EXHIBIT 10.4
PLEDGE AND SECURITY AGREEMENT
Dated March 31, 1990
Between
BOUNTIFUL PSYCHIATRIC HOSPITAL, INC.
(the "Company")
And
THE CITIZENS AND SOUTHERN NATIONAL BANK,
as Trustee
(the "Secured Party")
TABLE OF CONTENTS
Section Page
Parties.............................................................1
Recitals............................................................1
1. PLEDGE AND DEPOSIT OF COLLATERAL...........................2
2. WARRANTIES.................................................2
3. FURTHER ASSURANCE..........................................3
4. ADMINISTRATION OF PLEDGED SECURITIES.......................3
5. DEFAULT AND REMEDIES.......................................5
6. THE SECURED PARTY..........................................6
7. MISCELLANEOUS.............................................10
Signatures.........................................................11
ATTACHMENTS TO PLEDGE AND SECURITY AGREEMENT:
Schedule 1 - Description of Pledged Capital Stock
-i-
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT dated March 31,
1990 (this "Security Agreement") is between Bountiful
Psychiatric Hospital, Inc., a Utah corporation (the
"Company") and The Citizens and Southern National Bank, a
national banking association, as trustee (the "Secured
Party").
R E C I T A L S:
A. The Company, Ramsay Health Care, Inc., a
Delaware corporation, Cumberland Mental Health, Inc., a
North Carolina corporation, East Carolina Psychiatric
Services Corporation, a North Carolina corporation,
Havenwyck Hospital, Inc., a Michigan corporation, Mesa
Psychiatric Hospital, Inc., an Arizona corporation, and
Psychiatric Institute Of West Virginia, Inc., a Virginia
corporation (collectively, the "Obligors"), have entered
into the separate Note Purchase Agreements dated as of
March 31, 1990 (the "Note Agreements") with the
institutional investors (the "Note Purchasers") named in the
Note Agreements providing for the commitment of the Note
Purchasers to purchase the 11.6% Senior Secured Notes due
March 31, 2000 in the aggregate principal amount of
$56,500,000 and the 15.6% Subordinated Secured Notes due
March 31, 2000 in the aggregate principal amount of
$3,000,000 constituting the joint and several obligations of
the Obligors (collectively, the "Notes"), which Notes the
Obligors are creating and issuing under and pursuant to that
certain Trust Indenture (the "Indenture") dated as of March
31, 1990 between the Obligors and The Citizens and Southern
National Bank and Xxxxx X. Xxxxx, as Trustees (the
"Trustees").
B. The Company is the owner of 100% of the
outstanding capital stock of Mesa Psychiatric Hospital, Inc.
(another joint and several Obligor on the Notes).
C. The Note Purchasers have required as a
condition of their purchase of the Notes that the Company
execute this Security Agreement as further security for the
Notes, and the Company is willing to execute this Security
Agreement.
D. The Company, on and as of the date of this
Agreement, owns 100% of the shares of outstanding capital
stock of the corporations named in Schedule 1 hereto; said
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shares being evidenced by securities more specifically
identified in Schedule 1 hereto.
NOW, THEREFORE, as one of the inducements to and
as part of the consideration for the purchase by the Note
Purchasers of the Notes and in consideration of the premises
and other good and valuable consideration, the receipt
whereof is hereby acknowledged:
SECTION 1. PLEDGE AND DEPOSIT OF COLLATERAL.
1.1 The Company does hereby pledge, assign and
deposit with the Secured Party, and grant the Secured Party
a security interest in, the shares of capital stock of the
corporations named in Schedule 1 hereto evidenced by the
certificates described in Schedule 1 hereto, together with
the proceeds thereof (hereinafter, together with any
additional collateral that may be deposited with the Secured
Party hereunder, called the "Pledged Securities").
This pledge, deposit and grant of a security
interest is made as and shall at all times constitute,
subject to Section 10 of the Indenture, equal and pro rata
security for the payment in full of all principal of,
premium, if any, and interest on the Notes, including any
and all extensions, renewals or refundings thereof in whole
or in part, and the performance and observance by the
Company of all covenants and conditions contained in the
Notes and the Note Agreements; and as security for all
expenses and charges, legal or otherwise, paid or incurred
by the Secured Party in realizing upon or protecting this
Security Agreement or the indebtedness hereby secured.
SECTION 2. WARRANTIES.
The Company hereby represents and warrants to the
Secured Party that:
(a) the pledged shares of capital stock described
in Schedule 1 hereto are all duly authorized, validly
issued, fully paid and nonassessable shares of the issuing
corporation and constitute all of the issued and outstanding
shares of capital stock, of any class, of each of such
issuing corporations;
(b) the Company is the owner of the Pledged
Securities and all rights incident thereto free and clear of
any lien, security interest or other claim thereto other
than the pledge and security interest made hereunder; and
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(c) the Pledged Securities have been duly
endorsed in blank or accompanied by an assignment or
assignments sufficient to transfer title thereto.
SECTION 3. FURTHER ASSURANCE.
The Company agrees on request of the Secured Party
to execute and deliver to the Secured Party such other
documents or instruments as shall be deemed necessary or
appropriate by the Secured Party to confirm unto the Secured
Party the pledge hereunder of the Pledged Securities. As and
when any other Pledged Securities shall come into the
possession of the Company or under its control, the Company
shall forthwith deposit and pledge the same with the Secured
Party, together with such proper instruments of assignment
and transfer as the Secured Party may reasonably require,
which shall include express authority to the Secured Party
to vote any shares of stock included therein to the extent
herein provided or permitted and to cause such authority to
be recorded in the entry of transfer of such stock on the
books of the corporation issuing the same.
SECTION 4. ADMINISTRATION OF PLEDGED SECURITIES.
4.1 Unless and until a Default or an Event of
Default, as defined in Section 6.1 of the Indenture, shall
have occurred and be continuing, the Company shall be
entitled:
(a) to vote all or any part of the Pledged
Securities at any and all meetings of shareholders of the
corporations which have issued the Pledged Securities and to
execute consents in respect thereof, and to consent to,
ratify or waive notice of any or all meetings of the
shareholders with the same force and effect as if this
Security Agreement had not been made, and, if necessary and
upon the receipt of the written request from the Company,
the Secured Party shall from time to time execute and
deliver to the Company appropriate powers of attorney or
proxies for that purpose, provided that without the prior,
written consent of the Secured Party, the Company shall not
be entitled to exercise any consensual right or power to
convert or exchange any debt security pledged hereunder for
any other "security" as defined in Section 2(1) of the
Securities Act of 1933, as amended; and
(b) to receive, collect or to have paid over all
dividends or interest declared or paid on the Pledged
Securities, except (i) dividends or distributions
constituting stock dividends, (ii) dividends or
distributions in kind, or (iii) liquidating dividends
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(either partial or complete), any and all such excepted
dividends and distributions to constitute and be additional
security for the purposes aforesaid and to be paid over
and/or pledged and deposited with the Secured Party and the
Secured Party shall have in respect thereof all of the
powers and rights as are herein provided in respect of the
initial Pledged Securities.
4.2 The Company shall pay over to the Secured
Party, immediately upon receipt, any money or other
distribution upon or in respect of the Pledged Securities or
any part thereof, other than dividends or interest which the
Company is entitled to receive or retain under Section
4.1(b).
4.3 All payments or other distributions received
by the Company upon or in respect of the Pledged Securities
other than dividends or interest which the Company is
entitled to receive and retain under Section 4.1(b) shall be
held in trust for the Secured Party and forthwith delivered
by the Company in the form received, with the Company's
endorsement in blank for transfer or accompanied by an
assignment or assignments sufficient to transfer title
thereto, and shall constitute part of the Pledged
Securities.
4.4 Except as set forth in clause (i) of this
Section 4.4, the Secured Party may at any time (i) only so
long as a Default or an Event of Default shall have occurred
and be continuing, cause any Pledged Securities to be
registered in its or its nominee's name with or without any
indication of pledge or security interest, (ii) file
financing statements with respect to any Pledged Securities
without the signature of the Company, and (iii) deliver any
of the Pledged Securities to the Company for a period of not
more than 21 days or to the Issuer thereof for the purpose
of making exchanges or registrations or transfers or for
such other purposes in furtherance of the security interest
in the Pledged Securities as the Secured Party may deem
advisable.
4.5 The Company hereby appoints the Secured Party
the attorney-in-fact of the Company for the purpose of
carrying out the provisions of this Security Agreement and
taking any action and executing or completing any
instruments which the Secured Party may deem necessary or
advisable to accomplish the purpose hereof, which
appointment as attorney in-fact is irrevocable and coupled
with an interest; provided, however, that the Secured Party
shall have no duty or obligation to the Company or the
holders of the Notes to collect or enforce payment of any of
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the Pledged Securities or any claims for interest thereon
whether by way of presentment, demand, protest, notice of
dishonor or otherwise. Without limiting the generality of
the foregoing, in the event that a Default or an Event of
Default shall have occurred and be continuing the Secured
Party shall have the right and power to receive, endorse and
collect all checks made payable to the order of the Company
representing payments of principal, interest or any other
distribution or payment in respect of the Pledged Securities
or any part thereof and to give full discharge for the same.
SECTION 5. DEFAULT AND REMEDIES.
5.1 The Company acknowledges and agrees that the
term Event of Default wherever used in this Security
Agreement shall mean an Event of Default as defined in
Section 6.1 of the Indenture.
5.2 If an Event of Default shall occur and be
continuing, the Secured Party shall have all the rights,
remedies and options of a secured party under the Illinois
Uniform Commercial Code in respect to the Pledged Securities
and, upon, but only upon, the written direction of the
Required Holders, shall
(a) without demand on the Company or anyone, at
any time or from time to time thereafter, upon ten days
advance notice to the Company setting forth the time and
place of such sale, sell, free from any equity of redemption
in or of the Company (any such right of equity being, to the
extent permitted by applicable law, hereby expressly waived
and released), the Pledged Securities or any part thereof at
any brokers' board or at public or private sale. The Secured
Party is authorized at any sale or other disposition of the
Pledged Securities, if it deems it advisable to do so, to
restrict the prospective bidders or purchasers to persons
who will represent and agree that they are purchasing for
their own account for investment and not with a view to the
distribution or resale of any of the Pledged Securities.
Without limiting any of the other provisions hereof, the
Secured Party at any such sale or sales may sell all the
Pledged Securities as a unit even though the sale price
thereof may be in excess of the amount remaining unpaid on
the indebtedness hereby secured. No notice or advertisement
of any sale or sales (whether or not adjournments of such
sale occur) need be given other than as hereinabove provided
for, and any such sale or sales may be adjourned from time
to time by announcement at the time and place of such sale
or at the time and place appointed for any adjourned sale or
sales. Any sale or sales shall be for cash and may be upon
such other terms and at such price or prices as may be
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acceptable to the Secured Party. The Secured Party or the
holder of any Note may purchase the Pledged Securities or
any part thereof at any sale or sales, and for the purpose
of making settlement for or payment of the purchase price,
shall be entitled to turn in and use the Note or Notes and
any claims for interest matured and unpaid thereon, in order
that there may be credited as paid on the purchase price the
sum apportionable and applicable to the Notes so turned in,
including principal and interest thereof, out of the net
proceeds of such sale after allowing for the proportion of
the total purchase price required to be paid in actual cash;
(b) revoke all powers of attorney and proxies
which the Secured Party may have delivered to the Company
pursuant to Section 4.1(a) and shall vote and exercise, or
cause the nominee or nominees of the Secured Party to vote
and exercise, such powers of an owner with respect to any
Pledged Securities as the holders of 51% or more in
aggregate principal amount of the outstanding Notes shall
direct; and
(c) exercise any other rights or remedies now or
hereafter existing at law or in equity or by statute.
5.3 The proceeds of any sale of or other
realization upon all or any part of the Pledged Securities,
and any other cash at the time held by the Secured Party
under this Security Agreement, shall be paid to the Trustees
under the Indenture and such Trustees shall apply such
proceeds in the manner provided in Section 6.10 of the
Indenture.
5.4 The satisfaction or performance of any part
of the indebtedness hereby secured shall not affect the
security hereby afforded or intended to be afforded for any
other indebtedness hereby secured; but the pledge hereby
made shall at all times remain in full force and effect for
the benefit of all indebtedness hereby secured until all
such indebtedness is fully satisfied.
SECTION 6. THE SECURED PARTY.
The Citizens and Southern National Bank accepts
the duties and responsibilities of the Secured Party
hereunder on and subject to the following terms and
conditions:
6.1 Except during the continuance of an Event of
Default known to the Secured Party, the Secured Party
undertakes to perform such duties and only such duties as
are specifically set forth in this Security Agreement, and
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no implied covenants or obligations shall be read into this
Security Agreement against the Secured Party.
6.2 In case an Event of Default has occurred and
is continuing to the knowledge of the Secured Party, the
Secured Party shall exercise such of the rights and power
vested in it by this Security Agreement and use the same
degree of care and skill in its exercise as an ordinary
prudent man would exercise or use under the circumstances in
the conduct of his own affairs.
6.3 No provision of this Security Agreement shall
be construed to relieve the Secured Party from liability for
its own negligent action, negligent failure to act, or
wilful misconduct, except that:
(a) this Section shall not be construed to limit
the effect of Section 6.1;
(b) the Secured Party may consult with counsel
selected by the Secured Party and the advice or opinion of
such counsel on legal matters shall be full and complete
authorization and protection in respect of any action taken
or suffered hereunder in good faith and in accordance with
such advice or opinion of counsel;
(c) the Secured Party shall not be liable with
respect to any action taken or omitted to be taken by the
Secured Party in good faith in accordance with any direction
or request of the Required Holders with which the Secured
Party is required by the provisions hereof to comply;
(d) the Secured Party shall not be liable for any
error of judgment made in good faith by any of its officers
unless it shall be proved that the Secured Party was
negligent in ascertaining the pertinent facts;
(e) in the absence of bad faith on its part, the
Secured Party may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon any note, notice, resolution, consent,
certificate, affidavit, letter, telegram, teletype message,
statement, order, or other document believed by it to be
genuine and correct and to have been signed or sent by the
proper person or persons; but upon receipt of instruments
furnished to the Secured Party pursuant to the provisions of
this Security Agreement, the Secured Party shall examine the
same to determine whether or not such instruments conform to
the requirements of this Security Agreement.
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(f) no provision of this Security Agreement shall
require the Secured Party to expend or risk its own funds or
otherwise incur any financial liability in the performance
of any of its duties hereunder or in the exercise of any of
its rights or powers, if it shall have reasonable grounds
for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably
assured to it; and
(g) the Secured Party shall not be deemed to have
knowledge of any Event of Default unless and until an
officer of the corporate trust department of the Secured
Party who customarily handles corporate trusts shall have
actual knowledge thereof or the Secured Party shall have
received written notice thereof from a Noteholder.
6.4 The Secured Party shall not be responsible
for the correctness of the recitals and statements herein.
6.5 The Secured Party shall not be responsible
for the validity, genuineness or effectiveness of any
collateral given to or held by it or the effectiveness of
the Pledge Agreements and the security interest purported to
be created thereby.
6.6 The Secured Party and any affiliated
corporation may become the owner of any Note hereby secured
and be interested in any financial transaction with the
Company, and the Secured Party may act as depositary or
otherwise in respect to other securities of the Company, all
with the same rights which it would have if not the Secured
Party.
6.7 The Secured Party may resign and be
discharged of the trusts created by mailing notice
specifying the date when such resignation shall take effect
to the Company and to the holders of the Notes. Such
resignation shall take effect on the day specified in such
notice (being not less than 60 days after the mailing of
such notice) unless previously a successor secured party
shall have been appointed as hereinafter provided, in which
event such resignation shall take effect immediately upon
the appointment of such successor.
The Secured Party may be removed and/or a
successor secured party may be appointed at any time by an
instrument or concurrent instruments in writing signed and
acknowledged by the Required Holders and delivered to the
Secured Party and to the Company and, in the case of
appointment of a successor secured party, to such successor
secured party.
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Any successor secured party shall be a state or
national bank or trust company in good standing, organized
under the laws of the United States of America or of any
State thereof, having capital, surplus and undivided profits
aggregating at least $100,000,000, if there be such a bank
or trust company willing and able to accept this trust upon
reasonable and customary terms.
6.8 Every successor secured party appointed
hereunder shall execute, acknowledge and deliver to its
predecessor and also to the Company, an instrument in
writing accepting such appointment hereunder, and thereupon
such successor secured party without any further act, deed
or conveyance, shall become fully vested with all the
estates, properties, rights, powers, trusts, duties and
obligations of its predecessor; but such predecessor shall,
nevertheless, on the written request of the Company, or of
any successor secured party, execute and deliver an
instrument transferring to such successor secured party all
the estates, properties, rights, titles, powers and trusts
of such predecessor hereunder. Should any deed, conveyance
or instrument in writing from the Company be required to
more fully and certainly vest in such successor secured
party the estates, rights, titles, powers and duties hereby
vested, any and all such instruments in writing shall, on
request of the successor secured party, be executed,
acknowledged and delivered by the Company.
6.9 The Secured Party shall be entitled to
reasonable compensation (which shall not be limited by any
provision of law in regard to the compensation of a trustee
of an express trust) for all services rendered, and to
reimbursement for all reasonable expenses, disbursements and
advances incurred or made by it in and about the admini
stration of the trusts herein provided for and in and about
foreclosure, enforcement or other protection of this
Security Agreement or the security interest hereof
(including reasonable compensation and expenses and
disbursements of its counsel and of all persons not
regularly in its employ). The Company agrees to pay such
compensation for services of the Secured Party and to
reimburse it for such expenses, disbursements and advances
and to indemnify and save harmless the Secured Party from
and against all loss, liability and expense incurred in good
faith and without negligence on its part in the exercise or
performance of any rights, remedies or duties under this
Security Agreement; and the Secured Party agrees to look
solely to the Company for such payments and indemnification.
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SECTION 7. MISCELLANEOUS.
7.1 Whenever any of the parties hereto is
referred to, such reference shall be deemed to include the
successors and assigns of such party; and all the covenants,
promises and agreements in this Security Agreement contained
by or on behalf of the Secured Party, shall bind and inure
to the benefit of the respective successors and assigns of
such parties whether so expressed or not.
7.2 The unenforceability or invalidity of any
provision or provisions of this Security Agreement shall not
render any other provision or provisions herein contained
unenforceable or invalid.
7.3 The Secured Party shall release this Security
Agreement and the lien hereof by proper instrument or
instruments upon presentation of satisfactory evidence that
all indebtedness hereby secured has been fully paid or
discharged.
7.4 Any term, covenant, agreement or condition of
this Security Agreement may be amended or compliance
therewith may be waived (either generally or in a particular
instance and either retrospectively or prospectively) by an
instrument in writing executed by the Company and the
Secured Party, if the Company shall have obtained and filed
with the Secured Party the consent in writing of the
Required Holders.
7.5 All notices or other communications required
or contemplated by the provisions hereof shall, unless
otherwise specified, be in writing or by direct telex-to
telex, and shall be deemed to have been given or made on the
fourth Business Day after deposit thereof in the United
States mail, first class postage prepaid, or when received
if sent by facsimile communication or delivered by hand or
by overnight courier, addressed as follows:
If to the Company: One Poydras Plaza
000 Xxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxx 00000
If to the Secured Party: 00 Xxxxx Xxxxxx, X.X.,
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Corporate Trust
Department
Fax No.: (000) 000-0000
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If to any holder of Notes: at its address for notices
provided for in the Note
Agreements.
or to any such party at such other address as such party may
designate by notice duly given in accordance with this
Section to other parties.
7.6 This Security Agreement shall be governed by
and construed in accordance with the laws of the State of
Illinois.
7.7 This Security Agreement may be executed,
acknowledged and delivered in any number of counterparts,
each of such counterparts constituting an original but all
together only one Security Agreement.
IN WITNESS WHEREOF, the parties hereto have caused
this Security Agreement to be duly executed, all as of the
day and year first above written.
BOUNTIFUL PSYCHIATRIC HOSPITAL,
INC.
By_______________________________
Its President
ATTEST:
____________________________
Assistant Secretary
THE CITIZENS AND SOUTHERN NATIONAL
BANK, Secured Party as aforesaid
By_________________________________
Its Corporate Trust Officer
DESCRIPTION OF PLEDGED CAPITAL STOCK
Certificate No. of
Issuing Corporation No. Shares Issued in the Name of
Mesa Psychiatric 2 800 Bountiful Psychiatric
Hospital, Inc. Hospital, Inc.
SCHEDULE 1
to
PLEDGE AND SECURITY AGREEMENT
