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EXHIBIT 10.128
SUBORDINATION AGREEMENT
October 30, 1998
To: Fleet Capital Corporation
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx 0000, XX 21
Xxxxxx, Xxxxx 00000
Ladies and Gentlemen:
Ramsay Health Care, Inc., a Delaware corporation with its principal
place of business at Xxx Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxx Xxxxxx, Xxxxxxx 00000
("RAMSAY") is (i) indebted to Xxxx Xxxxxx Holdings Pty. Limited, an Australian
corporation ("RAMSAY HOLDINGS PTY"), in the current principal amount not in
excess of $7,283,553 under the terms of those certain promissory notes and other
agreements (either verbal or written) that are delineated in EXHIBIT "A" hereto
and (ii) the issuer of the Series B Preferred Stock described on EXHIBIT "A"
hereto and currently held by Ramsay Holdings Pty, Ramsay Holdings HSA Limited, a
Barbados corporation ("RAMSAY HSA") and Xxxx Xxxxxx Hospitals Pty. Limited, an
Australian corporation ("RAMSAY HOSPITALS" and together with Ramsay HSA and
Ramsay Holdings Pty, the "RAMSAY AFFILIATES" or individually, a "RAMSAY
AFFILIATE") (such instruments, certificates and agreements described in clauses
(i) and (ii) collectively, with all amendments, modifications and supplements
thereto, and all renewals, extensions and restatements thereof, being
hereinafter called the "SUBORDINATED AGREEMENTS"). Ramsay understands that,
pursuant to that certain Loan and Security Agreement dated October 30, 1998
(herein, as such Loan Agreement as the same may hereafter from time to time be
amended, modified, supplemented, renewed, extended and/or restated, the "LOAN
AGREEMENT"), among Ramsay and certain of its direct and indirect subsidiaries
now or hereafter becoming a party to the Loan Agreement (collectively, the
"BORROWERS" or individually, a "BORROWER") and Fleet Capital Corporation, a
Rhode Island corporation ("FLEET"), as Agent (Fleet and any successor Agent, in
such capacity, the "AGENT") for the lenders (including Fleet) that are a party
to the Loan Agreement (collectively, including Fleet in such capacity, the
"LENDERS", and individually, a "LENDER" and the respective assigns of such
Lenders pursuant to SECTION 12.3 of the Loan Agreement) the Agent and Lenders
have agreed to provide certain loans and financing and credit accommodations to
the Borrowers (Borrowers, together with any other Person (other than Agent or
each Lender) which are or becomes a party to any Loan Document, are sometimes
referred to collectively as the "LOAN PARTIES" or individually, as a "LOAN
PARTY", and the Loan Agreement, together with each of the other "LOAN DOCUMENTS"
defined in the Loan Agreement, and all other instruments and documents delivered
by any one or more of the Loan Parties to Agent and/or any one or more of the
Lenders pursuant to the Loan Agreement, and all other financing agreements now
or hereafter existing between and/or among the Agent and/or any one or more of
the Lenders and any one or more of the Loan Parties, together with all
amendments,
SUBORDINATION AGREEMENT - PAGE 1
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modifications, and supplements to, and all restatements of, any one or more of
the foregoing, and together with all renewals, extensions and restatements of
any one or more of the foregoing, are hereinafter collectively called the
"SENIOR LOAN DOCUMENTS"), but that the Agent and the Lenders require, as a
condition precedent to its obligation to commence funding loans under the Loan
Agreement, the execution of this Subordination Agreement by the Ramsay
Affiliates and the delivery of the same to the Agent. Accordingly, each Ramsay
Affiliate, in order to satisfy such condition precedent and intending to be
legally bound, jointly and severally, agrees as follows:
1. Each Ramsay Affiliate hereby agrees, jointly and severally, to
subordinate, and does hereby subordinate, (a) the payment by any Loan
Party of all or any part of such Loan Party's obligations, liabilities
and indebtedness which may now or hereafter be owing by such Loan Party
to any Ramsay Affiliate, whether pursuant to the Subordinated
Agreements or otherwise, including, without limitation, any dividend or
redemption obligation with respect to the Preferred Stock of Ramsay
described in EXHIBIT "A" hereto (the "PREFERRED STOCK")and the
outstanding balance of principal and accrued interest from time to time
owing by Ramsay to Ramsay Holdings Pty pursuant to the Junior
Subordinated Promissory Notes listed as items 2 and 3 on EXHIBIT "A"
hereto (together, the "SUBORDINATED NOTES" or individually, the
"SUBORDINATED NOTE" or otherwise, and all costs and expenses (including
attorneys' fees) owing by any Loan Party to any Ramsay Affiliate (all
of the obligations, liabilities and indebtedness described or to which
reference is made in this CLAUSE (a) (other than Common Stock issued in
respect thereof) being hereinafter called the "SUBORDINATED DEBT") to
the payment in full in cash of the Senior Debt, and (b) all security
interests, mortgages and liens now or hereafter securing the
Subordinated Debt, or any portion thereof, to all security interests,
mortgages and liens now or hereafter securing all or any part of the
Senior Debt, regardless of the time of granting of any security
interests or liens or the filing or recording of any mortgages or
financing statements, it being agreed that, by reason of this
Agreement, the liens and security interests in favor of the Agent
and/or any one or more of the Lenders in the Senior Collateral (as
defined in SECTION 3 hereof) shall be senior and superior to any and
all liens and security interests now or hereafter encumbering all or
any portion of the Senior Collateral as security for all or any portion
of the Subordinated Debt. Regardless of whether a default or an event
of default (however defined) exists under any one or more of the
Subordinated Agreements, each Ramsay Affiliate agrees not to (i)
accept, retain, request or take any security for the Subordinated Debt
or any guaranty of the Subordinated Debt without the Agent's prior
written consent, (ii) amend or modify the Subordinated Agreements, or
increase any of the Subordinated Debt, without the Agent's prior
written consent, or (iii) except as otherwise expressly provided in
SECTION 19 of this Subordination Agreement, (1) accept, demand, xxx
for, take or receive from any Loan Party or any other person or entity,
by payment, setoff or otherwise, and including the taking of any new
negotiable instrument, payment of all or any part of the Subordinated
Debt, or (2) take any action to enforce their rights in any collateral
securing payment thereof, or enforce their rights under any judgment
rendered or writ issued in favor of any Ramsay Affiliate with respect
to the Subordinated Debt, in any event with respect to the immediately
foregoing
SUBORDINATION AGREEMENT - PAGE 2
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CLAUSES (i) through (iii) unless and until all Senior Debt has been
indefeasibly paid in full in cash and the Loan Agreement has been
terminated.
2. Without limiting the generality or scope of SECTION 1 of this
Subordination Agreement, each Ramsay Affiliate expressly agrees,
jointly and severally, that if such Ramsay Affiliate at any time
purchases goods or services from any Loan Party, such Ramsay Affiliate
will pay for such goods or services in cash or cash equivalents in
accordance with the customary terms of such purchases available to
third parties and shall not deduct from or setoff against any amounts
owing by such Ramsay Affiliate to such Loan Party in connection with
such purchases any amounts due or claimed to be due with respect to, or
otherwise owing by reason of, the Subordinated Debt.
3. For purposes of this Subordination Agreement, the term "SENIOR DEBT"
means all obligations, including, without limitation (i) principal of
and interest (including, without limitation, interest that would accrue
during the pendency of any proceeding under Title 11 of the United
States Bankruptcy Code on all or any portion of the Senior Debt
regardless of whether such interest is included in any allowed claim in
any such proceeding) on all loans, advances, accommodations (including,
without limitation, guarantees of payment under letter of credit-
related obligations for the benefit of banks or other financial
institutions issuing letters of credit for the account of any Loan
Party and guarantees of any Loan Party's payment and performance under
written contracts to which any Loan Party is a party) and other
extensions of credit by the Lender now or hereafter made and howsoever
evidenced to or on behalf of any Loan Party (including any Loan Party
operating as Debtor or Debtor in Possession under, or any trustee of
any Loan Party appointed under, the United States Bankruptcy Code),
(ii) amounts owing by reason of guarantees by any one or more of the
Lenders of any Loan Party's indebtedness to others unrelated to the
Lender, (iii) accrued interest, attorneys' fees and expenses incurred
by the Agent and/or any one or more of the Lenders in enforcing their
rights in the event of default by any Loan Party under the Loan
Agreement and/or any one or more of the Senior Loan Documents, (iv)
amounts owing by reason of advances by Lender for the preservation,
maintenance, insurance or protection of any Senior Collateral, (v) all
other indebtedness for which any Loan Party is now or at any time
hereafter liable to the Agent and/or any one or more of the Lenders in
any manner, whether primarily or secondarily, absolutely or
contingently, directly or indirectly, jointly, severally or jointly and
severally, and whether matured or unmatured, including, without
limitation, all interest, costs, disbursements, indemnification
amounts, fees, expenses and all indebtedness arising directly out of
transactions among any Loan Party, the Agent and/or any one or more of
the Lenders or acquired by the Agent or any one or more of the Lenders
outright, conditionally or as collateral security from another person
or entity, and (vi) all "Obligations," as that term is defined in the
Loan Agreement (and, in the case of all of the foregoing, any and all
renewals, extensions, replacements and refinancings of all or any part
thereof), and the term "SENIOR COLLATERAL" means all property, real and
personal, tangible and intangible, now owned or hereafter acquired by
any Loan Party, and includes, without limitation, all inventory,
accounts, equipment, fixtures, instruments and general intangibles (as
those terms
SUBORDINATION AGREEMENT - PAGE 3
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are defined in the Uniform Commercial Code) now owned or hereafter
acquired by any Loan Party.
4. Upon the maturity of the Senior Debt (or any portion thereof) by lapse
of time, acceleration or otherwise, all amounts due or to become due in
connection therewith shall first be indefeasibly paid in full in cash
before any payment is made by any Borrower or any person acting on
behalf of any Borrower on account of any Subordinated Debt. Upon a
distribution of the assets or readjustment of the indebtedness of any
Borrower by reason of liquidation, composition, bankruptcy,
arrangement, receivership, assignment for the benefit of creditors or
any other action or proceeding involving the readjustments of all or
any of the debts of any Borrower, or the application of the assets of
any Borrower to the payment or liquidation thereof, each Ramsay
Affiliate acknowledges that the payment and satisfaction of the Senior
Debt and the Senior Loan Documents shall have priority over the payment
and satisfaction of the Subordinated Debt and the Subordinated
Agreements. If any Borrower shall become subject to a proceeding under
the United States Bankruptcy Code and the Agent and/or any one or more
of the Lenders shall desire to permit the use of cash collateral by
such Borrower or to provide financing to such Borrower under either
Section 363 or 364 of the United States Bankruptcy Code, with or
without obtaining a priority lien under Section 364(d) thereof, each
Ramsay Affiliate hereby agrees as follows: (a) adequate notice to such
Ramsay Affiliate shall have been given for such financing if such
Ramsay Affiliate is given notice thereof at least two (2) business days
prior to the entry of the order approving such financing, and (b) no
objection will be raised by any Ramsay Affiliate to any such financing
on the grounds of failure to provide "adequate protection" of such
Ramsay Affiliate's lien position, if any, in any portion of the Senior
Collateral subject to the senior lien position in the Senior Collateral
in favor of the Agent and/or any one or more of the Lenders, whether
granted in connection with such financing or otherwise existing or
created. For purposes hereof, notice of such a proposed financing or
use of cash collateral shall be deemed given to each Ramsay Affiliate
upon the sending of notice by overnight delivery service, telecopy or
hand delivery to such Ramsay Affiliate. The Agent, for itself and on
behalf of the Lenders is irrevocably authorized and empowered to
receive and collect any and all dividends, payments and distributions
made on account of any proof of claim relating to the Subordinated Debt
in whatever form the same may be paid or issued until the Senior Debt
is paid or satisfied.
5. Until the Senior Debt is indefeasibly paid in full in cash and the Loan
Agreement terminated, no Ramsay Affiliate shall, without the Agent's
prior written consent, (i) take or require the delivery of a guaranty
of the Subordinated Debt from any person or entity, (ii) take any
action to foreclose or otherwise enforce any liens or security
interests now existing in favor of any Ramsay Affiliate on any of the
Senior Collateral, (iii) take any action to foreclose or otherwise
enforce any judgment rendered or writ issued in favor of any Ramsay
Affiliate with respect to any of the Subordinated Agreements, (iv)
commence or join with any other creditor or creditors of any Loan Party
in commencing any bankruptcy, reorganization, receivership or
insolvency proceeding against any Loan Party, (v) except for the
acceleration of the amounts due with respect to the Subordinated Notes
in the event the Senior Debt is
SUBORDINATION AGREEMENT - PAGE 4
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accelerated, exercise any other rights or remedies any Ramsay Affiliate
may have under the Subordinated Agreements, the Uniform Commercial Code
or any other applicable law with respect to the Senior Collateral, or
(vi) take or permit any action prejudicial to or inconsistent
with the priority position of the Agent and the Lenders over each
Ramsay Affiliate that is created by this Subordination Agreement.
6. In the event any Loan Party defaults on any one or more of its
obligations with respect to all or any part of the Senior Debt or under
the Senior Loan Documents and, as a result, the Agent and/or any one or
more of the Lenders undertake to enforce any of the security interests
and liens in the Senior Collateral granted to or for the benefit of the
Agent and/or any one or more of the Lenders, each Ramsay Affiliate
agrees, jointly and severally, that no Ramsay Affiliate will hinder,
delay or otherwise prevent the Agent or any Lender from taking any and
all action which it or they deem necessary or appropriate to enforce
such liens and/or security interests in the Senior Collateral and to
realize thereon, and, in furtherance of the foregoing, each Ramsay
Affiliate hereby waives, jointly and severally, any and all rights (i)
to notices in respect of any public or private sales of the Senior
Collateral, (ii) to participate in the distribution of proceeds of any
public or private sales of the Senior Collateral, and (iii) to redeem
the Senior Collateral prior to or after the occurrence of any public or
private sales of the Senior Collateral. In connection with any sale or
transfer of the Senior Collateral by Lender or any Loan Party after the
occurrence and during the continuation of any "Default" and/or "Event
of Default", as defined in the Loan Agreement, each Ramsay Affiliate
hereby irrevocably authorizes, empowers and appoints Agent as their
agent and attorney-in-fact to execute, verify, deliver and file any
release, termination or other statement or document necessary to
release and terminate any liens or security interests which secure the
Subordinated Debt.
7. In the event of any distribution, division or application, partial or
complete, voluntary or involuntary, by operation of law or otherwise,
of all or any part of the assets of any Loan Party or the proceeds
thereof to creditors of any Loan Party, or the readjustment of the
obligations and indebtedness of any Loan Party, whether by reason of
liquidation, bankruptcy, arrangement, receivership, assignment for the
benefit of creditors or any other action or proceeding involving the
readjustment of all or any part of the Subordinated Debt, or the
application of all or any part of the assets of any Loan Party to the
payment or liquidation thereof, or upon the dissolution of any Loan
Party or the winding up of any Loan Party's business, or upon the sale
of all or substantially all of any Loan Party's assets, then, in any
such event, (a) the Agent and the Lenders shall be entitled to receive
payment in full in cash of the Senior Debt prior to the payment of all
or any part of the Subordinated Debt, and (b) any payment or
distribution of any kind or character, whether in cash, securities or
other property, which shall be payable or deliverable upon or with
respect to all or any portion of the Subordinated Debt shall be paid or
delivered directly to the Agent for application on the Senior Debt,
whether or not then due, until the Senior Debt shall have been fully
paid in cash. In order to enable the Agent and the Lenders to enforce
their rights hereunder in any of the aforesaid actions or proceedings,
the Agent is hereby irrevocably
SUBORDINATION AGREEMENT - PAGE 5
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authorized and empowered and granted the right, at any time and from
time to time in its discretion, (i) to make and present for and on
behalf of each Ramsay Affiliate such proofs of claim against any Loan
Party on account of the Subordinated Debt as the Agent may deem
expedient or proper in the event any Ramsay Affiliate fails to do so at
least ten (10) days prior to the deadline for filing such claims, (ii)
to vote such proofs of claim in any such proceeding upon failure of any
Ramsay Affiliate to do so prior to ten (10) days before the expiration
of the time to vote such claim, and (iii) to receive and collect any
and all dividends and other payments and disbursements made thereon in
whatever form the same may be paid or issued and to apply the same on
account of the Senior Debt. Agent shall have no obligation to execute,
verify, deliver, file and/or vote any such proofs of claim. In the
event Agent votes any claim in accordance with the authority granted
hereby, no Ramsay Affiliate shall be entitled to change or withdraw
such vote. Each Ramsay Affiliate irrevocably authorizes and empowers
the Agent to demand, xxx for, collect and receive each of the aforesaid
payments and distributions, to give acquittances therefor, and to file
claims and take such other actions, in the Agent's own name or in the
name of such Ramsay Affiliate or otherwise, as the Agent may deem
necessary or advisable for the enforcement of this Subordination
Agreement. Each Ramsay Affiliate will execute and deliver to the Agent
such powers of attorney, assignments and other instruments and
documents, including notes and stock certificates (together with such
assignments or endorsements as the Agent shall deem necessary), as may
be requested by the Agent in order to enable the Agent to enforce any
and all claims upon or with respect to all or any portion of the
Subordinated Debt and to collect and receive any and all payments and
distributions which may be payable at any time upon or with respect to
the Subordinated Debt, all for the benefit of the Agent and the Lenders
until the Senior Debt is paid in full in cash. When the Senior Debt is
paid in full in cash and the Loan Agreement has been terminated, the
Agent and each Lender will remit to each Ramsay Affiliate, to the
extent of its interest therein and to the extent permitted by law, all
dividends or other payments or distributions paid to and held by the
Agent or such Lender in excess of the amount necessary to pay the
Senior Debt in full in cash to the extent such Ramsay Affiliate shall
have made any payment to Agent or any payments have been made to the
Agent or any Lender by reason of the Subordinated Debt.
8. If any payment on account of, or any collateral for any part of, the
Subordinated Debt is received by any Ramsay Affiliate (other than a
payment expressly permitted to be received by such Ramsay Affiliate in
accordance with the provisions of SECTION 19 of this Subordination
Agreement), such payment or collateral shall be delivered forthwith by
such Ramsay Affiliate to the Agent for application to the Senior Debt,
in the form received except for the addition of any endorsement or
assignment necessary to effect a transfer of all rights therein to the
Agent. The Agent is irrevocably authorized to supply any required
endorsement or assignment which may have been omitted. Until so
delivered, any such payment or collateral required to be delivered by
any Ramsay Affiliate to the Agent under this SECTION 8 shall be held by
such Ramsay Affiliate in trust for the Agent and the Lenders and shall
not be commingled with other funds or property of any Ramsay Affiliate.
SUBORDINATION AGREEMENT - PAGE 6
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9. Each Ramsay Affiliate, jointly and severally, represents, warrants and
covenants to the Agent and to each of the Lenders that:
(a) It has not relied and will not rely on any representations or
information of any nature made by or received from the Agent
and/or any one or more of the Lenders relating to any Loan
Party in executing this Subordination Agreement.
(b) As of the date hereof, the total principal amount of the
Subordinated Debt does not exceed $7,283,553.
(c) Borrowers have delivered to the Agent true and correct copies
of the Subordinated Documents listed in EXHIBIT "A" hereto,
and, as of the date hereof, no documents or agreement
evidencing or otherwise relating to any Subordinated Debt
exist except as set forth in EXHIBIT "A" hereto.
(d) The Ramsay Affiliates are the lawful owners of the
Subordinated Debt free and clear of all liens and
encumbrances, and as of the date hereof, no Ramsay Affiliate
has subordinated, encumbered, assigned or transferred any
Subordinated Debt. Each Ramsay Affiliate agrees, jointly and
severally, that it will not subordinate or encumber, assign or
transfer at any time while this Subordination Agreement
remains in effect, any right, claim or interest of any kind in
or to the Subordinated Debt (a) without giving prior written
notice of such action to Agent, (b) unless prior to the
consummation of any such action, the transferee thereof shall
execute and deliver to Agent an agreement substantially
identical to this Agreement, providing for the continued
subordination and forbearance of the Subordinated Debt to the
Senior Debt as provided herein and for the continued
effectiveness of all of the rights of Agent and Lenders
arising under this Agreement and (c) unless following such
sale, assignment, pledge, disposition or other transfer, there
shall be no more than five holders of Subordinated Debt.
Notwithstanding the failure to execute or deliver any such
agreement, the subordination effected hereby shall survive any
sale, assignment, pledge, disposition or other transfer of all
or any portion of the Subordinated Debt, and the terms of this
Agreement shall be binding upon the successors and assigns of
each Ramsay Affiliate, as provided in Section 12 below.
(e) Each Ramsay Affiliate has received all consents and approvals
required in order for it to execute and deliver this
Subordination Agreement.
10. The Agent and/or any one or more of the Lenders may, at any time and
from time to time, in its and/or their discretion, (i) renew, extend or
otherwise modify the rate of interest on, the time and/or terms of
payment of, and/or any other of the terms and provisions relative to
the Senior Debt or any of the other provisions of the Senior Loan
Documents, (ii) lend additional monies, extend additional credit and
make other financial accommodations to or for the account of any Loan
Party, (iii) waive or release any collateral or guaranties which may be
SUBORDINATION AGREEMENT - PAGE 7
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held as security for all or any part of the Senior Debt, and/or (iv)
renew, extend, modify, amend, supplement and/or restate any and all of
the Senior Loan Documents, including the Loan Agreement, in any manner,
in each case, without necessity of consent from any Ramsay Affiliate
and without impairing or affecting this Subordination Agreement or any
of the rights of Agent and/or any one or more of the Lenders hereunder.
Each Ramsay Affiliate shall provide the Agent with copies of any
modifications or amendments to the Subordinated Agreements promptly
upon the execution thereof.
11. Each Ramsay Affiliate hereby waives any rights it has or may have in
the future to require the Agent or any Lender to marshal any of the
Senior Collateral securing payment of all or any part of the Senior
Debt, and agrees that the Agent and each of the Lenders may, in
addition to all other rights under this Subordination Agreement,
proceed against all or any part of the Senior Collateral securing all
or any portion of the Senior Debt in any order that they or any of them
deem appropriate in the exercise of their respective remedies. Each
Ramsay Affiliate also waives any right to be subrogated to the Senior
Debt unless and until the Senior Debt is paid in full in cash and the
Loan Agreement has been terminated in which event, such Ramsay
Affiliate shall be and hereby is subrogated to the Senior Debt and the
Senior Collateral.
12. Each Ramsay Affiliate agrees that it will advise each future holder of
all or any part of the Subordinated Debt that the Subordinated Debt is
subordinated to the Senior Debt in the manner and to the extent set
forth herein. To that end, each Ramsay Affiliate hereby agrees, jointly
and severally, (and is hereby so authorized by Borrowers) to endorse
upon each instrument, certificates and document evidencing all or any
part of the Subordinated Debt the following legend:
"The payment of any indebtedness or other obligations
evidenced by this instrument or certificate is subordinated to
the payment of the "Senior Debt" defined and described in the
Subordination Agreement dated October 30, 1998, between Xxxx
Xxxxxx Holdings Pty. Limited, an Australian corporation,
Ramsay Holdings HSA Limited, a Barbados corporation, Xxxx
Xxxxxx Hospitals Pty. Limited, an Australian corporation and
Fleet Capital Corporation, a Rhode Island corporation, as
Agent and its successors and assigns, and reference is made to
such Agreement for a full statement of the terms and
conditions of such subordination."
Each Ramsay Affiliate further agrees, jointly and severally, to
indemnify the Agent and each Lender against any losses, damages, costs
and expenses incurred or suffered by the Agent or any such Lender by
reason of the failure of any Ramsay Affiliate to so notify any future
holder of the Subordinated Debt, or any part thereof. Each Ramsay
Affiliate hereby authorizes the Agent to file this Subordination
Agreement and such other notices of record as the Agent may from time
to time deem appropriate to evidence or give notice of this
Subordination Agreement. This Agreement shall inure to the benefit of
the successors and
SUBORDINATION AGREEMENT - PAGE 8
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assigns of Agent and each Lender and shall be binding upon the
successors and assigns of each Ramsay Affiliate and each Loan Party.
13. Each Ramsay Affiliate agrees, jointly and severally, that it will not
at any time directly or indirectly contest the validity, perfection,
priority or enforceability of any lien, security interest, encumbrance
or claim granted to the Agent and/or any one or more of the Lenders in
or on the Senior Collateral, and hereby agrees not to hinder the Agent
or any Lender or take a position adverse to the Agent or any Lender in
the defense of any action contesting the validity, perfection, priority
or enforceability of any such liens, security interests, encumbrances
or claims. Each Ramsay Affiliate further agrees, jointly and severally,
that the provisions of this Subordination Agreement shall remain in
full force and effect notwithstanding a successful challenge to the
validity, perfection, priority or enforceability of all or any of the
Senior Debt or the liens and security interests securing the Senior
Debt.
14. This Subordination Agreement shall be effective and may not be
terminated or otherwise revoked by any Ramsay Affiliate until all
Senior Debt has been paid in full in cash and the Loan Agreement has
been terminated. This is a continuing agreement of subordination and
the Agent and each Lender may continue, at any time and without notice
to any Ramsay Affiliate, to extend credit or other financial
accommodations and loan monies to or for the benefit of any Loan Party
in reliance on this Subordination Agreement.
15. The Agent and/or any one or more of the Lenders, and each of them, at
any time and from time to time, either before or after any such
aforesaid notice of termination or revocation, may enter into such
agreement or agreements with any Loan Party or others as they or it, as
the case may be, may deem proper, extending the time of payment of or
renewing or otherwise altering the terms of all or any of the Senior
Debt or affecting the security underlying, or any guaranty of, any or
all of the Senior Debt, and may exchange, sell, release, surrender or
otherwise deal with any such security, without in any way thereby
impairing or affecting this Subordination Agreement.
16. All of the Senior Debt shall be deemed to have been made or incurred
in reliance upon this Subordination Agreement. Each Ramsay Affiliate
expressly waives all notice of the acceptance by any Lender of the
subordination and other provisions of this Subordination Agreement and
all other notices not specifically required pursuant to the terms of
this Subordination Agreement or applicable law whatsoever, and each
Ramsay Affiliate expressly waives reliance by the Agent and the Lenders
upon the subordination and other agreements as herein provided. Each
Ramsay Affiliate agrees, jointly and severally, that neither the Agent
nor any Lender has made any warranties or representations with respect
to the due execution, legality, validity, completeness or
enforceability of the Senior Loan Documents, or the collectibility of
the Senior Debt, that the Agent and the Lenders shall each be entitled
to manage and supervise its loans to any Loan Party in accordance with
applicable law and its usual practices, modified from time to time as
it deems appropriate under the circumstances, without regard to the
existence of any rights that any Ramsay Affiliate may
SUBORDINATION AGREEMENT - PAGE 9
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now or hereafter have in or to any of the assets of any Loan Party, and
that neither the Agent nor any Lender shall have any liability to any
Ramsay Affiliate for, and each Ramsay Affiliate waives any claim which
such Ramsay Affiliate may now or hereafter have against the Agent
and/or any one or more of the Lenders arising out of, (i) any and all
actions which the Agent and/or any one or more of the Lenders takes or
omits to take (including, without limitation, actions with respect to
the creation, perfection or continuation of liens or security interests
in all or any portion of the Senior Collateral and other security for
the Senior Debt, actions with respect to the occurrence of any default
or event of default under the Loan Agreement, actions with respect to
the foreclosure upon, sale, release, or depreciation of, or failure to
realize upon, any of the Senior Collateral and actions with respect to
the collection of any claim for all or any part of the Senior Debt from
any account debtor, guarantor or any other party) with respect to the
Senior Loan Documents or any other agreement related thereto or to the
collection of the Senior Debt or the valuation, use, protection or
release of any of the Senior Collateral and/or other security for the
Senior Debt, (ii) any election by the Agent and/or any one or more of
the Lenders in any proceeding instituted under Title 11 of the United
States Code (11 U.S.C. Section 101 et seq.) (the "Bankruptcy Code") of
the application of Section 1111(b)(2) of the Bankruptcy Code, and/or
(iii) any borrowing or grant of a security interest under Section 364
of the Bankruptcy Code to any Loan Party, as debtor in possession.
17. Each Ramsay Affiliate hereby assumes responsibility for keeping itself
informed of the financial condition of each Borrower and each other
Loan Party, any and all endorsers and any and all guarantors of the
Senior Debt and Subordinated Debt and of all other circumstances
bearing upon the risk of nonpayment of the Senior Debt and/or
Subordinated Debt that diligent inquiry would reveal, and each Ramsay
Affiliate hereby agrees that the Lender shall not have any duty to
advise any Ramsay Affiliate of information known to it regarding such
condition or any such circumstances. In the event Agent or any Lender,
in its sole discretion, undertakes, at any time or from time to time,
to provide any such information to any Ramsay Affiliate, neither the
Agent nor any Lender shall be under any obligation (i) to provide any
such information to any Ramsay Affiliate on any subsequent occasion or
(ii) to undertake any investigation and shall be under no obligation to
disclose any information which the Agent or any Lender wishes to
maintain confidential. Each Ramsay Affiliate hereby agrees that all
payments received by the Agent and/or any one or more of the Lenders
may be applied, reversed, and reapplied, in whole or in part, to any of
the Senior Debt, as the Agent, in its sole discretion, deems
appropriate, and each Ramsay Affiliate assents to any extension or
postponement of the time of payment of all or any portion of the Senior
Debt or to any other indulgence with respect thereto, to any
substitution, exchange or release of Senior Collateral which may at any
time secure the Senior Debt and to the addition or release of any other
party or Person primarily or secondarily liable therefor.
18. (A) THIS SUBORDINATION AGREEMENT SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
SUBORDINATION AGREEMENT - PAGE 10
11
THE INTERNAL LAWS OF THE STATE OF TEXAS WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES.
(B) EACH RAMSAY AFFILIATE HEREBY CONSENTS TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED
WITHIN THE COUNTY OF DALLAS, STATE OF TEXAS AND
IRREVOCABLY AGREES THAT, SUBJECT TO LENDER'S ELECTION,
ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO
THIS SUBORDINATION AGREEMENT SHALL BE LITIGATED IN SUCH
COURTS. EACH RAMSAY AFFILIATE ACCEPTS, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS SUBORDINATION
AGREEMENT. EACH RAMSAY AFFILIATE HEREBY AGREES THAT SERVICE
UPON SUCH RAMSAY AFFILIATE BY REGISTERED OR CERTIFIED MAIL
SHALL CONSTITUTE SUFFICIENT NOTICE. NOTHING HEREIN SHALL
AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE LENDER TO
BRING PROCEEDINGS AGAINST ANY LOAN PARTY IN THE COURTS OF ANY
OTHER JURISDICTION.
(C) EACH RAMSAY AFFILIATE AND AGENT EACH HEREBY WAIVE THEIR
RESPECTIVE RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS SUBORDINATION
AGREEMENT. EACH RAMSAY AFFILIATE, AGENT AND EACH
LENDER ALSO WAIVE ANY BOND OR SURETY OR SECURITY UPON
SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED
OF THE AGENT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE
ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE
FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER
OF THE SUBORDINATION AGREEMENT, INCLUDING, WITHOUT
LIMITATION CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.
EACH RAMSAY AFFILIATE AND THE AGENT EACH ACKNOWLEDGE
THAT EACH OF THESE WAIVERS IS A MATERIAL INDUCEMENT TO
ENTER INTO THIS SUBORDINATION AGREEMENT, THAT EACH HAS
ALREADY RELIED ON THESE WAIVERS IN ENTERING INTO THIS
SUBORDINATION AGREEMENT, AND THAT EACH WILL CONTINUE
TO RELY ON THESE WAIVERS IN THEIR RELATED FUTURE
DEALINGS. EACH RAMSAY AFFILIATE AND THE AGENT FURTHER
SUBORDINATION AGREEMENT - PAGE 11
12
WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS
WAIVER WITH THEIR OR ITS LEGAL COUNSEL AND THAT EACH
KNOWINGLY AND VOLUNTARILY WAIVES THEIR OR ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS OF OR TO THIS
SUBORDINATION AGREEMENT. IN THE EVENT OF LITIGATION, THIS
SUBORDINATION AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.
(d) This Subordination Agreement contains the entire agreement
among the Ramsay Affiliates, the Agent and the Lenders with
respect to this subject, and may only be modified by a writing
signed by both the Ramsay Affiliates and the Agent.
(e) No failure by the Agent and/or any Lender to exercise any
right hereunder shall be construed as a waiver of the right to
exercise the same or any other right at any other time and
from time to time thereafter, and such rights shall be
cumulative and not exclusive.
(f) The knowledge by Agent and/or any Lender of any breach or
other non-observance by any Ramsay Affiliate of the terms of
this Subordination Agreement shall not constitute a waiver
thereof or of any obligations to be performed by any Ramsay
Affiliate.
(g) Wherever possible, each provision of this Subordination
Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision
of this Subordination Agreement shall be prohibited by or
invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the
remaining provisions of this Subordination Agreement.
(h) Each Ramsay Affiliate acknowledges that Agent and each Lender
will rely upon this instrument in connection with the
extension of financial accommodations to each Loan Party
pursuant to the Senior Loan Documents, and that any additional
financial accommodations the Agent or any Lender may hereafter
extend to any Loan Party will be in reliance on this
instrument. Each Ramsay Affiliate agrees, jointly and
severally, that this Subordination Agreement (i) shall
continue in full force and effect until payment in full in
cash of the Senior Debt and the termination of the Loan
Agreement, and (ii) shall be binding upon each Ramsay
Affiliate and its successors and assigns, including, without
limitation, any future holder of all or any part of the
Subordinated Debt and shall inure to the benefit of Agent and
each Lender, and its
SUBORDINATION AGREEMENT - PAGE 12
13
successors and assigns, including, without limitation, any
future holder of all or any part of the Senior Debt, it being
expressly acknowledged that the Agent and each Lender's rights
under this Subordination Agreement may be assigned in
connection with any assignment or transfer of all or any
portion of Senior Debt and that each holder of any portion of
Senior Debt shall be equally and ratably entitled to the
benefits of this Subordination Agreement. References herein to
any Loan Party shall include any successor to, or assign of
such Loan Party, including without limitation any
debtor-in-possession or trustee for any Loan Party in any
proceeding under the United States Bankruptcy Code.
(i) All notices, requests and demands hereunder shall be made (a)
to the Agent at the following office of the Agent:
Fleet Capital Corporation
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx 0000, XX 21
Xxxxxx, Xxxxx 00000
Attention: Loan Administration Manager
Facsimile Number: (000) 000-0000
With a copy to:
Gardere & Xxxxx, L.L.P.
0000 Xxx Xxxxxx
0000 Xxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxx
Facsimile Number: (000) 000-0000
and (b) to the Ramsay Affiliates at their office as follows:
SUBORDINATION AGREEMENT - PAGE 13
14
Xxxx Xxxxxx Holdings Pty. Limited
Ramsay Holdings HSA Limited
Xxxx Xxxxxx Hospitals Pty. Limited
000 Xxxxxxx Xxxxxxx, 0xx Xxxxx
Xx. Xxxxxxxx XXX 0000
Xxxxxxxxx
Attention: Secretary
Facsimile Number: 011-612-94-333-460
With a copy to:
Xxxxxx & Xxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Facsimile Number: (000) 000-0000
or in the case of either party to such other address and/or
facsimile number as such party may designate by written notice
to the other party in accordance with this provision, and (b)
deemed to have been given or made: if by hand, immediately
upon delivery; if by telex, telegram or telecopy (facsimile),
immediately upon receipt; if by overnight delivery service,
one (1) day after dispatch; and if by first class or certified
mail three (3) days after mailing postage paid.
(j) Except as provided in Section 18(h) as to successors and
assigns of Agent and/or any Lender, this Subordination
Agreement is not intended to and shall not create rights in
favor of any third party (including without limitation, any
Loan Party).
(k) This Subordination Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original
hereof and submissible in evidence and all of which together
shall be deemed to be a single instrument.
19. (a) PAYMENT-IN-KIND. Notwithstanding the foregoing, to the extent
the cash payment of any regularly scheduled interest with
respect to the Subordinated Notes or the cash payment of any
dividend with respect to the Preferred Stock is prohibited by
the terms of this Agreement such interest may be deferred by
Ramsay and paid in kind by adding such deferred interest to
the principal amount of the Subordinated Notes, or such
dividends may accrue with respect to the Preferred Stock, as
the case may be.
(b) ISSUANCE OF COMMON STOCK. Notwithstanding the foregoing but
subject to Section 10.1.11 of the Loan Agreement, Ramsay may,
at any time and from time to time, issue shares of its common
stock, $.01 par value per share ("Common Stock") upon the
conversion or exchange of the Preferred Stock and issue shares
of Common Stock in payment of principal and interest with
respect to the Subordinated Notes.
SUBORDINATION AGREEMENT - PAGE 14
15
(c) PERMITTED PAYMENTS AND PAYMENT BLOCKAGE. Notwithstanding the
foregoing, until the Agent shall have given the Ramsay
Affiliates written notice that a "Default" and/or an "Event of
Default" as those terms are defined in the Loan Agreement, has
occurred (a "Default Notice"), beginning November 1, 1999,
Ramsay may pay and the Ramsay Affiliates may receive and
retain (1) the regularly scheduled quarterly payments of
interest due under the Subordinated Notes as and when the same
become due and payable in accordance with the terms and
provisions thereof and (2) the regularly scheduled dividends
on (but not any redemption of) the Preferred Stock; provided
that, with respect to this clause (c) of Section 19, EBITDA
(as defined in the Loan Agreement) of Ramsay, on a
consolidated basis and calculated in the manner specified in
the Loan Agreement, for the twelve month period ending on the
last day of the calendar month immediately preceding such
interest and/or dividend payment date for which Agent and
Lenders have received the financial statements required by
clause (ii) of Section 8.1.3 of the Loan Agreement, is greater
than $7,800,000. Except as otherwise permitted by clauses (a)
and (b) of this SECTION 19, no payment, whether in cash,
securities or other property, shall be made by or on behalf of
any Loan Party on account of the principal of, premium, if
any, or interest on the Subordinated Debt or to defease,
redeem or acquire any of the Subordinated Debt or on account
of any fees and expenses relating to the Subordinated Debt or
on account of any other amount or obligation arising under or
by virtue of the Subordinated Debt during the period beginning
on the date that Agent delivers to any Ramsay Affiliate a
Default Notice and ending on the earliest of (A) the date that
all Senior Debt is paid in full in cash and the Loan Agreement
has been terminated, and (B) the date on which the "Default"
and/or "Event of Default", as defined in the Loan Agreement,
giving rise to such Default Notice is waived in writing by the
Lenders in accordance with the Loan Documents or cured to the
satisfaction of Agent, and Required Lenders, in their sole and
absolute discretion.
SUBORDINATION AGREEMENT - PAGE 15
16
IN WITNESS WHEREOF, the Ramsay Affiliates have executed this Subordination
Agreement as of the date first above written.
Xxxx Xxxxxx Holdings Pty. Limited
By:
------------------------------------
Name:
Title:
Ramsay Holdings HSA Limited
By:
------------------------------------
Name:
Title:
Xxxx Xxxxxx Hospitals Pty. Limited
By:
------------------------------------
Name:
Title:
SUBORDINATION AGREEMENT - SIGNATURE PAGE
17
ACCEPTED AND AGREED TO AS OF THE DATE FIRST ABOVE WRITTEN:
Fleet Capital Corporation, as Agent
By:
------------------------------------
Name: Xxxxxxxx Xxxxx
Title: Vice President
SUBORDINATION AGREEMENT - SIGNATURE PAGE
18
CONSENT
Each Loan Party acknowledges receipt of a copy of the foregoing
Subordination Agreement, consents to all of the terms and conditions thereof,
and agrees that it will not pay any Subordinated Debt, except as provided
therein. In the event of any breach of the provisions of this Subordination
Agreement, each Loan Party agrees that, in addition to any other rights and
remedies which Agent and/or any Lender may have under any of the Loan Documents,
the Agent may by written notice to the Loan Parties declare all of the Senior
Debt to be, and the same shall thereupon become, immediately due and payable
unless Requisite Lenders shall otherwise elect. Each Loan Party agrees to xxxx
its records to reflect the subordination of the Subordinated Debt.
Xxxxxxx Psychiatric Hospital, Inc.
Bountiful Psychiatric Hospital, Inc.
East Carolina Psychiatric Services Corporation
Great Plains Hospital, Inc.
Gulf Coast Treatment Center, Inc.
Havenwyck Hospital, Inc.
H.C. Corporation
HSA Hill Crest Corporation
HSA of Oklahoma, Inc.
Michigan Psychiatric Services, Inc.
Ramsay Educational Services, Inc.
Ramsay Health Care, Inc.
Ramsay Louisiana, Inc.
Ramsay Managed Care, Inc.
Ramsay Youth Services, Inc.
Ramsay Youth Services of Alabama, Inc.
Ramsay Youth Services of Florida, Inc.
Ramsay Youth Services of South Carolina, Inc.
RHCI San Antonio, Inc.
Transitional Care Ventures, Inc.
Transitional Care Ventures (Texas), Inc.
By:
---------------------------------------
Name: Xxxxx Xxxx
Title: Vice President
SUBORDINATION AGREEMENT - SIGNATURE PAGE
19
H.C. Partnership
By: H.C. Corporation, its General Partner
By: HSA Hill Crest Corporation, its
General Partner
By:
-----------------------------------
Name: Xxxxx Xxxx
Its: Vice President
SUBORDINATION AGREEMENT - SIGNATURE PAGE
20
EXHIBIT A
SUBORDINATED AGREEMENTS
SUBORDINATED NOTES
1. Junior Subordinated Loan and Exchange Agreement dated as of October 30,
1998, by and between Xxxx Xxxxxx Holdings Pty. Limited, an Australian
corporation, as purchaser, and Ramsay Health Care, Inc., a Delaware
corporation, as seller.
2. Junior Subordinated Promissory Note due September 30, 2006, executed by
Ramsay Health Care, Inc., a Delaware corporation, as maker, bearing
interest at an initial fixed rate of thirteen and one-half percent
(13 1/2%) per annum, and payable to the order of Xxxx Xxxxxx Holdings
Pty. Limited, an Australian corporation, in the original principal
amount of $5,330,428.00.
3. Junior Subordinated Promissory Note due September 30, 2005, executed by
Ramsay Health Care, Inc., a Delaware corporation, as maker, bearing
interest at a fixed rate of thirteen percent (13%) per annum, and
payable to the order of Xxxx Xxxxxx Holdings Pty. Limited, an
Australian corporation, in the original principal amount of
$2,553,125.00.
PREFERRED STOCK
4. Certificate of Incorporation of Ramsay Health Care, Inc., a Delaware
corporation, as amended.
5. Certificate of Designation of Preferred Stock of Ramsay Health Care,
Inc., a Delaware corporation, filed in the office of the Secretary of
State of The State of Delaware on September 13, 1997 with respect to
the Class B Preferred Stock, Series 1997-A and all Stock Certificates
evidencing such shares.
6. Certificate of Designation of Preferred Stock of Ramsay Health Care,
Inc., a Delaware corporation, filed in the office of the Secretary of
State of the State of Delaware on June 29, 1993 with respect to the
Class B Preferred Stock, Series C and all Stock Certificates evidencing
such shares.
7. Certificate of Designation of Preferred Stock of Ramsay Health Care,
Inc., a Delaware corporation, filed in the office of the Secretary of
State of the State of Delaware on March 13, 1997 with respect to the
Class B Preferred Stock, Series 1996 and all Stock Certificates
evidencing such shares.
