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EXHIBIT 10.119
SECOND AMENDMENT TO
SUBORDINATED NOTE PURCHASE AGREEMENT
THIS SECOND AMENDMENT TO SUBORDINATED NOTE PURCHASE AGREEMENT
("AMENDMENT") is entered into as of May 20, 1998 by and among RAMSAY HEALTH
CARE, INC., a Delaware corporation (the "COMPANY"), GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation ("GE CAPITAL"), and ▇▇▇▇ ▇▇▇▇▇▇ HOLDINGS
PTY. LIMITED ACN 008 446 151, an Australian corporation ("RAMSAY HOLDINGS;" GE
Capital and Ramsay Holdings are hereinafter each individually referred to as a
"PURCHASER", and collectively, as "PURCHASERS"), for the benefit of the parties
and each of the Holders.
RECITALS
A. The Company and Purchasers are parties to a certain Subordinated
Note Purchase Agreement dated as of September 30, 1997, as amended by the First
Amendment to Subordinated Note Purchase Agreement dated as of March 27, 1998 (as
so amended, the "PURCHASE AGREEMENT;" capitalized terms used herein and not
defined herein have the meanings assigned to them in the Purchase Agreement).
B. Purchasers are all of the Holders of the Bridge Notes.
C. The Company has requested that the Holders waive certain Defaults
that have occurred for the period ending March 31, 1998 and consent to the sale
by Ramsay Managed Care, Inc. of FPM Behavioral Health, Inc. and the sale of
substantially all of the assets of Greenbrier Hospital, Inc., and the Holders
have agreed to waive such Defaults and to consent to such sales, subject to the
terms and conditions hereof.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, and intending to be legally bound, the parties
hereto agree as follows:
A. WAIVER
Each Holder hereby waives all Defaults that arose under Section 7.10 of
the Purchase Agreement as of March 31, 1998.
B. AMENDMENTS
1. AMENDMENT TO ARTICLE 6 The Purchase Agreement is hereby amended by
adding to the end of Article 6 thereof the following new Section 6.14:
SECTION 6.14 COLLATERAL FOR SERIES A BRIDGE NOTES.
(a) No later than May 27, 1998, the Company agrees to execute
and deliver, and to cause all other Credit Parties to execute
and deliver, to GE Capital a Subsidiary Guaranty (in the case
of the other Credit Parties), a Security
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Agreement, Financing Statements (Form UCC-1) in proper form
for filing under the Uniform Commercial Code, or chattel
mortgages in proper form for filing under other applicable
law, of all jurisdictions as may be necessary or, in the
opinion of GE Capital, desirable to perfect the Liens created
by the Security Agreement, powers of attorney, a Stock Pledge
Agreement, and a bailee letter (with the acknowledgment of the
Senior Agent) regarding perfection of the Liens created by the
Stock Pledge Agreement, and all other instruments and
documents reasonably requested by GE Capital in connection
therewith and all evidence that all action necessary or, in
the judgment of GE Capital, desirable to perfect and protect
the Liens created by the foregoing Bridge Note Collateral
Documents has been taken. The Company shall also deliver to GE
Capital certificates of the Secretary or Assistant Secretary
of the Company and each other Credit Party certifying true and
correct copies of the articles or certificate of incorporation
and bylaws of the Company or such Credit Party, resolutions of
the Company or such Credit Party approving the transactions
described above and incumbency of the officers of the Company
or such Credit Party executing the documents described above
(b) No later than June 3, 1998, the Company agrees to
execute and deliver, and to cause all other Credit Parties to
execute and deliver, to GE Capital Mortgages and fixture
financing statements in respect to the Mortgaged Property,
together with all other instruments and documents reasonably
requested by GE Capital in connection therewith and all
evidence that all action necessary or, in the judgment of GE
Capital, desirable to perfect and protect the Liens created by
the foregoing Mortgages has been taken. The Company shall also
deliver to GE Capital certificates of the Secretary or
Assistant Secretary of the Company and each other Credit Party
certifying true and correct copies of the articles or
certificate of incorporation and bylaws of the Company or such
Credit Party, resolutions of the Company or such Credit Party
approving the transactions described above and incumbency of
the officers of the Company or such Credit Party executing the
documents described above. The Company shall also deliver to
GE Capital opinions of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ and special local
counsel to GE Capital in each jurisdiction in which the
foregoing Mortgaged Property is located, in each case in form
and substance satisfactory to GE Capital, addressing the
transactions contemplated in paragraph (a) above, this
paragraph (b), paragraph (f) below and the Second Amendment to
Credit Agreement.
(c) To the extent that the Company or any Credit
Party is required to execute and deliver to GE Capital a
mortgage, leasehold mortgage or other appropriate instrument
with respect to any Real Property pursuant to Section 5.14(a)
of the Senior Credit Agreement (a "SENIOR MORTGAGE"), the
Company or such Credit Party shall execute and deliver a
mortgage, leasehold mortgage
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or other appropriate instrument substantially identical to the
Senior Mortgage (but in favor of GE Capital and securing the
Series A Bridge Note Obligations) and shall provide all
relevant documentation with respect thereto and take such
other actions in favor of GE Capital as the Company or such
Credit Party is required to provide or take in favor of the
Senior Agent or the Senior Lenders pursuant to Section 5.14(a)
of the Senior Credit Agreement. The Company agrees that,
following the taking of the actions with respect to any Real
Property required by this paragraph (b), GE Capital shall have
a valid and enforceable second priority Lien on such Real
Property, free and clear of all defects and encumbrances
except for Permitted Encumbrances of the types described in
paragraphs (a) and (i) of the definition thereof and others
acceptable to GE Capital in its reasonable discretion. All
actions to be taken pursuant to this SECTION 6.14(c) shall be
at the expense of the Company or the applicable Credit Party,
shall be taken to the reasonable satisfaction of GE Capital,
and shall be taken within the same number of days given for
delivery of similar documentation and taking of action under
Section 5.14(a) of the Credit Agreement.
(d) To the extent that any other Person is required
to become a "Credit Party" under the Senior Credit Agreement,
the Company shall cause such Person (i) to become a party to
the Subsidiary Guaranty, the Security Agreement and the Stock
Pledge Agreement, (ii) to provide all relevant documentation
with respect thereto and take such other actions in favor of
GE Capital as the Company or such Credit Party is required to
provide or take in favor of the Senior Agent or the Senior
Lenders pursuant to Section 5.14(b) of the Senior Credit
Agreement; and (iii) if such Credit Party owns or leases any
Real Property having a book or fair market value in excess of
$1,500,000, to comply with paragraph (a) hereof with respect
to such Real Property. The Company agrees that, following the
taking of the actions required by this paragraph (c), GE
Capital shall have a valid and enforceable second priority
Lien on the respective Collateral covered thereby, free and
clear of all Liens other than Permitted Liens. All actions to
be taken pursuant to this SECTION 6.14(d) shall be at the
expense of Company or the applicable Credit Party, shall be
taken to the reasonable satisfaction of GE Capital, and shall
be taken within the same number of days given for delivery of
similar documentation and taking of action under Section
5.14(b) of the Credit Agreement.
(e) Upon the request of GE Capital, the Company
agrees to deliver (1) ALTA lender's title insurance policies
from a title insurer, in a form and in an amount reasonably
satisfactory to GE Capital, showing the Mortgages referred to
in paragraphs (b) and (c) above as the "insured mortgage" and
insuring the validity and priority of such Mortgages as second
priority Liens upon the Mortgaged Property, subject only to
the mortgages in
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favor of the Senior Agent and those title exceptions which are
permitted under this Agreement or such Mortgages and (2)
certified copies of Requests for Information (Form UCC-11), or
other evidence satisfactory to GE Capital, as of a recent
date, listing all effective financing statements or chattel
mortgages which name each Credit Party (under its present
name, any previous name or any trade or doing business name)
as debtor and which are filed in the jurisdictions referred to
in paragraph (a) and (d) above, together with copies of such
financing statements.
(f) The Company agrees to enter into a modification
of this Agreement no later than June 3, 1998 to make
conforming changes related to the foregoing transaction,
including, without limitation, any representations, covenants,
Defaults, rights and remedies relating to the Collateral that
GE Capital requests.
(g) So long as GE Capital is not the sole Senior
Lender under the Senior Credit Agreement, the Company shall
not be required to comply with the foregoing provisions unless
and until the Senior Lenders and GE Capital have executed and
delivered an intercreditor agreement in form and substance
reasonably acceptable to the Senior Lenders and GE Capital,
subordinating the Liens granted under the Bridge Note
Documents to the Liens securing the Senior Obligations.
2. AMENDMENT TO SECTION 7.01. The Purchase Agreement is hereby further
amended by replacing Section 7.01 with the following:
SECTION 7.01. ACQUISITIONS. The Company will not, and will not
permit any of its Subsidiaries to, make any Acquisition.
3. AMENDMENTS TO SECTION 7.04, 7.11 AND 7.12. The Purchase Agreement is
hereby further amended by replacing all references to "Rolling Four-Quarter
Period" in Section 7.04, Section 7.11 and Section 7.12 with references to
"Rolling Twelve-Month Period" and by replacing all references to "Fiscal
Quarter" in Section 7.04, Section 7.11 and Section 7.12 with references to
"Fiscal Month".
4. AMENDMENT TO SECTION 7.05. The Purchase Agreement is hereby further
amended by adding the following sentence to the end of Section 7.05:
Notwithstanding the foregoing or any other provision of this
Agreement, the Company shall not (nor permit any of its
Subsidiaries to) pay bonuses to the persons described on
Schedule A to the Second Amendment to Credit Agreement, dated
as of even date herewith, by and among the Company, the
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Senior Lenders and the Senior Agent, until all Senior
Obligations and the Bridge Note Obligations have been paid in
full.
5. AMENDMENT TO SECTION 7.06. The Purchase Agreement is hereby further
amended by deleting Section 7.06(e) in its entirety and substituting the
following in lieu thereof:
(e) Liens securing the Series A Bridge Note Obligations, and
all interest, fees and obligations owed to GE Capital arising
under the Bridge Note Purchase Agreement, and extensions and
renewals thereof; and (f) extensions and renewals of Liens
referred to in paragraphs (b), and (d) above, provided that
any such extension or renewal Lien is limited to the property
or assets covered by the Lien extended or renewed and does not
secure Indebtedness in an amount greater than the amount of
the outstanding Indebtedness secured thereby immediately prior
to such extension, renewal or replacement.
6. AMENDMENTS TO SECTION 8.01. The Purchase Agreement is hereby further
amended by (a) deleting Section 8.01(b) in its entirety and substituting the
following in lieu thereof:
(b) The Company shall fail or neglect to perform, keep or
observe any of the provisions of SECTIONS 1.03, 6.06, 6.09, 6.10, 6.11
or 6.14, of ARTICLE 7, or of any of the provisions set forth in ANNEX C
or ANNEX C-2, as the case may be.
(b) deleting Section 8.01(k) in its entirety and substituting the following in
lieu thereof:
(k) Any material provision of any Bridge Note Document shall
for any reason cease to be valid, binding and enforceable in accordance
with its terms (or any Credit Party shall challenge the enforceability
of any Bridge Note Document or shall assert in writing, or engage in
any action or inaction based on any such assertion, that any provision
of any of the Bridge Note Collateral Documents has ceased to be or
otherwise is not valid, binding and enforceable in accordance with its
terms), or any security interest created under any Bridge Note Document
shall cease to be a valid and perfected second priority security
interest or Lien (except as otherwise permitted herein or therein) in
any material amount of the Collateral purported to be covered thereby.
and (c) adding the following as a new Section 8.01(m) and Section 8.01(n),
respectively:
(m) except as the result of any disposition specifically
permitted or consented to hereunder, the Company or any other Credit
Party shall fail at any time to be the record and beneficial owner of
100% of the issued and outstanding capital Stock of any of its
Subsidiaries (other than Gulf Coast Treatment Center) that are Credit
Parties as of May 20, 1998 or that become Credit Parties subsequent
thereto, or shall fail at any time to be the record and beneficial
owner of not less than 96% of
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the issued and outstanding capital Stock of Gulf Coast Treatment
Center, in each case free and clear of any Lien other than inchoate tax
Liens, and Liens in favor of the Senior Agent for the benefit of the
Senior Lenders and Liens in favor of GE Capital securing the Series A
Bridge Note Obligations.
(n) The Company or any of its Subsidiaries make cash payments
in an aggregate amount exceeding $500,000 for which the offsetting
entry on the Company's Financial Statements is a debit to a reserve
reflected in the 1997 Audited Financial Statements or in a reserve
reflected in unaudited Financial Statements of the Company for the
Fiscal Quarter ending March 31, 1998, rather than an expense or
reduction of revenues on the Company's income statement.
7. AMENDMENTS TO SECTION 10.02. The Purchase Agreement is hereby
further amended by (a) deleting the definitions of "Bridge Note Documents" and
"Bridge Note Obligations" and substituting the following in lieu thereof:
"BRIDGE NOTE DOCUMENTS" shall mean, collectively,
this Agreement, the GE Capital Fee Letter, the Bridge Notes,
the Bridge Note Collateral Documents and each other document,
instrument and certificate executed and delivered by the
Company or any other Credit Party as of the date hereof or at
any time thereafter, in connection with the transactions
contemplated by this Agreement, in each case, as amended,
modified or supplemented from time to time.
"BRIDGE NOTE OBLIGATIONS" shall mean all obligations
of the Company and the other Credit Parties (monetary or
otherwise) arising under or in connection with this Agreement,
the GE Capital Fee Letter, the Bridge Notes and the other
Bridge Note Documents (including without limitation all
principal, interest and Prepayment Premiums and, in the case
of the Series A Bridge Notes, the Contingent Payment Amount
payable under this Agreement).
and (b) adding the following as new definitions in Section 10.02, in proper
alphabetical order:
"BRIDGE NOTE COLLATERAL DOCUMENTS" shall mean the
Security Agreement, the Mortgages, the Subsidiary Guaranty,
the Stock Pledge Agreement, and all other instruments and
agreements now or hereafter securing the whole or any part of
the Series A Bridge Note Obligations.
"COLLATERAL" shall mean the property covered by the
Bridge Note Collateral Documents and any other property, real
or personal, tangible or intangible, now existing or hereafter
acquired, that may at any time be or become subject to a Lien
in favor of GE Capital to secure the Series A Bridge Note
Obligations.
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"CREDIT PARTIES" shall mean the Company, each of the
Company's direct or indirect, existing and future wholly-owned
Subsidiaries (other than Inactive Subsidiaries) and Gulf Coast
Treatment Center.
"FPM BEHAVIORAL HEALTH DIVESTITURE" shall mean the
sale by Ramsay Managed Care, Inc. of one hundred percent of
the issued and outstanding shares of FPM Behavioral Health,
Inc. to Horizon Health Corporation pursuant to the FPM
Behavioral Sale Agreement.
"FPM BEHAVIORAL HEALTH SALE AGREEMENT" shall mean the
Stock Purchase Agreement, dated as of May 1, 1998, by and
among Ramsay Managed Care, Inc., Ramsay Health Care, Inc. and
Horizon Health Corporation.
"GREENBRIER HOSPITAL DIVESTITURE" shall mean the sale
by Greenbrier Hospital, Inc. of substantially all of its
assets to Provider Options Holdings, L.L.C., pursuant to the
Greenbrier Hospital Sale Agreement.
"GREENBRIER HOSPITAL SALE AGREEMENT" shall mean the
Asset Purchase Agreement, dated as of May 15, 1998, between
Provider Options Holdings, L.L.C., Greenbrier Hospital, Inc.
and the Company.
"MORTGAGED PROPERTY" shall mean all Real Property
subject to the Mortgages and serving as security for the
Series A Bridge Note Obligations, consisting of hospitals
owned by Bountiful Psychiatric Hospital, Inc., Havenwyck
Hospital, Inc., East Carolina Psychiatric Services Corp., HC
Partnership and Great Plains Hospital, Inc., together with all
additional Real Property becoming subject to a Mortgage
pursuant to SECTION 6.14(c), all as more particularly
described in Exhibit A to the Mortgages.
"MORTGAGES" shall mean the mortgages, deeds of trust
or deeds to secure debt with respect to the Mortgaged
Property, substantially in the form of Exhibit E to the Senior
Credit Agreement, modified to secure the Series A Bridge Note
Obligations and with such changes thereto as shall be
necessary or appropriate for use in the States of Alabama,
Arizona, Florida, Louisiana, Missouri, Michigan, North
Carolina, Oklahoma, South Carolina, Texas, Utah and West
Virginia or any other state in which a Credit Party hereafter
acquires Real Property that becomes subject to a Mortgage
pursuant to SECTION 6.14(c), and with such other changes as
the Holders of the Series A Bridge Notes shall require, in
each case executed by the appropriate Credit Party in favor of
the Holders of the Series A Bridge Notes or a trustee for the
benefit of the Holders of the Series A Bridge Notes, including
all amendments, modifications and supplements thereto, and
shall refer to the
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Mortgages as the same may be in effect at the time such
reference becomes operative.
"SECURITY AGREEMENT" shall mean the security
agreement, substantially in the form of Exhibit F to the
Senior Credit Agreement, modified to secure the Series A
Bridge Note Obligations, with such other modifications as the
Holders of the Series A Bridge Notes shall require, executed
by the Credit Parties in favor of the Holders of the Series A
Bridge Notes, including all amendments, modifications and
supplements thereto, and shall refer to the Security Agreement
as the same may be in effect at the time such reference
becomes operative.
"SERIES A BRIDGE NOTE OBLIGATIONS" shall mean,
without duplication, the Series A Bridge Notes and all Bridge
Note Obligations owed to GE Capital and its successors and
assigns.
"STOCK PLEDGE AGREEMENT" shall mean the Stock Pledge
Agreement, substantially in the form of Exhibit G to the
Senior Credit Agreement, modified to secure the Series A
Bridge Note Obligations, with such other modifications as the
Holders of the Series A Bridge Notes shall require, executed
by the Credit Parties holding Stock in other Credit Parties in
favor of the Holders of the Series A Bridge Notes, including
all amendments, modifications and supplements thereto, and
shall refer to the Stock Pledge Agreement as the same may be
in effect at the time such reference becomes operative.
"SUBSIDIARY GUARANTY" shall mean the Guaranty,
substantially in the form of Exhibit H to the Senior Credit
Agreement, modified to secure the Series A Bridge Note
Obligations, with such other modifications as the Holders of
the Series A Bridge Notes shall require, executed by each of
the Credit Parties (other than the Company) in favor of the
Holders of the Series A Bridge Notes, including all
amendments, modifications and supplements thereto, and shall
refer to the Subsidiary Guaranty as the same may be in effect
at the time such reference become operative.
8. AMENDMENTS TO SECTION 12.03. The Purchase Agreement is hereby
further amended by deleting Section 12.03 thereof in its entirety and
substituting the following in lieu thereof:
SECTION 12.03 FEES AND EXPENSES; CERTAIN TAXES.
(a) The Company shall reimburse GE Capital for all
reasonable out-of-pocket expenses incurred in connection with
the preparation, negotiation, execution, delivery and
syndication of the Bridge Note
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Documents (including the reasonable fees and expenses of GE
Capital's special counsel, advisors, consultants and auditors
retained in connection with the Bridge Note Documents and
advice in connection therewith). The Company shall reimburse
GE Capital (and, with respect to clauses (iii), (iv) and (v)
below, all Holders) for all reasonable fees, costs and
expenses, including the reasonable fees, costs and expenses of
counsel or other advisors to the Holders (including
environmental and management consultants and appraisers) for
advice, assistance, or other representation in connection
with:
(i) wire transfer fees and other costs of the
forwarding to the Company or any other Person on behalf of the
Company by the Administrative Agent of the proceeds of the
Bridge Notes;
(ii) any amendment, modification or waiver of, or
consent with respect to, any of the Bridge Note Documents or
advice in connection with the administration of the
transactions contemplated by the Bridge Note Documents or the
rights of the Holders thereunder;
(iii) any litigation, contest, dispute, suit,
proceeding or action (whether instituted by any Holder, the
Company, any other Credit Party or any other Person) in any
way relating to the Collateral, any of the Bridge Note
Documents or any other agreement to be executed or delivered
in connection therewith or herewith, whether as party,
witness, or otherwise, including any litigation, contest,
dispute, suit, case, proceeding or action, and any appeal or
review thereof, in connection with a case commenced by or
against Company, any other Credit Party or any other Person
that may be obligated to the Holders by virtue of the Bridge
Note Documents, including any such litigation, contest,
dispute, suit, proceeding or action arising in connection with
any work-out or restructuring of the Bridge Notes during the
pendency of one or more Events of Default; PROVIDED, that
Company shall not be liable to reimburse any Holder for any
such fees, costs or expenses incurred by it in the defense of
any Claim as to which such Holder would not be entitled to
indemnification by virtue of the proviso to SECTION 12.17;
(iv) any attempt to enforce any remedies of any
Holder against any or all of the Credit Parties or any other
Person that may be obligated to the any Holder by virtue of
any of the Bridge Note Documents;
(v) any work-out or restructuring of the Bridge Note
Documents during the pendency of one or more Events of
Default; or
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(vi) any efforts to verify, protect, evaluate,
assess, appraise, collect, sell, liquidate or otherwise
dispose of any of the Collateral after the occurrence and
during the continuance of an Event of Default;
including all reasonable attorneys' and other professional and
service providers' fees arising from such services, including
those in connection with any appellate proceedings; and all
reasonable out-of-pocket expenses, costs, charges and other
fees incurred by such counsel and others in any way or respect
arising in connection with or relating to any of the events or
actions described in this SECTION 12.03 shall be payable, on
demand, by the Company to the respective Holders, as
applicable. Without limiting the generality of the foregoing,
such expenses, costs, charges and fees may include: reasonable
fees, costs and expenses of accountants, environmental
advisors, appraisers, investment bankers, management and other
consultants and paralegals; court costs and expenses;
photocopying and duplication expenses; court reporter fees,
costs and expenses; long distance telephone charges; air
express charges; telegram or telecopy charges; secretarial
overtime charges; and expenses for travel, lodging and food
paid or incurred in connection with the performance of such
legal or other advisory services.
(b) In addition, the Company agrees to pay any
present or future intangible personal property, stamp or
documentary taxes or any other excise or property taxes,
charges or similar levies that arise from the sale or delivery
of the Bridge Notes by the Company to Purchasers pursuant to
this Agreement, the issuance of Common Stock to Holders of
Series A Bridge Notes pursuant to Section 3.04 hereof, any
payment made hereunder or under the Bridge Notes or the
execution, delivery, recording or registration of, or
otherwise with respect to, this Agreement, any of the
Mortgages or any of the other Collateral Documents or Bridge
Note Documents or any other matter contemplated by this
Agreement, within ten (10) Business Days after demand by any
Holder therefor (including penalties, interest and expenses
arising therefrom or with respect thereto), whether or not
such taxes were correctly or legally asserted.
9. AMENDMENT TO ANNEX B. The Purchase Agreement is hereby further
amended by (a) deleting Section 1 and Section 2 of Annex B of the Purchase
Agreement and substituting the following in lieu thereof:
1. Within thirty-five (35) days after the close of
each Fiscal Month, (i) an unaudited consolidated and
consolidating income statement for the Company for such Fiscal
Month and that portion of the current Fiscal Year ending as of
the close of such Fiscal Month, together with comparisons to
the corresponding income statement for the prior year's
equivalent period,
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both on a monthly and year-to-date basis, and to budget, (ii)
the Company's consolidated balance sheet as at the end of such
Fiscal Month, and (iii) a Compliance Certificate of a
Responsible Financial Officer of the Company for such Fiscal
Month, substantially in the form of Exhibit A to this ANNEX B.
2. Within five (5) days after delivery to the SEC,
but in any event within fifty (50) days after the close of
each Fiscal Quarter, the Company's Form 10-Q for such Fiscal
Quarter,
(b) replacing all references in Exhibit A to Annex B to the "Rolling
Four-Quarter Period" with references to "Rolling Twelve-Month Period", (c)
replacing all references in Exhibit A to Annex B to "Fiscal Quarter" with
references to "Fiscal Month" and (d) replacing the reference to "[FOR QUARTERLY
CERTIFICATE:]" in Section 1 of Exhibit A to Annex B with a reference to "[FOR
MONTHLY CERTIFICATE:]".
10. AMENDMENTS TO ANNEX C. The Purchase Agreement is hereby further
amended by (a) replacing all references in Annex C to the "Rolling Four-Quarter
Period" with references to "Rolling Twelve-Month Period", (b) replacing the
reference to "Fiscal Quarter" in Section 1(e) with a reference to "Fiscal
Month", (c) deleting Section 1(f) in its entirety and substituting the following
in lieu thereof:
(f) The Company shall not make Capital Expenditures
in excess of $3,500,000 in the aggregate during its Fiscal
Year ending June 30, 1999 or any Fiscal Year thereafter.
(d) deleting Section 2(a) in its entirety and substituting the following in lieu
thereof:
(a) TRANSITIONAL RULES. Notwithstanding anything to
the contrary set forth herein, in calculating the Company's
compliance with the financial covenants set forth in
paragraphs 1(c) and (d) above for the Rolling Twelve-Month
Period ending April 30, 1998, May 31, 1998 and June 30, 1998,
the "Rolling Twelve-Month Period" ending April 30, 1998 shall
mean the ten Fiscal Months then ended; the "Rolling
Twelve-Month Period" ending May 31, 1998 shall mean the eleven
Fiscal Months then ended; and the "Rolling Twelve-Month
Period" ending June 30, 1998 shall mean the twelve Fiscal
Months then ended.
and (e) deleting the definitions of "Fixed Charges" and "Rolling Four-Quarter
Period" in Section 3 of Annex C and adding the following definitions of "Fixed
Charges" and "Rolling Twelve-Month Period" in proper alphabetical order:
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"FIXED CHARGES" shall mean, with respect to any
fiscal period of the Company, the sum of (i) Interest Expense
for such period, PLUS (ii) regularly scheduled payments of
principal paid on Funded Debt during such period.
"ROLLING TWELVE-MONTH PERIOD" shall mean, as of the
end of any Fiscal Month of the Company, the immediately
preceding twelve Fiscal Months (except as set forth in
paragraph 2(a) above), including the Fiscal Month then ending.
In addition, the Company agrees that at any time that the Senior Obligations
have been paid in full, Annex C and Annex C-2 to the Purchase Agreement shall be
deemed amended in their entirety by deleting such Annex C and Annex C-2 and
incorporating by reference all terms and conditions of Annex G and Annex G-2,
respectively, to the Senior Credit Agreement as Annex C and Annex C-2,
respectively to the Purchase Agreement, and all defined terms used therein.
11. NEW ANNEX C-2. The Purchase Agreement is hereby further amended by
adding ANNEX C-2 attached hereto as a new Annex C-2 to the Purchase Agreement.
C. CONSENTS
The Holders consent to the FPM Behavioral Health Divestiture and the
Greenbrier Hospital Divestiture and waive any Defaults that would arise
therefrom under Section 7.07 of the Purchase Agreement, PROVIDED that (i) the
FPM Behavioral Health Divestiture is consummated no later than June 15, 1998 in
accordance with the terms of the FPM Behavioral Health Sale Agreement (without
giving effect to any amendment, waiver or modification), (ii) the Greenbrier
Hospital Divestiture is consummated no later than June 15, 1998 in accordance
with the terms of the Greenbrier Hospital Sale Agreement (without giving effect
to any amendment, waiver or modification), (iii) Ramsay Managed Care shall
execute and deliver to the Holders, with the written consent of Horizon Health
Corporation and the Escrow Agent (as defined in the FPM Behavioral Health Sale
Agreement), a second-priority assignment (in form and substance satisfactory to
the Holders) of all of its rights in and to the Indemnity Escrow Deposit (as
defined in the FPM Behavioral Health Sale Agreement) and a second-priority
collateral assignment (in form and substance satisfactory to the Holders) of all
of its rights to purchase price adjustments and post-closing payments payable to
Ramsay Managed Care, Inc. or the Company under the FPM Behavioral Health Sale
Agreement, and (iv) Greenbrier Hospital, Inc. shall execute and deliver to the
Holders, with the written consent of Provider Options Holdings, L.L.C. and the
Escrow Agent (as defined in the Greenbrier Hospital Sale Agreement), a
second-priority assignment (in form and substance satisfactory to the Holders)
of all of the Company's rights in and to the Escrow Deposit (as defined in the
Greenbrier Hospital Sale Agreement) and a second-priority collateral assignment
(in form and substance satisfactory to the Holders) of all of the Company's
rights to purchase price adjustments and post-closing payments payable to
Greenbrier Hospital, Inc. or the Company under the Greenbrier Hospital Sale
Agreement.
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2. Ramsay Holdings consents to the amendments to Section 6.14 of the
Purchase Agreement effected by Section B hereof, and acknowledge that the Series
B Bridge Notes will not be entitled to the security and other benefits afforded
to the Holders of the Series A Bridge Notes by such Amendments.
D. CONDITIONS PRECEDENT
Notwithstanding any other provision of this Amendment and without
affecting in any manner the rights of GE Capital hereunder, it is understood and
agreed that this Amendment shall not become effective, and the Purchase
Agreement shall remain in full force and effect in its unamended form, the
Company shall have no rights under this Amendment and the Holders shall not be
obligated to take, fulfill or perform any action hereunder, until GE Capital
shall have received the following, each dated as of the date of this Amendment,
in form and substance reasonably satisfactory to and its counsel:
1. This Amendment, duly executed by all parties hereto;
2. Opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇, special counsel to the
Credit Parties, in form and substance satisfactory to
GE Capital; and
3. An acknowledgment from each employee listed on
SCHEDULE A acknowledging and accepting the
restriction added to Section 7.05 of the Purchase
Agreement in this Amendment.
E. REPRESENTATIONS
The Company hereby represents and warrants to Purchasers that:
1. The execution, delivery and performance by the Company of this
Amendment (i) are within the Company's corporate power; (ii) have been duly
authorized by all necessary corporate and shareholder action; (iii) are not in
contravention of any provision of the Company's certificate of incorporation or
bylaws or other organizational documents; (iv) do not violate any law or
regulation, or any order or decree of any Governmental Authority; (v) do not
conflict with or result in the breach or termination of, constitute a default
under or accelerate any performance required by, any indenture, mortgage, deed
of trust, lease, agreement or other instrument to which the Company or any of
its Subsidiaries is a party or by which the Company or any such Subsidiary or
any of their respective property is bound; (vi) do not result in the creation or
imposition of any Lien upon any of the property of the Company or any of its
Subsidiaries; and (vii) do not require the consent or approval of any
Governmental Authority or any other person other than the consent of the Senior
Lenders set forth below;
2. This Amendment has been duly executed and delivered for the benefit
of or on behalf of the Company and constitutes a legal, valid and binding
obligation of the Company, enforceable
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against the Company in accordance with its terms except as the enforceability
hereof may be limited by bankruptcy, insolvency, reorganization, moratorium and
other laws affecting creditors' rights and remedies in general; and
3. After giving effect to this Amendment, no Default or Event of
Default has occurred and is continuing as of the date hereof.
F. MISCELLANEOUS
1. The Company hereby restates, ratifies and reaffirms each and every
term and condition set forth in the Purchase Agreement, as modified by this
Amendment, effective as of the date hereof.
2. The Company agrees that as a condition precedent to the
effectiveness of this Amendment, it must deliver to the Holders the
acknowledgment of each employee listed on Schedule A to the Second Amendment to
Credit Agreement to the restriction added to Section 7.05 of the Purchase
Agreement in this Amendment.
3. The Company agrees to pay on demand all costs and expenses of GE
Capital in connection with the preparation, execution, delivery and enforcement
of this Amendment, including the reasonable fees and out-of-pocket expenses of
counsel to GE Capital. Without limiting the generality of the foregoing, the
Company agrees to pay the sum of $98,002.17 presently due and payable to King &
Spalding on or before the close of business on May 20, 1998.
4. This Amendment shall be governed by, and construed in accordance
with, the internal laws (and not the laws of conflicts), of the State of New
York and all applicable laws of the United States of America.
5. This Amendment may be executed in any number of separate
counterparts, each of which shall, collectively and separately, constitute one
agreement.
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IN WITNESS WHEREOF, this Amendment has been duly executed as of the
date first written above.
RAMSAY HEALTH CARE, INC.
By: _____________________________
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
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GENERAL ELECTRIC CAPITAL
CORPORATION
By: _____________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇
Authorized Signatory
▇▇▇▇ ▇▇▇▇▇▇ HOLDINGS PTY.
LIMITED
By: _____________________________
▇▇▇▇▇ ▇▇▇▇▇
Director
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The undersigned, being the Senior Agent and all of the Senior Lenders
under the Senior Credit Agreement, hereby consent to the foregoing Second
Amendment as of the date first written above.
GENERAL ELECTRIC CAPITAL
CORPORATION
By: _____________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇
Authorized Signatory
THE ING CAPITAL SENIOR SECURED
HIGH INCOME FUND, L.P.
By: _____________________________
Name:
Title:
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ANNEX C-2
Annex C-2 to
PURCHASE AGREEMENT
FINANCIAL COVENANTS FOR APRIL 1, 1998 - SEPTEMBER 30, 1998
1. FINANCIAL COVENANTS. The Company shall not breach or fail to comply
with any of the following financial covenants:
(a) The Company shall maintain, as of the end of each Rolling
Twelve-Month Period, commencing with the Rolling Twelve-Month Period ending
April 30, 1998, EBITDA for such Rolling Twelve-Month Period of not less than an
amount equal to the sum of (i) $840,000 for each Fiscal Month during such
Rolling Twelve-Month Period ending on or prior to the date of consummation of
the FPM Behavioral Health Divestiture and (ii) $625,000 for each Fiscal Month
during such Rolling Twelve-Month Period ending after the date of consummation of
the FPM Behavioral Health Divestiture.
(b) The Company shall maintain, as of the end of each Rolling
Twelve-Month Period set forth below, a Leverage Ratio of not more than
5.00:1.00.
(c) The Company shall maintain, as of the end of each Rolling
Twelve-Month Period, commencing with the Rolling Twelve-Month Period ending
April 30, 1998, a Fixed Charge Coverage Ratio of not less than 1.10:1.00.
(d) The Company shall maintain, as of the end of each Rolling
Twelve-Month Period set forth below, an Interest Coverage Ratio of not less than
1.50:1.00.
(e) The Company shall maintain, as of the last day of each Fiscal
Month, commencing April 30, 1998, a Tangible Net Worth of not less than an
amount equal to the sum of (i) (A) ($1,183,000) for each Fiscal Month ending
prior to the consummation of the FPM Behavioral Health Divestiture and (B)
$12,950,000 for each Fiscal Month ending after the consummation of the FPM
Behavioral Health Divestiture, PLUS (ii) fifty percent (50%) of the Company's
cumulative positive Net Income for each Fiscal Month ended subsequent to April
30, 1998 through and including the Fiscal Month then ended (but without
reduction for negative Net Income).
(f) The Company shall not make Capital Expenditures in excess of the
amount set forth below for the periods corresponding thereto:
PERIOD ENDING AMOUNT
One-month period ending 4/30/98 $315,000
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Two-month period ending 5/31/98 $555,000
Three-month period ending 6/30/98 $800,000
Four-month period ending 7/31/98 $1,040,000
Five-month period ending 8/31/98 $1,285,000
Six-month period ending 9/30/98 $1,533,000
2. TRANSITIONAL RULES. Notwithstanding anything to the contrary set
forth herein in calculating Company's compliance with the financial covenants
set forth in paragraphs 1(a), (b), (c) and (d) above for the Rolling
Twelve-Month Periods ending April 30, 1998, May 31, 1998, June 30, 1998, July
31, 1998, August 31, 1998 and September 30, 1998, the "Rolling Twelve-Month
Period" ending April 30, 1998 shall mean the Fiscal Month then ended; the
"Rolling Twelve-Month Period" ending May 31, 1998 shall mean the two Fiscal
Months then ended; the "Rolling Twelve-Month Period" ending June 30, 1998 shall
mean the three Fiscal Months then ended; the "Rolling Twelve-Month Period"
ending July 31, 1998 shall mean the four Fiscal Months then ended; the "Rolling
Twelve-Month Period" ending August 31, 1998 shall mean the five Fiscal Months
then ended; and the "Rolling Twelve-Month Period" ending September 30, 1998
shall mean the six Fiscal Months then ended.
3. DEFINITIONS AND RULES OF CONSTRUCTION.
(a) DEFINED TERMS. Capitalized terms used in this ANNEX C-2
and not defined in ARTICLE 10 of this Agreement shall have the following
respective meanings:
"CAPITAL EXPENDITURES" shall mean, with respect to any fiscal
period of the Company, all of the Company's consolidated expenditures during
such period for any fixed assets or improvements, or for replacements,
substitutions or additions thereto, that have a useful life of more than one
year and that are required to be capitalized under GAAP, and, in any event,
shall include Capital Lease Obligations and all asset purchases secured by
purchase money security interests.
"CAPITAL LEASE" shall mean any lease of any property (whether
real, personal or mixed) by any Person as lessee that, in accordance with GAAP,
either would be required to be classified and accounted for as a capital lease
on a consolidated balance sheet of such Person or otherwise be disclosed as such
in a note to such balance sheet.
"CAPITAL LEASE OBLIGATION" shall mean, as of any date, the
amount of the obligation of the lessee under a Capital Lease that, in accordance
with GAAP, would appear on a consolidated balance sheet of such lessee in
respect of such Capital Lease or otherwise be disclosed as such in a note to
such balance sheet.
"EBITDA" shall mean, with respect to any fiscal period of the
Company, (i) Net Income for such period, PLUS (ii) Interest Expense for such
period, PLUS (iii) Tax Expense for such period, PLUS (iv) to the extent deducted
in determining Net Income, Company's depreciation, amortization and other
similar non-cash charges for such period, MINUS (v) to the extent included in
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determining Net Income, Company's extraordinary gains for such period, PLUS,
(vi) to the extent included in determining Net Income, the non-cash portion of
any of the Company's extraordinary losses for such period, PLUS (vii) any losses
from asset sales for such period, MINUS (viii) any gains from asset sales for
such period, all determined in accordance with GAAP on a consolidated basis,
MINUS (ix) any cash payments made with respect to extraordinary losses related
to a prior period, MINUS (x) to the extent included in determining Net Income,
any consolidated net income derived from the reversal of a reserve reflected in
the 1997 Audited Financial Statements or a reserve reflected in unaudited
Financial Statements of the Company for the Fiscal Quarter ending March 31, 1998
for which there was not a corresponding cash payment.
"FIXED CHARGE COVERAGE RATIO" shall mean, with respect to any
fiscal period of the Company, the ratio of (a) the sum of (i) EBITDA for such
period, MINUS (ii) Capital Expenditures during such period, MINUS (iii) that
portion of Tax Expense paid in cash during such period, MINUS (iv) any payment
made in cash for which the offsetting entry on the Company's Financial
Statements is a debit to a reserve reflected in the 1997 Audited Financial
Statements or in a reserve reflected in unaudited Financial Statements of the
Company for the Fiscal Quarter ending March 31, 1998, rather than an expense or
reduction of revenues on the Company's income statement, to (b) Fixed Charges
for such period.
"FIXED CHARGES" shall mean, with respect to any fiscal period
of the Company, the sum of (i) Interest Expense for such period, PLUS (ii)
regularly scheduled payments of principal paid on Funded Debt during such
period, MINUS (iii) one-half of the scheduled payments of principal paid on the
Term Loans.
"FUNDED DEBT" shall mean all of the Company's consolidated
Indebtedness which by the terms of the agreement governing or instrument
evidencing such Indebtedness matures more than one year from or is directly or
indirectly renewable or extendible at its option under a revolving credit or
similar agreement obligating the lender or lenders to extend credit over a
period of more than one year from the date of creation thereof, including in
each instance current maturities of long-term debt (and the current portion of
long-term debt in the last year of its term), revolving credit and short-term
debt extendible beyond one year at the option of the debtor, and shall also
include, without limitation, (i) Indebtedness arising under or in connection
with any interest rate swap agreement or arrangements, (ii) the Obligations,
and (iii) Subordinated Indebtedness.
"GAAP" shall mean generally accepted accounting principles in
the United States as in effect from time to time, consistently applied.
"INTEREST COVERAGE RATIO" shall mean, with respect to any
fiscal period of the Company, the ratio of (a) the sum of (i) EBITDA for such
period, PLUS (ii) up to $150,000 of the losses incurred by Greenbrier Hospital,
Inc. during the Fiscal Month ending May 31, 1998 to the extent such losses
reduced Net Income, MINUS (iii) Capital Expenditures during such period
(excluding up to $150,000 of Capital Expenditures made by Greenbrier Hospital,
Inc. during the Fiscal Month ending April 30, 1998), to (b) Interest Expense for
such period.
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"INTEREST EXPENSE" shall mean, with respect to any fiscal
period of the Company, the Company's consolidated interest expense determined in
accordance with GAAP, including without limitation, the interest component of
any Capital Lease Obligation.
"LEVERAGE RATIO" shall mean, with respect to any period, the
ratio of (a) Funded Debt excluding the Ramsay Subordinated Note, as of the last
day of such period, to (b) EBITDA for such period divided by the number of
Fiscal Months in such period and multiplied by twelve.
"NET INCOME" shall mean, with respect to any fiscal period of
the Company, the Company's consolidated net income (or loss) from continuing
operations for such period.
"ROLLING TWELVE-MONTH PERIOD" shall mean, as of the end of any
Fiscal Month of the Company, the immediately preceding twelve Fiscal Months
(except as set forth in paragraph 2(a) above), including the Fiscal Month then
ending.
"TANGIBLE NET WORTH" shall mean, as of any date, (a) the
Company's consolidated shareholders' equity, MINUS (b) the Company's
consolidated intangible assets, including, without limitation, the following:
(a) any surplus resulting from the write-up of assets
subsequent to the Audit Date;
(b) goodwill, including any amounts (however designated on the
balance sheet) representing the cost of acquisitions of Subsidiaries in excess
of underlying tangible assets;
(c) patents, trademarks, copyrights, etc.; and
(d) deferred charges (including, but not limited to,
unamortized debt discount and expense, organization expenses and experimental
and development expenses, but excluding prepaid expenses), but excluding, to the
extent included therein, transaction costs in an amount not to exceed $3,400,000
incurred by the Company in connection with the consummation of the Senior Credit
Agreement, the Bridge Note Purchase Agreement and the Preferred Stock Purchase
Agreement.
"TAX EXPENSE" shall mean, with respect to any fiscal period of
the Company, the Company's consolidated provision for income taxes for such
period.
4. RULES OF CONSTRUCTION. Any accounting term used in this ANNEX C-2 or
elsewhere in this Agreement shall have, unless otherwise specifically provided,
the meaning customarily given such term in accordance with GAAP, and all
financial computations shall be computed, unless otherwise specifically
provided, on a consolidated basis in accordance with GAAP consistently applied.
That certain items or computations are explicitly modified by the phrase "in
accordance with GAAP" shall in no way be construed to limit the foregoing. In
the event that any "Accounting Changes" (as defined below) occur and such
changes result in a change in the calculation of the financial covenants,
standards or terms used in this ANNEX C-2 or elsewhere in this Agreement, then
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Company and the Holders agree to enter into negotiations in order to amend such
provisions of this Agreement, subject to the approval of the Required Holders,
so as equitably to reflect such Accounting Changes with the desired result that
the criteria for evaluating Company's financial condition shall be the same
after giving effect to such Accounting Changes as if such Accounting Changes had
not been made. "ACCOUNTING CHANGES" means (i) changes in accounting principles
required by the promulgation of any rule, regulation, pronouncement or opinion
by the Financial Accounting Standards Board of the American Institute of
Certified Public Accountants (or successor thereto or any agency with similar
functions), (c) purchase accounting adjustments under A.P.B. 16 and/or 17 and
EITF 88-16, and the application of the accounting principles set forth in FASB
109, including the establishment of reserves pursuant thereto and any subsequent
reversal (in whole or in part) of such reserves; and (d) the reversal of any
reserves established as a result of purchase accounting adjustments. All such
adjustments resulting from expenditures made subsequent to the Closing Date
(including capitalization of costs and expenses or payment of pre-Closing Date
liabilities) shall be treated as expenses in the period the expenditures are
made and deducted as part of the calculation of EBITDA in such period. and (ii)
changes in accounting principles concurred in by Company's independent public
accountants. In the event that Company and the Required Holders shall have
agreed upon any such required amendment, then, after such amendment has been
evidenced in writing and the underlying Accounting Change with respect thereto
has been implemented, any reference to GAAP contained in this ANNEX C-2 or
elsewhere in this Agreement shall, only to the extent of such Accounting Change,
refer to GAAP, consistently applied after giving effect to the implementation of
such Accounting Change. If Company, the Holders and the Required Holders cannot
agree upon any required amendment within thirty (30) days following the date of
implementation of any Accounting Change, then all financial statements delivered
in accordance with ANNEX B to this Agreement and all calculations of financial
covenants and other standards and terms in accordance with this ANNEX C-2 shall
be prepared, delivered and made without regard to the underlying Accounting
Change.
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