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EXHIBIT 10.3
TERM NOTE
$7,000,000 May 3, 1996
FOR VALUE RECEIVED, intending to be legally bound hereby, the
Undersigned, jointly and severally, promise to pay to the order of UNIVERSAL
HEALTH SERVICES, INC., a Delaware corporation, its successors and assigns (the
"Holder"), the principal sum of $7.0 MILLION, together with interest on the
unpaid balance of the principal of this Note from the date of this Note until
this Note is paid in full at the annual rate of nine and one-quarter percent
(9.25%) per annum through August 31, 1996 and at eleven percent (11%) per annum
from and after September 1, 1996 (computed on the basis of a year of 360 days
and actual days elapsed). The aforesaid interest calculation shall continue to
apply whether or not judgment shall be entered on this Note.
This Note evidences a portion of the Pre-Closing Loan as
defined in that certain Asset Purchase Agreement, dated as of April 19, 1996,
among UHS of Pennsylvania, Inc., Universal Health Services, Inc. ("UHS"), UHS
of Delaware, Inc. and Wellington Regional Medical Center, Inc. (collectively,
the "UHS Group") and First Hospital Corporation ("FHC"), FHC Management
Services, Inc. ("FHC-MSI"), Health Services Management, Inc. ("HSMI"), Horsham
Clinic, Inc. d/d/a The Horsham Clinic ("Horsham"), Centre Valley Management,
Inc. d/b/a The Meadows Psychiatric Center ("Meadows"), Clarion FHC, Inc. d/b/a
Clarion Psychiatric Center ("Clarion"), Westcare, Inc. d/b/a Roxbury
("Roxbury"), and First Hospital Corporation of Florida ("FHC-Florida")
(collectively, the "Sellers") (the "Purchase Agreement"). Any initial capital
term used in this Note and not otherwise defined shall have the meaning
ascribed to such term in the Purchase Agreement.
Commencing on June 1, 1996, and continuing on the first day of
each successive month thereafter until payment of the principal in full,
Undersigned shall pay to Holder monthly in arrears interest as set forth above.
This Note shall mature on the date (the "Maturity Date") of
the earlier to occur of (i) the Closing Date or (ii) October 31, 1996. On the
Maturity Date, this Note shall mature and the entire unpaid principal balance
of this Note, together with accrued but unpaid interest amounts shall become
immediately due and payable.
The Undersigned shall have the right to prepay this Note
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in full or in part without premium or penalty.
This Note is issued in consideration for (among other things)
and is secured by that certain Stock Pledge Agreement of even date herewith
issued by FHC to UHS (the "Stock Pledge") and that certain Interim Operating
Agreement of even date herewith among UHS and the Undersigned (the "Interim
Operating Agreement).
All payments of principal and interest shall be made in
immediately available funds, in lawful money of the United States of America at
such place as the Holder may direct.
The unpaid balance of principal, together with accrued but
unpaid interest and all other sums, due under this Note shall, at the option of
the Holder, without any prior notice, presentment or demand, become
immediately due and payable in full if either: (i) payment of principal or
interest under this Note is not paid when due, whether by declaration,
acceleration or otherwise; (ii) on or before May 20, 1996, the Undersigned
fails to deliver to UHS evidence, satisfactory to UHS in its reasonable
discretion, that the Facilities Assets and Management Contracts are free and
clear of all Liens under that certain Amended and Restated Credit Agreement
dated November 21, 1994, as amended by an amendment dated March 29, 1996, with
NationsBank of Tennessee, N.A., National Westminster Bank USA, and Signet
Bank/Virginia as Lenders and NationsBank of Virginia, N.A. and NationsBank of
Tennessee, N.A. as agents for the Lenders (the "Credit Facility"); (iii) on or
before May 8, 1996, the Undersigned fails to deliver to UHS evidence,
satisfactory to UHS, of payment in full of all amounts due and owing under and
with respect to the Credit Facility; (iv) without the Holder's consent, the
Undersigned and any of their respective subsidiaries or affiliates, taken as a
whole, incur, after the date hereof, Debt (as defined below) that exceeds $20.0
Million in the aggregate; (v) Sellers breach their covenants under Sections
4.1, 4.2 or 4.3 of the Purchase Agreement, which covenants shall survive any
termination of the Purchase Agreement, the Stock Pledge or the Interim
Operating Agreement; or (vi) the Undersigned default under that certain $36.5
Million Term Note of even date herewith issued by the Undersigned to UHS (items
(i), (ii), (iii), (iv), (v) and (vi) being a "default" under this Note).
For purposes of this Note, "Debt" means: (i) indebtedness or
liability for borrowed money, or for the deferred purchase price of property or
services, whether such indebtedness or liability is matured or unmatured,
liquidated or unliquidated, direct or contingent, and joint or several; (ii)
amounts payable with respect to the lease of property that is required by
generally accepted accounting principles to be reflected as a liability on the
face of the lessee's balance sheet; (iii)
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obligations under letters of credit; (iv) all guaranties, endorsements (other
than for collection or deposit in the ordinary course of business), and other
contingent obligations to purchase, to provide funds for payment, to supply
funds for investment in any person or entities or otherwise to assure a
creditor against loss; (v) obligations secured by any lien on property owned by
such person or entity, whether or not the obligations have been assumed; (vi)
all liabilities in respect of unfunded vested benefits under any Qualified
Plan; and (vii) the present value of amounts payable under any operating leases
entered into after the date hereof.
No delay by Holder, its successors or assigns in exercising
any power or right hereunder, and no partial exercise of such power or right,
shall operate in any way as a waiver of any subsequent exercise thereof.
Holder, it successors or assigns shall not be liable for or prejudiced by
failure to collect or lack of diligence in bringing suit on this Note. This
Note shall be governed and construed under the laws of the Commonwealth of
Pennsylvania.
The Undersigned waives demand, presentment, protest, notice of
dishonor, and notice of default and acceleration in connection with the
delivery, acceptance, performance, default or enforcement of this Note. If
this Note is not paid promptly in accordance with its terms and is placed in
the hands of an attorney for collection, the Undersigned agrees to pay, in
addition to the unpaid balance hereof, all reasonable costs and expenses of
collection, including, without limitation, reasonable attorney's and
paralegal's fees.
This Note shall bind Undersigned and the successors and
assigns of Undersigned and the benefits hereof shall inure to the benefit of
Holder, its successors and assigns. All references herein to "Undersigned"
shall be deemed to apply to each of the Undersigned, jointly and severally, and
to each of their respective successors and assigns, and all references herein
to "Holder" shall be deemed to apply to Holder and its successors and assigns.
UNDERSIGNED DOES HEREBY EMPOWER THE PROTHONOTARY OR ANY
ATTORNEY OF ANY COURT OF RECORD WITHIN THE COMMONWEALTH OF PENNSYLVANIA TO
APPEAR FOR UNDERSIGNED AND, WITH OR WITHOUT ONE OR MORE COMPLAINTS FILED,
CONFESS JUDGMENT OR JUDGMENTS AGAINST UNDERSIGNED IN ANY COURT OF RECORD WITHIN
THE COMMONWEALTH OF PENNSYLVANIA AT ANY TIME AFTER DEFAULT ON THIS NOTE IN
FAVOR OF HOLDER, ITS SUCCESSORS AND ASSIGNS, FOR THE UNPAID PRINCIPAL BALANCE
OF THIS NOTE AND ALL INTEREST ACCRUED HEREON, TOGETHER WITH COSTS OF SUIT AND
REASONABLE ATTORNEYS' FEES FOR COLLECTION OF SUCH SUMS, AND UNDERSIGNED HEREBY
FOREVER WAIVES AND RELEASES
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ANY AND ALL ERRORS IN SAID PROCEEDINGS AND WAIVES STAY OF EXECUTION AND STAY,
CONTINUANCE OR ADJOURNMENT OF SALE ON EXECUTION. THE AUTHORITY AND POWER TO
APPEAR FOR AND ENTER JUDGMENT AGAINST THE UNDERSIGNED SHALL NOT BE EXHAUSTED BY
ONE OR MORE EXERCISES THEREOF, AND MAY BE EXERCISED FROM TIME TO TIME AND AS
OFTEN AS HOLDER OR ITS SUCCESSORS AND ASSIGNS SHALL DEEM NECESSARY OR
DESIRABLE.
Executed by a duly authorized officer of each of the
Undersigned on the day and year first above written.
FIRST HOSPITAL CORPORATION
Name: /s/ Ronald I. Dozoretz
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Title: President
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HORSHAM CLINIC, INC. d/b/a
HORSHAM CLINIC
Name: /s/ Ronald I. Dozoretz
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Title: President
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CENTER VALLEY MANAGEMENT, INC. d/b/a
THE MEADOWS PSYCHIATRIC CENTER
By: /s/ Ronald I. Dozoretz
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Title: President
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CLARION FHC, INC. d/b/a CLARION
PSYCHIATRIC CENTER
By: /s/ Ronald I. Dozoretz
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Title: President
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WESTCARE, INC. d/b/a ROXBURY
By: /s/ Ronald I. Dozoretz
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Title: President
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FHC MANAGEMENT SERVICES, INC.
By: /s/ Ronald I. Dozoretz
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Title: President
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HEALTH SERVICES MANAGEMENT,
INC.
By: /s/ Ronald I. Dozoretz
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Title: President
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FIRST HOSPITAL CORPORATION OF
FLORIDA
By: /s/ Ronald I. Dozoretz
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Title: President
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