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EXHIBIT 10.145
EXECUTION COUNTERPART
THIS AMENDED AND RESTATED SUBORDINATED NOTE AND WARRANT PURCHASE AGREEMENT IS
SUBJECT TO THAT CERTAIN SUBORDINATION AGREEMENT, DATED AS OF THE DATE HEREOF,
AMONG RAMSAY YOUTH SERVICES, INC., THE GUARANTORS, SUNTRUST BANKS, INC., ING
(U.S.) CAPITAL, LLC AND FLEET CAPITAL CORPORATION, AS AGENT, AS AMENDED FROM
TIME TO TIME.
AMENDED AND RESTATED SUBORDINATED NOTE
AND WARRANT PURCHASE AGREEMENT
Dated as of June 19, 2000
by and among
RAMSAY YOUTH SERVICES, INC.,
as the Company,
THE SUBSIDIARIES OF THE COMPANY SET FORTH
ON THE SIGNATURE PAGES HERETO,
as Guarantors
and
SUNTRUST BANKS, INC.,
and
ING (U.S.) CAPITAL, LLC
as the Purchasers
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TABLE OF CONTENTS
ARTICLE 1. DEFINITIONS............................................................................................1
Section 1.1 Definitions..........................................................................1
ARTICLE 2. ISSUANCE AND PURCHASE OF NOTE AND WARRANT.............................................................11
Section 2.1 Authorization of Issuance of SunTrust Notes and Warrants............................11
Section 2.2 Purchase and Sale of SunTrust Note and Warrants.....................................12
Section 2.3 Authorization of Issuance of ING Notes and Warrants.................................12
Section 2.4 Purchase and Sale of ING Note and Warrants..........................................12
Section 2.5 Allocation of Purchase Price........................................................12
Section 2.6 Interest on the Notes...............................................................12
Section 2.7 Amortization and Maturity of Notes; Prepayments; Funding Losses.....................13
ARTICLE 3. OTHER PROVISIONS RELATING TO THE NOTES................................................................14
Section 3.1 Making of Payments..................................................................14
Section 3.2 Increased Costs.....................................................................14
Section 3.3 Capital Adequacy....................................................................15
Section 3.4 Default Rate of Interest............................................................15
Section 3.5 Calculation of Interest.............................................................15
Section 3.6 Usury...............................................................................16
ARTICLE 4. GUARANTY..............................................................................................16
ARTICLE 5. CONDITIONS PRECEDENT TO PURCHASE OF THE NOTES AND THE WARRANTS........................................18
Section 5.1 Closing Date Conditions.............................................................18
ARTICLE 6. REPRESENTATIONS AND WARRANTIES........................................................................21
Section 6.1 Representations and Warranties Generally............................................21
6.1.1 Corporate Existence; Subsidiaries.....................................................21
6.1.2 Authorization; No Conflict............................................................21
6.1.3 Approvals.............................................................................21
6.1.4 Tax Returns; Status...................................................................21
6.1.5 Binding Obligations...................................................................22
6.1.6 Litigation............................................................................22
6.1.7 No Defaults...........................................................................22
6.1.8 No Material Restrictions..............................................................22
6.1.9 Information...........................................................................22
6.1.10 Financial Statements..................................................................23
6.1.11 Title to Properties...................................................................23
6.1.12 Compliance with Laws..................................................................24
6.1.13 Possession of Franchises, Licenses, Etc...............................................24
6.1.14 Insurance.............................................................................24
6.1.15 Federal Reserve Regulations...........................................................24
6.1.16 Material Contracts....................................................................24
6.1.17 ERISA.................................................................................24
6.1.18 Broker's Fees.........................................................................25
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6.1.19 Offering of Notes and Warrants........................................................25
6.1.20 Registration Rights...................................................................25
6.1.21 Solvency..............................................................................25
6.1.22 Continuing Business of Company........................................................25
6.1.23 Year 2000 Compliance..................................................................26
6.1.24 Disclosure............................................................................26
Section 6.2 Representations and Warranties of each Purchaser....................................26
ARTICLE 7. AFFIRMATIVE COVENANTS.................................................................................27
Section 7.1 Preservation of Corporate Existence.................................................27
Section 7.2 Compliance with Laws................................................................27
Section 7.3 Maintenance of Insurance............................................................28
Section 7.4 Visitation Rights...................................................................28
Section 7.5 Records and Accounts................................................................28
Section 7.6 Payment of Debts, Taxes.............................................................28
Section 7.7 Further Assurances..................................................................29
Section 7.8 Maintenance of Properties...........................................................29
Section 7.9 Business............................................................................29
Section 7.10 Reporting Covenants.................................................................29
Section 7.11 Use of Proceeds.....................................................................31
Section 7.12 Compliance with Material Contracts..................................................31
ARTICLE 8. NEGATIVE COVENANTS....................................................................................31
Section 8.1 Liens and Other Encumbrances........................................................31
Section 8.2 Investments.........................................................................31
Section 8.3 Merger and Sale of Assets...........................................................32
Section 8.4 Creation or Issuance of Stock by Subsidiaries.......................................32
Section 8.5 Transactions with Affiliates........................................................32
Section 8.6 Debt................................................................................33
Section 8.7 Lease Obligations...................................................................33
Section 8.8 Restricted Payments.................................................................34
Section 8.9 Sale and Leasebacks.................................................................34
Section 8.10 Sale or Discount of Receivables.....................................................34
Section 8.11 Compliance with ERISA...............................................................34
Section 8.12 Financial Covenants.................................................................34
Section 8.13 Fiscal Year.........................................................................34
Section 8.14 Modifications to Material Contracts.................................................34
Section 8.15 Inconsistent Agreement..............................................................34
Section 8.16 No Repurchase Agreements............................................................35
ARTICLE 9. EVENTS OF DEFAULT.....................................................................................35
Section 9.1 Events of Default...................................................................35
Section 9.2 Remedies on Default.................................................................37
ARTICLE 10. MISCELLANEOUS........................................................................................37
Section 10.1 Notices.............................................................................37
Section 10.2 No Waiver...........................................................................39
Section 10.3 Expenses............................................................................39
Section 10.4 Amendments, Etc.....................................................................40
Section 10.5 Successors and Assigns..............................................................40
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Section 10.6 GOVERNING LAW.......................................................................40
Section 10.7 Survival of Representations and Warranties..........................................40
Section 10.8 Severability........................................................................40
Section 10.9 Counterparts........................................................................41
Section 10.10 Set-Off...............................................................................41
Section 10.11 Termination of Agreement..............................................................41
Section 10.12 JURISDICTION AND VENUE................................................................41
Section 10.13 WAIVER OF JURY TRIAL..................................................................41
Section 10.14 Entire Agreement......................................................................42
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EXHIBITS AND SCHEDULES
Exhibit A - Form of Note
Exhibit B - Form of Warrant Agreement
Exhibit C - Form of Warrant
Exhibit D - Form of Registration Rights Agreement
Exhibit E - Compliance Certificate As To Financial Covenants
Exhibit F - Subordination Agreement
Schedule 6.1.1 - Subsidiaries
Schedule 6.1.6 - Litigation
Schedule 6.1.16 - Material Contracts
Schedule 6.1.20 - Registration Rights
Schedule 8.4 - Issuance of Stock
Schedule 8.6 - Existing Debt
Schedule 8.9 - Sale/Leaseback Agreement
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AMENDED AND RESTATED SUBORDINATED NOTE
AND WARRANT PURCHASE AGREEMENT
THIS AMENDED AND RESTATED SUBORDINATED NOTE AND WARRANT PURCHASE
AGREEMENT dated as of June 19, 2000 by and between RAMSAY YOUTH SERVICES, INC.,
a corporation organized under the laws of the State of Delaware, as issuer of
the Notes and the Warrants (the "COMPANY"), each of the subsidiaries of the
Company listed on the signature pages hereto, as guarantors (individually, a
"GUARANTOR" and, collectively, the "GUARANTORS"), SUNTRUST BANKS, INC.,
("SUNTRUST"), ING (U.S.) CAPITAL, LLC ("ING"; ING and SunTrust individually a
"PURCHASER" and collectively the "PURCHASERS").
WHEREAS, the Company has previously entered into that certain
Subordinated Note and Warrant Purchase Agreement, dated as of January 25, 2000,
by and among the Company, the Guarantors and SunTrust (the "ORIGINAL NOTE
PURCHASE AGREEMENT"), pursuant to which SunTrust made a $5,000,000 subordinated
debt investment in the Company and purchased warrants for 475,000 shares of
Common Stock of the Company;
WHEREAS, the Company has requested that ING make a certain subordinated
debt investment in the Company, the proceeds of which will be used by the
Company to effect acquisition and expansion, to pay related fees and expenses,
and for general corporate purposes;
WHEREAS, ING has agreed to make a $5,000,000 subordinated debt
investment in the Company on the terms and subject to the conditions set forth
herein, such investment to be evidenced by subordinated notes in such amount
from the Company and certain warrants issued by the Company as more fully
described below;
WHEREAS, the Company has previously entered into that certain Loan and
Security Agreement, dated as of October 30, 1998, as amended, by and among the
Company (formerly known as Xxxxxx Health Care, Inc.), various subsidiaries of
the Company (such subsidiaries and the Company, collectively the "Borrowers"),
Fleet Capital Corporation, as Agent (in such capacity, the "Agent") for the
lenders party thereto (the "Senior Lenders") and the Senior Lenders, pursuant to
which the Borrowers may borrow up to $22,000,000.
NOW, THEREFORE, for and in consideration of the mutual premises,
covenants and conditions contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, agree to amend and restate the
Original Note Purchase Agreement as follows:
ARTICLE 1.
DEFINITIONS
SECTION 1.1 DEFINITIONS. In addition to the other terms defined herein, the
following terms used herein shall have the meanings herein specified (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
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"ADJUSTED NET EARNINGS FROM OPERATIONS (OR LOSS)" shall mean, with
respect to any fiscal period, the net earnings (or loss) after provision for
income taxes for such fiscal period of the Company, as reflected on the
financial statement of the Company supplied to the Purchasers pursuant to
SECTION 7.10, but excluding:
(i) any gain or loss arising from the sale of capital assets;
(ii) any gain or loss arising from any write-up or write-down
of assets;
(iii) earnings of any subsidiary of the Company accrued prior
to the date it became a Subsidiary;
(iv) earnings of any corporation, substantially all the assets
of which have been acquired in any manner by the Company or any Subsidiary of
the Company, realized by such corporation prior to the date of such acquisition;
(v) net earnings of any business entity (other than a domestic
Subsidiary of the Company) in which the Company has an ownership interest unless
such net earnings shall have actually been received by the Company in the form
of cash distributions;
(vi) any portion of the net earnings of any Subsidiary of the
Company which for any reason (other than the provisions of this Agreement) is
unavailable for payment of dividends to the Company;
(vii) any restoration to income of any reserve;
(viii) the earnings of any Person to which any assets of any
Consolidated Company shall have been sold, transferred or disposed of, or into
which such Consolidated company shall have merged, or been a party to any
consolidation or other form of reorganization, prior to the date of such
transaction;
(ix) any gain arising from the acquisition of any Securities
by any Borrower;
(x) the effect of the application of the rules of Purchase
Accounting (as set forth in APB No. 16, as amended); and
(xi) 1998 year end accruals arising from asset purchase price
adjustments related to the West Virginia University Hospitals Sale and the
Charter Sale;
(xii) any gain from extraordinary or non-recurring items.
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"AFFILIATE" shall mean with respect to any Person (the "Specified
Person"), any Person other than the Specified Person directly or indirectly
controlling, controlled by or under direct or indirect common control with, the
Specified Person. For purposes of this definition, the term "control" when used
with respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, partnership
interests, by contract or otherwise; PROVIDED that the holding by Purchasers of
the Warrants (or the Stock into which such Warrants are converted) shall not be
deemed to constitute any Purchaser as an Affiliate of the Company hereunder.
"AGENT" shall have the meaning given to such term in the recitals
hereof, or any successor thereof.
"AGREEMENT" shall mean this Amended and Restated Subordinated Note and
Warrant Purchase Agreement, as the same may be amended, restated, supplemented
or modified from time to time in accordance with the terms hereof.
"AMORTIZATION" shall mean, for any period, all amortization expense of
the Consolidated Companies determined on a consolidated basis in accordance with
GAAP.
"APPLICABLE LAW" shall mean all applicable provisions of constitutions,
statutes, rules, regulations and orders of all governmental bodies and all
orders and decrees of all courts, tribunals and arbitrators.
"BANKRUPTCY CODE" shall mean The Bankruptcy Code of 1978, as amended
and in effect from time to time (11 X.X.X.xx. 101 ET SEQ.).
"BUSINESS DAY" shall mean any day on which commercial banks located in
Atlanta, Georgia are required or permitted by law to be open for the purpose of
conducting a commercial banking business.
"CAPITAL LEASE" shall mean, as applied to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee which would,
in accordance with GAAP, be required to be classified and accounted for as a
capital lease on a balance sheet of such Person, other than, in the case of the
Company or a Subsidiary, any such lease under which the Company or a wholly
owned Subsidiary is the lessor.
"CAPITAL LEASE OBLIGATION" shall mean, with respect to any Capital
Lease, the amount of the obligation of the lessee thereunder which would, in
accordance with GAAP, appear on a balance sheet of such lessee in respect of
such Capital Lease.
"CHANGE IN CONTROL" shall mean (a) any "person" or "group", other than
members of the Controlling Shareholder Group, becoming the "beneficial owner(s)"
(within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934, as amended, and the applicable rules and regulations thereunder) of
shares of Stock of the Company which entitle the holder thereof to control more
than fifty percent (50%) of all voting rights with respect to all shares of
Stock of the Company (excluding preferred stock) without the approval in advance
of the board of directors of the Company; (b) approval by the stockholders of
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the Company of a merger, reorganization, consolidation, exchange of shares,
recapitalization, restructuring or other business combination which could result
in the occurrence of any event described in clause (a) of this definition or any
"person" or "group", other than members of the Controlling Shareholder Group,
becoming the "beneficial owner(s)" (within the meaning of Sections 13(d) and
14(d)2 of the Securities Exchange Act of 1934, as amended, and the applicable
rules and regulations thereunder) of shares of Stock of the surviving
corporation which entitle the holder thereof to control more than fifty percent
(50%) of all voting rights with respect to all shares of Stock of the surviving
corporation (excluding preferred stock) without the approval in advance of the
board of directors of the Company; (c) sale of all or substantially all of the
Company's assets; (d) any Controlling Shareholder or any member of the
Controlling Shareholder's Group selling or otherwise transferring shares of
Stock of the Company held by such Controlling Shareholder or member of the
Controlling Shareholder Group on the SunTrust Closing Date other than in
connection with a Permitted Transfer; (e) any recapitalization occurring in
which any dividends or other distributions, direct or indirect, on account of
any shares of the Stock of the Company or any of the Subsidiaries are not paid
to the Purchasers on a PARI PASSU basis with all other shareholders of the
Company as if the Warrants had been exercised for or converted into Stock; or
(f) after any transaction not approved in advance by the board of directors of
the Company, the Company's Common Stock is no longer required to be registered
under Section 12 of the Exchange Act.
"CHARTER SALE" shall mean, the sale by the Company to Charter
Behavioral Health Systems, LLC and affiliates of the Company's contract
management business and Bayou Oaks, Coastal Carolina, The Haven and Desert Vista
psychiatric hospitals and certain transitional care units and other assets
pursuant to that certain Purchase Agreement and purchase and sale contracts of
even date therewith between the Company and Charter Behavioral Health Systems,
LLC and the other parties thereto dated as of June 24, 1998, as amended by
Amendment No. 1 dated as of September 30, 1998.
"CLOSING DATE" shall mean, with respect to SunTrust, the SunTrust
Closing Date or, with respect to ING, the ING Closing Date.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and the rulings issued thereunder.
"COMMON STOCK" shall mean the Common Stock, par value $0.01 per share,
of the Company.
"COMPANY" has the meaning set forth in the introductory paragraph
hereof and shall include the Company's successors and assigns.
"CONSOLIDATED" shall mean consolidation in accordance with GAAP of the
accounts or other items as to which such term applies.
"CONSOLIDATED COMPANIES" shall mean, collectively, the Company and all
of its Subsidiaries, and "Consolidated Company" shall mean, individually, the
Company or any of its Subsidiaries.
"CONTROLLING SHAREHOLDER" shall mean Xxxx X. Xxxxxx.
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"CONTROLLING SHAREHOLDER GROUP" shall mean, collectively, (i) the
Controlling Shareholder, (ii) any lineal descendants (by birth or adoption) and
spouse, (iii) any trusts established for the sole benefit of the foregoing, (iv)
any charitable organization and (v) any Affiliate of the Controlling
Shareholder.
"DEBT" of any Person shall mean, without duplication, (i) indebtedness
of such Person for borrowed money or for the deferred purchase price of property
or services (other than trade accounts payable on customary terms in the
ordinary course of business), (ii) financial obligations of such Person
evidenced by bonds, debentures, notes or similar instruments, (iii) Capital
Lease Obligations, (iv) all obligations of such Person under conditional sale or
other title retention agreements relating to property or assets purchased by
such Person, (v) any obligation or liability of others secured by a Lien (or for
which the holder of such Debt has an existing right, contingent or otherwise, to
be secured by any Lien) on property or assets owned or acquired by such Person,
(vi) all obligations of such Person in respect of interest rate protection
agreements, foreign currency exchange agreements or other interest or exchange
rate hedging agreements, (vii) any letter of credit issued for such Person or
its Subsidiaries as account debtor, or (viii) all obligations under direct or
indirect Guaranties in respect of, and obligations (contingent or otherwise) to
purchase or otherwise acquire, or otherwise to assure a creditor against loss in
respect of obligations of other Persons of the kinds referred to above.
"DEFAULT" shall mean any event that, with notice or lapse of time or
both, would constitute an Event of Default.
"DEPRECIATION" shall mean, for any period, all depreciation expense of
the Consolidated Companies determined on a consolidated basis in accordance with
GAAP.
"DOLLAR" and the sign "$" shall mean the lawful money of the United
States of America.
"EBIT" shall mean, with respect to any fiscal period, the Consolidation
Adjusted Net Earnings From Operations (or Loss) of the Company, before Interest
Expense and taxes for such period as determined in accordance with GAAP,
excluding the impact, if any, from purchase accounting.
"EBITDA" with respect to any fiscal period shall mean EBIT PLUS
Depreciation and Amortization expense for such period.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA AFFILIATE" shall mean any trade or business (whether or not
incorporated) which, together with the Company, is treated as a single employer
under Section 414(b), (c), (m) or (o) of the Code.
"EVENT OF DEFAULT" means any of the events specified in SECTION 9.1
hereof.
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"GAAP" shall mean generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or any successor
authority) that are applicable to the circumstances as of the date of
determination, consistently applied and maintained through the periods
indicated.
"GUARANTY" shall mean any contractual obligation, contingent or
otherwise, of a Person with respect to any Debt or other obligation or liability
of another Person, including without limitation, any such Debt, obligation or
liability directly or indirectly guaranteed, endorsed, co-made or discounted or
sold with recourse by that Person, or in respect of which that Person is
otherwise directly or indirectly liable, including contractual obligations
(contingent or otherwise) arising through any agreement to purchase, repurchase,
or otherwise acquire such Indebtedness, obligation or liability or any security
therefor, or any agreement to provide funds for the payment or discharge thereof
(whether in the form of loans, advances, stock purchases, capital contributions
or otherwise), or to maintain solvency, assets, level of income, or other
financial condition, or to make any payment other than for value received. The
amount of any Guaranty shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which guaranty is
made or, if not so stated or determinable, the maximum reasonably anticipated
liability in respect thereof (assuming such Person is required to perform
thereunder) as determined by such Person in good faith.
"ING CLOSING DATE" shall mean June 19, 2000 or such later date that the
conditions set forth in SECTIONS 5.1 and 5.2 hereof are met.
"ING FACILITY FEE" shall mean the non-refundable facility fee payable
by the Company to ING in accordance with the terms of the commitment letter
executed by ING and the Company.
"ING NOTE" shall mean the subordinated promissory note issued by the
Company to ING pursuant to SECTION 2.3 or any other provision hereof, in
substantially the form of EXHIBIT A hereto, maturing on the Maturity Date, or
such earlier date as provided herein, at which time all principal, interest and
other amounts owing hereunder shall be due and payable in full, and bearing
interest as set forth in this Agreement, and each Note delivered in
substitution, amendment, modification, extension or exchange for any such Note
pursuant to the provisions of this Agreement.
"ING WARRANT AGREEMENT" shall mean that certain Warrant Agreement,
dated as of the date hereof, between the Company and ING in its capacity as
holder of the ING Warrant, in substantially the form of EXHIBIT B-2 hereto,
together with all the amendments and modifications thereto.
"ING WARRANT" shall mean the warrant to acquire 475,000 shares of
Common Stock to be issued and delivered to ING on the ING Closing Date, in the
form of Exhibit C-2, and each common stock purchase warrant issued and delivered
in substitution or exchange for any ING Warrant.
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"INTEREST EXPENSE" shall mean, for any period, all interest expense of
the Consolidated Companies (including without limitation, interest expense
attributable to capitalized leases in accordance with GAAP, all capitalized
interest, all commissions, discounts and other fees and charges owed with
respect to banker acceptance financing, and total interest expense (whether
shown as interest expense or as loss and expenses on sale of receivables) under
a receivables purchase facility) determined on a consolidated basis in
accordance with GAAP.
"INVESTMENT" shall have the meaning set forth in SECTION 8.2 hereof.
"LIEN" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any written agreement to give any of the
foregoing), any conditional sale or other title retention agreement and the
filing of or agreement to give any financing statement under the Uniform
Commercial Code of any jurisdiction.
"LOAN DOCUMENTS" shall mean, collectively, each of the Transaction
Documents other than the Warrant Documents, in each case either as originally
executed or as the same may from time to time be supplemented, modified,
amended, restated, extended or supplanted.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on (a)
the properties, operations, business, condition (financial or otherwise) or
prospects of the Company and its Subsidiaries taken as a whole, (b) the
Company's ability to pay the Notes and the other Obligations in accordance with
the terms thereof, or (c) the Company's ability to perform its obligations under
the Transaction Documents to which it is a party.
"MATERIAL CONTRACT" shall mean any contract or other arrangement (other
than Transaction Documents), whether written or oral, to which the Company or
any of its Subsidiaries is a party as to which the breach, nonperformance,
cancellation or failure to renew by any party thereto could reasonably likely
have a Material Adverse Effect, as the same are listed on SCHEDULE 6.1.16 as of
the date of this Agreement. The term "Material Contract" shall not include the
Senior Credit Agreement or the Senior Debt Documents.
"MATURITY DATE" shall mean January 24, 2007.
"MONEY BORROWED" shall mean, without duplication, (i) Debt arising from
the lending of money by any Person to the Company or any Subsidiary; (ii) Debt,
whether or not in any such case arising from the lending by any Person of money
to the Company or any Subsidiary, (A) which is represented by notes payable or
drafts accepted that evidence extensions of credit, (B) which constitutes
obligations evidenced by bonds, debentures, notes or similar instruments, or (C)
upon which interest charges are customarily paid (other than accounts payable)
or that was issued or assumed as full or partial payment for Property (as
defined in the Senior Credit Agreement); (iii) Debt that constitutes a Capital
Lease Obligation (as defined in the Senior Credit Agreement); (iv) reimbursement
obligations with respect to letters of credit or guaranties of letters of credit
and (v) Debt of the Company or any Subsidiary under any guaranty of obligations
that would constitute Debt for Money Borrowed under clauses (i) through (iii)
hereof, if owed directly by the Company or any Subsidiary. The calculation of
Money Borrowed shall exclude the Ramsay Group Payable.
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"MULTIEMPLOYER PLAN" shall mean, as of any date, a "multiemployer plan"
as defined in Section 4001(a)(3) of ERISA that is subject to Title IV of ERISA
to which the Company or any ERISA Affiliate is making or accruing an obligation
to make contributions, or has within any of the preceding seven plan years made
or accrued an obligation to make contributions.
"NET SECURITIES PROCEEDS" means, with respect to the issuance or sale
by the Company or any Subsidiary of any securities representing Stock or
indebtedness of such Person, but not including the Notes, the excess of (a) the
gross cash proceeds received from such issuance and sale, MINUS (b) all
reasonable out-of-pocket fees and expenses incurred in connection with such
issuance and sale and paid to Persons that are not Affiliates of the Company.
"NOTES" shall mean, collectively, the SunTrust Note and the ING Note.
"OBLIGATIONS" shall mean all present and future debt, liabilities and
obligations of the Company owing to the Purchasers, or any Person entitled to
indemnification hereunder, or any of their respective successors, permitted
transferees or permitted assigns, arising under or in connection with this
Agreement, the Notes or any other Loan Document.
"PERMITTED LIENS" shall mean the following Liens: (a) Liens securing
Senior Debt; (b) Liens for taxes, assessments or other governmental charges or
levies not yet due or which are being actively contested in good faith by
appropriate proceedings if adequate reserves with respect thereto are maintained
on the books of the Company in accordance with GAAP consistently applied; (c)
statutory Liens of landlords and Liens of carriers, warehousemen, mechanics,
material men and other Liens imposed by law created in the ordinary course of
business for amounts not yet due or which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves are being
maintained; (d) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business in connection with workmen's
compensation, unemployment insurance or other types of social security; (e)
easements, rights-of-way, restrictions and other similar charges or encumbrances
not materially detracting from the value of the properties of the Company or any
of its Subsidiaries or materially interfering with the ordinary conduct of the
business of the Company, any of its Subsidiaries or any of their respective
properties; (f) UCC filings made in connection with the lease of equipment in
the ordinary course of business; (g) Liens securing purchase money indebtedness
permitted by SECTION 8.6(G) which Liens encumber only the asset financed by such
indebtedness; and (h) extensions, renewals or replacements of any Lien referred
to in clause (a) herein.
"PERMITTED TRANSFER" shall mean the transfer by (i) any member of the
Controlling Shareholder Group of Stock to any other member of the Controlling
Shareholder Group, or (ii) any member of the Controlling Shareholder Group of
Stock to any Person, provided that following any such transfer or transfers
pursuant to clause (ii), the Controlling Shareholder Group, taken as a whole,
shall at no time own less than 95% of the Stock owned by the Controlling
Shareholder Group, taken as a whole, as of the SunTrust Closing Date.
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"PERSON" shall mean an individual, corporation, limited liability
company, partnership, joint venture, trust, unincorporated association, or other
entity, or a government or any political subdivision or agency thereof.
"PLAN" shall mean any "employee pension benefit plan" maintained by or
on behalf of the Company or any ERISA Affiliate as defined in Section 3(3) of
ERISA, including, but not limited to, any defined benefit pension plan, profit
sharing plan, money purchase pension plan, 401(k) plan, employee stock ownership
plan or Multiemployer Plan.
"PRINCIPAL OFFICE" for each Purchaser means the address set forth on
the signature pages hereto.
"PURCHASERS" means, collectively, SunTrust Banks, Inc., a Georgia
corporation, together with its successors and assigns and ING (U.S.) Capital,
LLC, a Delaware limited liability company, together with its successors and
assigns.
"RAMSAY GROUP" shall mean Xxxx Xxxxxx Holdings Pty. Limited, an
Australian corporation, Xxxx Xxxxxx Hospitals Pty. Limited, an Australian
corporation, Ramsay Holdings HSA Limited, a Barbados corporation, or any other
Affiliate of the Controlling Shareholder Group from time to time beneficially
holding Stock of the Company.
"RAMSAY GROUP PAYABLE" shall mean the $600,000 payable of the Company
to the Ramsay Group in connection with the Company's prior purchase of Ramsay
Hospital Corporation of Louisiana, Inc., a Louisiana corporation.
"REGISTRATION RIGHTS AGREEMENT" means that certain Amended and Restated
Registration Rights Agreement, dated as of the date hereof, between the Company
and the Purchasers in their capacity as holders of the Warrants, in
substantially the form of EXHIBIT D, together with all amendments and
modifications thereto.
"REQUIRED PURCHASERS" shall mean Purchasers who individually or
collectively hold more than seventy-five (75%) of the outstanding principal
amount of the Note or Notes.
"SECURITY" shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
"SENIOR CREDIT AGREEMENT" shall mean that certain Loan and Security
Agreement, dated as of October 30, 1998, as amended, by and between the Senior
Lenders, the Agent, and the Borrowers, providing for an aggregate credit
facility to the Company of $22,000,000, as the same may be hereafter amended,
modified, restated, supplemented, refinanced or replaced in accordance with
SECTION 8.6(F) and the other provisions hereof.
"SENIOR DEBT" shall have the meaning ascribed to the term "Senior
Indebtedness" in the Subordination Agreement.
"SENIOR DEBT DOCUMENTS" shall mean the Senior Credit Agreement and all
other Transaction Documents (as defined in the Senior Credit Agreement).
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"SENIOR LENDERS" shall have the meaning given to such term in the
recitals hereof.
"SOLVENT" shall mean, with respect to any Person at any time, that (i)
each of the fair value and the present fair saleable value of such Person's
assets (including any rights of subrogation or contribution to which such Person
is entitled, under any of the Transaction Documents or otherwise) is greater
than such Person's debts and other liabilities (including contingent, unmatured
and unliquidated debts and liabilities) and the maximum estimated amount
required to pay such debts and liabilities as such debts and liabilities mature
or otherwise become payable; (ii) such Person is able and expects to be able to
pay its debts and other liabilities (including, without limitation, contingent,
unmatured and unliquidated debts and liabilities) as they mature; and (iii) such
Person does not have unreasonably small capital to carry on its business as
conducted and as proposed to be conducted.
"STOCK" means all shares of capital stock of or in a corporation,
whether voting or non-voting, and including, without limitation, common stock
and preferred stock.
"SUBORDINATION AGREEMENT" shall mean that certain Amended and Restated
Subordination Agreement, dated as of the date hereof, by and among the Agent,
for the benefit of and on behalf of the Senior Lenders and the Purchasers, and
acknowledged by the Company and the Guarantors, either as originally executed or
as hereafter amended, modified or supplemented with the consent of the required
Purchasers.
"SUBSIDIARY" shall mean, as to any person, any corporation, limited
liability company, partnership or joint venture, whether now existing or
hereafter organized or acquired: (i) in the case of a corporation, of which at
least a majority of the outstanding shares of stock having by the terms thereof
ordinary voting power to elect a majority of the board of directors of such
corporation (other than stock having such voting power by reason of the
happening of any contingency) is at the time directly or indirectly owned or
controlled by such Person and/or one or more of its Subsidiaries or (ii) in the
case of a limited liability company, partnership or joint venture, in which such
Person or a Subsidiary of such Person is a member, general partner or joint
venturer and of which a majority of the partnership or other ownership interests
are at the time owned by such Person or one or more of its Subsidiaries.
"SUNTRUST CLOSING DATE" shall mean January 25, 2000.
"SUNTRUST FACILITY FEE" shall mean the non-refundable facility fee
payable by the Company to SunTrust in accordance with the terms of the
commitment letter executed by SunTrust and the Company.
"SUNTRUST NOTE" shall mean the subordinated promissory note issued by
the Company to SunTrust on January 25, 2000, maturing on the Maturity Date, or
such earlier date as provided herein, at which time all principal, interest and
other amounts owing hereunder shall be due and payable in full, and bearing
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interest as set forth in this Agreement, and each Note delivered in
substitution, amendment, modification, extension or exchange for any such Note
pursuant to the provisions of this Agreement.
"SUNTRUST WARRANT AGREEMENT" shall mean that certain Warrant Agreement,
dated as of January 25, 2000, between the Company and SunTrust in its capacity
as holder of the SunTrust Warrant, in substantially the form of EXHIBIT B-1
hereto, together with all amendments and modifications thereto.
"SUNTRUST WARRANT" shall mean the warrant to acquire 475,000 shares of
Common Stock to be issued and delivered to SunTrust on the SunTrust Closing
Date, in the form of Exhibit C-1, and each common stock purchase warrant issued
and delivered in substitution or exchange for any SunTrust Warrant.
"TOTAL DEBT TO EBITDA RATIO" shall mean, with respect to the Company
and its Subsidiaries on a consolidated basis, as of any calculation date, the
ratio of (a) Money Borrowed as of such date, to (b) EBITDA for the preceding
four fiscal quarter period then ending.
"TRANSACTION DOCUMENTS" shall mean, collectively, this Agreement, the
Notes, each Warrant, the Warrant Agreements, the Registration Rights Agreement,
the Subordination Agreement and any other agreements of any type or nature in
any way relating to or in furtherance of this Agreement, in each case either as
originally executed or as the same may from time to time be supplemented,
modified, amended, restated, extended or supplanted.
"WARRANT AGREEMENT" shall mean individually or collectively, the ING
Warrant Agreement and the SunTrust Warrant Agreement.
"WARRANT DOCUMENTS" shall mean, collectively, the Warrant Agreement,
the Warrants and the Registration Rights Agreement.
"WARRANTS" shall mean, collectively, the SunTrust Warrants and the Ing
Warrants.
"WEST VIRGINIA UNIVERSITY HOSPITALS SALE" shall mean, the sale by the
Company to West Virginia University Hospitals, Inc. of Chestnut Ridge Hospital
and other assets pursuant to that certain Asset Purchase Agreement between the
Company, Psychiatric Institute of West Virginia, Inc. and West University
Hospitals, Inc. dated as of July 1, 1998, as amended by Amended No. 1 dated as
of September 30, 1998.
ARTICLE 2.
ISSUANCE AND PURCHASE OF NOTE AND WARRANT
SECTION 2.1 AUTHORIZATION OF ISSUANCE OF SUNTRUST NOTES AND WARRANTS.
The Company has duly authorized the issuance and sale to SunTrust, on the terms
and subject to the conditions set forth herein, of Notes in the aggregate
principal amount of $5,000,000, to be dated as of the SunTrust Closing Date. The
Company has duly authorized the issuance and sale, on the terms and subject to
the conditions set forth herein and in the SunTrust Warrant Agreement, of the
SunTrust Warrants for the purchase of 475,000 shares of the Common Stock of the
Company.
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SECTION 2.2 PURCHASE AND SALE OF SUNTRUST NOTE AND WARRANTS. Subject to
the terms and conditions contained herein and in reliance upon the
representations and warranties of SunTrust contained in the Original Note
Purchase Agreement, the Company has sold to SunTrust and, subject to the terms
and conditions set forth herein and in reliance upon the representations and
warranties of the Company contained in the Original Note Purchase Agreement,
SunTrust has purchased from the Company the SunTrust Notes with the Warrants for
an aggregate purchase price of $5,000,000. The purchase price paid by SunTrust
for the SunTrust Note was equal to the principal amount thereof and no
additional consideration.
SECTION 2.3 AUTHORIZATION OF ISSUANCE OF ING NOTES AND WARRANTS. The
Company has duly authorized the issuance and sale to ING, on the terms and
subject to the conditions set forth herein, of the ING Note in the aggregate
principal amount of $5,000,000, to be dated as of the ING Closing Date. The
Company has duly authorized the issuance and sale, on the terms and subject to
the conditions set forth herein and in the ING Warrant Agreement, of the ING
Warrants for the purchase of 475,000 shares of the Common Stock of the Company.
SECTION 2.4 PURCHASE AND SALE OF ING NOTE AND WARRANTS. Subject to the
terms and conditions contained herein and in reliance upon the representations
and warranties of ING contained herein, the Company hereby agrees to sell to ING
and, subject to the terms and conditions set forth herein and in reliance upon
the representations and warranties of the Company contained herein, ING agrees
to purchase from the Company the ING Notes with the ING Warrants for an
aggregate purchase price of $5,000,000. The purchase price paid by ING for the
ING Note shall be equal to the principal amount thereof and no additional
consideration.
SECTION 2.5 ALLOCATION OF PURCHASE PRICE. Under both generally accepted
accounting standards consistently applied and the regulations of the Internal
Revenue Service, the issuance to each Purchaser of the Notes and the Warrants
for an aggregate purchase price equal to the aggregate principal amount of such
Notes being so purchased results in the creation of "original issue discount" on
such Notes (which original issue discount may also be deemed to constitute the
value of any Warrant issued in connection with the issuance of such Notes), and
such regulations require the determination of the value of any Warrant so
delivered. Pursuant to generally accepted accounting principles consistently
applied and applicable Treasury Regulations, the Company and each Purchaser
agree that the aggregate amount of such original issue discount and the
aggregate value of each Warrant for 475,000 shares of the Common Stock of the
Company is $461,000, which original issue discount and value of such Warrant
shall be allocated to the Note. The Company and each Purchaser agree to
recognize and adhere to the determinations and allocations of original issue
discount and valuation of each Warrant set forth herein for all federal and
state income tax purposes. In the event of any proposed transfer of any Note by
any Purchaser, such Purchaser shall, prior to such transfer, xxxx such Note with
a legend pertaining to the original issue discount in the form required by
Treasury Regulation Section 1.1275-3(b)(1).
SECTION 2.6 INTEREST ON THE NOTES.
(a) Interest on the Notes shall accrue at a rate per annum
equal to twelve and one-half percent (12.50%), subject to SECTION 3.5
below; PROVIDED, HOWEVER, that if the definition of "Senior
Indebtedness" in the Subordination Agreement is amended such that
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interest, fees, costs and charges accruing subsequent to the
commencement of an Insolvency Event (as such term is defined in the
Subordination Agreement) but not allowed as a claim in such Insolvency
Event are excluded from such definition, then interest on the Notes
shall accrue from the date of such amendment at a rate per annum equal
to twelve percent (12.00%), subject to SECTION 3.5 below. Interest
shall be payable (i) on the Business Day which is forty (40) days after
the last day of each calendar quarter, commencing on August 9, 2000 and
continuing thereafter until such Notes have been paid in full, (ii)
upon any prepayment of any Note to the date of prepayment on the amount
prepaid and (iii) at maturity of the Notes, whether by acceleration or
otherwise.
(b) After maturity, whether by acceleration or otherwise,
interest shall accrue on the Notes at the Default Rate set forth in
SECTION 3.3 below.
SECTION 2.7 AMORTIZATION AND MATURITY OF NOTES; PREPAYMENTS; FUNDING
LOSSES.
(a) The principal amount of the Notes shall be payable on the
Maturity Date, unless sooner accelerated in accordance with the terms
hereof.
(b) The Company may prepay the Notes in whole from time to
time, PROVIDED THAT (i) the Company provides at least thirty (30) days'
prior written notice to the Purchaser of such prepayment, and (ii) such
prepayment is accompanied by all accrued and unpaid interest on the
amount prepaid through the date of prepayment and all other amounts
then owing by the Company hereunder in connection with the Notes.
(c) Prepayment of the Notes shall not preclude the Purchasers
from continuing to own the Warrants or from exercising any of their
rights pursuant to the Warrants, the Warrant Agreements or the
Registration Rights Agreement at a later date.
SECTION 2.8 PREPAYMENT FEE.
(a) Upon any prepayment of a Note in full on or prior to the
first anniversary of the applicable Closing Date, the Company shall pay
to the relevant Purchaser prior to or concurrently with such prepayment
a prepayment fee in an amount equal to three percent (3%) of the amount
of such prepayment.
(b) Upon any prepayment of a Note in full after the first
anniversary of the applicable Closing Date and on or prior to the
second anniversary of the applicable Closing Date, the Company shall
pay to the relevant Purchaser prior to or concurrently with such
prepayment a prepayment fee in an amount equal to two percent (2%) of
the amount of such prepayment.
(c) Upon any prepayment of a Note in full after the second
anniversary of the applicable Closing Date and on or prior to the third
anniversary of the applicable Closing Date, the Company shall pay to
the relevant Purchaser prior to or concurrently with such prepayment a
prepayment fee in an amount equal to one percent (1%) of the amount of
such prepayment.
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(d) Upon any prepayment of a Note in full after the third
anniversary of the applicable Closing Date, the Company shall pay to
the relevant Purchaser prior to or concurrently with such prepayment a
prepayment fee in an amount equal to zero percent (0%) of the amount of
such prepayment.
SECTION 2.9 MANDATORY PREPAYMENT. Subject to the prior written consent
of the Senior Lenders (or any requisite percentage thereof), the Company shall,
upon receipt of the Company or any of its Subsidiaries of any Net Securities
Proceeds in excess of $5,000,000, make a mandatory prepayment of the Notes in an
amount equal to twenty-five percent (25%) of the total amount of such Net
Securities Proceeds.
SECTION 2.10 FUNDING OF THE LOANS. Subject to the terms and conditions
of this Agreement, each Purchaser severally and for itself alone agrees to
provide to the Company Loans as follows:
(a) On the SunTrust Closing Date, SunTrust made a loan to the
Company in an aggregate principal amount equal to $5,000,000.
(b) Subject to the limitations set forth in this Agreement,
ING will on the ING Closing Date make a loan to the Company in an
aggregate principal amount of $5,000,000.
ARTICLE 3.
OTHER PROVISIONS RELATING TO THE NOTES
SECTION 3.1 MAKING OF PAYMENTS. The Company shall make each payment
hereunder and under the Notes not later than 1:00 p.m. (Atlanta, Georgia time)
on the day when due in Dollars in same day funds to each Purchaser at its
Principal Office. All payments received after that hour shall be deemed to have
been received by such Purchaser on the next following Business Day.
SECTION 3.2 INCREASED COSTS. In the event that any change in any
Applicable Law, treaty or governmental regulation, or in the interpretation or
application thereof, or compliance by any Purchaser with any guideline, request
or directive (whether or not having the force of law) from any central bank or
other U.S. financial, monetary or other governmental authority, shall: (a)
subject any Purchaser to any tax of any kind whatsoever with respect to this
Agreement, the Notes or the Warrants or change the basis of taxation of payments
to any Purchaser of principal, interest, fees or any other amount payable
hereunder (except for changes in the rate of tax on the overall net income of
such Purchaser); (b) impose, modify, or hold applicable any reserve, special
deposit, assessment or similar requirement against assets held by, or deposits
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in or for the account of, advances or loans by, or other credit extended by or
committed to be extended by any office of any Purchaser, including, without
limitation, pursuant to Regulation D of the Board of Governors of the Federal
Reserve System; or (c) impose on any Purchaser any other condition with respect
to this Agreement, the Notes or the Warrants hereunder; and the result of any of
the foregoing is to increase the cost to the Purchaser of making or maintaining
the Notes or the Warrants or to reduce the amount of any payment (whether of
principal, interest or otherwise) in respect of the Notes or the Warrants, then,
in any case, the Company shall promptly pay from time to time, upon demand of
such Purchaser, such additional amounts as will compensate such Purchaser for
such additional cost or such reduction, as the case may be. The Purchaser shall
certify the amount of such additional cost or reduced amount to the Company, and
such certification shall be conclusive absent manifest error.
SECTION 3.3 CAPITAL ADEQUACY. If, after the date of this Agreement, any
Purchaser shall have determined that the adoption of any Applicable Law, rule or
regulation regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Purchaser with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Purchaser's capital (whether on
this credit facility or otherwise) as a consequence of its obligations hereunder
to a level below that which the Purchaser could have achieved but for such
adoption, change or compliance (taking into consideration the Purchaser's
policies with respect to capital adequacy) by an amount deemed by such Purchaser
to be material, then from time to time, promptly upon demand by such Purchaser,
the Company shall pay such Purchaser such additional amount or amounts as will
compensate such Purchaser for such reduction. A certificate of such Purchaser
claiming compensation under this Section and setting forth the additional amount
or amounts to be paid to it hereunder shall be PRIMA FACIE evidence of the
matters contained therein. In determining any such amount, such Purchaser may
use any reasonable averaging and attribution methods. The Purchaser agrees to
make reasonable efforts to allocate any such cost increase among its similarly
situated customers in good faith and on an equitable basis; provided, however,
that such Purchaser shall not be entitled to such amounts unless similar
assessments are generally imposed by such Purchaser on other borrowers of such
Purchaser that Purchaser determines to be comparable to the Company.
SECTION 3.4 DEFAULT RATE OF INTEREST. If the Company shall fail to pay
on the due date therefor, whether by acceleration or otherwise, any principal
owing under the Notes or any other Obligations, then interest shall accrue on
such unpaid principal or other Obligation from the due date until and including
the date on which such principal is paid in full at a rate per annum that is two
percent (2%) in excess of the rate of interest otherwise payable hereunder (the
"DEFAULT RATE"). Interest calculated at the Default Rate shall be due and
payable upon demand by the relevant Purchaser.
SECTION 3.5 CALCULATION OF INTEREST. Interest payable on the Notes
shall be calculated on the basis of a year of 360 days and shall be payable for
the actual number of days elapsed. If the date for any payment of principal is
extended (whether by operation of this Agreement, any provision of law or
otherwise), interest shall be payable for such extended time at the rates
provided herein. Whenever any payment hereunder shall be stated to be due on a
day other than a Business Day, such payment shall be due on the next succeeding
Business Day.
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SECTION 3.6 USURY. In no event shall the amount of interest due or
payable on any Obligation to a Purchaser, when aggregated with all amounts
payable by the Company under any of the Transaction Documents to the Purchaser
that are deemed or construed to be interest, exceed the maximum rate of interest
allowed by Applicable Law and, in the event any such payment is paid by the
Company or received by such Purchaser, then such excess sum shall be credited as
a payment of principal, unless the Company, as applicable, shall notify such
Purchaser in writing that it elects to have such excess sum returned to it
forthwith. It is the express intent of the parties hereto that the Company not
pay, and the Purchasers not receive, directly or indirectly, in any manner
whatsoever, interest in excess of that which may be lawfully paid by the Company
under Applicable Law.
ARTICLE 4.
GUARANTY
SECTION 4.1 THE GUARANTY.
Each Guarantor hereby jointly and severally guarantees to the
Purchasers, as primary obligor and not as surety, the prompt payment of the
Obligations in full when due (whether at stated maturity, as a mandatory
prepayment, by acceleration, as a mandatory cash collateralization or otherwise)
strictly in accordance with the terms thereof. Each Guarantor hereby further
agrees that if any of the Obligations are not paid in full when due (whether at
stated maturity, as a mandatory prepayment, by acceleration, or otherwise), the
Guarantors will promptly pay the same, without any demand or notice whatsoever,
and that in the case of any extension of time of payment or renewal of any of
the Obligations, the same will be promptly paid in full when due (whether at
extended maturity, as a mandatory prepayment, by acceleration, as a mandatory
cash collateralization or otherwise) in accordance with the terms of such
extension or renewal.
Notwithstanding any provision to the contrary contained herein or in
any other of the Transaction Documents, the obligations of the Guarantors under
this Agreement and the other Transaction Documents shall be limited to an
aggregate amount equal to the largest amount that would not render such
obligations subject to avoidance under Section 548 of the Bankruptcy Code or any
comparable provisions of any applicable state law.
SECTION 4.2 OBLIGATIONS UNCONDITIONAL.
The obligations of the Guarantors under SECTION 4.1 are joint and
several, absolute and unconditional, irrespective of the value, genuineness,
validity, regularity or enforceability of any of the Transaction Documents, or
any other agreement or instrument referred to therein, or any substitution,
release, impairment or exchange of any other guarantee of or security for any of
the Obligations, and, to the fullest extent permitted by applicable law,
irrespective of any other circumstance whatsoever which might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
it being the intent of this SECTION 4.2 that the obligations of each Guarantor
hereunder shall be absolute and unconditional under any and all circumstances.
Each Guarantor agrees that it shall have no right of subrogation, indemnity,
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reimbursement or contribution against the Company or any other Guarantor for
amounts paid under this SECTION 4 until such time as the Purchasers have been
paid in full in respect of all Obligations, and no Person or governmental
authority shall have any right to request any return or reimbursement of funds
from the Purchasers in connection with monies received under the Transaction
Documents. Without limiting the generality of the foregoing, it is agreed that,
to the fullest extent permitted by law, the occurrence of any one or more of the
following shall not alter or impair the liability of any Guarantor hereunder
which shall remain absolute and unconditional as described above:
(a) at any time or from time to time, without notice to any
Guarantor, the time for any performance of or compliance with any of
the Obligations shall be extended, or such performance or compliance
shall be waived;
(b) any of the acts mentioned in any of the provisions of any
of the Transaction Documents, or any other agreement or instrument
referred to in the Transaction Documents shall be done or omitted;
(c) the maturity of any of the Obligations shall be
accelerated, or any of the Obligations shall be modified, supplemented
or amended in any respect, or any right under any of the Transaction
Documents, or any other agreement or instrument referred to in the
Transaction Documents shall be waived or any other guarantee of any of
the Obligations or any security therefor shall be released, impaired or
exchanged in whole or in part or otherwise dealt with; or
(d) any of the Obligations shall be determined to be void or
voidable (including, without limitation, for the benefit of any
creditor of any Guarantor) or shall be subordinated to the claims of
any Person (including, without limitation, any creditor of any
Guarantor).
With respect to its obligations hereunder, each Guarantor hereby
expressly waives diligence, presentment, demand of payment, protest and all
notices whatsoever, and any requirement that a Purchaser exhaust any rights,
powers or remedies or proceed against any Person under any of the Transaction
Documents, or any other agreement or instrument referred to in the Transaction
Documents, or against any other Person under any other guarantee of, or security
for, any of the Obligations.
SECTION 4.3 REINSTATEMENT.
The obligations of each Guarantor under this SECTION 4 shall be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf of any Person in respect of the Obligations is rescinded or must be
otherwise restored by any holder of any of the Obligations, whether as a result
of any proceedings in bankruptcy or reorganization or otherwise, and each
Guarantor agrees that it will indemnify the Purchasers on demand for all
reasonable costs and expenses (including, without limitation, fees and expenses
of counsel) incurred by any Purchaser in connection with such rescission or
restoration, including any such costs and expenses incurred in defending against
any claim alleging that such payment constituted a preference, fraudulent
transfer or similar payment under any bankruptcy, insolvency or similar law.
SECTION 4.4 CERTAIN ADDITIONAL WAIVERS.
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Without limiting the generality of the provisions of this SECTION 4,
each Guarantor hereby specifically waives the benefits of O.C.G.A. ss.10-7-24 to
the extent applicable. Each Guarantor further agrees that it shall have no right
of recourse to security for the Obligations, except through the exercise of
rights of subrogation and contribution pursuant to SECTION 4.2.
SECTION 4.5 REMEDIES.
Each Guarantor agrees that, to the fullest extent permitted by law, as
between any Guarantor, on the one hand, and the Purchasers, on the other hand,
the Obligations may be declared to be forthwith due and payable as provided in
SECTION 9.2 (and shall be deemed to have become automatically due and payable in
the circumstances provided in said SECTION 9.2) for purposes of SECTION 4.1
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or preventing the Obligations from becoming automatically due and
payable) as against any other Person and that, in the event of such declaration
(or the Obligations being deemed to have become automatically due and payable),
the Obligations (whether or not due and payable by any other Person) shall
forthwith become due and payable by the Guarantors for purposes of SECTION 4.1.
SECTION 4.6 GUARANTEE OF PAYMENT; CONTINUING GUARANTEE.
The guarantee in this SECTION 4 is a guaranty of payment and not of
collection, is a continuing guarantee, and shall apply to all Obligations
whenever arising.
SECTION 4.7 SUBORDINATION OF GUARANTEES.
Each Guarantor, for itself and its successors, and each Purchaser, by
its acceptance of this Agreement, agrees that the obligations of the Guarantors
to the Purchasers pursuant to Article 4 of this Agreement are expressly
subordinate and subject in right of payment to the prior payment in full in cash
of all Senior Debt as provided in the Subordination Agreement.
ARTICLE 5.
CONDITIONS PRECEDENT TO PURCHASE OF THE NOTES AND THE WARRANTS
SECTION 5.1 CLOSING DATE CONDITIONS. The obligations of the
Consolidated Companies and the Purchasers under this Agreement are subject to
the satisfaction of each of the following conditions on the ING Closing Date:
(A) NO INJUNCTION, ETC. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or proposed
before any court, governmental agency or legislative body to enjoin, restrain,
or prohibit, or to obtain substantial damages in respect of, or which is related
to or arises out of, this Agreement or the Warrant Agreements or the
consummation of the transactions contemplated hereby or thereby, or which, in
each Purchaser's sole discretion, would make it inadvisable to consummate the
transactions contemplated by this Agreement.
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(B) DOCUMENTATION. Purchasers shall have received, on or prior to the
ING Closing Date, the following, each in the form and substance satisfactory to
Purchasers and their counsel:
(1) duly executed counterparts of this Agreement;
(2) the ING Note, in the principal amount of $5,000,000;
(3) the duly executed Warrant Agreements;
(4) duly executed ING Warrant, for the purchase of 475,000
shares of the Common Stock of the Company;
(5) the duly executed Registration Rights Agreement;
(6) a certificate signed by a senior officer of each
Consolidated Company stating that the representations and warranties
set forth in SECTION 6.1 hereof are true and correct in all material
respects, stating that each Consolidated Company is on such date in
compliance with all the terms and provisions of the Transaction
Documents, to which it is a party, to be observed or performed by it,
and stating that on such date, no Default or Event of Default, has
occurred or is continuing;
(7) (a) copies of the articles of incorporation of the Company
and all amendments thereto Certified by the Secretary of State of
Delaware; and (b) good standing certificates for each Consolidated
Company (other than Ramsay Youth Services Puerto Rico, Inc.) issued by
the relevant Secretary of State and any other States in which each
Consolidated Company's qualification is required, in each case as of a
recent date;
(8) a certificate of the Secretary or an Assistant Secretary
of each Consolidated Company, certifying (a) that the articles of
incorporation and by-laws delivered on the SunTrust Closing Date remain
in full force and effect, unamended; (b) that attached thereto is a
true and complete copy of resolutions adopted by the Board of Directors
of such Consolidated Company, authorizing the execution, delivery and
performance of this Agreement and the other Transaction Documents to
which such Consolidated Company is a party; (c) as to the incumbency
and genuineness of the signatures of the officers of such Consolidated
Company executing this Agreement or any of the other Transaction
Documents;
(9) a favorable legal opinion of counsel to each Consolidated
Company, addressed to the Purchasers, covering such matters relating to
the transactions contemplated hereby as the Purchasers may request;
(10) certified copies of the executed Senior Credit Agreement;
(11) copies of all consents and waivers, if any, required
under the Company's Material Contracts in connection with the
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transactions contemplated hereby, including, without limitation, copies
of amendments or waivers of any agreements currently prohibiting
payment of interest on the Notes unless a default has occurred under
such agreement;
(12) a duly executed solvency certificate of the Company with
respect to the Consolidated Companies;
(13) written instructions from the Company to the Purchasers
as to the disbursements of the proceeds of the Notes;
(14) the duly executed Subordination Agreement;
(15) evidence satisfactory to the Purchasers that the Company
is in compliance with the covenant set forth in Section 8.12 hereof,
calculated on a pro forma basis as of the last day of the most recent
fiscal quarter as if the indebtedness evidenced by the ING Note had
been created, incurred or assumed on the last day of such period;
(16) payment to ING of the balance of the ING Facility Fee;
(17) such other documents, instruments and agreements as
Purchaser shall reasonably request.
(C) CORPORATE ACTIONS. All corporate and other action required
hereunder shall be satisfactory.
(D) NO MATERIAL ADVERSE EFFECT. No Material Adverse Effect has occurred
since December 31, 1999.
(E) NO DEFAULT, ETC. No Default or Event of Default shall exist.
(F) NO INJUNCTION, ETC. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or proposed
before any court, governmental agency or legislative body to enjoin, restrain,
prohibit, or to obtain substantial damages in respect of, or which is related to
or arises out of, this Agreement, the Warrant Agreements or the consummation of
the transactions contemplated hereby or thereby, or which, in the Company's
reasonable discretion, would make it inadvisable to consummate the transactions
contemplated by this Agreement.
(G) ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made by the Purchasers contained herein or in any of the other
Transaction Documents shall be true and correct in all material respects with
the same effect as though such representations and warranties had been made on
and as of the ING Closing Date.
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ARTICLE 6.
REPRESENTATIONS AND WARRANTIES
SECTION 6.1 REPRESENTATIONS AND WARRANTIES GENERALLY. Each Consolidated
Company (as to itself and all other Consolidated Companies) hereby represents
and warrants to the Purchasers that the following statements are true and
correct as of the date hereof and as of the ING Closing Date:
6.1.1 CORPORATE EXISTENCE; SUBSIDIARIES. Each of the Company
and its Subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of the state of its incorporation
and has all requisite corporate power and authority to conduct its
business and to own its properties. Each of the Company and its
Subsidiaries has all requisite corporate power and authority to execute
and deliver and to perform all of its obligations under this Agreement
and the other Transaction Documents to which it is a party. Each of the
Company and its Subsidiaries is duly qualified and in good standing as
a foreign corporation authorized to do business in each jurisdiction
(other than the jurisdiction of its incorporation) in which the nature
of its activities or the character of the properties it owns or leases
makes such qualification necessary and in which the failure to be so
qualified would have a Material Adverse Effect. Except as set forth on
Schedule 6.1.1, the Company has no Subsidiaries.
6.1.2 AUTHORIZATION; NO CONFLICT. The execution, delivery and
performance by each of the Company and its Subsidiaries of this
Agreement and each of the other Transaction Documents to which it is a
party are within the corporate powers of the Company and its
Subsidiaries, have been duly authorized by all necessary corporate
action, and do not and will not (a) violate any provision of any
applicable law, rule or regulation, any judgment, order, or ruling of
any court or governmental agency applicable to the Company or any of
its Subsidiaries, the articles of incorporation or bylaws of the
Company or any of its Subsidiaries or any Material Contract or other
instrument to which the Company or any of its Subsidiaries is a party
or by which the Company, any of its Subsidiaries, or any of their
respective properties is bound, (b) be in conflict with, result in a
breach of or constitute with notice or lapse of time or both a default
under any such indenture, agreement or other instrument, or (c) result
in or require the creation of any material Lien upon or with respect to
any of the properties of the Company or any of its Subsidiaries, other
than Liens granted pursuant to the Senior Debt Documents.
6.1.3 APPROVALS. No consent of any Person and no authorization
or approval or other action by, and no notice to or filing with, any
governmental authority or regulatory body is required in connection
with the borrowings hereunder or with the execution, delivery,
performance, validity or enforcement of any Transaction Document
(including, without limitation, the issuance of the Notes or the
Warrants), which has not been obtained or made as of the date hereof.
6.1.4 TAX RETURNS; STATUS. The Company and its Subsidiaries
have filed all federal, state and other tax returns which are required
to have been filed, and each has paid all taxes due and payable except
such as are being actively contested in good faith by appropriate
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proceedings and with respect to which adequate reserves are being
maintained on the books of the Company in accordance with GAAP
consistently applied. None of the Company's or its Subsidiaries' tax
returns are under audit. No tax liens have been filed and, to the
Company's knowledge, no claims are being assessed with respect to any
such taxes.
6.1.5 BINDING OBLIGATIONS. Each of the Transaction Documents
to which the Company is a party constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in
accordance with its terms, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and by
general equitable principles (whether enforcement is sought by
proceedings in equity or at law).
6.1.6 LITIGATION. Except as set forth on Schedule 6.1.6, no
action, suit or proceeding is pending or, to the knowledge of the
Company, threatened against or affecting the Company, any of its
Subsidiaries or the properties of the Company or any of its
Subsidiaries before any court or governmental department, commission,
board, bureau, agency or instrumentality which, if determined adversely
to the Company or such Subsidiary, would have a Material Adverse
Effect, or which questions the validity of any Transaction Document or
any action taken or to be taken pursuant thereto.
6.1.7 NO DEFAULTS. Neither the Company nor any of its
Subsidiaries is in violation of any applicable statute or other law or
in default under any order, regulation or ruling of any court or other
tribunal or governmental or administrative authority or agency binding
on the Company or any of its Subsidiaries, or in default under their
respective articles of incorporation or bylaws, any material indenture,
agreement, lease, instrument or other undertaking to which the Company
or any of its Subsidiaries is a party or by which it or its property or
assets may be bound or affected, which could have a Material Adverse
Effect.
6.1.8 NO MATERIAL RESTRICTIONS. Neither the Company nor any of
its Subsidiaries is subject to any charter, corporate or, to the
knowledge of the Company and its Subsidiaries, other legal restriction,
or any contract, lease or other agreement, or any judgment, decree,
order, law, rule or regulation which, in the judgment of the Company,
currently has a Material Adverse Effect or any effect on the ability of
the Company to carry out its obligations under any Transaction
Document.
6.1.9 INFORMATION. No certificate, report or other paper
furnished by the Company to any Purchaser in connection with the
Transaction Documents, and to the best knowledge of the Company after
due inquiry, no certificate, report or other paper furnished by any
other Person at the request of the Company, in connection with the
Transaction Documents contains as of its effective date any material
misstatement of fact or fails to state a material fact or any fact
necessary to make the statements contained therein not misleading in
any material respect as of such date, and all of the information
contained therein is true, accurate and complete in all material
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respects as of such date; PROVIDED, HOWEVER, that any projections and
PRO FORMA financial information contained in the materials referenced
in the preceding sentence are based upon reasonable estimates of
management of the Company and reasonable assumptions at the time made,
it being recognized by the Purchasers that such financial information
as it relates to future events is not to be viewed as fact and that
actual results during the period or periods covered by any such
financial information may differ substantially from the projected
results set forth therein.
6.1.10 FINANCIAL STATEMENTS. (a) The Company has furnished the
Purchasers with (i) the consolidated balance sheet and related
consolidated statements of operations, stockholder's equity and cash
flows of the Company for the year ending December 31, 1999, audited by
Deloitte & Touche, LLP, and (ii) the internally prepared consolidated
balance sheet and related consolidated statement of operations of the
Company for the fiscal quarter ending March 31, 2000, in each case as
certified by the chief financial officer of the Company. All such
financial statements (including any related schedules and/or notes)
fairly present in all material respects in accordance with GAAP the
financial position of the Company as of such dates (subject, as to
interim statements, to changes resulting from audits and normal year
end adjustments and the absence of footnotes) and reflect all
liabilities, direct and contingent, of the Company and its Subsidiaries
required to be shown in accordance with such principles (subject, as to
interim statements, to changes resulting from audits and normal year
end adjustments and the absence of footnotes). There has been no
material adverse change in the business, financial condition, results
of operations or prospects of the Company and its Subsidiaries since
December 31, 1999, nor to the Company's knowledge any other event which
could reasonably be expected to have a Material Adverse Effect.
(b) The unaudited pro forma balance sheet of the Company
setting forth as of June 15, 2000 the pro forma financial position of
the Company, a copy of which has been delivered to the Purchasers,
fairly present in all material respects, on a pro forma basis, in
conformity with generally accepted accounting principles applied on a
basis consistent with the financial statements referred to in clause
(a) above (except for adjustments consistent with purchase price
accounting methods), the financial position of the Company as of such
date and time. The Company does not have any material contingent
obligations, contingent liabilities or other obligations which are not
reflected in the balance sheet referenced above which would be required
to be reflected in accordance with GAAP (subject, as to interim
statements, to changes resulting from audits and normal year end
adjustments and the absence of footnotes) (the "Pro Forma Financial
Statements").
6.1.11 TITLE TO PROPERTIES. Each of the Company and its
Subsidiaries has good and marketable title to its real properties
(other than real properties that it leases), and good title to all of
its other properties and assets, including the properties and assets
reflected in the balance sheet of the Company (other than properties
and assets disposed of in the ordinary course of business), subject to
no Lien of any kind except Permitted Liens. Each of the Company and its
Subsidiaries enjoys peaceful and undisturbed possession under all
leases necessary in any material respect for the operation of its
properties and assets, none of which contains in the reasonable
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judgment of the Company any unusual or burdensome provisions which
might materially affect or impair the operations of such properties and
assets. All such leases are valid and subsisting and in full force and
effect.
6.1.12 COMPLIANCE WITH LAWS. Each of the Company and its
Subsidiaries is in compliance with all applicable laws and regulations,
including all laws and regulations relating to ERISA and environmental
matters, except where the failure to comply would not have a Material
Adverse Effect.
6.1.13 POSSESSION OF FRANCHISES, LICENSES, ETC. Each of the
Company and its Subsidiaries possesses all franchises, certificates,
licenses, permits and other authorizations from governmental political
subdivisions or regulatory authorities, and all patents, trademarks,
service marks, trade names, copyrights, licenses and other rights, free
from burdensome restrictions, that are necessary for the ownership,
maintenance and operation of any of its properties and assets as
currently maintained, and neither the Company nor any of its
Subsidiaries is in material violation of any provision thereof except
where the failure to comply or have any such franchise, certificate,
license, permits or other authorization would not have a Materially
Adverse Effect.
6.1.14 INSURANCE. The Company has in place, with financially
sound and reputable insurance companies or associations, casualty,
public liability and other insurance, including without limitation,
product liability insurance, in such amounts and covering such risks as
are customarily maintained by other companies operating similar
businesses in similar locations and of similar size.
6.1.15 FEDERAL RESERVE REGULATIONS. The proceeds of the Notes
will be used solely for the purposes set forth in this Agreement and
none of such proceeds will be used, directly or indirectly, for the
purpose of purchasing or carrying any "margin security" or "margin
stock" or for the purpose of reducing or retiring any debt that
originally was incurred to purchase or carry a "margin security" or
"margin stock" or for any other purpose that might constitute this
transaction a "purpose credit" within the meaning of the regulations of
the Board of Governors of the Federal Reserve System.
6.1.16 MATERIAL CONTRACTS. SCHEDULE 6.1.16 sets forth a
complete list of all of the Material Contracts of the Company and its
Subsidiaries. Each of the Material Contracts is in full force and
effect and, to the best knowledge of the Company, no default exists
thereunder.
6.1.17 ERISA.
(1) IDENTIFICATION OF PLANS. Neither the Company or
any ERISA Affiliate maintains or contributes to, or has
maintained or contributed to, any Plan, other than its 401(k)
plan.
(2) LIABILITIES. Neither the Company nor any
Subsidiary is currently subject to any liability (other than
routine Plan expenses or contributions), tax or penalty which
liability, tax or penalty is directly or indirectly related to
any Plan including, but not limited to, any penalty or
liability arising under Title I or Title IV of ERISA, or any
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tax or penalty under Chapter 43 of the Code, except such
liabilities, taxes, or penalties (when taken as a whole) as
will not have a Material Adverse Effect; and
(3) FUNDING. The Company and each ERISA Affiliate has
made full and timely payment of all amounts required to be
contributed under the terms of each Plan.
6.1.18 BROKER'S FEES. Except for the SunTrust Facility Fee,
the ING Facility Fee and except for fees paid to SunTrust Equitable
Securities, Inc., no broker's or finder's fee, commission or similar
compensation will be payable with respect to the transactions
contemplated by this Agreement. No other similar fees or commissions
will be payable by the Company for any other services rendered to any
Consolidated Company or any Subsidiaries ancillary to the transactions
contemplated hereby.
6.1.19 OFFERING OF NOTES AND WARRANTS. Neither the Company
nor, to the best knowledge of the Company, anyone acting on its behalf
has offered the Notes or the Warrants for sale to, or solicited any
offer to buy any of the same from, or otherwise approached or
negotiated in respect thereof with, any person other than each
Purchaser. Subject to the representations of each Purchaser in SECTION
6.2, neither the Company nor any of its Subsidiaries nor, to the best
of knowledge of the Company, anyone acting on their behalf has taken,
or will take, any action which would subject the issuance or sale of
the Notes and the Warrants to Section 5 of the Securities Act of 1933,
as amended or the registration or qualification provisions of the blue
sky laws of any state.
6.1.20 REGISTRATION RIGHTS. Except as set forth on Schedule
6.1.20, as of the Closing Date, except as described in the Warrant
Agreements, the Company is under no obligation to register under the
Securities Act of 1933, as amended, or the Trust Indenture Act of 1939,
as amended, any of its presently outstanding securities or any of its
securities that may subsequently be issued.
6.1.21 SOLVENCY. Before and after giving effect to the
transactions contemplated by this Agreement, the Company shall be
Solvent and, after excluding any Debt owed by any Subsidiary Guarantor
to any other Subsidiary Guarantor from the calculation of Solvent, each
Subsidiary Guarantor shall be Solvent.
6.1.22 CONTINUING BUSINESS OF COMPANY. (a) Except as set forth
on SCHEDULE 6.1.22, there exists no actual or, to the knowledge of any
Consolidated Company, threatened termination, cancellation or
limitation of, or any material modification or change since April 18,
2000, in, (i) the business relationships of any Consolidated Company
with any customer or group of customers of such Consolidated Company
whose business individually or in the aggregate is material to the
operations or financial condition of such Consolidated Company, (ii)
the business relationships of any Consolidated Company with any of its
material suppliers or (iii) any Material Contract; and each
Consolidated Company reasonably anticipates that after the consummation
of the transactions contemplated by this Agreement, all such material
customers and suppliers will continue a business relationship with such
Consolidated Company on a basis no less favorable to such Consolidated
Company than as heretofore conducted.
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6.1.23 YEAR 2000 COMPLIANCE. To the Company's best knowledge,
the operating systems for the Company's computers and all software
applications that run on its computers are Year 2000 Compliant, except
where a failure to be Year 2000 Compliant would not have a Material
Adverse Effect. "Year 2000 Compliant" shall mean neither the
performance nor functionality of the operating systems for the
Company's computers and all software applications that run on the
Company's computers is affected by dates prior to, during, spanning or
after January 1, 2000, and shall include, but not be limited to (a)
accurately processing (including, but not limited to calculating,
comparing and sequencing) date and time data from, into, and between
the years 1999 and 2000 and leap year calculations, (b) functioning
without error, interruption or decreased performance relating to such
date and time data, (c) accurately processing such date and time data
when used in combination with other technology, if the other technology
properly exchanges date and time data, (d) accurate date and time data
century recognition, (e) calculations that accurately use same century
and multi-century formulas and date and time values, (f) date and time
data interface values which reflect the correct century, and (g)
processing, storing, receiving and outputting all date and time data in
a format that accurately indicates the century of the date and time
data.
6.1.24 DISCLOSURE. To the Company's best knowledge, neither
this Agreement nor any other document, certificate or statement
furnished to the Purchasers by or on behalf of the Company in
connection herewith contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the
statements contained herein and therein not misleading. There is no
fact of which the Company is aware and that is peculiar to the Company
and its Subsidiaries which materially adversely affects the business,
property or assets, or financial condition of the Company and its
Subsidiaries which has not been set forth in this Agreement or in the
other documents, certificates and statements furnished to the
Purchasers by or on behalf of the Company or any of its Subsidiaries
prior to the date hereof in connection with the transactions
contemplated hereby.
SECTION 6.2 REPRESENTATIONS AND WARRANTIES OF EACH PURCHASER. Each Purchaser
hereby represents and warrants to the Company and the other Consolidated
Companies that the following statements are true and correct, as of the date
hereof and as of the ING Closing Date.
6.2.1 AUTHORITY. The Purchaser has full corporate power and
authority to execute and deliver this Agreement and to perform all of
its obligations hereunder and under the other Transaction Documents,
and no consent or approval of any other person or governmental
authority is required therefor. The execution and delivery of this
Agreement by it, the performance by it of its covenants and agreements
hereunder and the consummation by it of the transactions contemplated
hereby have been duly authorized by all necessary corporate action.
This Agreement constitutes a valid and legally binding obligation of
it, enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency or other
similar laws of general application relating to or affecting the
enforcement of creditors' rights or by general principles of equity.
6.2.2 INVESTMENT IN THE COMPANY.
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(i) ING understands that the Company proposes to issue and
deliver to it the ING Note and the ING Warrant 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 Company will
rely upon the relevant Purchaser's representations and warranties contained
herein; and that such non-compliance with registration requirements is not
permissible unless such representations and warranties are correct.
(ii) ING understands that, under existing rules of the
Securities and Exchange Commission (the "SEC"), it may be unable to sell the ING
Note or the ING Warrant except to the extent that the ING Note or the ING
Warrant may be sold (i) pursuant to an effective registration statement covering
such sale pursuant to the Securities Act of 1933 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 of 1933 ("Rule 144").
(iii) ING is not relying on the Company respecting the
financial, tax and other economic considerations of an investment in the ING
Note or the ING Warrant, and ING has relied on the advice of, or has consulted
with, only its own advisors.
(iv) ING is familiar with the provisions of Rule 144 and the
limitations upon the availability and applicability of such rule.
(v) ING is purchasing the ING Note and the ING Warrant as an
investment for its sole account, and without any present view towards the resale
or other distribution thereof.
(vi) ING is an "accredited investor," within the meaning of
Rule 501 promulgated by the Securities and Exchange Commission under the
Securities Act of 1933.
ARTICLE 7.
AFFIRMATIVE COVENANTS
So long as any Note or any other Obligations shall remain outstanding
pursuant to the Loan Documents, unless the Required Purchasers shall otherwise
consent in the manner set forth in SECTION 10.4, each Consolidated Company shall
and shall cause each of its Subsidiaries to:
SECTION 7.1 PRESERVATION OF CORPORATE EXISTENCE. Do or cause to be done
all things necessary to (a) preserve and maintain its corporate existence and
all material rights and franchises and (b) qualify and remain qualified to
conduct business in each jurisdiction where the nature of the business or
ownership of property by the Company or any of its Subsidiaries may legally
require such qualification and where failure to be so qualified would have a
Material Adverse Effect.
SECTION 7.2 COMPLIANCE WITH LAWS. Comply with all applicable federal,
state and local laws, rules, regulations and orders of any governmental
authority, noncompliance with which would have a Material Adverse Effect, such
compliance to include, without limitation, (a) paying before the same become
delinquent all material taxes, assessments and governmental charges imposed upon
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it or upon its property (unless such taxes, assessments or charges are being
contested in good faith and by proper proceedings diligently pursued, and the
Company has obtained an adequate bond or adequate insurance or established
therefor a reserve of an adequate amount), and (b) complying in all material
respects with all federal, state and local laws, rules, regulations and orders
relating to pollution, reclamation, or protection of the environment, including
laws relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, or hazardous or toxic materials or wastes into air,
water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants or hazardous or toxic materials or wastes.
SECTION 7.3 MAINTENANCE OF INSURANCE. Maintain with financially sound
and reputable insurance companies or associations casualty, public liability and
other insurance in such amounts and covering such risks as are customarily
maintained by other companies operating similar businesses in similar locations
and of similar size, and, at the written request of a Purchaser, provide
evidence of compliance with this covenant to the Purchaser in the form of
certificates of insurance.
SECTION 7.4 VISITATION RIGHTS. At any reasonable time and from time to
time upon reasonable notice and without unreasonable interruption of the
Company's operations of business (provided that no notice shall be required upon
the occurrence and during the continuance of an Event of Default; provided
further that only one (1) business days' notice shall be required after the
occurrence and during the continuance of a Default), permit each Purchaser or
any agents or representatives of such Purchaser to examine and make copies of
and abstracts from the records and books of account of, and visit the properties
of the Company and its Subsidiaries and discuss the general business affairs of
the Company and its Subsidiaries (including, without limitation, significant
changes in personnel, compensation of employees, business ventures, important
acquisition and disposition of assets and significant litigation) with its
officers and its independent public accountants.
SECTION 7.5 RECORDS AND ACCOUNTS. Keep true records and books of
account in which entries will be made in accordance with GAAP consistently
applied and maintain accounts and reserves adequate in the opinion of the
Company for all taxes (including income taxes), all depreciation, depletion,
obsolescence and amortization of its properties, all other contingencies and all
other proper reserves.
SECTION 7.6 PAYMENT OF DEBTS, TAXES. Pay, or cause to be paid, all of
its debts and perform, or cause to be performed, all of its obligations promptly
and in accordance with the respective terms thereof, and promptly pay and
discharge, or cause to be paid and discharged, all taxes, assessments and
governmental charges or levies imposed upon it, upon its income or receipts or
upon any of its assets or properties before the same shall become in default, as
well as pay all lawful claims for labor, materials and supplies or otherwise
that, if not so paid, could or would result in the imposition of a Lien upon
such assets or properties or any part thereof; PROVIDED, that it shall not
constitute an Event of Default hereunder if the Company fails to perform any
such debt (except for any indebtedness serving under or in respect of any Loan
Document), tax, assessment, governmental or other charge, levy or claim that is
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being contested in good faith and by proper proceedings diligently pursued, if
the effect of such failure to pay or perform has not been to accelerate the
maturity of any other material debt or obligation of the Company or to subject
any part of the assets and properties of the Company to forfeiture or a Lien,
and if the Company has obtained therefor an adequate bond or adequate insurance
or established therefor a reserve of an adequate amount.
SECTION 7.7 FURTHER ASSURANCES. Execute and deliver to each Purchaser
such further instruments, provide it with such further data and information and
take such further action as the Purchasers may reasonably request or as may be
reasonably necessary further to effect the purposes of the Loan Documents.
SECTION 7.8 MAINTENANCE OF PROPERTIES. Cause all of its properties used
or useful in the conduct of its business to be maintained and kept in good
condition, repair and working order, reasonable wear and tear excepted, and
supplied with all necessary equipment and cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as in
the judgment of the Company may be necessary so that the business carried on in
connection therewith may be conducted at all times in the ordinary course of
business consistent with past practice.
SECTION 7.9 BUSINESS. Remain substantially in the business in which it
is engaged as of the date of this Agreement.
SECTION 7.10 REPORTING COVENANTS. Deliver to each Purchaser:
7.10.1 as soon as available and in any event within one
hundred fifteen (115) days after the end of each fiscal year of the
Company, a consolidated audited balance sheet of the Company and its
Subsidiaries as of the end of such fiscal year and the related
consolidated audited statements of income, retained earnings and cash
flow for such fiscal year, setting forth in each case in comparative
form the figures for the previous fiscal year, all in reasonable detail
and accompanied by a report thereon of Deloitte & Touche or other
independent public accountants acceptable to each Purchaser, which
report will be unqualified as to scope of audit and shall state that
such consolidated financial statements present fairly the consolidated
financial condition of the Company and its Subsidiaries as at the end
of such fiscal year, and the consolidated results of operations and
statements of cash flow of the Company and its Subsidiaries for such
fiscal year in accordance with GAAP and that the audit by such
accountants in connection with such consolidated financial statements
was made in accordance with GAAP;
7.10.2 as soon as available and in any event within
thirty-five (35) days after the end of each fiscal quarter in each
fiscal year of the Company, a consolidated balance sheet of the Company
and its Subsidiaries as of the end of such fiscal quarter and the
related consolidated statements of income, retained earnings and cash
flows for such fiscal quarter and for the portion of the Company's
fiscal year ended at the end of such fiscal quarter, setting forth in
each case in comparative form the figures for the corresponding fiscal
quarter and the corresponding portion of the Company's previous fiscal
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year, all certified (subject to normal year end adjustments and absence
of notes) as to fairness of presentation, preparation in accordance
with GAAP by the chief financial officer of the Company;
7.10.3 simultaneously with the delivery of each set of
financial statements referred to in SECTIONS 7.10.1 and 7.10.2 above, a
certificate of the chief financial officer of the Company substantially
in the form of EXHIBIT E hereto (i) setting forth in reasonable detail
the calculations required to establish whether the Company was in
compliance with the requirements of SECTION 8.12, on the date of such
financial statements and (ii) stating whether there exists on the date
of such certificate any Default or Event of Default and, if any Default
or Event of Default then exists, setting forth the details thereof and
the action which the Company is taking or proposes to take with respect
thereto;
7.10.4 forthwith upon the Company having knowledge of the
occurrence of any Default or Event of Default hereunder or any "Event
of Default" under any Senior Debt Documents (as such terms are defined
in the Senior Debt Documents), a certificate of the president or chief
financial officer of the Company setting forth the details thereof and
the action which the Company is taking or proposes to take with respect
thereto;
7.10.5 promptly upon the filing thereof or otherwise becoming
available, copies of all financial statements, annual, quarterly and
special reports, proxy statements and notices sent or made available
generally by the Company to its security holders, of all regular and
periodic reports and all registration statements and prospectuses, if
any, filed by any of them with any securities exchange, and of all
press releases and other statements made available generally to the
public containing material developments in the business or financial
condition of the Company;
7.10.6 promptly after receipt thereof, copies of all financial
statements of, and all reports and management letters submitted by,
independent public accountants to the Company in connection with each
annual, interim, or special audit of the Company's financial
statements;
7.10.7 within thirty (30) days prior to the end of the
Company's fiscal year, the Company shall deliver to the Purchaser the
annual budget for the Company and its Subsidiaries, including forecasts
of the income statement, the balance sheet and a cash flow statement
for the immediately succeeding year on a month by month basis and
thereafter, shall promptly deliver any amendment thereto;
7.10.8 promptly after the sending thereof, copies of all
financial statements, reports or other information sent to any holder
of the Senior Debt;
7.10.9 promptly after becoming aware of (i) the occurrence
thereof, notice of the institution by any Person of any action, suit or
proceeding or any governmental investigation or any arbitration, before
any court or arbitrator or any governmental or administrative body,
agency, or official, against the Company or any of its Subsidiaries or
material properties of any of the foregoing, and which if adversely
determined is likely to have a Material Adverse Effect, or (ii) the
receipt of actual knowledge thereof, notice of the threat of any such
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action, suit, proceeding, investigation or arbitration, each such
notice under this subsection to specify, if known, the amount of
damages being claimed or other relief being sought, the nature of the
claim, the Person instituting the action, suit, proceeding,
investigation or arbitration, and any other significant features of the
claim; and
7.10.10 such other information respecting the condition or
operations, financial or otherwise, of the Company or any of its
Subsidiaries as each Purchaser may from time to time reasonably
request, including, without limitation budget, projections, and
presentations to lenders or investor groups.
SECTION 7.11 USE OF PROCEEDS. Use proceeds from the sale of the Notes
and the Warrants (i) to finance acquisition and expansion, (ii) to partially
repay the Senior Debt, and (iii) for general corporate purposes; and the Company
shall not use any part of such proceeds to purchase or carry, or to reduce or
retire or refinance any credit incurred to purchase or carry, any margin stock
(within the meaning of Regulations U and X of the Board of Governors of the
Federal Reserve System) or to extend credit to others for the purpose of
purchasing or carrying any such margin stock.
SECTION 7.12 COMPLIANCE WITH MATERIAL CONTRACTS. Comply in all material
respects with all material terms and conditions of the Senior Debt Documents and
all other Material Contracts.
ARTICLE 8.
NEGATIVE COVENANTS
For so long as any Note or any of the other Obligations remains unpaid
or unperformed, unless the Required Purchasers (or, if required pursuant to
SECTION 10.4, all Purchasers) shall otherwise consent in the manner set forth in
SECTION 10.4, each Consolidated Company shall not, directly or indirectly, and
shall not allow any Subsidiary to:
SECTION 8.1 LIENS AND OTHER ENCUMBRANCES. Create, assume, incur or
permit to exist, or to be created, assumed, incurred or permitted to exist,
directly or indirectly, any Lien upon any of its property or assets, whether now
owned or hereafter acquired, or any income or profits therefrom except Permitted
Liens.
SECTION 8.2 INVESTMENTS. Make any loan or advance, or otherwise acquire
for a consideration, evidences of indebtedness, capital stock or other
securities of any Person or acquire any Subsidiary (an "INVESTMENT"), except
that, so long as no Default or Event of Default then exists or would be caused
thereby, the Company may:
(a) make (i) draws to sales persons in the ordinary course of
business, (ii) net advances to branches in the ordinary course of
business, and (iii) other loans or advances to officers and employees
for expenses incurred in the ordinary course of business in an
aggregate amount at any time outstanding not to exceed $15,000;
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(b) acquire and own prime commercial paper and certificates of
deposit in United States commercial banks (whose long-term debt is
rated "A" or better by Xxxxx'x Investors Service or Standard and Poor's
Corporation), in each case due within one year from the date of
purchase and payable in the United States in dollars;
(c) acquire and own direct obligations of the United States of
America or any agency thereof, or obligations fully guaranteed as to
principal and interest by the United States of America or any agency
thereof, in each case maturing within one year from the date of
creation of such obligation;
(d) endorse negotiable instruments for collection in the
ordinary course of business;
(e) create or form new Subsidiaries pursuant to Section 8.4.
SECTION 8.3 MERGER AND SALE OF ASSETS. (a) Enter into any transaction
of merger, consolidation, pooling of interest, joint venture, syndicate or other
combination with any other Person other than any merger or consolidation of (i)
any Subsidiary with another Subsidiary of the Company or (ii) of the Company
with another Person; PROVIDED THAT (A) the Company is the surviving entity, (B)
the Company is Solvent, (C) the Total Net Worth (as such term is defined in the
Senior Credit Agreement) of the Company equals or exceeds the Total Net Worth
(as such term is defined in the Senior Credit Agreement) of the Company,
immediately preceding such merger or consolidation, (D) any consideration for
stock or assets paid in connection therewith equals the fair market value of
such property and (E) no Change of Control or other Default or Event of Default
exists or is continuing; or
(b) Sell, lease, transfer or otherwise dispose of a substantial part of
its assets (whether now owned or hereafter acquired) in any single transaction
or series of related transactions, to any Person except for fair consideration
(as determined by the board of directors of the Company) where the net proceeds
of such sale are used to repay Senior Debt, or following the repayment thereof
in full, the Obligations. Nothing set forth in this subsection (b) shall limit
the rights and remedies of the Purchasers under the Transaction Documents upon
the occurrence of a Change of Control.
SECTION 8.4 CREATION OR ISSUANCE OF STOCK BY SUBSIDIARIES. Create any
Subsidiary other than wholly-owned Subsidiaries of the Company or any other
Consolidated Company (provided that any Subsidiary created shall execute and
deliver to the Purchasers a Guaranty Agreement in substantially the form of
ARTICLE 4 hereof, at the time such Subsidiary is created) or, except as set
forth on SCHEDULE 8.4, permit any Subsidiary (either directly or indirectly by
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the issuance of rights or options for, or securities convertible into such
shares) to issue, sell or dispose of any shares of its stock of any class (other
than directors' qualifying shares, if any) except to the Company or another
Subsidiary.
SECTION 8.5 TRANSACTIONS WITH AFFILIATES. Enter into any material
transaction or series of related transactions (other than the payment of
ordinary fees and expenses of members of the Board of Directors of the Company,
and other than payment of the Ramsay Group Payable) which in the aggregate would
be material, whether or not in the ordinary course of business, with any
Affiliate of the Company or any of its Subsidiaries, other than on terms and
conditions substantially as favorable to the Company or such Subsidiary as would
be obtained by the Company or such Subsidiary at the time in a comparable arm's
length transaction with a Person other than an Affiliate.
SECTION 8.6 DEBT. Incur, create, assume, guarantee, suffer to exist or
otherwise become liable on or with respect to, directly or indirectly, any Debt,
other than:
(a) any Debt owing to any Purchaser or an Affiliate of any
Purchaser, including, without limitation, the Senior Debt described in
Section 1 of SCHEDULE 8.6;
(b) Debt outstanding on the ING Closing Date (other than the
Senior Debt) and listed on SCHEDULE 8.6 hereof;
(c) endorsements of negotiable or similar instruments for
collection or deposit in the ordinary course of business;
(d) trade payables, current liabilities or similar obligations
(other than for borrowed money or purchase money obligations) from time
to time incurred in the ordinary course of business;
(e) taxes, assessments, or other governmental charges that are
not assessed or are being contested in good faith by appropriate action
promptly initiated and diligently conducted and for which the Company
shall have made adequate reserves for in accordance with generally
accepted accounting principles;
(f) Senior Debt; PROVIDED, HOWEVER, that in no event shall the
principal amount of the Senior Debt exceed the sum of (i)
$19,557,233.32 reduced by the amounts of any repayments and commitment
reductions under the Senior Credit Agreement (after the SunTrust
Closing Date) to the extent that such payments and reductions may not
be reborrowed, plus (ii) $2,000,000;
(g) purchase money Debt incurred by the Company in the
ordinary course of business, provided that, after incurring such Debt,
the aggregate principal amount of such Debt outstanding shall not
exceed $750,000 and no Default or Event of Default shall occur
hereunder;
(h) Capital Lease Obligations to the extent the underlying
Capital Lease is permitted pursuant to the terms of the Senior Credit
Agreement;
(i) Debt not included in paragraphs (a) through (h) above
which by its terms is unsecured and does not exceed at any time, in the
aggregate, the sum of $750,000.
SECTION 8.7 LEASE OBLIGATIONS. Create or suffer to exist any
obligations for the payment of rent for any property under operating leases or
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agreements to lease (other than Capital Leases) except for rental obligations of
the Company and its Subsidiaries, on a consolidated basis, not to exceed
$750,000 in any twelve month period.
SECTION 8.8 RESTRICTED PAYMENTS. Pay or declare any dividend or make
any other distribution on or on account of any class of its stock or other
equity or make cash distributions of equity, or make interest payments on
equity, or redeem, purchase, or otherwise acquire, directly or indirectly, any
shares of its stock or other equity, or make any other payments with respect to
Debt owed to shareholders except: (i) dividends paid, or distributions made, in
the stock of the Company; (ii) dividends paid, or distributions made, in cash
with respect to Stock of the Company to the extent that the holders of the
Warrants concurrently receives a special distribution equal to their pro rata
share of such dividend or distribution; (iii) dividends paid, or distributions
made, by a Subsidiary to another Subsidiary or to the Company; or (iv) the
repurchase of its Common Stock from an employee; (v) payment of ordinary fees
and expenses of members of the Board of Directors of the Company; and (vi)
payment of the Ramsay Group Payable.
SECTION 8.9 SALE AND LEASEBACKS. Except as set forth on Schedule 8.9,
enter into or permit any Subsidiary to enter into any arrangement, with any
lender or investor or under which such lender or investor is a party, providing
for the leasing by the Company or any Subsidiary of real or personal property,
used by the Company or any Subsidiary in the operations of the Company or any
Subsidiary, which has been or is sold or transferred by the Company or any
Subsidiary to such lender or investor or to any Person to whom funds have been
or are to be advanced by such lender or investor on the security of such rental
obligations of the Company or such Subsidiary.
SECTION 8.10 SALE OR DISCOUNT OF RECEIVABLES. Sell with recourse or
discount or otherwise sell for less than the face value thereof, any of its
notes or accounts receivable.
SECTION 8.11 COMPLIANCE WITH ERISA. Take or fail to take, nor permit
any ERISA Affiliate to take or fail to take, any action with respect to a Plan
including, but not limited to (i) establishing any Plan, (ii) amending any Plan,
(iii) terminating or withdrawing from any Plan, or (iv) incurring an amount of
unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA, or any
withdrawal liability under Title IV of ERISA, where such action or failure could
reasonably likely have a Material Adverse Effect.
SECTION 8.12 FINANCIAL COVENANTS. At any time during the term of this
Agreement, have a Total Debt to EBITDA Ratio, calculated on the last day of each
fiscal quarter of the Company, commencing with the quarter ending December 31,
1999, of more than 3.80:1.0.
SECTION 8.13 FISCAL YEAR. Change its Fiscal Year from that in effect as
of the ING Closing Date.
SECTION 8.14 MODIFICATIONS TO MATERIAL CONTRACTS. Permit any Material
Contract to be terminated prior to its stated maturity in the event such
termination would result in a Material Adverse Effect.
SECTION 8.15 INCONSISTENT AGREEMENT. Enter into any contract or
agreement which would violate the terms hereof or any other Transaction
Document.
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SECTION 8.16 NO REPURCHASE AGREEMENTS. Enter into any agreements to
repurchase any of its Stock upon the death or disability of any of its
shareholders, nor shall it maintain life insurance policies on any of its
shareholders for such purpose.
ARTICLE 9.
EVENTS OF DEFAULT
SECTION 9.1 EVENTS OF DEFAULT. Each of the following shall constitute
an Event of Default, whatever the reason for such event and whether or not it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment or order of any court or any order, rule, or regulation of any
governmental or nongovernmental body:
(a) failure of the Company to pay any principal or interest on
any of the Notes or any other amount payable hereunder or under any
other Loan Document when due; or
(b) failure on the part of the Company to perform or observe
any covenant contained in ARTICLE 8 or SECTIONS 7.1, 7.3 OR 7.10
hereof; or
(c) failure on the part of the Company to perform or observe
any other term, covenant or agreement contained in this Agreement not
specifically referred to in this ARTICLE 9, and any such failure
remains unremedied for 30 days after the earlier of (i) the discovery
thereof by the Company or (ii) written notice thereof to the Company by
the Purchaser; or
(d) any warranty or representation made by or on behalf of the
Company contained herein or in any instrument furnished in compliance
with or in reference to this Agreement is false or misleading in any
material respect on the date as of which made; or
(e) the Company or any of its Subsidiaries shall fail to pay
its debts generally as they come due, or shall file any petition or
action for relief under any bankruptcy, reorganization, insolvency or
moratorium law, or any other law or laws for the relief of, or relating
to, debtors; or
(f) an involuntary petition shall be filed under any
bankruptcy statute against the Company or any of its Subsidiaries, or a
custodian, receiver, trustee, assignee for the benefit of creditors (or
other similar official) shall be appointed to take possession, custody,
or control of the properties of the Company or any of its Subsidiaries,
unless such petition or appointment is set aside or withdrawn or ceases
to be in effect within sixty (60) days from the date of said filing or
appointment or an order for relief shall be entered in any such
involuntary action; or
(g) the Company or any of its Subsidiaries (i) shall fail to
make any payment when due (whether by scheduled maturity, required
prepayment, acceleration or otherwise) with respect to any Debt (other
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than Senior Debt) in excess of $500,000 in the aggregate, or (ii) shall
fail to perform or observe any other agreement, term or condition
contained in any agreement under which any Debt described in clause (i)
is created (or if any other event shall occur and be continuing
thereunder) and the effect of such failure or other event set forth in
clause (i) or (ii) above is to cause the holders thereof to cause such
obligation to become due prior to any stated maturity; or
(h) a Change of Control shall occur; or
(i) any order or judgment for the payment of money in excess
of $600,000 shall be rendered against the Company or any of its
Subsidiaries, and such order or judgment shall continue unsatisfied and
unstayed for more than thirty (30) days, unless (i) defense of the
action, suit or proceeding has been tendered to the Company's or such
Subsidiary's insurance carrier, and (ii) the company's or such
Subsidiary's insurance carrier has not denied or disputed coverage; or
(j) any material default shall occur and be continuing
pursuant to the terms of any of the other Loan Documents or any Senior
Debt shall be declared to be due and payable or required to be prepaid,
redeemed, purchased or defeased, or an offer to prepay, redeem,
purchase or defease such Debt shall be required to be made, in each
case prior to the stated maturity thereof and, in each case, other than
pursuant to the mandatory prepayment or optional prepayment provisions
of the Senior Debt Documents, or the maturity of any or all of such
Senior Debt is otherwise accelerated, or the Company or any of its
Subsidiaries shall fail to pay all or any portion of the Senior Debt in
full upon the final stated maturity of such Senior Debt; or
(k) the Company shall disavow, revoke or terminate any
Transaction Document to which it is a party or shall otherwise
challenge or contest in any action, suit or proceeding in any court or
before any arbitrator or governmental body the validity or
enforceability of this Agreement, the Notes or any other Transaction
Document; or
(l) a warrant or writ of attachment or execution or similar
process shall be issued against any property of the Company or any of
its Subsidiaries which exceeds, individually or together with all other
such warrants, writs and processes since the SunTrust Closing Date,
$600,000 in amount and such warrant, writ or process shall not be
discharged, vacated, stayed or bonded for a period of 60 days;
PROVIDED, HOWEVER, that in the event a bond has been issued in favor of
the claimant or other Person obtaining such attachment or writ, the
issuer of such bond shall execute a waiver or subordination agreement
in form and substance satisfactory to the Purchaser pursuant to which
the issuer of such bond subordinates its right of reimbursement,
contribution or subrogation to the Obligations and waives or
subordinates any Lien it may have on the assets of the Company or any
Subsidiary; or
(m) the Company or any of its Subsidiaries is enjoined,
restrained or in any way prevented by the order of any court or any
administrative or regulatory agency from conducting all or any material
part of its business and such order continues for more than thirty (30)
days; or
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(n) the loss, suspension or revocation or failure to renew of,
any license, permit or Material Contract now held or hereafter acquired
by the Company or any of its Subsidiaries, if such loss, suspension,
revocation or failure to renew could reasonably likely have a Material
Adverse Effect; or
(o) any order, judgment or decree is entered against the
Company or any of its Subsidiaries decreeing the dissolution or split
up of the Company or that Subsidiary and such order remains
undischarged or unstayed for a period in excess of sixty (60) days; or
SECTION 9.2 REMEDIES ON DEFAULT. (a) Upon the occurrence and
continuation of an Event of Default (other than an Event of Default described in
SECTION 9.1 (E) and (F)), the Required Purchasers, subject to the Subordination
Agreement, may, in their sole discretion, but shall not be obligated to, declare
all amounts payable by the Company under the Notes to be forthwith due and
payable, including, without limitation, costs of collection (including
reasonable attorneys' fees if collected by or through an attorney at law or in
bankruptcy, receivership or other judicial proceedings) and the same shall
thereupon become immediately due and payable without demand, presentment,
protest or further notice of any kind, all of which are hereby expressly waived,
and may exercise all of its rights and remedies under the Loan Documents or
under applicable law.
(b) Upon the occurrence of any Event of Default set forth in
clause (E) or (F) above, without any notice to the Company or any other
act by the Required Purchasers, all amounts payable by the Company
under the Notes, including, without limitation, all costs of collection
(including reasonable attorneys' fees if collected by or through an
attorney at law or in bankruptcy, receivership or other judicial
proceedings) shall be immediately due and payable, without presentment,
demand, protest or notice of any kind, all of which are hereby
expressly waived by the Company.
(c) No remedy herein conferred or reserved is intended to be
exclusive of any other available remedy or remedies, but each and every
such remedy shall be cumulative and shall be in addition to every other
remedy given under this Agreement or now or hereafter existing at law
or in equity or by statute. No delay or omission to exercise any right
or power accruing upon any default, omission or failure of performance
hereunder shall impair any such right or power or shall be construed to
be a waiver thereof, but any such right or power may be exercised from
time to time and as often as may be deemed expedient. In order to
exercise any remedy reserved to the Purchaser in this Agreement, it
shall not be necessary to give any notice, other than such notice as
may be herein expressly required.
ARTICLE 10.
MISCELLANEOUS
SECTION 10.1 NOTICES. All notices, requests and other communications to
any party hereunder shall be in writing (including telecopier) and shall be
effective (a) if given by mail, when deposited in the mails or (b) if given by
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telecopier, when so telecopied. Notices hereunder shall be mailed or telecopied
as follows:
If to the Company or any other Consolidated Company:
If to the Company:
Ramsay Youth Services, Inc.
Xxx Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxx 00000
Attn: Xx. Xxxxxx X. Xxxxxxx
Telecopy Number: (000) 000-0000
Telephone Number: (000) 000-0000
with a copy to:
Torys
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxxx, Esq.
Telecopy Number: (000) 000-0000
Telephone Number: (000) 000-0000
If to SunTrust:
SunTrust Banks, Inc.
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: Xx. Xxxxxx X. Xxxxxx
Telecopy Number: (000) 000-0000
Telephone Number: (000) 000-0000
with a copy to:
King & Spalding
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxx, Xx., Esq.
Telecopy Number: (000) 000-0000
Telephone Number: (000) 000-0000
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If to ING:
ING (U.S.) Capital, LLC
000 Xxxxxxxx Xxxxxxx, X.X.
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Xx. Xxxxxx X. Xxxxxxx
Telecopy Number: (000) 000-0000
Telephone Number: (000) 000-0000
with a copy to:
King & Spalding
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxx, Xx., Esq.
Telecopy Number: (000) 000-0000
Telephone Number: (000) 000-0000
SECTION 10.2 NO WAIVER. No delay or failure on the part of any
Purchaser or any holder of the Notes and the exercise of any right, power or
privilege granted under this Agreement or any other Transaction Document or
available at law or in equity, shall impair any such right, power or privilege
or be construed as a waiver of any Event of Default or any acquiescence therein.
No single or partial exercise of any such right, power or privilege shall
preclude the further exercise of such right, power or privilege. No waiver shall
be valid against any Purchaser unless made in writing and signed by such
Purchaser, and then only to the extent expressly specified therein.
SECTION 10.3 EXPENSES.
(1) The Company agrees to pay on demand all costs, expenses,
(i) incurred by the Purchasers in connection with the preparation,
execution and delivery of this Agreement and all other Transaction
Documents, including the reasonable fees and disbursements of counsel
for the Purchasers in an amount not to exceed $50,000; (ii) incurred by
the Purchasers in connection with the preparation, execution and
delivery of any waiver, amendment or consent by the Purchasers relating
to the Transaction Documents, including the reasonable costs and fees
of counsel for the Purchasers; and (iii) incurred by the Purchasers,
including the reasonable costs and fees of its counsel, in connection
with the enforcement of the Transaction Documents.
(2) The Company agrees to indemnify, pay and hold the
Purchaser and any holder of any of the Notes and the Warrants and the
officers, directors, employees and agents of the Purchasers and such
holders (the "INDEMNIFIED PERSONS") harmless from and against any and
all liabilities, losses, damages, costs and expenses of any kind
(including, without limitation, the reasonable fees and disbursements
of counsel for any Indemnified Person in connection with any
investigative, administrative or judicial proceeding, whether or not
such Indemnified Person shall be designated a party thereto) which may
be incurred by any Indemnified Person, relating to or arising out of
the enforcement of this Agreement, the Notes, the Warrants or any other
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Transaction Document or any actual or proposed use of proceeds of the
Notes; PROVIDED, that no Indemnified Person shall have the right to be
indemnified hereunder for its own gross negligence or willful
misconduct, as determined by a court of competent jurisdiction.
SECTION 10.4 AMENDMENTS, ETC. Any provision of this Agreement, the
Notes, or any other Transaction Document to which the Company is a party may be
amended or waived, if such amendment or waiver is in writing and is signed by
the Company, as the case may be, and the Required Purchasers; PROVIDED THAT,
without the approval in writing of each Purchaser with respect to its Note, no
amendment, modification, supplement, termination, waiver, or consent may be
effective:
(a) to amend or modify the principal of such Note, or the
amount of principal payments or prepayments required hereunder, or the
rate of interest payable on any Note;
(b) to postpone any date fixed for any payment of principal
of, prepayment of principal of, or any installment of interest on, any
Note or to extend the term of any Note;
(c) to amend or modify the definitions of "Required
Purchasers," or the provisions of this SECTION 10.4;
Any amendment, modification, supplement, termination, waiver or consent effected
in accordance with this SECTION 10.4 shall apply equally to, and shall be
binding upon, all Purchasers.
SECTION 10.5 SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; PROVIDED, that the Company may not assign or
otherwise transfer any of its rights or obligations under this Agreement, the
Notes or any other Transaction Document to any Person without the prior written
consent of the Purchasers. Such assignee shall have, to the extent of such
assignment (unless otherwise provided therein), the same rights, obligations and
benefits as it would have if it were the Purchaser hereunder and under the other
Loan Documents. Notwithstanding the foregoing, any Purchaser may sell or
otherwise grant participations in all or any part of the Notes. The holder of
any such participation, if the participation agreement so provides, shall have
the same rights and benefits of the Purchasers hereunder.
SECTION 10.6 GOVERNING LAW. THIS AGREEMENT, THE NOTES AND THE WARRANTS
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
GEORGIA (WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICTS OF LAWS).
SECTION 10.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained herein or made by or furnished on
behalf of the Company in connection herewith shall survive the execution and
delivery of this Agreement.
SECTION 10.8 SEVERABILITY. If any part of any provision contained in
this Agreement shall be invalid or unenforceable under applicable law, said part
shall be ineffective to the extent of such invalidity only, without in any way
affecting the remaining parts of said provision or the remaining provisions.
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SECTION 10.9 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original and all of
which, taken together, shall constitute one and the same instrument.
SECTION 10.10 SET-OFF. Upon the occurrence and during the continuation
of an Event of Default, each Consolidated Company authorizes each Purchaser,
without notice or demand, to apply any indebtedness due or to become due to such
Consolidated Company from such Purchaser in satisfaction of any of the
indebtedness, liabilities or obligations of such Consolidated Company under this
Agreement or under any other Loan Document, including, without limitation, the
right to set-off against any deposits or other cash collateral of the Company
held by such Purchaser or an Affiliate thereof.
SECTION 10.11 TERMINATION OF AGREEMENT. This Agreement shall terminate
upon the payment in full of the Notes and all Obligations relating thereto;
provided that, SECTIONS 3.2, 3.3 and 10.3 shall survive the termination of this
Agreement.
SECTION 10.12 JURISDICTION AND VENUE. EACH CONSOLIDATED COMPANY AGREES,
WITHOUT POWER OF REVOCATION, THAT ANY CIVIL SUIT OR ACTION BROUGHT AGAINST IT AS
A RESULT OF ANY OF ITS OBLIGATIONS UNDER THIS AGREEMENT OR UNDER ANY OTHER
TRANSACTION DOCUMENT TO WHICH IT IS A PARTY MAY BE BROUGHT AGAINST IT EITHER IN
THE IN THE CIRCUIT COURT OF XXXXXX COUNTY, GEORGIA, OR IN THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA, AND THAT SERVICE OF PROCESS
MAY BE MADE UPON IT IN ANY SUCH SUIT OR ACTION BY SERVICE OF PROCESS AS PROVIDED
BY GEORGIA LAW. EACH CONSOLIDATED COMPANY HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF SUCH COURTS AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTIONS THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF THE VENUE OF SUCH CIVIL SUIT OR ACTION AND ANY CLAIM THAT SUCH CIVIL SUIT OR
ACTION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH CONSOLIDATED COMPANY
AGREES THAT FINAL JUDGMENT IN ANY SUCH CIVIL SUIT OR ACTION SHALL BE CONCLUSIVE
AND BINDING UPON IT AND SHALL BE ENFORCEABLE AGAINST IT BY SUIT UPON SUCH
JUDGMENT IN ANY COURT OF COMPETENT JURISDICTION.
SECTION 10.13 WAIVER OF JURY TRIAL. EACH OF THE COMPANY, THE GUARANTORS
AND EACH PURCHASER KNOWINGLY, VOLUNTARILY, INTENTIONALLY, AND IRREVOCABLY WAIVE
THE RIGHT EITHER OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY
LITIGATION, WHETHER IN CONTRACT OR TORT, AT LAW OR EQUITY, BASED HEREON, OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT AND ANY OTHER
DOCUMENT OR INSTRUMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN)
OR ACTIONS OF ANY PARTY HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT FOR ANY
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PURCHASER ENTERING INTO THIS AGREEMENT. FURTHER, EACH CONSOLIDATED COMPANY
HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF ANY PURCHASER, NOR SUCH
PURCHASER'S COUNSEL, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT ANY PURCHASER
WOULD NOT, IN THE EVENT OF SUCH LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT
TO JURY TRIAL PROVISION, NO REPRESENTATIVE OR AGENT OF ANY PURCHASER, NOR SUCH
PURCHASER'S COUNSEL HAS THE AUTHORITY TO WAIVE, CONDITION, OR MODIFY THIS
PROVISION.
SECTION 10.14 ENTIRE AGREEMENT. This Agreement, the Notes, the Warrants
and the other Transaction Documents to which the Company is a party, together
with any exhibits and schedules attached hereto and thereto, constitute the
entire understanding of the parties with respect to the subject matter hereof
and thereof, and any other prior or contemporaneous agreements, whether written
or oral, with respect hereto or thereto are expressly superseded hereby. The
execution of this Agreement, the Notes, the Warrants and the other Transaction
Documents to which the Company is a party by the Company was not based upon any
facts or materials provided by any Purchaser, nor was the Company induced to
execute this Agreement, the Note, the Warrants or the other Transaction
Documents to which the Company is a party by any representation, statement or
analysis made by any Purchaser.
[SIGNATURES ON FOLLOWING PAGES]
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48
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their authorized officers all as of the day and year first above
written.
COMPANY:
RAMSAY YOUTH SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------
Xxxxxx X. Xxxxxxx
Executive Vice President
SUBSIDIARY GUARANTORS:
XXXXXXX PSYCHIATRIC HOSPITAL, INC.,
an Oklahoma corporation
BOUNTIFUL PSYCHIATRIC HOSPITAL, INC.,
a Utah corporation
EAST CAROLINA PSYCHIATRIC
SERVICES CORPORATION, a North
Carolina corporation
GREAT PLAINS HOSPITAL, INC.,
a Missouri corporation
GULF COAST TREATMENT CENTER, INC.,
a Florida corporation
H.C. CORPORATION, an Alabama corporation
HAVENWYCK HOSPITAL, INC.,
a Michigan corporation
HSA HILL CREST CORPORATION,
an Alabama corporation
HSA OF OKLAHOMA, INC., an Oklahoma
corporation
MICHIGAN PSYCHIATRIC SERVICES, INC.,
a Michigan corporation
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49
RAMSAY EDUCATIONAL SERVICES, INC.,
a Delaware corporation
RAMSAY HOSPITAL CORPORATION OF
LOUISIANA, INC., a Louisiana corporation
RAMSAY LOUISIANA, INC., a Delaware
corporation
RAMSAY MANAGED CARE, INC., a Delaware
corporation
RAMSAY YOUTH SERVICES OF ALABAMA, INC.,
a Delaware corporation
RAMSAY YOUTH SERVICES OF FLORIDA, INC.,
a Delaware corporation
RAMSAY YOUTH SERVICES OF SOUTH CAROLINA, INC.
a Delaware corporation
RAMSAY YOUTH SERVICES PUERTO RICO, INC.,
a Puerto Rico corporation
RHCI SAN ANTONIO, INC., a Delaware corporation
TRANSITIONAL CARE VENTURES, INC., a
Delaware corporation
TRANSITIONAL CARE VENTURES (TEXAS), INC., a
Delaware corporation
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------
Xxxxxx X. Xxxxxxx
Vice President
Address For all Subsidiary's:
c/o Ramsay Youth Services
Xxx Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxxx
[SIGNATURE PAGE TO THE
SUBORDINATED NOTE AND WARRANT PURCHASE AGREEMENT]
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50
H.C. PARTNERSHIP
By: H.C. CORPORATION, an Alabama
corporation, as a general partner
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------
Xxxxxx X. Xxxxxxx
Vice President
By: HSA HILL CREST CORPORATION,
an Alabama corporation, as a general
partner
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------
Xxxxxx X. Xxxxxxx
Vice President
Address for both:
c/o Ramsay Youth Services, Inc.
Xxx Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxxx
[SIGNATURE PAGE TO THE
SUBORDINATED NOTE AND WARRANT PURCHASE AGREEMENT]
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51
PURCHASERS:
SUNTRUST BANKS, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Xxxxxx X. Xxxxxx
Group Vice President
PRINCIPAL XXXXXX
000 Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
ING (U.S.) CAPITAL, LLC
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------
Xxxxxx X. Xxxxxxx
Director
PRINCIPAL XXXXXX
000 Xxxxxxxx Xxxxxxx, X.X.
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
[SIGNATURE PAGE TO THE
SUBORDINATED NOTE AND WARRANT PURCHASE AGREEMENT]
46
