pty. and the
Company.....................................
Exhibit 10.130 Amended and Restated Exchange Agreement
dated as of October 26, 1998 by and between
Holdings Pty. and the Company. 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................................
Exhibit 11 Computation of Net Income (Loss) Per
Share.......................................
Exhibit 27 Financial Data Schedule.....................
Exhibit 99.1 Press Release dated November 2, 1998........
Exhibit 99.2 Press Release dated November 2, 1998........
(b) Current Reports on Form 8-K
The Company did not file any Current Reports on From 8-K
during the quarter ended September 30, 1998. Subsequent to
September 30, 1998, the Company did file on October 9, 1998 a
Current Report on Form 8-K related to the sale of its
behavioral health facilities.
17
<PAGE> 20
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereupon duly authorized.
RAMSAY HEALTH CARE, INC.
Registrant
/s/ Marcio C. Cabrera
---------------------------------------
Marcio C. Cabrera
Executive V.P. and
Chief Financial Officer
Date: November 6, 1998
18
<PAGE> 21
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
The Exhibits required to be filed as part of this Quarterly
Report on Form 10-Q are as follows:
<TABLE>
<S> <C> <C>
Exhibit 4.13 Amended and Restated Subscription Agreement dated October 26, 1998
between the Company and Paul Ramsay Holdings Pty. Limited ("Holdings
Pty."). 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...............................................
Exhibit 4.14 Amended and Restated Subscription Agreement dated October 26, 1998
between the Company and Luis E. Lamela. 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.............
Exhibit 4.15 Subscription Agreement dated October 26, 1998 between the Company and
Haythe & Curley. 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..............................
Exhibit 4.16 Subscription Agreement dated as of October 26, 1998 between the
Company and Dauphin Capital Partners I, LP. 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 ........
Exhibit 4.17 Subscription Agreement dated as of October 26, 1998 between the
Company and Moises Hernandez, M.D. 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.............
Exhibit 4.18 Subscription Agreement dated as of October 26, 1998 between the
Company and Tom Hodapp. 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.........................
Exhibit 4.19 Subscription Agreement dated as of October 26, 1998 between the
Company and Aaron Beam. 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.........................
Exhibit 4.20 Subscription Agreement dated as of October 26, 1998 between the
Company and Sanford R. Robertson. 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.............
</TABLE>
<PAGE> 22
<TABLE>
<S> <C> <C>
Exhibit 4.21 Revolving Credit Note dated October 30, 1998 by the Company in the
aggregate principal amount of $8,000,000 payable to the order of
Fleet Capital Corporation..............................................
Exhibit 4.22 Secured Promissory Note (Term Note) by the Company in the aggregate
principal amount of $8,000,000 payable to the order of Fleet Capital
Corporation............................................................
Exhibit 4.23 Secured Promissory Note (Acquisition Note) by the Company in the
aggregate principal amount of $6,000,000 payable to the order of
Fleet Capital Corporation..............................................
Exhibit 10.126 Amendment No. 3 to Rights Agreement dated as of October 15, 1998
between the Company and First Union National Bank of North Carolina,
as Rights Agent........................................................
Exhibit 10.127 Loan and Security Agreement dated as of October 30, 1998 by and among
the Company, certain subsidiaries of the Company on the signature
pages thereto, Fleet Capital Corporation, as a Lender and as Agent,
and the Lenders from time to time party thereto. 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 ...............................................................
Exhibit 10.128 Subordination Agreement dated October 30, 1998 by and among Holdings
Pty., Paul Ramsay Hospitals Pty. Limited, Ramsay Holdings HSA Limited
and Fleet Capital Corporation, as Agent, and consented to by the
Company and certain of its subsidiaries on the signature pages
thereto................................................................
Exhibit 10.129 Junior Subordinated Loan and Exchange Agreement dated as of October
30, 1998 by and between Holdings Pty. and the Company..................
Exhibit 10.130 Amended and Restated Exchange Agreement dated as of October 26, 1998
by and between Holdings Pty. and the Company. 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..........
Exhibit 11 Computation of Net Income (Loss) Per Share ............................
Exhibit 27 Financial Data Schedule ...............................................
Exhibit 99.1 Press Release dated November 2, 1998 ..................................
Exhibit 99.2 Press Release dated November 2, 1998 ..................................
</TABLE>
<PAGE> 23
(b) Current Reports on Form 8-K.
The Company did not file any Current Reports on Form 8-K
during the quarter ended September 30, 1998. Subsequent to
September 30, 1998, the Company did file on October 9, 1998 a
Current Report on Form 8-K related to the sale of its
behavioral health facilities.
<PAGE> 1
EXHIBIT 4.13
AMENDED AND RESTATED SUBSCRIPTION AGREEMENT dated October 26,
1998 (this "Agreement") between RAMSAY HEALTH CARE, INC., a Delaware corporation
(the "Corporation"), and PAUL RAMSAY HOLDINGS PTY. LIMITED, an Australian
corporation (the "Subscriber").
W I T N E S S E T H :
WHEREAS, the authorized capital stock of the Corporation
consists of 30,000,000 shares of Common Stock, 100,000 shares of Class B
Convertible Redeemable Preferred Stock, Series 1997, 4,000 shares of Class B
Redeemable Preferred Stock, Series 1997-A, 152,321 shares of Class B Convertible
Preferred Stock, Series C, and 100,000 shares of Class B Convertible Preferred
Stock, Series 1996;
WHEREAS, subject to the terms and conditions hereof, the
Subscriber desires to subscribe for and purchase from the Corporation the
aggregate dollar value (determined at the Purchase Price as determined herein
and as such aggregate dollar value may be adjusted as set forth herein) of
shares of Common Stock (the "Purchased Shares") set forth opposite its name on
the signature page hereof (the "Purchase Commitment");
NOW, THEREFORE, in consideration of the mutual benefits to be
derived and the representations and warranties, conditions and promises herein
contained, and intending to be legally bound hereby, the Corporation and the
Subscriber hereby agree as follows:
1. PURCHASE OF PURCHASED SHARES. (a) Subject to the terms and
provisions of this Agreement, the Subscriber agrees to purchase from the
Corporation, and the Corporation agrees to issue to the Subscriber, a number of
Purchased Shares determined by dividing the Purchase Commitment, as adjusted as
provided in this Section 1, by the Purchase Price. It is understood and agreed
by the Corporation and the Subscriber that the initial Purchase Commitment set
forth opposite the Subscriber's name on the signature page hereof automatically
shall be reduced, if at all, but not below $0, by an amount equal to the
aggregate Committed Amount (as defined below). For purposes hereof, "Committed
Amount" shall mean the aggregate dollar value (determined at the Purchase Price)
of shares of Common Stock purchased from the Corporation on or before the close
of business on October 30, 1998 (the "Closing Date") by purchasers (other than
the Subscriber and other than Luis E. Lamela) which have received the
Corporation's Confidential Memorandum dated October 1998 covering the private
placement of $3.5 million in aggregate value of shares of Common Stock.
(b) The purchase price per share for the Purchased Shares to
be purchased by the Subscriber shall be the closing bid price per share of
Common Stock reported on the Nasdaq Stock Market on the date hereof (the
"Purchase Price"). The aggregate Purchase Commitment (adjusted as set forth in
subsection (a) above) shall be payable by the Subscriber by bank wire transfer
to an account established by the
<PAGE> 2
2
Corporation with Haythe & Curley, Esq. or by certified or bank cashiers check
payable to the Corporation and delivered to the Corporation c/o Haythe & Curley,
237 Park Avenue, New York, New York 10017, Attention: Bradley P. Cost, Esq., in
any case on or before the Closing Date.
(c) Upon the payment by the Subscriber to the Corporation of
the aggregate Purchase Commitment for the Purchased Shares on the Closing Date,
the Corporation shall cause its transfer agent to deliver to the Subscriber a
stock certificate representing ownership by it of the shares of Common Stock
purchased hereunder.
2. REGISTRATION REQUIREMENTS.
(a) As promptly as practicable following the Closing
Date, but in any event within a period of 90 days following the Closing Date,
the Corporation shall prepare and file with the Securities and Exchange
Commission a Registration Statement on Form S-3 for the purpose of registering
the resale by the Subscriber (or the Subscriber's affiliates) of the Purchased
Shares under the Securities Act.
(b) The Corporation shall pay all Registration Expenses
(as defined below) in connection with any registration, qualification or
compliance hereunder. Registration Expenses shall mean all expenses incurred by
the Corporation in complying with the registration provisions herein described,
including, without limitation, all registration, qualification and filing fees,
printing expenses, escrow fees, fees and disbursements of counsel for the
Corporation, blue sky fees and expenses, and the expense of any special audits
incident to or required by any such registration.
(c) In the case of the registration effected by the
Corporation pursuant to these registration provisions, the Corporation will use
its best efforts to: (i) cause the Registration Statement to become effective
within one hundred fifty (150) days of the Closing Date, (ii) keep such
registration effective until the earlier of (a) the second anniversary of the
Closing Date, (b) such date as all of the Purchased Shares have been resold by
the Subscriber thereof, or (c) such time as all of the Purchased Shares held by
the Subscriber can be sold within a given three-month period without compliance
with the registration requirements of the Securities Act pursuant to Rule 144
under the Securities Act; (iii) prepare and file with the Securities and
Exchange Commission such amendments and supplements to the Registration
Statement and the prospectus used in connection with the Registration Statement
as may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by the Registration
Statement; (iv) furnish such number of prospectuses and other documents incident
thereto, including any amendment of or supplement to the prospectus, as the
Subscriber from time to time may reasonably request; (v) cause all Purchased
Shares registered as described herein to be listed on each securities exchange
and quoted on each quotation service on which similar securities issued by the
Corporation are then listed or quoted; (vi) provide a transfer agent and
registrar for all Purchased Shares registered pursuant to the Registration
Statement and a CUSIP number for all such Purchased Shares; (vii) otherwise use
its best efforts to comply with all applicable rules and regulations of the
Securities and Exchange Commission; and (viii) file the documents required of
the Corporation and otherwise use its best efforts to maintain requisite blue
sky clearance in (A) all jurisdictions in which any of the Purchased Shares are
originally sold and (B) all other states reasonably specified in
<PAGE> 3
3
writing by the Subscriber, provided as to clause (B), however, that in no event
shall the Corporation be required to qualify to do business or consent to
service of process in any state in which it is not now so qualified or has not
so consented.
(d) The Corporation shall furnish to the Subscriber
upon request a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary in order to facilitate the public sale or
other disposition of all or any of the Purchased Shares held by the Subscriber.
(e) With a view to making available to the Subscriber
the benefits of Rule 144 promulgated under the Securities Act ("Rule 144") and
any other rule or regulation of the Securities and Exchange Commission that may
at any time permit the Subscriber to sell Purchased Shares to the public without
registration or pursuant to a registration on Form S-3, the Corporation
covenants and agrees to: (i) make and keep public information available, as
those terms are understood and defined in Rule 144 under the Securities Act,
until the earlier of (A) the second anniversary of the Closing Date or (B) such
date as all of the Purchased Shares shall have been resold by the Subscriber
thereof; (ii) file with the SEC in a timely manner all reports and other
documents required of the Corporation under the Securities Act and the Exchange
Act; and (iii) furnish to the Subscriber upon request, as long as the Subscriber
owns any Purchased Shares, (A) a written statement by the Corporation that it
has complied with the reporting requirements of the Securities Act and the
Exchange Act, (B) a copy of the most recent annual or quarterly report of the
Corporation, and (C) such other information as may be reasonably requested in
order to avail the Subscriber of any rule or regulation of the SEC that permits
the selling of any such Purchased Shares without registration or pursuant to
such Form S-3.
(f) Indemnification and Contribution.
(i) The Corporation agrees to indemnify and
hold harmless Subscriber from and against any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) to which such
Subscriber may become subject (under the Securities Act or otherwise) insofar as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon, any untrue statement of a
material fact contained in the Registration Statement, on the effective date
thereof, or arise out of any failure by the Corporation to fulfill any
undertaking included in the Registration Statement, and the Corporation will, as
incurred, reimburse Subscriber for any legal or other expenses reasonably
incurred in investigating, defending or preparing to defend any such action,
proceeding or claim; provided, however, that the Corporation shall not be liable
in any such case to the extent that such loss, claim, damage or liability arises
out of or is based upon (a) an untrue statement made in such Registration
Statement in reliance upon and in conformity with written information furnished
to the Corporation by or on behalf of Subscriber specifically for use in
preparation of the Registration Statement, (b) the failure of Subscriber to
comply with the covenants and agreements contained in this Agreement, or (c) any
untrue statement in any Prospectus that is corrected in any subsequent
Prospectus that was delivered to the Subscriber prior to the pertinent sale or
sales by the Subscriber.
<PAGE> 4
4
(ii) Subscriber agrees to indemnify and hold
harmless the Corporation from and against any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) to which the
Corporation may become subject (under the Securities Act or otherwise) insofar
as such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon (a) an untrue statement made in
such Registration Statement in reliance upon and in conformity with written
information furnished to the Corporation by or on behalf of Subscriber
specifically for use in preparation of the Registration Statement, provided,
however, that Subscriber shall not be liable in any such case for any untrue
statement included in any Prospectus which statement has been corrected, in
writing, by Subscriber and delivered to the Corporation before the sale from
which such loss occurred, (b) the failure of Subscriber to comply with the
covenants and agreements contained in this Agreement, or (c) any untrue
statement in any prospectus that is corrected in any subsequent Prospectus that
was delivered to the Subscriber prior to the pertinent sale or sales by the
Subscriber. Notwithstanding the foregoing, in no event shall the Subscriber to
liable to the Corporation under this Section 2 for any amounts in excess of the
net proceeds received by the Subscriber from the sale of the Purchased Shares
pursuant to the Registration Statement.
(iii) Promptly after receipt by any
indemnified person of a notice of a claim or the beginning of any action in
respect of which indemnity is to be sought against an indemnifying person
pursuant to this Section 2, such indemnified person shall notify the
indemnifying person in writing of such claim or of the commencement of such
action, and, subject to the provisions hereinafter stated, in case any such
action shall be brought against an indemnified person and the indemnifying
person shall have been notified thereof, the indemnifying person shall be
entitled to participate therein, and, to the extent that it shall wish, to
assume the defense thereof, with counsel reasonably satisfactory to the
indemnified person. After notice from the indemnifying person to such
indemnified person of the indemnifying person's election to assume the defense
thereof, the indemnifying person shall not be liable to such indemnified person
for any legal expenses subsequently incurred by such indemnified person in
connection with the defense thereof, provided, however, that if there exists or
shall exist a conflict of interest that would make it inappropriate in the
reasonable judgment of the indemnified person for the same counsel to represent
both the indemnified person and such indemnifying person or any affiliate or
associate thereof, the indemnified person shall be entitled to retain its own
counsel at the expense of such indemnifying person.
(iv) If the indemnification provided for in
this Section 2 is unavailable to or insufficient to hold harmless an indemnified
party under subsection (i) or (ii) above in respect of any losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) referred
to therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative fault of the Corporation on the one hand and the
Subscriber on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a
<PAGE> 5
5
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Corporation on the one hand or the
Subscriber on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Corporation and the Subscriber agree that it would not be just and equitable
if contribution pursuant to this subsection (iv) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to above in this subsection (iv). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, or liabilities (or actions in respect thereof) referred to
above in this subsection (iv) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (iv), Subscriber shall not be required to
contribute any amount in excess of the amount by which the net amount received
by the Subscriber from the sale of the Purchased Shares to which such loss
relates exceeds the amount of any damages which Subscriber has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(v) The obligations of the Corporation and
the Subscriber under this Section 2 shall be in addition to any liability which
the Corporation and the Subscriber may otherwise have.
3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. The Corporation
hereby represents and warrants to the Subscriber, as of the date hereof and as
of the Closing Date, as follows:
(a) CORPORATE EXISTENCE. Each of the Corporation and its
Subsidiaries: (i) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization; (ii) has all
requisite corporate power and corporate authority, and all material governmental
licenses, authorizations, consents and approvals necessary to own its assets and
carry on its business as now being conducted; and (iii) is qualified to do
business and is in good standing in all jurisdictions in which the nature of the
business conducted by it makes such qualification necessary and where failure so
to qualify would (either individually or in the aggregate) have a Material
Adverse Effect.
(b) NO BREACH. None of the execution and delivery of this
Agreement by the Corporation, the consummation by the Corporation of the
transactions herein contemplated or compliance by the Corporation with the terms
and provisions hereof will conflict with or result in a breach of, or require
any consent under, or result in the creation or imposition of any lien pursuant
to the terms of, the certificate of incorporation or by-laws of the Corporation,
or any law, regulation, order, writ, injunction or decree of any court or
governmental authority or agency, in each case which is binding on the
Corporation or any of its Subsidiaries, or any agreement or instrument to which
the Corporation or any of its Subsidiaries is a party or by which any of them or
any of their property is bound or to which any of them is subject, or constitute
a default under any such agreement or instrument. The foregoing representation,
insofar as relating to the Securities Act, is made in reliance upon the
representations and warranties of the
<PAGE> 6
6
Subscriber and the Other Investors set forth in Section 3(e) hereof and Section
3(e) of the Other Investors respective subscription agreements.
(c) AUTHORIZATION AND ENFORCEABILITY. The Corporation has all
necessary corporate power, authority and legal right to execute, deliver and
perform its obligations under this Agreement; the execution, delivery and
performance by the Corporation of this Agreement has been duly authorized by all
necessary corporate action on its part (including, without limitation, any
required stockholder approvals); and this Agreement has been duly authorized,
executed and delivered by the Corporation and this Agreement constitutes the
legal, valid and binding obligation of the Corporation, enforceable against the
Corporation in accordance with its terms, except as such enforceability may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar
laws of general applicability affecting the enforcement of creditors' rights and
(ii) the application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(d) APPROVALS. Other than as contemplated under Section 2
hereof or pursuant to any filing with the Nasdaq Stock Market following the
Closing Date, no authorizations, approvals or consents of, and no filings or
registrations with, any governmental or regulatory authority or agency, or any
securities exchange, are necessary for the execution, delivery or performance by
the Corporation of this Agreement. The foregoing representation, insofar as
relating to the Securities Act, is made in reliance upon the representations and
warranties of the Subscriber and the Other Investors set forth in Section 3(e)
hereof and Section 3(e) of the Other Investors respective subscription
agreements.
(e) INVESTMENT COMPANY ACT. Neither the Corporation nor any of
its Subsidiaries is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
(f) PUBLIC UTILITY HOLDING COMPANY ACT. Neither the
Corporation nor any of its Subsidiaries is a "holding company", or an
"affiliate" of a "holding company" or a "subsidiary company" of a "holding
company", within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
(g) CAPITALIZATION. As of the date hereof (and without giving
effect to the sale of the Purchased Shares hereunder or the other matters
referred to in Section 4(e)(vii) hereof), the authorized capital stock of the
Corporation consists of 30,000,000 shares of Common Stock, of which 10,877,982
shares of Common Stock are duly and validly issued and outstanding; 800,000
shares of Class A Preferred Stock, no shares of which are issued or outstanding;
and 2,000,000 shares of Class B Preferred Stock, of which the following are
authorized, and duly and validly issued and outstanding: 100,000 shares of Class
B Convertible Redeemable Preferred Stock, Series 1997 authorized, no shares of
which are issued and outstanding, 4,000 shares of Class B Redeemable Preferred
Stock, Series 1997-A authorized, of which 4,000 shares are duly and validly
issued and outstanding (the "Preferred Stock 1997-A"), 152,321 shares of Class B
Convertible Preferred Stock, Series C authorized, of which 142,486 shares are
duly and validly issued and outstanding, and 100,000 shares of Class B
Convertible Preferred Stock, Series 1996 authorized, of which 100,000 shares are
duly and validly issued and outstanding, and all such shares are fully paid and
nonassessable. All
<PAGE> 7
7
outstanding shares of the Corporation's capital stock have been issued in
compliance with all federal and state securities laws, and were not issued in
violation of or subject to any pre-emptive rights or other rights to subscribe
for or purchase securities of the Corporation. When issued in accordance with
this Agreement, the Purchased Shares will be duly and validly issued, fully paid
and non-assessable. The issuance and sale of the Purchased Shares is not subject
to the pre-emptive or other similar rights of the stockholders of the
Corporation or any liens or encumbrances.
(h) DISCLOSURE. Each of the reports filed by the Corporation
with the Securities and Exchange Commission under the Exchange Act, and the
Corporation's October 1998 Confidential Memorandum (together with all Appendices
and Exhibits thereto and all Appendices and Exhibits which are incorporated by
reference, the "Confidential Memorandum") did not, at the time each such report
was filed or, in the case of the Confidential Memorandum, as of the date
thereof, contain any untrue statement of material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(i) In connection with the private placement of shares of
Common Stock contemplated by the Confidential Memorandum, including, without
limitation, the shares of Common Stock being offered to the Subscriber and the
Other Investors, no more than 25 investors (each of which is an accredited
investor) have been offered shares of Common Stock by the Corporation and/or any
representative, advisor, agent or other person acting on behalf of the
Corporation. Assuming the accuracy of the representations and warranties of the
Subscriber and the Other Investors set forth in this Agreement and in the
subscription agreements of the Other Investors, the offer, sale and issuance of
the Purchased Shares are exempt from the registration requirements of Section 5
of the Securities Act.
4. REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBER. The Subscriber
hereby represents and warrants to the Corporation, as of the date hereof, as
follows:
(a) EXISTENCE. The Subscriber is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization.
(b) AUTHORITY. The Subscriber has all necessary power,
authority and legal right to execute, deliver and perform its obligations under
this Agreement; the execution, delivery and performance by the Subscriber of
this Agreement have been duly authorized by all necessary corporate, partnership
or other action required, if any, to be taken by the Subscriber or any affiliate
of the Subscriber.
(c) ENFORCEABILITY. This Agreement constitutes the legal,
valid and binding obligation of the Subscriber, enforceable against the
Subscriber in accordance with its terms, except as such enforceability may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar
laws of general applicability affecting the enforcement of creditors' rights and
(ii) the application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(d) NO BREACH. None of the execution and delivery of this
Agreement by the Subscriber, the consummation by the Subscriber of the
transactions herein
<PAGE> 8
8
contemplated or compliance by the Subscriber with the terms and provisions
hereof will conflict with or result in a breach of, or require any consent
under, in the event that the Subscriber is a corporation, partnership or other
entity, the organizational documents and/or by-laws, and/or other documents of
similar import, as the case may be, of the Subscriber, or, with regard to any
Subscriber, any law, regulation, order, writ, injunction or decree of any court
or governmental authority or agency, in each case which is binding on the
Subscriber or any of its Subsidiaries, if any, or any agreement or instrument to
which the Subscriber or any of its Subsidiaries, if any, is a party or by which
any of them or any of their Property is bound or to which any of them is
subject, constitute a default under any such agreement or instrument.
(e) INVESTMENT REPRESENTATIONS. (i) In evaluating the
suitability of an investment in the Corporation, the Subscriber has not relied
upon any representation or warranty (oral or written) (except those expressly
set forth in Section 3 hereof) of any Person. The Subscriber agrees that except
for the representations and warranties made by the Corporation expressly set
forth in Section 3 of this Agreement (as such representations and warranties are
modified by the Schedules hereto), neither the Corporation nor any affiliate
thereof has made and shall not be construed as having made to the Subscriber or
to any representative or affiliate thereof any representation or warranty of any
kind. Without limiting the generality of the foregoing, the Subscriber agrees
that neither the Corporation nor any affiliate thereof makes or has made any
representation or warranty to the Subscriber or to any representative or
affiliate thereof with respect to:
(A) any projections, estimates or budgets heretofore
delivered to or made available to the Subscriber or its
counsel, accountants, advisors, lenders, representatives or
affiliates of future revenues, expenses or expenditures,
future or pro forma results of operations (or any component
thereof), future or pro forma cash flows (or any component
thereof) or future or pro forma financial condition (or any
component thereof) of the Corporation and its Subsidiaries (or
any of them) or the future or pro forma business, operations
or affairs of the Corporation and its Subsidiaries (or any of
them);
(B) any future or pro forma rates of return in
respect of the Subscriber's investment in the Purchased Shares
or the future or pro forma value of such Purchased Shares; and
(C) any other information, statement or documents
heretofore delivered to or made available to the Subscriber or
its counsel, accountants, advisors, lenders, representatives
or affiliates with respect to the Corporation and its
Subsidiaries (or any of them) or the business, operations or
affairs of the Corporation and its Subsidiaries (or any of
them), except to the extent and as expressly covered by a
representation and warranty contained in Section 3 hereof.
(ii) The Subscriber understands that the Corporation
proposes to issue to it the Purchased Shares in a private placement transaction
exempt from the registration requirements of the Securities Act; that, as a
result, the Purchased Shares will be restricted securities for purposes of the
Federal securities laws; that for such purpose
<PAGE> 9
9
the Corporation will rely upon the representations, warranties, covenants and
agreements made by the Subscriber and contained herein; and that such exemption
from registration is not available unless such representations and warranties
are correct, and such covenants and agreements are performed in accordance with
this Agreement.
(iii) The Subscriber is familiar with the provisions
of Rule 144 of the Securities Act and the limitations upon the availability and
applicability of such Rule, including with respect to the Purchased Shares.
(iv) The Subscriber is a sophisticated investor
familiar with the type of risks inherent in the acquisition of restricted
securities such as the Purchased Shares and the Subscriber's financial position
is such that it can afford to retain such shares for an indefinite period of
time without realizing any direct or indirect cash return on its investment. The
Subscriber is an "accredited investor" as such term is defined in Rule 501 under
the Securities Act.
(v) The Subscriber has such knowledge and experience
in financial, tax and business matters as to enable it to utilize the
information made available to it in connection with the issuance of the
Purchased Shares and to evaluate the merits and risks of an investment in such
shares and to make an informed investment decision with respect thereto.
(vi) The Subscriber is acquiring the Purchased Shares
solely for its own account for investment and not with a present view to, or for
sale in connection with, the distribution thereof within the meaning of the
Securities Act.
(vii) The Subscriber understands that (a) the
Corporation proposes to effect an exchange (the "Exchange") in which it will
issue Common Stock, at the Purchase Price per Purchased Share, in exchange for
(1) all of the issued and outstanding shares of its Preferred Stock 1997-A, with
an aggregate liquidation preference of $4 million (and all accrued and unpaid
dividends thereon on the date of the exchange) and (2) the retirement of $1
million in principal amount of certain subordinated debt, all held by corporate
affiliates of Paul J. Ramsay, the Chairman of the Corporation, (b) the
Corporation proposes to effect one or more additional private placements of its
Common Stock to investors other than the Subscriber and other than Luis E.
Lamela, the Chief Executive Officer of the Corporation (collectively, the "Other
Investors") and (c) in connection with the Exchange and the private placements
contemplated above, the Corporation intends to amend its Rights Agreement as set
forth in Exhibit A hereto.
5. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; CERTAIN LIMITATIONS ON
DAMAGES. (a) The representations and warranties of the Corporation contained in
Section 3 hereof and the representations and warranties of the Subscriber
contained in Section 4 hereof shall survive indefinitely.
(b) The aggregate liability of the Corporation for any and all
damage, loss, liability, cost and expense (collectively, "Damages") arising out
of any and all breaches by the Corporation of the representations and warranties
set forth in Section 3 under this Agreement is, and shall be, limited to an
aggregate amount (the "Liability
<PAGE> 10
10
Amount") equal to the Purchase Price, and the Subscriber agrees not to seek any
Damages in excess of the Liability Amount for any and all Damages sustained or
incurred by the Subscriber arising out of any and all breaches by the
Corporation of any representation or warranty set forth in Section 3 under this
Agreement. The aggregate liability of the Subscriber for any and all Damages
arising out of any and all breaches by the Subscriber of the representations and
warranties set forth in Section 4 under this Agreement is, and shall be, limited
to the Liability Amount, and the Corporation agrees not to seek any Damages in
excess of the Liability Amount for any and all Damages sustained or incurred by
the Corporation arising out of any and all breaches by the Subscriber of any
representation or warranty set forth in Section 4 under this Agreement. This
Section 5(b) shall not apply to Section 2(f) hereof.
6. MISCELLANEOUS. (a) This Agreement contains the entire agreement
between the Corporation and the Subscriber with respect to the transactions
contemplated by this Agreement and supersede all prior arrangements or
understandings with respect thereto.
(b) All notices or other communications hereunder shall be in
writing and sufficient if delivered personally or sent by registered or
certified mail, postage prepaid, addressed to the Corporation at One Alhambra
Plaza, Suite 750, Coral Gables, Florida 38134, Fax: 305-567-1169, Attention:
Chief Executive Officer (with a copy to Haythe & Curley, 237 Park Avenue, New
York, New York 10017, Fax: 212-682-0200, Attention: Bradley P. Cost, Esq.) and
to the Subscriber at the address or facsimile set forth under its name on the
signature page to this Agreement. All such notices and communications shall be
deemed to have been duly given at the time delivered by hand, if personally
delivered, at the time received by fax, at the time received from a recognized
overnight carrier service, or three (3) business days after being deposited in
the mail, if sent by registered or certified mail, return receipt requested. Any
party hereto may by notice change the address to which notices or other
communications to such party are to be delivered or mailed.
(c) This Agreement may be executed in counterparts, including
by fax, each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
(d) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware (without regard to the
conflicts of law rules thereof).
(e) This Agreement shall not be assignable without the prior
written consent of the other party hereto, and any purported assignment by any
party without the prior written consent of the other party hereto shall be void.
(f) This Agreement shall not create benefits on behalf of any
third party, and this Agreement shall be effective only as among the parties
hereto, their respective successors and permitted assigns.
(g) Any term or provision of this Agreement may be waived at
any time by the party which is entitled to the benefits thereof, and any term or
provision of this Agreement may be amended or supplemented at any time by the
consent of the
<PAGE> 11
11
Corporation and the Subscriber, except that any waiver of any term or condition,
or any amendment or supplementation, of this Agreement shall be effective only
if in writing.
(h) The parties hereto agree that this Agreement is the
product of negotiations between sophisticated parties, each of whom was
represented by counsel, and each of whom had an opportunity to participate in,
and did participate in, the drafting of each provision hereof. Accordingly,
ambiguities in this Agreement, if any, shall not be construed strictly or in
favor of or against any party hereto but rather shall be given a fair and
reasonable construction without regard to the rule of contra proferentum.
(i) The parties hereto agree that each party shall bear such
party's own expenses in connection with this Agreement and the transactions
contemplated hereby.
7. DEFINITIONS. As used herein, the following terms shall have the
following meanings (all terms defined in this Section 7 or in other provisions
of this Agreement in the singular to have the same meanings when used in the
plural and VICE VERSA):
"Agreement" shall have the meaning set forth in the recitals
hereto.
"Class B Convertible Redeemable Preferred Stock, Series 1997"
shall mean the class B convertible redeemable preferred stock, par value $1.00
per share, of the Corporation.
"Class B Redeemable Preferred Stock, Series 1997-A" shall mean
the class B redeemable preferred stock, par value $1.00 per share, of the
Corporation.
"Class B Convertible Preferred Stock, Series C" shall mean the
class B convertible preferred stock, par value $1.00 per share, of the
Corporation.
"Class B Convertible Preferred Stock, Series 1996" shall mean
the class B convertible preferred stock, par value $1.00 per share, of the
Corporation.
"Common Stock" shall mean the Common Stock, par value $.01 per
share, of the Corporation.
"Corporation" shall have the meaning set forth in the recitals
hereto.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Liability Amount" shall have the meaning set forth in Section
5(b) hereof.
"Material Adverse Effect" shall mean a material adverse effect
on the Properties, results of operation or condition (financial or otherwise) of
the Corporation and its Subsidiaries, taken as a whole.
<PAGE> 12
12
"Person" shall mean any individual, corporation, company,
voluntary association, partnership, joint venture, trust, unincorporated
organization or government (or any agency, instrumentality or political
subdivision thereof).
"Preferred Stock" shall mean the Class B Convertible
Redeemable Preferred Stock, Series 1997, the Class B Redeemable Preferred Stock,
Series 1997-A, the Class B Convertible Preferred Stock, Series C, and the Class
B convertible Preferred Stock, Series 1996.
"Property" shall mean any right or interest in or to property
of any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Purchase Price" shall have the meaning set forth in
Section 1(b) hereto.
"Purchased Shares" shall have the meaning set forth in the
recitals hereto.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Subscriber" shall have the meaning set forth in the recitals
hereto.
"Subsidiary" shall mean, with respect to any Person, any
corporation, partnership or other entity of which at least a majority of the
securities or other ownership interests having by the terms thereof ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions of such corporation, partnership or other entity
(irrespective of whether or not at the time securities or other ownership
interests of any other class or classes of such corporation, partnership or
other entity shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned or controlled by
such Person or one or more Subsidiaries of such Person or by such Person and one
or more Subsidiaries of such Person.
* * *
<PAGE> 13
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IN WITNESS WHEREOF, each of the parties hereto has executed
this Agreement on the date first above written.
RAMSAY HEALTH CARE, INC.
By:
-----------------------------
Name: Luis E. Lamela
Title: Chief Executive Officer
PAUL RAMSAY HOLDINGS PTY. LIMITED
By:
-----------------------------
Name: Peter J. Evans
Title: Director
Purchase Commitment: U.S. $2,500,000
Address: 154 Pacific Highway
St. Leonards NSW 2065, Australia
Fax: 011-612-94-333-460
Attention: Director
<PAGE> 1
EXHIBIT 4.14
AMENDED AND RESTRATED SUBSCRIPTION AGREEMENT dated October 26,
1998 (this "Agreement") between RAMSAY HEALTH CARE, INC., a Delaware corporation
(the "Corporation"), and LUIS E. LAMELA (the "Subscriber").
W I T N E S S E T H :
WHEREAS, the authorized capital stock of the Corporation
consists of 30,000,000 shares of Common Stock, 100,000 shares of Class B
Convertible Redeemable Preferred Stock, Series 1997, 4,000 shares of Class B
Redeemable Preferred Stock, Series 1997-A, 152,321 shares of Class B Convertible
Preferred Stock, Series C, and 100,000 shares of Class B Convertible Preferred
Stock, Series 1996;
WHEREAS, subject to the terms and conditions hereof, the
Subscriber desires to subscribe for and purchase from the Corporation the
aggregate dollar value (determined at the Purchase Price as determined herein
and as such aggregate dollar value may be adjusted as set forth herein) of
shares of Common Stock (the "Purchased Shares") set forth opposite its name on
the signature page hereof (the "Purchase Commitment");
NOW, THEREFORE, in consideration of the mutual benefits to be
derived and the representations and warranties, conditions and promises herein
contained, and intending to be legally bound hereby, the Corporation and the
Subscriber hereby agree as follows:
1. PURCHASE OF PURCHASED SHARES. (a) Subject to the terms and
provisions of this Agreement, the Subscriber agrees to purchase from the
Corporation, and the Corporation agrees to issue to the Subscriber, a number of
Purchased Shares determined by dividing the Purchase Commitment, as adjusted as
provided in this Section 1, by the Purchase Price.
(b) The purchase price per share for the Purchased Shares to be
purchased by the Subscriber shall be the closing bid price per share of Common
Stock reported on the Nasdaq Stock Market on the date hereof (the "Purchase
Price"). The aggregate Purchase Commitment shall be payable by the Subscriber by
bank wire transfer to an account established by the Corporation with Haythe &
Curley, Esqs. (Citibank, N.A., 111 Wall Street, New York, New York, ABA No.
021000089, Client Escrow Account No. 37399318) or by certified or bank cashiers
check payable to the Corporation and delivered to the Corporation c/o Haythe &
Curley, 237 Park Avenue, New York, New York 10017, Attention: Bradley P. Cost,
Esq., in any case on or before the Closing Date.
(c) Upon the payment by the Subscriber to the Corporation of the
aggregate Purchase Commitment for the Purchased Shares on the Closing Date, the
Corporation shall cause its transfer agent to deliver to the Subscriber a stock
certificate representing ownership by it of the shares of Common Stock purchased
hereunder.
<PAGE> 2
2
2. REGISTRATION REQUIREMENTS.
(a) As promptly as practicable following the Closing
Date, but in any event within a period of 90 days following the Closing Date,
the Corporation shall prepare and file with the Securities and Exchange
Commission a Registration Statement on Form S-3 for the purpose of registering
the resale by the Subscriber (or the Subscriber's affiliates) of the Purchased
Shares under the Securities Act.
(b) The Corporation shall pay all Registration Expenses
(as defined below) in connection with any registration, qualification or
compliance hereunder. Registration Expenses shall mean all expenses incurred by
the Corporation in complying with the registration provisions herein described,
including, without limitation, all registration, qualification and filing fees,
printing expenses, escrow fees, fees and disbursements of counsel for the
Corporation, blue sky fees and expenses, and the expense of any special audits
incident to or required by any such registration.
(c) In the case of the registration effected by the
Corporation pursuant to these registration provisions, the Corporation will use
its best efforts to: (i) cause the Registration Statement to become effective
within one hundred fifty (150) days of the Closing Date, (ii) keep such
registration effective until the earlier of (a) the second anniversary of the
Closing Date, (b) such date as all of the Purchased Shares have been resold by
the Subscriber thereof, or (c) such time as all of the Purchased Shares held by
the Subscriber can be sold within a given three-month period without compliance
with the registration requirements of the Securities Act pursuant to Rule 144
under the Securities Act; (iii) prepare and file with the Securities and
Exchange Commission such amendments and supplements to the Registration
Statement and the prospectus used in connection with the Registration Statement
as may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by the Registration
Statement; (iv) furnish such number of prospectuses and other documents incident
thereto, including any amendment of or supplement to the prospectus, as the
Subscriber from time to time may reasonably request; (v) cause all Purchased
Shares registered as described herein to be listed on each securities exchange
and quoted on each quotation service on which similar securities issued by the
Corporation are then listed or quoted; (vi) provide a transfer agent and
registrar for all Purchased Shares registered pursuant to the Registration
Statement and a CUSIP number for all such Purchased Shares; (vii) otherwise use
its best efforts to comply with all applicable rules and regulations of the
Securities and Exchange Commission; and (viii) file the documents required of
the Corporation and otherwise use its best efforts to maintain requisite blue
sky clearance in (A) all jurisdictions in which any of the Purchased Shares are
originally sold and (B) all other states reasonably specified in writing by the
Subscriber, provided as to clause (B), however, that in no event shall the
Corporation be required to qualify to do business or consent to service of
process in any state in which it is not now so qualified or has not so
consented.
(d) The Corporation shall furnish to the Subscriber
upon request a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary in order to facilitate the public sale or
other disposition of all or any of the Purchased Shares held by the Subscriber.
<PAGE> 3
3
(e) With a view to making available to the Subscriber
the benefits of Rule 144 promulgated under the Securities Act ("Rule 144") and
any other rule or regulation of the Securities and Exchange Commission that may
at any time permit the Subscriber to sell Purchased Shares to the public without
registration or pursuant to a registration on Form S-3, the Corporation
covenants and agrees to: (i) make and keep public information available, as
those terms are understood and defined in Rule 144 under the Securities Act,
until the earlier of (A) the second anniversary of the Closing Date or (B) such
date as all of the Purchased Shares shall have been resold by the Subscriber
thereof; (ii) file with the SEC in a timely manner all reports and other
documents required of the Corporation under the Securities Act and the Exchange
Act; and (iii) furnish to the Subscriber upon request, as long as the Subscriber
owns any Purchased Shares, (A) a written statement by the Corporation that it
has complied with the reporting requirements of the Securities Act and the
Exchange Act, (B) a copy of the most recent annual or quarterly report of the
Corporation, and (C) such other information as may be reasonably requested in
order to avail the Subscriber of any rule or regulation of the SEC that permits
the selling of any such Purchased Shares without registration or pursuant to
such Form S-3.
(f) Indemnification and Contribution.
(i) The Corporation agrees to indemnify and
hold harmless Subscriber from and against any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) to which such
Subscriber may become subject (under the Securities Act or otherwise) insofar as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon, any untrue statement of a
material fact contained in the Registration Statement, on the effective date
thereof, or arise out of any failure by the Corporation to fulfill any
undertaking included in the Registration Statement, and the Corporation will, as
incurred, reimburse Subscriber for any legal or other expenses reasonably
incurred in investigating, defending or preparing to defend any such action,
proceeding or claim; provided, however, that the Corporation shall not be liable
in any such case to the extent that such loss, claim, damage or liability arises
out of or is based upon (a) an untrue statement made in such Registration
Statement in reliance upon and in conformity with written information furnished
to the Corporation by or on behalf of Subscriber specifically for use in
preparation of the Registration Statement, (b) the failure of Subscriber to
comply with the covenants and agreements contained in this Agreement, or (c) any
untrue statement in any Prospectus that is corrected in any subsequent
Prospectus that was delivered to the Subscriber prior to the pertinent sale or
sales by the Subscriber.
(ii) Subscriber agrees to indemnify and hold
harmless the Corporation from and against any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) to which the
Corporation may become subject (under the Securities Act or otherwise) insofar
as such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon (a) an untrue statement made in
such Registration Statement in reliance upon and in conformity with written
information furnished to the Corporation by or on behalf of Subscriber
specifically for use in preparation of the Registration Statement, provided,
however, that Subscriber shall not be liable in any such case for any untrue
statement included in any Prospectus which statement has been corrected, in
writing, by Subscriber and delivered to
<PAGE> 4
4
the Corporation before the sale from which such loss occurred, (b) the failure
of Subscriber to comply with the covenants and agreements contained in this
Agreement, or (c) any untrue statement in any prospectus that is corrected in
any subsequent Prospectus that was delivered to the Subscriber prior to the
pertinent sale or sales by the Subscriber. Notwithstanding the foregoing, in no
event shall the Subscriber to liable to the Corporation under this Section 2 for
any amounts in excess of the net proceeds received by the Subscriber from the
sale of the Purchased Shares pursuant to the Registration Statement.
(iii) Promptly after receipt by any
indemnified person of a notice of a claim or the beginning of any action in
respect of which indemnity is to be sought against an indemnifying person
pursuant to this Section 2, such indemnified person shall notify the
indemnifying person in writing of such claim or of the commencement of such
action, and, subject to the provisions hereinafter stated, in case any such
action shall be brought against an indemnified person and the indemnifying
person shall have been notified thereof, the indemnifying person shall be
entitled to participate therein, and, to the extent that it shall wish, to
assume the defense thereof, with counsel reasonably satisfactory to the
indemnified person. After notice from the indemnifying person to such
indemnified person of the indemnifying person's election to assume the defense
thereof, the indemnifying person shall not be liable to such indemnified person
for any legal expenses subsequently incurred by such indemnified person in
connection with the defense thereof, provided, however, that if there exists or
shall exist a conflict of interest that would make it inappropriate in the
reasonable judgment of the indemnified person for the same counsel to represent
both the indemnified person and such indemnifying person or any affiliate or
associate thereof, the indemnified person shall be entitled to retain its own
counsel at the expense of such indemnifying person.
(iv) If the indemnification provided for in
this Section 2 is unavailable to or insufficient to hold harmless an indemnified
party under subsection (i) or (ii) above in respect of any losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) referred
to therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative fault of the Corporation on the one hand and the
Subscriber on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Corporation on the one hand or the Subscriber on the other and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Corporation and the Subscriber agree
that it would not be just and equitable if contribution pursuant to this
subsection (iv) were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this subsection (iv). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, or liabilities (or actions in
respect thereof) referred to above in this subsection (iv) shall be deemed to
include any legal or other expenses reasonably incurred by such
<PAGE> 5
5
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subsection (iv), Subscriber
shall not be required to contribute any amount in excess of the amount by which
the net amount received by the Subscriber from the sale of the Purchased Shares
to which such loss relates exceeds the amount of any damages which Subscriber
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall bc entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(v) The obligations of the Corporation and
the Subscriber under this Section 2 shall be in addition to any liability which
the Corporation and the Subscriber may otherwise have.
3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. The Corporation
hereby represents and warrants to the Subscriber, as of the date hereof and as
of the Closing Date, as follows:
(a) CORPORATE EXISTENCE. Each of the Corporation and its
Subsidiaries: (i) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization; (ii) has all
requisite corporate power and corporate authority, and all material governmental
licenses, authorizations, consents and approvals necessary to own its assets and
carry on its business as now being conducted; and (iii) is qualified to do
business and is in good standing in all jurisdictions in which the nature of the
business conducted by it makes such qualification necessary and where failure so
to qualify would (either individually or in the aggregate) have a Material
Adverse Effect.
(b) NO BREACH. None of the execution and delivery of this
Agreement by the Corporation, the consummation by the Corporation of the
transactions herein contemplated or compliance by the Corporation with the terms
and provisions hereof will conflict with or result in a breach of, or require
any consent under, or result in the creation or imposition of any lien pursuant
to the terms of, the certificate of incorporation or by-laws of the Corporation,
or any law, regulation, order, writ, injunction or decree of any court or
governmental authority or agency, in each case which is binding on the
Corporation or any of its Subsidiaries, or any agreement or instrument to which
the Corporation or any of its Subsidiaries is a party or by which any of them or
any of their property is bound or to which any of them is subject, or constitute
a default under any such agreement or instrument. The foregoing representation,
insofar as relating to the Securities Act, is made in reliance upon the
representations and warranties of the Subscriber and the Other Investors set
forth in Section 3(e) hereof and Section 3(e) of the Other Investors respective
subscription agreements.
(c) AUTHORIZATION AND ENFORCEABILITY. The Corporation has all
necessary corporate power, authority and legal right to execute, deliver and
perform its obligations under this Agreement; the execution, delivery and
performance by the Corporation of this Agreement has been duly authorized by all
necessary corporate action on its part (including, without limitation, any
required stockholder approvals); and this Agreement has been duly authorized,
executed and delivered by the Corporation and this Agreement constitutes the
legal, valid and binding obligation of the Corporation, enforceable against the
Corporation in accordance with its terms, except as such
<PAGE> 6
6
enforceability may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium or similar laws of general applicability affecting the enforcement of
creditors' rights and (ii) the application of general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
(d) APPROVALS. Other than as contemplated under Section 2
hereof or pursuant to any filing with the Nasdaq Stock Market following the
Closing Date, no authorizations, approvals or consents of, and no filings or
registrations with, any governmental or regulatory authority or agency, or any
securities exchange, are necessary for the execution, delivery or performance by
the Corporation of this Agreement. The foregoing representation, insofar as
relating to the Securities Act, is made in reliance upon the representations and
warranties of the Subscriber and the Other Investors set forth in Section 3(e)
hereof and Section 3(e) of the Other Investors respective subscription
agreements.
(e) INVESTMENT COMPANY ACT. Neither the Corporation nor any of
its Subsidiaries is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
(f) PUBLIC UTILITY HOLDING COMPANY ACT. Neither the
Corporation nor any of its Subsidiaries is a "holding company", or an
"affiliate" of a "holding company" or a "subsidiary company" of a "holding
company", within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
(g) CAPITALIZATION. As of the date hereof (and without giving
effect to the sale of the Purchased Shares hereunder or the other matters
referred to in Section 4(e)(vii) hereof), the authorized capital stock of the
Corporation consists of 30,000,000 shares of Common Stock, of which 10,877,982
shares of Common Stock are duly and validly issued and outstanding; 800,000
shares of Class A Preferred Stock, no shares of which are issued or outstanding;
and 2,000,000 shares of Class B Preferred Stock, of which the following are
authorized, and duly and validly issued and outstanding: 100,000 shares of Class
B Convertible Redeemable Preferred Stock, Series 1997 authorized, no shares of
which are issued and outstanding, 4,000 shares of Class B Redeemable Preferred
Stock, Series 1997-A authorized, of which 4,000 shares are duly and validly
issued and outstanding (the "Preferred Stock 1997-A"), 152,321 shares of Class B
Convertible Preferred Stock, Series C authorized, of which 142,486 shares are
duly and validly issued and outstanding, and 100,000 shares of Class B
Convertible Preferred Stock, Series 1996 authorized, of which 100,000 shares are
duly and validly issued and outstanding, and all such shares are fully paid and
nonassessable. All outstanding shares of the Corporation's capital stock have
been issued in compliance with all federal and state securities laws, and were
not issued in violation of or subject to any pre-emptive rights or other rights
to subscribe for or purchase securities of the Corporation. When issued in
accordance with this Agreement, the Purchased Shares will be duly and validly
issued, fully paid and non-assessable. The issuance and sale of the Purchased
Shares is not subject to the pre-emptive or other similar rights of the
stockholders of the Corporation or any liens or encumbrances.
(h) DISCLOSURE. Each of the reports filed by the Corporation
with the Securities and Exchange Commission under the Exchange Act, and the
Corporation's October 1998 Confidential Memorandum (together with all Appendices
and Exhibits
<PAGE> 7
7
thereto and all Appendices and Exhibits which are incorporated by reference, the
"Confidential Memorandum") did not, at the time each such report was filed or,
in the case of the Confidential Memorandum, as of the date thereof, contain any
untrue statement of material fact or omit to state a material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
(i) In connection with the private placement of shares of
Common Stock contemplated by the Confidential Memorandum, including, without
limitation, the shares of Common Stock being offered to the Subscriber and the
Other Investors, no more than 25 investors (each of which is an accredited
investor) have been offered shares of Common Stock by the Corporation and/or any
representative, advisor, agent or other person acting on behalf of the
Corporation. Assuming the accuracy of the representations and warranties of the
Subscriber and the Other Investors set forth in this Agreement and in the
subscription agreements of the Other Investors, the offer, sale and issuance of
the Purchased Shares are exempt from the registration requirements of Section 5
of the Securities Act.
4. REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBER. The Subscriber
hereby represents and warrants to the Corporation, as of the date hereof, as
follows:
(a) EXISTENCE. The Subscriber is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization.
(b) AUTHORITY. The Subscriber has all necessary power,
authority and legal right to execute, deliver and perform its obligations under
this Agreement; the execution, delivery and performance by the Subscriber of
this Agreement have been duly authorized by all necessary corporate, partnership
or other action required, if any, to be taken by the Subscriber or any affiliate
of the Subscriber.
(c) ENFORCEABILITY. This Agreement constitutes the legal,
valid and binding obligation of the Subscriber, enforceable against the
Subscriber in accordance with its terms, except as such enforceability may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar
laws of general applicability affecting the enforcement of creditors' rights and
(ii) the application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(d) NO BREACH. None of the execution and delivery of this
Agreement by the Subscriber, the consummation by the Subscriber of the
transactions herein contemplated or compliance by the Subscriber with the terms
and provisions hereof will conflict with or result in a breach of, or require
any consent under, in the event that the Subscriber is a corporation,
partnership or other entity, the organizational documents and/or by-laws, and/or
other documents of similar import, as the case may be, of the Subscriber, or,
with regard to any Subscriber, any law, regulation, order, writ, injunction or
decree of any court or governmental authority or agency, in each case which is
binding on the Subscriber or any of its Subsidiaries, if any, or any agreement
or instrument to which the Subscriber or any of its Subsidiaries, if any, is a
party or by which any of them or any of their Property is bound or to which any
of them is subject, constitute a default under any such agreement or instrument.
<PAGE> 8
8
(e) INVESTMENT REPRESENTATIONS. (i) In evaluating the
suitability of an investment in the Corporation, the Subscriber has not relied
upon any representation or warranty (oral or written) (except those expressly
set forth in Section 3 hereof) of any Person. The Subscriber agrees that except
for the representations and warranties made by the Corporation expressly set
forth in Section 3 of this Agreement (as such representations and warranties are
modified by the Schedules hereto), neither the Corporation nor any affiliate
thereof has made and shall not be construed as having made to the Subscriber or
to any representative or affiliate thereof any representation or warranty of any
kind. Without limiting the generality of the foregoing, the Subscriber agrees
that neither the Corporation nor any affiliate thereof makes or has made any
representation or warranty to the Subscriber or to any representative or
affiliate thereof with respect to:
(A) any projections, estimates or budgets heretofore
delivered to or made available to the Subscriber or its
counsel, accountants, advisors, lenders, representatives or
affiliates of future revenues, expenses or expenditures,
future or pro forma results of operations (or any component
thereof), future or pro forma cash flows (or any component
thereof) or future or pro forma financial condition (or any
component thereof) of the Corporation and its Subsidiaries (or
any of them) or the future or pro forma business, operations
or affairs of the Corporation and its Subsidiaries (or any of
them);
(B) any future or pro forma rates of return in
respect of the Subscriber's investment in the Purchased Shares
or the future or pro forma value of such Purchased Shares; and
(C) any other information, statement or documents
heretofore delivered to or made available to the Subscriber or
its counsel, accountants, advisors, lenders, representatives
or affiliates with respect to the Corporation and its
Subsidiaries (or any of them) or the business, operations or
affairs of the Corporation and its Subsidiaries (or any of
them), except to the extent and as expressly covered by a
representation and warranty contained in Section 3 hereof.
(ii) The Subscriber understands that the Corporation
proposes to issue to it the Purchased Shares in a private placement transaction
exempt from the registration requirements of the Securities Act; that, as a
result, the Purchased Shares will be restricted securities for purposes of the
Federal securities laws; that for such purpose the Corporation will rely upon
the representations, warranties, covenants and agreements made by the Subscriber
and contained herein; and that such exemption from registration is not available
unless such representations and warranties are correct, and such covenants and
agreements are performed in accordance with this Agreement.
(iii) The Subscriber is familiar with the provisions
of Rule 144 of the Securities Act and the limitations upon the availability and
applicability of such Rule, including with respect to the Purchased Shares.
<PAGE> 9
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(iv) The Subscriber is a sophisticated investor
familiar with the type of risks inherent in the acquisition of restricted
securities such as the Purchased Shares and the Subscriber's financial position
is such that it can afford to retain such shares for an indefinite period of
time without realizing any direct or indirect cash return on its investment. The
Subscriber is an "accredited investor" as such term is defined in Rule 501 under
the Securities Act.
(v) The Subscriber has such knowledge and experience
in financial, tax and business matters as to enable it to utilize the
information made available to it in connection with the issuance of the
Purchased Shares and to evaluate the merits and risks of an investment in such
shares and to make an informed investment decision with respect thereto.
(vi) The Subscriber is acquiring the Purchased Shares
solely for its own account for investment and not with a present view to, or for
sale in connection with, the distribution thereof within the meaning of the
Securities Act.
(vii) The Subscriber understands that (a) the
Corporation proposes to effect an exchange (the "Exchange") in which it will
issue Common Stock, at the Purchase Price per Purchased Share, in exchange for
(1) all of the issued and outstanding shares of its Preferred Stock 1997-A, with
an aggregate liquidation preference of $4 million (and all accrued and unpaid
dividends thereon on the date of the exchange) and (2) the retirement of $1
million in principal amount of certain subordinated debt, all held by corporate
affiliates of Paul J. Ramsay, the Chairman of the Corporation, (b) the
Corporation proposes to effect one or more additional private placements of its
Common Stock to investors other than the Subscriber and other than Paul Ramsay
Holdings Pty. Limited (collectively, the "Other Investors") and (c) in
connection with the Exchange and the private placements contemplated above, the
Corporation intends to amend its Rights Agreement as set forth in Exhibit A
hereto.
5. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; CERTAIN LIMITATIONS ON
DAMAGES. (a) The representations and warranties of the Corporation contained in
Section 3 hereof and the representations and warranties of the Subscriber
contained in Section 4 hereof shall survive indefinitely.
(b) The aggregate liability of the Corporation for any and all
damage, loss, liability, cost and expense (collectively, "Damages") arising out
of any and all breaches by the Corporation of the representations and warranties
set forth in Section 3 under this Agreement is, and shall be, limited to an
aggregate amount (the "Liability Amount") equal to the Purchase Price, and the
Subscriber agrees not to seek any Damages in excess of the Liability Amount for
any and all Damages sustained or incurred by the Subscriber arising out of any
and all breaches by the Corporation of any representation or warranty set forth
in Section 3 under this Agreement. The aggregate liability of the Subscriber for
any and all Damages arising out of any and all breaches by the Subscriber of the
representations and warranties set forth in Section 4 under this Agreement is,
and shall be, limited to the Liability Amount, and the Corporation agrees not to
seek any Damages in excess of the Liability Amount for any and all Damages
sustained or incurred by the Corporation arising out of any and all breaches by
the
<PAGE> 10
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Subscriber of any representation or warranty set forth in Section 4 under this
Agreement. This Section 5(b) shall not apply to Section 2(f) hereof.
6. MISCELLANEOUS. (a) This Agreement contains the entire agreement
between the Corporation and the Subscriber with respect to the transactions
contemplated by this Agreement and supersede all prior arrangements or
understandings with respect thereto.
(b) All notices or other communications hereunder shall be in
writing and sufficient if delivered personally or sent by registered or
certified mail, postage prepaid, addressed to the Corporation at One Alhambra
Plaza, Suite 750, Coral Gables, Florida 38134, Fax: 305-567-1169, Attention:
Chief Executive Officer (with a copy to Haythe & Curley, 237 Park Avenue, New
York, New York 10017, Fax: 212-682-0200, Attention: Bradley P. Cost, Esq.) and
to the Subscriber at the address or facsimile set forth under its name on the
signature page to this Agreement. All such notices and communications shall be
deemed to have been duly given at the time delivered by hand, if personally
delivered, at the time received by fax, at the time received from a recognized
overnight carrier service, or three (3) business days after being deposited in
the mail, if sent by registered or certified mail, return receipt requested. Any
party hereto may by notice change the address to which notices or other
communications to such party are to be delivered or mailed.
(c) This Agreement may be executed in counterparts, including
by fax, each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
(d) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware (without regard to the
conflicts of law rules thereof).
(e) This Agreement shall not be assignable without the prior
written consent of the other party hereto, and any purported assignment by any
party without the prior written consent of the other party hereto shall be void.
(f) This Agreement shall not create benefits on behalf of any
third party, and this Agreement shall be effective only as among the parties
hereto, their respective successors and permitted assigns.
(g) Any term or provision of this Agreement may be waived at
any time by the party which is entitled to the benefits thereof, and any term or
provision of this Agreement may be amended or supplemented at any time by the
consent of the Corporation and the Subscriber, except that any waiver of any
term or condition, or any amendment or supplementation, of this Agreement shall
be effective only if in writing.
(h) The parties hereto agree that this Agreement is the
product of negotiations between sophisticated parties, each of whom was
represented by counsel, and each of whom had an opportunity to participate in,
and did participate in, the drafting of each provision hereof. Accordingly,
ambiguities in this Agreement, if any, shall not be construed strictly or in
favor of or against any party hereto but rather shall be given a fair and
reasonable construction without regard to the rule of contra proferentum.
<PAGE> 11
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(i) The parties hereto agree that each party shall bear such
party's own expenses in connection with this Agreement and the transactions
contemplated hereby.
7. DEFINITIONS. As used herein, the following terms shall have the
following meanings (all terms defined in this Section 7 or in other provisions
of this Agreement in the singular to have the same meanings when used in the
plural and VICE VERSA):
"Agreement" shall have the meaning set forth in the recitals
hereto.
"Class B Convertible Redeemable Preferred Stock, Series 1997"
shall mean the class B convertible redeemable preferred stock, par value $1.00
per share, of the Corporation.
"Class B Redeemable Preferred Stock, Series 1997-A" shall mean
the class B redeemable preferred stock, par value $1.00 per share, of the
Corporation.
"Class B Convertible Preferred Stock, Series C" shall mean the
class B convertible preferred stock, par value $1.00 per share, of the
Corporation.
"Class B Convertible Preferred Stock, Series 1996" shall mean
the class B convertible preferred stock, par value $1.00 per share, of the
Corporation.
"Common Stock" shall mean the Common Stock, par value $.01 per
share, of the Corporation.
"Corporation" shall have the meaning set forth in the recitals
hereto.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Liability Amount" shall have the meaning set forth in Section
5(b) hereof.
"Material Adverse Effect" shall mean a material adverse effect
on the Properties, results of operation or condition (financial or otherwise) of
the Corporation and its Subsidiaries, taken as a whole.
"Person" shall mean any individual, corporation, company,
voluntary association, partnership, joint venture, trust, unincorporated
organization or government (or any agency, instrumentality or political
subdivision thereof).
"Preferred Stock" shall mean the Class B Convertible
Redeemable Preferred Stock, Series 1997, the Class B Redeemable Preferred Stock,
Series 1997-A, the Class B Convertible Preferred Stock, Series C, and the Class
B convertible Preferred Stock, Series 1996.
"Property" shall mean any right or interest in or to property
of any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
<PAGE> 12
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"Purchase Price" shall have the meaning set forth in Section
1(b) hereto.
"Purchased Shares" shall have the meaning set forth in the
recitals hereto.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Subscriber" shall have the meaning set forth in the recitals
hereto.
"Subsidiary" shall mean, with respect to any Person, any
corporation, partnership or other entity of which at least a majority of the
securities or other ownership interests having by the terms thereof ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions of such corporation, partnership or other entity
(irrespective of whether or not at the time securities or other ownership
interests of any other class or classes of such corporation, partnership or
other entity shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned or controlled by
such Person or one or more Subsidiaries of such Person or by such Person and one
or more Subsidiaries of such Person.
* * *
<PAGE> 13
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IN WITNESS WHEREOF, each of the parties hereto has executed
this Agreement on the date first above written.
RAMSAY HEALTH CARE, INC.
By
---------------------------
Name: Marcio Cabrera
Title: Executive Vice President
SUBSCRIBER:
By:
---------------------------
Name: Luis E. Lamela
Purchase Commitment: U.S. $1,000,000
Address: c/o Ramsay Health Care, Inc.
One Alhambra Plaza
Suite 750
Coral Gables, Florida 33134
Fax: (305) 569-4647
<PAGE> 1
EXHIBIT 4.15
SUBSCRIPTION AGREEMENT dated October 26, 1998 (this
"Agreement") between RAMSAY HEALTH CARE, INC., a Delaware corporation (the
"Corporation"), and HAYTHE & CURLEY, a New York general partnership (the
"Subscriber").
W I T N E S S E T H :
WHEREAS, the authorized capital stock of the Corporation
consists of 30,000,000 shares of Common Stock, 100,000 shares of Class B
Convertible Redeemable Preferred Stock, Series 1997, 4,000 shares of Class B
Redeemable Preferred Stock, Series 1997-A, 152,321 shares of Class B Convertible
Preferred Stock, Series C, and 100,000 shares of Class B Convertible Preferred
Stock, Series 1996;
WHEREAS, the Subscriber desires to subscribe for and purchase
from the Corporation the aggregate dollar value (determined at the Purchase
Price per Purchased Share as set forth herein) of shares of or Common Stock set
forth opposite its name on the signature page hereof (the "Purchased Shares");
NOW, THEREFORE, in consideration of the mutual benefits to be
derived and the representations and warranties, conditions and promises herein
contained, and intending to be legally bound hereby, the Corporation and the
Subscriber hereby agree as follows:
1. PURCHASE OF PURCHASED SHARES.
(a) Subject to the terms and provisions of this
Agreement, the Subscriber agrees to purchase from the Corporation, and the
Corporation agrees to issue to the Subscriber, the Purchased Shares as provided
below.
(b) The purchase price per share for the Purchased
Shares to be purchased by the Subscriber shall be the closing bid price per
share of Common Stock reported on the Nasdaq Stock Market on the date hereof
(the "Purchase Price") and the aggregate Purchase Price shall be payable by
reducing by $100,000 the amount of fees otherwise payable to the Subscriber by
the Corporation for legal services rendered during the month of October 1998,
which purchase shall occur on October 30, 1998 (the "Closing Date").
(c) Upon the payment by the Subscriber to the
Corporation of the aggregate Purchase Price for the Purchased Shares on the
Closing Date, the Corporation shall cause its transfer agent to deliver to the
Subscriber a stock certificate representing ownership by it of the shares of
Common Stock purchased hereunder.
2. REGISTRATION REQUIREMENTS.
(a) As promptly as practicable following the Closing
Date, but in any event within a period of 90 days following the Closing Date,
the Corporation shall prepare and file with the Securities and Exchange
Commission a Registration Statement on Form S-3 for the purpose of registering
the resale by the Subscriber (or the Subscriber's affiliates) of the Purchased
Shares under the Securities Act.
<PAGE> 2
2
(b) The Corporation shall pay all Registration Expenses
(as defined below) in connection with any registration, qualification or
compliance hereunder. Registration Expenses shall mean all expenses incurred by
the Corporation in complying with the registration provisions herein described,
including, without limitation, all registration, qualification and filing fees,
printing expenses, escrow fees, fees and disbursements of counsel for the
Corporation, blue sky fees and expenses, and the expense of any special audits
incident to or required by any such registration.
(c) In the case of the registration effected by the
Corporation pursuant to these registration provisions, the Corporation will use
its best efforts to: (i) cause the Registration Statement to become effective
within one hundred fifty (150) days of the Closing Date, (ii) keep such
registration effective until the earlier of (a) the second anniversary of the
Closing Date, (b) such date as all of the Purchased Shares have been resold by
the Subscriber thereof, or (c) such time as all of the Purchased Shares held by
the Subscriber can be sold within a given three-month period without compliance
with the registration requirements of the Securities Act pursuant to Rule 144
under the Securities Act; (iii) prepare and file with the Securities and
Exchange Commission such amendments and supplements to the Registration
Statement and the prospectus used in connection with the Registration Statement
as may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by the Registration
Statement; (iv) furnish such number of prospectuses and other documents incident
thereto, including any amendment of or supplement to the prospectus, as the
Subscriber from time to time may reasonably request; (v) cause all Purchased
Shares registered as described herein to be listed on each securities exchange
and quoted on each quotation service on which similar securities issued by the
Corporation are then listed or quoted; (vi) provide a transfer agent and
registrar for all Purchased Shares registered pursuant to the Registration
Statement and a CUSIP number for all such Purchased Shares; (vii) otherwise use
its best efforts to comply with all applicable rules and regulations of the
Securities and Exchange Commission; and (viii) file the documents required of
the Corporation and otherwise use its best efforts to maintain requisite blue
sky clearance in (A) all jurisdictions in which any of the Purchased Shares are
originally sold and (B) all other states reasonably specified in writing by the
Subscriber, provided as to clause (B), however, that in no event shall the
Corporation be required to qualify to do business or consent to service of
process in any state in which it is not now so qualified or has not so
consented.
(d) The Corporation shall furnish to the Subscriber
upon request a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary in order to facilitate the public sale or
other disposition of all or any of the Purchased Shares held by the Subscriber.
(e) With a view to making available to the Subscriber
the benefits of Rule 144 promulgated under the Securities Act ("Rule 144") and
any other rule or regulation of the Securities and Exchange Commission that may
at any time permit the Subscriber to sell Purchased Shares to the public without
registration or pursuant to a registration on Form S-3, the Corporation
covenants and agrees to: (i) make and keep public information available, as
those terms are understood and defined in Rule 144 under the Securities Act,
until the earlier of (A) the second anniversary of the Closing Date or
<PAGE> 3
3
(B) such date as all of the Purchased Shares shall have been resold by the
Subscriber thereof; (ii) file with the SEC in a timely manner all reports and
other documents required of the Corporation under the Securities Act and the
Exchange Act; and (iii) furnish to the Subscriber upon request, as long as the
Subscriber owns any Purchased Shares, (A) a written statement by the Corporation
that it has complied with the reporting requirements of the Securities Act and
the Exchange Act, (B) a copy of the most recent annual or quarterly report of
the Corporation, and (C) such other information as may be reasonably requested
in order to avail the Subscriber of any rule or regulation of the SEC that
permits the selling of any such Purchased Shares without registration or
pursuant to such Form S-3.
(f) Indemnification and Contribution.
(i) The Corporation agrees to indemnify and
hold harmless Subscriber from and against any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) to which such
Subscriber may become subject (under the Securities Act or otherwise) insofar as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon, any untrue statement of a
material fact contained in the Registration Statement, on the effective date
thereof, or arise out of any failure by the Corporation to fulfill any
undertaking included in the Registration Statement, and the Corporation will, as
incurred, reimburse Subscriber for any legal or other expenses reasonably
incurred in investigating, defending or preparing to defend any such action,
proceeding or claim; provided, however, that the Corporation shall not be liable
in any such case to the extent that such loss, claim, damage or liability arises
out of or is based upon (a) an untrue statement made in such Registration
Statement in reliance upon and in conformity with written information furnished
to the Corporation by or on behalf of Subscriber specifically for use in
preparation of the Registration Statement, (b) the failure of Subscriber to
comply with the covenants and agreements contained in this Agreement, or (c) any
untrue statement in any Prospectus that is corrected in any subsequent
Prospectus that was delivered to the Subscriber prior to the pertinent sale or
sales by the Subscriber.
(ii) Subscriber agrees to indemnify and hold
harmless the Corporation from and against any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) to which the
Corporation may become subject (under the Securities Act or otherwise) insofar
as such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon (a) an untrue statement made in
such Registration Statement in reliance upon and in conformity with written
information furnished to the Corporation by or on behalf of Subscriber
specifically for use in preparation of the Registration Statement, provided,
however, that Subscriber shall not be liable in any such case for any untrue
statement included in any Prospectus which statement has been corrected, in
writing, by Subscriber and delivered to the Corporation before the sale from
which such loss occurred, (b) the failure of Subscriber to comply with the
covenants and agreements contained in this Agreement, or (c) any untrue
statement in any prospectus that is corrected in any subsequent Prospectus that
was delivered to the Subscriber prior to the pertinent sale or sales by the
Subscriber. Notwithstanding the foregoing, in no event shall the Subscriber to
liable to the Corporation under this Section 2 for any amounts in excess of the
net proceeds received
<PAGE> 4
4
by the Subscriber from the sale of the Purchased Shares pursuant to the
Registration Statement.
(iii) Promptly after receipt by any
indemnified person of a notice of a claim or the beginning of any action in
respect of which indemnity is to be sought against an indemnifying person
pursuant to this Section 2, such indemnified person shall notify the
indemnifying person in writing of such claim or of the commencement of such
action, and, subject to the provisions hereinafter stated, in case any such
action shall be brought against an indemnified person and the indemnifying
person shall have been notified thereof, the indemnifying person shall be
entitled to participate therein, and, to the extent that it shall wish, to
assume the defense thereof, with counsel reasonably satisfactory to the
indemnified person. After notice from the indemnifying person to such
indemnified person of the indemnifying person's election to assume the defense
thereof, the indemnifying person shall not be liable to such indemnified person
for any legal expenses subsequently incurred by such indemnified person in
connection with the defense thereof, provided, however, that if there exists or
shall exist a conflict of interest that would make it inappropriate in the
reasonable judgment of the indemnified person for the same counsel to represent
both the indemnified person and such indemnifying person or any affiliate or
associate thereof, the indemnified person shall be entitled to retain its own
counsel at the expense of such indemnifying person.
(iv) If the indemnification provided for in
this Section 2 is unavailable to or insufficient to hold harmless an indemnified
party under subsection (i) or (ii) above in respect of any losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) referred
to therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative fault of the Corporation on the one hand and the
Subscriber on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Corporation on the one hand or the Subscriber on the other and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Corporation and the Subscriber agree
that it would not be just and equitable if contribution pursuant to this
subsection (iv) were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this subsection (iv). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, or liabilities (or actions in
respect thereof) referred to above in this subsection (iv) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (iv), Subscriber shall not be
required to contribute any amount in excess of the amount by which the net
amount received by the Subscriber from the sale of the Purchased Shares to which
such loss relates exceeds the amount of any damages which Subscriber has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person
<PAGE> 5
5
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall bc entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
(v) The obligations of the Corporation and
the Subscriber under this Section 2 shall be in addition to any liability which
the Corporation and the Subscriber may otherwise have.
3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. The Corporation
hereby represents and warrants to the Subscriber, as of the date hereof and as
of the Closing Date, as follows:
(a) CORPORATE EXISTENCE. Each of the Corporation and its
Subsidiaries: (i) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization; (ii) has all
requisite corporate power and corporate authority, and all material governmental
licenses, authorizations, consents and approvals necessary to own its assets and
carry on its business as now being conducted; and (iii) is qualified to do
business and is in good standing in all jurisdictions in which the nature of the
business conducted by it makes such qualification necessary and where failure so
to qualify would (either individually or in the aggregate) have a Material
Adverse Effect.
(b) NO BREACH. None of the execution and delivery of this
Agreement by the Corporation, the consummation by the Corporation of the
transactions herein contemplated or compliance by the Corporation with the terms
and provisions hereof will conflict with or result in a breach of, or require
any consent under, or result in the creation or imposition of any lien pursuant
to the terms of, the certificate of incorporation or by-laws of the Corporation,
or any law, regulation, order, writ, injunction or decree of any court or
governmental authority or agency, in each case which is binding on the
Corporation or any of its Subsidiaries, or any agreement or instrument to which
the Corporation or any of its Subsidiaries is a party or by which any of them or
any of their property is bound or to which any of them is subject, or constitute
a default under any such agreement or instrument. The foregoing representation,
insofar as relating to the Securities Act, is made in reliance upon the
representations and warranties of the Subscriber and the Other Investors set
forth in Section 3(e) hereof and Section 3(e) of the Other Investors respective
subscription agreements.
(c) AUTHORIZATION AND ENFORCEABILITY. The Corporation has all
necessary corporate power, authority and legal right to execute, deliver and
perform its obligations under this Agreement; the execution, delivery and
performance by the Corporation of this Agreement has been duly authorized by all
necessary corporate action on its part (including, without limitation, any
required stockholder approvals); and this Agreement has been duly authorized,
executed and delivered by the Corporation and this Agreement constitutes the
legal, valid and binding obligation of the Corporation, enforceable against the
Corporation in accordance with its terms, except as such enforceability may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar
laws of general applicability affecting the enforcement of creditors' rights and
(ii) the application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
<PAGE> 6
6
(d) APPROVALS. Other than as contemplated under Section 2
hereof or pursuant to any filing with the Nasdaq Stock Market following the
Closing Date, no authorizations, approvals or consents of, and no filings or
registrations with, any governmental or regulatory authority or agency, or any
securities exchange, are necessary for the execution, delivery or performance by
the Corporation of this Agreement. The foregoing representation, insofar as
relating to the Securities Act, is made in reliance upon the representations and
warranties of the Subscriber and the Other Investors set forth in Section 3(e)
hereof and Section 3(e) of the Other Investors respective subscription
agreements.
(e) INVESTMENT COMPANY ACT. Neither the Corporation nor any of
its Subsidiaries is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
(f) PUBLIC UTILITY HOLDING COMPANY ACT. Neither the
Corporation nor any of its Subsidiaries is a "holding company", or an
"affiliate" of a "holding company" or a "subsidiary company" of a "holding
company", within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
(g) CAPITALIZATION. As of the date hereof (and without giving
effect to the sale of the Purchased Shares hereunder or the other matters
referred to in Section 4(e)(vii) hereof), the authorized capital stock of the
Corporation consists of 30,000,000 shares of Common Stock, of which 10,877,982
shares of Common Stock are duly and validly issued and outstanding; 800,000
shares of Class A Preferred Stock, no shares of which are issued or outstanding;
and 2,000,000 shares of Class B Preferred Stock, of which the following are
authorized, and duly and validly issued and outstanding: 100,000 shares of Class
B Convertible Redeemable Preferred Stock, Series 1997 authorized, no shares of
which are issued and outstanding, 4,000 shares of Class B Redeemable Preferred
Stock, Series 1997-A authorized, of which 4,000 shares are duly and validly
issued and outstanding (the "Preferred Stock 1997-A"), 152,321 shares of Class B
Convertible Preferred Stock, Series C authorized, of which 142,486 shares are
duly and validly issued and outstanding, and 100,000 shares of Class B
Convertible Preferred Stock, Series 1996 authorized, of which 100,000 shares are
duly and validly issued and outstanding, and all such shares are fully paid and
nonassessable. All outstanding shares of the Corporation's capital stock have
been issued in compliance with all federal and state securities laws, and were
not issued in violation of or subject to any pre-emptive rights or other rights
to subscribe for or purchase securities of the Corporation. When issued in
accordance with this Agreement, the Purchased Shares will be duly and validly
issued, fully paid and non-assessable. The issuance and sale of the Purchased
Shares is not subject to the pre-emptive or other similar rights of the
stockholders of the Corporation or any liens or encumbrances.
(h) DISCLOSURE. Each of the reports filed by the Corporation
with the Securities and Exchange Commission under the Exchange Act, and the
Corporation's October 1998 Confidential Memorandum (together with all Appendices
and Exhibits thereto and all Appendices and Exhibits which are incorporated by
reference, the "Confidential Memorandum") did not, at the time each such report
was filed or, in the case of the Confidential Memorandum, as of the date
thereof, contain any untrue statement of material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
<PAGE> 7
7
(i) In connection with the private placement of shares of
Common Stock contemplated by the Confidential Memorandum, including, without
limitation, the shares of Common Stock being offered to the Subscriber and the
Other Investors, no more than 25 investors (each of which is an accredited
investor) have been offered shares of Common Stock by the Corporation and/or any
representative, advisor, agent or other person acting on behalf of the
Corporation. Assuming the accuracy of the representations and warranties of the
Subscriber and the Other Investors set forth in this Agreement and in the
subscription agreements of the Other Investors, the offer, sale and issuance of
the Purchased Shares are exempt from the registration requirements of Section 5
of the Securities Act.
4. REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBER. The Subscriber
hereby represents and warrants to the Corporation, as of the date hereof, as
follows:
(a) EXISTENCE. The Subscriber is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization.
(b) AUTHORITY. The Subscriber has all necessary power,
authority and legal right to execute, deliver and perform its obligations under
this Agreement; the execution, delivery and performance by the Subscriber of
this Agreement have been duly authorized by all necessary corporate, partnership
or other action required, if any, to be taken by the Subscriber or any affiliate
of the Subscriber.
(c) ENFORCEABILITY. This Agreement constitutes the legal,
valid and binding obligation of the Subscriber, enforceable against the
Subscriber in accordance with its terms, except as such enforceability may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar
laws of general applicability affecting the enforcement of creditors' rights and
(ii) the application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(d) NO BREACH. None of the execution and delivery of this
Agreement by the Subscriber, the consummation by the Subscriber of the
transactions herein contemplated or compliance by the Subscriber with the terms
and provisions hereof will conflict with or result in a breach of, or require
any consent under, in the event that the Subscriber is a corporation,
partnership or other entity, the organizational documents and/or by-laws, and/or
other documents of similar import, as the case may be, of the Subscriber, or,
with regard to any Subscriber, any law, regulation, order, writ, injunction or
decree of any court or governmental authority or agency, in each case which is
binding on the Subscriber or any of its Subsidiaries, if any, or any agreement
or instrument to which the Subscriber or any of its Subsidiaries, if any, is a
party or by which any of them or any of their Property is bound or to which any
of them is subject, constitute a default under any such agreement or instrument.
(e) INVESTMENT REPRESENTATIONS. (i) In evaluating the
suitability of an investment in the Corporation, the Subscriber has not relied
upon any representation or warranty (oral or written) (except those expressly
set forth in Section 3 hereof) of any Person. The Subscriber agrees that except
for the representations and warranties made by the Corporation expressly set
forth in Section 3 of this Agreement (as such representations and warranties are
modified by the Schedules hereto), neither the
<PAGE> 8
8
Corporation nor any affiliate thereof has made and shall not be construed as
having made to the Subscriber or to any representative or affiliate thereof any
representation or warranty of any kind. Without limiting the generality of the
foregoing, the Subscriber agrees that neither the Corporation nor any affiliate
thereof makes or has made any representation or warranty to the Subscriber or to
any representative or affiliate thereof with respect to:
(A) any projections, estimates or budgets heretofore
delivered to or made available to the Subscriber or its
counsel, accountants, advisors, lenders, representatives or
affiliates of future revenues, expenses or expenditures,
future or pro forma results of operations (or any component
thereof), future or pro forma cash flows (or any component
thereof) or future or pro forma financial condition (or any
component thereof) of the Corporation and its Subsidiaries (or
any of them) or the future or pro forma business, operations
or affairs of the Corporation and its Subsidiaries (or any of
them);
(B) any future or pro forma rates of return in
respect of the Subscriber's investment in the Purchased Shares
or the future or pro forma value of such Purchased Shares; and
(C) any other information, statement or documents
heretofore delivered to or made available to the Subscriber or
its counsel, accountants, advisors, lenders, representatives
or affiliates with respect to the Corporation and its
Subsidiaries (or any of them) or the business, operations or
affairs of the Corporation and its Subsidiaries (or any of
them), except to the extent and as expressly covered by a
representation and warranty contained in Section 3 hereof.
(ii) The Subscriber understands that the Corporation
proposes to issue to it the Purchased Shares in a private placement transaction
exempt from the registration requirements of the Securities Act; that, as a
result, the Purchased Shares will be restricted securities for purposes of the
Federal securities laws; that for such purpose the Corporation will rely upon
the representations, warranties, covenants and agreements made by the Subscriber
and contained herein; and that such exemption from registration is not available
unless such representations and warranties are correct, and such covenants and
agreements are performed in accordance with this Agreement.
(iii) The Subscriber is familiar with the provisions
of Rule 144 of the Securities Act and the limitations upon the availability and
applicability of such Rule, including with respect to the Purchased Shares.
(iv) The Subscriber is a sophisticated investor
familiar with the type of risks inherent in the acquisition of restricted
securities such as the Purchased Shares and the Subscriber's financial position
is such that it can afford to retain such shares for an indefinite period of
time without realizing any direct or indirect cash return on its investment. The
Subscriber is an "accredited investor" as such term is defined in Rule 501 under
the Securities Act.
<PAGE> 9
9
(v) The Subscriber has such knowledge and experience
in financial, tax and business matters as to enable it to utilize the
information made available to it in connection with the issuance of the
Purchased Shares and to evaluate the merits and risks of an investment in such
shares and to make an informed investment decision with respect thereto.
(vi) The Subscriber is acquiring the Purchased Shares
solely for its own account for investment and not with a present view to, or for
sale in connection with, the distribution thereof within the meaning of the
Securities Act.
(vii) The Subscriber understands that (a) the
Corporation proposes to effect an exchange (the "Exchange") in which it will
issue Common Stock, at the Purchase Price per Purchased Share, in exchange for
(1) all of the issued and outstanding shares of its Preferred Stock 1997-A, with
an aggregate liquidation preference of $4 million (and all accrued and unpaid
dividends thereon on the date of the exchange) and (2) the retirement of $1
million in principal amount of certain subordinated debt, all held by corporate
affiliates of Paul J. Ramsay, the Chairman of the Corporation (the
"Affiliates"), (b) the Corporation proposes to effect one or more additional
private placements of its Common Stock to investors other than the Subscriber,
the Affiliates and other than Luis E. Lamela, the Chief Executive Officer of the
Corporation (collectively, the "Other Investors"), (c) in connection with the
Exchange and the private placements contemplated above, the Corporation intends
to amend its Rights Agreement as set forth in Exhibit A hereto and (d) the
Corporation has received commitments from one of the Affiliates and from Mr.
Lamela, to purchase an aggregate of $2.5 million and $1.0 million of shares of
Common Stock (valued at the Purchase Price), respectively, and that such
Affiliate's commitment (but not Mr. Lamela's commitment) shall be automatically
reduced (but not below $0) by an amount equal to the aggregate dollar value of
shares of Common Stock (valued at the Purchase Price) actually purchased by the
Subscriber hereunder and by the Other Investors.
5. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; CERTAIN LIMITATIONS ON
DAMAGES. (a) The representations and warranties of the Corporation contained in
Section 3 hereof and the representations and warranties of the Subscriber
contained in Section 4 hereof shall survive indefinitely.
(b) The aggregate liability of the Corporation for any and all
damage, loss, liability, cost and expense (collectively, "Damages") arising out
of any and all breaches by the Corporation of the representations and warranties
set forth in Section 3 under this Agreement is, and shall be, limited to an
aggregate amount (the "Liability Amount") equal to the Purchase Price, and the
Subscriber agrees not to seek any Damages in excess of the Liability Amount for
any and all Damages sustained or incurred by the Subscriber arising out of any
and all breaches by the Corporation of any representation or warranty set forth
in Section 3 under this Agreement. The aggregate liability of the Subscriber for
any and all Damages arising out of any and all breaches by the Subscriber of the
representations and warranties set forth in Section 4 under this Agreement is,
and shall be, limited to the Liability Amount, and the Corporation agrees not to
seek any Damages in excess of the Liability Amount for any and all Damages
sustained or incurred by the Corporation arising out of any and all breaches by
the
<PAGE> 10
10
Subscriber of any representation or warranty set forth in Section 4 under this
Agreement. This Section 5(b) shall not apply to Section 2(f) hereof.
6. MISCELLANEOUS. (a) This Agreement contains the entire agreement
between the Corporation and the Subscriber with respect to the transactions
contemplated by this Agreement and supersede all prior arrangements or
understandings with respect thereto.
(b) All notices or other communications hereunder shall be in
writing and sufficient if delivered personally or sent by registered or
certified mail, postage prepaid, addressed to the Corporation at One Alhambra
Plaza, Suite 750, Coral Gables, Florida 38134, Fax: 305-567-1169, Attention:
Chief Executive Officer (with a copy to Haythe & Curley, 237 Park Avenue, New
York, New York 10017, Fax: 212-682-0200, Attention: Bradley P. Cost, Esq.) and
to the Subscriber at the address or facsimile set forth under its name on the
signature page to this Agreement. All such notices and communications shall be
deemed to have been duly given at the time delivered by hand, if personally
delivered, at the time received by fax, at the time received from a recognized
overnight carrier service, or three (3) business days after being deposited in
the mail, if sent by registered or certified mail, return receipt requested. Any
party hereto may by notice change the address to which notices or other
communications to such party are to be delivered or mailed.
(c) This Agreement may be executed in counterparts, including
by fax, each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
(d) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware (without regard to the
conflicts of law rules thereof).
(e) This Agreement shall not be assignable without the prior
written consent of the other party hereto, and any purported assignment by any
party without the prior written consent of the other party hereto shall be void.
(f) This Agreement shall not create benefits on behalf of any
third party, and this Agreement shall be effective only as among the parties
hereto, their respective successors and permitted assigns.
(g) Any term or provision of this Agreement may be waived at
any time by the party which is entitled to the benefits thereof, and any term or
provision of this Agreement may be amended or supplemented at any time by the
consent of the Corporation and the Subscriber, except that any waiver of any
term or condition, or any amendment or supplementation, of this Agreement shall
be effective only if in writing.
(h) The parties hereto agree that this Agreement is the
product of negotiations between sophisticated parties, each of whom was
represented by counsel, and each of whom had an opportunity to participate in,
and did participate in, the drafting of each provision hereof. Accordingly,
ambiguities in this Agreement, if any, shall not be construed strictly or in
favor of or against any party hereto but rather shall be given a fair and
reasonable construction without regard to the rule of contra proferentum.
<PAGE> 11
11
(i) The parties hereto agree that each party shall bear such
party's own expenses in connection with this Agreement and the transactions
contemplated hereby.
7. DEFINITIONS. As used herein, the following terms shall have the
following meanings (all terms defined in this Section 7 or in other provisions
of this Agreement in the singular to have the same meanings when used in the
plural and VICE VERSA):
"Agreement" shall have the meaning set forth in the recitals
hereto.
"Class B Convertible Redeemable Preferred Stock, Series 1997"
shall mean the class B convertible redeemable preferred stock, par value $1.00
per share, of the Corporation.
"Class B Redeemable Preferred Stock, Series 1997-A" shall mean
the class B redeemable preferred stock, par value $1.00 per share, of the
Corporation.
"Class B Convertible Preferred Stock, Series C" shall mean the
class B convertible preferred stock, par value $1.00 per share, of the
Corporation.
"Class B Convertible Preferred Stock, Series 1996" shall mean
the class B convertible preferred stock, par value $1.00 per share, of the
Corporation.
"Common Stock" shall mean the Common Stock, par value $.01 per
share, of the Corporation.
"Corporation" shall have the meaning set forth in the recitals
hereto.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Liability Amount" shall have the meaning set forth in Section
5(b) hereof.
"Material Adverse Effect" shall mean a material adverse effect
on the Properties, results of operation or condition (financial or otherwise) of
the Corporation and its Subsidiaries, taken as a whole.
"Person" shall mean any individual, corporation, company,
voluntary association, partnership, joint venture, trust, unincorporated
organization or government (or any agency, instrumentality or political
subdivision thereof).
"Preferred Stock" shall mean the Class B Convertible
Redeemable Preferred Stock, Series 1997, the Class B Redeemable Preferred Stock,
Series 1997-A, the Class B Convertible Preferred Stock, Series C, and the Class
B convertible Preferred Stock, Series 1996.
"Property" shall mean any right or interest in or to property
of any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
<PAGE> 12
12
"Purchase Price" shall have the meaning set forth in Section
1(b) hereto.
"Purchased Shares" shall have the meaning set forth in the
recitals hereto.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Subscriber" shall have the meaning set forth in the recitals
hereto.
"Subsidiary" shall mean, with respect to any Person, any
corporation, partnership or other entity of which at least a majority of the
securities or other ownership interests having by the terms thereof ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions of such corporation, partnership or other entity
(irrespective of whether or not at the time securities or other ownership
interests of any other class or classes of such corporation, partnership or
other entity shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned or controlled by
such Person or one or more Subsidiaries of such Person or by such Person and one
or more Subsidiaries of such Person.
* * *
<PAGE> 13
13
IN WITNESS WHEREOF, each of the parties hereto has executed
this Agreement on the date first above written.
RAMSAY HEALTH CARE, INC.
By
------------------------------
Name: Luis E. Lamela
Title: Chief Executive Officer
HAYTHE & CURLEY
By:
-----------------------------
Name: Bradley P. Cost
Aggregate Title: Partner
Purchase Price: U.S. $100,000
Address: 237 Park Avenue, 20th Floor
New York, New York 10017
Fax: 212-682-0200
<PAGE> 1
EXHIBIT 4.16
SUBSCRIPTION AGREEMENT dated as of October 26, 1998 (this
"Agreement") between RAMSAY HEALTH CARE, INC., a Delaware corporation (the
"Corporation"), and DAUPHIN CAPITAL PARTNERS I, LP, a Delaware limited
partnership (the "Subscriber").
W I T N E S S E T H :
WHEREAS, subject to the terms and conditions hereof, the
Subscriber desires to have the right to subscribe for and purchase from the
Corporation the aggregate dollar value (determined at the Purchase Price per
Purchased Share as determined herein) of shares of Common Stock set forth
opposite its name on the signature page hereof (the "Purchased Shares");
NOW, THEREFORE, in consideration of the mutual benefits to be
derived and the representations and warranties, conditions and promises herein
contained, and intending to be legally bound hereby, the Corporation and the
Subscriber hereby agree as follows:
1. PURCHASE OF PURCHASED SHARES. (a) Subject to the terms and
provisions of this Agreement, the Corporation hereby grants the Subscriber the
right (the "Right") to purchase from the Corporation the Purchased Shares. The
Right shall be exercised, if at all, on or before the close of business (New
York City time) on October 30, 1998 (the "Closing Date") by written notice by
the Subscriber to the Corporation stating that the Subscriber is exercising the
Right to purchase the Purchased Shares pursuant to this Section 1(a) (which
notice may be given by fax as set forth in Section 6(b) hereto) and by delivery
of the aggregate Purchase Price for the Purchased Shares as set forth in Section
1(b) below. In the event that the Right is not exercised as aforesaid, the Right
shall automatically terminate and shall be of no further force or effect and
neither party hereto shall have any rights, entitlements or obligations
hereunder.
(b) The purchase price per share for the Purchased Shares to
be purchased by the Subscriber shall be the closing bid price per share of
Common Stock reported on the Nasdaq Stock Market on the date hereof (the
"Purchase Price") and the aggregate Purchase Price for the Purchased Shares
shall be payable by the Subscriber by bank wire transfer to an escrow account
established by the Corporation with Haythe & Curley, Esqs. (Citibank, N.A., 111
Wall Street, New York, New York, ABA No. 021000089, Client Escrow Account No.
37399318) or by certified or bank cashiers check payable to the Corporation and
delivered to the Corporation c/o Haythe & Curley, 237 Park Avenue, New York, New
York 10017, Attention: Bradley P. Cost, Esq., in any case on or before the close
of business on the Closing Date.
(c) Upon the payment by the Subscriber to the Corporation of
the aggregate Purchase Price for the Purchased Shares, the Corporation shall
cause its transfer agent to deliver to the Subscriber a stock certificate
representing ownership by it of the shares of Common Stock purchased hereunder.
<PAGE> 2
2. REGISTRATION REQUIREMENTS.
(a) As promptly as practicable following the Closing
Date, but in any event within a period of 90 days following the Closing Date,
the Corporation shall prepare and file with the Securities and Exchange
Commission a Registration Statement on Form S-3 for the purpose of registering
the resale by the Subscriber (or the Subscriber's affiliates) of the Purchased
Shares under the Securities Act.
(b) The Corporation shall pay all Registration Expenses
(as defined below) in connection with any registration, qualification or
compliance hereunder. Registration Expenses shall mean all expenses incurred by
the Corporation in complying with the registration provisions herein described,
including, without limitation, all registration, qualification and filing fees,
printing expenses, escrow fees, fees and disbursements of counsel for the
Corporation, blue sky fees and expenses, and the expense of any special audits
incident to or required by any such registration.
(c) In the case of the registration effected by the
Corporation pursuant to these registration provisions, the Corporation will use
its best efforts to: (i) cause the Registration Statement to become effective
within one hundred fifty (150) days of the Closing Date, (ii) keep such
registration effective until the earlier of (a) the second anniversary of the
Closing Date, (b) such date as all of the Purchased Shares have been resold by
the Subscriber thereof, or (c) such time as all of the Purchased Shares held by
the Subscriber can be sold within a given three-month period without compliance
with the registration requirements of the Securities Act pursuant to Rule 144
under the Securities Act; (iii) prepare and file with the Securities and
Exchange Commission such amendments and supplements to the Registration
Statement and the prospectus used in connection with the Registration Statement
as may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by the Registration
Statement; (iv) furnish such number of prospectuses and other documents incident
thereto, including any amendment of or supplement to the prospectus, as the
Subscriber from time to time may reasonably request; (v) cause all Purchased
Shares registered as described herein to be listed on each securities exchange
and quoted on each quotation service on which similar securities issued by the
Corporation are then listed or quoted; (vi) provide a transfer agent and
registrar for all Purchased Shares registered pursuant to the Registration
Statement and a CUSIP number for all such Purchased Shares; (vii) otherwise use
its best efforts to comply with all applicable rules and regulations of the
Securities and Exchange Commission; and (viii) file the documents required of
the Corporation and otherwise use its best efforts to maintain requisite blue
sky clearance in (A) all jurisdictions in which any of the Purchased Shares are
originally sold and (B) all other states reasonably specified in writing by the
Subscriber, provided as to clause (B), however, that in no event shall the
Corporation be required to qualify to do business or consent to service of
process in any state in which it is not now so qualified or has not so
consented.
(d) The Corporation shall furnish to the Subscriber
upon request a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary in order to facilitate the public sale or
other disposition of all or any of the Purchased Shares held by the Subscriber.
<PAGE> 3
(e) With a view to making available to the Subscriber
the benefits of Rule 144 promulgated under the Securities Act ("Rule 144") and
any other rule or regulation of the Securities and Exchange Commission that may
at any time permit the Subscriber to sell Purchased Shares to the public without
registration or pursuant to a registration on Form S-3, the Corporation
covenants and agrees to: (i) make and keep public information available, as
those terms are understood and defined in Rule 144 under the Securities Act,
until the earlier of (A) the second anniversary of the Closing Date or (B) such
date as all of the Purchased Shares shall have been resold by the Subscriber
thereof; (ii) file with the SEC in a timely manner all reports and other
documents required of the Corporation under the Securities Act and the Exchange
Act; and (iii) furnish to the Subscriber upon request, as long as the Subscriber
owns any Purchased Shares, (A) a written statement by the Corporation that it
has complied with the reporting requirements of the Securities Act and the
Exchange Act, (B) a copy of the most recent annual or quarterly report of the
Corporation, and (C) such other information as may be reasonably requested in
order to avail the Subscriber of any rule or regulation of the SEC that permits
the selling of any such Purchased Shares without registration or pursuant to
such Form S-3.
(f) Indemnification and Contribution.
(i) The Corporation agrees to indemnify and
hold harmless Subscriber from and against any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) to which such
Subscriber may become subject (under the Securities Act or otherwise) insofar as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon, any untrue statement of a
material fact contained in the Registration Statement, on the effective date
thereof, or arise out of any failure by the Corporation to fulfill any
undertaking included in the Registration Statement, and the Corporation will, as
incurred, reimburse Subscriber for any legal or other expenses reasonably
incurred in investigating, defending or preparing to defend any such action,
proceeding or claim; provided, however, that the Corporation shall not be liable
in any such case to the extent that such loss, claim, damage or liability arises
out of or is based upon (a) an untrue statement made in such Registration
Statement in reliance upon and in conformity with written information furnished
to the Corporation by or on behalf of Subscriber specifically for use in
preparation of the Registration Statement, (b) the failure of Subscriber to
comply with the covenants and agreements contained in this Agreement, or (c) any
untrue statement in any Prospectus that is corrected in any subsequent
Prospectus that was delivered to the Subscriber prior to the pertinent sale or
sales by the Subscriber.
(ii) Subscriber agrees to indemnify and hold
harmless the Corporation from and against any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) to which the
Corporation may become subject (under the Securities Act or otherwise) insofar
as such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon (a) an untrue statement made in
such Registration Statement in reliance upon and in conformity with written
information furnished to the Corporation by or on behalf of Subscriber
specifically for use in preparation of the Registration Statement, provided,
however, that Subscriber shall not be liable in any such case for any untrue
statement included in any Prospectus which statement has been corrected, in
writing, by Subscriber and delivered to
<PAGE> 4
the Corporation before the sale from which such loss occurred, (b) the failure
of Subscriber to comply with the covenants and agreements contained in this
Agreement, or (c) any untrue statement in any prospectus that is corrected in
any subsequent Prospectus that was delivered to the Subscriber prior to the
pertinent sale or sales by the Subscriber. Notwithstanding the foregoing, in no
event shall the Subscriber to liable to the Corporation under this Section 2 for
any amounts in excess of the net proceeds received by the Subscriber from the
sale of the Purchased Shares pursuant to the Registration Statement.
(iii) Promptly after receipt by any
indemnified person of a notice of a claim or the beginning of any action in
respect of which indemnity is to be sought against an indemnifying person
pursuant to this Section 2, such indemnified person shall notify the
indemnifying person in writing of such claim or of the commencement of such
action, and, subject to the provisions hereinafter stated, in case any such
action shall be brought against an indemnified person and the indemnifying
person shall have been notified thereof, the indemnifying person shall be
entitled to participate therein, and, to the extent that it shall wish, to
assume the defense thereof, with counsel reasonably satisfactory to the
indemnified person. After notice from the indemnifying person to such
indemnified person of the indemnifying person's election to assume the defense
thereof, the indemnifying person shall not be liable to such indemnified person
for any legal expenses subsequently incurred by such indemnified person in
connection with the defense thereof, provided, however, that if there exists or
shall exist a conflict of interest that would make it inappropriate in the
reasonable judgment of the indemnified person for the same counsel to represent
both the indemnified person and such indemnifying person or any affiliate or
associate thereof, the indemnified person shall be entitled to retain its own
counsel at the expense of such indemnifying person.
(iv) If the indemnification provided for in
this Section 2 is unavailable to or insufficient to hold harmless an indemnified
party under subsection (i) or (ii) above in respect of any losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) referred
to therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative fault of the Corporation on the one hand and the
Subscriber on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Corporation on the one hand or the Subscriber on the other and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Corporation and the Subscriber agree
that it would not be just and equitable if contribution pursuant to this
subsection (iv) were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this subsection (iv). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, or liabilities (or actions in
respect thereof) referred to above in this subsection (iv) shall be deemed to
include any legal or other expenses reasonably incurred by such
<PAGE> 5
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subsection (iv), Subscriber
shall not be required to contribute any amount in excess of the amount by which
the net amount received by the Subscriber from the sale of the Purchased Shares
to which such loss relates exceeds the amount of any damages which Subscriber
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall bc entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(v) The obligations of the Corporation and
the Subscriber under this Section 2 shall be in addition to any liability which
the Corporation and the Subscriber may otherwise have.
3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. The Corporation
hereby represents and warrants to the Subscriber, as of the date hereof and as
of the Closing Date, as follows:
(a) CORPORATE EXISTENCE. Each of the Corporation and its
Subsidiaries: (i) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization; (ii) has all
requisite corporate power and corporate authority, and all material governmental
licenses, authorizations, consents and approvals necessary to own its assets and
carry on its business as now being conducted; and (iii) is qualified to do
business and is in good standing in all jurisdictions in which the nature of the
business conducted by it makes such qualification necessary and where failure so
to qualify would (either individually or in the aggregate) have a Material
Adverse Effect.
(b) NO BREACH. None of the execution and delivery of this
Agreement by the Corporation, the consummation by the Corporation of the
transactions herein contemplated or compliance by the Corporation with the terms
and provisions hereof will conflict with or result in a breach of, or require
any consent under, or result in the creation or imposition of any lien pursuant
to the terms of, the certificate of incorporation or by-laws of the Corporation,
or any law, regulation, order, writ, injunction or decree of any court or
governmental authority or agency, in each case which is binding on the
Corporation or any of its Subsidiaries, or any agreement or instrument to which
the Corporation or any of its Subsidiaries is a party or by which any of them or
any of their property is bound or to which any of them is subject, or constitute
a default under any such agreement or instrument. The foregoing representation,
insofar as relating to the Securities Act, is made in reliance upon the
representations and warranties of the Subscriber and the Other Investors set
forth in Section 3(e) hereof and Section 3(e) of the Other Investors respective
subscription agreements.
(c) AUTHORIZATION AND ENFORCEABILITY. The Corporation has all
necessary corporate power, authority and legal right to execute, deliver and
perform its obligations under this Agreement; the execution, delivery and
performance by the Corporation of this Agreement has been duly authorized by all
necessary corporate action on its part (including, without limitation, any
required stockholder approvals); and this Agreement has been duly authorized,
executed and delivered by the Corporation and this Agreement constitutes the
legal, valid and binding obligation of the Corporation, enforceable against the
Corporation in accordance with its terms, except as such
<PAGE> 6
enforceability may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium or similar laws of general applicability affecting the enforcement of
creditors' rights and (ii) the application of general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
(d) APPROVALS. Other than as contemplated under Section 2
hereof or pursuant to any filing with the Nasdaq Stock Market following the
Closing Date, no authorizations, approvals or consents of, and no filings or
registrations with, any governmental or regulatory authority or agency, or any
securities exchange, are necessary for the execution, delivery or performance by
the Corporation of this Agreement. The foregoing representation, insofar as
relating to the Securities Act, is made in reliance upon the representations and
warranties of the Subscriber and the Other Investors set forth in Section 3(e)
hereof and Section 3(e) of the Other Investors respective subscription
agreements.
(e) INVESTMENT COMPANY ACT. Neither the Corporation nor any of
its Subsidiaries is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
(f) PUBLIC UTILITY HOLDING COMPANY ACT. Neither the
Corporation nor any of its Subsidiaries is a "holding company", or an
"affiliate" of a "holding company" or a "subsidiary company" of a "holding
company", within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
(g) CAPITALIZATION. As of the date hereof (and without giving
effect to the sale of the Purchased Shares hereunder or the other matters
referred to in Section 4(e)(vii) hereof), the authorized capital stock of the
Corporation consists of 30,000,000 shares of Common Stock, of which 10,877,982
shares of Common Stock are duly and validly issued and outstanding; 800,000
shares of Class A Preferred Stock, no shares of which are issued or outstanding;
and 2,000,000 shares of Class B Preferred Stock, of which the following are
authorized, and duly and validly issued and outstanding: 100,000 shares of Class
B Convertible Redeemable Preferred Stock, Series 1997 authorized, no shares of
which are issued and outstanding, 4,000 shares of Class B Redeemable Preferred
Stock, Series 1997-A authorized, of which 4,000 shares are duly and validly
issued and outstanding (the "Preferred Stock 1997-A"), 152,321 shares of Class B
Convertible Preferred Stock, Series C authorized, of which 142,486 shares are
duly and validly issued and outstanding, and 100,000 shares of Class B
Convertible Preferred Stock, Series 1996 authorized, of which 100,000 shares are
duly and validly issued and outstanding, and all such shares are fully paid and
nonassessable. All outstanding shares of the Corporation's capital stock have
been issued in compliance with all federal and state securities laws, and were
not issued in violation of or subject to any pre-emptive rights or other rights
to subscribe for or purchase securities of the Corporation. When issued in
accordance with this Agreement, the Purchased Shares will be duly and validly
issued, fully paid and non-assessable. The issuance and sale of the Purchased
Shares is not subject to the pre-emptive or other similar rights of the
stockholders of the Corporation or any liens or encumbrances.
(h) DISCLOSURE. Each of the reports filed by the Corporation
with the Securities and Exchange Commission under the Exchange Act, and the
Corporation's October 1998 Confidential Memorandum (together with all Appendices
and Exhibits
<PAGE> 7
thereto and all Appendices and Exhibits which are incorporated by reference, the
"Confidential Memorandum") did not, at the time each such report was filed or,
in the case of the Confidential Memorandum, as of the date thereof, contain any
untrue statement of material fact or omit to state a material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
(i) In connection with the private placement of shares of
Common Stock contemplated by the Confidential Memorandum, including, without
limitation, the shares of Common Stock being offered to the Subscriber and the
Other Investors, no more than 25 investors (each of which is an accredited
investor) have been offered shares of Common Stock by the Corporation and/or any
representative, advisor, agent or other person acting on behalf of the
Corporation. Assuming the accuracy of the representations and warranties of the
Subscriber and the Other Investors set forth in this Agreement and in the
subscription agreements of the Other Investors, the offer, sale and issuance of
the Purchased Shares are exempt from the registration requirements of Section 5
of the Securities Act.
4. REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBER. The Subscriber
hereby represents and warrants to the Corporation, as of the date hereof, as
follows:
(a) EXISTENCE. The Subscriber is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization.
(b) AUTHORITY. The Subscriber has all necessary power,
authority and legal right to execute, deliver and perform its obligations under
this Agreement; the execution, delivery and performance by the Subscriber of
this Agreement have been duly authorized by all necessary corporate, partnership
or other action required, if any, to be taken by the Subscriber or any affiliate
of the Subscriber.
(c) ENFORCEABILITY. This Agreement constitutes the legal,
valid and binding obligation of the Subscriber, enforceable against the
Subscriber in accordance with its terms, except as such enforceability may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar
laws of general applicability affecting the enforcement of creditors' rights and
(ii) the application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(d) NO BREACH. None of the execution and delivery of this
Agreement by the Subscriber, the consummation by the Subscriber of the
transactions herein contemplated or compliance by the Subscriber with the terms
and provisions hereof will conflict with or result in a breach of, or require
any consent under, in the event that the Subscriber is a corporation,
partnership or other entity, the organizational documents and/or by-laws, and/or
other documents of similar import, as the case may be, of the Subscriber, or,
with regard to any Subscriber, any law, regulation, order, writ, injunction or
decree of any court or governmental authority or agency, in each case which is
binding on the Subscriber or any of its Subsidiaries, if any, or any agreement
or instrument to which the Subscriber or any of its Subsidiaries, if any, is a
party or by which any of them or any of their Property is bound or to which any
of them is subject, constitute a default under any such agreement or instrument.
<PAGE> 8
(e) INVESTMENT REPRESENTATIONS. (i) In evaluating the
suitability of an investment in the Corporation, the Subscriber has not relied
upon any representation or warranty (oral or written) (except those expressly
set forth in Section 3 hereof) of any Person. The Subscriber agrees that except
for the representations and warranties made by the Corporation expressly set
forth in Section 3 of this Agreement (as such representations and warranties are
modified by the Schedules hereto), neither the Corporation nor any affiliate
thereof has made and shall not be construed as having made to the Subscriber or
to any representative or affiliate thereof any representation or warranty of any
kind. Without limiting the generality of the foregoing, the Subscriber agrees
that neither the Corporation nor any affiliate thereof makes or has made any
representation or warranty to the Subscriber or to any representative or
affiliate thereof with respect to:
(A) any projections, estimates or budgets heretofore
delivered to or made available to the Subscriber or its
counsel, accountants, advisors, lenders, representatives or
affiliates of future revenues, expenses or expenditures,
future or pro forma results of operations (or any component
thereof), future or pro forma cash flows (or any component
thereof) or future or pro forma financial condition (or any
component thereof) of the Corporation and its Subsidiaries (or
any of them) or the future or pro forma business, operations
or affairs of the Corporation and its Subsidiaries (or any of
them);
(B) any future or pro forma rates of return in
respect of the Subscriber's investment in the Purchased Shares
or the future or pro forma value of such Purchased Shares; and
(C) any other information, statement or documents
heretofore delivered to or made available to the Subscriber or
its counsel, accountants, advisors, lenders, representatives
or affiliates with respect to the Corporation and its
Subsidiaries (or any of them) or the business, operations or
affairs of the Corporation and its Subsidiaries (or any of
them), except to the extent and as expressly covered by a
representation and warranty contained in Section 3 hereof.
(ii) The Subscriber understands that the Corporation
proposes to issue to it the Purchased Shares in a private placement
transaction exempt from the registration requirements of the Securities Act;
that, as a result, the Purchased Shares will be restricted securities for
purposes of the Federal securities laws; that for such purpose the Corporation
will rely upon the representations, warranties, covenants and agreements made by
the Subscriber and contained herein; and that such exemption from registration
is not available unless such representations and warranties are correct, and
such covenants and agreements are performed in accordance with this Agreement.
(iii) The Subscriber is familiar with the provisions
of Rule 144 of the Securities Act and the limitations upon the availability and
applicability of such Rule, including with respect to the Purchased Shares.
<PAGE> 9
(iv) The Subscriber is a sophisticated investor
familiar with the type of risks inherent in the acquisition of restricted
securities such as the Purchased Shares and the Subscriber's financial position
is such that it can afford to retain such shares for an indefinite period of
time without realizing any direct or indirect cash return on its investment. The
Subscriber is an "accredited investor" as such term is defined in Rule 501 under
the Securities Act.
(v) The Subscriber has such knowledge and experience
in financial, tax and business matters as to enable it to utilize the
information made available to it in connection with the issuance of the
Purchased Shares and to evaluate the merits and risks of an investment in such
shares and to make an informed investment decision with respect thereto.
(vi) The Subscriber is acquiring the Purchased Shares
solely for its own account for investment and not with a present view to, or for
sale in connection with, the distribution thereof within the meaning of the
Securities Act.
(vii) The Subscriber understands that (a) the
Corporation proposes to effect an exchange (the "Exchange") in which it will
issue Common Stock, at the Purchase Price per Purchased Share, in exchange for
(1) all of the issued and outstanding shares of its Preferred Stock 1997-A, with
an aggregate liquidation preference of $4 million (and all accrued and unpaid
dividends thereon on the date of the exchange) and (2) the retirement of $1
million in principal amount of certain subordinated debt, all held by corporate
affiliates of Paul J. Ramsay, the Chairman of the Corporation (the
"Affiliates"), (b) the Corporation proposes to effect one or more additional
private placements of its Common Stock to investors other than the Subscriber,
the Affiliates and other than Luis E. Lamela, the Chief Executive Officer of the
Corporation (collectively, the "Other Investors"), (c) in connection with the
Exchange and the private placements contemplated above, the Corporation intends
to amend its Rights Agreement as set forth in Exhibit A hereto and (d) the
Corporation has received commitments from one of the Affiliates and from Mr.
Lamela, to purchase an aggregate of $2.5 million and $1.0 million of shares of
Common Stock (valued at the Purchase Price), respectively, and that such
Affiliate's commitment (but not Mr. Lamela's commitment) shall be automatically
reduced (but not below $0) by an amount equal to the aggregate dollar value of
shares of Common Stock (valued at the Purchase Price) actually purchased by the
Subscriber hereunder and by the Other Investors.
5. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; CERTAIN LIMITATIONS ON
DAMAGES. (a) The representations and warranties of the Corporation contained in
Section 3 hereof and the representations and warranties of the Subscriber
contained in Section 4 hereof shall survive indefinitely.
(b) The aggregate liability of the Corporation for any and all
damage, loss, liability, cost and expense (collectively, "Damages") arising out
of any and all breaches by the Corporation of the representations and warranties
set forth in Section 3 under this Agreement is, and shall be, limited to an
aggregate amount (the "Liability Amount") equal to the Purchase Price, and the
Subscriber agrees not to seek any Damages in excess of the Liability Amount for
any and all Damages sustained or
<PAGE> 10
incurred by the Subscriber arising out of any and all breaches by the
Corporation of any representation or warranty set forth in Section 3 under this
Agreement. The aggregate liability of the Subscriber for any and all Damages
arising out of any and all breaches by the Subscriber of the representations and
warranties set forth in Section 4 under this Agreement is, and shall be, limited
to the Liability Amount, and the Corporation agrees not to seek any Damages in
excess of the Liability Amount for any and all Damages sustained or incurred by
the Corporation arising out of any and all breaches by the Subscriber of any
representation or warranty set forth in Section 4 under this Agreement. This
Section 5(b) shall not apply to Section 2(f) hereof.
6. MISCELLANEOUS. (a) This Agreement contains the entire agreement
between the Corporation and the Subscriber with respect to the transactions
contemplated by this Agreement and supersede all prior arrangements or
understandings with respect thereto.
(b) All notices or other communications hereunder shall be in
writing and sufficient if delivered personally or sent by registered or
certified mail, postage prepaid, addressed to the Corporation at One Alhambra
Plaza, Suite 750, Coral Gables, Florida 38134, Fax: 305-567-1169, Attention:
Chief Executive Officer (with a copy to Haythe & Curley, 237 Park Avenue, New
York, New York 10017, Fax: 212-682-0200, Attention: Bradley P. Cost, Esq.) and
to the Subscriber at the address or facsimile set forth under its name on the
signature page to this Agreement (with a copy to Brobeck, Phleger & Harrison
LLP, 1633 Broadway, 47th Floor, New York, New York 10019, Fax: (212) 586-7878,
Attention: Ellen B. Corenswet, Esq.. All such notices and communications shall
be deemed to have been duly given at the time delivered by hand, if personally
delivered, at the time received by fax, at the time received from a recognized
overnight carrier service, or three (3) business days after being deposited in
the mail, if sent by registered or certified mail, return receipt requested. Any
party hereto may by notice change the address to which notices or other
communications to such party are to be delivered or mailed.
(c) This Agreement may be executed in counterparts, including
by fax, each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
(d) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware (without regard to the
conflicts of law rules thereof).
(e) This Agreement shall not be assignable without the prior
written consent of the other party hereto, and any purported assignment by any
party without the prior written consent of the other party hereto shall be void.
(f) This Agreement shall not create benefits on behalf of any
third party, and this Agreement shall be effective only as among the parties
hereto, their respective successors and permitted assigns.
(g) Any term or provision of this Agreement may be waived at
any time by the party which is entitled to the benefits thereof, and any term or
provision of this Agreement may be amended or supplemented at any time by the
consent of the
<PAGE> 11
Corporation and the Subscriber, except that any waiver of any term or condition,
or any amendment or supplementation, of this Agreement shall be effective only
if in writing.
(h) The parties hereto agree that this Agreement is the
product of negotiations between sophisticated parties, each of whom was
represented by counsel, and each of whom had an opportunity to participate in,
and did participate in, the drafting of each provision hereof. Accordingly,
ambiguities in this Agreement, if any, shall not be construed strictly or in
favor of or against any party hereto but rather shall be given a fair and
reasonable construction without regard to the rule of contra proferentum.
(i) The parties hereto agree that each party shall bear such
party's own expenses in connection with this Agreement and the transactions
contemplated hereby except that the Corporation shall pay up to $10,000 of the
fees and expenses of legal counsel incurred by the Subscriber in connection with
this Agreement and the transactions contemplated hereby.
(j) In the event that the Subscriber exercises its Right to
purchase from the Corporation the Purchased Shares in accordance with Section
1(a) hereof, the Corporation shall cause the Subscriber to receive an opinion of
Haythe & Curley, counsel for the Corporation, in the form attached hereto as
EXHIBIT B, within two (2) business days following the Closing Date, such opinion
to be dated as of the Closing Date.
7. DEFINITIONS. As used herein, the following terms shall have the
following meanings (all terms defined in this Section 7 or in other provisions
of this Agreement in the singular to have the same meanings when used in the
plural and VICE VERSA):
"Agreement" shall have the meaning set forth in the recitals
hereto.
"Class B Convertible Redeemable Preferred Stock, Series 1997"
shall mean the class B convertible redeemable preferred stock, par value $1.00
per share, of the Corporation.
"Class B Redeemable Preferred Stock, Series 1997-A" shall mean
the class B redeemable preferred stock, par value $1.00 per share, of the
Corporation.
"Class B Convertible Preferred Stock, Series C" shall mean the
class B convertible preferred stock, par value $1.00 per share, of the
Corporation.
"Class B Convertible Preferred Stock, Series 1996" shall mean
the class B convertible preferred stock, par value $1.00 per share, of the
Corporation.
"Common Stock" shall mean the Common Stock, par value $.01 per
share, of the Corporation.
"Corporation" shall have the meaning set forth in the recitals
hereto.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
<PAGE> 12
"Liability Amount" shall have the meaning set forth in Section
5(b) hereof.
"Material Adverse Effect" shall mean a material adverse effect
on the Properties, results of operation or condition (financial or otherwise) of
the Corporation and its Subsidiaries, taken as a whole.
"Person" shall mean any individual, corporation, company,
voluntary association, partnership, joint venture, trust, unincorporated
organization or government (or any agency, instrumentality or political
subdivision thereof).
"Preferred Stock" shall mean the Class B Convertible
Redeemable Preferred Stock, Series 1997, the Class B Redeemable Preferred Stock,
Series 1997-A, the Class B Convertible Preferred Stock, Series C, and the Class
B convertible Preferred Stock, Series 1996.
"Property" shall mean any right or interest in or to property
of any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Purchase Price" shall have the meaning set forth in Section
1(b) hereto.
"Purchased Shares" shall have the meaning set forth in the
recitals hereto.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Subscriber" shall have the meaning set forth in the recitals
hereto.
"Subsidiary" shall mean, with respect to any Person, any
corporation, partnership or other entity of which at least a majority of the
securities or other ownership interests having by the terms thereof ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions of such corporation, partnership or other entity
(irrespective of whether or not at the time securities or other ownership
interests of any other class or classes of such corporation, partnership or
other entity shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned or controlled by
such Person or one or more Subsidiaries of such Person or by such Person and one
or more Subsidiaries of such Person.
* * *
<PAGE> 13
IN WITNESS WHEREOF, each of the parties hereto has executed
this Agreement on the date first above written.
RAMSAY HEALTH CARE, INC.
By
--------------------------------
Name:
Title:
DAUPHIN CAPITAL PARTNERS I, LP
By: DCP I, LLC, General Partner
By:
--------------------------------
Name: James Hoover
Title: Member
Aggregate
Purchase Price: $1,250,000
Address: 1921 West Joppa Road
Purchase Price Ruxton, Maryland 21204-1848
Per Share: $ 1.125 Fax: 410-825-0910
Attention: President
<PAGE> 1
EXHIBIT 4.17
SUBSCRIPTION AGREEMENT dated as of October 26, 1998 (this
"Agreement") between RAMSAY HEALTH CARE, INC., a Delaware corporation (the
"Corporation"), and MOISES HERNANDEZ, M.D. (the "Subscriber").
W I T N E S S E T H :
WHEREAS, subject to the terms and conditions hereof, the
Subscriber desires to have the right to subscribe for and purchase from the
Corporation the aggregate dollar value (determined at the Purchase Price per
Purchased Share as determined herein) of shares of Common Stock set forth
opposite its name on the signature page hereof (the "Purchased Shares");
NOW, THEREFORE, in consideration of the mutual benefits to be
derived and the representations and warranties, conditions and promises herein
contained, and intending to be legally bound hereby, the Corporation and the
Subscriber hereby agree as follows:
1. PURCHASE OF PURCHASED SHARES. (a) Subject to the terms and
provisions of this Agreement, the Corporation hereby grants the Subscriber the
right (the "Right") to purchase from the Corporation the Purchased Shares. The
Right shall be exercised, if at all, on or before the close of business (New
York City time) on October 30, 1998 (the "Closing Date") by written notice by
the Subscriber to the Corporation stating that the Subscriber is exercising the
Right to purchase the Purchased Shares pursuant to this Section 1(a) (which
notice may be given by fax as set forth in Section 6(b) hereto) and by delivery
of the aggregate Purchase Price for the Purchased Shares as set forth in Section
1(b) below. In the event that the Right is not exercised as aforesaid, the Right
shall automatically terminate and shall be of no further force or effect and
neither party hereto shall have any rights, entitlements or obligations
hereunder.
(b) The purchase price per share for the Purchased Shares to
be purchased by the Subscriber shall be the closing bid price per share of
Common Stock reported on the Nasdaq Stock Market on the date hereof (the
"Purchase Price") and the aggregate Purchase Price for the Purchased Shares
shall be payable by the Subscriber by bank wire transfer to an escrow account
established by the Corporation with Haythe & Curley, Esqs. (Citibank, N.A., 111
Wall Street, New York, New York, ABA No. 021000089, Client Escrow Account No.
37399318) or by certified or bank cashiers check payable to the Corporation and
delivered to the Corporation c/o Haythe & Curley, 237 Park Avenue, New York, New
York 10017, Attention: Bradley P. Cost, Esq., in any case on or before the close
of business on the Closing Date.
(c) Upon the payment by the Subscriber to the Corporation of
the aggregate Purchase Price for the Purchased Shares, the Corporation shall
cause its transfer agent to deliver to the Subscriber a stock certificate
representing ownership by it of the shares of Common Stock purchased hereunder.
<PAGE> 2
2
2. REGISTRATION REQUIREMENTS.
(a) As promptly as practicable following the Closing
Date, but in any event within a period of 90 days following the Closing Date,
the Corporation shall prepare and file with the Securities and Exchange
Commission a Registration Statement on Form S-3 for the purpose of registering
the resale by the Subscriber (or the Subscriber's affiliates) of the Purchased
Shares under the Securities Act.
(b) The Corporation shall pay all Registration Expenses
(as defined below) in connection with any registration, qualification or
compliance hereunder. Registration Expenses shall mean all expenses incurred by
the Corporation in complying with the registration provisions herein described,
including, without limitation, all registration, qualification and filing fees,
printing expenses, escrow fees, fees and disbursements of counsel for the
Corporation, blue sky fees and expenses, and the expense of any special audits
incident to or required by any such registration.
(c) In the case of the registration effected by the
Corporation pursuant to these registration provisions, the Corporation will use
its best efforts to: (i) cause the Registration Statement to become effective
within one hundred fifty (150) days of the Closing Date, (ii) keep such
registration effective until the earlier of (a) the second anniversary of the
Closing Date, (b) such date as all of the Purchased Shares have been resold by
the Subscriber thereof, or (c) such time as all of the Purchased Shares held by
the Subscriber can be sold within a given three-month period without compliance
with the registration requirements of the Securities Act pursuant to Rule 144
under the Securities Act; (iii) prepare and file with the Securities and
Exchange Commission such amendments and supplements to the Registration
Statement and the prospectus used in connection with the Registration Statement
as may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by the Registration
Statement; (iv) furnish such number of prospectuses and other documents incident
thereto, including any amendment of or supplement to the prospectus, as the
Subscriber from time to time may reasonably request; (v) cause all Purchased
Shares registered as described herein to be listed on each securities exchange
and quoted on each quotation service on which similar securities issued by the
Corporation are then listed or quoted; (vi) provide a transfer agent and
registrar for all Purchased Shares registered pursuant to the Registration
Statement and a CUSIP number for all such Purchased Shares; (vii) otherwise use
its best efforts to comply with all applicable rules and regulations of the
Securities and Exchange Commission; and (viii) file the documents required of
the Corporation and otherwise use its best efforts to maintain requisite blue
sky clearance in (A) all jurisdictions in which any of the Purchased Shares are
originally sold and (B) all other states reasonably specified in writing by the
Subscriber, provided as to clause (B), however, that in no event shall the
Corporation be required to qualify to do business or consent to service of
process in any state in which it is not now so qualified or has not so
consented.
(d) The Corporation shall furnish to the Subscriber
upon request a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary in order to facilitate the public sale or
other disposition of all or any of the Purchased Shares held by the Subscriber.
(e) With a view to making available to the Subscriber
the benefits of Rule 144 promulgated under the Securities Act ("Rule 144") and
any other rule or regulation of the
<PAGE> 3
3
Securities and Exchange Commission that may at any time permit the Subscriber to
sell Purchased Shares to the public without registration or pursuant to a
registration on Form S-3, the Corporation covenants and agrees to: (i) make and
keep public information available, as those terms are understood and defined in
Rule 144 under the Securities Act, until the earlier of (A) the second
anniversary of the Closing Date or (B) such date as all of the Purchased Shares
shall have been resold by the Subscriber thereof; (ii) file with the SEC in a
timely manner all reports and other documents required of the Corporation under
the Securities Act and the Exchange Act; and (iii) furnish to the Subscriber
upon request, as long as the Subscriber owns any Purchased Shares, (A) a written
statement by the Corporation that it has complied with the reporting
requirements of the Securities Act and the Exchange Act, (B) a copy of the most
recent annual or quarterly report of the Corporation, and (C) such other
information as may be reasonably requested in order to avail the Subscriber of
any rule or regulation of the SEC that permits the selling of any such Purchased
Shares without registration or pursuant to such Form S-3.
(f) Indemnification and Contribution.
(i) The Corporation agrees to indemnify and
hold harmless Subscriber from and against any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) to which such
Subscriber may become subject (under the Securities Act or otherwise) insofar as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon, any untrue statement of a
material fact contained in the Registration Statement, on the effective date
thereof, or arise out of any failure by the Corporation to fulfill any
undertaking included in the Registration Statement, and the Corporation will, as
incurred, reimburse Subscriber for any legal or other expenses reasonably
incurred in investigating, defending or preparing to defend any such action,
proceeding or claim; provided, however, that the Corporation shall not be liable
in any such case to the extent that such loss, claim, damage or liability arises
out of or is based upon (a) an untrue statement made in such Registration
Statement in reliance upon and in conformity with written information furnished
to the Corporation by or on behalf of Subscriber specifically for use in
preparation of the Registration Statement, (b) the failure of Subscriber to
comply with the covenants and agreements contained in this Agreement, or (c) any
untrue statement in any Prospectus that is corrected in any subsequent
Prospectus that was delivered to the Subscriber prior to the pertinent sale or
sales by the Subscriber.
(ii) Subscriber agrees to indemnify and hold
harmless the Corporation from and against any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) to which the
Corporation may become subject (under the Securities Act or otherwise) insofar
as such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon (a) an untrue statement made in
such Registration Statement in reliance upon and in conformity with written
information furnished to the Corporation by or on behalf of Subscriber
specifically for use in preparation of the Registration Statement, provided,
however, that Subscriber shall not be liable in any such case for any untrue
statement included in any Prospectus which statement has been corrected, in
writing, by Subscriber and delivered to the Corporation before the sale from
which such loss occurred, (b) the failure of Subscriber to comply with the
covenants and agreements contained in this Agreement, or (c) any untrue
statement in any prospectus that is corrected in any subsequent Prospectus that
was delivered to the Subscriber prior to the pertinent sale or sales by the
<PAGE> 4
4
Subscriber. Notwithstanding the foregoing, in no event shall the Subscriber to
liable to the Corporation under this Section 2 for any amounts in excess of the
net proceeds received by the Subscriber from the sale of the Purchased Shares
pursuant to the Registration Statement.
(iii) Promptly after receipt by any
indemnified person of a notice of a claim or the beginning of any action in
respect of which indemnity is to be sought against an indemnifying person
pursuant to this Section 2, such indemnified person shall notify the
indemnifying person in writing of such claim or of the commencement of such
action, and, subject to the provisions hereinafter stated, in case any such
action shall be brought against an indemnified person and the indemnifying
person shall have been notified thereof, the indemnifying person shall be
entitled to participate therein, and, to the extent that it shall wish, to
assume the defense thereof, with counsel reasonably satisfactory to the
indemnified person. After notice from the indemnifying person to such
indemnified person of the indemnifying person's election to assume the defense
thereof, the indemnifying person shall not be liable to such indemnified person
for any legal expenses subsequently incurred by such indemnified person in
connection with the defense thereof, provided, however, that if there exists or
shall exist a conflict of interest that would make it inappropriate in the
reasonable judgment of the indemnified person for the same counsel to represent
both the indemnified person and such indemnifying person or any affiliate or
associate thereof, the indemnified person shall be entitled to retain its own
counsel at the expense of such indemnifying person.
(iv) If the indemnification provided for in
this Section 2 is unavailable to or insufficient to hold harmless an indemnified
party under subsection (i) or (ii) above in respect of any losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) referred
to therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative fault of the Corporation on the one hand and the
Subscriber on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Corporation on the one hand or the Subscriber on the other and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Corporation and the Subscriber agree
that it would not be just and equitable if contribution pursuant to this
subsection (iv) were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this subsection (iv). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, or liabilities (or actions in
respect thereof) referred to above in this subsection (iv) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (iv), Subscriber shall not be
required to contribute any amount in excess of the amount by which the net
amount received by the Subscriber from the sale of the Purchased Shares to which
such loss relates exceeds the amount of any damages which Subscriber has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
<PAGE> 5
5
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(v) The obligations of the Corporation and
the Subscriber under this Section 2 shall be in addition to any liability which
the Corporation and the Subscriber may otherwise have.
3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. The Corporation
hereby represents and warrants to the Subscriber, as of the date hereof and as
of the Closing Date, as follows:
(a) CORPORATE EXISTENCE. Each of the Corporation and its
Subsidiaries: (i) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization; (ii) has all
requisite corporate power and corporate authority, and all material governmental
licenses, authorizations, consents and approvals necessary to own its assets and
carry on its business as now being conducted; and (iii) is qualified to do
business and is in good standing in all jurisdictions in which the nature of the
business conducted by it makes such qualification necessary and where failure so
to qualify would (either individually or in the aggregate) have a Material
Adverse Effect.
(b) NO BREACH. None of the execution and delivery of this
Agreement by the Corporation, the consummation by the Corporation of the
transactions herein contemplated or compliance by the Corporation with the terms
and provisions hereof will conflict with or result in a breach of, or require
any consent under, or result in the creation or imposition of any lien pursuant
to the terms of, the certificate of incorporation or by-laws of the Corporation,
or any law, regulation, order, writ, injunction or decree of any court or
governmental authority or agency, in each case which is binding on the
Corporation or any of its Subsidiaries, or any agreement or instrument to which
the Corporation or any of its Subsidiaries is a party or by which any of them or
any of their property is bound or to which any of them is subject, or constitute
a default under any such agreement or instrument. The foregoing representation,
insofar as relating to the Securities Act, is made in reliance upon the
representations and warranties of the Subscriber and the Other Investors set
forth in Section 3(e) hereof and Section 3(e) of the Other Investors respective
subscription agreements.
(c) AUTHORIZATION AND ENFORCEABILITY. The Corporation has all
necessary corporate power, authority and legal right to execute, deliver and
perform its obligations under this Agreement; the execution, delivery and
performance by the Corporation of this Agreement has been duly authorized by all
necessary corporate action on its part (including, without limitation, any
required stockholder approvals); and this Agreement has been duly authorized,
executed and delivered by the Corporation and this Agreement constitutes the
legal, valid and binding obligation of the Corporation, enforceable against the
Corporation in accordance with its terms, except as such enforceability may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar
laws of general applicability affecting the enforcement of creditors' rights and
(ii) the application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(d) APPROVALS. Other than as contemplated under Section 2
hereof or pursuant to any filing with the Nasdaq Stock Market following the
Closing Date, no authorizations,
<PAGE> 6
6
approvals or consents of, and no filings or registrations with, any governmental
or regulatory authority or agency, or any securities exchange, are necessary for
the execution, delivery or performance by the Corporation of this Agreement. The
foregoing representation, insofar as relating to the Securities Act, is made in
reliance upon the representations and warranties of the Subscriber and the Other
Investors set forth in Section 3(e) hereof and Section 3(e) of the Other
Investors respective subscription agreements.
(e) INVESTMENT COMPANY ACT. Neither the Corporation nor any of
its Subsidiaries is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
(f) PUBLIC UTILITY HOLDING COMPANY ACT. Neither the
Corporation nor any of its Subsidiaries is a "holding company", or an
"affiliate" of a "holding company" or a "subsidiary company" of a "holding
company", within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
(g) CAPITALIZATION. As of the date hereof (and without giving
effect to the sale of the Purchased Shares hereunder or the other matters
referred to in Section 4(e)(vii) hereof), the authorized capital stock of the
Corporation consists of 30,000,000 shares of Common Stock, of which 10,877,982
shares of Common Stock are duly and validly issued and outstanding; 800,000
shares of Class A Preferred Stock, no shares of which are issued or outstanding;
and 2,000,000 shares of Class B Preferred Stock, of which the following are
authorized, and duly and validly issued and outstanding: 100,000 shares of Class
B Convertible Redeemable Preferred Stock, Series 1997 authorized, no shares of
which are issued and outstanding, 4,000 shares of Class B Redeemable Preferred
Stock, Series 1997-A authorized, of which 4,000 shares are duly and validly
issued and outstanding (the "Preferred Stock 1997-A"), 152,321 shares of Class B
Convertible Preferred Stock, Series C authorized, of which 142,486 shares are
duly and validly issued and outstanding, and 100,000 shares of Class B
Convertible Preferred Stock, Series 1996 authorized, of which 100,000 shares are
duly and validly issued and outstanding, and all such shares are fully paid and
nonassessable. All outstanding shares of the Corporation's capital stock have
been issued in compliance with all federal and state securities laws, and were
not issued in violation of or subject to any pre-emptive rights or other rights
to subscribe for or purchase securities of the Corporation. When issued in
accordance with this Agreement, the Purchased Shares will be duly and validly
issued, fully paid and non-assessable. The issuance and sale of the Purchased
Shares is not subject to the pre-emptive or other similar rights of the
stockholders of the Corporation or any liens or encumbrances.
(h) DISCLOSURE. Each of the reports filed by the Corporation
with the Securities and Exchange Commission under the Exchange Act, and the
Corporation's October 1998 Confidential Memorandum (together with all Appendices
and Exhibits thereto and all Appendices and Exhibits which are incorporated by
reference, the "Confidential Memorandum") did not, at the time each such report
was filed or, in the case of the Confidential Memorandum, as of the date
thereof, contain any untrue statement of material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(i) In connection with the private placement of shares of
Common Stock contemplated by the Confidential Memorandum, including, without
limitation, the shares of
<PAGE> 7
7
Common Stock being offered to the Subscriber and the Other Investors, no more
than 25 investors (each of which is an accredited investor) have been offered
shares of Common Stock by the Corporation and/or any representative, advisor,
agent or other person acting on behalf of the Corporation. Assuming the accuracy
of the representations and warranties of the Subscriber and the Other Investors
set forth in this Agreement and in the subscription agreements of the Other
Investors, the offer, sale and issuance of the Purchased Shares are exempt from
the registration requirements of Section 5 of the Securities Act.
4. REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBER. The Subscriber
hereby represents and warrants to the Corporation, as of the date hereof, as
follows:
(a) ENFORCEABILITY. This Agreement constitutes the legal,
valid and binding obligation of the Subscriber, enforceable against the
Subscriber in accordance with its terms, except as such enforceability may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar
laws of general applicability affecting the enforcement of creditors' rights and
(ii) the application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(b) NO BREACH. None of the execution and delivery of this
Agreement by the Subscriber, the consummation by the Subscriber of the
transactions herein contemplated or compliance by the Subscriber with the terms
and provisions hereof will conflict with or result in a breach of, or require
any consent under any law, regulation, order, writ, injunction or decree of any
court or governmental authority or agency, in each case which is binding on the
Subscriber or any agreement or instrument to which the Subscriber is a party or
by which he or any of his Property is bound or to which any of them is subject,
constitute a default under any such agreement or instrument.
(c) INVESTMENT REPRESENTATIONS. (i) In evaluating the
suitability of an investment in the Corporation, the Subscriber has not relied
upon any representation or warranty (oral or written) (except those expressly
set forth in Section 3 hereof) of any Person. The Subscriber agrees that except
for the representations and warranties made by the Corporation expressly set
forth in Section 3 of this Agreement (as such representations and warranties are
modified by the Schedules hereto), neither the Corporation nor any affiliate
thereof has made and shall not be construed as having made to the Subscriber or
to any representative or affiliate thereof any representation or warranty of any
kind. Without limiting the generality of the foregoing, the Subscriber agrees
that neither the Corporation nor any affiliate thereof makes or has made any
representation or warranty to the Subscriber or to any representative or
affiliate thereof with respect to:
(A) any projections, estimates or budgets heretofore
delivered to or made available to the Subscriber or its
counsel, accountants, advisors, lenders, representatives or
affiliates of future revenues, expenses or expenditures,
future or pro forma results of operations (or any component
thereof), future or pro forma cash flows (or any component
thereof) or future or pro forma financial condition (or any
component thereof) of the Corporation and its Subsidiaries (or
any of them) or the future or pro forma business, operations
or affairs of the Corporation and its Subsidiaries (or any of
them);
<PAGE> 8
8
(B) any future or pro forma rates of return in
respect of the Subscriber's investment in the Purchased Shares
or the future or pro forma value of such Purchased Shares; and
(C) any other information, statement or documents
heretofore delivered to or made available to the Subscriber or
its counsel, accountants, advisors, lenders, representatives
or affiliates with respect to the Corporation and its
Subsidiaries (or any of them) or the business, operations or
affairs of the Corporation and its Subsidiaries (or any of
them), except to the extent and as expressly covered by a
representation and warranty contained in Section 3 hereof.
(ii) The Subscriber understands that the Corporation
proposes to issue to it the Purchased Shares in a private placement transaction
exempt from the registration requirements of the Securities Act; that, as a
result, the Purchased Shares will be restricted securities for purposes of the
Federal securities laws; that for such purpose the Corporation will rely upon
the representations, warranties, covenants and agreements made by the Subscriber
and contained herein; and that such exemption from registration is not available
unless such representations and warranties are correct, and such covenants and
agreements are performed in accordance with this Agreement.
(iii) The Subscriber is familiar with the provisions
of Rule 144 of the Securities Act and the limitations upon the availability and
applicability of such Rule, including with respect to the Purchased Shares.
(iv) The Subscriber is a sophisticated investor
familiar with the type of risks inherent in the acquisition of restricted
securities such as the Purchased Shares and the Subscriber's financial position
is such that it can afford to retain such shares for an indefinite period of
time without realizing any direct or indirect cash return on its investment. The
Subscriber is an "accredited investor" as such term is defined in Rule 501 under
the Securities Act.
(v) The Subscriber has such knowledge and experience
in financial, tax and business matters as to enable it to utilize the
information made available to it in connection with the issuance of the
Purchased Shares and to evaluate the merits and risks of an investment in such
shares and to make an informed investment decision with respect thereto.
(vi) The Subscriber is acquiring the Purchased Shares
solely for its own account for investment and not with a present view to, or for
sale in connection with, the distribution thereof within the meaning of the
Securities Act.
(vii) The Subscriber understands that (a) the
Corporation proposes to effect an exchange (the "Exchange") in which it will
issue Common Stock, at the Purchase Price per Purchased Share, in exchange for
(1) all of the issued and outstanding shares of its Preferred Stock 1997-A, with
an aggregate liquidation preference of $4 million (and all accrued and unpaid
dividends thereon on the date of the exchange) and (2) the retirement of $1
million in principal amount of certain subordinated debt, all held by corporate
affiliates of Paul J. Ramsay,
<PAGE> 9
9
the Chairman of the Corporation (the "Affiliates"), (b) the Corporation proposes
to effect one or more additional private placements of its Common Stock to
investors other than the Subscriber, the Affiliates and other than Luis E.
Lamela, the Chief Executive Officer of the Corporation (collectively, the "Other
Investors"), (c) in connection with the Exchange and the private placements
contemplated above, the Corporation intends to amend its Rights Agreement as set
forth in Exhibit A hereto and (d) the Corporation has received commitments from
one of the Affiliates and from Mr. Lamela, to purchase an aggregate of $2.5
million and $1.0 million of shares of Common Stock (valued at the Purchase
Price), respectively, and that such Affiliate commitment (but not Mr. Lamela's)
shall be automatically reduced (but not below $0) by an amount equal to the
aggregate dollar value of shares of Common Stock (valued at the Purchase Price)
actually purchased by the Subscriber hereunder and by the Other Investors.
5. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; CERTAIN LIMITATIONS ON
DAMAGES. (a) The representations and warranties of the Corporation contained in
Section 3 hereof and the representations and warranties of the Subscriber
contained in Section 4 hereof shall survive indefinitely.
(b) The aggregate liability of the Corporation for any and all
damage, loss, liability, cost and expense (collectively, "Damages") arising out
of any and all breaches by the Corporation of the representations and warranties
set forth in Section 3 under this Agreement is, and shall be, limited to an
aggregate amount (the "Liability Amount") equal to the Purchase Price, and the
Subscriber agrees not to seek any Damages in excess of the Liability Amount for
any and all Damages sustained or incurred by the Subscriber arising out of any
and all breaches by the Corporation of any representation or warranty set forth
in Section 3 under this Agreement. The aggregate liability of the Subscriber for
any and all Damages arising out of any and all breaches by the Subscriber of the
representations and warranties set forth in Section 4 under this Agreement is ,
and shall be, limited to the Liability Amount, and the Corporation agrees not to
seek any Damages in excess of the Liability Amount for any and all Damages
sustained or incurred by the Corporation arising out of any and all breaches by
the Subscriber of any representation or warranty set forth in Section 4 under
this Agreement. This Section 5(b) shall not apply to Section 2(f) hereof.
6. MISCELLANEOUS. (a) This Agreement contains the entire agreement
between the Corporation and the Subscriber with respect to the transactions
contemplated by this Agreement and supersede all prior arrangements or
understandings with respect thereto.
(b) All notices or other communications hereunder shall be in
writing and sufficient if delivered personally or sent by registered or
certified mail, postage prepaid, addressed to the Corporation at One Alhambra
Plaza, Suite 750, Coral Gables, Florida 38134, Fax: 305-567-1169, Attention:
Chief Executive Officer (with a copy to Haythe & Curley, 237 Park Avenue, New
York, New York 10017, Fax: 212-682-0200, Attention: Bradley P. Cost, Esq.) and
to the Subscriber at the address or facsimile set forth under its name on the
signature page to this Agreement. All such notices and communications shall be
deemed to have been duly given at the time delivered by hand, if personally
delivered, at the time received by fax, at the time received from a recognized
overnight carrier service, or three (3) business days after being deposited in
the mail, if sent by registered or certified mail, return receipt requested. Any
<PAGE> 10
10
party hereto may by notice change the address to which notices or other
communications to such party are to be delivered or mailed.
(c) This Agreement may be executed in counterparts, including
by fax, each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
(d) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware (without regard to the
conflicts of law rules thereof).
(e) This Agreement shall not be assignable without the prior
written consent of the other party hereto, and any purported assignment by any
party without the prior written consent of the other party hereto shall be void.
(f) This Agreement shall not create benefits on behalf of any
third party, and this Agreement shall be effective only as among the parties
hereto, their respective successors and permitted assigns.
(g) Any term or provision of this Agreement may be waived at
any time by the party which is entitled to the benefits thereof, and any term or
provision of this Agreement may be amended or supplemented at any time by the
consent of the Corporation and the Subscriber, except that any waiver of any
term or condition, or any amendment or supplementation, of this Agreement shall
be effective only if in writing.
(h) The parties hereto agree that this Agreement is the
product of negotiations between sophisticated parties, each of whom was
represented by counsel, and each of whom had an opportunity to participate in,
and did participate in, the drafting of each provision hereof. Accordingly,
ambiguities in this Agreement, if any, shall not be construed strictly or in
favor of or against any party hereto but rather shall be given a fair and
reasonable construction without regard to the rule of contra proferentum.
(i) The parties hereto agree that each party shall bear such
party's own expenses in connection with this Agreement and the transactions
contemplated hereby.
(j) In the event that the Subscriber exercises its Right to
purchase from the Corporation the Purchased Shares in accordance with Section
1(a) hereof, the Corporation shall cause the Subscriber to receive an opinion of
Haythe & Curley, counsel for the Corporation, in the form attached hereto as
EXHIBIT B, within two (2) business days following the Closing Date, such opinion
to be dated as of the Closing Date.
7. DEFINITIONS. As used herein, the following terms shall have the
following meanings (all terms defined in this Section 7 or in other provisions
of this Agreement in the singular to have the same meanings when used in the
plural and VICE VERSA):
"Agreement" shall have the meaning set forth in the recitals
hereto.
"Class B Convertible Redeemable Preferred Stock, Series 1997"
shall mean the class B convertible redeemable preferred stock, par value $1.00
per share, of the Corporation.
<PAGE> 11
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"Class B Redeemable Preferred Stock, Series 1997-A" shall mean
the class B redeemable preferred stock, par value $1.00 per share, of the
Corporation.
"Class B Convertible Preferred Stock, Series C" shall mean the
class B convertible preferred stock, par value $1.00 per share, of the
Corporation.
"Class B Convertible Preferred Stock, Series 1996" shall mean
the class B convertible preferred stock, par value $1.00 per share, of the
Corporation.
"Common Stock" shall mean the Common Stock, par value $.01 per
share, of the Corporation.
"Corporation" shall have the meaning set forth in the recitals
hereto.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Liability Amount" shall have the meaning set forth in
Section 5(b) hereof.
"Material Adverse Effect" shall mean a material adverse effect
on the Properties, results of operation or condition (financial or otherwise) of
the Corporation and its Subsidiaries, taken as a whole.
"Person" shall mean any individual, corporation, company,
voluntary association, partnership, joint venture, trust, unincorporated
organization or government (or any agency, instrumentality or political
subdivision thereof).
"Preferred Stock" shall mean the Class B Convertible
Redeemable Preferred Stock, Series 1997, the Class B Redeemable Preferred Stock,
Series 1997-A, the Class B Convertible Preferred Stock, Series C, and the Class
B convertible Preferred Stock, Series 1996.
"Property" shall mean any right or interest in or to property
of any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Purchase Price" shall have the meaning set forth in Section
1(b) hereto.
"Purchased Shares" shall have the meaning set forth in the
recitals hereto.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Subscriber" shall have the meaning set forth in the recitals
hereto.
"Subsidiary" shall mean, with respect to any Person, any
corporation, partnership or other entity of which at least a majority of the
securities or other ownership interests having by the terms thereof ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions of such corporation, partnership or other entity
(irrespective of whether or not at the time securities or other ownership
interests of any other class or classes of such corporation, partnership or
other entity shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned or controlled by
such Person or one or more Subsidiaries of such Person or by such Person and one
or more Subsidiaries of such Person.
* * *
<PAGE> 12
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IN WITNESS WHEREOF, each of the parties hereto has executed
this Agreement on the date first above written.
RAMSAY HEALTH CARE, INC.
By
------------------------------
Name:
Title:
--------------------------------
Moises Hernandez, M.D.
Aggregate
Purchase Price: $200,000
Address: 118 Malva Court
Coral Gables, FL 33143-6548
Fax:
<PAGE> 1
EXHIBIT 4.18
SUBSCRIPTION AGREEMENT dated as of October 26, 1998 (this
"Agreement") between RAMSAY HEALTH CARE, INC., a Delaware corporation (the
"Corporation"), and TOM HODAPP, M.D. (the "Subscriber").
W I T N E S S E T H :
WHEREAS, subject to the terms and conditions hereof, the
Subscriber desires to have the right to subscribe for and purchase from the
Corporation the aggregate dollar value (determined at the Purchase Price per
Purchased Share as determined herein) of shares of Common Stock set forth
opposite its name on the signature page hereof (the "Purchased Shares");
NOW, THEREFORE, in consideration of the mutual benefits to be
derived and the representations and warranties, conditions and promises herein
contained, and intending to be legally bound hereby, the Corporation and the
Subscriber hereby agree as follows:
1. PURCHASE OF PURCHASED SHARES. (a) Subject to the terms and
provisions of this Agreement, the Corporation hereby grants the Subscriber the
right (the "Right") to purchase from the Corporation the Purchased Shares. The
Right shall be exercised, if at all, on or before the close of business (New
York City time) on October 30, 1998 (the "Closing Date") by written notice by
the Subscriber to the Corporation stating that the Subscriber is exercising the
Right to purchase the Purchased Shares pursuant to this Section 1(a) (which
notice may be given by fax as set forth in Section 6(b) hereto) and by delivery
of the aggregate Purchase Price for the Purchased Shares as set forth in Section
1(b) below. In the event that the Right is not exercised as aforesaid, the Right
shall automatically terminate and shall be of no further force or effect and
neither party hereto shall have any rights, entitlements or obligations
hereunder.
(b) The purchase price per share for the Purchased Shares to
be purchased by the Subscriber shall be the closing bid price per share of
Common Stock reported on the Nasdaq Stock Market on the date hereof (the
"Purchase Price") and the aggregate Purchase Price for the Purchased Shares
shall be payable by the Subscriber by bank wire transfer to an escrow account
established by the Corporation with Haythe & Curley, Esqs. (Citibank, N.A., 111
Wall Street, New York, New York, ABA No. 021000089, Client Escrow Account No.
37399318) or by certified or bank cashiers check payable to the Corporation and
delivered to the Corporation c/o Haythe & Curley, 237 Park Avenue, New York, New
York 10017, Attention: Bradley P. Cost, Esq., in any case on or before the close
of business on the Closing Date.
(c) Upon the payment by the Subscriber to the Corporation of
the aggregate Purchase Price for the Purchased Shares, the Corporation shall
cause its transfer agent to deliver to the Subscriber a stock certificate
representing ownership by it of the shares of Common Stock purchased hereunder.
<PAGE> 2
2
2. REGISTRATION REQUIREMENTS.
(a) As promptly as practicable following the Closing
Date, but in any event within a period of 90 days following the Closing Date,
the Corporation shall prepare and file with the Securities and Exchange
Commission a Registration Statement on Form S-3 for the purpose of registering
the resale by the Subscriber (or the Subscriber's affiliates) of the Purchased
Shares under the Securities Act.
(b) The Corporation shall pay all Registration Expenses
(as defined below) in connection with any registration, qualification or
compliance hereunder. Registration Expenses shall mean all expenses incurred by
the Corporation in complying with the registration provisions herein described,
including, without limitation, all registration, qualification and filing fees,
printing expenses, escrow fees, fees and disbursements of counsel for the
Corporation, blue sky fees and expenses, and the expense of any special audits
incident to or required by any such registration.
(c) In the case of the registration effected by the
Corporation pursuant to these registration provisions, the Corporation will use
its best efforts to: (i) cause the Registration Statement to become effective
within one hundred fifty (150) days of the Closing Date, (ii) keep such
registration effective until the earlier of (a) the second anniversary of the
Closing Date, (b) such date as all of the Purchased Shares have been resold by
the Subscriber thereof, or (c) such time as all of the Purchased Shares held by
the Subscriber can be sold within a given three-month period without compliance
with the registration requirements of the Securities Act pursuant to Rule 144
under the Securities Act; (iii) prepare and file with the Securities and
Exchange Commission such amendments and supplements to the Registration
Statement and the prospectus used in connection with the Registration Statement
as may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by the Registration
Statement; (iv) furnish such number of prospectuses and other documents incident
thereto, including any amendment of or supplement to the prospectus, as the
Subscriber from time to time may reasonably request; (v) cause all Purchased
Shares registered as described herein to be listed on each securities exchange
and quoted on each quotation service on which similar securities issued by the
Corporation are then listed or quoted; (vi) provide a transfer agent and
registrar for all Purchased Shares registered pursuant to the Registration
Statement and a CUSIP number for all such Purchased Shares; (vii) otherwise use
its best efforts to comply with all applicable rules and regulations of the
Securities and Exchange Commission; and (viii) file the documents required of
the Corporation and otherwise use its best efforts to maintain requisite blue
sky clearance in (A) all jurisdictions in which any of the Purchased Shares are
originally sold and (B) all other states reasonably specified in writing by the
Subscriber, provided as to clause (B), however, that in no event shall the
Corporation be required to qualify to do business or consent to service of
process in any state in which it is not now so qualified or has not so
consented.
(d) The Corporation shall furnish to the Subscriber
upon request a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary in order to facilitate the public sale or
other disposition of all or any of the Purchased Shares held by the Subscriber.
(e) With a view to making available to the Subscriber
the benefits of Rule 144 promulgated under the Securities Act ("Rule 144") and
any other rule or regulation of the
<PAGE> 3
3
Securities and Exchange Commission that may at any time permit the Subscriber to
sell Purchased Shares to the public without registration or pursuant to a
registration on Form S-3, the Corporation covenants and agrees to: (i) make and
keep public information available, as those terms are understood and defined in
Rule 144 under the Securities Act, until the earlier of (A) the second
anniversary of the Closing Date or (B) such date as all of the Purchased Shares
shall have been resold by the Subscriber thereof; (ii) file with the SEC in a
timely manner all reports and other documents required of the Corporation under
the Securities Act and the Exchange Act; and (iii) furnish to the Subscriber
upon request, as long as the Subscriber owns any Purchased Shares, (A) a written
statement by the Corporation that it has complied with the reporting
requirements of the Securities Act and the Exchange Act, (B) a copy of the most
recent annual or quarterly report of the Corporation, and (C) such other
information as may be reasonably requested in order to avail the Subscriber of
any rule or regulation of the SEC that permits the selling of any such Purchased
Shares without registration or pursuant to such Form S-3.
(f) Indemnification and Contribution.
(i) The Corporation agrees to indemnify and
hold harmless Subscriber from and against any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) to which such
Subscriber may become subject (under the Securities Act or otherwise) insofar as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon, any untrue statement of a
material fact contained in the Registration Statement, on the effective date
thereof, or arise out of any failure by the Corporation to fulfill any
undertaking included in the Registration Statement, and the Corporation will, as
incurred, reimburse Subscriber for any legal or other expenses reasonably
incurred in investigating, defending or preparing to defend any such action,
proceeding or claim; provided, however, that the Corporation shall not be liable
in any such case to the extent that such loss, claim, damage or liability arises
out of or is based upon (a) an untrue statement made in such Registration
Statement in reliance upon and in conformity with written information furnished
to the Corporation by or on behalf of Subscriber specifically for use in
preparation of the Registration Statement, (b) the failure of Subscriber to
comply with the covenants and agreements contained in this Agreement, or (c) any
untrue statement in any Prospectus that is corrected in any subsequent
Prospectus that was delivered to the Subscriber prior to the pertinent sale or
sales by the Subscriber.
(ii) Subscriber agrees to indemnify and hold
harmless the Corporation from and against any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) to which the
Corporation may become subject (under the Securities Act or otherwise) insofar
as such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon (a) an untrue statement made in
such Registration Statement in reliance upon and in conformity with written
information furnished to the Corporation by or on behalf of Subscriber
specifically for use in preparation of the Registration Statement, provided,
however, that Subscriber shall not be liable in any such case for any untrue
statement included in any Prospectus which statement has been corrected, in
writing, by Subscriber and delivered to the Corporation before the sale from
which such loss occurred, (b) the failure of Subscriber to comply with the
covenants and agreements contained in this Agreement, or (c) any untrue
statement in any prospectus that is corrected in any subsequent Prospectus that
was delivered to the Subscriber prior to the pertinent sale or sales by the
<PAGE> 4
4
Subscriber. Notwithstanding the foregoing, in no event shall the Subscriber to
liable to the Corporation under this Section 2 for any amounts in excess of the
net proceeds received by the Subscriber from the sale of the Purchased Shares
pursuant to the Registration Statement.
(iii) Promptly after receipt by any
indemnified person of a notice of a claim or the beginning of any action in
respect of which indemnity is to be sought against an indemnifying person
pursuant to this Section 2, such indemnified person shall notify the
indemnifying person in writing of such claim or of the commencement of such
action, and, subject to the provisions hereinafter stated, in case any such
action shall be brought against an indemnified person and the indemnifying
person shall have been notified thereof, the indemnifying person shall be
entitled to participate therein, and, to the extent that it shall wish, to
assume the defense thereof, with counsel reasonably satisfactory to the
indemnified person. After notice from the indemnifying person to such
indemnified person of the indemnifying person's election to assume the defense
thereof, the indemnifying person shall not be liable to such indemnified person
for any legal expenses subsequently incurred by such indemnified person in
connection with the defense thereof, provided, however, that if there exists or
shall exist a conflict of interest that would make it inappropriate in the
reasonable judgment of the indemnified person for the same counsel to represent
both the indemnified person and such indemnifying person or any affiliate or
associate thereof, the indemnified person shall be entitled to retain its own
counsel at the expense of such indemnifying person.
(iv) If the indemnification provided for in
this Section 2 is unavailable to or insufficient to hold harmless an indemnified
party under subsection (i) or (ii) above in respect of any losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) referred
to therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative fault of the Corporation on the one hand and the
Subscriber on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Corporation on the one hand or the Subscriber on the other and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Corporation and the Subscriber agree
that it would not be just and equitable if contribution pursuant to this
subsection (iv) were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this subsection (iv). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, or liabilities (or actions in
respect thereof) referred to above in this subsection (iv) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (iv), Subscriber shall not be
required to contribute any amount in excess of the amount by which the net
amount received by the Subscriber from the sale of the Purchased Shares to which
such loss relates exceeds the amount of any damages which Subscriber has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
<PAGE> 5
5
shall bc entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(v) The obligations of the Corporation and
the Subscriber under this Section 2 shall be in addition to any liability which
the Corporation and the Subscriber may otherwise have.
3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. The Corporation
hereby represents and warrants to the Subscriber, as of the date hereof and as
of the Closing Date, as follows:
(a) CORPORATE EXISTENCE. Each of the Corporation and its
Subsidiaries: (i) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization; (ii) has all
requisite corporate power and corporate authority, and all material governmental
licenses, authorizations, consents and approvals necessary to own its assets and
carry on its business as now being conducted; and (iii) is qualified to do
business and is in good standing in all jurisdictions in which the nature of the
business conducted by it makes such qualification necessary and where failure so
to qualify would (either individually or in the aggregate) have a Material
Adverse Effect.
(b) NO BREACH. None of the execution and delivery of this
Agreement by the Corporation, the consummation by the Corporation of the
transactions herein contemplated or compliance by the Corporation with the terms
and provisions hereof will conflict with or result in a breach of, or require
any consent under, or result in the creation or imposition of any lien pursuant
to the terms of, the certificate of incorporation or by-laws of the Corporation,
or any law, regulation, order, writ, injunction or decree of any court or
governmental authority or agency, in each case which is binding on the
Corporation or any of its Subsidiaries, or any agreement or instrument to which
the Corporation or any of its Subsidiaries is a party or by which any of them or
any of their property is bound or to which any of them is subject, or constitute
a default under any such agreement or instrument. The foregoing representation,
insofar as relating to the Securities Act, is made in reliance upon the
representations and warranties of the Subscriber and the Other Investors set
forth in Section 3(e) hereof and Section 3(e) of the Other Investors respective
subscription agreements.
(c) AUTHORIZATION AND ENFORCEABILITY. The Corporation has all
necessary corporate power, authority and legal right to execute, deliver and
perform its obligations under this Agreement; the execution, delivery and
performance by the Corporation of this Agreement has been duly authorized by all
necessary corporate action on its part (including, without limitation, any
required stockholder approvals); and this Agreement has been duly authorized,
executed and delivered by the Corporation and this Agreement constitutes the
legal, valid and binding obligation of the Corporation, enforceable against the
Corporation in accordance with its terms, except as such enforceability may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar
laws of general applicability affecting the enforcement of creditors' rights and
(ii) the application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(d) APPROVALS. Other than as contemplated under Section 2
hereof or pursuant to any filing with the Nasdaq Stock Market following the
Closing Date, no authorizations,
<PAGE> 6
6
approvals or consents of, and no filings or registrations with, any governmental
or regulatory authority or agency, or any securities exchange, are necessary for
the execution, delivery or performance by the Corporation of this Agreement. The
foregoing representation, insofar as relating to the Securities Act, is made in
reliance upon the representations and warranties of the Subscriber and the Other
Investors set forth in Section 3(e) hereof and Section 3(e) of the Other
Investors respective subscription agreements.
(e) INVESTMENT COMPANY ACT. Neither the Corporation nor any of
its Subsidiaries is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
(f) PUBLIC UTILITY HOLDING COMPANY ACT. Neither the
Corporation nor any of its Subsidiaries is a "holding company", or an
"affiliate" of a "holding company" or a "subsidiary company" of a "holding
company", within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
(g) CAPITALIZATION. As of the date hereof (and without giving
effect to the sale of the Purchased Shares hereunder or the other matters
referred to in Section 4(e)(vii) hereof), the authorized capital stock of the
Corporation consists of 30,000,000 shares of Common Stock, of which 10,877,982
shares of Common Stock are duly and validly issued and outstanding; 800,000
shares of Class A Preferred Stock, no shares of which are issued or outstanding;
and 2,000,000 shares of Class B Preferred Stock, of which the following are
authorized, and duly and validly issued and outstanding: 100,000 shares of Class
B Convertible Redeemable Preferred Stock, Series 1997 authorized, no shares of
which are issued and outstanding, 4,000 shares of Class B Redeemable Preferred
Stock, Series 1997-A authorized, of which 4,000 shares are duly and validly
issued and outstanding (the "Preferred Stock 1997-A"), 152,321 shares of Class B
Convertible Preferred Stock, Series C authorized, of which 142,486 shares are
duly and validly issued and outstanding, and 100,000 shares of Class B
Convertible Preferred Stock, Series 1996 authorized, of which 100,000 shares are
duly and validly issued and outstanding, and all such shares are fully paid and
nonassessable. All outstanding shares of the Corporation's capital stock have
been issued in compliance with all federal and state securities laws, and were
not issued in violation of or subject to any pre-emptive rights or other rights
to subscribe for or purchase securities of the Corporation. When issued in
accordance with this Agreement, the Purchased Shares will be duly and validly
issued, fully paid and non-assessable. The issuance and sale of the Purchased
Shares is not subject to the pre-emptive or other similar rights of the
stockholders of the Corporation or any liens or encumbrances.
(h) DISCLOSURE. Each of the reports filed by the Corporation
with the Securities and Exchange Commission under the Exchange Act, and the
Corporation's October 1998 Confidential Memorandum (together with all Appendices
and Exhibits thereto and all Appendices and Exhibits which are incorporated by
reference, the "Confidential Memorandum") did not, at the time each such report
was filed or, in the case of the Confidential Memorandum, as of the date
thereof, contain any untrue statement of material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(i) In connection with the private placement of shares of
Common Stock contemplated by the Confidential Memorandum, including, without
limitation, the shares of
<PAGE> 7
7
Common Stock being offered to the Subscriber and the Other Investors, no more
than 25 investors (each of which is an accredited investor) have been offered
shares of Common Stock by the Corporation and/or any representative, advisor,
agent or other person acting on behalf of the Corporation. Assuming the accuracy
of the representations and warranties of the Subscriber and the Other Investors
set forth in this Agreement and in the subscription agreements of the Other
Investors, the offer, sale and issuance of the Purchased Shares are exempt from
the registration requirements of Section 5 of the Securities Act.
4. REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBER. The Subscriber
hereby represents and warrants to the Corporation, as of the date hereof, as
follows:
(a) ENFORCEABILITY. This Agreement constitutes the legal,
valid and binding obligation of the Subscriber, enforceable against the
Subscriber in accordance with its terms, except as such enforceability may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar
laws of general applicability affecting the enforcement of creditors' rights and
(ii) the application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(b) NO BREACH. None of the execution and delivery of this
Agreement by the Subscriber, the consummation by the Subscriber of the
transactions herein contemplated or compliance by the Subscriber with the terms
and provisions hereof will conflict with or result in a breach of, or require
any consent under any law, regulation, order, writ, injunction or decree of any
court or governmental authority or agency, in each case which is binding on the
Subscriber or any agreement or instrument to which the Subscriber is a party or
by which he or any of his Property is bound or to which any of them is subject,
constitute a default under any such agreement or instrument.
(c) INVESTMENT REPRESENTATIONS. (i) In evaluating the
suitability of an investment in the Corporation, the Subscriber has not relied
upon any representation or warranty (oral or written) (except those expressly
set forth in Section 3 hereof) of any Person. The Subscriber agrees that except
for the representations and warranties made by the Corporation expressly set
forth in Section 3 of this Agreement (as such representations and warranties are
modified by the Schedules hereto), neither the Corporation nor any affiliate
thereof has made and shall not be construed as having made to the Subscriber or
to any representative or affiliate thereof any representation or warranty of any
kind. Without limiting the generality of the foregoing, the Subscriber agrees
that neither the Corporation nor any affiliate thereof makes or has made any
representation or warranty to the Subscriber or to any representative or
affiliate thereof with respect to:
(A) any projections, estimates or budgets heretofore
delivered to or made available to the Subscriber or its
counsel, accountants, advisors, lenders, representatives or
affiliates of future revenues, expenses or expenditures,
future or pro forma results of operations (or any component
thereof), future or pro forma cash flows (or any component
thereof) or future or pro forma financial condition (or any
component thereof) of the Corporation and its Subsidiaries (or
any of them) or the future or pro forma business, operations
or affairs of the Corporation and its Subsidiaries (or any of
them);
<PAGE> 8
8
(B) any future or pro forma rates of return in
respect of the Subscriber's investment in the Purchased Shares
or the future or pro forma value of such Purchased Shares; and
(C) any other information, statement or documents
heretofore delivered to or made available to the Subscriber or
its counsel, accountants, advisors, lenders, representatives
or affiliates with respect to the Corporation and its
Subsidiaries (or any of them) or the business, operations or
affairs of the Corporation and its Subsidiaries (or any of
them), except to the extent and as expressly covered by a
representation and warranty contained in Section 3 hereof.
(ii) The Subscriber understands that the Corporation
proposes to issue to it the Purchased Shares in a private placement transaction
exempt from the registration requirements of the Securities Act; that, as a
result, the Purchased Shares will be restricted securities for purposes of the
Federal securities laws; that for such purpose the Corporation will rely upon
the representations, warranties, covenants and agreements made by the Subscriber
and contained herein; and that such exemption from registration is not available
unless such representations and warranties are correct, and such covenants and
agreements are performed in accordance with this Agreement.
(iii) The Subscriber is familiar with the provisions
of Rule 144 of the Securities Act and the limitations upon the availability and
applicability of such Rule, including with respect to the Purchased Shares.
(iv) The Subscriber is a sophisticated investor
familiar with the type of risks inherent in the acquisition of restricted
securities such as the Purchased Shares and the Subscriber's financial position
is such that it can afford to retain such shares for an indefinite period of
time without realizing any direct or indirect cash return on its investment. The
Subscriber is an "accredited investor" as such term is defined in Rule 501 under
the Securities Act.
(v) The Subscriber has such knowledge and experience
in financial, tax and business matters as to enable it to utilize the
information made available to it in connection with the issuance of the
Purchased Shares and to evaluate the merits and risks of an investment in such
shares and to make an informed investment decision with respect thereto.
(vi) The Subscriber is acquiring the Purchased Shares
solely for its own account for investment and not with a present view to, or for
sale in connection with, the distribution thereof within the meaning of the
Securities Act.
(vii) The Subscriber understands that (a) the
Corporation proposes to effect an exchange (the "Exchange") in which it will
issue Common Stock, at the Purchase Price per Purchased Share, in exchange for
(1) all of the issued and outstanding shares of its Preferred Stock 1997-A, with
an aggregate liquidation preference of $4 million (and all accrued and unpaid
dividends thereon on the date of the exchange) and (2) the retirement of $1
million in principal amount of certain subordinated debt, all held by corporate
affiliates of Paul J. Ramsay,
<PAGE> 9
9
the Chairman of the Corporation (the "Affiliates"), (b) the Corporation proposes
to effect one or more additional private placements of its Common Stock to
investors other than the Subscriber, the Affiliates and other than Luis E.
Lamela, the Chief Executive Officer of the Corporation (collectively, the "Other
Investors"), (c) in connection with the Exchange and the private placements
contemplated above, the Corporation intends to amend its Rights Agreement as set
forth in Exhibit A hereto and (d) the Corporation has received commitments from
one of the Affiliates and from Mr. Lamela, to purchase an aggregate of $2.5
million and $1.0 million of shares of Common Stock (valued at the Purchase
Price), respectively, and that such Affiliate commitment (but not Mr. Lamela's)
shall be automatically reduced (but not below $0) by an amount equal to the
aggregate dollar value of shares of Common Stock (valued at the Purchase Price)
actually purchased by the Subscriber hereunder and by the Other Investors.
5. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; CERTAIN LIMITATIONS ON
DAMAGES. (a) The representations and warranties of the Corporation contained in
Section 3 hereof and the representations and warranties of the Subscriber
contained in Section 4 hereof shall survive indefinitely.
(b) The aggregate liability of the Corporation for any and all
damage, loss, liability, cost and expense (collectively, "Damages") arising out
of any and all breaches by the Corporation of the representations and warranties
set forth in Section 3 under this Agreement is, and shall be, limited to an
aggregate amount (the "Liability Amount") equal to the Purchase Price, and the
Subscriber agrees not to seek any Damages in excess of the Liability Amount for
any and all Damages sustained or incurred by the Subscriber arising out of any
and all breaches by the Corporation of any representation or warranty set forth
in Section 3 under this Agreement. The aggregate liability of the Subscriber for
any and all Damages arising out of any and all breaches by the Subscriber of the
representations and warranties set forth in Section 4 under this Agreement is,
and shall be, limited to the Liability Amount, and the Corporation agrees not to
seek any Damages in excess of the Liability Amount for any and all Damages
sustained or incurred by the Corporation arising out of any and all breaches by
the Subscriber of any representation or warranty set forth in Section 4 under
this Agreement. This Section 5(b) shall not apply to Section 2(f) hereof.
6. MISCELLANEOUS. (a) This Agreement contains the entire agreement
between the Corporation and the Subscriber with respect to the transactions
contemplated by this Agreement and supersede all prior arrangements or
understandings with respect thereto.
(b) All notices or other communications hereunder shall be in
writing and sufficient if delivered personally or sent by registered or
certified mail, postage prepaid, addressed to the Corporation at One Alhambra
Plaza, Suite 750, Coral Gables, Florida 38134, Fax: 305-567-1169, Attention:
Chief Executive Officer (with a copy to Haythe & Curley, 237 Park Avenue, New
York, New York 10017, Fax: 212-682-0200, Attention: Bradley P. Cost, Esq.) and
to the Subscriber at the address or facsimile set forth under its name on the
signature page to this Agreement. All such notices and communications shall be
deemed to have been duly given at the time delivered by hand, if personally
delivered, at the time received by fax, at the time received from a recognized
overnight carrier service, or three (3) business days after being deposited in
the mail, if sent by registered or certified mail, return receipt requested. Any
<PAGE> 10
10
party hereto may by notice change the address to which notices or other
communications to such party are to be delivered or mailed.
(c) This Agreement may be executed in counterparts, including
by fax, each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
(d) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware (without regard to the
conflicts of law rules thereof).
(e) This Agreement shall not be assignable without the prior
written consent of the other party hereto, and any purported assignment by any
party without the prior written consent of the other party hereto shall be void.
(f) This Agreement shall not create benefits on behalf of any
third party, and this Agreement shall be effective only as among the parties
hereto, their respective successors and permitted assigns.
(g) Any term or provision of this Agreement may be waived at
any time by the party which is entitled to the benefits thereof, and any term or
provision of this Agreement may be amended or supplemented at any time by the
consent of the Corporation and the Subscriber, except that any waiver of any
term or condition, or any amendment or supplementation, of this Agreement shall
be effective only if in writing.
(h) The parties hereto agree that this Agreement is the
product of negotiations between sophisticated parties, each of whom was
represented by counsel, and each of whom had an opportunity to participate in,
and did participate in, the drafting of each provision hereof. Accordingly,
ambiguities in this Agreement, if any, shall not be construed strictly or in
favor of or against any party hereto but rather shall be given a fair and
reasonable construction without regard to the rule of contra proferentum.
(i) The parties hereto agree that each party shall bear such
party's own expenses in connection with this Agreement and the transactions
contemplated hereby.
(j) In the event that the Subscriber exercises its Right to
purchase from the Corporation the Purchased Shares in accordance with Section
1(a) hereof, the Corporation shall cause the Subscriber to receive an opinion of
Haythe & Curley, counsel for the Corporation, in the form attached hereto as
EXHIBIT B, within two (2) business days following the Closing Date, such opinion
to be dated as of the Closing Date.
7. DEFINITIONS. As used herein, the following terms shall have the
following meanings (all terms defined in this Section 7 or in other provisions
of this Agreement in the singular to have the same meanings when used in the
plural and VICE VERSA):
"Agreement" shall have the meaning set forth in the recitals
hereto.
"Class B Convertible Redeemable Preferred Stock, Series 1997"
shall mean the class B convertible redeemable preferred stock, par value $1.00
per share, of the Corporation.
<PAGE> 11
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"Class B Redeemable Preferred Stock, Series 1997-A" shall mean
the class B redeemable preferred stock, par value $1.00 per share, of the
Corporation.
"Class B Convertible Preferred Stock, Series C" shall mean the
class B convertible preferred stock, par value $1.00 per share, of the
Corporation.
"Class B Convertible Preferred Stock, Series 1996" shall mean
the class B convertible preferred stock, par value $1.00 per share, of the
Corporation.
"Common Stock" shall mean the Common Stock, par value $.01 per
share, of the Corporation.
"Corporation" shall have the meaning set forth in the recitals
hereto.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Liability Amount" shall have the meaning set forth in
Section 5(b) hereof.
"Material Adverse Effect" shall mean a material adverse effect
on the Properties, results of operation or condition (financial or otherwise) of
the Corporation and its Subsidiaries, taken as a whole.
"Person" shall mean any individual, corporation, company,
voluntary association, partnership, joint venture, trust, unincorporated
organization or government (or any agency, instrumentality or political
subdivision thereof).
"Preferred Stock" shall mean the Class B Convertible
Redeemable Preferred Stock, Series 1997, the Class B Redeemable Preferred Stock,
Series 1997-A, the Class B Convertible Preferred Stock, Series C, and the Class
B convertible Preferred Stock, Series 1996.
"Property" shall mean any right or interest in or to property
of any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Purchase Price" shall have the meaning set forth in Section
1(b) hereto.
"Purchased Shares" shall have the meaning set forth in the
recitals hereto.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Subscriber" shall have the meaning set forth in the recitals
hereto.
"Subsidiary" shall mean, with respect to any Person, any
corporation, partnership or other entity of which at least a majority of the
securities or other ownership interests having by the terms thereof ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions of such corporation, partnership or other entity
(irrespective of whether or not at the time securities or other ownership
interests of any other class or classes of such corporation, partnership or
other entity shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned or controlled by
such Person or one or more Subsidiaries of such Person or by such Person and one
or more Subsidiaries of such Person.
* * *
<PAGE> 12
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IN WITNESS WHEREOF, each of the parties hereto has executed
this Agreement on the date first above written.
RAMSAY HEALTH CARE, INC.
By
------------------------------
Name:
Title:
--------------------------------
Tom Hodapp
Aggregate
Purchase Price: $100,000
Purchase Price Address: 254 Glen Drive
Per Share: $1.125 Sausalito, California 94965
Fax:
<PAGE> 1
EXHIBIT 4.19
SUBSCRIPTION AGREEMENT dated as of October 26, 1998 (this
"Agreement") between RAMSAY HEALTH CARE, INC., a Delaware corporation (the
"Corporation"), and AARON BEAM (the "Subscriber").
W I T N E S S E T H :
WHEREAS, subject to the terms and conditions hereof, the
Subscriber desires to have the right to subscribe for and purchase from the
Corporation the aggregate dollar value (determined at the Purchase Price per
Purchased Share as determined herein) of shares of Common Stock set forth
opposite its name on the signature page hereof (the "Purchased Shares");
NOW, THEREFORE, in consideration of the mutual benefits to be
derived and the representations and warranties, conditions and promises herein
contained, and intending to be legally bound hereby, the Corporation and the
Subscriber hereby agree as follows:
1. PURCHASE OF PURCHASED SHARES. (a) Subject to the terms and
provisions of this Agreement, the Corporation hereby grants the Subscriber the
right (the "Right") to purchase from the Corporation the Purchased Shares. The
Right shall be exercised, if at all, on or before the close of business (New
York City time) on October 30, 1998 (the "Closing Date") by written notice by
the Subscriber to the Corporation stating that the Subscriber is exercising the
Right to purchase the Purchased Shares pursuant to this Section 1(a) (which
notice may be given by fax as set forth in Section 6(b) hereto) and by delivery
of the aggregate Purchase Price for the Purchased Shares as set forth in Section
1(b) below. In the event that the Right is not exercised as aforesaid, the Right
shall automatically terminate and shall be of no further force or effect and
neither party hereto shall have any rights, entitlements or obligations
hereunder.
(b) The purchase price per share for the Purchased Shares to
be purchased by the Subscriber shall be the closing bid price per share of
Common Stock reported on the Nasdaq Stock Market on the date hereof (the
"Purchase Price") and the aggregate Purchase Price for the Purchased Shares
shall be payable by the Subscriber by bank wire transfer to an escrow account
established by the Corporation with Haythe & Curley, Esqs. (Citibank, N.A., 111
Wall Street, New York, New York, ABA No. 021000089, Client Escrow Account No.
37399318) or by certified or bank cashiers check payable to the Corporation and
delivered to the Corporation c/o Haythe & Curley, 237 Park Avenue, New York, New
York 10017, Attention: Bradley P. Cost, Esq., in any case on or before the close
of business on the Closing Date.
(c) Upon the payment by the Subscriber to the Corporation of
the aggregate Purchase Price for the Purchased Shares, the Corporation shall
cause its transfer agent to deliver to the Subscriber a stock certificate
representing ownership by it of the shares of Common Stock purchased hereunder.
<PAGE> 2
2
2. REGISTRATION REQUIREMENTS.
(a) As promptly as practicable following the Closing
Date, but in any event within a period of 90 days following the Closing Date,
the Corporation shall prepare and file with the Securities and Exchange
Commission a Registration Statement on Form S-3 for the purpose of registering
the resale by the Subscriber (or the Subscriber's affiliates) of the Purchased
Shares under the Securities Act.
(b) The Corporation shall pay all Registration Expenses
(as defined below) in connection with any registration, qualification or
compliance hereunder. Registration Expenses shall mean all expenses incurred by
the Corporation in complying with the registration provisions herein described,
including, without limitation, all registration, qualification and filing fees,
printing expenses, escrow fees, fees and disbursements of counsel for the
Corporation, blue sky fees and expenses, and the expense of any special audits
incident to or required by any such registration.
(c) In the case of the registration effected by the
Corporation pursuant to these registration provisions, the Corporation will use
its best efforts to: (i) cause the Registration Statement to become effective
within one hundred fifty (150) days of the Closing Date, (ii) keep such
registration effective until the earlier of (a) the second anniversary of the
Closing Date, (b) such date as all of the Purchased Shares have been resold by
the Subscriber thereof, or (c) such time as all of the Purchased Shares held by
the Subscriber can be sold within a given three-month period without compliance
with the registration requirements of the Securities Act pursuant to Rule 144
under the Securities Act; (iii) prepare and file with the Securities and
Exchange Commission such amendments and supplements to the Registration
Statement and the prospectus used in connection with the Registration Statement
as may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by the Registration
Statement; (iv) furnish such number of prospectuses and other documents incident
thereto, including any amendment of or supplement to the prospectus, as the
Subscriber from time to time may reasonably request; (v) cause all Purchased
Shares registered as described herein to be listed on each securities exchange
and quoted on each quotation service on which similar securities issued by the
Corporation are then listed or quoted; (vi) provide a transfer agent and
registrar for all Purchased Shares registered pursuant to the Registration
Statement and a CUSIP number for all such Purchased Shares; (vii) otherwise use
its best efforts to comply with all applicable rules and regulations of the
Securities and Exchange Commission; and (viii) file the documents required of
the Corporation and otherwise use its best efforts to maintain requisite blue
sky clearance in (A) all jurisdictions in which any of the Purchased Shares are
originally sold and (B) all other states reasonably specified in writing by the
Subscriber, provided as to clause (B), however, that in no event shall the
Corporation be required to qualify to do business or consent to service of
process in any state in which it is not now so qualified or has not so
consented.
(d) The Corporation shall furnish to the Subscriber
upon request a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary in order to facilitate the public sale or
other disposition of all or any of the Purchased Shares held by the Subscriber.
(e) With a view to making available to the Subscriber
the benefits of Rule 144 promulgated under the Securities Act ("Rule 144") and
any other rule or regulation of the
<PAGE> 3
3
Securities and Exchange Commission that may at any time permit the Subscriber to
sell Purchased Shares to the public without registration or pursuant to a
registration on Form S-3, the Corporation covenants and agrees to: (i) make and
keep public information available, as those terms are understood and defined in
Rule 144 under the Securities Act, until the earlier of (A) the second
anniversary of the Closing Date or (B) such date as all of the Purchased Shares
shall have been resold by the Subscriber thereof; (ii) file with the SEC in a
timely manner all reports and other documents required of the Corporation under
the Securities Act and the Exchange Act; and (iii) furnish to the Subscriber
upon request, as long as the Subscriber owns any Purchased Shares, (A) a written
statement by the Corporation that it has complied with the reporting
requirements of the Securities Act and the Exchange Act, (B) a copy of the most
recent annual or quarterly report of the Corporation, and (C) such other
information as may be reasonably requested in order to avail the Subscriber of
any rule or regulation of the SEC that permits the selling of any such Purchased
Shares without registration or pursuant to such Form S-3.
(f) Indemnification and Contribution.
(i) The Corporation agrees to indemnify and
hold harmless Subscriber from and against any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) to which such
Subscriber may become subject (under the Securities Act or otherwise) insofar as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon, any untrue statement of a
material fact contained in the Registration Statement, on the effective date
thereof, or arise out of any failure by the Corporation to fulfill any
undertaking included in the Registration Statement, and the Corporation will, as
incurred, reimburse Subscriber for any legal or other expenses reasonably
incurred in investigating, defending or preparing to defend any such action,
proceeding or claim; provided, however, that the Corporation shall not be liable
in any such case to the extent that such loss, claim, damage or liability arises
out of or is based upon (a) an untrue statement made in such Registration
Statement in reliance upon and in conformity with written information furnished
to the Corporation by or on behalf of Subscriber specifically for use in
preparation of the Registration Statement, (b) the failure of Subscriber to
comply with the covenants and agreements contained in this Agreement, or (c) any
untrue statement in any Prospectus that is corrected in any subsequent
Prospectus that was delivered to the Subscriber prior to the pertinent sale or
sales by the Subscriber.
(ii) Subscriber agrees to indemnify and hold
harmless the Corporation from and against any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) to which the
Corporation may become subject (under the Securities Act or otherwise) insofar
as such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon (a) an untrue statement made in
such Registration Statement in reliance upon and in conformity with written
information furnished to the Corporation by or on behalf of Subscriber
specifically for use in preparation of the Registration Statement, provided,
however, that Subscriber shall not be liable in any such case for any untrue
statement included in any Prospectus which statement has been corrected, in
writing, by Subscriber and delivered to the Corporation before the sale from
which such loss occurred, (b) the failure of Subscriber to comply with the
covenants and agreements contained in this Agreement, or (c) any untrue
statement in any prospectus that is corrected in any subsequent Prospectus that
was delivered to the Subscriber prior to the pertinent sale or sales by the
<PAGE> 4
4
Subscriber. Notwithstanding the foregoing, in no event shall the Subscriber to
liable to the Corporation under this Section 2 for any amounts in excess of the
net proceeds received by the Subscriber from the sale of the Purchased Shares
pursuant to the Registration Statement.
(iii) Promptly after receipt by any
indemnified person of a notice of a claim or the beginning of any action in
respect of which indemnity is to be sought against an indemnifying person
pursuant to this Section 2, such indemnified person shall notify the
indemnifying person in writing of such claim or of the commencement of such
action, and, subject to the provisions hereinafter stated, in case any such
action shall be brought against an indemnified person and the indemnifying
person shall have been notified thereof, the indemnifying person shall be
entitled to participate therein, and, to the extent that it shall wish, to
assume the defense thereof, with counsel reasonably satisfactory to the
indemnified person. After notice from the indemnifying person to such
indemnified person of the indemnifying person's election to assume the defense
thereof, the indemnifying person shall not be liable to such indemnified person
for any legal expenses subsequently incurred by such indemnified person in
connection with the defense thereof, provided, however, that if there exists or
shall exist a conflict of interest that would make it inappropriate in the
reasonable judgment of the indemnified person for the same counsel to represent
both the indemnified person and such indemnifying person or any affiliate or
associate thereof, the indemnified person shall be entitled to retain its own
counsel at the expense of such indemnifying person.
(iv) If the indemnification provided for in
this Section 2 is unavailable to or insufficient to hold harmless an indemnified
party under subsection (i) or (ii) above in respect of any losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) referred
to therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative fault of the Corporation on the one hand and the
Subscriber on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Corporation on the one hand or the Subscriber on the other and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Corporation and the Subscriber agree
that it would not be just and equitable if contribution pursuant to this
subsection (iv) were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this subsection (iv). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, or liabilities (or actions in
respect thereof) referred to above in this subsection (iv) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (iv), Subscriber shall not be
required to contribute any amount in excess of the amount by which the net
amount received by the Subscriber from the sale of the Purchased Shares to which
such loss relates exceeds the amount of any damages which Subscriber has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
<PAGE> 5
5
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(v) The obligations of the Corporation and
the Subscriber under this Section 2 shall be in addition to any liability which
the Corporation and the Subscriber may otherwise have.
3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. The Corporation
hereby represents and warrants to the Subscriber, as of the date hereof and as
of the Closing Date, as follows:
(a) CORPORATE EXISTENCE. Each of the Corporation and its
Subsidiaries: (i) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization; (ii) has all
requisite corporate power and corporate authority, and all material governmental
licenses, authorizations, consents and approvals necessary to own its assets and
carry on its business as now being conducted; and (iii) is qualified to do
business and is in good standing in all jurisdictions in which the nature of the
business conducted by it makes such qualification necessary and where failure so
to qualify would (either individually or in the aggregate) have a Material
Adverse Effect.
(b) NO BREACH. None of the execution and delivery of this
Agreement by the Corporation, the consummation by the Corporation of the
transactions herein contemplated or compliance by the Corporation with the terms
and provisions hereof will conflict with or result in a breach of, or require
any consent under, or result in the creation or imposition of any lien pursuant
to the terms of, the certificate of incorporation or by-laws of the Corporation,
or any law, regulation, order, writ, injunction or decree of any court or
governmental authority or agency, in each case which is binding on the
Corporation or any of its Subsidiaries, or any agreement or instrument to which
the Corporation or any of its Subsidiaries is a party or by which any of them or
any of their property is bound or to which any of them is subject, or constitute
a default under any such agreement or instrument. The foregoing representation,
insofar as relating to the Securities Act, is made in reliance upon the
representations and warranties of the Subscriber and the Other Investors set
forth in Section 3(e) hereof and Section 3(e) of the Other Investors respective
subscription agreements.
(c) AUTHORIZATION AND ENFORCEABILITY. The Corporation has all
necessary corporate power, authority and legal right to execute, deliver and
perform its obligations under this Agreement; the execution, delivery and
performance by the Corporation of this Agreement has been duly authorized by all
necessary corporate action on its part (including, without limitation, any
required stockholder approvals); and this Agreement has been duly authorized,
executed and delivered by the Corporation and this Agreement constitutes the
legal, valid and binding obligation of the Corporation, enforceable against the
Corporation in accordance with its terms, except as such enforceability may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar
laws of general applicability affecting the enforcement of creditors' rights and
(ii) the application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(d) APPROVALS. Other than as contemplated under Section 2
hereof or pursuant to any filing with the Nasdaq Stock Market following the
Closing Date, no authorizations,
<PAGE> 6
6
approvals or consents of, and no filings or registrations with, any governmental
or regulatory authority or agency, or any securities exchange, are necessary for
the execution, delivery or performance by the Corporation of this Agreement. The
foregoing representation, insofar as relating to the Securities Act, is made in
reliance upon the representations and warranties of the Subscriber and the Other
Investors set forth in Section 3(e) hereof and Section 3(e) of the Other
Investors respective subscription agreements.
(e) INVESTMENT COMPANY ACT. Neither the Corporation nor any of
its Subsidiaries is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
(f) PUBLIC UTILITY HOLDING COMPANY ACT. Neither the
Corporation nor any of its Subsidiaries is a "holding company", or an
"affiliate" of a "holding company" or a "subsidiary company" of a "holding
company", within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
(g) CAPITALIZATION. As of the date hereof (and without giving
effect to the sale of the Purchased Shares hereunder or the other matters
referred to in Section 4(e)(vii) hereof), the authorized capital stock of the
Corporation consists of 30,000,000 shares of Common Stock, of which 10,877,982
shares of Common Stock are duly and validly issued and outstanding; 800,000
shares of Class A Preferred Stock, no shares of which are issued or outstanding;
and 2,000,000 shares of Class B Preferred Stock, of which the following are
authorized, and duly and validly issued and outstanding: 100,000 shares of Class
B Convertible Redeemable Preferred Stock, Series 1997 authorized, no shares of
which are issued and outstanding, 4,000 shares of Class B Redeemable Preferred
Stock, Series 1997-A authorized, of which 4,000 shares are duly and validly
issued and outstanding (the "Preferred Stock 1997-A"), 152,321 shares of Class B
Convertible Preferred Stock, Series C authorized, of which 142,486 shares are
duly and validly issued and outstanding, and 100,000 shares of Class B
Convertible Preferred Stock, Series 1996 authorized, of which 100,000 shares are
duly and validly issued and outstanding, and all such shares are fully paid and
nonassessable. All outstanding shares of the Corporation's capital stock have
been issued in compliance with all federal and state securities laws, and were
not issued in violation of or subject to any pre-emptive rights or other rights
to subscribe for or purchase securities of the Corporation. When issued in
accordance with this Agreement, the Purchased Shares will be duly and validly
issued, fully paid and non-assessable. The issuance and sale of the Purchased
Shares is not subject to the pre-emptive or other similar rights of the
stockholders of the Corporation or any liens or encumbrances.
(h) DISCLOSURE. Each of the reports filed by the Corporation
with the Securities and Exchange Commission under the Exchange Act, and the
Corporation's October 1998 Confidential Memorandum (together with all Appendices
and Exhibits thereto and all Appendices and Exhibits which are incorporated by
reference, the "Confidential Memorandum") did not, at the time each such report
was filed or, in the case of the Confidential Memorandum, as of the date
thereof, contain any untrue statement of material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(i) In connection with the private placement of shares of
Common Stock contemplated by the Confidential Memorandum, including, without
limitation, the shares of
<PAGE> 7
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Common Stock being offered to the Subscriber and the Other Investors, no more
than 25 investors (each of which is an accredited investor) have been offered
shares of Common Stock by the Corporation and/or any representative, advisor,
agent or other person acting on behalf of the Corporation. Assuming the accuracy
of the representations and warranties of the Subscriber and the Other Investors
set forth in this Agreement and in the subscription agreements of the Other
Investors, the offer, sale and issuance of the Purchased Shares are exempt from
the registration requirements of Section 5 of the Securities Act.
4. REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBER. The Subscriber
hereby represents and warrants to the Corporation, as of the date hereof, as
follows:
(a) ENFORCEABILITY. This Agreement constitutes the legal,
valid and binding obligation of the Subscriber, enforceable against the
Subscriber in accordance with its terms, except as such enforceability may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar
laws of general applicability affecting the enforcement of creditors' rights and
(ii) the application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(b) NO BREACH. None of the execution and delivery of this
Agreement by the Subscriber, the consummation by the Subscriber of the
transactions herein contemplated or compliance by the Subscriber with the terms
and provisions hereof will conflict with or result in a breach of, or require
any consent under any law, regulation, order, writ, injunction or decree of any
court or governmental authority or agency, in each case which is binding on the
Subscriber or any agreement or instrument to which the Subscriber is a party or
by which he or any of his Property is bound or to which any of them is subject,
constitute a default under any such agreement or instrument.
(c) INVESTMENT REPRESENTATIONS. (i) In evaluating the
suitability of an investment in the Corporation, the Subscriber has not relied
upon any representation or warranty (oral or written) (except those expressly
set forth in Section 3 hereof) of any Person. The Subscriber agrees that except
for the representations and warranties made by the Corporation expressly set
forth in Section 3 of this Agreement (as such representations and warranties are
modified by the Schedules hereto), neither the Corporation nor any affiliate
thereof has made and shall not be construed as having made to the Subscriber or
to any representative or affiliate thereof any representation or warranty of any
kind. Without limiting the generality of the foregoing, the Subscriber agrees
that neither the Corporation nor any affiliate thereof makes or has made any
representation or warranty to the Subscriber or to any representative or
affiliate thereof with respect to:
(A) any projections, estimates or budgets heretofore
delivered to or made available to the Subscriber or its
counsel, accountants, advisors, lenders, representatives or
affiliates of future revenues, expenses or expenditures,
future or pro forma results of operations (or any component
thereof), future or pro forma cash flows (or any component
thereof) or future or pro forma financial condition (or any
component thereof) of the Corporation and its Subsidiaries (or
any of them) or the future or pro forma business, operations
or affairs of the Corporation and its Subsidiaries (or any of
them);
<PAGE> 8
8
(B) any future or pro forma rates of return in
respect of the Subscriber's investment in the Purchased Shares
or the future or pro forma value of such Purchased Shares; and
(C) any other information, statement or documents
heretofore delivered to or made available to the Subscriber or
its counsel, accountants, advisors, lenders, representatives
or affiliates with respect to the Corporation and its
Subsidiaries (or any of them) or the business, operations or
affairs of the Corporation and its Subsidiaries (or any of
them), except to the extent and as expressly covered by a
representation and warranty contained in Section 3 hereof.
(ii) The Subscriber understands that the Corporation
proposes to issue to it the Purchased Shares in a private placement transaction
exempt from the registration requirements of the Securities Act; that, as a
result, the Purchased Shares will be restricted securities for purposes of the
Federal securities laws; that for such purpose the Corporation will rely upon
the representations, warranties, covenants and agreements made by the Subscriber
and contained herein; and that such exemption from registration is not available
unless such representations and warranties are correct, and such covenants and
agreements are performed in accordance with this Agreement.
(iii) The Subscriber is familiar with the provisions
of Rule 144 of the Securities Act and the limitations upon the availability and
applicability of such Rule, including with respect to the Purchased Shares.
(iv) The Subscriber is a sophisticated investor
familiar with the type of risks inherent in the acquisition of restricted
securities such as the Purchased Shares and the Subscriber's financial position
is such that it can afford to retain such shares for an indefinite period of
time without realizing any direct or indirect cash return on its investment. The
Subscriber is an "accredited investor" as such term is defined in Rule 501 under
the Securities Act.
(v) The Subscriber has such knowledge and experience
in financial, tax and business matters as to enable it to utilize the
information made available to it in connection with the issuance of the
Purchased Shares and to evaluate the merits and risks of an investment in such
shares and to make an informed investment decision with respect thereto.
(vi) The Subscriber is acquiring the Purchased Shares
solely for its own account for investment and not with a present view to, or for
sale in connection with, the distribution thereof within the meaning of the
Securities Act.
(vii) The Subscriber understands that (a) the
Corporation proposes to effect an exchange (the "Exchange") in which it will
issue Common Stock, at the Purchase Price per Purchased Share, in exchange for
(1) all of the issued and outstanding shares of its Preferred Stock 1997-A, with
an aggregate liquidation preference of $4 million (and all accrued and unpaid
dividends thereon on the date of the exchange) and (2) the retirement of $1
million in principal amount of certain subordinated debt, all held by corporate
affiliates of Paul J. Ramsay,
<PAGE> 9
9
the Chairman of the Corporation (the "Affiliates"), (b) the Corporation proposes
to effect one or more additional private placements of its Common Stock to
investors other than the Subscriber, the Affiliates and other than Luis E.
Lamela, the Chief Executive Officer of the Corporation (collectively, the "Other
Investors"), (c) in connection with the Exchange and the private placements
contemplated above, the Corporation intends to amend its Rights Agreement as set
forth in Exhibit A hereto and (d) the Corporation has received commitments from
one of the Affiliates and from Mr. Lamela, to purchase an aggregate of $2.5
million and $1.0 million of shares of Common Stock (valued at the Purchase
Price), respectively, and that such Affiliate commitment (but not Mr. Lamela's)
shall be automatically reduced (but not below $0) by an amount equal to the
aggregate dollar value of shares of Common Stock (valued at the Purchase Price)
actually purchased by the Subscriber hereunder and by the Other Investors.
5. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; CERTAIN LIMITATIONS ON
DAMAGES. (a) The representations and warranties of the Corporation contained in
Section 3 hereof and the representations and warranties of the Subscriber
contained in Section 4 hereof shall survive indefinitely.
(b) The aggregate liability of the Corporation for any and all
damage, loss, liability, cost and expense (collectively, "Damages") arising out
of any and all breaches by the Corporation of the representations and warranties
set forth in Section 3 under this Agreement is, and shall be, limited to an
aggregate amount (the "Liability Amount") equal to the Purchase Price, and the
Subscriber agrees not to seek any Damages in excess of the Liability Amount for
any and all Damages sustained or incurred by the Subscriber arising out of any
and all breaches by the Corporation of any representation or warranty set forth
in Section 3 under this Agreement. The aggregate liability of the Subscriber for
any and all Damages arising out of any and all breaches by the Subscriber of the
representations and warranties set forth in Section 4 under this Agreement is,
and shall be, limited to the Liability Amount, and the Corporation agrees not to
seek any Damages in excess of the Liability Amount for any and all Damages
sustained or incurred by the Corporation arising out of any and all breaches by
the Subscriber of any representation or warranty set forth in Section 4 under
this Agreement. This Section 5(b) shall not apply to Section 2(f) hereof.
6. MISCELLANEOUS. (a) This Agreement contains the entire agreement
between the Corporation and the Subscriber with respect to the transactions
contemplated by this Agreement and supersede all prior arrangements or
understandings with respect thereto.
(b) All notices or other communications hereunder shall be in
writing and sufficient if delivered personally or sent by registered or
certified mail, postage prepaid, addressed to the Corporation at One Alhambra
Plaza, Suite 750, Coral Gables, Florida 38134, Fax: 305-567-1169, Attention:
Chief Executive Officer (with a copy to Haythe & Curley, 237 Park Avenue, New
York, New York 10017, Fax: 212-682-0200, Attention: Bradley P. Cost, Esq.) and
to the Subscriber at the address or facsimile set forth under its name on the
signature page to this Agreement. All such notices and communications shall be
deemed to have been duly given at the time delivered by hand, if personally
delivered, at the time received by fax, at the time received from a recognized
overnight carrier service, or three (3) business days after being deposited in
the mail, if sent by registered or certified mail, return receipt requested. Any
<PAGE> 10
10
party hereto may by notice change the address to which notices or other
communications to such party are to be delivered or mailed.
(c) This Agreement may be executed in counterparts, including
by fax, each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
(d) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware (without regard to the
conflicts of law rules thereof).
(e) This Agreement shall not be assignable without the prior
written consent of the other party hereto, and any purported assignment by any
party without the prior written consent of the other party hereto shall be void.
(f) This Agreement shall not create benefits on behalf of any
third party, and this Agreement shall be effective only as among the parties
hereto, their respective successors and permitted assigns.
(g) Any term or provision of this Agreement may be waived at
any time by the party which is entitled to the benefits thereof, and any term or
provision of this Agreement may be amended or supplemented at any time by the
consent of the Corporation and the Subscriber, except that any waiver of any
term or condition, or any amendment or supplementation, of this Agreement shall
be effective only if in writing.
(h) The parties hereto agree that this Agreement is the
product of negotiations between sophisticated parties, each of whom was
represented by counsel, and each of whom had an opportunity to participate in,
and did participate in, the drafting of each provision hereof. Accordingly,
ambiguities in this Agreement, if any, shall not be construed strictly or in
favor of or against any party hereto but rather shall be given a fair and
reasonable construction without regard to the rule of contra proferentum.
(i) The parties hereto agree that each party shall bear such
party's own expenses in connection with this Agreement and the transactions
contemplated hereby.
(j) In the event that the Subscriber exercises its Right to
purchase from the Corporation the Purchased Shares in accordance with Section
1(a) hereof, the Corporation shall cause the Subscriber to receive an opinion of
Haythe & Curley, counsel for the Corporation, in the form attached hereto as
EXHIBIT B, within two (2) business days following the Closing Date, such opinion
to be dated as of the Closing Date.
7. DEFINITIONS. As used herein, the following terms shall have the
following meanings (all terms defined in this Section 7 or in other provisions
of this Agreement in the singular to have the same meanings when used in the
plural and VICE VERSA):
"Agreement" shall have the meaning set forth in the recitals
hereto.
"Class B Convertible Redeemable Preferred Stock, Series 1997"
shall mean the class B convertible redeemable preferred stock, par value $1.00
per share, of the Corporation.
<PAGE> 11
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"Class B Redeemable Preferred Stock, Series 1997-A" shall mean
the class B redeemable preferred stock, par value $1.00 per share, of the
Corporation.
"Class B Convertible Preferred Stock, Series C" shall mean the
class B convertible preferred stock, par value $1.00 per share, of the
Corporation.
"Class B Convertible Preferred Stock, Series 1996" shall mean
the class B convertible preferred stock, par value $1.00 per share, of the
Corporation.
"Common Stock" shall mean the Common Stock, par value $.01 per
share, of the Corporation.
"Corporation" shall have the meaning set forth in the recitals
hereto.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Liability Amount" shall have the meaning set forth in Section
5(b) hereof.
"Material Adverse Effect" shall mean a material adverse effect
on the Properties, results of operation or condition (financial or otherwise) of
the Corporation and its Subsidiaries, taken as a whole.
"Person" shall mean any individual, corporation, company,
voluntary association, partnership, joint venture, trust, unincorporated
organization or government (or any agency, instrumentality or political
subdivision thereof).
"Preferred Stock" shall mean the Class B Convertible
Redeemable Preferred Stock, Series 1997, the Class B Redeemable Preferred Stock,
Series 1997-A, the Class B Convertible Preferred Stock, Series C, and the Class
B convertible Preferred Stock, Series 1996.
"Property" shall mean any right or interest in or to property
of any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Purchase Price" shall have the meaning set forth in
Section 1(b) hereto.
"Purchased Shares" shall have the meaning set forth in the
recitals hereto.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Subscriber" shall have the meaning set forth in the recitals
hereto.
"Subsidiary" shall mean, with respect to any Person, any
corporation, partnership or other entity of which at least a majority of the
securities or other ownership interests having by the terms thereof ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions of such corporation, partnership or other entity
(irrespective of whether or not at the time securities or other ownership
interests of any other class or classes of such corporation, partnership or
other entity shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned or controlled by
such Person or one or more Subsidiaries of such Person or by such Person and one
or more Subsidiaries of such Person.
* * *
<PAGE> 12
12
IN WITNESS WHEREOF, each of the parties hereto has executed
this Agreement on the date first above written.
RAMSAY HEALTH CARE, INC.
By
------------------------------
Name:
Title:
SUBSCRIBER:
--------------------------------
Name: Aaron Beam
Title:
Aggregate
Purchase Price: $10,000
Address: 5182 Greystone Way
Birmingham, Alabama 35242
Fax: 205-980-1355
<PAGE> 1
EXHIBIT 4.20
SUBSCRIPTION AGREEMENT dated as of October 26, 1998 (this
"Agreement") between RAMSAY HEALTH CARE, INC., a Delaware corporation (the
"Corporation"), and Sanford R. Robertson (the "Subscriber").
W I T N E S S E T H :
WHEREAS, subject to the terms and conditions hereof, the
Subscriber desires to have the right to subscribe for and purchase from the
Corporation the aggregate dollar value (determined at the Purchase Price per
Purchased Share as determined herein) of shares of Common Stock set forth
opposite its name on the signature page hereof (the "Purchased Shares");
NOW, THEREFORE, in consideration of the mutual benefits to be
derived and the representations and warranties, conditions and promises herein
contained, and intending to be legally bound hereby, the Corporation and the
Subscriber hereby agree as follows:
1. PURCHASE OF PURCHASED SHARES. (a) Subject to the terms and
provisions of this Agreement, the Corporation hereby grants the Subscriber the
right (the "Right") to purchase from the Corporation the Purchased Shares. The
Right shall be exercised, if at all, on or before the close of business (New
York City time) on October 30, 1998 (the "Closing Date") by written notice by
the Subscriber to the Corporation stating that the Subscriber is exercising the
Right to purchase the Purchased Shares pursuant to this Section 1(a) (which
notice may be given by fax as set forth in Section 6(b) hereto) and by delivery
of the aggregate Purchase Price for the Purchased Shares as set forth in Section
1(b) below. In the event that the Right is not exercised as aforesaid, the Right
shall automatically terminate and shall be of no further force or effect and
neither party hereto shall have any rights, entitlements or obligations
hereunder.
(b) The purchase price per share for the Purchased Shares to
be purchased by the Subscriber shall be the closing bid price per share of
Common Stock reported on the Nasdaq Stock Market on the date hereof (the
"Purchase Price") and the aggregate Purchase Price for the Purchased Shares
shall be payable by the Subscriber by bank wire transfer to an escrow account
established by the Corporation with Haythe & Curley, Esqs. (Citibank, N.A., 111
Wall Street, New York, New York, ABA No. 021000089, Client Escrow Account No.
37399318) or by certified or bank cashiers check payable to the Corporation and
delivered to the Corporation c/o Haythe & Curley, 237 Park Avenue, New York, New
York 10017, Attention: Bradley P. Cost, Esq., in any case on or before the close
of business on the Closing Date.
(c) Upon the payment by the Subscriber to the Corporation of
the aggregate Purchase Price for the Purchased Shares, the Corporation shall
cause its transfer agent to deliver to the Subscriber a stock certificate
representing ownership by it of the shares of Common Stock purchased hereunder.
<PAGE> 2
2
2. REGISTRATION REQUIREMENTS.
(a) As promptly as practicable following the Closing
Date, but in any event within a period of 90 days following the Closing Date,
the Corporation shall prepare and file with the Securities and Exchange
Commission a Registration Statement on Form S-3 for the purpose of registering
the resale by the Subscriber (or the Subscriber's affiliates) of the Purchased
Shares under the Securities Act.
(b) The Corporation shall pay all Registration Expenses
(as defined below) in connection with any registration, qualification or
compliance hereunder. Registration Expenses shall mean all expenses incurred by
the Corporation in complying with the registration provisions herein described,
including, without limitation, all registration, qualification and filing fees,
printing expenses, escrow fees, fees and disbursements of counsel for the
Corporation, blue sky fees and expenses, and the expense of any special audits
incident to or required by any such registration.
(c) In the case of the registration effected by the
Corporation pursuant to these registration provisions, the Corporation will use
its best efforts to: (i) cause the Registration Statement to become effective
within one hundred fifty (150) days of the Closing Date, (ii) keep such
registration effective until the earlier of (a) the second anniversary of the
Closing Date, (b) such date as all of the Purchased Shares have been resold by
the Subscriber thereof, or (c) such time as all of the Purchased Shares held by
the Subscriber can be sold within a given three-month period without compliance
with the registration requirements of the Securities Act pursuant to Rule 144
under the Securities Act; (iii) prepare and file with the Securities and
Exchange Commission such amendments and supplements to the Registration
Statement and the prospectus used in connection with the Registration Statement
as may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by the Registration
Statement; (iv) furnish such number of prospectuses and other documents incident
thereto, including any amendment of or supplement to the prospectus, as the
Subscriber from time to time may reasonably request; (v) cause all Purchased
Shares registered as described herein to be listed on each securities exchange
and quoted on each quotation service on which similar securities issued by the
Corporation are then listed or quoted; (vi) provide a transfer agent and
registrar for all Purchased Shares registered pursuant to the Registration
Statement and a CUSIP number for all such Purchased Shares; (vii) otherwise use
its best efforts to comply with all applicable rules and regulations of the
Securities and Exchange Commission; and (viii) file the documents required of
the Corporation and otherwise use its best efforts to maintain requisite blue
sky clearance in (A) all jurisdictions in which any of the Purchased Shares are
originally sold and (B) all other states reasonably specified in writing by the
Subscriber, provided as to clause (B), however, that in no event shall the
Corporation be required to qualify to do business or consent to service of
process in any state in which it is not now so qualified or has not so
consented.
(d) The Corporation shall furnish to the Subscriber
upon request a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary in order to facilitate the public sale or
other disposition of all or any of the Purchased Shares held by the Subscriber.
(e) With a view to making available to the Subscriber
the benefits of Rule 144 promulgated under the Securities Act ("Rule 144") and
any other rule or regulation of the
<PAGE> 3
3
Securities and Exchange Commission that may at any time permit the Subscriber to
sell Purchased Shares to the public without registration or pursuant to a
registration on Form S-3, the Corporation covenants and agrees to: (i) make and
keep public information available, as those terms are understood and defined in
Rule 144 under the Securities Act, until the earlier of (A) the second
anniversary of the Closing Date or (B) such date as all of the Purchased Shares
shall have been resold by the Subscriber thereof; (ii) file with the SEC in a
timely manner all reports and other documents required of the Corporation under
the Securities Act and the Exchange Act; and (iii) furnish to the Subscriber
upon request, as long as the Subscriber owns any Purchased Shares, (A) a written
statement by the Corporation that it has complied with the reporting
requirements of the Securities Act and the Exchange Act, (B) a copy of the most
recent annual or quarterly report of the Corporation, and (C) such other
information as may be reasonably requested in order to avail the Subscriber of
any rule or regulation of the SEC that permits the selling of any such Purchased
Shares without registration or pursuant to such Form S-3.
(f) Indemnification and Contribution.
(i) The Corporation agrees to indemnify and
hold harmless Subscriber from and against any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) to which such
Subscriber may become subject (under the Securities Act or otherwise) insofar as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon, any untrue statement of a
material fact contained in the Registration Statement, on the effective date
thereof, or arise out of any failure by the Corporation to fulfill any
undertaking included in the Registration Statement, and the Corporation will, as
incurred, reimburse Subscriber for any legal or other expenses reasonably
incurred in investigating, defending or preparing to defend any such action,
proceeding or claim; provided, however, that the Corporation shall not be liable
in any such case to the extent that such loss, claim, damage or liability arises
out of or is based upon (a) an untrue statement made in such Registration
Statement in reliance upon and in conformity with written information furnished
to the Corporation by or on behalf of Subscriber specifically for use in
preparation of the Registration Statement, (b) the failure of Subscriber to
comply with the covenants and agreements contained in this Agreement, or (c) any
untrue statement in any Prospectus that is corrected in any subsequent
Prospectus that was delivered to the Subscriber prior to the pertinent sale or
sales by the Subscriber.
(ii) Subscriber agrees to indemnify and hold
harmless the Corporation from and against any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) to which the
Corporation may become subject (under the Securities Act or otherwise) insofar
as such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon (a) an untrue statement made in
such Registration Statement in reliance upon and in conformity with written
information furnished to the Corporation by or on behalf of Subscriber
specifically for use in preparation of the Registration Statement, provided,
however, that Subscriber shall not be liable in any such case for any untrue
statement included in any Prospectus which statement has been corrected, in
writing, by Subscriber and delivered to the Corporation before the sale from
which such loss occurred, (b) the failure of Subscriber to comply with the
covenants and agreements contained in this Agreement, or (c) any untrue
statement in any prospectus that is corrected in any subsequent Prospectus that
was delivered to the Subscriber prior to the pertinent sale or sales by the
<PAGE> 4
4
Subscriber. Notwithstanding the foregoing, in no event shall the Subscriber to
liable to the Corporation under this Section 2 for any amounts in excess of the
net proceeds received by the Subscriber from the sale of the Purchased Shares
pursuant to the Registration Statement.
(iii) Promptly after receipt by any
indemnified person of a notice of a claim or the beginning of any action in
respect of which indemnity is to be sought against an indemnifying person
pursuant to this Section 2, such indemnified person shall notify the
indemnifying person in writing of such claim or of the commencement of such
action, and, subject to the provisions hereinafter stated, in case any such
action shall be brought against an indemnified person and the indemnifying
person shall have been notified thereof, the indemnifying person shall be
entitled to participate therein, and, to the extent that it shall wish, to
assume the defense thereof, with counsel reasonably satisfactory to the
indemnified person. After notice from the indemnifying person to such
indemnified person of the indemnifying person's election to assume the defense
thereof, the indemnifying person shall not be liable to such indemnified person
for any legal expenses subsequently incurred by such indemnified person in
connection with the defense thereof, provided, however, that if there exists or
shall exist a conflict of interest that would make it inappropriate in the
reasonable judgment of the indemnified person for the same counsel to represent
both the indemnified person and such indemnifying person or any affiliate or
associate thereof, the indemnified person shall be entitled to retain its own
counsel at the expense of such indemnifying person.
(iv) If the indemnification provided for in
this Section 2 is unavailable to or insufficient to hold harmless an indemnified
party under subsection (i) or (ii) above in respect of any losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) referred
to therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative fault of the Corporation on the one hand and the
Subscriber on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Corporation on the one hand or the Subscriber on the other and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Corporation and the Subscriber agree
that it would not be just and equitable if contribution pursuant to this
subsection (iv) were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this subsection (iv). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, or liabilities (or actions in
respect thereof) referred to above in this subsection (iv) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (iv), Subscriber shall not be
required to contribute any amount in excess of the amount by which the net
amount received by the Subscriber from the sale of the Purchased Shares to which
such loss relates exceeds the amount of any damages which Subscriber has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
<PAGE> 5
5
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(v) The obligations of the Corporation and
the Subscriber under this Section 2 shall be in addition to any liability which
the Corporation and the Subscriber may otherwise have.
3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. The Corporation
hereby represents and warrants to the Subscriber, as of the date hereof and as
of the Closing Date, as follows:
(a) CORPORATE EXISTENCE. Each of the Corporation and its
Subsidiaries: (i) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization; (ii) has all
requisite corporate power and corporate authority, and all material governmental
licenses, authorizations, consents and approvals necessary to own its assets and
carry on its business as now being conducted; and (iii) is qualified to do
business and is in good standing in all jurisdictions in which the nature of the
business conducted by it makes such qualification necessary and where failure so
to qualify would (either individually or in the aggregate) have a Material
Adverse Effect.
(b) NO BREACH. None of the execution and delivery of this
Agreement by the Corporation, the consummation by the Corporation of the
transactions herein contemplated or compliance by the Corporation with the terms
and provisions hereof will conflict with or result in a breach of, or require
any consent under, or result in the creation or imposition of any lien pursuant
to the terms of, the certificate of incorporation or by-laws of the Corporation,
or any law, regulation, order, writ, injunction or decree of any court or
governmental authority or agency, in each case which is binding on the
Corporation or any of its Subsidiaries, or any agreement or instrument to which
the Corporation or any of its Subsidiaries is a party or by which any of them or
any of their property is bound or to which any of them is subject, or constitute
a default under any such agreement or instrument. The foregoing representation,
insofar as relating to the Securities Act, is made in reliance upon the
representations and warranties of the Subscriber and the Other Investors set
forth in Section 3(e) hereof and Section 3(e) of the Other Investors respective
subscription agreements.
(c) AUTHORIZATION AND ENFORCEABILITY. The Corporation has all
necessary corporate power, authority and legal right to execute, deliver and
perform its obligations under this Agreement; the execution, delivery and
performance by the Corporation of this Agreement has been duly authorized by all
necessary corporate action on its part (including, without limitation, any
required stockholder approvals); and this Agreement has been duly authorized,
executed and delivered by the Corporation and this Agreement constitutes the
legal, valid and binding obligation of the Corporation, enforceable against the
Corporation in accordance with its terms, except as such enforceability may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar
laws of general applicability affecting the enforcement of creditors' rights and
(ii) the application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(d) APPROVALS. Other than as contemplated under Section 2
hereof or pursuant to any filing with the Nasdaq Stock Market following the
Closing Date, no authorizations,
<PAGE> 6
6
approvals or consents of, and no filings or registrations with, any governmental
or regulatory authority or agency, or any securities exchange, are necessary for
the execution, delivery or performance by the Corporation of this Agreement. The
foregoing representation, insofar as relating to the Securities Act, is made in
reliance upon the representations and warranties of the Subscriber and the Other
Investors set forth in Section 3(e) hereof and Section 3(e) of the Other
Investors respective subscription agreements.
(e) INVESTMENT COMPANY ACT. Neither the Corporation nor any of
its Subsidiaries is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
(f) PUBLIC UTILITY HOLDING COMPANY ACT. Neither the
Corporation nor any of its Subsidiaries is a "holding company", or an
"affiliate" of a "holding company" or a "subsidiary company" of a "holding
company", within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
(g) CAPITALIZATION. As of the date hereof (and without giving
effect to the sale of the Purchased Shares hereunder or the other matters
referred to in Section 4(e)(vii) hereof), the authorized capital stock of the
Corporation consists of 30,000,000 shares of Common Stock, of which 10,877,982
shares of Common Stock are duly and validly issued and outstanding; 800,000
shares of Class A Preferred Stock, no shares of which are issued or outstanding;
and 2,000,000 shares of Class B Preferred Stock, of which the following are
authorized, and duly and validly issued and outstanding: 100,000 shares of Class
B Convertible Redeemable Preferred Stock, Series 1997 authorized, no shares of
which are issued and outstanding, 4,000 shares of Class B Redeemable Preferred
Stock, Series 1997-A authorized, of which 4,000 shares are duly and validly
issued and outstanding (the "Preferred Stock 1997-A"), 152,321 shares of Class B
Convertible Preferred Stock, Series C authorized, of which 142,486 shares are
duly and validly issued and outstanding, and 100,000 shares of Class B
Convertible Preferred Stock, Series 1996 authorized, of which 100,000 shares are
duly and validly issued and outstanding, and all such shares are fully paid and
nonassessable. All outstanding shares of the Corporation's capital stock have
been issued in compliance with all federal and state securities laws, and were
not issued in violation of or subject to any pre-emptive rights or other rights
to subscribe for or purchase securities of the Corporation. When issued in
accordance with this Agreement, the Purchased Shares will be duly and validly
issued, fully paid and non-assessable. The issuance and sale of the Purchased
Shares is not subject to the pre-emptive or other similar rights of the
stockholders of the Corporation or any liens or encumbrances.
(h) DISCLOSURE. Each of the reports filed by the Corporation
with the Securities and Exchange Commission under the Exchange Act, and the
Corporation's October 1998 Confidential Memorandum (together with all Appendices
and Exhibits thereto and all Appendices and Exhibits which are incorporated by
reference, the "Confidential Memorandum") did not, at the time each such report
was filed or, in the case of the Confidential Memorandum, as of the date
thereof, contain any untrue statement of material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(i) In connection with the private placement of shares of
Common Stock contemplated by the Confidential Memorandum, including, without
limitation, the shares of
<PAGE> 7
7
Common Stock being offered to the Subscriber and the Other Investors, no more
than 25 investors (each of which is an accredited investor) have been offered
shares of Common Stock by the Corporation and/or any representative, advisor,
agent or other person acting on behalf of the Corporation. Assuming the accuracy
of the representations and warranties of the Subscriber and the Other Investors
set forth in this Agreement and in the subscription agreements of the Other
Investors, the offer, sale and issuance of the Purchased Shares are exempt from
the registration requirements of Section 5 of the Securities Act.
4. REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBER. The Subscriber
hereby represents and warrants to the Corporation, as of the date hereof, as
follows:
(a) ENFORCEABILITY. This Agreement constitutes the legal,
valid and binding obligation of the Subscriber, enforceable against the
Subscriber in accordance with its terms, except as such enforceability may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar
laws of general applicability affecting the enforcement of creditors' rights and
(ii) the application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(b) NO BREACH. None of the execution and delivery of this
Agreement by the Subscriber, the consummation by the Subscriber of the
transactions herein contemplated or compliance by the Subscriber with the terms
and provisions hereof will conflict with or result in a breach of, or require
any consent under any law, regulation, order, writ, injunction or decree of any
court or governmental authority or agency, in each case which is binding on the
Subscriber or any agreement or instrument to which the Subscriber is a party or
by which he or any of his Property is bound or to which any of them is subject,
constitute a default under any such agreement or instrument.
(c) INVESTMENT REPRESENTATIONS. (i) In evaluating the
suitability of an investment in the Corporation, the Subscriber has not relied
upon any representation or warranty (oral or written) (except those expressly
set forth in Section 3 hereof) of any Person. The Subscriber agrees that except
for the representations and warranties made by the Corporation expressly set
forth in Section 3 of this Agreement (as such representations and warranties are
modified by the Schedules hereto), neither the Corporation nor any affiliate
thereof has made and shall not be construed as having made to the Subscriber or
to any representative or affiliate thereof any representation or warranty of any
kind. Without limiting the generality of the foregoing, the Subscriber agrees
that neither the Corporation nor any affiliate thereof makes or has made any
representation or warranty to the Subscriber or to any representative or
affiliate thereof with respect to:
(A) any projections, estimates or budgets heretofore
delivered to or made available to the Subscriber or its
counsel, accountants, advisors, lenders, representatives or
affiliates of future revenues, expenses or expenditures,
future or pro forma results of operations (or any component
thereof), future or pro forma cash flows (or any component
thereof) or future or pro forma financial condition (or any
component thereof) of the Corporation and its Subsidiaries (or
any of them) or the future or pro forma business, operations
or affairs of the Corporation and its Subsidiaries (or any of
them);
<PAGE> 8
8
(B) any future or pro forma rates of return in
respect of the Subscriber's investment in the Purchased Shares
or the future or pro forma value of such Purchased Shares; and
(C) any other information, statement or documents
heretofore delivered to or made available to the Subscriber or
its counsel, accountants, advisors, lenders, representatives
or affiliates with respect to the Corporation and its
Subsidiaries (or any of them) or the business, operations or
affairs of the Corporation and its Subsidiaries (or any of
them), except to the extent and as expressly covered by a
representation and warranty contained in Section 3 hereof.
(ii) The Subscriber understands that the Corporation
proposes to issue to it the Purchased Shares in a private placement
transaction exempt from the registration requirements of the Securities Act;
that, as a result, the Purchased Shares will be restricted securities for
purposes of the Federal securities laws; that for such purpose the Corporation
will rely upon the representations, warranties, covenants and agreements made by
the Subscriber and contained herein; and that such exemption from registration
is not available unless such representations and warranties are correct, and
such covenants and agreements are performed in accordance with this Agreement.
(iii) The Subscriber is familiar with the provisions
of Rule 144 of the Securities Act and the limitations upon the availability and
applicability of such Rule, including with respect to the Purchased Shares.
(iv) The Subscriber is a sophisticated investor
familiar with the type of risks inherent in the acquisition of restricted
securities such as the Purchased Shares and the Subscriber's financial position
is such that it can afford to retain such shares for an indefinite period of
time without realizing any direct or indirect cash return on its investment. The
Subscriber is an "accredited investor" as such term is defined in Rule 501 under
the Securities Act.
(v) The Subscriber has such knowledge and experience
in financial, tax and business matters as to enable it to utilize the
information made available to it in connection with the issuance of the
Purchased Shares and to evaluate the merits and risks of an investment in such
shares and to make an informed investment decision with respect thereto.
(vi) The Subscriber is acquiring the Purchased Shares
solely for its own account for investment and not with a present view to, or for
sale in connection with, the distribution thereof within the meaning of the
Securities Act.
(vii) The Subscriber understands that (a) the
Corporation proposes to effect an exchange (the "Exchange") in which it will
issue Common Stock, at the Purchase Price per Purchased Share, in exchange for
(1) all of the issued and outstanding shares of its Preferred Stock 1997-A, with
an aggregate liquidation preference of $4 million (and all accrued and unpaid
dividends thereon on the date of the exchange) and (2) the retirement of $1
million in principal amount of certain subordinated debt, all held by corporate
affiliates of Paul J. Ramsay,
<PAGE> 9
9
the Chairman of the Corporation (the "Affiliates"), (b) the Corporation proposes
to effect one or more additional private placements of its Common Stock to
investors other than the Subscriber, the Affiliates and other than Luis E.
Lamela, the Chief Executive Officer of the Corporation (collectively, the "Other
Investors"), (c) in connection with the Exchange and the private placements
contemplated above, the Corporation intends to amend its Rights Agreement as set
forth in Exhibit A hereto and (d) the Corporation has received commitments from
one of the Affiliates and from Mr. Lamela, to purchase an aggregate of $2.5
million and $1.0 million of shares of Common Stock (valued at the Purchase
Price), respectively, and that such Affiliate's commitment (but not Mr. Lamela's
commitment) shall be automatically reduced (but not below $0) by an amount equal
to the aggregate dollar value of shares of Common Stock (valued at the Purchase
Price) actually purchased by the Subscriber hereunder and by the Other
Investors.
5. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; CERTAIN LIMITATIONS ON
DAMAGES. (a) The representations and warranties of the Corporation contained in
Section 3 hereof and the representations and warranties of the Subscriber
contained in Section 4 hereof shall survive indefinitely.
(b) The aggregate liability of the Corporation for any and all
damage, loss, liability, cost and expense (collectively, "Damages") arising out
of any and all breaches by the Corporation of the representations and warranties
set forth in Section 3 under this Agreement is, and shall be, limited to an
aggregate amount (the "Liability Amount") equal to the Purchase Price, and the
Subscriber agrees not to seek any Damages in excess of the Liability Amount for
any and all Damages sustained or incurred by the Subscriber arising out of any
and all breaches by the Corporation of any representation or warranty set forth
in Section 3 under this Agreement. The aggregate liability of the Subscriber for
any and all Damages arising out of any and all breaches by the Subscriber of the
representations and warranties set forth in Section 4 under this Agreement is,
and shall be, limited to the Liability Amount, and the Corporation agrees not to
seek any Damages in excess of the Liability Amount for any and all Damages
sustained or incurred by the Corporation arising out of any and all breaches by
the Subscriber of any representation or warranty set forth in Section 4 under
this Agreement. This Section 5(b) shall not apply to Section 2(f) hereof.
6. MISCELLANEOUS. (a) This Agreement contains the entire
agreement between the Corporation and the Subscriber with respect to the
transactions contemplated by this Agreement and supersede all prior arrangements
or understandings with respect thereto.
(b) All notices or other communications hereunder shall be in
writing and sufficient if delivered personally or sent by registered or
certified mail, postage prepaid, addressed to the Corporation at the address of
One Alhambra Plaza, Suite 750, Coral Gables, Florida 38134, Fax: 305-567-1169,
Attention: Chief Executive Officer (with a copy to Haythe & Curley, 237 Park
Avenue, New York, New York 10017, Fax: 212-682-0200, Attention: Bradley P. Cost,
Esq.) and to the Subscriber at the address or facsimile set forth under its name
on the signature page to this Agreement. All such notices and communications
shall be deemed to have been duly given at the time delivered by hand, if
personally delivered, at the time received by fax, at the time received from a
recognized overnight carrier service, or three (3) business days after being
deposited in the mail, if sent by registered or certified mail, return
<PAGE> 10
10
receipt requested. Any party hereto may by notice change the address to which
notices or other communications to such party are to be delivered or mailed.
(c) This Agreement may be executed in counterparts, including
by fax, each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
(d) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware (without regard to the
conflicts of law rules thereof).
(e) This Agreement shall not be assignable without the prior
written consent of the other party hereto, and any purported assignment by any
party without the prior written consent of the other party hereto shall be void.
(f) This Agreement shall not create benefits on behalf of any
third party, and this Agreement shall be effective only as among the parties
hereto, their respective successors and permitted assigns.
(g) Any term or provision of this Agreement may be waived at
any time by the party which is entitled to the benefits thereof, and any term or
provision of this Agreement may be amended or supplemented at any time by the
consent of the Corporation and the Subscriber, except that any waiver of any
term or condition, or any amendment or supplementation, of this Agreement shall
be effective only if in writing.
(h) The parties hereto agree that this Agreement is the
product of negotiations between sophisticated parties, each of whom was
represented by counsel, and each of whom had an opportunity to participate in,
and did participate in, the drafting of each provision hereof. Accordingly,
ambiguities in this Agreement, if any, shall not be construed strictly or in
favor of or against any party hereto but rather shall be given a fair and
reasonable construction without regard to the rule of contra proferentum.
(i) The parties hereto agree that each party shall bear such
party's own expenses in connection with this Agreement and the transactions
contemplated hereby.
(j) In the event that the Subscriber exercises its Right to
purchase from the Corporation the Purchased Shares in accordance with Section
1(a) hereof, the Corporation shall cause the Subscriber to receive an opinion of
Haythe & Curley, counsel for the Corporation, in the form attached hereto as
EXHIBIT B, within two (2) business days following the Closing Date, such opinion
to be dated as of the Closing Date.
7. DEFINITIONS. As used herein, the following terms shall have the
following meanings (all terms defined in this Section 7 or in other provisions
of this Agreement in the singular to have the same meanings when used in the
plural and VICE VERSA):
"Agreement" shall have the meaning set forth in the recitals
hereto.
"Class B Convertible Redeemable Preferred Stock, Series 1997"
shall mean the class B convertible redeemable preferred stock, par value $1.00
per share, of the Corporation.
<PAGE> 11
11
"Class B Redeemable Preferred Stock, Series 1997-A" shall mean
the class B redeemable preferred stock, par value $1.00 per share, of the
Corporation.
"Class B Convertible Preferred Stock, Series C" shall mean the
class B convertible preferred stock, par value $1.00 per share, of the
Corporation.
"Class B Convertible Preferred Stock, Series 1996" shall mean
the class B convertible preferred stock, par value $1.00 per share, of the
Corporation.
"Common Stock" shall mean the Common Stock, par value $.01 per
share, of the Corporation.
"Corporation" shall have the meaning set forth in the recitals
hereto.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Liability Amount" shall have the meaning set forth in Section
5(b) hereof.
"Material Adverse Effect" shall mean a material adverse effect
on the Properties, results of operation or condition (financial or otherwise) of
the Corporation and its Subsidiaries, taken as a whole.
"Person" shall mean any individual, corporation, company,
voluntary association, partnership, joint venture, trust, unincorporated
organization or government (or any agency, instrumentality or political
subdivision thereof).
"Preferred Stock" shall mean the Class B Convertible
Redeemable Preferred Stock, Series 1997, the Class B Redeemable Preferred Stock,
Series 1997-A, the Class B Convertible Preferred Stock, Series C, and the Class
B convertible Preferred Stock, Series 1996.
"Property" shall mean any right or interest in or to property
of any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Purchase Price" shall have the meaning set forth in Section
1(b) hereto.
"Purchased Shares" shall have the meaning set forth in the
recitals hereto.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Subscriber" shall have the meaning set forth in the recitals
hereto.
"Subsidiary" shall mean, with respect to any Person, any
corporation, partnership or other entity of which at least a majority of the
securities or other ownership interests having by the terms thereof ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions of such corporation, partnership or other entity
(irrespective of whether or not at the time securities or other ownership
interests of any other class or classes of such corporation, partnership or
other entity shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned or controlled by
such Person or one or more Subsidiaries of such Person or by such Person and one
or more Subsidiaries of such Person.
* * *
<PAGE> 12
12
IN WITNESS WHEREOF, each of the parties hereto has executed
this Agreement on the date first above written.
RAMSAY HEALTH CARE, INC.
By
------------------------------
Name:
Title:
--------------------------------
Sanford R. Robertson
Aggregate
Purchase Price: $50,000
Address: 555 California Street,
Suite 3130
San Francisco, CA 94104
Fax: (415) 392-6506
<PAGE> 1
EXHIBIT 4.21
REVOLVING CREDIT NOTE
$8,000,000.00 October 30, 1998
Dallas, Texas
FOR VALUE RECEIVED, each of the undersigned, jointly and
severally, (hereinafter collectively referred to as "Borrowers", and each
individually, a "Borrower"), hereby PROMISES TO PAY to the order of FLEET
CAPITAL CORPORATION, a Rhode Island corporation ("Lender"), or its registered
assigns, at the office of Fleet Capital Corporation, as agent for such Lender,
or at such other place in the United States of America as the holder of this
Note may designate from time to time in writing, in lawful money of the United
States of America and in immediately available funds, the principal amount of
EIGHT MILLION AND NO/100 DOLLARS ($8,000,000.00), or such lesser principal
amount as may be outstanding pursuant to the Loan Agreement (as hereinafter
defined) with respect to the Revolving Credit Loan, together with interest on
the unpaid principal amount of this Note outstanding from time to time.
This Note is one of the Revolving Credit Notes referred to in,
and issued pursuant to, that certain Loan and Security Agreement dated as of
October 30, 1998, by and among Borrowers, the lenders signatories thereto
(including Lender) and Fleet Capital Corporation ("FCC"), as agent for such
Lenders (FCC in such capacity "Agent") (hereinafter amended from time to time,
the "Loan Agreement"), and is entitled to all of the benefits and security of
the Loan Agreement. All of the terms, covenants and conditions of the Loan
Agreement and the Security Documents are hereby made a part of this Note and are
deemed incorporated herein in full. All capitalized terms herein, unless
otherwise defined, unless otherwise specifically defined in this Note, shall
have the meanings ascribed to them in the Loan Agreement.
The principal amount of the indebtedness evidenced hereby
shall be payable in the amounts and on the dates specified in the Loan Agreement
and, if not sooner paid in full, on the Commitment Termination Date, unless the
term hereof is extended in accordance with the Loan Agreement. Interest thereon
shall be paid until such principal amount is paid in full at such interest rates
and at such times as are specified in the Loan Agreement.
Upon and after the occurrence, and during the continuation, of
an Event of Default, this Note shall or may, as provided in the Loan Agreement,
become or be declared immediately due and payable.
The right to receive principal of, and stated interest on,
this Note may only be transferred in accordance with the provisions of the Loan
Agreement.
Demand, presentment, protest and notice of nonpayment and
protest are hereby waived by Borrowers.
<PAGE> 2
This Note shall be interpreted, governed by, and construed in
accordance with, the internal laws of the State of Texas.
RAMSAY HEALTH CARE, INC.
RAMSAY YOUTH SERVICES, INC.
BETHANY PSYCHIATRIC HOSPITAL, INC.
BOUNTIFUL PSYCHIATRIC HOSPITAL, INC.
EAST CAROLINA PSYCHIATRIC SERVICES CORPORATION
GREAT PLAINS HOSPITAL, INC.
GULF COAST TREATMENT CENTER, INC.
HAVENWYCK HOSPITAL, INC.
H. C. CORPORATION
HSA HILL CREST CORPORATION
HSA OF OKLAHOMA, INC.
MICHIGAN PSYCHIATRIC SERVICES, INC.
RAMSAY EDUCATIONAL SERVICES, INC.
RAMSAY LOUISIANA, INC.
RAMSAY MANAGED CARE, INC.
RAMSAY YOUTH SERVICES OF ALABAMA, INC.
RAMSAY YOUTH SERVICES OF FLORIDA, INC.
RAMSAY YOUTH SERVICES OF SOUTH CAROLINA, INC.
RHCI SAN ANTONIO, INC.
TRANSITIONAL CARE VENTURES, INC.
TRANSITIONAL CARE VENTURES (TEXAS), INC.
By:
-------------------------------------
Name: Jorge Rico
Its: Vice President
H. C. PARTNERSHIP
By: H.C. CORPORATION, General Partner
By: HSA HILL CREST CORPORATION, General Partner
By:
-------------------------------------
Name: Jorge Rico
Its: Vice President
<PAGE> 1
EXHIBIT 4.22
SECURED PROMISSORY NOTE
(TERM NOTE)
$8,000,000.00 October 30, 1998
Dallas, Texas
FOR VALUE RECEIVED, each of the undersigned, jointly and
severally, (hereinafter collectively referred to as "Borrowers", and each
individually, a "Borrower"), hereby promises to pay to the order of FLEET
CAPITAL CORPORATION, a Rhode Island corporation (hereinafter "Lender"), or its
registered assigns at the office of Fleet Capital Corporation, as agent for such
Lender, or at such other place in the United States of America as the holder of
this Note may designate from time to time in writing, in lawful money of the
United States, in immediately available funds, at the time of payment, the
principal sum of EIGHT MILLION AND NO/100 DOLLARS ($8,000,000.00), together with
interest from and after the date hereof on the unpaid principal balance
outstanding from time to time.
This Secured Promissory Note (the "Note") is one of the Term
Notes referred to in, and is issued pursuant to, that certain Loan and Security
Agreement dated as of October 30, 1998, by and among Borrowers, the lenders
signatories thereto (including Lender) and Fleet Capital Corporation ("FCC") as
Agent for said lenders (FCC in such capacity, "Agent") (hereinafter, as amended
from time to time, the "Loan Agreement"), and is entitled to all of the benefits
and security of the Loan Agreement. All of the terms, covenants and conditions
of the Loan Agreement and the Security Documents are hereby made a part of this
Note and are deemed incorporated herein in full. All capitalized terms used
herein, unless otherwise specifically defined in this Note, shall have the
meanings ascribed to them in the Loan Agreement.
For so long as no Event of Default shall have occurred and be
continuing the principal amount and accrued interest of this Note shall be due
and payable on the dates and in the manner hereinafter set forth:
(a) Interest on the unpaid principal balance outstanding from
time to time shall be paid at such interest rates and at such times as
are specified in the Loan Agreement;
(b) Principal shall be due and payable monthly on the first
day of each month during the periods set forth below in the amounts set
forth opposite such periods:
Date Scheduled Installment
---- ---------------------
May 1, 1999 through
October 31, 1999 $ 83,333.00
<PAGE> 2
November 1, 1999 through
October 31, 2000 $ 83,833.00
November 1, 2000 through
October 31, 2001 $104,666.00
November 1, 2001 through
October 31, 2002 $145,833.00
November 1, 2002 through
October 30, 2003 $208,333.00
(c) The entire remaining principal amount then outstanding,
together with any and all other amounts due hereunder, shall be due and
payable on the Commitment Termination Date.
Notwithstanding the foregoing, the entire unpaid principal balance and accrued
interest on this Note shall be due and payable immediately upon any termination
of the Loan Agreement pursuant to Section 4 thereof.
This Note shall be subject to mandatory prepayment in
accordance with the provision of Section 3.3 of the Loan Agreement. Borrowers
may also prepay this Note in the manner provided in Section 4 of the Loan
Agreement.
Upon the occurrence, and during the continuation, of an Event
of Default, this Note shall or may, as provided in the Loan Agreement, become or
be declared immediately due and payable.
The right to receive principal of, and stated interest on,
this Note may only be transferred in accordance with the provisions of the Loan
Agreement.
Demand, presentment, protest and notice of nonpayment and
protest are hereby waived by each Borrower.
This Note shall be governed by, and construed and enforced in
accordance with, the laws of the State of Texas.
RAMSAY HEALTH CARE, INC.
RAMSAY YOUTH SERVICES, INC.
BETHANY PSYCHIATRIC HOSPITAL, INC.
BOUNTIFUL PSYCHIATRIC HOSPITAL, INC.
EAST CAROLINA PSYCHIATRIC SERVICES CORPORATION
GREAT PLAINS HOSPITAL, INC.
<PAGE> 3
GULF COAST TREATMENT CENTER, INC.
HAVENWYCK HOSPITAL, INC.
H. C. CORPORATION
HSA HILL CREST CORPORATION
HSA OF OKLAHOMA, INC.
MICHIGAN PSYCHIATRIC SERVICES, INC.
RAMSAY EDUCATIONAL SERVICES, INC.
RAMSAY LOUISIANA, INC.
RAMSAY MANAGED CARE, INC.
RAMSAY YOUTH SERVICES OF ALABAMA, INC.
RAMSAY YOUTH SERVICES OF FLORIDA, INC.
RAMSAY YOUTH SERVICES OF SOUTH CAROLINA, INC.
RHCI SAN ANTONIO, INC.
TRANSITIONAL CARE VENTURES, INC.
TRANSITIONAL CARE VENTURES (TEXAS), INC.
By:
--------------------------------
Name: Jorge Rico
Its: Vice President
H. C. PARTNERSHIP
By: H.C. CORPORATION, General Partner
By: HSA HILL CREST CORPORATION, General Partner
By:
--------------------------------
Name: Jorge Rico
Its: Vice President
<PAGE> 1
EXHIBIT 4.23
SECURED PROMISSORY NOTE
(ACQUISITION NOTE)
$6,000,000.00 October 30, 1998
Dallas, Texas
FOR VALUE RECEIVED, each of the undersigned, jointly and
severally, (hereinafter collectively referred to as "Borrowers", and each
individually, a "Borrower"), hereby promise (as hereinafter defined) with
respect to the Acquisition Loan to pay to the order of FLEET CAPITAL
CORPORATION, a Rhode Island corporation (hereinafter "Lender"), or its
registered assigns at the office of Fleet Capital Corporation, as agent for such
Lender, or at such other place in the United States of America as the holder of
this Note may designate from time to time in writing, in lawful money of the
United States, in immediately available funds, at the time of payment, the
principal sum of SIX MILLION AND NO/100 DOLLARS ($6,000,000.00), or such lesser
principal amount as may be outstanding pursuant to the Loan Agreement together
with interest from and after the date hereof on the unpaid principal balance
outstanding from time to time.
This Secured Promissory Note (the "Note") is one of the
Acquisition Notes referred to in, and is issued pursuant to, that certain Loan
and Security Agreement dated as of October 30, 1998 by and among Borrowers, the
lenders signatories thereto (including Lender) and Fleet Capital Corporation
("FCC") as Agent for said lenders (FCC in such capacity "Agent") (hereinafter,
as amended from time to time, the "Loan Agreement"), and is entitled to all of
the benefits and security of the Loan Agreement. All of the terms, covenants and
conditions of the Loan Agreement and the Security Documents are hereby made a
part of this Note and are deemed incorporated herein in full. All capitalized
terms used herein, unless otherwise specifically defined in this Note, shall
have the meanings ascribed to them in the Loan Agreement.
For so long as no Event of Default shall have occurred and be
continuing the principal amount and accrued interest of this Note shall be due
and payable on the dates and in the manner hereinafter set forth:
(a) Interest on the unpaid principal balance outstanding from
time to time shall be paid at such interest rates and at such times as
are specified in the Loan Agreement;
(b) Principal shall be due and payable monthly commencing on
the first day of the first calendar month after the Acquisition Loan
Commitment Termination Date, and continuing on the first day of each
month thereafter to and including the first day the month in which the
Commitment Termination Date occurs, in installments equal to the
aggregate outstanding principal balance of the Acquisition Loans on the
Acquisition Loan Commitment Termination Date DIVIDED BY 48; and
Page 1
<PAGE> 2
(c) The entire remaining principal amount then outstanding,
together with any and all other amounts due hereunder, shall be due and
payable on the Commitment Termination Date.
Notwithstanding the foregoing, the entire unpaid principal balance and accrued
interest on this Note shall be due and payable immediately upon any termination
of the Loan Agreement pursuant to Section 4 thereof.
This Note shall be subject to mandatory prepayment in
accordance with the provisions of Section 3.3 of the Loan Agreement. Borrowers
may also prepay this Note in the manner provided in Section 4 of the Loan
Agreement.
Upon the occurrence, and during the continuation, of an Event
of Default, this Note shall or may, as provided in the Loan Agreement, and
become or be declared immediately due and payable.
The right to receive principal of, and stated interest on,
this Note may only be transferred in accordance with the provisions of the Loan
Agreement.
Demand, presentment, protest and notice of nonpayment and
protest are hereby waived by each Borrower.
Page 2
<PAGE> 3
This Note shall be governed by, and construed and enforced in
accordance with, the laws of the State of Texas.
RAMSAY HEALTH CARE, INC.
RAMSAY YOUTH SERVICES, INC.
BETHANY PSYCHIATRIC HOSPITAL, INC.
BOUNTIFUL PSYCHIATRIC HOSPITAL, INC.
EAST CAROLINA PSYCHIATRIC SERVICES CORPORATION
GREAT PLAINS HOSPITAL, INC.
GULF COAST TREATMENT CENTER, INC.
HAVENWYCK HOSPITAL, INC.
H. C. CORPORATION
HSA HILL CREST CORPORATION
HSA OF OKLAHOMA, INC.
MICHIGAN PSYCHIATRIC SERVICES, INC.
RAMSAY EDUCATIONAL SERVICES, INC.
RAMSAY LOUISIANA, INC.
RAMSAY MANAGED CARE, INC.
RAMSAY YOUTH SERVICES OF ALABAMA, INC.
RAMSAY YOUTH SERVICES OF FLORIDA, INC.
RAMSAY YOUTH SERVICES OF SOUTH CAROLINA, INC.
RHCI SAN ANTONIO, INC.
TRANSITIONAL CARE VENTURES, INC.
TRANSITIONAL CARE VENTURES (TEXAS), INC.
By:
--------------------------------
Name: Jorge Rico
Its: Vice President
H. C. PARTNERSHIP
By: H.C. CORPORATION, General Partner
By: HSA HILL CREST CORPORATION, General Partner
By:
--------------------------------
Name: Jorge Rico
Its: Vice President
Page 3
<PAGE> 1
EXHIBIT 10.126
AMENDMENT NO. 3 TO RIGHTS AGREEMENT
-----------------------------------
AMENDMENT No. 3 dated as of October 15, 1998 (this
"Amendment") made by Ramsay Health Care, Inc., a Delaware corporation (the
"Company"), to that certain Rights Agreement dated as of August 1, 1995, as
amended by that certain Amendment dated as of October 3, 1995, and further
amended by that certain Amendment No. 2 dated as of November 1, 1996 (as so
amended, the "Agreement"), between the Company and First Union National Bank of
North Carolina (the "Rights Agent").
WHEREAS, the Company has determined to provide for an
exception to the definition of "Acquiring Person" in the Agreement for Ramsay
Persons (as defined in the Agreement);
WHEREAS, the Company has determined that the exception to the
definition of "Acquiring Person" in the Agreement for persons who are eligible
to file a statement on Schedule 13G under Rule 13d-1(b) under the Securities
Exchange Act of 1934 should be amended to provide an exception for persons who
acquire 30% or less of the Common Shares (as defined in the Agreement), unless
and until the conditions set forth in Rule 13d-1(b)(3) or (4) exist;
WHEREAS, the Company desires to provide certainty to its
shareholders, the securities markets and the Rights Agent in respect of the
terms of the Agreement and to further the purposes and intent of the Agreement;
and
WHEREAS, in order to effect the foregoing, the Company has
determined to amend the Agreement pursuant to Section 27 of the Agreement as set
forth below.
NOW, THEREFORE, effective as of the date hereof, the Agreement
is hereby amended pursuant to Section 27 thereof as follows:
1. Clause (iii) in the second sentence of Section 1(a) of the
Agreement is hereby deleted and replaced with the following:
"(iii) none of the Ramsay Persons shall become an
"Acquiring Person" in the event that any Ramsay
Person (alone or together with other Ramsay Persons)
becomes the Beneficial Owner after the date hereof of
additional Common Shares"
2. Each reference to the percentage "25%" contained in Section
1(a) of the Agreement is hereby deleted and replaced with a reference to "30%."
<PAGE> 2
2
3. This Amendment shall be deemed to be a contract made under
the laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and to be performed entirely within such State, without regard to any conflict
of laws principles which would apply the laws of any other jurisdiction.
4. The Agreement, as amended hereby, is hereby ratified,
confirmed and continued in full force and effect.
* * *
<PAGE> 3
3
IN WITNESS WHEREOF, the Company has caused this Amendment to
be executed as of the date first above written.
RAMSAY HEALTH CARE, INC.
By
----------------------------
Name: Marcio Cabrera
Title: Executive Vice President
First Union National Bank of North Carolina hereby
acknowledges receipt of this Amendment made pursuant to Section 27 of the
Agreement.
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA
By
----------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 10.127
FLEET CAPITAL CORPORATION
$22,000,000
REVOLVER, TERM AND ACQUISITION LOAN FACILITY
TO
RAMSAY HEALTH CARE, INC.
AND VARIOUS SUBSIDIARIES,
AS BORROWERS,
CLOSING DATE: OCTOBER 30, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 1. CREDIT FACILITY........................................................................................1
1.1 REVOLVING CREDIT LOANS..........................................................................1
1.1.1 LOANS AND RESERVES.....................................................................1
1.1.2 USE OF PROCEEDS........................................................................4
1.2 TERM LOAN AND ACQUISITION LOANS.................................................................4
1.2.1 TERM LOAN..............................................................................4
1.2.2 ACQUISITION LOANS......................................................................5
1.3 LETTERS OF CREDIT; LC GUARANTIES................................................................5
1.4 JOINT AND SEVERAL LIABILITY; RIGHTS OF CONTRIBUTION.............................................6
1.5 STRUCTURE OF CREDIT FACILITY....................................................................7
SECTION 2. INTEREST, FEES AND CHARGES.............................................................................8
2.1 INTEREST........................................................................................8
2.1.1 RATES OF INTEREST......................................................................8
2.1.2 DEFAULT RATE OF INTEREST..............................................................11
2.1.3 MAXIMUM INTEREST......................................................................12
2.2 COMPUTATION OF INTEREST AND FEES...............................................................13
2.3 LETTER OF CREDIT AND LC GUARANTY FEES..........................................................13
2.4 UNUSED LINE FEE................................................................................13
2.5 AUDIT AND APPRAISAL FEES.......................................................................13
2.6 REIMBURSEMENT OF EXPENSES......................................................................14
2.7 BANK CHARGES...................................................................................14
2.8 CAPITAL ADEQUACY CHARGE........................................................................14
2.9 CLOSING FEE....................................................................................15
2.10 AGENTS FEE.....................................................................................15
SECTION 3. LOAN ADMINISTRATION...................................................................................15
3.1 MANNER OF BORROWING LOANS......................................................................15
3.1.1 LOAN REQUESTS.........................................................................15
3.1.2 DISBURSEMENT..........................................................................17
3.1.3 AUTHORIZATION.........................................................................17
3.2 PAYMENTS.......................................................................................17
3.2.1 PRINCIPAL.............................................................................17
3.2.2 INTEREST..............................................................................18
3.2.3 COSTS, FEES AND CHARGES...............................................................18
3.2.4 OTHER OBLIGATIONS.....................................................................18
3.3 MANDATORY PREPAYMENTS..........................................................................18
3.3.1 PROCEEDS OF SALE, LOSS, DESTRUCTION OR CONDEMNATION OF COLLATERAL.....................18
3.3.2 EXCESS CASH FLOW RECAPTURE............................................................19
3.4 APPLICATION OF PAYMENTS AND COLLECTIONS........................................................19
3.5 ALL LOANS TO CONSTITUTE ONE OBLIGATION.........................................................20
3.6 LOAN ACCOUNT...................................................................................20
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
3.7 STATEMENTS OF ACCOUNT.. .......................................................................20
SECTION 4. TERM AND TERMINATION..................................................................................20
4.1 TERM OF AGREEMENT..............................................................................20
4.2 TERMINATION....................................................................................20
4.2.1 TERMINATION BY AGENT OR LENDERS.......................................................20
4.2.2 TERMINATION BY BORROWER...............................................................20
4.2.3 [RESERVED]............................................................................21
4.2.4 EFFECT OF TERMINATION.................................................................21
SECTION 5. SECURITY INTERESTS....................................................................................21
5.1 SECURITY INTEREST IN COLLATERAL................................................................21
5.2 CROSS-COLLATERALIZATION........................................................................22
5.3 LIEN PERFECTION, FURTHER ASSURANCES............................................................22
5.4 LIEN ON REALTY.................................................................................22
5.5 PROPERTY EXCLUDED FROM COLLATERAL..............................................................23
5.5.1 MEADOWLAKE FACILITY...................................................................23
5.5.2 MISSION VISTA FACILITY................................................................23
5.5.3 MIDVALE FACILITY......................................................................23
5.5.4 OKLAHOMA LLC INTERESTS................................................................23
5.6 POST-CLOSING LIENS ON CERTAIN SECTION 5.5 PROPERTY.............................................23
SECTION 6. COLLATERAL ADMINISTRATION.............................................................................24
6.1 GENERAL........................................................................................24
6.1.1 LOCATION OF COLLATERAL................................................................24
6.1.2 INSURANCE OF COLLATERAL...............................................................24
6.1.3 PROTECTION OF COLLATERAL..............................................................25
6.2 ADMINISTRATION OF ACCOUNTS.....................................................................25
6.2.1 RECORDS, SCHEDULES AND ASSIGNMENTS OF ACCOUNTS........................................25
6.2.2 DISPUTES..............................................................................26
6.2.3 TAXES.................................................................................26
6.2.4 ACCOUNT VERIFICATION..................................................................26
6.2.5 MAINTENANCE OF DOMINION ACCOUNT.......................................................26
6.2.6 COLLECTION OF ACCOUNTS, PROCEEDS OF COLLATERAL........................................26
6.3 PERMITTED DISPOSITIONS OF SECTION 5.5 PROPERTIES...............................................27
6.3.1 MEADOWLAKE FACILITY...................................................................27
6.3.2 MISSION VISTA FACILITY................................................................27
6.3.3 MIDVALE FACILITY......................................................................27
6.3.4 OKLAHOMA LLC INTERESTS................................................................27
6.4 ADMINISTRATION OF EQUIPMENT....................................................................27
6.4.1 RECORDS AND SCHEDULES OF EQUIPMENT....................................................27
6.4.2 DISPOSITIONS OF EQUIPMENT.............................................................27
6.5 PAYMENT OF CHARGES.............................................................................28
SECTION 7. REPRESENTATIONS AND WARRANTIES........................................................................28
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C> <C>
7.1 GENERAL REPRESENTATIONS AND WARRANTIES.........................................................28
7.1.1 ORGANIZATION AND QUALIFICATION........................................................28
7.1.2 CORPORATE POWER AND AUTHORITY.........................................................28
7.1.3 LEGALLY ENFORCEABLE AGREEMENT.........................................................29
7.1.4 CAPITAL STRUCTURE.....................................................................29
7.1.5 CORPORATE NAMES.......................................................................29
7.1.6 BUSINESS LOCATIONS, AGENT FOR PROCESS.................................................29
7.1.7 TITLE TO PROPERTIES; PRIORITY OF LIENS................................................29
7.1.8 ACCOUNTS..............................................................................30
7.1.9 EQUIPMENT.............................................................................31
7.1.10 FINANCIAL STATEMENTS; FISCAL YEAR.....................................................31
7.1.11 FULL DISCLOSURE.......................................................................31
7.1.12 SOLVENT FINANCIAL CONDITION...........................................................31
7.1.13 SURETY OBLIGATIONS....................................................................31
7.1.14 TAXES.................................................................................32
7.1.15 BROKERS...............................................................................32
7.1.16 PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES..........................................32
7.1.17 GOVERNMENTAL CONSENTS.................................................................32
7.1.18 COMPLIANCE WITH LAWS..................................................................32
7.1.19 RESTRICTIONS..........................................................................32
7.1.20 LITIGATION............................................................................32
7.1.21 NO DEFAULTS...........................................................................33
7.1.22 LEASES................................................................................33
7.1.23 PENSION PLANS.........................................................................33
7.1.24 TRADE RELATIONS.......................................................................33
7.1.25 LABOR RELATIONS.......................................................................33
7.1.26 MEDICARE; MEDICAID AND OTHER GOVERNMENTAL PAYORS......................................34
7.1.27 ABSENCE OF CERTAIN BUSINESS PRACTICES.................................................34
7.1.28 FRAUD AND ABUSE.......................................................................34
7.1.29 CONTROLLED SUBSTANCES.................................................................35
7.1.30 GOVERNMENTAL AUTHORITY................................................................35
7.1.31 RATES AND REIMBURSEMENT POLICIES......................................................36
7.1.32 MATERIAL AGREEMENTS...................................................................36
7.1.33 INSURANCE.............................................................................36
7.1.34 COMPLIANCE PLAN.......................................................................36
7.1.35 INACTIVE SUBSIDIARIES.................................................................36
7.2 CONTINUOUS NATURE OF REPRESENTATIONS AND WARRANTIES............................................36
7.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.....................................................37
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS...................................................................37
8.1 AFFIRMATIVE COVENANTS..........................................................................37
8.1.1 VISITS AND INSPECTIONS................................................................37
</TABLE>
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8.1.2 NOTICES...............................................................................37
8.1.3 FINANCIAL STATEMENTS..................................................................38
8.1.4 YEAR 2000 COMPLIANCE..................................................................40
8.1.5 PROJECTIONS...........................................................................40
8.1.6 TAXES.................................................................................40
8.1.7 COMPLIANCE WITH LAWS..................................................................40
8.1.8 CERTAIN OTHER INSURANCE...............................................................40
8.1.9 BORROWING BASE CERTIFICATE............................................................40
8.1.10 FURTHER ASSURANCES....................................................................41
8.2 NEGATIVE COVENANTS.............................................................................41
8.2.1 MERGERS, CONSOLIDATIONS, ACQUISITIONS.................................................41
8.2.2 LOANS AND ADVANCES....................................................................43
8.2.3 TOTAL INDEBTEDNESS....................................................................43
8.2.4 AFFILIATE TRANSACTIONS................................................................44
8.2.5 LIMITATION ON LIENS...................................................................44
8.2.6 SUBORDINATED DEBT.....................................................................44
8.2.7 PARTNERSHIP OR JOINT VENTURES.........................................................45
8.2.8 DISTRIBUTIONS.........................................................................45
8.2.9 CAPITAL EXPENDITURES..................................................................45
8.2.10 DISPOSITION OF ASSETS.................................................................46
8.2.11 STOCK OF SUBSIDIARIES.................................................................46
8.2.12 RESTRICTED INVESTMENT.................................................................46
8.2.13 MARGIN SECURITIES.....................................................................46
8.2.14 TAX CONSOLIDATION.....................................................................46
8.2.15 HEDGING TRANSACTIONS.. ...............................................................46
8.2.16 LEASES................................................................................46
8.2.17 LIMITS ON INACTIVE SUBSIDIARIES.......................................................47
8.3 SPECIFIC FINANCIAL COVENANTS...................................................................47
8.3.1 FIXED CHARGE COVERAGE RATIO...........................................................47
8.3.2 INTEREST COVERAGE RATIO...............................................................48
8.3.3 TOTAL INDEBTEDNESS TO EBITDA..........................................................49
8.3.4 PRO FORMA AVAILABILITY COVENANT.......................................................49
SECTION 9. CONDITIONS PRECEDENT..................................................................................50
9.1 DOCUMENTATION..................................................................................50
9.2 NO DEFAULT.....................................................................................50
9.3 OTHER LOAN DOCUMENTS...........................................................................50
9.4 AVAILABILITY...................................................................................50
9.5 NO LITIGATION..................................................................................50
9.6 CAPITAL CONTRIBUTION...........................................................................50
9.7 PHASE I ENVIRONMENTAL SURVEY(S)................................................................50
9.8 JUNIOR SUBORDINATED DEBT EXCHANGE..............................................................50
9.9 DRAFT FINANCIAL STATEMENTS.....................................................................51
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT...................................................51
</TABLE>
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10.1 EVENTS OF DEFAULT..............................................................................51
10.1.1 PAYMENT OF OBLIGATIONS................................................................51
10.1.2 MISREPRESENTATIONS....................................................................51
10.1.3 BREACH OF SPECIFIC COVENANTS..........................................................51
10.1.4 BREACH OF OTHER COVENANTS.............................................................51
10.1.5 DEFAULT UNDER SECURITY DOCUMENTS/OTHER AGREEMENTS.....................................51
10.1.6 OTHER DEFAULTS........................................................................51
10.1.7 UNINSURED LOSSES......................................................................52
10.1.8 ADVERSE CHANGES.......................................................................52
10.1.9 INSOLVENCY AND RELATED PROCEEDINGS....................................................52
10.1.10 BUSINESS DISRUPTION; CONDEMNATION.....................................................52
10.1.11 CHANGE OF OWNERSHIP...................................................................52
10.1.12 ERISA.................................................................................52
10.1.13 CHALLENGE TO AGREEMENT................................................................53
10.1.14 REPUDIATION OF OR DEFAULT UNDER GUARANTY AGREEMENT....................................53
10.1.15 CRIMINAL FORFEITURE...................................................................53
10.1.16 JUDGMENTS.............................................................................53
10.2 ACCELERATION OF THE OBLIGATIONS................................................................53
10.3 OTHER REMEDIES.................................................................................54
10.4 REMEDIES CUMULATIVE; NO WAIVER.................................................................55
SECTION 11. THE AGENT...........................................................................................55
11.1 AUTHORIZATION AND ACTION.......................................................................55
11.2 AGENT'S RELIANCE, ETC..........................................................................56
11.3 FCC AND AFFILIATES.............................................................................56
11.4 LENDER CREDIT DECISION.........................................................................56
11.5 INDEMNIFICATION................................................................................56
11.6 SUCCESSOR AGENT................................................................................57
SECTION 12. MISCELLANEOUS........................................................................................57
12.1 POWER OF ATTORNEY.. ...........................................................................57
12.3 MODIFICATION OF AGREEMENT; SALE OF INTEREST....................................................59
12.4 SEVERABILITY...................................................................................63
12.5 SUCCESSORS AND ASSIGNS.........................................................................63
12.6 CUMULATIVE EFFECT; CONFLICT OF TERMS...........................................................63
12.7 EXECUTION IN COUNTERPARTS......................................................................63
12.8 NOTICE.........................................................................................63
12.9 LENDER'S CONSENT...............................................................................64
12.10 CREDIT INQUIRIES...............................................................................64
12.11 TIME OF ESSENCE................................................................................64
12.12 ENTIRE AGREEMENT, APPENDIX A AND EXHIBITS......................................................64
12.13 INTERPRETATION.................................................................................65
12.14 GOVERNING LAW; CONSENT TO FORUM................................................................65
12.15 WAIVERS BY BORROWER............................................................................66
12.16 PUBLICITY......................................................................................66
</TABLE>
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12.17 ORAL AGREEMENTS INEFFECTIVE. .................................................................66
12.18 NONAPPLICABILITY OF ARTICLE 5069-15.01 ET. ....................................................67
12.19 CERTAIN MATTERS OF CONSTRUCTION. .............................................................67
</TABLE>
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<PAGE> 8
LIST OF EXHIBITS
EXHIBITS:
- ---------
Exhibit A Revolving Credit Note
Exhibit A-1 Term Note
Exhibit A-2 Acquisition Note
Exhibit B Borrowers' and each Subsidiary's Business Locations
Exhibit C Form of Borrowing Base Certificate
Exhibit D Jurisdictions in which Borrowers and each Subsidiary are
Authorized to do Business
Exhibit E Capital Structure of Borrowers
Exhibit F Corporate Names
Exhibit G Tax Identification Numbers of Subsidiaries
Exhibit H Patents, Trademarks, Copyrights and Licenses
Exhibit I Certain Business Practices
Exhibit J Litigation
Exhibit K Capitalized Leases
Exhibit L Operating Leases
Exhibit M Pension Plans
Exhibit N Labor Contracts
Exhibit O Compliance Certificate
Exhibit P Permitted Liens
Exhibit Q Schedule of Documents
Exhibit R Inactive Subsidiaries
Exhibit S Medicare and Medicaid
Exhibit T Existing Indebtedness
Exhibit U Settlement Reserves
Exhibit V Surety Obligations
Exhibit W Payroll Accounts
Exhibit X Material Contracts
Exhibit Y Financial Statement Changes
vii
<PAGE> 9
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is made this 30th day of October,
1998, by and among RAMSAY HEALTH CARE, INC., a Delaware corporation
("HOLDINGS"), with its principal place of business at Columbus Center, One
Alhambra Plaza, Suite 750, Coral Gables, Florida 33134, each of the Subsidiaries
of Holdings party to this Agreement and listed in EXHIBIT B (the "HOLDINGS
SUBSIDIARIES"), each of which is a corporation or other legal entity as
indicated in EXHIBIT B, is organized under the laws of the jurisdiction
indicated in EXHIBIT B, and has its principal place of business at the location
indicated in EXHIBIT B (Holdings, the Holdings Subsidiaries, and each other
Subsidiary of Holdings or of any Subsidiary of Holdings from time to time party
to this Agreement are hereinafter collectively referred to as "BORROWERS" and
each individually as a "BORROWER"), and FLEET CAPITAL CORPORATION, a Rhode
Island corporation (in its individual capacity, "FCC"), with offices at 2711
North Haskell Avenue, Suite 2100, LB 21, Dallas Texas 75204, as a Lender (as
hereinafter defined in APPENDIX A), and as agent for all Lenders, in such
capacity, "AGENT"), and such Persons (as hereinafter defined in APPENDIX A) who
are or hereafter become parties to this Agreement as Lenders. Capitalized terms
used in this Agreement have the meanings assigned to them in APPENDIX A, General
Definitions. Accounting terms not otherwise specifically defined herein shall be
construed in accordance with GAAP consistently applied.
SECTION 1. CREDIT FACILITY
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, Lenders severally agree to make a Total Credit Facility of up to
Twenty-Two Million Dollars ($22,000,000) available upon Borrowers' request
therefor, as follows:
1.1 REVOLVING CREDIT LOANS.
1.1.1 LOANS AND RESERVES. (A) The aggregate amount of the
Revolving Credit Loans to be made by each Lender (such Lender's "REVOLVING
CREDIT LOAN COMMITMENT"), pursuant to the terms hereof, shall be the amount set
below such Lender's name on the signature pages hereof or in the most recent
Assignment and Acceptance Agreement, if any, executed by such Lender. The
aggregate principal amount of the Revolving Credit Loan Commitments is Eight
Million Dollars ($8,000,000). The percentage equal to the quotient of (x) each
Lender's Revolving Credit Loan Commitment divided by (y) the aggregate of all
Revolving Credit Loan Commitments, is that Lender's "REVOLVING CREDIT
PERCENTAGE". Subject to all of the terms and conditions of this Agreement, each
Lender agrees, severally, but not jointly and for so long as no Default or Event
of Default exists, to make Revolving Credit Loans to Borrowers from time to
time, as requested by Borrowers in accordance with the terms of SECTION 3.1, up
to a maximum principal amount at any time outstanding equal to the product of
(A) the Borrowing Base at such time, multiplied by (B) such Lender's Revolving
Credit Percentage. It is expressly understood and agreed that Agent and Lenders
may use the Borrowing Base as a maximum ceiling on Revolving Credit Loans
outstanding to Borrower at any time. If the unpaid balance of the Revolving
Credit Loans should exceed the ceiling so determined or any other limitation set
forth in this Agreement, such Revolving Credit Loans shall nevertheless
constitute Obligations that are secured by the Collateral and entitled to all
the benefits
<PAGE> 10
thereof. In no event shall Lenders be required to make a Revolving Credit Loan
at any time that there exists a Default or an Event of Default. Notwithstanding
the foregoing provisions of this SECTION 1.1.1, Agent shall have the right to
establish reserves in such amounts, and with respect to such matters (PROVIDED,
that reserves continued in effect or established after the Borrowing Base Change
Notice Date will be maintained only with respect to such matters as are not in
any material respect duplicative of matters taken into account by Agent in its
determinations of Accounts to be included in the Eligible Accounts), as Agent
shall deem necessary or appropriate, against the amount of Revolving Credit
Loans which Borrowers may otherwise request under this SECTION 1.1.1, including,
without limitation, with respect to (1) contract adjustments and allowances,
cost report reserves, payment refusal based on disputes with contract
provisions, bills which exceed contract limits or matters for which credit
memoranda are issued in the ordinary course of business of any Borrower or any
Borrower's Subsidiary, (2) other sums chargeable against Borrowers' Loan Account
as Revolving Credit Loans under any Section of this Agreement; and (3) matters,
events, conditions or contingencies as to which Agent, in its reasonable
discretion, determines reserves should be established from time to time
hereunder.
With respect to periods during which Variable Amount A is being utilized as the
Variable Component for purposes of computing the Borrowing Base:
(i) Borrowers shall have the right, at any time when Variable
Amount A is being utilized as the Variable Component for purposes of
computing the Borrowing Base, to elect to change the Variable Component
to be utilized prospectively from Variable Amount A to Variable Amount
B, with such election to be effected by the giving by Holdings of a
Borrowing Base Change Notice to Agent, and with such change to be
effective on and after the Borrowing Base Change Date, PROVIDED, that
such election shall not be effected, and such change shall not become
effective, unless such Borrowing Base Change Notice is accompanied by a
Borrowing Base Certificate dated as of the last day of the second
calendar month preceding the calendar month in which such Borrowing
Base Change Notice is given, if such Borrowing Base Change Notice is
given before the fifteenth day of a calendar month, or, if such
Borrowing Base Change Notice is given on or after the fifteenth day of
a calendar month, then such Borrowing Base Certificate shall be dated
as of the last day of the calendar month preceding the calendar month
in which such Borrowing Base Change Notice is given. Thereafter,
Borrowing Base Certificates will be required as provided in SECTION
8.1.9. Any Borrowing Base Change Notice given by Borrowers in
accordance with the preceding sentence shall be irrevocable once given.
(ii) Agent shall have the right, exercisable by Agent in its
sole discretion, at any time when Variable Amount A is being utilized
as the Variable Component for purposes of computing the Borrowing Base,
to change the Variable Component to be utilized prospectively from
Variable Amount A to Variable Amount B, with such change to be effected
by the giving by Agent of a Borrowing Base Change Notice to Borrowers,
and with such change to be effective on and after the Borrowing Base
Change Date, PROVIDED, that Agent shall not be entitled to exercise
such right unless, on the date on which such Borrowing Base Change
Notice is given:
<PAGE> 11
(a) the outstanding principal balance of the
Revolving Credit Loans exceeds $2,000,000;
or
(b) Availability is less than $5,000,000; or
(c) an Event of Default is continuing.
If a Borrowing Base Change Notice is given by Agent pursuant to this
SECTION 1.1.1(a)(ii), Borrower shall furnish to Agent, on or before the
Borrowing Base Change Date, a Borrowing Base Certificate dated as of
the last day of the second calendar month preceding the calendar month
in which such Borrowing Base Change Notice is given, if such Borrowing
Base Change Notice is given on or before the twelfth day of a calendar
month, or, if such Borrowing Base Change Notice is given after the
twelfth day of a calendar month, then such Borrowing Base Certificate
shall be dated as of the last day of the calendar month preceding the
calendar month in which such Borrowing Base Change Notice is given.
Thereafter, Borrowing Base Certificates will be required as provided in
SECTION 8.1.9.
(iii) At any time when Variable Amount B is being utilized as
the Variable Component for purposes of computing the Borrowing Base,
Borrowers may request a change to Variable Amount A, but Agent shall
have no obligation to grant such request, and no change from Variable
Amount B to Variable Amount A shall be effective unless (1) Borrowers
give Agent written notice requesting such change, and (b) in response
to such written notice, Agent gives written notice, within fifteen (15)
days after Agent's receipt of Borrowers' written notice requesting such
change, that Agent consents to such change, which consent may be
withheld by Agent in its sole discretion. If Agent consents to such
change, Borrowers' obligations under SECTION 8.1.9 with respect to
Borrowing Base Certificates shall be suspended until reinstated by
reason of a subsequent change back to Variable Amount B becoming
effective under SECTION 1.1.1(a)(i) or SECTION 1.1.1(a)(ii).
(iv) Nothing contained in SECTION 1.1.1(a)(i) or SECTION
1.1.1(a)(ii) shall, or shall be construed to, affect or impair the
right and ability of Agent, at any time and from time to time, to
establish and maintain reserves as provided in SECTION 1.1.1(a) or
otherwise pursuant to this Agreement, irrespective of the Variable
Component then being utilized.
(B) The Revolving Credit Loans shall be evidenced by
promissory notes to be executed and delivered by Borrowers at the time of the
initial Revolving Credit Loan, the form of which is attached hereto and made a
part hereof as EXHIBIT A (the "REVOLVING CREDIT NOTES"). Each Revolving Credit
Note shall be payable to the order of a Lender and shall represent the
obligation of Borrowers to pay the amount of such Lender's Revolving Credit Loan
Commitment or, if less, the aggregate unpaid principal amount of all Revolving
Credit Loans made by such Lender to Borrowers with interest thereon as
prescribed in SECTION 2.1.1.
(C) Insofar as any Borrower may request and Lenders may be
willing in their sole and absolute discretion to make Revolving Credit Loans to
such Borrower at a time when the unpaid balance of Revolving Credit Loans
exceeds, or would exceed with the making of any such Revolving
3
<PAGE> 12
Credit Loan, the Borrowing Base (any such Loan or Loans being herein referred to
individually as an "OVERADVANCE" and collectively as "OVERADVANCES"), Agent
shall enter such Overadvances as debits in the Loan Account. All Overadvances
shall be repaid on demand, shall be secured by the Collateral and shall bear
interest as provided in this Agreement for Revolving Credit Loans generally. Any
Overadvance to be made by Lenders pursuant to the terms hereof shall be made by
Lenders ratably in accordance with their Revolving Credit Percentages.
Overadvances in an aggregate amount of One Million Dollars ($1,000,000) or less
may, prior to occurrence and continuation of a Default or an Event of Default,
be made in the sole and absolute discretion of Agent. Overadvances in an
aggregate amount of more than One Million Dollars ($1,000,000) but less than Two
Million Dollars ($2,000,000) may, prior to the occurrence and continuation of a
Default or an Event of Default, be made in the sole and absolute discretion of
Required Lenders. Overadvances in an aggregate amount of Two Million Dollars
($2,000,000) or more and Overadvances to be made after the occurrence, and
during the continuation, of a Default or an Event of Default shall require the
consent of all Lenders. The forgoing notwithstanding, in no event, unless
otherwise consented to by all Lenders, (x) shall any Overadvances be outstanding
for more than sixty (60) consecutive days or (y) after all outstanding
Overadvances have been repaid, shall Agent or Lenders make any additional
Overadvances unless thirty (30) days or more have expired since the last date on
which any Overadvances were outstanding.
1.1.2 USE OF PROCEEDS. The Revolving Credit Loans shall be
used solely for the satisfaction of existing Indebtedness of Borrowers to
General Electric Capital Corporation and general operating and capital needs in
a manner consistent with the provisions of this Agreement and all applicable
laws. In no event shall any proceeds of any Revolving Credit Loans be used to
purchase or to carry, reduce, retire or refinance any Indebtedness incurred to
purchase or carry any margin stock (within the meaning of Regulations U or X of
the Federal Reserve Board).
1.2 TERM LOAN AND ACQUISITION LOANS.
1.2.1 TERM LOAN. On the Closing Date, subject to the
fulfillment or waiver of all conditions precedent to the effectiveness of this
Agreement, each Lender shall make term loans (collectively the "TERM LOAN") to
Borrowers in the aggregate principal amount equal to the amount set forth below
such Lender's name on the signature pages hereof (such Lender's "TERM LOAN
COMMITMENT"). The percentage equal to the quotient of (x) each Lender's Term
Loan Commitment, divided by (y) the aggregate of all Term Loan Commitments, is
the Lender's "TERM LOAN PERCENTAGE." The aggregate amount of the Term Loan
Commitments is Eight Million Dollars ($8,000,000). The Term Loan shall be
evidenced by one or more Term Notes to be executed and delivered by Borrowers to
Lenders on the Closing Date, which shall bear interest as specified in SECTION
2.1 and shall be repayable in accordance with the terms of Term Notes. The Term
Loan shall be funded upon the effectiveness of this Agreement. Amounts repaid
with respect to the Term Loan may not be reborrowed. The proceeds of the Term
Loan shall be used by Borrowers, solely for purposes for which the proceeds of
the Revolving Credit Loans are authorized to be used.
1.2.2 ACQUISITION LOANS. During the period commencing March 1,
1999, and ending on the day preceding the Acquisition Loan Commitment
Termination Date (the "ACQUISITION LOAN PERIOD"), each Lender agrees, for so
long as no Default or Event of Default exists, to make
4
<PAGE> 13
acquisition loans ("ACQUISITION LOAN(S)") to Borrowers to finance Permitted
Acquisitions consummated within the Acquisition Loan Period. The aggregate
amount of the Acquisition Loans to be made by each Lender (such Lender's
"ACQUISITION LOAN COMMITMENT"), pursuant to the terms hereof, shall be the
amount set below such Lender's name on the signature pages hereof or in the most
recent Assignment and Acceptance Agreement, if any, executed by such Lender. The
aggregate principal amount of the Acquisition Loan Commitments is Six Million
Dollars ($6,000,000). The Acquisition Loan shall be evidenced by one or more
Acquisition Notes to be executed and delivered by Borrowers to Lenders on the
Closing Date, which shall bear interest as specified in SECTION 2.1 and shall be
repayable in accordance with the terms of Acquisition Notes. The percentage
equal to the quotient of (x) each Lender's Acquisition Loan Commitment, divided
by (y) the aggregate of all Acquisition Loan Commitments, is that Lender's
"ACQUISITION LOAN PERCENTAGE." Subject to all of the terms and conditions of
this Agreement, each Lender agrees, for so long as no Default or Event of
Default exists, to make Acquisition Loans to Borrowers from time to time, as
requested by Borrowers in accordance with the terms of SECTION 3.1, up to a
maximum principal amount at any time outstanding equal to the product of (A) Six
Million Dollars ($6,000,000), multiplied by (B) such Lender's Acquisition Loan
Percentage. Amounts repaid with respect to the Acquisition Loans may not be
reborrowed. In no event shall any one request by Borrowers for Acquisition Loans
be in an aggregate amount of less than Five Hundred Thousand Dollars ($500,000).
1.3 LETTERS OF CREDIT; LC GUARANTIES. (A) Subject to all of the terms
and conditions of this Agreement, if requested to do so by a Borrower, Agent
shall, on behalf of Lenders, issue its, or cause to be issued Bank's Letters of
Credit for the account of Borrower or shall execute LC Guaranties by which
Lenders shall guaranty the payment or performance by such Borrower of its
reimbursement obligation with respect to Letters of Credit issued for such
Borrower's account by Bank or Agent; PROVIDED that the aggregate face amount of
all Letters of Credit and LC Guaranties outstanding at any time shall not exceed
One Million Dollars ($1,000,000) and no Letter of Credit may have an expiration
date that is after the Commitment Termination Date, unless Borrowers provide on
or prior to the Commitment Termination Date, Agent with cash collateral for said
Letter of Credit or LC Guaranty, in a manner and amount acceptable to Agent. Any
amounts paid by Agent or any Lender under any LC Guaranty or in connection with
any Letter of Credit (i) shall become part of the Obligations (ii) shall be paid
from the proceeds of a Revolving Credit Loan requested pursuant to SECTION
1.1.1, to the extent Lenders are required to make a Revolving Credit Loans
pursuant to the terms hereof, and (iii) otherwise, shall be payable on demand.
In no event shall Agent, Bank or Lenders be required to issue or cause to be
issued Letters of Credit or LC Guaranties at any time there exists a Default or
an Event of Default.
(B) Immediately upon the issuance of each Letter of Credit by
Agent or Bank or LC Guaranty by the Agent or a Lender hereunder, each Lender
shall be deemed to have automatically, irrevocably and unconditionally purchased
from the Agent or issuing Lender, as the case may be, an undivided interest and
participation in and to such Letter of Credit or LC Guaranty, the obligations of
Borrowers in respect thereof and the liability of the Agent or issuing Lender,
as the case may be, thereunder in an amount equal to the amount available for
drawing under such Letter of Credit or, in the case of a LC Guaranty, the amount
Guaranteed thereunder, multiplied by such Lender's Revolving Credit Percentage.
The Agent or the issuing Lender, as the case may be,
5
<PAGE> 14
will notify each Lender promptly upon presentation to it of a draw under a
Letter of Credit or a demand for payment under a LC Guaranty. On a weekly basis,
or more frequently if requested by Agent or the issuing Lender, each Lender
shall make payment to the Agent or issuing Lender, as the case may be, in
immediately available funds, of an amount equal to such Lender's pro rata share
of the amount of any payment made by Agent or the issuing Lender in respect to
any Letter of Credit or LC Guaranty. The obligation of each Lender to reimburse
the Agent or issuing Lender, as the case may be, under this SECTION 1.3 shall be
unconditional, continuing, irrevocable and absolute. In the event that any
Lender falls to make payment to the Agent or issuing Lender, as the case may be,
of any amount due under this SECTION 1.3, the Agent or the issuing Lender, as
the case may be, shall be entitled to receive, retain and apply against such
obligation the principal and interest otherwise payable to such Lender hereunder
until the Agent or issuing Lender, as the case may be, receives such payment
from such Lender or such obligation is otherwise fully satisfied; PROVIDED,
however, that nothing contained in this sentence shall relieve such Lender of
its obligation to reimburse the Agent or issuing Lender, as the case may be, for
such amount in accordance with this SECTION 1.3(B).
(C) Borrowers, jointly and severally, agree to
unconditionally, irrevocably and absolutely pay immediately to the Agent, for
the account of the Lenders, the amount drawn under a Letter of Credit or paid
pursuant to a LC Guaranty. If Borrowers at any time fails to make such payment,
Borrowers shall be deemed to have elected to borrow from the Lenders on such
date Revolving Credit Loans equal in aggregate amount to the amount paid by
Agent or the issuing Lender, as the case may be, under such Letter of Credit or
LC Guaranty.
1.4 JOINT AND SEVERAL LIABILITY; RIGHTS OF CONTRIBUTION.
(A) Each Borrower states and acknowledges that: (i)
pursuant to this Agreement, Borrowers desire to utilize their borrowing
potential on a consolidated basis to the same extent possible if they were
merged into a single corporate entity and that this Agreement reflects the
establishment of a credit facility which would not otherwise be available to any
Borrower if each Borrower were not jointly and severally liable for payment of
all of the Obligations; (ii) it has determined that it will benefit specifically
and materially from the advances of credit contemplated by this Agreement; (iii)
it is both a condition precedent to the obligations of Lenders hereunder and a
desire of the Borrowers that each Borrower execute and deliver to Lenders this
Agreement; and (iv) Borrowers have requested and bargained for the structure and
terms of and security for the advances contemplated by this Agreement.
(B) Each Borrower hereby irrevocably and
unconditionally: (i) agrees that it is jointly and severally liable to Lenders
for the full and prompt payment of the Obligations and the performance by each
Borrower of its obligations hereunder in accordance with the terms hereof; (ii)
agrees to fully and promptly perform all of its obligations hereunder with
respect to each advance of credit hereunder as if such advance had been made
directly to it; and (iii) agrees as a primary obligation to indemnify Agent and
each Lender on demand for and against any loss incurred by Agent or any Lender
as a result of any of the obligations of any one or more of the Borrowers being
or becoming void, voidable, unenforceable or ineffective for any reason
whatsoever, whether or not known to Agent or any Lender or any Person, the
amount of such loss being the amount which
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<PAGE> 15
Agent or such Lender would otherwise have been entitled to recover from any one
or more of the Borrowers.
(C) It is the intent of each Borrower that the
indebtedness, obligations and liability hereunder of neither of them be subject
to challenge on any basis, including, without limitation, pursuant to any
applicable fraudulent conveyance or fraudulent transfer laws. Accordingly, as of
the date hereof, the liability of each Borrower under this SECTION 1.4, together
with all of its other liabilities to all Persons as of the date hereof and as of
any other date on which a transfer or conveyance is deemed to occur by virtue of
this Agreement, calculated in amount sufficient to pay its probable net
liabilities on its existing Indebtedness as the same become absolute and matured
("DATED LIABILITIES") is, and is to be, less than the amount of the aggregate of
a fair valuation of its property as of such corresponding date ("DATED ASSETS").
To this end, each Borrower under this SECTION 1.4, (i) grants to and recognizes
in each other Borrower, ratably, rights of subrogation and contribution in the
amount, if any, by which the Dated Assets of such Borrower, but for the
aggregate of subrogation and contribution in its favor recognized herein, would
exceed the Dated Liabilities of such Borrower or, as the case may be, (ii)
acknowledges receipt of and recognizes its right to subrogation and contribution
ratably from each of the other Borrowers in the amount, if any, by which the
Dated Liabilities of such Borrower, but for the aggregate of subrogation and
contribution in its favor recognized herein, would exceed the Dated Assets of
such Borrower under this SECTION 1.4. In recognizing the value of the Dated
Assets and the Dated Liabilities, it is understood that Borrowers will
recognize, to at least the same extent of their aggregate recognition of
liabilities hereunder, their rights to subrogation and contribution hereunder.
It is a material objective of this SECTION 1.4 that each Borrower recognizes
rights to subrogation and contribution rather than be deemed to be insolvent (or
in contemplation thereof) by reason of an arbitrary interpretation of its joint
and several obligations hereunder. In addition to and not in limitation of the
foregoing provisions of this SECTION 1.4, Borrowers and each Lender hereby agree
and acknowledge that it is the intent of each Borrower and of each Lender that
the obligations of each Borrower hereunder be in all respects in compliance
with, and not be voidable pursuant to, applicable fraudulent conveyance and
fraudulent transfer laws.
1.5 STRUCTURE OF CREDIT FACILITY. Each Borrower agrees and acknowledges
that the present structure of the credit facilities detailed in this Agreement
is based in part upon the financial and other information presently known to
Lenders regarding each Borrower, the corporate structure of Borrowers, and the
present financial condition of each Borrower. Upon or after the occurrence of an
Event of Default and so long as it is continuing, each Borrower hereby agrees
that Agent shall have the right, in its sole credit judgment, to require that
any or all of the following changes be made to these credit facilities: (i)
restrict loans and advances between Borrowers, (ii) establish separate lockbox
and dominion accounts for each Borrower, (iii) separate the Revolving Credit
Loans into separate revolving credit loans to each of the Borrowers as shall be
determined by Required Lenders, (iv) separate the Term Loan into separate term
loans to each of the Borrowers as shall be determined by Required Lenders, and
(v) establish such other procedures as shall be reasonably deemed by
Required Lenders to be useful in tracking where Loans are made under this
Agreement and the source of payments received by Lenders on such Loans.
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<PAGE> 16
SECTION 2. INTEREST, FEES AND CHARGES
2.1 INTEREST.
2.1.1 RATES OF INTEREST.
(A) INTEREST. (i) Interest shall accrue on the Revolving
Credit and Term Base Rate Portion outstanding at the end of each day
(computed on the basis of a calendar year of 360 days and actual days
elapsed) at a fluctuating rate per annum equal to the sum of the Base
Rate Margin applicable to Revolving Credit and the Term Base Rate
Portion PLUS the Base Rate. Interest shall accrue on the Acquisition
Base Rate Portion outstanding at the end of each day (computed on the
basis of a calendar year of 360 days and actual days elapsed) at a
fluctuating rate per annum equal to the Base Rate Margin applicable to
Acquisition Loans plus the Base Rate. After the date hereof, the
foregoing rates of interest shall be increased or decreased, as the
case may be, by an amount equal to any increase or decrease in the Base
Rate, with such adjustments to be effective as of the opening of
business on the day that any such change in the Base Rate becomes
effective. The Base Rate in effect on the date hereof shall be the Base
Rate effective on the opening of business on the date hereof, but if
this Agreement is executed on a day that is not a Business Day, the
Base Rate in effect on the date hereof shall be the Base Rate effective
as of the opening of business on the last Business Day immediately
preceding the date hereof.
(ii) Interest shall accrue on each Revolving Credit
and Term Eurodollar Portion outstanding at the end of each day
(computed on the basis of a calendar year of 360 days and actual days
elapsed) at rates equal to the sum of the Eurodollar Rate applicable to
each such Revolving Credit and Term Eurodollar Portion PLUS the
Eurodollar Margin applicable to the Revolving Credit and Term
Eurodollar Portion Loan. Interest shall accrue on each Acquisition
Eurodollar Portion outstanding at the end of each day (computed on the
basis of a calendar year of 360 days and actual days elapsed) at rates
equal to the sum of the Eurodollar Rate applicable to each such
Acquisition Eurodollar Portion PLUS the Eurodollar Margin applicable to
Acquisition Eurodollar Portion.
BASE RATE MARGIN shall mean (i)(a) with respect to
the Revolving Credit and Term Base Rate Portion, as of the Closing
Date, 1.00% per annum, and (b) with respect to the Acquisition Base
Rate Portion as of the Closing Date, 1.25% per annum, and (ii)
thereafter, as of February 1, May 1, August 1 and November 1 of each
year (each, an "ADJUSTMENT DATE"), commencing on November 1, 1999, the
Base Rate Margin shall be adjusted, if necessary, to the applicable
percent per annum set forth in the pricing table below opposite the
Total Indebtedness to EBITDA Ratio calculated in the manner described
in SECTION 8.3.3 for the trailing twelve month period ending on the
last day of the most recently completed calendar quarter prior to the
applicable Adjustment Date (each such period, a "CALCULATION PERIOD").
EURODOLLAR MARGIN shall mean shall mean (i)(a) with
respect to the Revolving Credit and Term Base Rate Portion, as of the
Closing Date, 2.75% per annum, and (b) with respect to the Acquisition
Base Rate Portion as of the Closing Date, 3.00% per annum, and
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<PAGE> 17
(ii) thereafter, as of each Adjustment Date, commencing on November 1,
1999, the Eurodollar Margin shall be adjusted, if necessary, to the
applicable percent per annum set forth in the pricing table below
opposite the Total Indebtedness to EBITDA Ratio calculated for the
applicable Calculation Period.
PRICING TABLE
<TABLE>
<CAPTION>
Base Rate Margin Eurodollar Margin
----------------------------------- ---------------------------------
Revolving
Revolving Credit and
Credit and Term Acquisition Term Acquisition
Total Indebtedness to EBITDA Base Rate Base Rate Eurodollar Eurodollar
Ratio Portion Portion Portion Portion
- ------------------------------- --------------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Equal to or greater than 4:00:1 2.00% 2.25% 3.50% 3.75%
Greater than or equal to 3.50:1
but less than 4.00:1 1.50% 1.75% 3.00% 3.25%
Greater than or equal to 3.00:1
but less than 3.50:1 0.75% 1.00% 2.50% 2.75%
Less than 3.00:1 0.50% 0.75% 2.00% 2.25%
</TABLE>
If Borrowers shall fail to deliver a Compliance Certificate by
the date required pursuant to SECTION 8.1.3 with respect to any calendar
quarter, effective as of the first Business Day of the immediately succeeding
calendar month and continuing through the day preceding the earlier of (i) the
next succeeding Adjustment Date or (ii) the subsequent delivery of the
delinquent Compliance Certificate, each applicable Base Rate Margin and each
applicable Eurodollar Margin shall be conclusively presumed to equal the highest
applicable Base Rate Margin and the highest applicable Eurodollar Margin
specified in the pricing table set forth above. Subject to SECTION 2.1.2, in the
event a Default (other than a Default arising as a result of the failure to
deliver the Compliance Certificate as required by SECTION 8.1.3) has occurred
and is continuing as of any Adjustment Date, any reduction in the Base Rate
Margin or the Eurodollar Margin, as the case may be, which would have otherwise
occurred shall be postponed until the time such Default has been cured to the
satisfaction of Agent and Required Lenders or waived by Agent or Required
Lenders as applicable.
(B) EURODOLLAR OPTION.
(i) CONDITIONS FOR BASING INTEREST ON THE EURODOLLAR
RATE. Upon the condition that:
(a) Agent shall have received a Eurodollar Request
from Borrowers at least 2 Business Days prior to the first day of the
Eurodollar Period;
(b) There shall have occurred no change in applicable
law which would make it unlawful for any Lender to obtain deposits of
U.S. dollars in the London interbank foreign currency deposits market;
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<PAGE> 18
(c) As of the date of the Eurodollar Request and the
first day of the Eurodollar Period, there shall exist no Default or
Event of Default which has not been waived by Required Lenders; and
(d) Agent shall have determined in good faith that
Lenders are able to determine the Eurodollar Rate in respect of the
requested Eurodollar Period and that Lenders are able to obtain
deposits of U.S. dollars in the London interbank foreign currency
deposits market in the applicable amounts and for the requested
Eurodollar Period;
then interest on the Eurodollar Portion requested during the Eurodollar
Period requested will be based on the applicable Eurodollar Rate. Agent
shall give each Lender prompt written notice by telecopier, telex or
cable of any Eurodollar Request made by Borrowers in accordance with
the terms hereof. The foregoing notwithstanding, Borrowers acknowledge
that there may not be more than five Eurodollar Portions outstanding at
any one time.
(ii) INDEMNIFICATION FOR FUNDING AND OTHER LOSSES.
Each Eurodollar Request shall be irrevocable and binding on Borrowers.
Borrowers shall, jointly and severally, indemnify Agent and Lenders
against any expense or loss suffered by Agent or any Lender as a result
of any failure on the part of any Borrower to fulfill, on or before the
date specified in any Eurodollar Request, the applicable conditions set
forth in this Agreement or as a result of the prepayment of the
applicable Eurodollar Portion prior to the last day of the applicable
Eurodollar Period, including, without limitation, any loss (including
loss of anticipated profits) or expense incurred by reason of the
liquidation or redeployment of deposits or other funds acquired by
Agent or any Lender to fund or maintain the requested Eurodollar
Portion. Upon request by Borrowers, Agent or any applicable Lender
shall provide the Borrowers with a certificate of an officer of Agent
or such Lender setting forth the calculation of the amount of any such
loss and the basis therefor, which calculation shall, in the absence of
manifest error be conclusive.
(iii) CHANGE IN APPLICABLE LAWS, REGULATIONS, ETC. If
any Legal Requirement becoming effective after the date hereof shall
make it unlawful for any Lender to fund through the purchase of U.S.
dollar deposits any Eurodollar Portion or otherwise to give effect to
its obligations as contemplated under this SECTION 2.1 1(B), or shall
impose on any Lender any costs based on or measured by the excess above
a specified level of the amount of a category of deposits or other
liabilities of such Lender which includes deposits by reference to
which the Eurodollar Rate is determined as provided herein or a
category of extensions of credit or other assets of such Lender which
includes any Eurodollar Portion, or shall impose on any Lender any
restrictions on the amount of such a category of liabilities of assets
which such Lender may hold, (a) Agent may by notice thereof to
Borrowers terminate the Eurodollar Option as of a date which is no
earlier than the date required by applicable law, the date on which any
such cost is imposed or the date on which any such restriction becomes
effective, with respect to the Loans made or to be made by such Lender,
(b) any Eurodollar Portion outstanding as of the date the Eurodollar
Option is terminated shall thereafter bear interest at the rate
provided for in Section 2.1.1(A)(i) payable on the dates provided
for in SECTION 3.2.2 and (c) Borrowers shall, jointly and severally,
indemnify
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<PAGE> 19
such Lender against any out-of-pocket loss, penalty or expense incurred
by such Lender by reason of the liquidation or redeployment of deposits
or other funds acquired by such Lender to fund or maintain such
Eurodollar Portion. The applicable Lender shall promptly give Borrowers
and Agent prompt written notice of when such condition shall cease to
exist.
(iv) TAXES. It is the understanding of Borrowers and
Agent and Lenders that Lenders shall receive payments of amounts of
principal of and interest on the Revolving Credit Loans, the Term Loan
and the Acquisition Loans with respect to the Eurodollar Portions from
time to time subject to a Eurodollar Option free and clear of, and
without deduction for, any Taxes. If (i) any Lender shall be subject to
any such Tax in respect of any such Eurodollar Portion or any part
thereof or (ii) Borrowers shall be required to withhold or deduct any
such Tax from any such amount, the Eurodollar Rate applicable to such
Eurodollar Portion shall be adjusted by Agent on behalf of any such
Lender to reflect all additional costs incurred by such Lender in
connection with the payments by any such Lender or the withholding by
any Borrower of such Tax and Borrowers shall provide Agent and such
Lender with a statement detailing the amount of any such Tax actually
paid by such Borrower. Determination by Agent on behalf of such Lender
of the amount of such costs shall, in the absence of manifest error, be
conclusive, and at Borrowers' request, Agent shall demonstrate the
basis of such determination. If after any such adjustment, any part of
any Tax paid by any such Lender is subsequently recovered by such
Lender, such Lender shall promptly reimburse Borrowers to the extent of
the amount so recovered. A certificate of an officer of such Lender
setting forth the amount of such recovery and the basis therefor shall,
in the absence of manifest error, be conclusive. Notwithstanding
anything contained in this clause (iv) to the contrary each Lender
hereby agrees to change the lending office at which it accepts payments
of principal and interest from Borrowers pursuant to this Agreement if,
as a result of such change, any such Taxes could be legally avoided and
if any such change in lending office(s) does not impose additional
costs upon such Lender.
2.1.2 DEFAULT RATE OF INTEREST. Upon and after the occurrence
of an Event of Default, and during the continuation thereof, the principal
amount of all Loans shall, upon written notice from Agent to Holdings (except
that no such notice will be required with respect to any Event of Default
specified in SECTION 10.1.9), commence to bear interest at a rate per annum
equal to two percent (2%) above the interest rate otherwise applicable thereto
(the "DEFAULT RATE").
2.1.3 MAXIMUM INTEREST. (A) Notwithstanding anything to the
contrary in this Agreement or otherwise, (i) if at any time the amount of
interest computed on the basis of an Applicable Annual Rate or a Default Rate
would exceed the amount of such interest computed upon the basis of the maximum
rate of interest permitted by applicable state or federal law in effect from
time to time hereafter (the "MAXIMUM LEGAL RATE"), the interest payable under
this Agreement shall be computed upon the basis of the Maximum Legal Rate, but
any subsequent reduction in such Applicable Annual Rate or Default Rate, as
applicable, shall not reduce such interest thereafter payable hereunder below
the amount computed on the basis of the Maximum Legal Rate until the aggregate
amount of such interest accrued and payable under this Agreement equals the
total amount of interest which would have accrued if such interest had been at
all times computed solely on the basis of an Applicable Annual Rate or Default
Rate, as applicable; and (ii) unless preempted by
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<PAGE> 20
federal law, an Applicable Annual Rate or Default Rate, as applicable, from time
to time in effect hereunder may not exceed the "indicated ceiling rate" from
time to time in effect under Tex. Rev. Civ. Stat. Ann. art 5069-1.04(c) (Vernon
1987). If the applicable state or federal law is amended in the future to allow
a greater rate of interest to be charged under this Agreement than is presently
allowed by applicable state or federal law, then the limitation of interest
hereunder shall be increased to the maximum rate of interest allowed by
applicable state or federal law as amended, which increase shall be effective
hereunder on the effective date of such amendment, and all interest charges
owing to Lender by reason thereof shall be payable in accordance with SECTION
3.2.2.
(B) EXCESS INTEREST. No agreements, conditions, provisions or
stipulations contained in this Agreement or any other instrument, document or
agreement between Borrowers, Agent and Lenders or default of Borrowers, or the
exercise by Agent or Lenders of the right to accelerate the payment of the
maturity of principal and interest, or to exercise any option whatsoever
contained in this Agreement or any other Loan Document, or the arising of any
contingency whatsoever, shall entitle Agent or Lenders to contract for, charge,
or receive, in any event, interest exceeding the Maximum Legal Rate. In no event
shall Borrowers be obligated to pay interest exceeding such Maximum Legal Rate
and all agreements, conditions or stipulations, if any, which may in any event
or contingency whatsoever operate to bind, obligate or compel Borrowers to pay a
rate of interest exceeding the Maximum Legal Rate, shall be without binding
force or effect, at law or in equity, to the extent only of the excess of
interest over such Maximum Legal Rate. In the event any interest is contracted
for, charged or received in excess of the Maximum Legal Rate ("EXCESS INTEREST")
Borrowers acknowledge and stipulate that any such contract, charge, or receipt
shall be the result of an accident and bona fide error, and that any Excess
Interest received by Lenders shall be applied, first, to reduce the principal
then unpaid hereunder; second, to reduce the other Obligations; and third,
returned to Borrowers, it being the intention of the parties hereto not to enter
at any time into a usurious or otherwise illegal relationship. Borrowers
recognize that, with fluctuations in the Base Rate, the Eurodollar Rate and the
Maximum Legal Rate, such a result could inadvertently occur. By the execution of
this Agreement, Borrowers covenant that (i) the credit or return of any Excess
Interest shall constitute the acceptance by Borrowers of such Excess Interest,
and (ii) Borrowers shall not seek or pursue any other remedy, legal or
equitable, against Agent or Lenders, based in whole or in part upon contracting
for, charging or receiving of any interest in excess of the maximum authorized
by applicable law. For the purpose of determining whether or not any Excess
Interest has been contracted for, charged or received by Agent or Lenders, all
interest at any time contracted for, charted or received by Agent or Lenders in
connection with this Agreement shall be amortized, prorated, allocated and
spread in equal parts during the entire term of this Agreement.
(C) INCORPORATION BY THIS REFERENCE. The provisions of SECTION
2.1.3(A) and SECTION 2.1.3(B) shall be deemed to be incorporated into every
document or communication relating to the Obligations which sets forth or
prescribes any account, right or claim or alleged account, right or claim of
Agent or Lenders with respect to Borrowers (or any other obligor in respect of
Obligations), whether or not any provision of SECTION 2.1.3(A) or SECTION
2.1.3(B) is referred to therein. All such documents and communications and all
figures set forth therein shall, for the sole purpose of computing the extent of
the Obligations and obligations of the Borrowers (or any other obligor) asserted
by Agent or Lenders thereunder, be automatically recomputed by Borrowers or
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<PAGE> 21
obligor, and by any court considering the same, to give effect to the
adjustments or credits required by SECTION 2.1.3(A) or SECTION 2.1.3(B).
2.2 COMPUTATION OF INTEREST AND FEES. Interest, unused line fees,
Letter of Credit and LC Guaranty fees and collection charges hereunder shall be
calculated daily and shall be computed on the actual number of days elapsed over
a year of 360 days.
2.3 LETTER OF CREDIT AND LC GUARANTY FEES. Borrowers, on a joint and
several basis, shall pay to Agent for its benefit and the ratable benefit of
Lenders committed to make Revolving Credit Loans for standby Letters of Credit
and LC Guaranties of standby Letters of Credit, a fee equal to (i) (a) the LC
Amount, MULTIPLIED BY (b) the applicable Eurodollar Margin (on a per annum
basis) for the Revolving Credit and Term Eurodollar Portion, PLUS (ii) all
normal and customary charges associated with the issuance thereof, which fees
and charges shall be deemed fully earned upon issuance of each such Letter of
Credit or LC Guaranty, shall be due and payable on the first Business Day of
each month and shall not be subject to rebate or proration upon the termination
of this Agreement for any reason.
2.4 UNUSED LINE FEE. Borrowers, on a joint and several basis, shall pay
to Agent for the ratable benefit of Lenders an unused line fee equal to (i)
one-half percent (0.50%) per annum of the amount by which the Average Monthly
Revolving Credit Loan Balance is less than the Revolving Credit Loan Commitment
PLUS (ii) commencing on March 1, 1999, one-half percent (0.50%) per annum of the
amount by which the Average Monthly Acquisition Loan Balance is less than the
Acquisition Loan Commitment. The unused line fee shall be payable monthly in
arrears on the first day of each calendar month hereafter.
2.5 AUDIT AND APPRAISAL FEES. Borrower shall pay to Agent for its
reasonable out-of-pocket audit and appraisal costs and expenses in connection
with audits and appraisals of Borrower's books and records and such other
matters as Agent shall deem appropriate, plus all reasonable out-of-pocket costs
and expenses incurred by Agent in connection with such audits and appraisals.
Such amounts shall be payable on the first day of the month following the date
of issuance by Agent of a request for payment thereof to Borrowers.
2.6 REIMBURSEMENT OF EXPENSES. If, at any time or times regardless of
whether or not an Event of Default then exists, Agent (and, with respect to
SECTIONS 2.6(iii), 2.6(iv), and 2.6(v), any Lender) incurs reasonable legal or
accounting expenses or any other reasonable out-of-pocket costs and expenses in
connection with (i) the negotiation and preparation of this Agreement or any of
the other Loan Documents, any amendment of or modification of this Agreement or
any of the other Loan Documents, or any sale or attempted sale of any interest
herein by a Lender to a new Lender or to a Participating Lender; (ii) the
administration of this Agreement or any of the other Loan Documents and the
transactions contemplated hereby and thereby, including inspections and
verifications of Collateral; (iii) any litigation, contest, dispute, suit,
proceeding or action (whether instituted by Agent, any Lender, any Borrower or
any other Person) in any way relating to the Collateral, this Agreement or any
of the other Loan Documents or any Borrower's affairs except where, pursuant to
a final non-appealable order, such litigation, contest, dispute, suit,
proceeding or action is determined adversely to Agent and Lenders; (iv) any
attempt to enforce any rights of Agent
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<PAGE> 22
or any Lender against any Borrower or any other Person which may be obligated to
Agent or any Lender by virtue of this Agreement or any of the other Loan
Documents, including, without limitation, the Account Debtors; or (v) any
attempt to protect, preserve, restore, collect, sell, liquidate or otherwise
dispose of or realize upon the Collateral; then all such reasonable legal and
accounting expenses, reasonable other costs and reasonable out of pocket
expenses of Agent (and, with respect to SECTIONS 2.6(iii), 2.6(iv), and 2.6(v),
any Lender) shall be charged to Borrowers. All amounts chargeable to Borrowers
under this SECTION 2.6 shall be Obligations secured by all of the Collateral,
shall be payable on demand to Agent or to such Lender, as the case may be, and
shall bear interest from the date such demand is made until paid in full at the
rate applicable to Revolving Credit Base Rate Portions from time to time. Agent
will give same-day written notice to Borrower of amounts so advanced and charged
to Borrower's Loan Account under this SECTION 2.6. Borrowers, on a joint and
several basis, shall also reimburse Agent or Lenders for all reasonable
out-of-pocket costs and expenses incurred by Agent or Lenders in its or their
administration of the Collateral to the extent and in the manner provided in
SECTION 6.
2.7 BANK CHARGES. Borrowers, on a joint and several basis, shall pay to
Agent (for its own benefit or the benefit of a Lender, as applicable) on demand,
any and all fees, costs or expenses which Agent or any Lender pays to a bank or
other similar institution (including, without limitation, any fees paid by any
Lender to any Participating Lender) arising out of or in connection with (i) the
forwarding to any Borrower or any other Person on behalf of any Borrower, by
Agent or any Lender, of proceeds of Loans made by Lenders to Borrowers pursuant
to this Agreement and (ii) the depositing for collection, by Agent or any
Lender, of any check or item of payment received or delivered to Agent or any
Lender on account of the Obligations.
2.8 CAPITAL ADEQUACY CHARGE. In the event that any Lender shall have
determined that the adoption (effected after the date hereof) of any law, rule
or regulation regarding capital adequacy, or any change therein or in the
interpretation or application thereof or compliance by any Lender with any
request or directive regarding capital adequacy (whether or not having the force
of law) from any central bank or governmental authority, does or shall have the
effect of reducing the rate of return on such Lender's capital as a consequence
of its obligations hereunder to a level below that which such Lender could have
achieved but for such adoption, chance or compliance (taking into consideration
such Lender's policies with respect to capital adequacy) by an amount deemed by
such Lender, in its reasonable discretion, to be material, then from time to
time, after submission by such Lender to Borrowers of a written demand therefor,
which demand shall be made within sixty (60) days of such reduction, Borrowers,
on a joint and several basis, shall pay to such Lender such additional amount or
amounts as will compensate such Lender for such reduction. A certificate of such
Lender claiming entitlement to payment as set forth above shall be conclusive in
the absence of manifest error. Such certificate shall set forth the nature of
the occurrence giving rise to such payment, the additional amount or amounts to
be paid to such Lender, and the method by which such amounts were determined. In
determining such amount, such Lender may use any reasonable averaging and
attribution methods. Each Lender and Agent agrees to allocate any such cost
increase among its similarly situated customers in good faith and on an
equitable basis; provided, however, that any such Lender shall not be entitled
to such amounts unless similar assessments are imposed by such Lenders on other
comparable borrowers of such Lender.
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<PAGE> 23
2.9 CLOSING FEE. Borrowers, on a joint and several basis, shall pay to
FCC the closing fee referred to in that certain fee letter from FCC to Holdings
dated the Closing Date, which fee shall be fully earned and nonrefundable on the
Closing Date and shall be paid concurrently with the initial Loan hereunder.
2.10 AGENTS FEE. Borrowers, on a joint and several basis, shall pay to
FCC the Agent's fee referred to in that certain fee letter from FCC to Holdings
dated the Closing Date, which fee shall be paid on the Closing Date and on each
anniversary date thereafter.
SECTION 3. LOAN ADMINISTRATION.
3.1 MANNER OF BORROWING LOANS. Borrowings under the credit facility
established pursuant to SECTION 1 shall be as follows:
3.1.1 LOAN REQUESTS. A request for a Revolving Credit Loan or
an Acquisition Loan shall be made, or shall be deemed to be made, in the
following manner: (i) Borrowers may give Agent a Notice of Revolving Credit Loan
or Acquisition Loan, in which notice Borrowers shall specify the amount of the
proposed borrowing and the proposed borrowing date, PROVIDED, however, that no
such request may be made at a time when there exists a Default or an Event of
Default; and (ii) the becoming due of any amount required to be paid under this
Agreement, the Term Note or any Acquisition Note, whether as interest or for any
other Obligation, shall be deemed irrevocably to be a request for a Revolving
Credit Loan on the due date in the amount required to pay such interest or other
Obligation. As an accommodation to Borrowers, Agent may permit telephonic
requests for loans and electronic transmittal of instructions, authorizations,
agreements or reports to Agent by Borrowers. Unless Borrowers specifically
direct Agent in writing not to accept or act upon telephonic or electronic
communications from Borrowers, Agent shall have no liability to any Borrower for
any loss or damage suffered by any Borrower as a result of Agent's honoring of
any requests, execution of any instructions, authorizations or agreements or
reliance on any reports communicated to it telephonically or electronically and
purporting to have been sent to Agent by any Borrower and Agent shall have no
duty to verify the origin of any such communication or the authority of the
person sending it. Except as otherwise provided in SECTION 2.1. 1(B), each
Revolving Credit Loan and each Acquisition Loan shall be made on notice, given
not later than 11:00 a.m. (Dallas time) on the Business Day of the proposed
Revolving Credit Loan or Acquisition Loan, by Borrowers to Agent, which shall
give to each Lender prompt written notice thereof by telecopy, telex or cable.
Each such notice (a "NOTICE OF REVOLVING CREDIT LOAN" or a "NOTICE OF
ACQUISITION LOAN," as applicable) shall be in writing or by telephone to Agent
at (214) 828-6500, confirmed immediately in writing, specifying therein the
requested date and amount of such Revolving Credit Loan or Acquisition Loan.
Each Lender shall, not later than 2:00 p.m. (Dallas time) on each requested
date, wire to a bank designated by Agent the amount of that Lender's Revolving
Credit Percentage of the requested Revolving Credit Loan or the amount of that
Lender's Acquisition Loan Percentage of the requested Acquisition Loan. Agent
shall, before 2:30 P.M. (Dallas time) on the date of the proposed Revolving
Credit Loan or proposed Acquisition Loan, subject to the provisions hereof, wire
to a bank designated by Borrowers and reasonably acceptable to Agent, the amount
of such Revolving Credit Loan or Acquisition Loan to the extent received from
the Lenders. The failure of any Lender to make the Revolving Credit Loan or
Acquisition Loan to be made by it shall not relieve any other
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Lender of its obligation hereunder to make its Revolving Credit Loan or
Acquisition Loan. Neither Agent nor any other Lender shall be responsible for
the failure of any other Lender to make the Revolving Credit Loan or Acquisition
Loan to be made by such other Lender. The foregoing notwithstanding, unless
otherwise notified by any Lender, Agent, in its sole discretion, may, from its
own funds, make a Revolving Credit Loan or Acquisition Loan on behalf of any
Lender hereto. In such event, the Lender on behalf of whom Agent made the
Revolving Credit Loan or Acquisition Loan shall reimburse Agent for the amount
of Revolving Credit Loan or Acquisition Loan so made on its behalf, on a weekly
(or more frequent basis as determined by Agent, in its sole discretion) basis
and the entire amount of interest attributable to such Revolving Credit Loan or
Acquisition Loan for the period from the date on which said Revolving Credit
Loan or Acquisition Loan was made by Agent on such Lender's behalf until Agent
is reimbursed by such Lender, shall be paid to Agent. The foregoing
notwithstanding, Lenders shall not be required to make any Acquisition Loans,
unless Borrowers have fully complied with the provisions of SECTION 1.2.2.
If at any time one or more Lenders refuse or fail to make a requested
Revolving Credit Loan or Acquisition Loans when all conditions to a Revolving
Credit Loan or Acquisition Loan have been satisfied or waived, then Agent may,
at its option, but shall have no obligation whatsoever to, purchase all, but not
less than all, of the Revolving Credit Notes, Term Notes and Acquisition Loan
Notes held by the Lender(s) who so fail or refuse, and to assume such Lender's
commitments to make Revolving Credit Loans or Acquisition Loans and each such
Lender shall be obligated to sell and transfer such Revolving Credit Notes, Term
Notes or Acquisition Notes to Agent for a price in cash equal to the principal
balance outstanding plus all accrued but unpaid interest thereon plus all
accrued fees due any such Lender under the terms hereof, and the foregoing
provisions of this Section will be applicable to Agent with respect to the
Revolving Credit Notes or Acquisition Notes so purchased by it. Any such
purchase, however, shall not relieve any such Lender from any breach of contract
claims available to Agent and/or any Borrower against such Lender as a result of
its failure to make any such Revolving Credit Loan or Acquisition Loan.
3.1.2 DISBURSEMENT. Each Borrower hereby irrevocably
authorizes Lender to disburse the proceeds of the Term Loan, the Acquisition
Loans and each Revolving Credit Loan requested, or deemed to be requested,
pursuant to this SECTION 3.1.2 as follows: (i) the proceeds of the Term Loan,
each Acquisition Loan and of each Revolving Credit Loan shall be disbursed by
Agent in lawful money of the United States of America in immediately available
funds, in the case of the initial borrowing, in accordance with the terms of the
written disbursement letter from Borrowers, and in the case of each subsequent
borrowing, by wire transfer to such bank account as may be agreed upon by
Borrowers and Agent from time to time or elsewhere if pursuant to a written
direction from Borrowers; and (ii) the proceeds of each Revolving Credit Loan
requested under SECTION 3.1.1(ii) shall be disbursed by Agent by way of direct
payment of the relevant interest or other Obligation.
3.1.3 AUTHORIZATION. Each Borrower hereby irrevocably
authorizes Agent, in Agent's sole discretion, to advance to Borrowers, and to
charge to Borrowers' Loan Account hereunder as a Revolving Credit Loan, a sum
sufficient to pay all interest accrued on the Obligations during the immediately
preceding month and to pay all costs, fees and expenses at any time owed by any
Borrower to Agent or Lenders hereunder.
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3.2 PAYMENTS. Except where evidenced by notes or other instruments
issued or made by Borrowers to Agent or Lenders specifically containing payment
provisions which are in conflict with this SECTION 3.2 (in which event the
conflicting provisions of said notes or other instruments shall govern and
control), the Obligation shall be payable as follows:
3.2.1 PRINCIPAL. Principal payable on account of Revolving
Credit Loans shall be payable by Borrowers, on a joint and several basis, to
Agent for its benefit and the ratable benefit of Lenders immediately upon the
earliest of (i) the receipt by Agent or any Borrower of any proceeds of any
Collateral other than, except as otherwise provided in this Agreement, Equipment
or real Property, to the extent of said proceeds, (ii) the occurrence of an
Event of Default in consequence of which Agent or Required Lenders elect to
accelerate the maturity and payment of the Obligations, or (iii) termination of
this Agreement pursuant to SECTION 4; PROVIDED, however, that if an Overadvance
shall exist at any time, Borrowers, on a joint and several basis, shall, on
demand, repay the Overadvance; provided, further, that if any such payment
pursuant to clause (i) above would result in the prepayment of any Eurodollar
Portion, then the Borrower receiving such proceeds may at its option direct that
such proceeds be held by Agent in a non-interest bearing cash collateral account
maintained by Agent to be applied to the payment of principal until the earlier
of the last day of the Eurodollar Period applicable to each Eurodollar Portion
in the order of maturity or the occurrence of an Event of Default. Principal
payable on account of the Term Loan and any Acquisition Loan shall be payable by
Borrowers, on a joint and several basis, to Agent for the ratable benefit of
Lenders in accordance with the terms and conditions of the Term Note, the
applicable Acquisition Note and the provisions of this Agreement.
3.2.2 INTEREST. Interest accrued on the Base Rate Portion and
each Eurodollar Portion shall be due on the earliest of (i) the first day of
each month (for the immediately preceding month), computed through the last
calendar day of the preceding month, (ii) the occurrence of an Event of Default
in the consequence of which Agent or Required Lenders elect to accelerate the
maturity and payment of the Obligations or (iii) termination of this Agreement
pursuant to SECTION 4; PROVIDED, however, the Borrower hereby irrevocably
authorize Agent on behalf of Lenders, in Agent's sole discretion, to advance to
Borrower and to charge to Borrower's Loan Account hereunder as a Revolving
Credit Loan, a sum sufficient each month to pay all interest accrued on the Base
Rate Portion and each Eurodollar Portion during the immediately preceding month.
3.2.3 COSTS, FEES AND CHARGES. Costs, fees and charges payable
pursuant to this Agreement shall be payable by Borrowers, on a joint and several
basis, as and when provided in SECTION 2, to Agent for its benefit and the
ratable benefit of Lenders or to any other Person designated by Agent in
writing.
3.2.4 OTHER OBLIGATIONS. The balance of the Obligations
requiring the payment of money, if any, shall be payable by Borrowers, on a
joint and several basis, to Agent for its benefit and the ratable benefit of
Lenders as and when provided in this Agreement, the Other Agreements or the
Security Documents, or on demand, whichever is later.
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3.3 MANDATORY PREPAYMENTS.
3.3.1 PROCEEDS OF SALE, LOSS, DESTRUCTION OR CONDEMNATION OF
COLLATERAL. Except as provided in SECTION 6.4.2, if any Borrower sells any of
the Equipment, the Meadowlake Facility, or any other real Property, or if a
permitted disposition of the Mission Vista Facility is consummated during the
continuance of an Event of Default, or if any of the Collateral is lost or
destroyed or taken by condemnation, Borrowers, on a joint and several basis,
shall pay to Agent for the ratable benefit of Lenders, unless otherwise agreed
by Required Lenders, as and when received by such Borrower and as a mandatory
prepayment of (x) the Acquisition Loans or (y) if the Acquisition Loans are paid
in full, the Term Loans, a sum equal to the proceeds (including insurance
payments) received by such Borrower from such sale, loss, destruction or
condemnation, PROVIDED, that if no Event of Default exists when such proceeds
are received by such Borrower, the amount of such proceeds payable to Agent
under this SECTION 3.3.1 shall be net of (a) any reasonable costs of sale or
disposition incurred by Borrowers in connection therewith, (b) provisions for
any income tax expense reasonably expected to be incurred by Borrowers as a
result of such sale or disposition, and, (c) cash escrow or similar deposits
required to be made by such Borrower for the benefit of the purchaser in such
sale transaction as security for post-closing contingent liabilities of such
Borrower in order to enable such Borrower to consummate such sale transaction
(but any amounts released to such Borrower from any deposit of the type
described in the preceding clause (c) made by such Borrower shall, upon receipt
by Borrower, be deemed proceeds subject to the provisions of this SECTION 3.3.1
and shall be promptly paid over to Agent for application in accordance with the
provisions hereof). Any such prepayments shall be applied ratably among Lenders
to principal installments due under the Acquisition Notes or Term Notes, as
applicable, in the inverse order of maturity. Notwithstanding the foregoing,
unless an Event of Default exists at the time such proceeds are received by
Borrower, up to $250,000 of the aggregate amount of such net proceeds received
by all Borrowers during any period of twelve consecutive months by reason of
such transactions or occurrences, plus additional amounts so received and
expended pursuant to and for the purposes referenced in SECTION 6.4.2(II)
may be retained by Borrowers and shall not be subject to prepayment under this
SECTION 3.3.1. In addition, unless an Event of Default exists at the time of
such disposition, the provisions of this SECTION 3.3.1 shall not be applicable
to a disposition of the Mission Vista Facility made in accordance with SECTION
6.3.2. The provisions of this SECTION 3.3.1 shall not be applicable to a
disposition of the Midvale Facility made in accordance with SECTION 6.3.3 or to
a disposition of the Oklahoma LLC Interests made in accordance with SECTION
6.3.4.
3.3.2 EXCESS CASH FLOW RECAPTURE. Borrowers, on a joint and
several basis, shall prepay the Term Loan in amounts equal to Holdings' Excess
Cash Flow with respect to each fiscal year of Holdings ending on or after June
30, 1999, such prepayments to be made within 2 Business Days following the due
date for delivery by Borrowers to Agent and Lenders of the annual financial
statements required by SECTION 8.1.3(i) and each such prepayment shall be
applied to the installments of principal due under the Term Loan in the inverse
order of their maturities until payment thereof in full.
3.4 APPLICATION OF PAYMENTS AND COLLECTIONS. All items of payment
received by Agent by 12:00 noon, Dallas, Texas time, on any Business Day shall
be deemed received on that Business Day. All items of payment received after
12:00 noon, Dallas, Texas time, on any Business Day shall be deemed received on
the following Business Day. For the purpose of computing interest
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hereunder, all items of payment received by Agent shall be deemed applied by
Agent on account of the Obligations on the first Business Day after receipt of
final payment of such item in immediately good funds. Each Borrower irrevocably
waives the right to direct the application of any and all payments and
collections at any time or times hereafter received by Agent from or on behalf
of any Borrower during the continuance of any Event of Default, and each
Borrower does hereby irrevocably agree that, subject to Borrowers' rights under
SECTIONS 3.3.1, 3.7 and 6.4.2, Agent shall have the continuing exclusive right
at all times during the continuance of an Event of Default to apply and reapply
any and all such payments and collections received at any time or times
hereafter by Agent or its agent against the Obligations, in such manner as Agent
may deem advisable, notwithstanding any entry by Agent upon any of its books and
records. If as the result of collections of Accounts as authorized by SECTION
6.2.6 a credit balance exists in the Loan Account with respect to the Revolving
Credit Loans, Agent shall use its commercially reasonable efforts to give
Borrowers prompt notice (which may be oral) of any such credit balance. Such
credit balance shall not accrue interest in favor of Borrowers, but shall be
available to Borrowers at any time or times, subject to application as provided
in the next- following sentence, and, if not applied in accordance with the
next-following sentence, Agent shall cause the amount of such credit balance as
of the opening of each Business Day (net of reasonable out-of-pocket costs and
expenses incurred by Agent in connection therewith, which Agent may deduct from
the proceeds to be transferred) to be wire-transferred to the Operating Account
before the close of business on such Business Day. Any such transfer shall be at
the sole cost and expense of Borrowers. Such credit balance shall not be applied
or be deemed to have been applied as a prepayment of the Term Loan or the
Acquisition Loans, except that Agent may, at its option, offset such credit
balance against any of the Obligations upon and after the occurrence of an Event
of Default.
3.5 ALL LOANS TO CONSTITUTE ONE OBLIGATION. The Loans shall constitute
one general Obligation of Borrowers, and shall be secured by Agent's Lien (for
its benefit and the ratable benefit of Lenders) upon all of the Collateral.
3.6 LOAN ACCOUNT. Agent shall enter all Loans as debits to the Loan
Account and shall also record in the Loan Account all payments made by Borrowers
on any Obligations and all proceeds of Collateral which are finally paid to
Agent, and may record therein, in accordance with customary accounting practice,
other debits and credits, including interest and all charges and expenses
properly chargeable to Borrowers.
3.7 STATEMENTS OF ACCOUNT. Agent will account to Borrowers monthly with
a statement of Loans, charges and payments made pursuant to this Agreement, and
such account rendered by Agent shall be deemed final, binding and conclusive
upon Borrowers unless Agent is notified by Borrowers in writing to the contrary
within 30 days of the date each accounting is mailed to Borrowers. Such notice
shall only be deemed an objection to those items specifically objected to
therein.
SECTION 4. TERM AND TERMINATION
4.1 TERM OF AGREEMENT. Subject to Agent's and Lenders' right to cease
making Loans to Borrower after the occurrence, and during the continuation, of
any Default or Event of Default,
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this Agreement shall be in effect for a period of five (5) years from the date
hereof, through and including October 30, 2003.
4.2 TERMINATION.
4.2.1 TERMINATION BY AGENT OR LENDERS. Without in any manner
limiting or affecting the provisions of SECTION 10.2, Borrowers agree that Agent
or Required Lenders may terminate this Agreement upon the Agent's giving of
written notice of such termination to Borrowers at any time during the
continuance of an Event of Default, PROVIDED, that no such notice shall be
required in connection with a termination by reason of the occurrence of any
Event of Default under SECTION 10.1.9.
4.2.2 TERMINATION BY BORROWER. Upon at least thirty (30) days
prior written notice to Agent, Borrowers may, at their option, terminate this
Agreement; PROVIDED, HOWEVER, no such termination shall be effective until
Borrowers have paid all of the Obligations in immediately available funds and
all Letters of Credit and LC Guaranties have expired or have been cash
collateralized to Agent's satisfaction. Any notice of termination given by
Borrowers shall be irrevocable unless Required Lenders otherwise agree in
writing, and Lenders shall have no obligation to make any Loans or issue or
procure any Letters of Credit or LC Guaranties on or after the termination date
stated in any such termination notice given pursuant to this SECTION 4.2.2 or
pursuant to SECTION 4.2.1 in such notice. Borrowers may elect to terminate this
Agreement in its entirety only. No section of this Agreement or type of Loan
available hereunder may be terminated singly.
4.2.3 [RESERVED]
4.2.4 EFFECT OF TERMINATION. All of the Obligations shall be
immediately due and payable upon the termination date stated in any notice of
termination of this Agreement. All undertakings, agreements, covenants,
warranties and representations of each Borrower contained in the Loan Documents
shall survive any such termination and Agent shall retain its Liens (for its own
benefit and the ratable benefit of Lenders) in the Collateral and all of its
rights and remedies under the Loan Documents notwithstanding such termination
until Borrowers have paid the Obligations (including, without limitation, the
expiration, termination or cash collateralization of all outstanding Letters of
Credit and LC Guaranties) to Agent for the benefit of Lenders, in full, in
immediately available funds. Notwithstanding the payment in full of the
Obligations, Agent shall not be required to terminate its security interests in
the Collateral unless, with respect to any loss or damage Agent or Lender may
incur as a result of dishonored checks or other items of payment received by
Agent from any Borrower or any Account Debtor and applied to the Obligations,
Agent shall, at its option, (i) have received a customary written indemnity and
release agreement, executed by Borrowers and by any Person whose loans or other
advances to any Borrower are used in whole or in part to satisfy the
Obligations, indemnifying Agent and Lender from any such loss or damage; or (ii)
have retained such monetary reserves and Liens on the Collateral for such period
of time as Agent, in its reasonable discretion, may deem necessary to protect
Agent and Lenders from any such loss or damage.
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SECTION 5. SECURITY INTERESTS
5.1 SECURITY INTEREST IN COLLATERAL. To secure the prompt payment and
performance to Agent and Lenders of the Obligations, each Borrower hereby
grants, subject to applicable Legal Requirements, to Agent for its benefit and
the ratable benefit of Lenders a continuing Lien upon all of such Borrower's
assets, including all of the following Property and interests in Property of
such Borrower, whether now owned or existing or hereafter created, acquired or
arising and wheresoever located:
(i) Claims;
(ii) Accounts;
(iii) Inventory;
(iv) Equipment;
(v) General Intangibles;
(vi) Investment Property;
(vii) All monies and other Property of any kind now
or at any time or times hereafter in the possession or under the
control of Agent or any Lender or a bailee or Affiliate of Agent or any
Lender;
(viii) All accessions to, substitutions for and all
replacements, products and cash and non-cash proceeds of (i) through
(vii) above, including, without limitation, proceeds of and unearned
premiums with respect to insurance policies insuring any of the
Collateral; and
(ix) All books and records (including, without
limitation, patient records of identity, diagnosis, evaluation or
treatment, customer lists, credit files, computer programs, print-outs,
and other computer materials and records) of each Borrower pertaining
to any of (i) through (viii) above.
5.2 CROSS-COLLATERALIZATION. Each Borrower agrees that the Collateral
pledged by such Borrower hereunder shall secure all of the Obligations of the
Borrowers. Upon and after an Event of Default by any Borrower, Agent and each
Lender may pursue all rights and remedies that Agent or such Lender may have
against all or any part of the Collateral regardless of which Borrower has legal
title to such Collateral. Each Borrower hereby acknowledges that this
cross-collateralization of the Collateral owned by such Borrower is in
consideration of Lenders extending the credit hereunder and is mutually
beneficial to each Borrower.
5.3 LIEN PERFECTION, FURTHER ASSURANCES. Each Borrower shall execute
such UCC-1 financing statements as are required by the Code and such other
instruments, assignments or
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documents as are necessary to perfect Agent's Lien (for its benefit and the
ratable benefit of Lenders) upon any of the Collateral and shall take such other
action as may be required to perfect or to continue the perfection of Agent's
Lien (for its benefit and the ratable benefit of Lenders) upon the Collateral.
Unless prohibited by applicable law, each Borrower hereby authorizes Agent to
execute and file any such financing statement on such Borrower's behalf. The
parties agree that a carbon, photographic or other reproduction of this
Agreement shall be sufficient as a financing statement and may be filed in any
appropriate office in lieu thereof. At Agent's request, Borrower shall also
execute and deliver to Agent any and all documents deemed necessary or
appropriate by Agent to cause Agent's Lien to be noted on any motor vehicle,
tractor or trailer title certificates for motor vehicles, tractors or trailers
forming a part of the Collateral. At Agent's request, Borrower shall also
promptly execute or cause to be executed and shall deliver to Agent any and all
other documents, instruments and agreements deemed necessary by Agent to give
effect to or carry out the terms or intent of the Loan Documents.
5.4 LIEN ON REALTY. The due and punctual payment and performance of the
Obligations shall also be secured by the Lien created by the Mortgages. If any
Borrower shall acquire at any time or times hereafter any interest in other real
Property such Borrower agrees promptly to execute and deliver to Agent, as
additional security and Collateral for the Obligations, deeds of trust, security
deeds, mortgages or other collateral assignments satisfactory in form and
substance to Agent and its counsel (herein collectively referred to as "NEW
MORTGAGES") covering such real Property. The Mortgages and each New Mortgage
shall be duly recorded (at Borrower's expense) in each office where such
recording is required to constitute a valid Lien on the real Property covered
thereby. In respect to the Mortgages and each New Mortgage, Borrowers shall
deliver to Agent, at Borrowers' expense, mortgagee title insurance policies
issued by a title insurance company reasonably satisfactory to Agent, insuring
Agent, as mortgagee; such policies shall be in form and substance reasonably
satisfactory to Agent, and shall insure a valid first Lien in favor of Agent on
the real Property covered thereby, subject only to Permitted Liens and to those
exceptions reasonably acceptable to Agent and its counsel. Said policies shall
be in form and substance satisfactory to Agent. Borrower shall also deliver to
Agent such other documents, including, without limitation, ALTA Surveys of the
real Property, as Agent and its counsel may reasonably request relating to the
real Property subject to any such New Mortgage.
5.5 PROPERTY EXCLUDED FROM COLLATERAL. Subject, with respect to the
Meadow Lake Facility and the Mission Vista Facility, to the provisions of
SECTION 5.6, the following Property (collectively, the "SECTION 5.5 PROPERTIES")
is excluded from the Collateral:
5.5.1 MEADOWLAKE FACILITY. All of the right, title and
interest of Borrowers in and to the Meadowlake Facility.
5.5.2 MISSION VISTA FACILITY. All of the right, title and
interest of Borrowers in and to the Mission Vista Facility.
5.5.3 MIDVALE FACILITY. All of the right, title and interest
of Borrowers in and to the Midvale Facility.
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5.5.4 OKLAHOMA LLC INTERESTS. All of the right, title and
interest of Borrowers in and to the Oklahoma LLC Interests.
5.6 POST-CLOSING LIENS ON CERTAIN SECTION 5.5 PROPERTY. At any time
during the continuance of an Event of Default, Borrowers agree, promptly after
receipt of Agent's written notice of request therefor, to execute and deliver,
or to cause the appropriate Loan Party to execute and deliver, to Agent, as
additional security and Collateral for the Obligations, deeds of trust, security
deeds, mortgages, security agreements, and other collateral assignments, and
related Uniform Commercial Code financing statements, reasonably satisfactory in
form and substance to Agent and its counsel (herein collectively referred to as
"SECTION 5.6 SECURITY DOCUMENTS") covering each Section 5.5 Property referenced
in SECTION 5.5.1 and SECTION 5.5.2 as to which a disposition permitted under
SECTION 6.3 has not, at the time such written notice of request is given by
Agent to Borrowers, occurred. The Section 5.6 Security Documents shall, to the
extent reasonably required by Agent, be duly recorded (at Borrower's expense) in
each office where such recording is required to constitute and/or perfect a
valid Lien on the Section 5.5 Property covered thereby. In respect to each
mortgage, deed of trust, or similar instrument included within the Section 5.6
Security Documents that encumbers real Property, or an interest or estate in
real Property, Borrowers shall deliver to Agent, at Borrowers' expense, a
mortgagee title insurance policy issued by a title insurance company reasonably
satisfactory to Agent, insuring Agent, as mortgagee; such policies shall be in
form and substance reasonably satisfactory to Agent, and shall insure a valid
first Lien in favor of Agent on the real Property, or interest or estate
therein, covered thereby, subject only to Permitted Liens and to those
exceptions reasonably acceptable to Agent and its counsel. Said policies shall
be in form and substance reasonably satisfactory to Agent. Borrower shall also
deliver to Agent such other documents, including, without limitation, ALTA
Surveys of the real Property, as Agent and its counsel may reasonably request
relating to such real Property, or interest or estate therein, to be encumbered
by any such Section 5.6 Security Document. Borrowers shall have the right, at
Borrower's sole expense, and Agent shall cause the Section 5.6 Security
Documents, if any, encumbering the Meadowlake Facility to be released as to the
assets conveyed concurrently with the disposition of assets included within the
Meadowlake Facility in compliance with the provisions of SECTION 6.3.1; and
Borrowers shall have the right, at Borrowers' sole expense, and Agent shall
cause the Section 5.6 Security Documents, if any, encumbering the Mission Vista
Facility to be released as to the assets conveyed concurrently with the
disposition of assets included within the Mission Vista Facility in compliance
with the provisions of SECTION 6.3.2.
SECTION 6. COLLATERAL ADMINISTRATION
6.1 GENERAL
6.1.1 LOCATION OF COLLATERAL. All Collateral will at all times
be kept by each Loan Party at one or more of the business locations set forth in
EXHIBIT B hereto (as the same may be amended from time to time pursuant to the
applicable provisions of SECTION 7.2 and shall not, without the prior written
approval of Agent, be moved therefrom except, prior to an Event of Default and
Agent's acceleration of the maturity of the Obligations in consequence thereof,
for removals in connection with dispositions of Equipment that are authorized by
SECTION 6.4.2 or in connection with
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other dispositions of Property made in accordance with the express provisions of
SECTIONS 6.3, 8.2.1, 8.2.8, and 8.2.10.
6.1.2 INSURANCE OF COLLATERAL. Each Borrower shall maintain
and pay for, and cause each Subsidiary to maintain and pay for, insurance upon
all Collateral owned by it wherever located and with respect to such Loan
Party's business, covering casualty, hazard, public liability and such other
risks in such amounts and with such insurance companies as are reasonably
satisfactory to Agent. Each Borrower shall and shall cause each Subsidiary to
deliver the originals of such policies to Agent with satisfactory lender's loss
payable endorsements or collateral assignments thereof, naming Agent for its
benefit and the ratable benefit of Lenders as loss payee, assignee or additional
insured, as appropriate. Each policy of insurance or endorsement shall contain a
clause requiring the insurer to give not less than 30 days prior written notice
to Agent in the event of cancellation of the policy for any reason whatsoever
and a clause specifying that the interest of Agent shall not be impaired or
invalidated by any act or neglect of any Loan Party or the owner of the Property
or by the occupation of the premises for purposes more hazardous than are
permitted by said policy. If any Loan Party fails to provide and pay for such
insurance, Agent may, at its option but shall not be required to, procure the
same and charge Borrowers therefor. Each Borrower agrees to deliver and to cause
each Subsidiary to deliver to Agent, promptly as rendered, true copies of all
material reports made in any reporting forms to insurance companies.
6.1.3 PROTECTION OF COLLATERAL. All expenses of protecting,
storing, warehousing, insuring, handling, maintaining and shipping the
Collateral, any and all excise, property, sales, and use taxes imposed by any
state, federal, or local authority on any of the Collateral or in respect of the
sale thereof shall be borne and paid by Borrowers. If any Borrower fails to
promptly pay any portion thereof when due and is not actively contesting such
charge in the manner described in SECTION 7.1.14, Agent may, at its option, but
shall not be required to, pay the same and charge Borrowers therefor. Agent
shall not be liable or responsible in any way for the safekeeping of any of the
Collateral or for any loss or damage thereto (except for reasonable care in the
custody thereof while any Collateral is in Agent's actual possession) or for any
diminution in the value thereof, or for any act or default of any Person
whomsoever, but the same shall be at Borrowers' sole risk.
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6.2 ADMINISTRATION OF ACCOUNTS.
6.2.1 RECORDS, SCHEDULES AND ASSIGNMENTS OF ACCOUNTS.
Borrowers, on a Consolidated basis, shall execute and deliver to Agent a
Borrowing Base Certificate in the form attached hereto as EXHIBIT C, on a
monthly basis, commencing with the month specified in the Borrowing Base Change
Notice, or, if requested by Agent after the Borrowing Base Change Date, more
frequently. Each Borrower shall, and shall cause each Subsidiary to, keep
accurate and complete records of its respective Accounts and all payments and
collections thereon and shall submit to Agent on such periodic basis as Agent
shall request a sales and collections report for the preceding period, in form
satisfactory to Agent. On or before the fifteenth day of each month from and
after the date hereof, Borrowers shall deliver to Agent, in form acceptable to
Agent, a summary aged trial balance, on a Consolidated basis, of all of Accounts
of Borrowers and their respective Subsidiaries (and, if Agent requests on a
Borrower by Borrower and Subsidiary by Subsidiary basis) existing as of the last
day of the preceding month ("SCHEDULE OF ACCOUNTS"), specifying, if and to the
extent requested by Agent, the names, addresses, face value, dates of invoices
and due dates for each Account Debtor obligated on an Account so listed, and,
upon Agent's request therefor, copies of proof of delivery and the original copy
of all documents, including, without limitation, repayment histories and present
status reports relating to the Accounts so scheduled and such other matters and
information relating to the status of then existing Accounts as Agent shall
reasonably request. In addition, if at any time after the Borrowing Base Change
Date Accounts in an aggregate face amount in excess of $100,000 become
ineligible because they are all within one of the specified categories of
ineligibility set forth in the definition of Eligible Accounts or otherwise
established by Agent, Borrowers shall notify Agent of such occurrence on the
first Business Day following such occurrence and the Borrowing Base shall
thereupon be adjusted to reflect such occurrence. If requested by Agent,
Borrower shall, and shall cause each Subsidiary to, execute and deliver to Agent
formal written collateral assignments of all of its Accounts on a monthly basis
or, if requested by Agent, more frequently, which shall include all Accounts
that have been created since the date of the last assignment, together with
copies of invoices or invoice registers related thereto.
6.2.2 DISPUTES. Upon and during the continuation of an Event
of Default, Agent shall have the right to settle or adjust all disputes and
claims directly with the Account Debtor and to compromise the amount or extend
the time for payment of the Accounts upon such terms and conditions as Agent may
deem advisable, and to charge the deficiencies, costs and expenses thereof,
including reasonable attorney's fees, to Borrowers.
6.2.3 TAXES. If an Account of any Loan Party includes a charge
for any Tax payable to any governmental taxing authority and if such Tax is not
being contested in the manner described in SECTION 7.1.14, Agent is authorized,
in its sole discretion, to pay the amount thereof to the proper taxing authority
for the account of Borrowers and to charge Borrowers therefor, provided, however
that Agent shall not be liable for any Taxes to any governmental taxing
authority that may be due by any Loan Party.
6.2.4 ACCOUNT VERIFICATION. Whether or not a Default or an
Event of Default has occurred, any of Agent's officers, employees or agents
shall have the right, at any time or times hereafter, in the name of Agent, any
designee of Agent or any Loan Party, to verify the validity,
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amount or any other matter relating to any Accounts by mail, telephone,
telegraph or otherwise. Each Borrower shall and shall cause each of its
Subsidiaries to cooperate fully with Agent in an effort to facilitate and
promptly conclude any such verification process.
6.2.5 MAINTENANCE OF DOMINION ACCOUNT. Borrowers shall
establish, on or before November 30, 1998, and thereafter shall maintain a
Dominion Account with a bank (which need not be a Lender) selected by Borrowers
and reasonably acceptable to Agent. Borrowers shall cause all Collections in
each bank account maintained by each Loan Party, except the Operating Account
and the Payroll Accounts, to be transferred on a daily basis to the Dominion
Account. All funds deposited in the Dominion Account shall immediately be deemed
trust funds held on behalf of Agent for the benefit of Lenders, and Borrowers
shall obtain an agreement in favor of Agent by the bank at which the Dominion
Account is maintained to waive any offset rights against the funds so deposited.
Agent assumes no responsibility for deposit to the Dominion Account, including,
without limitation, any claim of accord and satisfaction or release with respect
to deposits accepted by any bank thereunder.
6.2.6 COLLECTION OF ACCOUNTS, PROCEEDS OF COLLATERAL. To
expedite collection, each Borrower shall, and shall cause its Subsidiaries to
endeavor in the first instance to make collection of its Accounts for the
benefit of Agent and the Lenders. All remittances received by any Loan Party on
account of its Accounts, together with the proceeds of any other Collateral,
shall be held for the benefit to Agent and the Lenders by such Loan Party as
trustee of an express trust for the benefit of Agent and the Lenders, and such
Loan Party shall immediately deposit the Collections in kind in the Dominion
Account or in a bank account maintained by such Loan Party to be transferred on
a daily basis to the Dominion Account. Agent retains the right at all times
after the occurrence and during the continuation of a Default or an Event of
Default to notify Account Debtors that Accounts have been assigned to Agent and
to collect Accounts directly in its own name and to charge the reasonable
collection costs and expenses, including reasonable attorneys' fees, to
Borrowers.
6.3 PERMITTED DISPOSITIONS OF SECTION 5.5 PROPERTIES. Dispositions of
the Section 5.5 Properties may be made, subject to the following:
6.3.1 MEADOWLAKE FACILITY. Borrowers may cause all of the
right, title and interest of the Loan Parties in and to the Meadowlake Facility,
or portion thereof, to be sold to the tenant under the Meadowlake Lease in
accordance with and subject to the provisions of the Meadowlake Option,
PROVIDED, HOWEVER, that the full amount of the net proceeds of such sale is,
concurrently with the closing thereof, paid over to Agent as a mandatory
prepayment pursuant to SECTION 3.3.1, for application as provided in SECTION
3.3.1.
6.3.2 MISSION VISTA FACILITY. Borrowers may cause all of the
right, title and interest of the Loan Parties in and to the Mission Vista
Facility, or any portion thereof, to be sold to any Person or Persons that is
not, at the closing of such sale or after giving effect thereto, an Affiliate of
any Loan Party, PROVIDED, HOWEVER, that, if at the time such sale is consummated
an Event of Default is continuing, the full amount of the net proceeds of such
sale is, concurrently with the closing thereof, paid over to Agent as a
mandatory prepayment pursuant to SECTION 3.3.1, for application as provided in
SECTION 3.3.1.
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6.3.3 MIDVALE FACILITY. Borrowers may cause all of the right,
title and interest of the Loan Parties in and to the Midvale Lease to be
terminated, including a termination in connection with the sale of the Midvale
Facility by the lessor under the Midvale Lease.
6.3.4 OKLAHOMA LLC INTERESTS. Borrowers may, at any time and
from time to time, cause all of the right, title and interest of the Loan
Parties in and to the Oklahoma LLC Interests (including Distributions payable
with respect thereto) to be conveyed to Charter Behavioral Health Systems, LLC
or its affiliates in furtherance of the consummation of the transaction
contemplated by the Purchase Agreement dated as of June 24, 1998, as amended by
Amendment No. 1 dated as of September 30, 1998, among Charter Behavioral Health
Systems, LLC, Ramsay Health Care, Inc., Carolina Treatment Center, Inc., Houma
Psychiatric Hospital, Inc., Mesa Psychiatric Hospital, Inc., RHCI San Antonio,
Inc., The Haven Hospital, Inc., Transitional Care Ventures (Arizona), Inc.,
Transitional Care Ventures (North Texas), Inc. and Transitional Care Ventures
(Texas), Inc.
6.4 ADMINISTRATION OF EQUIPMENT.
6.4.1 RECORDS AND SCHEDULES OF EQUIPMENT. Each Borrower shall,
and shall cause each Subsidiary to, keep accurate records itemizing and
describing the kind, type, quantity and value of its Equipment and all
dispositions made in accordance with SECTION 6.4.2, and shall furnish to Agent,
upon Agent's request, a current schedule containing the foregoing information on
at least an annual basis and, during the continuance of an Event of Default,
more often if requested by Agent.
6.4.2 DISPOSITIONS OF EQUIPMENT. No Borrower will sell, lease
or otherwise dispose of or transfer any of the Equipment or any part thereof
without the prior written consent of Agent; PROVIDED, however, that the
foregoing restriction shall not apply (i) to dispositions in accordance with
SECTION 6.3, or, (ii) for so long as no Default or Event of Default exists, to
dispositions of any Loan Party's Equipment which, in the aggregate in respect to
all such dispositions by all Loan Party's during any consecutive twelve-month
period, has a fair market value or book value, whichever is less, of $250,000 or
less, provided that all proceeds thereof, if and to the extent required under
SECTION 3.3.1, are remitted to Agent for application to the Loans pursuant to
SECTION 3.3.1 or are expended pursuant to clause (iii) of this sentence, or
(iii) replacements of Equipment that is substantially worn, damaged, redundant,
replaceable with better Equipment or obsolete with Equipment of like kind,
function and value provided that the replacement Equipment shall be acquired
prior to or concurrently or within 90 days of the disposition of the worn,
damaged, redundant, replaceable with better Equipment, or obsolete Equipment,
the replacement Equipment shall be free and clear of Liens other than Permitted
Liens that are not Purchase Money Liens, and Borrowers shall have given Agent at
least 5 days prior written notice of such disposition.
6.5 PAYMENT OF CHARGES. All amounts chargeable to any Borrower under
SECTION 6 shall be Obligations secured by all of the Collateral, shall be
payable on demand and shall bear interest from the date such advance was made
until paid in full at the rate applicable to the Base Rate Portions of Revolving
Credit Loans from time to time.
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SECTION 7. REPRESENTATIONS AND WARRANTIES
7.1 GENERAL REPRESENTATIONS AND WARRANTIES. To induce Agent and Lender
to enter into this Agreement and to make advances hereunder, each Borrower,
jointly and severally, warrants, represents and covenants to Agent and Lenders
that:
7.1.1 ORGANIZATION AND QUALIFICATION. Except as otherwise
disclosed on EXHIBIT D, each Loan Party is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation. Each Loan Party is duly qualified and is authorized to do
business and is in good standing as a foreign corporation in each state or
jurisdiction listed on EXHIBIT D hereto and in all other states and
jurisdictions where the character of its Properties or the nature of its
activities make such qualification necessary, except where the failure to be so
qualified would not have a Material Adverse Effect.
7.1.2 CORPORATE POWER AND AUTHORITY. Each Loan Party is duly
authorized and empowered to enter into, execute, deliver and perform this
Agreement and each of the other Loan Documents to which it is a party. The
execution, delivery and performance of this Agreement and each of the other Loan
Documents have been duly authorized by all necessary corporate action and do not
and will not: (i) require any consent or approval of the shareholders of any
Loan Party; (ii) contravene any Loan Parties', articles or certificate of
incorporation or by-laws; (iii) violate, or cause any Loan Party to be in
default under, any provision of any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award in effect having
applicability to such Loan Party; (iv) result in a breach of or constitute a
default under any indenture or loan or credit agreement or any other material
agreement, lease or instrument to which any Loan Party is a party or by which it
or its Properties may be bound or affected; or (v) result in, or require, the
creation or imposition of any Lien (other than Permitted Liens) upon or with
respect to any of the Properties now owned or hereafter acquired by any Loan
Party.
7.1.3 LEGALLY ENFORCEABLE AGREEMENT. This Agreement is, and
each of the other Loan Documents when delivered under this Agreement will be, a
legal, valid and binding obligation of each Loan Party enforceable against it in
accordance with its respective terms (subject, as to enforcement, to general
principles of equity, and to bankruptcy, insolvency and similar rights affecting
creditors' rights generally).
7.1.4 CAPITAL STRUCTURE. EXHIBIT E hereto states: (i) the
correct name of each Loan Party, its jurisdiction of incorporation and the
percentage of its Voting Stock owned by any other Loan Party; (ii) the name of
each of Loan Party's corporate or joint venture Affiliates and the nature of the
affiliation; (iii) the number, nature and holder of all outstanding Securities
of each Loan Party (except with respect to Holdings, such information is with
respect to the Preferred Stock only); and (iv) the number of authorized, issued
and treasury shares of each Loan Party (except Holdings). Each Borrower has good
title to all of the shares it purports to own of the stock of each of its
respective Subsidiaries, free and clear in each case of any Lien other than
Permitted Liens. All such shares have been duly issued and are fully paid and
non-assessable. Except as otherwise provided in EXHIBIT E, there are no
outstanding options to purchase, or any rights or warrants to subscribe for, or
any commitments or agreements to issue or sell, or any Securities or obligations
convertible into,
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or any powers of attorney relating to, shares of the capital stock of any Loan
Party. Except as set forth in EXHIBIT E, there are no outstanding agreements or
instruments binding upon any shareholders of any Loan Party relating to the
ownership of its shares of capital stock.
7.1.5 CORPORATE NAMES. Since June 30, 1993, no Loan Party has
been known as or used any corporate, fictitious or trade names except those
listed on EXHIBIT F hereto. Since June 30, 1993, except as set forth on EXHIBIT
F, no Loan Party has been the surviving corporation of a merger or consolidation
or acquired all or substantially all of the assets of any Person.
7.1.6 BUSINESS LOCATIONS, AGENT FOR PROCESS. The chief
executive office and other places of business of each Loan Party are as listed
on EXHIBIT B hereto. During the preceding one-year period, no Loan Party has had
an office, place of business or agent for service of process other than as
listed on EXHIBIT B.
7.1.7 TITLE TO PROPERTIES; PRIORITY OF LIENS. Each Borrower
and its Subsidiaries has good and insurable, title to or valid and subsisting
leasehold estate in, as applicable, all of its real Property, and good title to
all of the Collateral and all of its other Property, in each case, free and
clear of all Liens except for Permitted Liens and for Liens being contested in
the manner provided for in SECTION 7.1.14. Each Borrower has paid or discharged
all lawful claims which, if unpaid, might become a Lien against any of such
Borrower's Properties that is not a Permitted Lien, unless any such claim is
being contested in the manner provided for in SECTION 7.1.14. The Liens granted
to Agent for its benefit and the ratable benefit of Lender under SECTION 5 are
first priority Liens, subject only to Permitted Liens.
7.1.8 ACCOUNTS. Agent may rely, in determining which Accounts
are Eligible Accounts, on all statements and representations made by any Loan
Party with respect to any Account or Accounts. Unless otherwise indicated in
writing to Agent, with respect to each Account:
(i) It is genuine and in all respects what it purports to be,
and it is not evidenced by a judgment;
(ii) It arises out of a completed, bona fide sale and delivery
of goods or rendition of services by a Loan Party in the ordinary
course of its business and in accordance with the terms and conditions
of all purchase orders, contracts or other documents relating thereto
and forming a part of the contract between such Loan Party and the
Account Debtor;
(iii) It is for a liquidated amount maturing as stated in an
invoice covering such sale or rendition of services, or an electronic
record of which is available to Agent;
(iv) Other than by reason of matters occurring in the ordinary
course of Borrowers' business, such Account, and Agent's security
interest therein, is not, and will not be in the future, subject to any
offset, Lien, deduction, defense, dispute, counterclaim or any other
adverse condition except for disputes where the amount in controversy
is deemed by Agent to be immaterial, and, subject to the foregoing,
each such Account is absolutely owing to a Loan Party and is not
contingent in any respect or for any reason;
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(v) No Loan Party has made any agreement with any Account
Debtor thereunder for any extension, compromise, settlement or
modification of any such Account or any deduction therefrom, except
discounts, settlements or allowances which are granted by such Loan
Party in the ordinary course of its business in accordance with past
practice;
(vi) To the best knowledge of Borrowers, there are no facts,
events or occurrences which in any way impair the validity or
enforceability of any Accounts or tend to reduce the amount payable
thereunder from the face amount of the invoice and statements delivered
to Agent with respect thereto (other than refunds in the ordinary
course of business and refunds and settlements consistent with past
practices and other than those accounts for which an allowance for
doubtful accounts has been established in the most recent financial
statements delivered to Agent pursuant to SECTION 8.3);
(vii) To the best knowledge of Borrowers, the Account Debtor
thereunder (1) had the capacity to contract at the time any contract or
other document giving rise to the Account was executed and (2) such
Account Debtor is Solvent; and
(viii) To the best knowledge of Borrowers, there are no
proceedings or actions which are threatened or pending against any
material Account Debtor thereunder which might result in any material
adverse change in such Account Debtor's financial condition or the
collectibility of such Account.
7.1.9 EQUIPMENT. The Equipment of each Borrower is in good
operating condition and repair, and all necessary replacements of and repairs
thereto shall be made so that the value and operating efficiency of the
Equipment shall be maintained and preserved, reasonable wear and tear excepted.
No Borrower will permit any material portion of the Equipment to become affixed
to any real Property leased to any Borrower so that an interest arises therein
under the real estate laws of the applicable jurisdiction unless the landlord of
such real Property has executed a landlord waiver or leasehold mortgage in favor
of and in form acceptable to Agent, and no Borrower will permit any of the
Equipment of any Loan Party to become an accession to any personal Property
other than Equipment that is subject to first priority (except for Permitted
Liens) Liens in favor of Agent.
7.1.10 FINANCIAL STATEMENTS; FISCAL YEAR. The Consolidated
balance sheets of Holdings and its Subsidiaries described therein (including the
accounts of all Subsidiaries of Holdings for the respective periods during which
a Subsidiary relationship existed) as of June 30, 1998 and the related
statements of income, shareholders equity and cash flow for the periods ended on
such dates, have been prepared in accordance with GAAP (other than the absence
of footnotes), and present fairly, in all material respects, the financial
position of Holdings and its Subsidiaries at such dates and the results of
Holdings' operations for such periods (subject to normal year-end non-material
adjustments). Since June 30, 1998, there has been no material change in the
condition, financial or otherwise, of Holdings and its Subsidiaries as shown on
the Consolidated balance sheet as of such date and no change in the aggregate
value of Equipment and real Property owned by Holdings and its Subsidiaries,
except changes in the ordinary course of business, none of which individually or
in the aggregate constituted or resulted in a Material Adverse Effect, except as
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disclosed to the contrary in EXHIBIT Y attached to this Agreement as of the
Closing Date. Each fiscal year of Holdings and each of its Subsidiaries ended
before December 31, 1998, ended on June 30th of the year in question; each
fiscal year of Holdings and each of its Subsidiaries ending on or after December
31, 1998, will end on December 31st of the year in question.
7.1.11 FULL DISCLOSURE. The financial statements referred to
in SECTION 7.1.10 do not, nor does this Agreement or any other written statement
of any Loan Party to Agent or any Lender, contain any untrue statement of a
material fact or omit a material fact necessary to make the statements contained
therein or herein not misleading in light of the circumstances under which the
same were made. There is no fact or circumstances which any Loan Party has
failed to disclose to Agent and Lenders in writing which could reasonably be
expected to have a Material Adverse Effect.
7.1.12 SOLVENT FINANCIAL CONDITION. Each Loan Party is now
and, after giving effect to the Loans to be made and the Letters of Credit and
LC Guaranties to be issued hereunder, at all times will be, Solvent.
7.1.13 SURETY OBLIGATIONS. Except as set forth on EXHIBIT V,
no Loan Party is obligated as surety or indemnitor under any surety or similar
bond or other contract issued or entered into any agreement to assure payment,
performance or completion of performance of any undertaking or obligation of any
Person, except for Indebtedness permitted under SECTION 8.2.3.
7.1.14 TAXES. The federal tax identification number of each
Loan Party is shown on EXHIBIT G hereto. Each Loan party has filed all federal,
state and local tax returns and other reports it is required by law to file and
has paid, or made provision for the payment of, all taxes, assessments, fees,
levies and other governmental charges upon it, its income and Properties as and
when such taxes, assessments, fees, levies and charges that are due and payable,
except to the extent any such Taxes are being Properly Contested. The provision
for Taxes on the books of each Borrower and each Subsidiary of each Borrower,
taken as a whole, are adequate in all material respects for all years not closed
by applicable statutes, and for its current fiscal year.
7.1.15 BROKERS. There are no claims for brokerage commissions,
finder's fees or investment banking fees in connection with the transactions
contemplated by this Agreement, except for investment banking fees payable by
Holdings to an un-Affiliated Person pursuant to a written agreement, a correct
and complete copy of which has been furnished by Holdings to Agent.
7.1.16 PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES. Each Loan
Party owns or possesses all the patents, trademarks, service marks, trade names,
copyrights and licenses necessary for the present and planned future conduct of
its business without any known conflict with the rights of others. All such
patents, trademarks, service marks, trade names, copyrights, licenses and other
similar rights owned or possessed by Borrower are listed on EXHIBIT H hereto.
7.1.17 GOVERNMENTAL CONSENTS. Each Loan Party has, and is in
good standing with respect to, all governmental consents, approvals, licenses,
authorizations, permits, certificates, inspections and franchises necessary to
continue to conduct its business as heretofore or proposed to be conducted by it
and to own or lease and operate its Properties as now owned or leased by it,
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except where the failure to so lease, or be in good standing, would not
reasonably be expected to have a Material Adverse Effect.
7.1.18 COMPLIANCE WITH LAWS. Each Loan Party has duly complied
with, in all material respects, and its Properties, business operations and
leaseholds are in compliance in all material respects with, the provisions of
all Applicable Laws, except where such noncompliance could not reasonably be
expected to have a Material Adverse Effect, and there have been no citations,
notices or orders of noncompliance issued to any Loan Party under any such law,
rule or regulation. Each Loan Party has established and maintains an adequate
monitoring system to insure that it remains in compliance, in all material
respects, with all federal, state and local laws, rules and regulations
applicable to it.
7.1.19 RESTRICTIONS. No Loan Party is a party or subject to
any contract, agreement, or charter or other corporate restriction, which has or
could reasonably be expected to have a Material Adverse Effect.
7.1.20 LITIGATION. Except as set forth on EXHIBIT J, there are
no actions, suits, or proceedings, or, to the knowledge of Borrowers,
investigations, pending, against or affecting any Loan Party, or the business,
operations, Properties, prospects, profits or condition of any Loan Party, nor,
to the knowledge of any Loan Party, are any such actions, suits, proceedings or
investigations threatened, except those as of the date hereof in which a
determination adverse to any Loan Party could not reasonably be expected to have
a Material Adverse Effect, and except those arising after the date hereof which
could not reasonably be expected to have a Material Adverse Effect. No Loan
Party is in default with respect to any order, writ, injunction, judgment,
decree or rule of any court, governmental authority or arbitration board or
tribunal binding upon it or any of its Properties.
7.1.21 NO DEFAULTS. No event has occurred and no condition
exists which would, upon or after the execution and delivery of this Agreement
or the performance by any Loan Party hereunder, constitute a Default or an Event
of Default. No Loan Party is in default, and no event has occurred and no
condition exists which constitutes, or which with the passage of time or the
giving of notice or both would constitute, a default in the payment of any
Indebtedness to any Person for Money Borrowed the amount of which, together with
the amount of any other such Indebtedness for Money Borrowed with respect to
which there has been and continues to be a default in payment, exceeds $500,000.
7.1.22 LEASES. EXHIBIT K is a complete listing of all
capitalized leases of each Borrower and its Subsidiaries, and EXHIBIT L sets
forth a complete listing of all operating leases of each Borrower and its
Subsidiaries. Each Borrower and each of such Borrower's Subsidiaries is in
compliance, in all material respects, with all of the terms of each of their
respective capitalized and operating leases.
7.1.23 PENSION PLANS. Except as disclosed on EXHIBIT M, no
Loan Party has any Plan. Each Loan Party is in compliance, in all material
respects, with the requirements of ERISA and the regulations promulgated
thereunder with respect to each Plan. No fact or situation that could
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reasonably be expected to have a Material Adverse Effect on any Loan Party
exists in connection with any Plan. No Loan Party has any withdrawal liability
in connection with a Multiemployer Plan.
7.1.24 TRADE RELATIONS. There exists no actual or, to the best
knowledge of Borrowers, threatened termination, cancellation or limitation of,
or any modification or change in, the business relationship between any Borrower
or its Subsidiaries and any customer or any group of customers whose purchases
individually or in the aggregate are material to the business of the Borrowers
and their Subsidiaries, taken as a whole, the result of which could reasonably
be expected to have a Material Adverse Effect, and there exists no condition or
state of facts or circumstances which could reasonably be expected to have a
Material Adverse Effect or prevent any Loan Party from conducting such business
after the consummation of the transaction contemplated by this Agreement in
substantially the same manner in which it has heretofore been conducted by such
Loan Party.
7.1.25 LABOR RELATIONS. Except as described on EXHIBIT N, no
Borrower nor any Subsidiary of any Borrower is a party to any collective
bargaining agreement. There are no material grievances, disputes or
controversies with any union or any other organization of employees of any
Borrower or its Subsidiaries, or, to the knowledge of the Borrowers, threats of
strikes or work stoppages, or any asserted pending demands for collective
bargaining by any union or organization.
7.1.26 MEDICARE; MEDICAID AND OTHER GOVERNMENTAL PAYORS. Each
Loan Party is in compliance in all material respects with all applicable laws,
rules and regulations of the Medicare, Medicaid and other governmental
healthcare programs, except where such noncompliance could not reasonably be
expected to have a Material Adverse Effect, and has filed all claims, invoices,
returns and other forms, the use of which is required or permitted by such
programs, in the manner prescribed, except where such failure to file could not
reasonably be expected to have a Material Adverse Effect. All claims, returns,
invoices and other forms made by any Borrower to Medicare, Medicaid or any other
governmental health or welfare related entity or any other third party payor
since the inception of such Loan Party are in all respects true, complete,
correct and accurate in all material respects, except to the extent that such
inaccuracies could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. Except as set forth in EXHIBIT S, no
deficiency in any such claims, returns or other filings, including claims for
over- payments, or deficiencies for late filings, has been asserted or
threatened by any federal or state agency or instrumentality or other provider
or reimbursement entities relating to Medicare or Medicaid claims or any other
third party payor, and there is no basis for any material claims or requests for
reimbursement, that, in either case, if paid or required to be paid, either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect. Nevertheless, each Loan Party currently maintains, and
will continue to maintain, in accordance with GAAP, capital reserves sufficient
to pay any such deficiency. No Loan Party has been subject to any audit relating
to fraudulent Medicare or Medicaid procedures or practices. Except as set forth
in EXHIBIT S, there is no basis for any claim or request for recoupment or
reimbursement from any Loan Party by, or for reimbursement by any Loan Party of,
any federal or state agency or instrumentality or other provider reimbursement
entities relating to Medicare or Medicaid claims, that if paid or required to be
paid, either individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect.
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7.1.27 ABSENCE OF CERTAIN BUSINESS PRACTICES. No officer,
director, employee or agent of any Loan Party, nor any other person or entity
acting on behalf of any Loan Party, acting alone or together, has (i) received,
directly or indirectly, any rebates, payments, commissions, promotional
allowances or any other economic benefits, regardless of their nature or type,
from any customer, governmental employee or other person or entity with whom or
which any Loan Party has done business directly or indirectly; or (ii) directly
or indirectly, given or agreed to give any gift or similar benefit to any
customer, governmental employee or other person or entity who is or may be in a
position to help or hinder the business of any Loan Party (or assist any Loan
Party in connection with any actual or proposed transaction) which, in the case
of either clause (i) or clause (ii) above, would reasonably be expected to
subject such Loan Party to any damage or penalty in any civil, criminal or
governmental litigation or proceeding that could reasonably be expected to have
a Material Adverse Effect.
7.1.28 FRAUD AND ABUSE. To the knowledge of any Loan Party
after due inquiry, no Loan Party, no Loan Party personnel nor any Loan Party's
officers and directors, have engaged in any activities which are prohibited
under federal Medicare and Medicaid statutes, the Medicare and Medicaid
Anti-Fraud and Abuse Amendments found at 42 U.S.C. sections 1320a-7, 1320a-7a
and 1320a-7b, Stark II found at 42 U.S.C. section 1395nn, the Civil False Claims
Act found at 31 U.S.C. section 3727, the criminal false claims statute found at
18 U.S.C. section 287, the federal CHAMPUS statute or the regulations
promulgated pursuant to such statutes or related state or local statutes or
regulations or which are prohibited by rules of professional conduct promulgated
by the appropriate licensing authority of the state or states in which such
entity does business including, but not limited to, the following: (i) knowingly
and willfully making or causing to be made a false statement or representation
of a material fact in any application for any benefit or payment; (ii) knowingly
and willfully making or causing to be made any false statement or representation
of a material fact for use in determining rights to any benefit or payment;
(iii) presenting or causing to be presented a claim for reimbursement for
services under CHAMPUS, Medicare, Medicaid, or other state health care program
that is for an item or service that is known or should be known to be (a) not
provided as claimed, or (b) false or fraudulent; (iv) failing to disclose
knowledge by a claimant of the occurrence of any event affecting the initial or
continued right to any benefit or payment on its own behalf or on behalf of
another, with intent to fraudulently secure such benefit or payment; (v)
knowingly and willfully offering, paying, soliciting or receiving any
remuneration (including any kickback, bribe, or rebate), directly or indirectly,
overtly or covertly, in cash or in kind (a) in return for referring an
individual to a person for the furnishing or arranging for the furnishing of any
item or service for which payment may be made in whole or in part by CHAMPUS,
Medicare or Medicaid, or other state health care program, or (b) in return for
purchasing, leasing or ordering or arranging for or recommending purchasing,
leasing or ordering any good, facility, service, or item for which payment may
be made in whole or in part by CHAMPUS, Medicare or Medicaid or other state
health care program; or (vi) knowingly and willfully making or causing to be
made or inducing or seeking to induce the making of any false statement or
representation (or omit to state a fact required to be stated therein or
necessary to make the statements contained therein not misleading) of a material
fact with respect to (a) the conditions or operations of a facility in order
that the facility may qualify for CHAMPUS, Medicare, Medicaid or other state
health care program certification,
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or (b) information required to be provided under section 1124A of the Social
Security Act (42 U.S.C. section 1320a-3).
7.1.29 CONTROLLED SUBSTANCES. No Loan Party's officers and
directors, or, to the knowledge of any Loan Party after due inquiry, persons who
provide professional services under agreements with any Loan Party have, in
connection with their activities, directly or indirectly related to any Loan
Party and in their professional capacities only, as applicable, engaged in any
activities which are prohibited under the federal Controlled Substances Act, 21
U.S.C. section 801 ET SEQ. or the regulations promulgated pursuant to such
statute or any related state or local statutes or regulations concerning the
dispensing and sale of controlled substances.
7.1.30 GOVERNMENTAL AUTHORITY. There are no outstanding
notices of deficiencies relating to any Loan Party or any Loan Party's personnel
issued by any governmental authority or third party payor requiring conformity
or compliance with any applicable law or condition for participation of such
governmental authority or third party Payor which could reasonably be expected
to have a Material Adverse Effect, and after reasonable and independent inquiry
and due diligence and investigation, no Loan Party nor any Physician employed by
any Loan Party has any knowledge or reason to believe that such necessary
authorizations may be revoked or not renewed in the ordinary course. Each Loan
Party and each employee and independent contractor of each Loan Party
(including, but not limited to, physicians, pharmacists, nurses, psychologists,
psychiatrists, therapists, counselors, and administrators) have been granted all
valid licenses, permits, authorizations, approvals, certifications, and
accreditations, all of which are currently valid and in full force and effect,
from federal, state, local, and foreign government regulatory bodies and
recognized certifying and accrediting organizations necessary to carry on their
respective businesses and practices as such business and practices have been,
and continue to be, conducted, except where the failure to obtain or maintain
the same could not reasonably be expected to have a Material Adverse Effect
7.1.31 RATES AND REIMBURSEMENT POLICIES. Except as are being
pursued in the ordinary course of business consistent with past practices, no
Loan Party and no Loan Party's personnel has any rate appeal currently pending
before any governmental authority or any administrator of any governmental third
party Payor program.
7.1.32 MATERIAL AGREEMENTS. Except as set forth in EXHIBIT X,
no Borrower is party to, nor is any Property of any Borrower bound by, any
contract or agreement the breach of, or occurrence of a default under, would
reasonably be expected to result in a Material Adverse Effect.
7.1.33 INSURANCE. Each Loan Party represents and warrants that
such Loan Party currently maintains, and will continue to maintain in accordance
with current practices, sufficient levels of professional liability insurance
(in the minimum amounts of $1,000,000 per occurrence and $3,000,000 in the
aggregate) to cover any and all malpractice acts committed by, or at the
direction of, any licensed individual employed or otherwise engaged by such Loan
Party.
7.1.34 COMPLIANCE PLAN. Each Loan Party has conducted an
internal audit of its third party billing and collection practices, including
billing and collection practices related to
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Medicare and Medicaid reimbursement, and has implemented a company-wide
corporate compliance program and plan of action in substantial compliance with
the federal Sentencing Guidelines.
7.1.35 INACTIVE SUBSIDIARIES. As of the Closing Date, none of
the Inactive Subsidiaries has (either by ownership or lease) property or assets
with an aggregate fair market value of more than $10,000 or any employees or
business operations and the aggregate fair market value of all assets and
property of all Inactive Subsidiaries together does not exceed $50,000.
7.2 CONTINUOUS NATURE OF REPRESENTATIONS AND WARRANTIES. Each
representation and warranty contained in this Agreement and the other Loan
Documents shall be continuous in nature and shall remain, subject to any express
qualifications contained therein, accurate, complete and not misleading at all
times during the term of this Agreement, except for (a) such representations and
warranties that by their nature are limited only to a specific date in time and
(b) changes in the nature of the business or operations of any Loan Party
occurring, other than by reason of an act or omission that would constitute a
Default or Event of Default, that would render the information in any EXHIBIT
either inaccurate, incomplete or misleading in any material respect in light of
the circumstances under which the same are made or reaffirmed; PROVIDED that
Agent and Required Lenders have consented to such changes, or to the actions or
transactions resulting in such changes, or that such changes are, or result from
actions or transactions that are, expressly permitted by this Agreement, and
Borrowers shall be entitled to amend EXHIBITS B, D through H, and K through N,
and X to reflect any such change in the nature of the business or operations of
any Loan Party (i) to which Agent and Required Lenders have consented, (ii) that
is expressly permitted by this Agreement, or (iii) that has occurred other than
by reason of an act or omission that would constitute a Default or Event of
Default.
7.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Except for such
representations and warranties that by their nature are limited only to a
specific date in time, all representations and warranties of each Loan Party
contained in this Agreement or any of the other Loan Documents shall survive the
execution, delivery and acceptance thereof by Lender and the parties thereto and
the closing of the transactions described therein or related thereto.
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS
8.1 AFFIRMATIVE COVENANTS. During the term of this Agreement, and
thereafter for so long as there are any Obligations owed to Agent or any Lender,
each Borrower, on a joint and several basis, covenants that, unless otherwise
consented to by Agent and Required Lenders in writing, they shall:
8.1.1 VISITS AND INSPECTIONS. Permit representatives of Agent
or any Lender, from time to time, as often as may be reasonably requested, but
only during normal business hours, to (i) visit and inspect the Properties of
Borrower and each of its Subsidiaries, and (ii) inspect, audit and make extracts
from its books and records, and discuss with its officers, its employees and its
independent accountants, any Loan Party's business, assets, liabilities,
financial condition, business prospects and results of operations.
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8.1.2 NOTICES. Notify Agent in writing (a) of the occurrence
of any event or the existence of any fact which renders any representation or
warranty in this Agreement or any of the other Loan Documents inaccurate,
incomplete or misleading in any material respect, and (b) promptly after any
Borrower learning thereof, of the commencement of (i) any litigation affecting
any Loan Party or any of their respective Properties which if determined
adversely to any Loan Party, would have a Material Adverse Effect, unless the
claim involved (A) is considered by such Borrower to be covered to the full
amount thereof by insurance (subject to customary deductibles maintained on a
basis consistent with past practices); (B) defense of the claim has been
tendered to Borrowers' insurance carrier, and (C) Borrowers' insurance carrier
has not denied or disputed coverage, and (ii) the institution of any
administrative proceeding which if determined adversely to any Loan Party, would
have a Material Adverse Effect; (c) at least thirty (30) days prior thereto, of
(i) any Borrower's opening of any new office or place of business in any
jurisdiction in which, as of the date of this Agreement, such Borrower is not
qualified to do business in such jurisdiction under the Applicable Laws of such
jurisdiction, or (ii) any Borrower's closing of any existing office or place of
business if the value of any Collateral to be located or located at such office
or place of business to be closed exceeds $25,000, except, as to a Section 5.5
Property, any closing of a facility or office included therein in connection
with a disposition thereof under SECTION 6.3; (d) promptly after any Borrower's
learning thereof, of any general labor dispute to which such Borrower or any of
its Subsidiaries may become a party, any strikes or walkouts relating to any of
their respective plants or other facilities, and the expiration of any labor
contract to which any of them is a party or by which any of them is bound; (e)
promptly after any Borrower's learning thereof, of any material default by any
Loan Party under any note, indenture, loan agreement, mortgage, lease, deed,
guaranty or other similar agreement relating to any Indebtedness exceeding
$500,000; (f) promptly after the occurrence thereof, of any Default or Event of
Default; (g) promptly after the occurrence thereof, of any default by any
obligor under any note or other evidence of Indebtedness payable to any Borrower
or its Subsidiaries exceeding $500,000; and (h) promptly after the rendition
thereof, of any judgment rendered against any Loan Party in an amount exceeding
$250,000.
8.1.3 FINANCIAL STATEMENTS. Keep, and cause each Subsidiary to
keep, adequate records and books of account with respect to its business
activities in which proper entries are made in accordance with GAAP reflecting
all its financial transactions; and cause to be prepared and furnished to Agent
and Lenders the following (all to be prepared in accordance with GAAP applied on
a consistent basis, unless Holdings' certified public accountants concur in any
change therein and such change is disclosed to Agent and Lenders and is
consistent with GAAP):
(i) as soon as available but not later than 115 days
after the close of each fiscal year of Holdings, unqualified audited
(in respect to the Consolidated financial statements only) financial
statements of Holdings and its Subsidiaries as of the end of such year,
on a Consolidated and consolidating basis, certified by a firm of
independent certified (in respect to the Consolidated financial
statements only) public accountants of recognized standing selected by
Holdings but reasonably acceptable to Agent (except for a qualification
for a change in accounting principles with which the accountant
concurs);
(ii) as soon as available but not later than 35 days
after the end of each month hereafter, including the last month of
Holdings' fiscal year, unaudited interim
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financial statements of Holdings and its Subsidiaries as of the end of
such month and of the portion of Holding's financial year then elapsed,
on a Consolidated and, in the case of the income statement,
consolidating basis, certified by the principal financial officer of
Holdings as prepared in accordance with GAAP and fairly presenting in
all material respects the Consolidated financial position and results
of operations of Holdings and its Subsidiaries for such month and
period subject only to changes from audit and year-end adjustments and
except that such statements need not contain notes;
(iii) monthly, on or before the 10th day of each
month, a report itemizing and describing, in reasonable detail,
including the amount or amounts in question, Settlement Items arising
during the preceding month;
(iv) promptly after the sending or filing thereof, as
the case may be, copies of any proxy statements, financial statements
or reports which Holdings has made available to its shareholders and
copies of any regular, periodic and special reports or registration
statements which Holdings files with the Securities and Exchange
Commission or any governmental authority which may be substituted
therefor, or any national securities exchange;
(v) promptly after the filing thereof, copies of any
annual report to be filed with ERISA in connection with each Plan;
(vi) such data and information (financial and
otherwise) as Agent or Required Lenders, from time to time, may
reasonably request, bearing upon or related to the computation of the
Borrowing Base, and the components thereof, including, without
limitation, the Reimbursement Rate;
(vii) such schedules, data and information (financial
and otherwise) as Agent or Required Lenders, from time to time, may
reasonably request, bearing upon or related to Borrowers' accounts
payable, and agings thereof; and
(viii) such other data and information (financial and
otherwise) as Agent or Required Lenders, from time to time, may
reasonably request, bearing upon or related to the Collateral or
financial condition or results of operations of any Loan Party.
Concurrently with the delivery of the financial statements
described in clause (i) of this SECTION 8.1.3, Holdings shall forward to Agent
and Lenders a copy of the final accountants' letter issued to Holdings'
management that is prepared in connection with such financial statements.
Concurrently with the delivery of the financial statements described in clauses
(i) and (ii) of this SECTION 8.1.3, or more frequently if requested by Agent
during the continuance of any Event of Default, Holdings shall cause to be
prepared and furnished to Agent and Lenders a Compliance Certificate in
substantially the form of EXHIBIT O hereto executed by the Chief Financial
Officer of Holdings.
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Each Borrower hereby authorizes Agent or its designated
representatives to communicate directly with its independent certified public
accountants and authorizes those accountants to disclose to Agent any and all
financial statements and other supporting financial documents and schedules. At
or before the initial Closing Date, each Borrower shall deliver a letter
addressed to such accountants instructing them to comply with the provisions of
this SECTION 8.1.3. Further within five (5) days after the earlier of the last
day of each fiscal year of Holdings and the date Holdings engaged independent
certified public accountants to audit Holding's financial statements, Holdings
shall deliver to such independent certified public accountants a letter from
Holdings addressed to such independent certified public accountants indicating
that it is an intention of Holdings in engaging such accountants that Agent and
Lenders rely upon such financial statements of Holdings and its Subsidiaries.
Each Borrower covenants that the financial statements prepared
for each of Holdings Subsidiaries shall, in accordance with GAAP, include
charges or expenses for the compensation, fringe benefits and other employment
costs for all employees who perform materials services to such Subsidiary and
such other costs, charges or expenses which should be charged to such Subsidiary
in accordance with good business and accounting practice.
8.1.4 YEAR 2000 COMPLIANCE. Take all necessary action and
cause each of its Subsidiaries to take all necessary action to assure that at
all times the computer-based systems utilized by such Borrower and each of its
Subsidiaries are able to effectively interpret, process and manipulate data,
including dates on and after December 31, 1999. At Lender's request, Borrowers
shall provide to Lender assurance reasonably satisfactory to Lender that the
computer-based systems utilized by Borrower and each of its Subsidiaries are
able to recognize and perform without error functions involving dates before, on
and after December 31, 1999.
8.1.5 PROJECTIONS. No later than 30 days prior to the end of
each fiscal year of Holdings deliver to Agent and Lenders Projections of
Holdings (consisting of Consolidated balance sheets, income statements and cash
flow statements, and consolidating income statements, together with supporting
details and underlying assumptions) for the forthcoming 3 years, year by year,
and for the forthcoming fiscal year, month by month on a unconsolidated.
consolidating and Consolidated basis.
8.1.6 TAXES. Pay and discharge, and cause each Subsidiary to
pay and discharge, all Taxes prior to the date on which such Taxes become
delinquent or penalties attach thereto, except and only to the extent that such
Taxes are being Properly Contested.
8.1.7 COMPLIANCE WITH LAWS. Comply and cause each Subsidiary
to comply, with all Applicable Laws, including all laws, statutes, regulations
and ordinances regarding the collection, payment and deposit of all Taxes, and
all ERISA and Environmental Laws, and obtain and keep in force any and all
licenses, permits, franchises, or other governmental authorizations necessary to
the ownership of its Properties or to the conduct of its business, which
violation or failure to obtain or keep in force could reasonably be expected to
have a Material Adverse Effect.
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8.1.8 CERTAIN OTHER INSURANCE. In addition to the insurance
required herein with respect to the Collateral, each Loan Party shall maintain,
with financially sound and reputable insurers, insurance with respect to its
Properties and business against such casualties and contingencies of such type
(including product liability, business interruption, larceny, embezzlement, or
other criminal misappropriation insurance) as is customary in its business and
in such amounts as are reasonably acceptable to Lender.
8.1.9 BORROWING BASE CERTIFICATE. If the Borrowing Base Change
Notice is given by Agent to Borrowers, Borrowers shall deliver the initial
Borrowing Base Certificate required thereunder within three (3) Business Days
after the date on which the Borrowing Base Change Notice is given, and,
thereafter, as soon as available and in any event within fifteen (15) days after
the end of each month (including the month preceding the month in which the
Borrowing Base Change Notice is given if the same is given on or before the
twelfth day of a calendar month), and from time to time within three (3)
Business Days of the request of Lender, Borrowers will deliver to Lender a
Borrowing Base Certificate as at the last day of the preceding month (or if
furnished at the request of Lender, as at the date of the request), prepared on
a consolidated basis and otherwise in form and substance reasonably satisfactory
to Lender.
8.1.10 FURTHER ASSURANCES.
(A) Each Borrower shall and shall cause each Loan
Party to, from time to time, execute such guaranties, financing statements,
documents, mortgages, security agreements and reports as Agent or Required
Lenders at any time may reasonably request to evidence, perfect or otherwise
implement the guaranties and security for repayment of the Obligations
contemplated by the Loan Documents.
(B) At Agent's or Required Lenders' request,
Borrowers shall cause any Subsidiary of any Borrower that is not itself a
Borrower promptly to join in this Agreement as a "Borrower," or, at the option
of Agent, to guaranty the Obligations, and, in either case, to grant to Agent,
for the benefit of Agent and Lenders, a security interest in the real, personal
and mixed property of such Subsidiary to secure the Obligations. The
documentation for such joinder or such guaranty, and such security shall be or
be on terms substantially similar to the Loan Documents executed concurrently
herewith with such modifications as are reasonably requested by Agent.
8.1.11 EXCHANGE AGREEMENT TRANSACTIONS AND HSR. On or before
December 15, 1998, and provided Holdings either has received an "early
termination" under the Hart-Scott-Rodino Anti-Trust Improvements Act, or all
applicable waiting periods thereunder shall have expired, Holdings shall have
completed the transactions contemplated by the Exchange Agreement and as a
result thereof no Class B Redeemable Preferred Stock, Series 1997-A, $1.00 par
value, of Holdings shall be outstanding and the outstanding principal balance of
the Junior Subordinated Notes as a result of the issuance of Common Stock as
payment on the outstanding principal balance of such Junior Subordinated Notes
shall not be greater than $6,883,553, plus any capitalized interest with respect
thereto for the period after the Closing Date. Holdings shall request an early
termination under, and, in connection therewith, shall use its best efforts to
supply all requested information
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necessary for an early termination under, the Hart-Scott-Rodino Anti-Trust
Improvements Act of the transactions contemplated by the Exchange Agreement.
8.2 NEGATIVE COVENANTS. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Agent and Lenders, each
Borrower, on a joint and several basis, covenants that, unless Required Lenders
have first consented thereto in writing, no Borrower will and no Borrower will
permit any of its Subsidiaries directly or indirectly to:
8.2.1 MERGERS, CONSOLIDATIONS, ACQUISITIONS. Merge or
consolidate, or permit any Subsidiaries to merge or consolidate, with any Person
other than a Borrower or a Subsidiary of any Borrower that is not a party to
this Agreement as a Borrower, but only if no Event of Default then exists (or
will result therefrom) and a Borrower is the surviving or continuing entity; nor
acquire, nor permit any of its Subsidiaries to acquire, all or any substantial
part of the Properties of any Person, except that, if no Event of Default then
exists, a Borrower may acquire all or substantially all of the Properties of any
of its Subsidiaries, unless such merger or acquisition otherwise not permitted
hereby is consented to in writing by Agent or is consummated in compliance with
the proviso contained in SECTION 8.2.9. Notwithstanding the foregoing, Borrowers
may acquire the Rader Companies on the terms set forth in the Rader Purchase
Agreement provided that each of the following conditions has been satisfied:
(A) such acquisition is completed on or before December 31,
1998, and is structured as a stock acquisition by a Borrower of the Rader
Companies;
(B) Agent shall have received such duly executed and delivered
agreements, instruments and documents as Agent shall request in order to create
in favor of Agent, for its own benefit and on behalf of Lenders, a first
priority perfected security interest in the real, personal and mixed property of
the Rader Companies and the capital stock of the Rader Companies to secure the
Obligations;
(C) the business and assets (and, if applicable, all shares of
capital stock) so acquired in such acquisition shall be acquired by a Borrower
free and clear of all Liens (other than Permitted Liens) unless otherwise
permitted under this Agreement;
(D) no Indebtedness shall be incurred or assumed to finance
such acquisition and no contingent obligations will be incurred or assumed in
connection with such acquisition, which are prohibited by this Agreement;
(E) at the time of such acquisition, no Default and no Event
of Default exists, or would be caused upon the consummation thereof;
(F) the consideration to be paid for such acquisition shall be
cash, the total consideration to be paid in such acquisition on the closing date
thereof shall not exceed $1,000,000 and such sum shall be paid solely from the
proceeds of a capital contribution made in cash in exchange for Common Stock;
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(G) contemporaneous with such acquisition, a Borrower enters
into an employment agreement with Bill T. Rader, Ph.D. for a term of not less
than three (3) years; and
(H) except for the first year of any earnout period, the
amount of any earnout payments to be made in connection with such acquisition
shall be less than or equal to EBITDA of Ramsay Educational Services, Inc. and
its consolidated subsidiaries, including the Rader Companies, for the period
used to calculate such earnout payment and in the first year of the earnout
period such earnout payments may not exceed EBITDA for such period by more than
$50,000.
Each acquisition consummated by a Borrower in accordance with the provisions of
this SECTION 8.2.1, or as otherwise approved in writing by Agent, shall be
referred to as a "PERMITTED ACQUISITION".
8.2.2 LOANS AND ADVANCES. Make, or permit any of its
Subsidiaries to make, any loans or other advances of money to any Person, except
(a) for salary, travel advances, advances against commissions and other similar
advances in the ordinary course of business; (b) if no Event of Default exists
at the time of funding, any Borrower may make loans and advances to any other
Borrower (except a Restricted Subsidiary) for purposes other than as set forth
in SECTION 8.2.2(a), and (c) if no Event of Default exists at the time of
funding, Holdings may make loans and advances to the Restricted Subsidiaries for
purposes other than as set forth in SECTION 8.2.2.(a), if the aggregate amount
of such loans and advances made by Holdings to its Restricted Subsidiaries
during any fiscal quarter is less than the aggregate amount of Distributions and
other payments received by Holdings from its Restricted Subsidiaries during such
fiscal quarter, in each case computed as of the last day of such fiscal quarter.
8.2.3 TOTAL INDEBTEDNESS. Create, incur, assume, or suffer to
exist, or permit any of their respective Subsidiaries to create, incur or suffer
to exist, any Indebtedness, except:
(i) Obligations owing to Agent and Lenders;
(ii) The Junior Subordinated Debt and Indebtedness,
if any, relating to the Preferred Stock;
(iii) Indebtedness of a Borrower or a Subsidiary if
and to the extent permitted by SECTION 8.2.2;
(iv) Accounts payable to trade creditors and current
operating expenses (other than for Money Borrowed) ninety percent (90%)
of which are aged not more than 45 days from the due date, or, if aged
outside of the preceding parameters, that are being Properly Contested,
but in each case initially incurred in the ordinary course of business
and either paid within such time period or, if being Properly Contested
at the time and in the manner contemplated in the definition of the
term "Properly Contested";
(v) Obligations to pay Rentals permitted by
SECTION 8.2.16;
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(vi) Permitted Purchase Money Indebtedness;
(vii) Contingent liabilities arising out of
endorsements of checks and other negotiable instruments for deposit or
collection in the ordinary course of business;
(viii) Capitalized Lease Obligations to the extent
the underlying Capital Lease is permitted by the terms of SECTION
8.2.9;
(ix) Indebtedness in respect to deferred Taxes;
(x) Indebtedness existing on the Closing Date and
described in EXHIBIT T attached hereto; and
(xi) Indebtedness not included in paragraphs (i)
through (x) above which by its terms is unsecured and does not exceed
at any time, in the aggregate, the sum of Five Hundred Thousand Dollars
($500,000).
8.2.4 AFFILIATE TRANSACTIONS. Enter into, or be a party to, or
permit any of their respective Subsidiaries to enter into or be a party to, any
transaction with any Affiliate except pursuant to the reasonable requirements of
such Borrower's or such Subsidiary's business and upon fair and reasonable terms
which are fully disclosed to Agent and are no less favorable than would be
obtained in a comparable arm's length transaction with a Person not an Affiliate
of such Borrower or Subsidiary.
8.2.5 LIMITATION ON LIENS. Create or suffer to exist, or
permit any of their respective Subsidiaries to create or suffer to exist, any
Lien upon any of its Property, income or profits, whether now owned or hereafter
acquired, except:
(i) Liens at any time granted in favor of Agent for
its benefit and the ratable benefits of Lenders;
(ii) Liens for Taxes (excluding any Lien imposed
pursuant to any of the provisions of ERISA) not yet due, or being
Properly Contested;
(iii) Liens arising in the ordinary course of its
business by operation of law or regulation, but only if payment in
respect of any such Lien is not at the time required or (b) such Lien
does not materially detract from the value of the Property or
materially impair the use thereof in the operation of its business;
(iv) Purchase Money Liens securing Permitted Purchase
Money Indebtedness;
(v) such other Liens as appear on EXHIBIT P hereto;
and
(vi) Liens arising in connection with Capitalized
Lease Obligations to the extent the underlying Capital Lease is
permitted pursuant to SECTION 8.2.9; and
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(vii) such other Liens as Agent or Required Lenders
may hereafter approve in writing.
8.2.6 SUBORDINATED DEBT. Except in accordance with the
Subordination Agreement applicable thereto or the subordination provisions of
such Subordinated Debt, as the case may be, (i) make, or permit any Loan Party
to make, any payment of any part or all of any Subordinated Debt or take any
other action or omit to take any other action in respect of any Subordinated
Debt, (ii) without the prior written consent of Agent, agree to any amendment,
modification or supplement to any of the documents evidencing the Subordinated
Debt, including, without limitation, any amendment, modification or supplement
the effect of which is to increase the maximum principal amount of the
Subordinated Debt, dividend rate or rate of interest on any of the Subordinated
Debt, (iii) change the dates upon which payments of principal or interest, or
dividends on the Subordinated Debt are due, (iv) change, or add any event of
default or any covenant with respect to the Subordinated Debt, (v) change the
redemption or prepayment provisions of the Subordinated Debt, (vi) alter the
subordination provisions with respect to the Subordinated Debt, including,
without limitation, subordinating the Subordinated Debt to any other debt, (vii)
change the maturity date of any of the Subordinated Debt or otherwise to alter
the repayment terms of the Subordinated Debt, (viii) grant any Liens or security
interests in any assets of any Loan Party or any other assets securing the
Obligations to secure the Subordinated Debt, or (ix) change or amend any other
term of the documents evidencing the Subordinated Debt if such change or
amendment would increase the obligations of any Loan Party or confer additional
material rights on holder of the Subordinated Debt in a manner adverse to any
Loan Party or Lender.
8.2.7 PARTNERSHIP OR JOINT VENTURES. Become or agree to become
a general or limited partner in any general or limited partnership or a joint
venturer in any joint venture.
8.2.8 DISTRIBUTIONS. Declare or make, or permit any of their
respective Subsidiaries to declare or make, any Distributions, except that so
long as no Default or Event of Default exists, (a) any Subsidiary of any
Borrower may make Distributions to any Borrower, (b) any Borrower may make
Distributions to any other Borrower, and (c) Holdings may pay regularly
scheduled Distributions on the Preferred Stock , but only if and to the extent
permitted under the Subordination Agreement.
8.2.9 CAPITAL EXPENDITURES. Make Capital Expenditures
(including, by way of Capitalized Lease Obligations) which, in the aggregate, as
to Holdings and its Subsidiaries, on a Consolidated basis, exceed, in the
aggregate, (a) $600,000 during the period commencing on the Closing Date and
ending on December 31, 1998, (b) $3,500,000 during the calendar year 1999, and
(c) $2,000,000 during any calendar year after 1999; provided, however, that, in
addition to the Capital Expenditures permitted under this SECTION 8.2.9, (A)
Borrowers may make Capital Expenditures to the extent funded with the proceeds
of an Acquisition Loan and (B) Borrowers may make Capital Expenditures
consisting of the acquisition costs of real property and improvements
constituting, or to be operated as, Group Homes acquired by a Borrower during
the period commencing on the Closing Date and ending on February 28, 1999, which
do not exceed $500,000 in the aggregate if:
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(i) each such acquisition is completed on or before
February 28, 1999, and is structured as an asset acquisition by a Borrower;
(ii) if requested by Agent, Agent shall have received such
duly executed and delivered agreements, instruments and documents as Agent shall
request in order to create in favor of Agent, for its own benefit and on behalf
of Lenders, a first priority perfected security interest in the real, personal
and mixed property so acquired to secure the Obligations;
(iii) the assets acquired in each such acquisition shall be
acquired by a Borrower free and clear of all Liens (other than Permitted Liens);
(iv) no Indebtedness shall be incurred or assumed to finance
such acquisition, other than Revolving Loans hereunder;
(v) the assets so acquired are located in the United States
or in Puerto Rico; and
(vi) the full amount of the consideration to be paid for such
acquisition shall be paid in cash concurrently with the closing thereof.
8.2.10 DISPOSITION OF ASSETS. Sell, lease or otherwise dispose
of any of, or permit any of their respective Subsidiaries to sell, lease or
otherwise dispose any of, its Properties, including any disposition of Property
as part of a sale and leaseback transaction, to or in favor of any Person,
except (i) transfers of Property to a Borrower by another Borrower or by a
Subsidiary of a Borrower if permitted under SECTION 8.2.1, and (ii) dispositions
expressly permitted pursuant to SECTIONS 6.3, 6.4.2, 8.2.1 and 8.2.8.
8.2.11 STOCK OF SUBSIDIARIES. Permit any of their respective
Subsidiaries to issue any additional shares of its capital stock except
director's qualifying shares.
8.2.12 RESTRICTED INVESTMENT. Make or have, or permit any of
their respective Subsidiaries to make or have, any Restricted Investment.
8.2.13 MARGIN SECURITIES. Own, purchase or acquire (or enter
into any contract to purchase or acquire) any "margin security" as defined by
any regulation of the Federal Reserve Board as now in effect or as the same may
hereafter be in effect unless, prior to any such purchase or acquisition or
entering into any such contract, Agent shall have received an opinion of counsel
satisfactory to Agent to the effect that such purchase or acquisition will not
cause this Agreement to violate Regulations U or X or any other regulation of
the Federal Reserve Board then in effect.
8.2.14 TAX CONSOLIDATION. File or consent to the filing of any
consolidated income tax return with any Person other than their respective
Subsidiaries.
8.2.15 HEDGING TRANSACTIONS. Engage, without Agent's prior
written consent, in any currency, commodity or interest rate hedging or similar
transactions.
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8.2.16 LEASES. Become, or permit any of the Subsidiaries of
Holdings to become, a lessee under any operating lease executed after the
Closing Date (other than a lease under which a Borrower or any of its
Subsidiaries is lessor) of Property if the aggregate Rentals payable during any
current or future period of 12 consecutive months under the lease in question
and all other leases executed after the Closing Date under which Holdings or any
of its Subsidiaries is then lessee would exceed $500,000. The term "Rentals"
means, as of the date of determination, all payments which the lessee is
required to make by the terms of any lease.
8.2.17 LIMITS ON INACTIVE SUBSIDIARIES. Permit any Inactive
Subsidiary to (i) acquire, by purchase or lease, any property or assets, or (ii)
hire any employees or commence any business operations, in any event unless such
Inactive Subsidiary is, or concurrently therewith becomes, a Guarantor or a
party to this Agreement as a Borrower. In addition, no Borrower shall make any
loans to or investments in any Inactive Subsidiary prior to such Inactive
Subsidiary's becoming a Guarantor or a party to this Agreement as a Borrower
without the prior written consent of Agent and Required Lenders.
8.2.18 LIMITS ON PREFERRED STOCK. Issue any additional shares
of Preferred Stock, unless any liabilities or obligations with respect thereto
are subordinated to the Obligations in the manner set forth in the Subordination
Agreement or otherwise in a manner satisfactory to Agent.
8.3 SPECIFIC FINANCIAL COVENANTS. During the term of this Agreement,
and thereafter for so long as there are any Obligations to Lenders, each
Borrower, jointly and severally, covenants that, unless otherwise consented to
by Required Lenders in writing, Holdings, on a Consolidated basis, shall:
8.3.1 FIXED CHARGE COVERAGE RATIO. Maintain, as of the end of
each fiscal quarter set forth below, for the cumulative period ending on such
date, a Fixed Charge Ratio of not less than the ratio set forth below for each
period indicated below:
Period Amount
------ ------
(i) Three calendar month (i) .85 to 1.0
period ending on
December 31, 1998
(ii) Six calendar month (ii) 1.00 to 1.0
period ending on
March 31, 1999
(iii) Nine calendar month (iii) 1.00 to 1.0
period ending on
June 30, 1999
(iv) Twelve calendar month (iv) 1.00 to 1.0
period ending on
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September 30, 1999
(v) Twelve calendar month (v) 1.10 to 1.0
period ending
on December 31, 1999
(vi) Twelve calendar month (vi) 1.10 to 1.0
period ending on
March 31, 2000
(vii) Twelve calendar month (vi) 1.10 to 1.0
period ending on
June 30, 2000
(viii) Twelve calendar month (viii) 1.15 to 1.0
period ending on
September 30, 2000
(x) Twelve calendar month (x) 1.15 to 1.0
period ending
respectively on the last
day of each thereafter
occurring fiscal quarter
8.3.2 INTEREST COVERAGE RATIO. Achieve, at the end of each
fiscal quarter set forth below, for the cumulative period ending on such date,
an Interest Coverage Ratio not less than the ratio set forth below for the
period corresponding thereto:
Period Ratio
------ -----
(i) Three calendar month (i) 3.75 to 1.0
period ending on
December 31, 1998
(ii) Six calendar month (ii) 3.75 to 1.0
period ending on
March 31, 1999
(iii) Nine calendar month (iii) 3.75 to 1.0
period ending on
June 30, 1999
(iv) Twelve calendar month (iv) 3.75 to 1.0
period ending on
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September 30, 1998
(v) Twelve calendar month (v) 3.75 to 1.0
period ending
respectively on the last
day of each thereafter
occurring fiscal quarter
8.3.3 TOTAL INDEBTEDNESS TO EBITDA. As of the last day of each
fiscal quarter set forth below (the "CALCULATION DATE"), a ratio of (i)
Holdings' Total Indebtedness on such Calculation Date, to (ii) Holdings' EBITDA
for the twelve calendar month period ending on such Calculation Date, of not
greater than the ratio set forth below on the Calculation Date corresponding
thereto:
Calculation Date Ratio
----------------- -----
(i) December 31, 1998 (i) 6.00 to 1.0
(ii) March 31, 1999 (ii) 6.00 to 1.0
(iii) June 30, 1999 (iii) 4.00 to 1.0
(iv) September 30, 1999 (iv) 4.00 to 1.0
(v) December 31, 1999 (v) 3.50 to 1.0
(vi) March 31, 2000 (vi) 3.50 to 1.0
(vii) June 30, 2000 (vii) 3.00 to 1.0
(viii) September 30, 2000 (viii) 3.00 to 1.0
(ix) December 31, 2000 (ix) 2.50 to 1.0
and on the last day of
each thereafter occurring
fiscal quarter;
provided, however, that, notwithstanding anything to the contrary contained
herein, (a) Holdings' EBITDA for purposes of the December 31, 1998 Calculation
Date shall be the amount equal to (i) Holdings' EBITDA for the three months
ending December 31, 1998, MULTIPLIED BY (ii) four; (b) Holdings' EBITDA for
purposes of the March 31, 1999 Calculation Date shall be the amount equal to (i)
Holdings' EBITDA for the six months ending March 31, 1999, MULTIPLIED BY (ii)
two;
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and (c) Holdings' EBITDA for purposes of the June 30, 1999 Calculation Date
shall be the amount equal to (ii Holdings' EBITDA for the nine months ending
June 30, 1999, MULTIPLIED BY (ii) four, and DIVIDED BY (iii) three.
8.3.4 PRO FORMA AVAILABILITY COVENANT. Permit, at any time,
Pro Forma Quarterly Availability to be less than $3,000,000.
SECTION 9. CONDITIONS PRECEDENT
Notwithstanding any other provision of this Agreement or any of the
other Loan Documents, and without affecting in any manner the rights of Agent
and Lenders under the other sections of this Agreement, Lenders shall not be
required to make any Loan under this Agreement unless and until each of the
following conditions has been and continues to be satisfied:
9.1 DOCUMENTATION. Agent and Lenders shall have received, in form and
substance reasonably satisfactory to Agent and Lenders and their counsel, a duly
executed copy of this Agreement and the other Loan Documents, together with such
additional documents, instruments and certificates as Agent and Lenders and
their counsel shall require in connection therewith, including all documents,
instruments, agreements and schedules listed in the SCHEDULE OF DOCUMENTS
attached hereto and incorporated herein as EXHIBIT Q, all in form and substance
satisfactory to Agent and Lenders and their counsel.
9.2 NO DEFAULT. No Default or Event of Default shall exist.
9.3 OTHER LOAN DOCUMENTS. Each of the conditions precedent set forth in
the other Loan Documents shall have been satisfied.
9.4 AVAILABILITY. Agent shall have determined that immediately after
Lenders have made the initial Loans contemplated hereby, and paid all closing
costs incurred in connection with the transactions contemplated hereby the
aggregate amount of Borrowers' cash and Availability shall not be less than Nine
Million Dollars ($9,000,000).
9.5 NO LITIGATION. No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain or prohibit, or to
obtain damages in respect of, or which is related to or arises out of this
Agreement or the consummation of the transactions contemplated hereby.
9.6 CAPITAL CONTRIBUTION. Borrowers shall have provided Agent and
Lenders with evidence acceptable to Lenders that Holdings has received a capital
contribution of at least $2,500,000 in cash in exchange for Common Stock.
9.7 PHASE I ENVIRONMENTAL SURVEY(S). Borrowers shall have delivered to
Agent and Lenders Phase I Environmental Survey(s) for the real Property of
Borrowers, the form and contents of which shall have been deemed satisfactory by
Agent and Lenders in their sole discretion.
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9.8 JUNIOR SUBORDINATED DEBT EXCHANGE. Borrowers shall have provided
Agent and Lenders with evidence acceptable to Agent and Lenders in their sole
discretion that as of the Closing Date Borrowers have reduced the principal
amount of the Junior Subordinated Notes by $600,000 as a result of the issuance
of Common Stock to the holder thereof as provided in the Exchange Agreement and
that after giving effect to such reduction, the outstanding principal balance of
the Junior Subordinated Notes as of the Closing Date is not greater than
$7,283,553.
9.9 DRAFT FINANCIAL STATEMENTS . Agent and each Lender shall have
received drafts of the audited financial statements of Holdings and its
Subsidiaries for the period ending June 30, 1998. In addition, each Lender shall
have had the opportunity to confer with the auditors regarding those statements.
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
10.1 EVENTS OF DEFAULT. The occurrence of one or more of the following
events shall constitute an "EVENT OF DEFAULT":
10.1.1 PAYMENT OF OBLIGATIONS. Borrowers shall fail to pay any
of the Obligations on the due date thereof (whether due at stated maturity, on
demand, upon acceleration or otherwise).
10.1.2 MISREPRESENTATIONS. Any representation, warranty or
other statement made or furnished to Agent or Lenders by or on behalf of any
Loan Party in this Agreement, any of the other Loan Documents or any instrument,
certificate or financial statement furnished in compliance with or in reference
thereto proves to have been false or misleading in any material respect when
made or furnished or when reaffirmed pursuant to SECTION 7.2.
10.1.3 BREACH OF SPECIFIC COVENANTS. Any Borrower shall fail
or neglect to perform, keep or observe any covenant contained in SECTIONS 5.2,
5.3, 6.1.1, 6.2, 8.1.1, 8.1.3, 8.2 or 8.3 on the date that such Borrower is
required to perform, keep or observe such covenant.
10.1.4 BREACH OF OTHER COVENANTS. Any Borrower shall fail or
neglect to perform, keep or observe any covenant contained in this Agreement
(other than a covenant which is dealt with specifically elsewhere in this
SECTION 10.1) and the breach of such other covenant is not cured to Required
Lender's satisfaction within fifteen (15) days after the sooner to occur of any
Borrower's receipt of notice of such breach from Agent or Lenders or the date on
which such failure or neglect first becomes known to any officer of any
Borrower.
10.1.5 DEFAULT UNDER SECURITY DOCUMENTS/OTHER AGREEMENTS. Any
event of default shall occur under, or any Loan Party shall default in the
performance or observance of any term, covenant, condition or agreement
contained, in any of the Security Documents or the Other Agreements and such
default shall continue beyond any applicable grace period.
10.1.6 OTHER DEFAULTS. There shall occur any default or event
of default on the part of Loan Party under any agreement, document or instrument
to which Loan Party is a party or by which any Loan Party or any Property of any
Loan Party is bound, creating or relating to any
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Indebtedness in excess of $250,000 (other than the Obligations, but including
the Subordinated Debt) if the payment or maturity of such Indebtedness is
accelerated in consequence of such event of default or if demand for payment of
such Indebtedness is made by the holder or holders thereof.
10.1.7 UNINSURED LOSSES. Any loss, theft, damage or
destruction of any of the Collateral with a value of $250,000 or more not fully
covered (subject to such deductibles as Agent shall have permitted) by
insurance.
10.1.8 ADVERSE CHANGES. There shall occur any material adverse
change in the financial condition, business or operations of Borrowers, taken as
a whole, which shall, after notice from Agent, continue without being mitigated
or reversed within a period of thirty (30) days.
10.1.9 INSOLVENCY AND RELATED PROCEEDINGS. Any Loan Party
shall cease to be Solvent or shall suffer the appointment of a receiver,
trustee, custodian or similar fiduciary, or shall make an assignment for the
benefit of creditors, or any petition for an order for relief shall be filed by
or against any Loan Party under the Bankruptcy Code (and if, with respect to any
petition filed against any Loan Party, such proceeding shall continue for more
than 30 days), or any Loan Party shall make any offer of settlement, extension
or composition to its unsecured creditors generally.
10.1.10 BUSINESS DISRUPTION; CONDEMNATION. There shall occur a
cessation of a substantial part of the business of any Loan Party for a period
which significantly affects the capacity of such Loan Party to continue its
business, on a profitable basis; or any Loan Party shall suffer the loss or
revocation of any license or permit now held or hereafter acquired by which is
necessary to the continued or lawful operation of such Loan Party's business; or
any Loan Party shall be enjoined, restrained or in any way prevented by court,
governmental or administrative order from conducting all or any material part of
its business affairs; or any material lease or agreement pursuant to which such
Loan Party's leases, uses or occupies any Property shall be canceled or
terminated prior to the expiration of its stated term and such cancellation or
termination materially and adversely affects such Loan Party's capacity to
continue business, on a profitable basis; or any part of the Collateral shall be
taken through condemnation or the value of such Property shall be impaired
through condemnation, and such condemnation or impairment of value could
reasonably be expected to have a Material Adverse Effect.
10.1.11 CHANGE OF OWNERSHIP. (i) Holdings shall cease to own
and control, directly or through one or more Subsidiaries, beneficially and of
record, at least the percentage of the issued and outstanding capital stock of
any Borrower (other than Holdings) owned and controlled by it on the Closing
Date, as set forth in EXHIBIT E, (ii) the Control Group shall cease to own and
control, beneficially and of record, sufficient shares of the issued and
outstanding capital stock of Holdings so as to have the right to cast not less
than thirty-five (35%) of all votes in the election of directors of Holdings and
on each other matter that may be submitted to a vote of the shareholders of
Holdings, or (iii) any Borrower shall cease to own and control, beneficially and
of record, at least the percentage of the issued and outstanding capital stock
of each of its respective Subsidiaries owned and controlled by it on the Closing
Date, as set forth in EXHIBIT E.
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10.1.12 ERISA. A Reportable Event shall occur which Agent, in
its sole discretion, shall determine in good faith constitutes grounds for the
termination by the Pension Benefit Guaranty Corporation of any Plan or for the
appointment by the appropriate United States district court of a trustee for any
Plan, or if any Plan shall be terminated or any such trustee shall be requested
or appointed, or if any Loan Party is in "default" (as defined in SECTION
4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan resulting
from such Loan Party's complete or partial withdrawal from such Plan, and such
event could reasonably be expected to have a Material Adverse Effect.
10.1.13 CHALLENGE TO AGREEMENT. Any Loan Party or any
Affiliate of any Loan Party shall challenge or contest in any action, suit or
proceeding the validity or enforceability of this Agreement, or any of the other
Loan Documents, the legality or enforceability of any of the Obligations or the
perfection or priority of any Lien granted to Agent for its benefit and the
ratable benefit of Lenders.
10.1.14 REPUDIATION OF OR DEFAULT UNDER GUARANTY AGREEMENT.
Any Guarantor shall revoke or attempt to revoke the Guaranty Agreement signed by
such Guarantor, or shall repudiate such Guarantor's liability thereunder or
shall be in default under the terms thereof.
10.1.15 CRIMINAL FORFEITURE. Any Loan Party shall be
criminally indicted or convicted under any law that could lead to a forfeiture
of any Property of any Loan Party.
10.1.16 JUDGMENTS. Any (i) one or more money judgments, is
entered against any Loan Party or any Property of any Loan Party which exceeds,
in the aggregate, $500,000, and such judgment or, if more than one, any one of
such judgments shall remain unpaid, unsatisfied by insurance, and unstayed for
more than thirty (30) consecutive days, or (ii) writ of attachment or similar
process is filed against any Loan Party, or any Property of any Loan Party, and
such writ of attachment or similar process is not bonded or secured in an amount
and manner reasonably satisfactory to Lender.
10.2 ACCELERATION OF THE OBLIGATIONS. Without in any way limiting the
right of Lender to demand payment of any portion of the Obligations payable on
demand in accordance with SECTION 3.2, upon the occurrence of an Event of
Default and during the continuance thereof, Agent may, and, at request of the
Required Lenders, shall (i) without notice, terminate this facility with respect
to further Revolving Credit Loans, Acquisition Loans, and Letters of Credit and
LC Guaranties, whereupon no Revolving Credit Loans or Acquisition Loans may be
made hereunder and no Letters of Credit or LC Guaranties may be issued
hereunder, and/or (ii) with notice, declare all Obligations to be forthwith due
and payable, whereupon all Obligations shall become and be due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are expressly waived by each Borrower; PROVIDED, HOWEVER, that upon the
occurrence of an Event of Default specified in SECTION 10.1.9, the Obligations
shall become due and payable without declaration, notice or demand by Agent.
Agent shall take such action with respect to any Default or Event of
Default as shall be directed by the Required Lenders; PROVIDED that, unless and
until Agent shall have received such
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directions, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable and in the best interests of Agent and
Lenders taken as a whole, including any action (or the failure to act) pursuant
to the Loan Documents.
10.3 OTHER REMEDIES. After the occurrence, and during the continuation,
of an Event of Default, Agent and/or Lenders shall have and may exercise from
time to time the following rights and remedies:
10.3.1 All of the rights and remedies of a secured party under
the Code or under other applicable law, and all other legal and equitable rights
to which Agent or Lenders may be entitled, all of which rights and remedies
shall be cumulative and shall be in addition to any other rights or remedies
contained in this Agreement or any of the other Loan Documents, and none of
which shall be exclusive.
10.3.2 The right to take immediate possession of the
Collateral, and to (i) require Borrowers to assemble the Collateral, at
Borrowers' expense, and make it available to Agent at a place designated by
Agent which is reasonably convenient to both parties, and (ii) enter any
premises where any of the Collateral shall be located and to keep and store the
Collateral on said premises until sold (and if said premises be the Property of
any Borrower, each such Borrower agrees not to charge Agent for storage
thereof).
10.3.3 The right to sell or otherwise dispose of all or any
Collateral in its then condition, or after any further manufacturing or
processing thereof, at public or private sale or sales, with such notice as may
be required by law, in lots or in bulk, for cash or on credit, all as Agent, in
its sole discretion, may deem advisable. Each Borrower agrees that 10 days
written notice to any such Loan Party of any public or private sale or other
disposition of Collateral shall be reasonable notice thereof, and such sale
shall be at such locations as Agent may designate in said notice. Agent shall
have the right to conduct such sales on any Borrower's premises, without charge
therefor, and such sales may be adjourned from time to time in accordance with
applicable law. Agent shall have the right to sell, lease or otherwise dispose
of the Collateral, or any part thereof, for cash, credit or any combination
thereof, and Agent may purchase all or any part of the Collateral at public or,
if permitted by law, private sale and, in lieu of actual payment of such
purchase price, may set off the amount of such price against the Obligations.
The proceeds realized from the sale of any Collateral may be applied, after
allowing 2 Business Days for collection, first to the costs, expenses and
attorneys' fees incurred by Agent or any Lender in collecting the Obligations,
in enforcing the rights of Agent and Lenders under the Loan Documents and in
collecting, retaking, completing, protecting, removing, storing, advertising for
sale, selling and delivering any Collateral; second to the interest due upon any
of the Obligations; third, to the principal of the Obligations; and fourth, to
any remaining Obligations. If any deficiency shall arise, each Borrower and each
Guarantor shall remain liable to Agent and Lenders therefor.
10.3.4 Agent is hereby granted a license or other right to
use, without charge, all labels, patents, copyrights, rights of use of any name,
trade secrets, trade names, trademarks and advertising matter, or any Property
of a similar nature of any Loan Party, as it pertains to the
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Collateral, in advertising for sale and selling any Collateral and each
Borrower's rights under all licenses and all franchise agreements shall inure to
Agent's benefit.
10.3.5 Agent may, and at the request of Required Lenders
shall, require Borrowers to deposit with Agent funds equal to the LC Amount and,
if Borrower falls to promptly make such deposit, Lenders may advance such amount
as a Revolving Credit Loan (whether or not an Overadvance is created thereby).
Any such deposit or advance shall be held by Agent as a reserve to fund future
payments on such LC Guaranties and future drawings against such Letters of
Credit. At such time as all LC Guaranties have been paid or terminated and all
Letters of Credit have been drawn upon or expired, any amounts remaining in such
reserve shall be applied against any outstanding Obligations, or, if all
Obligations have been indefeasibly paid in full, promptly returned to Borrowers.
10.4 REMEDIES CUMULATIVE; NO WAIVER. All covenants, conditions,
provisions, warranties, guaranties, indemnities, and other undertakings of each
Borrower contained in this Agreement and the other Loan Documents, or in any
document referred to herein or contained in any agreement supplementary hereto
or in any schedule or contained in any other agreement between Agent and/or
Lenders and any Borrower, heretofore, concurrently, or hereafter entered into,
shall be deemed cumulative to and not in derogation or substitution of any of
the terms, covenants, conditions, or agreements of each Borrower herein
contained. The failure or delay of Agent or Lenders to require strict
performance by any Borrower of any provision of this Agreement or to exercise or
enforce any rights, Liens, powers, or remedies hereunder or under any of the
aforesaid agreements or other documents or security or Collateral shall not
operate as a waiver of such performance, Liens, rights, powers and remedies, but
all such requirements, Liens, rights, powers, and remedies shall continue in
full force and effect until all Loans and all other Obligations owing or to
become owing from any Borrower to Agent and/or Lenders shall have been fully
satisfied. None of the undertakings, agreements, warranties, covenants and
representations of any Borrower contained in this Agreement or any of the other
Loan Documents and no Event of Default by any Borrower under this Agreement or
any other Loan Documents shall be deemed to have been suspended or waived by
Agent or Lenders unless such suspension or waiver is by an instrument in writing
specifying such suspension or waiver and is signed by duly authorized
representatives of Agent and Required Lenders and directed to Borrowers.
SECTION 11. THE AGENT
11.1 AUTHORIZATION AND ACTION. Each Lender hereby appoints and
authorizes Agent to take such action on its behalf and to exercise such powers
under this Agreement, and the other Loan documents as are delegated to Agent by
the terms hereof and thereof, together with such powers as are reasonably
incidental thereto. As to any matters not expressly provided for by this
Agreement and the other Loan Documents (including, without limitations
enforcement or collection of the Notes), Agent shall not be required to exercise
any discretion or take any action, but shall be required to act or to refrain
from acting (and shall be fully protected in so acting or refraining from
acting) upon the instructions of the Required Lenders, and such instructions
shall be binding upon all Lenders; PROVIDED, however, that Agent shall not be
required to take any action which exposes Agent to personal liability or which
is contrary to this Agreement or the other Loan Documents or
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applicable law. Agent agrees to give each Lender promptly a copy of each notice
given to it by any Borrower pursuant to the terms of this Agreement and the
other Loan Documents.
11.2 AGENT'S RELIANCE, ETC. Neither Agent nor any of its directors,
officers, agents or employees shall be liable for any action taken or omitted to
be taken by it or them under or in connection with this Agreement or the other
Loan Documents, except for its or their own gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, Agent: (i)
may treat the payee of any Note as the holder thereof until Agent receives
written notice of the assignment or transfer thereof signed by such payee and in
form satisfactory to Agent; (ii) may consult with legal counsel, independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken in good faith by it in accordance with
the advice of such counsel, accountants or experts; (iii) makes no warranty or
representations to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations made in or in connection with this
Agreement or the other Loan Documents; (iv) shall not have any duty beyond
Agent's customary practices to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of this Agreement or the
other Loan Documents on the part of any Borrower or to inspect the property
(including the books and records) of any Borrower; (v) shall not be responsible
to any Lender for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or the other Loan Documents
or any other instrument or document furnished pursuant hereto or thereto; and
(vi) shall incur no liability under or in respect of this Agreement or the other
Loan Documents by acting upon any notice, consent, certificate or other
instrument or writing (which may be by telecopy, telegram, cable or telex)
believed in good faith by it to be genuine and signed or sent by the proper
party or parties.
11.3 FCC AND AFFILIATES. With respect to its commitment hereunder to
make Revolving Credit Loans, the Term Loan and the Acquisition Loans, FCC shall
have the same rights and powers under this Agreement and the other Loan
Documents as any other Lender and may exercise the same as though it were not
Agent; and the term "LENDER" or "LENDERS" shall, unless otherwise expressly
indicated, include FCC in its individual capacity. FCC and its Affiliates may
lend money to, and generally engage in any kind of business with, Holdings or
any of its Subsidiaries and any Person who may do business with or own
securities of Holdings or any such Subsidiary, all as if FCC were not Agent and
without any duty to account therefor to Lenders.
11.4 LENDER CREDIT DECISION. Each Lender acknowledges that it has,
independently and without reliance upon Agent or any other Lender and based on
the financial statements referred to in SECTION 7.1.10 and such other documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon Agent or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement.
11.5 INDEMNIFICATION. Lenders agree to indemnify Agent (to the extent
not reimbursed by Borrowers), ratably according to the respective principal
amounts of the Notes then held by each of them, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against Agent in any way relating to or
arising out of this
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Agreement or any other Loan Document or any action taken or omitted by Agent
under this Agreement, PROVIDED that no Lender shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from Agent's gross negligence
or wilful misconduct. Without limitation of the foregoing, each Lender agrees to
reimburse Agent promptly upon demand for its ratable shares of any out-of-pocket
expenses (including reasonable counsel fees) incur-red by Agent in connection
with the preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities under,
this Agreement and each other Loan Document, to the extent that Agent is not
reimbursed for such expenses by Borrowers.
11.6 SUCCESSOR AGENT. Agent may resign at any time by giving written
notice thereof to Lenders and Holdings. Upon any such resignation, the Required
Lenders shall have the right to appoint a successor Agent which shall be
reasonably acceptable to Holdings. If no successor Agent shall have been so
appointed by the Required Lenders, and shall have accepted such appointment,
within 30 days after the retiring Agent's giving notice of resignation, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent, which
shall be a commercial bank or financial institution organized under the laws of
the United States of America or of any State thereof and having a combined
capital and surplus of at least Five Hundred Million Dollars ($500,000,000) and
which shall be reasonably acceptable to Holdings. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations under this Agreement and the other Loan
Documents. After any retiring Agent's resignation hereunder as Agent, the
provisions of this SECTION 11 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement and the
other Loan Documents.
SECTION 12. MISCELLANEOUS
12.1 POWER OF ATTORNEY. Each Borrower hereby irrevocably designates,
makes, constitutes and appoints Agent (and all Persons designated by Agent) as
such Borrower's true and lawful attorney (and agent-in-fact) and Agent, or
Agent's agent, may, during the continuance of an Event of Default, without
notice to any Borrower and in any Borrower's or Agent's name, but at the cost
and expense of such Borrower:
12.1.1 At such time or times upon or after the occurrence, and
during the continuation, of a Default or an Event of Default as Agent or said
agent, in its sole discretion, may determine, endorse any Borrower's name on any
checks, notes, acceptances, drafts, money orders or any other evidence of
payment or proceeds of the Collateral which come into the possession of Agent or
under Agent's control.
12.1.2 At such time or times after the occurrence, and during
the continuation, of an Event of Default as Agent or its agent in its sole
discretion may determine: (i) demand payment of the Accounts from the Account
Debtors, enforce payment of the Accounts by legal proceedings or otherwise, and
generally exercise all of any Borrower's rights and remedies with respect to the
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collection of the Accounts; (ii) settle, adjust, compromise, discharge or
release any of the Accounts or other Collateral or any legal proceedings brought
to collect any of the Accounts or other Collateral, (iii) sell or assign any of
the Accounts and other Collateral upon such terms, for such amounts and at such
time or times as Agent deems advisable, (iv) take control, in any manner, of any
item of payment or proceeds relating to any Collateral; (v) prepare, file and
sign any Borrower's name to a proof of claim in bankruptcy or similar document
against any Account Debtor or to any notice of lien, assignment or satisfaction
of lien or similar document in connection with any of the Collateral; (vi)
receive, open and dispose of all mail addressed to Borrower and to notify postal
authorities to change the address for delivery thereof to such address as Agent
may designate; (vii) endorse the name of any Borrower upon any of the items of
payment or proceeds relating to any Collateral and deposit the same to the
account of Agent on account of the Obligations; (viii) endorse the name of any
Borrower upon any chattel paper, document, instrument, invoice, freight bill,
bill of lading or similar document or agreement relating to the Accounts,
Inventory and any other Collateral; (ix) use any Borrower's stationery and sign
the name of any Borrower to verifications of the Accounts and notices thereof to
Account Debtors; (x) use the information recorded on or contained in any data
processing equipment and computer hardware and software relating to the
Accounts, Inventory, Investment Property, Equipment and any other Collateral;
(xi) make and adjust claims under policies of insurance; and (xii) do all other
acts and things necessary, in Agent's determination, to fulfill Borrower's
obligations under this Agreement.
12.2 INDEMNITY. EACH BORROWER EACH HEREBY INDEMNIFY, HOLD HARMLESS AND
SHALL DEFEND AGENT AND EACH LENDER AND EACH OF THEIR RESPECTIVE DIRECTORS,
OFFICERS, AGENTS, COUNSEL AND EMPLOYEES ("INDEMNIFIED PERSONS") FROM AND AGAINST
ANY AND ALL LOSSES, LIABILITIES, DAMAGES, COSTS, EXPENSES, SUITS, ACTIONS AND
PROCEEDINGS ("LOSSES") EVER SUFFERED OR INCURRED BY ANY INDEMNIFIED PERSON
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION
CONTEMPLATED HEREBY, INCLUDING ANY LOSSES CAUSED BY THE NEGLIGENCE OF ANY SUCH
INDEMNIFIED PERSON, BUT NOT INCLUDING ANY LOSSES CAUSED BY THE GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT OF ANY SUCH INDEMNIFIED PERSON, AND EACH BORROWER SHALL,
ON A JOINT AND SEVERAL BASIS, REIMBURSE LENDER AND EACH OTHER INDEMNIFIED PERSON
FOR ANY REASONABLE EXPENSES (INCLUDING IN CONNECTION WITH THE INVESTIGATION OF,
PREPARATION FOR OR DEFENSE OF ANY ACTUAL OR THREATENED CLAIM, ACTION OR
PROCEEDING ARISING THEREFROM, INCLUDING ANY SUCH COSTS OF RESPONDING TO
DISCOVERY REQUESTS OR SUBPOENAS, REGARDLESS OF WHETHER AGENT OR SUCH LENDER OR
SUCH OTHER INDEMNIFIED PERSON IS A PARTY THERETO). WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, THIS INDEMNITY SHALL EXTEND TO ANY CLAIMS ASSERTED
AGAINST AGENT OR ANY LENDER OR ANY OTHER INDEMNIFIED PERSON BY ANY PERSON UNDER
ANY ENVIRONMENTAL LAWS OR SIMILAR LAWS BY REASON OF OR ANY BORROWER'S OR ANY
OTHER PERSON'S FAILURE TO COMPLY WITH LAWS APPLICABLE TO SOLID OR HAZARDOUS
WASTE MATERIALS OR OTHER TOXIC SUBSTANCES. EACH BORROWER MAY SELECT COUNSEL WITH
RESPECT TO ANY LOSSES; PROVIDED HOWEVER, EACH
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INDEMNIFIED PERSON SHALL HAVE THE RIGHT TO MONITOR THE PROGRESS OF ANY CLAIMS,
SUITS AND ADMINISTRATIVE PROCEEDINGS DEFENDED BY ANY BORROWER HEREUNDER WITH
COUNSEL OF SUCH INDEMNIFIED PERSON'S CHOICE, OR CONDUCT ITS DEFENSE THROUGH
COUNSEL OF SUCH INDEMNIFIED PERSON'S CHOICE, IN THE EVENT THAT (I) SUCH
INDEMNIFIED PERSON DETERMINES IN GOOD FAITH THAT THE CONDUCT OF ITS DEFENSE BY
ANY BORROWER COULD BE MATERIALLY PREJUDICIAL TO SUCH INDEMNIFIED PERSON'S
INTERESTS OR THAT OTHER REASONABLE GROUNDS EXIST WHICH DEMONSTRATE A LACK OF
EFFECTIVENESS OR HIGH LEVEL OF QUALITY IN THE CONDUCT OF SUCH DEFENSE BY ANY
BORROWER, AND (II) PRIOR TO RETAINING SUCH COUNSEL FOR SUCH PURPOSE, SUCH
INDEMNIFIED PERSON SHALL CONSULT WITH SUCH BORROWER AND SHALL ATTEMPT IN GOOD
FAITH TO AGREE UPON COUNSEL TO CONDUCT THE DEFENSE ON BEHALF OF SUCH BORROWER
AND SUCH INDEMNIFIED PERSON, AND IN EACH CASE THE FEES AND DISBURSEMENTS OF SUCH
COUNSEL SHALL BE PAID BY BORROWERS; PROVIDED, HOWEVER, THAT IF SUCH MUTUAL
AGREEMENT IS NOT REACHED WITHIN A REASONABLE TIME ON SELECTING COUNSEL, THEN
SUCH INDEMNIFIED PERSON MAY RETAIN ITS OWN COUNSEL AT BORROWERS' EXPENSE.
NOTWITHSTANDING ANY CONTRARY PROVISION OF THIS AGREEMENT, THE OBLIGATION OF EACH
BORROWER UNDER THIS SECTION 12.2 SHALL SURVIVE THE PAYMENT IN FULL OF THE
OBLIGATIONS AND THE TERMINATION OF THIS AGREEMENT. NOTHING CONTAINED IN THIS
SECTION 12.2 SHALL PREVENT ANY BORROWER FROM BRINGING A SEPARATE ACTION AGAINST
ANY PARTY HERETO FOR BREACH BY SUCH PARTY OF ANY CONTRACTUAL OBLIGATION OF SUCH
PARTY CONTAINED IN THE LOAN DOCUMENTS, NOR SHALL THE PROVISIONS OF THIS SECTION
12.2 BE APPLICABLE WITH RESPECT TO ANY ACTION BETWEEN A BORROWER AND ANY OTHER
PARTY FOR BREACH OF CONTRACTUAL OBLIGATION CONTAINED IN THE LOAN DOCUMENTS IN
WHICH SUCH BORROWER IS THE PREVAILING PARTY.
12.3 MODIFICATION OF AGREEMENT; SALE OF INTEREST. (a) The Loan
Documents constitute the complete agreement between the parties with respect to
the subject matter hereof and may not be modified, altered or amended except by
an agreement in writing signed by each Borrower, Required Lenders and, if
required by the terms hereof, Agent. No Borrower may sell, assign or transfer
any of the Loan Documents, or any of the Obligations, or any portion thereof,
including without limitation, any Borrower's rights, title, interests, remedies,
powers and duties hereunder or thereunder. Each Borrower hereby consents to
Agent's and any Lender's sale of participation, assignment, transfer or other
disposition in accordance with the terms hereof, at any time or times, of any of
the Loan Documents or of any portion thereof or interest therein, including,
without limitation, Agent's and any Lender's rights, title, interests, remedies,
powers or duties thereunder, whether evidenced in writing or not; each Borrower
agrees that it will use commercially reasonable efforts to assist and cooperate
with Agent and any Lender in any manner reasonably requested by Agent or such
Lender to effect the sale of participation in or assignment of any of the Loan
Documents or of any portion thereof or interest therein, including, without
limitation, assistance in
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the preparation of appropriate disclosure documents or placement memoranda and
executing appropriate amendments to the signature pages hereto to reflect the
addition of any Lenders and such Lender's respective commitments. The foregoing
notwithstanding, except with respect to sales, assignments or transfers to
Affiliates under common control pursuant to which the selling, assigning or
transferring Lender retains its voting rights, no Lender shall sell a
participation or assign, transfer or otherwise dispose of any of the Loan
Documents or any portion thereof or interest therein, without the prior written
consent of Agent, which shall not be unreasonably withheld.
(b) In respect to any assignment by a Lender of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Revolving Credit Loan Commitments, the Revolving Credit Loans
owed to it and the Revolving Credit Note held by it, all or a portion of the
Term Loan owned to it and the Term Note held by it and the Acquisition Loan
Commitments, the Acquisition Loans owed to it and the Acquisition Loan Note(s)
held by it) (i) each such assignment shall be of a uniform, and not a varying,
percentage of all rights and obligations, (ii) except in the case of an
assignment of all of a Lender's rights and obligations under this Agreement, (A)
the aggregate amount of the Revolving Loan, Acquisition Loan and Term Loan
Commitments of the assigning Lender being assigned pursuant to each such
assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than $5,000,000, and in
integral multiples of $1,000,000 thereafter, or such lesser amount as to which
Holdings and the Agent may consent to and (B) after giving effect to each such
assignment in the amount of the Revolving Loan, Acquisition Loan and Term Loan
Commitments of the Assigning Lender shall in no event be less than $5,000,000,
(iii) the parties to each such assignment shall execute and deliver to the
Agent, for its acceptance, an Assignment and Acceptance Agreement among the
parties to such Assignment, in form and substance acceptable to Agent, together
with any Revolving Credit Note, Term Note or Acquisition Note(s) subject to such
assignment and a processing and recordation fee of $3,500, and (iv) any Lender
may without the consent of any Borrower or the Agent, and without paying any
fee, assign to any Affiliate of such Lender that is a bank or financial
institution all of its rights and obligations under this Agreement. The
foregoing notwithstanding, no Person may become a Lender or a Participating
Lender hereunder, unless such Person is a financial institution having
stockholders' equity (or the equivalent) of at least One Hundred Million Dollars
($100,000,000). Upon such execution, delivery, acceptance and recording, from
and after the effective date specified in such Assignment and Acceptance (x) the
assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender hereunder and (y) the
Lender assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all of the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such Lender shall cease to be a party hereto). If, pursuant to this SECTION
12.3, any interest in this Agreement or any Revolving Credit Loan, the Term Loan
or any Acquisition Loan, Note, Letter of Credit or LC Guaranty is transferred to
any transferee which is organized under the laws of any jurisdiction other than
the United States or any state thereof, the transferor Lender shall cause such
transferee (other than any Participating Lender), and may cause any
Participating Lender concurrently with the effectiveness of such transfer, (a)
to represent to the transferor Lender (for the benefit of the transferor Lender,
Agent and Borrower) that under
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applicable law and treaties no Taxes will be required to be withheld by Agent,
Borrower or the transferor Lender with respect to any payments to be made to
such transferee in respect of the Revolving Credit Loans, Term Loan, Acquisition
Loans, Notes, Letters of Credit or LC Guaranties, (b) to furnish to the
transferor Lender, Agent and Borrowers either U.S. Internal Revenue Service Form
4224 or U.S. Internal Revenue Service Form 1001 (wherein such transfer claims
entitlement to complete exemption form U.S. federal withholding tax on all
interest payments hereunder), and (c) to agree (for the benefit of the
transferor Lender, Holdings and Borrowers) to provide the transferor Lender,
Agent and Borrowers a new Form 4224 or Form 1001 upon the obsolescence of any
previously delivered form and comparable statements in accordance with
applicable U.S. laws and regulations and amendments duly executed and completed
by such transferee, and to comply from time to time with all applicable U.S.
laws and regulations with regard to such withholding tax exemption.
(c) In addition to, and not in limitation of the foregoing,
each Borrower acknowledges that if FCC intends to sell, assign or participate
any of its Revolving Credit Loan Commitments, Term Loan Commitment and
Acquisition Loan Commitments, each Borrower agrees to use its best efforts to
assist FCC in any respect to any such sale, assignment or participation.
(d) In the event any Lender assigns or otherwise transfers all
or any part of its Revolving Credit Note, Term Note or Acquisition Note(s) any
such Lender shall so notify Borrower and Borrower shall, upon the request of
such Lender, issue new Revolving Credit Notes, Term Notes and Acquisition Notes
in exchange for the old Revolving Credit Notes, Term Notes and Acquisition
Notes.
(e) Any Lender may at any time sell to one or more commercial
banks, financial institutions, or other Persons not Affiliates of any Loan Party
(a "PARTICIPATING LENDER") participating interests in any Loans, the commitments
of that Lender and the other interests of that Lender (the "ORIGINATING LENDER")
hereunder and under the other Loan Documents; PROVIDED, however, that (i) the
originating Lender's obligations under this Agreement shall remain unchanged,
(ii) the originating Lender shall remain solely responsible for the performance
of such obligations, (iii) each Borrower and the Agent shall continue to deal
solely and directly with the originating Lender in connection with the
originating Lender's rights and obligations under this Agreement and the other
Loan Documents, and (iv) no Lender shall grant any participation under which the
Participating Lender shall have rights to approve any amendment to or waiver of
this Agreement or the Loan Documents, except to the extent such amendment or
waiver would: (A) extend the final maturity date for payment of the Loans in
which such Participating Lender is participating; (B) reduce the interest rate
or the amount of principal or fees applicable to the Loans in which such
Participating Lender is participating; or (C) release all or substantially all
of the Collateral, except as expressly provided herein. In those cases in which
an originating Lender grants rights to a Participating Lender to approve any
amendment to or waiver of this Agreement or the other Loan Documents respecting
the matters described in clauses (A) through (C) of the preceding sentence, the
relevant participation agreements shall provide for a voting mechanism whereby a
majority of the amount of such Lender's portion of the Loans (irrespective of
whether held by such Lender or participated) shall control the vote for all of
such Lender's portion of the Loans. In the case of any participation, the
Participating Lender shall not have any rights under this Agreement or any of
the other Loan
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Documents entered into in connection herewith (the Participating Lender's right
against such Lender in respect of such participation to be those set forth in
the participation or other agreement executed by such Lender and the
Participating Lender relating thereto). In no event shall any Participating
Lender grant a participation in its participation interest in the Loans without
the prior written consent of Agent, which approval shall not be unreasonably
withheld. All amounts payable by any Borrower hereunder shall be determined as
if the originating Lender had not sold any such participation, except that, if
amounts outstanding under this Agreement are due and unpaid, or shall have been
declared or shall have become due and payable upon the occurrence of an Event of
Default, each Participating Lender shall be deemed to have the right of set-off
in respect of its participating interest in amounts owing under this Agreement
to the same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement.
(f) Notwithstanding any other provision in this Agreement, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the Board or U.S.
Treasury Regulation 31 C.F.R. section 203.14, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under
applicable law.
(g) No amendment or waiver of any provision of this Agreement
or the Notes or any other Loan Document, nor consent to any departure by any
Borrower therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Required Lenders, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; PROVIDED, however: (a) that no amendment, waiver or consent
shall, unless in writing and signed by each Lender affected thereby do any of
the following: (i) increase the aggregate Revolving Credit Loan Commitments,
increase the aggregate Acquisition Loan Commitments or subject any Lender to any
additional obligations, (ii) reduce the principal of, or decrease the rate of
interest on, the Notes or other amount payable hereunder other than those
payable only to FCC in its capacity as Agent which may be reduced by FCC
unilaterally, (iii) postpone any date fixed for any payment of principal of, or
interest on, the Notes or other amounts payable hereunder, other than those
payable only to FCC in its capacity as Agent which may be postponed by FCC
unilaterally, (iv) reduce the aggregate unpaid principal amount of the Notes, or
the number of Lenders which shall be required for the Lenders or any of them to
take any action hereunder, (v) release or discharge any Person liable for the
performance of any obligations of any Borrower hereunder or under any of the
Loan Documents, (vi) subject to the provisions of SECTION 1.1.1(c) increase the
advance rates contained in the definition of the Borrowing Base, (vii) to the
extent Agent's or Lenders' consent is required by the terms hereof, release all
or substantially all of the Collateral or (viii) amend this SECTION 12.3; (b)
that no amendment, waiver or consent shall be effective unless in writing and
signed by either Required Lenders or all Lenders, as required by the terms
hereof and, if such amendment, waiver or consent affects Agent or its rights
hereunder, Agent.
(h) The foregoing notwithstanding, Agent on behalf of itself
and all Lenders may waive Events of Default arising from the breach of any of
the financial covenants contained in SECTION 8.3 if the deviation from each such
financial covenant does not exceed ten percent (10%).
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12.4 SEVERABILITY. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
12.5 SUCCESSORS AND ASSIGNS. This Agreement, the Other Agreements and
the Security Documents shall be binding upon and inure to the benefit of the
successors and assigns of each Borrower, Agent and Lenders permitted under
SECTION 12.3.
12.6 CUMULATIVE EFFECT; CONFLICT OF TERMS. The provisions of the Other
Agreements and the Security Documents are hereby made cumulative with the
provisions of this Agreement. Except as otherwise provided in SECTION 3.2 and
except as otherwise provided in any of the other Loan Documents by specific
reference to the applicable provision of this Agreement, if any provision
contained in this Agreement is in direct conflict with, or inconsistent with,
any provision in any of the other Loan Documents, the provision contained in
this Agreement shall govern and control.
12.7 EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which counterparts taken together shall constitute but one and the
same instrument.
12.8 NOTICE. Except as otherwise provided herein, all notices, requests
and demands to or upon a party hereto, to be effective, shall be in writing and
shall be sent by certified or registered mail, return receipt requested, by
personal delivery against receipt, by overnight courier or by facsimile and,
unless otherwise expressly provided herein, shall be deemed to have been validly
served, given or delivered immediately when delivered against receipt, three
Business Days after deposit in the mail, postage prepaid, or one Business Day
after delivery to an overnight courier or, in the case of facsimile notice, when
sent, addressed as follows:
(A) If to Agent: Fleet Capital Corporation
2711 N. Haskell Avenue
Suite 2100
Dallas, Texas 75204
Attention: Loan Administration Manager
Facsimile No.: (214) 828-6530
With a copy to: Gardere & Wynne, L.L.P.
1601 Elm Street
3000 Thanksgiving Tower
Dallas, Texas 75201
Attention: Gary B. Clark
Facsimile No.: (214) 999-4667
(B) If to any Borrower: Ramsay Health Care, Inc.
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One Alhambra Plaza, Suite 750
Coral Gables, Florida 33134
Attention: Chief Financial Officer
Facsimile No.: (305) 569-4647
With a copy to: Haythe & Curley
237 Park Avenue
New York, New York 10017
Attention: Bradley P. Cost
Facsimile No.: (212) 682-0200
(C) If to any Lender, at its address indicated on the
signature pages hereof or in a notice to Borrowers of assignment of a Note.
Or to such other address as each party may designate for itself by
notice given in accordance with this SECTION 12.8; PROVIDED, HOWEVER, that any
notice, request or demand to or upon Agent or Lenders pursuant to SECTION 3. 1.
1 or SECTION 4.2.2 shall not be effective until received by Agent or Lenders.
12.9 LENDER'S CONSENT. Whenever Agent's, Required Lenders' or Lenders'
consent is required to be obtained under this Agreement, any of the Other
Agreements or any of the Security Documents as a condition to any action,
inaction, condition or event, unless otherwise specifically provided herein,
Agent, Required Lenders or Lenders, as applicable, shall be authorized to give
or withhold such consent in its sole and absolute discretion and to condition
its consent upon the giving of additional collateral security for the
Obligations, the payment of money or any other matter.
12.10 CREDIT INQUIRIES. Each Borrower hereby authorizes and permits
Agent to respond to usual and customary credit inquiries from third parties
concerning any Loan Party.
12.11 TIME OF ESSENCE. Time is of the essence of this Agreement, the
Other Agreements and the Security Documents.
12.12 ENTIRE AGREEMENT, APPENDIX A AND EXHIBITS. This Agreement and
other Loan Documents, together with all other instruments, agreements and
certificates executed by the parties in connection therewith or with reference
thereto, embody the entire understanding and agreement between the parties
hereto and thereto with respect to the subject matter hereof and thereof and
supersede all prior agreements, understandings and inducements, whether express
or implied, oral and written. APPENDIX A and each of the EXHIBITS attached
hereto are incorporated into this Agreement and by this reference made a part
hereof.
12.13 INTERPRETATION. No provision of this Agreement or any of the
other Loan Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party having or being deemed to have structured or
dictated such provision.
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12.14 GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN
NEGOTIATED, EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN
DALLAS, DALLAS COUNTY, TEXAS. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS; PROVIDED, HOWEVER, THAT IF
ANY OF THE COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN TEXAS, THE
LAWS OF SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER AND PROCEDURE AND
FORECLOSURE OF AGENT'S LIEN (FOR ITS BENEFIT OR THE RATABLE BENEFIT OF LENDERS)
UPON SUCH COLLATERAL AND THE ENFORCEMENT OF AGENT'S AND LENDERS' OTHER REMEDIES
IN RESPECT OF SUCH COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH JURISDICTION
ARE DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF TEXAS. AS PART OF THE
CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT OR FUTURE
DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF BORROWER, AGENT OR ANY LENDER, EACH
BORROWER HEREBY CONSENTS AND AGREES THAT THE DISTRICT COURT OF DALLAS COUNTY,
TEXAS, OR, AT AGENT'S OPTION, THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF TEXAS, DALLAS DIVISION, SHALL HAVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN ANY BORROWER AND AGENT AND/OR LENDERS
PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS
AGREEMENT. EACH BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH
BORROWER HEREBY WAIVES ANY OBJECTION WHICH ANY SUCH BORROWER MAY HAVE BASED UPON
LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. EACH BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWERS AT THE ADDRESS SET FORTH IN
THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE
EARLIER OF ANY BORROWER'S ACTUAL RECEIPT THEREOF OR 3 BUSINESS DAYS AFTER
DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID. NOTHING IN THIS AGREEMENT
SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF AGENT OR LENDERS TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE
ENFORCEMENT BY AGENT OR LENDERS OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM
OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER
APPROPRIATE FORUM OR JURISDICTION.
12.15 WAIVERS BY BORROWER. EACH BORROWER WAIVES (i) THE RIGHT TO TRIAL
BY JURY (WHICH AGENT AND LENDERS HEREBY ALSO WAIVE IN ANY ACTION, SUIT,
PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE
LOAN DOCUMENTS, THE OBLIGATIONS OR THE
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COLLATERAL: (ii) PRESENTMENT, DEMAND AND PROTEST AND NOTICE OF PRESENTMENT,
PROTEST, DEFAULT, NON PAYMENT, MATURITY, RELEASE, COMPROMISE SETTLEMENT,
EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS,
DOCUMENTS, INSTRUMENTS CHATTEL PAPER AND GUARANTIES AT ANY TIME HELD BY AGENT'S
AND LENDERS ON WHICH BORROWER MAY IN ANY WAY BE LIABLE AND HEREBY RATIFY AND
CONFIRM WHATEVER AGENT OR LENDERS MAY DO IN THIS REGARD; (iii) NOTICE PRIOR TO
TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH
MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING AGENT OR LENDERS TO EXERCISE
ANY OF AGENT'S OR ANY LENDERS' REMEDIES; (iv) THE BENEFIT OF ALL VALUATION,
APPRAISEMENT AND EXEMPTION LAWS; AND (v) NOTICE OF ACCEPTANCE HEREOF. EACH
BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO
AGENT OR ANY LENDER ENTERING INTO THIS AGREEMENT AND THAT AGENT AND LENDERS ARE
RELYING UPON THE FOREGOING WAIVERS IN THEIR FUTURE DEALINGS WITH EACH BORROWER.
EACH BORROWER WARRANTS AND REPRESENTS THAT THEY HAVE REVIEWED THE FOREGOING
WAIVERS WITH THEIR LEGAL COUNSEL AND HAVE KNOWINGLY AND VOLUNTARILY WAIVED THEIR
JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
12.16 PUBLICITY. Each Borrower hereby consents to Agent's use of the
name or trade style of each such Borrower in any announcements or advertisements
relating to the completion of the transactions contemplated hereby and the role
played by Agent in providing financing to each Borrower hereunder in such media
and in such manner as Agent, with the prior written consent of Holdings, which
shall not be unreasonably withheld or delayed, deems appropriate.
12.17 ORAL AGREEMENTS INEFFECTIVE. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES, AND THE SAME MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
12.18 NONAPPLICABILITY OF ARTICLE 5069-15.01 ET. SEQ. Each Borrower,
Agent and Lenders hereby agree that, except for SECTION 346.004 of the Texas
Finance Code, the provisions of Chapter 346 of the Texas Finance Code and except
for SECTION 15.10(b) thereof, the provisions of Tex. Rev. Civ. Stat. Ann. art.
5069-15.01 ET SEQ. (Vernon 1987) (each regulating certain revolving credit loans
and revolving tri-party accounts) shall not apply to this Agreement or any of
the other Loan Documents.
12.19 CERTAIN MATTERS OF CONSTRUCTION. All references to statutes and
related regulations in this Agreement, the Other Agreements and the Security
Agreements shall include any amendments of same and any successor statutes and
regulations. All references in this Agreement, the Other Agreements and the
Security Agreements to any of the Loan Documents shall include any and all
modifications thereto and any and all extensions or renewals thereof.
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[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, this Agreement has been duly executed in Dallas,
Texas, on the day and year specified at the beginning of this Agreement.
Borrowers:
RAMSAY HEALTH CARE, INC.
RAMSAY YOUTH SERVICES, INC.
BETHANY PSYCHIATRIC HOSPITAL, INC.
BOUNTIFUL PSYCHIATRIC HOSPITAL, INC.
EAST CAROLINA PSYCHIATRIC SERVICES CORPORATION
GREAT PLAINS HOSPITAL, INC.
GULF COAST TREATMENT CENTER, INC.
HAVENWYCK HOSPITAL, INC.
H. C. CORPORATION
HSA HILL CREST CORPORATION
HSA OF OKLAHOMA, INC.
MICHIGAN PSYCHIATRIC SERVICES, INC.
RAMSAY EDUCATIONAL SERVICES, INC.
RAMSAY LOUISIANA, INC.
RAMSAY MANAGED CARE, INC.
RAMSAY YOUTH SERVICES OF ALABAMA, INC.
RAMSAY YOUTH SERVICES OF FLORIDA, INC.
RAMSAY YOUTH SERVICES OF SOUTH CAROLINA, INC.
RHCI SAN ANTONIO, INC.
TRANSITIONAL CARE VENTURES, INC.
TRANSITIONAL CARE VENTURES (TEXAS), INC.
By:
--------------------------------
Name: Jorge Rico
Title: Vice President
H. C. PARTNERSHIP
By: H.C. CORPORATION, General Partner
By: HSA HILL CREST CORPORATION, General Partner
By:
------------------------------
Name: Jorge Rico
Title: Vice President
Accepted in Dallas, Texas:
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FLEET CAPITAL CORPORATION
("Agent" and "Lender")
By:
------------------------------------
Name: Rosemary Davis
Title: Vice President
Revolving Credit Loan Commitment of: $8,000,000
Term Loan Commitment: $8,000,000
Acquisition Loan Commitment: $6,000,000
2711 N. Haskell Avenue
Suite 2100
Dallas, Texas 75204
Attention: Loan Administration Manager
Facsimile No.: (214) 828-6530
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APPENDIX A
GENERAL DEFINITIONS
When used in the Loan and Security Agreement dated as of October 30,
1998, by and among Ramsay Health Care, Inc. ("Holdings"), ET AL., as Borrowers
(Holdings and the other Persons defined therein as "Borrowers" are hereinafter
referred to collectively as "Borrowers"), the lender signatories thereto
("Lenders") and Fleet Capital Corporation ("FCC") as agent for said Lenders
(FCC, in such capacity, Agent"), the following terms shall have the following
meanings (terms defined in the singular to have the same meaning when used in
the plural and vice versa):
ACCOUNT DEBTOR - any Person who is or may become obligated
under or on account of an Account of any Borrower.
ACCOUNTS - with respect to any Person, all accounts, accounts
receivable, notes receivable contract rights (in any such case to the
extent a security interest can be granted in particular contracts)
instruments, notes, drafts, acceptances, documents, chattel paper, any
right of to payment for goods sold or leased or for services rendered,
whether arising out of the sale of Inventory (as hereinafter defined)
or otherwise and whether or not earned by performance, and all other
forms of obligations owing to such Person, and all of such Person's
rights to any merchandise (including without limitation any returned or
repossessed goods and the right of stoppage in transit which is
represented by, arises from or is related to any of the foregoing)
whether now existing or hereafter arising, and however evidenced or
acquired, in which such Person now has or hereafter acquires any
interest or rights, including, without limitation, all present and
future rights to payment for services or goods or merchandise sold,
accounts, receivables, contract rights, chattel paper, instruments,
documents, rights to payment, reimbursement or settlement (including
cost report or other governmental settlements) under Medicare,
Medicaid, CHAMPUS, other government-sponsored or funded health care
programs or insurance or other medical benefit payments assigned to any
Borrower by a customer or pursuant to any preferred provider, HMO,
capitated payment agreements, managed care contracts, or other
Debtor-Payor agreements, and General Intangibles relating to all of the
foregoing.
ACQUISITION BASE RATE PORTION - that portion of the
Acquisition Loans not subject to Eurodollar Option.
ACQUISITION EURODOLLAR PORTION - that portion of the
outstanding Acquisition Loans specified in the Eurodollar Request in
accordance with the terms hereof, which does not exceed the outstanding
balance of the Acquisition Loans not already subject to a Eurodollar
Option plus the amount of any expiring Acquisition Eurodollar Portion,
and which as of the date of the Eurodollar Request specifying such
Acquisition Eurodollar Portion has met the conditions for basing
interest on the Eurodollar Rate in SECTION 2.1(b) and in the definition
of Eurodollar Portion, and the Eurodollar Period of which was commenced
and not terminated.
ACQUISITION LOAN COMMITMENT - as defined in SECTION 1.2.2.
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ACQUISITION LOAN COMMITMENT TERMINATION DATE - the earliest of
(i) October 29, 1999, unless otherwise extended for a period of not
more than one year by written agreement among Holdings, Borrowers,
Agent and Lenders, (ii) the date of termination of the commitment to
make further Acquisition Loans pursuant to SECTION 4.2, and (iii) the
date of termination of the commitment to make further Revolving Credit
Loans pursuant to SECTION 10.2.
ACQUISITION LOAN PERCENTAGE - as defined in SECTION 1.2.2.
ACQUISITION LOAN PERIOD - as defined in Section 1.2.2.
ACQUISITION LOANS - the Loans to be made by Lender to Borrower
pursuant to SECTION 1.2.2.
ACQUISITION NOTE - each Secured Promissory Note (Acquisition
Note) to be executed in favor of each Lender as provided in SECTION
1.2.2 which shall be in the form of EXHIBIT A-2.
ADJUSTED NET EARNINGS FROM OPERATIONS (OR LOSS) - with respect
to any fiscal period, means the net earnings (or loss) after provision
for income taxes for such fiscal period of Holdings, as reflected on
the financial statement of Holdings supplied to Agent and Lenders
pursuant to SECTION 8.1.3, but excluding:
(i) any gain or loss arising from the sale of capital assets;
(ii) any gain or loss arising from any write-up or write-down
of assets;
(iii) earnings of any Subsidiary of Holdings accrued prior to
the date it became a Subsidiary;
(iv) earnings of any corporation, substantially all the assets
of which have been acquired in any manner by Holdings or any Subsidiary
of Holdings, realized by such corporation prior to the date of such
acquisition;
(v) net earnings of any business entity (other than a domestic
Subsidiary of Holdings) in which Holdings has an ownership interest
unless such net earnings shall have actually been received by Holdings
in the form of cash distributions;
(vi) any portion of the net earnings of any Subsidiary of
Holdings which for any reason (other than the provisions of this
Agreement) is unavailable for payment of dividends to Holdings;
(vii) any restoration to income of any reserve;
(viii) the earnings of any Person to which any assets of any
Borrower shall have been sold, transferred of disposed of, or into
which such Borrower shall have merged, or
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been a party to any consolidation or other form of reorganization,
prior to the date of such transaction;
(ix) any gain arising from the acquisition of any Securities
or any Borrower;
(x) the effect of the application of the rules of Purchase
Accounting (as set forth in APB No. 16, as amended); and
(xi) any gain from extraordinary or non-recurring items.
ADJUSTMENT DATE - as defined in SECTION 2.1.
AFFILIATE - a Person (other than a Subsidiary): (i) which
directly or indirectly through one or more intermediaries controls, or
is controlled by, or is under common control with, a Person; (ii) which
beneficially owns or holds 5 % or more of any class of the Voting Stock
of a Person; 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 a Person or a
Subsidiary of a Person. For the purpose of this definition, "control"
of a Person shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of its management policies,
whether through the ownership of voting securities, by contract or
otherwise.
AGREEMENT - the Loan and Security Agreement referred to in the
first sentence of this Appendix A and all Exhibits thereto and this
APPENDIX A.
APPLICABLE ANNUAL Rates - the interest rates payable on the
outstanding Base Rate Portion and the outstanding Eurodollar Portions
pursuant to SECTION 2.1.1(a).
APPLICABLE LAW - all laws, rules and regulations applicable to
the Person, conduct, transaction, covenant or Loan Documents in
question, including all applicable common law and equitable principles;
all provisions of all applicable state and federal constitutions,
statutes, rules, regulations and orders of government bodies; and
orders, judgments and decrees of all courts and arbitrators.
ALTA SURVEY - a survey prepared in accordance with the
standards adopted by the American Land Title Association and the
American Congress on Surveying and Mapping in 1986, known as the
"Minimum Standard Detail Requirements of Land Title Surveys". The ALTA
Survey shall be in sufficient form to satisfy the requirements of
Commonwealth Land Title Company or such other title insurance company
that is reasonably satisfactory to Agent, to provide extended coverage
over survey defects and shall also show the location of all easements,
utilities, and covenants of record, encroachments from any adjoining
property, and certify as to the location of any flood plain area
affecting the subject real estate. The ALTA Survey shall contain the
following certification: "To [BORROWER], Inc. Fleet Capital
Corporation, as agent and ___________________ Title Insurance Company.
This is to certify that this map of plat and the survey on which it is
based were made in accordance with the "Minimum Standard Detail
Requirements for Land Title Surveys" jointly
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established and adopted by ALTA and ACSM in 1986. (signed (SEAL)
License No. ___________").
ASSIGNMENT AND ACCEPTANCE - as defined in SECTION 12.3.
ASSIGNMENT AND ACCEPTANCE AGREEMENT - an agreement among
Agent, a Lender and such Lender's assignee regarding their respective
rights and obligations with respect to assignments of the Loans, the
Revolving Credit Loan Commitment and other interests under this
Agreement and the other Loan Documents.
AVAILABILITY - the amount of money which Borrowers are
entitled to borrow from time to time as Revolving Credit Loans, such
amount being the difference derived when the sum of the principal
amount of Revolving Credit Loans then outstanding (including any
amounts which Agent or any Lender may have paid for the account of
Borrowers pursuant to any of the Loan Documents and which have not been
reimbursed by Borrowers) PLUS the amount of any reserves established by
Agent pursuant to SECTION 1.1.1 is subtracted from the Borrowing Base.
If the amount outstanding is equal to or greater than the Borrowing
Base, Availability is 0.
AVERAGE MONTHLY ACQUISITION LOAN BALANCE -the amount obtained
by adding the aggregate unpaid principal amount of the Acquisition
Loans at the end of each day during the month in question and by
dividing such sum by the number of days in such month.
AVERAGE MONTHLY REVOLVING CREDIT LOAN BALANCE - the amount
obtained by adding the aggregate unpaid principal amount of Revolving
Credit Loans plus the LC Amount at the end of each day during the month
in question and by dividing such sum by the number of days in such
month.
BANK - Fleet National Bank.
BASE RATE - the rate of interest announced or quoted by Bank
from time to time as its prime rate for commercial loans, whether or
not such rate is the lowest rate charged by Bank to its most preferred
borrowers; and, if such prime rate for commercial loans is discontinued
by Bank as a standard, a comparable reference rate designated by Bank
as a substitute therefor shall be the Base Rate.
BASE RATE MARGIN - as defined in SECTION 2.1.1.
BASE RATE PORTION - that portion of the Loans not subject to a
Eurodollar Option.
BOARD - the Board of Governors of the Federal Reserve System
of the United States.
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BORROWING BASE - as at any date of determination thereof, an
amount equal to the lesser of:
(1) Eight Million Dollars ($8,000,000); or
(2) (a) prior to the Borrowing Base Change Date, the
amount equal to fifty percent (50%) of the amount of Net
Accounts as determined from the most recent Consolidated
balance sheet of Borrowers furnished to Agent pursuant to
SECTION 8.1.3(ii), or (b) from and after the Borrowing Base
Change Date, an amount equal to the sum of (i) eighty-five
percent (85%) of Net Eligible Accounts; PLUS (ii) the lesser
of (x) $2,500,000 and (y) eighty-five percent (85%) of Net
Eligible Unbilled Accounts; PLUS (iii) the lesser of (x)
$350,000 and (y) eighty-five percent (85%) of Net Eligible
Self-Pay Accounts; MINUS (iv) any amounts which Agent
reasonably expects it or Lenders may be obligated to pay in
the future for the account of any Borrower.
MINUS (subtract (3) below from the lesser of (1) or, as applicable,
(2)(a) or (2)(b) above)
(3) an amount equal to the LC Amount.
BORROWING BASE CERTIFICATE - as defined in SECTION 8.1.9.
BORROWING BASE CHANGE NOTICE - a written notice (a) from
Holdings to Agent as contemplated in SECTION 1.1.1.(i), pursuant to
which notice is given by Holdings to Agent of Borrower's election to
change the Variable Component from Variable Amount A to Variable Amount
B, or (b) from Agent to Borrowers as contemplated in SECTION
1.1.1.(ii), pursuant to which notice is given by Agent to Borrowers of
the change of the Variable Component from Variable Amount A to Variable
Amount B.
BORROWING BASE CHANGE DATE - the third Business Day following
the date on which the Borrowing Base Change Notice is given.
BUSINESS DAY - (i) when used with respect to the Eurodollar
Option, shall mean a day on which dealings may be effected in deposits
of United States dollars in the London interbank foreign currency
deposits market and on which the Agent is conducting business and on
which banks may conduct business in London, England, Dallas, Texas, and
New York, New York and (ii) when used with respect to the other
provisions of this Agreement, shall mean any day that is not a
Saturday, a Sunday or a day on which banks are required or permitted to
be closed either in the State of Texas or in the State of Florida.
CALCULATION PERIOD - as defined in SECTION 2.1.
CAPITAL EXPENDITURES - expenditures made or liabilities
incurred by any Borrower for the acquisition of any fixed assets or
improvements, replacements, substitutions or additions thereto which
have a useful life of more than one year, including the total principal
portion of such Borrower's Capitalized Lease Obligations.
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CAPITAL LEASES - a lease that is required to be capitalized
for financial reporting purposes in accordance with GAAP.
CAPITALIZED LEASE OBLIGATION - any Indebtedness of any Person
represented by obligations under a Capital Lease.
CLAIMS - all presently existing and hereafter created
Accounts, and other forms of obligations or rights to payment for
services rendered or goods sold, including, but not limited to, any and
all rights to payment, reimbursement or settlement (including cost
report settlements) under Medicare, Medicaid, CHAMPUS, or other
government-sponsored or funded programs or insurance or other medical
benefit rights covering any customer that were assigned by such
customer to Borrower or pursuant to preferred provider, HMO or other
Debtor-Payor agreements and any General Intangibles or contract rights
relating thereto owed to or owned by Borrower whether directly, as
assignee, by law or otherwise in respect of, arising or resulting from
the sale or rental of equipment, supplies or merchandise to its
customers by Borrower, all guaranties and security therefor, and all
goods and rights represented thereby or arising therefrom and all
proceeds of any of the foregoing.
CLOSING DATE - the date on which all of the conditions
precedent in SECTION 9 of the are satisfied and the initial Loan is
made.
CODE - the Uniform Commercial Code as adopted and in force in
the State of Texas, as from time to time in effect.
COLLATERAL - all of the Property and interests in Property
described in SECTION 5, and all other Property and interests in
Property that now or hereafter secure the payment and performance of
any of the Obligations.
COLLECTIONS - all cash, funds, checks, notes, instruments and
other forms of remittance tendered by account debtors in payment of
Accounts or otherwise tendered in payment of inventory purchased or
services provided.
COMMITMENT TERMINATION DATE - the earliest of (i) October 29,
2003, (ii) the date of termination of the commitment to make further
Revolving Credit Loans pursuant to SECTION 4.2, and (iii) the date of
termination of the commitment to make further Revolving Credit Loans
pursuant to SECTION 10.2.
COMMON STOCK - the common stock of Holdings, $.01 par value
per share.
CONSOLIDATED - the consolidation in accordance with GAAP of
the accounts or other items as to which such term applies.
CONTROL GROUP - collectively, Paul Ramsay Holdings Pty.
Limited, an Australian corporation, and its Affiliates.
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CURRENT ASSETS - of any Person(s) means at any date the amount
at which all of the current assets of such Person(s) would be properly
classified as current assets shown on a balance sheet of such Person at
such date in accordance with GAAP including amounts due from Affiliates
and investments in Affiliates.
CURRENT LIABILITIES - of any Person(s) means at any date the
amount at which all of the current liabilities of such Person(s) would
be properly classified as current liabilities on a balance sheet at
such date in accordance with GAAP including current maturities of any
long-term Indebtedness.
DATED ASSETS - as defined in SECTION 1.4(c).
DATED LIABILITIES - as defined in SECTION 1.4(c).
DEFAULT - an event or condition the occurrence of which would,
with the lapse of time or the giving of notice, or both, become an
Event of Default.
DEFAULT RATE - as defined in SECTION 2.1.2.
DISTRIBUTION - in respect of any corporation means and
includes: (i) the payment of any dividends or other distributions on
capital stock of the corporation (except distributions in such stock)
and (ii) the redemption or acquisition of Securities unless made
contemporaneously from the net proceeds of the sale of Securities.
DOMINION ACCOUNT - a special account of Agent for its benefit
and the ratable benefit of Lenders established by Borrowers pursuant to
the Agreement at a bank selected by Borrowers, but acceptable to Agent
in its reasonable discretion, and over which Agent for its benefit and
the ratable benefit of Lenders shall have sole and exclusive access and
control for withdrawal purposes.
EBIT - with respect to any fiscal period, the Consolidated
Adjusted Net Earnings From Operations (or Loss) of Holdings, before
interest expense and taxes for said period as determined in accordance
with GAAP, excluding the impact, if any, from purchase accounting.
EBITDA - with respect to any fiscal period, EBIT PLUS
depreciation and amortization expense for such period.
ELIGIBLE ACCOUNT - an Account arising in the ordinary course
of business of any Borrower or any Subsidiary of any Borrower (other
than Inactive Subsidiaries) from the sale of goods or rendition or
services which Agent, in its sole credit judgment, deems to be an
Eligible Account. Without limiting the generality of the foregoing,
no Account shall be an Eligible Account if:
(i) it arises out of a sale made by or services
performed by any Borrower or any Subsidiary to another
Borrower, any Subsidiary of any Borrower or an
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Affiliate of any Borrower or to a Person controlled by an
Affiliate of any Borrower; or
(ii) it is unpaid for more than 120 days after the
original invoice date; or
(iii) 25% or more of the Accounts from the Account
Debtor are not deemed Eligible Accounts hereunder; or
(iv) the total unpaid Accounts payable through
Medicaid or through any single state healthcare agency Payor
exceed 50% of the net amount of all Eligible Accounts, on a
Consolidated basis, to the extent of such excess; or
(v) the total unpaid Accounts of the Account Debtor
(other than the Accounts and Payors described in the preceding
clause (iv)) exceed 20% of the net amount of all Eligible
Accounts, on a Consolidated basis, to the extent of such
excess; or
(vi) any covenant, representation or warranty
contained in the Agreement with respect to such Account has
been breached; or
(vii) the Account Debtor is also a creditor or
supplier of any Borrower or any Subsidiary of any Borrower, or
the Account Debtor has disputed liability with respect to such
Account, or the Account Debtor has made any claim with respect
to any other Account due from such Account Debtor to any
Borrower or any Subsidiary of any Borrower, or the Account
otherwise is or may become subject to any right of setoff by
the Account Debtor; or
(viii) the Account Debtor has commenced a voluntary
case under the federal bankruptcy laws, as now constituted or
hereafter amended, or made an assignment for the benefit of
creditors, or a decree or order for relief has been entered by
a court having jurisdiction in the premises in respect of the
Account Debtor in an involuntary case under the federal
bankruptcy laws, as now constituted or hereafter amended, or
any other petition or other application for relief under the
federal bankruptcy laws has been filed against the Account
Debtor, or if the Account Debtor has failed, suspended
business, ceased to be Solvent, or consented to or suffered a
receiver, trustee, liquidator or custodian to be appointed for
it or for all or a significant portion of its assets or
affairs, or
(ix) it arises from a sale to or services performed
for an Account Debtor outside the United States (other than
services performed for Persons in Puerto Rico), unless the
sale is on letter of credit, guaranty or acceptance terms in
each case acceptable to Lender in its sole discretion; or
(x) the Account is subject to a Lien other than a
Permitted Lien; or
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(xi) the goods or services giving rise to such
Account have not been performed or delivered to and accepted
by the Account Debtor or the services giving rise to such
Account have not been performed by any Borrower any Subsidiary
of any Borrower and accepted by the Account Debtor or the
Account otherwise does not represent a final sale; or
(xii) the Account is evidenced by chattel paper or an
instrument of any kind, or has been reduced to judgment; or
(xiii) to the extent that any Borrower or any
Subsidiary of any Borrower has made any agreement with the
Account Debtor for any deduction therefrom, except for
discounts or allowances which are made in the ordinary course
of business for prompt payment and which discounts or
allowances are reflected in the calculation of the face value
of each invoice related to such Account; or
(xiv) any Borrower or any Subsidiary of any Borrower
has made an agreement with the Account Debtor to extend the
time of payment thereof; or
(xv) it has not been billed or invoiced to the
underlying Account Debtor; or
(xvi) it is payable by any Person other than a Payor;
or
(xvii) it arises out of a sale made or services
performed by an Inactive Subsidiary; or
(xviii) any Account subject to payment or
reimbursement on a periodic interim basis from Medicaid,
Medicare, Blue Cross or any other Payor; or
(xix) the Account is owing to a Borrower by an
Account Debtor to whom a net cost report liability has been
recorded by such Borrower, to the extent of the net cost
liability attributable to such Account Debtor as determined by
Agent in its reasonable discretion.
ELIGIBLE SELF-PAY ACCOUNTS- Accounts which would otherwise be
deemed by Agent, in its sole credit judgment, to be an Eligible
Account, but for clause (xvi) of the definition of Eligible Accounts.
ELIGIBLE UNBILLED ACCOUNTS - as of the end of any month,
Accounts which (i) arise from services performed during such month by
any Borrower or any Subsidiary of any Borrower in the ordinary course
of business for in-house residents of such Person which have not been
discharged or interim billed or invoiced as of the end of such month
(excluding any such Accounts which have not been approved by the Payor
of such Account) and (ii) would otherwise be deemed by Agent , in its
sole credit judgment, to be an Eligible Account, but for clauses (xv)
and (xvi) of the definition of Eligible Accounts.
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ENVIRONMENTAL LAWS - all federal, state and local laws, rules,
regulations, ordinances, programs, permits, guidances, orders and
consent decrees relating to health, safety and environmental matters.
EQUIPMENT - all machinery, apparatus, equipment, fittings,
furniture, fixtures, motor vehicles and other tangible personal
Property (other than Inventory) of every kind and description used in
the operations of any Borrower or owned by any Borrower or in which any
Borrower has an interest (including medical equipment), whether now
owned or hereafter acquired by any Borrower and wherever located, and
all parts, accessories and special tools and all increases and
accessions thereto and substitutions and replacements therefor.
ERISA - the Employee Retirement Income Security Act of 1974,
as amended, and all rules and regulations from time to time promulgated
thereunder.
EURODOLLAR MARGIN - as defined in SECTION 2.1.1.
EURODOLLAR OPTION - the option granted pursuant to SECTION
2.1.1 to have the interest on all or any portion of the principal
amount of the Term Loan, Revolving Credit Loans or the Acquisition
Loans based on a Eurodollar Rate.
EURODOLLAR PERIOD - any period, selected as provided below in
SECTION 2.1.1, of 1 month, 2 month, or 3 months, commencing on any
Business Day, subject to the provisions of SECTION 2.1.1; PROVIDED,
however, that no Eurodollar Period shall extend beyond the last day of
the Original Term, unless Borrowers and Agent and Lenders have agreed
to an extension of the Original Term beyond the expiration of the
Eurodollar Period in question. If any Eurodollar Period so elected
shall end on a date that is not a Business Day, such Eurodollar Period
shall instead end on the next preceding or succeeding Business Day as
determined by Agent in accordance with the then current banking
practice in London. Each determination by Agent of a Eurodollar Period
shall, in the absence of manifest error, be conclusive, and at
Borrowers' request, Agent shall demonstrate the basis for such
determination.
EURODOLLAR PORTION - that portion of the Revolving Credit
Loans, of the Term Loan or of the Acquisition Loans specified in a
Eurodollar Request (including any portion of Revolving Credit Loans or
any Acquisition Loan which is being borrowed by any Borrower
concurrently with such Eurodollar Request) which is not less than
$1,000,000 and an integral multiple of $100,000, which does not exceed
the outstanding balance of Revolving Credit Loans, Acquisition Loans
and/or Term Loan not already subject to a Eurodollar Option and, which,
as of the date of the Eurodollar Request specifying such Eurodollar
Portion, has met the conditions for basing interest on the Eurodollar
Rate in SECTION 2.1.1(b) and the Eurodollar Period of which was
commenced and not terminated.
EURODOLLAR RATE - with respect to any Eurodollar Portion for
the related Eurodollar Period, an interest rate per annum (rounded
upwards, if necessary, to the next higher 1/8 of 1%) equal to the
product of (a) the Base Eurodollar Rate ( as hereinafter defined) and
(b)
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Statutory Reserves. For purposes of this definition, the term "Base
Eurodollar Rate" shall mean the rate (rounded to the nearest 1/8 of 1%
or, if there is no nearest 1/8 of 1%, the next higher 1/8 of 1%) at
which deposits of U.S. dollars approximately equal in principal amount
to the Eurodollar Portion specified in the applicable Eurodollar
Request are offered to Bank, in the London interbank foreign currency
deposits market at approximately 11:00 a.m., London time, two (2)
Business Days prior to the commencement of such Eurodollar Period, for
delivery on the first day of such Eurodollar Period. Each determination
by Agent of any Eurodollar Rate shall in the absence of manifest error,
be conclusive, and at Borrowers' request, Agent shall promptly
demonstrate the basis of such determination.
EURODOLLAR REQUEST - a notice in writing (or by telephonic
communication confirmed by telex, telecopy or other facsimile
transmission on the same day as the telephone request) from Borrowers
to Agent requesting that interest on all or a portion of the Revolving
Credit Loans, the Acquisition Loans and/or Term Loan be based on the
Eurodollar Rate, specifying: (i) the first day of the Eurodollar
Period, (ii) the length of the Eurodollar Period consistent with the
definition of that term, and (iii) a dollar amount of the Eurodollar
Portion consistent with the definition of such term.
EVENT OF DEFAULT - as defined in SECTION 10.1.
EXCESS CASH FLOW - with respect to any fiscal year of Holdings
and on a Consolidated basis for such period, 50% of the amount derived
by adding to Adjusted Net Earnings from Operations (or Loss) for such
fiscal period depreciation, amortization and deferred taxes for such
fiscal period and subtracting from such sum regularly scheduled
payments of principal on Indebtedness for Money Borrowed, Capital
Expenditures which are not financed by Acquisition Loans, Capital
Leases permitted by the terms hereof, or Permitted Purchase Money
Indebtedness paid in cash during such fiscal period.
EXCESS INTEREST - as defined in SECTION 2.1.3.
EXCHANGE AGREEMENT - that certain Amended and Restated
Exchange Agreement dated as of October 30, 1998, by and between
Holdings, and Paul Ramsay Holdings Pty. Limited, an Australian
corporation.
FIXED CHARGE COVERAGE RATIO - with respect to any period of
determination, the ratio of (i) EBITDA for such period to (ii) Fixed
Charges of Holdings and its Subsidiaries, on a Consolidated basis, for
such period, all as determined in accordance with GAAP.
FIXED CHARGES - for any period, the following, each calculated
(without duplication) for such period: (a) cash interest expenses, PLUS
(b) income Taxes of Holdings and its Subsidiaries, PLUS (c) scheduled
payments of principal with respect to all Indebtedness of Holdings and
its Subsidiaries, PLUS (d) Capital Expenditures made during the
applicable period and not financed by Acquisition Loans, except Capital
Expenditures made in compliance with the proviso contained in SECTION
8.2.9, payments made during the applicable period under Capital Leases
permitted by the terms hereof, and payments made during the applicable
period under Permitted Purchase Money Indebtedness.
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GAAP - generally accepted account principles in the United
States of America in effect from time to time.
GENERAL INTANGIBLES - all general intangibles of any Borrower,
whether now owned or hereafter created or acquired by any Borrower,
including, without limitation, all choses in action, causes of action,
corporate or other business records, deposit accounts, inventions,
designs, patents, patent applications, trademarks, trade names, trade
secrets, goodwill, copyrights, registrations, licenses, permits,
governmental authorizations and approvals, franchises, certificates,
customer and/or patient lists, tax refund claims, cost report or other
governmental referral claims, computer programs, all claims under
guaranties, security interests or other security held by or granted to
any Borrower to secure payment of any of the Accounts by an Account
Debtor, all rights to indemnification and all other intangible property
of every kind and nature (other than Accounts).
GUARANTOR - Any Person who now or hereafter executes and
delivers to Agent for the benefit of Lenders, a Guaranty.
GUARANTY - the Unconditional Guaranty to be dated on or about
the Closing Date and executed by each Guarantor in form and substance
satisfactory to Lender.
GROUP HOME - a facility which houses fewer than twenty-five
full-time residents.
INACTIVE SUBSIDIARY - any of the Persons listed on EXHIBIT R
and collectively, the INACTIVE SUBSIDIARIES.
INDEBTEDNESS - as applied to a Person means, without
duplication
(i) all items which in accordance with GAAP would be
included in determining total liabilities as shown on the
liability side of a balance sheet of such Person as at the
date as of which Indebtedness is to be determined, including,
without limitation, Capitalized Lease Obligations,
(ii) all obligations of other Persons which such
Person has guaranteed,
(iii) all reimbursement obligations in connection
with letters of credit or letter of credit guaranties issued
for the account of such Person, and
(iv) in the case of any Borrower (without
duplication), the Obligations.
INDEMNIFIED PERSONS - as defined in SECTION 12.2.
INTEREST COVERAGE RATIO - with respect to any period of
determination, the ratio of (i) EBITDA for such period to (ii) cash
interest expenses for such period, all as determined in accordance with
GAAP.
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INVENTORY- all inventory of each Borrower, whether now owned
or hereafter acquired including, but not limited to, right, title and
interest in, to or under, or possession of, all drugs, pharmaceuticals,
products, substances, items or devices whose purchase, possession,
maintenance, administration, prescription or security requires the
authorization or order of a licensed health care provider or requires a
permit, registration, certification or any other governmental
authorization held by a licensed health care provider as specified
under any federal or state law; all goods intended for sale or lease by
each Borrower, or for display or demonstration; all work in process;
all raw materials and other materials and supplies of every nature and
description used or which might be used in connection with the
manufacture, printing, packing, shipping, advertising, selling, leasing
or furnishing of such goods or otherwise used or consumed in each
Borrower's business; and all documents evidencing and General
Intangibles relating to any of the foregoing, whether now owned or
hereafter acquired by any Borrower.
INVESTMENT PROPERTY - all of each Borrower's investment
property, whether now owned or hereinafter acquired by any Borrower,
including, without limitation, all securities (certificated or
uncertificated), securities accounts, securities entitlements,
commodity accounts and contracts.
JUNIOR SUBORDINATED DEBT DOCUMENTS - the Junior Subordinated
Loan Agreement, the Junior Subordinated Notes and all other
instruments, documents and agreements executed by or on behalf of any
Loan Party and delivered concurrently therewith or at any time
hereafter to or for the benefit of the holders of the Junior
Subordinated Notes or any agent or representative thereof in connection
with the Junior Subordinated Debt and other transactions contemplated
by the Junior Subordinated Agreement, all as amended, supplemented or
modified from time to time; but excluding all the Exchange Agreement
and the Loan Documents.
JUNIOR SUBORDINATED DEBT - the Subordinated Indebtedness
evidenced by the Junior Subordinated Debt Documents.
JUNIOR SUBORDINATED LOAN AGREEMENT - that certain Junior
Subordinated Loan and Exchange Agreement dated as of October 30, 1998,
by and between Paul Ramsay Holdings Pty. Limited, an Australian
corporation, as purchaser, and Holdings, as seller.
JUNIOR SUBORDINATED NOTES - collectively, (i) the Junior
Subordinated Promissory Note due September 30, 2006, executed by
Holdings, as maker, bearing interest at an initial fixed rate of
thirteen and one-half percent (13 1/2%) per annum, and payable to the
order of Paul Ramsay Holdings Pty. Limited, an Australian corporation,
in the original principal amount of $5,330,428 and (ii) the
Subordinated Promissory Note due September 30, 2005, executed by
Holdings, as maker, bearing interest at a fixed rate of thirteen
percent (13%) per annum, and payable to the order of Paul Ramsay
Holdings Pty. Limited, an Australian corporation, in the original
principal amount of $2,553,125.00
LC AMOUNT - at any time, the aggregate undrawn face amount of
all Letters of Credit and LC Guaranties then outstanding.
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LC GUARANTY - any guaranty pursuant to which Agent for its
behalf of Lenders or any Affiliate of Agent shall guaranty the payment
or performance by any Borrower of its reimbursement obligation under
any letter of credit.
LEGAL REQUIREMENT - any requirement imposed upon any Lender by
any law of the United States of America or the United Kingdom or by any
regulation, order, interpretation, ruling of official directive
(whether or not having the force of law) of the Board, the Bank of
England or any other board, central bank or governmental or
administrative agency, institution or authority of the United States of
America, the United Kingdom or any political subdivision of either
thereof.
LETTER OF CREDIT - any standby letter of credit issued by
Agent or Bank for the account of any Borrower.
LIEN - 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 common law, statute or contract. The
term "Lien" shall also include reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases
and other title exceptions and encumbrances affecting Property. For the
purpose of the Agreement, each Borrower shall be deemed to be the owner
of any Property which it has acquired or holds subject to a conditional
sale agreement or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person for
security purposes.
LOAN ACCOUNT - the loan account established on the books of
Agent pursuant to SECTION 3.6.
LOAN DOCUMENTS - the Agreement, the Other Agreements and the
Security Documents.
LOAN PARTIES - collectively, each Borrower, each Guarantor and
each other Person (other than Lender) which is at any time a party to
any Loan Document or individually, a "LOAN PARTY".
LOANS - all loans and advances of any kind made by any Lender
pursuant to the Agreement.
LOSSES - as defined in SECTION 12.2.
MATERIAL ADVERSE EFFECT - the effect of any event or condition
which, alone or when taken together with other events or conditions
occurring or existing concurrently therewith, (a) has a material
adverse effect upon the business, operations, Properties, or condition
(financial or otherwise) of Borrowers and the Subsidiaries of any
Borrower, taken as a whole; (b) has any material adverse effect
whatsoever upon the validity or enforceability of the Agreement or any
of the other Loan Documents; (c) has or may be reasonably expected to
have any material adverse effect upon the value of the whole or any
material part of the
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Collateral, the Liens or Lender with respect to the Collateral or any
material part thereof or the priority of such Liens; (d) materially
impairs the ability of Borrowers and the other Loan Parties, taken as a
whole, to perform their obligations under this Agreement or any of the
other Loan Documents, including repayment of the Obligations or realize
upon any of the Collateral in accordance with the Loan Documents and
Applicable Law.
MAXIMUM LEGAL RATE - as defined in SECTION 2.1.3.
MEADOWLAKE FACILITY - means the Property comprising or located
at the Meadowlake Hospital, located at 2216 South Van Buren, Enid
(Garfield County), Oklahoma, and, as of the date of this Agreement,
leased to Baptist Healthcare of Oklahoma, Inc., an Oklahoma
not-for-profit corporation, doing business as Integris Bass Baptist
Health Center, pursuant to the Meadowlake Lease.
MEADOWLAKE LEASE - means the Lease Agreement dated as of
August 1, 1997, between HSA of Oklahoma, Inc., an Oklahoma corporation
and Subsidiary of Holdings, as landlord, and Baptist Healthcare of
Oklahoma, Inc., an Oklahoma not-for-profit corporation, doing business
as Integris Bass Baptist Health Center, as tenant.
MEADOWLAKE OPTION - means the "Option" as defined in and
granted by the landlord therein to the tenant therein pursuant to
Section 28 of the Meadowlake Lease..
MIDVALE FACILITY - means the Property comprising the Benchmark
South Hospital, located at 175 West 7200 South, Midvale, Utah, and, as
of the date of this Agreement, leased by Bountiful Psychiatric
Hospital, Inc., a Utah corporation and a Subsidiary of Holdings,
pursuant to the Midvale Lease.
MIDVALE LEASE - means the Facility Lease Agreement dated as of
June 26, 1995, between Bountiful Psychiatric Hospital, Inc., a Utah
corporation and a Subsidiary of Holdings, as lessee, and Charter Canyon
Behavioral Health System, Inc., as lessor
MISSION VISTA FACILITY - means the Property comprising or
located at the Mission Vista Hospital, (or units therein) located at
14747 Jones Maltsberger, San Antonio (Bexar County), Texas,, and, as of
the date of this Agreement, leased by RHCI of San Antonio, Inc., a
Delaware corporation and a Subsidiary of Holdings, from Capstone
Capital of San Antonio, Ltd., d/b/a Cahaba of San Antonio, Ltd.,
pursuant to the Mission Vista Lease.
MISSION VISTA LEASE - means the Lease Agreement, dated as of
April 12, 1995, between RHCI of San Antonio, Inc., a Delaware
corporation and a Subsidiary of Holdings, as lessee, and Capstone
Capital of San Antonio, Ltd., d/b/a Cahaba of San Antonio, Ltd., as
lessor.
MONEY BORROWED - means, without duplication, (i) Indebtedness
arising from the lending of money by any Person to any Borrower; (ii)
Indebtedness, whether or not in any such case arising from the lending
by any Person of money to any Borrower, (A) which is represented by
notes payable or drafts accepted that evidence extensions of credit,
(B) which
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constitutes obligations evidenced by bonds, debentures, notes or
similar instruments, or (C) upon which interest charges are customarily
paid (other than accounts payable) or that was issued or assumed as
full or partial payment for Property; (iii) Indebtedness that
constitutes a Capitalized Lease Obligation; (iv) reimbursement
obligations with respect to letters of credit or guaranties of letters
of credit and (v) Indebtedness of any Borrower under any guaranty of
obligations that would constitute Indebtedness for Money Borrowed under
clauses (i) through (iii) hereof, if owed directly by any Borrower.
MORTGAGES - collectively, the deeds of trust or mortgages to
be executed by any Borrower on or about the Closing Date in favor of
Agent for its benefit and the ratable benefit of Lenders and by which a
Borrower shall grant and convey to Agent for its benefit or the ratable
benefit of Lenders, as security for the Obligations, a Lien upon the
real Property of such Borrowers.
MULTIEMPLOVER PLAN - has the meaning set forth in Section
4001(a)(3) of ERISA.
NET ACCOUNTS - on any date of determination, the dollar amount
of Borrowers' Accounts, determined on a Consolidated basis in
accordance with GAAP, reduced by the amount of reserves established
with respect thereto (which shall be established on a basis consistent
with the similar reserves shown on the Consolidated balance sheet of
Borrowers as at June 30, 1998) and further reduced by allowances for
bad debt as determined in accordance with GAAP.
NET ELIGIBLE ACCOUNTS - on any date of determination, the
product of the aggregate amount of Eligible Accounts, multiplied by the
Reimbursement Rate.
NET ELIGIBLE UNBILLED ACCOUNTS - on any date of determination,
the product of the aggregate amount of Eligible Unbilled Accounts
multiplied by the Reimbursement Rate.
NET ELIGIBLE SELF-PAY ACCOUNTS - on any date of determination,
the product of the aggregate amount of Eligible Self-Pay Accounts
multiplied by the Reimbursement Rate.
NEW MORTGAGES - as defined in SECTION 5.4.
NOTES - collectively, the Revolving Credit Notes, the Term
Notes and the Acquisition Notes.
NOTICE OF REVOLVING CREDIT LOAN OR NOTICE OF ACQUISITION
LOAN - as defined in SECTION 3.1.1.
OBLIGATIONS - all Loans and all other advances, debts,
liabilities, obligations, covenants and duties, together with all
interest, fees and other charges thereon, owing, arising, due or
payable from Borrowers to Agent and/or Lenders of any kind or nature,
present or future, whether or not evidenced by any note, guaranty or
other instrument, arising under the Agreement or any of the other Loan
Documents whether direct or indirect
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(including those acquired by assignment), absolute or contingent,
primary or secondary, due or to become due, now existing or hereafter
arising and however acquired.
OKLAHOMA LLC INTERESTS - means (a) the 12.5% limited liability
company interest owned as of the date of this Agreement by HSA of
Oklahoma, Inc., a Delaware corporation and a Subsidiary of Holdings, in
Integrated Behavioral Health. LLC, an Oklahoma limited liability
company, (b) the 50% limited liability company interest owned as of the
date of this Agreement by HSA of Oklahoma, Inc., a Delaware corporation
and a Subsidiary of Holdings, in Behavioral Health Systems of Oklahoma,
LLC, an Oklahoma limited liability company, and (c) the 12.5% limited
liability company interest owned as of the date of this Agreement by
Bethany Psychiatric Hospital, Inc., an Oklahoma corporation and a
Subsidiary of Holdings, in Integrated Behavioral Health. LLC, an
Oklahoma limited liability company, and, in each case, any and all
proceeds derived therefrom and rights relating thereto.
OPERATING ACCOUNT - either one or both of Account Number
38761657 maintained by Holdings at Citibank, N.A., and Account Number
812105744 maintained by Holdings at Hibernia National Bank.
ORIGINATING LENDER - as defined in SECTION 12.3(E).
OTHER AGREEMENTS - any and all agreements, instruments and
documents (other than the Agreement and the Security Documents),
heretofore, now or hereafter executed by any Borrower or any Subsidiary
of any Borrower and delivered to Agent or any Lender in respect of the
transactions contemplated by the Agreement.
OVERADVANCE - the amount, if any, by which the outstanding
principal amount of Revolving Credit Loans exceeds the Borrowing Base.
PARTICIPATING LENDER - shall have the meaning assigned such
term in SECTION 12.3(e).
PAYOR - any Person that is not a natural person who bears a
responsibility or obligation to pay part or all of a Claim, whether
such responsibility or obligation is absolute or conditional and shall
include insurance companies and government agencies.
PAYROLL ACCOUNTS - the bank accounts listed on EXHIBIT W.
PERMITTED ACQUISITION - as defined in SECTION 8.2.1.
PERMITTED LIENS - any Lien of a kind specified in SECTION
8.2.5.
PERMITTED PURCHASE MONEY INDEBTEDNESS - Purchase Money
Indebtedness of any Borrower incurred after the date hereof which is
secured by a Purchase Money Lien and which, when aggregated with the
principal amount of all other such Indebtedness and Capitalized Lease
Obligations of any Borrower at the time outstanding, does not exceed
$500,000. For the purposes of this definition, the principal amount of
any Purchase Money
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Indebtedness consisting of capitalized leases shall be computed as a
Capitalized Lease Obligation.
PERSON - an individual, partnership, corporation, limited
liability company, joint stock company, land trust, business trust, or
unincorporated organization, or a government or agency or political
subdivision thereof.
PHYSICIAN - including, but not limited to physician,
pharmacist, nurse, psychologist, psychiatrist, therapist, counselor, or
administrator.
PLAN - an employee benefit plan now or hereafter maintained by
any Borrower that is covered by Title IV of ERISA.
PREFERRED STOCK - collectively, (i) the Class B Convertible
Redeemable Preferred Stock, Series 1997, $1.00 par value, of Holdings,
(ii) the Class B Redeemable Preferred Stock, Series 1997-A, $1.00 par
value, of Holdings, (iii) the Class B Convertible Preferred Stock,
Series C, $1.00 par value, of Holdings, and (iv) any other preferred
stock which may issued by Holdings, from time to time, if each such
issuance is not prohibited by this Agreement.
PRO FORMA QUARTERLY AVAILABILITY - for any fiscal quarter of
Holdings the average daily balance of the Availability MINUS the
average daily LC Amount and MINUS Settlement Amounts paid in such
fiscal quarter or committed to be paid in the next-following fiscal
quarter, calculated on a pro forma basis for such fiscal quarter as if
such Settlement Amounts were paid in cash on the first day of such
fiscal quarter.
PROJECTIONS - Holdings' forecasted (a) Consolidated balance
sheets, (b) Consolidated and consolidating profit and loss statements,
(c) Consolidated cash flow statements, and (d) Consolidated
capitalization statements, all prepared on a consistent basis with the
projections provided to Agent prior to the Closing Date, together with
appropriate supporting details and a statement of underlying
assumptions.
PROPERLY CONTESTED - in the case of any Indebtedness of a Loan
Party (including any Taxes) that is not paid as and when due or payable
by reason of such Loan Party's bona fide dispute concerning its
liability to pay same or concerning the amount thereof, that (i) such
Indebtedness and any Liens securing same are being properly contested
in good faith by appropriate proceedings promptly instituted and
diligently conducted; (ii) such Loan Party has established appropriate
reserves as shall be required in conformity with GAAP, (iii) the
non-payment of such Indebtedness will not have a Material Adverse
Effect and has not resulted in a forfeiture of any assets of such Loan
Party; (iv) no Lien is imposed upon any of such Loan Party's assets
with respect to such Indebtedness unless such Lien is at all times
junior and subordinate in priority to the Liens in favor of Lender
(except only with respect to property and other taxes that have
priority as a matter of applicable state law); (v) if the Indebtedness
results from the entry, rendition or issuance against a Loan Party or
any of its assets of a judgment, writ, order or decree, such judgment,
writ, order or decree is stayed or bonded pending a timely appeal or
other judicial review; and (vi) if such contest is
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abandoned, settled or determined adversely to such Loan Party, such
Loan Party forthwith pays such Indebtedness and all penalties and
interest in connection therewith.
PROPERTY - any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
PURCHASE MONEY INDEBTEDNESS - means and includes (i)
Indebtedness (other than the Obligations) for the payment of all or any
part of the purchase price of any fixed assets, (ii) any Indebtedness
(other than the Obligations) incurred at the time of or within 90 days
prior to or after the acquisition of any fixed assets for the purpose
of financing all or any part of the purchase price thereof, and (iii)
any renewals, extensions or refinancings thereof, but not any increases
in the principal amounts thereof outstanding at the time.
PURCHASE MONEY LIEN - a Lien upon fixed assets which secures
Purchase Money Indebtedness, but only if such Lien shall at all times
be confined solely to the fixed assets the purchase price of which was
financed through the incurrence of the Purchase Money Indebtedness
secured by such Lien.
RADER COMPANIES - collectively, The Rader Group, Inc., a
Florida corporation, and The Rader Group, Inc., a Colorado corporation.
RADER PURCHASE AGREEMENT - a Stock Purchase Agreement by and
among a Borrower, the Rader Companies and Bill T. Rader , Ph.D.,
pursuant to which a Borrower acquires all of the issued and outstanding
capital stock of the Rader Companies on terms substantially similar to
the terms set forth in the draft of the Stock Purchase Agreement
delivered to Agent on the Closing Date, or such other terms as Agent
and Required Lenders may approve.
REIMBURSEMENT RATE - on any date of determination, an amount,
expressed as a percentage, equal to the reimbursement rate reported by
Holdings and its Subsidiaries, on a Consolidated basis, for the
twelve-month period immediately preceding such date of determination.
RENTALS - as specified in SECTION 8.2.16.
REPORTABLE EVENT - any of the events set forth in Section
4043(c) of ERISA (other than subsections (c) 9 and (c) (11) thereof),
with respect to which the applicable notice requirements have not been
waived.
REQUIRED LENDERS as of any date, the holders of Notes
evidencing at least sixty-seven percent (67%) of the sum of the
aggregate unpaid principal amount of the Term Notes plus the aggregate
principal amount of the Acquisition Commitments and the Revolving
Credit Commitments; PROVIDED, however, that any amendment to,
modification of, or supplementation to this Agreement or waiver of a
Default or an Event of Default hereunder that would have the effect of
reinstating the obligations to make Revolving Credit Loans or
Acquisition Loans from and after the date such obligations have been
terminated or changing the terms of, amount of or obligation to make
Revolving Credit Loans or Acquisition Loans
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shall require the affirmative consent thereto of the holders of
Revolving Credit Notes or Acquisition Notes evidencing at least
sixty-seven percent (67%) of the aggregate principal amount of
Revolving Credit Loan Commitments and/or the affirmative consent
thereto of the holders of the majority of the Acquisition Loan
Commitments, as applicable.
RESTRICTED INVESTMENT - any investment made in cash or by
delivery of Property to any Person, whether by acquisition of stock,
Indebtedness or other obligation or Security, or by loan, advance or
capital contribution, or otherwise, or in any Property except the
following:
(i) investments of any Borrower in any of its
Subsidiaries to the extent existing on the Closing Date, such
additional investments of any Borrower in any of its
Subsidiaries to the extent expressly permitted under the terms
of this Agreement, and investments of any Borrower in any
Subsidiary of such Borrower formed after the Closing Date if,
concurrently with such formation, such Subsidiary becomes a
Guarantor;
(ii) Property to be used in the ordinary course of
business;
(iii) Current Assets arising from the sale of goods
and services in the ordinary course of business of any
Borrower and their Subsidiaries;
(iv) investments in direct obligations of the United
States of America, or any agency thereof or obligations
guaranteed by the United States of America, provided that such
obligations mature within one year from the date of
acquisition thereof;
(v) investments in certificates of deposit maturing
within one year from the date of acquisition issued by 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 $100,000,000;
(vi) investments in commercial paper given the
highest rating by a national credit rating agency and maturing
not more than 270 days from the date of creation thereof;
(vii) Permitted Acquisitions;
(vii) hedging or similar contracts to the extent
permitted by SECTION 8.2.15; and
(viii) investments not included in paragraphs (i)
through (vii) above which do not exceed at any time, in the
aggregate, the sum of Two Hundred Fifty Thousand Dollars
($250,000).
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RESTRICTED SUBSIDIARIES - Bethany Psychiatric Hospital, Inc.,
an Oklahoma corporation, HSA of Oklahoma, Inc., an Oklahoma
corporation, RHCI San Antonio, Inc., a Delaware corporation,
Transitional Care Ventures, Inc., a Delaware Corporation, and
Transitional Care Ventures (Texas), Inc., a Delaware corporation.
REVOLVING CREDIT AND TERM BASE RATE PORTION - that portion of
the Revolving Credit Loans and the Term Loan not subject to Eurodollar
Option.
REVOLVING CREDIT AND TERM EURODOLLAR PORTION - That portion of
the Revolving Credit Loans and or outstanding Term Loans specified in a
Eurodollar Request (including any portion of any Revolving Credit Loan
which is being borrowed by Borrower concurrently with such Eurodollar
Request) in accordance with the terms hereof, which does not exceed the
outstanding balance of the Term Loan or Revolving Credit Loans not
already subject to a Eurodollar Option plus the amount of any expiring
Revolving Credit and Term Eurodollar Portion, and which as of the date
of the Eurodollar request specifying such Revolving Credit and Term
Eurodollar Portion has met the conditions for basing interest on the
Eurodollar rate in SECTION 2.1(B) and in the definition of Eurodollar
Portion and the Eurodollar Period of which was commenced and not
terminated.
REVOLVING CREDIT LOAN COMMITMENTS - as defined in SECTION
1.1.1.
REVOLVING CREDIT LOANS - Loans made by Lenders as provided in
SECTION 1.1.1.
REVOLVING CREDIT NOTE - the Revolving Credit Note(s) to be
executed by Borrowers in favor of Lenders to evidence the Revolving
Credit Loans, which shall be in the form of EXHIBIT A attached hereto.
REVOLVING CREDIT PERCENTAGE - as defined in SECTION 1.1.1.
SCHEDULE OF ACCOUNTS - as defined in SECTION 6.2.1.
SCHEDULE OF DOCUMENTS - as defined in SECTION 9.1.
SECTION 5.5 PROPERTIES - as defined in SECTION 5.5.
SECTION 5.6 SECURITY DOCUMENTS - as defined in SECTION 5.6.
SECURITY - shall have the same meaning as in Section 2(l) of
the Securities Act of 1933, as amended.
SECURITY DOCUMENTS - the Mortgages, any New Mortgage, each
Guarantee and all other instruments and agreements now or at any time
hereafter securing the whole or any part of the Obligations.
SETTLEMENT AMOUNTS - collectively, (a) any payments made by
Holdings or any of its Subsidiaries to satisfy all or any part of any
Settlement Items, any payments made to any
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Payor by Holdings or any of its Subsidiaries to settle any claims
against Holdings or any of its Subsidiaries asserted by any Payor, and
any other payments made by Holdings or any of its Subsidiaries with
respect to Settlement Items, and (b) any payment which Holdings or any
of its Subsidiaries is obligated to make under or by reason of any
final judgment, any final arbitration award, any final determination in
any judicial or administrative proceeding by or before any court or any
governmental or administrative agency, institution or authority of the
United States of America, the United Kingdom or any political
subdivision of either thereof, or any fully executed settlement
agreement entered as the result of, or by reason of the disposition of,
any claim against or liability or Indebtedness of Holdings or any of
its Subsidiaries arising under or related to the business operations
and activities now or at any time conducted by Holdings or any of its
Subsidiaries, or any predecessors of such Persons, and regardless
whether the amount of such claim, liability or Indebtedness is fixed
and determined or subject to any event or condition; PROVIDED that the
amount of any of the claims, liabilities or Indebtedness described in
this clause (b) shall be the maximum amount of such claim, liability or
Indebtedness; and, PROVIDED FURTHER, that in making the determination
of Settlement Amounts for the applicable two-quarter period with
respect to cost report liabilities that are evidenced by final
judgements, final arbitration awards, or written settlement agreements,
(x) amounts paid or committed to be paid during such period to
Borrowers pursuant to final judgments, final arbitration awards and
written settlement agreements may be offset against (y) amounts paid or
committed to be paid during such period by Borrowers pursuant to final
judgments, final arbitration awards, or written settlement agreements.
SETTLEMENT ITEMS - items in the nature of (a) claims,
disputes, liabilities or other contingent obligations for which
reserves have been established on the Consolidated balance sheet of
Holdings as of the Closing Date or are established by Holdings after
the Closing Date, including the matters for which Borrowers have
established the reserves referenced in EXHIBIT U, (b) final judgments,
final arbitration awards, monetary obligations resulting from a final
determination in any judicial or administrative proceeding by or before
any court or any governmental or administrative agency, institution or
authority of the United States of America, the United Kingdom or any
political subdivision of either thereof, or fully executed settlement
agreements entered as the result of, or by reason of the disposition
of, any claim against or liability or Indebtedness of Holdings or any
of its Subsidiaries, whether or not reserves therefor have been
established, and (c) actual or contingent obligations for claims,
disputes, liabilities or other contingent liabilities for claims and
other matters for which, under GAAP applied with respect to Holdings on
a basis consistent with current practices, reserves would be required
to be established, whether or not such reserves are actually
established, arising under or related to the business operations and
activities now or at any time conducted by Holdings or any of its
Subsidiaries or any predecessors of such Persons and regardless whether
the amount of such claim, liability or Indebtedness is fixed and
determined or subject to any event or condition.
SOLVENT - as to any Person, such Person (i) owns Property
whose fair saleable value is greater than the amount required to pay
all of such Person's Indebtedness (including contingent debts), (ii) is
able to pay all of its Indebtedness as such Indebtedness matures and
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(iii) has capital sufficient to carry on its business and transactions
and all business and transactions in which it is about to engage.
STATUTORY RESERVES - a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is
the number one minus the aggregate of the maximum reserve percentages
(including, without limitation, any marginal, special, emergency or
supplemental reserves), expressed as a decimal, established by the
Board and any other banking authority to which Bank or any Under is
subject for Eurocurrency Liabilities (as defined in Regulation D of the
Board or any successor thereto). Such reserve percentages shall
include, without limitation, those imposed under such Regulation D.
Eurodollar Portions shall be deemed to constitute Eurocurrency
Liabilities and as such shall be deemed to be subject to such reserve
requirements without benefit of or credit for proration, exceptions or
offsets which may be available from time to time to Bank or any Lender
under such Regulation D. Statutory Reserves shall be adjusted
automatically on and as of the effective date of any change in any
reserve percentage, provided that no adjustment shall reduce Statutory
Reserves below the amount in effect on the Closing Date.
STOCK - all shares, options, warrants, interests,
participations or other equivalents (regardless of how designated) of
or in a corporation or equivalent entity, whether voting or nonvoting,
including, without limitation, common stock, preferred stock, or any
other "equity security" (as such term in defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the Securities and
Exchange Commission under the Securities Act of 1934, as amended).
SUBORDINATED DEBT - (i) all Indebtedness evidenced by the
Junior Subordinated Debt Documents, (ii) all Indebtedness with respect
to the Preferred Stock, and (iii) all other Indebtedness of any
Borrower that is subordinated to the Obligations in a manner
satisfactory to Agent.
SUBORDINATION AGREEMENT - the Subordination Agreement to be
dated on or about the Closing Date between Agent and one or more
holders of the Junior Subordinated Debt and Preferred Stock, as the
same may be amended or modified from time to time.
SUBSIDIARY - any corporation of which a Person owns, directly
or indirectly through one or more intermediaries, more than 50% of the
Voting Stock at the time of determination. When such term is used in
respect to any Borrower, Subsidiary shall mean only those Subsidiaries
that are either incorporated in any state, commonwealth or territory of
the United States or have material assets in any state, commonwealth or
territory of the United States.
TAX - collectively, any present and future tax, levy, impost,
duty, fee, assessment, deduction, withholding or other charge of
whatever nature, including income, receipts, excise, property, sales,
transfer, license, payroll, withholding, social security and franchise
taxes now or hereafter imposed or levied by the United States, or any
state, local or foreign government or by any department, agency or
other political subdivision or taxing authority thereof or therein and
all interest, penalties, additions to tax and similar liabilities with
respect thereto and (ii) in relation to any Eurodollar Portion and the
applicable Eurodollar
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<PAGE> 99
Rate, any tax, levy, impost, duty, deduction, withholding or charges of
whatever nature required by any Legal Requirement (1) to be paid by any
Agent or Lender and/or (2) to be withheld or deducted from any payment
otherwise required hereby to be made by any Borrower to Agent or any
Lender; PROVIDED, that the term "Tax" shall not include any taxes
imposed upon the net income of Agent or any Lender.
TERM EURODOLLAR PORTION - that portion of the outstanding Term
Loans specified in the Eurodollar Request in accordance with the terms
hereof, which does not exceed the outstanding balance of the Term Loans
not already subject to a Eurodollar Option plus the amount of any
expiring Term Eurodollar Portion, and which as of the date of the
Eurodollar Request specifying such Term Eurodollar Portion has met the
conditions for basing interest on the Eurodollar Rate in SECTION 2.1(b)
and in the definition of Eurodollar Portion, and the Eurodollar Period
of which was commenced and not terminated.
TERM LOAN - the Loan described in SECTION 1.2.1.
TERM LOAN COMMITMENTS - as defined in SECTION 1.2.1.
TERM LOAN PERCENTAGE - as defined in SECTION 1.2.1.
TERM NOTE - the Secured Promissory Note (Term Note) to be
executed by Borrowers in favor of each Lender to evidence the Term
Loan, which shall be in the form of EXHIBIT A-1 to the Agreement.
TOTAL CREDIT FACILITY - Twenty-Two Million Dollars
($22,000,000).
TOTAL INDEBTEDNESS - as of any date of determination the
aggregate outstanding principal balance of all Money Borrowed of
Holdings and its Subsidiaries on a Consolidated basis.
VARIABLE AMOUNT A - amount determined in accordance with
(2)(a) in the definition of the term "Borrowing Base."
VARIABLE AMOUNT B - amount determined in accordance with
(2)(b) in the definition of the term "Borrowing Base."
VARIABLE COMPONENT - the component of the Borrowing Base
determined for purposes of (2) in the definition of the term "Borrowing
Base."
VOTING STOCK - Securities of any class or classes of a
corporation 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).
OTHER TERMS. All other terms contained in the Agreement shall
have, when the context so indicates, the meanings provided for by the
Code to the extent the same are used or defined therein.
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CERTAIN MATTERS OF CONSTRUCTION. References to "SECTIONS,"
"SUBSECTIONS," "EXHIBITS," and to the APPENDIX shall be to SECTIONS,
SUBSECTIONS, EXHIBITS and the APPENDIX, respectively, of or to the
Agreement unless otherwise specifically provided. The terms "herein",
"hereof" and "hereunder" and other words of similar import refer to the
Agreement as a whole and not to any particular section, paragraph or
subdivision. Any pronoun used shall be deemed to cover all genders. In
the computation periods of time from a specified date to a later
specified date, the word "from" means "from and including" and the
words "to" and "until" means "to but excluding." The section titles,
table of contents and list of exhibits appear as a matter of
convenience only and shall not affect the interpretation of the
Agreement. All references to statutes and related regulations shall
include any amendments of same and any successor statutes and
regulations. All references to any of the Loan Documents shall include
any and all modifications thereto and any and all extensions or
renewals thereof. Whenever the phrase "including" shall appear in this
Agreement, such word shall be understood to mean "including, without
limitation."
Any accounting term used in this Agreement shall have, unless
otherwise specifically provided herein, the meaning customarily given
such term in accordance with GAAP, and all financial computations
hereunder shall be computed, unless otherwise specifically provided
herein, in accordance with GAAP consistently applied. That certain
terms or computations are explicitly modified by the phrase "in
accordance with GAAP" shall in no way be construed to limit the
foregoing.
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<PAGE> 1
EXHIBIT 10.128
SUBORDINATION AGREEMENT
October 30, 1998
To: Fleet Capital Corporation
2711 North Haskell Avenue
Suite 2100, LB 21
Dallas, Texas 75204
Ladies and Gentlemen:
Ramsay Health Care, Inc., a Delaware corporation with its principal
place of business at One Alhambra Plaza, Suite 750, Coral Gables, Florida 33134
("RAMSAY") is (i) indebted to Paul Ramsay Holdings Pty. Limited, an Australian
corporation ("RAMSAY HOLDINGS PTY"), in the current principal amount not in
excess of $7,283,553 under the terms of those certain promissory notes and other
agreements (either verbal or written) that are delineated in EXHIBIT "A" hereto
and (ii) the issuer of the Series B Preferred Stock described on EXHIBIT "A"
hereto and currently held by Ramsay Holdings Pty, Ramsay Holdings HSA Limited, a
Barbados corporation ("RAMSAY HSA") and Paul Ramsay Hospitals Pty. Limited, an
Australian corporation ("RAMSAY HOSPITALS" and together with Ramsay HSA and
Ramsay Holdings Pty, the "RAMSAY AFFILIATES" or individually, a "RAMSAY
AFFILIATE") (such instruments, certificates and agreements described in clauses
(i) and (ii) collectively, with all amendments, modifications and supplements
thereto, and all renewals, extensions and restatements thereof, being
hereinafter called the "SUBORDINATED AGREEMENTS"). Ramsay understands that,
pursuant to that certain Loan and Security Agreement dated October 30, 1998
(herein, as such Loan Agreement as the same may hereafter from time to time be
amended, modified, supplemented, renewed, extended and/or restated, the "LOAN
AGREEMENT"), among Ramsay and certain of its direct and indirect subsidiaries
now or hereafter becoming a party to the Loan Agreement (collectively, the
"BORROWERS" or individually, a "BORROWER") and Fleet Capital Corporation, a
Rhode Island corporation ("FLEET"), as Agent (Fleet and any successor Agent, in
such capacity, the "AGENT") for the lenders (including Fleet) that are a party
to the Loan Agreement (collectively, including Fleet in such capacity, the
"LENDERS", and individually, a "LENDER" and the respective assigns of such
Lenders pursuant to SECTION 12.3 of the Loan Agreement) the Agent and Lenders
have agreed to provide certain loans and financing and credit accommodations to
the Borrowers (Borrowers, together with any other Person (other than Agent or
each Lender) which are or becomes a party to any Loan Document, are sometimes
referred to collectively as the "LOAN PARTIES" or individually, as a "LOAN
PARTY", and the Loan Agreement, together with each of the other "LOAN DOCUMENTS"
defined in the Loan Agreement, and all other instruments and documents delivered
by any one or more of the Loan Parties to Agent and/or any one or more of the
Lenders pursuant to the Loan Agreement, and all other financing agreements now
or hereafter existing between and/or among the Agent and/or any one or more of
the Lenders and any one or more of the Loan Parties, together with all
amendments,
SUBORDINATION AGREEMENT - PAGE 1
<PAGE> 2
modifications, and supplements to, and all restatements of, any one or more of
the foregoing, and together with all renewals, extensions and restatements of
any one or more of the foregoing, are hereinafter collectively called the
"SENIOR LOAN DOCUMENTS"), but that the Agent and the Lenders require, as a
condition precedent to its obligation to commence funding loans under the Loan
Agreement, the execution of this Subordination Agreement by the Ramsay
Affiliates and the delivery of the same to the Agent. Accordingly, each Ramsay
Affiliate, in order to satisfy such condition precedent and intending to be
legally bound, jointly and severally, agrees as follows:
1. Each Ramsay Affiliate hereby agrees, jointly and severally, to
subordinate, and does hereby subordinate, (a) the payment by any Loan
Party of all or any part of such Loan Party's obligations, liabilities
and indebtedness which may now or hereafter be owing by such Loan Party
to any Ramsay Affiliate, whether pursuant to the Subordinated
Agreements or otherwise, including, without limitation, any dividend or
redemption obligation with respect to the Preferred Stock of Ramsay
described in EXHIBIT "A" hereto (the "PREFERRED STOCK")and the
outstanding balance of principal and accrued interest from time to time
owing by Ramsay to Ramsay Holdings Pty pursuant to the Junior
Subordinated Promissory Notes listed as items 2 and 3 on EXHIBIT "A"
hereto (together, the "SUBORDINATED NOTES" or individually, the
"SUBORDINATED NOTE" or otherwise, and all costs and expenses (including
attorneys' fees) owing by any Loan Party to any Ramsay Affiliate (all
of the obligations, liabilities and indebtedness described or to which
reference is made in this CLAUSE (a) (other than Common Stock issued in
respect thereof) being hereinafter called the "SUBORDINATED DEBT") to
the payment in full in cash of the Senior Debt, and (b) all security
interests, mortgages and liens now or hereafter securing the
Subordinated Debt, or any portion thereof, to all security interests,
mortgages and liens now or hereafter securing all or any part of the
Senior Debt, regardless of the time of granting of any security
interests or liens or the filing or recording of any mortgages or
financing statements, it being agreed that, by reason of this
Agreement, the liens and security interests in favor of the Agent
and/or any one or more of the Lenders in the Senior Collateral (as
defined in SECTION 3 hereof) shall be senior and superior to any and
all liens and security interests now or hereafter encumbering all or
any portion of the Senior Collateral as security for all or any portion
of the Subordinated Debt. Regardless of whether a default or an event
of default (however defined) exists under any one or more of the
Subordinated Agreements, each Ramsay Affiliate agrees not to (i)
accept, retain, request or take any security for the Subordinated Debt
or any guaranty of the Subordinated Debt without the Agent's prior
written consent, (ii) amend or modify the Subordinated Agreements, or
increase any of the Subordinated Debt, without the Agent's prior
written consent, or (iii) except as otherwise expressly provided in
SECTION 19 of this Subordination Agreement, (1) accept, demand, sue
for, take or receive from any Loan Party or any other person or entity,
by payment, setoff or otherwise, and including the taking of any new
negotiable instrument, payment of all or any part of the Subordinated
Debt, or (2) take any action to enforce their rights in any collateral
securing payment thereof, or enforce their rights under any judgment
rendered or writ issued in favor of any Ramsay Affiliate with respect
to the Subordinated Debt, in any event with respect to the immediately
foregoing
SUBORDINATION AGREEMENT - PAGE 2
<PAGE> 3
CLAUSES (i) through (iii) unless and until all Senior Debt has been
indefeasibly paid in full in cash and the Loan Agreement has been
terminated.
2. Without limiting the generality or scope of SECTION 1 of this
Subordination Agreement, each Ramsay Affiliate expressly agrees,
jointly and severally, that if such Ramsay Affiliate at any time
purchases goods or services from any Loan Party, such Ramsay Affiliate
will pay for such goods or services in cash or cash equivalents in
accordance with the customary terms of such purchases available to
third parties and shall not deduct from or setoff against any amounts
owing by such Ramsay Affiliate to such Loan Party in connection with
such purchases any amounts due or claimed to be due with respect to, or
otherwise owing by reason of, the Subordinated Debt.
3. For purposes of this Subordination Agreement, the term "SENIOR DEBT"
means all obligations, including, without limitation (i) principal of
and interest (including, without limitation, interest that would accrue
during the pendency of any proceeding under Title 11 of the United
States Bankruptcy Code on all or any portion of the Senior Debt
regardless of whether such interest is included in any allowed claim in
any such proceeding) on all loans, advances, accommodations (including,
without limitation, guarantees of payment under letter of credit-
related obligations for the benefit of banks or other financial
institutions issuing letters of credit for the account of any Loan
Party and guarantees of any Loan Party's payment and performance under
written contracts to which any Loan Party is a party) and other
extensions of credit by the Lender now or hereafter made and howsoever
evidenced to or on behalf of any Loan Party (including any Loan Party
operating as Debtor or Debtor in Possession under, or any trustee of
any Loan Party appointed under, the United States Bankruptcy Code),
(ii) amounts owing by reason of guarantees by any one or more of the
Lenders of any Loan Party's indebtedness to others unrelated to the
Lender, (iii) accrued interest, attorneys' fees and expenses incurred
by the Agent and/or any one or more of the Lenders in enforcing their
rights in the event of default by any Loan Party under the Loan
Agreement and/or any one or more of the Senior Loan Documents, (iv)
amounts owing by reason of advances by Lender for the preservation,
maintenance, insurance or protection of any Senior Collateral, (v) all
other indebtedness for which any Loan Party is now or at any time
hereafter liable to the Agent and/or any one or more of the Lenders in
any manner, whether primarily or secondarily, absolutely or
contingently, directly or indirectly, jointly, severally or jointly and
severally, and whether matured or unmatured, including, without
limitation, all interest, costs, disbursements, indemnification
amounts, fees, expenses and all indebtedness arising directly out of
transactions among any Loan Party, the Agent and/or any one or more of
the Lenders or acquired by the Agent or any one or more of the Lenders
outright, conditionally or as collateral security from another person
or entity, and (vi) all "Obligations," as that term is defined in the
Loan Agreement (and, in the case of all of the foregoing, any and all
renewals, extensions, replacements and refinancings of all or any part
thereof), and the term "SENIOR COLLATERAL" means all property, real and
personal, tangible and intangible, now owned or hereafter acquired by
any Loan Party, and includes, without limitation, all inventory,
accounts, equipment, fixtures, instruments and general intangibles (as
those terms
SUBORDINATION AGREEMENT - PAGE 3
<PAGE> 4
are defined in the Uniform Commercial Code) now owned or hereafter
acquired by any Loan Party.
4. Upon the maturity of the Senior Debt (or any portion thereof) by lapse
of time, acceleration or otherwise, all amounts due or to become due in
connection therewith shall first be indefeasibly paid in full in cash
before any payment is made by any Borrower or any person acting on
behalf of any Borrower on account of any Subordinated Debt. Upon a
distribution of the assets or readjustment of the indebtedness of any
Borrower by reason of liquidation, composition, bankruptcy,
arrangement, receivership, assignment for the benefit of creditors or
any other action or proceeding involving the readjustments of all or
any of the debts of any Borrower, or the application of the assets of
any Borrower to the payment or liquidation thereof, each Ramsay
Affiliate acknowledges that the payment and satisfaction of the Senior
Debt and the Senior Loan Documents shall have priority over the payment
and satisfaction of the Subordinated Debt and the Subordinated
Agreements. If any Borrower shall become subject to a proceeding under
the United States Bankruptcy Code and the Agent and/or any one or more
of the Lenders shall desire to permit the use of cash collateral by
such Borrower or to provide financing to such Borrower under either
Section 363 or 364 of the United States Bankruptcy Code, with or
without obtaining a priority lien under Section 364(d) thereof, each
Ramsay Affiliate hereby agrees as follows: (a) adequate notice to such
Ramsay Affiliate shall have been given for such financing if such
Ramsay Affiliate is given notice thereof at least two (2) business days
prior to the entry of the order approving such financing, and (b) no
objection will be raised by any Ramsay Affiliate to any such financing
on the grounds of failure to provide "adequate protection" of such
Ramsay Affiliate's lien position, if any, in any portion of the Senior
Collateral subject to the senior lien position in the Senior Collateral
in favor of the Agent and/or any one or more of the Lenders, whether
granted in connection with such financing or otherwise existing or
created. For purposes hereof, notice of such a proposed financing or
use of cash collateral shall be deemed given to each Ramsay Affiliate
upon the sending of notice by overnight delivery service, telecopy or
hand delivery to such Ramsay Affiliate. The Agent, for itself and on
behalf of the Lenders is irrevocably authorized and empowered to
receive and collect any and all dividends, payments and distributions
made on account of any proof of claim relating to the Subordinated Debt
in whatever form the same may be paid or issued until the Senior Debt
is paid or satisfied.
5. Until the Senior Debt is indefeasibly paid in full in cash and the Loan
Agreement terminated, no Ramsay Affiliate shall, without the Agent's
prior written consent, (i) take or require the delivery of a guaranty
of the Subordinated Debt from any person or entity, (ii) take any
action to foreclose or otherwise enforce any liens or security
interests now existing in favor of any Ramsay Affiliate on any of the
Senior Collateral, (iii) take any action to foreclose or otherwise
enforce any judgment rendered or writ issued in favor of any Ramsay
Affiliate with respect to any of the Subordinated Agreements, (iv)
commence or join with any other creditor or creditors of any Loan Party
in commencing any bankruptcy, reorganization, receivership or
insolvency proceeding against any Loan Party, (v) except for the
acceleration of the amounts due with respect to the Subordinated Notes
in the event the Senior Debt is
SUBORDINATION AGREEMENT - PAGE 4
<PAGE> 5
accelerated, exercise any other rights or remedies any Ramsay Affiliate
may have under the Subordinated Agreements, the Uniform Commercial Code
or any other applicable law with respect to the Senior Collateral, or
(vi) take or permit any action prejudicial to or inconsistent
with the priority position of the Agent and the Lenders over each
Ramsay Affiliate that is created by this Subordination Agreement.
6. In the event any Loan Party defaults on any one or more of its
obligations with respect to all or any part of the Senior Debt or under
the Senior Loan Documents and, as a result, the Agent and/or any one or
more of the Lenders undertake to enforce any of the security interests
and liens in the Senior Collateral granted to or for the benefit of the
Agent and/or any one or more of the Lenders, each Ramsay Affiliate
agrees, jointly and severally, that no Ramsay Affiliate will hinder,
delay or otherwise prevent the Agent or any Lender from taking any and
all action which it or they deem necessary or appropriate to enforce
such liens and/or security interests in the Senior Collateral and to
realize thereon, and, in furtherance of the foregoing, each Ramsay
Affiliate hereby waives, jointly and severally, any and all rights (i)
to notices in respect of any public or private sales of the Senior
Collateral, (ii) to participate in the distribution of proceeds of any
public or private sales of the Senior Collateral, and (iii) to redeem
the Senior Collateral prior to or after the occurrence of any public or
private sales of the Senior Collateral. In connection with any sale or
transfer of the Senior Collateral by Lender or any Loan Party after the
occurrence and during the continuation of any "Default" and/or "Event
of Default", as defined in the Loan Agreement, each Ramsay Affiliate
hereby irrevocably authorizes, empowers and appoints Agent as their
agent and attorney-in-fact to execute, verify, deliver and file any
release, termination or other statement or document necessary to
release and terminate any liens or security interests which secure the
Subordinated Debt.
7. In the event of any distribution, division or application, partial or
complete, voluntary or involuntary, by operation of law or otherwise,
of all or any part of the assets of any Loan Party or the proceeds
thereof to creditors of any Loan Party, or the readjustment of the
obligations and indebtedness of any Loan Party, whether by reason of
liquidation, bankruptcy, arrangement, receivership, assignment for the
benefit of creditors or any other action or proceeding involving the
readjustment of all or any part of the Subordinated Debt, or the
application of all or any part of the assets of any Loan Party to the
payment or liquidation thereof, or upon the dissolution of any Loan
Party or the winding up of any Loan Party's business, or upon the sale
of all or substantially all of any Loan Party's assets, then, in any
such event, (a) the Agent and the Lenders shall be entitled to receive
payment in full in cash of the Senior Debt prior to the payment of all
or any part of the Subordinated Debt, and (b) any payment or
distribution of any kind or character, whether in cash, securities or
other property, which shall be payable or deliverable upon or with
respect to all or any portion of the Subordinated Debt shall be paid or
delivered directly to the Agent for application on the Senior Debt,
whether or not then due, until the Senior Debt shall have been fully
paid in cash. In order to enable the Agent and the Lenders to enforce
their rights hereunder in any of the aforesaid actions or proceedings,
the Agent is hereby irrevocably
SUBORDINATION AGREEMENT - PAGE 5
<PAGE> 6
authorized and empowered and granted the right, at any time and from
time to time in its discretion, (i) to make and present for and on
behalf of each Ramsay Affiliate such proofs of claim against any Loan
Party on account of the Subordinated Debt as the Agent may deem
expedient or proper in the event any Ramsay Affiliate fails to do so at
least ten (10) days prior to the deadline for filing such claims, (ii)
to vote such proofs of claim in any such proceeding upon failure of any
Ramsay Affiliate to do so prior to ten (10) days before the expiration
of the time to vote such claim, and (iii) to receive and collect any
and all dividends and other payments and disbursements made thereon in
whatever form the same may be paid or issued and to apply the same on
account of the Senior Debt. Agent shall have no obligation to execute,
verify, deliver, file and/or vote any such proofs of claim. In the
event Agent votes any claim in accordance with the authority granted
hereby, no Ramsay Affiliate shall be entitled to change or withdraw
such vote. Each Ramsay Affiliate irrevocably authorizes and empowers
the Agent to demand, sue for, collect and receive each of the aforesaid
payments and distributions, to give acquittances therefor, and to file
claims and take such other actions, in the Agent's own name or in the
name of such Ramsay Affiliate or otherwise, as the Agent may deem
necessary or advisable for the enforcement of this Subordination
Agreement. Each Ramsay Affiliate will execute and deliver to the Agent
such powers of attorney, assignments and other instruments and
documents, including notes and stock certificates (together with such
assignments or endorsements as the Agent shall deem necessary), as may
be requested by the Agent in order to enable the Agent to enforce any
and all claims upon or with respect to all or any portion of the
Subordinated Debt and to collect and receive any and all payments and
distributions which may be payable at any time upon or with respect to
the Subordinated Debt, all for the benefit of the Agent and the Lenders
until the Senior Debt is paid in full in cash. When the Senior Debt is
paid in full in cash and the Loan Agreement has been terminated, the
Agent and each Lender will remit to each Ramsay Affiliate, to the
extent of its interest therein and to the extent permitted by law, all
dividends or other payments or distributions paid to and held by the
Agent or such Lender in excess of the amount necessary to pay the
Senior Debt in full in cash to the extent such Ramsay Affiliate shall
have made any payment to Agent or any payments have been made to the
Agent or any Lender by reason of the Subordinated Debt.
8. If any payment on account of, or any collateral for any part of, the
Subordinated Debt is received by any Ramsay Affiliate (other than a
payment expressly permitted to be received by such Ramsay Affiliate in
accordance with the provisions of SECTION 19 of this Subordination
Agreement), such payment or collateral shall be delivered forthwith by
such Ramsay Affiliate to the Agent for application to the Senior Debt,
in the form received except for the addition of any endorsement or
assignment necessary to effect a transfer of all rights therein to the
Agent. The Agent is irrevocably authorized to supply any required
endorsement or assignment which may have been omitted. Until so
delivered, any such payment or collateral required to be delivered by
any Ramsay Affiliate to the Agent under this SECTION 8 shall be held by
such Ramsay Affiliate in trust for the Agent and the Lenders and shall
not be commingled with other funds or property of any Ramsay Affiliate.
SUBORDINATION AGREEMENT - PAGE 6
<PAGE> 7
9. Each Ramsay Affiliate, jointly and severally, represents, warrants and
covenants to the Agent and to each of the Lenders that:
(a) It has not relied and will not rely on any representations or
information of any nature made by or received from the Agent
and/or any one or more of the Lenders relating to any Loan
Party in executing this Subordination Agreement.
(b) As of the date hereof, the total principal amount of the
Subordinated Debt does not exceed $7,283,553.
(c) Borrowers have delivered to the Agent true and correct copies
of the Subordinated Documents listed in EXHIBIT "A" hereto,
and, as of the date hereof, no documents or agreement
evidencing or otherwise relating to any Subordinated Debt
exist except as set forth in EXHIBIT "A" hereto.
(d) The Ramsay Affiliates are the lawful owners of the
Subordinated Debt free and clear of all liens and
encumbrances, and as of the date hereof, no Ramsay Affiliate
has subordinated, encumbered, assigned or transferred any
Subordinated Debt. Each Ramsay Affiliate agrees, jointly and
severally, that it will not subordinate or encumber, assign or
transfer at any time while this Subordination Agreement
remains in effect, any right, claim or interest of any kind in
or to the Subordinated Debt (a) without giving prior written
notice of such action to Agent, (b) unless prior to the
consummation of any such action, the transferee thereof shall
execute and deliver to Agent an agreement substantially
identical to this Agreement, providing for the continued
subordination and forbearance of the Subordinated Debt to the
Senior Debt as provided herein and for the continued
effectiveness of all of the rights of Agent and Lenders
arising under this Agreement and (c) unless following such
sale, assignment, pledge, disposition or other transfer, there
shall be no more than five holders of Subordinated Debt.
Notwithstanding the failure to execute or deliver any such
agreement, the subordination effected hereby shall survive any
sale, assignment, pledge, disposition or other transfer of all
or any portion of the Subordinated Debt, and the terms of this
Agreement shall be binding upon the successors and assigns of
each Ramsay Affiliate, as provided in Section 12 below.
(e) Each Ramsay Affiliate has received all consents and approvals
required in order for it to execute and deliver this
Subordination Agreement.
10. The Agent and/or any one or more of the Lenders may, at any time and
from time to time, in its and/or their discretion, (i) renew, extend or
otherwise modify the rate of interest on, the time and/or terms of
payment of, and/or any other of the terms and provisions relative to
the Senior Debt or any of the other provisions of the Senior Loan
Documents, (ii) lend additional monies, extend additional credit and
make other financial accommodations to or for the account of any Loan
Party, (iii) waive or release any collateral or guaranties which may be
SUBORDINATION AGREEMENT - PAGE 7
<PAGE> 8
held as security for all or any part of the Senior Debt, and/or (iv)
renew, extend, modify, amend, supplement and/or restate any and all of
the Senior Loan Documents, including the Loan Agreement, in any manner,
in each case, without necessity of consent from any Ramsay Affiliate
and without impairing or affecting this Subordination Agreement or any
of the rights of Agent and/or any one or more of the Lenders hereunder.
Each Ramsay Affiliate shall provide the Agent with copies of any
modifications or amendments to the Subordinated Agreements promptly
upon the execution thereof.
11. Each Ramsay Affiliate hereby waives any rights it has or may have in
the future to require the Agent or any Lender to marshal any of the
Senior Collateral securing payment of all or any part of the Senior
Debt, and agrees that the Agent and each of the Lenders may, in
addition to all other rights under this Subordination Agreement,
proceed against all or any part of the Senior Collateral securing all
or any portion of the Senior Debt in any order that they or any of them
deem appropriate in the exercise of their respective remedies. Each
Ramsay Affiliate also waives any right to be subrogated to the Senior
Debt unless and until the Senior Debt is paid in full in cash and the
Loan Agreement has been terminated in which event, such Ramsay
Affiliate shall be and hereby is subrogated to the Senior Debt and the
Senior Collateral.
12. Each Ramsay Affiliate agrees that it will advise each future holder of
all or any part of the Subordinated Debt that the Subordinated Debt is
subordinated to the Senior Debt in the manner and to the extent set
forth herein. To that end, each Ramsay Affiliate hereby agrees, jointly
and severally, (and is hereby so authorized by Borrowers) to endorse
upon each instrument, certificates and document evidencing all or any
part of the Subordinated Debt the following legend:
"The payment of any indebtedness or other obligations
evidenced by this instrument or certificate is subordinated to
the payment of the "Senior Debt" defined and described in the
Subordination Agreement dated October 30, 1998, between Paul
Ramsay Holdings Pty. Limited, an Australian corporation,
Ramsay Holdings HSA Limited, a Barbados corporation, Paul
Ramsay Hospitals Pty. Limited, an Australian corporation and
Fleet Capital Corporation, a Rhode Island corporation, as
Agent and its successors and assigns, and reference is made to
such Agreement for a full statement of the terms and
conditions of such subordination."
Each Ramsay Affiliate further agrees, jointly and severally, to
indemnify the Agent and each Lender against any losses, damages, costs
and expenses incurred or suffered by the Agent or any such Lender by
reason of the failure of any Ramsay Affiliate to so notify any future
holder of the Subordinated Debt, or any part thereof. Each Ramsay
Affiliate hereby authorizes the Agent to file this Subordination
Agreement and such other notices of record as the Agent may from time
to time deem appropriate to evidence or give notice of this
Subordination Agreement. This Agreement shall inure to the benefit of
the successors and
SUBORDINATION AGREEMENT - PAGE 8
<PAGE> 9
assigns of Agent and each Lender and shall be binding upon the
successors and assigns of each Ramsay Affiliate and each Loan Party.
13. Each Ramsay Affiliate agrees, jointly and severally, that it will not
at any time directly or indirectly contest the validity, perfection,
priority or enforceability of any lien, security interest, encumbrance
or claim granted to the Agent and/or any one or more of the Lenders in
or on the Senior Collateral, and hereby agrees not to hinder the Agent
or any Lender or take a position adverse to the Agent or any Lender in
the defense of any action contesting the validity, perfection, priority
or enforceability of any such liens, security interests, encumbrances
or claims. Each Ramsay Affiliate further agrees, jointly and severally,
that the provisions of this Subordination Agreement shall remain in
full force and effect notwithstanding a successful challenge to the
validity, perfection, priority or enforceability of all or any of the
Senior Debt or the liens and security interests securing the Senior
Debt.
14. This Subordination Agreement shall be effective and may not be
terminated or otherwise revoked by any Ramsay Affiliate until all
Senior Debt has been paid in full in cash and the Loan Agreement has
been terminated. This is a continuing agreement of subordination and
the Agent and each Lender may continue, at any time and without notice
to any Ramsay Affiliate, to extend credit or other financial
accommodations and loan monies to or for the benefit of any Loan Party
in reliance on this Subordination Agreement.
15. The Agent and/or any one or more of the Lenders, and each of them, at
any time and from time to time, either before or after any such
aforesaid notice of termination or revocation, may enter into such
agreement or agreements with any Loan Party or others as they or it, as
the case may be, may deem proper, extending the time of payment of or
renewing or otherwise altering the terms of all or any of the Senior
Debt or affecting the security underlying, or any guaranty of, any or
all of the Senior Debt, and may exchange, sell, release, surrender or
otherwise deal with any such security, without in any way thereby
impairing or affecting this Subordination Agreement.
16. All of the Senior Debt shall be deemed to have been made or incurred
in reliance upon this Subordination Agreement. Each Ramsay Affiliate
expressly waives all notice of the acceptance by any Lender of the
subordination and other provisions of this Subordination Agreement and
all other notices not specifically required pursuant to the terms of
this Subordination Agreement or applicable law whatsoever, and each
Ramsay Affiliate expressly waives reliance by the Agent and the Lenders
upon the subordination and other agreements as herein provided. Each
Ramsay Affiliate agrees, jointly and severally, that neither the Agent
nor any Lender has made any warranties or representations with respect
to the due execution, legality, validity, completeness or
enforceability of the Senior Loan Documents, or the collectibility of
the Senior Debt, that the Agent and the Lenders shall each be entitled
to manage and supervise its loans to any Loan Party in accordance with
applicable law and its usual practices, modified from time to time as
it deems appropriate under the circumstances, without regard to the
existence of any rights that any Ramsay Affiliate may
SUBORDINATION AGREEMENT - PAGE 9
<PAGE> 10
now or hereafter have in or to any of the assets of any Loan Party, and
that neither the Agent nor any Lender shall have any liability to any
Ramsay Affiliate for, and each Ramsay Affiliate waives any claim which
such Ramsay Affiliate may now or hereafter have against the Agent
and/or any one or more of the Lenders arising out of, (i) any and all
actions which the Agent and/or any one or more of the Lenders takes or
omits to take (including, without limitation, actions with respect to
the creation, perfection or continuation of liens or security interests
in all or any portion of the Senior Collateral and other security for
the Senior Debt, actions with respect to the occurrence of any default
or event of default under the Loan Agreement, actions with respect to
the foreclosure upon, sale, release, or depreciation of, or failure to
realize upon, any of the Senior Collateral and actions with respect to
the collection of any claim for all or any part of the Senior Debt from
any account debtor, guarantor or any other party) with respect to the
Senior Loan Documents or any other agreement related thereto or to the
collection of the Senior Debt or the valuation, use, protection or
release of any of the Senior Collateral and/or other security for the
Senior Debt, (ii) any election by the Agent and/or any one or more of
the Lenders in any proceeding instituted under Title 11 of the United
States Code (11 U.S.C. Section 101 et seq.) (the "Bankruptcy Code") of
the application of Section 1111(b)(2) of the Bankruptcy Code, and/or
(iii) any borrowing or grant of a security interest under Section 364
of the Bankruptcy Code to any Loan Party, as debtor in possession.
17. Each Ramsay Affiliate hereby assumes responsibility for keeping itself
informed of the financial condition of each Borrower and each other
Loan Party, any and all endorsers and any and all guarantors of the
Senior Debt and Subordinated Debt and of all other circumstances
bearing upon the risk of nonpayment of the Senior Debt and/or
Subordinated Debt that diligent inquiry would reveal, and each Ramsay
Affiliate hereby agrees that the Lender shall not have any duty to
advise any Ramsay Affiliate of information known to it regarding such
condition or any such circumstances. In the event Agent or any Lender,
in its sole discretion, undertakes, at any time or from time to time,
to provide any such information to any Ramsay Affiliate, neither the
Agent nor any Lender shall be under any obligation (i) to provide any
such information to any Ramsay Affiliate on any subsequent occasion or
(ii) to undertake any investigation and shall be under no obligation to
disclose any information which the Agent or any Lender wishes to
maintain confidential. Each Ramsay Affiliate hereby agrees that all
payments received by the Agent and/or any one or more of the Lenders
may be applied, reversed, and reapplied, in whole or in part, to any of
the Senior Debt, as the Agent, in its sole discretion, deems
appropriate, and each Ramsay Affiliate assents to any extension or
postponement of the time of payment of all or any portion of the Senior
Debt or to any other indulgence with respect thereto, to any
substitution, exchange or release of Senior Collateral which may at any
time secure the Senior Debt and to the addition or release of any other
party or Person primarily or secondarily liable therefor.
18. (A) THIS SUBORDINATION AGREEMENT SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
SUBORDINATION AGREEMENT - PAGE 10
<PAGE> 11
THE INTERNAL LAWS OF THE STATE OF TEXAS WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES.
(B) EACH RAMSAY AFFILIATE HEREBY CONSENTS TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED
WITHIN THE COUNTY OF DALLAS, STATE OF TEXAS AND
IRREVOCABLY AGREES THAT, SUBJECT TO LENDER'S ELECTION,
ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO
THIS SUBORDINATION AGREEMENT SHALL BE LITIGATED IN SUCH
COURTS. EACH RAMSAY AFFILIATE ACCEPTS, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS SUBORDINATION
AGREEMENT. EACH RAMSAY AFFILIATE HEREBY AGREES THAT SERVICE
UPON SUCH RAMSAY AFFILIATE BY REGISTERED OR CERTIFIED MAIL
SHALL CONSTITUTE SUFFICIENT NOTICE. NOTHING HEREIN SHALL
AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE LENDER TO
BRING PROCEEDINGS AGAINST ANY LOAN PARTY IN THE COURTS OF ANY
OTHER JURISDICTION.
(C) EACH RAMSAY AFFILIATE AND AGENT EACH HEREBY WAIVE THEIR
RESPECTIVE RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS SUBORDINATION
AGREEMENT. EACH RAMSAY AFFILIATE, AGENT AND EACH
LENDER ALSO WAIVE ANY BOND OR SURETY OR SECURITY UPON
SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED
OF THE AGENT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE
ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE
FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER
OF THE SUBORDINATION AGREEMENT, INCLUDING, WITHOUT
LIMITATION CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.
EACH RAMSAY AFFILIATE AND THE AGENT EACH ACKNOWLEDGE
THAT EACH OF THESE WAIVERS IS A MATERIAL INDUCEMENT TO
ENTER INTO THIS SUBORDINATION AGREEMENT, THAT EACH HAS
ALREADY RELIED ON THESE WAIVERS IN ENTERING INTO THIS
SUBORDINATION AGREEMENT, AND THAT EACH WILL CONTINUE
TO RELY ON THESE WAIVERS IN THEIR RELATED FUTURE
DEALINGS. EACH RAMSAY AFFILIATE AND THE AGENT FURTHER
SUBORDINATION AGREEMENT - PAGE 11
<PAGE> 12
WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS
WAIVER WITH THEIR OR ITS LEGAL COUNSEL AND THAT EACH
KNOWINGLY AND VOLUNTARILY WAIVES THEIR OR ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS OF OR TO THIS
SUBORDINATION AGREEMENT. IN THE EVENT OF LITIGATION, THIS
SUBORDINATION AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.
(d) This Subordination Agreement contains the entire agreement
among the Ramsay Affiliates, the Agent and the Lenders with
respect to this subject, and may only be modified by a writing
signed by both the Ramsay Affiliates and the Agent.
(e) No failure by the Agent and/or any Lender to exercise any
right hereunder shall be construed as a waiver of the right to
exercise the same or any other right at any other time and
from time to time thereafter, and such rights shall be
cumulative and not exclusive.
(f) The knowledge by Agent and/or any Lender of any breach or
other non-observance by any Ramsay Affiliate of the terms of
this Subordination Agreement shall not constitute a waiver
thereof or of any obligations to be performed by any Ramsay
Affiliate.
(g) Wherever possible, each provision of this Subordination
Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision
of this Subordination Agreement shall be prohibited by or
invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the
remaining provisions of this Subordination Agreement.
(h) Each Ramsay Affiliate acknowledges that Agent and each Lender
will rely upon this instrument in connection with the
extension of financial accommodations to each Loan Party
pursuant to the Senior Loan Documents, and that any additional
financial accommodations the Agent or any Lender may hereafter
extend to any Loan Party will be in reliance on this
instrument. Each Ramsay Affiliate agrees, jointly and
severally, that this Subordination Agreement (i) shall
continue in full force and effect until payment in full in
cash of the Senior Debt and the termination of the Loan
Agreement, and (ii) shall be binding upon each Ramsay
Affiliate and its successors and assigns, including, without
limitation, any future holder of all or any part of the
Subordinated Debt and shall inure to the benefit of Agent and
each Lender, and its
SUBORDINATION AGREEMENT - PAGE 12
<PAGE> 13
successors and assigns, including, without limitation, any
future holder of all or any part of the Senior Debt, it being
expressly acknowledged that the Agent and each Lender's rights
under this Subordination Agreement may be assigned in
connection with any assignment or transfer of all or any
portion of Senior Debt and that each holder of any portion of
Senior Debt shall be equally and ratably entitled to the
benefits of this Subordination Agreement. References herein to
any Loan Party shall include any successor to, or assign of
such Loan Party, including without limitation any
debtor-in-possession or trustee for any Loan Party in any
proceeding under the United States Bankruptcy Code.
(i) All notices, requests and demands hereunder shall be made (a)
to the Agent at the following office of the Agent:
Fleet Capital Corporation
2711 North Haskell Avenue
Suite 2100, LB 21
Dallas, Texas 75204
Attention: Loan Administration Manager
Facsimile Number: (214) 828-6530
With a copy to:
Gardere & Wynne, L.L.P.
1601 Elm Street
3000 Thanksgiving Tower
Dallas, Texas 75201
Attention: Gary B. Clark
Facsimile Number: (214) 999-4667
and (b) to the Ramsay Affiliates at their office as follows:
SUBORDINATION AGREEMENT - PAGE 13
<PAGE> 14
Paul Ramsay Holdings Pty. Limited
Ramsay Holdings HSA Limited
Paul Ramsay Hospitals Pty. Limited
154 Pacific Highway, 9th Floor
St. Leonards NSW 2065
Australia
Attention: Secretary
Facsimile Number: 011-612-94-333-460
With a copy to:
Haythe & Curley
237 Park Avenue
New York, NY 10017
Attention: Thomas M. Haythe
Facsimile Number: (212) 682-0200
or in the case of either party to such other address and/or
facsimile number as such party may designate by written notice
to the other party in accordance with this provision, and (b)
deemed to have been given or made: if by hand, immediately
upon delivery; if by telex, telegram or telecopy (facsimile),
immediately upon receipt; if by overnight delivery service,
one (1) day after dispatch; and if by first class or certified
mail three (3) days after mailing postage paid.
(j) Except as provided in Section 18(h) as to successors and
assigns of Agent and/or any Lender, this Subordination
Agreement is not intended to and shall not create rights in
favor of any third party (including without limitation, any
Loan Party).
(k) This Subordination Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original
hereof and submissible in evidence and all of which together
shall be deemed to be a single instrument.
19. (a) PAYMENT-IN-KIND. Notwithstanding the foregoing, to the extent
the cash payment of any regularly scheduled interest with
respect to the Subordinated Notes or the cash payment of any
dividend with respect to the Preferred Stock is prohibited by
the terms of this Agreement such interest may be deferred by
Ramsay and paid in kind by adding such deferred interest to
the principal amount of the Subordinated Notes, or such
dividends may accrue with respect to the Preferred Stock, as
the case may be.
(b) ISSUANCE OF COMMON STOCK. Notwithstanding the foregoing but
subject to Section 10.1.11 of the Loan Agreement, Ramsay may,
at any time and from time to time, issue shares of its common
stock, $.01 par value per share ("Common Stock") upon the
conversion or exchange of the Preferred Stock and issue shares
of Common Stock in payment of principal and interest with
respect to the Subordinated Notes.
SUBORDINATION AGREEMENT - PAGE 14
<PAGE> 15
(c) PERMITTED PAYMENTS AND PAYMENT BLOCKAGE. Notwithstanding the
foregoing, until the Agent shall have given the Ramsay
Affiliates written notice that a "Default" and/or an "Event of
Default" as those terms are defined in the Loan Agreement, has
occurred (a "Default Notice"), beginning November 1, 1999,
Ramsay may pay and the Ramsay Affiliates may receive and
retain (1) the regularly scheduled quarterly payments of
interest due under the Subordinated Notes as and when the same
become due and payable in accordance with the terms and
provisions thereof and (2) the regularly scheduled dividends
on (but not any redemption of) the Preferred Stock; provided
that, with respect to this clause (c) of Section 19, EBITDA
(as defined in the Loan Agreement) of Ramsay, on a
consolidated basis and calculated in the manner specified in
the Loan Agreement, for the twelve month period ending on the
last day of the calendar month immediately preceding such
interest and/or dividend payment date for which Agent and
Lenders have received the financial statements required by
clause (ii) of Section 8.1.3 of the Loan Agreement, is greater
than $7,800,000. Except as otherwise permitted by clauses (a)
and (b) of this SECTION 19, no payment, whether in cash,
securities or other property, shall be made by or on behalf of
any Loan Party on account of the principal of, premium, if
any, or interest on the Subordinated Debt or to defease,
redeem or acquire any of the Subordinated Debt or on account
of any fees and expenses relating to the Subordinated Debt or
on account of any other amount or obligation arising under or
by virtue of the Subordinated Debt during the period beginning
on the date that Agent delivers to any Ramsay Affiliate a
Default Notice and ending on the earliest of (A) the date that
all Senior Debt is paid in full in cash and the Loan Agreement
has been terminated, and (B) the date on which the "Default"
and/or "Event of Default", as defined in the Loan Agreement,
giving rise to such Default Notice is waived in writing by the
Lenders in accordance with the Loan Documents or cured to the
satisfaction of Agent, and Required Lenders, in their sole and
absolute discretion.
SUBORDINATION AGREEMENT - PAGE 15
<PAGE> 16
IN WITNESS WHEREOF, the Ramsay Affiliates have executed this Subordination
Agreement as of the date first above written.
Paul Ramsay Holdings Pty. Limited
By:
------------------------------------
Name:
Title:
Ramsay Holdings HSA Limited
By:
------------------------------------
Name:
Title:
Paul Ramsay Hospitals Pty. Limited
By:
------------------------------------
Name:
Title:
SUBORDINATION AGREEMENT - SIGNATURE PAGE
<PAGE> 17
ACCEPTED AND AGREED TO AS OF THE DATE FIRST ABOVE WRITTEN:
Fleet Capital Corporation, as Agent
By:
------------------------------------
Name: Rosemary Davis
Title: Vice President
SUBORDINATION AGREEMENT - SIGNATURE PAGE
<PAGE> 18
CONSENT
Each Loan Party acknowledges receipt of a copy of the foregoing
Subordination Agreement, consents to all of the terms and conditions thereof,
and agrees that it will not pay any Subordinated Debt, except as provided
therein. In the event of any breach of the provisions of this Subordination
Agreement, each Loan Party agrees that, in addition to any other rights and
remedies which Agent and/or any Lender may have under any of the Loan Documents,
the Agent may by written notice to the Loan Parties declare all of the Senior
Debt to be, and the same shall thereupon become, immediately due and payable
unless Requisite Lenders shall otherwise elect. Each Loan Party agrees to mark
its records to reflect the subordination of the Subordinated Debt.
Bethany Psychiatric Hospital, Inc.
Bountiful Psychiatric Hospital, Inc.
East Carolina Psychiatric Services Corporation
Great Plains Hospital, Inc.
Gulf Coast Treatment Center, Inc.
Havenwyck Hospital, Inc.
H.C. Corporation
HSA Hill Crest Corporation
HSA of Oklahoma, Inc.
Michigan Psychiatric Services, Inc.
Ramsay Educational Services, Inc.
Ramsay Health Care, Inc.
Ramsay Louisiana, Inc.
Ramsay Managed Care, Inc.
Ramsay Youth Services, Inc.
Ramsay Youth Services of Alabama, Inc.
Ramsay Youth Services of Florida, Inc.
Ramsay Youth Services of South Carolina, Inc.
RHCI San Antonio, Inc.
Transitional Care Ventures, Inc.
Transitional Care Ventures (Texas), Inc.
By:
---------------------------------------
Name: Jorge Rico
Title: Vice President
SUBORDINATION AGREEMENT - SIGNATURE PAGE
<PAGE> 19
H.C. Partnership
By: H.C. Corporation, its General Partner
By: HSA Hill Crest Corporation, its
General Partner
By:
-----------------------------------
Name: Jorge Rico
Its: Vice President
SUBORDINATION AGREEMENT - SIGNATURE PAGE
<PAGE> 20
EXHIBIT A
SUBORDINATED AGREEMENTS
SUBORDINATED NOTES
1. Junior Subordinated Loan and Exchange Agreement dated as of October 30,
1998, by and between Paul Ramsay Holdings Pty. Limited, an Australian
corporation, as purchaser, and Ramsay Health Care, Inc., a Delaware
corporation, as seller.
2. Junior Subordinated Promissory Note due September 30, 2006, executed by
Ramsay Health Care, Inc., a Delaware corporation, as maker, bearing
interest at an initial fixed rate of thirteen and one-half percent
(13 1/2%) per annum, and payable to the order of Paul Ramsay Holdings
Pty. Limited, an Australian corporation, in the original principal
amount of $5,330,428.00.
3. Junior Subordinated Promissory Note due September 30, 2005, executed by
Ramsay Health Care, Inc., a Delaware corporation, as maker, bearing
interest at a fixed rate of thirteen percent (13%) per annum, and
payable to the order of Paul Ramsay Holdings Pty. Limited, an
Australian corporation, in the original principal amount of
$2,553,125.00.
PREFERRED STOCK
4. Certificate of Incorporation of Ramsay Health Care, Inc., a Delaware
corporation, as amended.
5. Certificate of Designation of Preferred Stock of Ramsay Health Care,
Inc., a Delaware corporation, filed in the office of the Secretary of
State of The State of Delaware on September 13, 1997 with respect to
the Class B Preferred Stock, Series 1997-A and all Stock Certificates
evidencing such shares.
6. Certificate of Designation of Preferred Stock of Ramsay Health Care,
Inc., a Delaware corporation, filed in the office of the Secretary of
State of the State of Delaware on June 29, 1993 with respect to the
Class B Preferred Stock, Series C and all Stock Certificates evidencing
such shares.
7. Certificate of Designation of Preferred Stock of Ramsay Health Care,
Inc., a Delaware corporation, filed in the office of the Secretary of
State of the State of Delaware on March 13, 1997 with respect to the
Class B Preferred Stock, Series 1996 and all Stock Certificates
evidencing such shares.
<PAGE> 1
EXHIBIT 10.129
JUNIOR SUBORDINATED LOAN AND EXCHANGE AGREEMENT
JUNIOR SUBORDINATED LOAN AND EXCHANGE AGREEMENT dated as of
October 30, 1998 by and between Paul Ramsay Holdings Pty. Limited, an Australian
corporation (the "Purchaser"), and Ramsay Health Care, Inc., a Delaware
corporation (the "Seller" or "RHCI").
W I T N E S S E T H:
WHEREAS, the Seller has issued to the Purchaser its Junior
Subordinated Promissory Note due September 30, 2006 (the "Original A Note") in
the aggregate principal amount of $5,000,000 plus Capitalized Interest (as
defined in the Original A Note);
WHEREAS, the Seller has issued to the Purchaser its Increasing
Rate Senior Subordinated Bridge Note due September 30, 2005 Series B (the
"Original B Note") in the aggregate principal amount of $2,500,000;
WHEREAS, the Seller desires to exchange the Original A Note
for its Junior Subordinated Promissory Note due September 30, 2006, (the "A
Note") in the aggregate principal amount of $5,330,428;
WHEREAS, the Seller desires to exchange the Original B Note
for its Junior Subordinated Promissory Note due September 30, 2005, (the "B
Note") in the aggregate principal amount of $2,553,125;
WHEREAS, the Purchaser desires to exchange the Original A Note
for the A Note; and
WHEREAS, the Purchaser desires to exchange the Original B Note
for the B Note;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements hereinafter set forth, the parties hereto hereby
agree as follows:
SECTION I.
EXCHANGE OF THE NOTES
1.1 EXCHANGE OF THE NOTES. Subject to the terms and conditions
of this Agreement and on the basis of the representations, warranties, covenants
and agreements herein contained, the Seller does hereby issue and convey to the
Purchaser on the Closing Date, and the Purchaser hereby acquires and accepts
from the Seller on the Closing Date, the A Note and the B Note (collectively,
the "New Notes," and the amount evidenced thereby, the "Loan").
<PAGE> 2
2
1.2 NEW NOTES. (a) The Seller's obligation to pay the
principal of, and interest on, the Loans made by the Purchaser shall be
evidenced by the notes, substantially in the form of Exhibits A and B hereto.
(b) Each New Note issued to the Purchaser shall (i) be
executed by the Seller, (ii) be payable to the order of the Purchaser and be
dated the date hereof, (iii) be in a stated principal amount equal to $5,330,428
plus Capitalized Interest in the case of the A Note and $2,553,125 plus
Capitalized Interest in the case of the B Note, (iv) mature on September 30,
2006 (the "A Maturity Date") in the case of the A Note and September 30, 2005
(the "B Maturity Date") in the case of the B Note and (v) bear interest as
provided in Section 2 of each New Note from the Closing Date until the principal
plus any interest due thereunder shall have been paid in full, and (vi) be
entitled to the benefits of this Agreement.
(c) The Purchaser shall deliver to the Seller the Original A
Note marked cancelled in exchange for the A Note.
(d) The Purchaser shall deliver to the Seller the Original B
Note marked cancelled in exchange for the B Note.
(e) The Seller's obligation hereunder and under the New Notes
shall be evidenced by this Agreement and the New Notes. The records of the
Purchaser shall be PRIMA FACIE evidence of the Loans, the interest accrued
thereon and all payments made with respect thereto, absent manifest error.
1.3 TERMINATION OF NOTE PURCHASE AGREEMENTS. Upon the
execution hereof, the Purchaser and the Seller agree that each of (i) the Junior
Subordinated Note Purchase Agreement, dated as of March 25, 1998 by and between
the Purchaser and the Seller, and (ii) the Amended and Restated Subordinated
Note Purchase Agreement, dated as of September 30, 1998 by and between the
Purchaser and the Seller are hereby terminated and of no further force and
effect.
1.4 VOLUNTARY AND MANDATORY PREPAYMENTS. (a) Subject to
Section 4 hereof, the Seller shall have the right to prepay Loans in whole or in
part, without premium or penalty, at any time and from time to time.
(b) The entire outstanding principal amount of the New Notes,
together with accrued and unpaid interest thereon, shall be prepaid in full by
the Seller prior to the A Maturity Date and B Maturity Date on the date upon
which (x) all commitments by the Lenders (as defined in the Subordination
Agreement) to make any additional loans or advances, or to issue any letters of
credit, to the Seller or any of its subsidiaries under the Senior Loan Documents
(as defined in the Subordination Agreement) are terminated and (y) the Senior
Debt (as defined in the Subordination Agreement) is repaid in full in cash.
1.5 METHOD AND PLACE OF PAYMENT. Except as otherwise
specifically provided herein, all payments under this Agreement shall be made to
the Purchaser as directed by the Purchaser, in writing, to the Seller not later
than 1:00 P.M. (New York
<PAGE> 3
3
time) on the date when due and shall be made in immediately available funds and
in lawful money of the United States of America by bank wire transfer to an
account designated by the Purchaser. Any payments under this Agreement which are
made later than 1:00 P.M. (New York time) shall be deemed to have been made on
the next succeeding Business Day. Whenever any payment to be made hereunder
shall be stated to be due on a day which is not a Business Day, the due date
thereof shall be extended to the next succeeding Business Day and, with respect
to payments of principal, interest shall be payable during such extension at the
applicable rate in effect immediately prior to such extension.
SECTION II.
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Purchaser, as
of the date hereof and as of the date of each Loan, that:
2.1 ORGANIZATION; GOOD STANDING. The Seller is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has full corporate power and authority to own
its properties and to conduct the businesses in which it is now engaged.
2.2 AUTHORITY. The Seller has full corporate power and
authority to execute and deliver this Agreement and to perform all of its
obligations hereunder, and no consent or approval of any other person or
governmental authority is required therefor. The execution and delivery of this
Agreement by the Seller, the performance by it of its covenants and agreements
hereunder and the consummation by the Seller of the transactions contemplated
hereby have been duly authorized by all necessary corporate action. This
Agreement constitutes a valid and legally binding obligation of the Seller,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency or other similar laws of
general application relating to or affecting the enforcement of creditors'
rights or by general principles of equity.
2.3 NO LEGAL BAR; CONFLICTS. Neither the execution and
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, violates any provision of the Certificate of Incorporation
or By-Laws of the Seller or any law, statute, ordinance, regulation, order,
judgment or decree of any court or governmental agency, or conflicts with or
results in any breach of any of the terms of or constitutes a default under or
results in the termination of or the creation of any lien pursuant to the terms
of any contract or agreement to which the Seller is a party or by which the
Seller or any of its assets is bound.
2.4 AUTHORIZATION OF THE NEW NOTES. The New Notes have been
duly and validly authorized, on the terms and subject to the conditions set
forth herein and each New Note.
<PAGE> 4
4
SECTION III.
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER
The Purchaser hereby represents and warrants to the Seller, as
of the date hereof, that:
3.1 AUTHORITY. It has full corporate power and authority to
execute and deliver this Agreement and to perform all of its obligations
hereunder, and no consent or approval of any other person or governmental
authority is required therefor. The execution and delivery of this Agreement by
it, the performance by it of its covenants and agreements hereunder and the
consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary corporate action. This Agreement constitutes a valid
and legally binding obligation of it, enforceable against it in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency or other similar laws of general application relating to or affecting
the enforcement of creditors' rights or by general principles of equity.
3.2 NO LEGAL BAR; CONFLICTS. Neither the execution and
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, violates any law, statute, ordinance, regulation, order,
judgment or decree of any court or governmental agency, or conflicts with or
results in any breach of any of the terms of or constitutes a default under or
results in the termination of or the creation of any lien pursuant to the terms
of any contract or agreement to which it is a party or by which it or any of its
assets is bound.
3.3 INVESTMENT IN THE SELLER.
(i) It understands that the Seller proposes to
issue and deliver to the Purchaser the New Notes pursuant to this Agreement
without compliance with the registration requirements of the Securities Act of
1933, as amended (the "Securities Act"); that for such purpose the Seller will
rely upon its representations and warranties contained herein; and that such
non-compliance with registration is not permissible unless such representations
and warranties are correct.
(ii) It understands that, under existing rules of
the Securities and Exchange Commission (the "SEC"), the Purchaser may be unable
to sell the New Notes except to the extent that the New Notes may be sold (i)
pursuant to an effective registration statement covering such sale pursuant to
the Securities Act and applicable state securities laws or an applicable
exemption therefrom or (ii) in a bona fide private placement to a purchaser who
shall be subject to the same restrictions on any resale or (iii) subject to the
restrictions contained in Rule 144 under the Securities Act ("Rule 144").
(iii) It is not relying on the Seller respecting
the financial, tax and other economic considerations of an investment in the New
Notes, and it has relied on the advice of, or has consulted with, only its own
advisors.
<PAGE> 5
5
(iv) It is familiar with the provisions of Rule
144 and the limitations upon the availability and applicability of such rule.
(v) It is a sophisticated investor familiar with
the type of risks inherent in the acquisition of restricted securities such as
the New Notes and its financial position is such that it can afford to retain
the New Notes for an indefinite period of time without realizing any direct or
indirect cash return on its investment.
(vi) It has such knowledge and experience in
financial, tax and business matters so as to enable it to utilize the
information made available to it in connection with the issuance of the New
Notes to the Purchaser and to evaluate the merits and risks of an investment in
the New Notes and to make an informed investment decision with respect thereto.
(vii) The Purchaser is accepting the New Notes as
an investment for its sole account, and without any present view towards the
resale or other distribution thereof.
SECTION IV.
SUBORDINATION PROVISIONS
4.1 SUBORDINATION. Notwithstanding any other provision of this
Agreement or either of the New Notes to the contrary, the Purchaser covenants
and agrees, and each subsequent holder of either of the New Notes by its
acceptance thereof shall be deemed to have covenanted and agreed, that the
payment of all Subordinated Debt (as defined in the Subordination Agreement)
shall be subordinate and subject in right of payment, to the extent and in the
manner hereinafter set forth in the Subordination Agreement dated as of October
30, 1998 by and among the Purchaser, the Seller, Ramsay Holdings USA Limited, a
Barbados corporation, Paul S. Ramsay Hospitals Pty. Limited, an Australia
corporation and Fleet Capital Corporation, as Agent and its successors and
assigns and reference is made to such Agreement for a full statement of the
terms and conditions of such subordination (the "Subordination Agreement").
4.2 SECTION NOT TO PREVENT EVENTS OF DEFAULT. The failure to
make a payment on account of principal of or interest on or other amounts
constituting Subordinated Debt by reason of any provision of this SECTION 4
shall not be construed as preventing the occurrence of an Event of Default
hereunder or a default or event of default under or in respect of the New Notes
or any other document or instrument evidencing any of the Subordinated Debt.
<PAGE> 6
6
SECTION V.
MISCELLANEOUS
5.1 NOTICES. All notices, requests or instructions hereunder
shall be in writing and delivered personally, by telecopy or sent by registered
or certified mail, postage prepaid, as follows:
(1) if to the Purchaser:
154 Pacific Highway, 9th Floor
St. Leonards NSW 2065
Australia
Attention: Secretary
Telecopy: 011-612-94-333-460
(2) if to the Seller:
Columbus Center
One Alhambra Plaza,
Suite 750
Coral Gables, Florida 33134
Attention: President
Telecopy No.: (305) 569-4647
Any of the above addresses may be changed at any time by notice given as
provided above; provided, however, that any such notice of change of address
shall be effective only upon receipt. All notices, requests or instructions
given in accordance herewith shall be deemed received on the date of delivery,
if hand delivered or delivered by telecopy, and five days after the date of
mailing, if mailed.
5.2 TAXES. The Purchaser is not a United States person (as
such term is defined in Section 7701(a)(30) of the Internal Revenue Code of
1986, as amended) for U.S. Federal income tax purposes and agrees to deliver to
the Seller on or prior to the Closing Date two accurate and complete original
signed copies of (i) Internal Revenue Service Form W-8 (or successor form)
certifying that the Purchaser is not a United States person, and (ii) Internal
Revenue Service Form 1001 (or any successor form) certifying that the Purchaser
is entitled to benefits under an income tax treaty to which the United States is
a party which reduces the rate of withholding tax on payments of interest, and
(iii) any other form or certificate required by any taxing authority certifying
that the Purchaser is entitled to an exemption from or reduced rate of tax on
payments pursuant to this Agreement. In addition, the Purchaser agrees that from
time to time after the Closing Date, when a lapse in time or change in
circumstances renders the previous certification obsolete or inaccurate in any
material respect, it will deliver to the Seller two new accurate and complete
original signed copies of Internal Revenue Service Form W-8, Internal Revenue
Service Form 1001 (or any successor form), or such other forms as may be
required in order to confirm or establish the entitlement of the Purchaser to a
<PAGE> 7
7
continued exemption from or reduction in United States withholding tax with
respect to payments under this Agreement and the New Notes, or it shall
immediately notify the Seller of its inability to deliver any such Form in which
case the Purchaser shall not be required to deliver any such Form.
5.3 SURVIVAL OF REPRESENTATIONS. Each representation,
warranty, covenant and agreement of the parties hereto herein contained shall
survive the execution of this Agreement, notwithstanding any investigation at
any time made by or on behalf of any party hereto.
5.4 ENTIRE AGREEMENT. This Agreement and the documents
referred to herein contain the entire agreement between the parties hereto with
respect to the transactions contemplated hereby. No modification hereof shall be
effective unless in writing and signed by the party against which it is sought
to be enforced.
5.5 ASSIGNMENT. This Agreement shall not be assignable by the
parties hereto except pursuant to a writing executed by each of the parties
hereto; provided that the Purchaser may assign all (but not less than all) of
its rights hereunder to any affiliate of the Purchaser which agrees to be bound
by all of the obligations of the Purchaser hereunder or to any lender in
connection with any financing transaction entered into by the Purchaser or any
of its affiliates.
5.6 INVALIDITY, ETC. If any provision of this Agreement, or
the application of any such provision to any person or circumstance, shall be
held invalid by a court of competent jurisdiction, the remainder of this
Agreement, or the application of such provision to persons or circumstances
other than those as to which it is held invalid, shall not be affected thereby.
5.7 EXPENSES. The Seller shall pay and be responsible for all
expenses of each of the parties hereto in connection with the negotiation,
execution and delivery of this Agreement and the Note and the transactions
contemplated hereby and thereby and the enforcement of the Purchaser's rights
hereunder and thereunder.
5.8 HEADINGS. The headings of this Agreement are for
convenience of reference only and are not part of the substance of this
Agreement.
5.9 BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
5.10 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable in the
case of agreements made and to be performed entirely within such State.
5.11 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
5.12 THIRD PARTY BENEFICIARY. This Agreement shall not create
any rights in favor of any person not a party hereto.
* * *
<PAGE> 8
8
IN WITNESS WHEREOF, this Agreement has been duly executed by
the parties hereto as of the date first above written.
PAUL RAMSAY HOLDINGS PTY. LIMITED
By:
--------------------------------
Name:
Title:
RAMSAY HEALTH CARE, INC.
By:
--------------------------------
Name:
Title:
<PAGE> 9
9
EXHIBIT A
THE PAYMENT OF ANY INDEBTEDNESS OR OTHER OBLIGATIONS EVIDENCED BY THIS
INSTRUMENT OR CERTIFICATE IS SUBORDINATED TO THE PAYMENT OF THE "SENIOR DEBT"
DEFINED AND DESCRIBED IN THE SUBORDINATION AGREEMENT DATED OCTOBER 30, 1998,
AMONG PAUL RAMSAY HOLDINGS PTY. LIMITED, AN AUSTRALIAN CORPORATION, RAMSAY
HOLDINGS HSA LIMITED, A BARBADOS CORPORATION, PAUL RAMSAY HOSPITALS PTY.
LIMITED, AN AUSTRALIA CORPORATION AND FLEET CAPITAL CORPORATION, A RHODE ISLAND
CORPORATION, AS AGENT AND ITS SUCCESSORS AND ASSIGNS (THE "SUBORDINATION
AGREEMENT"), AND REFERENCE IS MADE TO SUCH AGREEMENT FOR A FULL STATEMENT OF THE
TERMS AND CONDITIONS OF SUCH SUBORDINATION.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT").
THIS NOTE MAY NOT BE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT OR AN OPINION OF COUNSEL TO THE MAKER OR THE PAYEE OF
THIS NOTE THAT SUCH REGISTRATION IS NOT REQUIRED.
RAMSAY HEALTH CARE, INC.
Junior Subordinated Promissory Note Due September 30, 2006
$5,330,428 plus Capitalized Interest October 30, 1998
FOR VALUE RECEIVED, RAMSAY HEALTH CARE, INC., a Delaware
corporation ("RHCI" or the "Maker"), hereby promises to pay to the order of PAUL
RAMSAY HOLDINGS PTY. LIMITED, an Australian corporation (as the payee hereof and
together with its successors and all other holder or holders hereof, the
"Payee"), at the offices of the Payee (or at such other place as may be
designated by the Payee), a principal amount of the sum of (i) FIVE MILLION
THREE HUNDRED THIRTY THOUSAND FOUR HUNDRED TWENTY-EIGHT DOLLARS ($5,330,428) in
lawful money of the United States of America and (ii) all Capitalized Interest
(as defined below). Any principal amount repaid hereunder may not be reborrowed.
This Junior Subordinated Promissory Note (this "Note") is the
A Note referred to in the Junior Subordinated Loan and Exchange Agreement (the
"Note Exchange Agreement"), and is entitled to all of the benefits thereof.
<PAGE> 10
10
1. MATURITY. The entire unpaid principal amount of this Note,
together with any outstanding accrued and unpaid interest thereon, shall be due
and payable on September 30, 2006 (the "Maturity Date").
2. INTEREST. The Maker hereby promises to pay interest on the
unpaid principal amount hereof in lawful money of the United States of America
at the offices of the Payee (or at such other place as may be designated by the
Payee), from the date hereof until paid, at a rate equal to the Interest Rate
(as defined below). Such interest shall be capitalized and added to the unpaid
principal balance of this Note (such interest being herein referred to as
"Capitalized Interest"), and the amount of Capitalized Interest attributable to
such unpaid interest shall be due on the Maturity Date, but shall otherwise bear
interest at the foregoing rate per annum until paid and be payable quarterly in
arrears on the tenth Business Day of each March, June, September and December;
PROVIDED, HOWEVER, that from and after the date on which the conditions set
forth in Section 19(c) of the Subordination Agreement are satisfied, and subject
to the provisions thereof, such interest shall not be capitalized and added to
the unpaid principal balance of this Note, but rather shall be payable in cash
in arrears on the tenth Business Day of each March, June, September and
December, PROVIDED FURTHER that if the foregoing conditions are not met, such
interest shall be capitalized and added to the unpaid principal balance as
Capitalized Interest as aforesaid. For purposes hereof, "Interest Rate" shall
mean thirteen and one half percent (13 1/2%) per annum; PROVIDED, HOWEVER, that
if the B Note shall have been paid in full, "Interest Rate" shall mean twelve
and one-half percent (12 1/2%) per annum.
The Maker hereby also promises to pay on demand interest on
any amounts of overdue principal and (to the extent permitted by law) on any
amounts of overdue interest (exclusive of Capitalized Interest) from the due
date thereof until the obligations of the Maker with respect to the payment
thereof shall be discharged, at a rate of fifteen and one-half percent (15 1/2%)
per annum.
3. EVENTS OF DEFAULT. The Payee shall have the right, without
demand or notice, to accelerate this Note and to declare the entire unpaid
balance hereof and the obligations evidenced hereby immediately due and payable
and to seek and obtain payment of this Note if any of the following events (each
an "Event of Default") shall occur: (a) RHCI or any of its wholly-owned
subsidiaries shall commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or shall consent
to any such relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against it, or
shall make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any corporate or
partnership action to authorize any of the foregoing; (b) an involuntary case or
other proceeding shall be commenced against RHCI or any of its wholly-owned
subsidiaries seeking liquidation, reorganization or other relief with respect to
it or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other
<PAGE> 11
11
similar official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed for a
period of 90 days; or an order for relief shall be entered against RHCI or any
of its wholly-owned subsidiaries under the federal bankruptcy laws as now or
hereafter in effect; (c) the Maker shall fail to pay any amount owing hereunder
when due and such failure shall continue for a period of five (5) business days
after receipt of written notice thereof from the Payee, (d) any representation,
warranty or statement made by any party herein or in the Note Purchase Agreement
or in any statement or certificate delivered or required to be delivered
pursuant hereto or thereto shall prove to be untrue in any material respect on
the date as of which it was made or deemed made or (e) the acceleration of the
maturity of the Senior Debt (as defined in the Subordination Agreement);
PROVIDED, HOWEVER, that upon the occurrence of any Event of Default described in
clauses (a) or (b) above, the entire unpaid balance hereof and the obligations
evidenced hereby shall automatically become due and payable without any
declaration or other action being made or taken by the Payee.
4. MISCELLANEOUS. This Note shall be governed by and construed
in accordance with the laws of the State of New York, without regard to any
conflict of laws principles which would apply the laws of any other
jurisdiction, and shall be binding upon the successors of the Maker and inure to
the benefit of the Payee, its successors, endorsees and assigns. If any term or
provision of this Note shall be held invalid, illegal or unenforceable, the
validity of all other terms and provisions hereof shall in no way be affected
thereby. No delay or failure by the Payee in exercising any right, power or
remedy hereunder shall affect or operate as a waiver thereof, nor shall any
single or partial exercise thereof or any abandonment or discontinuance of steps
to enforce such a right, power or remedy preclude any further exercise thereof
or of any other right, power or remedy. The rights and remedies hereunder of the
Payee are cumulative and not exclusive of any rights or remedies which it would
otherwise have. Any waiver, permit, consent or approval of any kind or character
on the part of the Payee of any breach or default under this Note or any such
waiver of any provision or condition of this Note must be in writing and shall
be effective only to the extent in such writing specifically set forth. The
Maker agrees to pay to the Payee all expenses, including, without limitation,
reasonable fees and disbursements of counsel, incurred by the Payee in the
administration, enforcement and collection of this Note. Whenever any payment or
action to be made or taken under this Note shall be stated to be due on a day
which is not a business day, such payment or action shall be made or taken on
the next following business day, and such extension of time shall be included in
computing interest or fees, if any, in connection with such payment or action.
5. NOTICES. All communications provided for hereunder shall be
in writing and shall be delivered or sent by telex or facsimile to the
respective parties at the addresses and numbers set forth below:
If to the Maker:
Columbus Center
One Alhambra Plaza,
<PAGE> 12
12
Suite 750
Coral Gables, Florida 33134
Attention: President
Telecopy No.: (305) 569-4647
If to the Payee:
154 Pacific Highway, 9th Floor
St. Leonards NSW 2065
Australia
Attention: Secretary
Telecopy: 011-612-94-333-460
* * *
IN WITNESS WHEREOF, the Maker has caused this instrument to be
duly executed and delivered as of the date first above written.
RAMSAY HEALTH CARE, INC.
By:
--------------------------------
Name:
Title:
<PAGE> 13
13
EXHIBIT B
THE PAYMENT OF ANY INDEBTEDNESS OR OTHER OBLIGATIONS EVIDENCED BY THIS
INSTRUMENT OR CERTIFICATE IS SUBORDINATED TO THE PAYMENT OF THE "SENIOR DEBT"
DEFINED AND DESCRIBED IN THE SUBORDINATION AGREEMENT DATED OCTOBER 30, 1998,
AMONG PAUL RAMSAY HOLDINGS PTY. LIMITED, AN AUSTRALIAN CORPORATION, RAMSAY
HOLDINGS HSA LIMITED, A BARBADOS CORPORATION, PAUL RAMSAY HOSPITALS PTY.
LIMITED, AN AUSTRALIA CORPORATION AND FLEET CAPITAL CORPORATION, A RHODE ISLAND
CORPORATION, AS AGENT AND ITS SUCCESSORS AND ASSIGNS (THE "SUBORDINATION
AGREEMENT"), AND REFERENCE IS MADE TO SUCH AGREEMENT FOR A FULL STATEMENT OF THE
TERMS AND CONDITIONS OF SUCH SUBORDINATION.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT").
THIS NOTE MAY NOT BE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT OR AN OPINION OF COUNSEL TO THE MAKER OR THE PAYEE OF
THIS NOTE THAT SUCH REGISTRATION IS NOT REQUIRED.
RAMSAY HEALTH CARE, INC.
Junior Subordinated Promissory Note Due September 30, 2005
$2,553,125 plus Capitalized Interest October 30, 1998
FOR VALUE RECEIVED, RAMSAY HEALTH CARE, INC., a Delaware
corporation ("RHCI" or the "Maker"), hereby promises to pay to the order of PAUL
RAMSAY HOLDINGS PTY. LIMITED, an Australian corporation (as the payee hereof and
together with its successors and all other holder or holders hereof, the
"Payee"), at the offices of the Payee (or at such other place as may be
designated by the Payee), a principal amount of the sum of (i) TWO MILLION FIVE
HUNDRED FIFTY-THREE THOUSAND ONE HUNDRED TWENTY-FIVE DOLLARS ($2,553,125) in
lawful money of the United States of America and (ii) all Capitalized Interest
(as defined below). Any principal amount repaid hereunder may not be reborrowed.
This Junior Subordinated Promissory Note (this "Note") is the
B Note referred to in the Junior Subordinated Loan and Exchange Agreement (the
"Note Exchange Agreement"), and is entitled to all of the benefits thereof.
1. MATURITY. The entire unpaid principal amount of this Note,
together with any outstanding accrued and unpaid interest thereon, shall be due
and payable on September 30, 2005 (the "Maturity Date").
<PAGE> 14
14
2. INTEREST. The Maker hereby promises to pay interest on the
unpaid principal amount hereof in lawful money of the United States of America
at the offices of the Payee (or at such other place as may be designated by the
Payee), from the date hereof until paid, at a rate equal to the Interest Rate
(as defined below). Such interest shall be capitalized and added to the unpaid
principal balance of this Note (such interest being herein referred to as
"Capitalized Interest"), and the amount of Capitalized Interest attributable to
such unpaid interest shall be due on the Maturity Date, but shall otherwise bear
interest at the foregoing rate per annum until paid and be payable quarterly in
arrears on tenth Business Day of each March, June, September and December;
PROVIDED, HOWEVER, that from and after the date on which the conditions set
forth in Section 19(c) of the Subordination Agreement are satisfied, and subject
to the provisions thereof, such interest shall not be capitalized and added to
the unpaid principal balance of this Note, but rather shall be payable in cash
in arrears on the tenth Business Day of each March, June, September and
December, PROVIDED FURTHER that if the foregoing conditions are not met, such
interest shall be capitalized and added to the unpaid principal balance as
Capitalized Interest as aforesaid. For purposes hereof, "Interest Rate" shall
mean thirteen percent (13%) per annum.
The Maker hereby also promises to pay on demand interest on
any amounts of overdue principal and (to the extent permitted by law) on any
amounts of overdue interest (exclusive of Capitalized Interest) from the due
date thereof until the obligations of the Maker with respect to the payment
thereof shall be discharged, at a rate of fifteen percent (15%) per annum.
3. EVENTS OF DEFAULT. The Payee shall have the right, without
demand or notice, to accelerate this Note and to declare the entire unpaid
balance hereof and the obligations evidenced hereby immediately due and payable
and to seek and obtain payment of this Note if any of the following events (each
an "Event of Default") shall occur: (a) RHCI or any of its wholly-owned
subsidiaries shall commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or shall consent
to any such relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against it, or
shall make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any corporate or
partnership action to authorize any of the foregoing; (b) an involuntary case or
other proceeding shall be commenced against RHCI or any of its wholly-owned
subsidiaries seeking liquidation, reorganization or other relief with respect to
it or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 90 days; or an order for relief shall
be entered against RHCI or any of its wholly-owned subsidiaries under the
federal bankruptcy laws as now or hereafter in effect; (c) the Maker shall fail
to pay any amount owing hereunder when due and such failure shall continue for a
period of five (5) business days after receipt of written notice thereof from
the Payee, (d) any
<PAGE> 15
15
representation, warranty or statement made by any party herein or in the Note
Purchase Agreement or in any statement or certificate delivered or required to
be delivered pursuant hereto or thereto shall prove to be untrue in any material
respect on the date as of which it was made or deemed made or (e) the
acceleration of the maturity of the Senior Debt (as defined in the Subordination
Agreement); PROVIDED, HOWEVER, that upon the occurrence of any Event of Default
described in clauses (a) or (b) above, the entire unpaid balance hereof and the
obligations evidenced hereby shall automatically become due and payable without
any declaration or other action being made or taken by the Payee.
4. MISCELLANEOUS. This Note shall be governed by and construed
in accordance with the laws of the State of New York, without regard to any
conflict of laws principles which would apply the laws of any other
jurisdiction, and shall be binding upon the successors of the Maker and inure to
the benefit of the Payee, its successors, endorsees and assigns. If any term or
provision of this Note shall be held invalid, illegal or unenforceable, the
validity of all other terms and provisions hereof shall in no way be affected
thereby. No delay or failure by the Payee in exercising any right, power or
remedy hereunder shall affect or operate as a waiver thereof, nor shall any
single or partial exercise thereof or any abandonment or discontinuance of steps
to enforce such a right, power or remedy preclude any further exercise thereof
or of any other right, power or remedy. The rights and remedies hereunder of the
Payee are cumulative and not exclusive of any rights or remedies which it would
otherwise have. Any waiver, permit, consent or approval of any kind or character
on the part of the Payee of any breach or default under this Note or any such
waiver of any provision or condition of this Note must be in writing and shall
be effective only to the extent in such writing specifically set forth. The
Maker agrees to pay to the Payee all expenses, including, without limitation,
reasonable fees and disbursements of counsel, incurred by the Payee in the
administration, enforcement and collection of this Note. Whenever any payment or
action to be made or taken under this Note shall be stated to be due on a day
which is not a business day, such payment or action shall be made or taken on
the next following business day, and such extension of time shall be included in
computing interest or fees, if any, in connection with such payment or action.
5. NOTICES. All communications provided for hereunder shall be
in writing and shall be delivered or sent by telex or facsimile to the
respective parties at the addresses and numbers set forth below:
If to the Maker:
Columbus Center
One Alhambra Plaza,
Suite 750
Coral Gables, Florida 33134
Attention: President
Telecopy No.: (305) 569-4647
<PAGE> 16
16
If to the Payee:
154 Pacific Highway, 9th Floor
St. Leonards NSW 2065
Australia
Attention: Secretary
Telecopy: 011-612-94-333-460
* * *
IN WITNESS WHEREOF, the Maker has caused this instrument to be
duly executed and delivered as of the date first above written.
RAMSAY HEALTH CARE, INC.
By:
--------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 10.130
AMENDED AND RESTATED EXCHANGE AGREEMENT
Amended and Restated Exchange Agreement (the "Agreement")
dated as of October 26, 1998, by and between Ramsay Health Care, Inc., a
Delaware corporation ("RHCI"), and Paul Ramsay Holdings Pty. Limited , an
Australian corporation ("Holdings" or "Investor").
R E C I T A L S:
WHEREAS, the Board of Directors of RHCI has authorized the
exchange of 4,000 shares of outstanding Class B Preferred Stock, Series 1997-A,
$1.00 par value (the "Series 1997-A Preferred Stock"), held by Holdings (the
"Holding Series 1997-A Preferred Stock") for an aggregate number of shares of
common stock, $.01 par value ("Common Stock"), of RHCI equal to (a) the sum of
(i) $4,000,000 plus (ii) the aggregate amount of accrued but unpaid dividends
due on the Holdings Series 1997-A Preferred Stock as of the Closing Date (as
hereinafter defined) divided by (b) an amount equal to the closing bid price per
share of Common Stock on the Nasdaq Stock Market on the date hereof, that is $1
1/8 per share (the "Per Share Purchase Price"); and
WHEREAS, the Board of Directors of RHCI has authorized the
exchange of $1,000,000 of the principal amount of the Junior Subordinated Bridge
Note due September 30, 2005 (the "Note") in the original principal amount of
$2,553,125 made by RHCI in favor of Holdings for an aggregate number of shares
of Common Stock equal to (a) $1,000,000 divided by (b) the Per Share Purchase
Price.
NOW, THEREFORE, in consideration of the foregoing, and the
mutual covenants and agreements contained herein, and for other good and
valuable consideration the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION I
ISSUANCE OF STOCK
A. Subject to the terms and conditions hereof, at the First
Closing (as hereinafter defined), (a) RHCI shall issue and deliver to Holdings
the aggregate number of shares of Common Stock (the "First Shares") equal to (i)
$600,000 divided by (ii) the Per Share Purchase Price, and (b) the principal
amount of the Note shall be reduced to $1,953,125.
B. Subject to the terms and conditions hereof, at the Second
Closing (as hereinafter defined), Holdings shall surrender and deliver the
Holdings Series 1997-A Preferred Stock to RHCI for cancellation, together with
stock powers duly executed in blank, and RHCI shall issue and deliver to
Holdings the aggregate number of shares of Common Stock (the "Preferred Exchange
Shares") equal to (a) the sum of (i) $4,000,000
<PAGE> 2
2
plus (ii) the aggregate amount of accrued but unpaid dividends due on the
Holdings Series 1997-A Preferred Stock as of the Second Closing Date divided by
(b) the Per Share Purchase Price, all as set forth on Schedule I hereto, which
Schedule I shall be completed and attached hereto on the Second Closing Date.
C. Subject to the terms and conditions hereof, at the Second
Closing, (a) RHCI shall issue and deliver Holdings the aggregate number of
shares of Common Stock (the "Note Exchange Shares"; and together with the
Preferred Exchange Shares, "Second Shares") equal to (i) $400,000 plus all
accrued and unpaid interest thereon divided by (ii) Per Share Purchase Price and
(b) the principal amount of the Note shall be reduced to $1,553,125.
SECTION II
REPRESENTATIONS AND WARRANTIES OF RHCI
RHCI hereby represents and warrants to the Investor, as of the
date hereof, that:
A. ORGANIZATION; GOOD STANDING. RHCI is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has full corporate power and authority to own
its properties and to conduct the businesses in which it is now engaged.
B. AUTHORITY. RHCI has the corporate power and authority to
issue and deliver the Shares in accordance with the terms hereof. RHCI has taken
all necessary corporate action to duly authorize the execution and delivery of
this Agreement, the performance by it of its covenants and agreements hereunder
and the consummation by it of the transactions contemplated hereby, and this
Agreement constitutes a valid and legally binding obligation of RHCI enforceable
in accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency or other similar laws of general application relating to
or affecting the enforcement of creditors' rights or by general principles of
equity. Upon issuance and delivery of the Shares pursuant to the terms and
conditions hereof, the Shares will be validly issued, fully paid and
nonassessable shares of Common Stock.
C. NO LEGAL BAR; CONFLICTS. Neither the execution and delivery
of this Agreement by RHCI, nor the consummation by RHCI of the transactions
contemplated hereby, violates any provision of the Certificate of Incorporation
or By-Laws of RHCI or, subject to the expiration or termination of all
applicable waiting periods under the HSR Act (as hereinafter defined), any law,
statute, ordinance, regulation, order, judgment or decree of any court or
governmental agency binding on RHCI, or, subject to obtaining all necessary
lender consents, if any, conflicts with or results in any breach of any of the
terms of or constitutes a default under or results in the termination of or the
creation of any lien pursuant to the terms of any contract or agreement to which
RHCI is a party or by which RHCI or any of its assets is bound.
<PAGE> 3
3
D. CAPITALIZATION. After giving effect to the Closing and the
issuance of the Shares pursuant to this Agreement, as of the Closing Date the
authorized capital stock of the Company consists of 31,800,000 shares, of which
(a) 30,000,000 shares consist of Common Stock, 10,877,982 of which are issued
and outstanding as of the date hereof and 14,785,618 of which shall be issued
and outstanding as of the First Closing Date after giving effect to the First
Closing and the private placement of $3.5 million of shares of Common Stock
(assuming a $1.375 per share Per Share Purchase Price); (b) 800,000 shares
consist of Class A Preferred Stock, par value $1.00 per share, none of which are
issued and outstanding as of the date hereof or as of the First and the Second
Closing Date after giving effect to the Closings; and (c) 1,000,000 shares
consist of Class B Preferred Stock, par value $1.00 per share ("Class B
Preferred Stock"), 152,231 shares of which have been authorized and designated
as "Series C," 142,486 of which are issued and outstanding as of the date hereof
and as of the Closing Dates after giving effect to the First and the Second
Closings: 100,000 shares of which have been authorized and designated as "Series
1996," all of which are issued and outstanding as of the date hereof and as of
the First and the Second Closing Dates after giving effect to the Closings:
100,000 shares of which have been authorized and designated as "Series 1997,"
none of which are issued and outstanding as of the date hereof and as of the
First and the Second Closing Date after giving effect to the Closings; and 4,000
shares of which have been authorized and designated as "Series 1997-A," all of
which are issued and outstanding as of the date hereof and none of which shall
be issued and outstanding as of the Second Closing Date after giving effect to
the Second Closing. Except as set forth on Schedule II hereto (i) no Options or
Convertible Securities (each as defined below) are authorized or outstanding,
and (ii) there is no commitment of RHCI to issue any such Options or Convertible
Securities. For purposes hereof, the term "Convertible Securities" shall mean
any evidence of indebtedness, shares or other securities convertible into or
exchangeable for shares of Common Stock, and the term "Options" shall mean
rights, options or warrants to subscribe for, purchase or otherwise acquire
shares of Common Stock or Convertible Securities.
SECTION III
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
The Investor hereby represents and warrants to RHCI, as of the
date hereof, that:
A. AUTHORITY. Such Investor has the corporate power and
authority to execute and deliver this Agreement and to perform all of its
obligations hereunder, and no consent or approval of any other person or
governmental authority is required therefor. The execution and delivery of this
Agreement by such Investor, the performance by it of its covenants and
agreements hereunder and the consummation by it of the transactions contemplated
hereby have been duly authorized by all necessary corporate action. This
Agreement constitutes a valid and legally binding obligation of such Investor,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency or other similar laws of
general application relating to or affecting the enforcement of creditors'
rights or by general principles of equity.
<PAGE> 4
4
B. NO LEGAL BAR; CONFLICTS. Neither the execution and delivery
of this Agreement, nor the consummation by such Investor of the transactions
contemplated hereby, violates any provision of its Articles of Incorporation or
By-Laws or, subject to the expiration or termination of all applicable waiting
periods under the HSR Act, if any, law, statute, ordinance, regulation, order,
judgment or decree of any court or governmental agency binding on it, or,
subject to obtaining all necessary lender consents, if any, conflicts with or
results in any breach of any of the terms of or constitutes a default under or
results in the termination of or the creation of any lien pursuant to the terms
of any contract or agreement to which such Investor is a party or by which it or
any of its assets is bound.
C. INVESTMENT IN RHCI.
(i) the Investor understands that RHCI proposes to
issue and deliver to it the shares of Common Stock pursuant to this Agreement
without compliance with the registration requirements of the Securities Act of
1933, as amended (the "Securities Act"); that for such purpose RHCI will rely
upon the representations and warranties of the Investor contained herein; and
that such non-compliance with registration is not permissible unless such
representations and warranties are correct.
(ii) The Investor understands that, under existing
rules of the Securities and Exchange Commission (the "SEC"), it may be unable to
sell the shares of Common Stock except to the extent they may be sold (i)
pursuant to an effective registration statement covering the such shares
pursuant to the Securities Act and applicable state securities laws or an
applicable exemption therefrom or (ii) in a bona fide private placement to a
purchaser who shall be subject to the same restrictions on any resale or (iii)
subject to the restrictions contained in Rule 144 under the Securities Act
("Rule 144").
(iii) The Investor is familiar with the provisions of
Rule 144 and the limitations upon the availability and applicability of such
rule.
(iv) The Investor is a sophisticated investor
familiar with the type of risks inherent in the acquisition of restricted
securities such as the Common Stock and its financial position is such that it
can afford to retain such securities for an indefinite period of time without
realizing any direct or indirect cash return on its investment.
(v) The Investor has such knowledge and experience in
financial, tax and business matters so as to enable it to utilize the
information made available to it in connection with the issuance of the Common
Stock to it and to evaluate the merits and risks of an investment in the Common
Stock and to make an informed investment decision with respect thereto.
(vi) The Investor is acquiring the Common Stock as an
investment for its sole account, and without any present view towards the sale
or other distribution thereof.
<PAGE> 5
5
(vii) The Investor is an "accredited investor" as
that term is defined in Rule 501 of Regulation D promulgated under the
Securities Act.
SECTION IV
CONDITIONS TO CLOSING; EFFECTIVE DATE
1.A. CONDITIONS TO OBLIGATIONS OF RHCI TO FIRST CLOSING. The
obligations of RHCI to consummate the closing of the transactions contemplated
by Section I(A) hereof shall be subject to the satisfaction of each and every
one of the following conditions, on or before the First Closing Date (as
hereinafter defined), all or any of which may be waived, in whole or in part, by
RHCI:
(i) REPRESENTATIONS AND WARRANTIES. All
representations and warranties of the Investor contained in this Agreement shall
be true and correct in all material respects at and as of the First Closing Date
as though such representations and warranties were made at and as of such time.
(ii) THIRD PARTY CONSENTS. All necessary lender
consents, if any, shall have been obtained by RHCI and the Investor. (iii)
DELIVERIES. The Investor shall have made or stand willing and able to make all
the deliveries to RHCI set forth in Section V(1)(B) hereof.
(iv) NO ACTION OR OTHER PROCEEDING PENDING. No
action, proceeding, investigation, regulation or legislation shall have been
instituted, threatened or proposed before any court, governmental agency or
legislative body to enjoin, restrain, prohibit or obtain substantial damages in
respect of, or which is related to, or arises out of, this Agreement or the
consummation of the transaction contemplated hereby.
B. CONDITIONS TO OBLIGATIONS OF THE INVESTOR TO FIRST CLOSING.
The obligations of the Investor to consummate the closing of the transactions
contemplated by this Agreement shall be subject to the satisfaction, on or
before the First Closing Date, of each and every one of the following
conditions, all or any of which may be waived, in whole or in part, by the
Investor:
(i) REPRESENTATIONS AND WARRANTIES. All
representations and warranties of RHCI contained in this Agreement shall be true
and correct in all material respects at and as of the First Closing Date as
though such representations and warranties were made at and as of such time.
(ii) THIRD PARTY CONSENTS. All necessary lender
consents, if any, shall have been obtained by RHCI and the Investor.
(iii) DELIVERIES. RHCI shall have made or stand
willing and able to make all the deliveries to the Investor set forth in Section
V(1)(C) hereof.
<PAGE> 6
6
(iv) NO ACTION OR OTHER PROCEEDING PENDING. No
action, proceeding, investigation, regulation or legislation shall have been
instituted, threatened or proposed before any court, governmental agency or
legislative body to enjoin, restrain, prohibit or obtain substantial damages in
respect of, or which is related to, or arises out of, this Agreement or the
consummation of the transaction contemplated hereby.
2.A. CONDITIONS TO OBLIGATIONS OF RHCI TO SECOND CLOSING. The
obligations of RHCI to consummate the closing of the transactions contemplated
by Sections I(B) and I(C) hereof shall be subject to the satisfaction of each
and every one of the following conditions, on or before the Second Closing Date,
all or any of which may be waived, in whole or in part, by RHCI:
(i) REPRESENTATIONS AND WARRANTIES. All
representations and warranties of the Investor contained in this Agreement shall
be true and correct in all material respects at and as of the Second Closing
Date as though such representations and warranties were made at and as of such
time.
(ii) HSR ACT APPROVAL. The waiting periods applicable
to this Agreement and the transactions contemplated hereby, under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"), if any,
shall have expired or been terminated.
(iii) THIRD PARTY CONSENTS. All necessary lender
consents, if any, shall have been obtained by RHCI and the Investor.
(iv) DELIVERIES. The Investor shall have made or
stand willing and able to make all the deliveries to RHCI set forth in Section
V(2)(B) hereof.
(v) NO ACTION OR OTHER PROCEEDING PENDING. No action,
proceeding, investigation, regulation or legislation shall have been instituted,
threatened or proposed before any court, governmental agency or legislative body
to enjoin, restrain, prohibit or obtain substantial damages in respect of, or
which is related to, or arises out of, this Agreement or the consummation of the
transaction contemplated hereby.
B. CONDITIONS TO OBLIGATIONS OF THE INVESTOR TO SECOND
CLOSING. The obligations of the Investor to consummate the closing of the
transactions contemplated by this Agreement shall be subject to the
satisfaction, on or before the Second Closing Date, of each and every one of the
following conditions, all or any of which may be waived, in whole or in part, by
the Investor:
(i) REPRESENTATIONS AND WARRANTIES. All
representations and warranties of RHCI contained in this Agreement shall be true
and correct in all material respects at and as of the Second Closing Date as
though such representations and warranties were made at and as of such time.
(ii) HSR ACT APPROVAL. The waiting periods applicable
to this Agreement and the transactions contemplated hereby under the HSR Act, if
any, shall have expired or been terminated.
<PAGE> 7
7
(iii) THIRD PARTY CONSENTS. All necessary lender
consents, if any, shall have been obtained by RHCI and the Investor.
(iv) DELIVERIES. RHCI shall have made or stand
willing and able to make all the deliveries to the Investor set forth in Section
V(2)(C) hereof.
(v) NO ACTION OR OTHER PROCEEDING PENDING. No action,
proceeding, investigation, regulation or legislation shall have been instituted,
threatened or proposed before any court, governmental agency or legislative body
to enjoin, restrain, prohibit or obtain substantial damages in respect of, or
which is related to, or arises out of, this Agreement or the consummation of the
transaction contemplated hereby.
SECTION V
CLOSING AND CLOSING DELIVERIES
1.A. FIRST CLOSING. The closing of the transactions
contemplated by Section I(A) hereof (the "First Closing") shall occur on October
30, 1998 (the "First Closing Date"), and shall be held at the offices of the
Corporation set forth in Section VI below, commencing at 10:00 a.m. local time,
or at such other time and place as RHCI and the Investor may mutually agree.
B. DELIVERIES BY THE INVESTOR. Subject to the terms and
conditions hereof, on the First Closing Date:
(i) Holdings shall deliver to RHCI:
(a) such certificates or documents as
may be reasonably requested by
RHCI.
C. DELIVERIES BY RHCI. Subject to the terms and conditions
hereof, on the First Closing Date, RHCI shall deliver:
(a) the First Shares to Holdings; and
(b) such certificates or documents as may
be reasonably requested by the
Investor
2.A. SECOND CLOSING. The closing of the transactions
contemplated by Sections I(B) and I(C) hereof (the "Second Closing") shall occur
within 5 business days after the satisfaction or waiver of all conditions
precedent set forth in Section IV(2) hereof (the "Second Closing Date"), and
shall be held at the offices of the Corporation set forth in Section VI below,
commencing at 10:00 a.m. local time, or at such other time and place as RHCI and
the Investor may mutually agree.
B. DELIVERIES BY THE INVESTOR. Subject to the terms and
conditions hereof, on the Second Closing Date:
(i) Holdings shall deliver to RHCI:
<PAGE> 8
8
(a) the Holdings Series 1997-A Preferred
Stock, together with stock powers duly
executed in blank, and
(b) such other certificates or documents as
may be reasonably requested by RHCI.
C. DELIVERIES BY RHCI. Subject to the terms and conditions
hereof, on the Second Closing Date, RHCI shall deliver:
(a) the Second Shares to Holdings; and
(b) such other certificates or documents as
may be reasonably requested by the
Investor
SECTION VI
MISCELLANEOUS
A. NOTICES. All notices, requests or instructions hereunder
shall be in writing and delivered personally or sent by registered or certified
mail, postage prepaid, or sent via facsimile transmission as follows:
(1) if to RHCI:
Columbus Center
One Alhambra Plaza, Suite 750
Coral Gables, Florida 33134
Attention: President
Telecopier: (305) 569-4647
Telephone: (305) 569-6993
(2) if to the Investor:
154 Pacific Highway
St. Leonards NSW 2065
Australia
Attention: Paul J. Ramsay
Telecopier: 011-612-94-333-460
Telephone: 011-612-94-333-444
Any of the above addresses may be changed at any time by notice given as
provided above; provided, however, that any such notice of change of address
shall be effective only upon receipt. All notices, requests or instructions
given in accordance herewith shall be deemed received on the date of delivery,
if hand delivered, two days after the date of mailing, if mailed, or on the day
of transmission, if sent via facsimile provided telephonic confirmation of
receipt is obtained promptly after completion of transmission.
<PAGE> 9
9
B. SURVIVAL OF REPRESENTATIONS. Each representation, warranty,
covenant and agreement of the parties hereto herein contained shall survive the
execution of this Agreement, notwithstanding any investigation at any time made
by or on behalf of any party hereto.
C. ENTIRE AGREEMENT. This Agreement and the documents referred
to herein contain the entire agreement between the parties hereto with respect
to the transactions contemplated hereby, and no modification hereof shall be
effective unless in writing and signed by the party against which it is sought
to be enforced.
D. ASSIGNMENT. This Agreement shall not be assignable by RHCI,
or the Investor except pursuant to a writing executed by each of the parties
hereto; provided, however, that each Investor may assign this Agreement to any
corporation or other entity directly or indirectly controlled by Paul J. Ramsay
and provided further that any party hereto may assign this Agreement and its
rights hereunder to any bank or other financial institution as collateral
security in connection with any lending transaction.
E. INVALIDITY, ETC. If any provision of this Agreement, or the
application of any such provision to any person or circumstance, shall be held
invalid by a court of competent jurisdiction, the remainder of this Agreement,
or the application of such provision to persons or circumstances other than
those as to which it is held invalid, shall not be affected thereby.
F. EXPENSES. Each of the parties hereto shall bear such
party's own expenses in connection with this Agreement and the transactions
contemplated hereby, except that RHCI shall pay all filing fees in connection
with any required filings under the HSR Act.
G. HEADINGS; GENDER. The headings of this Agreement are for
convenience of reference only and are not part of the substance of this
Agreement. In this Agreement references to a particular gender shall include the
other genders as the context requires.
H. BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
I. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable in the
case of agreements made and to be performed entirely within such State.
J. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
* * *
<PAGE> 10
10
IN WITNESS WHEREOF, this Agreement has been duly executed by
the parties hereto as of the date first above written.
RAMSAY HEALTH CARE, INC.
By:
---------------------------------------
Name: Luis E. Lamela
Title: Chief Executive Officer
PAUL RAMSAY HOLDINGS PTY. LIMITED
By:
---------------------------------------
Name: Peter J. Evans
Title: Director
<PAGE> 1
EXHIBIT 11
RAMSAY HEALTH CARE, INC.
The following table sets forth the computation of basic and diluted earnings per
share:
<TABLE>
<CAPTION>
QUARTER ENDED SEPTEMBER 30,
------------ ------------
1998 1997
------------ ------------
<S> <C> <C>
Numerator:
Net income before extraordinary item, as reported ................ $ 707,000 $ 398,000
Dividends, Class B convertible preferred stock, Series C .......... (91,000) (91,000)
Dividends, Class B convertible preferred stock, Series 1996 ....... (38,000) (38,000)
Dividends, Class B convertible preferred stock, Series 1997 ....... (69,000) (1,000)
Dividends, Class B convertible preferred stock, Series 1997-A ..... (90,000) (1,000)
------------ ------------
Numerator for basic earnings per share - income attributable
to common stockholders, before extraordinary item ............. 419,000 267,000
Effect of dilutive securities:
Class B convertible preferred stock, Series 1996 ................ 38,000 1,000
------------ ------------
38,000 1,000
------------ ------------
Numerator for diluted earnings per share - income
attributable to common shareholders after assumed
conversions ................................................... $ 457,000 $ 268,000
============ ============
Denominator:
Denominator for basic earnings per share - weighted-average
shares .......................................................... 10,875,916 10,575,563
Effect of dilutive securities:
Employee stock options and warrants ............................. -- 1,591,633
Convertible preferred stock ..................................... 1,000,000 394,945
------------ ------------
Dilutive potential common shares .................................. 1,000,000 1,986,578
------------ ------------
Denominator for diluted earnings per share - adjusted
weighted-average shares and assumed conversions ................. 11,875,916 12,562,141
============ ============
Basic earnings per share, before extraordinary item .................. $ .04 $ .03
Extraordinary item ................................................... (.08) (.34)
------------ ------------
Basic earnings (loss) per share ...................................... $ (.04) $ (.31)
============ ============
Diluted earnings (loss) per share before extraordinary item .......... $ .04 $ .02
Extraordinary item ................................................... (.07) (.28)
------------ ------------
Diluted earnings (loss) per share .................................... $ (.03) $ (.26)
============ ============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 6,008,000
<SECURITIES> 0
<RECEIVABLES> 14,129,000
<ALLOWANCES> 2,602,000
<INVENTORY> 0
<CURRENT-ASSETS> 27,272,000
<PP&E> 45,613,000
<DEPRECIATION> 16,590,000
<TOTAL-ASSETS> 61,196,000
<CURRENT-LIABILITIES> 28,106,000
<BONDS> 15,098,000
4,361,000
3,655,000
<COMMON> 115,000
<OTHER-SE> (3,115,000)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 31,120,000
<CGS> 0
<TOTAL-COSTS> 27,394,000
<OTHER-EXPENSES> 703,000
<LOSS-PROVISION> 1,101,000
<INTEREST-EXPENSE> 1,215,000
<INCOME-PRETAX> 707,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 707,000
<DISCONTINUED> 0
<EXTRAORDINARY> (888,000)
<CHANGES> 0
<NET-INCOME> (181,000)
<EPS-PRIMARY> (0.04)
<EPS-DILUTED> (0.03)
</TABLE>
<PAGE> 1
EXHIBIT 99.1
RAMSAY HEALTH CARE, INC.
NEWS RELEASE
- --------------------------------------------------------------------------------
FOR IMMEDIATE RELEASE
- ---------------------
RAMSAY HEALTH CARE, INC. CLOSES $22 MILLION FINANCING
CORAL GABLES, FLORIDA NOVEMBER 2, 1998 . . . Ramsay Health Care, Inc.
(NASDAQ:RHCI), announced today that it had closed a $22 million financing with
Fleet Capital. $8.0 million of the financing has been used to refinance all
existing bank indebtedness. The additional financing will provide the Company
with a $8.0 million revolving credit line and a $6.0 million acquisition line.
Commenting on the completion of the financing, Luis E. Lamela, Chief Executive
Officer of Ramsay Health Care, Inc. stated, "We are very pleased to have
established a banking relationship with a financial institution of the caliber
of Fleet Capital. We look forward to working with them as we continue to grow
the Company in the youth services arena."
Ramsay Health Care, Inc. is a provider and manager of specialized programs and
services for at-risk and troubled youth. The Company through its subsidiary,
Ramsay Youth Services, Inc. operates residential treatment centers, group homes
and other specialized treatment and educational youth programs in 9 states and
Puerto Rico.
Contact: Isa Diaz
Vice President Corporate Relations
(305) 569-4626
<PAGE> 1
EXHIBIT 99.2
RAMSAY HEALTH CARE, INC.
NEWS RELEASE
- --------------------------------------------------------------------------------
FOR IMMEDIATE RELEASE
- ---------------------
RAMSAY HEALTH CARE, INC. ANNOUNCES
PRIVATE PLACEMENT OF COMMON STOCK
AND PARTIAL RECAPITALIZATION
CORAL GABLES, FLORIDA NOVEMBER 2, 1998 . . . Ramsay Health Care, Inc.
(NASDAQ:RHCI) announced today a private placement of $3.5 million of common
stock and a partial recapitalization which will result in the Company increasing
net worth by approximately $8.9 million.
The private placement, which closed on October 30, 1998, consisted of the
purchase by Luis E. Lamela, the Chief Executive Officer of the Corporation, of
$1,000,000 of shares of common stock, the purchase by a corporate affiliate of
Paul J. Ramsay, the Chairman of the Corporation, of $540,000 of shares of common
stock, and the purchase by unaffiliated third parties of an aggregate of
$1,960,000 of shares of common stock, all at a purchase price of $1 1/8 per
share (the closing bid price on October 26, 1998, the date of the subscription
agreements).
The partial recapitalization will consist of the exchange of approximately $4.4
million of outstanding shares of Series 1997-A Preferred Stock including accrued
dividends, and $1 million of subordinated indebtedness held by a corporate
affiliate of Mr. Ramsay, for shares of the Corporation's common stock also
valued at $1 1/8 per share. The partial recapitalization is subject to the
expiration of the waiting period under the Hart-Scott-Rodino Antitrust
Improvement Act and other customary conditions.
The foregoing securities have not been registered under the Securities Act of
1933, as amended and may not be offered or sold in the United States absent
registration or an applicable exemption from registration requirements.
Contact: Isa Diaz
Vice President Corporate Relations
(305) 569-4626
