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EXHIBIT 10.64
6.51% SUBORDINATED NOTE DUE AUGUST 30, 2006
US $7,185,467 HOUSTON, TEXAS
AUGUST 30, 1996
1. PRINCIPAL AND INTEREST PAYMENTS. For value received, Paracelsus
Healthcare Corporation, a California corporation with a business address at 515
W. Greens Road, Suite 800, Houston, Texas 77067 (the "Maker" or the
"Company"), hereby promises to pay to the order of Park Hospital GmbH, a German
corporation with a business address at AM Natruper Holz 69, D-49076 Osnabruck,
Federal Republic of Germany, or its registered assigns (the "Holder"), the
principal sum of SEVEN MILLION, ONE HUNDRED EIGHTY FIVE THOUSAND AND FOUR
HUNDRED SIXTY-SEVEN DOLLARS ($7,185,467), with interest on unpaid principal at
the rate of 6.51% per annum from this date until paid, principal and interest
payable in lawful money of the United States of America in equal, successive
yearly installments of $1 million, consisting of 1/10 of the principal amount
hereof together with interest thereon, commencing on August 30, 1997 and
continuing on each annual anniversary thereof until August 30, 2006, at which
time any unpaid balance of principal and all accrued and unpaid interest
thereon will be due and payable. Interest will be computed on the basis of a
360-day year of twelve 30- day months. The Company will pay interest on the
Note (except defaulted interest) to the person who is the registered holder of
Note at the close of business on the fourth business day prior to the interest
payment date. The Company may mail an interest check to the Holder's
registered address. Each payment will be applied first to interest then due
and the remainder to principal. Certain capitalized terms used herein are
defined in Section 11 below.
2. SUBORDINATION
2.1 SECURITIES SUBORDINATED TO SENIOR INDEBTEDNESS. The Company for
itself and its successors, and the Holder by its acceptance of the Note, agree
that the payment of the Note by the Company is subordinated, to the extent and
in the manner provided in this Section 2, to the prior payment in full of all
Senior Indebtedness, whether outstanding on the date of this Note or thereafter
incurred. This Section 2 will constitute a continuing offer to all persons
who, in reliance upon its provisions, become holders of, or continue to hold,
Senior Indebtedness, and such holders are made obligees under this Section 2
and they and/or each of them may enforce its provisions.
2.2 NO PAYMENT ON NOTES IN CERTAIN CIRCUMSTANCES
(a) No payment or distribution of cash or property (other than
capital stock of the Company or other securities of the Company that are
subordinated to Senior Indebtedness to at least the same extent as the Note) of
the Company will be made on account of principal of or interest on the Note, or
to defease or acquire the Note (i) upon the
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maturity of any Senior Indebtedness by lapse of time, acceleration or
otherwise, unless and until all Senior Indebtedness shall first be paid in full
in cash, or such payment duly made in a manner satisfactory to the holders (or
a trustee or authorized agent on behalf thereof) of such Senior Indebtedness,
(ii) in the event that the Company defaults in the payment of any principal of,
premium, if any, or interest on or any other amounts payable on or due in
connection with any Senior Indebtedness when it becomes due and payable,
whether at maturity or at a date fixed for prepayment or by declaration or
otherwise, unless and until such default has been cured or waived in writing or
has ceased to exist., (iii) in the event any judicial proceeding shall be
pending with respect to any of the events described in clauses (i), (ii) or
(iv) of this Section 2.2(a) or (iv) any other default shall have occurred and
be continuing that would permit the holders (or a trustee or authorized agent
on behalf thereof) of the Designated Senior Indebtedness to accelerate the
maturity of Designated Senior Indebtedness, upon written notice (a "Payment
Blockage Notice") of the default given to the Company and the Holder by the
holders of, or an agent, trustee or other representative for, such Designated
Senior Indebtedness, then, unless and until such default has been cured or
waived in writing, no payment or distribution of cash or property (other than
capital stock of the Company or other securities of the Company that are
subordinated to Senior Indebtedness to at least the same extent as the Note)
shall be made by the Company with respect to the principal of or interest on
the Note or to acquire or repurchase the Note for cash or property other than
Capital Stock of the Company. With respect to clause (iv) above, if such
Designated Senior Indebtedness is not declared due and payable within 270 days
after the Payment Blockage Notice is given, promptly after the end of the
270-day period the Company will pay all sums due in respect of the Note and not
paid during the 270-day period. Payments on the Note may and shall be resumed
in the case of a payment default upon the date on which such default is cured
or waived. During any 540-day consecutive period, only one such period during
which payment with respect to the Note may not be made pursuant to clause (iv)
above may commence and the duration of such period may not exceed 270 days. No
nonpayment default that existed or was continuing on the date of delivery of
any Payment Blockage Notice to the Holder shall be, or be made, the basis for a
subsequent Payment Blockage Notice unless such default shall have been waived
for a period of not less than 90 days.
(b) if any payment or distribution of assets of the Company
is received by the Holder in respect of the Note at a time when that payment or
distribution should not have been made because of paragraph (a) of this Section
2.2, such payment or distribution will be received and held and will be paid
over to the holders of Senior Indebtedness (PRO RATA as to each of such holders
on the basis of the respective amounts of Senior Indebtedness held by them)
until all such Senior Indebtedness has been paid in full, after giving effect
to any
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concurrent payment or distribution or provision therefor to the holders of such
Senior Indebtedness.
2.3 NOTE SUBORDINATED TO PRIOR PAYMENT OF ALL SENIOR INDEBTEDNESS ON
DISSOLUTION, LIQUIDATION OR REORGANIZATION. Upon any distribution of assets
of the Company upon any dissolution, winding up, liquidation or reorganization
of the Company (whether in bankruptcy, insolvency, receivership or similar
proceeding relating to the Company or its property or upon an assignment for
the benefit of creditors or any marshalling of the Company's assets or
liabilities or otherwise):
(a) the holders of all Senior Indebtedness will first be
entitled to receive payment in full of all amounts due or to become due on or
in respect of on Senior Indebtedness (including interest accruing after the
commencement of a bankruptcy or insolvency at the rate specified in the
applicable Senior Indebtedness and including, without limitation, in respect of
premiums, indemnities or otherwise, and all indebtedness under the Credit
Agreement which is disallowed, avoided or subordinated pursuant to Section 548
of Title 11, United States Code or any applicable state fraudulent conveyance
law) in cash before the Holder is entitled to receive any payment or
distribution on account of the principal of or interest on the Note;
(b) any payment or distribution of assets of the Company of
any kind or character, whether in cash, property or securities (except that the
Holder may receive securities that are subordinated at least to the same extent
as the Note is subordinated to Senior Indebtedness as provided in this Section
2 and any securities issued in exchange for Senior Indebtedness), to which the
Holder would be entitled except for the provisions of this Section 2.3, will be
paid by the liquidating trustee or agent or other persons making such a payment
or distribution directly to the holders of Senior Indebtedness (PRO RATA to
such holders on the basis of the respective amounts of Senior Indebtedness held
by such holders) or their representatives to the extent necessary to make or
provide for payment in full in cash of all Senior Indebtedness remaining
unpaid, after giving effect to any concurrent payment or distribution to the
holders of such Senior Indebtedness or provision for that payment or
distribution; and
(c) if, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in
cash, property or securities (except that the Holder may receive securities
that are subordinated at least to the same extent as the Note is so
subordinated to Senior Indebtedness as provided in this Section 2 and any
securities issued in exchange for Senior Indebtedness) is received by the
Holder on account of the principal of or interest on the Note (notwithstanding
the provisions of this Section 2.3) before all Senior Indebtedness is paid in
full such payment or distribution will be received and held in trust for and
will be forthwith paid over to the
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holders of the Senior Indebtedness remaining unpaid or unprovided for or their
representatives for application (in the case of cash) to, or as collateral (in
the case of non-cash property or securities) for the payment of such Senior
Indebtedness until all such Senior Indebtedness has been paid in full, after
giving effect to any concurrent payment or distribution or provision therefor
to the holders of such Senior Indebtedness.
The Company will give prompt written notice to the Holder of
any dissolution, winding up, liquidation or reorganization of it or any
assignment for the benefit of its creditors.
2.4 HOLDER TO BE SUBROGATED TO RIGHTS OF HOLDERS OF SENIOR
INDEBTEDNESS. Subject to the prior payment in full of all Senior Indebtedness,
the Holder shall be subrogated to the rights of the holders of Senior
Indebtedness to receive payments or distributions of cash, property or
securities of the Company applicable to the Senior Indebtedness until all
amounts owing on the Note shall be paid in full; and, for the purposes of such
subrogation:
(a) no payments or distributions to the holders of the
Senior Indebtedness of any cash, property or securities to which the Holder
would be entitled except for the provisions of this Section 2 and no payment
pursuant to the provisions of this Section 2 to the holders of Senior
Indebtedness by the Holder shall, as between the Company, its creditors (other
than holders of Senior Indebtedness) and the Holder, be deemed to be a payment
by the Company to or on account of the Senior Indebtedness; and
(b) no payment or distributions of cash, property or
securities to or for the benefit of the Holder pursuant to the subrogation
provisions of this Section 2, which would otherwise have been paid to the
holders of Senior Indebtedness, shall be deemed to be a payment by the Company
to or for the account of the Note.
It is understood that the provisions of this Section 2 are
intended solely for the purpose of defining the relative rights of the Holder,
on the one hand, and the holders of the Senior Indebtedness, on the other hand.
2.5 OBLIGATIONS OF THE COMPANY UNCONDITIONAL. Nothing contained in
this Section 2 or elsewhere in this Note is intended to or will impair, as
between the Company and the Holder, the obligations of the Company, which are
absolute and unconditional, to pay to the Holder the principal of and interest
on the Note as and when they become due and payable in accordance with their
terms, or is intended to or will affect the relative rights of the Holder and
creditors of the Company other than the holders of the Senior Indebtedness, nor
will anything herein or therein prevent the Holder from exercising all remedies
otherwise
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permitted by applicable law upon default under this Note, subject to the
rights, if any, under this Section 2 of the holders of Senior Indebtedness to
receive the cash, property or securities of the Company receivable upon the
exercise of any such remedy.
2.6 SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF THE
COMPANY OR HOLDERS OF SENIOR INDEBTEDNESS. No right of any present or future
holders of any Senior Indebtedness to enforce subordination as provided herein
will at any time in any way be prejudiced or impaired by any act or failure to
act on the part of the Company or by any act or failure to act by any such
holder, or by any noncompliance by the Company with the terms of this Note,
regardless of any knowledge thereof which any such holder may have or otherwise
be charged with. Without in any way limiting the generality of the foregoing,
the holders of Senior Indebtedness may extend, renew, modify or amend the terms
of the Senior Indebtedness or any security therefor and release, sell or
exchange such security and otherwise deal freely with the Company, all without
affecting the liabilities and obligations of the parties to the Note or the
Holder.
2.7 THIS SECTION NOT TO PREVENT EVENTS OF DEFAULT. The failure to
make a payment on account of the principal of or interest on the Note by reason
of any provision of this Section 2 will not be construed as preventing the
occurrence of an Event of Default.
2.8 REPRESENTATIVE OF SENIOR INDEBTEDNESS. Any notices to be given
or payments to be made to any holders of Senior Indebtedness pursuant to this
Note may be made or given to their authorized representative.
3. EVENTS OF DEFAULT
3.1 EVENTS OF DEFAULT. Each of the following constitutes an "Event
of Default":
(a) default for 30 days in the payment when due of interest
on the Note (whether or not prohibited by Section 2 of this Note);
(b) default in payment when due of principal on the Note,
either at maturity, by declaration or otherwise (whether or not prohibited by
Section 2 of this Note);
(c) default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by the Company or any of its Subsidiaries
(or the payment of which is guaranteed by the Company or any of its
Subsidiaries) whether such indebtedness or guarantee exists as of the date of
this Note, or is created after the date of this Note, after which default the
holders of such Indebtedness accelerate
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the maturity of such Indebtedness having an outstanding principal amount of at
least $15 million, or a failure to pay such Indebtedness having an outstanding
principal amount of at least $15 million at its stated maturity, as such
maturity may be extended, provided that such acceleration or failure to pay is
not cured within 30 days after such acceleration or failure to pay;
(d) failure by the Company or any of its Subsidiaries to pay
final non-appealable judgments (to the extent not covered by insurance and as
to which the insurer has not acknowledged coverage in writing) aggregating in
excess of $15 million which are not stayed within 60 days after their entry:
(e) a decree, judgment, or order by a court of competent
jurisdiction shall have been entered adjudging the Company or any of its
Significant Subsidiaries as bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization of the Company or any of its
Significant Subsidiaries under any bankruptcy or similar law, and such decree
or order shall have continued undischarged and unstayed for a period of 60
days; or a decree or order of a court of competent jurisdiction appointing a
receiver, liquidator, trustee, or assignee in bankruptcy or insolvency of the
Company or any of its Significant Subsidiaries, or of the property of any such
person, or for the winding up or liquidation of the affairs of any such person,
shall have been entered, and such decree, judgment, or order shall have
remained in force undischarged and unstayed for a period of 60 days;
(f) the Company or any of its Significant Subsidiaries shall
institute proceedings to be adjudicated a voluntary bankrupt, or shall consent
to the filing of a bankruptcy proceeding against it, or shall file a petition
or answer or consent seeking reorganization under any bankruptcy or similar law
or similar statute, or shall consent to the filing of any such petition, or
shall consent to the appointment of a custodian, receiver, liquidator, trustee,
or assignee in bankruptcy or insolvency of it or any of its assets or property,
or shall make a general assignment for the benefit of creditors, or shall be
generally unable to pay its debts as they become due.
The Subordination provisions set forth in Section 2 prohibiting
the Company from making a payment or distribution of cash or property on
account of principal or interest on the Note, or to defease or acquire the
Note, shall not prevent the occurrence of an Event of Default.
3.2 ACCELERATION. If an Event of Default occurs and is continuing
(other than an Event of Default specified in clause (e) or (f) of Section 3.1
relating to the Company), unless the principal of the Note shall have already
become due and payable, the Holder, by notice in writing to the Company (an
"Acceleration Notice"), may declare all
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principal and accrued interest on the Note to be due and payable (a)
immediately if no Senior Bank Debt or Existing Senior Subordinated Notes are
outstanding or (b) if Senior Bank Debt or Existing Senior Subordinated Notes
are outstanding, upon the earlier of (i) ten days after such Acceleration
Notice is received by the Company or (ii) the acceleration of Senior
Indebtedness; PROVIDED, that (x) prior to the expiration of such period, such
acceleration shall be automatically rescinded and annulled without further
action required on the part of the Holder in the event that any default
specified in the Acceleration Notice under the Note shall have been cured,
waived or otherwise remedied and (y) at any time before the entry of a judgment
or decree for the payment of moneys due under this Note, the Holder may waive
all defaults and annul the consequences thereof if certain conditions are
satisfied, including that all Events of Default (other than the non-payment of
the principal of the Note which became due by acceleration) shall have been
cured, waived or otherwise remedied. If an Event of Default specified in
clause (e) or (f) of Section 3.1 above relating to the Company occurs, all
principal and accrued interest shall be immediately due and payable on this
Note without any declaration or other act on the part of the Holder. Prior to
the declaration of acceleration of the maturity of the Note, the Holder may
waive any default, except where such waiver would conflict with any judgment or
decree of a court of competent jurisdiction.
3.3 WAIVER OF PAST DEFAULTS. The Holder may waive in writing an
existing Default or Event of Default and its consequences except a continuing
Default or Event of Default in the payment of the principal of or interest on
the Note. Upon any such waiver in writing, such Default shall cease to exist,
and any Event of Default arising therefrom shall be deemed to have been cured
for every purpose of this Note; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereon.
3.4 RIGHTS OF HOLDERS TO RECEIVE PAYMENT. Notwithstanding any other
provision of this Note, the right of the Holder to receive payment of principal
and interest on the Note, on or after the respective due dates expressed in the
Note, or to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of the
Holder.
4. REMEDIES. Upon the occurrence of an Event of Default (and for
so long as it continues), the Holder shall have the option to declare the
entire balance of principal, together with all accrued interest thereon,
immediately due and payable. Upon the Holder so declaring the principal and
interest to be immediately due and payable, the entire principal balance of
this Note, together with all interest theretofore accrued thereon, shall
thereafter bear interest at a per annum rate equal to eight and one-half
percent (8-1/2%). No delay or
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omission on the part of the Holder hereof in exercising any right under this
Note shall operate as a waiver of such right.
5. TRANSFER AND EXCHANGE; REPLACEMENT NOTES.
5.1 TRANSFER AND EXCHANGE. Where the Note is presented to the
Company with a request to register a transfer or to exchange it for an equal
principal amount of Notes of other denominations, the Company shall register
the transfer or make the exchange if its reasonable requirements for such
transactions are met; PROVIDED, HOWEVER, that any Note presented or surrendered
for registration of transfer or exchange shall be duly endorsed or accompanied
by a written instruction of transfer in form satisfactory to the Company duly
executed by the Holder thereof or by its, his or her attorney duly authorized
in writing. No service charge shall be made to the Holder for any registration
of transfer or exchange (except as otherwise expressly permitted herein), but
the Company may require payment of a sum sufficient to cover any transfer tax
or similar governmental charge payable in connection therewith.
5.2 REPLACEMENT NOTES. If any mutilated Note is surrendered to the
Company and the Company receives evidence to its satisfaction of the
destruction, loss or theft of any Note, the Company shall issue and
authenticate a replacement Note. If reasonably required by the Company, an
indemnity bond must be supplied by the Holder that is in the judgment of the
Company sufficient to protect the Company from any loss which it may suffer if
a Note is replaced. Every replacement Note issued pursuant to this Section 5.2
in lieu of any destroyed, lost or stolen Note shall constitute an additional
obligation of the Company.
6. WAIVER. The Maker hereby waives diligence, presentment, protest
and demand, notice of protest, dishonor and nonpayment of this Note and
expressly agrees, without in any way affecting the liability of the Maker
hereunder, that the Holder may extend any maturity date or the time for payment
of any amount due hereunder.
7. ATTORNEYS' FEES; COSTS OF COLLECTION. If this Note is not paid
when due or if any Event of Default occurs, the Maker promises to pay all
reasonable costs of enforcement and collection, including but not limited to
the Holder's reasonable attorneys' fees whether or not legal proceedings were
commenced.
8. SEVERABILITY. Every provision of this Note is intended to be
severable. In the event any term or provision hereof is declared by a court of
competent jurisdiction to be illegal or invalid for any reason whatsoever, such
illegality or invalidity shall not affect the balance of the terms and
provisions hereof, which terms and provisions shall remain binding and
enforceable.
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9. INTEREST RATE LIMITATION. It is the intent of the Maker and the
Holder in the execution of this Note and in all transactions related hereto to
comply with the Usury Laws. In the event that, for any reason, it should be
determined that the Usury Laws apply to this Note, the Holder and the Maker
stipulate and agree that none of the terms and provisions contained herein or
in the Dividend and Note Agreement shall ever be construed to create a contract
for use, forbearance or detention of money requiring payment of interest at a
rate in excess of the maximum interest rate permitted to be charged by the
Usury Laws. In such event, if the Holder shall collect monies or other
property which are deemed to constitute interest which would otherwise increase
the effective interest rate on this Note to a rate in excess of the maximum
rate permitted to be charged by the Usury Laws, all such sums or property
deemed to constitute interest in excess of such maximum rate shall, at the
option of the Holder, be credited to the payment of the principal sum due
hereunder.
10. NO RECOURSE AGAINST OTHERS. A director, officer, employee or
shareholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Note or for any claim based on, in respect
of or by reason of such obligations or their creation. The Holder by accepting
the Note waives and releases all such liability. The waiver and release are
part of the consideration for the issue of the Note.
11. CERTAIN DEFINITIONS.
"AFFILIATE" of any specified person means any other person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such person,
whether through the ownership of voting securities, by agreement or otherwise.
"ATTRIBUTABLE DEBT" in respect of a sale and leaseback
transaction means, at the time of determination, the present value (discounted
at the interest rate implicit in the lease, compounded semiannually) of the
obligation of the lessee of the property subject to such sale-leaseback
transaction for rental payments during the remaining term of the lease included
in such transaction including any period for which such lease has been extended
or may, at the option of the lessor, be extended or until the earliest date on
which the lessee may terminate such lease without penalty or upon payment of
penalty (in which case the rental payments shall include such penalty), after
excluding all amounts required to be paid on account of maintenance and
repairs, insurance, taxes, assessments, water, utilities and similar charges.
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"BANKRUPTCY LAW" means title 11, U.S. Code or any similar
Federal or state law for the relief of debtors.
"CAPITAL LEASE OBLIGATION" means, at the time any
determination thereof is to be made, the discounted present value of the rental
obligations of any person under any lease of any property that would at such
time be so required to be capitalized on the balance sheet of such person in
accordance with GAAP.
"CAPITAL STOCK" means (i) in the case of a corporation,
corporate stock, (ii) in the case of an association or business entity, any and
all shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership, partnership
interests (whether general or limited), and (iv) any other interest or
participation that confers on a person the right to receive a share of the
profits and losses of, or distributions of assets of the issuing Person.
"CONSOLIDATED SUBSIDIARY" of any person means a person which
for financial reporting purposes is or, in accordance with GAAP should be,
accounted for by such person as a consolidated subsidiary.
"CREDIT AGREEMENT" means that certain Credit Agreement, dated
as of December 8, 1995, by and among the Company and Bank of America National
Trust and Savings Association and NationsBank of Tennessee, N.A., providing for
up to $280 million of revolving credit borrowings, including any related notes,
guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, modified, renewed, refunded,
replaced or refinanced from time to time when such agreement is refinanced,
that certain Credit Agreement, dated as of August 16, 1996, by and among the
Company and Bank of America N.T.S.A. and the other lenders party thereto,
providing for up to $400 million of revolving credit borrowing's including any
related notes, guarantees, collateral documents, instruments and agreements
executed in connection therewith, and in each case as amended, modified,
renewed, refunded, replaced or refinanced from time to time.
"CUSTODIAN" means any receiver, trustee, assignee, liquidator
or similar official under any Bankruptcy law.
"DEFAULT" means any event that is or with the passage of time
or the giving of notice or both would be an Event of Default.
"DESIGNATED SENIOR INDEBTEDNESS" means (i) the Senior Bank
Debt and (ii) any other Indebtedness constituting Senior Indebtedness permitted
under the Existing Senior Subordinated Notes Indenture or the New Senior
Subordinated Notes Indenture and which at the time of
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determination has an aggregate amount outstanding of at least $10 million and
is specifically designated in the instrument creating or evidencing such Senior
Indebtedness as "Designated Senior Indebtedness."
"DISQUALIFIED STOCK" means 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, matures or is,
pursuant to a sinking fund obligation or redeemable for cash at the option of
the holder thereof, in whole or in part, on or prior to October 15, 2006.
"DIVIDEND AND NOTE AGREEMENT" means the Dividend and Note
Agreement dated as of August 16, 1996, by and between Park Hospital GmbH and
the Company.
"EXISTING SENIOR SUBORDINATED NOTES" means the Company's
9-7/8% Senior Subordinated Notes due 2003.
"EXISTING SENIOR SUBORDINATED NOTES INDENTURE" means the
indenture, dated as of the October 15, 1993, between the Company and The Bank
of New York, as successor to NationsBank of Tennessee, N.A., as trustee, with
respect to the Existing Senior Subordinated Notes.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession of the United States, which are in effect from time to
time.
"HEDGING OBLIGATIONS" means, with respect to any person, the
obligations of such person under (i) interest rate swap agreements, interest
rate cap agreements interest rate floor agreements, and interest rate collar
agreements and (ii) other agreements or arrangements designed to protect such
person against fluctuations in interest rates.
"INDEBTEDNESS" of any person means at any date, without
duplication, (i) all obligations of such person for borrowed money, (ii) all
obligations of such person evidenced by bonds, debentures, notes or other
similar instruments, (iii) all obligations of such person to pay the deferred
price of property or services required to be accrued on the balance sheet of
such person, except accounts payable arising in the ordinary course of
business, (iv) all Capital Lease Obligations of such person, (v) all
Indebtedness of others secured by a Lien on any asset of such person, whether
or not such Indebtedness is assumed by such person (the amount of such
obligation being deemed to be the lesser of the value of the property or assets
or the amount of the obligation
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so secured), (vi) all Indebtedness of others guaranteed by such person, (vii)
all obligations of such person to reimburse the issuer of any letter of credit,
(viii) Attributable Debt of such person, (ix) preferred stock issued by a
Subsidiary of such person, (x) Disqualified Stock, and (xi) Hedging
Obligations; PROVIDED, HOWEVER, that "Indebtedness" does not include any
obligations pursuant to receivables not required under GAAP to be booked as
liabilities on the balance sheet of such person.
"NEW SENIOR SUBORDINATED NOTES" means the Company's 10% Senior
Subordinated Notes due 2006.
"NEW SENIOR SUBORDINATED NOTES INDENTURE" means the indenture
dated as of August 16, 1996, between the Company and AmSouth Bank of Alabama,
as trustee, with respect to the New Senior Subordinated Notes.
"SENIOR BANK DEBT" means, with respect to any person, the
Indebtedness outstanding under the Credit Agreement as such agreement may be
restated, further amended, supplemented or otherwise modified or replaced from
time to time hereafter, together with any refunding or replacement of such
Indebtedness, up to an aggregate maximum principal amount outstanding or
available at any time of $400 million, less the aggregate amount of all
proceeds of sales or other disposition of assets (i) applied to reduce the
outstanding amount of such Indebtedness and (ii) not reinvested in the business
or businesses of the Company or any of its Consolidated Subsidiaries or
otherwise in accordance with the terms of the New Senior Subordinated Notes
Indenture. and the Existing Senior Subordinated Notes Indenture.
"SENIOR INDEBTEDNESS" means (i) the Senior Bank Debt, the New
Senior Subordinated Notes, the Existing Senior Subordinated Notes and all
indebtedness ranking senior to or PARI PASSU with the Existing Senior
Subordinated Notes or New Senior Subordinated Notes; (ii) all obligations
consisting of the principal, premium, if any, and accrued and unpaid interest,
whether existing on the date of this Note or thereafter incurred, in respect of
(A) indebtedness of the Company for money borrowed and (B) indebtedness
evidenced by notes, debentures, bonds or other instruments of indebtedness for
which the Company is responsible or liable; (iii) all Capital Lease Obligations
of the Company; (iv) all obligations of the Company (A) for the reimbursement
of any obligor on any letter of credit, banker's acceptance or similar credit
transaction, (B) under interest rate swaps, caps, collars, options or similar
arrangements and foreign currency hedges entered into in respect of any
obligations described in clauses (i), (ii) and (iii) immediately above and (C)
issued or assumed as the deferred purchase price of property or services and
all conditional sale obligations and all obligations under any title retention
agreement; (v) all obligations of the type referred to in clauses (ii), (iii)
and (iv) immediately above and all dividends of other persons for the
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payment of which, in either case, the Company is responsible or liable as
obligor, guarantor or otherwise; (vi) all obligations consisting of
modifications, renewals, extensions, replacements and refundings of any
obligations described in clause (i), (ii), (iii), (iv) or (v) immediately
above; (vii) any other Indebtedness which by its terms or the terms of any
instrument creating it is designated as "Senior Indebtedness" under the terms
of the Existing Senior Subordinated Notes Indenture or the New Senior
Subordinated Notes Indenture, or is otherwise expressed as being senior in
right of payment to the Existing Senior Subordinated Notes or the New Senior
Subordinated Notes. Notwithstanding anything to the contrary in the foregoing,
"Senior Indebtedness" shall not include any Indebtedness, liability or
obligation of the Company (i) as to which the terms of the instrument creating
or evidencing the same provide that such Indebtedness is not senior in right of
payment to this Note, (2) to any trade credit, (3) owed to a person when such
person is a Subsidiary or any other Affiliate of the Company, (4) that portion
of which is incurred in violation of this Note and (5) for Federal, state,
local or other taxes owed or owing by the Company.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary which would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulations S-X
promulgated pursuant to the Act, as such Regulations S-X is in effect on the
date hereof.
"SUBSIDIARY" means with respect to any person (i), any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers
or trustees thereof is at the time owned or controlled, directly or indirectly,
by any person or one or more of the other Subsidiaries of such person (or a
combination thereof) and (ii) any partnership (a) the sole general partner or
the general managing partner of which is such person or a Subsidiary of such
person or (b) the only general partners of which are such person or one or more
Subsidiaries of such person (or any combination thereof).
"USURY LAWS" means, collectively, the usury laws of the State
of New York (or the usury laws of any other state that might be determined by a
court of competent jurisdiction to be applicable notwithstanding such notice of
law).
12. APPLICABLE LAW AND VENUE. This Note shall be governed by and
construed in accordance with the laws of the State of New York, as applied to
contracts made and performed within the State of New York, without regard to
the conflicts of laws principles thereof. The Maker irrevocably submits to
(and this Note shall be subject only to) the jurisdiction of the courts of the
State of New York and the Federal courts of the United States of America
located in the State of New York
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solely in respect of the interpretation and enforcement of the provisions of
this Agreement, and in respect of the transactions contemplated hereby, and
hereby waives, and agrees not to assert, as a defense in any action, suit or
proceeding for the interpretation or enforcement hereof or of any such
document, that it is not subject thereto or that such action, suit or
proceeding may not be brought or is not maintainable in said courts or that the
venue thereof may not be appropriate or that this Agreement or any such
document may not be enforced in or by such courts. It is irrevocably agreed
that all claims with respect to such action or proceeding shall be heard and
determined in such a New York State or Federal court. Any such court shall
have jurisdiction over the person of such party and over the subject matter of
such dispute and agrees that mailing of process or other papers in connection
with any such action or proceeding in the manner provided in applicable law,
shall be valid and sufficient service thereof.
IN WITNESS WHEREOF, the undersigned has caused this Note to be
executed as of the year and date first above written.
PARACELSUS HEALTHCARE CORPORATION
By: \s\ Deborah H. Frankovich
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Name: Deborah H. Frankovich
Title: Vice President and Treasurer