-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, R47SWitEm1tS68C9kUcnYsg/WiR4ONUB/cHIdtWia8zKnWWA2oRqu9n+EBMnyaWM H38+90y7AjKDGyYY8leFGA== 0000950134-00-001463.txt : 20000228 0000950134-00-001463.hdr.sgml : 20000228 ACCESSION NUMBER: 0000950134-00-001463 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20000225 GROUP MEMBERS: RAINWATER INC GROUP MEMBERS: RAINWATER RICHARD E SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CRESCENT OPERATING INC CENTRAL INDEX KEY: 0001035426 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 752701931 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-51205 FILM NUMBER: 553244 BUSINESS ADDRESS: STREET 1: 777 MAIN ST STREET 2: STE 2100 CITY: FORT WORTH STATE: TX ZIP: 74102 BUSINESS PHONE: 8178870477 FORMER COMPANY: FORMER CONFORMED NAME: NEW CRESCENT INC DATE OF NAME CHANGE: 19970311 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: RAINWATER RICHARD E CENTRAL INDEX KEY: 0000909549 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: KY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 777 MAIN STREET STREET 2: SUITE 2250 CITY: FORT WORTH STATE: TX ZIP: 76102 BUSINESS PHONE: 8178780402 MAIL ADDRESS: STREET 1: 777 MAIN STREET STREET 2: SUITE 2250 CITY: FORT WORTH STATE: TX ZIP: 76102 FORMER COMPANY: FORMER CONFORMED NAME: RAINWATER RICHARD E/777 MAIN STREET CORP DATE OF NAME CHANGE: 19930722 SC 13D/A 1 AMENDMENT NO. 1 TO SCHEDULE 13D 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Schedule 13D** Under the Securities Exchange Act of 1934 (Amendment No. 1)* Crescent Operating, Inc. (Name of Issuer) Common Stock, $0.01 par Value (Title of Classes of Securities) 22575M 10 0 (CUSIP Number) J. Randall Chappel 777 Main Street, Suite 2250 Fort Worth, Texas 76102 (817) 820-6620 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) February 16, 2000 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box [ ]. NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Sections 240.13d-7(b) for other parties to whom copies are to be sent. * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). **The total number of shares reported herein is 1,210,045 shares of Common Stock, which constitute approximately 10.5% of the total number of shares outstanding, assuming, pursuant to Rule 13d-3(d)(1)(i), that there are 11,531,525 shares deemed outstanding. All ownership percentages set forth herein assume that there are 11,414,963 shares outstanding. Exhibit Index is located at page 11 herein. Page 1 of 11 Pages 2 - --------------------- ------------------ CUSIP No. 22575M 10 0 13D Page 2 of 11 Pages - --------------------- ------------------ - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON RICHARD E. RAINWATER - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP * (a) [ ] (b) [X] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS * NOT APPLICABLE -- SEE ITEM 3 - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION RICHARD E. RAINWATER IS A CITIZEN OF THE UNITED STATES OF AMERICA - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 1,210,045 (1) NUMBER OF ------------------------------------------------------------ SHARES 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 0 EACH ------------------------------------------------------------ REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH 1,210,045 (1) ------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,210,045 (1) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES * SEE NOTE (2) [X] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 10.5% (3) - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON * IN - -------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT ! 3 CUSIP NO. 22575M 10 0 13D Page 3 of 11 Pages (1) Such shares include 239,337 shares of the Stock owned directly by Mr. Rainwater; pursuant to Rule 13d-3(d)(1)(i)(A), 116,562 shares of the Stock underlying an Issuer-granted stock option owned directly by Mr. Rainwater; and a total of 854,146 shares of the Stock owned by the following persons (the number of shares owned by each person is set forth parenthetically): (a) Rainwater, Inc. (10,520) (b) Rainwater RainAm Investors, LP (55,542) (c) Rainwater Investor Partners, Ltd. (242,583) (d) Office Towers LLC (326,099) (e) Richard E. Rainwater, settlor of Trust Agreement creating The Richard E. Rainwater 1995 Charitable Remainder Unitrust No. 1, dated March 10,1995 (219,402) Mr. Rainwater may be deemed, for the following reasons, to be the beneficial owner of the shares of the Stock owned by the foregoing persons: (i) Rainwater, Inc. ("RI") is a Texas corporation wholly owned by Mr. Rainwater, who is a director of RI and its President. (ii) Mr. Rainwater is the settlor of The Richard E. Rainwater 1995 Charitable Remainder Unitrust No. 1, dated March 10,1995 ("CRUT"). Mr. Rainwater, in his capacity as settlor under the terms of the trust agreement creating CRUT has power, upon prior notice, to remove the trustee and designate a successor trustee, including himself. (iii) Rainwater RainAm Investors, LP ("RRI") is a Texas limited partnership, wholly owned by Mr. Rainwater and RI, which is its sole general partner. (iv) Rainwater Investor Partners, Ltd. ("RIP") is a Texas limited partnership, wholly owned by Mr. Rainwater and RI, which is its sole general partner. (v) Office Towers LLC ("OT") is a Nevada limited liability company, wholly owned and managed by Mr. Rainwater and RI. (2) Excludes 45,178 shares of the Stock beneficially owned by Darla Moore, Mr. Rainwater's spouse. Mr. Rainwater disclaims beneficial ownership of such shares. (3) Assumes 11,414,963 shares of the Stock actually outstanding and, pursuant to Rule 13d-3(d)(1)(i), that the number of shares of the Stock deemed outstanding is 11,531,525. 4 - --------------------- ------------------ CUSIP No. 22575M 10 0 13D Page 4 of 11 Pages - --------------------- ------------------ - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON RAINWATER, INC. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP * (a) [ ] (b) [X] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS * NOT APPLICABLE -- SEE ITEM 3 - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION RAINWATER, INC. IS A CORPORATION ORGANIZED UNDER THE LAWS OF THE STATE OF TEXAS - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 308,645 (1) NUMBER OF ------------------------------------------------------------ SHARES 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 326,099 (1) EACH ------------------------------------------------------------ REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH 308,645 (1) ------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER 326,099 (1) - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 634,744 (1) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES * [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.6% (2) - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON * CO - -------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT ! 5 CUSIP NO. 22575M 10 0 13D Page 5 of 11 Pages (1) Such shares include 10,520 shares of the Stock owned directly by RI and a total of 624,224 shares of the Stock owned by the following persons (the number of shares owned by each person is set forth parenthetically): (a) RRI (55,542) (b) RIP (242,583) (c) OT (326,099) RI may be deemed for the following reasons to be the beneficial owner of the shares of the shares of the Stock owned by the foregoing persons: (i) RI is the sole general partner of RRI. (ii) RI is the sole general partner of RIP. (iii) RI is a member of OT, which is managed by its members. (2) Assumes 11,414,963 shares of the Stock actually outstanding. 6 CUSIP NO. 22575M 10 0 13D Page 6 of 11 Pages Richard E. Rainwater and Rainwater, Inc. filed a Statement on Schedule 13D relating to the Common Stock of Crescent Operating, Inc. in July 1997. The undersigned are amending such Statement to reflect certain matters in Item 4 (Purpose of Transaction) and to reflect several immaterial changes (none of which involved a change in the aggregate stock owned by the Reporting Persons). ITEM 1. SECURITY AND ISSUER. This statement relates to the Common Stock, par value $0.01 per share (the "Stock") of Crescent Operating, Inc., a Delaware corporation (the "Issuer"). The address of the principal executive offices of the Issuer is 306 West 7th St., Suite 1000, Fort Worth, Texas 76102. ITEM 2. IDENTITY AND BACKGROUND. (a) - (c) This statement is being filed by Richard E. Rainwater and Rainwater, Inc. ("RI"). The business address and principal occupation of Mr. Rainwater are set forth below. Mr. Rainwater is a citizen of the United States of America. RI is a corporation organized under the laws of the State of Texas. The principal business address of RI is 777 Main Street, Suite 2250, Fort Worth, Texas 76102. The principal business of RI is investments. The sole shareholder of RI is Richard E. Rainwater. The name, business address, present principal occupation or employment and the name, principal business and address of any corporation or other organization in which such employment is conducted, of each of the executive officers and directors of RI, are set forth below:
Name, Principal Business Name and and Address of Organization Business Capacity in Principal in which Principal Occupation Address which serves Occupation is Conducted - ------- ------------ ---------- ------------ Richard E. Rainwater President, Director Personal Investment Self-employed 777 Main Street for own account 777 Main Street Suite 2250 Suite 2250 Fort Worth, TX 76102 Fort Worth, TX 76102 Darla D. Moore Vice President, Personal Investment Self-employed 777 Main Street Director for own account 777 Main Street Suite 2250 Suite 2250 Fort Worth, TX 76102 Fort Worth, TX 76102 Kenneth A. Hersh Vice President, Chief Investment Officer GFW II, L.L.C. 777 Main Street Secretary, for Rainwater, Inc. and 777 Main Street Suite 2250 Treasurer, related partnerships Suite 2250 Fort Worth, TX 76102 Director Fort Worth, TX 76102 J. Randall Chappel Authorized Officer Officer of Rainwater, Inc. Goff Moore Strategic Partners, Inc. 777 Main Street and Principal of affiliated 777 Main Street Suite 2250 investment partnership Suite 2250 Fort Worth, TX 76102 Fort Worth, TX 76102
7 CUSIP NO. 22575M 10 0 13D Page 7 of 11 Pages The principal business of GFW II, L.L.C., is investments. The principal business of Goff Moore Strategic Partners, L.P. is investments. (d) - (e) None of the entities or individuals identified in this Item 2 has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (f) Each of the individuals identified in this Item 2 is a citizen of the United States of America. Richard E. Rainwater and RI are collectively sometimes called the "Reporting Persons." ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. Prior to June 12, 1997, the Issuer was wholly owned by Crescent Real Estate Equities Limited Partnership, a Delaware limited partnership ("Operating Partnership"), which itself is a subsidiary of Crescent Real Estate Equities Company, a Texas real estate investment trust ("CRE"). CRE is a publicly owned company. As of June 12, 1997, Operating Partnership made a pro-rata distribution of all of the outstanding shares of the Stock of the Issuer among CRE's shareholders and Operating Partnership's limited partners in a transaction (the "Spin-Off Distribution") registered under the Securities Act of 1933, as amended (Registration No. 333-25223). Prior to but in anticipation of the Spin-Off Distribution, the Issuer adopted a stock incentive plan pursuant to which grants of stock options were made in order to provide each holder of options in CRE or Operating Partnership with an equivalent number of stock options in the Issuer. In their capacities as shareholders of CRE and/or limited partners of Operating Partnership, Mr. Rainwater, RI, 777 Main Street Corporation, Tower Holdings, Inc., CRUT, RRI, RIP and OT acquired pursuant to the Spin-Off Distribution all of the shares of the Stock herein reported (777 Main Street Corporation and Tower Holdings, Inc. were subsequently merged with RI) and Mr. Rainwater acquired the stock option herein reported (the "Option"). Subsequently, on June 23, 1997, the Issuer's registration statement registering the Stock under Section 12(g) of the Securities Exchange Act of 1934, as amended (Registration No. 000-22725), was declared effective by the Securities and Exchange Commission. ITEM 4. PURPOSE OF TRANSACTION. As more fully described in Item 3, the shares of Stock herein reported (and the Option) were acquired pursuant to the Spin-Off Distribution. All of the shares of Stock herein reported are held for investment purposes. Depending upon a variety of factors the Reporting Persons may deem significant to their investment decisions, the Reporting Persons may purchase additional shares of the Stock in open market or private transactions or may dispose of all or some of the shares of Stock they now own or may hereafter acquire. On February 16, 2000, COPI Healthcare, Inc. (a wholly-owned subsidiary of the Issuer) entered into an asset purchase agreement with Charter Behavioral Health Systems, LLC ("Charter") in conjunction with Charter's filing for reorganization in federal bankruptcy court. The agreement 8 CUSIP NO. 22575M 10 0 13D Page 8 of 11 Pages is subject to bankruptcy court approval and other conditions. The Issuer has 90% of the economic interest of Charter, directly and indirectly. Mr. Rainwater is in favor of the asset purchase agreement between COPI Healthcare, Inc. and Charter. In connection therewith, Mr. Rainwater, the Issuer and COPI Healthcare, Inc. entered into a letter agreement, as described below. COPI Healthcare, Inc., a wholly-owned subsidiary of the Issuer, entered into an agreement with Charter for the acquisition of Charter's core business, which consists of the assets used in the operation of 37 behavioral healthcare facilities, for $24.5 million. The Issuer has announced in a press release that it anticipates that if COPI Healthcare, Inc. is successful in acquiring the selected operating assets of Charter, it would first fund the purchase through a bank loan, guaranteed by Mr. Rainwater, on a compensated basis. In connection therewith, on February 16, 2000, the Issuer, COPI Healthcare and Mr. Rainwater entered into a letter agreement pursuant to which Mr. Rainwater agreed that if COPI Healthcare is successful in acquiring the selected operating assets of Charter, he would provide a personal guarantee to the bank providing the acquisition financing subject to the terms and conditions set forth in such letter agreement. The Issuer has announced in a press release that it plans to refinance such acquisition loan through the sale of equity in COPI Healthcare or the Issuer. The Issuer has also announced in a press release that it currently intends to offer its existing shareholders the first opportunity to participate in any such refinancing, although the form of any such refinancing has not been determined. CRE, a company in which Mr. Rainwater is chairman and a significant shareholder, is Charter's landlord in 30 of the 37 core facilities. CRE and COPI Healthcare have agreed in principle that if COPI Healthcare is successful in acquiring the operating assets, CRE will lease its 30 facilities to COPI Healthcare, provided that an agreement is reached on various terms of the lease and certain other conditions are satisfied. Mr. Rainwater realizes that matters that relate to the bankruptcy proceeding of Charter, including the possible purchase of Charter's operating assets by COPI Healthcare and the ability of COPI Healthcare to reach agreement with CRE on lease terms, are inherently unpredictable as to both outcome and timing, and events could differ materially from Mr. Rainwater's current expectations. As such, Mr. Rainwater may or may not be in favor of any different or amended proposals. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. (a) By virtue of his direct beneficial ownership of shares of Stock and in his capacities as the sole shareholder and/or director of RI (which also is the sole general partner of RRI and RIP and a managing member of OT), the settlor of CRUT with the right to remove the trustee and designate a successor trustee, and a managing member of OT, Mr. Rainwater may be deemed to be the beneficial owner of 1,210,045 shares of the Stock, including 116,562 shares of the Stock which may be acquired upon exercise of the Option described in Item 3. Assuming pursuant to Rule 13d-3(d)(1)(i) that 11,531,525 shares of the Stock are deemed outstanding, Mr. Rainwater may be deemed to be the beneficial owner of approximately 10.5% of the outstanding shares of the Stock. Pursuant to Rule 13d-4, Mr. Rainwater disclaims beneficial ownership of 45,178 shares of the Stock beneficially owned by Mr. Rainwater's spouse, Darla Moore, and such shares are not included within the 1,210,045 shares identified above. 9 CUSIP NO. 22575M 10 0 13D Page 9 of 11 Pages By virtue of its direct beneficial ownership of shares of Stock and in its capacities as the sole general partner of RRI and RIP and a managing member of OT, RI may be deemed to be the beneficial owner of 634,744 shares of the Stock. Assuming that 11,414,963 shares of the Stock are outstanding, RI may be deemed to be the beneficial owner of approximately 5.6% of the outstanding shares of the Stock. (b) Mr. Rainwater (whether directly or in his capacities as the sole shareholder and/or director of RI (which also is the sole general partner of RRI and RIP and a managing member of OT), the settlor of the CRUT, and a managing member of OT) has or may be deemed to have the sole power to vote or to direct the vote and to dispose or to direct the disposition of 1,210,045 shares of the Stock, including 116,562 shares of the Stock underlying the Option. RI (whether directly or in its capacities as the sole general partner of RRI and RIP) has or may be deemed to have the sole power to vote or to direct the vote and to dispose or to direct the disposition of 308,645 shares of the Stock. RI, in its capacity as a managing member of OT, has or may be deemed to have the shared power, with Mr. Rainwater, to vote or to direct the vote and to dispose or to direct the disposition of 326,099 shares of the Stock. (c) The Reporting Persons have had no transactions in the Stock during the past 60 days. (d) No person other than the Reporting Persons has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the shares of Stock owned by them. (e) It is inapplicable for the purposes herein to state the date on which the Reporting Persons ceased to be the owners of more than five percent (5%) of the Stock. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. Except as described herein, there are no contracts, arrangements, understandings or relationships between the Reporting Persons or between the Reporting Persons and any other person with respect to the shares of Stock owned by the Reporting Persons. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. Exhibit A -- Agreement pursuant to Rule 13d-1(f)(iii). Exhibit B -- Power of Attorney authorizing J. Randall Chappel and Kenneth A. Hersh to act on behalf of Richard E. Rainwater. 10 CUSIP NO. 22575M 10 0 13D Page 10 of 11 Pages Exhibit C -- Agreement dated February 16, 2000 between Richard E. Rainwater, COPI HealthCare, Inc. and Crescent Operating, Inc. Signatures After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: February 25, 2000 /s/ J. Randall Chappel --------------------------------------------------------------- J. Randall Chappel as Attorney-in-Fact for Richard E. Rainwater RAINWATER, INC. By: /s/ J. Randall Chappel ------------------------------------------------------------ J. Randall Chappel, Authorized Officer 11 CUSIP NO. 22575M 10 0 13D Page 11 of 11 Pages EXHIBIT INDEX
EXHIBIT DESCRIPTION - ------- ----------- Exhibit A Agreement pursuant to Rule 13-d-1(f)(iii), previously filed with the Schedule 13D Statement dated July 3, 1997. Exhibit B Power of Attorney authorizing J. Randall Chappel and Kenneth A. Hersh to act on behalf of Richard E. Rainwater, previously filed with Form 4 Statement of Richard E. Rainwater for December 1995 relating to securities of Crescent Real Estate Equities, Inc., dated January 9, 1996. Exhibit C Agreement dated February 16, 2000 between Richard E. Rainwater, COPI HealthCare, Inc. and Crescent Operating, Inc., filed herewith.
EX-99.C 2 AGREEMENT DATED FEBRUARY 16, 2000 1 EXHIBIT C [Letterhead] February 16, 2000 COPI Healthcare, Inc. Crescent Operating, Inc. 306 W. 7th Street, Suite 1000 Fort Worth, Texas 76102 Gentlemen: You have asked me to guarantee to Bank of America ("BOA") the payment of the proposed $25 million asset acquisition borrowing (the "Borrowing") by COPI Healthcare, Inc. ("COPI Healthcare") from Bank of America described in the letter from Cary Conwell dated February 10, 2000, a copy of which is attached to this letter. You have advised me that the Borrowing (or your reimbursement obligations with respect to my Guarantee) would be secured by (i) all of the assets of COPI Healthcare, whether purchased pursuant to the Asset Purchase Agreement (hereinafter defined) or thereafter acquired, and (ii) all of the stock or other interests of Crescent Operating, Inc. ("COI") in COPI Healthcare (COI's wholly-owned subsidiary). COPI Healthcare is proposing to incur the Borrowing in connection with the acquisition of certain assets of Charter Behavioral Health Systems, LLC ("CBHS") out of the bankruptcy of CBHS pursuant to the terms of an Asset Purchase Agreement (the "Asset Purchase Agreement"), which COPI Healthcare plans to present to CBHS contemporaneously with CBHS's filing a voluntary petition in bankruptcy. You have provided me with the final draft of the Asset Purchase Agreement, dated February 16, 2000. I have agreed to guarantee the Borrowing in an amount not to exceed $25 million, provided that, as conditions to my execution and delivery of the Guarantee, the Asset Purchase Agreement is consummated on substantially the terms and conditions set forth in the attached Asset Purchase Agreement, the Borrowing and the Guarantee are evidenced by loan documents reasonably satisfactory to me including provisions giving me the right to acquire COPI Healthcare's debt to BOA if there is a default under such loan documents, the terms of the proposed transaction are not materially different than those previously discussed between you and me, you pay me the Fee described below, COPI Healthcare executes and delivers to me a reimbursement agreement evidencing its agreement and obligation to reimburse to me all amounts that I am called upon to fund under my Guarantee, all on terms and conditions (and secured by such collateral) as are reasonably satisfactory to me, and COPI Healthcare secures a working capital facility from a financial institution (without the benefit of my guarantee) on such 2 terms and in such amount as are reasonably satisfactory to me. My agreement to provide such Guarantee on the conditions set forth herein shall expire if for any reason the transactions contemplated by the Asset Purchase Agreement are not closed prior to the expiration of 60 days after the date hereof unless extended by me in writing. If I provide the Guarantee, COPI Healthcare shall pay to me concurrently with the execution and delivery of such Guarantee, in immediately available cash funds, a fee equivalent to $937,000 (the "Fee"). COI and COPI Healthcare agree to pay, and to jointly and severally indemnify me from, all of my out-of-pocket and transaction expenses and costs, such as legal fees associated with this letter, the Guarantee and the transactions contemplated hereby as well as any other fees and expenses (including legal fees) incurred by me in any way relating to the transactions that are the subject of this letter. Neither BOA nor any other third party is intended to be a third party beneficiary of this letter. This letter may not be relied upon, circulated, quoted, in whole or in part, or otherwise referred to in any report or document or furnished to any other person without my prior written consent except to the extent required by law. To indicate your agreement with the foregoing, please execute and deliver to me a copy of this letter in the space provided. Very truly yours, /s/ Richard E. Rainwater /s/ by J. Randall Chappel Richard E. Rainwater [stamp: Richard E. Rainwater by J. Randall Chappel, Attorney-in-fact] COPI HEALTHCARE, INC. By: /s/ Rick Knight ------------------------------- Name: Rick Knight ----------------------------- Title: Vice President, CFO ---------------------------- CRESCENT OPERATING, INC. By: /s/ Rick Knight ------------------------------- Name: Rick Knight ----------------------------- Title: Chief Financial Officer ---------------------------- 3 [Bank of America Letterhead] February 10, 2000 Mr. Jeffrey Stevens-Chief Operations Officer Crescent Operating, Inc. 306 Main Street, Suite 1025 Fort Worth, TX 76102 Re: COPI Healthcare, Inc. Dear Jeff, This written communication is prepared to provide you the financial support you requested regarding the proposed $25,000,000 asset acquisition of selected Charter Behavioral Health Systems facilities out of bankruptcy. Bank of America, N.A. is pleased to make available to COPI Healthcare, Inc. $25,000,000 to finance the purchase of selected assets of the above mentioned Charter Systems. The Bank is prepared to provide this financing upon request of COPI Healthcare, Inc. within the course of the bankruptcy court's time table. Please feel free to have those officers of the bankruptcy court contact me at 1-817-390-6477 should they deem it necessary to verify this financing facility. Thank you for the opportunity to provide solutions for your company's banking needs. Regards, /s/ Cary C. Conwell Cary C. Conwell Senior Vice President -----END PRIVACY-ENHANCED MESSAGE-----