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EXHIBIT 10.139
THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT
This Third Amendment to Loan and Security Agreement (this "THIRD
AMENDMENT") is entered into as of the 17th day of November, 1999, between RAMSAY
YOUTH SERVICES, INC., a Delaware corporation, f/k/a RAMSAY HEALTH CARE, INC.
("HOLDINGS"), with its principal place of business at Columbus Center, Xxx
Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxx Xxxxxx, Xxxxxxx 00000, each of the Subsidiaries
of Holdings party to this Third Amendment and listed in EXHIBIT B to the Loan
Agreement referred to below (the "HOLDINGS SUBSIDIARIES"), each of which is a
corporation or other legal entity as indicated in EXHIBIT B, is organized under
the laws of the jurisdiction indicated in EXHIBIT B, and has its principal place
of business at the location indicated in EXHIBIT B (Holdings, the Holdings
Subsidiaries, and each other Subsidiary of Holdings or of any Subsidiary of
Holdings from time to time party to the Loan Agreement referred to below are
hereinafter collectively referred to as "BORROWERS" and each individually as a
"BORROWER"), and FLEET CAPITAL CORPORATION, a Rhode Island corporation (in its
individual capacity, "FCC"), with offices at 0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx
0000, LB 21, Xxxxxx Xxxxx 00000, as a Lender, and as agent for all Lenders, in
such capacity, "AGENT"), and such Persons who are or hereafter become parties to
the Loan Agreement as Lenders. Capitalized terms used but not defined in this
Third Amendment have the meanings assigned to them in Appendix A of that certain
Loan and Security Agreement dated October 30, 1998, among Borrowers, Lenders and
Agent, as amended (the "LOAN AGREEMENT").
W I T N E S S E T H:
WHEREAS, the Borrowers have requested certain amendments to the Loan
Agreement; and
WHEREAS, subject to the terms and conditions herein contained, Agent
and Lenders have agreed to the Borrowers' requests.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged and confessed,
Borrowers, Agent and Lenders hereby agree as follows:
SECTION 1. Subject to the satisfaction of each condition precedent set
forth in SECTION 2 hereof and in reliance on the representations, warranties,
covenants and agreements contained in this Third Amendment, the Loan Agreement
shall be amended effective November 17, 1999 (the "THIRD AMENDMENT EFFECTIVE
DATE") in the manner provided in this SECTION 1:
1.1 AMENDED DEFINITIONS. The definitions of Acquisition Loan Commitment
Termination Date and Pro Forma Quarterly Availability contained in APPENDIX A to
the Loan Agreement shall be amended by deleting those definitions in their
entirety and inserting in their place, respectively, the following definitions:
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ACQUISITION LOAN COMMITMENT TERMINATION DATE - THE EARLIEST OF (I) WITH
RESPECT TO ACQUISITION ADVANCES, NOVEMBER 30, 1999, OR WITH RESPECT TO
BRIDGE LOAN ADVANCES, FEBRUARY 28, 2000, (II) THE DATE OF TERMINATION
OF THE COMMITMENT TO MAKE FURTHER ACQUISITION LOANS PURSUANT TO SECTION
4.2, AND (III) THE DATE OF TERMINATION OF THE COMMITMENT TO MAKE
FURTHER REVOLVING CREDIT LOANS PURSUANT TO SECTION 10.2.
PRO FORMA QUARTERLY AVAILABILITY - FOR ANY FISCAL QUARTER OF HOLDINGS
THE SUM OF (I) THE AVERAGE DAILY BALANCE OF THE AVAILABILITY, MINUS
(II) THE AVERAGE DAILY LC AMOUNT, MINUS (III) SETTLEMENT AMOUNTS PAID
IN SUCH FISCAL QUARTER OR COMMITTED TO BE PAID IN THE NEXT-FOLLOWING
FISCAL QUARTER, CALCULATED ON A PRO FORMA BASIS FOR SUCH FISCAL QUARTER
AS IF SUCH SETTLEMENT AMOUNTS WERE PAID IN CASH ON THE FIRST DAY OF
SUCH FISCAL QUARTER, PLUS (IV) THE AMOUNT OF THE LIQUIDITY RESERVE AS
CALCULATED BY AGENT PURSUANT TO SECTION 1.1.1(A)(V).
1.2 ADDITIONAL DEFINITIONS. Appendix A to the Loan Agreement shall
be amended to add the following definitions to such Appendix:
ACQUISITION ADVANCES - AS DEFINED IN SECTION 1.2.2.
BRIDGE LOAN ADVANCES - AS DEFINED IN SECTION 1.2.2.
BENCHMARK YOUTH RESIDENTIAL FACILITY - THE FACILITY LOCATED AT 592 WEST
0000 XXXXX XXXXXX, XXXXX XXXXX, XXXX 00000.
CAPITAL STOCK - ANY AND ALL SHARES, INTERESTS, PARTICIPATIONS OR OTHER
EQUIVALENTS (HOWEVER DESIGNATED) OF CORPORATE STOCK, INCLUDING WITHOUT
LIMITATION, WITH RESPECT TO HOLDINGS, ALL COMMON STOCK.
CHARTER SALE INDEMNIFICATION - THE INDEMNIFICATION CLAIM ASSERTED
AGAINST HOLDINGS BY CHARTER BEHAVIORAL HEALTH SYSTEMS, L.L.C. REGARDING
THE DIFFERENCE BETWEEN ESTIMATED AND ACTUAL WORKING CAPITAL ACQUIRED BY
CHARTER IN THE CHARTER SALE.
CONTINGENT LIABILITIES - THE CHARTER SALE INDEMNIFICATION, THE XXXXXXXX
LAWSUIT, AND THE RHCL ASSUMED TAX LIABILITY.
DISQUALIFIED STOCK - ANY CAPITAL STOCK WHICH, BY ITS TERMS (OR BY THE
TERMS OF ANY SECURITY INTO WHICH IT IS CONVERTIBLE OR FOR WHICH IT IS
EXCHANGEABLE), OR UPON THE HAPPENING OF ANY EVENT, (I) MATURES OR IS
MANDATORILY REDEEMABLE, PURSUANT TO A SINKING FUND OBLIGATION OR
OTHERWISE, OR IS REDEEMABLE AT THE SOLE OPTION OF THE HOLDER THEREOF,
IN WHOLE OR IN PART, IN ANY CASE, ON OR PRIOR TO THE MATURITY DATE,
(II) PERMITS OR REQUIRES THE PAYMENT OF ANY DIVIDENDS IN CASH PRIOR TO
THE PAYMENT IN FULL OF ALL OF THE OBLIGATIONS AND TERMINATION OF THE
AGREEMENT, OR (III) IS NOT SUBORDINATED TO THE PRIOR PAYMENT IN FULL OF
ALL OF THE OBLIGATIONS AND TERMINATION OF THE AGREEMENT ON TERMS
ACCEPTABLE TO AGENT.
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XXXXXXXX LAWSUIT - THE LAWSUIT FILED BY XXXXXXX XXXXXXXX, A FORMER
CHIEF OPERATING OFFICER OF HOLDINGS, AGAINST HOLDINGS FOR DAMAGES
INCLUDING LOST WAGES, SEVERANCE PAYMENTS AND STOCK OPTIONS.
LIQUIDITY EVENT - THE RECEIPT BY HOLDINGS, AFTER THE THIRD AMENDMENT
EFFECTIVE DATE, OF AN AGGREGATE AMOUNT OF AT LEAST $7,000,000.00, PLUS
THE AGGREGATE AMOUNT OF ALL RHCL PAYMENTS, IF ANY, FROM THE OCCURRENCE
OF ANY ONE OR MORE OF THE FOLLOWING EVENTS: (I) THE PLACEMENT OF
SUBORDINATED INDEBTEDNESS ON TERMS AND CONDITIONS SATISFACTORY TO AGENT
IN ITS SOLE AND ABSOLUTE DISCRETION, (II) THE CONSUMMATION OF THAT
CERTAIN SALE/LEASEBACK OF HOLDINGS' BENCHMARK YOUTH RESIDENTIAL
FACILITY, (III) THE CONSUMMATION OF A SALE OF THE MISSION VISTA
FACILITY ON TERMS AND CONDITIONS SATISFACTORY TO AGENT IN ITS SOLE AND
ABSOLUTE DISCRETION, (IV) THE SALE AND ISSUANCE BY HOLDINGS OF ITS
CAPITAL STOCK (OTHER THAN DISQUALIFIED STOCK), AND (V) RHCL RECEIPTS.
RHCL ASSUMED TAX LIABILITY - THE $1,800,000 FEDERAL TAX LIABILITY OF
RHCL ASSUMED BY HOLDINGS AS PART OF THE PURCHASE PRICE OF RHCL IN THE
RHCL STOCK PURCHASE.
RHCL PAYMENTS - ANY AND ALL PAYMENTS MADE BY HOLDINGS OR ANY OF ITS
SUBSIDIARIES, AFTER THE DATE OF THE THIRD AMENDMENT, TO THE STATE OF
LOUISIANA OR ANY AGENCY OR GOVERNMENTAL BODY THEREOF IN CONNECTION WITH
THE LOUISIANA MEDICAID DISPROPORTIONATE SHARE PAYMENTS.
RHCL RECEIPTS - ANY AND ALL PAYMENTS RECEIVED BY HOLDINGS OR ANY OF ITS
SUBSIDIARIES, AFTER THE DATE OF THE THIRD AMENDMENT, FROM THE STATE OF
LOUISIANA OR ANY AGENCY OR GOVERNMENTAL BODY THEREOF IN CONNECTION WITH
THE LOUISIANA MEDICAID DISPROPORTIONATE SHARE PAYMENTS.
RHCL STOCK PURCHASE - AS DEFINED IN THE FIRST RECITAL OF THE SECOND
AMENDMENT TO LOAN AND SECURITY AGREEMENT, CONSENT AND BORROWING BASE
CHANGE NOTICE, DATED AS OF JUNE 30, 1999 BETWEEN HOLDINGS, HOLDINGS
SUBSIDIARIES, AGENT AND LENDER.
SUSPENSION EVENT - THE EXISTENCE OF ANY ONE OR MORE OF THE FOLLOWING:
(I) A DEFAULT OR EVENT OF DEFAULT, (II) AN AGREEMENT BETWEEN BORROWERS,
AGENT AND LENDERS THAT AGENT AND LENDERS SHALL FORBEAR FROM EXERCISING
ANY RIGHTS OR REMEDIES PURSUANT TO THE LOAN DOCUMENTS OR (III) THE
ACCELERATION OF ANY AMOUNTS DUE WITH RESPECT TO THE LOAN DOCUMENTS.
THIRD AMENDMENT - THE THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT
AMONG BORROWERS, LENDERS AND AGENT DATED NOVEMBER 17, 1999.
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THIRD AMENDMENT EFFECTIVE DATE - AS DEFINED IN THE THIRD AMENDMENT.
1.3 AMENDMENT ACKNOWLEDGING ADDITION TO BORROWING BASE RESERVE.
SECTION 1.1.1(A)(V) of the Loan Agreement shall be amended in its entirety to
read as follows:
(V) IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT A RESERVE EQUAL
TO THE SUM OF THREE MILLION AND NO/100 DOLLARS ($3,000,000.00) MINUS
THE AGGREGATE AMOUNT OF ANY BRIDGE LOAN ADVANCES MADE FROM TIME TO TIME
PURSUANT TO SECTION 1.2.2, SHALL BE ESTABLISHED AND MAINTAINED AGAINST
THE AMOUNT OF REVOLVING CREDIT LOANS THAT BORROWERS MAY OTHERWISE
REQUEST UNDER THIS AGREEMENT (THE "LIQUIDITY RESERVE"), WHICH LIQUIDITY
RESERVE SHALL REMAIN IN PLACE UNTIL THE OCCURRENCE OF A LIQUIDITY EVENT
AND THE SETTLEMENT AND SATISFACTION OF ALL CONTINGENT LIABILITIES.
1.4 AMENDMENT TO ACQUISITION LOANS. SECTION 1.2.2 of the Loan
Agreement shall be amended in its entirety to read as follows:
1.2.2 ACQUISITION LOANS. DURING THE PERIOD COMMENCING
MARCH 1, 1999, AND ENDING ON THE DAY PRECEDING THE ACQUISITION LOAN
COMMITMENT TERMINATION DATE WITH RESPECT TO ACQUISITION ADVANCES AND
BRIDGE LOAN ADVANCES, AS THE CASE MAY BE, (THE "ACQUISITION LOAN
PERIOD"), EACH LENDER AGREES, FOR SO LONG AS NO DEFAULT OR EVENT OF
DEFAULT EXISTS, TO MAKE LOANS ("ACQUISITION LOAN(S)") TO BORROWERS (I)
TO FINANCE PERMITTED ACQUISITIONS CONSUMMATED WITHIN THE ACQUISITION
LOAN PERIOD (THE "ACQUISITION ADVANCES") AND (II) FOR WORKING CAPITAL
AND GENERAL CORPORATE PURPOSES (THE "BRIDGE LOAN ADVANCES"); PROVIDED
THAT BRIDGE LOAN ADVANCES SHALL BE MADE IN THE SOLE AND ABSOLUTE
DISCRETION OF AGENT AND THE REQUIRED LENDERS AND, EXCEPT FOR THE
INITIAL BRIDGE LOAN ADVANCE, SUBJECT TO THE RECEIPT BY AGENT OF
EVIDENCE SATISFACTORY TO AGENT AND REQUIRED LENDERS THAT THE PROCEEDS
OF ANY AND ALL PRIOR BRIDGE LOAN ADVANCES WERE USED SOLELY TO SATISFY
CONTINGENT LIABILITIES OR, WITH THE PRIOR WRITTEN APPROVAL OF AGENT,
WHICH SHALL NOT BE UNREASONABLY WITHHELD, THE SATISFACTION OF OTHER
LIABILITIES OF BORROWERS, AS THEY BECOME DUE. THE AGGREGATE AMOUNT OF
ALL BRIDGE LOAN ADVANCES SHALL NOT EXCEED $3,000,000 AND THE AGGREGATE
AMOUNT OF ALL ACQUISITION ADVANCES SHALL NOT EXCEED $500,000 AFTER THE
THIRD AMENDMENT CLOSING DATE. THE AGGREGATE AMOUNT OF THE ACQUISITION
LOANS TO BE MADE BY EACH LENDER (SUCH LENDER'S "ACQUISITION LOAN
COMMITMENT"), PURSUANT TO THE TERMS HEREOF, SHALL BE THE AMOUNT SET
BELOW SUCH LENDER'S NAME ON THE SIGNATURE PAGES OF THE THIRD AMENDMENT
OR IN THE MOST RECENT ASSIGNMENT AND ACCEPTANCE AGREEMENT, IF ANY,
EXECUTED BY SUCH LENDER. THE AGGREGATE PRINCIPAL AMOUNT OF THE
ACQUISITION LOAN COMMITMENTS IS SIX MILLION DOLLARS ($6,000,000). XXX
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XXXXXXXXXXX XXXX XXXXX XX EVIDENCED BY ONE OR MORE ACQUISITION NOTES TO
BE EXECUTED AND DELIVERED BY BORROWERS TO LENDERS ON THE THIRD
AMENDMENT CLOSING DATE, WHICH SHALL BEAR INTEREST AS SPECIFIED IN
SECTION 2.1 AND SHALL BE REPAYABLE IN ACCORDANCE WITH THE TERMS OF
ACQUISITION NOTES. THE PERCENTAGE EQUAL TO THE QUOTIENT OF (X) EACH
LENDER'S ACQUISITION LOAN COMMITMENT, DIVIDED BY (Y) THE AGGREGATE OF
ALL ACQUISITION LOAN COMMITMENTS, IS THAT LENDER'S "ACQUISITION LOAN
PERCENTAGE." SUBJECT TO ALL OF THE TERMS AND CONDITIONS OF THIS
AGREEMENT, EACH LENDER AGREES, FOR SO LONG AS NO DEFAULT OR EVENT OF
DEFAULT EXISTS, TO MAKE ACQUISITION LOANS TO BORROWERS FROM TIME TO
TIME, AS REQUESTED BY BORROWERS IN ACCORDANCE WITH THE TERMS OF SECTION
3.1, UP TO A MAXIMUM PRINCIPAL AMOUNT AT ANY TIME OUTSTANDING EQUAL TO
THE PRODUCT OF (A) SIX MILLION DOLLARS ($6,000,000), MULTIPLIED BY (B)
SUCH LENDER'S ACQUISITION LOAN PERCENTAGE. AMOUNTS REPAID WITH RESPECT
TO THE ACQUISITION LOANS MAY NOT BE REBORROWED. IN NO EVENT SHALL ANY
ONE REQUEST BY BORROWERS FOR ACQUISITION LOANS BE IN AN AGGREGATE
AMOUNT OF LESS THAN TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000).
1.5 AMENDMENT TO UNUSED LINE FEE. SECTION 2.4 of the Loan
Agreement is hereby amended to read in its entirety as follows:
2.4 UNUSED LINE FEE. BORROWERS, ON A JOINT AND SEVERAL
BASIS, SHALL PAY TO AGENT FOR THE RATABLE BENEFIT OF LENDERS AN UNUSED
LINE FEE EQUAL TO (A) ONE-HALF PERCENT (0.50%) PER ANNUM OF THE AMOUNT
BY WHICH THE AVERAGE MONTHLY REVOLVING CREDIT LOAN BALANCE IS LESS THAN
THE REVOLVING CREDIT LOAN COMMITMENT PLUS (B)(I) DURING THE PERIOD FROM
MARCH 1, 1999, THROUGH OCTOBER 31, 1999, ONE-HALF PERCENT (0.50%) PER
ANNUM OF THE AMOUNT BY WHICH THE AVERAGE MONTHLY ACQUISITION LOAN
BALANCE IS LESS THAN THE ACQUISITION LOAN COMMITMENT, (II) DURING THE
PERIOD FROM NOVEMBER 1, 1999, THROUGH FEBRUARY 28, 2000, ONE-HALF
PERCENT (0.50%) PER ANNUM OF THE AMOUNT BY WHICH THE AVERAGE MONTHLY
ACQUISITION LOAN BALANCE IS LESS THAN $4,240,000. THE UNUSED LINE FEE
SHALL BE PAYABLE MONTHLY IN ARREARS ON THE FIRST DAY OF EACH CALENDAR
MONTH AFTER THE CLOSING DATE.
1.6 AMENDMENT OF MANDATORY PREPAYMENTS. SECTION 3.3 of the Loan
Agreement is hereby amended to read in its entirety as follows:
3.3 MANDATORY PREPAYMENTS.
3.3.1
(A) PROCEEDS OF SALE, LOSS, DESTRUCTION OR
CONDEMNATION OF COLLATERAL. EXCEPT AS PROVIDED IN SECTION
6.4.2, IF ANY BORROWER SELLS ANY OF THE EQUIPMENT, THE
MEADOWLAKE FACILITY, OR ANY OTHER REAL PROPERTY (OTHER THAN
THE MISSION VISTA FACILITY OR THE PERMITTED DISPOSITION OF THE
BENCHMARK YOUTH RESIDENTIAL FACILITY), OR IF A PERMITTED
DISPOSITION OF THE MISSION VISTA FACILITY OR THE BENCHMARK
YOUTH RESIDENTIAL FACILITY IS CONSUMMATED DURING THE
CONTINUANCE OF AN EVENT OF DEFAULT, OR IF ANY OF THE
COLLATERAL IS LOST OR DESTROYED OR TAKEN BY CONDEMNATION,
BORROWERS, ON A JOINT AND SEVERAL BASIS, SHALL PAY TO AGENT
FOR THE RATABLE BENEFIT OF LENDERS, UNLESS OTHERWISE AGREED BY
REQUIRED LENDERS, AS AND WHEN RECEIVED BY SUCH BORROWER AND AS
A MANDATORY PREPAYMENT OF (X) THE ACQUISITION ADVANCES OR (Y)
IF THE ACQUISITION ADVANCES ARE PAID IN FULL, THE TERM LOANS,
A SUM EQUAL TO THE PROCEEDS (INCLUDING INSURANCE PAYMENTS)
RECEIVED BY SUCH BORROWER FROM SUCH SALE, LOSS, DESTRUCTION OR
CONDEMNATION, PROVIDED, THAT IF NO EVENT OF DEFAULT EXISTS
WHEN SUCH PROCEEDS ARE RECEIVED BY SUCH BORROWER, THE AMOUNT
OF SUCH PROCEEDS PAYABLE TO AGENT UNDER THIS SECTION 3.3.1
SHALL BE NET OF (A) ANY REASONABLE COSTS OF SALE OR
DISPOSITION INCURRED BY BORROWERS IN CONNECTION THEREWITH, (B)
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PROVISIONS FOR ANY INCOME TAX EXPENSE REASONABLY EXPECTED TO
BE INCURRED BY BORROWERS AS A RESULT OF SUCH SALE OR
DISPOSITION, AND, (C) CASH ESCROW OR SIMILAR DEPOSITS REQUIRED
TO BE MADE BY SUCH BORROWER FOR THE BENEFIT OF THE PURCHASER
IN SUCH SALE TRANSACTION AS SECURITY FOR POST-CLOSING
CONTINGENT LIABILITIES OF SUCH BORROWER IN ORDER TO ENABLE
SUCH BORROWER TO CONSUMMATE SUCH SALE TRANSACTION (BUT ANY
AMOUNTS RELEASED TO SUCH BORROWER FROM ANY DEPOSIT OF THE TYPE
DESCRIBED IN THE PRECEDING CLAUSE (C) MADE BY SUCH BORROWER
SHALL, UPON RECEIPT BY BORROWER, BE DEEMED PROCEEDS SUBJECT TO
THE PROVISIONS OF THIS SECTION 3.3.1 AND SHALL BE PROMPTLY
PAID OVER TO AGENT FOR APPLICATION IN ACCORDANCE WITH THE
PROVISIONS HEREOF).
ANY SUCH PREPAYMENTS (OTHER THAN PREPAYMENTS RELATING TO A
PERMITTED DISPOSITION OF THE BENCHMARK YOUTH RESIDENTIAL
FACILITY CONSUMMATED IN THE ABSENCE OF AN EVENT OF DEFAULT)
SHALL BE APPLIED RATABLY AMONG LENDERS TO PRINCIPAL
INSTALLMENTS DUE UNDER THE ACQUISITION NOTES OR TERM NOTES, AS
APPLICABLE, IN THE INVERSE ORDER OF MATURITY. NOTWITHSTANDING
THE FOREGOING, UNLESS AN EVENT OF DEFAULT EXISTS AT THE TIME
SUCH PROCEEDS ARE RECEIVED BY BORROWER, UP TO $250,000 OF THE
AGGREGATE AMOUNT OF SUCH NET PROCEEDS RECEIVED BY ALL
BORROWERS DURING ANY PERIOD OF TWELVE CONSECUTIVE MONTHS BY
REASON OF SUCH TRANSACTIONS OR OCCURRENCES, PLUS ADDITIONAL
AMOUNTS SO RECEIVED AND EXPENDED PURSUANT TO AND FOR THE
PURPOSES REFERENCED IN SECTION 6.4.2(II) MAY BE RETAINED BY
BORROWERS AND SHALL NOT BE SUBJECT TO PREPAYMENT UNDER THIS
SECTION 3.3.1.
(B) PERMITTED DISPOSITION OF BENCHMARK YOUTH
RESIDENTIAL FACILITY. IF ANY BORROWER CONSUMMATES A PERMITTED
DISPOSITION OF THE BENCHMARK YOUTH RESIDENTIAL FACILITY IN THE
ABSENCE OF AN EVENT OF DEFAULT, BORROWERS, ON A JOINT AND
SEVERAL BASIS, SHALL PAY TO AGENT FOR THE RATABLE BENEFIT OF
LENDERS, UNLESS OTHERWISE AGREED BY REQUIRED LENDERS, AS AND
WHEN RECEIVED BY SUCH BORROWER, AND AS A MANDATORY PREPAYMENT
OF THE TERM LOANS AND THE REVOLVING CREDIT LOAN, AS
APPLICABLE, A SUM EQUAL TO THE PROCEEDS RECEIVED BY SUCH
BORROWER FROM SUCH PERMITTED DISPOSITION. ANY SUCH PREPAYMENTS
RELATING TO A PERMITTED DISPOSITION OF THE BENCHMARK YOUTH
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RESIDENTIAL FACILITY CONSUMMATED IN THE ABSENCE OF AN EVENT OF
DEFAULT SHALL (I) BE FIRST APPLIED TO REDUCE THE OUTSTANDING
PRINCIPAL BALANCE OF THE TERM NOTES BY AN AMOUNT EQUAL TO THE
LESSER OF (A) THE AGGREGATE OUTSTANDING PRINCIPAL BALANCE OF
THE TERM NOTES AND (B) $1,900,000, (II) THEREAFTER, BE APPLIED
TO THE OUTSTANDING PRINCIPAL BALANCE OF THE REVOLVING CREDIT
LOANS AND (III) NOT BE SUBJECT TO RETENTION BY BORROWERS OR
ANY OF THEM NOTWITHSTANDING ANY PROVISIONS TO THE CONTRARY SET
FORTH IN THIS SECTION 3.3.1.
(C) PREPAYMENTS RELATING TO THE LIQUIDITY
EVENT. UNTIL SUCH TIME AS ANY OF THE EVENTS DESCRIBED IN
CLAUSES (I) THROUGH (V) OF THE DEFINITION OF LIQUIDITY EVENT
RESULTS IN THE RECEIPT BY BORROWERS OF AT LEAST THE AGGREGATE
NET PROCEEDS REQUIRED FOR A LIQUIDITY EVENT, SO LONG AS NO
SUSPENSION EVENT HAS OCCURRED AND IS CONTINUING AT THE TIME
SUCH EVENT OCCURS, ALL PROCEEDS FROM THE OCCURRENCE OF ANY
SUCH EVENTS SHALL BE APPLIED TO THE OUTSTANDING PRINCIPAL
BALANCE OF THE REVOLVING CREDIT LOANS UNLESS THE APPLICATION
OF SUCH PROCEEDS IS OTHERWISE EXPRESSLY SET FORTH IN THIS
SECTION 3.3.1. UPON THE RECEIPT BY BORROWERS OF THE AGGREGATE
NET PROCEEDS REQUIRED FOR A LIQUIDITY EVENT, BORROWERS MAY,
SUBJECT TO SECTION 3.1 AND PROVIDED THAT NO SUSPENSION EVENT
HAS OCCURRED AND IS CONTINUING AND ALL CONTINGENT LIABILITIES
HAVE BEEN SETTLED AND SATISFIED, REQUEST A REVOLVING CREDIT
LOAN TO MAKE THE PREPAYMENT OF THE BRIDGE LOAN ADVANCES
REQUIRED BY THE ACQUISITION NOTES, AND LENDERS AGREE TO MAKE
SUCH REVOLVING CREDIT LOANS IN ACCORDANCE WITH AND SUBJECT TO
THE TERMS OF THIS AGREEMENT.
IN ADDITION, UNLESS AN EVENT OF DEFAULT EXISTS AT THE TIME OF
SUCH DISPOSITION, THE PROVISIONS OF THIS SECTION 3.3.1 SHALL
NOT BE APPLICABLE TO A DISPOSITION OF THE MISSION VISTA
FACILITY MADE IN ACCORDANCE WITH SECTION 6.3.2. THE PROVISIONS
OF THIS SECTION 3.3.1 SHALL NOT BE APPLICABLE TO A DISPOSITION
OF THE MIDVALE FACILITY MADE IN ACCORDANCE WITH SECTION 6.3.3
OR TO A DISPOSITION OF THE OKLAHOMA LLC INTERESTS MADE IN
ACCORDANCE WITH SECTION 6.3.4.
3.3.2 EXCESS CASH FLOW RECAPTURE. BORROWERS, ON A
JOINT AND SEVERAL BASIS, SHALL PREPAY THE TERM LOAN IN AMOUNTS EQUAL TO
HOLDINGS' EXCESS CASH FLOW WITH RESPECT TO EACH FISCAL YEAR OF HOLDINGS
ENDING ON OR AFTER JUNE 30, 1999, SUCH PREPAYMENTS TO BE MADE WITHIN 2
BUSINESS DAYS FOLLOWING THE DUE DATE FOR DELIVERY BY BORROWERS TO AGENT
AND LENDERS OF THE ANNUAL FINANCIAL STATEMENTS REQUIRED BY SECTION
8.1.3(I) AND EACH SUCH PREPAYMENT SHALL BE APPLIED TO THE INSTALLMENTS
OF PRINCIPAL DUE UNDER THE TERM LOAN IN THE INVERSE ORDER OF THEIR
MATURITIES UNTIL PAYMENT THEREOF IN FULL.
1.7 AMENDMENT TO NEGATIVE COVENANT REGARDING PAYMENT WITH RESPECT
TO RHCL STOCK PURCHASE. SUBSECTION 8.2.19 of the Loan Agreement shall be amended
in its entirety to read as follows:
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8.2.19 LIMITS ON PAYMENT WITH RESPECT TO RHCL STOCK
PURCHASE. HOLDINGS SHALL NOT PAY THE REMAINING BALANCE OF THE $700,000
CASH PURCHASE PRICE, WHICH AMOUNT DOES NOT EXCEED $600,000, WITH
RESPECT TO ITS PURCHASE OF ALL OF THE CAPITAL STOCK OF RAMSAY HOSPITAL
CORPORATION OF LOUISIANA, INC. UNTIL A LIQUIDITY EVENT HAS OCCURRED AND
ALL CONTINGENT LIABILITIES HAVE BEEN SETTLED AND SATISFIED.
1.8 ADDITION OF NEGATIVE COVENANT REGARDING USE OF PROCEEDS OF
BRIDGE LOAN ADVANCES. SECTION 8.2 of the Loan Agreement shall be amended by
inserting a new SUBSECTION 8.2.20 as follows:
8.2.20 LIMIT ON USE OF PROCEEDS OF BRIDGE LOAN ADVANCES. USE
THE PROCEEDS OF ANY BRIDGE LOAN ADVANCE FOR ANY PURPOSE OTHER THAN TO
SATISFY CONTINGENT LIABILITIES OR, WITH THE PRIOR WRITTEN APPROVAL OF
AGENT, WHICH SHALL NOT BE UNREASONABLY WITHHELD, THE SATISFACTION OF
OTHER LIABILITIES OF BORROWERS, AS THEY BECOME DUE.
1.9 ADDITION OF NEGATIVE COVENANT REGARDING SETTLEMENT OF
CONTINGENT LIABILITIES. SECTION 8.2 of the Loan Agreement shall be amended by
inserting a new SUBSECTION 8.2.21 as follows:
8.2.21 LIMIT ON SETTLEMENT OF CONTINGENT LIABILITIES.
OBLIGATE BORROWERS OR ANY ONE OF THEM TO MAKE PAYMENTS WITH RESPECT TO
THE SETTLEMENT OF ANY OF THE CONTINGENT LIABILITIES IN AN AMOUNT OR
AMOUNTS THE PAYMENT OF WHICH WOULD CAUSE EITHER (I) THE AGGREGATE OF
PAYMENTS IN SETTLEMENT OF THE CONTINGENT LIABILITIES MADE ON OR AFTER
THE THIRD AMENDMENT EFFECTIVE DATE TO EXCEED $3,100,000 (TOGETHER WITH
ANY STATUTORY INTEREST OR PENALTIES, IF ANY, IN RESPECT OF THE RHCL
ASSUMED TAX LIABILITY, WHICH ARE DEEMED BY AGENT, PRIOR TO THE PAYMENT
THEREOF, NOT TO BE MATERIAL IN AGENT'S REASONABLE CREDIT JUDGMENT) OR
(II) A MATERIAL ADVERSE EFFECT UPON ANY BORROWER.
1.10 AMENDMENT TO SPECIFIC FINANCIAL COVENANT REGARDING PRO FORMA
QUARTERLY AVAILABILITY. SUBSECTION 8.3.4 of the Loan Agreement shall be amended
in its entirety to read as follows:
8.3.4 PRO FORMA AVAILABILITY COVENANT. PERMIT, AT ANY TIME,
PRO FORMA QUARTERLY AVAILABILITY TO BE LESS THAN THE LIQUIDITY RESERVE.
1.11 NOTICES. Subsections (A) and (B) of SECTION 12.8 of the Loan
Agreement shall be amended in its entirety to read as follows:
(A) IF TO AGENT PRIOR TO
NOVEMBER 19, 1999: FLEET CAPITAL CORPORATION
0000 X. XXXXXXX XXXXXX, XXXXX 0000
XXXXXX, XXXXX 00000
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ATTENTION: LOAN ADMINISTRATION MANAGER
FACSIMILE NO.: (000) 000-0000
IF TO AGENT AFTER
NOVEMBER 19, 1999: FLEET CAPITAL CORPORATION
0000 XXXXXX XXXX, XXXXX 000
XXXXXX, XXXXX 00000
FACSIMILE NO.: (000) 000-0000
(B) IF TO ANY BORROWER: RAMSAY YOUTH SERVICES, INC.
XXX XXXXXXXX XXXXX, XXXXX 000
XXXXX XXXXXX, XXXXXXX 00000
ATTENTION: CHIEF FINANCIAL OFFICER
FACSIMILE NO.: (000) 000-0000
WITH A COPY TO: XXXX XXXXXX
000 XXXX XXXXXX
XXX XXXX, XXX XXXX 00000
ATTENTION: XXXXXXX X. COST
FACSIMILE NO.: (000) 000-0000
AND A COPY TO: XXXX XXXXXX HOLDINGS PTY. LIMITED
000 XXXXXXX XXXXXXX, 0XX XXXXX
XX. XXXXXXXX, XXX 0000
XXXXXXXXX
ATTENTION: XXXXX X. XXXXX
FACSIMILE NO.: 011-612-94-333-460
1.12 AMENDMENT OF ACQUISITION NOTE FORM. EXHIBIT A-2 attached
hereto as Annex I to this Third Amendment hereby replaces in its entirety
EXHIBIT A-2 attached to the Loan Agreement.
SECTION 2. CONDITIONS PRECEDENT TO EFFECTIVENESS OF AMENDMENTS. The
amendments to the Loan Agreement contained in SECTION 1 of this Third Amendment
shall be effective only upon the satisfaction of each of the conditions set
forth in this SECTION 2. If each condition set forth in this SECTION 2 has not
been satisfied by November 30, 1999, this Third Amendment and all obligations of
Lenders contained herein shall, at the option of Lenders, terminate.
2.1 DOCUMENTATION. Agent and Lenders shall have received, in form
and substance acceptable to Agent and Lenders and their counsel a duly executed
copy of this Third Amendment, and any other documents, instruments and
certificates as Agent and Lenders and their counsel shall require in connection
therewith prior to the date hereof, all in form and substance satisfactory to
Agent and Lenders and their counsel.
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2.2 ACQUISITION NOTES. Borrowers shall have executed and delivered
an amended and restated Acquisition Note in the stated principal amount of
$6,000,000 to restate in its entirety the outstanding Acquisition Note executed
on the Closing Date.
2.3 CORPORATE EXISTENCE AND AUTHORITY. Agent and Lenders shall
have received such resolutions, certificates and other documents as Agent and
Lenders shall request relative to the authorization, execution and delivery by
each Borrower of this Third Amendment.
2.4 NO DEFAULT. No Default or Event of Default shall exist.
2.5 NO LITIGATION. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or proposed
before any court, governmental agency or legislative body to enjoin, restrain or
prohibit, or to obtain damages in respect of, or which is related to or arises
out of this Third Amendment, the Agreement or the consummation of the
transactions contemplated hereby.
2.6 PERFECTION OF LIENS IN COLLATERAL. Agent and Lenders shall
have received such financing statements on Form UCC-1 or Form UCC-3 (or any
other form required by Agent and Lenders) as Agent and Lenders shall require
which shall be duly executed and delivered by the appropriate Loan Party.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF BORROWERS. To induce Agent
and Lenders to enter into this Third Amendment, each Borrower hereby represents
and warrants to Agent and Lenders as follows:
3.1 AMOUNT REQUIRED TO SETTLE CONTINGENT LIABILITIES. The
aggregate amount of remaining payments required to fully and finally settle all
Contingent Liabilities is not expected to exceed $3,100,000.
3.2 REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES. Each
representation and warranty of any Loan Party contained in the Loan Agreement
and the other Loan Documents, as amended hereby, is true and correct on the date
hereof and will be true and correct after giving effect to the amendments set
forth in SECTION 1 hereof.
3.3 CORPORATE AUTHORITY; NO CONFLICTS. The execution, delivery and
performance by each Borrower of this Third Amendment and all documents,
instruments and agreements contemplated herein are within each Borrower's
respective corporate powers, have been duly authorized by necessary action,
require no action by or in respect of, or filing with, any court or agency of
government and do not violate or constitute a default under any provision of
applicable Law or any material agreement binding upon any Loan Party or result
in the creation or imposition of any Lien upon any of the assets of any Loan
Party except as permitted in the Loan Agreement, as amended hereby.
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3.4 ENFORCEABILITY. This Third Amendment constitutes the valid and
binding obligation of each of the Borrowers enforceable in accordance with its
terms, except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditor's rights generally, and (ii) the
availability of equitable remedies may be limited by equitable principles of
general application.
3.5 NO DEFENSES. No Loan Party has any defenses to payment,
counterclaims or rights of set off with respect to the Obligations.
SECTION 4. MISCELLANEOUS.
4.1 REAFFIRMATION OF LOAN DOCUMENTS; EXTENSION OF LIENS. Any and
all of the terms and provisions of the Loan Agreement and the Loan Documents
shall, except as amended and modified hereby, remain in full force and effect.
Borrowers hereby extend the Liens securing the Obligations until the Obligations
have been paid in full, and agree that the amendments and modifications herein
contained shall in no manner affect or impair the Obligations or the Liens
securing the payment and performance thereof.
4.2 PARTIES IN INTEREST. All of the terms and provisions of this
Third Amendment shall bind and inure to the benefit of the parties hereto and
their respective successors and assigns.
4.3 LEGAL EXPENSES. The Borrowers hereby agree to pay promptly
following receipt of an invoice detailing all reasonable fees and expenses of
counsel to Agent and Lenders incurred by Agent or any Lender, in connection with
the preparation, negotiation and execution of this Third Amendment and all
related documents.
4.4 COUNTERPARTS. This Third Amendment may be executed in
counterparts, and all parties need not execute the same counterpart. However, no
party shall be bound by this Third Amendment until all parties have executed a
counterpart. Facsimiles shall be effective as originals.
4.5 COMPLETE AGREEMENT. THIS THIRD AMENDMENT, THE LOAN AGREEMENT
AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
4.6 HEADINGS. The headings, captions and arrangements used in this
Third Amendment are, unless specified otherwise, for convenience only and shall
not be deemed to limit, amplify or modify the terms of this Third Amendment, nor
affect the meaning thereof.
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( Signature Pages Follow )
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IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment
to be duly executed by their respective authorized officers on the date and year
first above written.
BORROWERS:
RAMSAY YOUTH SERVICES, INC.
XXXXXXX PSYCHIATRIC HOSPITAL, INC.
BOUNTIFUL PSYCHIATRIC HOSPITAL, INC.
EAST CAROLINA PSYCHIATRIC SERVICES CORPORATION
GREAT PLAINS HOSPITAL, INC.
GULF COAST TREATMENT CENTER, INC.
HAVENWYCK HOSPITAL, INC.
H. C. CORPORATION
HSA HILL CREST CORPORATION
HSA OF OKLAHOMA, INC.
MICHIGAN PSYCHIATRIC SERVICES, INC.
RAMSAY EDUCATIONAL SERVICES, INC.
RAMSAY LOUISIANA, INC.
RAMSAY MANAGED CARE, INC.
RAMSAY YOUTH SERVICES OF ALABAMA, INC.
RAMSAY YOUTH SERVICES OF FLORIDA, INC.
RAMSAY YOUTH SERVICES OF SOUTH CAROLINA, INC.
RHCI SAN ANTONIO, INC.
TRANSITIONAL CARE VENTURES, INC.
TRANSITIONAL CARE VENTURES (TEXAS), INC.
By:/s/ Xxxxxx Xxxxxxx
------------------------------
Xxxxxx Xxxxxxx
Executive Vice President
H. C. PARTNERSHIP
By: H.C. CORPORATION, General Partner
By: HSA HILL CREST CORPORATION, General Partner
By:/s/ Xxxxxx Xxxxxxx
------------------------------
Xxxxxx Xxxxxxx
Executive Vice President
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CONSENT AND REAFFIRMATION
Each of the undersigned (each a "GUARANTOR") hereby (i) acknowledges
receipt of a copy of the foregoing Third Amendment to Loan and Security
Agreement (the "THIRD AMENDMENT"); (ii) consents to Borrowers' execution and
delivery thereof; (iii) agrees to be bound thereby; and (iv) affirms that
nothing contained therein shall modify in any respect whatsoever its guaranty of
the obligations of the Borrowers to Lenders pursuant to the terms of those
certain Guaranties dated March 19, 1999 (collectively, the "GUARANTY") and
reaffirms that the Guaranty is and shall continue to remain in full force and
effect. Although each Guarantor has been informed of the matters set forth
herein and has acknowledged and agreed to same, each Guarantor understands that
the Lenders have no obligation to inform Guarantors of such matters in the
future or to seek any Guarantor's acknowledgment or agreement to future
amendments or waivers, and nothing herein shall create such duty.
IN WITNESS WHEREOF, the each of the undersigned has executed this
Consent and Reaffirmation on and as of the date of the Third Amendment.
GUARANTORS:
THE XXXXX GROUP, INCORPORATED,
a Florida corporation
By:/s/ Xxxxxx Xxxxxxx
------------------------------
Xxxxxx Xxxxxxx
Executive Vice President
RAMSAY YOUTH SERVICES PUERTO RICO, INC.,
a Puerto Rico corporation
By:/s/ Xxxxxx Xxxxxxx
------------------------------
Xxxxxx Xxxxxxx
Executive Vice President
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Accepted in Dallas, Texas:
Acquisition Loan Commitment: FLEET CAPITAL CORPORATION
$6,000,000 ("Agent" and "Lender")
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President
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ANNEX I TO THIRD AMENDMENT
EXHIBIT A-2
SECURED PROMISSORY NOTE
(Acquisition Note)
$------------- --------------, ----
-----------, -------
FOR VALUE RECEIVED, each of the undersigned, jointly and severally,
(hereinafter collectively referred to as "BORROWERS", and each individually, a
"BORROWER"), hereby promise (as hereinafter defined) with respect to the
Acquisition Loan to pay to the order of , a corporation
(hereinafter "Lender"), or its registered assigns at the office of Fleet Capital
Corporation, as agent for such Lender, or at such other place in the United
States of America as the holder of this Note may designate from time to time in
writing, in lawful money of the United States, in immediately available funds,
at the time of payment, the principal sum of Dollars ($ ), or
such lesser principal amount as may be outstanding pursuant to the Loan
Agreement together with interest from and after the date hereof on the unpaid
principal balance outstanding from time to time.
This Secured Promissory Note (the "Note") is one of the Acquisition
Notes referred to in, and is issued pursuant to, that certain Loan and Security
Agreement dated as of October 30, 1998 by and among Borrowers, the lenders
signatories thereto (including Lender) and Fleet Capital Corporation ("FCC") as
Agent for said lenders (FCC in such capacity "Agent") (as amended from time to
time, the "Loan Agreement"), and is entitled to all of the benefits and security
of the Loan Agreement. All of the terms, covenants and conditions of the Loan
Agreement and the Security Documents are hereby made a part of this Note and are
deemed incorporated herein in full. All capitalized terms used herein, unless
otherwise specifically defined in this Note, shall have the meanings ascribed to
them in the Loan Agreement.
For so long as no Event of Default shall have occurred and be
continuing the principal amount and accrued interest of this Note shall be due
and payable on the dates and in the manner hereinafter set forth:
(a) Interest on the unpaid principal balance outstanding from time to
time shall be paid at such interest rates and at such times as are
specified in the Loan Agreement;
(b) Principal shall be due and payable monthly commencing on December
1, 1999, and continuing on the first day of each month thereafter to and
including the first day of the month in which the Commitment Termination
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Date occurs, in installments equal to the aggregate outstanding principal
balance of all Acquisition Advances made by Lender prior to December 1,
1999 DIVIDED BY 48; and
(c) The entire remaining principal amount then outstanding, together
with any and all other amounts due hereunder, shall be due and payable on
the Commitment Termination Date.
In addition to the foregoing, immediately upon the receipt by any
Borrower or any of their Subsidiaries of the amount necessary to constitute the
Liquidity Event and provided that no Suspension Event shall have occurred and be
continuing and all Contingent Liabilities have been settled and satisfied,
Borrower shall prepay this Acquisition Note in an amount equal to the aggregate
amount of all Bridge Loan Advances made to Borrowers plus all accrued but unpaid
interest on the Bridge Loan Advances as of the date of such prepayment. All such
prepayments shall first be applied to the accrued but unpaid interest on the
Bridge Loan Advances and then in payment of the outstanding principal balance of
the Bridge Loan Advances in the inverse order of maturity.
Notwithstanding the foregoing, the entire unpaid principal balance of
and accrued interest on this Note shall be due and payable immediately upon any
termination of the Loan Agreement pursuant to Section 4 thereof.
This Note shall be subject to mandatory prepayment in accordance with
the provisions of Section 3.3 of the Loan Agreement. Borrowers may also prepay
this Note in the manner provided in Section 4 of the Loan Agreement.
Upon the occurrence, and during the continuation, of an Event of
Default, this Note shall or may, as provided in the Loan Agreement, and become
or be declared immediately due and payable.
The right to receive principal of, and stated interest on, this Note
may only be transferred in accordance with the provisions of the Loan Agreement.
Demand, presentment, protest and notice of nonpayment and protest are
hereby waived by each Borrower.
This Note is issued in substitution for and replacement of, but not in
payment of the Secured Promissory Note of Borrowers dated October 30, 1998,
payable to the order of Lender in the original principal amount of
$6,000,000.00.
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This Note shall be governed by, and construed and enforced in
accordance with, the laws of the State of Texas.
RAMSAY HEALTH CARE, INC.
RAMSAY YOUTH SERVICES, INC.
XXXXXXX PSYCHIATRIC HOSPITAL, INC.
BOUNTIFUL PSYCHIATRIC HOSPITAL, INC.
EAST CAROLINA PSYCHIATRIC SERVICES CORPORATION
GREAT PLAINS HOSPITAL, INC.
GULF COAST TREATMENT CENTER, INC.
HAVENWYCK HOSPITAL, INC.
H. C. CORPORATION
HSA HILL CREST CORPORATION
HSA OF OKLAHOMA, INC.
MICHIGAN PSYCHIATRIC SERVICES, INC.
RAMSAY EDUCATIONAL SERVICES, INC.
RAMSAY LOUISIANA, INC.
RAMSAY MANAGED CARE, INC.
RAMSAY YOUTH SERVICES OF ALABAMA, INC.
RAMSAY YOUTH SERVICES OF FLORIDA, INC.
RAMSAY YOUTH SERVICES OF SOUTH CAROLINA, INC.
RHCI SAN ANTONIO, INC.
TRANSITIONAL CARE VENTURES, INC.
TRANSITIONAL CARE VENTURES (TEXAS), INC.
By: __________________________________
Name: __________________________________
Its: __________________________________
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