<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For Quarter Ended: FEBRUARY 28, 1995
Commission File Number: 1-9369
___________________
HORIZON HEALTHCARE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 91-1346899
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
6001 INDIAN SCHOOL ROAD, N.E., SUITE 530, ALBUQUERQUE, NEW MEXICO 87110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (505) 881-4961
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such report(s), and (2) has been subject to
such filing requirements for the past 90 days. Yes XX No
---- ----
Shares of the registrant's Common Stock, $.001 par value, outstanding
exclusive of treasury stock, was 29,466,140 shares at April 6, 1995.
<PAGE>
Part 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
HORIZON HEALTHCARE CORPORATION
CONSOLIDATED BALANCE SHEETS
FEBRUARY 28, 1995 AND MAY 31, 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
FEBRUARY 28, MAY 31,
1995 1994
------------ --------
(UNAUDITED)
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $ 14,135 $ 10,963
Patient care accounts receivable, net 115,500 76,862
Estimated Medicare and Medicaid Settlements 17,796 6,702
Current portion of notes receivable 363 535
Prepaid and other current assets 26,038 17,071
-------- --------
Total current assets 173,832 112,133
-------- --------
Land, buildings and equipment
Land and land improvements 42,389 21,605
Buildings and improvements 280,866 144,213
Equipment 59,270 39,377
-------- --------
382,525 205,195
Less accumulated depreciation 22,029 11,769
-------- --------
Net land, buildings and equipment 360,496 193,426
Notes receivable, excluding current portion 19,690 22,436
Lease purchase costs, net 9,123 6,507
Lease, utility and other deposits 16,170 7,429
Deferred income taxes 7,359 7,271
Goodwill, net 75,182 41,673
Other intangible assets, net 8,843 7,609
Other assets 13,006 7,967
-------- --------
Total assets $683,701 $406,451
======== ========
</TABLE>
(continued)
See accompanying notes to consolidated financial statements.
<PAGE>
HORIZON HEALTHCARE CORPORATION
CONSOLIDATED BALANCE SHEETS
FEBRUARY 28, 1995 AND MAY 31, 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
FEBRUARY 28, MAY 31,
1995 1994
------------ --------
(UNAUDITED)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 1,765 $ 1,697
Current portion of obligations under
capital leases 597 0
Accounts payable 13,473 14,200
Accrued payroll 11,927 10,680
Accrued property and payroll taxes 16,342 14,318
Other accrued liabilities 7,195 8,157
-------- --------
Total current liabilities 51,299 49,052
-------- --------
Long-term debt, excluding current portion 140,815 76,673
Obligations under capital leases, excluding
current portion 47,728 0
Deferred lease credit, net 19,170 20,494
Convertible subordinated notes 26,620 30,906
-------- --------
Total liabilities 285,632 177,125
-------- --------
Stockholders' equity:
Preferred stock of $.001 par value, authorized
500,000 shares, none issued
Common stock of $.001 par value, authorized
150,000,000 shares; 29,027,527 shares issued with
28,523,752 shares outstanding at February 28, 1995
and 22,738,073 shares issued with 22,409,927
shares outstanding at May 31, 1994 29 22
Additional paid-in capital 351,073 200,273
Retained earnings 52,554 29,771
Treasury stock held (5,587) (740)
-------- --------
Total stockholders' equity 398,069 229,326
-------- --------
Total liabilities and stockholders' equity $683,701 $406,451
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
HORIZON HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE MONTHS AND NINE MONTHS ENDED
FEBRUARY 28, 1995 AND FEBRUARY 28, 1994
(UNAUDITED)
(in thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
FEBRUARY 28, FEBRUARY 28,
------------------ ------------------
1995 1994 1995 1994
-------- ------- -------- --------
<S> <C> <C> <C> <C>
Net patient care revenues $163,505 $87,243 $450,939 $238,513
Other operating revenues 3,018 1,359 8,518 3,987
-------- ------- -------- --------
Total operating revenues 166,523 88,602 459,457 242,500
-------- ------- -------- --------
Routine expenses:
Nursing services 48,768 27,187 137,934 75,216
Ancillary services 38,007 18,651 100,030 50,108
Dietary services 10,195 6,058 28,705 17,183
Facility operations and
maintenance 6,369 3,670 17,524 9,909
Housekeeping services 3,617 2,109 10,007 5,899
Laundry services 2,015 1,192 5,696 3,397
Administrative and general 16,967 8,634 47,163 25,376
Other services 4,563 2,861 13,308 7,607
-------- ------- -------- --------
Total routine expenses 130,501 70,362 360,367 194,695
-------- ------- -------- --------
Property expenses:
Facility lease expense 10,250 6,586 29,387 18,085
Interest expense 4,440 1,287 13,335 4,051
Depreciation and amortization 4,473 1,795 13,063 4,681
Other 2,108 1,267 5,916 3,388
-------- ------- -------- --------
Total property expenses 21,271 10,935 61,701 30,205
-------- ------- -------- --------
Total operating expenses 151,772 81,297 422,068 224,900
-------- ------- -------- --------
Earnings before income taxes 14,751 7,305 37,389 17,600
Income taxes 5,605 2,821 14,555 6,800
-------- ------- -------- --------
Net earnings $ 9,146 $ 4,484 $ 22,834 $ 10,800
======== ======= ======== ========
Earnings per common and
common equivalent share $ 0.31 $ 0.24 $ 0.88 $ 0.74
======== ======= ======== ========
Earnings per share - assuming
full dilution $ 0.31 $ 0.23 $ 0.88 $ 0.66
======== ======= ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
HORIZON HEALTHCARE CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
NINE MONTHS ENDED FEBRUARY 28, 1995 AND FEBRUARY 28, 1994
(IN THOUSANDS, UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
FEBRUARY 28,
-----------------------
1995 1994
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 22,834 $ 10,800
Adjustments to reconcile net earnings to net cash
provided by (used for) operating activities:
Depreciation and amortization 13,063 4,681
Gain on sale of assets (1,791) 0
Deferred lease credit amortization (1,324) 0
Provision for losses on patient care
receivables 1,262 75
Changes in assets and liabilities:
Patient care and settlement receivables (44,318) (5,963)
Prepaid and other current assets (11,303) (6,209)
Lease, utility and other deposits (7,510) (2,088)
Accounts payable (3,326) (2,679)
Accrued payroll (2,852) 4,121
Other current liabilities 2,949 25
Deferred income taxes (88) 0
--------- --------
Net cash provided by (used for)
operating activities (32,404) 2,763
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments received on notes receivable 271 46
Capital expenditures (28,553) (29,788)
Proceeds from sale of land, building and equipment 6,966 0
Lease purchase cost expenditures (60) 5
Cash used for the acquisition of peopleCARE
Heritage Group (62,152) 0
Cash used for the acquisition of Greenery
Rehab. Group, Inc. 0 (7,704)
Cash used for other acquisitions (34,537) 0
Additions to other intangible assets (8,122) (6,021)
Change in other assets (2,053) 50
--------- --------
Net cash used by investing activities (128,240) (43,412)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt 47,365 6,038
Repayment of debt (3,379) (8,121)
Repurchase of convertible subordinated notes (3,395) 0
Net proceeds from issuance of common stock 123,275 59,190
Distribution to subsidiary shareholder (50) 0
--------- --------
Net cash provided by financing
activities 163,816 57,107
--------- --------
Net increase in cash and cash equivalents 3,172 16,458
Cash and cash equivalents at beginning of period 10,963 5,928
--------- --------
Cash and cash equivalents at end of period $ 14,135 $ 22,386
========= ========
</TABLE>
<PAGE>
HORIZON HEALTHCARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
February 28, 1995
(unaudited)
(1) BASIS OF PRESENTATION
The consolidated financial statements included herein have been prepared by
Horizon Healthcare Corporation and its subsidiaries (collectively the
Company) without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although the Company believes the
disclosure contained in the consolidated financial statements are adequate to
make the information presented not misleading. In the opinion of management,
all adjustments necessary for a fair presentation of the financial position,
results of operations and cash flows for the periods presented have been made
and are of a normal recurring nature.
These consolidated financial statements should be read in conjunction with
the Company's consolidated financial statements and the notes thereto
included in the Company's 1994 Annual Report on Form 10-K filed with the
Securities and Exchange Commission. The results of operations for the
interim periods presented are not necessarily indicative of the results to be
expected for the entire year.
(2) LONG-TERM DEBT
Subsequent to February 28, 1995, the Company completed a $250 million
revolving credit loan agreement (the Credit Facility) which replaced the then
existing $200 million revolving credit loan agreement. The terms of the
Credit Facility agreement are substantially the same as those of the credit
agreement disclosed in the Company's 1994 Annual Report on Form 10-K, except
that certain accounts receivable of the Company have been pledged as
additional security pursuant to the Credit Facility.
(3) FACILITY ACQUISITIONS
On July 29, 1994, the Company acquired peopleCARE Heritage Group
(peopleCARE), a 13 facility long-term care company located in Texas.
Consideration given for the acquisition included the issuance of 449,438
shares of the Company's common stock, valued at approximately $10 million,
assumption of capital lease obligations of approximately $48.6 million for
six facilities, and cash payment of approximately $56 million for fee simple
title to seven facilities. Results of operations of peopleCARE for the seven
months ended February 28, 1995 are included in the Company's Consolidated
Statement of Earnings for the nine months ended February 28, 1995.
During fiscal year 1994, the Company completed its previously announced
merger with Greenery Rehabilitation Group, Inc. (Greenery) into the Company.
Pursuant to the merger, the Company exchanged approximately 2,050,000 shares
of its common stock, valued at approximately $48 million, for all of the
outstanding shares of Greenery common stock, resulting in the recording of
goodwill of approximately $43 million. This merger added the operations of
17 rehabilitation and skilled nursing facilities and 3 managed facilities to
the Company's current operations.
The Company had other acquisitions during the nine months ended February 28,
1995 and 1994 which individually were insignificant.
<PAGE>
The Company has accounted for these acquisitions using the purchase method.
The following unaudited proforma condensed consolidated statements of
earnings reflects the combined results of operations for the nine months
ended February 28, 1995 and 1994 as if the peopleCARE, Greenery and
individually insignificant acquisitions had been consummated on June 1, 1993.
<TABLE>
<CAPTION>
NINE MONTHS ENDED FEBRUARY 28,
----------------------------------------
1995 1994
---- ----
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C>
Total operating revenues . . . . . . . . . . . . . . . . $510,524 $446,503
Total operating expenses . . . . . . . . . . . . . . . . 472,825 442,897
-------- --------
Operating income. . . . . . . . . . . . . . . . . . . . 37,699 3,606
Income taxes . . . . . . . . . . . . . . . . . . . . . . 14,891 1,424
-------- --------
Net earnings . . . . . . . . . . . . . . . . . . . . . $ 22,808 $ 2,182
======== ========
Earnings per common and common equivalent share. . . . . $ .85 $ .12
======== ========
Earnings per common share assuming full dilution . . . . $ .85 $ .12
======== ========
</TABLE>
(4) CAPITAL STOCK
In November and December 1994, the Company completed the sale of 5,558,790
shares of its common stock, which included the sale of 643,333 shares held
by certain stockholders, through a public offering. The change in the
Company's stockholders' equity for the nine months ended February 28, 1995
was as follows:
<TABLE>
<CAPTION>
COMMON STOCK
------------------ ADDITIONAL
PAID-IN RETAINED
SHARES AMOUNT CAPITAL TREASURY STOCK EARNINGS TOTAL
---------- ------- ------------ -------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at May 31, 1994 22,738,073 $22,738 $200,272,997 $ (740,333) $29,770,807 $229,326,209
Common stock issued in connection with
purchase of peopleCARE 449,438 449 9,999,547 - - 9,999,996
Common stock issued in
connection with purchase of
Professional Rehabilitation
Services, Inc. 221,606 222 5,999,778 - - 6,000,000
Common stock issued in connection
with other insignificant acquisitions 344,161 344 9,174,656 - - 9,175,000
Exercise of stock options, warrants
and issuance of shares under the
employee stock purchase plan 358,792 359 5,545,053 - - 5,545,412
Common stock offering, net of
issue costs 4,915,457 4,916 120,080,880 - - 120,085,796
Treasury stock acquired in payment for
stockholder's note - - - (4,846,885) - (4,846,885)
Distribution to subsidiary shareholder - - - - (50,000) (50,000)
Net earnings - - - - 22,833,570 2,833,570
---------- ------- ------------ ----------- ----------- ------------
Balance at February 28, 1995 29,027,527 $29,028 $351,072,911 $(5,587,218) $52,554,377 $398,069,098
========== ======= ============ =========== =========== ============
</TABLE>
<PAGE>
(5) SUPPLEMENTARY INFORMATION RELATING TO CONSOLIDATED STATEMENTS OF
CASH FLOWS
For the nine months ended February 28, 1995, the following are considered
non-cash items for purposes of the consolidated statement of cash flows:
a) The issuance of 449,438 shares of common stock for the purchase
of certain assets net of liabilities of peopleCARE,
b) The issuance of 221,606 shares of common stock for the purchase
of Professional Rehabilitation Services, Inc.,
c) The issuance of 344,161 shares of common stock for other acquisitions
which in the aggregate were insignificant,
d) The acceptance of a $200,000 note in connection with the sale of a
facility, and
e) The acceptance of 175,041 shares of treasury stock for payment of a
note receivable from a director/shareholder.
(6) SUBSEQUENT EVENTS
On March 31, 1995, the Company entered into an Agreement and Plan of Merger
(the Merger Agreement), dated as of March 31, 1995, by and among the Company,
CMS Merger Corporation (Merger Sub), a wholly owned subsidiary of the
Company, and Continental Medical Systems, Inc. (CMS), pursuant to which
Merger Sub would merge with and into CMS (the Merger). CMS would be the
surviving corporation in the Merger and become a wholly owned subsidiary of
the Company.
In connection with the Merger Agreement and the transactions contemplated
thereby, the Company also entered into a Stock Option Agreement, dated as of
March 31, 1995, by and among the Company and CMS, and a Voting Agreement,
dated as of March 31, 1995, between the Company and certain stockholders of
CMS named therein.
CMS is a diversified provider of medical rehabilitation and physician
services. CMS operates 37 free standing rehabilitation hospitals, provides
outpatient rehabilitation services at more than 125 locations and manages 13
inpatient rehabilitation units for general acute care hospitals in 20 states.
CMS also provides contract physical, occupational and speech therapy
services in more than 30 states.
The Company will issue common stock to acquire CMS and is currently
preparing a Registration Statement on Form S-4 to be filed with the
Securities and Exchange Commission. The Merger requires approval of both
companies' stockholders, as well as governmental and regulatory approval. It
is anticipated that the Merger will be consummated during the first quarter
of fiscal 1996.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Company is a leading provider of long-term care and specialty health care
services. Such specialty health care services include licensed specialty
hospital services and subacute units, rehabilitation and other therapies,
institutional pharmacy services, Alzheimer's care, non-invasive medical
diagnostic testing services, home respiratory care service and clinical
laboratory services.
The Company's strategic business plan emphasizes operating and expanding its
long-term care and specialty programs and services in regionally concentrated
areas, including the Midwest, Southwest and Northeast. Further, the
Company's strategic business plan also includes the objective of increasing
its specialty health care services as a percent of total operating revenues.
The Company is accomplishing the latter objective through the development of
institutional pharmacies; acquisition and development of therapy companies,
home respiratory care companies and medical diagnostic companies; the
conversion and renovation or acquisition of specialty hospitals; and by
offering its broad range of specialty health care services to third parties.
Further, the acquisition of long-term care facilities in certain geographic
areas has enhanced the Company's expansion of its specialty health care
programs and services. Specifically, in certain geographic areas, the
Company's long-term care presence is a platform from which it can vertically
integrate its specialty health care programs and services.
As a result of the Company's strategic business plan, the Company's operating
revenues have grown over the last three years from $158.9 million in fiscal
1992 to $375.1 million in fiscal 1994, and to $459.5 million for the nine
months ending February 28, 1995. Moreover, specialty health care services
revenues have grown from $35.6 million, or 22% of operating revenues, in
fiscal 1992 to $141.7 million, or 38% of operating revenues, in fiscal 1994,
and to $202.8 million, or 44% of operating revenues, for the nine months
ending February 28, 1995.
These growth objectives have been, and will continue to be, the basis of the
Company's strategic business plan which has resulted in the growth of net
earnings from $5.0 million in fiscal 1992 to $16.6 million in fiscal 1994,
and to $22.8 million for the nine months ending February 28, 1995.
RESULTS OF OPERATIONS
The following table sets forth certain statement of earnings data expressed
as a percentage of total operating revenues:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
FEBRUARY 28, FEBRUARY 28,
------------------ -------------------
1995 1994 1995 1994
------ ------ ------ ------
<S> <C> <C> <C> <C>
Total operating revenues . . . . . . 100.0% 100.0% 100.0% 100.0%
----- ----- ----- -----
Total routine expenses (1) . . . . . 78.3 79.4 78.4 80.3
Total property expenses (2) . . . . . 12.8 12.3 13.4 12.5
----- ----- ----- -----
Total operating expenses . . . 91.1 91.7 91.8 92.8
----- ----- ----- -----
Earnings from operations . . . . . . 8.9 8.3 8.2 7.2
Income taxes . . . . . . . . . . . . 3.4 3.2 3.2 2.8
----- ----- ----- -----
Net earnings . . . . . . . . . 5.5% 5.1% 5.0% 4.4%
===== ===== ===== =====
<FN>
___________
(1) Includes the cost of nursing services, all other direct service costs and general
and administrative costs.
(2) Includes facility leases, interest, depreciation, amortization and other property
related costs.
</TABLE>
<PAGE>
The following table sets forth a summary of the Company's total operating
revenues by type of service and the percentage of total operating revenues
that each such service represented for each period indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
FEBRUARY 28, FEBRUARY 28,
----------------------------- ------------------------------
(IN THOUSANDS, EXCEPT FOR STATISTICAL DATA)
1995 1994 1995 1994
-------------- ------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Long-term care
services . . . . . $ 89,961 54% $52,904 60% $248,111 54% $154,792 64%
Specialty health care
services (1) . . . 73,544 44% 34,339 39% 202,828 44% 83,721 35%
Other operating
revenues (2) . . . 3,018 2% 1,359 1% 8,518 2% 3,987 1%
-------- --- ------- --- -------- --- -------- ----
Total operating
revenues . . . . . $166,523 100% $88,602 100% $459,457 100% $242,500 100%
======== === ======= === ======== === ======== ====
<FN>
___________
(1) Includes revenues derived from subacute care, rehabilitation and other therapies,
institutional pharmacy operations, Alzheimer's care, non-invasive medical
diagnostic testing services, home respiratory care services, clinical laboratory
services and sleep diagnostic services.
(2) Includes revenues derived from management fees, interest income, rental income
and other miscellaneous services.
</TABLE>
The following table sets forth the number of facilities operated by the
Company at the end of each period indicated, the aggregate number of licensed
beds contained in such facilities and average occupancy of such beds during
the periods indicated:
<TABLE>
<CAPTION>
FEBRUARY 28,
-----------------
1995 1994
------ ------
<S> <C> <C>
Number of facilities (end of period) (1) . . . 144 104
Number of licensed beds (end of period) (2) . . 17,059 11,917
Average occupancy (3) . . . . . . . . . . . . . 89% 90%
<FN>
___________
(1) Includes the Company's long-term care facilities and specialty
hospitals, in the latter case including those located
within discrete areas of long-term care facilities.
(2) "Licensed beds" refers to the number of beds for which a license
has been issued, which may vary in some instances
from beds available for use.
(3) Average occupancy is computed by dividing the total bed days
occupied by the total licensed bed days available for the
last month of the period indicated.
</TABLE>
<PAGE>
NINE MONTHS ENDED FEBRUARY 28, 1995 COMPARED TO NINE MONTHS ENDED FEBRUARY
28, 1994
Total operating revenues increased approximately $217.0 million or 89% for
the nine months ended February 28, 1995, as compared to the comparable nine
month period of the prior year and approximately $77.9 million or 88% for the
three months ended February 28, 1995, as compared to the comparable quarter
of the prior year. Operational factors which contributed to the increase in
operating revenues are summarized as follows:
a. The Company operated 37 more long-term care facilities with an
aggregate of 5,060 beds at February 28, 1995 than it did at
February 28, 1994.
b. The Company operated 16 specialty hospitals and specialty centers
and 15 subacute care units with an aggregate of 1,413 beds at
February 28, 1995, as compared to 13 specialty hospitals and specialty
centers and 15 subacute care units with an aggregate of 1,331 beds at
February 28, 1994.
c. The Company expanded its institutional pharmacy services to long-term
care facilities through its wholly owned subsidiary, National
Institutional Pharmacy Services, Inc. (NIPSI). Approximately 36,400
long-term care beds are now served by NIPSI as compared to
approximately 28,700 beds at February 28, 1994.
d. The Company received higher Medicare and Medicaid reimbursement rates
and increased its private pay rates charged. Overall the Company's
rate per patient day increased approximately 9.4% during the nine
months ended February 28, 1995 as compared to the comparable nine
month period of the prior year.
e. The Company continued its expansion of rehabilitation therapy services
through its subsidiaries in Ohio, Nevada, Texas, Connecticut and
Colorado, as well as the acquisition of another subsidiary in
Missouri. Our rehabilitation therapy subsidiaries now service
approximately 41,200 beds as compared to approximately 25,000
at February 28, 1994.
f. The Company continued its expansion of its clinical laboratory
services in Texas.
g. The Company began providing medical diagnostic services through
subsidiaries in New Mexico, Texas and Georgia.
h. The Company began providing home respiratory care services and
supplies through its subsidiaries in Texas, Oklahoma, Arkansas and
Louisiana.
Routine service expenses increased approximately $165.7 million or 85% for
the nine months ended February 28, 1995, over the comparable nine month
period of the prior year. This increase is due primarily to the increase in
the number of long-term care centers, specialty hospitals and subacute care
units operated by the Company, as well as the costs associated with the
expansion of specialty services programs.
Total property expenses excluding interest expense increased approximately
$22.2 million or 85% for the nine months ended February 28, 1995 as compared
to the comparable nine month period of the prior year. This increase is
directly related to the additional number of facilities operated. Interest
expense increased approximately 229% during this same nine month period. This
increase was due to increased use of the revolving credit agreement to fund
the acquisition and expansion of long-term care facilities and specialty
health care services and programs, increase in the number of mortgages on
properties acquired this year, assumption of certain convertible subordinated
notes in conjunction with the Greenery acquisition, and new capital lease
obligations entered into in conjunction with the peopleCARE acquisition.
Routine service expenses, total property expenses excluding interest expense,
and interest expense increased approximately 85%, 74%, and 245%, respectively
for the three months ended February 28, 1995 over the comparable quarter of
the prior year. These increases are directly related to the increased number
of facilities operated by the Company, the Company's expansion of its
specialty services and programs, and the financing mechanisms used by the
Company in its acquisition of long-term care centers and expansion of its
specialty services and programs.
<PAGE>
As a result of the foregoing factors, net earnings increased to $22.8 million
or $.88 per share and $9.1 million or $.31 per share for the nine months and
three months ended February 28, 1995, respectively. This compares to net
earnings of $10.8 million or $.66 per share and $4.5 million or $.23 per
share for the nine months and three months ended February 28, 1994,
respectively.
LIQUIDITY AND CAPITAL RESOURCES
OPERATIONS. At February 28, 1995, the Company's working capital was $119.7
million including cash and cash equivalents of $14.1 million, as compared to
working capital of $63.1 million at May 31, 1994 including cash and cash
equivalents of $11.0 million. During the nine months ended February 28,
1995, the Company used $34.5 million in net cash in its operations. During
the first nine months of fiscal 1995, patient care and settlement receivables
increased by $45.7 million, substantially all of which represents increases
generated by existing facilities or by new facilities after the date of
acquisition.
EXPANSION PROGRAM. The net cash used by the Company's investing activities
was $126.1 million for the nine months ended February 28, 1995. The primary
uses of cash from investment activities has been the acquisition of
peopleCARE during the first quarter of fiscal 1995, other individually
insignificant acquisitions during the nine months ended February 28, 1995,
and capital expenditures. The principal purpose of capital expenditures
during this period has been to fund the Company's internal and external
expansion program. During the nine months ended February 28, 1995, the
Company's capital expenditures were $28.6 million. The amount expended
during the nine months ended February 28, 1995 included approximately $9.3
million of routine capital improvements and the balance is attributable to
facility acquisitions and additions at sites acquired for specialty
hospitals, laboratory and pharmacy equipment, and computer equipment.
The Company's expansion program requires funds (i) to acquire assets and to
expand and improve existing and newly acquired facilities, (ii) to discharge
debt obligations assumed or otherwise acquired in connection with the
acquisitions of facilities and properties; and (iii) to finance the increase
in patient care and other accounts receivable resulting from the acquisitions
effected pursuant to the Company's expansion program. The funds necessary to
meet these capital expenditures and debt repayment obligations have been
provided principally by the Company's financing activities. During the nine
months ended February 28, 1995, proceeds from the issuance of debt
(principally net draws on the Company's Credit Facility), net of debt
repayments and repurchases of convertible subordinated notes, amounted to
$40.6 million. Proceeds from issuance of the Company's common stock were
approximately $123.3 million for this same period. Proceeds from the
issuance of the Company's common stock offering in November 1994 were used
primarily to repay borrowings under the Company's Credit Facility and to
finance the increase in patient care receivables and other operating assets
during the period.
SOURCES. At February 28, 1995, the aggregate revolving credit commitment
under the Credit Facility, subject to reduction through application of
certain financial ratios, was $200 million, of which the Company has borrowed
$88.25 million. At February 28, 1995, the remaining credit available to the
Company under the Credit Facility was $100.9 million. Subsequent to February
28, 1995, the Company increased its aggregate revolving credit commitment
under the Credit Facility to $250 million. At April 5, 1995, the remaining
credit available to the Company under the Credit Facility was $157.9 million.
To the extent that the Company's operations and expansion program require
cash expenditures in excess of the amounts available to it under the Credit
Facility, management of the Company believes that the Company can obtain the
necessary funds through other financing activities, including the issuance
and sale of debt and equity securities in public and private markets.
<PAGE>
RECENT REIMBURSEMENT POLICY CHANGES
In the recently enacted Federal Budget Deficit Reduction Bill (the "Budget
Agreement"), various reimbursement rules and regulations were adopted by the
federal government which pertain to the Company. The Company has analyzed
these and other reimbursement rules and regulations and does not believe they
will have a material adverse impact on future operating results. The Budget
Agreement also contained a number of changes affecting corporate income tax.
The changes contained in the Budget Agreement resulted in the Company's
effective tax rate increasing approximately 1% in the first three quarters of
fiscal 1994.
<PAGE>
HORIZON HEALTHCARE CORPORATION
PART II - Other Information
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
10.1 Amended and Restated Revolving Credit Loan Agreement, dated
March 16, 1995, by and between Horizon Healthcare Corporation,
The Boatmen's National Bank of St. Louis, as Agent, and the
Lenders named therein (excluding all exhibits thereto except
Exhibits 1.1 and 2)
11.1 Statement Re Computation of Per Share Earnings
b. Reports on Form 8-K
A report on Form 8-K was filed on April 10, 1995 under "Item 5.
Other Events" reporting that the Company entered into: (i) an
Agreement and Plan of Merger, dated as of March 31, 1995, by and
among the Company, CMS Merger Corporation, a wholly owned subsidiary
of the Company, and Continental Medical Systems, Inc. (CMS); (ii) a
Stock Option Agreement, dated as of March 31, 1995, by and among the
Company and CMS; and (iii) a Voting Agreement, dated as of March 31,
1995, between the Company and certain stockholders of CMS named
therein.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
HORIZON HEALTHCARE CORPORATION
Date: April 10, 1995 By /s/ Ernest A. Schofield
-----------------------------
Ernest A. Schofield
Chief Financial Officer and
Senior Vice President
*Ernest A. Schofield is signing in the dual capacities as Chief Financial
Officer and as a duly authorized officer of the Company.
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------ ----------- ----
<S> <C> <C>
10.1 Amended and Restated Revolving Credit Loan Agreement, dated
March 16, 1995, by and between Horizon Healthcare Corporation,
The Boatmen's National Bank of St. Louis, as Agent, and the
Lenders named therein (excluding all exhibits thereto except
Exhibits 1.1 and 2)
11.1 Statement Re Computation of Per Share Earnings
</TABLE>
<PAGE>
$250,000,000
AMENDED AND RESTATED REVOLVING CREDIT LOAN AGREEMENT
By and Between
HORIZON HEALTHCARE CORPORATION,
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS, AS AGENT,
and
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS,
FIRST INTERSTATE BANK OF TEXAS, N.A.,
NATIONSBANK OF TEXAS, N.A.,
BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION,
SUNWEST BANK OF ALBUQUERQUE, N.A.,
PNC BANK, NATIONAL ASSOCIATION
AND
SHAWMUT BANK CONNECTICUT, N.A.,
AS LENDERS
March 16, 1995
<PAGE>
TABLE OF CONTENTS
1. General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Terms Defined Herein.. . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Accounting Terms with GAAP Meanings. . . . . . . . . . . . . . . . 1
1.3. Prior Loan Agreement.. . . . . . . . . . . . . . . . . . . . . . . 1
2. Commitments. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1. Revolving Loan Commitment. . . . . . . . . . . . . . . . . . . . . 1
2.1.1. Limitation on Revolving Advances.. . . . . . . . . . . . . . . . . 1
2.1.2. Definition of Maximum Available Amount.. . . . . . . . . . . . . . 2
2.1.3. Definition of Aggregate Revolving Commitment.. . . . . . . . . . . 2
2.2. LC Commitment. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3. Notes and Reimbursement Agreement. . . . . . . . . . . . . . . . . 2
3.1. Revolving Note.. . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.2. LC Reimbursement Agreement.. . . . . . . . . . . . . . . . . . . . 2
4. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.1. Rates Until Maturity on Revolving Advances . . . . . . . . . . . . 2
4.1.1. Definition of Adjusted LIBOR Rate. . . . . . . . . . . . . . . . . 3
4.1.2. Definition of Adjusted CBR.. . . . . . . . . . . . . . . . . . . . 4
4.1.3. Interest Periods for LIBOR Advances. . . . . . . . . . . . . . . . 4
4.2. Rate on LC Draws.. . . . . . . . . . . . . . . . . . . . . . . . . 5
4.3. Conversions/Continuations. . . . . . . . . . . . . . . . . . . . . 5
4.4. Rate After Maturity. . . . . . . . . . . . . . . . . . . . . . . . 5
4.5. Rate After Event of Default. . . . . . . . . . . . . . . . . . . . 5
4.6. Time of Accrual. . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.7. Computation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
<PAGE>
4.8. Usury. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5. Fees.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.1. Facility Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.2. Non-Use Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.3. LC Standby Fees. . . . . . . . . . . . . . . . . . . . . . . . . . 7
6. Payments.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.1. Scheduled Payments.. . . . . . . . . . . . . . . . . . . . . . . . 7
6.1.1. Interest.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.1.2. Principal and Other Payments.. . . . . . . . . . . . . . . . . . . 7
6.2. Prepayments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.2.1. Voluntary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.2.2. Mandatory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.3. Manner of Payments and Timing of Application of Payments . . . . . 8
6.3.1. Payment Requirement. . . . . . . . . . . . . . . . . . . . . . . . 8
6.3.2. Application of Payments. . . . . . . . . . . . . . . . . . . . . . 8
6.3.3. Interest Calculation.. . . . . . . . . . . . . . . . . . . . . . . 8
6.4. Due Dates Not on Business Days.. . . . . . . . . . . . . . . . . . 9
7. Borrowing Procedure; Procedure for Requesting LCs; Funding LC
Draws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7.1. Borrowing Procedure for Revolving Advances.. . . . . . . . . . . . 9
7.1.1. Revolving Advance Requests by Borrower.. . . . . . . . . . . . . . 9
7.1.2. Disbursement of Funds. . . . . . . . . . . . . . . . . . . . . . . 9
7.2. Issuance of LCs; Funding LC Draws. . . . . . . . . . . . . . . . . 9
7.2.1. Procedure for Requesting LCs.. . . . . . . . . . . . . . . . . . . 9
7.2.2. Participations in Issued LCs.. . . . . . . . . . . . . . . . . . . 10
7.3. Agent's Notice to Lenders; Funds Deposit.. . . . . . . . . . . . . 10
7.3.1. Revolving Advances.. . . . . . . . . . . . . . . . . . . . . . . . 10
<PAGE>
7.3.2. Funding LC Draws.. . . . . . . . . . . . . . . . . . . . . . . . . 10
7.4. Revolving Advances Ratable.. . . . . . . . . . . . . . . . . . . . 11
7.5. Agent's Availability Assumption. . . . . . . . . . . . . . . . . . 11
8. Cancellation and Reduction of Commitment . . . . . . . . . . . . . 12
8.1. [intentionally left blank].. . . . . . . . . . . . . . . . . . . . 12
8.2. Voluntary By Borrower. . . . . . . . . . . . . . . . . . . . . . . 12
8.3. By Agent for Default.. . . . . . . . . . . . . . . . . . . . . . . 12
9. Collateral and Guaranty. . . . . . . . . . . . . . . . . . . . . . 12
9.1. Collateral.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
9.2. Guaranty.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
9.3. Security Interests.. . . . . . . . . . . . . . . . . . . . . . . . 13
9.4. Existing Security Documents. . . . . . . . . . . . . . . . . . . . 13
10. Yield Protection and LIBOR Matters.. . . . . . . . . . . . . . . . 14
10.1. Compensation for Increase In LIBOR Advance Costs.. . . . . . . . . 14
10.2. Suspension of Obligation to Make LIBOR Advances. . . . . . . . . . 14
10.3. Capital Adequacy Reimbursement . . . . . . . . . . . . . . . . . . 15
10.4. Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . 15
11. Conditions of Lending. . . . . . . . . . . . . . . . . . . . . . . 16
11.1. Conditions to Initial Revolving Advance. . . . . . . . . . . . . . 16
11.1.1. Executed Documents.. . . . . . . . . . . . . . . . . . . . . . . . 16
11.1.2. Financial Condition. . . . . . . . . . . . . . . . . . . . . . . . 16
11.1.3. No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
11.1.4. Representations and Warranties . . . . . . . . . . . . . . . . . . 16
11.1.5. Material Adverse Change. . . . . . . . . . . . . . . . . . . . . . 16
11.1.6. Pending Material Proceedings.. . . . . . . . . . . . . . . . . . . 16
11.1.7. Payment of Fees. . . . . . . . . . . . . . . . . . . . . . . . . . 17
<PAGE>
11.1.8. Legal Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
11.1.9. [intentionally left blank].. . . . . . . . . . . . . . . . . . . . 17
11.1.10. Additional Matters . . . . . . . . . . . . . . . . . . . . 17
11.2. Conditions to Subsequent Revolving Advances and LCs. . . . . . . . 17
11.2.1. General Conditions . . . . . . . . . . . . . . . . . . . . . . . . 17
11.2.2. Representations and Warranties . . . . . . . . . . . . . . . . . . 17
11.2.3. No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
11.2.4. Other Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . 17
12. Representations and Warranties . . . . . . . . . . . . . . . . . . 17
12.1. Organization and Existence . . . . . . . . . . . . . . . . . . . . 17
12.2. Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
12.3. Due Execution. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
12.4. Enforceability of Loan Documents . . . . . . . . . . . . . . . . . 18
12.5. Burdensome Obligations . . . . . . . . . . . . . . . . . . . . . . 18
12.6. Legal Restraints . . . . . . . . . . . . . . . . . . . . . . . . . 18
12.7. No Material Proceedings. . . . . . . . . . . . . . . . . . . . . . 18
12.8. Material Licenses. . . . . . . . . . . . . . . . . . . . . . . . . 18
12.9. Compliance with Laws.. . . . . . . . . . . . . . . . . . . . . . . 18
12.10. Other Names. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
12.11. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 18
12.12. No Change in Condition . . . . . . . . . . . . . . . . . . . . . . 18
12.13. No Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
12.14. Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
12.15. Indebtedness.. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
12.16. Indirect Obligations.. . . . . . . . . . . . . . . . . . . . . . . 18
12.17. Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
<PAGE>
12.18. [intentionally left blank].. . . . . . . . . . . . . . . . . . . . 19
12.19. Operating Leases.. . . . . . . . . . . . . . . . . . . . . . . . . 19
12.20. Capital Leases . . . . . . . . . . . . . . . . . . . . . . . . . . 19
12.21. Tax Liabilities; Governmental Charges. . . . . . . . . . . . . . . 19
12.22. Pension Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . 19
12.22.1. Prohibited Transactions . . . . . . . . . . . . . . . . . . . 19
12.22.2. Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
12.22.3. Reporting and Disclosure Requirements . . . . . . . . . . . . 19
12.22.4. Accumulated Funding Deficiency. . . . . . . . . . . . . . . . 19
12.22.5. Multiemployer Plan. . . . . . . . . . . . . . . . . . . . . . 20
12.23. Welfare Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . 20
12.24. Retiree Benefits . . . . . . . . . . . . . . . . . . . . . . . . . 20
12.25. Title to Property. . . . . . . . . . . . . . . . . . . . . . . . . 20
12.26. Chief Place of Business. . . . . . . . . . . . . . . . . . . . . . 20
12.27. Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . . . 20
12.28. Negative Pledges . . . . . . . . . . . . . . . . . . . . . . . . . 20
12.29. Security Documents.. . . . . . . . . . . . . . . . . . . . . . . . 20
12.30. Margin Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
12.31. Securities Matters . . . . . . . . . . . . . . . . . . . . . . . . 21
12.32. Investment Company Act, Etc. . . . . . . . . . . . . . . . . . . . 21
12.33. No Material Misstatements or Omissions . . . . . . . . . . . . . . 21
12.34. Filings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
12.35. General Ledger Entries.. . . . . . . . . . . . . . . . . . . . . . 21
13. Survival of Representations and Effect of Revolving Advances.. . . 21
13.1. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
13.2. Each Revolving Advance Request and Request for LC a New
Representation.. . . . . . . . . . . . . . . . . . . . . . . . . 21
<PAGE>
14. Affirmative Covenants. . . . . . . . . . . . . . . . . . . . . . . 22
14.1. Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . 22
14.2. Corporate and Partnership Existence. . . . . . . . . . . . . . . . 22
14.3. Maintenance of Property and Leases . . . . . . . . . . . . . . . . 22
14.4. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
14.5. Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 22
14.6. Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . . 23
14.7. Accounting System. . . . . . . . . . . . . . . . . . . . . . . . . 23
14.8. Financial Reports. . . . . . . . . . . . . . . . . . . . . . . . . 23
14.9. Other Information. . . . . . . . . . . . . . . . . . . . . . . . . 24
14.10. Pension Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . 24
14.11. Notice of Material Events. . . . . . . . . . . . . . . . . . . . . 25
14.12. Audits by Agent. . . . . . . . . . . . . . . . . . . . . . . . . . 26
14.13. Access to Borrower's Officers and Auditors . . . . . . . . . . . . 26
14.14. Borrowing Officer. . . . . . . . . . . . . . . . . . . . . . . . . 26
14.15. Security Interests.. . . . . . . . . . . . . . . . . . . . . . . . 26
14.16. Legal Opinions.. . . . . . . . . . . . . . . . . . . . . . . . . . 26
15. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . 26
15.2. Indebtedness.. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
15.3. Capital Leases.. . . . . . . . . . . . . . . . . . . . . . . . . . 28
15.4. Indirect Obligations.. . . . . . . . . . . . . . . . . . . . . . . 29
15.5. Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
15.6. Disposal of Property . . . . . . . . . . . . . . . . . . . . . . . 29
15.7. Transfers to Shareholders. . . . . . . . . . . . . . . . . . . . . 29
15.8. Change of Control. . . . . . . . . . . . . . . . . . . . . . . . . 30
15.9. Prohibition of Fundamental Changes . . . . . . . . . . . . . . . . 30
<PAGE>
15.10. Issuance of Securities . . . . . . . . . . . . . . . . . . . . . . 30
15.11. Transactions With Affiliates . . . . . . . . . . . . . . . . . . . 30
15.12. Debt Payments and Material Agreements. . . . . . . . . . . . . . . 30
15.13. Conflicting Agreements . . . . . . . . . . . . . . . . . . . . . . 30
15.14. Financial Measurements . . . . . . . . . . . . . . . . . . . . . . 30
15.14.1. Minimum Net Worth.. . . . . . . . . . . . . . . . . . . . . . 30
15.14.2. Minimum Fixed Charge Coverage Ratio.. . . . . . . . . . . . . 30
15.14.3. Maximum Leverage Ratio. . . . . . . . . . . . . . . . . . . . 31
15.14.4. [intentionally left blank]. . . . . . . . . . . . . . . . . . 31
15.14.5. Ratio of Senior Funded Debt to EBITDA.. . . . . . . . . . . . 31
15.15. Forgiveness of Intercompany Loans. . . . . . . . . . . . . . . . . 32
15.16. Indenture Redemption Rights. . . . . . . . . . . . . . . . . . . . 32
15.17. Modification of Greenery Indentures. . . . . . . . . . . . . . . . 32
15.18. Negative Pledge Agreements with Others.. . . . . . . . . . . . . . 32
15.19. Modification of Banker's Trust Documents, REMIC Loan Documents,
or peopleCare Acquisition Documents. . . . . . . . . . . . . . . 32
15.20. Acquisitions of Property.. . . . . . . . . . . . . . . . . . . . . 32
16. Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
16.1. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . 32
16.1.1. Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
16.1.2. Representations or Warranties. . . . . . . . . . . . . . . . . . . 33
16.1.3. Financial Measurements; Certain Covenants and Agreements . . . . . 33
16.1.4. Certain Covenants or Agreements. . . . . . . . . . . . . . . . . . 33
16.1.5. Other Covenants or Agreements. . . . . . . . . . . . . . . . . . . 33
16.1.6. Acceleration of Other Indebtedness . . . . . . . . . . . . . . . . 33
16.1.7. Default Under Other Agreements . . . . . . . . . . . . . . . . . . 33
16.1.8. Bankruptcy; Insolvency; Etc. . . . . . . . . . . . . . . . . . . . 33
<PAGE>
16.1.9. Judgments; Attachment; Etc . . . . . . . . . . . . . . . . . . . . 33
16.1.10. Pension Benefit Plan Termination, Etc . . . . . . . . . . . . 34
16.1.11. Security Documents. . . . . . . . . . . . . . . . . . . . . . 34
16.1.12. Liquidation or Dissolution. . . . . . . . . . . . . . . . . . 34
16.1.13. [intentionally left blank]. . . . . . . . . . . . . . . . . . 34
16.1.14. Material Adverse Event. . . . . . . . . . . . . . . . . . . . 34
16.1.15. Banker's Trust Documents. . . . . . . . . . . . . . . . . . . 34
16.1.16. REMIC Loan Documents. . . . . . . . . . . . . . . . . . . . . 34
16.1.17. peopleCARE Acquisition Documents. . . . . . . . . . . . . . . 34
16.2. Cross-Default. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
16.3. Rights and Remedies in the Event of Default. . . . . . . . . . . . 34
16.4. Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
16.5. Right of Set-Off . . . . . . . . . . . . . . . . . . . . . . . . . 35
16.6. Delivery of Cash Collateral Upon Cancellation of Commitments.. . . 35
16.7. Other Rights and Remedies. . . . . . . . . . . . . . . . . . . . . 35
17. The Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
17.1. Appointment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
17.2. Powers.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
17.3. General Immunity of Agent. . . . . . . . . . . . . . . . . . . . . 36
17.4. No Responsibility for Loans, Recitals, etc.. . . . . . . . . . . . 36
17.5. Action on Instructions of Lenders. . . . . . . . . . . . . . . . . 36
17.6. Employment of Agents and Counsel.. . . . . . . . . . . . . . . . . 36
17.7. Reliance on Documents; Counsel.. . . . . . . . . . . . . . . . . . 36
17.8. Agent's Reimbursement and Indemnification. . . . . . . . . . . . . 36
17.9. Rights as a Lender.. . . . . . . . . . . . . . . . . . . . . . . . 36
17.10. Independent Credit Decisions.. . . . . . . . . . . . . . . . . . . 37
<PAGE>
17.11. Successor Agent. . . . . . . . . . . . . . . . . . . . . . . . . . 37
17.12. Notification of Lenders. . . . . . . . . . . . . . . . . . . . . . 37
17.13. No Knowledge of Default. . . . . . . . . . . . . . . . . . . . . 37
17.14. Collections and Distributions to Lenders by Agent. . . . . . . . . 38
18. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . 38
18.1. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
18.2. Amendments and Waivers; Non-Exclusive Rights . . . . . . . . . . . 38
18.3. Survival of Agreements . . . . . . . . . . . . . . . . . . . . . . 38
18.4. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . 38
18.5. Participations . . . . . . . . . . . . . . . . . . . . . . . . . . 39
18.6. Payment of Expenses. . . . . . . . . . . . . . . . . . . . . . . . 40
18.7. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
18.8. Change in Accounting Principles. . . . . . . . . . . . . . . . . . 40
18.9. Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
18.10. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
18.11. Governing Law; No Third Party Rights . . . . . . . . . . . . . . . 41
18.12. Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
18.13. Incorporation By Reference . . . . . . . . . . . . . . . . . . . . 41
18.14. Statutory Notice . . . . . . . . . . . . . . . . . . . . . . . . . 41
EXHIBITS:
- ---------
Exhibit 1.1: Glossary of Defined Terms
Exhibit 2: Commitments and Addresses of Lenders
Exhibit 2.2: Existing LCs
Exhibit 3: Form of Notes
Exhibit 12: Disclosure Schedule of Borrower
Exhibit 12.26: Location of Chief Executive Office, etc. of Borrower and
Guarantors
Exhibit 14.8.2: Form of Compliance Certificate
Exhibit 14.8.8: Form of Supplemental Financial Reporting Certificate
Exhibit 15.2.3
and 15.2.4: Indebtedness Secured by Permitted Liens and Permitted Senior
Indebtedness
<PAGE>
AMENDED AND RESTATED REVOLVING CREDIT LOAN AGREEMENT
In consideration of the mutual agreements herein and other sufficient
consideration, the receipt of which is hereby acknowledged, Horizon Healthcare
Corporation, a Delaware corporation ("Borrower"), The Boatmen's National Bank of
St. Louis, a national banking association, as agent ("Agent"), and The Boatmen's
National Bank of St. Louis, a national banking association ("Boatmen's"), First
Interstate Bank of Texas, N.A. ("First Interstate"), NationsBank of Texas, N.A.
("NationsBank"), Bank of America National Trust & Savings Association ("BOA"),
Sunwest Bank of Albuquerque, N.A. ("Sunwest"), PNC Bank, National Association
("PNC"), and Shawmut Bank Connecticut, N.A. ("Shawmut") (each, a "Lender";
collectively, the "Lenders"), agree as follows:
1. GENERAL.
1.1. TERMS DEFINED HEREIN. All capitalized terms in this Agreement shall
have the meanings defined in the Sections where they are first used, or if not
therein defined, the meanings defined in the Glossary of Defined Terms which is
attached hereto as Exhibit 1.1 (such meanings to be equally applicable to both
the singular and the plural forms of the terms defined).
1.2. ACCOUNTING TERMS WITH GAAP MEANINGS. Unless the context otherwise
requires, accounting terms in any Loan Document that are not defined herein
shall have their meanings under GAAP.
1.3. PRIOR LOAN AGREEMENT. This Agreement amends, restates and replaces in
its entirety that certain Amended and Restated Revolving Credit Loan Agreement
dated May 27, 1994, by and between Borrower, Agent, Boatmen's, First Interstate,
NationsBank, BOA and Sunwest, as amended by an Amendment Number One to Amended
and Restated Revolving Credit Loan Agreement dated as of July 29, 1994, and an
Amendment Number Two to Amended and Restated Revolving Credit Loan Agreement
dated as of October 11, 1994 (as so amended, the "Prior Agreement," which term
shall also include the Revolving Credit Loan Agreement dated March 10, 1993, as
amended, that was replaced by the foregoing Amended and Restated Revolving
Credit Loan Agreement). Borrower hereby releases, discharges and acquits
forever Agent, Boatmen's, First Interstate, NationsBank, BOA, Sunwest, PNC and
Shawmut and their respective predecessors and successors, and past and present
officers, directors, servants, agents, employees and attorneys, from any and all
claims, demands and causes of action of whatever nature, whether in contract or
tort, accrued or to accrue, contingent or vested, known or unknown, running in
favor of Borrower and arising out of or relating to the Prior Agreement, the
making or handling of the revolving loan pursuant thereto, or the collateral
therefor, all as such claims, demands and causes of action may exist as of the
date hereof.
2. COMMITMENTS. Subject to the terms and conditions hereof, and in reliance
upon the representations and warranties of Borrower herein:
2.1. REVOLVING LOAN COMMITMENT. Each of the Lenders severally commits to
make advances to Borrower (each a "Revolving Advance") from time to time during
the period commencing on the Effective Date and ending at the close of business
on March 31, 1998 (the "Ultimate Maturity Date") in the amount of such Lender's
ratable share, as listed on Exhibit 2 hereto, of each Revolving Advance
requested by Borrower hereunder. (The from time to time outstanding principal
balance of all Revolving Advances from the Lenders is referred to herein as the
"Revolving Loan".) Amounts applied to reduce the Revolving Loan may be
reborrowed as Revolving Advances as provided herein, but no Revolving Advance
will be made on or after the Ultimate Maturity Date.
2.1.1. LIMITATION ON REVOLVING ADVANCES. No Revolving Advance will
be made which would result in the Revolving Loan exceeding the Maximum
Available Amount.
<PAGE>
2.1.2. DEFINITION OF MAXIMUM AVAILABLE AMOUNT. The "Maximum
Available Amount" on any date shall be a Dollar amount equal to (i) the
Aggregate Revolving Commitment LESS (ii) the aggregate undrawn Dollar
amount of all outstanding LC's plus the aggregate Dollar amount of all
unreimbursed LC Draws.
2.1.3. DEFINITION OF AGGREGATE REVOLVING COMMITMENT. The "Aggregate
Revolving Commitment" at any time shall be $250,000,000 minus the Dollar
amount of all reductions by Borrower pursuant to Section 8.2. (Each
Lender's ratable share of the Aggregate Revolving Commitment is referred to
herein as its "Revolving Commitment.")
2.2. LC COMMITMENT. Sunwest, in its capacity as Issuer, commits to issue
standby letters of credit for the account of Borrower (each an "LC") from time
to time, during the period commencing on the Effective Date and ending on the
Ultimate Maturity Date, with an aggregate undrawn amount (including the undrawn
amount of the Existing LCs) not to exceed $25,000,000 at any time (the
"Aggregate LC Commitment"). No LC shall have an expiration date more than one
year after its issue date; provided, however, that an LC may have an expiration
date which is later than one year after its issue date if, by the terms of the
LC, the LC may be canceled at the option of the issuer thereof at the end of
each anniversary of its issue date. No LC shall have an expiration date later
than the Ultimate Maturity Date unless Borrower delivers to Agent cash
collateral, in form acceptable to Agent, in an amount not less than the stated
amount of such LC, to secure Borrower's reimbursement obligations with respect
to such LCs. Upon the expiration of the LC or, if any LC Draws are made on such
LC and have not been reimbursed by Borrower, at such time as Lenders have been
reimbursed for all Revolving Advances made with respect to such LC Draws, Agent
shall deliver the remaining cash collateral for such LC, if any, to Borrower.
For purposes of this Agreement, the term "LC" or "LCs" shall include the
existing LCs issued by Sunwest for the account of Borrower or its Subsidiaries,
as more particularly described on Exhibit 2.2 hereto (the "Existing LCs"). Each
Lender commits to fund its ratable share, as listed on Exhibit 2 hereto, of each
draw on an LC (an "LC Draw"), if any, including but not limited to LC Draws on
Existing LCs, as provided in Section 7.2.1. (The commitment of each Lender to
fund its ratable share of LC Draws pursuant to this Agreement is referred to
herein as its "LC Commitment").
3. NOTES AND REIMBURSEMENT AGREEMENT.
3.1. REVOLVING NOTE. Each Lender's ratable share of the Revolving Loan
shall be evidenced by a promissory note payable to the order of such Lender in a
maximum principal amount equal to its Revolving Commitment in substantially the
form attached hereto as Exhibit 3 (individually, as the same may be renewed,
extended, modified, amended, restructured or replaced, a "Note"; collectively,
the "Notes"). The Notes shall be dated as of the Effective Date and shall
mature on the Ultimate Maturity Date.
3.2. LC REIMBURSEMENT AGREEMENT. The obligation of Borrower to reimburse
Lenders for all draws on LC's shall be evidenced by Issuer's standard
application for a standby letter of credit, which Borrower shall execute for
each LC; provided, however, if there is any conflict between the terms of any
such application for standby letter of credit and this Agreement, the terms of
this Agreement shall control. Borrower's obligation to reimburse Lenders for
all draws on Existing LCs shall be governed by the terms of this Agreement and
any application for standby letter of credit or other reimbursement agreement
executed by Borrower in connection with the issuance of such Existing LC;
provided, however, that if there is any conflict between the terms of any such
application or reimbursement agreement and this Agreement, the terms of this
Agreement shall control.
4. INTEREST.
4.1. RATES UNTIL MATURITY ON REVOLVING ADVANCES. Borrower shall pay
interest on the unpaid principal balance outstanding from time to time on each
Revolving Advance until its Maturity at a rate
2
<PAGE>
per annum that is either the Adjusted LIBOR Rate or the Adjusted CBR, as
designated by Borrower in the Revolving Advance Request or as otherwise
specified herein.
4.1.1. DEFINITION OF ADJUSTED LIBOR RATE. "Adjusted LIBOR Rate"
shall mean, with respect to a LIBOR Advance for its Interest Period, a rate
equal to (a) the LIBOR Rate for such Interest Period plus (b) the LIBOR
Increment.
4.1.1.1. "LIBOR Rate" shall mean, with respect to any LIBOR
Advance for any Interest Period, an interest rate per annum equal to
the quotient (rounded to the nearest 0.001%) of
(i) the rate at which Dollar deposits in immediately available
funds and for a maturity equal to the applicable Interest Period
are offered or available in the London Interbank Market for
Eurodollars as of 11:00 a.m. (London time) two Business Days
before the applicable Advance Date, as reported on Telerate
Screen LIBO page 3750,
divided by
(ii) a number equal to one (1) minus the decimal equivalent of
the aggregate of the maximum rates during the applicable Interest
Period of all reserve requirements (including, without
limitation, marginal, emergency, supplemental and special
reserves), established by the FRB or any other Governmental
Authority to which Agent or any Lender is subject, in respect of
"Eurocurrency liabilities" as referred to in Regulation D,
including but not limited to those imposed under Regulation D.
(The amount of every LIBOR Advance shall be deemed to constitute
a Eurocurrency liability and as such shall be deemed to be
subject to such reserve requirements without benefit of credits
for proration, exceptions or offsets which may be available from
time to time to any Lender under Regulation D.) The LIBOR Rate
shall be adjusted automatically on and as of the effective date
of any change in any such reserve requirements.
4.1.1.2. The "LIBOR Increment" for an Interest Period shall
initially be the percentage listed in the following table in the same
row as the Applicable Ratio.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
APPLICABLE RATIO
- ------------------------------------------------------------- LIBOR INCREMENT
FIXED CHARGE COVERAGE RATIO LEVERAGE RATIO
- --------------------------------------------------------------------------------
<S> <C> <C>
less than 1.50:1. equal to or greater than 1.25 %
65%
- --------------------------------------------------------------------------------
equal to or greater than 1.50:1 equal to or greater than 1.0625%
but less than 1.75:1 60% but less than 65%
- --------------------------------------------------------------------------------
equal to or greater than 1.75:1 equal to or greater than .875 %
but less than 2.25:1 55% but less than 60%
- --------------------------------------------------------------------------------
equal to or greater than 2.25:1 equal to or greater than .75 %
but less than 2.75:1 50% but less than 55%
equal to or greater than 2.75:1 less than 50% .50 %
- --------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
The LIBOR Increment shall be determined at the beginning of each
Interest Period based upon the most recent Financial Statements
received by Agent from Borrower as required under Section 14.8. and
thereafter it shall be adjusted automatically on and as of the date(s)
during such Interest Period on which Agent is able to calculate (in
the manner set forth below and based upon the most recent Financial
Statement received by Agent during said Interest Period) a greater or
lesser LIBOR Increment then was otherwise in effect prior to Agent's
receipt of said Financial Statements.
For purposes of this Section 4.1.1.2, "Applicable Ratio" means
either (i) the Fixed Charge Coverage Ratio or (ii) the Leverage Ratio,
whichever would result in the greater LIBOR Increment in the foregoing
table. The Fixed Charge Coverage Ratio and Leverage Ratio shall be
calculated in accordance with Section 15.14, but for the four quarter
period ended with the last day of the most recent quarter for which
Agent has received Financial Statements from Borrower.
4.1.2. DEFINITION OF ADJUSTED CBR. "Adjusted CBR" shall mean (a) the
per annum interest rate designated from time to time by Agent as its
corporate base rate ("CBR") plus (b) the CBR Increment. The CBR is a
reference rate and does not necessarily represent the lowest or best rate
charged to any customer of any Lender. The "CBR Increment" the percentage
listed in the following table in the same row as the Applicable Ratio.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
APPLICABLE RATIO
- --------------------------------------------------------------- CBR INCREMENT
FIXED CHARGE COVERAGE RATIO LEVERAGE RATIO
- --------------------------------------------------------------------------------
<S> <C> <C>
less than 1.50:1 equal to or greater than 0.25%
65%
- --------------------------------------------------------------------------------
equal to or greater than 1.50:1 less than 65% 0.00%
- --------------------------------------------------------------------------------
</TABLE>
For purposes of this Section 4.1.2, "Applicable Ratio" means
either (i) the Fixed Charge Coverage Ratio or (ii) the Leverage Ratio,
whichever would result in the greater CBR Increment in the foregoing
table. The Fixed Charge Coverage Ratio and Leverage Ratio shall be
calculated in accordance with Section 15.14, but for the four quarter
period ended with the last day of the most recent quarter for which
Agent has received Financial Statements from Borrower. The CBR
Increment shall be adjusted automatically each time the Agent receives
Financial Statements from Borrower which result in a different CBR
Increment.
4.1.3. INTEREST PERIODS FOR LIBOR ADVANCES. In connection with
each Revolving Advance that Borrower designates to be a LIBOR Advance,
Borrower shall elect an interest period (each, an "Interest Period") to be
applicable to each such Revolving Advance. The Interest Period for a LIBOR
Advance shall be either a 30, 60, or 90 day period; provided that:
(i) every such Interest Period shall commence on the Advance Date;
(ii) if any Interest Period would otherwise expire on a day of a
calendar month which is not a Business Day, then such Interest Period
shall expire on the next succeeding Business Day in that calendar
month; provided, however, that if the next succeeding Business Day
would be in the following calendar month, it shall expire on the first
preceding Business Day;
4
<PAGE>
(iii) no Interest Period for a Revolving Advance shall extend beyond
the Ultimate Maturity Date; and
(iv) no more than eight LIBOR Advances with different Interest Periods
may be outstanding at any one time.
4.2. RATE ON LC DRAWS. To the extent that an LC Draw is not funded by a
Revolving Advance pursuant to Section 7.3.2, Borrower shall pay interest on the
unreimbursed amount of such LC Draw at a per annum rate equal 4.0% plus the CBR.
4.3. CONVERSIONS/CONTINUATIONS. Borrower may at any time, other than after
the occurrence of a Default which is then continuing, (i) convert a Revolving
Advance of one type into a Revolving Advance of another type, or (ii) at the end
of any Interest Period with respect to a LIBOR Advance, continue such LIBOR
Advance for an additional Interest Period; provided, however, that a LIBOR
Advance may only be so converted or continued on the last day of its Interest
Period. To cause a conversion or continuation, Borrower shall give Agent, prior
to 11:00 a.m., St. Louis time, two (2) Business Days prior to the date the
conversion or continuation is to be effective, a telephonic request ("Notice of
Conversion/Continuation") (promptly confirmed in writing) (i) identifying the
Revolving Advance to be converted or continued, (ii) specifying whether a
conversion or continuation is requested, (iii) in the case of a conversion,
specifying whether the Revolving Advance is to be converted into a CBR Advance
or a LIBOR Advance, and (iv) in the case of conversion to or continuation of a
LIBOR Advance, specifying the Interest Period therefor. If a Notice of
Conversion/Continuation is not made by 11:00 a.m. St. Louis time on the last day
of the Interest Period for a LIBOR Advance, and if Borrower does not by such
time pay to Agent the principal balance thereof and all unpaid accrued interest
thereon, then Borrower shall be deemed to have timely given a Revolving Advance
Request to Agent requesting a CBR Advance in the amount thereof to refund the
maturing LIBOR Advance and specifying the last day of such Interest Period as
the Advance Date. All LIBOR Advances with Interest Periods that end during a
time in which a Default has occurred and is continuing shall be automatically
converted into CBR Advances as of the last day of each such Interest Period.
4.4. RATE AFTER MATURITY. Borrower shall pay interest on the unpaid
principal balance outstanding from time to time on a Revolving Advance after its
Maturity, and on all other overdue amounts owing hereunder, at a rate per annum
equal to 4.0% plus the CBR.
4.5. RATE AFTER EVENT OF DEFAULT. Upon the occurrence of any Event of
Default, at the option of the Required Lenders, all outstanding principal and,
to the extent permitted by law, accrued interest under the Revolving Loan and
all other outstanding Loan Obligations shall bear interest, payable on demand,
at a rate per annum equal to 4.0% plus the CBR.
4.6. TIME OF ACCRUAL. Interest shall accrue on all principal amounts
outstanding from and including the date when first outstanding to but excluding
the date when no longer outstanding. Amounts shall be deemed outstanding until
payments are applied thereto as provided herein.
4.7. COMPUTATION. Interest on CBR Advances shall be computed for the
actual days elapsed over a year deemed to consist of 365/366 days. Interest on
LIBOR Advances shall be computed for the actual days elapsed over a year deemed
to consist of 360 days. Interest rates that are based on the CBR shall change
simultaneously with any change in the CBR and such rates shall be effective for
the entire day on which such CBR change becomes effective.
4.8. USURY. Notwithstanding any provisions to the contrary in Section 4 or
elsewhere in any of the Loan Documents, Borrower shall not be obligated to pay
interest at a rate which exceeds the maximum rate permitted by Law. If, but for
this Section 4.8, Borrower would be deemed obligated to pay interest at a rate
which exceeds the maximum rate permitted by Law, or if any of the Loan
5
<PAGE>
Obligations is paid or becomes payable before the Ultimate Maturity Date and as
a result Borrower has paid or would be obligated to pay interest at such an
excessive rate, then (i) Borrower shall not be obligated to pay interest to the
extent it exceeds the interest that would be payable at the maximum rate
permitted by Law; (ii) any such excess interest that has been paid by Borrower
shall be applied as a payment and reduction of the outstanding principal balance
of the Loan Obligations and, if the outstanding principal balance of the Loan
Obligations has been paid in full, any remaining excess shall be refunded to
Borrower; and (iii) the effective rate of interest shall be deemed automatically
reduced to the maximum rate permitted by Law. In determining whether or not the
interest paid or payable exceeds the maximum rate permitted by applicable Law,
Borrower and Lenders shall, to the extent permitted by applicable Law, (i)
characterize any non-principal payment as an expense, fee or premium rather than
as interest, (ii) exclude voluntary prepayments and the effects thereof, and
(iii) amortize, prorate, allocate and spread in equal or unequal parts the total
amount of interest throughout the entire contemplated term of the Loan
Obligations so that interest for the entire term does not exceed the maximum
rate permitted by applicable Law. If interest in excess of the maximum amount
permitted by Law is provided for hereunder or under any of the other Loan
Documents or otherwise in connection with this loan transaction, the provisions
of this Section 4.8 shall govern and prevail.
5. FEES.
5.1. FACILITY FEE. Borrower shall pay to Agent for the account of Lenders
no later than the Effective Date, a one-time facility fee in the aggregate
amount of $115,000, to be distributed to Lenders as follows: Boatmen's -
$15,100; First Interstate - $17,250; Sunwest -$7,900; NationsBank - $23,000; BOA
- - $23,000; PNC - $14,375; and Shawmut - $14,375 (such fee is based upon 2 basis
points on the amount of the commitment of Lenders under the Prior Agreement and
15 basis points on the increased amount of the commitments of Lenders under this
Agreement).
5.2. NON-USE FEE. Borrower shall pay to Agent for the account of Lenders,
to be distributed to Lenders in accordance with their ratable shares of the
Aggregate Revolving Commitment, a "Non-Use Fee" calculated by applying the daily
equivalent of an annual rate equal to the Non-Use Rate to the Unused Commitment
on each day during the period from and including the Effective Date to but
excluding the Ultimate Maturity Date. The "Unused Commitment" on any day shall
be the difference between (a) the Aggregate Revolving Commitment and (b) the
total principal amount of all Revolving Advances outstanding plus the undrawn
amounts of all LC's outstanding as of the close of business on such day. The
"Non-Use Rate" means the percentage listed in the following table in the same
row as the Applicable Ratio. For purposes of this Section 5.2 only, the term
"Applicable Ratio" means either (i) the Fixed Charge Coverage Ratio or (ii) the
Leverage Ratio, whichever would result in the greater Non-Use Rate in the
foregoing table. The Fixed Charge Coverage Ratio and Leverage Ratio shall be
calculated in accordance with Section 15.14, but for the four quarter period
ended with the last day of the most recent quarter for which Agent has received
Financial Statements from Borrower. The Non-Use Fee shall be automatically
adjusted each time the Agent receives Financial Statements from Borrower which
result in a different Non-Use Rate.
[remainder of this page intentionally left blank]
6
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
APPLICABLE RATIO
- -------------------------------------------------------------- NON-USE RATE
FIXED CHARGE COVERAGE RATIO LEVERAGE RATIO
- ------------------------------------------------------------------------------
<S> <C> <C>
less than 1.50:1 equal to or greater than 0.3125%
65%
- ------------------------------------------------------------------------------
equal to or greater than 1.50:1 equal to or greater than 0.25 %
but less than 2.25:1 55% but less than 65%
- ------------------------------------------------------------------------------
equal to or greater than 2.25:1 equal to or greater than 0.1875%
but less than 2.75:1 50% but less than 55%
- ------------------------------------------------------------------------------
equal to or greater than 2.75:1 less than 50% 0.125 %
- ------------------------------------------------------------------------------
</TABLE>
The Non-Use Fee shall be payable quarterly in arrears commencing on the
first day of the first calendar quarter beginning after the Effective Date and
continuing on the first day of each calendar quarter beginning thereafter and on
the Ultimate Maturity Date.
5.3. LC STANDBY FEES. Borrower shall pay to Agent for the account of the
Lenders a non-refundable "LC Standby Fee" equal to a percentage per annum equal
to the then applicable LIBOR Increment of the undrawn amount of all outstanding
LC's as of the Effective Date and as of the first day of each calendar quarter
beginning thereafter until the Ultimate Maturity Date. The LC Standby Fee shall
be calculated and payable quarterly in advance on the Effective Date and on the
first day of each calendar quarter beginning thereafter until the Ultimate
Maturity Date. 0.125% of each LC Standby Fee received by Agent will be retained
by Issuer in consideration of Issuer issuing and managing the LCs, and the
remaining LC Fee will be distributed by Issuer to Lenders (including Issuer, if
Issuer is a Lender) in accordance with their ratable shares of the Aggregate LC
Commitment.
All of the foregoing fees that are based on a per annum percentage shall be
calculated on the basis of a year deemed to consist of 360 days and for the
actual number of days elapsed.
6. PAYMENTS.
6.1. SCHEDULED PAYMENTS.
6.1.1. INTEREST. Borrower shall pay interest accrued on CBR Advances
quarterly in arrears, beginning on the first day of June, 1995, and
continuing on the first day of each month of September, December, March,
and June thereafter, and on the Ultimate Maturity Date. Borrower shall pay
interest accrued on each LIBOR Advance on the date of expiration of the
Interest Period for such LIBOR Advance, and on the Ultimate Maturity Date.
All interest on a Revolving Advance accrued after its Maturity shall be
payable on demand. All interest accrued on unreimbursed LC Draws shall be
payable on demand.
6.1.2. PRINCIPAL AND OTHER PAYMENTS. The entire principal amount of
each outstanding CBR Advance shall be payable on the Ultimate Maturity Date
and the entire principal amount of each LIBOR Advance shall be payable at
the expiration of its Interest Period (subject to being converted to a CBR
Advance or continued as a LIBOR Advance as provided in Section 4.3 and
subject to being reborrowed as a new Revolving Advance as provided in this
Agreement) and on the Ultimate Maturity Date. All amounts drawn on LCs
will be reimbursable upon demand.
7
<PAGE>
6.2. PREPAYMENTS.
6.2.1. VOLUNTARY. Borrower may make prepayments on any CBR Advance
or LIBOR Advance, provided that (i) such prepayment is a whole multiple of
$100,000 or, if less, the total outstanding amount of all CBR Advances or
LIBOR Advances, as the case may be, (ii) all unpaid accrued interest on all
CBR Advances or LIBOR Advances, as the case may be, is paid at the same
time, and (iii) if such prepayment is with respect to a LIBOR Advance,
Borrower reimburses Lenders at the same time for all amounts which are due
to Lenders under Section 10.4 as a result of the prepayment.
6.2.2. MANDATORY. If at any time the sum of (i) the Revolving Loan,
(ii) the aggregate undrawn Dollar amount of all outstanding LC's, and (iii)
the aggregate Dollar amount of all unreimbursed LC Draws exceeds the
Maximum Available Amount, whether as a result of a voluntary reduction of
the Aggregate Revolving Commitment by Borrower as contemplated in Section
8.2 or otherwise, Borrower shall make a prepayment on the then outstanding
Revolving Advances in the amount of such excess. If the amount of such
excess is greater than the Revolving Loan, Borrower shall immediately
deliver to Agent cash collateral in form acceptable to Agent, to secure
Borrower's reimbursement obligations with respect to such LCs, in the
Dollar amount by which such excess is greater than the Revolving Loan. Any
prepayment made by Borrower hereunder on the Revolving Loan shall be
applied to outstanding CBR Advances first, and then to outstanding LIBOR
Advances in the order of the ending dates of their Interest Periods.
Borrower shall also at the same time pay all accrued interest on the
Revolving Advances to which the prepayment is to be applied and any payment
required under Section 10.4.
6.3. MANNER OF PAYMENTS AND TIMING OF APPLICATION OF PAYMENTS.
6.3.1. PAYMENT REQUIREMENT. Borrower shall make each payment on the
Loan Obligations to Agent for the benefit of Lenders as required under the
Loan Documents, in Dollars, at the Applicable Lending Office on the date
when due, without deduction, set-off or counterclaim.
6.3.2. APPLICATION OF PAYMENTS. All payments received by Agent at or
before 2:00 p.m. St. Louis time, on a Business Day will be applied to the
relevant Loan Obligation on the same day. Payments received on a day that
is not a Business Day or after 2:00 p.m. on a Business Day will be applied
to the relevant Loan Obligation on the first following Business Day. If a
payment is made by check, draft or other instrument and the check, draft or
other instrument is returned to Agent unpaid, the application to the Loan
Obligation will be reversed and will be treated as never having been made.
6.3.3. INTEREST CALCULATION. Section 6.3.2 notwithstanding, for
purposes of interest calculation only, (i) a payment by check, draft or
other instrument received at or before 2:00 p.m. St. Louis time, on a
Business Day shall be deemed to have been applied by Lenders to the
relevant Loan Obligation on the second following Business Day, (ii) a
payment by check, draft or other instrument received on a day that is not a
Business Day or after 2:00 p.m. on a Business Day shall be deemed to have
been applied by Lenders to the relevant Loan Obligation on the third
following Business Day, (iii) a payment in cash or by wire transfer
received at or before 2:00 p.m. St. Louis time, on a Business Day shall be
deemed to have been applied by Lenders to the relevant Loan Obligation on
the Business Day received, and (iv) a payment in cash or by wire transfer
received on a day that is not a Business Day or after 2:00 p.m. on a
Business Day shall be deemed to have been applied by Lenders to the
relevant Loan Obligation on the next Business Day.
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6.4. DUE DATES NOT ON BUSINESS DAYS. Except as provided in Section 4.1.3
with respect to LIBOR Advances, if any payment required hereunder becomes due on
a date that is not a Business Day, then such due date shall be deemed
automatically extended to the first following Business Day.
7. BORROWING PROCEDURE; PROCEDURE FOR REQUESTING LCS; FUNDING LC DRAWS.
7.1. BORROWING PROCEDURE FOR REVOLVING ADVANCES.
7.1.1. REVOLVING ADVANCE REQUESTS BY BORROWER. Borrower may request
a Revolving Advance by submitting a Revolving Advance Request to Agent.
Every Revolving Advance Request shall be irrevocable. Only a written or
telephoned request from a Borrowing Officer to Agent that specifies the
amount of the Revolving Advance to be made, the date (the "Advance Date")
the proceeds of the Revolving Advance are requested to be made available to
Borrower (which date shall be no earlier than the date on which the
Revolving Advance Request is treated as having been received by Agent
pursuant to this Section 7.1.1), the interest rate that is to be applicable
to the Revolving Advance pursuant to Section 4.1 (but if Borrower fails to
specify an interest rate, Borrower shall be deemed to have specified the
Adjusted CBR), and the Interest Period to be applicable to the Revolving
Advance Request if it is not a CBR Advance shall be treated as a "Revolving
Advance Request". Each LIBOR Advance shall be in an amount of no less
than $3,000,000 and each CBR Advance shall be in an amount of no less than
$2,000,000. A Revolving Advance Request received by Agent on a day that is
not a Business Day or that is received by Agent after 11:00 a.m., St. Louis
time, on a Business Day shall be treated as having been received by Agent
at 11:00 a.m., St. Louis time, on the first following Business Day. Agent
shall incur no liability to Borrower for treating any such request as a
Revolving Advance Request if Agent believes in good faith that the Person
making the request is a Borrowing Officer. Agent shall also incur no
liability to Borrower for failing to treat any such request as a Revolving
Advance Request if Agent believes in good faith that the Person making the
request is not a Borrowing Officer. There may not be more than one
Revolving Advance made on any one day and each Revolving Advance Request
requesting a LIBOR Advance will be given not less than two Business Days
prior to the Advance Date.
7.1.2. DISBURSEMENT OF FUNDS. Provided that all conditions precedent
thereto hereunder have been met, Agent will make the amount of each
requested Revolving Advance available to Borrower on the Advance Date in
immediately available funds in Dollars at the Applicable Lending Office.
7.2. ISSUANCE OF LCS; FUNDING LC DRAWS.
7.2.1. PROCEDURE FOR REQUESTING LCS. Borrower shall request the
issuance of an LC by submitting to Agent (or to Issuer, if requested by
Agent), no less than five Business Days prior to the requested issue date,
a completed and signed application for standby letter of credit in the form
customarily used by Issuer and acceptable to Agent, specifying (i) the
stated amount of the LC requested, (ii) the effective date (which shall be
a Business Day) of the requested LC, (iii) the date on which the requested
LC is to be issued (which shall be a Business Day and shall in no event be
later than the Ultimate Maturity Date unless cash collateral is provided by
Borrower in accordance with Section 2.2), (iv) the Person for whose benefit
the requested LC is to be issued, and (v) such other information as may be
specifically requested by Agent or Issuer in such application. If the
stated amount and other terms of the requested LC are within the
limitations set forth in Section 2.2, Agent shall promptly deliver the
application to Issuer (if the application was not previously delivered by
Borrower to Issuer at Agent's request). Unless Issuer receives, on or
before the Business Day immediately preceding the requested issue date,
written or telephonic notice from Agent (confirmed in writing) that one or
more conditions applicable to issuance of the LC (including but not limited
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to the conditions set forth in Section 11) under this Agreement have not
been satisfied, Issuer shall, on the requested date, issue an LC for the
account of Borrower in accordance with Issuer's usual and customary
business practices.
Notwithstanding anything to the contrary contained herein, Issuer shall not
be obligated to issue an LC if any order, judgment or decree of any
Governmental Authority or arbitrator shall purport by its terms to enjoin
or restrain Issuer or any other Lender from issuing such LC or any Law
applicable to Issuer or any other Lender or any request or directive
(whether or not having the force of law) from any Governmental Authority
with jurisdiction over Issuer or any other Lender shall prohibit, or
request that Issuer or any other Lender refrain from, the issuance of
letters of credit generally or such LC in particular or shall impose upon
Issuer or any other Lender with respect to such LC any restriction or
reserve or capital requirement (for which Issuer is not otherwise
compensated by the Borrower hereunder) not in effect on the Effective Date,
or any unreimbursed loss, cost or expense which was not applicable, in
effect or known to Issuer as of the Effective Date and which Issuer in good
faith deems material to it.
Agent shall, upon any Lender's request from time to time, advise such
Lender of the aggregate undrawn amount of the LCs (including the Existing
LCs) as of the date of such request, and shall provide to Lenders such
other information respecting the outstanding LCs as Lenders may reasonably
request from time to time.
7.2.2. PARTICIPATIONS IN ISSUED LCS. Immediately upon the issuance
by Issuer of an LC in accordance with the terms and conditions of this
Agreement, Issuer shall be deemed to have sold and transferred to each
Lender, and each Lender shall be deemed to have purchased and received from
Issuer, an undivided interest and participation in such LC and the
obligation of Borrower with respect thereto in an amount equal to such
Lender's ratable share thereof, as listed on Exhibit 2, and in each case
any security therefor and guaranty pertaining thereto.
7.3. AGENT'S NOTICE TO LENDERS; FUNDS DEPOSIT.
7.3.1. REVOLVING ADVANCES. Upon receipt of a Revolving Advance
Request, the Agent shall promptly notify each Lender of the contents
thereof and of such Lender's ratable share of such Revolving Advance. Not
later than 1:00 p.m. (St. Louis time) on the Advance Date, each Lender
shall make available its ratable share of such Revolving Advance, in
immediately available funds consisting solely of Dollars, to the Agent in
accordance with such remittance instructions as may be given by Agent to
each Lender from time to time.
7.3.2. FUNDING LC DRAWS. In the event that an LC Draw is made on an
LC and Borrower fails to reimburse such amount in full to Issuer on demand,
Issuer shall promptly notify Agent of such failure. Upon Agent's receipt
of such notice from Issuer, Agent shall have the right to cause a Revolving
Advance to be made, regardless of whether such Revolving Advance would
result in the Revolving Loan exceeding the Maximum Available Amount, by
notifying Lenders of the LC Draw, the amount of the Revolving Advance
required to fund such LC Draw, and the amount of such Lender's ratable
share of such Revolving Advance (such notice shall be deemed to be a
Revolving Advance Request). Unless otherwise agreed by the Required
Lenders, the Advance Date for such Revolving Advance shall not be later
than 1:00 p.m. (St. Louis time) on the first Business Day following Agent's
delivery of a Revolving Advance Request pursuant to this Section 7.3.2. By
no later than such Advance Date, each Lender shall unconditionally make
available its ratable share of the Revolving Advance, in immediately
available funds consisting solely of Dollars, to Agent in accordance with
such remittance instructions as may be given by Agent to each Lender from
time to time. Each Revolving Advance made by Lenders pursuant to this
Section 7.3.2 shall be deemed to be a CBR Advance.
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7.4. REVOLVING ADVANCES RATABLE. All Revolving Advances hereunder shall be
made by the Lenders ratably in proportion to their respective Revolving
Commitment or LC Commitment, as the case may be. The portion of each Revolving
Advance to be funded by each Lender shall be an amount equal to (x) the Dollar
amount of the Revolving Advance requested times (y) the percentage set forth
opposite such Lender's name on Exhibit 2. Except as otherwise provided herein, a
Lender shall not at any time be obligated to (i) make Revolving Advances
pursuant to this Agreement in excess of its Revolving Commitment at such time,
(ii) make Revolving Advances to fund LC Draws pursuant to this Agreement in
excess of its LC Commitment at such time, or (iii) advance more than its ratable
share of any Revolving Advance.
7.5. AGENT'S AVAILABILITY ASSUMPTION. Unless the Agent shall have been
notified by any Lender by written notice prior to an Advance Date, that such
Lender does not intend to make available to the Agent such Lender's ratable
portion of any Revolving Advance which it shall be obligated to make on such
date, the Agent may assume that each Lender has made the required amount
available to the Agent on the Advance Date and the Agent may, in reliance upon
such assumption, make available to the Borrower (or Issuer, if the Revolving
Advance is to reimburse Issuer for an LC Draw), a corresponding amount. If such
corresponding amount is not in fact made available to the Agent by such Lender
on the Advance Date, the Agent shall be entitled to recover such corresponding
amount on demand from such Lender. If such Lender does not pay such
corresponding amount immediately upon Agent's demand therefor, then the Agent
shall promptly notify the Borrower and the other Lenders and the Borrower shall
immediately pay such corresponding amount to Agent. The Agent shall also be
entitled to recover, either from such defaulting Lender or the Borrower,
interest on such corresponding amount for each day from, but not including, the
date such corresponding amount was made available by Agent to Borrower to, and
including, the date such corresponding amount is recovered by the Agent, at a
rate per annum equal to (i) if paid by such Lender, the cost to the Agent of
funding such amount at the Federal Funds Rate as notified in writing by the
Agent to such Lender, or (ii) if paid by the Borrower, the applicable rate for
Revolving Advances determined from the Revolving Advance Request to which such
amount relates (unless the amount is paid with respect to a Revolving Advance
made to fund an LC Draw, in which case, the rate shall be the Adjusted CBR).
Notwithstanding anything in this Section 7.5 to the contrary:
7.5.1. If a Lender fails to fund its ratable share of a Revolving
Advance and neither a Default has occurred which is continuing nor an Event
of Default exists which has not been expressly waived in writing by the
Required Lenders, and such Lender does not otherwise have the right under
the terms hereof not to fund its ratable share, then Borrower shall be
entitled to recover its reasonable attorneys' fees and court costs if it
pursues a legal or equitable remedy against such Lender for such failure
and obtains a judgment or injunction against such Lender which is final and
non-appealable.
7.5.2. If a Lender fails to fund its ratable share of a Revolving
Advance and neither a Default has occurred which is continuing nor an Event
of Default exists which has not been expressly waived in writing by the
Required Lenders, and Borrower has repaid the corresponding amount to Agent
upon Agent's demand therefor pursuant to this Section 7.5, then Borrower
shall not be required to compensate such Lender under Section 10.4 for any
loss or expense suffered by such Lender as a result of Borrower repaying
such amount.
7.5.3. If any Lender fails to fulfill its obligation to fund its
ratable share of any Revolving Advance within two (2) Business Days after
it shall be required to do so, the Borrower shall not be required to pay to
the Agent on behalf of such Lender such Lender's share of the Non-Use Fee
for the period that such Lender shall have so failed to fulfill its
obligation to fund (or if Agent shall advance such Lender's ratable share
of any Revolving Advance, until the Agent recovers such amount from such
Lender, together with interest thereon as provided above, or the Borrower
repays such amount to the Agent together with interest thereon as provided
above); provided, that if the Agent shall fund to the Borrower the
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defaulting Lender's ratable share of any Revolving Advance, then the
Borrower shall pay and the Agent may retain for its own account such Non-
Use Fee which the Borrower shall not be required to pay to such defaulting
Lender for the period that the amount so funded by the Agent on behalf of
such defaulting Lender, together with interest thereon as provided above,
shall remain outstanding.
7.5.4. No Lender shall be responsible for a failure of another Lender
to fund its ratable share of a Revolving Advance, nor shall the Revolving
Commitment or LC Commitment of a Lender be increased as a result of such
failure by another Lender. Each Lender shall be obligated only to fund its
ratable share of a Revolving Advance subject to the terms and conditions
hereof, regardless of the failure of another Lender to fund its ratable
share thereof.
8. CANCELLATION AND REDUCTION OF COMMITMENT.
8.1. [INTENTIONALLY LEFT BLANK].
8.2. VOLUNTARY BY BORROWER. Borrower shall have the right at any time,
upon at least five Business Days' prior written notice to Agent, to cancel or
from time to time reduce the Aggregate Revolving Commitment; provided, however,
that (i) if the amount of such reduction would result in the Aggregate Revolving
Commitment being less than the aggregate principal amount of all LIBOR Advances
then outstanding, such reduction shall be effective only to the extent that it
reduces the Aggregate Revolving Commitment to an amount equal to the aggregate
principal amount of all then outstanding LIBOR Advances, and (ii) such reduction
shall be a whole multiple of $1,000,000. Any such reduction of the Aggregate
Revolving Commitment shall be permanent.
8.3. BY AGENT FOR DEFAULT. At any time after an Event of Default occurs
that is not waived in writing by Agent and Required Lenders, Agent may cancel
the Aggregate Revolving Commitment as provided in Section 16.3.
9. COLLATERAL AND GUARANTY.
9.1. COLLATERAL. As security for all of the Loan Obligations, Borrower
shall grant to Agent, for the benefit of the Lenders in accordance with their
ratable shares of the Aggregate Revolving Commitment, a perfected security
interest in all Accounts of Borrower pursuant to one or more security agreements
executed by Borrower, in form and substance satisfactory to Lenders and Lenders'
counsels (as the same may be modified, amended, restated or replaced, the
"Security Agreement"). Borrower shall also grant to Agent, for the benefit of
the Lenders in accordance with their ratable shares of the Aggregate Revolving
Commitment, as security for all of the Loan Obligations, a first priority
security interest in all of the stock and partnership interests held by Borrower
in the Guarantors (other than Nevada Rehabilitation Services, Corp.), the
Material Subsidiaries, and Royal Oaks Partnership, a Florida general
partnership, pursuant to one or more stock pledge and assignment of partnership
interest agreements executed by Borrower, in form and substance satisfactory to
Lenders and Lenders' counsels (as the same may be modified, amended, restated or
replaced, the "Stock Pledge Agreement"). If Borrower or any of its Subsidiaries
creates or acquires any Material Subsidiaries subsequent to the Effective Date,
Borrower shall notify Agent thereof and shall immediately upon Agent's request
deliver such security documents covering the stock of such acquired or newly
created Material Subsidiaries as may be requested by Agent; all such documents
delivered to Agent shall be deemed to be Security Documents hereunder and all
property covered by such documents shall be deemed Collateral hereunder.
9.2. GUARANTY. Borrower shall cause National Institutional Pharmacy
Services, Inc., a Delaware corporation, Community Rehabilitation Centers, Inc.,
a Delaware corporation ("CRC Delaware"), Nevada Rehabilitation Services, Corp.,
a Delaware corporation, Horizon Health Systems, L.P., a Delaware limited
partnership, Horizon Holding, Inc., a Delaware corporation, Advanced
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Cardiovascular Technology, Inc., an Arizona corporation, Intra-City Enterprises,
Inc., an Ohio corporation, Physicians Hospital For Extended Care, a Nevada
corporation, Greenery Securities Corp., a Delaware corporation, Vegas Valley
Convalescent Center, Inc., a Nevada corporation, HHC Acquisition Corp., a
Delaware corporation, Midwest Regional Rehabilitation Center, Inc., a Delaware
corporation, Horizon CMS Corporation, a Delaware Corporation, and LTC Medical
Laboratories, Inc., a Delaware Corporation (collectively, the "Guarantors"), to
execute one or more continuing guaranties (as the same may be amended, restated
or replaced, the "Guaranty"), in form and substance satisfactory to Lenders,
pursuant to which Guarantors jointly and severally guaranty repayment of the
Loan Obligations to Agent for the ratable benefit of Lenders (with the liability
of each Guarantor for the Loan Obligations being limited at any particular time
to the greater of (i) the principal amount of and interest on the Revolving
Advances or portions thereof loaned or otherwise transferred by Borrower to such
Guarantor or any of its Subsidiaries from time to time, and (ii) the net worth
of such Guarantor, as more specifically provided in the Guaranty). If Borrower
or any of its Subsidiaries creates or acquires any Material Subsidiaries
subsequent to the Effective Date, Borrower shall notify Agent thereof and shall
immediately upon Agent's request deliver similar continuing guaranties from such
of the acquired or newly created Material Subsidiaries as may be requested by
Agent; all such guaranties delivered to Agent, together with the other
guaranties delivered pursuant hereto, as the same may be amended, restated or
replaced, shall be deemed to be the Guaranty hereunder. As security for the
Guaranty and Loan Obligations, Borrower shall cause (i) subject to the terms of
Section 14.15, each of the Guarantors and any and all Material Subsidiaries of
Borrower and any Guarantor to grant to Agent, for the benefit of the Lenders in
accordance with their ratable shares of the Aggregate Revolving Commitment, a
perfected security interest in all Accounts of the Guarantors and any of
Borrower's and Guarantors' Material Subsidiaries pursuant to one or more
security agreements executed by the Guarantors and Borrower's and Guarantors'
Material Subsidiaries, in form and substance satisfactory to Lenders (as the
same may be modified, amended, restated or replaced, the "Guarantor Security
Agreement"), (ii) CRC Delaware to grant to Agent, for the ratable benefit of the
Lenders in accordance with their ratable shares of the Aggregate Revolving
Commitment, a perfected first priority security interest in all of the stock
held by CRC Delaware in Nevada Rehabilitation Services, Corp., a Delaware
corporation, pursuant to one or more stock pledge agreements executed by CRC
Delaware, in form and substance satisfactory to Lenders (as the same may be
modified, amended, restated or replaced, the "CRC Stock Pledge Agreement"),
(iii) Horizon Holding, Inc. to grant to Agent, for the ratable benefit of the
Lenders in accordance with their ratable shares of the Aggregate Revolving
Commitment, a perfected first priority security interest in all of its
partnership interest in Horizon Health Systems, L.P., a Delaware limited
partnership, pursuant to one or more assignments of partnership interests
executed by Horizon Holding, Inc. in form and substance satisfactory to Lenders
(as the same may be modified, amended, restated or replaced, the "Horizon
Holding Assignment"), and (iv) National Institutional Pharmacy Services, Inc., a
Delaware corporation, to grant to Agent, for the ratable benefit of the Lenders
in accordance with their ratable shares of the Aggregate Revolving Commitment, a
perfected first priority security interest in all of its partnership interest in
ASCO of New England, L.P., pursuant to one or more assignments of partnership
interests executed by National Institutional Pharmacy Services, Inc. in form and
substance satisfactory to Lenders (as the same may be modified, amended,
restated or replaced, the "NIPSI Assignment").
9.3. SECURITY INTERESTS. The perfected security interests granted to
Agent, for the ratable benefit of the Lenders in accordance with their ratable
shares of the Aggregate Revolving Commitment, pursuant to the Security Agreement
and the Guarantor Security Agreement shall at all times constitute a perfected,
first priority security interest in at least 80% of the aggregate Dollar amount
of the Eligible Accounts (as defined in Section 14.15) of Borrower, the
Guarantors, and all Material Subsidiaries.
9.4. EXISTING SECURITY DOCUMENTS. Except as expressly provided in the Loan
Documents executed as of or subsequent to the Effective Date, each of the
Security Documents executed prior to the Effective Date (the "Existing Security
Documents") pursuant to the Prior Agreement shall in no way be affected,
replaced, impaired or waived by this Agreement or any of the other Loan
Documents executed as of the Effective Date; provided, however, that to the
extent of any irreconcilable conflicts
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between the terms of the Loan Documents executed as of or subsequent to the
Effective Date and the terms of the Existing Security Documents, the terms of
such Loan Documents shall be deemed to control. All of the Liens, priorities
and rights of Agent and Lenders with respect to the Collateral under the
Existing Security Documents are hereby extended, renewed and carried forward as
security for the Loan Obligations for the benefit of Agent, for the ratable
benefit of Lenders, and all of such Liens, priorities and rights shall relate
back to the date upon which they were first created and shall be preserved,
maintained, renewed, extended and carried forward to secure the Notes and other
Loan Obligations to the same extent as if the Notes and Loan Obligations had
been expressly mentioned in the Existing Security Documents.
10. YIELD PROTECTION AND LIBOR MATTERS.
10.1. COMPENSATION FOR INCREASE IN LIBOR ADVANCE COSTS. If, by reason of
(a) after the Effective Date, the introduction of or any change (including,
without limitation, any change by way of imposition or increase of reserve
requirements) in any or (b) the compliance by a Lender or its parent holding
company, if any, with any law, or any guideline or request (whether or not
having the force of law) of any Governmental Authority:
(i) such Lender is subject to any tax, duty or other charge with respect
to its LIBOR Advances or its obligation to make the same, or the basis
of taxation of payments to such Lender of the principal of or interest
on its LIBOR Advances or its obligation to make the same shall change
(except for changes in the rate of tax on the overall net income of
such Lender imposed by the United States or other jurisdiction in
which such Lender's principal executive office is located); or
(ii) any reserve (including, without limitation, any imposed by the FRB),
special deposit, compulsory loan, assessment, or similar requirement
against assets of, deposits with or for the account of, or credit
extended by, such Lender is imposed or deemed applicable or any other
condition affecting its LIBOR Advances or its obligation to make them
is imposed on such Lender or the London Interbank Market;
and as a result thereof there is any increase in the cost to such Lender of
agreeing to make or making, funding or maintaining its LIBOR Advances (except to
the extent already included in the determination of the applicable LIBOR Rate),
or there is a reduction in the amount received or receivable by such Lender,
then the Borrower shall from time to time, upon written notice from and demand
by such Lender (with a copy of such notice and demand to Agent), pay to such
Lender, within five Business Days after the date specified in such notice and
demand, additional amounts sufficient to compensate such Lender in the amount of
such increased cost. If such Lender claims compensation under this Section,
such Lender shall furnish a certificate to Borrower that states the additional
amount or amounts to be paid to it hereunder. Borrower shall have the burden of
proving that any such certificate is not correct.
10.2. SUSPENSION OF OBLIGATION TO MAKE LIBOR ADVANCES. In the event that
(i) on any date for determining the LIBOR Rate for any Interest Period, by
reason of any changes arising after the Effective Date affecting the London
Interbank Market, or any Lender's position in such market, adequate and fair
means do not exist for ascertaining the applicable interest rate on the basis
provided for in the definition herein of LIBOR Rate, or (ii) the making or
continuance of any LIBOR Advance by a Lender has become unlawful by compliance
by such Lender in good faith with any applicable law, governmental rule,
regulation, guideline or order (whether or not having the force of law and
whether or not failure to comply therewith would be unlawful), then such Lender
shall promptly give notice (by telephone, confirmed in writing) to Borrower of
such determination. Until such Lender notifies Borrower that the circumstances
giving rise to the suspension described herein no longer exist, (a) the
obligation of such Lender to make LIBOR Advances shall be suspended, (b) each
outstanding LIBOR Advance from such Lender shall be automatically converted into
a CBR Advance on the earlier of the
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last day of the Interest Period for such LIBOR Advance or the last date
permitted by applicable law, and (c) all Revolving Advances requested in
Revolving Advance Requests shall be CBR Advances. Notwithstanding anything to
the contrary contained herein, if a LIBOR Advance is converted to a CBR Advance
pursuant to this Section 10.2, the per annum interest rate applicable to such
Revolving Advance from and after the effective date of such conversion shall be
equal to the Adjusted CBR (but otherwise calculated as provided in Section 4)
and Borrower shall not be required to compensate Lenders under Section 10.4 for
any loss or expense suffered by Lenders as a result of such conversion.
10.3. CAPITAL ADEQUACY REIMBURSEMENT. If there is any change of Law or
any change in any guidelines from any central bank or any other Governmental
Authority (whether or not having the force of law) after the date hereof
regarding the capital that financial institutions in a class that includes a
Lender are required to maintain and which has the effect of reducing the rate of
return on, or increasing the cost of maintaining, such Lender's capital as a
consequence of its obligations hereunder, then such Lender may from time to time
demand, and Borrower shall pay to such Lender within fifteen days after each
such demand, such additional amount or amounts as will compensate such Lender
for such reduction or increase. If such Lender claims compensation under this
Section, such Lender shall furnish a certificate to Borrower that states the
additional amount or amounts to be paid to it hereunder. Borrower shall have
the burden of proving that any such certificate is not correct.
10.4. FUNDING LOSSES. Except as otherwise provided in Section 7.5.2 and
Section 10.2, Borrower shall pay to each Lender upon its demand an amount
sufficient to compensate such Lender for all loss and expense suffered by such
Lender, including but not limited to the cost of acquiring funds to make or
carry a LIBOR Advance, (i) if for any reason a requested Revolving Advance is
not taken by Borrower on the date specified therefor in a Revolving Advance
Request (whether or not withdrawn), (ii) if any prepayment or repayment of a
LIBOR Advance or conversion of a LIBOR Advance to a Revolving Advance of another
type, whether or not required hereby, occurs on a date which is not the last day
of the Interest Period therefor, (iii) if for any reason Borrower fails to repay
a LIBOR Advance when required by the terms of this Agreement, or (iv) Borrower
cancels or revokes a Notice of Conversion/Continuation previously given to Agent
pursuant to the terms of Section 4.3. The minimum that Borrower shall be
obligated to pay to such Lender in any such event shall be an amount equal to
(x) the greater of zero or
A x (B-C) x D
-------------
360
wherein
"A" is the Affected Principal Amount;
"B" is the decimal equivalent of the LIBOR Rate that is (or would be in the
case of Borrower's failure to borrow after giving a Revolving Advance
Request) payable by Borrower on such Revolving Advance;
"C" is the decimal equivalent of the LIBOR Rate that would apply to a
hypothetical Revolving Advance in the Affected Principal Amount whose
Advance Date were on the last Business Day on or before the first day of
the Remaining Interest Period and whose Interest Period were approximately
equal, as determined by Lender, to the Remaining Interest Period; and
"D" is the number of days from and including the first day of the Remaining
Interest Period to but excluding the last day of the Remaining Interest
Period;
plus (y) any other out-of-pocket loss or expense (including any internal
processing charge customarily charged by Lender) suffered by such Lender in
liquidating deposits prior to maturity in amounts which correspond to the
Affected Principal Amount.
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"Affected Principal Amount" shall mean, as applicable, (i) the principal amount
of a Revolving Advance that Borrower fails to take after having given a
Revolving Advance Request; (ii) the entire principal amount of a LIBOR Advance
that Borrower fails to repay when required by the terms of this Agreement; or
(iii) the amount of any prepayment or repayment on a LIBOR Advance that occurs,
or the entire principal amount of a LIBOR Advance that converts to a Revolving
Advance of another type, whether or not required hereby, on a date which is not
the last day of the Interest Period therefor.
"Remaining Interest Period" shall mean, as applicable, (i) the entire Interest
Period that would have been applicable to a Revolving Advance that Borrower
fails to take after having given a Revolving Advance Request; (ii) a period
equal in duration to the Interest Period of a LIBOR Advance that Borrower fails
to repay when required by the terms of this Agreement; or (iii) if a prepayment
or repayment on a LIBOR Advance occurs, or a LIBOR Advance converts to a
Revolving Advance of another type, whether or not required hereby, prior to the
last day of the Interest Period therefor, the period from and including the date
thereof to but excluding the last day of such Interest Period.
If a Lender claims compensation under this Section, such Lender shall furnish a
certificate to Borrower (with a copy to Agent if it is not the Lender involved)
that states the additional amount or amounts to be paid to it hereunder.
Borrower shall have the burden of proving that any such certificate is not
correct.
11. CONDITIONS OF LENDING.
11.1. CONDITIONS TO INITIAL REVOLVING ADVANCE AND LC. As conditions
precedent to Lenders' obligation to make the initial Revolving Advance or to
issue the initial LC hereunder:
11.1.1. EXECUTED DOCUMENTS. Agent shall have received on or before
the Effective Date all notes, agreements, documents, certificates and other
items reasonably requested by Agent and the other Lenders in connection
with the transactions contemplated by this Agreement, each duly executed
where applicable, and, as applicable, sealed, attested, acknowledged,
certified, or authenticated.
11.1.2. FINANCIAL CONDITION. Agent shall have completed an initial
audit of Borrower's books and records of account and shall have received
the Initial Financial Statements; and Lenders shall have determined to
their satisfaction that the Initial Financial Statements and other
information furnished to Lenders by Borrower fairly and accurately reflect
the business and financial condition of Borrower and the results of its
operations for the periods covered by the Initial Financial Statements and
such information.
11.1.3. NO DEFAULT. No Default shall have occurred and be continuing
that is not waived in writing by the Required Lenders, no Event of Default
shall have occurred that is not waived in writing by the Required Lenders,
and neither will occur as a result of such Revolving Advance being
requested or made or the application of the proceeds thereof, or as a
result of the issuance of the LC.
11.1.4. REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in the Loan Documents shall be true and correct.
11.1.5. MATERIAL ADVERSE CHANGE. Since the date of the most recent
Financial Statements delivered to Lenders, there shall not have been any
change which would have a Material Adverse Effect.
11.1.6. PENDING MATERIAL PROCEEDINGS. There shall be no pending
Material Proceedings.
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11.1.7. PAYMENT OF FEES. Borrower shall have paid and reimbursed to
Agent and Lenders all fees, costs and expenses that are payable or
reimbursable to them hereunder on or before the Effective Date.
11.1.8. LEGAL OPINION. Agent shall have received an opinion of
Borrower's counsel, in form and substance acceptable to Lenders, dated as
of the Effective Date, respecting the transactions contemplated by this
Agreement.
11.1.9. [INTENTIONALLY LEFT BLANK].
11.1.10. ADDITIONAL MATTERS. All other documents and legal matters
in connection with the transactions contemplated by the Loan Documents and
related documents shall be in form and substance reasonably satisfactory to
Lenders.
11.2. CONDITIONS TO SUBSEQUENT REVOLVING ADVANCES AND LCS. The obligation
of Lenders to make any subsequent Revolving Advance or to issue subsequent LCs
shall be subject to the prior or concurrent fulfillment of each of the following
additional conditions precedent:
11.2.1. GENERAL CONDITIONS. All of the conditions to the initial
Revolving Advance and LC in Section 11.1 shall have been and shall remain
satisfied.
11.2.2. REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in the Loan Documents shall be true and correct on the
Advance Date for such Revolving Advance with the same force and effect as
if made on such date.
11.2.3. NO DEFAULT. No Default shall have occurred and be continuing
that is not waived in writing by the Required Lenders, no Event of Default
shall have occurred that is not waived in writing by the Required Lenders,
and neither will occur as a result of such Revolving Advance being
requested or made or the application of the proceeds thereof, or as a
result of the issuance of such LC being issued, as the case may be.
11.2.4. OTHER APPROVALS. Agent shall have received from Borrower
such other approvals, opinions, certificates or documents as it may
reasonably request.
12. REPRESENTATIONS AND WARRANTIES.
Except as otherwise described in Borrower's disclosure schedule that is
attached hereto as Exhibit 12 (the "Disclosure Schedule"), Borrower represents
and warrants to Agent and Lenders as follows:
12.1. ORGANIZATION AND EXISTENCE. Each Covered Person is a corporation or
limited partnership duly organized and existing in good standing under the laws
of the state of its incorporation or organization, is duly qualified to do
business and is in good standing in every state where the nature or extent of
its business or properties require it to be qualified to do business as a
foreign corporation or limited partnership, and has the corporate or partnership
power and authority to own its properties and carry on its business as now being
conducted.
12.2. AUTHORIZATION. Each Covered Person is duly authorized to execute
and perform every Loan Document to which such Covered Person is a party, and
Borrower is duly authorized to borrow hereunder; this Agreement and the other
Loan Documents have been properly authorized by all requisite corporate action
of each Covered Person.
12.3. DUE EXECUTION. Every Loan Document to which a Covered Person is a
party has been duly executed on behalf of such Covered Person.
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12.4. ENFORCEABILITY OF LOAN DOCUMENTS. Each of the Loan Documents to
which a Covered Person is a party constitutes the legal, valid and binding
obligation of such Covered Person, enforceable against such Covered Person in
accordance with its terms, except to the extent that the enforceability thereof
against such Covered Person may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
or by equitable principles of general application.
12.5. BURDENSOME OBLIGATIONS. No Covered Person is a party to or bound by
any Contract or is subject to any provision in the Charter Documents of such
Covered Person which would, if performed by such Covered Person, have a Material
Adverse Effect on such Covered Person or any other Covered Person.
12.6. LEGAL RESTRAINTS. Except as expressly contemplated or permitted in
this Agreement, neither the execution of any Loan Document by any Covered Person
nor the performance by any Covered Person of its obligations thereunder now
violates or will in the future violate, or constitutes or will in the future
constitute a default under, the Charter Documents of such Covered Person, any
Material Agreement of such Covered Person, or any Material Law, or will result
in any Lien being imposed on any of such Covered Person's property.
12.7. NO MATERIAL PROCEEDINGS. There are no Material Proceedings pending
or threatened.
12.8. MATERIAL LICENSES. All Material Licenses have been obtained or
exist for each Covered Person.
12.9. COMPLIANCE WITH LAWS. Every Covered Person is in compliance with
all Material Laws.
12.10. OTHER NAMES. No Covered Person has used any name other than the
full name which identifies such Covered Person in this Agreement, and the name
"Greenery Rehabilitation Group, Inc.", except as otherwise set forth in Section
12.26. The only trade name or style under which a Covered Person creates
Accounts, or to which instruments in payment of Accounts are made payable, is
the name which identifies such Covered Person in this Agreement or as otherwise
specified in Exhibit 12.26 attached hereto.
12.11. FINANCIAL STATEMENTS. The Initial Financial Statements are
complete and correct, have been prepared in accordance with GAAP, and fairly
reflect the financial condition, results of operations and cash flows of the
Persons covered thereby as of the dates and for the periods stated therein.
12.12. NO CHANGE IN CONDITION. Since the date of the Initial Financial
Statements delivered to Lender, there has been no change which would have a
Material Adverse Effect on any Covered Person.
12.13. NO DEFAULTS. No Covered Person has breached or violated or is in
default under any Material Agreement, or has defaulted with respect to any
Material Obligation of such Covered Person. No Default has occurred which is
continuing and no Event of Default exists which has not been expressly waived in
writing by the Required Lenders.
12.14. INVESTMENTS. No Covered Person has any Investments in other
Persons except existing Permitted Investments.
12.15. INDEBTEDNESS. No Covered Person has any Indebtedness except
existing Permitted Indebtedness.
12.16. INDIRECT OBLIGATIONS. No Covered Person has any Indirect
Obligations except existing Permitted Indirect Obligations.
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12.17. LIENS. There are no Liens on any of the property purported to be
owned by any Covered Person, including the Collateral, except existing Permitted
Liens.
12.18. [INTENTIONALLY LEFT BLANK].
12.19. OPERATING LEASES. No Covered Person has an interest as lessee
under any Operating Leases except existing Permitted Operating Leases.
12.20. CAPITAL LEASES. No Covered Person has an interest as a lessee
under any Capital Leases except existing Permitted Capital Leases.
12.21. TAX LIABILITIES; GOVERNMENTAL CHARGES. Every Covered Person has
filed or caused to be filed all tax reports and returns required to be filed by
it with any Governmental Authority, except where extensions have been properly
obtained, and has paid or made adequate provision for payment of all taxes,
assessments, fees and other charges levied upon it or upon its income or
properties by any Governmental Authority which are due and payable, including
interest and penalties, except such taxes, assessments, fees and other charges,
if any, as are being diligently contested in good faith by appropriate
proceedings and as to which such Covered Person has established adequate
reserves in conformity with GAAP on the books of such Covered Person. No Liens
for any such taxes, assessments, fees or other charges have been filed and no
claims are being asserted with respect to any such taxes, assessments, fees or
other charges which, if adversely determined, would have a Material Adverse
Effect on such Covered Person. None of the federal income tax returns of each
Covered Person has been audited by the Internal Revenue Service. There are no
material unresolved issues concerning any tax liability of a Covered Person
which, if adversely determined, would have a Material Adverse Effect on such
Covered Person.
12.22. PENSION BENEFIT PLANS. All Pension Benefit Plans maintained by
each Covered Person qualify under Section 401 of the Code and are in compliance
with the provisions of ERISA. To the best of Borrower's knowledge, except with
respect to events or occurrences which would not have a Material Adverse Effect:
12.22.1. PROHIBITED TRANSACTIONS. None of such Pension Benefit Plans
has participated in, engaged in or been a party to any non-exempt
prohibited transaction as defined in ERISA or the Code, and no officer,
director or employee of a Covered Person has committed a breach of any of
the responsibilities or obligations imposed upon fiduciaries by Title I of
ERISA.
12.22.2. CLAIMS. There are no claims, pending or threatened,
involving any such Pension Benefit Plan by a current or former employee (or
beneficiary thereof) of such Covered Person, nor is there any reasonable
basis to anticipate any claims involving any such Pension Benefit Plan
which would likely be successfully maintained against any Covered Person.
12.22.3. REPORTING AND DISCLOSURE REQUIREMENTS. There are no
violations of any reporting or disclosure requirements with respect to any
such Pension Benefit Plan and none of such Pension Benefit Plans has
violated any applicable Law, including but not limited to ERISA and the
Code.
12.22.4. ACCUMULATED FUNDING DEFICIENCY. No such Pension Benefit
Plan has (i) incurred an "accumulated funding deficiency" (within the
meaning of Section 412(a) of the Code), whether or not waived; (ii) been a
Pension Benefit Plan with respect to which a Reportable Event (to the
extent that the reporting of such events to the PBGC within thirty days of
the occurrence has not been waived) has occurred and is continuing; or
(iii) been a Pension Benefit Plan with respect to which there exist
conditions or events which have
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occurred that present a significant risk of termination of such Pension
Benefit Plan by the PBGC.
12.22.5. MULTIEMPLOYER PLAN. No Covered Person has received notice
that any Multiemployer Plan to which such Covered Person contributes is in
reorganization or has been terminated within the meaning of Title IV of
ERISA, and no Multiemployer Plan to which such Covered Person contributes
is reasonably expected to be in reorganization or to be terminated within
the meaning of Title IV of ERISA.
12.23. WELFARE BENEFIT PLANS. No Covered Person maintains a Welfare
Benefit Plan that has a liability which, if enforced or collected, would have a
Material Adverse Effect. Every Covered Person has complied in all material
respects with the applicable requirements of Section 4980B of the Code
pertaining to the Consolidated Omnibus Budget Reconciliation Act continuation
coverage.
12.24. RETIREE BENEFITS. No Covered Person has an obligation to provide
any Person with any medical, life insurance, or similar benefit following such
Person's retirement or termination of employment (or to such Person's
beneficiary subsequent to such Person's death).
12.25. TITLE TO PROPERTY. Every Covered Person has good and marketable
title to all real and personal property purported to be owned by it or reflected
in the Initial Financial Statements.
12.26. CHIEF PLACE OF BUSINESS. As of the date hereof, the chief executive
office and the principal places of business of Borrower, each Guarantor, and
each Material Subsidiary are located at the places listed and so identified on
Exhibit 12.26. As of the date hereof, the books and records of Borrower, each
Guarantor, and each Material Subsidiary and all of the chattel paper and all
records of Accounts are located at Borrower's, each Guarantor's, and each
Material Subsidiary's respective chief executive office listed and so identified
on Exhibit 12.26. There is no office or place of business at which Borrower,
any Guarantor, or any Material Subsidiary conducts business except those
identified as its chief executive office and its places of business as so
identified on Exhibit 12.26.
12.27. ACCOUNTS RECEIVABLE. As to all Accounts reflected in the Accounts
aging reports delivered to Agent and Lenders pursuant to Section 14.8: (i) they
arise from bona fide transactions; (ii) the amounts thereof as shown on the
books and records of Borrower and its Subsidiaries are actually and absolutely
owing to Borrower or its Subsidiaries, as the case may be, and are not in any
way contingent (except for Medicare and Medicaid Accounts, which Accounts may be
subject to normal Medicare and Medicaid audits); and (iii) they arose in the
ordinary course of business.
12.28. NEGATIVE PLEDGES. No Covered Person is a party to or bound by any
Contract which prohibits the creation or existence of any Lien upon or
assignment or conveyance of the Collateral other than Contracts expressly
permitted by Section 15.18.
12.29. SECURITY DOCUMENTS. The provisions of the Stock Pledge Agreement,
the Guarantor Stock Pledge Agreement, the CRC Stock Pledge Agreement, the
Horizon Holding Assignment, and the NIPSI Assignment are effective to create in
favor of Agent, for the benefit of the Lenders, a legal, valid and enforceable
security interest in all right, title and interest of Borrower, Guarantors or
other owners thereof in the Collateral described therein. With respect to all
Collateral in which a security interest may be perfected under the UCC by filing
a financing statement or by possession of the Collateral by the secured party,
appropriate financing statements have been delivered to Agent, or have been
filed in the offices of the appropriate jurisdictions, or delivery of possession
of such Collateral has been made to Agent, and all other necessary steps have
been taken to create a fully perfected first priority Lien on and security
interest in the Collateral in favor of Agent, for the benefit of Lenders,
superior in right to any Liens, existing or future, which any third party may
have against such Collateral, subject only to the Permitted Liens.
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12.30. MARGIN STOCK. No Covered Person is engaged or will engage,
principally or as one of its important activities, in the business of extending
credit for the purpose of "purchasing" or "carrying" "margin stock" (within the
meaning of Regulation U), and no part of the proceeds of any Revolving Advance
or LC will be used to purchase or carry any such margin stock or to extend
credit to others for the purpose of purchasing or carrying any such margin stock
or for any purpose which violates, or which would be inconsistent with, the
provisions of Regulation U or Regulation G.
12.31. SECURITIES MATTERS. No proceeds of any Revolving Advance or LC
will be used to acquire any security in any transaction which is subject to
Sections 13 and 14 of the Securities Exchange Act of 1934, as amended.
12.32. INVESTMENT COMPANY ACT, ETC. No Covered Person is an "investment
company" registered or required to be registered under the Investment Company
Act of 1940, as amended, or a company "controlled" (within the meaning of such
Investment Company Act) by such an "investment company". No Covered Person is
subject to any Law limiting or regulating its ability to incur Indebtedness for
money borrowed.
12.33. NO MATERIAL MISSTATEMENTS OR OMISSIONS. Neither the Loan Documents
nor the Financial Statements nor any statement, list, certificate or other
information, furnished or to be furnished by a Covered Person to Agent or any
Lender in connection with the Loan Documents or any of the transactions
contemplated thereby contains any untrue statement of a material fact, or omits
to state a material fact necessary to make the statements therein not
misleading. Borrower has disclosed to Lenders everything regarding its
business, operations, property, financial condition, or business prospects that
would have a Material Adverse Effect on any Covered Person.
12.34. FILINGS. All registration statements, reports, proxy statements
and other documents, if any, required to be filed by Borrower with the
Securities and Exchange Commission pursuant to the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended, have been filed,
and such filings are complete and accurate and contain no untrue statements of
material fact or omit to state any material facts required to be stated therein
or necessary in order to make the statements therein not misleading.
12.35. GENERAL LEDGER ENTRIES. Each credit entry in the general ledger
account maintained by Borrower pursuant to Section 14.7.1, and each debit entry
in the general ledger accounts maintained by Covered Persons (other than
Borrower) pursuant to Section 14.7.2, represents an Intercompany Loan made by
Borrower to such Covered Persons, funded entirely with proceeds of one or more
Revolving Advances. Each credit entry in the general ledger accounts maintained
by the Covered Persons (other than Borrower) pursuant to Section 14.7.2
represents a payment of principal made by such Covered Person on the
Intercompany Loans reflected in such accounts.
13. SURVIVAL OF REPRESENTATIONS AND EFFECT OF REVOLVING ADVANCES.
13.1. SURVIVAL. All representations and warranties in Section 12 shall
survive execution of the Loan Documents and the making of every Revolving
Advance and the issuance of every LC, and may be relied upon by Agent and
Lenders as being true and correct until all of the Loan Obligations are fully
and irrevocably paid.
13.2. EACH REVOLVING ADVANCE REQUEST AND REQUEST FOR LC A NEW
REPRESENTATION. Each Revolving Advance Request, and each request by Borrower
for an LC, shall constitute a certification that (i) no Default has occurred
that is continuing and has not been waived in writing by Agent and the Required
Lenders and no Event of Default has occurred that has not been waived in writing
by Agent and the Required Lenders, (ii) all representations and warranties in
Section 12 and in the other Loan Documents are true and correct as of the
Advance Date; and (iii) all required conditions to the making of the requested
Revolving Advance or the issuance of the requested LC have been met.
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14. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that, so long as the Aggregate Revolving
Commitment or Aggregate LC Commitment remains in effect or any LCs are
outstanding or any of the Loan Obligations are owing to Lenders by Borrower,
Borrower shall do, or cause to be done, the following:
14.1. USE OF PROCEEDS. Subject to the terms and conditions hereof, the
proceeds of the Revolving Advances shall be used solely for the following
purposes: (i) to refinance the outstanding indebtedness under the Prior
Agreement as of the Effective Date, (ii) to provide a bridge facility for the
acquisition of nursing home properties for long-term and subacute care and for
expansion of therapy and pharmacy operations and other related purposes, (iii)
to finance working capital and interim capital expenditures of Borrower and
Guarantors, (iv) to reimburse Lenders for LC Draws, and (v) other general
corporate purposes. The LC's shall be issued solely for general corporate
purposes which include, among others, support for workmen's compensation and
lease obligations of Borrower.
14.2. CORPORATE AND PARTNERSHIP EXISTENCE. Each Covered Person shall
maintain in good standing its corporate or partnership existence, as the case
may be, and its right to transact business in those states in which it is now or
hereafter doing business (except as otherwise permitted by Section 15.8), and
each Covered Person shall obtain and maintain all Material Licenses for such
Covered Person.
14.3. MAINTENANCE OF PROPERTY AND LEASES. Every Covered Person shall
maintain all buildings, equipment, machinery, fixtures and other property
necessary for the operation of its business in good repair, working order and
condition, ordinary wear and tear excepted (except that a Covered Person is not
required to maintain or keep any property which such Covered Person determines
is not in the best interests in the ordinary conduct of business to maintain or
keep), and will from time to time make all needful and proper repairs thereto
and replacements thereof; every Covered Person shall maintain all leases of real
or personal property in good standing, free of any defaults thereunder; and
every Covered Person shall obtain and maintain all licenses, permits and
registrations necessary to the conduct of its operations.
14.4. INSURANCE. Every Covered Person shall at all times keep insured or
cause to be kept insured, in insurance companies having a rating of at least "A"
by Best's Rating Service, all property owned by it of a character usually
insured by others carrying on businesses similar to that of the Covered Person
in such manner and to such extent as such properties are usually insured. Every
Covered Person shall at all times carry insurance, in insurance companies having
a rating of at least "A" by Best's Rating Service, against liability on account
of damage to persons or property (including product liability insurance and
insurance required under all applicable workmen's compensation laws) and
covering all other liabilities common to the Covered Person's business, in such
manner and to such extent as such coverage is usually carried by others
conducting businesses similar to that of the Covered Person. Notwithstanding
the foregoing, Borrower may continue through its self-insurance program to
provide insurance coverage for Borrower employee health claims and workmen's
compensation up to the maximum occurrence limit amount of $100,000 per
occurrence and $250,000 per occurrence, respectively, provided that losses in
excess of such amounts are covered by insurance companies having a rating of at
least "A" by Best's Rating Service.
14.5 PAYMENT OF TAXES. Every Covered Person shall promptly pay and
discharge or cause to be paid and discharged, as and when due, any and all
income taxes, federal or otherwise, lawfully assessed and imposed upon it, and
any and all lawful taxes, rates, levies, and assessments whatsoever upon its
properties and every part thereof, or upon the income or profits therefrom and
all claims for labor, materials or supplies which if unpaid might be or become a
Lien or charge upon any of its property; provided, however, that nothing herein
contained shall be construed as prohibiting a Covered Person from diligently
contesting in good faith by appropriate proceedings the validity of any such
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taxes, rates, levies, or assessments, provided the Covered Person has
established adequate reserves therefor in conformity with GAAP on the books of
the Covered Person.
14.6. COMPLIANCE WITH LAWS. Every Covered Person shall comply with all
Material Laws.
14.7. ACCOUNTING SYSTEM; GENERAL LEDGER FOR INTERCOMPANY LOANS. Every
Covered Person shall maintain a system of accounting established and
administered in accordance with GAAP. As part of such system, each Covered
Person shall maintain a general ledger account with respect to Intercompany
Loans made by Borrower from time to time, as follows:
14.7.1. Borrower's general ledger account shall reflect, as a credit,
each Intercompany Loan made by Borrower and funded with proceeds of
Revolving Advances (identifying the Person to whom the Intercompany Loan
was made and the date and amount of such Intercompany Loan) and, as a
debit, each payment of principal received by Borrower with respect to such
Intercompany Loan (identifying the Intercompany Loan the date and amount of
each payment of principal received with respect to the Intercompany Loan).
14.7.2. The general ledger account of each Covered Person other than
Borrower shall reflect, as a debit, each Intercompany Loan made by Borrower
to such Covered Person (identifying the date and amount of the Intercompany
Loan) and, as a credit, each payment of principal made by such Covered
Person on the Intercompany Loan (identifying the date and amount of such
payment).
14.8. FINANCIAL REPORTS. Borrower shall deliver to Agent and each Lender:
14.8.1. Within 90 days after the close of each fiscal year of
Borrower, year end consolidated financial statements of Borrower and its
Subsidiaries, containing an audit report without qualification by an
independent certified "Big 6" public accounting firm selected by Borrower
or other independent certified public accounting firm acceptable to the
Required Lenders, and accompanied by a report of the aging of all Accounts
of Borrower and each of its Subsidiaries, in such reasonable detail as
Agent or the Required Lenders may require, and a Compliance Certificate
substantially in the form attached hereto as Exhibit 14.8.2, pursuant to
which the Chief Financial Officer of Borrower certifies that (i) there
exists no Default which is continuing that has not been waived in writing
by Agent and the Required Lenders and no Event of Default exists that has
not been waived in writing by Agent and the Required Lenders, and (ii)
containing detailed calculations of the financial measurements referred to
in Section 15.14.
14.8.2. Within 45 days after the end of each fiscal quarter of
Borrower (other than the last quarter of each fiscal year of Borrower),
unaudited consolidated financial statements of Borrower and its
Subsidiaries for the quarters not covered by the latest year end financial
statements, in each case accompanied by a Compliance Certificate
substantially in the form attached hereto as Exhibit 14.8.2, pursuant to
which the Chief Financial Officer of Borrower certifies (i) that such
financial statements are complete and correct in all material respects (but
without footnotes, and subject to normal year-end audit adjustments) and
have been prepared in accordance with GAAP applied consistently throughout
the period and with prior periods (except as disclosed therein), (ii) there
exists no Default which is continuing that has not been waived in writing
by Agent and the Required Lenders and no Event of Default exists that has
not been waived in writing by Agent and the Required Lenders, and (iii)
containing detailed calculations of the financial measurements referred to
in Section 15.14. Such financial statements shall contain, at a minimum,
balance sheets, statements of earnings, and statements of cash flows as of
the end of the applicable period.
14.8.3. Intentionally Omitted.
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14.8.4. Borrower shall cause each of its Subsidiaries to deliver to
Agent and each Lender, within 90 days after the end of each fiscal year of
such Subsidiary, annual unaudited financial statements of such Subsidiary,
and within 45 days after the end of each fiscal quarter of such Subsidiary,
unaudited financial statements of such Subsidiary, in each case accompanied
by a certificate of the Chief Financial Officer or Vice President of
Finance of such Subsidiary that such financial statements are complete and
correct in all material respects (but without footnotes, and subject to
normal year-end audit adjustments) and have been prepared in accordance
with GAAP applied consistently throughout the periods covered thereby and
with prior periods (except as disclosed therein). Such financial
statements shall contain, at a minimum, balance sheets, statements of
earnings, and statements of cash flows as of the end of the applicable
period.
14.8.5. Within 45 days after the end of the first three fiscal
quarters of each fiscal year of Borrower, a report of the aging of all
Accounts of Borrower and each of its Subsidiaries, in such reasonable
detail as Agent or the Required Lenders may require.
14.8.6. Within 90 days after the end of each fiscal year of Borrower,
evidence satisfactory to the Required Lenders that Borrower has all
Material Licenses necessary for the continued operation of its business,
such evidence to include, at the option of the Required Lenders, copies of
all licenses and permits, and any renewals thereof, which Borrower is
required to maintain under the laws or regulations of any state where
Borrower operates nursing home, therapy or pharmaceutical facilities, or
otherwise has one or more places of business.
14.8.7. A summary in form and detail satisfactory to Lenders of the
transactions, for the fiscal quarter most recently ended, recorded in the
general ledger account maintained by the Covered Persons pursuant to
Section 14.7 hereof.
14.8.8. Within 45 days after the end of each calendar quarter of
Borrower, a Supplemental Financial Reporting Certificate substantially in
the form attached hereto as Exhibit 14.8.8 to be executed by the Chief
Financial Officer of Borrower.
14.9. OTHER INFORMATION. Upon the written request of Agent, Borrower
shall within a reasonable time following such request deliver to Agent such
other information about the business, operations, revenues, financial condition,
property, or business prospects of Borrower and its Subsidiaries as Agent may,
from time to time, reasonably request.
14.10. PENSION BENEFIT PLANS. Borrower or the relevant Covered Person
(1) shall notify Agent promptly of the establishment of any Pension Benefit Plan
by Borrower or such Covered Person which is subject to the requirements of
ERISA; (2) shall at all times make prompt payments or contributions to meet the
minimum funding standards set forth in ERISA and the Code with respect to any
Pension Benefit Plan maintained by Borrower or such Covered Person to which such
standards are applicable; (3) shall promptly after the filing thereof furnish to
Agent a copy of any report required to be filed pursuant to Section 103 of ERISA
in connection with each such Pension Benefit Plan for each Pension Benefit Plan
year; (4) promptly after the receipt thereof, shall furnish to Agent a copy of
any reports and notices which it receives from PBGC (that are not general
mailings to all Pension Benefit Plan sponsors); (5) shall notify Agent within
thirty days of any Reportable Event as that term is defined in Section 4043 of
ERISA or any circumstances arising in connection with any Pension Benefit Plan
maintained by Borrower or such Covered Person which might constitute grounds for
the termination thereof by the PBGC or for the appointment by the appropriate
United States District Court of a trustee to administer such Pension Benefit
Plan; and promptly furnish such additional information concerning any such
Pension Benefit Plan as Agent may from time to time request.
24
<PAGE>
14.11. NOTICE OF MATERIAL EVENTS. Borrower shall, promptly upon any
Responsible Officer of Borrower obtaining knowledge or notice thereof, give
notice to Agent and each Lender of any (i) breach of any of the covenants in
Sections 14 or 15; (ii) Default or Event of Default; (iii) the commencement of
any Material Proceeding; and (iv) any loss of or damage to any assets of a
Covered Person that likely will result in a Material Adverse Effect. In
addition,
14.11.1. Borrower shall furnish to Agent and each Lender from time to
time all information which Agent or Lenders reasonably request with respect
to the status of any Material Proceeding.
14.11.2. Borrower shall within five days inform Agent and each Lender
of Borrower's receipt of, and deliver to Agent and each Lender a copy of,
any (a) notice that any violation of any federal, state or local
environmental, health or safety law or regulation, may have been committed
or is about to be committed by any Covered Person, (b) notice that any
administrative or judicial complaint or order has been filed or is about to
be filed against any Covered Person alleging violations of any such
federal, state or local environmental law or regulation or requiring such
Covered Person to take any action in connection with the release of any
Hazardous Waste into the environment, (c) notice from a federal, state, or
local governmental agency or private party alleging that a Covered Person
may be liable or responsible for costs associated with a response to or
cleanup of a release of Hazardous Waste into the environment or any damages
caused thereby, (d) notice that a Covered Person is subject to federal,
state or local investigation regarding the release of any Hazardous Waste
into the environment, (e) notice that any properties or assets of a Covered
Person are subject to a Lien in favor of any governmental entity for any
liability under federal, state or local environmental laws or regulations
or damages arising from or costs incurred by such governmental entity in
response to a release of Hazardous Waste into the environment, or (f)
notice of the occurrence of any default or event of default, or any event
which with the passage of time, giving of notice or otherwise will
constitute a default or event of default, under any of the documents and
instruments evidencing the Subordinated Debt.
14.11.3. Borrower shall within thirty days after they occur deliver
to Agent and each Lender notice of the following events: (i) the failure
of any Covered Person to make any required installment or any other
required payment to any Pension Benefit Plan in sufficient amount to comply
with ERISA and the Code on or before the due date for such installment or
payment; (ii) the occurrence of any Reportable Event, "prohibited
transaction" or "accumulated funding deficiency" (as those terms are
defined in ERISA) with respect to any Pension Benefit Plan maintained by a
Covered Person; (iii) receipt by a Covered Person of any notice from a
Multiemployer Plan regarding the imposition of withdrawal liability; and
(iv) receipt by a Covered Person of any notice of the institution, or a
Covered Person's expectancy of the institution, of any proceeding or
receipt by such Covered Person of any notice of the taking, or such Covered
Person's expectancy of the taking, of any other action which may result in
the termination of any Pension Benefit Plan maintained by such Covered
Person, or a Covered Person's withdrawal or partial withdrawal from any
Pension Benefit Plan, and a Covered Person's filing or receipt of any such
notice and filing or receipt of all subsequent reports or notices under
ERISA with or from the Internal Revenue Service, the PBGC, or the DOL
relating to the same; and, in addition to such notice, deliver to Agent and
each Lender a certificate of the President or Chief Financial Officer of
Borrower, setting forth details as to such events and the action that the
affected Covered Person proposes to take with respect thereto.
14.11.4. Borrower shall deliver (i) notice to Agent of any change in
any Covered Person's chief executive office, name, state of incorporation,
form of organization, trade names or styles under which such Covered Person
will create Accounts, or to which instruments in payment of Accounts may be
made payable, at least 30 days prior to such change and (ii) any and all
documents, agreements and/or instruments deemed by Agent to be necessary to
25
<PAGE>
preserve all obligations of such Covered Person under the Loan Documents
and to preserve the security interests in such Covered Person's Accounts,
at least 10 days prior to the effectiveness of such change.
14.11.5. Borrower shall deliver prompt notice to Agent of default by
any party (including the default of any Covered Person) under any of the
Banker's Trust Documents, the REMIC Loan Documents, and/or the peopleCare
Acquisition Documents.
14.12. AUDITS BY AGENT. Agent or Persons authorized by and acting on
behalf of Agent may audit the books and records of each Covered Person from time
to time upon reasonable notice to Borrower; provided, however, that such audits
shall not be conducted more often than annually if a Default has not occurred
which is continuing or an Event of Default exists which has not been expressly
waived in writing by Agent and the Required Lenders. Every Covered Person shall
cooperate with Agent and such Persons in the conduct of such audits. Borrower
shall reimburse Agent for all costs and expenses incurred by it in conducting
each audit; provided, however, that the maximum amount that Borrower will be
obligated to reimburse to Agent with respect to such audits shall not exceed
$5,000 per audit if no Default has occurred which is continuing and no Event of
Default exists which has not been expressly waived in writing by Agent and the
Required Lenders at the time that such audit is conducted.
14.13. ACCESS TO BORROWER'S OFFICERS AND AUDITORS. Borrower shall cause
each Covered Person to permit Persons authorized by Agent to discuss the
affairs, finances and accounts of such Covered Person with its officers and
independent auditors as often as Agent may reasonably request, and Borrower
shall cause such Covered Person to direct such officers and independent auditors
to cooperate with Agent and make full disclosure to Agent of those matters that
they may deem relevant to the continuing ability of Borrower timely to pay and
perform the Loan Obligations.
14.14. BORROWING OFFICER. Borrower shall keep on file with Agent at all
times an appropriate instrument naming each Borrowing Officer.
14.15. SECURITY INTERESTS. Cause Agent, for the benefit of the Lenders in
accordance with their ratable shares of the Aggregate Revolving Commitment, to
hold at all times a perfected, first priority security interest under the
Security Documents in at least 80% of the aggregate Dollar amount of the
Eligible Accounts of Borrower, the Guarantors, and all Material Subsidiaries
from time to time (the "80% Threshold"). "Eligible Accounts" shall consist only
of (i) Accounts of Borrower, any Guarantor, or any Material Subsidiary which
have not been pledged, assigned, or transferred to any Person, other than Agent
for the ratable benefit of the Lenders, and are not subject to or encumbered by
any Lien whatsoever, other than the Liens granted to Agent for the ratable
benefit of the Lenders pursuant to the terms of the Security Documents, and (ii)
Accounts of Borrower, any Guarantor, or any Material Subsidiary which are
subject to the security interest of any Person, other than Agent for the ratable
benefit of the Lenders, which have been subordinated in writing to the interest
of Agent for the ratable benefit of the Lenders on terms acceptable to Agent and
Lenders and Lenders' counsels.
14.16. LEGAL OPINIONS. Deliver to Agent no more than 30 days after the
Effective Date, legal opinion(s) acceptable to Agent and the other Lenders
opining that Borrower has all licenses, permits and other governmental
authorizations required by applicable law to operate its business or businesses
in any States in which Borrower was not conducting its business or operating as
of May 27, 1994.
15. NEGATIVE COVENANTS.
Borrower covenants and agrees that, so long as the Aggregate Revolving
Commitment or the Aggregate LC Commitment remains in effect or any LCs are
outstanding or any of the Loan Obligations are owing to Lenders by Borrower,
Borrower shall not, and shall not permit any other Covered Person
26
<PAGE>
to, directly or indirectly, without the prior written permission of the Required
Lenders, which permission will not be unreasonably withheld:
15.1. INVESTMENTS. Make any Investments in any other Person except the
following ("Permitted Investments"):
15.1.1. Investments in (i) interest-bearing United States government
obligations; (ii) certificates of deposit issued by or time deposits with
any commercial bank organized and existing under the laws of the United
States or any state thereof having a Thompson Bankwatch Rating of B/C or
better or, if unrated, maintaining a minimum primary capital to asset ratio
of 8% and minimum primary capital of not less than $25,000,000.00; (iii)
prime commercial paper rated A1 by Standard and Poor's Corporation or Prime
P1 by Moody's Investor Service, Inc.; or (iv) agreements involving the sale
and guarantied repurchase of United States government securities.
15.1.2. Accounts arising in the ordinary course of business and
payable in accordance with Borrower's or such other Covered Person's
customary trade terms.
15.1.3. Promissory notes or notes receivable received in settlement
of such Accounts.
15.1.4. Investments by Borrower made to acquire Subsidiaries in the
same line of business as Borrower and Investments in any of its existing
Subsidiaries, provided that at the time of such Investment no Default has
occurred which is continuing or Event of Default exists which has not been
expressly waived in writing by the Required Lenders, and further provided
that:
15.1.4.1. Such Investment will not cause the financial
measurements set forth in Section 15.14. to be breached, or cause any
Covered Person to incur any Indebtedness or Indirect Obligation other
than Permitted Indebtedness and Permitted Indirect Obligations, or
cause any other Default or Event of Default to occur as a consequence
of such Investment;
15.1.4.2. The amount of such Investment does not exceed the
amount equal to 10% of Borrower's net worth as of last day of the most
recent quarter for which Agent has received Financial Statements from
Borrower; and
15.1.4.3. Borrower shall have prepared and furnished to Agent
prior to such Investment pro forma consolidated financial statements
of Borrower and its Subsidiaries forecasting the financial condition
of Borrower and its Subsidiaries after the proposed Investment, such
financial statements to include a balance sheet as of the proposed
date of the Investment, an income statement and statement of cash flow
for the quarter ending on the proposed date of the Investment, and
such other reports and disclosures, covering such forecast periods, as
Agent (or any Lender, as requested through Agent) may in its sole
discretion require; and such pro forma financial statements shall
demonstrate to the satisfaction of the Required Lenders in their sole
discretion that none of the financial covenants in Section 15.14 will
be violated as a consequence of the proposed Investment.
15.1.5. Investments existing on the Effective Date as disclosed in
the Disclosure Schedule.
15.1.6. [intentionally left blank].
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<PAGE>
15.1.7. note receivable in the original principal amount of
$20,000,000, owed by M & P Partners Limited Partnership in connection with
its purchase of the "unwanted assets" of Greenery, as contemplated by
Section 5.2(d) of the Merger Agreement.
15.2. INDEBTEDNESS. Create, incur, assume or allow to exist any
Indebtedness of any kind or description, except the following (the "Permitted
Indebtedness"):
15.2.1. Indebtedness to trade creditors in the normal course of
business, to the extent that it is not overdue past the original due date
by more than 90 days.
15.2.2. Indebtedness to Lenders under this Agreement.
15.2.3. Indebtedness secured by Permitted Liens, to the extent not
otherwise described in this Section 15.2.
15.2.4. Indebtedness (the "Permitted Senior Indebtedness"), existing
on the Effective Date or hereafter incurred by Borrower for the purpose of
either purchasing real property or refinancing any such Indebtedness, in
each case secured solely by a first lien purchase money mortgage on the
purchased real property; PROVIDED, HOWEVER, that the aggregate amount of
such Indebtedness shall not at any time exceed the amount equal to 15% of
Borrower's net worth as of last day of the most recent quarter for which
Agent has received Financial Statements from Borrower.
15.2.5. Obligations under Operating Leases ("Permitted Operating
Leases") of Borrower which provide for payments by Borrower of no more than
(i) $60,000,000 in the aggregate during the period commencing on the
Effective Date and ending on May 31, 1995, (ii) $70,000,000 in the
aggregate during the period commencing on June 1, 1995 and ending on May
31, 1996, (iii) $80,000,000 in the aggregate during the period commencing
on June 1, 1996 and ending on May 31, 1997, and (iv) an unlimited amount at
any time after May 31, 1997, provided that such Operating Leases or
Obligations are not otherwise prohibited by the other provisions of this
Agreement.
15.2.6. Indebtedness under Capital Leases and Indebtedness secured by
purchase money security interests with respect to such Capital Leases to
the extent that the aggregate outstanding amount of all such Indebtedness
does not exceed $51,000,000.
15.2.7. Intentionally omitted.
15.2.8. Indebtedness not otherwise described in this Section 15.2, to
the extent it exists on the Effective Date and is disclosed to Lenders in
the Disclosure Schedule (but not any renewals, extensions or modifications
thereof).
15.2.9. Indebtedness consisting of the reimbursement obligations of
Borrower under the Existing LCs.
15.2.10. Indebtedness on Intercompany Loans expressly permitted by
Section 15.7.
15.2.11. Indebtedness approved by the Required Lenders in writing in
advance.
15.3. CAPITAL LEASES. Become a party, as lessee, to any Capital Leases
except to the extent that the aggregate outstanding amount of Indebtedness under
such Capital Leases constitutes Permitted Indebtedness under Section 15.2.6
("Permitted Capital Leases").
28
<PAGE>
15.4. INDIRECT OBLIGATIONS. Create, incur, assume or allow to exist any
Indirect Obligations other than (i) Indirect Obligations existing on the
Effective Date and disclosed to Lenders in the Disclosure Schedule, (ii)
subsequent Indirect Obligations which are disclosed in the Disclosure Schedule
as Indirect Obligations that Borrower anticipates incurring in the future, and
(iii) Indirect Obligations in the form of guaranties by Borrower for
Indebtedness of its Subsidiaries, provided that such other Indirect Obligations,
when combined with the existing Indirect Obligations described in clause (i)
hereof, do not exceed $2,000,000 in the aggregate (the "Permitted Indirect
Obligations").
15.5. LIENS. Create, incur, assume or allow to exist any Lien upon all or
any part of its property or any Covered Person's property, whether real or
personal, now owned or hereafter acquired, except the following (the "Permitted
Liens"):
15.5.1. Liens for taxes, assessments or governmental charges not
delinquent or being diligently contested in good faith and by appropriate
proceedings and for which adequate reserves in accordance with GAAP are
maintained on the books of the Covered Person against whom such taxes,
assessments or governmental charges have been assessed.
15.5.2. Liens arising out of deposits in connection with workmen's
compensation, unemployment insurance, old age pensions, or other social
security or retirement benefits legislation.
15.5.3. Deposits or pledges to secure bids, tenders, contracts (other
than contracts for the payment of money), leases (including Permitted
Operating Leases and Permitted Capital Leases), statutory obligations,
surety and appeal bonds, and other obligations of like nature arising in
the ordinary course of business.
15.5.4. Liens imposed by Law, such as mechanics', workmen's,
materialmen's, landlords', carriers', or other like Liens arising in the
ordinary course of business which secure payment of obligations which are
not past due or which are being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with
GAAP are maintained on the books of the Covered Person against whose
property such Liens have been imposed.
15.5.5. Liens which are purchase money mortgages on the real property
that secures the Permitted Senior Indebtedness described in Section 15.2.4.
15.5.6. Liens which are purchase money security interests that secure
the Permitted Indebtedness described in Section 15.2.6.
15.5.7. Liens on Accounts of any Covered Person existing on the
Effective Date; provided that any such Lien which causes Borrower to not be
in compliance with Section 14.15 above shall not be a Permitted Lien.
15.6. DISPOSAL OF PROPERTY. Sell, lease, pledge, hypothecate or otherwise
dispose of more than $10,000,000 in aggregate book value (or $5,000,000 in book
value for any single asset) of the assets of Covered Persons, except sales of
inventory in the normal course of business, without the prior written consent of
the Required Lenders, which consent will not be unreasonably withheld if the net
proceeds thereof are paid over to Agent to be applied to discharge the Loan
Obligations.
15.7. TRANSFERS TO SHAREHOLDERS. Make any payment with respect to its
stock, including any cash dividend or acquisition or redemption of any
outstanding stock or retirement or prepayment of any securities before their
regularly scheduled maturity dates, or loans or advances to shareholders or
Affiliates of any Covered Person; provided, however, that Borrower may make the
following dividends, loans and advances from time to time and at any time
provided that (i) a Default has not occurred
29
<PAGE>
which is continuing and a Event of Default does not exist which has not been
waived in writing by the Required Lenders, and (ii) Borrower is in compliance
with the covenants contained in Section 15.14 at such time and the making of
such dividends, loans or advances will not result in a breach of any such
covenants: (a) dividends to shareholders during any fiscal year of Borrower
which do not exceed 25% of Borrower's net income for the immediately preceding
fiscal year of Borrower, and (b) Intercompany Loans to Persons who constitute
Guarantors, the proceeds of which Intercompany Loans are funded entirely by
proceeds of Revolving Advances and duly noted in the general ledger accounts
described in Section 14.7.
15.8. CHANGE OF CONTROL. Merge or consolidate with or into another Person
except where Borrower is the surviving entity, or permit any Person or Group
other than Borrower to become the Beneficial Owner, directly or indirectly, of
securities representing thirty percent (30%) or more of the voting power of any
Covered Person's then outstanding securities having the power to vote, or
acquiring the power to elect a majority of the Board of Directors of any Covered
Person.
15.9. PROHIBITION OF FUNDAMENTAL CHANGES. Engage in any business other
than the acquisition, ownership and operation of nursing home properties for
long term and subacute care, related therapy and pharmacy operations, laboratory
services and other related healthcare operations.
15.10. ISSUANCE OF SECURITIES. Issue any capital stock, create any new
class of stock, or issue any other equity securities or non-equity securities
that are convertible into equity securities; provided, however, that Borrower
shall have the right to issue capital stock and create one or more new classes
of stock from time to time if such issuance or creation will not result in or
cause Borrower to incur any Obligations.
15.11. TRANSACTIONS WITH AFFILIATES. Enter into or be a party to any
transaction or arrangement, including without limitation, the purchase, sale or
exchange of property of any kind or the rendering of any service, with any
Affiliate, other than in the ordinary course of business and pursuant to the
reasonable requirements of the business of a Covered Person and on fair and
reasonable terms substantially as favorable to such Covered Person as those
which it could obtain in a comparable arm's-length transaction with a
non-Affiliate.
15.12. DEBT PAYMENTS AND MATERIAL AGREEMENTS. Default upon or fail to pay
any Indebtedness for money borrowed as the same matures, or breach, violate or
be in default under any Material Agreement and fail to cure such breach,
violation or default within any applicable cure period.
15.13. CONFLICTING AGREEMENTS. Enter into any agreement, any term or
condition of which would, if complied with by a Covered Person, result in a
Default or Event of Default either immediately or upon the elapsing of time.
15.14. FINANCIAL MEASUREMENTS.
15.14.1. MINIMUM NET WORTH. Allow the net worth of Borrower and its
Subsidiaries on a consolidated basis at any time to be less than the sum of
(i) $380,000,000, (ii) 75% of the net income of Borrower and its
Subsidiaries on a consolidated basis subsequent to December 31, 1994,
without deduction for losses, (iii) 100% of the net proceeds to Borrower
and its Subsidiaries from any issuance of equity securities and (iv) the
aggregate amount of all obligations under any convertible debt which is
converted to equity.
15.14.2. MINIMUM FIXED CHARGE COVERAGE RATIO. Allow the ratio of (i)
EBIT plus the aggregate annual Operating Lease expense of Borrower and its
Subsidiaries to (ii) aggregate interest expense plus aggregate annual
Operating Lease expense of Borrower and its Subsidiaries, at any time
during any of the following periods, to be less than the ratio set forth
below adjacent to such period:
30
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
PERIOD MINIMUM FIXED CHARGE COVERAGE RATIO
- ------------------------------------------------------------------------------
<S> <C>
From Effective Date through 5/31/95 1.25:1
- ------------------------------------------------------------------------------
6/1/95 through 5/31/96 1.50:1
- ------------------------------------------------------------------------------
6/1/96 and thereafter 1.75:1
- ------------------------------------------------------------------------------
</TABLE>
15.14.3. MAXIMUM LEVERAGE RATIO. Allow the ratio (calculated as a
percentage) of
(i) Total Funded Debt, to
(ii) the sum of (a) Total Funded Debt and (b) the stockholders' equity
of Borrower and its Subsidiaries,
at any time during any of the following periods, to be greater than the
ratio (reflected as percentage) set forth below adjacent to such period:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
PERIOD MAXIMUM LEVERAGE RATIO
- ------------------------------------------------------------------------
<S> <C>
From Effective Date through 5/31/95 70%
- ------------------------------------------------------------------------
6/1/95 through 5/31/96 68%
- ------------------------------------------------------------------------
6/1/96 through 5/31/97 66%
- ------------------------------------------------------------------------
6/1/97 and thereafter 65%
- ------------------------------------------------------------------------
</TABLE>
15.14.4. [INTENTIONALLY LEFT BLANK].
15.14.5. RATIO OF SENIOR FUNDED DEBT TO EBITDA. Allow the ratio of
Senior Funded Debt to EBITDA to exceed 3.0 to 1.00 at any time.
As used in this Section 15.14,
"EBIT", for any period, shall mean earnings of Borrower and its Subsidiaries
during such period from continuing operations, minus gains on sales of assets
not in the ordinary course of business (to the extent such gains are included in
earnings from continuing operations) exclusive of extraordinary items as
determined under GAAP, but without deducting income and franchise taxes or
interest expense.
"EBITDA", for any period, shall mean earnings of Borrower and its Subsidiaries
during such period from continuing operations, minus gains on sales of assets
not in the ordinary course of business (to the extent such gains are included in
earnings from continuing operations) exclusive of extraordinary items as
determined under GAAP, but without deducting income and franchise taxes,
interest expense, depreciation and amortization.
"Senior Funded Debt", as of the end of any period, shall mean the sum of the
aggregate principal of all funded Indebtedness of Borrower and its Subsidiaries
(other than Subordinated Debt), the aggregate undrawn amount of all outstanding
LC's, and the aggregate amount of all capitalized lease obligations as of the
end of such period.
"Total Funded Debt", as of the end of any period, shall mean the sum of (i) the
aggregate principal of all funded Indebtedness of Borrower and its Subsidiaries
(including but not limited to Subordinated Debt
31
<PAGE>
and Senior Funded Debt, including the aggregate undrawn amount of all
outstanding LC's at the end of such period) and (ii) the aggregate facility
Operating Lease expense for the four quarter period then ended multiplied by 8.
The financial measurements set forth in this Section 15.14 shall each be
calculated at the end of each fiscal quarter of Borrower based upon the four
quarter period then ended, all on the basis of the financial condition and
performance of Borrower and its Subsidiaries on a consolidated basis.
15.15. FORGIVENESS OF INTERCOMPANY LOANS. Forgive any Indebtedness on an
Intercompany Loan reflected in the general ledger accounts maintained pursuant
to Section 14.7.
15.16. INDENTURE REDEMPTION RIGHTS. Exercise any option to redeem all or
any of the securities which evidence the Subordinated Debt; provided, however,
that nothing contained herein shall be deemed to prohibit Borrower from
redeeming any such securities for the sole purpose of converting them to common
stock as provided in the Greenery Indentures.
15.17. MODIFICATION OF GREENERY INDENTURES. Amend, modify or waive, or
permit the amendment, modification or waiver of any of the terms or provisions
contained in Article 13 of the Greenery Indentures or any other provisions in
the Greenery Indentures relating to the subordination of payment of the
Subordinated Debt to the payment of the Loan Obligations.
15.18. NEGATIVE PLEDGE AGREEMENTS WITH OTHERS. Enter into or be bound by
any agreement with any Person (other than the Loan Documents) which prohibits or
restricts any Covered Person from selling, leasing, pledging, hypothecating or
otherwise disposing of any assets of such Covered Person; provided, however,
that nothing contained herein shall be deemed to prohibit Borrower from entering
into an agreement with the holder of Permitted Senior Indebtedness secured by
collateral which is a Permitted Lien under Section 15.5.5, to the extent such
agreement limits or restricts Borrower's right to sell, lease, pledge,
hypothecate or otherwise dispose of such collateral.
15.19. MODIFICATION OF BANKER'S TRUST DOCUMENTS, REMIC LOAN DOCUMENTS, OR
PEOPLECARE ACQUISITION DOCUMENTS. Amend, modify or waive, or permit the
amendment, modification or waiver of any of the terms or provisions contained in
the Banker's Trust Documents, the REMIC Loan Documents, or the peopleCARE
Acquisition Documents.
15.20. ACQUISITIONS OF PROPERTY. Acquire all or substantially all of the
assets of any Person except for assets to be used by Borrower or a Subsidiary in
the same line of business as Borrower, provided that (i) the total purchase
price and other costs in acquiring such assets do not exceed the amount equal to
10% of Borrower's net worth at the time of the acquisition (as calculated
immediately prior to such acquisition) and (ii) no Default or Event of Default
exists at the time of such acquisition or will occur as a consequence of such
acquisition.
16. DEFAULT.
16.1. EVENTS OF DEFAULT. Any one or more of the following shall
constitute an event of default (an "Event of Default") under this Agreement:
16.1.1. PAYMENT. Failure to pay any principal or interest when due
and payable under the Notes, whether at maturity or otherwise, or any fee
or other amount payable hereunder when the same becomes due, if such
failure continues more than three (3) days after Agent has given Borrower
written notice that such amount is past due; or failure to pay any other
Indebtedness of a Covered Person in excess of $10,000,000 in the aggregate
which continues unwaived beyond any applicable grace period specified in
the agreement or instrument evidencing such Indebtedness.
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<PAGE>
16.1.2. REPRESENTATIONS OR WARRANTIES. Any representation or
warranty made or deemed to be made by a Covered Person in this Agreement,
or any statement or representation made or deemed to be made in any
certificate, report, opinion or other document delivered pursuant to this
Agreement, is discovered to have been false in any material respect when
made.
16.1.3. FINANCIAL MEASUREMENTS; CERTAIN COVENANTS AND AGREEMENTS.
Breach by Borrower of any of the terms or provisions of Section 15.14; or
breach by Borrower or any other Covered Person, as applicable, of any of
the terms or provisions of Sections 14.13, 15.1, 15.2, 15.3, 15.4, 15.6,
15.18, 15.19, or 15.20.
16.1.4. CERTAIN COVENANTS OR AGREEMENTS. Breach by Borrower or any
other Covered Person, as applicable, of any of the terms or provisions of
Sections 14.9 or 15.5 which is not remedied or waived within ten (10) days
after the occurrence of such breach.
16.1.5. OTHER COVENANTS OR AGREEMENTS. Breach by a Covered Person
(other than a breach which constitutes an Event of Default under Sections
16.1.1, 16.1.2, 16.1.3, or 16.1.4) of any terms or provisions of any of the
Loan Documents which is not remedied or waived within thirty (30) days
after the occurrence of such breach.
16.1.6. ACCELERATION OF OTHER INDEBTEDNESS. Any Material Obligation
of a Covered Person (other than the Loan Obligations) for the payment of
borrowed money becomes or is declared to be due and payable or required to
be prepaid (other than by a regularly scheduled prepayment) prior to the
expressed maturity thereof.
16.1.7. DEFAULT UNDER OTHER AGREEMENTS. The occurrence of any
default or event of default under the Greenery Indentures or any of the
notes, mortgages or other documents executed in connection with or as
security for the Subordinated Debt or Permitted Senior Debt, or under any
other agreement to which a Covered Person is a party (other than the Loan
Documents), which default or breach continues unwaived beyond any
applicable grace period provided therein and likely would have a Material
Adverse Effect.
16.1.8. BANKRUPTCY; INSOLVENCY; ETC. A Covered Person (i) fails to
pay, or admits in writing its inability to pay, its debts as they become
due, or otherwise becomes insolvent (however evidenced); (ii) makes an
assignment for the benefit of creditors; (iii) files a petition in
bankruptcy, is adjudicated insolvent or bankrupt, petitions or applies to
any tribunal for any receiver or any trustee of a Covered Person or any
substantial part of its property; (iv) commences any proceeding relating to
a Covered Person under any reorganization, arrangement, readjustment of
debt, dissolution or liquidation law or statute of any jurisdiction,
whether now or hereafter in effect; (v) has commenced against it any such
proceeding which remains undismissed for a period of sixty (60) days, or by
any act indicates its consent to, approval of, or acquiescence in any such
proceeding or the appointment of any receiver of or any trustee for it or
of any substantial part of its property, or allows any such receivership or
trusteeship to continue undischarged for a period of sixty (60) days; or
(vi) takes any corporate action to authorize any of the foregoing.
16.1.9. JUDGMENTS; ATTACHMENT; ETC. Any one or more judgments or
orders against Covered Persons or any attachment or other levy against the
property of Covered Persons with respect to a claim or claims, involving in
the aggregate liabilities (not paid or fully covered by insurance, less the
amount of reasonable deductibles in effect on the Effective Date) in excess
of Ten Million Dollars ($10,000,000), remains unpaid, unstayed on appeal,
undischarged, unbonded, or undismissed for a period of thirty (30) days.
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16.1.10. PENSION BENEFIT PLAN TERMINATION, ETC. Any Pension Benefit
Plan termination by the PBGC or the appointment by the appropriate United
States District Court of a trustee to administer any Pension Benefit Plan
or to liquidate any Pension Benefit Plan; or any event which constitutes
grounds either for the termination of any Pension Benefit Plan by PBGC or
for the appointment by the appropriate United States District Court of a
trustee to administer or liquidate any Pension Benefit Plan shall have
occurred and be continuing for thirty (30) days after a Covered Person has
notice of any such event; or any voluntary termination of any Pension
Benefit Plan which is a defined benefit pension plan as defined in Section
3(35) of ERISA while such defined benefit pension plan has an accumulated
funding deficiency, unless Agent has been notified of such intent to
voluntarily terminate such plan and has given its consent and agreed that
such event shall not constitute a Default.
16.1.11. SECURITY DOCUMENTS. For any reason, any Security Document
ceases to be in full force and effect or any Lien on any of the Collateral
purported to be created by any Security Document ceases to be or is not a
valid and perfected priority Lien to the extent contemplated hereby or
thereby; or any action shall be taken to discontinue or assert the
invalidity or unenforceability of the Guaranty or any Guarantor fails to
comply with any terms or provisions of the Guaranty, or any Guarantor
denies that it has any further liability under the Guaranty or gives notice
to Agent or Lenders to such effect.
16.1.12. LIQUIDATION OR DISSOLUTION. Any Covered Person is
liquidated or dissolved (except in connection with a merger or
consolidation otherwise permitted by Section 15.8) or suspends or
terminates the operation of its business.
16.1.13. [INTENTIONALLY LEFT BLANK].
16.1.14. MATERIAL ADVERSE EVENT. The occurrence of any event which
would likely have a Material Adverse Effect.
16.1.15. BANKER'S TRUST DOCUMENTS. Default of any Covered Person
under the Banker's Trust Documents.
16.1.16. REMIC LOAN DOCUMENTS. Default of any Covered Person under
the REMIC Loan Documents.
16.1.17. PEOPLECARE ACQUISITION DOCUMENTS. Default of any Covered
Person under the peopleCARE Acquisition Documents.
16.2. CROSS-DEFAULT. Any Event of Default under this Agreement will
constitute an event of default under any other agreement with any of the Lenders
and under any evidence of Indebtedness held by any of the Lenders, whether or
not such is an event of default specified therein.
16.3. RIGHTS AND REMEDIES IN THE EVENT OF DEFAULT. Upon an Event of
Default described in Section 16.1.8, all of the outstanding Loan Obligations
shall automatically become immediately due and payable and the Aggregate
Revolving Commitment, the Aggregate LC Commitment, every Revolving Commitment
and every LC Commitment shall automatically be deemed canceled. Upon any other
Event of Default, and at any time thereafter, the Agent shall upon the direction
of the Required Lenders, on behalf of all the Lenders, declare all of the
outstanding Loan Obligations immediately due and payable and cancel the
Aggregate Revolving Commitment, the Aggregate LC Commitment, every Revolving
Commitment and LC Commitment without demand, presentment, notice of dishonor,
notice of acceleration, notice of intent to accelerate, notice of intent to
demand, protest or other notice or demand of any kind, the same being hereby
expressly waived by Borrower, and the Loan Obligations shall automatically
become immediately due and payable; and the Agent may at its option take the
foregoing actions without the direction of the Required Lenders in circumstances
where the ability of
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the Lenders to recover the Loan Obligations may otherwise be materially
impaired. Any funds received thereafter by the Agent with respect to the Loan
Obligations shall be applied as follows: (i) first, to reimburse the Agent and
the Lenders for any expenses due under Section 18.6; (ii) second, to the payment
of accrued and unpaid Non-Use Fees and all other fees, expenses and amounts due
hereunder (other than principal and interest on the Notes); (iii) third, to the
payment of interest accrued and unpaid on the Notes; (iv) fourth, to the payment
of principal outstanding on the Notes; and (v) fifth, to the payment of the
other Loan Obligations. Any remaining amounts shall be paid to Borrower.
16.4. NOTICE. Any notice of intended action required to be given by Agent
or the Lenders, if delivered or mailed at least ten (10) Business Days prior to
such proposed action, shall be effective and constitute reasonable and fair
notice to Borrower.
16.5. RIGHT OF SET-OFF. Upon the occurrence and during the continuance of
any Event of Default, each Lender is hereby authorized at any time and from time
to time, without notice to Borrower (any such notice being expressly waived by
Borrower), to set off and apply against the Loan Obligations any and all
deposits (general or special, time or demand, provisional or final) at any time
held, or any other Indebtedness at any time owing by such Lender to or for the
credit or the account of Borrower, irrespective of whether or not such Lender
shall have made any demand under this Agreement or the Notes and although such
Loan Obligations may be contingent or unmatured; provided, however, that such
Lender shall immediately pay over such amount collected to the Agent for the
Agent's prompt distribution to each Lender of its ratable share hereunder of
said amount. The rights of each Lender under this Section are in addition to
other rights and remedies (including, without limitation, other rights of
set-off) which each Lender may otherwise have.
16.6. DELIVERY OF CASH COLLATERAL UPON CANCELLATION OF COMMITMENTS. Upon
an Event of Default described in Section 16.1.8, an amount equal to the maximum
available to be drawn under all LCs then outstanding shall automatically become
immediately due and payable. Upon any other Event of Default, and at any time
thereafter, if any LC shall be outstanding at the time that the Aggregate
Revolving Commitment and Aggregate LC Commitment are canceled pursuant to
Section 16.3, Agent may (or, upon the direction of the Required Lenders, shall)
demand that Borrower pay, and within two Business Days of such demand Borrower
shall pay, to Agent in same day funds at the Applicable Lending Office, for
deposit in a cash collateral account established at Agent for that purpose, an
amount equal to the maximum available to be drawn under all LCs then
outstanding. All funds in such account shall be held by Agent as security for
the LCs and other Loan Obligations. Upon payment in full of all Loan
Obligations, the expiration of all LCs and reimbursement to Lenders of all
outstanding LC Draws, Agent shall deliver the cash collateral then remaining, if
any to Borrower.
16.7. OTHER RIGHTS AND REMEDIES. Upon an Event of Default and at any time
and from time to time thereafter, Agent and each Lender shall have the right to
exercise all of their rights and remedies under this Loan Agreement, the
Security Documents, the other Loan Documents, the UCC, and any and all other
rights and remedies otherwise available to them at law or in equity.
17. THE AGENT.
17.1. APPOINTMENT. The Boatmen's National Bank of St. Louis is hereby
appointed Agent hereunder and under each of the other Loan Documents, and each
of the Lenders irrevocably authorizes the Agent to act as the Agent of such
Lender. The Agent agrees to act as such upon the express conditions contained
in this Section 17. The Agent shall not have any duties or responsibilities
except those expressly set forth in the Loan Documents, nor any fiduciary
relationship with any Lender, and no implied covenants, functions, duties,
responsibilities, obligations or liabilities shall be read into the Loan
Documents or otherwise exist against the Agent by reason of this Agreement.
17.2. POWERS. The Agent shall have and may exercise such powers hereunder
as are specifically delegated to the Agent by the terms hereof, together with
such powers as are reasonably
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incidental thereto. The Agent shall have no implied duties to the Lenders, or
any obligation to the Lenders to take any action hereunder except action
specifically provided by this Agreement to be taken by the Agent.
17.3. GENERAL IMMUNITY OF AGENT. Neither the Agent nor any of its
directors, officers, agents, or employees shall be liable to any Lender for any
act or failure to act with respect to Agent's duties hereunder that does not
constitute gross negligence or willful misconduct.
17.4. NO RESPONSIBILITY FOR LOANS, RECITALS, ETC. The Agent and its
directors, officers, agents, and employees shall not be responsible to the
Lenders for any recitals, reports, statements, warranties or representations
herein or in any Loan Document or be bound to ascertain or inquire as to the
performance or observance of any of the terms of this Agreement.
17.5. ACTION ON INSTRUCTIONS OF LENDERS. The Agent and its directors,
officers, agents, and employees shall in all cases be fully protected in acting,
or in refraining from acting, hereunder in accordance with written instructions
executed by the Required Lenders, and such instructions and any act or failure
to act pursuant thereto shall be binding on all of the Lenders and on all
holders of Notes.
17.6. EMPLOYMENT OF AGENTS AND COUNSEL. The Agent may execute any of its
duties as Agent hereunder by or through employees, agents, and attorneys-in-fact
and shall not be answerable to the Lenders, except as to money or securities
received by it or its authorized agents, for the default or misconduct of any
such agents or attorneys-in-fact selected by it with reasonable care. The Agent
shall be entitled to advice of counsel concerning all matters pertaining to the
agency hereby created and its duties hereunder.
17.7. RELIANCE ON DOCUMENTS; COUNSEL. The Agent shall be entitled to rely
upon any notice, consent, certificate, affidavit, letter, telegram, statement,
paper or document believed by it to be genuine and correct and to have been
signed or sent by the proper person or persons, and, in respect to legal
matters, upon the opinion of counsel selected by the Agent, which counsel may be
employees of the Agent.
17.8. AGENT'S REIMBURSEMENT AND INDEMNIFICATION. The Lenders agree to
reimburse and indemnify the Agent ratably in proportion to their respective
Revolving Commitments (i) for any amounts not reimbursed by the Borrower for
which the Agent is entitled to reimbursement by the Borrower under the Loan
Documents (other than any Agent's fee payable by Borrower to the Agent and fees
incurred by Agent for its legal counsel and expenses advanced by Agent's legal
counsel in connection with the preparation and negotiation of the Loan Documents
and the closing of the transactions contemplated hereby), (ii) for any other
expenses incurred by the Agent on behalf of the Lenders, in connection with the
enforcement of the Loan Documents, and (iii) for any liabilities,
obligations,losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever which may be imposed
on, incurred by or asserted against the Agent in any way relating to or arising
out of this Agreement or any other document delivered in connection with this
Agreement or the transactions contemplated hereby or the enforcement of any of
the terms hereof or of any such other documents; provided, however, that no
Lender shall be liable for any of the foregoing to the extent arising from any
act or failure to act of Agent that constitutes gross negligence or willful
misconduct with respect to its duties as Agent.
17.9. RIGHTS AS A LENDER. With respect to its Revolving Commitment and LC
Commitment, Revolving Advances made by it and the Note issued to it, the Agent
shall have the same rights and powers hereunder as any Lender and may exercise
the same as though it were not the Agent, and the term "Lender" or "Lenders"
shall, unless the context otherwise indicates, include the Agent in its
individual capacity. The Agent may accept deposits from, lend money to, and
generally engage in any kind of banking or trust business with the Borrower or
any Subsidiary as if it were not the Agent.
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17.10. INDEPENDENT CREDIT DECISIONS. EACH LENDER ACKNOWLEDGES THAT IT
HAS, INDEPENDENTLY AND WITHOUT RELIANCE UPON THE AGENT OR ANY OTHER LENDER AND
BASED ON THE FINANCIAL STATEMENTS PREPARED BY THE BORROWER AND SUCH OTHER
DOCUMENTS AND INFORMATION AS IT HAS DEEMED APPROPRIATE, MADE ITS OWN CREDIT
ANALYSIS AND DECISION TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
EACH LENDER ALSO ACKNOWLEDGES THAT IT WILL, INDEPENDENTLY AND WITHOUT RELIANCE
UPON THE AGENT OR ANY OTHER LENDER AND BASED ON SUCH DOCUMENTS AND INFORMATION
AS IT SHALL DEEM APPROPRIATE AT THE TIME, CONTINUE TO MAKE ITS OWN CREDIT
DECISIONS IN TAKING OR NOT TAKING ACTION UNDER THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
17.11. SUCCESSOR AGENT. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower. In addition, Lenders
may remove Agent with cause if Agent fails or refuses to carry out its
obligations hereunder for any reason. At the time of such resignation or
removal, Agent shall assign its rights and delegate its associated obligations
under the Loan Documents to one or more Lenders or other financial institutions
appointed by Lenders, in which event Borrower and the successor Agent appointed
by Lenders shall execute such documents as Lenders may reasonably request to
reflect such change. Any resignation or removal of Agent or any successor Agent
shall become effective upon the appointment by Lenders of a successor Agent;
provided, however, that if Lenders fail for any reason to appoint a successor
within 30 days after such resignation or removal, the Agent or any successor
Agent (as the case may be) shall thereafter have no obligation to act as Agent
hereunder. So long as no Default or Event of Default has occurred and is
continuing, whenever Lenders appoint a successor Agent pursuant to this Section,
Lenders will use their best efforts to appoint a Lender or other financial
institution acceptable to Borrower; the appointed successor Agent will send
written notification to Borrower of the assignment. Upon a successor Agent's
acceptance of its appointment, such successor Agent shall succeed to and become
vested with all the rights, powers, privileges and duties of the resigning
Agent, and the resigning Agent shall be discharged from its duties and
obligations as Agent hereunder. After the resignation or removal of the Agent,
the provisions of this Section 17 shall continue in effect for the resigning or
removed Agent's benefit in respect of any act or failure to act while it was
Agent hereunder. For purposes of this Section 17.11, the removal of Agent or
any successor Agent by Lenders shall require the consent of all Lenders other
than the Lender who is the Agent or successor Agent to be removed.
17.12. NOTIFICATION OF LENDERS. Each Lender agrees to use its good faith
efforts, upon becoming aware of anything which would likely have a Material
Adverse Effect, to promptly notify the other Lenders thereof. The Agent shall
promptly deliver to each Lender copies of every written notice, demand, report
(including any financial report), or other writing which the Agent gives to or
receives from Borrower and which itself constitutes, or which contains
information about, something that would likely have a Material Adverse Effect
with respect to Borrower's indebtedness to such Lender hereunder. The Agent and
its directors, officers, agents, and employees shall have no liability to any
Lender for failure to deliver any such item to such Lender unless the failure
constitutes gross negligence or willful misconduct.
17.13. NO KNOWLEDGE OF DEFAULT. The Agent shall not be deemed to have
knowledge of any Default or Event of Default unless the Agent has received
written notice thereof from a Lender or the Borrower referring to this Agreement
and describing such Default or Event of Default, or the Agent otherwise has
actual knowledge thereof. If the Agent receives such notice or otherwise
acquires such actual knowledge, the Agent shall notify the Lenders of the same,
solicit advice from the Lenders as to the appropriate course of action, and take
such action (including but not limited to actions contemplated by Sections 8.3
and 16.3) as is directed by the Required Lenders; provided, however, that unless
and until the Agent has received such directions, the Agent may at its option
take such actions as it deems appropriate without the direction of the Required
Lenders in circumstances where the ability of the Lenders to recover the Loan
Obligations may otherwise be materially impaired.
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17.14. COLLECTIONS AND DISTRIBUTIONS TO LENDERS BY AGENT. All amounts
received by any Lender on account of the Loan Obligations shall be paid promptly
to Agent for distribution to the Lenders in accordance with their ratable
shares. On the same Business Day when amounts received by Agent must be applied
to the Loan Obligations as provided in Section 6.3.2, Agent shall distribute to
each Lender its ratable share thereof. Such distributions shall be made to the
office of each Lender as listed in Exhibit 2 unless another address is
designated by such Lender to Agent in writing.
18. MISCELLANEOUS.
18.1. NOTICES. All notices, consents, requests and demands to or upon the
respective parties hereto shall be in writing, and shall be deemed to have been
given or made when delivered in person to those Persons listed on the signature
pages hereof or when deposited in the United States mail, postage prepaid, or,
in the case of telegraphic notice, or the overnight courier services, when
delivered to the telegraph company or overnight courier service, or in the case
of telex or telecopy notice, when sent, verification received, in each case
addressed as set forth on the signature pages hereof, or such other address as
either party may designate by notice to the other in accordance with the terms
of this paragraph.
18.2. AMENDMENTS AND WAIVERS; NON-EXCLUSIVE RIGHTS. No amendment,
modification or waiver of any provision of this Agreement, or any of the other
Loan Documents, nor consent to any departure by Borrower herefrom or therefrom,
shall be effective unless the same shall be in writing and signed by authorized
officers of Borrower and the Required Lenders (and if the rights or duties of
Agent are affected thereby, by Agent); provided, however, that any such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given, and no such amendment, modification or waiver shall, unless
signed by all of the Lenders, (i) increase or reduce the Revolving Commitment or
LC Commitment of any Lender or subject it to a greater obligation than expressly
provided for herein, (ii) reduce or forgive the principal of any Revolving
Advance or reduce the rate of interest on any Revolving Advance or any fees or
other amounts payable by Borrower hereunder, (iii) change the regularly
scheduled dates for payments of principal or interest of any Revolving Advance
or other fees or amounts payable to Lenders under the Loan Documents, (iv)
change the provisions of Section 17 to the detriment of any Lender, (v) change
the definition of "Required Lenders" hereunder, (vi) change the provisions of
this Section 18.2, (vii) release any of the Collateral (except in the ordinary
course of business) or any Covered Person from its obligations under the Loan
Documents, or (viii) change any provisions hereof requiring ratable
distributions to the Lenders. No notice to or demand on Borrower in any case
shall entitle Borrower to any other or further notice or demand in similar or
other circumstances. No failure on the part of Agent or any Lender to exercise,
and no delay in exercising, any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise by Agent
of any right hereunder preclude any other or further exercise thereof, or the
exercise of any other right. Each and every right granted to Agent and the
Lenders hereunder or under any other Loan Document or other document delivered
hereunder or in connection with this Agreement or allowed to it at law or in
equity shall be deemed cumulative and may be exercised from time to time.
18.3. SURVIVAL OF AGREEMENTS. All agreements, representations and
warranties made herein and in the other Loan Documents, and in any certificates
delivered pursuant hereto shall survive the execution and delivery of this
Agreement, the execution and delivery of the Notes, the issuance of the LCs and
the making of the Revolving Advances. All agreements, obligations and
liabilities of Borrower under this Agreement concerning the payment of money to
Agent, other than the obligation to pay principal of and interest on the
Revolving Advances, shall survive the repayment in full of the Revolving Loan
and the Notes and the termination of this Agreement.
18.4. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and all future holders of the Notes
and their respective successors and assigns, except that Borrower may not
assign, delegate or transfer any of its rights or obligations under this
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Agreement without the prior written consent of all of the Lenders. No Lender
shall assign its rights or delegate its obligations under the Loan Documents,
except as provided below:
18.4.1. Each Lender shall have the right to assign its rights and
delegate its obligations under the Loan Documents to one or more financial
institutions or funds organized under the laws of the United States, or any
state thereof, or under the laws of any other country that is a member of
the Organization for Economic Cooperation and Development, or a political
subdivision of any such country, which is engaged in making, purchasing or
otherwise investing in commercial loans in the ordinary course of its
business (each, an "Assignee"); PROVIDED, HOWEVER, that (i) each such
assignment shall be subject to the prior written consent of Agent (and
Borrower, if no Default or Event of Default has occurred and is continuing
at the time of such assignment), which consent shall not be unreasonably
withheld; (ii) each such assignment shall be of a constant, and not a
varying, percentage of such Lender's rights and obligations under this
Agreement; (iii) the total amount of the Revolving Loan, outstanding LCs
and unreimbursed LC Draws being assigned pursuant to each such assignment
(determined as of the date of the assignment with respect to such
assignment) shall in no event be less than the lesser of (A) $20,000,000,
or (B) such Lender's Revolving Commitment; (iv) such Lender, Agent and the
applicable Assignee shall execute and deliver to Agent an assignment and
acceptance agreement in form and substance satisfactory to Agent (an
"Assignment"), together with the Note subject to such assignment; (v) the
assigning Lender shall deliver to Agent a processing fee in the amount of
$2,500; and (vi) the assigning Lender shall give Borrower notice of any
proposed assignment not less than 30 days prior to such assignment. On and
at all times after the effective date specified in any Assignment (which
shall be at least three Business Days after the execution thereof)
executed, delivered and accepted pursuant hereto, the Assignee thereunder
shall be a party hereto and shall have the rights and obligations of a
Lender hereunder to the extent that such rights and obligations have been
assigned to it pursuant to such Assignment.
18.4.2. Notwithstanding anything to the contrary contained in Section
18.4.1, with the prior written approval of Agent, which approval will not
be unreasonably withheld, and with written notification to Borrower, any
Lender may (i) assign and pledge its respective rights under the Loan
Documents to any Federal Reserve Bank, but without delegation of such
Lender's obligations thereunder, and (ii) assign its rights and delegate
its obligations under the Loan Documents to any affiliate of such Lender
that assumes its obligations to make Revolving Advances to Borrower subject
to the terms and conditions herein, but such assignment and delegation
should not relieve the assigning and delegating Lender from its obligations
hereunder.
18.4.3. Within three Business Days after its receipt of an Assignment
executed by a Lender and an Assignee, and any Note or Notes subject to such
Assignment, Borrower shall execute and deliver to Agent in exchange for the
surrendered Note or Notes: (i) a new Note to the order of such Assignee in
an amount equal to the portion of the Revolving Commitment assigned to it
pursuant such Assignment and (ii) to the extent that the assigning Lender
retains any of the Revolving Commitment, a new Note to the order of the
assigning Lender in an amount equal to the portion of the Revolving
Commitment retained by it hereunder. Such new Notes shall be in an
aggregate principal amount of the surrendered Notes, shall be dated the
effective date of the Assignment and shall otherwise be in substantially
the form of Exhibit 3 attached hereto.
18.5. PARTICIPATIONS. Any Lender may in the ordinary course of its
commercial banking business and in accordance with applicable law, but only with
the written consent of Borrower, grant additional participations to one or more
banks or other financial institutions in any one or more Revolving Advances made
and/or LCs issued pursuant to this Agreement; PROVIDED, HOWEVER, that each such
participation shall in no event be less than the lesser of (A) $10,000,000, or
(B) such Lender's
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Revolving Commitment. For purposes of the foregoing, the Lender may disclose to
a potential or actual participant any information supplied to the Lenders by or
on behalf of Borrower. In the event of the granting of any such participation
by a Lender, (i) such Lender's obligations hereunder shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other Lenders and to
Borrower for the performance of such obligations, (iii) such Lender shall remain
the holder of the Note issued to such Lender hereunder for all purposes under
the Loan Documents, (iv) Borrower and Agent may continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under the Loan Documents or with respect to the LC's, as the case
may be, and (v) the rights of the participant shall be limited to the right to
consent to any action taken or omitted to be taken by such Lender under this
Agreement which would increase the Revolving Commitment of such Lender, reduce
the Non-Use Fee or the interest rate payable on any Revolving Advance, extend
the Ultimate Maturity Date or postpone the payment or scheduled due dates for
payments of principal, interest and Non-Use Fees. Borrower hereby acknowledges
and agrees that every such participant has the same right of setoff as do the
Lenders under Section 16.5; provided, however, that all amounts received by any
such participant through the exercise of the right of setoff in excess of its
share of Revolving Advances as a participant shall be remitted to Agent for
distribution to the Lenders as provided in Section 16.5. Every such participant
shall be entitled to the benefits of Section 10 with respect to its
participation in the Revolving Commitment and LIBOR Advances of its transferor
Lender, but no such participant shall be entitled to receive any greater amount
pursuant thereto than the transferor Lender would have been entitled to receive
in respect of the amount of the participation had the participation not been
made. Every such participation shall be evidenced by a written assignment or
participation agreement that contains provisions binding on the participant that
will fully effectuate all of the foregoing.
18.6. PAYMENT OF EXPENSES. Borrower agrees to pay or reimburse Agent for
its reasonable costs and expenses incurred in connection with the assembly of
the group of Lenders and the negotiation and preparation of the Loan Documents,
including but not limited to all fees incurred by Agent for its legal counsel
and expenses advanced by Agent's legal counsel. Further, if at any time or
times hereafter Agent engages legal counsel for advice or other representation
in connection with the amendment of any of the Loan Documents at the request of
Borrower; or Agent or any other Lender engages legal counsel for advice or other
representation to enforce the rights of Agent or any Lender against Borrower
under the Loan Documents upon the occurrence of an Event of Default, or in
connection with the amendment of any of the Loan Documents as a consequence of a
Default or Event of Default, then all reasonable fees and all expenses advanced
of such legal counsel (including allocated costs of in-house counsel, without
duplication) and all litigation costs, including costs incurred as a consequence
of any proceedings involving Borrower under the federal Bankruptcy Code, (if
any) shall constitute a part of the Loan Obligations and be payable on demand.
The agreements in this Section shall survive the repayment in full of the
Revolving Loan and Notes and the termination of this Agreement.
18.7. SEVERABILITY. Any provision of this Agreement which is prohibited,
unenforceable or not authorized in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition, unenforceability
or nonauthorization without invalidating the remaining provisions hereof or
affecting the validity, enforceability or legality of such provision in any
other jurisdiction unless the ineffectiveness of such provision would result in
such a material change as to cause completion of the transactions contemplated
hereby to be unreasonable.
18.8. CHANGE IN ACCOUNTING PRINCIPLES. If Borrower shall, at the end of
its fiscal year and with the concurrence of its independent certified public
accountants, hereafter change the method of valuing the inventory of Borrower or
if any other changes in accounting principles from those used in the preparation
of the Financial Statements are hereafter occasioned by promulgation of rules,
regulations, pronouncements or opinions by or are otherwise required by the
Financial Accounting Standards Board or the American Institute of Certified
Public Accountants (or successors thereto or bodies with similar functions), and
any of such changes result in a change in the method of calculation of, or
affect the results of such calculation of, any of the financial covenants,
standards or terms found herein, then the parties hereto agree to enter into and
diligently pursue negotiations in order to amend such financial covenants,
standards or terms so as to equitably reflect such changes, with the desired
40
<PAGE>
result that the criteria for evaluating the financial condition and results of
operations of Borrower shall be the same after such changes as if such changes
had not been made; provided, however, that until such changes are made, all
financial covenants herein and all the provisions hereof which contemplate
financial calculation hereunder shall remain in full force and effect.
18.9. INDEMNITY. Borrower irrevocably and unconditionally agrees to pay,
indemnify and hold harmless Agent and Lenders and their respective directors,
officers, employees, agents, and representatives (the "Indemnified Parties")
from and against, and promptly to reimburse Agent or Lenders for, any and all
claims, damages, liabilities, losses, costs and expenses (including, without
limitations, reasonable attorneys' fees and disbursements and amounts paid in
settlement) incurred, paid or sustained by the Indemnified Parties in connection
with, arising out of, based upon or otherwise involving or resulting from any
threatened, pending or completed action, suit, investigation or other proceeding
by, against or otherwise involving the Indemnified Parties and in any way
dealing with, relating to or otherwise involving the Prior Loan Agreement, this
Agreement or any of the other Loan Documents, or any transaction contemplated
hereby or thereby; provided, however, that Borrower shall have no obligation to
indemnify the Indemnified Parties hereunder with respect to liability arising
from the gross negligence or willful misconduct of any of the Indemnified
Parties.
18.10. COUNTERPARTS. This Agreement may be executed by the parties hereto
on any number of separate counterparts, and all such counterparts taken together
shall constitute one and the same instrument. It shall not be necessary in
making proof of this Agreement to produce or account for more than one
counterpart signed by the party to be charged.
18.11. GOVERNING LAW; NO THIRD PARTY RIGHTS. This Agreement, the other
Loan Documents and the Notes and the rights and obligations of the parties
hereunder and thereunder shall be governed by and construed and interpreted in
accordance with the laws of the State of Missouri applicable to contracts made
and to be performed wholly within such State, without regard to any choice or
conflict of laws rules. This Agreement is solely for the benefit of the parties
hereto and their respective successors and assigns, and no other Person shall
have any right, benefit, priority or interest under, or because of the existence
of, this Agreement.
18.12. CAPTIONS. Section captions and the Table of Contents preceding
this Agreement are for convenience only and shall not affect the interpretation
or construction of this Agreement or the Notes.
18.13. INCORPORATION BY REFERENCE. All of the terms of the other Loan
Documents are incorporated in and made a part of this Agreement by this
reference.
18.14. STATUTORY NOTICE. The following notice is given pursuant to
Section 432.045 of the Missouri Revised Statutes; nothing contained in such
notice shall be deemed to limit or modify the terms of the Loan Documents:
ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR
FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW
SUCH DEBT ARE NOT ENFORCEABLE. TO PROTECT YOU (BORROWER) AND US (CREDITOR)
FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING
SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND
EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER
AGREE IN WRITING TO MODIFY IT.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.
[the next nine pages are signature pages]
41
<PAGE>
Signature page to Amended and Restated Revolving Credit Loan Agreement
dated March 16, 1995, between Horizon Healthcare Corporation,
The Boatmen's National Bank of St. Louis, as Agent,
The Boatmen's National Bank of St. Louis,
First Interstate Bank of Texas, N.A.,
NationsBank of Texas, N.A.,
Bank of America National Trust & Savings Association,
Sunwest Bank of Albuquerque, N.A.,
PNC Bank, National Association, and
Shawmut Bank Connecticut, N.A.
HORIZON HEALTHCARE CORPORATION, A DELAWARE CORPORATION
By: /s/ ERNEST A. SCHOFIELD
----------------------------------------------------
Ernest A. Schofield
Chief Financial Officer and Senior Vice President
Notice Address for Borrower:
Horizon Healthcare Corporation
6001 Indian School Road, NE, Suite 530
Albuquerque, New Mexico 87110
Attn: Chief Financial Officer
FAX No.: (505) 881-5097
<PAGE>
Signature page to Amended and Restated Revolving Credit Loan Agreement
dated March 16, 1995, between Horizon Healthcare Corporation,
The Boatmen's National Bank of St. Louis, as Agent,
The Boatmen's National Bank of St. Louis,
First Interstate Bank of Texas, N.A.,
NationsBank of Texas, N.A.,
Bank of America National Trust & Savings Association,
Sunwest Bank of Albuquerque, N.A.,
PNC Bank, National Association, and
Shawmut Bank Connecticut, N.A.
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS
as "Agent" and a "Lender"
By:
/s/ JUAN A. CAZORLA
-------------------------------------
Name:
Juan A. Cazorla
-----------------------------------
Title:
Assistant Vice President
----------------------------------
Notice Address for Agent and Boatmen's:
The Boatmen's National Bank of St. Louis
One Boatmen's Plaza, 800 Market Street
St. Louis, Missouri 63101
Attn: Juan A. Cazorla
FAX No. (314) 466-6499
<PAGE>
Signature page to Amended and Restated Revolving Credit Loan Agreement
dated March 16, 1995, between Horizon Healthcare Corporation,
The Boatmen's National Bank of St. Louis, as Agent,
The Boatmen's National Bank of St. Louis,
First Interstate Bank of Texas, N.A.,
NationsBank of Texas, N.A.,
Bank of America National Trust & Savings Association,
Sunwest Bank of Albuquerque, N.A.,
PNC Bank, National Association, and
Shawmut Bank Connecticut, N.A.
FIRST INTERSTATE BANK OF TEXAS, N.A.
as a "Lender"
By:
/s/ SCOTT B. WALKER
------------------------------------------
Scott B. Walker
Vice President
Notice Address for First Interstate:
First Interstate Bank of Texas, N.A.
1445 Ross Avenue, 3rd Floor
Dallas, Texas 75202
Attn: Scott B. Walker
FAX No.: (214) 740-1543
<PAGE>
Signature page to Amended and Restated Revolving Credit Loan Agreement
dated March 16, 1995, between Horizon Healthcare Corporation,
The Boatmen's National Bank of St. Louis, as Agent,
The Boatmen's National Bank of St. Louis,
First Interstate Bank of Texas, N.A.,
NationsBank of Texas, N.A.,
Bank of America National Trust & Savings Association,
Sunwest Bank of Albuquerque, N.A.,
PNC Bank, National Association, and
Shawmut Bank Connecticut, N.A.
NATIONSBANK OF TEXAS, N.A.
as a "Lender"
By:
/s/ GUILLERMO BORDA
--------------------------------------------
Name:
Guillermo Borda
------------------------------------------
Title:
Vice President
-----------------------------------------
Notice Address for NationsBank:
901 Main Street, 67th Floor
Dallas, Texas 75202
Attn: Guillermo Borda
FAX No.: (214) 508-0980
<PAGE>
Signature page to Amended and Restated Revolving Credit Loan Agreement
dated March 16, 1995, between Horizon Healthcare Corporation,
The Boatmen's National Bank of St. Louis, as Agent,
The Boatmen's National Bank of St. Louis,
First Interstate Bank of Texas, N.A.,
NationsBank of Texas, N.A.,
Bank of America National Trust & Savings Association,
Sunwest Bank of Albuquerque, N.A.,
PNC Bank, National Association, and
Shawmut Bank Connecticut, N.A.
BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION
as a "Lender"
By:
/s/ WYATT M. RITCHIE
--------------------------------------------
Name:
Wyatt M. Ritchie
------------------------------------------
Title:
Vice President
-----------------------------------------
Notice Address for BOA:
555 South Flower, 11th Floor, #5618
Los Angeles, California 90071
Attn: Wyatt Ritchie
FAX No.: (213) 228-2756
<PAGE>
Signature page to Amended and Restated Revolving Credit Loan Agreement
dated March 16, 1995, between Horizon Healthcare Corporation,
The Boatmen's National Bank of St. Louis, as Agent,
The Boatmen's National Bank of St. Louis,
First Interstate Bank of Texas, N.A.,
NationsBank of Texas, N.A.,
Bank of America National Trust & Savings Association,
Sunwest Bank of Albuquerque, N.A.,
PNC Bank, National Association, and
Shawmut Bank Connecticut, N.A.
SUNWEST BANK OF ALBUQUERQUE, N.A.
as a "Lender" and as "Issuer"
By:
/s/ NANCY K. MADIGAN
--------------------------------------
Name:
Nancy K. Madigan
------------------------------------
Title:
Vice President
-----------------------------------
Notice Address for Sunwest:
303 Roma NW
Albuquerque, New Mexico 87102
Attn: Nancy Madigan
FAX No.: (505) 764-4178
<PAGE>
Signature page to Amended and Restated Revolving Credit Loan Agreement
dated March 16, 1995, between Horizon Healthcare Corporation,
The Boatmen's National Bank of St. Louis, as Agent,
The Boatmen's National Bank of St. Louis,
First Interstate Bank of Texas, N.A.,
NationsBank of Texas, N.A.,
Bank of America National Trust & Savings Association,
Sunwest Bank of Albuquerque, N.A.,
PNC Bank, National Association, and
Shawmut Bank Connecticut, N.A.
PNC BANK, NATIONAL ASSOCIATION
as a "Lender"
By:
/s/ JOSEPH M. RUENIC
------------------------------------
Name:
Joseph M. Ruenic
----------------------------------
Title:
Vice President
---------------------------------
Notice Address for PNC:
Two PNC Plaza, 2nd Floor
620 Liberty Avenue
Pittsburgh, PA 15265
Attn: Karen George
FAX No.: (412) 762-2784
<PAGE>
Signature page to Amended and Restated Revolving Credit Loan Agreement
dated March 16, 1995, between Horizon Healthcare Corporation,
The Boatmen's National Bank of St. Louis, as Agent,
The Boatmen's National Bank of St. Louis,
First Interstate Bank of Texas, N.A.,
NationsBank of Texas, N.A.,
Bank of America National Trust & Savings Association,
Sunwest Bank of Albuquerque, N.A.,
PNC Bank, National Association, and
Shawmut Bank Connecticut, N.A.
SHAWMUT BANK CONNECTICUT, N.A.
as a "Lender"
By:
/s/ MANFRED D. EIGENBROD
- ------------------------------------------
Name:
Manfred D. Eigenbrod
- ------------------------------------------
Title:
Managing Director
- ------------------------------------------
Notice Address for Shawmut:
777 Main Street
12th Floor, MSN 397
Hartford, CT 06115
Attn: Gene F. Martin
FAX No.: (203) 986-5367
<PAGE>
EXHIBIT 1.1
GLOSSARY OF DEFINED TERMS
"80% Threshold": is defined on page 26.
"Accounts": as to any Person, shall collectively mean (i) the right of such
Person to payment for goods sold or leased or for services rendered by such
Person, all other accounts receivable, notes and other obligations owed to such
Person, all chattel paper, instruments, documents and other forms of obligations
(including but not limited to all obligations that may be characterized as
general intangibles or otherwise under the UCC) respecting rights to the payment
of money from others, including but not limited to rights to payment of Medicare
and Medicaid claims, and all other rights of such Person to the payment of
money, whether now owned or hereafter arising or acquired; (ii) all cash and
non-cash proceeds and all products of the foregoing; and (iii) all books and
records, related to the foregoing; individually, an "Account".
"Adjusted CBR": is defined on page 4.
"Adjusted LIBOR Rate": is defined on page 3.
"Advance Date": is defined on page 9.
"Affected Principal Amount": is defined on page 16.
"Affiliate": with respect to any Person, (a) any other Person who is a partner,
director, officer or stockholder of such Person; and (b) any other Person which,
directly or indirectly, is in control of, is controlled by or is under common
control with such Person, and any partner, director, officer or stockholder of
such other Person described. For purposes of this Agreement, control of a
Person by another Person shall be deemed to exist if such other Person has the
power, directly or indirectly, either to (i) vote twenty percent (20%) or more
of the securities having the power to vote in an election of directors of such
Person or such others charged with the management of such Person, or (ii) direct
the management of such Person, whether by contract or otherwise and whether
alone or in combination with others.
"Agent": is defined on page 1.
"Aggregate LC Commitment": is defined on page 2.
"Aggregate Revolving Commitment": is defined on page 2.
"Applicable Lending Office": the office of Agent located at One Boatmen's Plaza,
800 Market Street, St. Louis, Missouri 63101, Attn: Juan A. Cazorla.
"Assignee": is defined on page 39.
"Assignment": is defined on page 39.
"Banker's Trust Documents": collectively: (a) that certain Subordination,
Attornment and Non-Disturbance Agreement dated as of July 29, 1994 by and among
White Oaks, Trustee, and Borrower, (b) that certain Assignment and Security
Agreement dated as of July 29, 1994 by and among White Oaks, Trustee, and
Borrower, (c) all UCC-1 financing statements executed by Borrower in connection
with the foregoing documents, and (d) any and all amendments, modifications,
restatements, extensions or replacements of the foregoing.
i
<PAGE>
"Beneficial Owner": as defined in Rule 13-D-3 of the Securities and Exchange
Commission.
"BOA": is defined on page 1.
"Boatmen's": is defined on page 1.
"Borrowing Officer" means an officer of Borrower duly authorized on behalf of
Borrower to request Revolving Advances or LCs under this Agreement.
"Borrower": is defined on page 1.
"Business Day": a day other than a Saturday, Sunday or other day on which
commercial banks are authorized or required to close under the laws of either
the United States or the State of Missouri, and if the applicable day relates to
a LIBOR Advance, LIBOR Interest Period, or notice with respect to any LIBOR
Advance, a day on which dealings in Dollar deposits are also carried on in the
London interbank market and banks are open for business in London.
"Capital Lease": any lease obligation that has been or should be capitalized
under GAAP including, without limitation, the obligations of Borrower under that
certain Master Lease Agreement between White Oaks and Borrower dated July 1,
1994, as amended from time to time.
"CBR": is defined on page 4.
"CBR Advance": any Revolving Advance bearing interest at the CBR.
"CBR Increment": is defined on page 4.
"Charter Documents": the articles or certificate of incorporation and bylaws of
a corporation; the certificate of limited partnership and partnership agreement
of a limited partnership; the partnership agreement of a general partnership; or
the indenture of a trust.
"Code": the Internal Revenue Code of 1986, as amended from time to time, and all
regulations thereunder of the IRS.
"Collateral": all shares of capital stock and partnership interests owned by
Borrower in its Subsidiaries, all shares of capital stock owned by CRC Delaware
in Nevada Rehabilitation Services, Corp., all Accounts of Guarantors, and all
other property now or hereafter securing or intended to secure the Loan
Obligations, and all proceeds thereof.
"Commonly Controlled Entity": a Person which is under common control with
another Person within the meaning of Section 414(b) or (c) of the Code.
"Contract": any contract, note, deed, or other agreement or undertaking or any
security.
"Covered Person": Borrower, each Guarantor, and all Subsidiaries of the
Guarantors, and if Borrower or any Guarantor creates or acquires one or more
additional Subsidiaries after the Effective Date, each of such Subsidiaries.
"CRC Delaware": is defined on page 12.
"CRC Stock Pledge Agreement": is defined on page 13.
ii
<PAGE>
"Default": any of the events listed in Section 16.1 of this Agreement, without
giving effect to any requirement for the giving of notice, for the lapse of
time, or both, or for the happening of any other condition, event or act.
"Disclosure Schedule": is defined on page 17.
"DOL": the United States Department of Labor.
"Dollars" and the sign "$": lawful money of the United States.
"EBIT": is defined on page 31.
"EBITDA": is defined on page 31.
"Effective Date": March 16, 1995.
"Eligible Accounts": is defined on page 26.
"ERISA": the Employee Retirement Income Security Act of 1974, as amended from
time to time.
"Event of Default": any of the events listed in Section 16.1 of this Agreement
as to which any requirement for the giving of notice, for the lapse of time, or
both, or for the happening of any further condition, event or act has been
satisfied.
"Existing LCs": is defined on page 2.
"Existing Security Documents": is defined on page 13.
"Federal Funds Rate": for any day, the rate per annum (rounded to the nearest
1/100 of 1% or, if there is no nearest 1/100 of 1%, then to the next higher
1/100 of 1%) equal to the weighted average of the rates on overnight federal
funds transactions with members of the Federal Reserve System arranged by
federal funds brokers on such day, as published by the Federal Reserve Lender of
St. Louis on the Business Day next succeeding such day, provided that (i) if the
day for which such rate is to be determined is not a Business Day, the Federal
Funds Rate for such day shall be such rate on such transactions on the next
preceding Business Day as so published on the next succeeding Business Day, and
(ii) if such rate is not so published for any day, the Federal Funds Rate for
such day shall be the average rate charged to Agent on such day on such
transactions as determined by Agent.
"Financial Statements": financial statements of Borrower and its Subsidiaries
that are furnished to Agent and Lenders as required in Section 14.8 of this
Agreement.
"First Interstate": is defined on page 1.
"Fixed Charge Coverage Ratio": the ratio calculated pursuant to Section 15.14.2.
"Four-K": Four-K Investments, L.P., a Texas limited partnership.
"FRB": the Board of Governors of the Federal Reserve System and any successor
thereto or to the functions thereof.
"GAAP": those generally accepted accounting principles set forth in Statements
of the Financial Accounting Standards Board and in Opinions of the Accounting
Principles Board of the American Institute of Certified Public Accountants or
which have other substantial authoritative support in the United States and are
applicable in the circumstances, as applied on a consistent basis.
iii
<PAGE>
"Governmental Authority": the federal government of the United States; the
government of any foreign country that is recognized by the United States or is
a member of the United Nations; any state of the United States; any local
government or municipality within the territory or under the jurisdiction of any
of the foregoing; any department, agency, division, or instrumentality of any of
the foregoing; and any court whose orders or judgements are enforceable by or
within the territory of any of the foregoing.
"Greenery": Greenery Rehabilitation Group, Inc., formerly a Delaware
corporation, and now merged with Borrower, with Borrower as the surviving
corporation.
"Group": as used in Regulation 13-D issued by the Securities and Exchange
Commission.
"Guarantor Security Agreement": is defined on page 13.
"Guarantors": is defined on page 13.
"Guaranty": is defined on page 13.
"Hazardous Waste": any hazardous, radioactive, toxic, solid, special waste or
substance or constituent thereof, or any other such substance (as defined under
any applicable law or regulation).
"Horizon Holding Assignment": is defined on page 13.
"Indebtedness": as to any Person at any particular date, any contractual
requirement enforceable against such Person (i) to repay borrowed money; (ii) to
pay the deferred purchase price of property or services; (iii) to make payments
or reimbursements with respect to bank acceptances or to a factor; (iv) to make
payments or reimbursements with respect to letters of credit or drawings
thereunder; (v) that is secured by any Lien on any property of such Person;
(iv) to make payments under any Capital Lease; (v) to make any payment or
contribution to a Multi-Employer Plan; (vi) that is evidenced by a note, bond,
debenture or similar instrument; (vii) under any conditional sale agreement or
title retention agreement; (viii) to make rental or other payments under any
Operating Lease; or (ix) to pay interest or fees with respect to any of the
foregoing.
"Indemnified Parties": is defined on page 41.
"Indirect Obligation": as to any Person, (a) any guaranty by such Person of any
Obligation of another Person; (b) any Lien on any property of such Person that
secures any Obligation of another Person, (b) any enforceable contractual
requirement that such Person (i) purchase an Obligation of another Person or any
property that is security for such Obligation, (ii) advance or contribute funds
to another Person for the payment of an Obligation of such other Person or to
maintain the working capital, net worth or solvency of such other Person as
required in any documents evidencing an Obligation of such other Person,
(iii) purchase property, securities or services from another Person for the
purpose of assuring the beneficiary of any Obligation of such other Person that
such other Person has the ability to timely pay or discharge such Obligation,
(iv) grant a Lien on any property of such Person to secure any Obligation of
another Person, or (v) otherwise assure or hold harmless the beneficiary of any
Obligation of another Person against loss in respect thereof; and (c) any other
contractual requirement enforceable against such Person that has the same
substantive effect as any of the foregoing. The term "Indirect Obligation" does
not, however, include the indorsement by a Person of instruments for deposit or
collection in the ordinary course of business or the liability of a general
partner of a partnership for Loan Obligations of such partnership. The amount
of any Indirect Obligation of a Person shall be deemed to be the stated or
determinable amount of the Obligation in respect of which such Indirect
Obligation is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by such Person in good
faith.
iv
<PAGE>
"Initial Financial Statements": the financial statements of Borrower for the
period ended November 30, 1994, as furnished to Agent and Lenders.
"Intercompany Loan": a loan or advance made by a Person from time to time to
one or more of its Affiliates, whether or not evidenced by a promissory note.
"Interest Period": as defined on page 4.
"Investment": (a) a loan or advance of money or property to a Person, (b) stock
or other equity interest in a Person, (c) a debt instrument issued by a Person,
whether or not convertible to stock or other equity interest in such Person, (d)
assumption of debt of another Person, (e) assumption of Capital Lease
obligations of another Person, (f) assumption of Operating Lease obligations of
another person, or (g_) any other interest in or rights with respect to a Person
which include, in whole or in part, a right to share, with or without conditions
or restrictions, some or all of the revenues or net income of such Person.
"IRS": the Internal Revenue Service.
"Issuer": with respect to LCs issued pursuant to this Agreement, Sunwest or any
other Lender or any commercial bank to which Agent or a Lender has granted a
participation as provided in Section 18.5 or which is otherwise acceptable to
Borrower and the Required Lenders, which at the request of Agent agrees to issue
LCs pursuant to this Agreement.
"Law": any statute, rule, regulation, order, judgment, award or decree of any
Governmental Authority.
"Leverage Ratio": the ratio calculated pursuant to Section 15.14.3.
"LC": is defined on page 2.
"LC Commitment": is defined on page 2.
"LC Draw": is defined on page 2.
"LC Standby Fee": is defined on page 7.
"Lender": is defined on page 1.
"Lenders": is defined on page 1.
"LIBOR Advance": a Revolving Advance bearing interest at the LIBOR Rate.
"LIBOR Rate": is defined on page 3.
"LIBOR Increment": is defined on page 3.
"Lien": as to any item of tangible or intangible property, any interest therein
that secures an Obligation or Indirect Obligation of any Person, whether created
by statute (such as but not limited to a statutory lien for work or materials)
or under a mortgage, deed of trust, security agreement, financing statement,
pledge, hypothecation agreement, assignment, or other document, or which arises
under any form of preferential or title retention agreement or arrangement
(including but not limited to a conditional sale agreement or a lease) that has
substantially the same economic effect as any of the foregoing.
"Loan Documents": this Agreement, the Note, the Security Documents and all other
agreements, certificates, documents, instruments and other writings executed in
connection herewith.
v
<PAGE>
"Loan Obligations": all of Borrower's Indebtedness owing to the Lenders, whether
as principal, interest, fees or otherwise, and all other obligations and
liabilities of Borrower to the Lenders under the Loan Documents (including but
not limited to all extensions, renewals, modifications, rearrangements,
restructures, replacements and refinancings of the foregoing, whether or not the
same involve modifications to interest rates or other payment terms), whether
now existing or hereafter created, absolute or contingent, direct or indirect,
joint or several, secured or unsecured, due or not due, contractual or tortious,
liquidated or unliquidated, arising by operation of law or otherwise, or
acquired by any or all of the Lenders outright, conditionally or as collateral
security from another, including but not limited to the obligation of Borrower
to repay future advances by any or all of the Lenders, whether or not made
pursuant to commitment and whether or not presently contemplated by Borrower and
the Lenders in the Loan Documents.
"Material Adverse Effect": as to any Person and with respect to any event or
occurrence of whatever nature (including any adverse determination in any
litigation, arbitration, investigation or proceeding), a material adverse effect
on the business, operations, revenues, financial condition, property, or
business prospects of such Person or the ability of such Person to timely pay or
perform such Person's Obligations generally, or in the case of Borrower,
specifically the ability of Borrower to pay or perform any of the Loan
Obligations.
"Material Agreement": as to any Person, any Contract to which such Person is a
party or by which such Person is bound which, if violated or breached, would
have a Material Adverse Effect on such Person or any Covered Person, provided
that without limiting the foregoing, the Banker's Trust Documents, the REMIC
Loan Documents, and the peopleCARE Acquisition Documents shall be deemed
Material Agreements.
"Material Law": any Law whose violation by a Person would have a Material
Adverse Effect with respect to such Person.
"Material License": (i) as to any Covered Person, any license, permit or consent
from a Governmental Authority or other Person and any registration and filing
with a Governmental Authority or other Person which if not obtained, held or
made by such Covered Person would have a Material Adverse Effect with respect to
such Covered Person or any other Covered Person, and (ii) as to any Person who
is a party to this Agreement or any of the other Loan Documents, any license,
permit or consent from a Governmental Authority or other Person and any
registration or filing with a Governmental Authority or other Person that is
necessary for the execution or performance by such party, or the validity or
enforceability against such party, of this Agreement or such other Loan
Document.
"Material Obligation": as to any Person, an Obligation of such Person which if
not fully and timely paid or performed would have a Material Adverse Effect on
such Person.
"Material Proceeding": any litigation, investigation or other proceeding by or
before any Governmental Authority or any arbitration proceeding (i) which
involves any of the Loan Documents or any of the transactions contemplated
thereby, or involves a Covered Person as a party or any property of a Covered
Person, and would have a Material Adverse Effect with respect to any Covered
Person if adversely determined, (ii) in which there has been issued an
injunction, writ, temporary restraining order or any other order of any nature
which purports to restrain or enjoin the making of any Revolving Advance, the
consummation of any other transaction contemplated by the Loan Documents, or the
enforceability of any provision of any of the Loan Documents, (iii) which
involves the actual or alleged breach or violation by a Covered Person of, or
default by a Covered Person under, any Material Agreement, or (iv) which
involves the actual or alleged violation by a Covered Person of any Material
Law.
"Material Subsidiary": any Subsidiary created or acquired by Borrower or any
Subsidiary of Borrower of which any of the following is true from time to time,
as determined by Agent no more than four
vi
<PAGE>
times each calendar year: (i) such Subsidiary has gross revenues of more than
$2,000,000 during any four quarter period, (ii) such Subsidiary has total assets
of more than $2,000,000, or (iii) the aggregate Dollar amount of all investments
in and loans made to such Subsidiary by Borrower or any other Subsidiary of
Borrower is more than $1,000,000.
"Maturity": as to any Indebtedness, the time when it becomes payable in full,
whether at a regularly scheduled time, because of acceleration or otherwise.
"Maximum Available Amount": is defined on page 2.
"Merger Agreement": that certain Agreement and Plan of Merger dated August 2,
1993, between Borrower and Greenery, pursuant to which Borrower merged with
Greenery, with Borrower being the surviving corporation, as modified or amended.
"Multiemployer Plan": a Pension Benefit Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"NationsBank": is defined on page 1.
"NIPSI Assignment": is defined on page 13.
"Non-Use Fee": is defined on page 6.
"Non-Use Rate": is defined on page 6.
"Note": is defined on page 2.
"Notes": is defined on page 2.
"Notice of Conversion/Continuation": is defined on page 5.
"Obligation": as to any Person, any Indebtedness of such Person, any guaranty by
such Person of any Indebtedness of another Person, and any contractual
requirement enforceable against such Person that does not constitute
Indebtedness of such Person or a guaranty by such Person but which would involve
the expenditure of money by such Person if complied with or enforced.
"Operating Lease": a lease which is not a Capital Lease.
"PBGC": the Pension Benefit Guaranty Association.
"Pension Benefit Plan": any pension or profit-sharing plan which is covered by
Title I of ERISA and all other benefit plans and in respect of which the
Borrower or a Commonly Controlled Entity is an "employer" as defined in Section
3(5) of ERISA.
"peopleCARE Acquisition Documents": collectively: (a) Agreement and Plan of
Reorganization dated as of June 9, 1994 by and among Borrower and the peopleCARE
Corporations, as amended by that certain Amendment No. 1 To Agreement and Plan
of Organization dated June 30, 1994; (b) Agreement dated as of July 29, 1994,
between the Schlegels and Borrower; (c) Real Estate Contract of Sale between
White Oaks, Four-K, and Borrower dated June 9, 1994, as amended by that certain
Amendment No. 1 To Real Estate Contract of Sale dated June 30, 1994, and all
closing documents referenced therein including, without limitation, any and all
title commitments and policies which Borrower is entitled to thereunder; (d)
Real Estate Contract of Sale and Master Lease Agreement between White Oaks,
Robert J. Schlegel, and Borrower dated June 9, 1994, as amended by that certain
Amendment No. 1 To Real Estate Contract Of Sale And Master Lease Agreement, and
the
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closing documents referenced therein including, without limitation, any and all
title commitments and policies which Borrower is entitled to thereunder; (e)
Master Lease Agreement between White Oaks and Borrower dated July 1, 1994; (f)
any and all other documentation with respect to the acquisition and lease by
Borrower of certain assets of the peopleCARE Entities, and (g) any and all
amendments, modifications, restatements or replacements of the foregoing.
"peopleCARE Corporations": collectively: peopleCARE Heritage Manor Plano, Inc.,
peopleCARE Heritage Manor Canton, Inc., peopleCARE Heritage Park, Inc.,
peopleCARE Heritage Village, Inc., peopleCARE Winterhaven, Inc., peopleCARE
Heritage Place, Inc., peopleCARE Heritage Forest Lane, Inc., peopleCARE Heritage
Oaks, Inc., peopleCARE Heritage Manor Longview, Inc., peopleCARE Heritage
Gardens Carrollton, Inc., peopleCARE Heritage Estates, Inc., peopleCARE Heritage
Country Manor, Inc., peopleCARE Heritage Western Hills, Inc.
"peopleCARE Entities": collectively, the peopleCARE Corporations, White Oaks,
Four-K, and the Schlegels.
"Permitted Capital Leases": is defined on page 28.
"Permitted Indebtedness": is defined on page 28.
"Permitted Indirect Obligations": is defined on page 29.
"Permitted Investments": is defined on page 27.
"Permitted Liens": is defined on page 29.
"Permitted Operating Leases": is defined on page 28.
"Permitted Senior Indebtedness": is defined on page 28.
"Person": any individual, partnership, corporation, trust, unincorporated
association, joint venture, limited liability company, Governmental Authority,
or other organization in any form that has the legal capacity to sue or be sued.
If the context so implies or requires, the term Person includes Borrower.
"PNC": is defined on page 1.
"Prior Agreement": is defined on page 1.
"Regulation D", "Regulation G", and Regulation U": , respectively, Regulation D
issued by the FRB, Regulation G issued by the FRB, and Regulation U issued by
the FRB.
"Remaining Interest Period": is defined on page 16.
"REMIC Loan Documents": collectively, (a) that certain Loan Agreement between
White Oaks and SouthTrust and that certain Promissory Note executed by White
Oaks, each dated November 3, 1993, and each evidencing a loan of $14,100,000
with respect to the nursing home known as Heritage Village which is located in
Dallas, Texas, (b) that certain Loan Agreement between White Oaks and SouthTrust
and that certain Promissory Note executed by White Oaks, each dated November 3,
1993, and each evidencing a loan of $9,500,000 with respect to the nursing home
known as Heritage Oaks which is located in Arlington, Texas, (c) that certain
Loan Agreement between White Oaks and SouthTrust and that certain Promissory
Note executed by White Oaks, each dated November 3, 1993, and each evidencing a
loan of $5,000,000 with respect to the nursing home known as Heritage Manor
Canton which is located in Canton, Texas, (d) that certain Loan Agreement
between White Oaks and SouthTrust and that certain Promissory Note executed by
White Oaks, each dated November 3, 1993,
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and each evidencing a loan of $5,900,000 with respect to the nursing home known
as Heritage Place which is located in Dallas, Texas, (e) that certain Loan
Agreement between White Oaks and SouthTrust and that certain Promissory Note
executed by White Oaks, each dated November 3, 1993, and each evidencing a loan
of $5,600,000 with respect to the nursing home known as Heritage Forest Lane
which is located in Dallas Texas, (f) that certain Loan Agreement between White
Oaks and SouthTrust and that certain Promissory Note executed by White Oaks,
each dated November 3, 1993, and each evidencing a loan of $8,900,000 with
respect to the nursing home known as Winterhaven and which is located in
Houston, Texas, (g) that certain Cross-Collateralization and Cross-Default
Agreement by and among White Oaks, PeopleCARE Heritage Village, Inc., PeopleCARE
Heritage Forest, Inc., PeopleCARE Heritage Oaks, Inc., PeopleCARE Heritage Manor
Canton, Inc., PeopleCARE Winterhaven, Inc., PeopleCARE Heritage Place, Inc.,
PeopleCARE Heritage Management, Inc., and SouthTrust dated as of November 3,
1993, (h) that certain Deed of Trust and Security Agreement by and among White
Oaks, PeopleCARE Heritage Village, Inc., PeopleCARE Heritage Forest, Inc.,
PeopleCARE Heritage Oaks, Inc., PeopleCARE Heritage Manor Canton, Inc.,
PeopleCARE Winterhaven, Inc., PeopleCARE Heritage Place, Inc., PeopleCARE
Heritage Management, Inc., collectively as grantors, Sarah J. Sumner, as
Trustee, and SouthTrust, as beneficiary, dated as of November 3, 1993, (i) that
certain Assignment of Rents and Leases dated as of July 29, 1994 by White Oaks
to Trustee (j) any and all other agreements, documents, financing statements,
and certificates executed by White Oaks in connection with foregoing documents
and loan transactions, (k) any and all amendments, modifications, restatements
or replacements of the foregoing, and (l) all assignments of the foregoing
documents including, without limitation, any documentation evidencing the
assignment of the foregoing to SC Funding Corporation or Trustee.
"Reportable Event": a reportable event as defined in Title IV of ERISA or the
regulations thereunder.
"Required Lenders": any combination of Lenders holding at least 66 2/3% of the
Aggregate Revolving Commitment, provided that, the combination of Lenders
comprising the Required Lenders from time to time may not include any Lender
which has failed to remit its share of a requested Revolving Advance when all
the conditions precedent set forth in Section 11 of this Agreement to such
Lenders' obligation to make such Revolving Advance have been satisfied.
"Responsible Officer": as to any Person that is not an individual, partnership
or trust, the Chairman of the Board of Directors, the President, the chief
executive officer, the chief operating officer, the chief financial officer, the
Treasurer, any Assistant to the Treasurer, or any Vice President in charge of a
principal business unit; as to any partnership, any individual who is a general
partner thereof or any individual who is an officer of a corporate general
partner thereof or any individual who has general management or administrative
authority over all or any principal unit of the partnership's business; and as
to any trust, any individual who is a trustee.
"Revolving Advance": is defined on page 1.
"Revolving Advance Request": is defined on page 9.
"Revolving Commitment": is defined on page 2.
"Revolving Loan": is defined on page 1.
"Schlegels": collectively, Robert J. Schlegel and Myrna D. Schlegel.
"Security Agreement": is defined on page 12.
"Security Documents": collectively, the Security Agreement, the Guarantor
Security Agreement, the Guaranty, the Stock Pledge Agreement, the CRC Stock
Pledge Agreement, the Horizon Holding Assignment, the NIPSI Assignment, and all
additional security agreements, mortgages, assignments,
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guaranties or similar instruments which may be executed and delivered to Agent
or Lenders pursuant hereto, as the same may be amended, modified, restated, or
replaced from time to time.
"Senior Funded Debt": is defined on page 31.
"Shawmut" is defined on page 1.
"Stock Pledge Agreement": is defined on page 12.
"Subsidiary": as to any Person, (i) a corporation with respect to which more
than 80% of the outstanding shares of stock of each class having ordinary voting
power (other than stock having such power only by reason of the happening of a
contingency) is at the time owned by such Person or by one or more Subsidiaries
of such Person, or (ii) a partnership in which any Person or any Subsidiary of
any Person is a general partner or owns a partnership interest therein of 50% or
more.
"Sunwest": is defined on page 1.
"this Agreement": this document (including every document that is stated herein
to be an appendix, exhibit or schedule hereto (whether or not attached hereto)),
as amended, modified, restated or replaced from time to time.
"Total Funded Debt": is defined on page 31.
"Trustee": Bankers Trust Company of California, N.A., as Trustee under that
certain Pooling and Servicing Agreement, dated as of October 10, 1993, for SC
Commercial Mortgage Pass-Through Certificates, Series 1993-1, as amended from
time to time.
"UCC": the Uniform Commercial Code as in effect from time to time in the State
of Missouri or such other similar statute as in effect from time to time in
Missouri or any other appropriate jurisdiction.
"Ultimate Maturity Date": is defined on page 1.
"United States": when used in a geographical sense, all the states of the United
States of America and the District of Columbia; and when used in a legal
jurisdictional sense, the government of the country that is the United States of
America.
"Unused Commitment": is defined on page 6.
"Welfare Benefit Plan": any plan described by Section 3(1) of ERISA.
"White Oaks": White Oaks Investments, L.P., a Texas limited partnership.
x
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EXHIBIT 2
COMMITMENTS AND ADDRESSES OF
LENDERS FOR PAYMENT DISTRIBUTIONS BY AGENT
NAME AND ADDRESS RATABLE SHARE OF AGGREGATE RATABLE SHARE
OF LENDER REVOLVING COMMITMENT OF LC COMMITMENT
First Interstate Bank of Texas, N.A. 15.0% 15.0%
1445 Ross Avenue, 3rd Floor
Dallas, Texas 75202
Attn: Scott Walker
FAX No. (214) 740-1543
The Boatmen's National Bank of 12.0% 12.0%
St. Louis
One Boatmen's Plaza
800 Market Street
St. Louis, Missouri 63101
Attn: Juan Cazorla
FAX No. (314) 466-6449
NationsBank of Texas, N.A. 20.0% 20.0%
901 Main Street, 67th Floor
Dallas, Texas 75202
Attn: Guillermo Borda
FAX No. (214) 508-0980
Bank of America N.T. & S.A. 20.0% 20.0%
555 South Flower,
11th Floor, #5618
Los Angeles, California 90071
Attn: Wyatt Ritchie
FAX No. (213) 228-2756
Sunwest Bank of Albuquerque, 8.0% 8.0%
N.A.
303 Roma NW
Albuquerque, New Mexico 87102
Attn: Nancy Madigan
FAX No. (505) 764-4178
<PAGE>
EXHIBIT 2
(CONT.)
COMMITMENTS AND ADDRESSES OF
LENDERS FOR PAYMENT DISTRIBUTIONS BY AGENT
NAME AND ADDRESS RATABLE SHARE OF AGGREGATE RATABLE SHARE
OF LENDER REVOLVING COMMITMENT OF LC COMMITMENT
PNC Bank, National Association 12.5% 12.5%
Two PNC Plaza, 2nd Floor
620 Liberty Avenue
Pittsburgh, PA 15265
Attn: Karen George
FAX No. (412) 762-2784
Shawmut Bank Connecticut, N.A. 12.5% 12.5%
777 Main Street
12th Floor, MSN 397
Hartford, CT 06115
Attn: Gene F. Martin
FAX No. (203) 986-5367
- --------------------
(1) With respect to each Existing LC and each LC now or hereafter issued
pursuant to this agreement, each lender other than Sunwest will be deemed to
have purchased a particiption in such LC in the percentage of the LC Commitment
for such Lender set forth above, with Sunwest retaining the remaining 8.0%
interest in such LC.
ii
<PAGE>
HORIZON HEALTHCARE CORPORATION
EXHIBIT 11.1
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE EARNINGS)
Common and Common Equivalents:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
FEBRUARY 28, FEBRUARY 28,
1995 1994 1995 1994
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net Earnings $ 9,146 $ 4,484 $22,834 $10,800
======= ======= ======= =======
Applicable Common Shares:
Weighted average outstanding
shares during the period 28,923 17,920 25,248 14,062
Weighted average shares
issuable upon exercise of
common stock equivalents
outstanding (principally stock
options and warrants using the
treasury stock method) 644 629 684 589
------- ------- ------- -------
Total 29,567 18,549 25,932 14,651
======= ======= ======= =======
NET EARNINGS PER SHARE $ 0.31 $ 0.24 $ 0.88 $ 0.74
======= ======= ======= =======
</TABLE>
<PAGE>
HORIZON HEALTHCARE CORPORATION
EXHIBIT 11.1
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE EARNINGS)
Assuming Full Dilution:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
FEBRUARY 28, FEBRUARY 28,
1995 1994 1995 1994
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net Earnings $ 9,146 $ 4,484 $22,834 $10,800
Interest on subordinated convertible
notes, net of income taxes 0 308 0 1,428
------- ------- ------- -------
Earnings used for computation of
per share earnings $ 9,146 $ 4,792 $22,834 $12,228
======= ======= ======= =======
Applicable Common Shares:
Weighted average outstanding
shares during the period 28,923 20,436 25,248 14,901
Weighted average shares
issuable upon exercise of
common stock equivalents
outstanding (principally stock
options and warrants using the
treasury stock method and
subordinated convertible notes in
1994) 644 690 684 3,638
------- ------- ------- -------
Total 29,567 21,126 25,932 18,539
======= ======= ======= =======
NET EARNINGS PER SHARE $ 0.31 $ 0.23 $ 0.88 $ 0.66
======= ======= ======= =======
</TABLE>
