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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
Mark One /X/ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended June 30, 1996
OR
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ____________to___________
Commission file number 33-89514
RAMSAY MANAGED CARE, INC.
(Name of Small Business Issuer in its charter)
<TABLE>
<S> <C>
Delaware 72-1249464
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Entergy Corporation Building 70113
639 Loyola Avenue, Suite 1725 (Zip Code)
New Orleans, Louisiana
(Address of principal executive offices)
</TABLE>
Insurer's telephone number, including area code (504) 585-0515
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
- --------------------- -----------------------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $0.01 PAR VALUE
(Title of Class)
Check whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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___.
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Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. /X/
State issuer's revenues for its most recent fiscal year. $21,602,000
State the aggregate market value of the voting stock held by non-
affiliates, compute by reference to the price at which the stock was sold, or
the average bid and asked prices of such stock, as of a specified date within 60
days to the date of filing.
Aggregate market value as of September 13, 1996.....$ 3,598,484
State the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $.01 par value, as of September 13, 1996.... 6,397,304
Transitional Small Business Disclosure Format (check one): Yes___ No X
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DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the documents, all or portions of which are incorporated by
reference herein, and the Part of the Form 10-KSB into which the document is
incorporated:
Definitive Proxy Statement to be filed with respect to the Annual Meeting
of Stockholders to be held on November 21, 1996.
Part III.
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Part I
Item I. Description of Business.
General
Ramsay Managed Care, Inc. (hereinafter referred to as the "Company" or
"RMCI") began operations in October 1993 through the acquisition of Florida
Psychiatric Management, Inc. The Company became a publicly held company on April
24, 1995 through the distribution (the "Distribution"), on a pro-rata basis in
the form of a dividend, by Ramsay Health Care, Inc. ("RHCI"), of all of the
shares of common stock, $0.01 par value per share (the "Common Stock"), of the
Company held by RHCI on April 24, 1995 to the holders of record of (i) RHCI's
common stock, $0.01 par value, (ii) RHCI's Class A Convertible Preferred Stock,
par value $1.00 per share and (iii) RHCI's Class B Convertible Preferred Stock,
Series C, par value $1.00 per share, on April 21, 1995.
Prior to the Distribution , RMCI comprised the managed care activities
operated by RHCI consisting of managed behavioral health care services operating
as FPM Behavioral Health, Inc. ("FPM") based in Orlando, Florida and health
maintenance organization ("HMO") services operating as Apex Healthcare, Inc.
("Apex"), based in Birmingham, Alabama.
The Managed Care Industry
Health care costs in the United States have risen from $27 billion in
1960, comprising five percent of gross domestic product, to more than $1
trillion in 1994, comprising more than 14 percent of gross domestic product. In
response to the rapid increases in health care costs, employers, insurers,
government entities and health care providers have sought cost-effective
alternatives to conventional indemnity insurance for the delivery of and payment
for quality health care services. The integration of the delivery of, and
payment for, health care services distinguishes managed care companies from
conventional health insurance plans.
The Company's Behavioral Health Care Services
FPM manages and provides the delivery of mental health care and
substance abuse treatment through networks of Company-employed and independent
mental health care providers on behalf of its "managed care customers,"
primarily self-insured employers, health maintenance organizations (HMO's),
insurance companies and governmental agencies. FPM is an integrated managed
mental health care services company, in that it provides a full range of related
mental health services and treatment programs designed to improve and manage the
treatment delivered by health care professionals employed by FPM and by other
unaffiliated parties. FPM's services and treatment programs range from benefit
design, utilization review, case management, quality assurance and claims
processing services to fully capitated (at risk) mental health care treatment.
At June 30, 1996, FPM provided managed mental health care services in 13 states
to over 775,000 individuals through its regional offices located in Orlando,
Florida, Phoenix, Arizona, Honolulu, Hawaii and Morgantown, West Virginia.
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FPM programs utilize a treatment methodology structured to improve the
quality and cost effectiveness of mental health care by diagnosing patients as
early in the therapeutic process as possible and promptly providing the most
appropriate level of treatment in the least restrictive setting. An integral
component of its treatment methodology is FPM's 24-hour on-site inpatient
certification service which, when utilized in conjunction with the Company's
provider network, reduces unnecessary admissions to inpatient facilities and
often results in the increased utilization of more cost effective outpatient
services.
FPM presently provides managed health care and substance abuse
treatment through a network of approximately 48 Company-employed physicians,
psychologists and clinicians, approximately 2,800 independent physicians,
psychologists and clinicians, 13 Company-operated multidisciplinary mental
health outpatient facilities ("clinics"), and approximately 148 contracted
hospitals and other facilities. The Company's full and part-time staff of
physicians, psychologists, clinicians and ancillary care providers are generally
employed under both salary and hourly wage arrangements. Generally, subsidiaries
of the Company have contracts with independent physicians and other outside
providers who are paid on a discounted fee-for-service basis.
The Company believes that its physician-based provider network has been
able to both achieve cost savings for managed care customers and enhance the
quality of mental health and substance abuse treatment for patients.
FPM also provides an Administrative Services Only Program (the "ASO
Program") through which beneficiaries telephone a toll-free 24-hour telephone
line that is monitored by employed clinicians. The clinicians assess a
beneficiary's particular needs and verify eligibility for benefits coverage. In
the event a beneficiary requires inpatient care, the clinician will authorize
the coverage of the admission and refer the beneficiary to an inpatient
facility. If outpatient services are recommended, the clinician will refer a
beneficiary either to a Company-employed or independent contract provider. FPM's
customers typically are responsible for payment of inpatient facility and
outpatient provider charges under the ASO Program.
The Company's HMO Services
An HMO provides prepaid health care services to its members through
primary care and specialty physicians employed by the HMO at facilities operated
by the HMO, and/or through a network of independent primary care and specialty
physicians and other health care providers who contract with the HMO to furnish
such services. Primary care physicians include internists, family practitioners
and pediatricians. Generally, access to specialty physicians and other health
care providers must be approved by the member's primary care physician. These
other health care providers include, among others, hospitals, nursing homes,
home health agencies, pharmacies, mental health and substance abuse centers,
diagnostic centers, optometrists, outpatient surgery centers, dentists, urgent
care centers, and durable medical equipment suppliers. Because access to these
other health care providers must be approved by the primary care physician, the
HMO product is a restrictive form of managed care.
The Company's HMO services operated through the Company's wholly owned
subsidiary Apex Healthcare, Inc. ("Apex"), which currently has licenses to
operate HMO's in Louisiana, Mississippi and Alabama. During the year ended June
30, 1996, the Company adopted a formal plan for the sale of the operation
comprising its HMO business. The disposition of the Company's HMO operation is
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expected to be completed during fiscal 1997. See "Item 6. Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Item 7. Financial Statements."
Competition
The health care industry in general and managed mental health care
services industry in particular are highly fragmented and extremely competitive.
Contracts for the provision of managed mental health care services are generally
bid and renewed annually. Furthermore, competition in the managed mental health
care services industry has intensified in recent years.
Apex competes directly with independent local and national entities
that offer managed care services, as well as with large insurance companies,
HMO's and other provider groups that have established or acquired managed care
capabilities.
FPM competes with local and National Behavioral Companies, large
insurance companies, HMO's and not-for-profit health plan corporations,
preferred provider organizations and other provider networks as well as third
party administrators, all of which also offer services to manage mental health
care costs.
Many of these operations and entities have substantially greater
financial resources than RMCI and offer a wider range of services than
RMCI.
The competitive position of RMCI also has been, and in all likelihood
will continue to be, affected by the increased initiatives undertaken during the
past several years by federal and state governments and other major purchasers
of health care, including insurance companies and employers, to revise payment
methodologies and monitor health care expenditures in order to contain health
care costs.
Revenue Profile
With respect to each of its managed care programs, RMCI typically
charges each managed care customer a monthly capitation fee for each beneficiary
enrolled in the customer's health benefit program managed by the Company.
Depending upon both the type of program for which a customer contracts
and the benefits covered under such customer's benefit program, the capitation
fee arrangement is designed so that, with respect to both inpatient and
outpatient care, FPM accepts full risk (all services capitated), as is generally
the case, partial risk (selected services capitated) or limited risk (full risk
up to a maximum amount), in each case for costs that exceed the fees
attributable to such program. Certain FPM contracts, such as those for the
provision of the ASO Program may include fee adjustments linked to a comparison
of the level of utilization and/or cost of providing health care services on
behalf of the customer, given the customers historical level of utilization
and/or cost of providing such services prior to its contracting with the FPM.
In setting its fees, RMCI relies upon a number of factors, including:
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. the nature and scope of services to be provided;
. the benefits offered to the managed care customer;
. the prior utilization history and demographic make-up of the
beneficiary population to be served;
. the rates charged by providers and inpatient facilities in the
service area and the mode of the provision of such services; and
. the Company's prior experience with similar programs.
RMCI believes that its management information systems and provider
networks enable it to develop the policies, procedures and internal controls
necessary to assess and manage the risks associated with capitated arrangements.
There can be no assurance, however, that the Company's assumptions as to
utilization rates and costs, whether relating to inpatient facilities, use of
permitted nonaffiliated providers or otherwise, will accurately and adequately
reflect actual utilization rates and costs. If rates and costs exceed those
projected with respect to a particular program, the expenses to RMCI of
providing such program could be increased and could exceed the corresponding
capitation fee, which, in either case, could have a material adverse effect on
the Company's financial condition and results of operation.
HMO services began earning revenue in June 1995, and represented
approximately 6.0% of RMCI revenues for the year ended June 1996. Because of the
Company's decision to dispose of its HMO operation during fiscal 1997, the
revenue and expenses related to HMO operation has been reclassified as a
discontinued operation. In connection with its decision to discontinue its HMO
operation, the Company, in the fourth fiscal quarter, recorded a loss on a
discontinued operation of $4.9 million.
The following table sets forth, for the periods indicated, the
percentage of the Company's total revenues for continuing operations derived
from the FPM's managed mental health care (at risk) programs, ASO Programs, and
clinical services:
<TABLE>
<CAPTION>
Year Ended June 30
Sources 1996 1995 1994
- ------- ---- ---- ----
<S> <C> <C> <C>
Managed care (at risk) 83.0% 84.0% 76.8%
Managed care (ASO) 6.2% 8.3% 17.8%
Net clinical and other 10.8% 7.7% 5.4%
---- ---- ----
100.0% 100.0% 100.0%
===== ===== =====
</TABLE>
Customers
FPM's customers are generally self-insured employers, health
maintenance organizations, insurance companies and government agencies. At June
30, 1996, FPM provided services to over 775,000 individuals who are either
employees, enrollees, members or subsidiaries of its' customers, in 13 states.
Historically, however, a limited number of managed care customers has accounted
for substantially all of FPM's revenues. The following table sets forth, for the
period indicated, the percentage of the Company's total revenues accounted for
by (i) each customer of the Company from which the Company derived more than 10%
of its total revenues or (ii) the three largest customers of the Company in the
year indicated.
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<TABLE>
<CAPTION>
Year Ended June 30
Customer 1996 1995 1994(d)
- -------- ----- ----- --------
<S> <C> <C> <C>
Walt Disney World Co. 17.0% 21.7% 38.0%
The School Board of
Orange County, Florida (a) (a) 13.1%
Health Options, Inc. (b) 11.0% 10.4% 13.0%
AlohaCare, Inc. (c) 11.0% 9.2% ---
The Health Plan of The
Upper Ohio Valley (e) 12.0% (a) ---
</TABLE>
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(a) Percentage of revenue was below 10%.
(b) Contract with Health Options, Inc. commenced August 1, 1993
(c) Contract with AlohaCare, Inc. commenced August 1, 1994.
(d) Inclusive of predecessor corporation, Florida Psychiatric Management,
Inc., for period not owned by the Company.
(e) Contract with The Health Plan of The Upper Ohio Valley, commenced
January 1, 1995.
RMCI's revenues also are directly dependent upon the ability of each of
its customers to pay RMCI on a timely basis. To the extent that any customer
experiences financial difficulty or is otherwise unable to meet its obligations
as they become due, RMCI's financial condition and results of operations could
be materially adversely affected. To date, the Company's customers have
generally paid the Company on a timely basis.
Sales and Marketing
The senior management team of RMCI and the regional executives of each
of its operating subsidiaries are responsible for marketing and sales.
Typically, the Company markets its services to the potential customer's senior
operating and marketing staff, medical director or health care managers.
Marketing of FPM's services is provided at both a regional and national
level. FPM's regional offices employ marketing personnel to interface with
existing and potential customers in the immediate area, and surrounding
networks. FPM's offices in Florida employ a national marketing team which both
coordinates the regional marketing efforts and directs national marketing
strategies.
FPM focuses its marketing and sales efforts primarily on insurance
carriers, nonprofit health care corporations, HMOs, government employee groups
and self-insured employers. FPM has also targeted employee benefit consulting
firms that represent employers and groups of employers in the selection and
purchase of managed mental health care benefit programs.
Management Information Systems
The Company's managed care operations use integrated information
systems developed and/or customized specifically to meet the Company's needs and
to allow for aggregation of data and comparison across markets. These
information systems support marketing, sales, underwriting, contract
administration, billing, financial and other administrative functions, as well
as customer service, appointment scheduling, authorization and referral
management, concurrent review, physician capitation,
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claims administration, provider management. An important element of the
Company's information systems is the decision support database which is used by
marketing and corporate personnel for such items as provider profiling, quality
assessment, member satisfaction measurement, employer reporting, and utilization
review among others.
The Company's information systems are continually being upgraded to
incorporate new products and to take advantage of the latest advances in
technology.
Government Regulation
As a managed health care services company and a health care provider,
RMCI is currently subject to extensive and frequently changing government
regulations. These regulations are primarily concerned with licensure, conduct
of operations, financial solvency, standards of medical care provided, the
dispensing of drugs, the confidentiality of medical records of patients, and the
direct employment of psychiatrists, psychologists, and other licensed
professionals by business corporations. The various types of regulatory activity
affect RMCI's business either by controlling its operations, restricting
licensure of the business entity or by controlling the reimbursement for
services provided. Generally, regulatory agencies have broad discretionary
powers when granting, renewing or revoking licenses or granting approvals. In
addition, the time necessary to obtain licenses varies from state to state. In
certain cases, more than one regulatory agency in each jurisdiction may assert
that it has authority over the activities of the Company. State licensing laws
and other regulations are subject to amendment and to interpretation by
regulatory agencies with broad discretionary powers. Any such licensure and/or
regulation could require RMCI to modify its operations materially in order to
comply with applicable regulatory requirements and may have a material adverse
effect on the Company's business, financial condition or results of operations.
To the extent that RMCI operates or is deemed to operate in one or more
states as a prepaid limited health service organization, insurance company, HMO,
prepaid health plan, or other similar entity, it will be required to comply with
certain statutes and regulations that, among other things, may require it to
maintain minimum levels of deposits, capital, surplus, reserves or net worth,
and also may limit the ability of the Company and its subsidiaries to pay
dividends, make certain investments, and repay certain indebtedness. The
imposition of any such requirements will significantly increase the Company's
costs of doing business. Failure by RMCI to obtain or maintain required licenses
typically also constitutes an event of default under RMCI's contracts with its
customers. The loss of business from one or more of RMCI's major customers as a
result of such an event of default or otherwise could have a material adverse
effect on RMCI's business, financial condition or results of operations.
Several of the states in which FPM conducts its business have enacted
legislation requiring organizations engaged in utilization review to register
and to meet certain operating standards. Utilization review regulations
typically impose requirements with respect to qualifications of personnel,
appeal procedures, confidentiality and other matters relating to utilization
review services. FPM is registered in Arizona, Florida, Louisiana, Missouri,
North Carolina, Oklahoma, South Carolina, and Texas for such services. FPM has
been able to comply with the applicable legislation without significant expense
to date. FPM may be required to comply with similar statutes if other states in
which it conducts its business impose such requirements.
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Many states in which FPM does business have adopted statutes to
regulate third-party health claims administrators, which may include aspects of
the Company's business. These statutes typically impose requirements with
respect to the financial solvency and operation of the administrator. FPM has
obtained a certificate of authority as an administrator in Ohio and Texas. The
Company may be required to comply with similar statutes in other states in which
it conducts business.
Florida enacted a prepaid limited health service organization statute
in 1993. This statute provides for the regulation of limited service prepaid
health plans in a manner similar to the regulation of an HMO. FPM has obtained a
written determination from the staff of the Florida Department of Insurance that
it is not subject to regulation under this statute, but there can be no
assurance that the Florida Department of Insurance will not take a contrary
position in the future. The West Virginia Department of Insurance has issued
administrative rules regulating the financial solvency and operation of entities
that contract with HMOs to provide health services to HMO members on a prepaid
basis using a network of independent providers. FPM's HMO customer in West
Virginia has requested the West Virginia Department of Insurance to grant an
exemption for FPM from the working capital and segregated fund requirements of
these rules. However, there is no assurance this request will be granted and
there can be no assurance that such rules will not have a material adverse
effect upon the Company's business, financial condition or results of
operations.
Several of the states in which FPM operates regulate preferred provider
organizations ("PPO's"). Generally, FPM is exempt from PPO regulations but, as
required by North Carolina law, FPM has obtained a certificate of registration
as a PPO in North Carolina. FPM may be required to comply with similar statutes
in other states.
Certain of the Company's services are subject to the provisions of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). ERISA
governs certain aspects of the relationship between employer-sponsored health
benefit plans and certain providers of services to such plans through a series
of complex statutes and regulations that are subject to periodic interpretation
by the Internal Revenue Service and the United States Department of Labor. In
general, these regulations impose, among other things, an obligation on FPM to
act as a fiduciary with respect to some of the health benefit plans it provides
services to. However, there is little direct authority governing the application
of ERISA to many of the activities and arrangements of managed mental health
care and substance abuse treatment companies such as those operated by FPM.
RMCI is also affected directly by regulations imposed upon health care
providers and indirectly by regulations imposed upon the Company's customers.
Regulations imposed upon health care providers include provisions relating to
the conduct of and ethics in the practice of psychiatry, psychology, social work
and related mental health care professions, and, in certain cases, the common
law duty to warn others of danger or to prevent patient self-injury. In
addition, there are federal and state laws that require providers of mental
health or substance abuse treatment services to maintain the confidentiality of
treatment records and information with respect to such patients. These laws
generally specify the conditions under which patient-specific information may be
disclosed, and may be enforced through the imposition of criminal fines and
other penalties. Regulations imposed upon RMCI's customers include, among other
things, benefits mandated by statute, exclusions from coverage prohibited by
statute, procedures governing the payment and processing of claims, record
keeping and reporting requirements, requirements for and payment rates
applicable to coverage of Medicare and Medicaid beneficiaries,
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provider contracting and enrollee rights, and confidentiality requirements. Any
such direct and indirect regulation could have a material adverse effect on
RMCI's business, financial condition or results of operation.
In certain states, the employment of psychiatrists, psychologists and
certain other mental health care professionals by business corporations, such as
FPM, is a permissible practice. However, other states have legislation or
regulations or have interpreted existing medical practice licensing laws to
restrict business corporations from providing mental health services or from the
direct employment of psychiatrists and, in a few states, psychologists and other
mental health care professionals. For example, various state boards of medical
examiners have regulations which prohibit psychiatrists, and in a few cases,
psychologists, from being employed by business corporations and only permit
employment by professional corporations. These statutes vary from state to
state, are often vague and have seldom been recently interpreted by the courts
or regulatory agencies. Although FPM exercises care in an effort to structure
its arrangements with health care providers to comply with the relevant state
statutes, and although management believes that the Company is in compliance
with these laws, there can be no assurance that (i) governmental officials
charged with responsibility for enforcing these laws will not assert that the
Company or certain transactions in which it is involved are in violation of such
laws, (ii) such state laws will ultimately be interpreted by the courts in a
manner inconsistent with the practices of the Company or (iii) evolving
interpretations of such state laws or the adoption of other state laws or
regulations will not make it necessary for the Company to restructure certain of
its arrangements.
Federal and some state laws impose restrictions on physicians', and, in
a few states, on psychologists' and other mental health care professionals',
referrals for certain designated health services to entities with which they
have financial relationships. The Company believes its operations are structured
to comply with these restrictions to the extent applicable. However, there are
efforts to expand the scope of those referral restrictions at both the federal
and state level. Certain states are considering adopting similar restrictions or
expanding the scope of existing restrictions. There can be no assurance that the
federal government or other states in which the Company operates will not enact
similar or more restrictive legislation or restrictions that could under certain
circumstances impact the Company's operations.
FPM provides clinical services in its behavioral health programs to
some patients who are beneficiaries of the federal Medicare and Medicaid
programs. The compensation received by FPM for such services is established by
fee schedules and other similar cost containment measures. There can be no
assurance that future legislation will not adversely effect FPM's compensation
for services provided by FPM to Medicare and Medicaid beneficiaries. At present,
the revenues received by FPM under the Medicare and Medicaid programs are not
material.
The Social Security Act imposes criminal and civil penalties upon
persons who make or receive kickbacks, bribes or rebates in connection with the
Medicare or Medicaid programs. These antifraud and abuse rules prohibit
providers and others from soliciting, offering, receiving or paying, directly or
indirectly, any remuneration in return for either making a referral for Medicare
or Medicaid covered services or items or ordering any covered services or items.
Upon conviction, violations of these rules may be punished by fine of up to
$25,000 or imprisonment for up to five years, or both. In addition, the Medicare
and Medicaid Patient and Program Protection Act of 1987 imposes civil sanctions
for violation of these prohibitions, punishable by exclusion from the Medicare
and Medicaid program; such exclusion,
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if applied to FPM's operations, could result in significant loss of
reimbursement. In order to provide guidance with respect to the anti-fraud and
abuse rules, the Office of the Inspector General of the Department of Health and
Human Services has issued regulations outlining certain "safe harbor" practices,
which although potentially capable of including prohibited referrals, would not
be prohibited if all applicable requirements are met. A relationship which fails
to satisfy a safe harbor is not necessarily illegal, but could be scrutinized
under a case-by-case analysis. Since the anti-fraud and abuse laws have been
broadly interpreted, they limit the manner in which the Company can acquire
professional practices and market its services to, and contract for services
with, psychiatrists, psychologists, and other mental health care professionals.
Management considers and seeks to comply with these regulations in planning its
activities, and believes that its activities, even if not within a safe harbor,
do not violate the anti-fraud and abuse statute. However, no assurance can be
given regarding compliance in any particular factual situation, as there is no
procedure for advisory opinions from government officials.
In connection with the Company's entry into HMO businesses in the
southeastern United States, RMCI, through its subsidiary Apex, has obtained
licenses from the Louisiana Department of Insurance, the Mississippi Department
of Insurance and the Alabama Department of Insurance to operate HMOs in
Louisiana, Mississippi and Alabama respectively. The operation of HMO's in the
foregoing states subjects RMCI and its subsidiaries to extensive state and
federal regulation of both their operations and structure. In addition,
applicable state and local laws regulate the scope of benefits provided to the
Company's HMO members, the Company's quality assurance and utilization review
procedures, enrollment requirements and member grievance procedures, the form
and provisions of provider contracts and the Company's marketing and advertising
efforts. Furthermore, the Company's operation of HMOs requires it to file
periodic reports with, and subject itself to review by, federal and state
governmental authorities. Any changes in or additions to the current statutes
and regulations governing its HMO businesses could adversely affect RMCI's
business, financial condition or results of operations.
The Company believes that it is currently in compliance in all material
respects with applicable current statutes and regulations governing its
business. The Company monitors its compliance with applicable statutes and
regulations and works with regulators concerning various compliance issues that
arise from time to time. Notwithstanding the foregoing, the regulatory approach
to the managed health care services industry is evolving and there can be no
assurance that a regulatory agency will not take the position, under existing or
future statutes or regulations, or as a result of a change in the manner in
which existing statutes or regulations are or may be interpreted or applied,
that the conduct of all or a portion of the Company's operation within a given
jurisdiction is or will be subject to further licensure and/or regulation.
Expansion of the Company's businesses to cover additional geographic areas or to
different types of customers could also subject it to additional licensure
and/or regulatory requirements.
Acquisitions
Florida Psychiatric Management, Inc. The Company acquired all of the
capital stock of Florida Psychiatric Management, Inc. on October 29, 1993. This
acquisition marked the entry of RMCI into the direct provision of managed mental
health care services. Florida Psychiatric Management, Inc. is headquartered in
Orlando, Florida. Florida Psychiatric Management, Inc. was founded, and the
Company is continuing its operation, based on the concept that clinically
oriented managed care can control costs and curb reimbursement abuses while
assuring that each patient receives the most appropriate level of treatment in a
quality manner. The consideration for the acquisition was a combination of
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$4,000,000 in cash, $2,500,000 of debentures and a contingent earn-out payment
based on the attainment of certain earnings and revenue levels over the ensuing
two years. At June 30, 1995 all parties agreed to an additional payment of
$450,000, which was paid on October 31, 1995 and cancellation of the earn-out
provision. In connection with this acquisition, the Company recorded cost in
excess of net asset value of purchased businesses and other intangible assets of
approximately $4,900,000 and $3,100,000, respectively.
Florida Psychiatric Associates, Inc. As of June 1, 1994, RMCI acquired
all of the capital stock of Florida Psychiatric Associates, Inc. ("FPA"), a
physician practice group located in Orlando, Florida for $50,000 in cash. In
connection with the acquisition, RMCI entered into employment agreements with
each of the seller-physicians for two to four year periods. Prior to its
acquisition by RMCI, FPA was the largest network contract provider for RMCI in
the State of Florida.
FPMBH of Arizona, Inc. The assets of FPMBH of Arizona, Inc. ("FPMBH";
f/k/a Human Dynamics Institute), a former managed mental health care services
division of Phoenix South Community Mental Health Services, Inc., were acquired
by a wholly owned subsidiary of RMCI on June 30, 1994. FPMBH now serves as the
Company's regional office in Arizona and provides managed mental health care
services through its contract provider networks in Arizona, Nevada, New Mexico,
Oregon, Idaho, Texas, Utah and Washington. FPMBH's managed care customers are
primarily health maintenance organizations and insurance companies. The
consideration for the acquisition was a combination of $1,000,000 in cash, a
$1,000,000 promissory note, 86,425 shares of RMCI Common Stock and a contingent
earn-out payment based upon the attainment of certain revenue levels over the
ensuing two years. The earn-out payment of $425,789 is payable on or before
October 31, 1996. In connection with this acquisition, the Company recorded cost
in excess of net asset value of purchased businesses totaling approximately
$3,000,000. In June 1996, the Company recognized a goodwill impairment charge of
$1,929,000 related to the goodwill associated with this acquisition. See "Item
6. Management's Discussion and Analysis of Financial Condition and Results of
Operations." and "Item 7. Financial Statements."
Employees
As at June 30, 1996, the Company had 165 full time equivalent
employees. The Company believes that its relationship with its employees is
good.
Item 2. Description of Properties
The Company's headquarters in New Orleans are leased from RHCI on
commercially reasonable terms under a lease expiring in April, 1999. In August
1996, the Company announced plans to relocate its headquarters to Coral Gables,
Florida. This relocation is expected to be completed during fiscal 1997. The
Company's offices in Orlando, Florida and several Company-operated clinics are
leased from partnerships of which Martin Lazoritz, an Executive Vice President,
and other employees of the Company are partners under leases expiring from
September 1996 to August 2003. In addition, the
10
<PAGE>
Company leases other office space and clinics in various cities in the United
States which expire from September 1996 to April 1999. The Company does not
anticipate that it will experience any difficulty in renewing these leases upon
their expiration or obtaining different space on comparable terms if these
leases are not renewed. The Company believes that these facilities are well
maintained and are of adequate size for present needs. However, expansion of the
Company's operations will require obtaining additional space which the Company
believes will be available on commercially reasonable terms.
Item 3. Legal Proceedings.
From time to time, the Company is party to certain claims, suits and
complaints, whether arising from the acts or omissions of its employees,
providers or others which arise in the ordinary course of business. As both the
number of people serviced by the Company's programs and the number of providers
under contract with the Company increase, the probability of the Company being
subject to legal liability predicated on claims alleging malpractice or related
legal theories also increases. Currently, there are no such claims, suits or
complaints pending which, in the opinion of management, would have a material
adverse effect on the Company's business, financial condition, results of
operation or liquidity.
Item 4. Submission of Matters to a Vote of Security Holders.
Not Applicable.
Part II
Item 5. Market For the Registrant's Common Equity and Related Stockholder
Matters.
The following table sets forth the range of high and low closing sales
prices per share of the Common Stock since April 24 , 1995, the date of the
Distribution on a pro-rata basis in the form of a dividend by RHCI of all of the
shares of Common Stock of the Company held by RHCI on April 24, 1995 to the
holders of record on April 21, 1995 of (i) RHCI's common stock, $0.01 par value,
(ii) RHCI's Class A Convertible Preferred Stock, par value $1.00 per share and
(iii) RHCI's Class B Convertible Preferred Stock, Series C, par value $1.00 per
share, as reported on the OTC Bulletin Board:
<TABLE>
<CAPTION>
Common Stock Prices
-------------------
High Low
---- ---
<S> <C> <C>
Year ended June 30, 1995
Quarter ended June 30, 1995
(From April 24, 1995) $ 4.678 $ 2.020
Year ended June 30, 1996
Quarter ended September 30, 1995 $ 4.125 $ 2.25
Quarter ended December 31, 1995 3.00 1.625
Quarter ended March 31, 1995 3.3125 2.00
Quarter ended June 30, 1996 2.50 1.6875
</TABLE>
11
<PAGE>
The price quotations listed above reflect inter-dealer prices, without
retail mark-up, mark-down or commissions and may not represent actual
transactions.
On September 13, 1996, the closing sales price of the Company's Common
Stock was $0.5625 per share and there were approximately 620 record holders of
the Common Stock.
No dividends have been declared on the Common Stock since the Company
was organized.
The Company's HMO operation is required to maintain a minimum level of
statutory equity by each state in which it operates an HMO. At June 30, 1996,
the Company was required to maintain statutory equity of $1,800,000. In
addition, under the Credit Facility (defined below), FPM is required to maintain
a minimum stockholder's equity of $850,000 plus 75% of its net income subsequent
to June 30, 1996. At June 30, 1996, FPM's minimum stockholders' equity was less
than the requirement. The Bank (defined below) waived this requirement for the
year ended June 30, 1996.
12
<PAGE>
Item 6. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following table sets forth selected consolidated financial
information for the period shown and is qualified by reference to, and
should be read in conjunction with, the Consolidated Financial Statements
and Notes thereto appearing elsewhere in this Annual Report on Form 10-KSB.
<TABLE>
<CAPTION>
Year ended June 30
Summary of Operating Data: 1996 1995
<S> <C> <C>
Revenues:
Managed care revenue $ 19,430,000 $ 14,898,000
Clinical fee for service and other revenue 2,172,000 1,247,000
------------ -----------
Total revenues 21,602,000 16,145,000
Operating expenses:
Contracted provider services 8,088,000 5,149,000
Salaries, wages and benefits 8,743,000 6,882,000
Management fees charged by related companies 406,000 284,000
General and administrative expenses 5,846,000 3,215,000
Goodwill write-down 1,929,000 -
Depreciation and amortization 1,323,000 1,244,000
Interest 685,000 334,000
Listing and stock distribution expenses - 724,000
------------ -----------
Total operating expenses 27,020,000 17,832,000
------------ -----------
Loss from continuing operations (5,418,000) (1,687,000)
Income tax benefit - (192,000)
------------ -----------
Loss from continuing operations (5,418,000) (1,495,000)
Discontinued operation:
Loss from operations of discontinued HMO operation (3,149,000) (76,000)
Loss on disposal of HMO operation (4,927,000) -
------------ -----------
Net loss $(13,494,000) $(1,571,000)
============ ===========
Loss per common share from continuing operations ($0.85) ($0.39)
Loss per common share from discontinued operation ($1.27) ($0.02)
------------ -----------
Loss per common share ($2.12) ($0.41)
------------ -----------
Weighted average number of shares outstanding (a) 6,378,000 3,789,000
============ ===========
</TABLE>
<TABLE>
<CAPTION>
Balance Sheet Data As at June 30, 1996 (b)
<S> <C>
Cash and cash equivalents $ 228,000
Working Capital (deficit) (9,070,000)
Total assets 14,099,000
Long term obligations 9,639,000
Stockholders' equity (deficit) (7,847,000)
</TABLE>
(a) The per shares of RMCI Common Stock used in the net loss per share
computation is based on the number of weighted average shares
outstanding for the respective periods.
(b) Includes $2,027,000 of net assets used in discontinued operation.
13
<PAGE>
The Company provides comprehensive managed health care services through
wholly owned subsidiary companies. The behavioral health services are composed
of the management of mental health services and substance abuse care on behalf
of self-insured employers, health maintenance organizations, insurance companies
and government agencies in different states. The Company not only manages such
care but also provides where appropriate the delivery of care through integrated
systems involving clinics and other providers. These services range from benefit
design, case management, claims processing to fully capitated (at risk) mental
health care treatment.
At June 30, 1996, the Company operates in 13 states and has a strategy
to consolidate its behavioral health operations through development and joint
venture efforts in various regions of the country in which it currently
operates.
During the year, the Company applied for and received a license to
operate a health maintenance organization in the state of Alabama. During the
year, the Company also conducted HMO operations in the states of Louisiana and
Mississippi. In June 1996, the Company adopted a formal plan for the sale of
its' HMO operation during fiscal 1997 and recorded a loss on a discontinued
operation of $4.9 million.
In connection with the "safe harbor" provision of the Private
Securities Litigation Reform Act of 1995, the Company notes that this Annual
Report on Form 10-KSB 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 statement. Some of the most significant
factors include (i) the Company's inability to dispose of its HMO operation,
(ii) the effects of competition on the Company's business, including the loss of
a major customer or the loss of members from its provider network of physicians,
hospitals, and other healthcare providers, and (iii) statutory, regulatory and
administrative changes or interpretations of existing statutory and regulatory
provisions affecting the conduct of the Company's businesses, or the failure to
obtain exemptions from the existing statutory or regulatory provisions.
Accordingly, there can be no assurances that any anticipated future results will
be achieved.
RESULTS OF OPERATIONS
The Company began earning HMO revenue in June 1995. For the year ended
June 30, 1996, these revenues accounted for approximately 6.0% of the Company's
revenues. During the year ended June 30, 1996, the Company adopted plans to
discontinue the operations comprising its HMO business. These operations were
recorded as a discontinued operation at June 30 1996. Accordingly, the following
discussion of operations pertains entirely to the Company's behavioral health
services and related corporate activities during the year ended June 30, 1996.
The following table sets forth, for the periods indicated, certain
items of the Company's consolidated statements of income as a percentage of the
Company's net revenues.
14
<PAGE>
<TABLE>
<CAPTION>
Percentage of Total Revenues
Year Ended June 30
1996 1995
<S> <C> <C>
Total revenues................................................... 100.0 % 100.0%
----- -----
Operating expenses:
Contracted provider services................................... 37.4% 31.9%
Salaries, wages and benefits................................... 40.5% 42.6%
Management fees charged by related companies................... 1.9% 1.8%
General and administrative expenses............................ 27.1% 19.9%
Goodwill write-down............................................ 8.9% 0%
Depreciation and amortization.................................. 6.1% 7.7%
Interest expense............................................... 3.2% 2.1%
Listing and stock distribution costs........................... 0% 4.5%
------ ------
125.1% 110.5%
------ ------
Loss from continuing operations before income taxes............ (25.1%) (10.5%)
Discontinued operations:
Loss from operations of discontinued HMO operation............. (14.6%) 0%
Loss on disposal of HMO operation.............................. (22.8%) 0%
Net loss before income taxes................................... (62.5%) (10.5%)
</TABLE>
Year Ended June 30, 1996
Compared to Year Ended June 30, 1995
Net revenues from continuing operations for fiscal 1996, were $21.6
million compared to $16.1 million in fiscal 1995. The revenue increase is mainly
due to a full year of operations of The Health Plan of The Upper Ohio Valley
contract in West Virginia and a number of new managed care contracts entered
into during the year, including John Alden in Ohio and Prucare in North
Carolina.
Contracted provider services increased to $8.1 million in fiscal 1996
compared to $5.1 million in fiscal 1995 as a result of the increased number of
members whose care is managed by the Company. The percentage of net revenues
represented increased from 31.9% in fiscal 1995 to 37.4% in fiscal 1996.
Salaries, wages and benefits expense increased from $6.9 million in
fiscal 1995 to $8.7 million in the year ended June 30, 1996, primarily as a
result of the growth in revenues and continued expansion of the operations of
the Company in various regions, including Florida, Arizona, Hawaii and West
Virginia.
General and administrative operating expenses, including management
fees charged by a related company, increased from $3.5 million in fiscal 1995 to
$6.3 million in fiscal 1996 as a result of the expansion of the operations of
the Company into existing markets and targeted new markets.
Depreciation and amortization expense increased from $1.2 million to
$1.3 million mainly as a result of the amortization of goodwill associated with
the acquisition of Florida Psychiatric Management, Inc. and FPMBH of Arizona,
Inc.
Interest expense increased from $334,000 in fiscal 1995 to $685,000 in
fiscal 1996 primarily as a result of financing charges related to the
acquisition of businesses previously described.
The Company incurred a loss before taxes from continuing operations of
$5.42 million for the reasons discussed above and as a result of a goodwill
impairment charge of $1,929,000 related to the goodwill associated with the HDI
acquisition. At the time of the acquisition, HDI had contracts with five major
vendors and the possibility of obtaining an
15
<PAGE>
additional major contract. During 1996, HDI lost four of its existing contracts
and was not awarded the new major contract. Consequently, the Company wrote-off
the goodwill attributed to these contracts. The amount of the impairment was
determined based on the relative cash flows generated by each of the contracts
lost.
In June 1996, the Company adopted a plan to sell its HMO operation,
accordingly, the Company's HMO operation has been accounted for as a
discontinued operation. The Company has recorded a loss on this discontinued
operation of $4.9 million (including provision of $1.83 million for operating
losses during phaseout period).
LIQUIDITY AND CAPITAL RESOURCES
In connection with the Distribution, the Company and RHCI entered into
the Second Amended and Restated Distribution Agreement (the "Distribution
Agreement"). Pursuant to the Distribution Agreement, each of RHCI and RMCI has
agreed to pay to the other the net amount of all outstanding intercompany
receivables and payables as of April 24, 1995 (other than those evidenced by the
$6 million unsecured subordinated promissory note issued by RMCI to RHCI
representing certain advances made by RHCI to or on behalf of RMCI (the
"Subordinated Promissory Note") which are governed by the terms thereof). As of
June 30, 1996, RMCI owed RHCI approximately $1.8 million in relation to these
items, and in addition, accrued interest on the Subordinated Promissory Note of
$360.000. See the discussion below under "Indebtedness" concerning RHCI's
agreement not to require repayment of net cash advances and such accrued
interest on the Subordinated Promissory Note until after July 1997.
During fiscal 1996, the Company used net cash of $2.1 million in its
continuing operations. These funds were primarily provided by advances from
affiliates. The Company anticipates that its sources of liquidity during 1997
primarily will be its cash flow from continuing operations, funds anticipated to
be received from the disposition of Apex, and the proceeds from a $3 million
private placement of preferred stock discussed below.
The Company expects to use its sources of liquidity for working capital
and other general corporate purposes, including for the payment of costs and
expenses discussed above and costs associated with the establishment and
development of its managed mental health care business.
There can be no assurance that the Company will expand its operations
by development, acquisition or internal expansion or that any development
effort, acquisition or expansion will be profitable.
As discussed below (see "Indebtedness") the Company believes that it
may require additional funds for working capital and general corporate purposes.
Financing. On April 26, 1996, the Company amended its credit facility
(the "Credit Facility") with the First Union National Bank of Florida (the
"Bank"). A previous Revolving Credit Facility for up $4,200,000 was replaced by
a $1,500,000 Revolving Master Line of Credit (the "Master Revolver"), and a
$100,000 Term Loan.
The Master Revolver will expire on December 31, 1996 and the $100,000
Term Loan is repayable by 36 months of level principal payments of $2,777.70
plus interest. At June 30, 1996, $1,500,000 was outstanding under the Master
Revolver. The Master Revolver bears interest at the following rates, as
applicable and selected by the Company from time to time: (i)
16
<PAGE>
the Bank's LIBOR adjusted rate plus 3.0% or (ii) the Bank's prime rate plus
0.75%. The $100,000 Term Loan bears interest at the Bank's prime rate plus 1.0%.
As part of the acquisition of FPM in October 1993, the Company issued
7% three year debentures, totalling $2,500,000 (see "Indebtedness" below). These
debentures were prepaid with the proceeds of a $1,667,000 three year secured
term loan from the Bank on April 28, 1995. This three year term loan bears
interest at (i) the Bank's LIBOR adjusted rate plus 25% or (ii) the bank's prime
rate plus 0.50%, as selected by the Company. Principal on this three year term
loan is payable quarterly with a final maturity of January 31, 1998. The three
year secured term loan, the additional term loan of $100,000 (referred to above)
and the Master Revolver are secured by a pledge of the stock of RMCI's
subsidiaries and the assets of RMCI's subsidiaries.
The Credit Facility contains covenants customary for facilities of this
type, which include, without limitation, covenants which contain limitations on
the ability of FPM and its subsidiaries, subject to certain exceptions, to (i)
assume or incur liens, (ii) alter the nature of their business or effect
mergers, consolidations, or sales of assets, (iii) incur indebtedness or make
investments, (iv) acquire businesses, or (v) pay dividends to the Company . In
addition, the Credit Facility contains financial covenants related to senior
debt to cash flow, interest coverage, and minimum stockholders' equity. At June
30, 1996, FPM's minimum stockholders' equity ratio was less than the
requirement. The Bank agreed to waive this requirement for the year ended June
30, 1996.
Indebtedness. In connection with RMCI's acquisition of all the
outstanding shares of common stock of FPM in October 1993, FPM issued 7%
Debentures due October 31, 1996 (the "Debentures") in the aggregate principal
amount of $2,500,000 to the selling stockholders of FPM, including Martin
Lazoritz, Robert W. Pollack and I. Paul Mandelkern, officers of the Company or
its subsidiaries. Subsequently, on April 28, 1995, these Debentures were prepaid
with the proceeds of the $1,667,000 three year secured term loan discussed
above.
In connection with RMCI's acquisition of the assets of HDI, through a
wholly owned subsidiary FPMBH of Arizona, Inc., RMCI issued a promissory note in
the principal amount of $1,000,000 (the "HDI Note") to Phoenix South Community
Mental Health Centers ("Phoenix South"). Interest accrues on the HDI Note at a
fixed rate of 8.25% per annum and is payable monthly in arrears, together with
equal installments of principal, until the HDI Note matures on June 30, 1997.
The HDI Note is secured pursuant to a Stock Pledge Agreement dated June 30,
1994, pursuant to which Phoenix South has a first priority lien on all of the
common stock of FPMBH of Arizona, Inc. (f/k/a Ramsay HDI). Upon payment in full
of the HDI Note, the Bank will have a first priority lien on the common stock of
FPMBH of Arizona under the Credit Facility.
In addition, in connection with the spin-off of RMCI from RHCI, RMCI
issued to RHCI a Subordinated Promissory Note in the principal amount of
$6,000,000, evidencing certain funds advanced to or on behalf of RMCI by RHCI,
including in connection with the acquisition of certain acquired businesses.
Prior to its issuance, the amounts evidence by the Subordinated Promissory Note
were recorded as intercompany indebtedness between RMCI and RHCI. Interest
accrues on the Subordinated Promissory Note at an annual fixed rate of 8%,
payable in quarterly payments in arrears commencing June 30, 1995. The
Subordinated Promissory Note is payable as to interest only through September
30, 1996, and commencing on September 30, 1996 principal and interest will be
payable in equal quarterly installments in arrears for a four-year period with
the final payment due on September 30, 2000.
17
<PAGE>
The Subordinated Promissory Note is unsecured and is subordinated and
junior in right of payment to all indebtedness of RMCI and its subsidiaries
incurred in connection with the acquisition of HDI and future acquisitions of
other managed mental health care services businesses, and any other Senior
Indebtedness (as defined in the Subordinated Promissory Note), including
indebtedness arising under the Credit Facility and any other bank indebtedness
of RMCI or its subsidiaries. At the present time, Senior Indebtedness
outstanding is comprised of the HDI Note, the three year secured term note to
the Bank and amounts due under the Credit Facility.
In September 1996, RHCI and RMCI commenced negotiations to restructure
the payment terms associated with the net cash advances from RHCI totaling
$1,851,000 as at June 30, 1996, the interest due on the Subordinated Promissory
Note for the year ended June 30, 1997 and the $360,000 of interest accrued on
the Subordinated Promissory Note from October 1995 to June 30, 1996. RHCI has
agreed not to require repayment of the interest on the $6,000,000 Subordinated
Promissory Note or the net cash advances until after July 1997.
As of June 30, 1996, the aggregate amount of principal on the Company's
indebtedness payable during the fiscal year of the Company ending June 30, 1997
and during each of the next four fiscal years of the Company will be
approximately $2,334,000, $2,001,000, $1,437,000, $1,412,000, and $352,000,
respectively.
In June 1996, at the request of RMCI, Paul Ramsay Hospitals Pty.
Limited ("Ramsay Hospitals") agreed to loan RMCI up to $3,000,000 for working
capital and general corporate purposes. On June 28, 1996, RMCI borrowed
$1,600,000, which was evidenced by a demand promissory note (the "First
Hospitals Note") payable to Ramsay Hospitals with an interest rate of 12% per
annum. In addition, on August 7 and August 8, 1996, RMCI borrowed an aggregate
of $800,000, which was evidenced by a demand promissory note (the "Second
Hospitals Note") payable to Ramsay Hospitals in the principal amount of the
lesser of the amount borrowed or $1,400,000, with an interest rate of 12% per
annum. On September 10, 1996, as describe below, the First Hospitals Note and
the Second Hospitals Note were repaid and cancelled.
On September 10, 1996, RMCI entered into a stock purchase agreement
with Ramsay Hospitals, pursuant to which Ramsay Hospitals purchased 100,000
shares of Series 1996 Convertible Preferred Stock at a purchase price of
$3,000,000. The purchase price was paid by (i) offset against the outstanding
principal amounts under the First Hospitals Note and the Second Hospitals Note
($1,600,000 and $800,000, respectively), (ii) offset against the aggregate
accrued unpaid interest on such notes through September 10, 1996 ($54,667) and
(iii) $545,333 in cash. In connection with the purchase of the 100,000 shares of
Series 1996 Convertible Preferred Stock by Ramsay Hospitals, RMCI issued
warrants to Ramsay Hospitals to purchase 300,000 shares of Common Stock, at an
exercise price of $1.00 per share.
In September 1996, a corporate affiliate of Paul Ramsay formalized its
agreement to provide an additional loan facility, if required, of up to
$2,000,000 to RMCI for working capital and general corporate purposes.
See also "Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters" above.
The Company may be required to raise additional funds for working
capital, general corporate purposes, development and growth beyond its immediate
plans and/or to remain competitive with its larger competitors. Any additional
equity financing may result in substantial dilution to the stockholders of the
Company. Except for the financing provided by the above mentioned affiliate
commitment, the Company has made no arrangements to obtain any additional
18
<PAGE>
debt financing, and there can be no assurance that RMCI will be able to obtain
any required additional funds.
Item 7. Financial Statements.
Financial statements of the Company and its consolidated subsidiaries
are set forth herein.
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Not applicable.
Part III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
The information required by this Item with respect to directors and
executive officers will be contained in the Company's definitive Proxy Statement
("the Proxy Statement") for its 1996 Annual Meeting of Stockholders to be held
on November 21, 1996 and is incorporated herein by reference. Such Proxy
Statement will be filed with the Securities and Exchange Commission not later
than 120 days subsequent to June 30, 1996.
Item 10. Executive Compensation
The information required with respect to this Item will be contained
in the Proxy Statement, and such information is incorporated herein by
reference.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
The information required with respect to this Item will be contained
in the Proxy Statement, and such information is incorporated herein by
reference.
Item 12. Certain Relationships and Related Transactions.
The information required with respect to this Item will be contained
in the Proxy Statement, and such information is incorporated herein by
reference.
Part IV
Item 13. Exhibits and Reports on Form 8-K.
(a) Exhibits:
19
<PAGE>
Information with respect to this Item regarding Exhibits
required to be filed pursuant to Item 601 of Regulation SB is
contained in the attached Index to Exhibits, which Exhibits are
incorporated herein by reference. Exhibits 10.2, 10.3, 10.8, 10.9,
10.10, 10.11 and 10.36 are the management contracts and compensatory
plans and arrangements required to be filed as part of this Annual
Report on Form 10-KSB.
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed by the Company for the
quarter ended June 30, 1996.
20
<PAGE>
Power of Attorney
The registrant, and each person whose signature appears below, hereby
appoints Warwick D. Syphers and Thomas M. Haythe as attorneys-in-fact with full
power of substitution, severally, to execute in the name and on behalf of the
registrant and each such person, individually and in each capacity stated below,
one or more amendments to the annual report which amendments may make such
changes in the report as the attorney-in-fact acting deems appropriate and to
file any such amendment to the report with the Securities and Exchange
Commission.
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto fully authorized.
Dated: September 30, 1996
RAMSAY MANAGED CARE, INC.
By: /s/ Luis E. Lamela
--------------------------------
Luis E. Lamela
Vice-Chairman
Pursuant to the requirements of the Securities and Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated .
Date Signature/Title
- ---- ---------------
Dated: September 30, 1996
By: /s/ Paul J. Ramsay
---------------------------
Paul J. Ramsay
Chairman of the Board
and Director
Dated: September 30, 1996
By: /s/ Luis E. Lamela
---------------------------
Luis E. Lamela
Vice-Chairman
21
<PAGE>
Date Signature/Title
- ---- ---------------
Dated: September 30, 1996
By: /s/ Warwick D. Syphers
------------------------------
Warwick D. Syphers
Executive Vice President, and
Principal Financial and
Accounting Officer
Dated:
By:
------------------------------
Aaron Beam, Jr.
Director
Dated: September 30, 1996
By: /s/ Peter J. Evans
------------------------------
Peter J. Evans
Director
Dated: September 30, 1996
By: /s/ Thomas M. Haythe
------------------------------
Thomas M. Haythe
Director
Dated:
By:
------------------------------
Moises E. Hernandez
Director
Dated: September 30, 1996
By: /s/ Michael S. Siddle
------------------------------
Michael S. Siddle
Director
22
<PAGE>
Consolidated Financial Statements
Ramsay Managed Care, Inc.
and Subsidiaries
For the year ended June 30, 1996
with Report of Independent Auditors
<PAGE>
Ramsay Managed Care, Inc. and Subsidiaries
Consolidated Financial Statements
For the period ended June 30, 1996
Contents
<TABLE>
<CAPTION>
<S> <C>
Report of Independent Auditors............................. 1
Consolidated Balance Sheet................................. 2
Consolidated Statements of Operations...................... 4
Consolidated Statements of Stockholders' Equity (Deficit).. 5
Consolidated Statements of Cash Flows...................... 6
Notes to Consolidated Financial Statements................. 8
</TABLE>
<PAGE>
Report of Independent Auditors
The Board of Directors and Stockholders
Ramsay Managed Care, Inc.
We have audited the accompanying consolidated balance sheet of Ramsay Managed
Care, Inc. and subsidiaries as of June 30, 1996, and the related consolidated
statements of operations, stockholders' equity (deficit), and cash flows for
each of the two years in the period ended June 30, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Ramsay
Managed Care, Inc. and subsidiaries at June 30, 1996, and the consolidated
results of their operations and their cash flows for each of the two years in
the period ended June 30, 1996, in conformity with generally accepted accounting
principles.
/s/ Ernst & Young LLP
Orlando, Florida
August 28, 1996
1
<PAGE>
Ramsay Managed Care, Inc. and Subsidiaries
Consolidated Balance Sheet
June 30, 1996
<TABLE>
<CAPTION>
<S> <C>
Assets
Current assets:
Cash and cash equivalents $ 228,000
Accounts receivable, less allowance
for doubtful accounts of $334,000 846,000
Prepaid expenses 382,000
Other current assets 37,000
Current assets of discontinued operation 1,744,000
-------------
Total current assets 3,237,000
Other assets:
Goodwill and other intangible assets 8,152,000
Other noncurrent assets 60,000
Other assets of discontinued operation 1,862,000
-------------
Total other assets 10,074,000
Property and equipment:
Building and improvements 128,000
Equipment, furniture and fixtures 1,830,000
-------------
1,958,000
Less accumulated depreciation 1,170,000
-------------
788,000
Total assets $14,099,000
=============
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Liabilities and stockholders' deficit
Current liabilities:
<S> <C>
Accounts payable $ 1,397,000
Accrued salaries and wages 641,000
Hospital and medical claims payable 1,667,000
Other current liabilities 959,000
Line of credit and note payable 1,900,000
Current portion of long-term debt 2,334,000
Current liabilities of discontinued operation 1,579,000
Reserve for operating loss from discontinued operation 1,830,000
-------------
Total current liabilities 12,307,000
Due to affiliate 1,851,000
Advances from affiliate 1,600,000
Deferred income taxes 986,000
Long-term debt, less current portion 5,202,000
Stockholders' deficit:
Common stock, $.01 par value:
Authorized shares-20,000,000;
Issued shares-6,397,304 64,000
Additional paid-in capital 7,095,000
Accumulated deficit (15,006,000)
-------------
Total stockholders' deficit (7,847,000)
-------------
Total liabilities and stockholders' deficit $ 14,099,000
=============
</TABLE>
See accompanying notes.
3
<PAGE>
Ramsay Managed Care, Inc. and Subsidiaries
Consolidated Statements of Operations
<TABLE>
<CAPTION>
Year ended June 30
1996 1995
----------------------------
Revenues:
<S> <C> <C>
Managed care revenue $ 19,430,000 $14,898,000
Clinical fee for service and other revenue 2,172,000 1,247,000
----------------------------
Total revenues 21,602,000 16,145,000
Operating expenses:
Contracted provider services 8,088,000 5,149,000
Salaries, wages and benefits 8,743,000 6,882,000
Management fees charged by related companies 406,000 284,000
General and administrative expenses 5,846,000 3,215,000
Goodwill write-down 1,929,000 -
Depreciation and amortization 1,323,000 1,244,000
Interest 685,000 334,000
Listing and stock distribution expenses - 724,000
----------------------------
Total operating expenses 27,020,000 17,832,000
----------------------------
Loss from continuing operations before income taxes (5,418,000) (1,687,000
Income tax benefit - (192,000)
----------------------------
Loss from continuing operations (5,418,000) (1,495,000)
Discontinued operation:
Loss from operations of discontinued HMO operation (3,149,000) (76,000)
Loss on disposal of HMO operation,
including provision of $1,830,000
for operating losses during phaseout period (4,927,000) -
----------------------------
Loss from discontinued operation (8,076,000) (76,000)
----------------------------
Net loss $(13,494,000) $(1,571,000)
============================
Loss per common share from continuing operations $ (.85) $ (0.39)
Loss per common share from discontinued operation (1.27) (0.02)
----------------------------
Loss per common share $ (2.12) $ (0.41)
============================
Weighted average number of shares outstanding 6,378,000 3,789,000
</TABLE>
See accompanying notes.
4
<PAGE>
Ramsay Managed Care, Inc. and Subsidiaries
Consolidated Statements of Stockholders' Equity (Deficit)
<TABLE>
<CAPTION>
Class A Additional Total
Convertible Paid-In Note Retained Earnings Stockholders'
Preferred Stock Common Stock Capital Receivable (Deficit) Equity (Deficit)
<S> <C> <C> <C> <C> <C> <C>
Balance at July 1, 1994 $ 1,000 $21,000 $1,104,000 $ - $ 68,000 $ 1,194,000
Dividend paid on 71,092
shares of Class A
convertible preferred stock - - - - (9,000) (9,000)
Conversion of 71,092
shares of Class A
convertible preferred stock (1,000) 4,000 (3,000) - - -
Issuance of 1,500,000 shares of
common stock to Paul Ramsay
Hospitals Pty.
Limited, net of
expenses of $281,000 - 15,000 2,704,000 - - 2,719,000
Issuance of 160,000
shares of common stock
to three officers of the
Company, net of
expenses of $19,000 - 2,000 299,000 (148,000) - 153,000
Issuance of 1,250,000 shares of
common stock to Paul Ramsay
Hospitals Pty. Limited, net
of expenses of $225,000 - 12,000 2,263,000 - - 2,275,000
Issuance of 960,913 shares of
common stock in relation to
fully subscribed Rights Issue,
net of expenses of $886,000 - 10,000 1,026,000 (213,000) - 823,000
Net loss - - - - (1,571,000) (1,571,000)
---------------------------------------------------------------------------------------------------
Balance at June 30, 1995 - 64,000 7,393,000 (361,000) (1,512,000) 5,584,000
Issuance of 20,563 shares of
common stock to RMCI employee
stock purchase plan - - 32,000 - - 32,000
Exercise of options - - 12,000 - - 12,000
Payment of note receivable - - - 19,000 - 19,000
Allowance for uncollectible
note receivable - - (342,000) 342,000 - -
Net loss - - - - (13,494,000) (13,494,000)
-------------------------------------------------------------------------------------------------
Balance at June 30, 1996 $ - $64,000 $7,095,000 $ - $(15,006,000) $ (7,847,000)
=================================================================================================
</TABLE>
5
See accompanying notes.
<PAGE>
Ramsay Managed Care, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Year ended June 30
1996 1995
---------------------------
Cash flows from continuing operating activities
<S> <C> <C>
Net loss from continuing operations $(5,418,000) $(1,495,000)
Adjustments to reconcile net loss from
continuing operations to net cash
(used in) provided by operating activities:
Depreciation and amortization 1,323,000 $ 1,244,000
Loss on disposal of property and equipment 23,000 24,000
Goodwill write-down 1,929,000 -
Write-down of deferred costs 364,000 -
Other - 19,000
Cash flows from (increase) decrease in
operating assets:
Accounts receivable, net 79,000 (554,000)
Prepaid expenses (315,000) (37,000)
Other current assets 679,000 (461,000)
Cash flows from increase (decrease)
in operating liabilities:
Accounts payable (921,000) 1,992,000
Accrued salaries, wages and other liabilities (136,000) (95,000)
Hospital and medical claims payable 777,000 536,000
Due to related party (1,441,000) 1,441,000
Other current liabilities 959,000 -
---------------------------
Total adjustments 3,320,000 4,109,000
---------------------------
Net cash (used in) provided by
continuing operating activities (2,098,000) 2,614,000
Cash flows from discontinued operation
Net loss from discontinued operation (8,076,000) (76,000)
Adjustments to reconcile net loss from
discontinued operation to net cash
used in discontinued operation:
Loss on disposition of discontinued operation 4,927,000 -
Depreciation and amortization 724,000 -
(Increase) in current assets of
discontinued operation (836,000) (907,000)
Increase in other assets of
discontinued operation (2,765,000) (2,930,000)
Increase in current liabilities of
discontinued operation 1,361,000 218,000
---------------------------
Total adjustments 3,411,000 (3,619,000)
---------------------------
Net cash used in discontinued operation (4,665,000) (3,695,000)
</TABLE>
6
<PAGE>
Ramsay Managed Care, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (continued)
<TABLE>
<CAPTION>
Year ended June 30
1996 1995
--------------------------
Cash flows from investing activities
<S> <C> <C>
Expenditures for property and equipment (250,000) (610,000)
Sale of interest in partnerships - 325,000
Acquisitions of businesses, net of cash acquired (426,000) (450,000)
Goodwill, preopening and development costs (300,000) (466,000)
Other noncurrent assets 220,000 -
--------------------------
Net cash used in investing activities (756,000) (1,201,000)
Cash flows from financing activities
Advances from affiliate 3,451,000 119,000
Payment on debt (985,000) (2,728,000)
Issuance of common stock, net 63,000 5,970,000
Loan costs related to refinancing - (243,000)
Issuance of debt 1,723,000 1,845,000
Other - 51,000
---------------------------
Net cash provided by financing activities 4,252,000 5,014,000
---------------------------
Net (decrease) increase in cash and
cash equivalents (3,267,000) 2,732,000
Cash and cash equivalents at
beginning of period 3,495,000 763,000
---------------------------
Cash and cash equivalents at end of period $ 228,000 $ 3,495,000
===========================
Supplemental disclosures
Cash paid during the year for:
Interest $ 400,000 $ 222,000
===========================
Income taxes $ 41,000 $ 129,000
===========================
</TABLE>
See accompanying notes.
7
<PAGE>
Ramsay Managed Care, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
June 30, 1996
1. Summary of Significant Accounting Policies
Basis of Presentation
Ramsay Managed Care, Inc. (RMCI) was incorporated on July 21, 1993; however,
substantial operations did not commence until October 29, 1993 when RMCI
acquired the stock of Florida Psychiatric Management, Inc. (see Note 3). Prior
to April 24, 1995, RMCI was a wholly-owned subsidiary of Ramsay Health Care,
Inc. (RHCI). On April 24, 1995, RHCI distributed its stockholdings in the
Company to its stockholders as a dividend. A major stockholder and chairman of
the Company is also a major stockholder in RHCI. The Company has significant
interaction with RHCI (see Notes 5 and 11).
The consolidated financial statements include the accounts of RMCI and its
majority-owned subsidiaries (collectively, the Company). All significant
intercompany accounts and transactions have been eliminated in consolidation.
Industry
The Company's business consists of (i) behavioral health care services, through
which it manages and provides the delivery of mental health and substance abuse
services given by both independent and affiliated providers on behalf of its
clients-insurance carriers, health maintenance organizations and self-insured
employers and (ii) HMO services through which it manages and provides prepaid
health services to its members. The Company's first HMO began operations in June
1995. In June 1996, the Company adopted a formal plan to sell its HMO
operations.
Concentrations of Credit Risk
The Company provides services to self-insured patients without requiring
collateral. Exposure to losses on receivables is principally dependent on each
patient's financial condition. The Company monitors its exposure for credit
losses and maintains allowances for anticipated losses.
Use of Estimates
The preparation of these consolidated 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. Actual results could differ from those
estimates.
8
<PAGE>
Ramsay Managed Care, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
Cash Equivalents
Cash equivalents include short-term, highly liquid interest-bearing investments
with a maturity of 90 days or less at the date of acquisition and consist
primarily of money market deposits.
Financial Instruments
The carrying amounts of financial instruments including cash and cash
equivalents, accounts receivable and accounts payable approximate fair value as
of June 30, 1996.
Minimum Liquidity Requirements
The Company is required under the regulations of the states in which it operates
an HMO to maintain minimum liquidity requirements. Such amounts are included in
the accompanying balance sheet as other assets of discontinued operation.
Revenues
Revenues consist primarily of managed care and clinical fee for service revenue.
Managed care revenue represents capitated amounts received for behavioral health
services provided to patients covered by certain managed care contracts as well
as amounts received for case management, utilization review and quality
assurance oversight on the delivery of behavioral health services given by
independent providers on behalf of clients. Managed care revenue is recognized
during the period in which enrolled lives are covered for capitated payments
received. Clinical fee for service revenue represents professional fees for
outpatient services which are provided on a fee for service basis. Clinical fee
for service revenue is recognized as services are provided.
For the year ended June 30, 1996, approximately 49% of revenue was earned from
four managed care customers. Walt Disney World Co. comprised approximately
$3,624,000 or 17% of revenue. The Health Plan of The Upper Ohio Valley comprised
approximately $2,647,000 or 12% of revenue. Health Options, Inc. and AlohaCare,
Inc. comprised approximately $2,366,000 and $2,451,000 or revenue, respectively,
or approximately 11% each.
9
<PAGE>
Ramsay Managed Care, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
Revenues (continued)
For the year ended June 30, 1995, approximately 41% of revenue was earned from
three managed care customers. Walt Disney World Co. comprised approximately
$3,513,000 or 22% of revenue. Health Options, Inc. and AlohaCare, Inc. comprised
approximately $1,690,000 and $1,491,000 or approximately 10% and 9% of revenue,
respectively.
Contracted Provider Services
The Company contracts with various health care providers for the provision of
health care services. The Company provides for claims incurred but not yet
reported based on past experience, together with current factors. Estimates are
adjusted as changes in these factors occur and such adjustments are reported in
the year of determination. Although considerable variability is inherent in such
estimates, management believes that these reserves are adequate.
Goodwill and Other Intangible Assets
Goodwill consists of cost in excess of the net asset value of purchased
businesses. Other intangible assets represent the value assigned to acquired
clinical protocols, established provider networks and existing contracts related
to acquired companies (see Note 3). These costs are generally amortized over 10
to 25 years.
The Company periodically evaluates the recoverability of the carrying amounts of
intangible assets by determining if any impairment indicators are present. These
indicators include estimating the undiscounted cash flows of the entity acquired
over the remaining amortization period (see Note 14).
Preopening costs, principally salaries and other costs incurred prior to opening
a new clinic, HMO or other operation are deferred until the entity begins
operations whereupon the costs are amortized on a straight-line basis over two
years.
Organizational costs, principally specific external costs related to the
formation and licensure of the Company's HMOs, are deferred and amortized on a
straight-line basis over a period of five years from the start of operations.
10
<PAGE>
Ramsay Managed Care, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
Property and Equipment
Property and equipment are stated at cost. Upon sale or retirement of property
or equipment, the cost and related accumulated depreciation are removed from the
accounts and the resulting gain or loss is included in operations.
Depreciation is computed on the straight-line method for financial reporting
purposes and on an accelerated method for income tax purposes. The general range
of estimated useful lives is five to forty years for buildings and three to
twenty years for equipment.
Income Taxes
The Company accounts for income taxes in accordance with Financial Accounting
Standards Board (FASB) Statement No. 109, Accounting for Income Taxes. Under
this method, deferred income taxes at the end of each period are determined
based on the differences between the financial statement and tax basis of assets
and liabilities using the enacted tax rates for the years in which the taxes are
expected to be paid or recovered.
Stock Based Compensation
The Company grants stock options for a fixed number of shares to employees with
an exercise price equal to the fair value of the shares at the date of grant.
The Company plans to adopt Statement of Financial Accounting Standards No. 123,
Accounting for Stock-Based Compensation, and will continue to account for stock
option grants in accordance with APB Opinion No. 25, Accounting for Stock Issued
to Employees, and, accordingly, recognizes no compensation expense for the stock
option grants.
Loss Per Common Share
Loss per common share is calculated by dividing net loss by the weighted average
number of common shares outstanding during the period. Stock options and
warrants are considered common stock equivalents and are, in 1996 and 1995 anti
dilutive for purposes of calculating primary and fully diluted loss per share.
Fully diluted net loss per common share is not materially different from primary
net loss per common share.
11
<PAGE>
Ramsay Managed Care, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies (continued)
Reclassifications
Certain reclassifications have been made to the prior year financial statements
to conform with the 1996 presentation.
2. Sources of Liquidity
During 1996, the Company incurred a loss from continuing operations of
$5,418,000, a net loss of $13,494,000 and a cash flow deficit from continuing
operations of $2,090,000. At June 30, 1996, current liabilities exceeded current
assets by $9,070,000 and there is a deficiency in stockholders' equity of
$7,847,000.
Management's plan to address this situation and continue operations, includes
the following:
. Sale of its HMO operations
. A commitment by an affiliate of the Company's major shareholder to
acquire $1.4 million of 5% convertible preferred stock and to convert
the $1.6 million of advances from affiliate at June 30, 1996 to 5%
convertible preferred stock.
. A commitment by an affiliate of the Company's major shareholder to
loan the Company up to $2,000,000.
Management's opinion is that these actions will be adequate to enable the
Company to continue to operate as a going concern.
3. Acquisitions
On October 29, 1993, RMCI acquired, in a transaction accounted for as a
purchase, the stock of Florida Psychiatric Management, Inc. (FPM), a regional
provider of managed behavioral health care services based in Orlando, Florida,
for $7,141,000 consisting of cash of $4,641,000 (including $641,000 in
acquisition costs), the issuance of an aggregate of $2,500,000 of three-year 7%
debentures, and contingent consideration based on the attainment of certain
earnings and revenue levels over the ensuing two years. At June 30, 1995, all
parties agreed to an additional payment of $450,000, which was paid on October
31, 1995, and cancellation of the earn-out provisions. In connection with this
acquisition, RMCI recorded goodwill and other intangible assets of approximately
$8,000,000.
12
<PAGE>
Ramsay Managed Care, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
3. Acquisitions (continued)
On June 30, 1994, RMCI, through a wholly-owned subsidiary (Ramsay HDI, Inc.),
acquired, in a transaction accounted for as a purchase, the assets of Human
Dynamics Institute (HDI), a Phoenix, Arizona-based managed behavioral health
care business for $3,001,000 consisting of cash of $1,000,000, a three-year
$1,000,000 note bearing interest at 8.25%, the assumption of certain
liabilities, the issuance of 86,425 shares of common stock and contingent
consideration based upon the attainment of certain revenue levels over the
ensuing two years. In connection with this acquisition, RMCI recorded goodwill
totaling approximately $3,000,000. Subsequently, Ramsay HDI, Inc. changed its
name to FPMBH of Arizona, Inc.
The earn-out payment of $426,000, which is payable on or before October 31,
1996, increased the amount of goodwill related to the acquisition of HDI.
In June 1994, RMCI, through a wholly-owned subsidiary acquired, in a transaction
accounted for as a purchase, the stock of Florida Psychiatric Associates, P.A.
(FPA), a provider of mental health and substance abuse services in an outpatient
environment in the central Florida area, for a cash payment of $50,000. In
connection with this acquisition, RMCI recorded goodwill totaling approximately
$393,000.
4. Line of Credit and Note Payable
The Company's line of credit and note payable consist of the following:
<TABLE>
<CAPTION>
1996
------------
<S> <C>
Secured line of credit promissory note bank, principal payable
on demand, interest at prime rate plus .75% or LIBOR plus 300
basis points (interest rate of 8.0625% at June 30, 1996). $1,500,000
Secured promissory note issued to Apex Acquisition Corporation,
payable on demand, interest at prime rate plus .5% (interest
rate of 8.75% at June 30, 1996), secured by the stocks and
assets of RMCI's subsidiary, Apex Healthcare, Inc. The note was
paid on August 9, 1996. 400,000
------------
$1,900,000
============
</TABLE>
13
<PAGE>
Ramsay Managed Care, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
4. Line of Credit and Note Payable (continued)
On April 26, 1996, the Company amended its $4,200,000 revolving credit
agreement, originally entered into on April 28, 1995. The revolving credit
agreement was replaced by a $1,500,000 secured Revolving Master Line of Credit
and a $100,000 Term Loan (see Note 5). The secured Revolving Master Line of
Credit is to be used solely for working capital and other general corporate
purposes.
In addition, the Company received a secured overline line of credit note from
First Union National Bank of Florida, Inc. for $500,000. At June 30, 1996, the
Company has not borrowed any funds against the overline line of credit note. At
June 30, 1996 the overline of credit was terminated.
The line of credit promissory note and the overline line of credit are secured
by the stock and assets of RMCI's subsidiaries, FPM Behavioral Health, Inc., and
its subsidiaries (FPMBH) and Apex Healthcare, Inc. The Credit Facility contains
covenants, which include, without limitation, covenants which contain
limitations on the ability of FPM and its subsidiaries, subject to certain
exceptions, to (i) assume or incur liens, (ii) alter the nature of their
business or effect mergers, consolidations, or sales of assets, (iii) incur
indebtedness or make investments, (iv) acquire businesses, or (v) pay dividends
to RMCI. In addition, the Credit Facility contains financial covenants related
to senior debt to cash flow, interest coverage, and minimum stockholders'
equity. At June 30, 1996, FPM's minimum stockholders' equity was less than the
requirement. The bank waived this requirement for the year ended June 30, 1996.
14
<PAGE>
Ramsay Managed Care, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
5. Long-Term Debt
The Company's long-term debt consists of the following:
<TABLE>
<CAPTION>
1996
-------------
<S> <C>
8% 6-year unsecured promissory note issued to RHCI payable
quarterly, due September 30, 2000. $6,000,000
Variable rate (interest rate of 8.0625% at June 30, 1996),
3-year secured term loan to bank, payable quarterly, due
January 31, 1998. 1,111,000
8.25% 3-year secured promissory note issued in connection with
the acquisition of HDI, payable monthly, due June 30, 1997. 333,000
3-year secured term loan to bank, payable monthly through
April 5, 1999, interest at prime rate plus 1% (interest rate
of 9.25% at June 30, 1996). 92,000
------------
7,536,000
Less amounts due within one year 2,334,000
------------
$5,202,000
============
</TABLE>
The aggregate scheduled maturities of long-term debt during the five years
subsequent to June 30, 1996 are as follows: 1997--$2,334,000; 1998--$2,001,000;
1999--$1,437,000; 2000--$1,412,000; and 2001--$352,000.
The 8% 6-year unsecured promissory note issued to RHCI, which is the Company's
former parent corporation, is subordinate and junior to all indebtedness of the
Company. Principal will be payable in equal quarterly installments beginning
September 30, 1996, with the final payment due on September 30, 2000. Interest
is payable after July 1, 1997.
The 8.25% secured promissory note due June 30, 1997 is secured by the stock of
the Company's wholly-owned subsidiary, FPMBH of Arizona, Inc., which was the
acquiring entity of the assets of HDI. The note is payable in monthly
installments which began July 31, 1994.
15
<PAGE>
Ramsay Managed Care, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
5. Long-Term Debt (continued)
The term loans to the bank are secured by the stock and assets of RMCI's
subsidiaries, FPMBH and Apex Healthcare, Inc. The term loans require among other
things, that FPMBH maintain various financial ratios and restricts a portion of
FPMBH's equity for distribution to the Company.
Under the provisions of the term loan, FPMBH was required to maintain a minimum
stockholders' equity of $850,000 plus 75% of its net income subsequent to June
30, 1996. At June 30, 1996, FPM's minimum stockholders' equity was less than the
requirements. The bank waived this requirement for the year ended June 30, 1996.
As a result of its financial condition, the Company is unable to determine a
fair market value for its long-term fixed rate debt.
6. Income Taxes
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets and liabilities at June 30, 1996 are as
follows:
<TABLE>
<CAPTION>
Deferred tax assets:
<S> <C>
Hospital and medical claims payable $ 42,000
Loss on discontinued operations 1,853,000
Net operating loss carryforwards 1,797,000
Accrued employee benefits 257,000
Allowance for doubtful accounts 129,000
Related party expense deductible in future periods 135,000
Alternative minimum tax credit 59,000
Other 7,000
Valuation allowance (4,267,000)
-------------
Total deferred tax assets 12,000
Deferred tax liabilities:
Goodwill and other intangible assets 867,000
Change in tax accounting method 51,000
Tax over book depreciation and amortization 80,000
-------------
Total deferred tax liabilities 998,000
-------------
Net deferred tax liabilities $ 986,000
=============
</TABLE>
16
<PAGE>
Ramsay Managed Care, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
6. Income Taxes (continued)
The income tax benefit consists of the following:
<TABLE>
<CAPTION>
June 30
1996 1995
-----------------------
Income taxes currently payable:
<S> <C> <C>
Federal $ - $ -
State - 47,000
Deferred income taxes:
Federal - (179,000)
State - (60,000)
-----------------------
$ - $ (192,000)
=======================
</TABLE>
The income tax benefit included in the consolidated statements of operations
differs from the amounts computed by applying the statutory rate to income
before taxes, as follows:
<TABLE>
<CAPTION>
June 30
1996 1995
------------------------------
<S> <C> <C>
Loss before taxes $(13,494,000) $(1,763,000)
Federal statutory income tax rate 34% 34%
------------------------------
(4,588,000) (599,000)
Nondeductible amortization of goodwill 124,000 124,000
Nondeductible write-down of goodwill 656,000 -
Nondeductible stock distribution costs - 246,000
State income taxes, net of federal tax (400,000) (9,000)
benefit
Other, net (59,000) 46,000
Change in valuation allowance 4,267,000 -
------------------------------
$ - $ (192,000)
==============================
</TABLE>
17
<PAGE>
Ramsay Managed Care, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
6. Income Taxes (continued)
The Company has recorded a valuation allowance with respect to the future tax
benefits and the net operating loss reflected as deferred tax assets due to the
uncertainty of their ultimate realization. At June 30, 1996, net operating loss
carryforwards of approximately $4,741,000 for federal income tax purposes, which
expire from 2005 to 2010, and approximately $6,393,000 for state income tax
purposes, which expire from 2005 to 2010, are available to reduce future income
taxes subject to certain separate return loss year rules.
7. Stockholders' Equity (Deficit)
Effective April 5, 1995, the Company's Board of Directors approved a 1-for-2
reverse stock split of its common stock. Per share data and number of shares
included in the accompanying consolidated financial statements have been
adjusted to reflect the effect of the reverse stock split.
On June 23, 1994, the Company issued 71,092 shares of Class A convertible
preferred stock with a liquidation value of $10 per share, or $710,920, to RHCI.
Among other things, each share of preferred stock was convertible into shares of
common stock on a 5-for-1 basis and had total voting rights equivalent to
355,460 shares of common stock. On October 1, 1994, the Class A convertible
preferred stock was converted into 355,460 shares of common stock.
On October 25, 1994, the Company issued 1,500,000 shares of common stock to Paul
Ramsay Hospitals Pty. Limited (an affiliate of the Company's major stockholder
and Chairman) for $2.00 per share, or $3,000,000 with an option to acquire
1,250,000 additional shares of common stock at $2.00 per share on or before May
31, 1995 or $2.20 per share on or before August 31, 1995. On May 31, 1995, this
option was exercised and an additional 1,250,000 shares of common stock was
issued for $2,500,000.
Also on October 25, 1994, the Company sold 160,000 shares of common stock to
three officers of the Company for a total of $320,000. Of this amount, $148,500
was in the form of a promissory note from one of the officers, payable quarterly
starting December 31, 1995 with the final repayment due September 30, 1999.
Interest is payable quarterly in arrears at a rate equivalent to one year LIBOR
(6.125% at June 30, 1996). At June 30, 1996, the Company has fully reserved for
this note.
18
<PAGE>
Ramsay Managed Care, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
7. Stockholders' Equity (Deficit) (continued)
On April 24, 1995, RHCI distributed its total holdings in the Company (2,413,577
shares of common stock) to its stockholders in the form of a dividend.
Also on April 24, 1995, the Company commenced a rights offering (the Rights
Offering) pursuant to which the Company distributed, at no cost, transferable
rights to purchase up to 960,913 shares of common stock. Each Right entitled the
holder to purchase one share of the Company's common stock at $2.00 per share.
All Rights were exercised.
In connection with the April 24, 1995 rights offering, an officer of the Company
exercised rights through the issuance of two promissory notes. One note for
$75,000 is payable in eight quarterly installments commencing September 6, 1995
with the final payment due June 8, 1997. The other note for approximately
$138,000 is payable in three equal annual installments commencing June 8, 1998,
with the final installment due June 8, 2000. Interest on both notes is payable
quarterly in arrears at a rate equivalent to one year LIBOR. At June 30, 1996,
the Company has fully reserved these notes.
The Company has adopted a 1994 Stock Option Plan (1994 Option Plan) which
permits the issuance of options to officers and other key employees. The 1994
Option Plan reserves 1,000,000 shares of common stock for grant.
In October 1994, the Company:
. Granted options under the 1994 Option Plan, to certain directors, key
officers and other employees to purchase an aggregate of 475,250 shares
of common stock, at an option price per share of $2.00. These options
vest over a three to four-year period. At June 30, 1996, options to
acquire 146,750 of common stock were exercisable.
. Granted options under the 1994 Option Plan, to the chairman of the board
and former vice chairman/president and chief executive officer of the
Company for each to purchase 25,000 (50,000 in total) shares of common
stock at an option price per share of $2.00. These options are
exercisable in September 2004 or at an earlier date if, at the time of
exercise, the closing price of the Company's common stock has equaled or
exceeded $20 on at least twenty trading days, which need not be
consecutive. The options granted to the former vice chairman/president
and chief executive officer expired, unexercised in August, 1996.
19
<PAGE>
Ramsay Managed Care, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
7. Stockholders' Equity (Deficit) (continued)
Also in October 1994, the Company granted warrants to purchase 125,000 shares of
common stock to Ramsay Hospitals and warrants to purchase 52,000 shares of
common stock to certain other persons at a price of $2.00 per share. The
warrants issued to Ramsay Hospitals vest immediately. The other warrants vest
one-third on each anniversary date over three years.
In November 1994, the Company, under the 1994 Option Plan, granted options to
certain key employees to purchase an aggregate of 60,000 shares of common stock,
at an option price of $2.00 per share. The options vest over a four-year period
and 20,000 options are exercisable at June 30, 1996.
In 1996 the Company granted options to purchase 75,000 shares of common stock at
$2.44 per share and 250,000 shares of common stock at $2.31 per share. During
1995, the Company granted options to purchase 97,500 shares of common stock at
$2.00 per share. The options vest ratably over a four-year period beginning on
the anniversary date of the award.
The Company also issued, during 1996 and 1995, warrants to purchase 50,000 and
13,000 shares of common stock at $2.44 and $2.00 per share, respectively. The
1996 warrants vest one-sixth on the second anniversary and the remainder on the
third anniversary. The 1995 warrants vest one-third at date of issuance and one-
third on each of the next two anniversary dates, respectively.
Summary information on stock options and warrants is shown in the following
table:
<TABLE>
<CAPTION>
Options Warrants Exercisable Price Range
------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at July 1,1994 -- -- -- --
Granted 682,750 190,000 -- $ 2.0
Become exercisable - - 129,000 2.00
------------------------------------------------------
Balance at June 30, 1995 682,750 190,000 129,000 2.00
Granted 325,000 50,000 - 2.31-2.44
Become exercisable - - 219,250 2.00
Exercised - - (6,000) 2.00
Canceled (33,700) - (9,700) 2.00
------------------------------------------------------
Balance at June 30, 1996 974,050 240,000 332,550 $2.00-$2.44
======================================================
</TABLE>
20
<PAGE>
Ramsay Managed Care, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
7. Stockholders' Equity (Deficit) (continued)
The Company has adopted a 1994 Employee Stock Purchase Plan (1994 ESPP) that
allows employees to acquire up to 100,000 shares of common stock at a 15%
discount to the lower of the market price of the Company's stock at the
beginning or end of a six-month period. The Plan went into effect July 1, 1995.
During 1996, the Company issued approximately 20,500 shares of common stock
related to the ESPP.
At June 30, 1996, shares of common stock reserved for future issuance are as
follows:
<TABLE>
<S> <C>
1994 Option Plan 994,000
1994 ESPP 79,500
Warrants 240,000
-------------
1,313,500
=============
</TABLE>
In August, 1996, the Company adopted the 1996 Long Term Incentive Plan under
which 500,000 shares of common stock are available for option grants to
officers, directors and key employees.
8. Statutory Compliance
The Company's HMOs are required to maintain a minimum level of statutory equity
by each state in which they operate an HMO. At June 30, 1996, the Company was
required to maintain statutory equity of $1,800,000. In addition, the HMO
regulations of various states also limit distribution of earnings or equity
transfers to defined amounts.
21
<PAGE>
Ramsay Managed Care, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
9. Pension Plan
Prior to April 24, 1995, the Company participated in a 401(k) tax deferred
savings plan sponsored by RHCI. Subsequent to that date, the Company formed its
own 401(k) tax deferred savings plan and its employees no longer participate in
the RHCI plan. The Company plan covers substantially all employees over age 21
meeting a one-year minimum service requirement. The Company plan was adopted for
the purpose of supplementing employees' retirement, death and disability
benefits. The Company may, at its option, contribute to the plan through an
Employer Matching Account, but is under no obligation to do so. An employee
becomes vested in his Employer Matching Account over a four-year period. The
funds contributed by the Company's employees to the RHCI plan will be
transferred to the Company's plan once IRS approval is received. No contribution
to the plan was made by the Company during 1996 or 1995.
10. Operating Leases
The Company leases certain equipment and office space under noncancelable
operating leases that expire in various years through 2003. Future minimum
payments under noncancelable operating leases with initial terms of one year or
more consists of the following at June 30, 1996:
<TABLE>
<CAPTION>
Year ending June 30
<S> <C>
1997 $1,072,000
1998 937,000
1999 558,000
2000 440,000
2001 318,000
Thereafter 221,000
------------
Total minimum lease payments $3,546,000
============
</TABLE>
The Company has operating lease agreements with a related party for building,
office and parking space for which minimum future lease payments total
$1,357,000. These payments are included in the total future minimum lease
payments of $3,546,000. Total lease and rental expense for operating leases
included in operations for the year ended June 30, 1996 amounted to $1,246,000
(1995-$675,000). This amount includes $355,000 in 1996 ($414,000 in 1995) of
rent expense related to leases with related parties.
22
<PAGE>
Ramsay Managed Care, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
11. Related Party Transactions
RHCI provides management, accounting, information systems, tax, insurance and
personnel functions to the Company. The Company is charged management fees for
these services. The amount due to RHCI for these services and other amounts paid
by RHCI on behalf of the Company are included in due to affiliate at June 30,
1996.
The amounts due to affiliate include advances from RHCI to fund working capital
and other general corporate purposes. Intercompany advances from RHCI were non-
interest bearing through October 25, 1994. On October 25, 1994, advances from
RHCI aggregating $6,000,000 were converted into an 8% subordinated note payable
to RHCI. This note did not begin to accrue interest until March 1995. An
analysis of the Company's open account amount due to RHCI is as follows:
<TABLE>
<S> <C>
Balance at July 1, 1995 $1,441,000
Additions during the year ended June 30, 1996 410,000
------------
Balance at June 30, 1996 $1,851,000
============
</TABLE>
The average outstanding balance was $1,669,000 for the year ended June 30, 1996
and $2,922,000 for the year ended June 30, 1995.
RHCI has agreed not to require repayment of the $1,851,000 of advances it has
made to the Company, or interest on the $6,000,000 subordinated note until after
July 1, 1997. RMCI and RHCI are currently negotiating to restructure the
repayment of the intercompany advances and interest due on the note.
On June 28, 1996 RMCI received $1.6 million in advances from an affiliate of the
major shareholder. An additional $1.4 million was committed to be advanced
during the year ended June 30, 1997. On August 7 and August 8, 1996, RMCI
borrowed an aggregate of $800,000. The amounts advanced currently bear interest
at 12% and are payable on demand. The affiliate has committed to convert this
amount to 5% convertible preferred stock, consequently, at June 30, 1996 the
$1.6 million advance has been classified as a long-term liability.
23
<PAGE>
Ramsay Managed Care, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
12. Discontinued Operation
In June 1996, the Company adopted a formal plan for the sale of its HMO
operations by January 1997. The Company's HMO operations are accounted for as a
discontinued operation, and accordingly its operations are segregated in the
accompanying statement of operations. Net revenues and operating costs and
expenses for 1995 have been reclassified for amounts associated with the
discontinued operation.
Revenues and related losses associated with the discontinued operation for the
last two fiscal years were as follows:
<TABLE>
<CAPTION>
1996 1995
-------------------------------
<S> <C> <C>
Revenues $1,347,000 $69,000
===============================
Loss from operations $3,149,000 $76,000
-------------------------------
Loss on disposal 3,097,000 --
Estimated unrecovered costs through
expected disposal date 1,830,000 --
-------------------------------
Loss on disposal 4,927,000 --
-------------------------------
Loss from discontinued operations $8,076,000 $76,000
===============================
</TABLE>
No income tax benefit was recognized for losses on discontinued operation for
book purposes due to the uncertainty of their ultimate realization.
The components of net assets of discontinued operation included in the
Consolidated Balance Sheet at June 30, 1996 are as follows:
<TABLE>
<S> <C>
Cash and cash equivalents $ 1,618,000
Accounts receivable, net 38,000
Prepaid expenses 78,000
Other current assets 10,000
Restricted assets 1,565,000
Property and equipment, net 297,000
Accounts payable (234,000)
Accrued salaries and wages (86,000)
Hospital and medical claims payable (143,000)
Other current liabilities (1,116,000)
--------------
$ 2,027,000
==============
</TABLE>
24
<PAGE>
Ramsay Managed Care, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
13. Fourth Quarter Adjustments
In the fourth quarter of fiscal 1996, the Company made certain strategic
decisions affecting the future operations of the Company. Among other things,
the Company determined that it would not expand in certain markets in the United
States. As a result, approximately $426,000 of development costs that had been
deferred were charged to operations in the fourth quarter.
Also during the fourth quarter, the Company reversed income tax credits totaling
$1.1 million taken in the first three quarters of 1996 (see Note 6), wrote-down
$1.9 million of goodwill (see Note 14), and recorded a loss on discontinued
operations of $5.4 million (see Note 12).
14. Goodwill Write-down
In June 1996, the Company recognized a goodwill impairment charge of $1,929,000
related to the HDI acquisition (see Note 3). At the time of the acquisition HDI
had contracts with five major vendors and the possibility of obtaining an
additional major contract. During 1996, HDI lost four of its existing contracts
and was not awarded the new major contract.
25
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Sequential
Number Document Description Page No.
- ------- -------------------- --------
<S> <C> <C>
2.1 Agreement dated as of October 12, 1993 among Florida
Psychiatric Management, Inc., the stockholders of Florida
Psychiatric Management, Inc., Ramsay Health Care, Inc.
("RHCI") and the Company (incorporated by reference to
Exhibit 2.1 to the Company's Registration Statement on Form
S-1 (Registration No. 33-78034) filed with the Commission on
April 24, 1995).............................................. --
2.2 Agreement dated June 7, 1994 among Florida Psychiatric
Associates, Inc.("FPA"), the stockholders of FPA and Florida
Psychiatric Associates - South Florida, Inc. (incorporated
by reference to Exhibit 2 to the Company's Registration
Statement on Form S-1 (Registration No. 33-78034) filed with
the Commission on April 24, 1995)............................ --
2.3 Agreement dated as of June 30, 1994 among Phoenix South,
Ramsay HDI, Inc.and FPM Behavioral Health, Inc.
(incorporated by reference to Exhibit 2.3 to the Company's
Registration Statement on Form S-1 (Registration No.
3378034) filed with the Commission on April 24, 1995)........ --
3.1 Amended and Restated Certificate of Incorporation filed on
June 24, 1994................................................
3.2 Certificate of Designations filed on June 24, 1994...........
3.3 Certificate of Amendment to Amended and Restated Certificate
of Incorporation filed on September 20, 1994.................
3.4 Certificate of Designations filed on September 9, 1996.......
3.5 Amended and Restated By-laws (incorporated by reference to
Exhibit 3.3 to the Company's Registration Statement on Form
S-1 (Registration No. 33-78034) filed with the Commission on
April 24, 1995).............................................. --
3.6 Form of Rights Agreement between the Company and First Union
National Bank of North Carolina (incorporated by reference
to Exhibit 3.4 to the Company's Registration Statement on
Form S-1 (Registration No. 33-78034) filed with the
Commission on April 24, 1995)................................ --
4.1 Form of Stock Certificate of Common Stock (incorporated by
reference to Exhibit 4.1 to the Company's Registration
Statement on Form S-1 (Registration No. 33-78034) filed with
the Commission on April 24,1995)............................. --
</TABLE>
E-1
<PAGE>
<TABLE>
<CAPTION>
Exhibit Sequential
Number Document Description Page No.
- ------- -------------------- --------
<S> <C> <C>
4.2 Form of Subscription Certificate (incorporated by reference
to Exhibit 4.2 to the Company's Registration Statement on
Form S-1 (Registration No. 33-78034) filed with the
Commission on April 24, 1995)................................ --
4.3 Warrant Certificate dated September 10, 1996 evidencing
warrants to purchase 300,000 shares of common stock..........
4.4 Warrant Certificate dated September 10, 1996 evidencing
warrants to purchase 100,000 shares of common stock..........
10.1 Second Amended and Restated Distribution Agreement between
the Company and RHCI (incorporated by reference to Exhibit
10.1 to the Company's Registration Statement on Form S-1
(Registration No. 33-78034) filed with the Commission on
April 24, 1995).............................................. --
10.2 Ramsay Managed Care, Inc. 1994 Stock Option Plan
(incorporated by reference to Exhibit 4(v) to the Company's
Registration Statement on Form S-8 (Registration No.
33-95018) filed with the Commission on July 26, 1995)........ --
10.3 Ramsay Managed Care, Inc. 1994 Employee Stock Purchase Plan
(incorporated by reference to Exhibit 4(i) to the Company's
Registration Statement on Form S-8 (Registration No.
33-95018) filed with the Commission on July 26, 1995)........ --
10.4 Employee Benefit Agreement dated as of February 1, 1995
between the Company and RHCI (incorporated by reference to
Exhibit 10.4 to the Company's Registration Statement on Form
S-1 (Registration No. 33-78034) filed with the Commission on
April 24, 1995).............................................. --
10.5 Tax Sharing Agreement dated as of October 25, 1994 between
the Company and RHCI (incorporated by reference to Exhibit
10.5 to the Company's Registration Statement on Form S-1
(Registration No. 33-78034) filed with the Commission on
April 24, 1995).............................................. --
10.6 Corporate Services Agreement dated as of January 2, 1995
between the Company and RHCI (incorporated by reference to
Exhibit 10.6 to the Company's Registration Statement on Form
S-1 (Registration No. 33-78034) filed with the Commission on
April 24, 1995).............................................. --
</TABLE>
E-2
<PAGE>
<TABLE>
<CAPTION>
Exhibit Sequential
Number Document Description Page No.
- ------- -------------------- --------
<S> <C> <C>
10.7 Form of Withholding Tax Agreement between RHCI, Ramsay HSA,
Ramsay Holdings and Ramsay Health Care Pty. Limited
(incorporated by reference to Exhibit 10.7 to the Company's
Registration Statement on Form S-1 (Registration No.
33-78034) filed with the Commission on April 24, 1995)....... --
10.8 Employment Agreement dated as of October 29, 1993 between
Martin Lazoritz and the Company, as amended (incorporated by
reference to Exhibit 10.8 to the Company's Registration
Statement on Form S-1 (Registration No. 33-78034) filed with
the Commission on April 24, 1995)............................ --
10.9 Employment Agreement dated as of July 19, 1994 between
Parveez A. Oliaii and the Company, as amended (incorporated
by reference to Exhibit 10.9 to the Company's Registration
Statement on Form S-1 (Registration No. 33-78034) filed with
the Commission on April 24, 1995)............................ --
10.10 Employment Agreement dated as of October 29, 1993 between I.
Paul Mandelkern and the Company, as amended (incorporated by
reference to Exhibit 10.10 to the Company's Registration
Statement on Form S-1 (Registration No. 33-78034) filed with
the Commission on April 24, 1995)............................ --
10.11 Employment Agreement dated as of October 17, 1994 between
Kenneth Burkhart and Apex Healthcare, Inc., as amended
(incorporated by reference to Exhibit 10.11 to the Company's
Registration Statement on Form S-1 (Registration No.
33-78034) filed with the Commission on April 24, 1995)....... --
10.12 Form of Indemnification Agreement with directors and
officers (incorporated by reference to Exhibit 10.12 to the
Company's Registration Statement on Form S-1 (Registration
No. 33-78034) filed with the Commission on April 24, 1995)... --
10.13 $6,000,000 Subordinated Promissory Note of the Company, as
amended (incorporated by reference to Exhibit 10.13 to the
Company's Registration Statement on Form S-1 (Registration
No. 33-78034) filed with the Commission on April 24, 1995)... --
10.14 Form of Management Agreement between the Company and Ramsay
Health Care Pty. Limited (incorporated by reference to
Exhibit 10.14 to the Company's Registration Statement on
Form S-1 (Registration No. 33-78034) filed with the
Commission on April 24, 1995)................................ --
</TABLE>
E-3
<PAGE>
<TABLE>
<CAPTION>
Exhibit Sequential
Number Document Description Page No.
- ------- -------------------- --------
<S> <C> <C>
10.15 Stock Purchase Agreement dated as of October 25, 1994, as
amended as of February 1, 1995, between Ramsay Hospitals and
the Company (incorporated by reference to Exhibit 10.15 to
the Company's Registration Statement on Form S-1
(Registration No. 33-78034) filed with the Commission on
April 24, 1995).............................................. --
10.16 Warrant Acquisition Agreement dated as of October 25, 1994
between Ramsay Hospitals and the Company (incorporated by
reference to Exhibit 10.16 to the Company's Registration
Statement on Form S-1 (Registration No. 33-78034) filed with
the Commission on April 24, 1995)............................ --
10.17 Registration Rights Agreement dated as of October 25, 1994
between Ramsay Hospitals and the Company (incorporated by
reference to Exhibit 10.17 to the Company's Registration
Statement on Form S-1 (Registration No. 33-78034) filed with
the Commission on April 24, 1995)............................ --
10.18 Stock Purchase Agreement dated as of October 25, 1994
between Martin Lazoritz and the Company (incorporated by
reference to Exhibit 10.18 to the Company's Registration
Statement on Form S-1 (Registration No. 33-78034) filed with
the Commission on April 24, 1995)............................ --
10.19 Stock Purchase Agreement dated as of October 25, 1994,
between Parveez A. Oliaii and the Company (incorporated by
reference to Exhibit 10.19 to the Company's Registration
Statement on Form S-1 (Registration No. 33-78034) filed with
the Commission on April 24, 1995)............................ --
10.20 Stock Purchase Agreement dated as of October 25, 1994
between Kenneth Burkhart and the Company (incorporated by
reference to Exhibit 10.20 to the Company's Registration
Statement on Form S-1 (Registration No. 33-78034) filed with
the Commission on April 24, 1995)............................ --
10.21 Standard Form Private Practitioner Provider Contract
(incorporated by reference to Exhibit 10.21 to the Company's
Registration Statement on Form S-1 (Registration No.
33-78034) filed with the Commission on April 24, 1995)....... --
10.22 Standard Form Hospital Provider Contract (incorporated by
reference to Exhibit 10.22 to the Company's Registration
Statement on Form S-1 (Registration No.33-78034) filed with
the Commission on April 24, 1995)............................ --
</TABLE>
E-4
<PAGE>
<TABLE>
<CAPTION>
Exhibit Sequential
Number Document Description Page No.
- ------- -------------------- --------
<S> <C> <C>
10.23 Agreement dated October 1992 between Disney Worldwide
Services, Inc. and Florida Psychiatric Management, Inc.
(incorporated by reference to Exhibit 10.23 to the Company's
Registration Statement on Form S-1 (Registration No.
33-78034) filed with the Commission on April 24, 1995)....... --
10.24 Loan and Security Agreement between FPM Behavioral Health,
Inc. and First Union National Bank of Florida (incorporated
by reference to Exhibit 10.24 to the Company's Registration
Statement on Form S-1 (Registration No. 33-78034) filed with
the Commission on April 24, 1995)............................ --
10.25 First Amendment to Loan and Security Agreement dated April
24, 1996 between FPM Behavioral Health, Inc. and First Union
National Bank of Florida.....................................
10.26 Amended, Restated and Renewal Term Promissory Note dated
April 24, 1996 of the Company................................
10.27 Amended, Restated and Renewal Line of Credit Promissory Note
dated April 24, 1996 of the Company..........................
10.28 Overline Line of Credit Note dated April 24, 1996 of the
Company......................................................
10.29 First Amendment of Guaranty and Joinder of Guarantors dated
April 24, 1996...............................................
10.30 First Amendment to Stock Pledge and Security Agreements
dated April 24, 1996 by FPM Behavioral Health, Inc...........
10.31 First Amendment to Stock Pledge and Security Agreement dated
April 24, 1996 by the Company................................
10.32 Stock Purchase Agreement dated September 10, 1996 between
Paul Ramsay Hospitals Pty. Limited and the Company...........
10.33 $1,600,000 Promissory Note dated June 28, 1996 of the Company
10.34 $1,400,000 Grid Note dated August 7, 1996 of the Company.....
10.35 Exchange Agreement dated September 10, 1996 among Paul
Ramsay Hospitals Pty. Limited, Paul J. Ramsay and the Company
10.36 Ramsay Managed Care, Inc. 1996 Long Term Incentive Plan......
</TABLE>
E-5
<PAGE>
<TABLE>
<CAPTION>
Exhibit Sequential
Number Document Description Page No.
- ------- -------------------- --------
<S> <C> <C>
11 Computation of Per Share Earnings............................
21 List of Subsidiaries.........................................
23 Consent of Ernst & Young LLP.................................
24 Powers of Attorney (See "Power of Attorney" in Form 10 KSB).. --
27 Financial Data Schedule......................................
</TABLE>
E-6
<PAGE>
Exhibit 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
FPM BEHAVIORAL HEALTH, INC.
Pursuant to Sections 242 and 245 of the General
Corporation Law of the State of Delaware
-----------------------------------------------
FPM Behavioral Health, Inc., a corporation organized and existing
under and by the virtue of the General Corporation Law of the State of Delaware
(the "Corporation"), DOES HEREBY CERTIFY as follows:
1. That the name of the Corporation is FPM Behavioral Health, Inc.
2. That the Certificate of Incorporation of the Corporation was filed
in the office of the Secretary of State of the State of Delaware on the 21st day
of July, 1993, under the name of Ramsay Managed Mental Health Services, Inc.
3. That a Certificate of Amendment to the Certificate of
Incorporation was filed in the office of the Secretary of State of the State of
Delaware on the 11th day of January, 1994.
4. That this Amended and Restated Certificate of Incorporation
restates and integrates and further amends the Certificate of Incorporation of
the Corporation.
5. That the purposes of this Amended and Restated Certificate of
Incorporation effected hereby are to (i) change the authorized capital stock of
the Corporation to 10,000,000 shares, consisting of 9,500,000 shares of Common
Stock, par value $0.01 per share, and 500,000 shares of Preferred Stock, par
value $0.01 per share; and (ii) to provide for the rights, privileges, powers
and preferences of all classes and series of classes of the authorized capital
stock of the Corporation.
6. That the restatement of and amendment to the Certificate of
Incorporation of the Corporation, as set forth in this Amended and Restated
Certificate of Incorporation, was duly adopted in accordance with the provisions
of Section 242 and 245 of the General Corporation
<PAGE>
Law of the State of Delaware, (a) the Board of Directors of the Corporation
having duly adopted resolutions setting forth such amendment and declaring its
advisability and submitting it to the stockholders of the Corporation for their
approval in conformity with the By-laws of the Corporation, and (b) the holder
of all of the outstanding stock of the Corporation entitled to vote thereon,
having duly adopted resolutions setting forth such amendment by a written
consent of the sole stockholder in conformity with the By-laws of the
Corporation, there being only one class of stock of the Corporation outstanding.
7. That the text of the Certificate of Incorporation is hereby
restated and amended to read in its entirety as follows:
FIRST: The name of the corporation is FPM Behavioral Health, Inc.
(the "Corporation").
SECOND: The address of the Corporation's registered office in the
State of Delaware is 32 Loockerman Square, Suite L-100, Dover, Delaware 19901,
which address is located in the County of Kent, and the name of the
Corporation's registered agent at such address is The Prentice-Hall Corporation
System, Inc.
THIRD: The purpose for which the Corporation is organized is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
FOURTH: The total number of shares of capital stock which the
Corporation shall have authority to issue is 500,000 shares of Preferred Stock,
$0.01 par value per share (the "Preferred Stock"), and 9,500,000 shares of
Common Stock, $0.01 par value per share (the "Common Stock"). The number of
authorized shares of Preferred Stock and/or Common Stock may be increased or
decreased (but not below the number of shares then outstanding) by the
affirmative vote of the holders of a majority of the voting stock of the
Corporation. The powers, designations, preferences and relative, participating,
optional or other special rights, qualifications, limitations or restrictions of
the Preferred Stock and the Common Stock shall be as follows:
Subarticle I. Preferred Stock.
1. Designation, Description and Terms.
----------------------------------
(a) The Preferred Stock may be issued from time to time as shares of one or
more series of Preferred Stock, and in the resolution or resolutions providing
for the issue of shares of each particular series, before issuance, the Board of
Directors of the Corporation is expressly authorized to fix the designations,
powers, preferences, rights, qualifications, limitations and/or restrictions of
such series of Preferred Stock, including, without limitation:
<PAGE>
(i) the distinctive designation of such series and the number
of shares which shall constitute such series, which number may be
increased (except where otherwise provided by the Board of Directors in
creating such series) or decreased (but not below the number of shares
thereof then outstanding) from time to time by like action of the Board
of Directors;
(ii) the rate of dividends payable on such series, whether or
not dividends shall be cumulative, the date or dates from which
dividends shall accrue and, if cumulative, the relationship which such
dividends shall bear to dividends payable on any other series;
(iii) whether or not the shares of such series shall be subject
to redemption by the Corporation and, if so, the times, prices and
other terms and conditions of such redemption;
(iv) whether or not the shares of such series shall be subject
to the operation of a sinking fund or a fund of a similar nature and,
if so, the terms thereof;
(v) the rights of the shares of each series in case of
liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, or upon any distribution of its assets;
(vi) whether or not the shares of such series shall be
convertible into or exchangeable for shares of any other series or
class of stock of the Corporation and, if so, the terms of conversion
or exchange;
(vii) whether or not the shares of such series shall have
voting rights in addition to the voting rights provided by law and in
paragraph 4 below and, if so, the nature and extent thereof; and
(viii) the consideration to be received by the Corporation for
the shares of such series.
(b) The shares of the Preferred Stock of any one series
shall be identical with each other in all respects except as to the dates
from which dividends thereon shall accrue or be cumulative.
<PAGE>
(c) In case the stated dividends and the amounts, if any,
payable on liquidation, dissolution or winding up of the Corporation are
not paid in full, the shares of each series of the Preferred Stock, after
the payment in full of such dividends and amounts to all series of the
Preferred Stock ranking senior to such series and before any payment to any
series ranking junior thereto, shall share ratably in the payment of
dividends, including accumulations, if any, in accordance with the sums
which would be payable on said shares if all dividends were declared and
paid in full, and in any distribution of assets other than by way of
dividends, in accordance with the sums which would be payable on such
distribution if all sums payable were discharged in full.
(d) Upon the issuance of any series of Preferred Stock, a
certificate setting forth the resolution or resolutions (including the
designation, description and terms of such series) adopted by the Board of
Directors with respect to such series shall be made and filed in accordance
with the then applicable requirements, if any, of the laws of the State of
Delaware, or, if no certificate is then so required, such certificate shall
be signed and acknowledged on behalf of the Corporation by its President or
a Vice President, and its corporate seal shall be affixed thereto and
attested by its Secretary or an Assistant Secretary, and such certificate
shall be filed and kept on file at the principal office of the Corporation
in the State of Delaware or at such other place or places as the Board of
Directors shall designate.
2. Redemption. If so provided by the Board of Directors in
----------
the certificate made pursuant to subparagraph (d) of paragraph 1 with
respect to any series of the Preferred Stock, the Corporation may redeem
the whole or any part of such series, at such time or times and from time
to time and at such redemption price or prices as may be provided by the
Board of Directors in such certificate and otherwise upon the terms and
conditions fixed by the Board of Directors in such certificate for any such
redemptions.
3. Rights Upon Liquidation. In the event of any liquidation,
-----------------------
dissolution or winding up of the Corporation, whether voluntary or
involuntary, the holders of each series of the Preferred Stock then
outstanding shall be entitled to receive, after the payment in full of all
amounts to which the holders of all series of the Preferred Stock ranking
senior thereto are entitled, out of the assets of the Corporation,
<PAGE>
before any distribution or payment shall be made to the holders of any
series of the Preferred Stock ranking junior to such series upon
liquidation, dissolution or winding up of the Corporation, or of any Junior
Stock, the amount, if any, for each share provided by the Board of
Directors in the certificate made pursuant to subparagraph (d) of paragraph
1. If payment shall have been made in full to the holders of each series
of the Preferred Stock, the remaining assets of the Corporation shall be
distributed among the holders of the Junior Stock, according to their
respective rights and preferences and pro rata in accordance with their
respective holdings.
4. Vote. On all matters with respect to which holders of the
----
Preferred Stock or of certain series thereof are entitled to vote as a
single class, each holder of Preferred Stock afforded such class voting
right shall be entitled to one vote for each share held.
5. Junior Stock. For purposes of this Article FOURTH, the
------------
term "Junior Stock" shall mean the Common Stock and any other class of
stock of the Corporation hereafter authorized which shall rank junior to
all series of the Preferred Stock as to all dividends or preferences on
dissolution, liquidation or winding up of the Corporation.
6. General. Except as specifically set forth in this
-------
Subarticle I, whenever in this Subarticle I notice by the holders of the
Preferred Stock is called for, such notice shall be effective for all
purposes under this Subarticle I if effected by the holders of a majority
of the shares of Preferred Stock at the time outstanding.
Subarticle II. Common Stock
1. Vote. Each share of Common Stock shall be entitled to one vote
----
on matters to be voted on by the stockholders of the Corporation.
2. Dividends. After the requirements in respect of dividends
---------
payable on the Preferred Stock, as set forth in Subarticle I 1(a)(ii) are
met, the holders of Common Stock shall be entitled to dividends at such
time and in such amounts as shall be declared by the Board of Directors
from time to time out of funds legally available therefor.
3. Rights Upon Liquidation. In the event of any liquidation,
-----------------------
dissolution or winding-up of the Corporation (whether voluntary or
involuntary) after the payment in full to the holders of Preferred Stock of
all preferential amounts to which they are then
<PAGE>
entitled in accordance with Subarticle I, the holders of Common Stock shall
be entitled to receive out of the assets of the Corporation then remaining
an amount per share equal to the amount per share to which they would be
entitled if the holders of Common Stock were to share ratably in such
assets.
FIFTH: Subject to the provisions of the General Corporation Law of
the State of Delaware, the number of Directors of the Corporation shall be
determined as provided by the By-Laws.
SIXTH: To the fullest extent permitted by Section 145 of the
General Corporation Law of the State of Delaware, or any comparable successor
law, as the same may be amended and supplemented from time to time, the
Corporation (i) may indemnify all persons whom it shall have power to indemnify
thereunder from and against any and all of the expenses, liabilities or other
matters referred to in or covered thereby, (ii) shall indemnify each such person
if he is or is threatened to be made a party to an action, suit or proceeding by
reason of the fact that he is or was a director, officer, employee or agent of
the Corporation or because he was serving the Corporation or any other legal
entity in any capacity at the request of the Corporation while a director,
officer, employee or agent of the Corporation and (iii) shall pay the expenses
of such a current or former director, officer, employee or agent incurred in
connection with any such action, suit or proceeding in advance of the final
disposition of such action, suit or proceeding. The indemnification and
advancement of expenses provided for herein shall not be deemed exclusive of any
other rights to which those entitled to indemnification or advancement of
expenses may be entitled under any by-law, agreement, contract or vote of
stockholders or disinterested directors or pursuant to the direction (however
embodied) of any court of competent jurisdiction or otherwise, both as to action
in his official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
SEVENTH: In furtherance and not in limitation of the general powers
conferred by the laws of the State of Delaware, the Board of Directors is
expressly authorized to make, alter or repeal the By-Laws of the Corporation,
except as specifically stated therein.
EIGHTH: Whenever a compromise or arrangement is proposed between
the Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the Corporation under
<PAGE>
the provisions of (S)291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for the
Corporation under the provisions of (S)279 of Title 8 of the Delaware Code,
order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the case may be, to
be summoned in such manner as the said court directs. If a majority in number
representing three-fourths in value of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of the Corporation, as the
case may be, agree to any compromise or arrangement and to any reorganization of
the Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders of the Corporation, as the case may be, and also on the
Corporation.
NINTH: Except as otherwise required by the laws of the State of
Delaware, the stockholders and directors shall have the power to hold their
meetings and to keep the books, documents and papers of the Corporation outside
of the State of Delaware, and the Corporation shall have the power to have one
or more offices within or without the State of Delaware, at such places as may
be from time to time designated by the By-Laws or by resolution of the
stockholders or directors. Elections of directors need not be by ballot unless
the By-Laws of the Corporation shall so provide.
TENTH: The Corporation reserves the right to amend, alter, change
or repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
ELEVENTH: A director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) for the unlawful payment of dividends or
unlawful stock purchases under Section 174 of the General Corporation Law of the
State of Delaware, or (iv) for any transaction from which the director derived
any improper personal benefit. If the General Corporation Law of the State of
Delaware is amended to further eliminate or limit the personal liability of
directors, then the liability of a director of the Corporation shall be
eliminated or limited to the fullest extent permitted by the General Corporation
Law of the State of Delaware, as so amended. Any repeal or modification of this
Article by the stockholders of the Corporation shall be prospective only
<PAGE>
and shall not adversely affect any right or protection of a director of the
Corporation existing at the time of such repeal or modification.
IN WITNESS WHEREOF, the undersigned, has executed this Amended and
Restated Certificate of Incorporation this 24th day of June, 1994.
FPM BEHAVIORAL HEALTH, INC.
By:_________________________
President
ATTEST:
By:_______________________
Assistant Secretary
<PAGE>
Exhibit 3.2
CERTIFICATE OF DESIGNATIONS OF
PREFERRED STOCK
OF
FPM BEHAVIORAL HEALTH, INC.
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
------------------------------------------------
We, Gregory H. Browne, President, and Philip Symon, Treasurer and
Assistant Secretary, of FPM Behavioral Health, Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"Corporation"), in accordance with the provisions of Section 103 thereof, DO
HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors
by Subarticle I of Article FOURTH of the Certificate of Incorporation of the
Corporation, and in accordance with the provisions of Section 151 of the General
Corporation Law of the State of Delaware, on June 24, 1994, the Board of
Directors of the Corporation authorized and designated 71,092 of the authorized
shares of the Preferred Stock, $0.01 par value, of the Corporation as Series A
Convertible Preferred Stock, and adopted the following resolution in connection
therewith:
RESOLVED, that the Board of Directors of the Corporation, in
accordance with Section 151 of the Delaware General Corporation Law and
Subarticle I of Article FOURTH of the Corporation's Certificate of
Incorporation, hereby authorizes and designates 71,092 shares of Preferred
Stock, par value $0.01 per share, as Series A Convertible Preferred Stock (the
"Series A Convertible Preferred Stock"), which Series A Convertible Preferred
Stock shall be described and limited as follows:
(a) Definitions. For purposes of this Designation, the following
-----------
definitions shall apply:
"Affiliate" of any person or entity shall mean another person or
entity that directly, or indirectly through one or more intermediaries, controls
or is controlled by or is under common control with such person or entity.
<PAGE>
2
"Additional Shares of Common Stock" shall mean all shares of Common
Stock issued subsequent to the Base Date (or, pursuant to subparagraph (e)(v),
deemed to be issued subsequent to the Base Date) by the Corporation, other than
shares of Common Stock issued or issuable (A) upon conversion of shares of
Series A Convertible Preferred Stock; and (B) upon exercise of Options or
Convertible Securities, in each case which Options or Convertible Securities
were outstanding as of the Base Date.
"Base Date" shall mean June 24, 1994.
"Board of Directors" shall mean the board of directors of the
Corporation.
"Common Stock Outstanding" shall include all Common Stock issued and
outstanding and issuable upon exercise of all outstanding Options and conversion
of all outstanding Convertible Securities.
"Convertible Securities" shall mean any evidences of indebtedness,
shares or securities convertible into or exchangeable for shares of Common
Stock.
"Effective Price" of Additional Shares of Common Stock shall mean the
quotient determined by dividing the total number of Additional Shares of Common
Stock issued or sold, or deemed to have been issued or sold by the Corporation
under subparagraph (e)(v), into the aggregate consideration received or deemed
to have been received by the Corporation for such issue under subparagraph
(e)(v).
"Market Price" shall mean, for any day, the last sale price regular
way, or, in case no sale takes place on any such day, the average of the closing
bid and asked prices regular way, in either case on the principal national
securities exchange on which the Common Stock is listed or admitted to trading,
or if the Common Stock is not listed or admitted to trading on any national
securities exchange, the last sale price reported on the National Market System
of the National Association of Securities Dealers Automated Quotation System
("NASDAQ"), or the last sale price in the over-the-counter market reported on
NASDAQ, whichever is applicable, in each such case, unless otherwise provided
herein, averaged over a period of 20 consecutive business days prior to the day
as of which Market Price is being determined. If at any time the shares of
Common Stock are not listed or admitted to trading on any such exchange or
reported on NASDAQ, the Market Price of the shares of Common Stock shall be
deemed to be the higher of (i) the book value
<PAGE>
3
thereof, as determined in accordance with generally accepted accounting
principles consistent with those then being applied by the Corporation, by any
firm of independent certified public accountants (which may be the regular
auditors of the Corporation) of recognized national standing selected by the
Board of Directors of the Corporation, as of the last day of the month ending
within 31 days preceding the date as of which the determination is to be made,
and (ii) the fair value thereof, as determined in good faith by an independent
brokerage firm, Standard & Poor's Corporation or Moody's Investors Service, as
selected by the Board of Directors of the Corporation, as of a date which is
within 15 days preceding the date as of which the determination is to be made.
"Options" shall mean rights, options or warrants to subscribe for,
purchase or otherwise acquire shares of Common Stock or Convertible Securities.
(b) Dividend Rights. From and after the issuance of the Series A
---------------
Convertible Preferred Stock, the holders of outstanding Series A Convertible
Preferred Stock shall be entitled to receive, and shall be paid, when and as
declared by the Board of Directors, out of funds legally available therefor,
cumulative dividends at an annual rate of $0.50 per share, payable in arrears
quarterly on January 1, April 1, July 1 and October 1, to stockholders of record
on a date not more than 20 days prior to the date on which such cash dividends
are payable, said dividends to commence accrual on the Base Date. Such
dividends shall be prior and in preference to any declaration of payment of any
dividend on the Common Stock, par value $0.01 per share (the "Common Stock"), of
the Corporation. Such dividends shall be cumulative and shall accrue whether or
not declared by the Board of Directors. No cash dividends shall be paid with
respect to any class or series of capital stock of the Corporation, including,
without limitation, the Common Stock, until all dividends accrued on any
outstanding shares of the Series A Convertible Preferred Stock, whether or not
declared, have been set apart and fully paid. No accumulation of dividends on
the Series A Convertible Preferred Stock shall bear interest.
(c) Liquidation Rights. In the event of liquidation, dissolution or
------------------
winding up of the Corporation, whether voluntary or involuntary, the holder of
each share of the Series A Convertible Preferred Stock, by reason of their
ownership thereof, shall be entitled to receive in exchange for and in
redemption of their Series A Convertible Preferred Stock, prior and in
preference to any distribution
<PAGE>
4
of any of the assets or surplus funds of the Corporation to the holders of any
class or series of capital stock of the Corporation, including, without
limitation, the Common Stock, an amount equal to $10.00 per share plus all
accrued but unpaid dividends, whether or not declared, on such share.
All of the preferential amounts to be paid to the holders of the Series A
Convertible Preferred Stock under this Section (c) shall be paid or set apart
for payment before the payment or setting apart for payment of any amount for,
or the distribution of any assets or surplus funds of the Corporation to, the
holders of any other class or series of capital stock of the Corporation,
including, without limitation, the Common Stock, in connection with such
liquidation, dissolution or winding up, whether voluntary or involuntary. If
the assets or surplus funds to be distributed to the holders of the Series A
Convertible Preferred Stock are insufficient to permit the payment to such
holders of their full preferential amount, the assets and surplus funds legally
available for distribution shall be distributed ratably among the holders of the
Series A Convertible Preferred Stock in proportion to the full preferential
amount each such holder is otherwise entitled to receive.
(d) Voting Rights. Except as required by law, the holder of each
-------------
share of the Series A Convertible Preferred Stock shall be entitled to ten (10)
votes for each shares of Series A Convertible Preferred Stock held on all
matters put to a vote of the stockholders of the Corporation and shall otherwise
have voting rights and powers equal to the voting rights and powers of the
Common Stock. Such number of votes shall be appropriately adjusted in the event
of any recapitalization, reorganization, stock dividend, stock split or similar
event affecting the capital stock of the Corporation. In any and all
circumstances, the holders of the Series A Convertible Preferred Stock shall be
entitled to notice of any stockholders' meeting in accordance with the Bylaws of
the Corporation and shall vote together with the holders of the Common Stock as
one class upon any matter submitted to a vote of stockholders, except those
matters required by law to be submitted to a class vote of the holders of Series
A Convertible Preferred Stock.
(e) Conversion. The holders of the Series A Convertible Preferred
Stock shall have conversion rights as follows:
<PAGE>
5
(i) Right to Convert.
(A) Each share of Series A Convertible Preferred Stock shall be
convertible, at the option of the holder thereof, at any time
after the date of issuance of such share at the office of the
Corporation or any transfer agent for the Series A Convertible
Preferred Stock, into that number of fully paid and nonassessable
shares of Common Stock that results from dividing the Conversion
Price per share in effect at conversion into $10.00 and
multiplying the quotient obtained by the number of shares of
Series A Convertible Preferred Stock being converted. The initial
Conversion Price is $1.00 per share. The initial Conversion Price
is subject to adjustment from time to time as provided herein.
(B) No fractional shares of Common Stock shall be issued upon
conversion of Series A Convertible Preferred Stock and if any
shares of Series A Convertible Preferred Stock surrendered by a
holder, in the aggregate, for conversion which would otherwise
result in a fractional share of Common Stock, then such
fractional share shall be redeemed at the then effective
Conversion Price per share, payable as promptly as possible when
funds are legally available therefor.
(ii) Mechanics of Conversion. Before any holder of Series A
-----------------------
Convertible Preferred Stock shall be entitled to convert the same into shares of
Common Stock, such holder shall surrender the certificate or certificates
therefor, duly endorsed and accompanied by properly executed stock powers, at
the office of the Corporation or of any transfer agent for the Series A
Convertible Preferred Stock, shall give written notice to the Corporation at
such office of the name or names in which such holder wishes the certificate or
certificates for shares of Common Stock to be issued if different from the name
shown on the books and records of the Corporation and shall pay any applicable
transfer tax. Said conversion notice shall also contain such representations as
may reasonably be required by the Corporation to the effect that the shares to
be received upon conversion are not being acquired and will not be transferred
in any way which might violate the then applicable securities laws. The
Corporation shall, as soon
<PAGE>
6
as practicable thereafter, issue and deliver at such office to such holder of
Series A Convertible Preferred Stock, or to the nominee or nominees of such
holder, a certificate or certificates for the number shares of Common Stock to
which such holder shall be entitled as aforesaid. Such conversion shall be
deemed to have been made immediately prior to the close of business on the date
of such surrender of the shares of Series A Convertible Preferred Stock to be
converted, and the person or persons entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock as of such date. All
certificates issued upon the exercise of the conversion shall contain a legend
governing restrictions upon such shares imposed by applicable securities laws.
(iii) Adjustment for Subdivisions or Combinations of Common Stock.
-----------------------------------------------------------
In the event the Corporation at any time or from time to time after the Base
Date effects a subdivision or combination of its outstanding Common Stock into a
greater or lesser number of shares without a proportionate and corresponding
subdivision or combination of its outstanding Series A Convertible Preferred
Stock, then and in each such event the Conversion Price shall be decreased or
increased proportionately.
(iv) Adjustments for Dividends, Distributions and Convertible
--------------------------------------------------------
Securities. In the event the Corporation at any time or from time to time after
- ----------
the Base Date shall make or issue, or fix a record date for the determination of
holders of Common Stock entitled to receive, a dividend or other distribution
payable in Additional Shares of Common Stock or Convertible Securities without
payment of any consideration by such holder of such shares of Common Stock,
without a proportionate and corresponding dividend or other distribution to
holders of Series A Convertible Preferred Stock, then and in each such event the
maximum number of shares (as set forth in the instrument relating thereto
without regard to any provisions contained therein for subsequent adjustment of
such number) of Common Stock issuable in payment of such dividend or
distribution or upon conversion or exercise of such Convertible Securities shall
be deemed, for purposes of this subparagraph (e)(iv), to be issued and
outstanding as of the time of such issuance or, in the event such a record date
shall have been fixed, as of the close of business on such record date. In each
such event the then applicable Conversion Price shall be decreased as of the
time of such issuance or, in the event such a record date shall have been fixed,
as of the close of
<PAGE>
7
business on such record date, by multiplying the then applicable Conversion
Price by a fraction,
(A) the numerator of which shall be the total number of shares of
Common Stock issued and outstanding or deemed pursuant to the terms
hereof to be issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date; and
(B) the denominator of which shall be (x) the total number of
shares of Common Stock issued and outstanding or deemed pursuant to
the terms hereof to be issued and outstanding immediately prior to the
time of such issuance or the close of business on such record date,
plus (y) the number of shares of Common Stock issuable in payment of
----
such dividend or distribution or upon conversion or exercise of such
Convertible Securities;
and provided, however, (i) if such record date shall have been fixed and such
dividend is not fully paid or if such distribution is not fully made on the date
fixed therefor, the Conversion Price shall be recomputed accordingly as of the
close of business on such record date and thereafter the Conversion Price shall
be adjusted pursuant to this subparagraph (e)(iv) as of the time of actual
payment of such dividends or distributions; or (ii) if such Convertible
Securities provide, with the passage of time or otherwise, for any decrease or
increase in the number of shares of Common Stock issuable upon conversion or
exercise thereof (or upon the occurrence of a record date with respect thereto),
the Conversion Price computed upon the original issue thereof (or upon the
occurrence of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon any such decrease or increase becoming
effective, be recomputed to reflect such decrease or increase insofar as it
affects the rights of conversion or exercise of the Convertible Securities then
outstanding; or (iii) upon the expiration of any rights of conversion or
exercise under any unexercised Convertible Securities, the Conversion Price
computed upon the original issue thereof (or upon the occurrence of a record
date with respect thereto), and any subsequent adjustments based thereon, shall,
upon such expiration, be recomputed as if the only additional shares of Common
Stock issued were the shares of such stock, if any, actually issued upon the
conversion or exercise of such Convertible Securities; or (iv) in the event of
issuance of Convertible Securities which expire by their terms not more than
sixty (60) days after the date of
<PAGE>
8
issuance thereof, no adjustments of the Conversion Price shall be made until the
expiration or exercise of all such Convertible Securities, whereupon such
adjustment shall be made in the manner provided in this subparagraph (e)(iv).
(v) Adjustment of Conversion Price for Diluting Issues.
--------------------------------------------------
(A) If at any time or from time to time after the Base Date, the
Corporation issues or sells, or is deemed by the provisions of this
subparagraph (e)(v) to have issued or sold Additional Shares of
Common Stock, for an Effective Price less than the Conversion Price
for the Series A Convertible Preferred Stock in effect on the date
of and immediately prior to such issue, or the Corporation issues or
sells, or is deemed by the provisions of this subparagraph (e)(v) to
have issued or sold Additional Shares of Common Stock, for an
Effective Price less than the Market Price in effect on the date of
and immediately prior to such issue, then and in each such case the
then existing Conversion Price for the Series A Convertible
Preferred Stock shall be reduced, as of the opening of business of
the date of such issue or sale, to the lower of the prices
determined as follows:
(1) by multiplying the Conversion Price for the Series A
Convertible Preferred Stock in effect immediately prior to the
time of such issue or sale by a fraction (a) the numerator of
which shall be the sum of (i) the number of shares of Common
Stock Outstanding immediately prior to such issue or sale plus
(ii) the number of shares of Common Stock which the aggregate
consideration received (or by the provisions hereof deemed to
have been received) by the Corporation for the total number of
Additional Shares of Common Stock so issued would purchase at
such Conversion Price for the Series A Convertible Preferred
Stock and (b) the denominator of which shall be the number of
shares of Common Stock Outstanding at the close of business on
the date of such issue after giving effect to such issue of
Additional Shares of Common Stock; and
<PAGE>
9
(2) by multiplying the Conversion Price for the Series A
Convertible Preferred Stock in effect immediately prior to the
time of such issue or sale by a fraction (a) the numerator of
which shall be the sum of (i) the number of shares of Common
Stock Outstanding immediately prior to such issue or sale
multiplied by the Market Price immediately prior to such issue or
sale plus (ii) the aggregate consideration received (or by the
provisions hereof deemed to have been received) by the
Corporation for the total number of Additional Shares of Common
Stock so issued, and (b) the denominator of which shall be the
product of (iii) the number of shares of Common Stock Outstanding
at the close of business on the date of such issue after giving
effect to such issue of Additional Shares of Common Stock,
multiplied by (iv) the Market Price immediately prior to such
issue or sale.
(B) For the purpose of making any adjustment required under this
subparagraph (e)(v), the consideration received by the Corporation for
any issue or sale of securities shall (1) to the extent it consists of
cash, be computed at the amount of cash received by the Corporation
prior to deduction of any expenses payable by the Corporation and any
underwriting or similar commissions, compensation or concessions paid
or allowed by the Corporation in connection with such issue or sale,
(2) to the extent it consists of property other than cash, be computed
at the fair value of that property as determined in good faith by the
Board of Directors and (3) if Additional Shares of Common Stock,
Convertible Securities or Options to purchase either Additional Shares
of Common Stock or Convertible Securities are issued or sold together
with other stock or securities or other assets of the Corporation for
a consideration which covers both, be computed (as provided in clauses
(1) and (2) above) as the portion of the consideration so received
that may be determined in good faith by the Board of Directors to be
allocable to such Additional Shares of Common Stock, Convertible
Securities or Options.
<PAGE>
10
(C) For the purpose of the adjustment required under this
subparagraph (e)(v), if at any time or from time to time after the
Base Date for the Series A Convertible Preferred Stock, the
Corporation issues or sells any Options or Convertible Securities,
then in each case the Corporation shall be deemed to have issued at
the time of the issuance of such Options or Convertible Securities,
then in each case the Corporation shall be deemed to have issued at
the time of the issuance of such Options or Convertible Securities the
maximum number of Additional Shares of Common Stock (as set forth in
the instruments relating thereto, giving effect to any provision
contained therein for a subsequent upward adjustment of such number)
issuable upon exercise or conversion thereof and to have received as
consideration for the issuance of such shares an amount equal to the
total amount of the consideration, if any, received by the Corporation
for the issuance of such Options or Convertible Securities plus, in
the case of such Options, the minimum amounts of consideration, if any
(as set forth in the instruments relating thereto, giving effect to
any provision contained therein for a subsequent downward adjustment
of such consideration), payable to the Corporation upon the exercise
of such Options and, in the case of Convertible Securities, the
minimum amounts of consideration, if any, payable to the Corporation
(other than by cancellation of liabilities or obligations evidenced by
such Convertible Securities). No further adjustment of the Conversion
Price for the Series A Convertible Preferred Stock, adjusted upon the
issuance of such Options or Convertible Securities, shall be made as a
result of the actual issuance of Additional Shares of Common Stock on
the exercise of any such Options or the conversion of any such
Convertible Securities. If any such Options or the conversion
privilege represented by any such Convertible Securities shall expire
without having been exercised and fewer than the maximum number of
Additional Shares of Common Stock deemed issued thereunder upon
issuance thereof shall have actually been issued thereunder, or more
than the minimum consideration deemed to have been received by the
Corporation upon issuance thereof shall have been actually received by
the Corporation, then the Conversion Price for the Series A
<PAGE>
11
Convertible Preferred Stock adjusted upon the issuance of such Options
or Convertible Securities shall be readjusted to the Conversion Price
for the Series A Convertible Preferred Stock which would have been in
effect had an adjustment been made on the basis that the only
Additional Shares of Common Stock so issued were the Additional Shares
of Common Stock, if any, actually issued or sold on the exercise of
such Options or rights of conversion of such Convertible Securities,
and such Additional Shares of Common Stock, if any, were issued or
sold for the consideration actually received by the Corporation upon
such exercise, plus the consideration, if any, actually received by
the Corporation for the granting of all such Options, whether or not
exercised, plus the consideration received for issuing or selling the
Convertible Securities actually converted plus the consideration, if
any, actually received by the Corporation (other than by cancellation
of liabilities or obligations evidenced by such Convertible
Securities) on the conversion of such Convertible Securities.
(D) Except as expressly provided herein, no adjustment in the
Conversion Price of any share of Series A Convertible Preferred Stock
shall be made in respect of the issue of Additional Shares of Common
Stock unless the consideration per share for such Additional Shares of
Common Stock issued or deemed to be issued by the Corporation is less
than the Conversion Price for such share of Series A Convertible
Preferred Stock or Market Price, in each case in effect on the date
of, and immediately prior to, such issue.
(vi) Reorganizations, Mergers, Consolidations, or Sales of Assets. If
------------------------------------------------------------
at any time or from time to time there shall be a capital reorganization of the
Common Stock (other than a subdivision, combination, reclassification, or
exchange of shares provided for elsewhere in this paragraph (e)) or a merger or
consolidation of the Corporation with or into another corporation, or the sale
of all or substantially all of the Corporation's properties and assets to any
other person which is effected so that holders of Common Stock are entitled to
receive (either directly or upon subsequent liquidation) stock, securities or
assets with respect to or in exchange for Common Stock, then, as a part of such
reorganization, merger, consolidation, or sale, provision shall be made so that
the holders of the Series A
<PAGE>
12
Convertible Preferred Stock shall thereafter be entitled to receive upon
conversion of the Series A Convertible Preferred Stock, the number of shares of
stock, securities or assets of the Corporation, or of the successor corporation
resulting from such merger or consolidation or sale, to which a holder of Common
Stock deliverable upon conversion would have been entitled on such capital
reorganization, merger, consolidation, or sale. In any such case, appropriate
adjustment shall be made in the application of the provisions of this paragraph
(e) with respect to the rights of the holders of the Series A Convertible
Preferred Stock after the reorganization, merger, consolidation, or sale to the
end that the provisions of this paragraph (e) (including adjustment of the
Conversion Price then in effect and the number of shares purchasable upon
conversion of the Series A Convertible Preferred Stock) shall be applicable
after that event as nearly equivalent as may be practicable.
(vii) No Adjustment. No adjustment to the Conversion Price shall be
-------------
made if such adjustment would result in a change in the Conversion Price of less
than $0.01. Any adjustment of less than $0.01 which is not made shall be carried
forward and shall be made at the time of and together with any subsequent
adjustment which, on a cumulative basis, amounts to an adjustment of $0.01 or
more in the Conversion Price.
(viii) Certificate as to Adjustments. Upon the occurrence of each
-----------------------------
adjustment or readjustment of the Conversion Price pursuant to this paragraph
(e), the Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and cause independent public
accountants selected by the Corporation to verify such computation and prepare
and furnish to each holder of Series A Convertible Preferred Stock a certificate
setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based. The Corporation shall,
upon the written request at any time of any holder of Series A Convertible
Preferred Stock, furnish or cause to be furnished to such holder a like
certificate setting forth (i) such adjustments and readjustments, (ii) the
Conversion Price at that time in effect, and (iii) the number of shares of
Common Stock and the amount, if any, of other property which at that time would
be received upon the conversion of Series A Convertible Preferred Stock.
(ix) Notices of Record Date. In the event of any taking by the
----------------------
Corporation of a record of the holders of any
<PAGE>
13
class of securities other than Series A Convertible Preferred Stock for the
purpose of determining the holders thereof who are entitled to receive any
dividend or other distribution, any Convertible Securities or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, the Corporation
shall mail to each holder of Series A Convertible Preferred Stock at least
twenty (20) days prior to the date specified therein, a notice specifying the
date on which any such record is to be taken for the purpose of such dividend,
distribution or rights, and the amount and character of such dividend,
distribution or rights.
(x) Reservation of Stock Issuable Upon Conversion. The Corporation
---------------------------------- ----------
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock solely for the purpose of effecting the conversion of the
shares of Series A Convertible Preferred Stock such number of its shares of
Common Stock as shall from time to time be sufficient to effect the conversion
of all outstanding shares of the Series A Convertible Preferred Stock; and if at
any time the number of authorized but unissued shares of Common Stock shall not
be sufficient to effect the conversion of all then outstanding shares of Series
A Convertible Preferred Stock, the Corporation will take such corporate action
as may, in the opinion of its counsel, be necessary to increase its authorized
but unissued shares of Common Stock to such number of shares as shall be
sufficient for such purpose.
(f) Protective Provisions. In addition to any other rights provided
---------------------
by law, so long as any Series A Convertible Preferred Stock shall be
outstanding, the Corporation shall not, without first obtaining the affirmative
vote or written consent of the holders of not less than 66-2/3% of such
outstanding shares of Series A Convertible Preferred Stock, amend or repeal any
provision of, or add any provision to, the Corporation's Certificate of
Incorporation or Bylaws, as amended, or file any certificate of designations,
preferences and rights of any series of Preferred Stock, par value $0.01 per
share, of the Corporation if such action would alter or change the preferences,
rights, privileges or powers of, or the restrictions provided for the benefit
of, any Series A Convertible Preferred Stock. Nothing herein shall be deemed to
restrict the Board of Directors from amending the terms hereof prior to the
issuance of any Series A Convertible Preferred Stock.
<PAGE>
14
(g) Notices. Any notice required by the provisions hereof to be given
-------
to the holders of shares of Series A Convertible Preferred Stock shall be deemed
given if deposited in the United States Postal Service, postage prepaid, and
addressed to each holder of record at his address appearing on the books of the
Corporation. For so long as Ramsay Health Care, Inc., a Delaware corporation,
or any entity controlled by it shall be the beneficial owner of any shares of
the Series A Convertible Preferred Stock, a copy of any such notices shall also
be given to Haythe & Curley, 237 Park Avenue, New York, New York 10017,
Attention: John J. Butler, Esq.
The designation was authorized by resolution duly adopted by the Board
of Directors of the Corporation by written consent on June 23, 1994.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation to be signed by Gregory H. Browne, its President, and attested to by
Philip Symon, its Treasurer and Assistant Secretary, on the 24th day of June,
1994.
______________________________
Gregory H. Browne
President
Attest:
_________________________________
Philip G. Symon
Treasurer and Assistant Secretary
<PAGE>
Exhibit 3.3
CERTIFICATE OF AMENDMENT
TO THE AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
FPM BEHAVIORAL HEALTH, INC.
After Receipt of Payment for Stock
Pursuant to Section 242 of the General
Corporation Law of the State of Delaware
----------------------------------------
FPM Behavioral Health, Inc., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), DOES HEREBY CERTIFY as follows:
FIRST: The Amended and Restated Certificate of Incorporation of the
Corporation is hereby amended by deleting ARTICLE FIRST of the Amended and
Restated Certificate of Incorporation in its present form and substituting
therefor a new ARTICLE FIRST in the following form:
"FIRST: The name of the corporation is Ramsay Managed Care,
Inc. (the "Corporation")."
SECOND: The Amended and Restated Certificate of Incorporation of the
Corporation is hereby further amended by deleting the first sentence of the
first paragraph of ARTICLE FOURTH of the Amended and Restated Certificate of
Incorporation in its present form and substituting therefor
<PAGE>
a new first sentence of the first paragraph of ARTICLE FOURTH in the following
form:
"FOURTH: The total number of shares of capital stock which the
Corporation shall have authority to issue is 1,000,000 shares of
Preferred Stock, $0.01 par value per share (the "Preferred Stock"),
and 20,000,000 shares of Common Stock, $0.01 par value per share (the
"Common Stock")."
THIRD: The amendments to the Amended and Restated Certificate of
Incorporation of the Corporation set forth in this Certificate of Amendment have
been duly adopted in accordance with the applicable provisions of Section 242 of
the General Corporation Law of the State of Delaware, (a) the Board of Directors
of the Corporation having duly adopted resolutions setting forth such amendments
and declaring their advisability and submitting them to the stockholders of the
Corporation for their approval in conformity with the By-laws of the
Corporation, and (b) in lieu of a meeting and vote of stockholders, the holders
of the capital stock having not less than the minimum number of votes that would
have been necessary to adopt such amendments at a meeting at which all
stockholders having a right to vote thereon were present and voted having duly
consented in writing to the adoption of such amendments in accordance with
Section 228 of the General Corporation Law of the State of Delaware and written
notice thereof having
<PAGE>
been given to the holder who did not consent in accordance with Section 228(d)
of the General Corporation Law of the State of Delaware.
* * *
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to
be hereunto affixed and this Certificate of Amendment to its Amended and
Restated Certificate of Incorporation to be signed by Gregory H. Browne, its
President, and attested by Allison Greenhut, its Assistant Secretary, as of this
____ day of September, 1994.
FPM Behavioral Health, Inc.
By_______________________________
Gregory H. Browne
Chief Executive Officer
and President
Attest:
- ----------------------------
Allison Greenhut
Assistant Secretary
<PAGE>
Exhibit 3.4
CERTIFICATE OF DESIGNATIONS OF
PREFERRED STOCK
OF
RAMSAY MANAGED CARE, INC.
Pursuant to Section 151(g) of the
General Corporation Law of the State of Delaware
------------------------------------------------
The undersigned, Remberto Cibran, President and Chief Operating
Officer of Ramsay Managed Care, Inc., a corporation organized and existing under
the General Corporation Law of the State of Delaware (the "Corporation"), on
behalf of the Corporation and in accordance with the provisions of Section 103
thereof, DOES HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors
of the Corporation by Subarticle I of Article FOURTH of the Amended and Restated
Certificate of Incorporation of the Corporation, and in accordance with the
provisions of Section 151(g) of the General Corporation Law of the State of
Delaware, on August 13, 1996, the Board of Directors of the Corporation
authorized and designated 100,000 of the authorized shares of the Preferred
Stock, $0.01 par value, of the Corporation as Series 1996 Preferred Stock and
adopted the following resolution in connection therewith:
RESOLVED, that the Board of Directors of the Corporation, in
accordance with Section 151(g) of the General Corporation Law of the State of
Delaware and Subsection I of Article FOURTH of the Corporation's Amended and
Restated Certificate of Incorporation, hereby authorizes and designates 100,000
shares of Preferred Stock, par value $0.01 per share, as Series 1996 Convertible
Preferred Stock (the "Series 1996 Preferred Stock"), which Series 1996 Preferred
Stock shall be described and limited as follows:
(a) Definitions. For purposes of this Designation, the following
-----------
definitions shall apply:
"Additional Shares of Common Stock" shall mean all shares of Common
Stock, par value $0.01 per share (the "Common Stock"), of the Corporation issued
subsequent to the Base Date (or, pursuant to subparagraph (e)(v), deemed to be
issued subsequent to the Base Date) by the Corporation,
<PAGE>
2
other than shares of Common Stock issued or issuable (A) upon conversion of
shares of Series 1996 Preferred Stock; (B) pursuant to any Options issued under
the 1994 Stock Option Plan, pursuant to any Options or Convertible Securities
issued pursuant to the 1996 Long Term Incentive Plan or pursuant to the 1994
Employee Stock Purchase Plan of the Corporation; and (C) upon exercise of
Options or Convertible Securities other than those covered by clause (B) above,
in each case which Options or Convertible Securities were outstanding as of the
Base Date.
"Base Date" shall mean September 10, 1996.
"Board of Directors" shall mean the Board of Directors of the
Corporation.
"Common Stock Outstanding" shall include all Common Stock issued and
outstanding and issuable upon exercise of all outstanding Options and conversion
of all outstanding Convertible Securities.
"Convertible Securities" shall mean any evidences of indebtedness,
shares or securities convertible into or exchangeable for shares of Common
Stock.
"Effective Price" of Additional Shares of Common Stock shall mean the
quotient determined by dividing the total number of Additional Shares of Common
Stock issued or sold, or deemed to have been issued or sold by the Corporation
under subparagraph (e)(v), into the aggregate consideration received or deemed
to have been received by the Corporation for such issue under subparagraph
(e)(v).
"Market Price" shall mean, for any day, the last sale price for the
shares of Common Stock on the principal securities exchange on which such shares
are listed or admitted to trading, or, if not so listed or admitted to trading
on any securities exchange, the last sale price for the shares of Common Stock
on the Nasdaq National Market or the Nasdaq SmallCap Market, whichever is
applicable, or, if such shares shall not be included on either such market, the
average of the closing bid and asked prices in the over-the-counter market, in
each such case, unless otherwise provided herein, averaged over a period of 20
consecutive business days prior to the day as of which Market Price is being
determined. If at any time the shares of Common Stock are not listed on any
such exchange or in such markets or quoted in the over-the-counter market, the
Market Price of the shares of Common Stock shall be deemed to be the higher of
(i) the book value thereof, as determined in accordance with generally accepted
accounting principles consistent
<PAGE>
3
with those then being applied by the Corporation, by any firm of independent
certified public accountants (which may be the regular auditors of the
Corporation) of recognized national standing selected by the Board of Directors,
as of the last day of the month ending within 31 days preceding the date as of
which the determination is to be made, and (ii) the fair value thereof, as
determined in good faith by an independent brokerage firm, Standard & Poor's
Corporation or Moody's Investors Service, as selected by the Board of Directors,
as of a date which is within 15 days preceding the date as of which the
determination is to be made.
"Options" shall mean rights, options or warrants to subscribe for,
purchase or otherwise acquire shares of Common Stock or Convertible Securities.
(b) Dividend Rights. From and after the issuance of the Series 1996
---------------
Preferred Stock, the holder of each share of the Series 1996 Preferred Stock
shall be entitled to receive, and shall be paid, when and as declared by the
Board of Directors, out of funds legally available therefor, cumulative
dividends at an annual rate of $1.50 per share, payable in arrears quarterly on
January 1, April 1, July 1 and October 1, to stockholders of record on a date
not more than 20 days prior to the date on which such cash dividends are
payable, said dividends to commence accrual on the date of issuance of the
applicable shares. Such dividends shall be prior and in preference to any
declaration of payment of any dividend on the Common Stock. Such dividends
shall be cumulative and shall accrue whether or not declared by the Board of
Directors. No cash dividends shall be paid with respect to any class or series
of capital stock of the Corporation, including without limitation, the Common
Stock, until all dividends accrued on any outstanding shares of the Series 1996
Preferred Stock, whether or not declared, have been set apart and fully paid.
No accumulation of dividends on the Series 1996 Preferred Stock shall bear
interest.
(c) Liquidation Rights. In the event of liquidation, dissolution or
------------------
winding up of the Corporation, whether voluntary or involuntary, the holder of
each share of the Series 1996 Preferred Stock, by reason of ownership thereof,
shall be entitled to receive in exchange for and in redemption of shares of the
Series 1996 Preferred Stock held, prior and in preference to any distribution of
any of the assets or surplus funds of the Corporation to the holders of any
class or series of capital stock of the Corporation, including without
limitation, the Common Stock, an amount equal to $30.00 per share plus all
accrued but unpaid dividends, whether or not declared, on such share. All of
the preferential amounts to be paid to the holders of
<PAGE>
4
the Series 1996 Preferred Stock under this Section (c) shall be paid or set
apart for payment before the payment or setting apart for payment of any amount
for, or the distribution of any assets or surplus funds of the Corporation to,
the holders of any class or series of capital stock of the Corporation,
including without limitation, the Common Stock of the Corporation, in connection
with such liquidation, dissolution or winding up, whether voluntary or
involuntary. If the assets or surplus funds to be distributed to the holders of
the Series 1996 Preferred Stock are insufficient to permit the payment to such
holders of their full preferential amount, the assets and surplus funds legally
available for distribution shall be distributed ratably among the holders of the
Series 1996 Preferred Stock in proportion to the full preferential amount each
such holder is otherwise entitled to receive. After the payment or distribution
to the holders of the Series 1996 Preferred Stock of the full preferential
amounts aforesaid, the holders of the Common Stock then outstanding shall be
entitled to receive ratably all the remaining assets of the Corporation.
(d) Voting Rights. Except as required by law, each share of the
-------------
Series 1996 Preferred Stock shall entitle the holder thereof to that number of
votes per share equal to the number of whole shares of Common Stock into which
such share of Series 1996 Preferred Stock is then convertible on all matters put
to a vote of the stockholders of the Corporation and shall otherwise have voting
rights and powers equal to the voting rights and powers of the Common Stock.
Such number of votes shall be appropriately adjusted in the event of any
recapitalization, reorganization, stock dividend, stock split or similar event
affecting the capital stock of the Corporation. In any and all circumstances,
the holders of the Series 1996 Preferred Stock shall be entitled to notice of
any stockholders' meeting in accordance with the Bylaws of the Corporation and
shall vote together with the holders of the Common Stock as one class upon any
matter submitted to a vote of stockholders (whether at a meeting or by written
consent), except those matters required by law to be submitted to a class vote
of the holders of Series 1996 Preferred Stock.
(e) Conversion. Each holder of shares of the Series 1996 Preferred
Stock shall have conversion rights as follows:
(i) Right to Convert.
(A) Each share of the Series 1996 Preferred Stock shall be
convertible, at the option of the
<PAGE>
5
holder thereof, at any time after the date of issuance of such share
at the office of the Corporation or any transfer agent for the
Series 1996 Preferred Stock, into that number of fully paid and
nonassessable shares of Common Stock that results from dividing the
Conversion Price per share of the Series 1996 Preferred Stock in
effect at conversion into $30.00 and multiplying the quotient
obtained by the number of shares of the Series 1996 Preferred Stock
being converted. The initial Conversion Price of the Series 1996
Preferred Stock is $1.00 per share. The initial Conversion Price of
the Series 1996 Preferred Stock is subject to adjustment from time
to time as provided herein.
(B) No fractional shares of Common Stock shall be issued upon
conversion of shares of the Series 1996 Preferred Stock and if any
shares of the Series 1996 Preferred Stock surrendered by a holder,
in the aggregate, for conversion which would otherwise result in a
fractional share of Common Stock, then such fractional share shall
be redeemed at the then effective Conversion Price per share,
payable as promptly as possible when funds are legally available
therefor.
(ii) Mechanics of Conversion. Before any holder of shares of the
-----------------------
Series 1996 Preferred Stock shall be entitled to convert the same into shares of
Common Stock, such holder shall surrender the certificate or certificates
therefor, duly endorsed and accompanied by properly executed stock powers, at
the office of the Corporation or of any transfer agent for the Series 1996
Preferred Stock, shall give written notice to the Corporation at such office of
the name or names in which such holder wishes the certificate or certificates
for shares of Common Stock to be issued if different from the name shown on the
books and records of the Corporation and shall pay any applicable transfer tax.
Said conversion notice shall also contain such representations as may reasonably
be required by the Corporation to the effect that the shares to be received upon
conversion are not being acquired and will not be transferred in any way which
might violate the then applicable securities laws. The Corporation shall, as
soon as practicable thereafter, issue and deliver at such office to such holder
of the Series 1996 Preferred Stock, or to the nominee or nominees of such
holder, a certificate or certificates for the number shares of Common Stock to
which such holder shall be entitled as aforesaid. Such conversion shall be
deemed to have been made immediately prior to the
<PAGE>
6
close of business on the date of such surrender of the shares of the Series 1996
Preferred Stock to be converted, and the person or persons entitled to receive
the shares of Common Stock issuable upon such conversion shall be treated for
all purposes as the record holder or holders of such shares of Common Stock as
of such date. All certificates issued upon conversion of the Series 1996
Preferred Stock shall contain a legend setting forth any applicable restrictions
upon such shares imposed by applicable securities laws.
(iii) Adjustment for Subdivisions or Combinations of Common Stock.
-----------------------------------------------------------
In the event the Corporation at any time or from time to time after the Base
Date effects a subdivision or combination of its outstanding Common Stock into a
greater or lesser number of shares without a proportionate and corresponding
subdivision or combination of the outstanding Series 1996 Preferred Stock, then
and in each such event the Conversion Price shall be decreased or increased
proportionately.
(iv) Adjustments for Dividends, Distributions and Convertible
--------------------------------------------------------
Securities. In the event the Corporation at any time or from time to time after
- ----------
the Base Date shall make or issue, or fix a record date for the determination of
holders of Common Stock entitled to receive, a dividend or other distribution
payable in Additional Shares of Common Stock or Convertible Securities without
payment of any consideration by such holder of such shares of Common Stock,
without a proportionate and corresponding dividend or other distribution to
holders of the Series 1996 Preferred Stock, then and in each such event the
maximum number of shares (as set forth in the instrument relating thereto
without regard to any provisions contained therein for subsequent adjustment of
such number) of Common Stock issuable in payment of such dividend or
distribution or upon conversion or exercise of such Convertible Securities shall
be deemed, for purposes of this subparagraph (e)(iv), to be issued and
outstanding as of the time of such issuance or, in the event such a record date
shall have been fixed, as of the close of business on such record date. In each
such event the then applicable Conversion Price shall be decreased as of the
time of such issuance or, in the event such a record date shall have been fixed,
as of the close of business on such record date, by multiplying the then
applicable Conversion Price by a fraction,
(A) the numerator of which shall be the total number of shares
of Common Stock issued and outstanding or deemed pursuant to the
terms hereof to be issued and outstanding immediately prior to
<PAGE>
7
the time of such issuance or the close of business on such record
date; and
(B) the denominator of which shall be (x) the total number of
shares of Common Stock issued and outstanding or deemed pursuant to
the terms hereof to be issued and outstanding immediately prior to
the time of such issuance or the close of business on such record
date, plus (y) the number of shares of Common Stock issuable in
----
payment of such dividend or distribution or upon conversion or
exercise of such Convertible Securities;
and provided, however, (i) if such record date shall have been fixed and such
dividend is not fully paid or if such distribution is not fully made on the date
fixed therefor, the Conversion Price shall be recomputed accordingly as of the
close of business on such record date and thereafter the Conversion Price shall
be adjusted pursuant to this subparagraph (e)(iv) as of the time of actual
payment of such dividends or distributions; or (ii) if such Convertible
Securities provide, with the passage of time or otherwise, for any decrease or
increase in the number of shares of Common Stock issuable upon conversion or
exercise thereof (or upon the occurrence of a record date with respect thereto),
the Conversion Price computed upon the original issue thereof (or upon the
occurrence of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon any such decrease or increase becoming
effective, be recomputed to reflect such decrease or increase insofar as it
affects the rights of conversion or exercise of the Convertible Securities then
outstanding; or (iii) upon the expiration of any rights of conversion or
exercise under any unexercised Convertible Securities, the Conversion Price
computed upon the original issue thereof (or upon the occurrence of a record
date with respect thereto), and any subsequent adjustments based thereon, shall,
upon such expiration, be recomputed as if the only additional shares of Common
Stock issued were the shares of such stock, if any, actually issued upon the
conversion or exercise of such Convertible Securities; or (iv) in the event of
issuance of Convertible Securities which expire by their terms not more than
sixty (60) days after the date of issuance thereof, no adjustments of the
Conversion Price shall be made until the expiration or exercise of all such
Convertible Securities, whereupon such adjustment shall be made in the manner
provided in this subparagraph (e)(iv).
(v) Adjustment of Conversion Price for Diluting Issues.
--------------------------------------------------
<PAGE>
8
(A) If at any time or from time to time after the Base Date, the
Corporation issues or sells, or is deemed by the provisions of this
subparagraph (e)(v) to have issued or sold Additional Shares of Common
Stock, for an Effective Price less than the Conversion Price for the
Series 1996 Preferred Stock in effect on the date of and immediately
prior to such issue, or the Corporation issues or sells, or is deemed
by the provisions of this subparagraph (e)(v) to have issued or sold
Additional Shares of Common Stock, for an Effective Price less than
the Market Price in effect on the date of and immediately prior to
such issue, then and in each such case the then existing Conversion
Price for the Series 1996 Preferred Stock shall be reduced, as of the
opening of business of the date of such issue or sale, to the lower of
the prices determined as follows:
(1) by multiplying the Conversion Price for the Series 1996
Preferred Stock in effect immediately prior to the time of such
issue or sale by a fraction (a) the numerator of which shall be
the sum of (i) the number of shares of Common Stock Outstanding
immediately prior to such issue or sale plus (ii) the number of
shares of Common Stock which the aggregate consideration received
(or by the provisions hereof deemed to have been received) by the
Corporation for the total number of Additional Shares of Common
Stock so issued or sold would purchase at such Conversion Price
for the Series 1996 Preferred Stock and (b) the denominator of
which shall be the number of shares of Common Stock Outstanding
at the close of business on the date of such issue or sale after
giving effect to such issue or sale of Additional Shares of
Common Stock; and
(2) by multiplying the Conversion Price for the Series 1996
Preferred Stock in effect immediately prior to the time of such
issue or sale by a fraction (a) the numerator of which shall be
the sum of (i) the number of shares of Common Stock Outstanding
immediately prior to such issue or sale multiplied by the Market
Price immediately prior to such issue or sale plus (ii) the
aggregate consideration received (or by the
<PAGE>
9
provisions hereof deemed to have been received) by the
Corporation for the total number of Additional Shares of Common
Stock so issued or sold, and (b) the denominator of which shall
be the product of (iii) the number of shares of Common Stock
Outstanding at the close of business on the date of such issue or
sale after giving effect to such issue or sale of Additional
Shares of Common Stock, multiplied by (iv) the Market Price
immediately prior to such issue or sale.
(B) For the purpose of making any adjustment required under this
subparagraph (e)(v), the consideration received by the Corporation for
any issue or sale of securities shall (1) to the extent it consists of
cash be computed at the amount of cash received by the Corporation
prior to deduction of any expenses payable by the Corporation and any
underwriting or similar commissions, compensation or concessions paid
or allowed by the Corporation in connection with such issue or sale,
(2) to the extent it consists of property other than cash, be computed
at the fair value of that property as determined in good faith by the
Board of Directors and (3) if Additional Shares of Common Stock,
Convertible Securities or Options to purchase either Additional Shares
of Common Stock or Convertible Securities are issued or sold together
with other stock or securities or other assets of the Corporation for
a consideration which covers both, be computed (as provided in clauses
(1) and (2) above) as the portion of the consideration so received
that may be reasonably determined in good faith by the Board of
Directors to be allocable to such Additional Shares of Common Stock,
Convertible Securities or Options.
(C) For the purpose of the adjustment required under this
subparagraph (e)(v), if at any time or from time to time after the
Base Date for the Series 1996 Preferred Stock, the Corporation issues
or sells any Options or Convertible Securities (other than Options
specified in the definition of "Additional Shares of Common Stock"),
then in each case the Corporation shall be deemed to have issued or
sold at the time of the issuance or sale of such Options or
Convertible Securities the maximum number of Additional Shares of
Common Stock (as set forth in
<PAGE>
10
the instruments relating thereto, giving effect to any provision
contained therein for a subsequent upward adjustment of such number)
issuable upon exercise or conversion thereof and to have received as
consideration for the issuance or sale of such shares an amount equal
to the total amount of the consideration, if any, received by the
Corporation for the issuance or sale of such Options or Convertible
Securities plus, in the case of such Options, the minimum amounts of
consideration, if any (as set forth in the instruments relating
thereto, giving effect to any provision contained therein for a
subsequent downward adjustment of such consideration), payable to the
Corporation upon the exercise of such Options and, in the case of
Convertible Securities, the minimum amounts of consideration, if any,
payable to the Corporation (other than by cancellation of liabilities
or obligations evidenced by such Convertible Securities). No further
adjustment of the Conversion Price for the Series 1996 Preferred
Stock, adjusted upon the issuance or sale of such Options or
Convertible Securities, shall be made as a result of the actual
issuance or sale of Additional Shares of Common Stock on the exercise
of any such Options or the conversion of any such Convertible
Securities. If any such Options or the conversion privilege
represented by any such Convertible Securities shall expire without
having been exercised and fewer than the maximum number of Additional
Shares of Common Stock deemed issued thereunder upon issuance thereof
shall have actually been issued thereunder, or more than the minimum
consideration deemed to have been received by the Corporation upon
issuance thereof shall have been actually received by the Corporation,
then the Conversion Price for the Series 1996 Preferred Stock adjusted
upon the issuance of such Options or Convertible Securities shall be
readjusted to the Conversion Price for the Series 1996 Preferred Stock
which would have been in effect had an adjustment been made on the
basis that the only Additional Shares of Common Stock so issued were
the Additional Shares of Common Stock, if any, actually issued or sold
on the exercise of such Options or rights of conversion of such
Convertible Securities, and such Additional Shares of Common Stock, if
any, were issued or sold for the consideration actually received by
the Corporation upon such exercise, plus the
<PAGE>
11
consideration, if any, actually received by the Corporation for the
granting of all such Options, whether or not exercised, plus the
consideration received for issuing or selling the Convertible
Securities actually converted plus the consideration, if any, actually
received by the Corporation (other than by cancellation of liabilities
or obligations evidenced by such Convertible Securities) on the
conversion of such Convertible Securities.
(D) Except as expressly provided herein, no adjustment in the
Conversion Price of any share of the Series 1996 Preferred Stock shall
be made in respect of the issue of Additional Shares of Common Stock
unless the consideration per share for such Additional Shares of
Common Stock issued or sold or deemed to be issued or sold by the
Corporation is less than the Conversion Price for such share of the
Series 1996 Preferred Stock or Market Price, in each case in effect on
the date of, and immediately prior to, such issue or sale.
(vi) Reorganizations, Mergers, Consolidations, or Sales of Assets. If
------------------------------------------------------------
at any time or from time to time there shall be a capital reorganization of the
Common Stock (other than a subdivision, combination, reclassification, or
exchange of shares provided for elsewhere in this paragraph (e)) or a merger or
consolidation of the Corporation with or into another corporation, or the sale
of all or substantially all of the Corporation's properties and assets to any
other person which is effected so that holders of Common Stock are entitled to
receive (either directly or upon subsequent liquidation) stock, securities or
assets with respect to or in exchange for Common Stock, then, as a part of such
reorganization, merger, consolidation, or sale, provision shall be made so that
the holders of the Series 1996 Preferred Stock shall thereafter be entitled to
receive upon conversion of the Series 1996 Preferred Stock, the number of shares
of stock, securities or assets of the Corporation, of the successor corporation
resulting from such merger or consolidation or sale, or of any other corporation
as a result of such merger or consolidation or sale, to which a holder of Common
Stock deliverable upon conversion would have been entitled on such capital
reorganization, merger, consolidation, or sale. In any such case, appropriate
adjustment shall be made in the application of the provisions of this paragraph
(e) with respect to the rights of the holders of the Series 1996 Preferred Stock
after the reorganization, merger, consolidation, or sale to the end that the
provisions of
<PAGE>
12
this paragraph (e) (including adjustment of the Conversion Price then in effect
and the number of shares purchasable upon conversion of the Series 1996
Preferred Stock) shall be applicable after that event as nearly equivalent as
may be practicable.
(vii) No Adjustment. No adjustment to the Conversion Price shall be
-------------
made if such adjustment would result in a change in the Conversion Price of less
than $.01. Any adjustment of less than $.01 which is not made shall be carried
forward and shall be made at the time of and together with any subsequent
adjustment which, on a cumulative basis, amounts to an adjustment of $.01 or
more in the Conversion Price.
(viii) Certificate as to Adjustments. Upon the occurrence of each
-----------------------------
adjustment or readjustment of the Conversion Price pursuant to this paragraph
(e), the Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and cause independent public
accountants selected by the Corporation to verify such computation and prepare
and furnish to each holder of the Series 1996 Preferred Stock a certificate
setting forth such adjustment or readjustment and showing in reasonable detail
the facts upon which such adjustment or readjustment is based. The Corporation
shall, upon the written request at any time of any holder of the Series 1996
Preferred Stock, furnish or cause to be furnished to such holder a like
certificate setting forth (i) such adjustments and readjustments, (ii) the
Conversion Price at that time in effect, and (iii) the number of shares of
Common Stock and the amount, if any, of other property which at that time would
be received upon the conversion of the Series 1996 Preferred Stock.
(ix) Notices of Record Date. In the event of any taking by the
----------------------
Corporation of a record of the holders of any class of securities other than the
Series 1996 Preferred Stock for the purpose of determining the holders thereof
who are entitled to receive any dividend or other distribution, any Convertible
Securities or any right to subscribe for, purchase or otherwise acquire any
shares of stock of any class or any other securities or property, or to receive
any other right, the Corporation shall mail to each holder of the Series 1996
Preferred Stock at least twenty (20) days prior to the date specified therein, a
notice specifying the date on which any such record is to be taken for the
purpose of such dividend, distribution or rights, and the amount and character
of such dividend, distribution or rights.
<PAGE>
13
(x) Reservation of Stock Issuable Upon Conversion. The Corporation
---------------------------------------------
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock solely for the purpose of effecting the conversion of the
shares of the Series 1996 Preferred Stock such number of its shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Series 1996 Preferred Stock; and if at any time the
number of authorized but unissued shares of Common Stock shall not be sufficient
to effect the conversion of all then outstanding shares of the Series 1996
Preferred Stock, the Corporation will take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purpose.
(f) Protective Provisions. In addition to any other rights
---------------------
provided by law, so long as any Series 1996 Preferred Stock shall be
outstanding, the Corporation shall not, without first obtaining the affirmative
vote or written consent of the holders of not less than 66-2/3% of such
outstanding shares of the Series 1996 Preferred Stock, amend or repeal any
provision of, or add any provision to, the Corporation's Certificate of
Incorporation or Bylaws, as amended, or file any certificate of designations,
preferences and rights of any series of Preferred Stock, par value $0.01 per
share, of the Corporation, if such action would alter or change the preferences,
rights, privileges or powers of, or the restrictions provided for the benefit
of, any Series 1996 Preferred Stock. Nothing herein shall be deemed to restrict
the Board of Directors from amending the terms hereof prior to the issuance of
any Series 1996 Preferred Stock.
(g) Notices. Any notice required by the provisions hereof to be
-------
given to the holders of shares of the Series 1996 Preferred Stock shall be
deemed given if deposited in the United States Postal Service, postage prepaid,
and addressed to each holder of record at his address appearing on the books of
the Corporation. For so long as Paul J. Ramsay or any entity controlled by him
shall be the beneficial owner of any shares of the Series 1996 Preferred Stock,
a copy of any such notice shall also be given to Haythe & Curley, 237 Park
Avenue, New York, New York 10017, Attention: Thomas M. Haythe, Esq.
The designation was authorized by resolution duly adopted by the Board
of Directors of the Corporation at a meeting thereof duly called and held on
August 13, 1996, at which a quorum was present and acting throughout.
<PAGE>
14
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to
be hereunder affixed and this Certificate of Designations to be signed by
Remberto Cibran, its President and Chief Operating Officer on the 5th day of
September, 1996.
___________________________
Remberto Cibran
President and
Chief Operating Officer
<PAGE>
Exhibit 4.3
THIS WARRANT CERTIFICATE AND THE WARRANTS EVIDENCED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT")
BUT HAVE BEEN ISSUED PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION AND MAY NOT
BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNTIL
EITHER (i) THE HOLDER THEREOF SHALL HAVE RECEIVED AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY (AS HEREINAFTER DEFINED) THAT
REGISTRATION THEREOF UNDER THE SECURITIES ACT IS NOT REQUIRED OR (ii) A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT WITH RESPECT THERETO SHALL HAVE
BECOME EFFECTIVE.
THIS WARRANT CERTIFICATE IS ISSUED PURSUANT TO AND IS SUBJECT TO THE TERMS AND
CONDITIONS OF A STOCK PURCHASE AGREEMENT DATED AS OF SEPTEMBER 10, 1996 BY AND
AMONG RAMSAY MANAGED CARE, INC., PAUL RAMSAY HOSPITALS PTY. LIMITED AND PAUL J.
RAMSAY (A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY) AND
IS ENTITLED TO THE BENEFITS THEREOF.
300,000 Warrants
WARRANT CERTIFICATE
To Subscribe for and Purchase shares of Common Stock, par value $.01, of
RAMSAY MANAGED CARE, INC.
THIS CERTIFIES that, for value received, Paul Ramsay Hospitals Pty.
Limited, an Australian corporation, or its registered successors and assigns, is
the owner of the number of warrants (the "Warrants") set forth above, each of
which entitles the owner thereof to purchase from Ramsay Managed Care, Inc., a
Delaware corporation (herein called the "Company"), at any time during the
period from the date hereof through 5:00 P.M., New York City Time on September
10, 2006, one share of Common Stock, par value $.01, of the Company
(individually, a "Common Share" and collectively, the "Common Shares"), at an
initial exercise price of $1.00 per share, subject to adjustment from time to
time pursuant to the provisions of paragraph 2. For purposes of this Warrant
Certificate, the term "Common Shares" shall mean the class of capital stock of
the Company designated common stock, par value $.01, as constituted on the date
hereof, and any other class of capital stock of the Company resulting from
successive changes or reclassifications of the Common Shares.
<PAGE>
2
1. Exercise of Warrants. The Warrants evidenced hereby may be
--------------------
exercised by the registered holder hereof, in whole or in part, by the surrender
of this Warrant Certificate, duly endorsed (unless endorsement is waived by the
Company), at the principal office of the Company (or at such other office or
agency of the Company as it may designate by notice in writing to the registered
holder hereof at such holder's last address appearing on the books of the
Company) and upon payment to the Company by certified or official bank check or
checks payable to the order of the Company of the purchase price of the Common
Shares purchased. The Company agrees that the Common Shares so purchased shall
be deemed to be issued to the registered holder hereof on the date on which this
Warrant Certificate shall have been surrendered and payment made for such Common
Shares as aforesaid; provided, however, that no such surrender and payment on
any date when the stock transfer books of the Company shall be closed shall be
effective to constitute the person entitled to receive such Common Shares as the
record holder thereof on such date, but such surrender and payment shall be
effective to constitute the person entitled to receive such Common Shares as the
record holder thereof for all purposes immediately after the opening of business
on the next succeeding day on which such stock transfer books are open. The
certificate(s) for such Common Shares shall be delivered to the registered
holder hereof within a reasonable time, not exceeding five days, after the
Warrants evidenced hereby shall have been so exercised and a new Warrant
Certificate evidencing the number of Warrants, if any, remaining unexercised
shall also be issued to the registered holder within such time unless such
Warrants shall have expired. No fractional Common Shares of the Company, or
scrips for any such fractional shares, shall be issued upon the exercise of any
Warrants.
2. Adjustment in Exercise Price and Number of Shares. The initial
-------------------------------------------------
exercise price of $1.00 per share shall be subject to adjustment from time to
time as hereinafter provided (such price, as last adjusted, being hereinafter
called the "Exercise Price"). Upon each adjustment of the Exercise Price, the
holder of this Warrant shall thereafter be entitled to purchase at the Exercise
Price resulting from such adjustment, the number of shares obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of shares purchasable pursuant hereto immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.
(a) Adjustment of Warrant Exercise Price upon Issue of Common Shares.
----------------------------------------------------------------
Except in the case of the issuance
<PAGE>
3
from time to time of Excluded Shares (as defined below), if and whenever after
the date hereof the Company shall issue or sell any Common Shares for a
consideration per share less than the Exercise Price in effect immediately prior
to the time of such issue or sale, or the Company shall issue or sell any Common
Shares for a consideration per share less than the Market Price (as hereinafter
defined) of the Common Shares at the time of such issue or sale, then, forthwith
upon such issue or sale, the Exercise Price shall be reduced (but not increased,
except as otherwise specifically provided in Section 2(a)(C)) to the lower of
the prices (calculated to the nearest cent) determined as follows:
(x) by dividing (i) an amount equal to the sum of (A) the
aggregate number of Common Shares outstanding immediately prior to
such issue or sale multiplied by the then existing Exercise Price, and
(B) the consideration, if any, received by the Company upon such issue
or sale, by (ii) the aggregate number of Common Shares outstanding
immediately after such issue or sale; and
(y) by multiplying the Exercise Price in effect immediately
prior to the time of such issue or sale by a fraction, the numerator
of which shall be the sum of (i) the aggregate number of Common Shares
outstanding immediately prior to such issue or sale multiplied by the
Market Price of the Common Shares immediately prior to such issue or
sale plus (ii) the consideration received by the Company upon such
issue or sale, and the denominator of which shall be the product of
(iii) the aggregate number of Common Shares outstanding immediately
after such issue or sale, multiplied by (iv) the Market Price of the
Common Shares immediately prior to such issue or sale.
No adjustment of the Exercise Price, however, shall be made in an amount less
than $.01 per share, but any such lesser adjustment shall be carried forward and
shall be made upon the earlier of (i) the third anniversary of the issuance or
deemed issuance of the securities requiring such adjustment hereunder, and (ii)
the time of and together with the next subsequent adjustment.
For purposes hereof, the term "Excluded Shares" shall mean Common
Shares issued to employees, officers, directors or affiliates of, or consultants
to, the Company (or any of its subsidiaries, direct or indirect), pursuant to
any agreement, plan (including without limitation stock option plans and stock
purchase plans), arrangement or stock
<PAGE>
4
option heretofore or hereafter approved by the Board of Directors of the
Company, including without duplication pursuant to options or warrants to
purchase or rights to subscribe for such Common Shares, securities which by
their terms are convertible into or exchangeable for such Common Shares, and
options and warrants to purchase or rights to subscribe for such convertible or
exchangeable securities.
For purposes of this Section 2(a), the following paragraphs (A) to
(I), inclusive, shall be applicable:
(A) Issuance of Rights or Options. In case at any time after the
-----------------------------
date hereof the Company shall in any manner grant (whether directly or
by assumption in a merger or otherwise) any rights to subscribe for or
to purchase, or any options for the purchase of Common Shares or any
stock or securities convertible into or exchangeable for Common Shares
(such convertible or exchangeable stock or securities being herein
called "Convertible Securities"), whether or not such rights or
options or the right to convert or exchange any such Convertible
Securities are immediately exercisable, and the price per share for
which Common Shares are issuable upon the exercise of such rights or
options or upon conversion or exchange of such Convertible Securities
(determined by dividing (i) the total amount, if any, received or
receivable by the Company as consideration for the granting of such
rights or options, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the exercise of
such rights or options, or plus, in the case of such rights or options
which relate to Convertible Securities, the minimum aggregate amount
of additional consideration, if any, payable upon the issue or sale of
such Convertible Securities and upon the conversion or exchange
thereof, by (ii) the total maximum number of Common Shares issuable
upon the exercise of such rights or options or upon the conversion or
exchange of all such Convertible Securities issuable upon the exercise
of such rights or options) shall be less than the Exercise Price in
effect immediately prior to the time of the granting of such rights or
options or less than the Market Price of the Common Shares determined
as of the date of granting such rights or options, as the case may be,
then the total maximum number of Common Shares issuable upon the
exercise of such rights or options or upon
<PAGE>
5
conversion or exchange of all such Convertible Securities issuable
upon the exercise of such rights or options shall be deemed to be
outstanding as of the date of the granting of such rights or options
and to have been issued for such price per share, with the effect on
the Exercise Price specified in Section 2(a). Except as provided in
subparagraph (C), no further adjustment of the Exercise Price shall be
made upon the actual issue of such Common Shares or of such
Convertible Securities upon exercise of such rights or options or upon
the actual issue of such Common Shares upon conversion or exchange of
such Convertible Securities.
(B) Issuance of Convertible Securities. In case at any time
----------------------------------
after the date hereof the Company shall in any manner issue (whether
directly or by assumption in a merger or otherwise) or sell any
Convertible Securities, whether or not the right to exchange or
convert thereunder is immediately exercisable, and the price per share
for which Common Shares are issuable upon such conversion or exchange
(determined by dividing (i) the total amount, if any, received or
receivable by the Company as consideration for the issue or sale of
such Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the
conversion or exchange thereof, by (ii) the total maximum number of
Common Shares issuable upon the conversion or exchange of all such
Convertible Securities) shall be less than the Exercise Price in
effect immediately prior to the time of such issue or sale, or less
than the Market Price of the Common Shares determined as of the date
of such issue or sale of such Convertible Securities, as the case may
be, then the total maximum number of Common Shares issuable upon
conversion or exchange of all such Convertible Securities shall be
deemed to be outstanding as of the date of the issue or sale of such
Convertible Securities and to have been issued for such price per
share, with the effect on the Exercise Price specified in Section
2(a); provided, however, that (a) except as otherwise provided in
subparagraph (C), no further adjustment of the Exercise Price shall be
made upon the actual issue of such Common Shares upon conversion or
exchange of such Convertible Securities, and (b) if any such issue or
sale of such Convertible Securities is made upon exercise
<PAGE>
6
of any rights to subscribe for or to purchase or any option to
purchase any such Convertible Securities for which adjustments of the
Exercise Price have been or are to be made pursuant to the provisions
of subparagraph (A), no further adjustment of the Exercise Price shall
be made by reason of such issue or sale.
(C) Change in Option Price or Conversion Rate. Upon the
-----------------------------------------
happening of any of the following events, namely, if the purchase
price provided for in any right or option referred to in subparagraph
(A), the additional consideration, if any, payable upon the conversion
or exchange of any Convertible Securities referred to in subparagraphs
(A) or (B), or the rate at which any Convertible Securities referred
to in subparagraphs (A) or (B) are convertible into or exchangeable
for Common Shares shall change (other than under or by reason of
provisions designed to protect against dilution), the Exercise Price
then in effect hereunder shall forthwith be readjusted (increased or
decreased, as the case may be) to the Exercise Price which would have
been in effect at such time had such rights, options or Convertible
Securities still outstanding provided for such changed purchase price,
additional consideration or conversion rate, as the case may be, at
the time initially granted, issued or sold. On the expiration of any
such option or right referred to in subparagraph (A), or the
termination of any such right to convert or exchange any such
Convertible Securities referred to in subparagraphs (A) or (B), the
Exercise Price then in effect hereunder shall forthwith be readjusted
(increased or decreased, as the case may be) to the Exercise Price
which would have been in effect at the time of such expiration or
termination had such right, option or Convertible Securities, to the
extent outstanding immediately prior to such expiration or
termination, never been granted, issued or sold, and the Common Shares
issuable thereunder shall no longer be deemed to be outstanding. If
the purchase price provided for in any such right or option referred
to in subparagraph (A) or the rate at which any Convertible Securities
referred to in subparagraphs (A) or (B) are convertible into or
exchangeable for Common Shares shall be reduced at any time under or
by reason of provisions with respect thereto designed to protect
against
<PAGE>
7
dilution, then in case of the delivery of Common Shares upon the
exercise of any such right or option or upon conversion or exchange of
any such Convertible Securities, the Exercise Price then in effect
hereunder shall, if not already adjusted, forthwith be adjusted to
such amount as would have obtained had such right, option or
Convertible Securities never been issued as to such Common Shares and
had adjustments been made upon the issuance of the Common Shares
delivered as aforesaid, but only if as a result of such adjustment the
Exercise Price then in effect hereunder is thereby reduced.
(D) Stock Dividends. In case at any time the Company shall
---------------
declare a dividend or make any other distribution upon any class or
series of stock of the Company payable in Common Shares or Convertible
Securities, any Common Shares or Convertible Securities, as the case
may be, issuable in payment of such dividend or distribution shall be
deemed to have been issued or sold without consideration with the
effect on the Exercise Price specified in Section 2(a).
(E) Consideration for Stock. In case at any time Common Shares
-----------------------
or Convertible Securities or any rights or options to purchase any
such Common Shares or Convertible Securities shall be issued or sold
for cash, the consideration therefor shall be deemed to be the amount
received by the Company therefor, after deduction therefrom of any
expenses incurred or any underwriting commissions or concessions paid
or allowed by the Company in connection therewith. In case at any
time any Common Shares, Convertible Securities or any rights or
options to purchase any such Common Shares or Convertible Securities
shall be issued or sold for consideration other than cash, the amount
of the consideration other than cash received by the Company shall be
deemed to be the fair value of such consideration, as determined
reasonably and in good faith by the Board of Directors of the Company,
after deduction of any expenses incurred or any underwriting
commissions or concessions paid or allowed by the Company in
connection therewith. In case at any time any Common Shares,
Convertible Securities or any rights or options to purchase any Common
Shares or Convertible Securities shall be issued in connection with
any merger or consolidation in
<PAGE>
8
which the Company is the surviving corporation, the amount of
consideration received therefor shall be deemed to be the fair value,
as determined reasonably and in good faith by the Board of Directors
of the Company, of such portion of the assets and business of the
nonsurviving corporation as such Board of Directors may determine to
be attributable to such Common Shares, Convertible Securities, rights
or options, as the case may be. In case at any time any rights or
options to purchase any shares of Common Stock or Convertible
Securities shall be issued in connection with the issue and sale of
other securities of the Company, together comprising one integral
transaction in which no consideration is allocated to such rights or
options by the parties thereto, such rights or options shall be deemed
to have been issued without consideration. In the event of any
consolidation or merger of the Company in which stock or securities of
another corporation or other entity are issued in exchange for Common
Stock of the Company or in the event of any sale of all or
substantially all of the assets of the Company for stock or other
securities of any corporation or other entity, the Company shall be
deemed to have issued a number of shares of its Common Stock for stock
or securities of the other corporation or other entity computed on the
basis of the actual exchange ratio on which the transaction was
predicated and for a consideration equal to the fair market value on
the date of such transaction of such stock or securities of the other
corporation or other entity, and if any such calculation results in
the adjustment of the Exercise Price, the determination of the number
of shares of Common Stock receivable upon exercise of this Warrant
Certificate immediately prior to such merger, consolidation or sale,
for purposes of Section 2(c), shall be made after giving effect to
such adjustment of the Exercise Price.
(F) Record Date. In case the Company shall take a record of the
-----------
holders of its Common Shares for the purpose of entitling them (i) to
receive a dividend or other distribution payable in Common Shares or
Convertible Securities, or (ii) to subscribe for or purchase Common
Shares or Convertible Securities, then such record date shall be
deemed to be the date of the issue or sale of the Common Shares or
Convertible Securities deemed to have been issued or sold as a
<PAGE>
9
result of the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription
or purchase, as the case may be.
(G) Treasury Shares. The number of Common Shares outstanding at
---------------
any given time shall not include shares owned or held by or for the
account of the Company, and the disposition of any such shares shall
be considered an issue or sale of Common Shares for the purposes of
Section 2(a).
(H) Definition of Market Price. The term "Market Price" shall
--------------------------
mean, for any day, the last sale price for the Common Shares on the
principal securities exchange on which the Common Shares are listed or
admitted to trading, or, if not so listed or admitted to trading on
any securities exchange, the last sale price for the Common Shares on
the National Association of Securities Dealers National Market System,
or, if the Common Shares shall not be listed on such system, the
NASDAQ Small Cap Market, or, if the Common Shares shall not be listed
on such market, the average of the closing bid and asked prices in the
over-the-counter market, in each such case, unless otherwise provided
herein, averaged over a period of 20 consecutive business days prior
to the day as of which the Market Price is being determined. If at
any time the Common Shares are not listed on any such exchange, such
system or such market or quoted in the over-the-counter market, the
Market Price of the Common Shares shall be deemed to be the higher of
(i) the book value thereof, as determined in accordance with generally
accepted accounting principles consistent with those then being
applied by the Company, by any firm of independent certified public
accountants (which may be the regular auditors of the Company) of
recognized national standing selected by the Board of Directors of the
Company, as of the last day of the month ending within 31 days
preceding the date as of which the determination is to be made, and
(ii) the fair value thereof, as determined in good faith by an
independent brokerage firm, Standard & Poor's Corporation or Moody's
Investors Service, as of a date which is within 15 days preceding the
date as of which the determination is to be made.
(I) Certain Acquisitions. Anything herein to the contrary
--------------------
notwithstanding, in case at any
<PAGE>
10
time after the date hereof the Company shall issue any Common Shares
or Convertible Securities, or any rights or options to purchase any
Common Shares or Convertible Securities, in connection with the
acquisition by the Company of the stock or assets of any other
corporation or other entity or the merger of any other corporation or
other entity with and into the Company under circumstances where on
the date of the issuance of such Common Shares or Convertible
Securities, or such rights or options, the consideration received for
such Common Shares or deemed to have been received for the Common
Shares into which such Convertible Securities are convertible or for
which such rights or options are exercisable is less than the Market
Price of the Common Shares, but on the date the number of Common
Shares or Convertible Securities, or in the case of Convertible
Securities other than stock, the aggregate principal amount of
Convertible Securities, or the number of such rights or options was
determined (as set forth in a binding agreement between the Company
and the other party to the transaction) the consideration received for
such Common Shares or deemed to have been received for the Common
Shares into which such Convertible Securities are convertible or for
which such rights or options are exercisable would not have been less
than the Market Price of the Common Shares, such Common Shares shall
not be deemed to have been issued for less than the Market Price of
the Common Shares.
(b) Subdivision or Combination of Stock. In case the Company shall at
-----------------------------------
any time subdivide its outstanding Common Shares into a greater number of
shares, the Exercise Price in effect immediately prior to such subdivision shall
be proportionately reduced, and conversely, in case the outstanding Common
Shares of the Company shall be combined into a smaller number of shares, the
Exercise Price in effect immediately prior to such combination shall be
proportionately increased.
(c) Reorganization, Reclassification, Consolidation, Merger. If any
-------------------------------------------------------
capital reorganization, reclassification of the capital stock of the Company,
consolidation or merger of the Company with another corporation or other entity,
or sale, transfer or other disposition of all or substantially all of the
Company's properties to another corporation or other entity shall be effected,
then, as a condition of such reorganization,
<PAGE>
11
reclassification, consolidation, merger, sale, transfer or other disposition,
lawful and adequate provision shall be made whereby each holder of Warrants
shall thereafter have the right to purchase and receive upon the basis and upon
the terms and conditions herein specified and in lieu of the Common Shares
immediately theretofore issuable upon exercise of the Warrants, such shares of
stock, securities or properties as may be issuable or payable with respect to or
in exchange for a number of outstanding Common Shares equal to the number of
Common Shares immediately theretofore issuable upon exercise of the Warrants,
had such reorganization, reclassification, consolidation, merger, sale, transfer
or other disposition not taken place, and in any such case appropriate provision
shall be made with respect to the rights and interests of each holder of
Warrants to the end that the provisions hereof (including, without limitation,
provision for adjustment of the Exercise Price) shall thereafter be applicable,
as nearly equivalent as may be practicable in relation to any shares of stock,
securities or properties thereafter deliverable upon the exercise thereof. The
Company shall not effect any such consolidation, merger, sale, transfer or other
disposition, unless prior to or simultaneously with the consummation thereof the
successor corporation or other entity, if other than the Company, resulting from
such consolidation or merger, or the corporation or other entity purchasing or
otherwise acquiring such properties shall assume, by written instrument executed
and mailed or delivered to the holders of Warrants at the last address of such
holders appearing on the books of the Company, the obligation to deliver to such
holders such shares of stock, securities or properties, in accordance with the
foregoing provisions, as such holders may be entitled to acquire. The above
provisions of this subparagraph 2(c) shall similarly apply to successive
reorganizations, reclassifications, consolidations, mergers, sales, transfers,
or other dispositions.
(d) Liquidating Dividends. In case at any time the Company shall
---------------------
distribute pro rata to all holders of its Common Shares evidences of its
indebtedness or assets (excluding cash dividends or cash distributions paid out
of retained earnings or retained surplus) then, forthwith upon such
distribution, the Exercise Price shall be reduced by the fair market value of
the evidences of indebtedness or assets so distributed applicable to one Common
Share (as conclusively determined by an investment banking firm designated by a
majority in interest of the holders of Warrants; it being understood that the
fees of such investment banking firm shall be borne by the Company).
<PAGE>
12
(e) Notice of Determination. Except as otherwise provided herein,
-----------------------
upon any adjustment of the Exercise Price, then and in each such case the
Company shall promptly obtain the certification of a firm of independent
certified public accountants (which may be the regular auditors of the Company)
of recognized national standing selected by the Company's Board of Directors,
which certification shall state the Exercise Price resulting from such
adjustment and the increase or decrease, if any, in the number of Common Shares
issuable upon exercise of the Warrants held by each holder of Warrants, setting
forth in reasonable detail the method of calculation and the facts upon which
such calculation is based. The Company shall promptly mail a copy of such
accountants' certification to each holder of Warrants.
(f) Intent of Provisions. If any event occurs as to which, in the
--------------------
opinion of the Board of Directors of the Company, the other provisions of this
Section 2 are not strictly applicable or if strictly applicable, would not
fairly protect the rights of the holders of the Warrants in accordance with the
essential intent and principles of such provisions, then such Board of Directors
shall appoint a firm of independent certified public accountants (which may be
the regular auditors of the Company) of recognized national standing, which
shall give their opinion upon the adjustment, if any, on a basis consistent with
such essential intent and principles, necessary to preserve, without dilution,
the rights of the holders of Warrants. Upon receipt of such opinion by the
Board of Directors of the Company, the Company shall forthwith make the
adjustments described therein; provided, however, that no such adjustment
pursuant to this Section 2(f) shall have the effect of increasing the Exercise
Price as otherwise determined pursuant to the other provisions of this Section 2
except in the event of a combination of shares of the type contemplated in
Section 2(b) and then in no event to an amount larger than the Exercise Price as
adjusted pursuant to Section 2(b).
3. Other Notices. If at any time prior to the expiration of the
-------------
Warrants evidenced hereby:
(a) The Company shall declare any dividend on the Common Shares
payable in shares of capital stock of the Company, cash or other
property; or
(b) The Company shall authorize the issue of any options,
warrants or rights pro rata to all holders of Common Shares entitling
them to
<PAGE>
13
subscribe for or purchase any shares of stock of the Company or to
receive any other rights; or
(c) The Company shall authorize the distribution pro rata to all
holders of Common Shares of evidences of its indebtedness or assets
(excluding cash dividends or cash distributions paid out of retained
earnings or retained surplus); or
(d) There shall occur any reclassification of the Common Shares,
or any consolidation or merger of the Company with or into another
corporation or other entity (other than a consolidation or merger in
which the Company is the continuing corporation and which does not
result in any reclassification of the Common Shares) or a sale or
transfer to another corporation or other entity of all or
substantially all of the properties of the Company; or
(e) There shall occur the voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Company;
then, and in each of such cases, the Company shall deliver to the registered
holder hereof at its last address appearing on the books of the Company, as
promptly as practicable but in any event at least 15 days prior to the
applicable record date (or determination date) mentioned below, a notice
stating, to the extent such information is available, (i) the date on which a
record is to be taken for the purpose of such dividend, distribution or rights,
or, if a record is not to be taken, the date as of which the holders of Common
Shares of record to be entitled to such dividend, distribution or rights are to
be determined, or (ii) the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution or winding up is expected to
become effective and the date as of which it is expected that holders of Common
Shares of record shall be entitled to exchange their Common Shares for
securities or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution or winding up.
4. Representations and Warranties of the Company. The Company
---------------------------------------------
represents and warrants to and covenants with the registered holder hereof as
follows:
<PAGE>
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, is duly qualified and
in good standing under the laws of any foreign jurisdiction where the failure to
be so qualified would have a material adverse effect on its ability to perform
its obligations under the Warrants evidenced by this Warrant Certificate and it
has full corporate power and authority to issue the Warrants and to carry out
the provisions of the Warrants evidenced by this Warrant Certificate.
(b) The issuance, execution and delivery of this Warrant Certificate
has been duly authorized by all necessary corporate action on the part of the
Company and each of the Warrants evidenced by this Warrant Certificate
constitutes the valid and legally binding obligation of the Company, enforceable
against it in accordance with the terms hereof, except as such enforceability
may be limited by bankruptcy, insolvency or other laws affecting generally the
enforceability of creditors' rights, by general principles of equity and by
limitations on the availability of equitable remedies.
(c) Neither the execution and delivery of the Warrants evidenced by
this Warrant Certificate by the Company, nor compliance by the Company with the
provisions hereof, violates any provision of its Certificate of Incorporation or
By-Laws, as amended, or any law, statute, ordinance, regulation, order, judgment
or decree of any court or governmental agency, or conflicts with or will result
in any breach of the terms of or constitute a default under or result in the
termination of or the creation of any lien pursuant to the terms of any
agreement or instrument to which the Company is a party or by which it or any of
its properties is bound.
5. Company to Provide Stock. The Company covenants and agrees that all
------------------------
shares of capital stock of the Company which may be issued upon the exercise of
the Warrants evidenced hereby will be duly authorized, validly issued and fully
paid and nonassessable and free from all taxes, liens and charges with respect
to the issue thereof to the registered holder hereof. The Company further
covenants and agrees that during the period within which the Warrants evidenced
hereby may be exercised, the Company will at all times reserve such number of
shares of its capital stock as may be sufficient to permit the exercise in full
of the Warrants evidenced hereby.
6. Registered Holder. The registered holder of this Warrant Certificate
-----------------
shall be deemed the owner hereof
<PAGE>
15
and of the Warrants evidenced hereby for all purposes. The registered holder of
this Warrant Certificate shall not be entitled by virtue of ownership of this
Warrant Certificate to any rights whatsoever as a shareholder of the Company.
7. Transfer. This Warrant Certificate and the Warrants evidenced
--------
hereby may be sold, transferred, pledged, hypothecated or otherwise disposed of;
provided that this Warrant Certificate and the Warrants evidenced hereby may not
be sold, transferred, pledged, hypothecated or otherwise disposed of unless, in
the opinion of counsel reasonably satisfactory to the Company, such transfer
would not result in a violation of the provisions of the Securities Act. Any
transfer of this Warrant Certificate and the Warrants evidenced hereby, in whole
or in part, shall be effected upon surrender of this Warrant Certificate, duly
endorsed (unless endorsement is waived by the Company), at the principal office
or agency of the Company referred to in Section 1 hereof. If all of the
Warrants evidenced hereby are being sold, transferred, pledged, hypothecated or
otherwise disposed of, the Company shall issue a new Warrant Certificate
registered in the name of the appropriate transferee(s). If less than all of
the Warrants evidenced hereby are being sold, transferred, pledged, hypothecated
or otherwise disposed of, the Company shall issue new Warrant Certificates, in
each case in the appropriate number of Warrants, registered in the name of the
registered holder hereof and the transferee(s), as applicable. Any Common
Shares of the Company issued upon any exercise hereof may not be sold,
transferred, pledged, hypothecated or otherwise disposed of unless, in the
opinion of counsel reasonably satisfactory to the Company, such transfer would
not result in a violation of the Securities Act. Each taker and holder of this
Warrant Certificate, the Warrants evidenced hereby and any shares of capital
stock of the Company issued upon exercise of any such Warrants, by taking or
holding the same, consents to and agrees to be bound by the provisions of this
Section 7.
* * *
<PAGE>
16
IN WITNESS WHEREOF, RAMSAY MANAGED CARE, INC. has caused this Warrant
Certificate to be signed by a duly authorized officer and this Warrant
Certificate to be dated September 10, 1996.
RAMSAY MANAGED CARE, INC.
By_______________________________________
Name: Remberto Cibran
Title: President
<PAGE>
FORM OF EXERCISE
----------------
(to be executed by the registered holder hereof)
The undersigned hereby exercises ____ Warrants to subscribe for and
purchase shares of common stock, par value $.01 ("Common Shares"), of RAMSAY
MANAGED CARE, INC. evidenced by the within Warrant Certificate and herewith
makes payment of the purchase price in full. Kindly issue certificates for the
Common Shares in accordance with the instructions given below. The certificate
for the unexercised balance of the Warrants evidenced by the within Warrant
Certificate, if any, will be registered in the name of the undersigned.
Dated:
_____________________________
Instructions for registration of shares
_______________________________
Name (please print)
Social Security or Other Identifying
Number:__________________________
Address:
_________________________________
Street
_________________________________
City, State and Zip Code
<PAGE>
Exhibit 4.4
THIS WARRANT CERTIFICATE AND THE WARRANTS EVIDENCED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT")
BUT HAVE BEEN ISSUED PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION AND MAY NOT
BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNTIL
EITHER (i) THE HOLDER THEREOF SHALL HAVE RECEIVED AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY (AS HEREINAFTER DEFINED) THAT
REGISTRATION THEREOF UNDER THE SECURITIES ACT IS NOT REQUIRED OR (ii) A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT WITH RESPECT THERETO SHALL HAVE
BECOME EFFECTIVE.
THIS WARRANT CERTIFICATE IS ISSUED PURSUANT TO AND IS SUBJECT TO THE TERMS AND
CONDITIONS OF AN EXCHANGE AGREEMENT (THE "EXCHANGE AGREEMENT") DATED
SEPTEMBER 10, 1996 BY AND AMONG RAMSAY MANAGED CARE, INC., PAUL RAMSAY
HOSPITALS, PTY. LIMITED AND PAUL J. RAMSAY (A COPY OF WHICH IS ON FILE AT THE
PRINCIPAL OFFICE OF THE COMPANY) AND IS ENTITLED TO THE BENEFITS THEREOF.
100,000 Warrants
WARRANT CERTIFICATE
To Subscribe for and Purchase shares of Common Stock, par value $.01, of
RAMSAY MANAGED CARE, INC.
THIS CERTIFIES that, for value received, Paul Ramsay Hospitals, Pty.
Limited, an Australian corporation, or its registered successors and assigns, is
the owner of the number of warrants (the "Warrants") set forth above, each of
which entitles the owner thereof to purchase from Ramsay Managed Care, Inc., a
Delaware corporation (herein called the "Company"), one share of Common Stock,
par value $.01, of the Company (individually, a "Common Share" and collectively,
the "Common Shares"), at an initial exercise price of $1.00 per share, subject
to adjustment from time to time pursuant to the provisions of paragraph 2. The
Warrants evidenced hereby may be exercised by the registered holder hereof at
any time during the period from April 25, 2004 through 5:00 P.M., New York City
Time on October 25, 2004; provided, however, that notwithstanding the foregoing,
such Warrants may be exercised at any time after the date hereof, if at the time
of such exercise, the Market Price (as defined in Section 2(a)(H) hereof, but
calculated without giving effect to the last clause of the first
<PAGE>
2
sentence of such definition) shall have equalled or exceeded $2.333 (the
"Acceleration Price") on at least fifteen (15) trading days, which need not be
consecutive, subsequent to the date hereof. For purposes of this Warrant
Certificate, the term "Common Shares" shall mean the class of capital stock of
the Company designated common stock, par value $.01, as constituted on the date
hereof, and any other class of capital stock of the Company resulting from
successive changes or reclassifications of the Common Shares.
1. Exercise of Warrants. Subject to the foregoing, the Warrants
--------------------
evidenced hereby may be exercised by the registered holder hereof, in whole or
in part, by the surrender of this Warrant Certificate, duly endorsed (unless
endorsement is waived by the Company), at the principal office of the Company
(or at such other office or agency of the Company as it may designate by notice
in writing to the registered holder hereof at such holder's last address
appearing on the books of the Company) and upon payment to the Company by
certified or official bank check or checks payable to the order of the Company
of the purchase price of the Common Shares purchased. The Company agrees that
the Common Shares so purchased shall be deemed to be issued to the registered
holder hereof on the date on which this Warrant Certificate shall have been
surrendered and payment made for such Common Shares as aforesaid; provided,
however, that no such surrender and payment on any date when the stock transfer
books of the Company shall be closed shall be effective to constitute the person
entitled to receive such Common Shares as the record holder thereof on such
date, but such surrender and payment shall be effective to constitute the person
entitled to receive such Common Shares as the record holder thereof for all
purposes immediately after the opening of business on the next succeeding day on
which such stock transfer books are open. The certificate(s) for such Common
Shares shall be delivered to the registered holder hereof within a reasonable
time, not exceeding five days, after the Warrants evidenced hereby shall have
been so exercised and a new Warrant Certificate evidencing the number of
Warrants, if any, remaining unexercised shall also be issued to the registered
holder within such time unless such Warrants shall have expired. No fractional
Common Shares of the Company, or scrips for any such fractional shares, shall be
issued upon the exercise of any Warrants.
2. Adjustment in Exercise Price and Number of Shares. The initial
-------------------------------------------------
exercise price of $1.00 per share shall be subject to adjustment from time to
time as hereinafter provided (such price, as last adjusted, being hereinafter
called the "Exercise Price"). Upon each adjustment of the Exercise Price, the
holder of this Warrant shall thereafter
<PAGE>
3
be entitled to purchase at the Exercise Price resulting from such adjustment,
the number of shares obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior to such adjustment and dividing the product
thereof by the Exercise Price resulting from such adjustment.
(a) Adjustment of Warrant Exercise Price upon Issue of Common Shares.
----------------------------------------------------------------
Except in the case of the issuance from time to time of Excluded Shares (as
defined below), if and whenever after the date hereof the Company shall issue or
sell any Common Shares for a consideration per share less than the Exercise
Price in effect immediately prior to the time of such issue or sale, or the
Company shall issue or sell any Common Shares for a consideration per share less
than the Market Price (as hereinafter defined) of the Common Shares at the time
of such issue or sale, then, forthwith upon such issue or sale, the Exercise
Price shall be reduced (but not increased, except as otherwise specifically
provided in Section 2(a)(C)) to the lower of the prices (calculated to the
nearest cent) determined as follows:
(x) by dividing (i) an amount equal to the sum of (A) the
aggregate number of Common Shares outstanding immediately prior to
such issue or sale multiplied by the then existing Exercise Price, and
(B) the consideration, if any, received by the Company upon such issue
or sale, by (ii) the aggregate number of Common Shares outstanding
immediately after such issue or sale; and
(y) by multiplying the Exercise Price in effect immediately
prior to the time of such issue or sale by a fraction, the numerator
of which shall be the sum of (i) the aggregate number of Common Shares
outstanding immediately prior to such issue or sale multiplied by the
Market Price of the Common Shares immediately prior to such issue or
sale plus (ii) the consideration received by the Company upon such
issue or sale, and the denominator of which shall be the product of
(iii) the aggregate number of Common Shares outstanding immediately
after such issue or sale, multiplied by (iv) the Market Price of the
Common Shares immediately prior to such issue or sale.
No adjustment of the Exercise Price, however, shall be made in an amount less
than $.01 per share, but any such lesser adjustment shall be carried forward and
shall be made upon the earlier of (i) the third anniversary of the issuance or
<PAGE>
4
deemed issuance of the securities requiring such adjustment hereunder, and
(ii) the time of and together with the next subsequent adjustment.
For purposes hereof, the term "Excluded Shares" shall mean Common
Shares issued to employees, officers, directors or affiliates of, or consultants
to, the Company (or any of its subsidiaries, direct or indirect), pursuant to
any agreement, plan (including without limitation stock option plans and stock
purchase plans), arrangement or stock option heretofore or hereafter approved by
the Board of Directors of the Company, including without duplication pursuant to
options or warrants to purchase or rights to subscribe for such Common Shares,
securities which by their terms are convertible into or exchangeable for such
Common Shares, and options and warrants to purchase or rights to subscribe for
such convertible or exchangeable securities.
For purposes of this Section 2(a), the following paragraphs (A) to
(I), inclusive, shall be applicable:
(A) Issuance of Rights or Options. In case at any time after
-----------------------------
the date hereof the Company shall in any manner grant (whether
directly or by assumption in a merger or otherwise) any rights to
subscribe for or to purchase, or any options for the purchase of
Common Shares or any stock or securities convertible into or
exchangeable for Common Shares (such convertible or exchangeable stock
or securities being herein called "Convertible Securities"), whether
or not such rights or options or the right to convert or exchange any
such Convertible Securities are immediately exercisable, and the price
per share for which Common Shares are issuable upon the exercise of
such rights or options or upon conversion or exchange of such
Convertible Securities (determined by dividing (i) the total amount,
if any, received or receivable by the Company as consideration for the
granting of such rights or options, plus the minimum aggregate amount
of additional consideration, if any, payable to the Company upon the
exercise of such rights or options, or plus, in the case of such
rights or options which relate to Convertible Securities, the minimum
aggregate amount of additional consideration, if any, payable upon the
issue or sale of such Convertible Securities and upon the conversion
or exchange thereof, by (ii) the total maximum number of Common Shares
issuable upon the exercise of such rights or options or
<PAGE>
5
upon the conversion or exchange of all such Convertible Securities
issuable upon the exercise of such rights or options) shall be less
than the Exercise Price in effect immediately prior to the time of the
granting of such rights or options or less than the Market Price of
the Common Shares determined as of the date of granting such rights or
options, as the case may be, then the total maximum number of Common
Shares issuable upon the exercise of such rights or options or upon
conversion or exchange of all such Convertible Securities issuable
upon the exercise of such rights or options shall be deemed to be
outstanding as of the date of the granting of such rights or options
and to have been issued for such price per share, with the effect on
the Exercise Price specified in Section 2(a). Except as provided in
subparagraph (C), no further adjustment of the Exercise Price shall be
made upon the actual issue of such Common Shares or of such
Convertible Securities upon exercise of such rights or options or upon
the actual issue of such Common Shares upon conversion or exchange of
such Convertible Securities.
(B) Issuance of Convertible Securities. In case at any time
----------------------------------
after the date hereof the Company shall in any manner issue (whether
directly or by assumption in a merger or otherwise) or sell any
Convertible Securities, whether or not the right to exchange or
convert thereunder is immediately exercisable, and the price per share
for which Common Shares are issuable upon such conversion or exchange
(determined by dividing (i) the total amount, if any, received or
receivable by the Company as consideration for the issue or sale of
such Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the
conversion or exchange thereof, by (ii) the total maximum number of
Common Shares issuable upon the conversion or exchange of all such
Convertible Securities) shall be less than the Exercise Price in
effect immediately prior to the time of such issue or sale, or less
than the Market Price of the Common Shares determined as of the date
of such issue or sale of such Convertible Securities, as the case may
be, then the total maximum number of Common Shares issuable upon
conversion or exchange of all such Convertible Securities shall be
deemed to be outstanding as of the date of the issue or sale of
<PAGE>
6
such Convertible Securities and to have been issued for such price per
share, with the effect on the Exercise Price specified in
Section 2(a); provided, however, that (a) except as otherwise provided
in subparagraph (C), no further adjustment of the Exercise Price shall
be made upon the actual issue of such Common Shares upon conversion or
exchange of such Convertible Securities, and (b) if any such issue or
sale of such Convertible Securities is made upon exercise of any
rights to subscribe for or to purchase or any option to purchase any
such Convertible Securities for which adjustments of the Exercise
Price have been or are to be made pursuant to the provisions of
subparagraph (A), no further adjustment of the Exercise Price shall be
made by reason of such issue or sale.
(C) Change in Option Price or Conversion Rate. Upon the
-----------------------------------------
happening of any of the following events, namely, if the purchase
price provided for in any right or option referred to in subparagraph
(A), the additional consideration, if any, payable upon the conversion
or exchange of any Convertible Securities referred to in subparagraphs
(A) or (B), or the rate at which any Convertible Securities referred
to in subparagraphs (A) or (B) are convertible into or exchangeable
for Common Shares shall change (other than under or by reason of
provisions designed to protect against dilution), the Exercise Price
then in effect hereunder shall forthwith be readjusted (increased or
decreased, as the case may be) to the Exercise Price which would have
been in effect at such time had such rights, options or Convertible
Securities still outstanding provided for such changed purchase price,
additional consideration or conversion rate, as the case may be, at
the time initially granted, issued or sold. On the expiration of any
such option or right referred to in subparagraph (A), or the
termination of any such right to convert or exchange any such
Convertible Securities referred to in subparagraphs (A) or (B), the
Exercise Price then in effect hereunder shall forthwith be readjusted
(increased or decreased, as the case may be) to the Exercise Price
which would have been in effect at the time of such expiration or
termination had such right, option or Convertible Securities, to the
extent outstanding immediately prior to such expiration or
termination, never been granted,
<PAGE>
7
issued or sold, and the Common Shares issuable thereunder shall no
longer be deemed to be outstanding. If the purchase price provided
for in any such right or option referred to in subparagraph (A) or the
rate at which any Convertible Securities referred to in subparagraphs
(A) or (B) are convertible into or exchangeable for Common Shares
shall be reduced at any time under or by reason of provisions with
respect thereto designed to protect against dilution, then in case of
the delivery of Common Shares upon the exercise of any such right or
option or upon conversion or exchange of any such Convertible
Securities, the Exercise Price then in effect hereunder shall, if not
already adjusted, forthwith be adjusted to such amount as would have
obtained had such right, option or Convertible Securities never been
issued as to such Common Shares and had adjustments been made upon the
issuance of the Common Shares delivered as aforesaid, but only if as a
result of such adjustment the Exercise Price then in effect hereunder
is thereby reduced.
(D) Stock Dividends. In case at any time the Company shall
---------------
declare a dividend or make any other distribution upon any class or
series of stock of the Company payable in Common Shares or Convertible
Securities, any Common Shares or Convertible Securities, as the case
may be, issuable in payment of such dividend or distribution shall be
deemed to have been issued or sold without consideration with the
effect on the Exercise Price specified in Section 2(a).
(E) Consideration for Stock. In case at any time Common Shares
-----------------------
or Convertible Securities or any rights or options to purchase any
such Common Shares or Convertible Securities shall be issued or sold
for cash, the consideration therefor shall be deemed to be the amount
received by the Company therefor, after deduction therefrom of any
expenses incurred or any underwriting commissions or concessions paid
or allowed by the Company in connection therewith. In case at any
time any Common Shares, Convertible Securities or any rights or
options to purchase any such Common Shares or Convertible Securities
shall be issued or sold for consideration other than cash, the amount
of the consideration other than cash received by the Company shall be
deemed to be the
<PAGE>
8
fair value of such consideration, as determined reasonably and in good
faith by the Board of Directors of the Company, after deduction of any
expenses incurred or any underwriting commissions or concessions paid
or allowed by the Company in connection therewith. In case at any
time any Common Shares, Convertible Securities or any rights or
options to purchase any Common Shares or Convertible Securities shall
be issued in connection with any merger or consolidation in which the
Company is the surviving corporation, the amount of consideration
received therefor shall be deemed to be the fair value, as determined
reasonably and in good faith by the Board of Directors of the Company,
of such portion of the assets and business of the nonsurviving
corporation as such Board of Directors may determine to be
attributable to such Common Shares, Convertible Securities, rights or
options, as the case may be. In case at any time any rights or
options to purchase any shares of Common Stock or Convertible
Securities shall be issued in connection with the issue and sale of
other securities of the Company, together comprising one integral
transaction in which no consideration is allocated to such rights or
options by the parties thereto, such rights or options shall be deemed
to have been issued without consideration. In the event of any
consolidation or merger of the Company in which stock or securities of
another corporation or other entity are issued in exchange for Common
Stock of the Company or in the event of any sale of all or
substantially all of the assets of the Company for stock or other
securities of any corporation or other entity, the Company shall be
deemed to have issued a number of shares of its Common Stock for stock
or securities of the other corporation or other entity computed on the
basis of the actual exchange ratio on which the transaction was
predicated and for a consideration equal to the fair market value on
the date of such transaction of such stock or securities of the other
corporation or other entity, and if any such calculation results in
the adjustment of the Exercise Price, the determination of the number
of shares of Common Stock receivable upon exercise of this Warrant
Certificate immediately prior to such merger, consolidation or sale,
for purposes of Section 2(c), shall be made after giving effect to
such adjustment of the Exercise Price.
<PAGE>
9
(F) Record Date. In case the Company shall take a record of the
-----------
holders of its Common Shares for the purpose of entitling them (i) to
receive a dividend or other distribution payable in Common Shares or
Convertible Securities, or (ii) to subscribe for or purchase Common
Shares or Convertible Securities, then such record date shall be
deemed to be the date of the issue or sale of the Common Shares or
Convertible Securities deemed to have been issued or sold as a result
of the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription
or purchase, as the case may be.
(G) Treasury Shares. The number of Common Shares outstanding at
---------------
any given time shall not include shares owned or held by or for the
account of the Company, and the disposition of any such shares shall
be considered an issue or sale of Common Shares for the purposes of
Section 2(a).
(H) Definition of Market Price. The term "Market Price" shall
--------------------------
mean, for any day, the last sale price for the Common Shares on the
principal securities exchange on which the Common Shares are listed or
admitted to trading, or, if not so listed or admitted to trading on
any securities exchange, the last sale price for the Common Shares on
the National Association of Securities Dealers National Market System,
or, if the Common Shares shall not be listed on such system, the
NASDAQ Small Cap Market, or, if the Common Shares shall not be listed
on such market, the average of the closing bid and asked prices in the
over-the-counter market, in each such case, unless otherwise provided
herein (including in the second sentence of this Warrant Certificate),
averaged over a period of 20 consecutive business days prior to the
day as of which the Market Price is being determined. If at any time
the Common Shares are not listed on any such exchange, such system or
such market or quoted in the over-the-counter market, the Market Price
of the Common Shares shall be deemed to be the higher of (i) the book
value thereof, as determined in accordance with generally accepted
accounting principles consistent with those then being applied by the
Company, by any firm of independent certified public accountants
(which may be the regular auditors of the Company) of recognized
<PAGE>
10
national standing selected by the Board of Directors of the Company,
as of the last day of the month ending within 31 days preceding the
date as of which the determination is to be made, and (ii) the fair
value thereof, as determined in good faith by an independent brokerage
firm, Standard & Poor's Corporation or Moody's Investors Service, as
of a date which is within 15 days preceding the date as of which the
determination is to be made.
(I) Certain Acquisitions. Anything herein to the contrary
--------------------
notwithstanding, in case at any time after the date hereof the Company
shall issue any Common Shares or Convertible Securities, or any rights
or options to purchase any Common Shares or Convertible Securities, in
connection with the acquisition by the Company of the stock or assets
of any other corporation or other entity or the merger of any other
corporation or other entity with and into the Company under
circumstances where on the date of the issuance of such Common Shares
or Convertible Securities, or such rights or options, the
consideration received for such Common Shares or deemed to have been
received for the Common Shares into which such Convertible Securities
are convertible or for which such rights or options are exercisable is
less than the Market Price of the Common Shares, but on the date the
number of Common Shares or Convertible Securities, or in the case of
Convertible Securities other than stock, the aggregate principal
amount of Convertible Securities, or the number of such rights or
options was determined (as set forth in a binding agreement between
the Company and the other party to the transaction) the consideration
received for such Common Shares or deemed to have been received for
the Common Shares into which such Convertible Securities are
convertible or for which such rights or options are exercisable would
not have been less than the Market Price of the Common Shares, such
Common Shares shall not be deemed to have been issued for less than
the Market Price of the Common Shares.
(b) Subdivision or Combination of Stock. In case the Company shall
-----------------------------------
at any time subdivide its outstanding Common Shares into a greater number of
shares, each of the Exercise Price and the Acceleration Price in effect
immediately prior to such subdivision shall be proportionately reduced, and
conversely, in case the
<PAGE>
11
outstanding Common Shares of the Company shall be combined into a smaller number
of shares, each of the Exercise Price and the Acceleration Price in effect
immediately prior to such combination shall be proportionately increased.
(c) Reorganization, Reclassification, Consolidation, Merger. If any
-------------------------------------------------------
capital reorganization, reclassification of the capital stock of the Company,
consolidation or merger of the Company with another corporation or other entity,
or sale, transfer or other disposition of all or substantially all of the
Company's properties to another corporation or other entity shall be effected,
then, as a condition of such reorganization, reclassification, consolidation,
merger, sale, transfer or other disposition, lawful and adequate provision shall
be made whereby each holder of Warrants shall thereafter have the right to
purchase and receive upon the basis and upon the terms and conditions herein
specified and in lieu of the Common Shares immediately theretofore issuable upon
exercise of the Warrants, such shares of stock, securities or properties as may
be issuable or payable with respect to or in exchange for a number of
outstanding Common Shares equal to the number of Common Shares immediately
theretofore issuable upon exercise of the Warrants, had such reorganization,
reclassification, consolidation, merger, sale, transfer or other disposition not
taken place, and in any such case appropriate provision shall be made with
respect to the rights and interests of each holder of Warrants to the end that
the provisions hereof (including, without limitation, provision for adjustment
of the Exercise Price and the Acceleration Price) shall thereafter be
applicable, as nearly equivalent as may be practicable in relation to any shares
of stock, securities or properties thereafter deliverable upon the exercise
thereof. The Company shall not effect any such consolidation, merger, sale,
transfer or other disposition, unless prior to or simultaneously with the
consummation thereof the successor corporation or other entity, if other than
the Company, resulting from such consolidation or merger, or the corporation or
other entity purchasing or otherwise acquiring such properties shall assume, by
written instrument executed and mailed or delivered to the holders of Warrants
at the last address of such holders appearing on the books of the Company, the
obligation to deliver to such holders such shares of stock, securities or
properties, in accordance with the foregoing provisions, as such holders may be
entitled to acquire. The above provisions of this subparagraph 2(c) shall
similarly apply to successive reorganizations, reclassifications,
consolidations, mergers, sales, transfers, or other dispositions.
<PAGE>
12
(d) Liquidating Dividends. In case at any time the Company shall
---------------------
distribute pro rata to all holders of its Common Shares evidences of its
indebtedness or assets (excluding cash dividends or cash distributions paid out
of retained earnings or retained surplus) then, forthwith upon such
distribution, the Exercise Price shall be reduced by the fair market value of
the evidences of indebtedness or assets so distributed applicable to one Common
Share (as conclusively determined by an investment banking firm designated by a
majority in interest of the holders of Warrants; it being understood that the
fees of such investment banking firm shall be borne by the Company).
(e) Notice of Determination. Except as otherwise provided herein,
-----------------------
upon any adjustment of the Exercise Price, then and in each such case the
Company shall promptly obtain the certification of a firm of independent
certified public accountants (which may be the regular auditors of the Company)
of recognized national standing selected by the Company's Board of Directors,
which certification shall state the Exercise Price resulting from such
adjustment and the increase or decrease, if any, in the number of Common Shares
issuable upon exercise of the Warrants held by each holder of Warrants, setting
forth in reasonable detail the method of calculation and the facts upon which
such calculation is based. The Company shall promptly mail a copy of such
accountants' certification to each holder of Warrants.
(f) Intent of Provisions. If any event occurs as to which, in the
--------------------
opinion of the Board of Directors of the Company, the other provisions of this
Section 2 are not strictly applicable or if strictly applicable, would not
fairly protect the rights of the holders of the Warrants in accordance with the
essential intent and principles of such provisions, then such Board of Directors
shall appoint a firm of independent certified public accountants (which may be
the regular auditors of the Company) of recognized national standing, which
shall give their opinion upon the adjustment, if any, on a basis consistent with
such essential intent and principles, necessary to preserve, without dilution,
the rights of the holders of Warrants. Upon receipt of such opinion by the
Board of Directors of the Company, the Company shall forthwith make the
adjustments described therein; provided, however, that no such adjustment
pursuant to this Section 2(f) shall have the effect of increasing the Exercise
Price as otherwise determined pursuant to the other provisions of this Section 2
except in the event of a combination of shares of the type contemplated in
Section 2(b) and then in no event to an
<PAGE>
13
amount larger than the Exercise Price as adjusted pursuant to Section 2(b).
3. Other Notices. If at any time prior to the expiration of the
-------------
Warrants evidenced hereby:
(a) The Company shall declare any dividend on the Common Shares
payable in shares of capital stock of the Company, cash or other
property; or
(b) The Company shall authorize the issue of any options,
warrants or rights pro rata to all holders of Common Shares entitling
them to subscribe for or purchase any shares of stock of the Company
or to receive any other rights; or
(c) The Company shall authorize the distribution pro rata to all
holders of Common Shares of evidences of its indebtedness or assets
(excluding cash dividends or cash distributions paid out of retained
earnings or retained surplus); or
(d) There shall occur any reclassification of the Common Shares,
or any consolidation or merger of the Company with or into another
corporation or other entity (other than a consolidation or merger in
which the Company is the continuing corporation and which does not
result in any reclassification of the Common Shares) or a sale or
transfer to another corporation or other entity of all or
substantially all of the properties of the Company; or
(e) There shall occur the voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Company;
then, and in each of such cases, the Company shall deliver to the registered
holder hereof at its last address appearing on the books of the Company, as
promptly as practicable but in any event at least 15 days prior to the
applicable record date (or determination date) mentioned below, a notice
stating, to the extent such information is available, (i) the date on which a
record is to be taken for the purpose of such dividend, distribution or rights,
or, if a record is not to be taken, the date as of which the holders of Common
Shares of record to be entitled to such dividend, distribution or rights are to
be determined, or (ii) the date on which such reclassification, consolidation,
<PAGE>
14
merger, sale, transfer, liquidation, dissolution or winding up is expected to
become effective and the date as of which it is expected that holders of Common
Shares of record shall be entitled to exchange their Common Shares for
securities or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution or winding up.
4. Representations and Warranties of the Company. The Company
---------------------------------------------
represents and warrants to and covenants with the registered holder hereof as
follows:
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, is duly
qualified and in good standing under the laws of any foreign jurisdiction where
the failure to be so qualified would have a material adverse effect on its
ability to perform its obligations under the Warrants evidenced by this Warrant
Certificate and it has full corporate power and authority to issue the Warrants
and to carry out the provisions of the Warrants evidenced by this Warrant
Certificate.
(b) The issuance, execution and delivery of this Warrant
Certificate has been duly authorized by all necessary corporate action on the
part of the Company and each of the Warrants evidenced by this Warrant
Certificate constitutes the valid and legally binding obligation of the Company,
enforceable against it in accordance with the terms hereof, except as such
enforceability may be limited by bankruptcy, insolvency or other laws affecting
generally the enforceability of creditors' rights, by general principles of
equity and by limitations on the availability of equitable remedies.
(c) Neither the execution and delivery of the Warrants evidenced
by this Warrant Certificate by the Company, nor compliance by the Company with
the provisions hereof, violates any provision of its Certificate of
Incorporation or By-Laws, as amended, or any law, statute, ordinance,
regulation, order, judgment or decree of any court or governmental agency, or
conflicts with or will result in any breach of the terms of or constitute a
default under or result in the termination of or the creation of any lien
pursuant to the terms of any agreement or instrument to which the Company is a
party or by which it or any of its properties is bound.
5. Company to Provide Stock. The Company covenants and agrees that
------------------------
all shares of capital stock of the Company which may be issued upon the exercise
of the
<PAGE>
15
Warrants evidenced hereby will be duly authorized, validly issued and fully paid
and nonassessable and free from all taxes, liens and charges with respect to the
issue thereof to the registered holder hereof. The Company further covenants
and agrees that during the period within which the Warrants evidenced hereby may
be exercised, the Company will at all times reserve such number of shares of its
capital stock as may be sufficient to permit the exercise in full of the
Warrants evidenced hereby.
6. Registered Holder. The registered holder of this Warrant
-----------------
Certificate shall be deemed the owner hereof and of the Warrants evidenced
hereby for all purposes. The registered holder of this Warrant Certificate
shall not be entitled by virtue of ownership of this Warrant Certificate to any
rights whatsoever as a shareholder of the Company.
7. Transfer. This Warrant Certificate and the Warrants evidenced
--------
hereby may be sold, transferred, pledged, hypothecated or otherwise disposed of;
provided that this Warrant Certificate and the Warrants evidenced hereby may not
be sold, transferred, pledged, hypothecated or otherwise disposed of unless, in
the opinion of counsel reasonably satisfactory to the Company, such transfer
would not result in a violation of the provisions of the Securities Act. Any
transfer of this Warrant Certificate and the Warrants evidenced hereby, in whole
or in part, shall be effected upon surrender of this Warrant Certificate, duly
endorsed (unless endorsement is waived by the Company), at the principal office
or agency of the Company referred to in Section 1 hereof. If all of the
Warrants evidenced hereby are being sold, transferred, pledged, hypothecated or
otherwise disposed of, the Company shall issue a new Warrant Certificate
registered in the name of the appropriate transferee(s). If less than all of
the Warrants evidenced hereby are being sold, transferred, pledged, hypothecated
or otherwise disposed of, the Company shall issue new Warrant Certificates, in
each case in the appropriate number of Warrants, registered in the name of the
registered holder hereof and the transferee(s), as applicable. Any Common
Shares of the Company issued upon any exercise hereof may not be sold,
transferred, pledged, hypothecated or otherwise disposed of unless, in the
opinion of counsel reasonably satisfactory to the Company, such transfer would
not result in a violation of the Securities Act. Each taker and holder of this
Warrant Certificate, the Warrants evidenced hereby and any shares of capital
stock of the Company issued upon exercise of any such Warrants, by taking or
holding the same, consents to and agrees to be bound by the provisions of this
Section 7.
* * *
<PAGE>
16
IN WITNESS WHEREOF, RAMSAY MANAGED CARE, INC. has caused this Warrant
Certificate to be signed by a duly authorized officer and this Warrant
Certificate to be dated September 10, 1996.
RAMSAY MANAGED CARE, INC.
By____________________________
Name: Remberto Cibran
Title: President
<PAGE>
FORM OF EXERCISE
----------------
(to be executed by the registered holder hereof)
The undersigned hereby exercises ____ Warrants to subscribe for and
purchase shares of common stock, par value $.01 ("Common Shares"), of RAMSAY
MANAGED CARE, INC. evidenced by the within Warrant Certificate and herewith
makes payment of the purchase price in full. Kindly issue certificates for the
Common Shares in accordance with the instructions given below. The certificate
for the unexercised balance of the Warrants evidenced by the within Warrant
Certificate, if any, will be registered in the name of the undersigned.
Dated:
_____________________________
Instructions for registration of shares
_________________________________
Name (please print)
Social Security or Other Identifying
Number:__________________________
Address:
_________________________________
Street
_________________________________
City, State and Zip Code
<PAGE>
Exhibit 10.25
FIRST AMENDMENT TO
LOAN AND SECURITY AGREEMENT
THIS FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT is made this ___
day of April, 1996 by and between FPM BEHAVIORAL HEALTH, INC., a Delaware
corporation (hereinafter "FPM") and FIRST UNION NATIONAL BANK OF FLORIDA, a
national banking association organized and existing under the laws of the United
States of America (hereinafter "Lender")
W I T N E S S E T H:
WHEREAS, Lender is the owner and holder of (i) that certain Term Note
from FPM to Lender, dated April 28, 1995 in the original principal amount of ONE
MILLION SIX HUNDRED SIXTY-SEVEN THOUSAND AND NO/100 DOLLARS ($1,667,000.00) (the
"Term Note") and (ii) that certain Line of Credit Promissory from FPM to Lender
dated April 28, 1995 in the face amount of FOUR MILLION TWO HUNDRED THOUSAND AND
NO/100 DOLLARS ($4,200,000.00) (the "Line of Credit Note"); and
WHEREAS, the Term Note and the Line of Credit Note are secured by that
certain Loan and Security Agreement between FPM and Lender dated April 6, 1995
(the "Loan Agreement"); and
WHEREAS, FPM has requested that certain terms of the Loan Agreement be
modified; and
WHEREAS, Lender has agreed to modify the Loan Agreement, but only upon
the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the premises hereof, and the mutual
covenants contained herein, and the sum of TEN AND NO/100 DOLLARS ($10.00) in
hand paid by FPM to Lender, the receipt and sufficiency of which is hereby
acknowledged, it is agreed as follows:
1. REPRESENTATIONS OF BORROWER. In order to induce Lender to enter
---------------------------
into this Agreement, FPM does hereby acknowledge, warrant, and represent to and
in favor of Lender:
(a) that the outstanding principal balance of the indebtedness
represented by the Term Note on the date hereof is ONE MILLION SIX
HUNDRED SIXTY-SEVEN THOUSAND AND NO/100 DOLLARS ($1,667,000.00) and
that said indebtedness is due from FPM to Lender in accordance with
the terms of the Term Note free from any defense, claim, or right of
set-off;
<PAGE>
(b) that the outstanding principal balance of the indebtedness
represented by the Line of Credit Note on the date hereof is
($971,918.67), $100,000.00 of which has been split into and is now
evidenced by that certain Term Note of even date herewith in the
original principal amount of ONE HUNDRED THOUSAND AND NO/100 DOLLARS
($100,000.00), and the remainder of which (i.e., $871,918.67) has been
split into and is now evidenced by that certain Amended, Restated and
Renewal Line of Credit Note of even date herewith in the face amount
of ONE MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS
($1,500,000.00), and that said indebtedness is due from FPM to Lender
in accordance with the terms of said Notes free from any defense,
claims or right of set-off; and
(c) that all representations and warranties made by FPM under
the Loan Agreement are true and correct as of the date hereof.
2. DEFINITIONS. The Definitions in Section 1 of the Loan Agreement
are hereby amended and changed as follows:
(a) The term "Advance" is hereby amended to include advances of
proceeds under the Overline Note as well as advances under the Line of
Credit Loan.
(b) The term "Advance Period" is hereby modified to expire on
October 30, 1996 with respect to Advances under the Line of Credit
Note, and to expire with respect to the Overline Note at the earlier
of (i) June 30, 1996 or (ii) the sale of all or substantially all of
the stock or assets of Apex Healthcare, Inc., a Delaware corporation.
(c) The term "Line of Credit Loan" is amended to mean the Loan
and all Advances now or hereafter made by the Lender to Borrower in
the maximum aggregate principal amount of ONE MILLION FIVE HUNDRED
THOUSAND AND NO/100 DOLLARS ($1,500,000.00), the indebtedness of which
is evidenced by the Line of Credit Note.
(d) The term "Line of Credit Note" is amended to mean that
certain Amended, Restated, and Renewal Line of Credit Promissory Note
made by Borrower in favor of Lender of even date with this First
Amendment in the face amount of ONE MILLION FIVE HUNDRED THOUSAND AND
NO/100 DOLLARS ($1,500,000.00), as such Note may hereafter be renewed,
extended or modified.
(e) The term "Loan" is amended to include the Overline Line of
Credit Loan, the Term Loan, the Second Term Loan and the Line of
Credit Loan.
(f) The term "Note" is amended to add to the definition
thereof the Overline Note and the Second Term Note.
2
<PAGE>
(g) The term "Overline Line of Credit Loan" is hereby added to
the Definitions and shall mean the Loan and all Advances now or
hereafter to be made by Lender to Borrower in the maximum aggregate
principal amount of FIVE HUNDRED THOUSAND AND NO/100 DOLLARS
($500,000.00), the Indebtedness of which is evidenced by the Overline
Line of Credit Note.
(h) The term "Overline Note" is hereby added to the
Definitions and shall mean the promissory note made by Borrower in
favor of Lender of even date with this First Amendment in the face
amount of FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($500,000.00), as
such Note may hereafter be renewed, extended or modified.
(i) The term "Second Term Loan" is hereby added to the
Definitions and shall mean the Loan made by Lender to Borrower in the
amount of ONE HUNDRED THOUSAND AND NO/100 DOLLARS ($100,000.00), the
Indebtedness of which is evidenced by the Second Term Note.
(j) The term "Second Term Note" is hereby added to the
Definitions and shall mean the Amended, Restated and Renewal Term Note
made by Borrower in favor of Lender of even date with this First
Amendment in the original principal amount of ONE HUNDRED THOUSAND AND
NO/100 DOLLARS ($100,000.00), as such Note may hereafter be renewed,
extended or modified.
3. SUBSIDIARIES. As of the date of this First Amendment, the
------------
Subsidiaries include the Subsidiaries referenced in Section 2.18 of the Loan
Agreement and listed on Exhibit 2.18 thereto, and also include FPM of Ohio,
-------
Inc., a Delaware corporation.
4. LINE OF CREDIT LOAN. Section 3.2 of the Loan Agreement is hereby
-------------------
deleted in its entirety and replaced with the following new Section 3.2:
3.2 Line Of Credit Loan. During the Advance Period, and subject to
-------------------
the terms and conditions of this Agreement, Lender shall lend to
Borrower a total principal amount not to exceed ONE MILLION FIVE
HUNDRED THOUSAND AND NO/100 DOLLARS. The Line of Credit Loan shall be
advanced upon request of Borrower from time to time during the Advance
Period solely for working capital and other general corporate purposes
(including, without limitation, for capital contributions and other
investments in and to Subsidiaries and other Persons in which the
Borrower or any Subsidiary owns Stock). At the conclusion of the
Advance Period, the Line of Credit Loan shall be converted to a Term
Loan in the principal amount of the then outstanding principal balance
due under the Line of Credit Loan. The Line of Credit Loan shall be
evidenced by and payable in accordance with the terms of the Line of
Credit Note. All advances by Lender to or for the account of Borrower,
shall be considered part of the Indebtedness under the Line of Credit
Note, shall bear interest
3
<PAGE>
as provided in the Line of Credit Note, and shall be entitled to all rights
and benefits hereunder and under all other Loan Documents.
5. ACQUISITION LINE OF CREDIT. Lender and Borrower agree that Lender will
--------------------------
make no further advances to Borrower on account of the Acquisition portion of
the Line of Credit as referenced in Section 3.2 and elsewhere in the Loan
Agreement. The current principal balance of the Acquisition portion of the Line
of Credit in the amount of $100,000.00 shall hereafter be evidenced by and
payable in accordance with the terms of the Second Term Note. Therefore, all
references in the Loan Agreement to Lender's funding any Acquisition portion of
the Line of Credit Loan shall be deemed to refer to fundings prior to the date
hereof and all references to prospective funding of any Acquisition portion of
the Line of Credit Loan from and after the date hereof shall be deleted from the
Loan Agreement.
6. LIMITATIONS ON LINES OF CREDIT ADVANCES.
---------------------------------------
(a) Section 3.3(a) of the Loan Agreement is hereby deleted in its
entirety and replaced with the following new Section 3.3(a):
3.3 (a) No advance will be made which, if made, will cause the
outstanding principal balance of the Line of Credit Loan to
exceed $1,500,000.00.;
(b) Section 3.3(b) of the Loan Agreement is hereby deleted in its
entirety and replaced with the following new Section 3.3(b):
3.3 (b) Advances for general corporate purposes shall not
exceed an outstanding aggregate principal amount of
$1,500,000.00.
7. NOTICE AND MANNER OF BORROWING. The portions of Section 3.4 of the
------------------------------
Loan Agreement with respect to requirements for funding the Acquisition portion
of the Line of Credit beginning at the eleventh line of said Section 3.4 are
hereby deleted in their entirety.
8. FINANCIAL COVENANTS. The Financial Covenants in Section 5.7 of the
-------------------
Loan Agreement are hereby amended and changed as follows:
(a) Section 5.7(a) of the Loan Agreement is hereby deleted in its
entirety and hereby replaced by the following new Section 5.7(a):
5.7(a) Senior Debt to Cash Flow. Borrower shall maintain at
------------------------
fiscal year end, for the fiscal year ending June 30,
1996, and at the end of each fiscal quarter thereafter
based on an annual period comprised of the fiscal
quarter just ended and the preceding three fiscal
quarter periods, a Senior Debt to Cash Flow Ratio of
not more than 3.0:1.
4
<PAGE>
(b) Section 5.7(b) of the Loan Agreement is hereby deleted in its
entirety and hereby replaced by the following new Section 5.7(b):
5.7(b) Interest Coverage Ratio. Borrower shall maintain at
-----------------------
fiscal year end, for the fiscal year ending June 30,
1996, and at the end of each fiscal quarter thereafter
based on an annual period comprised of the fiscal
quarter just ended and the preceding three fiscal
quarter periods, an Interest Coverage Ratio of not
less than 5.0:1.
(c) Section 5.7(d) of the Loan Agreement is hereby deleted in its
entirety and hereby replaced by the following new Section 5.7(d):
5.8(d) Minimum Stockholder's Equity. Borrower shall maintain
----------------------------
as of June 30 of each fiscal year, commencing June 30,
1996, a Minimum Stockholder's Equity equal to at least
$850,000.00 plus 75% of Consolidated Net Income
accruing subsequent to June 30, 1996.
9. ACQUISITIONS. Section 5.9 of the Loan Agreement is hereby deleted in
------------
its entirety and replaced with the following new Section 5.9:
5.9 Acquisitions Any approval by Lender of a proposed acquisition
may be withheld by Lender in its sole, absolute and unreviewable discretion.
Borrower will notify Lender in writing of each and every Acquisition whether or
not an Advance is requested by Borrower to finance the Acquisition.
10. SALE OF APEX HEALTHCARE, INC. The following new section 5.33 is
----------------------------
hereby added to the Loan Agreement:
5.33 Sale of Apex Healthcare, Inc. Upon the sale of all of or
-----------------------------
substantially all of the assets of Apex Healthcare, Inc., a Delaware corporation
("APEX"), or more than 49% of the Stock of Apex, , Borrower shall (i)
immediately pay to Lender all of the outstanding principal balance, together
with all interest thereon, of the Overline Note and (ii) immediately pay to
Lender ONE MILLION AND NO/100 DOLLARS ($1,000,000.00) as a principal reduction
of the Term Note.
11. CROSS-DEFAULT AND CROSS-COLLATERALIZATION. Section 6.4 of the Loan
-----------------------------------------
Agreement is hereby amended to provide a cross-default and cross-
collateralization among the Line of Credit Note, the Term Note, the Line of
Credit Note, the Second Term Note and the Overline Note. A default under any of
such Notes shall, at the option of Lender, be and constitute a default under any
of the other Notes. All of the Notes are also cross-collateralized such that
any collateral securing any obligations of Borrower under any of the Notes is
hereby deemed to also secure the obligations of the Borrower under any of the
other Notes, as fully as if such Collateral were
5
<PAGE>
described in the Loan Documents executed in connection with each of the Notes,
and were pledged by Borrower therein to secure each of the Notes.
12. MISCELLANEOUS. Except for the changes and modifications effected
-------------
hereby, it is expressly agreed that the Loan and Security Agreement shall remain
in full force and effect in strict accordance with its terms. This First
Amendment shall be binding upon and shall inure to the benefit of, the heirs,
executors, administrators, personal representatives, successors and assigns of
the parties hereto.
FPM BEHAVIORAL HEALTH, INC., a
Delaware corporation
_______________________________________ By:____________________________
Printed Name:__________________________ Warwick D. Syphers,
Executive Vice President
_______________________________________
Printed Name:__________________________ [CORPORATE SEAL]
FIRST UNION NATIONAL BANK OF FLORIDA
_______________________________________ By:____________________________
Printed Name:__________________________ Lisa Simington,
Vice President
_______________________________________
Printed Name:__________________________ [CORPORATE SEAL]
STATE OF ___________________
COUNTY OF __________________
The foregoing instrument was acknowledged before me this _______ day of
April, 1996, by Warwick D. Syphers as Executive Vice President of FPM BEHAVIORAL
HEALTH, INC., a Delaware Corporation, on behalf of the corporation. He is
personally known to me or produced __________________as identification and did
not take an oath.
____________________________________________
Name of Notary______________________________
NOTARY PUBLIC, STATE OF_____________________
Commission Number:__________________________
My Commission Expires:______________________
6
<PAGE>
STATE OF ___________________
COUNTY OF __________________
The foregoing instrument was acknowledged before me this _____ day of April,
1996, by Lisa Simington as Vice President of FIRST UNION NATIONAL BANK OF
FLORIDA, on behalf of the Bank. She is personally known to me or produced
__________________as identification and did not take an oath.
____________________________________________
Name of Notary______________________________
NOTARY PUBLIC, STATE OF_____________________
Commission Number:__________________________
My Commission Expires:______________________
7
<PAGE>
Exhibit 10.26
THIS TERM PROMISSORY NOTE IS ONE OF TWO (2) NOTES RENEWING, AMENDING,
RESTATING AND SPLITTING THAT CERTAIN LINE OF CREDIT PROMISSORY NOTE FROM
BORROWER TO LENDER DATED APRIL 28, 1995 IN THE ORIGINAL FACE AMOUNT OF
$4,200,000.00 (THE "ORIGINAL NOTE"), WHICH AS OF THE DATE HEREOF HAS AN
OUTSTANDING PRINCIPAL BALANCE OF $971,918.67, AND THE ORIGINAL OF WHICH IS
ATTACHED HERETO. $871,918.67 OF THE CURRENT PRINCIPAL BALANCE OF THE
ORIGINAL NOTE HAS, OF EVEN DATE HEREWITH, BEEN RENEWED, AMENDED, RESTATED
AND SPLIT INTO, AND IS EVIDENCED BY, THAT CERTAIN AMENDED, RESTATED AND
RENEWAL LINE OF CREDIT NOTE OF EVEN DATE HEREWITH FROM BORROWER TO LENDER
IN THE AMOUNT OF $1,500,000.00. THIS TERM NOTE RENEWS, AMENDS, RESTATES
AND SPLITS $100,000.00 OF THE OUTSTANDING PRINCIPAL BALANCE OF THE ORIGINAL
NOTE WHICH HAS HERETOFORE BEEN DISBURSED BY LENDER TO BORROWER.
FIRST UNION
AMENDED, RESTATED AND RENEWAL
TERM PROMISSORY NOTE
_____________________
$100,000.00 No._____________ April 24, 1996
LENDER: FIRST UNION NATIONAL BANK OF FLORIDA, a national banking
association, 800 North Magnolia Avenue, 8th Floor, P.O. Box
1000, Orlando, Florida, 32802 Attention: Portfolio Management,
Ms. Lisa Simington (hereinafter termed "Lender"),
BORROWER: FPM BEHAVIORAL HEALTH, INC., a Delaware corporation, 1276
Minnesota Avenue, Winter Park, Florida 32789 (hereinafter
termed the "Borrower").
BORROWER REPRESENTS THAT THE LOAN EVIDENCED HEREBY IS BEING OBTAINED FOR THE
FOLLOWING PRIMARY PURPOSE:
[X]BUSINESS; [ ]PERSONAL; [ ]FAMILY OR HOUSEHOLD; [ ]AGRICULTURAL
<PAGE>
FOR VALUE RECEIVED: to wit, money loaned the undersigned Borrower, jointly
and severally, promises to pay to the order of Lender at its office in the above
city, or wherever else Lender may specify, the sum of ONE HUNDRED THOUSAND AND
NO/100 DOLLARS ($100,000.00) with interest until paid in accordance herewith.
PAYMENT
OF INTEREST: Interest only at the rate of ONE PERCENT (1%) above the Prime
Rate, as hereinafter defined, shall be paid monthly, in arrears,
on the fifth day of each month hereafter beginning on May 5, 1996
and continuing until this Note shall be fully paid. The interest
rate shall be calculated with reference to the Prime Rate which
is in effect on the date of this Note and shall be adjusted as of
each date such Prime Rate changes. The term "Prime Rate" as used
herein shall mean and be defined as the interest rate per annum
announced by Lender from time to time to be its Prime Rate. The
Prime Rate is one of several interest rate bases used by Lender,
and is not necessarily the lowest or most favorable rate of
interest offered by Lender.
PAYMENT OF
PRINCIPAL: Beginning on May 5, 1996, monthly payments of principal (not
including interest) in the amount of TWO THOUSAND SEVEN HUNDRED
SEVENTY-SEVEN and 78/100 DOLLARS ($2,777.78) shall be due and
payable on the fifth (5th) day of each and every month to and
including March 5, 1999. On April 5, 1999 the then remaining
principal balance of this Note shall be paid in full, together
with all interest accrued thereon.
The Loan may be prepaid in whole or in part at any time without any prepayment
premium, penalty, or fee whatsoever, provided, however, that any such prepayment
must be made on an installment payment date and the Lender must be given at
least thirty (30) days prior written notice of Borrower's intention to prepay.
Interest is computed on the basis of a 360 day year for the actual number
of days in the interest period (Actual/360 Computation). Lender's Actual/360
computation determines the annual effective interest yield by taking the stated
(nominal) interest rate for a year's period and then dividing said rate by 360
to determine the daily periodic rate to be applied for each day in the interest
period. Application of such computation produces an annualized effective
interest rate exceeding that of the nominal rate.
In no event shall the amount of interest due or payment in the nature of
interest payable hereunder exceed the maximum rate of interest allowed by
applicable law, as amended from time to time, and in the event any such payment
is paid by the Borrower or received by the Lender, then such excess sum,
together with all interest accrued thereon, which shall accrue at the maximum
legal rate from the date of such excess payment, shall be credited as a payment
of principal unless the Borrower shall notify the Lender in writing that
Borrower elects to have such excess sum returned forthwith.
2
<PAGE>
All capitalized terms not otherwise defined herein shall have the same
meaning as set forth in the Loan and Security Agreement made by Lender and
Borrower dated April 6, 1995, as amended of even date herewith, with respect to
the Loan (the "Loan Agreement").
The Borrower agrees to pay a late charge equal to 5% of each payment of
principal and/or interest which is not paid within 10 days of the date on which
it is due. At Lender's option, the Interest Rate shall become the Default Rate
commencing with and continuing for so long as the loan or any portion thereof is
in Default as defined in this Note. Further, upon Borrower's Default and where
Lender deems it necessary or proper to employ an attorney to enforce collection
of any unpaid balance or to otherwise protect its interests hereunder, then
Borrower agrees to pay Lender's reasonable attorneys' fees (including appellate
costs, if any) and collection costs. Liability for reasonable attorneys fees
and costs shall exist whether or not any suit or proceeding is commenced.
All payments received during normal banking hours after 2:00 P.M., Orlando,
Florida time, shall be deemed received at the opening of the next banking day.
Borrower warrants that Borrower does not have a "record" with respect to
any violation of Laws of the United States or of any State relating to liquor
(as referred to in 18 U.S.C.A. 3617, et seq.) or narcotics and/or any commercial
crimes.
The undersigned Borrower, and all sureties, endorsers, guarantors and
others who may become liable for all or any part of the Indebtedness evidenced
hereby (the "Obligors"), do hereby, jointly and severally waive presentment,
demand, protest, notice of protest and/or of dishonor, and also notice of
acceleration of maturity on Default or otherwise. Further, they agree that
Lender may, from time to time, extend, modify, amend or renew this Note for any
period (whether or not longer than the original period of the Note) and grant
any releases, compromises or indulgences with respect to the Note or any
extensions, modifications, amendments or renewals thereof or any security
therefor, or to any party liable thereunder or hereunder, all without notice to
or consent of any of the Obligors and without affecting the liability of the
Obligors.
If more than one person has signed this instrument, such parties are
jointly and severally obligated hereunder. Further, use of the masculine
pronoun herein shall include the feminine and neuter and also the plural. If
any provision of this instrument shall be prohibited or invalid under applicable
law, such provision shall be ineffective but only to the extent of such
prohibition of invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Note.
3
<PAGE>
TIME IS OF THE ESSENCE HEREOF.
Any notices to Borrower shall be sufficiently given, if mailed or delivered
in accordance with the provisions of the Loan Agreement.
EVENTS OF DEFAULT
BORROWER shall be in default (herein referred to as a "Default") under this
Note upon the happening of any of the events, circumstances or conditions
described as an "Event of Default" under the terms of Section 6.1 of the Loan
Agreement.
REMEDIES ON DEMAND OR DEFAULT
Upon the occurrence of any of the events, circumstances or conditions of
Default, the entire principal balance of this Note, all interest accrued thereon
and all other Indebtedness evidenced herein and secured hereby shall at the
option of the Lender, immediately be due and payable without notice. Without
limitation thereto, Lender shall have all the specific rights and remedies of a
Secured Party under the Uniform Commercial Code, as adopted by the State of
Florida, and under the Loan Agreement.
Upon the occurrence of any Default, subject to any applicable cure or grace
periods set forth herein or in the Loan Agreement, Lender is herewith expressly
authorized to exercise its right of set-off or bank lien as to any monies
deposited in demand, checking, time, savings or other accounts of any nature
maintained in and with it by any of the undersigned, without advance notice.
Said right of set-off may also be exercised and applicable where Lender is
indebted to any signer hereof by reason of any Certificate of Deposit, Note or
otherwise.
BORROWER hereby further warrants, covenants, and agrees, as follows:
Upon any transfer of this Note, the Lender may deliver the property held as
security, or any part thereof, to the transferee, as well as any subsequent
holder hereof who shall thereupon become vested with all the power and rights
herein given to the Lender in respect to the property so transferred and
delivered; and the Lender shall thereafter be forever relieved and fully
discharged from any liability or responsibility with respect to such property so
transferred but with respect to any property not so transferred, the Lender
shall retain all rights and powers hereby given.
With prior written consent of Lender, other Collateral may be substituted
for the original Collateral herein, in which event all rights, duties,
obligations, remedies and security interests provided for, created or granted
shall apply fully to such substitute Collateral. Borrower will cause the
security interests of Lender to be properly protected and perfected.
Borrower has, or forthwith will acquire, valid title to Collateral, and
will at all times, keep same free of any liens, security interests, attachments
and/or claims whatsoever except Permitted
4
<PAGE>
Liens as defined in the Loan Agreement. Borrower has good and valid title
thereto and will warrant and defend same against all claims. Borrower is not to
and will not attempt to transfer, sell or encumber the Collateral or use it in
violation of any statute or ordinance. Borrower, further, agrees to pay
promptly all taxes and assessments upon the Collateral except as otherwise
permitted under the Loan Agreement.
No waivers, amendments or modifications of this Note shall be valid unless
in writing and signed by the party to be charged. Further, this Note shall be
governed by and construed under the laws of the State of Florida. Unless
otherwise defined herein or in the Loan Agreement, all terms and expressions
contained herein which are defined in Articles 1, 3 or 9 of the Uniform
Commercial Code of the State of Florida shall have the same meaning herein as in
said Articles of said Code. No waiver by Lender of any default(s) shall operate
as a waiver of any other default or the same default on a future occasion. All
rights of Lender hereunder shall inure to the benefit of its successors and
assigns; and all obligations of Borrower shall bind its successors and assigns.
Borrower shall promptly pay all documentary and/or intangible taxes in
connection with the closing of this transaction whether assessed at closing or
arising from time to time.
Borrower will discharge all of Borrower's duties and obligations as stated
in any Security Agreement to Lender for any debt of Borrower to Lender and in
any other Loan Document.
WAIVER OF JURY TRIAL. BY THE EXECUTION HEREOF, BORROWER HEREBY KNOWINGLY,
--------------------
VOLUNTARILY AND INTENTIONALLY AGREES, THAT:
(A) NEITHER THE BORROWER NOR ANY SUCCESSOR OR ASSIGN SHALL SEEK A JURY
TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM, OR ANY OTHER LITIGATION
PROCEDURE ARISING FROM OR BASED UPON THIS PROMISSORY NOTE, THE LOAN AGREEMENT OR
ANY LOAN DOCUMENT EVIDENCING, SECURING OR RELATING TO THE OBLIGATIONS OR TO THE
DEALINGS OR RELATIONSHIP BETWEEN OR AMONG THE PARTIES THERETO;
(B) NEITHER THE BORROWER NOR THE LENDER WILL SEEK TO CONSOLIDATE ANY SUCH
ACTION, IN WHICH A JURY TRIAL HAS BEEN WAIVED, WITH ANY OTHER ACTION IN WHICH A
JURY TRIAL HAS NOT BEEN OR CANNOT BE WAIVED;
(C) THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY NEGOTIATED BY THE
PARTIES HERETO, AND THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS;
(D) NEITHER THE BORROWER NOR THE LENDER HAS IN ANY WAY AGREED WITH OR
REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE
FULLY ENFORCED IN ALL INSTANCES; AND
5
<PAGE>
(E) THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER TO ENTER INTO THIS
TRANSACTION.
IN WITNESS WHEREOF, the Borrower, on the day and year first written above,
has caused this Note to be executed under seal by its duly authorized
officer(s).
FPM BEHAVIORAL HEALTH, INC.,
a Delaware corporation
By:
------------------------------
Warwick D. Syphers,
Executive Vice President
U.S. Tax I.D. Number: 59-3269144
[AFFIX CORPORATE SEAL]
STATE OF ________________
COUNTY OF ______________
The foregoing instrument was acknowledged before me this _____ day of
April, 1996 by Warwick D. Syphers, as Executive Vice President of FPM BEHAVIORAL
HEALTH, INC., a Delaware corporation, on behalf of the corporation. He is
personally known to me or produced __________________________ as identification
and did not take an oath.
____________________________________________
Name of Notary______________________________
NOTARY PUBLIC, STATE OF ____________________
Commission Number:__________________________
My Commission Expires:______________________
6
<PAGE>
Exhibit 10.27
THIS AMENDED, RESTATED AND RENEWAL LINE OF CREDIT PROMISSORY NOTE IS ONE OF TWO
NOTES RENEWING, AMENDING, RESTATING AND SPLITTING THAT CERTAIN LINE OF CREDIT
PROMISSORY NOTE FROM BORROWER TO LENDER DATED APRIL 28, 1995 IN THE ORIGINAL
PRINCIPAL AMOUNT OF $4,200,000.00 (THE "ORIGINAL NOTE"), WHICH AS OF THE DATE
HEREOF HAS AN OUTSTANDING PRINCIPAL BALANCE OF $971,918.67, AND THE ORIGINAL OF
WHICH IS ATTACHED HERETO. $100,000.00 OF THE CURRENT OUTSTANDING PRINCIPAL
BALANCE OF THE ORIGINAL NOTE HAS, OF EVEN DATE HEREWITH, BEEN RENEWED, AMENDED,
RESTATED AND SPLIT INTO THAT CERTAIN TERM NOTE FROM BORROWER TO LENDER OF EVEN
DATE HEREWITH IN THE ORIGINAL PRINCIPAL AMOUNT OF $100,000.00 WHICH, TOGETHER
WITH THIS AMENDED, RESTATED AND RENEWAL LINE OF CREDIT PROMISSORY NOTE RENEWS,
AMENDS, RESTATES AND SPLITS THE ORIGINAL NOTE. THE REMAINING $871,918.67 OF THE
CURRENT OUTSTANDING PRINCIPAL OF THE ORIGINAL NOTE SHALL BE THE BEGINNING
OUTSTANDING PRINCIPAL BALANCE UNDER THIS AMENDED, RESTATED AND RENEWAL LINE OF
CREDIT PROMISSORY NOTE.
FIRST UNION
AMENDED, RESTATED AND RENEWAL
LINE OF CREDIT PROMISSORY NOTE
--------, --------
$1,500,000.00 No. April 24, 1996
-------------
LENDER: FIRST UNION NATIONAL BANK OF FLORIDA, a national banking
association, 800 North Magnolia Avenue, 8th Floor, P.O. Box 1000,
Orlando, Florida, 32802 Attention: Portfolio Management, Ms. Lisa
Simington (hereinafter termed "Lender"),
BORROWER: FPM BEHAVIORAL HEALTH, INC., a Delaware corporation, 1276
Minnesota Avenue, Winter Park, Florida 32789 (hereinafter termed
the "Borrower").
BORROWER REPRESENTS THAT THE LOAN EVIDENCED HEREBY IS BEING OBTAINED FOR THE
FOLLOWING PRIMARY PURPOSE:
[X]BUSINESS; [_]PERSONAL; [_]FAMILY OR HOUSEHOLD; [_]AGRICULTURAL
FOR VALUE RECEIVED: to wit, money loaned the undersigned Borrower, jointly
and severally, promises to pay to the order of Lender at its office in the above
city, or wherever else
Initials:
-----
<PAGE>
Lender may specify, the sum of ONE-MILLION FIVE-HUNDRED THOUSAND AND NO/100
DOLLARS ($1,500,000.00), with interest until paid in accordance herewith.
2 Initials:
-----
<PAGE>
CONTRACT RATE
OF INTEREST: Interest shall accrue from the date of each advance on the
principal balance of this Note at a rate per annum (the
"Interest Rate") which is either (a) the Lender's Prime Rate, as
hereinafter defined, plus three-fourths of one percent (.75%)
per annum, as that rate may change from time to time with
changes to be effective as of the date the Lender's Prime Rate
changes (the "Prime Rate Alternative"); or (b) the LIBOR
Adjusted Base Rate, as hereinafter defined, plus 300 Basis
Points per annum, as that rate may change from time to time with
changes to be effective as of the day following the last day of
each successive "LIBOR Period", as defined below (the "LIBOR
Rate Alternative"). The term "Lender's Prime Rate" as used
herein shall mean and be defined as the interest rate per annum
announced by Lender from time to time as its prime rate. The
term "LIBOR Adjusted Rate" shall mean the rate per annum
[rounded upwards, if necessary, to the next higher one one-
hundredths of one percent (.01%)] for deposits in United States
Dollars for a maturity of ninety (90) days which appears on the
Telerate Page 3750 at approximately 11:00 a.m. London time two
(2) London business days prior to the effective date of this
Note initially, and thereafter two (2) London business days
prior to the end of each LIBOR Period, as defined below, as such
rate is adjusted in accordance with Lender's standard practices
for reserves and other requirements. A "LIBOR Period" for
purposes of this Note shall mean each ninety (90) day period
during the term of this Note that the LIBOR Adjusted Rate is in
effect, beginning with the date of this Note. The Lender's Prime
Rate and the LIBOR Adjusted Rate are each one of several
interest rate bases used by Lender, and neither is necessarily
the lowest or most favorable rate of interest offered by Lender.
Unless Borrower requests in writing that the Interest Rate be
changed to the Prime Rate Alternative, the Interest Rate shall
be the LIBOR Rate Alternative. During the term of this Note,
Borrower shall have the option of changing the Interest Rate
from the Prime Rate Alternative to the LIBOR Rate Alternative
and conversely, provided that a written request for such a
change to the Interest Rate is first delivered to Lender. No
change to the Interest Rate shall be effective unless and until
an Allonge, prepared by Lender and setting forth the applicable
Interest Rate, is executed and delivered by Borrower to Lender.
Each such change to the Interest Rate shall be effective as of
the date to be set forth in the Allonge, which date shall be the
next occurring interest payment date provided that such date is
not less than thirty (30) days from the date Lender receives
Borrower's written request for a change of the Interest Rate.
TERMS OF
PAYMENT: Interest only on the outstanding principal balance of this Note
at the Contract Rate of Interest provided above shall be paid
monthly, in arrears, on the fifth day of each month hereafter
beginning on May 5, 1996 and continuing until
3 Initials:
-----
<PAGE>
this Note shall be fully paid. The outstanding principal balance
under this Note, together with all interest accrued thereon,
shall be payable on demand. The principal amount of this Note
will be advanced from time to time pursuant to and subject to the
terms of a Loan and Security Agreement between Borrower and
Lender dated April 6, 1995, as amended by that certain First
Amendment to Loan and Security Agreement of even date herewith.
The outstanding principal balance under this Note may increase or
decrease from time to time and may be borrowed, paid, re-borrowed
and repaid in accordance with the terms of said Loan and Security
Agreement, provided that the line of credit provided under this
Note and Borrower's ability to request draws hereunder shall
expire on October 30, 1996.
The Loan may be prepaid in whole or in part at any time without any prepayment
premium, penalty, or fee whatsoever, provided, however, that any such prepayment
must be made on an installment payment date and the Lender must be given at
least thirty (30) days prior written notice of Borrower's intention to prepay.
Interest is computed on the basis of a 360 day year for the actual number
of days in the interest period (Actual/360 Computation). Lender's Actual/360
computation determines the annual effective interest yield by taking the stated
(nominal) interest rate for a year's period and then dividing said rate by 360
to determine the daily periodic rate to be applied for each day in the interest
period. Application of such computation produces an annualized effective
interest rate exceeding that of the nominal rate.
In no event shall the amount of interest due or payment in the nature of
interest payable hereunder exceed the maximum rate of interest allowed by
applicable law, as amended from time to time, and in the event any such payment
is paid by the Borrower or received by the Lender, then such excess sum,
together with all interest accrued thereon, which shall accrue at the maximum
legal rate from the date of such excess payment, shall be credited as a payment
of principal unless the Borrower shall notify the Lender in writing that
Borrower elects to have such excess sum returned forthwith.
All capitalized terms not otherwise defined herein shall have the same
meaning as set forth in the Loan and Security Agreement made by Lender and
Borrower dated April 6, 1995, as amended of even date herewith, with respect to
the Loan (the "Loan Agreement").
The Borrower agrees to pay a late charge equal to 5% of each payment of
principal and/or interest which is not paid within 10 days of the date on which
it is due. At Lender's option, the Interest Rate shall become the Default Rate
commencing with and continuing for so long as the loan or any portion thereof is
in Default as defined in this Note. Further, upon Borrower's Default and where
Lender deems it necessary or proper to employ an attorney to enforce collection
of any unpaid balance or to otherwise protect its interests hereunder, then
Borrower agrees to pay Lender's reasonable attorneys' fees (including appellate
costs, if any) and collection costs. Liability for reasonable attorneys fees and
costs shall exist whether or not any suit or proceeding is commenced.
4 Initials:
-----
<PAGE>
All payments received during normal banking hours after 2:00 P.M., Orlando,
Florida time, shall be deemed received at the opening of the next banking day.
Borrower warrants that Borrower does not have a "record" with respect to
any violation of Laws of the United States or of any State relating to liquor
(as referred to in 18 U.S.C.A. 3617, et seq.) or narcotics and/or any commercial
crimes.
The undersigned Borrower, and all sureties, endorsers, guarantors and
others who may become liable for all or any part of the Indebtedness evidenced
hereby (the "Obligors"), do hereby, jointly and severally waive presentment,
demand, protest, notice of protest and/or of dishonor, and also notice of
acceleration of maturity on Default or otherwise. Further, they agree that
Lender may, from time to time, extend, modify, amend or renew this Note for any
period (whether or not longer than the original period of the Note) and grant
any releases, compromises or indulgences with respect to the Note or any
extensions, modifications, amendments or renewals thereof or any security
therefor, or to any party liable thereunder or hereunder, all without notice to
or consent of any of the Obligors and without affecting the liability of the
Obligors.
If more than one person has signed this instrument, such parties are
jointly and severally obligated hereunder. Further, use of the masculine
pronoun herein shall include the feminine and neuter and also the plural. If
any provision of this instrument shall be prohibited or invalid under applicable
law, such provision shall be ineffective but only to the extent of such
prohibition of invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Note.
TIME IS OF THE ESSENCE HEREOF.
Any notices to Borrower shall be sufficiently given, if mailed or delivered
in accordance with the provisions of the Loan Agreement.
EVENTS OF DEFAULT
BORROWER shall be in default (herein referred to as a "Default") under this
Note upon the happening of any of the events, circumstances or conditions
described as an "Event of Default" under the terms of Section 6.1 of the Loan
Agreement.
REMEDIES ON DEMAND OR DEFAULT
Upon the occurrence of any of the events, circumstances or conditions of
Default, the entire principal balance of this Note, all interest accrued thereon
and all other Indebtedness evidenced herein and secured hereby shall at the
option of the Lender, immediately be due and payable without notice. Without
limitation thereto, Lender shall have all the specific rights and remedies of a
Secured Party under the Uniform Commercial Code, as adopted by the State of
Florida, and under the Loan Agreement.
5 Initials:
-----
<PAGE>
Upon the occurrence of any Default, subject to any applicable cure or grace
periods set forth herein or in the Loan Agreement, Lender is herewith expressly
authorized to exercise its right of set-off or bank lien as to any monies
deposited in demand, checking, time, savings or other accounts of any nature
maintained in and with it by any of the undersigned, without advance notice.
Said right of set-off may also be exercised and applicable where Lender is
indebted to any signer hereof by reason of any Certificate of Deposit, Note or
otherwise.
BORROWER hereby further warrants, covenants, and agrees, as follows:
Upon any transfer of this Note, the Lender may deliver the property held as
security, or any part thereof, to the transferee, as well as any subsequent
holder hereof who shall thereupon become vested with all the power and rights
herein given to the Lender in respect to the property so transferred and
delivered; and the Lender shall thereafter be forever relieved and fully
discharged from any liability or responsibility with respect to such property so
transferred but with respect to any property not so transferred, the Lender
shall retain all rights and powers hereby given.
With prior written consent of Lender, other Collateral may be substituted
for the original Collateral herein, in which event all rights, duties,
obligations, remedies and security interests provided for, created or granted
shall apply fully to such substitute Collateral. Borrower will cause the
security interests of Lender to be properly protected and perfected.
Borrower has, or forthwith will acquire, valid title to Collateral, and
will at all times, keep same free of any liens, security interests, attachments
and/or claims whatsoever except Permitted Liens as defined in the Loan
Agreement. Borrower has good and valid title thereto and will warrant and
defend same against all claims. Borrower is not to and will not attempt to
transfer, sell or encumber the Collateral or use it in violation of any statute
or ordinance. Borrower, further, agrees to pay promptly all taxes and
assessments upon the Collateral except as otherwise permitted under the Loan
Agreement.
No waivers, amendments or modifications of this Note shall be valid unless
in writing and signed by the party to be charged. Further, this Note shall be
governed by and construed under the laws of the State of Florida. Unless
otherwise defined herein or in the Loan Agreement, all terms and expressions
contained herein which are defined in Articles 1, 3 or 9 of the Uniform
Commercial Code of the State of Florida shall have the same meaning herein as in
said Articles of said Code. No waiver by Lender of any default(s) shall operate
as a waiver of any other default or the same default on a future occasion. All
rights of Lender hereunder shall inure to the benefit of its successors and
assigns; and all obligations of Borrower shall bind its successors and assigns.
Borrower shall promptly pay all documentary and/or intangible taxes in
connection with the closing of this transaction whether assessed at closing or
arising from time to time.
Borrower will discharge all of Borrower's duties and obligations as stated
in any Security Agreement to Lender for any debt of Borrower to Lender and in
any other Loan Document.
6 Initials:
-----
<PAGE>
WAIVER OF JURY TRIAL. BY THE EXECUTION HEREOF, BORROWER HEREBY KNOWINGLY,
--------------------
VOLUNTARILY AND INTENTIONALLY AGREES, THAT:
(A) NEITHER THE BORROWER NOR ANY SUCCESSOR OR ASSIGN SHALL SEEK A JURY
TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM, OR ANY OTHER LITIGATION
PROCEDURE ARISING FROM OR BASED UPON THIS PROMISSORY NOTE, THE LOAN AGREEMENT OR
ANY LOAN DOCUMENT EVIDENCING, SECURING OR RELATING TO THE OBLIGATIONS OR TO THE
DEALINGS OR RELATIONSHIP BETWEEN OR AMONG THE PARTIES THERETO;
(B) NEITHER THE BORROWER NOR THE LENDER WILL SEEK TO CONSOLIDATE ANY SUCH
ACTION, IN WHICH A JURY TRIAL HAS BEEN WAIVED, WITH ANY OTHER ACTION IN WHICH A
JURY TRIAL HAS NOT BEEN OR CANNOT BE WAIVED;
(C) THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY NEGOTIATED BY THE
PARTIES HERETO, AND THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS;
(D) NEITHER THE BORROWER NOR THE LENDER HAS IN ANY WAY AGREED WITH OR
REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE
FULLY ENFORCED IN ALL INSTANCES; AND
(E) THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER TO ENTER INTO THIS
TRANSACTION.
IN WITNESS WHEREOF, the Borrower, on the day and year first written above,
has caused this Note to be executed under seal by its duly authorized
officer(s).
FPM BEHAVIORAL HEALTH, INC.,
a Delaware corporation
By:
-----------------------------
Warwick D. Syphers,
Executive Vice President
U.S. Tax I.D. Number: 59-3269144
[AFFIX CORPORATE SEAL]
7 Initials:
-----
<PAGE>
STATE OF
------------------
COUNTY OF
-----------------
The foregoing instrument was acknowledged before me this _____ day of
April, 1996 by Warwick D. Syphers, as Executive Vice President of FPM BEHAVIORAL
HEALTH, INC., a Delaware corporation, on behalf of the corporation. He is
personally known to me or produced __________________________ as identification
and did not take an oath.
-------------------------------------------
Name of Notary
----------------------------
NOTARY PUBLIC, STATE OF
-------------------
Commission Number:
------------------------
My Commission Expires:
---------------------
8 Initials:
-----
<PAGE>
Exhibit 10.28
FIRST UNION
OVERLINE LINE OF CREDIT NOTE
__________________
$500,000.00 No._____________ April 24, 1996
LENDER: FIRST UNION NATIONAL BANK OF FLORIDA, a national banking
association, 800 North Magnolia Avenue, 8th Floor, P.O. Box
1000, Orlando, Florida, 32802 Attention: Portfolio Management,
Ms. Lisa Symington (hereinafter termed "Lender"),
BORROWER: FPM BEHAVIORAL HEALTH, INC., a Delaware corporation, 1276
Minnesota Avenue, Winter Park, Florida 32789 (hereinafter
termed the "Borrower").
BORROWER REPRESENTS THAT THE LOAN EVIDENCED HEREBY IS BEING OBTAINED FOR THE
FOLLOWING PRIMARY PURPOSE:
[X]BUSINESS; [ ]PERSONAL; [ ]FAMILY OR HOUSEHOLD; [ ]AGRICULTURAL
FOR VALUE RECEIVED: to wit, money loaned the undersigned Borrower, jointly
and severally, promises to pay to the order of Lender at its office in the above
city, or wherever else Lender may specify, the sum of FIVE HUNDRED THOUSAND AND
NO/100 DOLLARS ($500,000.00), with interest until paid.
CONTRACT RATE
OF INTEREST: Interest shall accrue from the date of each advance on the
principal balance of this Note at a rate per annum (the
"Interest Rate") which is either (a) the Lender's Prime Rate,
as hereinafter defined, plus three quarters of one percent
(.75%) per annum, as that rate may change from time to time
with changes to be effective as of the date the Lender's Prime
Rate changes (the "Prime Rate Alternative"); or (b) the LIBOR
Adjusted Base Rate, as hereinafter defined, plus 300 Basis
Points per annum, as that rate may change from time to time
with changes to be effective as of the day following the last
day of each successive "LIBOR Period", as defined below (the
"LIBOR Rate Alternative"). The term "Lender's Prime Rate" as
used herein shall mean and be defined as the interest rate per
annum announced by Lender from time to time as its prime rate.
The term "LIBOR Adjusted Rate" shall mean the rate
<PAGE>
per annum [rounded upwards, if necessary, to the next higher one
one-hundredths of one percent (.01%)] for deposits in United
States Dollars for a maturity of ninety (90) days which appears
on the Telerate Page 3750 at approximately 11:00 a.m. London time
two (2) London business days prior to the effective date of this
Note initially, and thereafter two (2) London business days prior
to the end of each LIBOR Period, as defined below, as such rate
is adjusted in accordance with Lender's standard practices for
reserves and other requirements. A "LIBOR Period" for purposes of
this Note shall mean each ninety (90) day period during the term
of this Note that the LIBOR Adjusted Rate is in effect, beginning
with the date of this Note. The Lender's Prime Rate and the LIBOR
Adjusted Rate are each one of several interest rate bases used by
Lender, and neither is necessarily the lowest or most favorable
rate of interest offered by Lender. Unless Borrower requests in
writing that the Interest Rate be changed to the Prime Rate
Alternative, the Interest Rate shall be the LIBOR Rate
Alternative. During the term of this Note, Borrower shall have
the option of changing the Interest Rate from the Prime Rate
Alternative to the LIBOR Rate Alternative and conversely,
provided that a written request for such a change to the Interest
Rate is first delivered to Lender. No change to the Interest Rate
shall be effective unless and until an Allonge, prepared by
Lender and setting forth the applicable Interest Rate, is
executed and delivered by Borrower to Lender. Each such change to
the Interest Rate shall be effective as of the date to be set
forth in the Allonge, which date shall be the next occurring
interest payment date provided that such date is not less than
thirty (30) days from the date Lender receives Borrower's written
request for a change of the Interest Rate.
TERMS OF
PAYMENT: Beginning on May 30, 1996, interest on the outstanding principal
balance of this Note shall be payable in arrears in consecutive
monthly installments due and payable on the thirtieth day of each
month until this Note shall be fully paid.
MATURITY: The outstanding principal balance of this Note, together with all
interest thereon, shall be payable on demand. If not sooner paid
on demand, the principal balance of this Note, together with all
interest accrued thereon, shall be paid in full on the earlier of
(i) July 30, 1996 or (ii) upon closing of the sale, assignment or
transfer of all or substantially all of the assets, or more than
49% of the stock, of Apex Healthcare, Inc., a Delaware
corporation.
The Loan may be prepaid in whole or in part at any time without any
prepayment premium, penalty, or fee whatsoever, provided, however, that any such
prepayment must be made on an installment payment date and the Lender must be
given at least thirty (30) days prior written notice of Borrower's intention to
prepay.
2
<PAGE>
Interest is computed on the basis of a 360 day year for the actual number
of days in the interest period (Actual/360 Computation). Lender's Actual/360
computation determines the annual effective interest yield by taking the stated
(nominal) interest rate for a year's period and then dividing said rate by 360
to determine the daily periodic rate to be applied for each day in the interest
period. Application of such computation produces an annualized effective
interest rate exceeding that of the nominal rate.
In no event shall the amount of interest due or payment in the nature of
interest payable hereunder exceed the maximum rate of interest allowed by
applicable law, as amended from time to time, and in the event any such payment
is paid by the Borrower or received by the Lender, then such excess sum,
together with all interest accrued thereon, which shall accrue at the maximum
legal rate from the date of such excess payment, shall be credited as a payment
of principal unless the Borrower shall notify the Lender in writing that
Borrower elects to have such excess sum returned forthwith.
All capitalized terms not otherwise defined herein shall have the same
meaning as set forth in the Loan and Security Agreement made by Lender and
Borrower dated April 6, 1995, as amended of even date herewith, (the "Loan
Agreement").
The Borrower agrees to pay a late charge equal to 5% of each payment of
principal and/or interest which is not paid within 10 days of the date on which
it is due. At Lender's option, the Interest Rate shall become the Default Rate
commencing with and continuing for so long as the loan or any portion thereof is
in Default as defined in this Note. Further, upon Borrower's Default and where
Lender deems it necessary or proper to employ an attorney to enforce collection
of any unpaid balance or to otherwise protect its interests hereunder, then
Borrower agrees to pay Lender's reasonable attorneys' fees (including appellate
costs, if any) and collection costs. Liability for reasonable attorneys fees
and costs shall exist whether or not any suit or proceeding is commenced.
All payments received during normal banking hours after 2:00 P.M., Orlando,
Florida time, shall be deemed received at the opening of the next banking day.
Borrower warrants that Borrower does not have a "record" with respect to
any violation of Laws of the United States or of any State relating to liquor
(as referred to in 18 U.S.C.A. 3617, et seq.) or narcotics and/or any commercial
crimes.
The undersigned Borrower, and all sureties, endorsers, guarantors and
others who may become liable for all or any part of the Indebtedness evidenced
hereby (the "Obligors"), do hereby, jointly and severally waive presentment,
demand, protest, notice of protest and/or of dishonor, and also notice of
acceleration of maturity on Default or otherwise. Further, they agree that
Lender may, from time to time, extend, modify, amend or renew this Note for any
period (whether or not longer than the original period of the Note) and grant
any releases, compromises or indulgences with respect to the Note or any
extensions, modifications, amendments or renewals thereof or any security
therefor, or to any party liable thereunder or hereunder, all without notice to
or consent of any of the Obligors and without affecting the liability of the
Obligors.
3
<PAGE>
If more than one person has signed this instrument, such parties are
jointly and severally obligated hereunder. Further, use of the masculine
pronoun herein shall include the feminine and neuter and also the plural. If
any provision of this instrument shall be prohibited or invalid under applicable
law, such provision shall be ineffective but only to the extent of such
prohibition of invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Note.
TIME IS OF THE ESSENCE HEREOF.
Any notices to Borrower shall be sufficiently given, if mailed or delivered
in accordance with the provisions of the Loan Agreement.
EVENTS OF DEFAULT
BORROWER shall be in default (herein referred to as a "Default") under this
Note upon the happening of any of the events, circumstances or conditions
described as an "Event of Default" under the terms of Section 6.1 of the Loan
Agreement.
REMEDIES ON DEMAND OR DEFAULT
Upon the occurrence of any of the events, circumstances or conditions of
Default, the entire principal balance of this Note, all interest accrued thereon
and all other Indebtedness evidenced herein and secured hereby shall at the
option of the Lender, immediately be due and payable without notice. Without
limitation thereto, Lender shall have all the specific rights and remedies of a
Secured Party under the Uniform Commercial Code, as adopted by the State of
Florida, and under the Loan Agreement.
Upon the occurrence of any Default, subject to any applicable cure or grace
periods set forth herein or in the Loan Agreement, Lender is herewith expressly
authorized to exercise its right of set-off or bank lien as to any monies
deposited in demand, checking, time, savings or other accounts of any nature
maintained in and with it by any of the undersigned, without advance notice.
Said right of set-off may also be exercised and applicable where Lender is
indebted to any signer hereof by reason of any Certificate of Deposit, Note or
otherwise.
BORROWER hereby further warrants, covenants, and agrees, as follows:
Upon any transfer of this Note, the Lender may deliver the property held as
security, or any part thereof, to the transferee, as well as any subsequent
holder hereof who shall thereupon become vested with all the power and rights
herein given to the Lender in respect to the property so transferred and
delivered; and the Lender shall thereafter be forever relieved and fully
discharged from any liability or responsibility with respect to such property so
transferred but with respect to any property not so transferred, the Lender
shall retain all rights and powers hereby given.
4
<PAGE>
With prior written consent of Lender, other Collateral may be substituted
for the original Collateral herein, in which event all rights, duties,
obligations, remedies and security interests provided for, created or granted
shall apply fully to such substitute Collateral. Borrower will cause the
security interests of Lender to be properly protected and perfected.
Borrower has, or forthwith will acquire, valid title to Collateral, and
will at all times, keep same free of any liens, security interests, attachments
and/or claims whatsoever except Permitted Liens as defined in the Loan
Agreement. Borrower has good and valid title thereto and will warrant and
defend same against all claims. Borrower is not to and will not attempt to
transfer, sell or encumber the Collateral or use it in violation of any statute
or ordinance. Borrower, further, agrees to pay promptly all taxes and
assessments upon the Collateral except as otherwise permitted under the Loan
Agreement.
No waivers, amendments or modifications of this Note shall be valid unless
in writing and signed by the party to be charged. Further, this Note shall be
governed by and construed under the laws of the State of Florida. Unless
otherwise defined herein or in the Loan Agreement, all terms and expressions
contained herein which are defined in Articles 1, 3 or 9 of the Uniform
Commercial Code of the State of Florida shall have the same meaning herein as in
said Articles of said Code. No waiver by Lender of any default(s) shall operate
as a waiver of any other default or the same default on a future occasion. All
rights of Lender hereunder shall inure to the benefit of its successors and
assigns; and all obligations of Borrower shall bind its successors and assigns.
Borrower shall promptly pay all documentary and/or intangible taxes in
connection with the closing of this transaction whether assessed at closing or
arising from time to time.
Borrower will discharge all of Borrower's duties and obligations as stated
in any Security Agreement to Lender for any debt of Borrower to Lender and in
any other Loan Document.
WAIVER OF JURY TRIAL. BY THE EXECUTION HEREOF, BORROWER HEREBY KNOWINGLY,
--------------------
VOLUNTARILY AND INTENTIONALLY AGREES, THAT:
(A) NEITHER THE BORROWER NOR ANY SUCCESSOR OR ASSIGN SHALL SEEK A JURY
TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM, OR ANY OTHER LITIGATION
PROCEDURE ARISING FROM OR BASED UPON THIS PROMISSORY NOTE, THE LOAN AGREEMENT OR
ANY LOAN DOCUMENT EVIDENCING, SECURING OR RELATING TO THE OBLIGATIONS OR TO THE
DEALINGS OR RELATIONSHIP BETWEEN OR AMONG THE PARTIES THERETO;
(B) NEITHER THE BORROWER NOR THE LENDER WILL SEEK TO CONSOLIDATE ANY SUCH
ACTION, IN WHICH A JURY TRIAL HAS BEEN WAIVED, WITH ANY OTHER ACTION IN WHICH A
JURY TRIAL HAS NOT BEEN OR CANNOT BE WAIVED;
5
<PAGE>
(C) THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY NEGOTIATED BY THE
PARTIES HERETO, AND THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS;
(D) NEITHER THE BORROWER NOR THE LENDER HAS IN ANY WAY AGREED WITH OR
REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE
FULLY ENFORCED IN ALL INSTANCES; AND
(E) THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER TO ENTER INTO THIS
TRANSACTION.
IN WITNESS WHEREOF, the Borrower, on the day and year first written above,
has caused this Note to be executed under seal by its duly authorized
officer(s).
FPM BEHAVIORAL HEALTH, INC.,
a Delaware corporation
By:_____________________________________
Warwick D. Syphers,
Executive Vice President
U.S. Tax I.D. Number: 59-3269144
[AFFIX CORPORATE SEAL]
STATE OF _________________
COUNTY OF _______________
The foregoing instrument was acknowledged before me this _____ day of
April, 1996 by Warwick D. Syphers, as Executive Vice President of FPM BEHAVIORAL
HEALTH, INC., a Delaware corporation, on behalf of the corporation. He is
personally known to me or produced __________________________ as identification
and did not take an oath.
___________________________________________
Name of Notary_____________________________
NOTARY PUBLIC, STATE OF____________________
Commission Number:_________________________
My Commission Expires:_____________________
6
<PAGE>
Exhibit 10.29
FIRST AMENDMENT OF GUARANTYS AND
JOINDER OF GUARANTORS
THIS FIRST AMENDMENT OF GUARANTYS AND JOINDER OF GUARANTORS
(hereinafter the "First Amendment and Joinder") is made this ___ day of April,
1996 by the undersigned (collectively the "Guarantors") to and in favor of FIRST
UNION NATIONAL BANK OF FLORIDA, a national banking association organized and
existing under the laws of the United States of America (hereinafter "Lender").
W I T N E S S E T H:
WHEREAS, Lender is the owner and holder of: (i) that certain Term Note
from FPM Behavioral Health, Inc., a Delaware corporation (hereinafter "FPM") to
Lender dated April 28, 1995 in the original principal amount of ONE MILLION SIX
HUNDRED SIXTY-SEVEN THOUSAND AND NO/100 DOLLARS ($1,667,000.00) (the "Term
Note") and (ii) that certain Line of Credit Promissory Note from FPM to Lender
dated April 28, 1995 in the face amount of FOUR MILLION TWO HUNDRED THOUSAND AND
NO/100 DOLLARS ($4,200,000.00) (the "Line of Credit Note"); and
WHEREAS, the Term Note and the Line of Credit Note are secured by that
certain Loan and Security Agreement between FPM and Lender dated April 6, 1995
(the "Loan Agreement"); and
WHEREAS, each of the Guarantors executed and delivered to Lender their
separate Unconditional and Continuing Guarantys (collectively the "Guarantys")
each dated April 28, 1995 (except that the Unconditional and Continuing Guaranty
of FPM of Ohio, Inc., a Delaware corporation is dated June 19, 1995), which
guaranteed FPM's payment of the Term Note and the Line of Credit Note and FPM's
performance of its obligations under the Loan Agreement and related loan
documents, all as more particularly described therein; and
WHEREAS, FPM has requested that certain terms of the Line of Credit
Note and Loan Agreement be modified and that in connection therewith Lender
provide FPM an additional Line of Credit in the amount of FIVE HUNDRED THOUSAND
AND NO/100 DOLLARS ($500,000.00); and
WHEREAS, Lender has agreed to modify the Line of Credit Note and Loan
Agreement and to provide FPM a new Line of Credit in the amount of FIVE HUNDRED
THOUSAND AND NO/100 DOLLARS ($500,000.00), provided that Guarantors acknowledge
their continuing obligations pursuant to their Guarantys notwithstanding any
such modifications, and provided that
<PAGE>
Guarantors amend their Guarantys to include a Guaranty of FPM's payment of and
performance of its obligations under the "Overline Note" as defined below; and
WHEREAS, Guarantors wish to acknowledge their continuing obligations
pursuant to their Guarantys notwithstanding any such modifications and wish to
amend their Guarantys to include the Guaranty of FPM's payment of and
performance of its obligations under the Overline Note; and
WHEREAS, concurrently herewith: (1) FPM and Lender have executed that
certain First Modification of Loan and Security Agreement, (2) FPM has executed
that certain Overline Line of Credit Note in favor of Lender in the face amount
of FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($500,000.00) (the "Overline Note"),
and (3) FPM has split the Line of Credit Note into that certain Amended,
Restated and Renewal Line of Credit Note (the "Amended Line of Credit Note") of
even date herewith in the face amount of ONE MILLION FIVE HUNDRED THOUSAND AND
NO/100 DOLLARS ($1,500,000.00) and that certain Term Note (the "Second Term
Note") of even date herewith in the original principal amount of ONE HUNDRED
THOUSAND AND NO/100 DOLLARS ($100,000.00);
NOW THEREFORE, in consideration of the foregoing, Guarantors hereby
covenant and agree as follows:
1. AMENDMENT TO GUARANTYS. Guarantors hereby amend each of their
----------------------
Guarantys such that the term "Notes" as used in their Guarantys shall, from and
after the date hereof, be deemed to mean, and their Guarantys shall be deemed to
secure in all respects, the Term Note, the Line of Credit Note (as split into
the Amended Line of Credit Note and the Second Term Note), and the Overline
Note.
2. ACKNOWLEDGMENT OF CONTINUING GUARANTY. Guarantors hereby
-------------------------------------
acknowledge their continuing obligations pursuant to their Guarantys and agree
that their Guarantys shall remain in full force and effect notwithstanding the
modifications described above and effected by the documents described herein.
3. REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES. In order to
-----------------------------------------------
induce Lender to provide the line of credit evidenced by the Overline Note and
to make the modifications to the Loan Agreement and other documents described
herein, Guarantors, excepting Ramsay Managed Care, Inc., a Delaware corporation
("Ramsay"), hereby reaffirm as of the date hereof all of the representations and
warranties made by Guarantors referenced in Paragraph 2 of the Joinder of
Guarantors executed by each of the Guarantors and attached to and made a part
of the Loan Agreement. Ramsay hereby reaffirms as of the date hereof all of the
representations and warranties made by Ramsay in its Guaranty.
2
<PAGE>
IN WITNESS WHEREOF, the undersigned Guarantors have caused this
Joinder and Amendment to be executed, in duplicate counterparts, and delivered
to Lender as of the day and year set forth below.
WITNESSES: FLORIDA PSYCHIATRIC MANAGEMENT,
INC., a Florida corporation
________________________________ By:____________________________
Name: Warwick D. Syphers,
__________________________
Executive Vice President
________________________________ "GUARANTOR"
Name:___________________________
STATE OF __________________
COUNTY OF _________________
The foregoing instrument was acknowledged before me this _______ day
of April, 1996, by Warwick D. Syphers as Executive Vice President of FLORIDA
PSYCHIATRIC MANAGEMENT, INC., a Florida Corporation, on behalf of the
corporation. He is personally known to me or produced
______________________________________________________________as identification
and did not take an oath.
__________________________________________________
Name of Notary ___________________________________
NOTARY PUBLIC, STATE OF __________________________
Commission Number:________________________________
My Commission Expires:____________________________
3
<PAGE>
WITNESSES: FPM MANAGEMENT, INC., a Florida
corporation
______________________________ By:____________________________
Name: Warwick D. Syphers,
-------------------------
Executive Vice President
"GUARANTOR"
______________________________
Name:_________________________
STATE OF __________________
COUNTY OF _________________
The foregoing instrument was acknowledged before me this _______ day
of April, 1996, by Warwick D. Syphers as Executive Vice President of FPM
MANAGEMENT, INC., a Florida Corporation, on behalf of the corporation. He is
personally known to me or produced ___________________________________________as
identification and did not take an oath.
__________________________________________________
Name of Notary ___________________________________
NOTARY PUBLIC, STATE OF __________________________
Commission Number:________________________________
My Commission Expires:____________________________
4
<PAGE>
WITNESSES: FLORIDA PSYCHIATRIC ASSOCIATES,
INC., a Florida corporation
__________________________________ By:____________________________
Name: Warwick D. Syphers,
-----------------------------
Executive Vice President
"GUARANTOR"
__________________________________
Name:_____________________________
STATE OF __________________
COUNTY OF _________________
The foregoing instrument was acknowledged before me this _______ day
of April, 1996, by Warwick D. Syphers as Executive Vice President of FLORIDA
PSYCHIATRIC ASSOCIATES, INC., a Florida Corporation, on behalf of the
corporation. He is personally known to me or produced__________________________
___________________________________as identification and did not take an oath.
__________________________________________________
Name of Notary ___________________________________
NOTARY PUBLIC, STATE OF __________________________
Commission Number:________________________________
My Commission Expires:____________________________
5
<PAGE>
WITNESSES: FPMBH CLINICAL SERVICES, INC., a
Delaware corporation
_______________________________ By:_____________________________
Name: Warwick D. Syphers,
--------------------------
Executive Vice President
_______________________________ "GUARANTOR"
Name:__________________________
STATE OF __________________
COUNTY OF _________________
The foregoing instrument was acknowledged before me this _______ day
of April, 1996, by Warwick D. Syphers as Executive Vice President of FPMBH
CLINICAL SERVICES, INC., a Delaware Corporation, on behalf of the corporation.
He is personally known to me or produced______________________________________as
identification and did not take an oath.
___________________________________________________
Name of Notary ____________________________________
NOTARY PUBLIC, STATE OF ___________________________
Commission Number:_________________________________
My Commission Expires:_____________________________
6
<PAGE>
WITNESSES: ARIZONA PSYCHIATRIC AFFILIATES,
INC., a Delaware corporation
______________________________ By:____________________________
Name: Warwick D. Syphers,
-------------------------
Executive Vice President
______________________________ "GUARANTOR"
Name:_________________________
STATE OF __________________
COUNTY OF _________________
The foregoing instrument was acknowledged before me this _______ day
of April, 1996, by Warwick D. Syphers as Executive Vice President of ARIZONA
PSYCHIATRIC AFFILIATES, INC., a Delaware Corporation, on behalf of the
corporation. He is personally known to me or produced _________________________
____________________________________as identification and did not take an oath.
__________________________________________________
Name of Notary ___________________________________
NOTARY PUBLIC, STATE OF __________________________
Commission Number:________________________________
My Commission Expires:____________________________
7
<PAGE>
WITNESSES: FPM/HAWAII, INC., a Delaware corporation
______________________________ By:_____________________________________
Name:_________________________ Warwick D. Syphers,
Executive Vice President
______________________________ "GUARANTOR"
Name:_________________________
STATE OF __________________
COUNTY OF _________________
The foregoing instrument was acknowledged before me this _______ day
of April, 1996, by Warwick D. Syphers as Executive Vice President of FPM/HAWAII,
INC., a Delaware Corporation, on behalf of the corporation. He is personally
known to me or produced ______________________________________________________as
identification and did not take an oath.
__________________________________________________
Name of Notary ___________________________________
NOTARY PUBLIC, STATE OF __________________________
Commission Number:________________________________
My Commission Expires:____________________________
8
<PAGE>
WITNESSES: FPMBH OF ARIZONA, INC., a Delaware
corporation
________________________________ By:_______________________________
Name: Warwick D. Syphers,
---------------------------
Executive Vice President
________________________________ "GUARANTOR"
Name:___________________________
STATE OF __________________
COUNTY OF _________________
The foregoing instrument was acknowledged before me this _______ day
of April, 1996, by Warwick D. Syphers as Executive Vice President of FPMBH OF
ARIZONA, INC., a Delaware Corporation, on behalf of the corporation. He is
personally known to me or produced ___________________________________________as
identification and did not take an oath.
__________________________________________________
Name of Notary ___________________________________
NOTARY PUBLIC, STATE OF __________________________
Commission Number:________________________________
My Commission Expires:____________________________
9
<PAGE>
WITNESSES: FPM OF WEST VIRGINIA, INC., a Delaware
corporation
______________________________ By:____________________________________
Name: Warwick D. Syphers,
-------------------------
Executive Vice President
______________________________ "GUARANTOR"
Name:_________________________
STATE OF __________________
COUNTY OF _________________
The foregoing instrument was acknowledged before me this _______ day
of April, 1996, by Warwick D. Syphers as Executive Vice President of FPM OF WEST
VIRGINIA, INC., a Delaware Corporation, on behalf of the corporation. He is
personally known to me or produced ___________________________________________as
identification and did not take an oath.
__________________________________________________
Name of Notary ___________________________________
NOTARY PUBLIC, STATE OF __________________________
Commission Number:________________________________
My Commission Expires:____________________________
10
<PAGE>
WITNESSES: FPM/SOUTHEAST, INC., a Delaware
corporation
________________________________ By:____________________________
Name: Warwick D. Syphers,
---------------------------
Executive Vice President
________________________________ "GUARANTOR"
Name:___________________________
STATE OF __________________
COUNTY OF _________________
The foregoing instrument was acknowledged before me this _______ day
of April, 1996, by Warwick D. Syphers as Executive Vice President of FPM/
SOUTHEAST, INC., a Delaware Corporation, on behalf of the corporation. He is
personally known to me or produced ___________________________________________as
identification and did not take an oath.
__________________________________________________
Name of Notary ___________________________________
NOTARY PUBLIC, STATE OF __________________________
Commission Number:________________________________
My Commission Expires:____________________________
11
<PAGE>
WITNESSES: FPM OF LOUISIANA, INC., a Delaware
corporation
______________________________ By:_______________________________
Name: Warwick D. Syphers,
_________________________
Executive Vice President
______________________________ "GUARANTOR"
Name:_________________________
STATE OF __________________
COUNTY OF _________________
The foregoing instrument was acknowledged before me this _______ day
of April, 1996, by Warwick D. Syphers as Executive Vice President of FPM OF
LOUISIANA, INC., a Delaware Corporation, on behalf of the corporation. He is
personally known to me or produced ___________________________________________as
identification and did not take an oath.
__________________________________________________
Name of Notary ___________________________________
NOTARY PUBLIC, STATE OF __________________________
Commission Number:________________________________
My Commission Expires:____________________________
12
<PAGE>
WITNESSES: RAMSAY MANAGED CARE, INC., a
Delaware corporation
_____________________________ By:_________________________
Name: Warwick D. Syphers,
________________________
Executive Vice President
_____________________________ "GUARANTOR"
Name:________________________
STATE OF __________________
COUNTY OF _________________
The foregoing instrument was acknowledged before me this _______ day
of April, 1996, by Warwick D. Syphers as Executive Vice President of RAMSAY
MANAGED CARE, INC., a Delaware Corporation, on behalf of the corporation. He is
personally known to me or produced ___________________________________________as
identification and did not take an oath.
__________________________________________________
Name of Notary ___________________________________
NOTARY PUBLIC, STATE OF __________________________
Commission Number:________________________________
My Commission Expires:____________________________
13
<PAGE>
WITNESSES: FPM OF OHIO, INC., a Delaware
corporation
_______________________________ By:__________________________
Name: Warwick D. Syphers
__________________________
Executive Vice President
_______________________________ "GUARANTOR"
Name:__________________________
STATE OF FLORIDA
COUNTY OF ORANGE
The foregoing instrument was acknowledged before me this _______ day
of April, 1996, by Warwick D. Syphers as Executive Vice President of FPM OF
OHIO, INC., a Delaware Corporation, on behalf of the corporation. He is
personally known to me or produced ___________________________________________as
identification and did not take an oath.
__________________________________________________
Name of Notary ___________________________________
NOTARY PUBLIC, STATE OF __________________________
Commission Number:________________________________
My Commission Expires:____________________________
14
<PAGE>
Exhibit 10.30
FIRST AMENDMENT
TO
STOCK PLEDGE AND SECURITY AGREEMENTS
THIS FIRST AMENDMENT TO STOCK PLEDGE AND SECURITY AGREEMENTS is made this
_____ day of April, 1996 by FPM BEHAVIORAL HEALTH, INC., a Delaware corporation
(hereinafter "FPM"), FLORIDA PSYCHIATRIC MANAGEMENT, INC., a Florida corporation
(hereinafter "Florida Psychiatric"), and FPMBH CLINICAL SERVICES, INC., a
Delaware corporation (hereinafter "FPMBH") (hereinafter collectively "Pledgors")
and FIRST UNION NATIONAL BANK OF FLORIDA, a national banking association
organized and existing under the laws of the United States of America
(hereinafter "Lender").
W I T N E S S E T H:
WHEREAS, Lender is the owner and holder of (i) that certain Term Note from
FPM to Lender dated April 28, 1995 in the original principal amount of ONE
MILLION SIX HUNDRED SIXTY-SEVEN THOUSAND AND NO/100 DOLLARS ($1,667,000.00) (the
"Term Note") and (ii) that certain Line of Credit Promissory from FPM to Lender
dated April 28, 1995 in the face amount of FOUR MILLION TWO HUNDRED THOUSAND AND
NO/100 DOLLARS ($4,200,000.00) (the "Line of Credit Note"); and
WHEREAS, the Line of Credit Note has been renewed, amended, restated and
split into two (2) Promissory Notes (together the "Renewal Notes") described as
follows: (a) that certain Amended, Restated and Renewal Note made by FPM in
favor of Lender of even date herewith in the face amount of $1,500,000.00,
having a current outstanding principal balance of $971,918.67, and (b) that
certain Amended, Restated and Renewal Term Promissory Note made by FPM in favor
of Lender of even date herewith in the face amount and with a current
outstanding principal balance of $100,000.00; and
WHEREAS, the Term Note and the Line of Credit Note, as amended, restated,
renewed and split into the Renewal Notes, are secured by that certain Loan and
Security Agreement between FPM and Lender dated April 6, 1995, as amended of
even date herewith (the "Loan Agreement"); and
WHEREAS, the Term Note and the Line of Credit Note are further secured by a
pledge of certain stock as evidenced by: (a) those certain separate Stock Pledge
and Security Agreements dated April 28, 1995 made by each Pledgor in favor of
Lender, (b) that certain Stock Pledge and Security Agreement dated June 19, 1995
made by FPM in favor of Lender with respect to the pledge of the stock of FPM of
Ohio, Inc., and (c) that certain Collateral Assignment of Joint
Venture/Partnership Interest and Security Agreement made by FPM in favor of
Lender dated June 19, 1995 with respect to the pledge of a 50% venture interest
in Green Spring Behavioral Health of
<PAGE>
Florida Co., a Florida joint venture/partnership) (hereinafter collectively the
"Pledge Agreements"); and
WHEREAS, FPM has requested that in connection with the modification of the
Line of Credit Note and Loan Agreement Lender provide FPM an additional line of
credit in the amount of FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($500,000.00)
which is to be evidenced by an Overline Line of Credit Note in such amount from
FPM to Lender of even date herewith (the "Overline Note"); and
WHEREAS, Lender has agreed to modify the Line of Credit Note and Loan
Agreement and to provide a new line of credit to FPM in the amount of FIVE
HUNDRED THOUSAND AND NO/100 DOLLARS ($500,000.00) provided that Pledgors
acknowledge their continuing obligations pursuant to the Pledge Agreements
notwithstanding any such modifications, and provided that Pledgors amend the
Pledge Agreements to provide that they also secure FPM's payment and performance
of its obligations under the Overline Note; and
WHEREAS, Pledgors wish to acknowledge their continuing obligations pursuant
to the Pledge Agreements notwithstanding any such modifications and wish to
amend the Pledge Agreements to secure FPM's payment and performance of its
obligations under the Overline Note; and
NOW THEREFORE, in consideration of the foregoing, Pledgors hereby covenant
and agree as follows:
1. AMENDMENT TO PLEDGE AGREEMENT. Each Pledgor hereby amends its
-----------------------------
respective Pledge Agreement such that the term "Notes" as used in the Pledge
Agreements shall, from and after the date hereof be deemed to mean, and the
Pledge Agreements shall be deemed to secure FPM's payment of, the Term Note and
the Line of Credit Note, as amended, restated, renewed and split concurrently
herewith into the Renewal Notes, and the Overline Note.
2. ACKNOWLEDGMENT OF CONTINUING PLEDGE. Each Pledgor hereby acknowledges
-----------------------------------
its continuing obligations pursuant to its Pledge Agreement and agrees that its
Pledge Agreement shall remain in full force and effect notwithstanding the
modifications described above and effected by the documents described herein.
3. REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES. In order to induce
-----------------------------------------------
Lender to provide the line of credit evidenced by the Overline Note and to make
the modifications to the Loan Agreement and other documents described herein,
Pledgors hereby reaffirm as of the date hereof all of the representations and
warranties made by Pledgors under the Pledge Agreements.
4. MISCELLANEOUS. Except for the changes and modifications effected
-------------
hereby, it is expressly agreed that the Pledge Agreements shall remain in full
force and effect in strict accordance with their terms. This First Amendment
shall be binding upon and shall inure to the
2
<PAGE>
benefit of, the heirs, executors, administrators, personal representatives,
successors and assigns of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment
to Stock Pledge and Security Agreements as of the day and year first above
written.
FIRST UNION NATIONAL BANK OF
FLORIDA, a national banking association
By:
- ----------------------------------- ------------------------------------
Name: Lisa Simington, Vice President
------------------------------
- -----------------------------------
Name:
------------------------------
FPM BEHAVIORAL HEALTH, INC., a
Delaware corporation
By:
- ----------------------------------- ------------------------------------
Name: Warwick D. Syphers,
------------------------------ Executive Vice President
- -----------------------------------
Name:
------------------------------
FLORIDA PSYCHIATRIC
MANAGEMENT, INC., a Florida
corporation
By:
- ----------------------------------- ------------------------------------
Name: Warwick D. Syphers,
------------------------------ Executive Vice President
- -----------------------------------
Name:
------------------------------
3
<PAGE>
4
<PAGE>
FPMBH CLINICAL SERVICES, INC., a
Delaware corporation
By:
- ----------------------------------- ------------------------------------
Name: Warwick D. Syphers,
------------------------------ Executive Vice President
- -----------------------------------
Name:
------------------------------
STATE OF FLORIDA
COUNTY OF ORANGE
The foregoing instrument was acknowledged before me on April _____, 1996 by
Lisa Simington as Vice President of FIRST UNION NATIONAL BANK OF FLORIDA, a
national banking association, on behalf of the bank. She is personally known to
me or produced _______________________________________ as identification and did
not take an oath.
----------------------------------------
NOTARY SIGNATURE
----------------------------------------
PRINTED NOTARY SIGNATURE
Notary Public, State of Florida
Commission Number:______________________
My Commission Expires:__________________
STATE OF
--------------------
COUNTY OF
-------------------
The foregoing instrument was acknowledged before me on April _____, 1996 by
Warwick D. Syphers as Executive Vice President of FPM BEHAVIORAL HEALTH, INC., a
Delaware corporation on behalf of the corporation. He is personally known to me
or produced _______________________________________ as identification and did
not take an oath.
----------------------------------------
NOTARY SIGNATURE
----------------------------------------
PRINTED NOTARY SIGNATURE
Notary Public, State of _____________
Commission Number:______________________
My Commission Expires:__________________
5
<PAGE>
STATE OF
--------------------
COUNTY OF
-------------------
The foregoing instrument was acknowledged before me on April _____, 1996 by
Warwick D. Syphers as Executive Vice President of FLORIDA PSYCHIATRIC
MANAGEMENT, INC., a Florida corporation on behalf of the corporation. He is
personally known to me or produced ___________________________________ as
identification and did not take an oath.
----------------------------------------
NOTARY SIGNATURE
----------------------------------------
PRINTED NOTARY SIGNATURE
Notary Public, State of _____________
Commission Number:______________________
My Commission Expires:__________________
STATE OF
--------------------
COUNTY OF
-------------------
The foregoing instrument was acknowledged before me on April _____, 1996 by
Warwick D. Syphers as Executive Vice President of FPMBH CLINICAL SERVICES, INC.,
a Delaware corporation on behalf of the corporation. He is personally known to
me or produced _________________________________________ as identification and
did not take an oath.
----------------------------------------
NOTARY SIGNATURE
----------------------------------------
PRINTED NOTARY SIGNATURE
Notary Public, State of _____________
Commission Number:______________________
My Commission Expires:__________________
6
<PAGE>
Exhibit 10.31
FIRST AMENDMENT
TO
STOCK PLEDGE AND SECURITY AGREEMENT
THIS FIRST AMENDMENT TO STOCK PLEDGE AND SECURITY AGREEMENT
(hereinafter the "First Amendment to Pledge") is made this _____ day of April,
1996 by RAMSAY MANAGED CARE, INC., a Delaware corporation (hereinafter "Ramsay")
to and in favor of FIRST UNION NATIONAL BANK OF FLORIDA, a national banking
association organized and existing under the laws of the United States of
America (hereinafter "Lender").
W I T N E S S E T H:
WHEREAS, Lender is the owner and holder of that (i) certain Term Note
from FPM Behavioral Health, Inc., a Delaware corporation (hereinafter "FPM"), a
wholly owned subsidiary of Ramsay, to Lender dated April 28, 1995 in the
original principal amount of ONE MILLION SIX HUNDRED SIXTY-SEVEN THOUSAND AND
NO/100 DOLLARS ($1,667,000.00) (the "Term Note") and that (ii) certain Line of
Credit Promissory from FPM to Lender dated April 28, 1995 in the face amount of
FOUR MILLION TWO HUNDRED THOUSAND AND NO/100 DOLLARS ($4,200,000.00) (the "Line
of Credit Note"); and
WHEREAS, the Line of Credit Note has been renewed, amended, restated
and split into two (2) Promissory Notes (together the "Renewal Notes") described
as follows: (a) that certain Amended, Restated and Renewal Note made by FPM in
favor of Lender of even date herewith in the face amount of $1,500,000.00,
having a current outstanding principal balance of $971,918.67, and (b) that
certain Amended, Restated and Renewal Term Promissory Note made by FPM in favor
of Lender of even date herewith in the face amount and with a current
outstanding principal balance of $100,000.00; and
WHEREAS, the Term Note and the Line of Credit Note are secured by that
certain Loan and Security Agreement between FPM and Lender dated April 6, 1995,
as amended of even date herewith (the "Loan Agreement"); and
WHEREAS, the Term Note and the Line of Credit Note as amended,
restated, renewed and split into the Renewal Notes, are further secured by that
certain Stock Pledge and Security Agreement made by Ramsay in favor of Lender
dated April 28, 1995 (hereinafter the "Pledge Agreement") whereby Ramsay pledged
certain stock owned by it, as more particularly described therein, as security
for FPM's payment of the Term Note and the Line of Credit Note and FPM's
performance of its obligations under the Loan Agreement and other loan documents
executed in connection therewith, all as more particularly described therein;
and
WHEREAS, FPM has requested that in connection with the modification of
the Line of Credit Note and Loan Agreement Lender provide FPM an additional line
of credit in the amount of
<PAGE>
FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($500,000.00) which is to be evidenced
by an Overline Line of Credit Note in such amount from FPM to Lender of even
date herewith (the "Overline Note"); and
WHEREAS, Lender has agreed to modify the Line of Credit Note and Loan
Agreement and to provide a new line of credit to FPM in the amount of FIVE
HUNDRED THOUSAND AND NO/100 DOLLARS ($500,000.00) provided that (i) Ramsay
acknowledges its continuing obligations pursuant to the Pledge Agreement
notwithstanding any such modifications, and (ii) Ramsay amends the Pledge
Agreement to provide that it secures FPM's payment and performance of its
obligations under the Overline Note; and
WHEREAS, Ramsay wishes to acknowledge its continuing obligations
pursuant to the Pledge Agreement notwithstanding any such modifications and
wishes to amend the Pledge Agreement to provide that it secures FPM's payment
and performance of its obligations under the Overline Note.
NOW THEREFORE, in consideration of the foregoing, Ramsay hereby
covenants and agrees as follows:
1. AMENDMENT TO PLEDGE AGREEMENT. Ramsay hereby amends the Pledge
-----------------------------
Agreement such that the term "Notes" as used in the Pledge Agreement shall, from
and after the date hereof be deemed to mean, and the Pledge Agreement shall be
deemed to secure FPM's payment of, the Term Note, the Line of Credit Note, as
amended, restated, renewed and split concurrently herewith into the Renewal
Notes, and the Overline Note.
2. INTENTIONALLY LEFT BLANK
3. ACKNOWLEDGMENT OF CONTINUING PLEDGE. Ramsay hereby acknowledges
-----------------------------------
its continuing obligations pursuant to the Pledge Agreement and agrees that the
Pledge Agreement shall remain in full force and effect notwithstanding the
modifications described above and effected by the documents described herein.
4. REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES. In order to
------------------------------------------------
induce Lender to provide the line of credit evidenced by the Overline Note and
to make the
2
<PAGE>
modifications to the Loan Agreement and other documents described herein, Ramsay
hereby reaffirms as of the date hereof all of the representations and warranties
made by Ramsay under the Pledge Agreement.
5. MISCELLANEOUS. Except for the changes and modifications effected
-------------
hereby, it is expressly agreed that the Pledge Agreement shall remain in full
force and effect in strict accordance with its terms. This First Amendment
shall be binding upon and shall inure to the benefit of, the heirs, executors,
administrators, personal representatives, successors and assigns of the parties
hereto.
IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment to Stock Pledge and Security Agreement as of the day and year first
above written.
FIRST UNION NATIONAL BANK OF
FLORIDA, a national banking association
By:
________________________________ _____________________________________
Name: Lisa Simington, Vice President
___________________________
________________________________
Name:
___________________________
RAMSAY MANAGED CARE, INC.,
a Delaware corporation
By:
________________________________ _____________________________________
Name: Warwick D. Syphers,
___________________________ Executive Vice President
________________________________
Name:
___________________________
3
<PAGE>
STATE OF FLORIDA
COUNTY OF ORANGE
The foregoing instrument was acknowledged before me on April _____,
1996 by Lisa Simington as Vice President of FIRST UNION NATIONAL BANK OF
FLORIDA, a national banking association, on behalf of the bank. She is
personally known to me or produced ____________________________________________
______ as identification and did not take an oath.
_________________________________________________
NOTARY SIGNATURE
_________________________________________________
PRINTED NOTARY SIGNATURE
Notary Public, State of Florida
Commission Number:_______________________________
My Commission Expires:___________________________
STATE OF ____________________
COUNTY OF __________________
The foregoing instrument was acknowledged before me on April _____,
1996 by Warwick D. Syphers as Executive Vice President of RAMSAY MANAGED CARE,
INC., a Delaware corporation on behalf of the corporation. He is personally
known to me or produced ________________________________________________________
as identification and did not take an oath.
_________________________________________________
NOTARY SIGNATURE
_________________________________________________
PRINTED NOTARY SIGNATURE
Notary Public, State of _________________________
Commission Number:_______________________________
My Commission Expires:____________________________
4
<PAGE>
Exhibit 10.32
STOCK PURCHASE AGREEMENT
------------------------
STOCK PURCHASE AGREEMENT dated September 10, 1996 by and between Paul
Ramsay Hospitals Pty. Limited, an Australian corporation (the "Acquiror"), and
Ramsay Managed Care, Inc., a Delaware corporation (the "Seller").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Seller and the Acquiror desire to provide for the
issuance by the Seller to the Acquiror of (i) 100,000 shares (the "Shares") of
Series 1996 Convertible Preferred Stock, par value $.01 per share ("Preferred
Stock"), for a purchase price of $3,000,000 (the "Purchase Price") payable as
set forth herein, and (ii) warrants (the "Warrants") to purchase 300,000 shares
of the common stock, $.01 par value (the "Common Stock"), of the Seller.
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
PURCHASE AND SALE OF THE SHARES
-------------------------------
A. Purchase and Sale of the Shares. Subject to the terms and
-------------------------------
conditions of this Agreement and on the basis of the representations,
warranties, covenants and agreements herein contained, the Seller hereby agrees
to sell, issue and convey to the Acquiror on the Closing Date (as hereinafter
defined), and the Acquiror hereby agrees to purchase, acquire and accept from
the Seller on the Closing Date, the Shares.
B. Consideration for the Shares. (i) The Acquiror hereby agrees,
----------------------------
subject to and in accordance with the terms and conditions hereof, to pay to the
Seller on the Closing Date, upon receipt of the certificate for the Shares
referred to in paragraph C of this Section I, the Purchase Price, payable as
follows:
(a) by offset against the Purchase Price of an amount equal to the
outstanding principal amount under that certain $1,600,000
promissory note dated June 28, 1996 made by
<PAGE>
2
the Seller in favor of the Acquiror (the "Promissory Note");
(b) by offset against the Purchase Price of an amount equal to the
outstanding principal amount under that certain $1,400,000 grid
note dated August 7, 1996 made by the Seller in favor of the
Acquiror (the "Grid Note");
(c) by offset against the Purchase Price of an amount equal to the
aggregate unpaid interest on the Promissory Note and the Grid
Note accrued to the Closing Date;
(d) by offset against the Purchase Price of an amount equal to the
aggregate amounts due and owing by the Seller under Section 3.1
of the Promissory Note and Section 3.1 of the Grid Note; and
(e) by cash (the "Cash Portion") in an amount equal to the Purchase
Price less the sum of the amounts set forth in clauses (a)
through (d) above.
(ii) The Purchase Price for the Shares is payable on the Closing Date
by delivery to the Seller by the Acquiror of the Promissory Note and the Grid
Note and by payment to the Seller by the Acquiror of the Cash Portion by
certified or official bank check payable to the order of the Seller or direct
bank wire transfer of immediately available funds to a bank account or accounts
to be designated by the Seller.
C. Delivery of the Shares. Delivery of the Shares shall be made by
----------------------
the Seller to the Acquiror on the Closing Date by delivering a certificate of
the Seller representing the Shares registered in the name of the Acquiror, such
certificate to be accompanied by any requisite documentary or stock transfer
taxes.
D. The Closing. The closing of the sale of the Shares to the
-----------
Acquiror shall occur on September 10, 1996 (the "Closing Date"), or on such
other date as shall be mutually agreed to between the Seller and the Acquiror.
E. Issuance of the Warrants. In consideration of the consummation
------------------------
of the transactions contemplated hereby, the Seller agrees to issue the Warrants
to the Acquiror on the Closing Date, each of which such Warrants entitles the
holder thereof to purchase one share of Common Stock at an
<PAGE>
3
initial exercise price and on such other terms and conditions as are contained
in the warrant certificate (the "Warrant Certificate") in the form of Exhibit A
attached hereto.
SECTION II
REPRESENTATIONS AND WARRANTIES
OF THE SELLER
------------------------------
The Seller hereby represents and warrants to the Acquiror, as of the
date hereof and as of the Closing Date, that:
A. 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.
B. 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 the Seller 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 the Seller 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.
C. 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.
<PAGE>
4
D. Authorization of Shares and Warrant Shares. The Shares being
------------------------------------------
purchased by the Acquiror hereunder have been duly and validly authorized and,
upon delivery of the certificate representing ownership by the Acquiror of the
Shares as herein provided, for the consideration herein provided, such Shares
will be duly and validly issued, fully paid and nonassessable. The shares of
Common Stock issuable upon the exercise of the Warrants (the "Warrant Shares"),
when issued and paid for in accordance with the terms of the Warrant
Certificate, will be validly issued, fully paid and nonassessable shares of
Common Stock.
SECTION III
REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR
----------------------------------------------
The Acquiror hereby represents and warrants to the Seller, as of the
date hereof and as of the Closing Date, that:
A. Authority. The Acquiror 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 Acquiror, the performance by the Acquiror of its covenants and agreements
hereunder and the consummation by the Acquiror 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 Acquiror,
enforceable against the Acquiror 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.
B. 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 charter of the Acquiror 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
Acquiror is a party or by which the Acquiror or any of its assets is bound.
<PAGE>
5
C. Investment in the Seller.
------------------------
(i) The Acquiror understands that the Seller proposes to issue
and deliver to the Acquiror the Shares and the Warrants 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 the Acquiror's representations and warranties
contained herein; and that such non-compliance with registration is not
permissible unless such representations and warranties are correct.
(ii) The Acquiror understands that, under the existing rules of
the Securities and Exchange Commission (the "SEC"), the Acquiror may be unable
to sell the Shares, the Warrants or the Warrant Shares except to the extent that
the Shares, the Warrants or the Warrant Shares 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) The Acquiror is not relying on the Seller respecting the
financial, tax and other economic considerations of an investment in the
Preferred Stock, the Warrants and the Common Stock, and the Acquiror has relied
on the advice of, or has consulted with, only its own advisors.
(iv) The Acquiror is familiar with the provisions of Rule 144 and
the limitations upon the availability and applicability of such rule.
(v) The Acquiror is an "accredited investor" within the meaning
of Regulation D under the Securities Act and is a sophisticated investor
familiar with the type of risks inherent in the acquisition of restricted
securities such as the Shares, the Warrants and the Warrant Shares and its
financial position is such that it can afford to retain the Shares, the Warrants
and the Warrant Shares for an indefinite period of time without realizing any
direct or indirect cash return on its investment.
(vi) The Acquiror 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 Shares to it and to
evaluate the merits and risks of an investment in the Shares
<PAGE>
6
and to make an informed investment decision with respect thereto.
(vii) The Acquiror is acquiring the Shares, the Warrants and the
Warrant Shares as an investment for its sole account, and without any present
view towards the resale or other distribution thereof.
D. Legend. Each certificate representing Shares or Warrant Shares,
------
as applicable, shall contain upon its face or upon the reverse side thereof a
legend to the following effect:
"These securities have not been registered under the Securities Act of
1933, as amended, or qualified under state securities laws and may not be
sold, pledged, or otherwise transferred unless (a) covered by an effective
registration statement under the Securities Act of 1933, as amended, and
qualified under applicable state securities laws, or (b) the Corporation
has been furnished with an opinion of counsel acceptable to the Corporation
to the effect that no registration or qualification is legally required for
such transfer."
SECTION IV
CONDITIONS TO THE SELLER'S OBLIGATION TO CLOSE
----------------------------------------------
The obligation of the Seller to sell the Shares and otherwise to
consummate the transactions contemplated by this Agreement on the Closing Date
is subject to the following conditions precedent, any or all of which may be
waived by the Seller in the Seller's sole discretion, and each of which the
Acquiror hereby agrees to use its reasonable best efforts to satisfy at or prior
to the Closing:
A. Representations, Warranties and Covenants. The representations
-----------------------------------------
and warranties of the Acquiror contained herein shall be true and correct at and
as of the Closing Date with the same effect as though all such representations
and warranties were made at and as of the Closing Date and the Acquiror shall
have complied with all of its covenants and agreements contained herein required
to be complied with on or prior to the Closing Date.
B. No Litigation. No action, suit, proceeding, writ, judgment,
-------------
injunction, decree or similar order of any governmental entity, authority or
agency or of any other third party restraining, enjoining or otherwise
preventing
<PAGE>
7
the consummation of any of the transactions contemplated by this Agreement, or
seeking to obtain any damages or any other relief as a result of this Agreement
or any of the transactions contemplated hereby, shall be pending or threatened.
C. Approvals. All governmental, corporate and other third party
---------
filings, consents, authorizations and approvals (if any) that are required for
the consummation of the transactions contemplated hereby shall have been duly
made and obtained in form and substance reasonably satisfactory to the Seller.
SECTION V
CONDITIONS TO THE ACQUIROR'S OBLIGATION TO CLOSE
------------------------------------------------
The obligation of the Acquiror to purchase the Shares and otherwise to
consummate the transactions contemplated by this Agreement on the Closing Date
is subject to the following conditions precedent, any or all of which may be
waived by the Acquiror in its sole discretion, and each of which the Seller
hereby agrees to use its reasonable best efforts to satisfy at or prior to the
Closing:
A. Representations, Warranties and Covenants. The representations
-----------------------------------------
and warranties of the Seller contained herein shall be true and correct at and
as of the Closing Date with the same effect as though all such representations
and warranties were made at and as of the Closing Date and the Seller shall have
complied with all of its covenants and agreements contained herein required to
be complied with on or prior to the Closing Date.
B. No Litigation. No action, suit, proceeding, writ, judgment,
-------------
injunction, decree or similar order of any governmental entity, authority or
agency or of any other third party restraining, enjoining or otherwise
preventing the consummation of any of the transactions contemplated by this
Agreement, or seeking to obtain any damages or any other relief as a result of
this Agreement or any of the transactions contemplated hereby, shall be pending
or threatened.
C. Approvals. All governmental, corporate and other third party
---------
filings, consents, authorizations and approvals (if any) that are required for
the consummation of the transactions contemplated hereby shall have been duly
<PAGE>
8
made and obtained in form and substance reasonably satisfactory to the Acquiror.
SECTION VI
MISCELLANEOUS
-------------
A. 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 Acquiror:
154 Pacific Highway
Greenwich NSW 2065
Australia
Attention: Peter J. Evans
Telecopy: (011) 61-2-906-5205
(2) if to the Seller:
Entergy Corporation Building
639 Loyola Avenue
Suite 1725
New Orleans, Louisiana 70113
Attention: President
Telecopy No.: (504) 585-0506
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.
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 contains 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.
<PAGE>
9
D. Assignment. This Agreement shall not be assignable by the Seller
----------
or the Acquiror except pursuant to a writing executed by each of the parties
hereto; provided that the Acquiror may assign any of its rights hereunder to any
affiliate of the Acquiror which agrees to be bound by all of the obligations of
the Acquiror hereunder or to any lender in connection with any financing
transaction entered into by the Acquiror or any of its affiliates.
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. Except as expressly set forth herein, each of the
--------
parties hereto shall bear such party's own expenses in connection with this
Agreement and the transactions contemplated hereby.
G. Headings. The headings of this Agreement are for convenience of
--------
reference only and are not part of the substance of this Agreement.
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 New York 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.
K. Third Party Beneficiary. This Agreement shall not create any
-----------------------
rights in favor of any person not a party hereto.
* * *
<PAGE>
10
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto on the date first above written.
PAUL RAMSAY HOSPITALS PTY. LIMITED
By
---------------------------------
Name: Peter J. Evans
Title: Director
RAMSAY MANAGED CARE, INC.
By
---------------------------------
Name: Remberto Cibran
Title: President
<PAGE>
Exhibit 10.33
PROMISSORY NOTE
$1,600,000 June 28, 1996
FOR VALUE RECEIVED, the undersigned, RAMSAY MANAGED CARE, INC. (the
"Maker"), hereby promises to pay to order of PAUL RAMSAY HOSPITALS PTY. LIMITED
(the "Lender") the principal sum of One Million Six Hundred Thousand Dollars
($1,600,000) with interest at the rate of 12% per annum until the principal has
been paid in full. Principal and interest shall be payable on demand.
Payments hereunder shall be made in money of the United States of
America which at the time of payment is legal tender for the payment of public
and private debts, at the offices of the Lender, 7th Floor, 154 Pacific Highway,
Greenwich, NSW 2065
Australia (or at such other office as the Lender may from time to time designate
by notice to the Maker).
Section 1. Prepayment.
--------- ----------
1.1 Optional. This Promissory Note may be prepaid in full or in
--------
part, at any time and from time to time and without notice, at the option of the
Maker, without charge, premium or penalty therefor. Any prepayment shall be
applied first to accrued and unpaid interest and thereafter to principal.
Section 2. Events of Default, Etc.
--------- ----------------------
2.1 Events of Default. If any one or more of the following events
-----------------
("Events of Default") shall happen:
(a) default shall be made by the Maker in the payment of principal or
interest under this Promissory Note when and as the same shall become due and
payable; or
(b) a breach shall be made by the Maker with respect to any
obligation, representation, warranty or covenant under this Promissory Note,
other than a default under Section 2.1 (a) hereof; or
(c) (i) the Maker shall commence any case, proceeding or other action
under any existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, conservatorship or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation,
<PAGE>
2
dissolution, composition or other relief with respect to it or its debts, or
seeking appointment of a receiver, trustee, custodian, conservator or other
similar official for it or for all or any substantial part of its assets, or the
Maker shall make a general assignment for the benefit of its creditors; or (ii)
there shall be commenced against the Maker any case, proceeding or other action
of a nature referred to in clause (i) above which results in the entry of an
order for relief or any such adjudication or appointment or which remains
undismissed, undischarged or unbonded for a period of thirty (30) days; or (iii)
there shall be commenced against the Maker any case, proceeding or other action
seeking issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets which results in the
entry of an order for any such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within thirty (30) days from the
entry thereof; or (iv) the Maker shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in clause (i), (ii) or (iii) above; or (v) the Maker shall generally not,
or shall be unable to, or shall admit in writing its inability to, pay its debts
as they become due;
then in each and every case the unpaid principal of this Promissory Note
together with all accrued and unpaid interest shall become immediately due and
payable without presentation, protest or further demand or notice of any kind,
all of which are hereby expressly waived.
2.2 Collection Costs. The Maker covenants that if default be made
----------------
under this Promissory Note, the Maker will pay to the Lender such further
amount, to the extent lawful, as shall be sufficient to cover the cost and
expense of collection, including reasonable compensation to counsel to the
Lender for all services rendered in that connection.
Section 3. Miscellaneous.
--------- -------------
3.1 Taxes. Any and all payments by the Maker hereunder shall be made
-----
free and clear of and without deduction for any and all current or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding taxes imposed on or measured by net income or overall
gross receipts of the Lender and franchise taxes imposed on the Lender by the
United States or the jurisdiction under the laws of which the Lender is
organized or any political subdivision thereof (all such nonexcluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Maker shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder to the Lender
(i) the sum
<PAGE>
3
payable shall be increased by the amount necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section) the Lender shall receive an amount equal to the sum it would
have received had no such deductions been made, (ii) the Maker shall make such
deductions and (iii) the Maker shall pay the full amount deducted to the
relevant taxing authority or other governmental authority in accordance with
applicable law. In addition, the Maker agrees to pay any current or future
stamp or documentary taxes or any other excise or property taxes, charges,
assessments or similar levies that arise from any payment hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Promissory Note (hereinafter referred to as "Other Taxes"). Within thirty (30)
days after the date of any payment of Taxes or Other Taxes withheld by the Maker
in respect of any payment to the Lender, the Maker will furnish to the Lender
the original or a certified copy of a receipt evidencing payment thereof.
3.2 No Waiver. No waiver by the Lender of any breach hereof or
---------
default hereunder shall be deemed a waiver of any preceding or succeeding breach
or default and no failure of the Lender to exercise any right or privilege
hereunder shall be deemed a waiver of the Lender's rights to exercise the same
or any other right or privilege at any subsequent time or times.
3.3 Notices. All notices, requests or instructions hereunder shall
-------
be in writing and delivered personally, by recognized overnight courier or by
registered or certified mail, postage prepaid, return receipt requested, as
follows:
(1) If to the Maker:
Ramsay Managed Care, Inc.
One Poydras Plaza
639 Loyola Avenue
Suite 1725
New Orleans, Louisiana 70113
Attention: President
(2) If to the Lender:
Paul Ramsay Hospitals Pty. Limited
7th Floor
154 Pacific Highway
Greenwich, NSW 2065
Australia
Attention: President
Any of the above addresses may be changed at any time by notice given as
provided above; provided, however, that any such notice
<PAGE>
4
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 sent by recognized overnight
courier, and three business days after the date of mailing, if mailed.
3.4 Waiver of Presentment and Notice of Dishonor. The Maker and all
--------------------------------------------
endorsers, guarantors and any other parties that may be liable under this
Promissory Note hereby waive presentment, notice of dishonor, protest and all
other demands and notices in connection with the delivery, acceptance,
performance or enforcement of this Promissory Note.
3.5 Binding Effect; Assignment. This Promissory Note shall be
--------------------------
binding upon the Maker and its successors and assigns and shall inure to the
benefit of the Lender and its successors and assigns.
3.6 Governing Law. This Promissory Note shall be construed and
-------------
enforced in accordance with the laws of the State of New York without regard to
the principles of conflicts of law thereof.
3.7 Cumulative Powers. All powers and remedies given hereunder to
-----------------
the Lender shall, to the extent permitted by law, be deemed cumulative and shall
not be exclusive of any other powers and remedies available to the Lender
hereunder, by judicial proceedings or otherwise, to enforce the performance or
observance of the covenants and agreements contained in this Promissory Note,
and every power and remedy given hereunder or by law to the Lender may be
exercised from time to time, and as often as shall be deemed expedient by the
Lender.
* * *
<PAGE>
IN WITNESS WHEREOF, the Maker has caused this Promissory Note to be duly
executed and delivered as of the date first above written.
RAMSAY MANAGED CARE, INC.
By:_______________________________
Warwick D. Syphers
Executive Vice President
<PAGE>
Exhibit 10.34
GRID NOTE
$1,400,000 August 7, 1996
FOR VALUE RECEIVED, the undersigned, RAMSAY MANAGED CARE, INC. (the
"Maker"), hereby promises to pay to order of PAUL RAMSAY HOSPITALS PTY. LIMITED
(the "Lender") the principal sum of One Million Four Hundred Thousand Dollars
($1,400,000) or, if less, the aggregate outstanding principal amount of all
loans made by the Lender to the Maker from time to time after the date hereof
pursuant to this Grid Note. The Maker also promises to pay interest on the
unpaid principal amount hereof at the rate of 12% per annum until the principal
has been paid in full. Principal and interest shall be payable on demand. Any
principal amount repaid hereunder may not be reborrowed.
Payments hereunder shall be made in money of the United States of
America which at the time of payment is legal tender for the payment of public
and private debts, at the offices of the Lender, 7th Floor, 154 Pacific Highway,
Greenwich, NSW 2065 Australia (or at such other office as the Lender may from
time to time designate by notice to the Maker).
The Lender shall endorse the amount and the date of the making of each
loan to the Maker pursuant to this Grid Note, and each payment of principal with
respect thereto, on the schedule annexed hereto and made a part hereof, or on
continuations thereof which shall be attached hereto and made a part hereof,
which endorsement shall constitute prima facie evidence of the accuracy of the
----- -----
information so endorsed provided, however, that any failure to endorse such
-------- -------
information on such schedule or continuations thereof shall not in any manner
affect the obligation of the Maker to make payments of principal and interest in
accordance with the terms of this Grid Note.
Section 1. Prepayment.
--------- ----------
1.1 Optional. This Grid Note may be prepaid in full or in part, at
--------
any time and from time to time and without notice, at the option of the Maker,
without charge, premium or penalty therefor. Any prepayment shall be applied
first to accrued and unpaid interest and thereafter to principal.
Section 2. Events of Default, Etc.
--------- ----------------------
2.1 Events of Default. If any one or more of the following events
-----------------
("Events of Default") shall happen:
<PAGE>
(a) default shall be made by the Maker in the payment of principal or
interest under this Grid Note when and as the same shall become due and payable;
or
(b) a breach shall be made by the Maker with respect to any
obligation, representation, warranty or covenant under this Grid Note, other
than a default under Section 2.1 (a) hereof; or
(c) (i) the Maker shall commence any case, proceeding or other action
under any existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, conservatorship or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to it or its debts, or seeking appointment of a
receiver, trustee, custodian, conservator or other similar official for it or
for all or any substantial part of its assets, or the Maker shall make a general
assignment for the benefit of its creditors; or (ii) there shall be commenced
against the Maker any case, proceeding or other action of a nature referred to
in clause (i) above which results in the entry of an order for relief or any
such adjudication or appointment or which remains undismissed, undischarged or
unbonded for a period of thirty (30) days; or (iii) there shall be commenced
against the Maker any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar process against all or
any substantial part of its assets which results in the entry of an order for
any such relief which shall not have been vacated, discharged, or stayed or
bonded pending appeal within thirty (30) days from the entry thereof; or (iv)
the Maker shall take any action in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the acts set forth in clause (i), (ii)
or (iii) above; or (v) the Maker shall generally not, or shall be unable to, or
shall admit in writing its inability to, pay its debts as they become due;
then in each and every case the unpaid principal of this Grid Note together with
all accrued and unpaid interest shall become immediately due and payable without
presentation, protest or further demand or notice of any kind, all of which are
hereby expressly waived.
2.2 Collection Costs. The Maker covenants that if default be made
----------------
under this Grid Note, the Maker will pay to the Lender such further amount, to
the extent lawful, as shall be sufficient to cover the cost and expense of
collection, including reasonable compensation to counsel to the Lender for all
services rendered in that connection.
<PAGE>
Section 3. Miscellaneous.
--------- -------------
3.1 Taxes. Any and all payments by the Maker hereunder shall be made
-----
free and clear of and without deduction for any and all current or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding taxes imposed on or measured by net income or overall
gross receipts of the Lender and franchise taxes imposed on the Lender by the
United States or the jurisdiction under the laws of which the Lender is
organized or any political subdivision thereof (all such nonexcluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Maker shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder to the Lender
(i) the sum payable shall be increased by the amount necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section) the Lender shall receive an amount equal to the
sum it would have received had no such deductions been made, (ii) the Maker
shall make such deductions and (iii) the Maker shall pay the full amount
deducted to the relevant taxing authority or other governmental authority in
accordance with applicable law. In addition, the Maker agrees to pay any
current or future stamp or documentary taxes or any other excise or property
taxes, charges, assessments or similar levies that arise from any payment
hereunder or from the execution, delivery or registration of, or otherwise with
respect to, this Grid Note (hereinafter referred to as "Other Taxes"). Within
thirty (30) days after the date of any payment of Taxes or Other Taxes withheld
by the Maker in respect of any payment to the Lender, the Maker will furnish to
the Lender the original or a certified copy of a receipt evidencing payment
thereof.
3.2 No Waiver. No waiver by the Lender of any breach hereof or
---------
default hereunder shall be deemed a waiver of any preceding or succeeding breach
or default and no failure of the Lender to exercise any right or privilege
hereunder shall be deemed a waiver of the Lender's rights to exercise the same
or any other right or privilege at any subsequent time or times.
3.3 Notices. All notices, requests or instructions hereunder shall
-------
be in writing and delivered personally, by recognized overnight courier or by
registered or certified mail, postage prepaid, return receipt requested, as
follows:
(1) If to the Maker:
<PAGE>
Ramsay Managed Care, Inc.
Entergy Corporation Building
639 Loyola Avenue
Suite 1725
New Orleans, Louisiana 70113
Attention: President
(2) If to the Lender:
Paul Ramsay Hospitals Pty. Limited
7th Floor
154 Pacific Highway
Greenwich, NSW 2065
Australia
Attention: President
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 sent by recognized overnight courier, and three business
days after the date of mailing, if mailed.
3.4 Waiver of Presentment and Notice of Dishonor. The Maker and all
--------------------------------------------
endorsers, guarantors and any other parties that may be liable under this Grid
Note hereby waive presentment, notice of dishonor, protest and all other demands
and notices in connection with the delivery, acceptance, performance or
enforcement of this Grid Note.
3.5 Binding Effect; Assignment. This Grid Note shall be binding upon
--------------------------
the Maker and its successors and assigns and shall inure to the benefit of the
Lender and its successors and assigns.
3.6 Governing Law. This Grid Note shall be construed and enforced in
-------------
accordance with the laws of the State of New York without regard to the
principles of conflicts of law thereof.
3.7 Cumulative Powers. All powers and remedies given hereunder to
-----------------
the Lender shall, to the extent permitted by law, be deemed cumulative and shall
not be exclusive of any other powers and remedies available to the Lender
hereunder, by judicial proceedings or otherwise, to enforce the performance or
observance of the covenants and agreements contained in this Grid Note, and
every power and remedy given hereunder or by law to the Lender may be exercised
from time to time, and as often as shall be deemed expedient by the Lender.
* * *
<PAGE>
IN WITNESS WHEREOF, the Maker has caused this Grid Note to be duly
executed and delivered as of the date first above written.
RAMSAY MANAGED CARE, INC.
By:_______________________________
Name: Warwick D. Syphers
Title: Executive Vice President
<PAGE>
Schedule of Loans and Payments
------------------------------
<TABLE>
<CAPTION>
Amount of Unpaid
Principal Principal
Date Amount of Loan Paid Balance
- ---------------- -------------- --------- ---------
<S> <C> <C> <C>
August 7, 1996 $400,000 - $400,000
August 8, 1996 $400,000 - $800,000
</TABLE>
<PAGE>
Exhibit 10.35
EXCHANGE AGREEMENT
------------------
Exchange Agreement (the "Agreement") dated September 10, 1996, by and
among Ramsay Managed Care, Inc., a Delaware corporation ("RMC"), Paul Ramsay
Hospitals Pty. Limited, an Australian corporation ("Ramsay Hospitals"), and Paul
J. Ramsay ("Ramsay").
R E C I T A L S:
- - - - - - - -
WHEREAS, the Board of Directors of RMC has authorized the exchange of
outstanding options (the "Options") to purchase 100,000 shares of common stock,
$.01 par value (the "Common Stock"), of RMC held by Ramsay for warrants (the
"Warrants") to purchase 100,000 shares of Common Stock; and
WHEREAS, Ramsay has directed RMC to issue the Warrants to Ramsay
Hospitals.
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 WARRANTS
--------------------
A. In exchange for the Warrants, Ramsay hereby surrenders and
delivers the Options to RMC for cancellation and RMC hereby acknowledges receipt
of an option certificate dated October 25, 1994 representing the Options.
Ramsay hereby directs RMC to issue the Warrants to Ramsay Hospitals. RMC hereby
issues and delivers to Ramsay Hospitals the Warrants and Ramsay Hospitals
acknowledges receipt of a certificate representing the Warrants in the form of
Exhibit A hereto.
SECTION II
REPRESENTATIONS AND WARRANTIES OF RMC
-------------------------------------
RMC hereby represents and warrants to each of Ramsay Hospitals and
Ramsay, as of the date hereof, that:
<PAGE>
2
A. Organization; Good Standing. RMC 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. RMC has the corporate power and authority to issue and
---------
deliver the Warrants in accordance with the terms hereof. RMC has duly
authorized the execution and delivery of this Agreement and this Agreement
constitutes a valid and legally binding obligation of the Company 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. The shares of Common Stock issuable upon the exercise of the Warrants,
when issued and paid for in accordance with the terms of the warrant certificate
evidencing the Warrants, 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, nor the consummation of the transactions contemplated hereby,
violates any provision of the Certificate of Incorporation or By-Laws of RMC 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
RMC is a party or by which RMC or any of its assets is bound.
SECTION III
REPRESENTATIONS AND WARRANTIES OF RAMSAY HOSPITALS
--------------------------------------------------
Ramsay Hospitals hereby represents and warrants to each of RMC and
Ramsay, as of the date hereof, that:
A. Authority. Ramsay Hospitals 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
Ramsay Hospitals, the performance by Ramsay Hospitals of its covenants and
agreements hereunder and the consummation by Ramsay
<PAGE>
3
Hospitals of the transactions contemplated hereby have been duly authorized by
all necessary corporate action. This Agreement constitutes a valid and legally
binding obligation of Ramsay Hospitals, enforceable against Ramsay Hospitals 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.
B. 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 Ramsay Hospitals is a party or by which Ramsay Hospitals or
any of its assets is bound.
C. Investment in RMC.
-----------------
(i) Ramsay Hospitals understands that RMC proposes to issue and
deliver to Ramsay Hospitals the Warrants 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 RMC will rely upon the
representations and warranties of Ramsay Hospitals contained herein; and that
such non-compliance with registration is not permissible unless such
representations and warranties are correct.
(ii) Ramsay Hospitals understands that, under existing rules of
the Securities and Exchange Commission (the "SEC"), Ramsay Hospitals may be
unable to sell the Warrants or the underlying shares of Common Stock with
respect to which the Warrants are exercisable (the "RMC Shares") except to the
extent that the Warrants or the RMC Shares may be sold (i) pursuant to an
effective registration statement covering the Warrants or the RMC 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) Ramsay Hospitals is not relying on RMC respecting the
financial, tax and other economic
<PAGE>
4
considerations of an investment in the Warrants and the Common Stock; Ramsay
Hospitals has relied on the advice of, or has consulted with, only its own
advisors.
(iv) Ramsay Hospitals is familiar with the provisions of Rule 144
and the limitations upon the availability and applicability of such rule.
(v) Ramsay Hospitals is a sophisticated investor familiar with
the type of risks inherent in the acquisition of restricted securities such as
the Warrants and the RMC Shares 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.
(vi) Ramsay Hospitals 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 Warrants
and the RMC Shares to Ramsay Hospitals and to evaluate the merits and risks of
an investment in the Warrants and the RMC Shares and to make an informed
investment decision with respect thereto.
(vii) Ramsay Hospitals is acquiring the Warrants and the RMC
Shares as an investment for its sole account, and without any present view
towards the sale or other distribution thereof.
(viii) Ramsay Hospitals is an "accredited investor" as that term is
defined in Rule 501 of Regulation D promulgated under the Securities Act.
SECTION IV
REPRESENTATIONS AND WARRANTIES OF PAUL J. RAMSAY
------------------------------------------------
Ramsay hereby represents and warrants to each of RMC and Ramsay
Hospitals, as of the date hereof, that:
A. Ramsay has good and valid title to the Options, free and clear of
all liens, charges, encumbrances, security interests or adverse claims
whatsoever and has the right to transfer the Options to RMC, and upon the
transfer of the Options to RMC hereunder, RMC will acquire good and marketable
title to the Options, free and clear of any lien, encumbrance, charge, security
interest or claim whatsoever.
<PAGE>
5
B. Ramsay has duly executed and delivered this Agreement, and this
Agreement constitutes a valid and legal binding obligation of Ramsay,
enforceable against him in accordance with its terms.
SECTION V
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 RMC:
Entergy Corporation Building
639 Loyola Avenue, Suite 1725
New Orleans, Louisiana 70113
Attention: President
Telecopier: (504) 585-0506
Telephone: (504) 585-0515
(2) if to Ramsay Hospitals:
c/o Ramsay Health Care Pty. Limited
Suite 103
1st Floor, 156 Pacific Highway
Greenwich NSW 2065
Australia
Attention: Paul J. Ramsay
Telecopier: 011-61-2-906-5205
Telephone: 011-61-2-906-3444
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.
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.
<PAGE>
6
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 RMC,
----------
Ramsay Hospitals or Ramsay except pursuant to a writing executed by each of the
parties hereto; provided, however, that Ramsay Hospitals may assign this
Agreement and the Warrants to any corporation or other entity directly or
indirectly controlled by Ramsay.
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.
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>
7
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the date first above written.
RAMSAY MANAGED CARE, INC.
By:
--------------------------------
Name: Remberto Cibran
Title: President
PAUL RAMSAY HOSPITALS PTY. LIMITED
By:
--------------------------------
Name: Peter J. Evans
Title: Director
-----------------------------------
Paul J. Ramsay
<PAGE>
Exhibit 10.36
RAMSAY MANAGED CARE, INC.
1996 LONG TERM INCENTIVE PLAN
SECTION 1. Purpose. The purposes of this Ramsay Managed Care, Inc.
1996 Long Term Incentive Plan (the "Plan") are to encourage selected employees,
officers, directors and consultants of, and other individuals providing services
to, Ramsay Health Care, Inc. (together with any successor thereto, the
"Company") and its Affiliates (as defined below) to acquire a proprietary
interest in the growth and performance of the Company, to generate an increased
incentive to contribute to the Company's future success and prosperity thus
enhancing the value of the Company for the benefit of its stockholders, and to
enhance the ability of the Company and its Affiliates to attract and retain
exceptionally qualified individuals upon whom, in large measure, the sustained
progress, growth and profitability of the Company depend.
SECTION 2. Definitions. As used in the Plan, the following terms
shall have the meanings set forth below:
"Affiliate" shall mean (i) any entity that, directly or through one or
more intermediaries, is controlled by the Company and (ii) any entity in which
the Company has a significant equity interest, as determined by the Committee.
"Award" shall mean any Option, Stock Appreciation Right, Restricted
Security, Performance Award, or Other Stock-Based Award granted under the Plan.
"Award Agreement" shall mean any written agreement, contract or other
instrument or document evidencing any Award granted under the Plan.
"Board" shall mean the Board of Directors of the Company.
"Cause", as used in connection with the termination of a Participant's
employment, shall mean (i) with respect to any Participant employed under a
written employment agreement with the Company or an Affiliate of the Company
which agreement includes a definition of "cause," "cause" as defined in such
agreement or, if such agreement contains no such definition, a material breach
by the Participant of such agreement, or (ii) with respect to any other
Participant, the failure to perform adequately in carrying out such
Participant's employment responsibilities, including any directives from the
Board, or engaging in such behavior in his personal or business life as to lead
the Committee in its reasonable judgment to determine that it is in the best
interests of the Company to terminate his employment.
"Common Stock" shall mean the common stock of the Company, $.01 par
value.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated thereunder.
"Committee" shall mean the Compensation and Conflict of Interest
Committee or any other committee of the Board designated by the Board to
administer the Plan and composed of not less than three outside directors, as
described in Section 162(m) of the Code, each of whom, to the extent
<PAGE>
necessary to comply with Rule 16b-3 only, is a "disinterested person" within the
meaning of Rule 16b-3 as in effect at April 30, 1991.
"Common Shares" shall mean any or all, as applicable, of the Common
Stock and such other securities or property as may become the subject of Awards,
or become subject to Awards, pursuant to an adjustment made under Section 4(b)
of the Plan and any other securities of the Company or any Affiliate or any
successor that may be so designated by the Committee.
"Employee" shall mean any employee of the Company or of any Affiliate.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" shall mean (A) with respect to any property other
than the Common Shares, the fair market value of such property determined by
such methods or procedures as shall be established from time to time by the
Committee; and (B) with respect to the Common Shares, the last sale price
regular way on the date of reference, or, in case no sale takes place on such
date, the average of the high bid and low asked prices, in either case on the
principal national securities exchange on which the Common Shares are listed or
admitted to trading, or if the Common Shares are not listed or admitted to
trading on any national securities exchange, the last sale price reported on the
National Market System of the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") on such date, or the average of the
closing high bid and low asked prices in the over-the-counter market reported on
NASDAQ on such date, whichever is applicable, or if there are no such prices
reported on NASDAQ on such date, as furnished to the Committee by any New York
Stock Exchange member selected from time to time by the Committee for such
purpose. If there is no bid or asked price reported on any such date, the Fair
Market Value shall be determined by the Committee in accordance with the
regulations promulgated under Section 2031 of the Code, or by any other
appropriate method selected by the Committee.
"Good Reason", as used in connection with the termination of a
Participant's employment, shall mean (i) with respect to any Participant
employed under a written employment agreement with the Company or an Affiliate
of the Company, "good reason" as defined in such written agreement or, if such
agreement contains no such definition, a material breach by the Company of such
agreement, or (ii) with respect to any other Participant, a failure by the
Company to pay such Participant any amount otherwise vested and due and a
continuation of such failure for 30 business days following notice to the
Company thereof.
"Incentive Stock Option" shall mean an option granted under Section
6(a) of the Plan that is intended to meet the requirements of Section 422 of the
Code or any successor provision thereto.
"Non-Qualified Stock Option" shall mean an option granted under
Section 6(a) of the Plan that is not intended to be an Incentive Stock Option.
Any stock option granted by the Committee which is not designated an Incentive
Stock Option shall be deemed a Non-Qualified Stock Option.
"Option" shall mean an Incentive Stock Option or a Non-Qualified Stock
Option.
"Other Stock-Based Award" shall mean any right granted under Section
6(e) of the Plan.
"Participant" shall mean any individual granted an Award under the
Plan.
"Performance Award" shall mean any right granted under Section 6(d) of
the Plan.
<PAGE>
3
"Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, or
government or political subdivision thereof.
"Released Securities" shall mean securities that were Restricted
Securities but with respect to which all applicable restrictions have expired,
lapsed or been waived in accordance with the terms of the Plan or the applicable
Award Agreement.
"Restricted Securities" shall mean any Common Shares granted under
Section 6(c) of the Plan, any right granted under Section 6(c) of the Plan that
is denominated in Common Shares or any other Award under which issued and
outstanding Common Shares are held subject to certain restrictions.
"Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Exchange Act, or any successor rule or regulation
thereto as in effect from time to time.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Stock Appreciation Right" shall mean any right granted under Section
6(b) of the Plan.
SECTION 3. Administration. The Plan shall be administered by the
Committee. Subject to the terms of the Plan and applicable law, and in addition
to other express powers and authorizations conferred on the Committee by the
Plan, the Committee shall have full power and authority to: (i) designate
Participants; (ii) determine the type or types of Awards to be granted to an
eligible Employee or other individual under the Plan; (iii) determine the number
and classification of Common Shares to be covered by (or with respect to which
payments, rights or other matters are to be calculated in connection with)
Awards; (iv) determine the terms and conditions of any Award; (v) determine
whether, to what extent, and under what circumstances Awards may be settled or
exercised in cash, Common Shares, other securities, other Awards or other
property, or canceled, forfeited or suspended, and the method or methods by
which Awards may be settled, exercised, canceled, forfeited or suspended; (vi)
determine requirements for the vesting of Awards or performance criteria to be
achieved in order for Awards to vest; (vii) determine whether, to what extent
and under what circumstances cash, Common Shares, other securities, other
Awards, other property and other amounts payable with respect to an Award under
the Plan shall be deferred either automatically or at the election of the holder
thereof or of the Committee; (viii) interpret and administer the Plan and any
instrument or agreement relating to, or Award made under, the Plan; (ix)
establish, amend, suspend or waive such rules and regulations and appoint such
agents as it shall deem appropriate for the proper administration of the Plan;
and (x) make any other determination and take any other action that the
Committee deems necessary or desirable for the administration of the Plan.
Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations and other decisions under or with respect to the
Plan or any Award shall be within the sole discretion of the Committee, may be
made at any time and shall be final, conclusive and binding upon all Persons,
including the Company, any Affiliate, any Participant, any holder or beneficiary
of any Award, any shareholder and any Employee. Notwithstanding the foregoing,
the maximum number of Awards which may be granted to any one Participant under
this Plan shall not exceed 150,000 Common Shares, subject to the adjustments
provided in Section 4(b) hereof and no Awards under this Plan shall be granted
after December 31, 2004.
SECTION 4. Common Shares Available for Awards.
<PAGE>
(a) Common Shares Available. Subject to adjustment as provided in
Section 4(b):
(i) Calculation of Number of Common Shares Available. The
number of Common Shares available for granting Awards under the Plan shall
be 500,000, any or all of which may be or may be based on Common Stock, any
other security which becomes the subject of Awards, or any combination
thereof. Initially 500,000 shares of Common Stock shall be reserved for
Awards hereunder. Further, if, after the effective date of the Plan, any
Common Shares covered by an Award granted under the Plan or to which such
an Award relates, are forfeited, or if an Award otherwise terminates or is
canceled without the delivery of Shares or of other consideration, then the
Common Shares covered by such Award or to which such Award relates, or the
number of Common Shares otherwise counted against the aggregate number of
Common Shares available under the Plan with respect to such Award, to the
extent of any such forfeiture, termination or cancellation, shall again be,
or shall become, available for granting Awards under the Plan.
(ii) Accounting for Awards. For purposes of this Section 4,
(A) if an Award is denominated in or based upon Common Shares,
the number of Common Shares covered by such Award or to which such
Award relates shall be counted on the date of grant of such Award
against the aggregate number of Common Shares available for granting
Awards under the Plan and against the maximum number of Awards
available to any Participant; and
(B) Awards not denominated in Common Shares may be counted
against the aggregate number of Common Shares available for granting
Awards under the Plan and against the maximum number of Awards
available to any participant in such amount and at such time as the
Committee shall determine under procedures adopted by the Committee
consistent with the purposes of the Plan;
provided, however, that Awards that operate in tandem with (whether granted
simultaneously with or at a different time from), or that are substituted
for, other Awards may be counted or not counted under procedures adopted by
the Committee in order to avoid double counting. Any Common Shares that
are delivered by the Company, and any Awards that are granted by, or become
obligations of, the Company, through the assumption by the Company or an
Affiliate of, or in substitution for, outstanding awards previously granted
by an acquired company shall, in the case of Awards granted to Participants
who are officers or directors of the Company for purposes of Section 16 of
the Exchange Act, be counted against the Common Shares available for
granting Awards under the Plan.
(iii) Sources of Common Shares Deliverable Under Awards. Any
Common Shares delivered pursuant to an Award may consist, in whole or in
part, of authorized and unissued Common Shares or of treasury Common
Shares.
(b) Adjustments. In the event that the Committee shall determine
that any dividend or other distribution (whether in the form of cash, Common
Shares, other securities or other property), recapitalization, stock split,
reverse stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase or exchange of Common Shares or other securities of the
Company, issuance of warrants or other rights to purchase Common Shares or other
securities of the Company, or other similar corporate transaction or event
affects the Common Shares such that an adjustment is determined by the Committee
to be appropriate in order to prevent dilution or
<PAGE>
enlargement of the benefits or potential benefits intended to be made available
under the Plan, then the Committee shall, in such manner as it may deem
equitable, adjust any or all of (i) the number and kind of Common Shares (or
other securities or property) which thereafter may be made the subject of
Awards, (ii) the number and kind of Common Shares (or other securities or
property) subject to outstanding Awards, and (iii) the grant or exercise price
with respect to any Award or, if deemed appropriate, make provision for a cash
payment to the holder of an outstanding Award; provided, however, that the
number of Common Shares subject to any Award denominated in Common Shares shall
always be a whole number.
In connection with any merger or consolidation in which the Company is
not the surviving corporation and which results in the holders of the
outstanding voting securities of the Company (determined immediately prior to
such merger or consolidation) owning less than a majority of the outstanding
voting securities of the surviving corporation (determined immediately following
such merger or consolidation), or any sale or transfer by the Company of all or
substantially all its assets or any tender offer or exchange offer for or the
acquisition, directly or indirectly, by any person or group of all or a majority
of the then outstanding voting securities of the Company, all outstanding
Options under the Plan shall become exercisable in full, notwithstanding any
other provision of the Plan or of any outstanding options granted thereunder, on
and after (i) the fifteenth day prior to the effective date of such merger,
consolidation, sale, transfer or acquisition or (ii) the date of commencement of
such tender offer or exchange offer, as the case may be. The provisions of the
foregoing sentence shall apply to any outstanding Options which are Incentive
Stock Options to the extent permitted by Section 422(d) of the Code and such
outstanding Options in excess thereof shall, immediately upon the occurrence of
the event described in clause (i) or (ii) of the foregoing sentence, be treated
for all purposes of the Plan as Non-Qualified Stock Options and shall be
immediately exercisable as such as provided in the foregoing sentence.
SECTION 5. Eligibility. Any Employee, including any officer or
employee-director of the Company or of any Affiliate, and any consultant of, or
other individual providing services to, the Company or any Affiliate shall be
eligible to be designated a Participant. A non-employee director shall be
eligible to receive Non-Qualified Stock Options under the Plan.
SECTION 6. Awards.
(a) Options. The Committee is hereby authorized to grant to
eligible individuals options to purchase Common Shares (each, an "Option") which
shall contain the following terms and conditions and with such additional terms
and conditions, in either case not inconsistent with the provisions of the Plan,
as the Committee shall determine:
(i) Exercise Price. The purchase price per Common Share
purchasable under an Option shall be determined by the Committee; provided,
however, that such purchase price shall not be less than one hundred
percent (100%) of the Fair Market Value of a Common Share on the date of
grant of such Option, or such other price as required under Subsection
6(a)(iv) hereof.
(ii) Time and Method of Exercise. Subject to the terms of
Section 6(a)(iii), the Committee shall determine the time or times at which
an Option may be exercised in whole or in part, and the method or methods
by which, and the form or forms (including, without limitation, cash,
Common Shares, outstanding Awards, or other property, or any combination
thereof, having a Fair Market Value on the exercise date equal to the
relevant exercise price) in which, payment of the exercise price with
respect thereto may be made or deemed to have been made.
<PAGE>
(iii) Exercisability Upon Death, Retirement and Termination of
Employment. Subject to the condition that no Option may be exercised in whole or
in part after the expiration of the Option period specified in the applicable
Award Agreement:
(A) Subject to the terms of paragraph (D) below, upon the death of a
Participant while employed or within 3 months of retirement or disability
as defined in paragraph (B) below, the person or persons to whom such
Participant's rights with respect to any Option held by such Participant
are transferred by will or the laws of descent and distribution may, prior
to the expiration of the earlier of: (1) the outside exercise date
determined by the Committee at the time of granting the Option, or (2) nine
months after such Participant's death, purchase any or all of the Common
Shares with respect to which such Participant was entitled to exercise such
Option immediately prior to such Participant's death, and any Options not
so exercisable will lapse on the date of such Participant's death;
(B) Subject to the terms of paragraph (D) below, upon termination of
a Participant's employment with the Company (x) as a result of retirement
pursuant to a retirement plan of the Company or an Affiliate or disability
(as determined by the Committee) of such Participant, (y) by the Company
other than for Cause, or (z) by the Participant with Good Reason, such
Participant may, prior to the expiration of the earlier of: (1) the outside
exercise date determined by the Committee at the time of granting the
Option, or (2) three months after the date of such termination, purchase
any or all of the Common Shares with respect to which such Participant was
entitled to exercise any Options immediately prior to such termination, and
any Options not so exercisable will lapse on such date of termination;
(C) Subject to the terms of paragraph (D) below, upon termination of
a Participant's employment with the Company under any circumstances not
described in paragraphs (A) or (B) above, such Participant's Options shall
be canceled to the extent not theretofore exercised;
(D) Upon (i) the death of the Participant, or (ii) termination of
the Participant's employment with the Company (x) by the Company other than
for Cause (y) by the Participant with Good Reason or (z) as a result of
retirement or disability as defined in paragraph (B) above, the Company
shall have the right to cancel all of the Options such Participant was
entitled to exercise at the time of such death or termination (subject to
the terms of paragraphs (A) or (B) above) for a payment in cash equal to
the excess, if any, of the Fair Market Value of one Common Share on the
date of death or termination over the exercise price of such Option for one
Common Share times the number of Common Shares subject to the Option and
exercisable at the time of such death or termination; and
(E) Upon expiration of the respective periods set forth in each of
paragraphs (A) through (C) above, the Options of a Participant who has died
or whose employment has been terminated shall be canceled to the extent not
theretofore canceled or exercised.
(F) For purposes of paragraphs (A) through (D) above, the period of
service of an individual as a director or consultant of the Company or an
Affiliate shall be deemed the period of employment.
<PAGE>
(iv) Incentive Stock Options. The following provisions shall
apply only to Incentive Stock Options granted under the Plan:
(A) No Incentive Stock Option shall be granted to any eligible
Employee who, at the time such Option is granted, owns securities
possessing more than ten percent (10%) of the total combined voting power
of all classes of securities of the Company or of any Affiliate, except
that such an Option may be granted to such an Employee if at the time the
Option is granted the option price is at least one hundred ten percent
(110%) of the Fair Market Value of the Common Shares (determined in
accordance with Section 2) subject to the Option, and the Option by its
terms is not exercisable after the expiration of five (5) years from the
date the Option is granted; and
(B) To the extent that the aggregate Fair Market Value of the
Common Shares with respect to which Incentive Stock Options (without regard
to this subsection) are exercisable for the first time by any individual
during any calendar year (under all plans of the Company and its
Affiliates) exceeds $100,000, such Options shall be treated as Non-
Qualified Stock Options. This subsection shall be applied by taking Options
into account in the order in which they were granted. If some but not all
Options granted on any one day are subject to this subsection, then such
Options shall be apportioned between Incentive Stock Option and Non-
Qualified Stock Option treatment in such manner as the Committee shall
determine. For purposes of this subsection, the Fair Market Value of any
Common Shares shall be determined, in accordance with Section 2, as of the
date the Option with respect to such Common Shares is granted.
(v) Terms and Conditions of Options Granted to Directors.
Notwithstanding any provision contained in the Plan to the contrary, during any
period when any member of the Committee shall not be a "disinterested person" as
defined in Rule 16b-3, as such Rule was in effect at April 30, 1991, then, the
terms and conditions of Options granted under the Plan to any director of the
Company during such period shall be as follows:
(1) The price at which each Common Share subject to an
option may be purchased shall, subject to any adjustments which may be made
pursuant to Section 4, in no event be less than the Fair Market Value of a
Common Share on the date of grant, and provided further that in the event
the option is intended to be an Incentive Stock Option and the optionee
owns on the date of grant securities possessing more than ten percent (10%)
of the total combined voting power of all classes of securities of the
Company or of any Affiliate, the price per share shall not be less than one
hundred ten percent (110%) of the Fair Market Value per Common Share on the
date of grant.
(2) The Option may be exercised to purchase Common Shares
covered by the Option not sooner than six (6) months following the date of
grant. The Option shall terminate and no Common Shares may be purchased
thereunder more than ten (10) years after the date of grant, provided that
if the Option is intended to be an Incentive Stock Option and the Optionee
owns on the date of grant securities possessing more than ten percent (10%)
of the total combined voting power of all classes of securities of the
Company or of any Affiliate, the Option shall terminate and no Common
Shares may be purchased thereunder more than five (5) years after the date
of grant.
<PAGE>
(3) The maximum number of Common Shares which may be subject
to options granted to all directors pursuant to this Section 5(j)
shall be 500,000 shares in the aggregate. The maximum number of Common
Shares which may be subject to options granted to any director of the
Company shall be 150,000 shares.
(b) Stock Appreciation Rights. The Committee is hereby authorized
to grant to eligible Employees "Stock Appreciation Rights." Each Stock
Appreciation Right shall consist of a right to receive the excess of (i) the
Fair Market Value of one Common Share on the date of exercise or, if the
Committee shall so determine in the case of any such right other than one
related to any Incentive Stock Option, at any time during a specified period
before or after the date of exercise over (ii) the grant price of the right as
specified by the Committee, which shall not be less than one hundred percent
(100%) of the Fair Market Value of one Common Share on the date of grant of the
Stock Appreciation Right (or, if the Committee so determines, in the case of any
Stock Appreciation Right retroactively granted in tandem with or in substitution
for another Award, on the date of grant of such other Award). Subject to the
terms of the Plan and any applicable Award Agreement, the grant price, term,
methods of exercise, methods of settlement, and any other terms and conditions
of any Stock Appreciation Right granted under the Plan shall be as determined by
the Committee. The Committee may impose such conditions or restrictions on the
exercise of any Stock Appreciation Right as it may deem appropriate.
(c) Restricted Securities.
(i) Issuance. The Committee is hereby authorized to grant to
eligible Employees "Restricted Securities" which shall consist of the right
to receive, by purchase or otherwise, Common Shares which are subject to
such restrictions as the Committee may impose (including, without
limitation, any limitation on the right to vote such Common Shares or the
right to receive any dividend or other right or property), which
restrictions may lapse separately or in combination at such time or times,
in such installments or otherwise, as the Committee may deem appropriate.
(ii) Registration. Restricted Securities granted under the
Plan may be evidenced in such manner as the Committee may deem appropriate,
including, without limitation, book-entry registration or issuance of a
stock certificates or certificates. In the event any stock certificate is
issued in respect of Restricted Securities granted under the Plan, such
certificate shall be registered in the name of the Participant and shall
bear an appropriate legend referring to the terms, conditions and
restrictions applicable to such Restricted Securities.
(iii) Forfeiture. Except as otherwise determined by the
Committee, upon termination of a Participant's employment for any reason
during the applicable restriction period, all of such Participant's
Restricted Securities which had not become Released Securities by the date
of termination of employment shall be forfeited and reacquired by the
Company; provided, however, that the Committee may, when it finds that a
waiver would be in the best interests of the Company, waive in whole or in
part any or all remaining restrictions with respect to such Participant's
Restricted Securities. Unrestricted Common Shares, evidenced in such
manner as the Committee shall deem appropriate, shall be issued to the
holder of Restricted Securities promptly after such Restricted Securities
become Released Securities.
(d) Performance Awards. The Committee is hereby authorized to
grant to eligible Employees "Performance Awards." Each Performance Award shall
consist of a right, (i) denominated or payable in cash, Common Shares, other
securities or other property (including, without limitation, Restricted
Securities), and (ii) which shall confer on the holder thereof rights valued as
<PAGE>
determined by the Committee and payable to, or exercisable by, the holder of the
Performance Award, in whole or in part, upon the achievement of such performance
goals during such performance periods as the Committee shall establish. Subject
to the terms of the Plan and any applicable Award Agreement, the performance
goals to be achieved during any performance period, the length of any
performance period, the amount of any Performance Award granted, the termination
of a Participant's employment and the amount of any payment or transfer to be
made pursuant to any Performance Award shall be determined by the Committee and
by the other terms and conditions of any Performance Award. The Committee shall
issue performance goals prior to the commencement of the performance period to
which such performance goals pertain.
(e) Other Stock-Based Awards. The Committee is hereby authorized to
grant to eligible Employees "Other Stock Based Awards." Each Other Stock-Based
Award shall consist of a right (i) which is other than an Award or right
described in Section 6(a), (b), (c) or (d) above and (ii) which is denominated
or payable in, valued in whole or in part by reference to, or otherwise based on
or related to, Common Shares (including, without limitation, securities
convertible into Common Shares) as are deemed by the Committee to be consistent
with the purposes of the Plan; provided, however, that such right shall comply,
to the extent deemed desirable by the Committee, with Rule 16b-3 and applicable
law. Subject to the terms of the Plan and any applicable Award Agreement, the
Committee shall determine the terms and conditions of Other Stock-Based Awards.
Common Shares or other securities delivered pursuant to a purchase right granted
under this Section 6(e) shall be purchased for such consideration, which may be
paid by such method or methods and in such form or forms, including, without
limitation, cash, Common Shares, other securities, other Awards, other property,
or any combination thereof, as the Committee shall determine.
(f) General.
(i) No Cash Consideration for Awards. Awards may be granted
for no cash consideration or for such minimal cash consideration as may be
required by applicable law.
(ii) Awards May Be Granted Separately or Together. Awards
may, in the discretion of the Committee, be granted either alone or in
addition to, in tandem with, or in substitution for any other Award, except
that in no event shall an Incentive Stock Option be granted together with a
Non-Qualified Stock Option in such a manner that the exercise of one Option
affects the right to exercise the other. Awards granted in addition to or
in tandem with other Awards may be granted either at the same time as or at
a different time from the grant of such other awards.
(iii) Forms of Payment Under Awards. Subject to the terms of
the Plan and of any applicable Award Agreement, payments or transfers to be
made by the Company or an Affiliate upon the grant, exercise or payment of
an Award may be made in such form or forms as the Committee shall
determine, including, without limitation, cash, Common Shares, other
securities, other Awards, or other property, or any combination thereof,
and may be made in a single payment or transfer, in installments, or on a
deferred basis, in each case in accordance with rules and procedures
established by the Committee. Such rules and procedures may include,
without limitation, provisions for the payment or crediting of reasonable
interest on installment or deferred payments. In accordance with the
above, the Committee may elect (i) to pay a Participant (or such
Participant's permitted transferee) upon the exercise of an Option in whole
or in part, in lieu of the exercise thereof and the delivery of Common
Shares thereunder, an amount of cash equal to the excess, if any, of the
Fair Market Value of one Common Share on the date of such exercise over the
exercise price of such
<PAGE>
10
Option for one Common Share times the number of Common Shares subject to the
Option or portion thereof so exercised or (ii) to settle other stock denominated
Awards in cash.
(iv) Limits on Transfer of Awards.
(A) No award (other than Released Securities), and no right
under any such Award, may be assigned, alienated, pledged, attached, sold
or otherwise transferred or encumbered by a Participant otherwise than by
will or by the laws of descent and distribution (or, in the case of
Restricted Securities, to the Company) and any such purported assignment,
alienation, pledge, attachment, sale or other transfer or encumbrance shall
be void and unenforceable against the Company or any Affiliate.
(B) Each award, and each right under any Award, shall be
exercisable, during the Participant's lifetime only by the Participant or
if permissible under applicable law, by the Participant's guardian or legal
representative.
(v) Terms of Awards. The term of each Award shall be for
such period as may be determined by the Committee; provided, however, that
in no event shall the term of any Option exceed a period of ten years from
the date of its grant.
(vi) Rule 16b-3 Six-Month Limitations. To the extent
required in order to maintain the exemption provided under Rule 16b-3 only,
any equity security offered pursuant to the Plan must be held for at least
six months after the date of grant, and with respect to any derivative
security issued pursuant to the Plan, at least six months must elapse from
the date of acquisition of such derivative security to the date of
disposition of the derivative security (other than upon exercise or
conversion) or its underlying equity security. Terms used in the preceding
sentence shall, for the purposes of such sentence only, have the meanings,
if any, assigned or attributed to them under Rule 16b-3.
(vii) Common Share Certificates. All certificates for Common
Shares delivered under the Plan pursuant to any Award of the exercise
thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan or the
rules, regulations, and other requirements of the Securities and Exchange
Commission, any stock exchange upon which such Common Shares are then
listed, and any applicable Federal or state securities laws, and the
Committee may cause a legend or legends to be put on any such certificates
to make appropriate reference to such restrictions.
(viii) Delivery of Common Shares or Other Securities and
Payment by Participant of Consideration. No Common Shares or other
securities shall be delivered pursuant to any Award until payment in full
of any amount required to be paid pursuant to the Plan or the applicable
Award Agreement is received by the Company. Such payment may be made by
such method or methods and in such form or forms as the Committee shall
determine, including, without limitation, cash, Common Shares, other
securities, other Awards or other property, or any combination thereof;
provided that the combined value, as determined by the Committee, of all
cash and cash equivalents and the Fair Market Value of any such Common
Shares or other property so tendered to the Company, as of the date of such
tender, is at least equal to the full amount required to be paid pursuant
to the Plan or the applicable Award Agreement to the Company.
<PAGE>
SECTION 7. Amendments; Adjustments and Termination. Except to the
extent prohibited by applicable law and unless otherwise expressly provided in
an Award Agreement or in the Plan:
(a) Amendments to the Plan. The Board may amend, alter, suspend,
discontinue, or terminate the Plan without the consent of any stockholder,
Participant, other holder or beneficiary of an Award, or other Person; provided,
however, that, subject to the Company's rights to adjust Awards under Sections
7(c) and (d), any amendment, alteration, suspension, discontinuation, or
termination that would impair the rights of any Participant, or any other holder
or beneficiary of any Award theretofore granted, shall not to that extent be
effective without the consent of such Participant, other holder or beneficiary
of an Award, as the case may be; and provided further, however, that
notwithstanding any other provision of the Plan or any Award Agreement, without
the approval of the stockholders of the Company no such amendment, alteration,
suspension, discontinuation, or termination shall be made that would:
(i) increase the total number of Common Shares available for
Awards under the Plan, except as provided in Section 4 hereof; or
(ii) otherwise cause the Plan to cease to comply with any tax
or regulatory requirement, including for these purposes any approval or
other requirement which is or would be a prerequisite for exemptive relief
from Section 16(b) of the Exchange Act.
(b) Amendments to Awards. The Committee may waive any conditions
or rights under, amend any terms of, or alter, suspend, discontinue, cancel or
terminate, any Award theretofore granted, prospectively or retroactively;
provided, however, that, subject to the Company's rights to adjust Awards under
Sections 7(c) and (d), any amendment, alteration, suspension, discontinuation,
cancellation or termination that would impair the rights of any Participant or
holder or beneficiary of any Award theretofore granted, shall not to that extent
be effective without the consent of such Participant or holder or beneficiary of
an Award, as the case may be.
(c) Adjustment of Awards Upon Certain Acquisitions. In the event
the Company or any Affiliate shall assume outstanding employee awards or the
right or obligation to make future such awards in connection with the
acquisition of another business or another corporation or business entity, the
Committee may make such adjustments, not inconsistent with the terms of the
Plan, in the terms of Awards as it shall deem appropriate in order to achieve
reasonable comparability or other equitable relationship between the assumed
awards and the Awards granted under the Plan as so adjusted.
(d) Adjustments of Awards Upon the Occurrence of Certain Unusual or
Non-recurring Events. The Committee is hereby authorized to make adjustments in
the terms and conditions of, and the criteria included in, Awards in recognition
of unusual or non recurring events (including, without limitation, the events
described in Section 4(b) hereof) affecting the Company, any Affiliate, or the
financial statements of the Company or any Affiliate, or of changes in
applicable laws, regulations, or accounting principles, whenever the Committee
determines that such adjustments are appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan.
SECTION 8. General Provisions.
(a) No Rights to Awards. No Employee or other Person shall have
any claim to be granted any Award under the Plan, and there is no obligation for
uniformity of treatment of
<PAGE>
Employees, or holders or beneficiaries of Awards under the Plan. The terms and
conditions of Awards need not be the same with respect to each recipient.
(b) Delegation. Subject to the terms of the Plan and applicable
law, the Committee may delegate to one or more officers or managers of the
Company or any Affiliate, or to a committee of such officers or managers, the
authority, subject to such terms and limitations as the Committee shall
determine, to grant Awards to, or to cancel, modify, waive rights with respect
to, alter, discontinue, suspend, or terminate Awards; provided, however, that,
no such delegation shall be permitted with respect to Awards held by Employees
who are officers or directors of the Company for purposes of Section 16 of the
Exchange Act, or any successor section thereto or who are otherwise subject to
such Section.
(c) Correction of Defects, Omissions, and Inconsistencies. The
Committee may correct any defect, supply any omission, or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent it shall
deem desirable to carry the Plan into effect.
(d) Withholding. The Company or any Affiliate shall be authorized
to withhold from any Award granted, from any payment due or transfer made under
any Award or under the Plan or from any compensation or other amount owing to a
Participant the amount (in cash, Common Shares, other securities, other Awards,
or other property) of withholding taxes due in respect of an Award, its
exercise, or any payment or transfer under such Award or under the Plan and to
take such other action as may be necessary in the opinion of the Company or
Affiliate to satisfy all obligations for the payment of such taxes.
(e) No Limit on Other Compensation Arrangements. Nothing contained
in the Plan shall prevent the Company or any Affiliate from adopting or
continuing in effect other or additional compensation arrangements, and such
arrangements may be either generally applicable or applicable only in specific
cases.
(f) No Right to Employment. The grant of an Award shall not be
construed as giving a Participant the right to be retained in the employ of the
Company or any Affiliate. Further, the Company or an Affiliate may at any time
dismiss a Participant from employment, free from any liability, or any claim
under the Plan, unless otherwise expressly provided in the Plan or in any Award
Agreement.
(g) Governing Law. The validity, construction, and effect of the
Plan and any rules and regulations relating to the Plan shall be determined in
accordance with the laws of the State of Delaware and applicable Federal law.
(h) Severability. If any provision of the Plan or any Award is or
becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction
or as to any Person or Award under any law deemed applicable by the Committee,
such provision shall be construed or deemed amended to conform to applicable
laws, or if it cannot be construed or deemed amended without, in the
determination of the Committee, materially altering the intent of the Plan or
the Award, such provision shall be stricken as to such jurisdiction, Person or
Award and the remainder of the Plan and any such Award shall remain in full
force and effect.
(i) No Trust or Fund Created. Neither the Plan nor any Award shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Affiliate and a Participant or
any other Person. To the extent that any Person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Award, such
<PAGE>
13
right shall be no greater than the right of any unsecured general creditor of
the Company or any Affiliate.
(j) No Fractional Common Shares. No fractional Common Shares shall
be issued or delivered pursuant to the Plan or any Award, and the Committee
shall determine whether cash, other securities, or other property shall be paid
or transferred in lieu of any fractional Common Shares or whether such
fractional Common Shares or any rights thereto shall be canceled, terminated, or
otherwise eliminated.
(k) Headings. Headings are given to the Sections and subsections
of the Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
SECTION 9. Adoption, Approval and Effective Date of the Plan. The
Plan shall be considered adopted and shall become effective on the date the Plan
is approved by the Board.
<PAGE>
Exhibit 11--Statement Re: Computation of Per-Share Earnings
<TABLE>
<CAPTION>
Year ended June 30
1996 1995
---------------------------------
(In Thousands, except per-
share data)
<S> <C> <C>
Primary
Average shares outstanding 6,378,000 3,789,000
=================================
Loss from continuing operations $ (5,418,000) $(1,495,000)
Loss from operations of discontinued
HMO operation (3,149,000) (76,000)
Loss on disposal of HMO operation (4,927,000) -
---------------------------------
Net loss $(13,494,000) $(1,571,000)
=================================
Loss from continuing operations $ (0.85) $ (0.39)
Loss from discontinued operation (1.27) (0.02)
---------------------------------
Net loss $ (2.12) $ (0.41)
=================================
Fully diluted
Average shares outstanding 6,378,000 3,789,000
Net effect of dilutive stock options
and warrants-based on the treasury
stock method using year end market
price, if higher than average market price 190,000 253,000
---------------------------------
Total 6,568,000 4,042,000
Loss from continuing operations $ (5,418,000) $(1,495,000)
Loss from operations of discontinued
HMO operation (3,149,000) (76,000)
Loss on disposal of HMO operation (4,927,000) -
---------------------------------
Net loss $(13,494,000) $(1,571,000)
Loss from continuing operations $ 0.82 $ (0.37)
Loss from discontinued operation (1.23) (0.02)
---------------------------------
Net loss $ (2.05) $ (0.39)
=================================
</TABLE>
1
<PAGE>
Exhibit 21
Ramsay Managed Care, Inc.
List of Subsidiaries
As of June 30, 1996
<TABLE>
<CAPTION>
Name of Subsidiary State of Incorporation
------------------ ----------------------
<S> <C>
FPM Behavioral Health, Inc. Delaware
Florida Psychiatric Management, Inc. Florida
FPM Management, Inc. Florida
FPMBH of Arizona,Inc. Delaware
FPM/Hawaii, Inc. Delaware
FPM of West Virginia, Inc. Delaware
FPM Southeast, Inc. Delaware
FPM of Louisiana, Inc. Delaware
FPM of Ohio, Inc. Delaware
FPM Behavioral Health of Ohio, Ltd.
FPMBH of Texas, Inc. Texas
FPMBH Clinical Services, Inc. Delaware
Florida Psychiatric Associates, Inc. Florida
Arizona Psychiatric Affiliates, Inc. Delaware
Apex Healthcare, Inc. Delaware
Apex Healthcare of Louisiana, Inc. Louisiana
Apex Healthcare of Mississippi, Inc. Mississippi
Apex Healthcare of Alabama, Inc. Alabama
Apex Healthcare of Florida, Inc. Florida
</TABLE>
<PAGE>
Consent
We consent to the incorporation by reference in the Registration Statement (the
Form S-8 No. 33-95018) pertaining to the Ramsay Managed Care, Inc. 1994 Stock
Option Plan, the Ramsay Managed Care, Inc. 1994 Employee Stock Purchase Plan,
and the Ramsay Managed Care, Inc. Warrant Plan of our report dated
August 28, 1996 respect to the consolidated financial statements of Ramsay
Managed Care, Inc. included in the Annual Report (Form 10-KSB) for the year
ended June 30, 1996.
Orlando, Florida
September 27, 1996 /s/ Ernst & Young LLP
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<CASH> 228,000
<SECURITIES> 0
<RECEIVABLES> 1,180,000
<ALLOWANCES> 334,000
<INVENTORY> 0
<CURRENT-ASSETS> 3,237,000
<PP&E> 1,958,000
<DEPRECIATION> 1,170,000
<TOTAL-ASSETS> 14,099,000
<CURRENT-LIABILITIES> 12,307,000
<BONDS> 0
0
0
<COMMON> 64,000
<OTHER-SE> (7,911,000)
<TOTAL-LIABILITY-AND-EQUITY> 14,099,000
<SALES> 0
<TOTAL-REVENUES> 21,602,000
<CGS> 0
<TOTAL-COSTS> 16,831,000
<OTHER-EXPENSES> 9,504,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 685,000
<INCOME-PRETAX> (5,418,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,418,000)
<DISCONTINUED> (8,076,000)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (13,494,000)
<EPS-PRIMARY> $(2.12)
<EPS-DILUTED> $(2.12)
</TABLE>
